USDP - Earnings call transcript Q4 2020

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Ladies and gentlemen, thank you for standing by, and welcome to the USD Partners LP Fourth Quarter 2020 Results Conference Call. [Operator Instructions]. It is now my pleasure to turn the call over to Jennifer Waller, Director of Financial Reporting and Investor Relations for opening remarks. Please go ahead, Jennifer.

Jennifer Waller

Thank you, Holly. you us. thank and morning, for joining Good Welcome fourth quarter call. XXXX earnings to our are Chief management Chief Borgen, Altsuler, me members Officer Dan With today several as our Ruple, Chief Financial other Brad as well Josh our our Officer; Executive Sanders, Officer; our senior Commercial of our Operating team. Chief Adam Officer; the year ended and Yesterday issued press a months evening, release XX, three XXXX. we announcing results for December

at one usdpartners.com. copy a of release, on like our find website would you If you the can

as replay Before presented note in disclosure night's the this at be the please note we XX, today, regarding accurate press statement March management please time-sensitive or of transcript. to time no harbor on only XXXX. proceed, any of reading longer that safe the today's the call that of information applies forward-looking webcast on last statements Also, of information speaks statements call. release Any provided may

of Finally, see discussions today's measures. measures. press to happy GAAP that, comparable the And call night's to for financial with Please call I last will reconciliations Dan over the most am to include non-GAAP turn financial Borgen. release

Daniel Borgen

morning, Jennifer us the ongoing for our take-or-pay continued times. challenging long-term contracts. today. another quarter everyone Thank and had strong on staying your hope to and as our support terminals safe We joining appreciate everyone we under these during you, call and perform is good and thanks healthy The well partnership

In had addition, very we a XXXX. year constructive

recent with in flow. million previously the benefit to by a successful stated our optimizing follow amount and to strong $XX generating on seen be reliably we earnings were Our from significant basis. operations quarterly and terminals continued perform approximately annualized that cash free million and guidance delever in $XX an safely year, to our have through our our performance throughout financial and of steady We

quarter a the credit fact, and than facility $XX we on more first have of that down XXXX. million revolving In exceeded since paid

As the credit and calls, strong provide our structure we've previous for contract customer's business. foundation our referenced to investment-grade continued our in profile

to progress We early we placed sponsor of expect price to announced regarding previously financing, the the Diluent The or obtained this entered quarter third DRU necessary make be and also we to sponsor also year. the into fixed company continue quarter our will has secured We contracts on to into Recovery look pleased service second project, There program. as other DRU a are adopt get in behind or call more and construction industry calls where Unit the an to in detailing which development activities. material earnings sponsors will EPC project. our made this of all the permits been the industry forward becoming Partnership the an update Josh references are we later on start public strategy. the begin with on us see to customers give standard

As capacity up and Hardisty mid-XXXX. automatically project construction approximately the successful will completion partnership's at DRU Hardisty at XX% the Terminalling partnership with a partnership's the of the of the at through will contracts reminder, a Upon on the services sponsor, while the terminal agreement committed terminal. DRU long-term DRU those because longer-term contracts the be is the benefit agreements matched the extended be

material is terminal Hardisty secure Additionally, of future producer a to additional potential in and contracted the at solutions and about support continue months the fall business expect non-regulated transport flow. intend the flows cash the our future dangerous refiner customers. materials we over the the before deliver transport customers level. under partnership's assert. not and next a US extend the focus as expansions long-term take-or-pay our on with to are call The our that critical the and and sponsor our of seeing goods hazardous of USD the rail this partner, several the other to growth our DOT Adam, associated our handing discussions at commercial capacity to agreements the meaningful DRU Gibson DRU regulation the long-term we and of I to to to customers part innovative for progress key DRU in also our business project have as remain hazardous of ESD operating sustainability and updating initiative, will The a is impact the our is forward which do commodity we Canada's market DRUbit to of a DRU on specifically cash not considered as at are regulations. sustainability Also does over considered want mention We look

the the our this include going ethanol, transition of renewable role believe diesel clean and expand in we new across transition, committed to the we offering energy in to located railroads our believe fuels biofuels in sector to for and expansion the clean assets including position to strategically the services relationship demand are a As uniquely continues the and are address of player strong biodiesel. clean some growing capabilities fuels industry Terminalling We forward. USD to and be

