10-Q

Table of Contents

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D. C. 20549

FORM 10-Q

(Mark one)

☑ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF

THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2020

OR

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF

THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ___  to  ___.

Commission file number: 1-07908

ADAMS RESOURCES & ENERGY, INC.

(Exact Name of Registrant as Specified in Its Charter)

Delaware	74-1753147
(State or Other Jurisdiction of Incorporation or Organization)	(I.R.S. Employer Identification No.)

17 South Briar Hollow Lane, Suite 100

Houston, Texas 77027

(Address of Principal Executive Offices, including Zip Code)

(713) 881-3600

(Registrant’s Telephone Number, including Area Code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, $0.10 Par Value	AE	NYSE American LLC

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes þ No o

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes þ No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company.  See definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	☐	Accelerated filer	☑
Non-accelerated filer	☐	Smaller reporting company	☑
Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No þ

A total of 4,242,284 shares of Common Stock were outstanding at November 1, 2020.

Table of Contents

ADAMS RESOURCES & ENERGY, INC. AND SUBSIDIARIES

TABLE OF CONTENTS

		Page No.
PART I.  FINANCIAL INFORMATION
Item 1.	Financial Statements
	Unaudited Condensed Consolidated Balance Sheets	2
	Unaudited Condensed Consolidated Statements of Operations	3
	Unaudited Condensed Consolidated Statements of Cash Flows	4
	Unaudited Condensed Consolidated Statements of Shareholders’ Equity	5
	Notes to Unaudited Condensed Consolidated Financial Statements	7
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	28
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	39
Item 4.	Controls and Procedures	40
PART II.  OTHER INFORMATION
Item 1.	Legal Proceedings	40
Item 1A.	Risk Factors	40
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	41
Item 3.	Defaults Upon Senior Securities	41
Item 4.	Mine Safety Disclosures	41
Item 5.	Other Information	41
Item 6.	Exhibits	42
Signatures		43

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PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

ADAMS RESOURCES & ENERGY, INC. AND SUBSIDIARIES

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except share data)

	September 30,		December 31,
	2020		2019
ASSETS
Current assets:
Cash and cash equivalents	$	53,106	$	112,994
Restricted cash	4,865		9,261
Accounts receivable, net of allowance for doubtful
accounts of $114 and $141, respectively	94,654		94,534
Inventory	15,942		26,407
Derivative assets	3		—
Income tax receivable	7,054		2,569
Prepayments and other current assets	1,417		1,559
Total current assets	177,041		247,324
Property and equipment, net	64,469		69,046
Operating lease right-of-use assets, net	8,453		9,576
Intangible assets, net	4,304		1,597
Cash deposits and other assets	2,193		3,299
Total assets	$	256,460	$	330,842
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	76,407	$	147,851
Accounts payable – related party	158		5
Current portion of finance lease obligations	2,505		2,167
Current portion of operating lease liabilities	2,137		2,252
Other current liabilities	11,687		7,302
Total current liabilities	92,894		159,577
Other long-term liabilities:
Asset retirement obligations	1,610		1,573
Finance lease obligations	4,011		4,376
Operating lease liabilities	6,314		7,323
Deferred taxes and other liabilities	7,547		6,352
Total liabilities	112,376		179,201
Commitments and contingencies (Note 14)
Shareholders’ equity:
Preferred stock – $1.00 par value, 960,000 shares
authorized, none outstanding	—		—
Common stock – $0.10 par value, 7,500,000 shares
authorized, 4,242,284 and 4,235,533 shares outstanding, respectively	423		423
Contributed capital	13,150		12,778
Retained earnings	130,511		138,440
Total shareholders’ equity	144,084		151,641
Total liabilities and shareholders’ equity	$	256,460	$	330,842

See Notes to Unaudited Condensed Consolidated Financial Statements.

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ADAMS RESOURCES & ENERGY, INC. AND SUBSIDIARIES

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share data)

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2020		2019		2020		2019
Revenues:
Marketing	$	245,184	$	434,609	$	722,546	$	1,331,410
Transportation	21,720		15,698		50,121		48,498
Total revenues	266,904		450,307		772,667		1,379,908
Costs and expenses:
Marketing	237,479		429,507		721,798		1,313,822
Transportation	17,105		13,365		41,178		40,902
General and administrative	1,405		2,739		7,030		8,005
Depreciation and amortization	4,859		4,393		13,610		12,266
Total costs and expenses	260,848		450,004		783,616		1,374,995
Operating (losses) earnings	6,056		303		(10,949)		4,913
Other income (expense):
Gain on dissolution of investment	—		—		—		573
Interest income	105		758		614		2,145
Interest expense	(70)		(242)		(288)		(424)
Total other income (expense), net	35		516		326		2,294
(Losses) Earnings before income taxes	6,091		819		(10,623)		7,207
Income tax benefit (provision)	(3,018)		(179)		5,772		(1,653)
Net (losses) earnings	$	3,073	$	640	$	(4,851)	$	5,554
(Losses) Earnings per share:
Basic net (losses) earnings per common share	$	0.72	$	0.15	$	(1.14)	$	1.31
Diluted net (losses) earnings per common share	$	0.72	$	0.15	$	(1.14)	$	1.31
Dividends per common share	$	0.24	$	0.24	$	0.72	$	0.70

See Notes to Unaudited Condensed Consolidated Financial Statements.

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ADAMS RESOURCES & ENERGY, INC. AND SUBSIDIARIES

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

	Nine Months Ended
	September 30,
	2020		2019
Operating activities:
Net (losses) earnings	$	(4,851)	$	5,554
Adjustments to reconcile net (losses) earnings to net cash
provided by (used in) operating activities:
Depreciation and amortization	13,610		12,266
Gains on sales of property	(985)		(1,386)
Provision for doubtful accounts	(27)		(36)
Stock-based compensation expense	453		352
Deferred income taxes	(1,503)		1,493
Net change in fair value contracts	(3)		20
Gain on dissolution of AREC	—		(573)
Changes in assets and liabilities:
Accounts receivable	(93)		8,520
Accounts receivable/payable, affiliates	153		(23)
Inventories	10,465		(2,121)
Income tax receivable	(1,782)		(135)
Prepayments and other current assets	142		166
Accounts payable	(70,082)		13,613
Accrued liabilities	4,396		4,561
Other	17		871
Net cash provided by (used in) operating activities	(50,090)		43,142
Investing activities:
Property and equipment additions	(3,589)		(25,425)
Asset acquisition	(9,163)		(5,624)
Proceeds from property sales	2,282		2,853
Proceeds from dissolution of AREC	—		998
Insurance and state collateral (deposits) refunds	1,127		750
Net cash used in investing activities	(9,343)		(26,448)
Financing activities:
Principal repayments of finance lease obligations	(1,677)		(1,171)
Payment of contingent consideration liability	(111)		—
Dividends paid on common stock	(3,063)		(2,960)
Net cash used in financing activities	(4,851)		(4,131)
(Decrease) Increase in cash and cash equivalents, including restricted cash	(64,284)		12,563
Cash and cash equivalents, including restricted cash, at beginning of period	122,255		117,066
Cash and cash equivalents, including restricted cash, at end of period	$	57,971	$	129,629

See Notes to Unaudited Condensed Consolidated Financial Statements.

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ADAMS RESOURCES & ENERGY, INC. AND SUBSIDIARIES

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY

(In thousands, except per share data)

							Total
	Common		Contributed		Retained		Shareholders’
	Stock		Capital		Earnings		Equity
Balance, January 1, 2020	$	423	$	12,778	$	138,440	$	151,641
Net losses	—		—		(11,427)		(11,427)
Stock-based compensation expense	—		134		—		134
Dividends declared:
Common stock, $0.24/share	—		—		(1,016)		(1,016)
Awards under LTIP, $0.24/share	—		—		(6)		(6)
Balance, March 31, 2020	423		12,912		125,991		139,326
Net earnings	—		—		3,503		3,503
Stock-based compensation expense	—		170		—		170
Cancellation of shares withheld to cover taxes upon vesting of restricted awards	—		(81)		—		(81)
Dividends declared:
Common stock, $0.24/share	—		—		(1,018)		(1,018)
Awards under LTIP, $0.24/share	—		—		(10)		(10)
Balance, June 30, 2020	423		13,001		128,466		141,890
Net earnings	—		—		3,073		3,073
Stock-based compensation expense	—		149		—		149
Dividends declared:
Common stock, $0.24/share	—		—		(1,018)		(1,018)
Awards under LTIP, $0.24/share	—		—		(10)		(10)
Balance, September 30, 2020	$	423	$	13,150	$	130,511	$	144,084

See Notes to Unaudited Condensed Consolidated Financial Statements.

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ADAMS RESOURCES & ENERGY, INC. AND SUBSIDIARIES

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY

(In thousands, except per share data)

							Total
	Common		Contributed		Retained		Shareholders’
	Stock		Capital		Earnings		Equity
Balance, January 1, 2019	$	422	$	11,948	$	134,228	$	146,598
Net earnings	—		—		4,908		4,908
Stock-based compensation expense	—		123		—		123
Dividends declared:
Common stock, $0.22/share	—		—		(928)		(928)
Awards under LTIP, $0.22/share	—		—		(2)		(2)
Balance, March 31, 2019	422		12,071		138,206		150,699
Net earnings	—		—		6		6
Stock-based compensation expense	—		74		—		74
Issuance of common shares for acquisition	1		391		—		392
Cancellation of shares withheld to cover taxes upon vesting of restricted awards	—		(39)		—		(39)
Dividends declared:
Common stock, $0.24/share	—		—		(1,016)		(1,016)
Awards under LTIP, $0.24/share	—		—		(8)		(8)
Balance, June 30, 2019	423		12,497		137,188		150,108
Net earnings	—		—		640		640
Stock-based compensation expense	—		155		—		155
Dividends declared:
Common stock, $0.24/share	—		—		(1,016)		(1,016)
Awards under LTIP, $0.24/share	—		—		(6)		(6)
Balance, September 30, 2019	$	423	$	12,652	$	136,806	$	149,881

See Notes to Unaudited Condensed Consolidated Financial Statements.

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ADAMS RESOURCES & ENERGY, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Note 1. Organization and Basis of Presentation

Organization

Adams Resources & Energy, Inc. is a publicly traded Delaware corporation organized in 1973, the common shares of which are listed on the NYSE American LLC under the ticker symbol “AE”. Through our subsidiaries, we are primarily engaged in the business of crude oil marketing, transportation and storage in various crude oil and natural gas basins in the lower 48 states of the United States (“U.S.”). We also conduct tank truck transportation of liquid chemicals and dry bulk primarily in the lower 48 states of the U.S. with deliveries into Canada and Mexico, and with terminals in the Gulf Coast region of the U.S. Unless the context requires otherwise, references to “we,” “us,” “our” or “Company” are intended to mean the business and operations of Adams Resources & Energy, Inc. and its consolidated subsidiaries.  

We operate and report in two business segments: (i) crude oil marketing, transportation and storage, and (ii) tank truck transportation of liquid chemicals and dry bulk. See Note 8 for further information regarding our business segments.

Basis of Presentation

Our results of operations for the three and nine months ended September 30, 2020 are not necessarily indicative of results expected for the full year of 2020. In the opinion of management, the accompanying unaudited condensed consolidated financial statements reflect all adjustments consisting of normal recurring accruals necessary for fair presentation.  The condensed consolidated financial statements and the accompanying notes are prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) for interim financial statements and the rules of the U.S. Securities and Exchange Commission (“SEC”). Certain information and footnote disclosures required by GAAP for complete annual financial statements have been omitted and, therefore, these interim financial statements should be read in conjunction with our audited consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2019 (the “2019 Form 10-K”) filed with the SEC on March 6, 2020. All significant intercompany transactions and balances have been eliminated in consolidation.

Use of Estimates

The preparation of our financial statements in conformity with GAAP requires management to use estimates and assumptions that affect the reported amount of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. We base our estimates and judgments on historical experience and on various other assumptions and information we believe to be reasonable under the circumstances. Estimates and assumptions about future events and their effects cannot be perceived with certainty and, accordingly, these estimates may change as new events occur, as more experience is acquired, as additional information is obtained and as the operating environment changes. While we believe the estimates and assumptions used in the preparation of these condensed consolidated financial statements are appropriate, actual results could differ from those estimates.

Note 2. Summary of Significant Accounting Policies

Cash, Cash Equivalents and Restricted Cash

Restricted cash represents an amount held in a segregated bank account by Wells Fargo as collateral for outstanding letters of credit.

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ADAMS RESOURCES & ENERGY, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

The following table provides a reconciliation of cash and cash equivalents and restricted cash as reported in the unaudited condensed consolidated balance sheets that totals to the amounts shown in the unaudited condensed consolidated statements of cash flows at the dates indicated (in thousands):

	September 30,		December 31,
	2020		2019
Cash and cash equivalents	$	53,106	$	112,994
Restricted cash	4,865		9,261
Total cash, cash equivalents and restricted cash shown in the
unaudited condensed consolidated statements of cash flows	$	57,971	$	122,255

Common Shares Outstanding

The following table reconciles our outstanding common stock for the periods indicated:

	Common
	shares
Balance, January 1, 2020	4,235,533
Vesting of restricted stock unit awards	217
Balance, March 31, 2020	4,235,750
Vesting of restricted stock unit awards	8,641
Shares withheld to cover taxes upon vesting of restricted stock unit awards	(2,107)
Balance, June 30, 2020	4,242,284
No activity	—
Balance, September 30, 2020	4,242,284

Earnings Per Share

Basic earnings (losses) per share is computed by dividing our net earnings (losses) by the weighted average number of shares of common stock outstanding during the period. Diluted earnings (losses) per share is computed by giving effect to all potential shares of common stock outstanding, including our stock related to unvested restricted stock unit awards. Unvested restricted stock unit awards granted under the Adams Resources & Energy, Inc. 2018 Long-Term Incentive Plan (“2018 LTIP”) are not considered to be participating securities as the holders of these shares do not have non-forfeitable dividend rights in the event of our declaration of a dividend for common shares (see Note 11 for further discussion).

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ADAMS RESOURCES & ENERGY, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

A reconciliation of the calculation of basic and diluted (losses) earnings per share was as follows for the periods indicated (in thousands, except per share data):

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2020		2019		2020		2019
Earnings (losses) per share — numerator:
Net (losses) earnings	$	3,073	$	640	$	(4,851)	$	5,554
Denominator:
Basic weighted average number of shares outstanding	4,242		4,234		4,239		4,226
Basic (losses) earnings per share	$	0.72	$	0.15	$	(1.14)	$	1.31
Diluted (losses) earnings per share:
Diluted weighted average number of shares outstanding:
Common shares	4,242		4,234		4,239		4,226
Restricted stock unit awards (1)	9		3		—		4
Performance share unit awards (1) (2)	2		1		—		—
Total diluted shares	4,253		4,238		4,239		4,230
Diluted (losses) earnings per share	$	0.72	$	0.15	$	(1.14)	$	1.31

_______________

(1)For the nine months ended September 30, 2020, the effect of the restricted stock unit awards and the performance share awards on losses per share is anti-dilutive.

(2)The dilutive effect of performance share awards are included in the calculation of diluted earnings per share when the performance share award performance conditions have been achieved. For the nine months ended September 30, 2019, the effect of the performance share awards on earnings per share is anti-dilutive.

Fair Value Measurements

The carrying amounts reported in the unaudited condensed consolidated balance sheets for cash and cash equivalents, accounts receivable and accounts payable approximates fair value because of the immediate or short-term maturity of these financial instruments. Marketable securities are recorded at fair value based on market quotations from actively traded liquid markets.

A three-tier hierarchy has been established that classifies fair value amounts recognized in the financial statements based on the observability of inputs used to estimate these fair values.  The hierarchy considers fair value amounts based on observable inputs (Levels 1 and 2) to be more reliable and predictable than those based primarily on unobservable inputs (Level 3).  At each balance sheet reporting date, we categorize our financial assets and liabilities using this hierarchy.

See Note 6 for a discussion of the Level 3 inputs used in the determination of the fair value of the intangible assets acquired in an asset acquisition that occurred in June 2020.

Fair value contracts consist of derivative financial instruments and are recorded as either an asset or liability measured at its fair value. Changes in fair value are recognized immediately in earnings unless the derivatives qualify for, and we elect, cash flow hedge accounting. We had no contracts designated for hedge accounting during any current reporting periods (see Note 10 for further information).

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ADAMS RESOURCES & ENERGY, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Income Taxes

Income taxes are accounted for using the asset and liability method. Under this approach, deferred tax assets and liabilities are recognized based on anticipated future tax consequences attributable to differences between financial statement carrying amounts of these items and their respective tax basis.

On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”) was enacted and signed into law in response to the COVID-19 pandemic. The CARES Act, among other things, permits net operating losses (“NOL”) incurred in tax years 2018, 2019 and 2020 to offset 100 percent of taxable income and be carried back to each of the five preceding taxable years to generate a refund of previously paid income taxes.

We are continuing to evaluate the full impact of the CARES Act. However, we have determined that the NOL carryback provision in the CARES Act would result in a cash benefit to us for the fiscal years 2018 and 2019. We carried back our NOL for fiscal year 2018 to 2013, and in June 2020, we received a cash refund of approximately $2.7 million. We have an income tax receivable at September 30, 2020 of approximately $3.7 million for the benefit of carrying back the NOL for the fiscal year 2019 to 2014. We are forecasting an NOL for fiscal year 2020 and expect to carry it back to previous years. As a result, we have also included the 2020 provisional amounts in income tax receivable at September 30, 2020. As we are carrying the losses back to years beginning before January 1, 2018, the receivables were recorded at the previous 35 percent federal tax rate rather than the current statutory rate of 21 percent.

Inventory

Inventory consists of crude oil held in storage tanks and at third-party pipelines as part of our crude oil marketing operations. Crude oil inventory is carried at the lower of cost or net realizable value. At the end of each reporting period, we assess the carrying value of our inventory and make adjustments necessary to reduce the carrying value to the applicable net realizable value. Any resulting adjustments are a component of marketing costs and expenses on our consolidated statements of operations. During the nine months ended September 30, 2020, we recorded a write-down of $18.2 million of our crude oil inventory due to significant declines in prices in 2020.

Property and Equipment

Property and equipment is recorded at cost. Expenditures for additions, improvements and other enhancements to property and equipment are capitalized, and minor replacements, maintenance and repairs that do not extend asset life or add value are charged to expense as incurred. When property and equipment assets are retired or otherwise disposed of, the related cost and accumulated depreciation is removed from the accounts and any resulting gain or loss is included in results of operations in operating costs and expenses for the respective period. Property and equipment, except for land, is depreciated using the straight-line method over the estimated average useful lives ranging from two to thirty-nine years.

We review our long-lived assets for impairment whenever there is evidence that the carrying value of these assets may not be recoverable. Any impairment recognized is permanent and may not be restored. Property and equipment is reviewed at the lowest level of identifiable cash flows. For property and equipment requiring impairment, the fair value is estimated based on an internal discounted cash flow model of future cash flows.

See Note 5 for additional information regarding our property and equipment.

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ADAMS RESOURCES & ENERGY, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Recent Accounting Pronouncements

In December 2019, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes (“ASU 2019-12”). This new standard eliminates certain exceptions in Accounting Standards Codification (“ASC”) 740 related to the approach for intraperiod tax allocation, the methodology for calculating income taxes in an interim period, and the recognition of deferred tax liabilities for outside basis differences. It also clarifies and simplifies other aspects of the accounting for income taxes. ASU 2019-12 is effective for fiscal years, and interim periods within those years, beginning after December 15, 2020, with early adoption permitted in any interim period within that year.

We elected to early adopt this standard during the period ended June 30, 2020, and most amendments within the standard were required to be applied on a prospective basis as of January 1, 2020, while certain amendments were applied on a retrospective or modified retrospective basis. The most significant impact to us is the removal of a limit on the tax benefit recognized on pre-tax losses in interim periods, which was required to be applied on a prospective basis. As a result of our adoption of ASU 2019-12, we calculated our quarterly income tax benefits based on ordinary losses incurred during the first, second and third quarters of 2020, no longer limiting the computed benefit if it exceeds the amount of benefit that would be recognized if the year-to-date ordinary loss were the anticipated ordinary loss for the full fiscal year.

Stock-Based Compensation

We measure all share-based payments, including the issuance of restricted stock units and performance share units to employees and board members, using a fair-value based method. The cost of services received from employees and non-employee board members in exchange for awards of equity instruments is recognized in the consolidated statements of operations based on the estimated fair value of those awards on the grant date and amortized on a straight-line basis over the requisite service period. The fair value of restricted stock unit awards and performance share unit awards is based on the closing price of our common stock on the grant date. We account for forfeitures as they occur. See Note 11 for additional information regarding our 2018 LTIP.

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ADAMS RESOURCES & ENERGY, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Note 3. Revenue Recognition

Revenue Disaggregation

The following table disaggregates our revenue by segment and by major source for the periods indicated (in thousands):

	Reporting Segments
	Marketing		Transportation		Total
Three Months Ended September 30, 2020
Revenues from contracts with customers	$	242,267	$	21,720	$	263,987
Other (1)	2,917		—		2,917
Total revenues	$	245,184	$	21,720	$	266,904
Timing of revenue recognition:
Goods transferred at a point in time	$	242,267	$	—	$	242,267
Services transferred over time	—		21,720		21,720
Total revenues from contracts with customers	$	242,267	$	21,720	$	263,987
Three Months Ended September 30, 2019
Revenues from contracts with customers	$	396,001	$	15,698	$	411,699
Other (1)	38,608		—		38,608
Total revenues	$	434,609	$	15,698	$	450,307
Timing of revenue recognition:
Goods transferred at a point in time	$	396,001	$	—	$	396,001
Services transferred over time	—		15,698		15,698
Total revenues from contracts with customers	$	396,001	$	15,698	$	411,699
Nine Months Ended September 30, 2020
Revenues from contracts with customers	$	693,513	$	50,121	$	743,634
Other (1)	29,033		—		29,033
Total revenues	$	722,546	$	50,121	$	772,667
Timing of revenue recognition:
Goods transferred at a point in time	$	693,513	$	—	$	693,513
Services transferred over time	—		50,121		50,121
Total revenues from contracts with customers	$	693,513	$	50,121	$	743,634
Nine Months Ended September 30, 2019
Revenues from contracts with customers	$	1,147,139	$	48,498	$	1,195,637
Other (1)	184,271		—		184,271
Total revenues	$	1,331,410	$	48,498	$	1,379,908
Timing of revenue recognition:
Goods transferred at a point in time	$	1,147,139	$	—	$	1,147,139
Services transferred over time	—		48,498		48,498
Total revenues from contracts with customers	$	1,147,139	$	48,498	$	1,195,637

_______________

(1)Other marketing revenues are recognized under ASC 815, Derivatives and Hedging, and ASC 845, Nonmonetary Transactions – Purchases and Sales of Inventory with the Same Counterparty.

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Other Crude Oil Marketing Revenue

Certain of the commodity purchase and sale contracts utilized by our crude oil marketing business qualify as derivative instruments with certain specifically identified contracts also designated as trading activity. From the time of contract origination, these contracts are marked-to-market and recorded on a net revenue basis in the accompanying consolidated financial statements.

Certain of our crude oil contracts may be with a single counterparty to provide for similar quantities of crude oil to be bought and sold at different locations. These contracts are entered into for a variety of reasons, including effecting the transportation of the commodity, to minimize credit exposure, and/or to meet the competitive demands of the customer. These buy/sell arrangements are reflected on a net revenue basis in the accompanying consolidated financial statements.

Reporting these crude oil contracts on a gross revenue basis would increase our reported revenues as follows for the periods indicated (in thousands):

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2020		2019		2020		2019
Revenue gross-up	$	97,566	$	193,440	$	315,049	$	658,606

Note 4. Prepayments and Other Current Assets

The components of prepayments and other current assets were as follows at the dates indicated (in thousands):

	September 30,		December 31,
	2020		2019
Insurance premiums	$	153	$	473
Rents, licenses and other	1,264		1,086
Total prepayments and other current assets	$	1,417	$	1,559

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Note 5. Property and Equipment

The historical costs of our property and equipment and related accumulated depreciation balances were as follows at the dates indicated (in thousands):

	Estimated
	Useful Life	September 30,		December 31,
	in Years	2020		2019
Tractors and trailers (1)	5 – 6	$	115,809	$	115,693
Field equipment (2)	2 – 5	25,152		25,094
Buildings	5 – 39	14,939		16,055
Office equipment	2 – 5	1,893		1,951
Land		1,790		1,790
Construction in progress		606		3,661
Total		160,189		164,244
Less accumulated depreciation		(95,720)		(95,198)
Property and equipment, net		$	64,469	$	69,046

_______________

(1)Amounts include tractors in our crude oil marketing segment and trailers in our transportation segment held under finance leases. At September 30, 2020 and December 31, 2019, gross property and equipment associated with these assets held under finance leases were $7.2 million and $5.5 million, respectively. Accumulated amortization associated with these assets held under these finance leases were $2.6 million and $1.7 million at September 30, 2020 and December 31, 2019, respectively (see Note 13 for further information).

(2)Amounts include a tank storage and throughput arrangement in our crude oil marketing segment held under a finance lease. At September 30, 2020 and December 31, 2019, gross property and equipment associated with these assets held under a finance lease were $3.3 million and $3.3 million, respectively. Accumulated amortization associated with these assets held under a finance lease was $1.6 million and $0.7 million at September 30, 2020 and December 31, 2019, respectively (see Note 13 for further information).

