Adams Resources & Energy, Inc.

Total revenue for Q2 2024 was $718.5 million, up from $624.8 million in Q2 2023. Marketing segment revenue was $682.8 million versus $585.3 million last year, with operating income of $5.6 million versus $3.4 million. Transportation revenue was $22.8 million versus $24.5 million, with operating income of $637,000 versus $1.1 million. Pipeline and storage posted an operating loss of $1.1 million versus a loss of $779,000. Logistics and repurposing revenue was $12.9 million versus $14.8 million, with an operating loss of $2.9 million versus $133,000. G&A was $4.5 million versus $1.7 million, and interest expense was $671,000 versus $802,000. Net loss was $2.2 million, or $0.87 per share, versus net income of $827,000, or $0.32 per diluted share. Cash provided by operating activities was $8.3 million, and capex was $2.4 million. Unrestricted cash was $38.5 million and total liquidity was $88.5 million at June 30. Management said adjusted EBITDA was $5 million in Q2 versus $4.2 million in Q1 after adjustments. For guidance, management expects GulfMark margins to remain strong in Q3, VEX volumes to stay at a steady but possibly slightly lower level than Q2, Phoenix to begin barge deliveries in mid-Q3 and improve in the back half of the year, Firebird volumes to be flat or slightly lower in Q3, and Service Transport to see signs of rate improvement. Full-year timing of broader market recovery was pushed into 2025.

Kevin Roycraft emphasized that sequential improvement continued, but results are still below the company’s potential. He tied the first-half weakness to soft freight demand, lower drilling activity, and inflation, while highlighting improving conditions in GulfMark, Phoenix’s upcoming barge option, and early signs of tightening in freight capacity. His tone was cautious but more constructive about the back half of the year and 2025, especially around freight rates and drilling recovery.

Tracy Ohmart laid out the quarter’s financials and the main bridges behind the results. She noted revenue of $718.5 million, net loss of $2.2 million, operating cash flow of $8.3 million, capex of $2.4 million, unrestricted cash of $38.5 million, and liquidity of $88.5 million. She also pointed to the higher G&A from last year’s one-time favorable adjustment, lower interest expense of $671,000 due to reduced borrowings, and continued debt paydown, including $3 million of accelerated principal payments that left $15.6 million outstanding on the term loan.

Analysts focused on what could improve the chemical transportation market and how sustainable VEX Pipeline’s strong throughput would be. Management said carrier turndowns are rising, trucking capacity is exiting the market, and Service Transport is starting to secure targeted rate increases, all of which may signal a market bottom. On VEX, Greg Mills said Q2 and Q1 were helped by producer flowbacks, so volumes may stay steady but not necessarily as high as Q2, and third-party revenue at the Victoria terminal will drop off a bit.