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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549

FORM 10-Q
(Mark One)

☑ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2024

OR

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ___  to  ___.

Commission file number: 1-07908

ADAMS RESOURCES & ENERGY, INC.
(Exact Name of Registrant as Specified in Its Charter)
Delaware
74-1753147
(State or Other Jurisdiction of
Incorporation or Organization)
(I.R.S. Employer
Identification No.)
17 South Briar Hollow Lane, Suite 100
Houston, Texas 77027
(Address of Principal Executive Offices, including Zip Code)
(713) 881-3600
(Registrant’s Telephone Number, including Area Code)

Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Common Stock, $0.10 Par ValueAENYSE American LLC

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes þ No o

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes þ No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company.  See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer
☐
Accelerated filer
☑
Non-accelerated filer
☐
Smaller reporting company
☑
Emerging growth company
☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No þ
A total of 2,577,872 shares of Common Stock were outstanding at November 1, 2024.

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ADAMS RESOURCES & ENERGY, INC. AND SUBSIDIARIES
TABLE OF CONTENTS

Page Number



1
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PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
ADAMS RESOURCES & ENERGY, INC. AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except share data)
September 30,December 31,
20242023
ASSETS
Current assets:
Cash and cash equivalents$25,089 $33,256 
Restricted cash10,448 11,990 
Accounts receivable, net of allowance for credit
losses of $42 and $117, respectively
144,334 164,295 
Inventory30,028 19,827 
Income tax receivable823 — 
Prepayments and other current assets2,322 3,103 
Total current assets213,044 232,471 
Property and equipment, net99,607 105,065 
Operating lease right-of-use assets, net3,971 5,832 
Intangible assets, net6,743 7,985 
Goodwill6,673 6,673 
Other assets2,956 3,308 
Total assets$332,994 $361,334 
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Accounts payable$178,617 $183,102 
Current portion of finance lease obligations5,843 6,206 
Current portion of operating lease liabilities1,688 2,829 
Current portion of long-term debt2,500 2,500 
Other current liabilities16,720 16,150 
Total current liabilities205,368 210,787 
Other long-term liabilities:
Long-term debt12,500 19,375 
Asset retirement obligations2,551 2,514 
Finance lease obligations15,248 19,685 
Operating lease liabilities2,293 3,006 
Deferred taxes and other liabilities10,254 13,251 
Total liabilities248,214 268,618 
Commitments and contingencies (Note 14)
Shareholders’ equity:
Preferred stock – $1.00 par value, 960,000 shares
authorized, none outstanding
— — 
Common stock – $0.10 par value, 7,500,000 shares
authorized, 2,577,872 and 2,547,154 shares outstanding, respectively
256 253 
Contributed capital23,066 21,802 
Retained earnings61,458 70,661 
Total shareholders’ equity84,780 92,716 
Total liabilities and shareholders’ equity$332,994 $361,334 

See Notes to Unaudited Condensed Consolidated Financial Statements.
2
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ADAMS RESOURCES & ENERGY, INC. AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)

Three Months EndedNine Months Ended
September 30,September 30,
2024202320242023
Revenues:
Marketing$660,842 $719,925 $1,967,491 $1,913,673 
Transportation21,758 24,206 67,745 75,103 
Pipeline and storage43 59 67 308 
Logistics and repurposing12,520 16,424 39,403 46,458 
Total revenues695,163 760,614 2,074,706 2,035,542 
Costs and expenses:
Marketing657,191 710,169 1,948,591 1,894,416 
Transportation19,778 19,642 59,284 62,315 
Pipeline and storage929 659 2,568 2,350 
Logistics and repurposing12,555 15,121 40,579 41,448 
General and administrative4,520 4,162 13,755 10,649 
Depreciation and amortization5,752 6,936 18,287 21,289 
Total costs and expenses700,725 756,689 2,083,064 2,032,467 
Operating (losses) earnings(5,562)3,925 (8,358)3,075 
Other income (expense):
Interest and other income528 119 1,662 893 
Interest expense(572)(1,027)(2,036)(2,525)
Total other expense, net(44)(908)(374)(1,632)
(Losses) Earnings before income taxes(5,606)3,017 (8,732)1,443 
Income tax benefit (provision)1,066 (759)1,465 (357)
Net (losses) earnings$(4,540)$2,258 $(7,267)$1,086 
(Losses) Earnings per share:
Basic net (losses) earnings per common share$(1.76)$0.89 $(2.83)$0.43 
Diluted net (losses) earnings per common share$(1.76)$0.88 $(2.83)$0.42 
Dividends per common share$0.24 $0.24 $0.72 $0.72 


