USD Partners LP Announces Second Quarter 2020 Results
Houston, TX - USD Partners LP (NYSE: USDP) (the “Partnership”) announced today its operating and financial results for the three and six months ended June 30, 2020. Financial highlights with respect to the second quarter of 2020 include the following:
Generated Net Cash Provided by Operating Activities of $5.4 million, Adjusted EBITDA(1) of $12.8 million and Distributable Cash Flow(1) of $9.7 million
Reported Net Income of $1.2 million
Declared a quarterly cash distribution of $0.111 per unit ($0.444 per unit on an annualized basis) with over 3.0x Distributable Cash Flow Coverage
“We are pleased to report another solid quarter for the Partnership,” said Dan Borgen, the Partnership’s Chief Executive Officer. “We continue to execute on our plan to divert some of our free cash flow towards paying down debt. During the second quarter, the Partnership paid down $6 million on our Revolver which is consistent with our intent to de-lever by approximately $20-$25 million on an annual basis.”
“In addition, we continue to be excited about our Sponsor’s previously announced diluent recovery unit (“DRU”) project, which we expect will be placed into service in the second quarter of 2021. The Partnership’s Sponsor has secured the necessary financing, obtained all material permits and entered into fixed-price construction contracts regarding the construction of the project. Upon the successful construction and completion of the DRU, approximately 32% of the Partnership’s Hardisty terminal’s capacity will be automatically extended under a long-term committed agreement through mid-2031,” added Mr. Borgen. “USD and our partner, Gibson, are currently in commercial discussions with other potential producer and refiner customers to secure additional long-term, take-or-pay agreements to support future expansions of capacity at the DRU, and we look forward to keeping the market updated as things continue to develop.”
Partnership’s Second 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 second quarter of 2020 relative to the same quarter in 2019 were primarily influenced by higher revenue at its Hardisty terminal associated with contracted throughput that exceeded the Partnership’s existing capacity at its Hardisty terminal and increased rates on a portion of the terminalling services agreements that became effective July 1, 2019. Additionally, in the third quarter of 2019, the Partnership entered into a terminalling services agreement with the Hardisty South facility owned by the Partnership’s Sponsor to provide terminalling services for the contracted throughput that exceeded the Hardisty terminal’s transloading capacity. Under this arrangement, the Partnership incurred operating costs payable to the Partnership’s Sponsor representing the same rate, on a per barrel basis, that the Partnership received in revenue for such contracted throughput.
(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” on page 3 and reconciliations of Net Cash Provided by Operating Activities, the most directly comparable GAAP measure, to Adjusted EBITDA and Distributable Cash Flow on page 9 of this press release.