Adams Resources & Energy (AE) 10 May 232023 Q1 Earnings call transcript

Good day and welcome to Adam Resources & Energy Incorporated First Quarter 2023 Earnings Call. All participants will be in listen-only mode. [Operator Instructions] Please note that this event is being recorded. I’d like to turn the conference over to Mr. Steven Hooser from Three Part Advisors. ahead. go Please

good for and call We you appreciate review Thank Adam’s morning, Resources us results. the quarter conference & joining first you XXXX everyone. Energy, to Inc.

Adams me Resources Kevin Joining and Executive Ohmart. CFO, company’s President the call the today Roycraft & President and on Energy CEO, and Tracy Vice are

audio This the the of Company adamsresources.com. longer will no will link call. the be replay Greg reading. any of Asset is any GulfMark of Transport on be the Additionally, call call at session Holdings and may end us of and Investor information Service accessed for be Relations or transcript Q&A accurate that page webcast Q&A Mills, President Wade advised time-sensitive Today’s session the Harrison, can at President the through as being joining recorded. the of be Please date including the be

that are the or Litigation in future forward-looking of like provisions would Act made financial performance to are today’s remind statements statements Private the of including Harbor statements Reform XXXX. facts, are and that you made discussions expectations or historical future pursuant I to Safe events also Securities of not

their uncertainties Commission. control. risks the Please materially nature disclosures other the company’s forward-looking and Forward-looking in statements issued for with earnings was may yesterday and to the from filings statements. described Securities factors and and company’s our press on uncertain by the detail of Actual those outside Exchange refer expressed are These implied. differ results are or in release that

can statements. share. an the found earnings flow, Management at EBITDA, end update the release. adjusted to measures, free on measures income forward-looking per cash the be nearest Reconciliations Energy will any and net including Adams assumes non-GAAP Resources the GAAP & obligation of adjusted publicly of to no refer return earnings to revisions

the release release X-K the Investor our in included adamsresources.com. has the of the press Relations yesterday also is submitted the website, Finally, A was of section copy been earnings issued with posted on SEC.

now the and CEO, Kevin like company’s now that, And to would over to the call I turn Roycraft. Kevin? with President

of you first continue Good Thank Resources. our understanding call all you, your as ever hosting I’m and interest create Adams conference to delighted for further financials. then transparency with shareholders. be we Steven. in and I to and morning, thank business color our to future to will call I Tracy today’s current the over turn quarter the through start to the and will run call on some

of to additional on return will us. future I provide color ahead Finally, and outlook the

and by by of of prior Energy improved XXXX, for cash QX improvement, recently and improved XX% QX Adams acquired earnings XXXX results affected quarter driven top and division prices, and were XXXX entities. the lower quarter-over-quarter our over by while negatively line QX the GulfMark our and performance Carriers over For flow oil significant QX primarily saw Phoenix year Adjusted XX% Bulk by over Firebird contributions Oil quarter by XXXX.

ongoing XXXX and disruptions, crude supply market. economic at today’s balance improved including slower trailer $XX.X close. This the was achieved QX manufacturing concerns, a oil million inflation from tractor chemical prices, the growth XXXX unrestricted challenges to QX continued cash of end Adams’ declining production and million backlogs, chain despite at $XX.X in marketplace,

a to our flow achieve pleased not of all While our in efforts we including the cash QX challenging team, deliver did of improved environment. am I ability our with goals, overall

showed cost-cutting, focus day XX,XXX are quarterly GulfMark ability improving moving barrels margins crude significant the performance per quarter back historical bring to As Though was currently versus volumes were be I sell per improvement, and contributing improved with Energy’s of previously, in as day headwinds in to factor increase XXXX. face increasing barrels first GulfMark’s XX,XXX GulfMark’s quarter. and the mentioned the still on quarter volume for a line GulfMark To growth. inflation costs by margins. levels, our outpacing forward contracts we will

