Table of Contents


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 June 30, 20222023

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)
Delaware74-1753147
(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 definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filerAccelerated filer
Non-accelerated filerSmaller 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 4,378,3162,534,685 shares of Common Stock were outstanding at August 1, 2022.2023.


Table of Contents


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

Page Number



1

Table of Contents


PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
ADAMS RESOURCES & ENERGY, INC. AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except share data)
June 30,December 31,
20222021
ASSETS
Current assets:
Cash and cash equivalents$67,728 $97,825 
Restricted cash7,853 9,492 
Accounts receivable, net of allowance for doubtful
accounts of $100 and $108, respectively267,634 137,789 
Accounts receivable – related party
Inventory61,281 18,942 
Derivative assets1,501 347 
Income tax receivable— 6,424 
Prepayments and other current assets2,007 2,389 
Total current assets408,006 273,210 
Property and equipment, net84,528 88,036 
Operating lease right-of-use assets, net6,437 7,113 
Intangible assets, net2,938 3,317 
Other assets2,714 3,027 
Total assets$504,623 $374,703 
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Accounts payable$289,381 $168,224 
Derivative liabilities848 324 
Current portion of finance lease obligations4,308 3,663 
Current portion of operating lease liabilities2,228 2,178 
Other current liabilities14,207 11,622 
Total current liabilities310,972 186,011 
Other long-term liabilities:
Asset retirement obligations2,406 2,376 
Finance lease obligations8,609 9,672 
Operating lease liabilities4,205 4,938 
Deferred taxes and other liabilities10,979 11,320 
Total liabilities337,171 214,317 
Commitments and contingencies (Note 14)00
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, 4,378,316 and 4,355,001 shares outstanding, respectively436 433 
Contributed capital17,541 16,913 
Retained earnings149,475 143,040 
Total shareholders’ equity167,452 160,386 
Total liabilities and shareholders’ equity$504,623 $374,703 

June 30,December 31,
20232022
ASSETS
Current assets:
Cash and cash equivalents$8,974 $20,532 
Restricted cash8,784 10,535 
Accounts receivable, net of allowance for doubtful
accounts of $78 and $88, respectively158,433 189,039 
Inventory26,523 26,919 
Income tax receivable469 — 
Prepayments and other current assets2,608 3,118 
Total current assets205,791 250,143 
Property and equipment, net111,834 106,425 
Operating lease right-of-use assets, net6,783 7,720 
Intangible assets, net8,837 9,745 
Goodwill6,673 6,428 
Other assets3,564 3,698 
Total assets$343,482 $384,159 
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Accounts payable$162,787 $204,391 
Accounts payable – related party— 31 
Derivative liabilities30 330 
Current portion of finance lease obligations6,444 4,382 
Current portion of operating lease liabilities2,802 2,712 
Current portion of long-term debt2,500 — 
Other current liabilities14,011 19,214 
Total current liabilities188,574 231,060 
Other long-term liabilities:
Long-term debt20,625 24,375 
Asset retirement obligations2,650 2,459 
Finance lease obligations20,693 12,085 
Operating lease liabilities3,986 5,007 
Deferred taxes and other liabilities15,233 15,996 
Total liabilities251,761 290,982 
Commitments and contingencies (Note 16)
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, 2,534,685 and 2,495,484 shares outstanding, respectively252 248 
Contributed capital20,943 19,965 
Retained earnings70,526 72,964 
Total shareholders’ equity91,721 93,177 
Total liabilities and shareholders’ equity$343,482 $384,159 
See Notes to Unaudited Condensed Consolidated Financial Statements.
2

Table of Contents


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

Three Months EndedSix Months EndedThree Months EndedSix Months Ended
June 30,June 30,June 30,June 30,
20222021202220212023202220232022
Revenues:Revenues:Revenues:
MarketingMarketing$962,516 $463,092 $1,710,071 $767,115 Marketing$585,272 $962,516 $1,193,748 $1,710,071 
TransportationTransportation29,534 23,497 56,224 44,732 Transportation24,452 29,534 50,897 56,224 
Pipeline and storagePipeline and storage— 155 — 388 Pipeline and storage249 — 249 — 
Logistics and repurposingLogistics and repurposing14,793 — 30,034 — 
Total revenuesTotal revenues992,050 486,744 1,766,295 812,235 Total revenues624,766 992,050 1,274,928 1,766,295 
Costs and expenses:Costs and expenses:Costs and expenses:
MarketingMarketing955,511 453,081 1,691,158 748,288 Marketing579,753 955,511 1,184,247 1,691,158 
TransportationTransportation23,674 19,078 44,539 36,538 Transportation20,260 23,674 42,673 44,539 
Pipeline and storagePipeline and storage606 488 1,160 1,032 Pipeline and storage753 606 1,691 1,160 
Logistics and repurposingLogistics and repurposing13,202 — 26,327 — 
General and administrativeGeneral and administrative4,211 2,961 8,229 6,337 General and administrative1,715 4,211 6,487 8,229 
Depreciation and amortizationDepreciation and amortization5,088 4,801 10,101 9,854 Depreciation and amortization7,303 5,088 14,353 10,101 
Total costs and expensesTotal costs and expenses989,090 480,409 1,755,187 802,049 Total costs and expenses622,986 989,090 1,275,778 1,755,187 
Operating earnings2,960 6,335 11,108 10,186 
Operating earnings (losses)Operating earnings (losses)1,780 2,960 (850)11,108 
Other income (expense):Other income (expense):Other income (expense):
Interest and other incomeInterest and other income303 62 327 196 Interest and other income570 303 774 327 
Interest expenseInterest expense(136)(204)(250)(424)Interest expense(802)(136)(1,498)(250)
Total other income (expense), net167 (142)77 (228)
Total other (expense) income, netTotal other (expense) income, net(232)167 (724)77 
Earnings before income taxes3,127 6,193 11,185 9,958 
Income tax provision(651)(1,484)(2,619)(2,441)
Earnings (Losses) before income taxesEarnings (Losses) before income taxes1,548 3,127 (1,574)11,185 
Income tax (provision) benefitIncome tax (provision) benefit(721)(651)402 (2,619)
Net earnings$2,476 $4,709 $8,566 $7,517 
Net earnings (losses)Net earnings (losses)$827 $2,476 $(1,172)$8,566 
Earnings per share:
Basic net earnings per common share$0.57 $1.11 $1.96 $1.77 
Diluted net earnings per common share$0.56 $1.10 $1.95 $1.76 
Earnings (Losses) per share:Earnings (Losses) per share:
Basic net earnings (losses) per common shareBasic net earnings (losses) per common share$0.33 $0.57 $(0.46)$1.96 
Diluted net earnings (losses) per common shareDiluted net earnings (losses) per common share$0.32 $0.56 $(0.46)$1.95 
Dividends per common shareDividends per common share$0.24 $0.24 $0.48 $0.48 Dividends per common share$0.24 $0.24 $0.48 $0.48 


See Notes to Unaudited Condensed Consolidated Financial Statements.
3

Table of Contents


ADAMS RESOURCES & ENERGY, INC. AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
Six Months EndedSix Months Ended
June 30,June 30,
2022202120232022
Operating activities:Operating activities:Operating activities:
Net earnings$8,566 $7,517 
Adjustments to reconcile net earnings to net cash
(used in) provided by operating activities:
Net (losses) earningsNet (losses) earnings$(1,172)$8,566 
Adjustments to reconcile net (losses) earnings to net cashAdjustments to reconcile net (losses) earnings to net cash
used in operating activities:used in operating activities:
Depreciation and amortizationDepreciation and amortization10,101 9,854 Depreciation and amortization14,353 10,101 
Gains on sales of propertyGains on sales of property(938)(265)Gains on sales of property(766)(938)
Provision for doubtful accountsProvision for doubtful accounts(8)(2)Provision for doubtful accounts(10)(8)
Stock-based compensation expenseStock-based compensation expense458 417 Stock-based compensation expense655 458 
Change in contingent consideration liabilityChange in contingent consideration liability(2,566)— 
Deferred income taxesDeferred income taxes(332)(1,636)Deferred income taxes(770)(332)
Net change in fair value contractsNet change in fair value contracts(630)(25)Net change in fair value contracts(300)(630)
Changes in assets and liabilities:Changes in assets and liabilities:Changes in assets and liabilities:
Accounts receivableAccounts receivable(129,837)(26,109)Accounts receivable30,616 (129,837)
Accounts receivable/payable, affiliatesAccounts receivable/payable, affiliates— (4)Accounts receivable/payable, affiliates(31)— 
InventoriesInventories(42,339)(10,376)Inventories396 (42,339)
Income tax receivableIncome tax receivable6,424 7,442 Income tax receivable(469)6,424 
Prepayments and other current assetsPrepayments and other current assets382 842 Prepayments and other current assets510 382 
Accounts payableAccounts payable121,144 63,831 Accounts payable(41,606)121,144 
Accrued liabilitiesAccrued liabilities2,614 1,235 Accrued liabilities(2,564)2,614 
OtherOther217 (614)Other116 217 
Net cash (used in) provided by operating activities(24,178)52,107 
Net cash used in operating activitiesNet cash used in operating activities(3,608)(24,178)
Investing activities:Investing activities:Investing activities:
Property and equipment additionsProperty and equipment additions(4,783)(3,602)Property and equipment additions(5,908)(4,783)
Proceeds from property salesProceeds from property sales1,374 1,316 Proceeds from property sales1,444 1,374 
Net cash used in investing activitiesNet cash used in investing activities(3,409)(2,286)Net cash used in investing activities(4,464)(3,409)
Financing activities:Financing activities:Financing activities:
Borrowings under Credit AgreementBorrowings under Credit Agreement30,000 8,000 Borrowings under Credit Agreement38,000 30,000 
Repayments under Credit AgreementRepayments under Credit Agreement(30,000)— Repayments under Credit Agreement(39,250)(30,000)
Principal repayments of finance lease obligationsPrincipal repayments of finance lease obligations(2,306)(2,123)Principal repayments of finance lease obligations(3,247)(2,306)
Payment for financed portion of VEX acquisition— (10,000)
Net proceeds from sale of equityNet proceeds from sale of equity283 — Net proceeds from sale of equity549 283 
Dividends paid on common stockDividends paid on common stock(2,126)(2,062)Dividends paid on common stock(1,289)(2,126)
Net cash used in financing activitiesNet cash used in financing activities(4,149)(6,185)Net cash used in financing activities(5,237)(4,149)
(Decrease) Increase in cash and cash equivalents, including restricted cash(31,736)43,636 
Decrease in cash and cash equivalents, including restricted cashDecrease in cash and cash equivalents, including restricted cash(13,309)(31,736)
Cash and cash equivalents, including restricted cash, at beginning of periodCash and cash equivalents, including restricted cash, at beginning of period107,317 52,065 Cash and cash equivalents, including restricted cash, at beginning of period31,067 107,317 
Cash and cash equivalents, including restricted cash, at end of periodCash and cash equivalents, including restricted cash, at end of period$75,581 $95,701 Cash and cash equivalents, including restricted cash, at end of period$17,758 $75,581 


See Notes to Unaudited Condensed Consolidated Financial Statements.

4

Table of Contents


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, 2022$433 $16,913 $143,040 $160,386 
Net earnings— — 6,090 6,090 
Stock-based compensation expense— 195 — 195 
Vesting of restricted awards(2)— — 
Cancellation of shares withheld to cover
taxes upon vesting of restricted awards— (86)— (86)
Dividends declared:
Common stock, $0.24/share— — (1,048)(1,048)
Awards under LTIP, $0.24/share— — (16)(16)
Balance, March 31, 2022435 17,020 148,066 165,521 
Net earnings— — 2,476 2,476 
Stock-based compensation expense— 263 — 263 
Cancellation of shares withheld to cover
taxes upon vesting of restricted awards— (24)— (24)
Shares sold at the market282 — 283 
Dividends declared:
Common stock, $0.24/share— — (1,049)(1,049)
Awards under LTIP, $0.24/share— — (18)(18)
Balance, June 30, 2022$436 $17,541 $149,475 $167,452 

TotalTotal
CommonContributedRetainedShareholders’CommonContributedRetainedShareholders’
StockCapitalEarningsEquityStockCapitalEarningsEquity
Balance, January 1, 2021$423 $13,340 $135,329 $149,092 
Net earnings— — 2,808 2,808 
Stock-based compensation expense— 185 — 185 
Cancellation of shares withheld to cover
taxes upon vesting of restricted awards— (31)— (31)
Dividends declared:
Common stock, $0.24/share— — (1,019)(1,019)
Awards under LTIP, $0.24/share— — (18)(18)
Balance, March 31, 2021423 13,494 137,100 151,017 
Net earnings— — 4,709 4,709 
Balance, January 1, 2023Balance, January 1, 2023$248 $19,965 $72,964 $93,177 
Net lossNet loss— — (1,999)(1,999)
Stock-based compensation expenseStock-based compensation expense— 232 — 232 Stock-based compensation expense— 283 — 283 
Vesting of restricted awardsVesting of restricted awards(1)— — Vesting of restricted awards(3)— — 
Cancellation of shares withheld to coverCancellation of shares withheld to coverCancellation of shares withheld to cover
taxes upon vesting of restricted awards taxes upon vesting of restricted awards— (70)— (70)taxes upon vesting of restricted awards— (222)— (222)
Shares sold under at-the-marketShares sold under at-the-market
offering programoffering program548 — 549 
Dividends declared:Dividends declared:Dividends declared:
Common stock, $0.24/shareCommon stock, $0.24/share— — (1,021)(1,021)Common stock, $0.24/share— — (608)(608)
Awards under LTIP, $0.24/shareAwards under LTIP, $0.24/share— — (16)(16)Awards under LTIP, $0.24/share— — (25)(25)
Balance, June 30, 2021$424 $13,655 $140,772 $154,851 
Balance, March 31, 2023Balance, March 31, 2023252 20,571 70,332 91,155 
Net earningsNet earnings— — 827 827 
Stock-based compensation expenseStock-based compensation expense— 372 — 372 
Dividends declared:Dividends declared:
Common stock, $0.24/shareCommon stock, $0.24/share— — (608)(608)
Awards under LTIP, $0.24/shareAwards under LTIP, $0.24/share— — (25)(25)
Balance, June 30, 2023Balance, June 30, 2023$252 $20,943 $70,526 $91,721 



























5

Table of Contents


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, 2022$433 $16,913 $143,040 $160,386 
Net earnings— — 6,090 6,090 
Stock-based compensation expense— 195 — 195 
Vesting of restricted awards(2)— — 
Cancellation of shares withheld to cover
taxes upon vesting of restricted awards— (86)— (86)
Dividends declared:
Common stock, $0.24/share— — (1,048)(1,048)
Awards under LTIP, $0.24/share— — (16)(16)
Balance, March 31, 2022435 17,020 148,066 165,521 
Net earnings— — 2,476 2,476 
Stock-based compensation expense— 263 — 263 
Cancellation of shares withheld to cover
  taxes upon vesting of restricted awards— (24)— (24)
Shares sold under at-the-market
offering program282 — 283 
Dividends declared:
Common stock, $0.24/share— — (1,049)(1,049)
Awards under LTIP, $0.24/share— — (18)(18)
Balance, June 30, 2022$436 $17,541 $149,475 $167,452 

See Notes to Unaudited Condensed Consolidated Financial Statements.
56

Table of Contents

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, terminalling and storage in various crude oil and natural gas basins in the lower 48 states of the United States (“U.S.”). We alsoIn addition, we conduct tank truck transportation of liquid chemicals, pressurized gases, asphalt and dry bulk primarily in the lower 48 states of the U.S. with deliveries into Canada and Mexico, and with nineteeneighteen 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”“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 3four business segments: (i) crude oil marketing, transportation and storage; (ii) tank truck transportation of liquid chemicals, pressurized gases, asphalt and dry bulk; and (iii) pipeline transportation, terminalling and storage of crude oil.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 78 for further information regarding our business segments.

