Vertex Energy Provides Operational Update for First Quarter 2024
- Vertex Energy exceeded its conventional throughput guidance with 64,000 bpd, higher than the forecasted 60,000 to 63,000 bpd.
- The company reported improved crack spreads of 28% on finished refined products compared to the fourth quarter of 2023.
- Vertex reduced direct operating expenses by 11% and capital expenditures by 29% compared to previous guidance midpoints.
- Renewable throughput and utilization were in line with guidance, showcasing operational stability.
- The company's President and CEO, Benjamin P. Cowart, emphasized the focus on margin efficiency and cost reduction to increase cash flow.
- Key commodity price averages for the first quarter of 2024 were favorable for Vertex Energy's operations.
- None.
Insights
Vertex Energy's reported conventional throughput of 64,000 barrels per day (bpd), surpassing its projection, suggests a significant operational leverage especially in light of the 11% reduction in operating expenses and 29% cut in capital expenditures. These figures indicate an optimization of resources which could enhance the company's gross margins. Notably, average first-quarter crack spreads rising by 28% quarter-over-quarter could imply stronger refining margins benefiting the bottom line. The lower yield of finished products, likely impacted by turnarounds and weather conditions, while a concern, may have been offset by the operational efficiencies.
From a financial perspective, the improvement in spreads could translate to an uptick in cash flow, bolstering the company’s financial health and potentially enhancing shareholder value. Investors should monitor the company's ability to maintain these reduced costs over the ensuing quarters, as it would reflect on the sustainability of the operational improvements and its potential impact on the stock’s valuation.
The uptick in conventional throughput volumes at the Mobile Refinery is impressive and when coupled with the reported improvements in crack spreads, suggests that Vertex Energy could be capitalizing on favorable market conditions. This performance is indicative of a robust operational strategy, aligning capacity utilization with market demands. Investors should note the importance of crack spreads as a key indicator in the refining sector since these spreads are a proxy for margin and profitability.
On the renewable side, the throughput volume for renewable diesel aligns with previous guidance, which highlights stability in this segment. As the energy market continues to shift towards sustainability, Vertex's performance in renewable fuels will become increasingly relevant to its valuation. The efficiency in renewable fuel production demonstrates Vertex's commitment to this growing segment, which may become a significant driver for future growth.
Vertex Energy's focus on reducing direct operating expenses while maintaining throughput volumes speaks to a broader commitment to operational efficiency, potentially leading to reduced environmental impact per unit of production. This is a positive note from an ESG perspective, as cost reductions in this manner often correlate with resource efficiency and environmental stewardship. Additionally, the stability in renewable diesel production underscores Vertex's role in the alternative energy landscape, which aligns with investor interest in companies contributing to a lower carbon economy.
Looking at the long term, the shift towards renewables and the management of operational costs are in line with the principles of sustainable business practices. Companies that successfully integrate ESG considerations into their business models may attract ESG-focused investors and can benefit from potentially lower risk premiums, impacting the cost of capital and thus valuation.
Highlights include:
- Anticipated conventional throughput of 64,000 barrels per day (bpd) exceeding guidance of 60,000 to 63,000 bpd due to stronger capacity utilization compared to forecast;
- Strong renewable throughput and utilization in line with midpoint of guidance;
-
Projected improved average first quarter crack spreads on finished refined products of
28% compared to fourth quarter 2023; and -
Forecasted reductions in direct operating expense by
11% and capital expenditures by29% compared to previous guidance midpoints.
Benjamin P. Cowart, President and CEO of Vertex, stated, “We delivered or exceeded our guidance in the first quarter of 2024, coupled with improved crack spreads, lower operating expense and lower capital spending, providing Vertex with a solid foundation to begin the year. We continue to focus on margin efficiency while we look to opportunistically ramp up our production rates and better align our capacity utilization with evolving market conditions. Our priorities remain clear, increase cash flow by improving margins and reducing our costs. We are pleased with our operational performance, the improving crack spreads and our ability to reduce operating expense in the first quarter of 2024.”
