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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): August 8, 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
August 8, 2024, Vertex Energy, Inc. (“Vertex” or the “Company”) issued a press release and will
hold a conference call regarding its financial results for the three and six months ended June 30, 2024. 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.
*
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 presentation. 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: August 8, 2024 |
By: |
/s/
Chris Carlson |
|
| |
|
Chris Carlson |
|
| |
|
Chief Financial Officer |
|
Vertex Energy, Inc. 8-K
Exhibit 99.1
VERTEX
ENERGY ANNOUNCES SECOND QUARTER 2024 RESULTS
HOUSTON,
TX (Business Wire) – August 8, 2024 – Vertex Energy, Inc. (NASDAQ:VTNR) ("Vertex" or the "Company"),
a leading specialty refiner and marketer of high-quality refined products and renewable fuels, today announced its operational
and financial results for the second quarter of 2024. The Company also updated its progress in the optimization of its hydrocracking
capacity between conventional production and renewables production.
The
Company will host a conference call to discuss second quarter 2024 results today, at 9:00 A.M. Eastern Time. Details regarding
the conference call are included at the end of this release.
Highlights
for the second quarter of 2024 and through the date of this press release include:
| ● | Secured
new $15 million and $20 million loans, as previously disclosed, enhancing the Company’s
liquidity; |
| ● | Modified
certain terms and conditions of the current term loan agreement and appointed Seth Bullock
as Chief Restructuring Officer; |
| ● | Continued
safe operation of the Company’s Mobile, Alabama refinery (the “Mobile Refinery”)
with second quarter 2024 conventional throughput of 67,758 barrels per day (bpd); |
| ● | Reported
net loss attributable to the Company of ($53.8) million, or ($0.58) per fully-diluted
share; |
| ● | Recorded
Adjusted EBITDA of ($22.4) million driven by a 28% decrease in crack spreads compared
to the first quarter of 2024; |
| ● | Decreased
selling, general and administrative expense by 6% compared to the first quarter of 2024
and by 12% compared to the second quarter of 2023; and |
| ● | Completed
running all renewable feedstock and began optimizing the Mobile Refinery hydrocracker
capacity from renewable diesel to conventional fuels with expected contribution in Q4
2024. |
Note:
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).
Mr.
Benjamin P. Cowart, Vertex’s Chief Executive Officer, stated, “We continued to demonstrate operational reliability
for conventional refining and overall continued strong performance in safety. We saw a difficult crack spread environment driven
by a weakening in gasoline and diesel demand in the second quarter that drove our Adjusted EBITDA lower. Consistent with the previously
announced pause and pivot strategy, Vertex successfully processed the remaining inventories of renewable feedstock and safely
decommissioned the hydrotreater out of renewable service. The Company also continued to manage expenses, seeing moderate reductions
in capital and fixed costs across the business.”
“Given
continued near-term EBITDA and liquidity constraints, the Company continues its pursuit of strategic pathways, considering alternatives
and exploring financing pathways to maximize value. This includes working with our lenders to secure additional $15 and $20 million
loans in June and July, as well as naming Seth Bullock as our Chief Restructuring Officer. Seth has significant experience in
the industry and understands Vertex’s operational and financial capabilities very well. Seth is being brought in to assist
Vertex in managing through a difficult macro-economic environment and providing additional expertise in liquidity management and
performance improvement. We believe that continued support from our lenders is key to executing our strategic priorities which
are focused on managing our liquidity position, reducing our operating costs, and improving margins.”
Mr.
Cowart concluded, “We are focused on navigating through the recent lower crack spreads and continue to believe that
the decision and execution to convert the hydrocracking unit to conventional fuels will help us toward accomplishing our strategic
priorities for the second half of 2024 and into 2025.”
MOBILE
REFINERY OPERATIONS
Total
conventional throughput at the Mobile Refinery was 67,758 bpd in the second quarter of 2024. Total production of finished high-value,
light products, such as gasoline, diesel, and jet fuel, represented approximately 64% of total production in the second quarter
of 2024, flat with the first quarter of 2024, and in line with management’s original expectations, reflecting a continued
solid yield at the Mobile conventional refining facility.
The
Mobile Refinery’s conventional operations generated a gross profit of $6.4 million and $35.0 million of fuel gross margin
(a key performance indicator (KPI) discussed below) or $5.67 per barrel during the second quarter of 2024, versus generating a
gross profit of $37.5 million, and fuel gross margin of $73.6 million, or $12.63 per barrel in the first quarter of 2024. The
decline in profit and margin was driven by a 28% decrease in crack spreads compared to the first quarter of 2024.
Total
renewable throughput at the Mobile Renewable Diesel facility was 3,092 bpd in the second quarter of 2024. Total production of
renewable diesel was 3,082 bpd reflecting a product yield of 99.7%.
The
Mobile Renewable Diesel facility operations generated a gross loss of $(11.8) million and $4.5 million of fuel gross margin (a
KPI discussed below) or $16.08 per barrel during the second quarter of 2024.
Renewable
Business Pause and Pivot
As
previously announced, Vertex is pausing renewable fuels production and redirecting the hydrocracking unit to conventional fuels
and products. The Company had a previously planned catalyst and maintenance turnaround scheduled for 2024. It will use that planned
turnaround to load conventional catalyst and bring the unit out of turnaround in conventional service. In addition, the total
cost of about $10 million was previously budgeted as part of the planned catalyst and maintenance turnaround and does not represent
a material change to our forecasted capital spend.
The
Company has ceased renewable production and is on-schedule for the conversion of its Hydrocracker back to conventional service.
This focus on the conventional business seeks to capture available margins in a more established market with an on-stream target
of the fourth quarter of 2024.
Second
Quarter 2024 Mobile Refinery Results Summary ($/millions unless otherwise noted)
| Conventional
Fuels Refinery |
1Q24 |
2Q24 |
2024
YTD |
| |
|
|
|
|
| |
Total
Throughput (bpd) |
64,065 |
67,758 |
65,911 |
| |
Total
Throughput (MMbbl) |
5.83
|
6.17
|
12.00
|
| |
Conventional
Facility Capacity Utilization1 (%) |
85.4%
|
90.3%
|
87.88%
|
| |
|
|
|
|
| |
Direct
Opex Per Barrel ($/bbl) |
$2.75
|
$2.59
|
$2.67
|
| |
Fuel
Gross Margin ($/MM) |
$73.6
|
$35.0
|
$108.60
|
| |
Fuel
Gross Margin Per Barrel ($/bbl) |
$12.63
|
$5.67
|
$9.06
|
| |
|
|
|
|
| |
Production
Yield |
|
|
|
| |
Gasoline
(bpd) |
14,678 |
15,642 |
15,160 |
| |
%
Production |
22.9% |
22.6% |
22.7% |
| |
ULSD
(bpd) |
13,441 |
14,174 |
13,808 |
| |
%
Production |
21.0% |
20.4% |
20.7% |
| |
Jet
(bpd) |
12,595 |
14,848 |
13,722 |
| |
%
Production |
19.6% |
21.4% |
20.6% |
| |
Total
Finished Fuel Products (bpd) |
40,714 |
44,664 |
42,690 |
| |
%
Production |
63.5% |
64.4% |
64.0% |
| |
Other2
(bpd) |
23,428 |
24,683 |
24,056 |
| |
%
Production |
36.5% |
35.6% |
36.0% |
| |
Total
Production (bpd) |
64,142 |
69,347 |
66,746 |
| |
Total
Production (MMbbl) |
5.84 |
6.31 |
12.15 |
| |
|
|
|
|
| Renewable
Fuels Refinery |
1Q24 |
2Q24 |
2024
YTD |
| |
|
|
|
|
| |
Total
Renewable Throughput (bpd) |
4,090 |
3,092 |
3,591 |
| |
Total
Renewable Throughput (MMbbl) |
0.37
|
0.28 |
0.65
|
| |
Renewable
Diesel Facility Capacity Utilization3 (%) |
51.1%
|
38.7%
|
44.9%
|
| |
|
|
|
|
| |
Direct
Opex Per Barrel ($/bbl) |
$25.20
|
$31.75
|
$28.03
|
| |
Renewable
Fuel Gross Margin |
$3.8
|
$4.5
|
$8.4
|
| |
Renewable
Fuel Gross Margin Per Barrel ($/bbl) |
$10.29
|
16.08
|
$12.78
|
| |
|
|
|
|
| |
Renewable
Diesel Production (bpd) |
4,003 |
3,082 |
3,543 |
| |
Renewable
Diesel Production (MMbbl) |
0.36 |
0.28 |
0.64 |
| |
Renewable
Diesel Production Yield (%) |
97.9%
|
99.7%
|
98.7%
|
1)
Assumes 75,000 barrels per day of conventional operational capacity 2) Other includes naphtha, intermediates, and LNG 3) Assumes
8,000 barrels per day of renewable fuels operational capacity
Second
Quarter 2024 Financial Update
Vertex
reported second quarter 2024 net loss attributable to the Company of ($53.8) million, or ($0.58) per fully-diluted share, versus
net loss attributable to the Company of ($17.7) million, or ($0.19) per fully-diluted share for the first quarter of 2024. Adjusted
EBITDA was $(22.4) million for the second quarter of 2024, compared to Adjusted EBITDA of $18.6 million in the first quarter of
2024. The reduction in quarter-over-quarter results was primarily driven by decreased crack spread pricing across all products.
Balance
Sheet and Liquidity Update
As
of June 30, 2024, Vertex had total debt outstanding of $303.8 million, including $15.2 million in 6.25% Senior Convertible Notes,
$207.2 million outstanding on the Company’s Term Loan, finance lease obligations of $67.5 million, and $13.9 million in
other obligations. The Company had total cash and cash equivalents of $18.9 million, including $0.1 million of restricted cash
on the balance sheet as of June 30, 2024, for a net debt position of $284.9 million.
As
previously disclosed, on July 24, 2024 the Company reached an agreement with its senior lenders to modify certain terms and conditions
of the current term loan agreement and agreed to provide a term loan in the amount of $20 million. The new term loan provided
an incremental $20.0 million in borrowings.
Vertex
management continuously monitors current market conditions to assess expected cash generation and liquidity needs against its
available cash position, using the forward crack spreads in the market. Additionally, the Company continues to evaluate strategic
financial opportunities seeking further enhancements to its current liquidity position.
Management
Outlook
All
guidance presented below is current as of the time of this release and is subject to change. All prior financial guidance should
no longer be relied upon.
| Conventional
Fuels |
3Q
2024 |
| Operational: |
Low |
|
High |
| Mobile
Refinery Conventional Throughput Volume (Mbpd) |
55.0 |
|
60.0 |
| Capacity
Utilization |
73%
|
|
80%
|
| Production
Yield Profile: |
|
|
|
| Percentage
Finished Products1 |
64% |
|
68% |
| Intermediate
& Other Products2 |
36% |
|
32% |
| |
|
|
|
| Financial
Guidance: |
Low |
|
High |
| Direct
Operating Expense ($/bbl) |
$5.52 |
|
$6.02 |
| Capital
Expenditures ($/MM) |
$15.00 |
|
$20.00 |
| 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, August 8, 2024, at 9:00 A.M. Eastern Time to review the Company’s financial results,
discuss recent events. 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
A
replay of the teleconference will be available in the “Events and Presentation” section of Vertex’s website
at www.vertexenergy.com for up to one year following the conference call.
