Vertex Energy Announces Fourth Quarter and Full Year 2022 Results

HOUSTON--()--Vertex Energy, Inc. (NASDAQ:VTNR) (“Vertex” or the “Company”), a leading specialty refiner and marketer of high-quality refined products, today announced its financial results for the fourth quarter and full-year ended December 31, 2022.

The company will host a conference call to discuss 4Q22 results today at 8:00 A.M. Eastern Time, details are included at the end of this release.

FOURTH QUARTER 2022 HIGHLIGHTS

  • Reported net income of $44.4 million, or $0.56 per basic share
  • Reported Adjusted EBITDA of $75.2 million
  • Continued safe operation of Mobile refinery with fourth quarter 2022 operational results exceeding with prior guidance for throughput, and capture rate at 77,964 bpd and 61%, respectively
  • Renewable diesel conversion project continues to track on schedule for mechanical completion in late March 2023 and start-up in April 2023
  • Total liquidity including restricted cash of $146.2 million as of December 31, 2022

FULL YEAR 2022 HIGHLIGHTS

  • Reported net income of $1.9 million (which includes a $2.5 million tax benefit) or $0.03 per basic share
  • Reported Adjusted EBITDA of $161 million
  • Successfully closed on strategic acquisition and associated financing of Mobile, AL refining facility for $75 million
  • Exhibited significant operational reliability at Mobile facility with 9-month throughput volumes of 72,555 bpd (97% capacity utilization)
  • Initiated construction of renewable diesel conversion project at Mobile refining facility
    • Tracking on schedule for mechanical completion in March 2023 and initial production of 8,000 bpd in April 2023
    • Installation of additional hydrogen supply to drive production ramp to 14,000 bpd by early 2024

Vertex reported fourth quarter 2022 net income of $44.4 million, or $0.56 per fully diluted share, versus a net loss of $8.3 million, or $0.15 per fully diluted share for the fourth quarter 2021. Adjusted earnings before interest, taxes, depreciation and amortization (“Adjusted EBITDA”) was $75.2 million for the fourth quarter 2022 compared to Adjusted EBITDA of $9.5 million in the prior-year period and $1.6 million in the prior quarter. Financial results for the fourth quarter 2022 include a $9.6 million financing charge related to inventory backwardation and a $2.5 million released valuation allowance which is reflected as an income tax benefit as a result of the taxable gain generated by the Heartland divestiture subsequent to the quarter end. Schedules reconciling the Company’s GAAP and non-GAAP financial results, including Adjusted Net Income and Adjusted EBITDA are included later in this release (see also “Non-GAAP Financial Measures”, below).

Management Commentary

“During the fourth quarter, we delivered as promised on our goals of truly demonstrating the significant earnings potential of our Mobile facility.” stated Benjamin P. Cowart, President and CEO of Vertex, who continued, “Our fourth quarter financial results reflect the continued safe, smooth operations at the facility, attractive product yields following the maintenance operations completed in the prior period and the continuation of near record refining margins during the quarter. We remain on track to begin the production of renewable diesel in the second quarter of this year while continuing to benefit from an extremely attractive macro environment facing the conventional fuels business for the foreseeable future. We believe the Company is well positioned to execute on both our strategic goals in the renewable fuels business, as well as our financial goals of streamlining our balance sheet and capital structure in 2023.”

Operating Details and Discussion

Mobile Refinery Operations

The Mobile refinery operations generated $147.1 million of fuels gross margin or $20.50 per barrel during the fourth quarter 2022, its third quarter of operations since being acquired by Vertex. The Mobile refinery financial results include the impact of an inventory backwardation charge in the amount of $9.6 million. Adjusting for the impact of $3.96 of RIN obligations per barrel, refining gross margin at Mobile was $118.7 million, or $16.54 per barrel.

Total throughput at the Mobile refinery was 77,964 barrels per day in the fourth quarter, resulting in 104% utilization for the stated operable capacity of approximately 75,000 barrels per day. Total production of finished high-value light products, such as gasoline, diesel and jet fuel, represented approximately 74% of the total production in the fourth quarter, vs 69% in 3Q22.

The benchmark 2-1-1 Gulf Coast crack spread was $33.84 in the fourth quarter 2022, an increase of 134% versus the fourth quarter 2021, supported by reduced inventories for refined fuels, a constrained global refining complex and continued strength in demand for conventional refined products. On a gross margin per barrel basis, excluding non-fuel costs, the Mobile refinery captured $20.50 per barrel or 61% of the Gulf Coast 2-1-1 crack spread, exceeding prior expectations on higher than expected diesel and jet fuel margins. Adjusting for the per barrel RIN obligation, RIN-adjusted gross profit per barrel was $16.54 or 49% of the Gulf Coast 2-1-1 crack spread.

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

 

2Q-4Q

Prior

4Q22

2022

Guidance1

 

 

 

 

Total Throughput (bpd)

77,964

72,686

74,000

Total Production (MMbbl)

7.13

19.90

6.81

Facility Capacity Utilization2

104.0%

96.9%

-

 

 

 

 

Fuel Gross Margin ($/MM)

147.1

398.4

-

RIN Obligation

28.4

68.8

-

RIN Adjusted Fuel Gross Margin

118.7

329.6

-

 

 

 

 

Fuel Gross Margin Per Barrel ($/bbl)

$20.50

$19.93

-

RIN Expense Per Barrel

$3.96

$3.44

-

RIN Adjusted Fuel Gross Margin Per Barrel

$16.54

$16.49

-

 

 

 

Gulf Coast 2-1-1 Crack Spread

$33.84

$37.94

-

Capture Rate

61%

53%

52%

RIN Adjusted Capture Rate

49%

44%

-

Direct Opex Per Barrel ($/bbl)

$3.98

$3.86

$3.88

 

 

 

 

Production Yield

 

 

 

Gasoline (bpd)

20,840

18,049

-

% Production

26.9%

23.3%

-

ULSD (bpd)

24,489

21,424

-

% Production

31.6%

27.7%

-

Jet (bpd)

12,196

11,307

-

% Production

15.7%

14.6%

-

Other3

19,956

21,575

-

% Production

25.8%

27.8%

-

Total Production (bpd)

77,481

72,355

-

Total Production (MMbbl)

7.13

19.90

-

 

 

 

1.) Prior guidance issued on Nov. 2 2022
2.) Assumes 75,000 barrels per day of operational capacity
3.) Other includes naphtha, intermediates and LPG

Black Oil & Recovery Segment

The legacy Black Oil and Recovery segment generated gross profit of $9.6 million for the fourth quarter 2022. Operating income was $3.4 million in quarter. The prior year period is not comparable due to the reclassification of our segment operating and financial data, which has been consolidated into two primary reportable segments, Black Oil and Recovery and Refining and Marketing, for financial reporting purposes.

During the 2022 fourth quarter, the Company’s legacy Marrero (Louisiana) and Columbus (Ohio) refineries operated at 106% and 89% of total utilization, respectively.

Renewable Diesel Conversion Project Timeline & Construction Update

Renewable diesel conversion project continues on estimated timeline and budget. Vertex’s previously disclosed capital project designed to modify the Mobile, Alabama refinery’s hydrocracking unit to produce renewable diesel fuel on a standalone basis continues to progress along the Company’s planned construction timeline towards mechanical completion in late March 2023, with initial renewable diesel production volumes expected in April 2023. The company took down the hydrocracking unit as planned on January 6th 2023, with approximately 55% of shut-down related work now completed. The company continues to expect the project to reach mechanical completion in late 1Q23. Expected total capital costs for the project are estimated to be approximately $110-$115 million, with approximately $33.2 million or 75% of the company’s total $42.2 million capital expenditure budget for the fourth quarter spent on the project. Recent construction progress milestones as of February 28, 2023 include:

  • Over 290,000 work hours completed without reportable safety incident
  • Hydrocracker outage related work execution is >55% complete
  • ISBL equipment nearing completion – catalyst loading to begin in the next week
  • Mechanical completion remains on track for late March 2023
  • Detailed system handover and commissioning plan in place

Balance Sheet and Liquidity Update

As of December 31, 2022, Vertex had total long-term debt outstanding of $360.3 million, including long term debt $260.2 million and lease obligations of $100.1 million. The Company had total cash and equivalents of $146.2 million including $4.9 million of restricted cash on the balance sheet as of December 31, 2022, for a net debt position of $214.1 million. The ratio of net debt to trailing twelve month Adjusted EBITDA was 1.3x as of December 31, 2022.

