Adams Resources & Energy (AE), mcap=$138m

AE pitch:
– Transportation and logistics company serving the energy and chemical sectors, primarily onshore.
– Has momentum in each of its core business segments.
– Trades under 3x EBITDA.
– New management is turning the business around.
– Previously poorly managed for many years and run like a private company under Adams family control.
– In Nov’22 all 44% of the family’s ownership was cashed out at $36/share.
– Current management team led by the current CEO was hired in 2018 to turn around operations.
– Despite the pandemic, since then the company has been meaningfully building adjusted FCF.
– Recently completed highly accretive acquisitions of Firebird Bulk Carriers and Phoenix Oil for about $40m in cash.
– Repurchases and acquisitions, the net debt is close to zero.

AE valuation:

– Expected to generate $40m of adj. EBITDA in 2022 and $50m+ in 2023.
– $AE is trading at 3x 2022 adjusted EBITDA and 2.5x 2023 estimated adj. EBITDA.
– At 6x multiple would be worth $120/share.

Exp. gain: +140% to $120/share

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