Good day, and welcome to Adams Resources and Energy Incorporated First Quarter 2023 earnings call. All participants will be in listen-only mode. If you need assistance, please signal conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. Please note that this event is being recorded. I'd like to turn the conference over to Mr. Steven Oser from Three Part Advisors. Please go ahead. Thank you, good morning, everyone. We appreciate you joining us for the Adams Resources and Energy Inc. conference call to review first quarter 2023 results. Joining me on the call today are Adams Resources and Energy President and CEO, Kevin Roycraft, and the company's Executive Vice President and CFO, Tracy Ohmart. 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 of the date of any replay or transcript reading. I would also like to remind you that statements made in today's discussion that are not historical facts, including statements or expectations of 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 & Energy assumes no obligation to publicly update the revisions of any forward-looking statements. Management will refer to non-GAAP measures, including Adjusted EBITDA, free cash flow, return on adjusted net income, and earnings per share. Reconciliation to the nearest GAAP measures can be found at the end of the earnings release. Finally, the earnings press release was issued yesterday, is posted on the investor relations section of our website, adamsresources.com. A copy of the release has also been included in the Form 8-K submitted with the SEC. With that, I would now like to turn the call over to the company's President and CEO, Kevin Roycraft. Kevin? Thank you, Steven. Good morning, all, thank you for your interest in Adams Resources. I'm delighted to be hosting our first-ever conference call as we continue to create further transparency and understanding of our business to current and future shareholders. I will start today's call with some color on the quarter, then I will turn the call over to Tracy to run through the financials. Finally, I will return to provide additional color on outlook and the future ahead of us. For Q1 2023, while top line results and earnings were negatively affected by lower oil prices, Adams saw a significant quarter-over-quarter and quarter-over-prior-year quarter improvement, driven primarily by the improved performance of our GulfMark Energy division and by the contributions of our recently acquired Phoenix Oil and Firebird Bulk Carriers entities. Adjusted cash flow for Q1 2023 improved by 17% over Q1 2022, and by 38% over Q4 2022. Adams' unrestricted cash balance improved from $20.5 million at the end of Q4 2022 to $42.1 million at Q1 2023 close. This growth was achieved despite the ongoing economic challenges in today's marketplace, including continued supply chain disruptions, tractor and trailer manufacturing backlogs, inflation concerns, declining crude oil prices, and a slower chemical production market. While we did not achieve all of our Q1 goals, I am pleased with the efforts of our team, including our overall ability to deliver improved cash flow in a challenging environment. As I mentioned previously, GulfMark Energy's performance was a significant contributing factor to the improved quarter. GulfMark's volumes for the quarter were 94,030 barrels per day versus 90,385 barrels per day in the first quarter of 2022. GulfMark showed quarterly improvement, we still face headwinds as inflation and increasing costs are currently outpacing our ability to increase margins. To bring margins back in line with historical levels, GulfMark's focus moving forward will be on cost cutting, improving crude buy-sell contracts, and volume growth. The quarter saw construction wrap up on our portion of the VEX Pipeline connection to the Max Midstream system. The pipeline continued its steady performance, delivering an average of 10,088 barrels per day to our barge loading location in Victoria, Texas, and providing efficiencies to GulfMark by allowing those barrels to move by pipe instead of truck. After a slow post-acquisition start in the latter part of 2022, Phoenix Oil and Firebird Bulk Carriers have begun to find their footing by contributing $1.4 million in cash flow for the quarter. Crude oil hauling volumes for Firebird remained steady at around 25,000 barrels per day. First quarter volumes and margins for Phoenix improved over our first full quarter in Q4 2022. In the quarter, we started to benefit from synergies that exist between the divisions. These benefits include reducing dependence on third parties by beginning to bring maintenance and overflow load-sharing in-house. Additionally, cross-customer selling is starting to have a positive effect by bringing new opportunities to expand our offering to all the different entities. Turning to our chemical transport division, Service Transport Company. Service Transport performed well in the quarter, considering the