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
View source
version on businesswire.com: https://www.businesswire.com/news/home/20220302005831/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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