Ardmore Shipping Corp. Stock

Good morning, ladies and gentlemen, and welcome to Ardmore Shipping's Second Quarter 2026 Earnings Conference Call.

Today's call is being recorded, and an audio webcast and presentation are available in the Investor Relations section of the company's website, www.ardmoreshipping.com. [Operator Instructions] A replay of the conference call will be accessible any time during the next week by dialing 1 (888) 660-6345 or 1 (646) 517-4150 and entering passcode 94353.

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

Good morning, and welcome to Ardmore Shipping's Second Quarter 2026 Earnings Call. First, let me ask our President, Bart Kelleher, to discuss forward-looking statements.

Thanks, Gernot.

Turning to Slide 2. Please allow me to remind you that our discussion today contains forward-looking statements. Actual results may differ materially from those projected in the forward-looking statements. Additional information concerning factors that could cause the actual results to differ materially from those in the forward-looking statements is contained in the second quarter 2026 earnings release, which is available on our website.

And now I will turn the call back to Gernot.

Thank you, Bart.

Let me outline the format of today's call, which you can see here on Slide 3. First, I'll give you a brief overview of our second quarter highlights and how we are executing on our capital allocation policy. I will then hand over to Bart, who will cover the market outlook and update you on our financial and operating performance. Thereafter, I will conclude the presentation before opening up the call for questions.

Now turning to Slide 4, covering our earnings highlights. We are pleased to report another strong quarter for Ardmore. Adjusted earnings were $48.3 million or $1.18 per share. Market conditions remained positive throughout the second quarter and into the third. In addition to long-term sectoral trends, the continued disruption in the Middle East is driving higher refining margins and long-haul volumes, boosting product tanker TCE rates.

We are declaring a dividend of $0.79 per share, in line with our policy of paying out 2/3 of adjusted earnings. And as announced during the quarter, we exercised options on 2 additional Handysize tanker new buildings at the same terms as agreed at the start of the year, taking our total order to 4 vessels with deliveries beginning in late 2028.

Now turning to Slide 5, where we highlight our TCE performance. Our second quarter TCE reflects favorable market conditions and rates in the third quarter remained well above seasonal levels. Our MR tankers earned $51,900 per day for the second quarter. So far in the third quarter, with 45% booked, MRs earned $29,600 per day, which represents a year-over-year uplift of 20%.

Our chemical tankers earned $26,900 per day for the second quarter. So far in the third quarter, with 50% booked, chemical tankers earned $25,000 per day, which represents a year-over-year increase of 10%. To put things in perspective, current MR rates are, therefore, at levels nearly 3x our operating cash breakeven of $10,800 per day.

Moving to Slide 6, where we highlight our capital allocation activity. We continue to return capital to shareholders while investing in the business. As mentioned, we contracted 2 additional Handysize product and chemical tanker newbuildings, bringing our total order to 4 vessels with options for an additional 2.

These highly flexible assets are capable of carrying the full range of mainstream oil and refined products as well as the majority of advanced chemical cargoes, edible oils and other liquids, all fully consistent with our long-term commercial strategy and organizational capability.

We are declaring our 15th consecutive quarterly dividend, representing a yield of approximately 20%, reflecting the doubling of our payout level as introduced earlier this year. And our operating cash breakeven remains at a low $10,800 per day, providing us with considerable financial flexibility across all market conditions.

With that, I would like to hand over to Bart to cover the market outlook.

Thanks, Gernot.

Turning first to the market, starting with Slide 8. Product tanker markets were exceptionally strong throughout the second quarter and have remained very firm into the third with positive underlying fundamentals amplified by the continued disruption in the Middle East. Refining margins remain elevated and benchmark crack spreads reached nearly $70 per barrel, the highest level on record.

As a result, Atlantic refinery utilization is running at multiyear highs. And correspondingly, U.S. Gulf clean product exports are at historical highs, as shown in the chart on the upper right, with cargoes continuing to travel much longer distances.

The map in the bottom right demonstrates how replacement cargoes now need to be sourced over longer-haul routes. In addition, the Panama Canal Authority is closely monitoring water levels. Further cuts to canal throughput could provide an additional tailwind for ton-mile demand.

Moving to Slide 9. Refined product inventories have declined by nearly 100 million barrels since March. Looking ahead, this creates a need for a meaningful restocking cycle, adding an additional layer of demand on top of actual consumption. Higher oil volumes are anticipated to boost refinery throughput and support an extended period of elevated trading activity as inventories are replenished.

The IEA projects significant expansion of oil supply in 2027 as non-OPEC production continues to grow. And energy security remains a key priority with inventories likely to get replenished to an even higher level. This would support sustained firm demand for product tankers well beyond the current disruption.

Moving to Slide 10 and the impact of the Russian diesel export ban. As a result of domestic refinery outages and growing fuel shortages. Earlier this month, Russia imposed a full ban on diesel exports. Russian clean product exports continue to decline accordingly, as shown in the bottom left chart. Displaced buyers are sourcing replacement cargoes from elsewhere, boosting demand for the compliant fleet in an already tight market. For example, Brazilian importers are replacing Russian supply, reducing reliance on sanctioned vessels and benefiting the mainstream fleet.

Turning to Slide 11 and long-term demand fundamentals. As we've emphasized, energy security remains a growing priority for governments worldwide. Diversification of import sources and the securing of seaborne supply chains are reinforcing long-term demand for product tankers.

The structural shifts in refining capacity continue in parallel. Expansion is concentrated in Asia and the Middle East, while closures persist in Europe and the United States. This ongoing dislocation between refining hubs and major points of consumption continues to drive ton-mile demand.

Furthermore, the energy transition is proceeding at a slower pace than previously anticipated. The IEA now forecasts oil demand growth through 2050. These structural dynamics underpin a constructive long-term outlook in addition to the supportive near-term dynamics we discussed.

Moving to Slide 12 for the supply picture. As we have pointed out in the past, the MR fleet is the oldest it has been in decades. As the chart on the left illustrates, the average age of the fleet is nearly 14 years old, the highest this century, while the MR order book represents just 16% of the existing fleet. And if we examine the Handysize order book, it stands at just 6% with an even higher average fleet age of 18 years.

Moving to the chart on the right. Within the next 5 years, half of all MRs will be over 20 years old and approaching the scrapping window. This is more than 3x the size of the current order book and the dynamics in the Handy market are even more favorable. As a reminder, even if older vessels are not immediately scrapped in a strong market, their utilization levels decline materially as they age past 20 years.

With that, I'd like to shift to our financial and operating performance. Turning to Slide 14, where we highlight our continued focus on financial strength. Ardmore's balance sheet remains robust. Effective leverage is a modest 24%, inclusive of our forward newbuilding CapEx.

Our low operating cash breakeven of $10,800 per day or $11,700 per day, including pro rata dry dock CapEx gives us significant financial flexibility. We have nearly $300 million of undrawn revolving debt capacity, providing ample coverage for our newbuilding commitments with access to a wide range of additional financing options as well. As always, Ardmore remains focused on optimizing TCE performance, closely managing costs and maintaining a strong balance sheet.

Turning to Slide 15 for financial highlights. For the second quarter, we are reporting EBITDAR of $61.1 million, and as mentioned earlier, earnings per share of $1.18. We continue to frame EBITDAR as an important comparable valuation metric against our IFRS reporting peers. A full reconciliation is provided in the appendix alongside our third quarter guidance figures.

Importantly, our strong operating leverage positions Ardmore to capture market volatility. Every $10,000 per day increase in TCE rates translates to nearly $2 per share in additional annual earnings.

Moving to Slide 16 for operational highlights. As a reminder, we have no planned dry dockings this year and limited activity through 2027. Existing fleet CapEx for the balance of 2026 is estimated at only $3 million. On the innovation front, we're harnessing AI and digitalization across our fleet, now including real-time propulsion automation.

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

Thank you, Bart.

Wrapping up then with Slide 18. Ardmore is performing extremely well. We are capturing TCE rates at multiples of our cash breakeven. The market backdrop remains highly supportive, as we discussed, driven by long-term fundamentals as well as more immediate market forces.

We continue to take a disciplined and deliberate approach to capital allocation, distributing 2/3 of earnings while executing on targeted and measured growth. Our decisions are and will be guided by our long-term strategy, strong corporate governance and our commitment to create value across market cycles.

And with that, we now welcome your questions.

[Operator Instructions] First question comes from Omar Nokta with Clarksons Securities.

Just a couple of questions from my end. And maybe just first on the Handy options. You have the 4 new buildings now on order after exercising those 2 options. Gearing at the company overall remains, I'd say, quite low and you're back to being in net cash territory.

As you kind of look forward, it seems that just the way this market is coming in, as you just said at the end of your comments there, Gernot, that you're bringing in revenues at multiple of your breakeven. It looks like you're going to continue to be in this net cash territory or at least you're on pace for that. How do you think about fleet expansion from here? You have those 2 options again on the Handys. What's the thought on exercising those? Is there a time and when those have to be exercised? And then just in general, how are you thinking about further expansion?

Yes. Omar, great question. Thank you. Definitely, we do like the ships that we've ordered. We like the design. We also see value in the prices we agreed. And of course, we do like the optionality also that they provide. Options are options. So we'll continue to assess, of course, the economic rationale they're declarable later this summer.

Why do we like them? Well, the fundamental backdrop, we believe, is quite positive and how these assets, in particular, fit into this. If you think about what we discussed here, we're tracking long-term oil demand growth. Investment in fossil energy has been consistently on the rise since that dip we saw during COVID. And it looks that we also have the oil supply to really match it.

Adding to that is this theme around energy security, which creates a whole different set of needs, which is benefiting really the whole energy oil supply chain and tankers included. But it's, of course, not just about fossils when you think about energy security because all of a sudden, diversification of your energy sources becomes very much part of that theme of supply chain resilience, which I think is top of the agenda for enterprise and state actors alike.

So these particular assets really provide us maximum optionality, not just in the near-term trading performance because they are so versatile and can optimize TCE performance, but they really give you a wide range of strategic direction, whether it's mainstream refined oil products, whether it's crude oil and dirty products, certainly a wide range of chemical products, edible oils and other really interesting liquids as well.

And there's liquid markets for all of these in itself, the Handy market, of course, is also quite liquid. It's a good size. And there's a high degree of overlap with what we're doing on the MRs as well. So, our broader trading footprint and our commercial strategy. So that's the strategic rationale. That's the fundamental and market outlook rationale.

And then when it comes to capital allocation, very neatly fits into how we continue to balance, of course, the continued rationale to reinvest in the business, continue to embrace opportunities for selective and well-measured growth, but at the same time -- while at the same time, returning capital to shareholders and maintaining responsible debt levels. That, of course, is something we continue to look on a dynamic basis as well.

