ADAMS RESOURCES & ENERGY, INC. ANNOUNCES THIRD QUARTER 2023 RESULTS AND DECLARES QUARTERLY DIVIDEND
- Adams Resources & Energy, Inc. reported a total revenue of $760.6 million for Q3 2023, showcasing a strong financial performance.
- The Company declared a quarterly cash dividend of $0.24 per common share, demonstrating a commitment to delivering long-term value to shareholders.
- The logistics and repurposing segment had a positive impact on quarterly cash flow, indicating potential for future growth and profitability.
- Net cash provided by operating activities decreased by $28.6 million from the prior-year quarter, which may raise concerns about the Company's ability to maintain strong cash flow.
- The challenges facing the GulfMark and Service Transport segments are expected to remain in place for the next few months, which could impact future financial performance.
Q3 2023 Financial Summary
- Total revenue of
, versus$760.6 million for the third quarter of 2022.$852.9 million - Net earnings of
, or$2.3 million per diluted common share, compared to earnings of$0.88 , or$0.8 million per common share for the second quarter of 2023 and net earnings of$0.32 , or$2.2 million per diluted common share for the third quarter of 2022.$0.50 - Net cash provided by operating activities of
for the third quarter of 2023, a decrease of$11.4 million 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.$28.6 million - Adjusted cash flow of
for the third quarter of 2023, compared to$4.8 million for the second quarter of 2023 and$7.1 million in the prior-year.$12.6 million - Cash and cash equivalents were
as of September 30, 2023, versus$16.3 million at June 30, 2023, primarily due to the timing of receipts and early payments from crude oil customers.$9.0 million - Liquidity of
at September 30, 2023, versus$55.9 million at June 30, 2023.$48.6 million - Paid dividends totaling
per share during the third quarter of 2023. The Company has consistently paid a dividend since 1994.$0.24
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 92,556 barrels per day ("bpd") of crude oil during the third quarter of 2023, compared to 91,878 bpd during the third quarter of 2022 and 92,152 bpd during the second quarter of 2023.
- The collective fleet of Service Transport Company ("Service Transport"), Adams' liquid chemicals, pressurized gases, asphalt and dry bulk transportation subsidiary, traveled 6.51 million miles during the third quarter of 2023, versus 6.78 million miles during the third quarter of 2022 and 6.30 million miles during the second quarter of 2023.
- Adams' crude oil pipeline and storage segment, which includes the Victoria Express Pipeline System ("VEX Pipeline System"), throughput was 8,548 bpd for the third quarter of 2023, compared to 9,963 bpd for the third quarter of 2022 and 8,560 bpd for the second quarter of 2023, and terminalling volumes were 9,350 bpd for the third quarter of 2023, compared to 9,716 bpd in the third quarter of 2022, and 10,785 bpd for the second 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 307,175 barrels of crude oil inventory at September 30, 2023, compared to 328,562 barrels at December 31, 2022.
"Our performance in the third quarter showcased several encouraging highlights in a very challenging environment. Our crude oil marketing segment demonstrated a sequential increase in operating income despite a number of headwinds," said Kevin J. Roycraft, Chief Executive Officer of Adams. "Moreover, we increased our cash balance and liquidity and nearly tripled our net income on a sequential basis."
Capital Investments and Dividends
During the third quarter of 2023, the Company had capital expenditures of
As part of Adams' on-going capital allocation strategy, the Board of Directors declared a quarterly cash dividend for the third quarter of 2023 of
Outlook
"We believe the challenges facing our GulfMark and Service Transport segments are expected to remain in place for the next few months, with a gradual recovery to begin late in the first half of 2024," Mr. Roycraft continued. "Our Company remains in a very strong financial position to navigate the continued macroeconomic challenges affecting our industries. We are well-prepared to deliver meaningful performance when our key markets begin to improve. In addition, 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 third quarter results on Thursday, November 9, 2023 at 9:00 a.m. ET (8:00 a.m. CT). To participate in the live conference call, dial 1-844-413-3976 (Toll-Free) within the
