Ultrapetrol (Bahamas) Limited (ULTR)

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Ultrapetrol (Bahamas) Limited (ULTR)

Q3 2009 Earnings Call

November 11, 2009 10:00 am ET


Len Hoskinson - Chief Financial Officer

Felipe Menendez - President and Chief Executive Officer


Ben Nolan - Jefferies & Company

Jamie Nicholson - Credit Suisse

[Claire Caroka] - Raymond James

Marc Lebensfeld - Newland Capital

Ira Socket - Socket and Company



Good morning, everyone. Thank you all for standing by, and welcome to today's conference call. (Operator Instructions)

I will now turn the conference over to Len Hoskinson, CFO of Ultrapetrol. Sir, you may proceed.

Len Hoskinson

Thank you. good morning, everyone. Thank you for joining us. Welcome to the Ultrapetrol (Bahamas) Limited conference call to discuss the company's 2009 third 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 a slide presentation which forms 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 materially from the forward-looking statement. 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 reports on Form 20-F for the year ending December 31, 2008 or Form 6-K for the third quarter of 2009 that was filed yesterday as well as 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 CapEx plan and 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

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

In Slide 3 you will find a summary of our third quarter results 2009 compared to the equivalent period in 2008. The adjusted EBITDA for the period is $15.8 million, which compares $30.5 million in the same period of 2008, while the adjusted net income and earnings per share in the third quarter of 2009 are a negative $0.8 million and negative $0.03 per share respectively, which compare to $11.1 million and $0.34 per share in the third quarter of 2008.

As we go through the results of the various segments you will notice that broadly speaking this difference between the third quarter EBITDA in both periods of approximately $11 million results from a difference of about $3.7 million in our River segment results, $4.7 million in our Offshore Supply Business and about $7.3 million in our Ocean Business counterbalanced by several factors, including our non-discontinued Passenger Vessel operation.

On the right-hand side of the table you will find a similar comparison of the first nine months of 2009 and the equivalent period in 2008, where our adjusted EBITDA and EPS have been $51 million and $0.10 per share compared with $82 million and $0.94 per share in the equivalent period of 2008.

As in previous quarters, we adjust our reported EBITDA and net income for the effect of a provision for income taxes for unrealized gains resulting from exchange variances in our Brazilian subsidiary. In addition, this quarter we have made an adjustment to deduct the effect of a non-cash $1.5 million provision charged against the quarter results for the possible penalty that may be incurred on account of the late delivery of UP Rubi under her new long-term employment with Petrobras. The provision in fact relates to the four-year contract that we have secured for the vessel and it may be paid month by month over the four-year period, but the loss is reflected completely in this third quarter.

During the quarter we signed with BNDES in Brazil an $18.7 million loan for a 17-year term at a fixed interest rate of 3% per annum. We have similarly signed an agreement for which DVB will provide a guarantee to this loan. We have ended the third quarter with approximately $41.9 million in cash.

Now turning to Slide 5, you will find the quarter-on-quarter comparison of our River results. As you can see, the volume loaded in the second quarter of 2009 was approximately 36% lower than the equivalent volume in 2008. Much as we anticipated in our second quarter call, the majority of this difference come from a significantly smaller quantity of soybeans and agricultural commodities shipped during the third quarter of 2009 because of the extreme drought that the entire region has experienced in 2009.

As you can see in the right-hand column, our revenues and fuel expense compared to the same period in 2008 reduced more than proportionately to the volumes carried. The main reason for this is, of course, the reduction in fuel prices experienced during the period which adjust our freights automatically, leaving us neutral to the variation in the price of fuel. As you can see, however, the fuel expense reduced even further as a result of a better overall consumption efficiency achieved despite the very low volumes of cargo available.

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