Q4 2024 Ardmore Shipping Corp Earnings Call and Investor Day
Quarter full year 'twenty 'twenty four.
Speaker Change: Bryan Degnan with IGD group, just a few administrative points before we get underway. This event is being recorded and broadly distributed via live webcast, which along with todays slides accessible at www Dot Ardmore shipping Dot com, an audio replay of the event will be available on the website from later today.
Speaker Change: The standard earnings press release was issued premarket. This morning and is also available on the website.
Speaker Change: Turn to slide two.
Speaker Change: Later in the event following the prepared remarks, there will be a Q&A session in which point, we will take questions from people with us in the room today. So those joining remotely please feel.
Speaker Change: On behalf of the RMR Board and its senior management team. Let me welcome you all to our annual Investor Day luncheon.
Speaker Change: Last year in my opening remarks, some of you may remember them hopefully you don't.
Speaker Change: I noted that we lived in interesting times.
Speaker Change: And in many ways, we still live in interesting times.
Speaker Change: But theres also been a great number of changes since our last meeting.
Speaker Change: We are hopefully seeing maybe a more subtle situation in the middle east and possibly as of this morning.
Speaker Change: Thirdly that we must keep our Ames constantly focused on the future.
Speaker Change: As you'll hear this afternoon.
Speaker Change: Ardmore is focused squarely on the future.
Speaker Change: We remain committed to performance and progress.
Speaker Change: Through innovation.
Speaker Change: Two are well articulated capital allocation policy.
Speaker Change: And to thoughtful and transparent governance.
Speaker Change: With that being said Youll hear a lot about all of those topics. This afternoon and I want to thank you again for your continued interest in.
Speaker Change: And your support of Ardmore shipping.
Speaker Change: We remain solidly committed to being good stewards of your investment.
Speaker Change: And with that I'll ask Earthnut and Bart to come up and join me as they begin their remarks.
Speaker Change: Okay.
Speaker Change: Sure.
Speaker Change: Okay.
Speaker Change: Thank you Curtis and welcome everyone. We.
Speaker Change: We're delighted you could join US today as we are pleased to update you on another great year for Ardmore.
Speaker Change: For those of you who are new in the audience Slide five gives you a snapshot of our company today.
Speaker Change: <unk> is listed on the New York Stock Exchange and are frustrated governance is a cornerstone of who we are.
Speaker Change: The guides our values, our business principles and how we make decisions.
Speaker Change: Our core focus is on product and chemical tankers, which we operate through our globally integrated platform.
Speaker Change: And our performance based culture and emphasis on innovation is what consistently drives us to deliver outstanding results.
Speaker Change: Moving to slide six here's the outline of today's presentation.
Speaker Change: Bart and I will first guide you through our earnings highlights. We will then pivot to the Investor Day segment of the presentation here, we will focus on external market fundamentals before you give you a business update and a look under the hood.
Speaker Change: And finally I'll offer some closing thoughts before opening up the meeting for questions.
Speaker Change: Turning first to slide seven for highlights.
Speaker Change: We're pleased to report another successful year for Ardmore.
Speaker Change: Adjusted earnings were $120 million or $2 84 per share for the full year.
Speaker Change: And $10 3 million or <unk> 25 per share for the fourth quarter.
Speaker Change: Our markets are experiencing continued strength as a result of tight supply and demand fundamentals bolstered by ongoing geopolitical disruption.
Speaker Change: Meanwhile, <unk> continues to execute on its long standing capital allocation policy.
We repurchased 4% of our shares during the fourth quarter at an average price of.
Speaker Change: $11 49.
Speaker Change: And today, we declared another quarterly cash dividend of <unk> <unk> per share consistent with our policy of paying out one third of adjusted earnings.
Speaker Change: We also remain committed to tight cost management and have achieved low cash breakeven levels of $11500 per day.
Speaker Change: This positions us to benefit strongly from a wide range of market scenarios and across cycles.
Speaker Change: Moving to slide eight.
Speaker Change: Our TCE performance reflects continued strength in rates remained significantly above our cash breakeven level.
In the fourth quarter full year 2024.
Speaker Change: I'm Bryan Degnan with Iga group, just a few administrative points before we get underway.
Speaker Change: <unk> earned $22700 per day for the fourth quarter and $23400 per day, so far in the first quarter with 55% booked.
This event is being recorded and broadly distributed via live webcast, which along with todays slides accessible at www Dot Ardmore shipping Dot com, an audio replay of the event will be available on the website from later today.
Speaker Change: Our six chemical tankers earned $21400 per day for the fourth quarter and $14000 per day for the first quarter with 40% booked so far.
Speaker Change: The standard earnings press release was issued premarket. This morning and is also available on the website.
Speaker Change: Turn to slide two.
Speaker Change: And with this I'll hand.
Later in the event following the prepared remarks, there will be a Q&A session in which point, we will take questions from people with us in the room today. So those joining remotely please feel.
Bart: Over to Bart <unk>.
Speaker Change: Thanks, Karen.
Speaker Change: Moving to slide nine.
Speaker Change: Here, we detailed our continued focus on financial strength.
Speaker Change: Once again the chart on the bottom left highlights the significant reduction in our cash breakeven levels now standing at a low of $11500 per day.
Speaker Change: We've accomplished this through our effective cost control lower debt levels and access to revolving credit facilities.
Speaker Change: As we will emphasize today Ardmore remains focused on optimizing performance closely managing costs and preserving a strong balance sheet.
Speaker Change: Turning to slide 10 for financial highlights.
Speaker Change: Echoing Guerinot, we're pleased to report our continued strong performance with adjusted earnings of $2 84 per share for the full year and 25 per share for the fourth quarter.
Speaker Change: We're correspondingly reporting strong EBIT dollar and continue to frame. This is an important comparable valuation metric against our <unk> reporting peers.
Speaker Change: Full reconciliation of this is presented in the appendix.
Speaker Change: Also please refer to our first quarter guidance numbers in the appendix on slide 45.
Speaker Change: Thanks Bart.
Speaker Change: This concludes the earnings portion of the presentation and we will now move on to the Investor Day section and.
Speaker Change: Ill begin with an outlook on.
Speaker Change: On the market.
Speaker Change: Key points.
Speaker Change: Strong long term fundamentals and products and chemicals and on top of that geopolitical disruption sanctions and regulatory shifts.
Speaker Change: On behalf of the Ardmore Board and its senior management team. Let me welcome you all to our annual Investor Day luncheon.
Speaker Change: Starting with slide 12, the demand picture.
Speaker Change: Last year in my opening remarks, some of you may remember them hopefully you don't.
Speaker Change: Global oil demand accelerated in the fourth quarter and further robust growth as projected in 2025.
Speaker Change: I noted that we live in interesting times.
Speaker Change: The U S economy is proving resilient with solid GDP and jobs growth.
Speaker Change: And in many ways, we still live in interesting times.
Speaker Change: But there's also been a great number of changes since our last meeting.
Speaker Change: Meanwhile, the IEA is projecting oil supply growth of one 1 million barrels per day in 2025, even in the absence of OPEC unwinding its voluntary cups.
Speaker Change: We are hopefully seeing maybe a more subtle situation in the middle east and possibly as of this morning.
Speaker Change: In the fourth quarter, we saw traders taking a step back.
Speaker Change: Lower refining margins and uncertainty and broader global markets resulted in a general risk off approach.
Speaker Change: There were fewer long haul cargoes, particularly on east to West runs and overall activity was somewhat muted.
Speaker Change: But things have started to pick up.
Speaker Change: In contrast to the uncertainty of the fourth quarter and a general wait and see attitude market players are beginning to take positions.
Speaker Change: Trading firms are arbitraging shifting cargo flows time charter activity is on the rise and very notably refining margins have jumped.
Speaker Change: And all this should result in a fresh boost to ton mile demand.
Speaker Change: Moving to slide 13, where we provide an example of how tariffs create market inefficiencies, adding to overall ton mile demand.
Speaker Change: Secondly that we must.
Speaker Change: As shown on the chart on the lower right, Canada currently accounts for 40% of gasoline deliveries to the U S East coast.
Speaker Change: Keep our aimed constantly focused on the future.
Speaker Change: As you'll hear this afternoon.
Speaker Change: If terrorists are introduced on Canadian refined product imports, we would expect to see a significant portion of these volumes replaced from elsewhere, most likely Europe.
Speaker Change: Ardmore is focused squarely on the future.
Speaker Change: We remain committed to performance and progress.
Speaker Change: Through innovation.
Speaker Change: And West Africa.
Speaker Change: Two are well articulated capital allocation policy.
Speaker Change: Already now we have witnessed cargo activity in the Atlantic Basin as a direct result.
Speaker Change: And to thoughtful and transparent governance.
Speaker Change: We can see from the chart on the upper right that voyage distances are six times greater for imports from Europe compared to Canada.
Speaker Change: With that being said Youll hear a lot about all of those topics. This afternoon and I want to thank you again for your continued interest in.
Speaker Change: And even longer from West Africa.
Speaker Change: And your support of Ardmore shipping.
Speaker Change: This is expected to happen in both directions, whereby Canadian barrels would find new export markets that by definition are substantially further away.
Speaker Change: We remained solidly committed to being good stewards of your investment and with that I'll ask Garnet and Bart to come up and join me as they begin their remarks.
Speaker Change: So both imports and exports traveling longer distances.
Speaker Change: Okay.
Speaker Change: Sure.
Speaker Change: It is impossible to overlook the strong parallels to the E U refined product embargo on Russian exports.
Thank you Curtis and welcome everyone.
Speaker Change: And as we enter an era, where we may see additional action taken on trades across numerous cargo routes. It is important to remember that this typically means.
Speaker Change: We're delighted you could join US today as we are pleased to update you on another great year for Ardmore.
Speaker Change: For those of you who are new in the audience Slide five gives you a snapshot of our company today.
Speaker Change: More trading opportunities longer waiting times greater volumes of product on the water.
Speaker Change: <unk> is listed on the New York Stock Exchange and I'll Frustrate governance is a cornerstone of who we are.
Speaker Change: This fundamentally supports ton mile demand and thereby freight rates.
Speaker Change: It guides all values, our business principles and how we make decisions.
Speaker Change: On slide 14.
Speaker Change: We take a step back and review longer term demand drivers.
Speaker Change: Our core focus is on product and chemical tankers, which we operate through our globally integrated platform.
Speaker Change: Dislocation of oil.
Speaker Change: Dislocation of oil refineries remains an enduring trend.
Speaker Change: And our performance based culture and emphasis on innovation is what consistently drives us to deliver outstanding results.
Speaker Change: Refining and petrochemical production has been shifting east, which combined with refinery closures in the west continues to drive incremental ton miles.
Speaker Change: Moving to slide six here's the outline of today's presentation.
Speaker Change: Market projections reflect the sustained and increasing demand for refined oil products in order to meet global.
Speaker Change: Bart and I will first guide you through our earnings highlights.
