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Vertex Energy Announces Third Quarter 2022 Results

Vertex Energy, Inc. (NASDAQ:VTNR) (“Vertex” or the “Company”), a leading specialty refiner and marketer of high-quality refined products, today announced its financial results for the third quarter ended September 30, 2022.

The company will host a conference call to discuss 3Q22 results today at 8:00 A.M. Eastern Time, details are included at the end of this release.

THIRD QUARTER 2022 HIGHLIGHTS

  • Reported net income of $22.2 million, or $0.28 per fully diluted share
  • Reported Adjusted EBITDA of $1.7 million
  • Continued safe operation of Mobile refinery with third quarter 2022 operational results in-line with prior guidance for throughput, operating expense per barrel, and capture rate
  • Renewable diesel conversion project continues to track on schedule and budget for scheduled start-up in the second quarter 2023
  • Hedge position expiration on September 30, 2022, positions the Company to capitalize on recent near-record refining margins in fourth quarter 2022
  • Total liquidity including restricted cash of $122.3 million as of September 30, 2022

Vertex reported third quarter 2022 net income of $22.2 million, or $0.28 per fully diluted share, versus net income of $7.9 million, or $0.12 per fully diluted share for the third quarter 2021. Adjusted earnings before interest, taxes, depreciation and amortization (“Adjusted EBITDA”) was $1.7 million for the third quarter 2022 compared to Adjusted EBITDA of $1.5 million in the prior-year period. Financial results for the third quarter 2022 include several non-recurring, extraordinary items, including a $47.7 million reversal of unrealized derivative losses from 2Q22, realized derivative losses of $37.2 million, a $12.3 million gain related to a change in derivative liability, a $17.9 million negative inventory backwardation charge and $2.9 million in charges related to the recent Shell refinery acquisition. Schedules reconciling the Company’s GAAP and non-GAAP financial results, including Adjusted Net Income and Adjusted EBITDA are included later in this release (see also “Non-GAAP Financial Measures”, below).

Management Commentary

“During the third quarter, we demonstrated continued operational reliability and flexibility at our Mobile, AL facility, despite several unforeseen challenges,” stated Benjamin P. Cowart, President and CEO of Vertex, who continued, “Our third quarter financial results included some non-recurring items related to hedges and transaction costs. With those non-recurring items now behind us, we remain very confident in our future financial performance given our increased access to spot refined product margins following hedge expirations, compounded by improved efficiency and product yields, following the completion of maintenance operations during the third quarter. We now believe the Company is positioned extremely well to demonstrate our true cash generation capability during the fourth quarter of 2022 and into 2023.”

Operating Details and Discussion

Mobile Refinery Operations

The Mobile refinery operations generated $48.8 million of refining gross profit or $7.73 per barrel during the third quarter 2022, its second quarter of operations since being acquired by Vertex. The Mobile refinery financial results include the impact of $38.7 million in realized hedge losses during the quarter, as well as an inventory backwardation charge in the amount of $17.9 million. Adjusting for the impact of non-recurring items, refining gross profit at Mobile was $86.9 million, or $13.92 per barrel.

Total throughput at the Mobile refinery was 67,954 barrels per day in the third quarter, resulting in 91% utilization for the stated operable capacity of approximately 75,000 barrels per day. Total production of finished high-value light products, such as gasoline, diesel and jet fuel, represented approximately 69% of the total production in the third quarter, vs 67% in 2Q22.

The benchmark 2/1/1 Gulf Coast crack spread was $34.82 in the third quarter 2022, an increase of 159% versus the third quarter 2021, supported by reduced inventories for refined fuels, a constrained global refining complex and continued strength in demand for conventional refined products. On an adjusted gross profit per barrel basis, excluding non-fuel costs, the Mobile refinery captured 52% of the Gulf Coast 2/1/1 crack spread, in line with prior expectations.

The following table presents the summary financial and operating results from the Mobile Refinery:

3Q22

2Q22

% Q/Q

Prior Guidance

 

 

 

 

Low

High

Total Throughput - Barrels per day (bpd)

 

67,954

 

 

72,133

 

(5.8%)

 

68,000

 

 

69,000

 

Total Production - Million barrels (MMbbl)

 

6.24

 

 

6.53

 

(4.4%)

 

-

 

 

-

 

Facility Capacity Utilization

 

90.6%

 

96.2%

-

 

 

-

 

 

-

 

 

 

 

 

 

 

Operating Expenses Per Barrel

$4.20

 

$3.35

 

25.4%

$4.25

 

$4.50

 

Gross Margin ($ / millions)

$48.8

 

$2.0

 

2,340.0%

 

-

 

 

-

 

 

 

 

 

 

 

Realized Gross Margin Per Barrel

$7.73

 

$14.11

 

(45.2%)

 

-

 

 

-

 

Adjusted Gross Margin Per Barrel

$13.92

 

$23.16

 

(39.9%)

 

-

 

 

-

 

 

 

 

Gulf Coast 2-1-1 Crack Spread

$34.82

 

$45.06

 

(22.7%)

 

-

 

 

-

 

Capture Rate

 

52.2%

 

51.0%

2.4%

 

50.0%

 

54.0%

 

 

 

 

 

 

Production Yield

 

 

 

 

 

Gasoline (bpd)

 

15,310

 

 

17,997

 

(14.9%)

 

-

 

 

-

 

% Production

 

22.6%

 

25.1%

-

 

 

-

 

 

-

 

Diesel (bpd)

 

20,342

 

 

19,420

 

4.7%

 

-

 

 

-

 

% Production

 

30.0%

 

27.1%

-

 

 

-

 

 

-

 

Jet Fuel (bpd)

 

11,026

 

 

10,692

 

3.1%

 

-

 

 

-

 

% Production

 

16.3%

 

14.9%

-

 

 

-

 

 

-

 

Other (bpd)

 

21,147

 

 

23,646

 

(10.6%)

 

-

 

 

-

 

% Production

 

31.2%

 

33.0%

-

 

 

-

 

 

-

 

Total production (bpd)

 

67,825

 

 

71,755

 

-

 

 

-

 

 

-

 

Black Oil & Recovery Segment

The legacy Black Oil and Recovery segment generated gross profit of $7.2 million for the third quarter 2022. Operating income was $2.2 million in quarter. The prior year period is not comparable due to the reclassification of our segment operating and financial data, which has been consolidated into two primary reportable segments, Black Oil and Recovery and Refining and Marketing, for financial reporting purposes.

During the 2022 third quarter, the Company’s legacy Marrero (Louisiana) and Columbus (Ohio) refineries operated at 106% and 93% of total utilization, respectively.

