Ardmore Shipping Corporation Announces Financial Results For The Three and Nine Months Ended September 30, 2024
HAMILTON, Bermuda, Nov. 6, 2024 /PRNewswire/ -- Ardmore Shipping Corporation (NYSE:ASC) ("Ardmore", the "Company" or "we") today announced results for the three and nine months ended September 30, 2024.
Highlights and Recent Activity
Reported net income and Adjusted earnings of $23.3 million for the three months ended September 30, 2024, or $0.55 earnings and Adjusted earnings per basic share and diluted share, compared to net income attributable to common stockholders and Adjusted earnings of $20.3 million, or $0.49 earnings and Adjusted earnings per basic share and diluted share for the three months ended September 30, 2023. (See reconciliation of net income to Adjusted earnings in the Non-GAAP Measures section.)
Reported net income of $123.5 million for the nine months ended September 30, 2024, or $2.96 earnings per basic share and $2.93 earnings per diluted share, compared to net income attributable to common stockholders of $87.3 million, or $2.12 earnings per basic share and $2.09 earnings per diluted share, for the nine months ended September 30, 2023. We reported Adjusted earnings of $109.3 million for the nine months ended September 30, 2024, or $2.62 Adjusted earnings per basic share and $2.60 Adjusted earnings per diluted share, compared to Adjusted earnings of $87.3 million for the nine months ended September 30, 2023, or $2.12 Adjusted earnings per basic share and $2.09 Adjusted earnings per diluted share. (See reconciliation of net income to Adjusted earnings in the Non-GAAP Measures section with the main driver of the variance being the gain on the sale of the Ardmore Seafarer of $12.3 million.)
Consistent with the Company's variable dividend policy of paying out dividends on its shares of common stock equal to one-third of Adjusted earnings, the Board of Directors declared a cash dividend on November 6, 2024, of $0.18 per common share for the quarter ended September 30, 2024. The dividend will be paid on December 13, 2024, to all shareholders of record on November 29, 2024.
MR Eco-Design tankers earned an average spot TCE rate of $28,481 per day for the three months ended September 30, 2024. Chemical tankers earned an average TCE rate of $21,604 per day for the three months ended September 30, 2024. Based on approximately 50% of total revenue days currently fixed for the fourth quarter of 2024, the average spot TCE rate is approximately $25,000 per day for MR Eco-Design tankers; based on approximately 55% of revenue days fixed for the fourth quarter of 2024, the average TCE rate for chemical tankers is approximately $25,150 per day.
Gernot Ruppelt, the Company's Chief Executive Officer, commented:
"Strong fundamentals combined with geopolitical factors have continued to raise product and chemical tanker charter rates, up on a year-over-year basis, against the backdrop of typical third quarter seasonality. Ardmore is well-positioned to capture further market upside as conditions are beginning to accelerate in the early stages of the winter season.
Our focus remains consistent: maximizing our TCE performance, tightly managing our costs, and lowering our breakeven level. Our strong performance has enabled us to sustain our momentum in pursuing all our capital allocation priorities, and in turn, strengthen our earnings capacity for a wide range of market conditions. We continue returning capital to our shareholders through a consistent quarterly dividend, investing in our existing fleet to enhance performance and reduce emissions, while reducing debt to lower our breakeven.
We believe that Ardmore's commitment to these priorities positions us strongly to continue building value for our shareholders through operational and financial efficiency across market cycles."
Summary of Recent and Third Quarter 2024 Events
Fleet
Fleet Operations and Employment
As of September 30, 2024, the Company had 26 vessels in operation (including four chartered-in vessels), consisting of 20 MR tankers ranging from 45,000 deadweight tonnes ("dwt") to 49,999 dwt (16 Eco-Design and four Eco-Mod) and six Eco-Design IMO 2 product/chemical tankers ranging from 25,000 dwt to 37,800 dwt.
MR Tankers (45,000 dwt – 49,999 dwt)
At the end of the third quarter of 2024, the Company had 20 MR tankers in operation, all of which were trading in either the spot market or on time charters. The MR tankers earned an average TCE rate of $28,032 per day in the third quarter of 2024. In the third quarter of 2024, the Company's 16 MR Eco-Design tankers earned an average TCE rate of $28,481 and the Company's four MR Eco-Mod tankers earned an average TCE rate of $25,726 per day.
In the fourth quarter of 2024, the Company expects to have 95% of its revenue days for its MR tankers employed in the spot market with the remaining 5% of revenue days subject to time charters. As of November 6, 2024, the Company had fixed approximately 50% of its total spot MR revenue days for the fourth quarter of 2024 at an average spot TCE rate of approximately $23,100 per day, which includes MR Eco-Design tankers at an average of approximately $25,000 per day and MR Eco-Mod tankers at an average of approximately $11,950 per day.
