USD Partners LP (NYSE: USDP) (the “Partnership”) announced today
its operating and financial results for the three months and year
ended December 31, 2020. Financial highlights with respect to the
fourth quarter of 2020 include the following:
- Generated Net Cash Provided by Operating Activities of $12.1
million, Adjusted EBITDA(1) of $14.9 million and Distributable Cash
Flow(1) of $12.9 million
- Reported Net Income of $6.5 million
- Declared a quarterly cash distribution of $0.111 per unit
($0.444 per unit on an annualized basis) with almost 4.3x
Distributable Cash Flow Coverage(2)
“We are pleased to report another successful year for the
Partnership,” said Dan Borgen, the Partnership’s Chief Executive
Officer. “Despite all of the challenges that occurred during 2020,
the Partnership’s financial performance remained steady, and our
terminals performed safely and reliably throughout the year. We
attribute this to our strong operations team, our investment grade
customers and our compelling contract profile, which is underpinned
by long-term, take-or-pay agreements.”
“We continue to be very excited about our Sponsor’s previously
announced diluent recovery unit (“DRU”) project and destination
terminal in Port Arthur, Texas (“PAT”) and look forward to
announcing their in-service dates late in the second quarter or
early in the third quarter of this year. As previously mentioned,
the Partnership will benefit from the completion of the DRU and PAT
projects, as approximately 32% of the Partnership’s Hardisty
terminal’s capacity will be automatically extended under a
long-term committed agreement through mid-2031 with a strong
investment grade customer. We remain focused on commercial
discussions with other potential producer and refiner customers to
secure long-term, take-or-pay agreements at the Partnership’s
Hardisty terminal in support of future expansions of capacity at
the DRU. We look forward to keeping the market updated as this
project continues to develop,” added Mr. Borgen.
Adam Altsuler, the Partnership’s Chief Financial Officer, added,
“In addition, our efforts to strengthen our balance sheet continue
to produce results. We have paid down more than $30 million of
revolver borrowings since the first quarter of 2020, which is above
our previously stated guidance of approximately $20-$25 million on
an annualized basis. Notably, our leverage ratio(3) is currently
3.5x and trending lower, and our Distributable Cash Flow yield(4)
over the last twelve months continues to be strong, at greater than
30% based on our current unit price.”
Partnership’s Fourth Quarter 2020 Liquidity, Operational and
Financial Results
Substantially all of the Partnership’s cash flows are generated
from multi-year, take-or-pay terminalling services agreements
related to its crude oil 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.
The Partnership’s operating results for the fourth quarter of
2020 relative to the same quarter in 2019 were primarily influenced
by higher revenue at its Stroud terminal during the quarter due to
higher rates that are based on crude oil index pricing
differentials.
The Partnership experienced lower operating costs during the
fourth quarter of 2020 as compared to the fourth quarter of 2019
due primarily to lower subcontracted rail services costs associated
with lower throughput during the quarter.
Net income for the quarter increased as compared to the fourth
quarter of 2019, primarily as a result of the operating factors
discussed above coupled with lower interest expense incurred
resulting from a lower weighted average balance of debt outstanding
coupled with lower interest rates during the quarter and foreign
currency transaction gains.
In September 2020, the Partnership terminated its existing
interest rate collar and simultaneously entered into a new interest
rate swap that was made effective as of August 2020. The new
interest rate swap is a five-year contract with a $150 million
notional value that fixes the Partnership’s one-month LIBOR to
0.84% for the notional value of the swap agreement instead of the
variable rate that the Partnership pays under its Credit Agreement.
The swap settles monthly through the termination date in August
2025.
Net Cash Provided by Operating Activities for the quarter
increased 181% relative to the fourth quarter of 2019, primarily
due to the operating factors discussed above and the general timing
of receipts and payments of accounts receivable, accounts payable
and deferred revenue balances.
