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Ultra Petrol published results for the second quarter of 2010
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 second quarter ended June 30, 2010.
Felipe Menendez, Ultrapetrol’s President and Chief Executive Officer,
said, “During the second quarter we generated strong results in all
three of our businesses. In the River Business, our volumes grew 57% and
margins improved, as we transported a much larger soybean volume and
benefited from a more efficient cost structure. In our Offshore Supply
Business we also posted strong results, as our six state-of-the-art
existing PSV’s operated on favorable time charter contracts in Brazil.
Finally, in our Ocean Business our five Product Tankers continued to
successfully operate on existing time charters contracts and our
remaining Capesize vessel earned profitable time charter rates, as a
result of our successful FFA coverage of the vessel’s earnings
throughout 2010.”
Mr. Menendez continued, “Our expansion program continues to progress as
planned and we expect our results to begin to gradually reflect the
investments we have made over the past three years. In our River
Business, we began operations at our new yard which has already launched
five jumbo tank barges which will commence service in the third quarter
and will continue to deliver new barges into our fleet on a regular
basis. We are pleased that our new 8,300BHP heavy fuel powered pushboat
Zonda I started service in May and that her operational performance has
exceeded expectations. Before year’s-end, we expect three additional
re-engined pushboats to commence service and anticipate completing
eleven units by the end of 2011. In our Offshore Supply Business, the
Company’s strong presence in the Brazilian market remains a cornerstone
of Ultrapetrol’s growth. With an offshore fleet that is expected to
double in size in the next two years, we are well positioned to help
meet Brazil’s equipment needs to support a drilling program that will
make the region the second largest market in the world for offshore
services. In our Ocean Business we made a timely reduction of our
Capesize exposure. We acquired a modern container vessel at the very
attractive price prevailing in the market and initiated a new container
feeder service in South America positioning the Company in the domestic,
flag-protected container trade. Going forward, we believe there will be
compelling opportunities to expand this service as well as grow our
tanker and dry bulk fleet.”
Overview of Financial Results
Total revenues for second quarter 2010 were $60.6 million, as compared with $54.9 million in the same period of 2009.
Adjusted EBITDA for second quarter 2010 was $17.6 million as compared
with $18.1 million in the same period of 2009. For a reconciliation of
adjusted EBITDA to cash flows from operating activities, please see the
tables at the end of this release.
Reported net income for the second quarter 2010 was $0.7 million or
$0.02 per share, as compared with a net loss of $0.09 million, or $0.00
per share, during the same period of 2009. Second quarter 2010 net
income includes a $0.2 million, or $0.01 per share, income tax benefit
for unrealized foreign exchange rate losses on U.S. dollar-denominated
debt of our Brazilian subsidiary in the Offshore Supply Business and
does not include $1.3 million or $0.04 per share, on account of a net
gain on FFAs. Considering these effects, the adjusted net income for the
second quarter of 2010 was $1.7 million or $0.06 per share.
Len Hoskinson, Ultrapetrol’s Chief Financial Officer, said, “During the
quarter, we increased our financial strength. Our CAPEX plan is
adequately funded and we continue to have ample liquidity. Our focus on
conservatively financing assets ensures that the Company has a strong
financial foundation for the future.”
Business Segment Highlights
River
The River Business experienced a 57% increase in the volume of cargo
loaded in the second quarter of 2010 as compared with the same period of
2009. Second quarter 2010 River segment adjusted EBITDA was $10.4
million versus $0.6 million in 2009. For a reconciliation of adjusted
EBITDA to segment operating profit, please see the tables at the end of
this release.
The soybean production in Paraguay and in the whole of the Hidrovia
region is expected to be a record high for 2010. The latest 2010 USDA
estimate for the Paraguayan soybean crop of 7.2 million tons implies an
eighty percent increase when compared to 2009 levels and is consistent
with a larger seeded area and yields with a normal rainfall. River water
levels are normal for this time of the year and iron ore production
continued to normalize. Consequently, provided water levels do not fall
beyond historical lows, we expect to carry increased quantities of iron
ore during the second half of 2010.
