ARDMORE SHIPPING CORPORATION 2014ardmoreshipping.investorroom.com/download/ASC+2016+Investor+… ·...
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ARDMORE SHIPPING CORPORATION
Investor Day Presentation
May 25, 2016
Modern Fleet of Eco-design and Eco-mod built at high quality Korean and Japanese shipyards with upgrades to improve fuel efficiency and commercial capability
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Disclaimer
This presentation contains certain statements that may be deemed to be “forward-looking statements” within the
meaning of applicable U.S. federal securities laws. All statements, other than statements of historical facts, that
address activities, events or developments that Ardmore Shipping Corporation (“Ardmore” or the “Company”)
expects, projects, believes or anticipates will or may occur in the future, including, without limitation, statements
about: future operating or financial results; global and regional economic conditions and trends; pending vessel
acquisitions or possible upgrades to vessels; the Company’s business strategy and expected capital spending or
operating expenses; competition in the tanker industry; shipping market trends; the Company’s financial condition
and liquidity, including ability to obtain financing in the future to fund capital expenditures, acquisitions and other
general corporate activities; the Company’s share repurchase program; ability to enter into fixed-rate charters after
the current charters expire and the Company’s ability to earn income in the spot market; expectations of the
availability of vessels to purchase and the time it may take to construct new vessels and vessels’ useful lives are
forward-looking statements. Although the Company believes that its expectations stated in this presentation are
based on reasonable assumptions, actual results may differ from those projected in the forward-looking
statements.
Factors that might cause or contribute to such a discrepancy include, but are not limited to, the risk factors
described in the Company's filings with the Securities and Exchange Commission (the "SEC"), including the
Company’s Annual Report on Form 20-F for the year ended December 31, 2015. This presentation is for
information purposes only and does not constitute an offer to buy or sell securities of the Company. For more
complete information about the Company, the information in this presentation should be read together with the
Company 's filings with the SEC which may be accessed on the SEC website at www.sec.gov.
Modern Fleet of Eco-design and Eco-mod built at high quality Korean and Japanese shipyards with upgrades to improve fuel efficiency and commerical capability
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Investor Day May 25th, 2016
Agenda
I. Welcome and Presenter Introduction Anthony Gurnee - CEO
II. Overview of Ardmore Shipping Anthony Gurnee - CEO
III. Charter Update and Trading Patterns Gernot Ruppelt - SVP
IV. Asia Pacific: A Growing Market for Refined Products Al Troner - President APEC(Guest Speaker)
V. Demand & Supply Outlook and Financial Review Paul Tivnan - CFO
VI. Closing Remarks Anthony Gurnee - CEO
VII. Q&A
Modern Fleet of Eco-design and Eco-mod built at high quality Korean and Japanese shipyards with upgrades to improve fuel efficiency and commercial capability
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Introduction
Modern Fleet of Eco-design and Eco-mod built at high quality Korean and Japanese shipyards with upgrades to improve fuel efficiency and commercial capability
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Our Company
Leading public product tanker focused on most attractive sector over the
long-term, strategy based on service excellence and operating efficiency
Continuing to execute and deliver on commitment to shareholders
Owns and operates a fleet of 22 “Eco” medium size (“MR”) product and
chemical tankers.