find the the steady saw day efficiencies delivering XX,XXX barrels Additionally, wrap Midstream quarter the pipeline our After Texas of to allowing Max XXXX, and remained in in volumes for the by and $X.X steady by quarter to connection by in contributing for construction Oil Bulk pipe over oil and volumes our of its improved day performance start of loading continued The for barrels and part an QX system. average around XX,XXX Crude up XXXX. latter move full portion slow to trucks. Firebird GulfMark at margins Carriers Phoenix barrels quarter have of Victoria, quarter. first location per VEX to million Phoenix cash pipeline a on the per Firebird to barge their providing flow our post-acquisition begun those footing first hauling instead and

to benefit synergies started benefits third-parties we beginning quarter, divisions. that exist include bring from in-house. sharing overflow and the maintenance on In load by between reducing dependence the These

cross have our is selling Additionally, positive different expand to the new to bringing customer opportunities to effect entities. a by all starting offering

Transport considering facing Despite our Service chemical excess chemical and up recently cash Transport the capacity due This and X chemical both Service markets positive to the a the macroeconomic as drops, new performance in Transport the Transport the to for upward on Service capitalize years. shippers’ of footprint. the strong transportation industries flow trajectory industry the has for service Transport rebound. division, Service temporary to maintain rate shopping produced well volume Transport quarter, business struggled challenges million our Company, pressures market. Chemical adding the transfer by that winning expanded set overall performed over should cash market it Turning the Overcoming seen flow to has to new and hauling in been $X.X Throughout past quarter. causing the lanes able headwinds, quarter pressures, the Service shipment pricing these saw

around activity and the Currently, XXXX. lot this was Phoenix call. the lie I acquisitions. positive later in Adams we is in the yet ahead to a especially any pipeline, on for synergies challenges our with there believe of potential Overall, VEX will assets, potential Firebird be touch captured our well positioned and that surrounding

it With that, financials to would in cover over I more to the Tracy like detail. to turn

Thank you, everyone. my good working some I issues am through morning with Kevin voice. still health and

to segment to which the Carriers our Firebird is this revenue and primarily crude first directly me. please with XXXX were marketing quarter year last So for was of low Phoenix of quarter. compared revenues by in Total prior the of million was oil August. offset price the bear $XXX.X in $XXX.X revenues Bulk related for by The Oil tied partially and oil revenue million decline to segment, acquisition our driven

versus decrease of the income primarily in oil segments, liquidation the operating the $X.X over loss segment reflecting last in our the decrease loss gain, in pressures $XX.X quarter valuation operating million due $XXX.X at $X.X million past Adjusting price XX% individual XXXX. quarter decrease year versus crude is of the expenses the valuation prior an quarter for million earnings quarter. year offset for first marketing cost operating is the was to million the segment by the due inventory in quarter XXXX. across million of compared this the first Looking volumes. to as of compared segment first as in revenue an year of of earnings inventory had million partially higher the for year’s Operating higher marketing marketing in million liquidation quarter was business. $X.X The well by to $X.X in to out inventory XXXX quarter $XXX.X The gain first million of in $X

compared $XX.X XXXX. due Our $X.X million $XX.X higher income prior million transportation in maintenance primarily year million million was to to depreciation of the quarter and in for decrease first is $X.X the quarter segment The expenses. reported of quarter. first the Operating revenue versus

logistics revenue XXXX of Phoenix of consist repurposing which Our and of $X.X income. for quarter million first August million acquired of added XXXX were and the in operating $XX.X segment that Firebird,

we General audit costs, $X.X expense increase fees. hire increased this first million the $X.X our year. related approximately $X.X from quarter. this stock service $X.X of the last repurchase due of versus term Interest year part the $X.X and first million and in from last is as increased administrative loan in outside of The as shares expenses million well of put to year's personnel quarter, by KSA that to as million higher XXXX to quarter million place

of was million $X.XX year per $X.XX or diluted $X.X or the compared $X was compared the of income per of adjusted or per million, for share million, quarter loss loss net loss or loss for $X million, share, to quarter. net loss per share, basis, an net prior to share. $X.XX of Net $X.XX $X.X a On

for expenditures was $X.X For million, totaled the operations capital flow quarter, $XX.X million. cash from quarter the and

is payments XXXX, crude XX, includes on March timing equivalents XX, $XX.X Our our related agreement. primarily million, December available million The of XXXX. million $XX.X million $XX of was from customers. and cash $XX.X credit compared as cash $XX.X receipts of available increase which to in liquidity March early XX, million Total as under to oil totaled

Kevin the comments. to back call Now over turn final some for Kevin?

