Adams Resources & Energy, Inc. Announces Results For Third Quarter 2019 And Declares Quarterly Dividend
HOUSTON, Nov. 6, 2019 /PRNewswire/ -- Adams Resources & Energy, Inc. (NYSE AMERICAN: AE) ("Adams" or the "Company") today announced financial results for the three months ended September 30, 2019 and declared a quarterly cash dividend of $0.24 per common share.
The Company reported net earnings of $0.6 million, or $0.15 per common share, on revenues of $450.3 million for the third quarter of 2019, compared to net earnings of $2.0 million, or $0.48 per common share, on revenues of $467.9 million for the third quarter of 2018. On an adjusted basis, net earnings were $1.6 million, or $0.38 per common share, for the third quarter of 2019, compared to net earnings of $1.3 million, or $0.30 per common share, for the third quarter of 2018.
Adjusted net (losses) earnings, adjusted (losses) earnings per 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.
Key Highlights for Third Quarter 2019:
- Generated revenues of $450.3 million for the third quarter of 2019 compared to $467.9 million for the third quarter of 2018
- Net cash flow from operating activities increased from $8.6 million for the third quarter of 2018 to $9.4 million for the third quarter of 2019. Grew adjusted cash flow to $6.5 million for the third quarter of 2019 from $4.2 million for the third quarter of 2018.
- Increased cash and cash equivalents by approximately 7% from $117.1 million at December 31, 2018 to $124.7 million at September 30, 2019
- Retained strong financial flexibility with no short- or long-term debt as of September 30, 2019
- Adam's crude oil marketing subsidiary, GulfMark Energy, Inc., marketed approximately 105,801 barrels per day ("bpd") of crude oil during the third quarter of 2019, compared to 70,635 bpd of crude oil during the third quarter of 2018 — an increase of approximately 50%
- Solidly positioned with 439,173 barrels of crude oil inventory at September 30, 2019 compared to 415,523 barrels at December 31, 2018
"We were pleased with our overall results for this year's third quarter, which included a 54% increase in adjusted cash flow from the third quarter of 2018," said Townes G. Pressler, Executive Chairman. "We also saw 28% growth in adjusted net earnings year-over-year for the quarter, while revenues and net earnings decreased primarily due to declining gathered crude oil volumes from our captive customer in the Red River area."
"Our Service Transport business unit began to see lagging market conditions during the quarter, while as our revenue per mile increased 4% from the third quarter of 2018, it decreased 1% from this year's second quarter. In this environment of slightly declining demand for chemical transport, we are working closely with our customers to maintain trucking rates given our strong history of on-time and safe product delivery. Supporting these efforts, we remain on schedule with 'stair-casing' the age of our fleet, including the purchase of 86 new tractors and 46 new trailers during the first nine months of 2019, and commitments to purchase an additional 55 tractors and 15 trailers during the remainder of 2019 and into 2020."
"At GulfMark, our legacy and Red River combined crude oil volumes for the third quarter of 2019 increased 4% from the second quarter of 2019 primarily due to volumes increases in the Gulf Coast that were partially offset by continued decreased production in our Red River market areas. Similar to Service Transport, we are actively improving the combined age of our GulfMark fleet, including the replacement and purchase of 28 new tractors during the first nine months of 2019."
Capital Investments and Dividends
During the third quarter of 2019, the Company spent approximately $12.3 million of capital and paid dividends of $1.0 million ($0.24 per common share). The majority of the capital spending related to the aforementioned purchase of tractors in Adams' Service Transport subsidiary.
The Company's Board of Directors declared a quarterly cash dividend for the third quarter of 2019 in the amount of $0.24 per common share, payable on December 20, 2019 to shareholders of record as of December 6, 2019. Adams' has consistently paid a dividend since 1994, or more than 25 years.
Outlook
Mr. Pressler concluded, "While the macro-environment has become more challenging over the past months, the Company remains solidly positioned for continued long-term success given our best-in-class safety performance, strategically located footprint of operations, targeted investments to improve the quality of our vehicle fleet and strong corporate financial position. Supported by our diverse customer base, we also continue to benefit from substantially stable crude oil gathered volumes in our legacy areas that are relatively resilient to resource play production swings."
"For the remainder of this year and into 2020, we remain laser-focused on our peer-leading safety initiatives, including further fleet modernization and enhanced company-wide processes for recruiting and retaining drivers. In addition, we will execute on additional opportunities to increase efficiencies in our crude oil marketing transportation division, including right sizing the Red River operation to reflect current operating conditions. Finally, buttressed by a cash position of well over $100 million and no debt outstanding, we are exploring both organic and open market opportunities to further grow the business. As in the past, all potential investments will be evaluated on a risk-adjusted basis and for what we believe will provide the most long-term benefit for all of our shareholders."
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.