Effective chartering strategy: value maximisation through opportunistic
employment in spot and time charter markets
Internal management company and no transactions with affiliates
Delivering solid financial performance with EBITDA of $18.8 mln and net
income of $6.7 mln, equating to $0.26 per share in 1Q16
Cost efficient platform delivering significant earnings upside:
o Every $1,000 increase in charter rates adds 31 cents to EPS & Cashflow
and increases the dividend by $0.19 / share(1)
Attractive dividend policy paying out 60% of net income quarterly
Strong balance sheet with conservative leverage
1. Realized across a full fleet of 22 ships. Calculation based on: ($1,000 day x 363 revenue days x 22 ships) / 25.9mln shares = $0.31 per share. $0.31 x 60% = Dividend of $0.19 per share
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Ardmore Fleet – May 2016
1. Average age at Mar 31, 2016
Modern “Eco” Fleet
Average age of ~4.2 yrs
Upgraded for enhanced
commercial capability
Built at high-quality yards in
Korea and Japan
Quality fleet = lower operating
cost, higher utilization and
maximum value appreciation
Complementary fleet
High Quality Vessels Fleet List
Vessel Name Type Dwt IMO Constructed Country Employment Specification
In Operation
Ardmore Seavaliant Product/Chemical 49,998 2/3 Feb-13 Korea Spot Eco-design
Ardmore Seaventure Product/Chemical 49,998 2/3 Jun-13 Korea Spot Eco-design
Ardmore Seavantage Product/Chemical 49,997 2/3 Jan-14 Korea Time Charter Eco-design
Ardmore Seavanguard Product/Chemical 49,998 2/3 Feb-14 Korea Time Charter Eco-design
Ardmore Sealion Product/Chemical 49,999 2/3 May-15 Korea Pool Eco-design
Ardmore Seafox Product/Chemical 49,999 2/3 Jun-15 Korea Pool Eco-design
Ardmore Seawolf Product/Chemical 49,999 2/3 Aug-15 Korea Pool Eco-design
Ardmore Seahawk Product/Chemical 49,999 2/3 Nov-15 Korea Pool Eco-design
Ardmore Endeavour Product/Chemical 49,997 2/3 Jul-13 Korea Spot Eco-design
Ardmore Seafarer Product/Chemical 45,744 3 Aug-04 Japan Spot Eco-mod
Ardmore Seatrader Product 47,141 — Dec-02 Japan Spot Eco-mod
Ardmore Seamaster Product/Chemical 45,840 3 Sep-04 Japan Spot Eco-mod
Ardmore Seamariner Product 45,726 — Oct-06 Japan Spot Eco-mod
Ardmore Sealeader Product 47,463 — Aug-08 Japan Spot Eco-mod
Ardmore Sealifter Product 47,472 — Jul-08 Japan Spot Eco-mod
Ardmore Dauntless Product/Chemical 37,764 2 Feb-15 Korea Pool Eco-design
Ardmore Defender Product/Chemical 37,791 2 Feb-15 Korea Pool Eco-design
Ardmore Centurion Product/Chemical 29,006 2 Nov-05 Korea Spot Eco-mod
Ardmore Cherokee Product/Chemical 25,215 2 Jan-15 Japan Pool Eco-design
Ardmore Cheyenne Product/Chemical 25,217 2 Mar-15 Japan Time Charter Eco-design
Ardmore Chinook Product/Chemical 25,217 2 Jul-15 Japan Time Charter Eco-design
Ardmore Chippewa Product/Chemical 25,217 2 Nov-15 Japan Time Charter Eco-design
Total 22 934,797 4.2(1)
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Consistent and Focused Strategy
Acquire vessels at cyclical lows: low cash
breakeven and maximum ship value
appreciation
Operate and maintain vessels efficiently
Low overhead at approx. $1,500 per ship /
day
Cost Efficiency
Time charter and spot employment - mix
adjusted to maximize TCE
2Q16: Spot 75% v Time Charter 25%
Maintain close dialogue with charterers at
all times for time-charter opportunities
Maintain a high-quality, fuel efficient fleet
Exploit the product and chemical overlap
Close operational collaboration with
charterers: service excellence
Optimise voyage performance: maximise
TCE
Highly Effective Chartering Strategy2
Superior Operational And Financial Performance
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Consistent Focus on MR Product and Chemical Tankers1
Value Added Service = Max Earnings4
Modern Fleet of Eco-design and Eco-mod built at high quality Korean and Japanese shipyards with upgrades to improve fuel efficiency and commercial capability
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Charter Update and Trading Patterns
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Chartering Profile