macroeconomic challenges facing both the chemical and transportation industries, but struggled to maintain the upward cash flow trajectory it has seen over the past 5 years. Overcoming the market headwinds, Service Transport produced positive cash flow of $2.5 million for the quarter. Throughout the quarter, Service Transport, and the industry overall, saw pricing pressures due to chemical shipment volume drops, causing temporary excess hauling capacity in the market. Despite these pressures, Service Transport has been able to capitalize on shippers' rate shopping by winning new business and adding new lanes to our recently expanded footprint. This should set Service Transport up for a strong performance as the chemical markets rebound. Overall, we believe Adams is well positioned for any potential challenges that lie ahead in 2023. Currently, there is a lot of positive activity surrounding our assets, especially around the VEX Pipeline and the potential synergies yet to be captured with our Phoenix and Firebird acquisitions. I will touch on this later in the call. With that, I would like to turn it over to Tracy to cover the financials in more detail. Thank you, Kevin. Good morning, everyone. I'm still working through some health issues with my voice, so please bear with me. Total revenue for the first quarter of 2023 was $650.2 million, compared to $774.2 million in the prior year quarter. The decline was primarily driven by lower revenues in our crude marketing oil segment, which revenue for this segment is directly tied to the price of oil, were partially offset by revenues related to our acquisition of Phoenix Oil and Firebird Bulk Carriers last August. Looking at the quarter by individual segments. First quarter revenue for our marketing segment was $608.5 million, compared to $747.6 million in the prior year quarter. The decrease is primarily due to a 21% decrease in the price of crude oil over the past year, partially offset by higher volumes. Operating income for the quarter for the marketing segment was $1.9 million, compared to $10.1 million in the first quarter of 2022. The decrease is due to an inventory valuation loss of $1 million in this year's first quarter, versus an inventory liquidation gain of $8.7 million in the first quarter of last year, as well as higher operating expenses, reflecting cost pressures across the business. Adjusting out the inventory valuation loss and liquidation gain, the marketing segment had operating earnings of $2.9 million in 2023, versus operating earnings of $1.4 million in 2022. Our transportation segment recorded $26.4 million of revenue in the first quarter, compared to $26.7 million in the prior year quarter. Operating income was $0.9 million versus $2.9 million for the first quarter of 2022. The decrease is primarily due to higher depreciation and maintenance expenses. Our logistics and repurposing segment, which consists of Firebird and Phoenix, that were acquired August of 2022, added $15.2 million in revenue for the first quarter of 2023, and $0.5 million of operating income. General and administrative expenses increased by $0.8 million from the first quarter of 2022 to $4.8 million this quarter. The increase is related to higher personnel and outside service costs, as well as higher audit fees. Interest expense increased to $0.5 million this year versus $0.1 million in last year's first quarter, due to the term loan that we put in place as part of the repurchase of approximately 1.9 million shares of our stock from KSA last year. Net loss for the quarter was $2 million, or $0.79 per share, compared to net income of $6.1 million, or $1.39 per diluted share. On an adjusted basis, net loss was $1.4 million, or a loss of $0.54 per share, compared to a net loss of $1 million, or a loss of $0.24 per share for the prior year quarter. For the quarter, cash flow from operations was $23.7 million, and capital expenditures for the quarter totaled $1.9 million. Our available cash and cash equivalents as of March 31, 2023, totaled $42.1 million, compared to $20.5 million on December 31, 2022. The increase is primarily related to the timing of receipts and early payments from crude oil customers. Total liquidity as of March 31, was $81.7 million, which includes $39.6 million available under our $60 million credit agreement. Now I'll turn the call back over to Kevin for some final comments. Kevin? Thank you, Tracy. I wanted to provide a little more color around our outlook for Q2 and beyond, along with some comments on the activities surrounding the VEX Pipeline and the Phoenix and Firebird acquisitions. The The VEX Pipeline connection with Max Midstream system is nearly complete. Max has had some delays on this project due to weather and repairs that are being made to their own system, but we expect barrels to begin flowing through this connection in Q3. Through a new customer introduction from our newly acquired Phoenix Oil, in April of this year, we started