EPS Forecast
Revenue Forecast
EX-99.1
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a4q2019erexhibit991.htm
EX-99.1
Document
Exhibit 99.1
FOR IMMEDIATE RELEASE
ADAMS RESOURCES & ENERGY, INC. ANNOUNCES
RESULTS FOR FOURTH QUARTER AND FULL YEAR 2019
Houston, Texas (Thursday, March 5, 2020) -- 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, 2019.
The Company reported net earnings of $2.7 million, or $0.63 per common share, on revenues of $431.3 million for the fourth quarter of 2019, compared to net losses of $3.8 million, or a $0.91 loss per common share, on revenues of $442.6 million for the fourth quarter of 2018. On an adjusted basis, net earnings were $0.9 million, or $0.22 per common share, for the fourth quarter of 2019, compared to net earnings of $2.2 million, or $0.52 per common share, for the fourth quarter of 2018.
For the full year 2019, the Company had net earnings of $8.2 million, or $1.94 per common share, on revenues of $1.81 billion, compared to net earnings of $2.9 million, or $0.70 per common share, on revenues of $1.75 billion for the full year 2018. On an adjusted basis, net earnings were $4.1 million, or $0.96 per common share, for the full year 2019, compared to net earnings of $5.9 million, or $1.40 per common share, for the full year 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.
Additional Key Highlights
•Grew net cash flow from operating activities to $3.8 million for the fourth quarter of 2019 compared to $1.2 million for the fourth quarter of 2018. Full year 2019 net cash flow from operating activities increased more than 50% to $46.9 million from $31.0 million in 2018.
•Adjusted cash flow for the fourth quarter of 2019 was $5.5 million, which was relatively flat with $5.7 million for the fourth quarter of 2018. Grew adjusted cash flow to $21.9 million for full year 2019 — a 23% increase from $17.9 million in 2018.
•Paid dividends totaling $0.94 per common share in 2019. Adams has consistently paid a dividend since 1994, or more than 25 years.
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•Entered 2020 with a strong balance sheet and enhanced financial flexibility supported by cash and cash equivalents of $113.0 million and no debt at December 31, 2019.
•Marketed 108,627 barrels per day (“bpd”) of crude oil during the fourth quarter of 2019 through Adams’ crude oil marketing subsidiary, GulfMark Energy, Inc. (“GulfMark”), compared to 110,802 bpd of crude oil during the fourth quarter of 2018. For the full year 2019, GulfMark marketed 107,383 bpd of crude oil versus 79,361 bpd of crude oil in 2018.
•Solidly positioned with 426,397 barrels of crude oil inventory at December 31, 2019 compared to 415,523 barrels at December 31, 2018.
•Ended 2019 with owned or leased fleet across GulfMark and Service Transport Company (“Service Transport”), Adams’ liquid chemicals and dry bulk transportation subsidiary, of 537 tractors and 919 trailers. Through its targeted efforts to further modernize its fleet, Adams’ improved the average life of its tractor fleet to 2.4 years at December 31, 2019 compared to 4.3 years at December 31, 2018.
“We were pleased with our overall results for the fourth quarter of 2019, which included modest improvement in gross margins from the third quarter of 2019 in both of our businesses,” said Kevin J. Roycraft, Chief Executive Officer and President. “We were also pleased with our full year results for 2019, which included more than a 20% increase in adjusted cash flow from 2018 levels.”
“During the fourth quarter of 2019, our Service Transport business unit posted a 3% increase in revenue per mile from the third quarter despite an environment of slightly declining demand for chemical transport. Our ability to grow or maintain trucking rates is directly tied to customer recognition of our industry-leading reputation of on-time and safe product delivery. As a result, in the fourth quarter, we continued to ‘stair-case’ the age of our fleet through the purchase of 66 new tractors and 31 new trailers.”
“GulfMark’s total crude oil volumes for the fourth quarter of 2019 increased 3% from the third quarter of 2019 primarily due to higher volumes in the Gulf Coast, partially offset by decreased volumes coming from our Red River market areas as a result of decreased production. During the fourth quarter, we also further improved the combined age of our fleet through the replacement and purchase of 15 new tractors.”
