HOUSTON, Nov. 10,
2022 /PRNewswire/ -- 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 and nine month period ended September 30,
2022. The Company also declared a quarterly cash dividend of
$0.24 per common share.
Q3 2022 Financial Highlights
- Net earnings of $2.2 million, or
$0.50 per diluted common share, on
revenues of $852.9 million for the
third quarter of 2022, compared to net earnings of $1.5 million, or $0.36 per diluted common share, on revenues of
$568.2 million for the third quarter
of 2021.
- Net cash generated by operating activities in the quarter was
$40.0 million, versus $12.1 million for the third quarter of 2021. The
increase was primarily driven by changes in inventory due to
fluctuations in crude oil pricing and barrels held.
- Adjusted net earnings of $4.7
million in the quarter, or $1.06 per diluted common share, compared to
adjusted net earnings of $1.8
million, or $0.41 per diluted
common share, for the third quarter of 2021.
- Adjusted cash flow of $12.6
million for the quarter versus $7.3
million for the third quarter of 2021.
- Cash and cash equivalents position was $86.5 million at September
30, 2022, versus $97.8 million
at December 31, 2021, primarily due
to an increase in crude oil inventory barrels, due in part to
timing of customer deliveries, together with an increase in crude
oil prices.
- Enhanced financial liquidity of $123.3
million at September 30, 2022,
including cash and cash equivalents and $36.8 million available under the Company's
$60.0 million Credit Agreement.
Adjusted net earnings, adjusted earnings per diluted common
share and adjusted cash flow are non-generally accepted accounting
principle ("non-GAAP") financial measures that are defined and
reconciled in the financial tables later in this
release.
Q3 2022 Operational Highlights
- Adam's crude oil marketing subsidiary, GulfMark Energy, Inc.
("GulfMark"), marketed 91,878 barrels per day ("bpd") of crude oil,
compared to 91,941 bpd during the third quarter of 2021 and 94,876
bpd during the second quarter of 2022. GulfMark held 304,554
barrels of crude oil inventory at September 30, 2022, compared
to 259,489 barrels at December 31, 2021.
- The collective fleet of Service Transport Company ("Service
Transport"), Adams' liquid
chemicals, pressurized gases, asphalt and dry bulk transportation
subsidiary, traveled 6.78 million miles versus 6.93 million miles
during the third quarter of 2021 and 6.86 million miles during the
second quarter of 2022.
- Adams' crude oil pipeline and
storage segment's, which includes the Victoria Express Pipeline
System ("VEX Pipeline System"), throughput increased to 9,963 bpd
from 9,759 bpd for the third quarter of 2021, although representing
a decline from 13,281 bpd for the second quarter of 2022, and
terminalling volumes grew to 9,716 bpd from 9,159 bpd in the third
quarter of 2021, down from 13,704 bpd for the second quarter of
2022.
- Adams' newly added logistics
and repurposing segment, which includes the Firebird Bulk Carriers,
Inc. ("Firebird") and Phoenix Oil, Inc. ("Phoenix") businesses acquired in August 2022, had an immediate positive impact on
quarterly cash flow.
Additional Corporate Updates
- During the quarter, the Company acquired the operations of
Firebird and Phoenix and began
reporting results as logistics and repurposing. The adjusted
aggregate purchase price was approximately $40 million. The acquisition expands
Adams' footprint, includes
operating synergies, and is accretive to earnings and cash
flow.
- Subsequent to the quarter, the Company announced the repurchase
of all outstanding Adams common
shares owned by KSA Industries, Inc. and affiliates, representing
approximately 44% of the total shares outstanding. The
$70 million purchase price was funded
through cash on hand and a new term loan. Following the
transaction, the share count has decreased to 2,452,404 shares
outstanding.
- During the quarter, the Company announced that it will be
breaking ground on the new pipeline connection between the Victoria
Express Pipeline and the Max Midstream pipeline system and expects
to complete construction and place the new connection into
commercial service during the second quarter of 2023.
- During the quarter, the Company announced that Service
Transport had opened its 20th terminal located in the Pittsburgh, Pennsylvania area. This new
facility will offer Service Transport's clients additional
resources in the Northeastern United
States, providing additional opportunities for revenue and
profitability growth, while serving as a base of operations for
recruiting in the immediate area.
