Attached files
| file | filename |
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| 8-K - 2Q 2017 ER 8-K - ADAMS RESOURCES & ENERGY, INC. | a2q2017er8-k.htm |
Exhibit 99.1
 | FOR IMMEDIATE RELEASE | |
ADAMS RESOURCES & ENERGY, INC. ANNOUNCES RESULTS FOR
SECOND QUARTER 2017 AND DECLARES QUARTERLY DIVIDEND
Houston, Texas (Tuesday, August 8, 2017) -- Adams Resources & Energy, Inc. (NYSE: AE) (“Adams” or the “Company”) today announced its financial results for the three months ended June 30, 2017.
The Company reported a net loss of $0.3 million, or ($0.07) per common share, on revenues of $315.2 million for the second quarter of 2017, compared to net income of $3.4 million, or $0.81 per common share, on revenues of $293.2 million for the second quarter of 2016. On an adjusted basis, net earnings were $1.4 million, or $0.34 per common share, for the second quarter of 2017, compared to a net loss of $0.1 million, or ($0.02) per common share, for the second quarter of 2016. The second quarter of 2017 includes a loss of $1.6 million related to the deconsolidation of our oil and gas exploration segment, which voluntarily filed for Chapter 11 bankruptcy in April 2017.
Adjusted net (losses) earnings, adjusted (losses) earnings per common share and cash flow from operations before changes in working capital are non-generally accepted accounting principle (“non-GAAP”) financial measures that are defined and reconciled in the financial tables below.
Second Quarter 2017 Highlights:
• | Gross revenues of approximately $315 million for the second quarter of 2017 compared to $293 million for the second quarter of 2016 |
• | Our crude oil marketing subsidiary, GulfMark Energy, Inc., marketed approximately 66,817 barrels per day (“bpd”) of crude oil during the second quarter of 2017 and 66,374 bpd of crude oil during the first quarter of 2017, compared to 75,986 bpd of crude oil during the second quarter of 2016 |
• | $164 million of liquidity ($104 million of cash and cash equivalents and $60 million of undrawn letter of credit facility) as of June 30, 2017 |
• | Generated cash flow from operations before changes in working capital of $3.5 million for the second quarter of 2017 compared to $6.5 million for the second quarter of 2016 |
• | Dividend of $0.22 per share for the second quarter of 2017 |
• | No short or long term debt as of June 30, 2017 |
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“Adams made significant progress toward its strategic exit of the upstream exploration and production segment, and we anticipate the sale of substantially all of the upstream assets to close during the third quarter of 2017. Our diversification of Service Transport’s offerings continued with the launch of ISO tank container storage and transportation in July 2017. GulfMark Energy continues to find ways to create value for upstream producers as evidenced by the slight increase in volumes over the first quarter of 2017. We are continuing to focus on leveraging our strong balance sheet through exploring business development opportunities and strengthening our core businesses during the second half of 2017,” said Thomas S. Smith, President and Chief Executive Officer.
Capital Investments and Dividends
During the second quarter of 2017, the Company invested approximately $1.1 million of capital and paid dividends of $0.9 million ($0.22 per share). The majority of the capital during the second quarter of 2017 was invested in the upstream oil and gas exploration and production subsidiary as the Company participated in several wells in the Permian Basin.
As we disclosed in our press release on April 20, 2017, our oil and gas exploration and production division filed a voluntary petition of reorganization under Chapter 11 of the Bankruptcy Code in Delaware. The Company retained Oil & Gas Asset Clearinghouse, LLC to conduct an auction, which concluded on August 1, 2017 with the anticipated sale of these assets for aggregate gross proceeds of approximately $5.0 million. The sale is expected to close during the third quarter of 2017.
The Company’s Board of Directors also declared a quarterly cash dividend for the second quarter of 2017 in the amount of $0.22 per common share, payable on September 20, 2017 to shareholders of record as of September 6, 2017.
Use of Non-GAAP Financial Measures
This press release and accompanying schedules includes the non-GAAP financial measures of operating cash flow before changes in working capital, 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 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.
Adams Resources & Energy, Inc. is engaged in the business of crude oil marketing, tank truck transportation of liquid chemicals and dry bulk, and oil and gas exploration and production. For more information, visit www.adamsresources.com.