Capital Investments and Dividends
The Company spent $10.3 million of capital and paid dividends of $1.0 million ($0.24 per common share) during the fourth quarter of 2019. The majority of the capital spending related to the aforementioned purchase of tractors.
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For the full year 2019, Adams’ spent $35.7 million on capital projects, substantially associated with further modernization of its combined tractor and trailer fleet. In total, the Company purchased 195 new tractors and 77 new trailers in 2019. In addition, on May 6, 2019, the Company completed the acquisition of the assets of EH Transport, Inc. and affiliates (collectively, “EH Transport”) for $6.4 million, which added 39 tractors and 51 trailers to Service Transport’s fleet.
As previously announced on February 20, 2020, the Company’s Board of Directors declared a quarterly cash dividend for the fourth quarter of 2019 in the amount of $0.24 per common share, payable on March 20, 2020 to shareholders of record as of March 6, 2020.
Outlook
Mr. Roycraft concluded, “For 2020, we are focused on growing market share in an environment where competition in both of our core businesses is expected to remain strong. At GulfMark, we will continue to identify and execute on opportunities to increase margins and cash flow, including increasing our trucking fleet to add to our ability to gather and distribute crude oil. Service Transport’s efforts will remain squarely focused on increasing truck utilization through further enhancements in fleet quality and driver retention and recruitment. We believe this business is uniquely positioned to benefit from all the major downstream infrastructure projects taking place across the Gulf Coast, and we will continue to look for ways to enhance our terminal footprint in support of our efforts to gain new business.”
“In addition to our multi-faceted organic development efforts, we will also evaluate opportunities to further differentiate and grow our market position through the acquisition of businesses that are adjacent and complementary to our existing operating activities. We believe our strong financial position, including more than $100 million in cash and no debt, places us in a strong position to execute on strategic opportunities as appropriate. Of course, any investment decision will be evaluated using a clear and objective lens of 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 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.
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About Adams Resources & Energy, Inc.
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
tohmart@adamsresources.com
(713) 881-3609
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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, | ||||||||||||||||||||||||||||||||||
| 2019 | 2018 | 2019 | 2018 | ||||||||||||||||||||||||||||||||
| Revenues: | |||||||||||||||||||||||||||||||||||
| Marketing | $ | 416,646 | $ | 428,382 | $ | 1,748,056 | $ | 1,694,437 | |||||||||||||||||||||||||||
| Transportation | 14,693 | 14,267 | 63,191 | 55,776 | |||||||||||||||||||||||||||||||
| Total revenues | 431,339 | 442,649 | 1,811,247 | 1,750,213 | |||||||||||||||||||||||||||||||
| Costs and expenses: | |||||||||||||||||||||||||||||||||||
| Marketing | 409,394 | 430,812 | 1,723,216 | 1,681,045 | |||||||||||||||||||||||||||||||
| Transportation | 12,490 | 11,566 | 53,392 | 48,169 | |||||||||||||||||||||||||||||||
| General and administrative | 2,193 | 2,837 | 10,198 | 8,937 | |||||||||||||||||||||||||||||||
