Adams Resources & Energy (AE) 9 May 242024 Q1 Earnings call transcript

Good morning, everyone. Welcome to the Adams Resources & Energy First Quarter 2024 Financial Results Conference Call. [Operator Instructions] Please note, this event is being recorded.

Now I will turn the call over to John Beisler, Investor Relations at Three Part Advisors. Please go ahead.

morning, good and you, everyone. Thank Adams Welcome XXXX Energy Quarter & Call. to the Conference First Resources

Joining call the on also the and CFO, me audio the Ohmart. being CEO, Energy Resources Tracy be Kevin President webcast & link and Roycraft; accessed call and This company's can and today EVP is are through Adams no as on Relations page that the the be will session be any the transcript at advised including replay accurate Investor reading. recorded. time-sensitive any longer date of may information Q&A of adamsresources.com. Today's be Please or call

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

expressed Actual statements. to company's Forward-looking differ issued materially statements of that forward-looking release our outside by yesterday those the implied. and was their for are disclosures may results earnings uncertain press or on Please control. nature from the refer

the These filings factors obligation and or the nearest to certain any risks EBITDA. to of and measures Commission. including described assumes earnings Reconciliations end Exchange at with Energy Resources our forward-looking the Adams GAAP & Securities Management release. to in the be publicly uncertainties will refer in no are detail other update statements. company's revise and found non-GAAP measures, can

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

President Roycraft. over like Kevin? would I company's the call CEO, Kevin the to and Now to turn

some interest the Harrison, and will a for the Thank of at the to the on and you Myself, for details remarks for Tracy over our Mills today's questions available good in the more the with the call morning, year XXXX. then be continued into financials. in-depth prepared Thank and you, I discussing I second before Tracy remarks. quarter Wade full it will for John, will turning quarter conclusion prepared Greg begin close outlook Adams. your by for everyone. dive the your and Presidents, division

to In quarter, certain especially improved. signs some of encouraging the first of the we the segments were began segments recovery and our quarter see volumes latter our in where of half in business, oil of margins much

with hopeful that current into will are encouraged visibility. and QX We this continue our trend

For and liquidation net in includes $X.X the first from million compares XXXX include EBITDA million. inventory produced losses million to of approximately earnings in of quarter XXXX. of The from EBITDA. million XXXX, the inventory valuation $X QX number These $X in results valuation company liquidation. This $X.X and

$XX.X with we headed business positions the generally million. improved improved even direction to with is QX XX% in fourth XXXX first face. with I'm positive the last the XXXX and Liquidity million as continued Cash pleased quarters. over headwinds unrestricted liquidity cash. Cash quarter quarter showing continued from $XX.X of the ended over X the improving their $X.X we $XX.X million economic the over trends million

to XXXX. were of ownership goal our loan improvements stated towards achieving $XX to these share payments was million that October of still We in able while accelerating our used term the deliver repurchase KSA

$X approximately the was million. the loan quarter, The end the QX $XX.X balance additional at of on principal we million. during Additionally, made of payments

quarter ramped strong barrels quarter-over-quarter day. volumes, area Texas, nearly GulfMark able which Along as with Louisiana, and a X,XXX maintain we the adding Energy's progressed, were these improving up legacy Michigan include margins. South truck volumes, steadily to

for through average recent on increased of to VEX. on we an growth division's by volume per of a improve sequential was basis Volumes much Energy's continued XX% our driven line GulfMark the ability day positive their Pipeline. quarter as by the VEX the to primarily This counts trends saw route QX. XX,XXX the to barrels Turning barrel

As internal strengthen barrels margins. a of on reminder, moving as these safety, profitability truck, via as GulfMark's well line the by pipeline transporting instead them improve

our deliveries also Phoenix VEX's oil, in Texas began one terminaling slowdown products. securing saw and during location third-party due of building inventory experienced reduced Victoria, hydrocarbon in activity in successful quarter, resume our repurposing operations the was customer the restart a to intentions their back of second with fuel as quarter to the segment truck in primary barrels quarter. barging Oil,

I Phoenix's resuming to We the before provide this lasting to slowdown this section on in outlook further this half QX. will detail QX in of combat of call. again plan expect be temporary, back into the later

a favorable Our X quarter million a barrels. the Firebird XX% This a start by the Bulk hauling year increases volumes to taking hauler, Firebird recently volumes quarter, oil saw and driven same largely purchased in over XXXX a record nearly QX and recent had year, improvement hold. ago. improvement rate the over Carriers, X% improved crude was

in The transport, soft our a the mileage. hauling did continued first chemical sequential market division, and experience in volume increase STC over-the-road quarter. service for

should remained back negotiations the of reductions for year. this last shippers rate can the and spike The However, due allow of in throughout to rate year. half course demand in encouraging demand if the levels depressed, successfully increased rate be sustained, is demanding it