Management Outlook

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

All guidance presented below is current as of the time of this release and is subject to change. All prior financial guidance should no longer be relied upon.

First Quarter 2023 Financial and Operating Outlook:

1Q 2023

Projections:

Low

 

High

Mobile Refinery Total Throughput (bpd)

69,000

72,000

Direct Operating Expense ($/bbl)

$3.85

$4.00

 

 

Capture Rate (GC 2-1-1 Crack Spread)

50.0%

54.0%

 

 

Capital Expenditures ($ / millions)

$30.0

$35.0

Commodity Derivative Position and Price Risk Management Strategy

Vertex may, at times, utilize derivative instruments to manage exposure to fluctuations in various commodity prices, including refined fuel products sold, natural gas used in the refining process, as well as feedstocks and refined products held in inventory. Management sets and implements hedging policies in order to improve visibility on cost inputs, sales prices, and resulting cash flow generation for the purpose of planning and budgeting of the business.

The company currently has no substantial outstanding commodity derivative hedge positions as of February 28, 2022, and as such, continues to remain exposed to prevailing market prices and conditions for the purchase and sale of all feedstocks and refined products.

Conference Call and Webcast Details

A conference call will be held today at 8:00 A.M. Eastern Time to review the Company’s financial results, discuss recent events and conduct a question-and-answer session. An audio webcast of the conference call and accompanying presentation materials 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: 1-877-300-8521
International: 1-412-317-6026

Conference ID: 10174530

To listen to a replay of the teleconference, which will be available through Tuesday, March 14, 2023 at 11:59 PM ET, either go to the Events and Presentation section of Vertex’s website at www.vertexenergy.com or call the number below:

Domestic Replay: 1-844-512-2921
Access Code: 10174530

ABOUT VERTEX ENERGY

Houston-based Vertex Energy, Inc. (NASDAQ: VTNR), is an energy transition company focused on the production and distribution of conventional and alternative fuels. Vertex owns a refinery in Mobile (AL) with an operable refining capacity of 75,000 barrels per day and more than 3.2 million barrels of product storage, positioning it as a leading supplier of fuels in the region. Vertex is also one of the largest processors of used motor oil and co-products in the U.S. Gulf Coast. Vertex also owns a facility, Myrtle Grove, located on a 41-acre industrial complex, with hydroprocessing and plant infrastructure along the Gulf Coast in Belle Chasse, LA, that presents high yield, low CAPEX opportunity for future Energy Transition projects.

FORWARD-LOOKING STATEMENTS

Certain of the matters discussed in this communication which are not statements of historical fact constitute forward-looking statements within the meaning of the securities laws, including the Private Securities Litigation Reform Act of 1995, that involve a number of risks and uncertainties. Words such as “strategy,” “expects,” “continues,” “plans,” “anticipates,” “believes,” “would,” “will,” “estimates,” “intends,” “projects,” “goals,” “targets” and other words of similar meaning are intended to identify forward-looking statements but are not the exclusive means of identifying these statements. Any statements made in this news release other than those of historical fact, about an action, event or development, are forward-looking statements. The important factors that may cause actual results and outcomes to differ materially from those contained in such forward-looking statements include, without limitation, the Company’s projected Outlook for the first quarter of 2023, as discussed above; the Company’s ability to raise sufficient capital to complete future capital projects and the terms of such funding, to the extent necessary; the timing of planned capital projects at the Mobile Refinery and the outcome thereof; the future production of the Mobile Refinery; the estimated timeline of the renewable diesel capital project, estimated and actual production associated therewith, estimated revenues over the course of the agreement with Idemitsu, anticipated and unforeseen events which could reduce future production at the refinery or delay planned capital projects, changes in commodity and credits values, and certain early termination rights associated with the Idemitsu agreement and conditions precedent to such agreement; certain mandatory redemption provisions of the outstanding senior convertible notes, the conversion rights associated therewith, and dilution caused by such conversions; the Company’s ability to comply with required covenants under outstanding senior notes and a term loan and pay amounts due under such senior notes and term loan, including interest and other amounts due thereunder; the ability of the Company to retain and hire key personnel; risks associated with the ability of Vertex to complete current plans for expansion and growth, and planned capital projects; the level of competition in our industry and our ability to compete; our ability to respond to changes in our industry; the loss of key personnel or failure to attract, integrate and retain additional personnel; our ability to protect our intellectual property and not infringe on others’ intellectual property; our ability to scale our business; our ability to maintain supplier relationships and obtain adequate supplies of feedstocks; our ability to obtain and retain customers; our ability to produce our products at competitive rates; our ability to execute our business strategy in a very competitive environment; trends in, and the market for, the price of oil and gas and alternative energy sources; the impact of inflation on margins and costs; the volatile nature of the prices for oil and gas caused by supply and demand, including volatility caused by the ongoing Ukraine/Russia conflict; our ability to maintain our relationships with our partners; the impact of competitive services and products; the outcome of pending and potential future litigation, judgments and settlements; rules and regulations making our operations more costly or restrictive; changes in environmental and other laws and regulations and risks associated with such laws and regulations; economic downturns both in the United States and globally, increases in inflation and interest rates, increased costs of borrowing associated therewith and potential declines in the availability of such funding; risk of increased regulation of our operations and products; disruptions in the infrastructure that we and our partners rely on; interruptions at our facilities; unexpected and expected changes in our anticipated capital expenditures resulting from unforeseen or planned required maintenance, repairs, or upgrades; our ability to acquire and construct new facilities; our ability to effectively manage our growth; decreases in global demand for, and the price of, oil, due to COVID-19, state, federal and foreign responses thereto, inflation, recessions or other reasons, including declines in economic activity or global conflicts; our ability to acquire sufficient amounts of used oil feedstock through our collection routes, to produce finished products, and in the absence of such internally collected feedstocks, and our ability to acquire fourth-party feedstocks on commercially reasonable terms; unexpected downtime at our facilities; risks associated with COVID-19, the global efforts to stop the spread of COVID-19, potential downturns in the U.S. and global economies due to COVID-19 and the efforts to stop the spread of the virus, and COVID-19 in general; anti-dilutive rights associated with our outstanding securities; our level of indebtedness, which could affect our ability to fulfill our obligations, impede the implementation of our strategy, and expose us to interest rate risk; dependence on fourth party transportation services and pipelines; risks related to obtaining required crude oil supplies, and the costs of such supplies; counterparty credit and performance risk; unanticipated problems at, or downtime effecting, our facilities and those operated by fourth parties; risks relating to our hedging activities; and risks relating to planned divestitures and acquisitions. Other important factors that may cause actual results and outcomes to differ materially from those contained in the forward-looking statements included in this communication are described in the Company’s publicly filed reports, including, but not limited to, the Company’s Annual Report on Form 10-K for the year ended December 31, 2021, and the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2022 and future Annual Reports on Form 10-K and Quarterly Reports on Form 10-Q. These reports are available at www.sec.gov. The Company cautions that the foregoing list of important factors is not complete. All subsequent written and oral forward-looking statements attributable to the Company or any person acting on behalf of the Company are expressly qualified in their entirety by the cautionary statements referenced above. Other unknown or unpredictable factors also could have material adverse effects on Vertex’s future results. The forward-looking statements included in this press release are made only as of the date hereof. Vertex cannot guarantee future results, levels of activity, performance or achievements. Accordingly, you should not place undue reliance on these forward-looking statements. Finally, Vertex undertakes no obligation to update these statements after the date of this release, except as required by law, and takes no obligation to update or correct information prepared by fourth parties that are not paid for by Vertex. If we update one or more forward-looking statements, no inference should be drawn that we will make additional updates with respect to those or other forward-looking statements.