Basis of Presentation

Our results of operations for the three and six months ended June 30, 20222023 are not necessarily indicative of results expected for the full year of 2022.2023. 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, 20212022 (the “2021“2022 Form 10-K”) filed with the SEC on March 9, 2022.16, 2023. 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.


67

Table of Contents

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):

June 30,December 31,June 30,December 31,
2022202120232022
Cash and cash equivalentsCash and cash equivalents$67,728 $97,825 Cash and cash equivalents$8,974 $20,532 
Restricted cash:Restricted cash:Restricted cash:
Collateral for outstanding letters of credit (1)
Collateral for outstanding letters of credit (1)
356 892 
Captive insurance subsidiary (1)(2)
Captive insurance subsidiary (1)(2)
7,853 9,492 
Captive insurance subsidiary (1)(2)
8,428 9,643 
Total cash, cash equivalents and restricted cash shown in theTotal cash, cash equivalents and restricted cash shown in theTotal cash, cash equivalents and restricted cash shown in the
unaudited condensed consolidated statements of cash flowsunaudited condensed consolidated statements of cash flows$75,581 $107,317 unaudited condensed consolidated statements of cash flows$17,758 $31,067 
_____________
(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 represents amounts paid to 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, 202220234,355,0012,495,484 
Vesting of restricted stock unit awards (see Note 11)13)15,96620,291 
Vesting of performance share unit awards (see Note 13)12,319 
Shares withheld to cover taxes upon vesting of restricted stock unitequity awards(3,101)(8,089)
Shares sold under at-the-market offering program14,680 
Balance, March 31, 202220234,367,8662,534,685 
Vesting of restricted stock unit awards (see Note 11)No activity2,953 
Shares withheld to cover taxes upon vesting of restricted stock unit awards(705)
Shares sold at the market8,202 
Balance, June 30, 202220234,378,3162,534,685 

Credit Agreement

At June 30, 2022, we had no borrowings outstanding under our $40.0 million Credit Agreement with Wells Fargo Bank, National Association (“Credit Agreement”) and $5.7 million of letters of credit issued under the Credit Agreement at a fee of 1.75 percent per annum. At June 30, 2022, we were in compliance with all financial covenants under the Credit Agreement. However, as of June 30, 2022, we obtained a waiver relating to a breach of a non-financial covenant in connection with our failure to timely notify the lender of the creation of a new holding company subsidiary.


7

Table of Contents

ADAMS RESOURCES & ENERGY, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Earnings Per Share

Basic earnings (losses) per share is computed by dividing our net earnings (losses) by the weighted average number of common shares outstanding during the period. Diluted earnings (losses) per share is computed by giving effect to all potential common shares outstanding, including our 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 1113 for further discussion).

A reconciliation
8

Table of theContents

ADAMS RESOURCES & ENERGY, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
The calculation of basic and diluted earnings (losses) per share was as follows for the periods indicated (in thousands, except per share data):

Three Months EndedSix Months EndedThree Months EndedSix Months Ended
June 30,June 30,June 30,June 30,
20222021202220212023202220232022
Earnings per share — numerator:
Net earnings$2,476 $4,709 $8,566 $7,517 
Earnings (Losses) per share — numerator:Earnings (Losses) per share — numerator:
Net earnings (losses)Net earnings (losses)$827 $2,476 $(1,172)$8,566 
Denominator:Denominator:Denominator:
Basic weighted average number of shares outstandingBasic weighted average number of shares outstanding4,371 4,254 4,365 4,250 Basic weighted average number of shares outstanding2,535 4,371 2,526 4,365 
Basic earnings per share$0.57 $1.11 $1.96 $1.77 
Basic net earnings (losses) per shareBasic net earnings (losses) per share$0.33 $0.57 $(0.46)$1.96 
Diluted earnings per share:
Diluted earnings (losses) per share:Diluted earnings (losses) per share:
Diluted weighted average number of shares outstanding:Diluted weighted average number of shares outstanding:Diluted weighted average number of shares outstanding:
Common sharesCommon shares4,371 4,254 4,365 4,250 Common shares2,535 4,371 2,526 4,365 
Restricted stock unit awards(1)Restricted stock unit awards(1)21 13 22 15 Restricted stock unit awards(1)14 21 — 22 
Performance share unit awards (1)
12 12 
Performance share unit awards (1) (2)
Performance share unit awards (1) (2)
12 12 — 12 
Total diluted sharesTotal diluted shares4,404 4,273 4,399 4,272 Total diluted shares2,561 4,404 2,526 4,399 
Diluted earnings per share$0.56 $1.10 $1.95 $1.76 
Diluted net earnings (losses) per shareDiluted net earnings (losses) per share$0.32 $0.56 $(0.46)$1.95 
_______________
(1)For the six months ended June 30, 2023, 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 are included in the calculation of diluted earnings per share when the performance share award performance conditions have been achieved.

Equity At-The-Market Offerings

During the three and six months ended June 30, 2022,2023, we received net proceeds of approximately $0.3$0.6 million (net of offering costs to B. Riley Securities, Inc. of $14$27 thousand) from the sale of 8,20214,680 of our common shares at an average price per share of approximately $37.38$40.74 in at-the-market offerings under our At Market Issuance Sales Agreement with B. Riley Securities, Inc. dated December 23, 2020.

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 11 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.

8

Table of Contents

ADAMS RESOURCES & ENERGY, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
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.
9

Table of Contents

ADAMS RESOURCES & ENERGY, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
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 during any current reporting periods (see Note 1012 for further information).

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.

On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”) was enacted and signed into law in response to the COVID-19 pandemic. The CARES Act, among other things, permits net operating losses (“NOL”) incurred in tax years 2018, 2019 and 2020 to offset 100 percent of taxable income and be carried back to each of the five preceding taxable years to generate a refund of previously paid income taxes. We carried back our NOL for fiscal year 2020 to fiscal years 2015 and 2016, and in June 2022, we received a cash refund of approximately $6.8 million.

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 expenses on our consolidated statements of operations. No charges were recognized during the three and six months ended June 30, 2022 and 2021.

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.


9

Table of Contents

ADAMS RESOURCES & ENERGY, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
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 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 1113 for additional information regarding our 2018 LTIP.


10

Table of Contents

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):

Reporting SegmentsThree Months EndedSix Months Ended
Crude Oil MarketingTransportationPipeline and storageTotalJune 30,June 30,
2023202220232022
Three Months Ended June 30, 2022
Revenues from contracts with customers$952,325 $29,534 $— $981,859 
Other (1)
10,191 — — 10,191 
Total revenues$962,516 $29,534 $— $992,050 
Timing of revenue recognition:
Crude Oil Marketing:Crude Oil Marketing:
Revenue from contracts with customers:Revenue from contracts with customers:
Goods transferred at a point in timeGoods transferred at a point in time$952,325 $— $— $952,325 Goods transferred at a point in time$580,636 $952,325 $1,168,725 $1,688,359 
Services transferred over timeServices transferred over time— 29,534 — 29,534 Services transferred over time292 — 336 — 
Total revenues from contracts with customersTotal revenues from contracts with customers$952,325 $29,534 $— $981,859 Total revenues from contracts with customers580,928 952,325 1,169,061 1,688,359 
Other (1)
Other (1)
4,344 10,191 24,687 21,712 
Total crude oil marketing revenueTotal crude oil marketing revenue$585,272 $962,516 $1,193,748 $1,710,071 
Three Months Ended June 30, 2021
Revenues from contracts with customers$452,820 $23,497 $155 $476,472 
Other (1)
10,272 — — 10,272 
Total revenues$463,092 $23,497 $155 $486,744 
Timing of revenue recognition:
Transportation:Transportation:
Revenue from contracts with customers:Revenue from contracts with customers:
Goods transferred at a point in timeGoods transferred at a point in time$452,820 $— $— $452,820 Goods transferred at a point in time$— $— $— $— 
Services transferred over timeServices transferred over time— 23,497 155 23,652 Services transferred over time24,452 29,534 50,897 56,224 
Total revenues from contracts with customersTotal revenues from contracts with customers$452,820 $23,497 $155 $476,472 Total revenues from contracts with customers24,452 29,534 50,897 56,224 
OtherOther— — — — 
Total transportation revenueTotal transportation revenue$24,452 $29,534 $50,897 $56,224 
Six Months Ended June 30, 2022
Revenues from contracts with customers$1,698,550 $56,224 $— $1,754,774 
Other (1)
11,521 — — 11,521 
Total revenues$1,710,071 $56,224 $— $1,766,295 
Timing of revenue recognition:
Pipeline and storage: (2)
Pipeline and storage: (2)
Revenue from contracts with customers:Revenue from contracts with customers:
Goods transferred at a point in timeGoods transferred at a point in time$1,698,550 $— $— $1,698,550 Goods transferred at a point in time$— $— $— $— 
Services transferred over timeServices transferred over time— 56,224 — 56,224 Services transferred over time249 — 249 — 
Total revenues from contracts with customersTotal revenues from contracts with customers$1,698,550 $56,224 $— $1,754,774 Total revenues from contracts with customers249 — 249 — 
OtherOther— — — — 
Total pipeline and storage revenueTotal pipeline and storage revenue$249 $— $249 $— 
Six Months Ended June 30, 2021
Revenues from contracts with customers$750,295 $44,732 $388 $795,415 
Other (1)
16,820 — — 16,820 
Total revenues$767,115 $44,732 $388 $812,235 
Timing of revenue recognition:
Logistics and repurposing:Logistics and repurposing:
Revenue from contracts with customers:Revenue from contracts with customers:
Goods transferred at a point in timeGoods transferred at a point in time$750,295 $— $— $750,295 Goods transferred at a point in time$9,009 $— $17,163 $— 
Services transferred over timeServices transferred over time— 44,732 388 45,120 Services transferred over time5,784 — 12,871 — 
Total revenues from contracts with customersTotal revenues from contracts with customers$750,295 $44,732 $388 $795,415 Total revenues from contracts with customers14,793 — 30,034 — 
OtherOther— — — — 
Total logistics and repurposing revenueTotal logistics and repurposing revenue$14,793 $— $30,034 $— 
Subtotal:Subtotal:
Total revenues from contracts with customersTotal revenues from contracts with customers$620,422 $981,859 $1,250,241 $1,744,583 
Total other (1)
Total other (1)
4,344 10,191 24,687 21,712 
Total consolidated revenuesTotal consolidated revenues$624,766 $992,050 $1,274,928 $1,766,295 
_______________
(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.

11

Table of Contents

ADAMS RESOURCES & ENERGY, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(2)All pipeline and storage revenue during the three and six months ended June 30, 2022 and for the period from January 1, 2023 to May 31, 2023 was from an affiliated shipper, GulfMark Energy, Inc., our subsidiary, and was eliminated in consolidation. During June 2023, we began earning revenue from an unaffiliated shipper.

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 EndedSix Months Ended
June 30,June 30,
2022202120222021
Revenue gross-up$419,081 $189,512 $726,467 $324,378 
Three Months EndedSix Months Ended
June 30,June 30,
2023202220232022
Revenue gross-up$240,969 $419,081 $527,671 $726,467 


Note 4. Prepayments and Other Current Assets

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

June 30,December 31,June 30,December 31,
2022202120232022
Insurance premiumsInsurance premiums$724 $641 Insurance premiums$766 $1,220 
Vendor prepayment— 602 
Rents, licenses and otherRents, licenses and other1,283 1,146 Rents, licenses and other1,842 1,898 
Total prepayments and other current assetsTotal prepayments and other current assets$2,007 $2,389 Total prepayments and other current assets$2,608 $3,118 


12

Table of Contents

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 LifeJune 30,December 31,
in Years20222021
Tractors and trailers5 – 6$109,390 $106,558 
Field equipment2 – 522,959 22,851 
Finance lease ROU assets (1)
3 – 620,929 22,349 
Pipeline and related facilities20 – 2520,408 20,336 
Linefill and base gas (2)
N/A3,922 3,922 
Buildings5 – 3916,163 16,163 
Office equipment2 – 52,888 2,060 
LandN/A2,008 2,008 
Construction in progressN/A1,507 3,396 
Total200,174 199,643 
Less accumulated depreciation and amortization(115,646)(111,607)
Property and equipment, net$84,528 $88,036 

Estimated
Useful LifeJune 30,December 31,
in Years20232022
Tractors and trailers5 – 6$126,419 $128,223 
Field equipment2 – 524,964 24,676 
Finance lease ROU assets (1)
3 – 637,890 25,106 
Pipeline and related facilities20 – 2520,362 20,362 
Linefill and base gas (2)
N/A3,922 3,922 
Buildings5 – 3916,189 16,163 
Office equipment2 – 52,964 2,937 
LandN/A4,163 2,309 
Construction in progressN/A4,823 3,629 
Total241,696 227,327 
Less accumulated depreciation and amortization(129,862)(120,902)
Property and equipment, net$111,834 $106,425 
_______________
(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, a tank storage and throughput arrangement and office equipment (see Note 1315 for further information). Accumulated amortization of the assets presented as “Finance lease ROU assets” was $8.9$12.2 million and $9.8$9.9 million at June 30, 20222023 and December 31, 2021,2022, 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 EndedSix Months EndedThree Months EndedSix Months Ended
June 30,June 30,June 30,June 30,
20222021202220212023202220232022
Depreciation and amortization, excluding amounts under finance leasesDepreciation and amortization, excluding amounts under finance leases$3,827 $3,591 $7,632 $7,504 Depreciation and amortization, excluding amounts under finance leases$4,913 $3,639 $9,737 $7,252 
Amortization of property and equipment under finance leasesAmortization of property and equipment under finance leases1,261 1,210 2,469 2,350 Amortization of property and equipment under finance leases1,933 1,261 3,708 2,469 
Amortization of intangible assetsAmortization of intangible assets457 188 908 380 
Total depreciation and amortizationTotal depreciation and amortization$5,088 $4,801 $10,101 $9,854 Total depreciation and amortization$7,303 $5,088 $14,353 $10,101 



13

Table of Contents

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

On August 12, 2022, we entered into a purchase agreement with each of Scott Bosard, Trey Bosard and Tyler Bosard (collectively, the “Sellers”) to acquire all of the equity interests of Firebird Bulk Carriers, Inc. (“Firebird”) and Phoenix Oil, Inc. (“Phoenix”) for approximately $39.3 million, consisting of a cash payment of $35.4 million, 45,777 of our common shares valued at $1.4 million, of which 15,259 shares were issued immediately and 30,518 shares will be issued over a three year period, and contingent consideration valued at approximately $2.6 million. We funded the cash consideration using cash on hand at the time of acquisition. Pursuant to the purchase agreement, the purchase price is subject to customary post-closing adjustment provisions, including an earn-out payable to the Sellers to the extent the earnings before interest, taxes, depreciation and amortization (EBITDA) of Phoenix exceeds a specified threshold during the twelve full calendar months after the closing date of the acquisition.

