USD Partners (USDP) Q3 2024 earnings summary

Executive summary

• Revenue and net income declined sharply year-over-year due to contract expirations and asset sales, with significant reductions in contracted capacity at key terminals and the sale of the Casper Terminal in March 2023.

• The company faces substantial doubt about its ability to continue as a going concern, with a maturing credit facility, limited liquidity, and ongoing efforts to refinance or extend debt.

• The NYSE has notified the company of non-compliance with listing standards, and delisting is expected if market capitalization and unit price do not recover.

• Quarterly cash distributions remain suspended, and management is focused on asset sales, cost reductions, and contract renewals to stabilize operations.

Financial highlights

• Q3 2023 revenue was $11.1M, down from $21.5M in Q3 2022; nine-month revenue was $51.7M, down from $91.0M year-over-year.

• Net loss for Q3 2023 was $2.8M, compared to a net loss of $69.4M in Q3 2022; nine-month net income was $3.8M, compared to a net loss of $58.1M year-over-year.

• Adjusted EBITDA for Q3 2023 was $2.0M, down from $12.3M in Q3 2022; nine-month Adjusted EBITDA was $11.1M, down from $33.0M year-over-year.

• Cash flow from operations was negative $1.0M for the nine months ended September 30, 2023, compared to positive $29.0M in the prior year period.

• No quarterly cash distributions were paid in 2023; distributions remain suspended.

Outlook and guidance

• Management expects continued challenges in renewing or replacing expired contracts at Hardisty and Stroud Terminals, which will pressure revenue and liquidity.

• The company is actively pursuing refinancing, asset sales, and new customer agreements but cannot assure success or favorable terms.

• If unable to refinance or extend the credit facility by November 17, 2023, the company may be forced to sell assets at a loss or seek bankruptcy protection.