Renewable Diesel Conversion Project Timeline & Construction Update

Renewable diesel conversion project continues on estimated timeline and budget. Vertex’s previously disclosed capital project designed to modify the Mobile, Alabama refinery’s hydrocracking unit to produce renewable diesel fuel on a standalone basis continues to progress along the Company’s recently updated construction timeline towards mechanical completion during the first quarter 2023, with initial renewable diesel production volumes expected in second quarter 2023. Expected total capital costs for the project continue to track in-line with the previously targeted project budget of $90-$100 million. Recent construction progress milestones as of November 1, 2022 include:

  • 95% of all project civil construction work completed
  • Recent procurement delays on critical bulk items resolved
  • 100% of pipe and valve fittings have arrived at the fabrication shop with all final components projected to be delivered on-site by the end of year
  • Final delivery of long lead engineered equipment is expected to be on-site on or around feed-out in January

Balance Sheet and Liquidity Update

As of September 30, 2022, the Company had total cash and equivalents of $122.3 million including $4.9 million of restricted cash on the balance sheet. Vertex had total net debt outstanding of $364.0 million at the end of the third quarter 2022, including lease finance obligations of $45.4 million. The ratio of net debt to trailing twelve month Adjusted EBITDA was 2.5x as of September 30, 2022, which includes only two quarters of Adjusted EBITDA contribution from the Mobile refinery.

Management Outlook

Based on current data and projected trends, Company management believes that several ongoing factors will continue to support a robust refined product margin environment for the US refining complex in the near to medium term. Primary market drivers include continued strength in global refined product demand, reduced capacity in global refining throughput and below average levels of domestic inventories of refined products including gasoline, and distillate. As a result, management’s expectations for a historically elevated margin environment continue through the fourth quarter of 2022 and into the first quarter of 2023.

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.

Fourth Quarter 2022 Financial and Operating Outlook:

4Q 2022

Projections:

Low

 

High

Mobile Refinery Total Throughput (bpd)

73,000

75,000

Direct Operating Expense ($/bbl)

$3.50

$3.75

 

Capture Rate (GC 211 Crack Spread)

50.0%

54.0%

 

Capital Expenditures ($ / millions)

$35.0

$40.0

Commodity Derivative Position and 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.

As of September 30, 2022, the original crack spread hedges for the 2022 second and third quarter related to the Mobile acquisition have expired. The Company now remains exposed to prevailing market prices and conditions for the purchase and sale of all feedstocks and refined products.

Conference Call and Webcast Details

A conference call will be held today at 8:00 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 (which will be available 15 minutes before the start of the conference call) will also be available in the “Events and Presentation” section of Vertex’s website at www.vertexenergy.com. To listen to a live broadcast, go to 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: 1-877-300-8521

International: 1-412-317-6026

Conference ID: 10172978

To listen to a replay of the teleconference, which will be available through November 22, 2022, 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

Access Code: 10172978

ABOUT VERTEX ENERGY

Houston-based Vertex Energy, Inc. (NASDAQ: VTNR), is an energy transition company focused on the production and distribution of conventional and alternative fuels. Vertex owns a refinery in Mobile (AL) with an operable refining capacity of 75,000 barrels per day and more than 3.2 million barrels of product storage, positioning it as a leading supplier of fuels in the region. Vertex is also one of the largest processors of used motor oil in the U.S., with operations located in Houston and Port Arthur (TX), Marrero (LA), and Columbus (OH). Vertex also owns a facility, Myrtle Grove, located on a 41-acre industrial complex along the Gulf Coast in Belle Chasse, LA, with existing hydroprocessing and plant infrastructure assets, that include nine million gallons of storage. The Company has built a reputation as a key supplier of base oils to the lubricant manufacturing industry throughout North America.

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 fourth quarter of 2022, as discussed above; 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 thereof; the future production of the Mobile Refinery; the estimated timeline of the renewable diesel capital project, estimated and actual production associated therewith, 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 Ukraine/Russia conflict; our ability to maintain our relationships with our partners; the impact of competitive services and products; the outcome of pending and potential future litigation, judgments and settlements; rules and regulations making our operations more costly or restrictive; 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, increases 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 our operations and products; disruptions in the infrastructure that we and our partners rely on; interruptions at our facilities; unexpected and expected changes in our anticipated capital expenditures resulting from unforeseen or planned required maintenance, repairs, or upgrades; our ability to acquire and construct new facilities; our ability to effectively manage our growth; decreases in global demand for, and the price of, oil, due to COVID-19, state, federal and foreign responses thereto, inflation, recessions or other reasons, including declines in economic activity or global conflicts; our ability to acquire sufficient amounts of used oil feedstock through our collection routes, to produce finished products, and in the absence of such internally collected feedstocks, and our ability to acquire third-party feedstocks on commercially reasonable terms; unexpected downtime at our facilities; risks associated with COVID-19, the global efforts to stop the spread of COVID-19, potential downturns in the U.S. and global economies due to COVID-19 and the efforts to stop the spread of the virus, and COVID-19 in general; anti-dilutive rights associated with our outstanding securities; our level of indebtedness, which could affect our ability to fulfill our obligations, impede the implementation of our strategy, and expose us to 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, our facilities and those operated by third parties; risks relating to our hedging activities; and risks relating to planned divestitures 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, 2021, and the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2022 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 United States ("GAAP"), in this earnings release we also present Refining Gross Margin, EBITDA and Adjusted EBITDA. Refining Gross Margin, EBITDA and Adjusted EBITDA are “non-GAAP financial measures” presented as supplemental measures of the Company’s performance. They are not presented in accordance with GAAP. Refining gross margin is defined as revenues less the cost of fuel intakes and other fuel costs. It excludes operating expense and depreciation attributable to cost of revenues and other non-operating items in cost of revenues. EBITDA represents net income before interest, taxes, depreciation and amortization, for continued and discontinued operations. Adjusted EBITDA is defined as EBITDA before other income, impairment loss on assets, unrealized (gain)/loss on hedging activities, (gain)/loss on hedge roll (backwardation), environmental clean-up reserve, loss (gain) on change in value of derivative warrant liability, unrealized (gain) loss on derivative instruments, gain (loss) on intermediation agreement, Shell transaction related and acquisition expenses and stock-based compensation expense (for continued and discontinued operations) and other unusual or non-recurring items. Refining gross margin is defined as gross profit (loss) less the cost of fuel intakes and other fuel costs. Refining Gross Margin, EBITDA and Adjusted EBITDA are presented because we believe they provide additional useful information to investors due to the various noncash items during the period. Refining Gross Margin, EBITDA and Adjusted EBITDA are also frequently used by analysts, investors and other interested parties to evaluate companies in our industry. We use Refining Gross Margin, EBITDA and Adjusted EBITDA 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. Refining Gross Margin, EBITDA and Adjusted EBITDA 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: Refining Gross Margin, EBITDA and Adjusted EBITDA do not reflect cash expenditures, or future or contractual commitments; EBITDA and Adjusted EBITDA do not reflect changes in, or cash requirements for, capital expenditures or working capital needs; EBITDA and Adjusted EBITDA 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, and EBITDA and Adjusted EBITDA do not reflect any cash requirements for such replacements. In addition, other companies in this industry may calculate Refining Gross Margin, EBITDA and Adjusted EBITDA differently than Vertex does, limiting its 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 Refining Gross Margin and Refining Gross Margin per throughput barrel to Gross Profit”, each included at the end of this release and “Unaudited Consolidated Continued and Discontinued Operations Reconciliations of Net Loss attributable to Vertex Energy, Inc., to Earnings before Interest, Taxes, Depreciation and Amortization (EBITDA) and Adjusted EBITDA” each included at the end of this release.

