Earnings call transcript: Ardmore Shipping beats Q2 2025 earnings expectations

Ardmore Shipping (ASC) reported stronger-than-expected earnings for the second quarter of 2025, with adjusted earnings per share (EPS) of €0.22, surpassing the forecast of €0.19. This 15.79% positive surprise was accompanied by a significant revenue beat, as the company reported €72.05 million against an expected €44.92 million, marking a 60.4% surprise. Following the announcement, Ardmore’s stock rose by 2.84% in pre-market trading. According to InvestingPro analysis, the company maintains excellent financial health with a "GREAT" overall score and appears undervalued based on comprehensive Fair Value calculations.

Key Takeaways

• Ardmore Shipping exceeded both EPS and revenue forecasts for Q2 2025.
• The company’s stock price increased by 2.84% following the earnings announcement.
• Strong performance in tanker rates contributed to the earnings beat.
• Operational efficiency remained high with 99% on-hire availability.
• The company anticipates continued market strength into the third quarter.

Company Performance

Ardmore Shipping’s performance in Q2 2025 demonstrated resilience and growth, particularly in its tanker operations. The company achieved significant gains in Time Charter Equivalent (TCE) rates, with MR Tankers and Chemical Tankers showing robust daily rates. This performance aligns with broader industry trends of increased demand and limited supply, positioning Ardmore favorably against competitors. The company’s strong financial position is evidenced by its impressive current ratio of 3.88 and minimal debt-to-equity ratio of 0.05, indicating excellent liquidity and balance sheet strength.

Financial Highlights

• Revenue: €72.05 million, significantly above forecasts.
• Earnings per share: €0.22, beating expectations by 15.79%.
• EBITDAR: €22.4 million, reflecting strong operational performance.

Earnings vs. Forecast

Ardmore Shipping reported an EPS of €0.22, exceeding the forecast of €0.19 by 15.79%. The revenue surprise was even more pronounced, with actual figures coming in 60.4% above expectations. This marks a substantial improvement over previous quarters, highlighting effective strategic initiatives and market positioning.

Market Reaction

Following the earnings release, Ardmore’s stock experienced a 2.84% increase in pre-market trading, reaching €10.88. This positive movement reflects investor confidence in the company’s ability to outperform expectations and capitalize on favorable market conditions. InvestingPro data reveals two key strengths: management’s aggressive share buyback program and the company’s strong cash position relative to debt. These are just two of several bullish indicators available to InvestingPro subscribers. The stock trades between its 52-week range of $8.32 to $19.93, with all analysts maintaining a "Buy" recommendation and setting price targets between $12.20 and $14.00.

Outlook & Guidance

Looking ahead, Ardmore Shipping projects continued strong market momentum into Q3 2025, with increased trading activity anticipated. The company expects structural market strength as it heads into the winter months, driven by geopolitical shifts and changes in trade flows. Recent guidance revisions indicate a positive outlook for the remainder of the fiscal year. For detailed analysis and comprehensive insights, investors can access the full Pro Research Report available on InvestingPro, which provides in-depth coverage of Ardmore’s market position, financial health, and growth prospects among 1,400+ top stocks.

Executive Commentary

CEO Gernot Ruppelt highlighted the company’s strategic flexibility, stating, "We’re not trying to optimize for a specific growth target." President Bart Kelleher emphasized a balanced approach to debt management, noting, "We really look at debt through the cycle." These comments underscore Ardmore’s focus on sustainable growth and financial stability.

Risks and Challenges

• Geopolitical tensions could impact trade flows and market stability.
• Potential supply chain disruptions may affect operational efficiency.
• Economic downturns could lead to decreased demand for shipping services.
• Regulatory changes in environmental standards could increase operational costs.
• Fluctuations in oil prices may affect profitability.

Q&A

During the earnings call, analysts inquired about Ardmore’s balance sheet leverage strategy and the potential impact of U.S. sanctions on Russian oil. Management emphasized their opportunistic capital allocation approach and highlighted their ability to navigate shifting trade flows, ensuring resilience in a dynamic market environment.

Full transcript - Ardmore Shpng (ASC) Q2 2025:

Conference Operator: Good morning, ladies and gentlemen, and welcome to Ardmore Shipping’s Second Quarter twenty twenty five Earnings Conference Call. Today’s call is being recorded and an audio webcast and presentation are available in the Investor Relations section of the company’s website, ardmoreshipping.com. We will conduct a question and answer session after the opening remarks. Instructions will follow at that time. A replay of the conference call will be accessible through August 6 by dialing 88345 or 40150 and entering passcode twenty four thousand five hundred twenty eight.

