Adams Resources reported a net loss of $2.2 million

HOUSTON - Adams Resources & Energy, Inc. (NYSE AMERICAN: AE) disclosed a net loss of $2.2 million for the second quarter ended June 30, 2024, a decline from the profit reported in the same period last year. Despite the setback, the company announced a maintained quarterly cash dividend of $0.24 per common share.

The energy company, which specializes in the marketing, transportation, and logistics of crude oil and other products, reported total revenues of $718.5 million for the quarter, marking a significant increase from the previous year. However, the net loss of $2.2 million, or $0.87 per share, contrasts with a net profit of $827,000 in the second quarter of 2023.

"Our second quarter results reflect the prolonged weakness across the specialty chemicals market through a combination of lower demand, excess capacity, and continued inflationary pressures across our business as well as an additional $0.8 million of self-insurance retention expense," said Kevin Roycraft, President and CEO of the Company.

Earnings before interest, taxes, depreciation, and amortization (EBITDA) stood at $3.7 million, with adjusted EBITDA, which excludes inventory valuation losses, at $4.2 million. The company highlighted the impact of a challenging specialty chemicals market, characterized by lower demand and inflationary pressures, as a key factor in the quarter's performance.

Operational highlights included a decrease in crude oil marketing volumes by GulfMark Energy, one of Adams' subsidiaries, and a 23% sequential growth in throughput and terminalling volumes at the Victoria Express pipeline. The company also reported a solid position with 244,871 barrels of crude oil inventory by the end of the quarter.

Capital investments during the quarter totaled $2.4 million, primarily for the purchase of transportation equipment and ongoing construction at the Dayton facility. Despite the net loss, Adams emphasized its strong financial position, which includes cash and cash equivalents of $38.5 million and liquidity of $88.5 million.

In other recent news, Adams Resources & Energy, Inc. has made significant changes to its existing credit agreement. The amendments, referred to as Amendment No. 2, modify the financial covenants, specifically the Fixed Charge Coverage Ratio and the Consolidated Fixed Charges definitions. These alterations are designed to provide more accurate financial covenant calculations and will be effective from the period ending June 30, 2024.

InvestingPro Insights

Adams Resources & Energy, Inc. (NYSE AMERICAN: AE) has recently faced a challenging market environment, as reflected in the company's financial performance. According to real-time data from InvestingPro, AE's revenue for the last twelve months as of Q1 2024 stood at $2.76 billion, experiencing a decline of 15.01% compared to the same period last year. This contraction in revenue aligns with the company's reported net loss for the second quarter of 2024.

While revenue growth for Q1 2024 showed a marginal increase of 1.67%, it's important to note that AE's gross profit margins remain under pressure, with a low margin of 1.7% for the same period. This aligns with one of the InvestingPro Tips, which points out the company's struggle with weak gross profit margins. Furthermore, the company's operating income margin was just 0.09%, indicating that profitability challenges persist.

Despite these financial headwinds, AE has demonstrated a commitment to shareholder returns, maintaining dividend payments for 31 consecutive years, with a dividend yield of 3.92% as of mid-2024. This is a significant aspect for investors, especially those seeking income-generating investments. Additionally, the company has been profitable over the last twelve months, with a basic EPS from continuing operations at $0.67.

Investors looking for a deeper analysis can find more InvestingPro Tips on AE, which provide insights into the company's performance and expectations. For instance, while analysts do not anticipate the company will be profitable this year, AE operates with a moderate level of debt, suggesting a balanced approach to financial management. In total, there are seven InvestingPro Tips available for AE, which can be found at https://www.investing.com/pro/AE, offering a comprehensive outlook for informed investment decisions.

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