storing our first third-party barrels on the VEX GMT system. We expect internal GulfMark barrels on the VEX Pipeline to remain steady, while consistently increasing third-party barrels through Max and other customers for the remainder of the year. For Phoenix and Firebird, we will continue to capitalize on synergies between the divisions, focusing largely on facility, IT, and back-office integrations. We plan to also focus on load sharing between divisions and reduction of third-party maintenance expense. On May fourth, we announced the purchase of land in Dayton, Texas, that will be the future home of Phoenix and Firebird. This new location is strategically located to move the company closer to its customer base and will be capable of on-site railcar transloading and storage. Having on-site rail capabilities is expected to improve our efficiency, reduce our dependence on third-party rail transloading sites, and allow for more robust service offerings to our customers. We intend to begin construction on our rail spur this summer and expect to have the spur complete and operational before the end of the year. We are excited for what the future holds for both Phoenix and Firebird. For GulfMark and Service Transport, we expect to see a challenging environment at least through Q2. GulfMark needs time to realize the benefit of their cost-cutting efforts and the work to improve margins. For Service Transport, projections from our customers lean towards a stronger second half of 2023. Through our recent expansion and acquisitions, Service Transport has positioned itself to successfully navigate these slower markets with an eye towards coming out of this in a stronger position when the environment improves. We look forward to Q2 and the remainder of 2023, there are many unknowns in the macroeconomic environment that can cloud our vision of the future. Adams has been built on a solid foundation. We have a growing cash position, and our fundamentals remain strong. The acquisitions we have added to this organization are highly complementary and will allow us to drive further success even in challenging markets. We expect improved performance as the year progresses, especially in the second half of 2023. With that, I would like to open the line for questions. Operator? Thank you. Now I'll begin the question-and-answer session. To ask a question, press star then one on your touchtone phone. If you're using a speakerphone, please pick up your handset before pressing the keys. To withdraw your question, please press star then two. At this time, we'll pause momentarily to assemble the roster. First question will be from Liam Burt, B. Riley Securities. Please go ahead, sir. Good morning, Kevin. Good morning, Tracy. Good morning, Liam. Good morning, Liam. Your costs at GulfMark sequentially improved from fourth quarter of 2022. They're not quite where they were a year ago, but can you give us a sense as to what you can do on the cost side to, to improve those margins? Yeah, I can start with that. We have Greg in the room, too. I can let him comment as well. I mean, we've, we've been meeting, really pulling going back as the economy softens, going back to our vendors, starting there, and seeing where we can, you know, capitalize on getting some rate reductions or, or cost improvements from, from there. I do think, you know, looking at every aspect of our spending, you know, going back and negotiating fuel. Fuel is one of our largest expenses. Going back and renegotiating contracts for third-party maintenance, those are huge opportunities for us. Challenging to get in, in some environments, because especially on the maintenance side, the labor is, is, is still driving higher prices. Fuel, I think we're in the process of negotiating a slightly better fuel discount, bringing in the Phoenix and Firebird barrels, because they usually require more volume to discount their fuel more. Greg, I don't know if you have any other things we'll be working on from a GulfMark perspective, from a cost side? I, I would say, a better level of focus down to the district level, utilizing some tools that we've put together to allow our district supervisors to look into the P&L for their district, see where they are on each line item of expense, and help us manage it, you know, across the whole company, not just hear from, from the downtown or the office here. Really, just a lot more eyes on it and a lot more focus in terms of where we need to be on the OpEx side. I'll, I'll jump on that, too, because I think it's an important point Greg brought up, is some of our IT upgrades that we've done over the last year and a half have allowed the district or terminal managers at GulfMark to actually see P&Ls in their, in their own cost center. Historically, GulfMark had not driven down to that level of detail, and our new system that we've moved to allows that to happen. This is really the first year that we're holding individual managers