Adams Resources & Energy (AE) 14 Mar 242023 Q4 Earnings call transcript

Good morning, and welcome to the Adams Resources & Energy Fourth Quarter 2023 Earnings Conference Call. [Operator Instructions] Please note this event is being recorded. I would now like to turn the conference over to John Beisler, Investor Relations. Please go ahead.

Thank you, and good morning, everyone. Resources call. fourth Adams year and the conference XXXX to & quarter Energy full Welcome

be on be call and at Relations future replay safe Litigation as me is transcript remind through President XXXX. are performance longer the and the Joining the the including Tracy harbor Securities made adamsresources.com. are also and recorded. Reform & Adams or CFO, the time-sensitive session, be information advised accurate on and events can of Q&A statements the CEO, Today's of forward-looking Private Energy or facts, being that Resources would no audio date webcast that in made call, provisions to Kevin or be of This like link future historical any page pursuant any Roycraft; discussion Ohmart. the Act to the that statements not or Please and EVP financial this company's also will call morning accessed today's of are are Investor statements the reading.I including you may expectations

on the income per EBITDA, to free nearest any can no measures, adjusted company's to and statements. Forward-looking flow, materially are GAAP Please refer company's yesterday those to may their results release. our at Reconciliations and end control. return or with Management of non-GAAP found Adams uncertainties Exchange detail differ disclosures on Securities publicly update that filings our the statements, Energy for Commission. earnings the and outside forward-looking share. and earnings the or risks and Actual revise & described nature, be obligation factors are the uncertain Resources net implied. of press assumes the other including measures refer by issued earnings to expressed adjusted cash release from and was in statements.These forward-looking will in

Investor to X-K we the to Relations Kevin website. issued the like on also an turn yesterday I'd copy the section SEC.Now of has earnings is the release President submitted our A the posted Kevin? over company's Roycraft. in press and CEO, Finally, release call the to of included been

the John, you, remarks division to macroeconomic the call Harrison XXXX. some calls, begin remarks. in-depth outlook for by our the basis. flow, quarter cash dive a available be continuation the quarter Presidents, with it discussed in on sequentially details Tracy and conclusion I first at business prepared everyone. turning results improved full the today's Adjusted of your morning, the will Greg before year on discussing solid and a close the produced Tracy encouraged fourth Wade of headwinds I I then by quarter. financials. and for for the quarter and into questions cash two Thank prepared liquidity the last good in fourth will was areas all and the over available our for many the more results.Despite company's will Myself, quarterly Mills the year-over-year

quarter of third third during onetime our flow and company's into cash $X.X of quarter the For over closure flow were of million XXX% strongest XXXX fourth of produced of million $X numbers in quarter. cash included and million events flow million nearly we've year quarter the Red quarter, the we easily adjusted prior XX% we improved $X.X the in with sale our $X.X since quarter gains cash the onetime in over to Not the the of associated had both adjusted these assets, XXXX. the from adjusted numbers, quarter.Factoring operations from River the expenses

cash XXXX, $XX.X $XX.X million to by over XXXX $XX.X of year the million. For improved million from from activities full flow net we operating

and taxes, in cash was the largest assets oil crude these inventory for $XX.X flow compared adjusted $XX in the at came when The However, XXXX's differentials changes, XXXX. of year. million change million and sale adjusted of prior XXXX inventory adjustments on to gain between

the momentum from see the previously, prior for or these River XX was closure quarter in pleased equipment. end. net million with $XX.X a sale very cash North exit our operation, exit. commitments over which in million short of trailers maintenance and CapEx the Texas, growth to of Dakota XX Oklahoma.I $XX.X move improved volumes fully in is contract which completed sold include the model of mentioned for the our on divisions and continue remaining Red Energy's Texas equivalents quarterly third dedicated flat XX% operations, volumes, positive XX compared and South Louisiana year over million. moved and a improving the and working We and Of sequentially, and I team's legacy be cash Red River needs XXXX. Firebird generally Overall, to a third this to very the the and to our As while tractors into positions.Cash cash. on decreased the expected trajectory, in Michigan, and to due $XX.X Liquidity GulfMark XX we execution will quarter $X.X year trailers with operations to million liquidity North in GulfMark in XXX% late the we area The to XXXX. gain tractors timeline equipment the quarter at our XX% fourth similar reduce finishing year's quarter followed were quarter of area primarily