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
John Beisler or Steven Hooser
Three Part Advisors
(817) 310-8776
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, | |||||||
2023 | 2022 | 2023 | 2022 | |||||
Revenues: | ||||||||
Marketing | $ 719,925 | $ 814,394 | $ 1,913,673 | $ 2,524,465 | ||||
Transportation | 24,206 | 29,830 | 75,103 | 86,054 | ||||
Pipeline and storage | 59 | — | 308 | — | ||||
Logistics and repurposing | 16,424 | 8,677 | 46,458 | 8,677 | ||||
Total revenues | 760,614 | 852,901 | 2,035,542 | 2,619,196 | ||||
Costs and expenses: | ||||||||
Marketing | 710,169 | 807,316 | 1,894,416 | 2,498,474 | ||||
Transportation | 19,642 | 23,732 | 62,315 | 68,271 | ||||
Pipeline and storage | 659 | 640 | 2,350 | 1,799 | ||||
Logistics and repurposing | 15,121 | 7,582 | 41,448 | 7,582 | ||||
General and administrative | 4,162 | 4,630 | 10,649 | 12,860 | ||||
Depreciation and amortization | 6,936 | 6,008 | 21,289 | 16,109 | ||||
Total costs and expenses | 756,689 | 849,908 | 2,032,467 | 2,605,095 | ||||
Operating earnings | 3,925 | 2,993 | 3,075 | 14,101 | ||||
Other income (expense): | ||||||||
Interest and other income | 119 | 338 | 893 | 665 | ||||
Interest expense | (1,027) | (119) | (2,525) | (369) | ||||
Total other (expense) income, net | (908) | 219 | (1,632) | 296 | ||||
Earnings before income taxes | 3,017 | 3,212 | 1,443 | 14,397 | ||||
Income tax provision | (759) | (1,022) | (357) | (3,641) | ||||
Net earnings | $ 2,258 | $ 2,190 | $ 1,086 | $ 10,756 | ||||
Earnings per share: | ||||||||
Basic net earnings per common share | $ 0.89 | $ 0.50 | $ 0.43 | $ 2.46 | ||||
Diluted net earnings per common share | $ 0.88 | $ 0.50 | $ 0.42 | $ 2.44 | ||||
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, | |||
2023 | 2022 | |||
ASSETS | ||||
Current assets: | ||||
Cash and cash equivalents | $ 16,313 | $ 20,532 | ||
Restricted cash | 8,575 | 10,535 | ||
Accounts receivable, net of allowance for doubtful accounts | 219,263 | 189,039 | ||
Inventory | 27,650 | 26,919 | ||
Derivative assets | 5 | — | ||
Income tax receivable | 510 | — | ||
Prepayments and other current assets | 2,470 | 3,118 | ||
Total current assets | 274,786 | 250,143 | ||
Property and equipment, net | 111,042 | 106,425 | ||
Operating lease right-of-use assets, net | 6,212 | 7,720 | ||
Intangible assets, net | 8,407 | 9,745 | ||
Goodwill | 6,673 | 6,428 | ||
Other assets | 3,475 | 3,698 | ||
Total assets | $ 410,595 | $ 384,159 | ||
LIABILITIES AND SHAREHOLDERS' EQUITY | ||||
Current liabilities: | ||||
Accounts payable | $ 226,613 | $ 204,391 | ||
Accounts payable – related party | — | 31 | ||
Derivative liabilities | — | 330 | ||
Current portion of finance lease obligations | 6,863 | 4,382 | ||
Current portion of operating lease liabilities | 2,769 | 2,712 | ||
Current portion of long-term debt | 2,500 | — | ||
Other current liabilities | 13,856 | 19,214 | ||
Total current liabilities | 252,601 | 231,060 | ||
Other long-term liabilities: | ||||
Long-term debt | 20,000 | 24,375 | ||
Asset retirement obligations | 2,499 | 2,459 | ||
Finance lease obligations | 22,292 | 12,085 | ||
Operating lease liabilities | 3,446 | 5,007 | ||
Deferred taxes and other liabilities | 15,696 | 15,996 | ||
Total liabilities | 316,534 | 290,982 | ||
Commitments and contingencies | ||||
Shareholders' equity | 94,061 | 93,177 | ||
Total liabilities and shareholders' equity | $ 410,595 | $ 384,159 |
ADAMS RESOURCES & ENERGY, INC. AND SUBSIDIARIES UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands) | |||||||
Three Months Ended | Nine Months Ended | ||||||
September 30, | September 30, | ||||||
2023 | 2022 | 2023 | 2022 | ||||
Operating activities: | |||||||
Net earnings | $ 2,258 | $ 2,190 | $ 1,086 | $ 10,756 | |||
Adjustments to reconcile net earnings to net cash | |||||||
provided by operating activities: | |||||||
Depreciation and amortization | 6,936 | 6,008 | 21,289 | 16,109 | |||
Gains on sales of property | (663) | (771) | (1,429) | (1,709) | |||
Provision for doubtful accounts | 39 | (12) | 29 | (20) | |||
Stock-based compensation expense | 389 | 254 | 1,044 | 712 | |||
Change in contingent consideration liability | — | — | (2,566) | — | |||
Deferred income taxes | 773 | (1,429) | 3 | (1,761) | |||
Net change in fair value contracts | (35) | (1,254) | (335) | (1,884) | |||