accountable to their own district P&L. I guess from your prepared comments or your press release, this is a second-half event, so you're gonna need second quarter to work through a lot of these details. Is that right? Yeah, I believe that's mostly right. We do expect we expect to see slight improvements over Q1. We, we don't know that factually at this point, but just the way it's, it's shaping up at this point. I, I think largely we need some of the work that we're doing, both from a cost reduction effort, trying to improve the volume at that-- from, from GulfMark, capitalizing on some of the synergies of Phoenix and Firebird. Really, what we hear from the Service Transport side, that the chemical markets will certainly be a little depressed through Q2. We sort of see the second half of the year being more bullish than, than Q2 and Q1, for that matter. Okay, and then just, 1 final 1 on VEX. It had been rather quiet, now it looks like it's picking up with the connection to Max Midstream. Should we expect revenue to be realized in third quarter, or would that be more of a fourth quarter event? Well, take that. Well, we, with respect to the Max Midstream joint tariff project that we have going, I would expect some activity in the third quarter. We will have some second quarter revenue as we've picked up some customers on the terminalling side, and we're staging somebody to begin working as another VEX shipper on that system as well. Some of that business started in April on the terminalling side. We've got some more going this month on the terminalling side, so you'll see some GMT revenue, and then I believe our other shipper will start in June, so we'll see some volume, tariff volume. Yeah, Liam, I think you'll see light revenue starting in Q2, then it ramping up, through the course of the year. Great. Thank you. Thank you. Appreciate the interest. Thank you. The next question will be from Chris Sakai of Singular Research. Please go ahead. Hi, good morning. Good morning, Chris. Good morning. Just wanted to get an idea about, this new processing facility, that was purchased for Phoenix Oil. What are the costs there, for, for this new facility? Greg, do you want to take that? Sure. For that one, we of course, we have purchased the property itself for $1.8 million. We closed on that a week or so ago. We actually just began working on kind of an interim step to get some initial usage out of the rail siding and some tanks in there. We expect to have use of the transload facility and some tanks by the end of this year. Our project spend will take place over two to three years, in the $7 million type range when we're done. We expect to have the full facility running, you know, we're probably talking about late next year to the year after that, 2025, at the longest. We're trying to spend the money as we see fit with respect to how the business is going, and make that transition from Humboldt to Dayton over the next three years. Yeah, I'll just add that, you know, the, the first priority is getting that rail spur built and the tanks laid down so we can eliminate the use of the third-party rail spur that Phoenix currently uses today. That, that will be our goal for 2023, is to get that in place, up and running, and then eliminate that cost of the third-party rail spur. Okay, thanks. Sounds good. Do you have any sort of forecasts or, or idea for capital expenditures for the remainder of the year? Chris, do you want to take, take that? Yeah. We're, we're working with the manufacturers, because one of the things that is happening, we are seeing, is other trucking companies are backing out of some of their orders. I, I don't have a, a, a real good number at the moment. We're working through that, trying to figure out timing and schedules, but I, I, I think we're gonna see, you know, a good $10 million or so, yet to be spent just on maintenance on our tractors and trailers, which is separate from any money that we spend on the Dayton project for the rail spur or any, you know, stuff on the VEX, any connection or anything like that. From a maintenance, I'm, I'm gonna say we're kind of looking around the $10 million range is, is what I'm looking at. Chris, I'll, I'll add that, you know, we are going through the process of both with Wade at Service Transport and Greg at GulfMark, to relook at our budget that we put together towards the end of 2022 from a CapEx spend, just to make sure, number one, that we have what we need going forward and just make, you know, just double-check that all the, the items that we earmarked in November as being necessary are still necessary for 2023. Especially considering the supply chain issues, we may have to prioritize what we need to buy and what we can actually get this year. Okay, great. You mentioned supply chain issues. Can you comment on that? How are things there? You know, it's been a, a pretty steady issue for us over the last, you know, 2 years, is, is that the trailer