At this time, I will turn the call over to Garnard Ruppelt, Chief Executive Officer of Ardmore Shipping.

Gernot Ruppelt, Chief Executive Officer, Ardmore Shipping: Good morning, and welcome to Ardmore Shipping’s second quarter twenty twenty five earnings call. First, let me ask our President, Bart Kelleher, to discuss forward looking statements.

Bart Kelleher, President, Ardmore Shipping: Thanks, Gernot. Turning to Slide two. Please allow me to remind you that our discussion today contains forward looking statements. Actual results may differ materially from those projected in the forward looking statements. Additional information concerning factors that could cause the actual results to differ materially from those in the forward looking statements is contained in the second quarter twenty twenty five earnings release, which is available on our website.

And now I’ll turn the call back over to Gernot.

Gernot Ruppelt, Chief Executive Officer, Ardmore Shipping: Thank you, Bart. Please allow me to outline the format of today’s call, which you can see here on Slide three. First, I’ll give you the usual snapshot of second quarter highlights and then we will call out some transactions we executed since our last call. I will then hand over the call to Bart, who will cover the market outlook and provide an update on our financial and operating performance. Thereafter, I will conclude the presentation before opening up the call for questions.

Turning first to Slide four. We’re pleased to report adjusted earnings for the second quarter of EUR 9,000,000 or EUR $0.02 2 per share. TCE rates have been increasing over the course of the year. And in the third quarter, typically a softer period, we’re seeing continued momentum with even higher bookings to date. Our MRs earned $23,500 per day for the second quarter and $25,500 so far in the third quarter with 50% booked.

Meanwhile, our chemical tankers earned $20,400 per day for the second quarter and $21,700 for the third quarter with 65% booked. Overall, these rates reflect levels that are about double our cash breakeven. Market dynamics remained favorable, driven by stronger refining margins, OPEC plus production increases and heightened geopolitical factors. In addition, long term industry fundamentals remain robust, which we will cover in more detail later. Moving to Slide five.

Since our last earnings call, we executed well timed transactions that enhance our strong performance and earnings power, while opportunistically cementing earnings quality. We agreed to acquire three high quality MR tankers in the second hand market. All vessels were built in Korea, and we expect to take delivery this quarter. We achieved prices that are attractive relative to applicable benchmarks, reflecting Artemore’s disciplined and deliberate approach to fleet growth. We also closed on a comprehensive refinancing with leading banks at favorable terms.

Through this refinancing, we consolidated our existing debt into a single fully revolving credit facility, million in total. This enhances our financial flexibility while supporting low cash breakeven. In addition, while our predominant trading strategy remains focused on the spot market, we dynamically executed on selected quality fixed rate opportunities. For one of our 25,000 ton chemical tankers, we secured a three year time charter at $19,250 per day. The counterparty is a top tier chemical producer.

And to give you a bit of context, we achieved essentially what is a three year MR rate, which goes without saying is a vessel twice the size. On a more tactical level, we opportunistically increased our short term coverage, adding fixed rate charters on two additional MR tankers. This brings our MR fixed rate coverage to four vessels at an average rate of $22,500 per day over varying durations between six and twelve months. Turning to Slide six, where we highlight our capital allocation policy and how we are delivering across all strategic priorities. We continue to balance growth, reinvestment in our fleet and capital return to shareholders, while maintaining low debt levels.

We declared our eleventh consecutive dividend since the re initiation of our dividend policy in 2022. We just mentioned our acquisition of three modern MR tankers, and we’re almost done with our chemical tanker recoating project, which we discussed previously. Five of the six recoatings are completed, with the final vessel scheduled for completion this quarter. We are already seeing results for the ships on the water, accessing premium cargoes and boosting earnings power. With that, I’d like to hand it over to Bart.

Bart Kelleher, President, Ardmore Shipping: Thanks, Kurnat. Turning to Slide eight and the market outlook, starting with industry fundamentals. With OPEC plus ramping up supply, an additional 2,500,000 barrels of oil per day are forecast to hit the water by the September. And at present, low diesel inventories, particularly in Europe, have already driven up crack spreads, boosting trading activity and incentivizing increased refinery production. In addition, the EU has further ramped up sanctions, creating market inefficiencies and effectively reducing vessel supply.