Changes in assets and liabilities: | |||||||
Accounts receivable | (60,869) | 73,777 | (30,253) | (56,060) | |||
Accounts receivable/payable, affiliates | — | 17 | (31) | 17 | |||
Inventories | (1,127) | 32,080 | (731) | (10,259) | |||
Income tax receivable | (41) | — | (510) | 6,424 | |||
Prepayments and other current assets | 138 | 86 | 648 | 468 | |||
Accounts payable | 63,845 | (74,219) | 22,239 | 46,925 | |||
Accrued liabilities | (145) | 3,875 | (2,709) | 6,489 | |||
Other | (52) | (592) | 64 | (375) | |||
Net cash provided by operating activities | 11,446 | 40,010 | 7,838 | 15,832 | |||
Investing activities: | |||||||
Property and equipment additions | (3,009) | (2,014) | (8,917) | (6,797) | |||
Acquisition of Firebird and | — | (33,590) | — | (33,590) | |||
Proceeds from property sales | 1,634 | 835 | 3,078 | 2,209 | |||
Insurance and state collateral refunds | — | 331 | — | 331 | |||
Net cash used in investing activities | (1,375) | (34,438) | (5,839) | (37,847) | |||
Financing activities: | |||||||
Borrowings under Credit Agreement | 38,000 | 15,000 | 76,000 | 45,000 | |||
Repayments under Credit Agreement | (38,625) | — | (77,875) | (30,000) | |||
Principal repayments of finance lease obligations | (1,697) | (1,185) | (4,944) | (3,491) | |||
Net proceeds from sale of equity | — | — | 549 | 283 | |||
Dividends paid on common stock | (619) | (1,054) | (1,908) | (3,180) | |||
Net cash (used in) provided by financing activities | (2,941) | 12,761 | (8,178) | 8,612 | |||
Increase (Decrease) in cash and cash equivalents, including restricted cash | 7,130 | 18,333 | (6,179) | (13,403) | |||
Cash and cash equivalents, including restricted cash, at beginning of period | 17,758 | 75,581 | 31,067 | 107,317 | |||
Cash and cash equivalents, including restricted cash, at end of period | $ 24,888 | $ 93,914 | $ 24,888 | $ 93,914 |
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, | |||||||
2023 | 2022 | 2023 | 2022 | |||||
Reconciliation of Adjusted Cash Flow to Net Earnings: | ||||||||
Net earnings | $ 2,258 | $ 2,190 | $ 1,086 | $ 10,756 | ||||
Add (subtract): | ||||||||
Income tax provision | 759 | 1,022 | 357 | 3,641 | ||||
Depreciation and amortization | 6,936 | 6,008 | 21,289 | 16,109 | ||||
Gains on sales of property | (663) | (771) | (1,429) | (1,709) | ||||
Stock-based compensation expense | 389 | 254 | 1,044 | 712 | ||||
Change in contingent consideration liability | — | — | (2,566) | — | ||||
Inventory liquidation gains | (4,890) | — | (2,922) | (2,062) | ||||
Inventory valuation losses | — | 5,122 | — | — | ||||
Net change in fair value contracts | (35) | (1,254) | (335) | (1,884) | ||||
Adjusted cash flow | $ 4,754 | $ 12,571 | $ 16,524 | $ 25,563 | ||||
Reconciliation of Adjusted net earnings (losses) and earnings | ||||||||
(losses) per common share (Non-GAAP) to Net Earnings: | ||||||||
Net earnings | $ 2,258 | $ 2,190 | $ 1,086 | $ 10,756 | ||||
Add (subtract): | ||||||||
Gains on sales of property | (663) | (771) | (1,429) | (1,709) | ||||
Stock-based compensation expense | 389 | 254 | 1,044 | 712 | ||||
Change in contingent consideration liability | — | — | (2,566) | — | ||||
Net change in fair value contracts | (35) | (1,254) | (335) | (1,884) | ||||
Inventory liquidation gains | (4,890) | — | (2,922) | (2,062) | ||||
Inventory valuation losses | — | 5,122 | — | — | ||||
Tax effect of adjustments to earnings (losses) | 1,092 | (704) | 1,304 | 1,038 | ||||
Adjusted net (losses) earnings | $ (1,849) | $ 4,837 | $ (3,818) | $ 6,851 | ||||
Adjusted (losses) earnings per common share | $ (0.72) | $ 1.09 | $ (1.49) | $ 1.55 | ||||
Reconciliation of Adjusted Cash Flow to Net Cash | ||||||||
Provided By Operating Activities: | ||||||||
Net cash provided by operating activities | $ 11,446 | $ 40,010 | $ 7,838 | $ 15,832 | ||||
Add (subtract): | ||||||||
Income tax provision (benefit) | 759 | 1,022 | 357 | 3,641 | ||||
Deferred income taxes | (773) | 1,429 | (3) | 1,761 | ||||
Provision for doubtful accounts | (39) | 12 | (29) | 20 | ||||
Inventory liquidation gains | (4,890) | — | (2,922) | (2,062) | ||||
Inventory valuation losses | — | 5,122 | — | — | ||||
Changes in assets and liabilities | (1,749) | (35,024) | 11,283 | 6,371 | ||||
Adjusted cash flow | $ 4,754 | $ 12,571 | $ 16,524 | $ 25,563 |
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SOURCE Adams Resources & Energy, Inc.
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