Vertex Energy Announces First Quarter 2023 Results
The Company will host a conference call to discuss first quarter 2023 results today at 8:30 A.M. Eastern Time, details are included at the end of this release.
FIRST QUARTER 2023 HIGHLIGHTS
-
Reported net income of
$53.8 million $0.71 -
Reported Adjusted EBITDA of
$34.9 million -
Continued safe operation of Mobile Refinery with first quarter 2023 operational results in-line with prior guidance for throughput and capture rate, at 71,328 bpd and
51% , respectively - Renewable diesel conversion project achieved mechanical completion on March 31, 2023 on schedule, and on budget
- Renewable diesel production startup delayed following failure in feedstock pumping system
-
Total cash and cash equivalents of
$95.1 million $8.4 million
Vertex reported first quarter 2023 net income of
MANAGEMENT COMMENTARY
“During the first quarter, we reached an important milestone in the evolution of the Company’s strategic objectives by successfully reaching mechanical completion of our renewable diesel (RD) conversion project both on-time, and budget,” stated Benjamin P. Cowart, President and CEO of Vertex, who continued, “Our first quarter financial results reflect continued smooth, safe operations at the facility, despite the added complexity of concurrent construction activities on the RD project, an achievement I am particularly proud of. Regretfully, we are experiencing a delay in our renewable diesel startup sequence due to a failure in our feedstock pumping system. However, our team is focused on addressing known issues, minimizing impacts, and resuming startup sequencing following repair and reinstallation operations. I have faith in our team’s ability to resolve the issue with minimal delay."
SEGMENT PERFORMANCE (Inclusive of Discontinued Operations)
The Mobile Refinery operations generated
Total throughput at the Mobile Refinery was 71,328 barrels per day in the first quarter, resulting in
The benchmark 2-1-1 Gulf Coast crack spread was
The following table presents the summary financial and operating results from the Mobile Refinery:
Prior |
||||
1Q23 |
4Q22 |
%Q/Q |
Guidance |
|
|
|
|
|
|
Total Throughput (bpd) |
71,328 |
77,964 |
( |
70,500 |
Total Production (MMbbl) |
6.24 |
7.13 |
( |
6.35 |
Facility Capacity Utilization |
|
|
- |
- |
|
|
|
|
|
Direct Opex Per Barrel ($/bbl) |
|
|
( |
|
|
|
|
|
|
Gross Profit ($/MM) |
65.5 |
89.9 |
( |
- |
Fuel Gross Margin ($/MM) |
103.8 |
147.1 |
( |
- |
RIN Expense |
16.1 |
28.4 |
( |
- |
Adjusted Fuel Gross Margin ($/MM) |
87.7 |
118.7 |
( |
- |
|
|
|
|
|
Fuel Gross Margin Per Barrel ($/bbl) |
|
|
( |
- |
RIN Expense Per Barrel |
|
|
( |
- |
Adjusted Fuel Gross Margin ($/bbl) |
|
|
( |
- |
|
|
|
|
|
Gulf Coast 2-1-1 Crack Spread ($/bbl) |
|
|
( |
- |
Capture Rate |
|
|
- |
|
Adjusted Capture Rate |
|
|
( |
- |
|
|
|
|
|
Production Yield |
|
|
|
|
Gasoline (bpd) |
15,723 |
20,840 |
( |
- |
% Production |
|
|
- |
- |
ULSD (bpd) |
14,720 |
24,489 |
( |
- |
% Production |
|
|
- |
- |
Jet (bpd) |
12,789 |
12,196 |
|
- |
% Production |
|
|
- |
- |
Other |
26,119 |
19,956 |
|
- |
% Production |
|
|
- |
- |
Total Production (bpd) |
69,351 |
77,481 |
- |
- |
Total Production (MMbbl) |
6.24 |
7.13 |
- |
- |
SEGMENT PERFORMANCE
Black Oil & Recovery Segment
During the 2023 first quarter, the Company’s
Under the terms of the transaction, GFL acquired Vertex’s 20 million gallon per year Heartland used motor oil (UMO) refinery in
Renewable Diesel Conversion Project Update
Renewable diesel conversion project completed on time and budget. Vertex’s previously disclosed capital project designed to modify the
Startup of renewable diesel facility delayed due to failure in feedstock pumping system. Following the ribbon-cutting ceremony held on April 28, 2023, Vertex transitioned from commissioning to start-up sequencing of its renewable diesel facility. During this start-up process, the facility’s feedstock pumping system suffered a critical equipment failure. This failure is isolated to the feed system with no known impacts to the renewable diesel hydrocracker or conventional refining capabilities. Management has confirmed the availability of the necessary parts for repair of the equipment and anticipates that completion of a full diagnosis, repair, and reinstallation of the equipment will occur within the second half of May 2023, followed by plans to resume startup activities.
Balance Sheet and Liquidity Update
As of March 31, 2023, Vertex had total debt outstanding of
Management Outlook
All guidance presented below is current as of the time of this release and is subject to change. All prior financial guidance should no longer be relied upon.
Second Quarter 2023 Financial and Operating Outlook:
|
2Q 2023 |
||
Projections: |
Low |
High |
|
|
|
||
Mobile Refinery Conventional Throughput Volume (Mbpd) |
68 |
|
72 |
Capacity Utilization |
|
|
|
|
|
|
|
Direct Operating Expense ($/bbl) |
|
|
|
Capture Rate (GC 2-1-1 Crack Spread) (%) |
|
|
|
Capital Expenditures ($/MM) |
|
|
|
Commodity Price Risk Management Strategy
Vertex may, at times, utilize derivative instruments to manage exposure to fluctuations in various commodity prices, including refined fuel products sold, natural gas used in the refining process, as well as feedstocks and refined products held in inventory. Management sets and implements hedging policies in order to improve visibility on cost inputs, sales prices, and resulting cash flow generation for the purpose of planning and budgeting of the business.