Revenue Day Estimates 2Q16(1)Fleet Employment Profile
1. Includes estimated drydock days for 2Q16
31%
69%
1Q 2016
25%
75%
2Q 2016 E
Vessel Employment TC ExpiryArdmore Seavantage Time Charter Jan-17Ardmore Seavanguard Time Charter Feb-17Ardmore Cheyenne Time Charter Mar-17Ardmore Chinook Time Charter Jul-16Ardmore Chippewa Time Charter Nov-16Ardmore Seavaliant Spot n/aArdmore Seaventure Spot n/aArdmore Endeavour Spot n/aArdmore Seafarer Spot n/aArdmore Sealifter Spot n/aArdmore Sealeader Spot n/aArdmore Seatrader Spot n/aArdmore Seamaster Spot n/aArdmore Seamariner Spot n/aArdmore Centurion Spot n/aArdmore Sealion Pool n/aArdmore Seafox Pool n/aArdmore Seawolf Pool n/aArdmore Seahawk Pool n/aArdmore Dauntless Pool n/aArdmore Defender Pool n/aArdmore Cherokee Pool n/a
622
519
273
91
182
0
273
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MR Eco-design MR Eco-mod Prod/Chem Eco-design Prod/Chem Eco-mod
Spot / Pool TC Days
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Charter Market Active Heading into Summer
1. Time Charter Equivalent (“TCE”) daily rate is the gross charter rate or gross pool rate, as appropriate, per revenue day plus Communication Victualing and Entertainment Income (“CVE). For vessels employed on voyage charters, TCE is the net rate after deducting voyage
Time Charter Equivalent ($ / day)(1)
+27% YoY
+20% YoY
+37% YoY
+18% YoY
Strong MR spot performance of $21,548 / day in 2015
Fleet earnings steady in 1Q16 (flat quarter on quarter - 1Q16 v 1Q15)
Refinery utilization recovering and expecting strong gasoline demand
17,149 17,806
19,020
16,599
12,228
17,131 18,038 17,833 17,367
12,499
18,309 19,149
20,223
17,507
13,417
AVG. FLEET TCE MR ECO-DES MR ECO-MOD PROD/CHEM ECO-DES PROD/CHEM ECO-MOD
1Q15 1Q16 FY 2015
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Regional Presence in Key Global Markets
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Extensive Global Customer Base
Strong support from key players through consistent track record
in commercial and operational performance
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Key Market Movers in 2015
Strong inter-regional movements between West and East
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Freight Trends in 2016
Mixed Aromatics into China
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Freight Trends in 2016
West Africa Imports
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Freight Trends in 2016
Exports from Asia to American markets
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Freight Trends in 2016
Strong Import Demand from Australia and New Zealand
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Freight Trends in 2016
Strong Activity Within Asia due to Regional Arbitrage
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Freight Trends in 2016
Long-Haul Trades into East and South Africa
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Freight Trends in 2016
Brazil Becoming a Two-Way Trade
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Freight Trends in 2016
North American Driving Demand Keeping Classic TA Route Busy
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Freight Trends in 2016
Distillate Finding Markets in Multiple Locations
and Necessitating Strong Trading Flexibility
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Freight Trends in 2016
MR Segment Continues to Evolve and Benefit
from Structural Demand and Global Arbitrage Opportunities
Modern Fleet of Eco-design and Eco-mod built at high quality Korean and Japanese shipyards with upgrades to improve fuel efficiency and commercial capability
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Asia Pacific: A Growing Market for Refined Products
Ship Me Somewhere East of Suez
Asian Growth: Still Key to Global Products Demand
Al Troner, President Asia Pacific Energy Consulting (APEC)Houston, TexasTel/Dir: (281) 759 4440Email: [email protected] 25
Contents
Asia Pacific – An Overview
Refining and Product Exports
Downstream
Product Trade and Shipping
