SECOND QUARTER 2023 RESULTS AND DECLARES QUARTERLY DIVIDEND
Houston, Texas (Wednesday, August 9, 2023) -- Adams Resources & Energy, Inc. (NYSE AMERICAN: AE) (“Adams” or the “Company”), a company engaged in marketing, transportation, logistics and repurposing of crude oil, refined products and dry bulk materials, today announced operational and financial results for the quarter ended June 30, 2023. The Company also declared a quarterly cash dividend of $0.24 per common share.
Q2 2023 Financial Summary
•Total revenue of $624.8 million, versus $992.1 million for the second quarter of 2022.
•Net earnings of $0.8 million, or $0.32 per diluted common share, compared to a net loss of $2.0 million, or a loss of $0.79 per common share for the first quarter of 2023 and net earnings of $2.5 million, or $0.56 per diluted common share for the second quarter of 2022.
•Net cash used in operating activities of $27.3 million for the second quarter of 2023, a decrease of $2.7 million in net cash used in operating activities from the prior-year quarter. This decrease was primarily driven by the timing of payments and receipts from crude oil customers and changes in inventory due to fluctuations in crude oil pricing and barrels held.
•Adjusted cash flow of $7.1 million for the second quarter of 2023, compared to $4.7 million for the first quarter of 2023 and $9.0 million in the prior-year.
•Cash and cash equivalents were $9.0 million as of June 30, 2023, versus $20.5 million at December 31, 2022, primarily due to the timing of receipts and early payments from crude oil customers.
•Liquidity of $48.6 million at June 30, 2023.
•Paid dividends totaling $0.24 per share during the second quarter of 2023. The Company has consistently paid a dividend since 1994.
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Adjusted cash flow is a non-generally accepted accounting principle (“non-GAAP”) financial measure that is defined and reconciled, along with the non-GAAP financial measures adjusted net (losses) earnings and adjusted net (losses) earnings per diluted common share, in the financial tables later in this release.
Additional Operational Highlights
•Adams’ crude oil marketing subsidiary, GulfMark Energy, Inc. (“GulfMark”), marketed 92,152 barrels per day (“bpd”) of crude oil during the second quarter of 2023, compared to 94,876 bpd during the second quarter of 2022 and 94,030 bpd during the first quarter of 2023.
•The collective fleet of Service Transport Company (“Service Transport”), Adams’ liquid chemicals, pressurized gases, asphalt and dry bulk transportation subsidiary, traveled 6.30 million miles during the second quarter of 2023, versus 6.86 million miles during the second quarter of 2022 and 6.55 million miles during the first quarter of 2023.
•Adams’ crude oil pipeline and storage segment, which includes the Victoria Express Pipeline System (“VEX Pipeline System”), throughput was 8,560 bpd for the second quarter of 2023, compared to 13,281 bpd for the second quarter of 2022 and 10,088 bpd for the first quarter of 2023, and terminalling volumes were 10,785 bpd for the second quarter of 2023, compared to 13,704 bpd in the second quarter of 2022, and 10,395 bpd for the first quarter of 2023.
•The logistics and repurposing segment, which includes the Firebird Bulk Carriers, Inc. (“Firebird”) and Phoenix Oil, Inc. (“Phoenix”) businesses acquired in August 2022, had a positive impact on quarterly cash flow.
•Remained solidly positioned with 369,738 barrels of crude oil inventory at June 30, 2023, compared to 328,562 barrels at December 31, 2022.
“Our second quarter performance contains multiple bright spots in a challenging environment, including our crude oil marketing segment posting a sequential increase in operating income despite a number of headwinds,” said Kevin J. Roycraft, Chief Executive Officer of Adams. “Adjusted cash flows also improved sequentially as each segment contributed positively, and we returned to positive net earnings for the quarter.”
Capital Investments and Dividends
During the second quarter of 2023, the Company had capital expenditures of $4.0 million primarily for the previously announced purchase of land for the Dayton project, construction of the pipeline connection, three tractors, one trailer and other field equipment. In addition, Adams paid dividends of $0.6 million, or $0.24 per common share.
As part of Adams’ on-going capital allocation strategy, the Board of Directors declared a quarterly cash dividend for the second quarter of 2023 of $0.24 per common share, payable on September 22, 2023, to shareholders of record as of September 8, 2023.
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Outlook
“We believe the challenges facing our GulfMark and Service Transport segments have reached their lowest point, and we expect a more gradual recovery across our business over the remainder of the year and into 2024,” Mr. Roycraft continued.