This quarter has also been marked by continued examples of geopolitical disruption. Furthermore, fresh Chinese export quotas for refined products are anticipated to be announced in the near term. Following a significant ramp up in exports in July, the current quotas are expected to be fully utilized earlier than normal. Turning to Slide nine, where we examine the ongoing evolution of the global refinery landscape and its positive impact on product tanker demand. The refinery base continues to shift.

Refining and petrochemical capacity is increasingly concentrated in the East, while closures persist in the West, driving ton mile growth. As shown in the table on the upper right, new capacity additions in Asia, The Middle East and Africa sharply contrast with recent closures in The U. S. And Europe, adding to import volumes and long haul trade flows. A clear example is playing out in California.

Local refinery shutdowns are leading to record high imports, in fact up 25% from prior peak levels. The chart on the lower right emphasizes the ton mile component. Refined product that would have been produced and consumed locally on the West Coast must now be imported on lengthy Transpacific voyages. This trend is anticipated to accelerate in the near term with additional refinery closures planned for The U. S.

West Coast over the next twelve months. On Slide 10, we contrast the aging MR fleet with the decreasing order book, highlighting the favorable supply dynamics. Starting with our favorite chart on the left, the evolution of the MR fleet over time. As we have discussed on previous calls, the MR fleet is the oldest it’s been this century. And with the lack of newbuild orders this year, the order book is now declining and currently represents just 14% of the overall MR fleet.

Moving to the chart on the right, the aging fleet is three times larger than the current order book. Half the fleet will be older than twenty years by the end of the decade. Now moving to Slide 11. Looking at the broader product tanker sector, it’s important to highlight the positive impact of the low Aframax order book. LR2s have been exiting the product trade, shifting into the crude trade as the Aframax fleet continues to shrink.

This is not a temporary shift. More than 50% of the Aframax fleet is now over fifteen years old, and there are essentially no new orders for uncoated Aframaxes. The trend is already very evident today. Looking at the chart on the right, the percentage of LR2s in the clean trade has declined over the last several years. Now moving to Slide 13.

Turning our attention to Ardmore’s financial performance. We continue to maintain our strong financial position. We successfully refinanced our existing debt facilities into a single fully revolving credit facility, enhancing our financial flexibility and supporting our low cash breakeven. As highlighted in the table on the left, the terms are quite attractive, including a margin of 1.8% and tenor of six years. We’re showing quarter ending figures as well as pro form a that include the three vessel acquisitions.

As you’ll see, given the notably lower margin and modest leverage level, we continue to maintain our low cash breakeven. Turning to slide 14 for financial highlights. For the second quarter, we reported EBITDAR of 22,400,000 and as mentioned earlier, earnings per share of $0.22 We continue to frame EBITDAR as an important comparable valuation metric against our IFRS reporting peers. Full reconciliation details can be found in the appendix on slide 24. As noted in the chart on the bottom left, we continue our downward trajectory on cash breakeven, achieving this in an elevated interest rate environment and when accounting for the recent vessel acquisitions.

This cost discipline, in tandem with our significant operating leverage, strongly positions Ardmore to take advantage of market volatility. Also, please refer to Slide 25 in the appendix for our third quarter guidance numbers. Moving to slide 15 for fleet operations. The majority of this year’s drydocking work is now behind us, and we have limited dockings in the years ahead. The company stands to benefit from increased revenue days and enhanced earnings power.

Dry docking and the related capital expenditures for 2025 are now projected to be $35,000,000 to 38,000,000 As a reminder, approximately half of this capital outlay is related to tank coatings and efficiency upgrade projects. This also includes the first special survey for the 2020 builds vessel we are acquiring this quarter. In addition, we’re continuing to invest in digitalization tools and AI and are seeing benefits across our fleet and shore side operations. Finally, our on hire availability was a strong 99% in the second quarter. Moving to Slide 16.

Here we bring our nearly completed MarineLine project to life. As you can see in the shiny pictures on the bottom left, we’ve got some really fresh high spec tank coatings that are enhancing our trading flexibility and attracting premium cargoes. These vessels haven’t been out of the yard for very long, and we’ve already secured some really exciting voyages, achieving strong TCE premiums. In fact, with our new coatings, our vessels are practically behaving close to stainless steel tankers, but at a lower capital cost based on current market values. In addition to this, we’re benefiting from shorter tank cleaning times, improving asset utilization and reducing fuel consumption.

With that, I’m happy to hand the call back to Gernot and look forward to answering any questions at the end.

Gernot Ruppelt, Chief Executive Officer, Ardmore Shipping: Great. Thank you, Bart. Moving to Slide 18, allow me to summarize three key points. Earnings have continued to strengthen through the 2025 and into the third quarter, reflecting favorable market conditions. We executed a range of well timed transactions and initiatives that further enhance our strong performance and earnings power, while maintaining our financial strength.