our the to quarter, barrels line previous their quarter's GulfMark VEX barrels our the find X,XXX shipper to still of drive increase Pipeline, per X,XXX able expected third-party line the over to the on XX% is continues of the behind the was encouraging, VEX day an Turning a on volume to is total repair growth system. in expectations and issues per barrel day.Although as pipeline

it online. sign shipper a will our is savings need potential, come is still full to by and third-party our company, to system. money reducing their huge future barrels still reach While critical repair asset to that to miles positive spending providing is its time VEX truck a cost It

scope we no Phoenix the has repairs.Our control and we finished control Carriers than with those Bulk timeline over and cash allows in-house, have customer on However, and in first savings positive acquisitions $X company. truck I towards providing produce am continues Firebird's to of businesses Transport. to Top with Oil the GulfMark Firebird of barrels start-up recent am progress on integration full the with I vertical the the X making and most their also pleased challenges the business continuing reluctant GulfMark more the for produced opportunities year Even the a put timing since overflow flow. their with a in business. million market, Firebird. intra-company cost units.Phoenix trucks especially Using keep and to become crossover operational allowing Service safety combined are

in compared cash Our saw and quarter over-the-road quarter chemical earnings the Transport the hauling fourth when improved flow of company third XXXX. to division Service

However, not to to for an safety truly awarded named STCI driven ] XXXX. top a due Service Heil [ for perspective, back Tank the award operation.In a sluggish conditions, the market in base premium financials. safe largely by a safety outlook on to are From the prior Trophy bulk Truck Award these for of insurance dive related their nationwide, spotlights increases were that better-than-expected Tracy through are year second to American is a Transport's this will to performance Winner expected but year. still Transport for XXXX has for finalist and chemical fact, the shipping turn carrier customers National the the cost-effective quarter periods. contest environment in battling favorable Service doing North improving to XXXX and touch I a the Safety I'll adjustments Transport is well-earned call and market continue run Association deeper work over Grand just later.But into a now the and credits were QX These Service

Kevin, Thank decline morning, The by XXXX over in of lower Total year oil decrease The Chinese recession. in market primarily everyone. in was revenue the continued oil oil and weaknesses economic due and for quarter was crude good prior price compared primarily $XXX.X quarter. volumes. the economy of and was decrease in price concerns the to the million crude a fourth million to $XXX.X driven you, crude

oil, oil at individual were compared Now year volumes. crude for in quarter.The is decrease quarter lower due decrease due $X.X our period. oil operating average XXXX million income the for Marketing year fourth loss of oil a Marketing decrease increase $X.X $XXX.X of expenses and quarter quarter the volumes the The Fourth quarter look XXXX. $XXX.X changes, of partially in lower million segment revenues segments. to primarily the a past in of over prior Operating and let's the offset to segment to market price result inventory crude valuation in million crude a the in by compared of for to the a price is the higher by crude market was million the

segment Transportation reported quarter transportation income decrease of market. volumes as year quarter in $X.X softening was million a the result in in revenue $XX.X the to compared a $X.X million in XXXX. during rates in versus quarter.Operating the $XX.X Our is fourth decrease XXXX in fourth of the to prior the million The primarily of million transportation due

and the of to due reversal for quarter. related the Interest of segment quarter million $XXX,XXX and to fourth a $X.X compared of Phoenix Logistics in a segment, the and prior acquired XXXX to fourth which acquisition the costs administrative which we reported quarter for of XXXX personnel The $XX.X million and $XX.X $XXX,XXX compared year the in million XXXX, $XXX,XXX consideration the were expenses $XX.X is last year's fourth the of contingent the expense of year that lower and million August compared the of quarter to Firebird for $X.X in year of prior in quarter.General adjustment fees. Phoenix to legal for an million $X.X million Our earnings and quarter. consists for Firebird to added and Repurposing for of primarily year, loss XXXX, decreased of XXXX accrual versus $X.X million decrease revenue the full fourth

a $X.XX net share $XXX,XXX borrowings interest increased million which For to million of XX, place expense by in quarter was due share to agreement, put loss XXXX. result the $X.X to $X.XX on quarter credit fourth total of or primarily interest a of $X.X XXXX.Net million the $X.X under loss per in per compared XXXX as in for October the was expense compared a the year, or increase

