Ardmore Shipping (ASC) 31 Jul 242024 Q2 Earnings call transcript

Good morning, ladies and gentlemen, and welcome to Ardmore Shipping's Second Quarter 2024 Earnings Conference Call. Today's call is being recorded and an audio webcast and presentation are available in the Investor Relations section of the company's website, ardmoreshipping.com. [Operator Instructions] A replay of the conference call will be accessible anytime during the next 2 weeks by dialing 1 (888) 660-6345 or 1 (646) 517-4150 and entering passcode 88347.

At this time, I will turn the call over to Anthony Gurnee, Chief Executive Officer of Ardmore Shipping.

Good morning, and welcome to Ardmore Shipping's Second Quarter 2024 Earnings Call.

our Kelleher, ask statements. discuss me let CFO, to Bart forward-looking First,

Tony. Thanks,

may those Please Turning contains discussion results our to forward-looking materially allow Actual to Slide X. me remind forward-looking in projected the you that statements. differ statements. from today

factors quarter concerning the cause which our available XXXX from earnings could differ is contained website. actual forward-looking on in release, the that statements to in materially information Additional results those the second is

back And now will to I call over the Tony. turn

Bart. you, Thank

format the I outline today's call. upcoming me transition, with, let first, announced of To begin month. will leadership So the discuss earlier which we this

Following policy, before provide then near-term this, call performance. He Ruppelt, up financial on which, will outlook an market Ardmore. second will clarify and tanker presentation will allocation as be taking And our Gernot for and chemical in our after September, CEO will for the update who opening this fundamentals conclude then the Bart and product means our questions. highlights, the what Gernot discuss over will capital quarter

to turning our transition. to X So leadership discuss Slide first

has done plan with selection with the extremely my founder the process, and shareholder, of with years quite company around a and Board to succession has job I'm always pleased Our underway been for what outcome. intention The XX. as frankly, age a retire been terrific has several aligns and the of the the

on in years capital and experience brokerage, chartering, XX Together, practical and operations architecture, combined naval the industry, and Gernot finance, sale spanning markets and have Bart from experience to of shipping everything strategy a tankers. purchase

O'Driscoll; Robert our SVP, Bart, management round our the Gaina, newly effective new Corporate to promoted Gernot Services, Mark COO, And Commercial, and Cameron, September. in team out senior will SVP our and Aideen addition

to I'm approach following high the forward which a in to years I rest the of dynamic energetic come, philosophy along and continuing of you. is continuity what you will really building business to Ardmore and see strategy, degree looking a believe with in

to And happy note, than call Gernot. I'm the over on that more to hand

Ardmore has throughout the you you, is gratitude on company the past of is there you since have tremendous organization Thank an what while staff, speaking looking for And behalf in years. Ardmore ahead, the had the journey company XX amazing entire built the Tony. over founded XXXX.

I our era and am build success the the substantial position unique future around me. to excited and us and lead for Ardmore with so next into to doing a company's strong team such on

to turning Slide Now X.

Ardmore's has of it the The been Bart Not leadership and have over executed team been that on both Tony's It and further is of and message on it. continuity. strategy expand supportive key only I tested and strategic me part are the developed comments long-term we very provide strategy, has successful. thinking. has has Let into consistent been insights our years. the been

focus Our the continue ships as on these will chemical be are as well overlapping in. to product involved tankers and trades

For ourselves Ardmore, expertise important marketplace. area and differentiate an core way to of is in is this a the

fleet for have to as This opportunities and the reinvest will continue we vessel modernization, past. We includes opportunistically upgrades in growth.

long-term that means us business. continuity Strategic evolve as we that will provided allocation to capital shareholder to a such transactions our we policy. increase enabled to committed also and Always continue remain value,

board We ]. we run will evaluate ways company in machine the and Asure technology how and embrace [ learning to on integrate new and both

platform. strengthen we the we a increase and build continue that culture out diverse teams. fully our Ardmore capabilities. our incredibly we strong have integrated Thereby, to will will also at develop Today, and organization competent and means have our It to we global

service a with regions scale us strategically fleet. reach onboard our customer and This and work they the is key colleagues team gives base. shoreside fuel-efficient seafaring Our to our closely located across diverse, modern high-quality

demand continued change, to geopolitical continue industry and our flows. and cargo energy natural growth, transition, the trade of complexity evolution regulation, environmental in the markets Our

we organization agile these opportunities, We well will ample create position that believe to and factors our our should developing these and opportunities. expect us running forward-looking all capture that and the approach business to

