USD Partners LP (NYSE: USDP) (the “Partnership”) announced today
its operating and financial results for the three and six months
ended June 30, 2023. Financial highlights with respect to the
second quarter of 2023 include the following:
- Generated Net Income of $4.6 million
- Reported Net Cash Used in Operating Activities of $1.3 million,
Adjusted EBITDA(1) of $5.8 million and Distributable Cash Flow(1)
of $1.1 million
- Announced new three-month, rail-to-truck Terminalling Services
Agreement with a third-party customer at the Partnership’s Stroud
Terminal; the new customer is entering into the agreement as a
trial period to test the Stroud Terminal as a destination for its
waxy crude oil production out of the Uinta Basin
“During the second quarter, we remained focused on existing and
new commercial opportunities at the Partnership’s Hardisty and
Stroud terminals and our DRUbit™ by Rail™ network, and we remain
optimistic that this focus will lead to longer-term, take-or-pay
commitments with our new and existing customers, in the future,”
said Dan Borgen, the Partnership’s Chief Executive Officer. “Also,
in anticipation of our revolving credit facility maturity date in
November 2023, we have engaged our bank group with the help of
advisors. We are pleased to have executed an amendment and interim
waiver to our revolving credit agreement that will give us time to
work with the bank group regarding the term maturity and are
encouraged by our discussions to date. As previously mentioned, we
continue to evaluate strategic alternatives as it relates to the
Partnership’s liquidity position and we look forward to keeping our
investors up to date on our progress when appropriate in the coming
months.”
Stroud Terminal Short-Term Agreement
In June 2023, we entered into a three-month rail-to-truck
terminalling services agreement with a new third-party customer at
the Stroud Terminal. The short-term agreement includes take-or-pay
provisions with a minimum volume commitment. The customer is
entering into the agreement as a trial period to test the Stroud
Terminal as a destination for its waxy crude oil production out of
the Uinta Basin. If the testing period is successful, it is
expected that a longer-term terminalling services agreement could
be executed with the customer. The trial period commenced in August
2023.
Notification from NYSE Regarding Continued Listing Standard
On July 26, 2023, the Partnership announced that it received
notification from the New York Stock Exchange (“NYSE”) that the
Partnership was no longer in compliance with the NYSE’s continued
minimum price criteria set forth in Section 802.01C of the NYSE’s
Listed Company Manual, which provides that the Partnership is
considered below compliance standards if the average closing price
of the Partnership’s common units is less than $1.00 over a
consecutive 30 trading-day period.
The Partnership’s common units will continue to be listed and
traded on the NYSE, subject to its compliance with other NYSE
continued listing requirements. The NYSE notification does not
affect the Partnership’s business operations or its Securities and
Exchange Commission reporting requirements, nor does it conflict
with or cause an event of default under the Partnership’s Credit
Agreement or other agreements.
In accordance with NYSE rules, the Partnership will respond to
the NYSE within 10 business days of receipt of the non-compliance
notification to notify the NYSE of the Partnership’s intention to
cure the deficiency. If the NYSE accepts the Partnership’s plans to
regain compliance with the minimum closing price requirement, the
Partnership will have a period of six months from receipt of the
notification to do so, also referred to as the cure period. Under
NYSE rules, the Partnership can regain compliance if on the last
trading day of any calendar month during the cure period (or the
last trading day of the cure period) the Partnership’s common units
have a closing price of at least $1.00 and an average closing price
of at least $1.00 over the prior 30 trading-day period.
Distribution for the quarter ended June 30, 2023
On August 8, 2023, the Board of Directors of the Partnership’s
general partner, approved the continued suspension of its quarterly
distribution, effective for the quarter ended June 30, 2023, and
utilize free cash flow to support the Partnership’s operations and
potentially pay down debt. In addition, the amendment and interim
waiver we entered into with the lenders under our senior secured
credit facility (the “Credit Agreement”) in August 2023 prohibits
us from making further distributions without our lenders’
consent.
Partnership’s Second Quarter 2023 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 terminals, which include minimum monthly commitment
fees. The Partnership’s customers include major integrated oil
companies, refiners and marketers, the majority of which are
primarily investment-grade rated or high-quality credit
counterparties.
