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Adams Resources & Energy, Inc. Announces Results For Third Quarter 2020 And Declares Quarterly Dividend

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HOUSTON, Nov. 5, 2020 /PRNewswire/ -- Adams Resources & Energy, Inc. (NYSE:AE) ("Adams" or the "Company") today announced operational and financial results for the three months ended September 30, 2020 and declared a quarterly cash dividend of $0.24 per common share. 

  • Reported net earnings of $3.1 million, or $0.72 per diluted common share, on revenues of $266.9 million for the third quarter of 2020, compared to net earnings of $0.6 million, or $0.15 per diluted common share, on revenues of $450.3 million for the third quarter of 2019.
  • Reported net cash used in operating activities of $19.6 million for the third quarter of 2020, compared to net cash provided by operating activities of $9.4 million for the third quarter of 2019. The decrease was primarily driven by changes in working capital due to a reduction in the market price of crude oil.
  • Reported adjusted net earnings of $2.5 million, or $0.60 per diluted common share, for the third quarter of 2020, compared to adjusted net earnings of $1.6 million, or $0.38 per diluted common share, for the third quarter of 2019.
  • Reported adjusted cash flow of $10.3 million for the third quarter of 2020, versus $6.5 million for the third quarter of 2019.

Adjusted net (losses) earnings, adjusted (losses) 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 below. 

Additional Highlights for Q3 2020

  • Maintained strong financial flexibility at September 30, 2020, including $53.1 million in cash and cash equivalents. Cash and cash equivalents were $70.2 million at June 30, 2020.
  • Adam's crude oil marketing subsidiary, GulfMark Energy, Inc. ("GulfMark"), marketed approximately 90,896 barrels per day ("bpd") of crude oil during the third quarter of 2020, compared to 105,801 bpd during the third quarter of 2019 and 81,152 bpd during the second quarter of 2020. GulfMark held 411,380 barrels of crude oil inventory at September 30, 2020, compared to 519,927 barrels at June 30, 2020.
  • The collective fleet of Service Transport Company ("Service Transport") traveled approximately 7.625 million miles during the third quarter of 2020, compared to 5.152 million miles during the third quarter of 2019 and 3.890 million miles during the second quarter of 2020.

Kevin J. Roycraft, Adams' Chief Executive Officer, commented, "Our third quarter benefited from a significant uptick in activity levels from this year's second quarter in both of our businesses.  The result was sequential quarterly revenue growth of 75% and, more importantly, a more than five-fold increase in adjusted cash flow.  Our third quarter financial performance is a direct result of the efforts of our employees, and I want to thank them for their continued hard work and dedication as we focus on safely serving the needs of our customers during these challenging times." 

"At GulfMark, we saw improved topline driven by a 12% increase in marketed volumes along with strengthening crude pricing from the second quarter.  GulfMark's third quarter results also benefited from the cost and operational efficiency initiatives we put in place in the first half of the year to help offset the impact of reduced crude oil demand due to the COVID-19 pandemic."          

"Substantially contributing to Service Transport's sequential quarterly revenue growth of almost 80% was the impact of our recent purchase of assets from CTL Transportation.  With the closing of the transaction on June 26, we grew our collective fleet of tractors and trailers by more than 50%, as well as expanded our footprint of operations into important markets in Florida, Georgia, Illinois, Missouri and Ohio." 

Capital Investments and Dividends

During the third quarter of 2020, the Company spent capital of $0.7 million for leasehold improvements and other equipment.  In addition, Adams paid dividends of $1.0 million ($0.24 per common share).    

Adams' Board of Directors has declared a quarterly cash dividend for the third quarter of 2020 in the amount of $0.24 per common share, payable on December 18, 2020 to shareholders of record as of December 4, 2020.  Adams' has consistently paid a dividend since 1994, or more than 25 years.    

Outlook

Mr. Roycraft concluded, "As we look to the remainder of the year and into 2021, we believe both of our businesses are well positioned for success despite the continued market volatility as a result of the ongoing COVID-19 pandemic.  Supporting our view are the two strategic M&A transactions we recently executed that significantly enhance and expand our service offerings and footprint of operations."