The company currently has no substantial outstanding crack spread derivative hedge positions as of May 9, 2023, and as such, continues to remain exposed to prevailing market spreads and conditions the foreseeable future.
CONFERENCE CALL AND WEBCAST DETAILS
A conference call will be held today, May 9, 2023 at 8:30 A.M. Eastern Time to review the Company’s financial results, discuss recent events and conduct a question-and-answer session. An audio webcast of the conference call and accompanying presentation materials will also be available in the “Events and Presentation” section of Vertex’s website at www.vertexenergy.com. To listen to a live broadcast, visit the site at least 15 minutes prior to the scheduled start time in order to register, download, and install any necessary audio software.
To participate in the live teleconference:
Domestic: 1-888-886-7786
International: 1-416-764-8658
To listen to a replay of the teleconference, which will be available through May 15, 2023, either go to the Events and Presentation section of Vertex's website at www.vertexenergy.com, or call the number below:
Domestic Replay: 1-844-512-2921
International: 1-412-317-6671
Access ID: 11072292
ABOUT VERTEX ENERGY
FORWARD-LOOKING STATEMENTS
Certain of the matters discussed in this communication which are not statements of historical fact constitute forward-looking statements within the meaning of the securities laws, including the Private Securities Litigation Reform Act of 1995, that involve a number of risks and uncertainties. Words such as “strategy,” “expects,” “continues,” “plans,” “anticipates,” “believes,” “would,” “will,” “estimates,” “intends,” “projects,” “goals,” “targets” and other words of similar meaning are intended to identify forward-looking statements but are not the exclusive means of identifying these statements. Any statements made in this news release other than those of historical fact, about an action, event or development, are forward-looking statements. The important factors that may cause actual results and outcomes to differ materially from those contained in such forward-looking statements include, without limitation, the Company’s projected Outlook for the second quarter of 2023, as discussed above; the timing and outcome of the resumed start up of the renewable diesel unit at the Company’s Mobile Refinery (the “Mobile Refinery”); the Company’s ability to raise sufficient capital to complete future capital projects and the terms of such funding, to the extent necessary; the timing of planned capital projects at the Mobile Refinery and the outcome of such projects; the future production of the Mobile Refinery; estimated and actual production and costs associated with the renewable diesel capital project, estimated revenues over the course of the agreement with Idemitsu, anticipated and unforeseen events which could reduce future production at the refinery or delay planned capital projects, changes in commodity and credits values, and certain early termination rights associated with the Idemitsu agreement and conditions precedent to such agreement; certain mandatory redemption provisions of the outstanding senior convertible notes, the conversion rights associated therewith, and dilution caused by such conversions; the Company’s ability to comply with required covenants under outstanding senior notes and a term loan and pay amounts due under such senior notes and term loan, including interest and other amounts due thereunder; the ability of the Company to retain and hire key personnel; risks associated with the ability of Vertex to complete current plans for expansion and growth, and planned capital projects; the level of competition in our industry and our ability to compete; our ability to respond to changes in our industry; the loss of key personnel or failure to attract, integrate and retain additional personnel; our ability to protect our intellectual property and not infringe on others’ intellectual property; our ability to scale our business; our ability to maintain supplier relationships and obtain adequate supplies of feedstocks; our ability to obtain and retain customers; our ability to produce our products at competitive rates; our ability to execute our business strategy in a very competitive environment; trends in, and the market for, the price of oil and gas and alternative energy sources; the impact of inflation on margins and costs; the volatile nature of the prices for oil and gas caused by supply and demand, including volatility caused by the ongoing
Other important factors that may cause actual results and outcomes to differ materially from those contained in the forward-looking statements included in this communication are described in the Company’s publicly filed reports, including, but not limited to, the Company’s Annual Report on Form 10-K for the year ended December 31, 2022, and the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2023 and future Annual Reports on Form 10-K and Quarterly Reports on Form 10-Q. These reports are available at www.sec.gov. The Company cautions that the foregoing list of important factors is not complete. All subsequent written and oral forward-looking statements attributable to the Company or any person acting on behalf of the Company are expressly qualified in their entirety by the cautionary statements referenced above. Other unknown or unpredictable factors also could have material adverse effects on Vertex’s future results. The forward-looking statements included in this press release are made only as of the date hereof. Vertex cannot guarantee future results, levels of activity, performance or achievements. Accordingly, you should not place undue reliance on these forward-looking statements. Finally, Vertex undertakes no obligation to update these statements after the date of this release, except as required by law, and takes no obligation to update or correct information prepared by third parties that are not paid for by Vertex. If we update one or more forward-looking statements, no inference should be drawn that we will make additional updates with respect to those or other forward-looking statements.
