Ultrapetrol (Bahamas) Limited : Ultrapetrol Reports Financial Results for Third Quarter 2013

NASSAU, Bahamas, Nov. 13, 2013 (GLOBE NEWSWIRE) -- Ultrapetrol (Bahamas) Limited (Nasdaq:ULTR), an industrial transportation company serving marine transportation needs in three markets (River Business, Offshore Supply Business and Ocean Business), today announced financial results for the third quarter ended September 30, 2013.

Third Quarter 2013 and subsequent events highlights:

• Recorded third quarter 2013 revenues of $112.6 million;
  
• Recorded adjusted EBITDA of $30.2 million in the third quarter of 2013; 1 which includes adjusted EBITDA of $11.4 million from our River Business, adjusted EBITDA of $12.7 million from Offshore Supply Business segment, adjusted EBITDA of $0.7 million from Ocean Business segment, and adjusted EBITDA of $5.4 million from other activities-primarily foreign currency exchange cash gains;
  
• Total adjusted net income and adjusted net income per share of $8.4 million and $0.06 per share, respectively, in the third quarter of 2013 which excludes the effect of a $0.2 million gain for deferred taxes on unrealized foreign exchange losses on U.S. dollar-denominated debt of our Brazilian subsidiary in our Offshore Supply Business, a $(1.7) million non-cash loss from debt extinguishments and a $0.1 million gain related to the sale of dry barges which were subsequently leased back to the Company (for accounting purposes such gain will be deferred over the term of the lease up to the present value of the lease payments). 2 Before adjusting for these effects, the recorded total net income and net income per share are $7.0 million and $0.05, respectively;
  
• Third quarter 2013 Adjusted EBITDA for our River Business segment increased $11.7 million as compared with the same period of 2012 as a result of normal crop year and rainfall and the increased activity from our Punta Alvear shipyard;
  
• On October 2, 2013, we closed the sale of $25.0 million in aggregate principal amount of our 8.875% First Preferred Ship Mortgage Notes due 2021 (the "Add-On Notes"), which were offered as an add-on to our outstanding $200.0 million aggregate principal amount of 8.875% First Preferred Ship Mortgage Notes due 2021. As a result of the offering of the Add-On Notes, we have outstanding an aggregate principal amount of $225.0 million of our 8.875% First Preferred Ship Mortgage Notes due 2021. The Add-On Notes were sold at 104.5% and the gross proceeds to us of the offering totaled $26.1 million;
  
• On October 3, 2013, we entered into two Memorandums of Agreement ("MOAs") whereby we agreed to acquire two 5,145 dwt newbuilt Chinese sister PSVs, named UP Agate and UP Coral, which were subsequently delivered on October 29, 2013. The purchase price for these vessels is approximately $32.0 million each (including some minor works still underway). In addition we exercised our option to acquire the third sister 5,145 dwt newbuilt Chinese PSV (to be named UP Opal), and consequently, on October 30, 2013, entered into an MOA for the same price as the previous two. All three vessels will undergo certain upgrading to conform to our operation at the same yard where they were built and are expected to commence operations during the first quarter of 2014;
  
• On October 22, 2013, we cancelled the Shipbuilding Contract for Hull No. V-387 (UP Onyx) on account of the shipyard's delay in delivering the vessel. The appropriate repayment demands have been made under the refund guarantees issued by certain banks;
  
• On October 24, 2013, we entered into a barge building contract whereby we agreed to build and sell from our Punta Alvear yard a set of twelve newbuilt barges to a third party with deliveries ranging between January and April 2014. Gross proceeds to us from this sale will be $13.2 million.

1  For a reconciliation of non-GAAP measures, please see the tables included under the supplemental information section of this release.

2  For a detailed explanation of these adjustments and other adjustments elsewhere in this release, see "Overview of Financial Results" and the tables included under the Supplemental Information section of this release.

