Ultrapetrol Bahamas Limited
Ultrapetrol is expanding its river system business as commodities shipping booms. The company reported record revenues in the second quarter as revenues rose 50%. Ultrapetrol has surprised the last two quarters by an average of 135.90%. It's trading at only 5.1x forward earnings.
Company Description
Ultrapetrol Bahamas Limited (ULTR - Snapshot Report) is an international industrial shipping company that transports grain, vegetable oils, minerals, crude, petroleum and supplies the offshore oil platform market and the leisure passenger cruise market.
ULTR's offshore supply business operates 5 vessels that provide transportation and other support for offshore petroleum platforms in the North Sea and off the coast of Brazil. A sixth ship is under construction and due to be delivered by the first quarter of 2009.
It also ships on 9 oceangoing vessels that are used in the South American coastal trade and owns 1 passenger cruise ship with a capacity for 575 passengers that services 7-day and 14-day cruises in the Aegean Sea.
Ultrapetrol Secures Expansion Financing
Even with a worldwide financial crisis that has caused credit to tighten, Ultrapetrol was still able to secure capital to assist with its $200 million 3-year expansion plan in the river system.
On Sep 16, the company announced it had obtained $60 million in long-term financing from IFC, a member of the World Bank Group. Under the agreement, IFC will provide the financing package and assist the company in raising an additional $15 million from third parties.
Ultrapetrol Reports Record Revenue for the Second Quarter
The shipping business was very profitable in the second quarter, as Ultrapetrol saw revenues jump 50% to a record $83 million from $55.4 million a year ago. The company surprised on estimates by 233.33%. Net income was $11.7 million, or 36 cents per share, compared to $0.9 million, or 3 cents per share, in the second quarter of 2007. Analysts expected a loss of 27 cents a share.
The River Business segment saw total cargo loaded increase by 6% over the year ago period. The company is riding the hot agricultural markets as industry sources expect the soybean crop in the Hidrovia region to be robust in 2008. The USDA estimate for the Paraguayan soybean crop suggests a 9.7% growth in production over 2007. Iron ore production at three mines in the river system is also expected to grow substantially.
The company also generated record revenues in its Ocean Business by operating four Capesize/OBO vessels for the entire quarter.
Share Repurchase Program
In the second quarter, Ultrapetrol purchased 32,200 shares at an average cost of $10.30 per share for a total of $0.3 million as part of its ongoing share repurchase program. The company has authorized repurchases through Sep 30.
Consensus Estimates Rise for the Third Quarter and the Full Year
Over the past 60 days, third quarter consensus estimates have risen 4 cents to 62 cents from 58 cents. Covering analysts are equally as bullish on the full year, as estimates have risen to $1.47 from $1.33 in the last 60 days.
Analysts expect 2008 year over year earnings growth of 140.16%.
Value Fundamentals
Ultrapetrol's stock has sold off in recent weeks with the volatility in commodities prices and the decline in the Baltic Dry Index (BDI). ULTR's stock is now cheap, trading at only 5.1x forward earnings. Its price-to-book is 1.23. The company has a one year return on equity (ROE) of 11.46%.