USD Partners LP (the partnership) has announced its operating and financial results for the three months ended 31 March 2016. Highlights with respect to the 1Q16 include the following:
- Increased quarterly cash distribution to US$0.3075 per unit (US$1.23 per unit on an annualised basis).
- Reported adjusted EBITDA of US$14.4 million and distributable cash flow of US$10.9 million, representing increases of 40% and 17% over the 1Q15, respectively.
- Reported net income of US$2.2 million.
- Ended quarter with approximately US$167 million of available liquidity.
“We are proud to deliver Adjusted EBITDA growth of 40% over the prior year and remain confident in our strategy of operating high quality infrastructure assets underpinned by contracted cash flows,” said Dan Borgen, the partnership’s Chief Executive Officer.
“First quarter results include a full quarter contribution from our Casper terminal acquisition, which supported the partnership’s fourth consecutive quarterly distribution increase and distribution coverage over 1.5 times,” said Adam Altsuler, the partnership’s Chief Financial Officer. “The partnership continues to be well capitalised with conservative leverage and remains well positioned to grow the distribution by at least 10% in 2016.”
For the 1Q16, the partnership’s terminalling services segment generated adjusted EBITDA of approximately US$16.1 million and net income of approximately US$6.4 million. The partnership’s terminalling services segment includes the Hardisty, Casper, San Antonio and West Colton terminals.
Substantially, all of the capacity at the partnership’s Hardisty terminal is contracted under multi-year, take or pay terminal services agreements that extend through mid-2019. All of the terminal services agreements have renewal options and are subject to inflation-based escalators. Approximately 83% of the Hardisty terminal’s utilisation is contracted with subsidiaries of five investment grade companies that include major integrated oil companies, refiners and marketers.
The partnership’s adjusted EBITDA for the 1Q16 includes a net adjustment of US$0.8 million associated with deferred revenues. The adjustment includes cash receipts in excess of charges implied by actual throughput during the quarter, reduced by amounts related to the recognition of previously deferred revenue, as well as adjustments for corresponding pipeline fees payable to Gibson Energy, which are recognised as an expense concurrently with the recognition of revenue.
Adjusted EBITDA attributable to the Hardisty terminal was negatively impacted by the lower average value of the Canadian dollar relative to the US dollar during the quarter as compared to the 4Q15, which was partially offset by approximately US$0.5 million received from the settlement of derivative contracts the partnership put in place to reduce the impact of fluctuations in foreign exchange rates.
The Casper terminal, which the partnership acquired in November 2015, commenced operations in September 2014 and is supported by multi-year, take or pay agreements with primarily investment grade refiner customers. The initial terms of the agreements vary from three to five years, with extension or renewal options for one to three additional years.
Adjusted EBITDA attributable to the Casper terminal for the 1Q16 was approximately US$6.3 million, which included approximately US$0.2 million of one time charges for repairs and maintenance, materials and supplies, and training expenses associated with the partnership’s integration of the terminal.
San Antonio and West Colton terminals
Average throughput for the 1Q16 was approximately 10 000 bpd at the San Antonio terminal and approximately 5600 bpd at the West Colton terminal. These amounts represent a decrease of approximately 6% and an increase of approximately 4%, respectively, relative to the prior quarter.
The San Antonio and West Colton terminals operate under traditional fee for service arrangements that provide fixed fees per gallon of ethanol transloaded at each terminal.
Fleet services segment
During the 1Q16, the partnership’s fleet services segment generated adjusted EBITDA of approximately US$0.5 million and net income of approximately US$0.5 million. The fleet services segment provides customers with railcars and fleet services related to the transportation of liquid hydrocarbons and biofuels by rail under multi-year, take or pay contracts for periods ranging from five to nine years. Fleet services customers typically pay monthly fees per railcar which include a component for railcar use and a component for fleet services.
Corporate activities include corporate and financing activities, which are not allocated to the partnership’s established reporting segments. During the first quarter, the partnership incurred approximately US$0.4 million of one time administrative and legal expenses associated with the acquisition of the Casper terminal.
The partnership’s sponsor charges the partnership a fixed annual fee for the management and operation of the partnership’s assets and for the provision of various centralised administrative services, plus allocates general and administrative expenses incurred by them on the partnership’s behalf. In 2016, the fixed annual fee increased by approximately US$0.7 million to approximately US$3.2 million, primarily as a result of hiring new employees dedicated to partnership activities.
Capitalisation and liquidity
As of 31 March 2016, the partnership had total available liquidity of US$167.3 million, including US$8.6 million of unrestricted cash and cash equivalents and undrawn borrowing capacity of US$158.7 million on its US$400 million senior secured credit facility, subject to continued compliance with financial covenants. The partnership had US$241.3 million of total debt outstanding as of 31 March 2016. The partnership is in compliance with its financial covenants and has no maturities under its senior secured credit facility until July 2019.
As of 31 March 2016, the partnership had outstanding 14.2 million common units, 8.4 million subordinated units, 138 750 Class A units, 461 136 general partner units and 854 228 phantom units associated with its long term incentive programme.
On 28 April 2016, the partnership announced a US$0.3075 per unit quarterly cash distribution with respect to the 1Q16, or US$1.23 per unit on an annualised basis. The distribution represents an increase of US$0.0075 per unit over the prior quarter and will be paid on 13 May 2016, to unitholders of record as of the close of business on 9 May 2016.
Adapted from press release by Francesca Brindle
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