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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934
Date of Report (Date of Earliest Event
Reported): February 28, 2024
VERTEX ENERGY, INC.
(Exact name of registrant as specified in its charter)
| Nevada |
001-11476 |
94-3439569 |
(State or other jurisdiction of
incorporation) |
(Commission File Number) |
(IRS Employer
Identification No.) |
|
1331 Gemini Street
Suite 250
Houston, Texas |
77058 |
| (Address of principal executive offices) |
(Zip Code) |
Registrant’s telephone number, including area
code: (866) 660-8156
Check the appropriate box below if the Form 8-K filing
is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
| ☐ |
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
| |
|
| ☐ |
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| |
|
| ☐ |
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| |
|
| ☐ |
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Securities registered pursuant to Section 12(b) of
the Act:
| Title of each class |
Trading Symbol(s) |
Name of each exchange on which registered |
|
Common Stock,
$0.001 Par Value Per Share |
VTNR |
The NASDAQ
Stock Market LLC
(Nasdaq Capital Market) |
Indicate by check mark whether the registrant is an
emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities
Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ☐
If an emerging growth company, indicate by check mark
if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards
provided pursuant to Section 13(a) of the Exchange Act. ☐
| Item 2.02 |
Results of Operations and Financial Condition. |
On
February 28, 2024, Vertex Energy, Inc. (“Vertex” or the “Company”) issued a press release and will
hold a conference call regarding its financial results for the twelve months ended December 31, 2023. A copy of the press release,
which includes information on the conference call and a summary of such financial results is furnished as Exhibit 99.1 to
this Form 8-K and incorporated herein by reference. Additionally, a copy of a presentation which will be discussed on the earnings call
is furnished as Exhibit 99.2 to this Form 8-K and is incorporated herein by reference, and has also been posted
to the Company’s website at https://www.vertexenergy.com/presentation, although the Company reserves the right to discontinue that
availability at any time.
The
information contained in this Current Report and Exhibits 99.1 and 99.2 hereto shall not be deemed “filed”
for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) or otherwise subject
to the liabilities of that section, nor shall they be deemed incorporated by reference in any filing under the Securities Act of 1933,
as amended or the Exchange Act, except as expressly set forth by specific reference in such a filing.
The Company is making reference
to non-GAAP financial information in the press release, presentation, and the conference call. A reconciliation of these non-GAAP financial
measures to the comparable GAAP financial measures is contained in the attached press release and presentation.
| Item 9.01 |
Financial Statements and Exhibits. |
| Exhibit No. |
|
Description |
|
| |
|
|
|
| 99.1* |
|
Press Release of Vertex Energy, Inc., dated February 28, 2024 |
| 99.2* |
|
Fourth Quarter 2023 Earnings Call Presentation |
| 104 |
|
Inline XBRL for the cover page of this Current Report on Form 8-K |
* Furnished herewith.
The inclusion of any website
address in this Form 8-K, and any exhibit thereto, is intended to be an inactive textual reference only and not an active hyperlink. The
information contained in, or that can be accessed through, such website is not part of or incorporated into this Form 8-K.
Forward-Looking Statements
This Current Report on Form 8-K,
including the press release and presentation furnished as Exhibits 99.1 and 99.2,
respectively, to this Current Report on Form 8-K, contains forward-looking statements
within the meaning of the federal securities laws, including the Private Securities
Litigation Reform Act of 1995, and, as such, may involve known and unknown risks, uncertainties and assumptions. You can identify
these forward-looking statements by words such as “may,” “should,” “expect,”
“anticipate,” “believe,” “estimate,” “intend,” “plan”
and other similar expressions. These forward-looking statements relate to the Company’s
current expectations and are subject to the limitations and qualifications set forth in the press release and presentation as well as
in the Company’s other filings with the Securities and Exchange Commission, including, without limitation, that actual events and/or
results may differ materially from those projected in such forward-looking statements. These statements also involve known and unknown
risks, which may cause the results of the Company, its divisions and concepts to be materially different than those expressed
or implied in such statements, including those referenced in the press release and presenation. Accordingly,
readers should not place undue reliance on any forward-looking statements. Forward-looking statements may include comments as to the Company’s
beliefs and expectations as to future financial performance, events and trends affecting its business and are necessarily subject to uncertainties,
many of which are outside the Company’s control. More information on potential factors that could affect the Company’s financial
results is included from time to time in the “Cautionary Statement Regarding Forward-Looking Statements,” “Risk
Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations”
sections of the Company’s most recently filed periodic reports on Form 10-K and Form 10-Q and subsequent filings with the SEC and
available at www.sec.gov and in the “Investor Relations” – “SEC Filings”
section of the Company’s website at www.vertexenergy.com. Forward-looking statements speak only as of the date
they are made. The Company undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of
new information, future events or otherwise that occur after that date, except as otherwise provided by law.
SIGNATURES
Pursuant to the requirements of
the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto
duly authorized.
| |
VERTEX ENERGY, INC. |
|
| |
|
|
| Date: February 28, 2024 |
By: |
/s/ Chris Carlson |
|
| |
|
Chris Carlson |
|
| |
|
Chief Financial Officer |
|
Vertex Energy, Inc. 8-K
Exhibit 99.1
Vertex
Energy Announces Fourth Quarter and Full Year 2023 Financial and Results
HOUSTON,
TX / BUSINESSWIRE / February 28, 2024 / 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 fourth quarter ended December
31, 2023.
The
Company will host a conference call to discuss fourth quarter 2023 results today, at 8:30 A.M. Eastern Time. Details regarding the conference
call are included at the end of this release.
FOURTH
QUARTER 2023 HIGHLIGHTS
| ● | Reported
net loss attributable to the Company of ($63.9) million, or ($0.84) per fully-diluted share
|
| ● | Reported
Adjusted EBITDA of ($35.1) million (see “Non-GAAP Financial Measures and Key Performance
Indicators”, below). |
| ● | Continued
safe operation of the Company’s Mobile, Alabama refinery (the “Mobile Refinery”)
with fourth quarter 2023 conventional throughput of 67,083 barrels per day (bpd), in line
with prior guidance. |
| ● | Renewable
diesel (“RD”) throughput of 3,926 bpd, reflecting Phase One capacity utilization
of 49.1%. |
| ● | Total
cash and cash equivalents of $80.6 million, including restricted cash of $3.6 million and
$50 million in additional term loan proceeds received during the quarter ended December 31,
2023. |
FULL-YEAR
2023 HIGHLIGHTS
| ● | Reported
net loss attributable to the Company of ($71.5) million for the full year 2023, versus net
loss attributable to the Company of ($4.8) million in 2022. |
| ● | Reported
Adjusted EBITDA of $17.1 million for the full-year versus Adjusted EBITDA of $161.0 million
for the full year 2022 (see “Non-GAAP Financial Measures and Key Performance Indicators”,
below). |
| ● | Conventional
throughput volumes of 73,734 barrels per day (bpd) for 2023 (98.3% utilization). |
| ● | Completion
of Phase I of Renewable Diesel conversion project with the launch of Renewables business
and Marine Fuels and Logistics business in Mobile, Alabama. |
Vertex
reported fourth quarter 2023 net loss attributable to the Company of ($63.9) million, or ($0.84) per fully-diluted share, versus net
income attributable to the Company of $44.4 million, or $0.07 per fully-diluted share for the fourth quarter of 2022. Adjusted EBITDA
(see “Non-GAAP Financial Measures and Key Performance Indicators”, below) was ($35.1) million for the fourth quarter 2023,
compared to Adjusted EBITDA of $75.2 million in the prior-year period.
For
the full-year 2023, the Company reported a net loss attributable to the Company of ($71.5) million versus ($4.8) million for the full-year
2022, largely attributable to losses in the Renewables segment due to elevated costs for Refined, Bleached and Deodorized (“RBD”)
soybean oil feedstock, and increased corporate segment expenses for overhead to support business expansion. The Company also reported
Adjusted EBITDA of $17.1 million, versus $161.0 million for the full years 2023 and 2022, respectively. Full-year financial results for
2023 include several non-cash items such as inventory valuation adjustments of $6 million, changes in the value of derivative liabilities
which amounted to $8 million and a one-time pre-tax gain on the sale of assets of $70.9 million related to the sale of the Heartland
facility.
Schedules
reconciling the Company’s generally accepted accounting principles in the United States (“GAAP”) and non-GAAP financial
results, including Adjusted EBITDA and certain key performance indicators, are included later in this release (see also “Non-GAAP
Financial Measures and Key Performance Indicators”, below).
MANAGEMENT
COMMENTARY
Mr.
Benjamin P. Cowart, Vertex’s Chief Executive Officer, stated, “In 2023, we focused on establishing new lines of business,
expanding our capabilities, and positioning ourselves for growth into new markets. We believe the launch of Vertex Renewables and optimization
of feedstocks have positioned the Company for margin opportunities under the new credit regime post-2024. Additionally, the inauguration
of our Marine Fuels and Logistics business alongside our Supply and Trading division has enabled us to leverage strategic integration
opportunities, enhancing netbacks and capturing additional value for our finished products.” Mr. Cowart continued, “As we
move into 2024, our priorities are to increase our cash position, reduce our operating costs, and improve margins.”
MOBILE
REFINERY OPERATIONS
Conventional
Fuels Refining
Total
conventional throughput at the Mobile Refinery was 67,083 bpd in the fourth quarter of 2023. Total production of finished high-value,
light products, such as gasoline, diesel, and jet fuel, represented approximately 66% of total production in the fourth quarter of 2023,
vs. 64% in the third quarter of 2023, and in line with management’s original expectations, reflecting a continued successful yield
optimization initiative at the Mobile conventional refining facility.
The
Mobile Refinery’s conventional operations generated a gross profit of $7.3 million and $29.6 million of fuel gross margin (a Key
performance indicator (KPI) discussed below) or $4.79 per barrel during the fourth quarter of 2023, versus generating a gross profit
of $89.9 million, and fuel gross margin of $147.0 million, or $20.50 per barrel in the fourth quarter of 2022.
Total
conventional throughput at the Mobile Refinery was 73,734 bpd for the full year 2023, reflecting capacity utilization of 98%. Total production
of finished high-value, light products, such as gasoline, diesel, and jet fuel, represented approximately 63% of total production in
2023, vs. 70% in the nine-month operating period in 2022.
The
Mobile Refinery’s conventional operations generated a gross profit of $165.5 million and $318.6 million of fuel gross margin (a
KPI discussed below) or $11.84 per barrel during the full year 2023, versus generating a gross profit of $140.9 million, and fuel gross
margin of $398.4 million, or $19.93 per barrel in the nine-month operating period in 2022.
Renewable
Diesel Facility
Total
renewable throughput at the Mobile Renewable Diesel facility was 3,926 bpd in the fourth quarter of 2023. Total production of renewable
diesel was 3,786 bpd reflecting a product yield of 96.4%.
The
Mobile Renewable Diesel facility operations generated a gross loss of $(17.6) million and $4.4 million of fuel gross margin (a KPI discussed
below) or $12.11 per barrel during the fourth quarter of 2023.
Feedstock
Supply Strategy Advanced. During the fourth quarter, Vertex continued to advance its alternative feedstock supply strategy. The
Company had recently completed the required temporary filings for low carbon fuel standard (“LCFS”) credits at the default
carbon intensity (“CI”) score. As previously communicated, the Company expected that the initial default level LCFS credits
would be applied to all volumes of renewable diesel produced during the third and fourth quarter of 2023 and to contribute to financial
results in the fourth quarter. As anticipated, during the fourth quarter of 2023, Vertex received an initial LCFS payment calculated
using the temporary default CI score, resulting in a net payment of $9.6 million.
During
the fourth quarter, the Company successfully completed runs to support filing for proprietary carbon intensity scores of LCFS pathways
for Tallow. In addition to the testing completed for Soy, distiller’s corn oil (“DCO”) and Canola completed during
the third quarter of 2023, the Company has now successfully completed the filings for each of these four feedstocks allowing Vertex to
receive the increased credit value available with their lower carbon intensity production as compared to the default temporary values
for all future renewable diesel production values.
Fourth
Quarter and Full Year 2023 Mobile Refinery Results Summary ($/millions unless otherwise noted)
| Conventional
Fuels Refinery |
1Q23 |
2Q23 |
3Q23 |
4Q23 |
FY2023 |
| |
|
|
|
|
|
| Total
Throughput (bpd) |
71,328 |
76,330 |
80,171 |
67,083 |
73,734 |
| Total
Throughput (MMbbl) |
6.42
|
6.95
|
7.38
|
6.17
|
26.91
|
| Conventional
Facility Capacity Utilization1 |
95.1%
|
101.8%
|
106.9%
|
89.4%
|
98.3%
|
| |
|
|
|
|
|
| Direct
Opex Per Barrel ($/bbl) |
$3.84
|
$3.35
|
$2.40
|
$2.46
|
$3.00
|
| Fuel
Gross Margin ($/MM) |
$103.8
|
$55.7
|
$129.5
|
$29.6
|
$318.6
|
| Fuel
Gross Margin Per Barrel ($/bbl) |
$16.17
|
$8.03
|
$17.56
|
$4.79
|
$11.84
|
| |
|
|
|
|
|
| Production
Yield |
|
|
|
|
|
| Gasoline
(bpd) |
15,723 |
17,812 |
19,211 |
17,826 |
17,653 |
| %
Production |
22.7% |
23.2% |
24.0% |
25.9% |
23.9% |
| ULSD
(bpd) |
14,720 |
15,618 |
16,479 |
14,510 |
15,334 |
| %
Production |
21.2% |
20.3% |
20.6% |
21.1% |
20.8% |
| Jet
(bpd) |
12,789 |
13,570 |
15,823 |
12,937 |
13,786 |
| %
Production |
18.4% |
17.7% |
19.8% |
18.8% |
18.7% |
| Total
Finished Fuel Products |
43,232 |
47,000 |
51,513 |
45,273 |
46,773 |
| %
Production |
62.3% |
61.2% |
64.4% |
65.9% |
63.4% |
| Other2 |
26,119 |
29,828 |
28,495 |
23,457 |
26,972 |
| %
Production |
37.7% |
38.8% |
35.6% |
34.1% |
36.6% |
| Total
Production (bpd) |
69,351 |
76,828 |
80,008 |
68,730 |
73,745 |
| Total
Production (MMbbl) |
6.24 |
6.99 |
7.36 |
6.32 |
26.92 |
| |
|
|
|
|
|
| Renewable
Fuels Refinery |
1Q23 |
2Q23 |
3Q23 |
4Q23 |
FY2023 |
| |
|
|
|
|
|
| Total
Renewable Throughput (bpd) |
- |
2,490 |
5,397 |
3,926 |
3,943 |
| Total
Renewable Throughput (MMbbl) |
- |
0.23
|
0.50
|
0.36
|
1.08
|
| Renewable
Diesel Facility Capacity Utilization3 |
-
|
31.1%
|
67.5%
|
49.1%
|
49.3%
|
| |
|
|
|
|
|
| Direct
Opex Per Barrel ($/bbl) |
-
|
$31.23
|
$23.05
|
$27.32
|
$26.17
|
| Renewable
Fuel Gross Margin |
-
|
($3.1) |
$2.4
|
$4.4
|
$3.7
|
| Renewable
Fuel Gross Margin Per Barrel ($/bbl) |
-
|
($13.66) |
$4.78
|
$12.11
|
$3.37
|
| Renewable
Diesel Production (bpd) |
- |
2,208 |
5,276 |
3,786 |
3,762 |
| Renewable
Diesel Production (MMbbl) |
- |
0.20 |
0.49 |
0.35 |
1.03 |
| Renewable
Diesel Production Yield (%) |
-
|
88.7%
|
97.8%
|
96.4%
|
95.4%
|
| |
|
|
|
|
|
1.) Assumes 75,000 barrels per day of conventional operational capacity
2.) Other includes naphtha, intermediates, and LPG
3.) Assumes 8,000 barrels per day of renewable fuels operational capacity
|
Balance
Sheet and Liquidity Update
As
of December 31, 2023, Vertex had total debt outstanding of $286 million, including $15.2 million in 6.25% Senior Convertible Notes, $196.0
million outstanding on the Company’s Term Loan, finance lease obligations of $68.6 million, and $6.2 million in other obligations.
