Adams Resources & Energy Inc (AE) Reports Mixed Q3 Results Amidst Market Challenges
Adams Resources & Energy Inc (AE) reports a decrease in total revenue to $760.6 million in Q3 2023 from $852.9 million in Q3 2022.
Net earnings increased to $2.3 million in Q3 2023, up from $0.8 million in Q2 2023 and $2.2 million in Q3 2022.
Net cash provided by operating activities fell to $11.4 million in Q3 2023, a significant drop from $40.0 million in the same quarter of the previous year.
The company declared a consistent quarterly cash dividend of $0.24 per common share.
On November 8, 2023, Adams Resources & Energy Inc (AE), a key player in the marketing, transportation, logistics, and repurposing of various commodities, released its financial results for the third quarter ended September 30, 2023. The company faced a challenging market environment but managed to increase its net income sequentially and maintain a consistent dividend payout.
Financial Performance Overview
Adams Resources & Energy Inc (AE) experienced a decrease in total revenue, reporting $760.6 million for Q3 2023 compared to $852.9 million for the same period in 2022. Despite the revenue decline, the company's net earnings saw a rise to $2.3 million, or $0.88 per diluted common share, an increase from $0.8 million, or $0.32 per common share in Q2 2023, and slightly higher than the $2.2 million, or $0.50 per diluted common share, reported in Q3 2022.
However, net cash provided by operating activities showed a significant decrease to $11.4 million in Q3 2023, down from $40.0 million in the same quarter of the previous year. This decline was primarily attributed to the timing of payments and receipts from crude oil customers and changes in inventory due to fluctuations in crude oil pricing and barrels held.
The company's liquidity improved, with cash and cash equivalents reaching $16.3 million as of September 30, 2023, compared to $9.0 million at the end of the previous quarter. This increase was mainly due to the timing of receipts and early payments from crude oil customers.
Operational Highlights
Adams' crude oil marketing subsidiary, GulfMark Energy, marketed 92,556 barrels per day (bpd) of crude oil during the third quarter of 2023, showing stability compared to the previous year's quarter. The Service Transport Company, another subsidiary, traveled 6.51 million miles, indicating a slight decrease from the 6.78 million miles in Q3 2022.
The company's pipeline and storage segment, including the Victoria Express Pipeline System, reported a throughput of 8,548 bpd for Q3 2023, down from 9,963 bpd for the same period in 2022. The logistics and repurposing segment, which includes the Firebird Bulk Carriers, Inc. and Phoenix Oil, Inc. businesses acquired in August 2022, had a positive impact on quarterly cash flow.
Adams Resources & Energy Inc (AE) remains solidly positioned with 307,175 barrels of crude oil inventory at the end of the quarter, compared to 328,562 barrels at the end of 2022.
Capital Investments and Dividends
During Q3 2023, the company had capital expenditures of $3.0 million, primarily for the purchase of transportation equipment. Adams also paid dividends totaling $0.24 per share during the quarter, continuing its long-standing practice of dividend payments since 1994.
Outlook and Management Commentary
Kevin J. Roycraft, Chief Executive Officer of Adams, commented on the results:
Our performance in the third quarter showcased several encouraging highlights in a very challenging environment. Our crude oil marketing segment demonstrated a sequential increase in operating income despite a number of headwinds,"
and
Moreover, we increased our cash balance and liquidity and nearly tripled our net income on a sequential basis."
He also provided an outlook, expecting challenges to persist in the near term with a gradual recovery anticipated to begin late in the first half of 2024.
Adams Resources & Energy Inc (AE) is well-prepared to navigate the ongoing macroeconomic challenges and is positioned to deliver meaningful performance as market conditions improve. The company's commitment to its dividend is also seen as a key element in delivering long-term value to its shareholders.
For more detailed information, investors and interested parties are encouraged to review the full earnings release and financial statements, as well as to join the conference call scheduled for November 9, 2023.
For further insights and analysis on Adams Resources & Energy Inc (AE) and other investment opportunities, visit GuruFocus.com.
Explore the complete 8-K earnings release (here) from Adams Resources & Energy Inc for further details.
This article first appeared on GuruFocus.
