Adams Resources & Energy, Inc.

Good morning, everyone. Welcome to the Adams Resources and Energy Third Quarter 2023 Financial Results Conference Call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star, then one on your touchtone phone. To withdraw your question, please press star, then two. As a reminder, this conference call is being recorded. Now I will turn the call over to John Biesler, Investor Relations at the Three-Part Advisors. Please go ahead.

Thank you, Operator, and good morning, everyone. Welcome to the Adams Resources and Energy Third Quarter 2023 Conference Call. Joining me on the call today are Adams Resources and Energy President and CEO, Kevin Roycraft, and the company's EVP and CFO, Tracy O'Martin. Additionally, Greg Mills, President of Gulfmark Asset Holdings, and Wade Harrison, President of Service Transport Company, will be joining us for the Q&A session at the end of the call. This call is being webcast and can be accessed through the audio link on the Investor Relations page at AdamsResources.com. Today's call, including the Q&A session, will be recorded. Please be advised that any time-sensitive information may no longer be accurate as to the date of any replay or transcript readings. I'd like to remind you that the statements made in today's discussion that are not historical facts, including statements or expectations or future events or future financial performance, are forward-looking statements and are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements by their nature are uncertain and outside of the company's control. Actual results may differ materially from those expressed or implied. Please refer to the earnings press release that was issued yesterday for our disclosures on forward-looking statements. These factors and other risks and uncertainties are described in detail in the company's filings with the Securities and Exchange Commission. Adams Resources and Energy assumes no obligation to publicly update or revise any forward-looking statements. Management will refer to non-GAAP measures, including adjusted EBITDA, free cash flow, return on and adjusted net income, and earnings per share. Reconciliations to the nearest gap measures can be found at the end of our earnings release. Finally, the earnings press release we issued yesterday is posted on the investor relations section of our website, adamsresources.com, and a copy of the release has been included in an 8K submitted to the SEC. Now, I would like to turn the call over to the company's president and CEO, Kevin Whitecraft. Kevin?

Thank you, John, and good morning, everyone. I will begin today's call with some details on the quarter before turning it over to Tracy for a more in-depth dive into the financials. I will then close my prepared remarks by discussing the outlook for Q4 and beyond. Myself, Tracy, and our division presidents, Greg Mills and Wade Harrison, will be available for your questions at the conclusion of the prepared remarks. We experienced some positive improvement across key financial measures of our company, despite the continued macroeconomic headwinds of our business. including limited drilling in our legacy crude oil basins and a prolonged recession in the chemical freight shipment market. Our cash at the end of the third quarter increased to $16.3 million from $9 million at the end of June, while liquidity improved by 15% from $48.6 million to $55.9 million. These increases came largely from Gulfmark's ability to sell oil positions into a rising commodity price market and from the timing of early payments received from our customers. We generated $11.4 million in cash flow from operations in the third quarter of 2023, and net income increased to $2.3 million, or $0.88 per diluted share, up from $827,000, or $0.32 per diluted share, in the second quarter. The improvements in our GAAP numbers came largely from inventory price increases, but also from the improved performance of our recently acquired Phoenix Oil business. At Gulfmark Energy, volumes increased sequentially from 92,152 barrels per day to 92,556 barrels per day. Q3 of this year was also an improvement over the 91,878 barrels per day we saw in the prior year quarter. On an adjusted basis, Gulfmark continued to be impacted by the soft drilling market, which is limiting volume growth and margin improvement. Gulfmark's Red River Division in Oklahoma and Northwest Texas saw volumes decrease throughout the quarter and also produce a marginal loss. I will get into more details about our future plans for the Red River area later in the call. The soft drilling environment also had an impact on our BEX pipeline and GMT storage business. Our new third-party customer on this asset struggled to purchase the oil necessary to lift barges from our Port of Victoria station as frequently as initially projected. Also, we continue to see delays in oil flowing through our recent connection with the Max Midstream system, as this customer continues to make repairs to the recently acquired feeding system. We are hopeful that the commissioning of this line and the commencement of oil flow through the Max connection will occur later this quarter. The VEX remains a critical asset for Gulfmark. Utilizing this line for Gulfmark's own barrels reduces the trucking burden and risk by over 50 trips per day. each in excess of 100 miles. This not only saves money by improving the efficiency of the fleet, but also results in cost savings by eliminating the risk associated with the over-the-road truck transport. The addition of external barrels to this pipeline will generate additional efficiency and profitability to the company. Another bright spot in the quarter was the performance of our recently acquired Phoenix Oil division. It generated approximately $1.4 million in adjusted cash flow and 1.1 million of adjusted earnings for the quarter. These results were largely driven by improved commodity prices throughout the quarter and increased volumes. Also, intra-company cooperation between Phoenix Oil and Service Transport continued to grow as these divisions worked together to bid on the purchasing and transportation of these recyclable commodities. Turning to Service Transport Company, our over-the-road chemical hauling division, In Q3, STC's cash flow decreased slightly compared to Q2, largely due to the continued sluggishness of the chemical shipment environment, limited loads available to haul, and forced rate reductions, especially from large shippers. Despite this, the team at Service Transport has done a good job adding new customers while retaining our existing customers and our driver base. As market conditions improve, STC is well positioned for strong performance. I will touch on Q4 and the future outlook later in the call. I will now turn the call over to Tracy for a deeper dive into the financials.