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Adams Resources & Energy, Inc. Announces Fourth Quarter 2018 Results


HOUSTONMarch 8, 2019 /PRNewswire/ — Adams Resources & Energy, Inc. (NYSE AMERICAN: AE) (“Adams” or the “Company”) today announced its financial results for the three months and year ended December 31, 2018.

The Company reported a net loss of $3.8 million, or ($0.91) per common share, on revenues of $442.6 millionfor the fourth quarter of 2018, compared to net earnings of $3.7 million, or $0.88 per common share, on revenues of $408.5 million for the fourth quarter of 2017.  On an adjusted basis, net earnings were $2.2 million, or $0.52 per common share, for the fourth quarter of 2018, compared to net earnings of $1.3 million, or $0.31 per common share, for the fourth quarter of 2017.  For the full year 2018, the Company had net earnings of $2.9 million, or $0.70 per common share, on revenues of $1.75 billion, compared to a net loss of $0.5 million, or ($0.11) per common share, on revenues of $1.32 billion for the full year 2017.  On an adjusted basis, net earnings were $5.9 million, or $1.40 per common share, for the full year 2018, compared to net earnings of $1.3 million, or $0.31 per common share, for the full year 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.

Fourth Quarter 2018 Highlights:

  • Gross revenues of approximately $442.6 million for the fourth quarter of 2018 compared to $408.5 million for the fourth quarter of 2017, and gross revenues of approximately $1.75 billion for the full year 2018 compared to $1.32 billion for the full year 2017
  • Our crude oil marketing subsidiary, GulfMark Energy, Inc., marketed approximately 110,802 barrels per day (“bpd”) of crude oil during the fourth quarter of 2018, compared to 72,387 bpd of crude oil during the fourth quarter of 2017
  • Cash and cash equivalents increased by approximately 7.0 percent from December 31, 2017 of $109.4 million to over $117.1 million at December 31, 2018
  • $55.4 million of undrawn capacity under our letter of credit facility at December 31, 2018
  • Adjusted cash flow of $5.7 million for the fourth quarter of 2018 compared to $3.2 million for the fourth quarter of 2017, and adjusted cash flow of $17.9 million for the full year 2018 compared to $12.9 million for the full year 2017
  • Approximately 415,523 barrels of crude oil inventory at December 31, 2018 compared to 198,011 barrels at December 31, 2017
  • Dividend of $0.22 per share for the fourth quarter of 2018
  • No short or long term debt at December 31, 2018

“During the fourth quarter of 2018, our Service Transport business unit continued to generate improved financial and operating results as our revenue per mile increased 7 percent from the third quarter of 2018 and 23 percent from the fourth quarter of 2017,” said Townes 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 60 new tractors during 2018, and commitments to purchase an additional 35 tractors and 20 trailers by the end of the first quarter of 2019.”

“At our GulfMark business unit, crude oil marketing volumes for the fourth quarter of 2018 increased 57 percent from the third quarter of 2018 and increased 53 percent from the fourth quarter of 2017, primarily as a result of the acquisition of a crude oil gathering operation during October 2018, coupled with increased production in our marketing areas.  We have seen some increase in marketing margins as a result of improved marketing conditions.”

“During 2019, we will remain focused on safety first and remaining in the top tier for all safety statistics.  We will be 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,  and improving company-wide driver recruitment and retention, and increasing our driver count.  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 fourth quarter of 2018, the Company spent approximately $4.0 million of capital and paid dividends of $0.9 million ($0.22 per common share).  For the full year 2018, the Company spent approximately $11.7 million of capital and paid dividends of $3.7 million (a total of $0.88 per common share).  The majority of the capital costs relate to the purchase of tractors in our Service Transport subsidiary.

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 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
[email protected]
(713) 881-3609

ADAMS RESOURCES & ENERGY, INC. AND SUBSIDIARIES

UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share data)

Three Months Ended

Year Ended

December 31,

December 31,

2018

2017

2018

2017

Revenues:

Marketing

$

428,382

$

395,255

$

1,694,437

$

1,267,275

Transportation

14,267

13,205

55,776

53,358

Oil and natural gas

1,427

Total revenues

442,649

408,460

1,750,213

1,322,060

Costs and expenses:

Marketing

430,812

387,196

1,681,045

1,247,763

Transportation

11,566

11,857

48,169

48,538

Oil and natural gas

948

Oil and natural gas property impairments

3

General and administrative

2,837

2,823

8,937

9,707

Depreciation, depletion and amortization

3,640

2,827

10,654

13,599

Total costs and expenses

448,855

404,703

1,748,805

1,320,558

Operating earnings (losses)

(6,206)

3,757

1,408

1,502

Other income (expense):

Loss on deconsolidation of subsidiary

(3,505)

Impairment of investment in unconsolidated affiliate

(2,500)

Interest income

669

314

2,155

1,103

Interest expense

(49)

(17)

(109)

(27)

Total other income (expense), net

620

297

2,046

(4,929)

(Losses) earnings before income taxes

(5,586)

4,054

3,454

(3,427)

Income tax benefit (provision)

1,738

(361)

(509)

2,945

Net (losses) earnings

$

(3,848)

$

3,693

$

2,945

$

(482)

Earnings (losses) per share:

Basic and diluted net (losses) earnings per common share

$

(0.91)

$

0.88

$

0.70

$

(0.11)

Dividends per common share

$

0.22

$

0.22

$

0.88

$

0.88

ADAMS RESOURCES & ENERGY, INC. AND SUBSIDIARIES

UNAUDITED CONSOLIDATED BALANCE SHEETS

(In thousands, except share data)

