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Vertex Energy, Inc. Announces 2018 Third Quarter and Year-To-Date Financial Results

Revenue increased 56%, Gross Profit rose 113%

Gross Profit Margin was 15.8%, EBITDA improved 157% from prior year

Conference call to be held today at 9:00 A.M. EST

HOUSTON, Nov. 06, 2018 (GLOBE NEWSWIRE) -- Vertex Energy, Inc. (VTNR), a specialty refiner and marketer of high-quality hydrocarbon products, announced today its financial results for the three months and nine months ended September 30, 2018.

2018 THIRD QUARTER FINANCIAL HIGHLIGHTS

  • Consolidated revenue increased to $50.6 million, a 56% increase from the third quarter of 2017.
  • Gross profit was $8.0 million, an increase of 113% from the same period in 2017.
  • Gross profit margin was 15.8%.
  • Total overall volume was up 6%.
  • Consolidated per barrel margin increased 100%, compared to the same period in 2017.
  • Net loss available to common shareholders was $4.6 million, or loss of $0.13 per share.
  • Income from operations was $0.6 million.

2018 YEAR-TO-DATE FINANCIAL RESULTS

  • Consolidated revenue increased to $138.9 million, a 33% improvement from the same period in 2017.
  • Gross profit was $24.5 million, an increase of approximately 84% from the same period in 2017.
  • Gross profit margin was 17.6%.
  • Total overall volume decreased 2%.
  • Consolidated per barrel margin rose 87%, compared to the same period in 2017.
  • Net loss available to common shareholders was $6.7 million, or loss of $0.20 per share.
  • Income from operations was $2.6 million.

Benjamin P. Cowart, Chairman and CEO of Vertex Energy, Inc., stated, "We reported improved quarterly revenue and EBITDA. Our revenue for the quarter rose approximately 56 percent to 50.6 million dollars, gross profit grew 113 percent to 8.0 million dollars, and our EBITDA was 0.3 million dollars."

Mr. Cowart added, "We are happy with the operational performance of our business. Our cost effective strategy of building a regional collection and aggregation system has proven successful. We anticipate that our system, along with the capital investments we have been making, will continue to benefit our operating performance moving forward. In addition, we plan to continue to grow our collections through acquisitions and organic growth."

Mr. Cowart concluded, "There are additional catalysts for our business that we believe can lead to long-term positive returns. First, the shift of our production to the Marine Fuel Market is expected to allow us to leverage our low sulfur fuel for ships when IMO 2020 regulations begin to transition into effect in 2019. Second, we currently anticipate entering into a transaction by the end of 2018 in order to raise capital for our Heartland and Myrtle Grove facilities."  

THIRD QUARTER 2018 FINANCIAL RESULTS CONFERENCE CALL DETAILS

Management will host a conference call on November 6, 2018 at 9 A.M. EST. Those who wish to participate in the conference call may telephone 1-877-869-3847 from the U.S. and International callers may telephone 1-201-689-8261, approximately 15 minutes before the call. A webcast will also be available under the Investor Relations section at www.vertexenergy.com

A digital replay will be available by telephone approximately two hours after the completion of the call until March 31, 2019, and may be accessed by dialing 1-877-660-6853 from the U.S. or 1-201-612-7415 for international callers, using conference ID #13683687.

ABOUT VERTEX ENERGY, INC.

Vertex Energy, Inc. (VTNR) is a specialty refiner of alternative feedstocks and marketer of high-purity petroleum products. With its headquarters in Houston, Texas, Vertex is one of the largest processors of used motor oil in the U.S. and has processing capacity of over 115 million gallons annually with operations located in Houston and Port Arthur (TX), Marrero (LA), and Columbus (OH). Vertex also has a facility, Myrtle Grove, located on a 41 acre industrial complex along the Gulf Coast in Belle Chasse, LA, with existing hydroprocessing and plant infrastructure assets, that include nine million gallons of storage. Vertex has implemented a cost-effective strategy for building its feedstock supply by establishing a successful self-collection and aggregation system. The Company has built a reputation as a key supplier of Group II+ and Group III base oils to the lubricant manufacturing industry in North America. For more information on Vertex Energy please contact Porter, LeVay & Rose, Inc.'s investor relations representative Marlon Nurse, D.M. at 212-564-4700 or visit our website at www.vertexenergy.com

