USD Partners LP (NYSE: USDP) (the “Partnership”) announced today
its operating and financial results for the three and six months
ended June 30, 2021. Financial highlights with respect to the
second quarter of 2021 include the following:
- Generated Net Cash Provided by Operating Activities of $14.1
million, Adjusted EBITDA(1) of $16.3 million and Distributable Cash
Flow(1) of $14.4 million
- Reported Net Income of $6.7 million
- Increased quarterly cash distribution to $0.116 per unit
($0.464 per unit on an annualized basis) with over 4.0x
Distributable Cash Flow Coverage(2)
- Announced West Colton Renewable Diesel project and new
terminalling services agreement that once operational is expected
to generate approximately $2.0 million per year of Adjusted
EBITDA(3) over the five-year term of the agreement for the
Partnership.
“We are pleased to report another strong quarter in 2021,” said
Dan Borgen, the Partnership’s Chief Executive Officer. “Our
terminals performed well during the second quarter, and we are very
excited to report that construction of our Sponsor’s Diluent
Recovery Unit project, or DRU, was completed in July. The DRU is
now in the start-up phase, and our Sponsor expects the facility to
be placed into service during the third quarter. In addition,
construction of all major items at our Sponsor’s destination
facility at Port Arthur necessary to receive DRUbit™ by rail, and
blend and ship product by pipe, is complete and start-up of the new
terminal has begun. As mentioned previously, our DRUbit™ by Rail™
network provides the Partnership with long-term take-or-pay
revenues while providing transportation safety and environmental
benefits to our customers, as well as providing increased market
access and additional jobs along the rail routes.”
“We continue to be very excited about our future as well as the
future of our Sponsor’s new DRU and Port Arthur Terminal as we
engage with our customers regarding the second phase of USD’s
growth, which could include a second DRU customer committing to
delivering the next 50,000 barrels per day of diluted bitumen into
the DRU, with the resulting DRUbitTM available to be transloaded
through the Partnership’s Hardisty rail terminal to the Gulf Coast
and other potential destinations,” added Mr. Borgen. “We look
forward to keeping our investors updated with future announcements
regarding the DRU.”
Partnership’s Second Quarter 2021 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 second quarter of
2021 relative to the same quarter in 2020 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. Also during the quarter the Partnership recognized
revenue that was previously deferred at the Stroud terminal during
the first quarter of 2021 associated with the make-up right options
that are granted to the Partnership’s customers. Additionally,
revenue at the Hardisty terminal in the second quarter of 2021
relative to the second quarter of 2020, was higher due to a
favorable variance resulting from the change in the Canadian
exchange rate associated with the Partnership’s Canadian-dollar
denominated contracts and increased rates on certain of the
Partnership’s Hardisty agreements.
The Partnership experienced higher operating costs during the
second quarter of 2021 as compared to the second quarter of 2020.
This increase was primarily attributable to an increase in
subcontracted rail services costs and pipeline fees associated with
higher throughput, partially offset by lower selling, general and
administrative costs.
Net income increased in the second quarter of 2021 as compared
to the second quarter of 2020, primarily because of the operating
factors discussed above coupled with lower interest expense
incurred during the 2021 period resulting from lower interest rates
and a lower weighted average balance of debt outstanding. The
Partnership also recognized a small non-cash foreign currency
transaction gain in the second quarter of 2021 as compared to a
non-cash loss recognized in the 2020 comparative period. Partially
offsetting was a higher non-cash loss associated with the
Partnership’s interest rate derivatives during the second quarter
of 2021 when compared to the same period in 2020.
Net Cash Provided by Operating Activities for the quarter
increased 160% relative to the second quarter of 2020, 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
28% and 48%, respectively, for the quarter relative to the second
quarter of 2020. 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 during
the quarter, partially offset by an increase in cash paid for
income taxes and higher maintenance capital expenditures incurred
during the current quarter, which included technology upgrades and
safety maintenance at the Partnership’s Hardisty and Stroud
terminals.
As of June 30, 2021, the Partnership had approximately $3
million of unrestricted cash and cash equivalents and undrawn
borrowing capacity of $206 million on its $385 million senior
secured credit facility, subject to the Partnership’s continued
compliance with financial covenants. As of the end of the second
quarter of 2021, the Partnership had borrowings of $179 million
outstanding 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 $100 million as of June 30, 2021.
The Partnership was in compliance with its financial covenants, as
of June 30, 2021.
On July 21, 2021, the Partnership declared a quarterly cash
distribution of $0.116 per unit ($0.464 per unit on an annualized
basis), representing an increase of $0.0025 per unit, or 2.2% over
the distribution declared for the first quarter of 2021. The
distribution is payable on August 13, 2021, to unitholders of
record at the close of business on August 4, 2021.