| Depreciation and amortization | 4,375 | 3,640 | 16,641 | 10,654 | |||||||||||||||||||||||||||||||
| Total costs and expenses | 428,452 | 448,855 | 1,803,447 | 1,748,805 | |||||||||||||||||||||||||||||||
| Operating earnings (losses) | 2,887 | (6,206) | 7,800 | 1,408 | |||||||||||||||||||||||||||||||
| Other income (expense): | |||||||||||||||||||||||||||||||||||
| Gain on dissolution of investment | — | — | 573 | — | |||||||||||||||||||||||||||||||
| Interest income | 621 | 669 | 2,766 | 2,155 | |||||||||||||||||||||||||||||||
| Interest expense | (212) | (49) | (636) | (109) | |||||||||||||||||||||||||||||||
| Total other income (expense), net | 409 | 620 | 2,703 | 2,046 | |||||||||||||||||||||||||||||||
| (Losses) earnings before income taxes | 3,296 | (5,586) | 10,503 | 3,454 | |||||||||||||||||||||||||||||||
| Income tax benefit (provision) | (643) | 1,738 | (2,296) | (509) | |||||||||||||||||||||||||||||||
| Net (losses) earnings | $ | 2,653 | $ | (3,848) | $ | 8,207 | $ | 2,945 | |||||||||||||||||||||||||||
| Earnings (losses) per share: | |||||||||||||||||||||||||||||||||||
| Basic net (losses) earnings per common share | $ | 0.63 | $ | (0.91) | $ | 1.94 | $ | 0.70 | |||||||||||||||||||||||||||
| Diluted net (losses) earnings per common share | $ | 0.63 | $ | (0.91) | $ | 1.94 | $ | 0.70 | |||||||||||||||||||||||||||
| Dividends per common share | $ | 0.24 | $ | 0.22 | $ | 0.94 | $ | 0.88 | |||||||||||||||||||||||||||
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ADAMS RESOURCES & ENERGY, INC. AND SUBSIDIARIES
UNAUDITED CONSOLIDATED BALANCE SHEETS
(In thousands)
| December 31, | |||||||||||||||||
| 2019 | 2018 | ||||||||||||||||
| ASSETS | |||||||||||||||||
| Current assets: | |||||||||||||||||
| Cash and cash equivalents | $ | 112,994 | $ | 117,066 | |||||||||||||
| Restricted cash | 9,261 | — | |||||||||||||||
| Accounts receivable, net of allowance for doubtful accounts | 94,534 | 85,197 | |||||||||||||||
| Accounts receivable – related party | — | 425 | |||||||||||||||
| Inventory | 26,407 | 22,779 | |||||||||||||||
| Derivative assets | — | 162 | |||||||||||||||
| Income tax receivable | 2,569 | 2,404 | |||||||||||||||
| Prepayments and other current assets | 1,559 | 1,557 | |||||||||||||||
| Total current assets | 247,324 | 229,590 | |||||||||||||||
| Property and equipment, net | 69,046 | 44,623 | |||||||||||||||
| Operating lease right-of-use assets, net | 9,576 | — | |||||||||||||||
| Intangible assets, net | 1,597 | — | |||||||||||||||
| Cash deposits and other | 3,299 | 4,657 | |||||||||||||||
| Total assets | $ | 330,842 | $ | 278,870 | |||||||||||||
| LIABILITIES AND SHAREHOLDERS’ EQUITY | |||||||||||||||||
| Current liabilities: | |||||||||||||||||
| Accounts payable | $ | 147,851 | $ | 116,068 | |||||||||||||
| Accounts payable – related party | 5 | 29 | |||||||||||||||
| Derivative liabilities | — | 139 | |||||||||||||||
| Current portion of finance lease obligations | 2,167 | 883 | |||||||||||||||
| Current portion of operating lease liabilities | 2,252 | — | |||||||||||||||
| Other current liabilities | 7,302 | 6,148 | |||||||||||||||
| Total current liabilities | 159,577 | 123,267 | |||||||||||||||
| Other long-term liabilities: | |||||||||||||||||
| Asset retirement obligations | 1,573 | 1,525 | |||||||||||||||
| Finance lease obligations | 4,376 | 3,209 | |||||||||||||||
| Operating lease liabilities | 7,323 | — | |||||||||||||||
| Deferred taxes and other liabilities | 6,352 | 4,271 | |||||||||||||||
| Total liabilities | 179,201 | 132,272 | |||||||||||||||
| Commitments and contingencies | |||||||||||||||||