Last year, at around this time, we saw a lot of value in secondhand values that had dropped significantly, acted on those very decisively. Those would have appreciated by 30%, 35% in value since and are happily trading in our fleet. At the same time, we saw now at the start of the year, really an opportune time to invest on a more forward-looking basis in the start of this set of -- at the moment for new buildings with options that are options that we'll continue to assess as we move along.

Okay. And maybe just one -- another question, then I'll pass it back. It's a bit more kind of on the market. And you mentioned in your answer just now a bit of sort of the diversification that we're seeing in sources of oil. How are you kind of seeing things develop here?

Obviously, it's been a very volatile year or moves closed, it reopened. Now it's back to closed potentially, you have the Red Sea as a potential risk for transit, which had already been there, but maybe a bit more heightened now. Have you seen any sort of immediate response in the product market as to the latest developments there on the geopolitical front? And then also, how do you think about where MR rates can be as we move forward here over the next few months?

I believe you're touching on a great point here where markets continue to be very much in motion and probably more than we can kind of really verbalize in the presentation like this. But the status quo is there is no status quo.

And even the events of the last 24 hours and the last few days and weeks, of course, always trigger reactions in the underlying commodity pricing for oil and of course, the underlying oil products as well. And with that relative price point creates regional arbitrage, creates arbitrage within the system as well. And we certainly have seen freight react as well.

An important point to make is that I think there is a lot going on beyond the Middle East as well. Of course, there's the long-term fundamentals that we discussed here, not just on the demand side, but also on the supply side. But U.S. Gulf refineries cranking out product at record levels refining margins really high.

At the same time, I think we touched on briefly is the situation with the Panama Canal, but I believe it is somewhat overlooked, whereby we've already had some initial signals from the Panama Canal Authority that they might actually interrupt some of the transit. Now that hasn't happened yet.

But just speaking with a market participant on this recently, if we continue to see really low rainfalls here from August through October, if there's going to be a super El Nino, some of this will really only play out on a forward basis, where if you're entering the traditional dry season in January with already low water levels, this is really only going to kick in, in Q2 2027. So, I believe there's really a multitude of factors that really can continue to drive volatility in freight to really a wide range of outcomes.

Yes. No, certainly a lot of moving parts.

[Operator Instructions] We have no further questions. This does conclude your conference call for today. We thank you for participating. And at this time, we ask that you please disconnect your lines.

Good morning, ladies and gentlemen, and welcome to Ardmore Shipping's First Quarter 2026 Earnings Conference Call. Today's call is being recorded, and an audio webcast and presentation are available in the Investor Relations section of the company's website, www.ardmoreshipping.com. [Operator Instructions] A replay of the conference call will be accessible any time during the next 2 weeks by dialing 1 (888) 660-6345 or 1 (646) 517-4150, and entering passcode 89653.

At this time, I will turn the call over to Gernot Ruppelt, Chief Executive Officer of Ardmore Shipping. Please go ahead.

Good morning, and welcome to Ardmore Shipping's First Quarter 2026 Earnings Call. First, let me ask our President, Bart Kelleher, to discuss forward-looking statements.

Thanks, Gernot. Turning to Slide 2. Please allow me to remind you that our discussion today contains forward-looking statements. Actual results may differ materially from those projected in the forward-looking statements.

Additional information concerning factors that could cause the actual results to differ materially from those in the forward-looking statements is contained in the first quarter 2026 earnings release, which is available on our website.

And now I will turn the call back over to Gernot.

Thank you, Bart. Let me outline the format of today's call, which you can see here on Slide 3. First, I'll give you a brief overview of our first quarter highlights and cover key strategic and capital allocation actions we have taken since our last call. I will then hand over to Bart, who will cover the market outlook and update you on our financial and operating performance. Thereafter, I will conclude the presentation before opening up the call for questions.

But before we discuss our earnings, I'd like to take a moment to acknowledge the major disruption in the Middle East and the significant impact this has had on the maritime industry, in particular, on seafarers and their families. While Ardmore has not had any ships in the region since the beginning of the conflict, we express our solidarity with those currently living through this period of hardship and distress.

And we continue to engage with and actively support industry organizations, such as The Mission to Seafarers, INTERTANKO and other industry partners who have been playing a vital role in working with the people directly affected by these recent events. Now turning to Slide 4 for earnings highlights. In addition to last week's activity update and TCE guidance, we report today adjusted earnings of $23.6 million or $0.58 per share.

We are declaring a dividend of $0.39 per share, in line with our recently updated dividend policy of paying out 2/3 of adjusted earnings effective Q1. Disruption in the Middle East is adding further tightness to an already firm market. Our Q1 TCE performance reflects these market conditions and momentum is accelerating into the second quarter.

Our MR tankers earned $33,700 per day for the first quarter and $52,100 per day so far in the second quarter with 55% booked. Our chemical tankers earned $22,300 per day for the first quarter and $32,500 per day so far in the second quarter with 65% booked. MR spot rates are, therefore, at levels nearly 5x our operating cash breakeven of $10,800 per day.

And as we'll discuss in the next slide, we are executing on a clear and deliberate long-term strategy, targeted fleet investment, while simultaneously increasing the return of capital to shareholders in a meaningful manner.

Moving to Slide 5. Here, we highlight 3 significant updates since our last call. First, we have ordered 2 highly efficient and versatile Handysize tankers at Wuhu Shipyard at a price of $44.9 million per vessel. This price includes a $3 million upgrade package to make the vessels fully IMO2 capable, as well as advanced MarineLine tank coatings. In addition, we are commissioning further performance and safety upgrades.

Deliveries are scheduled from late 2028, and we have the option to acquire 2 additional vessels on the same terms. Second, we are doubling our quarterly dividend payout ratio to 2/3 of adjusted earnings. 2025 was a heavy CapEx year, which entailed an extensive dry docking program and significant vessel efficiency and commercial upgrades.

This is now behind us. Importantly, we also invested over $100 million in 3 vessel acquisitions that have substantially increased in value since, arguably by about 30% to 35% on a like-for-like basis. And as always, dynamic in our approach to capital allocation, we increased our percentage dividend payout effective this quarter. We have also agreed the opportunistic sale of a 2014-built MR tanker for $35.5 million.

At the time of agreement, the delivery window was about 3 months forward, allowing us to continue participating in the strong market with delivery to the buyer expected in June 2026. We believe this is an attractive transaction, not least in conjunction with the previous newbuilding announcement and in context of the aforementioned acquisitions.

Overall, these decisions reflect our disciplined through-the-cycle approach to value creation, growing the business in a thoughtful way, investing in high-quality assets that match our strategy and unique organizational capabilities, all while enabling meaningful distribution of capital to shareholders.

Moving to Slide 6 for a bit more detail on the newbuildings just mentioned. The vessels will be handysize product and chemical tankers built to full IMO2 specifications with MarineLine coatings. These upgrades will enable us to trade across a wide cargo slate from mainstream oil products to edible oils, renewable fuels and complex commodity chemicals.

As a reminder, we upgraded our existing chemical fleet last year with MarineLine coatings, and we are capturing significant benefits through access to premium cargo options and shortened cleaning times.

We have undertaken an extensive review of shipyards in China, Korea and Japan, and we believe Wuhu offers a compelling combination of high construction quality and value. In terms of funding, we have ample capacity under our existing revolving credit facilities and access to a wide range of alternative sources.

With that, I'd like to hand it over to Bart.

Thanks, Gernot. Turning to the market, starting with Slide 8 and some significant shifts in trade flows. This slide illustrates the rerouting of refined product cargoes as a result of the conflict in the Middle East. Shortages in the East are being filled long haul from the Atlantic Basin. Flows from the U.S., Europe and West Africa are replacing lost Middle East volumes with voyage lengths roughly doubling.

As Gernot mentioned, unfortunately, there are approximately 130 product tankers currently trapped in the Middle East Gulf. This is having an impact on the available vessel supply. In addition, the recent Jones Act waiver is further supporting U.S. bicoastal trade flows. Moving to Slide 9 for more detail on current market drivers. The effective closure of the Strait of Hormuz is disrupting approximately 15% of the global oil product flows and 30% of crude flows.

As a result, refining margins in the Atlantic have reached their highest level since the pandemic recovery, creating notable arbitrage. Asian refineries have needed to reduce throughput with replacement products sourced via long-haul imports from the Atlantic, boosting U.S. exports. Vessels bouncing back to the Atlantic Basin had a further layer of fleet inefficiency, tightening effective supply.

This run-up in the Atlantic market has resulted in a lack of vessels in the East, accelerating rates in the Pacific in recent weeks. Product inventories have been significantly drawn down. Looking ahead, a substantial post-conflict restocking requirement should support elevated trading activity for an extended period, all while damaged refining capacity may take several years to restore with replacement volumes continuing to move on long-haul voyages.

Turning to Slide 10. Looking beyond the immediate disruption and focusing on the longer-term fundamentals. Energy security is front and center, supporting long-term demand forecast. Meanwhile, refining capacity continues to shift east with closures in Europe and the U.S. adding to ton-mile demand.

While the markets understandably pay attention to the situation in the Middle East, these fundamentals are driving the market over the long term. Moving to Slide 11 for the supply side. The chart on the left depicts how the MR fleet has continued to age during this century, while the current order book represents just 15% of the fleet.

The Handysize segment is a connected market. But if we look at the Handy order book in isolation, it stands at just 5% against an average fleet age of 18 years. The chart on the right highlights the same story from a different angle. Within the next 5 years, half of the global MR fleet will be over 20 years old and approaching the scrapping window.

As a reminder, even if these vessels are not initially scrapped as a result of strong market conditions, their utilization levels notably decline. Turning to Slide 13 and our capital allocation summary. As outlined in our late April press release and commentary today, we have been active across all pillars of our capital allocation policy.

And this slide further highlights the numerous actions taken in recent quarters. We're dynamically investing in the business while returning capital to shareholders, including the doubling of our dividend payout ratio to 2/3 of adjusted earnings.

Moving to Slide 14, where we detail our financial position. As always, Ardmore remains focused on optimizing TCE performance, closely managing costs and preserving a strong balance sheet. Our low cash breakeven level of $11,700 per day or $10,800 per day, excluding dry dock CapEx, gives us financial flexibility.

Considering forward new build CapEx, which we can fund through our existing credit facilities or other alternatives, overall pro forma leverage remains at a modest level.

Turning to Slide 15 for financial highlights. Ardmore is well positioned with strong operating leverage. Every $10,000 per day increase in TCE rates translates to an additional nearly $2 per share in annual earnings.

For the first quarter, we are reporting adjusted EBITDAR of $37.3 million and as noted earlier, earnings per share of $0.58. We continue to frame EBITDAR as an important comparable valuation metric against our IFRS reporting peers.

A full reconciliation is in the appendix alongside our second quarter guidance figures. Moving to Slide 16 for fleet operations. As a reminder, we have limited dry docking activity through 2027. Existing fleet capital expenditure is expected to decline significantly to approximately $8 million this year versus $30 million last year. We have our refreshed fleet on the water capturing the current market.