Components of depreciation and amortization expense were as follows for the periods indicated (in thousands):

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2020		2019		2020		2019
Depreciation and amortization, excluding amounts under finance leases	$	4,237	$	3,840	$	11,882	$	11,012
Amortization of property and equipment under finance leases	622		553		1,728		1,254
Total depreciation and amortization	$	4,859	$	4,393	$	13,610	$	12,266

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Note 6. Acquisition

On May 17, 2020, we entered into a purchase and sale agreement with Comcar Industries, Inc. (“Comcar”), a bulk carrier trucking company, for the purchase of substantially all of the transportation assets of Comcar’s subsidiary, CTL Transportation, LLC (“CTL”). CTL provides delivery services to customers in the chemical industry, with operations in nine locations in the southeastern United States. On June 26, 2020, we closed on the asset acquisition for approximately $9.0 million in cash. This acquisition added approximately 163 tractors and 328 trailers to our existing transportation fleet, and these assets were included in our transportation segment. This acquisition added new customers, new market areas and new product lines to our transportation segment portfolio. As a result of the acquisition, we added services to new and existing customers in six new market areas, including new terminals in Louisiana, Missouri, Ohio, Georgia and Florida.

We also incurred approximately $0.1 million of acquisition costs in connection with this acquisition, which has been included in the allocation of the total purchase price of $9.2 million to the assets acquired.

The following table summarizes the estimated fair value of the assets acquired at the acquisition date (in thousands):

Property and equipment — tractors and trailers	$	5,901
Materials and supplies	87
Intangible assets — customer relationships	3,175
Total purchase price	$	9,163

The estimated fair value of the acquired property and equipment was determined using the estimated market value of each type of asset. The estimated fair value of the acquired customer relationship intangible assets was determined using an income approach, specifically a discounted cash flow analysis. The income approach estimates the future benefits of the customer relationships and deducts the expenses incurred in servicing the relationships and the contributions from the other business assets to derive the future net benefits of these assets. The future net benefits are discounted back to present value using the appropriate discount rate, which results in the value of the customer relationships.

A customer relationship intangible asset is the relationship between CTL and various customers to whom we did not have a previous relationship. The customer relationships we acquired in this transaction provide us with access to those customers to whom we did not have a previous relationship and allows us to enter product markets in which we have not previously participated. Because of the highly competitive and fragmented transportation market, we believe access to these customers will provide us with an entry into new market areas.

The discounted cash flow analysis used to estimate the fair value of the CTL customer relationships relied on Level 3 fair value inputs. Level 3 fair values are based on unobservable inputs. Unobservable inputs are used to measure fair value to the extent that observable inputs are not available, thereby allowing for situations in which there is little, if any, market activity for the asset at the measurement date. With respect to the CTL customer relationships, the Level 3 inputs included the rate of retention of the current customers of CTL as of the valuation date, our transportation segment’s historical customer retention rate and projected future revenues associated with the customers. The CTL customers expected to remain with us after the transaction were included in the valuation of the customer relationships. We are amortizing the customer relationship intangible assets over a period of seven years, using a modified straight-line approach.

For the period from acquisition to September 30, 2020, we recorded $0.1 million of amortization expense related to these intangible assets.

In connection with the acquisition, we entered into a finance lease agreement for an additional 40 trailers with a six year term. See Note 13 for further information regarding finance leases.

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Note 7. Cash Deposits and Other Assets

Components of cash deposits and other assets were as follows at the dates indicated (in thousands):

	September 30,		December 31,
	2020		2019
Amounts associated with liability insurance program:
Insurance collateral deposits	$	675	$	1,233
Excess loss fund	521		943
Accumulated interest income	425		609
Other amounts:
State collateral deposits	65		37
Materials and supplies	507		477
Total cash deposits and other assets	$	2,193	$	3,299

We have established certain deposits to support participation in our liability insurance program and remittance of state crude oil severance taxes and other state collateral deposits. Insurance collateral deposits are held by the insurance company to cover past or potential open claims based upon a percentage of the maximum assessment under our insurance policies. Insurance collateral deposits are invested at the discretion of our insurance carrier. Excess amounts in our loss fund represent premium payments in excess of claims incurred to date that we may be entitled to recover through settlement or commutation as claim periods are closed. Interest income is earned on the majority of amounts held by the insurance companies and will be paid to us upon settlement of policy years.

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Note 8. Segment Reporting

We operate and report in two business segments: (i) crude oil marketing, transportation and storage, and (ii) tank truck transportation of liquid chemicals and dry bulk.

Financial information by reporting segment was as follows for the periods indicated (in thousands):

	Reporting Segments
	Marketing		Transportation		Other		Total
Three Months Ended September 30, 2020
Revenues	$	245,184	$	21,720	$	—	$	266,904
Segment operating earnings (1)	5,869		1,592		—		7,461
Depreciation and amortization	1,836		3,023		—		4,859
Property and equipment additions (2) (3)	684		(32)		52		704
Three Months Ended September 30, 2019
Revenues	$	434,609	$	15,698	$	—	$	450,307
Segment operating earnings (1)	2,888		154		—		3,042
Depreciation and amortization	2,214		2,179		—		4,393
Property and equipment additions (3)	3,894		8,410		—		12,304
Nine Months Ended September 30, 2020
Revenues	$	722,546	$	50,121	$	—	$	772,667
Segment operating (losses) earnings (1)	(4,952)		1,033		—		(3,919)
Depreciation and amortization	5,700		7,910		—		13,610
Property and equipment additions (2) (3)	2,734		332		523		3,589
Nine Months Ended September 30, 2019
Revenues	$	1,331,410	$	48,498	$	—	$	1,379,908
Segment operating earnings (1)	10,948		1,970		—		12,918
Depreciation and amortization	6,640		5,626		—		12,266
Property and equipment additions (3)	6,896		18,529		—		25,425

_______________

(1)Our crude oil marketing segment’s operating (losses) earnings included inventory valuation losses of $12 thousand and $2.1 million for the three months ended September 30, 2020 and 2019, respectively. For the nine months ended September 30, 2020 and 2019, our crude oil marketing segment’s operating (losses) earnings included inventory valuation losses of $18.2 million and inventory liquidation gains of $1.5 million, respectively.

(2)During the three and nine months ended September 30, 2020, we had $0.1 million and $0.5 million, respectively, of property and equipment additions for leasehold improvements at our corporate headquarters, which is not attributed or allocated to any of our reporting segments.

(3)Our transportation segment’s property and equipment additions do not include approximately $1.7 million of assets acquired under finance leases during the nine months ended September 30, 2020. Our crude oil marketing segment’s property and equipment additions do not include approximately $4.1 million of assets acquired under finance leases during the nine months ended September 30, 2019. See Note 13 for further information.

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Segment operating (losses) earnings reflect revenues net of operating costs and depreciation and amortization expense and are reconciled to (losses) earnings before income taxes, as follows for the periods indicated (in thousands):

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2020		2019		2020		2019
Segment operating (losses) earnings	$	7,461	$	3,042	$	(3,919)	$	12,918
General and administrative	(1,405)		(2,739)		(7,030)		(8,005)
Operating (losses) earnings	6,056		303		(10,949)		4,913
Gain on dissolution of investment	—		—		—		573
Interest income	105		758		614		2,145
Interest expense	(70)		(242)		(288)		(424)
Earnings (losses) before income taxes	$	6,091	$	819	$	(10,623)	$	7,207

Identifiable assets by business segment were as follows at the dates indicated (in thousands):

	September 30,		December 31,
	2020		2019
Reporting segment:
Marketing	$	119,758	$	141,402
Transportation	67,310		58,483
Cash and other	69,392		130,957
Total assets	$	256,460	$	330,842

There were no significant intersegment sales during the three and nine months ended September 30, 2020 and 2019, respectively. Other identifiable assets are primarily corporate cash, corporate accounts receivable and properties not identified with any specific segment of our business. Accounting policies for transactions between reportable segments are consistent with applicable accounting policies as disclosed herein.

Note 9. Transactions with Affiliates

We enter into certain transactions in the normal course of business with affiliated entities including direct cost reimbursement for shared phone and administrative services. In addition, we lease our corporate office space in a building operated by 17 South Briar Hollow Lane, LLC, an affiliate of KSA Industries, Inc., which is an affiliated entity.

Activities with affiliates were as follows for the periods indicated (in thousands):

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2020		2019		2020		2019
Affiliate billings (refunds) to us (1)	$	(15)	$	20	$	17	$	63
Billings to affiliates	1		1		3		3
Rentals paid to affiliate (2)	256		122		500		366

_______________

(1)During the third quarter of 2020, we received a refund for overpayment of certain affiliate billings.

(2)2020 amounts include the payment of rental adjustments for common area maintenance.

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Note 10. Derivative Instruments and Fair Value Measurements

Derivative Instruments

In the normal course of our operations, our crude oil marketing segment purchases and sells crude oil. We seek to profit by procuring the commodity as it is produced and then delivering the material to the end users or the intermediate use marketplace. As typical for the industry, these transactions are made pursuant to the terms of forward month commodity purchase and/or sale contracts. Some of these contracts meet the definition of a derivative instrument, and therefore, we account for these contracts at fair value, unless the normal purchase and sale exception is applicable. These types of underlying contracts are standard for the industry and are the governing document for our crude oil marketing segment. None of our derivative instruments have been designated as hedging instruments.

At September 30, 2020, we had in place four commodity purchase and sale contracts, one of which had fair value associated with it as the contractual price of crude oil was outside of the range of prices specified in the agreement. These commodity purchase and sale contracts encompassed approximately:

•258 barrels per day of crude oil during October 2020 through December 2020; and

•64 barrels per day of crude oil during January 2021 through December 2021.

At December 31, 2019, we had in place six commodity purchase and sale contracts with no fair value associated with them as the contractual prices of crude oil were within the range of prices specified in the agreements. These commodity purchase and sale contracts encompassed approximately:

•258 barrels per day of crude oil during January 2020 through February 2020;

•322 barrels per day of crude oil during March 2020 through April 2020; and

•258 barrels per day of crude oil during May 2020 through December 2020.

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The estimated fair value of forward month commodity contracts (derivatives) reflected in the accompanying unaudited condensed consolidated balance sheet were as follows at the dates indicated (in thousands):

	Balance Sheet Location and Amount
	Current		Other		Current		Other
	Assets		Assets		Liabilities		Liabilities
September 30, 2020
Asset derivatives:
Fair value forward hydrocarbon commodity
contracts at gross valuation	$	3	$	—	$	—	$	—
Liability derivatives:
Fair value forward hydrocarbon commodity
contracts at gross valuation	—		—		—		—
Less counterparty offsets	—		—		—		—
As reported fair value contracts	$	3	$	—	$	—	$	—
December 31, 2019
Asset derivatives:
Fair value forward hydrocarbon commodity
contracts at gross valuation	$	—	$	—	$	—	$	—
Liability derivatives:
Fair value forward hydrocarbon commodity
contracts at gross valuation	—		—		—		—
Less counterparty offsets	—		—		—		—
As reported fair value contracts	$	—	$	—	$	—	$	—

We only enter into commodity contracts with creditworthy counterparties and evaluate our exposure to significant counterparties on an ongoing basis. At September 30, 2020 and December 31, 2019, we were not holding nor have we posted any collateral to support our forward month fair value derivative activity. We are not subject to any credit-risk related trigger events. We have no other financial investment arrangements that would serve to offset our derivative contracts.

Forward month commodity contracts (derivatives) reflected in the accompanying unaudited condensed consolidated statements of operations were as follows for the periods indicated (in thousands):

	Gains (losses)
	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2020		2019		2020		2019
Revenues – marketing	$	(9)	$	(1)	$	3	$	(21)

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Fair Value Measurements

The following tables set forth, by level with the Level 1, 2 and 3 fair value hierarchy, the carrying values of our financial assets and liabilities at the dates indicated (in thousands):

	Fair Value Measurements Using
	Quoted Prices
	in Active		Significant
	Markets for		Other		Significant
	Identical Assets		Observable		Unobservable
	and Liabilities		Inputs		Inputs		Counterparty
	(Level 1)		(Level 2)		(Level 3)		Offsets		Total
September 30, 2020
Derivatives:
Current assets	$	—	$	3	$	—	$	—	$	3
Current liabilities	—		—		—		—		—
Net value	$	—	$	3	$	—	$	—	$	3
December 31, 2019
Derivatives:
Current assets	$	—	$	—	$	—	$	—	$	—
Current liabilities	—		—		—		—		—
Net value	$	—	$	—	$	—	$	—	$	—

These assets and liabilities are measured on a recurring basis and are classified based on the lowest level of input used to estimate their fair value. Our assessment of the relative significance of these inputs requires judgments.

When determining fair value measurements, we make credit valuation adjustments to reflect both our own nonperformance risk and our counterparty’s nonperformance risk. When adjusting the fair value of derivative contracts for the effect of nonperformance risk, we consider the impact of netting and any applicable credit enhancements. Credit valuation adjustments utilize Level 3 inputs, such as credit scores to evaluate the likelihood of default by us or our counterparties. At September 30, 2020 and December 31, 2019, credit valuation adjustments were not significant to the overall valuation of our fair value contracts. As a result, applicable fair value assets and liabilities are included in their entirety in the fair value hierarchy.

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Note 11. Stock-Based Compensation Plan

We have in place a long-term incentive plan in which any employee or non-employee director who provides services to us is eligible to participate. The 2018 LTIP, which is overseen by the Compensation Committee of our Board of Directors, provides for the grant of various types of equity awards, of which restricted stock unit awards and performance-based compensation awards have been granted. The maximum number of shares authorized for issuance under the 2018 LTIP is 150,000 shares, and the 2018 LTIP is effective until May 8, 2028. After giving effect to awards granted and forfeitures made under the 2018 LTIP, and assuming the potential achievement of the maximum amounts of the performance factors through September 30, 2020, a total of 81,735 shares were available for issuance.

Compensation expense recognized in connection with equity-based awards was as follows for the periods indicated (in thousands):

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2020		2019		2020		2019
Compensation expense	$	149	$	155	$	453	$	352

At September 30, 2020 and December 31, 2019, we had $37,900 and $23,600, respectively, of accrued dividend amounts for awards granted under the 2018 LTIP.

Restricted Stock Unit Awards

The following table presents restricted stock unit award activity for the periods indicated:

		Weighted-
		Average Grant
	Number of	Date Fair Value
	Shares	per Share (1)
Restricted stock unit awards at January 1, 2020	18,782	$	37.05
Granted (2)	20,346	$	24.85
Vested	(8,858)	$	36.87
Forfeited	(1,804)	$	32.29
Restricted stock unit awards at September 30, 2020	28,466	$	28.68

_______________

(1)Determined by dividing the aggregate grant date fair value of awards by the number of awards issued.

(2)The aggregate grant date fair value of restricted stock unit awards issued during 2020 was $0.5 million based on a grant date market price of our common shares ranging from $24.77 to $26.23 per share.

Unrecognized compensation cost associated with restricted stock unit awards was approximately $0.4 million at September 30, 2020. Due to the graded vesting provisions of these awards, we expect to recognize the remaining compensation cost for these awards over a weighted-average period of 1.4 years.

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Performance Share Unit Awards

The following table presents performance share unit award activity for the periods indicated:

		Weighted-
		Average Grant
	Number of	Date Fair Value
	Shares	per Share (1)
Performance share unit awards at January 1, 2020	2,787	$	43.00
Granted (2)	10,781	$	24.92
Vested	—	$	—
Forfeited	(595)	$	30.22
Performance share unit awards at September 30, 2020	12,973	$	28.56

_______________

(1)Determined by dividing the aggregate grant date fair value of awards by the number of awards issued.

(2)The aggregate grant date fair value of performance share unit awards issued during 2020 was $0.2 million based on a grant date market price of our common shares ranging from $24.77 to $26.23 per share and assuming a performance factor of 100 percent.

Unrecognized compensation cost associated with performance share unit awards was approximately $0.2 million at September 30, 2020. We expect to recognize the remaining compensation cost for these awards over a weighted-average period of 2.2 years.

Note 12. Supplemental Cash Flow Information

Supplemental cash flows and non-cash transactions were as follows for the periods indicated (in thousands):

	Nine Months Ended
	September 30,
	2020		2019
Cash paid for interest	$	288	$	424
Cash paid for federal and state income taxes	419		234
Cash refund for NOL carryback under CARES Act	2,703		—
Non-cash transactions:
Change in accounts payable related to property and equipment additions	(1,232)		(1,538)
Property and equipment acquired under finance leases	1,655		4,148
Issuance of common shares in asset acquisition	—		392

See Note 13 for information related to other non-cash transactions related to leases.

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Note 13. Leases

The following table provides the components of lease expense for the periods indicated (in thousands):

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2020		2019		2020		2019
Finance lease cost:
Amortization of ROU assets	$	622	$	553	$	1,728	$	1,254
Interest on lease liabilities	70		87		212		214
Operating lease cost	681		675		2,038		2,254
Short-term lease cost	3,085		2,527		7,756		7,355
Total lease expense	$	4,458	$	3,842	$	11,734	$	11,077

The following table provides supplemental cash flow and other information related to leases for the periods indicated (in thousands):

	Nine Months Ended
	September 30,
	2020		2019
Cash paid for amounts included in measurement of lease liabilities:
Operating cash flows from operating leases (1)	$	2,037	$	2,254
Operating cash flows from finance leases	295		197
Financing cash flows from finance leases	1,677		1,171
ROU assets obtained in exchange for new lease liabilities:
Finance leases (2)	1,655		4,148
Operating leases	630		12,006

______________

(1)Amounts are included in Other operating activities on the unaudited condensed consolidated statements of cash flows.

(2)2020 amount consists of a finance lease agreement for 40 trailers with a six year term that we entered into in connection with the CTL acquisition. See Note 6 for further information.

The following table provides the lease terms and discount rates for the periods indicated:

	Nine Months Ended
	September 30,
	2020	2019
Weighted-average remaining lease term (years):
Finance leases	3.18	3.28
Operating leases	4.46	4.98
Weighted-average discount rate:
Finance leases	4.3%	4.9%
Operating leases	4.4%	5.0%

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The following table provides supplemental balance sheet information related to leases at the dates indicated (in thousands):

	September 30,		December 31,
	2020		2019
Assets
Finance lease ROU assets (1)	$	6,307	$	6,384
Operating lease ROU assets	8,453		9,576
Liabilities
Current
Finance lease liabilities	2,505		2,167
Operating lease liabilities	2,137		2,252
Noncurrent
Finance lease liabilities	4,011		4,376
Operating lease liabilities	6,314		7,323

______________

(1)Amounts are included in Property and equipment, net on the unaudited condensed consolidated balance sheets.

The following table provides maturities of undiscounted lease liabilities at September 30, 2020 (in thousands):

	Finance		Operating
	Lease		Lease
Remainder of 2020	$	681	$	678
2021	2,723		2,343
2022	1,789		2,002
2023	939		1,821
2024	336		1,700
Thereafter	445		679
Total lease payments	6,913		9,223
Less: Interest	(397)		(772)
Present value of lease liabilities	6,516		8,451
Less: Current portion of lease obligation	(2,505)		(2,137)
Total long-term lease obligation	$	4,011	$	6,314

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The following table provides maturities of undiscounted lease liabilities at December 31, 2019 (in thousands):

	Finance		Operating
	Lease		Lease
2020	$	2,426	$	2,660
2021	2,426		2,256
2022	1,492		1,914
2023	642		1,776
2024	37		1,668
Thereafter	—		443
Total lease payments	7,023		10,717
Less: Interest	(480)		(1,142)
Present value of lease liabilities	6,543		9,575
Less: Current portion of lease obligation	(2,167)		(2,252)
Total long-term lease obligation	$	4,376	$	7,323

Note 14. Commitments and Contingencies

Insurance Policies

We establish a liability under our automobile and workers’ compensation insurance policies for expected claims incurred but not reported on a monthly basis. As claims are paid, the liability is relieved. Our accruals for automobile and workers’ compensation claims are presented in the table below.

For periods prior to October 1, 2017, we pre-funded our estimated claims, and therefore, we could either receive a return of premium paid or be assessed for additional premiums up to pre-established limits. Additionally, in certain instances, the risk of insured losses was shared with a group of similarly situated entities through an insurance captive. We have appropriately recognized estimated expenses and liabilities related to these policies for losses incurred but not reported to us or our insurance carrier. The amount of pre-funded insurance premiums left to cover potential future losses are presented in the table below. If the potential insurance claims do not further develop, the pre-funded premiums will be returned to us as a premium refund.

The amount of pre-funded insurance premiums left to cover potential future losses related to periods prior to October 1, 2017, and our accruals for automobile and workers’ compensation claims were as follows at the dates indicated (in thousands):

	September 30,		December 31,
	2020		2019
Pre-funded premiums for losses incurred but not reported	$	57	$	168
Accrued automobile and workers’ compensation claims	2,686		2,956

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ADAMS RESOURCES & ENERGY, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

We maintain a self-insurance program for managing employee medical claims. A liability for expected claims incurred but not reported is established on a monthly basis. As claims are paid, the liability is relieved. We also maintain third party insurance stop-loss coverage for individual medical claims exceeding a certain minimum threshold. In addition, we maintain $1.4 million of umbrella insurance coverage for annual aggregate medical claims exceeding approximately $7.5 million. Medical accrual amounts were as follows at the dates indicated (in thousands):

	September 30,		December 31,
	2020		2019
Accrued medical claims	$	2,249	$	1,016

Legal Proceedings

On August 15, 2019, we received a notice from the Internal Revenue Service (the “IRS”) regarding a proposed penalty of approximately $1.2 million for our 2017 tax year information returns. The notice alleges that certain taxpayer identification numbers supplied to the IRS for our returns in 2017 were either missing or incorrect and that certain filings were late. We responded to the IRS on September 25, 2019 disputing the proposed penalty and requesting that the amount be waived, abated or a hearing held. On March 11, 2020, we received a response from the IRS indicating that they had reviewed our response and waived the full penalty. As such, this matter will not have a material impact on our consolidated financial position, results of operations or cash flows.

Litigation

From time to time as incidental to our operations, we may become involved in various lawsuits and/or disputes. Primarily as an operator of an extensive trucking fleet, we are a party to motor vehicle accidents, worker compensation claims and other items of general liability as would be typical for the industry. We are presently unaware of any claims against us that are either outside the scope of insurance coverage or that may exceed the level of insurance coverage and could potentially represent a material adverse effect on our financial position or results of operations.

Note 15. Subsequent Event

On October 22, 2020, we acquired the outstanding equity interests of Victoria Express Pipeline, LLC (“VEX”) and certain related pipeline terminal facility assets from EnLink Midstream Operating, L.P. for $20.0 million. Of the total purchase price, $10.0 million was paid at closing, with the remainder to be paid in four quarterly installments of $2.5 million, plus interest at a rate of 4.0% per annum, beginning in March 2021. The equity interests in GulfMark Terminals, LLC, VEX and the other acquired assets were pledged to secure the payment of the installment portions of the purchase price as part of the agreement.

The VEX Pipeline System, with truck and storage terminals at both Cuero and the Port of Victoria, Texas, is a crude oil and condensate pipeline system, which connects the heart of the Eagle Ford Basin to the Gulf Coast waterborne market. The VEX Pipeline System includes 56 miles of 12-inch pipeline, which spans DeWitt county to Victoria County, Texas, with 350,000 barrels of above ground storage, two 8 bay truck offload stations, and access to two docks at the Port of Victoria. The VEX Pipeline System can receive crude oil by pipeline and truck, and has downstream pipeline connections to two terminals today, with potential for additional downstream connection opportunities in the future. The pipeline system has a current capacity of 90,000 barrels per day.

We plan to integrate the VEX Pipeline System into our Gulf Coast marketing business, which we expect will further strengthen our ability to provide excellent service to the producers in the region, as well as more effectively service our end-user markets along the Gulf Coast. In addition, the VEX Pipeline System complements our existing storage terminal and dock at the Port of Victoria, where we now control 450,000 barrels of storage with three docks after giving effect to the acquisition.

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Item 2.    Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following information should be read in conjunction with our Unaudited Condensed Consolidated Financial Statements and accompanying Notes included in this quarterly report on Form 10-Q and the Audited Consolidated Financial Statements and related Notes, together with our discussion and analysis of financial position and results of operations, included in our annual report on Form 10-K for the year ended December 31, 2019 (the “2019 Form 10-K”), as filed on March 6, 2020 with the U.S. Securities and Exchange Commission (“SEC”).  Our financial statements have been prepared in accordance with generally accepted accounting principles in the United States (“GAAP”).

Cautionary Statement Regarding Forward-Looking Information

This quarterly report on Form 10-Q contains various forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) and information that are based on our beliefs, as well as assumptions made by us and information currently available to us. When used in this document, words such as “anticipate,” “project,” “expect,” “plan,” “seek,” “goal,” “estimate,” “forecast,” “intend,” “could,” “should,” “would,” “will,” “believe,” “may,” “potential” and similar expressions and statements regarding our plans and objectives for future operations are intended to identify forward-looking statements. Although we believe that our expectations reflected in such forward-looking statements are reasonable, we cannot give any assurances that such expectations will prove to be correct.  Forward-looking statements are subject to a variety of risks, uncertainties and assumptions as described in more detail under Part I, Item 1A of our 2019 Form 10-K and within Part II, Item 1A of this quarterly report.  If one or more of these risks or uncertainties materialize, or if underlying assumptions prove incorrect, our actual results may vary materially from those anticipated, estimated, projected or expected.  You should not put undue reliance on any forward-looking statements.  The forward-looking statements in this quarterly report speak only as of the date hereof.  Except as required by federal and state securities laws, we undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or any other reason.