| Shareholders’ equity | 151,641 | 146,598 | |||||||||||||||
| Total liabilities and shareholders’ equity | $ | 330,842 | $ | 278,870 | |||||||||||||
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ADAMS RESOURCES & ENERGY, INC. AND SUBSIDIARIES
UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
| Year Ended | |||||||||||||||||
December 31, | |||||||||||||||||
| 2019 | 2018 | ||||||||||||||||
| Operating activities: | |||||||||||||||||
| Net earnings | $ | 8,207 | $ | 2,945 | |||||||||||||
| Adjustments to reconcile net earnings to net cash | |||||||||||||||||
| provided by operating activities: | |||||||||||||||||
| Depreciation and amortization | 16,641 | 10,654 | |||||||||||||||
| Gains on sales of property | (1,400) | (1,240) | |||||||||||||||
| Provision for doubtful accounts | (12) | (150) | |||||||||||||||
| Stock-based compensation expense | 478 | 255 | |||||||||||||||
| Deferred income taxes | 2,085 | 936 | |||||||||||||||
| Net change in fair value contracts | 23 | (2) | |||||||||||||||
| Gain on dissolution of AREC | (573) | — | |||||||||||||||
| Changes in assets and liabilities: | |||||||||||||||||
Accounts receivable | (8,373) | 36,350 | |||||||||||||||
Accounts receivable/payable, affiliates | (24) | 24 | |||||||||||||||
Inventories | (3,628) | (10,587) | |||||||||||||||
Income tax receivable | (165) | (1,087) | |||||||||||||||
Prepayments and other current assets | (2) | (293) | |||||||||||||||
Accounts payable | 31,795 | (10,252) | |||||||||||||||
Accrued liabilities | 1,154 | 1,744 | |||||||||||||||
Other | 693 | 1,717 | |||||||||||||||
| Net cash provided by operating activities | 46,899 | 31,014 | |||||||||||||||
| Investing activities: | |||||||||||||||||
| Property and equipment additions | (35,743) | (11,731) | |||||||||||||||
| Asset acquisitions | (5,624) | (10,272) | |||||||||||||||
| Proceeds from property sales | 3,680 | 2,038 | |||||||||||||||
| Proceeds from dissolution of AREC | 998 | — | |||||||||||||||
| Insurance and state collateral (deposits) refunds | 652 | 830 | |||||||||||||||
| Net cash used in investing activities | (36,037) | (19,135) | |||||||||||||||
| Financing activities: | |||||||||||||||||
| Principal repayments of finance lease obligations | (1,697) | (495) | |||||||||||||||
| Dividends paid on common stock | (3,976) | (3,711) | |||||||||||||||
| Net cash used in financing activities | (5,673) | (4,206) | |||||||||||||||
| Increase in cash and cash equivalents, including restricted cash | 5,189 | 7,673 | |||||||||||||||
| 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 | $ | 122,255 | $ | 117,066 | |||||||||||||
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ADAMS RESOURCES & ENERGY, INC. AND SUBSIDIARIES
NON-GAAP RECONCILIATIONS
(In thousands, except per share data)
| Three Months Ended | Year Ended | ||||||||||||||||||||||||||||||||||
December 31, | December 31, | ||||||||||||||||||||||||||||||||||
| 2019 | 2018 | 2019 | 2018 | ||||||||||||||||||||||||||||||||
| Reconciliation of Adjusted Cash Flow to Net (Losses) Earnings: | |||||||||||||||||||||||||||||||||||
| Net (losses) earnings | $ | 2,653 | $ | (3,848) | $ | 8,207 | $ | 2,945 | |||||||||||||||||||||||||||
| Add (subtract): | |||||||||||||||||||||||||||||||||||
| Income tax benefit (provision) | 643 | (1,738) | 2,296 | 509 | |||||||||||||||||||||||||||||||
| Depreciation and amortization | 4,375 | 3,640 | 16,641 | 10,654 | |||||||||||||||||||||||||||||||
| Gains on sales of property | (14) | (350) | (1,400) | (1,240) | |||||||||||||||||||||||||||||||
| Gain on dissolution of AREC | — | — | (573) | — | |||||||||||||||||||||||||||||||