The Company had total cash and equivalents of $80.6 million, including $3.6 million of restricted cash on the balance sheet as of December
31, 2023, for a net debt position of $205.5 million. The ratio of net debt to trailing twelve-month Adjusted EBITDA was 12.0 times as
of December 31, 2023 (see also “Non-GAAP Financial Measures and Key Performance Indicators”, below).
As
previously announced on January 2, 2024, the Company reached an agreement with its existing lending group to modify certain terms and
conditions of the current term loan agreement. The amended term loan provided an incremental $50.0 million in borrowings, the full amount
of which was borrowed upon closing on December 29, 2023 and therefore reflected in Vertex’s year end cash position of $80.6 million.
Vertex
management continuously monitors current market conditions to assess expected cash generation and liquidity needs against its available
cash position, using the forward crack spreads in the market.
As
of the current year-end, the Company believes it has adequate financial flexibility to meet its needs based on the total liquidity position.
Furthermore, the Company is currently going through a strategic evaluation process with BofA Securities, which started in October 2023,
that may result in further enhancements to its current liquidity options.
Commodity
Price Risk Management
During
the fourth quarter, Vertex’s commodity price risk management team entered into hedge positions
covering approximately 38% of planned diesel production and distillate production for the first quarter of 2024 as discussed below:
| Asset |
Contract |
Contract |
Price |
Mid-Point
|
Hedged |
Approximate
% |
| Type |
Details |
Period |
($/bbl) |
Prod'n
(Bbl) |
Volumes
(bbl) |
Hedged1 |
| Fixed
Price Swap |
ULSD/LLS
Swap |
January |
$25.55
|
762,600 |
100,000 |
13.1%
|
| Fixed
Price Swap |
ULSD/LLS
Swap |
February |
$30.68
|
713,400 |
375,000 |
52.6%
|
| Fixed
Price Swap |
ULSD/LLS
Swap |
March |
$28.95
|
762,600 |
375,000 |
49.2%
|
| |
|
Total |
$28.39
|
2,238,600 |
850,000 |
38.0%
|
| |
|
|
|
|
|
|
1.)
% hedged assumes mid-point of operating guidance of 61.5 Mbbld and mid-point of distillate production yield of 40%
Management
Outlook
All
guidance presented below is current as of the time of this release and is subject to change. All prior financial guidance should no longer
be relied upon.
| Conventional
Fuels |
1Q
2024 |
| Operational: |
Low |
|
High |
| Mobile
Refinery Conventional Throughput Volume (Mbpd) |
60.0 |
|
63.0 |
| Capacity
Utilization |
80%
|
|
84%
|
| Production
Yield Profile: |
|
|
|
| Percentage
Finished Products1 |
64% |
|
68% |
| Intermediate
& Other Products2 |
36% |
|
32% |
| |
|
|
|
| Renewable
Fuels |
1Q
2024 |
| Operational: |
Low |
|
High |
| Mobile
Refinery Renewable Throughput Volume (Mbpd) |
3.0 |
|
5.0 |
| Capacity
Utilization |
38%
|
|
63%
|
| Production
Yield |
96% |
|
98% |
| Yield
Loss |
4% |
|
2% |
| |
|
|
|
| Consolidated |
1Q
2024 |
| Operational: |
Low |
|
High |
| Mobile
Refinery Total Throughput Volume (Mbpd) |
63.0 |
|
68.0 |
| Capacity
Utilization |
76%
|
|
82%
|
| |
|
|
|
| Financial
Guidance: |
|
|
|
| Direct
Operating Expense ($/bbl) |
$4.59
|
|
$4.95
|
| Capital
Expenditures ($/MM) |
$20.00
|
|
$25.00
|
| |
|
|
|
| |
|
|
|
| 1.)
Finished products include gasoline, ULSD, and Jet A |
|
|
|
| 2.)
Intermediate & Other products include Vacuum Gas Oil (VGO), Liquified Petroleum Gases (LPGs), and
Vacuum Tower Bottoms (VTBs) |
CONFERENCE
CALL AND WEBCAST DETAILS
A
conference call will be held today, February 28, 2024 at 8:30 A.M. Eastern Time to review the Company’s financial results, discuss
recent events and conduct a question-and-answer session. An audio webcast of the conference call and accompanying presentation materials
will also be available in the “Events and Presentation” section of Vertex’s website at www.vertexenergy.com.
To listen to a live broadcast, visit the site at least 15 minutes prior to the scheduled start time in order to register, download, and
install any necessary audio software.
To
participate in the live teleconference:
Domestic: (888)
350-3870
International: (646) 960-0308
Conference
ID: 8960754
To
listen to a replay of the teleconference, which will be available through Thursday, March 14, 2024, either go to the “Events and
Presentation” section of Vertex’s website at www.vertexenergy.com, or call the
number below:
Domestic
Replay: (800) 770-2030
Access Code: 8960754
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 our customers and partners while also prioritizing sustainability, safety,
and operational excellence. With a commitment to providing superior products and services, Vertex Energy is dedicated to shaping the
future of the energy industry.
FORWARD-LOOKING
STATEMENTS
Certain
of the matters discussed in this communication which are not statements of historical fact constitute forward-looking statements within
the meaning of the securities laws, including the Private Securities Litigation Reform Act of 1995, that involve a number of risks and
uncertainties. Words such as “strategy,” “expects,” “continues,” “plans,” “anticipates,”
“believes,” “would,” “will,” “estimates,” “intends,” “projects,”
“goals,” “targets” and other words of similar meaning are intended to identify forward-looking statements but
are not the exclusive means of identifying these statements. Any statements made in this news release other than those of historical
fact, about an action, event or development, are forward-looking statements. The important factors that may cause actual results and
outcomes to differ materially from those contained in such forward-looking statements include, without limitation, the Company’s
projected Outlook for the first quarter of 2024, as discussed above; statements concerning: the Company’s engagement of BofA Securities,
Inc., as previously disclosed; the review and evaluation of potential joint ventures, divestitures, acquisitions, mergers, business combinations,
or other strategic transactions, the outcome of such review, and the impact on any such transactions, or the review thereof, and their
impact on shareholder value; the process by which the Company engages in evaluation of strategic transactions; the Company’s ability
to identify potential partners; the outcome of potential future strategic transactions and the terms thereof; the future production of
the Company’s Mobile Refinery; anticipated and unforeseen events which could reduce future production at the refinery or delay
future capital projects, and changes in commodity and credit values; throughput volumes, production rates, yields, operating expenses
and capital expenditures at the Mobile Refinery; the timing of, and outcome of, the evaluation and associated carbon intensity scoring
of the Company’s feedstock blends by officials in the state of 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 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 to 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,
changes in interest rates and inflation, and potential recessions; 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 September 30, 2023, and future Annual Reports on Form 10-K (including the Company’s Annual Report on Form 10-K for the year
ended December 31, 2023, when filed by the Company) 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 AND KEY PERFORMANCE INDICATORS
In
addition to our results calculated under generally accepted accounting principles in the United States (“GAAP”), in
this news release we also present certain non-U.S. GAAP financial measures and key performance indicators. Non-U.S. GAAP financial measures
include Adjusted Gross Margin, Fuel Gross Margin and Adjusted EBITDA, for the Company’s Legacy Refining and Marketing segment,
and the total Refining and Marketing segment, as a whole, and Net Long-Term Debt and Ratio of Net Long-Term Debt (collectively, the “Non-U.S.
GAAP Financial Measures”). Key performance indicators include Adjusted Gross Margin, Fuel Gross Margin and Adjusted EBITDA
for Conventional, Renewable and the Mobile Refinery as a whole, and Fuel Gross Margin Per Barrel of Throughput and Adjusted Gross Margin
Per Barrel of Throughput for Conventional, Renewable and the Mobile Refinery as a whole (collectively, the “KPIs”).
EBITDA represents net income before interest, taxes, depreciation and amortization, for continued and discontinued operations. Adjusted
EBITDA represents net income (loss) from operations plus or minus unrealized gain or losses on hedging activities, Renewable Fuel Standard
(RFS) costs (mainly related to Renewable Identification Numbers (RINs), and inventory adjustments, depreciation and amortization, acquisition
costs, gain on change in value of derivative warrant liability, environmental clean-up, stock-based compensation, (gain) loss on sale
of assets, interest expense, and certain other unusual or non-recurring charges included in selling, general, and administrative expenses.
Adjusted Gross Margin is defined as gross profit (loss) plus or minus unrealized gain or losses on hedging activities and inventory valuation
adjustments. Fuel Gross Margin is defined as Adjusted Gross Margin, plus production costs, operating expenses and depreciation attributable
to cost of revenues and other non-fuel items included in costs of revenues including realized and unrealized gain or losses on hedging
activities, RFS costs (mainly related to RINs), inventory valuation adjustments, fuel financing costs and other revenues and cost of
sales items. Fuel Gross Margin Per Barrel of Throughput is calculated as fuel gross margin divided by total throughput barrels for the
period presented. Operating Expenses Per Barrel of Throughput is defined as total operating expenses divided by total barrels of throughput.
RIN Adjusted Fuel Gross Margin is defined as [Fuel Gross Margin minus RIN expense divided by total barrels of throughput. RIN Adjusted
Fuel Gross Margin Per Barrel of Throughput is calculated as RIN Adjusted Fuel Gross Margin divided by total throughput barrels for the
period presented. Net Long-Term Debt is long-term debt and lease obligations, adjusted for unamortized discount and deferred financing
costs, insurance premiums financed, less cash and cash equivalents and restricted cash. Ratio of Net Long-Term Debt is defined as Long-Term
Debt divided by Adjusted EBITDA.
Each
of the Non-U.S. GAAP Financial Measures and KPIs are discussed in greater detail below. The (a) Non-U.S. GAAP Financial Measures are
“non-U.S. GAAP financial measures”, and (b) the KPIs are, presented as supplemental measures of the Company’s
performance. They are not presented in accordance with U.S. GAAP. We use the Non-U.S. GAAP Financial Measures and KPIs as supplements
to U.S. 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 U.S.
GAAP financial measures, provide investors with an additional financial analytical framework which management uses, in addition to historical
operating results, as the basis for financial, operational and planning decisions and present measurements that third parties have indicated
are useful in assessing the Company and its results of operations. The Non-U.S. GAAP Financial Measures and KPIs are presented because
we believe they provide additional useful information to investors due to the various noncash items during the period. Non-U.S. GAAP
financial information and KPIs similar to the Non-U.S. GAAP Financial Measures and KPIs are also frequently used by analysts, investors
and other interested parties to evaluate companies in our industry. The Non-U.S. GAAP Financial Measures and KPIs 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 U.S. GAAP. Some of these limitations are: the Non-U.S. GAAP Financial Measures and KPIs do not reflect cash
expenditures, or future requirements for capital expenditures, or contractual commitments; the Non-GAAP Financial Measures and KPIs do
not reflect changes in, or cash requirements for, working capital needs; the Non-GAAP Financial Measures and KPIs do not reflect the
significant interest expense, or the cash requirements necessary to service interest or principal payments, on debt or cash income tax
payments; although depreciation and amortization are noncash charges, the assets being depreciated and amortized will often have to be
replaced in the future, the Non-U.S. GAAP Financial Measures and KPIs do not reflect any cash requirements for such replacements; the
Non-U.S. GAAP Financial Measures and KPIs represent only a portion of our total operating results; and other companies in this industry
may calculate the Non-U.S. GAAP Financial Measures and KPIs differently than we do, limiting their usefulness as a comparative measure.
You should not consider the Non-U.S. GAAP Financial Measures and KPIs in isolation, or as substitutes for analysis of the Company’s
results as reported under U.S. GAAP. 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-U.S. GAAP Financial Measures and KPIs to the most comparable U.S. GAAP measure below. 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-U.S. GAAP Financial Measures and KPIs in conjunction with the most directly comparable U.S. GAAP financial
measure.
For
more information on these non-GAAP financial measures and KPIs, please see the sections titled “Unaudited Reconciliation of Gross
Profit (Loss) From Continued and Discontinued Operations to Adjusted Gross Margin, Fuel Gross Margin, Fuel Gross Margin Per Barrel of
Throughput and Operating Expenses Per Barrel of Throughput”, “Unaudited Reconciliation of Adjusted EBITDA to Net loss from
Continued and Discontinued Operations”, and “Unaudited Reconciliation of Long-Term Debt to Net Long-Term Debt and Net Leverage”,
at the end of this release.