Product / Chemical Tankers (IMO 2: 25,000 dwt – 37,800 dwt)
At the end of the third quarter of 2024, the Company had six Eco-Design IMO 2 product / chemical tankers in operation, all of which were trading in the spot market. During the third quarter of 2024, the Company's six Eco-Design product / chemical vessels earned an average TCE rate of $21,604 per day.
In the fourth quarter of 2024, the Company expects to have all revenue days for its Eco-Design IMO 2 product / chemical tankers employed in the spot market. As of November 6, 2024, the Company had fixed approximately 55% of its Eco-Design IMO 2 product / chemical tankers revenue days for the fourth quarter of 2024 at an average TCE rate of approximately $25,150 per day.
Drydocking
The Company had no drydocking days in the third quarter of 2024. The Company does not currently have any drydocking days scheduled in the fourth quarter of 2024.
Dividend on Common Shares
Consistent with the Company's variable dividend policy of paying out dividends on its shares of common stock equal to one-third of Adjusted earnings, as calculated for dividends (see Adjusted earnings (for purposes of dividend calculations) in the Non-GAAP Measures section), the Board of Directors declared a cash dividend on November 6, 2024 of $0.18 per common share for the quarter ended September 30, 2024. The dividend will be paid on December 13, 2024, to all shareholders of record on November 29, 2024.
Preferred Stock Redemption
On November 4, 2024, the Company delivered a notice of redemption with respect to 10,000 shares of its Series A Preferred Stock at a redemption value of $10.3 million, which equates to 103% of the liquidation preference per share, plus any accumulated and unpaid dividends. The redemption is expected to occur in December 2024.
Leadership Transition
As previously announced on July 8, 2024, Ardmore Founder and CEO Anthony Gurnee retired from his executive and board positions effective September 16, 2024. The Board of Directors appointed current executive and Chief Commercial Officer Gernot Ruppelt as the Company's new CEO, and expanded current CFO Bart Kelleher's position to take on the additional role of President. The leadership transition took effect at the Company's quarterly Board meeting on September 16, 2024.
Geopolitical Conflicts
The ongoing Russia-Ukraine war has disrupted energy supply chains, caused instability and significant volatility in the global economy and resulted in economic sanctions by several nations. The ongoing conflict has contributed significantly to related increases in spot tanker rates.
Geopolitical tensions have increased since commencement of the Israel-Hamas war in October 2023. Since mid-December 2023, Houthi rebels in Yemen have carried out numerous attacks on vessels in the Red Sea area. As a result of these attacks, many shipping companies have routed their vessels away from the Red Sea, which has affected trading patterns, rates and expenses. Further escalation or expansion of hostilities in the Middle East or elsewhere could continue to affect the price of crude oil and the oil industry, the tanker industry and demand for the Company's services.
Results for the Three Months Ended September 30, 2024 and 2023
The Company reported net income of $23.3 million for the three months ended September 30, 2024, or $0.55 earnings per basic share and diluted share, as compared to net income attributable to common stockholders of $20.3 million, or $0.49 earnings per basic share and diluted share for the three months ended September 30, 2023.
Results for the Nine Months Ended September 30, 2024 and 2023
The Company reported net income of $123.5 million for the nine months ended September 30, 2024, or $2.96 earnings per basic share and $2.93 earnings per diluted share, as compared to net income attributable to common stockholders of $87.3 million, or $2.12 earnings per basic share and $2.09 earnings per diluted share for the nine months ended September 30, 2023.
Management's Discussion and Analysis of Financial Results for the Three Months Ended September 30, 2024 and 2023
Revenue. Revenue for the three months ended September 30, 2024 was $96.1 million, an increase of $9.2 million from $86.9 million for the three months ended September 30, 2023.
The Company's average number of operating vessels was 26.0 for the three months ended September 30, 2024, consistent with 26.0 for the three months ended September 30, 2023.
The Company had 2,279 spot revenue days for the three months ended September 30, 2024, as compared to 2,185 for the three months ended September 30, 2023. The Company had 25 vessels employed directly in the spot market as of September 30, 2024 compared with 26 vessels as of September 30, 2023. Increases in spot rates during the three months ended September 30, 2024 resulted in an increase in revenue of $2.7 million, while the increase in spot revenue days resulted in an increase in revenue of $3.7 million for the three months ended September 30, 2024, as compared to the three months ended September 30, 2023.
The Company had one product tanker employed under time charters as of September 30, 2024 as compared to none as of September 30, 2023. There were 92 revenue days derived from time charters for the three months ended September 30, 2024, as compared to none for the three months ended September 30, 2023. The increase in revenue days for time-chartered vessels resulted in an increase in revenue of $2.8 million for the three months ended September 30, 2024.