Forward-Looking Statements

This press release may contain forward-looking statements, including information about management’s view of Vertex Energy’s future expectations, plans and prospects, within the safe harbor provisions under The Private Securities Litigation Reform Act of 1995 (the “Act”). In particular, when used in the preceding discussion, the words “believes,” “hopes,” “expects,” “intends,” “plans,” “anticipates,” or “may,” and similar conditional expressions are intended to identify forward-looking statements within the meaning of the Act, and are subject to the safe harbor created by the Act. Any statements made in this news release other than those of historical fact, about an action, event or development, are forward-looking statements. These statements involve known and unknown risks, uncertainties and other factors, which may cause the results of Vertex Energy, its divisions and concepts to be materially different than those expressed or implied in such statements. These risk factors and others are included from time to time in documents Vertex Energy files with the Securities and Exchange Commission, including but not limited to, its Form 10-Ks, Form 10-Qs and Form 8-Ks. Other unknown or unpredictable factors also could have material adverse effects on Vertex Energy’s future results. The forward-looking statements included in this press release are made only as of the date hereof. Vertex Energy cannot guarantee future results, levels of activity, performance or achievements. Accordingly, you should not place undue reliance on these forward-looking statements. Finally, Vertex Energy undertakes no obligation to update these statements after the date of this release, except as required by law, and also takes no obligation to update or correct information prepared by third parties that are not paid for by Vertex Energy.

Vertex Energy, Inc.
Reconciliation of Net Income (Loss) attributable to Vertex Energy, Inc., to Earnings before Interest, Taxes, Depreciation and Amortization (EBITDA) and Adjusted EBITDA*

 

    For the Three Months Ended   For the Nine Months Ended
    September 30, 2018   September 30, 2017   September 30, 2018   September 30, 2017
Net (loss) income              
attributable to Vertex Energy, Inc.   $   (2,287,880 )   $   2,983,932          
Add (deduct):              
Interest Income      -       (1,519 )        
Interest Expense     798,880       798,880.00       2,448,771.00     2,688,394.00  
Depreciation and amortization     1,806,839       1,697,821       5,234,014     4,942,911  
Tax (expense) benefit                
                 
EBITDA*     317,759       (554,171 )     5,665,692     (422,289 )
                 
Add (deduct):                
Gain loss on change in value of derivative warrant liability     2,169,133       -1,371,461       2,124,971     -2,676,902  
Add (deduct): Stock-Based compensation     165,057       163,002       494,779     460,475  
                 
Adjusted EBITDA   $    2,651,949     $    (1,762,630 )   $    8,285,442   $    (2,638,716 )
               

* EBITDA and adjusted EBITDA are non-GAAP financial measures. These measurements are not recognized in accordance with GAAP and should not be viewed as an alternative to GAAP measures of performance.

EBITDA represents net income before interest, taxes, depreciation and amortization. Adjusted EBITDA is defined as EBITDA before stock-based compensation expense and gain (loss) on change in value of derivative warrant liability. 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. EBITDA and adjusted EBITDA 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:

  • EBITDA and adjusted EBITDA do not reflect cash expenditures, or future requirements for capital expenditures, or contractual commitments;
  • EBITDA and adjusted EBITDA do not reflect changes in, or cash requirements for, 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; and
  • Other companies in this industry may calculate EBITDA and adjusted EBITDA differently than Vertex Energy does, limiting its usefulness as a comparative measure.

VERTEX ENERGY, INC.
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)

  September 30,
 2018
  December 31,
 2017
ASSETS      
Current assets      
Cash and cash equivalents $ 1,840,345     $ 1,105,787  
Accounts receivable, net 14,380,264     11,288,991  
Federal income tax receivable 137,212      
Inventory 6,646,171     6,304,842  
Prepaid expenses 3,973,105     1,771,832  
Total current assets 26,977,097     20,471,452  
       
Noncurrent assets      
Fixed assets, at cost 66,781,807     65,237,652  
Less accumulated depreciation (18,671,219 )   (16,617,824 )
Fixed assets, net 48,110,588     48,619,828  
Goodwill and other intangible assets, net 13,210,821     14,499,354  
Federal income tax receivable
137,211     274,423  
Other assets 694,059     440,417  
TOTAL ASSETS $ 89,129,776     $ 84,305,474  
       