Firebird is an interstate bulk motor carrier of crude oil, condensate, fuels, oils and other petroleum products. Firebird is headquartered in Humble, Texas, with six terminal locations throughout Texas, and operates 130 tractors and 209 trailers largely in the Eagle Ford basin. Phoenix is also headquartered in Humble, Texas, and recycles and repurposes off-specification fuels, lubricants, crude oil and other chemicals from producers in the U.S. Firebird and Phoenix have formed our new logistics and repurposing segment. We expect that this acquisition will offer us the opportunity to expand our value chain and market impact, with numerous synergies benefiting the combined companies.

We accounted for the acquisition of Firebird and Phoenix under the acquisition method in accordance with ASC 805, Business Combinations. The allocation of purchase consideration was based upon the estimated fair value of the tangible and identifiable intangible assets acquired and liabilities assumed in the acquisition.

The purchase price allocation was subject to revision as acquisition-date fair value analyses were completed and if additional information about facts and circumstances that existed at the acquisition date became available. During the period ended June 30, 2023, we revised the fair value of certain tractors and trailers, resulting in a decrease in the amount allocated to property and equipment of $0.2 million and with a corresponding increase in goodwill. No other changes to the purchase price allocation occurred during the first half of 2023. The purchase price consideration, as well as the estimated fair values of the assets acquired and liabilities assumed, was finalized during the second quarter of 2023.


14

Table of Contents

ADAMS RESOURCES & ENERGY, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
The following table presents the final purchase price allocation of the indentifiable assets acquired and liabilities assumed at the acquisition date of August 12, 2022 (in thousands):

Assets acquired:
Cash and cash equivalents$2,203 
Accounts receivable4,653 
Inventory643 
Other current assets137 
Property and equipment24,809 
Intangible assets7,607 
Goodwill6,673 
Other assets458 
Total assets acquired$47,183 
Liabilities assumed:
Accounts payable and other accrued liabilities$(1,696)
Deferred tax liabilities(6,207)
Total liabilities assumed$(7,903)
Net assets acquired$39,280 

During the second quarter of 2023, based upon a review of the contingent consideration calculation terms, we determined that no payment would be made to the Sellers, and as such, we adjusted our accrual of $2.6 million that had been recorded as part of the purchase price allocation. The reversal of the accrual for the contingent consideration is included in general and administrative expense on our unaudited condensed consolidated statements of operations.

Unaudited Pro Forma Financial Information

The unaudited pro forma condensed consolidated results of operations in the table below are provided for illustrative purposes only and summarize the combined results of our operations and those of Firebird and Phoenix. For purposes of this pro forma presentation, the acquisition of Firebird and Phoenix is assumed to have occurred on January 1, 2022. The pro forma financial information for all periods presented also includes the estimated business combination accounting effects resulting from this acquisition, notably amortization expense from the acquired intangible assets and certain other integration related impacts. This unaudited pro forma financial information should not be relied upon as being indicative of the historical results that would have been obtained if the acquisition had actually occurred on January 1, 2022, nor of the results of operations that may be obtained in the future (in thousands).

Three Months EndedSix Months Ended
June 30,June 30,
20222022
Revenues$1,009,694 $1,802,675 
Net earnings5,257 14,982 
Basic net earnings per common share$1.20 $3.42 
Diluted net earnings per common share$1.19 $3.39 


15

Table of Contents

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

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

June 30,December 31,June 30,December 31,
2022202120232022
Amounts associated with liability insurance program:
Insurance collateral depositsInsurance collateral deposits$375 $721 Insurance collateral deposits$503 $463 
Excess loss fund622 622 
Accumulated interest income515 489 
Other amounts:
State collateral depositsState collateral deposits36 36 State collateral deposits23 23 
Materials and suppliesMaterials and supplies652 574 Materials and supplies1,281 1,257 
Debt issuance costsDebt issuance costs229 292 Debt issuance costs1,427 1,595 
OtherOther285 293 Other330 360 
Total other assetsTotal other assets$2,714 $3,027 Total other assets$3,564 $3,698 

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 maximum assessmentexpected losses under ourthe insurance policies.programs. Insurance collateral deposits are invested at the discretion of our insurance carrier. Excess amounts in our loss fund represent premium payments in excess of claims incurred to date that we may be entitled to recover through settlement or commutation as claim periods are closed. Interest income is earned on the majority of amounts held by the insurance companies and will be paid to us upon settlement of policy years.


1416

Table of Contents

ADAMS RESOURCES & ENERGY, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Note 7.8. Segment Reporting

We operate and report in 3four business segments: (i) crude oil marketing, transportation and storage; (ii) tank truck transportation of liquid chemicals, pressurized gases, asphalt and dry bulk; and (iii) pipeline transportation, terminalling and storage of crude oil.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 MarketingTransportationPipeline and storageOtherTotal
Three Months Ended June 30, 2022
Segment revenues (1)
$962,516 $29,621 $2,060 $— $994,197 
Less: Intersegment revenues (1)
— (87)(2,060)— (2,147)
Revenues$962,516 $29,534 $— $— $992,050 
Segment operating earnings (losses) (2)
5,111 2,937 (877)— 7,171 
Depreciation and amortization1,894 2,923 271 — 5,088 
Property and equipment additions (3) (4)
884 159 46 — 1,089 
Three Months Ended June 30, 2021
Segment revenues (1)
$463,092 $23,535 $651 $— $487,278 
Less: Intersegment revenues (1)
— (38)(496)— (534)
Revenues$463,092 $23,497 $155 $— $486,744 
Segment operating earnings (losses) (2)
8,370 1,482 (556)— 9,296 
Depreciation and amortization1,641 2,937 223 — 4,801 
Property and equipment additions (3) (4)
492 2,761 179 — 3,432 
Six Months Ended June 30, 2022
Segment revenues (1)
$1,710,071 $56,398 $4,120 $— $1,770,589 
Less: Intersegment revenues (1)
— (174)(4,120)— (4,294)
Revenues$1,710,071 $56,224 $— $— $1,766,295 
Segment operating earnings (losses) (2)
15,231 5,805 (1,699)— 19,337 
Depreciation and amortization3,682 5,880 539 — 10,101 
Property and equipment additions (3) (4)
4,008 694 73 4,783 
Six Months Ended June 30, 2021
Segment revenues (1)
$767,115 $44,803 $1,070 $— $812,988 
Less: Intersegment revenues (1)
— (71)(682)— (753)
Revenues$767,115 $44,732 $388 $— $812,235 
Segment operating earnings (losses) (2)
15,388 2,256 (1,121)— 16,523 
Depreciation and amortization3,439 5,938 477 — 9,854 
Property and equipment additions(3) (4) (5)
702 2,703 189 3,602 
Reporting Segments
Crude oil marketingTrans-portationPipeline and storage
Logistics and repurposing (1)
OtherTotal
Three Months Ended June 30, 2023
Segment revenues (2)
$585,272 $24,576 $894 $15,780 $— $626,522 
Less: Intersegment revenues (2)
— (124)(645)(987)— (1,756)
Revenues$585,272 $24,452 $249 $14,793 $— $624,766 
Segment operating earnings (losses) (3)
3,351 1,056 (779)(133)— 3,495 
Depreciation and amortization2,168 3,136 275 1,724 — 7,303 
Property and equipment additions (4) (5)
394 1,171 270 2,088 85 4,008 
Three Months Ended June 30, 2022
Segment revenues (2)
$962,516 $29,593 $1,163 $— $— $993,272 
Less: Intersegment revenues (2)
— (59)(1,163)— — (1,222)
Revenues$962,516 $29,534 $— $— $— $992,050 
Segment operating earnings (losses) (3)
5,111 2,937 (877)— — 7,171 
Depreciation and amortization1,894 2,923 271 — — 5,088 
Property and equipment additions (4) (5)
884 159 46 — — 1,089 
Six Months Ended June 30, 2023
Segment revenues (2)
$1,193,748 $51,106 $1,703 $32,527 $— $1,279,084 
Less: Intersegment revenues (2)
— (209)(1,454)(2,493)— (4,156)
Revenues$1,193,748 $50,897 $249 $30,034 $— $1,274,928 
Segment operating earnings (losses) (3)
5,258 1,957 (1,980)402 — 5,637 
Depreciation and amortization4,243 6,267 538 3,305 — 14,353 
Property and equipment additions (4) (5)
669 1,338 1,241 2,548 112 5,908 
Six Months Ended June 30, 2022
Segment revenues (2)
$1,710,071 $56,311 $2,060 $— $— $1,768,442 
Less: Intersegment revenues (2)
— (87)(2,060)— — (2,147)
Revenues$1,710,071 $56,224 $— $— $— $1,766,295 
Segment operating earnings (losses) (3)
15,231 5,805 (1,699)— — 19,337 
Depreciation and amortization3,682 5,880 539 — — 10,101 
Property and equipment additions (4) (5)
4,008 694 73 — 4,783 
_______________
(1)On August 12, 2022, we acquired a transportation logistics and recycling and repurposing business, resulting in a new operating segment.
17

Table of Contents

ADAMS RESOURCES & ENERGY, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(2)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.

15

Table of Contents

ADAMS RESOURCES & ENERGY, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(2)(3)Our crude oil marketing segment’s operating earnings included inventory valuation losses of $1.5$1.0 million and inventory liquidation gains of $3.7$1.5 million for the three months ended June 30, 20222023 and 2021,2022, respectively. For the six months ended June 30, 20222023 and 2021,2022, our crude oil marketing segment’s operating (losses) earnings included inventory valuation losses of $2.0 million and inventory liquidation gains of $7.2 million, and $10.6 million, respectively.
(3)(4)Our segment property and equipment additions do not include assets acquired under finance leases during the three and six months ended June 30, 20222023 and 2021.2022. See Note 1315 for further information.
(4)(5)Amounts included in property and equipment additions for Other are additions for computer or other office equipment and a company vehicle at our corporate headquarters, which were not attributed or allocated to any of our reporting segments.
(5)During the three months ended March 31, 2021, we received a refund of approximately $0.3 million for amounts previously spent in our transportation segment, which has been reflected as a reduction in property and equipment additions.

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

Three Months EndedSix Months EndedThree Months EndedSix Months Ended
June 30,June 30,June 30,June 30,
20222021202220212023202220232022
Segment operating earningsSegment operating earnings$7,171 $9,296 $19,337 $16,523 Segment operating earnings$3,495 $7,171 $5,637 $19,337 
General and administrativeGeneral and administrative(4,211)(2,961)(8,229)(6,337)General and administrative(1,715)(4,211)(6,487)(8,229)
Operating earnings2,960 6,335 11,108 10,186 
Operating earnings (losses)Operating earnings (losses)1,780 2,960 (850)11,108 
Interest and other incomeInterest and other income303 62 327 196 Interest and other income570 303 774 327 
Interest expenseInterest expense(136)(204)(250)(424)Interest expense(802)(136)(1,498)(250)
Earnings before income taxes$3,127 $6,193 $11,185 $9,958 
Earnings (Losses) before income taxesEarnings (Losses) before income taxes$1,548 $3,127 $(1,574)$11,185 

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

June 30,December 31,June 30,December 31,
2022202120232022
Reporting segment:Reporting segment:Reporting segment:
Crude oil marketingCrude oil marketing$332,711 $162,770 Crude oil marketing$193,478 $215,813 
TransportationTransportation66,138 67,167 Transportation58,276 60,405 
Pipeline and storagePipeline and storage25,067 25,569 Pipeline and storage25,444 25,815 
Logistics and repurposingLogistics and repurposing43,097 45,307 
Cash and other (1)
Cash and other (1)
80,707 119,197 
Cash and other (1)
23,187 36,819 
Total assetsTotal assets$504,623 $374,703 Total assets$343,482 $384,159 
_______________
(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.


1618

Table of Contents

ADAMS RESOURCES & ENERGY, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Note 8.9. Transactions with Affiliates

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

Three Months EndedSix Months Ended
June 30,June 30,
2023202220232022
KSA and affiliate billings to us$— $— $— $
Billings to KSA and affiliates10 
Rentals paid to an affiliate of KSA95 138 232 252 
Payments to an affiliate of KSA for purchase of
  vehicles (1)
— — 157 78 
Rentals paid to affiliates of Scott Bosard140 — 280 — 
_______________
(1)Amounts paid to West Point Buick GMC are for the purchase of three and two pickup trucks during the six months ended June 30, 2023 and 2022, respectively.

Affiliate transactions included direct cost reimbursement for shared phone and administrative services from KSA Industries, Inc. (“KSA”), an affiliated entity. We lease our corporate office space in a building operated by 17 South Briar Hollow Lane, LLC, an affiliate of KSA.

Activities with affiliates were as follows for the periods indicated (in thousands):

Three Months EndedSix Months Ended
June 30,June 30,
2022202120222021
Affiliate billings to us$— $— $$12 
Billings to affiliates10 
Rentals paid to affiliate138 143 252 317 

During the six months ended June 30, 2022, In addition, we paidpurchase pickup trucks from West Point Buick GMC, an affiliate of KSA. KSA a total of approximately $0.1 million (net of trade-in values) forwas our largest shareholder until October 31, 2022 when we repurchased the purchase of 2 pickup trucks. During the six months ended June 30, 2021, we paid West Point Buick GMC, ancommon stock owned by it. An affiliate of KSA a totalserved on our Board of approximately $0.4 million (netDirectors through the date of trade-in values)our 2023 annual meeting, when he retired. As of May 31, 2023, KSA and its affiliates are no longer related parties.

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 purchase of 8 pickup trucks.sellers, for periods ranging from two to five years.


Note 9.10. Other Current Liabilities

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

June 30,December 31,
20222021June 30,December 31,
20232022
Accrual for payroll, benefits and bonusesAccrual for payroll, benefits and bonuses$5,317 $5,210 Accrual for payroll, benefits and bonuses$5,563 $6,435 
Accrued automobile and workers’ compensation claimsAccrued automobile and workers’ compensation claims4,075 4,127 Accrued automobile and workers’ compensation claims5,690 5,579 
Contingent consideration for acquisition (see Note 6)Contingent consideration for acquisition (see Note 6)— 2,566 
Accrued medical claimsAccrued medical claims1,618 1,100 Accrued medical claims1,085 1,007 
Accrued taxesAccrued taxes2,488 534 Accrued taxes496 2,208 
OtherOther709 651 Other1,177 1,419 
Total other current liabilitiesTotal other current liabilities$14,207 $11,622 Total other current liabilities$14,011 $19,214 


19

Table of Contents

ADAMS RESOURCES & ENERGY, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Note 11. 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.