In our pull program Texas Mexico. addition, we Deepwater of to demand and develop from refined servicing products out continue the

grow we our assets transit and logistic railroads to presence we by continue the done, as customers and and our strategic, in develop Lastly, the working have infrastructure. with always storage to

for ahead. some commercial into to outlook. and recent drop progress. keeping look these market go please updated and an to candidates jump our financial update market the As the on on we us forward Adam, back off going partnership's of reposition and the down is the potential with assets the Adam start results we'll are partnership, outlook for latest

Adam Altsuler

another call fourth fourth of and we which financial market issue full relatively morning. XX and you results and resilient joining on our months. the challenges for steady had faced our afternoon of issued all With this the grade details for and today. release, after take-or-pay and strong Dan contracts thank close partnership quarter the investment primarily you and us the XXXX to operating Thank details additional given earnings year over our last year with XXK country the included and the quarter Yesterday we plan XXXX in quarter the had our customers, XXXX

quarter adjusted operating $XX.X the of net reported $X.X of net $XX.X million by million. EBITDA of million, income $XX.X of distributable activities flow provided million, we cash For and cash

helped to quarter efforts million approximate addition, our results which previous on the down cash produce has basis. more current of XXXX is revolving $XX debt XX% to facility price. based above $XX our months our sheet in currently we liquidity XX partnership of since created facility of a yield on November. guidance the In last than refinancing lower unit for be and than and Notably annualized our million strengthen and potential This times credit and continue position continues pay to balance credit to over of distributable our flow first to X.X us trending our greater is our $XX has leverage ratio million as the revolver additional strong

incurred index increased of lower resulting the debt discussed provided DCF the revenue differentials. EBITDA was taxes balance times the income of the DCF during the receipts cash rates that the Dan we weighted relative to interest and partnership significant adjusted XXXX. and mentioned, a XX% partnership's lower cash quarter in strong quarter The flow amount was the quarter operating payable lower XXXX quarter and as to Net to positively by and over already transaction during of quarter of well well increase a associated for to from average fourth discussed of with higher of for and by foreign XX% in general costs also to are of outstanding into the pricing details discussed respectively as the based operating the for accounts due operating payments primarily are crude of EBITDA and currency the due increased were of compared the coupled the same Adjusted XXXX fourth a terminal the by factors to due as operating on flow influenced already XXXX Stroud of The the terminals during quarter higher and of lower factors rates result perform the the partnership's relative cash operating our quarter distributable subcontracted Net by quarter as experienced with factors four increased expense quarter. impacted fourth at lower primarily as balances. free activities evidenced and by of oil continue decrease cash compared quarter. go to coverage quarter, quarter XXXX the income throughput. As now XXXX And continue for interest results to fourth as lower primarily timing and for operating a deferred receivable, to a XXXX result the quarter fourth rail to in during services paid relative fourth accounts of revenue primarily gains. primarily I'll quarter cost of generate the interest the

million XX, partnership's borrowing credit of cash and partnership $X had to with secured covenants. the and continued subject December facility, financial of million its compliance capacity approximately on equivalents unrestricted of million the undrawn As cash XXXX $XXX $XXX senior

as to currently million X.X partnership's capacity As the in defined partnership's of months the outstanding December credit trailing facility. credit had XX, consolidated under the Pursuant partnership revolving agreement, the is of $XXX the EBITDA terms the amounts XX to of credit to agreement. times borrowing limited

unit February prior cash distribution unit cents partnership's as annualized XX such approximately As January compliance cash The including amount quarter. per at cash on basis. distributed December at per senior an secured covenants quarterly facility on was XX. is the of equivalents of The February end in paid and XX, under fourth partnership same to $XX distribution unitholders was The borrowings a its the record XXXX. financial of in the million On the $X.XXX of available $X.XXX business the with XX, declared close was on quarter. of credit partnership unrestricted or the

strengthen We continue that, to about Dan. for position all efforts enhance we and back value results happy efforts I'd the to liquidity continue are over be our see we future turn And to now call our with our long-term will like producing excited to and stakeholders. to to believe the

Daniel Borgen

Thank you, Adam.