CONTACT:
IR@vertexenergy.com
203-682-8284
| VERTEX
ENERGY, INC. |
| CONSOLIDATED
BALANCE SHEETS |
| (unaudited
in thousands, except number of shares and par value) |
| (UNAUDITED) |
| | |
31-Dec-23 | | |
31-Dec-22 | |
| ASSETS | |
| | | |
| | |
| Current assets | |
| | | |
| | |
| Cash and cash equivalents | |
$ | 76,967 | | |
$ | 141,258 | |
| Restricted cash | |
| 3,606 | | |
| 4,929 | |
| Accounts receivable, net | |
| 36,164 | | |
| 34,548 | |
| Inventory | |
| 182,120 | | |
| 135,473 | |
| Prepaid expenses and other current assets | |
| 53,174 | | |
| 36,660 | |
| Assets held for sale | |
| — | | |
| 20,560 | |
| Total current assets | |
| 352,031 | | |
| 373,428 | |
| | |
| | | |
| | |
| Fixed assets, net | |
| 326,111 | | |
| 201,749 | |
| Finance lease right-of-use assets, net | |
| 64,499 | | |
| 44,081 | |
| Operating lease right-of-use assets, net | |
| 96,394 | | |
| 53,557 | |
| Intangible assets, net | |
| 11,541 | | |
| 11,827 | |
| Deferred tax assets | |
| — | | |
| 2,498 | |
| Other assets | |
| 4,048 | | |
| 2,245 | |
| Total non-current assets | |
| 502,593 | | |
| 315,957 | |
| TOTAL ASSETS | |
$ | 854,624 | | |
$ | 689,385 | |
| | |
| | | |
| | |
| LIABILITIES AND EQUITY | |
| | | |
| | |
| Current liabilities | |
| | | |
| | |
| Accounts payable | |
$ | 75,004 | | |
$ | 20,997 | |
| Accrued expenses and other current liabilities | |
| 73,636 | | |
| 81,953 | |
| Finance lease-current | |
| 2,435 | | |
| 1,363 | |
| Operating lease-current | |
| 20,296 | | |
| 3,713 | |
| Current portion of long-term debt | |
| 16,362 | | |
| 13,911 | |
| Obligations under inventory financing agreements, net | |
| 141,093 | | |
| 117,939 | |
| Liabilities held for sale, current | |
| — | | |
| 3,424 | |
| Total current liabilities | |
| 328,826 | | |
| 243,300 | |
| | |
| | | |
| | |
| Long-term debt, net | |
| 170,701 | | |
| 170,010 | |
| Finance lease-non-current | |
| 66,206 | | |
| 45,164 | |
| Operating lease-non-current | |
| 74,444 | | |
| 49,844 | |
| Deferred tax liabilities | |
| 2,776 | | |
| — | |
| Derivative warrant liability | |
| 9,907 | | |
| 14,270 | |
| Other liabilities | |
| 1,377 | | |
| 1,377 | |
| Total liabilities | |
| 654,237 | | |
| 523,965 | |
| | |
| | | |
| | |
| EQUITY | |
| | | |
| | |
| 50,000,000 of total Preferred shares authorized: | |
| | | |
| | |
| Common stock, $0.001 par value per share; 750,000,000 shares authorized; 93,514,346 and 75,668,826 issued and outstanding at December 31, 2023 and 2022, respectively. | |
| 94 | | |
| 76 | |
| Additional paid-in capital | |
| 383,632 | | |
| 279,552 | |
| Accumulated deficit | |
| (187,379 | ) | |
| (115,893 | ) |
| Total Vertex Energy, Inc. stockholders' equity | |
| 196,347 | | |
| 163,735 | |
| Non-controlling interest | |
| 4,040 | | |
| 1,685 | |
| Total equity | |
| 200,387 | | |
| 165,420 | |
| TOTAL LIABILITIES AND EQUITY | |
$ | 854,624 | | |
$ | 689,385 | |
| VERTEX
ENERGY, INC. |
| CONSOLIDATED
STATEMENTS OF OPERATIONS |
| FOR
THE YEARS ENDED DECEMBER 31, |
| (in
thousands, except per share amounts) |
| (UNAUDITED) |
| | |
2023 | | |
2022 | | |
2021 | |
| Revenues | |
$ | 3,177,187 | | |
$ | 2,791,715 | | |
$ | 207,760 | |
| Cost of revenues (exclusive of depreciation and amortization shown separately below) | |
| 3,005,996 | | |
| 2,598,276 | | |
| 178,786 | |
| Depreciation and amortization attributable to costs of revenues | |
| 27,018 | | |
| 13,429 | | |
| 4,043 | |
| Gross profit | |
| 144,173 | | |
| 180,010 | | |
| 24,931 | |
| | |
| | | |
| | | |
| | |
| Operating expenses: | |
| | | |
| | | |
| | |
| Selling, general and administrative expenses | |
| 168,640 | | |
| 127,782 | | |
| 30,606 | |
| Loss on assets impairment | |
| — | | |
| — | | |
| 2,124 | |
| Depreciation and amortization attributable to operating expenses | |
| 4,146 | | |
| 3,673 | | |
| 1,681 | |
| Total operating expenses | |
| 172,786 | | |
| 131,455 | | |
| 34,411 | |
| Income (loss) from operations | |
| (28,613 | ) | |
| 48,555 | | |
| (9,480 | ) |
| Other income (expense): | |
| | | |
| | | |
| | |
| Other income (expense) | |
| 633 | | |
| (306 | ) | |
| 4,158 | |
| Gain (loss) on change in value of derivative warrant liability | |
| 7,992 | | |
| 7,821 | | |
| (15,685 | ) |
| Interest expense | |
| (119,567 | ) | |
| (79,911 | ) | |
| (3,832 | ) |
| Total other expense | |
| (110,942 | ) | |
| (72,396 | ) | |
| (15,359 | ) |
| Loss from continuing operations before income tax | |
| (139,555 | ) | |
| (23,841 | ) | |
| (24,839 | ) |
| Income tax benefit | |
| 13,385 | | |
| 7,171 | | |
| — | |
| Loss from continuing operations | |
| (126,170 | ) | |
| (16,670 | ) | |
| (24,839 | ) |
| Income from discontinued operations, net of tax (see operation report of discontinued operation below) | |
| 54,197 | | |
| 18,667 | | |
| 17,178 | |
| Net income (loss) | |
| (71,973 | ) | |
| 1,997 | | |
| (7,661 | ) |
| Net income (loss) attributable to non-controlling interest and redeemable non-controlling interest from continuing operations | |
| (487 | ) | |
| (63 | ) | |
| 207 | |
| Net income attributable to non-controlling interest and redeemable non-controlling interest from discontinued operations | |
| — | | |
| 6,882 | | |
| 10,496 | |
| Net loss attributable to Vertex Energy, Inc. | |
| (71,486 | ) | |
| (4,822 | ) | |
| (18,364 | ) |
| | |
| | | |
| | | |
| | |
| Accretion of redeemable noncontrolling interest to redemption value | |
| — | | |
| (428 | ) | |
| (1,992 | ) |
| Accretion of discount on Series B and B-1 Preferred Stock | |
| — | | |
| — | | |
| (507 | ) |
| Dividends on Series B and B-1 Preferred Stock | |
| — | | |
| — | | |
| 258 | |
| | |
| | | |
| | | |
| | |
| Net loss attributable to stockholders from continuing operations | |
| (125,683 | ) | |
| (17,035 | ) | |
| (27,287 | ) |
| Net income attributable to stockholders from discontinued operations, net of tax | |
| 54,197 | | |
| 11,785 | | |
| 6,682 | |
| Net loss attributable to common stockholders | |
$ | (71,486 | ) | |
$ | (5,250 | ) | |
$ | (20,605 | ) |
| | |
| | | |
| | | |
| | |
| Basic income (loss) per common share | |
| | | |
| | | |
| | |
| Continuing operations | |
$ | (1.47 | ) | |
$ | (0.24 | ) | |
$ | (0.48 | ) |
| Discontinued operations, net of tax | |
| 0.63 | | |
| 0.17 | | |
| 0.12 | |
| Basic loss per common share | |
$ | (0.84 | ) | |
$ | (0.07 | ) | |
$ | (0.36 | ) |
| | |
| | | |
| | | |
| | |
| Diluted income (loss) per common share | |
| | | |
| | | |
| | |
| Continuing operations | |
$ | (1.47 | ) | |
$ | (0.24 | ) | |
$ | (0.48 | ) |
| Discontinued operations, net of tax | |
| 0.63 | | |
| 0.17 | | |
| 0.12 | |
| Diluted loss per common share | |
$ | (0.84 | ) | |
$ | (0.07 | ) | |
$ | (0.36 | ) |
| | |
| | | |
| | | |
| | |
| Shares used in computing income (loss) per share | |
| | | |
| | | |
| | |
| Basic | |
| 85,596 | | |
| 70,686 | | |
| 56,303 | |
| Diluted | |
| 85,596 | | |
| 70,686 | | |
| 56,303 | |
| VERTEX
ENERGY, INC. |
| CONSOLIDATED
STATEMENTS OF STOCKHOLDERS' EQUITY |
| FOR
THE YEARS ENDING DECEMBER 31, 2023, 2022 AND 2021 |
| (in
thousands except par value) |
| (UNAUDITED) |
| | |
Common
Stock | | |
Series
A Preferred | | |
Additional | | |
| | |
Non- | | |
Total | |
| | |
Shares | | |
$0.001
Par | | |
Shares | | |
$0.001
Par | | |
Paid-in
Capital | | |
Accumulated
Deficit | | |
controlling
Interest | | |
Stockholders'
Equity | |
| Balance on December 31, 2020 | |
| 45,555 | | |
$ | 46 | | |
| 420 | | |
$ | — | | |
$ | 94,570 | | |
$ | (90,009 | ) | |
$ | 1,318 | | |
$ | 5,925 | |
| Dividends on Series B and B1
Preferred Stock | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| (372 | ) | |
| — | | |
| (372 | ) |
| Accretion of discount on Series
B and B1 Preferred Stock | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| (507 | ) | |
| — | | |
| (507 | ) |
| Conversion of B1 Preferred Stock
to common | |
| 7,722 | | |
| 7 | | |
| — | | |
| — | | |
| 12,038 | | |
| — | | |
| — | | |
| 12,045 | |
| Share based compensation expense | |
| — | | |
| — | | |
| — | | |
| — | | |
| 863 | | |
| — | | |
| — | | |
| 863 | |
| Exercise of options | |
| 1,800 | | |
| 2 | | |
| — | | |
| — | | |
| 2,188 | | |
| — | | |
| — | | |
| 2,190 | |
| Exercise of B1 warrants | |
| 3,093 | | |
| 3 | | |
| — | | |
| — | | |
| 16,402 | | |
| — | | |
| — | | |
| 16,405 | |
| Conversion of Series A Preferred
stock to common stock | |
| 34 | | |
| — | | |
| (34 | ) | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | |
| Conversion of Series B Preferred
Stock to common stock | |
| 5,084 | | |
| 5 | | |
| — | | |
| — | | |
| 12,559 | | |
| 630 | | |
| — | | |
| 13,194 | |
| Distribution to noncontrolling | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| (169 | ) | |
| (169 | ) |
| Adjustment of redeemable noncontrolling
interest to redemption value | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| (1,992 | ) | |
| — | | |
| (1,992 | ) |
| Contribution from noncontrolling
interest | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| (11 | ) | |
| (11 | ) |
| Net income (loss) | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| (18,364 | ) | |
| 10,703 | | |
| (7,661 | ) |
| Less: amount
attributable to redeemable non-controlling interest | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| (9,844 | ) | |
| (9,844 | ) |
| Balance on December 31, 2021 | |
| 63,288 | | |
| 63 | | |
| 386 | | |
| — | | |
| 138,620 | | |
| (110,614 | ) | |
| 1,997 | | |
| 30,066 | |
| Conversion of Series A Preferred
stock to common stock | |
| 386 | | |
| 1 | | |
| (386 | ) | |
| — | | |
| — | | |
| — | | |
| — | | |
| 1 | |
| Conversion of Convertible Senior
Notes to common (net of tax) | |
| 10,165 | | |
| 10 | | |
| — | | |
| — | | |
| 59,812 | | |
| — | | |
| — | | |
| 59,822 | |
| Reclass of derivative liabilities | |
| — | | |
| — | | |
| — | | |
| — | | |
| 78,789 | | |
| — | | |
| — | | |
| 78,789 | |
| Share based compensation expense | |
| — | | |
| — | | |
| — | | |
| — | | |
| 1,574 | | |
| — | | |
| — | | |
| 1,574 | |
| Exercise of warrants | |
| 1,209 | | |
| 1 | | |
| — | | |
| — | | |
| (1 | ) | |
| — | | |
| — | | |
| — | |
| Exercise of options | |
| 622 | | |
| 1 | | |
| — | | |
| — | | |
| 729 | | |
| — | | |
| — | | |
| 730 | |
| Adjustment of redeemable non
controlling interest | |
| — | | |
| — | | |
| — | | |
| — | | |
| 29 | | |
| (29 | ) | |
| — | | |
| — | |
| Distribution to noncontrolling | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| (380 | ) | |
| (380 | ) |
| Adjustment of redeemable noncontrolling
interest to redemption value | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| (428 | ) | |
| — | | |
| (428 | ) |
| Redemption of noncontrolling
interest | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| 41 | | |
| 41 | |
| Net income (loss) | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| (4,822 | ) | |
| 6,819 | | |
| 1,997 | |
| Less: amount
attributable to redeemable non-controlling interest | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| (6,792 | ) | |
| (6,792 | ) |
| Balance on December 31, 2022 | |
| 75,670 | | |
| 76 | | |
| — | | |
| — | | |
| 279,552 | | |
| (115,893 | ) | |
| 1,685 | | |
| 165,420 | |
| Issurance of restricted stock | |
| 113 | | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | |
| Exercise of options | |
| 526 | | |
| 1 | | |
| — | | |
| — | | |
| 682 | | |
| — | | |
| — | | |
| 683 | |
| Share based compensation expense | |
| — | | |
| — | | |
| — | | |
| — | | |
| 2,285 | | |
| — | | |
| — | | |
| 2,285 | |
| Conversion of Convertible Senior
Note, net | |
| 17,206 | | |
| 17 | | |
| — | | |
| — | | |
| 101,113 | | |
| — | | |
| — | | |
| 101,130 | |
| Contribution from noncontrolling
shareholder | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| 2,842 | | |
| 2,842 | |
| Net loss | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| (71,486 | ) | |
| (487 | ) | |
| (71,973 | ) |
| Balance on December 31,
2023 | |
| 93,515 | | |
$ | 94 | | |
| — | | |
$ | — | | |
$ | 383,632 | | |
$ | (187,379 | ) | |
$ | 4,040 | | |
$ | 200,387 | |
| VERTEX
ENERGY, INC. |
| CONSOLIDATED
STATEMENTS OF CASH FLOWS |
| FOR
THE YEARS ENDING DECEMBER 31, 2023, 2022 AND 2021 |
| (UNAUDITED) |
| | |
2023 | | |
2022 | | |
2021 | |
| Cash flows from operating activities | |
| | | |
| | | |
| | |
| Net income (loss) | |
$ | (71,973 | ) | |
$ | 1,997 | | |
$ | (7,661 | ) |
| Net income from discontinued operations, net of tax | |
| 54,197 | | |
| 18,667 | | |
| 17,178 | |
| Net loss from continuing operations | |
| (126,170 | ) | |
| (16,670 | ) | |
| (24,839 | ) |
| Adjustments to reconcile net income (loss) from continuing operations to
cash used in operating activities: | |
| | | |
| | | |
| | |
| Stock-based compensation expense | |
| 2,285 | | |
| 1,574 | | |
| 862 | |
| Depreciation and amortization | |
| 31,165 | | |
| 17,102 | | |
| 5,724 | |
| (Reduction in) Provision for bad debt | |
| (224 | ) | |
| 242 | | |
| 826 | |
| Loss (gain) on commodity derivative contracts | |
| (2,858 | ) | |
| 87,978 | | |
| 2,258 | |
| Provision for environment clean up | |
| — | | |
| 1,428 | | |
| — | |
| Gain on forgiveness of debt | |
| — | | |
| — | | |
| (4,222 | ) |
| Net cash settlement on commodity derivatives | |
| 6,575 | | |
| (92,556 | ) | |
| (2,436 | ) |
| Loss on sale of assets | |
| (1 | ) | |
| 220 | | |
| 64 | |
| Loss on assets impairment | |
| — | | |
| — | | |
| 2,124 | |
| Amortization of debt discount and deferred costs | |
| 78,779 | | |
| 49,251 | | |
| 1,231 | |
| Deferred income tax benefit | |
| (13,385 | ) | |
| (7,171 | ) | |
| — | |
| Loss (gain) on change in value of derivative warrant
liability | |
| (7,992 | ) | |
| (7,821 | ) | |
| 15,685 | |
| Changes in operating assets and liabilities, net of
acquisitions: | |
| | | |
| | | |
| | |
| Accounts receivable | |
| (3,075 | ) | |
| (27,183 | ) | |
| (821 | ) |
| Inventory | |
| (45,231 | ) | |
| 2,586 | | |
| (3,997 | ) |
| Prepaid expenses | |
| (21,027 | ) | |
| (26,724 | ) | |
| (1,615 | ) |
| Accounts payable | |
| 53,593 | | |
| 10,850 | | |
| 1,054 | |
| Accrued expenses | |
| (9,855 | ) | |
| 77,647 | | |
| 2,551 | |
| Other assets | |
| (1,061 | ) | |
| 56 | | |
| (48 | ) |
| Net cash (used in) provided by operating activities
from continuing operations | |
| (58,482 | ) | |
| 70,809 | | |
| (5,599 | ) |
| Cash flows from investing activities | |
| | | |
| | | |
| | |
| Deposit for refinery purchase and related costs | |
| — | | |
| — | | |
| (13,663 | ) |
| Internally developed or purchased software | |
| (3,223 | ) | |
| (149 | ) | |
| — | |
| Proceeds from sale of discontinued operation | |
| 92,034 | | |
| — | | |
| — | |
| Redemption of noncontrolling entity | |
| — | | |
| 556 | | |
| — | |
| Proceeds from the sale of assets | |
| 7 | | |
| 395 | | |
| 75 | |
| Acquisition of business, net of cash | |
| (7,775 | ) | |
| (227,525 | ) | |
| 2 | |
| Purchase of fixed assets | |
| (140,313 | ) | |
| (75,512 | ) | |
| (2,331 | ) |
| Net cash used in investing activities from continuing
operations | |
| (59,270 | ) | |
| (302,235 | ) | |
| (15,917 | ) |
| Cash flows from financing activities | |
| | | |
| | | |
| | |
| Line of credit payments, net | |
| — | | |
| — | | |
| (133 | ) |
| Proceeds received from exercise of options and warrants | |
| 683 | | |
| 730 | | |
| 6,921 | |
| Net borrowings on inventory financing agreements | |
| 22,154 | | |
| 117,189 | | |
| — | |
| Contribution received from noncontrolling interest | |
| 2,842 | | |
| — | | |
| 2 | |
| Distribution to non-controlling interest | |
| — | | |
| (380 | ) | |
| (169 | ) |
| Redemption of redeemable noncontrolling interest | |
| — | | |
| (50,666 | ) | |
| — | |
| Payments on finance leases | |
| (2,045 | ) | |
| (819 | ) | |
| (844 | ) |
| Proceeds from issuance of notes payable | |
| 68,236 | | |
| 173,256 | | |
| 143,831 | |
| Payments made on notes payable | |
| (39,582 | ) | |
| (18,948 | ) | |
| (15,836 | ) |
| Net cash provided by financing activities from continuing operations | |
| 52,288 | | |
| 220,362 | | |
| 133,772 | |
| | |
| | | |
| | | |
| | |
| Discontinued operations: | |
| | | |
| | | |
| | |
| Net cash (used in) provided by operating activities | |
| (150 | ) | |
| 25,287 | | |
| 15,349 | |
| Net cash used in investing activities | |
| — | | |
| (4,663 | ) | |
| (1,973 | ) |
| Net cash provided by (used in) discontinued operations | |
| (150 | ) | |
| 20,624 | | |
| 13,376 | |
| | |
| | | |
| | | |
| | |
| Net change in cash and cash equivalents and restricted cash | |
| (65,614 | ) | |
| 9,560 | | |
| 125,632 | |
| Cash and cash equivalents and restricted cash at beginning
of the year | |
| 146,187 | | |
| 136,627 | | |
| 10,995 | |
| Cash and cash equivalents and restricted cash at
end of year | |
$ | 80,573 | | |
$ | 146,187 | | |
$ | 136,627 | |
The
following table provides a reconciliation of cash and cash equivalents and restricted cash reported within the consolidated balance sheets
to the same amounts shown in the consolidated statements of cash flows (in thousands).