PROJECTIONS

The financial projections (the “Projections”) included herein were prepared by Vertex in good faith using assumptions believed to be reasonable. A significant number of assumptions about the operations of the business of Vertex were based, in part, on economic, competitive, and general business conditions prevailing at the time the Projections were developed. Any future changes in these conditions, may materially impact the ability of Vertex to achieve the financial results set forth in the Projections. The Projections are based on numerous assumptions, including realization of the operating strategy of Vertex; industry performance; no material adverse changes in applicable legislation or regulations, or the administration thereof, or generally accepted accounting principles; general business and economic conditions; competition; retention of key management and other key employees; absence of material contingent or unliquidated litigation, indemnity, or other claims; minimal changes in current pricing; static material and equipment pricing; no significant increases in interest rates or inflation; and other matters, many of which will be beyond the control of Vertex, and some or all of which may not materialize. The Projections also assume the continued uptime of the Company’s facilities at historical levels and the successful funding of, timely completion of, and successful outcome of, planned capital projects. Additionally, to the extent that the assumptions inherent in the Projections are based upon future business decisions and objectives, they are subject to change. Although the Projections are presented with numerical specificity and are based on reasonable expectations developed by Vertex’s management, the assumptions and estimates underlying the Projections are subject to significant business, economic, and competitive uncertainties and contingencies, many of which will be beyond the control of Vertex. Accordingly, the Projections are only estimates and are necessarily speculative in nature. It is expected that some or all of the assumptions in the Projections will not be realized and that actual results will vary from the Projections. Such variations may be material and may increase over time. In light of the foregoing, readers are cautioned not to place undue reliance on the Projections. The projected financial information contained herein should not be regarded as a representation or warranty by Vertex, its management, advisors, or any other person that the Projections can or will be achieved. Vertex cautions that the Projections are speculative in nature and based upon subjective decisions and assumptions. As a result, the Projections should not be relied on as necessarily predictive of actual future events.

NON-GAAP FINANCIAL MEASURES

In addition to our results calculated under generally accepted accounting principles in the United States ("GAAP"), in this earnings release we also present Refining Gross Margin, EBITDA and Adjusted EBITDA. Refining Gross Margin, EBITDA and Adjusted EBITDA are “non-GAAP financial measures” presented as supplemental measures of the Company’s performance. They are not presented in accordance with GAAP. Refining gross margin is defined as revenues less the cost of fuel intakes and other fuel costs. It excludes operating expense and depreciation attributable to cost of revenues and other non-operating items in cost of revenues. EBITDA represents net income before interest, taxes, depreciation and amortization, for continued and discontinued operations. Adjusted EBITDA is defined as EBITDA before other income, impairment loss on assets, unrealized (gain)/loss on hedging activities, (gain)/loss on hedge roll (backwardation), environmental clean-up reserve, loss (gain) on change in value of derivative warrant liability, unrealized (gain) loss on derivative instruments, gain (loss) on intermediation agreement, Shell transaction related and acquisition expenses and stock-based compensation expense (for continued and discontinued operations) and other unusual or non-recurring items. Refining gross margin is defined as gross profit (loss) less the cost of fuel intakes and other fuel costs. Refining Gross Margin, EBITDA and Adjusted EBITDA are presented because we believe they provide additional useful information to investors due to the various noncash items during the period. Refining Gross Margin, EBITDA and Adjusted EBITDA are also frequently used by analysts, investors and other interested parties to evaluate companies in our industry. We use Refining Gross Margin, EBITDA and Adjusted EBITDA as supplements to GAAP measures of performance to evaluate the effectiveness of our business strategies, to make budgeting decisions, to allocate resources and to compare our performance relative to our peers. Additionally, these measures, when used in conjunction with related GAAP financial measures, provide investors with an additional financial analytical framework which management uses, in addition to historical operating results, as the basis for financial, operational and planning decisions and present measurements that fourth parties have indicated are useful in assessing the Company and its results of operations. Refining Gross Margin, EBITDA and Adjusted EBITDA are unaudited, and have limitations as analytical tools, and you should not consider them in isolation, or as a substitute for analysis of our operating results as reported under GAAP. Some of these limitations are: Refining Gross Margin, EBITDA and Adjusted EBITDA do not reflect cash expenditures, or future or contractual commitments; EBITDA and Adjusted EBITDA do not reflect changes in, or cash requirements for, capital expenditures or working capital needs; EBITDA and Adjusted EBITDA do not reflect the significant interest expense, or the cash requirements necessary to service interest or principal payments, on debt or cash income tax payments; although depreciation and amortization are noncash charges, the assets being depreciated and amortized will often have to be replaced in the future, and EBITDA and Adjusted EBITDA do not reflect any cash requirements for such replacements. In addition, other companies in this industry may calculate Refining Gross Margin, EBITDA and Adjusted EBITDA differently than Vertex does, limiting its usefulness as a comparative measure. The Company’s presentation of these measures should not be construed as an inference that future results will be unaffected by unusual or nonrecurring items. We compensate for these limitations by providing a reconciliation of each of these non-GAAP measures to the most comparable GAAP measure. We encourage investors and others to review our business, results of operations, and financial information in their entirety, not to rely on any single financial measure, and to view these non-GAAP measures in conjunction with the most directly comparable GAAP financial measure. For more information on these non-GAAP financial measures, please see the sections titled “Unaudited Reconciliation of Refining Gross Margin and Refining Gross Margin per throughput barrel to Gross Profit”, each included at the end of this release and “Unaudited Consolidated Continued and Discontinued Operations Reconciliations of Net Loss attributable to Vertex Energy, Inc., to Earnings before Interest, Taxes, Depreciation and Amortization (EBITDA) and Adjusted EBITDA” each included at the end of this release.

 

VERTEX ENERGY, INC.

CONSOLIDATED BALANCE SHEETS

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

 

December 31, 2022

 

December 31, 2021

ASSETS

 

 

 

Current assets

 

 

 

Cash and cash equivalents

$

141,258

 

 

$

36,130

 

Restricted cash

 

4,929

 

 

 

100,497

 

Accounts receivable, net

 

34,548

 

 

 

7,607

 

Inventory

 

135,473

 

 

 

7,839

 

Derivative commodity asset

 

 

 

 

96

 

Prepaid expenses and other current assets

 

36,660

 

 

 

4,595

 

Assets held for sale

 

20,560

 

 

 

8,852

 

Total current assets

 

373,428

 

 

 

165,616

 

 

 

 

 

 

 

 

 

Fixed assets, net

 

201,749

 

 

 

36,131

 

Finance lease right-of-use assets, net

 

44,081

 

 

 

377

 

Operating lease right-of-use assets, net

 

53,557

 

 

 

33,105

 

Intangible assets, net

 

11,827

 

 

 

6,652

 

Deferred tax assets

 

2,498

 

 

 

 

Other assets

 

2,245

 

 

 

15,335

 

Assets held for sale, noncurrent

 

 

 

 

8,844

 

Total non-current assets

 

315,957

 

 

 

100,444

 