"The integration of the assets of CTL Transportation into Service Transport's business has gone very well, and we look forward to leveraging the opportunities provided by our entrance into five new strategic markets.  We are also excited about GulfMark's recently completed acquisition of the VEX Pipeline System, which includes a 90,000 barrel per day capacity crude oil and condensate pipeline that connects the heart of the Eagle Ford Basin to the Gulf Coast waterborne market through two terminals, along with 350,000 barrels of above ground storage and two eight bay truck offload stations.  In addition, the acquisition significantly enhances our position at the Port of Victoria where we now control 450,000 barrels of storage with three docks.  The VEX Pipeline System has been key to GulfMark's crude oil supply and marketing business, and we look forward to leveraging our expanded midstream offerings to better serve our end-user markets along the Gulf Coast." 

"While our recent expansion initiatives are key milestones, as important to our long-term success is our strong balance sheet.  Having financial flexibility is critical, especially in today's environment, and affords our first-class group of employees the ability to remain solely focused on providing our customers unparalleled service quality and reliability."

Use of Non-GAAP Financial Measures

This press release and accompanying schedules includes the non-GAAP financial measures of adjusted cash flow, adjusted net (losses) earnings and adjusted (losses) 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.  Our 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 we do.  The non-GAAP financial measures are defined and reconciled in the financial tables below. 

About Adams Resources & Energy, Inc.

Adams Resources & Energy, Inc. is primarily engaged in the business of crude oil marketing, transportation and storage, tank truck transportation of liquid chemicals and dry bulk through its two subsidiaries, GulfMark Energy, Inc. and Service Transport Company, respectively.  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, 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.

Contact 

Tracy E. Ohmart
EVP, Chief Financial Officer
tohmart@adamsresources.com
(713) 881-3609

 

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,



2020


2019


2020


2019

Revenues:









Marketing


$

245,184



$

434,609



$

722,546



$

1,331,410


Transportation


21,720



15,698



50,121



48,498


Total revenues


266,904



450,307



772,667



1,379,908











Costs and expenses:









Marketing


237,479



429,507



721,798



1,313,822


Transportation


17,105



13,365



41,178



40,902


General and administrative


1,405



2,739



7,030



8,005


Depreciation and amortization


4,859



4,393



13,610



12,266


Total costs and expenses


260,848



450,004



783,616



1,374,995











Operating earnings (losses)


6,056



303



(10,949)



4,913











Other income (expense):









Gain on dissolution of investment








573


Interest income


105



758



614



2,145


Interest expense


(70)



(242)



(288)



(424)


Total other income (expense), net


35



516



326



2,294











Earnings (losses) before income taxes


6,091



819



(10,623)



7,207


Income tax (provision) benefit


(3,018)



(179)



5,772



(1,653)











Net (losses) earnings


$

3,073



$

640



$

(4,851)



$

5,554











Earnings (losses) per share:









Basic net earnings (losses) per common share


$

0.72



$

0.15



$

(1.14)



$

1.31


Diluted net earnings (losses) per common share


$

0.72



$

0.15



$

(1.14)



$

1.31











Dividends per common share


$

0.24



$

0.24



$

0.72



$

0.70


 

ADAMS RESOURCES & ENERGY, INC. AND SUBSIDIARIES

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands)




September 30,


December 31,



2020


2019

ASSETS





Current assets:





Cash and cash equivalents


$

53,106



$

112,994


Restricted cash


4,865



9,261


Accounts receivable, net of allowance for doubtful accounts


94,654



94,534


Inventory


15,942



26,407


Derivative assets


3




Income tax receivable


7,054



2,569


Prepayments and other current assets


1,417



1,559


Total current assets


177,041



247,324







Property and equipment, net


64,469



69,046


Operating lease right-of-use assets, net


8,453



9,576


Intangible assets, net


4,304



1,597


Cash deposits and other assets


2,193



3,299


Total assets


$

256,460



$

330,842







LIABILITIES AND SHAREHOLDERS' EQUITY





Current liabilities:





Accounts payable


$

76,407



$

147,851


Accounts payable – related party


158



5


Current portion of finance lease obligations


2,505



2,167


Current portion of operating lease liabilities


2,137



2,252


Other current liabilities


11,687



7,302


Total current liabilities


92,894



159,577


Other long-term liabilities:





Asset retirement obligations


1,610



1,573


Finance lease obligations


4,011



4,376


Operating lease liabilities


6,314



7,323


Deferred taxes and other liabilities


7,547



6,352


Total liabilities


112,376



179,201







Commitments and contingencies










Shareholders' equity


144,084



151,641


Total liabilities and shareholders' equity


$

256,460



$

330,842


 

ADAMS RESOURCES & ENERGY, INC. AND SUBSIDIARIES

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)




