Ardmore Shipping Corp (ASC) Exchange: NYSE

Ardmore owns and operates a fleet of MR product and chemical tankers ranging from 25,000 to 50,000 deadweight tonnes. Ardmore provides seaborne transportation of petroleum products and chemicals worldwide to oil majors, national oil companies, oil and chemical traders, and chemical companies, with its modern, fuel-efficient fleet of mid-size tankers. 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, commercial pools, 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 has established Ardmore Ventures as Ardmore's holding company for existing and future potential investments related to the Energy Transition Plan and completed its first projects under the ETP in June 2021. Ardmore Shipping Corporation Unaudited Interim Condensed Consolidated Balance Sheets (Expressed in U.S. Dollars, except for shares) As at September 30, 2021 December 31, 2020 ASSETS Current assets Cash and cash equivalents 54,476,651 58,365,330 Receivables, net of allowance for bad debts of $0.8 million (2020: $0.5 million) 18,523,409 17,808,496 Prepaid expenses and other assets 3,161,888 3,683,910 Advances and deposits 3,779,031 2,516,646 Inventories 10,267,752 10,274,062 Vessel held for sale — 9,895,000 Total current assets 90,208,731 102,543,444 Non-current assets Investments and other assets, net 11,009,518 678,632 Vessels and vessel equipment, net 610,733,088 631,458,305 Deferred drydock expenditures, net 10,089,582 10,216,090 Advances for ballast water treatment systems 2,032,894 2,568,874 Amount receivable in respect of finance leases 2,880,000 2,880,000 Non-current portion of derivative assets 255,139 — Operating lease, right-of-use asset 1,348,032 1,662,510 Total non-current assets 638,348,253 649,464,411 TOTAL ASSETS 728,556,984 752,007,855 LIABILITIES AND EQUITY Current liabilities Accounts payable 7,929,529 9,125,321 Accrued expenses and other liabilities 12,378,288 11,233,767 Deferred revenue 1,364,185 — Accrued interest on debt and finance leases 708,130 769,304 Current portion of long-term debt 15,076,992 22,456,396 Current portion of finance lease obligations 20,724,948 18,454,222 Current portion of derivative liabilities 402,469 397,418 Current portion of operating lease obligations 332,868 463,559 Total current liabilities 58,917,409 62,899,987 Non-current liabilities Non-current portion of long-term debt 136,470,315 188,054,568 Non-current portion of finance lease obligations 210,815,138 179,250,162 Non-current portion of derivative liabilities — 433,974 Non-current portion of operating lease obligations 790,420 1,034,218 Total non-current liabilities 348,075,873 368,772,922 TOTAL LIABILITIES 406,993,282 431,672,909 Preferred Stock Cumulative Series A 8.5% redeemable preferred stock 23,041,348 — Total preferred stock 23,041,348 — Stockholders' equity Common stock 363,839 352,067 Additional paid in capital 425,312,334 418,180,983 Accumulated other comprehensive loss (151,159) (729,135) Treasury stock (15,635,765) (15,635,765) Accumulated deficit (111,366,895) (81,833,204) Total stockholders' equity 298,522,354 320,334,946 Total stockholders' equity and preferred stock 321,563,702 320,334,946 TOTAL LIABILITIES, REDEEMABLE PREFERRED STOCK AND EQUITY 728,556,984 752,007,855 Ardmore Shipping Corporation Unaudited Interim Condensed Consolidated Statements of Operations (Expressed in U.S. Dollars, except for shares) Three months ended Nine months ended September 30, 2021 September 30, 2020 September 30, 2021 September 30, 2020 Revenue, net 47,199,860 45,206,271 140,025,232 178,332,280 Voyage expenses (23,100,685) (16,830,964) (63,985,687) (61,365,121) Vessel operating expenses (15,511,136) (16,124,919) (45,091,468) (46,124,309) Charter