And guided by our strong governance and consistent approach to capital allocation, Artemore continues to deliver on its strategy to create long term value through market cycles. And with that, we now welcome your questions.

Conference Operator: Thank you, gentlemen. Ladies and gentlemen, we will now begin the question and answer session. Should you have a question, please press the star followed by the one on your touch tone phone. You will hear a prompt that your hand has been raised. Should you wish to decline from the polling process, please press the star followed by the two.

If you are using a speakerphone, please lift the handset before pressing any keys. One moment for your first question. Our first question comes from Omar Nokta from Jefferies. Please go ahead.

Omar Nokta, Analyst, Jefferies: Okay, thank you. Hi, Gernot and Bart. Good afternoon. Thank you for the update and congrats on the transaction to buy those MRs. You know, clearly the company has been in net cash position for the past several quarters.

You’re buying these MRs, and it’s not really going to stress your balance sheet.

Gernot Ruppelt, Chief Executive Officer, Ardmore Shipping: Obviously, you need to take

Omar Nokta, Analyst, Jefferies: these ships in, transition them in and get them going. But in general, is there a target leverage you want to get to in a perfect world given in this environment, nothing changes from here? Is there a certain net leverage ratio you’d like to get to?

Gernot Ruppelt, Chief Executive Officer, Ardmore Shipping: I’ll let Bart comment on that in a second. Omar, good morning and thanks for joining. But I think we’re really focusing on value and being opportunistic on all the avenues of capital allocation. We saw great value in these three ships, quality built, top yard, attractive prices. And we demonstrated that we were able to be patient as we felt the markets were going through a notable correction over the past year.

And now certainly, at an opportune time, we were able to be very decisive. And ultimately, that’s what we’re looking for. And for us, of course, having the financial flexibility to do so is important. We’re not trying to optimize for a specific growth target. We’re under no rush.

We have an organization that’s performing to a very high standard, is very scalable, but at the same time, it’s ultimately value that we’re looking for and that will determine our future capital allocation choices.

Bart Kelleher, President, Ardmore Shipping: And I’d just add in Omar, we really look at debt through the cycle. I’d say moderate debt levels are a guiding principle. I think to what you’re hinting at certainly it is situational in terms of the market conditions and our view of forward market conditions, but maintaining some dry powder to be opportunistic and build value, all while maintaining the low breakeven are things that are really important that are in focus.

Omar Nokta, Analyst, Jefferies: Thank you. That’s helpful perspective. And maybe perhaps we’re not just a bit more kind of like a market related question and obviously a lot of moving parts to this. But recently we’ve been seeing The U. S.

Stepping up pressure on Russia and using tariffs perhaps as a bit of a deterrent for say Chinese or Indian refiners to buy those barrels and refine it. How would you as you see this and things are still to develop, how do you see this kind of affecting the product market if things really start to take shape on that front?

Gernot Ruppelt, Chief Executive Officer, Ardmore Shipping: Yes. Think there’s a few different things in play. I think markets are definitely getting a stronger sense of direction. We have gone through a period of risk aversion at the earlier part of the year. And I think that’s now overcome by sort of a snapback in activity.

Inventories need to be rebuilt. There’s this catch up phase in trading activity that’s playing out now in the third quarter. And of course, we’re not far from sort of a structurally stronger winter. I would say that without kind of trying to unpack the many layers of the geopolitical landscape, we continue to, of course, monitor very closely as long as we continue to see reshift in trade, reshift in regulation that creates constant reshift in trade flows as well. That sort of volatility is something that benefits the overall product tanker market.

And the way we operate the business, I believe we’re perfectly geared for that because it’s always a question about how can we best position ourselves those shifting trade flows.

Omar Nokta, Analyst, Jefferies: Thank you, Gernot, for that. And then Bart, thank you. I’ll turn it over.

Conference Operator: There are no further questions at this time. I will now turn the call over to management for closing remarks. Please continue.

Bart Kelleher, President, Ardmore Shipping: Thank you, operator. We understand it’s a busy reporting day for shipping in the broader general transportation sector. So we look forward to further Q and A in follow-up meetings. And thank you. All set for now on the call.

Gernot Ruppelt, Chief Executive Officer, Ardmore Shipping: Thank you.

Conference Operator: Ladies and gentlemen, this concludes today’s conference call. Thank you for your participation. You may now disconnect.

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