Adams Resources & Energy, Inc.

Welcome to the Adams Resources and Energy First Quarter 2024 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 telephone keypad. To withdraw your question, please press star then two. Please note this event is being recorded. Now I will turn the call over to John Beisler, Investor Relations at Three Part Advisors. Please go ahead.

Thank you, and good morning, everyone. Welcome to the Adams Resources and Energy First Quarter 2024 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 Omar. This call is also 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 of the date of any replay or transcript reading. I would also 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 certain non-GAAP measures, including EBITDA. 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 would like to turn the call over to the company's president and CEO, Kevin Roycraft. Kevin?

Thank you, John, and good morning, everyone. Thank you for your continued interest in Adams. 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 second quarter, and for the 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. In the first quarter, we began to see some encouraging signs of recovery in certain segments of our business, especially in the latter half of the quarter, where volumes and margins of our oil segments were much improved. We're hopeful that this trend will continue into Q2 and encouraged with our current visibilities. For the first quarter of 2024, the company produced $6 million in EBITDA. These results include $1.8 million in earnings from inventory valuation and liquidation. This compares to $4.4 million in EBITDA from Q1 of 2023. The 2023 number includes inventory valuation and liquidation losses of approximately $1 million. I am generally pleased with the direction the business is headed, even with the continued economic headwinds we face. Cash and liquidity continued their positive trend, showing improving positions over the last three quarters. Cash improved 10% over Q4 2023 as we ended the first quarter with $36.6 million in unrestricted cash. Liquidity improved $3.3 million over the fourth quarter of 2023 from $80.3 million to $83.6 million. We were able to deliver these improvements while still achieving our stated goal of accelerating payments towards our $25 million term loan that was used to repurchase the KSA share ownership in October of 2022. Additionally, during the quarter, we made additional principal payments of $2 million. The balance on the loan at the end of Q1 was approximately $19.5 million. Gulf Park Energy's legacy area truck volumes, which include South Texas, Michigan, and Louisiana, steadily ramped up as the quarter progressed, adding nearly 6,000 barrels a day. Along with these improving volumes, we were able to maintain strong quarter-over-quarter margins. Turning to the VEX pipeline, volumes on the line continued the recent positive trends as we saw barrel counts improve by 20% on a sequential quarter basis to an average of 11,260 barrels per day for Q1. This growth was primarily driven by our Gulfmark Energy Division's ability to route much of their increased volume through the VEX. As a reminder, moving these barrels via pipeline instead of transporting them by truck improves safety, internal profitability on the line, as well as strengthens Gulf Marks margins. VEX's terminal location in Victoria, Texas, also saw third-party activity resume as our customer was successful in securing barrels in the quarter and began building back inventory with intentions to restart barging operations in the second quarter. Phoenix Oil, our hydrocarbon repurposing segment, experienced a slowdown during the quarter due to reduced truck deliveries of fuel oil, one of their primary products. We expect this slowdown to be temporary, lasting until the back half of Q2 before resuming again in Q3. I will provide further detail on Phoenix's plan to combat this later in the outlook section of this call. Our recently purchased crude oil hauler, Firebird Bulk Carriers, had a favorable start to the year, largely driven by improved volumes and recent rate increases taking hold. Firebird saw record volumes in the quarter, hauling nearly 3 million barrels. This was a 7% improvement over Q4 2023 and a 24% improvement over the same quarter a year ago. The soft market for service transport, our over-the-road chemical hauling division, continued in the first quarter. STC did experience a sequential increase in volume and mileage. However, rate levels remained depressed due to shippers successfully demanding rate reductions throughout the course of last year. The spike in demand is encouraging, and if this demand can be sustained, it should allow for rate increase negotiations in the back half of the year. I will touch on the outlook for Q2 and 2024 later, But now I'll turn the call over to Tracy for a deeper dive into the financials. Tracy?