Ardmore Shipping Corporation Q1 FY2026 earnings call

Key Strategic Actions

• Ordered two highly efficient and versatile handy-sized tankers at Wuhu Shipyard at $44.9 million per vessel, with options for two additional vessels, deliveries from late 2028.
• Doubled quarterly dividend payout ratio to two-thirds of adjusted earnings.
• Agreed to opportunistic sale of a 2014 built MR tanker for $35.5 million, with delivery expected in June 2026.

Market Impact

• Middle East disruption has added tightness to the maritime market, causing rerouting of refined product cargos, with flows from Atlantic Basin replacing lost Middle East volumes, and approximately 130 product tankers trapped in the Middle East Gulf affecting vessel supply.
• Refining margins in the Atlantic reached highest level since pandemic recovery, creating arbitrage, and Asian refineries reducing throughput leading to increased U.S. exports.

Fleet and Capital Allocation

• Limited dry docking activity through 2027, with existing fleet capital expenditure expected to decline significantly to $8 million this year vs $30 million last year.
• Refreshed fleet capturing current market, and disciplined approach to capital allocation balancing reinvestment in fleet and returning capital to shareholders while maintaining healthy debt levels.

MR tankers earned $33,700 per day for the first quarter and $52,100 per day so far in the second quarter with 55% booked. Chemical tankers earned $22,300 per day for the first quarter and $32,500 per day so far in the second quarter with 65% booked. MR spot rates are at levels nearly five times the operating cash break even of $10,800 per day.

Forward-Looking

• MR tankers had $52,100 per day so far in Q2 with 55% booked.
• Chemical tankers had $32,500 per day so far in Q2 with 65% booked.
• Targeted fleet investment with deliveries scheduled from late 2028, and option to acquire additional vessels.
• Doubled dividend payout ratio to two-thirds of adjusted earnings effective Q1.

• Major disruption in the Middle East affecting seafarers and their families, with Ardmore having no ships in the region but engaging with industry organizations to support affected people.
• Approximately 130 product tankers trapped in the Middle East Gulf impacting available vessel supply.
• Middle East conflict disrupting approximately 15% of global oil product flows and 30% of crude flows, affecting trade flows and market dynamics.

Q: Discuss the dividend policy timing and thought process.

A: Gernot said dividend policy is part of capital allocation, with reshift and rebalance acknowledging price movements and balanced approach to reinvestment and returning capital while maintaining healthy debt levels.

Q: About fleet strategy in MR and chem market.

A: Time charter rates moved up but not significantly executed in past quarter as value proposition not as pronounced as crew tankers, monitoring and looking at interest from oil majors, refiners, etc.

Q: Talk about MRs and chemical tankers segments and performance.

A: Handy-sized tankers ordered cover full range of liquid products, offering trading options, with existing chemical fleet redirecting to CPP cargoes where the money is, integrated approach to business, and strategic fit of new orders considering relative value.