PROJECTIONS
The financial projections (the “Projections”) included herein were prepared by Vertex in good faith using assumptions believed to be reasonable. A significant number of assumptions about the operations of the business of Vertex were based, in part, on economic, competitive, and general business conditions prevailing at the time the Projections were developed. Any future changes in these conditions, may materially impact the ability of Vertex to achieve the financial results set forth in the Projections. The Projections are based on numerous assumptions, including realization of the operating strategy of Vertex; industry performance; no material adverse changes in applicable legislation or regulations, or the administration thereof, or generally accepted accounting principles; general business and economic conditions; competition; retention of key management and other key employees; absence of material contingent or unliquidated litigation, indemnity, or other claims; minimal changes in current pricing; static material and equipment pricing; no significant increases in interest rates or inflation; and other matters, many of which will be beyond the control of Vertex, and some or all of which may not materialize. The Projections also assume the continued uptime of the Company’s facilities at historical levels and the successful funding of, timely completion of, and successful outcome of, planned capital projects. Additionally, to the extent that the assumptions inherent in the Projections are based upon future business decisions and objectives, they are subject to change. Although the Projections are presented with numerical specificity and are based on reasonable expectations developed by Vertex’s management, the assumptions and estimates underlying the Projections are subject to significant business, economic, and competitive uncertainties and contingencies, many of which will be beyond the control of Vertex. Accordingly, the Projections are only estimates and are necessarily speculative in nature. It is expected that some or all of the assumptions in the Projections will not be realized and that actual results will vary from the Projections. Such variations may be material and may increase over time. In light of the foregoing, readers are cautioned not to place undue reliance on the Projections. The projected financial information contained herein should not be regarded as a representation or warranty by Vertex, its management, advisors, or any other person that the Projections can or will be achieved. Vertex cautions that the Projections are speculative in nature and based upon subjective decisions and assumptions. As a result, the Projections should not be relied on as necessarily predictive of actual future events.
NON-GAAP FINANCIAL MEASURES
In addition to our results calculated under generally accepted accounting principles in
The Non-GAAP Financial Measures are presented because we believe they provide additional useful information to investors due to the various noncash items during the period. The Non-GAAP Financial Measures are also frequently used by analysts, investors and other interested parties to evaluate companies in our industry. We use the Non-GAAP Financial Measures as supplements to GAAP measures of performance to evaluate the effectiveness of our business strategies, to make budgeting decisions, to allocate resources and to compare our performance relative to our peers. Additionally, these measures, when used in conjunction with related GAAP financial measures, provide investors with an additional financial analytical framework which management uses, in addition to historical operating results, as the basis for financial, operational and planning decisions and present measurements that third parties have indicated are useful in assessing the Company and its results of operations. The Non-GAAP Financial Measures are unaudited, and have limitations as analytical tools, and you should not consider them in isolation, or as a substitute for analysis of our operating results as reported under GAAP. Some of these limitations are: the Non-GAAP Financial Measures do not reflect cash expenditures, or future requirements for capital expenditures, or contractual commitments; the Non-GAAP Financial Measures do not reflect changes in, or cash requirements for, working capital needs; the Non-GAAP Financial Measures do not reflect the significant interest expense, or the cash requirements necessary to service interest or principal payments, on debt or cash income tax payments; although depreciation and amortization are noncash charges, the assets being depreciated and amortized will often have to be replaced in the future, the Non-GAAP Financial Measures do not reflect any cash requirements for such replacements; the Non-GAAP Financial Measures represent only a portion of our total operating results; and other companies in this industry may calculate the Non-GAAP Financial Measures differently than we do, limiting their usefulness as a comparative measure. The Company’s presentation of these measures should not be construed as an inference that future results will be unaffected by unusual or nonrecurring items. We compensate for these limitations by providing a reconciliation of each of these non-GAAP measures to the most comparable GAAP measure. We encourage investors and others to review our business, results of operations, and financial information in their entirety, not to rely on any single financial measure, and to view these non-GAAP measures in conjunction with the most directly comparable GAAP financial measure. For more information on these non-GAAP financial measures, please see the sections titled “Unaudited Reconciliation of Gross Profit From Continued and Discontinued Operations to Adjusted Gross Margin, Adjusted Gross Margin Per Throughput Barrel, Fuel Gross Margin and Fuel Gross Margin Per Throughput Barrel” at the end of this release.
VERTEX ENERGY, INC.
|
|||||||
|
March 31,
|
|
December 31,
|
||||
ASSETS |
|
|
|
||||
Current assets |
|
|
|
||||
Cash and cash equivalents |
$ |
86,689 |
|
|
$ |
141,258 |
|
Restricted cash |
|
8,429 |
|
|
|
4,929 |
|
Accounts receivable, net |
|
57,908 |
|
|
|
34,548 |
|
Inventory |
|
188,026 |
|
|
|
135,473 |
|
Derivative commodity asset |
|
14 |
|
|
|
— |
|
Prepaid expenses and other current assets |
|
52,504 |
|
|
|
36,660 |
|
Assets held for sale, current |
|
— |
|
|
|
20,560 |
|
Total current assets |
|
393,570 |
|
|
|
373,428 |
|
|
|
|
|
||||
Fixed assets, net |
|
272,310 |
|
|
|
201,749 |
|
Finance lease right-of-use assets |
|
58,319 |
|
|
|
44,081 |
|
Operating lease right-of use assets |
|
68,635 |
|
|
|
53,557 |
|
Intangible assets, net |
|
10,768 |
|
|
|
11,827 |
|
Deferred taxes assets |
|
— |
|
|
|
2,498 |
|
Other assets |
|
2,335 |
|
|
|
2,245 |
|
TOTAL ASSETS |
$ |
805,937 |
|
|
$ |
689,385 |
|
|
|
|
|
||||
LIABILITIES, TEMPORARY EQUITY, AND EQUITY |
|
|
|
||||
Current liabilities |
|
|
|
||||
Accounts payable |
$ |
32,001 |
|
|
$ |
20,997 |
|
Accrued expenses |
|
104,196 |
|
|
|
81,711 |
|
Finance lease liability-current |
|
1,916 |
|
|
|
1,363 |
|
Operating lease liability-current |
|
13,137 |
|
|
|
9,012 |
|
Current portion of long-term debt, net |
|
9,609 |
|
|
|
13,911 |
|
Obligations under inventory financing agreements, net |
|
106,905 |
|
|
|
117,939 |
|
Derivative commodity liability |
|
— |
|
|
|
242 |
|
Liabilities held for sale, current |
|
— |
|
|
|
3,424 |
|
Total current liabilities |
|
267,764 |
|
|
|
248,599 |
|
|
|
|
|
||||
Long-term debt, net |
|
161,470 |
|
|
|
170,010 |
|
Finance lease liability-long-term |
|
59,325 |
|
|
|
45,164 |
|
Operating lease liability-long-term |
|
55,498 |
|
|
|
44,545 |
|
Deferred tax liabilities |
|
16,261 |
|
|
|
— |
|
Derivative warrant liability |
|
23,455 |
|
|
|
14,270 |
|
Other liabilities |
|
1,377 |
|
|
|
1,377 |
|
Total liabilities |
|
585,150 |
|
|
|
523,965 |
|
|
|
|
|
||||
COMMITMENTS AND CONTINGENCIES (Note 4) |
|
— |
|
|
|
— |
|
|
|
|
|
||||
EQUITY |
|
|
|
||||
|
|
|
|
||||
Common stock, 750,000,000 shares authorized; 75,834,826 and 75,668,826 shares issued and outstanding at March 31, 2023 and December 31, 2022, respectively. |
|
76 |
|
|
|
76 |
|
Additional paid-in capital |
|
280,126 |
|
|
|
279,552 |
|
Accumulated deficit |
|
(62,030 |
) |
|
|
(115,893 |
) |
Total Vertex Energy, Inc. shareholders' equity |
|
218,172 |
|
|
|
163,735 |
|
Non-controlling interest |
|
2,615 |
|
|
|
1,685 |
|
Total equity |
|
220,787 |
|
|
|
165,420 |
|
TOTAL LIABILITIES, TEMPORARY EQUITY, AND EQUITY |
$ |
805,937 |
|
|
$ |
689,385 |
|
VERTEX ENERGY, INC.