Adjusted EBITDA and Distributable Cash Flow (“DCF”) increased by
16% and 36%, respectively, for the quarter relative to the fourth
quarter of 2019. The increase in Adjusted EBITDA was primarily a
result of the operating factors discussed above. DCF was also
positively impacted by a decrease in cash paid for interest and
income taxes during the quarter.
As of December 31, 2020, the Partnership had approximately $3
million of unrestricted cash and cash equivalents and undrawn
borrowing capacity of $188 million on its $385 million senior
secured credit facility, subject to the Partnership’s continued
compliance with financial covenants. As of December 31, 2020, the
Partnership had amounts outstanding of $197.0 million under the
Revolving Credit Facility. Pursuant to the terms of the
Partnership’s Credit Agreement, the Partnership’s borrowing
capacity is currently limited to 4.5 times its trailing 12-month
consolidated EBITDA, as defined in the Credit Agreement. As such,
the Partnership’s available borrowings under the senior secured
credit facility, including unrestricted cash and cash equivalents,
was approximately $56 million as of December 31, 2020. The
Partnership was in compliance with its financial covenants, as of
December 31, 2020.
On January 28, 2021, the Partnership declared a quarterly cash
distribution of $0.111 per unit ($0.444 per unit on an annualized
basis), the same amount as distributed in the prior quarter. The
distribution was paid on February 19, 2021, to unitholders of
record at the close of business on February 10, 2021.
During the last nine months of 2020, the Partnership reduced the
outstanding balance of its revolving credit facility by $27
million. In addition, the Partnership has repaid an additional $5
million subsequent to the end of the fourth quarter of 2020. As a
result, since the Partnership announced the reduction to its
distribution in the first quarter of 2020, it has paid down $32
million of principal on its revolving credit facility.
Fourth Quarter 2020 Conference Call Information
The Partnership will host a conference call and webcast
regarding fourth quarter 2020 results at 11:00 a.m. Eastern Time
(10:00 a.m. Central Time) on Thursday, March 4, 2021.
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 3094936. 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 3094936. 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 (“USD”) to
acquire, develop and operate midstream infrastructure and
complementary logistics solutions for crude oil, biofuels and other
energy-related products. The Partnership generates substantially
all of its operating cash flows from multi-year, take-or-pay
contracts with primarily investment grade customers, including
major integrated oil companies, refiners and marketers. The
Partnership’s principal assets include a network of crude oil
terminals that facilitate the transportation of heavy crude oil
from Western Canada to key demand centers across North America. The
Partnership’s operations include railcar loading and unloading,
storage and blending in on-site tanks, inbound and outbound
pipeline connectivity, truck transloading, as well as other related
logistics services. In addition, the Partnership provides customers
with leased railcars and fleet services to facilitate the
transportation of liquid hydrocarbons and biofuels by rail.
USD, which owns the general partner of USD Partners LP, is
engaged in designing, developing, owning, and managing large-scale
multi-modal logistics centers and energy-related infrastructure
across North America. USD solutions create flexible market access
for customers in significant growth areas and key demand centers,
including Western Canada, the U.S. Gulf Coast and Mexico. Among
other projects, USDG, along with its partner Gibson Energy, Inc.,
is pursuing long-term solutions to transport heavier grades of
crude oil produced in Western Canada through the construction of a
Diluent Recovery Unit at the Hardisty terminal, which is expected
to be placed into service late in the second quarter or early in
the third quarter of 2021. USDG is also currently pursuing the
development of a premier energy logistics terminal on the Houston
Ship Channel with capacity for substantial tank storage, multiple
docks (including barge and deepwater), inbound and outbound
pipeline connectivity, as well as a rail terminal with unit train
capabilities. For additional information, please visit
texasdeepwater.com. Information on websites referenced in this
release is not part of this release.
