Starwood Reaffirms its All-Cash Offer Delivering Higher Value and Greater Certainty for Monmouth Shareholders

Starwood Encourages Monmouth Board to Immediately Declare its Offer Superior and Proceed to Certain Close with Greater Value for Shareholders

MIAMI--(BUSINESS WIRE)--Starwood Real Estate Income Trust, Inc. (“Starwood”), an affiliate of Starwood Capital Group, a leading global private investment firm focused on real estate and energy investments, today commented on a report issued by Institutional Shareholder Services Inc. (“ISS”), a leading independent proxy advisory firm. In its report, ISS recommends Monmouth Real Estate Investment Corp. (NYSE:MNR) (“Monmouth” or “MNR”) shareholders vote “AGAINST” Monmouth’s proposed transaction with Equity Commonwealth (“EQC”), which is scheduled to be voted on at a special meeting of Monmouth shareholders on August 24, 2021.

“We are pleased ISS recognizes that the value and uncertain upside of Monmouth’s proposed transaction with EQC renders it inferior to the Starwood offer. This recommendation is an important step toward ensuring that Monmouth shareholders can receive maximum, certain value from our superior offer.

“Starwood’s offer remains superior in both value and certainty to any bid that has been made during or after the strategic review process. In a letter to Monmouth’s Board today, Starwood reaffirmed its $18.88 per share net, all-cash offer and encouraged the Board to immediately declare its offer a 'Superior Proposal' under the EQC merger agreement.

“Allowing the current transaction to proceed to a vote given the recommendation from ISS and the two-thirds requirement for approval would unnecessarily delay shareholders from receiving the superior value from the Starwood transaction and expose Monmouth to greater expense reimbursements to EQC for a transaction we believe is unlikely to gain shareholder approval. We stand ready to sign the already-negotiated merger agreement we provided to Monmouth that offers shareholders significantly greater value and certainty than EQC’s proposal, and we are resubmitting our all-cash proposal to the Monmouth Board today to leave absolutely no doubt that they are free to engage with us under the existing agreement with EQC. We encourage the Monmouth Board to act in the best interest of shareholders by immediately declaring the Starwood offer superior and moving quickly to close our proposed transaction.”

ISS notes in its report that¹:

• “…support is not warranted for the proposed [EQC] transaction, particularly in light of the greater value and certainty of the Starwood proposal.”
• “In consideration of [EQC]’s limited presence in industrial real estate, and the noticeable gap between EQC's recent industrial acquisition history and the billions of dollars of acquisitions that are planned for the combined company, there remains substantial uncertainty that the combined company will be able to execute on the post-transaction opportunities touted by MNR's board.”
• “In light of the decline in the value of the consideration and potential execution risk that could limit shareholders' future returns, particularly relative to the value and certainty of the higher competing cash proposal, support for the [EQC] transaction is not warranted.”
• “Absent the Starwood proposal there would also be downside risk of rejection because of the possibility that MNR shares would return to a value in line with their historical relationship to peers.”
• “…lingering concern in the minds of shareholders about the possibility that a preference for a tax-deferred structure over certainty of value led to a sub-ideal outcome…”

The full text of Starwood’s letter to the Monmouth Board is incorporated below:

August 6, 2021

Monmouth Real Estate Investment Corporation
101 Crawfords Corner Road, Suite 1405
Holmdel, NJ 07733

Attention: Eugene W. Landy, Chairman of the Board

Dear Eugene:

Today, Institutional Shareholder Services (“ISS”) recommended that shareholders of Monmouth Real Estate Investment Corporation (“Monmouth”) vote against the proposed merger with Equity Commonwealth (“EQC”) at the special meeting of Monmouth shareholders scheduled for August 24, 2021 (the “Special Meeting”). The ISS recommendation is consistent with our view that the all-cash Starwood proposal provides greater value and certainty for Monmouth shareholders than a transaction predicated upon speculative upside from merging two entities without obvious synergies or competitive advantages in the industrial sector. Given the two-thirds support required from Monmouth shareholders and the “against” recommendation from ISS, continuing with any vote on the EQC transaction will subject shareholders to further delays in realizing value and unnecessarily obligate Monmouth to $10 million in additional expense reimbursements for an inferior transaction with a low probability of being approved.

In view of recent events, Starwood Real Estate Income Trust, Inc. (“Starwood” or “we”) is hereby reaffirming, and hereby submits, a proposal to acquire all of the outstanding common shares of Monmouth for a price of $19.51 per share reduced by the termination fee owed to EQC of $0.63 per share for a net consideration of $18.88 per share to Monmouth shareholders. In light of the ISS recommendation and the views of several large shareholders who have publicly and privately expressed opposition to the EQC transaction, we believe recent events have added even more uncertainty to the already low prospects of consummating the EQC transaction. We therefore urge the Monmouth Board of Directors to immediately declare our proposal a “Superior Proposal” under the existing merger agreement with EQC and move down a path that will deliver certain, maximum value for your shareholders and bring an efficient conclusion to this lengthy process without adding additional undue costs.

We stand ready to sign the merger agreement previously submitted to you and consummate a transaction on terms that stand out above any presented during your comprehensive strategic review process.

Thank you for your continued consideration. We look forward to working with you to achieve the optimal outcome for your shareholders.

Regards,

Starwood Real Estate Income Trust, Inc.

Christopher Graham
Chief Investment Officer

Ethan B. Bing
Managing Director

STARWOOD STRONGLY URGES SHAREHOLDERS FOLLOW ISS’ INDEPENDENT RECOMMENDATION TO VOTE “AGAINST” THE EQC MERGER PROPOSAL TO PROTECT THEIR INTERESTS

A vote “AGAINST” the EQC merger proposal on the BLUE proxy card will send a clear message to Monmouth’s Board that shareholders prefer the higher value and greater certainty Starwood is offering and that shareholders expect the Monmouth Board to act in their best interests. If the EQC merger proposal is not approved, Monmouth will have the right to terminate the EQC merger agreement. Starwood also recommends Monmouth shareholders vote “AGAINST” Proposal 2 (Compensation Proposal) and Proposal 3 (Adjournment Proposal) for reasons outlined in its definitive proxy statement filed with the SEC on July 30, 2021.

About Starwood Capital Group

Starwood Capital Group is a private investment firm with a core focus on global real estate, energy infrastructure and oil & gas. The Firm and its affiliates maintain 16 offices in seven countries around the world, and currently have approximately 4,000 employees. Since its inception in 1991, Starwood Capital Group has raised over $60 billion of capital, and currently has approximately $90 billion of assets under management. Through a series of comingled opportunity funds and Starwood Real Estate Income Trust, Inc. (SREIT), a non-listed REIT, the Firm has invested in virtually every category of real estate on a global basis, opportunistically shifting asset classes, geographies and positions in the capital stack as it perceives risk/reward dynamics to be evolving. Starwood Capital also manages Starwood Property Trust (NYSE:STWD), the largest commercial mortgage real estate investment trust in the United States, which has successfully deployed over $69 billion of capital since inception and manages a portfolio of over $18 billion across debt and equity investments. Over the past 29 years, Starwood Capital Group and its affiliates have successfully executed an investment strategy that involves building enterprises in both the private and public markets. Additional information can be found at starwoodcapital.com.