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 | Nine Months Ended | |||||||||||
September 30, | September 30, | |||||||||||
2019 | 2018 | 2019 | 2018 | |||||||||
Revenues: | ||||||||||||
Marketing | $ | 434,609 | $ | 453,626 | $ | 1,331,410 | $ | 1,266,055 | ||||
Transportation | 15,698 | 14,265 | 48,498 | 41,509 | ||||||||
Total revenues | 450,307 | 467,891 | 1,379,908 | 1,307,564 | ||||||||
Costs and expenses: | ||||||||||||
Marketing | 429,507 | 449,367 | 1,313,822 | 1,250,233 | ||||||||
Transportation | 13,365 | 12,412 | 40,902 | 36,603 | ||||||||
General and administrative | 2,739 | 1,533 | 8,005 | 6,100 | ||||||||
Depreciation and amortization | 4,393 | 2,340 | 12,266 | 7,014 | ||||||||
Total costs and expenses | 450,004 | 465,652 | 1,374,995 | 1,299,950 | ||||||||
Operating earnings | 303 | 2,239 | 4,913 | 7,614 | ||||||||
Other income (expense): | ||||||||||||
Gain on dissolution of investment | — | — | 573 | — | ||||||||
Interest income | 758 | 601 | 2,145 | 1,486 | ||||||||
Interest expense | (242) | (26) | (424) | (60) | ||||||||
Total other income (expense), net | 516 | 575 | 2,294 | 1,426 | ||||||||
Earnings before income taxes | 819 | 2,814 | 7,207 | 9,040 | ||||||||
Income tax provision | (179) | (779) | (1,653) | (2,247) | ||||||||
Net earnings | $ | 640 | $ | 2,035 | $ | 5,554 | $ | 6,793 | ||||
Earnings per share: | ||||||||||||
Basic net earnings per common share | $ | 0.15 | $ | 0.48 | $ | 1.31 | $ | 1.61 | ||||
Diluted net earnings per common share | $ | 0.15 | $ | 0.48 | $ | 1.31 | $ | 1.61 | ||||
Dividends per common share | $ | 0.24 | $ | 0.22 | $ | 0.70 | $ | 0.66 | ||||
ADAMS RESOURCES & ENERGY, INC. AND SUBSIDIARIES UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS (In thousands) | ||||||
September 30, | December 31, | |||||
2019 | 2018 | |||||
ASSETS | ||||||
Current assets: | ||||||
Cash and cash equivalents | $ | 124,726 | $ | 117,066 | ||
Restricted cash | 4,903 | — | ||||
Accounts receivable, net of allowance for doubtful accounts | 77,665 | 85,197 | ||||
Accounts receivable – related party | — | 425 | ||||
Inventory | 24,900 | 22,779 | ||||
Derivative assets | 129 | 162 | ||||
Income tax receivable | 2,539 | 2,404 | ||||
Prepayments and other current assets | 1,391 | 1,557 | ||||
Total current assets | 236,253 | 229,590 | ||||
Property and equipment, net | 62,733 | 44,623 | ||||
Operating lease right-of-use assets, net | 10,137 | — | ||||
Intangible assets, net | 1,704 | — | ||||
Cash deposits and other assets | 3,018 | 4,657 | ||||
Total assets | $ | 313,845 | $ | 278,870 | ||
LIABILITIES AND SHAREHOLDERS' EQUITY | ||||||
Current liabilities: | ||||||
Accounts payable | $ | 128,607 | $ | 116,068 | ||
Accounts payable – related party | 6 | 29 | ||||
Derivative liabilities | 126 | 139 | ||||
Current portion of finance lease obligations | 2,142 | 883 | ||||
Current portion of operating lease liabilities | 2,245 | — | ||||
Other current liabilities | 10,709 | 6,148 | ||||
Total current liabilities | 143,835 | 123,267 | ||||
Other long-term liabilities: | ||||||
Asset retirement obligations | 1,549 | 1,525 | ||||
Finance lease obligations | 4,927 | 3,209 | ||||
Operating lease liabilities | 7,890 | — | ||||
Deferred taxes and other liabilities | 5,763 | 4,271 | ||||
Total liabilities | 163,964 | 132,272 | ||||
Commitments and contingencies | ||||||
Shareholders' equity | 149,881 | 146,598 | ||||
Total liabilities and shareholders' equity | $ | 313,845 | $ | 278,870 | ||
ADAMS RESOURCES & ENERGY, INC. AND SUBSIDIARIES UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands) | ||||||
Nine Months Ended | ||||||
September 30, | ||||||
2019 | 2018 | |||||
Operating activities: | ||||||
Net earnings | $ | 5,554 | $ | 6,793 | ||
Adjustments to reconcile net earnings to net cash | ||||||
provided by operating activities: | ||||||
Depreciation and amortization | 12,266 | 7,014 | ||||
Gains on sales of property | (1,386) | (890) | ||||
Provision for doubtful accounts | (36) | (95) | ||||
Stock-based compensation expense | 352 | 144 | ||||
Deferred income taxes | 1,493 | (685) | ||||
Net change in fair value contracts | 20 | 5 | ||||
Gain on dissolution of AREC | (573) | — | ||||
Changes in assets and liabilities: | ||||||
Accounts receivable | 8,520 | 12,830 | ||||