X. Slide to Moving

and in same You our discuss slide will part the This have past shows examples us a performance, how heard an integrating being progressive strong while performs progress to approach our X at of performance bedrock. cultural company. important of the driving time,

both highlighted in very relative the high absolute it and to TCE at a we performed standard to performance. terms top, As when comes of results,

levels are discipline provide shareholders. things, throughout yield enabled strong to other to debt, our a the among us meaningful and breakeven dividend very cost Our has which, to low cycle due minimal

We operational continue our way as and company. the embrace to see between a a performance strong we progress link

investment for future further Today's in way future our the performance enhances continued turn and progress, which paves performance.

dedicated industry's and rank have a scorecard. seek out team consistently the energy of the ESG projects, innovation We top we to efficiency at and

on With that, quarter and capital let update us the turn our outlook near-term an to earnings, allocation. market second

X. Slide to Turning

slower in exceptionally period, along seasonally is with We Seasonal geopolitical a around summer fundamentals, high strong the very positive have baseline. seen out ongoing rates volatility impacts. reflecting playing

reflects per rates conditions the in seasonally even adjusted and million earnings slower third share performance with $XX.X robust elevated quarter second Our quarter. of market or $X.XX

in day capital $XX,XXX third XX% per booked. quarter tankers earned and Our booked chemical second adjusted MRs $XX,XXX the so our XX% per the quarter with for earned for a basis $XX,XXX on $XX,XXX and second per for quarter the day third day far. far And day quarter the per so with

our a allocation execute chart strength the see long-standing As continue rates you year-on-year. the a TCE market robust on with can see we upper showing policy. to increase right, capital we substantial from on Meanwhile,

of of emissions in are and And our continue also quarterly with out we share, consistent per paying the X/X to of dividend another policy improve to taking invest cash earnings. while performance adjusted breakeven Ardmore our $X.XX also We level opportunistic reducing trading fleet $XX,XXX and fleet declaring and down having performance benefit managing to to cost our day. to a optimizing over modernization focus Overall, approach from tightly strategic per gradual time. continues and reduce spot while

outlook additions. the of on macro X. positive. of Strong tonne-miles upper to with which global fleet. higher continues the layers right very EU be highlights near-term are chart Moving drive to The the product of ongoing refined by to due The impact the cemented fundamentals to limited the embargo, continues multiple tonne-mile bifurcation demand Slide supply

such emerging from Some routes China and further as West supporting strength. Africa and trade are exports U.S. Europe biofuels the from market to

Cape significantly the Hope. it highlights extended from distances rerouting Good around the of of away the Finally, Sea also caused by voyage Red the and vessels

we in we're on happy As this more further is touch Red only story, past, a is of Seen Sea isolation, a large Q&A. small to in and in situation portion this the out relatively demand. overall MR the pointed in

In addition, drivers are near-term demand robust.

with see forecasted runs As you will lower from XXXX. highs can pre-COVID further with result phase in global of forecast the economy remains in growth right, the resilient to start of September, in scheduled fee IMF steady keeping global out growth. limited low and surpassed OPEC+ the million Also, XXXX. X.X% with year into growth X.X barrels the this graph net will day Meanwhile, refinery supply on per cuts have deliveries

where allocation XX, policy. we Slide to our long-standing highlight capital Moving

of ships share, pursue we while our further. we commitment shareholders. another breakeven per are capital shown In position, financial refinanced X our our strong allocation are continue this particular, Given to highlighting dividend priorities on returning Meanwhile, slide. our lease to lowering $X.XX which all of our to capital simultaneously, cash of pleased we declare to

and the transactions, of develop to modernization continue gradual our and We potential evaluate this fleet. includes

that, call like with the I Bart. And hand would to to over

further Gernot. the we outlook, Gernot's comments will on Building industry examine Thanks, upon fundamentals. the market

each highly favorable. remain dynamics supply-demand in the supply/demand discussing, in component significant subsequent the highlight On I'll been address we've and slides. As XX, detail we more Slide gap,

chemical can demand the of In fundamentals a forecasted bars contrast, and MRs, As as indicated positive underlying can the and, tankers, and particular, across in product see both net this tonne-mile in the from which fleet ongoing strong market blue growth we is we the see the growth by gray green limited bars. result chart, dislocation. and