The Partnership’s revenues for the second quarter of 2023
relative to the same quarter in 2022 were lower primarily as a
result of lower revenues at the Hardisty Terminal due to a
reduction in contracted capacity. Revenues were also lower at the
Hardisty terminal due to an unfavorable variance in the Canadian
exchange rate on the Partnership’s Canadian-dollar denominated
contracts during the second quarter of 2023 as compared to the
second quarter of 2022. Revenue was lower at the Stroud Terminal
due to the conclusion of the Partnership’s terminalling services
contracts with its sole customer effective July 1, 2022. In
addition, the Partnership had a decrease in revenue due to the sale
of the Casper Terminal that occurred at the end of the first
quarter of 2023.
The Partnership achieved lower operating costs during the second
quarter of 2023 as compared to the second quarter of 2022. The
Partnership experienced lower pipeline fee expense which is
directly attributable to the associated decrease in the combined
Hardisty terminal revenues previously discussed, as compared to the
second quarter of 2022. In addition, subcontracted rail services
costs were lower due to decreased throughput at the terminals.
Operating and maintenance costs were lower primarily due to lower
costs incurred associated with the Stroud and Hardisty Terminals
primarily resulting from the decreased throughput at the terminals
and lower expenses due to the sale of the Casper Terminal.
Selling, general and administrative costs (“SG&A costs”)
were lower as SG&A costs for the second quarter of 2022
included expenses associated with the Hardisty South acquisition,
with no acquisition expense incurred in the second quarter of 2023.
In addition, SG&A costs were lower due to the aforementioned
sale of the Casper Terminal. Partially offsetting, were legal costs
incurred in the second quarter of 2023 in connection with an
internal corporate jurisdictional reorganization.
Depreciation and amortization expenses were lower in the second
quarter of 2023 as compared to the same period in 2022, primarily
associated with the decrease in the carrying value of the assets at
the Casper Terminal resulting from the impairment that was
recognized in September 2022. In addition, the Partnership
discontinued the depreciation and amortization of its Casper
Terminal assets during the current quarter, as the assets were
classified as held for sale in January 2023 and subsequently sold
in March 2023.
The Partnership generated net income of $4.6 million in the
second quarter of 2023 as compared to net income of $3.8 million in
the second quarter of 2022. The decreases in operating income due
to the factors discussed above coupled with higher interest expense
incurred during the second quarter of 2023 resulting from higher
interest rates were offset by a higher non-cash gain associated
with the Partnership’s interest rate derivatives recognized in the
second quarter of 2023 as compared to the comparative period. The
Partnership also recognized a lower foreign currency transaction
loss in the second quarter of 2023, as compared to the second
quarter of 2022.
The Partnership had Net Cash Used in Operating activities of
$1.3 million for the three months ended June 30, 2023 as compared
Net Cash Provided by Operating Activities of $6.2 million for the
prior year period. The decrease in the Partnership’s operating cash
flow resulted from the factors already discussed. Net Cash Used in
Operating Activities was also impacted by the general timing of
receipts and payments of accounts receivable, accounts payable and
deferred revenue balances.
Adjusted EBITDA for the second quarter of 2023 decreased by 50%
when compared to the same period in 2022 due primarily to the
factors discussed above. Distributable Cash Flow decreased to $1.1
million for the current quarter and also includes the impact of
higher cash paid for interest and taxes when compared to the prior
year quarter.
Partnership’s Second Quarter 2023 Liquidity Position
As of June 30, 2023, the Partnership had approximately $10.3
million of unrestricted cash and cash equivalents and undrawn
borrowing capacity of approximately $79.1 million on its $275.0
million Credit Agreement, subject to the Partnership’s continued
compliance with financial covenants, and borrowings of $195.9
million outstanding. Per the terms of the Credit Agreement, the
Partnership’s available borrowings was limited to 5.50 times its
12-month trailing consolidated EBITDA. As such, the borrowing
capacity and available borrowings under the senior secured credit
facility, including unrestricted cash and cash equivalents, was
approximately $12 million as of June 30, 2023. These terms do not
give effect to the amendment to the Credit Agreement entered into
in August 2023 and discussed below.
As of July 28, 2023, the Partnership had borrowings of
approximately $195.9 million outstanding under its senior secured
credit facility and unrestricted cash and cash equivalents of
approximately $9.2 million. The Partnership was in compliance with
its financial covenants as of June 30, 2023.
Credit Agreement Update
The Partnership’s senior secured credit facility expires on
November 2, 2023. The Partnership is in active discussions with the
administrative agent and other banks within the lender group, as
well as other potential financing sources, regarding the possible
extension, renewal or replacement of the senior secured credit
facility prior to the expiration of the forbearance under the
Amendment described below.