TOTAL ASSETS

$

689,385

 

 

$

266,060

 

 

 

 

 

LIABILITIES, TEMPORARY EQUITY AND EQUITY

 

 

 

Current liabilities

 

 

 

Accounts payable

$

20,997

 

 

$

10,149

 

Accrued expenses

 

81,711

 

 

 

4,399

 

Finance lease-current

 

1,363

 

 

 

598

 

Operating lease-current

 

9,012

 

 

 

5,721

 

Current portion of long-term debt, net

 

13,911

 

 

 

2,414

 

Obligations under inventory financing agreements, net

 

117,939

 

 

 

 

Derivative commodity liability

 

242

 

 

 

 

Liabilities held for sale, current

 

3,424

 

 

 

2,502

 

Total current liabilities

 

248,599

 

 

 

25,783

 

 

 

 

 

Long-term debt, net

 

170,010

 

 

 

64,130

 

Finance lease-non-current

 

45,164

 

 

 

 

Operating lease-non-current

 

44,545

 

 

 

27,384

 

Derivative warrant liability

 

14,270

 

 

 

75,211

 

Other liabilities

 

1,377

 

 

 

 

Liabilities held for sale, noncurrent

 

 

 

 

39

 

Total liabilities

 

523,965

 

 

 

192,547

 

 

 

 

 

COMMITMENTS AND CONTINGENCIES (Note 4)

 

 

 

 

 

 

 

 

 

TEMPORARY EQUITY

 

 

 

 

 

 

Redeemable non-controlling interest

 

 

 

 

43,447

 

Total temporary equity

 

 

 

 

43,447

 

EQUITY

 

 

 

50,000,000 of total Preferred shares authorized:

 

 

 

Series A Convertible Preferred stock, $0.001 par value;

5,000,000 shares authorized and 0 and 385,601 shares issued

and outstanding at December 31, 2022 and 2021, respectively, with a liquidation preference of $— and $575 thousand at December 31, 2022 and December 31, 2021, respectively.

 

 

 

 

 

 

 

 

 

Common stock, $0.001 par value per share;

750,000,000 shares authorized; 75,668,826 and 63,287,965

issued and outstanding at December 31, 2022 and 2021, respectively.

 

76

 

 

 

63

 

Additional paid-in capital

 

279,552

 

 

 

138,620

 

Accumulated deficit

 

(115,893

)

 

 

(110,614

)

Total Vertex Energy, Inc. stockholders' equity

 

163,735

 

 

 

28,069

 

Non-controlling interest

 

1,685

 

 

 

1,997

 

Total equity

 

165,420

 

 

 

30,066

 

TOTAL LIABILITIES, TEMPORARY EQUITY AND EQUITY

$

689,385

 

 

$

266,060

 

VERTEX ENERGY, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

FOR THE YEARS ENDED DECEMBER 31,

(unaudited in thousands, except per share amounts)

 

 

2022

 

 

 

2021

 

 

 

2020

 

Revenues

$

2,791,715

 

 

$

207,760

 

 

$

103,810

 

Cost of revenues (exclusive of depreciation and amortization shown separately below)

 

2,598,276

 

 

 

178,786

 

 

 

91,630

 

Depreciation and amortization attributable to costs of revenues

 

13,429

 

 

 

4,043

 

 

 

3,667

 

Gross profit

 

180,010

 

 

 

24,931

 

 

 

8,513

 

 

 

 

 

 

 

Operating expenses:

 

 

 

 

 

Selling, general and administrative expenses

 

127,782

 

 

 

30,606

 

 

 

20,376

 

Loss on assets impairment

 

 

 

 

2,124

 

 

 

 

Depreciation and amortization attributable to operating expenses

 

3,673

 

 

 

1,681

 

 

 

1,645

 

Total operating expenses

 

131,455

 

 

 

34,411

 

 

 

22,021

 

Income (loss) from operations

 

48,555

 

 

 

(9,480

)

 

 

(13,508

)

Other income (expense):

 

 

 

 

 

Other income (expense)

 

(306

)

 

 

4,158

 

 

 

(125

)

Gain (loss) on change in value of derivative warrant liability

 

7,821

 

 

 

(15,685

)

 

 

1,639

 

Interest expense

 

(79,911

)

 

 

(3,832

)

 

 

(980

)

Total other income (expense)

 

(72,396

)

 

 

(15,359

)

 

 

534

 

Loss from continuing operations before income tax

 

(23,841

)

 

 

(24,839

)

 

 

(12,974

)

Income tax benefit

 

7,171

 

 

 

 

 

 

 

Income (loss) from continuing operations

 

(16,670

)

 

 

(24,839

)

 

 

(12,974

)

Income from discontinued operations, net of tax

 

18,667

 

 

 

17,178

 

 

 

1,578

 

Net income (loss)

 

1,997

 

 

 

(7,661

)

 

 

(11,396

)

Net income (loss) attributable to non-controlling interest and redeemable non-controlling interest from continuing operations

 

(63

)

 

 

207

 

 

 

364

 

Net income attributable to non-controlling interest and redeemable non-controlling interest from discontinued operations

 

6,882

 

 

 

10,496

 

 

 

276

 

Net income (loss) attributable to Vertex Energy, Inc.

 

(4,822

)

 

 

(18,364

)

 

 

(12,036

)

 

 

 

 

 

 

Accretion of redeemable noncontrolling interest to redemption value

 

(428

)

 

 

(1,992

)

 

 

(15,135

)

Accretion of discount on Series B and B-1 Preferred Stock

 

 

 

 

(507

)

 

 

(1,688

)

Dividends on Series B and B-1 Preferred Stock

 

 

 

 

258

 

 

 

(1,903

)

 

 

 

 

 

 

Net income (loss) attributable to stockholders from continuing operations

 

(17,035

)

 

 

(27,287

)

 

 

(32,064

)

Net income available to stockholders from discontinued operations, net of tax

 

11,785

 

 

 

6,682

 

 

 

1,302

 

Net income (loss) attributable to common stockholders

$

(5,250

)

 

$

(20,605

)

 

$

(30,762

)

 

 

 

 

 

 

Basic income (loss) per common share

 

 

 

 

 

Continuing operations

$

(0.24

)

 

$

(0.48

)

 

$

(0.70

)

Discontinued operations, net of tax

 

0.17

 

 

 

0.12

 

 

 

0.03

 

Basic income (loss) per common share

$

(0.07

)

 

$

(0.36

)

 

$

(0.67

)

 

 

 

 

 

 

Diluted income (loss) per common share

 

 

 

 

 

Continuing operations

$

(0.24

)

 

$

(0.48

)

 

$

(0.70

)

Discontinued operations, net of tax

 

0.17

 

 

 

0.12

 

 

 

0.03

 

Diluted income (loss) per common share

$

(0.07

)

 

$

(0.36

)

 

$

(0.67

)

 

 

 

 

 

 

Shares used in computing income (loss) per share

 

 

 

 

 

Basic

 

70,686

 

 

 

56,303

 

 

 

45,509

 

Diluted

 

70,686

 

 

 

56,303

 

 

 

45,509

 

VERTEX ENERGY, INC.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

FOR THE YEARS ENDING DECEMBER 31, 2022, 2021 AND 2020

(unaudited in thousands except par value)

 

Common Stock

 

Series A Preferred

 

Series C Preferred

 

Additional Paid-in Capital

 

Accumulated Deficit

 

Non-controlling Interest

 

Total Stockholders' Equity

 

Shares

 

$0.001 Par

 

Shares

 

$0.001 Par

 

Shares

 

$0.001 Par

 

 

 

 

Balance on December 31, 2019

43,396

 

$

44

 

420

 

 

$

 

 

$

 

$

81,528

 

 

$

(59,247

)

 

$

777

 

