Vertex Energy Provides Operational Update for Third Quarter 2023

Rhea-AI Summary

Vertex Energy, Inc. provides an update on its financial and operational outlook for Q3 2023.

Positive

• Throughput volumes at the Mobile Refinery are expected to be approximately 80,000 bpd, exceeding previous projections of 74,000-77,000 bpd.
• Finished product yield is expected to be 65%-67%, surpassing the previous range of 59%-63%.

Negative

• None.

Conventional throughput volumes expected for the third quarter of 2023 of approximately 80,000 bpd to exceed previously forecasted 74,000-77,000 bpd range, reflecting continued focus on enhanced conventional feedstock supply-chain flexibility and continued operational efficiency and reliability

Expected third quarter finished product yield of 65%-67% to exceed previously forecasted range of 59%-63%, reflecting continued successful yield optimization strategy

HOUSTON--(BUSINESS WIRE)-- Vertex Energy, Inc. (NASDAQ: VTNR) ("Vertex" or “the Company"), a leading specialty refiner and marketer of high-quality refined products, today provided an update to its financial and operational outlook for the third quarter of 2023.

Third Quarter Conventional Throughput Volumes Expected to Exceed Prior Projections

Reported throughput volumes at the Company’s Mobile, Alabama Refinery (the “Mobile Refinery”) for the third quarter of 2023 are expected to be approximately 80,000 barrels per day (bpd), exceeding management’s prior expectations of 74,000 bpd to 77,000 bpd. Throughput volumes for the third quarter of 2023 reflect a continued focus on strengthening the Company’s conventional feedstock procurement program, initiated during the second quarter in response to previously disclosed supply chain risks. Finished fuel products are expected to account for 65% to 67% of total production volumes for the quarter, ahead of the previously forecasted range of 59%-63%, and reflecting the successful implementation of a facility-wide yield optimization initiative introduced early in the second quarter of 2023.

Operating expenses per barrel for the third quarter of 2023 are estimated to total between $3.70 to $3.80 per barrel, in-line with prior expectations. Capex is expected to be $21-$23 million, also in-line with prior expectations.

Key commodity averages in local markets served by Vertex for the third quarter include CBOB gasoline of $108.50 per barrel, ultra-low sulfur diesel of $124.87 per barrel, Jet fuel of $120.35 per barrel and Louisiana Light, Sweet Crude oil of $84.88 per barrel.

Updated 3Q 2023 Guidance Summary
	Operating Guidance
	(as of 08/09/23)		(as of 10/13/23)
Operating Data
Mobile Refinery Conventional Throughput Volume (Mbpd)1	74 - 77		~80
Capacity Utilization	99% - 103%		107%
Production Yield Profile Guidance:
Percentage Finished Products2	59% - 63%		65% - 67%
Remaining Intermediate & Other Products3	41% - 37%		35% - 33%
Financial Guidance:
Direct Operating Expense ($/bbl)	$3.60 - $3.80		$3.70 - $3.80
Capital Expenditures ($/MM)	$20 - 25		$21 - $23
1.) Preliminary actual throughput volume results (Mbpd = Thousand barrels per day).
2.) Finished products reflect finished motor fuels such as gasoline diesel and jet fuel
3.) Intermediate products include Vacuum gas oil (“VGO”), liquified petroleum gas (“LPGs”), and Other

Renewable Diesel Feedstock Supply Strategy Update

Vertex continues to advance the assessment and pathway approval process for its feedstock optimization strategy, which began in the second quarter of this year. The Company recently completed its internal quality approval process for a combination of eight different feedstock blends as of September 30, 2023 and is currently awaiting evaluation and approval by the state of California.

Production rates of renewable diesel (“RD”) averaged approximately 5,200 bpd for the third quarter of 2023, reflecting strategic rate optimization based on pathway development and current economic conditions.

Management Commentary

Benjamin P. Cowart, President and CEO of Vertex, stated, “Our strong preliminary third quarter operational results reflect the impact of facility optimization initiatives. Our conventional feedstock procurement strategy and yield optimization efforts extracted substantial value for conventional finished products while our near-term focus on the optimization of different renewable feedstock blends is steadily progressing according to plan.”