Thoughts & Conclusions
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Asia Pacific – An Overview
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Asia Pacific in World Demand
Since 1995, has led world demand growth
Recessions staggered, not stopped, growth
Import-dependent, crude & product
Demand, absolute/relative, led by China
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Asia Pacific Crude Demand
Continued expansion 1995-2015
Refinery sophistication ranged widely
Regional crude waxy/sweet
Refiners had low sulfur ceiling
Preferred mid/heavy crudes
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Asia Pacific Product Demand (2014)
China by far the largest single market
Focus traditionally mid-barrel
Diesel, not gasoline, top transport fuel
Biggest user of petrochemical naphtha
Singapore focus transport fuels, bunker
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Asia Pacific Product Demand (2014)
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China Share of Asia Pacific Demand (2014)
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Illusionary Appearances: Oil
Present price slump simply cyclical
Too much supply focus
Too little demand focus
Crude/Products: Differing drivers
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Illusionary Appearances: Oil/Shipping
Crude price a poor shipping barometer
Demand often shifts to product imports
Crude: Short-haul usually wins in the end
Product: Long-haul often competitive
Shifts in oil basics support products trade
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Prices Not Always Lockstep ($/BBL)
Source: Oil Market Intelligence, Energy Intelligence Group
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Jan Feb Mar
Brent $31.10 $31.93 $38.06
0.1%S Diesel (NW Europe) $37.34 $44.27 $50.64
Naphtha FOB (Singapore) $36.46 $33.68 $38.91
Refining and Product Exports
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Refining & Exports
India export-oriented refining
China now shifting to exports
Asia still leads refinery add-ons
Refineries gaining complexity
“Export anywhere” plants, i.e. Reliance
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Refinery Trends/1
Refinery Migration; Europe closing shop
Asia expansion shifting
Big closures: Japan & Australia
Offset by India, China
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Refinery Additions/Closures (2016-18)
Note: All values in MBD 39
No. Of Refineries Base Capacity
Severe Secondary
China N/A 3,204 1,089
India N/A 470 378
France 3 619 187
Germany 3 396 343
UK 3 416 187
China/India Additions
European Refineries at Risk (min)
Refinery Trends/2
Africa & Latin America short refining
Quantity short (Mexico)
Quality squeeze (Brazil)
US products boom needs tankers
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Pemex/Mexico “Expansion” Plans
Refinery = Grassroots;
CDU = Crude Distillation Unit;
VDU = Vacuum Distillation Unit;
HDS = Hydrodesulfurization, Gas
oil or Residual
*Projected date for Coker only 41
Plant Refinery CDU VDU HDS Coker When
Minatitlan 150 150 25 2018?
Guanajuato 250Post2020
Salamanca 38 2016
Tula 250 1662019-
2020?*
Cadereyta 42 2017
CiudadMadero 42 2017
Salina Cruz 25 2017
Downstream
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Asian Downstream Detailed
State companies dominate refining
Asia Markets: Price controls; retail subsidies
Mideast exporters seek outlets, Jubail, Yanbu & Al Ruwais
Quality premiums; seeking developed country markets
Wide-ranging quality specifications
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More Complex Asian Product Market
Imports: Naphtha, Jet/Kero, Residual, LPG
Exports: Gasoline, Gas Oil/Diesel
Exporters: Singapore, S. Korea, India, now China
Crude imports preferred
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India Export Drive Still Accelerating
Note: All values rounded to MBD
* Indian fiscal year ends March 31st 45
Product YE Mar16* QE Mar16*
LPG 274 272
Gasoline 376 436
Naphtha 96 111
Kero/Jet 95 98
GO/Diesel 595 706
Fuel Oil 28 9
TOTAL 1,464 1,632
