Attached files
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| 8-K - 8-K - ADAMS RESOURCES & ENERGY, INC. | ae-20200806.htm |
Exhibit 99.1
FOR IMMEDIATE RELEASE
ADAMS RESOURCES & ENERGY, INC. ANNOUNCES RESULTS FOR
SECOND QUARTER 2020 AND DECLARES QUARTERLY DIVIDEND
Houston, Texas (Thursday, August 6, 2020) -- 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
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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.
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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.
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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. 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
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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, | |||||||||||||||||||||||||
| 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 | ||||||||||||||||||
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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 | ||||||||||
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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 | ||||||||||
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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, | |||||||||||||||||||||||||
| 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 | ||||||||||||||||||
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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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