Adams Resources & Energy, Inc. (NYSE American:AE), a company specializing in the wholesale of petroleum and petroleum products, announced today that it has entered into a second amendment to its existing credit agreement, which originally dates back to October 27, 2022. This amendment alters the financial covenants of the company, specifically the Fixed Charge Coverage Ratio and the Consolidated Fixed Charges definitions.
The modifications were made to exclude Operating Lease Expenses paid in cash from the calculation of the Consolidated Fixed Charge Coverage Ratio and to ensure that only Consolidated Interest Expense paid in cash is included in the denominator of the Fixed Charge Coverage Ratio. These changes are effective for the financial covenant calculations starting from the period ending June 30, 2024.
This second amendment, referred to as Amendment No. 2, follows the first amendment made on August 2, 2023. The company believes these adjustments will provide more accurate financial covenant calculations. The details of the amendment were included in a form 8-K filed with the Securities and Exchange Commission on July 16, 2024, and are based on a press release statement.
Adams Resources & Energy, Inc., headquartered in Houston, Texas, operates through its wholly-owned subsidiaries GulfMark Asset Holdings, LLC and Service Transport Company. The credit agreement involves Cadence Bank N.A., serving as the administrative agent, swingline lender, and issuing lender, alongside other lenders.
The company's financial maneuver is a strategic step in managing its capital structure and financial commitments. The full text of the amendment can be found in Exhibit 10.1 of the 8-K filing. The information in this article is based on a press release statement.
In other recent news, Adams Resources & Energy reported a positive shift in its first-quarter 2024 financial results. The company generated $6 million in EBITDA, supported by $1.8 million from inventory valuation and liquidation. Cash reserves rose by 10% to $36.6 million, and liquidity improved to $83.6 million. GulfMark Energy, a subsidiary, and the VEX Pipeline both reported significant volume increases.
Despite a slowdown at Phoenix Oil due to reduced truck deliveries, Adams Resources & Energy expects operations to resume in the third quarter. The company also plans to initiate barge deliveries in the Houston area and expand further through a new operational rail spur in Dayton, Texas, by late 2024.
Service Transport, another subsidiary, is implementing strategies to increase capacity and rates despite facing a soft market. These are among the recent developments at Adams Resources & Energy, which remains optimistic about future market improvements and is focused on capitalizing on opportunities.
InvestingPro Insights
As Adams Resources & Energy, Inc. (NYSE American:AE) navigates through its financial restructuring with recent amendments to its credit agreement, a glance at the company's financial performance via InvestingPro data reveals some challenges and opportunities. The company's revenue over the last twelve months as of Q1 2024 stood at $2.756 billion, a notable decline of 15.01% from the previous year. Despite this contraction, the company managed a slight quarterly revenue growth of 1.67% in Q1 2024. The gross profit margin during this period was lean at 1.7%, reflecting one of the concerns highlighted in the InvestingPro Tips, which points to weak gross profit margins.
InvestingPro Tips also suggest caution as analysts expect a drop in net income this year, and do not anticipate the company will be profitable within this timeframe. However, it's worth noting that Adams Resources & Energy has a history of reliability in returning value to shareholders, having maintained dividend payments for 31 consecutive years, with a current dividend yield of 3.69%. Additionally, the company has operated with a moderate level of debt and was profitable over the last twelve months. For readers interested in a deeper dive into the financial health and future prospects of Adams Resources & Energy, Inc., InvestingPro offers additional insights and tips. Use coupon code PRONEWS24 to get up to 10% off a yearly Pro and a yearly or biyearly Pro+ subscription, and discover the wealth of information that can inform investment decisions, including several more InvestingPro Tips related to AE.
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