Oil Shifts Support Clean Shipping/1
Demand will recover in Europe & Latin America
The Great Lie: “Euro-X” standards
AP demand remains world pace-setter
AP refining mismatched for demand
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India 2015 “Euro-Spec” vs. EU Euro-IV
T-95 is Temperature at which 95 vol% distills;
PAH = Polycyclic Aromatic Hydrocarbons
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Sulfur %mass (max) Cetane Density T-95* PAH
Urban Rural (Index) (max) (Deg C max) (%max)
India 0.005 0.035 510.82-0.845
360 11
EU 0.001 0.001 51 0.845 360 8
Oil Shifts Support Clean Shipping/2
AP emerging as product exporter
Yet requires product imports
Mideast export refining expanding
Iran’s expanding role
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China Product Exports
Notes: Numbers within parentheses indicate a net import volume;
Volumes in MBD 49
CY 2014 1Q 2016 % change
LPG (173.9) (415.6) 239.0%
Gasoline 118.0 160.4 35.9%
Naphtha (82.5) (184.3) 223.4%
Kero/Jet 140.0 124.5 -15.5%
GO/ADO 70.9 196.6 277.3%
Fuel Oil (46.9) (85.7) 82.7%
Product Quality
Size varies: China (10MMBD); Brunei (22MBD)
Quality varies: (Pakistan Diesel 0.25%S, Japan (0.001%S)
Progressive spec tightening
No central quality authority
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Selected Asian Refining Capacity*
Note: Volumes in MBD
* As at 1/2015;
** For China, only counting plants of >40 MBD base capacity 51
Size Giant Large Minimal
Country China** Singapore Brunei
No. of Refineries 112 5 1
Base Capacity 17,266 1,481 12
Severe Secondary
10,783 178 0
Hydrocracking 2,261 80 0
Pricing/Subsidies
Free markets: Japan, Singapore, Australia, NZ
All others have some price controls
Now abolishing/cutting retail subsidies
Price reform slow, but continuing
Demand will shift but not decline
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The Nature of Product Quality/1
Quality only improves; one – directional
Improving quality is progressive
Specification tightening is cumulative
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Recent Reduced Retail Subsidies (By Market & Product)
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Country India Indonesia Malaysia Vietnam Pakistan
LPG X
Gasoline X X X X X
GO/Diesel X X X X X
Fuel Oil X
Product Trade and Shipping
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Shipping, Refining & Quality
Boosts clean trade on quality deltas
Boosts extra-regional arbitrage
Clean trade: more vessels, more routes
Products trade truly global
Export trade hinges on quality
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Asian Product Improvement
Groups: OECD, NIC & Developing Asia
Japan led world in 2000; fallen behind
Gap between OECD and rest now smaller
China has overtaken India on quality
Cutting subsidies often raises quality
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Panama Canal & Gasoline Trade
Liquid tankers limit 150,000 DWT
Economy of scale vs. lumpiness
Gasoline demand growth exceeding diesel
Many gasoline grades; component needs
Singapore: Blending activity rising
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Emerging US/Asia Yin Yang
US structural supply overhang …
… Complemented by Asia import needs
Drop in US crude will not change
Panama Canal will expand trade
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US Product Exports
US has become largest product exporter
US soon to become largest NGL exporter
US has become largest gasoline exporter
USGC a supply prop to Europe
Atlantic almost saturated; Pacific beckons
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US Gross Product Exports(Selected Products Only)
Note: Volumes in MBD
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CY 2015 Jan-Feb 2016
Gasoline 618 802
Kero/Jet 182 213
Gas Oil/Diesel 1,186 944
Product Export Competition
Bad for oil; good for shipping
New Mideast export refineries (Jubail, Yanbu & Al Ruwais)
Total already planning Jubail expansion
Iran still yet to enter the game
Asian exports search for new markets
