Adams Resources & Energy, Inc. Announces Results For Third Quarter 2018 And Declares Quarterly Dividend

HOUSTON, Nov. 7, 2018 /PRNewswire/ — Adams Resources & Energy, Inc. (NYSE AMERICAN: AE) (“Adams” or the “Company”) today announced its financial results for the three months ended September 30, 2018.

The Company reported net earnings of $2.0 million, or $0.48 per common share, on revenues of $467.9 million for the third quarter of 2018, compared to a net loss of $3.0 million, or ($0.72) per common share, on revenues of $295.3 million for the third quarter of 2017.  On an adjusted basis, net earnings were $1.3 million, or $0.30 per common share, for the third quarter of 2018, compared to a net loss of $0.2 million, or ($0.04) per common share, for the third quarter of 2017.

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.

Third Quarter 2018 Highlights:

  • Gross revenues of approximately $467.9 million for the third quarter of 2018 compared to $295.3 million for the third quarter of 2017
  • Our crude oil marketing subsidiary, GulfMark Energy, Inc., marketed approximately 70,635 per day (“bpd”) of crude oil during the third quarter of 2018, compared to 64,104 bpd of crude oil during the third quarter of 2017
  • Cash and cash equivalents increased by 20 percent from December 31, 2017 levels of $109.4 million to $130.8 million at September 30, 2018
  • $59.6 million of undrawn capacity under our letter of credit facility at September 30, 2018
  • Adjusted cash flow of $4.2 million for the third quarter of 2018 compared to $2.3 million for the third quarter of 2017
  • Approximately 476,703 barrels of crude oil inventory at September 30, 2018 compared to 198,011 barrels at December 31, 2017
  • Dividend of $0.22 per share for the third quarter of 2018
  • No short or long term debt as of September 30, 2018

“During the third quarter of 2018, our Service Transport business unit continued to generate improved financial and operating results as our revenue per mile increased 1 percent from the second quarter of 2018 and 21 percent from the third quarter of 2017,” said Townes G. Pressler, Executive Chairman.  “As customer demand continues to be strong in this segment, improved trucking rates allow improved hiring and retention of skilled drivers as we continue to provide dependable superior service to our customers at Service Transport.  We are continuing on schedule with improving the age of our fleet, with the purchase of 40 new tractors through September 30, 2018 and commitments to purchase an additional 61 tractors and 20 trailers by the end of the first quarter of 2019.”

“At our GulfMark business unit, crude oil marketing volumes for the third quarter of 2018 were consistent with the second quarter of 2018 and increased 10 percent from the third quarter of 2017, primarily as a result of increased production in our market areas.  Our overall marketing margins have increased as a result of the exit of areas with thin margins.”

“During the remainder of 2018, we will remain focused on introducing efficiencies in our crude oil marketing division, integrating our crude oil gathering company acquisition into our business, replacing aging tractors and right sizing our tractor and trailer fleets in both business units, improving company-wide driver retention and increasing driver count, and placing safety first in all of our operations.  We will continue to explore synergic growth opportunities in our core businesses, both organically and in the open market,” continued Pressler.

Capital Investments and Dividends

During the third quarter of 2018, the Company recorded approximately $5.0 million of capital costs and paid dividends of $0.9 million ($0.22 per share).  The majority of the capital costs relate to the purchase of tractors in our Service Transport subsidiary.

The Company’s Board of Directors also declared a quarterly cash dividend for the third quarter of 2018 in the amount of $0.22 per common share, payable on December 21, 2018 to shareholders of record as of December 7, 2018.

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 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 and ISO tank container storage and transportation 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,

2018

2017

2018

2017

Revenues:

Marketing

$

453,626

$

282,229

$

1,266,055

$

872,020

Transportation

14,265

13,082

41,509

40,153

Oil and natural gas

1,427

  Total revenues

467,891

295,311

1,307,564

913,600

Costs and expenses:

Marketing

449,367

277,906

1,250,233

860,567

Transportation

12,412

12,668

36,603

36,681

Oil and natural gas

951

General and administrative

1,533

2,787

6,100

6,884

Depreciation, depletion and amortization

2,340

3,240

7,014

10,772

  Total costs and expenses

465,652

296,601

1,299,950

915,855

Operating earnings (losses)

2,239

(1,290)

7,614

(2,255)

Other income (expense):

Loss on deconsolidation of subsidiary

(1,870)

(3,505)

Impairment of investment in unconsolidated affiliate

(2,500)

(2,500)

Interest income

601

370

1,486

789

Interest expense

(26)

(8)

(60)

(10)

  Total other income (expense), net

575

(4,008)

1,426

(5,226)

(Losses) earnings before income taxes

2,814

(5,298)

9,040

(7,481)

Income tax benefit (provision)

(779)

2,265

(2,247)

3,306

Net (losses) earnings

$

2,035

$

(3,033)

$

6,793

$

(4,175)

Earnings (losses) per share:

Basic net (losses) earnings per common share

$

0.48

$

(0.72)

$

1.61

$

(0.99)

Diluted net (losses) earnings per common share

$

0.48

$

(0.72)

$

1.61

$

(0.99)

Dividends per common share

$

0.22

$

0.22

$

0.66

$

0.66

 

ADAMS RESOURCES & ENERGY, INC. AND SUBSIDIARIES

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except share data)