VERTEX ENERGY, INC.

CONSOLIDATED BALANCE SHEETS

(in thousands, except number of shares and par value)

(UNAUDITED)

 

 

September 30,

2022

 

December 31,

2021

ASSETS

 

 

 

Current assets

 

 

 

Cash and cash equivalents

$

117,464

 

 

$

36,130

 

Restricted cash

 

4,929

 

 

 

100,497

 

Accounts receivable, net

 

51,830

 

 

 

14,880

 

Inventory

 

169,772

 

 

 

8,031

 

Derivative commodity asset

 

1,219

 

 

 

96

 

Prepaid expenses and other current assets

 

33,337

 

 

 

4,567

 

Assets held for sale, current

 

11,651

 

 

 

10,070

 

Total current assets

 

390,202

 

 

 

174,271

 

 

 

 

 

Fixed assets, at cost

 

198,088

 

 

 

62,196

 

Less accumulated depreciation

 

(33,371

)

 

 

(26,043

)

Fixed assets, net

 

164,717

 

 

 

36,153

 

Finance lease right-of-use assets

 

43,649

 

 

 

377

 

Operating lease right-of use assets

 

33,960

 

 

 

33,272

 

Intangible assets, net

 

12,803

 

 

 

6,652

 

Other assets

 

2,246

 

 

 

15,335

 

TOTAL ASSETS

$

647,577

 

 

$

266,060

 

 

 

 

 

LIABILITIES, TEMPORARY EQUITY, AND EQUITY

 

 

 

Current liabilities

 

 

 

Accounts payable

$

70,906

 

 

$

11,980

 

Accrued expenses

 

42,650

 

 

 

4,942

 

Finance lease liability-current

 

1,155

 

 

 

342

 

Operating lease liability-current

 

6,421

 

 

 

5,849

 

Current portion of long-term debt, net

 

16,637

 

 

 

2,413

 

Obligations under inventory financing agreements, net

 

134,244

 

 

 

 

Total current liabilities

 

272,013

 

 

 

25,526

 

Long-term debt, net

 

167,665

 

 

 

64,131

 

Finance lease liability-long-term

 

44,339

 

 

 

256

 

Operating lease liability-long-term

 

27,539

 

 

 

27,423

 

Derivative warrant liability

 

14,303

 

 

 

75,211

 

Other liabilities

 

1,378

 

 

 

 

Total liabilities

 

527,237

 

 

 

192,547

 

 

 

 

 

COMMITMENTS AND CONTINGENCIES (Note 4)

 

 

 

 

 

 

 

 

 

TEMPORARY EQUITY

 

 

 

Redeemable non-controlling interest

 

 

 

 

43,447

 

Total temporary equity

 

 

 

 

43,447

 

EQUITY

 

 

 

50,000,000 of total Preferred shares authorized:

 

 

 

Series A Convertible Preferred Stock, $0.001 par value;

 

zero and 5,000,000 shares designated, zero and 385,601 shares issued and

outstanding at September 30, 2022 and December 31, 2021, with a liquidation

preference of $0 and $574,545 at September 30, 2022 and December 31, 2021.

 

 

 

 

 

 

 

 

 

Common stock, $0.001 par value per share;

 

750,000,000 shares authorized; 75,608,826 and 63,287,965 shares issued and

outstanding at September 30, 2022 and December 31, 2021, respectively.

 

76

 

 

 

63

 

Additional paid-in capital

 

278,930

 

 

 

138,620

 

Accumulated deficit

 

(160,354

)

 

 

(110,614

)

Total Vertex Energy, Inc. shareholders' equity

 

118,652

 

 

 

28,069

 

Non-controlling interest

 

1,688

 

 

 

1,997

 

Total equity

 

120,340

 

 

 

30,066

 

TOTAL LIABILITIES, TEMPORARY EQUITY, AND EQUITY

$

647,577

 

 

$

266,060

 

VERTEX ENERGY, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except per share amounts)

(UNAUDITED)

 

 

 

Three Months Ended September 30,

 

Nine Months Ended September 30,

 

 

2022

 

2021

 

2022

 

2021

Revenues

 

$

810,208

 

 

$

50,982

 

 

$

1,915,423

 

 

$

147,807

 

Cost of revenues (exclusive of depreciation and

amortization shown separately below)

 

 

750,463

 

 

 

46,142

 

 

 

1,819,757

 

 

 

127,986

 

Depreciation and amortization attributable to costs

of revenues

 

 

4,050

 

 

 

1,028

 

 

 

9,144

 

 

 

3,002

 

Gross profit

 

 

55,695

 

 

 

3,812

 

 

 

86,522

 

 

 

16,819

 

 

 

 

 

 

 

 

 

 

Operating expenses:

 

 

 

 

 

 

 

 

Selling, general and administrative expenses

 

 

36,978

 

 

 

8,177

 

 

 

89,934

 

 

 

21,742

 

Depreciation and amortization attributable to

operating expenses

 

 

1,120

 

 

 

420

 

 

 

2,656

 

 

 

1,260

 

 

 

 

 

 

 

 

 

 

Total operating expenses

 

 

38,098

 

 

 

8,597

 

 

 

92,590

 

 

 

23,002

 

 

 

 

 

 

 

 

 

 

Income (loss) from operations

 

 

17,597

 

 

 

(4,785

)

 

 

(6,068

)

 

 

(6,183

)

 

 

 

 

 

 

 

 

 

Other income (expense):

 

 

 

 

 

 

 

 

Other income (expenses)

 

 

417

 

 

 

(3

)

 

 

1,060

 

 

 

4,220

 

Gain (loss) on change in value of derivative

warrant liability

 

 

12,312

 

 

 

11,907

 

 

 

7,788

 

 

 

(11,380

)

Interest expense

 

 

(13,131

)

 

 

(455

)

 

 

(65,083

)

 

 

(919

)

Total other income (expense)

 

 

(402

)

 

 

11,449

 

 

 

(56,235

)

 

 

(8,079

)

Income (loss) from continuing operations before

income tax

 

 

17,195

 

 

 

6,664

 

 

 

(62,303

)

 

 

(14,262

)

Income tax benefit (expense)

 

 

 

 

 

 

 

 

 

 

 

 

Income (loss) from continuing operations

 

 

17,195

 

 

 

6,664

 

 

 

(62,303

)

 

 

(14,262

)

Income from discontinued operations, net of tax

(see note 23)

 

 

4,975

 

 

 

3,981

 

 

 

19,882

 

 

 

11,915

 

Net income (loss)

 

 

22,170

 

 

 

10,645

 

 

 

(42,421

)

 

 

(2,347

)

Net income (loss) attributable to non-controlling

interest and redeemable non-controlling interest

from continuing operations

 

 

(64

)

 

 

(115

)

 

 

33

 

 

 

511

 

Net income attributable to non-controlling interest

and redeemable non-controlling interest from

discontinued operations

 

 

 

 

 

2,400

 

 

 

6,829

 

 

 

7,183

 

Net income (loss) attributable to Vertex Energy,

Inc.