See Notes to Unaudited Condensed Consolidated Financial Statements.
3
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ADAMS RESOURCES & ENERGY, INC. AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
Nine Months Ended
September 30,
20242023
Operating activities:
Net (losses) earnings$(7,267)$1,086 
Adjustments to reconcile net (losses) earnings to net cash provided by
operating activities:
Depreciation and amortization18,287 21,289 
Gains on sales of property(912)(1,429)
Provision for credit losses(75)29 
Stock-based compensation expense1,181 1,044 
Change in contingent consideration liability— (2,566)
Deferred income taxes(2,709)3 
Net change in fair value contracts— (335)
Changes in assets and liabilities:
Accounts receivable20,172 (30,253)
Accounts receivable/payable, affiliates— (31)
Inventories(10,201)(731)
Income tax receivable/payable(823)(510)
Prepayments and other current assets781 648 
Accounts payable(4,574)22,239 
Accrued liabilities649 (2,709)
Other194 64 
Net cash provided by operating activities14,703 7,838 
Investing activities:
Property and equipment additions(13,316)(8,917)
Proceeds from property sales2,506 3,078 
Net cash used in investing activities(10,810)(5,839)
Financing activities:
Borrowings under Credit Agreement— 76,000 
Repayments under Credit Agreement(6,875)(77,875)
Principal repayments of finance lease obligations(4,800)(4,944)
Net proceeds from sale of equity— 549 
Dividends paid on common stock(1,927)(1,908)
Net cash used in financing activities(13,602)(8,178)
Decrease in cash and cash equivalents, including restricted cash(9,709)(6,179)
Cash and cash equivalents, including restricted cash, at beginning of period45,246 31,067 
Cash and cash equivalents, including restricted cash, at end of period$35,537 $24,888 


See Notes to Unaudited Condensed Consolidated Financial Statements.

4
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ADAMS RESOURCES & ENERGY, INC. AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY
(In thousands, except per share data)

Total
CommonContributedRetainedShareholders’
StockCapitalEarningsEquity
Balance, January 1, 2024
$253 $21,802 $70,661 $92,716 
Net losses— — (498)(498)
Stock-based compensation expense— 307 — 307 
Vesting of restricted awards3 (3)— — 
Cancellation of shares withheld to cover
taxes upon vesting of restricted awards(1)(227)— (228)
Dividends declared:
Common stock, $0.24/share
— — (615)(615)
Awards under LTIP, $0.24/share
— — (28)(28)
Balance, March 31, 2024
255 21,879 69,520 91,654 
Net losses— — (2,229)(2,229)
Stock-based compensation expense— 451 — 451 
Dividends declared:
Common stock, $0.24/share
— — (615)(615)
Awards under LTIP, $0.24/share
— — (31)(31)
Balance, June 30, 2024
255 22,330 66,645 89,230 
Net losses— — (4,540)(4,540)
Stock-based compensation expense— 423 — 423 
Vesting of restricted awards1 313 — 314 
Dividends declared:
Common stock, $0.24/share
— — (618)(618)
Awards under LTIP, $0.24/share
— — (29)(29)
Balance, September 30, 2024
$256 $23,066 $61,458 $84,780 



















5
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ADAMS RESOURCES & ENERGY, INC. AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY
(In thousands, except per share data)

Total
CommonContributedRetainedShareholders’
StockCapitalEarningsEquity
Balance, January 1, 2023
$248 $19,965 $72,964 $93,177 
Net losses— — (1,999)(1,999)
Stock-based compensation expense— 283 — 283 
Vesting of restricted awards3 (3)— — 
Cancellation of shares withheld to cover
taxes upon vesting of restricted awards— (222)— (222)
Shares sold under at-the-market offering
program1 548 — 549 
Dividends declared:
Common stock, $0.24/share
— — (608)(608)
Awards under LTIP, $0.24/share
— — (25)(25)
Balance, March 31, 2023
252 20,571 70,332 91,155 
Net earnings— — 827 827 
Stock-based compensation expense— 372 — 372 
Dividends declared:
Common stock, $0.24/share
— — (608)(608)
Awards under LTIP, $0.24/share
— — (25)(25)
Balance, June 30, 2023
252 20,943 70,526 91,721 
Net earnings— — 2,258 2,258 
Stock-based compensation expense— 389 — 389 
Vesting of restricted awards1 321 — 322 
Dividends declared:
Common stock, $0.24/share
— — (609)(609)
Awards under LTIP, $0.24/share
— — (20)(20)
Balance, September 30, 2023
$253 $21,653 $72,155 $94,061 

See Notes to Unaudited Condensed Consolidated Financial Statements.
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ADAMS RESOURCES & ENERGY, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Note 1. Organization and Basis of Presentation

Organization

Adams Resources & Energy, Inc. is a publicly traded Delaware corporation organized in 1973, the common shares of which are listed on the NYSE American LLC under the ticker symbol “AE”. Through our subsidiaries, we are primarily engaged in crude oil marketing, truck and pipeline transportation of crude oil, and terminalling and storage in various crude oil and natural gas basins in the lower 48 states of the United States (“U.S.”). In addition, we conduct tank truck transportation of liquid chemicals and dry bulk primarily in the lower 48 states of the U.S. with deliveries into Canada and Mexico, and with sixteen terminals across the U.S. We also recycle and repurpose off-specification fuels, lubricants, crude oil and other chemicals from producers in the U.S. Unless the context requires otherwise, references to “we,” “us,” “our,” “Adams” or the “Company” are intended to mean the business and operations of Adams Resources & Energy, Inc. and its consolidated subsidiaries.  