Felipe Menéndez, Ultrapetrol's President and Chief Executive Officer, stated, "During the third quarter, our main business segments once again performed well, continuing the momentum we developed in the first half of the year. In our River Business, we transported significantly higher cargo volumes, capitalized on increased freight rates and delivered ten barges from our shipyard to third parties. In our Offshore Supply Business, we made further progress growing our fleet and positioning the Company to take advantage of the strong demand for PSVs. We placed into service a new ship, UP Amber, in the third quarter and subsequently received from the yard our UP Pearl which is on her way to Brazil where she will be delivered to Petrobras under a four year charter. We believe that these new vessels and the higher time charter rates obtained on the renewal of the contracts for the rest of the existing fleet will significantly contribute to our Offshore segment EBITDA next year." 

Mr. Menéndez continued, "Consistent with this important objective, just last month we made a very significant investment of about $96.0 million to add three state-of-the art diesel electric very large PSVs to our fleet. We bought these ships off the building yard in China and expect them to be in service in early 2014. With the additions of these new vessels, we have increased our Offshore Supply fleet's capacity close to 30% during a time when demand in Brazil and elsewhere is growing at a fast pace."

Mr. Menéndez concluded, "Having successfully placed our new $225.0 million Senior Notes due 2021 and repaid our earlier notes, we believe we are now in an ideal position to capitalize on the opportunities that our core business segments will present in 2014 and 2015."

Overview of Financial Results

Total revenues for the third quarter of 2013 were $112.6 million as compared with $82.8 million in the same period of 2012.

Adjusted EBITDA for the third quarter 2013 was $30.2 million as compared with $9.1 million in the same period of 2012. For a reconciliation of adjusted EBITDA to cash flows from operating activities, please see the tables at the end of this release.

Adjusted net income for the third quarter of 2013 was $8.4 million which excludes the effect of a $0.2 million gain for deferred taxes on unrealized foreign exchange losses on U.S. dollar-denominated debt of our Brazilian subsidiary in our Offshore Supply Business, a $(1.7) million non-cash loss from debt extinguishments and a $0.1 million gain related to the sale of dry barges which were subsequently leased back to the Company (for accounting purposes such gain will be deferred over the term of the lease up to the present value of the lease payments). Before adjusting for these effects, the recorded total net income was $7.0 million.

Cecilia Yad, Ultrapetrol's Chief Financial Officer, said, "During this quarter, we continued to generate strong financial results enhancing our performance in line with our expectations. When comparing the quarter ended September 30, 2013, to the same period of 2012, adjusted EBITDA more than tripled. We also maintained our strong cash position during the third quarter ending the period with $123.1 million, providing a strong foothold for our strategic investment plans in the River and Offshore segments."

Business Segment Highlights

River

The River Business experienced a 31% increase in the volume of cargo transported in the third quarter of 2013 as compared with the same period of 2012, which was mainly due to normalized rainfall levels resulting in a significantly higher crop and normal river levels.

Third quarter 2013 River Business segment adjusted EBITDA was $11.4 million versus a loss of $(0.3) million in the same period of 2012, an $11.7 million increase. For a reconciliation of segment adjusted EBITDA to operating profit (loss), please see the tables at the end of this release.

Results for the third quarter of 2013 demonstrate the positive compounded effects of stronger freight rates and the normalized cargo volumes, taking into consideration the expected seasonality inherent in the segment as well as the sale of a larger number of barges manufactured in our shipyard to third parties. According to the latest USDA estimates, the soybean crop in Paraguay for 2013 is expected to be 9.4 million tons, which is 5.3 million tons or 132% greater than the 2012 crop. Argentina, Brazil, Bolivia, Paraguay and Uruguay are estimated to account for approximately 55% of world soybean production in 2013, as compared to 30% in 1995.

These figures are a sign of the strength of the long-term growth prospects of the agricultural sector along the Hidrovia, where the seeded area is expected to continue to grow, fostered by the strong prices of soybean and other agricultural commodities. This steady long-term growth trend represents an important demand driver for Ultrapetrol's River Business. In addition, iron ore production in the three mines connected with the river system has also increased substantially in the last decade.

The Company has continued to install its new engines that will convert a substantial portion of its line pushboats from diesel to heavy fuel consumption. The seventh re-engined pushboat is expected to commence operation within the first half of 2014. This program has demonstrated its potential to lead to substantial savings in fuel expense and to an increase in tow size and navigation speed, which we believe will enhance our EBITDA margins in the future.