But pipeline, to color being through this is VEX activity we comments the pipeline around own and Firebird nearly beyond. made barrels on connection Along Phoenix this and connection some I Tracy. in Max Thank to outlook the with a system on begin VEX our are due following provide you, some wanted delays that little Max their project had has surrounding weather Midstream for system. to acquisitions. and more complete. QX expect the with repairs to and QX.

party the year, VEX, customer Phoenix So we this acquired April introduction of GMT newly our a third on our Oil barrels from system. started storing new first in

third through other the GulfMark internal remainder year. remain consistently barrels the Max steady, expect while of We the for increasing pipeline customers and VEX barrels on to party

future to to strategically of sharing have in before rail on-site rail and office of we to between also will for divisions is This year. improve X, focusing and will on service the be and announced the new continue focus will capable to on storage. We intend move customers. on robust we between expected home company Phoenix to third that and allow this of to customer facility integrations. and begin our end party divisions, transloading synergies Having Dayton, reduce spur the Spur our On an May railcar third-party load Firebird, both and IT largely Texas maintenance capabilities sites our location summer expect be back the the Firebird. transloading reduction complete closer located purchase the rail of and land is its and expense. Phoenix to dependence For plan construction operational our more offerings capitalize the on-site on on We efficiency, base, to

to future to at their realize the Service Transport, challenging and what GulfMark Firebird. are the expect the least for We to time for environment GulfMark holds for and we QX, work efforts The a Phoenix of improve and cutting benefit excited margins. needs cost both see

For second expansion Service environment Transport towards when navigate our successfully projections from this stronger and our stronger coming itself an positioned Service half of the a has customers acquisitions, recent a to towards eye in of slower Transport with markets position improves. out the Through lean XXXX.

we unknowns QX are As and our of there can that the the environment cloud XXXX look in remainder forward vision the of macroeconomic many to future.

solid built However, a Adams on been has foundation.

and drive markets. a have us in further position will cash we challenging highly to complementary, The organization our fundamentals acquisitions, We this to even remain and have strong. we are added success growing allow

year We second the XXXX. expect the improved especially performance half in of progresses, as

I the With to like questions. line Operator? open would that, for

FBR. be will Please from Thank Liam Burke, question you. go Riley ahead, B. sir. [Operator First Instructions]

Good Morning, Kevin. Tracy. morning, Good

morning, Good Liam.

Good morning, Liam.

of on GulfMark side to They us a Your improve what improved sense the give at year they But are not as quarter quite, were those do from a margins? to where you ‘XX. can cost you can fourth costs sequentially ago.

they of of our And do back us, perspective, challenging have on on a and looking third-party can getting for some because maintenance, Fuel going Fuel, going we is seeing fuel Yes. GulfMark driving the really going because start higher I on slightly a bringing back think our mean, fuel. improvements discount side. in volume environments, labor maintenance cost we as economy the reductions our still Greg, meeting at more in more. Phoenix we too, back with comment barrels can discount prices. room process be the side, Greg how every Firebird to But rate where there, especially largest some and I have I a as from we huge opportunities aspect usually any renegotiating the things, softens, contracts the know, don't from we if is I and let expenses, better require from other him back will can for that. to been their have in and well. I starting are working you vendors in those think, fuel going negotiating get I to of negotiating spending, capitalize or one there. the are cost pulling,

