Adams Resources & Energy, Inc.

Good morning and welcome to the Adams Resources and Energy 4th Quarter 2023 Earnings Conference Call. All participants will be in listen-only mode. Should you need assistance to ask questions 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 Security 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 GAAP 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. A copy of the release has also been included in an 8K submitted to the SEC. Now I'd like to turn the call over to the company's president and CEO, Kevin Roycroft. 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 the prepared remarks by discussing the outlook for the first quarter and full year 2024. Myself, Tracy, and our division presidents, Greg Mills and Wade Harrison, will be available for your questions at the conclusion of the prepared remarks. I was encouraged in many areas by the company's fourth quarter results. Despite the continuation of the macroeconomic headwinds discussed in our last two quarterly calls, the business produced solid results for the fourth quarter. Adjusted cash flow, available cash, and liquidity all improved sequentially on a year-over-year basis. For the quarter, we improved our adjusted cash flow 44% over the third quarter of 2023, from 4.8 million to 6.8 million. and 100% over the prior year quarter. Not included in the fourth quarter adjusted cash flow numbers were nearly 1 million of one-time expenses and 2.6 million in gains from sale of assets, both associated with the closure of our Red River operations during the quarter. Factoring in these one-time events into the company's adjusted cash flow numbers, we easily produced the strongest quarter we've had since the third quarter of 2022. For the full year of 2023, we improved net cash flow from operating activities by $16.5 million over 2022, from $13.8 million to $30.3 million. However, when adjusted for crude oil inventory changes, gain on sale of assets and taxes, 2023's adjusted cash flow came in at $23.4 million compared to $29 million in the prior year. The largest of these adjustments was the inventory change differentials between 2022 and 2023. As I mentioned previously, we continue to see positive momentum in our cash and liquidity positions. Cash and cash equivalents improved 62% over the prior year quarter and 104% sequentially, finishing the year with $33.3 million in cash. Liquidity followed a similar trajectory, improving 44% over the third quarter from $55.9 million to $80.3 million at year's end. Gulfmark Energy's legacy area volumes, which include South Texas, Michigan, North Dakota, and Louisiana, were generally flat in the fourth quarter compared to the third quarter of 2023. Overall, quarterly volumes decreased, primarily due to the closure of our Red River operations in North Texas and Oklahoma. I was very pleased with our team's execution of this exit. We fully completed our contract commitments while working on a very short timeline to exit the area and move equipment. Of 62 tractors and 88 trailers dedicated to the Red River operation, we sold 38 tractors and 68 trailers in the quarter for a net gain on the sale of $2.6 million. The remaining late model equipment will be moved into the Gulfmark or Firebird operations, which is expected to reduce these divisions' needs for growth and maintenance capex in 2024. Turning to the VEX pipeline, Gulfmark was able to drive a total of 9,377 barrels per day to the line in the quarter, an increase of 10% over the previous quarter's 8,548 barrels per day. Although the barrel growth is encouraging, VEX is still behind our volume expectations, as our expected third-party shipper on the line continues to find and repair issues on their pipeline system. While VEX is still a critical asset to our company, providing huge cost savings by reducing truck miles, To reach its full potential, it will need third-party barrels to come online. It is a positive sign that our future shipper is still spending time and money to repair their system. However, I am reluctant to put a timeline on the startup since we have no control on the scope and timing of their repairs. Our most recent acquisitions of Phoenix Oil and Firebird bulk carriers finished their first full year with the company. Even with the continuing challenges in the market, the combined businesses produced more than $4 million in positive cash flow. I am especially pleased with the progress we are making towards vertical integration and intra-company business. Gulfmark has become a top five customer for Firebird. Using Firebird's trucks allows Gulfmark to keep the overflow truck barrels in-house, providing cost savings and allowing safety and operational control over those units. Phoenix also continues to produce crossover business opportunities with service transport. Our over-the-road chemical hauling division service transport company saw improved cash flow and earnings in the fourth quarter when compared to the third quarter of 2023. However, these increases were not due to improving market conditions, but were largely driven by favorable insurance premium adjustments related to better than expected safety performance in prior year periods. These credits were well-earned and truly spotlights the work service transport is doing to run a safe and cost-effective operation. In fact, the National Tank Truck Association has just named Service Transport a grand award winner for their 2023 North American Safety Contest, and a finalist for the Heil Trophy, awarded to the top bulk carrier for safety nationwide, an award STC won back in 2021. From a market perspective, Service Transport's customers are still battling a sluggish chemical shipping environment that is expected to continue through the second quarter of this year. I will touch base on the outlook for Q1 and 2024 later. but now we'll turn the call over to Tracy for a deeper dive into the financials.