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

Great. Thank you, Bart. Moving to Slide 18. Allow me to summarize. On top of compelling long-term fundamentals, product markets continue to experience significant near-term disruption driving ton-mile demand as is reflected in our TCE performance on this slide.

Commodity dislocation and product supply gaps, urgent inventory restocking needs as well as continued structural demand growth point to sustained strength. Ardmore continues to progress through a disciplined, deliberate and dynamic approach to capital allocation.

We have made targeted investments in the fleet over the past years through value-focused newbuilding and secondhand acquisitions as well as upgrades to the existing fleet, all while increasing shareholder returns and maintaining responsible debt levels.

As always, our investment decisions are guided by the company's strategy, strong corporate governance and a long-term value approach. We now welcome your questions.

[Operator Instructions] Your first question comes from Jon Chappell with Evercore.

I'll start with the dividend policy. I know you've spoken about it a little bit in the prepared remarks, but just trying to understand the timing and the thought process behind it. Again, I understand you've sold the vessel, you have far less capital commitments as it relates to fleet maintenance this year. But is this kind of a sign that investing in this part of the cycle where asset values where they are, just doesn't offer the same type of returns that you think a doubling of the capital return policy to the investors provides?

Yes. Great question, Jon. I think we really want to look at dividend policy as a subset of returning capital to shareholders as part of our capital allocation policy, which we've been quite consistent with. If you go back to end of 2024, of course, we saw some opportunity in our stock price, and we did some buybacks, continue to pay dividends all throughout. But last year, we also saw some really interesting opportunities to reinvest in the fleet through the acquisitions we've mentioned, some really interesting retrofits, paid down the pref on top of the interesting refi, and we're able to also pay back some debt.

So I think for us, this is really a way to reshift and rebalance, acknowledging, of course, that half of debt prices have moved up, but also not in any way, I think, taking away from this kind of rebalanced approach to capital allocation that you really need to see across quarters and across the whole game, which will continue to balance thoughtful and measured reinvestment in the fleet with returning capital to shareholders while maintaining healthy debt levels.

Okay. That makes sense. And then as it relates to fleet strategy, I know you have a couple of time charter outs right now. It feels like in the larger crude asset classes, time charter rates have spiked to all-time record highs, and there seems to be a pretty decent amount of liquidity, especially in the [ VEs ]. Is there a similar thing transpiring in the MR and chem market? And if there is, what's your appetite to kind of lock in at some of these really elevated rates with guaranteed cash flows versus maintaining that optionality in the spot market that you speak to?

So time charter rates have definitely reacted and moved up significantly. We have not executed on those time charters in the past quarter because we don't quite feel that the value proposition is maybe as pronounced as you would see in crude tankers.

And sometimes these things take some time to build just to the nature of the timing and the rhythm of the time charter markets. But we'll continue to monitor that. We, of course, do take note that a lot of the time charter interest right now is coming from oil majors, refiners and major traders, including some long-term interest, and we think that's really encouraging. And we have in the past, opportunistically engaged in time charters out and time charters in. But for now, we've been monitoring, and we're looking at it with great interest, of course.

[Operator Instructions] Your next question comes from Omar Nokta with Clarksons Securities.

Clearly, nice quarter, and it looks like definitely more to come. I just want to ask, you've got the MRs, which are historically and continue to be your biggest footprint. You've also got the chemical tankers or the handy chemical tankers. Can you just talk a little bit about those segments and how they performed in this market given the Hormuz disruption just in terms of the 37 and the 25 deadweight that you have? Are those capturing similar earnings together? Or would you say there's a detachment where the 37s are closer to the MRs and the 25s are separate? Any color you can give on how those are traded?

Yes. I think this is actually a great question and maybe something we didn't highlight enough. For us, the order we committed to, these are handysize tankers that cover the full range of liquid products, which includes chemicals, but this is really all about creating trading options for these ships and for the company.

It's not some fundamental philosophical leaning deeper into chemicals. For us, it's always been enabling the full range of oil products, which, of course, includes jet fuel and naphtha and all the other road fuels that are in extremely high demand.

And equally then alternative cargoes, emerging cargoes because we think this offers really interesting long-term strategic perspectives for the business. And in the near term, it already offers substantial triangulation opportunities.

So these ships that we have ordered and the way we're approaching our existing chemical tankers too, these ships are fully conversant in both markets. And we will basically continue to follow the money and just benefit from this added optionality.

So right now, even our 25,000 toners that you mentioned, which make up the majority of our existing chemical fleet, half the size of an MR, and typically, under sort of normalized market conditions, they would probably trade 90% in non-CPP cargoes, but we have been redirecting those ships where they now trade almost exclusively CPP because that's where the money is. So really, for us, about trading options, not trading obligations, and continuing to be very versatile players across the full spectrum of products and nonproduct cargoes.

Okay. That's quite detailed and helpful. And I guess then just as you place those orders and you look to be something that you're looking to be a bit more opportunistic on as you see an opportunity there, as we kind of think about then your footprint going forward, not necessarily saying you're going to potentially deemphasize MRs because clearly, that's your main market, but should we kind of think about you potentially pivoting into maybe expanding more within that business or maybe bringing them both together in size over the long term?

Yes. I think very important, the way we treat these ships already is in a very integrated fashion where we don't have a separated sort of product or separated chemical part of the business, very much the relationships, cargo flows, market insights are used in a very integrated fashion. So for us, it's really just continued progress along this product and chemical space.

For us, we felt like these ships really are terrific strategic fit given our current and our forward strategy. We will continue to follow all sources of deal flow, of course, as we have in the past. It felt that last year, there was a much stronger value in secondhand MRs where we saw values drop by arguably 20%, 25% on the back of concerns on tariffs and what that could mean for the global economy, liberation day and the likes.

And we then acted very decisively on MRs. And of course, that was money well spent, given the fact that they are under money by 30%, 35%. And we now saw the value proposition much clearer on these very forward-looking, very versatile fuel-efficient assets. If you compare the price between the 12-year-old MR we just sold to the newbuildings, we're committing to the delta on a like-for-like basis is less than $10 million.

So again, it is a combination of strategic fit on one hand, which is products, products with full versatility and flexibility to trade into more complex cargoes, but of course, there's a strategic fit and then there's opportunity and just relative value and being opportunistic at times when we have that -- when the market gives us that chance.

Ladies and gentlemen, there are no further questions at this time. This concludes today's conference call. Thank you for participating. You may now disconnect.

All right. Good morning, everyone. Welcome to Ardmore Shipping's 2026 Investor Day, during which we will also be covering the company's results for the fourth quarter and full year 2025.

I'm Bryan Degnan with IGB Group. Just a few administrative points before we get underway today. The event is being recorded and broadly distributed via live webcast, which along with today's slides, is accessible at ardmoreshipping.com. An audio replay of the event will be available on the website from later today. The standard earnings press release was issued premarket this morning and is also available on the website.

Turning to Slide 2. Later in the event following the prepared remarks, there will be a Q&A session, at which point, we will take questions from the people with us in the room today. For those joining remotely, please feel free to submit any questions that you might have at any time to [email protected]. [Operator Instructions]

Turning to Slide 3. Please allow me to remind you that our discussion today contains forward-looking statements. Actual results may differ materially from those projected in the forward-looking statements. Additional information concerning factors that could cause the actual results to differ materially from those in the forward-looking statements is contained in the fourth quarter and full year 2025 earnings release.

Slide 4, please. Moving to Slide 4. I'd like to introduce you to the members of the Ardmore leadership team who we'll have the pleasure of hearing from today. We have Curtis McWilliams, our Admore's Chair of the Board; Gernot Ruppelt, Chief Executive Officer; Bart Kelleher, President; and James Fok, Independent Non-Executive Director.

We also have a number of other members of the extended Admore management team sitting amongst you in the crowd today. So hopefully, you'll take the opportunity after our formal agenda to spend some time with them as well. And with that, I would ask Curtis McWilliams, Chair of the Board, to please join us on stage to provide today's opening remarks.

Thank you, Bryan, and good afternoon. On behalf of the Ardmore Board as well as the senior management team, let me once again welcome you to Ardmore's Annual Investor Day lunch. Last year, in my opening remarks, you may recall I talked about change, changes in the geopolitical situations around the globe, changes in the administration here in the United States and even closer to home, changes in our own senior management team with the retirement of Anthony Gurney and the elevation of Gernot as CEO, and Bart as President of Ardmore.

While change is candidly a constant in all our lives, Ardmore's Board and senior management team remains focused on a few key strategic principles, which have not and will not change. As you will hear this afternoon, Ardmore is focused squarely on the future. We remain committed to performance and progress, the transactions, which leverage our scalable platform, to innovation, to our well-articulated capital allocation policy and to thoughtful and transparent governance. With respect to the import of governance, as Nelson Mandela once noted, the time is always right to do right. In addition to Gernot and Bart speaking this afternoon, I'm pleased that my fellow Director, James Fok is joining us and will be providing his thoughts on macro global trade trends.

With the rise of China and the Pacific Rim and its impact on the shipping sector, James' unique perspective has been incredibly helpful to our Board. I am sure you will find his comments, both compelling and thoughtful. Again, I want to thank you for your continued support of Ardmore. As a Board and management team, we remain fully committed to being faithful stewards of your investment. And with that, now let me welcome up Gernot and Bart, who will commence their review.

Thank you, Curtis, and welcome. We are delighted you could join us today for an update on another great year for Ardmore. For those of you who are new in the audience, Slide 5 gives you a snapshot of our company. Ardmore is listed on the New York Stock Exchange and strong governance remains fundamental to who we are. It shapes the way we make decisions, our business principles and our values.

We own and operate a fleet of product and chemical tankers and through a fully integrated global platform, we actively trade a wide range of liquid cargoes from mainstream refined oil products to complex specialized chemicals, edible oils and biofuels. Our performance-driven culture and our commitment to constantly innovate enabled us to maximize earnings across markets and cycles.

Moving to Slide 6. Here's the outline of today's presentation. At the start, I will briefly guide you through our earnings highlights. Then Bart and I will move on to the Investor Day section starting with external market fundamentals followed by a business update and a deeper dive into some of the key performance drivers. Thereafter, James will share his perspectives on major themes in our macro environment, the broader geopolitical landscape and implications for Ardmore. Then we will open up the meaning for questions.

Turning first to Slide 7 for earnings highlights. We are pleased to report another successful year for Ardmore. Underlying market conditions have continued to be very favorable. On top of strong ton-mile demand, we see considerable disruption and a very robust earnings environment. Our TCE performance reflects this continued strength, as you can see in the chart on the right.