ABOUT
VERTEX ENERGY
Vertex
Energy is a leading energy transition company that specializes in producing high-purity refined fuels and products. Our 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 third quarter of 2024, the costs associated with, and outcome
of the Company’s plans to optimize conventional fuel and renewable diesel production moving forward; 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; potential restructuring of the Company, its operations, financials,
debts and assets; 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 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, including to pay amounts owed under the Company’s
outstanding term loan, the Company’s ability to raise such capital in the future, and the terms of such funding, including
dilution caused thereby, and steps the Company may be required to take in the future if the Company is unable to raise additional
capital, including potentially seeking bankruptcy protection; 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 and conventional production and the breakdown between the two; 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 intermediation facilities,
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 and interest rates 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, 2023, and the Company’s Quarterly Report
on Form 10-Q for the quarter ended June 30, 2024, and future Annual Reports on Form 10-K and Quarterly Reports on Form 10-Q. These
reports are available at www.sec.gov. The Company cautions that the foregoing list of important factors is not complete.
All subsequent written and oral forward-looking statements attributable to the Company or any person acting on behalf of the Company
are expressly qualified in their entirety by the cautionary statements referenced above. Other unknown or unpredictable factors
also could have material adverse effects on Vertex’s future results. The forward-looking statements included in this press
release are made only as of the date hereof. Vertex cannot guarantee future results, levels of activity, performance or achievements.
Accordingly, you should not place undue reliance on these forward-looking statements. Finally, Vertex undertakes no obligation
to update these statements after the date of this release, except as required by law, and takes no obligation to update or correct
information prepared by third parties that are not paid for by Vertex. If we update one or more forward-looking statements, no
inference should be drawn that we will make additional updates with respect to those or other forward-looking statements.
PROJECTIONS
The
financial projections (the “Projections”) included herein were prepared by Vertex in good faith using assumptions
believed to be reasonable. A significant number of assumptions about the operations of the business of Vertex were based, in part,
on economic, competitive, and general business conditions prevailing at the time the Projections were developed. Any future changes
in these conditions, may materially impact the ability of Vertex to achieve the financial results set forth in the Projections.
The Projections are based on numerous assumptions, including realization of the operating strategy of Vertex; industry performance;
no material adverse changes in applicable legislation or regulations, or the administration thereof, or generally accepted accounting
principles; general business and economic conditions; competition; retention of key management and other key employees; absence
of material contingent or unliquidated litigation, indemnity, or other claims; minimal changes in current pricing; static material
and equipment pricing; no significant increases in interest rates or inflation; and other matters, many of which will be beyond
the control of Vertex, and some or all of which may not materialize. The Projections also assume the continued uptime of the Company’s
facilities at historical levels and the successful funding of, timely completion of, and successful outcome of, planned capital
projects. Additionally, to the extent that the assumptions inherent in the Projections are based upon future business decisions
and objectives, they are subject to change. Although the Projections are presented with numerical specificity and are based on
reasonable expectations developed by Vertex’s management, the assumptions and estimates underlying the Projections are subject
to significant business, economic, and competitive uncertainties and contingencies, many of which will be beyond the control of
Vertex. Accordingly, the Projections are only estimates and are necessarily speculative in nature. It is expected that some or
all of the assumptions in the Projections will not be realized and that actual results will vary from the Projections. Such variations
may be material and may increase over time. In light of the foregoing, readers are cautioned not to place undue reliance on the
Projections. The projected financial information contained herein should not be regarded as a representation or warranty by Vertex,
its management, advisors, or any other person that the Projections can or will be achieved. Vertex cautions that the Projections
are speculative in nature and based upon subjective decisions and assumptions. As a result, the Projections should not be relied
on as necessarily predictive of actual future events.
NON-GAAP
FINANCIAL MEASURES 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 Net Leverage(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 EBITDA 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, acquisition costs,
gain on change in value of derivative warrant liability, environmental clean-up, stock-based compensation, (gain) loss on sale
of assets, 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), 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, and various short-term
notes including insurance premium financing. Net leverage is defined as Long-Term Debt divided by trailing twelve month 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.
VERTEX ENERGY, INC.
CONSOLIDATED BALANCE SHEETS
(in thousands, except number of shares and par value)
(UNAUDITED)
| | |
June 30, 2024 | | |
December 31, 2023 | |
| ASSETS | |
| | | |
| | |
| Current assets | |
| | | |
| | |
| Cash and cash equivalents | |
$ | 18,763 | | |
$ | 76,967 | |
| Restricted cash | |
| 100 | | |
| 3,606 | |
| Accounts receivable, net | |
| 80,526 | | |
| 36,164 | |
| Inventory | |
| 126,319 | | |
| 182,120 | |
| Prepaid expenses and other current assets | |
| 50,613 | | |
| 53,174 | |
| Total current assets | |
| 276,321 | | |
| 352,031 | |
| | |
| | | |
| | |
| Fixed assets, net | |
| 343,341 | | |
| 326,111 | |
| Finance lease right-of-use assets | |
| 62,519 | | |
| 64,499 | |
| Operating lease right-of use assets | |
| 76,370 | | |
| 96,394 | |
| Intangible assets, net | |
| 9,773 | | |
| 11,541 | |
| Other assets | |
| 4,044 | | |
| 4,048 | |
| TOTAL ASSETS | |
$ | 772,368 | | |
$ | 854,624 | |
| | |
| | | |
| | |
| LIABILITIES AND EQUITY | |
| | | |
| | |
| Current liabilities | |
| | | |
| | |
| Accounts payable | |
$ | 36,484 | | |
$ | 75,004 | |
| Accrued expenses and other current liabilities | |
| 137,043 | | |
| 73,636 | |
| Finance lease liability-current | |
| 2,541 | | |
| 2,435 | |
| Operating lease liability-current | |
| 12,524 | | |
| 20,296 | |
| Current portion of long-term debt, net | |
| 197,235 | | |
| 16,362 | |
| Obligations under inventory financing agreements, net | |
| 108,728 | | |
| 141,093 | |
| Total
current liabilities | |
| 494,555 | | |
| 328,826 | |
| | |
| | | |
| | |
| Long-term debt, net | |
| 14,530 | | |
| 170,701 | |
| Finance lease liability-long-term | |
| 64,918 | | |
| 66,206 | |
| Operating lease liability-long-term | |
| 62,702 | | |
| 74,444 | |
| Deferred tax liabilities | |
| 2,776 | | |
| 2,776 | |
| Derivative warrant liability | |
| 1,961 | | |
| 9,907 | |
| Other liabilities | |
| 1,377 | | |
| 1,377 | |
| Total liabilities | |
| 642,819 | | |
| 654,237 | |
| | |
| | | |
| | |
| EQUITY | |
| | | |
| | |
| Common stock, $0.001 par value per share; 750,000,000 shares authorized; 93,514,346 shares issued and outstanding at June 30, 2024 and December 31, 2023. | |
| 94 | | |
| 94 | |
| Additional paid-in capital | |
| 384,493 | | |
| 383,632 | |
| Accumulated deficit | |
| (258,886 | ) | |
| (187,379 | ) |
| Total Vertex Energy, Inc. shareholders' equity | |
| 125,701 | | |
| 196,347 | |
| Non-controlling interest | |
| 3,848 | | |
| 4,040 | |
| Total equity | |
| 129,549 | | |
| 200,387 | |
| TOTAL LIABILITIES AND EQUITY | |
$ | 772,368 | | |
$ | 854,624 | |
VERTEX
ENERGY, INC.
CONSOLIDATED
STATEMENTS OF OPERATIONS
(in
thousands, except per share amounts)
(UNAUDITED)
| | |
Three Months Ended June 30, | | |
Six Months Ended June 30, | |
| | |
2024 | | |
2023 | | |
2024 | | |
2023 | |
| Revenues | |
$ | 750,061 | | |
$ | 734,893 | | |
$ | 1,445,387 | | |
$ | 1,426,035 | |
| Cost of revenues (exclusive of depreciation and amortization shown separately below) | |
| 741,202 | | |
| 729,649 | | |
| 1,393,236 | | |
| 1,349,001 | |
| Depreciation and amortization attributable to costs of revenues | |
| 8,613 | | |
| 6,630 | | |
| 16,799 | | |
| 10,967 | |
| Gross profit (loss) | |
| 246 | | |
| (1,386 | ) | |
| 35,352 | | |
| 66,067 | |
| | |
| | | |
| | | |
| | | |
| | |
| Operating expenses: | |
| | | |
| | | |
| | | |
| | |
| Selling, general and administrative expenses (exclusive of depreciation and amortization shown separately below) | |
| 37,441 | | |
| 42,636 | | |
| 77,223 | | |
| 84,578 | |
| Depreciation and amortization attributable to operating expenses | |
| 1,125 | | |
| 1,028 | | |
| 2,229 | | |
| 2,044 | |
| Total operating expenses | |
| 38,566 | | |
| 43,664 | | |
| 79,452 | | |
| 86,622 | |
| Loss from operations | |
| (38,320 | ) | |
| (45,050 | ) | |
| (44,100 | ) | |
| (20,555 | ) |
| Other income (expense): | |
| | | |
| | | |
| | | |
| | |
| Other income (expenses) | |
| 520 | | |
| (496 | ) | |
| (529 | ) | |
| 1,156 | |
| Gain on change in value of derivative warrant liability | |
| 1,680 | | |
| 9,600 | | |
| 8,338 | | |
| 415 | |
| Interest expense | |
| (17,725 | ) | |
| (77,536 | ) | |
| (35,408 | ) | |
| (90,013 | ) |
| Total other expense | |
| (15,525 | ) | |
| (68,432 | ) | |
| (27,599 | ) | |
| (88,442 | ) |
| Loss from continuing operations before income tax | |
| (53,845 | ) | |
| (113,482 | ) | |
| (71,699 | ) | |
| (108,997 | ) |
| Income tax expense | |
| — | | |
| 28,688 | | |
| — | | |
| 27,676 | |
| Loss from continuing operations | |
| (53,845 | ) | |
| (84,794 | ) | |
| (71,699 | ) | |
| (81,321 | ) |
| Income from discontinued operations, net of tax (see note 22) | |
| — | | |
| 3,340 | | |
| — | | |
| 53,680 | |
| Net loss | |
| (53,845 | ) | |
| (81,454 | ) | |
| (71,699 | ) | |
| (27,641 | ) |
| Net loss attributable to non-controlling interest from continuing operations | |
| (72 | ) | |
| (53 | ) | |
| (192 | ) | |
| (103 | ) |
| Net loss attributable to Vertex Energy, Inc. | |
$ | (53,773 | ) | |
$ | (81,401 | ) | |
$ | (71,507 | ) | |
$ | (27,538 | ) |
| | |
| | | |
| | | |
| | | |
| | |
| Net income loss attributable to common shareholders from continuing operations | |
$ | (53,773 | ) | |
$ | (84,741 | ) | |
$ | (71,507 | ) | |
$ | (81,218 | ) |
| Net income attributable to common shareholders from discontinued operations, net of tax | |
| — | | |
| 3,340 | | |
| — | | |
| 53,680 | |
| Net loss attributable to common shareholders | |
$ | (53,773 | ) | |
$ | (81,401 | ) | |
$ | (71,507 | ) | |
$ | (27,538 | ) |
| | |
| | | |
| | | |
| | | |
| | |
| Basic loss per common share | |
| | | |
| | | |
| | | |
| | |
| Continuing operations | |
$ | (0.58 | ) | |
$ | (1.07 | ) | |
$ | (0.76 | ) | |
$ | (1.05 | ) |
| Discontinued operations, net of tax | |
| — | | |
| 0.03 | | |
| — | | |
| 0.69 | |
| Basic loss per common share | |
$ | (0.58 | ) | |
$ | (1.04 | ) | |
$ | (0.76 | ) | |
$ | (0.36 | ) |
| | |
| | | |
| | | |
| | | |
| | |
| Diluted income (loss) per common share | |
| | | |
| | | |
| | | |
| | |
| Continuing operations | |
$ | (0.58 | ) | |
$ | (1.07 | ) | |
$ | (0.76 | ) | |
$ | (1.05 | ) |
| Discontinued operations, net of tax | |
| — | | |
| 0.03 | | |
| — | | |
| 0.69 | |
| Diluted income (loss) per common share | |
$ | (0.58 | ) | |
$ | (1.04 | ) | |
$ | (0.76 | ) | |
$ | (0.36 | ) |
| | |
| | | |
| | | |
| | | |
| | |
| Shares used in computing earnings per share | |
| | | |
| | | |
| | | |
| | |
| Basic | |
| 93,514 | | |
| 79,519 | | |
| 93,514 | | |
| 77,615 | |
| Diluted | |
| 93,514 | | |
| 79,519 | | |
| 93,514 | | |
| 77,615 | |
VERTEX
ENERGY, INC.