 

 

22,234

 

 

 

8,360

 

 

 

(49,283

)

 

 

(10,041

)

 

 

 

 

 

 

 

 

 

Accretion of redeemable noncontrolling interest

to redemption value from continued operations

 

 

 

 

 

(415

)

 

 

(428

)

 

 

(1,177

)

Accretion of discount on Series B and B1

Preferred Stock

 

 

 

 

 

 

 

 

 

 

 

(507

)

 

 

 

 

 

 

 

 

 

Net income (loss) attributable to shareholders from

continuing operations

 

 

17,259

 

 

 

6,364

 

 

 

(62,764

)

 

 

(16,457

)

Net income attributable to shareholders from

discontinued operations, net of tax

 

 

4,975

 

 

 

1,581

 

 

 

13,053

 

 

 

4,732

 

Net income (loss) attributable to common

shareholders

 

$

22,234

 

 

$

7,945

 

 

$

(49,711

)

 

$

(11,725

)

 

 

 

 

 

 

 

 

 

Basic income (loss) per common share

 

 

 

 

 

 

 

 

Continuing operations

 

$

0.23

 

 

$

0.10

 

 

$

(0.91

)

 

$

(0.31

)

Discontinued operations, net of tax

 

 

0.07

 

 

 

0.03

 

 

 

0.19

 

 

 

0.09

 

Basic income (loss) per common share

 

$

0.30

 

 

$

0.13

 

 

$

(0.72

)

 

$

(0.22

)

 

 

 

 

 

 

 

 

 

Diluted income (loss) per common share

 

 

 

 

 

 

 

 

Continuing operations

 

$

0.22

 

 

$

0.10

 

 

$

(0.91

)

 

$

(0.31

)

Discontinued operations, net of tax

 

 

0.06

 

 

 

0.02

 

 

 

0.19

 

 

 

0.09

 

Diluted income (loss) per common share

 

$

0.28

 

 

$

0.12

 

 

$

(0.72

)

 

$

(0.22

)

 

 

 

 

 

 

 

 

 

Shares used in computing earnings per share

 

 

 

 

 

 

 

 

Basic

 

 

75,591

 

 

 

61,349

 

 

 

69,007

 

 

 

53,964

 

Diluted

 

 

79,638

 

 

 

64,605

 

 

 

69,007

 

 

 

53,964

 

VERTEX ENERGY, INC.

CONSOLIDATED STATEMENTS OF EQUITY

(in thousands, except par value)

(UNAUDITED)

Nine Months Ended September 30, 2022

 

Common Stock

Series A

Preferred

 

 

 

 

 

Shares

$0.001

Par

Shares

$0.001

Par

Additional

Paid-In

Capital

Retained

Earnings

Non-controlling

Interest

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

)

 

 

 

 

 

 

Share based compensation expense

 

 

 

 

250

 

 

 

 

 

 

250

 

Conversion of Series A Preferred stock to common

5

 

(5

)

 

 

 

 

 

 

 

 

 

Reclassification of derivative liabilities

 

 

 

 

78,789

 

 

 

 

 

 

78,789

 

Accretion of redeemable non-controlling interest to redemption value

 

 

 

 

 

 

(422

)

 

 

 

(422

)

Net income (loss)

 

 

 

 

 

 

(4,547

)

 

3,739

 

 

(808

)

Less: amount attributable to redeemable non-controlling interest

 

 

 

 

 

 

 

 

(3,769

)

 

(3,769

)

Balance on March 31, 2022

64,466

 

64

381

 

 

 

217,734

 

 

(115,583

)

 

1,967

 

 

104,182

 

Exercise of options to common

498

 

1

 

 

 

553

 

 

 

 

 

 

554

 

Exercise of options to common- unissued

 

 

 

 

3

 

 

 

 

 

 

3

 

Distribution to noncontrolling shareholder

 

 

 

 

 

 

 

 

(380

)

 

(380

)

Adjustment of redeemable non controlling interest

 

 

 

 

29

 

 

(29

)

 

 

 

 

Conversion of Convertible Senior Notes to common

10,165

 

10

 

 

 

59,812

 

 

 

 

 

 

59,822

 

Share based compensation expense

 

 

 

 

324

 

 

 

 

 

 

324

 

Conversion of Series A Preferred stock to common

381

 

1

(381

)

 

 

 

 

 

 

 

1

 

Accretion of redeemable non-controlling interest to redemption value

 

 

 

 

 

 

(6

)

 

 

 

(6

)

Net income (loss)

 

 

 

 

 

 

(66,970

)

 

3,188

 

 

(63,782

)

Less: amount attributable to redeemable non-controlling interest

 

 

 

 

 

 

 

 

(3,023

)

 

(3,023

)

Balance on June 30, 2022

75,510

 

76

 

 

 

278,455

 

 

(182,588

)

 

1,752

 

 

97,695

 

Exercise of options to common

4

 

 

 

 

 

 

 

 

 

 

 

Exercise of options to common- unissued

 

 

 

 

97

 

 

 

 

 

 

97

 

Exercise of warrants

96

 

 

 

 

 

 

 

 

 

 

 

Share based compensation expense

 

 

 

 

378

 

 

 

 

 

 

378

 

Net income (loss)

 

 

 

 

 

22,234

 

 

(64

)

 

22,170

 

Balance on September 30, 2022

75,610

$

76

 

$

$

278,930

 

$

(160,354

)

$

1,688

 

$

120,340

 

Nine Months Ended September 30, 2021

 

Common Stock

 

Series A

Preferred

 

 

 

 

 

 

 

 

 

Shares

 

$0.001

Par

 

Shares

 

$0.001

Par

 

Additional

Paid-In

Capital

 

Retained

Earnings

 

Non-controlling

Interest

 

Total

Equity

Balance on January 1, 2021

45,555

 

$

46

 

420

 

 

$

 

$

94,570

 

$

(90,009

)

 

$

1,318

 

 

$

5,925

 

Exercise of options

23

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Exercise of B1 warrants

1,080

 

 

1

 

 

 

 

 

 

2,757

 

 

 

 

 

 

 

 

2,758

 

Exchanges of Series B Preferred stock to common

2,359

 

 

2

 

 

 

 

 

 

4,114

 

 

630

 

 

 

 

 

 

4,746

 

Share based compensation expense

 

 

 

 

 

 

 

 

150

 

 

 

 

 

 

 

 

150

 

Conversion of Series B Preferred stock to common

638

 

 

1

 

 

 

 

 

 

1,978

 

 

 

 

 

 

 

 

1,979

 

Conversion of Series B1 Preferred stock to common

2,087

 

 

2

 

 

 

 

 

 

3,254

 

 

 

 

 

 

 

 

3,256

 

Dividends on Series B and B1

 

 

 

 

 

 

 

 

 

 

(372

)

 

 

 

 

 

(372

)

Accretion of discount on Series B and B1

 

 

 

 

 

 

 

 

 

 

(224

)

 

 

 

 

 

(224

)

Accretion of redeemable non-controlling interest to redemption value

 

