USD Partners LP (NYSE:USDP) Q2 2020 Earnings Conference Call - Final Transcript
Aug 06, 2020 • 11:00 am ET
Ladies and gentlemen, thank you for standing by and welcome to the USD Partners LP Second 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.
Thank you. Good morning and thank you for joining us. Welcome to our second quarter 2020 earnings call. With me today are Dan Borgen, our Chief Executive Officer; Adam Altsuler, our Chief Financial Officer; Brad Sanders, our Chief Commercial Officer, as well as several other members of our senior management team.
Yesterday evening, we issued a press release announcing results for the three and six months ended June 30, 2020. If you would like a copy of the press release, you can find one on our website at usdpartners.com. Before we proceed, please note that the Safe Harbor disclosure statement regarding forward-looking statements in last night's press release applies to the statements of management on this call. Also, please note that information presented on today's call speaks only as of today, August 6, 2020. Any time-sensitive information provided may no longer be accurate at the time of any webcast replay or reading of the transcript.
Finally, today's call will include discussion of non-GAAP financial measures. Please see last night's press release for reconciliations to the most comparable GAAP financial measures.
And with that, I'll turn the call over to Dan Borgen.
Thank you, Jennifer, and good morning, everyone. Thanks for joining the call today. And as always, we appreciate your support, and we hope everyone is staying healthy and safe during these challenging times.
Second quarter was another solid quarter for the Partnership as our terminals continue to perform well under our long term take-or-pay contracts. As we have referenced in previous calls, our strong contract structure and counterparty credit profile continue to provide the foundation for our business. And we continue to generate a significant amount of free cash flow in our business.
Last quarter, the Board of Directors made the proactive decision to strengthen the Partnership's financial position by reducing its quarterly distribution and redeploying certain free cash flow to pay down debt and enhance our liquidity position. And during the second quarter, we did just that. The Partnership paid down $6 million on our revolver, which is consistent with our intent to delever by $20 million to $25 million on an annual basis. As we have previously stated, the decision to reduce the distribution was not driven by any material deterioration in the performance of the Partnership's underlying business, but rather represents a conscious effort to enhance long term value for our unitholders.
Also, we continue to be excited about our sponsor's previously announced Diluent Recovery Unit, or DRU, project, which we expect will be placed into service in the second quarter of 2021. The Partnership's sponsor has secured the necessary financing, obtained all material permits and entered into fixed price construction contracts regarding the construction of the project.