CONSOLIDATED
STATEMENTS OF STOCKHOLDERS' EQUITY
(in
thousands, except par value)
(UNAUDITED)
| Six Months Ended June 30, 2024 |
| | |
Common Stock | | |
Additional
Paid-In | | |
Accumulated | | |
Non-
controlling | | |
| |
| | |
Shares | | |
$0.001 Par | | |
Capital | | |
Deficit | | |
Interest | | |
Total Equity | |
| Balance on January 1, 2024 | |
| 93,515 | | |
$ | 94 | | |
$ | 383,632 | | |
$ | (187,379 | ) | |
$ | 4,040 | | |
$ | 200,387 | |
| Stock based compensation expense | |
| — | | |
| — | | |
| 431 | | |
| — | | |
| — | | |
| 431 | |
| Net loss | |
| — | | |
| — | | |
| — | | |
| (17,734 | ) | |
| (120 | ) | |
| (17,854 | ) |
| Balance on March 31, 2024 | |
| 93,515 | | |
| 94 | | |
| 384,063 | | |
| (205,113 | ) | |
| 3,920 | | |
| 182,964 | |
| Stock based compensation expense | |
| — | | |
| — | | |
| 430 | | |
| — | | |
| — | | |
| 430 | |
| Net loss | |
| — | | |
| — | | |
| — | | |
| (53,773 | ) | |
| (72 | ) | |
| (53,845 | ) |
| Balance on June 30, 2024 | |
| 93,515 | | |
$ | 94 | | |
$ | 384,493 | | |
$ | (258,886 | ) | |
$ | 3,848 | | |
$ | 129,549 | |
| Six Months Ended June 30, 2023 |
| | |
Common Stock | | |
Additional
Paid-In | | |
Accumulated | | |
Non-
controlling | | |
| |
| | |
Shares | | |
$0.001 Par | | |
Capital | | |
Deficit | | |
Interest | | |
Total Equity | |
| Balance on January 1, 2023 | |
| 75,670 | | |
$ | 76 | | |
$ | 279,552 | | |
$ | (115,893 | ) | |
$ | 1,685 | | |
$ | 165,420 | |
| Exercise of options | |
| 166 | | |
| — | | |
| 209 | | |
| — | | |
| — | | |
| 209 | |
| Stock based compensation expense | |
| — | | |
| — | | |
| 365 | | |
| — | | |
| — | | |
| 365 | |
| Non-controlling shareholder contribution | |
| — | | |
| — | | |
| — | | |
| — | | |
| 980 | | |
| 980 | |
| Net income (loss) | |
| — | | |
| — | | |
| — | | |
| 53,863 | | |
| (50 | ) | |
| 53,813 | |
| Balance on March 31, 2023 | |
| 75,836 | | |
| 76 | | |
| 280,126 | | |
| (62,030 | ) | |
| 2,615 | | |
| 220,787 | |
| Exercise of options | |
| 195 | | |
| — | | |
| 169 | | |
| — | | |
| — | | |
| 169 | |
| Stock based compensation expense | |
| — | | |
| — | | |
| 368 | | |
| — | | |
| — | | |
| 368 | |
| Non-controlling shareholder contribution | |
| — | | |
| — | | |
| — | | |
| — | | |
| 490 | | |
| 490 | |
| Senior Note converted | |
| 17,206 | | |
| 17 | | |
| 101,113 | | |
| — | | |
| — | | |
| 101,130 | |
| Net income (loss) | |
| — | | |
| — | | |
| — | | |
| (81,401 | ) | |
| (53 | ) | |
| (81,454 | ) |
| Balance on June 30, 2023 | |
| 93,237 | | |
$ | 93 | | |
$ | 381,776 | | |
$ | (143,431 | ) | |
$ | 3,052 | | |
$ | 241,490 | |
VERTEX
ENERGY, INC.
CONSOLIDATED
STATEMENTS OF CASH FLOWS
(in
thousands)
(UNAUDITED)
| | |
Six Months Ended | |
| | |
June 30,
2024 | | |
June 30,
2023 | |
| Cash flows from operating activities | |
| | | |
| | |
| Net loss | |
$ | (71,699 | ) | |
$ | (27,641 | ) |
| Income from discontinued operations, net of tax | |
| — | | |
| 53,680 | |
| Loss from continuing operations | |
| (71,699 | ) | |
| (81,321 | ) |
Adjustments to reconcile loss from continuing operations to
cash used in operating activities from continuing operations
| |
| | | |
| | |
| Stock based compensation expense | |
| 861 | | |
| 733 | |
| Depreciation and amortization | |
| 19,028 | | |
| 13,011 | |
| Deferred income tax expense | |
| — | | |
| (27,676 | ) |
| Loss on lease modification | |
| 35 | | |
| — | |
| Loss (gain) on sale of assets | |
| 684 | | |
| (2 | ) |
| Increase (decrease) in allowance for credit losses | |
| (704 | ) | |
| 93 | |
| Decrease in fair value of derivative warrant liability | |
| (8,338 | ) | |
| (415 | ) |
| Loss on commodity derivative contracts | |
| 1,551 | | |
| 2,123 | |
| Net cash settlements on commodity derivatives contracts | |
| (1,547 | ) | |
| 1,269 | |
| Amortization of debt discount and deferred costs | |
| 9,416 | | |
| 70,948 | |
| Changes in operating assets and liabilities | |
| | | |
| | |
| Accounts receivable and other receivables | |
| (43,658 | ) | |
| (18,589 | ) |
| Inventory | |
| 55,801 | | |
| (80,199 | ) |
| Prepaid expenses and other current assets | |
| 3,001 | | |
| (16,546 | ) |
| Accounts payable | |
| (38,518 | ) | |
| 20,376 | |
| Accrued expenses | |
| 53,183 | | |
| 5,932 | |
| Right-of use operating lease liabilities change | |
| 475 | | |
| — | |
| Other assets | |
| 4 | | |
| (1,090 | ) |
| Net cash used in operating activities from continuing operations | |
| (20,425 | ) | |
| (111,353 | ) |
| Cash flows from investing activities | |
| | | |
| | |
| Software purchase | |
| — | | |
| (2,500 | ) |
| Purchase of fixed assets | |
| (25,996 | ) | |
| (105,344 | ) |
| Proceeds from sale of discontinued operations | |
| — | | |
| 92,034 | |
| Proceeds from sale of fixed assets | |
| 2,584 | | |
| 5 | |
| Net cash used in investing activities from continuing operations | |
| (23,412 | ) | |
| (15,805 | ) |
| Cash flows from financing activities | |
| | | |
| | |
| Payments on finance leases | |
| (1,187 | ) | |
| (908 | ) |
| Proceeds from exercise of options and warrants to common stock | |
| — | | |
| 378 | |
| Contributions received from noncontrolling interest | |
| — | | |
| 1,470 | |
| Net change on inventory financing agreements | |
| (32,615 | ) | |
| 43,657 | |
| Proceeds from note payable | |
| 28,997 | | |
| 13,081 | |
| Payments on note payable | |
| (13,068 | ) | |
| (24,422 | ) |
| Net cash provided by (used in) financing activities from continuing operations | |
| (17,873 | ) | |
| 33,256 | |
| | |
| | | |
| | |
| Discontinued operations: | |
| | | |
| | |
| Net cash used in operating activities | |
| — | | |
| (150 | ) |
| Net cash used in discontinued operations | |
| — | | |
| (150 | ) |
| | |
| | | |
| | |
| Net decrease in cash, cash equivalents and restricted cash | |
| (61,710 | ) | |
| (94,052 | ) |
| Cash, cash equivalents, and restricted cash at beginning of the period | |
| 80,573 | | |
| 146,187 | |
| Cash, cash equivalents, and restricted cash at end of period | |
$ | 18,863 | | |
$ | 52,135 | |
VERTEX
ENERGY, INC.