|
||||||||
|
|
Three Months Ended March 31, |
||||||
|
|
2023 |
|
2022 |
||||
Revenues |
|
$ |
691,142 |
|
|
$ |
74,537 |
|
Cost of revenues (exclusive of depreciation and amortization shown separately below) |
|
|
619,352 |
|
|
|
60,990 |
|
Depreciation and amortization attributable to costs of revenues |
|
|
4,337 |
|
|
|
1,027 |
|
Gross profit |
|
|
67,453 |
|
|
|
12,520 |
|
|
|
|
|
|
||||
Operating expenses: |
|
|
|
|
||||
Selling, general and administrative expenses (exclusive of depreciation and amortization shown separately below) |
|
|
41,942 |
|
|
|
12,149 |
|
Depreciation and amortization attributable to operating expenses |
|
|
1,016 |
|
|
|
409 |
|
Total operating expenses |
|
|
42,958 |
|
|
|
12,558 |
|
Income (loss) from operations |
|
|
24,495 |
|
|
|
(38 |
) |
Other income (expense): |
|
|
|
|
||||
Other income |
|
|
1,653 |
|
|
|
472 |
|
Loss on change in value of derivative warrant liability |
|
|
(9,185 |
) |
|
|
(3,579 |
) |
Interest expense |
|
|
(12,477 |
) |
|
|
(4,221 |
) |
Total other expense |
|
|
(20,009 |
) |
|
|
(7,328 |
) |
Income (loss) from continuing operations before income tax |
|
|
4,486 |
|
|
|
(7,366 |
) |
Income tax benefit (expense) |
|
|
(1,013 |
) |
|
|
— |
|
Income (loss) from continuing operations |
|
|
3,473 |
|
|
|
(7,366 |
) |
Income from discontinued operations, net of tax (see note 23) |
|
|
50,340 |
|
|
|
6,557 |
|
Net income (loss) |
|
|
53,813 |
|
|
|
(809 |
) |
Net loss attributable to non-controlling interest and redeemable non-controlling interest from continuing operations |
|
|
(50 |
) |
|
|
(68 |
) |
Net income attributable to non-controlling interest and redeemable non-controlling interest from discontinued operations |
|
|
— |
|
|
|
3,807 |
|
Net income (loss) attributable to Vertex Energy, Inc. |
|
|
53,863 |
|
|
|
(4,548 |
) |
|
|
|
|
|
||||
Accretion of redeemable noncontrolling interest to redemption value from continued operations |
|
|
— |
|
|
|
(421 |
) |
|
|
|
|
|
||||
Net income (loss) attributable to common shareholders from continuing operations |
|
|
3,523 |
|
|
|
(7,719 |
) |
Net income attributable to common shareholders from discontinued operations, net of tax |
|
|
50,340 |
|
|
|
2,750 |
|
Net income (loss) attributable to common shareholders |
|
$ |
53,863 |
|
|
$ |
(4,969 |
) |
|
|
|
|
|
||||
Basic income (loss) per common share |
|
|
|
|
||||
Continuing operations |
|
$ |
0.05 |
|
|
$ |
(0.12 |
) |
Discontinued operations, net of tax |
|
|
0.66 |
|
|
|
0.04 |
|
Basic income (loss) per common share |
|
$ |
0.71 |
|
|
$ |
(0.08 |
) |
|
|
|
|
|
||||
Diluted income (loss) per common share |
|
|
|
|
||||
Continuing operations |
|
$ |
0.04 |
|
|
$ |
(0.12 |
) |
Discontinued operations, net of tax |
|
|
0.64 |
|
|
|
0.04 |
|
Diluted income (loss) per common share |
|
$ |
0.68 |
|
|
$ |
(0.08 |
) |
|
|
|
|
|
||||
Shares used in computing earnings per share |
|
|
|
|
||||
Basic |
|
|
75,689 |
|
|
|
63,372 |
|
Diluted |
|
|
78,996 |
|
|
|
63,372 |
|
VERTEX ENERGY, INC.