_____________________
¹ Permission to use quotations neither sought nor obtained from ISS and emphasis added by Starwood.

Media:
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• Revenues and Adjusted EBITDA in Line with Last Year’s Record Results Demonstrating Resilience of the Company’s Infrastructure Businesses
• Construction Products Adjusted EBITDA Growth of 17%
• Portfolio Shift toward Construction Products Advanced with $150 Million Acquisition of a Leading Arizona Pure-Play Aggregates Producer
• Scaled Entry into Attractive Phoenix Metropolitan Area
• Healthy Balance Sheet with Pro Forma Net Debt to Adjusted EBITDA of 2.4X, within Targeted Long-Term Range of 2-2.5X

DALLAS--(BUSINESS WIRE)--Arcosa, Inc. (NYSE: ACA) (“Arcosa,” the “Company,” “We,” or “Our”), a provider of infrastructure-related products and solutions, today announced results for the quarter ended June 30, 2021.

Arcosa also announced that it acquired Arizona-based Southwest Rock Products, LLC and affiliated entities (“Southwest Rock”) for $150 million. Southwest Rock is a pure-play natural aggregates company serving the greater Phoenix metropolitan area with five active sand and gravel locations and one hard rock quarry producing approximately five million annual tons of construction aggregates. Southwest Rock had trailing 12 month revenues of approximately $36 million and Adjusted EBITDA of approximately $14 million as of May 31, 2021, implying a purchase price multiple of 10.7X Adjusted EBITDA.

Second Quarter Highlights (All comparisons are versus the prior-year quarter unless noted otherwise)

• Revenues of $515.1 million, up 3%
• Net income of $20.8 million and Adjusted Net Income of $29.1 million
• Diluted EPS of $0.43 and Adjusted Diluted EPS of $0.60
• Adjusted EBITDA of $78.9 million, in-line with last year
• Operating cash flow of $50.7 million and Free Cash Flow of $29.1 million

“Our second quarter results reflect the resilience of our portfolio of infrastructure businesses as we executed successfully and kept pace with last year’s record results despite some headwinds,” commented Antonio Carrillo, President and Chief Executive Officer.

“Construction activity was strong overall, with some offset from abnormally wet weather during the quarter, especially in our largest markets within Texas and along the Gulf Coast. The integration of StonePoint is progressing smoothly and performance is tracking well against our expectations, adjusting for the wet weather.

“Order activity for our utility and traffic structures businesses was very healthy during the quarter as growth drivers remain intact. We are also encouraged by improving fundamentals in the North American railcar market, with orders in our steel components business outpacing shipments during the quarter.

“We continue to confront high steel prices. On a positive note, we have been able to proactively raise prices across most of our steel manufacturing businesses to help mitigate the impact on margins. While long-term fundamentals remain strong for our barge business, high steel prices continued to depress order activity. As planned, we will idle our Louisiana plant in the third quarter, and we have taken additional steps to strategically extend our backlog into 2022 to allow time for a market recovery.”

Carrillo also noted, “I am excited to announce the acquisition of Southwest Rock, which is an excellent strategic fit for Arcosa. The business is aligned with our strategy to reduce our cyclicality and enter new and attractive geographies. Southwest Rock has an experienced operating team, a strong footprint in the high growth Phoenix market area, and a pipeline of actionable bolt-on opportunities.

“We have made considerable progress advancing our portfolio shift into higher margin and more stable Construction Products. Since our spin-off, we have invested approximately $1.3 billion in construction materials acquisitions, which has expanded our Construction Products businesses to now represent more than 50% of our Adjusted EBITDA.”

2021 Outlook and Guidance

The Company maintained its 2021 full year Adjusted EBITDA guidance range of $270 million to $290 million. The guidance range incorporates Southwest Rock’s expected results from the date of acquisition.

• Full year 2021 Transportation Products Adjusted EBITDA guidance revised to approximately $25 million from prior guidance range of $35 to $40 million due to lower production expectations for our barge business as high steel prices continued to escalate in the second quarter suppressing new order activity and profitability on the orders received.

Commenting on the outlook, Carrillo noted, “Our 2021 Adjusted EBITDA guidance keeps us on a path to meet or exceed 2020’s strong results, despite additional weakness in our barge business and higher raw materials costs.

“Overall, our key growth businesses, Construction Products and Engineered Structures, remain positioned well for the future. While high steel pricing has curtailed order activity for some of our business lines, our outlook and longer-term fundamentals remain strong.”

Second Quarter 2021 Results and Commentary

Construction Products

• Revenues increased 38% to $204.5 million, primarily driven by the acquisition of StonePoint, a top 25 U.S. construction aggregates company acquired in April.
• StonePoint expanded our footprint in Texas and Louisiana and provided entry into Tennessee, Kentucky, Pennsylvania, and West Virginia.
• Demand was generally stronger across our natural and recycled aggregates businesses serving construction end markets, but excessive rainfall during the quarter impacted sales volumes, especially our operations in Texas and along the Gulf Coast.
• Revenues from our specialty materials businesses increased from strong volumes in our lightweight aggregates business and product lines serving building product end markets.
• Revenues from our trench shoring business increased 43% as volumes recovered to pre-pandemic levels.
• Adjusted Segment EBITDA increased 17% to $45.1 million, excluding a $4.7 million cost impact from the fair value markup of acquired inventory.
• Segment margin decreased to 22.1% compared to 26.0% in the prior year. We estimate the adverse weather-related impact to Adjusted Segment EBITDA was $3 million to $4 million during the quarter. Additionally, Adjusted Segment EBITDA was impacted by higher fuel prices.

Engineered Structures

• Revenues increased 9% year-over-year to $242.5 million as pricing increased across all product lines driven by higher steel prices. Increased volumes for storage tanks and utility and traffic structures more than offset lower anticipated volumes in wind towers.
• Revenues also included a $7.7 million one-time resolution of a customer dispute from 2019 in our wind towers business. These towers were removed from our backlog in 2020, and we maintain a good commercial relationship with this customer.
• Adjusted Segment EBITDA increased 25% to $38.0 million, representing a 15.7% margin compared to a 13.6% margin a year ago. The increase in Adjusted Segment EBITDA was primarily driven by higher volumes and margins in our storage tank business and proceeds from the resolution of the customer dispute.
• Order activity for utility and traffic structures was strong, reflecting grid hardening and reliability initiatives within the utility industry and favorable road infrastructure investments in Florida as well as other southeastern markets.
• The combined backlog for utility, wind, and related structures at the end of the second quarter was $348.5 million compared to $379.5 million at the end of the first quarter of 2021.

