Ardmore Shipping Corp. Form 6-K Summary
Business Context and Reporting Period
This report covers the three and nine months ended September 30, 2021. Ardmore Shipping Corporation (ASC) owns and operates a fleet of Medium Range (MR) product and chemical tankers. As of September 30, 2021, the fleet consisted of 27 vessels in operation (25 owned, 2 chartered-in), with an average age of 8 years. The company focuses on fuel-efficient, modern vessels and is actively pursuing an Energy Transition Plan (ETP).
Key Financial Metrics
| Metric | 3 Months Ended Sep 30, 2021 | 9 Months Ended Sep 30, 2021 |
|---|---|---|
| Net Revenue | $47.2 million | $140.0 million |
| Net Loss | $(12.3) million | $(28.9) million |
| Net Loss Attributable to Common Stockholders | $(12.8) million | $(29.5) million |
| Time Charter Equivalent (TCE) Rate | $10,319 per day | $11,153 per day |
| Cash and Cash Equivalents | $54.5 million | $54.5 million (as of period end) |
| Total Debt (Net) | $151.5 million | $151.5 million (as of period end) |
| Finance Lease Obligations (Net) | $231.5 million | $231.5 million (as of period end) |
| Operating Cash Flow | Not provided for 3 months | $(2.3) million used |
Material Changes vs. Prior Period
- Revenue: For the nine months ended September 30, 2021, net revenue decreased by 21% ($38.3 million) compared to the same period in 2020. This decline was driven by lower spot rates and fewer spot revenue days, partially offset by increased revenue from time-chartered vessels.
- Profitability: The company reported a net loss of $28.9 million for the nine months ended September 30, 2021, compared to a net income of $13.5 million in the prior year period. The loss before taxes increased by 312%.
- Expenses: Voyage expenses increased by 4% ($2.6 million) for the nine-month period, primarily due to higher bunker prices. Charter hire costs increased significantly (3,015%) due to the addition of chartered-in vessels.
- TCE Rates: The average TCE rate for the nine months ended September 30, 2021, was $11,153 per day, a decrease of $6,071 per day (35%) from the prior year period.
Guidance, Outlook, and Risks
- Strategic Investments: In June 2021, ASC completed a strategic investment in Element 1 Corp. (10% equity stake) and established the e1 Marine joint venture (33.33% ownership) to develop methanol-to-hydrogen technology. Total investment was approximately $10.4 million.
- Refinancing: In June 2021, the company refinanced two vessels (Ardmore Seawolf and Ardmore Seahawk) via a sale and leaseback arrangement, generating net proceeds of $15.5 million.
- Liquidity: As of September 30, 2021, total liquidity was $61.4 million, comprising $54.5 million in cash and $6.9 million in undrawn credit facilities. The company remains in compliance with all debt covenants.
- Risks: Key risks include fluctuations in charter rates and vessel values, bunker price volatility, the impact of the COVID-19 pandemic on global oil demand, and potential disruptions to shipping routes. The company notes that the energy transition presents both compliance challenges and opportunities.
Investor Verification Checklist
- Debt Covenants: Verify continued compliance with minimum solvency (30%) and minimum cash/cash equivalents ($19.2 million required) covenants.
- Preferred Stock Dividends: Confirm payment of the 8.5% cumulative dividend on the newly issued Series A Preferred Stock, which restricts common stock dividends until paid.
- Spot Market Exposure: Assess the impact of the high percentage of vessels (23 of 27) employed in the volatile spot market on future earnings stability.
- Energy Transition ROI: Monitor the performance and adoption timeline of the Element 1 Corp. and e1 Marine joint venture investments.
- Drydock Schedule: Review the upcoming drydock schedule (9 vessels in 2023, 6 in 2024) and associated capital expenditure requirements.