| VERTEX
ENERGY, INC. |
| CONSOLIDATED
STATEMENTS OF CASH FLOWS |
| FOR
THE YEARS ENDING DECEMBER 31, 2023, 2022 AND 2021 |
| (UNAUDITED) |
| (Continued) |
| | |
2023 | | |
2022 | | |
2021 | |
| Cash and cash equivalents | |
$ | 76,967 | | |
$ | 141,258 | | |
$ | 36,130 | |
| Restricted cash | |
| 3,606 | | |
| 4,929 | | |
| 100,497 | |
| Cash and cash equivalents and restricted cash as
shown in the consolidated statements of cash flows | |
$ | 80,573 | | |
$ | 146,187 | | |
$ | 136,627 | |
| | |
| | | |
| | | |
| | |
| SUPPLEMENTAL INFORMATION | |
| | | |
| | | |
| | |
| Cash paid for interest | |
$ | 47,430 | | |
$ | 33,901 | | |
$ | 2,273 | |
| Cash paid for income taxes | |
| — | | |
| — | | |
| — | |
| | |
| | | |
| | | |
| | |
| NON-CASH INVESTING AND FINANCING TRANSACTIONS | |
| | | |
| | | |
| | |
| Conversion of Series B and B1 Preferred Stock into common
stock | |
$ | — | | |
$ | — | | |
$ | 24,610 | |
| Dividends on Series B and B-1 Preferred Stock | |
$ | — | | |
$ | — | | |
$ | (258 | ) |
| Accretion of discount on Series B and B-1 Preferred
Stock | |
$ | — | | |
$ | — | | |
$ | 507 | |
| Accretion of redeemable noncontrolling interest to redemption
value | |
$ | — | | |
$ | 428 | | |
$ | 1,992 | |
| Equipment acquired under finance leases | |
$ | 24,159 | | |
$ | 46,351 | | |
$ | 552 | |
| Equipment acquired under operating leases | |
$ | 55,114 | | |
$ | 20,452 | | |
$ | 89 | |
| Reclass derivative liabilities | |
$ | — | | |
$ | 78,789 | | |
$ | — | |
| Conversion of Convertible Senior note | |
$ | 79,948 | | |
$ | 59,822 | | |
$ | — | |
Unaudited
segment information for the three and twelve months ended December 31, 2023, 2022 and 2021 is as follows (in thousands):
| YEAR
ENDED DECEMBER 31, 2023 |
| | |
Refining and
Marketing | | |
Black Oil &
Recovery | | |
Corporate and
Eliminations | | |
Total | |
| Revenues: | |
| | |
| | |
| | |
| |
| Refined products | |
$ | 3,007,937 | | |
$ | 121,122 | | |
$ | (13,039 | ) | |
$ | 3,116,020 | |
| Re-refined products | |
| 17,997 | | |
| 15,959 | | |
| — | | |
| 33,956 | |
| Services | |
| 20,057 | | |
| 7,154 | | |
| — | | |
| 27,211 | |
| Total revenues | |
| 3,045,991 | | |
| 144,235 | | |
| (13,039 | ) | |
| 3,177,187 | |
| Cost of revenues (exclusive of depreciation and amortization shown separately
below) | |
| 2,894,617 | | |
| 124,731 | | |
| (13,352 | ) | |
| 3,005,996 | |
| Depreciation and amortization attributable to costs
of revenues | |
| 22,118 | | |
| 4,900 | | |
| — | | |
| 27,018 | |
| Gross profit | |
| 129,256 | | |
| 14,604 | | |
| 313 | | |
| 144,173 | |
| Selling, general and administrative expenses | |
| 118,165 | | |
| 19,788 | | |
| 30,687 | | |
| 168,640 | |
| Depreciation and amortization attributable to operating
expenses | |
| 3,311 | | |
| 164 | | |
| 671 | | |
| 4,146 | |
| Income (loss) from operations | |
| 7,780 | | |
| (5,348 | ) | |
| (31,045 | ) | |
| (28,613 | ) |
| Other income (expenses) | |
| | | |
| | | |
| | | |
| | |
| Other income (expense) | |
| — | | |
| 600 | | |
| 33 | | |
| 633 | |
| Gain on change in derivative liability | |
| — | | |
| — | | |
| 7,992 | | |
| 7,992 | |
| Interest expense | |
| (18,092 | ) | |
| (188 | ) | |
| (101,287 | ) | |
| (119,567 | ) |
| Total other income (expense) | |
| (18,092 | ) | |
| 412 | | |
| (93,262 | ) | |
| (110,942 | ) |
| Income (loss) before income tax | |
$ | (10,312 | ) | |
$ | (4,936 | ) | |
$ | (124,307 | ) | |
$ | (139,555 | ) |
| | |
| | | |
| | | |
| | | |
| | |
| Total capital expenditures | |
$ | 122,827 | | |
$ | 17,486 | | |
$ | — | | |
$ | 140,313 | |
| YEAR
ENDED DECEMBER 31, 2022 |
| | |
Refining and
Marketing | | |
Black Oil &
Recovery | | |
Corporate and
Eliminations | | |
Total | |
| Revenues: | |
| | |
| | |
| | |
| |
| Refined products | |
$ | 2,370,240 | | |
$ | 163,095 | | |
$ | — | | |
$ | 2,533,335 | |
| Re-refined products | |
| 229,793 | | |
| 19,105 | | |
| — | | |
| 248,898 | |
| Services | |
| 6,611 | | |
| 2,871 | | |
| — | | |
| 9,482 | |
| Total revenues | |
| 2,606,644 | | |
| 185,071 | | |
| — | | |
| 2,791,715 | |
| Cost of revenues (exclusive of depreciation and amortization shown separately
below) | |
| 2,453,809 | | |
| 144,467 | | |
| — | | |
| 2,598,276 | |
| Depreciation and amortization attributable to costs
of revenues | |
| 9,605 | | |
| 3,824 | | |
| — | | |
| 13,429 | |
| Gross profit | |
| 143,230 | | |
| 36,780 | | |
| — | | |
| 180,010 | |
| Selling, general and administrative expenses | |
| 83,001 | | |
| 17,241 | | |
| 27,540 | | |
| 127,782 | |
| Depreciation and amortization attributable to operating
expenses | |
| 2,593 | | |
| 180 | | |
| 900 | | |
| 3,673 | |
| Income (loss) from operations | |
| 57,636 | | |
| 19,359 | | |
| (28,440 | ) | |
| 48,555 | |
| Other income (expenses) | |
| | | |
| | | |
| | | |
| | |
| Other income (expense) | |
| 18 | | |
| (104 | ) | |
| (220 | ) | |
| (306 | ) |
| Gain on change in derivative liability | |
| — | | |
| — | | |
| 7,821 | | |
| 7,821 | |
| Interest expense | |
| (10,414 | ) | |
| (50 | ) | |
| (69,447 | ) | |
| (79,911 | ) |
| Total other income (expense) | |
| (10,396 | ) | |
| (154 | ) | |
| (61,846 | ) | |
| (72,396 | ) |
| Income (loss) before income tax | |
$ | 47,240 | | |
$ | 19,205 | | |
$ | (90,286 | ) | |
$ | (23,841 | ) |
| | |
| | | |
| | | |
| | | |
| | |
| Total capital expenditures | |
$ | 72,588 | | |
$ | 2,924 | | |
$ | — | | |
$ | 75,512 | |
| YEAR
ENDED DECEMBER 31, 2021 |
| | |
Refining and
Marketing | | |
Black Oil &
Recovery | | |
Corporate and
Eliminations | | |
Total | |
| Revenues: | |
| | |
| | |
| | |
| |
| Refined products | |
$ | 78,191 | | |
$ | 85,253 | | |
$ | — | | |
$ | 163,444 | |
| Re-refined products | |
| 15,039 | | |
| 25,611 | | |
| — | | |
| 40,650 | |
| Services | |
| — | | |
| 3,666 | | |
| — | | |
| 3,666 | |
| Total revenues | |
| 93,230 | | |
| 114,530 | | |
| — | | |
| 207,760 | |
| Cost of revenues (exclusive of depreciation and amortization shown separately
below) | |
| 89,570 | | |
| 89,216 | | |
| — | | |
| 178,786 | |
| Depreciation and amortization attributable to costs
of revenues | |
| 509 | | |
| 3,534 | | |
| — | | |
| 4,043 | |
| Gross profit | |
| 3,151 | | |
| 21,780 | | |
| — | | |
| 24,931 | |
| Selling, general and administrative expenses | |
| 3,277 | | |
| 14,444 | | |
| 12,885 | | |
| 30,606 | |
| Loss on Assets Impairment | |
| — | | |
| 2,124 | | |
| — | | |
| 2,124 | |
| Depreciation and amortization attributable to operating
expenses | |
| 434 | | |
| 234 | | |
| 1,013 | | |
| 1,681 | |
| Income (loss) from operations | |
| (560 | ) | |
| 4,978 | | |
| (13,898 | ) | |
| (9,480 | ) |
| Other income (expenses) | |
| | | |
| | | |
| | | |
| | |
| Other income (expense) | |
| — | | |
| — | | |
| 4,158 | | |
| 4,158 | |
| Loss on change in derivative liability | |
| — | | |
| — | | |
| (15,685 | ) | |
| (15,685 | ) |
| Interest expense | |
| — | | |
| — | | |
| (3,832 | ) | |
| (3,832 | ) |
| Total other income | |
| — | | |
| — | | |
| (15,359 | ) | |
| (15,359 | ) |
| Income (loss) before income tax | |
$ | (560 | ) | |
$ | 4,978 | | |
$ | (29,257 | ) | |
$ | (24,839 | ) |
| | |
| | | |
| | | |
| | | |
| | |
| Total capital expenditures | |
$ | — | | |
$ | 2,331 | | |
$ | — | | |
$ | 2,331 | |
The
following summarized unaudited financial information has been segregated from continuing operations and reported as Discontinued Operations
for the years ended December 31, 2023, 2022 and 2021 (in thousands):
| | |
For The Year Ended December 31 | |
| | |
2023 | | |
2022 | | |
2021 | |
| Revenues | |
$ | 7,366 | | |
$ | 85,495 | | |
$ | 58,248 | |
| Cost of revenues (exclusive of depreciation shown separately below) | |
| 4,589 | | |
| 51,815 | | |
| 32,467 | |
| Depreciation and amortization attributable to costs
of revenues | |
| 124 | | |
| 1,566 | | |
| 1,566 | |
| Gross profit | |
| 2,653 | | |
| 32,114 | | |
| 24,215 | |
| Operating expenses: | |
| | | |
| | | |
| | |
| Selling, general and administrative expenses (exclusive of acquisition
related expenses) | |
| 632 | | |
| 8,501 | | |
| 6,727 | |
| Depreciation and amortization expense attributable
to operating expenses | |
| 21 | | |
| 251 | | |
| 251 | |
| Total Operating expenses | |
| 653 | | |
| 8,752 | | |
| 6,978 | |
| Income from operations | |
| 2,000 | | |
| 23,362 | | |
| 17,237 | |
| Other income (expense) | |
| | | |
| | | |
| | |
| Interest expense | |
| — | | |
| -39 | | |
| -59 | |
| Total other expense | |
| — | | |
| -39 | | |
| -59 | |
| Income before income tax | |
| 2,000 | | |
| 23,323 | | |
| 17,178 | |
| Income tax expense | |
| (1,572 | ) | |
| (4,683 | ) | |
| — | |
| Gain on sale of discontinued operations, net of tax
of 1,711 | |
| 53,769 | | |
| 27 | | |
| — | |
| Income from discontinued operations, net of tax | |
$ | 54,197 | | |
$ | 18,667 | | |
$ | 17,178 | |
Unaudited
Reconciliation of Gross Profit (Loss) From Continued and Discontinued Operations to Adjusted Gross Margin, Fuel Gross Margin, Fuel Gross
Margin Per Barrel of Throughput and Operating Expenses Per Barrel of Throughput.