So net market combined limited ongoing increasing strength. supports sectors, overall, across we believe these tonne-miles fleet with growth the

rapidly the Quadrant, order XX order Red on fleet. with book. fleet sharply Moving how low ago, fleet aging the we representation where time. the as to a tanker of in MR chart highlighted visual The years observed left a an XX, highlight Slide changes MR modern contract with we large important book in a over the the provides

However, the time, over the fleet book order aged. has has declined while

green we a X decades in quadrant, years. book standards low and age have the XX as historical fleet highlighted oldest order of average nearly by with Currently, in the an

compared old MR put And this the XX% as book order in right important it's the to right on over are existing of XX fleet. age over to many trading typically Xx equivalent graph is experience on MRs at newbuildings of XX years some the context. side, Looking order. But years Vessels current restrictions. now, the the to

vessels of book important tanker the growth crude that of reemphasize in recently This the experiencing of order standing will the to fleet, some including older implies Aframax the current transition crude lack the Western expansion, tanker Mountain as Aframax tanker LRXs, product of result opened the overall XX% on the while shortfall likely fleet. With naturally the notable book. in a demand to the Trans which newbuildings is order it's fleet tanker overall has still product to shrinking Currently, impact, at crude that the cover most trades pipeline, proportion an Canada. Aframax increasing

drivers where greater in XX, demand Turning to Slide detail. we address

Ukraine, market pace and with products, indicate moderating tonne-miles. energy mentioned, the product the thereby previously coupled As transition Russia overall in forecasts reality an increase enhancing EU consistently in the has annual between trades, demand. embargo reordering resulted and refined ongoing the persistent same oil of time, global energy on is of conflict At

capacity markets. drive In In closures enduring in fundamentals tonne-miles. and with in positive addition, West production East of tanker the long-term refinery these continues point oil in to expansion strength continued to along the and trend chemical the product summary, the increased petrochemical

turning to its strength. continues to and to build Ardmore our XX Moving financial the upon Slide company. attention

of focus in As elevated a breakeven the environment. reduction our bottom per reducing levels, on cash $X,XXX the left highlights interest achieving a day on chart rate reminder, significantly an almost our

preserving and of to revolving result per In available a further reduce credit potential of $XX million. managing day. is our costs lower And second a refinanced quarter, at vessels a strong a pathway we balance closely debt cost below first total facilities, control, As for $XX,XXX while our and performance always, our levels as X breakeven optimizing on to sheet. focused effective of opportunity see we to access our the Ardmore lease

highlights. XX Turning financial for to Slide

of As with the second results for we are performance per share as pleased our we noted, report very $X.XX quarter.

We frame as reporting EBITDAR an metric our continue EBITDAR important the for IFRS reporting quarter strong comparable against correspondingly peers. valuation to and are

there on Slide a appendix presented the go is won't detail While full I XX. in into here, this of reconciliation

in technology, May, hold we divested stake While X, $X.X a the in for to Marine million, continue million. our our million small of we eX stake affiliate, reformer $X.XX of Element to methanol its $XX gain developer in realizing modest hydrogen

from will given However, our for benefit in Element Also, sector. in to Slide guidance we maritime continue position appendix XX growth quarter the the eX Marine's please in third X, numbers. refer our to

Slide XX, our examining to Moving fleet.

