Ardmore Shipping Corporation announced results for the three and twelve months ended December 31, 2021.

Highlights and Recent Activity

Reported a net loss of $8.6 million for the three months ended December 31, 2021, or $0.25 loss per basic and diluted share. This compares to a net loss of $19.5 million, or $0.59 loss per basic and diluted share, for the three months ended December 31, 2020. Reported Adjusted EBITDA, which includes unrealized losses on derivatives and amortization of drydock expenditure (see Non-GAAP Measures section), of $5.5 million for the three months ended December 31, 2021 as compared to $0.9 million for the three months ended December 31, 2020.
Reported a net loss of $38.1 million for the year ended December 31, 2021 or $1.12 loss per basic and diluted share, which includes deferred finance fees written off; losses adjusted for these items (see Adjusted (loss) / earnings in the Non-GAAP Measures section) are $37.5 million, or $1.11 Adjusted loss per basic and diluted share. This compares to a net loss of $6.0 million, or $0.18 loss per basic and diluted share, and Adjusted earnings of $0.4 million, or $0.01 Adjusted earnings per basic and diluted share, for the year ended December 31, 2020. Reported Adjusted EBITDA (see Non-GAAP Measures section) of $16.6 million for the year ended December 31, 2021, as compared to $57.0 million for the year ended December 31, 2020.
MR tankers earned an average TCE rate of $11,424 per day for the three months ended December 31, 2021 and $11,286 per day for the year ended December 31, 2021. Chemical tankers earned an average TCE rate of $11,274 per day for the three months ended December 31, 2021 and $10,982 per day for the year ended December 31, 2021.
In November 2021, e1 Marine announced it has signed a memorandum of understanding with Maritime Partners LLC, Elliott Bay Design Group and ABB to develop the world’s first methanol-to-hydrogen fueled towboat, Hydrogen One, which will be powered by e1 Marine’s reformer technology.
In December 2021, Ardmore completed the issuance of an additional 15,000 Series A 8.5% Cumulative Redeemable Perpetual Preferred Shares to Maritime Partners, LLC for a purchase price of $15.0 million.

Anthony Gurnee, the Company’s Chief Executive Officer, commented:

“The tanker market overall was weak throughout 2021, lagging other shipping sectors mainly due to the pandemic’s negative impact on mobility and transport fuels. Given the direct connection to economic activity and consumer demand, the product and chemical tanker sectors did recover in the fourth quarter along with the global economy; however, it was not until year-end that charter rates began to properly improve, as reflected in our fourth quarter results.

Based upon clear and encouraging fundamentals, we expect our sectors to continue a recovery in 2022 from an already improved first quarter to-date, but also potentially influenced by many competing factors, including the evolution of the pandemic and the global economy, geopolitical concerns, and currently high oil prices impacting cargo movement and bunker costs.

Notwithstanding these factors, the big picture is very much one of an ongoing economic recovery, rising tonne-mile demand, and a tight tonnage supply outlook aided by heightened tanker scrapping and a rush of newbuilding orders in other shipping sectors that has pushed tanker newbuilding prices up and delivery schedules out.

Given this outlook, we have been increasing our spot exposure, while continuing a financially conservative stance in view of the potential cross currents in the market. Moving forward, Ardmore remains well positioned in terms of market upside and financial strength, with a high-quality modern fleet and a strong balance sheet.”

Summary of Recent and Fourth Quarter 2021 Events

Fleet Operations and Employment

As at December 31, 2021, the Company had 27 vessels in operation, including 21 MR tankers ranging from 45,000 deadweight tonnes (Dwt) to 49,999 Dwt (15 Eco-Design and six Eco-Mod) and six Eco-Design IMO 2 product / chemical tankers ranging from 25,000 Dwt to 37,800 Dwt.

MR Tankers (45,000 Dwt – 49,999 Dwt)

At the end of the fourth quarter of 2021, the Company had 21 MR tankers trading in the spot market or on time charters. The MR tankers earned an average TCE rate of $11,424 per day in the fourth quarter of 2021. In the fourth quarter of 2021, the Company’s 15 Eco-Design MR tankers earned an average TCE rate of $11,614 and the Company’s six Eco-Mod MR tankers earned an average TCE rate of $10,950 per day.