On August 8, 2023, the Partnership entered into an amendment
(the “Amendment”) to the Credit Agreement with the lenders and the
administrative agent. Pursuant to the Amendment, subject to certain
terms and conditions, the lenders have agreed to forbear through
and including October 10, 2023, from exercising any rights or
remedies arising from certain defaults or events of default
asserted by the lenders, which the Partnership disputed, or certain
prospective defaults or events of default under the Credit
Agreement and other loan documents arising from, among other
things, any failure to disclose certain events that give or may
give rise to a Material Adverse Effect (as defined in the Credit
Agreement). Upon the occurrence of events of default under the
Credit Agreement other than those that are the subject of the
Amendment or the failure by the borrowers to perform under the
terms of the Amendment, the forbearance under the Amendment may be
terminated earlier than October 10, 2023.
The Partnership also agreed that it will not be permitted to
make any additional requests for new borrowings or letters of
credit, or convert outstanding loans from one type to another, in
each case under the Credit Agreement. In addition, among other
things, the Amendment requires the Partnership to provide
additional financial and operational reporting to the
administrative agent and the lenders, and further restricts the
ability of the Partnership and its subsidiaries, without the
consent of the administrative agent and lenders holding at least a
majority of the outstanding loans under the Credit Agreement, to
incur additional indebtedness, to make additional investments or
restricted payments, to sell additional assets or to incur growth
capital expenditures. In addition, unless otherwise agreed by the
Administrative Agent and lenders holding at least a majority of
outstanding loans under the Credit Agreement, the Partnership is
required to apply 100% of the net cash proceeds from any asset
sales to repay borrowings outstanding under the Credit
Agreement.
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
(Used in) 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 (Used in) Operating Activities.
Adjusted EBITDA and DCF should not be considered alternatives to
Net Cash Provided by (Used in) 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 (Used in) 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 (Used in)
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 to extend, renew or replace its senior
secured credit facility prior to the expiration of the forbearance
under the Amendment; 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 Partnership’s ability to
enter into new contracts for uncontracted capacity and to renew
expiring contracts, actions by the Partnership’s lenders, including
with respect to modifications to or waivers under the Credit
Agreement in light of the current uncertainty regarding the
Partnership’s ability to remain in compliance with the covenants of
the Credit Agreement or to refinance the Credit Agreement before
the expiration of the forbearance under the Amendment, the
Partnership’s ability to obtain additional sources of capital and
maintain sufficient liquidity, 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 (Used in) Operating
Activities, the most directly comparable GAAP measure, to Adjusted
EBITDA and Distributable Cash Flow in this press release.
USD Partners LP Consolidated Statements of Operations
For the Three and Six Months Ended June 30, 2023 and 2022
(unaudited) For the Three Months Ended For
the Six Months Ended June 30, June 30,
2023
2022
2023
2022
(in thousands)
Revenues Terminalling services
$
18,364
$
31,704
$
38,103
$
65,527
Terminalling services — related party
732
662
1,446
1,317
Fleet leases — related party
287
913
570
1,825
Fleet services — related party
86
299
171
598
Freight and other reimbursables
—
163
190
260
Freight and other reimbursables — related party
2
—
117
—
Total revenues
19,471
33,741
40,597
69,527
Operating costs Subcontracted rail services
2,323
3,604
5,608
7,595
Pipeline fees
5,834
8,389
11,307
16,890
Freight and other reimbursables
2
163
307
260
Operating and maintenance
1,015
3,090
2,776
6,576
Operating and maintenance — related party
—
127
—
258
Selling, general and administrative
2,358
4,830
6,758
8,252
Selling, general and administrative — related party
1,795
2,565
3,979
7,889
Gain on sale of business
—
—
(6,202
)
—
Depreciation and amortization
