• Adjusted Earnings: $23.3 million or $0.55 per share for the Third Quarter.
• MR Tankers TCE Rates: $28,500 per day for the Third Quarter; $25,000 per day for the Fourth Quarter with 50% booked.
• Chemical Tankers TCE Rates: $21,600 per day for the Third Quarter; $25,150 per day for the Fourth Quarter with 55% booked.
• Dividend: Quarterly cash dividend of $0.18 per share.
• Cash Break Even Level: Reduced to $11,500 per day, the lowest in company history.
• Capital Expenditure for 2025: Forecasted at $30 million to $35 million.
• Operational Performance: Over 99% on-hire availability in the Third Quarter.
• Investments in Fleet: $15 million in efficiency-enhancing technologies and scrubber installations in 2024.

• Warning! GuruFocus has detected 2 Warning Sign with AVDX.

Release Date: November 06, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Ardmore Shipping Corp (NYSE:ASC) reported strong Third Quarter results with Adjusted Earnings of $23.3 million or $0.55 per share, reflecting elevated TCE rates.
• The company declared its 8th consecutive quarterly cash dividend of $0.18 per share, consistent with its policy of paying out 1/3 of Adjusted Earnings.
• ASC has reduced its breakeven level to $11,500 per day, the lowest in its history, providing flexibility and resilience.
• The company continues to make high-return investments in its fleet, enhancing performance and reducing emissions.
• ASC's strategic focus on optimizing trading performance and tightly managing costs has resulted in a robust balance sheet and strong earnings.

Negative Points

• TCE rates in the Third Quarter were impacted by an unusual spike in the number of VLCCs and Suezmaxes carrying refined products due to temporarily weaker crude markets.
• The aging MR Fleet presents a challenge, with 50% of the global MR Fleet expected to be over 20 years old and entering the scrapping window within the next five years.
• There is a lack of Aframax crude tanker new buildings, which could impact the product tanker order book.
• Ongoing geopolitical disruptions continue to drive higher ton miles and dislocation of core trades, adding volatility to freight rates.
• Short-term volatility in the market remains a concern, despite supportive long-term fundamentals.

Q & A Highlights

Q: With the recent political changes, do you foresee any immediate impacts on the product market? A: Gernot Ruppelt, Senior Vice President, Chief Commercial Officer, stated that the fundamentals remain positive and are not significantly affected by the US presidency. Key market drivers such as refinery dislocation and East-West flows are independent of US political changes. Additionally, any incoming president would likely avoid actions that increase fuel prices, which could lead to more trading activity and transport needs.

Q: Your Fourth Quarter bookings seem strong. Are they above market indices, and how do they compare to current market averages? A: Gernot Ruppelt confirmed that their bookings are indeed strong and reflect the company's focus on maximizing TCE performance. The integrated platform and capital investments in energy efficiency have allowed Ardmore to access premium trades and cargos, outperforming market indices.

Q: How do you view current asset pricing, and what is your approach to asset acquisition given the supply-demand dynamics? A: Gernot Ruppelt explained that Ardmore maintains a disciplined and selective approach to asset acquisition, ensuring any investment meets their value criteria. They focus on reinvesting in the existing fleet for attractive returns while staying connected to potential deal flows.

Q: Regarding your preferred stock buyback, how do you decide between buying back stock versus preferred shares? A: Bart Kelleher, President and CFO, noted that the preferred shares are treated similarly to debt. In a decreasing interest rate environment, reducing the preferred shares, which have a fixed 8.5% interest, is seen as an efficient way to lower break-even costs.

Q: Are there any restrictions on redeeming the remaining preferred shares? A: Bart Kelleher confirmed there are no restrictions on redeeming the remaining preferred shares. The company plans to assess market developments and cash flow generation to continue reducing their position in the preferred shares.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.