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Ultrapetrol announces Q4, 2013 full year results

Ultrapetrol (Bahamas) Ltd (Nasdaq:ULTR), an industrial transportation company serving marine transportation needs in three markets (River Business, Offshore Supply Business and Ocean Business), has announced financial results for the fourth quarter and full year ended December 31, 2013. 

Source:
Date:
Updated:
Ultrapetrol
Monday, March 17, 2014
Monday, March 17, 2014

Ultrapetrol (Bahamas) LimitedNASSAU, Bahamas, March. 12, 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 fourth quarter and full year ended December 31, 2013.

Full Year 2013 highlights:

  • Recorded full year 2013 revenues of $411.2 million;
  • Recorded adjusted consolidated EBITDA of $97.1 million in 2013,1 which includes adjusted EBITDA of $38.8 million from our River Business, adjusted EBITDA of $40.0 million from our Offshore Supply Business, adjusted EBITDA of $2.4 million from our Ocean Business, and adjusted EBITDA of $15.8 million from other activities — including foreign currency exchange cash gains;
  • Recorded total adjusted net income and adjusted net income per share of $13.2 million and $0.09 per share, respectively, in 2013, which excludes the effect of a $1.2 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, and a $(5.5) million non-cash loss from debt extinguishments mainly resulting from the prepayment of our $180.0 million Senior Notes and $80.0 million Convertible Senior Notes; and includes a $1.5 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 $7.4 million and $0.05, respectively;
  • FY 2013 Adjusted EBITDA for our Offshore Supply Business segment increased 45% to $40.0 million as compared to $27.7 million in FY 2012.

Fourth Quarter 2013 and subsequent events highlights:

  • During the fourth quarter of 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 we received gross proceeds from the offering totaling $26.1 million;
  • During the fourth quarter of 2013, we acquired three 5,145 dwt newbuilt Chinese sister PSVs, named UP Agate, UP Coral and UP Opal ex yard in China, all of which have already been delivered for approximately $96.0 million. All three vessels underwent certain upgrading to conform to our operations at the same yard where they were built and are expected to commence operations during the second quarter of 2014;
  • During the fourth quarter of 2013, we entered into a loan agreement with DVB Bank SE and NIBC Bank NV (as co-lenders) to provide up to $38.4 million of post-delivery financing on the acquisition of the two new built Chinese sister PSVs, UP Agate and UP Coral;
  • During the fourth quarter of 2013, we cancelled the shipbuilding contract for Hull No. V-387 (UP Onyx) on account of the shipyard’s delay in delivering the vessel. Pursuant to the refund guarantees issued by certain banks, the appropriate repayment demands were settled on January 6 and January 24, 2014, with proceeds to Ultrapetrol of $17.7 million;
  • During the fourth quarter of 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 Ultrapetrol from this sale will be $13.2 million;
  • During the fourth quarter of 2013, we entered into a 5-year agreement with Vale to time charter four river pushboats with 16 barges each.

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, “Over the course of 2013, we accomplished every objective that we had set for the year, enabling the Company to further strengthen its balance sheet, earnings power and future prospects. In terms of our balance sheet strength, we consolidated our financial position by prepaying our $80.0 million 2017 convertible bond, placed a new $225.0 million note due 2021 and prepaid the existing $180.0 million notes due 2014. Complementing this success, we capitalized on attractive growth opportunities including investing close to $100.0 million in three new, very large PSVs for our offshore supply fleet which will enter service early in 2014. These new vessels provide not only extraordinary capacity, with over 1,000 square meters on deck and in excess of 5,000 dwt each, but are also fully diesel electric and have the capability to operate as subsea support vessels, opening a window to a full array of new services for our Company. At the same time, in 2013, we took delivery of two new construction PSVs from India, UP Amber and UP Pearl, which entered service under four-year contracts with Petrobras. Additionally, four of our existing PSVs in Brazil renewed their four-year employments at significantly increased rates.”

Mr. Menéndez continued, “In 2013, we achieved our goal of constructing 58 barges for third parties at our yard (the largest third party yearly delivery so far) and, while we have committed to further third party constructions in 2014, we also have a robust plan to build barges for our own river fleet. Our River Business in 2013 experienced favorable climatic conditions, which led to normal crop levels and increased volumes over those transported in 2012. We are pleased that the average contracts of affreightment expiring in 2013 were renewed at increased rates and that we successfully entered into new long-term agreements to time charter part of our fleet to Vale, which will stabilize the future earnings of our river fleet and, together with our new iron ore transshipment facility, should contribute significantly to our EBITDA. Our Ocean Segment produced a contribution to our gross profit of approximately $11.1 million in 2013, and the time charter rates for existing contracts were renewed at increased levels.”

Mr. Menéndez concluded, “With most of our earlier investments already producing substantial results and a firm financial structure in place, we are in a very strong position to capitalize on the growth opportunities that lie ahead.”