At June 30, 2023, we had $23.1 million outstanding under the Term Loan at a weighted average interest rate of 7.71 percent, and $20.4 million letters of credit outstanding at a fee of 2.50 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 June 30, 2023 for the next five years, and in total thereafter (in thousands):


Remainder of 2023$1,250 
20242,500 
20252,500 
20262,500 
202714,375 
Total debt maturities$23,125 

At June 30, 2023, we were in compliance with all covenants under the Credit Agreement.

See Note 17 regarding information relating to an amendment to the Credit Agreement.


Note 10.12. Derivative Instruments and Fair Value Measurements

Derivative Instruments

In the normal course of our operations, our crude oil marketing segment purchases and sells crude oil. We seek to profit by procuring the commodity as it is produced and then delivering the material to the end users or the intermediate use marketplace. As typical for the industry, these transactions are made pursuant to the terms of forward month commodity purchase and/or sale contracts. Some of these contracts meet the definition of a derivative instrument, and therefore, we account for these contracts at fair value, unless the normal purchase and sale exception is applicable. These types of underlying contracts are standard for the industry and are the governing document for our crude oil marketing segment. None of our derivative instruments have been designated as hedging instruments.

At June 30, 2023, we had in place three derivative instruments, entered into in June 2023 for a total of 250,000 barrels of crude oil to be purchased and sold in July 2023, and one derivative instrument, entered into in 2022, for the purchase of 126,000 gallons of diesel fuel per month during January 2023 through December 2023.

At December 31, 2022, we had in place three derivative instruments, entered into in 2022 for a total of 300,000 barrels of crude oil to be purchased and sold in January 2023, and one derivative instrument, also entered into in 2022, for the purchase of 126,000 gallons of diesel fuel per month during January 2023 through December 2023.

1720

Table of Contents

ADAMS RESOURCES & ENERGY, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
At June 30, 2022, we had in place 8 commodity purchase and sale contracts which had a fair value associated with them as the contractual prices of crude oil were outside of the range of prices specified in the agreements. These commodity purchase and sale contracts encompass approximately 324 barrels per day of crude oil during July 2022 through December 2022, and also include purchase and sale contracts entered into in May 2022 for an additional 300,000 barrels of crude oil in July 2022.
At December 31, 2021, we had in place 4 commodity purchase and sale contracts, of which 2 had a fair value associated with them as the contractual prices of crude oil were outside the range of prices specified in the agreements. These commodity purchase and sale contracts encompassed approximately 324 barrels per day of crude oil during January 2022 through December 2022.
The estimated fair value of forward month commodity contracts (derivatives)derivatives instruments reflected in the accompanying unaudited condensed consolidated balance sheets were as follows at the dates indicated (in thousands):

Balance Sheet Location and Amount
CurrentOtherCurrentOther
AssetsAssetsLiabilitiesLiabilities
June 30, 2022
Asset derivatives:
Fair value forward hydrocarbon commodity
contracts at gross valuation$1,501 $— $— $— 
Liability derivatives:
Fair value forward hydrocarbon commodity
contracts at gross valuation— — 848 — 
Less counterparty offsets— — — — 
As reported fair value contracts$1,501 $— $848 $— 
December 31, 2021
Asset derivatives:
Fair value forward hydrocarbon commodity
contracts at gross valuation$347 $— $— $— 
Liability derivatives:
Fair value forward hydrocarbon commodity
contracts at gross valuation— — 324 — 
Less counterparty offsets— — — — 
As reported fair value contracts$347 $— $324 $— 
Balance Sheet Location and Amount
CurrentOtherCurrentOther
AssetsAssetsLiabilitiesLiabilities
June 30, 2023
Asset derivatives:
Fair value forward derivative instruments
at gross valuation$— $— $— $— 
Liability derivatives:
Fair value forward derivative instruments
at gross valuation— — 30 — 
Less counterparty offsets— — — — 
As reported fair value contracts$— $— $30 $— 
December 31, 2022
Asset derivatives:
Fair value forward derivative instruments
at gross valuation$— $— $— $— 
Liability derivatives:
Fair value forward derivative instruments
at gross valuation— — 330 — 
Less counterparty offsets— — — — 
As reported fair value contracts$— $— $330 $— 

We only enter into commodity contractsderivative instruments with creditworthy counterparties and evaluate our exposure to significant counterparties on an ongoing basis. At June 30, 20222023 and December 31, 2021,2022, we were not holding nor have we posted any collateral to support our forward month fair value derivative activity. We are not subject to any credit-risk related trigger events. We have no other financial investment arrangements that would serve to offset our derivative contracts.

Forward month derivatives instruments reflected in the accompanying unaudited condensed consolidated statements of operations were as follows for the periods indicated (in thousands):

Gains (losses)
Three Months EndedSix Months Ended
June 30,June 30,
2023202220232022
Revenues – marketing$— $(14)$— $
Cost and expenses – marketing187 625 (299)625 


1821

Table of Contents

ADAMS RESOURCES & ENERGY, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Forward month commodity contracts (derivatives) reflected in the accompanying unaudited condensed consolidated statements of operations were as follows for the periods indicated (in thousands):

Gains (losses)
Three Months EndedSix Months Ended
June 30,June 30,
2022202120222021
Revenues – marketing$(14)$$$25 
Cost and expenses – marketing625 — 625 — 

Fair Value Measurements

The following tables set forth, by level with the Level 1, 2 and 3 fair value hierarchy, the carrying values of our financial assets and liabilities at the dates indicated (in thousands):

Fair Value Measurements UsingFair Value Measurements Using
Quoted PricesQuoted Prices
in ActiveSignificantin ActiveSignificant
Markets forOtherSignificantMarkets forOtherSignificant
Identical AssetsObservableUnobservableIdentical AssetsObservableUnobservable
and LiabilitiesInputsInputsCounterpartyand LiabilitiesInputsInputsCounterparty
(Level 1)(Level 2)(Level 3)OffsetsTotal(Level 1)(Level 2)(Level 3)OffsetsTotal
June 30, 2022
June 30, 2023June 30, 2023
Derivatives:Derivatives:Derivatives:
Current assetsCurrent assets$— $1,501 $— $— $1,501 Current assets$— $— $— $— $— 
Current liabilitiesCurrent liabilities— (848)— — (848)Current liabilities— (30)— — (30)
Net valueNet value$— $653 $— $— $653 Net value$— $(30)$— $— $(30)
December 31, 2021
December 31, 2022December 31, 2022
Derivatives:Derivatives:Derivatives:
Current assetsCurrent assets$— $347 $— $— $347 Current assets$— $— $— $— $— 
Current liabilitiesCurrent liabilities— (324)— — (324)Current liabilities— (330)— — (330)
Net valueNet value$— $23 $— $— $23 Net value$— $(330)$— $— $(330)

These assets and liabilities are measured on a recurring basis and are classified based on the lowest level of input used to estimate their fair value. Our assessment of the relative significance of these inputs requires judgments.

When determining fair value measurements, we make credit valuation adjustments to reflect both our own nonperformance risk and our counterparty’s nonperformance risk. When adjusting the fair value of derivative contracts for the effect of nonperformance risk, we consider the impact of netting and any applicable credit enhancements. Credit valuation adjustments utilize Level 3 inputs, such as credit scores, to evaluate the likelihood of default by us or our counterparties. At June 30, 20222023 and December 31, 2021,2022, credit valuation adjustments were not significant to the overall valuation of our fair value contracts. As a result, applicable fair value assets and liabilities are included in their entirety in the fair value hierarchy.


19

Table of Contents

ADAMS RESOURCES & ENERGY, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Note 11.13. 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 effective dateterm of the 2018 LTIP was extended tothrough 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 June 30, 2022,2023, a total of 154,975123,362 shares were available for issuance.
22

Table of Contents

ADAMS RESOURCES & ENERGY, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Compensation expense recognized in connection with equity-based awards was as follows for the periods indicated (in thousands):
Three Months EndedSix Months Ended
June 30,June 30,
2022202120222021
Compensation expense$263 $232 $458 $417 

Three Months EndedSix Months Ended
June 30,June 30,
2023202220232022
Compensation expense$372 $263 $655 $458 

At June 30, 20222023 and December 31, 2021,2022, we had $91,200$117,700 and $82,500,$140,300, respectively, of accrued dividend amounts for awards granted under the 2018 LTIP.LTIP or as inducement awards.

Restricted Stock Unit Awards

The following table presents restricted stock unit award activity for the periods indicated:
Weighted-Weighted-
Average GrantAverage Grant
Number ofDate Fair ValueNumber ofDate Fair Value
Shares
per Share (1)
Shares
per Share (1)
Restricted stock unit awards at January 1, 202238,265 $28.78 
Restricted stock unit awards at January 1, 2023Restricted stock unit awards at January 1, 202370,244 $31.89 
Granted (2)
Granted (2)
26,796 $31.83 
Granted (2)
23,409 $57.18 
VestedVested(18,919)$29.11 Vested(20,291)$29.76 
ForfeitedForfeited(1,673)$30.64 Forfeited(845)$45.67 
Restricted stock unit awards at June 30, 202244,469 $30.41 
Restricted stock unit awards at June 30, 2023Restricted stock unit awards at June 30, 202372,517 $40.49 
_______________
(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 2022the first six months of 2023 was $0.9$1.3 million based on a grant date market priceprices of our common shares ranging from $31.80$37.56 to $37.42$58.05 per share.

Unrecognized compensation cost associated with restricted stock unit awards was approximately $0.9$1.3 million at June 30, 2022.2023. 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 1.51.6 years.


2023

Table of Contents

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-Weighted-
Average GrantAverage Grant
Number ofDate Fair ValueNumber ofDate Fair Value
Shares
per Share (1)
Shares
per Share (1)
Performance share unit awards at January 1, 202221,492 $26.64 
Performance share unit awards at January 1, 2023Performance share unit awards at January 1, 202330,687 $28.59 
Granted (2)
Granted (2)
13,458 $31.80 
Granted (2)
12,061 $56.84 
VestedVested— $— Vested(12,319)$24.96 
ForfeitedForfeited(756)$31.42 Forfeited— $— 
Performance share unit awards at June 30, 202234,194 $28.57 
Performance share unit awards at June 30, 2023Performance share unit awards at June 30, 202330,429 $41.26 
_______________
(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 2022the first six months of 2023 was $0.4$0.7 million based on a grant date market priceprices of our common shares of $31.80ranging from $38.42 to $58.05 per share and assuming a performance factor of 100 percent.

Unrecognized compensation cost associated with performance share unit awards was approximately $0.6$0.9 million at June 30, 2022.2023. We expect to recognize the remaining compensation cost for these awards over a weighted-average period of 2.22.3 years.


Note 12.14. Supplemental Cash Flow Information

Supplemental cash flows and non-cash transactions were as follows for the periods indicated (in thousands):
Six Months EndedSix Months Ended
June 30,June 30,
2022202120232022
Cash paid for interestCash paid for interest$250 $424 Cash paid for interest$1,656 $250 
Cash paid for federal and state income taxesCash paid for federal and state income taxes1,313 258 Cash paid for federal and state income taxes2,467 1,313 
Cash refund for NOL carryback under CARES Act6,907 3,712 
Cash refund for net operating loss (NOL) carryback under CARES ActCash refund for net operating loss (NOL) carryback under CARES Act— 6,907 
Non-cash transactions:Non-cash transactions:Non-cash transactions:
Change in accounts payable related to property and equipment additionsChange in accounts payable related to property and equipment additions— (1,238)Change in accounts payable related to property and equipment additions52 — 
Property and equipment acquired under finance leasesProperty and equipment acquired under finance leases1,888 2,083 Property and equipment acquired under finance leases13,917 1,888 

See Note 1315 for information related to other non-cash transactions related to leases.


2124

Table of Contents

ADAMS RESOURCES & ENERGY, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Note 13.15. Leases

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

Three Months EndedSix Months EndedThree Months EndedSix Months Ended
June 30,June 30,June 30,June 30,
20222021202220212023202220232022
Finance lease cost:Finance lease cost:Finance lease cost:
Amortization of ROU assetsAmortization of ROU assets$1,261 $1,210 $2,469 $2,350 Amortization of ROU assets$1,933 $1,261 $3,707 $2,469 
Interest on lease liabilitiesInterest on lease liabilities78 110 158 220 Interest on lease liabilities308 78 546 158 
Operating lease costOperating lease cost676 623 1,349 1,247 Operating lease cost914 676 1,793 1,349 
Short-term lease costShort-term lease cost3,802 3,448 7,583 6,698 Short-term lease cost3,440 3,802 7,138 7,583 
Variable lease costVariable lease cost10 Variable lease cost11 10 
Total lease expenseTotal lease expense$5,821 $5,392 $11,569 $10,517 Total lease expense$6,601 $5,821 $13,195 $11,569 

The following table provides supplemental cash flow and other information related to leases for the periods indicated (in thousands):
Six Months EndedSix Months Ended
June 30,June 30,
2022202120232022
Cash paid for amounts included in measurement of lease liabilities:Cash paid for amounts included in measurement of lease liabilities:Cash paid for amounts included in measurement of lease liabilities:
Operating cash flows from operating leases (1)
Operating cash flows from operating leases (1)
$1,347 $1,244 
Operating cash flows from operating leases (1)
$1,576 $1,347 
Operating cash flows from finance leases(1)Operating cash flows from finance leases(1)139 187 Operating cash flows from finance leases(1)515 139 
Financing cash flows from finance leasesFinancing cash flows from finance leases2,306 2,123 Financing cash flows from finance leases3,247 2,306 
ROU assets obtained in exchange for new lease liabilities:ROU assets obtained in exchange for new lease liabilities:ROU assets obtained in exchange for new lease liabilities:
Finance leasesFinance leases1,888 2,083 Finance leases13,917 1,888 
Operating leasesOperating leases549 285 Operating leases501 549 
______________
(1)Amounts are included in Other operating activities on the unaudited condensed consolidated statements of cash flows.

