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