“Our Company remains in a very strong financial position to withstand the continued macroeconomic challenges facing our industries and is poised to deliver meaningful performance when our key markets begin to improve. This plus our continued commitment to our dividend should deliver long-term value to our shareholders,” Mr. Roycraft concluded.
Use of Non-GAAP Financial Measures
This press release and accompanying schedules include the non-GAAP financial measures of adjusted cash flow, adjusted net earnings (losses) and adjusted earnings (losses) per common share. The accompanying schedules provide definitions of these non-GAAP financial measures and reconciliations to their most directly comparable financial measures calculated and presented in accordance with GAAP. Company management believes these measures are useful indicators of the financial performance of our business and uses these measurements as aids in monitoring the Company’s ongoing financial performance from quarter to quarter and year to year on a regular basis and for benchmarking against peer companies. Our non-GAAP financial measures should not be considered as alternatives to GAAP measures such as net income, operating income, net cash flow provided by operating activities, earnings per share or any other measure of financial performance calculated and presented in accordance with GAAP. Adams’ non-GAAP financial measures may not be comparable to similarly titled measures of other companies because they may not calculate such measures in the same manner as Adams does.
Conference Call
The Company will host a conference call to discuss its second quarter results on Thursday, August 10, 2023 at 9:00 a.m. ET (8:00 a.m. CT). To participate in the live conference call, dial 1-877-344-7529 (Toll-Free) within the U.S., or 1-412-317-0088 (Toll-Required) outside the U.S., or log into the webcast, available on Adams’ investor relations website at adamsresources.com/investor-relations. A replay will also be available on the Company’s website or by dialing 1-877-317-6789 (Toll-Free) within the U.S., or 1-412-317-6789 (Toll-Required) outside the U.S. and entering code 6520493.
About Adams Resources & Energy, Inc.
Adams Resources & Energy, Inc. is engaged in crude oil marketing, transportation, terminalling and storage, tank truck transportation of liquid chemicals and dry bulk, interstate bulk transportation logistics of crude oil, condensate, fuels, oils and other petroleum products and recycling and repurposing of off-specification fuels, lubricants, crude oil and other chemicals through its subsidiaries, GulfMark Energy, Inc., Service Transport Company, Victoria Express Pipeline, LLC, GulfMark Terminals, LLC, Firebird Bulk Carriers, Inc. and Phoenix Oil, Inc. For more information, visit www.adamsresources.com.
This news release contains forward-looking statements. Forward-looking statements relate to future events and anticipated results of operations, business strategies, capital deployment plans and other aspects of our operations or operating results. In many cases you can identify forward-looking statements by terminology such as “anticipate,” “intend,” “plan,” “project,” “estimate,” “continue,” “potential,” “should,” “could,” “may,” “will,” “objective,” “guidance,” “outlook,” “effort,” “expect,” “believe,” “predict,” “budget,” “projection,” “goal,” “forecast,” “target” or similar words. Statements may be forward looking even in the absence of these particular words. Where, in any forward-looking statement, the Company expresses an expectation or belief as to future results, such expectation or belief is expressed in good faith and believed to have a reasonable basis. Forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from those expressed or implied in the forward-looking statements, and any other risk factors included in Adams’ reports filed with the Securities and Exchange Commission. However, there can be no assurance that such expectation or belief will result or be achieved. Unless legally required, Adams undertakes no obligation to update publicly any forward-looking statements, whether as a result of new information, future events or otherwise.