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China: The Asian Product Mismatch/1
China >40% regional GO/Diesel demand
Gas Oil/Diesel was king; now stagnant
Large part of “Diesel” actually Gas Oil
China 2015: Gasoline growth 8-9%; Diesel 1-2%
Desire for car ownership unsated
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China: The Asian Product Mismatch/2
Chinese refineries geared to mid-barrel
3.5 MM B/D gas oil output more than most total markets
To meet gasoline needs, produces excess gas oil
Also more petrochemical naphtha needed
Shift to light demand forcing Chinese exports
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The Asian Product Mismatch/3
Same trend to light products across Asia
Demand giants also maturing in growth
Reduced subsidies shift demand growth
Encouraging products trade over more refining
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AP Demand vs Refinery Capacity (2014)
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Demand
Units MBD Vol%
Light Products
12,641 45.2
Mid-Distillate 10,778 38.6
Sub Total 23,419 83.8
TOTAL 28 MMBD 100%
Refinery Working Capacity
Type MBD
Total Severe Secondary 15,072
Hydrocracking (HDC) Only 4,011
HDC% of Severe 26.6
Total Base Capacity 37,919
Demand for Light Products while refining capacity geared to
Middle Distillate
Pure Independent Trader Trends
Vitol no longer alone as sophisticated trader
New rivals: Glencore, Trafigura, Mercuria, Gunvor
All active in all global markets
Capable in wet & futures trade
Focusing on increased arbitrage
Impact: Increasing arbitrage using clean tankers
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Clean Shipping Upbeat
Tanker miles more than double oil demand growth
Clean makes up 36% of tanker traffic and rising
Limited correlation: oil price/shipping activity
Clean tanker share will continue to increase
Wide product specs & drive to better quality supports more trade
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Thoughts and Conclusions
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Conclusions/1
Limited correlation between oil price & shipping needs
Asia Pacific remains demand growth leader
Shift to gasoline use will increase overall clean shipping activity
Basic mismatch between Asia refining & demand
Gasoline growth outpacing diesel in Asia
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Conclusions/2
Better quality supports more clean tanker trade
East of Suez product exports ballooning
East of Suez exporters need more clean shipping
Rising arbitrage from pure trading companies
Emerging “Yin-Yang” in US/Asia products trade
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Modern Fleet of Eco-design and Eco-mod built at high quality Korean and Japanese shipyards with upgrades to improve fuel efficiency and commercial capability
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Demand & Supply Outlook and Financial Review
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bp
d
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Demand: Seaborne Volumes Growing at 4% CAGR
+27% YoY
+18% YoY
Estimate of 2016 Seaborne Imports / Exports(1) Seaborne Volume of Oil Products Traded(1)
1. Source: Clarksons Shipping Intelligence Network, forecast for 2016 according to Clarkson’s data2. Source: IEA Medium Term Market Report 2016 and management estimates
Import Export NetImports as %
TotalExports as %
TotalMiddle East 1.4 2.8 1.4 6.1% 12.1%North America 1.8 3.2 1.4 7.8% 13.9%China 0.6 0.6 0.0 2.6% 2.6%Asia (ex China) 8.0 5.7 -2.3 34.6% 24.7%Europe 7.2 6.0 -1.2 31.2% 26.0%Latin America 1.8 0.6 -1.2 7.8% 2.6%Africa 1.4 0.4 -1.0 6.1% 1.7%FSU n/a 3.1 n/a n/a 13.4%Other 0.9 0.7 -0.2 3.9% 3.0%Total Trade MMbpd 23.1 23.1 100% 100%
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CAGR +4%
Seaborne volume of products growing at ~4% CAGR
driven by refinery expansion and increased output
Major trading regions are: Europe, Asia, North America
and Middle East
China not really a player in refined products import /
export until late 2015 – significant increases in distillate
exports