Speaker Change: We will then pivots to the Investor day segment of the presentation here, we will focus on external market fundamentals before you give you a business update and a look under the hood.
Speaker Change: Our fleet and its replacement needs with the current order book.
Speaker Change: The chart on the left provides an important visual of the changes in the EMR fleet over time.
Speaker Change: And finally I'll offer some closing thoughts before opening up the meeting for questions.
Speaker Change: Highlighted in Green quadrant currently there is an exceptionally old fleet in fact, it's the oldest fleet in recent history with an average age of 14 years.
Speaker Change: Turning first to slide seven for highlights.
Speaker Change: We're pleased to report another successful year for Ardmore.
Speaker Change: Now moving to the chart on the right.
Speaker Change: Adjusted earnings were 120 million or $2.84 per share for the full year.
Speaker Change: More than half of the global MLR fleet.
Speaker Change: So as the Aframax fleet shrinks and creates a shortfall a portion of these LR twos will naturally operate in the crude trades.
Speaker Change: $10 3 million or 25 cents per share for the fourth quarter.
All markets are continued are experiencing continued strengths as a result of tight supply and demand fundamentals bolstered by ongoing geopolitical disruption.
Speaker Change: Turning to slide 16.
Speaker Change: The pie charts on the left further highlight the rapidly aging EMR fleet and has mentioned more than 50% of the fleet will be over 20 years old within the five years.
Speaker Change: Meanwhile, auto continues to execute on its long standing capital allocation policy.
Speaker Change: We repurchased 4% of our shares during the fourth quarter at an average price of $11.49.
Speaker Change: This aging fleet ships.
Speaker Change: Next month, and additional 155 tankers were sanctioned by Ofer.
Speaker Change: And today, we declared another quarterly cash dividend of eight cents per share consistent with our policy of paying out one third of adjusted earnings.
Speaker Change: Bringing the total sanctioned tanker fleet to over 500 vessels.
Speaker Change: And effectively halting further utilization of the ships.
Speaker Change: We also remain committed to tight cost management and have achieved low cash breakeven levels of $11500 per day.
Speaker Change: Specifically on the product tanker side, approximately a quarter of the total fleet has been sanctioned and or has participated in Russia trade.
Speaker Change: This positions us to benefit strongly from a wide range of market scenarios and across cycles.
Speaker Change: Notably the Aframax segment has been most impacted with 20% of the fleet now under sanctions.
Speaker Change: Moving to slide eight.
Speaker Change: Our TCE performance reflects continued strength in rates remained significantly above our cash breakeven level.
Speaker Change: And as you can see in the chart on the right.
Speaker Change: There is a clear trend line.
Speaker Change: <unk> earned 22000 and $700 per day for the fourth quarter and $23400 per day, so far in the first quarter with 55% booked.
Speaker Change: <unk> are increasingly shifting into dirty trades widening the supply demand gap in the clean market.
Speaker Change: Please please keep in mind.
Speaker Change: Shifting from clean to dirty can be done on an AD hoc basis, but on the other hand, bringing ships back from dirty into refined product trades is costly and requires an extensive tank cleaning and intermediate cargos.
Speaker Change: Our six chemical tankers earned $21400 per day for the fourth quarter and $14000 per day for the first quarter with 40% booked so far.
Speaker Change: And with this I'll hand, it over to Bob Thanks.
Bob: Thanks, Karen.
Speaker Change: Overall as the impact of sanctions continues to reverberate through markets.
Bob: Moving to slide nine.
Bob: Here, we detailed our continued focus on financial strength.
Speaker Change: Effective supply has reduced significantly and.
Bob: Once again the chart on the bottom left highlights the significant reduction in our cash breakeven levels now standing at a low of $11500 per day.
Speaker Change: And this benefits top tier tanker operators such as Ardmore.
Speaker Change: Moving to slide 18.
Bob: We've accomplished this through our effective cost control lower debt levels and access to revolving credit facilities.
Speaker Change: Here, we highlight the growing complexity of the regulatory landscape.
Speaker Change: This is actually impacting supply and playing to <unk> strengths.
Bob: As we will emphasize today Ardmore remains focused on optimizing performance closely managing costs and preserving a strong balance sheet.
Speaker Change: The company was very well prepared for the recent fuel regulations in Europe.
Speaker Change: And even though the costs are treated as pass through voyage expenses required significant planning by our team.
Bob: Turning to slide 10 for financial highlights.
Speaker Change: This regulatory environment also enhances the returns on the energy efficiency investments that we have successfully completed over the past few years.
Garnet: Echoing Garnet, we're pleased to report our continued strong performance with the adjusted earnings of $2.84 per share for the full year and 25 cents per share for the fourth quarter.
Speaker Change: We will take a look at some concrete examples in the next section.
Garnet: We're correspondingly reporting strong EBITDAR and continue to frame. This is an important comparable valuation metric against our ifr S reporting peers.
Speaker Change: Overall, while regulations can be a burden for some they benefit companies such as Ardmore since we are positioned to manage them effectively and capture incremental earnings.
Garnet: Full reconciliation of this is presented in the appendix.
Speaker Change: Now moving to slide 19.
Garnet: Also please refer to our first quarter guidance numbers in the appendix on slide 45.
What does all this mean for us.
Speaker Change: In these volatile markets, we can experience significant jumps in charter rates and earnings and for example, a $10000 a day increase in rates is equivalent to an annual increase of about $2 30 in earnings per share and a boost of nearly $100 million and free cash flow generation.
Speaker Change: Thanks Bart.
Speaker Change: This concludes the earnings portion of the presentation and we will now move on to the Investor Day section.
Speaker Change: And begin with an outlook.
Speaker Change: On the market.
Speaker Change: Key points strong long term fundamentals and products and chemicals and on top of that geopolitical disruption sanctions and regulatory shifts.
Speaker Change: Ardmore is very well positioned to harness this market volatility and translated into earnings upside.
Speaker Change: Starting with slide 12, the demand picture.
Speaker Change: Turning now to the business update starting with an overview of our strategy on slide 21.
Speaker Change: Global oil demand accelerated in the fourth quarter and further robust growth as projected in 2025.
Speaker Change: <unk> strategy is clear and well defined.
Speaker Change: The U S economy is proving resilient with solid GDP and jobs growth.
Speaker Change: We are a global owner and operator of product and chemical tankers with a particular focus on leveraging opportunities, where our products and chemicals overlap.
Speaker Change: Meanwhile, the IEA is projecting oil supply growth of 1.1 million barrels per day in 2025, even in the absence of OPEC unwinding its voluntary cups.
Speaker Change: This is an important part of utmost competitive advantage.
Speaker Change: In the fourth quarter, we saw traders taking a step back.
Speaker Change: It is one thing to simply buy tankers with chemical capabilities.
Speaker Change: Lower refining margins and uncertainty and broader global markets resulted in a general risk off approach.
Speaker Change: Owning steel is easy but.
Speaker Change: But managing and trading these vessels in a safe and efficient way is more complex.
Speaker Change: There were fewer long haul cargoes, particularly on east to West runs and overall activity was somewhat muted.
Speaker Change: It requires unique organizational capabilities that need to be built and developed over time.
Speaker Change: These more complex markets are harder to penetrate.
Speaker Change: But things have started to pick up.
Speaker Change: In contrast to the uncertainty of the fourth quarter and a general wait and see attitude market players are beginning to take positions.
And for US. This is one of the ways, we differentiate ourselves as a business.
Speaker Change: <unk> features a fully integrated trading platform.
Speaker Change: Trading firms are arbitraging shifting cargo flows time charter activity is on the rise and very notably refining margins have jumped.
Speaker Change: Our talented <unk> team strategically covers all our markets 24 seven.
Speaker Change: Three key locations.
Speaker Change: They work closely with our dedicated seafaring colleagues on board a modern fuel efficient fleet.
Speaker Change: And all this should result in a fresh boost to ton mile demand.
Speaker Change: Thereby we can transact close to our customers and execute voyages in close partnership with our vessels.
Speaker Change: Moving to slide 13, where we provide an example of how terrorists create market inefficiencies, adding to overall ton mile demand.
Speaker Change: All of this of course to maximize TCE.
Speaker Change: Yeah.
Speaker Change: Inherent within our performance focus is a constant restlessness to innovate and improve.
Speaker Change: As shown on the chart on the lower right, Canada currently accounts for 40% of gasoline deliveries to the U S East coast.
Speaker Change: This permeates the entire organization.
Speaker Change: This reflected in how we upgrade our vessels physically to reduce fuel costs.
Speaker Change: If terrorists are introduced on Canadian refined product imports, we would expect to see a significant portion of these volumes replaced from elsewhere.
Speaker Change: It is it is about how we integrate artificial intelligence to enhance decision making.
Speaker Change: Most likely Europe and West Africa.
Speaker Change: We developed new trades optimize voyage execution and experiment with new ideas.
Speaker Change: Already now we have witnessed cargo activity in the Atlantic Basin as a direct result.
Speaker Change: From large capex projects to everyday business processes.
Speaker Change: We can see from the chart on the upper right that voyage distances are six times greater for imports from Europe.
Speaker Change: We will show you a few example, shortly but other than our core values.
Speaker Change: Compared to Canada.
Speaker Change: At Ardmore.
Speaker Change: And even longer from West Africa.
Speaker Change: Everything is always in motion as we are always looking for ways to develop further.
Speaker Change: This is expected to happen in both directions, whereby Canadian barrels would find new export markets that by definition are substantially further away.
Why.
Speaker Change: Because we believe this is how we can best position ardmore for the future.
Speaker Change: I will remember, how we remain competitive regardless of market cycles.
Speaker Change: So both imports and exports traveling longer distances.
While we continue building a great company.
Speaker Change: It is impossible to overlook the strong parallels to the E U refined product embargo on Russian exports.
Speaker Change: And so that ultimately of course, how we create long term shareholder value.
Speaker Change: And as we enter an era, where we may see additional action taken on trades across numerous cargo routes. It is important to remember that this typically means more trading opportunities longer waiting times greater volumes of product on the water.
Speaker Change: Slide 22, reintroduces, the concept, which is core to our belief performance and progress.
Speaker Change: The success of this philosophy is reflected in the key metrics highlighted on this slide.
Speaker Change: Both absolute and relative performance are crucial to us.
Speaker Change: Addis fundamentally supports ton mile demand and thereby freight rates.
Sean: Sean here, a key metric as our full year TCE or $3300 per day.
Sean: We place significant emphasis on heart performance measures and this is how our team members are collectively measured and incentivize companywide.
Speaker Change: On slide 14.
Speaker Change: We take a step back and review longer term demand drivers.
Speaker Change: Dislocation of oil.
Speaker Change: Dislocation of our refineries remains an enduring trend.
Sean: Cost discipline throughout the cycle and low debt have enabled us to achieve a historically low cash breakeven 11 $5000 per day as mentioned before.
Speaker Change: Refining and petrochemical production has been shifting east, which combined with refinery closures in the west continues to drive incremental ton miles.