| Three
Months Ended December 31, 2023 |
| In thousands | |
Conventional | | |
Renewable | | |
Mobile
Refinery
Total | |
| Gross profit | |
$ | 7,283 | | |
$ | (17,557 | ) | |
$ | (10,273 | ) |
| Unrealized (gain) loss on hedging activities | |
| 4,892 | | |
| 77 | | |
| 4,969 | |
| Inventory valuation adjustments | |
| (3,400 | ) | |
| 2,152 | | |
| (1,248 | ) |
| Adjusted gross margin | |
$ | 8,775 | | |
$ | (15,328 | ) | |
$ | (6,553 | ) |
| Variable production costs attributable to cost of revenues | |
| 19,770 | | |
| 19,497 | | |
| 39,267 | |
| Depreciation and amortization attributable to cost of revenues | |
| 2,492 | | |
| 3,997 | | |
| 6,489 | |
| RINs | |
| 6,662 | | |
| — | | |
| 6,662 | |
| Realized (gain) loss on hedging activities | |
| (3,751 | ) | |
| (3,587 | ) | |
| (7,338 | ) |
| Financing costs | |
| 1,989 | | |
| 157 | | |
| 2,146 | |
| Other revenues | |
| (6,361 | ) | |
| (361 | ) | |
| (6,722 | ) |
| Fuel gross margin | |
$ | 29,576 | | |
$ | 4,375 | | |
$ | 33,951 | |
| Throughput (bpd) | |
| 67,083 | | |
| 3,926 | | |
| 71,009 | |
| Fuel gross margin per
barrel of throughput | |
$ | 4.79 | | |
$ | 12.11 | | |
$ | 5.20 | |
| Total OPEX | |
$ | 15,162 | | |
$ | 9,868 | | |
$ | 25,030 | |
| Operating expenses per
barrel of throughput | |
$ | 2.46 | | |
$ | 27.32 | | |
$ | 3.83 | |
| Three
Months Ended September 30, 2023 |
| In thousands | |
Conventional | | |
Renewable | | |
Mobile
Refinery
Total | |
| Gross profit | |
$ | 86,185 | | |
$ | (8,515 | ) | |
$ | 77,670 | |
| Unrealized (gain) loss on hedging activities | |
| (4,620 | ) | |
| (3,622 | ) | |
| (8,242 | ) |
| Inventory valuation adjustments | |
| 13,225 | | |
| (3,851 | ) | |
| 9,374 | |
| Adjusted gross margin | |
$ | 94,790 | | |
$ | (15,988 | ) | |
$ | 78,802 | |
| Variable production costs attributable to cost of revenues | |
| 26,847 | | |
| 12,958 | | |
| 39,805 | |
| Depreciation and amortization attributable to cost of revenues | |
| 2,982 | | |
| 3,320 | | |
| 6,302 | |
| RINs | |
| 7,058 | | |
| — | | |
| 7,058 | |
| Realized (gain) loss on hedging activities | |
| 2,854 | | |
| 2,401 | | |
| 5,255 | |
| Financing costs | |
| 1,772 | | |
| 205 | | |
| 1,977 | |
| Other revenues | |
| (6,804 | ) | |
| (524 | ) | |
| (7,328 | ) |
| Fuel gross margin | |
$ | 129,499 | | |
$ | 2,372 | | |
$ | 131,871 | |
| Throughput (bpd) | |
| 80,171 | | |
| 5,397 | | |
| 85,568 | |
| Fuel gross margin per
barrel of throughput | |
$ | 17.56 | | |
$ | 4.78 | | |
$ | 16.75 | |
| Total OPEX | |
$ | 17,720 | | |
$ | 11,445 | | |
$ | 29,165 | |
| Operating expenses per
barrel of throughput | |
$ | 2.40 | | |
$ | 23.05 | | |
$ | 3.70 | |
| Three
Months Ended June 30, 2023 |
| In thousands | |
Conventional | | |
Renewable | | |
Mobile
Refinery
Total | |
| Gross profit | |
$ | 6,544 | | |
$ | (13,006 | ) | |
$ | (6,462 | ) |
| Unrealized (gain) loss on hedging activities | |
| 849 | | |
| 2,913 | | |
| 3,762 | |
| Inventory valuation adjustments | |
| (4,246 | ) | |
| 3,745 | | |
| (501 | ) |
| Adjusted gross margin | |
$ | 3,147 | | |
$ | (6,348 | ) | |
$ | (3,201 | ) |
| Variable production costs attributable to cost of revenues | |
| 28,686 | | |
| 77 | | |
| 28,763 | |
| Depreciation and amortization attributable to cost of revenues | |
| 3,351 | | |
| 2,018 | | |
| 5,369 | |
| RINs | |
| 25,410 | | |
| — | | |
| 25,410 | |
| Realized (gain) loss on hedging activities | |
| (1,150 | ) | |
| 1,288 | | |
| 138 | |
| Financing costs | |
| (87 | ) | |
| 58 | | |
| (29 | ) |
| Other revenues | |
| (3,610 | ) | |
| (190 | ) | |
| (3,800 | ) |
| Fuel gross margin | |
$ | 55,747 | | |
$ | (3,097 | ) | |
$ | 52,650 | |
| Throughput (bpd) | |
| 76,330 | | |
| 2,490 | | |
| 78,820 | |
| Fuel gross margin per
barrel of throughput | |
$ | 8.03 | | |
$ | (13.66 | ) | |
$ | 7.34 | |
| Total OPEX | |
$ | 23,299 | | |
$ | 7,076 | | |
$ | 30,375 | |
| Operating expenses per
barrel of throughput | |
$ | 3.35 | | |
$ | 31.23 | | |
$ | 4.23 | |
| Three
Months Ended March 31, 2023 |
| In thousands | |
Conventional | | |
Renewable | | |
Mobile
Refinery
Total | |
| Gross profit | |
$ | 65,470 | | |
$ | — | | |
$ | 65,470 | |
| Unrealized (gain) loss on hedging activities | |
| (570 | ) | |
| — | | |
| (570 | ) |
| Inventory valuation adjustments | |
| (1,532 | ) | |
| — | | |
| (1,532 | ) |
| Adjusted gross margin | |
$ | 63,368 | | |
$ | — | | |
$ | 63,368 | |
| Variable production costs attributable to cost of revenues | |
| 21,252 | | |
| — | | |
| 21,252 | |
| Depreciation and amortization attributable to cost of revenues | |
| 3,144 | | |
| — | | |
| 3,144 | |
| RINs | |
| 16,115 | | |
| — | | |
| 16,115 | |
| Realized loss on hedging activities | |
| (439 | ) | |
| — | | |
| (439 | ) |
| Financing costs | |
| 2,295 | | |
| — | | |
| 2,295 | |
| Other revenues | |
| (1,933 | ) | |
| — | | |
| (1,933 | ) |
| Fuel gross margin | |
$ | 103,802 | | |
$ | — | | |
$ | 103,802 | |
| Throughput (bpd) | |
| 71,328 | | |
| — | | |
| 71,328 | |
| Fuel gross margin per
barrel of throughput | |
$ | 16.17 | | |
$ | — | | |
$ | 16.17 | |
| Total OPEX | |
$ | 24,681 | | |
$ | — | | |
$ | 24,681 | |
| Operating expenses per
barrel of throughput | |
$ | 3.84 | | |
$ | — | | |
$ | 3.84 | |
| Twelve
Months Ended December 31, 2023 |
| In thousands | |
Conventional | | |
Renewable | | |
Mobile
Refinery
Total | |
| Gross profit | |
$ | 165,481 | | |
$ | (39,078 | ) | |
$ | 126,403 | |
| Unrealized (gain) loss on hedging activities | |
| 551 | | |
| (632 | ) | |
| (81 | ) |
| Inventory valuation adjustments | |
| 4,047 | | |
| 2,046 | | |
| 6,093 | |
| Adjusted gross margin | |
$ | 170,079 | | |
$ | (37,664 | ) | |
$ | 132,415 | |
| Variable production costs attributable to cost of revenues | |
| 96,555 | | |
| 32,532 | | |
| 129,087 | |
| Depreciation and amortization attributable to cost of revenues | |
| 11,969 | | |
| 9,335 | | |
| 21,304 | |
| RINs | |
| 55,245 | | |
| — | | |
| 55,245 | |
| Realized (gain) loss on hedging activities | |
| (2,486 | ) | |
| 102 | | |
| (2,384 | ) |
| Financing costs | |
| 5,969 | | |
| 420 | | |
| 6,389 | |
| Other revenues | |
| (18,708 | ) | |
| (1,075 | ) | |
| (19,783 | ) |
| Fuel gross margin | |
$ | 318,623 | | |
$ | 3,650 | | |
$ | 322,273 | |
| Throughput (bpd) | |
| 73,734 | | |
| 3,943 | | |
| 77,677 | |
| Fuel gross margin per
barrel of throughput | |
$ | 11.84 | | |
$ | 3.37 | | |
$ | 11.37 | |
| Total OPEX | |
$ | 80,862 | | |
$ | 28,389 | | |
$ | 109,251 | |
| Operating expenses per
barrel of throughput | |
$ | 3.00 | | |
$ | 26.18 | | |
$ | 3.85 | |
Unaudited
Reconciliation of Adjusted EBITDA to Net loss from Continued and Discontinued Operations.
| In thousands | |
Three
Months Ended | | |
Twelve
Months Ended | |
| | |
December
31, 2023 | | |
December
31, 2022 | | |
December
31, 2023 | | |
December
31, 2022 | |
| Net income (loss) | |
$ | (63,865 | ) | |
$ | 44,418 | | |
$ | (71,973 | ) | |
$ | 1,997 | |
| Depreciation and amortization | |
| 9,225 | | |
| 5,761 | | |
| 31,310 | | |
| 18,919 | |
| Income tax expense (benefit) | |
| 1,543 | | |
| (2,489 | ) | |
| 5,297 | | |
| (2,488 | ) |
| Interest expense | |
| 16,029 | | |
| 14,956 | | |
| 119,566 | | |
| 79,950 | |
| EBITDA | |
$ | (37,068 | ) | |
$ | 62,646 | | |
$ | 84,200 | | |
$ | 98,378 | |
| Unrealized (gain) loss on hedging activities | |
| 4,981 | | |
| 978 | | |
| (252 | ) | |
| (146 | ) |
| Inventory valuation adjustments | |
| (1,248 | ) | |
| 9,614 | | |
| 6,093 | | |
| 50,766 | |
| Gain on change in value of derivative warrant liability | |
| (2,956 | ) | |
| (33 | ) | |
| (7,992 | ) | |
| (7,821 | ) |
| Stock-based compensation | |
| 783 | | |
| 622 | | |
| 2,285 | | |
| 1,574 | |
| (Gain) loss on sale of assets | |
| 3 | | |
| — | | |
| (70,878 | ) | |
| — | |
| Acquisition costs | |
| — | | |
| — | | |
| 4,308 | | |
| 16,527 | |
| Environmental clean-up reserve | |
| — | | |
| — | | |
| — | | |
| 1,428 | |
| Other | |
| 388 | | |
| 1,339 | | |
| (634 | ) | |
| 280 | |
| Adjusted EBITDA | |
$ | (35,117 | ) | |
$ | 75,166 | | |
$ | 17,130 | | |
$ | 160,986 | |
| | |
Three
Months Ended December 31, 2023 | |
| | |
Mobile
Refinery | | |
Legacy
Refining | | |
Total
Refining & | | |
Black
Oil and | | |
| | |
| |
| In thousands | |
Conventional | | |
Renewable | | |
&Marketing | | |
Marketing | | |
Recovery | | |
Corporate | | |
Consolidated | |
| Net income (loss) | |
$ | (11,112 | ) | |
$ | (30,266 | ) | |
$ | (2,424 | ) | |
$ | (43,801 | ) | |
$ | (1,670 | ) | |
$ | (18,395 | ) | |
$ | (63,865 | ) |
| Depreciation and amortization | |
| 3,252 | | |
| 4,017 | | |
| 313 | | |
| 7,582 | | |
| 1,476 | | |
| 167 | | |
| 9,225 | |
| Income tax expense (benefit) | |
| — | | |
| — | | |
| — | | |
| — | | |
| (517 | ) | |
| 2,060 | | |
| 1,543 | |
| Interest expense | |
| 2,473 | | |
| 2,820 | | |
| — | | |
| 5,293 | | |
| 62 | | |
| 10,675 | | |
| 16,029 | |
| EBITDA | |
$ | (5,387 | ) | |
$ | (23,429 | ) | |
$ | (2,111 | ) | |
$ | (30,926 | ) | |
$ | (649 | ) | |
$ | (5,493 | ) | |
$ | (37,068 | ) |
| Unrealized (gain) loss on hedging activities | |
| 4,892 | | |
| 77 | | |
| (7 | ) | |
| 4,962 | | |
| 19 | | |
| — | | |
| 4,981 | |
| Inventory valuation adjustments | |
| (3,400 | ) | |
| 2,152 | | |
| — | | |
| (1,248 | ) | |
| — | | |
| — | | |
| (1,248 | ) |
| Gain on change in value of derivative warrant liability | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| (2,956 | ) | |
| (2,956 | ) |
| Stock-based compensation | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| 783 | | |
| 783 | |
| (Gain) loss on sale of assets | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| 3 | | |
| 3 | |
| Other | |
| — | | |
| — | | |
| — | | |
| — | | |
| 389 | | |
| (1 | ) | |
| 388 | |
| Adjusted EBITDA | |
$ | (3,895 | ) | |
$ | (21,200 | ) | |
$ | (2,118 | ) | |
$ | (27,212 | ) | |
$ | (241 | ) | |
$ | (7,664 | ) | |
$ | (35,117 | ) |
| | |
Twelve
Months Ended December 31, 2023 | |
| | |
Mobile
Refinery | | |
Legacy Refining | | |
Total Refining & | | |
Black Oil and | | |
Corporate | | |
Consolidated | |
| In thousands | |
Conventional | | |
Renewable | | |
& Marketing | | |
Marketing | | |
Recovery | | |
| | |
| |
| Net income (loss) | |
$ | 68,574 | | |
$ | (72,537 | ) | |
$ | (6,349 | ) | |
$ | (10,312 | ) | |
$ | 49,260 | | |
$ | (110,922 | ) | |
$ | (71,973 | ) |
| Depreciation and amortization | |
| 14,937 | | |
| 9,390 | | |
| 1,103 | | |
| 25,430 | | |
| 5,209 | | |
| 671 | | |
| 31,310 | |
| Income tax expense (benefit) | |
| — | | |
| — | | |
| — | | |
| — | | |
| 18,682 | | |
| (13,385 | ) | |
| 5,297 | |
| Interest expense | |
| 13,077 | | |
| 5,015 | | |
| — | | |
| 18,092 | | |
| 188 | | |
| 101,287 | | |
| 119,566 | |
| EBITDA | |
$ | 96,588 | | |
$ | (58,132 | ) | |
$ | (5,246 | ) | |
$ | 33,210 | | |
$ | 73,339 | | |
$ | (22,349 | ) | |
$ | 84,200 | |
| Unrealized (gain) loss on hedging activities | |
| 551 | | |
| (632 | ) | |
| (89 | ) | |
| (170 | ) | |
| (82 | ) | |
| — | | |
| (252 | ) |
| Inventory valuation adjustments | |
| 4,047 | | |
| 2,046 | | |
| — | | |
| 6,093 | | |
| — | | |
| — | | |
| 6,093 | |
| Gain on change in value of derivative warrant liability | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| (7,992 | ) | |
| (7,992 | ) |
| Stock-based compensation | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| 2,285 | | |
| 2,285 | |
| (Gain) loss on sale of assets | |
| — | | |
| — | | |
| — | | |
| — | | |
| (70,884 | ) | |
| 6 | | |
| (70,878 | ) |
| Acquisition costs | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| 4,308 | | |
| 4,308 | |
| Other | |
| — | | |
| — | | |
| — | | |
| — | | |
| (595 | ) | |
| (39 | ) | |
| (634 | ) |
| Adjusted EBITDA | |
$ | 101,186 | | |
$ | (56,718 | ) | |
$ | (5,335 | ) | |
$ | 39,133 | | |
$ | 1,778 | | |
$ | (23,781 | ) | |
$ | 17,130 | |
| | |
Three
Months Ended December 31, 2022 | |
| In thousands | |
Mobile
Refinery | | |
Legacy
Refining & Marketing | | |
Total
Refining & Marketing | | |
Black
Oil | | |
Corporate | | |
Consolidated | |
| Net income (loss) | |
$ | 56,839 | | |
$ | (1,860 | ) | |
$ | 54,979 | | |
$ | 4,706 | | |
$ | (15,267 | ) | |
$ | 44,418 | |
| Depreciation and amortization | |
| 3,857 | | |
| — | | |
| 3,857 | | |
| 1,733 | | |
| 171 | | |
| 5,761 | |
| Income tax expense (benefit) | |
| — | | |
| — | | |
| — | | |
| — | | |
| (2,489 | ) | |
| (2,489 | ) |
| Interest expense | |
| 3,721 | | |
| — | | |
| 3,721 | | |
| 25 | | |
| 11,210 | | |
| 14,956 | |
| EBITDA | |
$ | 64,417 | | |
$ | (1,860 | ) | |
$ | 62,557 | | |
$ | 6,464 | | |
$ | (6,375 | ) | |
$ | 62,646 | |
| Unrealized (gain) loss on hedging activities | |
| 165 | | |
| 138 | | |
| 303 | | |
| 675 | | |
| — | | |
| 978 | |
| Inventory valuation adjustments | |
| 14,011 | | |
| — | | |
| 14,011 | | |
| (4,397 | ) | |
| — | | |
| 9,614 | |
| Gain on change in value of derivative warrant liability | |
| — | | |
| — | | |
| — | | |
| — | | |
| (33 | ) | |
| (33 | ) |
| Stock-based compensation | |
| — | | |
| — | | |
| — | | |
| — | | |
| 622 | | |
| 622 | |
| Other | |
| — | | |
| — | | |
| — | | |
| 1,119 | | |
| 220 | | |
| 1,339 | |
| Adjusted EBITDA | |
$ | 78,593 | | |
$ | (1,722 | ) | |
$ | 76,871 | | |
$ | 3,861 | | |
$ | (5,566 | ) | |
$ | 75,166 | |
| | |
Twelve
Months Ended December 31, 2022 | |
| In thousands | |
Mobile
Refinery | | |
Legacy
Refining & Marketing | | |
Total
Refining & Marketing | | |
Black
Oil | | |
Corporate | | |
Consolidated | |
| Net income (loss) | |
$ | 51,247 | | |
$ | (4,007 | ) | |
$ | 47,240 | | |
$ | 18,968 | | |
$ | (64,211 | ) | |
$ | 1,997 | |
| Depreciation and amortization | |
| 11,273 | | |
| 925 | | |
| 12,198 | | |
| 4,004 | | |
| 2,717 | | |
| 18,919 | |
| Income tax expense (benefit) | |
| — | | |
| — | | |
| — | | |
| — | | |
| (2,488 | ) | |
| (2,488 | ) |
| Interest expense | |
| 10,414 | | |
| — | | |
| 10,414 | | |
| 67 | | |
| 69,469 | | |
| 79,950 | |
| EBITDA | |
$ | 72,934 | | |
$ | (3,082 | ) | |
$ | 69,852 | | |
$ | 23,039 | | |
$ | 5,487 | | |
$ | 98,378 | |
| Unrealized (gain) loss on hedging activities | |
| 90 | | |
| 69 | | |
| 159 | | |
| (305 | ) | |
| — | | |
| (146 | ) |
| Inventory valuation adjustments | |
| 37,764 | | |
| — | | |
| 37,764 | | |
| 13,002 | | |
| — | | |
| 50,766 | |
| Gain on change in value of derivative warrant liability | |
| — | | |
| — | | |
| — | | |
| — | | |
| (7,821 | ) | |
| (7,821 | ) |
| Stock-based compensation | |
| — | | |
| — | | |
| — | | |
| — | | |
| 1,574 | | |
| 1,574 | |
| Acquisition costs | |
| 11,967 | | |
| — | | |
| 11,967 | | |
| 4,560 | | |
| — | | |
| 16,527 | |
| Environmental clean-up reserve | |
| 1,428 | | |
| — | | |
| 1,428 | | |
| — | | |
| — | | |
| 1,428 | |
| Other | |
| 13,282 | | |
| — | | |
| 13,282 | | |
| (13,222 | ) | |
| 220 | | |
| 280 | |
| Adjusted EBITDA | |
$ | 137,465 | | |
$ | (3,013 | ) | |
$ | 134,452 | | |
$ | 27,074 | | |
$ | (540 | ) | |
$ | 160,986 | |
Unaudited
Reconciliation of Long-Term Debt to Net Long-Term Debt and Net Leverage.