|
|||||||||||||||||||||||
Three Months Ended March 31, 2023 |
|||||||||||||||||||||||
|
Common Stock |
|
Series A Preferred |
|
|
|
|
|
|
|
|
||||||||||||
|
Shares |
|
|
|
Shares |
|
|
|
Additional
|
|
Retained
|
|
Non-
|
|
Total Equity |
||||||||
Balance on January 1, 2023 |
75,670 |
|
$ |
76 |
|
— |
|
$ |
— |
|
$ |
279,552 |
|
$ |
(115,893 |
) |
|
$ |
1,685 |
|
|
$ |
165,420 |
Exercise of options |
166 |
|
|
— |
|
— |
|
|
— |
|
|
209 |
|
|
— |
|
|
|
— |
|
|
|
209 |
Stock based compensation expense |
— |
|
|
— |
|
— |
|
|
— |
|
|
365 |
|
|
— |
|
|
|
— |
|
|
|
365 |
Non controlling shareholder contribution |
— |
|
|
— |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
|
980 |
|
|
|
980 |
Net income (loss) |
— |
|
|
— |
|
— |
|
|
— |
|
|
— |
|
|
53,863 |
|
|
|
(50 |
) |
|
|
53,813 |
Balance on March 31, 2023 |
75,836 |
|
$ |
76 |
|
— |
|
$ |
— |
|
$ |
280,126 |
|
$ |
(62,030 |
) |
|
$ |
2,615 |
|
|
$ |
220,787 |
Three Months Ended March 31, 2022 |
|||||||||||||||||||||||
|
Common Stock |
|
Series A Preferred |
|
|
|
|
|
|
|
|
||||||||||||
|
Shares |
|
|
|
Shares |
|
|
|
Additional
|
|
Retained
|
|
Non-
|
|
Total Equity |
||||||||
Balance on January 1, 2022 |
63,288 |
|
$ |
63 |
|
386 |
|
$ |
— |
|
$ |
138,620 |
|
$ |
(110,614 |
) |
|
$ |
1,997 |
|
|
$ |
30,066 |
Exercise of options |
60 |
|
|
— |
|
— |
|
|
— |
|
|
76 |
|
|
— |
|
|
|
— |
|
|
|
76 |
Exercise of warrants |
1,113 |
|
|
1 |
|
— |
|
|
— |
|
|
(1) |
|
|
— |
|
|
|
— |
|
|
|
— |
Stock based compensation expense |
— |
|
|
— |
|
— |
|
|
— |
|
|
250 |
|
|
— |
|
|
|
— |
|
|
|
250 |
Conversion of Series A Preferred stock to common |
5 |
|
|
— |
|
(5) |
|
|
— |
|
|
— |
|
|
— |
|
|
|
— |
|
|
|
— |
Equity component of the convertible note issuance, net |
— |
|
|
— |
|
— |
|
|
— |
|
|
78,789 |
|
|
— |
|
|
|
— |
|
|
|
78,789 |
Accretion of redeemable non-controlling interest to redemption value |
— |
|
|
— |
|
— |
|
|
— |
|
|
— |
|
|
(422 |
) |
|
|
— |
|
|
|
(422) |
Net income (loss) |
— |
|
|
— |
|
— |
|
|
— |
|
|
— |
|
|
(4,548 |
) |
|
|
3,739 |
|
|
|
(809) |
Less: amount attributable to redeemable non-controlling interest |
— |
|
|
— |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
|
(3,769 |
) |
|
|
(3,769) |
Balance on March 31, 2022 |
64,466 |
|
$ |
64 |
|
381 |
|
$ |
— |
|
$ |
217,734 |
|
$ |
(115,584 |
) |
|
$ |
1,967 |
|
|
$ |
104,181 |
VERTEX ENERGY, INC.
|
|||||||
|
Three Months Ended |
||||||
|
March 31,
|
|
March 31,
|
||||
Cash flows from operating activities |
|
|
|
||||
Net income (loss) |
$ |
53,813 |
|
|
$ |
(809 |
) |
Income from discontinued operations, net of tax |
|
50,340 |
|
|
|
6,557 |
|
Income (loss) from continuing operations |
|
3,473 |
|
|
|
(7,366 |
) |
Adjustments to reconcile net loss from continuing operations to cash used in operating activities |
|
|
|
||||
Stock based compensation expense |
|
365 |
|
|
|
250 |
|
Depreciation and amortization |
|
5,353 |
|
|
|
1,436 |
|
Deferred income tax expense |
|
1,013 |
|
|
|
— |
|
(Gain) loss on sale of assets |
|
3 |
|
|
|
(57 |
) |
Increase (decrease) in allowance for bad debt |
|
882 |
|
|
|
(22 |
) |
Increase in fair value of derivative warrant liability |
|
9,185 |
|
|
|
3,579 |
|
(Gain) loss on commodity derivative contracts |
|
(1,516 |
) |
|
|
3,487 |
|
Net cash settlements on commodity derivatives |
|
3,519 |
|
|
|
(5,497 |
) |
Amortization of debt discount and deferred costs |
|
4,572 |
|
|
|
1,771 |
|
Changes in operating assets and liabilities |
|
|
|
||||
Accounts receivable and other receivables |
|
(26,291 |
) |
|
|
(4,045 |
) |
Inventory |
|
(52,553 |
) |
|
|
(11,096 |
) |
Prepaid expenses and other current assets |
|
(18,103 |
) |
|
|
(722 |
) |
Accounts payable |
|
11,005 |
|
|
|
11,224 |
|
Accrued expenses |
|
22,486 |
|
|
|
(304 |
) |
Other assets |
|
(44 |
) |
|
|
(1,301 |
) |
Net cash used in operating activities from continuing operations |
|
(36,651 |
) |
|
|
(8,663 |
) |
Cash flows from investing activities |
|
|
|
||||
Investment in Mobile Refinery assets |
|
— |
|
|
|
(6,427 |
) |
Purchase of fixed assets |
|
(73,936 |
) |
|
|
(388 |
) |