Global Refinery Capacity Additions (2)
+1.1mbd
+1.4mbd
+1.3mbd
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Demand: Refinery Dislocation Increasing Voyage Distances
Global Refinery Developments (2015-2020) (1) Global Refinery Capacity Growth (2)
1. Source: IEA Medium Term Market Report 2015 and management estimates2. Source: IEA Medium Term Market Report 2016 and management estimates
IEA forecasting ~7.7 million bpd in additional refinery
capacity by 2021
~1.1 million bpd of new refining capacity expected to
come on stream in 2016 resulting in net capacity
growth of ~0.5 million bpd
o United States +400kbd (primarily PADD3)
o China +327kbd / Middle East +306kbd
o Europe -258kbd / Japan -318kbd
Increasing diesel exports from China driving trade
Refinery margins remain strong, particularly for
gasoline, resulting in higher outputs worldwide
0%
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leet
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Supply: Orderbook at Historical Lows
MR Product Tanker Orderbook and Fleet Development(1)
MR orderbook currently at ~8.1% of the fleet, which is the lowest level since 2001:
o ~45 MR’s delivered and 12 MR’s scrapped YTD
o Est. 70 MRs to deliver through remainder of 2016 resulting in net fleet growth of ~4.5% for year(2)
o Orderbook expected to be ~5% of the fleet by year end 2016(3)
1. Source: Clarksons Shipping Intelligence Network and Management Estimates2. Based on management estimates3. Assumes no new orders placed in 2016
Currently ~8.1%
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Supply Shortfall Vessel Deliveries Scrapping Demand Growth Net Fleet Growth %
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Deliveries Reducing: Demand to Exceed Supply in Late 2016
Demand growth of 5.5% equates to required fleet growth (after scrapping) of 11 MR’s per month
Delivery schedule reduces in late 2016 at which point demand will exceed supply
1. Source: Clarksons World Fleet Register, forecast based on management estimates
Vessel Demand Exceeding Supply
MR Product Tanker Vessel Delivery Schedule(1)
5% - 6% Demand Growth
77
Scrapping Set to Continue: ~25 Ships Per Year
+27% YoY
+20% YoY
+37% YoY
+18% YoY
1. Source: Clarksons World Fleet Register (MR Product Tanker Fleet 25,000 – 59,999 DWT)
MR Tanker Profile(1)
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>20 years old:167 MRs (~8% Fleet) >15 years old: 358 MRs (~18% Fleet)
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Number of Years to Deliver at Least One MR Tanker
China Korea Japan Other
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Supply Constrained: Shipyard Capacity Reduced
+20% YoY
+37% YoY
+18% YoY
Shipyard Capacity(1)
Shipyard capacity significantly reduced to ~40% of
2008 levels(2) (20 yards in 2008 v 12 in 2015)
Tier I Yards (Volume):
o Hyundai Mipo (South Korea)
o SPP (South Korea)
o STX (South Korea)
Tier II Yards (Volume):
o Sungdong (South Korea)
o Onomichi (Japan)
o CSSC Offshore Marine (China)
Increasing regulations resulting in increased newbuild
cost
o Tier 3 Engines NOX Tier II / Tier III
o Noise Abatement
o Sulphur Emissions
1. Source: Clarksons World Fleet Register, forecast based on management estimates2. Based on number of yards to deliver at least one MR Product Tanker in 2008 and 2015 and management estimates
- 40%
Modern Fleet of Eco-design and Eco-mod built at high quality Korean and Japanese shipyards with upgrades to improve fuel efficiency and commercial capability
79
Financial Review
Delivered record earnings in 2015 driven by strong charter market
and timing of deliveries
o Net income of $32 million
o Avg MR TCE of ~$20,000 / day
Continuing to build value with strong financial performance in
1Q16 with EPS of $0.26
Clean and transparent corporate structure with continued focus
on cost efficiency
Fully funded with conservative leverage and strong liquidity
position
Debt refinancing in 1Q16 reduced interest expense and extended
debt maturities to 2022 with additional committed debt for further
growth