Quarter-on-quarter growth throughout 2025, and into the first quarter of 2026. Rates are currently edging towards levels 3x our breakeven. Our MR tankers earned $25,300 per day for the fourth quarter and $29,100 per day so far in the first quarter with 50% booked. Our chemical tankers earned $19,900 per day for the fourth quarter and $20,800 per day for the first quarter with 30% booked so far. Regardless of the market we're in, we remain committed to tight cost management and we have achieved a cash breakeven of $11,700 per day or excluding CapEx, $10,800 per day. This enables us to be both opportunistic and resilient, positioning Ardmore to perform strongly throughout market cycles.

Moving to Slide 8, adjusted earnings were $38.8 million or $0.95 per share for the full year and EUR 11.6 million or $0.28 per share for the fourth quarter. We continue to execute on our long-standing capital allocation policy, and we've declared another quarterly cash dividend of $0.09 per share, consistent with our policy of paying out 1/3 of adjusted earnings. We just completed a major drydocking cycle, which also included significant performance upgrades to our fleet.

And last year, we bought 3 modern fuel-efficient MR tankers at an opportune time. These have appreciated in value by 15% since. In addition to the company's strong footing in the spot market at 82%, we enhanced earnings quality with selective high-quality fixed rate time charters. Just recently, we fixed the 2013-built MR on a 1-year time charter at a rate of $26,000 per day.

Moving to Slide 9, where we highlight our continued focus on financial strength. As previously announced, after refinancing our bank debt at favorable terms, we fully redeemed our remaining 30 million of preferred shares, further reducing our cash breakeven. And as we will cover in more detail, Ardmore remains focused on optimizing performance, closely managing costs and preserving a strong balance sheet.

Turning to Slide 10 for financial highlights. Ardmore's strong operating leverage positions us to take immediate advantage of market shifts. As an approximate rule of thumb for every $10,000 per day in additional TCE, our annual earnings would increase by close to $2 per share. This quarter, we're reporting EBITDAR of $27 million for the quarter and $95 million for the year. And we continue to frame this as an important comparable valuation metric against our IFRS reporting peers. A full reconciliation is presented in the appendix alongside our first quarter guidance numbers. This concludes the earnings portion of the presentation. We now move on to the Investor Day section, starting with Bart, who will take us through the market outlook.

Thanks, Gernot. Starting with Slide 12, where we discuss the long-term demand fundamentals. Dislocation of oil refineries remains an enduring trend. Refining and petrochemical production capacity has been shifting east. And at the same time, tightening regional supply in the west is pushing buyers to source for more distant export hubs, extending voyage lengths, driving ton miles and lifting fleet utilizations. In addition, the latest long-term forecast point to an increased focus on energy security, slower energy transition, reinforcing expectations for sustained oil demand.

Moving to Slide 13. Looking at the chart on the top right, favorable margins and rising oil consumption are driving heavy refinery throughput. At the same time, ever-evolving geopolitical disruption continues to reshape trade routes and extend voyage distances. Good example of this is shown on the chart on the bottom left.

Not only is there a ban by the EU on Russian diesel, the refined products derived from Russian crude oil have also now been banned. Refined product flows that once originated from Turkey are now being replaced by cargoes from the U.S., representing a more than threefold increase in relative voyage length. In addition, more recent events in Venezuela have already begun redirecting existing Venezuelan crude oil toward the U.S. Gulf, boosting refinery throughput. This will further support product exports from the region. These are just a few of the layers of the continually evolving tanker demand landscape.

Moving to Slide 14, where we examine how increased sanctions enforcement is tightening supply and benefiting the compliant fleet. The chart on the left shows that over 16% of the global tanker fleet is currently subjected to sanctions. Step-up in enforcement is making it increasingly difficult for these vessels to trade. And as shown in the chart on the right, this is further encouraging additional vessels to join the dark fleet.

So taken together, about 30% of the global fleet and growing is operating outside mainstream trades, tightening available supply and boosting utilization for compliant tanker fleets such as ours. This trend is poised to accelerate with the potential for India to replace Russian oil with non-sanctioned alternatives further benefiting compliant tanker fleet at large.

We'll further examine this in a few slides, but it's important to note that these tend to be older vessels that would have a very difficult time returning to the mainstream fleet. For one, this is simply due to their history of trading in the shadows. But more practically and as reported across industry sources, the maintenance standard is alarming.

Moving to Slide 15. Here's a trend we've highlighted in the past. LR2 is exiting the clean product trades and moving into the crude market. There are a few key dynamics at play here. Aframaxes are the crude tanker equivalents of LR2s. The order book for these Aframaxes is marginal. Therefore, the LR2 order book is effectively replacing the crude Aframax deficit. At the same time, geopolitical dynamics are driving trading activity in crude markets overall, which has an additional positive impact on the Aframax segment.

The trend of the LR2 fleet migrating to crude continues to play out. As depicted in the chart on the left, with an additional 10% trading in crude this year. This shift has been driven by evolving geopolitical events leading to higher volumes of crude on the water. One of the many examples is the recent disruption in Venezuela. Restoring Venezuelan crude exports to the U.S. would quadruple Aframax needs for this trade.

Turning to Slide 16. Here, we revisit the aging MR fleet. The chart on the left provides a clear visual of how the MR fleet has evolved over time. Focusing on the Green Quadrant, today's fleet is the oldest this century and with an average age of almost 15 years.

Now moving to the chart on the right, the portion of the MR fleet approaching the scrapping window dwarfs the current order book by a magnitude of 4. It's important to note even if these vessels are not initially scrapped, their utilization level notably declines as they turn 20. So while the market is experiencing an increase in deliveries this year, there is a significant buffer of older, less efficient vessels. These potential scrapping candidates represent an inherent mechanism for market buoyancy.

Turning to Slide 17. Expanding on the point just made, the tanker industry is subjected to rigid safety, environmental and regulatory scrutiny as well as high compliance standards by international law and oil major customers. Naturally, older tankers are increasingly marginalized by top-tier charters, enhanced diligence standards, discourage employment of higher risk and/or noncompliant tonnage. These charts depict how this aging fleet is less utilized. The chart on the right highlights how utilization declines below 50%, thus benefiting younger vessels, including Ardmore's fleet.

And with that, I'd like to hand it back to Gernot to turn to the business update.

Thanks, Bart. Let's start with an overview of our strategy on Slide 19. Ardmore's strategy is clear and well defined. We are a global owner and operator of product and chemical tankers with a strong focus on capturing opportunities where refined oil products and more complex chemical cargoes overlap.

Ardmore Shipping Corporation is a fully integrated and aligned company, which includes our highly regarded trading platform. Our shoreside team works around the clock from 3 strategic locations in close coordination with our seafaring colleagues on board a modern fuel-efficient fleet to safely execute the business of Ardmore's top-tier customers. We have a long-standing capital allocation policy, which is well matched to our strategy, our through-the-cycle approach and ultimately to creating long-term value.

Our focus on performance drives ongoing innovation across the organization from efficiency enhancing upgrades to our ships and machinery to AI-driven voyage optimization tools and everyday business processes always purposeful and application-oriented in order to deliver tangible commercial and operational results. And importantly, we maintain best-in-class corporate governance standards which are fundamental to everything we do and who we are as a business.

Turning to Slide 20. Asset flexibility is a core strategic advantage for Ardmore. Our fleet of MR product and chemical tankers is designed to operate across a wide range of complex cargoes and regional markets, giving us the ability to adapt quickly as trading conditions evolve. Instead of a singular focus on refined products or chemicals, Ardmore deliberately covers the full spectrum. This enables us to compete effectively and interchangeably in both segments and capture value across market cycles. We have specific examples for this later.

Slide 21 reintroduces a concept, which is core to our belief, integrating performance and progress. The success of this philosophy is reflected here. Performance, both absolute and relative, is crucial to us, and we track our performance through a range of objective measures. Our entire team is incentivized on the basis of these measures. Shown here is a key factor, our TCE result of about $25,000 per day.

Next box, our disciplined focus on cost combined with low leverage has resulted in a historically low cash breakeven of $11,700 per day or excluding CapEx, $10,800 per day. So this performance focus, we have been able to return a significant level of capital to our shareholders, equivalent to 26% of our market cap since the end of 2022.

Moving to the bottom of the page, the progress section. Industry-leading governance ensures discipline, transparency and alignment throughout the organization and long-term focus on shareholder value. Our innovation mindset is at the center of everything we do. Every cargo, every voyage and every decision offer opportunity to optimize outcomes and maximize value. More of that later. None of this would be possible without creating the right culture to drive both progress and with that performance.

Our people are at the core of this effort, especially our seafarers. We have worked hard to create a rewarding and respectful work environment, which includes direct and personal engagement with our onboard leadership and broader participation in industry bodies such as INTERTANKO and the mission to seafarers.

All this is part of what we consider our responsibility as a leadership team and indeed what Ardmore has always stood for. These are some of the tenets of our operating philosophy and now bringing it back to performance they are at the foundation of our strong operating results. Now one quick question, does operating efficiency matter when it's the market making the headlines? We absolutely believe, yes. Performance focus will continue to deliver value in perpetuity across all market conditions.

On Slide 22, we summarize our capital allocation policy and how we have dynamically addressed our priorities. 2025 was an active year, which we will cover in the section. At a high level, we expanded our fleet. We invested in various efficiency upgrades. We managed responsible leverage levels, all while continuing to distribute capital to our shareholders throughout.

Let's take a closer look. On Slide 23, you can see the continued payment of dividend streams. And as I stated upfront, we are paying our 13th quarterly cash dividend since reinitiation in Q4 '22.

Moving to Slide 24. We completed an intensive drydocking program during 2025, which impacted nearly half of our fleet. On the flip side, this means we have very limited dockings for 2026 and 2027, about 10% of the fleet across 2 years. We naturally expect revenue days to increase accordingly and with that, earnings power. In line with that, we forecast a significant reduction in fleet CapEx for 2026, approximately $5 million compared with $30 million in 2025. The last bullet here is something we almost take for granted, but it's worth highlighting. We had near perfect on-hire availability for the year as a result of the quality of our assets and the continued close coordination of our teams at sea and onshore. To my earlier point, also here, progress meets business performance.

On Slide 25, we're providing a visual of a key element of the upgrade package we executed this past year. In line with the mandatory drydocking schedule of our chemical tankers, we upgraded the cargo tank coatings on all of them, thereby increasing cargo versatility and expanding revenue opportunities. We are already realizing early returns exceeding our expectations with some recent voyages delivering TCE premiums of up to $6,000 per day in addition to some guaranteed operational benefits and fuel savings.

Slide 26. Here, you can see these new advanced cargo tank coatings in action. The green lines on this map reflect the voyages carrying cargo or you could say making money. And the black line show when the ship was empty, so essentially just burning fuel. And you look at this and you wonder where are the black lines. The vessel did remain laden for nearly a full year. Expressed in dollars, the resulting TCE is $22,700 per day. This was in line with MR earnings at that time, but achieved by a smaller chemical tanker. That is a prime example of why we believe that in the right hands chemical tankers with advanced coatings represent economically superior assets.