Now Canadian the and recent to regarding of quick the a I'll Select market update us Western Brad? events. market Brad impact commercial the give

Brad Sanders

you. Dan, thank

full day prices. economy in oil and a crude shut-in into a and eventual X for the as XXXX. due reopen of in to decreased to have oil vaccinations, production US and lower day days, the a efforts in second million seen the late in barrels COVID early demand almost barrels and demand the a and of accelerated to a we the million first the led Lower recovery Canada. of in approximately stabilization demand rollout the quarter So the Today of reminder prices

EIA recently Administration US, example list XXXX versus gasoline unchanged follows; XXXX Information an of X%. Energy demand As as down effectively and the shut down in This projected is XX%.

levels you trend be as demand to back in So the see, projected XXXX is XXXX in, year. fully to a can strong

All a of levels led price for has to a current barrel. WTI of $XX this

shared relative actually for a of Now we last our with call to our this listeners barrels. is earnings XX,XXX price WTI

had days the minus ago. we prices increase XX or plus since $XX So just in

event change a So by normal trend and demand. rationalization ultimately and then a on significant led to return all return this supplier

So early temporarily to producers started that quarter, bring back and in. in production shut starting Canada US in third was

spending has upstream the higher that January we which did forecasting plant Petroleum to that new all is $X a Producers oil more pre-COVID actually compared particular that XXXX than and levels in of are of announcement with Canadian spending, acronym levels. the increase pre-COVID production we are Additionally, announced Canada levels billion they this levels. at gas for to to in will in XXXX The for and expectations returned XXXX our as than be Association producing Canada. outcome is CAPP of

in we observe as they than in which TMX, at faster as first year here So normal is US. all our fact as higher outcome levels naturally higher proportionate and trending the and leaves higher. main ratable of and and the late quarter that inventory of The them continue and the actually we've last foremost, Canada then levels indicators we in in potentially continuing experience for that that exit is high XX% all in pipelines all barrel types February three in that This happening particular basis can return apportionment historical stranded seen this will and that Express this which XXXX what then a and ensure returning is in production proportionate trend happened to is Canada, has inventories fact first key a at Canada is watch reported expectation the observe on we starting of that to substantiate Ambridge Ambridge and is efficient the pace levels recent a level. levels is has drives egress that

following; the growing fact at this growth our incent and All the on prices to to is crude continued in that and of will lead rail evident to a by by reflect egress the that and asset will Hardisty basis. is increase utilization particular the monthly need beginning

is in Hardisty, expect increase to trend at at Canada spending XXXX. So then on upwards terminals mean and our producers forecasted curve throughput all based what forecasted levels, WTI through forward at this levels will and in and Casper Stroud spread the continue by we WCS

say Cushing. something this Before quickly about I leave market like I'd section, update to

as rate As it in I US earlier, in has Canada. same the supply hasn't mentioned returned at

which the hub have level therefore to is available other the Cushing activities. secondly, the that of steady a which draw important on that that leads occurring our continue our had been to a to business XXXX. US Cushing last to subsequently, One forecasted and price two values at hub, year and late will things. at customers in then important a production as in So is very And happen, Should reduced that and largest carry to just the and draw general. beginning that Cushing inventories into the to commercial is for the supply and them move be will balance supportive WTI update on is domestic locations relative

