USD Partners LP (NYSE: USDP) (the “Partnership”) announced today its operating and financial results for the three months and year ended December 31, 2021. Financial highlights with respect to the fourth quarter of 2021 include the following:

  • Generated Net Cash Provided by Operating Activities of $9.4 million, Adjusted EBITDA(1) of $11.9 million and Distributable Cash Flow(1) of $10.7 million
  • Reported Net Income of $3.6 million
  • Declared a quarterly cash distribution of $0.121 per unit ($0.484 per unit on an annualized basis) with approximately 3.2x Distributable Cash Flow Coverage(2)

“2021 was a momentous year for the Partnership as well as for our Sponsor. During the year, we announced a five-year renewable diesel throughput agreement underpinned by an investment-grade rated, refining customer at the Partnership’s West Colton Terminal; formed USD Clean Fuels LLC, a subsidiary of our Sponsor to focus on providing production and logistics solutions to the growing market for clean energy transportation fuels; and declared the DRU to be fully operational and commenced shipment of DRUbit™ by Rail™,” said Dan Borgen, the Partnership’s Chief Executive Officer. “As mentioned previously, our DRUbit™ by Rail™ network has already enhanced the sustainability and quality of the Partnership’s cash flows by significantly increasing the tenor of approximately 32% of the Hardisty terminal’s capacity, through 2031. In addition, our DRUbit™ by Rail™ network provides the safest transportation and environmental benefits to our customers, as well as increased market access and additional jobs along the rail routes.”

“We hope to continue our momentum in 2022 and are very encouraged about the future as we engage with our customers regarding the next phase of USD’s growth, which could include a second DRU customer commitment, resulting in additional longer-term commitments at the Partnership’s Hardisty rail terminal,” added Mr. Borgen. “Based on this momentum, management intends to recommend to the Board of Directors of its general partner to remain on its current growth trajectory of increasing its quarterly cash distribution per unit by an additional $0.0025 per quarter for the first, second, third and fourth quarters in 2022.”

Partnership’s Fourth 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 fourth quarter of 2021 relative to the same quarter in 2020 were primarily influenced by lower revenue at its Stroud terminal during the quarter associated with the existing DRU customer electing to reduce its contracted volume commitments by one-third of its previous commitment effective August 2021, which was primarily driven by the successful commencement of the DRU.

The Partnership experienced higher operating costs during the fourth quarter of 2021 as compared to the fourth quarter of 2020 primarily attributable to an increase in subcontracted rail services costs due to increased throughput.

Net income decreased in the fourth quarter of 2021 as compared to the fourth quarter of 2020, primarily because of the operating factors discussed above coupled with a non-cash foreign currency transaction loss in the fourth quarter of 2021 as compared to a non-cash gain recognized in the 2020 comparative period. Partially offsetting the decrease in net income was lower interest expense incurred during the fourth quarter of 2021 resulting from lower interest rates and a lower weighted average balance of debt outstanding and a larger non-cash gain associated with the Partnership’s interest rate derivatives during the fourth quarter of 2021, as compared to the same period in 2020.

Net Cash Provided by Operating Activities for the quarter decreased 22% relative to the fourth 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”) decreased by 20% and 18%, respectively, for the quarter relative to the fourth quarter of 2020. The decrease in Adjusted EBITDA and DCF was primarily a result of the operating factors discussed above. Partially offsetting the decrease in DCF was a decrease in cash paid for interest and taxes during the quarter.

As of December 31, 2021, the Partnership had approximately $3.7 million of unrestricted cash and cash equivalents and undrawn borrowing capacity of $107.0 million on its $275.0 million senior secured credit facility, subject to the Partnership’s continued compliance with financial covenants. As of the end of the fourth quarter of 2021, the Partnership had borrowings of $168.0 million outstanding under its revolving credit facility. The Partnership was in compliance with its financial covenants, as of December 31, 2021.