Transportation Products

• Revenues were $68.2 million, down 47% year-over-year. Barge revenues decreased 54% driven by lower hopper and tank barge deliveries as COVID-19 and increased steel prices limited demand. Steel components revenues declined 9% representing the slowest rate of decline in two years.
• Adjusted Segment EBITDA decreased 73% year-over-year to $5.8 million, representing an 8.5% margin compared to a 16.5% margin a year ago. Segment margins decreased due to declines in operational efficiencies from reduced capacity utilization.
• The barge business received orders of approximately $55 million, for a book-to-bill of 1.1 on a low level of revenues. Pricing of the new orders reflects weak current market conditions, with the orders providing a base level of production in 2022.
• The barge backlog at the end of the second quarter increased to $139.4 million from $133.2 million at the end of the first quarter of 2021.
• Order inquires for steel components increased during the quarter as the new rail car market continues to show signs of improvement, and third-party forecasts indicate a higher level of North American railcar deliveries in 2022.

Corporate and other Financial Notes

• Corporate expenses increased to $17.0 million, including $5.8 million of acquisition-related transaction and integration costs that have been excluded from Adjusted EBITDA, primarily from the StonePoint acquisition.
• The Company continues to expect corporate expenses of approximately $13-14 million per quarter for the balance of 2021, excluding non-recurring acquisition expenses.
• We expect acquisition-related transaction and integration costs of approximately $2 million per quarter in each of the third and fourth quarters.

Cash Flow and Liquidity

• Operating cash flow was $50.7 million. Free Cash Flow was $29.1 million, with Free Cash Flow Conversion of 140% of net income.
• Capital expenditures were $21.6 million.
• We invested $388.7 million, net of cash acquired, in two acquisitions that closed during the quarter, including the $375 million acquisition of StonePoint and a bolt-on acquisition of a Dallas-Fort Worth, Texas based recycled aggregates business.
• In April, we issued $400.0 million of 4.375% senior notes that mature in 2029 to fund the StonePoint acquisition.
• We returned approximately $6.9 million in dividends and share repurchases to shareholders.
• We ended the quarter with total liquidity of $471.8 million, including $100.3 million of cash, and net debt to Adjusted EBITDA was 1.9X for the trailing twelve months.
• Today, we acquired Southwest Rock for approximately $150 million. The acquisition was funded with cash and $100.0 million of revolver borrowings resulting in a pro forma net debt to Adjusted EBITDA of 2.4X at quarter end.

Non-GAAP Financial Information

This earnings release contains financial measures that have not been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”). Reconciliations of non-GAAP financial measures to the closest GAAP measure are included in the accompanying tables to this earnings release.

Conference Call Information

A conference call is scheduled for 8:30 a.m. Eastern Time on August 5, 2021 to discuss 2021 second quarter results as well as the Southwest Rock acquisition. To listen to the conference call webcast, please visit the Investor Relations section of Arcosa’s website at https://ir.arcosa.com. A slide presentation for this conference call will be posted on the Company’s website in advance of the call at https://ir.arcosa.com. The audio conference call number is 866-342-8588 for domestic callers and 203-518-9865 for international callers. The conference ID is ARCOSA and the passcode is 272672. An audio playback will be available through 11:59 p.m. Eastern Time on August 19, 2021, by dialing 800-839-3013 for domestic callers and 402-220-7233 for international callers. A replay of the webcast will be available for one year on Arcosa’s website at https://ir.arcosa.com/news-events/events-presentations.

About Arcosa

Arcosa, Inc. (NYSE:ACA), headquartered in Dallas, Texas, is a provider of infrastructure-related products and solutions with leading positions in construction, engineered structures, and transportation markets. Arcosa reports its financial results in three principal business segments: the Construction Products segment, the Engineered Structures segment, and the Transportation Products segment. For more information, visit www.arcosa.com.

Kirkland & Ellis LLP acted as legal advisor to Arcosa on the acquisition of Southwest Rock.

Some statements in this release, which are not historical facts, are “forward-looking statements” as defined by the Private Securities Litigation Reform Act of 1995. Forward-looking statements include statements about Arcosa’s estimates, expectations, beliefs, intentions or strategies for the future. Arcosa uses the words “anticipates,” “assumes,” “believes,” “estimates,” “expects,” “intends,” “forecasts,” “may,” “will,” “should,” “guidance,” “outlook,” “strategy,” and similar expressions to identify these forward-looking statements. Forward-looking statements speak only as of the date of this release, and Arcosa expressly disclaims any obligation or undertaking to disseminate any updates or revisions to any forward-looking statement contained herein, except as required by federal securities laws. Forward-looking statements are based on management’s current views and assumptions and involve risks and uncertainties that could cause actual results to differ materially from historical experience or our present expectations, including but not limited to assumptions, risks and uncertainties regarding the impact of the COVID-19 pandemic on Arcosa’s customer demand for Arcosa’s products and services, Arcosa’s supply chain, Arcosa’s employees’ ability to work because of COVID-19 related illness, the health and safety of our employees, the effect of governmental regulations imposed in response to the COVID-19 pandemic; assumptions, risks and uncertainties regarding achievement of the expected benefits of Arcosa’s spin-off from Trinity; tax treatment of the spin-off; failure to successfully integrate acquisitions, or failure to achieve the expected benefits of acquisitions; market conditions and customer demand for Arcosa’s business products and services; the cyclical nature of, and seasonal or weather impact on, the industries in which Arcosa competes; competition and other competitive factors; governmental and regulatory factors; changing technologies; availability of growth opportunities; market recovery; ability to improve margins; and Arcosa’s ability to execute its long-term strategy, and such forward-looking statements are not guarantees of future performance. For further discussion of such risks and uncertainties, see "Risk Factors" and the "Forward-Looking Statements" section of "Management's Discussion and Analysis of Financial Condition and Results of Operations" in Arcosa's Form 10-K for the year-ended December 31, 2020, and as may be revised and updated by Arcosa's Quarterly Reports on Form 10-Q and Current Reports on Form 8-K.

INVESTOR CONTACTS
Gail M. Peck
Chief Financial Officer
T 972.942.6500
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David Gold
ADVISIRY Partners
T 212.661.2220
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MEDIA CONTACT
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HOUSTON--(BUSINESS WIRE)--DXP Enterprises, Inc. (NASDAQ: DXPE) is pleased to provide shareholders with a preannouncement of DXP’s performance for the three months ended June 30, 2021, which features growth in sequential sales, improvement in gross margins and solid free cash flow generation.

David R. Little, Chairman and CEO commented, “Today, based on preliminary financial information, we are pleased to announce sequential sales growth in all three business segments for the second quarter of 2021. I am pleased that DXP’s performance continues to strengthen as we accelerate into the COVID-19 recovery. Most of our customers and the markets we serve continue to show improvement. We remain encouraged by the sequential increases despite the continued choppiness. Thank you to all our customers and DXPeople for the support and efforts to remain safe and healthy while moving forward.”

Preliminary Results:

($ thousands, unaudited)

Other Items:

Kent Yee, CFO, added, “Our second quarter sequential sales growth of 16.2 percent and $10.6 million in free cash flow was great to see. As of June 30, 2021, we had $79.3 million in cash and cash equivalents, despite completing two acquisitions during 2021, four acquisitions at year-end 2020 and share repurchases completed towards the end of the quarter.”

