USD Partners LP Announces First Quarter 2021 Results
USD Partners LP (NYSE: USDP) reported strong Q1 2021 results, with Net Cash from Operating Activities of $12.6 million and Adjusted EBITDA of $14.6 million. Net Income stood at $7.3 million. The Partnership raised its quarterly cash distribution to $0.1135 per unit, representing a 2.25% increase. Management plans to recommend further distribution hikes for the next three quarters. Operating results improved due to higher revenues at its Stroud terminal, while cash flow increased by 27% year-over-year. The Partnership maintains a robust liquidity position with $3 million in cash and $196 million undrawn on its credit facility.
- Net Cash Provided by Operating Activities increased to $12.6 million.
- Adjusted EBITDA rose by 18% to $14.6 million.
- Distributable Cash Flow increased by 27% to $12.5 million.
- Net Income improved to $7.3 million from a loss in Q1 2020.
- Quarterly distribution raised to $0.1135 per unit, a 2.25% increase.
- Revenue at Hardisty terminal slightly declined compared to Q1 2020.
- Deferred revenue impacted operational results.
USD Partners LP (NYSE: USDP) (the “Partnership”) announced today its operating and financial results for the three months ended March 31, 2021. Financial highlights with respect to the first quarter of 2021 include the following:
-
Generated Net Cash Provided by Operating Activities of
$12.6 million , Adjusted EBITDA(1) of$14.6 million and Distributable Cash Flow(1) of$12.5 million -
Reported Net Income of
$7.3 million -
Increased quarterly cash distribution to
$0.11 35 per unit ($0.45 4 per unit on an annualized basis) with approximately 4.0x Distributable Cash Flow Coverage(2) -
Announced that Management intends to recommend to the Board of Directors of the Partnership’s general partner to increase the quarterly cash distribution per unit by an additional
$0.00 25 per quarter for each of the second, third and fourth quarters in 2021 as compared to the preceding quarter
“We are pleased to report a strong start to 2021 at the Partnership as well as our intent to resume growing our quarterly distribution during 2021,” said Dan Borgen, the Partnership’s Chief Executive Officer. “Our strategically located terminals continue to perform well, and our recommendation to the Board to increase our quarterly distribution by
“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 next quarter. We expect that construction of the DRU will reach substantial completion in July, ramping to its full capacity in August,” added Mr. Borgen.
Partnership’s First 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 first 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, which was partially offset by revenue that was deferred in the first quarter of 2021 in connection with the make-up right options that the Partnership granted to its customers. Additionally, revenue at the Hardisty terminal was slightly lower in the first quarter of 2021 relative to the first quarter of 2020 resulting from the recognition in the first quarter of 2020 of revenue that was deferred in 2019 in connection with the make-up rights granted to our customers, compared to the first quarter of 2021 where no previously deferred revenue was recognized and a minor amount of revenue was deferred. This decrease in Hardisty revenues was partially offset by 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 when compared to the first quarter of 2020.
The Partnership experienced lower operating costs during the first quarter of 2021 as compared to the first quarter of 2020. This decrease was primarily due to a non-cash impairment of the goodwill associated with the Casper terminal that was recognized in the first quarter of 2020, with no similar charge recognized in the first quarter of 2021.
Net income increased in the first quarter of 2021 as compared to the net loss recognized in the first 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. Additionally, the Partnership recognized a non-cash gain associated with its interest rate derivatives during the first quarter of 2021.
Net Cash Provided by Operating Activities for the quarter increased
Adjusted EBITDA and Distributable Cash Flow (“DCF”) increased by
As of March 31, 2021, the Partnership had approximately
On April 22, 2021, the Partnership declared a quarterly cash distribution of
Since the end of the first quarter of 2020, the Partnership has reduced the outstanding balance of its revolving credit facility by
First Quarter 2021 Conference Call Information
The Partnership will host a conference call and webcast regarding first quarter 2021 results at 11:00 a.m. Eastern Time (10:00 a.m. Central Time) on Thursday, May 6, 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 4593597. 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 4593597. 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. 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 and whether those projects and opportunities developed by USD would be made available for acquisition, or acquired, by the Partnership; the timing and 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 |
| USD Partners LP | ||||||||
| Consolidated Statements of Operations | ||||||||
| For the Three Months Ended March 31, 2021 and 2020 | ||||||||
| (unaudited) | ||||||||
For the Three Months Ended |
||||||||
March 31, |
||||||||
2021 |
|
2020 |
||||||
| (in thousands) | ||||||||
| Revenues | ||||||||
| Terminalling services | $ |
28,105 |
|
$ |
24,235 |
|
||
| Terminalling services — related party |
|
1,103 |
|
|
4,088 |
|
||
| Fleet leases — related party |
|
984 |
|
|
984 |
|
||
| Fleet services |
|
24 |
|
|
50 |
|
||
| Fleet services — related party |
|
227 |
|
|
227 |
|
||
| Freight and other reimbursables |
|
156 |
|
|
622 |
|
||
| Total revenues |
|
30,599 |
|
|
30,206 |
|
||
| Operating costs | ||||||||
| Subcontracted rail services |
|
3,141 |
|
|
3,445 |
|
||
| Pipeline fees |
|
6,046 |
|
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FAQ
What were USD Partners LP's Q1 2021 financial highlights?
In Q1 2021, USD Partners LP reported Net Cash from Operating Activities of $12.6 million, Adjusted EBITDA of $14.6 million, and Net Income of $7.3 million.
What is the new cash distribution rate for USDP?
USD Partners LP increased its quarterly cash distribution to $0.1135 per unit for Q1 2021.
How does USD Partners' Q1 2021 performance compare to Q1 2020?
Compared to Q1 2020, USD Partners LP experienced an increase in Net Cash, Adjusted EBITDA, and Distributable Cash Flow, while Hardisty terminal revenue decreased slightly.
What is the future outlook for USD Partners LP's cash distributions?
Management intends to recommend increasing quarterly distributions by an additional $0.0025 each for the next three quarters in 2021.
How much liquidity does USD Partners LP have as of March 31, 2021?
As of March 31, 2021, USD Partners LP had approximately $3 million in cash and $196 million in undrawn borrowing capacity.
USD PARTNERS LP
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