December 31,

2018

2017

ASSETS

Current assets:

Cash and cash equivalents

$

117,066

$

109,393

Accounts receivable, net of allowance for doubtful accounts

85,197

121,353

Accounts receivable – related party

425

Inventory  

22,779

12,192

Derivative assets

162

166

Income tax receivable  

2,404

1,317

Prepayments and other current assets

1,557

1,264

Total current assets  

229,590

245,685

Property and equipment, net

44,623

29,362

Investments in unconsolidated affiliates

425

Cash deposits and other

4,657

7,232

Total assets

$

278,870

$

282,704

LIABILITIES AND SHAREHOLDERS’ EQUITY

Current liabilities:

Accounts payable  

$

116,068

$

124,706

Accounts payable – related party

29

5

Derivative liabilities

139

145

Current portion of capital lease obligations

883

338

Other current liabilities 

6,148

4,404

Total current liabilities  

123,267

129,598

Other long-term liabilities:

Asset retirement obligations

1,525

1,273

Capital lease obligations

3,209

1,351

Deferred taxes and other liabilities

4,271

3,363

Total liabilities  

132,272

135,585

Commitments and contingencies

Shareholders’ equity

146,598

147,119

Total liabilities and shareholders’ equity   

$

278,870

$

282,704

ADAMS RESOURCES & ENERGY, INC. AND SUBSIDIARIES

UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

Year Ended

December 31,

2018

2017

Operating activities:

Net (losses) earnings 

$

2,945

$

(482)

Adjustments to reconcile net (losses) earnings to net cash

provided by operating activities:

Depreciation, depletion and amortization  

10,654

13,599

Gains on sales of property

(1,240)

(594)

Impairment of oil and natural gas properties  

3

Provision for doubtful accounts

(150)

78

Stock-based compensation expense

255

Deferred income taxes

936

(3,840)

Net change in fair value contracts

(2)

27

Impairment of investment in unconsolidated affiliate

2,500

Loss on deconsolidation of subsidiary

3,505

Changes in assets and liabilities:

Accounts receivable

36,350

(34,935)

Accounts receivable/payable, affiliates

24

271

Inventories

(10,587)

878

Income tax receivable  

(1,087)

1,418

Prepayments and other current assets

(293)

831

Accounts payable  

(10,252)

44,790

Accrued liabilities  

1,744

(991)

Other

1,717

(962)

Net cash provided by operating activities   

31,014

26,096

Investing activities:

Property and equipment additions

(11,731)

(2,644)

Asset acquisition

(10,272)

Proceeds from property sales  

2,038

720

Proceeds from sales of AREC assets

2,775

Insurance and state collateral (deposits) refunds

830

(1,067)

Net cash used in investing activities

(19,135)

(216)

Financing activities:

Principal repayments of capital lease obligations

(495)

(118)

Dividends paid on common stock

(3,711)

(3,711)

Net cash used in financing activities

(4,206)

(3,829)

Increase in cash and cash equivalents

7,673

22,051

Cash and cash equivalents at beginning of period

109,393

87,342

Cash and cash equivalents at end of period

$

117,066

$

109,393

ADAMS RESOURCES & ENERGY, INC. AND SUBSIDIARIES

NON-GAAP RECONCILIATIONS

(In thousands, except per share data)

Three Months Ended

Year Ended

December 31,

December 31,

2018

2017

2018

2017

Reconciliation of Adjusted Cash Flow to Net (Losses) Earnings:

Net (losses) earnings  

$

(3,848)

$

3,693

$

2,945

$

(482)

Income tax (benefit) provision

(1,738)

361

509

(2,945)

Depreciation, depletion and amortization  

3,640

2,827

10,654

13,599

Gains on sales of property

(350)

(247)

(1,240)

(594)

Impairment of oil and natural gas properties

3

Loss on deconsolidation of subsidiary

3,505

Impairment of investment in unconsolidated affiliate

2,500

Stock-based compensation expense

111

255

Inventory liquidation gains

(3,481)

(3,372)

Inventory valuation losses

7,898

5,363

Net change in fair value contracts

(7)

(21)

(2)

27

Costs of voluntary early retirement program

1,435

Legal and other accrual reversals

(840)

Insurance proceeds for Hurricane Harvey claims

(610)

Insurance deductible related to hurricane

100

100

Adjusted cash flow

$

5,706

$

3,232

$

17,874

$

12,936

Three Months Ended

Year Ended

December 31,

December 31,

2018

2017

2018

2017

Adjusted net (losses) earnings and (losses) earnings per common share (Non-GAAP):

Net (losses) earnings  

$

(3,848)

$

3,693

$

2,945

$

(482)

Add (subtract):

Loss on deconsolidation of subsidiary

3,505

Impairment of investment in unconsolidated affiliate

2,500

Gains on sales of property

(350)

(247)

(1,240)

(594)

Impairment of oil and natural gas properties  

3

Stock-based compensation expense

111

255

Costs of voluntary early retirement program

1,435

Net change in fair value contracts

(7)

(21)

(2)

27

Inventory liquidation gains

(3,481)

(3,372)

Inventory valuation losses

7,898

5,363

Legal and other accrual reversals

(840)

Insurance proceeds for Hurricane Harvey claims

(610)

Insurance deductible related to hurricane

100

100

Tax effect of adjustments to (losses) earnings

(1,607)

1,277

(790)

(967)

Adjusted net (losses) earnings

$

2,197

$

1,321

$

5,921

$

1,315

Adjusted (losses) earnings per common share

$

0.52

$

0.31

$

1.40

$

0.31

SOURCE Adams Resources & Energy, Inc.



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