say the tools allow where to of some of office level, I focus us into here each that on see the line company, the whole to a district for they our across better down help supervisors item just would P&L utilizing it, here. level put are manage the district, expense, from district together downtown with to look their to we not the

to a just lot a eyes we more really lot OpEx terms where on more side. and So of in need on focus be the

their over IT of on last Because own allowed This are driven the holding P&L managers done GulfMark center that think cost jump that to see And new really to I point too. Historically, that and district managers the own actually to have have we is year moved year that of center. to district that or that GulfMark half a down individual our And P&L. first at not to some brought detail. happen. important its that system the accountable had we allows I their Greg we as our up have upgrades terminal will level

comments guess, release, your or your maybe prepared half a And of this from that. is I second press

are work lot quarter these to a going details through So second you need right? to now, of

do Service expect, that we that know improvements at point. we factually some we and shaping need mostly cost some doing synergies But little that of through side chemical the right, what is that more depressed of Yes. just than from the We slight point. Laim. this trying QX. hear Transport you reduction do over And But being from we work certainly largely, I really GulfMark, up the are capitalizing believe see see QX. not that it way of the Phoenix half think both improve of effort, the to at expect second QX, is volume to a this we a markets of we the the I will the be for Firebird. from year the Thank sort one bullish

third more Max up Should Okay. one just of the quarter And and be one it connection with or been now be it realized that expect to then it's we rather is event? a would VEX, final quiet, on like of picking fourth looks Midstream. revenue quarter in

Wade, you want to take that?

we the with Well, in going activity expect we quarter. respect third to Max Midstream joint I the that have tariff some would

VEX will second We and as picked on we as well. revenue as side we to another staging some begin on are system somebody the terminalling have customers shipper working that some quarter up

we So some some going on side, on started business got more of April that this the in terminalling month side. terminalling have

shipper GMT our So start you other revenue. will that I will June. some see believe in then And

So – volume. we tariff will some volume see

QX through the of then revenue you and think see ramping I starting year. course the in light Liam, Yes. will up

Great. you. Thank

Thank the you. interest. Appreciate

be question of Sakai the Please from And Research. go you. Chris next Singular on. will Thank

good morning. Hi,

Chris. morning, Good

morning, Chris. Good

about Phoenix Wanted facility? the that what facility to get this an for new was this Oil, feet idea new are purchased costs there processing for

you to want Greg, that? take

Sure.

one, we on course, that – for have the week that ago. we so property For or $X.X closed million purchased of itself

type expect running, But full initial late X X over some rail transload year. spin the facility it years in with have facility will there, place done. we the fit and an going get probably the take year to then we in to year just that how of project business next we Humboldt to $X use And transition we trying began to are X we the will actually some take so when just the we expect respect is by and on of of some end longest, to the Dayton, the tanks usage million the range to our from but tanks next spin over this see as step to the interim and about at and, the money siding make the of have working years. after talking kind And XXXX are are that out to we

belt the will that laid that, And rail just Yes. tanks first spur I add in getting is down. the priority

of that eliminate today. rail we third-party use currently So the spur the uses can Phoenix

So back for will is that get to in rail goal XXXX and be our cost up and of running, place the eliminate that third-party then spur.

Okay. Thanks.

year? for do capital expenditures the Sounds you good. And idea remainder the or of of sort any forecasts for have

want that? you take Greg, to

Yes.

working are is do with a the moment. at seeing their real trucking other I of number not some are manufacturers, companies the things We happening one the orders. good is because backing of are we have out that

trailers, are through We to going see, out and I the so the trying which million and $XX on are VEX, connection project spent is figure just spend working think we on yet like be is on separate on connect tractors the any timing to or we or from good rail the on maintenance or – but any, any money stuff spur, that a schedules, anything to date our that and that. for

maintenance, from is kind $XX am So range I at. a the what going million looking am to around I looking of

together prioritize this going the what relook can year. in going I we need through still Greg GulfMark will at what the necessary what we have, to actually we forward, in August earmarked that, at with chain for of Especially get being XXXX. that items should and double spend we buy November to all of that we and necessary supply XXXX considering or be may just that check as make one from and Service we just to And have at number sure CapEx issues, need that the to Transport towards budgets both our Wade a the process we Chris, put make end add are we

Okay. Great.