CONSOLIDATED
STATEMENTS OF CASH FLOWS
(in
thousands)
(UNAUDITED)
(Continued)
| | |
Six Months Ended | |
| | |
June 30,
2024 | | |
June 30,
2023 | |
| | |
| | |
| |
| Cash and cash equivalents | |
$ | 18,763 | | |
$ | 48,532 | |
| Restricted cash | |
| 100 | | |
| 3,603 | |
| Cash and cash equivalents and restricted cash as shown in the consolidated statements of cash flows | |
$ | 18,863 | | |
$ | 52,135 | |
| | |
| | | |
| | |
| SUPPLEMENTAL INFORMATION | |
| | | |
| | |
| Cash paid for interest | |
$ | 27,772 | | |
$ | 24,755 | |
| Cash paid for taxes | |
$ | — | | |
$ | — | |
| | |
| | | |
| | |
| NON-CASH INVESTING AND FINANCING TRANSACTIONS | |
| | | |
| | |
| Warrants issued with debt | |
$ | (392 | ) | |
$ | — | |
| Conversion of Convertible Senior Notes to common stock | |
$ | — | | |
$ | 79,948 | |
| ROU assets obtained from new finance leases | |
$ | 16 | | |
$ | 23,990 | |
| ROU assets obtained from new operating leases | |
$ | 1,084 | | |
$ | 38,945 | |
| ROU assets disposed under operating leases | |
$ | (9,747 | ) | |
$ | — | |
Unaudited
segment information for the three and six months ended June 30, 2024 and 2023 is as follows (in thousands):
| | |
Three Months Ended June 30, 2024 | |
| | |
Refining &
Marketing | | |
Black Oil &
Recovery | | |
Corporate and
Eliminations | | |
Total | |
| Revenues: | |
| | |
| | |
| | |
| |
| Refined products | |
$ | 707,622 | | |
$ | 26,682 | | |
$ | (1,892 | ) | |
$ | 732,412 | |
| Re-refined products | |
| 4,877 | | |
| 5,346 | | |
| — | | |
| 10,223 | |
| Services | |
| 4,504 | | |
| 2,922 | | |
| — | | |
| 7,426 | |
| Total revenues | |
| 717,003 | | |
| 34,950 | | |
| (1,892 | ) | |
| 750,061 | |
| Cost of revenues (exclusive of depreciation and amortization shown separately below) | |
| 714,003 | | |
| 29,091 | | |
| (1,892 | ) | |
| 741,202 | |
| Depreciation and amortization attributable to costs of revenues | |
| 6,945 | | |
| 1,668 | | |
| — | | |
| 8,613 | |
| Gross profit (loss) | |
| (3,945 | ) | |
| 4,191 | | |
| — | | |
| 246 | |
| Selling, general and administrative expenses | |
| 25,457 | | |
| 5,327 | | |
| 6,657 | | |
| 37,441 | |
| Depreciation and amortization attributable to operating expenses | |
| 815 | | |
| 72 | | |
| 238 | | |
| 1,125 | |
| Loss from operations | |
| (30,217 | ) | |
| (1,208 | ) | |
| (6,895 | ) | |
| (38,320 | ) |
| Other income (expenses) | |
| | | |
| | | |
| | | |
| | |
| Other income (expense) | |
| — | | |
| (56 | ) | |
| 576 | | |
| 520 | |
| Gain on change in derivative liability | |
| — | | |
| — | | |
| 1,680 | | |
| 1,680 | |
| Interest expense | |
| (5,353 | ) | |
| (141 | ) | |
| (12,231 | ) | |
| (17,725 | ) |
| Total other expense | |
| (5,353 | ) | |
| (197 | ) | |
| (9,975 | ) | |
| (15,525 | ) |
| Loss from continuing operations before income tax | |
$ | (35,570 | ) | |
$ | (1,405 | ) | |
$ | (16,870 | ) | |
$ | (53,845 | ) |
| | |
| | | |
| | | |
| | | |
| | |
| Capital expenditures | |
$ | 9,102 | | |
$ | 2,168 | | |
$ | — | | |
$ | 11,270 | |
| | |
Three Months Ended June 30, 2023 | |
| | |
Refining &
Marketing | | |
Black Oil &
Recovery | | |
Corporate and
Eliminations | | |
Total | |
| Revenues: | |
| | |
| | |
| | |
| |
| Refined products | |
$ | 702,606 | | |
$ | 21,797 | | |
$ | (2,411 | ) | |
$ | 721,992 | |
| Re-refined products | |
| 5,011 | | |
| 3,536 | | |
| — | | |
| 8,547 | |
| Services | |
| 3,802 | | |
| 552 | | |
| — | | |
| 4,354 | |
| Total revenues | |
| 711,419 | | |
| 25,885 | | |
| (2,411 | ) | |
| 734,893 | |
| Cost of revenues (exclusive of depreciation and amortization shown separately below) | |
| 710,958 | | |
| 23,263 | | |
| (4,572 | ) | |
| 729,649 | |
| Depreciation and amortization attributable to costs of revenues | |
| 5,568 | | |
| 1,062 | | |
| — | | |
| 6,630 | |
| Gross profit (loss) | |
| (5,107 | ) | |
| 1,560 | | |
| 2,161 | | |
| (1,386 | ) |
| Selling, general and administrative expenses | |
| 32,969 | | |
| 4,504 | | |
| 5,163 | | |
| 42,636 | |
| Depreciation and amortization attributable to operating expenses | |
| 822 | | |
| 38 | | |
| 168 | | |
| 1,028 | |
| Loss from operations | |
| (38,898 | ) | |
| (2,982 | ) | |
| (3,170 | ) | |
| (45,050 | ) |
| Other income (expenses) | |
| | | |
| | | |
| | | |
| | |
| Other income (expense) | |
| — | | |
| (499 | ) | |
| 3 | | |
| (496 | ) |
| Loss on change in derivative liability | |
| — | | |
| — | | |
| 9,600 | | |
| 9,600 | |
| Interest expense | |
| (4,529 | ) | |
| (28 | ) | |
| (72,979 | ) | |
| (77,536 | ) |
| Total other expense | |
| (4,529 | ) | |
| (527 | ) | |
| (63,376 | ) | |
| (68,432 | ) |
| Loss from continuing operations before income tax | |
$ | (43,427 | ) | |
$ | (3,509 | ) | |
$ | (66,546 | ) | |
$ | (113,482 | ) |
| | |
| | | |
| | | |
| | | |
| | |
| Capital expenditures | |
$ | 27,762 | | |
$ | 2,827 | | |
$ | — | | |
$ | 30,589 | |
| | |
Six Months Ended June 30, 2024 | |
| | |
Refining & Marketing | | |
Black Oil & Recovery | | |
Corporate and Eliminations | | |
Total | |
| Revenues: | |
| | |
| | |
| | |
| |
| Refined products | |
$ | 1,358,381 | | |
$ | 58,406 | | |
$ | (2,914 | ) | |
$ | 1,413,873 | |
| Re-refined products | |
| 8,744 | | |
| 10,561 | | |
| — | | |
| 19,305 | |
| Services | |
| 7,585 | | |
| 4,624 | | |
| — | | |
| 12,209 | |
| Total revenues | |
| 1,374,710 | | |
| 73,591 | | |
| (2,914 | ) | |
| 1,445,387 | |
| Cost of revenues (exclusive of depreciation and amortization shown separately below) | |
| 1,336,978 | | |
| 59,172 | | |
| (2,914 | ) | |
| 1,393,236 | |
| Depreciation and amortization attributable to costs of revenues | |
| 13,485 | | |
| 3,314 | | |
| — | | |
| 16,799 | |
| Gross profit | |
| 24,247 | | |
| 11,105 | | |
| — | | |
| 35,352 | |
| Selling, general and administrative expenses | |
| 51,604 | | |
| 10,724 | | |
| 14,895 | | |
| 77,223 | |
| Depreciation and amortization attributable to operating expenses | |
| 1,608 | | |
| 144 | | |
| 477 | | |
| 2,229 | |
| Income (loss) from operations | |
| (28,965 | ) | |
| 237 | | |
| (15,372 | ) | |
| (44,100 | ) |
| Other income (expenses) | |
| | | |
| | | |
| | | |
| | |
| Other income (expense) | |
| (685 | ) | |
| (415 | ) | |
| 571 | | |
| (529 | ) |
| Gain on change in derivative liability | |
| — | | |
| — | | |
| 8,338 | | |
| 8,338 | |
| Interest expense | |
| (10,100 | ) | |
| (237 | ) | |
| (25,071 | ) | |
| (35,408 | ) |
| Total other expense | |
| (10,785 | ) | |
| (652 | ) | |
| (16,162 | ) | |
| (27,599 | ) |
| Loss from continuing operations before income tax | |
$ | (39,750 | ) | |
$ | (415 | ) | |
$ | (31,534 | ) | |
$ | (71,699 | ) |
| | |
| | | |
| | | |
| | | |
| | |
| Capital expenditures | |
$ | 20,401 | | |
$ | 5,595 | | |
$ | — | | |
$ | 25,996 | |
| | |
Six Months Ended June 30, 2023 | |
| | |
Refining & Marketing | | |
Black Oil & Recovery | | |
Corporate and Eliminations | | |
Total | |
| Revenues: | |
| | |
| | |
| | |
| |
| Refined products | |
$ | 1,356,166 | | |
$ | 51,220 | | |
$ | (5,143 | ) | |
$ | 1,402,243 | |
| Re-refined products | |
| 8,847 | | |
| 7,947 | | |
| — | | |
| 16,794 | |
| Services | |
| 5,734 | | |
| 1,264 | | |
| — | | |
| 6,998 | |
| Total revenues | |
| 1,370,747 | | |
| 60,431 | | |
| (5,143 | ) | |
| 1,426,035 | |
| Cost of revenues (exclusive of depreciation and amortization shown separately below) | |
| 1,300,770 | | |
| 53,681 | | |
| (5,450 | ) | |
| 1,349,001 | |
| Depreciation and amortization attributable to costs of revenues | |
| 8,862 | | |
| 2,105 | | |
| — | | |
| 10,967 | |
| Gross profit | |
| 61,115 | | |
| 4,645 | | |
| 307 | | |
| 66,067 | |
| Selling, general and administrative expenses | |
| 59,455 | | |
| 9,303 | | |
| 15,820 | | |
| 84,578 | |
| Depreciation and amortization attributable to operating expenses | |
| 1,630 | | |
| 76 | | |
| 338 | | |
| 2,044 | |
| Income (loss) from operations | |
| 30 | | |
| (4,734 | ) | |
| (15,851 | ) | |
| (20,555 | ) |
| Other income (expenses) | |
| | | |
| | | |
| | | |
| | |
| Other income | |
| — | | |
| 1,156 | | |
| — | | |
| 1,156 | |
| Loss on change in derivative liability | |
| — | | |
| — | | |
| 415 | | |
| 415 | |
| Interest expense | |
| (8,405 | ) | |
| (85 | ) | |
| (81,523 | ) | |
| (90,013 | ) |
| Total other income (expense) | |
| (8,405 | ) | |
| 1,071 | | |
| (81,108 | ) | |
| (88,442 | ) |
| Loss from continuing operations before income tax | |
$ | (8,375 | ) | |
$ | (3,663 | ) | |
$ | (96,959 | ) | |
$ | (108,997 | ) |
| | |
| | | |
| | | |
| | | |
| | |
| Capital expenditures | |
$ | 97,670 | | |
$ | 7,674 | | |
$ | — | | |
$ | 105,344 | |
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 June 30, 2024 |
| In thousands | |
Conventional | | |
Renewable | | |
Mobile Refinery Total | |
| Gross profit | |
$ | 6,407 | | |
$ | (11,847 | ) | |
$ | (5,440 | ) |
| Unrealized (gain) loss on hedging activities | |
| 353 | | |
| (302 | ) | |
| 51 | |
| Inventory valuation adjustments | |
| 3,233 | | |
| 2,524 | | |
| 5,757 | |
| Adjusted gross margin | |
$ | 9,993 | | |
$ | (9,625 | ) | |
$ | 368 | |
| Variable production costs attributable to cost of revenues | |
| 19,671 | | |
| 12,182 | | |
| 31,853 | |
| Depreciation and amortization attributable to cost of revenues | |
| 2,960 | | |
| 3,933 | | |
| 6,893 | |
| RINs | |
| 9,099 | | |
| — | | |
| 9,099 | |
| Realized (gain) loss on hedging activities | |
| (56 | ) | |
| 158 | | |
| 102 | |
| Financing costs | |
| (4,397 | ) | |
| 85 | | |
| (4,312 | ) |
| Other revenues | |
| (2,296 | ) | |
| (2,208 | ) | |
| (4,504 | ) |
| Fuel gross margin | |
$ | 34,974 | | |
$ | 4,525 | | |
$ | 39,499 | |
| Throughput (bpd) | |
| 67,758 | | |
| 3,092 | | |
| 70,850 | |
| Fuel gross margin per barrel of throughput | |
$ | 5.67 | | |
$ | 16.08 | | |
$ | 6.13 | |
| Total OPEX | |
$ | 15,942 | | |
$ | 8,934 | | |
$ | 24,876 | |
| Operating expenses per barrel of throughput | |
$ | 2.59 | | |
$ | 31.75 | | |
$ | 3.86 | |
| Three Months Ended March 31, 2024 |
| In thousands | |
Conventional | | |
Renewable | | |
Mobile Refinery Total | |
| Gross profit | |
$ | 37,508 | | |
$ | (10,462 | ) | |
$ | 27,046 | |
| Unrealized (gain) loss on hedging activities | |
| (555 | ) | |
| 934 | | |
| 379 | |
| Inventory valuation adjustments | |
| 9,657 | | |
| 4,592 | | |
| 14,249 | |
| Adjusted gross margin | |
$ | 46,610 | | |
$ | (4,936 | ) | |
$ | 41,674 | |
| Variable production costs attributable to cost of revenues | |
| 25,651 | | |
| 6,846 | | |
| 32,497 | |
| Depreciation and amortization attributable to cost of revenues | |
| 2,558 | | |
| 3,932 | | |
| 6,490 | |
| RINs | |
| (857 | ) | |
| — | | |
| (857 | ) |
| Realized (gain) loss on hedging activities | |
| 2,577 | | |
| (1,783 | ) | |
| 794 | |
| Financing costs | |
| (172 | ) | |
| 132 | | |
| (40 | ) |
| Other revenues | |
| (2,719 | ) | |
| (362 | ) | |
| (3,081 | ) |
| Fuel gross margin | |
$ | 73,648 | | |
$ | 3,829 | | |
$ | 77,477 | |
| Throughput (bpd) | |
| 64,065 | | |
| 4,090 | | |
| 68,155 | |
| Fuel gross margin per barrel of throughput | |
$ | 12.63 | | |
$ | 10.29 | | |
$ | 12.49 | |
| Total OPEX | |
$ | 16,061 | | |
$ | 9,382 | | |
$ | 25,443 | |
| Operating expenses per barrel of throughput | |
$ | 2.75 | | |
$ | 25.21 | | |
$ | 4.10 | |
| Six Months Ended June 30, 2024 |
| In thousands | |
Conventional | | |
Renewable | | |
Mobile Refinery Total | |
| Gross profit | |
$ | 43,917 | | |
$ | (22,310 | ) | |
$ | 21,607 | |
| Unrealized (gain) loss on hedging activities | |
| (202 | ) | |
| 632 | | |
| 430 | |
| Inventory valuation adjustments | |
| 12,890 | | |
| 7,117 | | |
| 20,007 | |
| Adjusted gross margin | |
$ | 56,605 | | |
$ | (14,561 | ) | |
$ | 42,044 | |
| Variable production costs attributable to cost of revenues | |
| 45,322 | | |
| 19,029 | | |
| 64,351 | |
| Depreciation and amortization attributable to cost of revenues | |
| 5,518 | | |
| 7,865 | | |
| 13,383 | |
| RINs | |
| 8,242 | | |
| — | | |
| 8,242 | |
| Realized (gain) loss on hedging activities | |
| 2,521 | | |
| (1,625 | ) | |
| 896 | |
| Financing costs | |
| (4,569 | ) | |
| 217 | | |
| (4,352 | ) |
| Other revenues | |
| (5,015 | ) | |
| (2,570 | ) | |
| (7,585 | ) |
| Fuel gross margin | |
$ | 108,624 | | |
$ | 8,355 | | |
$ | 116,979 | |
| Throughput (bpd) | |
| 65,911 | | |
| 3,591 | | |
| 69,502 | |
| Fuel gross margin per barrel of throughput | |
$ | 9.06 | | |
$ | 12.78 | | |
$ | 9.25 | |
| Total OPEX | |
$ | 32,002 | | |
$ | 18,316 | | |
$ | 50,318 | |
| Operating expenses per barrel of throughput | |
$ | 2.67 | | |
$ | 28.03 | | |
$ | 3.98 | |
Unaudited
Reconciliation of Adjusted EBITDA to Net loss from Continued and Discontinued Operations.