Kevin J. Roycraft, Adams' Chief Executive Officer, said, "We are
delighted to report continued operating and financial momentum
through the third quarter. Additionally, the recent purchase
of both Firebird and Phoenix and
the repurchase of the KSA shares significantly transforms and
strengthens the Company. Our three existing segments made
important progress on their strategic initiatives while our new
fourth segment, the new Logistics and Repurposing group, is also
off to a very strong start. The new Adams operating structure is designed to grow
profitability through strategic, disciplined operational excellence
and growth within each respective business segment, all for the
long-term benefit of our shareholders. I want to thank all of
our team members for their steadfast dedication to providing our
customers with a safe, efficient and best-in-class service
offering."
Capital Investments and Dividends
During the third quarter of 2022, the Company spent capital of
$2.0 million for tractors, trailers
and other field equipment. In addition, Adams paid dividends of $1.1 million, or $0.24 per common
share.
As part of Adams' on-going
capital allocation strategy, the Board of Directors has declared a
quarterly cash dividend for the third quarter of 2022 of
$0.24 per common share, payable on
December 16, 2022, to shareholders of
record as of December 2, 2022.
Adams has consistently paid a dividend since 1994.
Outlook
Mr. Roycraft concluded, "As we begin to think about 2023, we
look forward to further executing our strategic plan to drive
increased efficiencies across the entire organization and to
maximize shareholder value. Towards that end, our recent corporate
actions, including the Firebird/Phoenix acquisition, the repurchase of
approximately 1.4 million KSA-related shares, and the new planned
pipeline connection have set the Company up for a strong
2023. Additionally, with our new and expanded credit
agreement that we entered into in October, we continue to have a
strong financial position, which currently includes available debt
capacity of $60 million under the new
credit agreement. As in the past, we will continue to
leverage our significant operational expertise and financial
flexibility to execute on accretive acquisition opportunities
designed to prudently grow our business. Finally, we remain
focused on providing significant long-term value for our
shareholders, demonstrated by the regular return on capital through
our consistent payment of quarterly cash dividends."
Use of Non-GAAP Financial Measures
This press release and accompanying schedules includes the
non-GAAP financial measures of adjusted cash flow, adjusted net
earnings and adjusted earnings 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.
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.
Cautionary Statement Regarding Forward-Looking
Statements
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
Gary Guyton or Steven
Hooser
Three Part Advisors
(214) 442-0016
ADAMS RESOURCES