later, to but touch over on call XXXX and a turn for now into QX Tracy the I'll will Tracy? outlook financials. the I deeper the for dive

increase primarily $XXX.X of XXXX Total crude to $XXX.X and which oil the for prior the East partially the market economic first price economy, Thank primarily due in uncertainty of was The quarter morning, crude in was fluctuate. concerns Chinese oil, prices Middle everyone. caused was increase quarter. the to revenue increase you, year by and compared our tensions geopolitical the oil Kevin, oil in The crude to million good million volumes. price in continued of continued an crude lower in by recession, offset driven

individual quarter let's segments. by Now look the at

of the million Marketing the $X.X to segment $XXX.X million increase first compared XXXX Operating year the average was of in XXXX. due $XXX.X market segment quarter and to quarter period. million the income for and the prior changes Marketing was operating inventory to the increase for $X.X crude million in revenues quarter in price an First for lower in oil expenses compared is The valuation quarter.

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

acquired volumes consist in increased and $XX transportation year rates in of the segment and revenues $XX.X The an the compared increased quarter. XXXX million Repurposing decreased operating loss and to Firebird activity. which of of due Phoenix's while million of to year lower segment $X.X to quarter. due primarily Logistics in were compared Firebird's Our prior revenues, prior to million reported and August that volumes, Phoenix we revenues income $XXX,XXX

General for and of administrative quarter by of insurance XXXX expenses to versus both Interest were fees. fees costs, increased fees, XXXX the higher expense lower banking first director for and service $X.X XXXX partially outside first by costs were out credit put the of with course agreement, quarter legal $XXX,XXX and due under million leases year. and the fees, to $XXX,XXX months, compared year higher the additional place that loan balance XX prior of year lower interest and finance the a the quarter, in prior primarily to in offset rates during past last over the quarter offset

first in $XXX,XXX Net or the for or compared $X.XX loss share quarter share million was of $X a per per XXXX. to quarter the $X.XX net loss of

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

Our prior versus equivalents $XX.X quarter. March on to available million XX, and XXXX. million million totaled Total was of $XX.X XX, $XX.X cash as $XX.X as liquidity million XX December compared of in the cash March XXXX

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

Tracy. you, Thank

Turning to our the XXXX. for year quarter outlook and full for second

improve work while drilling maintaining signs slowing serve costs areas, seeing are divisions activity GulfMark's continuing the are and we efficiencies, all the awakening. has year are their with legacy we our As Even throughout the markets in operational that volumes to experienced control margins. improving steadily

expect into that to the We continue trend second quarter.

versus the of positive barrels we VEX route reduce to costs GulfMark's pipeline the flows on internal increasing volumes the volume barrels. This by much able oil should through more allows to effect increased results have ability via also GulfMark's this and trucking helps the shipping year. VEX a of have expense the pipeline cash for been line improve as

and our in VEX Victoria, the barrels utilizes third-party should their barge terminal our resume shipments started in barge customer tanks consolidating again has Also, that Texas loading storage QX.

will results deliveries mostly to most continue Our by experience our transitions as by hydrocarbon truck repurposing likely Phoenix business, soft delivering in barge. oil to fuel from business QX Oil,

purchase location of QX. an Phoenix XX-acre in Phoenix Texas, late area with start ground Oil. Dayton, the will the the with terminaling Later expected land which in this quarter, early deliveries to our expects to in home or Houston sign broke barge on agreement Phoenix future be QX recently

We operational spur this are targeting property the XXXX. rail in late to have on

current expense the our the expense spur rail current efficiencies from by cost to improve reducing is our operational leased rail west miles location significantly storage The XX from in that and of An rail trucking directly location will lease operational Phoenix will trucking for of and storage railcar eliminate into product Noble, improve associated cost for efficiencies. will our product spur Texas. this with business the new This unloading allow and tanks.

all operations project, completion We which XXXX. the trucking expect of on-site of Firebird's late in move will full

saw This, led balance we quarter volumes levels. of much record returns will results oil the this at improved trend in trend of positive monthly are rate steady can holding, with steadily crude optimistic and hold to oil volumes recorded along show the adjustments Speaking Early the this year, trucking as of and Firebird, March. volumes remain the crude for throughout quarter operations a first if progressed. the increase series QX

and the past the rate market. of drivers they in work demand Transport, over of upcoming Chemical meet we of in then and In into to a continuing tighten see STC their reductions advantage early incurred to process to placed service area. Service the the need to take to our capacity increases, offset quarters, quarter make is to recovering year. targeted will QX, pockets stages add Transportation division, increasing well began the first rate Late in chemical this of

closing, say imminent. recovery that is I'm not market ready In yet to

in company. I have we And actions front positioned efficient Adams headwinds over encouraged taken am divisions driving have the all past the deliver on faced improving and is markets economic capitalize us our improved seen across opportunities response a recent convinced well months. in we the of in to have that However, year long-term the made the am of value the of with prospect us, and I cost-effective more to shareholders. results to

Lastly, the we would I would line IDEAS on like to like Conference in should New June to I that, Part will Tracy schedule XX. for Three Part Qualified City investors contact with attend the and Advisors. With that meeting questions. or be Operator? York Advisors a participating in Three open

begin now with Instructions] The the question Burke comes [Operator will from question-and-answer Riley. B. We first Liam session.

