Ardmore Shipping Company sold two vessels and cut sale and leaseback deals for seven others in a fourth quarter that saw it just miss analyst expectations.
The Irish tanker owner said in its earnings release Wednesday that it had sold the 47,100-dwt Ardmore Seatrader (built 2002) and 45,840-dwt Ardmore Seamaster (built 2004) for $8.3m and $9.7m, respectively.
The Anthony Gurnee-led company took a $6.4m loss on the Seatrader booked in the fourth quarter. It will take a $6.5m loss on the Seamaster in the first quarter, once it is delivered to its new owner this month.
Buyers were not disclosed, but, according to VesselsValue, the Seatrader was sold to India's Sanmar Shipping and was renamed Sanmar Santoor.
A few cents short
For the last three months of 2018, Ardmore took an operating loss of $8.8m, or $0.26 per share, two cents lower than consensus, and lower than the $3.8m loss for the fourth quarter of last year. Unadjusted, the company lost $17m.
"Ardmore successfully weathered very difficult market conditions in 2018 by maintaining its financial strength and keeping a clear focus on operational performance," Gurnee said.
"We were pleased to see significant improvement in the market rate environment late in the year, with MR average TCE levels reaching a multi-year high of $17,500/day in late December and with even better market conditions anticipated in 2019 as the impact of IMO 2020 begins to be felt."
Deutche Bank's Amit Mehrotra said Ardmore's miss was down to the performance of its chemical tanker fleet, which came in lower despite rates shooting up late in the year. Still, he said in a note, first quarter rates project well, with the company reporting an average rate of $15,500 per day for MR tankers and $14,000 per day for product tankers.
"We would expect a muted reaction for the stock as positive Q1 bookings and positive outlook offset the relatively soft Q4 average dayrate," he wrote.
Seaport Global's Magnus Fyhr said the company's $28.3m in revenue and $7.8m in Ebitda came in above their expectations. He reaffirmed his positive outlook.
"We continue to like ASC as a play on a recovery in the product tanker market, as we believe the upcoming IMO 2020 regulations and low fleet growth provide positive catalysts for ASC over the next 12 months," Fyhr said.
The refinancing deals
The sale and leaseback deals — for five MR tankers and two product tankers — provided Ardmore with $32.7m in cash.
The deals for the 37,000-dwt Ardmore Dauntless and Ardmore Defender (both built 2015) were done with Ocean Yield for a period of 12 years.
The 50,000-dwt Ardmore Explorer, Ardmore Encounter, Ardmore Seavanguard and Ardmore Exporter (all built 2014) were refinanced in two separate deals with "top-tier" Chinese firms for seven years each.
The 50,000-dwt Ardmore Engineer (built 2014) deal was done with a Japanese firm for 11 years.
Ardmore has the ability to buy the ships back at various points over the life of the lease.