& ENERGY, INC. AND SUBSIDIARIES UNAUDITED CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS (In thousands,
except per share data)
|
|
|
|
Three Months
Ended
|
|
Nine Months
Ended
|
|
|
September
30,
|
|
September
30,
|
|
|
2022
|
|
2021
|
|
2022
|
|
2021
|
Revenues:
|
|
|
|
|
|
|
|
|
Marketing
|
|
$
814,394
|
|
$
543,228
|
|
$
2,524,465
|
|
$
1,310,343
|
Transportation
|
|
29,830
|
|
24,826
|
|
86,054
|
|
69,558
|
Pipeline and
storage
|
|
—
|
|
127
|
|
—
|
|
515
|
Logistics and
repurposing
|
|
8,677
|
|
—
|
|
8,677
|
|
—
|
Total
revenues
|
|
852,901
|
|
568,181
|
|
2,619,196
|
|
1,380,416
|
|
|
|
|
|
|
|
|
|
Costs and
expenses:
|
|
|
|
|
|
|
|
|
Marketing
|
|
807,316
|
|
537,362
|
|
2,498,474
|
|
1,285,650
|
Transportation
|
|
23,732
|
|
19,605
|
|
68,271
|
|
56,143
|
Pipeline and
storage
|
|
640
|
|
562
|
|
1,799
|
|
1,594
|
Logistics and
repurposing
|
|
7,582
|
|
—
|
|
7,582
|
|
—
|
General and
administrative
|
|
4,630
|
|
3,502
|
|
12,860
|
|
9,839
|
Depreciation and
amortization
|
|
6,008
|
|
4,849
|
|
16,109
|
|
14,703
|
Total costs and
expenses
|
|
849,908
|
|
565,880
|
|
2,605,095
|
|
1,367,929
|
|
|
|
|
|
|
|
|
|
Operating
earnings
|
|
2,993
|
|
2,301
|
|
14,101
|
|
12,487
|
|
|
|
|
|
|
|
|
|
Other income
(expense):
|
|
|
|
|
|
|
|
|
Interest and other
income
|
|
338
|
|
37
|
|
665
|
|
233
|
Interest
expense
|
|
(119)
|
|
(178)
|
|
(369)
|
|
(602)
|
Total other (expense)
income, net
|
|
219
|
|
(141)
|
|
296
|
|
(369)
|
|
|
|
|
|
|
|
|
|
Earnings before
income taxes
|
|
3,212
|
|
2,160
|
|
14,397
|
|
12,118
|
Income tax
provision
|
|
(1,022)
|
|
(614)
|
|
(3,641)
|
|
(3,055)
|
|
|
|
|
|
|
|
|
|
Net
earnings
|
|
$
2,190
|
|
$
1,546
|
|
$
10,756
|
|
$
9,063
|
|
|
|
|
|
|
|
|
|
Earnings per
share:
|
|
|
|
|
|
|
|
|
Basic net earnings per
common share
|
|
$
0.50
|
|
$
0.36
|
|
$
2.46
|
|
$
2.13
|
Diluted net earnings
per common share
|
|
$
0.50
|
|
$
0.36
|
|
$
2.44
|
|
$
2.12
|
|
|
|
|
|
|
|
|
|
Dividends per common
share
|
|
$
0.24
|
|
$
0.24
|
|
$
0.72
|
|
$
0.72
|
|
|
|
|
|
|
|
|
|
ADAMS RESOURCES
& ENERGY, INC. AND SUBSIDIARIES UNAUDITED CONDENSED
CONSOLIDATED BALANCE SHEETS (In thousands)
|
|
|
|
September
30,
|
|
December
31,
|
|
|
2022
|
|
2021
|
ASSETS
|
|
|
|
|
Current
assets:
|
|
|
|
|
Cash and cash
equivalents
|
|
$
86,510
|
|
$
97,825
|
Restricted
cash
|
|
7,404
|
|
9,492
|
Accounts receivable,
net of allowance for doubtful accounts
|
|
198,790
|
|
137,789
|
Accounts receivable –
related party
|
|
5
|
|
2
|
Inventory
|
|
29,844
|
|
18,942
|
Derivative
assets
|
|
2,036
|
|
347
|
Income tax
receivable
|
|
—
|
|
6,424
|
Prepayments and other
current assets
|
|
2,058
|
|
2,389
|
Total current
assets
|
|
326,647
|
|
273,210
|
|
|
|
|
|
Property and equipment,
net
|
|
107,991
|
|
88,036
|
Operating lease
right-of-use assets, net
|
|
7,906
|
|
7,113
|
Intangible assets,
net
|
|
10,379
|
|
3,317
|
Goodwill
|
|
5,755
|
|
—
|
Other assets
|
|
3,445
|
|
3,027
|
Total
assets
|
|
$
462,123
|
|
$
374,703
|
|
|
|
|
|
LIABILITIES AND
SHAREHOLDERS' EQUITY
|
|
|
|
|
Current
liabilities:
|
|