We operate and report in four business segments: (i) crude oil marketing, transportation and storage; (ii) tank truck transportation of liquid chemicals and dry bulk; (iii) pipeline transportation, terminalling and storage of crude oil; and (iv) interstate bulk transportation logistics of crude oil, condensate, fuels, oils and other petroleum products and recycling and repurposing of off-specification fuels, lubricants, crude oil and other chemicals. See Note 7 for further information regarding our business segments.

Basis of Presentation

Our results of operations for the three and nine months ended September 30, 2024 are not necessarily indicative of results expected for the full year of 2024. In the opinion of management, the accompanying unaudited condensed consolidated financial statements reflect all adjustments consisting of normal recurring accruals necessary for fair presentation.  The condensed consolidated financial statements and the accompanying notes are prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) for interim financial statements and the rules of the U.S. Securities and Exchange Commission (“SEC”). Certain information and footnote disclosures required by GAAP for complete annual financial statements have been omitted and, therefore, these interim financial statements should be read in conjunction with our audited consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2023 (the “2023 Form 10-K”) filed with the SEC on March 13, 2024. All significant intercompany transactions and balances have been eliminated in consolidation.

Use of Estimates

The preparation of our financial statements in conformity with GAAP requires management to use estimates and assumptions that affect the reported amount of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. We base our estimates and judgments on historical experience and on various other assumptions and information we believe to be reasonable under the circumstances. Estimates and assumptions about future events and their effects cannot be perceived with certainty and, accordingly, these estimates may change as new events occur, as more experience is acquired, as additional information is obtained and as the operating environment changes. While we believe the estimates and assumptions used in the preparation of these condensed consolidated financial statements are appropriate, actual results could differ from those estimates.
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ADAMS RESOURCES & ENERGY, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Note 2. Summary of Significant Accounting Policies

Cash, Cash Equivalents and Restricted Cash

The following table provides a reconciliation of cash and cash equivalents and restricted cash as reported in the unaudited condensed consolidated balance sheets that totals to the amounts shown in the unaudited condensed consolidated statements of cash flows at the dates indicated (in thousands):

September 30,December 31,
20242023
Cash and cash equivalents$25,089 $33,256 
Restricted cash:
Collateral for outstanding letters of credit (1)
112 111 
Captive insurance subsidiary (2)
10,336 11,879 
Total cash, cash equivalents and restricted cash shown in the
unaudited condensed consolidated statements of cash flows$35,537 $45,246 
_____________
(1)Represents amounts that are held in a segregated bank account by Wells Fargo Bank as collateral for an outstanding letter of credit.
(2)$1.5 million of the restricted cash balance relates to the initial capitalization of our captive insurance company formed in late 2020, and the remainder primarily represents cash amounts held by our captive insurance company for insurance premiums.

Common Shares Outstanding

The following table reconciles our outstanding common stock for the periods indicated:

Common
shares
Balance, January 1, 2024
2,547,154 
Vesting of restricted stock unit awards (see Note 11)
19,334 
Vesting of performance share unit awards (see Note 11)
6,318 
Shares withheld to cover taxes upon vesting of equity awards(6,157)
Balance, March 31, 2024
2,566,649 
Vesting of restricted stock unit awards (see Note 11)
924 
Vesting of performance share unit awards (see Note 11)
127 
Balance, June 30, 2024
2,567,700 
Vesting of shares issued10,172 
Balance, September 30, 2024
2,577,872 

Earnings Per Share

Basic earnings per share is computed by dividing our net earnings (losses) by the weighted average number of common shares outstanding during the period. Diluted earnings per share is computed by giving effect to all potential common shares outstanding, including shares related to unvested restricted stock unit awards. Unvested restricted stock unit awards granted under the Adams Resources & Energy, Inc. 2018 Long-Term Incentive Plan, as amended and restated (“2018 LTIP”), or granted as employment inducement awards outside of the 2018 LTIP, are not considered to be participating securities as the holders of these shares do not have non-forfeitable dividend rights in the event of our declaration of a dividend for common shares (see Note 11 for further discussion).
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ADAMS RESOURCES & ENERGY, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
A reconciliation of the calculation of basic and diluted (losses) earnings per share was as follows for the periods indicated (in thousands, except per share data):

Three Months EndedNine Months Ended
September 30,September 30,
2024202320242023
(Losses) Earnings per share — numerator:
Net (losses) earnings$(4,540)$2,258 $(7,267)$1,086 
Denominator:
Basic weighted average number of shares outstanding2,573 2,541 2,565 2,531 
Basic net (losses) earnings per share$(1.76)$0.89 $(2.83)$0.43 
Diluted (losses) earnings per share:
Diluted weighted average number of shares outstanding:
Common shares2,573 2,541 2,565 2,531 
Restricted stock unit awards (1)
— 15 — 15 
Performance share unit awards (1) (2)
— 14 — 18 
Total diluted shares2,573 2,570 2,565 2,564 
Diluted net (losses) earnings per share$(1.76)$0.88 $(2.83)$0.42 
_______________
(1)For the three and nine months ended September 30, 2024, the effect of the restricted stock unit awards and the performance share unit awards on losses per share was anti-dilutive.
(2)The dilutive effect of performance share awards is included in the calculation of diluted earnings per share when the performance share award performance conditions have been achieved.