Proceeds from sale of discontinued operation |
|
87,238 |
|
|
|
— |
|
Proceeds from sale of fixed assets |
|
— |
|
|
|
132 |
|
Net cash provided by (used in) investing activities from continuing operations |
|
13,302 |
|
|
|
(6,683 |
) |
Cash flows from financing activities |
|
|
|
||||
Payments on finance leases |
|
(310 |
) |
|
|
(98 |
) |
Proceeds from exercise of options and warrants to common stock |
|
209 |
|
|
|
77 |
|
Contributions received from noncontrolling interest |
|
980 |
|
|
|
— |
|
Net change on inventory financing agreements |
|
(11,284 |
) |
|
|
— |
|
Payments on note payable |
|
(17,165 |
) |
|
|
(1,376 |
) |
Net cash used in financing activities from continuing operations |
|
(27,570 |
) |
|
|
(1,397 |
) |
|
|
|
|
||||
Discontinued operations: |
|
|
|
||||
Net cash provided by (used in) operating activities |
|
(150 |
) |
|
|
4,672 |
|
Net cash used in investing activities |
|
— |
|
|
|
(9 |
) |
Net cash provided by (used in) discontinued operations |
|
(150 |
) |
|
|
4,663 |
|
|
|
|
|
||||
Net decrease in cash, cash equivalents and restricted cash |
|
(51,069 |
) |
|
|
(12,080 |
) |
Cash, cash equivalents, and restricted cash at beginning of the period |
|
146,187 |
|
|
|
136,627 |
|
Cash, cash equivalents, and restricted cash at end of period |
$ |
95,118 |
|
|
$ |
124,547 |
|
VERTEX ENERGY, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(UNAUDITED)
(Continued)
The following table provides a reconciliation of cash and cash equivalents and restricted cash reported within the consolidated balance sheets to the same amounts shown in the consolidated statements of cash flows (in thousands).
|
Three Months Ended |
||||
|
March 31,
|
|
March 31,
|
||
|
|
|
|
||
Cash and cash equivalents |
$ |
86,689 |
|
$ |
24,050 |
Restricted cash |
|
8,429 |
|
|
100,497 |
Cash and cash equivalents and restricted cash as shown in the consolidated statements of cash flows |
$ |
95,118 |
|
$ |
124,547 |
|
|
|
|
||
SUPPLEMENTAL INFORMATION |
|
|
|
||
Cash paid for interest |
$ |
10,124 |
|
$ |
15 |
Cash paid for taxes |
$ |
— |
|
$ |
— |
|
|
|
|
||
NON-CASH INVESTING AND FINANCING TRANSACTIONS |
|
|
|
||
Equity component of the convertible note issuance |
$ |
— |
|
$ |
78,789 |
ROU assets obtained from new finance leases |
$ |
15,024 |
|
$ |
— |
ROU assets obtained from new operating leases |
$ |
15,078 |
|
$ |
— |
Accretion of redeemable noncontrolling interest to redemption value |
$ |
— |
|
$ |
421 |
Unaudited segment information for the three months ended March 31, 2023 and 2022 is as follows (in thousands):
THREE MONTHS ENDED MARCH 31, 2023 |
||||||||||||||
|
|
Refining &
|
|
Black Oil &
|
|
Corporate and
|
|
Total |
||||||
Revenues: |
|
|
|
|
|
|
|
|
||||||
Refined products |
|
$ |
472,552 |
|
$ |
29,423 |
|
|
$ |
(878 |
) |
|
$ |
501,097 |
Re-refined products |
|
|
184,843 |
|
|
3,694 |
|
|
|
(2,012 |
) |
|
|
186,525 |
Services |
|
|
1,933 |
|
|
1,587 |
|
|
|
— |
|
|
|
3,520 |
Total revenues |
|
|
659,328 |
|
|
34,704 |
|
|
|
(2,890 |
) |
|
|
691,142 |
Cost of revenues (exclusive of depreciation and amortization shown separately below) |
|
|
589,812 |
|
|
30,418 |
|
|
|
(878 |
) |
|
|
619,352 |
Depreciation and amortization attributable to costs of revenues |
|
|
3,294 |
|
|
1,043 |
|
|
|
— |
|
|
|
4,337 |
Gross profit |
|
|
66,222 |
|
|
3,243 |
|
|
|
(2,012 |
) |
|
|
67,453 |
Selling, general and administrative expenses |
|
|
26,486 |
|
|
4,799 |
|
|
|
10,657 |
|
|
|
41,942 |
Depreciation and amortization attributable to operating expenses |
|
|
808 |
|
|
38 |
|
|
|
170 |
|
|
|
1,016 |
Income (loss) from operations |
|
$ |
38,928 |
|
$ |
(1,594 |
) |
|
$ |
(12,839 |
) |
|
$ |
24,495 |
|
|
|
|
|
|
|
|
|
||||||
Capital expenditures |
|
$ |
69,908 |
|
$ |
4,028 |
|
|
$ |
— |
|
|
$ |
73,936 |
THREE MONTHS ENDED MARCH 31, 2022 |
||||||||||||||
|
|
Refining &
|
|
Black Oil &
|
|
Corporate and
|
|
Total |
||||||
Revenues: |
|
|
|
|
|
|
|
|
||||||
Refined products |
|
$ |
29,457 |
|
$ |
34,952 |
|
$ |
— |
|
|
$ |
64,409 |
|
Re-refined products |
|
|
5,262 |
|
|
4,315 |
|
|
— |
|
|
|
9,577 |
|
Services |