Overview of Business

Adams Resources & Energy, Inc., a Delaware corporation organized in 1973, and its subsidiaries are primarily engaged in the business of crude oil marketing, transportation and storage in various crude oil and natural gas basins in the lower 48 states of the United States (“U.S.”). We also conduct tank truck transportation of liquid chemicals and dry bulk primarily in the lower 48 states of the U.S. with deliveries into Canada and Mexico, and with terminals in the Gulf Coast region of the U.S. Unless the context requires otherwise, references to “we,” “us,” “our” or the “Company” are intended to mean the business and operations of Adams Resources & Energy, Inc. and its consolidated subsidiaries.  

We operate and report in two business segments: (i) crude oil marketing, transportation and storage, and (ii) tank truck transportation of liquid chemicals and dry bulk. See Note 8 in the Notes to Unaudited Condensed Consolidated Financial Statements for further information regarding our business segments.

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Recent Developments and Outlook

CTL Asset Acquisition

On May 17, 2020, we entered into a purchase and sale agreement with Comcar Industries, Inc. (“Comcar”), a bulk carrier trucking company, for the purchase of substantially all of the transportation assets of Comcar’s subsidiary, CTL Transportation, LLC (“CTL”). CTL provides delivery services to customers in the chemical industry, with operations in nine locations in the southeastern United States. On June 26, 2020, we closed on the asset acquisition for approximately $9.2 million in cash, including acquisition costs. This acquisition added approximately 163 tractors and 328 trailers to our existing transportation fleet, and these assets were included in our transportation segment.

Global Pandemic and Industry Supply Events

On January 30, 2020, the World Health Organization (“WHO”) announced a global health emergency because of a new strain of coronavirus originating in Wuhan, China (the “COVID-19 outbreak”). In March 2020, the WHO classified the COVID-19 outbreak as a pandemic, based on the rapid increase in exposure globally. The COVID-19 pandemic and the emergency response measures enacted by the United States and governments around the world have caused material disruptions to many businesses resulting in a severe slowdown in global economies, including the United States, leading to increased volatility in financial markets worldwide and reduced demand for crude oil and other commodities.

In March 2020, members of OPEC failed to agree on crude oil production levels, which resulted in an increased supply of crude oil and led to a substantial decline in crude oil prices and an increasingly volatile market. During the second quarter of 2020, while members of OPEC reached agreements to cut crude oil production, downward pressure on crude oil prices continued due to concerns regarding an oversupply of crude oil inventories. Crude oil prices weakened during the third quarter of 2020, with the price at the end of September being slightly below $40 per barrel after trading around $42 per barrel in August.

The COVID-19 outbreak continues to spread globally, which is slowing U.S. and global crude oil demand recovery. U.S. crude oil production levels are well below where they were at the beginning of 2020, with shale crude production significantly lower than production amounts in the first quarter of 2020. Refinery margins continue to weaken, resulting in a number of U.S. refineries shutting in, and nearly all domestic refineries running well below capacity. As markets compete for the limited crude oil supply, buy-sell margins have been tightening. As a result, prices of crude oil and other commodities continue to remain volatile.

The adverse economic effects of the COVID-19 outbreak, including the restrictions in place by governments, changes in consumer behavior related to the slowdown of the economy and the disruption of historical supply and demand patterns, and the volatility of the crude oil markets have resulted in a decline in our crude oil marketing operations and significantly decreased demand for our transportation services. Our crude oil marketing operations have declined as low crude oil prices have negatively impacted production of crude oil, and demand for crude oil and other related products has significantly decreased due to the global economic slowdown from COVID-19. During the first quarter of 2020, our overall transportation operations remained steady as we transported products including bleach, disinfectant, soap and other similar products in high demand, while seeing an offsetting drop in demand for other products we typically transport. During April and May 2020, we saw a significant decline in our overall transportation operations primarily due to the continuation of the governmental restrictions and the adverse economic effects. However, beginning in late June, demand for transportation of products began to increase. During the third quarter of 2020, demand for transportation of chemicals and personal care products, along with automotive plants coming back online and strong home building product lines, resulted in an increase in our transportation operations.

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At September 30, 2020, we had 411,380 barrels of crude oil in inventory, and during the nine months ended September 30, 2020, we recognized an inventory valuation loss of approximately $18.2 million as the price of our crude oil inventory declined from $61.93 per barrel at December 31, 2019 to $38.75 per barrel at September 30, 2020. Further valuation losses may occur if the price of crude oil continues to decline.

We are dependent on our workforce of truck drivers to transport crude oil and products for our customers. Developments such as social distancing and shelter-in-place directives thus far have not had a significant impact on our ability to deploy our workforce effectively as the transportation industry has been deemed an essential service under current Cybersecurity and Infrastructure Security Agency guidelines. We have taken measures to seek to ensure the safety of our employees and operations while maintaining uninterrupted service to our customers. The safety of our employees and operations while providing uninterrupted service to our customers remains our primary focus. We are actively monitoring the global situation and its effect on our financial condition, liquidity, operations, customers, industry and workforce. Given the daily evolution of the COVID-19 outbreak and the global responses to curb its spread, we cannot estimate the length or gravity of the impacts of these events at this time. While we consider the decreased demand for crude oil and in transportation services and the lower crude oil prices to be temporary, if the pandemic and decline in oil prices continue, they may have a material adverse effect on our results of future operations, financial position and liquidity in 2021.

We plan to continue to operate our remaining business segments with internally generated cash flows during the remainder of 2020, but intend to remain flexible as the focus will be on increasing efficiencies and on business development opportunities. During the remainder of 2020, we plan to integrate our newly acquired terminals and leverage back haul opportunities with the continued efforts to diversify service offerings, and we plan to grow in new or existing areas with our crude oil marketing segment.

Voluntary Early Retirement Program and Terminations

In May 2020, primarily as a result of the economic downturn, we implemented a voluntary early retirement program for certain employees, which resulted in an increase in personnel expenses of approximately $0.4 million. Of this amount, approximately $0.3 million was included in general and administrative expenses and $0.1 million was included in operating expenses.

Acquisition of Pipeline and Related Terminal Facility Assets

On October 22, 2020, we acquired the outstanding equity interests of Victoria Express Pipeline, LLC (“VEX”) and certain related pipeline terminal facility assets from EnLink Midstream Operating, L.P. for $20.0 million. The VEX Pipeline System, with truck and storage terminals at both Cuero and the Port of Victoria, Texas, is a crude oil and condensate pipeline system, which connects the heart of the Eagle Ford Basin to the Gulf Coast waterborne market. The VEX Pipeline System includes 56 miles of 12-inch pipeline, which spans DeWitt county to Victoria County, Texas, with 350,000 barrels of above ground storage, two 8 bay truck offload stations, and access to two docks at the Port of Victoria. The VEX Pipeline System can receive crude oil by pipeline and truck, and has downstream pipeline connections to two terminals today, with potential for additional downstream connection opportunities in the future. The pipeline system has a current capacity of 90,000 barrels per day.

We plan to integrate the VEX Pipeline System into our Gulf Coast marketing business, which we expect will further strengthen our ability to provide excellent service to the producers in the region, as well as more effectively service our end-user markets along the Gulf Coast. In addition, the VEX Pipeline System complements our existing storage terminal and dock at the Port of Victoria, where we now control 450,000 barrels of storage with three docks after giving effect to the acquisition.

See Note 15 in the Notes to Unaudited Condensed Consolidated Financial Statements for further information.

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Results of Operations

Marketing

Our crude oil marketing segment revenues, operating (losses) earnings and selected costs were as follows for the periods indicated (in thousands):

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2020		2019		Change (1)		2020		2019		Change (1)
Revenues	$	245,184	$	434,609	(44	%)	$	722,546	$	1,331,410	(46	%)
Operating (losses) earnings (2)	5,869		2,888		103	%	(4,952)		10,948		(145	%)
Depreciation and amortization	1,836		2,214		(17	%)	5,700		6,640		(14	%)
Driver compensation	4,579		5,728		(20	%)	13,961		17,439		(20	%)
Insurance	553		2,104		(74	%)	5,193		6,336		(18	%)
Fuel	1,372		2,154		(36	%)	4,538		6,952		(35	%)

_______________

(1)Represents the percentage increase (decrease) from the prior year period.

(2)Operating (losses) earnings included inventory valuation losses of $12 thousand and $2.1 million for the three months ended September 30, 2020 and 2019, respectively. For the nine months ended September 30, 2020 and 2019, operating (losses) earnings included inventory valuation losses of $18.2 million and inventory liquidation gains of $1.5 million, respectively, as discussed further below.

Volume and price information were as follows for the periods indicated:

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2020		2019		2020		2019
Field level purchase volumes – per day (1)
Crude oil – barrels	90,896		105,801		93,762		106,965
Average purchase price
Crude oil – per barrel	$	37.12	$	55.84	$	36.38	$	56.61

_______________

(1)Reflects the volume purchased from third parties at the field level of operations.

Three Months Ended September 30, 2020 vs. Three Months Ended September 30, 2019. Crude oil marketing revenues decreased by $189.4 million during the three months ended September 30, 2020 as compared to the three months ended September 30, 2019, primarily as a result of a decrease in the market price of crude oil, which decreased revenues by approximately $149.2 million, and lower overall crude oil volumes, which decreased revenues by approximately $40.2 million. The average crude oil price received was $55.84 during the three months ended September 30, 2019, which decreased to $37.12 during the three months ended September 30, 2020. The decrease in the market price of crude oil and the lower crude oil volumes produced and available for purchase were due to the effects of the COVID-19 outbreak and the delay of OPEC to agree on crude oil production levels during the second quarter, both of which resulted in market disruptions that decreased the demand for and price of crude oil during the three months ended September 30, 2020.

Our crude oil marketing operating earnings for the three months ended September 30, 2020 increased by $3.0 million, primarily due to inventory valuation changes (as shown in the table below) and lower insurance, fuel and driver compensation costs, partially offset by lower crude oil prices and volumes.

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Driver compensation decreased by $1.1 million during the three months ended September 30, 2020 as compared to the same period in 2019, primarily as a result of a decrease in the number of drivers required for volumes transported in the 2020 period as compared to the 2019 period.

Insurance costs decreased by $1.6 million during the three months ended September 30, 2020 as compared to the same period in 2019, primarily due to favorable adjustments to reserves for insurance claims resulting from our favorable safety record over the policy period, a lower driver count and lower miles driven in the 2020 period. Fuel costs decreased by $0.8 million during the three months ended September 30, 2020 as compared to the same period in 2019, consistent with a lower driver count and lower miles driven in the current period.

Depreciation and amortization expense decreased by $0.4 million during the three months ended September 30, 2020 as compared to the same period in 2019, primarily due to the timing of purchases and retirements of tractors and other field equipment during 2019 and 2020.

Nine Months Ended September 30, 2020 vs. Nine Months Ended September 30, 2019. Crude oil marketing revenues decreased by $608.9 million during the nine months ended September 30, 2020 as compared to the nine months ended September 30, 2019, primarily as a result of a decrease in the market price of crude oil, which decreased revenues by approximately $510.2 million, and lower overall crude oil volumes, which decreased revenues by approximately $98.7 million. The average crude oil price received was $56.61 during the nine months ended September 30, 2019, which decreased to $36.38 during the nine months ended September 30, 2020. The decrease in the market price of crude oil and the lower crude oil volumes produced and available for purchase were due to the effects of the COVID-19 outbreak and the delay of OPEC to agree on crude oil production levels during the second quarter, both of which resulted in market disruptions that decreased the demand for and price of crude oil.

Our crude oil marketing operating (losses) earnings for the nine months ended September 30, 2020 decreased by $15.9 million, from earnings of $10.9 million during the 2019 period to a loss of $5.0 million in the 2020 period, primarily due to inventory valuation changes (as shown in the table below) and lower revenues due to lower crude oil prices and volumes, partially offset by lower insurance, fuel and driver compensation costs.

Driver compensation decreased by $3.5 million during the nine months ended September 30, 2020 as compared to the same period in 2019, primarily as a result of a decrease in the number of drivers required for volumes transported in the 2020 period as compared to the 2019 period.

Insurance costs decreased by $1.1 million during the nine months ended September 30, 2020 as compared to the same period in 2019, primarily due to favorable adjustments to reserves for insurance claims resulting from our favorable safety record over the policy period, lower hours worked by drivers and lower miles driven in the 2020 period. Fuel costs decreased by $2.4 million during the nine months ended September 30, 2020 as compared to the same period in 2019, consistent with the lower driver count and lower miles driven in the current period.

Depreciation and amortization expense decreased by $0.9 million during the nine months ended September 30, 2020 as compared to the same period in 2019, primarily due to the timing of purchases and retirements of tractors and other field equipment during 2019 and 2020.

Field Level Operating Earnings (Non-GAAP Financial Measure). Inventory valuations and forward commodity contract (derivatives or mark-to-market) valuations are two significant factors affecting comparative crude oil marketing segment operating (losses) earnings. As a purchaser and shipper of crude oil, we hold inventory in storage tanks and third-party pipelines. During periods of increasing crude oil prices, we recognize inventory liquidation gains while during periods of falling prices, we recognize inventory liquidation and valuation losses.

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Crude oil marketing operating (losses) earnings can be affected by the valuations of our forward month commodity contracts (derivative instruments). These non-cash valuations are calculated and recorded at each period end based on the underlying data existing as of such date. We generally enter into these derivative contracts as part of a pricing strategy based on crude oil purchases at the wellhead (field level). The valuation of derivative instruments at period end requires the recognition of non-cash “mark-to-market” gains and losses.

The impact of inventory liquidations and derivative valuations on our crude oil marketing segment operating (losses) earnings is summarized in the following reconciliation of our non-GAAP financial measure for the periods indicated (in thousands):

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2020		2019		2020		2019
As reported segment operating (losses) earnings (1)	$	5,869	$	2,888	$	(4,952)	$	10,948
Add (subtract):
Inventory liquidation gains	—		—		—		(1,459)
Inventory valuation losses	12		2,051		18,196		—
Derivative valuation (gains) losses	9		1		(3)		21
Field level operating earnings (2)	$	5,890	$	4,940	$	13,241	$	9,510

_______________

(1)Our crude oil marketing segment’s operating (losses) earnings included inventory valuation losses of $12 thousand and $2.1 million for the three months ended September 30, 2020 and 2019, respectively. For the nine months ended September 30, 2020 and 2019, operating (losses) earnings included inventory valuation losses of $18.2 million and inventory liquidation gains of $1.5 million, respectively.

(2)The use of field level operating earnings is unique to us, not a substitute for a GAAP measure and may not be comparable to any similar measures developed by industry participants. We utilize this data to evaluate the profitability of our operations.

Field level operating earnings and field level purchase volumes depict our day-to-day operation of acquiring crude oil at the wellhead, transporting the product and delivering the product to market sales point. Field level operating earnings increased during the three months ended September 30, 2020 as compared to the same period in 2019 primarily due to lower insurance, fuel and driver compensation costs, partially offset by lower revenues resulting from lower crude oil margins and volumes. Field level operating earnings increased during the nine months ended September 30, 2020 as compared to the same period in 2019 primarily due to lower insurance, fuel and driver compensation costs, partially offset by lower crude oil margins and volumes.

We held crude oil inventory at a weighted average composite price as follows at the dates indicated (in barrels):

	September 30, 2020			December 31, 2019
		Average			Average
	Barrels	Price		Barrels	Price
Crude oil inventory	411,380	$	38.75	426,397	$	61.93

Prices received for crude oil have been volatile and unpredictable with price volatility expected to continue. See “Recent Developments and Outlook” above, “Part II, Item 1A. Risk Factors” of this Quarterly Report on Form 10-Q and “Part I, Item 1A. Risk Factors” in our 2019 Form 10-K.

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Transportation

Our transportation segment revenues, operating earnings and selected costs were as follows for the periods indicated (in thousands):

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2020		2019		Change (1)		2020		2019		Change (1)
Revenues	$	21,720	$	15,698	38	%	$	50,121	$	48,498	3	%
Operating earnings	$	1,592	$	154	934	%	$	1,033	$	1,970	(48	%)
Depreciation and amortization	$	3,023	$	2,179	39	%	$	7,910	$	5,626	41	%
Driver commissions	$	4,069	$	2,588	57	%	$	8,627	$	8,352	3	%
Insurance	$	1,711	$	1,379	24	%	$	4,797	$	4,557	5	%
Fuel	$	1,599	$	1,454	10	%	$	3,486	$	4,934	(29	%)
Maintenance expense	$	1,295	$	981	32	%	$	2,746	$	3,072	(11	%)
Mileage (000s)	7,625		5,152		48	%	16,755		15,866		6	%

_______________

(1)Represents the percentage increase (decrease) from the prior year period.

Our revenue rate structure includes a component for fuel costs in which fuel cost fluctuations are largely passed through to the customer. Revenues, net of fuel cost, were as follows for the periods indicated (in thousands):

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2020		2019		2020		2019
Total transportation revenue	$	21,720	$	15,698	$	50,121	$	48,498
Diesel fuel cost	(1,599)		(1,454)		(3,486)		(4,934)
Revenues, net of fuel cost (1)	$	20,121	$	14,244	$	46,635	$	43,564

_______________

(1) Revenues, net of fuel cost, is a non-GAAP financial measure and is utilized for internal analysis of the results of our transportation segment.

Three Months Ended September 30, 2020 vs. Three Months Ended September 30, 2019. Transportation revenues increased by $6.0 million during the three months ended September 30, 2020 as compared to the three months ended September 30, 2019, primarily as a result increased revenues resulting from the CTL acquisition in June 2020, partially offset by a decrease in business activities of our customers as a result of the COVID-19 outbreak. On June 26, 2020, we completed the acquisition of the transportation assets of CTL, which added new customers and new product lines to our portfolio. We hired approximately 140 additional drivers in connection with this acquisition. Revenues, net of fuel cost, increased by $5.9 million during the three months ended September 30, 2020, primarily as a result of the higher transportation revenues and increased miles traveled during the 2020 period as a result of the CTL acquisition.

As a result of the COVID-19 outbreak, our transportation operations declined primarily during April and May 2020, after having remained steady through March 2020. During the first quarter of 2020, we transported products in higher demand, including bleach, disinfectant, soap and other similar products, which had offset decreased transportation demand for certain other products that we transported. However, during the second quarter of 2020, we experienced a significant decline in transportation operations. During the third quarter of 2020, we experienced an increase in transportation operations, as well as the additional revenues related to the CTL acquisition. As a result, revenues, net of fuel cost, increased by $5.9 million during the three months ended September 30, 2020, primarily as a result of increased miles traveled during the 2020 period.

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Our transportation operating earnings for the three months ended September 30, 2020 increased by $1.4 million as compared to the same period in 2019, primarily due to higher revenues resulting from increased miles traveled primarily as a result of the CTL acquisition, partially offset by higher depreciation and amortization expense related to new assets placed into service and higher insurance, fuel costs, maintenance expense and other operating expenses.

Fuel costs increased by $0.1 million during the three months ended September 30, 2020 as compared to the three months ended September 30, 2019, primarily as a result of the CTL acquisition, which increased the number of miles traveled during the 2020 period. Insurance costs increased by $0.3 million during the three months ended September 30, 2020 as compared to the same period in 2019, primarily due to the CTL acquisition which resulted in a higher driver count and increased miles driven in the 2020 period. Depreciation and amortization expense increased by $0.8 million during the three months ended September 30, 2020 as compared to the same period in 2019, primarily as a result of the CTL asset acquisition in June 2020 and the purchase of new tractors and trailers in 2019.

Nine Months Ended September 30, 2020 vs. Nine Months Ended September 30, 2019. Transportation revenues increased by $1.6 million during the nine months ended September 30, 2020 as compared to the nine months ended September 30, 2019, primarily as a result of the CTL acquisition in June 2020 and the previously announced acquisition of assets of a transportation company (the “EH Transport acquisition”) in May 2019, partially offset by a decrease in certain business activities of our customers as a result of the COVID-19 outbreak resulting in lower miles traveled. Revenues, net of fuel cost, increased by $3.1 million during the nine months ended September 30, 2020, primarily as a result of the higher transportation revenues and increased miles traveled during the 2020 period.

Our transportation operating earnings for the nine months ended September 30, 2020 decreased by $0.9 million as compared to the same period in 2019, primarily due to higher depreciation and amortization expense related to the CTL acquisition, the EH Transport acquisition and new assets placed into service, and higher insurance and other operating expenses, partially offset by higher revenues and increased miles traveled during the 2020 period.

Fuel costs decreased by $1.4 million during the nine months ended September 30, 2020 as compared to the nine months ended September 30, 2019, primarily as a result of lower miles traveled during the first six months of 2020, partially offset by an increase in the number of miles traveled as a result of the CTL asset acquisition in June 2020. Insurance costs increased by $0.2 million during the nine months ended September 30, 2020 as compared to the same period in 2019, primarily due to the CTL acquisition which resulted in a higher driver count and increased miles driven in the 2020 period. Depreciation and amortization expense increased by $2.3 million during the nine months ended September 30, 2020 as compared to the same period in 2019, primarily as a result of the CTL asset acquisition in June 2020, the EH Transport acquisition during the second quarter of 2019 and the purchase of new tractors and trailers in 2019.

General and Administrative Expense

General and administrative expense decreased by $1.3 million during the three months ended September 30, 2020 as compared to the same period in 2019, primarily due to lower insurance costs due to insurance premium true-ups and lower salaries and wages and outside service costs, partially offset by higher audit fees, office rental costs due to true-ups related to common area maintenance and legal fees.

General and administrative expense decreased by $1.0 million during the nine months ended September 30, 2020 as compared to the same period in 2019, primarily due to lower insurance costs due to insurance premium true-ups and lower audit fees, partially offset by higher salaries and wages, office rental costs due to true-ups related to common area maintenance and legal fees.

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Gain on Dissolution of Investment

During the nine months ended September 30, 2019, we received a cash payment from Adams Resources Exploration Corporation (“AREC”) totaling approximately $1.0 million, related to the final settlement of its bankruptcy and dissolution. AREC had been one of our wholly owned subsidiaries, until its bankruptcy filing in April 2017. Of the amount received, approximately $0.4 million was offset against a receivable that had been set up as of December 31, 2018 and $0.6 million was recorded as a gain in our unaudited condensed consolidated financial statements during the nine months ended September 30, 2019.

Income Taxes

Provision for (benefit from) income taxes is based upon federal and state tax rates, and variations in amounts are consistent with taxable income (loss) in the respective accounting periods.

On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”) was enacted and signed into law in response to the COVID-19 pandemic. The CARES Act, among other things, permits net operating losses (“NOL”) incurred in tax years 2018, 2019 and 2020 to offset 100 percent of taxable income and be carried back to each of the five preceding taxable years to generate a refund of previously paid income taxes.

We are continuing to evaluate the full impact of the CARES Act. However, we have determined that the NOL carryback provision in the CARES Act would result in a cash benefit to us for the fiscal years 2018 and 2019. We carried back our NOL for fiscal year 2018 to 2013, and in June 2020, we received a cash refund of approximately $2.7 million. We have an income tax receivable at September 30, 2020 of approximately $3.7 million for the benefit of carrying back the NOL for the fiscal year 2019 to 2014. We are forecasting an NOL for fiscal year 2020 and expect to carry it back to previous years. As a result, we have also included the 2020 provisional amounts in income tax receivable at September 30, 2020. As we are carrying the losses back to years beginning before January 1, 2018, the receivables were recorded at the previous 35 percent federal tax rate rather than the current statutory rate of 21 percent.

Liquidity and Capital Resources

Liquidity

Our liquidity is from our cash balance and net cash provided by operating activities and is therefore dependent on the success of future operations. If our cash inflow subsides or turns negative, we will evaluate our investment plan accordingly and remain flexible.

At September 30, 2020 and December 31, 2019, we had no bank debt or other forms of debenture obligations. We maintain cash balances in order to meet the timing of day-to-day cash needs. Cash and cash equivalents (excluding restricted cash) and working capital, the excess of current assets over current liabilities, were as follows at the dates indicated (in thousands):

	September 30,		December 31,
	2020		2019
Cash and cash equivalents	$	53,106	$	112,994
Working capital	84,147		87,747

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Although our cash balance at September 30, 2020 decreased by 53 percent from December 31, 2019, as discussed further below, we believe current cash balances, together with expected cash generated from future operations, and the ease of financing truck and trailer additions through leasing arrangements (should the need arise) will be sufficient to meet our short-term and long-term liquidity needs. During June 2020, we made a cash payment of approximately $9.2 million, including acquisition costs, for the acquisition of CTL transportation assets. In October 2020, we also made a cash payment of approximately $10.0 million for the acquisition of a pipeline and related terminal facilities (see Note 15 in the Notes to Unaudited Condensed Consolidated Financial Statements for further information). In addition, we have significantly curtailed our capital spending as a result of the current business environment. We are currently evaluating other long-term financing options in the event the need arises.

We utilize cash from operations to make discretionary investments in our crude oil marketing and transportation businesses. With the exception of operating and finance lease commitments primarily associated with storage tank terminal arrangements, leased office space, tractors and trailers, our future commitments and planned investments can be readily curtailed if operating cash flows decrease. See “Other Items” below for information regarding our operating and finance lease obligations.