Updated 1Q 2024 Management Guidance
Conventional Fuels |
1Q 2024 |
||
Operational: |
As of 2/28/24 |
|
As of 4/18/24 |
Mobile Refinery Conventional Throughput Volume (Mbpd) |
60 - 63 |
|
~64 |
Capacity Utilization |
80 - |
|
84 - |
Production Yield Profile: |
|
|
|
Percentage Finished Products1 |
64 - |
|
62 - |
Intermediate & Other Products2 |
36 - |
|
38 - |
|
|
|
|
Renewable Fuels |
1Q 2024 |
||
Operational: |
As of 2/28/24 |
|
As of 4/18/24 |
Mobile Refinery Renewable Throughput Volume (Mbpd) |
3 – 5 |
|
~4 |
Capacity Utilization |
38 - |
|
50 - |
Production Yield |
96 - |
|
97 - |
Yield Loss |
4 - |
|
3 - |
|
|
|
|
Consolidated |
1Q 2024 |
||
Operational: |
As of 2/28/24 |
|
As of 4/18/24 |
Mobile Refinery Total Throughput Volume (Mbpd) |
63 - 68 |
|
~68 |
Capacity Utilization |
76 - |
|
81 - |
|
|
|
|
Financial Guidance: |
|
|
|
Direct Operating Expense ($/bbl) |
|
|
|
Capital Expenditures ($/MM) |
|
|
|
|
|
|
|
1.) Finished products include gasoline, ULSD, and Jet A |
|||
2.) Intermediate & Other products include Vacuum Gas Oil (VGO), Liquified Petroleum Gases (LPGs), and Vacuum Tower Bottoms (VTBs) |
First quarter conventional throughput volumes above the high end of prior forecasts with lower operating expenses and capital expenditures
Reported throughput volumes at the Company’s
The expected yield of finished conventional fuel products such as gasoline, diesel, and jet fuel is expected to be between
Operating expenses per barrel for the first quarter of 2024 are expected to total between
Key commodity price averages in local markets served by Vertex for the first quarter of 2024 include Conventional Blendstock for Oxygenate Blending or CBOB gasoline at
Renewable diesel volume expected to be in line with prior outlook
Vertex’s reported renewable diesel production for the first quarter 2024 is expected to be about 4,000 bpd, at the midpoint of the forecasted range of 3,000 to 5,000 bpd. The yield on renewable throughput volumes is expected to be between
ABOUT VERTEX ENERGY
Vertex Energy is a leading energy transition company that specializes in producing both renewable and conventional fuels. The Company’s innovative solutions are designed to enhance the performance of its customers and partners while also prioritizing sustainability, safety, and operational excellence. With a commitment to providing superior products and services, Vertex Energy is dedicated to shaping the future of the energy industry.
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 expected results of operations for the first quarter of 2024, as discussed above; statements concerning: the Company’s engagement of BofA Securities, Inc., as previously disclosed; the review and evaluation of potential joint ventures, divestitures, acquisitions, mergers, business combinations, or other strategic transactions, the outcome of such review, and the impact on any such transactions, or the review thereof, and their impact on shareholder value; the process by which the Company engages in evaluation of strategic transactions; the Company’s ability to identify potential partners; the outcome of potential future strategic transactions and the terms thereof; the future production of the Company’s Mobile Refinery; anticipated and unforeseen events which could reduce future production at the refinery or delay future capital projects, and changes in commodity and credit values; throughput volumes, production rates, yields, operating expenses and capital expenditures at the Mobile Refinery; the timing of, and outcome of, the evaluation and associated carbon intensity scoring of the Company’s feedstock blends by officials in the state of
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, 2023, and the Company’s Quarterly Report on Form 10-Q for the quarter ended January 31, 2024, when filed, 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.
PRELIMINARY FINANCIAL AND OPERATIONAL DATA
The financial and operational data for the three months ended March 31, 2024, contained in this release are preliminary in nature. The Company’s management has prepared the preliminary financial and operational data contained in this release based on the most current information available to management. The Company’s normal closing and financial reporting processes with respect to its financial and operational data for the three months ended March 31, 2024, have not been fully completed. This preliminary financial and operational data has been prepared by, and is the responsibility of, the Company’s management. Neither the Company’s independent accountants, nor any other independent accounting firm, has expressed an opinion or any other form of assurance with respect thereto. As a result, the Company’s actual financial and operational results for the three months ended March 31, 2024, could be different from the preliminary financial and operational data contained herein, and any differences could be material. The Company has prepared these estimates on a basis materially consistent with its historical financial results and in good faith based upon its internal reporting as of and for the three months ended March 31, 2024. This release is not intended to be a comprehensive statement of financial results for this period. The results of operations for an interim period may not give a true indication of the results to be expected for a full year or any future period.
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INVESTOR CONTACT
IR@vertexenergy.com
Source: Vertex Energy, Inc.
FAQ
What is Vertex Energy's (VTNR) reported conventional throughput volume for the first quarter of 2024?
How did Vertex Energy's crack spreads on finished refined products compare to the fourth quarter of 2023?
What reductions were made in Vertex Energy's direct operating expenses and capital expenditures for the first quarter of 2024?
Was Vertex Energy's renewable throughput volume in line with guidance for the first quarter of 2024?
What did Vertex Energy's President and CEO emphasize regarding the company's performance in the first quarter of 2024?