 

$

23,102

 

Dividends on Series B and B1 Preferred Stock

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1,903

)

 

 

 

 

 

(1,903

)

Accretion of discount on Series B and B1 Preferred Stock

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1,688

)

 

 

 

 

 

(1,688

)

Purchase of shares of consolidated subsidiary

 

 

 

 

 

 

 

 

 

 

 

(71

)

 

 

 

 

 

 

 

 

(71

)

Share based compensation expense

 

 

 

 

 

 

 

 

 

 

 

656

 

 

 

 

 

 

 

 

 

656

 

Adjustment of carrying amount of noncontrolling interest

 

 

 

 

 

 

 

 

 

 

 

9,091

 

 

 

 

 

 

 

 

 

9,091

 

Conversion of Series B1 Preferred stock to common

2,159

 

 

2

 

 

 

 

 

 

 

 

 

3,366

 

 

 

 

 

 

 

 

 

3,368

 

Adjustment of redeemable noncontrolling interest to redemption value

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(15,135

)

 

 

 

 

 

(15,135

)

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(12,036

)

 

 

640

 

 

 

(11,396

)

Less: amount attributable to redeemable non-controlling interest

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(99

)

 

 

(99

)

Balance on December 31, 2020

45,555

 

 

46

 

420

 

 

 

 

 

 

 

 

94,570

 

 

 

(90,009

)

 

 

1,318

 

 

 

5,925

 

Dividends on Series B and B1 Preferred Stock

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(372

)

 

 

 

 

 

(372

)

Accretion of discount on Series B and B1 Preferred Stock

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(507

)

 

 

 

 

 

(507

)

Conversion of B1 Preferred Stock to common

7,722

 

 

7

 

 

 

 

 

 

 

 

 

12,038

 

 

 

 

 

 

 

 

 

12,045

 

Share based compensation expense

 

 

 

 

 

 

 

 

 

 

 

863

 

 

 

 

 

 

 

 

 

863

 

Exercise of B1 warrants

3,093

 

 

3

 

 

 

 

 

 

 

 

 

16,402

 

 

 

 

 

 

 

 

 

16,405

 

Exercise of options

1,800

 

 

2

 

 

 

 

 

 

 

 

 

2,188

 

 

 

 

 

 

 

 

 

2,190

 

Conversion of Series A Preferred stock to common stock

34

 

 

 

(34

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Distribution to noncontrolling

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(169

)

 

 

(169

)

Adjustment of redeemable noncontrolling interest to redemption value

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1,992

)

 

 

 

 

 

(1,992

)

Conversion of Series B Preferred Stock to common stock

5,084

 

 

5

 

 

 

 

 

 

 

 

 

12,559

 

 

 

630

 

 

 

 

 

 

13,194

 

Contribution from noncontrolling interest

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(11

)

 

 

(11

)

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(18,364

)

 

 

10,703

 

 

 

(7,661

)

Less: amount attributable to redeemable non-controlling interest

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(9,844

)

 

 

(9,844

)

Balance on December 31, 2021

63,288

 

 

63

 

386

 

 

 

 

 

 

 

 

138,620

 

 

 

(110,614

)

 

 

1,997

 

 

 

30,066

 

Reclass of derivative liabilities

 

 

 

 

 

 

 

 

 

 

 

78,789

 

 

 

 

 

 

 

 

 

78,789

 

Exercise of warrants

1,209

 

 

1

 

 

 

 

 

 

 

 

 

(1

)

 

 

 

 

 

 

 

 

 

Exercise of options

622

 

 

1

 

 

 

 

 

 

 

 

 

729

 

 

 

 

 

 

 

 

 

730

 

Share based compensation expense

 

 

 

 

 

 

 

 

 

 

 

1,574

 

 

 

 

 

 

 

 

 

1,574

 

Conversion of Series A Preferred stock to common stock

386

 

 

1

 

(386

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1

 

Conversion of Convertible Senior Notes to common, net (1)

10,165

 

 

10

 

 

 

 

 

 

 

 

 

59,812

 

 

 

 

 

 

 

 

 

59,822

 

Adjustment of redeemable non controlling interest

 

 

 

 

 

 

 

 

 

 

 

29

 

 

 

(29

)

 

 

 

 

 

 

Distribution to noncontrolling interest

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(380

)

 

 

(380

)

Adjustment of redeemable noncontrolling interest to redemption value

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(428

)

 

 

 

 

 

(428

)

Redemption of noncontrolling interest

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

41

 

 

 

41

 

Net income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(4,822

)

 

 

6,819

 

 

 

1,997

 

Less: amount attributable to redeemable non-controlling interest

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(6,792

)

 

 

(6,792

)

Balance on December 31, 2022

75,670

 

$

76

 

 

 

$

 

 

$

 

$

279,552

 

 

$

(115,893

)

 

$

1,685

 

 

$

165,420

 

VERTEX ENERGY, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE YEARS ENDING DECEMBER 31, 2022, 2021 AND 2020

(unaudited)

 

 

2022

 

 

 

2021

 

 

 

2020

 

Cash flows from operating activities

 

 

 

 

 

Net income (loss)

$

1,997

 

 

$

(7,661

)

 

$

(11,396

)

Net income from discontinued operations, net of tax

 

18,667

 

 

 

17,178

 

 

 

1,578

 

Net income (loss) from continuing operations

 

(16,670

)

 

 

(24,839

)

 

 

(12,974

)

Adjustments to reconcile net income (loss) from continuing operations to cash used in operating activities:

 

 

 

 

 

Stock-based compensation expense

 

1,574

 

 

 

862

 

 

 

656

 

Depreciation and amortization

 

17,102

 

 

 

5,724

 

 

 

5,312

 

Provision for bad debt

 

242

 

 

 

826

 

 

 

239

 

Loss (gain) on commodity derivative contracts

 

87,978

 

 

 

2,258

 

 

 

(3,477

)

Provision for environment clean up

 

1,428

 

 

 

 

 

 

Gain on forgiveness of debt

 

 

 

 

(4,222

)

 

 

 

Net cash settlement on commodity derivatives

 

(92,556

)

 

 

(2,436

)

 

 

4,253

 

Loss on sale of assets

 

220

 

 

 

64

 

 

 

125

 

Loss on assets impairment

 

 

 

 

2,124

 

 

 

 

Amortization of debt discount and deferred costs

 

49,251

 

 

 

1,231

 

 

 

48

 

Deferred income tax benefit

 

(7,171

)

 

 

 

 

 

 

Loss (gain) on change in value of derivative warrant liability

 

(7,821

)

 

 

15,685

 

 

 

(1,639

)

Changes in operating assets and liabilities, net of acquisitions:

 

 

 

 

 

Accounts receivable

 

(27,183

)

 

 

(821

)

 

 

1,984

 

Inventory

 

2,586

 

 

 

(3,997

)

 

 

2,705

 

Prepaid expenses

 

(26,724

)

 

 

(1,615

)

 

 

53

 

Accounts payable

 

10,850

 

 

 

1,054

 

 

 

2,884

 

Accrued expenses

 

77,647

 

 

 

2,551

 

 

 

(2,992

)

Other assets

 

56

 

 

 

(48

)

 

 

(868

)

Net cash provided by (used in) operating activities from continuing operations

 

70,809

 

 

 

(5,599

)

 

 

(3,691

)

Cash flows from investing activities

 

 

 

 

 

Internally developed or purchased software

 

(149

)

 

 

 

 

 

(50

)

Deposit for refinery purchase and related costs

 

 

 

 

(13,663

)

 

 

 

Redemption of noncontrolling entity

 

556

 

 

 

 

 

 

 

Proceeds from the sale of assets

 

395

 

 

 

75

 

 

 

75

 

Acquisition of business, net of cash

 

