Ardmore Announces H1, Q2 Results
Ardmore Shipping Corporation announced results for the three and six months ended June 30, 2013. A summary of the recent and second quarter highlights are as follows:
- The company raised $140 million of gross proceeds in its initial public offering (IPO) of common stock, par value $0.01, which closed on August 6, 2013. In connection with its IPO, the company listed its common stock on the New York Stock Exchange and trading commenced on August 1, 2013.
- Signed contracts for the construction of ten newbuildings at yards in South Korea and Japan which are expected to be delivered in 2014 and 2015 for a total of $319.8 million, increasing the Ardmore fleet to 20 ships consisting of eight vessels in operation and 12 vessels on order.
- Entered into a commercial management arrangement with Mansel Limited, a subsidiary of the Vitol Group, for employment of six eco-design MR product tankers.
- Accepted delivery of the company’s second newbuilding, the Ardmore Seaventure from SPP Shipbuilding Co. Ltd, which commenced employment under a one year time charter with Cargill International S.A. (Cargill).
- Renewed the time charter for the Ardmore Seafarer in July, for one year at an increased rate with Itochu Enex Co. Ltd.
- Entered into a commercial management arrangement with Nordic Womar Pte Ltd to spot charter the Ardmore Centurion in chemical and product trades.
- Reported adjusted EBITDA of $3 million (see Non-GAAP Measures section below) in the three months ended June 30, 2013, an increase of $0.9 million from the three months ended June 30, 2012. The company reported an adjusted net loss of $0.7 million (see Non-GAAP Measures section below), or $0.04 basic and diluted adjusted loss per share, for the three months ended June 30, 2013. Including IPO related expenses and deferred finance fees written off in the period, the net loss was $1.2 million, or $0.07 basic and diluted loss per share, for the period.
Anthony Gurnee, the Company’s Chief Executive Officer commented, “It is my pleasure to present Ardmore’s first earnings release as a public company and to outline a number of significant transactions concluded in the past few weeks. We are pleased with Ardmore’s successful listing on New York Stock Exchange on August 1, 2013 and the caliber of investors who chose to participate in the offering. We believe it is a highly opportune time to invest in our sectors and we look forward to building the value of Ardmore for our investors.
“As part of our expansion, we are pleased to announce a commercial management arrangement with Mansel Limited, the in-house shipping arm of Vitol SA. The arrangement is for the employment of six MR product tankers on a pooling and time charter basis. Ardmore’s chartering policy is to balance time charters and spot employment with customers having large cargo volumes in an effort to maximise commercial flexibility, manage cash flow visibility, andprovide shareholders with upside in an improving market. The arrangement with Mansel is a significant step for Ardmore given Vitol’s strong position in the global oil market. We look forward to providing Vitol with high quality service with these brand new, fuel efficient vessels.”
Mr. Gurnee continued, “We are very satisfied with Ardmore’s progress in furtherance of our business strategy by adding ten newbuildings to the fleet in recent weeks at attractive prices from high quality yards. Our recent orders increase our total fleet to 20 ships which consists of approximately 80% MR tankers by cargo capacity. As a consequence, we believe that Ardmore is well positioned to take advantage of improvements in the charter market for both products and chemicals.”
Summary of Recent and Second Quarter Events
Initial Public Offering
On August 6, 2013, the company completed its IPO of 10,000,000 shares of its common stock, par value $0.01, at $14 per share. The gross proceeds to the company from the IPO were $140 million before deducting underwriting discounts and commission and IPO related expenses. The underwriters have an over-allotment option to purchase up to an additional 1,500,000 shares at $14 per share which expires on August 30, 2013.
Commercial Arrangement with Vitol Group companies
In July 2013, Ardmore agreed to terms for a commercial arrangement for the employment of six MR product tankers with Mansel Limited. Two of the vessels will be employed on a time charter arrangement and four vessels will be employed under a commercial pooling arrangement. All six vessels will operate as part of Mansel’s MR product tanker fleet.
Mansel Limited is the commercial shipping arm of Vitol SA, one of the largest independent energy trading companies. Mansel’s activities complement the core cargo flows and it seeks to maximise utilization of its fleet through access to third party and internal cargos.
SPP Shipbuilding Co. Ltd – Four Newbuildings
On July 16, 2013, Ardmore agreed to acquire two 50,300 Dwt IMO three eco-design product tankers ordered from SPP Shipbuilding Co. Ltd, South Korea. (SPP). On August 8, 2013, the company exercised options on two additional 50,300 Dwt IMO 3 eco-design product tankers. The four vessels have a total contract cost of approximately $136,400,000 inclusive of ballast water treatment systems. Ardmore expects to take delivery of these vessels from SPP commencing in the first quarter 2015.
Hyundai Mipo Dockyard Co. Ltd – Two Newbuildings
On August 14, 2013, Ardmore executed contracts for the construction of two 37,000 Dwt IMO two eco-design chemical tankers ordered from Hyundai Mipo Dockyard Co. Ltd, South Korea (HMD) for approximately $32.7 million each with options for further equipment upgrades. As part of the contracts, Ardmore has also negotiated fixed price options for additional vessels. Ardmore expects to take delivery of the contracted vessels in the fourth quarter 2014 or in the first quarter 2015.
Fukuoka Shipbuilding Co. Ltd – Four Newbuildings
On August 21, 2013, Ardmore executed contracts for the construction of four 25,000 Dwt IMO 2 eco-design chemical tankers ordered from Fukuoka Shipbuilding Co. Ltd., Japan for a total contract price of approximately $118,000,000. As part of the contracts, Ardmore has also negotiated fixed price options for additional vessels. Ardmore expects to take delivery of the contracted vessels between fourth quarter 2014 and fourth quarter 2015.
On June 7, 2013, the Company took delivery of the Ardmore Seaventure. This vessel is built to the latest eco-design and includes upgrades for further improvements to enhance fuel efficiency. The Ardmore Seaventure began employment on a one-year time charter with Cargill at a rate of $19,500 per day for the first 60 days and $15,100 thereafter. Cargill is an international producer and marketer of food, agricultural, financial and industrial products and services.
In July 2013, the company renewed the time charter for the Ardmore Seafarer at an improved rate of $13,750 per day. In addition, the charter rate includes a performance bonus of up to $250 per day. The new charter is scheduled to expire in July 2014.
On August 3, 2013 following redelivery of the Ardmore Centurion from previous charterers, the company delivered the vessel to Nordic Womar Pte Ltd to operate it under a third party spot chartering arrangement. The third party spot chartering arrangement does not have a fixed expiration period.
On April 2, 2013, Ardmore entered into a capital lease agreement (bareboat charter) for the Ardmore Calypso and Ardmore Capella. In connection with the transaction, $17.9 million of outstanding senior debt was repaid in full. The capital lease is scheduled to expire in 2018 and includes a mandatory purchase obligation. The total amount financed under the capital lease arrangement was $31.5 million.