The preliminary results above are unaudited and are based on management’s initial review of DXP’s financial results for the three month period ended June 30, 2021.

Earnings Conference Call Update

DXP is currently in its quiet period ahead of its second quarter 2021 earnings call and will not host a call to provide additional commentary regarding this preannouncement. We will now host a conference call regarding June 30, 2021 second quarter results on the Company’s website (www.dxpe.com) no later than Friday, August 13, 2021. The Company will provide an update, when appropriate.

Non-GAAP Financial Measures

DXP supplements reporting of net income with non-GAAP measurement, free cash flow. This supplemental information should not be considered in isolation or as a substitute for the unaudited GAAP measurements.

Free Cash Flow reconciles to the most directly comparable GAAP financial measure of cash flows from operations as provided above. We believe Free Cash Flow is an important liquidity metric because it measures, during a given period, the amount of cash generated that is available to fund acquisitions, make investments, repay debt obligations, repurchase company shares, and for certain other activities.

About DXP Enterprises, Inc.

DXP Enterprises, Inc. is a leading products and service distributor that adds value and total cost savings solutions to industrial customers throughout the United States, Canada and Dubai. DXP provides innovative pumping solutions, supply chain services and maintenance, repair, operating and production ("MROP") services that emphasize and utilize DXP’s vast product knowledge and technical expertise in rotating equipment, bearings, power transmission, metal working, industrial supplies and safety products and services. DXP's breadth of MROP products and service solutions allows DXP to be flexible and customer-driven, creating competitive advantages for our customers. DXP’s business segments include Service Centers, Innovative Pumping Solutions and Supply Chain Services. For more information, go to www.dxpe.com.

The Private Securities Litigation Reform Act of 1995 provides a “safe-harbor” for forward-looking statements. Certain information included in this press release (as well as information included in oral statements or other written statements made by or to be made by the Company) contains statements that are forward-looking. These forward-looking statements include without limitation those about the Company’s expectations regarding the impact of and recovery from the COVID-19 pandemic and the impact of low commodity prices of oil and gas; the Company’s business, the Company’s future profitability, cash flow, liquidity, and growth. Such forward-looking information involves important risks and uncertainties that could significantly affect anticipated results in the future; and accordingly, such results may differ from those expressed in any forward-looking statement made by or on behalf of the Company. These risks and uncertainties include, but are not limited to; decreases in oil and natural gas prices; decreases in oil and natural gas industry expenditure levels, which may result from decreased oil and natural gas prices or other factors; ability to obtain needed capital, dependence on existing management, leverage and debt service, domestic or global economic conditions, economic risks related to the impact of COVID-19, ability to manage changes and the continued health or availability of management personnel and changes in customer preferences and attitudes. In some cases, you can identify forward-looking statements by terminology such as, but not limited to, “may,” “will,” “should,” “intend,” “expect,” “plan,” “anticipate,” “believe,” “estimate,” “predict,” “potential,” “goal,” or “continue” or the negative of such terms or other comparable terminology. For more information, review the Company’s filings with the Securities and Exchange Commission. More information on these risks and other potential factors that could affect the Company’s business and financial results is included in the Company’s filings with the SEC, including in the “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” sections of the Company’s most recently filed periodic reports on Form 10-K and Form 10-Q and subsequent filings. The Company assumes no obligation to update any forward-looking statements or information, which speak as of their respective dates.

Kent Yee, (713) 996-4700
Senior Vice President, CFO
www.dxpe.com

VALLEY FORGE, Pa.--(BUSINESS WIRE)--#Dividend--The Board of Directors of UGI Corporation (NYSE: UGI) has declared a quarterly dividend of $0.345 per share of the company’s common stock. The dividend is payable October 1, 2021 to shareholders of record as of September 15, 2021. UGI has paid common dividends for 137 consecutive years and raised its dividend in each of the last 34 years.

UGI’s Board of Directors also declared a quarterly dividend of 0.125% per annum, payable in cash, on the company’s convertible preferred stock, which was issued as part of Equity Units (NYSE: UGIC) on May 25, 2021. The dividend is payable September 1, 2021.

About UGI

UGI Corporation is a distributor and marketer of energy products and services. Through subsidiaries, UGI operates natural gas and electric utilities in Pennsylvania, distributes LPG both domestically (through AmeriGas) and internationally (through UGI International), manages midstream energy assets in Pennsylvania, Ohio, and West Virginia and electric generation assets in Pennsylvania, and engages in energy marketing, including renewable natural gas, in twelve states and the District of Columbia and internationally in France, Belgium, the Netherlands and the UK.

Comprehensive information about UGI Corporation is available on the Internet at https://www.ugicorp.com.

INVESTOR RELATIONS
610-337-1000
Tameka Morris, ext. 6297
Arnab Mukherjee, ext. 7498
Shelly Oates, ext. 3202

PHOENIX--(BUSINESS WIRE)--Residents in the sunniest state in the nation could soon have the power to choose 100 percent renewable, clean energy for their homes and businesses as Green Mountain Energy (GME) submitted its application on August 4, 2021 to the Arizona Corporation Commission to provide regulated competitive retail electric services in accordance with the Energy Competition Act (ECA).

When approved, Green Mountain will be the first and only Arizona electricity provider to exclusively offer clean renewable energy to its customers, meeting the Arizona Corporation Commission’s recent 100 percent clean energy requirement nearly 50 years ahead of the 2070 deadline.

“Arizona consumers want to live sustainably across all parts of their lives, including the energy they use at home. They deserve the freedom to choose clean energy, now,” said Mark Parsons, vice president and general manager of Green Mountain. “We applaud the Corporation Commission for recognizing the importance of renewable energy in working toward a cleaner planet, and Green Mountain can help accelerate their timeline. As more consumers choose to switch to clean energy, they will help increase the supply of renewable energy by growing demand and reducing their carbon footprint.”

Under Arizona’s longstanding Energy Competition Act (ECA), energy providers have the right to petition the Commission for issuance of a certificate to provide regulated competitive retail electric services in Arizona, this was confirmed in 2020 by an Arizona Supreme court decision and paves the way for this application. Green Mountain, winner of ‘best solar provider’ in 2020 by the Houston Chronicle, is the first company to do so under the ECA.

The Arizona Corporation Commission directly regulates the market, including allowable rates and customer protection. When approved, the Commission’s oversight will apply to Green Mountain’s participation in the market as well. The Commission’s authority includes:

• Establishing reasonable customer rate bounds, including the maximum that can be charged
• Protecting the consumer
• Regulating transmission and distribution access
• Other critical oversight that ensures reliable service at just and reasonable rates

It’s clear that Arizona consumers want to—and should be able to—choose their electricity provider—just like they choose their cellular phone, internet, and other service providers. Recent polling conducted by Green Mountain highlights that, of surveyed Arizonans:

• 80 percent want the freedom of choice in energy and direct access to state-approved electric service providers
• 84 percent want the option to purchase green power and energy
• 90 percent want a “customer protections bill of rights” to protect customers from unfair, misleading, and deceptive practices, including protection from unauthorized billings.