Turning to Slide 27 where we quickly spotlight the timely expansion of our fleet. As you can see here, our acquisitions last year were well timed. The blue line represents Clarksons published 5-year MR price index. You can see the compelling relative value of our transactions in green, both at the time of transacting and also in hindsight. We achieved this by leveraging a period of considerable uncertainty in the marketplace, and by leveraging our strong track record as a reliable counterparty. In a nutshell, clear execution, closely in sync with market swings, guided by a disciplined long-term approach to building value in a cyclical industry.

Turning to Slide 28. Ardmore continues to trade predominantly in the spot market with 82% market exposure. At the same time, we managed to layer in some high-quality time charters at attractive rates to fortify our earnings portfolio. You can see this here. It goes without saying that these are all with top rated counterparties.

Moving to Slide 29, where we highlight low cash breakeven levels and favorable leverage. In 2025, we refinanced our existing debt facilities at attractive terms into a $350 million fully revolving credit facility. We also fully redeemed the remaining $30 million of our preferred shares. Our leverage levels reflect our strategy to create value through the cycle, providing resilience and capacity to pursue opportunities in a patient and disciplined manner. And with that, back over to Bart.

Turning to Slide 31, where we take a look at our global trading operation. This is a key snapshot of our vast commercial universe, covered efficiently from 3 key locations, Houston, Ireland and Singapore. As you can see here, we're servicing a wide high-quality customer base across the world.

Turning to Slide 32. As we've emphasized, having flexible assets in a highly skilled organization are key competitive advantages for Ardmore. Our team and fleet can handle a wide range of cargoes from mainstream refined products to significantly more complex chemical cargoes in various layers in between. This is not for everyone in the industry. It requires a strong culture, matched with deep technical and commercial expertise both the shore and onboard. We believe that this is an important differentiator for Ardmore and our performance.

Turning to Slide 33., where we set the backdrop of evolving regional trade roots. In this case, in the Atlantic market before we get to some more specific hard more vessel trading examples. The maps illustrate 3 distinct phases of how traditional point-to-point routes between the U.S. and Europe have evolved into a far more complex multidirectional trade flows. Shifts in refining activity, cargo sourcing and regional imbalances, plus constantly fluctuating arbitrage have created new patterns across West Africa and South America, extending Voyage combinations across the Atlantic Basin. Ardmore's fully integrated platform and fleet of highly versatile tankers enables us to navigate and capitalize on these emerging trade routes, driving TCE performance.

Turning to Slide 34, bringing it to life for the Ardmore fleet. A great example of how we capture new trading opportunities, maximizing revenue days and enhancing earnings performance. In this case, the vessel achieved a TCE of over $32,000 a day for a period of 136 days. These trade routes are constantly in flux, which requires a very nimble and connected footing in the market.

On to Slide 35. Switching oceans to the Pacific. This example highlights how refinery closures are driving significantly longer haul voyages. The recent shuttering of 2 refineries in California has enhanced product arbitrage from large-scale refineries in the east, resulting in substantial long-haul transpacific voyages. Here, this vessel had been seamlessly trading in the Asian markets, and then later in the U.S. Gulf, connected by a very lucrative 60-day voyage from India, carrying gasoline into the U.S. West Coast earnings $32,000 per day over 117 days. While we can't highlight every voyage, this should give you a feel for how our global trading platform, versatile fleet and company culture create value.

Turning now to Slide 36. How can we make things more efficient, better, faster, safer every time we do them. Innovation sits at the core of Ardmore's culture, shaping everything we do, both onboard and ashore. We'll share a few examples to bring this commitment to life.

Turning to Slide 37. On our ships across the Ardmore fleet from the top of the bridge to the bottom of the engine room and extending to our shoreside teams, we continue to deploy cutting-edge technologies that reduce fuel consumption and boost operational performance. We've been casting a wide net, reviewing hundreds of solutions, and we ultimately select and implement the most promising, many of which have already delivered outsized returns, including some exceeding 100%.

Let's have a look at some specific examples. On Slide 38, we take a deeper dive into our innovative approach to hull performance. Fuel is our largest expense typically accounting for around 2/3 of voyage costs. And while you come out of the drydock with a clean hull, you don't take proactive measures, fuel consumption can increase significantly. Over a 5-year docking cycle, earnings erosion can be substantial. By deploying advanced hull coatings, onboard sensors, and timely proactive in-water hull cleanings, we maintain peak vessel performance. As shown in the chart on the top right, these practices place Ardmore in the best-in-class quartile. versus a global fleet, which experiences significant hull and earnings degradation across docking cycles. But we're not resting here. We're continuing to push the efficiency frontier.

Ardmore is presently trialing autonomous hull cleaning robots that offer promising returns in the 60% to 70% range. Using a hull cleaning robot is literally like brushing your teeth. You start with a clean hull coming out of the drydock and then your resident robot continuously and smartly cleans the ship's hull just like your daily routine of brushing your teeth.

Turning now to Slide 39, which highlights Ardmore's approach to utilizing the latest AI-driven technology to optimize voyages. Over the past several years, our focus has been on adopting best-in-class technology. Using an ecosystem of integrated solutions, this approach enables us to scale quickly, stay flexible and capture efficiency gains as soon as they become available. Every voyage contains multiple decision points. Speed, routing, weather, commercial market conditions and fuel pricing. Having real-time data and the ability to react to changing conditions ensures we're capturing all we can and not leaving anything on the table when it comes to fuel consumption. This system continues to yield significant savings with returns exceeding 100%.

And turning to Slide 40. While we regularly speak about our efforts utilizing AI on board our vessels, we take an identical approach shoreside. As AI and a genetic AI continue to evolve, there are abundant off-the-shelf tools available and we selectively trial and integrate the most promising into our platform to augment our organizational capabilities.

So to wrap up this section, bringing it back to our core operating philosophy and our approach to innovation. We're executing this pragmatic approach organizationally positioning us at the forefront of what's possible and thereby driving returns in all markets. With that, I hand it back to Gernot.

Let's move to Slide 41. Here, we highlight our commitment to best-in-class corporate governance. Ardmore received once again the honor of being the Top Ranked Tanker Company on the latest addition of Webber Corporate Governance Scorecard.

Guided by our highly experienced Board of Directors, all well regarded leaders in their respective fields, we recognize that robust corporate governance essential to achieving long-term success. Important to note also that Ardmore Shipping Corporation and all its business activities are fully aligned and integrated under the public company umbrella.

Turning to Slide 42. This matrix gives you a quick snapshot of the depth and breadth that our Board brings to our company across a wide range of essential fields. The Ardmore Board operates to the latest quality governance practices that are constantly reviewed and refreshed. Our diverse and international Board has a robust and healthy debate culture, including on matters of strategy, opportunity and risk. Corporate responsibility is seen as a hands-on opportunity for positive impact on our business and its people, ultimately enhancing value creation. And there's ongoing Board interaction with our teams during company and ship visits. For us, this is not a mere compliance exercise. It is rooted in our belief that a strong and high-performing Board is key to value creation in the long run.

Turning to Slide 44. So speaking of the Board, we thought it would be a great idea to give you first an experience, no pressure, James. I'm extremely pleased to ask one of our Board members, James Fok to join us on stage and to share some insights on broader macro themes. James does not come from a maritime background, which is refreshing. He brings with him over 25 years of experience as a financial and strategic adviser. James' deep expertise in Asian and cross-border capital markets transactions. His global perspective and pulse on international markets make him exceptionally well positioned to speak to the broader trends shaping today's world. Please join me in welcoming James.

Thanks, Gernot, for that very kind introduction. And good afternoon to all of you who have joined us here at Penn Club today and online. If we can turn to Page 45, please. I've served on the Board about more for a little bit over 3 years now, and it has been a pleasure to be involved with a company with such a culture of performance and one of strong strategic execution. But sometimes sound strategy and execution are not enough. The reality is that the company will be affected by circumstances beyond our control that will affect our operating environment and our financial performance. To the extent that we're able, the Ardmore Board in partnership with management try to keep an eye on macro themes that are likely to affect our risk and opportunity going forward. And today, I'm going to talk about 3 of these themes, namely the geopolitical environment, technology shifts and global liquidity.

We turn to Page 46, please. Geopolitical risks ranked first and second this year on the World Economic Forum's risk perception survey. The resurgence of geopolitics has created a significantly more complex operating environment for both investors and corporate management. who most often don't have relevant experience or frames of reference to deal with these issues. The supply chain shocks highlighted by COVID-19, the Ukraine war and the trade war have led to a fundamental reevaluation of supply chain security. The old mantra of just in time has been replaced by just in case. Informally, capital-light business models are having to confront the issue of dealing with strategic redundancy and higher levels of inventory.

As industries and processes are repatriated or friendshored in the name of National Security, we're also seeing a deemphasis of ESG goals. And as Western countries re-industrialize, this is going to impact financial returns for Wall Street. What's more, as governments look to drive investment into strategic or favored sectors, we're also quite likely to see a diminution in capital mobility going forward.

If we can turn forward to Page 47. Notwithstanding the trade war narrative, over the last few years, we've seen a continued trend up in the total size of -- or total value of global trade. Those trade patterns are changing. And this is highlighted significantly by change in China's trade counterparties over the past 2 decades that was just shown on the right-hand side of the slide here. Over that period, the total value of China's trade has increased by more than 4x to USD 6.4 trillion last year. Over that time, trade with the United States has continued to grow, but the U.S. share of that trade has fallen from 15% to 9%. Meanwhile, what we've seen is that China's trade with ASEAN countries has increased from 10% to 17% of its total. And the trade with the Global South has increased from around 30% to around 40%.

As Bart mentioned earlier, we've seen a significant shift in refining locations across the petroleum products industry. As we look forward to these national security concerns that are being highlighted, we expect to see a continued shift in the locations of processing for key commodities. Notwithstanding, we believe that players like Ardmore that are nimble and global will be able to manage and prosper in this more complex environment.

Going forward to Page 48 and technology. The major theme of the past several years has, of course, been artificial intelligence. We believe that artificial intelligence is a transformative technology and it will drive significant productivity improvements across a wide range of industries. That being said, what we are also observing is that there is a significant divergence in the investment approaches to AI, which is perhaps most easily encapsulated in the consumer model that has raised a huge amount of capital here in the United States and the industrial model, which has been more aggressively pursued in countries like China. In a report published last year, Bain calculated that using a $20 per month subscription model for GPT in order to justify the total amount of investment that is going into AI, you would need to have 8.33 billion active subscribers that is versus a total present global population of just 8.16 billion people.

The fact is that the risk of capital misallocation and capital loss are very real, notwithstanding the fact that we still believe AI will bring substantial benefits in many areas. In Ardmore's approach to innovation, while the Board has been very encouraging of continued investment innovation, but we're also very careful to ensure that each CapEx initiative is scrutinized carefully to ensure that the expected IRR justifies the investment that's being put into it.

