ULTR

Ultrapetrol (Bahamas) Limited (ULTR)

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Ultrapetrol (Bahamas) Ltd (ULTR)

Q2 2008 Earnings Call Transcript

August 13, 2008 10:00 am ET

Executives

Len Hoskinson - Director and CFO

Filipe Menendez - President and CEO

Analysts

Ben Nolan - Jefferies & Company

Rodrigo Guerosare - Analyst

Matthew Dundon - Miller Tabak Roberts

Michael Safransky - Onyx Capital

Presentation

Operator

Welcome to the Ultrapetrol Limited second quarter 2008 earnings conference call. At this time, all lines are in a listen-only mode. During the question-and-answer session today (Operator Instructions) Today's call is being recorded.

At this time, I will turn the call over to the CFO, Mr. Len Hoskinson. Sir, you may begin.

Len Hoskinson

Good morning, everyone. Thank you for joining us. Welcome to the Ultrapetrol Bahamas Limited conference call to discuss the Company's 2008 second quarter results. I would like to remind everyone that this conference call is now being webcast at the Company's website, ultrapetrol.net. There are also additional materials related to our earnings announcements, including a slide presentation on our website.

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 reports on Form 20F 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. And I will take you through the financials. After our remarks, we will be happy to open the floor for your questions.

Now, I hand it over to Filipe.

Filipe Menendez

Thank you, Len. Good morning, everyone, and thank you for joining us in the call today. In order to make the best use of the 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.

As you will see on slide three, our revenues during the second quarter of 2008 have increased by 50% over the same period of 2007 that is to $83 million. Similarly, our recorded EBITDA for the second quarter was $29 million, which compares with an adjusted EBITDA of $19.4 million in the second quarter of 2007.

Our recorded net income for the same period in 2008 was $11.7 million. The Company's second quarter 2008 net income includes a deferred income tax charge of $2.2 million from unrealized foreign currency exchange rate gains on U.S. dollar denominated debt on one of our Brazilian subsidiaries in the Offshore Supply Business.

The adjusted net income for the second quarter 2008, excluding this effect, is $13.9 million or an EPS of $0.43 per share, which compares with a similarly adjusted net income and EPS of $5.6 million and $0.18 per share, respectively, during the same period of last year.

Len will discuss our financials in more detail later on in the call. However, I would like to mention at this point that our overall results for the second quarter of 2008 have been strong in all segments, but particularly in our Ocean Business.

We are very much in line with what we discussed during our last call, the expiring of the old charters that covered part of our fleet, as well as the addition of one Capesize vessel at the end of 2007 have significantly changed the contribution of this segment in our overall results.

During the quarter, we entered into a 12-year secured term loan of up to $93.6 million with DVB Bank AG and Natixis, in respect of a pre-delivery and post-delivery financing of the four PSVs we have under construction in India.

In addition, we assigned an MOA to sell our passenger vessel, the Blue Monarch. The net proceeds of this sale to the Company are expected to be $8.3 million. Under the terms of this agreement, the buyers must deposit the purchase price prior to August 25, 2008. If the price is not deposited, however, in accordance with the MOA by August 25, this transaction may not materialize as agreed.

A good look at slide four, just to mention that our adjusted EBITDA, adjusted net income, and corresponding EPS for the first six months of the year have been $51.5 million, $19.7 million, and $0.60 per share, respectively, exceeding by44% the adjusted EBITDA and more than doubling the adjusted net income and earnings per share that we obtained in the same period of last year.

Let's turn to slide five for an update on what has happened in our River Business in this quarter. While we continued our barge enlargement program with 48 units already processed, we have advanced according to plan with the construction of our new barge building facility in Rosario, Argentina. We expect the facility to be in full production in the first quarter of 2009. This shipyard will be the most modern of its kind in South America, and it is designed to be able to add to our fleet 1 million tons of cargo -- iron ore cargo carrying capacity per year.

Volumes loaded grew 6% from 1.1 million tons in the second quarter of 2007 to 1.2 million tons in the second quarter of 2008. We have received in the Hidrovia the 27 Mississippi barges and two pushboats previously acquired in the Mississippi River, which became operational only in June 2008. So effectively, they did not have a significant impact in our second quarter results.

On slide six, you will find a quarter-on-quarter comparison of our River segment revenues, expenses and EBITDA. The second quarter 2008 River segment EBITDA was $5.8 million as compared to $5.7 million in the second quarter of 2007. When analyzing the expense side of our River results, we note an increase in our voyage expenses of approximately $8.3 million. The majority of this increase, $6.6 million, is attributable to fuel expense.

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