Non-GAAP Financial Measures
The Partnership defines Adjusted EBITDA as Net Cash Provided by
Operating Activities adjusted for changes in working capital items,
interest, income taxes, foreign currency transaction gains and
losses, 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 flow being retained for use in enhancing the
Partnership’s existing business; 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 presented
in accordance with GAAP. Adjusted EBITDA and DCF exclude some, but
not all, items that affect Net Cash Provided by Operating
Activities 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. Reconciliations of Net Cash
Provided by Operating Activities to Adjusted EBITDA and DCF are
presented in this press release.
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 ability of the Partnership and USD to achieve
contract extensions, new customer agreements and expansions; the
ability of the Partnership and USD to develop existing and future
additional projects and expansion opportunities (including
successful completion of USD’s DRU) and whether those projects and
opportunities developed by USD would be made available for
acquisition, or acquired, by the Partnership; volumes at, and
demand for, the Partnership’s terminals; and the amount and timing
of future distribution payments and distribution growth. Words and
phrases such as “expect,” “plan,” “intent,” “believes,” “projects,”
“begin,” “anticipates,” “subject to” 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 the impact of the novel
coronavirus (COVID-19) pandemic and related economic downturn and
changes in general economic conditions and commodity prices, as
well as those factors set forth under the heading “Risk Factors”
and elsewhere in the Partnership’s most recent Annual Report on
Form 10-K and in the Partnership’s subsequent filings with the
Securities and Exchange Commission (many of which may be amplified
by the COVID-19 pandemic and the recent significant reductions in
demand for and prices of crude oil, natural gas and natural gas
liquids). 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, except as required by law.
__________
(1)
The Partnership presents both GAAP and
non-GAAP financial measures in this press release to assist in
understanding the Partnership’s liquidity and ability to fund
distributions. See “Non-GAAP Financial Measures” and
reconciliations of Net Cash Provided by Operating Activities, the
most directly comparable GAAP measure, to Adjusted EBITDA and
Distributable Cash Flow in this press release.
(2)
The Partnership calculates quarterly
Distributable Cash Flow Coverage by dividing Distributable Cash
Flow for the quarter as presented in this press release by the cash
distributions declared for the quarter, or approximately $3
million.
(3)
The Partnership calculates its leverage
ratio by dividing the outstanding balance under the Partnership’s
revolving credit facility at the end of the 12-month period by the
Partnership’s Adjusted EBITDA for the last 12 months, as presented
in this press release.
(4)
Distributable Cash Flow Yield represents
the total amount of Distributable Cash Flow per unit divided by the
closing market price for one of the Partnership’s common units as
of a recent date ($4.85, as of February 26, 2021). Distributable
Cash Flow per unit is calculated by dividing the total
Distributable Cash Flow for the period as presented in this press
release by the weighted average number of common units outstanding
for the period (26,514 thousand units).
USD Partners LP Consolidated Statements of Operations
For the Three Months and the Years Ended December 31, 2020 and
2019 (unaudited)
For the Three Months
Ended
For the Years Ended
December 31,
December 31,
2020
2019
2020
2019
(in thousands)
Revenues Terminalling services
$
28,604
$
23,736
$
104,053
$
87,173