Green Mountain will provide Arizonans a choice in their electricity provider, the ability to purchase green power, and robust consumer-protection standards. This is a win for the environment, Arizona consumers and their pocketbooks.

“As an Arizona provider, Green Mountain will help advance the Commission’s long-standing policy objective of increasing the use of renewable energy. Green Mountain service plans can help eliminate long-standing barriers to renewable energy adoption, and in this application Green Mountain proposes to make those options available to residential and commercial customers alike,” said Parsons.

About Green Mountain Energy Company

Green Mountain Energy Company is the nation’s longest serving renewable energy retailer and believes in using wind, sun and water for good. The company was founded in 1997 with a simple mission: to change the way power is made. Green Mountain offers consumers and businesses the choice of cleaner electricity products from renewable sources, as well as a variety of carbon offset products and sustainable solutions for businesses. Green Mountain customers have collectively helped avoid 90 billion pounds of carbon dioxide emissions. To learn more about Green Mountain, visit greenmountainenergy.com.

Diana Maddock
713-537-5025
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Twitter: @GreenMtnEnergy

HOUSTON--(BUSINESS WIRE)--Chesapeake Granite Wash Trust (OTC Markets Group, Inc.:CHKR) (the “Trust”) today announced that its common unit distribution for the quarter ended June 30, 2021 (which primarily relates to production attributable to the Trust’s royalty interests from March 1, 2021 through May 31, 2021) will be $0.0373 per common unit. The distribution will be paid on August 30, 2021 to common unitholders of record at the close of business on August 19, 2021.

The following table provides supporting documentation, for the calculation of distributable income available to unitholders for the production period from March 1, 2021 through May 31, 2021.

Due to the timing of the payment of production proceeds to the Trust, quarterly distributions generally include royalties attributable to sales of oil, natural gas liquids and natural gas for three months, including the first two months of the quarter just ended and the last month of the prior quarter.

The Trust owns royalty interests in certain oil and natural gas properties in the Colony Granite Wash play in Washita County, Oklahoma. The Trust is entitled to receive proceeds from the sale of production attributable to the royalty interests. As described in the Trust’s filings with the Securities and Exchange Commission (the “SEC”), the amount of Trust revenues and the quarterly distributions to Trust unitholders will fluctuate from quarter to quarter, depending on the sales volume of oil, natural gas liquids and natural gas attributable to the Trust’s royalty interests and the prices received for such sales and the amount of the Trust’s administrative expenses, among other factors.

For additional information regarding the Trust and its results of operations and financial condition, please refer to the Trust’s SEC filings.

ABOUT CHESAPEAKE GRANITE WASH TRUST:

Pursuant to IRC Section 1446, withholding tax on income effectively connected to a U.S. trade or business allocated to foreign partners should be made at the highest marginal rate. Under Section 1441, withholding tax on fixed, determinable, annual, periodic income from U.S. sources allocated to foreign partners should be made at 30% of gross income unless the rate is reduced by treaty. This release is intended to be a qualified notice to nominees and brokers as provided for under Treasury Regulation Section 1.1446-4(b) by the Trust, and while specific relief is not specified for Section 1441 income, this disclosure is intended to suffice. For distributions made to foreign partners, nominees and brokers should withhold at the highest effective tax rate.

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The Bank of New York Mellon Trust Company, N.A.
Monika Rusin
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Q2 Revenue of $228.5 million; an increase of 21.6% year-over-year

Q2 GAAP Gross Margin of 16.3%; Non-GAAP Gross Margin of 18.0%

Q2 GAAP Operating Margin of (18.7%); Non-GAAP Operating Margin of (10.3%)

Q2 GAAP EPS of $(0.31); Adjusted EPS of $(0.23)

SAN JOSE, Calif.--(BUSINESS WIRE)--#earnings--Bloom Energy Corporation (NYSE: BE) today announced financial results for its second quarter ended June 30, 2021.

Second Quarter Financial Highlights

• Revenue of $228.5 million in the second quarter of 2021, an increase of 21.6% compared to revenue of $187.9 million in the second quarter of 2020. Product revenue of $146.9 million in the second quarter of 2021, an increase of 26.4% from the second quarter of 2020, primarily driven by a 41.5% increase in acceptances.
• Gross margin of 16.3% in the second quarter of 2021, an increase of 2.3 percentage points compared to gross margin of 14.0% in the second quarter of 2020, primarily driven by improved product cost and favorable sales mix from growth in product and electricity.
• Non-GAAP gross margin was 18.0% in the second quarter of 2021, an increase of 1.5 percentage points compared to non-GAAP gross margin of 16.5% in the second quarter of 2020, primarily driven by improved product cost and favorable sales mix from growth in product and electricity.
• Operating margin of (18.7%) in the second quarter of 2021, a decline of 3.0 percentage points compared to operating margin of (15.7%) in the second quarter of 2020, driven by increases in operating expenses to expand our commercial capability, invest in technology and ensure our control environment is ready to scale for growth.
• Non-GAAP operating margin was (10.3%) in the second quarter of 2021, a decrease of 4.5 percentage points compared to non-GAAP operating margin of (5.8%) in the second quarter of 2020, driven by increases in operating expenses to expand our commercial capability, invest in technology and ensure our control environment is ready to scale for growth.
• GAAP EPS of $(0.31) and Adjusted EPS of $(0.23) in the second quarter of 2021, compared to GAAP EPS of $(0.34) and Adjusted EPS of $(0.23) in the second quarter of 2020, driven by a reduction in interest expenses due to refinancing of our notes at a lower interest rate in 2020 and an increase in outstanding shares.

Commenting on the second quarter, KR Sridhar, founder, chairman, and CEO of Bloom Energy said, “We believe there are three key imperatives in the energy market today – resiliency, sustainability and cost-predictability. Bloom Energy is uniquely positioned with our Bloom Energy Server to solve these challenges and the global marketplace is recognizing this. We believe our business is poised for growth given the progress we have made in deploying our products and the demand we are seeing from partners and customers around the world. We are investing in our technology, continuing to innovate, and adding people and infrastructure to meet these opportunities in the months and years ahead.”

Greg Cameron, executive vice president and CFO of Bloom Energy added, “Bloom Energy is executing well, as we achieved record revenue, acceptances, and generated positive free cash flow in the second quarter. We are making progress on our operational and financial milestones. While we face some temporary operating cost pressures, we remain confident in our business and are reaffirming our full year 2021 guidance.”

Summary of Key Financial Metrics

Revenue Highlights

Revenue of $228.5 million in the second quarter of 2021, an increase of 21.6% compared to revenue of $187.9 million in the second quarter of 2020, primarily driven by a $30.7 million increase in product revenue and a $9.5 million increase in service revenue.