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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. The actual results of operations can and will be affected by a variety of risks and other matters including, but not limited to, changes in commodity prices; changes in expected levels of natural gas and oil reserves or production; operating hazards, drilling risks, unsuccessful exploratory activities; limited access to capital or significantly higher cost of capital related to illiquidity or uncertainty in the domestic or international financial markets; international monetary conditions; unexpected cost increases; potential liability for remedial actions under existing or future environmental regulations; potential liability resulting from pending or future litigation; and general domestic and international economic and political conditions; as well as changes in tax, environmental and other laws applicable to our business. Other factors that could cause actual results to differ materially from those described in the forward-looking statements include other economic, business, competitive and/or regulatory factors affecting our business generally as set forth in our filings with the Securities and Exchange Commission. 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: Josh C. Anders
EVP, Chief Financial Officer
janders@adamsresources.com
(281) 974-9442
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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, | ||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||
Revenues: | |||||||||||||||
Marketing | $ | 301,176 | $ | 278,529 | $ | 589,791 | $ | 514,923 | |||||||
Transportation | 13,616 | 13,860 | 27,071 | 27,207 | |||||||||||
Oil and natural gas | 410 | 774 | 1,427 | 1,564 | |||||||||||
Total revenues | 315,202 | 293,163 | 618,289 | 543,694 | |||||||||||
Costs and expenses: | |||||||||||||||
Marketing | 297,508 | 268,780 | 582,661 | 497,837 | |||||||||||
Transportation | 11,851 | 11,309 | 24,013 | 22,498 | |||||||||||
Oil and natural gas | 201 | 779 | 951 | 1,410 | |||||||||||
General and administrative | 1,460 | 1,938 | 4,097 | 4,138 | |||||||||||
Depreciation, depletion and amortization | 3,563 | 4,756 | 7,532 | 9,871 | |||||||||||
Total costs and expenses | 314,583 | 287,562 | 619,254 | 535,754 | |||||||||||
Operating earnings (losses) | 619 | 5,601 | (965 | ) | 7,940 | ||||||||||
Other income (expense): | |||||||||||||||
Loss on deconsolidation of subsidiary | (1,635 | ) | — | (1,635 | ) | — | |||||||||
Losses from equity investments | — | (209 | ) | — | (400 | ) | |||||||||
Interest income | 260 | 96 | 419 | 199 | |||||||||||
Interest expense | (1 | ) | — | (2 | ) | — | |||||||||
Total other income (expense), net | (1,376 | ) | (113 | ) | (1,218 | ) | (201 | ) | |||||||
(Losses) earnings before income taxes | (757 | ) | 5,488 | (2,183 | ) | 7,739 | |||||||||
Income tax benefit (provision) | 475 | (2,084 | ) | 1,041 | (2,905 | ) | |||||||||
Net (losses) earnings | $ | (282 | ) | $ | 3,404 | $ | (1,142 | ) | $ | 4,834 | |||||
Earnings (losses) per share: | |||||||||||||||
Basic and diluted net (losses) earnings | |||||||||||||||
per common share | $ | (0.07 | ) | $ | 0.81 | $ | (0.27 | ) | $ | 1.15 | |||||
Weighted average number of common | |||||||||||||||
shares outstanding | 4,218 | 4,218 | 4,218 | 4,218 | |||||||||||
Dividends per common share | $ | 0.22 | $ | 0.22 | $ | 0.44 | $ | 0.44 | |||||||
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ADAMS RESOURCES & ENERGY, INC. AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except share data)
June 30, | December 31, | ||||||
2017 | 2016 | ||||||
ASSETS | |||||||
Current assets: | |||||||
Cash and cash equivalents | $ | 103,687 | $ | 87,342 | |||
Accounts receivable, net of allowance for doubtful accounts | 72,923 | 87,162 | |||||
Accounts receivable – related party | 417 | — | |||||
Inventory | 15,957 | 13,070 | |||||
Derivative assets | 782 | 112 | |||||
Income tax receivable | 3,071 | 2,735 | |||||
Prepayments and other current assets | 1,208 | 2,097 | |||||
Total current assets | 198,045 | 192,518 | |||||
Property and equipment, net | 33,105 | 46,325 | |||||
Investments in unconsolidated affiliates | 7,570 | 2,500 | |||||
Cash deposits and other | 5,230 | 5,529 | |||||
Total assets | $ | 243,950 | $ | 246,872 | |||
LIABILITIES AND SHAREHOLDERS’ EQUITY | |||||||
Current liabilities: | |||||||
Accounts payable | $ | 83,228 | $ | 79,897 | |||
Accounts payable – related party | — | 53 | |||||
Derivative liabilities | 34 | 64 | |||||
Other current liabilities | 4,912 | 6,060 | |||||
Total current liabilities | 88,174 | 86,074 | |||||
Other long-term liabilities: | |||||||
Asset retirement obligations | 1,236 | 2,329 | |||||