The most significant item affecting future increases or decreases in liquidity is earnings from operations, and these earnings are dependent on the success of future operations. See “Part II, Item 1A. Risk Factors” of this Quarterly Report on Form 10-Q and “Part I, Item 1A. Risk Factors” in our 2019 Form 10-K.

Cash Flows from Operating, Investing and Financing Activities

Our consolidated cash flows from operating, investing and financing activities were as follows for the periods indicated (in thousands):

	Nine Months Ended
	September 30,
	2020		2019
Cash provided by (used in):
Operating activities	$	(50,090)	$	43,142
Investing activities	(9,343)		(26,448)
Financing activities	(4,851)		(4,131)

Operating activities. Net cash flows used in operating activities was $50.1 million for the nine months ended September 30, 2020 compared to net cash flows provided by operating activities of $43.1 million for the nine months ended September 30, 2019. The decrease in net cash flows from operating activities of $93.2 million was primarily due to lower earnings in the current period and changes in our working capital accounts.

At various times each month, we may make cash prepayments and/or early payments in advance of the normal due date to certain suppliers of crude oil within our crude oil marketing operations. Crude oil supply prepayments are recouped and advanced from month to month as the suppliers deliver product to us. In addition, in order to secure crude oil supply, we may also “early pay” our suppliers in advance of the normal payment due date of the twentieth of the month following the month of production. These “early payments” reduce cash and accounts payable as of the balance sheet date. At September 30, 2020, we had no cash prepayments or early payments outstanding.

We also require certain customers to make similar early payments or to post cash collateral with us in order to support their purchases from us. Early payments and cash collateral received from customers increases cash and reduces accounts receivable as of the balance sheet date.

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Early payments received from customers were as follows at the dates indicated (in thousands):

	September 30,		December 31,
	2020		2019
Early payments received	$	—	$	54,108

We rely heavily on our ability to obtain open-line trade credit from our suppliers especially with respect to our crude oil marketing operations. During December 2019, we received several early payments from certain customers in our crude oil marketing operations, while during September 2020, we did not receive any early payments from customers. Our cash balance decreased by approximately $59.9 million as of September 30, 2020 relative to the year ended December 31, 2019 primarily as a result of the timing of the receipt of these early payments received during each period resulting from the decrease in crude oil marketing activities.

Investing activities. Net cash flows used in investing activities for the nine months ended September 30, 2020 decreased by $17.1 million when compared to the same period in 2019. This decrease was primarily due to a decrease of $21.8 million in capital spending for property and equipment (see following table) and an increase of $0.4 million in insurance and state collateral refunds, partially offset by an increase of $3.5 million in cash paid for asset acquisitions ($9.2 million was paid in June 2020 for the purchase of the CTL transportation assets while $5.6 million was paid in May 2019 for the purchase of the EH Transport assets — both in our transportation segment), the receipt in 2019 of $1.0 million in cash proceeds related to the final settlement of AREC’s bankruptcy and a decrease of $0.6 million in cash proceeds from the sales of assets.

Capital spending was as follows for the periods indicated (in thousands):

	Nine Months Ended
	September 30,
	2020		2019
Crude oil marketing (1)	$	2,734	$	6,896
Transportation (2)	332		18,529
Other (3)	523		—
Capital spending	$	3,589	$	25,425

_______________

(1)2020 amount primarily relates to the purchase of 16 tractors and other field equipment. 2019 amount primarily relates to the purchase of 28 tractors and other field equipment.

(2)2020 amount does not include approximately $9.2 million of capital spending related to the CTL asset acquisition. 2019 amount primarily relates to the purchase of 86 tractors, 46 trailers and other field equipment, and does not include approximately $5.6 million of capital spending related to the EH Transport asset acquisition.

(3)Amount relates to leasehold improvements at our corporate headquarters, which is not attributed to any of our reporting segments.

Financing activities. Cash used in financing activities for the nine months ended September 30, 2020 increased by $0.7 million when compared to the same period in 2019. The increase was primarily due to an increase of $0.5 million in principal repayments made for finance lease obligations for certain of our tractors, trailers and a tank storage and throughput arrangement. During the nine months ended September 30, 2020, we paid cash dividends of $0.72 per common share, or a total of $3.1 million, while during the nine months ended September 30, 2019, we paid a cash dividend of $0.70 per common share, or a total of $3.0 million. See “Other Items” below for further information regarding our finance leases.

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Other Items

Contractual Obligations

The following table summarizes our significant contractual obligations at September 30, 2020 (in thousands):

			Payments due by period
Contractual Obligations	Total		Less than 1 year		1-3 years		3-5 years		More than 5 years
Finance lease obligations (1)	$	6,913	$	2,725	$	3,279	$	687	$	222
Operating lease obligations (2)	9,223		2,451		3,971		2,291		510
Total contractual obligations	$	16,136	$	5,176	$	7,250	$	2,978	$	732

_______________

(1)Amounts represent our principal contractual commitments, including interest, outstanding under finance leases for certain tractors and tank storage and throughput arrangements in our crude oil marketing segment and for certain trailers in our transportation segment.

(2)Amounts represent rental obligations under non-cancelable operating leases and terminal arrangements with terms in excess of one year.

See Note 13 in the Notes to Unaudited Condensed Consolidated Financial Statements for further information regarding our finance and operating leases.

Off-Balance Sheet Arrangements

We have no off-balance sheet arrangements that have or are reasonably expected to have a material current or future effect on our financial position, results of operations or cash flows.

Recent Accounting Pronouncements    

For information regarding recent accounting pronouncements, see Note 2 in the Notes to Unaudited Condensed Consolidated Financial Statements.

Related Party Transactions

For more information regarding related party transactions, see Note 9 in the Notes to Unaudited Condensed Consolidated Financial Statements.

Critical Accounting Policies and Use of Estimates

A discussion of our critical accounting policies and estimates is included in our 2019 Form 10-K. Certain of these accounting policies require the use of estimates. There have been no material changes to our accounting policies since the disclosures provided in our 2019 Form 10-K, except as discussed in Note 2 and Note 6 in the Notes to Unaudited Condensed Consolidated Financial Statements in relation to Level 3 inputs used in the determination of fair value of intangible assets acquired.

Item 3. Quantitative and Qualitative Disclosures about Market Risk

There have been no material changes to our “Quantitative and Qualitative Disclosures about Market Risk” that have occurred since the disclosures provided in our 2019 Form 10-K.

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Item 4. Disclosure Controls and Procedures

As of the end of the period covered by this quarterly report, our management carried out an evaluation, with the participation of our Chief Executive Officer and Chief Financial Officer, of the effectiveness of our disclosure controls and procedures pursuant to Rule 13a-15 and 15d-15(e) of the Exchange Act. Based on this evaluation, as of the end of the period covered by this quarterly report, our Chief Executive Officer and our Chief Financial Officer concluded:

(i)that our disclosure controls and procedures are designed to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our principal executive and financial officers, as appropriate to allow for timely decisions regarding required disclosures; and

(ii)that our disclosure controls and procedures are effective.

Changes in Internal Control over Financial Reporting

There were no changes in our internal control over financial reporting (as defined in Rule 13a-15(f) and 15d-15(e) under the Exchange Act) during the fiscal quarter ended September 30, 2020, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II. OTHER INFORMATION

Item 1. Legal Proceedings

From time to time as incidental to our operations, we may become involved in various lawsuits and/or disputes. Primarily as an operator of an extensive trucking fleet, we are a party to motor vehicle accidents, worker compensation claims and other items of general liability as would be typical for the industry. We are presently unaware of any claims against us that are either outside the scope of insurance coverage or that may exceed the level of insurance coverage and could potentially represent a material adverse effect on our financial position or results of operations.

Item 1A. Risk Factors

In addition to the other information set forth in this Quarterly Report, you should carefully consider the risk factors and other cautionary statements described under the heading “Item 1A. Risk Factors” included in our 2019 Form 10-K and the risk factors and other cautionary statements contained in our other SEC filings, which could materially affect our businesses, financial condition or future results. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially adversely affect our business, financial condition or future results. Except as set forth below, there have been no material changes in our Risk Factors from those disclosed in Item 1A of our 2019 Form 10-K or our other SEC filings.

The ongoing COVID-19 pandemic and the recent OPEC price war could disrupt our operations and adversely impact our business and financial results.

The outbreak of COVID-19 has resulted in the implementation of significant governmental measures to control the spread of the virus, including quarantines, travel restrictions, business shutdowns and restrictions on non-essential activities in the United States and abroad. As a result, the global economy has been marked by significant slowdown and uncertainty, which has led to a precipitous decline in crude oil prices in response to demand concerns, further exacerbated by the OPEC price war during the first quarter of 2020 and global storage considerations. During the second quarter of 2020, while members of OPEC reached agreements to cut crude oil production,

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downward pressure on crude oil prices continues and could continue into the foreseeable future, due to concerns regarding an oversupply of crude oil inventories. As a result, prices of crude oil and other commodities continue to remain volatile.

The ongoing COVID-19 pandemic has caused a number of adverse economic effects, including government restrictions, changes in consumer behavior related to the economic slowdown, and disruption of historical supply and demand patterns, which have negatively affected our business and the businesses of our customers.

As a result, our crude oil marketing operations have declined, as low crude oil prices have negatively impacted production of crude oil, and demand for crude oil and other related products has significantly decreased. While we consider the lower crude oil prices and decrease in demand to be temporary, if the pandemic and decline in crude oil prices continue, they may have a material adverse on our results of future operations, financial position and liquidity in 2021. We are actively monitoring our financial condition, liquidity, operations, customers, industry and workforce. Although we cannot estimate the length or gravity of the impacts of these events at this time, if the pandemic and decline in oil prices continue, we expect that they will have an adverse effect on our results of future operations, financial position and liquidity.

Additionally, during the second quarter of 2020, we saw a significant decline in our overall transportation operations primarily due to the continuation of the governmental restrictions and the adverse economic effects. While we have seen signs that demand for transportation of products has begun to increase, such demand may decrease again in the future, particularly if governmental restrictions are renewed or reinstituted.

The implementation of governmental restrictions related to COVID-19 has not to date had a significant impact on our ability to deploy our workforce effectively, as the transportation industry has been deemed an essential service, but limitations or restrictions could be enacted in the future that would impact our operations. Additionally, we may also experience disruptions in our workforce related to COVID-19, which may negatively affect our revenues in 2020 and our overall liquidity.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

None.

Item 3. Defaults Upon Senior Securities

None.

Item 4. Mine Safety Disclosures

Not applicable.

Item 5. Other Information

None.

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Item 6. Exhibits

Exhibit
Number	Exhibit
3.1	Certificate of Incorporation of Adams Resources & Energy, Inc., as amended (incorporated by reference to Exhibit 3.1 to Form 10-K for the fiscal year ended December 31, 2019).
3.2	Bylaws of Adams Resources & Energy, Inc., as amended (incorporated by reference to Exhibit 3(b) to Form 10-K for the year ended December 31, 2012).
31.1*	Sarbanes-Oxley Section 302 certification of Executive Chairman pursuant to Exchange Act Rules 13a-14(a) and 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2*	Sarbanes-Oxley Section 302 certification of Chief Financial Officer pursuant to Exchange Act Rules 13a-14(a) and 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1*	Sarbanes-Oxley Section 906 certification of Executive Chairman pursuant to 18. U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2*	Sarbanes-Oxley Section 906 certification of Chief Financial Officer pursuant to 18. U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.CAL*	Inline XBRL Calculation Linkbase Document
101.DEF*	Inline XBRL Definition Linkbase Document
101.INS*	Inline XBRL Instance Document — the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.
101.LAB*	Inline XBRL Labels Linkbase Document
101.PRE*	Inline XBRL Presentation Linkbase Document
101.SCH*	Inline XBRL Schema Document
104*	Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101)

____________

*Filed or furnished (in the case of Exhibits 32.1 and 32.2) with this report.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

			ADAMS RESOURCES & ENERGY, INC.
			(Registrant)
Date:	November 5, 2020	By:	/s/ Kevin J. Roycraft
			Kevin J. Roycraft
			Chief Executive Officer
			(Principal Executive Officer)
		By:	/s/ Tracy E. Ohmart
			Tracy E. Ohmart
			Chief Financial Officer
			(Principal Financial Officer and Principal
			Accounting Officer)

43

EX-31.1

Exhibit 31.1

SARBANES-OXLEY SECTION 302 CERTIFICATION

I, Kevin J. Roycraft, certify that:

1.I have reviewed this quarterly report on Form 10-Q of Adams Resources & Energy, Inc.;

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)), for the registrant and have:

(a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c)Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d)Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent functions):

(a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date:	November 5, 2020	By:	/s/ Kevin J. Roycraft
			Kevin J. Roycraft
			Chief Executive Officer

EX-31.2

Exhibit 31.2

SARBANES-OXLEY SECTION 302 CERTIFICATION

I, Tracy E. Ohmart, certify that:

1.I have reviewed this quarterly report on Form 10-Q of Adams Resources & Energy, Inc.;

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)), for the registrant and have:

(a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c)Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d)Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent functions):

(a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date:	November 5, 2020	By:	/s/ Tracy E. Ohmart
			Tracy E. Ohmart
			Chief Financial Officer

EX-32.1

Exhibit 32.1

SARBANES-OXLEY SECTION 906 CERTIFICATION

CERTIFICATION OF KEVIN J. ROYCRAFT,

CHIEF EXECUTIVE OFFICER OF ADAMS RESOURCES & ENERGY, INC.

In connection with the quarterly report of Adams Resources & Energy, Inc. (the “Registrant”) on Form 10-Q for the quarterly period ended September 30, 2020, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Kevin J. Roycraft, Chief Executive Officer of the Registrant, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that, to my knowledge:

(1)The Report fully complies with the requirements of Section 13(a) of the Securities Exchange Act of 1934; and

(2)The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Registrant.

Date:	November 5, 2020	By:	/s/ Kevin J. Roycraft
			Kevin J. Roycraft
			Chief Executive Officer

EX-32.2

Exhibit 32.2

SARBANES-OXLEY SECTION 906 CERTIFICATION

CERTIFICATION OF TRACY E. OHMART,

CHIEF FINANCIAL OFFICER OF ADAMS RESOURCES & ENERGY, INC.

In connection with the quarterly report of Adams Resources & Energy, Inc. (the “Registrant”) on Form 10-Q for the quarterly period ended September 30, 2020, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Tracy E. Ohmart, Chief Financial Officer of the Registrant, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that, to my knowledge:

(1)The Report fully complies with the requirements of Section 13(a) of the Securities Exchange Act of 1934; and

(2)The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Registrant.

Date:	November 5, 2020	By:	/s/ Tracy E. Ohmart
			Tracy E. Ohmart
			Chief Financial Officer

XML

Cover Page - shares	9 Months Ended
	Sep. 30, 2020	Nov. 02, 2020
Cover [Abstract]
Document Type	10-Q
Document Quarterly Report	true
Document Period End Date	Sep. 30, 2020
Document Transition Report	false
Entity File Number	1-07908
Entity Registrant Name	ADAMS RESOURCES & ENERGY, INC.
Entity Incorporation, State or Country Code	DE
Entity Tax Identification Number	74-1753147
Entity Address, Address Line One	17 South Briar Hollow Lane
Entity Address, Address Line Two	Suite 100
Entity Address, City or Town	Houston
Entity Address, State or Province	TX
Entity Address, Postal Zip Code	77027
City Area Code	713
Local Phone Number	881-3600
Title of 12(b) Security	Common Stock, $0.10 Par Value
Trading Symbol	AE
Security Exchange Name	NYSEAMER
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Accelerated Filer
Entity Small Business	true
Entity Emerging Growth Company	false
Entity Shell Company	false
Entity Common Stock, Shares Outstanding		4,242,284
Document Fiscal Year Focus	2020
Entity Central Index Key	0000002178
Current Fiscal Year End Date	--12-31
Document Fiscal Period Focus	Q3
Amendment Flag	false

XML

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands	Sep. 30, 2020	Dec. 31, 2019
Current assets:
Cash and cash equivalents	$ 53,106	$ 112,994
Restricted cash	4,865	9,261
Accounts receivable, net of allowance for doubtful accounts of $- and $141, respectively	94,654	94,534
Inventory	15,942	26,407
Derivative assets	3	0
Income tax receivable	7,054	2,569
Prepayments and other current assets	1,417	1,559
Total current assets	177,041	247,324
Property and equipment, net	64,469	69,046
Operating lease right-of-use assets, net	8,453	9,576
Intangible assets, net	4,304	1,597
Cash deposits and other assets	2,193	3,299
Total assets	256,460	330,842
Current liabilities:
Accounts payable	76,407	147,851
Accounts payable – related party	158	5
Current portion of finance lease obligations	2,505	2,167
Current portion of operating lease liabilities	2,137	2,252
Other current liabilities	11,687	7,302
Total current liabilities	92,894	159,577
Other long-term liabilities:
Asset retirement obligations	1,610	1,573
Finance lease obligations	4,011	4,376
Operating lease liabilities	6,314	7,323
Deferred taxes and other liabilities	7,547	6,352
Total liabilities	112,376	179,201
Commitments and contingencies (Note 14)
Shareholders’ equity:
Preferred stock - $1.00 par value, 960,000 shares authorized, none outstanding	0	0
Common stock - $0.10 par value, 7,500,000 shares authorized, 4,235,750 and 4,235,533 shares outstanding, respectively	423	423
Contributed capital	13,150	12,778
Retained earnings	130,511	138,440
Total shareholders’ equity	144,084	151,641
Total liabilities and shareholders’ equity	$ 256,460	$ 330,842

XML

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Thousands	Sep. 30, 2020	Dec. 31, 2019
Current assets:
Allowance for doubtful accounts	$ 114	$ 141
Shareholders’ equity:
Preferred stock - par value (in dollars per share)	$ 1.00	$ 1.00
Preferred stock - shares authorized (in shares)	960,000	960,000
Preferred stock - shares outstanding (in shares)	0	0
Common stock - par value (in dollars per share)	$ 0.10	$ 0.10
Common stock - shares authorized (in shares)	7,500,000	7,500,000
Common stock - shares outstanding (in shares)	4,242,284	4,235,533

XML

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2020	Sep. 30, 2019	Sep. 30, 2020	Sep. 30, 2019
Revenues:
Total revenues	$ 266,904	$ 450,307	$ 772,667	$ 1,379,908
Costs and expenses:
General and administrative	1,405	2,739	7,030	8,005
Depreciation and amortization	4,859	4,393	13,610	12,266
Total costs and expenses	260,848	450,004	783,616	1,374,995
Operating (losses) earnings	6,056	303	(10,949)	4,913
Other income (expense):
Gain on dissolution of investment	0	0	0	573
Interest income	105	758	614	2,145
Interest expense	(70)	(242)	(288)	(424)
Total other income (expense), net	35	516	326	2,294
(Losses) Earnings before income taxes	6,091	819	(10,623)	7,207
Income tax benefit (provision)	(3,018)	(179)	5,772	(1,653)
Net (losses) earnings	$ 3,073	$ 640	$ (4,851)	$ 5,554
(Losses) Earnings per share:
Basic net (losses) earnings per common share (in dollars per share)	$ 0.72	$ 0.15	$ (1.14)	$ 1.31
Diluted net (losses) earnings per common share (in dollars per share)	0.72	0.15	(1.14)	1.31
Dividends per common share (in dollars per share)	$ 0.24	$ 0.24	$ 0.72	$ 0.70
Marketing
Revenues:
Total revenues	$ 245,184	$ 434,609	$ 722,546	$ 1,331,410
Costs and expenses:
Cost of goods and services sold	237,479	429,507	721,798	1,313,822
Transportation
Revenues:
Total revenues	21,720	15,698	50,121	48,498
Costs and expenses:
Cost of goods and services sold	$ 17,105	$ 13,365	$ 41,178	$ 40,902

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UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2020	Sep. 30, 2019
Operating activities:
Net (losses) earnings	$ (4,851)	$ 5,554
Adjustments to reconcile net losses earnings to net cash provided by (used in) operating activities:
Depreciation and amortization	13,610	12,266
Gains on sales of property	(985)	(1,386)
Provision for doubtful accounts	(27)	(36)
Stock-based compensation expense	453	352
Deferred income taxes	(1,503)	1,493
Net change in fair value contracts	(3)	20
Gain on dissolution of AREC	0	(573)
Changes in assets and liabilities:
Accounts receivable	(93)	8,520
Accounts receivable/payable, affiliates	153	(23)
Inventories	10,465	(2,121)
Income tax receivable	(1,782)	(135)
Prepayments and other current assets	142	166
Accounts payable	(70,082)	13,613
Accrued liabilities	4,396	4,561
Other	17	871
Net cash provided by (used in) operating activities	(50,090)	43,142
Investing activities:
Property and equipment additions	(3,589)	(25,425)
Asset acquisition	(9,163)	(5,624)
Proceeds from property sales	2,282	2,853
Proceeds from dissolution of AREC	0	998
Insurance and state collateral (deposits) refunds	1,127	750
Net cash used in investing activities	(9,343)	(26,448)
Financing activities:
Principal repayments of finance lease obligations	(1,677)	(1,171)
Payment of contingent consideration liability	(111)	0
Dividends paid on common stock	(3,063)	(2,960)
Net cash used in financing activities	(4,851)	(4,131)
(Decrease) Increase in cash and cash equivalents, including restricted cash	(64,284)	12,563
Cash and cash equivalents, including restricted cash, at beginning of period	122,255	117,066
Cash and cash equivalents, including restricted cash, at end of period	$ 57,971	$ 129,629

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UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY - USD ($) $ in Thousands	Total	Common Stock	Contributed Capital	Retained Earnings
Beginning balance at Dec. 31, 2018	$ 146,598	$ 422	$ 11,948	$ 134,228
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net (losses) earnings	4,908			4,908
Stock-based compensation expense	123		123
Dividends declared:
Common stock	(928)			(928)
Awards under LTIP	(2)			(2)
Ending balance at Mar. 31, 2019	150,699	422	12,071	138,206
Beginning balance at Dec. 31, 2018	146,598	422	11,948	134,228
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net (losses) earnings	5,554
Ending balance at Sep. 30, 2019	149,881	423	12,652	136,806
Beginning balance at Mar. 31, 2019	150,699	422	12,071	138,206
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net (losses) earnings	6			6
Stock-based compensation expense	74		74
Issuance of common shares for acquisition	392	1	391
Cancellation of shares withheld to cover taxes upon vesting of restricted awards	(39)		(39)
Dividends declared:
Common stock	(1,016)			(1,016)
Awards under LTIP	(8)			(8)
Ending balance at Jun. 30, 2019	150,108	423	12,497	137,188
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net (losses) earnings	640			640
Stock-based compensation expense	155		155
Dividends declared:
Common stock	(1,016)			(1,016)
Awards under LTIP	(6)			(6)
Ending balance at Sep. 30, 2019	149,881	423	12,652	136,806
Beginning balance at Dec. 31, 2019	151,641	423	12,778	138,440
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net (losses) earnings	(11,427)			(11,427)
Stock-based compensation expense	134		134
Dividends declared:
Common stock	(1,016)			(1,016)
Awards under LTIP	(6)			(6)
Ending balance at Mar. 31, 2020	139,326	423	12,912	125,991
Beginning balance at Dec. 31, 2019	151,641	423	12,778	138,440
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net (losses) earnings	(4,851)
Ending balance at Sep. 30, 2020	144,084	423	13,150	130,511
Beginning balance at Mar. 31, 2020	139,326	423	12,912	125,991
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net (losses) earnings	3,503			3,503
Stock-based compensation expense	170		170
Cancellation of shares withheld to cover taxes upon vesting of restricted awards	(81)		(81)
Dividends declared:
Common stock	(1,018)			(1,018)
Awards under LTIP	(10)			(10)
Ending balance at Jun. 30, 2020	141,890	423	13,001	128,466
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net (losses) earnings	3,073			3,073
Stock-based compensation expense	149		149
Dividends declared:
Common stock	(1,018)			(1,018)
Awards under LTIP	(10)			(10)
Ending balance at Sep. 30, 2020	$ 144,084	$ 423	$ 13,150	$ 130,511

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UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (Parenthetical) - $ / shares	3 Months Ended
	Sep. 30, 2020	Jun. 30, 2020	Mar. 31, 2020	Sep. 30, 2019	Jun. 30, 2019	Mar. 31, 2019
Statement of Stockholders' Equity [Abstract]
Dividends per common share (in dollars per share)	$ 0.24	$ 0.24	$ 0.24	$ 0.24	$ 0.24	$ 0.22
Awards under LTIP (in dollars per share)	$ 0.24	$ 0.24	$ 0.24	$ 0.24	$ 0.24	$ 0.22

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Organization and Basis of Presentation

9 Months Ended

Sep. 30, 2020

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Organization and Basis of Presentation

Organization and Basis of Presentation

Organization

Adams Resources & Energy, Inc. is a publicly traded Delaware corporation organized in 1973, the common shares of which are listed on the NYSE American LLC under the ticker symbol “AE”. Through our subsidiaries, we are primarily engaged in the business of crude oil marketing, transportation and storage in various crude oil and natural gas basins in the lower 48 states of the United States (“U.S.”). We also conduct tank truck transportation of liquid chemicals and dry bulk primarily in the lower 48 states of the U.S. with deliveries into Canada and Mexico, and with terminals in the Gulf Coast region of the U.S. Unless the context requires otherwise, references to “we,” “us,” “our” or “Company” are intended to mean the business and operations of Adams Resources & Energy, Inc. and its consolidated subsidiaries.  