hire costs (2,281,452) (155,550) (4,845,334) (155,550) Depreciation (7,978,252) (8,117,971) (23,693,915) (23,918,364) Amortization of deferred drydock expenditures (1,134,332) (1,708,215) (3,884,365) (4,485,885) General and administrative expenses Corporate (4,293,560) (4,116,490) (12,730,427) (12,054,616) Commercial and chartering (750,472) (791,220) (2,197,189) (2,546,319) Unrealized (losses) / gains on derivatives (25,394) 11,289 54,655 (88,003) Interest expense and finance costs (4,383,322) (4,023,165) (12,471,055) (14,252,270) Interest income 9,000 37,652 38,991 255,842 Loss on vessel held for sale — — — — Loss on sale of vessels — — — — (Loss) / income before taxes (12,249,745) (6,613,282) (28,780,562) 13,597,685 Income tax (44,792) (19,715) (136,006) (128,478) Net (loss) / income (12,294,537) (6,632,997) (28,916,568) 13,469,207 Preferred dividend (535,616) — (617,123) — Net (loss) / income attributable to common stockholders (12,830,153) (6,632,997) (29,533,691) 13,469,207 (Loss) / earnings per share, basic (0.37) (0.20) (0.88) 0.41 (Loss) / earnings per share, diluted (0.37) (0.20) (0.88) 0.40 Adjusted (loss) / earnings (1) (12,804,759) (6,644,286) (29,019,508) 13,557,210 Adjusted (loss) / earnings per share, basic (0.37) (0.20) (0.86) 0.41 Adjusted (loss) / earnings per share, diluted (0.37) (0.20) (0.86) 0.41 Weighted average number of shares outstanding, basic 34,363,884 33,285,255 33,720,853 33,243,493 Weighted average number of shares outstanding, diluted 34,363,884 33,285,255 33,720,853 33,426,412 _______________________ (1) Adjusted (loss) / earnings is a non-GAAP measure and is defined and reconciled under the "Non-GAAP Measures" section. Adjusted (loss) / earnings has been calculated as Earnings per share reported under US GAAP as adjusted for unrealized and realized gains and losses (see Non-GAAP Measures Section). Ardmore Shipping Corporation Unaudited Interim Condensed Consolidated Statements of Cash Flows (Expressed in U.S. Dollars) Nine months ended September 30, 2021 September 30, 2020 CASH FLOWS FROM OPERATING ACTIVITIES Net (loss) / income (28,916,568) 13,469,207 Adjustments to reconcile net (loss) / income to net cash (used in) / provided by operating activities: Depreciation 23,693,915 23,918,364 Amortization of deferred drydock expenditures 3,884,365 4,485,885 Share-based compensation 1,823,123 2,437,422 Amortization of deferred finance fees 1,797,865 1,301,183 Unrealized (gains) / losses on derivatives (54,655) 88,003 Foreign exchange (60,011) 39,538 Deferred drydock expenditures (4,948,073) (4,535,473) Changes in operating assets and liabilities: Receivables (714,913) 10,358,259 Prepaid expenses and other assets 522,022 323,816 Advances and deposits (1,262,385) 1,232,291 Inventories 6,310 1,237,496 Accounts payable (150,015) (936,126) Accrued expenses and other liabilities 812,594 (6,422,257) Deferred revenue 1,364,185 — Accrued interest on debt and finance leases (104,187) (81,654) Net cash (used in) / provided by operating activities (2,306,428) 46,915,954 CASH FLOWS FROM INVESTING ACTIVITIES Proceeds from sale of vessels 9,895,000 — Payments for acquisition of vessels and vessel equipment (1,985,816) (17,664,815) Advances for ballast water treatment systems (157,879) (2,248,826) Payments for other non-current assets (80,308) (121,425) Payments for equity investments (5,112,593) — Net cash provided by / (used in) investing activities 2,558,404 (20,035,066) CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from long-term debt — 7,801,248 Repayments of long-term debt (60,254,615) (12,579,795) Proceeds from finance leases 49,000,000 — Repayments of finance leases (14,691,204) (13,948,978) Payments for deferred finance fees (980,000) — Payment of dividend — (1,659,308) Issuance of preferred stock, net 23,041,348 — Payment of preferred dividend (256,184) — Net cash used in financing activities (4,140,655) (20,386,833) Net (decrease) / increase in cash and cash equivalents (3,888,679) 6,494,055 Cash and cash equivalents at the beginning of the year 58,365,330 51,723,107 Cash and cash equivalents at the end of the period 54,476,651 58,217,162 Ardmore Shipping Corporation Unaudited Other Operating Data (Expressed in U.S. Dollars, unless otherwise stated) Three months ended Nine months ended September 30, 2021 September 30, 2020 September 30, 2021 September 30, 2020 EBITDA (1) 1,262,555 7,187,128 11,175,127 56,086,365 AVERAGE DAILY DATA MR Tankers Eco-Design Spot TCE per day (2) 10,281 13,036 10,900 18,040 Fleet TCE per day (2) 10,319 12,432 11,153 17,224 Fleet operating expenses per day (3) 5,922 6,257 5,909 6,052 Technical management fees per day (4) 451 457 461 458 6,373 6,714 6,370 6,510 MR Tankers Eco-Design TCE per day (2) 11,051 13,036 11,462 18,040 Vessel operating expenses per day (5) 6,430 6,901 6,408 6,520 MR Tankers Eco-Mod TCE per day (2) 10,422 12,291 10,547 16,724 Vessel operating expenses per day (5) 6,233 6,770 6,357 6,604 Prod/Chem Tankers Eco-Design (25k - 38k Dwt) TCE per day (2) 8,400 11,037 10,882 15,442 Vessel operating expenses per day (5) 6,325 6,205 6,285 6,420 FLEET Average number of owned operating vessels 25.0 25.5 25.0 25.2 _______________________ (1) EBITDA is a non-GAAP measure and is defined and reconciled to the most directly comparable U.S. GAAP measure under the "Non-GAAP Measures" section. (2) Time Charter Equivalent ("TCE") rate, a non-GAAP measure, represents net revenues (revenues less voyage expenses) divided by revenue days. Revenue days are the total number of calendar days the vessels are in the Company's possession less off-hire days generally associated with drydocking or repairs, and idle days associated with repositioning of vessels held for sale. 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. Under discharge to discharge, revenues are recognized beginning from the discharge of cargo from the prior voyage to the anticipated discharge of cargo in the current voyage, and voyage expenses are recognized as incurred. (3) Fleet operating expenses per day are routine operating expenses and comprise crewing, repairs and maintenance, insurance, stores, lube oils and communication expenses. These amounts do not include expenditures related to upgradings and enhancements or other non-routine expenditures which were expensed during the period. (4) Technical management fees are fees paid to third-party technical managers. (5) Vessel operating expenses per day include technical management fees. Ardmore Shipping Corporation Fleet Details at September 30, 2021 (Expressed in Millions of U.S. Dollars, other than per share amount) Estimated Resale Estimated Newbuilding Depreciated Eco Price (1) Replacement Vessel IMO Built Country DWT Specification September 30, 2021 Value (2) Seavaliant IMO2/3 Feb–13 S. Korea 49,998 Eco-Design $ 38.00 $ 26.05 Seaventure IMO2/3 Jun–13 S. Korea 49,998 Eco-Design $ 38.00 $ 26.43 Seavantage IMO2/3 Jan–14 S. Korea 49,997 Eco-Design $ 38.00 $ 27.28 Seavanguard IMO2/3 Feb–14 S. Korea 49,998 Eco-Design $ 38.00 $ 27.38 Sealion IMO2/3 May–15 S. Korea 49,999 Eco-Design $ 38.00 $ 29.17 Seafox IMO2/3 Jun–15 S. Korea 49,999 Eco-Design $ 38.00 $ 29.28 Seawolf IMO2/3 Aug–15 S. Korea 49,999 Eco-Design $ 38.00 $ 29.47 Seahawk IMO2/3 Nov–15 S. Korea 49,999 Eco-Design $ 38.00 $ 29.77 Endeavour IMO2/3 Jul–13 S. Korea 49,997 Eco-Design $ 38.00 $ 26.60 Enterprise IMO2/3 Sep–13 S. Korea 49,453 Eco-Design $ 38.00 $ 26.82 Endurance IMO2/3 