Fair Value Measurements

The carrying amounts reported in the unaudited condensed consolidated balance sheets for cash and cash equivalents, accounts receivable and accounts payable approximates fair value because of the immediate or short-term maturity of these financial instruments. Marketable securities are recorded at fair value based on market quotations from actively traded liquid markets. The fair value of the term loan under our credit agreement (see Note 10 for further information) is representative of the carrying value based upon the variable terms and management’s opinion that the current rates available to us with the same maturity and security structure are equivalent to that of the debt.

A three-tier hierarchy has been established that classifies fair value amounts recognized in the financial statements based on the observability of inputs used to estimate these fair values.  The hierarchy considers fair value amounts based on observable inputs (Levels 1 and 2) to be more reliable and predictable than those based primarily on unobservable inputs (Level 3).  At each balance sheet reporting date, we categorize our financial assets and liabilities using this hierarchy.

Fair value contracts consist of derivative financial instruments and are recorded as either an asset or liability measured at its fair value. Changes in fair value are recognized immediately in earnings unless the derivatives qualify for, and we elect, cash flow hedge accounting. We had no contracts designated for hedge accounting outstanding during any current reporting periods.


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ADAMS RESOURCES & ENERGY, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Income Taxes

Income taxes are accounted for using the asset and liability method. Under this approach, deferred tax assets and liabilities are recognized based on anticipated future tax consequences attributable to differences between financial statement carrying amounts of these items and their respective tax basis.

Inventory

Inventory consists of crude oil held in storage tanks and at third-party pipelines as part of our crude oil marketing and pipeline and storage operations. Crude oil inventory is carried at the lower of cost or net realizable value. At the end of each reporting period, we assess the carrying value of our inventory and make adjustments necessary to reduce the carrying value to the applicable net realizable value. Any resulting adjustments are a component of marketing costs and expenses or pipeline and storage costs and expenses on our unaudited condensed consolidated statements of operations.

Property and Equipment

Property and equipment is recorded at cost. Expenditures for additions, improvements and other enhancements to property and equipment are capitalized, and minor replacements, maintenance and repairs that do not extend asset life or add value are charged to expense as incurred. When property and equipment assets are retired or otherwise disposed of, the related cost and accumulated depreciation is removed from the accounts and any resulting gain or loss is included in results of operations in operating costs and expenses for the respective period. Property and equipment, except for land, is depreciated using the straight-line method over the estimated average useful lives ranging from two to thirty-nine years.

We review our long-lived assets for impairment whenever there is evidence that the carrying value of these assets may not be recoverable. Any impairment recognized is permanent and may not be restored. Property and equipment is reviewed at the lowest level of identifiable cash flows. For property and equipment requiring impairment, the fair value is estimated based on an internal discounted cash flow model of future cash flows.

See Note 5 for additional information regarding our property and equipment.

Stock-Based Compensation

We measure all share-based payment awards, including the issuance of restricted stock unit awards and performance share unit awards to employees and board members, using a fair-value based method. The cost of services received from employees and non-employee board members in exchange for awards of equity instruments is recognized in the condensed consolidated statements of operations based on the estimated fair value of those awards on the grant date and is amortized on a straight-line basis over the requisite service period. The fair value of restricted stock unit awards and performance share unit awards is based on the closing price of our common stock on the grant date. We account for forfeitures as they occur. See Note 11 for additional information regarding our 2018 LTIP.
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ADAMS RESOURCES & ENERGY, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Note 3. Revenue Recognition

Revenue Disaggregation
The following table disaggregates our revenue by segment and by major source for the periods indicated (in thousands):