Terminalling services — related party
1,102
3,958
10,031
19,580
Fleet leases — related party
984
984
3,935
3,935
Fleet services
51
50
203
208
Fleet services — related party
228
228
910
910
Freight and other reimbursables
95
639
845
1,612
Freight and other reimbursables — related party
—
(16
)
66
238
Total revenues
31,064
29,579
120,043
113,656
Operating costs Subcontracted rail services
2,412
3,824
10,845
14,777
Pipeline fees
6,184
5,597
23,862
20,971
Freight and other reimbursables
95
623
911
1,850
Operating and maintenance
2,515
2,751
10,459
10,953
Operating and maintenance — related party
2,093
2,493
8,287
4,964
Selling, general and administrative
2,573
2,577
10,883
10,716
Selling, general and administrative — related party
1,811
2,047
7,374
8,128
Goodwill impairment loss
—
—
33,589
—
Depreciation and amortization
5,441
5,347
21,496
20,664
Total operating costs
23,124
25,259
127,706
93,023
Operating income (loss)
7,940
4,320
(7,663
)
20,633
Interest expense
1,892
2,832
8,932
12,006
Loss (gain) associated with derivative instruments
(509
)
(546
)
3,896
1,420
Foreign currency transaction loss (gain)
(545
)
128
267
365
Other income, net
(27
)
(284
)
(903
)
(336
)
Income (loss) before income taxes
7,129
2,190
(19,855
)
7,178
Provision for (benefit from) income taxes
585
50
(41
)
662
Net income (loss)
$
6,544
$
2,140
$
(19,814
)
$
6,516
USD Partners LP Consolidated Statements of Cash
Flows For the Three Months and the Years Ended December 31,
2020 and 2019 (unaudited)
For the Three Months
Ended
For the Years Ended
December 31,
December 31,
2020
2019
2020
2019
Cash flows from operating activities: (in thousands) Net
income (loss)
$
6,544
$
2,140
$
(19,814
)
$
6,516
Adjustments to reconcile net income (loss) to net cash provided by
operating activities: Depreciation and amortization
5,441
5,347
21,496
20,664
Loss (gain) associated with derivative instruments
(509
)
(546
)
3,896
1,420
Settlement of derivative contracts
(261
)
—
(892
)
1
Unit based compensation expense
1,654
1,533
6,563
6,066
Deferred income taxes
290
378
(973
)
79
Other
207
214
829
1,129
Goodwill impairment loss
—
—
33,589
—
Changes in operating assets and liabilities: Accounts receivable
374
(1,620
)
1,266
(109
)
Accounts receivable – related party
137
(68
)
(621
)
(1,122
)
Prepaid expenses and other assets
(1,107
)
(1,556
)
(2,410
)
(1,484
)
Other assets – related party
(388
)
149
(1,287
)
(180
)
Accounts payable and accrued expenses
(354
)
(195
)
(963
)
(606
)
Accounts payable and accrued expenses – related party
(4
)
(2,427
)
(82
)
2
Deferred revenue and other liabilities
40
939
6,258
6,529
Deferred revenue – related party
(10
)
(1
)
(1,041
)
(463
)
Net cash provided by operating activities
12,054
4,287
45,814
38,442
Cash flows from investing activities: Additions of property
and equipment
(89
)
(1,368
)
(484
)
(8,440
)
Net cash used in investing activities
(89
)
(1,368
)
(484
)
(8,440
)
Cash flows from financing activities: Payments for deferred
financing costs
—
—
—
(7
)
Distributions
(3,183
)
(10,563
)
(20,203
)
(41,557
)
Vested Phantom Units used for payment of participant taxes
—
(3
)
(1,789
)
(1,829
)
Proceeds from long-term debt
—
10,000
12,000
38,000
Repayments of long-term debt
(12,000
)
(6,000
)
(35,000
)
(27,000
)
Other financing activities
—
—
—
(13
)
Net cash used in financing activities
(15,183
)
(6,566
)
(44,992
)
(32,406
)
Effect of exchange rates on cash
(321
)
208
(28
)
705
Net change in cash, cash equivalents and restricted cash
(3,539
)
(3,439
)
310
(1,699
)
Cash, cash equivalents and restricted cash – beginning of period
14,533
14,123
10,684
12,383
Cash, cash equivalents and restricted cash – end of period
$
10,994
$
10,684
$
10,994
$
10,684
USD Partners LP Consolidated Balance Sheets
(unaudited)
December 31,
December 31,
2020
2019
ASSETS (in thousands) Current assets Cash and cash
equivalents