| In thousands | |
As of | |
| | |
December
31, 2023 | | |
December
31, 2022 | |
| Long-Term Debt: | |
| | | |
| | |
| Senior Convertible Note | |
$ | 15,230 | | |
$ | 95,178 | |
| Term Loan 2025 | |
| 195,950 | | |
| 165,000 | |
| Finance lease liability long-term | |
| 66,206 | | |
| 45,164 | |
| Finance lease liability short-term | |
| 2,435 | | |
| 1,363 | |
| Insurance premiums financed | |
| 6,237 | | |
| 5,661 | |
| Long-Term Debt and Lease
Obligations | |
$ | 286,058 | | |
$ | 312,366 | |
| Unamortized discount
and deferred financing costs | |
| (30,354 | ) | |
| (81,918 | ) |
| Long-Term Debt and Lease
Obligations per Balance Sheet | |
$ | 255,704 | | |
$ | 230,448 | |
| Cash and Cash Equivalents | |
| (76,967 | ) | |
| (141,258 | ) |
| Restricted Cash | |
| (3,606 | ) | |
| (4,929 | ) |
| Total Cash and Cash
Equivalents | |
$ | (80,573 | ) | |
$ | (146,187 | ) |
| Net Long-Term Debt | |
$ | 205,485 | | |
$ | 166,179 | |
| Adjusted EBITDA | |
$ | 17,130 | | |
$ | 160,985 | |
| Net Leverage | |
| 12.0 | x | |
| 1.0 | x |
Vertex Energy, Inc. 8-K
Exhibit 99.2
Fourth Quarter & Full Year 2023 Results Summary Presentation February 2024
DISCLAIMER Forward - looking statements 2 Forward - Looking Statements Certain of the matters discussed in this presentation which are not statements of historical fact constitute forward - looking sta tements within the meaning of the securities laws, including the Private Securities Litigation Reform Act of 1995, that invol ve 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 me aning are intended to identify forward - looking statements but are not the exclusive means of identifying these statements. Any s tatements made in this presentation 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 material ly from those contained in such forward - looking statements include, without limitation; statements concerning: the Company’s eng agement of BofA Securities, Inc., as previously disclosed; the review and evaluation of potential joint ventures, divestitures, acquisitions, mergers, business combinations, or other strategic transactions and the ir impact on shareholder value; the process by which the Company engages in evaluation of strategic transactions; the Company’s abi lity to identify potential partners; the outcome of potential future strategic transactions and the terms thereof; the future production of the Company’s Mobile, Alabama Refinery (the “Mobile Refinery”); anticipated and unfor ese en events which could reduce future production at the refinery or delay future capital projects, and changes in commodity and cr edits values; throughput volumes, production rates, yields, operating expenses and capital expenditures at the Mobile Refinery; the timing of, and outcome of, the evaluation and associated carbon intensity scoring of th e Company’s feedstock blends by officials in the state of California; the ability of the Company to obtain low carbon fuel st and ard (LCFS) credits, and the amounts thereof; the need for additional capital in the future, including, but not limited to, in order to complete capital projects and satisfy liabilities, the Company’s ability to raise such capita l i n the future, and the terms of such funding; the timing and costs of capital projects at the Company’s Mobile Refinery and th e o utcome 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; est imated revenues, margins and expenses, over the course of the agreement with Idemitsu Kosan (“ 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 par ty agreements and conditions precedent to such agreements; certain mandatory redemption provisions of the outstanding senior con vertible 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 outstand ing senior notes and a term loan and pay amounts due under such senior notes and term loan, including interest and other amounts du e 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 ; t he loss of key personnel or failure to attract, integrate and retain additional personnel; the Company’s ability to protect i nte llectual 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 abi lity to obtain and retain customers; the Company’s ability to produce products at competitive rates; the Company’s ability to ex ecute 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 pr ices for oil and gas caused by supply and demand, including volatility caused by the ongoing Ukraine/Russia conflict and/or t he Israel/Hamas conflict, changes in interest rates and inflation and potential recessions; the Company’s ability to maintain relationships with partners; the outcome of pending and potential future litigation, judgments and settle men ts; rules and regulations making the Company’s operations more costly or restrictive; volatility in the market price of compl ian ce 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 environmen tal emissions programs, the requirement for the Company to purchase RINs in the secondary market to the extent it does not ge ner ate 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 wi th such laws and regulations; economic downturns both in the United States and globally, changes in inflation and interest rates , i ncreased 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 Co mpa ny and its partners rely on; interruptions at the Company’s facilities; unexpected and expected changes in the Company’s anti cip ated 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 man age growth; decreases in global demand for, and the price of, oil, due to inflation, recessions or other reasons, including decli ne s 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 implem ent ation of its strategy, and expose the Company’s interest rate risk; dependence on third party transportation services and pip eli nes; 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 th ird 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 - look ing statements included in this communication are described in the Company’s publicly filed reports, including, but not limit ed 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 September 30, 2023, and future Annual Reports on Form 10 - K (includ ing the Company’s Annual Report on Form 10 - K for the year ended December 31, 2023, when filed by the Company) and Quarterly Repo rts 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 statement s attributable to the Company or any person acting on behalf of the Company are expressly qualified in their entirety by the cau tionary 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 presentation 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 presentation, except as required by law, and takes no obligat ion to update or correct information prepared by third parties that are not paid for by Vertex. If we update one or more forward - lo oking statements, no inference should be drawn that we will make additional updates with respect to those or other forward - looking statements. Date of Information in Presentation All information in this presentation is as of February [ ], 2024 (unless otherwise stated). The Company undertakes no duty to up date any forward - looking statement to conform the statement to actual results or changes in the Company’s expectations. Industry Information In this presentation, we may rely on and refer to information regarding the refining, re - refining, used oil and oil and gas indu stries in general from market research reports, analyst reports and other publicly available information. Although we believe th at this information is reliable, we have not commissioned any of such information, we cannot guarantee the accuracy and completeness of this information, and we have not independently verified any of it. Projections The financial projections (the “Projections”) included herein were prepared by Vertex in good faith using assumptions believe d t o be reasonable. A significant number of assumptions about the operations of the business of Vertex were based, in part, on e con omic, 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 resul ts set forth in the Projections. The Projections are based on numerous assumptions, including realization of the operating strat egy 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 condit ion s; competition; retention of key management and other key employees; absence of material contingent or unliquidated litigatio n, 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 faci li ties 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 fut ure business decisions and objectives, they are subject to change. Although the Projections are presented with numerical specific it y 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 con tin gencies, many of which will be beyond the control of Vertex. Accordingly, the Projections are only estimates and are necessar ily 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 ti me. In light of the foregoing, readers are cautioned not to place undue reliance on the Projections. The projected financial inf ormation 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.
DISCLAIMER Non - GAAP Financial Measures 3 Non - GAAP Financial Measures and Key Performance Measures In addition to our results calculated under generally accepted accounting principles in the United States (“GAAP”), in this p res entation we also present certain non - U.S. GAAP financial measures and key performance indicators. Non - U.S. GAAP financial measur es include Adjusted EBITDA, Net Long - Term Debt and Net Leverage for the Company (collectively, the “Non - U.S. GAAP Financial Measures”). Key performance indicators include Fuel Gross Margin, Fuel Gross Margin Per Barrel, Operating Expenses Per Barrel of Throughput, Renewable Gross Margin and Renewable Gross Margin Per Barrel (c ollectively, the “KPIs”). EBITDA represents net income before interest, taxes, depreciation and amortization, for continued and discontinued operations. Adjusted EBITDA represents net income (loss) fr om operations plus unrealized gain or losses on hedging activities, Renewable Fuel Standard (RFS) costs (mainly related to Re new able Identification Numbers (RINs), and inventory adjustments, depreciation and amortization, acquisition costs, gain on change in value of derivative warrant liability, environmental clean - up, stock - base d compensation, (gain) loss on sale of assets, interest expense, and certain other unusual or non - recurring charges included in selling, general, and administrative expenses. Net Long - Term Debt is long - term debt and lease obligations, adjusted for unamortized discount and deferred financing costs, less cash and cash equivalents and res tri cted cash. Net Leverage is defined as Long - Term Debt divided by Adjusted EBITDA. Fuel Gross Margin is defined as gross profit (l oss) plus unrealized gain or losses on hedging activities and inventory valuation adjustments, plus production costs, depreciation attributable to cost of revenues and certain other non - fuel items included in c osts of revenues including realized and unrealized gain or losses on hedging activities, RFS costs (mainly related to RINs), fue l financing costs and other revenues and cost of sales items. Fuel Gross Margin Per Barrel of Throughput is calculated as fuel gross margin divided by total throughput barrels for the period presented. Operati ng Expenses Per Barrel of Throughput is defined as total operating expenses divided by total barrels of throughput. Renewable Fu el Gross Margin is defined as gross profit (loss) plus unrealized gain or losses on hedging activities and inventory valuation adjustments, plus production costs, operating expenses and depreciation attributab le to cost of revenues and other non - fuel items included in costs of revenues including realized and unrealized gain or losses on h edging activities, inventory valuation adjustments, fuel financing costs and other revenues and cost of sales items. Renewable Fuel Gross Margin Per Barrel is Renewable Gross Margin divided by total renewable th roughput barrels for the period presented. The (a) Non - U.S. GAAP Financial Measures, which are “non - U.S. GAAP financial measures”, and (b) the KPIs, are presented as suppl emental measures of the Company’s performance. They are not presented in accordance with U.S. GAAP. We use the Non - U.S. GAAP Fin ancial Measures and KPIs as supplements to U.S. 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 U.S. GAAP fin ancial 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 pla nni ng decisions and present measurements that third parties have indicated are useful in assessing the Company and its results o f o perations. The Non - U.S. GAAP Financial Measures and KPIs are presented because we believe they provide additional useful information to investors due to the various noncash items during the period. Non - U.S. GAAP financial information and KPIs similar to the Non - U.S. GAAP Financial Measures and KPIs are also frequently used by analyst s, investors and other interested parties to evaluate companies in our industry. The Non - U.S. GAAP Financial Measures and KPIs are unaudited, and have limitations as analytical tools, and you should not consid er them in isolation, or as a substitute for analysis of our operating results as reported under U.S. GAAP. Some of these lim ita tions are: the Non - U.S. GAAP Financial Measures and KPIs do not reflect cash expenditures, or future requirements for capital expenditures, or contractual commitments; the Non - GAAP Financial Measures and K PIs do not reflect changes in, or cash requirements for, working capital needs; the Non - GAAP Financial Measures and KPIs 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 no nca sh charges, the assets being depreciated and amortized will often have to be replaced in the future, the Non - U.S. GAAP Financial Measures and KPIs do not reflect any cash requirements for such replacements; the Non - U.S. GAAP Financial Measures and KPIs represent only a portion of our total operating results; and other c ompanies in this industry may calculate the Non - U.S. GAAP Financial Measures and KPIs differently than we do, limiting their use fulness as a comparative measure. You should not consider the Non - U.S. GAAP Financial Measures and KPIs in isolation, or as substitutes for analysis of the Company’s results as reported under U.S. GAAP . T he Company’s presentation of these measures should not be construed as an inference that future results will be unaffected by un usual or nonrecurring items. We compensate for these limitations by providing a reconciliation of each of these non - U.S. GAAP Financial Measures and KPIs to the most comparable U.S. GAAP measure below. We enc ourage investors and others to review our business, results of operations, and financial information in their entirety, not t o r ely on any single financial measure, and to view these non - U.S. GAAP Financial Measures and KPIs in conjunction with the most directly comparable U.S. GAAP financial measure. We compensate for these limitations by providing a reconciliation of each of the non - GAAP Financial Measures to the most compara ble GAAP measure and reconciliation of the KPIs, below. We encourage investors and others to review our business, results of ope rations, and financial information in their entirety, not to rely on any single financial measure, and to view the non - GAAP Financial Measures in conjunction with the most directly comparable GAAP financial m easure. For more information on these non - GAAP financial measures and KPIs, please see the sections titled “Unaudited Reconcilia tion of Gross Profit (Loss) From Continued and Discontinued Operations to Adjusted Gross Margin, Fuel Gross Margin, Fuel Gross Margin Per Barrel of Throughput and Operating Expenses Per Barrel of Thr oug hput”, “Unaudited Reconciliation of Adjusted EBITDA to Net loss from Continued and Discontinued Operations”, and “Unaudited R eco nciliation of Long - Term Debt to Net Long - Term Debt and Net Leverage”, at the end of this release.
