USD Partners LP (NYSE: USDP) (the “Partnership”) announced today
its operating and financial results for the three months ended
March 31, 2017. Highlights with respect to the first quarter of
2017 include the following:
- Generated Net cash provided by
operating activities of $12.8 million, Adjusted EBITDA of $15.4
million and Distributable cash flow of $12.3 million
- Reported Net income of $5.2
million
- Increased quarterly cash distribution
for eighth consecutive quarter to $0.335 per unit ($1.34 per unit
on an annualized basis)
- Ended quarter with $192.2 million of
available liquidity
“The Partnership’s results continue to benefit from stable and
predictable cash flows from high-quality customers,” said Dan
Borgen, the Partnership’s Chief Executive Officer. “This enabled us
to deliver another quarter of distribution growth, with
approximately 1.6x coverage, while remaining well-positioned to
execute on accretive growth opportunities.”
First Quarter 2017 Operational and Financial Results
Substantially all of the Partnership’s cash flows are generated
from multi-year, take-or-pay terminal service agreements related to
the Hardisty and Casper terminals, which include minimum monthly
commitment fees. The Partnership’s customers include major
integrated oil companies, refiners and marketers, the majority of
which are investment grade rated.
For the first quarter of 2017 relative to the first quarter of
2016, Net cash provided by operating activities increased by 39%,
while Adjusted EBITDA and Distributable cash flow increased by 7%
and 12%, respectively. These increases were primarily driven by a
reduction in operating expenses due to one-time costs associated
with the integration of the Casper terminal during the first
quarter of 2016 and were partially offset by higher interest
expense associated with the Partnership’s revolving credit
facility.
Distributable cash flow for the first quarter of 2017 also
benefited from an approximate $1.1 million decrease in Cash paid
for income taxes, primarily due to the receipt of the remaining
C$0.9 million tax refund, as well as lower Canadian income taxes
paid during the quarter.
Net income, which increased 142% for the first quarter of 2017
relative to 2016, also benefited from additional Terminalling
services revenue due to the recognition of greater amounts of
previously deferred revenues in the current period as compared to
the prior year. Additionally, the value of the Canadian dollar
relative to the U.S. dollar strengthened to a lesser extent during
the first quarter of 2017 relative to 2016, which resulted in
smaller non-cash losses from changes in the fair value of the
Partnership’s derivative instruments.
On April 27, 2017, the Partnership declared a quarterly cash
distribution of $0.335 per unit ($1.34 per unit on an annualized
basis), which represents growth of 1.5% relative to the fourth
quarter of 2016 and 8.9% relative to the first quarter of 2016. The
distribution is payable on May 12, 2017, to unitholders of record
as of the close of business on May 8, 2017.
During March 2017, the Partnership repaid all amounts previously
outstanding on its term loan facility. As a result, the
Partnership’s revolving credit facility comprises the full $400.0
million of capacity under its credit agreement, subject to limits
set forth therein.
As of March 31, 2017, the Partnership had total available
liquidity of $192.2 million, including $4.2 million of unrestricted
cash and cash equivalents and undrawn borrowing capacity of $188.0
million on its $400.0 million senior secured credit facility,
subject to continued compliance with financial covenants. The
Partnership is in compliance with its financial covenants and has
no maturities under its senior secured credit facility until
October 2019.
First Quarter 2017 Conference Call Information
The Partnership will host a conference call and webcast
regarding first quarter 2017 results at 11:00 a.m. Eastern Time
(10:00 a.m. Central Time) on Thursday, May 4, 2017.
To listen live over the Internet, participants are advised to
log on to the Partnership’s website at www.usdpartners.com and
select the “Events & Presentations” sub-tab under the
“Investors” tab. To join via telephone, participants may dial (877)
266-7551 domestically or +1 (339) 368-5209 internationally,
conference ID 14385750. Participants are advised to dial in at
least five minutes prior to the call.
An audio replay of the conference call will be available for
thirty days by dialing (800) 585-8367 domestically or +1 (404)
537-3406 internationally, conference ID 14385750. In addition, a
replay of the audio webcast will be available by accessing the
Partnership's website after the call is concluded.
About USD Partners LP
USD Partners LP is a fee-based, growth-oriented master limited
partnership formed in 2014 by US Development Group LLC to acquire,
develop and operate energy-related logistics assets, including rail
terminals and other high-quality and complementary midstream
infrastructure. The Partnership’s assets consist primarily of: (i)
a crude oil origination terminal in Hardisty, Alberta, Canada, with
capacity to load up to two 120-railcar unit trains per day, (ii) a
crude oil terminal in Casper, Wyoming, with unit train-capable
railcar loading capacity in excess of 100,000 barrels per day and
six customer-dedicated storage tanks with 900,000 barrels of total
capacity and (iii) a unit train-capable ethanol destination rail
terminal in West Colton, California. In addition, the Partnership
provides railcar services through the management of a railcar fleet
that is committed to customers on a long-term basis.