$
3,040
$
3,083
Restricted cash
7,954
7,601
Accounts receivable, net
4,049
5,313
Accounts receivable — related party
2,460
1,778
Prepaid expenses
1,959
1,915
Other current assets
1,777
954
Other current assets — related party
15
343
Total current assets
21,254
20,987
Property and equipment, net
139,841
147,737
Intangible assets, net
61,492
74,099
Goodwill
—
33,589
Operating lease right-of-use assets
9,630
11,804
Other non-current assets
3,625
1,335
Other non-current assets — related party
1,706
15
Total assets
$
237,548
$
289,566
LIABILITIES AND PARTNERS’ CAPITAL Current liabilities
Accounts payable and accrued expenses
$
1,865
$
3,087
Accounts payable and accrued expenses — related party
383
465
Deferred revenue
6,367
6,104
Deferred revenue — related party
410
1,482
Operating lease liabilities, current
5,291
4,649
Other current liabilities
4,222
3,150
Total current liabilities
18,538
18,937
Long-term debt, net
195,480
217,651
Deferred income tax liabilities, net
40
458
Operating lease liabilities, non-current
4,392
7,386
Other non-current liabilities
12,830
4,078
Total liabilities
231,280
248,510
Commitments and contingencies Partners’ capital Common units
3,829
61,013
Subordinated units
—
(22,597
)
General partner units
1,892
2,767
Accumulated other comprehensive income (loss)
547
(127
)
Total partners’ capital
6,268
41,056
Total liabilities and partners’ capital
$
237,548
$
289,566
USD Partners LP GAAP to Non-GAAP
Reconciliations For the Three Months and the Years Ended
December 31, 2020 and 2019 (unaudited)
For the Three Months
Ended
For the Years Ended
December 31,
December 31,
2020
2019
2020
2019
(in thousands)
Net cash provided by operating
activities
$
12,054
$
4,287
$
45,814
$
38,442
Add (deduct): Amortization of deferred financing costs
(207
)
(207
)
(829
)
(1,072
)
Deferred income taxes
(290
)
(378
)
973
(79
)
Changes in accounts receivable and other assets
984
3,095
3,052
2,895
Changes in accounts payable and accrued expenses
358
2,622
1,045
604
Changes in deferred revenue and other liabilities
(30
)
(938
)
(5,217
)
(6,066
)
Interest expense, net
1,891
2,803
8,895
11,936
Provision for (benefit from) income taxes
585
50
(41
)
662
Foreign currency transaction loss (gain) (1)
(545
)
128
267
365
Other income
—
69
—
—
Non-cash deferred amounts (2)
97
1,264
1,637
2,809
Adjusted EBITDA
14,897
12,795
55,596
50,496
Add (deduct): Cash paid for income taxes (3)
(151
)
(302
)
(324
)
(1,206
)
Cash paid for interest
(1,756
)
(2,915
)
(8,593
)
(11,775
)
Maintenance capital expenditures
(41
)
(40
)
(171
)
(216
)
Distributable cash flow
$
12,949
$
9,538
$
46,508
$
37,299
(1)
Represents foreign exchange transaction amounts associated with
activities between the Partnership's U.S. and Canadian
subsidiaries.
(2)
Represents the change in non-cash contract assets and liabilities
associated with revenue recognized at blended rates based on tiered
rate structures in certain of the Partnership's customer contracts
and deferred revenue associated with deficiency credits that are
expected to be used in the future prior to their expiration.
Amounts presented are net of the corresponding prepaid Gibson
pipeline fee that will be recognized as expense concurrently with
the recognition of revenue.
(3)
Includes the net effect of tax refunds of $480 thousand received in
the third quarter of 2020 associated with carrying back U.S. net
operating losses incurred during 2020 and prior periods allowed for
by the provisions of the CARES Act.
Category: Earnings
View source
version on businesswire.com: https://www.businesswire.com/news/home/20210303005977/en/
Adam Altsuler Senior Vice President, Chief Financial Officer
(281) 291-3995 aaltsuler@usdg.com
Jennifer Waller Director, Financial Reporting and Investor
Relations (832) 991-8383 jwaller@usdg.com
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