|
|
|
Accounts
payable
|
|
$
217,123
|
|
$
168,224
|
Accounts payable –
related party
|
|
20
|
|
—
|
Derivative
liabilities
|
|
129
|
|
324
|
Current portion of
finance lease obligations
|
|
4,263
|
|
3,663
|
Current portion of
operating lease liabilities
|
|
2,724
|
|
2,178
|
Other current
liabilities
|
|
20,972
|
|
11,622
|
Total current
liabilities
|
|
245,231
|
|
186,011
|
Other long-term
liabilities:
|
|
|
|
|
Long-term
debt
|
|
15,000
|
|
—
|
Asset retirement
obligations
|
|
2,474
|
|
2,376
|
Finance lease
obligations
|
|
9,934
|
|
9,672
|
Operating lease
liabilities
|
|
5,179
|
|
4,938
|
Deferred taxes and
other liabilities
|
|
15,054
|
|
11,320
|
Total
liabilities
|
|
292,872
|
|
214,317
|
|
|
|
|
|
Commitments and
contingencies
|
|
|
|
|
|
|
|
|
|
Shareholders'
equity
|
|
169,251
|
|
160,386
|
Total liabilities and
shareholders' equity
|
|
$
462,123
|
|
$
374,703
|
ADAMS RESOURCES
& ENERGY, INC. AND SUBSIDIARIES UNAUDITED CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS (In
thousands)
|
|
|
|
Nine Months
Ended
|
|
|
September
30,
|
|
|
2022
|
|
2021
|
Operating
activities:
|
|
|
|
|
Net earnings
|
|
$
10,756
|
|
$
9,063
|
Adjustments to
reconcile net earnings to net cash
|
|
|
|
|
provided by operating
activities:
|
|
|
|
|
Depreciation and
amortization
|
|
16,109
|
|
14,703
|
Gains on sales of
property
|
|
(1,709)
|
|
(532)
|
Provision for doubtful
accounts
|
|
(20)
|
|
(3)
|
Stock-based
compensation expense
|
|
712
|
|
641
|
Deferred income
taxes
|
|
(1,761)
|
|
(1,664)
|
Net change in fair
value contracts
|
|
(1,884)
|
|
(32)
|
Changes in assets
and liabilities:
|
|
|
|
|
Accounts
receivable
|
|
(56,060)
|
|
(30,367)
|
Accounts
receivable/payable, affiliates
|
|
17
|
|
(5)
|
Inventories
|
|
(10,259)
|
|
(5,026)
|
Income tax
receivable
|
|
6,424
|
|
7,099
|
Prepayments and other
current assets
|
|
468
|
|
1,455
|
Accounts
payable
|
|
46,925
|
|
68,766
|
Accrued
liabilities
|
|
6,489
|
|
770
|
Other
|
|
(375)
|
|
(636)
|
Net cash provided by
operating activities
|
|
15,832
|
|
64,232
|
|
|
|
|
|
Investing
activities:
|
|
|
|
|
Property and equipment
additions
|
|
(6,797)
|
|
(9,929)
|
Acquisition of Firebird
and Phoenix, net of cash acquired
|
|
(33,590)
|
|
—
|
Proceeds from property
sales
|
|
2,209
|
|
1,886
|
Insurance and state
collateral refunds
|
|
331
|
|
—
|
Net cash used in
investing activities
|
|
(37,847)
|
|
(8,043)
|
|
|
|
|
|
Financing
activities:
|
|
|
|
|
Borrowings under Credit
Agreement
|
|
45,000
|
|
8,000
|
Repayments under Credit
Agreement
|
|
(30,000)
|
|
—
|
Principal repayments of
finance lease obligations
|
|
(3,491)
|
|
(3,240)
|
Payment for financed
portion of VEX acquisition
|
|
—
|
|
(10,000)
|
Net proceeds from sale
of equity
|
|
283
|
|
2,504
|
Dividends paid on
common stock
|
|
(3,180)
|
|
(3,096)
|
Net cash provided by
(used in) financing activities
|
|
8,612
|
|
(5,832)
|
|
|
|
|
|
(Decrease) Increase
in cash and cash equivalents, including restricted
cash
|
|
(13,403)
|
|
50,357
|
Cash and cash
equivalents, including restricted cash, at beginning of
