Ardmore Shipping Corporation — FY 2013 Form 20-F
Reporting period: Fiscal year ended December 31, 2013; this is an annual report, not a standalone Q4 report. The filing does not provide clear Q4-only financial results. Financial statements are prepared under U.S. GAAP. Ardmore transports petroleum products and chemicals using mid-size tanker vessels.
Financial and operating performance
| Metric | FY 2013 | FY 2012 |
|---|---|---|
| Revenue | $35.9 million | $25.2 million |
| Operating loss | $0.35 million | $1.53 million |
| Net loss | $3.84 million | $4.54 million |
| Basic and diluted loss per share | $0.31 | $0.56 |
| Cash from operating activities | $8.12 million | $3.99 million |
| Cash used in investing activities | $144.64 million | $14.94 million |
| Cash from financing activities | $178.04 million | $20.83 million |
- Revenue increased 42.5%, principally reflecting delivery of two new tankers and higher revenue days. Fleet-weighted average TCE rose to $12,850 per day from $10,911; net TCE was $12,584 per day versus $10,184.
- Operating loss narrowed as revenue growth exceeded expense growth. Net loss improved 15.3%, but remained significant; interest and finance costs increased to $3.46 million from $2.97 million. Approximate operating margin was -1.0% and net margin -10.7%.
- At year-end, cash was $56.86 million and total assets were $357.97 million. Current assets of $61.96 million exceeded current liabilities of $17.05 million, implying working capital of about $44.91 million and a current ratio of about 3.6.
- Long-term debt was $88.86 million and capital lease obligations were $30.38 million, or $119.24 million combined; cash less these obligations was about $62.38 million net debt. The required minimum cash balance was $4.8 million. The company reported compliance with loan covenants.
- Operating expenses rose 35.7% to $36.22 million. Vessel operating expenses increased to $18.22 million; general and administrative expenses rose to $5.67 million, including IPO-related costs and higher public-company expenses.
Material changes and unusual items
- The August 2013 IPO raised $140 million gross; net equity proceeds recorded in the cash flow statement were $128.43 million. The company paid a $1.19 million dividend in 2013. A March 2014 follow-on offering raised $108.7 million gross; this was after the reporting period.
- Investing cash outflows increased sharply with vessel purchases and construction payments. At December 31, 2013, vessels under construction were carried at $89.02 million.
- Management identified an estimated $3.8 million excess of aggregate carrying value over basic charter-free market value for a subset of vessels, but recorded no impairment, citing projected undiscounted cash flows above carrying values. A 10% sensitivity reduction in utilization or charter rates reportedly did not change that conclusion.
- The 2012 audit had identified a material weakness in accounting for deferred finance fees and capitalized interest on vessels under construction. Management said it was remediated in 2013. Disclosure controls were assessed as effective; the filing includes no management assessment or auditor attestation of internal controls, citing the newly public company transition period.
Outlook, risks and contingencies
- Management described product and chemical tanker markets as recovering from cyclical lows, while cautioning that charter rates and vessel values remain volatile. It gave no formal earnings guidance.
- Management estimated vessel and potential acquisition capital expenditures of $300–$400 million in 2014–2015. Ten vessels were described as on order in the company overview, with deliveries expected to start in late 2014; eight were to be financed under a $172 million facility, while financing for two ordered vessels and the Ardmore Seamariner was still under discussion at the report date.
- The company intended to pay quarterly dividends of $0.10 per share, subject to cash generation, board decisions, law, and debt covenants. It reported subsequent declarations/payments for the December 2013 and March 2014 quarters.
- Key exposures include the cyclical tanker market, spot-rate volatility, charterer defaults, vessel oversupply and impairment, variable LIBOR-linked borrowing costs, substantial construction commitments, and environmental, safety, piracy, insurance and sanctions risks. No material litigation was reported.
Important facts for investors to verify
- Reconcile the year-end fleet and commitments: the filing gives differing fleet descriptions across dates, reflecting deliveries after December 31, 2013.
- Confirm remaining newbuilding costs, delivery timing, and whether financing for the two vessels and the Seamariner was completed on acceptable terms.
- Review debt maturities, LIBOR exposure, collateral-value covenants, and liquidity needs against planned capital spending and dividends.
- Assess the assumptions behind vessel impairment testing, particularly charter rates, utilization, operating costs and market values.
- Verify the sustainability of the stated dividend intention given recurring losses, capital requirements and the spot-market exposure.