You can chain mentioned that, on you how supply things there? or comment issues, are

received pretty they – that has some the and the orders all trailer be issue But of orders. able struggling our building we that slots. tractor because number have on some to to cancellations. the And have have we X It we tractor a those trucks been just is able in in open and and for of trailers right side. the both believe manufacturing some orders or orders the equipment last Tracy And won’t told The the been I coming now. our were meet order, fill over late the seen are receiving fill all into done year. back up side of we quotas, years QX get slots the manufacturers Like still cutting commented, are of have pushed on their XXXX XXXX XXXX’s being steady to us this and – QX,

So, is to stick they I for a those now, timelines probably be is will there sign certainly future, an able if to backlog. the but still sense encouraging which

Okay, Greg. Thanks the for answers.

Thank you, it. Chris. Appreciate

Mitchell Next will ahead. of Instructions] Slam. from be question [Operator Grand go Sacks Please

respect three just or some personnel going G&A, to to things are mentioned With services. of there and audit had Are go costs, some I continue those costs of time? away over you outside the think those

Yes. I the the we year. basically out equally what are costs was audit very spreading over those unfortunately, full are

per financials, basically Phoenix addition month. we audit the are and have to going the with our be. of that costs increased audit XXX And what the of has So, Firebird ‘XX recognized

not cheap. the is, auditors amount, unfortunately, but is a aren’t it that So, huge

kind true is costs, some year the the up of personnel the really paid bonuses the end of bit on executive kind back complete. and for are out, think we of a go I the after year, of Some bonuses probably

of to uptick, where reassessing And there kind good evaluation trend. across answer of we Sarbanes-Oxley are them from of just we kind then the of of that the with I the what kind if not through There our can whether we not time. that, various a a are, of more of the all particular from at is outside But what just the February, side, we vendors. lower at was again, services in-house. had tend those so spend will consultants that we just do that services, on services, stood go will SEC more year. working do to doing with we our trying And that slight money, particularly compliance, helping still there level, to that the, anticipated and IT if an I to need January legal think with choppiness compared end is see board. have project mean assistance of on to of go opportunities counsel are we different to, I Counsel then we suppliers use, what particular really on because because back for a us we kind

some really reliance little to and are a or it’s how focusing we sense to put going So, but does what we do is necessary, minimize on less or third-parties. be it bit mix, on of can things costs, internally make

the the I to in sort week with over will spot last that I in filled some brought close, We this gotten our we using services contractors outside accounting accounting the will challenges have some help hump But us do have side. on we the the say in through of hiring services. believe of from roles. accounting some third-parties for year-end

staffed from us less bringing So, we side. should accounting should dependence be help fully contractors the because the with those, outside on to in see we on

coming piece that see I So, down.

do doing to see whether that synergies can with with merger the about And the you Firebird, talk or carriage that to you on what And third-party of dollar GulfMark, you kind business? are any particular cost then little the respect perspective, from acquisition? a bit a prior opportunity

Greg that. Yes. comment both and can I on

and just from my GulfMark that. right top are who looking customers their know XX Firebird to in was exactly if right amount But want and now. here as can be our get at to March their you, through about tell the I close we think I dollar not went into do exactly recently, perspective, XX, I I

do I can better. we So, think

GulfMark. communications on So, the right some hauling for They that to made started, enough. Firebird and just we having get have Firebird not progress hauling, GulfMark

of Firebird to you more as has once the carriers usage Greg for think third-party we to increase some contact… I overflow turn initiatives

then we trucks the Sure, that it before Texas we and purchased we GulfMark well and where together all map actually shops, across that when we Yes. a mechanic stations have and Firebird overlays – shows and locations put just Phoenix, Firebird as shops. has

