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ADAMS RESOURCES & ENERGY, INC. (AE)·Q1 2024 Earnings Summary

Executive Summary

  • Q1 2024 revenue was $661.1M (+1.7% YoY) and diluted EPS improved to ($0.19) from ($0.79) YoY; EBITDA rose to $6.0M from $4.4M, aided by $1.8M inventory liquidation gains versus $1.0M valuation losses in Q1 2023 .
  • Liquidity increased to $83.6M and cash to $36.6M, with operating cash flow of $13.1M; the company paid a $0.24 dividend and invested $6.2M of capex .
  • Marketing margins strengthened; VEX pipeline throughput and terminal volumes rose sequentially and YoY; Service Transport miles ticked up QoQ though rates remained depressed; Phoenix softness expected near term as fuel oil delivery shifts to barges .
  • Potential catalysts: third‑party barging resuming at Victoria in Q2, continued volume routing through VEX, Firebird rate increases and driver additions, and STC capacity tightening enabling rate negotiations later in 2024 .

What Went Well and What Went Wrong

What Went Well

  • “We increased volumes and strengthened our margins within our oil segments…optimistic these trends can continue throughout the year.” — Kevin Roycraft, CEO .
  • VEX pipeline throughput grew ~20% sequentially to ~11.26K bpd; terminaling volumes resumed with third‑party inventory build for Q2 barging start-up .
  • Liquidity and cash improved sequentially for the third consecutive quarter, while continuing accelerated term loan amortization; ~$2M principal repaid, balance ~$19.5M at Q1 end .

What Went Wrong

  • GulfMark volumes fell to 64.6K bpd versus 73.4K in Q4 2023 and 94.0K in Q1 2023, largely due to the Red River trucking exit in Q4 2023 .
  • Transportation revenues and operating income declined YoY as the chemical haul market remained soft and rate reductions persisted; STC volume/mileage up slightly QoQ but pricing still weak .
  • Phoenix Oil experienced a slowdown due to reduced truck fuel oil deliveries; management expects softness to continue into late Q2 before rebounding with barge and rail logistics changes .

Financial Results

Consolidated Results vs Prior Periods

MetricQ1 2023Q4 2023Q1 2024
Revenues ($USD Millions)$650.2 $709.8 $661.1
Diluted EPS ($USD)($0.79) ($0.34) ($0.19)
Operating Income ($USD Millions)($2.63) ($0.68) ($0.36)
EBITDA ($USD Millions)$4.42 N/A$5.99

Notes:

  • Q1 2024 EBITDA includes $1.8M inventory liquidation gains vs Q1 2023’s ~$1.0M inventory valuation losses .

Segment Revenue Breakdown

Segment Revenues ($USD Millions)Q1 2023Q1 2024
Marketing$608.5 $623.8
Transportation$26.4 $23.2
Pipeline & Storage$0.0 $0.004
Logistics & Repurposing$15.2 $14.0
Total Revenues$650.2 $661.1

Operational KPIs

KPIQ1 2023Q4 2023Q1 2024
GulfMark crude marketed (bpd)94,030 73,381 64,634
Service Transport miles (MM)6.55 6.13 6.29
VEX pipeline throughput (bpd)10,088 9,377 11,256
VEX terminalling volumes (bpd)10,395 9,589 11,544

Financial KPIs

KPIQ4 2023Q1 2024
Cash & Equivalents ($USD Millions)$33.3 $36.6
Liquidity ($USD Millions)$80.3 $83.6
Operating Cash Flow ($USD Millions)$22.4 $13.1
Capex ($USD Millions)$3.0 $6.2
Dividends per share ($USD)$0.24 $0.24
Crude oil inventory (barrels)267,731 329,287

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Dividend per shareQ1 2024$0.24 (Q4 2023 declared) $0.24 declared; payable Jun 28, 2024 (record Jun 14, 2024) Maintained
VEX terminal bargingQ2 2024No formal numeric guidanceThird‑party barging expected to resume in Q2; inventory build underway Initiated qualitative outlook
Phoenix delivery modeLate Q2/Early Q3 2024Truck heavyShift to barge deliveries; Houston terminal agreement expected; rail spur targeted late 2024 Strategic change
STC rates/capacity2H 2024Depressed rates; soft demandCapacity tightening in pockets; targeted rate increases in back half if demand sustains Potentially raised (conditional)
Capex outlookFY 2024Lower vs 2023 (post Red River exit) Minimal on crude; STC deliveries early Q3/Q4; Dayton project spending ramps later 2024 Maintained lower trajectory

No formal revenue/EPS/margin numeric guidance was issued in Q1 materials .