Sean: Strong earnings and low cost combined this allows us to return a significant level of capital to our shareholders equivalent to 23% of our market cap since the end of 2022.
Speaker Change: Market projections reflect the sustained and increasing demand for refined oil products in order to meet global.
Sean: Under the progress banner innovation mindset is at the center of what we do with every voyage every decision and every process of opportunities to do things better.
Sean: Seafarers and shore staff work seamlessly together as one team other tied together by industry leading governance.
Sean: Importantly for us at Ardmore, the concept of performance and progress has.
Sean: It has never been about tradeoffs.
Sean: We're either performance would come at the cost of progress.
Sean: Or progress would come at the cost of performance.
Speaker Change: Our fleet and its replacement needs with the current order book.
Sean: On the country, we believe that one enhances the other.
Speaker Change: The chart on the left provides an important visual of the changes in the EMR fleet over time.
Sean: And we're happy to discuss this point further during Q&A, but in essence, we believe that strong governance also enabled strong business performance.
Speaker Change: Highlighted in the Green quadrant currently there is an exceptionally old fleet. In fact is the oldest fleet in recent history with an average age of 14 years.
Sean: Slide 23 provides some more detail on that last point.
Speaker Change: Now moving to the chart on the right.
Sean: Led by our experienced and extremely versatile board, we recognize that robust corporate governance is crucial to ensure long term success.
Speaker Change: More than half of the global EM or fleet.
Sean: We are honored to be recognized once again as the top ranked tanker company on the web governance scorecard.
Sean: And we are delighted that our principled approach continues to set the standard within the industry.
Sean: And for anyone investing in Ardmore, we believe this is equally meaningful.
Sean: Slide 24.
Sean: It can't be said often enough.
Sean: A key part of that governance is our long standing capital allocation policy.
Speaker Change: Shows he asked for Max fleet shrinks and creates a shortfall a portion of these.
Sean: Committed to utilizing our robust financial position to actively deliver on all of our allocation priorities the.
Speaker Change: LR twos will naturally operate in the crude trade.
Sean: The fourth quarter, we repurchased shares and declared our ninth consecutive dividend, we are continuing to reinvest in our business in meaningful ways. We continue to reduce debt and building on our track record of accretive growth, we are developing and evaluating potential transactions in a measured and disciplined way.
Speaker Change: Turning to slide <unk>.
Speaker Change: X gene.
Speaker Change: The pie charts on the left further.
Speaker Change: Over 20 years old within five years.
Speaker Change: This aging fleet ships.
Sean: This policy reflects a sensible cyclical approach to creating long term shareholder value.
Sean: Okay, let's pivot a little bit we promised you look under the Hood and of course.
Sean: On a day like today I have to show you some apps.
Sean: So moving on to slide 25.
Sean: We want to show you three real life examples of how we trade our ships.
Speaker Change: X months, an additional 155 tankers were sanctioned by Ofer.
Sean: In this first example, we're looking at a vessel that has to be repositioned from northern Europe, all the way to China for a scheduled dry dock.
Speaker Change: Bringing the total sanctioned tanker fleet to over 500 vessels.
Speaker Change: And effectively halting further utilization of the ships.
Sean: Through our deliberate repositioning plan that played out over five months, our team leveraged our number of creative voyage combinations.
Speaker Change: Specifically on the product tanker side, approximately a quarter of the total fleet has been sanctioned and or has participated in Russia trade.
Sean: Close market access advanced planning and tight execution enabled us to deliver the ship literally.
Speaker Change: Notably the Aframax segment has been most impacted with 20% of the fleet now under sanctions.
Sean: At the doorstep of the intend to dry dock with minimal ballast.
Speaker Change: And as you can see in the chart on the right. There is a clear trend line.
Sean: Going back to the point that we just made about the strong alignment of our team we managed to achieve a significant reduction in our dry docking cost.
Speaker Change: The LR twos are increasingly shifting into dirty trades widening the supply demand gap in the clean market.
Sean: While at the same time, enabling strong on higher performance by collaborating across functional lines that would traditionally be divided.
Speaker Change: And please please keep in mind.
Speaker Change: Shifting from clean to dirty can be done on an AD hoc basis, but on the other hand, bringing ships back from dirty into refined product trades is costly and requires an extensive tank cleaning and intermediate cargos.
Bart will later cover our capex upgrades, but of course, we need to remember that these intelligent repositioning strategies amplify overdrive docking program.
Speaker Change: Overall as the impact of sanctions continues to reverberate through markets.
Bart: Turning to slide 26 here.
Sean: You see a year without ballast.
Speaker Change: <unk> supply has reduced significantly.
Sean: The green lines on this map reflect voyages carrying cargo.
Speaker Change: And this benefits top tier tanker operators such as Ardmore.
Sean: And the Black lines show when the ship was empty.
Speaker Change: Moving to slide 18.
Sean: And when empty the ship is not earning any money.
Speaker Change: Here, we highlight the growing complexity of the regulatory landscape.
Sean: We are of course quite pleased to see how hard it is to find that black line here on this map.
Speaker Change: This is actually impacting supply and playing to our more strengths.
Sean: This vessel was laid in for almost the entire 14 months period.
Speaker Change: The company was very well prepared for the recent fuel regulations in Europe.
Faulting and an average TCE of $35000 per day.
Speaker Change: And even though the costs are treated as pass through voyage expenses required significant planning by our team.
Sean: Well in excess of market earnings over that period.
Sean: How can we achieve something like this.
Speaker Change: This regulatory environment also enhances the returns on the energy efficiency investments that we have successfully completed over the past few years.
Sean: Well.
Sean: The luck.
Sean: But more so strong team expertise and the right connections combined with utilizing our digital tools to enable fast and accurate commercial decision making.
Speaker Change: We will take a look at some concrete examples in the next section.
Speaker Change: Overall, while regulations can be a burden for some they benefit companies such as Ardmore since we are positioned to manage them effectively and capture incremental earnings.
Sean: Turning to slide 27.
Sean: Here, we have a visual of how we are leveraging emerging cargo trades beyond oil products on one of our chemical tankers.
Speaker Change: Now moving to slide 19.
Sean: The voyage combination you see here includes edible oils and used cooking oils for biofuel production.
Speaker Change: What does all this mean for us.
Speaker Change: In these volatile markets, we can experience significant jumps in charter rates and earnings and for example, a $10000 a day increase in rates is equivalent to an annual increase of about $2.30 in earnings per share and a boost of nearly $100 million and free cash flow generation.
Sean: Among others.
We discussed earlier, our expertise in carrying non petroleum based cargoes as a deliberate strategy.
Sean: Through that we were able to achieve a TCE of over $35000 per day over five months period.
Speaker Change: Ardmore is very well positioned to harness this market volatility and translated into earnings upside.
Sean: This demonstrates the versatility of our chemical tankers, which part will cover a bit later.
Sean: When he takes us through the further enhancements.
Speaker Change: Turning now to the business update starting with an overview of our strategy on slide 21.
Sean: Due to our tank coatings during the upcoming cycle.
Speaker Change: Ardmore strategy is clear and well defined.
Sean: Slide 28, how do we achieve these results.
Sean: Provides a summary of what we just covered but as a reminder, world class fully integrated platform high performance culture, and a team that is constantly innovating to deliver.
Speaker Change: We are a global owner and operator of product and chemical tankers with a particular focus on leveraging opportunities, where our products and chemicals overlap.
Sean: Premium earnings.
Speaker Change: This is an important part of <unk> competitive advantage.
Sean: Turning to slide 29.
Speaker Change: It is one thing to simply buy tankers with chemical capabilities.
Sean: This is a snapshot of our global setup, which we discussed before efficiently covering our key markets in the Americas, and Europe, and the Middle East and Asia.
Speaker Change: Owning steel is easy.
Speaker Change: But managing and trading these vessels in a safe and efficient way is more complex.
Sean: This enables us to engage a broad and diverse range of high quality customers.
Speaker Change: It requires unique organizational capabilities that need to be built and developed overtime.
Sean: It is important to note that the vast majority of cargoes transacted in the market every day are transported by these blue chip companies and major trading firms.
Speaker Change: These more complex markets are harder to penetrate and for US. This is one of the ways, we differentiate ourselves as a business.
Sean: We have extremely stringent regulations in terms of compliance and.
Speaker Change: Ardmore features a fully integrated to trading platform.
Sean: And technical vetting.
Sean: Ultimately this is about having lots of trading options for ardmore to ensure we can capture the strong markets in the most optimal way.
Speaker Change: Our talented Chaucer team strategically covers all our markets 24 seven.
Speaker Change: Out of three key locations.
Speaker Change: They worked closely with our dedicated seafaring colleagues on board a modern fuel efficient fleet.
Sean: In terms of timing and voyage combinations.
Speaker Change: Thereby we can transact close to our customers and execute voyages in close partnership with all vessels.
Sean: Now turning to slide 30.
Sean: Key part of our focus on innovation is our energy transition plan.
Speaker Change: All of this of course to maximize TCE.
Sean: Launched in early 2021 and going strong today to.
Speaker Change: Inherent within our performance focus is a constant restlessness to innovate and improve.
Sean: The plan is a natural evolution of our strategy focused on continuing to create value in an ever evolving market landscape.
Speaker Change: This permeates the entire organization.
Speaker Change: This reflected in how we upgrade our vessels physically to reduce fuel costs.
Sean: While reducing emissions along the way.
Sean: The energy transition will take time.
Speaker Change: It is how it is about how we integrate artificial intelligence to enhance decision, making how we develop new trades optimize voice execution and experiment with new ideas.
Sean: And so this plan is firmly rooted in our commitment to achieve tangible results today that are highly accretive to our performance while at the same time strategically positioning ardmore for the future.
Speaker Change: From large capex projects to everyday business processes.
Sean: In the following slides, we'll highlight some powerful examples.
Speaker Change: We will show you a few example, shortly but other than our core values at.
Sean: Moving to slide 31.
Speaker Change: At Ardmore.
Sean: We take our dry dockings to the next level, we continue to make significant investments in our fleet to further improve operating performance reduce emissions and enhance earnings.
Speaker Change: Everything is always in motion as we are always looking for ways to develop further.
Speaker Change: Why.
Speaker Change: Because we believe this is how we can best position ardmore for the future.
Speaker Change: I will remember, how we remain competitive regardless of market cycles.
Sean: In 2024, we completed five dry dockings with a total capex of $25 million.
Speaker Change: While we continue building a great company.
Sean: Including an elective 14 million spent on scrubber installations and other energy efficiency technologies.
Speaker Change: Out of that ultimately of course I'll be create long term shareholder value.
Speaker Change: Okay.
Sean: For 2025, we forecast capex of approximately $30 million to $35 million and again, a combination of routine drydock maintenance as well as additional high returning performance upgrades.
Speaker Change: Slide 22, reintroduces, a concept, which is core to our belief performance and progress.
