ASC - Ardmore Shipping (ASC) 2024 Investor Day and Q4 2023 Earnings Call Transcript

2024-02-15 20:03:02 ET

Ardmore Shipping (ASC)

2024 Investor Day and Q4 2023 Earnings Conference Call

February 15, 2024 12:00 PM ET

Company Participants

Bryan Degnan – IGB Group

Curtis Mc Williams – Chairman

Anthony Gurnee – Founder and Chief Executive Officer

Bart Kelleher – Chief Financial Officer

Gernot Ruppelt – Chief Commercial Officer

Conference Call Participants

Presentation

Bryan Degnan

Good morning, everyone. Welcome to Ardmore Shipping’s 2024 Investor Day, during which we will also be covering the company’s Results for the Fourth Quarter and the Full Year 2023. I’m Bryan Degnan with the IGB Group. Just a few administrative points before we get underway today. This event is being recorded and broadly distributed via live webcast, which along with today’s slides, is accessible at www.ardmoreshipping.com. An audio replay of the event will be available on the website from later today. The standard earnings press release was issued premarket this morning and is also available on the website.

Let’s turn to Slide 2 here. Later in the event following the prepared remarks, there will be a Q&A session, at which point we will take questions from the people with us in the room today. For those joining remotely, please feel free to submit any questions that you might have at any time to ardmore@igbir.com. That’s Ardmore at India, Gulf Bravo, India, romeo.com. Throughout the event and for the benefit of those joining remotely, we’d ask that all those with questions utilize the provided microphones.

Turning to Slide 3. Please allow me to remind you that our discussion today contains forward-looking statements. Actual results may differ materially from those projected in the forward-looking statements. Additional information concerning factors that could cause the actual results to differ materially from those in the forward-looking statements is contained in the fourth quarter and full year 2023 earnings release.

Moving to Slide 4. I’d like to introduce you to the members of the Ardmore leadership team, whom we will have the pleasure of hearing from today. We have with us Curtis Mc Williams, Ardmore’s Chairman; Anthony Gurnee, Founder and Chief Executive Officer; Bart Kelleher, Chief Financial Officer; and Gernot Ruppelt, Chief Commercial Officer.

And with that, I would ask Curtis Mc Williams, the Chair of Ardmore Shipping Corporation to please join us on stage to provide today’s opening remarks.

Curtis Mc Williams

Thanks, Brian. Good morning or good afternoon now, excuse me. On behalf of the Ardmore Board and the senior management team, let me welcome you to our annual now investor conference to say that we live in interesting times, would be an understatement. Wars in Europe and the Middle East and congestion caused by the deteriorating climate drought-related conditions in the Panama Canal have resulted in profound changes to trade flows for our product tankers. Over the course of the next hour, you will hear how Ardmore strict commitment to three guiding principles, those being, one, performance and progress. We believe these are not mutually exclusive, endeavors, but in the long run, support Ardmore’s ability to excel in both arenas; two, our well-articulated capital allocation policy; and three, our ongoing efforts to ensure that we have best-in-class governance. We believe that these continue to position the company well to drive our financial performance, both in the short-term as well and more importantly, in the long-term. With that being said, I want to again thank you for your continued interest in Ardmore and your support of our company. We remain solidly committed to being good stewards of your investment.

And with that, I’ll ask Tony, our CEO, to come and begin his remarks.

Anthony Gurnee

Thank you, Curtis. What happened to your foot? Okay. Good. Great. Okay. So firstly, I’d like to thank you Curtis for those kind remarks. I would like to outline the format for today’s meeting. Bart and I are going to start off by presenting our results for the fourth quarter and full year 2023. And then we’re then going to pivot to the Investor Day segment, which Bart and Gernot are going to lead, focusing on our strategy and how we’re converting these strong markets into earnings. And then at the end, I’ll offer some closing thoughts before opening up the meeting to questions either from here at the floor or remotely. And again, for remote questions, please send them to ardmore@igbir.com.

So turning first to Slide 6 for highlights. We’re pleased to report another successful year for Ardmore with earnings of $113 million, or $2.71 a share, continuing what is now a multiyear trend. Our fourth quarter performance reflects robust product and chemical tanker market conditions with adjusted earnings of $26 million, or $0.63 a share, and with further strength building into the first quarter. Our MRs earned $32,500 per day for the fourth quarter and $35,400 per day so far in the first quarter with 60% booked. And our chemical tankers on a capital adjusted basis earned $29,300 per day for the fourth quarter and $30,100 per day so far for the first quarter with 70% booked.

Our markets are clearly experiencing significant strength as a result of geopolitical and climate-related trading restrictions bolstering already tight supply/demand fundamentals and which all – all of which are going to be the themes and focus of our presentation today. So meanwhile, we continue to execute on our longstanding capital allocation policy. Today, we’re declaring another quarterly cash dividend of $0.21 per share, consistent with our policy of paying out one third of adjusted earnings. And as a part of a gradual fleet upgrade and modernization plan, we’ve acquired a 2017 built MR tanker while also simultaneously selling our 2010 built Ardmore Seafarer. In addition, we’ve opportunistically chartered out one of our chartered-in MRs to realize the $7,500 a day spread and a profit of $2.7 million over the remaining one year period. And overall, we believe that Ardmore is in an excellent position to benefit from these ongoing strong market conditions.

So turning to Slide 7. Near-term product to chemical tanker market outlook. I want to take the opportunity now to briefly introduce the geopolitical and climate-related trading restrictions that have been affecting our market. The disruptions in the Red Sea and the consequent rerouting of vessels around Africa are adding significantly to voyage lengths and therefore, the tonne-mile demand. But before we go further, we need to remember that numbers aside, we’re dealing with real people with real world issues, and I’d like to acknowledge the key role of our seafarers in this increasingly dangerous world and to emphasize that their securities are top priority....

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