Ardmore Shipping Corporation (ASC) Earnings

Management highlights

- Quarterly Financial Results & Capital Return * Reported strong Q2 2026 performance with adjusted earnings of $48.3 million, or $0.18 per share, and EBITDA of $61.1 million * Declared a 79 cent per share dividend, aligned with the policy of paying out two-thirds of adjusted earnings; this marks the 15th consecutive quarterly dividend, with a payout yield of approximately 20% following a doubling of the payout level earlier in 2026 * Maintains a robust balance sheet with effective leverage of 24% (including forward newbuilding CapEx), nearly $300 million in undrawn revolving debt capacity, and low operating break-even that provides strong financial flexibility across market conditions - Fleet Growth & Strategic Investment * Exercised options for two additional handy-sized tanker newbuildings, bringing the total order to four vessels (with options for two more) with deliveries starting in late 2028 * These new vessels are highly flexible, capable of carrying refined oil products, crude, most chemical cargos, edible oils, and other liquids, aligned with the company's long-term commercial strategy - Near-Term Market Fundamentals * Product tanker markets remained exceptionally strong in Q2 2026 and have stayed firm into Q3, with positive fundamentals amplified by ongoing Middle East disruption * Refining margins and benchmark crack spreads are at record highs, driving multi-year high Atlantic refinery utilization and record high U.S. Gulf clean product exports, with longer cargo voyage distances increasing ton-mile demand * Declined refined product inventories (down nearly 100 million barrels since March 2026) will require a meaningful restocking cycle that adds additional demand, and inventory rebuilding to higher levels for energy security will support sustained demand * Russia's recent full diesel export ban has displaced cargoes, with buyers sourcing from alternative suppliers and increasing demand for the compliant, non-sanctioned mainstream fleet - Long-Term Structural Fundamentals * Growing global focus on energy security is driving import source diversification and longer supply chains, reinforcing long-term product tanker demand * Structural shifts in refining capacity, with expansion concentrated in Asia/Middle East and closures continuing in Europe/North America, create geographic dislocation between refining and consumption hubs that further increases ton-mile demand * The energy transition is progressing slower than previously expected, with the IEA projecting oil demand growth through 2050, supporting extended positive demand for tankers - Supply Side Dynamics * The existing MR tanker fleet is the oldest it has been in decades, with an average age of nearly 14 years, and the MR order book is only 16% of the existing fleet. Half of all current MRs will be over 20 years old (approaching scrapping age) within five years, which is three times the size of the current MR order book * The handy-sized fleet has an even higher average age of 18 years, with an order book equal to just 6% of the existing fleet, making supply dynamics even more favorable * Vessels over 20 years old see material declines in utilization even if they are not immediately scrapped in a strong market - Operational Updates * No planned dry dockings for 2026, with very limited dry docking activity through 2027; 2026 remaining fleet CapEx is estimated at only $3 million * The company is implementing AI and digitalization across the fleet, including newly added real-time propulsion automation to optimize performance

Guidance

No explicit full-year or quarterly numerical financial guidance was provided in the transcript. Management outlined the following forward-looking outlooks: - Q3 2026 TCE rates are currently tracking well above seasonal levels, with booked MR rates showing a 20% year-over-year uplift and booked chemical tanker rates showing a 10% year-over-year increase - Management expects restocking demand after inventory declines, combined with long-term structural drivers including energy security priorities, geographic shifts in refining capacity, and slower-than-expected energy transition, to support sustained firm product tanker demand well beyond current near-term disruption - Management highlighted that multiple ongoing factors (including geopolitical disruption in the Middle East, potential Panama Canal throughput cuts related to low water levels, and shifting trade flows) will likely continue to drive freight market volatility across a wide range of potential outcomes over the coming quarters

Segment performance

Ardmore Shipping operates two product segments: MR tankers and chemical tankers. In Q2 2026, MR tankers earned a Time Charter Equivalent (TCE) rate of $51,900 per day. As of the Q2 update, 45% of Q3 2026 MR capacity is booked at an average TCE of $29,600 per day, representing a 20% year-over-year increase. Chemical tankers earned a TCE rate of $26,900 per day in Q2 2026. 50% of Q3 2026 chemical tanker capacity is booked at an average TCE of $25,000 per day, representing a 10% year-over-year increase. No separate revenue contribution percentages for each segment were provided in the transcript. The company's aggregate Q2 2026 adjusted earnings were $48.3 million ($0.18 per share), and aggregate EBITDA was $61.1 million. The company's operating cash break-even across the fleet is $10,800 per day, meaning current MR rates are nearly three times this break-even level.

Risks & headwinds

- Ongoing geopolitical disruption in the Middle East, including heightened risks to Red Sea and Strait of Hormuz transit, creates volatility in commodity markets and trade flows that can lead to unexpected shifts in freight demand and rates - Low water levels in the Panama Canal could lead to further throughput cuts, though management notes this as a potential tailwind for ton-mile demand, it still introduces operational and market uncertainty - Forward-looking statements are inherently uncertain, and actual results may differ materially from projected outlooks due to unforeseen changes in market, geopolitical, or industry conditions

Analyst Q&A

• Q: With four handy-sized newbuildings now ordered, two additional options outstanding, and the company expecting to remain in net cash territory, what is the strategy for further fleet expansion, and when will the decision on the remaining two options be made? /

  A: Management likes the ordered vessels' versatile design and contracted pricing, and the remaining options provide valuable strategic optionality. The options must be decided upon later this summer, and management will continue to assess the economic rationale dynamically. The vessels fit well with long-term fundamentals: growing global oil demand, rising energy security needs, and the vessels' flexibility to carry multiple cargo types align with Ardmore's commercial strategy. The expansion fits the disciplined capital allocation framework, which balances selective measured growth, returning capital to shareholders, and maintaining responsible leverage.

• Q: How has the product market reacted to recent heightened geopolitical tensions in the Middle East (Red Sea/Hormuz), and what is your outlook for MR rates over the next several months? /

  A: Geopolitical developments are ongoing and constantly shifting, with recent events triggering commodity price shifts that create new regional arbitrage opportunities, which the trade has already reacted to. Beyond geopolitics, multiple other factors support the market: U.S. Gulf refinery production is at record levels with high margins, and potential Panama Canal throughput cuts driven by low water levels are an underappreciated factor that could impact ton-mile demand starting as early as Q2 2027. Management notes a multitude of factors that will continue to drive freight volatility, leading to a wide range of potential outcomes for rates.