TSX:WPO: World Point Terminals Inc. (the “Company”) is pleased to announce its results for the first nine months of 2008. During the first nine months of 2008 virtually 100% of the Company’s tankage remained under contract. The new construction of two new tanks at its Bahamian terminal operation (“South Riding Point”) neared completion and contracts have been entered for their use. The Company’s U.S. operations (“Center Point”) continued to generate strong operating results and continued to progress on several expansion projects of its own.
Revenues from continuing operations for the first nine months of 2008 were $59,791 compared to $53,769 in 2007, an increase of 11%. This increase primarily results from increased heating revenues, which are partially offset by increased utility costs as discussed below, the continued growth in storage capacity within Center Point and, to a lesser extent, storage rate increases. Additionally, the Company has seen marine activity increase at its South Riding Point facility which generates additional port fee related revenues.
Center Point’s revenues grew by $5,497 for the first nine months of 2008 or 14% percent as compared to the first nine months of 2007. This increase was due to fewer tanks being out of service in the first nine months of 2008 compared to the same period in 2007 and new tankage placed in service at the Galveston terminal. Additionally, the Company was able to pass increased utility costs to its customers in the form of increased heating charges.
South Riding Point’s revenues increased by $397 or 3% percent for the first nine months of 2008 compared to the same period in 2007. This increase was primarily the result of increased marine activity revenues at the South Riding Point terminal facility in the third quarter of 2008 and storage revenues associated with one of the newly constructed storage tanks at South Riding Point being placed into service. While the Company anticipates marine activity revenues to remain strong throughout the fourth quarter, these revenues are difficult to predict as they fluctuate based on the business decisions of the Company’s customers and general market conditions. It should be noted that in the first nine months of 2007 South Riding Point realized $247 in revenues from crude oil sales which did not repeat in the first nine months of 2008.
Freepoint’s revenues increased by $128 for the first nine months of 2008 or 6% percent compared to the first nine months of 2007. This increase is a result of rate increases, fuel-surcharges and the strategic bare-boat chartering of two of its vessels.
Operating expenses are primarily comprised of salary, wages and benefits expenses associated with operating personnel, the maintenance and repair of the Company’s storage facilities, insurance costs, equipment and real estate rental charges, the cost for utilities and fuel and environmental associated costs. Costs associated with professional services, directors’ fees, compensation and travel of non-operating personnel, expenses related to being a public company and other similar items (selling, general and administrative expenses) are not included in operating expenses. All costs related to the ownership of the Europoint facility are included in Discontinued Operations.
Operating expenses for the first nine months of 2008 totaled $26,067 as compared to $22,523 for the first nine months of 2007, a 16% increase. This increase was primarily the result of higher natural gas, fuel oil and fuel additive prices. Additionally, repairs and maintenance costs increased by $1,883 for the nine months ended September 30, 2008.
South Riding Point is currently engaged in arbitration with a company it had contracted with to repair its sea island jetty. Such repairs were necessary largely due to the impact of hurricanes that hit the Bahamas in 2004. The expenses of this arbitration, principally legal fees, will continue to impact income from continuing operations throughout the remainder of 2008.
Net income for the first nine months of 2008 was $13,366 versus $11,250 for the first nine months of 2007 and basic earnings per share were US$0.552 versus US$0.478. Diluted earnings per share increased to US$0.552 in the first nine months of 2008 from US$0.468 in the first nine months of 2007. Income from continuing operations in the first nine months of 2008 was $14,457 versus $13,541 in the first nine months of 2007 and basic earnings per share from continuing operations were US$0.597 in the first nine months of 2008 versus US$0.576 in the first nine months of 2007. It should be noted that the results of operations for the first nine months of 2008 reflect gains related to insurance proceeds ($1,536), interest rate swaps ($193) and foreign currency positions ($381). No such gains were reported in the first nine months of 2007. The insurance gain is not attributed to the underlying operations of the business, but rather the accounting for our ongoing insurance claims stemming from hurricane damage which South Riding Point incurred in 2004. It should be further noted that the Company incurred $1,325 in stock based compensation expense in the third quarter of 2008 and realized losses on certain investing activity of $1,282. Except for stock based compensation related to options that vest over time, these expenditures are not anticipated to reoccur in the near future.
Operating income (net income excluding income taxes, general corporate expenses and discontinued operations) increased from $21,468 for the first nine months of 2007 to $23,897 for the first nine months of 2008.
Interest and dividend income increased from $447 for the first nine months of 2007 to $789 in the first nine months of 2008, primarily as a result of interest earned on the higher cash balances on hand subsequent to closing on the additional bank borrowing.
Depreciation and amortization from continuing operations increased from $7,689 for the first nine months of 2007 to $8,603 for the first nine months of 2008 reflecting the effect of significant capital expenditures and new storage facilities added in recent years.
For the remainder of the 2008 fiscal year, virtually all of the Company’s tankage continues to be under contract. South Riding Point has experienced an increase in shipping activity as of late, resulting in revenues which are dependent on throughput volumes to increase in late September. It is unclear whether or not this trend will continue. As of the date of this release, the two new tanks at South Riding Point are operational and under short-term contracts. South Riding Point will experience an increase in storage revenues in the fourth quarter as a result. Center Point continues to work on its expansion project at its Galveston, Texas, terminal. This expansion will be significant for this terminal and the Company has customers committed to utilize the new capacity.
World Point Terminals Inc. and its subsidiaries own and operate 16 million barrels of liquid bulk storage and terminal facilities located in North America (Center Point) and the Bahamas (South Riding Point). These facilities store, blend, and transship petroleum and other liquid products as an integral part of the wholesale distribution system. Through a joint venture, the Company also operates a fleet of tugboats around Grand Bahama Island in the Bahamas (“Freepoint”).
<< On behalf of the Board: Bernard A. Roy President and CEO November 14, 2008 (514) 847-4519 >> Additional Information
Additional information relating to the Company, including a copy of the Company’s Annual Information Form, is available on SEDAR at www.sedar.com. The company maintains an informational website at www.wpo.ca.
Cautionary Statement Regarding Forward-Looking Statements
Some of the statements contained in this release may be forward-looking statements, such as estimates and statements that describe the Company’s future plans, objectives or goals, including words to the effect that the Company or management expects a stated condition to exist or occur. Since forward-looking statements, by their very nature, involve inherent risks and uncertainties, actual results in the future could differ materially from those currently anticipated in such statements by reason of factors including, but not limited to, changes in economic and market conditions and changes in world political stability. World Point Terminals will not update or revise forward-looking statements for new information, future events, or otherwise.
This discussion and analysis of operating results and the financial position of the Company should be read in conjunction with the third quarter 2008 report to shareholders and the 2007 audited financial statements of the Company and Management’s Discussion and Analysis as filed with Sedar.