Speaker Change: The success of this philosophy is reflected in the key metrics highlighted on this slide.
Speaker Change: Both absolute and relative performance are crucial to us.
Sean: Also noteworthy we had very strong and higher availability for the quarter at nearly 100% as.
Speaker Change: Shown here are key metric as our full year TCE or $30300 per day.
Speaker Change: We place significant emphasis on hard performance measures and this is how our team members are collectively measures and incentivize companywide.
Sean: As a result of the continued close coordination of our teams at sea and onshore.
Sean: Yes.
Sean: Turning to slide 32.
Speaker Change: Cost discipline throughout the cycle and low debt.
Sean: From the bow to Stern the bridge to the engine room and extending to the shore base team here.
Speaker Change: Have enabled us to achieve a historically low cash breakeven.
Speaker Change: 11, and a half thousand dollars per day as mentioned before.
Sean: Here, we highlight some of our latest technology investments that are reducing our fuel cost and increasing our operational efficiencies.
Speaker Change: Strong earnings and low cost combined this allows us to return a significant level of capital to our shareholders equivalent to 23% of our market cap since the end of 2022.
Sean: Since launching our energy transition plan with fully embraced innovation and cast a wide net evaluating and testing potential projects and.
Speaker Change: Under the progress banner innovation mindset is at the center of what we do where every voyage every decision and every process of opportunities to do things better.
Sean: In fact, we've reviewed over 200 technologies successfully implementing 20 initiatives, while achieving very strong returns often in some cases in excess of 100%.
Speaker Change: Seafarers and shore staff work seamlessly together as one team.
Speaker Change: They're tied together by industry, leading governance.
Sean: So let's look at some specific examples.
Speaker Change: Importantly for us at Ardmore, the concept of performance and progress has.
Sean: Turning now to slide 33.
Speaker Change: <unk> has never been about tradeoffs.
Sean: We're upgrading our tank coatings on our chemical fleet to increase cargo versatility and further expand revenue opportunities.
Speaker Change: We're either performance would come at the cost of progress.
Speaker Change: Or progress would come at the cost of performance.
Speaker Change: On the country, we believe that one enhances the other.
Sean: The chart on the left illustrates the growing list of cargoes available to us.
Speaker Change: And we're happy to discuss this point further during Q&A, but in essence, we believe that strong governance also enabled strong business performance.
Sean: At the same time reduce cleaning and turnaround time will increase our asset utilization by approximately 10%.
Speaker Change: Yeah.
Sean: This all aligns with iron horse trading strategy.
Speaker Change: Slide 23 provides some more detail on that last point.
Sean: With refinery closures in the west continues to drive incremental ton miles.
Speaker Change: Led by our experienced and extremely versatile board we recognized at robust corporate governance is crucial to ensure long term success.
Sean: Market projections reflect the sustained and increasing demand for refined oil products in order to meet global energy and mobility needs. It.
Speaker Change: We are honored to be recognized once again as the top ranked tanker company on the Weber governance scorecard.
Sean: At the same time looking at the bottom right chart.
Speaker Change: And we are delighted that our principal approach continues to set the standard within the industry.
Sean: We note the evolving demand picture, reflecting the growing importance of bio fuels and the energy mix.
Speaker Change: And for anyone investing in Ardmore, we believe this is equally meaningful.
Sean: As our naturally long haul trades oftentimes from east to West.
Speaker Change: Slide 24.
Sean: And not to linger for too long on the ongoing conflict between Russia and Ukraine. It remains a fact that global product trades have been reshuffled substantially as a result.
It can't be said often enough.
Speaker Change: A key part of that governance is our long standing capital allocation policy, we are committed to utilizing our robust financial position to actively deliver on all of our allocation priorities in the fourth quarter, we repurchased shares and declared our ninth consecutive dividend we are continuing to reinvest in our <unk>.
Sean: Now turning to supply on slide 15.
Sean: Bold contrast of an elderly EMR fleet and its replacement needs with the current order book.
Sean: Chart on the left provides an important visual of the changes in the EMR fleet over time.
Speaker Change: Business in meaningful ways, we continue to reduce debt and building on our track record of accretive growth, we are developing and evaluating potential transactions in a measured and disciplined way.
Sean: Highlighted in Green quadrant currently there is an exceptionally old fleet. In fact is the oldest fleet in recent history with an average age of 14 years.
Sean: Now moving to the chart on the right.
Speaker Change: This policy reflects a sensible cyclical approach to creating long term shareholder value.
Sean: More than half of the global MLR fleet will be over 20 years old and scrapping candidates within the next five years.
Speaker Change: Okay.
Sean: In contrast, the current order book delivering over the same time period represents only 15% of the fleet.
Speaker Change: Let's pivot a little bit we promised you look under the Hood and of course on.
Speaker Change: On a day like today I have to show you some maps.
Sean: So the aging fleet is three five times the current order book.
Speaker Change: So moving on to slide 25.
Sean: While these charts examine the product tanker fleet in isolation.
Speaker Change: You want to show you three real life examples of all be tradeoffs ships.
Sean: Also important to reemphasize that.
Speaker Change: In this first example, we're looking at a vessel that had to be repositioned from northern Europe, all the way to China for a scheduled dry dock.
Sean: Low aframax crude tanker order book.
Sean: Remember.
Sean: <unk> on the same size as Aframax <unk> and can operate in the same trades.
Speaker Change: Through our deliberate repositioning plan that played out over five months.
Sean: So as the Aframax fleet shrinks and creates a shortfall a portion of these LR twos will naturally operate in the crude trades.
Speaker Change: Our team leveraged our number of create avoid combinations.
Sean: Turning to slide 16.
Speaker Change: Those market access advanced planning and tight execution enabled us to deliver their ship literally.
Sean: The pie charts on the left further highlight the rapidly aging EMR fleet and as mentioned more than 50% of the fleet will be over 20 years old within five years.
Speaker Change: At the doorstep of the intended drydock with minimal ballast.
Speaker Change: Going back to the point that we just made about the strong alignment of our team we managed to achieve a significant reduction in our dry docking costs, while at the same time, enabling strong on higher performance by collaborating across functional lines that would traditionally be divided.
Sean: This aging fleet should have a direct impact on the effective vessel supply.
Sean: These older vessels trade at significantly lower utilization levels in fact looking at the chart on the right.
Sean: About half of the time these vessels are typically empty.
Speaker Change: Bart will later cover our capex upgrades, but of course, we need to remember that these intelligent repositioning strategies amplify overdrive docking program.
Sean: Moving to slide 17.
Sean: When we discuss the impact of recent sanctions on the product tanker fleet.
Bart: Turning to slide 26 here.
Sean: Last month, an additional 155 tankers were sanctioned by Ofer.
Speaker Change: You see a year without ballast.
Sean: Bringing the total sanctioned tanker fleet to over 500 vessels in.
Speaker Change: The green lines on this map reflect voyages carrying cargo.
Sean: And effectively halting further utilization of these ships.
Speaker Change: The black lines show when the ship was empty.
Speaker Change: And when empty the ship is not earning any money.
Sean: Specifically on the product tanker side <unk>.
Sean: Approximately a quarter of the total fleet has been sanctioned and or has participated in Russia trade.
Speaker Change: We are of course quite pleased to see how hard it is to find that black line here on this map.
Speaker Change: This vessel was laid in for almost the entire 14 months period, resulting in an average TCE of $35000 per day, well in excess of market earnings over that period.
Sean: Notably the Aframax segment has been most impacted with 20% of the fleet now under sanctions.
Sean: And as you can see in the chart on the right.
Sean: There is a clear trend line.
Speaker Change: How can we achieve something like this well with a luck.
Sean: <unk> are increasingly shifting into dirty trades widening the supply demand gap in the clean market.
Speaker Change: But more so strong team expertise and the right connections combined with utilizing our digital tools to enable fast and accurate commercial decision making.
Sean: And please please keep in mind.
Sean: Shifting from clean to dirty can be done on an AD hoc basis, but on the other hand, bringing ships back from dirty into refined product trades is costly and requires an extensive tank cleaning and intermediate cargos.
Speaker Change: Turning to slide 27.
Speaker Change: Here, we have a visual of how we are leveraging emerging cargo trades beyond oil products on one of our chemical tankers.
Sean: Overall as the impact of sanctions continues to reverberate through markets.
Speaker Change: The voyage combination you see here includes edible oils and used cooking oils for biofuel production.
Sean: Effective supply has reduced significantly and.
Sean: And this benefits top tier tanker operators such as Ardmore.
Speaker Change: Among others.
Speaker Change: We discussed earlier, our expertise in carrying non petroleum based cargoes as a deliberate strategy.
Sean: Moving to slide 18.
Sean: Here, we highlight the growing complexity of the regulatory landscape.
Speaker Change: That we were able to achieve a TCE of over $35000 per day over five months period.
Sean: This is actually impacting supply and playing to our strengths.
Sean: The company was very well prepared for the recent fuel regulations in Europe.
Speaker Change: This demonstrates the versatility of our chemical tankers, which Bart will cover a bit later.
Sean: And even though the costs are treated as pass through voyage expenses required significant planning by our team.
Speaker Change: When he takes us through the further enhancements, what we're doing to our tank coatings JV upcoming cycle.
Sean: This regulatory environment also enhances the returns on the energy efficiency investments that we have successfully completed over the past few years.
Speaker Change: Slide 28, how do we achieve these results.
Speaker Change: Kind of provides a summary of what we just covered but as a reminder, world class fully integrated platform high performance culture, and a team that is constantly innovating to deliver.
Sean: We'll take a look at some concrete examples in the next section.
Sean: Overall, while regulations can be a burden for some they benefit companies such as Ardmore since we are positioned to manage them effectively and capture incremental earnings.
Speaker Change: Premium earnings.
Speaker Change: Turning to slide 29.
This is a snapshot of our global setup, which we discussed before efficiently covering all key markets in the Americas, and Europe, and the Middle East and Asia.
Sean: Now moving to slide 19.
Sean: What does all this mean for us.
Sean: In these volatile markets, we can experience significant jumps in charter rates and earnings and for example, a $10000 a day increase in rates is equivalent to an annual increase of about $2 30 in earnings per share and a boost of nearly $100 million and free cash flow generation.
Speaker Change: This enables us to engage a broad and diverse range of high quality customers.
Speaker Change: It is important to note that the vast majority of cargoes transacted in the market everyday are transported by these blue chip oil companies and major trading firms. They have extremely stringent regulations in terms of compliance.
Sean: Ardmore is very well positioned to harness this market volatility and translated into earnings upside.
Speaker Change: And technical vetting.
Speaker Change: Ultimately this is about having lots of trading options for Ardmore.
Sean: Turning now to the business update starting with an overview of our strategy on slide 21.
Sean: <unk> strategy is clear and well defined.
Sean: We are a global owner and operator of product and chemical tankers with a particular focus on leveraging opportunities, where our products and chemicals overlap.
Speaker Change: And going strong today.