quarter, the million. provided $XX.X operating activities For cash was from

million XX For the was of prior to operating compared was $XX.X full year, our cash the tractors, barrels XX.X% of field million, X the in in $X inventory.Capital oil in year. result from trailers activities number for equipment. provided other $XX.X held of expenditures The price decrease decrease the a and purchase a from inventory and increase the million totaled crude quarter in the an primarily of

as available for on and to Kevin? December equivalents compared final million million $XX.X over XXXX. of liquidity the XX December $XX.X prior XXXX, cash Kevin December turn quarter.Now to was back XX, million as XX, $XX.X the I'll in Total Our of versus cash totaled call comments. million $XX.X some

back these market you, to took XXXX and work on in I XXXX. for in cost for the on we of year half benefit initiatives now our hold. as We of the results of quarter the units as the touch Thank All with cost outlook to second first improved efforts saw the continue headwinds control efficiencies and into continue reduction full the will business operational expect year. half Tracy. the the will

has for can We over will especially GulfMark the the improving quarter from to where Energy for drilling basin, negotiations. repurchase to in Eagle still continue the success more in will and count the cash Ford continue KSA battle activity pay in XX% the year.As rig positions incurred a decreased down to XXXX. conducted debt available cost as and share fourth as of liquidity XX we competition by achieve GulfMark on reductions the the well past barrels, heavy margins build XX through increase from wait customer reduction to operations, efficient area,

finding on on VEX this Pipeline, the to operationally continue we work critical will barrels new line. run to For

to the team Pipeline. potential that focus are on the of remain due with previously of a are held While with conversations connection out other potential this, possibility, likely shippers their VEX on as timeline on factors efforts put recent shipper mentioned.Because from start-up our being control, the a on we hesitant the will multiple our barrels to third-party future the

the from We the will acquisitions. as Firebird acquisition has from rates The has from break efficiency hauling come products. the XXXX the this improving look XXXX. and overflow. for Texas from up as XX company drivers on half and growth the ground first work capacity growth increased in GulfMark addition Energy's hauling and both as customers at count grown should of well Firebird rail Completion in in ability XXXX.Phoenix lab to Driver XXX Oil well of Dayton, will to on drivers transloading Firebird open for the of and returns facility time today. continue will Phoenix to internal at of improve project process of new the new new as

streamlined As capacity as low, I even added ready the them the in of areas has Chemical in Transportation increases, and year. the for could is over market have a significant persist, Service anticipation count improve. the in of results Driver improved when we new Transport they improve, see year-over-year half market our current housing market mentioned first starts, manufacturing, to specifically of automobile can expect conditions shippers the rebound. operations calls, success company Transport the division, believe improvement. time Obviously, production closing, provide customers for domestic we chemical previous rig when remained has challenges XXXX and and Service well-positioned to additional we if if see market conditions to turnover comes.In are

Adams we be company the necessary that, As not line the market team for our to will successful.With waits continue would for the shareholders take Rather, for to idly. improvements, Operator? we like the sit I open questions. to steps and will

our Erik from [Operator Instructions] Grand Slam. first And comes Volfing of question

are you? Hey guys. How quarter. Nice

Erik. morning Good

Thank doing? you are How you.

I'm well. doing

of going Red through. of flows where I and there's divestiture So lot think with on just figure the out was River, a to trying we kind

the gain you you those then are million flowing about relating And sale of expenses million said on an the Where $X.X the other So had equipment. a of on selling things $X from you extra to that. through on had side, P&L? rented

In the section marketing. and the for expense cost

gain there fourth assets So in of embedded like and the in in are also quarter, of the million in third are costs there, are quarter expenses. the severances -- and in $XXX The there. sale

Okay.

okay, where So more I if say, basically would where things of million and if view I it's to that wanted that me give the about and will in of looking were a I'm that's $X.X consistent -- of adjust, those kind line, going forward? net benefit kind

Correct.

