Adams Resources & Energy (AE) 8 Aug 242024 Q2 Earnings call transcript

Good afternoon, everyone. Welcome to the Adams Resources & Energy Second Quarter 2024 Financial Results Conference Call. [Operator Instructions] As a reminder, this conference call is being recorded.

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

good and operator, you, afternoon, everyone. Thank the Conference Call. to Adams Resources XXXX Quarter Second Energy & Welcome

Joining the the adamsresources.com. page President also the and CFO, me audio & Ohmart. being CEO, Resources on Tracy the be Kevin call webcast today link and Roycraft; accessed call on at and This company's can and Adams EVP is are through Energy Relations Investor

accurate Please may reading. including call, the be of Today's no advised information any time-sensitive will of recorded. Q&A date that be be transcript longer any as the or session, replay

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

risks implied. may earnings yesterday Actual their disclosures publicly forward-looking from any statements. and those Forward-looking uncertainties company's the Resources statements, These on for Energy Adams Exchange uncertain other or obligation the control. in refer of by and was differ issued materially release outside that Please nature, to and filings results update and our are expressed factors press detail Commission. are described Securities no assumes & revise the company's or statements. to in with forward-looking the

Reconciliations earnings found share. adjusted of cash be return flow, end earnings per adjusted the measures including income free non-GAAP EBITDA, our will measures, and to the Management refer on and nearest at net release. can to GAAP

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

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

quarter will today's a and in-depth it Greg GulfMark afternoon, quarter your be the the discussing close you the dive Tracy Thank I remarks for of remarks. financials. full I Tracy; details with I in interest by Asset conclusion Adams. good your prepared more the our will to President; John, for for the before you, for turning the the continued will Holdings call and prepared then and begin Division some available Thank everyone. on for year third at questions XXXX. the outlook Mills, into

quarter-over-quarter our While meeting as results I'm our the is encouraged current do by potential. there work sequential are still not to company's improvement,

reflect basin activity weak inflation. driving operating period Our for months and the primary the extended demand results of year in ongoing of our freight operational an first drilling lower rates, of an X cost the combination down

When adjusted for noncash inventory quarter losses, when results were to QX. flat consolidated second generally compared

were have not million improved. an it of expense much trucking primarily $X.X occurred EBITDA that would self-insured been from in for additional performance a quarter-over-quarter and However the retention the quarter, incident

EBITDA inventory for million for quarter our these $X.X insurance additional of and EBITDA million expense challenges, valuation the in when are improve Despite continuing second $X we to financial position. overall adjusted was adjusted versus QX.

ending positions. and liquidity have the XXXX, same available Over million from $XX.X $XX.X unrestricted $X.X cash. grew we second cash For at $X.X quarters, increased by QX, the million March million consecutive with our we improved in by liquidity million. versus XX, period, cash X million also quarter $XX.X company's time Adams' that to

million. was used shares. KSA $XX million quarter, to the was payments of to the the repurchase the loan quarter, At accelerated the $X make of our were $XX.X that million term remaining able balance end of the loan in Additionally, principal we towards

margins experienced improvement in Our GulfMark a growth crude a Energy, certainly was both and saw oil segment, quarter-over-quarter as QX. for bright spot the in GulfMark marketing volumes. company they significant

the XX,XXX barrels company's legacy and EBITDA grew per XX% of Louisiana, Michigan our from GulfMark's quarter day day. Texas, XX,XXX South barrels the trucking performance. area, in for came to from Volumes Approximately which includes per

GulfMark's grown on in has the over results as improved each line XX% Pipeline The volume strong achieve performance X by quarters. well. the of helped VEX the previous

Throughput per in barrels of and of third-party quarter was through day per first barrels services. from day and in day barrels system QX, this from customers primarily by year reached GulfMark XX,XXX the This up gain per terminalling VEX XX,XXX our QX the driven revenue routing XXXX. volumes increase X,XXX in by utilizing

second our will quarter. As repurposing product I call, weakness continued in offering QX to barge. in the our be for Oil, due alleviated truck is previous primary on reduced of one Phoenix acceptance deliveries by to Phoenix as be hydrocarbon expected of late This in have discussed slowdown, their products, segment, the delivery

Phoenix we improve expect tankage markets filled is by And ability in Houston begin the product. to Ship to on has that barge being and their open Channel deliver with barge new This currently products leased for to expected QX. up Phoenix's deliveries is margins.

retention expense Our mentioned volumes our Quarter-over-quarter, this flat, expense Bulk remained crude the this combat on transportation business reducing counts quarterly oil on will achieve hauler, tight Eagle results the Ford. the but impact in expenses softening Carriers, of previously targets. to self-insured margin rig this from suffered Firebird additional our call. improving fairly too and to Firebird much overcome to look was efficiencies to

as Transport count Service sequential Our load positive. over-the-road mild chemical and showed ticked improvement hauling mileage Company, division, quarter

short-haul as as experienced effect down took the number However, rate came RFPs an of in customers' and reductions along. revenue loads, was we increase slightly

lay year. improvements, the should We half see meet XXXX to of Service tighten for to While it rates to market. as for is struggling the encouraging Transport need expect in capacity goals. exit return groundwork second the demand profitability levels to rates to carriers its do and increased This will help quarter-over-quarter the