Can we turn to Page 49, please. As Bart touched on, a lot of the focus of Ardmore's investment is into driving greater fuel economy. And this is something that I believe the Board will continue to support. That being said, as the technology landscape evolves and we see that centers of innovation are evolving from those established ones to new ones. We also need to be conscious that we need to cast a very wide eye in ensuring that we're capturing the best and most relevant technologies for us. And in this, I think that -- with regards to -- in terms of our technology kind of focus is that if you take my business for example in market infrastructure, if you go about 20 years ago, the dominant technology providers in the industry were primarily U.S. and European players. What we saw over time was that there was an emergence of various Indian technology providers, which were able to produce similar quality at significantly lower cost.

More recently, what we've observed in our industry is that some of the Chinese vendors are now producing not just lower cost technologies, but they're also producing superior technologies. The takeaway for us here at Ardmore is simply that in order to remain globally competitive, we need to look for technologies and keep abreast of technology developments on a global basis.

We turn to Page 50, please. In recent years, we've operated in a very benign liquidity environment. Since the COVID-19 pandemic in 2020, we've seen significant increases in the level of government indebtedness across virtually every major economy. The congressional budget office projects that in order to finance ongoing deficits and to refinance maturing debt, the U.S. federal government between now and 2030 is going to have to issue between USD 22 trillion and USD 27 trillion of bonds.

On top of that, if you look at Western reindustrialization, if you look at the AI-related CapEx spending, if you look at the infrastructure spending that's going to be required to replace obsolete infrastructure, you are going to see significant demands for capital. Allianz has estimated that the energy transition alone over the next 10 years is going to require between $26 trillion and $30 trillion of CapEx.

What does all of this mean? What it means is that the financing environment is likely to get significantly tougher. At Ardmore, the Board and management are laser-focused on ensuring that we maintain adequate liquidity and also that we ensure that we have access to diverse sources of funding. And to give you a little flavor of some of the things that we've been looking at -- if you turn to the next slide, Page 51.

I'm just going to touch very briefly on the offshore Renminbi bond market and developments there. This market that I've personally been very closely involved with in recent years. Over the past several years, as Renminbi interest rates have fallen below U.S. dollar interest rates, you have seen an explosion in new issuance in the offshore Renminbi bond market. You're also seeing many more international issuers flocking to that market.

Last year, Chinese regulators made a relaxation to allow more onshore Chinese investors to invest in that offshore market. And with that, what we have seen is an increase in the term maturity in that bond market. And we're also seeing significant opportunities for international issuers to capture funding cost advantages that arise from time to time, even after the cost of swapping back into U.S. dollars typically is a range between about 20 and 60 basis points. While this is obviously very early days still. This is where -- something that we're going to continue to keep an eye on and we're also going to keep an eye on developments in liquidity sources happening elsewhere.

To summarize and conclude, the geopolitical environment is no doubt creating a more complex operative environment for us. That said, if you look back historically, market fragmentation has tended to drive higher arbitrage spreads, which for players that are able to be nimble and operate across a number of different markets, the opportunities can be very, very significant. So from Ardmore's perspective, if we continue to invest in our efficiency, and we continue to maintain strong liquidity and strong access to finance, we believe that the company will be very, very well positioned, notwithstanding the greater complexity in the operating environment.

Thank you, James, for sharing your insights. Really appreciate it. And just to note for everybody in the audience, James will be with us also during the Q&A section, and is welcoming and any of your questions, of course. But just allow me to kind of take these comments now and mirror them back from the Ardmore what key implications are for our business. At a high level, the first is that James described here resonate strongly with what we see play out day-to-day in our markets. And what we also described, of course, in the earlier part of the presentation during the market section.

Geopolitics continue to reshape trade flows and create ongoing disruption reinforcing the importance of flexibility in our commercial approach as well as the strategic importance of tanker assets in general. Second, innovation must remain central to everything we do. and we leverage the company's vast network of technology providers across the globe which we continuously seek to expand, therefore, to keep pushing the productivity frontier and maintaining financial flexibility is essential. It ensures that we can navigate uncertainty, act opportunistically and continue delivering long-term value for our shareholders.

On to the last slide before Q&A, Slide 54 for those online. We have covered a lot of ground today. So allow me to leave you with the following key points. Market conditions are very positive. Ardmore has been able to capture this strength in a formidable way. Our strong financial footing, and agile organization enable us to respond effectively to change and take advantage of opportunities as they arise. Discipline and governance are foundational to Ardmore and continue to guide our decisions. Where to from here?

Some of you might ask, very simple. We will continue to be responsive to market shifts and opportunities. We will continue to drive operating performance, and we will continue to make responsible capital decisions, all guided by our long-term strategy. Thank you. We now welcome your questions.

Okay. If I could just remind everybody for the Q&A session here, a couple of things. There are people on the webcast. So please do wait for the microphone before you pose your questions. And similarly, for those on the webcast, keep those questions coming in to [email protected], and I'll be your Avatar in the room here. With that, hands in the room. Omar, of course.

Omar Nokta from Clarkson Securities. Thanks for the presentation, very good detail. Maybe just sort of on your last point, Gernot, you were talking about the way forward or where do you go from here? You mentioned early in the presentation, those 3 MRs you acquired last year, they're up 15% in value. So obviously, goodbye. How are you thinking about future capital allocation, considering we've seen these values now start to take off? Where do you put capital? Do you put capital to work? Where do you stand on the sidelines?

I think we always like to look at capital allocation in a nonbinary way where we continue to do all of the above, all of the dimensions we described, maybe not always within the same quarter. But for us, it's always important that we look at capital allocation kind of across the game really. Values have picked up a lot. We do observe that right now we could sell our 2013-2014 bold units at a price which is identical to what we bought 2017 ships for less than a year ago. So you basically get for the same price, 4, 4-plus years when you factor in that actually a year has progressed. At the same time, these ships are also very fuel efficient. Taking advantage of credible earnings environment have been under our care for a long time and can easily be with us for 10 years or longer. Quite happy with the fleet as it is. I think we've demonstrated that we can deliver outstanding performance with those assets. But at the same time, we believe that markets as much as, of course, they are very exciting, and these numbers speak for themselves. They tend to not always move in a straight line. And I think if you had -- well, if you think back to a conversation that would have played out maybe exactly a year ago, you could have asked the question, how do you grow the fleet given current prices. And I think it just takes sometimes a bit of patience, and we continue to look for pockets of value across the full spectrum of sources of tonnage. And you, of course, have to weigh specification, fuel efficiency, age, delivery position, all that. There has been a lot of new building activity. We haven't been active in the new building market in a very long time. And of course, those are quite forward deliveries. So I think for us, we tend to be a bit -- I almost want to say market agnostic, thereby making sure that we take capital decisions that will benefit us really no matter what happens in the market that continues to be very active and also very dynamic.

Can I just follow up to that? You mentioned the new buildings, which I don't think have really participated in. It's funny. We've come somewhat full circle where MRs are now probably the low -- MRs and Handy's are the lowest in terms of percentage growth coming, which is different from, say, 2 or 3 years ago, which gave a lot of investors' apprehension. Now it's the lowest part of the order book. In general, how are you feeling about the new building market for MRs? Is that something of interest? You mentioned it's a bit of a -- there's a bit of a lag until you get delivery, but how are you thinking about new buildings from here?

So we haven't been in the new building market since 2013. We took delivery of our last new building in 2015, and we always found there to be incredible value in a very lively and very liquid secondhand market. Of course, we continue to monitor how those different asset classes and different ages compare on value and kind of really look very closely along that curve where we see the most compelling value. So it's a fairly general answer towards it really depends. But again, we are very closely connected to whatever goes on in any market. And as you see an opportunity, we have demonstrated that we react very quickly and discretely and can make things happen at a moment's notice.

I have 2 questions for James. In your comment about AI and returns, did you mean return on investment or return of investment? Second question. I'm serious. It doesn't mean getting your money back. We're making a profit 8.3 billion people.

Candidly, I mean, from everything that I've seen that there is going to be a significant risk to a lot of investors getting back their money at all. That being said, I think that if you look at the overall system in aggregate, that the benefits will be substantial, but the fact is the economic benefits and what happens in markets quite often do diverge.

Can I just add also one point. Of course, different companies have different AI strategies and that's for every company to determine. We made a decision very early on the game, whether you could be an investor in AI. You could be a developer of AI or you could be really good at adopting AI. And we're always 100% in the later bucket because there, we can -- we have guaranteed returns and very often also on a subscription model with very little CapEx investment. I mean for fuel efficiency sometimes, you need to do some upgrades to machinery that involve some CapEx, but our AI strategy is almost purely on a subscription basis. So at the technology that we thought would deliver great returns isn't working out, we just pull the plug on it. So in that sense, for us, it's definitely -- the question is not so much around return on capital, but really just -- is it meeting our very kind of ambitious return expectations when we deploy cash flows.

Yes. And my second question, James, is in your table about China, the debt and all that stuff. Does that include local and provincial debt or just national debt?

The figures on that, that slide of the national data. I mean the reality is that -- and it's not just China. I mean, a lot of countries have -- is actually hidden sources of debt.

And if everybody could just identify yourselves if you wouldn't mind.

Sure. James Cirenza from DNB Carnegie. So a question for James and a question for Bart. So the competition for capital as this year goes on. So just focus on the U.S. and leave the rest of the world out for a moment. Our treasury is probably going to issue an excess of $7 trillion worth of treasuries this year. We have about $3 trillion of corporate debt maturing this year. The big 4 spenders, mega spenders, I call them, we're going to have a CapEx budget of $650 billion this year. So just do the math on the amount of debt that needs to be raised, how does it make me think about your capital structure as this year unfolds?

Thanks, Jim. Good question. I think in general, and I would say not just this year, but for us, it's always having a capital structure where you can be opportunistic when you see the opportunity for value and as Gernot described on a capital allocation standpoint and maintaining a really wide network of diverse sources of capital. We did take advantage of through the years, the shift with the traditional shipping banks stepping back up and then providing revolving capacity and that was our avenue to shift from some more highly levered leasing structures in Asia. But that being said, just maintaining that network across that sphere and obviously, across the different bond markets as well. I think is one that then when you see opportunity and you can place together potential investment with different slices of optimal capital structure, it makes sense to do so. But then in between, when you can simplify, that also has its merit. So we think back to last quarter and redeeming the preferred. And so preferred was a great piece of capital when we needed more on our balance sheet in 2021. And then when we did refinance and had lower interest rates on the revolver, we knocked off $100 a day or so on our cash breakeven by redeeming the preferred.

The only thing I'll add to that is this is a world in which fortune favors the discipline. And I mean that's one of the things that Ardmore has been very careful to do through the cycle.

All right. I'll log in a couple from the webcast here. There's a few, but they're on a theme. So I'll just sort of lump them here. How do you keep finding new vessel efficiency investments you continue to expect to see those? And then how do you decide between that and buying a ship?