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 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 credits values; actual throughput volumes, production rates, yields, operating expenses and capital expenditures, for the third quarter of 2023 and for future periods; 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 California; the ability of the Company to obtain low carbon fuel standard (LCFS) credits, and the amounts thereof; the need for additional capital in the future, including, but not limited to, in order to complete future capital projects and satisfy liabilities, the Company’s ability to raise such capital in the future, and the terms of such funding; the timing of capital projects at the Company’s refinery located in Mobile, Alabama (the “Mobile Refinery”) and the outcome of such projects; the future production of the Mobile Refinery, including but not limited to, renewable diesel production; estimated and actual production and costs associated with the renewable diesel capital project; estimated revenues, margins and expenses, over the course of the agreement with Idemitsu; anticipated and unforeseen events which could reduce future production at the Mobile Refinery or delay planned and future capital projects; changes in commodity and credits values; certain early termination rights associated with third party agreements and conditions precedent to such agreements; certain mandatory redemption provisions of the outstanding senior convertible notes, the conversion rights associated therewith, and dilution caused by conversions and/or the exchanges of convertible notes; 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; the level of competition in the Company’s industry and its ability to compete; the Company’s ability to respond to changes in its industry; the loss of key personnel or failure to attract, integrate and retain additional personnel; the Company’s ability to protect intellectual property and not infringe on others’ intellectual property; the Company’s ability to scale its business; the Company’s ability to maintain supplier relationships and obtain adequate supplies of feedstocks; the Company’s ability to obtain and retain customers; the Company’s ability to produce products at competitive rates; the Company’s ability to execute its 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 Ukraine/Russia conflict and/or the Israel/Hamas conflict, increased interest rates, recessions and inflation; the Company’s ability to maintain relationships with partners; the outcome of pending and potential future litigation, judgments and settlements; rules and regulations making the Company’s operations more costly or restrictive; volatility in the market price of compliance credits (primarily Renewable Identification Numbers (RINs) needed to comply with the Renewable Fuel Standard (“RFS”)) under renewable and low-carbon fuel programs and emission credits needed under other environmental emissions programs, the requirement for the Company to purchase RINs in the secondary market to the extent it does not generate sufficient RINs internally, liabilities associated therewith and the timing, funding and costs of such required purchases, if any; changes in environmental and other laws and regulations and risks associated with such laws and regulations; economic downturns both in the United States and globally, changes in inflation and interest rates, increased costs of borrowing associated therewith and potential declines in the availability of such funding; risk of increased regulation of the Company’s operations and products; disruptions in the infrastructure that the Company and its partners rely on; interruptions at the Company’s facilities; unexpected and expected changes in the Company’s anticipated capital expenditures resulting from unforeseen and expected required maintenance, repairs, or upgrades; the Company’s ability to acquire and construct new facilities; the Company’s ability to effectively manage growth; decreases in global demand for, and the price of, oil, due to inflation, recessions or other reasons, including declines in economic activity or global conflicts; expected and unexpected downtime at the Company’s facilities; the Company’s level of indebtedness, which could affect its ability to fulfill its obligations, impede the implementation of its strategy, and expose the Company’s interest rate risk; dependence on third party transportation services and pipelines; risks related to obtaining required crude oil supplies, and the costs of such supplies; counterparty credit and performance risk; unanticipated problems at, or downtime effecting, the Company’s facilities and those operated by third parties; risks relating to the Company’s hedging activities or lack of hedging activities; and risks relating to planned and future divestitures, asset sales, joint ventures and acquisitions.

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 June 30, 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.

PRELIMINARY FINANCIAL AND OPERATIONAL DATA

The financial and operational data for the three months ended September 30, 2023, 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 September 30, 2023, 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 September 30, 2023, 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 September 30, 2023. 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.

View source version on businesswire.com: https://www.businesswire.com/news/home/20231013791185/en/

INVESTORS

John Ragozzino Jr., CFA (ICR)

IR@vertexenergy.com

Source: Vertex Energy, Inc.

FAQ

What are the expected throughput volumes for Q3 2023?

The expected throughput volumes at the Mobile Refinery for Q3 2023 are approximately 80,000 bpd.

What is the expected finished product yield for Q3 2023?

The expected finished product yield for Q3 2023 is 65%-67%.

What are the operating expenses per barrel for Q3 2023?

The estimated operating expenses per barrel for Q3 2023 are between $3.70 to $3.80.

What is the expected capex for Q3 2023?

The expected capex for Q3 2023 is $21-$23 million.

What are the key commodity averages for Q3 2023?

The key commodity averages for Q3 2023 include CBOB gasoline at $108.50 per barrel, ultra-low sulfur diesel at $124.87 per barrel, Jet fuel at $120.35 per barrel, and Louisiana Light, Sweet Crude oil at $84.88 per barrel.

What is the update on Vertex's feedstock optimization strategy?

Vertex is advancing the assessment and pathway approval process for its feedstock optimization strategy. The company has completed its internal quality approval process for eight different feedstock blends and is awaiting evaluation and approval by the state of California.

What are the production rates of renewable diesel for Q3 2023?

The production rates of renewable diesel averaged approximately 5,200 bpd for Q3 2023.

What did Benjamin P. Cowart, President and CEO of Vertex, say about the results?

Benjamin P. Cowart stated that the strong preliminary third-quarter operational results reflect the impact of facility optimization initiatives.