| Stock-based compensation expense | 126 | 111 | 478 | 255 | |||||||||||||||||||||||||||||||
| Inventory liquidation gains | (2,290) | — | (3,749) | — | |||||||||||||||||||||||||||||||
| Inventory valuation losses | — | 7,898 | — | 5,363 | |||||||||||||||||||||||||||||||
| Net change in fair value contracts | 3 | (7) | 23 | (2) | |||||||||||||||||||||||||||||||
| Insurance proceeds for Hurricane Harvey claims | — | — | — | (610) | |||||||||||||||||||||||||||||||
| Adjusted cash flow | $ | 5,496 | $ | 5,706 | $ | 21,923 | $ | 17,874 | |||||||||||||||||||||||||||
| Three Months Ended | Year Ended | ||||||||||||||||||||||||||||||||||
December 31, | December 31, | ||||||||||||||||||||||||||||||||||
| 2019 | 2018 | 2019 | 2018 | ||||||||||||||||||||||||||||||||
| Adjusted net earnings and earnings | |||||||||||||||||||||||||||||||||||
| per common share (Non-GAAP): | |||||||||||||||||||||||||||||||||||
| Net (losses) earnings | $ | 2,653 | $ | (3,848) | $ | 8,207 | $ | 2,945 | |||||||||||||||||||||||||||
| Add (subtract): | |||||||||||||||||||||||||||||||||||
| Gain on dissolution of AREC | — | — | (573) | — | |||||||||||||||||||||||||||||||
| Gains on sales of property | (14) | (350) | (1,400) | (1,240) | |||||||||||||||||||||||||||||||
| Stock-based compensation expense | 126 | 111 | 478 | 255 | |||||||||||||||||||||||||||||||
| Net change in fair value contracts | 3 | (7) | 23 | (2) | |||||||||||||||||||||||||||||||
| Inventory liquidation gains | (2,290) | — | (3,749) | — | |||||||||||||||||||||||||||||||
| Inventory valuation losses | — | 7,898 | — | 5,363 | |||||||||||||||||||||||||||||||
| Insurance proceeds for Hurricane Harvey claims | — | — | — | (610) | |||||||||||||||||||||||||||||||
| Tax effect of adjustments to (losses) earnings | 457 | (1,607) | 1,096 | (790) | |||||||||||||||||||||||||||||||
| Adjusted net earnings | $ | 935 | $ | 2,197 | $ | 4,082 | $ | 5,921 | |||||||||||||||||||||||||||
| Adjusted earnings per common share | $ | 0.22 | $ | 0.52 | $ | 0.96 | $ | 1.40 | |||||||||||||||||||||||||||
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ADAMS RESOURCES & ENERGY, INC. AND SUBSIDIARIES
NON-GAAP RECONCILIATIONS
(In thousands)
| Three Months Ended | Year Ended | |||||||||||||||||||||||||||||||||||||
| December 31, | December 31, | |||||||||||||||||||||||||||||||||||||
| 2019 | 2018 | 2019 | 2018 | |||||||||||||||||||||||||||||||||||
| Reconciliation of Adjusted Cash Flow to Net Cash Provided by Operating Activities: | ||||||||||||||||||||||||||||||||||||||
| Net cash provided by operating activities | $ | 3,757 | $ | 1,189 | $ | 46,899 | $ | 31,014 | ||||||||||||||||||||||||||||||
| Add (subtract): | ||||||||||||||||||||||||||||||||||||||
| Income tax benefit (provision) | 643 | (1,738) | 2,296 | 509 | ||||||||||||||||||||||||||||||||||
| Deferred income taxes | (592) | (1,621) | (2,085) | (936) | ||||||||||||||||||||||||||||||||||
| Provision for doubtful accounts | (24) | 55 | 12 | 150 | ||||||||||||||||||||||||||||||||||
| Inventory liquidation gains | (2,290) | — | (3,749) | — | ||||||||||||||||||||||||||||||||||
| Inventory valuation losses | — | 7,898 | — | 5,363 | ||||||||||||||||||||||||||||||||||
| Insurance proceeds for Hurricane Harvey claims | — | — | — | (610) | ||||||||||||||||||||||||||||||||||
| Changes in assets and liabilities | 4,002 | (77) | (21,450) | (17,616) | ||||||||||||||||||||||||||||||||||
| Adjusted cash flow | $ | 5,496 | $ | 5,706 | $ | 21,923 | $ | 17,874 | ||||||||||||||||||||||||||||||
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