The following table provides the lease terms and discount rates for the periods indicated:

Six Months EndedSix Months Ended
June 30,June 30,
2022202120232022
Weighted-average remaining lease term (years):Weighted-average remaining lease term (years):Weighted-average remaining lease term (years):
Finance leasesFinance leases3.163.92Finance leases3.673.16
Operating leasesOperating leases3.534.13Operating leases3.173.53
Weighted-average discount rate:Weighted-average discount rate:Weighted-average discount rate:
Finance leasesFinance leases2.5%2.7%Finance leases5.0%2.5%
Operating leasesOperating leases3.7%4.2%Operating leases4.1%3.7%


2225

Table of Contents

ADAMS RESOURCES & ENERGY, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
The following table provides supplemental balance sheet information related to leases at the dates indicated (in thousands):
June 30,December 31,June 30,December 31,
2022202120232022
AssetsAssetsAssets
Finance lease ROU assets (1)
Finance lease ROU assets (1)
$12,012 $12,590 
Finance lease ROU assets (1)
$25,663 $15,264 
Operating lease ROU assetsOperating lease ROU assets6,437 7,113 Operating lease ROU assets6,783 7,720 
LiabilitiesLiabilitiesLiabilities
CurrentCurrentCurrent
Finance lease liabilitiesFinance lease liabilities4,308 3,663 Finance lease liabilities6,444 4,382 
Operating lease liabilitiesOperating lease liabilities2,228 2,178 Operating lease liabilities2,802 2,712 
NoncurrentNoncurrentNoncurrent
Finance lease liabilitiesFinance lease liabilities8,609 9,672 Finance lease liabilities20,693 12,085 
Operating lease liabilitiesOperating lease liabilities4,205 4,938 Operating lease liabilities3,986 5,007 
______________
(1)Amounts are included in Property and equipment, net on the unaudited condensed consolidated balance sheets.

The following table provides maturities of undiscounted lease liabilities at June 30, 20222023 (in thousands):

FinanceOperatingFinanceOperating
LeaseLeaseLeaseLease
Remainder of 2022$2,429 $1,298 
20233,691 2,176 
Remainder of 2023Remainder of 2023$3,962 $1,553 
202420242,450 1,996 20247,277 2,826 
202520253,873 458 20257,582 1,098 
20262026903 387 20264,754 904 
202720275,185 570 
ThereafterThereafter154 478 Thereafter1,557 237 
Total lease paymentsTotal lease payments13,500 6,793 Total lease payments30,317 7,188 
Less: InterestLess: Interest(583)(360)Less: Interest(3,180)(400)
Present value of lease liabilitiesPresent value of lease liabilities12,917 6,433 Present value of lease liabilities27,137 6,788 
Less: Current portion of lease obligationLess: Current portion of lease obligation(4,308)(2,228)Less: Current portion of lease obligation(6,444)(2,802)
Total long-term lease obligationTotal long-term lease obligation$8,609 $4,205 Total long-term lease obligation$20,693 $3,986 


2326

Table of Contents

ADAMS RESOURCES & ENERGY, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
The following table provides maturities of undiscounted lease liabilities at December 31, 20212022 (in thousands):
FinanceOperatingFinanceOperating
LeaseLeaseLeaseLease
2022$3,941 $2,399 
202320233,143 2,080 2023$4,870 $2,958 
202420242,348 1,911 20243,629 2,617 
202520253,771 394 20254,652 962 
20262026801 333 20262,482 879 
202720272,179 570 
ThereafterThereafter— 455 Thereafter— 237 
Total lease paymentsTotal lease payments14,004 7,572 Total lease payments17,812 8,223 
Less: InterestLess: Interest(669)(456)Less: Interest(1,345)(504)
Present value of lease liabilitiesPresent value of lease liabilities13,335 7,116 Present value of lease liabilities16,467 7,719 
Less: Current portion of lease obligationLess: Current portion of lease obligation(3,663)(2,178)Less: Current portion of lease obligation(4,382)(2,712)
Total long-term lease obligationTotal long-term lease obligation$9,672 $4,938 Total long-term lease obligation$12,085 $5,007 


Note 14.16. Commitments and Contingencies

Insurance

We have accrued liabilities for estimated workers’ compensation and other casualty claims incurred based upon claim reserves plus an estimate for loss development and incurred but not reported claims. We self-insure a significant portion of expected losses relating to workers’ compensation, general liability and automobile liability, with a self-insured retention of $1.0 million. Insurance is purchased over our retention to reduce our exposure to catastrophic events. Estimates are recorded for potential and incurred outstanding liabilities for workers’ compensation, auto and general liability claims and claims that are incurred but not reported. Estimates are based on adjusters’ estimates, historical experience and statistical methods commonly used within the insurance industry that we believe are reliable. We have also engaged a third-party actuary to perform a review of our accrued liability for these claims as well as potential funded losses in our captive insurance company. Insurance estimates include certain assumptions and management judgments regarding the frequency and severity of claims, claim development and settlement practices and the selection of estimated loss among estimates derived using different methods. Unanticipated changes in these factors may produce materially different amounts of expense that would be reported under these programs.

On October 1, 2020, we elected to utilize a wholly owned insurance captive to insure the self-insured retention for our workers’ compensation, general liability and automobile liability insurance programs. All accrued liabilities associated with periods from October 1, 2017 through current were transferred to the captive.

We maintain excess property and casualty programs with third-party insurers in an effort to limit the financial impact of significant events covered under these programs. Our operating subsidiaries pay premiums to both the excess and reinsurance carriers and our captive for the estimated losses based on an external actuarial analysis. These premiums held by our wholly owned captive are currently held in a restricted account, resulting in a transfer of risk from our operating subsidiaries to the captive.

We also maintain a self-insurance program for managing employee medical claims in excess of employee deductibles. As claims are paid, the liability is relieved. We also maintain third party insurance stop-loss coverage for individual medical claims exceeding a certain minimum threshold. In addition, we maintain $1.2$1.3 million of umbrella insurance coverage for annual aggregate medical claims exceeding approximately $11.5$11.3 million.

2427

Table of Contents

ADAMS RESOURCES & ENERGY, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Our accruals for automobile, workers’ compensation and medical claims were as follows at the dates indicated (in thousands):

June 30,December 31,June 30,December 31,
2022202120232022
Pre-funded premiums for losses incurred but not reported$95 $50 
Accrued automobile and workers’ compensation claimsAccrued automobile and workers’ compensation claims4,075 4,127 Accrued automobile and workers’ compensation claims$5,690 $5,579 
Accrued medical claimsAccrued medical claims1,618 1,100 Accrued medical claims1,085 1,007 

Litigation

From time to time as incidental to our operations, we may become involved in various lawsuits and/or disputes. Primarily asAs an operator of an extensive trucking fleet, we are a party to motor vehicle accidents, worker compensation claims and other items of general liability as would be typical for the industry. We are presently unaware of any claims against us that are either outside the scope of insurance coverage or that may exceed the level of insurance coverage and could potentially represent a material adverse effect on our financial position, results of operations or cash flows.


Note 15.17. Subsequent Event

On August 11, 2022,2, 2023, we entered into an amendment to our Credit AgreementAmendment No. 1 (the “Credit Agreement Amendment”“Amendment”). Pursuant to the termsCredit Agreement. The Amendment (i) clarifies 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 (as defined in the Credit Agreement) for purposes of the related financial covenants, (ii) provides for the exclusion of unusual and non-recurring losses and expenses from the calculation of Consolidated EBITDA, not to exceed ten percent (10%) of Consolidated EBITDA for the period, and (iii) amends the definition of Consolidated Funded Indebtedness (as defined in the Credit Agreement Amendment, we may now borrow or issueAgreement) to include letters of credit in an aggregateand banker’s acceptances only to the extent such letters of up to $60.0 million. The Credit Agreement Amendment also extended the maturitycredit or banker’s acceptances have been drawn, for purposes of the facilityConsolidated Total Leverage Ratio calculation (as defined in the Credit Agreement). The Amendment applies to August 11, 2025.our fiscal period ending June 30, 2023 and thereafter.
2528

Table of Contents
Item 2.    Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following information should be read in conjunction with our Unaudited Condensed Consolidated Financial Statements and accompanying Notes included in this quarterly report on Form 10-Q and the Audited Consolidated Financial Statements and related Notes, together with our discussion and analysis of financial position and results of operations, included in our annual report on Form 10-K for the year ended December 31, 20212022 (the “2021“2022 Form 10-K”), as filed on March 9, 202216, 2023 with the U.S. Securities and Exchange Commission (“SEC”).  Our financial statements have been prepared in accordance with generally accepted accounting principles in the United States (“GAAP”).


Cautionary Statement Regarding Forward-Looking Information

This quarterly report on Form 10-Q contains various forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) and information that are based on our beliefs, as well as assumptions made by us and information currently available to us. When used in this document, words such as “anticipate,” “project,” “expect,” “plan,” “seek,” “goal,” “estimate,” “forecast,” “intend,” “could,” “should,” “would,” “will,” “believe,” “may,” “potential” and similar expressions and statements regarding our plans and objectives for future operations are intended to identify forward-looking statements. Although we believe that our expectations reflected in such forward-looking statements are reasonable, we cannot give any assurances that such expectations will prove to be correct.  Forward-looking statements are subject to a variety of risks, uncertainties and assumptions as described in more detail under Part I, Item 1A of our 20212022 Form 10-K.  If one or more of these risks or uncertainties materialize, or if underlying assumptions prove incorrect, our actual results may vary materially from those anticipated, estimated, projected or expected.  You should not put undue reliance on any forward-looking statements.  The forward-looking statements in this quarterly report speak only as of the date hereof.  Except as required by federal and state securities laws, we undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or any other reason.


Overview of Business

Adams Resources & Energy, Inc., a Delaware corporation organized in 1973, and its subsidiaries are primarily engaged in crude oil marketing, truck and pipeline transportation of crude oil, terminalling and storage in various crude oil and natural gas basins in the lower 48 states of the United States (“U.S.”). We alsoIn addition, we conduct tank truck transportation of liquid chemicals, pressurized gases, asphalt and dry bulk primarily in the lower 48 states of the U.S. with deliveries into Canada and Mexico, and with nineteeneighteen 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” 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 threefour business segments: (i) crude oil marketing, transportation and storage; (ii) tank truck transportation of liquid chemicals, pressurized gases, asphalt and dry bulk; and (iii) pipeline transportation, terminalling and storage of crude oil.oil; and (iv) interstate bulk transportation logistics of crude oil, condensate, fuels, oils and other petroleum products and recycling and repurposing of off-spec fuels, lubricants, crude oil and other chemicals. See Note 78 in the Notes to Unaudited Condensed Consolidated Financial Statements for further information regarding our business segments.


26
29

Table of Contents
Recent Developments

Land Purchase for Dayton Project

On May 4, 2023, we acquired approximately 10.6 acres of land in the Gulf Inland Industrial Park, located in Dayton, Texas, for approximately $1.8 million to build a new processing facility for Phoenix with rail spur and siding, product storage, and truck rack. Phoenix will build new infrastructure to service its existing customers and to create opportunities for growing the business. Phoenix will also relocate its headquarters from Humble, Texas to this new location.

Amendment to Credit Agreement

On August 2, 2023, we entered into Amendment No. 1 (the “Amendment”) to the credit agreement (“Credit Agreement”) with Cadence Bank, as administrative agent, swingline lender and issuing lender, and the other lenders party thereto. The Amendment (i) clarifies 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 (as defined in the Credit Agreement) for purposes of the related financial covenants, (ii) provides for the exclusion of unusual and non-recurring losses and expenses from the calculation of Consolidated EBITDA, not to exceed ten percent (10%) of Consolidated EBITDA for the period, and (iii) amends the definition of Consolidated Funded Indebtedness (as defined in the Credit Agreement) 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 (as defined in the Credit Agreement). The Amendment applies to our fiscal period ending June 30, 2023 and thereafter. See Note 11 and Note 17 in the Notes to Unaudited Condensed Consolidated Financial Statements for further information.


Results of Operations

Crude Oil Marketing

Our crude oil marketing segment revenues, operating earnings and selected costs were as follows for the periods indicated (in thousands):

Three Months EndedSix Months EndedThree Months EndedSix Months Ended
June 30,June 30,June 30,June 30,
20222021
Change (1)
20222021
Change (1)
20232022
Change (1)
20232022
Change (1)
RevenuesRevenues$962,516 $463,092 108 %$1,710,071 $767,115 123 %Revenues$585,272 $962,516 (39 %)$1,193,748 $1,710,071 (30 %)
Operating earnings (2)
Operating earnings (2)
5,111 8,370 (39 %)15,231 15,388 (1 %)
Operating earnings (2)
3,351 5,111 (34 %)5,258 15,231 (65 %)
Depreciation and amortizationDepreciation and amortization1,894 1,641 15 %3,682 3,439 %Depreciation and amortization2,168 1,894 14 %4,243 3,682 15 %
Driver compensationDriver compensation4,616 4,296 %9,242 8,686 %Driver compensation5,092 4,616 10 %10,100 9,242 %
InsuranceInsurance1,674 1,869 (10 %)3,408 3,846 (11 %)Insurance1,816 1,674 %3,602 3,408 %
FuelFuel3,458 1,971 75 %6,004 3,712 62 %Fuel2,572 3,458 (26 %)5,431 6,004 (10 %)
_______________
(1)Represents the percentage increase (decrease) from the prior year period.
(2)Operating earnings included inventory valuation losses of $1.5$1.0 million and inventory liquidation gains of $3.7$1.5 million for the three months ended June 30, 2023 and 2022, and 2021, respectively.respectively, as discussed further below. For the six months ended June 30, 20222023 and 2021,2022, operating earnings included inventory valuation losses of $2.0 million and inventory liquidation gains of $7.2 million, and $10.6 million, respectively, as discussed further below.below


30

Table of Contents
Volume and price information were as follows for the periods indicated:

Three Months EndedSix Months EndedThree Months EndedSix Months Ended
June 30,June 30,June 30,June 30,
20222021202220212023202220232022
Field level purchase volumes – per day (1)
Field level purchase volumes – per day (1)
Field level purchase volumes – per day (1)
Crude oil – barrelsCrude oil – barrels94,876 89,585 92,643 86,254 Crude oil – barrels92,152 94,876 93,086 92,643 
Average purchase priceAverage purchase priceAverage purchase price
Crude oil – per barrelCrude oil – per barrel$107.28 $63.27 $100.21 $59.28 Crude oil – per barrel$70.27 $107.28 $71.78 $100.21 
_______________
(1)Reflects the volume purchased from third parties at the field level of operations.

Three Months Ended June 30, 20222023 vs. Three Months Ended June 30, 20212022. Crude oil marketing revenues increaseddecreased by $499.4$377.2 million during the three months ended June 30, 20222023 as compared to the three months ended June 30, 2021,2022, primarily as a result of a decrease in the market price of crude oil, which decreased revenues by approximately $359.9 million and lower overall crude oil volumes, which decreased revenues by approximately $17.3 million. The average crude oil price received was $107.28 per barrel during the three months ended June 30, 2022, which decreased to $70.27 per barrel during the three months ended June 30, 2023. Revenues from our volumes are mostly based upon the market price in our market areas, primarily in the Gulf Coast. The market price of crude oil was elevated in the 2022 period primarily as a result of a return of global crude oil demand following the pandemic. In addition, the invasion of Ukraine by Russia also contributed to an increase in the market price of crude oil which increased revenues by approximately $445.7 million,in the first half of 2022. In the second half of 2022 and higher overallcontinuing into 2023, weakness in the Chinese economy and concern over economic recession caused crude oil volumes, whichprices to fall.