 

 

 

 

 

 

 

 

 

(373

)

 

 

 

 

 

(373

)

Net income

 

 

 

 

 

 

 

 

 

 

974

 

 

 

1,991

 

 

 

2,965

 

Less: amount attributable to redeemable non-controlling interest

 

 

 

 

 

 

 

 

 

 

 

 

 

(1,542

)

 

 

(1,542

)

Balance on March 31, 2021

51,742

 

 

52

 

420

 

 

 

 

 

106,823

 

 

(89,374

)

 

 

1,767

 

 

 

19,268

 

Exercise of options to common

505

 

 

 

 

 

 

 

 

229

 

 

 

 

 

 

 

 

229

 

Exercise of options to common- unissued

 

 

 

 

 

 

 

 

475

 

 

 

 

 

 

 

 

475

 

Leverage Lubricants contribution

 

 

 

 

 

 

 

 

 

 

 

 

 

(13

)

 

 

(13

)

Exercise of B1 warrants

157

 

 

 

 

 

 

 

 

1,634

 

 

 

 

 

 

 

 

1,634

 

Exercise of B1 warrants-unissued

 

 

 

 

 

 

 

 

1,186

 

 

 

 

 

 

 

 

1,186

 

Share based compensation expense

 

 

 

 

 

 

 

 

205

 

 

 

 

 

 

 

 

205

 

Conversion of Series A Preferred stock to common

28

 

 

 

(28

)

 

 

 

 

 

 

 

 

 

 

 

 

 

Conversion of Series B Preferred stock to common

1,842

 

 

2

 

 

 

 

 

 

5,707

 

 

 

 

 

 

 

 

5,709

 

Conversion of Series B Preferred stock to common-unissued

 

 

 

 

 

 

 

 

760

 

 

 

 

 

 

 

 

760

 

Conversion of Series B1 Preferred stock to common

5,635

 

 

6

 

 

 

 

 

 

8,785

 

 

 

 

 

 

 

 

8,791

 

Accretion of discount on Series B and B1

 

 

 

 

 

 

 

 

 

 

(284

)

 

 

 

 

 

(284

)

Accretion of redeemable non-controlling interest to redemption value

 

 

 

 

 

 

 

 

 

 

(387

)

 

 

 

 

 

(387

)

Net income (loss)

 

 

 

 

 

 

 

 

 

 

(19,375

)

 

 

3,418

 

 

 

(15,957

)

Less: amount attributable to redeemable non-controlling interest

 

 

 

 

 

 

 

 

 

 

 

 

 

(3,113

)

 

 

(3,113

)

Balance on June 30, 2021

59,909

 

 

60

 

392

 

 

 

 

 

125,804

 

 

(109,420

)

 

 

2,059

 

 

 

18,503

 

Exercise of options to common

1,267

 

 

1

 

 

 

 

 

 

1,481

 

 

 

 

 

 

 

 

1,482

 

Exercise of options to common- unissued

 

 

 

 

 

 

 

 

3

 

 

 

 

 

 

 

 

3

 

Exercise of B1 warrants

1,576

 

 

2

 

 

 

 

 

 

9,361

 

 

 

 

 

 

 

 

9,363

 

Conversion of Series B Preferred stock to common

245

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Conversion of Series A Preferred stock to common

6

 

 

 

(6

)

 

 

 

 

 

 

 

 

 

 

 

 

 

Leverage Lubricants contribution

 

 

 

 

 

 

 

 

 

 

 

 

 

2

 

 

 

2

 

Distribution from VRM LA

 

 

 

 

 

 

 

 

 

 

 

 

 

(169

)

 

 

(169

)

Share based compensation expense

 

 

 

 

 

 

 

 

257

 

 

 

 

 

 

 

 

257

 

Accretion of redeemable non-controlling interest to redemption value

 

 

 

 

 

 

 

 

 

 

(415

)

 

 

 

 

 

(415

)

Net income

 

 

 

 

 

 

 

 

 

 

8,360

 

 

 

2,285

 

 

 

10,645

 

Less: amount attributable to redeemable non-controlling interest

 

 

 

 

 

 

 

 

 

 

 

 

 

(2,329

)

 

 

(2,329

)

Balance on September 30, 2021

63,003

 

$

63

 

386

 

 

$

 

$

136,906

 

$

(101,475

)

 

$

1,848

 

 

$

37,342

 

VERTEX ENERGY, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

(UNAUDITED)

 

 

Nine Months Ended September 30,

 

2022

 

2021

Cash flows from operating activities

 

 

 

Net loss

$

(42,421

)

 

$

(2,347

)

Income from discontinued operations, net of tax

 

19,882

 

 

 

11,915

 

Loss from continuing operations

 

(62,303

)

 

 

(14,262

)

Adjustments to reconcile net loss from continuing operations to cash

provided by (used in) operating activities, net of acquisitions

 

 

 

Stock based compensation expense

 

952

 

 

 

613

 

Depreciation and amortization

 

11,800

 

 

 

4,263

 

Gain on forgiveness of debt

 

 

 

 

(4,222

)

(Gain) loss on sale of assets

 

(112

)

 

 

2

 

Provision for environment clean up

 

1,428

 

 

 

 

Increase in allowance for bad debt

 

157

 

 

 

717

 

Increase in fair value of derivative warrant liability

 

(7,788

)

 

 

11,380

 

Loss on commodity derivative contracts

 

87,218

 

 

 

2,205

 

Net cash settlements on commodity derivatives

 

(100,253

)

 

 

(1,999

)

Amortization of debt discount and deferred costs

 

44,537

 

 

 

38

 

Changes in operating assets and liabilities, net of acquisition

 

 

 

Accounts receivable and other receivables

 

(37,157

)

 

 

(6,123

)

Inventory

 

(31,521

)

 

 

(3,716

)

Prepaid expenses and other current assets

 

(16,433

)

 

 

(2,366

)

Accounts payable

 

58,925

 

 

 

1,945

 

Accrued expenses

 

37,658

 

 

 

2,450

 

Other assets

 

54

 

 

 

(648

)

Net cash used in operating activities from continuing operations

 

(12,838

)

 

 

(9,723

)

Cash flows from investing activities

 

 

 

Acquisition of business, net of cash

 

(227,525

)

 

 

2

 

Software purchase

 

(106

)

 

 

 

Purchase of fixed assets

 

(34,744

)

 

 

(2,313

)

Proceeds from sale of fixed assets

 

188

 

 

 

75

 

Net cash used in investing activities from continuing operations

 

(262,187

)

 

 

(12,477

)

Cash flows from financing activities

 

 

 

Payments on finance leases

 

(201

)

 

 

(409

)

Proceeds from exercise of options and warrants to common stock

 

729

 

 

 

6,493

 

Distributions to noncontrolling interest

 

(380

)

 

 

(169

)

Net borrowings on inventory financing agreements

 

133,744

 

 

 

 

Net change in line of credit

 

 

 

 

(166

)

Redemption of noncontrolling interest

 

(50,666

)

 

 

 

Proceeds from note payable

 

173,315

 

 

 

10,078

 

Payments on note payable

 

(14,101

)

 

 

(3,779

)

Net cash provided by financing activities from continuing operations

 

242,440

 

 

 

12,050

 

 

 

 

 

Discontinued operations:

 

 

 

Net cash provided by operating activities

 

20,199

 

 

 

13,043

 

Net cash used in investing activities

 

(1,848

)

 

 

(1,675

)

Net cash provided by discontinued operations

 

18,351

 

 

 

11,368

 

 

 

 

 

Net change in cash, cash equivalents and restricted cash

 

(14,234

)

 

 

1,218

 

Cash, cash equivalents, and restricted cash at beginning of the period

 

136,627

 

 

 

10,995

 

Cash, cash equivalents, and restricted cash at end of period

$

122,393

 

 

$

12,213

 

See accompanying condensed notes to the consolidated financial statements.