-- very River quarter-to-quarter. Was that Okay. even that a then that was that, like that going Was rid that if I fluctuates it adjust know getting And how I margin good. for that margin of still simply looks the Red drag was from do just marketing about of some or we think forward?

strong. on Red margin legacy Yeah. combined talking the focus we've hard -- That was not the to crude to oil entity, something just by business be of was marketing. about lot team, related That's marketing That with continued River. some separate a cost marketing It cutting. the work GulfMark a

make increasing is of are comment been rig the seen this team margins barrel losses is Yeah, to marketing I'll our areas, to the Greg's we've has counts Kevin. successful year-over-year. though for up the what down add was -- some in

if then a maybe talk what's great. and going to about around what's been this you initially for. we right, the level performing have year? Phoenix, bit kind Firebird All turning at that can on And little quite not of see were with they you -- do finally, How here hoping Okay. seem

up, back was driver With Greg. formula Again, of part this count which getting the just successful. been the is Firebird, we've

count that coming I to XXX,XXX on our drivers business, they see we're But grow really beyond overflow term to hauling some the not volume we that some think Phoenix us also even picking we for to of move up we're entities. repeat respect it's business, hire. and then now, to very for are see the contracts. with spot By business. the focused And new getting we're I carrier. other continuing see with as with business as along. We're looking still combined forward today.And hiring a much continue trying some I busier. only business, get nature businesses GulfMark

And that the savings rail working -- cost over-to-date, more so not addition we with make consistent, our getting have in that the we'll assets offload having to see of as Dayton to business directly towards out work and the to tanks. opportunities just we

good see as side things well. we So Phoenix the coming on

own out add in to them is improved. our system. mentioned, growing been into driver found the separated obviously, of could base. But I'll barrel we've things specifically Firebird's Firebird, P&L that Erik, Greg sort expenses the and count, which And Phoenix be associated the one we We when what the doing unwound also Firebird them were rates actually of and put with

end the some successful to back need in it have improve, successful we we'll to the And the of across. customer as but saw more, our pushing of increases base. rate QX. see going QX. been we been So rate market at some think increases have I We'll additional conditions take We

a year. I see this think we'll benefit of into

And more. one do Great. if I can just

for pipeline. to the you're to CapEx pipeline's interconnection heard on do Just other again saying the I new pipelines? you're expand Do to more you any need customers. looking

We have, as we've existing already connection, you know, on an capital that. some

I they're pipeline, focused pipeline They ready. and after or we connecting getting we'll They're closer. know their to work not, partner name ours that. them on to but another Our get system then continuing third-party through are don't getting pipeline to if

out that. that capital, there see respect be that this know would don't be I optimistic help to point. the there on capital parties burdened is it at us There year.With to of this we a third-party we'll we that. connection all where make with a -- still another So additional other sponsor burdened might can opportunity to

that. expect but I capital working connect large pipeline have we that another So towards we're wouldn't year, this

B. of Burke Riley. Liam from comes question next The

the barrel XX,XXX volume, operations, on at count the level? volume daily reset the that new Kevin, River closing is Red of

Yes.

have does resetting that -- but that. in sounds I front like number me, that of it sound to don't -- sounds that number So the like we're

kind does wellhead volume, marketed That done include yes. Rockies out area. the volume through not the our are That's core that barrels of

say have would XX,XXX reported the that additional would same. from I Yeah, right? truck We be barrels that barrels, the aren't

really back margin. Okay. the perfect. in on [ no, in you've terms push And it's that's GulfMark, ] of No, expense -- a tight

You those you more How push move do to much margins? back. can

Yeah.

to We renegotiated been again, We our some year work this on going And forward. for have labor we've dashboarded now. already that. We actually will business rates continue successful.

we're very best down the to marketers we're feel managing So and to I our that -- push every level, opportunity give district costs manage we to our and the costs. looking at every continue can margins. confident

one have. well, key as but insurance I would to difficult say manage aspect safety that and things can of the it control, that sometimes within it's the our is gets the

And talk to drive new a equipment continue make low possible. down enhancements standpoint as Greg I about safety trying we're and so to keep it as and the try doing to rates or other know can cameras we're from insurance to

to we're monitors the a that to have referring And effectively that is out then in the we truck. past rolling additional they're drivers exterior more haven't What the behavior we of also Yeah. maintaining elaborate safety. utmost Tracy is camera views had that the system ensure new to

And going our so we'll insurance know us, with everything is that's going very we find helpful on which be to risk. around