Accounts receivable/payable, affiliates | (23) | 1 | ||||
Inventories | (2,121) | (22,568) | ||||
Income tax receivable | (135) | 1,317 | ||||
Prepayments and other current assets | 166 | (7) | ||||
Accounts payable | 13,613 | 22,254 | ||||
Accrued liabilities | 4,561 | 3,815 | ||||
Other | 871 | (103) | ||||
Net cash provided by operating activities | 43,142 | 29,825 | ||||
Investing activities: | ||||||
Property and equipment additions | (25,425) | (7,756) | ||||
Asset acquisition | (5,624) | — | ||||
Proceeds from property sales | 2,853 | 1,314 | ||||
Proceeds from dissolution of AREC | 998 | — | ||||
Insurance and state collateral refunds | 750 | 1,070 | ||||
Net cash used in investing activities | (26,448) | (5,372) | ||||
Financing activities: | ||||||
Principal repayments of finance lease obligations | (1,171) | (288) | ||||
Dividends paid on common stock | (2,960) | (2,784) | ||||
Net cash used in financing activities | (4,131) | (3,072) | ||||
Increase in cash and cash equivalents, including restricted cash | 12,563 | 21,381 | ||||
Cash and cash equivalents, including restricted cash, at beginning of period | 117,066 | 109,393 | ||||
Cash and cash equivalents, including restricted cash, at end of period | $ | 129,629 | $ | 130,774 | ||
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, | |||||||||||
2019 | 2018 | 2019 | 2018 | |||||||||
Reconciliation of Adjusted Cash Flow to | ||||||||||||
Net earnings | $ | 640 | $ | 2,035 | $ | 5,554 | $ | 6,793 | ||||
Add (subtract): | ||||||||||||
Income tax provision | 179 | 779 | 1,653 | 2,247 | ||||||||
Depreciation and amortization | 4,393 | 2,340 | 12,266 | 7,014 | ||||||||
Gains on sales of property | (952) | (444) | (1,386) | (890) | ||||||||
Gain on dissolution of AREC | — | — | (573) | — | ||||||||
Stock-based compensation expense | 155 | 141 | 352 | 144 | ||||||||
Inventory liquidation gains | — | (60) | (1,459) | (2,535) | ||||||||
Inventory valuation losses | 2,051 | — | — | — | ||||||||
Net change in fair value contracts | 1 | 8 | 20 | 5 | ||||||||
Insurance proceeds for Hurricane | — | (610) | — | (610) | ||||||||
Adjusted cash flow | $ | 6,467 | $ | 4,189 | $ | 16,427 | $ | 12,168 | ||||
Three Months Ended | Nine Months Ended | |||||||||||
September 30, | September 30, | |||||||||||
2019 | 2018 | 2019 | 2018 | |||||||||
Adjusted net earnings and earnings per | ||||||||||||
Net earnings | $ | 640 | $ | 2,035 | $ | 5,554 | $ | 6,793 | ||||
Add (subtract): | ||||||||||||
Gain on dissolution of AREC | — | — | (573) | — | ||||||||
Gains on sales of property | (952) | (444) | (1,386) | (890) | ||||||||
Stock-based compensation expense | 155 | 141 | 352 | 144 | ||||||||
Net change in fair value contracts | 1 | 8 | 20 | 5 | ||||||||
Inventory liquidation gains | — | (60) | (1,459) | (2,535) | ||||||||
Inventory valuation losses | 2,051 | — | — | — | ||||||||
Insurance proceeds for Hurricane | — | (610) | — | (610) | ||||||||
Tax effect of adjustments to earnings | (264) | 203 | 639 | 817 | ||||||||
Adjusted net earnings | $ | 1,631 | $ | 1,273 | $ | 3,147 | $ | 3,724 | ||||
Adjusted earnings per common share | $ | 0.38 | $ | 0.30 | $ | 0.73 | $ | 0.88 | ||||
ADAMS RESOURCES & ENERGY, INC. AND SUBSIDIARIES NON-GAAP RECONCILIATIONS (In thousands) | ||||||||||||
Three Months Ended | Nine Months Ended | |||||||||||
September 30, | September 30, | |||||||||||
2019 | 2018 | 2019 | 2018 | |||||||||
Reconciliation of Adjusted Cash Flow to | ||||||||||||
Net cash provided by operating activities | $ | 9,394 | $ | 8,588 | $ | 43,142 | $ | 29,825 | ||||
Add (subtract): | ||||||||||||
Income tax benefit (provision) | 179 | 779 | 1,653 | 2,247 | ||||||||
Deferred income taxes | (481) | (147) | (1,493) | 685 | ||||||||
Provision for doubtful accounts | — | 63 | 36 | 95 | ||||||||
Inventory liquidation gains | — | (60) | (1,459) | (2,535) | ||||||||
Inventory valuation losses | 2,051 | — | — | — | ||||||||
Harvey insurance proceeds | — | (610) | — | (610) | ||||||||
Changes in assets and liabilities | (4,676) | (4,424) | (25,452) | (17,539) | ||||||||
Adjusted cash flow | $ | 6,467 | $ | 4,189 | $ | 16,427 | $ | 12,168 | ||||
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SOURCE Adams Resources & Energy, Inc.