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

second in everyone. market increase good crude price primarily may increase the cuts was and year The quarter production Kevin, by prior volatility revenue Israel, was the oil, driven as as million Ukraine an of and in partially resulted the price in in due lower in crude have the Mid-Continent increase oil million was prices. Coast by oil you, Thank OPEC Gulf $XXX.X to U.S. of quarter. to XXXX oil $XXX.X for afternoon, which oil compared Total events and and crude in draws from inventory The primarily offset well crude volumes.

by quarter individual the at Looking segments.

quarter primarily for price in revenues oil. year market our an marketing Second prior increase in segment million result $XXX.X $XXX.X were million is to of crude the This of the increase compared quarter. a

average costs quarter for inventory marketing due quarter valuation Operating in was $X.X to to million increase $X.X the income increase River River contract expiration of and the lower of offset Red second termination. the October segment volumes end crude the oil is partially the for crude and XXXX. changes lower The the related from of million compared operating Red the contract of market by in to the oil at price XXXX,

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

wider personnel to primarily increases loss revenues operating wages of XXXX. the related outside and offsetting of is quarter second due costs. revenues losses from The versus intersegment segment quarter reported a revenues as $X.X loss for crude and marketing $XXX,XXX well million lower salaries segment. in our as from customers, the were oil and after third-party minimal pipeline the storage other expenses for service Our Operating

$XX.X of year Phoenix's Our in to period, reported decreased logistics and million revenue volumes compared quarter. while repurposing the activity. $XX.X increased to consists of which segment, lower revenues due in million revenues primarily and due the Firebird and to Firebird's transportation rates current Phoenix, increased prior

quarter. $XXX,XXX The segment to mentioned prior operating retention an include Firebird's a the self-insured Kevin of additional loss million expense, $X.X results as loss also compared earlier. in reported year of

expenses accrual reduction and for for favorable and The quarter the year XXXX. $X.X quarter the to Phoenix included related acquisition Firebird General million of million in to $X.X XXXX. of administrative second the a the adjustment prior million contingent consideration were compared $X.X

up Excluding the year's quarter. last our slightly are to adjustment from G&A only expenses compared second favorable last year,

second as the in prior in loan, lower quarter to of the partially XXXX year higher primarily to obligations offset $XXX,XXX decreased the by we borrowings continue $XXX,XXX in our quarter under period outstanding term repay outstanding to lease expense Interest XXXX the versus due under amounts XXXX for amounts finance period.

due $XXX,XXX provided by year in loss or the of share to activities operating quarter. $XX.X accounts. XXXX was the million of operating cash $X.X flows net compared second was in cash $X.XX quarter per million primarily Net the of for of working or used activities in income our diluted per in share was quarter to Cash quarter increase This prior capital second $X.X XXXX. million the to changes in operating $X.XX for compared

totaled quarter from the other primarily for expenditures and $X.X construction tractors, Dayton of and of continuing for various spending Capital the the equipment trailers the million facility. purchase

million June as cash versus December XX, XX, $XX.X previously million was on December equivalents XXXX, cash at $XX.X $XX.X Kevin XXXX. XX, our As liquidity to million mentioned, million at Total unrestricted totaled compared XX $XX.X and of XXXX. June

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

Thank you, Tracy.

quarter the third to full and year the Turning outlook for XXXX. for

of we without the of QX week as The challenging all a impacted were locations July. off most to operations. damage, first power full -- area got of the well vendors' many were of any customers our locations for our as as and Though start first significant spared Beryl week Hurricane Houston our our of

and logjam count barrels Transport as spike make up in their volumes came a We chemical of work able plants as And to majority were GulfMark online. of impact load well orders. missed through experienced Beryl's on as the Service back

not material of the from do Hurricane we on impact So Beryl. effects a QX expect results

Even the to signs the will drilling slowing we areas, in improve legacy of control as are and our GulfMark are efficiencies divisions all continue steady we serve seeing throughout our activity our markets We efforts in has improving experienced with year. awakening. operational margins costs that

GulfMark into for quarter. margins the continue third to strong expect We

GulfMark's trends. shippers elusive. will VEX follow Pipeline's performance been generally consistent third-party volume Finding has

the to we in that However, third-party an complete will activity we drilling capital projects, in their work potential see area performance. improves secure increase and VEX's to partners we barrels. will Once optimistic our continue are

of traditional operational VEX cost of crude For and company for by XX annually. being roads semi by equates X.X transportation. pipe to day off tremendous efficiency instead the truckloads miles to kept million XX This of risk moving the approximately each provides now,

improved expect of We begin Oil, business, results will hydrocarbon see back half Phoenix the in repurposing year. to our the

I begin to is previously, open delivery barge up expected mentioned mid-third This new markets. quarter. product delivery As should

is up and property spur this the Dayton, new aim have to rail quarter. on in construction rail underway. rail running well We This yard by cutting trucking products our Also, expenses our spur transfer will location in Phoenix Texas storage for enhance to the Humble, in efficiency cost the associated which the leased rail west effectiveness is and facility, Texas. from our fourth with miles XX