The Company’s new shipyard for building barges inaugurated in December
2009 continued to operate successfully with productivity levels ahead of
our plan for the initial eight months of activity. The yard is the most
modern of its kind in South America and we believe it will allow the
Company to supply the capacity that we expect will be required in the
near future due to growing volumes of liquids, soybeans and iron ore
produced in the region. On July 30, 2010 the first tanker barge built in
our yard entered into operation and was added to our river fleet. We
have successfully continued the re-engining and re-powering program that
aims to convert the engines on eleven of our main push boats. The first
of them, Zonda I, started operations on May 22, 2010, equipped with
more powerful heavy fuel engines instead of the diesel consuming engines
that we operate in all other push boats today. This should lead to
gradually increasing savings in fuel expense and to an increase in tow
size and navigation speed both of which we have already started to
benefit from through the operation of Zonda I.
Offshore Supply
In the Offshore Supply Business, six vessels operated in the second
quarter of 2010. The adjusted EBITDA generated by the Offshore Supply
segment during the quarter was $5.1 million or 42% higher, than the $3.6
million generated in the same period of 2009. For a reconciliation of
adjusted EBITDA to segment operating profit, please see the tables at
the end of this release.
Total revenues from the Offshore Supply Business increased by 44%
attributable primarily to a full three months’ operation in 2010 of the
UP Rubi, which started its employment with Petrobras under a long-term
time charter in August 2009, and to the full quarter operation of our
vessels, UP Esmeralda and UP Safira. Both the UP Esmeralda and UP Safira
are operating under long-term time charter with Petrobras after
arriving in Brazil from the North Sea during the first quarter of 2010
at improved rates from those prevailing in the North Sea in the same
period of 2009. All of our six existing PSVs are now chartered to
Petrobras on long-term employments at attractive rates for periods
ranging between three to four years.
Ultrapetrol has continued with the construction of an additional six new
PSVs that will be added to the fleet. The two PSVs under construction
in China, Up Turquoise and UP Jasper, are expected to be delivered in
the fourth quarter of 2010, while the first of the four vessels under
construction in India is now expected to be delivered in the first
quarter of 2011.
The Company has continued to invest heavily in the expansion of its PSV
fleet since it believes that the Brazilian market will grow
substantially due to the support of Petrobras’ aggressive capital
expenditure plans.
Ocean
The Ocean segment generated adjusted EBITDA of $3.3 million in the
second quarter of 2010, as compared to $11.4 million in the same period
of 2009. For a reconciliation of adjusted EBITDA to segment operating
profit, please see the tables at the end of this release.
The 50% decrease in revenues is mainly attributable to the sale of two
of our Capesize vessels, M.V. Princess Susana and M.V. Princess Nadia,
which were sold and delivered to their buyers on December 10, 2009 and
January 28, 2010, respectively. In addition, our Ocean revenues during
the second quarter were also reduced by the partial operation of our
Princess Marisol which was sold on April 23, 2010, coupled with a $5.7
million decrease in the net settlements of FFAs which qualified as cash
flow hedges in the second quarter of 2010 compared to the same period of
2009 and to a 19% decrease in Time Charter rates of the BCI; partially
offset by the entry into operation of our new container vessel
Asturiano.
Our only remaining Capesize vessel, Princess Katherine, is fully covered
with FFAs at rates higher than those prevailing in the spot and future
markets for Capesize vessels. On August 4, 2010 we entered into an
agreement (MOA) to sell our Princess Katherine for a total price of
$10.5 million with expected delivery between September 1 and October 15,
2010. This transaction remains subject to completion and might not
materialize as expected.
The Company has operated a total of five vessels in its Product Carrier
fleet in the second quarter of 2010, which continued to be employed in
the South American coastal trade mostly under medium/long-term charters
with the oil majors that operate in the region.
On April 16, 2010, the Company took delivery of the 1,100-TEU,
2003-built container vessel M.V. Frisian Commander (renamed Asturiano).
The vessel was ballasted from the Caribbean, positioned in South America
and entered into operation on May 21, 2010 in a regular flag-protected
container service to Patagonia, where she had completed its third voyage
by June 30, 2010.
Source: Ultrapetrol
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