Adams

Resources & Energy, Inc.

ADAMS RESOURCES & ENERGY, INC. ANNOUNCES RESULTS FOR

SECOND QUARTER 2017 AND DECLARES QUARTERLY DIVIDEND

Houston, Texas (Tuesday, August 8, 2017) -- Adams Resources & Energy, Inc. (NYSE: AE) (“Adams” or the “Company”) today announced its financial results for the three months ended June 30, 2017.

The Company reported a net loss of $0.3 million, or ($0.07) per common share, on revenues of $315.2 million for the second quarter of 2017, compared to net income of $3.4 million, or $0.81 per common share, on revenues of $293.2 million for the second quarter of 2016.  On an adjusted basis, net earnings were $1.4 million, or $0.34 per common share, for the second quarter of 2017, compared to a net loss of $0.1 million, or ($0.02) per common share, for the second quarter of 2016.  The second quarter of 2017 includes a loss of $1.6 million related to the deconsolidation of our oil and gas exploration segment, which voluntarily filed for Chapter 11 bankruptcy in April 2017.

Adjusted net (losses) earnings, adjusted (losses) earnings per common share and cash flow from operations before changes in working capital are non-generally accepted accounting principle (“non-GAAP”) financial measures that are defined and reconciled in the financial tables below.

Second Quarter 2017 Highlights:

Gross revenues of approximately $315 million for the second quarter of 2017 compared to $293 million for the second quarter of 2016

  • Our crude oil marketing subsidiary, GulfMark Energy, Inc., marketed approximately 66,817 barrels per day (“bpd”) of crude oil during the second quarter of 2017 and 66,374 bpd of crude oil during the first quarter of 2017, compared to 75,986 bpd of crude oil during the second quarter of 2016
  • $164 million of liquidity ($104 million of cash and cash equivalents and $60 million of undrawn letter of credit facility) as of June 30, 2017
  • Generated cash flow from operations before changes in working capital of $3.5 million for the second quarter of 2017 compared to $6.5 million for the second quarter of 2016
  • Dividend of $0.22 per share for the second quarter of 2017
  • No short or long term debt as of June 30, 2017


           

“Adams made significant progress toward its strategic exit of the upstream exploration and production segment, and we anticipate the sale of substantially all of the upstream assets to close during the third quarter of 2017.  Our diversification of Service Transport’s offerings continued with the launch of ISO tank container storage and transportation in July 2017.  GulfMark Energy continues to find ways to create value for upstream producers as evidenced by the slight increase in volumes over the first quarter of 2017.  We are continuing to focus on leveraging our strong balance sheet through exploring business development opportunities and strengthening our core businesses during the second half of 2017,” said Thomas S. Smith, President and Chief Executive Officer.

Capital Investments and Dividends

During the second quarter of 2017, the Company invested approximately $1.1 million of capital and paid dividends of $0.9 million ($0.22 per share). The majority of the capital during the second quarter of 2017 was invested in the upstream oil and gas exploration and production subsidiary as the Company participated in several wells in the Permian Basin.

As we disclosed in our press release on April 20, 2017, our oil and gas exploration and production division filed a voluntary petition of reorganization under Chapter 11 of the Bankruptcy Code in Delaware.  The Company retained Oil & Gas Asset Clearinghouse, LLC to conduct an auction, which concluded on August 1, 2017 with the anticipated sale of these assets for aggregate gross proceeds of approximately $5.0 million.  The sale is expected to close during the third quarter of 2017.

The Company’s Board of Directors also declared a quarterly cash dividend for the second quarter of 2017 in the amount of $0.22 per common share, payable on September 20, 2017 to shareholders of record as of September 6, 2017.

Use of Non-GAAP Financial Measures

This press release and accompanying schedules includes the non-GAAP financial measures of operating cash flow before changes in working capital, adjusted net (losses) earnings and adjusted (losses) earnings per common share.  The accompanying schedules provide definitions of these non-GAAP financial measures and reconciliations to their most directly comparable financial measures calculated and presented in accordance with GAAP.  Company management uses these measurements as aids in monitoring the Company’s ongoing financial performance from quarter to quarter and year to year on a regular basis and for benchmarking against peer companies.  Our non-GAAP financial measures should not be considered as alternatives to GAAP measures such as net income, operating income, net cash flow provided by operating activities or any other measure of financial performance calculated and presented in accordance with GAAP.  Our non-GAAP financial measures may not be comparable to similarly-titled measures of other companies because they may not calculate such measures in the same manner as we do.

Adams Resources & Energy, Inc. is engaged in the business of crude oil marketing, tank truck transportation of liquid chemicals and dry bulk, and oil and gas exploration and production.  For more information, visit www.adamsresources.com.