With rail the railcars can directly the unloaded our from into rail products storage spur, and tank, lease expense. cost be eliminating trucking the both

project all this We late that upon the of will and operations Firebird's of anticipate full achieving relocate completion trucking XXXX. by

Firebird, significantly in As do back for in basin see the drilling the activity Eagle increasing not half we of the Ford year.

volumes will slightly of expect is production in in continue drilling be For hauling operational anticipation QX, Firebird normal to lower declines. a efficiency which and in activity on this work line Firebird's XXXX. we cost in control robust or reason, with flat more to

division, chemical transport our Service Transport. to Turning

hearing freight certainly are that by fall, and bottom been toward first we time are the -- XXXX. the by predicting reached Many stages recession in early of are that optimism almost For began this but since the towards moving the some XXXX, markets. has the possibly we freight analysts recovery in

trucking QX Transport to Service spot has carriers Enough increased returns the shrink predictions. support carrier in rejections Early load which number the rates industry the markets. hauling in these exited grown offer have capacity, of and available the for

we Post early reverse will increased, damage to shipment volumes are the but the tunnel, Transport see chemical seeing had appears increases done will targeted portions end It time be over Hurricane rate of that declining past take Service success our has that Beryl, customer and some from a base. some markets rate light approaching. the been -- securing the years, it from and recovery at have has may the we of X

to results. has returns. I the more demand as financial the while to a work as marketplace progress and closing, continues and This markets decisions have exit slow, improvements pleased believe freight will improve too We industry should In company, do. am sequential the more operational whole as we the improve capacity a pricing disciplined been drive and in with increasing

increase surpassing will as our We results. drilling and believe primary drilling production are and also components energy and Adams Both critical reaching our historical in grow. demand towards that freight operating basins demands increased

these on improvements timing expectation of into XXXX. the current Our extends

As the divisions to have all when we to improve. organization, long-term in on efficiencies. believe our that make prepare and work control revive, and conditions the we of work markets through -- weak for improve markets continue will to market it We and foundation established operational to cost allows thrive us the strength

for the our professional to delivering drivers, thankful Adams, and forward shareholders. look results are We especially to team improved drive at value our to

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

Sakai our question with [Operator first Chris Instructions] Singular Research. comes And today from

chemical latter I what we do sort half in ask to just improving XXXX early optimistic conditions market see in catalysts of and wanted about be XXXX? the the of to transportation is

number it. been by appreciate of the seen Yes, that's some showing What increasing. Chris. we've a I data has turndowns is carriers great question,

in -- give a load to them in loads. turndowns, offered example, overall the for XX% an back, of was when So all they and industry, carrier XXXX, is offer around when it

really the tick up. flatlined as X% we're to to over years last and then -- X% to that and in X has the the And and dropped freight QX, that's recession see between been starting recession hit, started

And possibly, is capacity analysts this we that was looking the is shrinking. so were sign definitely, a at possibly but the saying that not

the a trucking from the companies a also, the having us is that surrounding some Transport for targeted of is or through and create data years, gives just getting some that market being to number creating closing either able time is And -- hope Service that bankruptcies it away capacity starting on first the is rate thing X the success to take in increases. And shortage. some exiting

where to that to really recover It years, time hit will pockets is start increases. the have from but capacity customers of rate rates in agree seeing take a over are getting tight lot we hard X the been last to

couple as rate-increasing a mode we a in So we of really because see sign that a positive in been haven't years.

looks And be we from should there second then Great. How thinking this Okay. great about the throughput of year? some Pipeline the VEX in was for rest like the throughput the quarter.

I'll you that that to one? Maybe to Greg, turn over take want one Greg. do Yes.

that and see probably second was where been, flowbacks. experienced we volumes moving flowbacks. and have seeing in by Kevin. not We would Sure, first volume quarter you. out as Thank they the are producer quite the even but quarter consistently many helped where they I year we're some say the this

so in with high think where headed steady, we at level, not And yet steady VEX still volume but is I saw the comfortable on but volume. we're as a XQ maybe that quite

Okay. Great. as terminalling for And be well? is same that volumes -- the would the that

-- at do pipeline, and into volume not the will well, some the The GulfMark have moving into terminal to We Victoria that revenue respect With third-party terminalling the stay the steady. quarter. of yes. this forward

drop So off we'll that see a bit.

remarks. like [Operator to back session. for And I'd closing question-and-answer company any our concludes turn the to over conference Instructions] this the

your for interest you in and thank you, continued Thank Adams.

the Qualified Part like I that in attend XX. or meeting investors Advisors IDEAS participating Part Three Tracy We with in contact schedule would Chicago and on will Conference August should a be to Advisors. Three

forward our to We progress when in report joining you update us. quarter an we Thank providing our on earnings third for November. look

Thank We This today's all thank for you. attending concludes today's call. you presentation. conference

a now and have disconnect your may You wonderful day. lines,