Deferred taxes and other liabilities | 6,226 | 7,157 | |||||
Total liabilities | 95,636 | 95,560 | |||||
Commitments and contingencies | |||||||
Shareholders’ equity | 148,314 | 151,312 | |||||
Total liabilities and shareholders’ equity | $ | 243,950 | $ | 246,872 | |||
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ADAMS RESOURCES & ENERGY, INC. AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
Six Months Ended | |||||||
June 30, | |||||||
2017 | 2016 | ||||||
Operating activities: | |||||||
Net (losses) earnings | $ | (1,142 | ) | $ | 4,834 | ||
Adjustments to reconcile net (losses) earnings to net cash | |||||||
provided by operating activities: | |||||||
Depreciation, depletion and amortization | 7,532 | 9,871 | |||||
Gains on sale of property | (129 | ) | (1,275 | ) | |||
Impairment of oil and natural gas properties | 3 | 87 | |||||
Provision for doubtful accounts | (8 | ) | 93 | ||||
Deferred income taxes | (926 | ) | (1,965 | ) | |||
Net change in fair value contracts | (700 | ) | (124 | ) | |||
Losses from equity investment | — | 400 | |||||
Loss on deconsolidation of subsidiary | 1,635 | — | |||||
Changes in assets and liabilities: | |||||||
Accounts receivable | 13,581 | (10,073 | ) | ||||
Accounts receivable/payable, affiliates | (151 | ) | — | ||||
Inventories | (2,887 | ) | (5,191 | ) | |||
Income tax receivable | (336 | ) | 2,587 | ||||
Prepayments and other current assets | 887 | (1,683 | ) | ||||
Accounts payable | 3,357 | 7,043 | |||||
Accrued liabilities | (483 | ) | 1,570 | ||||
Other | (461 | ) | (22 | ) | |||
Net cash provided by operating activities | 19,772 | 6,152 | |||||
Investing activities: | |||||||
Property and equipment additions | (2,108 | ) | (4,812 | ) | |||
Proceeds from property sales | 190 | 2,860 | |||||
Investments in unconsolidated affiliates | — | (4,700 | ) | ||||
Insurance and state collateral (deposits) refunds | 347 | 1,250 | |||||
Net cash used in investing activities | (1,571 | ) | (5,402 | ) | |||
Financing activities: | |||||||
Dividends paid on common stock | (1,856 | ) | (1,856 | ) | |||
Net cash used in financing activities | (1,856 | ) | (1,856 | ) | |||
Increase (decrease) in cash and cash equivalents | 16,345 | (1,106 | ) | ||||
Cash and cash equivalents at beginning of period | 87,342 | 91,877 | |||||
Cash and cash equivalents at end of period | $ | 103,687 | $ | 90,771 | |||
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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, | ||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||
Operating cash flow before changes in working capital reconciliation (Non-GAAP): | |||||||||||||||
Net (losses) earnings | $ | (282 | ) | $ | 3,404 | $ | (1,142 | ) | $ | 4,834 | |||||
Adjustments to reconcile net (losses) earnings to net cash | |||||||||||||||
provided by operating activities: | |||||||||||||||
Depreciation, depletion and amortization | 3,563 | 4,756 | 7,532 | 9,871 | |||||||||||
Gains on sale of property | (136 | ) | (1,155 | ) | (129 | ) | (1,275 | ) | |||||||
Impairment of oil and natural gas properties | — | 58 | 3 | 87 | |||||||||||
Provision for doubtful accounts | (8 | ) | 93 | (8 | ) | 93 | |||||||||
Deferred income taxes | (986 | ) | (613 | ) | (926 | ) | (1,965 | ) | |||||||
Net change in fair value contracts | (280 | ) | (282 | ) | (700 | ) | (124 | ) | |||||||
Losses from equity investment | — | 209 | — | 400 | |||||||||||
Loss on deconsolidation of subsidiary | 1,635 | — | 1,635 | — | |||||||||||
Operating cash flow before changes in working capital | $ | 3,506 | $ | 6,470 | $ | 6,265 | $ | 11,921 | |||||||
Three Months Ended | Six Months Ended | ||||||||||||||
June 30, | June 30, | ||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||
Adjusted net (losses) earnings and (losses) earnings per common share (Non-GAAP): | |||||||||||||||
Net (losses) earnings | $ | (282 | ) | $ | 3,404 | $ | (1,142 | ) | $ | 4,834 | |||||
Add (subtract): | |||||||||||||||
Loss on deconsolidation of subsidiary | 1,635 | — | 1,635 | — | |||||||||||
Gains on sale of property | (136 | ) | (1,155 | ) | (129 | ) | (1,275 | ) | |||||||
Impairment of oil and natural gas properties | — | 58 | 3 | 87 | |||||||||||
Derivative valuation gains | (280 | ) | (282 | ) | (700 | ) | (124 | ) | |||||||
Inventory liquidation gains | — | (4,008 | ) | — | (6,211 | ) | |||||||||
Inventory valuation losses | 1,405 | — | 2,063 | — | |||||||||||
Tax effect of adjustments to (losses) earnings | (918 | ) | 1,885 | (1,005 | ) | 2,633 | |||||||||
Adjusted net (losses) earnings | $ | 1,424 | $ | (98 | ) | $ | 725 | $ | (56 | ) | |||||
Adjusted (losses) earnings per common share | $ | 0.34 | $ | (0.02 | ) | $ | 0.17 | $ | (0.01 | ) | |||||
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