|
|
— |
|
|
551 |
|
|
— |
|
|
|
551 |
|
Total revenues |
|
|
34,719 |
|
|
39,818 |
|
|
— |
|
|
|
74,537 |
|
Cost of revenues (exclusive of depreciation and amortization shown separately below) |
|
|
33,086 |
|
|
27,904 |
|
|
— |
|
|
|
60,990 |
|
Depreciation and amortization attributable to costs of revenues |
|
|
123 |
|
|
904 |
|
|
— |
|
|
|
1,027 |
|
Gross profit |
|
|
1,510 |
|
|
11,010 |
|
|
— |
|
|
|
12,520 |
|
Selling, general and administrative expenses |
|
|
1,125 |
|
|
4,123 |
|
|
6,901 |
|
|
|
12,149 |
|
Depreciation and amortization attributable to operating expenses |
|
|
105 |
|
|
58 |
|
|
246 |
|
|
|
409 |
|
Income (loss) from operations |
|
$ |
280 |
|
$ |
6,829 |
|
$ |
(7,147 |
) |
|
$ |
(38 |
) |
|
|
|
|
|
|
|
|
|
||||||
Capital expenditures |
|
$ |
— |
|
$ |
388 |
|
$ |
— |
|
|
$ |
388 |
|
The following summarized unaudited financial information has been segregated from continuing operations and reported as Discontinued Operations for the three months ended March 31, 2023, and 2022 (in thousands):
|
Three Months Ended March 31, |
||||||
|
2023 |
|
2022 |
||||
Revenues |
$ |
7,366 |
|
|
$ |
18,926 |
|
Cost of revenues (exclusive of depreciation shown separately below) |
|
4,589 |
|
|
|
10,183 |
|
Depreciation and amortization attributable to costs of revenues |
|
124 |
|
|
|
391 |
|
Gross profit |
|
2,653 |
|
|
|
8,352 |
|
Operating expenses: |
|
|
|
||||
Selling, general and administrative expenses (exclusive of depreciation shown separately below) |
|
632 |
|
|
|
1,718 |
|
Depreciation and amortization expense attributable to operating expenses |
|
21 |
|
|
|
63 |
|
Total operating expenses |
|
653 |
|
|
|
1,781 |
|
Income from operations |
|
2,000 |
|
|
|
6,571 |
|
Other income (expense) |
|
|
|
||||
Interest expense |
|
— |
|
|
|
(14 |
) |
Total other expense |
|
— |
|
|
|
(14 |
) |
Income before income tax |
|
2,000 |
|
|
|
6,557 |
|
Income tax expense |
|
(528 |
) |
|
|
— |
|
Gain on sale of discontinued operations, net of |
|
48,868 |
|
|
|
— |
|
Income from discontinued operations, net of tax |
$ |
50,340 |
|
|
$ |
6,557 |
|
Unaudited segment information for the three months ended March 31, 2023 are as follows (in thousands):
| Three Months Ended March 31, 2023 | |||||||||
| In thousands | Total Refining & Marketing |
Mobile Refinery | Legacy Refining & Marketing |
||||||
| Gross profit | $ |
66,222 |
|
$ |
65,470 |
|
$ |
752 |
|
| Unrealized loss on hedging activities | $ |
(637 |
) |
$ |
(570 |
) |
$ |
(67 |
) |
| Inventory valuation adjustments |
|
(1,532 |
) |
|
(1,532 |
) |
|
- |
|
| Adjusted gross margin | $ |
64,053 |
|
$ |
63,368 |
|
$ |
685 |
|
| Variable production costs |
|
21,252 |
|
|
21,252 |
|
|
- |
|
| Depreciation and amortization attributable to cost of revenues |
|
3,294 |
|
|
3,144 |
|
|
150 |
|
| RINs |
|
16,115 |
|
|
16,115 |
|
|
- |
|
| Realized loss on hedging activities |
|
(470 |
) |
|
(439 |
) |
|
(31 |
) |
| Financing costs |
|
2,295 |
|
|
2,295 |
|
|
- |
|
| Other revenues |
|
(1,933 |
) |
|
(1,933 |
) |
|
- |
|
| Fuel gross margin | $ |
104,606 |
|
$ |
103,802 |
|
$ |
804 |
|
| Throughput (bpd) |
|
71,328 |
|
||||||
| Adjusted gross margin per barrel of throughput | $ |
9.87 |
|
||||||
| Fuel gross margin per barrel of throughput | $ |
16.17 |
|
||||||
| Variable production costs per barrel of throughput | $ |
3.31 |
|
||||||
| Twelve Months Ended March 31, 2023 | |||||||||
| In thousands | Total Refining & Marketing |
Mobile Refinery | Legacy Refining & Marketing |
||||||
| Gross profit | $ |
207,945 |
|
$ |
206,453 |
|
$ |
1,492 |
|
| Unrealized loss on hedging activities | $ |
(478 |
) |
$ |
(480 |
) |
$ |
2 |
|
| Inventory valuation adjustments |
|
36,232 |
|
|
36,232 |
|
|
- |
|
| Adjusted gross margin | $ |
243,699 |
|
$ |
242,205 |
|
$ |
1,494 |
|
| Variable production costs |
|
82,385 |
|
|
82,385 |
|
|
- |
|
| Depreciation and amortization attributable to cost of revenues |
|
12,776 |
|
|
12,209 |
|
|
567 |
|
| RINs |
|
84,873 |
|
|
84,873 |
|
|
- |
|
| Realized loss on hedging activities |
|
84,733 |
|
|
84,799 |
|
|
(66 |
) |
| Financing costs |