Earnings Call Themes & Trends

TopicQ3 2023 (Nov 2023)Q4 2023 (Mar 2024)Q1 2024 (May 2024)Trend
Oil marketing volumes/marginsRed River exit planned; margins supported by cost control; inventory gains Red River exited; marketing margin strong despite lower rigs; negotiating costs and rates Volumes down YoY but margins maintained; cash/liquidity improving Margins resilient; volumes rebuilding ex‑Red River
VEX pipeline & terminalThird‑party delays; internal benefits of VEX stressed Throughput up; third‑party repairs ongoing; timing uncertain Throughput +20% QoQ; third‑party barging to resume Q2; potential shipper later in 2024 Sequential progress; external barrels likely later 2024
Chemical transport (STC)Soft market; forced rate reductions; retention focus Sluggish through H1 2024; insurance credits aided Q4; outlook gradual recovery mid‑2024 Volumes/miles up QoQ; pockets tightening; rate increases targeted 2H Stabilizing; groundwork for rate uplift
Phoenix/Firebird integrationPositive Phoenix cash flow; building intra‑company synergies Firebird rates being raised; drivers added; Phoenix Dayton project prep Firebird record monthly volumes; further rate increases; Phoenix shifting logistics Execution improving; logistics optimization
Macro/geopolitics & crude pricingLower crude price YoY; tight barrels Rig count down in Eagle Ford; cautious outlook Price volatility tied to China/Mideast/recession concerns Persistent macro headwinds

Management Commentary

  • “We increased volumes and strengthened our margins within our oil segments…We believe we are well-positioned to benefit when the economy improves” — Kevin Roycraft, CEO .
  • “Total revenue…was $661.1 million…The increase was primarily driven by an increase in the market price of crude oil, partially offset by lower crude oil volumes” — Tracy Ohmart, CFO .
  • “Volumes on the [VEX] line continued…to an average of 11,260 barrels per day…our customer…began building back inventory with intentions to restart barging operations in the second quarter” — Kevin Roycraft .
  • “The soft market for Service Transport…continued…rate levels remained depressed…we are seeing capacity tighten…allow for rate increased negotiations in the back half of the year” — Kevin Roycraft .

Q&A Highlights

  • STC pricing and capacity: Rates remain depressed despite modest volume/mileage improvement; pockets tightening could enable rate increases later in 2024 .
  • Firebird operational scaling: Driver count increased >123 and rate increases implemented; positioning to exceed 125–130 drivers as demand grows .
  • VEX outlook: Expect “more of the same” throughput in Q2 with third‑party barging resuming; targeting additional third‑party shipper later in 2024 .
  • Inventory management: Working inventory managed lean; end‑Q1 carryover ~100K barrels already priced, reducing exposure .
  • Capex cadence: Minimal crude segment capex post-Red River redeployment; STC equipment deliveries scheduled for early Q3–Q4; supply chain lead times shortened to ~3 months for trailers .

Estimates Context

  • Wall Street consensus (S&P Global) for Q1 2024 revenue and EPS was unavailable for AE due to missing CIQ mapping; therefore, no beat/miss comparison can be provided at this time. Values retrieved from S&P Global were unavailable.

Key Takeaways for Investors

  • Margin resilience offset lower crude volumes, driving improved EPS and EBITDA YoY; internal routing through VEX and Firebird rate increases support profitability .
  • Sequential momentum is visible in VEX throughput/terminaling and STC miles; watch Q2 for confirmation and barging resumption at Victoria .
  • Liquidity and cash strengthened while debt amortization continued; financial flexibility supports ongoing optimization and selective growth capex (Dayton rail/barge shift) .
  • Near-term headwinds: lower GulfMark volumes post-Red River exit and Phoenix softness through late Q2; medium-term potential: STC rate uplift if capacity tightening persists .
  • With estimates unavailable, trading setups should focus on operational KPIs (VEX volumes, STC load/miles, Firebird rates/driver count) and cash generation trajectory into Q2/Q3 .
  • Dividend stability ($0.24) continues; non-GAAP adjustments (inventory valuation/liquidation) materially affect period earnings—normalize for these when modeling .
  • Monitor third‑party shipper developments on VEX and STC contract renegotiations as potential narrative catalysts into 2H 2024 .