We operate and report in two business segments: (i) crude oil marketing, transportation and storage, and (ii) tank truck transportation of liquid chemicals and dry bulk. See Note 8 for further information regarding our business segments.

Basis of Presentation

Our results of operations for the three and nine months ended September 30, 2020 are not necessarily indicative of results expected for the full year of 2020. In the opinion of management, the accompanying unaudited condensed consolidated financial statements reflect all adjustments consisting of normal recurring accruals necessary for fair presentation.  The condensed consolidated financial statements and the accompanying notes are prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) for interim financial statements and the rules of the U.S. Securities and Exchange Commission (“SEC”). Certain information and footnote disclosures required by GAAP for complete annual financial statements have been omitted and, therefore, these interim financial statements should be read in conjunction with our audited consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2019 (the “2019 Form 10-K”) filed with the SEC on March 6, 2020. All significant intercompany transactions and balances have been eliminated in consolidation.

Use of Estimates

The preparation of our financial statements in conformity with GAAP requires management to use estimates and assumptions that affect the reported amount of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. We base our estimates and judgments on historical experience and on various other assumptions and information we believe to be reasonable under the circumstances. Estimates and assumptions about future events and their effects cannot be perceived with certainty and, accordingly, these estimates may change as new events occur, as more experience is acquired, as additional information is obtained and as the operating environment changes. While we believe the estimates and assumptions used in the preparation of these condensed consolidated financial statements are appropriate, actual results could differ from those estimates.

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Summary of Significant Accounting Policies

9 Months Ended

Sep. 30, 2020

Accounting Policies [Abstract]

Summary of Significant Accounting Policies

Summary of Significant Accounting Policies

Cash, Cash Equivalents and Restricted Cash

Restricted cash represents an amount held in a segregated bank account by Wells Fargo as collateral for outstanding letters of credit.

The following table provides a reconciliation of cash and cash equivalents and restricted cash as reported in the unaudited condensed consolidated balance sheets that totals to the amounts shown in the unaudited condensed consolidated statements of cash flows at the dates indicated (in thousands):

	September 30,		December 31,
	2020		2019
Cash and cash equivalents	$	53,106	$	112,994
Restricted cash	4,865		9,261
Total cash, cash equivalents and restricted cash shown in the
unaudited condensed consolidated statements of cash flows	$	57,971	$	122,255

Common Shares Outstanding

The following table reconciles our outstanding common stock for the periods indicated:

	Common
	shares
Balance, January 1, 2020	4,235,533
Vesting of restricted stock unit awards	217
Balance, March 31, 2020	4,235,750
Vesting of restricted stock unit awards	8,641
Shares withheld to cover taxes upon vesting of restricted stock unit awards	(2,107)
Balance, June 30, 2020	4,242,284
No activity	—
Balance, September 30, 2020	4,242,284

Earnings Per Share

Basic earnings (losses) per share is computed by dividing our net earnings (losses) by the weighted average number of shares of common stock outstanding during the period. Diluted earnings (losses) per share is computed by giving effect to all potential shares of common stock outstanding, including our stock related to unvested restricted stock unit awards. Unvested restricted stock unit awards granted under the Adams Resources & Energy, Inc. 2018 Long-Term Incentive Plan (“2018 LTIP”) are not considered to be participating securities as the holders of these shares do not have non-forfeitable dividend rights in the event of our declaration of a dividend for common shares (see Note 11 for further discussion).

A reconciliation of the calculation of basic and diluted (losses) earnings per share was as follows for the periods indicated (in thousands, except per share data):

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2020		2019		2020		2019
Earnings (losses) per share — numerator:
Net (losses) earnings	$	3,073	$	640	$	(4,851)	$	5,554
Denominator:
Basic weighted average number of shares outstanding	4,242		4,234		4,239		4,226
Basic (losses) earnings per share	$	0.72	$	0.15	$	(1.14)	$	1.31
Diluted (losses) earnings per share:
Diluted weighted average number of shares outstanding:
Common shares	4,242		4,234		4,239		4,226
Restricted stock unit awards (1)	9		3		—		4
Performance share unit awards (1) (2)	2		1		—		—
Total diluted shares	4,253		4,238		4,239		4,230
Diluted (losses) earnings per share	$	0.72	$	0.15	$	(1.14)	$	1.31

_______________

(1)For the nine months ended September 30, 2020, the effect of the restricted stock unit awards and the performance share awards on losses per share is anti-dilutive.

(2)The dilutive effect of performance share awards are included in the calculation of diluted earnings per share when the performance share award performance conditions have been achieved. For the nine months ended September 30, 2019, the effect of the performance share awards on earnings per share is anti-dilutive.

Fair Value Measurements

The carrying amounts reported in the unaudited condensed consolidated balance sheets for cash and cash equivalents, accounts receivable and accounts payable approximates fair value because of the immediate or short-term maturity of these financial instruments. Marketable securities are recorded at fair value based on market quotations from actively traded liquid markets.

A three-tier hierarchy has been established that classifies fair value amounts recognized in the financial statements based on the observability of inputs used to estimate these fair values.  The hierarchy considers fair value amounts based on observable inputs (Levels 1 and 2) to be more reliable and predictable than those based primarily on unobservable inputs (Level 3).  At each balance sheet reporting date, we categorize our financial assets and liabilities using this hierarchy.

See Note 6 for a discussion of the Level 3 inputs used in the determination of the fair value of the intangible assets acquired in an asset acquisition that occurred in June 2020.

Fair value contracts consist of derivative financial instruments and are recorded as either an asset or liability measured at its fair value. Changes in fair value are recognized immediately in earnings unless the derivatives qualify for, and we elect, cash flow hedge accounting. We had no contracts designated for hedge accounting during any current reporting periods (see Note 10 for further information).

Income Taxes

Income taxes are accounted for using the asset and liability method. Under this approach, deferred tax assets and liabilities are recognized based on anticipated future tax consequences attributable to differences between financial statement carrying amounts of these items and their respective tax basis.

On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”) was enacted and signed into law in response to the COVID-19 pandemic. The CARES Act, among other things, permits net operating losses (“NOL”) incurred in tax years 2018, 2019 and 2020 to offset 100 percent of taxable income and be carried back to each of the five preceding taxable years to generate a refund of previously paid income taxes.

We are continuing to evaluate the full impact of the CARES Act. However, we have determined that the NOL carryback provision in the CARES Act would result in a cash benefit to us for the fiscal years 2018 and 2019. We carried back our NOL for fiscal year 2018 to 2013, and in June 2020, we received a cash refund of approximately $2.7 million. We have an income tax receivable at September 30, 2020 of approximately $3.7 million for the benefit of carrying back the NOL for the fiscal year 2019 to 2014. We are forecasting an NOL for fiscal year 2020 and expect to carry it back to previous years. As a result, we have also included the 2020 provisional amounts in income tax receivable at September 30, 2020. As we are carrying the losses back to years beginning before January 1, 2018, the receivables were recorded at the previous 35 percent federal tax rate rather than the current statutory rate of 21 percent.

Inventory

Inventory consists of crude oil held in storage tanks and at third-party pipelines as part of our crude oil marketing operations. Crude oil inventory is carried at the lower of cost or net realizable value. At the end of each reporting period, we assess the carrying value of our inventory and make adjustments necessary to reduce the carrying value to the applicable net realizable value. Any resulting adjustments are a component of marketing costs and expenses on our consolidated statements of operations. During the nine months ended September 30, 2020, we recorded a write-down of $18.2 million of our crude oil inventory due to significant declines in prices in 2020.

Property and Equipment

Property and equipment is recorded at cost. Expenditures for additions, improvements and other enhancements to property and equipment are capitalized, and minor replacements, maintenance and repairs that do not extend asset life or add value are charged to expense as incurred. When property and equipment assets are retired or otherwise disposed of, the related cost and accumulated depreciation is removed from the accounts and any resulting gain or loss is included in results of operations in operating costs and expenses for the respective period. Property and equipment, except for land, is depreciated using the straight-line method over the estimated average useful lives ranging from two to thirty-nine years.

We review our long-lived assets for impairment whenever there is evidence that the carrying value of these assets may not be recoverable. Any impairment recognized is permanent and may not be restored. Property and equipment is reviewed at the lowest level of identifiable cash flows. For property and equipment requiring impairment, the fair value is estimated based on an internal discounted cash flow model of future cash flows.

See Note 5 for additional information regarding our property and equipment.

Recent Accounting Pronouncements

In December 2019, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes (“ASU 2019-12”). This new standard eliminates certain exceptions in Accounting Standards Codification (“ASC”) 740 related to the approach for intraperiod tax allocation, the methodology for calculating income taxes in an interim period, and the recognition of deferred tax liabilities for outside basis differences. It also clarifies and simplifies other aspects of the accounting for income taxes. ASU 2019-12 is effective for fiscal years, and interim periods within those years, beginning after December 15, 2020, with early adoption permitted in any interim period within that year.

We elected to early adopt this standard during the period ended June 30, 2020, and most amendments within the standard were required to be applied on a prospective basis as of January 1, 2020, while certain amendments were applied on a retrospective or modified retrospective basis. The most significant impact to us is the removal of a limit on the tax benefit recognized on pre-tax losses in interim periods, which was required to be applied on a prospective basis. As a result of our adoption of ASU 2019-12, we calculated our quarterly income tax benefits based on ordinary losses incurred during the first, second and third quarters of 2020, no longer limiting the computed benefit if it exceeds the amount of benefit that would be recognized if the year-to-date ordinary loss were the anticipated ordinary loss for the full fiscal year.

Stock-Based Compensation

We measure all share-based payments, including the issuance of restricted stock units and performance share units to employees and board members, using a fair-value based method. The cost of services received from employees and non-employee board members in exchange for awards of equity instruments is recognized in the consolidated statements of operations based on the estimated fair value of those awards on the grant date and amortized on a straight-line basis over the requisite service period. The fair value of restricted stock unit awards and performance share unit awards is based on the closing price of our common stock on the grant date. We account for forfeitures as they occur. See Note 11 for additional information regarding our 2018 LTIP.

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Revenue Recognition

9 Months Ended

Sep. 30, 2020

Revenue from Contract with Customer [Abstract]

Revenue Recognition

Revenue Recognition

Revenue Disaggregation

The following table disaggregates our revenue by segment and by major source for the periods indicated (in thousands):

	Reporting Segments
	Marketing		Transportation		Total
Three Months Ended September 30, 2020
Revenues from contracts with customers	$	242,267	$	21,720	$	263,987
Other (1)	2,917		—		2,917
Total revenues	$	245,184	$	21,720	$	266,904
Timing of revenue recognition:
Goods transferred at a point in time	$	242,267	$	—	$	242,267
Services transferred over time	—		21,720		21,720
Total revenues from contracts with customers	$	242,267	$	21,720	$	263,987
Three Months Ended September 30, 2019
Revenues from contracts with customers	$	396,001	$	15,698	$	411,699
Other (1)	38,608		—		38,608
Total revenues	$	434,609	$	15,698	$	450,307
Timing of revenue recognition:
Goods transferred at a point in time	$	396,001	$	—	$	396,001
Services transferred over time	—		15,698		15,698
Total revenues from contracts with customers	$	396,001	$	15,698	$	411,699
Nine Months Ended September 30, 2020
Revenues from contracts with customers	$	693,513	$	50,121	$	743,634
Other (1)	29,033		—		29,033
Total revenues	$	722,546	$	50,121	$	772,667
Timing of revenue recognition:
Goods transferred at a point in time	$	693,513	$	—	$	693,513
Services transferred over time	—		50,121		50,121
Total revenues from contracts with customers	$	693,513	$	50,121	$	743,634
Nine Months Ended September 30, 2019
Revenues from contracts with customers	$	1,147,139	$	48,498	$	1,195,637
Other (1)	184,271		—		184,271
Total revenues	$	1,331,410	$	48,498	$	1,379,908
Timing of revenue recognition:
Goods transferred at a point in time	$	1,147,139	$	—	$	1,147,139
Services transferred over time	—		48,498		48,498
Total revenues from contracts with customers	$	1,147,139	$	48,498	$	1,195,637

_______________

(1)Other marketing revenues are recognized under ASC 815, Derivatives and Hedging, and ASC 845, Nonmonetary Transactions – Purchases and Sales of Inventory with the Same Counterparty.

Other Crude Oil Marketing Revenue

Certain of the commodity purchase and sale contracts utilized by our crude oil marketing business qualify as derivative instruments with certain specifically identified contracts also designated as trading activity. From the time of contract origination, these contracts are marked-to-market and recorded on a net revenue basis in the accompanying consolidated financial statements.

Certain of our crude oil contracts may be with a single counterparty to provide for similar quantities of crude oil to be bought and sold at different locations. These contracts are entered into for a variety of reasons, including effecting the transportation of the commodity, to minimize credit exposure, and/or to meet the competitive demands of the customer. These buy/sell arrangements are reflected on a net revenue basis in the accompanying consolidated financial statements.

Reporting these crude oil contracts on a gross revenue basis would increase our reported revenues as follows for the periods indicated (in thousands):

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2020		2019		2020		2019
Revenue gross-up	$	97,566	$	193,440	$	315,049	$	658,606

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Prepayments and Other Current Assets

9 Months Ended

Sep. 30, 2020

Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract]

Prepayments and Other Current Assets

Prepayments and Other Current Assets

The components of prepayments and other current assets were as follows at the dates indicated (in thousands):

	September 30,		December 31,
	2020		2019
Insurance premiums	$	153	$	473
Rents, licenses and other	1,264		1,086
Total prepayments and other current assets	$	1,417	$	1,559

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Property and Equipment

9 Months Ended

Sep. 30, 2020

Property, Plant and Equipment [Abstract]

Property and Equipment

Property and Equipment

The historical costs of our property and equipment and related accumulated depreciation balances were as follows at the dates indicated (in thousands):

	Estimated
	Useful Life	September 30,		December 31,
	in Years	2020		2019
Tractors and trailers (1)	5 – 6	$	115,809	$	115,693
Field equipment (2)	2 – 5	25,152		25,094
Buildings	5 – 39	14,939		16,055
Office equipment	2 – 5	1,893		1,951
Land		1,790		1,790
Construction in progress		606		3,661
Total		160,189		164,244
Less accumulated depreciation		(95,720)		(95,198)
Property and equipment, net		$	64,469	$	69,046

_______________

(1)Amounts include tractors in our crude oil marketing segment and trailers in our transportation segment held under finance leases. At September 30, 2020 and December 31, 2019, gross property and equipment associated with these assets held under finance leases were $7.2 million and $5.5 million, respectively. Accumulated amortization associated with these assets held under these finance leases were $2.6 million and $1.7 million at September 30, 2020 and December 31, 2019, respectively (see Note 13 for further information).

(2)Amounts include a tank storage and throughput arrangement in our crude oil marketing segment held under a finance lease. At September 30, 2020 and December 31, 2019, gross property and equipment associated with these assets held under a finance lease were $3.3 million and $3.3 million, respectively. Accumulated amortization associated with these assets held under a finance lease was $1.6 million and $0.7 million at September 30, 2020 and December 31, 2019, respectively (see Note 13 for further information).

Components of depreciation and amortization expense were as follows for the periods indicated (in thousands):

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2020		2019		2020		2019
Depreciation and amortization, excluding amounts under finance leases	$	4,237	$	3,840	$	11,882	$	11,012
Amortization of property and equipment under finance leases	622		553		1,728		1,254
Total depreciation and amortization	$	4,859	$	4,393	$	13,610	$	12,266

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Acquisition

9 Months Ended

Sep. 30, 2020

Asset Acquisition [Abstract]

Acquisition

Acquisition

On May 17, 2020, we entered into a purchase and sale agreement with Comcar Industries, Inc. (“Comcar”), a bulk carrier trucking company, for the purchase of substantially all of the transportation assets of Comcar’s subsidiary, CTL Transportation, LLC (“CTL”). CTL provides delivery services to customers in the chemical industry, with operations in nine locations in the southeastern United States. On June 26, 2020, we closed on the asset acquisition for approximately $9.0 million in cash. This acquisition added approximately 163 tractors and 328 trailers to our existing transportation fleet, and these assets were included in our transportation segment. This acquisition added new customers, new market areas and new product lines to our transportation segment portfolio. As a result of the acquisition, we added services to new and existing customers in six new market areas, including new terminals in Louisiana, Missouri, Ohio, Georgia and Florida.

We also incurred approximately $0.1 million of acquisition costs in connection with this acquisition, which has been included in the allocation of the total purchase price of $9.2 million to the assets acquired.

The following table summarizes the estimated fair value of the assets acquired at the acquisition date (in thousands):

Property and equipment — tractors and trailers	$	5,901
Materials and supplies	87
Intangible assets — customer relationships	3,175
Total purchase price	$	9,163

The estimated fair value of the acquired property and equipment was determined using the estimated market value of each type of asset. The estimated fair value of the acquired customer relationship intangible assets was determined using an income approach, specifically a discounted cash flow analysis. The income approach estimates the future benefits of the customer relationships and deducts the expenses incurred in servicing the relationships and the contributions from the other business assets to derive the future net benefits of these assets. The future net benefits are discounted back to present value using the appropriate discount rate, which results in the value of the customer relationships.

A customer relationship intangible asset is the relationship between CTL and various customers to whom we did not have a previous relationship. The customer relationships we acquired in this transaction provide us with access to those customers to whom we did not have a previous relationship and allows us to enter product markets in which we have not previously participated. Because of the highly competitive and fragmented transportation market, we believe access to these customers will provide us with an entry into new market areas.

The discounted cash flow analysis used to estimate the fair value of the CTL customer relationships relied on Level 3 fair value inputs. Level 3 fair values are based on unobservable inputs. Unobservable inputs are used to measure fair value to the extent that observable inputs are not available, thereby allowing for situations in which there is little, if any, market activity for the asset at the measurement date. With respect to the CTL customer relationships, the Level 3 inputs included the rate of retention of the current customers of CTL as of the valuation date, our transportation segment’s historical customer retention rate and projected future revenues associated with the customers. The CTL customers expected to remain with us after the transaction were included in the valuation of the customer relationships. We are amortizing the customer relationship intangible assets over a period of seven years, using a modified straight-line approach.

For the period from acquisition to September 30, 2020, we recorded $0.1 million of amortization expense related to these intangible assets.

In connection with the acquisition, we entered into a finance lease agreement for an additional 40 trailers with a six year term. See Note 13 for further information regarding finance leases.

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Cash Deposits and Other Assets

9 Months Ended

Sep. 30, 2020

Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract]

Cash Deposits and Other Assets

Cash Deposits and Other Assets

Components of cash deposits and other assets were as follows at the dates indicated (in thousands):

	September 30,		December 31,
	2020		2019
Amounts associated with liability insurance program:
Insurance collateral deposits	$	675	$	1,233
Excess loss fund	521		943
Accumulated interest income	425		609
Other amounts:
State collateral deposits	65		37
Materials and supplies	507		477
Total cash deposits and other assets	$	2,193	$	3,299

We have established certain deposits to support participation in our liability insurance program and remittance of state crude oil severance taxes and other state collateral deposits. Insurance collateral deposits are held by the insurance company to cover past or potential open claims based upon a percentage of the maximum assessment under our insurance policies. Insurance collateral deposits are invested at the discretion of our insurance carrier. Excess amounts in our loss fund represent premium payments in excess of claims incurred to date that we may be entitled to recover through settlement or commutation as claim periods are closed. Interest income is earned on the majority of amounts held by the insurance companies and will be paid to us upon settlement of policy years.

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Segment Reporting

9 Months Ended

Sep. 30, 2020

Segment Reporting [Abstract]

Segment Reporting

Segment Reporting

We operate and report in two business segments: (i) crude oil marketing, transportation and storage, and (ii) tank truck transportation of liquid chemicals and dry bulk.

Financial information by reporting segment was as follows for the periods indicated (in thousands):

	Reporting Segments
	Marketing		Transportation		Other		Total
Three Months Ended September 30, 2020
Revenues	$	245,184	$	21,720	$	—	$	266,904
Segment operating earnings (1)	5,869		1,592		—		7,461
Depreciation and amortization	1,836		3,023		—		4,859
Property and equipment additions (2) (3)	684		(32)		52		704
Three Months Ended September 30, 2019
Revenues	$	434,609	$	15,698	$	—	$	450,307
Segment operating earnings (1)	2,888		154		—		3,042
Depreciation and amortization	2,214		2,179		—		4,393
Property and equipment additions (3)	3,894		8,410		—		12,304
Nine Months Ended September 30, 2020
Revenues	$	722,546	$	50,121	$	—	$	772,667
Segment operating (losses) earnings (1)	(4,952)		1,033		—		(3,919)
Depreciation and amortization	5,700		7,910		—		13,610
Property and equipment additions (2) (3)	2,734		332		523		3,589
Nine Months Ended September 30, 2019
Revenues	$	1,331,410	$	48,498	$	—	$	1,379,908
Segment operating earnings (1)	10,948		1,970		—		12,918
Depreciation and amortization	6,640		5,626		—		12,266
Property and equipment additions (3)	6,896		18,529		—		25,425

_______________

(1)Our crude oil marketing segment’s operating (losses) earnings included inventory valuation losses of $12 thousand and $2.1 million for the three months ended September 30, 2020 and 2019, respectively. For the nine months ended September 30, 2020 and 2019, our crude oil marketing segment’s operating (losses) earnings included inventory valuation losses of $18.2 million and inventory liquidation gains of $1.5 million, respectively.

(2)During the three and nine months ended September 30, 2020, we had $0.1 million and $0.5 million, respectively, of property and equipment additions for leasehold improvements at our corporate headquarters, which is not attributed or allocated to any of our reporting segments.

(3)Our transportation segment’s property and equipment additions do not include approximately $1.7 million of assets acquired under finance leases during the nine months ended September 30, 2020. Our crude oil marketing segment’s property and equipment additions do not include approximately $4.1 million of assets acquired under finance leases during the nine months ended September 30, 2019. See Note 13 for further information.

Segment operating (losses) earnings reflect revenues net of operating costs and depreciation and amortization expense and are reconciled to (losses) earnings before income taxes, as follows for the periods indicated (in thousands):

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2020		2019		2020		2019
Segment operating (losses) earnings	$	7,461	$	3,042	$	(3,919)	$	12,918
General and administrative	(1,405)		(2,739)		(7,030)		(8,005)
Operating (losses) earnings	6,056		303		(10,949)		4,913
Gain on dissolution of investment	—		—		—		573
Interest income	105		758		614		2,145
Interest expense	(70)		(242)		(288)		(424)
Earnings (losses) before income taxes	$	6,091	$	819	$	(10,623)	$	7,207

Identifiable assets by business segment were as follows at the dates indicated (in thousands):

	September 30,		December 31,
	2020		2019
Reporting segment:
Marketing	$	119,758	$	141,402
Transportation	67,310		58,483
Cash and other	69,392		130,957
Total assets	$	256,460	$	330,842

There were no significant intersegment sales during the three and nine months ended September 30, 2020 and 2019, respectively. Other identifiable assets are primarily corporate cash, corporate accounts receivable and properties not identified with any specific segment of our business. Accounting policies for transactions between reportable segments are consistent with applicable accounting policies as disclosed herein.

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Transactions with Affiliates

9 Months Ended

Sep. 30, 2020

Related Party Transactions [Abstract]

Transactions with Affiliates

Transactions with Affiliates

We enter into certain transactions in the normal course of business with affiliated entities including direct cost reimbursement for shared phone and administrative services. In addition, we lease our corporate office space in a building operated by 17 South Briar Hollow Lane, LLC, an affiliate of KSA Industries, Inc., which is an affiliated entity.

Activities with affiliates were as follows for the periods indicated (in thousands):

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2020		2019		2020		2019
Affiliate billings (refunds) to us (1)	$	(15)	$	20	$	17	$	63
Billings to affiliates	1		1		3		3
Rentals paid to affiliate (2)	256		122		500		366

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Derivative Instruments and Fair Value Measurements

9 Months Ended

Sep. 30, 2020

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Derivative Instruments and Fair Value Measurements

Derivative Instruments and Fair Value Measurements

Derivative Instruments

In the normal course of our operations, our crude oil marketing segment purchases and sells crude oil. We seek to profit by procuring the commodity as it is produced and then delivering the material to the end users or the intermediate use marketplace. As typical for the industry, these transactions are made pursuant to the terms of forward month commodity purchase and/or sale contracts. Some of these contracts meet the definition of a derivative instrument, and therefore, we account for these contracts at fair value, unless the normal purchase and sale exception is applicable. These types of underlying contracts are standard for the industry and are the governing document for our crude oil marketing segment. None of our derivative instruments have been designated as hedging instruments.

At September 30, 2020, we had in place four commodity purchase and sale contracts, one of which had fair value associated with it as the contractual price of crude oil was outside of the range of prices specified in the agreement. These commodity purchase and sale contracts encompassed approximately:

•258 barrels per day of crude oil during October 2020 through December 2020; and

•64 barrels per day of crude oil during January 2021 through December 2021.

At December 31, 2019, we had in place six commodity purchase and sale contracts with no fair value associated with them as the contractual prices of crude oil were within the range of prices specified in the agreements. These commodity purchase and sale contracts encompassed approximately:

•258 barrels per day of crude oil during January 2020 through February 2020;

•322 barrels per day of crude oil during March 2020 through April 2020; and

•258 barrels per day of crude oil during May 2020 through December 2020.