Pursuant to the terms of the Partnership’s senior secured credit facility, as amended, the Partnership’s borrowing capacity continues to be limited to 4.5 times its trailing 12-month consolidated EBITDA, as defined in the senior secured credit facility. As such, the Partnership’s available borrowings under the senior secured credit facility, including unrestricted cash and cash equivalents, was approximately $83.7 million as of December 31, 2021.

On January 26, 2022, the Partnership declared a quarterly cash distribution of $0.121 per unit ($0.484 per unit on an annualized basis), representing an increase of $0.0025 per unit, or 2.1% over the distribution declared for the third quarter of 2021. The distribution was paid on February 18, 2022, to unitholders of record at the close of business on February 9, 2022.

Since the end of the first quarter of 2020, the Partnership has reduced the outstanding balance of its revolving credit facility by $56 million as of December 31, 2021.

Fourth Quarter 2021 Conference Call Information

The Partnership will host a conference call and webcast regarding fourth quarter 2021 results at 11:00 a.m. Eastern Time (10:00 a.m. Central Time) on Thursday, March 3, 2022.

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 (866) 518-6930 domestically or +1 (203) 518-9822 internationally, conference ID 8961403. 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) 688-7945 domestically or +1 (402) 220-1370 internationally, conference ID 8961403. 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’s 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 is 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 $3.4 million.

USD Partners LP Consolidated Statements of Operations For the Three Months and the Years Ended December 31, 2021 and 2020 (unaudited)  

For the Three Months Ended

 

For the Years Ended

December 31,

 

December 31,

2021

 

 

2020

 

 

2021

 

 

2020

 

(in thousands)

Revenues Terminalling services

$

26,643

 

$

28,604

 

$

113,810

 

$

104,053

 

Terminalling services — related party

 

226

 

 

1,102

 

 

2,753

 

 

10,031

 

Fleet leases — related party

 

984

 

 

984

 

 

3,935

 

 

3,935

 

Fleet services

 

 

 

51

 

 

24

 

 

203

 

Fleet services — related party

 

228

 

 

228

 

 

910

 

 

910

 

Freight and other reimbursables

 

133

 

 

95

 

 

666

 

 

845

 

Freight and other reimbursables — related party

 

 

 

 

 

 

 

66

 

Total revenues

 

28,214

 

 

31,064

 

 

122,098

 

 

120,043

 

Operating costs Subcontracted rail services

 

3,481

 

 

2,412

 

 

13,838

 

 

10,845

 

Pipeline fees

 

5,849

 

 

6,184

 

 

24,324

 

 

23,862

 

Freight and other reimbursables

 

133

 

 

95

 

 

666

 

 

911

 

Operating and maintenance

 

2,850

 

 

2,515

 

 

10,822

 

 

10,459

 

Operating and maintenance — related party

 

2,219

 

 

2,093

 

 

8,369

 

 

8,287

 

Selling, general and administrative

 

2,313

 

 

2,573

 

 

10,376

 

 

10,883

 

Selling, general and administrative — related party

 

1,875

 

 

1,811

 

 

6,826

 

 

7,374

 

Goodwill impairment loss

 

 

 

 

 

 

 

33,589

 

Depreciation and amortization

 

5,500

 

 

5,441

 

 

22,075

 

 

21,496

 

Total operating costs

 

24,220

 

 

23,124

 

 

97,296

 

 

127,706

 

Operating income (loss)

 

3,994

 

 

7,940

 

 

24,802

 

 

(7,663

)

Interest expense

 

1,685

 

 

1,892

 

 

6,491

 

 

8,932

 

Loss (gain) associated with derivative instruments

 

(1,661

)

 

(509

)

 

(4,129

)

 

3,896

 

Foreign currency transaction loss (gain)

 

121

 

 

(545

)

 

313

 

 

267

 

Other income, net

 

(18

)

 

(27

)

 

(31

)

 

(903

)

Income (loss) before income taxes

 

3,867

 

 

7,129

 

 

22,158

 