and the of the fleet the the outfitted are to right, million fleet approximately X enhancing fleet related MR year $XX upper is technologies the expenditure complete, be for for of $XX on installations. million further in has our and program highlighted XX% year. in earnings scrubber As chart increased majority scrubbers a the this days with docking for enhancement XXXX. of now revenue dry expected to and balance payments including with forecasted currently of Capital XXXX in our efficiency CapEx enhanced power now

the Finally, which January maritime, preparing we of implementation fuel on into comes for XXXX. effect EU are X,

for chartering of it's a Also, voyage this is pass-through planning operations going this chartering likely team, team. and a regulation our important market While even essence, into nimble in greater new complexities, inefficiencies, is opportunities representing to which lead that to note expense. trading this by lot increases our

XX, to operating highlight can significant Moving the jumps our where we power volatile strong leverage. we in of experience these markets, rates. In Slide charter

earnings in important a for cash in increase It market. annual per exciting to generation. increase million our share to about boost TCE That's rates potential to day in harness means free performance. understand equates of in it's $XX,XXX this what per of a $XXX and of the Ardmore is nearly kind flow So $X.XX an positioned

the answering With happy and hand the to back Gernot end. questions call forward to that, at to look any I'm

we their you, new market demand continued of changes Bart. then, the and tanker strength geopolitical the persistent the cargo are embargo seasonally to more the tonne-mile up strong quarter. Key substantially To the Thank quarter, Great. in second drivers and during products third in Rates momentum factors summarize Even market. trades creating this rates product flows. due first, slower track other EU year-on-year.

supported an deliveries gap, steady versus Long-term significant fleet supply building market new in and growth one trades and limited demand new hand, emerging aging oil on on other. fundamentals are strongly the by

control, achieving TCE priorities. are a to to we on execute allocation breakeven simultaneously performance robust and Ardmore, us capital strong enabling The our Regarding result all balance sheet, lower. effective us drive is cost allowing our

Before for concluding I'd call remarks. we hand questions, open up for the the to some Tony to like call over

Thank to personal I'm retiring been you're wondering step the me is proving is why was why now. XX. for age this years the time. at have works you, the Gernot. Many always commitment I has have September been answer people as with simple And starting in to my around of down intention And the if that that many align it

upturn I the cycle that of clear where a the of of middle lasts the historical in pattern X long part a making, upturn typically XX X as we're to believe years. do and in one portion was what years I think

are guarantees, strong this that Of patterns are but as do I course, predictors. historical there believe very no powerful as usually

Given lie during at on I down. this step XX-odd ahead miss to on colleagues an qualified will, Ardmore, years also is of to to generation. it as definitely this outlook time friendships time new is believe that have to Ardmore. opportunities what not also time pass the And industry eminently easy market challenges. excellent in torch that But an the an new I right is is this well the to developed for as the course, and move

very have I'm the to proud say the Ardmore all of organization. levels of team at I

shared changes to bottom is not explain is a levels, It team to in like many As at found values, belief the you our effect with from knock-on therefore combining the and particular, progress. is shared also to that all this by top, but imagine, filled can the there top on Ardmore just of likely internally. power important performance in goals, be

to Ardmore's company consequence, strength ahead. a the excited succeed And the forward positioned to prospects. I'm it from about go watching is As ever to in than very believe before. better strength look I years now I

we'd questions. And up to call with open that, the for like

[Operator first from question comes of Evercore. from Chappell Jon line Your the Instructions]

top Congratulations, of Tony, anymore. and of heck run on questions have going the market our answer out to don't

So well done.

ask my market. one the to I'll So first Gernot on

when was the you somewhat in ago, some So Gernot, several time locked years charters peaky. market

timed. that get to to think I proved and some balance well be very

of when I you're rates. think XX you that at the here But is the next elevated months in duration outlook did locking XXXX. different wondering back than for just maybe some how historical considering the balance in

on capitalize to our thank and the Yes. switch on governed when is that Jon, markets at lot the And question. we approach, as you time our more opportunity correctly, in XXXX more to general, look were coverage open and I fully had year the charter came and in And for strength. and exposure kind way lot a the we think of difficult charter up more market you, really said time great policy. we by I exposure taken a in think

think looking about holds and liquidity potential the spot deals, we're for there's why evaluating those At very moment, ahead, the on which market. we constantly. are the that in I we predominantly is coming strongly the market spot feel us, always

significant not winter million. months done realize a that -- kind in to of have think, to locked a months adoption I of ship over ships play locking we one at kind in, spot our an too XX that for XX where then wrote We premium remaining X.X ago, extended interesting of value spread took period the long and