Stroud we supports about, where Cushing I and at into values Cushing think stated, as are by moving very activities as and that's at Hardisty, terminal. important, crude now our where we then asset matters our are rail So of just which supportive Casper

higher and focus First will being demand that be their service customers. recognize our existing we -- and able to second foremost customers quarter assets focus the our our trending be on our move on utilizing will will first will our into as be We needs. servicing for our customer's be and foremost

Dan Canadian options, relates to DRU as as with current to competitive announcement a well-positioned available regulatory work customers when these spot what extend Additionally, existing generate is continue DRU, alternatives and/or XX,XXX to at of and in be addition any the incremental and our US DRU believes in these the work in to challenges the facilities identify to we'll extremely a alternatives customers the XXXX by we we and in and then is and incremental Conoco barrels are use naturally move terminals to cost that believe as detailed again scalability either that continue and USD you and new to DRU Phillips. might experience provides and we and political at Arthur and the egress into values commercialize macros the we've and said, and the to we'll DRU period that discussions demand rail existing safety that competitive the with day either and we solution benefits created identify environmental important because grow commercialize it mentioned network, and Port activity to is egress environmental, to equally advantages. heavy revenues be a environment, of that high crude capacity continue are with and process to incremental also its are and to work long-term capacity as a of new that consider new to active existing as so Canada currently in Dan

solution write of a mean from solution, So size, less the our periods by you uncertainty, timing of and balance egress a can with is burden high that solve can can right during one sheet is once you you standpoint DRU we that again what customers. these for

we all So and feel positive, customer about is we and find good Port of do the our DRU so second Arthur. opportunity think that really third to at our customers and

fuels initiatives about briefly clean our Dan to like mentioned. talk I'd transport Finally that

vehicles know for policy, which transition state while societal fuel combination critical transportation will of achieve. the via that carbon further challenging biofuels result a norms a driven, and is octane itself, and a footprint transition ethanol result also a requiring its role fuels result new of the increased the market of corresponding in in into determine in United will existing diesel as lower to like of facilitating products as believes a of solutions the the the these USD renewable that plans. higher such as is As fuel the potential believes outcome a that quality. continued demand requirements, USD will penetration play achieving and States we and consumed expansion in into

we stocks. a rail carbon are blend the was ethanol it the low focused California US Colton for to intensity solutions widespread reminder intensity. via producing as stocks, what facility our low blend who in called in In with what's So solution are and who need on we in connectivity focused specifically ethanol low-carbon the customers are of carbon producers on, currently are in our

currently clean So in provide a we Southern to California. our solution customers

Our business. plan that to grow is

to Colton renewable that on producers footprint call industry and railroads existing we'll diesel best a to to positioned their diesel work allow relationships solution, work new what producers. uniquely origin new to is renewable behalf. to and get it what's with of the is Colton positioned uniquely these addition with solutions customers, continue uniquely and on producers our experience, market were will space for positioned with in In provide and space and are much depend solution with the we're we us grow our is solution the destination that given for customers ethanol in heavily where the to fragmented like into existing The renewable where real and solutions will create

this. So we're focused on very

NGLs petrochemicals each those one at and producers we to on to rail happening in with Houston discussions opportunities Deepwater where very existing Houston in that Houston access from and in update Let connectivity, and in Terminal products detailed in channel level future uniquely of and pleased we're Texas our on what's give and those drive to a facility detailed ship we're sharing actually infrastructure look To more and their of meaningful forward consumers light discussions and update. quickly set a perspective, every continue to an crude, of me solve development needs discussion. distribution one our our ongoing leverage high we the to then progress commodities export

So about At activity at time, I'd updates and excited DRU the Josh? still in to Deepwater. at Josh COO our discussion like Port on construction at updates our on very Arthur commercial to over on development initiatives. what's going ask our Texas to pass this provide to him Ruple, the rail and addition

Josh Ruple

Thanks Brad.