 

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 such amounts shown in the consolidated statements of cash flows (in thousands).

 

 

Nine Months Ended

 

September 30,

2022

 

September 30,

2021

Cash and cash equivalents

$

117,464

 

$

12,113

 

Restricted cash

 

4,929

 

$

100

 

Cash and cash equivalents and restricted cash as shown in the consolidated statements

of cash flows

$

122,393

 

$

12,213

 

 

 

 

 

SUPPLEMENTAL INFORMATION

 

 

 

Cash paid for interest

$

20,191

 

$

844

 

Cash paid for taxes

$

 

$

 

NON-CASH INVESTING AND FINANCING TRANSACTIONS

 

 

 

Equity component of the convertible note issuance

$

78,789

 

$

 

Conversion of Series B Preferred Stock into common stock

$

 

$

8,447

 

Conversion of Series B1 Preferred Stock into common stock

$

 

$

12,046

 

Exchanges of Series B Preferred Stock into common stock

$

 

$

4,747

 

Accretion of discount on Series B and B1 Preferred Stock

$

 

$

507

 

Dividends-in-kind accrued on Series B and B1 Preferred Stock

$

 

$

(258

)

Conversion of Convertible Senior Notes to common stock

$

59,822

 

$

 

Equipment acquired (disposed) under leases

$

45,096

 

$

174

 

Accretion of redeemable noncontrolling interest to redemption value

$

428

 

$

1,177

 

Segment information for the three and nine months ended September 30, 2022 and 2021 is as follows (in thousands):

THREE MONTHS ENDED SEPTEMBER 30, 2022

 

 

Black Oil &

Recovery

 

Refining &

Marketing

 

Corporate

and

Eliminations

 

Consolidated

Revenues:

 

 

 

 

 

 

 

 

Refined products

 

$

37,607

 

$

694,677

 

$

 

 

$

732,284

Re-refined products

 

 

5,550

 

 

69,948

 

 

 

 

 

75,498

Services

 

 

282

 

 

2,144

 

 

 

 

 

2,426

Total revenues

 

 

43,439

 

 

766,769

 

 

 

 

 

810,208

Cost of revenues (exclusive of depreciation and

amortization shown separately below)

 

 

35,299

 

 

715,164

 

 

 

 

 

750,463

Depreciation and amortization attributable to costs of

revenues

 

 

939

 

 

3,111

 

 

 

 

 

4,050

Gross profit

 

 

7,201

 

 

48,494

 

 

 

 

 

55,695

Selling, general and administrative expenses

 

 

4,919

 

 

27,988

 

 

4,071

 

 

 

36,978

Depreciation and amortization attributable to operating

expenses

 

 

39

 

 

850

 

 

231

 

 

 

1,120

Income (loss) from operations

 

$

2,243

 

$

19,656

 

$

(4,302

)

 

$

17,597

 

 

 

 

 

 

 

 

 

Capital expenditures

 

$

412

 

$

26,333

 

$

 

 

$

26,745

THREE MONTHS ENDED SEPTEMBER 30, 2021

 

 

Black Oil &

Recovery

 

Refining &

Marketing

 

Corporate

and

Eliminations

 

Consolidated

Revenues:

 

 

 

 

 

 

 

 

Refined products

 

$

20,339

 

 

$

20,419

 

 

$

 

 

$

40,758

 

Re-refined products

 

 

5,237

 

 

 

4,153

 

 

 

 

 

 

9,390

 

Services

 

 

834

 

 

 

 

 

 

 

 

 

834

 

Total revenues

 

 

26,410

 

 

 

24,572

 

 

 

 

 

 

50,982

 

Cost of revenues (exclusive of depreciation and

amortization shown separately below)

 

 

22,205

 

 

 

23,937

 

 

 

 

 

 

46,142

 

Depreciation and amortization attributable to costs of

revenues

 

 

901

 

 

 

127

 

 

 

 

 

 

1,028

 

Gross profit

 

 

3,304

 

 

 

508

 

 

 

 

 

 

3,812

 

Selling, general and administrative expenses

 

 

3,618

 

 

 

1,034

 

 

 

3,525

 

 

 

8,177

 

Depreciation and amortization attributable to operating

expenses

 

 

59

 

 

 

108

 

 

 

253

 

 

 

420

 

Loss from operations

 

$

(373

)

 

$

(634

)

 

$

(3,778

)

 

$

(4,785

)

 

 

 

 

 

 

 

 

 

Capital expenditures

 

$

228

 

 

$

 

 

$

 

 

$

228

 

NINE MONTHS ENDED SEPTEMBER 30, 2022

 

 

Black Oil &

Recovery

 

Refining &

Marketing

 

Corporate

and

Eliminations

 

Consolidated

Revenues:

 

 

 

 

 

 

 

 

Refined products

 

$

129,078

 

$

1,595,070

 

 

$

 

 

$

1,724,148

 

Re-refined products

 

 

17,191

 

 

168,356

 

 

 

 

 

 

185,547

 

Services

 

 

1,276

 

 

4,452

 

 

 

 

 

 

5,728

 

Total revenues

 

 

147,545

 

 

1,767,878

 

 

 

 

 

 

1,915,423

 

Cost of revenues (exclusive of depreciation and

amortization shown separately below)

 

 

111,740

 

 

1,708,017

 

 

 

 

 

 

1,819,757

 

Depreciation and amortization attributable to costs of

revenues

 

 

2,805

 

 

6,339

 

 

 

 

 

 

9,144

 

Gross profit

 

 

33,000

 

 

53,522

 

 

 

 

 

 

86,522

 

Selling, general and administrative expenses

 

 

13,383

 

 

52,709

 

 

 

23,842

 

 

 

89,934

 

Depreciation and amortization attributable to operating

expenses

 

 

142

 

 

1,785

 

 

 

729

 

 

 

2,656

 

Income (loss) from operations

 

$

19,475

 

$

(972

)

 

$

(24,571

)

 

$

(6,068

)

 

 

 

 

 

 

 

 

 

Capital expenditures

 

$

2,830

 

$

142,927

 

 

$

 

 

$

145,757

 

NINE MONTHS ENDED SEPTEMBER 30, 2021

 

 

Black Oil &

Recovery

 

Refining &

Marketing

 

Corporate

and

Eliminations

 