In the first quarter of 2022, the Company expects to have 18% of its revenue days for its MR Eco-Design tankers on time charter. The remaining 82% of days for its MR Eco-Design and all of its MR Eco-Mod tankers are expected to be employed in the spot market. As of February 15, 2022, the Company had fixed approximately 60% of its total MR revenue days for the first quarter of 2022 at an average TCE rate of approximately $13,725 per day.

Product / Chemical Tankers (IMO 2: 25,000 Dwt – 37,800 Dwt)

At the end of the fourth quarter of 2021, the Company had six Eco-Design IMO 2 product / chemical tankers in operation, all of which were trading in the spot market. During the fourth quarter of 2021, the Company’s six Eco-Design product / chemical vessels earned an average TCE rate of $11,274 per day.

In the first quarter of 2022, the Company expects to have all revenue days for its Eco-Design IMO 2 product / chemical tankers employed in the spot market. As of February 15, 2022, the Company had fixed approximately 70% of its Eco-Design IMO 2 product / chemical tankers spot revenue days for the first quarter of 2022 at an average TCE rate of approximately $13,325 per day.

Drydocking

The Company had no drydock or repositioning days in the fourth quarter of 2021. The Company does not expect to have any drydock days in the first quarter of 2022.

Capital Allocation Policy

Consistent with the Company’s capital allocation policy, the Company is not declaring a dividend, in respect of its common shares, for the fourth quarter of 2021.

Financing

In December 2021, Ardmore completed the issuance of an additional 15,000 Series A 8.5% Cumulative Redeemable Perpetual Preferred Shares to Maritime Partners, LLC for a purchase price of $15.0 million

Investments: e1 Marine and Element 1 Corp

In November 2021, e1 Marine announced it has signed a memorandum of understanding with Maritime Partners LLC, Elliott Bay Design Group and ABB to develop the world’s first methanol-to-hydrogen fueled towboat, Hydrogen One, which will be powered by e1 Marine’s reformer technology.

COVID-19

In response to the COVID-19 pandemic, many countries, ports and organizations, including those where Ardmore conducts a large part of its operations, have implemented measures to combat the outbreak, such as quarantines and travel restrictions. Such measures have caused severe trade disruptions. In addition, the pandemic has resulted and may continue to result in a significant decline in global demand for refined oil products. As Ardmore’s business is the transportation of refined oil products on behalf of oil majors, oil traders and other customers, any significant decrease in demand for the cargo Ardmore transports could adversely affect demand for its vessels and services. The extent to which the pandemic may impact Ardmore’s results of operations and financial condition, including possible impairments, will depend on future developments, which are highly uncertain and cannot be predicted, including, among others, new information which may emerge concerning the virus and of its variants and the level of the effectiveness and delivery of vaccines and other actions to contain or treat its impact. Accordingly, an estimate of the impact of the COVID-19 pandemic on the Company cannot be made at this time.

Results for the three months ended December 31, 2021 and 2020

The Company reported a net loss of $8.6 million for the three months ended December 31, 2021, or $0.25 loss per basic and diluted share, as compared to a net loss of $19.5 million, or $0.59 loss per basic and diluted share, for the three months ended December 31, 2020. The Company reported Adjusted EBITDA (see Non-GAAP Measures section) of $5.5 million for the three months ended December 31, 2021, as compared to $0.9 million for the three months ended December 31, 2020.

Results for the year ended December 31, 2021 and 2020

The Company reported a net loss of $38.1 million for the year ended December 31, 2021, or $1.12 loss per basic and diluted share, as compared to a net loss of $6.0 million, or $0.18 loss per basic and diluted share, for the year ended December 31, 2020. The Company reported Adjusted EBITDA (see Non-GAAP Measures section) of $16.6 million for the year ended December 31, 2021, as compared to Adjusted EBITDA of $57.0 million for the year ended December 31, 2020.

The Company reported an Adjusted loss (see Non–GAAP Measures section) of $37.5 million for the year ended December 31, 2021, or $1.11 Adjusted loss per basic and diluted share, as compared to Adjusted earnings of $0.4 million, or $0.01 Adjusted earnings per basic and diluted share, for the year ended December 31, 2020.

Management’s Discussion and Analysis of Financial Results for the three months ended December 31, 2021 and 2020

Revenue. Revenue for the three months ended December 31, 2021 was $52.5 million, an increase of $10.8 million from $41.7 million for the three months ended December 31, 2020.

The Company’s average number of operating vessels increased to 27 for the three months ended December 31, 2021, compared to 26 for the three months ended December 31, 2020.