Voyage Expenses. Voyage expenses were $34.6 million for the three months ended September 30, 2024, an increase of $4.0 million from $30.6 million for the three months ended September 30, 2023. The net increase is primarily due to a $2.3 million increase in port, agency and broker commission costs, and a $1.7 million increase from higher bunker consumption.
TCE Rate. The average TCE rate for the Company's fleet was $26,628 per day for the three months ended September 30, 2024, an increase of $281 per day from $26,347 per day for the three months ended September 30, 2023. TCE rates represent net revenues (a non-GAAP measure representing revenue less voyage expenses) divided by revenue days. Net revenue utilized to calculate TCE is determined on a discharge-to-discharge basis, which is different from how the Company records revenue under U.S. GAAP.
Vessel Operating Expenses. Vessel operating expenses were $14.0 million for the three months ended September 30, 2024, a decrease of $0.4 million from $14.4 million for the three months ended September 30, 2023. The decrease reflects the timing of vessel operating expenses between quarters. Vessel operating expenses, by their nature, are prone to fluctuations between periods.
Charter Hire Costs. Total charter hire expense was $5.9 million for the three months ended September 30, 2024, an increase of $1.8 million from $4.1 million for the three months ended September 30, 2023. This increase is as a result of higher charter hire rates during the three months ended September 30, 2024 compared to the three months ended September 30, 2023. Total charter hire expense for the three months ended September 30, 2024 was comprised of an operating expense component of $3.1 million and a vessel lease expense component of $2.8 million.
Depreciation. Depreciation expense for the three months ended September 30, 2024 was $7.8 million, an increase of $0.9 million from $6.9 million for the three months ended September 30, 2023. This increase is primarily attributable to the purchase of the Ardmore Gibraltar in April 2024 and the installation of ballast water treatment systems and scrubber systems on several vessels during their most recent drydock cycle.
Amortization of Deferred Drydock Expenditures. Amortization of deferred drydock expenditures for the three months ended September 30, 2024 was $1.0 million, an increase of $0.3 million from $0.7 million for the three months ended September 30, 2023. Deferred drydocking costs for a given vessel are amortized on a straight-line basis to the next scheduled drydocking of the vessel.
General and Administrative Expenses: Corporate. Corporate-related general and administrative expenses for the three months ended September 30, 2024 were $6.3 million, an increase of $1.2 million from $5.1 million for the three months ended September 30, 2023. This increase is primarily due to one-time expenses associated with the leadership transition during the three months ended September 30, 2024 compared to the three months ended September 30, 2023.
General and Administrative Expenses: Commercial and Chartering. Commercial and chartering expenses are the expenses attributable to Ardmore's chartering and commercial operations departments in connection with its spot trading activities. Commercial and chartering expenses for the three months ended September 30, 2024 were $1.2 million, generally consistent with $1.1 million for the three months ended September 30, 2023.
Unrealized losses on Derivatives. The Company had an insignificant amount of unrealized losses on derivatives for the three months ended September 30, 2024, as compared to no unrealized gains or losses for the three months ended September 30, 2023.
Interest Expense and Finance Costs. Interest expense and finance costs for the three months ended September 30, 2024 were $1.1 million, a decrease of $1.9 million from $3.0 million for the three months ended September 30, 2023. The decrease in costs was due to the reduction of the average outstanding balance due to the conversion of the Company's term loan into a fully revolving facility with 50% of the term loan being converted to a revolving facility during the three months ended June 30, 2023 and the remaining 50% being converted during the three months ended March 31, 2024. The current flexibility of the Company's revolving facilities, with only $22.5 million drawn down as of September 30, 2024, has minimized the impact on the Company of the elevated interest rate environment. Amortization of deferred finance fees for the three months ended September 30, 2024 was $0.3 million, consistent with $0.3 million for the three months ended September 30, 2023.
Liquidity
As of September 30, 2024, the Company had $268.5 million in liquidity available, with cash and cash equivalents of $47.6 million (December 31, 2023: $46.8 million) and amounts available and undrawn under its revolving credit facilities of $220.9 million (December 31, 2023: $221.2 million).
Conference Call
The Company plans to host a conference call on November 6, 2024, at 10:00 a.m. Eastern Time to discuss its financial results for the quarter ended September 30, 2024. All interested parties are invited to listen to the live conference call and review the related slide presentation by choosing from the following options:
By dialing 800‑836‑8184 (U.S.) or 646-357-8785 (International) and referencing "Ardmore Shipping."
By accessing the live webcast at Ardmore's website at www.ardmoreshipping.com.
Participants should dial into the call 10 minutes before the scheduled time.
