Executive Summary

Q2 2023 revenue fell sharply year over year on reduced Hardisty contracted capacity, Stroud customer roll-off, FX headwinds, and Casper sale; total revenues were $19.47M, net income was $4.64M, Adjusted EBITDA was $5.80M, and DCF was $1.12M .
The Board continued suspension of the quarterly distribution for Q2 and disclosed receipt of an NYSE minimum-price non-compliance notice (30-day average < $1.00), initiating a six‑month cure period .
Liquidity: $10.29M cash and $79.1M undrawn capacity existed, but borrowing availability was constrained to ~5.5x TTM EBITDA, effectively limiting available borrowings (incl. cash) to ~$12M; senior credit facility amendment added forbearance and restrictions (no new borrowings/LOCs) .
Commercial update: a three-month rail-to-truck trial began at Stroud in August to handle Uinta Basin waxy crude; success could lead to a longer-term take‑or‑pay agreement, offering a near-term volume catalyst .
Estimates: S&P Global Wall Street consensus for Q2 2023 EPS/revenue was unavailable due to data constraints; results are assessed vs prior quarters/years in the absence of published estimates (Values retrieved from S&P Global – unavailable).

What Went Well and What Went Wrong

What Went Well

Net income of $4.64M improved vs $3.81M in Q2 2022, aided by a higher non‑cash gain on interest rate derivatives and lower FX losses year over year .
Operating costs declined across pipeline fees, subcontracted rail services, and O&M, reflecting lower throughput and Casper divestiture benefits .
New commercial activity: three‑month Stroud rail‑to‑truck terminalling trial for Uinta waxy crude commenced in August, with take‑or‑pay minimums and potential long‑term agreement if successful .
CEO tone constructive on commercial pipeline and refinancing: “we remain optimistic that this focus will lead to longer-term, take-or-pay commitments… [and]… engaged our bank group… executed an amendment and interim waiver… encouraged by our discussions to date” .

What Went Wrong

Revenues down materially YoY due to Hardisty contract reductions, FX headwinds, Stroud customer contract termination effective July 1, 2022, and Casper sale at March-end .
Operating cash outflow: Net Cash Used in Operating Activities was $(1.31)M for Q2 vs $6.22M in Q2 2022; DCF fell to $1.12M, pressured by higher cash interest and taxes .
Distribution remained suspended and credit agreement restrictions limited financial flexibility; NYSE flagged minimum-price non-compliance, adding listing risk and potential investor overhang .

Financial Results

Consolidated Results vs Prior Quarters (GAAP and Non-GAAP)

Metric ($USD Millions)	Q4 2022	Q1 2023	Q2 2023
Total Revenues	$20.649	$21.126	$19.471
Operating Income	$2.573	$8.014	$4.421
Net Income	$(3.211)	$1.975	$4.635
Net Cash from Operating Activities	$8.272	$(0.582)	$(1.306)
Adjusted EBITDA	$13.330	$3.286	$5.800
Distributable Cash Flow (DCF)	$9.631	$(1.634)	$1.118

Notes: EBITDA margin % (computed) = Adjusted EBITDA / Total revenues: Q4’22 ~64.5%, Q1’23 ~15.6%, Q2’23 ~29.8% (derived from cited values) .

Year-over-Year (Q2 2023 vs Q2 2022)

Metric ($USD Millions)	Q2 2022	Q2 2023	YoY Change
Total Revenues	$33.741	$19.471	$(14.270)
Operating Income	$5.208	$4.421	$(0.787)
Net Income	$3.805	$4.635	$0.830
Net Cash from Operating Activities	$6.215	$(1.306)	$(7.521)
Adjusted EBITDA	$11.594	$5.800	$(5.794)
DCF	$10.212	$1.118	$(9.094)

Revenue Breakdown (Q2 2023 vs Q2 2022)

Revenue Line ($USD Thousands)	Q2 2022	Q2 2023
Terminalling services	$31,704	$18,364
Terminalling services — related party	$662	$732
Fleet leases — related party	$913	$287
Fleet services — related party	$299	$86
Freight and other reimbursables	$163	$—
Freight and other reimbursables — related party	$—	$2
Total Revenues	$33,741	$19,471

Liquidity and Balance Sheet Snapshots

Metric ($USD Millions)	Dec 31, 2022	Mar 31, 2023	Jun 30, 2023
Cash and Cash Equivalents	$2.530	$10.843	$10.291
Restricted Cash	$3.250	$23.659	$3.783
Borrowings Outstanding	$214.092 (current portion)	$214.206 (current portion)	$195.447 (current portion)
Undrawn Capacity (Credit Facility)	$60.0	$60.0	$79.1
Available Borrowings incl. Cash	~$55.5	~$41.0	~$12.0

