Adams Resources & Energy, Inc. Announces Results For Second

|Aug 6|magazine34 min read

HOUSTON, Aug. 6, 2020 /PRNewswire/ -- Adams Resources & Energy, Inc. (NYSE AMERICAN: AE) ("Adams" or the "Company") today announced operational and financial results for the three months ended June 30, 2020 and declared a quarterly cash dividend of $0.24 per common share. 

  • Reported net earnings of $3.5 million, or $0.82 per diluted common share, on revenues of $152.3 million for the second quarter of 2020, compared to net earnings of $0.1 million on revenues of $484.4 million for the second quarter of 2019.
  • Incurred inventory liquidation gains of approximately $6.0 million during the second quarter of 2020 as a result of the recovery in crude oil prices following the dramatic decline in the market price of crude oil that began in early March, substantially due to decreased global demand and subsequent oversupply driven by the global COVID-19 pandemic.
  • Reported net cash used in operating activities of $6.6 million for the second quarter of 2020, compared to net cash provided by operating activities of $12.7 million for the second 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 losses of $0.8 million, or $0.18 loss per diluted common share, for the second quarter of 2020, compared to adjusted net earnings of $0.6 million, or $0.13 of earnings per diluted common share, for the second quarter of 2019.
  • Reported adjusted cash flow $1.9 million for the second quarter of 2020, versus $5.0 million for the second 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 Q2 2020

  • Announced on May 17, 2020 and closed on June 26, 2020 Service Transport Company's ("Service Transport"), Adams' transportation subsidiary, purchase of substantially all of the assets of CTL Transportation, LLC ("CTL"), a subsidiary of Comcar Industries, Inc. The acquisition grew Service Transport's collective fleet size through the addition of approximately 163 tractor trailer trucks and 328 trailers, and expanded its footprint of operations into Florida, Georgia, Illinois, Missouri and Ohio.
  • Maintained strong financial flexibility at June 30, 2020, with no short- or long-term debt and $70.2 million in cash and cash equivalents. Cash and cash equivalents were $87.4 million at March 31, 2020.
  • Adam's crude oil marketing subsidiary, GulfMark Energy, Inc. ("GulfMark"), marketed approximately 81,152 barrels per day ("bpd") of crude oil during the second quarter of 2020, compared to 101,884 bpd during the second quarter of 2019 and 109,253 bpd during the first quarter of 2020. GulfMark held 519,927 barrels of crude oil inventory at June 30, 2020, compared to 494,812 barrels at March 31, 2020.
  • The collective fleet of Service Transport traveled approximately 3.890 million miles during the second quarter of 2020, compared to 5.639 million miles during the second quarter of 2019 and 5.240 million miles during the first quarter of 2020.
  • Adams' stock (NYSE AMERICAN: AE) was added to the Russell 3000® Index and Russell 2000® Index effective June 29, 2020. The Company expects that joining the indexes will drive increased awareness among institutional investors and additional liquidity in the trading of its shares.

Kevin J. Roycraft, Adams' Chief Executive Officer, commented, "We are pleased with our overall performance given the challenging backdrop brought on by the COVID-19 pandemic and global decline in crude oil demand.  These events have driven an unprecedented slowdown in global economic activity and disrupted historical supply and demand patterns.  While this resulted in a decline in demand for our crude oil marketing operations and transportation services during the second quarter, we were able to mitigate these declines through operational efficiencies, pricing flexibility and product diversification." 

"Both GulfMark and Service Transport saw a noticeable improvement in customer activity levels in the latter half of the second quarter after seeing significant declines at the end of the first quarter and beginning of the second quarter of 2020.  In this volatile environment, we remain squarely focused on ensuring we maintain maximum flexibility in our operations and effectively controlling our cost structure."          

"I am very proud of the entire Adams' team for their commitment to safety and customer satisfaction as we provide essential services that keep this country moving." 

Capital Investments and Dividends

During the second quarter of 2020, the Company spent capital of $9.1 million for the purchase of substantially all of the assets of CTL, as well as $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 second quarter of 2020 in the amount of $0.24 per common share, payable on September 18, 2020 to shareholders of record as of September 4, 2020.  Adams' has consistently paid a dividend since 1994, or more than 25 years.    