Singular comes next Sakai Chris from The Research. question of

that? barrels QX we XXXX? Should I I now should we X -- Just mean, in a for should be at be for question, guess, thinking looking about that GulfMark. per day be how

consistent, or continuing high been But high say market month, We have complemented market overall, Supply March. have relatively continuing continuing hold have little a VEX I'd a share we're to which some I'd get we're into QX. did also this to QX, uptick our had Pipeline. in -- bit. -- the in an some it's We're has to say own. a as competitive uptick and relatively to up we we barrels, flat

maintain margins. We continuing have consistent to business and strong

QX that for be for same number for Transport Service Would the and the XXXX? thinking of miles

Wade, want that? do to you take

Yeah.

kind shorter I season think of haul towards one thing of that is a I bid more business. we've seen guess, through, kind gravitation our

our per mileage kind an in noticed of count in so decrease load And and increase we've load. a our

business. so hire And because we terrible can thing drivers a for necessarily localized that's more not typically

more in what a customers, business might basis awarded volume we this in of in kind dealing see that we've of cycle, that our mile on to regional have some been the the through just so XXX-plus type overall so loads. result. with of heritage rather we seems bid kind we from have awarded.And seen a been from And but mileage have We're a than been shift decrease still downturn local the

be So while total I results I the anticipate in don't company. will a in overall downturn mileage, of the do think that reflective

That's capital talk And QX about XXXX? can in Okay. expenditures helpful. you for

out we're can of take the generally, out think that mean we really the trying out Red bit We've seen closing tractors. of I down a performance replace the received do. that about little fleet set XX% I to better our we've River have operations. I that. every we year. But that's Yeah. to extended benefit But what of

will we to able Firebird XX One which then use need GulfMark Transport, take of CapEx. into going they type of XXXX that about were different to for really the and refreshed tractors a because was their Service the trucks. fleet.And we're benefits late-model tractors operations, had And move decrease we the of that

on [ over they're stay that last the we've few seen using similar They'll trucks. So a pretty sleeper ] trajectory years. the over-the-road

And on of And closures, Red we'll a River expect the because XXXX CapEx. be more reasons, lower. remain back get for do same. Service the I normalized those to then CapEx So XXXX, will Transport

still ago. early XXXX, carryover orders placed of some seeing The part from we're years that were

little So quarter, a spending, of bit there's of hadn't nothing but being we're forward manufacturers first bit orders a that delivered. that's seeing from significant, activity still still yet brought the little

ordered in had still manufacturers seeing seeing equipment from that years. not delays like Yeah, previous still we but we before, the delays we producing were are are

question The Holdings. Bumbershoot comes of Jason Ursaner from next

of very the of if recovery that's you see cash it, gradual that's or but there quarter. kind see sort in expecting kind to for going progressing? Kevin, to on of said how kind in of What start are -- you're you're the the that track? looking on to flow the apologize I know already later any signs strong that, half, Congrats looking first you you to see are are what to

Yeah, are, we're we're per of on internally the monitoring what shippers on at load counts the what also barrels then both Obviously, a things. seeing. are count But saying. day and we Service major Transport, monitoring look what few we're our volumes internally, outside our

have optimism the so last said is their over what They saying haven't their of Admittedly, refilling turnaround, about at along bottom been yet. least in until that's sure bounce feelings And causes what I for couple towards bit the what quarter side, quarters, they a don't heard not that results I they a to fourth customers of expected from XXX% on way.We We're know the their chemical have a spike seen if inventories. mid-XXXX. QX.

don't So out point. a far recovery we this to that's too want say ahead and at get

the loads especially sort that Transport our we thing monitor, Service the is have. overflow on major side Another shippers of

drivers that of the to So course down have that turning out that lanes enough capacity lanes.It means are the virtually that is they there. getting shippers cover were means overflow available. XXXX, and loads carriers tight don't there Throughout zero are or

We some up to overflow have an seen encouraging but a is that getting not extent, early which year, sign, too. this huge in tick populated is list

not I that, signs happening. don't to Again, begun say turnaround the it's some is think of consistency. ready that have think some I'm but we'll seeing of signs to early -- some turnaround's needs to I while here when So see quite we're

turn closing to over for like to Kevin conference would I back session. remarks. question-and-answer our the Roycraft concludes any This

forward continued we updating your joining the progress first and look the in report you for we in to you company, on when us. Thank earnings for quarter interest May. you Thank our

disconnect. conference The and Thank presentation concluded. has you you now attending now may for today's