The estimated fair value of forward month commodity contracts (derivatives) reflected in the accompanying unaudited condensed consolidated balance sheet were as follows at the dates indicated (in thousands):

	Balance Sheet Location and Amount
	Current		Other		Current		Other
	Assets		Assets		Liabilities		Liabilities
September 30, 2020
Asset derivatives:
Fair value forward hydrocarbon commodity
contracts at gross valuation	$	3	$	—	$	—	$	—
Liability derivatives:
Fair value forward hydrocarbon commodity
contracts at gross valuation	—		—		—		—
Less counterparty offsets	—		—		—		—
As reported fair value contracts	$	3	$	—	$	—	$	—
December 31, 2019
Asset derivatives:
Fair value forward hydrocarbon commodity
contracts at gross valuation	$	—	$	—	$	—	$	—
Liability derivatives:
Fair value forward hydrocarbon commodity
contracts at gross valuation	—		—		—		—
Less counterparty offsets	—		—		—		—
As reported fair value contracts	$	—	$	—	$	—	$	—

We only enter into commodity contracts with creditworthy counterparties and evaluate our exposure to significant counterparties on an ongoing basis. At September 30, 2020 and December 31, 2019, we were not holding nor have we posted any collateral to support our forward month fair value derivative activity. We are not subject to any credit-risk related trigger events. We have no other financial investment arrangements that would serve to offset our derivative contracts.

Forward month commodity contracts (derivatives) reflected in the accompanying unaudited condensed consolidated statements of operations were as follows for the periods indicated (in thousands):

	Gains (losses)
	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2020		2019		2020		2019
Revenues – marketing	$	(9)	$	(1)	$	3	$	(21)

Fair Value Measurements

The following tables set forth, by level with the Level 1, 2 and 3 fair value hierarchy, the carrying values of our financial assets and liabilities at the dates indicated (in thousands):

	Fair Value Measurements Using
	Quoted Prices
	in Active		Significant
	Markets for		Other		Significant
	Identical Assets		Observable		Unobservable
	and Liabilities		Inputs		Inputs		Counterparty
	(Level 1)		(Level 2)		(Level 3)		Offsets		Total
September 30, 2020
Derivatives:
Current assets	$	—	$	3	$	—	$	—	$	3
Current liabilities	—		—		—		—		—
Net value	$	—	$	3	$	—	$	—	$	3
December 31, 2019
Derivatives:
Current assets	$	—	$	—	$	—	$	—	$	—
Current liabilities	—		—		—		—		—
Net value	$	—	$	—	$	—	$	—	$	—

These assets and liabilities are measured on a recurring basis and are classified based on the lowest level of input used to estimate their fair value. Our assessment of the relative significance of these inputs requires judgments.

When determining fair value measurements, we make credit valuation adjustments to reflect both our own nonperformance risk and our counterparty’s nonperformance risk. When adjusting the fair value of derivative contracts for the effect of nonperformance risk, we consider the impact of netting and any applicable credit enhancements. Credit valuation adjustments utilize Level 3 inputs, such as credit scores to evaluate the likelihood of default by us or our counterparties. At September 30, 2020 and December 31, 2019, credit valuation adjustments were not significant to the overall valuation of our fair value contracts. As a result, applicable fair value assets and liabilities are included in their entirety in the fair value hierarchy.

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Stock-Based Compensation Plan

9 Months Ended

Sep. 30, 2020

Share-based Payment Arrangement [Abstract]

Stock-Based Compensation Plan

Stock-Based Compensation Plan

We have in place a long-term incentive plan in which any employee or non-employee director who provides services to us is eligible to participate. The 2018 LTIP, which is overseen by the Compensation Committee of our Board of Directors, provides for the grant of various types of equity awards, of which restricted stock unit awards and performance-based compensation awards have been granted. The maximum number of shares authorized for issuance under the 2018 LTIP is 150,000 shares, and the 2018 LTIP is effective until May 8, 2028. After giving effect to awards granted and forfeitures made under the 2018 LTIP, and assuming the potential achievement of the maximum amounts of the performance factors through September 30, 2020, a total of 81,735 shares were available for issuance.

Compensation expense recognized in connection with equity-based awards was as follows for the periods indicated (in thousands):

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2020		2019		2020		2019
Compensation expense	$	149	$	155	$	453	$	352

At September 30, 2020 and December 31, 2019, we had $37,900 and $23,600, respectively, of accrued dividend amounts for awards granted under the 2018 LTIP.

Restricted Stock Unit Awards

The following table presents restricted stock unit award activity for the periods indicated:

		Weighted-
		Average Grant
	Number of	Date Fair Value
	Shares	per Share (1)
Restricted stock unit awards at January 1, 2020	18,782	$	37.05
Granted (2)	20,346	$	24.85
Vested	(8,858)	$	36.87
Forfeited	(1,804)	$	32.29
Restricted stock unit awards at September 30, 2020	28,466	$	28.68

_______________

(1)Determined by dividing the aggregate grant date fair value of awards by the number of awards issued.

(2)The aggregate grant date fair value of restricted stock unit awards issued during 2020 was $0.5 million based on a grant date market price of our common shares ranging from $24.77 to $26.23 per share.

Unrecognized compensation cost associated with restricted stock unit awards was approximately $0.4 million at September 30, 2020. Due to the graded vesting provisions of these awards, we expect to recognize the remaining compensation cost for these awards over a weighted-average period of 1.4 years.

Performance Share Unit Awards

The following table presents performance share unit award activity for the periods indicated:

		Weighted-
		Average Grant
	Number of	Date Fair Value
	Shares	per Share (1)
Performance share unit awards at January 1, 2020	2,787	$	43.00
Granted (2)	10,781	$	24.92
Vested	—	$	—
Forfeited	(595)	$	30.22
Performance share unit awards at September 30, 2020	12,973	$	28.56

_______________

(1)Determined by dividing the aggregate grant date fair value of awards by the number of awards issued.

(2)The aggregate grant date fair value of performance share unit awards issued during 2020 was $0.2 million based on a grant date market price of our common shares ranging from $24.77 to $26.23 per share and assuming a performance factor of 100 percent.

Unrecognized compensation cost associated with performance share unit awards was approximately $0.2 million at September 30, 2020. We expect to recognize the remaining compensation cost for these awards over a weighted-average period of 2.2 years.

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Supplemental Cash Flow Information

9 Months Ended

Sep. 30, 2020

Supplemental Cash Flow Elements [Abstract]

Supplemental Cash Flow Information

Supplemental Cash Flow Information

Supplemental cash flows and non-cash transactions were as follows for the periods indicated (in thousands):

	Nine Months Ended
	September 30,
	2020		2019
Cash paid for interest	$	288	$	424
Cash paid for federal and state income taxes	419		234
Cash refund for NOL carryback under CARES Act	2,703		—
Non-cash transactions:
Change in accounts payable related to property and equipment additions	(1,232)		(1,538)
Property and equipment acquired under finance leases	1,655		4,148
Issuance of common shares in asset acquisition	—		392

See Note 13 for information related to other non-cash transactions related to leases.

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Leases

9 Months Ended

Sep. 30, 2020

Leases [Abstract]

Leases

Leases

The following table provides the components of lease expense for the periods indicated (in thousands):

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2020		2019		2020		2019
Finance lease cost:
Amortization of ROU assets	$	622	$	553	$	1,728	$	1,254
Interest on lease liabilities	70		87		212		214
Operating lease cost	681		675		2,038		2,254
Short-term lease cost	3,085		2,527		7,756		7,355
Total lease expense	$	4,458	$	3,842	$	11,734	$	11,077

The following table provides supplemental cash flow and other information related to leases for the periods indicated (in thousands):

	Nine Months Ended
	September 30,
	2020		2019
Cash paid for amounts included in measurement of lease liabilities:
Operating cash flows from operating leases (1)	$	2,037	$	2,254
Operating cash flows from finance leases	295		197
Financing cash flows from finance leases	1,677		1,171
ROU assets obtained in exchange for new lease liabilities:
Finance leases (2)	1,655		4,148
Operating leases	630		12,006

______________

(1)Amounts are included in Other operating activities on the unaudited condensed consolidated statements of cash flows.

(2)2020 amount consists of a finance lease agreement for 40 trailers with a six year term that we entered into in connection with the CTL acquisition. See Note 6 for further information.

The following table provides the lease terms and discount rates for the periods indicated:

	Nine Months Ended
	September 30,
	2020	2019
Weighted-average remaining lease term (years):
Finance leases	3.18	3.28
Operating leases	4.46	4.98
Weighted-average discount rate:
Finance leases	4.3%	4.9%
Operating leases	4.4%	5.0%

The following table provides supplemental balance sheet information related to leases at the dates indicated (in thousands):

	September 30,		December 31,
	2020		2019
Assets
Finance lease ROU assets (1)	$	6,307	$	6,384
Operating lease ROU assets	8,453		9,576
Liabilities
Current
Finance lease liabilities	2,505		2,167
Operating lease liabilities	2,137		2,252
Noncurrent
Finance lease liabilities	4,011		4,376
Operating lease liabilities	6,314		7,323

______________

(1)Amounts are included in Property and equipment, net on the unaudited condensed consolidated balance sheets.

The following table provides maturities of undiscounted lease liabilities at September 30, 2020 (in thousands):

	Finance		Operating
	Lease		Lease
Remainder of 2020	$	681	$	678
2021	2,723		2,343
2022	1,789		2,002
2023	939		1,821
2024	336		1,700
Thereafter	445		679
Total lease payments	6,913		9,223
Less: Interest	(397)		(772)
Present value of lease liabilities	6,516		8,451
Less: Current portion of lease obligation	(2,505)		(2,137)
Total long-term lease obligation	$	4,011	$	6,314

The following table provides maturities of undiscounted lease liabilities at December 31, 2019 (in thousands):

	Finance		Operating
	Lease		Lease
2020	$	2,426	$	2,660
2021	2,426		2,256
2022	1,492		1,914
2023	642		1,776
2024	37		1,668
Thereafter	—		443
Total lease payments	7,023		10,717
Less: Interest	(480)		(1,142)
Present value of lease liabilities	6,543		9,575
Less: Current portion of lease obligation	(2,167)		(2,252)
Total long-term lease obligation	$	4,376	$	7,323

Leases

Leases

The following table provides the components of lease expense for the periods indicated (in thousands):

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2020		2019		2020		2019
Finance lease cost:
Amortization of ROU assets	$	622	$	553	$	1,728	$	1,254
Interest on lease liabilities	70		87		212		214
Operating lease cost	681		675		2,038		2,254
Short-term lease cost	3,085		2,527		7,756		7,355
Total lease expense	$	4,458	$	3,842	$	11,734	$	11,077

The following table provides supplemental cash flow and other information related to leases for the periods indicated (in thousands):

	Nine Months Ended
	September 30,
	2020		2019
Cash paid for amounts included in measurement of lease liabilities:
Operating cash flows from operating leases (1)	$	2,037	$	2,254
Operating cash flows from finance leases	295		197
Financing cash flows from finance leases	1,677		1,171
ROU assets obtained in exchange for new lease liabilities:
Finance leases (2)	1,655		4,148
Operating leases	630		12,006

______________

(1)Amounts are included in Other operating activities on the unaudited condensed consolidated statements of cash flows.

(2)2020 amount consists of a finance lease agreement for 40 trailers with a six year term that we entered into in connection with the CTL acquisition. See Note 6 for further information.

The following table provides the lease terms and discount rates for the periods indicated:

	Nine Months Ended
	September 30,
	2020	2019
Weighted-average remaining lease term (years):
Finance leases	3.18	3.28
Operating leases	4.46	4.98
Weighted-average discount rate:
Finance leases	4.3%	4.9%
Operating leases	4.4%	5.0%

The following table provides supplemental balance sheet information related to leases at the dates indicated (in thousands):

	September 30,		December 31,
	2020		2019
Assets
Finance lease ROU assets (1)	$	6,307	$	6,384
Operating lease ROU assets	8,453		9,576
Liabilities
Current
Finance lease liabilities	2,505		2,167
Operating lease liabilities	2,137		2,252
Noncurrent
Finance lease liabilities	4,011		4,376
Operating lease liabilities	6,314		7,323

______________

(1)Amounts are included in Property and equipment, net on the unaudited condensed consolidated balance sheets.

The following table provides maturities of undiscounted lease liabilities at September 30, 2020 (in thousands):

	Finance		Operating
	Lease		Lease
Remainder of 2020	$	681	$	678
2021	2,723		2,343
2022	1,789		2,002
2023	939		1,821
2024	336		1,700
Thereafter	445		679
Total lease payments	6,913		9,223
Less: Interest	(397)		(772)
Present value of lease liabilities	6,516		8,451
Less: Current portion of lease obligation	(2,505)		(2,137)
Total long-term lease obligation	$	4,011	$	6,314

The following table provides maturities of undiscounted lease liabilities at December 31, 2019 (in thousands):

	Finance		Operating
	Lease		Lease
2020	$	2,426	$	2,660
2021	2,426		2,256
2022	1,492		1,914
2023	642		1,776
2024	37		1,668
Thereafter	—		443
Total lease payments	7,023		10,717
Less: Interest	(480)		(1,142)
Present value of lease liabilities	6,543		9,575
Less: Current portion of lease obligation	(2,167)		(2,252)
Total long-term lease obligation	$	4,376	$	7,323

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Commitments and Contingencies

9 Months Ended

Sep. 30, 2020

Commitments and Contingencies Disclosure [Abstract]

Commitments and Contingencies

Commitments and Contingencies

Insurance Policies

We establish a liability under our automobile and workers’ compensation insurance policies for expected claims incurred but not reported on a monthly basis. As claims are paid, the liability is relieved. Our accruals for automobile and workers’ compensation claims are presented in the table below.

For periods prior to October 1, 2017, we pre-funded our estimated claims, and therefore, we could either receive a return of premium paid or be assessed for additional premiums up to pre-established limits. Additionally, in certain instances, the risk of insured losses was shared with a group of similarly situated entities through an insurance captive. We have appropriately recognized estimated expenses and liabilities related to these policies for losses incurred but not reported to us or our insurance carrier. The amount of pre-funded insurance premiums left to cover potential future losses are presented in the table below. If the potential insurance claims do not further develop, the pre-funded premiums will be returned to us as a premium refund.

The amount of pre-funded insurance premiums left to cover potential future losses related to periods prior to October 1, 2017, and our accruals for automobile and workers’ compensation claims were as follows at the dates indicated (in thousands):

	September 30,		December 31,
	2020		2019
Pre-funded premiums for losses incurred but not reported	$	57	$	168
Accrued automobile and workers’ compensation claims	2,686		2,956

We maintain a self-insurance program for managing employee medical claims. A liability for expected claims incurred but not reported is established on a monthly basis. As claims are paid, the liability is relieved. We also maintain third party insurance stop-loss coverage for individual medical claims exceeding a certain minimum threshold. In addition, we maintain $1.4 million of umbrella insurance coverage for annual aggregate medical claims exceeding approximately $7.5 million. Medical accrual amounts were as follows at the dates indicated (in thousands):

	September 30,		December 31,
	2020		2019
Accrued medical claims	$	2,249	$	1,016

Legal Proceedings

On August 15, 2019, we received a notice from the Internal Revenue Service (the “IRS”) regarding a proposed penalty of approximately $1.2 million for our 2017 tax year information returns. The notice alleges that certain taxpayer identification numbers supplied to the IRS for our returns in 2017 were either missing or incorrect and that certain filings were late. We responded to the IRS on September 25, 2019 disputing the proposed penalty and requesting that the amount be waived, abated or a hearing held. On March 11, 2020, we received a response from the IRS indicating that they had reviewed our response and waived the full penalty. As such, this matter will not have a material impact on our consolidated financial position, results of operations or cash flows.

Litigation

From time to time as incidental to our operations, we may become involved in various lawsuits and/or disputes. Primarily as an operator of an extensive trucking fleet, we are a party to motor vehicle accidents, worker compensation claims and other items of general liability as would be typical for the industry. We are presently unaware of any claims against us that are either outside the scope of insurance coverage or that may exceed the level of insurance coverage and could potentially represent a material adverse effect on our financial position or results of operations.

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Subsequent Event

9 Months Ended

Sep. 30, 2020

Subsequent Events [Abstract]

Subsequent Event

Subsequent Event

On October 22, 2020, we acquired the outstanding equity interests of Victoria Express Pipeline, LLC (“VEX”) and certain related pipeline terminal facility assets from EnLink Midstream Operating, L.P. for $20.0 million. Of the total purchase price, $10.0 million was paid at closing, with the remainder to be paid in four quarterly installments of $2.5 million, plus interest at a rate of 4.0% per annum, beginning in March 2021. The equity interests in GulfMark Terminals, LLC, VEX and the other acquired assets were pledged to secure the payment of the installment portions of the purchase price as part of the agreement.

The VEX Pipeline System, with truck and storage terminals at both Cuero and the Port of Victoria, Texas, is a crude oil and condensate pipeline system, which connects the heart of the Eagle Ford Basin to the Gulf Coast waterborne market. The VEX Pipeline System includes 56 miles of 12-inch pipeline, which spans DeWitt county to Victoria County, Texas, with 350,000 barrels of above ground storage, two 8 bay truck offload stations, and access to two docks at the Port of Victoria. The VEX Pipeline System can receive crude oil by pipeline and truck, and has downstream pipeline connections to two terminals today, with potential for additional downstream connection opportunities in the future. The pipeline system has a current capacity of 90,000 barrels per day.

We plan to integrate the VEX Pipeline System into our Gulf Coast marketing business, which we expect will further strengthen our ability to provide excellent service to the producers in the region, as well as more effectively service our end-user markets along the Gulf Coast. In addition, the VEX Pipeline System complements our existing storage terminal and dock at the Port of Victoria, where we now control 450,000 barrels of storage with three docks after giving effect to the acquisition.

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Summary of Significant Accounting Policies (Policies)

9 Months Ended

Sep. 30, 2020

Accounting Policies [Abstract]

Organization

Organization

Adams Resources & Energy, Inc. is a publicly traded Delaware corporation organized in 1973, the common shares of which are listed on the NYSE American LLC under the ticker symbol “AE”. Through our subsidiaries, we are primarily engaged in the business of crude oil marketing, transportation and storage in various crude oil and natural gas basins in the lower 48 states of the United States (“U.S.”). We also conduct tank truck transportation of liquid chemicals and dry bulk primarily in the lower 48 states of the U.S. with deliveries into Canada and Mexico, and with terminals in the Gulf Coast region of the U.S. Unless the context requires otherwise, references to “we,” “us,” “our” or “Company” are intended to mean the business and operations of Adams Resources & Energy, Inc. and its consolidated subsidiaries.  

We operate and report in two business segments: (i) crude oil marketing, transportation and storage, and (ii) tank truck transportation of liquid chemicals and dry bulk. See Note 8 for further information regarding our business segments.

Basis of Presentation

Basis of Presentation

Our results of operations for the three and nine months ended September 30, 2020 are not necessarily indicative of results expected for the full year of 2020. In the opinion of management, the accompanying unaudited condensed consolidated financial statements reflect all adjustments consisting of normal recurring accruals necessary for fair presentation.  The condensed consolidated financial statements and the accompanying notes are prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) for interim financial statements and the rules of the U.S. Securities and Exchange Commission (“SEC”). Certain information and footnote disclosures required by GAAP for complete annual financial statements have been omitted and, therefore, these interim financial statements should be read in conjunction with our audited consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2019 (the “2019 Form 10-K”) filed with the SEC on March 6, 2020. All significant intercompany transactions and balances have been eliminated in consolidation.

Use of Estimates

Use of EstimatesThe preparation of our financial statements in conformity with GAAP requires management to use estimates and assumptions that affect the reported amount of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. We base our estimates and judgments on historical experience and on various other assumptions and information we believe to be reasonable under the circumstances. Estimates and assumptions about future events and their effects cannot be perceived with certainty and, accordingly, these estimates may change as new events occur, as more experience is acquired, as additional information is obtained and as the operating environment changes. While we believe the estimates and assumptions used in the preparation of these condensed consolidated financial statements are appropriate, actual results could differ from those estimates.

Cash, Cash Equivalents and Restricted Cash

Cash, Cash Equivalents and Restricted CashRestricted cash represents an amount held in a segregated bank account by Wells Fargo as collateral for outstanding letters of credit.

Earnings Per Share

Earnings Per ShareBasic earnings (losses) per share is computed by dividing our net earnings (losses) by the weighted average number of shares of common stock outstanding during the period. Diluted earnings (losses) per share is computed by giving effect to all potential shares of common stock outstanding, including our stock related to unvested restricted stock unit awards. Unvested restricted stock unit awards granted under the Adams Resources & Energy, Inc. 2018 Long-Term Incentive Plan (“2018 LTIP”) are not considered to be participating securities as the holders of these shares do not have non-forfeitable dividend rights in the event of our declaration of a dividend for common shares (see Note 11 for further discussion).

Fair Value Measurements

Fair Value Measurements

The carrying amounts reported in the unaudited condensed consolidated balance sheets for cash and cash equivalents, accounts receivable and accounts payable approximates fair value because of the immediate or short-term maturity of these financial instruments. Marketable securities are recorded at fair value based on market quotations from actively traded liquid markets.

A three-tier hierarchy has been established that classifies fair value amounts recognized in the financial statements based on the observability of inputs used to estimate these fair values.  The hierarchy considers fair value amounts based on observable inputs (Levels 1 and 2) to be more reliable and predictable than those based primarily on unobservable inputs (Level 3).  At each balance sheet reporting date, we categorize our financial assets and liabilities using this hierarchy.

See Note 6 for a discussion of the Level 3 inputs used in the determination of the fair value of the intangible assets acquired in an asset acquisition that occurred in June 2020.

Fair value contracts consist of derivative financial instruments and are recorded as either an asset or liability measured at its fair value. Changes in fair value are recognized immediately in earnings unless the derivatives qualify for, and we elect, cash flow hedge accounting. We had no contracts designated for hedge accounting during any current reporting periods (see Note 10 for further information).

Income Taxes

Income Taxes

Income taxes are accounted for using the asset and liability method. Under this approach, deferred tax assets and liabilities are recognized based on anticipated future tax consequences attributable to differences between financial statement carrying amounts of these items and their respective tax basis.

On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”) was enacted and signed into law in response to the COVID-19 pandemic. The CARES Act, among other things, permits net operating losses (“NOL”) incurred in tax years 2018, 2019 and 2020 to offset 100 percent of taxable income and be carried back to each of the five preceding taxable years to generate a refund of previously paid income taxes.

We are continuing to evaluate the full impact of the CARES Act. However, we have determined that the NOL carryback provision in the CARES Act would result in a cash benefit to us for the fiscal years 2018 and 2019. We carried back our NOL for fiscal year 2018 to 2013, and in June 2020, we received a cash refund of approximately $2.7 million. We have an income tax receivable at September 30, 2020 of approximately $3.7 million for the benefit of carrying back the NOL for the fiscal year 2019 to 2014. We are forecasting an NOL for fiscal year 2020 and expect to carry it back to previous years. As a result, we have also included the 2020 provisional amounts in income tax receivable at September 30, 2020. As we are carrying the losses back to years beginning before January 1, 2018, the receivables were recorded at the previous 35 percent federal tax rate rather than the current statutory rate of 21 percent.

Inventory

InventoryInventory consists of crude oil held in storage tanks and at third-party pipelines as part of our crude oil marketing operations. Crude oil inventory is carried at the lower of cost or net realizable value. At the end of each reporting period, we assess the carrying value of our inventory and make adjustments necessary to reduce the carrying value to the applicable net realizable value. Any resulting adjustments are a component of marketing costs and expenses on our consolidated statements of operations. During the nine months ended September 30, 2020, we recorded a write-down of $18.2 million of our crude oil inventory due to significant declines in prices in 2020.

Property and Equipment

Property and Equipment

Property and equipment is recorded at cost. Expenditures for additions, improvements and other enhancements to property and equipment are capitalized, and minor replacements, maintenance and repairs that do not extend asset life or add value are charged to expense as incurred. When property and equipment assets are retired or otherwise disposed of, the related cost and accumulated depreciation is removed from the accounts and any resulting gain or loss is included in results of operations in operating costs and expenses for the respective period. Property and equipment, except for land, is depreciated using the straight-line method over the estimated average useful lives ranging from two to thirty-nine years.

We review our long-lived assets for impairment whenever there is evidence that the carrying value of these assets may not be recoverable. Any impairment recognized is permanent and may not be restored. Property and equipment is reviewed at the lowest level of identifiable cash flows. For property and equipment requiring impairment, the fair value is estimated based on an internal discounted cash flow model of future cash flows.

Recent Accounting Pronouncements

Recent Accounting Pronouncements

In December 2019, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes (“ASU 2019-12”). This new standard eliminates certain exceptions in Accounting Standards Codification (“ASC”) 740 related to the approach for intraperiod tax allocation, the methodology for calculating income taxes in an interim period, and the recognition of deferred tax liabilities for outside basis differences. It also clarifies and simplifies other aspects of the accounting for income taxes. ASU 2019-12 is effective for fiscal years, and interim periods within those years, beginning after December 15, 2020, with early adoption permitted in any interim period within that year.