September 30,

December 31,

2018

2017

ASSETS

Current assets:

Cash and cash equivalents

$

130,774

$

109,393

Accounts receivable, net of allowance for doubtful accounts

108,662

121,353

Inventory

34,760

12,192

Derivative assets

263

166

Income tax receivable

1,317

Prepayments and other current assets

1,271

1,264

 Total current assets

275,730

245,685

Property and equipment, net

30,918

29,362

Investment in unconsolidated affiliate

425

425

Cash deposits and other

6,239

7,232

Total assets

$

313,312

$

282,704

LIABILITIES AND SHAREHOLDERS’ EQUITY

Current liabilities:

Accounts payable

$

146,895

$

124,706

Accounts payable – related party

6

5

Derivative liabilities

247

145

Current portion of capital lease obligations

568

338

Other current liabilities

8,219

4,404

  Total current liabilities

155,935

129,598

Other long-term liabilities:

Asset retirement obligations

1,414

1,273

Capital lease obligations

2,041

1,351

Deferred taxes and other liabilities

2,655

3,363

  Total liabilities

162,045

135,585

Commitments and contingencies

Shareholders’ equity

151,267

147,119

Total liabilities and shareholders’ equity

$

313,312

$

282,704

 

ADAMS RESOURCES & ENERGY, INC. AND SUBSIDIARIES

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

Nine Months Ended

September 30,

2018

2017

Operating activities:

Net (losses) earnings

$

6,793

$

(4,175)

Adjustments to reconcile net (losses) earnings to net cash

provided by operating activities:

   Depreciation, depletion and amortization

7,014

10,772

   Gains on sales of property

(890)

(347)

   Impairment of oil and natural gas properties

3

   Provision for doubtful accounts

(95)

(9)

   Stock-based compensation expense

144

   Deferred income taxes

(685)

(1,198)

   Net change in fair value contracts

5

48

   Impairment of investment in unconsolidated affiliate

2,500

   Loss on deconsolidation of subsidiary

3,505

Changes in assets and liabilities:

Accounts receivable

12,830

5,228

Accounts receivable/payable, affiliates

1

266

Inventories

(22,568)

(9,328)

Income tax receivable

1,317

(1,412)

Prepayments and other current assets

(7)

927

Accounts payable

22,254

9,482

Accrued liabilities

3,815

465

Other

(103)

(240)

Net cash provided by operating activities

29,825

16,487

Investing activities:

Property and equipment additions

(7,756)

(2,465)

Proceeds from property sales

1,314

430

Insurance and state collateral refunds

1,070

439

Net cash used in investing activities

(5,372)

(1,596)

Financing activities:

Principal repayments of capital lease obligations

(288)

Dividends paid on common stock

(2,784)

(2,784)

Net cash used in financing activities

(3,072)

(2,784)

Increase in cash and cash equivalents

21,381

12,107

Cash and cash equivalents at beginning of period

109,393

87,342

Cash and cash equivalents at end of period

$

130,774

$

99,449

 

 

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,

2018

2017

2018

2017

Reconciliation of Adjusted Cash Flow to

   Net (Losses) Earnings:

Net (losses) earnings

$

2,035

$

(3,033)

$

6,793

$

(4,175)

Income tax benefit (provision)

779

(2,265)

2,247

(3,306)

Depreciation, depletion and amortization

2,340

3,240

7,014

10,772

Gains on sales of property

(444)

(218)

(890)

(347)

Impairment of oil and natural gas properties

3

Loss on deconsolidation of subsidiary

1,870

3,505

Stock-based compensation expense

141

144

Impairment of investment in unconsolidated affiliate

2,500

2,500

Inventory liquidation gains

(60)

(1,954)

(2,535)

Inventory valuation losses

109

Net change in fair value contracts

8

748

5

48

Costs of voluntary early retirement program

1,435

1,435

Insurance proceeds for Hurricane Harvey claims

(610)

(610)

Legal and other accrual reversals

(840)

 Adjusted cash flow

$

4,189

$

2,323

$

12,168

$

9,704

Three Months Ended

Nine Months Ended

September 30,

September 30,

2018

2017

2018

2017

Adjusted net (losses) earnings and (losses)

   earnings per common share (Non-GAAP):

Net (losses) earnings

$

2,035

$

(3,033)

$

6,793

$

(4,175)

Add (subtract):

Loss on deconsolidation of subsidiary

1,870

3,505

Impairment of investment in unconsolidated affiliate

2,500

2,500

Gains on sales of property

(444)

(218)

(890)

(347)

Impairment of oil and natural gas properties

3

Stock-based compensation expense

141

144

Costs of voluntary early retirement program

1,435

1,435

Net change in fair value of contracts

8

748

5

48

Inventory liquidation gains

(60)

(1,954)

(2,535)

Inventory valuation losses

109

Legal and other accrual reversals

(840)

Insurance proceeds for Hurricane Harvey claims

(610)

(610)

Tax effect of adjustments to (losses) earnings

203

(1,533)

817

(2,245)

  Adjusted net (losses) earnings

$

1,273

$

(185)

$

3,724

$

(7)

Adjusted (losses) earnings per common share

$

0.30

$

(0.04)

$

0.88

$

 

 

 

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SOURCE Adams Resources & Energy, Inc.

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