Driver compensation increased revenues by approximately $53.7 million. The average crude oil price received was $63.27 during the three months ended June 30, 2021, which increased to $107.28 during the three months ended June 30, 2022. Revenues from legacy volumes are based upon the market price primarily in our Gulf Coast market area. The market price of crude oil has continued to increase in 2022, as it did throughout 2021, and was in excess of $100 per barrel by the end of June 2022. Many U.S. producers have been exercising capital discipline, maintaining oil production plans in spite of the crude oil price, and have been focusing capital on share buy-backs and renewables, although rig count has been increasing slowly. Contributing to the volatility in price has been the war in Europe, as well as COVID-19 outbreaks in China, supply chain issues and labor shortages, creating uncertainty for demand growth. OPEC+ has also maintained a disciplined approach, allowing only modest production increases.
27

Table of Contents
Our crude oil marketing operating earnings decreased by $3.3$0.5 million during the three months ended June 30, 20222023 as compared to the same period in 2021,2022, primarily due to higher fuel costs, higheran increase in driver compensation and inventory valuation changes (as shownpay in the table below),2023 period as compared to the same period in 2022, partially offset by higher crude oil prices and volumes.lower volumes transported in the 2023 period.

Driver compensationInsurance costs increased by $0.3$0.1 million during the three months ended June 30, 20222023 as compared to the same period in 2021,2022, primarily as a result ofdue to an increase in insurance premiums and an overall higher volumes transportedoverall driver count in the 20222023 period, as compared topartially offset in part by our safety performance during the same period in 2021.

Insurancecurrent period. Fuel costs decreased by $0.2$0.9 million during the three months ended June 30, 20222023 as compared to the same period in 2021,2022, primarily due in part to our safety performance in the prior year, and to a lower overall driver count in the 2022 period. Fuel costs increased by $1.5 million during the three months ended June 30, 2022 as compared to the same period in 2021, consistent with the increase in crude oil volumes in the current period and higher fuel prices.

Depreciation and amortization increased by $0.3 million during the three months ended June 30, 20222023 as compared to the same period in 2021,2022, primarily due to the timing of purchases and retirements of tractors and other field equipment during 20212022 and 2022.

Six Months Ended June 30, 2022 vs. Six Months Ended June 30, 2021. Crude oil marketing revenues increased by $943.0 million during the six months ended June 30, 2022 as compared to the six months ended June 30, 2021, primarily as a result of an increase in the market price of crude oil, which increased revenues by approximately $825.0 million, and higher overall crude oil volumes, which increased revenues by approximately $118.0 million. The average crude oil price received was $59.28 during the six months ended June 30, 2021, which increased to $100.21 during the six months ended June 30, 2022.2023.

Our crude oil marketing operating earnings decreased by $0.2$1.8 million during the three months ended June 30, 2023 as compared to the same period in 2022, primarily as a result of inventory valuation changes (as shown in the table below), a decrease in the average market price of crude oil, lower crude oil volumes and higher operating expenses in the 2023 period.

Six Months Ended June 30, 2023 vs. Six Months Ended June 30, 2022. Crude oil marketing revenues decreased by $516.3 million during the six months ended June 30, 2023 as compared to the six months ended June 30, 2022, primarily as a result of a decrease in the market price of crude oil, which decreased revenues by approximately $522.0 million, partially offset by a slight increase in overall crude oil volumes, which increased revenues by approximately $5.7 million. The average crude oil price received was $100.21 per barrel during the six months ended June 30, 2022, which decreased to $71.78 per barrel during the six months ended June 30, 2023. The decrease in the market price of crude oil was primarily due to weakness in the Chinese economy and concern over economic recession caused crude oil prices to fall.
31

Table of Contents
Driver compensation increased by $0.9 million during the six months ended June 30, 2023 as compared to the same period in 2022, primarily due to inventory valuation changes (as shownan increase in driver pay in the table below), higher fuel costs and higher driver compensation, partially offset by higher crude oil prices and volumes.2023 period as compared to the same period in 2022.

Driver compensationInsurance costs increased by $0.2 million during the six months ended June 30, 2023 as compared to the same period in 2022, primarily due to an increase in insurance premiums and an overall higher overall driver count in the 2023 period as compared to the same period in 2022. Fuel costs decreased by $0.6 million during the six months ended June 30, 2023 as compared to the same period in 2022, primarily due to lower fuel prices in the current period.

Depreciation and amortization expense increased by $0.6 million during the six months ended June 30, 20222023 as compared to the same period in 2021, primarily as a result of higher volumes transported in the 2022, period as compared to the same period in 2021.

Insurance costs decreased by $0.4 million during the six months ended June 30, 2022 as compared to the same period in 2021, primarily due in part to our safety performance in the prior year, and to a lower overall driver count in the 2022 period. Fuel costs increased by $2.3 million during the six months ended June 30, 2022 as compared to the same period in 2021, consistent with the increase in crude oil volumes in the current period and higher fuel prices.

Depreciation and amortization expense increased by $0.2 million during the six months ended June 30, 2022 as compared to the same period in 2021, primarily due to the timing of purchases and retirements of tractors and other field equipment during 20212022 and 2022.2023.

Our crude oil marketing operating earnings decreased by $10.0 million during the six months ended June 30, 2023 as compared to the same period in 2022, primarily as a result of inventory valuation changes (as shown in the table below), lower revenues due to lower crude oil prices and higher operating expenses in the 2023 period.

Field Level Operating Earnings (Non-GAAP Financial Measure). Inventory valuations and forward commodity contract (derivatives or mark-to-market)month derivative instrument valuations (mark-to-market) are two significant factors affecting comparative crude oil marketing segment operating earnings (losses), of which inventory valuations is the most significant.earnings. As a purchaser and shipper of crude oil, we hold inventory in storage tanks and third-party pipelines. DuringGenerally, during periods of increasing crude oil prices, we recognize inventory liquidation gains while during periods of falling prices, we recognize inventory liquidation and valuation losses.


28

Table of Contents
Crude oil marketing operating earnings (losses) can be affected by the valuations of our forward month commodity contracts (derivative instruments), if material.derivative instruments. These non-cash valuations are calculated and recorded at each period end based on the underlying data existing as of such date. We generally enter into these derivative contracts to as part of a pricing strategy based onto protect crude oil purchases at the wellhead (field level).inventory value from market price fluctuations. The valuation of derivative instruments at period end requires the recognition of non-cash “mark-to-market” gains and losses.

The impact of inventory liquidations and valuations and derivative valuations on our crude oil marketing segment operating earnings is summarized in the following reconciliation of our non-GAAP financial measure and provides management a measure of the business unit’s performance withoutby removing the impact of inventory valuation and liquidation adjustments for the periods indicated (in thousands):

Three Months EndedSix Months EndedThree Months EndedSix Months Ended
June 30,June 30,June 30,June 30,
20222021202220212023202220232022
As reported segment operating earnings (1)
As reported segment operating earnings (1)
$5,111 $8,370 $15,231 $15,388 
As reported segment operating earnings (1)
$3,351 $5,111 $5,258 $15,231 
Add (subtract):Add (subtract):Add (subtract):
Inventory liquidation gainsInventory liquidation gains— (3,650)(7,184)(10,593)Inventory liquidation gains— — — (7,184)
Inventory valuation lossesInventory valuation losses1,533 — — — Inventory valuation losses951 1,533 1,968 — 
Derivative valuation (gains) losses (2)
(611)(4)(630)(25)
Derivative valuation losses (gains)Derivative valuation losses (gains)187 (611)(299)(630)
Field level operating earnings (3)(1)
Field level operating earnings (3)(1)
$6,033 $4,716 $7,417 $4,770 
Field level operating earnings (3)(1)
$4,489 $6,033 $6,927 $7,417 
_______________
(1)Our crude oil marketing segment’s operating earnings included inventory valuation losses of $1.5 million and inventory liquidation gains of $3.7 million for the three months ended June 30, 2022 and 2021, respectively. For the six months ended June 30, 2022 and 2021, operating earnings included inventory liquidation gains of $7.2 million and $10.6 million, respectively.
(2)During the second quarter of 2022, we entered into commodity purchase and sale contracts for 300,000 barrels of crude oil, which were adjusted to fair value at June 30, 2022.
(3)The use of field level operating earnings is unique to us, not a substitute for a GAAP measure and may not be comparable to any similar measures developed by industry participants. We utilize this data to evaluate the profitability of our operations.

32

Table of Contents
Field level operating earnings and field level purchase volumes depict our day-to-day operation of acquiring crude oil at the wellhead, transporting the product and delivering the product to market sales point. Field level operating earnings increaseddecreased during the three months ended June 30, 20222023 as compared to the same period in 20212022 primarily due to higherlower revenues resulting from lower crude oil pricesvolumes and volumesprices in the 20222023 period, partially offset by higher fuel costs and higher driver compensation. Field level operating earnings increased duringexpenses in the 2023 period. During the six months ended June 30, 20222023, field level operating earnings decreased as compared to the same period in 20212022 primarily due to higherlower revenues resulting from lower crude oil prices and volumes in the 20222023 period, partially offset by higher fuel costs and higher driver compensation.operating expenses in the 2023 period.

We held crude oil inventory at a weighted average composite price as follows at the dates indicated (in barrels):
June 30, 2022December 31, 2021
AverageAverage
BarrelsPriceBarrelsPrice
Crude oil inventory (1)
573,036 $101.69 259,489 $71.86 
_______________
(1)At June 30, 2022, crude oil inventory included approximately 159,000 barrels in which we had a contract with a customer to sell at June 2022 pricing. The barrels were delivered in early July 2022.
June 30, 2023December 31, 2022
AverageAverage
BarrelsPriceBarrelsPrice
Crude oil inventory369,738 $70.49 328,562 $78.39 

Prices received for crude oil have been volatile and unpredictable with price volatility expected to continue. See “Part I, Item 1A. Risk Factors” in our 20212022 Form 10-K.
29

Table of Contents

Transportation

Our transportation segment revenues, operating earnings, and selected costs and operating data were as follows for the periods indicated (in thousands):

Three Months EndedSix Months EndedThree Months EndedSix Months Ended
June 30,June 30,June 30,June 30,
20222021
Change (1)
20222021
Change (1)
20232022
Change (1)
20232022
Change (1)
RevenuesRevenues$29,534 $23,497 26 %$56,224 $44,732 26 %Revenues$24,452 $29,534 (17 %)$50,897 $56,224 (9 %)
Operating earningsOperating earnings$2,937 $1,482 98 %$5,805 $2,256 157 %Operating earnings$1,056 $2,937 (64 %)$1,957 $5,805 (66 %)
Depreciation and amortizationDepreciation and amortization$2,923 $2,937 — %$5,880 $5,938 (1 %)Depreciation and amortization$3,136 $2,923 %$6,267 $5,880 %
Driver commissions$3,724 $3,875 (4 %)$7,489 $7,471 — %
Driver commissions and wagesDriver commissions and wages$3,569 $3,724 (4 %)$7,296 $7,489 (3 %)
InsuranceInsurance$2,164 $2,164 — %$4,313 $4,312 — %Insurance$2,246 $2,164 %$4,426 $4,313 %
FuelFuel$3,709 $2,105 76 %$6,511 $3,980 64 %Fuel$2,174 $3,709 (41 %)$4,852 $6,511 (25 %)
Maintenance expenseMaintenance expense$1,270 $1,061 20 %$2,518 $1,974 28 %Maintenance expense$1,258 $1,270 (1 %)$2,645 $2,518 %
Mileage (000s)Mileage (000s)6,863 7,246 (5 %)13,661 14,178 (4 %)Mileage (000s)6,296 6,863 (8 %)12,848 13,661 (6 %)
_______________
(1)Represents the percentage increase (decrease) from the prior year period.


33

Table of Contents
Our revenue rate structure includes a component for fuel costs in which fuel cost fluctuations are largely passed through to the customer. Revenues, net of fuel costs, were as follows for the periods indicated (in thousands):

Three Months EndedSix Months EndedThree Months EndedSix Months Ended
June 30,June 30,June 30,June 30,
20222021202220212023202220232022
Total transportation revenueTotal transportation revenue$29,534 $23,497 $56,224 $44,732 Total transportation revenue$24,452 $29,534 $50,897 $56,224 
Diesel fuel costDiesel fuel cost(3,709)(2,105)(6,511)(3,980)Diesel fuel cost(2,174)(3,709)(4,852)(6,511)
Revenues, net of fuel costs (1)
Revenues, net of fuel costs (1)
$25,825 $21,392 $49,713 $40,752 
Revenues, net of fuel costs (1)
$22,278 $25,825 $46,045 $49,713 
_______________
(1) Revenues, net of fuel costs, is a non-GAAP financial measure and is utilized for internal analysis of the results of our transportation segment.

Three Months Ended June 30, 20222023 vs. Three Months Ended June 30, 20212022. Transportation revenues increaseddecreased by $6.0$5.1 million during the three months ended June 30, 20222023 as compared to the three months ended June 30, 2021.2022. Transportation revenues, net of fuel costs, increaseddecreased by $4.4$3.5 million during the three months ended June 30, 2022,2023, as compared to the prior year period. These increasesdecreases in transportation revenues were primarily due to increaseddecreased transportation rates during the 20222023 period through continued negotiations with customers to increase rates. In addition, as a result of customer demand, we opened four new terminals duringa softening in the second half of 2021. These terminals, located in West Memphis, Arkansas, Charleston, West Virginia, Augusta, Georgia, and Joliet, Illinois, increased revenues by approximately $2.5 million during the second quarter of 2022.

Our transportation operating earnings increased by $1.5 million for the three months ended June 30, 2022 as compared to the same period in 2021, primarilymarket due to higher revenues as a result of increased transportation rateschanges in demand, supply chain issues and revenues from new terminals, partially offset by higher fuel costs and higher maintenance expense.inflation.

Driver commissions decreased by $0.2 million during the three months ended June 30, 20222023 as compared to the three months ended June 30, 2021,2022, primarily due to lower mileage during the 20222023 period, partially offset by an increase in driver pay.pay in July 2022.
30

Table of Contents

Fuel costs increaseddecreased by $1.6$1.5 million during the three months ended June 30, 20222023 as compared to the same period in 2021,2022, primarily as a result of an increasea decrease in the price of fuel and lower miles traveled during the 20222023 period. Insurance costs remained relatively constant during the three months ended June 30, 20222023 as compared to the same period in 2021,2022, primarily due to consistent insurance premiums during the 20212022 and 20222023 periods. Maintenance expense remained relatively constant during the three months ended June 30, 2023 as compared to the same period in 2022, primarily due to consistent repairs and maintenance to older tractors and trailers in our fleet offset by escalating prices in parts, repairs and maintenance between periods.

Depreciation and amortization expense increased by $0.2 million during the three months ended June 30, 20222023 as compared to the same period in 2021, primarily due to repairs and maintenance to older tractors and trailers in our fleet.

Depreciation and amortization expense was relatively consistent during the three months ended June 30, 2022, as compared to the same period in 2021, primarily as a result of the timing of purchases of new tractors and trailers in 20212022 and 2022.2023.