Nine Months Ended



September 30,



2020


2019

Operating activities:





Net (losses) earnings


$

(4,851)



$

5,554


Adjustments to reconcile net (losses) earnings to net cash





(used in) provided by operating activities:





Depreciation and amortization


13,610



12,266


Gains on sales of property


(985)



(1,386)


Provision for doubtful accounts


(27)



(36)


Stock-based compensation expense


453



352


Deferred income taxes


(1,503)



1,493


Net change in fair value contracts


(3)



20


Gain on dissolution of AREC




(573)


Changes in assets and liabilities:





Accounts receivable


(93)



8,520


Accounts receivable/payable, affiliates


153



(23)


Inventories


10,465



(2,121)


Income tax receivable


(1,782)



(135)


Prepayments and other current assets


142



166


Accounts payable


(70,082)



13,613


Accrued liabilities


4,396



4,561


Other


17



871


Net cash (used in) provided by operating activities


(50,090)



43,142







Investing activities:





Property and equipment additions


(3,589)



(25,425)


Asset acquisition


(9,163)



(5,624)


Proceeds from property sales


2,282



2,853


Proceeds from dissolution of AREC




998


Insurance and state collateral refunds


1,127



750


Net cash used in investing activities


(9,343)



(26,448)







Financing activities:





Principal repayments of finance lease obligations


(1,677)



(1,171)


Payment of contingent consideration liability


(111)




Dividends paid on common stock


(3,063)



(2,960)


Net cash used in financing activities


(4,851)



(4,131)







(Decrease) Increase in cash and cash equivalents, including restricted cash


(64,284)



12,563


Cash and cash equivalents, including restricted cash, at beginning of period


122,255



117,066


Cash and cash equivalents, including restricted cash, at end of period


$

57,971



$

129,629


 

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,



2020


2019


2020


2019

Reconciliation of Adjusted Cash Flow to
   Net Earnings (Losses):









Net earnings (losses)


$

3,073



$

640



$

(4,851)



$

5,554


Add (subtract):









Income tax provision (benefit)


3,018



179



(5,772)



1,653


Depreciation and amortization


4,859



4,393



13,610



12,266


Gains on sales of property


(845)



(952)



(985)



(1,386)


Gain on dissolution of AREC








(573)


Stock-based compensation expense


149



155



453



352


Early retirement and terminations costs






431




Inventory liquidation gains








(1,459)


Inventory valuation losses


12



2,051



18,196




Net change in fair value contracts


9



1



(3)



20


Adjusted cash flow


$

10,275



$

6,467



$

21,079



$

16,427





Three Months Ended


Nine Months Ended



September 30,


September 30,



2020


2019


2020


2019

Adjusted net earnings and earnings
  per common share (Non-GAAP):









Net earnings (losses)


$

3,073



$

640



$

(4,851)



$

5,554


Add (subtract):









Gain on dissolution of AREC








(573)


Gains on sales of property


(845)



(952)



(985)



(1,386)


Stock-based compensation expense


149



155



453



352


Early retirement and terminations costs






431




Net change in fair value contracts


9



1



(3)



20


Inventory liquidation gains








(1,459)


Inventory valuation losses


12



2,051



18,196




Tax effect of adjustments to earnings (losses)


142



(264)



(3,799)



639


Adjusted net earnings


$

2,540



$

1,631



$

9,442



$

3,147











Adjusted earnings per common share


$

0.60



$

0.38



$

2.23



$

0.74


 

ADAMS RESOURCES & ENERGY, INC. AND SUBSIDIARIES

NON-GAAP RECONCILIATIONS

(In thousands)




Three Months Ended


Nine Months Ended



September 30,


September 30,



2020


2019


2020


2019

Reconciliation of Adjusted Cash Flow to Net Cash
   (Used in) Provided by Operating Activities:







Net cash (used in) provided by operating activities


$

(19,631)



$

9,394



$

(50,090)



$

43,142


Add (subtract):









Income tax provision (benefit)


3,018



179



(5,772)



1,653


Deferred income taxes


(31)



(481)



1,503



(1,493)


Provision for doubtful accounts


3





27



36


Early retirement and terminations costs






431




Inventory liquidation gains








(1,459)


Inventory valuation losses


12



2,051



18,196




Changes in assets and liabilities


26,904



(4,676)



56,784



(25,452)


Adjusted cash flow


$

10,275



$

6,467



$

21,079



$

16,427


 

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SOURCE Adams Resources & Energy, Inc.

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