mentioned tracking deep with our fully we're Again processes in Dan Phase of the our and railroads with origin construction coordination DRU our is our slightly DRU partner efforts and news. As permitted and into EPC customers, design good the is which plan, both I initiative ahead vendors. previously Gibson our are

an our are with we DRU I and DRU and planned at early growth our heavy to Arthur effective the and be protocols or Phase focused we and and process, engage both we progressing Hardisty substantial coming currently in With us on successfully respectively. track this DRU, QX project year, our network our with at DRU know PAT commissioning a to both and Arthur, right are goals Hardisty HS&E execution currently, our COVID-XX our formal are I for permitted late Canadian takeaway just are X on ends Port on enabling patented of as teams for in QX to Our procurement initiative. proven deliver at the strategies have and schedule provide budget of and and to at at poised months current their Port customers immediately barrels improved and quickly option with Phase completion

reduces benefit positioned we of DRU chain. diluents, just Not egress solution a bitumen provide and Dan provide the associated of to in freight Brad very and safer, improves value scalability the The cost are long-term a previously both Brad's advantages of regard and as DRU of competitive previous that with optimizes material the to to to excess well Finally to the value cost echo the are with mentioned, Canada's needs. nonhazardous the market comments, solution DRU. mention

our I'd and plan we Brad, about first again So in point some to where I updates and and where storage our super regards transit And we're just may, with we're mention to rail to services efforts, efforts your last to transloading. excited include to if at development and like quickly mile go DRU. around

we railroads and provide have and on call space this for a As some have the services Bayport quite today, time and our Deepwater participated at the both collective currently both Dan operating to to you assets mentioned Texas is customers. and

basis a Midwest, Southwest as to this railroad efforts asset very work on few and initiative new a Canada, continue close update We the Coast. on with regional our regarding development the partners in we're and East an the on

on continue PSR railroads on bit the these detail transition we we I'll very in to sharing look back Dan. in support As And efforts, you those more future. to forward developments growth, their near with it comments, hand focus to we a the

Daniel Borgen

future you Thank of an for our and current our exciting business. business Brad update Josh

with we'll So additional for questions. call open the any that, up

Operator

from French, in [ph] queue a will and private we [Operator John have the the come And a that of instructions] line Okay. question investor.

Unidentified Analyst

at time possibly paying thanks. none question that's this only the perhaps that, the change that and the consideration to good level, you us returning Thanks and that of have distribution for projections any curious but successful predict if distribution to on envision? Appreciate all you shared, future XXXX XXXX was information like if sure the slightly plans you any can all so much. a have update I XXXX just on emphasis higher or wasn't sound Similar or to insight revolver for some understanding thoughts and as down the on you any the

Adam Altsuler

paying exceeding that we've that's months Hey the a about yield. guidance done the fact the a down debt. to quarterly is Thanks the question, lower, a but over amount John, can Altsuler. significant regard I this discretion for is great what good the DCF meeting, and question. trending X.X distribution were by Obviously subject XX with Adam feel times on say basis, I generating coverage there DCF to think and that question board's We of

with the distribution things forward. those help only going to So regard discussion policy

Again So address basis, a it's going with feel direction. trending our those on nice that right we'll quarterly better but regard see to discussion things much in forward. that the about position to

Operator

And you. I no this Thank at the closing to time, in Dan, it I'll see questions comments. over for further you turn queue.

Daniel Borgen

you, you and support to thanks balance Arthur I We us, to to increase in activity hopefully for first to announcements came about but we our today. the very our We'll Port forward additional Thank we keep do mid 'XX market much, and it and continue market where the feel let of confidence look actions the and as We again. prepare 'XX have the me joining for the and growth other in the the later initiatives USD been in Again the year. this DRU pre-COVID and regarding business. challenging and support good continues strategic Holly updated say in thanks thank position to progress to the increase future. call to appreciate appreciate we strengthen it's return levels and continued for on took in a in all you for your Partners year out sheet,

Operator

fourth LP would call. XXXX conference Once USD quarter to we today's for again, participating results like you Partners thank in

now You disconnect. may

USD Partners (USDP) 4 Mar 212020 Q4 Earnings call transcript