|
4,306 |
|
|
4,306 |
|
|
- |
|
| Other revenues |
|
(8,544 |
) |
|
(8,544 |
) |
|
- |
|
| Fuel gross margin | $ |
504,228 |
|
$ |
502,233 |
|
$ |
1,995 |
|
| Throughput (bpd) |
|
72,351 |
|
||||||
| Adjusted gross margin per barrel of throughput | $ |
9.17 |
|
||||||
| Fuel gross margin per barrel of throughput | $ |
19.02 |
|
||||||
| Variable production costs per barrel of throughput | $ |
3.12 |
|
||||||
Unaudited Reconciliation of EBITDA and Adjusted EBITDA to Net loss from Continued and Discontinued Operations
| In thousands | Three Months Ended | Twelve Months Ended | Three Months Ended | ||||||||||||||||
| March 31, 2023 | March 31, 2022 | March 31, 2023 | March 31, 2022 | December 31, 2022 | |||||||||||||||
| Consolidated | |||||||||||||||||||
| EBITDA and Adjusted EBITDA | |||||||||||||||||||
| Net income (loss) including discontinued operations | $ |
53,813 |
|
$ |
(809 |
) |
$ |
56,619 |
|
$ |
(11,435 |
) |
$ |
44,418 |
|
||||
| Depreciation and amortization |
|
5,498 |
|
|
1,890 |
|
|
22,527 |
|
|
7,599 |
|
|
5,761 |
|
||||
| Income tax expense (benefit) |
|
18,759 |
|
|
— |
|
|
16,270 |
|
|
— |
|
|
(2,489 |
) |
||||
| Interest expense |
|
12,477 |
|
|
4,235 |
|
|
88,193 |
|
|
7,891 |
|
|
14,956 |
|
||||
| EBITDA | $ |
90,547 |
|
$ |
5,316 |
|
$ |
183,609 |
|
$ |
4,055 |
|
$ |
62,646 |
|
||||
| Unrealized (gain)loss hedging activities |
|
(255 |
) |
|
(268 |
) |
|
(133 |
) |
|
(23 |
) |
|
978 |
|
||||
| Inventory valuation adjustments |
|
(1,532 |
) |
|
— |
|
|
49,234 |
|
|
— |
|
|
9,614 |
|
||||
| (Gain) Loss sale of assets |
|
(67,741 |
) |
|
(415 |
) |
|
(67,326 |
) |
|
— |
|
|||||||
| (Gain) Loss on derivative warrant liability |
|
9,185 |
|
|
3,579 |
|
|
(2,215 |
) |
|
17,484 |
|
|
(33 |
) |
||||
| Stock compensation expense |
|
365 |
|
|
250 |
|
|
1,689 |
|
|
962 |
|
|
622 |
|
||||
| Acquisition costs |
|
4,308 |
|
|
4,560 |
|
|
16,275 |
|
|
11,383 |
|
|
— |
|
||||
| Environmental clean-up reserve |
|
— |
|
|
— |
|
|
1,428 |
|
|
— |
|
|
— |
|
||||
| Impairtment loss |
|
— |
|
|
— |
|
|
2,124 |
|
|
— |
|
|||||||
| Other |
|
— |
|
|
— |
|
|
280 |
|
|
(4,637 |
) |
|
1,339 |
|
||||
| Adjusted EBITDA | $ |
34,877 |
|
$ |
13,022 |
|
$ |
182,842 |
|
$ |
31,348 |
|
$ |
75,166 |
|
||||
| Three Months Ended March 31, 2023 | |||||||||||||||||||||||
| In thousands | Mobile Refinery |
|
Legacy Refining and
|
|
Total Refining &
|
|
Black Oil and
|
|
Corporate |
|
Consolidated |
||||||||||||
| Consolidated | |||||||||||||||||||||||
| EBITDA and Adjusted EBITDA | |||||||||||||||||||||||
| Net income (loss) including discontinued operations | $ |
36,177 |
|
$ |
(1,125 |
) |
$ |
35,052 |
|
$ |
2,004 |
|
$ |
16,757 |
|
$ |
53,813 |
|
|||||
| Depreciation and amortization |
|
3,880 |
|
|
222 |
|
|
4,102 |
|
|
1,226 |
|
|
170 |
|
|
5,498 |
|
|||||
| Income tax expense (benefit) |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
18,759 |
|
|
18,759 |
|
|||||
| Interest expense |
|
3,876 |
|
|
— |
|
|
3,876 |
|
|
57 |
|
|
8,544 |
|
|
12,477 |
|
|||||
| EBITDA | $ |
43,933 |
|
$ |
(903 |
) |
$ |
43,030 |
|
$ |
3,287 |
|
$ |
44,230 |
|
$ |
90,547 |
|
|||||
| Unrealized (gain)loss hedging activities |
|
(570 |
) |
|
(67 |
) |
|
(637 |
) |
|
382 |
|
|
— |
|
|
(255 |
) |
|||||
| Inventory valuation adjustments |
|
(1,532 |
) |
|
— |
|
|
(1,532 |
) |
|
— |
|
|
— |
|
|
(1,532 |
) |
|||||
| (Gain) Loss sale of assets |
|
— |
|
|
— |
|
|
— |
|
|
(1,655 |
) |
|
(66,086 |
) |
|
(67,741 |
) |
|||||
| (Gain) Loss on derivative warrant liability |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
9,185 |
|
|
9,185 |
|
|||||
| Stock compensation expense |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
365 |
|
|
365 |
|
|||||
| Acquisition costs |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
4,308 |
|
|
4,308 |
|
|||||
| Adjusted EBITDA | $ |
41,831 |
|
$ |
(970 |
) |
$ |
40,861 |
|
$ |
2,014 |
|
$ |
(7,998 |
) |
$ |
34,877 |
|
|||||
View source version on businesswire.com: https://www.businesswire.com/news/home/20230509005529/en/
IR@vertexenergy.com
203-682-8284
Source: Vertex Energy, Inc.