Continuing our strong track record of execution and value creation
as a public company
80
1. Data sourced from most recent public filings2. Source: CEFOR (Nordic Association of Marine Insurers)
Average OPEX ($ / day)(1)
+27% YoY
+20% YoY
+37% YoY
+18% YoY
4,500
5,000
5,500
6,000
6,500
7,000
7,500
8,000
Ardmore Co. A Co. B Co. C
Transparent and Low Cost Corporate Structure
Transparent corporate structure with low cost operations and no transactions with affiliates
High quality fleet built in Japan and South Korea ensures low operating cost and asset value maximization
Recent research highlighted high proportion of insurance claims on Chinese built vessels(2)
Vessel Type TCE per day TCE per day TCE per day
MR Product (50k) $18,500 $21,500 $24,250
MR Chem (25-37k) $16,500 $17,500 $18,000
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Every $1,000 / day
increase in rates
equals 31 cents per
share in EPS and
Cashflow &
dividend increase
of $0.19 / share(2)
Earnings Per Share(1)
1. Management estimates based on a full fleet of 22 vessels operating in the spot market for 363 revenue days / ship2. Realized across a full fleet of 22 ships. Calculation based on: ($1,000 day x 363 revenue days x 22 ships) / 25.9 mln shares = $0.31 per share. $0.31 x 60% = Dividend of $0.19 per share
Dividend Per Share(1)
Revenue Days Increasing and Significant Earnings Power
Revenue days increasing by 16% in full year 2016
Efficient operations resulting in significant earnings power and dividends
$1.12$1.83
$2.46
$0.67$1.10
$1.47
Base Rates Rates FY2015 Upside Rates - 3Q15
82
Strong Balance Sheet with Conservative Capital Structure
Fully funded with strong liquidity position
Low corporate leverage: ~55% as at Mar 31, 2016
Sale of Ardmore Calypso and Ardmore Capella will reduce debt by $26.7 million in 2Q16
Recent refinancing of $382 million of debt reduced interest expense and extended maturities to 2022
Debt is amortizing at ~$38 mln per year (No non-amortising debt) accreting significant value to shareholders
Debt Profile
1. Gross Debt excludes impact of netting of deferred finance fees as required under US GAAP ($424.3 mln - $12.1 mln = $412 mln)2. Capital Lease Obligation of $26.7 mln excludes netting of deferred finance fees as required under US GAPP ($26.7 mln - $0.5 mln = $26.3 mln)
$397.6
$692.8
$26.7
$9.4 $9.4 $9.4
Vessel Assets @ 1Q16 Gross Debt @ 1Q16 2Q 2016 3Q 2016 4Q 2016
Senior Debt Repayments
Modern Fleet of Eco-design and Eco-mod built at high quality Korean and Japanese shipyards with upgrades to improve fuel efficiency and commercial capability
83
Closing Remarks
Modern Fleet of Eco-design and Eco-mod built at high quality Korean and Japanese shipyards with upgrades to improve fuel efficiency and commercial capability
84
Closing Remarks
Conclusion: two to three-year outlook for MR tanker sector is best we have seen in years
Secular drivers continue to propel MR demand growth in 6% range:
o Oil consumption growth 1-1.5 million bpd on 90 million bpd base (23 million bpd seaborne product volume)
o Export oriented refinery expansion in Middle East and Asia most important driver for volumes and distance
o Trade complexity (regional product slate imbalances / multiple grades / blending / multi-port voyages)
o US Gulf export growth to Latin America also important
MR tanker supply growth about to decelerate sharply to 2-3%:
o The delivery bulge is almost over – orderbook 8.1% and dropping
o Ordering has ground to a halt: 48 worldwide y-t-d vs. 375 same period 2015
o Korean shipbuilding crisis, other shipping sectors in downturn, debt and equity capital constraints
This is a set-up for a classic shipping upturn: strong demand growth vs. supply constraints:
o Unless conditions change, the eventual result will be sharply higher spot rates
o Which would kick off ordering activity but deliveries on average two years out
o Spot rates in past 18 months have been healthy but of a different nature entirely
Ardmore will continue to seek ways to build value for our shareholders under this scenario while
remaining financially conservative.