Consolidated

Revenues:

 

 

 

 

 

 

 

 

Refined products

 

$

58,039

 

$

55,974

 

 

$

 

 

$

114,013

 

Re-refined products

 

 

19,218

 

 

11,709

 

 

 

 

 

 

30,927

 

Services

 

 

2,867

 

 

 

 

 

 

 

 

2,867

 

Total revenues

 

 

80,124

 

 

67,683

 

 

 

 

 

 

147,807

 

Cost of revenues (exclusive of depreciation and

amortization shown separately below)

 

 

63,431

 

 

64,555

 

 

 

 

 

 

127,986

 

Depreciation and amortization attributable to costs of

revenues

 

 

2,623

 

 

379

 

 

 

 

 

 

3,002

 

Gross profit

 

 

14,070

 

 

2,749

 

 

 

 

 

 

16,819

 

Selling, general and administrative expenses

 

 

10,841

 

 

2,482

 

 

 

8,419

 

 

 

21,742

 

Depreciation and amortization attributable to operating

expenses

 

 

176

 

 

325

 

 

 

759

 

 

 

1,260

 

Income (loss) from operations

 

$

3,053

 

$

(58

)

 

$

(9,178

)

 

$

(6,183

)

 

 

 

 

 

 

 

 

 

Capital expenditures

$

2,313

$

$

$

2,313

The following summarized financial information has been segregated from continuing operations and reported as Discontinued Operations for the three months and nine months ended September 30, 2022, and 2021 (in thousands):

 

Three Months Ended September 30,

 

Nine Months Ended September 30,

 

2022

 

2021

 

2022

 

2021

Revenues

$

22,153

 

$

14,507

 

 

$

63,534

 

 

$

41,039

 

Cost of revenues (exclusive of

depreciation shown separately below)

 

14,306

 

 

8,638

 

 

 

36,077

 

 

 

23,124

 

Depreciation and amortization

attributable to costs of revenues

 

391

 

 

393

 

 

 

1,170

 

 

 

1,160

 

Gross profit

 

7,456

 

 

5,476

 

 

 

26,287

 

 

 

16,755

 

Operating expenses:

 

 

 

 

 

 

 

Selling, general and administrative

expenses (exclusive of depreciation

shown separately below)

 

2,418

 

 

1,418

 

 

 

6,213

 

 

 

4,606

 

Depreciation and amortization

expense attributable to operating

expenses

 

63

 

 

63

 

 

 

188

 

 

 

188

 

Total operating expenses

 

2,481

 

 

1,481

 

 

 

6,401

 

 

 

4,794

 

Income from operations

 

4,975

 

 

3,995

 

 

 

19,886

 

 

 

11,961

 

Other income (expense)

 

 

 

 

 

 

 

Interest expense

 

 

 

(14

)

 

 

(4

)

 

 

(46

)

Total other expense

 

 

 

(14

)

 

 

(4

)

 

 

(46

)

Income before income tax

 

4,975

 

 

3,981

 

 

 

19,882

 

 

 

11,915

 

Income tax benefit (expense)

 

 

 

 

 

 

 

 

 

 

Income from discontinued operations,

net of tax

$

4,975

 

$

3,981

 

 

$

19,882

 

 

$

11,915

 

Unaudited Reconciliation of Refining Gross Margin and Refining Gross Margin per throughput barrel to Gross Profit

 
Three Months Ended September 30, 2022
In thousands Total Refining & Marketing Mobile Refinery Other Refining & Marketing
Gross profit

$

48,493

 

$

48,882

 

$

(389

)

Operating expenses included in cost of revenues

 

25,508

 

 

25,508

 

 

-

 

Depreciation and amortization attributable to cost of revenues

 

3,111

 

 

2,957

 

 

154

 

Unrealized loss hedging activities

 

(47,752

)

 

(46,977

)

 

(775

)

Loss on inventory intermediaton agreement

 

17,972

 

 

17,972

 

 

-

 

Refining gross margin

$

47,332

 

$

48,342

 

$

(1,010

)

Throughput bpd

 

67,954

 

Refining gross margin per throughput barrel

$

7.73

 

 
Refining gross margin

$

48,342

 

$

(1,010

)

Realized loss on hedging activities

 

38,695

 

Refining gross margin (adjusted for non-recurring items)

$

87,037

 

$

(1,010

)

Throughput bpd

 

67,954

 

Refining gross margin per throughput barrel (adjusted)

$

13.92

 

 
 
Nine Months Ended September 30, 2022
In thousands Total Refining & Marketing Mobile Refinery Other Refining & Marketing
Gross profit

$

53,521

 

$

50,848

 

$

2,673

 

Operating expenses included in cost of revenues

 

43,083

 

 

43,083

 

 

-

 

Depreciation and amortization attributable to cost of revenues

 

6,339

 

 

5,944

 

 

395

 

Unrealized loss hedging activities

 

(144

)

 

(76

)

 

(68

)

Loss on inventory intermediaton agreement

 

41,152

 

 

41,152

 

 

-

 

Refining gross margin

$

143,951

 

$

140,951

 

$

3,000

 

Throughput bpd

 

70,032

 

Refining gross margin per throughput barrel

$

11.00

 

 
Refining gross margin

$

140,951

 

$

3,000

 

Realized loss on hedging activities

 

84,830

 

One-time inventory adjustment

 

13,300

 

Refining gross margin (adjusted for non-recurring items)

$

239,092

 

$

3,000

 

Throughput bpd

 

70,032

 

Refining gross margin per throughput barrel (adjusted)

$

18.66

 

Unaudited Consolidated Continued and Discontinued Operations Reconciliations of Net Loss attributable to Vertex Energy, Inc., to Earnings before Interest, Taxes, Depreciation and Amortization (EBITDA) and Adjusted EBITDA

Three Months Ended Nine Months Ended
September 30, 2022 September 30, 2021 September 30, 2022 September 30, 2021
Consolidated
EBITDA and Adjusted EBITDA
Net income (loss) including discontinued operations

$

22,172

 

$

10,680

 

$

(42,421

)

$

(2,347

)

Depreciation and amortization

 

5,623

 

 

1,904

 

 

13,157

 

 

5,610

 

Interest expense

 

13,129

 

 

469

 

 

65,069

 

 

999

 

EBITDA

 

40,924

 

 

13,053

 

 

35,805

 

 

4,262

 

Unrealized (gain)/loss hedging activities

 

(47,756

)

 

147

 

 

(1,123

)

 

62

 

(Gain)/loss on hedge roll (backwardation)

 

17,972

 

 

-

 

 

41,152

 

 

-

 

Acquisition costs

 

2,889

 

 

-

 

 

16,526

 

 

-

 

Environmental clean-up reserve

 

-

 

 

-

 

 

1,428

 

 

-

 

Loss on derivative warrant liability

 

(12,312

)

 

(11,907

)

 

(7,788

)

 

11,380

 

Stock compensation expense

 

378

 

 

257

 

 

951

 

 

613

 

Other

 

(417

)

 

-

 

 

(1,042

)

 

(4,222

)

Impairment loss

 

