Ultrapetrol (Bahamas) Limited (ULTR)

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Ultrapetrol (Bahamas) Limited (ULTR)

Q3 2008 Earnings Call

November 13, 2008 10:00 am ET


Filipe Menendez - President and CEO

Len Hoskinson - CFO


Mike Lanier - AIG

Francisco Schumacher - Raymond James

Leenk Warden - HD Willington

Ira Socket - Socket and Company

Rodrigo Goes - UBS



Welcome to the Ultrapetrol conference call third quarter 2008 financial results. At this time, all participants are on a listen-only mode. (Operator Instructions). Today's conference is being recorded.

And at this time, I'll turn the call over to Mr. Len Hoskinson, Chief Financial Officer.

Len Hoskinson

Good morning, everyone. Thank you for joining us and welcome to the Ultrapetrol conference call to discuss the company's 2008 third quarter results. I would like to remind everyone that this conference call is now being webcast at the company's website and there are also additional materials there related to our earnings announcement, including the slide presentation which forms part of this conference call.

You should be aware that in today's conference call, we'll be making certain forward-looking statements to discuss future events and performance. These statements are subject to risks and uncertainties that could cause actual results to differ from the forward-looking statements.

For a discussion of factors that could cause results to differ, please see the company's press release that was issued yesterday and the company's filings with the SEC including, without limitation, the company's annual report on Form 20-F for the year ending December 31, 2007 and its subsequent reports on Form 6-K.

With me today is Filipe Menendez, Ultrapetrol's President and Chief Executive Officer. Filipe will review Ultrapetrol's business segments as well as discuss our industry and future growth opportunities. I will take you through the financials. And after our remarks, we will be happy to take your questions.

And with that, I will now hand it to Felipe.

Felipe Menendez

Thank you for joining us on the call today. In order to make the best use of the material that we have filed together with our press release, as we along we will reference the slide number that corresponds to the information that we are discussing.

As you will see in slide 3, our revenues during the third quarter of 2008 have increased by 45% over the same period of 2007 to $91.3 million. Similarly, our recorded EBIDTA for the third quarter was $30.6 million, which compares with an adjusted EBIDTA of $21.7 million in the third quarter of 2007.

Our recorded net income for the third quarter of 2008 was $15.1 million, which includes an income tax on exchange variance provision of $3.9 million from unrealized foreign currency exchange rate gains on US dollar-denominated debt of one our Brazilian subsidiaries in the Offshore Supply Business.

The adjusted net income for the third quarter of 2008, excluding this effect, is $11.1 million, or $0.34 per share, which compares with a similarly adjusted net income and EPS of $7.7 million and $0.33 per share respectively during the same period of last year.

Len will discuss our financials in more detail later on the call. However, I would like to mention at this point that our overall results for the third quarter of 2008 have been strong in full course, particularly in our Ocean Business. We are very much in line with what we discussed during our last call. The expiry of our old charters that covered part of our fleet coupled with the FAA forward coverage that we secured have significantly changed the contribution of this segment to our results.

During the quarter, we drew down senior credit loan facility with IFC for $60 million, to which we expect to add another $15 million loan before the end of 2008. With the total of $75 million under these two facilities, both of which had a 12-year term with four years of grace, we have all the external financing that we think we need to fund our River Business growth programs.

Let's turn to slide 4, just to mention that our adjusted EBITDA, adjusted net income and corresponding earnings per share for the first nine months of the year have been $82.1 million, $30.8 million and $0.94 per share, exceeding by 43% the adjusted EBITDA and almost doubling the adjusted net income and EPS that we obtained during the same period of last year.

Our share repurchase program, which was authorized up to $50 million, has been extended up to the end of December 2008. During October 2008, the company acquired 2,531,108 of its shares at an average cost of $0.439 for a total cost of $11.1 million, making the total acquisition in 2008 about 3.2 million shares or about 9.6% of the shares outstanding at the beginning of the year at an average price of $5.49.

Let's turn to slide 5 for an update on what has happened in our River Business in this quarter. We have advanced with the construction of our new barge building facility in Rosario, in Argentina. The progress of construction is approximately two months behind schedule, mainly due to delays of one of our contractors.

We are receiving and started to install the equipment for the yard as planned, so we should not experience any significant delays from now on. We expect to have the yard in full production for the second quarter of 2009. As we have previously discussed, this ship yard will be the most modern of its kind in South America and will give also a great competitive advantage in creating new capacity at a low unit cost.

We have temporarily slowed down our barge enlargement program until the second quarter of 2009 to prioritize the re-bottoming and repairs required by our existing fleet. During the next six months, we will be using only 30% of our Ramallo yard capacity for enlargements, and 70% for repairs.

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