We elected to early adopt this standard during the period ended June 30, 2020, and most amendments within the standard were required to be applied on a prospective basis as of January 1, 2020, while certain amendments were applied on a retrospective or modified retrospective basis. The most significant impact to us is the removal of a limit on the tax benefit recognized on pre-tax losses in interim periods, which was required to be applied on a prospective basis. As a result of our adoption of ASU 2019-12, we calculated our quarterly income tax benefits based on ordinary losses incurred during the first, second and third quarters of 2020, no longer limiting the computed benefit if it exceeds the amount of benefit that would be recognized if the year-to-date ordinary loss were the anticipated ordinary loss for the full fiscal year.

Stock-Based Compensation

Stock-Based CompensationWe measure all share-based payments, including the issuance of restricted stock units and performance share units to employees and board members, using a fair-value based method. The cost of services received from employees and non-employee board members in exchange for awards of equity instruments is recognized in the consolidated statements of operations based on the estimated fair value of those awards on the grant date and amortized on a straight-line basis over the requisite service period. The fair value of restricted stock unit awards and performance share unit awards is based on the closing price of our common stock on the grant date. We account for forfeitures as they occur.

Other Marketing Revenue

Other Crude Oil Marketing Revenue

Certain of the commodity purchase and sale contracts utilized by our crude oil marketing business qualify as derivative instruments with certain specifically identified contracts also designated as trading activity. From the time of contract origination, these contracts are marked-to-market and recorded on a net revenue basis in the accompanying consolidated financial statements.

Certain of our crude oil contracts may be with a single counterparty to provide for similar quantities of crude oil to be bought and sold at different locations. These contracts are entered into for a variety of reasons, including effecting the transportation of the commodity, to minimize credit exposure, and/or to meet the competitive demands of the customer. These buy/sell arrangements are reflected on a net revenue basis in the accompanying consolidated financial statements

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Summary of Significant Accounting Policies (Tables)

9 Months Ended

Sep. 30, 2020

Accounting Policies [Abstract]

Summary of Cash and Cash Equivalents and Restricted Cash

The following table provides a reconciliation of cash and cash equivalents and restricted cash as reported in the unaudited condensed consolidated balance sheets that totals to the amounts shown in the unaudited condensed consolidated statements of cash flows at the dates indicated (in thousands):

	September 30,		December 31,
	2020		2019
Cash and cash equivalents	$	53,106	$	112,994
Restricted cash	4,865		9,261
Total cash, cash equivalents and restricted cash shown in the
unaudited condensed consolidated statements of cash flows	$	57,971	$	122,255

Schedule of Common Stock Outstanding

The following table reconciles our outstanding common stock for the periods indicated:

	Common
	shares
Balance, January 1, 2020	4,235,533
Vesting of restricted stock unit awards	217
Balance, March 31, 2020	4,235,750
Vesting of restricted stock unit awards	8,641
Shares withheld to cover taxes upon vesting of restricted stock unit awards	(2,107)
Balance, June 30, 2020	4,242,284
No activity	—
Balance, September 30, 2020	4,242,284

Schedule of Earnings Per Share, Basic and Diluted

A reconciliation of the calculation of basic and diluted (losses) earnings per share was as follows for the periods indicated (in thousands, except per share data):

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2020		2019		2020		2019
Earnings (losses) per share — numerator:
Net (losses) earnings	$	3,073	$	640	$	(4,851)	$	5,554
Denominator:
Basic weighted average number of shares outstanding	4,242		4,234		4,239		4,226
Basic (losses) earnings per share	$	0.72	$	0.15	$	(1.14)	$	1.31
Diluted (losses) earnings per share:
Diluted weighted average number of shares outstanding:
Common shares	4,242		4,234		4,239		4,226
Restricted stock unit awards (1)	9		3		—		4
Performance share unit awards (1) (2)	2		1		—		—
Total diluted shares	4,253		4,238		4,239		4,230
Diluted (losses) earnings per share	$	0.72	$	0.15	$	(1.14)	$	1.31

_______________

(1)For the nine months ended September 30, 2020, the effect of the restricted stock unit awards and the performance share awards on losses per share is anti-dilutive.

(2)The dilutive effect of performance share awards are included in the calculation of diluted earnings per share when the performance share award performance conditions have been achieved. For the nine months ended September 30, 2019, the effect of the performance share awards on earnings per share is anti-dilutive.

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Revenue Recognition (Tables)

9 Months Ended

Sep. 30, 2020

Revenue from Contract with Customer [Abstract]

Disaggregation of Revenue

The following table disaggregates our revenue by segment and by major source for the periods indicated (in thousands):

	Reporting Segments
	Marketing		Transportation		Total
Three Months Ended September 30, 2020
Revenues from contracts with customers	$	242,267	$	21,720	$	263,987
Other (1)	2,917		—		2,917
Total revenues	$	245,184	$	21,720	$	266,904
Timing of revenue recognition:
Goods transferred at a point in time	$	242,267	$	—	$	242,267
Services transferred over time	—		21,720		21,720
Total revenues from contracts with customers	$	242,267	$	21,720	$	263,987
Three Months Ended September 30, 2019
Revenues from contracts with customers	$	396,001	$	15,698	$	411,699
Other (1)	38,608		—		38,608
Total revenues	$	434,609	$	15,698	$	450,307
Timing of revenue recognition:
Goods transferred at a point in time	$	396,001	$	—	$	396,001
Services transferred over time	—		15,698		15,698
Total revenues from contracts with customers	$	396,001	$	15,698	$	411,699
Nine Months Ended September 30, 2020
Revenues from contracts with customers	$	693,513	$	50,121	$	743,634
Other (1)	29,033		—		29,033
Total revenues	$	722,546	$	50,121	$	772,667
Timing of revenue recognition:
Goods transferred at a point in time	$	693,513	$	—	$	693,513
Services transferred over time	—		50,121		50,121
Total revenues from contracts with customers	$	693,513	$	50,121	$	743,634
Nine Months Ended September 30, 2019
Revenues from contracts with customers	$	1,147,139	$	48,498	$	1,195,637
Other (1)	184,271		—		184,271
Total revenues	$	1,331,410	$	48,498	$	1,379,908
Timing of revenue recognition:
Goods transferred at a point in time	$	1,147,139	$	—	$	1,147,139
Services transferred over time	—		48,498		48,498
Total revenues from contracts with customers	$	1,147,139	$	48,498	$	1,195,637

_______________

(1)Other marketing revenues are recognized under ASC 815, Derivatives and Hedging, and ASC 845, Nonmonetary Transactions – Purchases and Sales of Inventory with the Same Counterparty.

Schedule of New Accounting Pronouncements and Changes in Accounting Principles

Reporting these crude oil contracts on a gross revenue basis would increase our reported revenues as follows for the periods indicated (in thousands):

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2020		2019		2020		2019
Revenue gross-up	$	97,566	$	193,440	$	315,049	$	658,606

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Prepayments and Other Current Assets (Tables)

9 Months Ended

Sep. 30, 2020

Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract]

Components of Prepayments and Other Current Assets

The components of prepayments and other current assets were as follows at the dates indicated (in thousands):

	September 30,		December 31,
	2020		2019
Insurance premiums	$	153	$	473
Rents, licenses and other	1,264		1,086
Total prepayments and other current assets	$	1,417	$	1,559

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Property and Equipment (Tables)

9 Months Ended

Sep. 30, 2020

Property, Plant and Equipment [Abstract]

Property and equipment

The historical costs of our property and equipment and related accumulated depreciation balances were as follows at the dates indicated (in thousands):

	Estimated
	Useful Life	September 30,		December 31,
	in Years	2020		2019
Tractors and trailers (1)	5 – 6	$	115,809	$	115,693
Field equipment (2)	2 – 5	25,152		25,094
Buildings	5 – 39	14,939		16,055
Office equipment	2 – 5	1,893		1,951
Land		1,790		1,790
Construction in progress		606		3,661
Total		160,189		164,244
Less accumulated depreciation		(95,720)		(95,198)
Property and equipment, net		$	64,469	$	69,046

_______________

(1)Amounts include tractors in our crude oil marketing segment and trailers in our transportation segment held under finance leases. At September 30, 2020 and December 31, 2019, gross property and equipment associated with these assets held under finance leases were $7.2 million and $5.5 million, respectively. Accumulated amortization associated with these assets held under these finance leases were $2.6 million and $1.7 million at September 30, 2020 and December 31, 2019, respectively (see Note 13 for further information).

(2)Amounts include a tank storage and throughput arrangement in our crude oil marketing segment held under a finance lease. At September 30, 2020 and December 31, 2019, gross property and equipment associated with these assets held under a finance lease were $3.3 million and $3.3 million, respectively. Accumulated amortization associated with these assets held under a finance lease was $1.6 million and $0.7 million at September 30, 2020 and December 31, 2019, respectively (see Note 13 for further information).

Components of depreciation and amortization expense were as follows for the periods indicated (in thousands):

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2020		2019		2020		2019
Depreciation and amortization, excluding amounts under finance leases	$	4,237	$	3,840	$	11,882	$	11,012
Amortization of property and equipment under finance leases	622		553		1,728		1,254
Total depreciation and amortization	$	4,859	$	4,393	$	13,610	$	12,266

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Acquisition (Tables)

9 Months Ended

Sep. 30, 2020

Asset Acquisition [Abstract]

Schedule of Asset Acquisition

The following table summarizes the estimated fair value of the assets acquired at the acquisition date (in thousands):

Property and equipment — tractors and trailers	$	5,901
Materials and supplies	87
Intangible assets — customer relationships	3,175
Total purchase price	$	9,163

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Cash Deposits and Other Assets (Tables)

9 Months Ended

Sep. 30, 2020

Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract]

Components of cash deposits and other assets

Components of cash deposits and other assets were as follows at the dates indicated (in thousands):

	September 30,		December 31,
	2020		2019
Amounts associated with liability insurance program:
Insurance collateral deposits	$	675	$	1,233
Excess loss fund	521		943
Accumulated interest income	425		609
Other amounts:
State collateral deposits	65		37
Materials and supplies	507		477
Total cash deposits and other assets	$	2,193	$	3,299

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Segment Reporting (Tables)

9 Months Ended

Sep. 30, 2020

Segment Reporting [Abstract]

Information concerning business activities

Financial information by reporting segment was as follows for the periods indicated (in thousands):

	Reporting Segments
	Marketing		Transportation		Other		Total
Three Months Ended September 30, 2020
Revenues	$	245,184	$	21,720	$	—	$	266,904
Segment operating earnings (1)	5,869		1,592		—		7,461
Depreciation and amortization	1,836		3,023		—		4,859
Property and equipment additions (2) (3)	684		(32)		52		704
Three Months Ended September 30, 2019
Revenues	$	434,609	$	15,698	$	—	$	450,307
Segment operating earnings (1)	2,888		154		—		3,042
Depreciation and amortization	2,214		2,179		—		4,393
Property and equipment additions (3)	3,894		8,410		—		12,304
Nine Months Ended September 30, 2020
Revenues	$	722,546	$	50,121	$	—	$	772,667
Segment operating (losses) earnings (1)	(4,952)		1,033		—		(3,919)
Depreciation and amortization	5,700		7,910		—		13,610
Property and equipment additions (2) (3)	2,734		332		523		3,589
Nine Months Ended September 30, 2019
Revenues	$	1,331,410	$	48,498	$	—	$	1,379,908
Segment operating earnings (1)	10,948		1,970		—		12,918
Depreciation and amortization	6,640		5,626		—		12,266
Property and equipment additions (3)	6,896		18,529		—		25,425

_______________

(1)Our crude oil marketing segment’s operating (losses) earnings included inventory valuation losses of $12 thousand and $2.1 million for the three months ended September 30, 2020 and 2019, respectively. For the nine months ended September 30, 2020 and 2019, our crude oil marketing segment’s operating (losses) earnings included inventory valuation losses of $18.2 million and inventory liquidation gains of $1.5 million, respectively.

(2)During the three and nine months ended September 30, 2020, we had $0.1 million and $0.5 million, respectively, of property and equipment additions for leasehold improvements at our corporate headquarters, which is not attributed or allocated to any of our reporting segments.

(3)Our transportation segment’s property and equipment additions do not include approximately $1.7 million of assets acquired under finance leases during the nine months ended September 30, 2020. Our crude oil marketing segment’s property and equipment additions do not include approximately $4.1 million of assets acquired under finance leases during the nine months ended September 30, 2019. See Note 13 for further information.

Reconciliation of segment earnings to earnings before income taxes

Segment operating (losses) earnings reflect revenues net of operating costs and depreciation and amortization expense and are reconciled to (losses) earnings before income taxes, as follows for the periods indicated (in thousands):

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2020		2019		2020		2019
Segment operating (losses) earnings	$	7,461	$	3,042	$	(3,919)	$	12,918
General and administrative	(1,405)		(2,739)		(7,030)		(8,005)
Operating (losses) earnings	6,056		303		(10,949)		4,913
Gain on dissolution of investment	—		—		—		573
Interest income	105		758		614		2,145
Interest expense	(70)		(242)		(288)		(424)
Earnings (losses) before income taxes	$	6,091	$	819	$	(10,623)	$	7,207

Identifiable assets by industry segment

Identifiable assets by business segment were as follows at the dates indicated (in thousands):

	September 30,		December 31,
	2020		2019
Reporting segment:
Marketing	$	119,758	$	141,402
Transportation	67,310		58,483
Cash and other	69,392		130,957
Total assets	$	256,460	$	330,842

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Transactions with Affiliates (Tables)

9 Months Ended

Sep. 30, 2020

Related Party Transactions [Abstract]

Activities with affiliates

Activities with affiliates were as follows for the periods indicated (in thousands):

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2020		2019		2020		2019
Affiliate billings (refunds) to us (1)	$	(15)	$	20	$	17	$	63
Billings to affiliates	1		1		3		3
Rentals paid to affiliate (2)	256		122		500		366

_______________

(1)During the third quarter of 2020, we received a refund for overpayment of certain affiliate billings.

(2)2020 amounts include the payment of rental adjustments for common area maintenance.

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Derivative Instruments and Fair Value Measurements (Tables)

9 Months Ended

Sep. 30, 2020

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Derivatives reflected in the consolidated balance sheet

The estimated fair value of forward month commodity contracts (derivatives) reflected in the accompanying unaudited condensed consolidated balance sheet were as follows at the dates indicated (in thousands):

	Balance Sheet Location and Amount
	Current		Other		Current		Other
	Assets		Assets		Liabilities		Liabilities
September 30, 2020
Asset derivatives:
Fair value forward hydrocarbon commodity
contracts at gross valuation	$	3	$	—	$	—	$	—
Liability derivatives:
Fair value forward hydrocarbon commodity
contracts at gross valuation	—		—		—		—
Less counterparty offsets	—		—		—		—
As reported fair value contracts	$	3	$	—	$	—	$	—
December 31, 2019
Asset derivatives:
Fair value forward hydrocarbon commodity
contracts at gross valuation	$	—	$	—	$	—	$	—
Liability derivatives:
Fair value forward hydrocarbon commodity
contracts at gross valuation	—		—		—		—
Less counterparty offsets	—		—		—		—
As reported fair value contracts	$	—	$	—	$	—	$	—

Derivatives reflected in the consolidated statement of operations

Forward month commodity contracts (derivatives) reflected in the accompanying unaudited condensed consolidated statements of operations were as follows for the periods indicated (in thousands):

	Gains (losses)
	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2020		2019		2020		2019
Revenues – marketing	$	(9)	$	(1)	$	3	$	(21)

Fair value assets and liabilities

The following tables set forth, by level with the Level 1, 2 and 3 fair value hierarchy, the carrying values of our financial assets and liabilities at the dates indicated (in thousands):

	Fair Value Measurements Using
	Quoted Prices
	in Active		Significant
	Markets for		Other		Significant
	Identical Assets		Observable		Unobservable
	and Liabilities		Inputs		Inputs		Counterparty
	(Level 1)		(Level 2)		(Level 3)		Offsets		Total
September 30, 2020
Derivatives:
Current assets	$	—	$	3	$	—	$	—	$	3
Current liabilities	—		—		—		—		—
Net value	$	—	$	3	$	—	$	—	$	3
December 31, 2019
Derivatives:
Current assets	$	—	$	—	$	—	$	—	$	—
Current liabilities	—		—		—		—		—
Net value	$	—	$	—	$	—	$	—	$	—

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Stock-Based Compensation Plan (Tables)

9 Months Ended

Sep. 30, 2020

Share-based Payment Arrangement [Abstract]

Schedule of Share-based Payment Arrangement

Compensation expense recognized in connection with equity-based awards was as follows for the periods indicated (in thousands):

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2020		2019		2020		2019
Compensation expense	$	149	$	155	$	453	$	352

Share-based Compensation, Activity

The following table presents restricted stock unit award activity for the periods indicated:

		Weighted-
		Average Grant
	Number of	Date Fair Value
	Shares	per Share (1)
Restricted stock unit awards at January 1, 2020	18,782	$	37.05
Granted (2)	20,346	$	24.85
Vested	(8,858)	$	36.87
Forfeited	(1,804)	$	32.29
Restricted stock unit awards at September 30, 2020	28,466	$	28.68

_______________

(1)Determined by dividing the aggregate grant date fair value of awards by the number of awards issued.

(2)The aggregate grant date fair value of restricted stock unit awards issued during 2020 was $0.5 million based on a grant date market price of our common shares ranging from $24.77 to $26.23 per share.

Unrecognized compensation cost associated with restricted stock unit awards was approximately $0.4 million at September 30, 2020. Due to the graded vesting provisions of these awards, we expect to recognize the remaining compensation cost for these awards over a weighted-average period of 1.4 years.

Performance Share Unit Awards

The following table presents performance share unit award activity for the periods indicated:

		Weighted-
		Average Grant
	Number of	Date Fair Value
	Shares	per Share (1)
Performance share unit awards at January 1, 2020	2,787	$	43.00
Granted (2)	10,781	$	24.92
Vested	—	$	—
Forfeited	(595)	$	30.22
Performance share unit awards at September 30, 2020	12,973	$	28.56

_______________

(1)Determined by dividing the aggregate grant date fair value of awards by the number of awards issued.

(2)The aggregate grant date fair value of performance share unit awards issued during 2020 was $0.2 million based on a grant date market price of our common shares ranging from $24.77 to $26.23 per share and assuming a performance factor of 100 percent.

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Supplemental Cash Flow Information (Tables)

9 Months Ended

Sep. 30, 2020

Supplemental Cash Flow Elements [Abstract]

Supplemental Cash Flow Information

Supplemental cash flows and non-cash transactions were as follows for the periods indicated (in thousands):

	Nine Months Ended
	September 30,
	2020		2019
Cash paid for interest	$	288	$	424
Cash paid for federal and state income taxes	419		234
Cash refund for NOL carryback under CARES Act	2,703		—
Non-cash transactions:
Change in accounts payable related to property and equipment additions	(1,232)		(1,538)
Property and equipment acquired under finance leases	1,655		4,148
Issuance of common shares in asset acquisition	—		392

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Leases (Tables)

3 Months Ended

9 Months Ended

Sep. 30, 2020

Sep. 30, 2020

Leases [Abstract]

Lease, Cost

The following table provides the components of lease expense for the periods indicated (in thousands):

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2020		2019		2020		2019
Finance lease cost:
Amortization of ROU assets	$	622	$	553	$	1,728	$	1,254
Interest on lease liabilities	70		87		212		214
Operating lease cost	681		675		2,038		2,254
Short-term lease cost	3,085		2,527		7,756		7,355
Total lease expense	$	4,458	$	3,842	$	11,734	$	11,077

The following table provides supplemental cash flow and other information related to leases for the periods indicated (in thousands):

	Nine Months Ended
	September 30,
	2020		2019
Cash paid for amounts included in measurement of lease liabilities:
Operating cash flows from operating leases (1)	$	2,037	$	2,254
Operating cash flows from finance leases	295		197
Financing cash flows from finance leases	1,677		1,171
ROU assets obtained in exchange for new lease liabilities:
Finance leases (2)	1,655		4,148
Operating leases	630		12,006

______________

(1)Amounts are included in Other operating activities on the unaudited condensed consolidated statements of cash flows.

(2)2020 amount consists of a finance lease agreement for 40 trailers with a six year term that we entered into in connection with the CTL acquisition. See Note 6 for further information.

The following table provides the lease terms and discount rates for the periods indicated:

	Nine Months Ended
	September 30,
	2020	2019
Weighted-average remaining lease term (years):
Finance leases	3.18	3.28
Operating leases	4.46	4.98
Weighted-average discount rate:
Finance leases	4.3%	4.9%
Operating leases	4.4%	5.0%

Assets and Liabilities, Lessee

The following table provides supplemental balance sheet information related to leases at the dates indicated (in thousands):

	September 30,		December 31,
	2020		2019
Assets
Finance lease ROU assets (1)	$	6,307	$	6,384
Operating lease ROU assets	8,453		9,576
Liabilities
Current
Finance lease liabilities	2,505		2,167
Operating lease liabilities	2,137		2,252
Noncurrent
Finance lease liabilities	4,011		4,376
Operating lease liabilities	6,314		7,323

______________

(1)Amounts are included in Property and equipment, net on the unaudited condensed consolidated balance sheets.

Lessee, Operating Lease, Liability, Maturity

The following table provides maturities of undiscounted lease liabilities at September 30, 2020 (in thousands):

	Finance		Operating
	Lease		Lease
Remainder of 2020	$	681	$	678
2021	2,723		2,343
2022	1,789		2,002
2023	939		1,821
2024	336		1,700
Thereafter	445		679
Total lease payments	6,913		9,223
Less: Interest	(397)		(772)
Present value of lease liabilities	6,516		8,451
Less: Current portion of lease obligation	(2,505)		(2,137)
Total long-term lease obligation	$	4,011	$	6,314

The following table provides maturities of undiscounted lease liabilities at December 31, 2019 (in thousands):

	Finance		Operating
	Lease		Lease
2020	$	2,426	$	2,660
2021	2,426		2,256
2022	1,492		1,914
2023	642		1,776
2024	37		1,668
Thereafter	—		443
Total lease payments	7,023		10,717
Less: Interest	(480)		(1,142)
Present value of lease liabilities	6,543		9,575
Less: Current portion of lease obligation	(2,167)		(2,252)
Total long-term lease obligation	$	4,376	$	7,323

Finance Lease, Liability, Maturity

The following table provides maturities of undiscounted lease liabilities at September 30, 2020 (in thousands):

	Finance		Operating
	Lease		Lease
Remainder of 2020	$	681	$	678
2021	2,723		2,343
2022	1,789		2,002
2023	939		1,821
2024	336		1,700
Thereafter	445		679
Total lease payments	6,913		9,223
Less: Interest	(397)		(772)
Present value of lease liabilities	6,516		8,451
Less: Current portion of lease obligation	(2,505)		(2,137)
Total long-term lease obligation	$	4,011	$	6,314

The following table provides maturities of undiscounted lease liabilities at December 31, 2019 (in thousands):

	Finance		Operating
	Lease		Lease
2020	$	2,426	$	2,660
2021	2,426		2,256
2022	1,492		1,914
2023	642		1,776
2024	37		1,668
Thereafter	—		443
Total lease payments	7,023		10,717
Less: Interest	(480)		(1,142)
Present value of lease liabilities	6,543		9,575
Less: Current portion of lease obligation	(2,167)		(2,252)
Total long-term lease obligation	$	4,376	$	7,323

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Commitments and Contingencies (Tables)

9 Months Ended

Sep. 30, 2020

Commitments and Contingencies Disclosure [Abstract]

Schedule of expenses and losses incurred but not reported and accrued workers' compensation

The amount of pre-funded insurance premiums left to cover potential future losses related to periods prior to October 1, 2017, and our accruals for automobile and workers’ compensation claims were as follows at the dates indicated (in thousands):

	September 30,		December 31,
	2020		2019
Pre-funded premiums for losses incurred but not reported	$	57	$	168
Accrued automobile and workers’ compensation claims	2,686		2,956

Schedule of accrued medical claims

Medical accrual amounts were as follows at the dates indicated (in thousands):

	September 30,		December 31,
	2020		2019
Accrued medical claims	$	2,249	$	1,016

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Organization and Basis of Presentation (Details)	9 Months Ended
	Sep. 30, 2020 segment state
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Number of states in which entity operates | state	48
Number of operating segments	2
Number of reportable segments	2

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Summary of Significant Accounting Policies - Reconciliation of Cash and Restricted Cash (Details) - USD ($) $ in Thousands	Sep. 30, 2020	Dec. 31, 2019	Sep. 30, 2019	Dec. 31, 2018
Accounting Policies [Abstract]
Cash and cash equivalents	$ 53,106	$ 112,994
Restricted cash	4,865	9,261
Total cash, cash equivalents and restricted cash shown in the unaudited condensed consolidated statements of cash flows	$ 57,971	$ 122,255	$ 129,629	$ 117,066

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Summary of Significant Accounting Policies - Common Shares Outstanding (Details) - shares	3 Months Ended
	Jun. 30, 2020	Mar. 31, 2020
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Beginning balance (in shares)	4,235,750	4,235,533
Vesting of restricted stock unit awards (in shares)	8,641	217
Shares withheld to cover taxes upon vesting of restricted stock unit awards (in shares)	(2,107)
Ending balance (in shares)	4,242,284	4,235,750

