ULTR

Ultrapetrol (Bahamas) Limited (ULTR)

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Ultrapetrol (Bahamas) (ULTR)

Q4 2012 Earnings Call

March 15, 2013 10:00 am ET

Executives

Leonard J. Hoskinson - Chief Financial Officer and Secretary

Felipe Menendez Ross - Chief Executive Officer, President, Director, Chief Executive Officer of UABL Limited, President of UABL Limited, President of Ultrapetrol S A, Director of UABL Limited and Director of Ultrapetrol S A

Analysts

Benjamin Nolan

Arieh Coll

Presentation

Operator

Welcome, and thank you for standing by. [Operator Instructions] Today's call is being recorded. If you have any objections, please disconnect at this time.

I would like now to turn the conference over to Mr. Len Hoskinson, Chief Financial Officer of Ultrapetrol. You may begin.

Leonard J. Hoskinson

Thank you, Wendy. Good morning, everyone, and thank you for joining us. Welcome to the Ultrapetrol (Bahamas) Ltd. Conference Call to Discuss the Company's 2012 Full Year and Fourth Quarter Earnings. I would like to remind everyone that this conference call is now being webcast at the company's website, www.ultrapetrol.net. There are also additional materials related to our earnings announcement on our website, including the slide presentation, which forms a part of this conference call.

You should be aware that in today's conference call, we will 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 Securities and Exchange Commission, including, without limitation, the company's Annual Report on Form 20-F for the year ending December 31, 2012, which was filed yesterday as well, and on Page 2 of the slide presentation that shortly follows.

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

So with that, I will hand the proceedings over to Felipe.

Felipe Menendez Ross

Thank you, Len. Good morning, everyone, and thank you for joining us on the call today. In order to be able to make best use of the material that we have filed, together with our press release, as we go along, we will reference, as usual, the slide number that corresponds to the information we are discussing.

In Slide 3, you will find a summary of our year-end results for 2012 compared to the equivalent results for 2011. The most significant event of 2012 has been the closing of a capital infusion in the amount of $220 million concluded in December. The beneficial effects of this transaction will be discussed in more detail later as we go along the presentation.

The adjusted EBITDA for the period is $32 million, which compares with $54 million in the same period of 2011, while our adjusted net loss and earnings per share are $46 million negative and negative $1.30 per share, which compares to a negative $22.4 million and $0.76 per share in 2011. As usual, we adjust the net income and earnings per share to reflect the provision for exchange variance in our Brazilian subsidiary, which is a non-cash effect produced solely by the devaluation of the Brazilian currency.

In 2012, we have also carried out a non-cash impairment charge on the value of our vessel, Amadeo, which Len will explain later in more detail. It is important to point out that most of our fleet is not exposed to the volatility in values common to some sectors of the shipping market. And that we do not anticipate any other significant impairment charge on our fleet values. Finally, in the adjustment to net loss, you will note that we include $900,000 noncash write-down of the expenses associated to the old DVB/Natixis financing, which was partially prepaid in 2012.

Let's turn to Slide 4, where you will find our fourth quarter 2012 EBITDA per segment compared to the equivalent period in 2011. As you have seen in more detail, when we analyze each individual segment, the River results continued to suffer in the fourth quarter. The consequences of the very severe drought that reduced the volume carried and produced abnormally low river levels impacting our operating costs and resulting in a decrease of $11.4 million in the EBITDA of this segment, when compared with the fourth quarter of 2011.

Our Offshore businesses provided its results substantially as a consequence of the improvement in the operation of the fourth quarter of one additional vessel, UP Jade, that entered service in August 2012, as well as a marginal increase in operating days of UP Diamante and Jasper, when compared to the same period of 2011.

Our Ocean business adjusted EBITDA decreased $2 million, mostly as a consequence of the offhire time of MV Argentino, which carried out its regular drydock during most of the fourth quarter of 2012.

Finally, there was a noncash variance associated to the regular exchange variation at the end of the period, which produced a $1.4 million positive variation across the segments in our adjusted consolidated EBITDA.

In Slide 6, you will find the full year and fourth quarter comparison of our 2012 River results against those obtained in 2011. As you can see, the total volume transported in 2012 was 24% or 1 million tons lower than the equivalent total volume we carried in 2011.

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