Overview of Financial Results

Total revenues for the fourth quarter of 2013 were $99.0 million as compared with $86.3 million in the same period of 2012.

Adjusted EBITDA for the fourth quarter of 2013 was $15.0 million as compared with $6.2 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 loss for the fourth quarter of 2013 was $(7.4) million, or $(0.05) per share as compared with net loss of $(13.4) million, or $(0.26) per share, during the same period of 2012. Fourth quarter 2013 adjusted net loss excludes the effect of a $0.1 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 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 loss and net loss per share are $(7.2) million and $(0.05), respectively.

Cecilia Yad, Ultrapetrol’s Chief Financial Officer, said, “Our business performed strongly during 2013, enabling the Company to deliver solid financial results to shareholders. We generated adjusted EBITDA for the year of $97.1 million, which almost tripled the level attained in 2012. During the fourth quarter of 2013, we successfully closed a debt offering of $25.0 million, which was an add-on to our outstanding $200.0 million Senior Notes due 2021 and priced at a premium of 4.5%. We also entered into a loan agreement with DVB and NIBC to provide up to $38.4 million of post-delivery financing for our UP Agate and UP Coral, two of our three newbuilt Chinese sister PSVs acquired in the period.

“As a result of our successes throughout 2013, we have entered 2014 with increased liquidity and the expectation of further business development, making us feel confident that we are well positioned for the continued and accelerated execution of our growth strategy in 2014 and beyond.”

Business Segment Highlights

River

The River Business volumes in the fourth quarter of 2013 remained practically unchanged as compared with the same period of 2012.

Fourth quarter 2013 River Business segment adjusted EBITDA was $0.4 million versus a loss of $(0.8) million in the same period of 2012, representing a $1.2 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 fourth quarter of 2013 demonstrate the effect of a better cargo mix as well as the sale of a larger number of barges manufactured in our shipyard to third parties. According to the latest United States Department of Agriculture (“USDA”) estimates, the soybean crop in Paraguay for 2013 was 8.3 million tons, which is 4.3 million tons, or 105% greater than the USDA’s estimate for the 2012 crop. Argentina, Brazil, Bolivia, Paraguay and Uruguay are estimated to account for approximately 54% of world soybean production in 2013, as compared to 30% in 1995.

We believe 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.

As a result of this promising growth trajectory, the Company has decided to build two 6,000 and two 7,250 BHP new, state-of-the-art, shallow-drafted, heavy fuel consuming pushboats to add to its fleet, the first of which is expected to enter service in 2015.

Notwithstanding its newbuild program for pushboats, 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 reduce fuel expense and to increase both tow size and navigation speed, which we believe will enhance our EBITDA margins in the future.

During the fourth 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, and one which operates in the North Sea. Our recently delivered UP Pearl commenced operations on November 25, 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 and scheduled to commence operation early in the second quarter of 2014. The adjusted EBITDA generated by the Offshore Supply Business segment during the fourth quarter of 2013 was $11.1 million, 37% higher than the $8.1 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 fourth quarter of 2013 increased by $3.0 million compared with the same period of 2012. This 14% increase was primarily attributable to the operation of our UP Amber and UP Pearl, which commenced their charters with Petrobras on August 1, 2013, and November 25, 2013, respectively, to higher operating days of our UP Jade, 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.

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

During the fourth quarter of 2013, we cancelled the shipbuilding contract for Hull No. V-387 (UP Onyx) on account of the shipyard’s delay in delivering the vessel. Pursuant to the refund guarantees issued by certain banks, the appropriate repayment demands have been settled on January 6 and January 24, 2014, with proceeds to Ultrapetrol of $17.7 million.

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 $1.4 million in the fourth quarter of 2013 as compared to negative adjusted EBITDA of $(1.8) million in the same period of 2012, a $3.2 million increase. For a reconciliation of segment adjusted EBITDA to operating profit (loss), please see the tables at the end of this release.

Revenues from the Ocean Business increased from $15.6 million in the fourth quarter of 2012 to $17.9 million in the same period of 2013, mainly attributable to a combined increase in revenues from our Asturiano and Argentino and to an increase in revenues from our Product Tanker Amadeo, which was related to the vessel’s offhire days during the fourth quarter of 2012.

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

Use of Non-GAAP Measures

Ultrapetrol believes that the disclosed non-Generally Accepted Accounting Principles, or non-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, March 13, 2014, at 10:00 a.m. EDT accessible via telephone and Internet with an accompanying slide presentation. Investors and analysts may participate in the live conference call by dialing 1-800-857-5161 (toll-free U.S.) or +1-630-395-0045 (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 1-800-234-7802 (toll-free U.S.) or +1-402-220-9690 (outside of the U.S.); passcode: 3569. 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 atwww.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.

More: Summary consolidated financial data.

Morgans Hotel Group Co (NASDAQ: MHGC), which has partnered with Baha Mar in The Bahamas, last week reported financial results for the quarter and year ended December 31, 2013.

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