Since the end of the first quarter of 2020, the Partnership has
reduced the outstanding balance of its revolving credit facility by
$45 million as of June 30, 2021.
Second Quarter 2021 Conference Call Information
The Partnership will host a conference call and webcast
regarding second quarter 2021 results at 11:00 a.m. Eastern Time
(10:00 a.m. Central Time) on Thursday, August 5, 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 6061075. 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 6061075. 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, USD, 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. USD 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.
DRUbit™ and DRUbit™ by Rail™ are registered trademarks of DRU
Assets LLC, a wholly-owned subsidiary of USD. All rights
reserved.
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 and whether those
projects and opportunities developed by USD would be made available
for acquisition, or acquired, by the Partnership; the impact of the
West Colton Renewable Diesel project; the impact of the completion
of USD’s DRU project; 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
significant reductions in demand for, and fluctuations in the
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 $3.2
million.
(3)
This press release provides the expected
Adjusted EBITDA contribution from the West Colton Renewable Diesel
project. The most directly comparable GAAP measure is not provided
because certain information necessary to calculate the most
directly comparable GAAP measure is unavailable due to the
uncertainty and inherent difficulty of predicting the occurrence
and future impact of certain items. As a result of the uncertainty
and variability of the nature and amount of future items, which
could be significant, the Partnership is unable to provide a
reconciliation to the most directly comparable GAAP measure without
unreasonable efforts.
USD Partners LP Consolidated Statements of Operations
For the Three and Six Months Ended June 30, 2021 and 2020
(unaudited) For the Three Months Ended For
the Six Months Ended June 30, June 30,
2021
2020
2021
2020
(in thousands)
Revenues Terminalling services
$
30,992
$
22,309
$
59,097
$
46,544
Terminalling services — related party
1,111
3,800
2,214
7,888
Fleet leases — related party
983
983
1,967
1,967
Fleet services
—
51
24
101
Fleet services — related party
228
228
455
455
Freight and other reimbursables
207
64
363
686
Freight and other reimbursables — related party
—
1
—
1
Total revenues
33,521
27,436
64,120
57,642
Operating costs Subcontracted rail services
3,523
2,688
6,664
6,133
Pipeline fees
6,398
5,395
12,444
11,742
Freight and other reimbursables
207
65
363
687
Operating and maintenance
2,602
2,564
5,434
5,645
Operating and maintenance — related party
2,101
2,065
4,191
4,092
Selling, general and administrative
2,411
2,620
5,467
5,800
Selling, general and administrative — related party
1,625
1,835
3,302
3,828
Goodwill impairment loss
—
—
—
33,589
Depreciation and amortization
5,500
5,203
10,971
10,625
Total operating costs
24,367
22,435
48,836
82,141
Operating income (loss)
9,154
5,001
15,284
(24,499
)
Interest expense
1,591
2,256
3,326
4,995
Loss (gain) associated with derivative instruments
718
332
(2,358
)
3,205
Foreign currency transaction loss (gain)
(41
)
1,150
(102
)
1,058
Other expense (income), net
4
(111
)
(16
)
(843
)
Income (loss) before income taxes
6,882
1,374
14,434
(32,914
)
Provision for (benefit from) income taxes
166
188
390
(319
)
Net income (loss)
$
6,716
$
1,186
$
14,044
$
(32,595
)
USD Partners LP Consolidated Statements of Cash
Flows For the Three and Six Months Ended June 30, 2021 and
2020 (unaudited) For the Three Months
Ended For the Six Months Ended June 30, June
30,
2021
2020
2021
2020
Cash flows from operating activities: (in thousands) Net
income (loss)
$
6,716
$
1,186
$
14,044
$
(32,595
)
Adjustments to reconcile net income(loss)
to net cash provided by operating activities:
Depreciation and amortization
5,500
5,203
10,971
10,625
Loss (gain) associated with derivative instruments
718
332
(2,358
)
3,205
Settlement of derivative contracts
(279
)
(283
)
(543
)
(289
)
Unit based compensation expense
1,405
1,630
2,917
3,265
Loss associated with disposal of assets
5
—
5
—
Deferred income taxes
(72
)
(189
)
(90
)
(541
)
Amortization of deferred financing costs
207
207
414
414
Goodwill impairment loss
—
—
—
33,589