| In thousands | |
Three Months Ended | | |
Six Months Ended | | |
Twelve Months Ended | |
| | |
June 30, 2024 | | |
June 30, 2023 | | |
June 30, 2024 | | |
June 30, 2023 | | |
June 30, 2024 | | |
June 30, 2023 | |
| Net income (loss) | |
$ | (53,845 | ) | |
$ | (81,454 | ) | |
$ | (71,699 | ) | |
$ | (27,641 | ) | |
$ | (116,031 | ) | |
$ | 38,947 | |
| Depreciation and amortization | |
| 9,738 | | |
| 7,658 | | |
| 19,028 | | |
| 13,156 | | |
| 37,182 | | |
| 24,541 | |
| Income tax expense (benefit) | |
| — | | |
| (27,236 | ) | |
| — | | |
| (8,477 | ) | |
| 13,774 | | |
| (10,966 | ) |
| Interest expense | |
| 17,725 | | |
| 77,536 | | |
| 35,408 | | |
| 90,013 | | |
| 64,961 | | |
| 118,008 | |
| EBITDA | |
$ | (26,381 | ) | |
$ | (23,496 | ) | |
$ | (17,263 | ) | |
$ | 67,051 | | |
$ | (114 | ) | |
$ | 170,530 | |
| Unrealized (gain) loss on hedging activities | |
| 8 | | |
| 3,370 | | |
| 453 | | |
| 3,115 | | |
| (2,914 | ) | |
| (43,664 | ) |
| Inventory valuation adjustments | |
| 5,757 | | |
| (501 | ) | |
| 20,007 | | |
| (2,033 | ) | |
| 28,132 | | |
| 25,553 | |
| Gain on change in value of derivative warrant liability | |
| (1,680 | ) | |
| (9,600 | ) | |
| (8,338 | ) | |
| (415 | ) | |
| (15,915 | ) | |
| (12,760 | ) |
| Stock-based compensation | |
| 430 | | |
| 368 | | |
| 861 | | |
| 733 | | |
| 2,412 | | |
| 1,733 | |
| (Gain) loss on sale of assets | |
| (8 | ) | |
| (4,291 | ) | |
| 684 | | |
| (72,032 | ) | |
| 686 | | |
| (71,109 | ) |
| Acquisition costs | |
| — | | |
| — | | |
| — | | |
| 4,308 | | |
| — | | |
| 7,197 | |
| Environmental clean-up reserve | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | |
| Other | |
| (512 | ) | |
| — | | |
| (154 | ) | |
| — | | |
| 366 | | |
| (3 | ) |
| Adjusted EBITDA | |
$ | (22,386 | ) | |
$ | (34,150 | ) | |
$ | (3,750 | ) | |
$ | 727 | | |
$ | 12,654 | | |
$ | 77,477 | |
| | |
Three
Months Ended June 30, 2024 |
| | |
Mobile
Refinery | | |
Legacy
Refining & | | |
Total Refining & | | |
Black Oil and | | |
| | |
| | |
| In
thousands | |
Conventional | | |
Renewable | | |
Marketing | | |
Marketing | | |
Recovery | | |
Corporate | | |
Consolidated | |
| Net
income (loss) | |
$ | (13,046 | ) | |
$ | (23,438 | ) | |
$ | 914 | | |
$ | (35,570 | ) | |
$ | (1,405 | ) | |
$ | (16,870 | ) | |
$ | (53,845 | ) |
| Depreciation
and amortization | |
| 3,754 | | |
| 3,954 | | |
| 52 | | |
| 7,760 | | |
| 1,740 | | |
| 238 | | |
| 9,738 | |
| Income
tax expense (benefit) | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | |
| Interest
expense | |
| 2,717 | | |
| 2,636 | | |
| — | | |
| 5,353 | | |
| 141 | | |
| 12,231 | | |
| 17,725 | |
| EBITDA | |
$ | (6,575 | ) | |
$ | (16,848 | ) | |
$ | 966 | | |
$ | (22,457 | ) | |
$ | 476 | | |
$ | (4,401 | ) | |
$ | (26,382 | ) |
| Unrealized
(gain) loss on hedging activities | |
| 353 | | |
| (302 | ) | |
| — | | |
| 51 | | |
| (42 | ) | |
| — | | |
| 9 | |
| Inventory
valuation adjustments | |
| 3,233 | | |
| 2,524 | | |
| — | | |
| 5,757 | | |
| — | | |
| — | | |
| 5,757 | |
| Gain
on change in value of derivative warrant liability | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| (1,680 | ) | |
| (1,680 | ) |
| Stock-based
compensation | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| 430 | | |
| 430 | |
| (Gain)
loss on sale of assets | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| (8 | ) | |
| (8 | ) |
| Other | |
| — | | |
| — | | |
| — | | |
| — | | |
| 56 | | |
| (568 | ) | |
| (512 | ) |
| Adjusted
EBITDA | |
$ | (2,989 | ) | |
$ | (14,626 | ) | |
$ | 966 | | |
$ | (16,649 | ) | |
$ | 490 | | |
$ | (6,227 | ) | |
$ | (22,386 | ) |
| | |
Six Months Ended June 30, 2024 |
| | |
Mobile
Refinery | | |
Legacy
Refining & | | |
Total Refining & | | |
Black Oil and | | |
| | |
| | |
| In
thousands | |
Conventional | | |
Renewable | | |
Marketing | | |
Marketing | | |
Recovery | | |
Corporate | | |
Consolidated | |
| Net income (loss) | |
$ | 4,492 | | |
$ | (45,596 | ) | |
$ | 1,354 | | |
$ | (39,750 | ) | |
$ | (415 | ) | |
$ | (31,534 | ) | |
$ | (71,699 | ) |
| Depreciation and amortization | |
| 7,084 | | |
| 7,907 | | |
| 102 | | |
| 15,093 | | |
| 3,458 | | |
| 477 | | |
| 19,028 | |
| Income tax expense (benefit) | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | |
| Interest expense | |
| 5,172 | | |
| 4,928 | | |
| — | | |
| 10,100 | | |
| 237 | | |
| 25,071 | | |
| 35,408 | |
| EBITDA | |
$ | 16,748 | | |
$ | (32,761 | ) | |
$ | 1,456 | | |
$ | (14,557 | ) | |
$ | 3,280 | | |
$ | (5,986 | ) | |
$ | (17,263 | ) |
| Unrealized (gain) loss on hedging activities | |
| (202 | ) | |
| 632 | | |
| 20 | | |
| 450 | | |
| 4 | | |
| — | | |
| 454 | |
| Inventory valuation adjustments | |
| 12,890 | | |
| 7,117 | | |
| — | | |
| 20,007 | | |
| — | | |
| — | | |
| 20,007 | |
| Gain on change in value of derivative warrant liability | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| (8,338 | ) | |
| (8,338 | ) |
| Stock-based compensation | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| 861 | | |
| 861 | |
| (Gain) loss on sale of assets | |
| 685 | | |
| — | | |
| — | | |
| 685 | | |
| 5 | | |
| (7 | ) | |
| 683 | |
| Other | |
| — | | |
| — | | |
| — | | |
| — | | |
| 410 | | |
| (564 | ) | |
| (154 | ) |
| Adjusted EBITDA | |
$ | 30,121 | | |
$ | (25,012 | ) | |
$ | 1,476 | | |
$ | 6,585 | | |
$ | 3,699 | | |
$ | (14,034 | ) | |
$ | (3,750 | ) |
| | |
Three Months Ended June 30, 2023 | |
| In thousands | |
Mobile Refinery | | |
Legacy Refining and Marketing | | |
Total Refining & Marketing | | |
Black Oil and Recovery | | |
Corporate | | |
Consolidated | |
| | |
| | |
| | |
| | |
| | |
| | |
| |
| Net income (loss) | |
$ | (42,116 | ) | |
$ | (1,312 | ) | |
$ | (43,428 | ) | |
$ | (3,667 | ) | |
$ | (34,359 | ) | |
$ | (81,454 | ) |
| Depreciation and amortization | |
| 6,119 | | |
| 272 | | |
| 6,391 | | |
| 1,100 | | |
| 167 | | |
| 7,658 | |
| Income tax expense (benefit) | |
| — | | |
| — | | |
| — | | |
| — | | |
| (27,236 | ) | |
| (27,236 | ) |
| Interest expense | |
| 4,529 | | |
| — | | |
| 4,529 | | |
| 28 | | |
| 72,979 | | |
| 77,536 | |
| EBITDA | |
$ | (31,468 | ) | |
$ | (1,040 | ) | |
$ | (32,508 | ) | |
$ | (2,539 | ) | |
$ | 11,551 | | |
$ | (23,496 | ) |
| Unrealized (gain) loss on hedging activities | |
| 3,762 | | |
| 25 | | |
| 3,787 | | |
| (417 | ) | |
| — | | |
| 3,370 | |
| Inventory valuation adjustments | |
| (501 | ) | |
| — | | |
| (501 | ) | |
| — | | |
| — | | |
| (501 | ) |
| Gain on change in value of derivative warrant liability | |
| — | | |
| — | | |
| — | | |
| — | | |
| (9,600 | ) | |
| (9,600 | ) |
| Stock-based compensation | |
| — | | |
| — | | |
| — | | |
| — | | |
| 368 | | |
| 368 | |
| (Gain) loss on sale of assets | |
| — | | |
| — | | |
| — | | |
| 499 | | |
| (4,790 | ) | |
| (4,291 | ) |
| Adjusted EBITDA | |
$ | (28,207 | ) | |
$ | (1,015 | ) | |
$ | (29,222 | ) | |
$ | (2,457 | ) | |
$ | (2,471 | ) | |
$ | (34,150 | ) |
| | |
Six Months Ended June 30, 2023 | |
| In thousands | |
Mobile Refinery | | |
Legacy Refining and Marketing | | |
Total Refining & Marketing | | |
Black Oil and Recovery | | |
Corporate | | |
Consolidated | |
| | |
| | |
| | |
| | |
| | |
| | |
| |
| Net income (loss) | |
$ | (5,939 | ) | |
$ | (2,437 | ) | |
$ | (8,376 | ) | |
$ | (1,663 | ) | |
$ | (17,602 | ) | |
$ | (27,641 | ) |
| Depreciation and amortization | |
| 9,999 | | |
| 494 | | |
| 10,493 | | |
| 2,326 | | |
| 337 | | |
| 13,156 | |
| Income tax expense (benefit) | |
| — | | |
| — | | |
| — | | |
| — | | |
| (8,477 | ) | |
| (8,477 | ) |
| Interest expense | |
| 8,405 | | |
| — | | |
| 8,405 | | |
| 85 | | |
| 81,523 | | |
| 90,013 | |
| EBITDA | |
$ | 12,465 | | |
$ | (1,943 | ) | |
$ | 10,522 | | |
$ | 748 | | |
$ | 55,781 | | |
$ | 67,051 | |
| Unrealized (gain) loss on hedging activities | |
| 3,192 | | |
| (42 | ) | |
| 3,150 | | |
| (35 | ) | |
| — | | |
| 3,115 | |
| Inventory valuation adjustments | |
| (2,033 | ) | |
| — | | |
| (2,033 | ) | |
| — | | |
| — | | |
| (2,033 | ) |
| Gain on change in value of derivative warrant liability | |
| — | | |
| — | | |
| — | | |
| — | | |
| (415 | ) | |
| (415 | ) |
| Stock-based compensation | |
| — | | |
| — | | |
| — | | |
| — | | |
| 733 | | |
| 733 | |
| (Gain) loss on sale of assets | |
| — | | |
| — | | |
| — | | |
| (1,156 | ) | |
| (70,876 | ) | |
| (72,032 | ) |
| Acquisition costs | |
| — | | |
| — | | |
| — | | |
| — | | |
| 4,308 | | |
| 4,308 | |
| Adjusted EBITDA | |
$ | 13,624 | | |
$ | (1,985 | ) | |
$ | 11,639 | | |
$ | (443 | ) | |
$ | (10,469 | ) | |
$ | 727 | |
| | |
Three
Months Ended March 31, 2024 |
| | |
Mobile
Refinery | | |
Legacy
Refining & | | |
Total Refining & | | |
Black Oil and | | |
| | |
| | |
| In
thousands | |
Conventional | | |
Renewable | | |
Marketing | | |
Marketing | | |
Recovery | | |
Corporate | | |
Consolidated | |
| Net income (loss) | |
$ | 17,535 | | |
$ | (22,157 | ) | |
$ | 442 | | |
$ | (4,180 | ) | |
$ | 990 | | |
$ | (14,664 | ) | |
$ | (17,854 | ) |
| Depreciation and amortization | |
| 3,330 | | |
| 3,953 | | |
| 51 | | |
| 7,334 | | |
| 1,717 | | |
| 239 | | |
| 9,290 | |
| Income tax expense (benefit) | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | |
| Interest expense | |
| 2,455 | | |
| 2,292 | | |
| — | | |
| 4,747 | | |
| 96 | | |
| 12,840 | | |
| 17,683 | |
| EBITDA | |
$ | 23,320 | | |
$ | (15,912 | ) | |
$ | 493 | | |
$ | 7,901 | | |
$ | 2,803 | | |
$ | (1,585 | ) | |
$ | 9,119 | |
| Unrealized (gain) loss on hedging activities | |
| (555 | ) | |
| 934 | | |
| 20 | | |
| 399 | | |
| 46 | | |
| — | | |
| 445 | |
| Inventory valuation adjustments | |
| 9,657 | | |
| 4,592 | | |
| — | | |
| 14,249 | | |
| — | | |
| — | | |
| 14,249 | |
| Gain on change in value of derivative warrant liability | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| (6,658 | ) | |
| (6,658 | ) |
| Stock-based compensation | |
| — | | |
| — | | |
| — | | |
| — | | |
| — | | |
| 430 | | |
| 430 | |
| (Gain) loss on sale of assets | |
| 685 | | |
| — | | |
| — | | |
| 685 | | |
| 5 | | |
| 1 | | |
| 691 | |
| Other | |
| — | | |
| — | | |
| — | | |
| — | | |
| 354 | | |
| 4 | | |
| 358 | |
| Adjusted EBITDA | |
$ | 33,107 | | |
$ | (10,386 | ) | |
$ | 513 | | |
$ | 23,234 | | |
$ | 3,208 | | |
$ | (7,808 | ) | |
$ | 18,634 | |
Unaudited
