Adams Resources & Energy, Inc.

Good afternoon, everyone. Welcome to the Adams Resources and Energy's second 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. As a reminder, this conference call is being recorded. Now, I will turn the call over to John Beazler, Investor Relations and Three-Part Advisors. Please go ahead.

Thank you, Operator, and good afternoon, everyone. Welcome to the Adams Resources and Energy second 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 or 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 revise or update 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, adamsresources.com. 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 Whitecraft. Kevin?

Thank you, John, and good afternoon, everyone. Thank you for your continued interest in Adams. I will begin today's call with some details on the quarter before turning it to Tracy to for a more in-depth dive into the financials. I will then close the prepared remarks by discussing the outlook for the third quarter and for the full year 2024. Tracy, Greg Mills, our Gulfmark Asset Holdings Division President, and I will be available for your questions at the conclusion of the prepared remarks. While I'm encouraged by our sequential quarter-over-quarter improvement, there is still work to do as our results are not meeting the company's current potential. Our operating results for the first six months of the year reflect a combination of an extended period of weak freight demand driving down rates, lower drilling activity in our primary basin, and ongoing operational cost inflation. When adjusted for non-cash inventory losses, consolidated second quarter results were generally flat when compared to Q1. However, we're not for an additional $0.8 million of self-insured retention expense, primarily from a trucking incident that occurred in the quarter. the quarter-over-quarter performance in EBITDA would have been much improved. EBITDA for the second quarter, when adjusted for inventory valuation and additional insurance expense, was $5 million versus adjusted EBITDA of $4.2 million in Q1. Despite these challenges, we are continuing to improve our overall financial position. For four consecutive quarters, we have increased the company's cash and liquidity positions. Adam's available cash grew by 1.9 million versus Q1, ending the second quarter with 38.5 million in unrestricted cash. Over that same time period, we also improved our liquidity by 4.9 million, from 83.6 million at March 31, 2024, to 88.5 million. Additionally, in the quarter, we were able to make $3 million of accelerated principal payments towards our $25 million term loan that was used to repurchase the KSA shares. At the end of the quarter, the remaining balance of the loan was $15.6 million. Our crude oil marketing segment, Gulfmark Energy, was certainly a bright spot for the company in Q2. Gulfmark saw significant quarter-over-quarter improvement as they experienced growth in both margins and volumes. Volumes in our legacy trucking area, which includes South Texas, Michigan, and Louisiana, grew from 64,634 barrels per day to 67,099 barrels per day. Approximately 80% of the company's EBITDA for the quarter came from Gulfmark's performance. Gulfmark's strong performance helped the VEX pipeline achieve improved results as well. The volume on the line has grown by over 20% in each of the previous two quarters. Throughput reached 13,881 barrels per day in Q2, up from 11,256 barrels per day in the first quarter of this year, and 9,377 barrels per day in Q4 of 2023. This increase was primarily driven by Gulfmark routing volumes through the VEX system and by third-party revenue gained from customers utilizing our terminaling services. As I have discussed on our previous call, the weakness in our hydrocarbon repurposing segment, Phoenix Oil, continued in the second quarter. This slowdown, due to reduced acceptance of truck deliveries for one of their primary products, is expected to be alleviated late in Q3 as Phoenix will be offering product delivery by barge. Phoenix has leased tankage on the Houston Ship Channel that is currently being filled with product, and we expect barge deliveries to begin in Q3. This ability to deliver by barge is expected to open up new markets for Phoenix's products and improve their margins. Our crude oil transportation hauler, Firebird Bulk Carriers, quarterly results suffered from the additional self-insured retention expense mentioned previously on this call. Quarter over quarter, our volumes remain fairly flat. but the impact of this expense on this tight margin business was too much to overcome to achieve their targets. Firebird will look to reducing expenses and improving efficiencies to combat softening rig counts in the Eagleford. Our over-the-road chemical hauling division service transport company showed mild sequential quarter improvement as mileage and load count ticked positive. However, revenue was slightly down as we experienced an increase in the number of short haul loads and rate reductions took effect as customers' RFPs came along. While it is encouraging to see quarter-over-quarter improvements, demand and rates will need to return to 2022 levels for service transport to meet its profitability goals. We do expect capacity to tighten as struggling carriers exit the market. This should help lay the groundwork for increased rates in the second half of the year. I will touch on the outlook for Q3 and 2024 later, But we'll now turn the call over to Tracy for a deeper dive into the financials. Tracy?