consistently concerned, think relative we do time charter as always value sort we can spot potential the So as we're right But to play. significant. again, And are of is now, of monitoring. market opportunities the far continue quite

to as understand Okay. the to you're keep core That leadership close be end this if the by going balance estimation, especially is makes you I transition sense. strategy want the a of anyone's and go to that. pretty of And Bart, strong year, By in net through before. place, cash not sheet a

allocation just Is does to a asset it the about think change? looking net way as at wondering, you're risk a current relates difference capital So there as the version strategy position, cash you in values.

of think it we stages the about if early the help Just that think does. the path way 'XX us continues

Jon. Thanks, Sure.

our I still by for number in making capital and investing think do a for scope as place policy in looking current the for this of been fleet always, And increase we're allocation through guided deleveraging and efficiency. its we still some at further to always that's year plans years. have

for And on also, the so modernization. pair do fleet you trade potential saw the us

pay while So our remains that, substantial also to related I think to continuing really it situational dividend.

to it's breakeven would from to level had this we've we do to close benefit a think so, that the didn't of on delevering important I day the path mission, $XX,XXX and versus point $XX,XXX current if be out per our XX.X.

a earnings $XX additional as annum so consequence And got an or $X per of that, share. about million we've per of

I front, come and if front. enhance things the up see that continue situationally to continue on further on So think that investment

again and Okay. to you Congrats Gernot.

Your next of Jefferies. line Nokta Omar from question of comes the

Gernot, on Also, roles. also, on of congrats your couple Tony, Bart questions. And congrats your retirement. A elevated

been the and First, is the of about thinking just way capital. how kind you've deploying market

the last the sorry, So acquired XXXX XX maybe built topic thinking you the MR. discussion. this -- year, of Earlier about

get you prices, down-purchase what And seen chemicals? compelling there vessel. segment acquired Any from in from the think, the the a also, of on seeing I you trended or sense kind MR -- We've values having here. in you're do color on that firm you can still market. you're how since just see then to returns in looking you But wanted seeing give

done allocation but to return policy committed -- really where the we can to our we're think shareholders I Look, approach that. way capital allocation we capital XXX% for capital thanks through Omar, the we ways in really to incredible terms lot in between different have a XX%, business. upgrading fleet, existing we IRR. also sometimes with And of our reinvest just returns find

But interesting out, in you're as appropriately of spread we've And of done built. play also a pointing accordingly more efficient, our XXXX an course, more strong for also, then ownerships modern XXXX built for versatile at course, and fuel price price. as one asset incredibly an of in paying more market serving much

continue on And focused our continue we the to growth. we whole the or how market, bandwidth even be will from that's assets focused being I across reinvestment upgrading to of monetization on really to opportunity approach think gradual fleet existing

point, find the strong. benefiting You're there's making bring going larger markets. very course, pockets opportunities with But of is We a of identify of stroke aging we and all positive, find they make even the to on cycle, sure amount We're, to that generating big of are think flow can markets that it's always of fragmented here. I fully the Quite within sort from good a we're fronts which still very to develop. opportunities be sector. value, as kind cash

acquired. of above you're quarter it punch got so spread XX seems and a weight I -- decent on able big at plus able quarter of And like ships mean, -- critical obviously seems just maybe the your very XX-odd companies, is to you that you're it to to sold rate, least was that out. the that capture you've mass relative in, trade, Do kind realized other into still 'XX

So growth isn't necessarily needed. perhaps

is just or you've need about and you So investment this are footprint further fine-tuning. basically really want you got saying that

maybe the sell you'll ones. and replace older XX So with

the is ideal spread thought or sheet, the a that scenario kind forward? of going So doing

think but Yes, and organization. but fleet building kind we'll of we business continue to not want building also just the the a that think play I part, think to growing the about I

a to is lateral of can of for value presents it avenues we as lot sure this possible think So think really Again, evolve has But look around fleet markets I pursue I to this a kind continue both we at business and that evolve reinvestment. finding themselves think as and make kind consistent size. the of the as do us, don't be to to as approach opportunity binary. there's even I

a at on a bit Okay. the on or if for of interest as any just X is Any but eX then few -- of there one, transaction. to this of years equity trigger? that -- a preferred does it's there part you final to issuance was way transaction know back, guess, Bart, redeem also, I that sale. sold, as touched the that part one Wondering that does And in sort your that? small And amount I a in time a I was interest preferred? me. sale, that result that recall the on trigger