1,723
5,765
3,629
11,604
Total operating costs
15,050
28,533
28,162
59,324
Operating income
4,421
5,208
12,435
10,203
Interest expense
4,479
2,097
8,920
3,599
Gain associated with derivative instruments
(4,755
)
(812
)
(2,905
)
(6,896
)
Foreign currency transaction loss
48
143
102
1,790
Other income, net
(82
)
(4
)
(116
)
(27
)
Income before income taxes
4,731
3,784
6,434
11,737
Provision for (benefit from) income taxes
96
(21
)
(176
)
459
Net income
$
4,635
$
3,805
$
6,610
$
11,278
USD Partners LP
Consolidated Statements of
Cash Flows
For the Three and Six Months Ended June 30, 2023 and 2022
(unaudited) For the Three Months Ended For
the Six Months Ended June 30, June 30,
2023
2022
2023
2022
Cash flows from operating activities: (in thousands) Net
income
$
4,635
$
3,805
$
6,610
$
11,278
Adjustments to reconcile net income to net cash provided by ( used
in) operating activities: Depreciation and amortization
1,723
5,765
3,629
11,604
Gain associated with derivative instruments
(4,755
)
(812
)
(2,905
)
(6,896
)
Settlement of derivative contracts
426
(335
)
611
(608
)
Unit based compensation expense
879
1,283
1,912
2,520
Gain on sale of business
—
—
(6,202
)
—
Loss associated with disposal of assets
—
3
—
3
Deferred income taxes
(4
)
(311
)
1
(114
)
Amortization of deferred financing costs
340
272
658
628
Changes in operating assets and liabilities: Accounts receivable
(9
)
5,452
(4
)
398
Accounts receivable – related party
74
1,296
91
1,717
Prepaid expenses, inventory and other assets
657
(5,096
)
1,032
(2,727
)
Accounts payable and accrued expenses
(2,158
)
(703
)
(97
)
3,361
Accounts payable and accrued expenses – related party
(124
)
(1,759
)
(526
)
(1,038
)
Deferred revenue and other liabilities
(2,848
)
(3,027
)
(6,747
)
(5,044
)
Deferred revenue and other liabilities – related party
(142
)
382
49
366
Net cash provided by (used in) operating activities
(1,306
)
6,215
(1,888
)
15,448
Cash flows from investing activities: Additions of property
and equipment
—
(88
)
(375
)
(288
)
Internal-use software development costs
(55
)
—
(55
)
—
Net proceeds from sale of business
—
—
32,650
—
Acquisition of Hardisty South entities from Sponsor
—
(75,000
)
—
(75,000
)
Net cash provided by (used in) investing activities
(55
)
(75,088
)
32,220
(75,288
)
Cash flows from financing activities: Distributions
—
(3,636
)
(2,154
)
(7,154
)
Payments for deferred financing costs
(22
)
—
(203
)
(13
)
Vested Phantom Units used for payment of participant taxes
—
(39
)
(671
)
(1,091
)
Proceeds from long-term debt
—
75,000
—
75,000
Repayments of long-term debt
(19,100
)
(6,000
)
(19,100
)
(12,396
)
Net cash provided by (used in) financing activities
(19,122
)
65,325
(22,128
)
54,346
Effect of exchange rates on cash
55
(108
)
90
1,057
Net change in cash, cash equivalents and restricted cash
(20,428
)
(3,656
)
8,294
(4,437
)
Cash, cash equivalents and restricted cash – beginning of period
34,502
11,936
5,780
12,717
Cash, cash equivalents and restricted cash – end of period
$
14,074
$
8,280
$
14,074
$
8,280
USD Partners LP Consolidated Balance Sheets At
June 30, 2023 and December 31, 2022 (unaudited) June
30, December 31,
2023
2022
ASSETS (in thousands) Current assets Cash and cash
equivalents
$
10,291
$
2,530
Restricted cash
3,783
3,250
Accounts receivable, net
1,766
2,169
Accounts receivable — related party
318
409
Prepaid expenses
2,566
3,188
Assets held for sale
19,141
—
Other current assets
2,560
1,746
Total current assets
40,425
13,292
Property and equipment, net
62,847
106,894
Intangible assets, net
55
3,526
Operating lease right-of-use assets
1,578
1,508
Other non-current assets
1,303
1,556
Total assets
$
106,208
$
126,776
LIABILITIES AND PARTNERS’ CAPITAL Current liabilities
Accounts payable and accrued expenses
$
2,852
$
3,389
Accounts payable and accrued expenses — related party
631
1,147
Deferred revenue
1,746
3,562
Deferred revenue — related party
—
128
Long-term debt, current portion
195,447
214,092
Operating lease liabilities, current
847
700
Liabilities held for sale
221
—
Other current liabilities
3,182
7,907
Other current liabilities — related party
55
11
Total current liabilities
204,981
230,936
Operating lease liabilities, non-current
702
688
Other non-current liabilities
5,894
7,556
Other non-current liabilities — related party
133
—
Total liabilities
211,710
239,180
Commitments and contingencies Partners’ capital Common units
(102,630
)
(108,263
)
Accumulated other comprehensive loss
(2,872
)
(4,141
)
Total partners’ capital