Reconciliation of Long-Term Debt to Net Long-Term Debt and Net Leverage.
| In thousands | |
As of | |
| | |
June 30, 2024 | | |
June 30, 2023 | |
| Long-Term Debt: | |
| | | |
| | |
| Senior Convertible Note | |
$ | 15,230 | | |
$ | 15,230 | |
| Term Loan 2025 | |
| 207,169 | | |
| 150,075 | |
| Promissory Note | |
| 4,414 | | |
| — | |
| Finance lease liability long-term | |
| 64,918 | | |
| 67,290 | |
| Finance lease liability short-term | |
| 2,541 | | |
| 2,320 | |
| Various short term note including insurance premium financing | |
| 9,500 | | |
| 9,995 | |
| Long-Term Debt and Lease Obligations | |
$ | 303,772 | | |
$ | 244,910 | |
| Unamortized discount and deferred financing costs | |
| (24,548 | ) | |
| (33,402 | ) |
| Long-Term Debt and Lease Obligations per Balance Sheet | |
$ | 279,224 | | |
$ | 211,508 | |
| Cash and Cash Equivalents | |
| (18,763 | ) | |
| (48,532 | ) |
| Restricted Cash | |
| (100 | ) | |
| (3,603 | ) |
| Total Cash and Cash Equivalents | |
$ | (18,863 | ) | |
$ | (52,135 | ) |
| Net Long-Term Debt | |
$ | 284,909 | | |
$ | 192,775 | |
| TTM
Adjusted EBITDA | |
$ | 12,654 | | |
$ | 77,477 | |
| Net Leverage | |
| 22.5 | x | |
| 2.5 | x |
Vertex Energy, Inc. 8-K
Exhibit 99.2
Second Quarter 2024 Results Summary Presentation August 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 statements 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, the Company’s projected Outlook for the third quarter of 2024, the costs associated with, and outcome of the Company’s plans to optimize conventional fuel and renewable diesel production moving forward; statements concerning: the Company’s engagement of BofA Securities, Inc., as previously disclosed; the review and evaluation of potential joint ventures, divestitures, acquisitions, m ergers, 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 t he Company engages in evaluation of strategic transactions; the Company’s ability to identify potential partners; the outcome of po tential future strategic transactions and the terms thereof; potential restructuring of the Company, its operations, financials, debts and assets; the future production of the Company’s Mobile Refinery; anticipated an d u nforeseen events which could reduce future production at the refinery or delay future capital projects, and changes in commod ity and credit values; throughput volumes, production rates, yields, operating expenses and capital expenditures at the Mobile Refinery; the ability of the Company to obtain low carbon fuel standard (LCFS) credits, an d t he amounts thereof; the need for additional capital in the future, including, but not limited to, in order to complete capita l p rojects and satisfy liabilities, including to pay amounts owed under the Company’s outstanding term loan, the Company’s ability to raise such capital in the future, and the terms of such funding, including dilution caused the reb y, and steps the Company may be required to take in the future if the Company is unable to raise additional capital, includin g p otentially seeking bankruptcy protection; 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 Refi ner y, including but not limited to, renewable diesel and conventional production and the breakdown between the two; estimated an d a ctual production and costs associated with the renewable diesel capital project; estimated 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 ca pital 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 con ver tible notes, the conversion rights associated therewith, and dilution caused by conversions and/or the exchanges of convertib le notes; the Company’s ability to comply with required covenants under outstanding intermediation facilities, senior notes and a term loan and to pay amounts due under such senior notes and term loan, includi ng interest and other amounts due thereunder; the ability of the Company to retain and hire key personnel; the level of competit ion 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 Comp any ’s ability to protect intellectual property and not infringe on others’ intellectual property; the Company’s ability to scale it s 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 ra tes ; the Company’s ability to execute its business strategy in a very competitive environment; trends in, and the market for, th e p rice of oil and gas and alternative energy sources; the impact of inflation and interest rates 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 re cessions; 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 res trictive; volatility in the market price of compliance credits (primarily Renewable Identification Numbers (RINs) needed to c omp ly 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 th e secondary market to the extent it does not generate sufficient RINs internally, liabilities associated therewith and the ti min g, 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 gl oba lly, changes in inflation and interest rates, increased costs of borrowing associated therewith and potential declines in the av ailability 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; unexp ect ed and expected changes in the Company’s anticipated capital expenditures resulting from unforeseen and expected required mai nte nance, 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, rece ssi ons or other reasons, including declines in economic activity or global conflicts; expected and unexpected downtime at the Co mpa ny’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 part y t ransportation services and pipelines; risks related to obtaining required crude oil supplies, and the costs of such supplies; co unterparty 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 hedgi ng 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, 2023, and the Company’s Quarterly Report on Form 10 - Q for the quarter ended June 30, 2024, and future Annual Reports on Form 10 - K and Quarterl y Reports on Form 10 - Q. These reports are available at www.sec.gov. The Company cautions that the foregoing list of important fa ctors 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 ca uti onary statements referenced above. Other unknown or unpredictable factors also could have material adverse effects on Vertex’ s f uture 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 sh ould not place undue reliance on these forward - looking statements. Finally, Vertex undertakes no obligation to update these stat ements after the date of this presentation, 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 - lookin g statements, no inference should be drawn that we will make additional updates with respect to those or other forward - looking s tatements. Date of Information in Presentation All information in this presentation is as of August 7, 2024 (unless otherwise stated). The Company undertakes no duty to upd ate 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 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 Net Leverage(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 Ba rre l 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 EBITDA from operations plus or minus unrealized gain or los ses on hedging activities, Renewable Fuel Standard (RFS) costs (mainly related to Renewable Identification Numbers (RINs), and in ve ntory adjustments, acquisition costs, gain on change in value of derivative warrant liability, environmental clean - up, stock - based compensation, (gain) loss on sale of assets, and certain other unusual or non - recurring charges included in selling, general, and administrative expenses. Adjusted Gross Margin is defined as gross prof it (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 d epr eciation attributable to cost of revenues and other non - fuel items included in costs of revenues including realized and unrealiz ed gain or losses on hedging activities, RFS costs (mainly related to RINs), fuel financing costs and other revenues and cost of sales items. Fuel Gross Margin Per Barrel of Throughput is calculated as fuel gro ss margin divided by total throughput barrels for the period presented. Operating Expenses Per Barrel of Throughput is define d a s 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 Gros s M argin Per Barrel of Throughput is calculated as RIN Adjusted Fuel Gross Margin divided by total throughput barrels for the pe rio d 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 a nd restricted cash, and various short - term notes including insurance premium financing. Net leverage is defined as Long - Term Debt d ivided by trailing twelve month 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 Mea sures are “non - U.S. GAAP financial measures”, and (b) the KPIs are, presented as supplemental measures of the Company’s performa nce. 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 o ur business strategies, to make budgeting decisions, to allocate resources and to compare our performance relative to our pee rs. 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 additi on to historical operating results, as the basis for financial, operational and planning decisions and present measurements that th ird 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 inform ation to investors due to the various noncash items during the period. Non - U.S. GAAP financial information and KPIs similar to t he 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 substitu te 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 capi tal expenditures, or contractual commitments; the Non - GAAP Financial Measures and KPIs do not reflect changes in, or cash requir ements 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 , o n 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. G AAP 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 s ubstitutes for analysis of the Company’s results as reported under U.S. GAAP. The Company’s presentation of these measures sh oul d 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 b usi ness, 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 mos t 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 Pe r 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 Reconcil iat ion of Long - Term Debt to Net Long - Term Debt and Net Leverage”, at the end of this presentation.