I'll give a start to that one. I think, yes, we've deployed a number of efficiency investments. But when you think about what's been achieved in other industrial sectors and then a lot of the marinization of that technology. So if we look to see what shoreside industrial manufacturing, power generation, I think there still is tremendous runway on the shipping front. And we're really only now seeing that combination of hardware and software working together. And for us, we were one of the first to actually install StarLink across the whole fleet, having that bandwidth to then be able to have the data exchange to come shoreside, run analysis and then give different orders back is one that the frontier will continue to push. That doesn't preclude us from doing anything else. I mean these tend to be fairly discrete quick payback investments or pay-as-you-go service models. And so certainly, I think all of the above, but from the innovation standpoint, certainly core to our culture, and you'll see us continue to make strides.

Okay. So a couple that you would have anticipated and have come in, in different ways, but I'll sort of leave it to you this way. what are we supposed to think about Venezuela? And similarly, Iran right now?

That's a very big question. I think typically, we try to maybe stay clear of really trying to give political or geopolitical opinions or direction. There seem to be a lot of political analysts that would be much better placed to provide answers here. But what it certainly has done, this has created yet additional layers of volatility shifts in commodity pricing, with that commodity arbitrage with that, of course, volatility in freight rates whenever trade routes are withdrawn or redrawn, where you take certain supply or demand areas out of the picture, and they need to be replaced by others. Obviously, that benefits tankers directly. Crude sources or crude destinations for Venezuela, of course, have already been restructured that had an impact on the respective crude freight markets. Freight markets are already volatile as they are in the Middle East and I think it just adds another layer to already several layers of demand in this market.

Okay. So I'm tempted -- this next one I've just gotten in, I'm tempted to actually ask the people in the audience here. I don't know that that's terribly feasible. So I'll put it to you, what's the market missing? What do you feel is underappreciated about what it is that you're presenting and talking about here such that maybe it's not fully understood?

Again, it comes back to those layers of demand. It's a bit like you're peeling back the layers of an onion and you just can't get done. I mean we have, of course, a lot of sort of now fairly aged themes whether it's displacement of Russian barrels, whether it's Red Sea transits, whether it's big East West dislocation, also just the evolution of the refining landscape that Bart, I think, presented really well, where we went from a kind of almost 2-way trade in the North Atlantic, which would have been 10, 20 years ago. to those early triangulation trades to now really lively far fetched triangulation and combination trade. A lot of stuff is happening in Brazil at the moment with regard to crude inflows, crude outflows, ethanol inflows, ethanol outflows and the same also on refined products that I think is probably not really in the scope of public debate quite as much, and it continues. But I think overall, important just to note that I mean we're guiding about $29,000 a day at 50% booked. And just at the Super Bowl, of course. My wife and kids are big Seahawk fans. And so there's been a lot of celebration in the [indiscernible] House. So I'm dying to make a Super Bowl reference. We're at half time, and sometimes at half time, you don't really know how the rest of the game is going to go and could really go still 2 ways. But I think we're really heading into the second half of the first quarter with just so many different layers of demand and complexity that it's hard to see a huge negative surprises.

Maybe I'll just layer in as the Lifetime Buffalo Bills fan, which is a little tough. But we were chatting earlier and Holly Cummings, our Global Head of Chartering is here as well. And just how tight the market is, where you can have a conversation at the start of the week and maybe the U.S. Gulf is somewhere in the mid-20s and then all of a sudden, through the week, 30s, 40s, 50s and they're not satisfied unless they're actually fixing even further north of that. And when you see that in different pockets of the world geography, it just gives you that sense that you definitely have this inherent tightness. And if you're there to capture that volatility, it can be very powerful.

[indiscernible] Boston Partners. What do you think happens when the rush on Ukraine war ends, if ever? Or what do you think the implications are? How will Europe respond to Russia, flows of product and obviously, it's been a huge benefit to this company over the last couple of years. Do you think that the market changes materially thereafter?

I can take a first stab and Bart let me know what you want to add. I think clearly, the market will change. And as long as the market changes, that's a positive. Hard to really say what the new end state would be given that the embargo is really an EU embargo, it's a European embargo, but there's also of course a lot of individual governments within Europe with different views and different voices. And just a lot of stuff in motion politically right now across the world. I would doubt that we're necessarily going straight back to how it used to be. At the same time, of course, the economics of the cheapest barrel will always prevail, but you shouldn't underestimate that also a lot of new trade routes have been established. New trading relationships have been forged, maybe triggered by this, but once people are doing business with each other, they kind of tend to keep doing that. So I'd say definitely a change if we were to just go back to -- revert back to the status quo that would be ton-mile negative. But I think just reverting back to how things used to be is highly likely considering a lot of those new trade participants in the Atlantic from West African exports Brazilian movements, a lot of East West flows on top of the California refining system. So I'd say change, yes, but not necessarily change to the worse.

All right. From the webcast and time charters and Holly got to shout out, so we can keep it on the theme here. Time charter market, there's more of that in the deck than usual. How does that fit in? How does that -- what does that say about your expectation? Sort of talk us through time charters and how they fit in?

Yes, really a portfolio approach. I mean, in terms of revenue days for the year ahead, it's still 82% market exposure. So we're still a predominant spot player and for good reason. So I wouldn't want this to be misinterpreted as a full sort of risk-off move. But we always like to look at what we do within the company across the whole portfolio, buying ships, locking in some high-quality time charters out, there's nothing wrong with having a few top oil majors at really solid rates with a 2-handle over a multiyear period. And of course, that could also give us the ability, if we're locking in visibility on earnings on yet a part of the portfolio, we can also then take a bit more risk on the other end of it. And as we've demonstrated, really not too long ago, we've just last year had an interesting actually still on time charter, where we extended the ship for a year. I can't quite recall the rate. It was something around [ 18% ] and then flipped it out at a think it was a [ 21% ] or [ 22% ], really with no risk whatsoever on full back-to-back terms locking in a couple of million. So something we keep doing and looking at our earnings portfolio as indeed that a portfolio. Yes. So shout out to Holly Cummings, our Global Charting Director from our Houston office, who's sitting at the table over there. So well done to the team.

Okay. One more chance for the group with us here. All right, Gernot over to you, closing remarks. We'll call it a day.

Just thank you. Thank you again for your support. Thank you for following the Ardmore story many of you over a very long period of time. It's been a new venue. I hope it was to your liking, and I hope the food was pleasant. We're all here to have more Q&A on a one-on-one basis and look forward to interacting with all of you. Thank you again, and wish you a great rest of the day and great rest of the year.

Good morning, ladies and gentlemen, and welcome to Ardmore Shipping's Third Quarter 2025 Earnings Conference Call.

Today's call is being recorded, and an audio webcast and presentation are available in the Investor Relations section of the company's website, ardmoreshipping.com. [Operator Instructions] A replay of the conference call will be accessible through November 12 by dialing 1 (888) 660-6345 or 1 (646) 517-4150 and entering passcode 96494.

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

Good morning, and welcome to Ardmore Shipping's Third Quarter 2025 Earnings Call.

First, let me ask our President, Bart Kelleher, to discuss forward-looking statements.

Thanks, Gernot. Turning to Slide 2. Please allow me to remind you that our discussion today contains forward-looking statements. Actual results may differ materially from those projected in the forward-looking statements. Additional information concerning factors that could cause the actual results to differ materially from those in the forward-looking statements is contained in the third quarter 2025 earnings release, which is available on our website.

And now back over to Gernot.

Thank you, Bart. Let me outline the format of today's call, which you can see here on Slide 3. First, I'll give you a brief overview of third quarter results, market trends and how we are executing on capital allocation. I will then hand over to Bart, who will cover the market outlook and update you on our financial and operating performance. Thereafter, I will conclude the presentation before opening up the call for questions.

Turning first to Slide 4. We're pleased to announce our third quarter results, delivering adjusted earnings of $12.6 million or $0.31 per share. Earnings increased throughout the third quarter and into the fourth, driven by record volumes of refined product on the water. Our TCE performance remains exceptionally strong, defying seasonal norms. Rates have been firming throughout the year and into the typically stronger winter period at levels more than double our cash breakeven.

Our MRs earned $24,700 per day for the third quarter and $24,900 so far in the fourth quarter with 40% booked. Our chemical tankers earned $22,600 per day for the third quarter and $22,200 so far in the fourth quarter with 35% booked. We took delivery of 3 modern MR tankers during the quarter. These were opportunistically acquired during a period of market uncertainty before the summer. Secondhand prices have been firming considerably since. These vessels have been capturing strong spot markets, notable fuel savings and increased our earnings power.

Meanwhile, guided by our capital allocation policy, we have fully redeemed our 30 million preferred shares, further reducing our cash breakeven. And we are declaring our 12th consecutive dividend, consistent with our policy of paying out 1/3 of adjusted earnings. In addition, we are further enhancing the value of our trading book through high-quality long-term charter contracts. We recently fixed one of our 2014-built MRs for 2 years to an oil major at $21,250 per day. Looking ahead, markets are experiencing evolving product tanker demand, significant near-term disruption and tight supply-demand balances, as Bart will cover in greater detail.

Turning to Slide 5, where we highlight our disciplined and deliberate approach to capital allocation. We continue to balance returning capital to shareholders with growing the business and reinvesting in our fleet, while maintaining low debt levels. As just mentioned, we are paying our 12th consecutive dividend. We fully redeemed $30 million of preferred shares, and we took delivery of 3 high-performing MRs.

With that, over to Bart.

Thanks, Gernot. Turning to Slide 7 and the market outlook. Export volumes in refined product and transit reached record levels during the quarter, fueling robust product tanker demand. In addition, ample oil supply is driving strong refinery throughput and trading activity. At the same time, high crude fleet utilization is tightening supply across the tanker industry. Notably, 50% of the LR2 fleet is now trading in the crude market, up 23% over the past year.

Turning to Slide 8, where we examine how geopolitical factors are creating further inefficiencies and favorably impacting the market. 16% of the global tanker fleet is now sanctioned, significantly reducing the pool of compliant vessels and limiting available supply. Looking ahead to the start of next year, the EU is further tightening restrictions, targeting products refined from Russian crude. The map on the lower right highlights one example of notably longer voyage distances that are likely to emerge. Meanwhile, rapid changes to geopolitical conflicts, tariffs and trade disruptions are driving increased market activity.

Slide 9 highlights the favorable supply dynamics with positive trends on both ends of the age spectrum, an increasingly older fleet and a shrinking order book with decelerating ordering activity. Our favorite chart on the left illustrates the continued evolution of the aging MR fleet over time. The fleet is the oldest it's been this century. Ongoing regulatory uncertainties continues to limit ordering activity with the order book now representing just 13% of the fleet. Moving to the chart on the right, the older MR fleet approaching the scrapping window is 4x larger than the current order book. As a reminder, even if these vessels are not initially scrapped, their utilization levels notably decline.