Speaker Change: The plan is a natural evolution of our strategy focused on continuing to create value in an ever evolving market landscape while reducing.
Sean: This is an important part of utmost competitive advantage.
Sean: It is one thing to simply buy tankers with chemical capabilities.
Speaker Change: Singh emissions along the way.
Speaker Change: The energy transition will take time and.
Sean: Owning steel is easy but.
Speaker Change: And so this plan is firmly rooted in our commitment to achieve tangible results today that are highly accretive to our performance while at the same time strategically positioning ardmore for the future.
Sean: But managing and trading these vessels in a safe and efficient way is more complex.
Sean: It requires unique organizational capabilities that need to be built and developed overtime.
Sean: These more complex markets are harder to penetrate.
Speaker Change: In the following slides I'll highlight some powerful examples.
Sean: And for US. This is one of the ways, we differentiate ourselves as a business.
Speaker Change: Moving to slide 31.
Speaker Change: We take our dry dockings to the next level.
Sean: Art.
Sean: So let's go ahead and open up.
Sean: So with Omar here.
Sean: Please.
Sean: Thank you alright, thanks, Garnaut embark for that presentation.
Speaker Change: You guys have obviously stepped into senior roles here just as the world began to shift quite.
Speaker Change: Extra of $25 million.
Speaker Change: Including an elective 14 million spent on scrubber installations and other energy efficiency technologies.
Speaker Change: Quite differently. So a lot a lot of things you guys I'm sure are discussing and thinking about.
Speaker Change: Yes.
Speaker Change: Thinking about the.
Speaker Change: For 2025, we forecast Capex of approximately 30 to 35 million and again, a combination of routine drydock maintenance as well as additional high returning performance upgrades.
Speaker Change: I want to thank Lee the first thing you mentioned, it or not and just sort of the way this market has evolved.
Speaker Change: And that kind of we've seen at the rates kind of shifted downwards in the fourth quarter still a very strong result, right in the twenties.
Also noteworthy we had very strong on higher availability for the quarter at nearly 100%.
Lee: But just in general you mentioned that things have picked up and theres been a lot more trading activity Theres volume and then just is there a trigger that has caused that.
Speaker Change: As a result of the continued close coordination of our teams at sea and onshore.
Lee: Or is this more a return to normal and it was really the fourth quarter that was quiet and any any sense you can give us in terms of like a trigger that caused things to improve.
Speaker Change: Yes.
Speaker Change: Turning to slide 32.
Lee: I think the point, we were trying to.
Jamie: Thank you Jamie.
Jamie: Got it got it.
Jamie: Okay.
Jamie: Yes, I think the point, we were trying to.
Jamie: To make was that in way it really went beyond tanker freight and even beyond oil products in the commodities that we carry we're certainly the fourth quarter.
Speaker Change: We've fully embraced.
Speaker Change: Asian, and cast a wide net evaluating and testing potential projects.
Jamie: There was this overarching theme of what does this all mean I mean, the world was changing in a way it's always changing but I think they were just a lot of open ended questions around.
Speaker Change: In fact, we've reviewed over 200 technologies successfully implementing 20 initiatives, while achieving very strong returns often in some cases in excess of 100%.
Jamie: What does this mean and I think it was hard for market participants that drive demand to really lean in and take positions.
Speaker Change: So let's look at some specific examples.
Jamie: And that has shifted.
Jamie: As I said people are willing to commit to time charters, we see now that we're shifting from this uncertainty to okay. Here's what some of these sanctions could mean to cargo flows here's what tariffs could mean to cargo flows.
Speaker Change: Turning now to slide 33.
Speaker Change: We're upgrading our tank coatings on our chemical fleet to increase cargo versatility and further expand revenue opportunities.
Jamie: And traders oil traders, who of course drive an important portion of demand.
Speaker Change: The chart on the left illustrates the growing list of cargoes available to us.
Jamie: A really arbitraging those trade flows.
Speaker Change: At the same time reduce cleaning and turnaround time will increase our asset utilization by approximately 10%.
Jamie: So in a way I would look at it indeed is a normalization we're taking a step back we have strong oil demand growth forecast, we have this interesting emerging new.
Speaker Change: This all aligns with Ardmore is trading strategy to continue to move deeper into the premium end of the cargo slate boost.
Jamie: Pattern of cargoes that are coming into the mix that we can arbitrage and.
Jamie: Some some seasonal factors that are falling away, we have seen upward volatility already in the quarter.
Speaker Change: Boosting earnings Accordingly.
Speaker Change: Yes.
Speaker Change: Moving to slide 34.
Jamie: At a time when U S Gulf refineries actually right now we're running at a very low level, we have the cold snap in Houston and of course to seasonal maintenance, where our refineries are at the moment running at 80% with normally they would be running at 90, 495%. So a lot of those factors should be normalizing in and you can't overlook those key long term.
Speaker Change: Yeah.
Speaker Change: Strongly overlapping with our energy transition plan, we are leveraging a full and growing suite of AI and digitalization tools to enhance our commercial and operating performance.
Speaker Change: Let's take a further look on slide 35.
Yes.
Jamie: Van drivers before you can get to the to the fact that <unk> exceptionally older. So the industry.
Speaker Change: We were one of the first ship owners globally to deploy starlink across our entire fleet.
Jamie: Okay.
Speaker Change: This system has been a game changing category connectivity tool. It has enabled our fleet and our shore staff to pilot and implement several new technologies.
Speaker Change: Yes, we've got one here.
Speaker Change: Are there any specific effects from specific tariffs.
Speaker Change: All driving fleet performance.
Speaker Change: Whether it is a product or a country, how how do you see that shaping up.
Speaker Change: And well beyond the performance gains having Sterling Com Board has supported morale amongst our seafarers.
Speaker Change: Yes, great question, and it's almost as long as things are shifting our vessels of course floating so they can very quickly adjust to those arbitrage flows. So if you were to see.
Speaker Change: It is so powerful how our crew members can connect with their families virtually.
Every night.
Speaker Change: And from the office, we now officially host true all hands meetings with all of our vessels joining lives.
Speaker Change: Product imports from let's say, China to diminish very quickly you see other refineries in the area of Middle East Korean refinery stepping in and whenever you see a shift in trade patterns that creates this upward volatility in rates and particular asset classes that provide that optionality of course in a time of uncertainty or volatility you value of <unk>.
Speaker Change: It's just wasn't technically feasible in the past.
Speaker Change: And we're just getting started realizing the benefits of this amazing connectivity.
Garner: With that I'm going to hand, it back over to garner he's going to discuss another exciting multi year projects that he actually drove with the teams.
Speaker Change: Of having an option goes up and in a way by taking a product tanker you have that you have that option value.
Speaker Change: Thank you Bart onto slide 36.
Speaker Change: Here, we discuss at a high level one of the many ways, we maximize voyage performance.
Speaker Change: Alright for.
Speaker Change: For those on the webcast as a reminder, ardmore at <unk> IR Dot Com. We've got another couple in the room, and then I'm going to speak.
Speaker Change: Our largest variable cost is fuel.
Speaker Change: Through extensive adoption of AI assisted optimization tools, most prominently deep sea AI and Airbus.
Speaker Change: I speak for the <unk>.
Speaker Change: <unk>.
Speaker Change: If you could for the benefit of the people on the webcast.
Speaker Change: The red she's been very helpful, particularly on the chemical tanker side, if you have any views as to how thats playing out.
Speaker Change: We are substantially reduces cost.
Speaker Change: We're optimizing speed.
Speaker Change: How cleanings weather routing <unk> voyage execution.
Speaker Change: When we talk about the <unk> for Us Steve.
Speaker Change: And much more.
Speaker Change: Every voyage contains multiple decision points.
Speaker Change: Utmost priority will always be the safety of our seafarers.
Speaker Change: So that being the overarching objective we are in contact with security advisers with multiple industry associations and directly with other industry peers.
Speaker Change: Having access to real time data.
Speaker Change: And then having the ability to execute on the swap insurers optimal performance.
Speaker Change: To provide a bit more context.
Speaker Change: And not to try and unpack the situation in the middle East.
Speaker Change: Every time you decide on a voyage speed.
Speaker Change: We believe that it still infinitely complex and as I think we can already see these things don't.
Speaker Change: You essentially do one of two things.
Speaker Change: Either.
Speaker Change: Tend to always move in a straight line.
Speaker Change: Hugo faster and.
And capture a stronger market.
Speaker Change: So for us to consider resuming transit, which we're not.
Speaker Change: While you go slower.
Speaker Change: And thereby save fuel.
Speaker Change: We would really have to look at a sustained.
You make a microeconomic output decision at any point of the voyage and.
Speaker Change: And invisible incredible normalization of trade flows.
Speaker Change: And only with the help of AI can you then ensure that marginal revenue and module cost a perfectly balanced.
Speaker Change: Again looking at other owners very much taking a similar stance.
Speaker Change: You mentioned volatility.
Speaker Change: At all times.
Speaker Change: Thereby.
Speaker Change: There is a lot of volatility regarding tariffs the products that youre carrying as well and I'm just thinking that the.
Speaker Change: Profit is maximized.
Speaker Change: The results are speaking for themselves with annual savings well in excess of $5 million and returns well north of 100%.
Speaker Change: The end game for the tariff is to come up with a solution and renegotiation and.
All fully scalable for us.
Speaker Change: It seems like.
Speaker Change: Now that we've finished looking under the Hood and before I open the floor to questions.
Speaker Change: Trump is not that keen on having that many sanctions with certain countries sell im wondering its supply comes on when the sanction start coming off.
Speaker Change: Let us summarize key points.
Speaker Change: We continue to see strength in the market and track positive fundamentals.
Speaker Change: Maybe a year or two down the road.
Speaker Change: The world around us is changing.
Speaker Change: Because volatility is beneficial to you and once that supply starts coming in.
And in such a fast changing environment, our strong financial position as well as our nimble organizational mindset set.
Speaker Change: And things normalizing operating environment normalizing do you have.
Speaker Change: Set us up for continued success.
Speaker Change: Finally.
Speaker Change: Plans for that projections for overcapacity or supply and redirection.
Speaker Change: Our commitment and focus continue to be our core governance principles in order to build long term shareholder value.
Speaker Change: Yes, great point for US we believe the <unk>.
Speaker Change: Thank you for your attention.
Speaker Change: Shift of tonnage into.
Speaker Change: And we hereby welcome your questions.
Speaker Change: Great fleets shadow fleets sanction trades, it's very much a one way ticket no matter what happens with regard to sanctions.
Speaker Change: Very very often these ships are maintained to very poor standards.
Speaker Change: Okay.
Speaker Change: Yes.
Speaker Change: Often they're owned by entities that are very much on the fringes of what.
Speaker Change: Yes.
Speaker Change: Thank you.
Speaker Change: Alright so.
Speaker Change: Any of our customers would find acceptable and they are very old. So you could argue maybe the economics of being in these sanctions conflict of trades actually we're keeping those ships quote unquote alive, you take that away.