-- River year at ago. they that. nicely from on all on were a Margins Kevin, Kevin, the business. Red exit from Tracy GulfMark Help up trucking? Did

contract maybe of be able I event rate Red River, on agreement series would that come stand of that a terms us on expiring. the too, for environment mean We was it's if comment their I like. No, case. were a at own. not the and to with to separate a on really GulfMark but I'll a margins say really River to Greg really let where sort wouldn't Red is he'd that

a say Yes. all We're -- not lot year, And the our We've our little first strong bad. the watching margins last really the And guys than marketing that dashboarded are hurt smoothly. but cost too focus just of in our run price expenses businesses. first of on a maybe -- control. quarter, I'd closely. better running dialed providing do. things side, in customer us high-value relationship it the Crude didn't are quarter. It during is on very

along moving steadily. So just of things kind are

Yes. a operated P&L And for the we River business. separate internally Liam, also Red

separately. So and run were they really operated

crossover So we didn't any there. have

on were And revenues mean, down down about down XX% volumes I -- STC, Okay. only X%. mileage but about Cool. your

get was to pricing Kevin, obviously, the chemical highlighted we a in getting you had I that that So as said you move in weak I think that, this reverse that the itself Did that, right? past through is tough year. market. starting

long, pockets, the market and little is certain The shipping some major the spot capacity have The improved rate especially Coast, a to Yes, some chemical volumes, gone Rates have for chemical fourth quarter Gulf around a really to starting to quarter, process get up Louisiana, start shippers, we're these new for in because very A the challenge pick not they seeing has or place us effective turn first market. rates in and improved. in tighten. whole lot bit. and Texas, just through big early some that they're in those seeing producers just the upset got of RFP renegotiating extensive place. their going in were

that for if need happening tighten shippers Then we better, continue get we'll things an rate able be loads rates market add can't substantial and capacity. that's I better, and capacity we seeking go year. the see once at we them. they issue more where a least. to be see get But for to as the hope, of until get increases. they And back to little see ask So become covered, don't point get And -- into rates get really farther will less they'll the our to

get not that. we We're there but hopeful trend to in the can market we'll the right continues yet, if quite there, look So direction. at we're

factored can I more Great. up substantially revenues. year-over-year And lower on if Driver into logistics. was in What just slide on that? one commission

business Are particular? you Firebird looking the at in

Yes.

Yes.

the we've So the number of of biggest that piece drivers is added.

that capitalize had acquired from we we're we some XXX opportunities that's shippers -- XX to think Really Firebird, XX over when drivers, drivers, business. in we've on new that and I now. So up had

increases, business pretty bullish the revenue Firebird I drivers. of all think we're We rate direction which little got addressing and drivers So direction. quality we're in that going. in the through our XXX had is on round right we And a add to to be March, excess We'd issue XXX, continuing first place of expect there. to we're like in continue that trend the of in to

is question from Bumbershoot The Holdings. next Jason with Ursaner

the Congrats Kevin, on on making, and at really of all appreciate end. progress details the you're kind them the of

kind a Just quick on of one Liam. following up

chemical bit, actually pricing shippers side, major is in seeing? a you're the of and the saying you're general. when you is volumes of kind more the On anecdotal of Or outside said tightening in what so that chemical that major the sort it's of kind or and customers

every to it since you that Wade, of one? Maybe President that could that I'll pass division living our take he's day. Wade,

past. of our major What customers produce chemical Yes. than is starting they we're to most volumes are seeing more had in the

And of driver so XXXX, of kind the past, a -- as over through carriers. we overall our count we reduced lot probably other

volumes. a slowly of those up enough creeping drivers on steadily capitalize so And it's not and to volumes increased combination having

drivers And adding continues, so adage this to as the of the fleet. old

so go And in of they hand. kind hand

steadily up these beef I efforts as goes to year starting we're so the and our And on. it volumes think will hiring continue, as progress

see improve, volumes. increased capitalize to more these to be continue add we as So volumes able headcount. on and we'll

Is of guys you general that's do do read. chemical? what guess, volumes guess, kind of it's I I now driving lot see is it the increased activity, generally, is right driving my -- kind perception mixed which What see a just you a application And just of Okay. in economic the increase?