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Quarterly Distribution	Q2 2023	Declared $0.1235/unit in Q4 2022; suspended in Q1 2023	Continued suspension for Q2 2023	Lowered/Maintained suspension
Credit Facility	2023	Matures Nov 2, 2023; discussions ongoing	Aug 8 amendment with forbearance to Oct 10, restrictions incl. no new borrowings/LOCs; asset sale proceeds to repay debt	Tightened terms/forbearance
Listing Compliance	Jul 26, 2023 notice	In compliance prior to notice	Received NYSE minimum‑price non‑compliance; 6‑month cure window	Heightened listing risk
Stroud Terminal	Jun–Aug 2023	No active customer post July 2022 roll-off	Began 3‑month rail‑to‑truck trial in Aug with take‑or‑pay minimums	Added near-term volume test

No formal revenue, margin, OpEx, OI&E, tax rate, or dividend guidance ranges were provided in Q2 materials .

Earnings Call Themes & Trends

Note: No Q2 2023 call transcript found; trends use Q4 2022 and Q1 2023 prior calls/releases vs Q2 2023 press release.

Topic	Previous Mentions (Q4 2022, Q1 2023)	Current Period (Q2 2023)	Trend
DRUbit by Rail strategy	“Network continues to operate at/above expected capacity; focused on converting dilbit capacity to DRUbit”	CEO remains optimistic on commercial opportunities and longer-term take‑or‑pay commitments	Steady emphasis; awaiting new contracts
Canadian macro & pipeline parity	Challenging macro, crude-by-rail parity dependent on supply growth; commercialization more likely in 2H23	Hardisty revenues down on reduced capacity; FX headwind	Macro headwinds persisted; volumes under pressure
Stroud Terminal utilization	Stroud contract ended July 2022; planning heavier grades, Uinta waxy crude solution	3‑month rail‑to‑truck trial commenced Aug 2023	Positive test; potential to convert to long-term
Liquidity/refinancing	Plan to refinance/replace credit facility; suspension of distribution to preserve liquidity	Forbearance amendment with lender restrictions; continued distribution suspension	Tightened financial flexibility; heightened urgency
Regulatory/listing	None	NYSE minimum-price non-compliance notice	New listing risk factor

Management Commentary

“During the second quarter, we remained focused on existing and new commercial opportunities… and we remain optimistic that this focus will lead to longer-term, take-or-pay commitments…” (Dan Borgen, CEO) .
“…we have engaged our bank group… executed an amendment and interim waiver to our revolving credit agreement… encouraged by our discussions to date.” (Dan Borgen, CEO) .
Stroud trial: “short-term agreement includes take-or-pay… trial period to test… waxy crude oil production out of the Uinta Basin… trial commenced in August 2023.” .

Q&A Highlights

(From Q1 2023 call; no Q2 transcript available)

Distribution reinstatement timing: Management will evaluate quarterly; reinstatement depends on recontracting progress (extensions/new DRUbit commitments) and refinancing of the revolver .
DRUbit commercialization: Advanced discussions with multiple customers; validation via performance, reliability, and improved netbacks with lower carbon footprint; timing depends on customers’ internal approvals .
Stroud asset: Targeting Uinta waxy crude throughput starting Q3 2023 as scalable destination solution leveraging Cushing connectivity .

Estimates Context

Wall Street consensus for Q2 2023 EPS and revenue via S&P Global was unavailable due to data constraints (Values retrieved from S&P Global – unavailable).
In the absence of published estimates, assess results vs prior year and prior quarter trends: revenues down YoY by ~$14.27M, Adjusted EBITDA down YoY by ~$5.79M; net income improved YoY by ~$0.83M due to derivative gains and lower FX losses .

Key Takeaways for Investors

Revenue compression and lower Adjusted EBITDA reflect Hardisty capacity reductions, FX impacts, Stroud roll‑off, and Casper sale; the pivot to DRUbit contracts remains the central margin/volume recovery lever .
Stroud’s waxy crude trial is the most immediate potential volume catalyst; success could translate to a take‑or‑pay longer‑term agreement, partially offsetting other terminal headwinds .
Liquidity remains constrained by credit facility covenants and the Aug 8 amendment’s restrictions; asset-sale proceeds must repay debt, limiting flexibility; watch refinancing milestones ahead of facility maturity .
Continued distribution suspension conserves cash amid recontracting and refinancing; any reinstatement likely contingent on signed long‑term contracts and improved DCF coverage .
NYSE minimum‑price non-compliance introduces listing risk and potential trading volatility; cure period status will be a near-term stock narrative driver .
Near-term trading: headlines around lender forbearance extensions, Stroud trial updates, and any DRUbit contract announcements will be primary catalysts; absence of estimates coverage may widen post‑print volatility .
Medium-term thesis: If DRUbit expansion lands and Stroud converts to long‑term volumes, EBITDA stability could improve; otherwise, reduced capacity and covenant constraints may continue to pressure cash generation and listings .

USD Partners LP (USDP)·Q2 2023 Earnings Summary