USDP - USD Partners: IDRs Gone Forever Short-Term Pain But Long-Term Gain

• The uneventful outlook for USD Partners did not last long with them recently announcing a relatively sizeable acquisition and the elimination of their IDRs.
• Their Hardisty South Terminal acquisition stands to boost their operating cash flow by around one-third versus their results during 2021.
• Most of this should translate into free cash given their usual low capital expenditure requirements, thereby providing more cash for distributions.
• Even though eliminating their IDRs will cause short-term pain via diluting their unitholders, it provides a cleaner outlook for distribution growth.
• This does not necessarily change their outlook for distribution growth during 2022 but adds more in 2023 and beyond, which means that I believe maintaining my strong buy rating is still appropriate.

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