Non-GAAP Financial Measures
The Partnership defines Adjusted EBITDA as Net cash provided by
operating activities adjusted for changes in working capital items,
changes in restricted cash, interest, income taxes, foreign
currency transaction gains and losses, adjustments related to
deferred revenue associated with minimum monthly commitment fees
and other items which do not affect the underlying cash flows
produced by the Partnership’s businesses. Adjusted EBITDA is a
non-GAAP, supplemental financial measure used by management and
external users of the Partnership’s financial statements, such as
investors and commercial banks, to assess:
- the Partnership’s liquidity and the
ability of the Partnership’s businesses to produce sufficient cash
flows to make distributions to the Partnership’s unitholders;
and
- the Partnership’s ability to incur and
service debt and fund capital expenditures.
The Partnership defines Distributable cash flow, or DCF, as
Adjusted EBITDA less net cash paid for interest, income taxes and
maintenance capital expenditures. DCF does not reflect changes in
working capital balances. DCF is a non-GAAP, supplemental financial
measure used by management and by external users of the
Partnership’s financial statements, such as investors and
commercial banks, to assess:
- the amount of cash available for making
distributions to the Partnership’s unitholders;
- the excess cash being retained for use
in enhancing the Partnership’s existing businesses; and
- the sustainability of the Partnership’s
current distribution rate per unit.
The Partnership believes that the presentation of Adjusted
EBITDA and DCF in this press release provides information that
enhances an investor's understanding of the Partnership’s ability
to generate cash for payment of distributions and other purposes.
The GAAP measure most directly comparable to Adjusted EBITDA and
DCF is Net cash provided by operating activities. Adjusted EBITDA
and DCF should not be considered alternatives to Net cash provided
by operating activities or any other measure of liquidity or
performance presented in accordance with GAAP. Adjusted EBITDA and
DCF exclude some, but not all, items that affect cash from
operations and these measures may vary among other companies. As a
result, Adjusted EBITDA and DCF may not be comparable to similarly
titled measures of other companies.
Cautionary Note Regarding Forward-Looking Statements
This press release contains forward-looking statements within
the meaning of U.S. federal securities laws, including statements
with respect to the Partnership’s liquidity, the ability of the
Partnership to grow and opportunities to grow, and the amount and
timing of future distribution payments. Words and phrases such as
“is expected,” “is planned,” “believes,” “projects,” and similar
expressions are used to identify such forward-looking statements.
However, the absence of these words does not mean that a statement
is not forward-looking. Forward-looking statements relating to the
Partnership are based on management’s expectations, estimates and
projections about the Partnership, its interests and the energy
industry in general on the date this press release was issued.
These statements are not guarantees of future performance and
involve certain risks, uncertainties and assumptions that are
difficult to predict. Therefore, actual outcomes and results may
differ materially from what is expressed or forecast in such
forward-looking statements. Factors that could cause actual results
or events to differ materially from those described in the
forward-looking statements include those as set forth under the
heading “Risk Factors” in the Partnership’s most recent Annual
Report on Form 10-K and in our subsequent filings with the
Securities and Exchange Commission. The Partnership is under no
obligation (and expressly disclaims any such obligation) to update
or alter its forward-looking statements, whether as a result of new
information, future events or otherwise.
USD Partners LP Consolidated
Statements of Income For the Three Months Ended March 31,
2017 and 2016 (unaudited) For the Three Months
Ended March 31, 2017 2016
(in thousands)
Revenues Terminalling services $ 23,559 $ 22,023
Terminalling services — related party 1,740 1,650 Railroad
incentives 15 15
Fleet leases
643 643 Fleet leases — related party 890 890 Fleet services 468 69
Fleet services — related party 279 684 Freight and other
reimbursables 157 383 Freight and other reimbursables — related
party 1 -
Total revenues
27,752 26,357 Operating costs
Subcontracted rail services 2,013 2,043 Pipeline fees 5,417 4,714
Fleet leases 1,533 1,533 Freight and other reimbursables 158 383
Operating and maintenance 707 870 Selling, general and
administrative 2,315 2,894 Selling, general and administrative —
related party 1,432 1,492 Depreciation and amortization
4,941 4,905
Total operating costs
18,516 18,834 Operating income
9,236 7,523 Interest expense 2,607 2,183 Loss
associated with derivative instruments 211 1,523 Foreign currency
transaction loss (gain) 30 (130 ) Other expense, net 5
-
Income before provision for income taxes
6,383 3,947 Provision for income taxes 1,185
1,797
Net income $ 5,198
$ 2,150 USD Partners