Dec–13 S. Korea 49,466 Eco-Design $ 38.00 $ 27.14 Encounter IMO2/3 Jan–14 S. Korea 49,494 Eco-Design $ 38.00 $ 27.21 Explorer IMO2/3 Jan–14 S. Korea 49,478 Eco-Design $ 38.00 $ 27.31 Exporter IMO2/3 Feb–14 S. Korea 49,466 Eco-Design $ 38.00 $ 27.41 Engineer IMO2/3 Mar–14 S. Korea 49,420 Eco-Design $ 38.00 $ 27.51 Sealeader IMO3 Jun–08 Japan 47,451 Eco-Mod $ 38.00 $ 19.17 Sealifter IMO3 Aug–08 Japan 47,463 Eco-Mod $ 38.00 $ 19.45 Sealancer IMO3 Jul–08 Japan 47,472 Eco-Mod $ 38.00 $ 19.29 Seafarer IMO3 Jun–10 Japan 49,999 Eco-Mod $ 38.00 $ 22.05 Dauntless IMO2 Feb–15 S. Korea 37,764 Eco-Design $ 35.00 $ 26.43 Defender IMO2 Feb–15 S. Korea 37,791 Eco-Design $ 35.00 $ 26.47 Cherokee IMO2 Jan–15 Japan 25,215 Eco-Design $ 31.50 $ 23.53 Cheyenne IMO2 Mar–15 Japan 25,217 Eco-Design $ 31.50 $ 23.79 Chinook IMO2 Jul–15 Japan 25,217 Eco-Design $ 31.50 $ 24.15 Chippewa IMO2 Nov–15 Japan 25,217 Eco-Design $ 31.50 $ 24.50 $ 643.65 Cash / Debt / Work. Cap / Other Assets $ (316.98) Total Asset Value (Assets) (3) $ 326.67 DRV / Share (3)(4) $ 9.51 Ardmore Commercial Management (5) $ 19.13 Total Asset Value (Assets & Commercial Management) (3) $ 345.80 DRV / Share (3)(4) $ 10.06 Investment in Element 1 Corp. / e1 Marine (6) $ 10.43 Total Asset Value (Assets, Commercial Management & Investments) (3) $ 356.23 DRV / Share (3)(4)(6) $ 10.37 __________________________ 1. Based on the average of two broker estimates of prompt resale for a newbuild vessel of equivalent deadweight tonne at a yard in South Korea as at September 30, 2021. 2. Depreciated Replacement Value ("DRV") is based on estimated resale price for a newbuild vessel depreciated for the age of each vessel (assuming an estimated useful life of 25 years on a straight-line basis and assuming a residual scrap value of $300 per tonne which is in line with Ardmore's depreciation policy). The Company's estimates of DRV assume that its vessels are all in good and seaworthy condition without the need for repair and, if inspected, that they would be certified in class without notations of any kind. Vessel values are highly volatile and, as such, the Company's estimates of DRV may not be indicative of the current or future value of its vessels, or prices that the Company could achieve if it were to sell them. 3. Depreciated Asset Value ("DRV") and DRV per share are non-GAAP measures. Management believes that many investors use DRV as a reference point in assessing valuation of fleets of ships and similar assets. 4. DRV / Share calculated using 34,363,884 shares outstanding as at September 30, 2021. 5. Ardmore Commercial Management is management's estimate of the value of Ardmore's commercial management and pooling business. The estimate is based on industry standard commercial management and pooling fees in determining revenue less Ardmore's commercial and chartering overhead (as stated in Ardmore's Statement of Operations) and applying an illustrative multiple to the resulting net earnings of 7x. The multiple is illustrative only and may not be indicative of the valuation multiple the Company could achieve if it were to sell its commercial management and pooling business. Revenue of this business is comprised of (i) commission (1.25% for standard product tankers and 2.5% for chemical tankers) on gross freight based on estimated current TCE rates grossed up for voyage expenses and (ii) administration fee of $300 per vessel per day. These rates may vary over time. 6. Valuation of investment in E1 Corp. and e1 Marine (a joint venture with E1 Corp and Maritime Partners, LLC, of which ASC owns 33%) are at cost. CO 2 Emissions Reporting (1) In April 2018, the International Maritime Organization's ("IMO") Marine Environment Protection