 

(19,855

)

Provision for (benefit from) income taxes

 

261

 

 

585

 

 

700

 

 

(41

)

Net income (loss)

$

3,606

 

$

6,544

 

$

21,458

 

$

(19,814

)

USD Partners LP Consolidated Statements of Cash Flows For the Three Months and the Years Ended December 31, 2021 and 2020 (unaudited)  

For the Three Months Ended

 

For the Years Ended

December 31,

 

December 31,

2021

 

 

2020

 

 

2021

 

 

2020

 

Cash flows from operating activities:

(in thousands)

Net income (loss)

$

3,606

 

$

6,544

 

$

21,458

 

$

(19,814

)

Adjustments to reconcile net income (loss) to net cash provided by operating activities: Depreciation and amortization

 

5,500

 

 

5,441

 

 

22,075

 

 

21,496

 

Loss (gain) associated with derivative instruments

 

(1,661

)

 

(509

)

 

(4,129

)

 

3,896

 

Settlement of derivative contracts

 

(283

)

 

(261

)

 

(1,112

)

 

(892

)

Unit based compensation expense

 

1,424

 

 

1,654

 

 

5,698

 

 

6,563

 

Loss associated with disposal of assets

 

 

 

 

 

11

 

 

 

Deferred income taxes

 

(91

)

 

290

 

 

(316

)

 

(973

)

Amortization of deferred financing costs

 

509

 

 

207

 

 

1,131

 

 

829

 

Goodwill impairment loss

 

 

 

 

 

 

 

33,589

 

Changes in operating assets and liabilities: Accounts receivable

 

(1,649

)

 

374

 

 

(1,637

)

 

1,266

 

Accounts receivable – related party

 

(292

)

 

137

 

 

(474

)

 

(621

)

Prepaid expenses, inventory and other assets

 

(3,861

)

 

(1,107

)

 

(2,394

)

 

(2,410

)

Other assets – related party

 

67

 

 

(388

)

 

(770

)

 

(1,287

)

Accounts payable and accrued expenses

 

4,927

 

 

(354

)

 

5,611

 

 

(963

)

Accounts payable and accrued expenses – related party

 

1,188

 

 

(4

)

 

1,104

 

 

(82

)

Deferred revenue and other liabilities

 

447

 

 

40

 

 

1,215

 

 

6,258

 

Deferred revenue and other liabilities – related party

 

(390

)

 

(10

)

 

(346

)

 

(1,041

)

Net cash provided by operating activities

 

9,441

 

 

12,054

 

 

47,125

 

 

45,814

 

Cash flows from investing activities: Additions of property and equipment

 

(44

)

 

(89

)

 

(2,389

)

 

(484

)

Net cash used in investing activities

 

(44

)

 

(89

)

 

(2,389

)

 

(484

)

Cash flows from financing activities: Payments for deferred financing costs

 

(1,595

)

 

 

 

(1,595

)

 

 

Distributions

 

(3,446

)

 

(3,183

)

 

(13,307

)

 

(20,203

)

Vested Phantom Units used for payment of participant taxes

 

(1

)

 

 

 

(860

)

 

(1,789

)

Proceeds from long-term debt

 

 

 

 

 

 

 

12,000

 

Repayments of long-term debt

 

(6,000

)

 

(12,000

)

 

(29,000

)

 

(35,000

)

Net cash used in financing activities

 

(11,042

)

 

(15,183

)

 

(44,762

)

 

(44,992

)

Effect of exchange rates on cash

 

90

 

 

(321

)

 

(45

)

 

(28

)

Net change in cash, cash equivalents and restricted cash

 

(1,555

)

 

(3,539

)

 

(71

)

 

310

 

Cash, cash equivalents and restricted cash – beginning of period

 

12,478

 

 

14,533

 

 

10,994

 

 

10,684

 

Cash, cash equivalents and restricted cash – end of period

$

10,923

 

$

10,994

 

$

10,923

 