FOURTH QUARTER & FULL YEAR 2023 Performance Summary
4Q23 Performance Indicators COMPANY PERFORMANCE SUMMARY Fourth Quarter 2023 5 1. A full - reconciliation of GAAP to Non - GAAP metrics is provided in the appendix of this presentation 2. Net debt defined as total long - term debt outstanding less cash and equivalents 3. Net leverage defined as net debt (cash) divided by trailing twelve - month adjusted EBITDA * Total cash & equivalents, Net long - term debt, and net leverage stated as of 12/31/2023 & 12/31/2022, respectively Key Performance Indicators ($/MM) Key Takeaways 4Q23 Performance Summary • Reported net loss attributable to the Company of ($63.9) million and Adjusted EBITDA of ($35.1) million in 4Q23, versus net income attributable to the Company of $44.4 million and Adjusted EBITDA of $75.2 million in 4Q22. Reported financial results include an unrealized loss on derivative instruments of $5.0 million and an inventory valuation adjustment of $1.2 million. • Conventional throughput volumes of 67,083 barrels per day (bpd) slightly below prior outlook and reflect planned downtime for replacement of electrical transformer as well as opportunistic curtailment due to weak margin environment experienced in 4Q23. • Renewable Diesel (RD) facility throughput of 3,926 barrels per day (bpd) • Phase one capacity utilization of 49.1% • Volumes optimized for consideration of • Prevailing economic market conditions • Current commercial obligations • Feedstock diet optimization process • Ended 2023 with cash and equivalents of $80.6 million and total net long - term debt of $205.5 million, implying a leverage position of approximately 12.0x trailing - twelve - month (“TTM”) Adjusted EBITDA. 4Q23 4Q22 % Y / Y Total Gross Profit ($6.9) $99.0 (107%) GAAP Net Income (63.9) 44.4 (244%) Adjusted EBITDA 1 (35.1) 75.2 (147%) Total Cash & Equivalents 80.6 146.2 (45%) Net Long-Term Debt 2 205.5 166.2 24% Net Leverage 3 12.0x 1.0x 1100%
Mobile Performance Indicators MOBILE REFINERY PERFORMANCE Fourth Quarter 2023 6 • Operated at 89% conventional capacity utilization in 4Q23, with total crude throughput of 67,083 barrels per day (bpd). Full year conventional throughput of 73,734 or 98% capacity utilization reflects strength and reliability of operations team. • Conventional fuel business operations generated $29.6 million or $4.79 per barrel of fuel gross margin before RIN expense, depreciation and operating expenses in cost of sales in 4Q23. • Direct operating expense per barrel (total combined) of $3.83 in 4Q23, in line with forecast despite curtailed throughput volumes, driven by increasing cost efficiencies from smooth consistent operations. • Operated at 49.1% renewable fuels capacity utilization in 4Q23, with total throughput of 3,926 barrels per day (bpd) and production yield of 96.4%. • Renewable fuels business operations generated $4.4 million or $12.11 per barrel of fuel gross margin in 4Q23 which includes $6.1 million of LCFS benefit from 2Q23 and 3Q23. 1.) Assumes 75,000 barrels per day of conventional operational capacity 2.) Other includes naphtha, intermediates, and LPG 3.) Assumes 8,000 barrels per day of renewable fuels operational capacity Fourth Quarter 2023 Mobile Performance Summary Key Takeaways FY2023 4Q23 3Q23 2Q23 1Q23 Conventional Fuels Refinery 73,734 67,083 80,171 76,330 71,328 Total Throughput (bpd) 26.91 6.17 7.38 6.95 6.42 Total Throughput (MMbbl) 98.3% 89.4% 106.9% 101.8% 95.1% Conventional Facility Capacity Utilization 1 $3.00 $2.46 $2.40 $3.35 $3.84 Direct Opex Per Barrel ($/bbl) $318.6 $29.6 $129.5 $55.7 $103.8 Fuel Gross Margin ($/MM) $11.84 $4.79 $17.56 $8.03 $16.17 Fuel Gross Margin Per Barrel ($/bbl) Production Yield 17,653 17,826 19,211 17,812 15,723 Gasoline (bpd) 23.9% 25.9% 24.0% 23.2% 22.7% % Production 15,334 14,510 16,479 15,618 14,720 ULSD (bpd) 20.8% 21.1% 20.6% 20.3% 21.2% % Production 13,786 12,937 15,823 13,570 12,789 Jet (bpd) 18.7% 18.8% 19.8% 17.7% 18.4% % Production 46,773 45,273 51,513 47,000 43,232 Total Finished Fuel Products 63.4% 65.9% 64.4% 61.2% 62.3% % Production 26,972 23,457 28,495 29,828 26,119 Other 2 36.6% 34.1% 35.6% 38.8% 37.7% % Production 73,745 68,730 80,008 76,828 69,351 Total Production (bpd) 26.92 6.32 7.36 6.99 6.24 Total Production (MMbbl) FY2023 4Q23 3Q23 2Q23 1Q23 Renewable Fuels Refinery 3,943 3,926 5,397 2,490 - Total Renewable Throughput (bpd) 1.08 0.36 0.50 0.23 - Total Renewable Throughput (MMbbl) 49.3% 49.1% 67.5% 31.1% - Renewable Diesel Facility Capacity Utilization 3 $26.17 $27.32 $23.05 $31.23 - Direct Opex Per Barrel ($/bbl) $3.7 $4.4 $2.4 ($3.1) - Renewable Fuel Gross Margin $3.37 $12.11 $4.78 ($13.66) - Renewable Fuel Gross Margin Per Barrel ($/bbl) 3,762 3,786 5,276 2,208 - Renewable Diesel Production (bpd) 1.03 0.35 0.49 0.20 - Renewable Diesel Production (MMbbl) 95.4% 96.4% 97.8% 88.7% - Renewable Diesel Production Yield (%)
2023 Performance Indicators COMPANY PERFORMANCE SUMMARY Full Year 2023 7 1. A full - reconciliation of GAAP to Non - GAAP metrics is provided in the appendix of this presentation 2. Net debt defined as total long - term debt outstanding less cash and equivalents 3. Net leverage defined as net debt (cash) divided by trailing twelve - month adjusted EBITDA * Total cash & equivalents, Net long - term debt, and net leverage stated as of 12/31/2023 & 12/31/2022, respectively Key Performance Indicators ($/MM) Key Takeaways 2023 Performance Summary • Reported net loss attributable to the Company of ($71.5) million and Adjusted EBITDA of $17.1 million for full year 2023, versus net loss attributable to the Company of ($4.8) million and Adjusted EBITDA of $161.0 million for the full year 2022. Reported financial results include inventory valuation adjustments of $6.0 million and a pre - tax gain on sale of asset of $70.9 million related to the sale of the Heartland facility. • Conventional throughput volumes of 73,734 barrels per day (bpd) for 2023 (98.3 % utilization) reflect smooth operations despite increased site activity during renewable diesel conversion project engineering and construction activity. • Renewable Diesel (RD) facility construction completed on time & on budget. • Phase one capacity of 8,000 bpd successfully tested • EPA approval for generation of D4 RINs • Feedstock diet optimization process underway • Temporary carbon intensity score (CI score) received • Initial LCFS credits received during 4Q23 • Phase II capacity expansion to 14,000 bpd underway and targeted for 4Q24 completion • Ongoing evaluation of potential JV partnership with encouraging results FY 2023 FY 2022 % Y / Y Total Gross Profit $146.8 $212.1 (31%) GAAP Net Income (71.5) (4.8) 1390% Adjusted EBITDA 1 17.1 161.0 (89%) Total Cash & Equivalents 80.6 146.2 (44.9%) Net Long-Term Debt 2 205.5 166.2 23.6% Net Leverage 3 12.0x 1.0x 1100.0%
RENEWABLE DIESEL UPDATE 8 Proven Production with Continued Feedstock Diversification Progress • Soybean Oil, Tallow, DCO 1 , and Canola completed • Sampling and Testing underway for UCO 2 Proven Feedstocks • Renewable Diesel Fuel Primary Products • Phase I Capex: $110 - 115 million ( completed ) Project Budget • Initial commercial sales transactions of RD announced on June 26 th , 2023 Output Timeline • ~8 Mbbl /d – Phase I • ~14 Mbbl /d – Phase II (Hydrogen supply installed) Projected Renewable Capacity • Idemitsu Apollo (5 - year) Supply Agreements • California market Offtake Markets PROJECT SUMMARY SPECS Pathway Updates • Phase I operational capacity validated at 8,000 bpd • Current throughput levels optimized for current economics and feedstock blending required for LCFS proprietary carbon intensity approval process for Soy, DCO, Canola and Tallow • Temporary LCFS 3 filings completed, LCFS credits in the amount of $9.6 million received in 4 th quarter, which includes $6.1 million of LCFS benefit from 2Q23 and 3Q23. • Runs and the data collection LCFS application for four Vertex specific pathways covering SOY, Canola, Tallow and DCO • Feeds tock optimization strategy progressing ahead of schedule • Preparing for 90 day runs for data collection of UCO and poultry fat feedstock • Lower carbon intensity (“CI”) score and lower cost • Feedstock logistics and supplier base expanded with inclusion of UCO and poultry fat to include shipments via barge, rail and truck • multimodal delivery capacity across dedicated tanks improves agility and responsiveness to price volatility 1.) DCO – “Distillers Corn Oil” 2.) UCO – “Used Cooking Oil” 3.) LCFS – “Low Carbon Fuel Standard” 4.) RBD – “refined, bleached, deodorized”
5 6 7 8 9 10 11 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec '17-'23 '17-'23 Average 2022 2023 2024 DOMESTIC FUELS DEMAND Conventional Refined Fuels Demand Remains Strong 9 US Gasoline Demand ( MMbpd ) US Distillate Demand ( MMbpd ) 3 4 5 6 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec '17-'23 '17-'23 Average 2022 2023 2024 Source: Bloomberg; data as of 2/16/2024
DOMESTIC FUELS INVENTORIES REMAIN TIGHT Distillate Inventory Levels Remain Below 5 - Year Average, Gasoline Inventory Levels Building US Gasoline Inventories 10 ( MMbbl ) US Distillate Inventories ( MMbbl ) 80 100 120 140 160 180 200 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec '17-'23 '17-'23 Average 2022 2023 2024 200 210 220 230 240 250 260 270 280 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec '17-'23 '17-'23 Average 2022 2023 2024 Source: Bloomberg; data as of 2/16/2024
DOMESTIC FUELS PRODUCTION LEVELS Production Levels In - Line With Historical Averages US Conventional Gasoline Production 11 ( MMbpd ) US Distillate Production ( MMbpd ) 2.5 3.0 3.5 4.0 4.5 5.0 5.5 6.0 6.5 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec '17-'23 '17-'23 Average 2022 2023 2024 5.0 6.0 7.0 8.0 9.0 10.0 11.0 12.0 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec '17-'23 '17-'23 Average 2022 2023 2024 Source: Bloomberg; data as of 2/16/2024
$1.75 $2.00 $2.25 $2.50 $2.75 $/Gal COMMODITIES FUTURES MARKETS Gasoline & Diesel Futures Pricing Reflects Tightening Margin Environment In 2024 12 Gasoline Monthly Futures Price ($/Gal) ULSD Monthly Futures Price ($/Gal) $2.00 $2.25 $2.50 $2.75 $3.00 $/Gal FY 2024 4Q24 3Q24 2Q24 1Q24 FY 2023 4Q23 3Q23 2Q23 1Q23 $2.21 $2.12 $2.06 $2.30 $2.36 $2.42 $2.19 $2.37 $2.58 $2.53 Gasoline ($/gal) $2.47 $2.36 $2.43 $2.51 $2.58 $2.80 $2.82 $3.04 $2.44 $2.90 ULSD ($/gal) $73.97 $71.99 $73.46 $75.00 $75.49 $78.09 $78.33 $84.09 $73.75 $76.11 WTI Crude ($/Bbl) Source: Bloomberg; data as of 2/16/2024
Crude Futures Curve Remains Backwardated 13 COMMODITIES FUTURES MARKETS FY 2024 4Q24 3Q24 2Q24 1Q24 FY 2023 4Q23 3Q23 2Q23 1Q23 $2.21 $2.12 $2.06 $2.30 $2.36 $2.42 $2.19 $2.37 $2.58 $2.53 Gasoline ($/gal) $2.47 $2.36 $2.43 $2.51 $2.58 $2.80 $2.82 $3.04 $2.44 $2.90 ULSD ($/gal) $73.97 $71.99 $73.46 $75.00 $75.49 $78.09 $78.33 $84.09 $73.75 $76.11 WTI Crude ($/Bbl) 0.7 0.8 0.9 1.0 1.1 Current 1 Year Ago 2 Years Ago $60.00 $70.00 $80.00 $90.00 $100.00 Current 1 Year Ago 2 Years Ago Source: Bloomberg; data as of 2/16/2024
BALANCE SHEET UPDATE Streamlining Of Balance Sheet Remains a Priority 14 Outstanding Debt Details ($/MM) Debt Maturity Schedule ($/MM) ► Current total long - term debt $286.0 million ► Current cash & equivalents $80.6 million ► Net long - term debt = $205.5 million ► 12/31/23 Net Leverage = 12.0x ► Amended term loan provided an additional $50 million of liquidity before year end to ensure adequate financial flexibility to fund operations through duration of strategic assessment process * See "Non - GAAP Financial Measures and Key Performance Measures", above and the appendix hereto, below 1. Including restricted cash of $3.6 million 2. Net long - term debt defined as total long - term debt outstanding less cash and equivalents 3. Net leverage defined as net debt (cash) divided by trailing twelve - month adjusted EBITDA (see reconciliations to non - GAAP me asures at end of this presentation $0 $25 $50 $75 $100 $125 $150 $175 $200 Sr. Convertible Note Term Loan Finance Lease Principal Maturity Coupon Instrument 15.2 2027 6.25% Senior Convertible Note 196.0 2025 17.25% Term Loan 68.6 - - Finance Lease Obligations 6.2 - - Other $286.0 Total 80.6 Cash & equivalents 1 $205.5 Net Long Term Debt 2 12.0x Net Leverage 3
Hedge Position Contract Details FINANCIAL AND OPERATING GUIDANCE First Quarter 2024 Fixed Price Hedges 15 • Deteriorating margin environment beginning in early 4Q23 as well as ongoing capital preservation • Opportunistic sale of fixed price ULSD swaps • Average of 38% of expected 1Q 2024 ULSD & distillate production hedged • Weighted average fixed price of $28.39/ Bbl • Remaining opportunistic for additional commodity price risk aversion 1.) % hedged assumes mid - point of operating guidance of 61.5 Mbbld and mid - point of distillate production yield of 40% Approximate % Hedged Mid - Point Price Contract Contract Asset Hedged 1 Volumes (bbl) Prod'n (Bbl) ($/bbl) Period Details Type 13.1% 100,000 762,600 $25.55 January ULSD/LLS Swap Fixed Price Swap 52.6% 375,000 713,400 $30.68 February ULSD/LLS Swap Fixed Price Swap 49.2% 375,000 762,600 $28.95 March ULSD/LLS Swap Fixed Price Swap 38.0% 850,000 2,238,600 $28.39 Total
Projected Financial Guidance COMMODITY PRICE RISK MANAGEMENT First Quarter 2024 Outlook 16 Management Commentary • For the first quarter 2024, the Company expects the Mobile Refinery to generate total throughput of between 60,000 to 63,000 bpd, reflecting between 80% and 84% total conventional facility capacity utilization. Reduced outlook for conventional throughput volumes reflects: • Planned downtime to proactively perform certain maintenance / repair operations • Downtime for Pitstop on crude unit #1 • Management expects 64% to 68% of its refined product output to be higher - value finished products such as gasoline, diesel and Jet fuel, with the remainder reflecting intermediate and other products • Vertex expects direct operating expense per barrel for consolidated operations of between $4.59 to $4.95 per barrel in the first quarter 2024 • Vertex anticipates total consolidated capital expenditures of between $20 million and $25 million in the first quarter 2024 First Quarter 2024 First Quarter 2024 1.) Finished products include gasoline, ULSD, and Jet A 2.) Intermediate & Other products include Vacuum Gas Oil (VGO), Liquified Petroleum Gases (LPGs), and Vacuum Tower Bottoms (V TBs ) 1Q 2024 Conventional Fuels High Low Operational: 63.0 60.0 Mobile Refinery Conventional Throughput Volume (Mbpd) 84% 80% Capacity Utilization Production Yield Profile: 68% 64% Percentage Finished Products 1 32% 36% Intermediate & Other Products 2 1Q 2024 Renewable Fuels High Low Operational: 5.0 3.0 Mobile Refinery Renewable Throughput Volume (Mbpd) 63% 38% Capacity Utilization 98% 96% Production Yield 2% 4% Yield Loss 1Q 2024 Consolidated High Low Operational: 68.0 63.0 Mobile Refinery Total Throughput Volume (Mbpd) 82% 76% Capacity Utilization Financial Guidance: $4.95 $4.59 Direct Operating Expense ($/bbl) $25.00 $20.00 Capital Expenditures ($/MM)
OUR STRATEGIC FOCUS 17 ASSET UTILIZATION • Target investments expected to drive long - term profitability at Mobile Refinery • Leverage expertise with complementary assets in adjacent markets • Vertically integrate from feedstock to retail products MARGIN CAPITALIZATION • Conventional distillate and gasoline economics at Alabama Refinery • Leverage feedstock origination capabilities for lower cost, lower CI inputs • Phase II renewables project expansion expected in late 2024 RENEWABLE INVESTMENT • Conversion of Mobile Refinery hydrocracker • Increase renewables optionality in feedstocks and products • Expected opportunities for Renewable Diesel, Sustainable Aviation Fuel, and renewable hydrogen STRENGTHEN BALANCE SHEET • Reduce total debt prioritizing high - interest term loan and remaining convertible notes • Term loan prepayment option began on October 1, 2023 • Engaged BofA to assess alternatives for balance sheet improvement Staying loyal to our DNA as a development company while continuing to run/operate our assets.