During the third quarter of 2013, our Punta Alvear barge-building facility continued with the production of barges for third parties and has secured an order to build an additional set of barges for a non-related third party. Including this order, as well as the barges built for our own fleet, we expect to have our yard fully contracted into the second quarter of 2014.

Offshore Supply

In the Offshore Supply Business, we now operate a fleet of eleven PSVs, ten of which are contracted to Petrobras in Brazil while one operates in the North Sea. Our recently delivered UP Pearl is expected to commence operations during the fourth quarter of 2013 under a four year charter with Petrobras after finalizing the vessel's positioning trip and completing the set-up work for that charter. In addition, we recently acquired three newbuilt 4,500 class PSVs delivered off the yard in China, scheduled to commence operation in the first quarter of 2014. The adjusted EBITDA generated by the Offshore Supply Business segment during the third quarter of 2013 was $12.7 million, twice the $6.3 million adjusted EBITDA generated in the same period of 2012. For a reconciliation of segment adjusted EBITDA to operating profit (loss), please see the tables at the end of this release.

Total revenues from our Offshore Supply Business for the third quarter of 2013 increased by $6.2 million compared with the same period of 2012. This represents a 33% increase which was primarily attributable to the operation of our UP Amber which commenced operation with Petrobras on August 1, 2013, and on account of the charters of our UP Agua-Marinha, UP Topazio and UP Diamante which were renewed with Petrobras in the second quarter of 2013 for four years at $35,380 per day as compared to their expiring charters at $28,000 per day. Also, during the second quarter of 2013 the charter of UP Esmeralda was renewed for four years at $31,950 per day as compared to its expiring charter of $26,200 per day. Our recently delivered PSV, UP Pearl, is expected to commence operation under a four year charter with Petrobras at $32,950 per day during the fourth quarter of 2013.

We expect that the full effect of these new vessels will positively impact our results in the forthcoming quarters.

On October 22, 2013, we cancelled the Shipbuilding Contract for Hull No. V-387 (UP Onyx) due to excessive delays in delivering the vessel. The appropriate repayment demands have been made under the refund guarantees issued by certain banks.

The Company believes that the Brazilian market should grow in line with Petrobras' capital expenditure plans. Ultrapetrol's fleet in the Offshore Supply Business has the advantage of being very modern and technologically capable of supporting deep sea oil drilling in both the Brazilian and North Sea markets.

Ocean

The Ocean Business segment generated adjusted EBITDA of $0.7 million in the third quarter of 2013 as compared to adjusted EBITDA of $3.8 million in the same period of 2012. For a reconciliation of segment adjusted EBITDA to operating profit (loss), please see the tables at the end of this release.

The 6% decrease in revenues from $19.9 million in the third quarter of 2012 to $18.7 million in the same period of 2013 is mainly attributable to a decrease in revenues of our Product Tanker Miranda I mostly related to its scheduled drydock, a reduction of volume in our container trade partially offset by a better performance of our Product Tanker Alejandrina.

The Company operated a total of four vessels in its Product Tanker fleet in the third quarter of 2013 (Miranda I, Amadeo, Alejandrina, and Austral) which continue to be employed in the same flag protected South American coastal trade in which they have operated in the past on charters with oil majors that operate in the region.

Our container feeder service experienced a decrease in volumes at the end of the second quarter and beginning of the third quarter. Volumes are now back to normal.

Use of Non-GAAP Measures

Ultrapetrol believes that the disclosed non-Generally Accepted Accounting Principles, ("or GAAP"), measures such as adjusted EBITDA, adjusted net income and any other adjustments thereto, when presented in conjunction with comparable GAAP measures, are useful for investors to use in evaluating the liquidity of the company. These non-GAAP measures should not be considered a substitute for, or superior to, measures of liquidity prepared in accordance with GAAP. A reconciliation of adjusted EBITDA to segment operating profit and cash flow from operations is presented in the tables that accompany this press release.