Three Months EndedNine Months Ended
September 30,September 30,
2024202320242023
Crude oil marketing:
Revenue from contracts with customers:
Goods transferred at a point in time$659,422 $710,010 $1,937,229 $1,878,735 
Services transferred over time— 427 31 763 
Total revenues from contracts with customers659,422 710,437 1,937,260 1,879,498 
Other (1)
1,420 9,488 30,231 34,175 
Total crude oil marketing revenue$660,842 $719,925 $1,967,491 $1,913,673 
Transportation:
Revenue from contracts with customers:
Goods transferred at a point in time$— $— $— $— 
Services transferred over time21,758 24,206 67,745 75,103 
Total revenues from contracts with customers21,758 24,206 67,745 75,103 
Other— — — — 
Total transportation revenue$21,758 $24,206 $67,745 $75,103 
Pipeline and storage: (2)
Revenue from contracts with customers:
Goods transferred at a point in time$— $— $— $— 
Services transferred over time43 59 67 308 
Total revenues from contracts with customers43 59 67 308 
Other— — — — 
Total pipeline and storage revenue$43 $59 $67 $308 
Logistics and repurposing:
Revenue from contracts with customers:
Goods transferred at a point in time$6,556 $8,545 $19,739 $25,708 
Services transferred over time5,964 7,879 19,664 20,750 
Total revenues from contracts with customers12,520 16,424 39,403 46,458 
Other— — — — 
Total logistics and repurposing revenue$12,520 $16,424 $39,403 $46,458 
Subtotal:
Total revenues from contracts with customers$693,743 $751,126 $2,044,475 $2,001,367 
Total other (1)
1,420 9,488 30,231 34,175 
Total consolidated revenues$695,163 $760,614 $2,074,706 $2,035,542 
________________________
(1)Other crude oil marketing revenues are recognized under Accounting Standards Codification (“ASC”) 815, Derivatives and Hedging, and ASC 845, Nonmonetary Transactions – Purchases and Sales of Inventory with the Same Counterparty.
(2)The substantial majority of pipeline and storage revenue earned during the three and nine months ended September 30, 2024 and 2023, was from an affiliated shipper, GulfMark Energy, Inc. (“GulfMark”), our subsidiary, and eliminated in consolidation. See Note 7.
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ADAMS RESOURCES & ENERGY, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Other Crude Oil Marketing Revenue

Certain of the commodity purchase and sale contracts utilized by our crude oil marketing business qualify as derivative instruments with certain specifically identified contracts also designated as trading activity. From the time of contract origination, these contracts are marked-to-market and recorded on a net revenue basis in the accompanying unaudited condensed consolidated financial statements.

Certain of our crude oil contracts may be with a single counterparty to provide for similar quantities of crude oil to be bought and sold at different locations. These contracts are entered into for a variety of reasons, including effecting the transportation of the commodity, to minimize credit exposure, and/or to meet the competitive demands of the customer. These buy/sell arrangements are reflected on a net revenue basis in the accompanying unaudited condensed consolidated financial statements.

Reporting these crude oil contracts on a gross revenue basis would increase our reported revenues as follows for the periods indicated (in thousands):

Three Months EndedNine Months Ended
September 30,September 30,
2024202320242023
Revenue gross-up$96,236 $257,965 $218,394 $785,636 


Note 4. Prepayments and Other Current Assets

The components of prepayments and other current assets were as follows at the dates indicated (in thousands):

September 30,December 31,
20242023
Insurance premiums$258 $798 
Rents, licenses and other2,064 2,305 
Total prepayments and other current assets$2,322 $3,103 


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ADAMS RESOURCES & ENERGY, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Note 5. Property and Equipment

The historical costs of our property and equipment and related accumulated depreciation and amortization balances were as follows at the dates indicated (in thousands):

Estimated
Useful LifeSeptember 30,December 31,
in Years20242023
Tractors and trailers
5 – 6
$117,113 $119,265 
Field equipment
2 – 5
25,085 25,024 
Finance lease ROU assets (1)
3 – 6
35,039 35,724 
Pipeline and related facilities
20 – 25
20,619 20,397 
Linefill and base gas (2)
N/A4,135 3,922 
Buildings
5 – 39
17,078 17,089 
Office equipment
2 – 5
3,025 3,000 
LandN/A4,163 4,163 
Construction in progressN/A8,495 3,385 
Total234,752 231,969 
Less accumulated depreciation and amortization(135,145)(126,904)
Property and equipment, net$99,607 $105,065 
_______________
(1)Our finance lease right-of-use (“ROU)” assets arise from leasing arrangements for the right to use various classes of underlying assets including tractors, trailers and a tank storage and throughput arrangement (see Note 13 for further information). Accumulated amortization of the assets presented as “Finance lease ROU assets” was $15.7 million and $11.0 million at September 30, 2024 and December 31, 2023, respectively.
(2)Linefill and base gas represents crude oil in the VEX pipeline and storage tanks we own, and the crude oil is recorded at historical cost.

Components of depreciation and amortization expense were as follows for the periods indicated (in thousands):

Three Months EndedNine Months Ended
September 30,September 30,
2024202320242023
Depreciation and amortization, excluding amounts under finance leases$3,563 $4,523 $11,589 $14,260 
Amortization of property and equipment under finance leases1,788 1,983 5,456 5,691 
Amortization of intangible assets401 430 1,242 1,338 
Total depreciation and amortization$5,752 $6,936 $18,287 $21,289 



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ADAMS RESOURCES & ENERGY, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Note 6. Other Assets

Components of other assets were as follows at the dates indicated (in thousands):

September 30,December 31,
20242023
Insurance collateral deposits$605 $605 
State collateral deposits23 23 
Materials and supplies948 1,050 
Debt issuance costs1,007 1,259 
Other373 371 
Total other assets$2,956 $3,308 

We have established certain deposits to support participation in our liability insurance program and remittance of state crude oil severance taxes and other state collateral deposits. Insurance collateral deposits are held by the insurance company to cover past or potential open claims based upon a percentage of the expected losses under the insurance programs. Insurance collateral deposits are invested at the discretion of our insurance carrier.