we can to the one of we of going I so district one think maintenance doing and are for make, eliminate is, then And are of utilize shops things two together merge to our equipment. those we locations, our and Firebird

on make terminal needs. by some so help feed then we And paying is help move so utilize better that’s to based Cuero at leases And and can one to new taking ship VEX bring home moved to can both is those people two VEX we that looking big at in the Firebird do are the the third-party the we that other And It on we the with and pipeline and overflow for Cuero to the locations, we GulfMark And us to trucks bills, are location can products. it. truck pipeline. we part equipment some of just move can trucks. help are transportation so where Firebird feeds where larger get and and related a stage looking working migrate drivers that time the GulfMark’s typically at pipeline, things Cuero additional carrier folks, Firebird Firebird we when barrels and terminal we is Firebird then are with another thing of VEX for

And brought they XX barrels on I the XX, think when doing onboard, they really Firebird challenges day. was, around were the driver were Mitch had drivers we somewhere a counsel, XX,XXX around One that around of we there.

– their pretty So, utilized. was capacity they are pretty much

I little bit. or their today. to XXX a We or up we have have drivers been successful remained up steady volumes are Firebird, adding And think XXX picked at

getting business. from – fill seats a we goal so the empty to Firebird the walk little really is without do base GulfMark want they having capacity but their core from provide walk can away GulfMark, to a to at additional away to to try have So, Firebird, not customer their service

the is VEX question And then pipeline. the around last

a So, have I Midstream Can to said, a to sell capacity what QX. pre-sales are think or and pipeline to talk are you volume the little the through there could you that to start utilization moving think you have connected you going be on really the what the Max bit perspective once you of and barrels new the VEX it connection? in starting kind you from done capacity

to but customer. pipeline to we Max but that deal market and lot that seeing a Max a conduit opportunities pre-sold, quite the expect end effectively the VEX XX,XXX activity technically year. we picked there and bit out flow haven’t there. some or we several so up of That attracted up up provides pipeline just to the The primarily to Max’ getting of of has interest see parties, attractive are VEX the would connection, with word day than now. a But VEX of Max spent volumes are come barrels of more VEX build connecting with that just right a which lot a and additional money we pre-sale, which to if from a customer Our was by be the different come one going VEX rather

So, X,XXX the a for of and is incremental target think today. of we course, good are end XX barrels moving already VEX by again, year I a XX the – day

Greg, a are, right they that’s new is could bit should they now, what their where you tanks, what when customers the little touch on process filling start…?

Sure.

terminal, the have by tanks have mouth on that the signed terminal of a to ready Victoria then at that to terminal they at the the VEX are and have connected doing VEX. the June, what signed to those is going. tank shipping filled, them And a and be will up in Once the pipeline. the system for we volume customer. we where get we we enough with deal them Cuero Barge is move we get should Initially, – filling new this So, tanks

not is to it large very a terminal the working volume get start going business customer, out steady So, as again. but us Barge and for

would Yes. I like, Mitch. And go-ahead

oil of the terms ask, it helped is I it to part GulfMark that better not the getting connection so in going transaction? for prices of that was owns or realized

that GulfMark GulfMark or from activity that I other not GulfMark VEX helps one it know we do does. really pipeline a doing know don’t I the valuable – crude it from marketing that market oil more VEX general. pipeline on I to create value do way the know business are we the not the what with makes oil perspective other impacts that more than But in the can business, VEX helps crude marketing, Energy’s the that

Thanks.

Thank you, Mitch.

Thank Kevin you. call remarks. to This Roycraft over concludes like to the our question-and-answer for session. back turn closing I

and you, in for you company. thank Thank continued interest operator your the

Los We in B. be Institutional Ideas The on Investor June Part Conference on the City on in for May in the you report August. providing the June joining Advisors to Three of Conference progress XXth. Virtual May when route, XXth and Singular Angeles and results New XXst second Thank participating look our update Riley us. will We York Conference forward from an XXnd. we quarter in

Conference has now for concluded. today’s attending Thank you presentation.

disconnect. now may You