Company Contact
Tracy E. Ohmart
EVP, Chief Financial Officer
tohmart@adamsresources.com
(713) 881-3609
Investor Relations Contact
John Beisler or Steven Hooser
Three Part Advisors
(817) 310-8776
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ADAMS RESOURCES & ENERGY, INC. AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
Three Months Ended
Six Months Ended
June 30,
June 30,
2023
2022
2023
2022
Revenues:
Marketing
$
585,272
$
962,516
$
1,193,748
$
1,710,071
Transportation
24,452
29,534
50,897
56,224
Pipeline and storage
249
—
249
—
Logistics and repurposing
14,793
—
30,034
—
Total revenues
624,766
992,050
1,274,928
1,766,295
Costs and expenses:
Marketing
579,753
955,511
1,184,247
1,691,158
Transportation
20,260
23,674
42,673
44,539
Pipeline and storage
753
606
1,691
1,160
Logistics and repurposing
13,202
—
26,327
—
General and administrative
1,715
4,211
6,487
8,229
Depreciation and amortization
7,303
5,088
14,353
10,101
Total costs and expenses
622,986
989,090
1,275,778
1,755,187
Operating earnings (losses)
1,780
2,960
(850)
11,108
Other income (expense):
Interest and other income
570
303
774
327
Interest expense
(802)
(136)
(1,498)
(250)
Total other (expense) income, net
(232)
167
(724)
77
Earnings (Losses) before income taxes
1,548
3,127
(1,574)
11,185
Income tax (provision) benefit
(721)
(651)
402
(2,619)
Net earnings (losses)
$
827
$
2,476
$
(1,172)
$
8,566
Earnings (Losses) per share:
Basic net earnings (losses) per common share
$
0.33
$
0.57
$
(0.46)
$
1.96
Diluted net earnings (losses) per common share
$
0.32
$
0.56
$
(0.46)
$
1.95
Dividends per common share
$
0.24
$
0.24
$
0.48
$
0.48
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ADAMS RESOURCES & ENERGY, INC. AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
June 30,
December 31,
2023
2022
ASSETS
Current assets:
Cash and cash equivalents
$
8,974
$
20,532
Restricted cash
8,784
10,535
Accounts receivable, net of allowance for doubtful accounts
158,433
189,039
Inventory
26,523
26,919
Income tax receivable
469
—
Prepayments and other current assets
2,608
3,118
Total current assets
205,791
250,143
Property and equipment, net
111,834
106,425
Operating lease right-of-use assets, net
6,783
7,720
Intangible assets, net
8,837
9,745
Goodwill
6,673
6,428
Other assets
3,564
3,698
Total assets
$
343,482
$
384,159
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Accounts payable
$
162,787
$
204,391
Accounts payable – related party
—
31
Derivative liabilities
30
330
Current portion of finance lease obligations
6,444
4,382
Current portion of operating lease liabilities
2,802
2,712
Current portion of long-term debt
2,500
—
Other current liabilities
14,011
19,214
Total current liabilities
188,574
231,060
Other long-term liabilities:
Long-term debt
20,625
24,375
Asset retirement obligations
2,650
2,459
Finance lease obligations
20,693
12,085
Operating lease liabilities
3,986
5,007
Deferred taxes and other liabilities
15,233
15,996
Total liabilities
251,761
290,982
Commitments and contingencies
Shareholders’ equity
91,721
93,177
Total liabilities and shareholders’ equity
$
343,482
$
384,159
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ADAMS RESOURCES & ENERGY, INC. AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
Three Months Ended
Six Months Ended
June 30,
June 30,
2023
2022
2023
2022
Operating activities:
Net earnings (losses)
$
827
$
2,476
$
(1,172)
$
8,566
Adjustments to reconcile net earnings (losses) to net cash
used in operating activities:
Depreciation and amortization
7,303
5,088
14,353
10,101
Gains on sales of property
(735)
(447)
(766)
(938)
Provision for doubtful accounts
(7)
(3)
(10)
(8)
Stock-based compensation expense
372
263
655
458
Change in contingent consideration liability
(2,566)
—
(2,566)
—
Deferred income taxes
654
(893)
(770)
(332)
Net change in fair value contracts
187
(610)
(300)
(630)
Changes in assets and liabilities:
Accounts receivable
(300)
(55,177)
30,616
(129,837)
Accounts receivable/payable, affiliates
—
(48)
(31)
—
Inventories
(4,248)
(18,899)
396
(42,339)
Income tax receivable
(469)
5,140
(469)
6,424
Prepayments and other current assets
420
(302)
510
382
Accounts payable
(28,953)
29,933
(41,606)
121,144
Accrued liabilities
(50)
3,389
(2,564)
2,614
Other
250
39
116
217
Net cash used in operating activities
(27,315)
(30,051)
(3,608)
(24,178)
Investing activities:
Property and equipment additions
(4,008)
(1,089)
(5,908)
(4,783)
Proceeds from property sales
1,003
518
1,444
1,374
Net cash used in investing activities
(3,005)
(571)
(4,464)
(3,409)
Financing activities:
Borrowings under Credit Agreement
20,000
30,000
38,000
30,000
Repayments under Credit Agreement
(20,625)
(30,000)
(39,250)
(30,000)
Principal repayments of finance lease obligations
(1,671)
(1,167)
(3,247)
(2,306)
Net proceeds from sale of equity
—
283
549
283
Dividends paid on common stock
(608)
(1,058)
(1,289)
(2,126)
Net cash used in financing activities
(2,904)
(1,942)
(5,237)
(4,149)
Decrease in cash and cash equivalents, including restricted cash
(33,224)
(32,564)
(13,309)
(31,736)
Cash and cash equivalents, including restricted cash, at beginning of period
50,982
108,145
31,067
107,317
Cash and cash equivalents, including restricted cash, at end of period