Now moving to Slide 10. Here, we take a closer look at evolving trade flows and long-term demand. The global refinery base continues to shift with capacity expansion concentrated in Asia and the Middle East, while closures persist in the West. In Europe and the U.S., refinery shutdowns are increasingly requiring long-haul substitution flows from the East, driving ton-mile demand. Specifically in California, refined product imports are up 50% year-on-year with some major refineries now permanently shutting down. Meanwhile, forecasts note extended oil demand growth, supported by an increased focus on energy security and continued economic growth.

Now moving to Slide 12 and turning our attention to Ardmore's strong financial performance. As previously mentioned, we've utilized our low-cost debt to fully redeem our preferred shares. As a reminder, this was from a 2021 bilateral transaction done directly with our friends at Maritime Partners. Redeeming these shares supports our evolving capital structure and focus on low cash breakeven levels. Once again, the chart on the bottom left highlights the progress we have made to reduce our cash breakeven levels to $11,700 per day. This includes CapEx for drydocking cycles. Without this, our breakeven is an even lower $10,800 per day on an operating basis.

Turning to Slide 13 for financial highlights. For the third quarter, we reported EBITDAR of $27.6 million, and as mentioned earlier, earnings per share of $0.31. We continue to frame EBITDAR as an important comparable valuation metric against our IFRS reporting peers. Full reconciliation details can be found in the appendix on Slide 22. Also, please refer to the appendix on Slide 23 for our fourth quarter guidance numbers. And most importantly, our strong operating leverage positions Ardmore to take advantage of market volatility. Every $10,000 a day in additional TCE increases annual earnings by approximately $2.15 per share.

Moving to Slide 14 for fleet operations. Drydocking activity for the year is largely complete with very limited dockings in the coming years, resulting in more revenue days, earnings power and cash generation. As a reminder, capital expenditures for 2025 are projected to be $37 million, nearly half of which is elective CapEx related to efficiency and tank coating upgrades, projects where we are already realizing notable early returns.

Our strong spot exposure is further enhanced through high-quality charter contracts at attractive levels. We're continuing to invest in tangible AI and digitalization projects with short paybacks. For example, we're currently upgrading high-frequency data collection and transmission across our fleet to take voyage optimization to the next frontier. Our targeted use of biofuel bunker supports trading strategies in the EU, and we are achieving full fuel EU compliance across the fleet in 2025.

Finally, our on-hire availability was a strong 99% in the third quarter, a testament to our seafarers working in coordination with our global team.

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

Thank you, Bart. Moving to Slide 16. Let me summarize. Earnings have continued to strengthen through the first 3 quarters of 2025 and into the fourth quarter, supported by favorable market conditions and strong operating performance. Our recent acquisitions are capturing these favorable markets and increase Ardmore's earnings power. We are wrapping up our CapEx program for the year with a minimal drydock schedule for the coming 2 years, and we continue to enhance the quality of our trading book with compelling long-term charters.

Our strong financial position enables us to be opportunistic and resilient, giving us the flexibility to both reinvest in the business and deliver shareholder returns. As always, our actions are guided by industry-leading governance. and we take an agile and responsive approach to market shifts enabled by our high-performing operating platform.

With that, we now welcome your questions.

[Operator Instructions] Your first question comes from Jonathan Chappell with Evercore.

Maybe Bart, either one of you guys can answer this one. But if you look at Slide 7, the output on the water, the size it's ever been, the refinery run size it's ever been, a lot of favorable things you're talking about as it relates to sanctions. And mid-20s a day is a decent rate, but it's not a phenomenal rate. And it's also lagging, I'd say, a historical relationship with the strength of the VLCC market. So is this like things are building and you expect a much stronger winter period? Or is there some limiting factor that kind of keeps the MR spot rates from getting $35,000, $40,000 a day?

Yes. Thanks, Jon. I'm going to start here and then see what Bart might want to add. But you're making a good point. If you look at just sort of the short-term sort of relationship between MRs and some of the crude tankers, if you zoom out, there is a relatively strong correlation. And of course, you could argue that whatever goes into the refinery also comes out the other end. So yes, I think that point is well made. Just kind of looking at our sector, we feel pretty compelled by the significant ramp-up in earnings that we've seen from the start of the year where there's been more of a risk of approaching markets to our trading activity really going through a catch-up phase.

But we're equally excited, of course, about sort of the long-term demand drivers, sectoral drivers, evolution of the demand picture of product tankers as a whole, where the market that we're facing today is vastly evolved from what it would have been 10 to 15 years ago. And of course, not to forget that we have the oldest fleet kind of on record this century. So we're quite positive about the long-term picture.

And I think near term, not to kind of dive into all the geopolitical factors that are in play, but it certainly feels like the world is nowhere near an equilibrium. And while there are these shifts brought on by geopolitical tension or even by conflict, of which there are many, that creates volatility in commodity markets. And with volatility in commodity markets, you see more trading and with more trading, you have a higher demand for ships carrying those commodities and to move at increasing lengths. I think what we hinted at, what's going on right now with regard to imports really moving up significantly into California is significant.

Some of the new triangulations we're seeing in the Atlantic Basin. It's just a story that's starting to play out now. We've, of course, talked at length about the displacement trade of formerly Russian diesel exports into Europe, whereby Europe is cutting that from different regions. But probably very little talked about is that Russia is now actually looking to import CPP or petroleum products from relatively far away places like in Asia to actually bridge the shortfall of their own domestic petroleum production, which has been quite heavily hit, of course, recently. So I think taking into account all of that, we feel positive about the market outlook.

Okay. That's very helpful, Gernot. And then given that, I mean, I understand you want to balance chartering strategy and 2 years with an oil major is probably a pretty good business. But again, that's at a level that's lower than what you just did in the third quarter, what you're indicating for the fourth quarter, what you're effectively insinuating for the near term. So just help us understand the thought process behind that deal and your appetite to do others of similar duration and rate levels.

Yes. I mean it is, of course, a relatively small portion of the fleet, and the fleet is predominantly operating in the spot market where we can capture those favorable currents. We look at it really as a portfolio. We have been active on both the time charter in and time charter out front, sometimes simultaneously, and we'll continue to do that. This was an opportunity to lock in a really strong return with a high-quality counterparty. And as we're expanding the earnings power, we also kind of augment and solidify earnings quality with a counterparty that is well known to us, first grade, and we have a long operating history with.

So we'll continue to, of course, evaluate opportunities on both sides of the table in, out as well, of course, on the S&P side of things, and it's just one part of a broader portfolio. And I think maybe taking a little cue here from your first question on market direction. I mean, this is a major oil and refining company. And for there to be the confidence to take a long-term charter at these good levels, I think also is -- reflects positively on their view of their physical needs in terms of moving their product over the -- over multiple years.

Your next question comes from Omar Nokta with Jefferies.

A couple of questions on my end. Just a couple for me. And maybe just following up on the first question from John. I guess, thinking about the market in, you've already talked about it. But just from maybe your vantage point, obviously, the market has gotten better this year as time has gone on, right, your results have sequentially improved, but it doesn't have that sizzle yet like we are seeing in crude tankers.

And I guess just from what you're saying, is this as expected? Is this what you would have thought would have happened to product tankers given the shift in OPEC that we would see crude tankers surge, products just sort of improve? And then is it just simply a matter of time, as you mentioned, that it's just simply these cargoes now need to deliver into the refining system and then that will then create more product flow? Is it as simple as that?

Yes. I mean, look, if there's an abundance of oil supply, which I think is, at this point, pretty much a given, given the -- not just the strong output and OPEC+ production increases, even though they might be moderated now at the start of the year. But of course, that's always kind of a balancing act. But OPEC+, of course, are not the only oil producers at the moment. And I think we have continued to observe is there is ample oil supply that creates really strong incentives for refineries to, of course, put that to the refinery. We see already refining margins very strong. We see product on the water indeed quite firm.

And just with the market -- sort of the oil market kind of flirting with the contango kind of not quite there, but dipping in and out of that, of course, that then creates all sort of interesting commodity plays, increases economic incentive for long-haul trading for the larger ships could certainly lead to some storage activity, which has a very positive cascading effect and just kind of creates that additional layer of trading demand. So to your point, I think there's still a lot of positive factors that could play out in addition to just continued trade shifts that are purely within refined products trading.

And I'd just add in, Omar, as well. Typical seasonality is always more of the discussion of is it mid-November or kind of prior to Thanksgiving. And so from that, I mean, we still do have part of the refining base coming back from maintenance period and everything, and then you have the accelerants that Gernot just spoke about.

That's helpful. And I just wanted to ask maybe a bit more on Ardmore specifically strategy. Obviously, you guys have done very well in terms of strengthening the balance sheet. You've got now just looking here on your slides, no dry docks next year, you've got no real debt repayments next year, and you've paid for those 3 MRs are delivered. So you're in a great position with plenty of flexibility as we look into '26. Presumably, the market still looks fairly decent. Kind of what are you thinking now that you -- especially now that you've redeemed the preferreds, you have a lot more flexibility than you have had in the past. Does this change anything in terms of how you want to deploy capital, whether it's returning more capital to shareholders? Or do you think there's opportunities to kind of maybe replicate the sale and purchase transaction you did a few months ago with those 3 MRs? How are you thinking about that?

Yes. That's a great question, Omar. And I think ultimately, our next steps will be guided by the market, always, of course, underpinned and guided by our strong governance and our very balanced approach to capital allocation. We feel like we have found a way to be value-enhancing across a wide range of transactions. So of course, the 3 vessels we took delivery of just after the summer, if you just take sort of price point that we paid for the 5-year-old would have been around $38 million, just north of that. And we've seen now ships of the same age getting sold for $43 million in one case, as much as north of $44 million. So we in the money by 15% there within 4 months. And of course, we take note of that big step-up, happy with that transaction. And to what extent there are opportunities moving forward, closely, of course, connected with all sources of deal flow. It's an active market, fragmented buyers, sellers that sometimes buy and sell ships for reasons that are not necessarily only economically motivated.

But at the same time, we've also found ways to reinvest in the business, not by acquiring ships, but by investing in vessel upgrades that had extremely short payback periods, whether it was efficiency upgrades that enabled really compelling fuel savings, whether it was increasing cargo versatility by upgrading our chemical tankers. And of course, across the past year, we have provided shareholder returns, not just through a dividend, but also through share buybacks when we thought there was an opportunity to lean in and all those avenues will continue to be on the table. And of course, what we did recently with the pref helps reduce our breakeven on top of kind of really rigorous cost discipline as well. And I think that will continue to be the guiding pillars of our strategy focused on the product and chemical space and looking to do value-enhancing transactions across the spectrum. And how that would look in detail, again, is ultimately guided by the market.

Since there are no further questions, this concludes today's conference call. Thank you for your participation. You may now disconnect.