period
|
|
107,317
|
|
52,065
|
Cash and cash
equivalents, including restricted cash, at end of
period
|
|
$
93,914
|
|
$
102,422
|
ADAMS RESOURCES
& ENERGY, INC. AND SUBSIDIARIES NON-GAAP
RECONCILIATIONS (In thousands, except per share
data)
|
|
|
|
Three Months
Ended
|
|
Nine Months
Ended
|
|
|
September
30,
|
|
September
30,
|
|
|
2022
|
|
2021
|
|
2022
|
|
2021
|
Reconciliation of
Adjusted Cash Flow to Net Earnings:
|
|
|
|
|
|
|
|
|
Net earnings
|
|
$
2,190
|
|
$
1,546
|
|
$
10,756
|
|
$
9,063
|
Add
(subtract):
|
|
|
|
|
|
|
|
|
Income tax
provision
|
|
1,022
|
|
614
|
|
3,641
|
|
3,055
|
Depreciation and
amortization
|
|
6,008
|
|
4,849
|
|
16,109
|
|
14,703
|
Gains on sales of
property
|
|
(771)
|
|
(267)
|
|
(1,709)
|
|
(532)
|
Stock-based
compensation expense
|
|
254
|
|
224
|
|
712
|
|
641
|
Inventory liquidation
gains
|
|
—
|
|
—
|
|
(2,062)
|
|
(10,282)
|
Inventory valuation
losses
|
|
5,122
|
|
311
|
|
—
|
|
—
|
Net change in fair
value contracts
|
|
(1,254)
|
|
(7)
|
|
(1,884)
|
|
(32)
|
Adjusted cash
flow
|
|
$
12,571
|
|
$
7,270
|
|
$
25,563
|
|
$
16,616
|
|
|
Three Months
Ended
|
|
Nine Months
Ended
|
|
|
September
30,
|
|
September
30,
|
|
|
2022
|
|
2021
|
|
2022
|
|
2021
|
Adjusted net
earnings and earnings
|
|
|
|
|
|
|
|
|
per common share
(Non-GAAP):
|
|
|
|
|
|
|
|
|
Net earnings
|
|
$
2,190
|
|
$
1,546
|
|
$
10,756
|
|
$
9,063
|
Add
(subtract):
|
|
|
|
|
|
|
|
|
Gains on sales of
property
|
|
(771)
|
|
(267)
|
|
(1,709)
|
|
(532)
|
Stock-based
compensation expense
|
|
254
|
|
224
|
|
712
|
|
641
|
Net change in fair
value contracts
|
|
(1,254)
|
|
(7)
|
|
(1,884)
|
|
(32)
|
Inventory liquidation
gains
|
|
—
|
|
—
|
|
(2,062)
|
|
(10,282)
|
Inventory valuation
losses
|
|
5,122
|
|
311
|
|
—
|
|
—
|
Tax effect of
adjustments to earnings (losses)
|
|
(835)
|
|
(55)
|
|
907
|
|
2,142
|
Adjusted net
earnings
|
|
$
4,706
|
|
$
1,752
|
|
$
6,720
|
|
$
1,000
|
|
|
|
|
|
|
|
|
|
Adjusted earnings per
common share
|
|
$
1.06
|
|
$
0.41
|
|
$
1.53
|
|
$
0.23
|
ADAMS RESOURCES
& ENERGY, INC. AND SUBSIDIARIES NON-GAAP
RECONCILIATIONS (In thousands)
|
|
|
|
Three Months
Ended
|
|
Nine Months
Ended
|
|
|
September
30,
|
|
September
30,
|
|
|
2022
|
|
2021
|
|
2022
|
|
2021
|
Reconciliation of
Adjusted Cash Flow to Net Cash
Provided by Operating Activities:
|
|
|
|
|
|
|
Net cash provided by
operating activities
|
|
$
40,010
|
|
$
12,125
|
|
$
15,832
|
|
$
64,232
|
Add
(subtract):
|
|
|
|
|
|
|
|
|
Income tax
provision
|
|
1,022
|
|
614
|
|
3,641
|
|
3,055
|
Deferred income
taxes
|
|
1,429
|
|
28
|
|
1,761
|
|
1,664
|
Provision for doubtful
accounts
|
|
12
|
|
1
|
|
20
|
|
3
|
Inventory liquidation
gains
|
|
—
|
|
—
|
|
(2,062)
|
|
(10,282)
|
Inventory valuation
losses
|
|
5,122
|
|
311
|
|
—
|
|
—
|
Changes in assets and
liabilities
|
|
(35,024)
|
|
(5,809)
|
|
6,371
|
|
(42,056)
|
Adjusted cash
flow
|
|
$
12,571
|
|
$
7,270
|
|
$
25,563
|
|
$
16,616
|
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SOURCE Adams Resources & Energy, Inc.