2024 HIGHLIGHTS 4 Health and Safety Performance • Mobile Refinery had one OSHA Recordable Injury during Q2 2024, one environmental non - compliance, and zero Process Safety Events Focused on Operating Cost and Capital Management • Decreased selling, general and administrative expense by 6%, compared to the first quarter of 2024 and by 12%, compared to the second quarter of 2023 • Reduced capital expenditures by 29%, compared to previous guidance midpoint Managing Near Term Liquidity • Secured new $15 million and $20 million loans, as previously disclosed, enhancing the Company’s liquidity • Modified certain terms and conditions of the current term loan agreement and appointed Seth Bullock as Chief Restructuring Officer Production Pause and Pivot for the Company’s Renewable Business • Optimizing the Mobile Refinery hydrocracker capacity from renewable diesel to conventional fuels • Completed running all renewable feedstock and began optimizing the Mobile Refinery hydrocracker capacity from renewable diesel to conventional fuels with expected contribution in Q4 2024
2Q24 Performance Indicators COMPANY PERFORMANCE SUMMARY Second Quarter 2024 5 1. A full - reconciliation of GAAP to Non - GAAP metrics is provided in the appendix of this presentation 2. Net debt defined as total long - term debt outstanding less cash and equivalents 3. Net leverage defined as net debt (cash) divided by trailing twelve - month adjusted EBITDA * Total cash & equivalents, Net long - term debt, and net leverage stated as of 06/30/2024 & 06/30/2023, respectively Key Performance Indicators ($/MM) Key Takeaways 2Q24 Performance Summary • Continued safe operation of the Mobile Refinery with Q2 2024 conventional throughput of 67,758 barrels per day (bpd) • Reported net loss attributable to the Company of ($53.8) million, or ($0.58) per fully - diluted share • Recorded Adjusted EBITDA of ($22.4) million driven by a 28% decrease in crack spreads compared to the first quarter of 2024 • Decreased selling, general and administrative expense by 6%, compared to the first quarter of 2024 and by 12%, compared to the second quarter of 2023 • Completed running all renewable feedstock and began optimizing the Mobile Refinery hydrocracker capacity from renewable diesel to conventional fuels with expected contribution in Q4 2024 • Achieved renewable diesel (“RD”) throughput of 3,092 bpd. 2Q24 2Q23 % Y / Y Total Gross Profit $0.2 ($1.4) (118%) GAAP Net Income (53.8) (81.4) (34%) Adjusted EBITDA 1 (22.4) (34.2) (34%) Total Cash & Equivalents 18.9 52.1 (64%) Net Long-Term Debt 2 284.9 192.8 48% Net Leverage 3 22.5x 2.5x 805%
Mobile Performance Indicators MOBILE REFINERY PERFORMANCE Second Quarter 2024 6 • Operated at 90% conventional capacity utilization in 2Q24, with total crude throughput of 67,758 barrels per day (bpd) • Conventional fuel business operations generated $35.0 million or $5.67 per barrel of fuel gross margin before RIN expense, depreciation and operating expenses in cost of sales in 2Q24. • Decreased selling, general and administrative expense by 6%, compared to the first quarter of 2024. • Operated at 38.7% renewable fuels capacity utilization in 2Q24, with total throughput of 3,092 barrels per day (bpd) and production yield of 99.7%. • Completed running all renewable feedstock and began optimizing the Mobile Refinery hydrocracker capacity from renewable diesel to conventional fuels with expected contribution in Q4 2024. 1.) Assumes 75,000 barrels per day of conventional operational capacity 2.) Other includes naphtha, intermediates, and LPG 3.) Assumes 8,000 barrels per day of renewable fuels operational capacity Mobile Performance Summary Key Takeaways Conventional Fuels Refinery 1Q24 2Q24 2024 YTD Total Throughput (bpd) 64,065 67,758 65,911 Total Throughput (MMbbl) 5.83 6.17 12.0 Conventional Facility Capacity Utilization 1 85.4% 90.3% 87.88% Direct Opex Per Barrel ($/bbl) $2.75 $2.59 $2.67 Fuel Gross Margin ($/MM) $73.6 $35.0 $108.60 Fuel Gross Margin Per Barrel ($/bbl) $12.63 $5.67 $9.06 Production Yield Gasoline (bpd) 14,678 15,642 15,160 % Production 22.9% 22.6% 22.7% ULSD (bpd) 13,441 14,174 13,808 % Production 21.0% 20.4% 20.7% Jet (bpd) 12,595 14,848 13,722 % Production 19.6% 21.4% 20.6% Total Finished Fuel Products (bpd) 40,714 44,664 42,690 % Production 63.5% 64.4% 64.0% Other 2 (bpd) 23,428 24,683 24,056 % Production 36.5% 35.6% 36.0% Total Production (bpd) 64,142 69,347 66,746 Total Production (MMbbl) 5.84 6.31 12.15 Renewable Fuels Refinery 1Q24 2Q24 2024 YTD Total Renewable Throughput (bpd) 4,090 3,092 3,591 Total Renewable Throughput (MMbbl) 0.37 0.28 0.65 Renewable Diesel Facility Capacity Utilization 3 51.1% 38.7% 44.9% Direct Opex Per Barrel ($/bbl) $25.20 $31.75 $28.03 Renewable Fuel Gross Margin $3.8 $4.5 $8.36 Renewable Fuel Gross Margin Per Barrel ($/bbl) $10.29 $16.08 $12.78 Renewable Diesel Production (bpd) 4,003 3,082 3,543 Renewable Diesel Production (MMbbl) 0.36 0.28 0.64 Renewable Diesel Production Yield (%) 97.9% 99.7% 98.7%
Future Curves Remain Backwardated 7 MACRO ECONOMIC INDICATORS Source: Argus as of 8/2/2024 ► Conventional refined fuels demand remains strong ► Distillate inventory levels remain below 5 - year average, gasoline inventory levels building ► Production levels in - line with historical averages ► Crude Futures Curve Remains Backwardated $1.00 $1.20 $1.40 $1.60 $1.80 $2.00 $2.20 $2.40 $2.60 $2.80 $3.00 Monthly Gasoline Pricing $/gal 4Q25 3Q25 2Q25 1Q25 4Q24 3Q24 2Q24 1Q24 4Q23 $1.93 $2.15 $2.21 $1.99 $1.98 $2.00 $2.30 $2.45 $2.33 Gasoline ($/gal) $2.28 $2.32 $2.31 $2.33 $2.32 $2.33 $2.44 $2.44 $2.90 ULSD ($/gal) $70.55 $71.39 $72.34 $73.33 $74.75 $76.31 $80.62 $76.05 $77.63 WTI Crude ($/ Bbl )
BALANCE SHEET UPDATE Streamlining Of Balance Sheet Remains a Priority 8 Outstanding Debt Details ($/MM) Debt Maturity Schedule ($/MM) ► Current total long - term debt $303.8 million ► Current cash & equivalents $18.9 million ► Net long - term debt = $284.9 million ► Secured new $15 and $20 million loans in June and July 2024 enhancing the Company’s liquidity * See "Non - GAAP Financial Measures and Key Performance Measures", in the appendix 1.) Including restricted cash of $0.1 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 m easures at end of this presentation). Principal Maturity Coupon Instrument 15.2 2027 6.25% Senior Convertible Note 207.2 2025 17.25% Term Loan 4.4 2029 7.83% Promissory Note 67.5 - - Finance Lease Obligations 9.5 - - Other $303.8 Total 18.9 Cash & equivalents 1 $284.9 Net Long Term Debt 2 22.5x Net Leverage 3 $0 $25 $50 $75 $100 $125 $150 $175 $200 $225 Sr. Convertible Note Promissory Note Term Loan Finance Lease
Projected Financial Guidance FINANCIAL AND OPERATING GUIDANCE Third Quarter 2024 Outlook 9 Management Commentary • For the third quarter 2024, the Company expects the Mobile Refinery to generate total throughput of between 55,000 and 60,000 bpd, reflecting between 73% and 80% total conventional facility capacity utilization. • Planned turnaround in the third quarter, scheduled in conjunction with the hydrocracker conversion, will impact throughput • 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 $5.52 and $6.02 per barrel in Q3 2024, also higher due to lower throughput • Vertex anticipates total consolidated capital expenditures of between $15 million and $20 million in the third quarter 2024, which includes a portion of the $10 million conversion cost Third Quarter 2024 Third Quarter 2024 1.) Finished products include gasoline, ULSD, and Jet A 2.) Intermediate & Other products include Vacuum Gas Oil (VGO), Liquified Petroleum Gases (LPGs), and Vacuum Tower Bottoms (V TBs ) Conventional Fuels Operational: Low High Mobile Refinery Conventional Throughput Volume (Mbpd) 55.0 60.0 Capacity Utilization 73% 80% Production Yield Profile: Percentage Finished Products1 64% 68% Intermediate & Other Products2 36% 32% Financial Guidance: Direct Operating Expense ($/bbl) $5.52 $6.02 Capital Expenditures ($/MM) $15.00 $20.00 3Q 2024
OUR STRATEGIC FOCUS 10 ASSET UTILIZATION • Flexible production at Mobile Refinery enhances long - term value • Continued strategic evaluation of opportunities aimed at driving Mobile Refinery profitability • Complementary assets in adjacent markets situated along the Gulf Coast MARGIN CAPITALIZATION • Mobile Refinery acts as a key regional supplier of conventional fuels • Renewable hydrocracker to be redeployed for conventional use • Redeployment is expected to increase conventional fuel margin opportunities RENEWABLE INVESTMENT • Demonstrated proven renewable fuel capabilities at the Mobile Refinery • Renewable investments enhance unit robustness in renewable or conventional service mode • CI * pathway approvals expected to unlock margin opportunities STRENGTHEN BALANCE SHEET • Reduce total debt prioritizing high - interest term loan and remaining convertible notes • Evaluating alternatives for balance sheet improvement Staying loyal to our DNA as an energy transition company while continuing to run/operate our assets * CI is carbon intensity. A CI Score is the carbon footprint score assigned to a bushel of grain, biofuel, or other product. The score is linked to the unit of production and is used with quantifying the total carbon footprint of a company or product
STRATEGIC REDIRECTION Optimization of Hydrocracking Capacity from Renewables to Conventional Production 11 • During the third quarter of 2024, Vertex is executing on the redeployment of our hydrocracking unit to produce conventional fuels and hydrocracked VGO. • This pivot is utilizing a previously planned catalyst and maintenance turnaround scheduled for 2024, Vertex is performing this turnaround now in 3Q, which includes loading conventional catalyst and bringing the unit out of turnaround in conventional service. • The total cost of about $10 million was previously budgeted as part of the planned catalyst and maintenance turnaround and does not represent a material change to our forecasted capital spend. • During June, Vertex completed running the remaining inventories of renewable feedstock, which have allowed the Company to reduce its working capital and stop the losses associated with RD production. • The redeployment of the hydrocracker in conventional service is being done to maintain the proven renewable diesel production flexibility and the typical catalyst change cycle in 24 months would represent the next evaluation window to consider resuming RD production if economics warranted. • Strategic priorities are to increase cash position, reduce operating costs, and improve margins; market conditions continue to support this decision and to progress all of these for the remainder of 2024 and into 2025