Changes in operating assets and liabilities: Accounts receivable
(447
)
82
(849
)
690
Accounts receivable – related party
1,153
195
1,069
(746
)
Prepaid expenses and other assets
(151
)
(351
)
733
(1,571
)
Other assets – related party
(412
)
(260
)
(806
)
(510
)
Accounts payable and accrued expenses
292
(1,552
)
582
(1,145
)
Accounts payable and accrued expenses – related party
(11
)
(578
)
(36
)
(87
)
Deferred revenue and other liabilities
(590
)
811
622
3,846
Deferred revenue – related party
—
(1,024
)
—
(1,024
)
Other liabilities – related party
20
—
24
—
Net cash provided by operating activities
14,054
5,409
26,699
17,126
Cash flows from investing activities: Additions of property
and equipment
(901
)
(230
)
(1,384
)
(377
)
Net cash used in investing activities
(901
)
(230
)
(1,384
)
(377
)
Cash flows from financing activities: Distributions
(3,303
)
(3,182
)
(6,486
)
(13,837
)
Vested Phantom Units used for payment of participant taxes
—
—
(857
)
(1,788
)
Proceeds from long-term debt
—
—
—
10,000
Repayments of long-term debt
(10,000
)
(6,000
)
(18,000
)
(12,000
)
Net cash used in financing activities
(13,303
)
(9,182
)
(25,343
)
(17,625
)
Effect of exchange rates on cash
(53
)
1,427
(148
)
438
Net change in cash, cash equivalents and restricted cash
(203
)
(2,576
)
(176
)
(438
)
Cash, cash equivalents and restricted cash – beginning of period
11,021
12,822
10,994
10,684
Cash, cash equivalents and restricted cash – end of period
$
10,818
$
10,246
$
10,818
$
10,246
USD Partners LP Consolidated Balance Sheets
(unaudited) June 30, December 31,
2021
2020
ASSETS (in thousands) Current assets Cash and cash
equivalents
$
3,131
$
3,040
Restricted cash
7,687
7,954
Accounts receivable, net
4,938
4,049
Accounts receivable — related party
1,442
2,460
Prepaid expenses
2,556
1,959
Other current assets
465
1,777
Other current assets — related party
242
15
Total current assets
20,461
21,254
Property and equipment, net
138,140
139,841
Intangible assets, net
55,189
61,492
Operating lease right-of-use assets
7,551
9,630
Other non-current assets
3,941
3,625
Other non-current assets — related party
2,337
1,706
Total assets
$
227,619
$
237,548
LIABILITIES AND PARTNERS’ CAPITAL Current liabilities
Accounts payable and accrued expenses
$
2,686
$
1,865
Accounts payable and accrued expenses — related party
348
383
Deferred revenue
5,949
6,367
Deferred revenue — related party
410
410
Operating lease liabilities, current
5,627
5,291
Other current liabilities
5,086
4,222
Total current liabilities
20,106
18,538
Long-term debt, net
177,895
195,480
Operating lease liabilities, non-current
1,894
4,392
Other non-current liabilities
11,080
12,870
Other non-current liabilities — related party
24
—
Total liabilities
210,999
231,280
Commitments and contingencies Partners’ capital Common units
13,100
3,829
General partner units
2,018
1,892
Accumulated other comprehensive income
1,502
547
Total partners’ capital
16,620
6,268
Total liabilities and partners’ capital
$
227,619
$
237,548
USD Partners LP
GAAP to Non-GAAP Reconciliations For the Three and Six
Months Ended June 30, 2021 and 2020 (unaudited)
For the Three Months Ended For the Six
Months Ended June 30, June 30,
2021
2020
2021
2020
(in thousands)
Net cash provided by
operating activities
$
14,054
$
5,409
$
26,699
$
17,126
Add (deduct): Amortization of deferred financing costs
(207
)
(207
)
(414
)
(414
)
Deferred income taxes
72
189
90
541
Changes in accounts receivable and other assets
(143
)
334
(147
)
2,137
Changes in accounts payable and accrued expenses
(281
)
2,130
(546
)
1,232
Changes in deferred revenue and other liabilities
570
213
(646
)
(2,822
)
Interest expense, net
1,590
2,253
3,324
4,968
Provision for (benefit from) income taxes
166
188
390
(319
)
Foreign currency transaction loss (gain) (1)
(41
)
1,150
(102
)
1,058
Non-cash deferred amounts (2)
543
1,119
2,226
1,556
Adjusted EBITDA
16,323
12,778
30,874
25,063
Add (deduct): Cash paid for income taxes
(248
)
(116
)
(534
)
(433
)
Cash paid for interest
(1,438
)
(2,874
)
(2,987
)
(4,957
)
Maintenance capital expenditures
(235
)
(82
)
(438
)
(114
)
Distributable cash flow
$
14,402
$
9,706
$
26,915
$
19,559
__________________________
(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.
Category: Earnings
View source
version on businesswire.com: https://www.businesswire.com/news/home/20210804006110/en/
Adam Altsuler Executive 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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