Adams Resources & Energy (AE) 15th Annual Midwest IDEAS Investor Conference summary

Company overview and financial highlights

• Operates diversified divisions in crude oil marketing, chemical transport, and hydrocarbon recycling, with a strong, conservative balance sheet and a history of stable dividends.

• Repurchased 44% of shares in 2022, reducing Adams family involvement; paid $36 per share for the buyback.

• Ended June quarter with $38 million in cash and $13.1 million in long-term debt, focusing on rebuilding cash after major acquisitions and share repurchase.

• Management believes the company is undervalued, citing $145 million in assets versus a $58 million market cap.

• Paid a steady dividend for 118 consecutive quarters, projecting $0.90 per share this year.

Business operations and strategy

• Key divisions include Service Transport (chemical hauling), GulfMark Energy (crude oil marketing), Victoria Express Pipeline, Firebird Bulk Carriers, and Phoenix Oil (hydrocarbon recycling).

• GulfMark now contributes 69% of EBITDA, reflecting a shift from trucking to energy marketing amid a trucking recession.

• Service Transport has diversified its customer base and expanded locations, reducing reliance on BASF and improving profitability.

• Acquisitions of Phoenix and Firebird enabled in-house maintenance, cost savings, and expanded recycling and crude gathering capabilities.

• Facility relocation from Humble to Dayton, Texas, aims to reduce flood risk and support future growth.

Market trends and industry analysis

• Trucking industry has faced a two-year recession, with capacity tightening and spot rates showing signs of bottoming out in 2024.

• Service Transport is positioned for $16+ million EBITDA when market conditions improve, with reduced driver turnover due to better equipment and operational changes.

• Free cash flow and adjusted EBITDA have grown since 2017, but market cap has not reflected operational improvements.