APPENDIX
NON - GAAP RECONCILIATION 13 Unaudited Reconciliation of Gross Profit (Loss) From Continued and Discontinued Operations to Adjusted Gross Margin, Fuel Gross Margin, Fuel Gross Margin Per Barrel of Throughput and Operating Expenses Per Barrel of Throughput. In thousands Conventional Renewable Mobile Refinery Total Gross profit 6,407$ (11,847)$ (5,440)$ Unrealized (gain) loss on hedging activities 353 (302) 51 Inventory valuation adjustments 3,233 2,524 5,757 Adjusted gross margin 9,993$ (9,625)$ 368$ Variable production costs attributable to cost of revenues 19,671 12,182 31,853 Depreciation and amortization attributable to cost of revenues 2,960 3,933 6,893 RINs 9,099 - 9,099 Realized (gain) loss on hedging activities (56) 158 102 Financing costs (4,397) 85 (4,312) Other revenues (2,296) (2,208) (4,504) Fuel gross margin 34,974$ 4,525$ 39,499$ Throughput (bpd) 67,758 3,092 70,850 Fuel gross margin per barrel of throughput $5.67 16.08$ $6.13 Total OPEX 15,942$ 8,934$ 24,876$ Operating expenses per barrel of throughput $2.59 31.75$ $3.86 Three Months Ended June 30, 2024
NON - GAAP RECONCILIATION 14 Unaudited Reconciliation of Gross Profit (Loss) From Continued and Discontinued Operations to Adjusted Gross Margin, Fuel Gross Margin, Fuel Gross Margin Per Barrel of Throughput and Operating Expenses Per Barrel of Throughput. In thousands Conventional Renewable Mobile Refinery Total Gross profit 43,917$ (22,310)$ 21,607$ Unrealized (gain) loss on hedging activities (202) 632 430 Inventory valuation adjustments 12,890 7,117 20,007 Adjusted gross margin 56,605$ (14,561)$ 42,044$ Variable production costs attributable to cost of revenues 45,322 19,029 64,351 Depreciation and amortization attributable to cost of revenues 5,518 7,865 13,383 RINs 8,242 - 8,242 Realized (gain) loss on hedging activities 2,521 (1,625) 896 Financing costs (4,569) 217 (4,352) Other revenues (5,015) (2,570) (7,585) Fuel gross margin 108,624$ 8,355$ 116,979$ Throughput (bpd) 65,911 3,591 69,502 Fuel gross margin per barrel of throughput $9.06 12.78$ $9.25 Total OPEX 32,002$ 18,316$ 50,319$ Operating expenses per barrel of throughput $2.67 28.03$ $3.98 Six Months Ended June 30, 2024
NON - GAAP RECONCILIATION 15 Unaudited Reconciliation of Gross Profit (Loss) From Continued and Discontinued Operations to Adjusted Gross Margin, Fuel Gross Margin, Fuel Gross Margin Per Barrel of Throughput and Operating Expenses Per Barrel of Throughput. In thousands Conventional Renewable Mobile Refinery Total Gross profit 37,508$ (10,462)$ 27,046$ Unrealized (gain) loss on hedging activities (555) 934 379 Inventory valuation adjustments 9,657 4,592 14,249 Adjusted gross margin 46,610$ (4,936)$ 41,674$ Variable production costs attributable to cost of revenues 25,651 6,846 32,497 Depreciation and amortization attributable to cost of revenues 2,558 3,932 6,490 RINs (857) - (857) Realized (gain) loss on hedging activities 2,577 (1,783) 794 Financing costs (172) 132 (40) Other revenues (2,719) (362) (3,081) Fuel gross margin 73,648$ 3,829$ 77,477$ Throughput (bpd) 64,065 4,090 68,155 Fuel gross margin per barrel of throughput $12.63 10.29$ $12.49 Total OPEX 16,061$ 9,382$ 25,443$ Operating expenses per barrel of throughput $2.75 25.21$ $4.10 Three Months Ended March 31, 2024
NON - GAAP RECONCILIATION 16 Unaudited Reconciliation of EBITDA and Adjusted EBITDA to Net loss from Continued and Discontinued Operations In thousands June 30, 2024 June 30, 2023 June 30, 2024 June 30, 2023 June 30, 2024 June 30, 2023 Net income (loss) $ (53,845) $ (81,454) $ (71,699) $ (27,641) $ (116,031) $ 38,947 Depreciation and amortization 9,738 7,658 19,028 13,156 37,182 24,541 Income tax expense (benefit) - (27,236) - (8,477) 13,774 (10,966) Interest expense 17,725 77,536 35,408 90,013 64,961 118,008 EBITDA $ (26,381) $ (23,496) $ (17,263) $ 67,051 $ (114) $ 170,530 Unrealized (gain) loss on hedging activities 9 3,370 454 3,115 (2,914) (43,664) Inventory valuation adjustments 5,757 (501) 20,007 (2,033) 28,132 25,553 Gain on change in value of derivative warrant liability (1,680) (9,600) (8,338) (415) (15,915) (12,760) Stock-based compensation 430 368 861 733 2,412 1,733 (Gain) loss on sale of assets (8) (4,291) 683 (72,032) 686 (71,109) Acquisition costs - - - 4,308 - 7,197 Environmental clean-up reserve - - - - - - Other (512) - (154) - 366 (3) Adjusted EBITDA $ (22,386) $ (34,150) $ (3,750) $ 727 $ 12,654 $ 77,477 Three Months Ended Twelve Months EndedSix Months Ended
NON - GAAP RECONCILIATION 17 Unaudited Reconciliation of EBITDA and Adjusted EBITDA to Net loss from Continued and Discontinued Operations In thousands Conventional Renewable Net income (loss) $ (13,046) $ (23,438) $ 914 $ (35,570) $ (1,405) $ (16,870) $ (53,845) Depreciation and amortization 3,754 3,954 52 7,760 1,740 238 9,738 Income tax expense (benefit) - - - - - - - Interest expense 2,717 2,636 - 5,353 141 12,231 17,725 EBITDA $ (6,575) $ (16,848) $ 966 $ (22,457) $ 476 $ (4,401) $ (26,382) Unrealized (gain) loss on hedging activities 353 (302) - 51 (42) - 9 Inventory valuation adjustments 3,233 2,524 - 5,757 - - 5,757 Gain on change in value of derivative warrant liability - - - - - (1,680) (1,680) Stock-based compensation - - - - - 430 430 (Gain) loss on sale of assets - - - - - (8) (8) Other - - - - 56 (568) (512) Adjusted EBITDA $ (2,988) $ (14,626) $ 966 $ (16,649) $ 490 $ (6,227) $ (22,386) Three Months Ended June 30, 2024 Mobile Refinery Legacy Refining & Marketing Total Refining & Marketing Black Oil and Recovery Corporate Consolidated
NON - GAAP RECONCILIATION 18 Unaudited Reconciliation of EBITDA and Adjusted EBITDA to Net loss from Continued and Discontinued Operations In thousands Mobile Refinery Legacy Refining and Marketing Total Refining & Marketing Black Oil and Recovery Corporate Consolidated Net income (loss) $ (42,116) $ (1,312) $ (43,428) $ (3,667) $ (34,359) $ (81,454) Depreciation and amortization 6,119 272 6,391 1,100 167 7,658 Income tax expense (benefit) - - - - (27,236) (27,236) Interest expense 4,529 - 4,529 28 72,979 77,536 EBITDA $ (31,468) $ (1,040) $ (32,508) $ (2,539) $ 11,551 $ (23,496) Unrealized (gain) loss on hedging activities 3,762 25 3,787 (417) - 3,370 Inventory valuation adjustments (501) - (501) - - (501) Gain on change in value of derivative warrant liability - - - - (9,600) (9,600) Stock-based compensation - - - - 368 368 (Gain) loss on sale of assets - - - 499 (4,790) (4,291) Adjusted EBITDA $ (28,207) $ (1,015) $ (29,222) $ (2,457) $ (2,471) $ (34,150) Three Months Ended June 30, 2023
NON - GAAP RECONCILIATION 19 Unaudited Reconciliation of EBITDA and Adjusted EBITDA to Net loss from Continued and Discontinued Operations In thousands Conventional Renewable Net income (loss) $ 4,492 $ (45,596) $ 1,354 $ (39,750) $ (415) $ (31,534) $ (71,699) Depreciation and amortization 7,084 7,907 102 15,093 3,458 477 19,028 Income tax expense (benefit) - - - - - - - Interest expense 5,172 4,928 - 10,100 237 25,071 35,408 EBITDA $ 16,748 $ (32,761) $ 1,456 $ (14,557) $ 3,280 $ (5,986) $ (17,263) Unrealized (gain) loss on hedging activities (202) 632 20 450 4 - 454 Inventory valuation adjustments 12,890 7,117 - 20,007 - - 20,007 Gain on change in value of derivative warrant liability - - - - - (8,338) (8,338) Stock-based compensation - - - - - 861 861 (Gain) loss on sale of assets 685 - - 685 5 (7) 683 Other - - - - 410 (564) (154) Adjusted EBITDA $ 30,121 $ (25,013) $ 1,476 $ 6,585 $ 3,699 $ (14,034) $ (3,750) Six Months Ended June 30, 2024 Mobile Refinery Legacy Refining & Marketing Total Refining & Marketing Black Oil and Recovery Corporate Consolidated
NON - GAAP RECONCILIATION 20 Unaudited Reconciliation of EBITDA and Adjusted EBITDA to Net loss from Continued and Discontinued Operations In thousands Mobile Refinery Legacy Refining and Marketing Total Refining & Marketing Black Oil and Recovery Corporate Consolidated Net income (loss) $ (5,939) $ (2,437) $ (8,376) $ (1,663) $ (17,602) $ (27,641) Depreciation and amortization 9,999 494 10,493 2,326 337 13,156 Income tax expense (benefit) - - - - (8,477) (8,477) Interest expense 8,405 - 8,405 85 81,523 90,013 EBITDA $ 12,465 $ (1,943) $ 10,522 $ 748 $ 55,781 $ 67,051 Unrealized (gain) loss on hedging activities 3,192 (42) 3,150 (35) - 3,115 Inventory valuation adjustments (2,033) - (2,033) - - (2,033) Gain on change in value of derivative warrant liability - - - - (415) (415) Stock-based compensation - - - - 733 733 (Gain) loss on sale of assets - - - (1,156) (70,876) (72,032) Acquisition costs - - - - 4,308 4,308 Adjusted EBITDA $ 13,624 $ (1,985) $ 11,639 $ (443) $ (10,469) $ 727 Six Months Ended June 30, 2023
NON - GAAP RECONCILIATION 21 Unaudited Reconciliation of Long - Term Debt to Net Long - Term Debt and Net Leverage Note: Net leverage is equal to Net Long - Term Debt divided by trailing twelve - month Adjusted EBITDA In thousands June 30, 2024 June 30, 2023 Long-Term Debt: Senior Convertible Note $ 15,230 $ 15,230 Term Loan 2025 207,169 150,075 Promissory Note 4,414 - Finance lease liability long-term 64,918 67,290 Finance lease liability short-term 2,541 2,320 Various short term note including insurance premium financing 9,500 9,995 Long-Term Debt and Lease Obligations $ 303,772 $ 244,910 Unamortized discount and deferred financing costs (24,548) (33,402) Long-Term Debt and Lease Obligations per Balance Sheet 279,224$ 211,508$ Cash and Cash Equivalents (18,763) (48,532) Restricted Cash (100) (3,603) Total Cash and Cash Equivalents $ (18,863) $ (52,135) Net Long-Term Debt 284,909$ 192,775$ TTM Adjusted EBITDA $ 12,654 $ 77,477 Net Leverage 22.5x 2.5x As of
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Vertex Energy (NASDAQ:VTNR)
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