Speaker Change: Thanks, everybody, we are going to open up Q&A now I appreciate those on the webcast who have sent in questions. Please.
Speaker Change: To do so I'll be here sort of avatar in the room here.
Speaker Change: So let's go ahead and open up.
Speaker Change: They don't really have that much to stand on anymore and we've had recent examples of how some of those shadow fleet tonnage can really.
Omar: So start with Omar here.
Speaker Change: Please.
Speaker Change: Alright, thanks, Garnaut embark for their presentation.
Speaker Change: Create a real apparel too.
Speaker Change: Human and environmental disaster.
Speaker Change: Guys are obviously stepped into senior roles here just as the world began to to shift quite a quite differently. So a lot a lot of things you guys I'm sure are discussing and thinking about.
Speaker Change: And for these ships can do to swing back into into into complicit mainstream trades. We believe is an illusion.
Speaker Change: Just you know.
Speaker Change: Thinking about the.
Speaker Change: And over there.
Sam: Thanks Sam.
Speaker Change: Mitch I want to thank you. The first thing you mentioned garnet and just sort of the way. This market has evolved you mentioned is it kind of still we've seen at the rates kind of shifted downwards in the fourth quarter still a very strong result, right in the twenties.
Sam: Ben Nolan from Stifel.
Ben Nolan: I wanted to maybe put two sort of strategic questions together.
Ben Nolan: If I could the first is you talked about putting marine Marine line on the six chemical tankers as you look forward and and being able to as a function of that carry a wider swath of chemicals.
Speaker Change: But just in general you mentioned that things have picked up and theres been a lot more trading activity Theres volume in and then just what is there a trigger that has caused that.
Speaker Change: Or is this more a return to normal and it was really the fourth quarter that was quiet and any any sense you can give us in terms of like a trigger that costing so jim proof points.
Ben Nolan: As you look forward.
Ben Nolan: In the Big picture do you see.
Ben Nolan: Ardmore as an <unk> company with some chemical exposure or how do you envision the company developing over time.
Speaker Change: One who were trying to.
Speaker Change: Can you hear me.
Speaker Change: Hey, guys.
Ben Nolan: What is the identity and then and there.
Speaker Change: Okay.
Ben Nolan: And maybe along those lines I mean, as Omar mentioned you guys have been in the seat for.
Speaker Change: I think the point, we were trying to.
Speaker Change: To make was that in a way it really went beyond tanker freight and even beyond byproducts in the commodities that we carry we're certainly the fourth quarter.
Ben Nolan: Nine months or so I think something like that.
Ben Nolan: Looking back is there anything that you would've done differently.
Ben Nolan: Are there opportunities to buy or sell things that you didn't know you kind of what you did or charter or or or what is it what's the learning process ban I suppose thus far.
Speaker Change: There was this overarching theme of what does this all mean I mean, the world was changing in a way it's always changing but I think they were just a lot of open ended questions around.
Speaker Change: What does this mean and and I think it was hard for our market participants that drive demand to really lean in and take positions.
Ben Nolan: Maybe.
Ben Nolan: I'll hand, it over to Bart and a second to explain sort of the boarder scope around the capital allocation decisions, we're making here.
Ben Nolan: But I think strategically very important for us we almost look at those trades product and chemicals. The way we look at it we actually don't compartmentalize them, we connect them and by connecting them, we gained that that strength.
Speaker Change: And that has shifted.
Speaker Change: As I said, you know people are willing to commit to time charters, we see now with Debbie shifting from this uncertainty to okay. Here's what some of these sanctions could mean to cargo flows is what tariffs could mean to cargo flows.
Ben Nolan: <unk>.
Ben Nolan: And I think more specifically do you want to take this one sure.
Speaker Change: And and and and traders oil traders who of course drive an important portion of demand.
Ben Nolan: Even with that too and we carry chemicals on our MRC at times. So I think we look at the fleet. We've had specific upgrades on the <unk>. Two it's unique that we have the chemical ships going through their drydocking. This year and we can we can do the coding upgrade.
Speaker Change: Really arbitraging those trade flows.
Speaker Change: So in a way I would look at it indeed is a normalization where you know taking step back we have strong oil demand growth forecast. We have this interesting emerging new a pattern of cargoes that are coming into the mix that we can arbitrage and you know some some seasonal factors that are falling away.
Ben Nolan: When it comes back to the capital allocation plan that we've had in place for a long time, where when we think about.
Ben Nolan: We want to maintain our fleet make it more efficient and make it able to carry the wider swath of the cargos and at the same time balancing that with the debt reduction with looking at accretive growth opportunities and returning capital to shareholders and so you know.
Speaker Change: We have seen.
Speaker Change: Upward volatility already in the quarter and that's at a time when U S. Gulf refineries actually right now are running at a very low level, we have the cold snap in Houston and of course, just seasonal maintenance, where our refineries are at the moment running at 80% when normally they would be running at 90, 495%. So a lot of those factors should be normalizing ins and you can't overlook.
Ben Nolan: Just the example that in December when we actually saw that.
Ben Nolan: Value in the share we actually leaned in and we bought back 4% of the shares.
Speaker Change: Those you know key long term they might man drivers before you can get to the to the fact that the fleet is just so exceptionally older. So the industry.
Ben Nolan: That's certainly something more.
Ben Nolan: New and recent from from <unk> perspective.
Speaker Change: Thank you.
Ben Nolan: I would say being in this seat for the last nine.
Kevin: I am Kevin here.
Speaker Change: Yeah.
Ben Nolan: Nine months.
To us, it's really not about us it's about the team.
Speaker Change: Are there any specific effects from specific tariffs are whether it is a product or a country. How how do you see that shaping up.
Speaker Change: You've got <unk>.
Speaker Change: Great team deep bench, we've got a number of team members here and it's really about leading that global franchise through challenging conditions, but when it is when theres complexities and theres challenges. That's when you can actually have the incremental earnings and produce strong results and so I think.
Speaker Change: Yeah, Great question, and it's almost that as long as things are shifting our vessels of course floating so they can break quickly adjust to those arbitrage flows. So if you were to see you know.
Speaker Change: We've been excited about that.
Speaker Change: Product imports from let's say, China to diminish very quickly you see other refineries in the area of Middle East Korean refinery stepping in and whenever you see a shift in trade patterns that creates this upward volatility in rates and particular asset classes that provide that optionality of course in a time of uncertainty or volatility you value of option of <unk>.
Speaker Change: Energize us and.
Speaker Change: I think more exciting times for us to come.
Speaker Change: And to answer your question on maybe a review of the of the year. That's behind US. We were active of course on the full front of capital allocation options, where we did an interesting swap your ownership sold our oldest there was approaching for third special survey that 15 year old Mark Board, a very new ship at a really strong.
Speaker Change: Having an option goes up and in a way by taking a product tanker you have that you have that option value.
Speaker Change: Relative price spread a ship that's also more fuel efficient higher performing more versatile.
Speaker Change: Alright.
Speaker Change: Those on the webcast as a reminder, ardmore at IGD IR Dot Com, we've got another couple in the room, and then I'm going to.
Speaker Change: And then at the same time, we found a number of these incredible.
Speaker Change: Upgrade opportunities that gives you a guaranteed return no matter what happens in the market and that's not to say that will service the absent from S&P markets, but you know again, comparing where we see most value for the capital that we deploy the decision has been fairly straightforward and we continue to in a very dynamic flexible way in <unk>.
Speaker Change: For the year.
Speaker Change: Castro's.
Speaker Change: I can do that or if you could for the benefit of the people on the webcast.
Speaker Change: The red she's been very helpful, particularly on the chemical tanker side do you have any views as to how that's playing out.
Speaker Change: When we talk about the Red Sea prestige.
Speaker Change: Utmost priority will always be the safety of our seafarers.
Speaker Change: Engaging with our board continue to.
Speaker Change: Ah evaluate all options for capital allocation in the future.
Speaker Change: So that being the overarching objective we are in contact with our security advisers with multiple industry associations and directly with other industry peers.
Speaker Change: Okay John.
Speaker Change: And he was really notable and encouraging that you bought back stock in the fourth quarter, it's something that's been missing in the Ardmore story for ever I think but.
Speaker Change: And look not to try and unpack the situation in the middle East.
Speaker Change: Are you willing to its very accretive when you trade below book value below most estimates of net asset value. When you buy back stock or are you and your leverage is quite low are you willing to lean into it to the extent that you might buy back in a period. If the shares are attractive more than your earnings and let the leverage.
Speaker Change: We believe that it's still infinitely complex and as I think we can already see these things don't.
Speaker Change: Tend to always move in a straight line.
Speaker Change: So for us to consider resuming transit, which we're not.
Speaker Change: We would really have to look at a sustained.
Speaker Change: And in an invisible incredible normalization of trade flows and.
Speaker Change: Ratio increase a bit just because it is such a powerful way to create shareholder value.
Speaker Change: So again looking at it other owners are very much taking a similar stance.
Speaker Change: It's a great question and I think it comes back to this fairly dynamic way to look at all those angles because everything is constantly in motion I mean, when you look at those four big dimensions of capital allocation, there's lots of subsets to them as well when you look at reinvesting in the business. When you look at what types of debt and also when you look at.
Speaker Change: You mentioned volatility.
Speaker Change: There's a lot of volatility regarding carriage are the products that youre carrying as well.
Speaker Change: And I'm just thinking that the end game for the tariff is to come up with a solution and renegotiation and it seems like Trump is not that keen on having that many sanctions with certain countries shell I'm wondering it's supply comes on when the sanction start coming.
Speaker Change: Returning shareholder value and of course markets move investment opportunities move.
Speaker Change: <unk> moves and in our share price moves as well so as that plays out it is very much alive discussion rather than kind of like let's make a big statement today, we're committed to the policy for the Sophoclean fundamentally but the components of course are quite variable and we continue to again engage with the board on what what is the best way forward here.
Speaker Change: Off.
Speaker Change: Maybe a year or two down the road.
Speaker Change: Because volatility is beneficial to Yale and once that supply starts coming in.
Speaker Change: And things normalizing operating environment, not normalizing do you have.
Speaker Change: Okay take a couple from the webcast here.
Speaker Change: Okay.
Speaker Change: Plans for that project change for overcapacity or supply and redirection.
Speaker Change: Could you talk a bit about challenges of cannibalization from crude tankers in the product space, perhaps potential swing tonnage opportunities in the chemical space.
Speaker Change: Yeah, Great point for US we believe the the the shift of tonnage into.
Speaker Change: Great question, I mean, I think the two highlights slide we showed earlier is really moving the other way right now where the most prominent and most immediate way to swing between clean and crude trades, our ela tools.
Speaker Change: Gray fleets shadow fleets sanction trades is very much a one way ticket no matter what happens with regard to sanctions.