Outlook

Mr. Roycraft concluded, "Over the past couple of months we have been pleased to see overall improvement in our customer's activity levels.  We currently expect this trend will continue but also recognize there will be ongoing volatility in the marketplace until the COVID-19 pandemic has effectively ended and the global economy begins to recover more fully.  We believe our proven business model and strong balance sheet – including a substantial cash balance and no debt – places us in a unique position for both near and long-term success.  Supporting our efforts is what I believe to be one of the best teams in the business, and I want to thank all of our employees for their continued efforts as we work together safely and provide our customers unsurpassed 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 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.

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. 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
[email protected]
(713) 881-3609

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,



2020


2019


2020


2019

Revenues:









Marketing


$

140,141



$

467,040



$

477,362



$

896,801


Transportation


12,145



17,393



28,401



32,800


  Total revenues


152,286



484,433



505,763



929,601











Costs and expenses:









Marketing


131,454



463,774



484,319



884,315


Transportation


10,888



14,436



24,073



27,537


General and administrative


2,731



2,582



5,625



5,266


Depreciation and amortization


4,278



4,284



8,751



7,873


  Total costs and expenses


149,351



485,076



522,768



924,991











Operating (losses) earnings


2,935



(643)



(17,005)



4,610











Other income (expense):









Gain on dissolution of investment




75





573


Interest income


144



731



509



1,387


Interest expense


(68)



(117)



(218)



(182)


  Total other income (expense), net


76



689



291



1,778











(Losses) Earnings before income taxes


3,011



46



(16,714)



6,388


Income tax benefit (provision)


492



(40)



8,790



(1,474)











Net (losses) earnings


$

3,503



$

6



$

(7,924)



$

4,914











(Losses) Earnings per share:









Basic net (losses) earnings per common share


$

0.83



$



$

(1.87)



$

1.16


Diluted net (losses) earnings per common share


$

0.82



$



$

(1.87)



$

1.16











Dividends per common share


$

0.24



$

0.24



$

0.48



$

0.46











 

ADAMS RESOURCES & ENERGY, INC. AND SUBSIDIARIES

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands)




June 30,


December 31,



2020


2019

ASSETS





Current assets:





Cash and cash equivalents


$

70,215



$

112,994


Restricted cash


7,982



9,261


Accounts receivable, net of allowance for doubtful accounts


67,455



94,534


Inventory


19,837



26,407


Derivative assets


26




Income tax receivable


10,005



2,569


Prepayments and other current assets


1,297



1,559


  Total current assets


176,817



247,324







Property and equipment, net


69,280



69,046


Operating lease right-of-use assets, net


8,599



9,576


Intangible assets, net


4,491



1,597


Cash deposits and other assets


2,147



3,299


Total assets


$

261,334



$

330,842







LIABILITIES AND SHAREHOLDERS' EQUITY





Current liabilities:





Accounts payable


$

83,410



$

147,851


Accounts payable – related party


6



5


Derivative liabilities


14




Current portion of finance lease obligations


2,482



2,167


Current portion of operating lease liabilities


2,159



2,252


Other current liabilities


11,167



7,302


  Total current liabilities


99,238



159,577


Other long-term liabilities:





Asset retirement obligations


1,598



1,573


Finance lease obligations


4,647



4,376


Operating lease liabilities


6,442



7,323


Deferred taxes and other liabilities


7,519



6,352


  Total liabilities


119,444



179,201







Commitments and contingencies










Shareholders' equity


141,890



151,641


Total liabilities and shareholders' equity


$

261,334



$

330,842



 

ADAMS RESOURCES & ENERGY, INC. AND SUBSIDIARIES

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)




Six Months Ended



June 30,



2020


2019

Operating activities:





Net (losses) earnings


$

(7,924)



$

4,914


Adjustments to reconcile net (losses) earnings to net cash provided by (used in) operating activities:





