Ultrapetrol Bahamas Limited

Ultrapetrol Bahamas Limited (ULTR - Snapshot Report), the South American focused shipper, reported a record 2008 as its river transportation business continued to grow. The company has surprised on estimates 4 quarters in a row by an average of 77.04%. The stock is cheap, trading at only 4.8x forward earnings.

Company Description

Ultrapetrol Bahamas operates a marine transportation business with three segments: River Business, Offshore Supply Business and Ocean Business. Ultrapetrol transports grain, forest products, minerals, crude oil and refined products.

The company's fleet consists of river barges and push boats, platform supply vessels, tankers oil-bulk-ore vessels and a Capesize bulk carrier.

The company discontinued its passenger service segment in Dec 2008 to focus on its 3 core markets and is selling its cruise ship.

Ultrapetrol is the largest operator of river barges and pushboats through the Hidrovia Region of South America, which is an agricultural rich area. The company operates 591 barges to ship dry bulk and liquid cargoes to ports serviced by ocean going vessels.

The Offshore Supply Business provides logistical and transportation services for oil companies in the North Sea and the coastal waters off of Brazil. The company has five supply vessels with one under construction and expected to be delivered in the second quarter of 2009. Four more are under construction in India and two in China with deliveries beginning sometime in 2009.

The Ocean Business has 10 oceangoing vessels, including 4 Product Tankers which work the South American coastal trade where the company has preferential rights.

Ultrapetrol Sees Record 2008

On Mar 17, Ultrapetrol reported fourth quarter and full year results and easily beat Wall Street estimates for the fourth quarter by 31.82%. Adjusted earnings per share were 29 cents compared to analyst estimates of 22 cents per share.

2008 revenue climbed 57% to a record $303.6 million from $193.8 million in 2007. Fourth quarter revenue was also strong, jumping 30% to $71.4 million from $54.8 million in the year ago period.

The River Business saw volumes rise 6% in 2008 compared to 2007, however the fourth quarter results were impacted by the global financial crisis as soybean exports came to a near standstill.

Additionally, low water levels in the High Paraguay River, due to the worst drought in 70 years in South America, impacted volumes in the quarter. The company sees an upturn in the soybean market and the water levels by the second half of 2009 and into 2010.

The Offshore Supply Business has its vessels under long-term charters in Brazil into the second and third quarters of 2009. In the North Sea, vessels were committed at fixed rates through the winter.

The company has seen the North Sea market weaken as demand for crude has weakened. However, it expects the Brazilian market to show strong growth because of Petrobras' aggressive exploration plans. Ultrapetrol's fleet is capable of supporting deep sea oil drilling.

Cash and Financings in Order

Ultrapetrol recently secured 12-year financings for its $168 million planned expansion of its River and Offshore Supply segments.

"We have maintained our financial flexibility with over $105 million in unrestricted cash at year end 2008," said Len Hoskinson, Ultrapetrol's Chief Financial Office.

"Our liquidity has never been stronger, with no financing renegotiations or covenant waiver requests on the horizon," he added.

Share Repurchase Program

In 2008, the company repurchased 3,923,094 shares of common stock as part of its ongoing $50 million share repurchase program which is expected to last until March 31, 2009. In 2008, a total of $19.5 million was spent on the program.

Consensus Estimates on the Rise

There's only 1 covering analyst on Ultrapetrol. Estimates for the first quarter 2009 are up 5 cents from negative 5 cents to 0 cents per share in the last 30 days.

Full year estimates are also up 5 cents to 51 cents in the last month.

Value Fundamentals

Ultrapetrol Bahamas is an attractive value stock. It is trading with a forward P/E of 4.8 and a price-to-book of just 0.20. The company has a solid 1-year return on equity (ROE) of 13.45%.

Ultrapetrol is a Zacks #1 Rank (strong buy) stock. It is scheduled to report first quarter earnings on May 11.