Our transportation operating earnings decreased by $1.9 million for the three months ended June 30, 2023 as compared to the same period in 2022, primarily due to lower revenues as a result of decreased transportation rates and higher depreciation and amortization expense, partially offset by lower fuel costs.

Six Months Ended June 30, 20222023 vs. Six Months Ended June 30, 20212022. Transportation revenues increaseddecreased by $11.5$5.3 million during the six months ended June 30, 20222023 as compared to the six months ended June 30, 2021.2022. Transportation revenues, net of fuel costs, increaseddecreased by $9.0$3.7 million during the six months ended June 30, 2022,2023, as compared to the prior year period. These increasesdecreases in transportation revenues were primarily due to increaseddecreased transportation rates during the 20222023 period through continued negotiations with customers to increase rates. In addition, as a result of customer demand, we opened four new terminals during the second half of 2021. These terminals, located in West Memphis, Arkansas, Charleston, West Virginia, Augusta, Georgia, and Joliet, Illinois, increased revenues by approximately $4.5 million during the first half of 2022. In February 2021, a severe winter storm and resulting power outages affected Texas, which resulted in a significant decline in transportation services for over a week and a temporary loss of revenuessoftening in the 2021 period.transportation market due to changes in demand, supply chain issues and inflation.

Our transportation operating earnings increasedDriver commissions decreased by $3.5$0.2 million for the six months ended June 30, 20222023 as compared to the same period in 2021,2022, primarily due to higher revenues as a result of increased transportation rates and revenues from new terminals, partially offset by higher fuel costs and higher maintenance expense.

Driver commissions for the six months ended June 30, 2022 were consistent with the same period in 2021, with lower mileage during the 20222023 period, partially offset by an increase in driver pay.pay in July 2022.

34

Table of Contents
Fuel costs increaseddecreased by $2.5$1.7 million during the six months ended June 30, 20222023 as compared to the same period in 2021,2022, primarily as a result of an increasea decrease in the price of fuel and lower miles traveled during the 20222023 period. Insurance costs remained constant during the six months ended June 30, 2022 as compared to the same period in 2021, primarily due to consistent premiums during the 2021 and 2022 periods. Maintenance expense increased by $0.5$0.1 million during the six months ended June 30, 20222023 as compared to the same period in 2021,2022, primarily due to slightly higher insurance premiums during the 2023 period. Maintenance expense increased by $0.1 million during the six months ended June 30, 2023 as compared to the same period in 2022, primarily due to repairs and maintenance to older tractors and trailers in our fleet.fleet and escalating prices in parts, repairs and maintenance.

Depreciation and amortization expense decreasedincreased by $0.1$0.4 million during the six months ended June 30, 20222023 as compared to the same period in 2021,2022, primarily as a result of the timing of purchases of new tractors and trailers in 20212022 and 2022.2023.

Our transportation operating earnings decreased by $3.8 million for the six months ended June 30, 2023 as compared to the same period in 2022, primarily due to lower revenues as a result of decreased transportation rates and higher insurance costs and maintenance expense and other operating costs.

31

Table of Contents
Pipeline and Storage

Our pipeline and storage segment revenues, operating losses and selected costs were as follows for the periods indicated (in thousands):

Three Months EndedSix Months EndedThree Months EndedSix Months Ended
June 30,June 30,June 30,June 30,
20222021
Change (1)
20222021
Change (1)
20232022
Change (1)
20232022
Change (1)
Segment revenues (2)
Segment revenues (2)
$2,060 $651 216 %$4,120 $1,070 285% 
Segment revenues (2)
$894 $1,163 (23 %)$1,703 $2,060 (17%)
Less: Intersegment revenues (2)
Less: Intersegment revenues (2)
(2,060)(496)315 %(4,120)(682)504% 
Less: Intersegment revenues (2)
(645)(1,163)(45 %)(1,454)(2,060)(29%)
RevenuesRevenues$— $155 (100 %)$— $388 (100%)Revenues$249 $— — %$249 $— —% 
Operating lossesOperating losses(877)(556)58 %(1,699)(1,121)52% Operating losses(779)(877)(11 %)(1,980)(1,699)17% 
Depreciation and amortizationDepreciation and amortization271 223 22 %539 477 13% Depreciation and amortization275 271 %538 539 —% 
InsuranceInsurance200 148 35 %400 358 12% Insurance217 200 %434 400 9% 
_______________
(1)Represents the percentage increase (decrease) from the prior year period.
(2)Segment revenues include intersegment revenues from our crude oil marketing segment, which are eliminated due to consolidation in our unaudited condensed consolidated statements of operations.

Volume information was as follows for the periods indicated (in barrels per day):

Three Months EndedSix Months EndedThree Months EndedSix Months Ended
June 30,June 30,June 30,June 30,
20222021202220212023202220232022
Pipeline throughputPipeline throughput13,281 7,876 11,891 5,430 Pipeline throughput8,560 13,281 9,320 11,891 
TerminallingTerminalling13,704 8,106 12,334 6,518 Terminalling10,785 13,704 10,591 12,334 

Three Months Ended June 30, 2023 vs. Three Months Ended June 30, 2022. Pipeline and storage revenues increased by $0.2 million during the three months ended June 30, 2023 as compared to the three months ended June 30, 2022. During the three and six months ended June 30, 2022, all pipeline and storage segment revenues were earned from GulfMark, an affiliated shipper, while during the three and six months ended June 30, 2021,2023, approximately a third of our pipeline and storage revenues, included revenuesor $0.2 million, were earned from a third party shipper under a contract that had been in place at the time of the acquisition of thecustomers. All pipeline and related terminal assets, and has subsequently ended. Revenuesstorage revenues earned from an affiliated shipperGulfMark are eliminated due toin consolidation, with the offset to marketing costs and expenses in our unaudited condensed consolidated statements of operations. Pipeline and storage revenues from GulfMark decreased by $0.5 million for the three months ended June 30, 2023 as compared to the same period in 2022, primarily due to lower volumes transported by GulfMark during the current period.

35

Table of Contents
We are continuingcurrently constructing a new pipeline connection between the VEX Pipeline System and the Max Midstream pipeline system, and we expect to focus on opportunities to increase our pipeline and storage capacity utilization, by identifying opportunities with our existing and new customers to increase volumes.place the assets into commercial service during the fourth quarter of 2023. In addition, we are exploring new connections with other pipeline systems, for the pipeline systemnew crude oil supply opportunities both upstream and downstream of the pipeline, to increaseenhance the crude oil supply and take-away capability of the system.

Our pipeline and storage operating losses decreased by $0.1 million during the three months ended June 30, 2023 as compared to the 2022 period, primarily due to an increase in third party revenues in the 2023 period, partially offset by increases in operating salaries and wages and related personnel costs, materials and supplies, outside service costs and insurance costs in the 2023 period.

Six Months Ended June 30, 2023 vs. Six Months Ended June 30, 2022. Pipeline and storage revenues increased by $0.2 million during the six months ended June 30, 2023 as compared to the six months ended June 30, 2022. During the six months ended June 30, 2022, all pipeline and storage segment revenues were earned from GulfMark, an affiliated shipper, while during the six months ended June 30, 2023, approximately a third of our pipeline and storage revenues, or $0.2 million, were earned from third party customers. Pipeline and storage revenues from GulfMark decreased by $0.6 million for the six months ended June 30, 2023 as compared to the same period in 2022, primarily due to lower volumes transported by GulfMark during the current period.

Our pipeline and storage operating losses increased by $0.3 million during the six months ended June 30, 2023 as compared to the 2022 period, primarily due to increases in operating salaries and wages and related personnel costs, materials and supplies, outside service costs and insurance costs in the 2023 period, partially offset by an increase in third party revenues.

Logistics and Repurposing

Our logistics and repurposing segment revenues, operating (losses) earnings and selected costs were as follows for the period indicated (in thousands):

Three Months EndedSix Months Ended
June 30,June 30,
20232023
Revenues$14,793 $30,034 
Operating (losses) earnings(133)402 
Depreciation and amortization1,724 3,305 
Driver commissions2,098 4,143 
Insurance640 1,208 
Fuel836 1,830 
Maintenance expense544 1,053 

On August 12, 2022, we acquired all of the equity interests of Firebird and Phoenix. Firebird is an interstate bulk motor carrier of crude oil, condensate, fuels, oils and ͏other petroleum products. Firebird has six terminal locations throughout Texas and owns 123 tractors and 216 trailers largely in the Eagle Ford basin. Phoenix ͏recycles and repurposes off-specification fuels, lubricants, crude oil and other chemicals from ͏producers in the U.S.


36

Table of Contents
General and Administrative Expense

General and administrative expense increaseddecreased by $1.3$2.5 million during the three months ended June 30, 20222023 as compared to the same period in 2021,2022, primarily due to higheran adjustment in the 2023 period of the $2.6 million contingent consideration accrual related to the Firebird and Phoenix acquisition in 2022 (see Note 6 in the Notes to Unaudited Condensed Consolidated Financial Statements for further information) and lower salaries and wages and related personnel costs, partially offset by higher outside service costs, audit fees and banking fees primarily related to outstanding letters of credit.

General and administrative expense decreased by $1.7 million during the six months ended June 30, 2023 as compared to the same period in 2022, primarily due to an adjustment in the 2023 period of the $2.6 million contingent consideration accrual related to the Firebird and Phoenix acquisition in 2022 and lower salaries and wages and related personnel costs, partially offset by higher insurance costs, outside service costs, audit fees and legalbanking fees partially offset by lower franchise and other taxes.primarily related to outstanding letters of credit.

General and administrativeInterest Expense

Interest expense increased by $1.9$0.7 million during the three months ended June 30, 2023 as compared to the same period in 2022, primarily due to higher interest expense related to the outstanding Term Loan of $23.1 million under our Credit Agreement (see Note 11 in the Notes to Unaudited Condensed Consolidated Financial Statements for further information).

Interest expense increased by $1.2 million during the six months ended June 30, 20222023 as compared to the same period in 2021,2022, primarily due to higher salaries and wages andinterest expense related personnel costs, outside service costs, audit fees and legal fees, partially offset by lower franchise and other taxes.to the outstanding Term Loan of $23.1 million under our Credit Agreement (see Note 11 in the Notes to Unaudited Condensed Consolidated Financial Statements for further information).


32

Table of Contents
Income Taxes

Provision for (benefit from) income taxes is based upon federal and state tax rates, and variations in amounts are consistent with taxable income (loss) in the respective accounting periods.

On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”) was enacted and signed into law in response to the COVID-19 pandemic. The CARES Act, among other things, permits net operating losses (“NOL”) incurred in tax years 2018, 2019 and 2020 to offset 100 percent of taxable income and be carried back to each of the five preceding taxable years to generate a refund of previously paid income taxes. We carried back our NOL for fiscal year 2020 to fiscal years 2015 and 2016, and in June 2022, we received a cash refund of approximately $6.8 million.


Liquidity and Capital Resources

Liquidity

Our primary sources of liquidity are (i) our cash balance, (ii) cash flow from operating activities, (iii) borrowings under our $40.0 million credit agreement (“Credit Agreement”) and (iv) funds received from the sale of equity securities. Our primary cash requirements include, but are not limited to, (i)(a) ordinary course of business uses, such as the payment of amounts related to the purchase of crude oil, and other expenses, (ii)(b) discretionary capital spending for investments in our business and (iii)(c) dividends to our shareholders. We believe we will have sufficient liquidity through our current cash balances, availability under our Credit Agreement,credit agreement, expected cash generated from future operations, and the ease of financing tractor and trailer additions through leasing arrangements (should the need arise) to meet our short-term and long-term liquidity needs for the reasonably foreseeable future. Our cash balance and cash flow from operating activities is dependent on the success of future operations. If our cash inflow subsides or turns negative, we will evaluate our investment plan accordingly and remain flexible.


37

Table of Contents
We maintain cash balances in order to meet the timing of day-to-day cash needs. Cash and cash equivalents (excluding restricted cash) and working capital, the excess of current assets over current liabilities, were as follows at the dates indicated (in thousands):
June 30,December 31,June 30,December 31,
2022202120232022
Cash and cash equivalentsCash and cash equivalents$67,728 $97,825 Cash and cash equivalents$8,974 $20,532 
Working capitalWorking capital97,034 87,199 Working capital17,217 19,083 

Our cash balance at June 30, 20222023 decreased by 3156 percent from December 31, 2021,2022, as discussed further below.

We have in place a Credit Agreement with Cadence Bank. 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, and (b) a term loan in aggregate principal amount of $25.0 million (the “Term Loan”). We may also obtain letters of credit under the revolving credit facility up to a maximum amount of $30.0 million, which reduces availability under the revolving credit facility by a like amount. Borrowings under the revolving credit facility may be, at our option, base rate loans (defined by reference to the higher of the prime rate, the federal funds rate or an adjusted term SOFR for a one month tenor plus one percent) or SOFR loans, in each case plus an applicable margin, the amount of which is determined by reference to our consolidated total leverage ratio, and is between 1 percent and 2 percent for base rate loans and between 2 percent and 3 percent for SOFR loans.

The term loan amortizes on a 10-year schedule with quarterly payments beginning December 31, 2022, and matures October 27, 2027. Proceeds of the term loan were used, together with additional cash on hand, to fund the repurchase of shares from the KSA and certain of its affiliates. The term loan bears interest at the SOFR loan rate plus the applicable margin for SOFR loans.

We are required to maintain compliance with certain financial covenants under the Credit Agreement, including a consolidated leverage ratio, an asset coverage ratio and a consolidated fixed charge coverage ratio. We were in compliance with these covenants as of June 30, 2023. See “Recent Developments” for further information regarding an amendment to the Credit Agreement in August 2023.

At June 30, 2022,2023, we had no$23.1 million of borrowings outstanding under ourthe Credit Agreement, and $5.7representing the remaining principal balance of the Term Loan, with a weighted average interest rate of 7.71 percent. We also had $20.4 million of letters of credit issued under the Credit Agreement at a fee of 1.752.50 percent per annum. No amounts were outstanding under the revolving credit facility. See Note 211 and Note 17 in the Notes to Unaudited Condensed Consolidated Financial Statements for further information. During the second quarter of 2022, as a result of the significant increase in crude oil prices, we borrowed $30.0 million under the Credit Agreement for working capital purposes and repaid that amount in full shortly thereafter. At June 30, 2022, we were in compliance with all financial covenants under the Credit Agreement. However, as of June 30, 2022, we obtained a waiver relating to a breach of a non-financial covenant in connection with our failure to timely notify the lender of the creation of a new holding company subsidiary.
33

Table of Contents

We have in place an At Market Issuance Sales Agreement (“ATM Agreement”) with B. Riley Securities, Inc., as agent (the “Agent”), in which we may offer to sell shares of our common stock through or to the Agent for cash from time to time. We filed a registration statement initially registering an aggregate of $20.0 million of shares of common stock for sale under the ATM Agreement. The total number of shares of common stock to be sold, if any, and the price at which the shares will be sold will be determined by us periodically in connection with any such sales, though the total amount sold may not exceed the limitations stated in the registration statement. During the three and six months ended June 30, 2022,2023, we received net proceeds of approximately $0.3$0.6 million (net of offering costs to B. Riley Securities, Inc.the Agent of $14$27 thousand) from the sale of 8,20214,680 of our common shares at an average price per share of approximately $37.38$40.74 under this agreement.


