USD Partners LP

The partnership reported net income of $2 million for the first quarter of 2023, compared with $7.5 million in the first quarter of 2022. Adjusted EBITDA was $3.3 million, down 67% year over year, and distributable cash flow was negative $1.6 million. Net cash used in operating activities was $600,000 versus net cash provided by operating activities of $9.2 million in the prior-year period. As of March 31, the partnership had about $11 million of unrestricted cash and cash equivalents and approximately $60 million of undrawn borrowing capacity on its $275 million senior secured credit facility, subject to covenants and with $215 million of borrowings; on an adjusted basis, available borrowings plus cash was about $41 million. The company closed the sale of Casper Terminal for $33 million on March 31 and in April used about $19 million of net proceeds to repay facility borrowings. Management did not provide formal next-quarter or full-year financial guidance, but said the suspension of the distribution was intended to preserve liquidity and reduce net debt through the recontracting cycle, and that commercialization of Hardisty capacity is more likely in the second half of 2023.

Dan Borgen framed the quarter as one of difficult market conditions, especially around Canadian heavy crude and Dilbit, and emphasized the company’s shift toward more sustainable DRUbit business. He said the partnership is in active discussions with multiple potential customers and remains confident that renewed or new long-term commitments could follow. His tone was cautious but constructive, repeatedly stressing that the distribution suspension and strategic review were prudent steps to position the company for renewal, refinancing, or replacement of its credit facility later this year.

Adam Altsuler highlighted the quarter’s operating figures and the balance-sheet actions: $2 million of net income, $3.3 million of adjusted EBITDA, negative $1.6 million of DCF, and $600,000 of operating cash outflow. He attributed year-over-year declines mainly to lower Hardisty and Stroud revenues, an unfavorable Canadian dollar impact, higher interest expense, and the loss on interest rate derivatives, partly offset by lower operating costs and the Casper asset sale. He also noted roughly $11 million of cash at March 31, $60 million of undrawn revolver capacity, about $41 million of cash plus available borrowings under the 5.5x EBITDA covenant framework, and post-sale borrowings of about $196 million with $9 million of cash at April 30.

On the distribution, management said reinstatement would depend on progress on renewals, new DRUbit agreements, and the company’s ability to get through the current recontracting cycle and year-end revolver renewal. On the DRUbit opportunity, management said discussions are active and weekly with both existing and new customers, and Brad Sanders added that customers are satisfied with performance, reliability, and the economics, though their internal approval processes affect timing. Management also said it expects commercializing Hardisty capacity to be more likely in the second half of 2023 if Canadian supply growth materializes and inventory conditions improve.