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ADAMS RESOURCES & ENERGY, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Note 7. Segment Reporting

We operate and report in four business segments: (i) crude oil marketing, transportation and storage; (ii) tank truck transportation of liquid chemicals and dry bulk; (iii) pipeline transportation, terminalling and storage of crude oil; and (iv) interstate bulk transportation logistics of crude oil, condensate, fuels, oils and other petroleum products and recycling and repurposing of off-specification fuels, lubricants, crude oil and other chemicals.

Financial information by reporting segment was as follows for the periods indicated (in thousands):

Reporting Segments
Crude oil marketingTrans-portationPipeline and storageLogistics and repurposingOtherTotal
Three Months Ended September 30, 2024
Segment revenues (1)
$660,856 $21,810 $1,052 $13,570 $— $697,288 
Less: Intersegment revenues (1)
(14)(52)(1,009)(1,050)— (2,125)
Revenues$660,842 $21,758 $43 $12,520 $— $695,163 
Segment operating earnings (losses) (2)
2,284 (542)(1,147)(1,637)— (1,042)
Depreciation and amortization1,367 2,522 261 1,602 — 5,752 
Property and equipment additions (3) (4)
65 1,463 243 2,856 179 4,806 
Three Months Ended September 30, 2023
Segment revenues (1)
$719,925 $24,333 $770 $16,457 $— $761,485 
Less: Intersegment revenues (1)
— (127)(711)(33)— (871)
Revenues$719,925 $24,206 $59 $16,424 $— $760,614 
Segment operating earnings (losses) (2)
7,664 1,558 (866)(269)— 8,087 
Depreciation and amortization2,092 3,006 266 1,572 — 6,936 
Property and equipment additions (3)
140 1,416 182 1,271 — 3,009 
Nine Months Ended September 30, 2024
Segment revenues (1)
$1,967,515 $67,906 $3,234 $42,752 $— $2,081,407 
Less: Intersegment revenues (1)
(24)(161)(3,167)(3,349)— (6,701)
Revenues$1,967,491 $67,745 $67 $39,403 $— $2,074,706 
Segment operating earnings (losses) (2)
14,499 308 (3,298)(6,112)— 5,397 
Depreciation and amortization4,401 8,153 797 4,936 — 18,287 
Property and equipment additions (3) (4)
3,685 4,374 439 4,639 179 13,316 
Nine Months Ended September 30, 2023
Segment revenues (1)
$1,913,673 $75,439 $2,473 $48,984 $— $2,040,569 
Less: Intersegment revenues (1)
— (336)(2,165)(2,526)— (5,027)
Revenues$1,913,673 $75,103 $308 $46,458 $— $2,035,542 
Segment operating earnings (losses) (2)
12,922 3,515 (2,846)133 — 13,724 
Depreciation and amortization6,335 9,273 804 4,877 — 21,289 
Property and equipment additions (3) (4)
809 2,754 1,423 3,819 112 8,917 
_______________
(1)Segment revenues include intersegment amounts that are eliminated due to consolidation in operating costs and expenses in our unaudited condensed consolidated statements of operations. Intersegment activities are conducted at posted tariff rates where applicable, or otherwise at rates similar to those charged to third parties or rates that we believe approximate market at the time the agreement is executed.
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ADAMS RESOURCES & ENERGY, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(2)Our crude oil marketing segment’s operating earnings included inventory valuation losses of $2.1 million and liquidation gains of $4.9 million for the three months ended September 30, 2024 and 2023, respectively. For the nine months ended September 30, 2024 and 2023, our crude oil marketing segment’s operating earnings included inventory valuation losses of $0.8 million and inventory liquidation gains of $2.9 million, respectively.
(3)Our segment property and equipment additions do not include assets acquired under finance leases during the three and nine months ended September 30, 2024 and 2023. See Note 13 for further information.
(4)Amounts included in property and equipment additions for Other are additions for computer and other office equipment and a company vehicle at our corporate headquarters, which were not attributed or allocated to any of our reporting segments.

Segment operating (losses) earnings reflect revenues net of operating costs and depreciation and amortization expense and are reconciled to (losses) earnings before income taxes, as follows for the periods indicated (in thousands):

Three Months EndedNine Months Ended
September 30,September 30,
2024202320242023
Segment operating (losses) earnings$(1,042)$8,087 $5,397 $13,724 
General and administrative(4,520)(4,162)(13,755)(10,649)
Operating (losses) earnings(5,562)3,925 (8,358)3,075 
Interest and other income528 119 1,662 893 
Interest expense(572)(1,027)(2,036)(2,525)
(Losses) earnings before income taxes$(5,606)$3,017 $(8,732)$1,443 

Identifiable assets by business segment were as follows at the dates indicated (in thousands):

September 30,December 31,
20242023
Reporting segment:
Crude oil marketing$172,033 $185,285 
Transportation52,831 57,653 
Pipeline and storage25,043 25,027 
Logistics and repurposing42,712 43,258 
Cash and other (1)
40,375 50,111 
Total assets$332,994 $361,334 
_______________
(1)Other identifiable assets are primarily corporate cash, corporate accounts receivable, properties and operating lease right-of-use assets not identified with any specific segment of our business.

