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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
FORM 10-Q
(Mark One)
/X/ Quarterly report pursuant to Section 13 or 15 (d) of the Securities
Exchange Act of 1934
For the quarterly period ended June 30, 1995 or
/ / Transition report pursuant to Section 13 or 15 (d) of the Securities
Exchange Act of 1934
For the transition period from to
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Commission File Number 1-7908
ADAMS RESOURCES & ENERGY, INC.
(Exact name of Registrant as specified in its charter)
Delaware 74-1753147
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
6910 Fannin, Houston, Texas 77030
(Address of principal executive office & Zip Code)
Registrant's telephone number, including area code (713) 797-9966
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 X No
-- --
The number of shares of Common Stock of the Registrant, par value $.10 per
share, outstanding at July 31, 1995 was 4,186,096.
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ADAMS RESOURCES & ENERGY, INC. AND SUBSIDIARIES
UNAUDITED CONSOLIDATED STATEMENT OF OPERATIONS
In thousands, except per share data)
Six Months Ended Three Months Ended
---------------------- ----------------------
June 30, June 30,
---------------------- ----------------------
1995 1994 1995 1994
-------- -------- -------- --------
Revenues:
Marketing ................................ $339,242 $283,744 $184,463 $153,636
Transportation ........................... 11,003 9,991 5,493 5,124
Oil and gas .............................. 3,676 1,288 2,064 604
-------- -------- -------- --------
353,921 295,023 192,020 159,364
-------- -------- -------- --------
Costs and expenses:
Operating
Marketing .............................. 337,798 282,376 183,715 152,886
Transportation ......................... 9,578 8,259 4,739 4,179
Oil and gas ............................ 764 390 384 216
Corporate general and
administrative ......................... 1,054 1,006 483 460
Depreciation, depletion and
amortization ........................... 2,720 832 1,828 417
-------- -------- -------- --------
351,914 292,863 191,149 158,158
-------- -------- -------- --------
Operating earnings ......................... 2,007 2,160 871 1,206
Other income (expense):
Discontinued coal operations ............ - 660 - 660
Interest ................................ (216) (92) (128) (72)
-------- -------- -------- --------
(216) 568 (128) 588
-------- -------- -------- --------
Earnings before income taxes ............... 1,791 2,728 743 1,794
Income tax provision
Current .................................. 79 84 40 48
Deferred ................................. 600 950 250 650
-------- -------- -------- --------
679 1,034 290 698
-------- -------- -------- --------
Net earnings ............................... $ 1,112 $ 1,694 $ 453 $ 1,096
======== ======== ======== ========
Earnings per common share .................. $ .27 $ .40 $ .11 $ .26
======== ======== ======== ========
Dividends per common share ................. $ - $ - $ - $ -
======== ======== ======== ========
The accompanying notes are an integral part of these financial statements.
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MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Results of Operations
Six Months Comparison
- Marketing
Gross revenues for the Company's Marketing operations increased by
$55,498,000, or 19%, in the comparative current period as a result of generally
higher overall world crude oil prices. In contrast to higher crude oil prices,
the Company's purchases of crude oil at the wellhead remained consistent at
approximately 45,000 barrels per day. The Company's strategy for crude oil
marketing is to link purchase and sales contracts to established quotations
(postings) that move with general market trends. In this manner, profitability
is based on the spread between the going price paid to suppliers at the wellhead
and the price received from customers at various delivery points less
transportation. Thus, the Company is substantially insulated from the impact of
general movements in world crude oil prices. Because of the Company's crude oil
marketing strategy, higher world crude oil prices had little or no impact on
current operating margins. Marketing division operating margins before
depreciation for the first six months of 1995 were $1,444,000 versus $1,368,000
in the similar 1994 period.
- Transportation
Strong demand caused transportation revenues to increase by 10% to
$11,003,000 for the first six months of 1995, however, operating margins before
depreciation decreased by 17% to $1,425,000. Reduced earnings are primarily a
result of narrowing operating margins as the Company's cost structure has
increased while trucking rates have remained constant. In addition, the Company
is still in the process of increasing its sales volumes to better match its
expanded terminal facility and fleet capacity. As an improved balance between
sales volumes and service capacity is obtained, profitability should improve
dramatically.
- Oil and Gas
Oil and gas revenues and operating earnings before depreciation and
depletion tripled in the current period to $3,676,000 and $2,912,000
respectively as a direct result of increased oil and gas production volumes
stemming from the Company's recent drilling efforts. Volumes and prices compare
as follows:
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Six Months Ended Three Months Ended
------------------------------- -------------------------------
June 30, June 30,
------------------------------- -------------------------------
1995 1994 1995 1994
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Crude oil
Volume 58,500 Bbls. 28,000 Bbls. 31,000 Bbls. 12,500 Bbls.
Average price $ 16.15/Bbl. $ 13.46/Bbl. $ 16.99/Bbl. $ 14.15/Bbl.
Natural gas
Volume 1,700,000 Mcf 400,000 Mcf 1,100,000 Mcf 200,000 Mcf
Average price, includes value
of associated gas liquids $ 1.54 Mcf $ 1.99 Mcf $ 1.40 Mcf $ 2.00 Mcf
- Other
The provision for depreciation, depletion and amortization is increased
in the current quarter with increased capital costs associated with the
Company's recent oil and gas drilling activity. Interest expense is also
increased because the company increased its level of debt to finance such
drilling activity.
Three Month Comparison
Variations for the comparative three month period ended June 30, 1995
are consistent with the discussion above.