Speaker Change: Very very often these ships are maintained to very poor standards are very often they're owned by entities that are very much on the fringes of what what any of our customers would find acceptable and they're very old. So you could argue maybe the economics of being in these sanctions conflict of trades actually we're keeping those ships quote unquote alive you take that.
Speaker Change: The the order book is pretty much all Ela two was no aframax is and you can see that these swing ships that are actively moving between markets are actually going to the other direction are going dirty.
Speaker Change: As far as.
Speaker Change: Some of those cannibalization trades as oppose referred to are concerned.
Speaker Change: Way they.
Speaker Change: They don't really have that much to stand on anymore and we've had recent examples of how some of those shadow fleets tonnage can really Ah.
Speaker Change: We see the occasional clean cargo getting lifted on a new building, but we haven't seen since since the last fall and summer.
Speaker Change: Create a real apparel too.
Speaker Change: Human and environmental disaster and for these ships and dish to swing back into into into complicit mainstream trades. We believe is a is an illusion.
Speaker Change: Ships deliberately cleaning up from a dirty history is in crude tankers cleaning up from a dirty history towards clean the shift has gone the other way right now and.
Speaker Change: And over there and then I'll ask him.
Speaker Change: And of course that creates.
Speaker Change: Isn't created amplifiers.
Ben Nolan: Ben Nolan from Stifel.
Speaker Change: Tightness in the product space, where you have.
Speaker Change: I wanted to maybe put two sort of strategic questions together.
Speaker Change: Our radio supply and demand gap and all the points that <unk> made about sanctions.
Speaker Change: If I could the first is you talked about putting marine Marine line on the six chemical tankers.
Speaker Change: And just to use the ageing of the fleet. There is a lot of short term.
Speaker Change: The amplification of that of the broader supply tightening.
Speaker Change: Alright.
Speaker Change: AI is a big buzzword, what does that actually do in shipping.
Speaker Change: Well look yes, maybe it is a buzzword to some but for us it's a way to to improve performance.
Speaker Change: Your or how do you envision the company developing over.
Speaker Change: There is myriad of ways that you can apply it and drive real hard financial results and we've given you look under the Hood, how we can do that today and the space is evolving quickly and as an organization. We're excited by it because it means we can find very very sensible and easy ways to continue building on that performance.
Speaker Change: Time.
Speaker Change: What what is the identity and then.
Speaker Change: And then maybe along those lines I mean, as Omar mentioned you guys have been in the seat for.
Speaker Change: The nine months or so I think something like that.
Speaker Change: Looking back is there anything that you would have done differently.
Speaker Change: Are there opportunities to buy or sell things that you didn't in a kind of what you did or charter or or or what is it what's.
Speaker Change: And that's when we talk about lowering your fuel cost.
Speaker Change: What's the learning process Spanish pose thus far.
Speaker Change: Tracking cargo flows.
Speaker Change: Putting navigation.
Speaker Change: Maybe.
Speaker Change: This should all be baseline type of stuff every company should be doing that today and there is a lot more beyond that that we're exploring.
Speaker Change: I'll hand, it over to Bart and a second to explain sort of the border scope around the capital allocation decisions, we're making here but.
Speaker Change: A very kind of interesting way throughout the organization to make sure. We continue to inject those opportunities as we look forward to driving performance. So if you want to call. It a buzzword that's fine we for US it's real dollars in our pocket.
Speaker Change: But I think strategically very important for us we almost look at those trade.
Speaker Change: And maybe I'll just add I mean, it wasn't all that long ago that really the vessels out at sea, we're more islands of data and information and you would get a daily update in terms of fuel and conditions onboard and so to have that connectivity.
Speaker Change: And that larger dataset, bringing at shore side analyzing it running it through your systems and it really is about the team and the technology and finding that right fit together and then being able to communicate back to the vessel.
I mean, it's just much greater precision Youre building, a culture at <unk> and at shore that really is focused on efficiency and.
Speaker Change: Every ton of fuel save drops directly to the bottom line.
Speaker Change: They saw that.
Speaker Change: Value in the share we actually leaned in and we bought them.
Speaker Change: Okay come over here.
Omar: Okay, Omar and then.
Speaker Change: Thanks, just a follow up with more market related again, just on the sanctions I think Bart you had talked about in January the 150.
Speaker Change: Tankers that were sanctioned just from your perspective, what inning are we in in terms of the impact of that.
Speaker Change: Having on the market.
Speaker Change: Yes, I mean, I guess it depends because we kind of think this is probably a trend likely potentially continues to expand.
Speaker Change: Through challenging conditions, but when it is when theres complexities and there's challenges. That's when you can actually has the incremental earnings and produced strong results and so I think we've been excited about that.
Speaker Change: But there is the debt that absolute impact when you have sanctions were you really taken out of the market much more so than when.
Speaker Change: Dark flee gratefully and Youre still operating area economically incentivize to trade outside of the main global trades.
Speaker Change: De energize us and them and I think more exciting times rustigan.
Speaker Change: And to answer your question or maybe a review of the of the of the year. That's behind US. We were active of course on the fore front of capital allocation options, where we did an interesting swap your ownership soda oldest there was approaching or a third special survey that 15 year old Mark Board, a very new ship at a really strong.
Speaker Change: It feels relatively early I mean, when you when you have this step up takes.
Speaker Change: It takes a couple of months I would say for voyages to get fixed and.
Speaker Change: And to see how different trading patterns may emerge.
Speaker Change: And then also what is the mindset then of those isolated vessels and in terms of scrap value today versus really high opex and really high capex to keep them in operation and all of a sudden they're choked off from that that other alternative trade.
Speaker Change: Our relative price spread a ship that's also more fuel efficient higher performing more versatile.
Speaker Change: And then at the same time, we found a number of these incredible.
Speaker Change: Upgrade opportunities that gives you a guaranteed return no matter what happens in the market and that's not to say the pool pharmacy absent from S&P markets, but you know again, comparing where we see most value.
Speaker Change: So, yes, I'd say probably early innings.
Speaker Change: But we're watching closely.
Speaker Change: And then just on that I mean, I guess, it's because we haven't seen a rate spike right.
Speaker Change: To give people conviction that the sanctions are going to bite, but not to put words in your mouth, but just simply looking at the numbers and I think in your slides a share percentages of vessels that have now effectively removed from.
Speaker Change: The capital that we deploy the decision has been fairly straightforward and who continue to in a very dynamic flexible way and engaging with our board continue to.
Speaker Change: Evaluate all options for capital allocation of the future.
Speaker Change: Active trading or at least in the compliant fleet is not more significant than the impact of Red Sea rerouting or impact of Russia, Ukraine trade dynamics shifting.
Speaker Change: He was really notable and encouraging that you bought back stock in the fourth quarter is something that's been missing in the Ardmore story for ever I think but.
Speaker Change: Vessel patterns or the Panama Canal and that was closed for a period isn't this substantially more significant than anything we've seen the past three years.
Speaker Change: Are you willing to it's it's very accretive when you trade below book value below most estimates of net asset value. When you buy back stock or are you and your leverage is quite low are you willing to lean into it to the extent that you might buy back in a in a period. If the shares are attractive more than your earnings and let the leverage ratio increase.
Speaker Change: Yes, I mean a lot of.
Speaker Change: Dynamic marketplace activity going on and I'm smiling, because you are seeded with Holly our head of global chartering. So.
Speaker Change: You guys had discussion over lunch, but.
Speaker Change: But I think that.
Speaker Change: A bit just because it is such a.
Speaker Change: For us it comes back to you have all these different shocks that come into the marketplace, having the team trading globally staying nimble.
Powerful way to create shareholder value.
Speaker Change: It's a great question and I think it comes back to this in a fairly dynamic way to look at all those angles, because everything is constantly emotion I mean, when you look at those four big dimensions of capital allocation, there's lots of subsets to them as well when you look at reinvesting in the business. When you look at you know what types of debt and also when you look at.
Speaker Change: And trying to actually take advantage of that at the margin.
Speaker Change: It's that's the $11500 a day breakeven a real range of potential earnings.
Speaker Change: Levels that we can capture with that low breakeven.
Speaker Change: Returning shareholder value and of course markets move investment opportunities move.
Speaker Change: Not.
Speaker Change: And to your point looking back at past examples of Suez sanctions happened implemented of course, there is always a market today, but it takes some time for that to really reverberate as those voyages are completed and find themselves just back again in a market with 20% of supply removed that is quite impactful in.
Speaker Change: Technology moves and in Osha presence as well so as that plays out it's very much alive discussion rather than kind of like let's make a big statement today Ana we're committed to the policy for the Sophoclean fundamentally but the components of course are quite variable and who continue to again engage with the board on what what is the best way forward here.
Speaker Change: So yes I believe there is there is a lot of it's a real wildcard, but in a positive sense.
Speaker Change: Take a couple from the webcast here.
Speaker Change: Thank you.
Speaker Change: One here.
Speaker Change: Okay.
Speaker Change: Could you talk a bit about challenges of cannibalization from crude tankers in the product space, perhaps potential swing tonnage opportunities in the chemical space.
Speaker Change: Just here.
Speaker Change: Your next bill.
Speaker Change: Thank you, yes, you just brushed on the AI story, and I mean Thats what people are looking at for the future is how to make yourself more productive by leveraging technology.
Speaker Change: Great question, I mean, I think the duties to highlight a slide we showed earlier.
Speaker Change: How big is your technology team and do you plan to invest in that now that youre working with Starlink. It does seem that the company has a treasure trove of information are you.
Speaker Change: Really moving the other way right now where you know the most prominent and most immediate way to swing between clean and crude trades, our ela tools.
Speaker Change: You know the the order book is pretty much all alerts who was no aframax is and you can see that these swing ships that are actively moving it between markets are actually going to the other direction are going dirty.
Speaker Change: Considering monetizing some your information your data into end to end AI product for.
Speaker Change: Another vertical and I'm just.
Speaker Change: As far as.
Speaker Change: Thinking out loud here, great questions and I think that kind of leads you back to some very fundamental questions you have to ask yourself as a company strategically and and at the board level around what is your AI strategy do you want to be.
Speaker Change: Some of those cannibalization trades as oppose referred to our concerns.
Speaker Change: We see the occasional clean cargo getting lifted on a on a new building, but we haven't seen since since the last fall and summer.
Speaker Change: <unk> of AI solutions do you want to be an investor in AI solutions would you want to be really good at adapting.
Speaker Change: Ships deliberately cleaning up from a dirty history is in crew tankers cleaning up from a dirty history towards clean the shift has gone the other way right now.
Speaker Change: What is the latest development on that forefront and we made a choice for us it's the former.
Speaker Change: Of course that creates no.
Speaker Change: That's the first two options don't necessarily conform with our core strategy or our strength.
Speaker Change: That doesn't created amplifies tightness in the product space, where you know you have.
Speaker Change: Our radio supply and demand gap depends or the points support made ahmad sanctions and.
Speaker Change: But I could probably talk about this for an hour because I'm quite passionate about the topic because it has become surreal.
Speaker Change: And just to you the ageing of the fleet, there's a lot of short term.