The Company had four product tankers employed under time charters as at December 31, 2021, compared with none as at December 31, 2020. Revenue days derived from time charters were 364 for the three months ended December 31, 2021, as compared to none for the three months ended December 31, 2020. The increase in revenue days for time-chartered vessels resulted in an increase in revenue of $5.3 million.

The Company had 2,112 spot revenue days for the three months ended December 31, 2021, as compared to 2,267 for the three months ended December 31, 2020. The Company had 23 and 26 vessels employed directly in the spot market as of the years ended December 31, 2021 and 2020, respectively. The decrease in spot revenue days resulted in a decrease in revenue of $2.9 million, while changes in spot rates resulted in an increase in revenue of $8.1 million for the three months ended December 31, 2021, as compared to the three months ended December 31, 2020. The Company managed four third party chemical tankers employed under spot as at December 31, 2021, compared with none as at December 31, 2020. This resulted in an increase in revenue of $0.3 million.

Voyage Expenses. Voyage expenses were $24.6 million for the three months ended December 31, 2021, an increase of $4.7 million from $19.9 million for the three months ended December 31, 2020. Voyage expenses increased primarily due to the increase in bunker prices resulting in an increase of $6.1 million, partially offset by a decrease in spot revenue days of $1.4 million for the three months ended December 31, 2021, as compared to the three months ended December 31, 2020.

TCE Rate. The average TCE rate for the Company’s fleet was $11,390 per day for the three months ended December 31, 2021, an increase of $1,626 per day from $9,764 per day for the three months ended December 31, 2020. The increase in average TCE rate was the result of higher spot rates for the three months ended December 31, 2021, as compared to the three months ended December 31, 2020. TCE rates represent net revenues (or revenue less voyage expenses) divided by revenue days.

Vessel Operating Expenses. Vessel operating expenses were $15.8 million for the three months ended December 31, 2021, a decrease of $0.6 million from $16.4 million for the three months ended December 31, 2020. This decrease is due to one less vessel in operation in the three months ended December 31, 2021, as compared to the three months ended December 31, 2020. Vessel operating expenses, by their nature, are prone to fluctuations between periods. Average fleet operating expenses per day, including technical management fees, were $6,592 per vessel for the three months ended December 31, 2021, as compared to $6,518 per vessel for the three months ended December 31, 2020.

Charter Hire Costs. Charter hire costs were $2.1 million for the three months ended December 31, 2021, an increase of $0.9 million from $1.2 million for the three months ended December 31, 2020. The Company currently has two vessels chartered-in, as compared to one vessel chartered-in as at December 31, 2020.

Depreciation. Depreciation expense for the three months ended December 31, 2021 was $8.0 million, as compared to $8.3 million for the three months ended December 31, 2020.

Amortization of Deferred Drydock Expenditures. Amortization of deferred drydock expenditures for the three months ended December 31, 2021 was $1.3 million, a decrease of $0.4 million from $1.7 million for the three months ended December 31, 2020. The deferred costs of drydockings for a given vessel are amortized on a straight-line basis to the next scheduled drydocking of the vessel.

General and Administrative Expenses: Corporate. Corporate-related general and administrative expenses for the three months ended December 31, 2021 were $3.3 million, an increase of $0.2 million from $3.1 million for the three months ended December 31, 2020.

General and Administrative Expenses: Commercial and Chartering. Commercial and chartering expenses are the expenses attributable to Ardmore’s chartering and commercial operations departments in connection with its spot trading activities. Commercial and chartering expenses for the three months ended December 31, 2021 were $0.9 million, an increase of $0.7 million from $0.2 million for the three months ended December 31, 2020.

Interest Expense and Finance Costs. Interest expense and finance costs include loan interest, finance lease interest, and amortization of deferred finance fees. Interest expense and finance costs for the three months ended December 31, 2021 were $4.3 million, an increase of $0.4 million from $3.9 million for the three months ended December 31, 2020. Cash interest expense increased by $0.4 million to $3.8 million for the three months ended December 31, 2021, from $3.4 million for the three months ended December 31, 2020, primarily due to increased interest costs following the refinancing of two vessels in June 2021. Amortization of deferred finance fees for the three months ended December 31, 2021 was $0.4 million, consistent with $0.5 million for the three months ended December 31, 2020.
Source: Ardmore Shipping Corporation