I think it's of of just kind the normalization really market.

of so it's what's additional past false kind market historical not kind volumes." of it's the of And depressed normal. back kind from "normal increase, really it's getting XX, just Over volumes. been XX a It's to months, so a really

running really they're they past normal-type just with guys. trending whereas kind of of normal. kind time normal to just And For they've and were back spent the back getting major exceeding of towards And kind before, been the actually a normal. now we level, years, it's a several of of ahead lot

business that But markets, recoveries XXXX, start wood even on And But really a good and right either Jason, that you boom to get some starts. whether And will as bit, think or were to little markets. of that we in we the a and not main we focus but automotive it's on those seen now busy. have the add them I'll improvement. start the slight STC going inventories really headlines of to lot those areas, full there's those of have to some industries is housing do rebuilding will in in close getting back into latex get go treating automobiles, see recovery significant have foams a think I products or where a

the maybe Got it. or is, path little the it to in everything least, stronger positive getting on to either hear. sounds But like kind anecdotally, of more which is at numbers a

the So progress. on just congrats

Sakai from [Operator Chris Instructions] The is next with Singular question Research.

What terminaling for quarters? for expecting on question of segment. Pipeline couple we and your throughput volumes first Just be next should the your

I'd even can some the bring of the more and volumes group They've to really pipeline. flowbacks been same. has targeted production this up say few Marketing a year. that new picking successful they

steady we're month And each now, we So and right volumes have pretty at now, can now. volumes grew the but first we we're think maintain plateaued of been actually right kind in the the quarter. volumes

that saw Should the say the I'd in be So more you quarter. the first similar of same quarter. about second in

I there. we'll location through being third-party the the getting some but ship barging doesn't to think barge They're revenue use Victoria, terminaling in able Texas close does in it see Yes, line, location. from run our QX. That to a start-up

out. are in line spending on the QX giving may started signs then out should Greg we've certainly their this at be be that they targeting QX, do before get that shipping the year line, shipping us been party As positive sometime and steadily year's we won't that fixing be QX, we've money said, still hopeful that seen shipping but stronger still they And a way. than we're third volumes increase. little least, third-party

we -- to we crude should the Do about how that inventory be same or or increasing you oil be expect would thinking lowering? And stay barrels? your Okay.

Yes, doing exposure Greg. oil had minimum. we're good take this of we've focus crude inventory a that a I'll job on to one. our now keeping is The a inventories inventory, and managing our

we just try have we're carrying But inventory we we Now to have do times. for and buy. sake that at fills bottoms to marketing all everything effectively that, of are going of tank line not do in terms we the and inventory,

keep trying . it that keep and the Keep we're numbers So to in out it relatively flat. just

a Chris, And it's you, I'll tell inventory. Yes. working

keeping as end month. So the swings, the towards usually, either low of the us, And focused next on in as pushed hit is that barge that Greg the of fluctuations you barges as some the significant leaves the inventory may into could see it really timing for gets month. relatively month the or is have late if possible, a

think on see I that. So you swings

That's correct.

if so first inventory And did number a quarter we you year, see carryover. the higher some this in have

So not inventory still necessarily but presold, counts that on, that's we're sitting inventory numbers. but our already it in

month, facility Right. own that see if it risk, instances in we it, late in We already is but at [ don't probably in you it in given show any the so quarter in to our hasn't months. multiple where repriced inventory that as exposure price that that happen late it ] were we like left when but have because quarters happens, the future or the

the barrels was right. to And that close first quarter. That's end exactly at probably XXX,XXX of number the

talk for know. the good number you for target about your expenditures capital a the remaining year? of Can have the you year? That's Okay. Do to

call the capital carryover the and spending here saw was from orders -- both lot in it, A Yes. quarter you placed in Chris, I'll XXXX a of XXXX. that yes. first

business, facility, expenditures both will of crude growth going to it a than is segment Marketing other segment, minimal the of the the revenue-type Dayton Repurposing more on which or very capital. new forward the and oil be the related the side So Logistics,

and of with replacement took But both of equipment, between Red River from we that GulfMark. business, the shutdown tractors the redeployed and among or it just trailers Firebird

of of delivery. And So substantial early on trailers for capital. really we'll got it's QX then side, spending It amount kind business. orders the capital have in little on into but crude starting the very Transportation and Service going not QX a tractors scheduled of side the and for we've

shortened. I'll for to lead equipment the been And times has say really

So -- months They're times now. to lead last trailer looking in were at year. year, we of a we around X down excess

been today. in So years. the case we couple by we'll summer, we which kind have, -- the CapEx by X indicator the to shouldn't carryover of of where of It generally, end if the receive year. over year also from of last is much limit But the has how the what the we that is next, order an not market

absolutely. Yes,

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

Adams. joining in second and look an for update we interest forward to on for Debbie, August. quarter your you all our call. you, continued thank progress you We providing when in Thank earnings you Thank report our the

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

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