Committee ("MEPC") adopted an initial strategy for the reduction of greenhouse gas ("GHG") emissions from ships, setting out a vision to reduce GHG emissions from international shipping and phase them out as soon as possible. Ardmore is committed to transparency and contributing to the reduction of CO 2 emissions in the Company's industry. Ardmore's reporting methodology is in line with the framework set out within the IMO's Data Collection System ("DCS") initiated in 2019. Three months ended Twelve months ended September 30, 2021 September 30, 2020 September 30, 2021 September 30, 2020 Number of Owned & TC-In Vessels in Operation (at period end) 27 26 27 26 Fleet Average Age 8.3 7.3 8.3 7.3 CO 2 Emissions Generated in Metric Tonnes 103,379 96,476 401,701 388,455 Distance Travelled (Miles) 395,221 353,024 1,512,609 1,424,169 Fuel Consumed in Metric Tonnes 32,684 30,477 126,754 122,929 Cargo Heating and Tank Cleaning Fuel Consumption Fuel Consumed in Metric Tonnes 1,064 950 4,676 N/A % of Total Fuel Consumed 3.25% 3.12% 3.69% N/A Annual Efficiency Ratio (AER) for the period (2) Fleet 5.84g / tm 6.10g / tm 5.92g / tm 6.11g / tm MR Eco-Design 5.47g / tm 5.81g / tm 5.67g / tm 5.78g / tm MR Eco-Mod 6.15g / tm 6.31g / tm 6.11g / tm 6.21g / tm Chemical 7.17g / tm 7.37g / tm 7.14g / tm 7.63g / tm Energy Efficiency Operational Indicator (EEOI) for the period (3) Fleet 12.07g / ctm 12.63g / ctm 12.75g / ctm 12.04g / tm MR Eco-Design 11.55g / ctm 12.17g / ctm 12.87g / ctm 11.75g / tm MR Eco-Mod 13.11g / ctm 13.36g / ctm 11.63g / ctm 12.01g / tm Chemical 13.00g / ctm 13.55g / ctm 12.55g / ctm 13.10g / tm Wind Force (% greater than 4 on BF) 45.90% 39.80% 47.81% 41.24% % Idle Time (4) 5.07% 5.65% 5.79% 5.86% tm = tonne-mile ctm = cargo tonne-mile Ardmore Performance Ardmore is continuing to perform well on both AER and EEOI. Results vary quarter to quarter depending on various factors, primarily ship activity, ballast / laden ratio, cargo carried, weather, waiting time and time in port, however, the analysis is also presented on a trailing 12-month basis to provide a more accurate assessment of Ardmore's progress over a longer period and to mitigate seasonality. From a weather perspective rougher weather (based on Beaufort Scale wind force rating being greater than 4) will generally have a mitigating impact on the ability to optimize fuel consumption while idle time will impact ships metrics as they will still require power to run but will not be moving. Overall Ardmore Shipping's carbon emissions for the trailing 12-month period increased 3.4% to 401,701 metric tonnes of CO2, in comparison to the same 12-month period from 2019 to 2020, mainly as a result of an increase in distance travelled. However, the fleet AER for the period decreased by 3.1% to 5.92 g / tm, from 6.11 g / tm, while the EEOI shows an increase of a 5.9% to 12.75 g / ctm, from 12.04 g / ctm. Continued improvements are being achieved through a combination of technological advancements and operational optimization. In addition, Ardmore notes that its Chemical Tanker ratios are disproportionately impacted by cargo heating and tank cleaning; Ardmore will continue to refine the methodology and transparency in the components of fuel consumption in future reports. _________________________________ 1 Ardmore's emissions data is based on the reporting tools and information reasonably available to Ardmore and its applicable third-party technical managers for Ardmore's owned fleet. Management assesses such data and may adjust and restate the data to reflect latest information. It is expected that the shipping industry will continue to refine the performance measures for emissions and efficiency over time. AER and