Ardmore Shipping (NYSE: ASC) reported Q2 EPS of $0.41, $0.02 worse than the analyst estimate of $0.43. Revenue for the quarter came in at $67.93 million versus the consensus estimate of $52.13 million.

Highlights and Recent Activity

• Reported net income of $13.6 million for the three months ended June 30, 2020, or $0.41 earnings per basic and diluted share, as compared to a net loss of $9.9 million, or $0.30 loss per basic and diluted share, for the three months ended June 30, 2019. Net loss for the three months ended June 30, 2019 includes the loss on sale of the Ardmore Seafarer of $6.6 million. Reported EBITDA (see Non-GAAP Measures section) of $27.9 million for the three months ended June 30, 2020 as compared to $5.7 million for the three months ended June 30, 2019.
• Reported Adjusted earnings (see Non-GAAP Measures section) of $13.7 million for the three months ended June 30, 2020 or $0.41 Adjusted earnings per basic share and diluted share, as compared to Adjusted loss of $3.4 million, or $0.10 Adjusted loss per basic and diluted share, for the three months ended June 30, 2019. Reported Adjusted EBITDA (see Non-GAAP Measures section) of $27.9 million for the three months ended June 30, 2020, as compared to $12.3 million for the three months ended June 30, 2019.
• Reported net income of $20.1 million for the six months ended June 30, 2020, or $0.61 earnings per basic and diluted share, as compared to a net loss of $19.1 million, or $0.58 loss per basic and diluted share, for the six months ended June 30, 2019. Net loss for the six months ended June 30, 2019 includes aggregate loss on the sales of the Ardmore Seamaster and Ardmore Seafarer of $13.2 million. Reported EBITDA (see Non-GAAP Measures section) of $48.9 million for the six months ended June 30, 2020, as compared to $12.7 million for the six months ended June 30, 2019.
• Reported Adjusted earnings (see Non-GAAP Measures section) of $20.2 million for the six months ended June 30, 2020, or $0.61 Adjusted earnings per basic and diluted share, as compared to an Adjusted loss of $5.9 million, or $0.18 Adjusted loss per basic and diluted share, for the six months ended June 30, 2019. Reported adjusted EBITDA (see Non-GAAP Measures section) of $48.9 million for the six months ended June 30, 2020, as compared to $25.9 million for the six months ended June 30, 2019.
• MR tankers earned an average TCE rate of $21,256 per day for the three months ended June 30, 2020 and $20,280 per day for the six months ended June 30, 2020. Chemical tankers earned an average TCE rate of $16,337 per day for the three months ended June 30, 2020, and an average of $17,864 per day for the six months ended June 30, 2020.
• In May 2020, the Company entered floating-to-fixed interest rate swaps with a total notional amount of $324 million at an average fixed interest rate of 0.32% for a term of three years.
• In July 2020, the Company completed its first sustainability-linked finance facility with ABN AMRO; the new $15 million receivables facility contains a pricing adjustment feature linked to Ardmore's performance on carbon emission reduction and other environmental and social initiatives. The facility's performance targets for carbon emission reduction align with International Maritime Organization's targets for GHG emissions reduction.
• On July 21, 2020, the Company agreed to acquire a 50,093 Dwt 2010 Japanese-built MR product tanker for a purchase price of $16.7 million. The vessel completed second special survey and ballast water treatment installation in June and is expected to deliver to Ardmore in August 2020.
• On July 23, 2020, the Company entered into an agreement to charter-in a 47,981 Dwt 2010 Japanese-built MR product tanker for one year at a rate of approximately $13,400 per day, plus a one-year extension option. Delivery is expected in September 2020.
• On March 11, 2020, the World Health Organization declared the recent novel coronavirus (COVID 19) outbreak a pandemic. In response to the outbreak, many countries, ports and organizations, including those where the Company conducts a large part of its operations, have implemented measures to combat the outbreak, such as quarantines and travel restrictions. Such measures have caused and will likely continue to cause sever trade disruptions. The extent to which COVID-19 will impact the Company's results of operations and financial condition, including possible impairments, will depend on future developments, which are highly uncertain and cannot be predicted, including new information which may emerge concerning the severity of the virus and the actions to contain or treat its impact, among others. Accordingly, an estimate of the impact cannot be made at this time.

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

"We are pleased to report a very profitable second quarter with 41 cents in earnings per share, reflecting solid Ardmore chartering performance on the back of strong trading conditions driven by volatility and market disruption. We have taken advantage of these conditions to build cash and strengthen our balance sheet: our leverage on a net debt basis is down to 48.5% and cash and undrawn lines as of now is $82 million, therefore our capital allocation policy and priorities are working as intended.

The more recent market weakness has also presented attractive opportunities, and we are pleased to announce the acquisition of a high-quality Japanese MR built 2010 for $16.7 million. The ship completed its required second special survey and ballast water treatment system installation recently in June, saving us that cost and effectively reducing the price by $2 million in addition to enabling it to trade uninterrupted until its next docking in 2023. We have also recently chartered-in another 2010-built Japanese MR for one year at a rate of $13,400 per day plus one option year with delivery expected in September.

Meanwhile, the charter market is playing out as expected in reaction to underlying macroeconomic and oil market conditions, with the earlier spikes in rates followed by lows in recent weeks, and now with signals emerging that we are coming off a bottom. The oil market itself remains in turmoil; inventory levels remain high, global oil consumption is recovering to differing degrees across geographies and oil production is set to increase in August under the existing OPEC+ agreement.

Overall, we are very satisfied with the Company's performance throughout the first half of the year in which we have earned 61 cents per share. While the near-term outlook remains uncertain and market conditions are highly volatile, we maintain our long-term positive view and will continue with our capital allocation priorities while also sustaining our spot-market earnings power and seeking opportunities to build long-term value for our shareholders."

For earnings history and earnings-related data on Ardmore Shipping (ASC) click here.