Product revenue increased $30.7 million, or 26.4%, in the second quarter of 2021 as compared to the prior year period, primarily driven by a 41.5% increase in product acceptances. Acceptance typically occurs upon transfer of control to our customers, which depending on the contract terms is when the system is shipped and delivered to our customers, when the system is shipped and delivered and physically ready for startup and commissioning, or when the system is shipped and delivered and is turned on and producing power. In the second quarter of 2021, we were able to achieve a larger number of acceptances at time of delivery than in the prior year.

Service revenue increased $9.5 million in the second quarter 2021 as compared to the prior year period. This increase is driven by continued additions to our installation base.

Margin Highlights

GAAP gross margin in the second quarter of 2021 was 16.3%, up 2.3 percentage points compared to 14.0% in the second quarter of 2020. Non-GAAP gross margin in the second quarter of 2021 was 18.0%, up 1.5 percentage points compared to 16.5% in the second quarter of 2020. The improvement in gross margin was primarily driven by improved product cost and favorable sales mix from growth in product and electricity.

Balance Sheet Highlights

Bloom Energy’s cash position, including restricted cash, as of June 30, 2021 was $400.5 million, compared to $324.1 million as of June 30, 2020. Unrestricted cash as of June 30, 2021 was $204.0 million, compared to $144.1 million as of June 30, 2020. Bloom ended the second quarter of 2021 with $519.2 million of total debt, a decrease of $3.0 million from the first quarter of 2021. Non-recourse debt as of June 30, 2021 was $219.2 million, compared to $222.2 million as of March 31, 2021.

2021 Outlook

Bloom reaffirmed the following outlook for the full-year 2021:

*Non-GAAP gross margin and non-GAAP operating margin only exclude stock-based compensation expense.

Conference Call Details

Bloom will host a conference call today, August 4, 2021, at 2:00 p.m. Pacific Time (5:00 p.m. Eastern Time) to discuss its financial results. To participate in the live call, analysts and investors may call +1 (833) 520-0063 and enter the passcode: 7526169. Those calling from outside the United States may dial +1 (236) 714-2197 and enter the same passcode: 7526169. A simultaneous live webcast will also be available under the Investor Relations section on our website at https://investor.bloomenergy.com/. Following the webcast, an archived version will be available on Bloom’s website for one year. A telephonic replay of the conference call will be available for one week following the call, by dialing +1 (800) 585-8367 or +1 (416) 621-4642 and entering passcode 7526169.

Use of Non-GAAP Financial Measures

This release includes certain non-GAAP financial measures as defined by the rules and regulations of the Securities and Exchange Commission (SEC). These non-GAAP financial measures are in addition to, and not a substitute for or superior to, measures of financial performance prepared in accordance with U.S. GAAP. There are a number of limitations related to the use of these non-GAAP financial measures versus their nearest GAAP equivalents. For example, other companies may calculate non-GAAP financial measures differently or may use other measures to evaluate their performance, all of which could reduce the usefulness of our non-GAAP financial measures as tools for comparison. Bloom urges you to review the reconciliations of its non-GAAP financial measures to the most directly comparable U.S. GAAP financial measures set forth in this press release, and not to rely on any single financial measure to evaluate our business. With respect to Bloom’s expectations regarding its 2021 Outlook, Bloom is not able to provide a quantitative reconciliation of non-GAAP gross margin and non-GAAP operating margin measures to the corresponding GAAP measures without unreasonable efforts.

About Bloom Energy

Bloom Energy’s mission is to make clean, reliable energy affordable for everyone in the world. Bloom’s product, the Bloom Energy Server, delivers highly reliable and resilient, always-on electric power that is clean, cost-effective, and ideal for microgrid applications. Bloom’s customers include many Fortune 100 companies and leaders in manufacturing, data centers, healthcare, retail, higher education, utilities, and other industries. For more information, visit www.bloomenergy.com.

Forward-Looking Statements

This press release contains certain forward-looking statements, which are subject to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements generally relate to future events or our future financial or operating performance. In some cases, you can identify forward-looking statements because they contain words such as “anticipate,” “believe,” “could,” “estimate,” “expect,” “intend,” “may,” “should,” “will,” and “would” or the negative of these words or similar terms or expressions that concern Bloom’s expectations, strategy, priorities, plans or intentions. These forward-looking statements include, but are not limited to, Bloom’s ability to solve the three key imperatives of resiliency, sustainability and cost-predictability; Bloom’s expectations of future growth; Bloom’s expectations of meeting its operational and financial milestones; and Bloom’s financial outlook for 2021. Readers are cautioned that these forward-looking statements are only predictions and may differ materially from actual future events or results due to a variety of factors including, but not limited to, Bloom’s limited operating history; the emerging nature of the distributed generation market and rapidly evolving market trends; the significant losses Bloom has incurred in the past; the significant upfront costs of Bloom’s Energy Servers and Bloom’s ability to secure financing for its products; Bloom’s ability to drive cost reductions and to successfully mitigate against potential price increases; Bloom’s ability to service its existing debt obligations; Bloom’s ability to be successful in new markets; the risk of manufacturing defects; the accuracy of Bloom’s estimates regarding the useful life of its Energy Servers; delays in the development and introduction of new products or updates to existing products; the impact of the COVID-19 pandemic on the global economy and its potential impact on Bloom’s business; the availability of rebates, tax credits and other tax benefits; Bloom’s reliance on tax equity financing arrangements; Bloom’s reliance upon a limited number of customers; Bloom’s lengthy sales and installation cycle, construction, utility interconnection and other delays and cost overruns related to the installation of its Energy Servers; business and economic conditions and growth trends in commercial and industrial energy markets; global economic conditions and uncertainties in the geopolitical environment; overall electricity generation market; Bloom’s ability to protect its intellectual property; and other risks and uncertainties detailed in Bloom’s SEC filings from time to time. More information on potential factors that may impact Bloom’s business are set forth in Bloom’s periodic reports filed with the SEC, including our Quarterly Report on Form 10-Q for the quarter ended on March 31, 2021 as filed with the SEC on May 6, 2021, as well as subsequent reports filed with or furnished to the SEC from time to time. These reports are available on Bloom’s website at www.bloomenergy.com and the SEC’s website at www.sec.gov. Bloom assumes no obligation to, and does not currently intend to, update any such forward-looking statements.

The Investor Relations section of Bloom’s website at investor.bloomenergy.com contains a significant amount of information about Bloom Energy, including financial and other information for investors. Bloom encourages investors to visit this website from time to time, as information is updated and new information is posted.