-

 

 

-

 

 

-

 

 

-

 

Adjusted EBITDA

$

1,678

 

$

1,550

 

$

85,909

 

$

12,095

 

Three Months Ended September 30, 2022

In thousands Mobile Refinery Legacy Refining and Marketing Total Refining & Marketing Black Oil and Recovery Corporate Consolidated
Segment
EBITDA and Adjusted EBITDA
Net income (loss) continued operations

$

18,370

 

$

(2,251

)

$

16,119

 

$

7,638

 

$

(1,585

)

$

22,172

 

Depreciation and amortization

 

3,693

 

 

268

 

 

3,961

 

 

1,431

 

 

231

 

 

5,623

 

Interest expense

 

3,536

 

 

-

 

 

3,536

 

 

(2

)

 

9,595

 

 

13,129

 

EBITDA

 

25,599

 

 

(1,983

)

 

23,616

 

 

9,067

 

 

8,241

 

 

40,924

 

Unrealized (gain)/loss hedging activities

 

(46,977

)

 

(775

)

 

(47,752

)

 

(4

)

 

-

 

 

(47,756

)

(Gain)/loss on hedge roll (backwardation)

 

17,972

 

 

-

 

 

17,972

 

 

-

 

 

-

 

 

17,972

 

Acquisition costs

 

2,889

 

 

-

 

 

2,889

 

 

-

 

 

-

 

 

2,889

 

Loss on derivative warrant liability

 

-

 

 

-

 

 

-

 

 

-

 

 

(12,312

)

 

(12,312

)

Stock compensation expense

 

-

 

 

-

 

 

-

 

 

-

 

 

378

 

 

378

 

Other

 

-

 

 

-

 

 

-

 

 

(417

)

 

-

 

 

(417

)

Adjusted EBITDA

$

(517

)

$

(2,758

)

$

(3,275

)

$

8,646

 

$

(3,693

)

$

1,678

 

 
 

Nine Months Ended September 30, 2022

In thousands Mobile Refinery Legacy Refining and Marketing Total Refining & Marketing Black Oil and Recovery Corporate Consolidated
Segment
EBITDA and Adjusted EBITDA
Net income (loss) continued operations

$

(5,593

)

$

(2,147

)

$

(7,740

)

$

40,399

 

$

(75,080

)

$

(42,421

)

Depreciation and amortization

 

7,416

 

 

707

 

 

8,123

 

 

4,305

 

 

729

 

 

13,157

 

Interest expense

 

6,768

 

 

-

 

 

6,768

 

 

4

 

 

58,297

 

 

65,069

 

EBITDA

 

8,591

 

 

(1,440

)

 

7,151

 

 

44,708

 

 

(16,054

)

 

35,805

 

Unrealized (gain)/loss hedging activities

 

(76

)

 

(68

)

 

(144

)

 

(979

)

 

-

 

 

(1,123

)

(Gain)/loss on hedge roll (backwardation)

 

41,152

 

 

-

 

 

41,152

 

 

-

 

 

-

 

 

41,152

 

Acquisition costs

 

11,967

 

 

-

 

 

11,967

 

 

-

 

 

4,559

 

 

16,526

 

Environmental clean-up reserve

 

1,428

 

 

-

 

 

1,428

 

 

-

 

 

-

 

 

1,428

 

Loss on derivative warrant liability

 

-

 

 

-

 

 

-

 

 

-

 

 

(7,788

)

 

(7,788

)

Stock compensation expense

 

-

 

 

-

 

 

-

 

 

-

 

 

951

 

 

951

 

Other

 

-

 

 

-

 

 

-

 

 

(1,042

)

 

-

 

 

(1,042

)

Adjusted EBITDA

$

63,062

 

$

(1,508

)

$

61,554

 

$

42,687

 

$

(18,332

)

$

85,909

 

 
 
 

Three Months Ended September 30, 2021

In thousands Mobile Refinery Legacy Refining and Marketing Total Refining & Marketing Black Oil and Recovery Corporate Consolidated
Segment
EBITDA and Adjusted EBITDA
Net income (loss) including discontinued operations

$

-

 

$

(634

)

$

(634

)

$

3,643

 

$

7,671

 

$

10,680

 

Depreciation and amortization

 

-

 

 

235

 

 

235

 

 

960

 

 

709

 

 

1,904

 

Interest expense

 

-

 

 

-

 

 

-

 

 

-

 

 

469

 

 

469

 

EBITDA

 

-

 

 

(399

)

 

(399

)

 

4,603

 

 

8,849

 

 

13,053

 

Unrealized (gain)/loss hedging activities

 

-

 

 

-

 

 

-

 

 

147

 

 

-

 

 

147

 

Acquisition costs

 

-

 

 

-

 

 

-

 

 

-

 

 

-

 

 

-

 

Environmental clean-up reserve

 

-

 

 

-

 

 

-

 

 

-

 

 

-

 

 

-

 

Loss on derivative warrant liability

 

-

 

 

-

 

 

-

 

 

-

 

 

(11,907

)

 

(11,907

)

Stock compensation expense

 

-

 

 

-

 

 

-

 

 

-

 

 

257

 

 

257

 

Other

 

-

 

 

-

 

 

-

 

 

-

 

 

-

 

 

-

 

Adjusted EBITDA

$

-

 

$

(399

)

$

(399

)

$

4,750

 

$

(2,801

)

$

1,550

 

 
 

Nine Months Ended September 30, 2021

In thousands Mobile Refinery Legacy Refining and Marketing Total Refining & Marketing Black Oil and Recovery Corporate Consolidated
Segment
 
Net income (loss) including discontinued operations

$

-

 

$

(58

)

$

(58

)

$

14,968

 

$

(17,257

)

$

(2,347

)

Depreciation and amortization

 

-

 

 

704

 

 

704

 

 

4,147

 

 

759

 

 

5,610

 

Interest expense

 

-

 

 

-

 

 

-

 

 

80

 

 

919

 

 

999

 

EBITDA

 

-

 

 

646.00

 

 

646.00

 

 

19,195.00

 

 

-15,579.00

 

 

4,262.00

 

Unrealized (gain)/loss hedging activities

 

-

 

 

-

 

 

-

 

 

-

 

 

62

 

 

62

 

(Gain)/loss on hedge roll (backwardation)

 

-

 

 

-

 

 

-

 

 

-

 

 

-

 

 

-

 

Acquisition costs

 

-

 

 

-

 

 

-

 

 

-

 

 

-

 

 

-

 

Environmental clean-up reserve

 

-

 

 

-

 

 

-

 

 

-

 

 

-

 

 

-

 

Loss on derivative warrant liability

 

-

 

 

-

 

 

-

 

 

-

 

 

11,380

 

 

11,380

 

Stock compensation expense

 

-

 

 

-

 

 

-

 

 

-

 

 

613

 

 

613

 

Other

 

-

 

 

-

 

 

-

 

 

-

 

 

(4,222

)

 

(4,222

)

Adjusted EBITDA

$

-

 

$

646

 

$

646

 

$

19,195

 

$

(7,746

)

$

12,095

 

 

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