No.

to we piece transaction a did and Marine question, the point a Marine all. So capital the business Yes, for we our own to automatically when It when means the trigger -- X come the equity X, best to $XX scale. of listeners, exit and reminder building good eX it for -- it's it transaction our after a that preferred to about simultaneously Omar. policy Element was preferred at anything years, balance a the up as we to put exit million company for additional thought also we mean that did eX for allocation sheet. really of felt on I capital doesn't

then further action my the can something debt enhancing in and so see the the first back continue traditional and breakeven bank from going deleveraging we plans no terms preferred. assess immediate there, Jon, taking to And of pathway for answer for from on that side to but

Tony, again. Good. congrats

[Operator Ben Stifel. the of Instructions] comes of next Your Nolan from line question

So I have a couple.

that? Eco-Mods that are some that the doing in a those have better the I specific The asset the first positioning? so than Or do quarter Eco answer, is something Is is know people find -- just the but third more just there anything Or will far, desirable? suspect I to bit design.

now, over have different fully data And not just the ratios that opportunities that sometimes then is of triangulation The you a yet. kind e-commerce question. comparatively were years find to X booked between out front there's the average course, quarter. pretty backhauls it's many portion underway, of haul, why the just good now Ben, set. small And quarter of Right Yes, just small.

are ships very ships. good These

are been great back with under them X a on for us, to doing job they've now with provider, that time. we're those of our course, a really operating charter tonnage care the close long they're ships. Of and

even all to So I marketplace again, our in desire. them so majors fully face heart's the received think take And data a broadly the you now. end for But the and the extremely our profile on can fleet, the this we layout very just really of earnings. age though older of well acceptable see set on as small can

Sure.

assumed. That's on I've September. Okay. I that X Matterhorn, X believe And secondly option. the I got option extension? then extend -- it exercise the has is what in hopefully months the which when an that's X-month rate secondly, what to And okay. But to in, started you for Curious for have we

All right. Yes.

So charter don't as is We sense. by kind basically providing flexibility that can of exercise actually that where us a to actually period the redeliver have min/max full time the and we ship that in structured a option. gives notice

just min/max option are with right, firm of But in case, a declaration periods you're it's dates. contracts, typical period. this kind So

that's of kind So that.

Okay. me, here. stepping That's new helpful. role, for And obviously, shoes into a to fill then big lastly

you do can mission of success the appreciate you'd we the what say, would and think how it's all and that this guys But business, continuity cyclical the you big plan you X And cover talking line, to as leader As sort of years do the you sticking picture, envision down forth. look a -- just you and and company. out X, that. you -- about to so appreciating and accomplished. what as But well

have Yes. fill, Bart, including of Yes. very definitely Good and think big a working got the faith hard team I high-value experience and to we'll to I'll task. and an be been to best full up but diverse point, him do justice, our me, real background around And a shoes the do really I course, be who's I, and incredible network. to between and

I'd ahead, of point -- reiterate. something very the to my I is made Now like vision, terms in looking is yes,

I fast have We if a raised throughout -- kind were But business forward, technology Asure that in hardware successful would incredible have, company, have a and more innovate to it's both a journey, I to an run learning, opportunities we of and incredible think or well-tested as fleet. we had machine the whether truly strategy. integrate ways an the

focus, innovation transactions and at the opportunistic culture the being we kind to develop continuing build of So and that have. organization on

So X culture, would transactions advance years, those would like progress I elements, in continued looking opportunistic we as back probably to a to have think in X innovation, company. that on and

I just And say, your Tony, -- turning and me I with to forward let of I'm Great. and appreciate to you critiquing some congratulations, to the work look it. Bart, guys. to continue tables excited and

Thank at time. conference We this This further today's questions your don't have concludes call. for you participation.

You disconnect. may now