PR Newswire | Aug 6, 2020 04:03PM EDT

Declares Quarterly Dividend

08/06 15:03 CDT

Adams Resources & Energy, Inc. Announces Results For Second Quarter 2020 And Declares Quarterly Dividend HOUSTON, Aug. 6, 2020

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(r) Index and Russell 2000(r) 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. OhmartEVP, Chief Financial Officertohmart@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 - 75 - 573 investment

Interest income 144 731 509 1,387

Interest expense (68) (117) (218) (182)

Total other income (expense), 76 689 291 1,778 net



(Losses) Earnings before income 3,011 46 (16,714) 6,388 taxes

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 $0.83 $- $(1.87) $1.16 common share

Diluted net (losses) earnings $0.82 $- $(1.87) $1.16 per common share



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 67,455 94,534 accounts

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, (44,058) 15,480 including restricted cash

Cash and cash equivalents, including restricted cash, 122,255 117,066 at beginning of period

Cash and cash equivalents, including restricted cash, $78,197 $132,546at end of period

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 431 - 431 - costs

Inventory liquidation gains (6,031) - - (3,510)

Inventory valuation losses - 952 18,184 -

Net change in fair value contracts7 - (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 431 - 431 - costs

Net change in fair value contracts7 - (12) 19

Inventory liquidation gains (6,031) - - (3,510)

Inventory valuation losses - 952 18,184 -

Tax effect of adjustments to 1,139 (146) (3,941) 903 (losses) earnings

Adjusted net (losses) earnings $(781) $555 $6,902 $1,516



Adjusted (losses) earnings per $(0.18)$0.13 $1.63 $0.35 common share

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) $(6,613)$12,732$(30,459)$33,748operating activities

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 431 - 431 - terminations costs

Inventory liquidation gains (6,031) - - (3,510)

Inventory valuation losses - 952 18,184 -

Changes in assets and 15,726 (8,525) 29,880 (20,776)liabilities

Adjusted cash flow $1,866 $5,025 $10,804 $9,960

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SOURCE Adams Resources & Energy, Inc.