EEOI metrics are impacted by external factors such as charter speed, vessel orders and weather, in conjunction with overall market factors such as cargo load sizes and fleet utilization rate. As such, variance in performance can be found in the reported emissions between two periods for the same vessel and between vessels of a similar size and type. Furthermore, other companies may report slight variations (e.g. some shipping companies report CO 2 in tonnes per kilometre as opposed to CO 2 in tonnes per nautical mile) and consequently it is not always practical to directly compare emissions from different companies. The figures reported above represent Ardmore's initial findings; the Company is committed to improving the methodology and transparency of its emissions reporting in line with industry best practices. Accordingly, the above results may vary as the methodology and performance measures set out by the industry evolve. 2 Annual Efficiency Ratio ("AER") is a measure of carbon efficiency using the parameters of fuel consumption, distance travelled, and design deadweight tonnage ("DWT"). AER is reported in unit grams of CO 2 per ton-mile (gCO 2 /dwt-nm). It is calculated by dividing (i) mass of fuel consumed by type converted to metric tonnes of CO 2 by (ii) DWT multiplied by distance travelled in nautical miles 3 Energy Efficiency Operational Indicator ("EEOI") is a tool for measuring CO 2 gas emissions in a given time period per unit of transport work performed. It is calculated by dividing (i) mass of fuel consumed by type converted to metric tonnes of CO 2 by (ii) cargo carried in tonnes multiplied by laden voyage distance in nautical miles. This calculation is performed as per IMO MEPC.1/Circ684 4 Idle time is the amount of time a vessel is waiting in port or awaiting the laycan or waiting in port/at sea unfixed Non-GAAP Measures This press release describes EBITDA and Adjusted (loss) / earnings, which are not measures prepared in accordance with U.S. GAAP and are defined and reconciled below. EBITDA is defined as earnings before interest, unrealized losses / (gains) on derivatives, taxes, depreciation and amortization. Adjusted (loss) / earnings excludes certain items from net (loss) / income, including gain or loss on sale of vessels, write-off of deferred finance fees and unrealized gains (losses) on derivatives because they are considered to be not representative of its operating performance. These non-GAAP measures are presented in this press release as the Company believes that they provide investors with a means of evaluating and understanding how Ardmore's management evaluates operating performance. EBITDA increases the comparability of the Company's fundamental performance from period to period. This increased comparability is achieved by excluding the potentially disparate effects between periods of interest expense, taxes, depreciation or amortization, which items are affected by various and possibly changing financing methods, capital structure and historical cost basis and which items may significantly affect net income between periods. The Company believes that including EBITDA and Adjusted (loss) / earnings as financial and operating measures assists investors in making investment decisions regarding the Company and its common stock. These non-GAAP measures should not be considered in isolation from, as substitutes for, or superior to, financial measures prepared in accordance with U.S. GAAP. In addition, these non-GAAP measures may not have a standardized meaning and therefore may not be comparable to similar measures presented by other companies. All amounts in the tables below are expressed in U.S. dollars, unless otherwise stated.