Cautionary Statement Regarding Forward-Looking Statements

This news release contains forward-looking statements. Forward-looking statements relate to future events and anticipated results of operations, business strategies, and other aspects of our operations or operating results. In many cases you can identify forward-looking statements by terminology such as “anticipate,” “intend,” “plan,” “project,” “estimate,” “continue,” “potential,” “should,” “could,” “may,” “will,” “objective,” “guidance,” “outlook,” “effort,” “expect,” “believe,” “predict,” “budget,” “projection,” “goal,” “forecast,” “target” or similar words. Statements may be forward looking even in the absence of these particular words. Where, in any forward-looking statement, the Company expresses an expectation or belief as to future results, such expectation or belief is expressed in good faith and believed to have a reasonable basis. However, there can be no assurance that such expectation or belief will result or be achieved. The actual results of operations can and will be affected by a variety of risks and other matters including, but not limited to, changes in commodity prices; changes in expected levels of natural gas and oil reserves or production; operating hazards, drilling risks, unsuccessful exploratory activities; limited access to capital or significantly higher cost of capital related to illiquidity or uncertainty in the domestic or international financial markets; international monetary conditions; unexpected cost increases; potential liability for remedial actions under existing or future environmental regulations; potential liability resulting from pending or future litigation; and general domestic and international economic and political conditions; as well as changes in tax, environmental and other laws applicable to our business. Other factors that could cause actual results to differ materially from those described in the forward-looking statements include other economic, business, competitive and/or regulatory factors affecting our business generally as set forth in our filings with the Securities and Exchange Commission. Unless legally required, Adams undertakes no obligation to update publicly any forward-looking statements, whether as a result of new information, future events or otherwise.

Contact:  Josh C. Anders

EVP, Chief Financial Officer

This email address is being protected from spambots. You need JavaScript enabled to view it.

(281) 974-9442


ADAMS RESOURCES & ENERGY, INC. AND SUBSIDIARIES

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share data)

 

Three Months Ended

 

Six Months Ended

 

June 30,

 

June 30,

 

2017

 

2016

 

2017

 

2016

Revenues:

             

Marketing

$

301,176

   

$

278,529

   

$

589,791

   

$

514,923

 

Transportation

13,616

   

13,860

   

27,071

   

27,207

 

Oil and natural gas

410

   

774

   

1,427

   

1,564

 

Total revenues

315,202

   

293,163

   

618,289

   

543,694

 
               

Costs and expenses:

             

Marketing

297,508

   

268,780

   

582,661

   

497,837

 

Transportation

11,851

   

11,309

   

24,013

   

22,498

 

Oil and natural gas

201

   

779

   

951

   

1,410

 

General and administrative

1,460

   

1,938

   

4,097

   

4,138

 

Depreciation, depletion and amortization

3,563

   

4,756

   

7,532

   

9,871

 

Total costs and expenses

314,583

   

287,562

   

619,254

   

535,754

 
               

Operating earnings (losses)

619

   

5,601

   

(965

)

 

7,940

 
               

Other income (expense):

             

Loss on deconsolidation of subsidiary

(1,635

)

 

   

(1,635

)

 

 

Losses from equity investments

   

(209

)

 

   

(400

)

Interest income

260

   

96

   

419

   

199

 

Interest expense

(1

)

 

   

(2

)

 

 

Total other income (expense), net

(1,376

)

 

(113

)

 

(1,218

)

 

(201

)

               

(Losses) earnings before income taxes

(757

)

 

5,488

   

(2,183

)

 

7,739

 

Income tax benefit (provision)

475

   

(2,084

)

 

1,041

   

(2,905

)

               

Net (losses) earnings

$

(282

)

 

$

3,404

   

$

(1,142

)

 

$

4,834

 
               

Earnings (losses) per share:

             

Basic and diluted net (losses) earnings

             

per common share

$

(0.07

)

 

$

0.81

   

$

(0.27

)

 

$

1.15

 
               

Weighted average number of common

             

shares outstanding

4,218

   

4,218

   

4,218

   

4,218

 
               

Dividends per common share

$

0.22

   

$

0.22

   

$

0.44

   

$

0.44

 
               


ADAMS RESOURCES & ENERGY, INC. AND SUBSIDIARIES

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except share data)

 

June 30,

 

December 31,

 

2017

 

2016

ASSETS

     

Current assets:

     

Cash and cash equivalents

$

103,687

   

$

87,342

 

Accounts receivable, net of allowance for doubtful accounts

72,923

   

87,162

 

Accounts receivable – related party

417

   

 

Inventory

15,957

   

13,070

 

Derivative assets

782

   

112

 

Income tax receivable

3,071

   

2,735

 

Prepayments and other current assets

1,208

   

2,097

 

Total current assets

198,045

   

192,518

 
       

Property and equipment, net

33,105

   

46,325

 

Investments in unconsolidated affiliates

7,570

   

2,500

 

Cash deposits and other

5,230

   

5,529

 

Total assets

$

243,950

   

$

246,872

 
       

LIABILITIES AND SHAREHOLDERS’ EQUITY

     

Current liabilities:

     

Accounts payable

$

83,228

   

$

79,897

 

Accounts payable – related party

   

53

 

Derivative liabilities

34

   

64

 

Other current liabilities

4,912

   

6,060

 

Total current liabilities

88,174

   

86,074

 

