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
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.
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version on businesswire.com: https://www.businesswire.com/news/home/20231013791185/en/
INVESTORS John Ragozzino Jr., CFA (ICR) IR@vertexenergy.com
Vertex Energy (NASDAQ:VTNR)
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