and the tractor manufacturing, manufacturers are struggling to, to meet their quotas, cutting back our orders. If we order a number of trucks, they won't be able to fill all the slots. Like Tracy commented, we have seen some slots open up, both on the trailers and the tractor building side, because of cancellations, and we've been able to fill in and get some equipment on that side. But we've just received, I believe we're done receiving our, some of our 2021 orders. The 2022 orders are still coming in right now, and the 2023s are, we're being told, are pushed into late Q4, Q3, Q4 this year. If they... I sense we'll be able to stick to those timelines now, which is probably an encouraging sign for the future, but there's certainly still a backlog. Okay, great. Thanks for the answers. Thank you, Chris. Thank you, Chris. Appreciate it. Thank you. And again, if you have a question, please press star then one. Next question will be from Mitchell Sacks of Grand Slam. Please go ahead. ... with respect to the G&A, I think you'd mentioned 3 things: personnel costs, audit, and outside services. Are some of those costs, gonna continue there, or do some of those go away over time? Yeah, I'd say, unfortunately, the audit costs are, we're basically, we are spreading those out equally over the full year. The audit of the 23 financials, you know, we recognize basically 1/12 per month. With the addition of Phoenix and Firebird, that has increased what our audit costs are gonna be. That, it's a, you know, not a huge amount, but it is. Unfortunately, the auditors aren't cheap. Some of the personnel costs, I think we I'm trying to go back on the kind of truing up some of the bonuses a bit for the year. You know, the executive bonuses are paid out really kind of after year-end is complete. I think there was just a slight uptick compared to what we had anticipated that, you know, from where we stood at the end of the year. Outside services, again, what we're doing with them is kind of reassessing all of our vendors. I mean, from our legal counsel, for S.E.C. counsel to, you know, just various suppliers of different services we use, trying to see what kind of opportunities there are, if we still need those particular services, if we can do more in-house, but just really kind of going through an evaluation across the board. I don't have a good answer on whether that'll trend. There is choppiness to that because at the with the assistance for the Sarbanes-Oxley compliance, you know, January and February, we tend to spend more money with consultants helping us, particularly on the IT side, that then we'll kind of go back to a lower level, because, you know, we're not, we're not working on that particular project at that time. You know, it's a little bit of mix, but we are gonna be really focusing on what's necessary or how can we minimize costs, or does it make some sense to do things internally and put less reliance on third parties. I will say that we have sort of gotten over the hump on some of the outside services with using contractors for accounting services. We brought in some third parties to help us through the year-end close due to some challenges in hiring in the accounting roles. I believe this week we will have filled our last spot from the accounting side. We should see less dependence on bringing in contractors from the outside to help us with those, because we should be fully staffed on the accounting side. I see that, that piece coming down. Yeah. With respect to, to GulfMark and the synergies with Firebird, can you talk a little bit about, you know, the third-party carriage that you're doing prior to the, the merger or the acquisition? Then, what, what kind of opportunity from a, whether a dollar or cost perspective, do you see, you know, on that particular business? Yeah, Greg and I can both comment on that. I, I think from my perspective, I don't know if I want to get into the dollar amount exactly right now, but I can tell you, you know, as we went through our, our, you know, March close here recently, and looking just, you know, at Firebird and who their customers are, GulfMark was in their top 15, 15th to be exactly right about that. I think we can do better. We just started, you know, having the right communications to get Firebird and GulfMark, hauling, you know, Firebird hauling for GulfMark. They made some progress on that, not enough. I think Greg has some initiatives to increase the usage of Firebird as we, as we turn more to third-party carriers for overflows. I'll let you comment that. Well, sure. When we, when we actually, before we purchased Firebird and Phoenix, we put a map together that shows all the locations across Texas that Firebird has trucks and mechanic shops, and it just overlays where we have GulfMark stations as well, and shops. So one of the things we're doing is we're gonna merge those together and make... You know, I think we can eliminate one to two of our district