(105,502
)
(112,404
)
Total liabilities and partners’ capital
$
106,208
$
126,776
USD Partners LP GAAP to Non-GAAP Reconciliations
For the Three and Six Months Ended June 30, 2023 and 2022
(unaudited) For the Three Months Ended For
the Six Months Ended June 30, June 30,
2023
2022
2023
2022
(in thousands)
Net cash provided by (used in) operating
activities
$
(1,306
)
$
6,215
$
(1,888
)
$
15,448
Add (deduct): Amortization of deferred financing costs
(340
)
(272
)
(658
)
(628
)
Deferred income taxes
4
311
(1
)
114
Changes in accounts receivable and other assets
(722
)
(1,652
)
(1,119
)
612
Changes in accounts payable and accrued expenses
2,282
2,462
623
(2,323
)
Changes in deferred revenue and other liabilities
2,990
2,645
6,698
4,678
Interest expense, net
4,399
2,092
8,807
3,593
Provision for (benefit from) income taxes
96
(21
)
(176
)
459
Foreign currency transaction loss (1)
48
143
102
1,790
Non-cash deferred amounts (2)
(1,651
)
(329
)
(3,302
)
(1,886
)
Adjusted EBITDA attributable to Hardisty South entities prior to
acquisition (3)
—
—
—
(258
)
Adjusted EBITDA
5,800
11,594
9,086
21,599
Add (deduct): Cash paid for income taxes, net (4)
(375
)
(147
)
(1,196
)
(680
)
Cash paid for interest
(4,307
)
(1,185
)
(8,406
)
(2,360
)
Maintenance capital expenditures
—
(50
)
—
(50
)
Cash paid for interest attributable to Hardisty South entities
prior to acquisition (5)
—
—
—
59
Distributable cash flow
$
1,118
$
10,212
$
(516
)
$
18,568
__________________________
(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)
Adjusted EBITDA attributable to the Hardisty South entities for the
three months ended March 31, 2022, was excluded from the
Partnership’s Adjusted EBITDA, as these amounts were generated by
the Hardisty South entities prior to the Partnership’s acquisition
and therefore, they were not amounts that could be distributed to
the Partnership’s unitholders. Refer to the table provided below
for a reconciliation of “Net cash provided by operating activities”
to Adjusted EBITDA for the Hardisty South entities prior to
acquisition.
(4)
Includes the net effect of tax refunds of $11 thousand received in
the second quarter of 2023 associated with prior period Canadian
taxes and $84 thousand received in the second quarter of 2022
associated with carrying back U.S. net operating losses incurred
during 2020 and prior periods allowed for by the provisions of the
CARES Act.
(5)
Cash payments made for interest of $59 thousand attributable to the
Hardisty South entities for the three months ended March 31, 2022
was excluded from the Partnership’s DCF calculations, as these
amounts were generated by the Hardisty South entities prior to the
Partnership’s acquisition.
The following table sets forth a reconciliation of “Net cash
used in operating activities,” the most directly comparable
financial measure calculated and presented in accordance with GAAP,
to Adjusted EBITDA attributable to the Hardisty South entities
prior to our acquisition of the entities:
Three months endedMarch 31, 2022 (in
thousands)
Net cash used in operating activities
$
(1,475
)
Add (deduct): Amortization of deferred financing costs
(84
)
Deferred income taxes
(53
)
Changes in accounts receivable and other assets
(217
)
Changes in accounts payable and accrued expenses
155
Changes in deferred revenue and other liabilities
488
Interest expense, net
117
Provision for income taxes
59
Foreign currency transaction loss
1,600
Non-cash deferred amounts (1)
(332
)
Adjusted EBITDA (2)
$
258
__________________________
(1)
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 customer
contracts.
(2)
Adjusted EBITDA associated with the Hardisty South entities
prior the Partnership's acquisition includes the impact of expenses
pursuant to a services agreement with USD for the provision of
services related to the management and operation of transloading
assets. These expenses totaled $3.2 million for the three months
ended March 31, 2022. Upon the Partnership's acquisition of the
entities effective April 1, 2022, the services agreement with USD
was cancelled and a similar agreement was established with the
Partnership.
Category: Earnings
View source
version on businesswire.com: https://www.businesswire.com/news/home/20230808782554/en/
Adam Altsuler Executive Vice President, Chief Financial Officer
(281) 291-3995 aaltsuler@usdg.com
Jennifer Waller Sr. Director, Financial Reporting and Investor
Relations (832) 991-8383 jwaller@usdg.com
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