(227,525

)

 

 

2

 

 

 

(1,822

)

Purchase of fixed assets

 

(75,512

)

 

 

(2,331

)

 

 

(5,550

)

Net cash used in investing activities from continuing operations

 

(302,235

)

 

 

(15,917

)

 

 

(7,347

)

Cash flows from financing activities

 

 

 

 

 

Line of credit payments, net

 

 

 

 

(133

)

 

 

(3,143

)

Proceeds received from exercise options and warrants

 

730

 

 

 

6,921

 

 

 

 

Net borrowings on inventory financing agreements

 

117,189

 

 

 

 

 

 

 

Contribution received from stockholder

 

 

 

 

2

 

 

 

 

Distribution to non-controlling interest

 

(380

)

 

 

(169

)

 

 

 

Contribution received from redeemable noncontrolling interest

 

 

 

 

 

 

 

21,000

 

Redemption of redeemable noncontrolling interest

 

(50,666

)

 

 

 

 

 

 

Payments on finance leases

 

(819

)

 

 

(844

)

 

 

(403

)

Proceeds from issuance of notes payable

 

173,256

 

 

 

143,831

 

 

 

8,217

 

Payments made on notes payable

 

(18,948

)

 

 

(15,836

)

 

 

(10,367

)

Net cash provided by financing activities from continuing operations

 

220,362

 

 

 

133,772

 

 

 

15,304

 

 

 

 

 

 

 

Discontinued operations:

 

 

 

 

 

Net cash provided by operating activities

 

25,287

 

 

 

15,349

 

 

 

3,675

 

Net cash used in investing activities

 

(4,663

)

 

 

(1,973

)

 

 

(1,146

)

Net cash used in financing activities

 

 

 

 

 

 

 

 

Net cash provided by discontinued operations

 

20,624

 

 

 

13,376

 

 

 

2,529

 

 

 

 

 

 

 

Net change in cash and cash equivalents and restricted cash

 

9,560

 

 

 

125,632

 

 

 

6,795

 

Cash and cash equivalents and restricted cash at beginning of the year

 

136,627

 

 

 

10,995

 

 

 

4,200

 

Cash and cash equivalents and restricted cash at end of year

$

146,187

 

 

$

136,627

 

 

$

10,995

 

 

 

 

 

 

 

Cash and cash equivalents

$

141,258

 

 

$

36,130

 

 

$

10,895

 

Restricted cash

 

4,929

 

 

 

100,497

 

 

 

100

 

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

$

146,187

 

 

$

136,627

 

 

$

10,995

 

 

 

 

 

 

 

SUPPLEMENTAL INFORMATION

 

 

 

 

 

Cash paid for interest

$

33,901

 

 

$

2,273

 

 

$

1,051

 

Cash paid for income taxes

 

 

 

 

 

 

 

 

 

 

 

 

 

 

NON-CASH INVESTING AND FINANCING TRANSACTIONS

 

 

 

 

 

Conversion of Series B and B1 Preferred Stock into common stock

$

 

 

$

24,610

 

 

$

3,368

 

Dividends on Series B and B-1 Preferred Stock

$

 

 

$

(258

)

 

$

1,903

 

Initial adjustment of carrying amount of redeemable noncontrolling interest

$

 

 

$

 

 

$

9,091

 

Accretion of discount on Series B and B-1 Preferred Stock

$

 

 

$

507

 

 

$

1,688

 

Accretion of redeemable noncontrolling interest to redemption value

$

428

 

 

$

1,992

 

 

$

15,135

 

Equipment acquired under capital leases standard

$

46,351

 

 

$

552

 

 

$

1,018

 

Equipment acquired under operating leases standard

$

20,452

 

 

$

89

 

 

$

 

Reclass derivative liabilities

$

78,789

 

 

$

 

 

$

 

Conversion of Senior note

$

59,822

 

 

$

 

 

$

 

Unaudited segment information for the years ended December 31, 2022, 2021 and 2020 are as follows (in thousands):

YEAR ENDED DECEMBER 31, 2022

 

 

Refining and Marketing

 

Black Oil & Recovery

 

Corporate and Eliminations

 

Total

Revenues:

 

 

 

 

 

 

 

 

Refined products

 

$

2,370,240

 

 

$

163,095

 

$

 

 

$

2,533,335

 

Re-refined products

 

 

229,793

 

 

 

19,105

 

 

 

 

 

248,898

 

Services

 

 

6,611

 

 

 

2,871

 

 

 

 

 

9,482

 

Total revenues

 

 

2,606,644

 

 

 

185,071

 

 

 

 

 

2,791,715

 

Cost of revenues (exclusive of depreciation and amortization shown separately below)

 

 

2,453,809

 

 

 

144,467

 

 

 

 

 

2,598,276

 

Depreciation and amortization attributable to costs of revenues

 

 

9,605

 

 

 

3,824

 

 

 

 

 

13,429

 

Gross profit

 

 

143,230

 

 

 

36,780

 

 

 

 

 

180,010

 

Selling, general and administrative expenses

 

 

83,001

 

 

 

17,241

 

 

27,540

 

 

 

127,782

 

Depreciation and amortization attributable to operating expenses

 

 

2,593

 

 

 

180

 

 

900

 

 

 

3,673

 

Income (loss) from operations

 

$

57,636

 

 

$

19,359

 

$

(28,440

)

 

$

48,555

 

 

 

 

 

 

 

 

 

 

Total capital expenditures

 

$

72,588

 

 

$

2,924

 

$

 

 

$

75,512

 

 

 

 

 

 

 

 

 

 

YEAR ENDED DECEMBER 31, 2021

 

 

Refining and Marketing

 

Black Oil & Recovery

 

Corporate and Eliminations

 

Total

Revenues:

 

 

 

 

 

 

 

 

Refined products

 

$

78,191

 

 

$

85,253

 

$

 

 

$

163,444

 

Re-refined products

 

 

15,039

 

 

 

25,611

 

 

 

 

 

40,650

 

Services

 

 

 

 

 

3,666

 

 

 

 

 

3,666

 

Total revenues

 

 

93,230

 

 

 

114,530

 

 

 

 

 

207,760

 

Cost of revenues (exclusive of depreciation and amortization shown separately below)

 

 

89,570

 

 

 

89,216

 

 

 

 

 

178,786

 

Depreciation and amortization attributable to costs of revenues

 

 

509

 

 

 

3,534

 

 

 

 

 

4,043

 

Gross profit

 

 

3,151

 

 

 

21,780

 

 

 

 

 

24,931

 

Selling, general and administrative expenses

 

 

3,277

 

 

 

14,444

 

 

12,885

 

 

 

30,606

 

Loss on assets impairment

 

 

 

 

 

2,124

 

 

 

 

 

2,124

 

Depreciation and amortization attributable to operating expenses

 

 

434

 

 

 

234

 

 

1,013

 

 

 

1,681

 

Income (loss) from operations

 

$

(560

)

 

$

4,978

 

$

(13,898

)

 

$

(9,480

)

 

 

 

 

 

 

 

 

 

Total capital expenditures

 

$

 

 

$

2,331

 

$

 

 

$

2,331

 

YEAR ENDED DECEMBER 31, 2020

 

 

Refining and Marketing

 

Black Oil & Recovery

 

Corporate and Eliminations

 

Total

Revenues:

 

 

 

 

 

 

 

 

Refined products

 

$

28,943

 

 

$

45,905

 

 

$

 

 

$

74,848

 

Re-refined products

 

 

6,862

 

 

 

17,734

 

 

 

 

 

 

24,596

 

Services

 

 

 

 

 

4,366

 

 

 

 

 

 

4,366

 

Total revenues

 

 

35,805

 

 

 

68,005

 

 

 

 

 

 