Accounting policies for transactions between reportable segments are consistent with applicable accounting policies as disclosed herein.


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ADAMS RESOURCES & ENERGY, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Note 8. Transactions with Affiliates

We enter into certain transactions in the normal course of business with affiliated entities. Activities with affiliates were as follows for the periods indicated (in thousands):

Three Months EndedNine Months Ended
September 30,September 30,
2024202320242023
Crude oil purchases from affiliate (1)
$3,921 $9,362 $13,065 $13,940 
Rentals paid to affiliates of Scott Bosard (2)
146 125 434 405 
Billings to KSA and affiliates— — — 9 
Rentals paid to an affiliate of KSA— — — 232 
Payments to an affiliate of KSA for purchase of
  vehicles (3)
— — — 157 
_______________
(1)From time to time, GulfMark purchases crude oil from Endeavor Natural Gas, L.P., of which a member of our Board of Directors is the Managing Partner.
(2)In connection with the acquisition of Firebird and Phoenix on August 12, 2022, we entered into four operating lease agreements for office and terminal locations with entities owned by Scott Bosard, one of the sellers, for periods ranging from two to five years.
(3)Amount paid to West Point Buick GMC was for the purchase of three pickup trucks during the nine months ended September 30, 2023, and are net of trade-in values.

Affiliate transactions included direct cost reimbursement for shared phone and administrative services from KSA Industries, Inc. (“KSA”), a formerly affiliated entity. We lease our corporate office space in a building that was operated by 17 South Briar Hollow Lane, LLC, an affiliate of KSA, prior to its December 2023 sale to an unaffiliated entity. In addition, we purchase pickup trucks from West Point Buick GMC, an affiliate of KSA. KSA was our largest shareholder until October 31, 2022, when we repurchased the common stock owned by it. An affiliate of KSA served on our Board of Directors through the date of our 2023 annual meeting, when he retired. As of May 31, 2023, KSA and its affiliates are no longer related parties. The table above consequently does not reflect any payments to or from KSA and its affiliates after that date.


Note 9. Other Current Liabilities

The components of other current liabilities were as follows at the dates indicated (in thousands):

September 30,December 31,
20242023
Accrual for payroll, benefits and bonuses$6,860 $5,684 
Accrued automobile and workers’ compensation claims7,285 5,804 
Accrued medical claims678 997 
Accrued taxes675 2,453 
Other1,222 1,212 
Total other current liabilities $16,720 $16,150 


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ADAMS RESOURCES & ENERGY, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Note 10. Long-Term Debt

On October 27, 2022, we entered into a credit agreement (the “Credit Agreement”) with Cadence Bank, as administrative agent, swingline lender and issuing lender, and the other lenders party thereto (collectively, the “Lenders”). The Credit Agreement provides for (a) a revolving credit facility that allows for borrowings up to $60.0 million in aggregate principal amount from time to time (the “Revolving Credit Facility”) and (b) a Term Loan in aggregate principal amount of $25.0 million (the “Term Loan”). The Revolving Credit Facility matures on October 27, 2027 unless earlier terminated.

Pursuant to the terms of the Credit Agreement, we are required to maintain compliance with certain financial covenants as of the end of each fiscal quarter and on a pro forma basis, after giving effect to any borrowings. Each of such ratios is calculated as outlined in the Credit Agreement and subject to certain exclusions and qualifications described therein. See Note 15 for more information relating to these financial covenants.

On August 2, 2023, we entered into Amendment No. 1 (the “First Amendment”) to the Credit Agreement. The First Amendment (i) clarified our ability to exclude crude oil inventory valuation losses (and, to the extent included in our consolidated net income, inventory liquidation gains) from the calculation of Consolidated EBITDA for purposes of the related financial covenants, (ii) provided for the exclusion of unusual and non-recurring losses and expenses from the calculation of Consolidated EBITDA, not to exceed 10.0 percent of Consolidated EBITDA for the period, and (iii) amended the definition of Consolidated Funded Indebtedness to include letters of credit and banker’s acceptances only to the extent such letters of credit or banker’s acceptances have been drawn, for purposes of the Consolidated Total Leverage Ratio calculation in the Credit Agreement. The First Amendment applied to our fiscal period ending June 30, 2023 and thereafter.