If you are unable to participate at this time, an audio replay of the call will be available through November 13, 2024 at 888-660-6345 or 646-517-4150. Enter the passcode 17491 to access the audio replay. A recording of the webcast, with associated slides, will also be available on the Company's website. The information provided on the teleconference is only accurate at the time of the conference call, and the Company takes no responsibility for providing updated information.
About Ardmore Shipping Corporation
Ardmore owns and operates a fleet of MR product and chemical tankers ranging from 25,000 to 50,000 deadweight tonnes. Ardmore provides, through its modern, fuel-efficient fleet of mid-size tankers, seaborne transportation of petroleum products and chemicals worldwide to oil majors, national oil companies, oil and chemical traders, and chemical companies.
Ardmore's core strategy is to continue to develop a modern, high-quality fleet of product and chemical tankers, build key long-term commercial relationships and maintain its cost advantage in assets, operations and overhead, while creating synergies and economies of scale as the company grows. Ardmore provides its services to customers through voyage charters and time charters, and enjoys close working relationships with key commercial and technical management partners.
Ardmore's Energy Transition Plan ("ETP") focusses on three key areas: transition technologies, transition projects, and sustainable (non-fossil fuel) cargos. The ETP is an extension of Ardmore's strategy, building on its core strengths of tanker chartering, shipping operations, technical and operational fuel efficiency improvements, technical management, construction supervision, project management, investment analysis, and ship finance.
Ardmore Shipping CorporationUnaudited Condensed Consolidated Balance Sheets
As of
In thousands of U.S. Dollars, except as indicated
September 30, 2024
December 31, 2023
ASSETS
Current assets
Cash and cash equivalents
47,574
46,805
Receivables, net of allowance for bad debts of $2.2 million (2023: $1.6 million)
65,079
56,234
Prepaid expenses and other assets
3,901
4,348
Advances and deposits
4,635
6,833
Inventories
11,574
12,558
Total current assets
132,763
126,778
Non-current assets
Investments and other assets, net
9,690
11,186
Vessels and vessel equipment, net
550,416
524,044
Deferred drydock expenditures, net
14,512
12,022
Advances for ballast water treatment and scrubber systems
4,840
9,587
Deferred finance fees, net
3,003
2,835
Operating lease, right-of-use asset
7,589
4,499
Total non-current assets
590,050
564,173
TOTAL ASSETS
722,813
690,951
LIABILITIES, REDEEMABLE PREFERRED STOCK AND EQUITY
Current liabilities
Accounts payable
7,251
2,016
Accrued expenses and other liabilities
17,763
18,265
Deferred revenue
2,792
347
Accrued interest on debt and finance leases
—
939
Current portion of long-term debt
2,517
6,436
Current portion of finance lease obligations
—
2,029
Current portion of operating lease obligations
6,860
3,807
Total current liabilities
37,183
33,839
Non-current liabilities
Non-current portion of long-term debt
20,000
39,590
Non-current portion of finance lease obligations
—
41,614
Non-current portion of operating lease obligations
635
510
Other non-current liabilities
954
954
Total non-current liabilities
21,589
82,668
TOTAL LIABILITIES
58,772
116,507
Redeemable Preferred Stock
Cumulative Series A 8.5% redeemable preferred stock
37,043
37,043
Total redeemable preferred stock
37,043
37,043
Stockholders' equity
Common stock
440
433
Additional paid in capital
474,805
471,216
Treasury stock
(15,636)
(15,636)
Retained earnings
167,389
81,388
Total stockholders' equity
626,998
537,401
Total redeemable preferred stock and stockholders' equity
664,041
574,444
TOTAL LIABILITIES, REDEEMABLE PREFERRED STOCK AND EQUITY
722,813
690,951
Ardmore Shipping CorporationUnaudited Condensed Consolidated Statements of Operations
Three Months Ended
Nine Months Ended
In thousands of U.S. Dollars except pershare and share data
September 30, 2024
September 30, 2023
September 30, 2024
September 30, 2023
Revenue, net
96,118
86,940
323,745
297,099
Voyage expenses
(34,574)
(30,640)
(99,842)
(98,735)
Vessel operating expenses
(13,970)
(14,427)
(45,114)
(44,622)
Time charter-in
Operating expense component
(3,082)
(2,115)
(8,812)
(7,229)
Vessel lease expense component
(2,835)
(1,946)
(8,109)
(6,652)
Depreciation
(7,833)
(6,928)
(22,414)
(20,683)
Amortization of deferred drydockexpenditures
(997)
(733)
(2,692)
(2,635)
General and administrative expenses
Corporate
(6,274)
(5,081)
(16,648)
(14,902)
Commercial and chartering
(1,212)
(1,087)
(3,296)
(3,310)
Unrealized losses on derivatives
(26)
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