103,810

 

Cost of revenues (exclusive of depreciation and amortization shown separately below)

 

 

35,208

 

 

 

56,422

 

 

 

 

 

 

91,630

 

Depreciation and amortization attributable to costs of revenues

 

 

470

 

 

 

3,197

 

 

 

 

 

 

3,667

 

Gross profit

 

 

127

 

 

 

8,386

 

 

 

 

 

 

8,513

 

Selling, general and administrative expenses

 

 

2,529

 

 

 

12,953

 

 

 

4,894

 

 

 

20,376

 

Depreciation and amortization attributable to operating expenses

 

 

387

 

 

 

234

 

 

 

1,024

 

 

 

1,645

 

Loss from operations

 

 

(2,789

)

 

 

(4,801

)

 

 

(5,918

)

 

 

(13,508

)

 

 

 

 

 

 

 

 

 

Total capital expenditures

 

$

 

 

$

5,550

 

 

$

 

 

$

5,550

 

The following summarized unaudited financial information has been segregated from continuing operations and reported as Discontinued Operations for the years ended December 31, 2022, 2021 and 2020 (in thousands):

 

For The Year Ended December 31

 

 

2022

 

 

 

2021

 

 

 

2020

 

Revenues

$

85,495

 

 

$

58,248

 

 

$

31,330

 

Cost of revenues (exclusive of depreciation shown separately below)

 

51,815

 

 

 

32,467

 

 

 

22,248

 

Depreciation and amortization attributable to costs of revenues

 

1,566

 

 

 

1,566

 

 

 

1,423

 

Gross profit

 

32,114

 

 

 

24,215

 

 

 

7,659

 

Operating expenses:

 

 

 

 

 

Selling, general and administrative expenses

(exclusive of acquisition related expenses)

 

8,501

 

 

 

6,727

 

 

 

5,767

 

Depreciation and amortization expense attributable to operating expenses

 

251

 

 

 

251

 

 

 

251

 

Total Operating expenses

 

8,752

 

 

 

6,978

 

 

 

6,018

 

Income from operations

 

23,362

 

 

 

17,237

 

 

 

1,641

 

Other income (expense)

 

 

 

 

 

Interest expense

 

(39

)

 

 

(59

)

 

 

(63

)

Total other expense

 

(39

)

 

 

(59

)

 

 

(63

)

Income before income tax

 

23,323

 

 

 

17,178

 

 

 

1,578

 

Income tax expense

 

(4,683

)

 

 

 

 

 

 

Net gain on sale of discontinued operations

 

27

 

 

 

 

 

 

 

Income from discontinued operations, net of tax

$

18,667

 

 

$

17,178

 

 

$

1,578

 

Three Months Ended December 31, 2022

In thousands Total Refining &
Marketing
Mobile Refinery Legacy Refining
& Marketing
Gross profit

 $

     89,441

 

 $

     89,864

 

 $

              (423

)

Inventory valuation adjustments

 $

     14,011

 

 $

     14,011

 

 $

                      -

 

Unrealized loss on hedging activities

 

              303

 

 

              165

 

 

                    138

 

Adjusted Gross Profit

 $

   103,755

 

 $

   104,040

 

 $

              (285

)

Operating expenses included in cost of revenues

 

         22,469

 

 

         22,469

 

 

                         -

 

Depreciation and amortization attributable to cost of revenues

 

           3,266

 

 

           3,121

 

 

                    145

 

Realized loss on hedging activities

 

              627

 

 

              407

 

 

                    220

 

Financing costs

 

         (9,204

)

 

         (9,204

)

 

                         -

 

Other revenues  

 

         (2,159

)

 

                         -

 

Cost of revenues - RINs

 

         28,397

 

 

         28,397

 

 

                         -

 

Fuel Gross profit

 $

   147,151

 

 $

   147,071

 

 $

                   80

 

Throughput (bpd)

 

        77,964

 

Adjusted Gross Profit per throughput barrel  

 $

       14.51

 

 
Fuel Gross profit per throughput barrel  

 $

       20.50

 

 
 
 

Twelve Months Ended December 31, 2022

In thousands Total Refining &
Marketing
Mobile Refinery Legacy Refining
& Marketing
Gross profit

 $

   143,233

 

 $

   140,983

 

 $

             2,250

 

Inventory valuation adjustments

 $

     37,764

 

 $

     37,764

 

 $

                      -

 

Unrealized loss on hedging activities

 

              159

 

 

                90

 

 

                      69

 

Adjusted Gross margin

 $

   181,156

 

 $

   178,837

 

 $

             2,319

 

Operating expenses included in cost of revenues

 

         61,133

 

 

         61,133

 

 

                         -

 

Depreciation and amortization attributable to cost of revenues

 

           9,605

 

 

           9,065

 

 

                    540

 

Realized loss on hedging activities

 

         85,550

 

 

         85,238

 

 

                    312

 

Financing costs

 

           2,011

 

 

           2,011

 

 

                         -

 

Other revenues

 

         (6,611

)

 

         (6,611

)

 

                         -

 

Cost of revenues - RINs

 

         68,758

 

 

         68,758

 

 

                         -

 

Fuel Gross margin

 $

   401,602

 

 $

   398,431

 

 $

             3,171

 

Throughput (bpd)

 

        72,686

 

Adjusted Gross Profit per throughput barrel  

 $

          8.95

 

 
Fuel Gross profit per throughput barrel  

 $

       19.93

 

 

Unaudited Reconciliation of EBITDA and Adjusted EBITDA to Net loss from Continued and Discontinued Operations

 

Three Months Ended

 

Twelve Months Ended

 

December 31 2022

 

December 31, 2021

 

December 31 2022

 

December 31, 2021

Consolidated

 

 

 

 

 

 

 

EBITDA and Adjusted EBITDA

 

 

 

 

 

 

 

Net income (loss) including discontinued operations

$

44,418

 

 

$

(5,350

)

 

$

1,997

 

 

$

(7,661

)

Depreciation and amortization

 

5,761

 

 

 

1,930

 

 

 

18,919

 

 

 

7,540

 

Income tax benefit

 

(2,489

)

 

 

 

 

 

(2,489

)

 

 

 

Interest expense

 

14,956

 

 

 

2,927

 

 

 

79,951

 

 

 

3,891

 

EBITDA

$

62,646

 

 

$

(493

)

 

$

98,378

 

 

$

3,770

 

Unrealized (gain)loss hedging activities

 

978

 

 

 

(252

)

 

 

(146

)

 

 

(190

)

(Gain)loss on hedge roll (backwardation)

 

9,614

 

 

 

 

 

 

50,766

 

 

 

 

Acquisition costs

 

 

 

 

3,565

 

 

 

16,527

 

 

 

3,565

 

Environmental clean-up reserve

 

 

 

 

 

 

 

1,428

 

 

 

 

(Gain)loss on derivative warrant liability

 

(33

)

 

 

4,305

 

 

 

(7,821

)

 

 

15,685

 

Stock compensation expense

 

622

 

 

 

250

 

 

 

1,574

 

 

 

863

 

Impairment loss

 

 

 

 

2,124

 

 

 

 

 

 

2,124

 

Other

 

1,339

 

 

 

 

 

 

280

 

 

 

(4,222

)

Adjusted EBITDA

$

75,166

 

 

$

9,499

 

 

$

160,986

 

 

$

21,595

 

 

Three Months Ended December 31, 2022

 

Mobile Refinery

 

Legacy Refining and Marketing

 

Total Refining & Marketing

 

Black Oil and Recovery

 

Corporate

 

Consolidated

Consolidated

 

 

 

 

 

 

 

 

 

 

 

EBITDA and Adjusted EBITDA

 

 

 

 

 

 

 

 

 

 

 