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Summary of Significant Accounting Policies - Reconciliation of Basic and Diluted Earnings (Losses) per Share (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands	3 Months Ended						9 Months Ended
	Sep. 30, 2020	Jun. 30, 2020	Mar. 31, 2020	Sep. 30, 2019	Jun. 30, 2019	Mar. 31, 2019	Sep. 30, 2020	Sep. 30, 2019
Basic earnings per share:
Net (losses) earnings	$ 3,073	$ 3,503	$ (11,427)	$ 640	$ 6	$ 4,908	$ (4,851)	$ 5,554
Basic weighted average number of shares outstanding (in shares)	4,242			4,234			4,239	4,226
Basic earnings per share (in dollars per share)	$ 0.72			$ 0.15			$ (1.14)	$ 1.31
Diluted weighted average number of shares outstanding:
Basic weighted average number of shares outstanding (in shares)	4,242			4,234			4,239	4,226
Total diluted shares (in shares)	4,253			4,238			4,239	4,230
Diluted earnings per share (in dollars per share)	$ 0.72			$ 0.15			$ (1.14)	$ 1.31
Restricted stock units awards
Diluted weighted average number of shares outstanding:
Unit awards (in shares)	9			3			0	4
Performance share unit awards
Diluted weighted average number of shares outstanding:
Unit awards (in shares)	2			1			0	0

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Summary of Significant Accounting Policies - Fair Value (Details)	Sep. 30, 2020 contract
Hedging accounting
Derivative Instruments and Hedging Activities Disclosures [Line Items]
Number of contracts held	0

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Summary of Significant Accounting Policies - Income Taxes, Inventory and Property and Equipment (Details) - USD ($) $ in Thousands	1 Months Ended	9 Months Ended
	Jun. 30, 2020	Sep. 30, 2020
Accounting Policies [Abstract]
Income tax cash refunds	$ 2,700
CARES Act, cash benefits		$ 3,700
Inventory write-down		$ 18,200
Minimum
Property, Plant and Equipment [Abstract]
Property and equipment, useful life		2 years
Maximum
Property, Plant and Equipment [Abstract]
Property and equipment, useful life		39 years

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Revenue Recognition - Revenue Disaggregation (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2020	Sep. 30, 2019	Sep. 30, 2020	Sep. 30, 2019
Disaggregation of Revenue [Line Items]
Total revenues from contracts with customers	$ 263,987	$ 411,699	$ 743,634	$ 1,195,637
Total revenues	266,904	450,307	772,667	1,379,908
Goods transferred at a point in time
Disaggregation of Revenue [Line Items]
Total revenues from contracts with customers	242,267	396,001	693,513	1,147,139
Services transferred over time
Disaggregation of Revenue [Line Items]
Total revenues from contracts with customers	21,720	15,698	50,121	48,498
Revenues from contracts with customers
Disaggregation of Revenue [Line Items]
Total revenues from contracts with customers	263,987	411,699	743,634	1,195,637
Other
Disaggregation of Revenue [Line Items]
Total revenues from contracts with customers	2,917	38,608	29,033	184,271
Marketing
Disaggregation of Revenue [Line Items]
Total revenues from contracts with customers	242,267	396,001	693,513	1,147,139
Total revenues	245,184	434,609	722,546	1,331,410
Marketing | Goods transferred at a point in time
Disaggregation of Revenue [Line Items]
Total revenues from contracts with customers	242,267	396,001	693,513	1,147,139
Marketing | Services transferred over time
Disaggregation of Revenue [Line Items]
Total revenues from contracts with customers	0	0	0	0
Marketing | Revenues from contracts with customers
Disaggregation of Revenue [Line Items]
Total revenues from contracts with customers	242,267	396,001	693,513	1,147,139
Marketing | Other
Disaggregation of Revenue [Line Items]
Total revenues from contracts with customers	2,917	38,608	29,033	184,271
Transportation
Disaggregation of Revenue [Line Items]
Total revenues from contracts with customers	21,720	15,698	50,121	48,498
Total revenues	21,720	15,698	50,121	48,498
Transportation | Goods transferred at a point in time
Disaggregation of Revenue [Line Items]
Total revenues from contracts with customers	0	0	0	0
Transportation | Services transferred over time
Disaggregation of Revenue [Line Items]
Total revenues from contracts with customers	21,720	15,698	50,121	48,498
Transportation | Revenues from contracts with customers
Disaggregation of Revenue [Line Items]
Total revenues from contracts with customers	21,720	15,698	50,121	48,498
Transportation | Other
Disaggregation of Revenue [Line Items]
Total revenues from contracts with customers	$ 0	$ 0	$ 0	$ 0

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Revenue Recognition - Other Revenue (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2020	Sep. 30, 2019	Sep. 30, 2020	Sep. 30, 2019
Revenue from Contract with Customer [Abstract]
Revenue gross-up	$ 97,566	$ 193,440	$ 315,049	$ 658,606

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Prepayments and Other Current Assets (Details) - USD ($) $ in Thousands	Sep. 30, 2020	Dec. 31, 2019
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract]
Insurance premiums	$ 153	$ 473
Rents, licenses and other	1,264	1,086
Total prepayments and other current assets	$ 1,417	$ 1,559

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Property and Equipment (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2020	Sep. 30, 2019	Sep. 30, 2020	Sep. 30, 2019	Dec. 31, 2019
Property, Plant and Equipment [Line Items]
Property and equipment, gross	$ 160,189		$ 160,189		$ 164,244
Less accumulated depreciation	(95,720)		(95,720)		(95,198)
Property and equipment, net	64,469		64,469		69,046
Total depreciation and amortization	4,859	$ 4,393	$ 13,610	$ 12,266
Minimum
Property, Plant and Equipment [Line Items]
Property and equipment, useful life			2 years
Maximum
Property, Plant and Equipment [Line Items]
Property and equipment, useful life			39 years
Assets not held under finance eases
Property, Plant and Equipment [Line Items]
Total depreciation and amortization	4,237	3,840	$ 11,882	11,012
Assets held under finance leases
Property, Plant and Equipment [Line Items]
Total depreciation and amortization	622	$ 553	1,728	$ 1,254
Tractors and trailers
Property, Plant and Equipment [Line Items]
Property and equipment, gross	115,809		$ 115,809		115,693
Tractors and trailers | Minimum
Property, Plant and Equipment [Line Items]
Property and equipment, useful life			5 years
Tractors and trailers | Maximum
Property, Plant and Equipment [Line Items]
Property and equipment, useful life			6 years
Tractors and trailers | Assets held under finance leases
Property, Plant and Equipment [Line Items]
Property and equipment, gross	7,200		$ 7,200		5,500
Less accumulated depreciation	(2,600)		(2,600)		(1,700)
Field equipment
Property, Plant and Equipment [Line Items]
Property and equipment, gross	25,152		$ 25,152		25,094
Field equipment | Minimum
Property, Plant and Equipment [Line Items]
Property and equipment, useful life			2 years
Field equipment | Maximum
Property, Plant and Equipment [Line Items]
Property and equipment, useful life			5 years
Field equipment | Assets held under finance leases
Property, Plant and Equipment [Line Items]
Property and equipment, gross	3,300		$ 3,300		3,300
Less accumulated depreciation	(1,600)		(1,600)		(700)
Buildings
Property, Plant and Equipment [Line Items]
Property and equipment, gross	14,939		$ 14,939		16,055
Buildings | Minimum
Property, Plant and Equipment [Line Items]
Property and equipment, useful life			5 years
Buildings | Maximum
Property, Plant and Equipment [Line Items]
Property and equipment, useful life			39 years
Office equipment
Property, Plant and Equipment [Line Items]
Property and equipment, gross	1,893		$ 1,893		1,951
Office equipment | Minimum
Property, Plant and Equipment [Line Items]
Property and equipment, useful life			2 years
Office equipment | Maximum
Property, Plant and Equipment [Line Items]
Property and equipment, useful life			5 years
Land
Property, Plant and Equipment [Line Items]
Property and equipment, gross	1,790		$ 1,790		1,790
Construction in progress
Property, Plant and Equipment [Line Items]
Property and equipment, gross	$ 606		$ 606		$ 3,661

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Acquisition - Additional Information (Details) $ in Thousands			3 Months Ended
	Jun. 26, 2020 USD ($) trailer marker_area truck	May 17, 2020 trailer location	Sep. 30, 2020 USD ($)
Schedule of Asset Acquisition [Line Items]
Amortization of intangible assets			$ 100
Comcar
Schedule of Asset Acquisition [Line Items]
Number of operating locations | location		9
Payments for asset acquisitions	$ 9,000
Number of tractors | truck	163
Number of trailers | trailer	328
New market areas | marker_area	6
Transaction costs	$ 100
Total purchase price	$ 9,163
Finance leased arrangements, number of trailers | trailer		40
Comcar | Customer Relationships
Schedule of Asset Acquisition [Line Items]
Useful life		7 years
Comcar | Trailers
Schedule of Asset Acquisition [Line Items]
Useful life		6 years

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Acquisition - Consideration Paid and Amortization Expense (Details) - Comcar $ in Thousands	Jun. 26, 2020 USD ($)
Schedule of Asset Acquisition [Line Items]
Property and equipment — tractors and trailers	$ 5,901
Materials and supplies	87
Intangible assets — customer relationships	3,175
Total purchase price	$ 9,163

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Cash Deposits and Other Assets (Details) - USD ($) $ in Thousands	Sep. 30, 2020	Dec. 31, 2019
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract]
Insurance collateral deposits	$ 675	$ 1,233
Excess loss fund	521	943
Accumulated interest income	425	609
State collateral deposits	65	37
Materials and supplies	507	477
Total cash deposits and other assets	$ 2,193	$ 3,299

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Segment Reporting - Information Concerning Business Activities (Details)	3 Months Ended		9 Months Ended
	Sep. 30, 2020 USD ($)	Sep. 30, 2019 USD ($)	Sep. 30, 2020 USD ($) segment	Sep. 30, 2019 USD ($)
Segment Reporting [Abstract]
Number of reportable segments | segment			2
Number of operating segments | segment			2
Segment Reporting Information [Line Items]
Revenues	$ 266,904,000	$ 450,307,000	$ 772,667,000	$ 1,379,908,000
Segment operating (losses) earnings	6,056,000	303,000	(10,949,000)	4,913,000
Depreciation and amortization	4,859,000	4,393,000	13,610,000	12,266,000
Property and equipment additions	704,000	12,304,000
Property and equipment acquired under finance leases			1,700,000	4,100,000
Leasehold Improvements
Segment Reporting Information [Line Items]
Property and equipment additions	100,000		500,000
Marketing
Segment Reporting Information [Line Items]
Revenues	245,184,000	434,609,000	722,546,000	1,331,410,000
Depreciation and amortization	1,836,000	2,214,000
Property and equipment additions	684,000	3,894,000
Inventory liquidation (losses) gains	(12,000)	(2,100,000)	(18,200,000)	1,500,000
Transportation
Segment Reporting Information [Line Items]
Revenues	21,720,000	15,698,000	50,121,000	48,498,000
Depreciation and amortization	3,023,000	2,179,000
Property and equipment additions	(32,000)	8,410,000
Other
Segment Reporting Information [Line Items]
Revenues	0	0
Depreciation and amortization	0	0
Property and equipment additions	52,000	0
Operating Segments
Segment Reporting Information [Line Items]
Revenues			772,667,000	1,379,908,000
Segment operating (losses) earnings	7,461,000	3,042,000	(3,919,000)	12,918,000
Depreciation and amortization			13,610,000	12,266,000
Property and equipment additions			3,589,000	25,425,000
Operating Segments | Marketing
Segment Reporting Information [Line Items]
Revenues			722,546,000	1,331,410,000
Segment operating (losses) earnings	5,869,000	2,888,000	(4,952,000)	10,948,000
Depreciation and amortization			5,700,000	6,640,000
Property and equipment additions			2,734,000	6,896,000
Operating Segments | Transportation
Segment Reporting Information [Line Items]
Revenues			50,121,000	48,498,000
Segment operating (losses) earnings	1,592,000	154,000	1,033,000	1,970,000
Depreciation and amortization			7,910,000	5,626,000
Property and equipment additions			332,000	18,529,000
Operating Segments | Other
Segment Reporting Information [Line Items]
Revenues			0	0
Segment operating (losses) earnings	0	0	0	0
Depreciation and amortization			0	0
Property and equipment additions			523,000	0
Intersegment
Segment Reporting Information [Line Items]
Revenues	$ 0	$ 0	$ 0	$ 0

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Segment Reporting - Reconciliation of Segment Earnings to Earnings Before Income Taxes (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2020	Sep. 30, 2019	Sep. 30, 2020	Sep. 30, 2019
Reconciliation of Operating Profit (Loss) from Segments to Consolidated [Abstract]
Operating (losses) earnings	$ 6,056	$ 303	$ (10,949)	$ 4,913
Gain on dissolution of investment	0	0	0	573
Interest income	105	758	614	2,145
Interest expense	(70)	(242)	(288)	(424)
(Losses) Earnings before income taxes	6,091	819	(10,623)	7,207
Operating Segments
Reconciliation of Operating Profit (Loss) from Segments to Consolidated [Abstract]
Operating (losses) earnings	7,461	3,042	(3,919)	12,918
General and administrative
Reconciliation of Operating Profit (Loss) from Segments to Consolidated [Abstract]
Operating (losses) earnings	(1,405)	(2,739)	(7,030)	(8,005)
Segment reconciling items
Reconciliation of Operating Profit (Loss) from Segments to Consolidated [Abstract]
Gain on dissolution of investment	0	0	0	573
Interest income	105	758	614	2,145
Interest expense	$ (70)	$ (242)	$ (288)	$ (424)

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Segment Reporting - Identifiable Assets by Industry Segment (Details) - USD ($) $ in Thousands	Sep. 30, 2020	Dec. 31, 2019
Segment Reconciliation [Abstract]
Total assets	$ 256,460	$ 330,842
Operating Segments
Segment Reconciliation [Abstract]
Total assets	256,460	330,842
Operating Segments | Marketing
Segment Reconciliation [Abstract]
Total assets	119,758	141,402
Operating Segments | Transportation
Segment Reconciliation [Abstract]
Total assets	67,310	58,483
Cash and other
Segment Reconciliation [Abstract]
Total assets	$ 69,392	$ 130,957

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Transactions with Affiliates (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2020	Sep. 30, 2019	Sep. 30, 2020	Sep. 30, 2019
Transactions with Affiliates [Abstract]
Billings to affiliates	$ 263,987	$ 411,699	$ 743,634	$ 1,195,637
Affiliated entities
Transactions with Affiliates [Abstract]
Affiliate billings (refunds) to us	(15)	20	17	63
Billings to affiliates	1	1	3	3
Rentals paid to affiliate	$ 256	$ 122	$ 500	$ 366

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Derivative Instruments and Fair Value Measurements - Narrative (Details) - Commodity Contract	3 Months Ended	9 Months Ended
	Mar. 31, 2020 barrel_of_oil_per_day	Sep. 30, 2020 barrel_of_oil_per_day contract	Dec. 31, 2019 contract
Derivative Instruments, Gain (Loss) [Line Items]
Number of contracts held | contract		4	6
October 2020 through December 2020
Derivative Instruments, Gain (Loss) [Line Items]
Production		258
January 2021 through December 2021
Derivative Instruments, Gain (Loss) [Line Items]
Production		64
January 2020 through February 2020
Derivative Instruments, Gain (Loss) [Line Items]
Production	258
March 2020 through April 2020
Derivative Instruments, Gain (Loss) [Line Items]
Production	322
May 2020 through December 2020
Derivative Instruments, Gain (Loss) [Line Items]
Production	258

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Derivative Instruments and Fair Value Measurements - Use of Derivative Instruments (Details) - Commodity Contract - Not Designated as Hedging Instrument - USD ($) $ in Thousands	Sep. 30, 2020	Dec. 31, 2019
Current Assets
Derivatives, Fair Value [Line Items]
Asset derivatives	$ 3	$ 0
Liability derivatives	0	0
Less counterparty offsets	0	0
As reported fair value contracts	3	0
Other Assets
Derivatives, Fair Value [Line Items]
Asset derivatives	0	0
Liability derivatives	0	0
Less counterparty offsets	0	0
As reported fair value contracts	0	0
Current Liabilities
Derivatives, Fair Value [Line Items]
Asset derivatives	0	0
Liability derivatives	0	0
Less counterparty offsets	0	0
As reported fair value contracts	0	0
Other Liabilities
Derivatives, Fair Value [Line Items]
Asset derivatives	0	0
Liability derivatives	0	0
Less counterparty offsets	0	0
As reported fair value contracts	$ 0	$ 0

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Derivative Instruments and Fair Value Measurements - Gain (Loss) on Derivatives (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2020	Sep. 30, 2019	Sep. 30, 2020	Sep. 30, 2019
Revenues – marketing | Not Designated as Hedging Instrument | Commodity Contract
Derivative [Line Items]
Gain (loss) on derivative	$ (9)	$ (1)	$ 3	$ (21)

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Derivative Instruments and Fair Value Measurements - Fair Value Measurements (Details) - Fair Value, Measurements, Recurring - USD ($) $ in Thousands	Sep. 30, 2020	Dec. 31, 2019
Derivatives:
Current assets	$ 3	$ 0
Current assets, counterparty offsets	0	0
Current liabilities	0	0
Current liabilities, counterparty offsets	0	0
Net value	3	0
Net value, counterparty offsets	0	0
Quoted Prices in Active Markets for Identical Assets and Liabilities (Level 1)
Derivatives:
Current assets	0	0
Current liabilities	0	0
Net value	0	0
Significant Other Observable Inputs (Level 2)
Derivatives:
Current assets	3	0
Current liabilities	0	0
Net value	3	0
Significant Unobservable Inputs (Level 3)
Derivatives:
Current assets	0	0
Current liabilities	0	0
Net value	$ 0	$ 0

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Stock-Based Compensation Plan (Details) - The 2018 LTIP - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2020	Sep. 30, 2019	Sep. 30, 2020	Sep. 30, 2019	Dec. 31, 2019	May 31, 2018
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of shares authorized (in shares)	81,735		81,735			150,000
Compensation expense	$ 149,000	$ 155,000	$ 453,000	$ 352,000
Accrued dividends	$ 37,900		$ 37,900		$ 23,600
Restricted stock units awards
Number of Shares
Unit awards, beginning balance (in shares)			18,782
Granted (in shares)			20,346
Vested (in shares)			(8,858)
Forfeited (in shares)			(1,804)
Unit awards, ending balance (in shares)	28,466		28,466
Weighted Average Grant Date Fair Value per Share
Unit awards, beginning balance (in dollars per share)			$ 37.05
Granted (in dollars per share)			24.85
Vested (in dollars per share)			36.87
Forfeited (in dollars per share)			32.29
Unit awards, ending balance (in dollars per share)	$ 28.68		$ 28.68
Aggregate grant date fair value awards issues			$ 500,000
Unrecognized compensation cost	$ 400,000		$ 400,000
Period for recognition for remaining compensation cost			1 year 4 months 24 days
Restricted stock units awards | Minimum
Weighted Average Grant Date Fair Value per Share
Granted (in dollars per share)			$ 24.77
Restricted stock units awards | Maximum
Weighted Average Grant Date Fair Value per Share
Granted (in dollars per share)			$ 26.23
Performance share unit awards
Number of Shares
Unit awards, beginning balance (in shares)			2,787
Granted (in shares)			10,781
Vested (in shares)			0
Forfeited (in shares)			(595)
Unit awards, ending balance (in shares)	12,973		12,973
Weighted Average Grant Date Fair Value per Share
Unit awards, beginning balance (in dollars per share)			$ 43.00
Granted (in dollars per share)			24.92
Vested (in dollars per share)			0
Forfeited (in dollars per share)			30.22
Unit awards, ending balance (in dollars per share)	$ 28.56		$ 28.56
Aggregate grant date fair value awards issues			$ 200,000
Performance factor			100000.00%
Unrecognized compensation cost	$ 200,000		$ 200,000
Period for recognition for remaining compensation cost			2 years 2 months 12 days
Performance share unit awards | Minimum
Weighted Average Grant Date Fair Value per Share
Granted (in dollars per share)			$ 24.77
Performance share unit awards | Maximum
Weighted Average Grant Date Fair Value per Share
Granted (in dollars per share)			$ 26.23

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Supplemental Cash Flow Information (Details) - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2020	Sep. 30, 2019
Supplemental Cash Flow Elements [Abstract]
Cash paid for interest	$ 288	$ 424
Cash paid for federal and state income taxes	419	234
Cash refund for NOL carryback under CARES Act	2,703	0
Non-cash transactions:
Change in accounts payable related to property and equipment additions	(1,232)	(1,538)
Property and equipment acquired under finance leases	1,655	4,148
Issuance of common shares in asset acquisition	$ 0	$ 392

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Leases (Details) $ in Thousands		3 Months Ended		9 Months Ended
	May 17, 2020 trailer	Sep. 30, 2020 USD ($)	Sep. 30, 2019 USD ($)	Sep. 30, 2020 USD ($)	Sep. 30, 2019 USD ($)	Dec. 31, 2020 USD ($)	Dec. 31, 2019 USD ($)
Lease, Cost [Abstract]
Amortization of ROU assets		$ 622	$ 553	$ 1,728	$ 1,254
Interest on lease liabilities		70	87	212	214
Operating lease cost		681	675	2,038	2,254
Short-term lease cost		3,085	2,527	7,756	7,355
Total lease expense		$ 4,458	$ 3,842	11,734	11,077
Operating cash flows from operating leases				2,037	2,254
Operating cash flows from finance leases				295	197
Financing cash flows from finance leases				1,677	1,171
ROU assets obtained in exchange for new lease liabilities, Finance leases				1,655	4,148
ROU assets obtained in exchange for new lease liabilities, Operating leases				$ 630	$ 12,006
Weighted-average remaining lease term (years), Finance leases		3 years 2 months 4 days	3 years 3 months 10 days	3 years 2 months 4 days	3 years 3 months 10 days
Weighted-average remaining lease term (years), Operating leases		4 years 5 months 15 days	4 years 11 months 23 days	4 years 5 months 15 days	4 years 11 months 23 days
Weighted-average discount rate, Finance leases		4.30%	4.90%	4.30%	4.90%
Weighted-average discount rate, Operating leases		4.40%	5.00%	4.40%	5.00%
Assets and Liabilities, Lessee [Abstract]
Finance lease ROU assets		$ 6,307		$ 6,307			$ 6,384
Operating lease ROU assets		8,453		8,453			9,576
Finance lease liabilities, Current		2,505		2,505			2,167
Operating lease liabilities, Current		2,137		2,137			2,252
Finance lease liabilities, Noncurrent		4,011		4,011			4,376
Operating lease liabilities, Noncurrent		6,314		6,314			7,323
Finance Lease Liabilities, Payments
Remainder of 2020		681		681
2021		2,723		2,723			2,426
2022		1,789		1,789			2,426
2023		939		939			1,492
2024		336		336			642
Thereafter		445		445
2024							37
Thereafter							0
Total lease payments		6,913		6,913			7,023
Less: Interest		(397)		(397)			(480)
Present value of lease liabilities		6,516		6,516			6,543
Less: Current portion of lease obligation		(2,505)		(2,505)			(2,167)
Finance lease obligations		4,011		4,011			4,376
Operating Lease Liabilities, Payments Due
Remainder of 2020		678		678
2021		2,343		2,343			2,660
2022		2,002		2,002			2,256
2023		1,821		1,821			1,914
2024		1,700		1,700			1,776
Thereafter						$ 679
2024							1,668
Thereafter							443
Total lease payments		9,223		9,223			10,717
Less: Interest		(772)		(772)			(1,142)
Present value of lease liabilities		8,451		8,451			9,575
Less: Current portion of lease obligation		(2,137)		(2,137)			(2,252)
Total long-term lease obligation		$ 6,314		$ 6,314			$ 7,323
Comcar
Schedule of Asset Acquisition [Line Items]
Finance leased arrangements, number of trailers | trailer	40
Comcar | Trailers
Schedule of Asset Acquisition [Line Items]
Useful life	6 years

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Commitments and Contingencies - Pre-funded Insurance (Details) - USD ($) $ in Thousands	Sep. 30, 2020	Dec. 31, 2019
Commitments and Contingencies Disclosure [Abstract]
Pre-funded premiums for losses incurred but not reported	$ 57	$ 168
Accrued automobile and workers’ compensation claims	$ 2,686	$ 2,956

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Commitments and Contingencies - Schedule of Accrued Medical Claims (Details) - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2020	Dec. 31, 2019	Aug. 15, 2019
Commitments and Contingencies Disclosure [Abstract]
Umbrellas insurance coverage	$ 1,400
Aggregate medical claims for umbrella insurance coverage per calendar year	7,500
Accrued medical claims	$ 2,249	$ 1,016
Income tax examination, proposed penalty			$ 1,200

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Subsequent Event (Details) - Subsequent Event $ in Millions	Oct. 22, 2020 USD ($) station barrel_of_oil_per_day bbl doc terminal payment
Victoria Express Pipeline, LLC (VEX) and EnLink Midstream Operating, L.P.
Subsequent Event [Line Items]
Purchase price	$ 20.0
Amount at closing	$ 10.0
Number of quarterly Installment payments | payment	4
Quarterly installment payment	$ 2.5
Quarterly installments, interest rate	4.00%
Victoria Express Pipeline, LLC (VEX)
Subsequent Event [Line Items]
Capacity of ground storage in barrels | bbl	350,000
Number of offload stations | station	2
Number of docs | doc	2
Connection to number of terminals | terminal	2
Capacity of a pipeline | barrel_of_oil_per_day	90,000
Controlled capacity of ground storage in barrels | bbl	450,000
Controlled Number of Docs | doc	3