38

Table of Contents
We utilize cash from operations to make discretionary investments in our crude oil marketing, transportation, and pipeline and storage and logistics and repurposing businesses. With the exception of operating and finance lease commitments primarily associated with storage tank terminal arrangements, leased office space, tractors, trailers and other equipment, and borrowings outstanding under the Credit Agreement,our bank credit facility, our future commitments and planned investments can be readily curtailed if operating cash flows decrease. See “Material Cash Requirements” below for information regarding our operating and finance lease obligations.

The most significant item affecting future increases or decreases in liquidity is earnings from operations, and these earnings are dependent on the success of future operations. See “Part I, Item 1A. Risk Factors” in our 20212022 Form 10-K.

Cash Flows from Operating, Investing and Financing Activities

Our consolidated cash flows from operating, investing and financing activities were as follows for the periods indicated (in thousands):
Six Months EndedSix Months Ended
June 30,June 30,
2022202120232022
Cash provided by (used in):Cash provided by (used in):Cash provided by (used in):
Operating activitiesOperating activities$(24,178)$52,107 Operating activities$(3,608)$(24,178)
Investing activitiesInvesting activities(3,409)(2,286)Investing activities(4,464)(3,409)
Financing activitiesFinancing activities(4,149)(6,185)Financing activities(5,237)(4,149)

Operating activities. Net cash flows used in operating activities was $24.2 million for the six months ended June 30, 20222023 decreased by $20.6 million as compared to net cash flows provided by operating activities of $52.1 million for the six months ended June 30, 2021.same period in 2022. The decrease in net cash flows fromused in operating activities of $76.3 million was primarily due to changes in our working capital accounts, including an increase of $42.3accounts. Early payments received from customers decreased by approximately $24.6 million in crudethe 2023 period, while early payments made to suppliers decreased by approximately $7.9 million in the 2023 period. Crude oil inventory decreased by $0.4 million at June 30, 2022. The increase in inventory was2023, primarily due to an increasea decrease in the price of our crude oil inventory, which increaseddecreased from $71.86$78.39 per barrel at December 31, 20212022 to $101.69$70.49 per barrel at June 30, 2022, and2023, partially offset by an increase of 12112.5 percent in the number of barrels held in inventory. At June 30, 2022, crude oil inventory included approximately 159,000 barrels of pre-sold inventory at June 2022 pricing. The barrels were delivered in early July 2022.

At various times each month, we may make cash prepayments and/or early payments in advance of the normal due date to certain suppliers of crude oil within our crude oil marketing operations. Crude oil supply prepayments are recouped and advanced from month to month as the suppliers deliver product to us. In addition, in order to secure crude oil supply, we may also “early pay” our suppliers in advance of the normal payment due date of the twentieth of the month following the month of production. These “early payments” reduce cash and accounts payable as of the balance sheet date.

We also require certain customers to make similar early payments or to post cash collateral with us in order to support their purchases from us. Early payments and cash collateral received from customers increasesincrease cash and reducesreduce accounts receivable as of the balance sheet date.


34

Table of Contents
Early payments received from customers and prepayments to suppliers were as follows at the dates indicated (in thousands):
June 30,December 31,June 30,December 31,
2022202120232022
Early payments receivedEarly payments received$54,434 $52,841 Early payments received$20,666 $45,265 
Prepayments to suppliersPrepayments to suppliers30,903 5,732 Prepayments to suppliers6,130 14,055 

39

Table of Contents
We rely heavily on our ability to obtain open-line trade credit from our suppliers especially with respect to our crude oil marketing operations. During December 2021 and June 2022, we received early payments from certain customers in our crude oil marketing operations as noted in the table above. Our cash balance decreased by approximately $30.1 million as of June 30, 2022 relative to the year ended December 31, 2021 primarily as a result of theThe timing of the receiptpayments and receipts of these early paymentspays received and prepayments made to suppliers during each period resulting from an increase in crude oil price and marketing activities.paid can have a significant impact on our cash balance.

Investing activities. Net cash flows used in investing activities for the six months ended June 30, 20222023 increased by $1.1 million as compared to the same period in 2021.2022. This increase was due to an increase of $1.2$1.1 million in capital spending for property and equipment (see following table), partially offset by an increase of $0.1 million in cash proceeds from the sales of assets.

Capital spending was as follows for the periods indicated (in thousands):

Six Months EndedSix Months Ended
June 30,June 30,
2022202120232022
Crude oil marketing (1)
Crude oil marketing (1)
$4,008 $702 
Crude oil marketing (1)
$669 $4,008 
Transportation (2)
Transportation (2)
694 2,703 
Transportation (2)
1,338 694 
Pipeline and storage (3)
Pipeline and storage (3)
73 189 
Pipeline and storage (3)
1,241 73 
Other (4)
Logistics and repurposing (4)
Logistics and repurposing (4)
2,548 — 
Other (5)
Other (5)
112 
Capital spendingCapital spending$4,783 $3,602 Capital spending$5,908 $4,783 
_______________
(1)2023 amount relates to the purchase of various field equipment, and the 2022 amount relates to the purchase of 20 tractors and other field equipment, and the 2021equipment.
(2)2023 amount primarily relates to the purchase of three tractors and various field equipment.
(2)equipment, and the 2022 amount relates to the purchase of three tractors, one trailer and other field equipment, and the 2021equipment.
(3)2023 amount relates to spending for the purchasecontinued construction of 52 trailers, ofa planned pipeline connection, which 50 wereis expected to be placed intoin commercial service during the third quarter of 2021,2023, and computer software and equipment.
(3)the 2022 and 2021 amounts relateamount relates to the purchase of field equipment.
(4)20222023 amount relates to the purchase of approximately 10.6 acres of land in the Gulf Inland Industrial Park, located in Dayton, Texas, for approximately $1.8 million to build a copier,new processing facility for Phoenix (see “Recent Developments” for further information), five tractors, 2 trailers and the 2021 amountvarious field equipment.
(5)Other capital spending relates to the purchase of a company vehicle and office and computer software and equipment.

Financing activities. Net cash used in financing activities was $5.2 million for the six months ended June 30, 2022 decreased by $2.0 million2023 as compared to $4.1 million for the same period in 2021. This decreasesix months ended June 30, 2022. The increase in net cash flows used in financing activities of $1.1 million was primarily due to borrowingsthe following cash outflows and inflows:

an increase in the 2023 period in net repayments under our Credit Agreement during each period.Agreement. During the 2022 period, as a resultsix months ended June 30, 2023, we made principal payments of $1.3 million on the significant increase in crude oil prices,Term Loan. During the six months ended June 30, 2023, we also borrowed and repaid $38.0 million under the revolving credit facility under our Credit Agreement, primarily for working capital purposes, while during the six months ended June 30, 2022, we borrowed and repaid $30.0 million under the Credit Agreement for working capital purposes and repaid $30.0 million shortly thereafter, while during the 2021 period, we borrowed $8.0 million under the Credit Agreement primarily to repay the $10.0 million outstanding payable related to the purchase of the VEX pipeline system in October 2020. This decrease was partially offset by revolving credit facility;
an increase in the 2023 period of $0.2$0.9 million infor principal repayments made for finance lease obligations (see “Material Cash Requirements” below for information regarding our finance lease obligations).;
an increase in the 2023 period in net proceeds from the sale of common shares under the ATM program. During each of the six months ended June 30, 2022 and 2021,2023, we paid cash dividendsreceived net proceeds of $0.48 perapproximately $0.6 million from the sale of 14,680 of our common share, or a total of $2.1 million. Duringshares, while during the six months ended June 30, 2022, we received net proceeds of approximately $0.3 million from the sale of 8,202 of our common shares under the ATM Agreement.shares; and
3540

Table of Contents
a decrease in the 2023 period in cash dividends paid on our common shares. During each of the six months ended June 30, 2023 and 2022, we paid cash dividends of $0.48 per common share, or totals of $1.3 million and $2.1 million, respectively. On October 31, 2022, the number of common shares outstanding decreased by 1.9 million as a result of the repurchase of shares from KSA and certain of its affiliates.

Material Cash Requirements

The following table summarizes our contractual obligations with material cash requirements at June 30, 20222023 (in thousands):

Payments due by periodPayments due by period
Contractual ObligationsContractual ObligationsTotalLess than 1 year1-3 years3-5 yearsMore than 5 yearsContractual ObligationsTotalLess than 1 year1-3 years3-5 yearsMore than 5 years
Credit Agreement (1)
Credit Agreement (1)
$29,145 $4,211 $7,843 $17,091 $— 
Finance lease obligations (1)(2)
Finance lease obligations (1)(2)
$13,500 $4,572 $5,204 $3,724 $— 
Finance lease obligations (1)(2)
30,317 7,622 14,176 8,519 — 
Operating lease obligations (2)(3)
Operating lease obligations (2)(3)
6,793 2,410 3,295 741 347 
Operating lease obligations (2)(3)
7,188 3,014 2,956 1,090 128 
Purchase obligations (3)(4)
Purchase obligations (3)(4)
15,499 15,499 — — — 
Purchase obligations (3)(4)
17,429 17,429 — — — 
Total contractual obligationsTotal contractual obligations$35,792 $22,481 $8,499 $4,465 $347 Total contractual obligations$84,079 $32,276 $24,975 $26,700 $128 
_______________
(1)Represents scheduled future maturities for amounts due under the Term Loan under our Credit Agreement plus estimated cash payments for interest. Interest payments are based upon the principal amount of the amount outstanding and the applicable interest rate at June 30, 2023. See Note 11 and Note 17 in the Notes to Unaudited Condensed Consolidated Financial Statements for further information about our Credit Agreement.
(2)Amounts represent our principal contractual commitments, including interest, outstanding under finance leases for certain tractors, trailers, tank storage and throughput arrangements and other equipment.
(2)(3)Amounts represent rental obligations under non-cancelable operating leases and terminal arrangements with terms in excess of one year.
(3)(4)Amount represents commitments to purchase 3532 new tractors and 4033 new trailers in our transportation business, 31 new tractors in our crude oil marketing business and 3514 new tractors and two new trailers in our logistics and repurposing segment.

We maintain certain lease arrangements with independent truck owner-operators for use of their equipment and driver services on a month-to-month basis. In addition, we enter into office space and certain lease and terminal access contracts in order to provide tank storage and dock access for our crude oil marketing business. These storage and access contracts require certain minimum monthly payments for the term of the contracts.

See Note 1315 in the Notes to Unaudited Condensed Consolidated Financial Statements for further information regarding our finance and operating leases.

Off-Balance Sheet Arrangements

We have no off-balance sheet arrangements that have or are reasonably expected to have a material current or future effect on our financial position, results of operations or cash flows.

Recent Accounting Pronouncements    

For information regarding recent accounting pronouncements, see Note 2 in the Notes to Unaudited Condensed Consolidated Financial Statements.


41

Table of Contents
Transactions with Affiliates

For more information regarding transactions with our affiliates during the three and six months ended June 30, 20222023 and 2021,2022, see Note 89 in the Notes to Unaudited Condensed Consolidated Financial Statements.


Critical Accounting Policies and Use of Estimates

A discussion of our critical accounting policies and estimates is included in our 20212022 Form 10-K. Certain of these accounting policies require the use of estimates. There have been no material changes to our accounting policies since the disclosures provided in our 20212022 Form 10-K.


Item 3. Quantitative and Qualitative Disclosures About Market Risk

There have been no other material changes to our “Quantitative and Qualitative Disclosures about Market Risk” that have occurred since the disclosures provided in our 20212022 Form 10-K.

36


Table of Contents
Item 4. Controls and Procedures

As of the end of the period covered by this quarterly report, our management carried out an evaluation, with the participation of our Chief Executive Officer and Chief Financial Officer, of the effectiveness of our disclosure controls and procedures pursuant to Rule 13a-15 and 15d-15(e) of the Exchange Act. Based on this evaluation, as of the end of the period covered by this quarterly report, our Chief Executive Officer and our Chief Financial Officer concluded:

(i)that our disclosure controls and procedures are designed to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our principal executive and financial officers, as appropriate to allow for timely decisions regarding required disclosures; and

(ii)that our disclosure controls and procedures are effective.


Changes in Internal Control over Financial Reporting

There were no changes in our internal control over financial reporting (as defined in Rule 13a-15(f) and 15d-15(e) under the Exchange Act) during the fiscal quarter ended June 30, 2022,2023, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.


PART II. OTHER INFORMATION

Item 1. Legal Proceedings

From time to time as incidental to our operations, we may become involved in various lawsuits and/or disputes. Primarily asAs an operator of an extensive trucking fleet, we are a party to motor vehicle accidents, worker compensation claims and other items of general liability as would be typical for the industry. We are presently unaware of any claims against us that are either outside the scope of insurance coverage or that may exceed the level of insurance coverage and could potentially represent a material adverse effect on our financial position or results of operations.

42


Table of Contents
Item 1A. Risk Factors

In addition to the other information set forth in this Quarterly Report, you should carefully consider the risk factors and other cautionary statements described under the heading “Item 1A. Risk Factors” included in our 20212022 Form 10-K and the risk factors and other cautionary statements contained in our other SEC filings, which could materially affect our businesses, financial condition or future results. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially adversely affect our business, financial condition or future results. There have been no material changes in our Risk Factors from those disclosed in Item 1A of our 20212022 Form 10-K as updated by our Form 8-K filed on May 9, 2022 or our other SEC filings.


Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

None.


37

Table of Contents
Item 3. Defaults Upon Senior Securities

None.


Item 4. Mine Safety Disclosures

Not applicable.


Item 5. Other Information

None.


43

Table of Contents
Item 6. Exhibits

Exhibit
NumberExhibit
3.1
3.2
10.1+
31.1*
31.2*
32.1*
32.2*
101.CAL*Inline XBRL Calculation Linkbase Document
101.DEF*Inline XBRL Definition Linkbase Document
101.INS*Inline XBRL Instance Document — the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.
101.LAB*Inline XBRL Labels Linkbase Document
101.PRE*Inline XBRL Presentation Linkbase Document
101.SCH*Inline XBRL Schema Document
104*Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101)
____________
* Filed or furnished (in the case of Exhibits 32.1 and 32.2) with this report.
+ Management compensatory plan or arrangement.
3844

Table of Contents
SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

ADAMS RESOURCES & ENERGY, INC.
(Registrant)
Date:August 11, 20229, 2023By:/s/ Kevin J. Roycraft
Kevin J. Roycraft
Chief Executive Officer
(Principal Executive Officer)
By:/s/ Tracy E. Ohmart
Tracy E. Ohmart
Chief Financial Officer
(Principal Financial Officer and Principal
Accounting Officer)

3945