Reconciliation of GAAP to Non-GAAP Financial Measures (preliminary & unaudited) (in thousands)

Gross Profit and Gross Margin to Gross Profit Excluding Stock-Based Compensation and Gross Margin Excluding Stock-Based Compensation

Gross profit and gross margin excluding stock-based compensation (SBC) are supplemental measures of operating performance that do not represent and should not be considered alternatives to gross profit or gross margin, as determined under GAAP. These measures remove the impact of stock-based compensation. We believe that gross profit and gross margin excluding stock-based compensation supplement the GAAP measures and enable us to more effectively evaluate our performance period-over-period. A reconciliation of gross profit and gross margin excluding stock-based compensation to gross profit and gross margin, the most directly comparable GAAP measures, and the computation of gross margin excluding stock-based compensation are as follows:

Cost of Revenue and Operating Expenses to Cost of Revenue and Operating Expenses Excluding Stock-Based Compensation

Cost of revenue and operating expenses excluding stock-based compensation are a supplemental measure of operating performance that does not represent and should not be considered an alternative to cost of revenue and operating expenses, as determined under GAAP. This measure removes the impact of stock-based compensation. We believe that cost of revenue and operating expenses excluding stock-based compensation supplements the GAAP measure and enables us to more effectively evaluate our performance period-over-period. A reconciliation of cost of revenue and operating expenses excluding stock-based compensation to cost of revenue and operating expenses, the most directly comparable GAAP measure, are as follows:

Operating Loss to Operating Income (Loss) Excluding Stock-Based Compensation

Operating income (loss) excluding stock-based compensation is a supplemental measure of operating performance that does not represent and should not be considered an alternative to operating loss, as determined under GAAP. This measure removes the impact of stock-based compensation. We believe that operating income (loss) excluding stock-based compensation supplements the GAAP measure and enables us to more effectively evaluate our performance period-over-period. A reconciliation of operating income (loss) excluding stock-based compensation to operating loss, the most directly comparable GAAP measure, and the computation of operating income (loss) excluding stock-based compensation are as follows:

Net Loss to Adjusted Net Loss and Computation of Adjusted Net Loss per Share (EPS)

Adjusted net loss and adjusted net loss per share are supplemental measures of operating performance that do not represent and should not be considered alternatives to net loss and net loss per share, as determined under GAAP.

Investor Relations:
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Media:
Jennifer Duffourg
Bloom Energy
+1 (480) 341-5464
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HOUSTON--(BUSINESS WIRE)--USD Partners LP (NYSE: USDP) (the “Partnership”) announced today its operating and financial results for the three and six months ended June 30, 2021. Financial highlights with respect to the second quarter of 2021 include the following:

• Generated Net Cash Provided by Operating Activities of $14.1 million, Adjusted EBITDA⁽¹⁾ of $16.3 million and Distributable Cash Flow⁽¹⁾ of $14.4 million
• Reported Net Income of $6.7 million
• Increased quarterly cash distribution to $0.116 per unit ($0.464 per unit on an annualized basis) with over 4.0x Distributable Cash Flow Coverage⁽²⁾
• Announced West Colton Renewable Diesel project and new terminalling services agreement that once operational is expected to generate approximately $2.0 million per year of Adjusted EBITDA⁽³⁾ over the five-year term of the agreement for the Partnership.

“We are pleased to report another strong quarter in 2021,” said Dan Borgen, the Partnership’s Chief Executive Officer. “Our terminals performed well during the second quarter, and we are very excited to report that construction of our Sponsor’s Diluent Recovery Unit project, or DRU, was completed in July. The DRU is now in the start-up phase, and our Sponsor expects the facility to be placed into service during the third quarter. In addition, construction of all major items at our Sponsor’s destination facility at Port Arthur necessary to receive DRUbit™ by rail, and blend and ship product by pipe, is complete and start-up of the new terminal has begun. As mentioned previously, our DRUbit™ by Rail™ network provides the Partnership with long-term take-or-pay revenues while providing transportation safety and environmental benefits to our customers, as well as providing increased market access and additional jobs along the rail routes.”

“We continue to be very excited about our future as well as the future of our Sponsor’s new DRU and Port Arthur Terminal as we engage with our customers regarding the second phase of USD’s growth, which could include a second DRU customer committing to delivering the next 50,000 barrels per day of diluted bitumen into the DRU, with the resulting DRUbit^TM available to be transloaded through the Partnership’s Hardisty rail terminal to the Gulf Coast and other potential destinations,” added Mr. Borgen. “We look forward to keeping our investors updated with future announcements regarding the DRU.”

Partnership’s Second Quarter 2021 Liquidity, Operational and Financial Results

Substantially all of the Partnership’s cash flows are generated from multi-year, take-or-pay terminalling services agreements related to its crude oil terminals, which include minimum monthly commitment fees. The Partnership’s customers include major integrated oil companies, refiners and marketers, the majority of which are investment-grade rated.

The Partnership’s operating results for the second quarter of 2021 relative to the same quarter in 2020 were primarily influenced by higher revenue at its Stroud terminal during the quarter due to higher rates that are based on crude oil index pricing differentials. Also during the quarter the Partnership recognized revenue that was previously deferred at the Stroud terminal during the first quarter of 2021 associated with the make-up right options that are granted to the Partnership’s customers. Additionally, revenue at the Hardisty terminal in the second quarter of 2021 relative to the second quarter of 2020, was higher due to a favorable variance resulting from the change in the Canadian exchange rate associated with the Partnership’s Canadian-dollar denominated contracts and increased rates on certain of the Partnership’s Hardisty agreements.

The Partnership experienced higher operating costs during the second quarter of 2021 as compared to the second quarter of 2020. This increase was primarily attributable to an increase in subcontracted rail services costs and pipeline fees associated with higher throughput, partially offset by lower selling, general and administrative costs.

Net income increased in the second quarter of 2021 as compared to the second quarter of 2020, primarily because of the operating factors discussed above coupled with lower interest expense incurred during the 2021 period resulting from lower interest rates and a lower weighted average balance of debt outstanding. The Partnership also recognized a small non-cash foreign currency transaction gain in the second quarter of 2021 as compared to a non-cash loss recognized in the 2020 comparative period. Partially offsetting was a higher non-cash loss associated with the Partnership’s interest rate derivatives during the second quarter of 2021 when compared to the same period in 2020.

Net Cash Provided by Operating Activities for the quarter increased 160% relative to the second quarter of 2020, primarily due to the operating factors discussed above and the general timing of receipts and payments of accounts receivable, accounts payable and deferred revenue balances.

Adjusted EBITDA and Distributable Cash Flow (“DCF”) increased by 28% and 48%, respectively, for the quarter relative to the second quarter of 2020. The increase in Adjusted EBITDA was primarily a result of the operating factors discussed above. DCF was also positively impacted by a decrease in cash paid for interest during the quarter, partially offset by an increase in cash paid for income taxes and higher maintenance capital expenditures incurred during the current quarter, which included technology upgrades and safety maintenance at the Partnership’s Hardisty and Stroud terminals.

As of June 30, 2021, the Partnership had approximately $3 million of unrestricted cash and cash equivalents and undrawn borrowing capacity of $206 million on its $385 million senior secured credit facility, subject to the Partnership’s continued compliance with financial covenants. As of the end of the second quarter of 2021, the Partnership had borrowings of $179 million outstanding under the revolving credit facility. Pursuant to the terms of the Partnership’s Credit Agreement, the Partnership’s borrowing capacity is currently limited to 4.5 times its trailing 12-month consolidated EBITDA, as defined in the Credit Agreement. As such, the Partnership’s available borrowings under the senior secured credit facility, including unrestricted cash and cash equivalents, was approximately $100 million as of June 30, 2021. The Partnership was in compliance with its financial covenants, as of June 30, 2021.