Liquidity and Capital Resources
During the first six months of 1995, the Company invested $4,935,000 in
property equipment additions with the majority of the investment ($3.5 million)
going towards oil and gas drilling efforts. Funding for these investments was
derived in part from the Company generating $4,432,000 of working capital funds,
defined as the sum of net earnings plus the non-cash provisions for depreciation
and deferred income taxes not owing as a result of the Company's tax loss
carryforward position. The additional $503,000 of investment was financed
through increased bank debt. Due to depressed natural gas prices combined with
marginal results from the Company's most recent drilling efforts, the Company
has slowed its rate of investment in new oil and gas drilling. In this manner,
the Company's historic balance between working capital generated from operations
and capital spending is maintained.
Refer to the "Liquidity and Capital Resources" section of the Company's
Annual Report on Form 10-K for the year ended December 31, 1994 for additional
discussion of the Company's bank relationships, tax loss carryforwards and other
matters.
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ADAMS RESOURCES & ENERGY, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
(In thousands)
June 30, December 31,
1995 1994
--------- ---------
(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents ........................... $ 2,088 $ 2,695
Accounts receivable, net ............................ 42,859 35,952
Inventories ......................................... 3,132 2,218
Prepaid and other ................................... 833 552
--------- ---------
Total current assets ................... 48,912 41,417
--------- ---------
Property and equipment ................................ 40,091 35,230
Less - accumulated depreciation,
depletion and amortization ................ (18,210) (15,564)
--------- ---------
21,881 19,666
--------- ---------
Deferred income taxes ................................. 125 725
Other assets .......................................... 301 493
--------- ---------
$ 71,219 $ 62,301
========= =========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable .................................... $ 43,005 $ 35,420
Accrued and other liabilities ....................... 1,174 2,387
Current maturities of long-term debt ................ 326 653
--------- ---------
Total current liabilities .............. 44,505 38,460
Long-term debt, less current maturities ............... 11,297 9,263
Other liabilities ..................................... 1,062 1,345
--------- ---------
56,864 49,068
--------- ---------
Shareholders' equity:
Common stock - $.10 par value, 7,500,000
shares authorized, 4,183,096 shares outstanding 418 418
Contributed capital ................................. 8,480 8,470
Retained earnings, after eliminating $13,931,000 of
accumulated deficit on December 31, 1992 ...... 5,457 4,345
--------- ---------
Total shareholders' equity ............ 14,355 13,233
--------- ---------
$ 71,219 $ 62,301
========= =========
The accompanying notes are an integral part of these financial statements.
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ADAMS RESOURCES & ENERGY, INC. AND SUBSIDIARIES
UNAUDITED CONSOLIDATED STATEMENT OF CASH FLOWS
(In thousands)
Six Months Ended
June 30,
---------------------
1995 1994
-------- --------
CASH PROVIDED (USED) BY OPERATIONS:
Net earnings ....................................... $ 1,112 $ 1,694
Items of income not requiring (providing) cash -
Depreciation, depletion and amortization ......... 2,720 832
Deferred income tax provision .................... 600 950
Other, net ....................................... (91) 1,016
Decrease (increase) in accounts receivable ......... (6,907) (1,551)
Decrease (increase) in inventories ................. (914) (886)
Decrease (increase) in prepaid and other ........... (281) 85
Increase (decrease) in accounts payable ............ 7,585 3,119
Increase (decrease) in accrued liabilities ......... (1,213) (668)
-------- --------
Net cash provided (required) by operating
activities ................................... 2,611 4,591
-------- --------
INVESTING ACTIVITIES:
Property and equipment additions ................... (4,935) (6,672)
Proceeds from property sales ....................... - 504
-------- --------
Net cash provided by (used in) investing
activities .................................... (4,935) (6,168)
-------- --------
FINANCING ACTIVITIES:
Borrowings from bank ............................... 2,065 5,453
Repayment of debt .................................. (358) (46)
Sales of stock ..................................... 10 3
-------- --------
Net cash provided by (used in) financing
activities ..................................... 1,717 5,410
-------- --------
Increase (decrease) in cash .......................... (607) 3,833
Cash at beginning of period .......................... 2,695 3,323
-------- --------
Cash at end of period ................................ $ 2,088 $ 7,156
======== ========
Supplemental disclosure of cash flow information:
Interest paid during the period .................. $ 486 $ 142
======== ========
Income taxes paid during the period .............. $ 136 $ -
======== ========
The accompanying notes are an integral part of these financial statements.
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ADAMS RESOURCES & ENERGY, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED
CONSOLIDATED FINANCIAL STATEMENTS
Note 1 - Basis of Presentation
The accompanying condensed financial statements are unaudited but, in
the opinion of the Company's management, include all adjustments (consisting of
normal recurring accruals) necessary for a fair presentation of financial
position at June 30, 1995 and results of operations and cash flows for the six
months ended June 30, 1995 and 1994. Certain information and note disclosures
normally included in annual financial statements prepared in accordance with
generally accepted accounting principles have been condensed or omitted pursuant
to Securities and Exchange Commission rules and regulations, although the
Company believes the disclosures made are adequate to make the information
presented not misleading. It is suggested these condensed financial statements
be read in conjunction with the financial statements, and the notes thereto,
included in the Company's latest annual report on Form 10-K. The interim
statement of operations is not necessarily indicative of results to be expected
for a full year.
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ADAMS RESOURCES & ENERGY, INC. AND SUBSIDIARIES
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8K
a. Exhibits - None.
b. Reports on Form 8-K - None.
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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 5, 1995 By: K. S. ADAMS, JR.
---------------------- -------------------------
K. S. Adams, Jr.
Chief Executive Officer
RICHARD B. ABSHIRE
-------------------------
Richard B. Abshire
Chief Financial Officer
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INDEX TO EXHIBITS
Exhibit 27 Financial Data Schedule