locations and then utilize Firebird shops for maintenance of our equipment. So that, that's a big part of it, is just taking the time to get, get leases moved and move people and move trucks. Another thing related to that is we're looking at where can Firebird better help us based on where we're paying larger third-party carrier bills, and can we migrate some of the Firebird drivers and equipment to those locations so that we can utilize Firebird for GulfMark's transportation overflow needs? One other location we're looking at is the Cuero terminal feeds the VEX Pipeline when we bring barrels in by truck to ship on the VEX Pipeline. We're working with Firebird to typically stage trucks at Cuero terminal and make Cuero a new home for Firebird folks, so we can do two things, both help GulfMark and help feed the VEX Pipeline with some additional product. One of the challenges we had on that, Mitch, was, you know, really driver count. When we brought Firebird on board, I think they were around 88 drivers, somewhere around there, and they, they were doing around 25,000 barrels a day. Their capacity was pretty much utilized. We've been successful adding drivers at Firebird. I think we're up to 102 or 103 today, and their volumes have remained steady or, or ticked up a little bit. We really don't want to have Firebird walk away from their customer base to service GulfMark. The goal is to try to fill the empty seats at Firebird, so they could provide a little, like, additional capacity to GulfMark without having to walk away from their core business. The last question is, is around the VEX Pipeline. I think you said you're gonna start to have barrels moving through it to the MAX Midstream in Q3. Can you, can you talk a little about what kind of presales you've done from a volume perspective, and what you think the capacity utilization or the capacity could be on the VEX Pipeline once you're really connected there and starting to sell that new connection? Okay, well, I, I, I think I heard presale. We haven't technically presold, but we, we expect to see up to 10,000 barrels a day of additional volumes by the end of the year. That would come from several different parties, some of which or one of which that was attracted to VEX Pipeline with the MAX connection. Effectively, we're going to be primarily a VEX customer rather than a VEX/MAX customer. The, the interest is has, it picked up quite a bit just with getting the word out there that VEX and MAX are connecting. MAX has spent a lot of money at Point Comfort to, to build a market there. The VEX Pipeline provides that conduit, and, and so, we're just seeing a lot more you know, activity and, and deal flow opportunities right now. Again, I think, I think 10 is a good incremental target for VEX by the end of the year, and of course, we're already moving ten, ten, or 2,000 barrels a day today. Greg, could you touch on a little bit what the, the new customer that's, that's filling tanks, you know, what their process is right now, where, where they are when they should start ship-shipping? Sure. we signed a deal with this new customer. Initially, what they're doing is filling the tanks at the Victoria terminal, where the barge terminal is connected to VEX. Once we get those tanks ready and filled, we'll move them up to the Cuero terminal at the mouth of the VEX system and get that tank going. And then by June, we should have enough volume for them to begin shipping on the pipeline. It's not gonna start out as a very large volume customer, but steady business for us and get the barge terminal working again. Yeah, I, I would like- And just- Oh, go, go ahead, Mitch. I was gonna ask, you know, Does the connection help GulfMark in terms of getting better realized prices for the oil that it owns, or is it not part of that transaction? I don't know that it helps... I don't know that it helps GulfMark from the marketing, crude oil marketing business, other than the, the more value we can create with VEX makes, makes, you know, the VEX Pipeline more valuable to GulfMark in general. I don't know that from a market perspective, that the activity that we're doing on the VEX Pipeline really impacts one way or the other what, what GulfMark Energy's crude oil business does. Thanks. Thank you, Mitch. Thank you. This concludes our question and answer session. I'd now like to turn the call back over to Mr. Kevin Roycraft for closing remarks. Thank you, operator, and thank you for your continued interest in the company. We will be participating in the B. Riley Institutional Investor Conference in Los Angeles on May 24th and May 25th, the Three Part Advisors Virtual Ideas Conference on June 21st, and the Singular Conference in New York City on June 22nd. We look forward to providing an update of our progress when we report the 2nd quarter results in August. Thank you for joining us. Conference is now concluded. Thank you for attending today's presentation. You may now disconnect.