Net income (loss) including discontinued operations

$

56,839

 

$

(1,860

)

 

$

54,979

 

$

4,706

 

 

$

(15,267

)

 

$

44,418

 

Depreciation and amortization

 

3,857

 

 

 

 

 

3,857

 

 

1,733

 

 

 

171

 

 

 

5,761

 

Income tax benefit

 

 

 

 

 

 

 

 

 

 

 

(2,489

)

 

 

(2,489

)

Interest expense

 

3,721

 

 

 

 

 

3,721

 

 

25

 

 

 

11,210

 

 

 

14,956

 

EBITDA

$

64,417

 

$

(1,860

)

 

$

62,557

 

$

6,464

 

 

$

(6,375

)

 

$

62,646

 

Unrealized (gain)loss hedging activities

 

165

 

 

138

 

 

 

303

 

 

675

 

 

 

 

 

 

978

 

(Gain)loss on hedge roll (backwardation)

 

14,011

 

 

 

 

 

14,011

 

 

(4,397

)

 

 

 

 

 

9,614

 

Acquisition costs

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Environmental clean-up reserve

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(Gain)loss on derivative warrant liability

 

 

 

 

 

 

 

 

 

 

 

(33

)

 

 

(33

)

Stock compensation expense

 

 

 

 

 

 

 

 

 

 

 

622

 

 

 

622

 

Impairment loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other

 

 

 

 

 

 

 

 

1,119

 

 

 

220

 

 

 

1,339

 

Adjusted EBITDA

$

78,593

 

$

(1,722

)

 

$

76,871

 

$

3,861

 

 

$

(5,566

)

 

$

75,166

 

 

Three Months Ended December 31, 2021

 

Mobile Refinery

 

Legacy Refining and Marketing

 

Total Refining & Marketing

 

Black Oil and Recovery

 

Corporate

 

Consolidated

Consolidated

 

 

 

 

 

 

 

 

 

 

 

EBITDA and Adjusted EBITDA

 

 

 

 

 

 

 

 

 

 

 

Net income (loss) including discontinued operations

$

 

$

(503

)

 

$

(503

)

 

$

7,152

 

 

$

(11,999

)

 

$

(5,350

)

Depreciation and amortization

 

 

 

238

 

 

 

238

 

 

 

1,439

 

 

 

253

 

 

 

1,930

 

Income tax benefit

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest expense

 

 

 

 

 

 

 

 

 

14

 

 

 

2,913

 

 

 

2,927

 

EBITDA

$

 

$

(265

)

 

$

(265

)

 

$

8,605

 

 

$

(8,833

)

 

$

(493

)

Unrealized (gain)loss hedging activities

 

 

 

 

 

 

 

 

 

(252

)

 

 

 

 

 

(252

)

(Gain)loss on hedge roll (backwardation)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Acquisition costs

 

 

 

 

 

 

 

 

 

3,565

 

 

 

 

 

 

3,565

 

Environmental clean-up reserve

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(Gain)loss on derivative warrant liability

 

 

 

 

 

 

 

 

 

 

 

 

4,305

 

 

 

4,305

 

Stock compensation expense

 

 

 

 

 

 

 

 

 

 

 

 

250

 

 

 

250

 

Impairment loss

 

 

 

 

 

 

 

 

 

2,124

 

 

 

 

 

 

2,124

 

Other

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted EBITDA

$

 

$

(265

)

 

$

(265

)

 

$

14,042

 

 

$

(4,278

)

 

$

9,499

 

 

Twelve Months Ended December 31, 2022

 

Mobile Refinery

 

Legacy Refining and Marketing

 

Total Refining & Marketing

 

Black Oil and Recovery

 

Corporate

 

Consolidated

Consolidated

 

 

 

 

 

 

 

 

 

 

 

EBITDA and Adjusted EBITDA

 

 

 

 

 

 

 

 

 

 

 

Net income (loss) including discontinued operations

$

51,247

 

$

(4,008

)

 

$

47,239

 

$

37,285

 

 

$

(62,002

)

 

$

1,997

 

Depreciation and amortization

 

11,273

 

 

926

 

 

 

12,199

 

 

5,820

 

 

 

900

 

 

 

18,919

 

Income tax benefit

 

 

 

 

 

 

 

 

 

 

 

(2,489

)

 

 

(2,489

)

Interest expense

 

10,414

 

 

 

 

 

10,414

 

 

(67

)

 

 

69,604

 

 

 

79,951

 

EBITDA

$

72,934

 

$

(3,082

)

 

$

69,852

 

$

22,513

 

 

$

6,013

 

 

$

98,378

 

Unrealized (gain)loss hedging activities

 

90

 

 

69

 

 

 

159

 

 

(305

)

 

 

 

 

 

(146

)

(Gain)loss on hedge roll (backwardation)

 

37,764

 

 

 

 

 

37,764

 

 

13,002

 

 

 

 

 

 

50,766

 

Acquisition costs

 

11,967

 

 

 

 

 

11,967

 

 

4,560

 

 

 

 

 

 

16,527

 

Environmental clean-up reserve

 

1,428

 

 

 

 

 

1,428

 

 

 

 

 

 

 

 

1,428

 

(Gain)loss on derivative warrant liability

 

 

 

 

 

 

 

 

 

 

 

(7,821

)

 

 

(7,821

)

Stock compensation expense

 

 

 

 

 

 

 

 

 

 

 

1,574

 

 

 

1,574

 

Impairment loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other

 

13,282

 

 

 

 

 

13,282

 

 

(13,222

)

 

 

220

 

 

 

280

 

Adjusted EBITDA

$

137,465

 

$

(3,013

)

 

$

134,452

 

$

26,548

 

 

$

(14

)

 

$

160,986

 

 

Twelve Months Ended December 31, 2021

 

Mobile Refinery

 

Legacy Refining and Marketing

 

Total Refining & Marketing

 

Black Oil and Recovery

 

Corporate

 

Consolidated

Consolidated

 

 

 

 

 

 

 

 

 

 

 

EBITDA and Adjusted EBITDA

 

 

 

 

 

 

 

 

 

 

 

Net income (loss) including discontinued operations

$

 

$

(560

)

 

$

(560

)

 

$

22,156

 

 

$

(29,257

)

 

$

(7,661

)

Depreciation and amortization

 

 

 

943

 

 

 

943

 

 

 

5,585

 

 

 

1,012

 

 

 

7,540

 

Income tax benefit

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest expense

 

 

 

 

 

 

 

 

 

59

 

 

 

3,832

 

 

 

3,891

 

EBITDA

$

 

$

383

 

 

$

383

 

 

$

27,800

 

 

$

(24,413

)

 

$

3,770

 

Unrealized (gain)loss hedging activities

 

 

 

 

 

 

 

 

 

(190

)

 

 

 

 

 

(190

)

(Gain)loss on hedge roll (backwardation)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Acquisition costs

 

 

 

 

 

 

 

 

 

 

 

 

3,565

 

 

 

3,565

 

Environmental clean-up reserve

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(Gain)loss on derivative warrant liability

 

 

 

 

 

 

 

 

 

 

 

 

15,685

 

 

 

15,685

 

Stock compensation expense

 

 

 

 

 

 

 

 

 

 

 

 

863

 

 

 

863

 

Impairment loss

 

 

 

 

 

 

 

 

 

2,124

 

 

 

 

 

 

2,124

 

Other

 

 

 

 

 

 

 

 

 

 

 

 

(4,222

)

 

 

(4,222

)

Adjusted EBITDA

$

 

$

383

 

 

$

383

 

 

$

29,734

 

 

$

(8,522

)

 

$

21,595

 

 

Contacts

IR@vertexenergy.com
203-682-8284

Contacts

IR@vertexenergy.com
203-682-8284