On July 21, 2021, the Partnership declared a quarterly cash distribution of $0.116 per unit ($0.464 per unit on an annualized basis), representing an increase of $0.0025 per unit, or 2.2% over the distribution declared for the first quarter of 2021. The distribution is payable on August 13, 2021, to unitholders of record at the close of business on August 4, 2021.

Since the end of the first quarter of 2020, the Partnership has reduced the outstanding balance of its revolving credit facility by $45 million as of June 30, 2021.

Second Quarter 2021 Conference Call Information

The Partnership will host a conference call and webcast regarding second quarter 2021 results at 11:00 a.m. Eastern Time (10:00 a.m. Central Time) on Thursday, August 5, 2021.

To listen live over the Internet, participants are advised to log on to the Partnership’s website at www.usdpartners.com and select the “Events & Presentations” sub-tab under the “Investors” tab. To join via telephone, participants may dial (877) 266-7551 domestically or +1 (339) 368-5209 internationally, conference ID 6061075. Participants are advised to dial in at least five minutes prior to the call.

An audio replay of the conference call will be available for thirty days by dialing (800) 585-8367 domestically or +1 (404) 537-3406 internationally, conference ID 6061075. In addition, a replay of the audio webcast will be available by accessing the Partnership's website after the call is concluded.

About USD Partners LP

USD Partners LP is a fee-based, growth-oriented master limited partnership formed in 2014 by US Development Group, LLC (“USD”) to acquire, develop and operate midstream infrastructure and complementary logistics solutions for crude oil, biofuels and other energy-related products. The Partnership generates substantially all of its operating cash flows from multi-year, take-or-pay contracts with primarily investment grade customers, including major integrated oil companies, refiners and marketers. The Partnership’s principal assets include a network of crude oil terminals that facilitate the transportation of heavy crude oil from Western Canada to key demand centers across North America. The Partnership’s operations include railcar loading and unloading, storage and blending in on-site tanks, inbound and outbound pipeline connectivity, truck transloading, as well as other related logistics services. In addition, the Partnership provides customers with leased railcars and fleet services to facilitate the transportation of liquid hydrocarbons and biofuels by rail.

USD, which owns the general partner of USD Partners LP, is engaged in designing, developing, owning, and managing large-scale multi-modal logistics centers and energy-related infrastructure across North America. USD solutions create flexible market access for customers in significant growth areas and key demand centers, including Western Canada, the U.S. Gulf Coast and Mexico. Among other projects, USD, along with its partner Gibson Energy, Inc., is pursuing long-term solutions to transport heavier grades of crude oil produced in Western Canada through the construction of a Diluent Recovery Unit at the Hardisty terminal. USD is also currently pursuing the development of a premier energy logistics terminal on the Houston Ship Channel with capacity for substantial tank storage, multiple docks (including barge and deepwater), inbound and outbound pipeline connectivity, as well as a rail terminal with unit train capabilities. For additional information, please visit texasdeepwater.com. Information on websites referenced in this release is not part of this release.

DRUbit™ and DRUbit™ by Rail™ are registered trademarks of DRU Assets LLC, a wholly-owned subsidiary of USD. All rights reserved.

Non-GAAP Financial Measures

The Partnership defines Adjusted EBITDA as Net Cash Provided by Operating Activities adjusted for changes in working capital items, interest, income taxes, foreign currency transaction gains and losses, and other items which do not affect the underlying cash flows produced by the Partnership’s businesses. Adjusted EBITDA is a non-GAAP, supplemental financial measure used by management and external users of the Partnership’s financial statements, such as investors and commercial banks, to assess:

• the Partnership’s liquidity and the ability of the Partnership’s businesses to produce sufficient cash flows to make distributions to the Partnership’s unitholders; and
• the Partnership’s ability to incur and service debt and fund capital expenditures.

The Partnership defines Distributable Cash Flow, or DCF, as Adjusted EBITDA less net cash paid for interest, income taxes and maintenance capital expenditures. DCF does not reflect changes in working capital balances. DCF is a non-GAAP, supplemental financial measure used by management and by external users of the Partnership’s financial statements, such as investors and commercial banks, to assess:

• the amount of cash available for making distributions to the Partnership’s unitholders;
• the excess cash flow being retained for use in enhancing the Partnership’s existing business; and
• the sustainability of the Partnership’s current distribution rate per unit.

The Partnership believes that the presentation of Adjusted EBITDA and DCF in this press release provides information that enhances an investor's understanding of the Partnership’s ability to generate cash for payment of distributions and other purposes. The GAAP measure most directly comparable to Adjusted EBITDA and DCF is Net Cash Provided by Operating Activities. Adjusted EBITDA and DCF should not be considered alternatives to Net Cash Provided by Operating Activities or any other measure of liquidity presented in accordance with GAAP. Adjusted EBITDA and DCF exclude some, but not all, items that affect Net Cash Provided by Operating Activities and these measures may vary among other companies. As a result, Adjusted EBITDA and DCF may not be comparable to similarly titled measures of other companies. Reconciliations of Net Cash Provided by Operating Activities to Adjusted EBITDA and DCF are presented in this press release.

Cautionary Note Regarding Forward-Looking Statements

This press release contains forward-looking statements within the meaning of U.S. federal securities laws, including statements with respect to the ability of the Partnership and USD to achieve contract extensions, new customer agreements and expansions; the ability of the Partnership and USD to develop existing and future additional projects and expansion opportunities and whether those projects and opportunities developed by USD would be made available for acquisition, or acquired, by the Partnership; the impact of the West Colton Renewable Diesel project; the impact of the completion of USD’s DRU project; volumes at, and demand for, the Partnership’s terminals; and the amount and timing of future distribution payments and distribution growth. Words and phrases such as “expect,” “plan,” “intent,” “believes,” “projects,” “begin,” “anticipates,” “subject to” and similar expressions are used to identify such forward-looking statements. However, the absence of these words does not mean that a statement is not forward-looking. Forward-looking statements relating to the Partnership are based on management’s expectations, estimates and projections about the Partnership, its interests and the energy industry in general on the date this press release was issued. These statements are not guarantees of future performance and involve certain risks, uncertainties and assumptions that are difficult to predict. Therefore, actual outcomes and results may differ materially from what is expressed or forecast in such forward-looking statements. Factors that could cause actual results or events to differ materially from those described in the forward-looking statements include the impact of the novel coronavirus (COVID-19) pandemic and related economic downturn and changes in general economic conditions and commodity prices, as well as those factors set forth under the heading “Risk Factors” and elsewhere in the Partnership’s most recent Annual Report on Form 10-K and in the Partnership’s subsequent filings with the Securities and Exchange Commission (many of which may be amplified by the COVID-19 pandemic and the significant reductions in demand for, and fluctuations in the prices of, crude oil, natural gas and natural gas liquids). The Partnership is under no obligation (and expressly disclaims any such obligation) to update or alter its forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.

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