  Depreciation and amortization


8,751



7,873


  Gains on sales of property


(140)



(434)


  Provision for doubtful accounts


(24)



(36)


  Stock-based compensation expense


304



197


  Deferred income taxes


(1,534)



1,012


  Net change in fair value contracts


(12)



19


  Gain on dissolution of AREC




(573)


Changes in assets and liabilities:





  Accounts receivable


27,103



11,812


  Accounts receivable/payable, affiliates


1



(23)


  Inventories


6,570



2,802


  Income tax receivable


(4,733)



187


  Prepayments and other current assets


262



(271)


  Accounts payable


(63,013)



1,505


  Accrued liabilities


3,875



3,765


  Other


55



999


Net cash provided by (used in) operating activities


(30,459)



33,748







Investing activities:





Property and equipment additions


(2,880)



(13,121)


Asset acquisition


(9,137)



(5,611)


Proceeds from property sales


514



1,287


Proceeds from dissolution of AREC




998


Insurance and state collateral refunds


1,129



774


  Net cash used in investing activities


(10,374)



(15,673)







Financing activities:





Principal repayments of finance lease obligations


(1,070)



(651)


Payment of contingent consideration liability


(111)




Dividends paid on common stock


(2,044)



(1,944)


  Net cash used in financing activities


(3,225)



(2,595)







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


(44,058)



15,480


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


$

78,197



$

132,546


 

ADAMS RESOURCES & ENERGY, INC. AND SUBSIDIARIES

NON-GAAP RECONCILIATIONS

(In thousands, except per share data)




Three Months Ended


Six Months Ended



June 30,


June 30,



2020


2019


2020


2019

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









Net (losses) earnings


$

3,503



$

6



$

(7,924)



$

4,914


Add (subtract):









Income tax (benefit) provision


(492)



40



(8,790)



1,474


Depreciation and amortization


4,278



4,284



8,751



7,873


Gains on sales of property




(256)



(140)



(434)


Gain on dissolution of AREC




(75)





(573)


Stock-based compensation expense


170



74



304



197


Early retirement and terminations costs


431





431




Inventory liquidation gains


(6,031)







(3,510)


Inventory valuation losses




952



18,184




Net change in fair value contracts


7





(12)



19


Adjusted cash flow


$

1,866



$

5,025



$

10,804



$

9,960














Three Months Ended


Six Months Ended



June 30,


June 30,



2020


2019


2020


2019

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









Net (losses) earnings


$

3,503



$

6



$

(7,924)



$

4,914


Add (subtract):









Gain on dissolution of AREC




(75)





(573)


Gains on sales of property




(256)



(140)



(434)


Stock-based compensation expense


170



74



304



197


Early retirement and terminations costs


431





431




Net change in fair value contracts


7





(12)



19


Inventory liquidation gains


(6,031)







(3,510)


Inventory valuation losses




952



18,184




Tax effect of adjustments to (losses) earnings


1,139



(146)



(3,941)



903


Adjusted net (losses) earnings


$

(781)



$

555



$

6,902



$

1,516











Adjusted (losses) earnings per common share


$

(0.18)



$

0.13



$

1.63



$

0.35


 

 

ADAMS RESOURCES & ENERGY, INC. AND SUBSIDIARIES

NON-GAAP RECONCILIATIONS

(In thousands)




Three Months Ended


Six Months Ended



June 30,


June 30,



2020


2019


2020


2019

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







Net cash provided by (used in) operating activities


$

(6,613)



$

12,732



$

(30,459)



$

33,748


Add (subtract):









Income tax (benefit) provision


(492)



40



(8,790)



1,474


Deferred income taxes


(1,155)



(178)



1,534



(1,012)


Provision for doubtful accounts




4



24



36


Early retirement and terminations costs


431





431




Inventory liquidation gains


(6,031)







(3,510)


Inventory valuation losses




952



18,184




Changes in assets and liabilities


15,726



(8,525)



29,880



(20,776)


  Adjusted cash flow


$

1,866



$

5,025



$

10,804



$

9,960


 

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SOURCE Adams Resources & Energy, Inc.