LP Consolidated Statements of Cash Flows For the
Three Months Ended March 31, 2017 and 2016 (unaudited)
For the Three Months Ended March 31,
2017 2016 Cash flows from operating
activities:
(in thousands)
Net income $ 5,198 $ 2,150 Adjustments to reconcile net income to
net cash provided by operating activities: Depreciation and
amortization 4,941 4,905 Loss associated with derivative
instruments 211 1,523 Settlement of derivative contracts 299 490
Unit based compensation expense 798 728 Other 282 169 Changes in
operating assets and liabilities: Accounts receivable 35 (62 )
Accounts receivable – related party 213 1,706 Prepaid expenses and
other current assets 1,579 330 Accounts payable and accrued
expenses 93 (737 ) Accounts payable and accrued expenses – related
party 307 (95 ) Deferred revenue and other liabilities (1,120 ) 872
Deferred revenue – related party
-
(329 ) Change in restricted cash (21 ) (2,426 ) Net
cash provided by operating activities
12,815
9,224 Cash flows from investing
activities: Additions of property and equipment (126 )
(273 ) Net cash used in investing activities
(126 ) (273 ) Cash flows from
financing activities: Distributions (7,903 ) (7,030 ) Vested
phantom units used for payment of participant taxes (1,070 ) (77 )
Proceeds from long-term debt 5,000 5,000 Repayment of long-term
debt (16,342 ) (9,077 ) Net cash used in financing
activities
(20,315 ) (11,184
) Effect of exchange rates on cash 105
325 Net change in cash and cash equivalents (7,521 ) (1,908
) Cash and cash equivalents – beginning of period 11,705
10,500 Cash and cash equivalents – end of
period
$ 4,184 $ 8,592
USD Partners LP Consolidated Balance
Sheets (unaudited) March 31, December
31, 2017 2016 ASSETS (in thousands)
Current assets Cash and cash equivalents $ 4,184 $ 11,705
Restricted cash 5,498 5,433 Accounts receivable, net 4,295 4,321
Accounts receivable — related party - 219 Prepaid expenses 9,737
10,325 Other current assets 1,130 2,562
Total current assets 24,844 34,565 Property and equipment, net
124,728 125,702 Intangible assets, net 108,767 111,919 Goodwill
33,589 33,589 Other non-current assets 186 192
Total assets $ 292,114 $
305,967 LIABILITIES AND PARTNERS’
CAPITAL Current liabilities Accounts payable and accrued
expenses $ 2,498 $ 2,221 Accounts payable and accrued expenses —
related party 517 214 Deferred revenue, current portion 26,461
26,928 Deferred revenue, current portion — related party 4,324
4,292 Other current liabilities 3,351 3,513
Total current liabilities 37,151 37,168 Long-term debt, net
209,981 220,894 Deferred revenue, net of current portion - 264
Deferred income tax liability, net 886 823
Total liabilities 248,018
259,149 Commitments and contingencies Partners’
capital Common units 101,902 122,802 Class A units 1,300 1,811
Subordinated units (58,306 ) (76,749 ) General partner units 72 111
Accumulated other comprehensive income (loss) (872 )
(1,157 )
Total partners' capital 44,096
46,818 Total liabilities and partners'
capital $ 292,114 $ 305,967
USD Partners LP GAAP to
Non-GAAP Reconciliations For the Three Months Ended March
31, 2017 and 2016 (unaudited) For the Three
Months Ended March 31, 2017 2016
(in thousands)
Net cash provided by operating activities $
12,815 $ 9,224 Add (deduct): Amortization of
deferred financing costs (215 ) (215 ) Deferred income taxes (58 )
46 Changes in accounts receivable and other assets (1,827 ) (1,974
) Changes in accounts payable and accrued expenses (400 ) 832
Changes in deferred revenue and other liabilities 1,120 (543 )
Change in restricted cash 21 2,426 Interest expense, net 2,603
2,183 Provision for income taxes 1,185 1,797 Foreign currency
transaction loss (gain) (1) 30 (130 ) Deferred revenue associated
with minimum monthly commitment fees (2) 80
763
Adjusted EBITDA 15,354 14,409 Add
(deduct): Cash paid for income taxes (3) (616 ) (1,710 ) Cash paid
for interest (2,362 ) (1,807 ) Maintenance capital expenditures
(126 ) -
Distributable cash flow
$ 12,250 $ 10,892
(1) Represents foreign exchange transaction gains and losses
associated with activities between the Partnership's U.S. and
Canadian subsidiaries. (2) Represents deferred revenue
associated with minimum monthly commitment fees in excess of
throughput utilized, which fees are not refundable to the
Partnership's customers. Amounts presented are net of: (a) the
corresponding prepaid Gibson pipeline fee that will be recognized
as expense concurrently with the recognition of revenue; (b)
revenue recognized in the current period that was previously
deferred; and (c) expense recognized for previously prepaid Gibson
pipeline fees, which correspond with the revenue recognized that
was previously deferred. (3)
Includes a partial refund of approximately
$0.7 million (representing C$0.9 million) received in the three
months ended March 31, 2017, for our 2015 foreign income taxes.
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version on businesswire.com: http://www.businesswire.com/news/home/20170503006660/en/
USD Partners LPAdam Altsuler, (281) 291-3995Vice President,
Chief Financial Officeraaltsuler@usdg.comorAshley Means Zavala,
(281) 291-3965Director, Finance & Investor
Relationsameans@usdg.com
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