Investment Community Conference Call

Ultrapetrol will host a conference call for investors and analysts on Thursday, November 14, 2013, at 9:00 a.m. EST accessible via telephone and Internet with an accompanying slide presentation. Investors and analysts may participate in the live conference call by dialing 1-800-475-0469 (toll-free U.S.) or +1-630-395-0482 (outside of the U.S.); passcode: ULTR. Please register at least 10 minutes before the conference call begins. A replay of the call will be available for one week via telephone starting approximately one hour after the call ends. The replay can be accessed at 1-888-568-0802 (toll-free U.S.) or +1-203-369-3929 (outside of the U.S.); passcode: 1114. The webcast will be archived on Ultrapetrol's Web site for 30 days after the call.

About Ultrapetrol

Ultrapetrol is an industrial transportation company serving the marine transportation needs of its clients in the markets on which it focuses. It serves the shipping markets for containers, grain and soya bean products, forest products, minerals, crude oil, petroleum, and refined petroleum products, as well as the offshore oil platform supply market with its extensive and diverse fleet of vessels. These include river barges and pushboats, platform supply vessels, tankers and two container feeder vessels. More information on Ultrapetrol can be found at www.ultrapetrol.net.

Forward-Looking Language

The forward-looking statements in this press release are based upon various assumptions, many of which are based, in turn, upon further assumptions, including without limitation, our management's examination of historical operating trends, data contained in our records and other data available from third parties. Although we believe that these assumptions were reasonable when made, because these assumptions are inherently subject to significant uncertainties and contingencies which are difficult or impossible to predict and are beyond our control, we cannot assure you that we will achieve or accomplish these expectations, beliefs or projections.

In addition to these important factors, other important factors that, in our view, could cause actual results to differ materially from those discussed in the forward-looking statements include future operating or financial results; pending or recent acquisitions, business strategy and expected capital spending or operating expenses, including dry docking and insurance costs; general market conditions and trends, including charter rates, vessel values, and factors affecting vessel supply and demand; our ability to obtain additional financing; our financial condition and liquidity, including our ability to obtain financing in the future to fund capital expenditures, acquisitions and other general corporate activities; our expectations about the availability of vessels to purchase, the time that it may take to construct new vessels, or vessels' useful lives; our dependence upon the abilities and efforts of our management team; changes in governmental rules and regulations or actions taken by regulatory authorities; adverse weather conditions that can affect production of the goods we transport and navigability of the river system; the highly competitive nature of the oceangoing transportation industry; the loss of one or more key customers; fluctuations in foreign exchange rates and devaluations; potential liability from future litigation; and other factors. Please see our filings with the Securities and Exchange Commission for a more complete discussion of these and other risks and uncertainties.

ULTR - G

Supplemental Information: Summary consolidated financial data

The following table shows our unaudited consolidated balance sheet as of September 30, 2013 and our audited consolidated balance sheet as of December 31, 2012:

The following table sets forth certain unaudited historical statements of income data for the periods indicated below derived from our unaudited condensed consolidated statements of income expressed in thousands of U.S. dollars:

The following table contains our unaudited statements of cash flows for the nine-month periods ended September 30, 2013, and 2012:

(Stated in thousands of U.S. dollars)

Supplemental Information

The following tables reconcile our Adjusted Consolidated EBITDA to our cash flow for the nine months ended September 30, 2013 and 2012:

The following table reconciles our adjusted net income and adjusted EPS to net income and EPS for the nine months and three months ended September 30, 2013, and 2012:

The following table reconciles our Adjusted Consolidated EBITDA to our Operating Profit per business segment for the third quarter ended September 30, 2013:

The following table reconciles our Adjusted Consolidated EBITDA to our Operating Profit per business segment for the third quarter ended September 30, 2012:

The following table reconciles our Adjusted Consolidated EBITDA to our Operating Profit per business segment for the nine month period ended September 30, 2013:

The following table reconciles our Adjusted Consolidated EBITDA to our Operating Profit per business segment for the nine month period ended September 30, 2012:

CONTACT: The IGB Group

         

         Leon Berman

         212-477-8438

         lberman@igbir.com

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