Speaker Change: Whereby in processes that we have always been part of what we do and how we do things.
Speaker Change: Amplification of that of the broader supply tightening.
Speaker Change: Right.
Speaker Change: 10 years ago, we were some of the first to rollout onboard telemetry on our ships to collect all this data hardware shifts behave in different states different currents different rpms, depending on how much you drop of the engine. So we actually have the benefit of sitting on a vast.
Speaker Change: Okay.
Speaker Change: Thank you Richard.
Speaker Change: Yes.
Speaker Change: Perfect.
Speaker Change: Okay.
Speaker Change: Okay.
Speaker Change: Okay.
Speaker Change: Our field of data, where a lot of other companies are just beginning that journey now I would argue we probably 15 years ahead of that and anybody who understands the I noticed how important next year. The data aspect is collecting that data to begin with but now we're using.
Speaker Change: Right.
Speaker Change: Okay.
Speaker Change: Okay.
Okay.
Speaker Change: Perfect.
Speaker Change: Okay.
Speaker Change: Okay.
Speaker Change: Alright.
Speaker Change: Okay.
Speaker Change: Okay.
Speaker Change: New tools to actually help us.
Speaker Change: Okay.
Speaker Change: Okay.
Speaker Change: Process. This data on a real time basis, so we can make.
Speaker Change: Okay.
Speaker Change: Okay.
Speaker Change: <unk> better more accurate decisions with that data and happy to talk about this offline.
Speaker Change: Okay.
Speaker Change: That's helpful.
Speaker Change: Okay.
Speaker Change: Okay.
Speaker Change: Okay.
Speaker Change: But it applies to so many different parts of the business organizationally, we have a real commitment to that where we actually have a small but very impactful innovation team two people one person coming from a technical background actually youll see ferring background, you know the person coming from from a data background, having worked for one of the Blue chip.
Speaker Change: Alright.
Speaker Change: Yeah.
Speaker Change: Okay.
Speaker Change: Thanks.
Speaker Change: Okay.
Speaker Change: Okay.
Speaker Change: Yes.
Speaker Change: Got it.
Speaker Change: Thanks.
Speaker Change: Great.
Speaker Change: Right.
Speaker Change: Okay.
Speaker Change: Right.
Speaker Change: Okay.
<unk>.
Speaker Change: Okay.
Speaker Change: Technology firms.
Speaker Change: Alright.
Speaker Change: And in between those there is a lot of strength, but you cannot put this into a department you cannot put innovation into a corner in a company you have to bring those right into the central at every level you need to have people think about what am I doing today, how could I do this better and something stands in my way can we not leveraged some of those new technologies to overcome this.
Speaker Change: Hi.
Speaker Change: Okay.
Speaker Change: Okay.
Speaker Change: Okay.
Speaker Change: Alright.
Speaker Change: Okay.
Speaker Change: Okay.
Got it.
Speaker Change: All right.
Speaker Change: Okay.
Speaker Change: Make it make it personal make it fun and be very open to experimentation and I think that's how you bring AI into the into the into the core of the strategy of your performance and then it's not a buzzword it becomes very very real and extremely impactful.
Speaker Change: Okay.
Speaker Change: Cleanup.
Speaker Change: Thanks.
Speaker Change: Okay.
Speaker Change: Yeah.
Speaker Change: Yes.
Speaker Change: Okay.
Speaker Change: We're focused on efficiency and <unk>.
Speaker Change: Every ton of fuel.
Speaker Change: Directly to the bottom line.
Speaker Change: Okay excellent.
Speaker Change: A couple of here that yes.
Great. Thanks.
Speaker Change: So I appreciate it.
Omar: Yeah Omar.
Speaker Change: Let them have the microphone again.
Omar: Thanks, just a follow up in more market related again, just on the sanctions I think Bart you had talked about in January the 150.
Speaker Change: So.
Speaker Change: In the hard questions here.
Speaker Change: And talking through just even even AI and a lot of the other things the innovations that you've been undertaking most of those are improvements in efficiencies as opposed to a few years ago. There was a <unk> marine and really more.
Speaker Change: The tank or sanctioned.
Speaker Change: From your perspective, what what inning are we in in terms of the impact of that.
Speaker Change: Having on the market.
Speaker Change: Yeah, I mean, I guess it depends because we kind of think this is probably a trend that you know likely potentially continues to expand.
Speaker Change: Structural big shifts like what kind of fuel as my engine going to use.
Speaker Change: But there is the debt that absolute impact when you have sanctions for you really taken out of the market much more so than when you know.
Speaker Change:
Speaker Change: Is that is that indicative of sort of where you're at at the moment, we're not really thinking as much about where we are going to be using methanol or ammonia or whatever and let's just make our ships work a little bit better.
Speaker Change: Dark flea gratefully, and you're still operating area economically incentivized to trade outside of the the main global trades.
Speaker Change: Yes, I think always.
Speaker Change: It feels relatively early.
Speaker Change: West for greater efficiency on your fleets.
Speaker Change: Do you have that.
Speaker Change: Excellent.
Speaker Change: That spans.
Speaker Change: Good morning.
Speaker Change: All times in a lot of different scenarios certainly for us.
Speaker Change: Okay.
Speaker Change: Thanks Raj.
Speaker Change: And then also what is the mindset of those isolated vessels and in terms of it's a.
Speaker Change: There's the focus on the application of technologies, but.
Speaker Change: Looking at being sponsors of technologies or corporate venture capital or something like that.
Speaker Change: Failure today versus really high Opex and really high cap.
Speaker Change: Not not in our ZIP code at all.
Speaker Change: But I think it.
Speaker Change: It comes back to a lot of the comments that take.
Speaker Change: <unk> not made its one where.
Speaker Change: There is a shift and a realization that the energy transition is going to take a significant period of time.
Speaker Change: Thanks to keep them in operation now.
Speaker Change: The availability of fuel that the evolution of the engine technology is going to take time and so what do you do today you make your fleet as efficient as possible you invest in new technologies that you can put on board your existing fleet and Youre building that knowledge base for when the right time comes what does that vessel the future look like and you have this.
Speaker Change: <unk> knowledge.
Speaker Change: It's much greater.
Speaker Change: And then.
Speaker Change: Can I just add to this I mean, this is where it really comes back to performance and progress where they need to enable each other and you know it.
Speaker Change: No no initiative towards a future fuel can exist in isolation it needs to tie right back to performance and in terms of the discovery process, where we talk to all sorts of new technology is on track different different.
Speaker Change: Prices and caloric values for different fuel types. That's all underway, we want to be very much patched into whats going on of course, when it comes to deploying capital.
Speaker Change: Has to be.
Speaker Change: Done with.
Speaker Change: With the rigor and the discipline, how we would look at buying a new ship or doing anything else is there is this truly accretive to performance and what are the what are the risk factors here and I think that's ultimately where we see with the upgrades that we've done no brainer guaranteed returns in.
Speaker Change: Walked in that direction.
Speaker Change: And then lastly for me so.
Speaker Change: Given all of the unknowns unknowable really things that are in the market.
Speaker Change: Do you have a view or any conviction around asset prices do you feel like.
Speaker Change: You know that.
Speaker Change: There is.
Speaker Change: Substantial risk or opportunity at current levels.
Speaker Change: There's probably always both risk and opportunity.
Speaker Change: Somehow belong together as well.
Speaker Change: Do see definitely some movement in SMB markets Theres. Some some a lot of things actually that emerge around resales around options that they're looking to be converted.
Speaker Change: <unk>.
Speaker Change: And we are engaging with all sources of deal flow to make sure that just like on technology, We know exactly what's out there how it's priced.
Speaker Change: And what things we can take and then we run it through our processes is worth is worth it is worth today or under what circumstances, So I think compared to maybe.
Speaker Change: Last year in the summer there definitely seems to be a lot more movement and of course. It is a fragmented market, where there's a lot of different participants with different views on our near term.
Speaker Change: Needs and motivations and withstanding by two to explore those.
Speaker Change: Okay.
Speaker Change: One from the webcast and then we'll come to you just after so I'm going to try to summarize this so you've put money into.
Speaker Change: Into the existing fleet improvements into the technology has talked about AI.
Speaker Change: How much more of that is there to do and why isn't that a given why isn't everybody doing it if it is so great.
Speaker Change: Yes.
Speaker Change: I mean, the latter point of your question I can't really speak to that how other companies conduct their business for us.
Speaker Change: That frontier is constantly moving because the technology is not standing still.
Speaker Change: As long as the technology develops whether it's on AI or onboard technology. There is always going to be opportunity for us to develop and we have an organization that always wants to shift that boundary backwards. So.
Speaker Change: Unless anybody believes that technologically we have now.
Speaker Change: As humankind eclipsed and this is how far we've come I think theres going to be infinite opportunities rose continue optimizing and developing performance gains.
Speaker Change: I think just think about it a ship is really a floating city has every system that a city would have.
Speaker Change: And then it's in motion on the Ocean <unk> and so much has been done in other industries, where we're just chipping away at that in the shipping industry. So very long runway.
Speaker Change: Thank you I have a two parter. So the first I was wondering what does the TCE spread between your worst performing ship initially in your best performing ship and the second question is what kind of considerations go into the decision to add a ship to the fleet like how do you think about the economies of scale of the business as well.
Speaker Change: The marginal contribution or constraints that you have and adding a ship.
Speaker Change: Great question, I mean, the spread between sort of best and worst performing ships of course.
Speaker Change: Moves theyre sort of economic is that for just general characteristics of the ships, but you know over the course of a quarter year of course, it depends on timing positions and various other things that could be very closer could be several thousand dollars a day.
Speaker Change: We feel like we've built a really good company, we have a really good performance record and we've demonstrated that time and time again.
Speaker Change: We feel like we're delivering that performance given the current scale, we have today and we're very.
Speaker Change: Proud of that.
Speaker Change: Would we like to use that great platform the creek that.
Speaker Change: Great performance track record and multiply that over wider asset base in theory of course, and then it comes right back to you now.
Speaker Change: Timing and conditions and what vessels will be looking at and the thresholds of course are always.
Speaker Change: You know that we want to continue to use <unk>.
Speaker Change: Capital in smart ways that they are truly accretive but also we have built a really strong high quality fleet and you know not.
Not every ship is the same and it needs to vet, our high technical and operational standards and ideally make us more versatile the industrial stuff.
Speaker Change: Thank you.
Speaker Change: Okay last call in the room.
Speaker Change: Alright, I think we are.
Speaker Change: We are done for the day, thanks, everybody for joining us.
Speaker Change: To be around for a bit longer here, if anybody has questions as mentioned at the top there are others from the Ardmore team in the crowd amongst you feel free to passenger them. That's why they're here for your benefit.
Speaker Change: Yeah. Thanks, Thanks, very much. Thank you, Brian and thank you once again everybody.
Speaker Change: Yes.
Speaker Change: Yes.
Speaker Change: Okay.
Okay.