ADAMS RESOURCES & ENERGY, INC. (AE)·Q3 2024 Earnings Summary

Executive Summary

• Q3 2024 revenue was $695.2M with a net loss of $4.5M (-$1.76 diluted EPS); adjusted EBITDA was $2.3M, impacted by inventory valuation losses and Gulf Coast operational disruptions from hurricanes and flooding .
• No Q3 earnings call was held; management cancelled the call due to the announced definitive agreement to be acquired by an affiliate of Tres Energy LLC for $38.00/share (39% premium to prior close), a clear stock reaction catalyst .
• Sequentially, revenue fell vs Q2 ($718.5M to $695.2M) and margins compressed; crude marketing volumes improved (72,208 bpd vs 67,099 bpd), but VEX throughput and terminalling volumes declined vs Q2 .
• Specialty chemicals market weakness, inflationary pressures, and weather-related outages weighed on transportation/logistics results; management highlighted crude marketing margin resilience vs prior year .
• S&P Global consensus estimates for Q3 2024 were unavailable for AE; therefore, estimate comparisons are not provided (consensus not mapped by SPGI for AE).

What Went Well and What Went Wrong

What Went Well

• Crude oil marketing adjusted EBITDA increased year over year as higher crude prices offset lower volumes post-Red River exit; GulfMark volumes rose sequentially to 72,208 bpd (vs 67,099 bpd in Q2) .
• Crude pipeline/storage terminalling volumes were higher YoY (11,319 bpd vs 9,350 bpd), and VEX throughput increased YoY (10,326 bpd vs 8,548 bpd) .
• Strategic catalyst: agreed sale to Tres Energy at $38.00/share, valuing AE at ~$138.9M TEV, potentially crystallizing value for shareholders and changing narrative to deal spread/closing risk .
• Quote: “We are encouraged by the increase in Adjusted EBITDA from crude oil marketing operations, as higher oil prices compared to the prior-year quarter more than offset the lower volumes...” — Kevin Roycraft, CEO .

What Went Wrong

• Consolidated operating loss of $5.6M and net loss of $4.5M; adjusted EBITDA of $2.3M down YoY (vs $6.0M in Q3 2023), reflecting inventory valuation losses and segment pressure .
• Weather disruptions: “power outages and flooding... throughout the Gulf Coast caused by multiple hurricanes” impacted operations across divisions .
• Logistics and repurposing revenues fell YoY ($12.5M vs $16.4M), and pipeline/storage intersegment revenue was minimal; VEX throughput and terminalling volumes declined sequentially vs Q2 (10,326/11,319 bpd vs 13,881/16,660 bpd) .
• Transportation segment continued to face specialty chemical market weakness, rate pressure and inflationary costs, compressing margins .

Financial Results

Consolidated P&L and EPS vs prior periods

Margins vs prior periods

Note: Margin percentages are computed from cited revenue and profit metrics in each period.

Segment Revenue Breakdown

Operating KPIs

Guidance Changes

No formal quantitative guidance was issued; the Q3 earnings call was cancelled due to the Tres Energy transaction. Dividend was maintained.

Earnings Call Themes & Trends

Management Commentary

• “Our third quarter results reflect the impact of power outages and flooding on our operations throughout the Gulf Coast caused by multiple hurricanes and the prolonged weakness across the specialty chemicals market...” — Kevin Roycraft, CEO .
• “We are encouraged by the increase in Adjusted EBITDA from crude oil marketing operations, as higher oil prices compared to the prior-year quarter more than offset the lower volumes...” — Kevin Roycraft, CEO .
• Transaction message: “This transaction marks the successful completion of a profitable journey for our shareholders... By returning to our roots as a private company...” — Townes G. Pressler, Chairman .
• Deal rationale: “This new chapter will empower us to innovate more freely... without the pressures of being a public company.” — Kevin Roycraft, CEO .

Q&A Highlights

• Chemical transportation recovery catalysts: management cited rising carrier load offer rejections and capacity exiting the market, enabling targeted rate increases at Service Transport for the first time in two years .
• VEX Pipeline outlook: volumes expected to be steady but potentially below Q2 levels; third-party terminalling revenue expected to drop off in the subsequent quarter .

Note: No Q3 2024 call Q&A due to cancellation tied to merger announcement .

Estimates Context

• S&P Global consensus estimates for AE Q3 2024 (EPS, revenue, EBITDA, target price) were unavailable due to missing Capital IQ mapping for AE; as a result, no beat/miss comparison to Wall Street consensus can be provided for this quarter (SPGI consensus data unavailable).

Key Takeaways for Investors

• Operationally soft quarter: revenue and margins declined sequentially; adjusted EBITDA compressed to $2.3M with inventory valuation losses and weather-related disruptions weighing on results .
• Crude marketing remains the anchor: sequential volume increase and margin resilience; YoY pricing tailwinds offset structural volume reductions from Red River exit .
• Pipeline/storage levered to internal routing: QoQ decline in VEX throughput/terminalling underscores dependence on GulfMark routing and limited third‑party barrels near term .
• Transportation/logistics headwinds persist: specialty chemicals and inflationary costs kept segment under pressure; management is pursuing rate discipline and cost control while capacity exits support early rate improvement .
• Cash/liquidity stepped down in Q3 (cash $25.1M; liquidity $73.6M) after strong Q2; watch working capital swings and hurricane impacts on cash generation .
• Corporate catalyst dominates: the definitive merger agreement at $38.00/share (39% premium) re-frames the stock as a deal spread with focus on shareholder vote and customary closing conditions (expected Q1 2025 close) .
• Near-term trading: narrative shifts from fundamentals to merger closing risk; fundamental volatility (weather, chemicals markets) likely secondary until deal resolution .