$

10,994

 

USD Partners LP Consolidated Balance Sheets (unaudited)  

December 31,

 

December 31,

2021

 

2020

ASSETS

(in thousands)

Current assets Cash and cash equivalents

$

3,747

$

3,040

Restricted cash

 

7,176

 

7,954

Accounts receivable, net

 

5,688

 

4,049

Accounts receivable — related party

 

2,953

 

2,460

Prepaid expenses

 

3,857

 

1,959

Inventory

 

3,027

 

Other current assets

 

129

 

1,777

Other current assets — related party

 

260

 

15

Total current assets

 

26,837

 

21,254

Property and equipment, net

 

133,102

 

139,841

Intangible assets, net

 

48,886

 

61,492

Operating lease right-of-use assets

 

5,658

 

9,630

Other non-current assets

 

4,881

 

3,625

Other non-current assets — related party

 

2,227

 

1,706

Total assets

$

221,591

$

237,548

  LIABILITIES AND PARTNERS’ CAPITAL Current liabilities Accounts payable and accrued expenses

$

7,621

$

1,865

Accounts payable and accrued expenses — related party

 

1,486

 

383

Deferred revenue

 

6,889

 

6,367

Deferred revenue — related party

 

 

410

Operating lease liabilities, current

 

4,674

 

5,291

Other current liabilities

 

7,223

 

4,222

Other current liabilities — related party

 

64

 

Total current liabilities

 

27,957

 

18,538

Long-term debt, net

 

166,003

 

195,480

Operating lease liabilities, non-current

 

793

 

4,392

Other non-current liabilities

 

7,751

 

12,870

Total liabilities

 

202,504

 

231,280

Commitments and contingencies Partners’ capital Common units

 

16,355

 

3,829

General partner units

 

2,029

 

1,892

Accumulated other comprehensive income

 

703

 

547

Total partners’ capital

 

19,087

 

6,268

Total liabilities and partners’ capital

$

221,591

$

237,548

USD Partners LP GAAP to Non-GAAP Reconciliations For the Three Months and the Years Ended December 31, 2021 and 2020 (unaudited)  

For the Three Months Ended

 

For the Years Ended

December 31,

 

December 31,

2021

 

 

2020

 

 

2021

 

 

2020

 

(in thousands)

  Net cash provided by operating activities

$

9,441

 

$

12,054

 

$

47,125

 

$

45,814

 

Add (deduct): Amortization of deferred financing costs

 

(509

)

 

(207

)

 

(1,131

)

 

(829

)

Deferred income taxes

 

91

 

 

(290

)

 

316

 

 

973

 

Changes in accounts receivable and other assets

 

5,735

 

 

984

 

 

5,275

 

 

3,052

 

Changes in accounts payable and accrued expenses

 

(6,115

)

 

358

 

 

(6,715

)

 

1,045

 

Changes in deferred revenue and other liabilities

 

(57

)

 

(30

)

 

(869

)

 

(5,217

)

Interest expense, net

 

1,684

 

 

1,891

 

 

6,487

 

 

8,895

 

Provision for (benefit from) income taxes

 

261

 

 

585

 

 

700

 

 

(41

)

Foreign currency transaction loss (gain) (1)

 

121

 

 

(545

)

 

313

 

 

267

 

Non-cash deferred amounts (2)

 

1,262

 

 

97

 

 

3,606

 

 

1,637

 

Adjusted EBITDA

 

11,914

 

 

14,897

 

 

55,107

 

 

55,596

 

Add (deduct): Cash paid for income taxes (3)

 

(63

)

 

(151

)

 

(741

)

 

(324

)

Cash paid for interest

 

(1,176

)

 

(1,756

)

 

(5,472

)

 

(8,593

)

Maintenance capital expenditures

 

(16

)

 

(41

)

 

(612

)

 

(171

)

Distributable cash flow

$

10,659

 

$

12,949

 

$

48,282

 

$

46,508

 

___________

(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

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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