Other long-term liabilities:

     

Asset retirement obligations

1,236

   

2,329

 

Deferred taxes and other liabilities

6,226

   

7,157

 

Total liabilities

95,636

   

95,560

 
       

Commitments and contingencies

     
       

Shareholders’ equity

148,314

   

151,312

 

Total liabilities and shareholders’ equity

$

243,950

   

$

246,872

 


ADAMS RESOURCES & ENERGY, INC. AND SUBSIDIARIES

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

 

Six Months Ended

 

June 30,

 

2017

 

2016

Operating activities:

     

Net (losses) earnings

$

(1,142

)

 

$

4,834

 

Adjustments to reconcile net (losses) earnings to net cash

     

provided by operating activities:

     

Depreciation, depletion and amortization

7,532

   

9,871

 

Gains on sale of property

(129

)

 

(1,275

)

Impairment of oil and natural gas properties

3

   

87

 

Provision for doubtful accounts

(8

)

 

93

 

Deferred income taxes

(926

)

 

(1,965

)

Net change in fair value contracts

(700

)

 

(124

)

Losses from equity investment

   

400

 

Loss on deconsolidation of subsidiary

1,635

   

 

Changes in assets and liabilities:

     

Accounts receivable

13,581

   

(10,073

)

Accounts receivable/payable, affiliates

(151

)

 

 

Inventories

(2,887

)

 

(5,191

)

Income tax receivable

(336

)

 

2,587

 

Prepayments and other current assets

887

   

(1,683

)

Accounts payable

3,357

   

7,043

 

Accrued liabilities

(483

)

 

1,570

 

Other

(461

)

 

(22

)

Net cash provided by operating activities

19,772

   

6,152

 
       

Investing activities:

     

Property and equipment additions

(2,108

)

 

(4,812

)

Proceeds from property sales

190

   

2,860

 

Investments in unconsolidated affiliates

   

(4,700

)

Insurance and state collateral (deposits) refunds

347

   

1,250

 

Net cash used in investing activities

(1,571

)

 

(5,402

)

       

Financing activities:

     

Dividends paid on common stock

(1,856

)

 

(1,856

)

Net cash used in financing activities

(1,856

)

 

(1,856

)

       

Increase (decrease) in cash and cash equivalents

16,345

   

(1,106

)

Cash and cash equivalents at beginning of period

87,342

   

91,877

 

Cash and cash equivalents at end of period

$

103,687

   

$

90,771

 


ADAMS RESOURCES & ENERGY, INC. AND SUBSIDIARIES

NON-GAAP RECONCILIATIONS

(In thousands, except per share data)

 

Three Months Ended

 

Six Months Ended

 

June 30,

 

June 30,

 

2017

 

2016

 

2017

 

2016

Operating cash flow before changes in working capital reconciliation (Non-GAAP):

             

Net (losses) earnings

$

(282

)

 

$

3,404

   

$

(1,142

)

 

$

4,834

 

Adjustments to reconcile net (losses) earnings to net cash

             

provided by operating activities:

             

Depreciation, depletion and amortization

3,563

   

4,756

   

7,532

   

9,871

 

Gains on sale of property

(136

)

 

(1,155

)

 

(129

)

 

(1,275

)

Impairment of oil and natural gas properties

   

58

   

3

   

87

 

Provision for doubtful accounts

(8

)

 

93

   

(8

)

 

93

 

Deferred income taxes

(986

)

 

(613

)

 

(926

)

 

(1,965

)

Net change in fair value contracts

(280

)

 

(282

)

 

(700

)

 

(124

)

Losses from equity investment

   

209

   

   

400

 

Loss on deconsolidation of subsidiary

1,635

   

   

1,635

   

 

Operating cash flow before changes in working capital

$

3,506

   

$

6,470

   

$

6,265

   

$

11,921

 
 

Three Months Ended

 

Six Months Ended

 

June 30,

 

June 30,

 

2017

 

2016

 

2017

 

2016

Adjusted net (losses) earnings and (losses) earnings per common share (Non-GAAP):

             

Net (losses) earnings

$

(282

)

 

$

3,404

   

$

(1,142

)

 

$

4,834

 

Add (subtract):

             

Loss on deconsolidation of subsidiary

1,635

   

   

1,635

   

 

Gains on sale of property

(136

)

 

(1,155

)

 

(129

)

 

(1,275

)

Impairment of oil and natural gas properties

   

58

   

3

   

87

 

Derivative valuation gains

(280

)

 

(282

)

 

(700

)

 

(124

)

Inventory liquidation gains

   

(4,008

)

 

   

(6,211

)

Inventory valuation losses

1,405

   

   

2,063

   

 

Tax effect of adjustments to (losses) earnings

(918

)

 

1,885

   

(1,005

)

 

2,633

 

Adjusted net (losses) earnings

$

1,424

   

$

(98

)

 

$

725

   

$

(56

)

               

Adjusted (losses) earnings per common share

$

0.34

   

$

(0.02

)

 

$

0.17

   

$

(0.01

)