On July 16, 2024, we entered into Amendment No. 2 (the “Second Amendment”) to the Credit Agreement. The Second Amendment amended and restated the definitions of the Consolidated Fixed Charge Coverage Ratio and Consolidated Fixed Charges in order (i) to remove the inclusion of Operating Lease Expenses paid in cash from both the numerator and denominator in the calculation of the Consolidated Fixed Charge Coverage Ratio, and (ii) to clarify that only Consolidated Interest Expense paid in cash is included in the denominator of the Consolidated Fixed Charge Coverage Ratio. These amendments applied to the financial covenant calculations for the period ending June 30, 2024 and thereafter.

At September 30, 2024, we had $15.0 million outstanding under the Term Loan at a weighted average interest rate of 7.60 percent, and $11.5 million of letters of credit outstanding at a fee of 2.25 percent. No amounts were outstanding under the Revolving Credit Facility.

The following table presents the scheduled maturities of principal amounts of our debt obligations at September 30, 2024 for the next five years, and in total thereafter (in thousands):


Remainder of 2024$625 
20252,500 
20262,500 
20279,375 
Total debt maturities$15,000 

At September 30, 2024, we were in compliance with all covenants under the Credit Agreement. See Note 15 for information relating to the Third Amendment to the Credit Agreement.

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ADAMS RESOURCES & ENERGY, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Note 11. Stock-Based Compensation Plan

We have in place a long-term incentive plan in which any employee or non-employee director who provides services to us is eligible to participate. The 2018 LTIP, which is overseen by the Compensation Committee of our Board of Directors, provides for the grant of various types of equity awards, of which restricted stock unit awards and performance-based compensation awards have been granted. In May 2022, our shareholders approved an amendment and restatement of the 2018 LTIP, in which the maximum number of shares authorized for issuance under the 2018 LTIP was increased by 150,000 shares to a total of 300,000 shares, and the term of the 2018 LTIP was extended through February 23, 2032. After giving effect to awards granted and forfeitures made under the 2018 LTIP and assuming the potential achievement of the maximum amounts of the performance factors through September 30, 2024, a total of 42,244 shares remained available for issuance.

Compensation expense recognized in connection with equity-based awards was as follows for the periods indicated (in thousands):

Three Months EndedNine Months Ended
September 30,September 30,
2024202320242023
Compensation expense$423 $389 $1,181 $1,044 

At September 30, 2024 and December 31, 2023, we had $0.1 million and $0.1 million, respectively, of accrued dividend amounts for awards granted under the 2018 LTIP or as inducement awards.

Restricted Stock Unit Awards

The following table presents restricted stock unit award activity for the periods indicated:
Weighted-
Average Grant
Number ofDate Fair Value
Shares
per Share (1)
Restricted stock unit awards at January 1, 2024
58,587 $41.16 
Granted (2)
53,266 $29.96 
Vested(30,430)$39.03 
Forfeited(3,491)$36.67 
Restricted stock unit awards at September 30, 2024
77,932 $34.54 
_______________
(1)Determined by dividing the aggregate grant date fair value of awards by the number of awards issued.
(2)The aggregate grant date fair value of restricted stock unit awards issued during the first nine months of 2024 was $1.6 million based on grant date market prices of our common shares ranging from $24.51 to $30.03 per share.

Unrecognized compensation cost associated with restricted stock unit awards was approximately $1.2 million at September 30, 2024. Due to the graded vesting provisions of these awards, we expect to recognize the remaining compensation cost for these awards over a weighted-average period of 1.4 years.


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ADAMS RESOURCES & ENERGY, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Performance Share Unit Awards

The following table presents performance share unit award activity for the periods indicated:
Weighted-
Average Grant
Number ofDate Fair Value
Shares
per Share (1)
Performance share unit awards at January 1, 2024
17,424 $31.03 
Granted (2)
29,546 $30.01 
Vested(6,445)$29.72 
Forfeited(524)$30.26 
Performance share unit awards at September 30, 2024
40,001 $30.50 
_______________
(1)Determined by dividing the aggregate grant date fair value of awards by the number of awards issued.
(2)The aggregate grant date fair value of performance share unit awards issued during the first nine months of 2024 was $0.9 million based on grant date market prices of our common shares ranging from $24.58 to $30.03 per share and assuming a performance factor of 100 percent.

Unrecognized compensation cost associated with performance share unit awards was approximately $0.8 million at September 30, 2024. We expect to recognize the remaining compensation cost for these awards over a weighted-average period of 2.3 years.


Note 12. Supplemental Cash Flow Information

Supplemental cash flows and non-cash transactions were as follows for the periods indicated (in thousands):
Nine Months Ended
September 30,
20242023
Cash paid for interest$1,937 $2,671 
Cash paid for federal and state income taxes3,942 2,472 
Non-cash transactions:
Change in accounts payable related to property and equipment additions— 52 
Property and equipment acquired under finance leases— 17,632 

See Note 13 for information related to other non-cash transactions related to leases.


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ADAMS RESOURCES & ENERGY, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Note 13. Leases

The following table provides the components of lease expense for the periods indicated (in thousands):

Three Months EndedNine Months Ended
September 30,September 30,
20242023