APPENDIX
NON - GAAP RECONCILIATION 19 Unaudited Reconciliation of Gross Profit (Loss) From Continued and Discontinued Operations to Adjusted Gross Margin, Fuel Gross Margin, Fuel Gross Margin Per Barrel of Throughput and Operating Expenses Per Barrel of Throughput. In thousands Conventional Renewable Mobile Refinery Total Gross profit 7,283$ (17,557)$ (10,273)$ Unrealized (gain) loss on hedging activities 4,892 77 4,969 Inventory valuation adjustments (3,400) 2,152 (1,248) Adjusted gross margin 8,775$ (15,328)$ (6,553)$ Variable production costs attributable to cost of revenues 19,770 19,497 39,267 Depreciation and amortization attributable to cost of revenues 2,492 3,997 6,489 RINs 6,662 - 6,662 Realized (gain) loss on hedging activities (3,751) (3,587) (7,338) Financing costs 1,989 157 2,146 Other revenues (6,361) (361) (6,722) Fuel gross margin 29,576$ 4,375$ 33,951$ Throughput (bpd) 67,083 3,926 71,009 Fuel gross margin per barrel of throughput 4.79$ 12.11$ 5.20$ Total OPEX 15,162$ 9,868$ 25,030$ Operating expenses per barrel of throughput 2.46$ 27.32$ 3.83$ Three Months Ended December 31, 2023
NON - GAAP RECONCILIATION 20 Unaudited Reconciliation of Gross Profit (Loss) From Continued and Discontinued Operations to Adjusted Gross Margin, Fuel Gross Margin, Fuel Gross Margin Per Barrel of Throughput and Operating Expenses Per Barrel of Throughput. In thousands Conventional Renewable Mobile Refinery Total Gross profit 165,481$ (39,078)$ 126,403$ Unrealized (gain) loss on hedging activities 551 (632) (81) Inventory valuation adjustments 4,047 2,046 6,093 Adjusted gross margin 170,079$ (37,664)$ 132,415$ Variable production costs attributable to cost of revenues 96,555 32,532 129,087 Depreciation and amortization attributable to cost of revenues 11,969 9,335 21,304 RINs 55,245 - 55,245 Realized (gain) loss on hedging activities (2,486) 102 (2,384) Financing costs 5,969 420 6,389 Other revenues (18,708) (1,075) (19,783) Fuel gross margin 318,623$ 3,650$ 322,273$ Throughput (bpd) 73,734 3,943 77,677 Fuel gross margin per barrel of throughput 11.84$ 3.37$ 11.37$ Total OPEX 80,862$ 28,389$ 109,251$ Operating expenses per barrel of throughput 3.00$ 26.18$ 3.85$ Twelve Months Ended December 31, 2023
NON - GAAP RECONCILIATION 21 Unaudited Reconciliation of Gross Profit (Loss) From Continued and Discontinued Operations to Adjusted Gross Margin, Fuel Gross Margin, Fuel Gross Margin Per Barrel of Throughput and Operating Expenses Per Barrel of Throughput. In thousands Conventional Renewable Mobile Refinery Total Gross profit 86,185$ (8,515)$ 77,670$ Unrealized (gain) loss on hedging activities (4,620) (3,622) (8,242) Inventory valuation adjustments 13,225 (3,851) 9,374 Adjusted gross margin 94,790$ (15,988)$ 78,802$ Variable production costs attributable to cost of revenues 26,847 12,958 39,805 Depreciation and amortization attributable to cost of revenues 2,982 3,320 6,302 RINs 7,058 - 7,058 Realized (gain) loss on hedging activities 2,854 2,401 5,255 Financing costs 1,772 205 1,977 Other revenues (6,804) (524) (7,328) Fuel gross margin 129,499$ 2,372$ 131,871$ Throughput (bpd) 80,171 5,397 85,568 Fuel gross margin per barrel of throughput 17.56$ 4.78$ 16.75$ Total OPEX 17,720$ 11,445$ 29,165$ Operating expenses per barrel of throughput 2.40$ 23.05$ 3.70$ Three Months Ended September 30, 2023
NON - GAAP RECONCILIATION 22 Unaudited Reconciliation of Gross Profit (Loss) From Continued and Discontinued Operations to Adjusted Gross Margin, Fuel Gross Margin, Fuel Gross Margin Per Barrel of Throughput and Operating Expenses Per Barrel of Throughput. In thousands Conventional Renewable Mobile Refinery Total Gross profit 6,544$ (13,006)$ (6,462)$ Unrealized (gain) loss on hedging activities 849 2,913 3,762 Inventory valuation adjustments (4,246) 3,745 (501) Adjusted gross margin 3,147$ (6,348)$ (3,201)$ Variable production costs attributable to cost of revenues 28,686 77 28,763 Depreciation and amortization attributable to cost of revenues 3,351 2,018 5,369 RINs 25,410 - 25,410 Realized (gain) loss on hedging activities (1,150) 1,288 138 Financing costs (87) 58 (29) Other revenues (3,610) (190) (3,800) Fuel gross margin 55,747$ (3,097)$ 52,650$ Throughput (bpd) 76,330 2,490 78,820 Fuel gross margin per barrel of throughput 8.03$ (13.66)$ 7.34$ Total OPEX 23,299$ 7,076$ 30,375$ Operating expenses per barrel of throughput 3.35$ 31.23$ 4.23$ Three Months Ended June 30, 2023
NON - GAAP RECONCILIATION 23 Unaudited Reconciliation of Gross Profit (Loss) From Continued and Discontinued Operations to Adjusted Gross Margin, Fuel Gross Margin, Fuel Gross Margin Per Barrel of Throughput and Operating Expenses Per Barrel of Throughput. In thousands Conventional Renewable Mobile Refinery Total Gross profit 65,470$ -$ 65,470$ Unrealized (gain) loss on hedging activities (570) - (570) Inventory valuation adjustments (1,532) - (1,532) Adjusted gross margin 63,368$ -$ 63,368$ Variable production costs attributable to cost of revenues 21,252 - 21,252 Depreciation and amortization attributable to cost of revenues 3,144 - 3,144 RINs 16,115 - 16,115 Realized (gain) loss on hedging activities (439) - (439) Financing costs 2,295 - 2,295 Other revenues (1,933) - (1,933) Fuel gross margin 103,802$ -$ 103,802$ Throughput (bpd) 71,328 - 71,328 Fuel gross margin per barrel of throughput 16.17$ -$ 16.17$ Total OPEX 24,681$ -$ 24,681$ Operating expenses per barrel of throughput 3.84$ -$ 3.84$ Three Months Ended March 31, 2023
NON - GAAP RECONCILIATION 24 Unaudited Reconciliation of EBITDA and Adjusted EBITDA to Net loss from Continued and Discontinued Operations In thousands December 31, 2023 December 31, 2022 December 31, 2023 December 31, 2022 Net income (loss) $ (63,865) $ 44,418 $ (71,973) $ 1,997 Depreciation and amortization 9,225 5,761 31,310 18,919 Income tax expense (benefit) 1,543 (2,489) 5,297 (2,488) Interest expense 16,029 14,956 119,566 79,950 EBITDA $ (37,068) $ 62,646 $ 84,200 $ 98,378 Unrealized (gain) loss on hedging activities 4,981 978 (252) (146) Inventory valuation adjustments (1,248) 9,614 6,093 50,766 Gain on change in value of derivative warrant liability (2,956) (33) (7,992) (7,821) Stock-based compensation 783 622 2,285 1,574 (Gain) loss on sale of assets 3 - (70,878) - Acquisition costs - - 4,308 16,527 Environmental clean-up reserve - - - 1,428 Other 388 1,339 (634) 280 Adjusted EBITDA $ (35,117) $ 75,166 $ 17,130 $ 160,986 Three Months Ended Twelve Months Ended
NON - GAAP RECONCILIATION 25 Unaudited Reconciliation of EBITDA and Adjusted EBITDA to Net loss from Continued and Discontinued Operations In thousands Conventional Renewable Net income (loss) $ (11,112) $ (30,266) $ (2,424) $ (43,801) $ (1,670) $ (18,395) $ (63,865) Depreciation and amortization 3,252 4,017 313 7,582 1,476 167 9,225 Income tax expense (benefit) - - - - (517) 2,060 1,543 Interest expense 2,473 2,820 - 5,293 62 10,675 16,029 EBITDA $ (5,387) $ (23,429) $ (2,111) $ (30,926) $ (649) $ (5,493) $ (37,068) Unrealized (gain) loss on hedging activities 4,892 77 (7) 4,962 19 - 4,981 Inventory valuation adjustments (3,400) 2,152 - (1,248) - - (1,248) Gain on change in value of derivative warrant liability - - - - - (2,956) (2,956) Stock-based compensation - - - - - 783 783 (Gain) loss on sale of assets - - - - - 3 3 Other - - - - 389 (1) 388 Adjusted EBITDA $ (3,895) $ (21,200) $ (2,118) $ (27,212) $ (241) $ (7,664) $ (35,117) Three Months Ended December 31, 2023 Mobile Refinery Legacy Refining & Marketing Total Refining & Marketing Black Oil and Recovery Corporate Consolidated
NON - GAAP RECONCILIATION 26 Unaudited Reconciliation of EBITDA and Adjusted EBITDA to Net loss from Continued and Discontinued Operations In thousands Mobile Refinery Legacy Refining & Marketing Total Refining & Marketing Black Oil Corporate Consolidated Net income (loss) $ 56,839 $ (1,860) $ 54,979 $ 4,706 $ (15,267) $ 44,418 Depreciation and amortization 3,857 - 3,857 1,733 171 5,761 Income tax expense (benefit) - - - - (2,489) (2,489) Interest expense 3,721 - 3,721 25 11,210 14,956 EBITDA $ 64,417 $ (1,860) $ 62,557 $ 6,464 $ (6,375) $ 62,646 Unrealized (gain) loss on hedging activities 165 138 303 675 - 978 Inventory valuation adjustments 14,011 - 14,011 (4,397) - 9,614 Gain on change in value of derivative warrant liability - - - - (33) (33) Stock-based compensation - - - - 622 622 Acquisition costs - - - - - - Other - - - 1,119 220 1,339 Adjusted EBITDA $ 78,593 $ (1,722) $ 76,871 $ 3,861 $ (5,566) $ 75,166 Three Months Ended December 31, 2022
NON - GAAP RECONCILIATION 27 Unaudited Reconciliation of EBITDA and Adjusted EBITDA to Net loss from Continued and Discontinued Operations In thousands Conventional Renewable Net income (loss) $ 68,574 $ (72,537) $ (6,349) $ (10,312) $ 49,260 $ (110,922) $ (71,973) Depreciation and amortization 14,937 9,390 1,103 25,430 5,209 671 31,310 Income tax expense (benefit) - - - - 18,682 (13,385) 5,297 Interest expense 13,077 5,015 - 18,092 188 101,287 119,566 EBITDA $ 96,588 $ (58,132) $ (5,246) $ 33,210 $ 73,339 $ (22,349) $ 84,200 Unrealized (gain) loss on hedging activities 551 (632) (89) (170) (82) - (252) Inventory valuation adjustments 4,047 2,046 - 6,093 - - 6,093 Gain on change in value of derivative warrant liability - - - - - (7,992) (7,992) Stock-based compensation - - - - - 2,285 2,285 (Gain) loss on sale of assets - - - - (70,884) 6 (70,878) Acquisition costs - - - - - 4,308 4,308 Other - - - - (595) (39) (634) Adjusted EBITDA $ 101,186 $ (56,718) $ (5,335) $ 39,133 $ 1,778 $ (23,781) $ 17,130 Twelve Months Ended December 31, 2023 Mobile Refinery Legacy Refining & Marketing Total Refining & Marketing Black Oil and Recovery Corporate Consolidated
NON - GAAP RECONCILIATION 28 Unaudited Reconciliation of EBITDA and Adjusted EBITDA to Net loss from Continued and Discontinued Operations In thousands Mobile Refinery Legacy Refining & Marketing Total Refining & Marketing Black Oil Corporate Consolidated Net income (loss) $ 51,247 $ (4,007) $ 47,240 $ 18,968 $ (64,211) $ 1,997 Depreciation and amortization 11,273 925 12,198 4,004 2,717 18,919 Income tax expense (benefit) - - - - (2,488) (2,488) Interest expense 10,414 - 10,414 67 69,469 79,950 EBITDA $ 72,934 $ (3,082) $ 69,852 $ 23,039 $ 5,487 $ 98,378 Unrealized (gain) loss on hedging activities 90 69 159 (305) - (146) Inventory valuation adjustments 37,764 - 37,764 13,002 - 50,766 Gain on change in value of derivative warrant liability - - - - (7,821) (7,821) Stock-based compensation - - - - 1,574 1,574 Acquisition costs 11,967 - 11,967 4,560 - 16,527 Environmental clean-up reserve 1,428 - 1,428 - - 1,428 Other 13,282 - 13,282 (13,222) 220 280 Adjusted EBITDA $ 137,465 $ (3,013) $ 134,452 $ 27,074 $ (540) $ 160,986 Twelve Months Ended December 31, 2022
NON - GAAP RECONCILIATION 29 Unaudited Reconciliation of Long - Term Debt to Net Long - Term Debt and Net Leverage In thousands December 31, 2023 December 31, 2022 Long-Term Debt: Senior Convertible Note $ 15,230 $ 95,178 Term Loan 2025 195,950 165,000 Finance lease liability long-term 66,206 45,164 Finance lease liability short-term 2,435 1,363 Insurance premiums financed 6,237 5,661 Long-Term Debt and Lease Obligations $ 286,058 $ 312,366 Unamortized discount and deferred financing costs (30,354) (81,918) Long-Term Debt and Lease Obligations per Balance Sheet 255,704$ 230,448$ Cash and Cash Equivalents (76,967) (141,258) Restricted Cash (3,606) (4,929) Total Cash and Cash Equivalents $ (80,573) $ (146,187) Net Long-Term Debt 205,485$ 166,179$ Adjusted EBITDA $ 17,130 $ 160,985 Net Leverage 12.0x 1.0x As of
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Vertex Energy (NASDAQ:VTNR)
Historical Stock Chart
From Mar 2024 to Apr 2024
Vertex Energy (NASDAQ:VTNR)
Historical Stock Chart
From Apr 2023 to Apr 2024
