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Ardmore Expecting Product, Chemical Tanker Recovery

Ardmore Shipping Corporation announced results for the three and nine months ended September 30, 2021.

Highlights and Recent Activity

  • Reported a net loss of $12.8 million for the three months ended September 30, 2021, or $0.37 loss per basic and diluted share. This compares to net loss of $6.6 million, or $0.20 loss per basic and diluted share, for the three months ended September 30, 2020. Reported EBITDA (see Non-GAAP Measures section) of $1.3 million for the three months ended September 30, 2021 as compared to $7.2 million for the three months ended September 30, 2020.
  • Reported a net loss of $29.5 million for the nine months ended September 30, 2021 or $0.88 loss per basic and diluted share, which includes deferred finance fees written off and unrealized gains on derivatives; losses adjusted for these items (see Adjusted (loss) / earnings in the Non-GAAP Measures section) are $29.0 million, or $0.86 Adjusted loss per basic and diluted share. This compares to net income of $13.5 million, or $0.41 basic and $0.40 diluted earnings per share for the nine months ended September 30, 2020. Adjusted earnings were $13.6 million, or $0.41 Adjusted earnings per basic and diluted share for the nine months ended September 30, 2020.
  • Reported EBITDA (see Non-GAAP Measures section) of $11.2 million for the nine months ended September 30, 2021, as compared to $56.1 million for the nine months ended September 30, 2020
  • MR tankers earned an average TCE rate of $10,904 per day for the three months ended September 30, 2021 and $11,237 per day for the nine months ended September 30, 2021.
  • Chemical tankers earned an average TCE rate of $8,400 per day (comprising average rates of $10,387 per day on chemical cargos and $6,652 per day on Clean Petroleum Product (“CPP”) cargos) for the three months ended September 30, 2021 and $10,882 per day for the nine months ended September 30, 2021.
  • In September 2021, Ardmore extended its sustainability-linked finance facility with ABN AMRO for a further year until June 2023; the facility contains a pricing adjustment feature linked to Ardmore’s performance on carbon emission reduction and other environmental and social initiatives. The facility’s performance targets for carbon emission reduction align with the International Maritime Organization’s targets for GHG emissions reduction.
  • In July 2021, Ardmore extended an agreement to time charter-in a 2010 Japanese-built MR product tanker for one year at a net rate of $11,500 per day, plus a one-year extension option.
  • In October, e1 Marine completed its first sale of a hydrogen generator to a leading US based global marine engine manufacturer for a pilot project. The sale is on profitable terms and expected to lead to a commercial licensing agreement for e1 Marine. In addition, Element 1 Corp. is entering into a joint research agreement with Aramco Americas to apply a carbon capture system to Element 1’s hydrogen generator.

Anthony Gurnee, the Company’s Chief Executive Officer, commented:

“While our earnings through the first nine months of 2021 reflect the very tough prevailing market conditions during the period, our strong balance sheet and low-cost structure have enabled us to hold our own and we believe that we have now reached a turning point, with the product and chemical tanker markets showing signs of real recovery.

Having experienced an unprecedentedly sharp drop in tanker demand earlier in the pandemic, a full oil demand recovery is now well underway, and an extensive global oil inventory destocking seems to be reaching its logical end-point. As a consequence, we believe that we are now very close to an inflection point for product and chemical tanker demand, beyond which rates should rebound strongly.

At the moment, we are seeing improved spot performance, as well as higher period and FFA (futures) rates being taken by charterers looking to secure cover in what is expected to be a much stronger market. Our spot MR voyages booked over the last two weeks have averaged $15,300 / day and our chemical tankers $17,400 / day, while Eco-Design MR one-year TC rates have improved to $15,500 / day, and the FFA Atlantic triangulation TCE rates for December through March now stand at $16,200 / day.

On this basis, we expect a much improved second half of the fourth quarter and a good run through the winter, where many additional factors may be in play that provide a further boost to tonne-mile demand, such as low Atlantic Basin refined product inventories, an end to oil inventory de-stocking, “energy crisis” spill over in the form of gas-to-oil switching for power generation, and typical winter weather disruptions and supply dislocations. Longer term, we are very positive given the fundamentals of demand growth and the visibility that we have on highly constrained product and chemical tanker supply growth.

In the meantime, Ardmore remains well positioned in terms of both market upside and financial strength, is maintaining its low-cost structure and strong relative chartering performance and is making good progress in our energy transition plan including multiple positive developments with e1 Marine alongside world-class commercial partners.”

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