Ardmore Shipping(ASC) - 2025 Q4 - Earnings Call Transcript

Financial Data and Key Metrics Changes - Adjusted earnings for the full year were $38.8 million or $0.95 per share, and for the fourth quarter, they were $11.6 million or $0.28 per share [11] - EBITDA for the quarter was $27 million and for the year was $95 million, highlighting strong operating leverage [13] - The cash break-even rate was reported at $11,700 per day, or $10,800 per day excluding CapEx, indicating effective cost management [10][23] Business Line Data and Key Metrics Changes - MR tankers earned $25,300 per day in Q4 and $29,100 per day in Q1 2026, with 50% booked [10] - Chemical tankers earned $19,900 per day in Q4 and $20,800 per day in Q1 2026, with 30% booked [10] - The company maintained a strong spot market exposure of 82% while also securing high-quality fixed-rate time charters [11][29] Market Data and Key Metrics Changes - The dislocation of oil refineries is driving longer voyage lengths and increased ton-mile demand, positively impacting earnings [15] - Geopolitical disruptions, such as sanctions on Russian oil, are reshaping trade routes and benefiting compliant fleets [16] - The aging MR fleet is expected to lead to increased scrapping, providing buoyancy to the market by reducing supply [18] Company Strategy and Development Direction - Ardmore's strategy focuses on capturing opportunities in refined oil products and complex chemical cargoes, leveraging a fully integrated trading platform [21] - The company emphasizes innovation and performance, with ongoing investments in efficiency upgrades and AI-driven voyage optimization tools [22][24] - Ardmore aims to maintain best-in-class corporate governance and a disciplined capital allocation policy to create long-term value [25][38] Management's Comments on Operating Environment and Future Outlook - Management highlighted favorable underlying market conditions and a robust earnings environment, with TCE performance reflecting continued strength [9] - The geopolitical landscape is creating complexities but also opportunities for nimble operators like Ardmore [53] - The company is committed to maintaining financial flexibility to navigate uncertainties and capitalize on market shifts [55] Other Important Information - Ardmore completed a major dry docking cycle with significant performance upgrades, enhancing fleet capabilities [11][26] - The company has declared a quarterly cash dividend of $0.09 per share, consistent with its policy of returning one-third of adjusted earnings to shareholders [11] Q&A Session Summary Question: Future capital allocation considering rising asset values - Management indicated a non-binary approach to capital allocation, balancing between growth and maintaining a strong fleet [60] Question: Thoughts on the new building market for MRs - Management has not participated in the new building market since 2013, focusing instead on the second-hand market for value [63] Question: Clarification on AI returns - AI investments are viewed with caution, focusing on adoption rather than development, ensuring guaranteed returns with minimal CapEx [67]