LIABILITIES, TEMPORARY EQUITY, AND EQUITY      
Current liabilities      
Accounts payable and accrued expenses $ 9,805,852     $ 10,318,738  
Dividends payable 479,311     420,713  
Capital leases-current 92,900      
Current portion of long-term debt, net of unamortized finance costs 2,167,171     1,616,926  
Derivative commodity liability 601,534      
Revolving note 5,999,733     4,591,527  
 Total current liabilities 19,146,501     16,947,904  
Long-term liabilities      
  Long-term debt, net of unamortized finance costs 14,483,702     13,531,179  
Capital leases-long-term 322,538      
Contingent consideration 108,564     236,680  
Derivative warrant liability 4,370,379     2,245,408  
Total liabilities 38,431,684     32,961,171  
       
COMMITMENTS AND CONTINGENCIES      
       
TEMPORARY EQUITY      
Series B Convertible Preferred Stock, $0.001 par value per share;10,000,000 shares designated, 3,551,549 and 3,427,597 shares issued and outstanding at September 30, 2018 and December 31, 2017, respectively with a liquidation preference of $11,009,802 and $10,625,551 at September 30, 2018 and December 31, 2017, respectively. 8,432,160     7,190,467  
       
Series B1 Convertible Preferred Stock, $0.001 par value per share;17,000,000 shares designated, 11,074,331 and 13,151,989 shares issued and outstanding at September 30, 2018 and December 31, 2017, respectively with a liquidation preference of $17,275,956 and $20,517,103 at September 30, 2018 and December 31, 2017, respectively. 14,387,804     15,769,478  
Total Temporary Equity 22,819,964     22,959,945  
EQUITY      
50,000,000 of total Preferred shares authorized:      
Series A Convertible Preferred Stock, $0.001 par value; 5,000,000 shares designated, 419,859 and 453,567 shares issued and outstanding at September 30, 2018 and December 31, 2017, respectively with a liquidation preference of $625,590 and $675,815 at September 30, 2018 and December 31, 2017, respectively. 420     454  
       
Series C Convertible Preferred Stock, $0.001 par value; 44,000 shares designated, 31,568 shares issued and outstanding at December 31, 2017, with a liquidation preference of $3,156,800 at December 31, 2017.     32  
       
Common stock, $0.001 par value per share; 750,000,000 shares authorized; 38,840,890 and 32,658,176 shares issued and outstanding at September 30, 2018 and December 31, 2017, respectively. 38,841     32,658  
Additional paid-in capital 72,974,146     67,768,509  
Accumulated deficit (45,508,871 )   (39,816,300 )
Total Vertex Energy, Inc. stockholders' equity 27,504,536     27,985,353  
Non-controlling interest 373,592     399,005  
Total Equity 27,878,128     28,384,358  
TOTAL LIABILITIES, TEMPORARY EQUITY, AND EQUITY $ 89,129,776     $ 84,305,474  


VERTEX ENERGY, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)

    Three Months Ended September 30,   Nine Months Ended September 30,
    2018   2017   2018   2017
Revenues   $ 50,632,948     $ 32,470,451     $ 138,918,913     $ 104,153,844  
Cost of revenues (exclusive of depreciation and amortization shown separately below)   42,593,367     28,696,461     114,434,776     90,864,044  
Gross profit   8,039,581     3,773,990     24,484,137     13,289,800  
                 
Operating expenses:                
Selling, general and administrative expenses   5,658,659     5,690,761     16,668,692     16,280,495  
Depreciation and amortization   1,806,839     1,697,821     5,234,014     4,942,911  
Total operating expenses   7,465,498     7,388,582     21,902,706     21,223,406  
Income (loss) from operations   574,083     (3,614,592 )   2,581,431     (7,933,606 )
Other income (expense):                
Interest income       1,519     659     5,748  
Gain (loss) on sale of assets       25,693     51,523     (13,806 )
Gain (loss) on change in value of derivative warrant liability   (2,169,133 )   1,371,461     (2,124,971 )   2,676,902  
Interest expense   (798,800 )   (733,459 )   (2,448,771 )   (2,688,394 )
Total other income (expense)   (2,967,933 )   665,214     (4,521,560 )   (19,550 )
Income (loss) before income tax   (2,393,850 )   (2,949,378 )   (1,940,129 )   (7,953,156 )
Income tax benefit (expense)                
Net income (loss)   (2,393,850 )   (2,949,378 )   (1,940,129 )   (7,953,156 )
Net income (loss) attributable to non-controlling interest   (105,970 )   34,554     76,305     94,690  
Net income (loss) attributable to Vertex Energy, Inc.   (2,287,880 )   (2,983,932 )   (2,016,434 )   (8,047,846 )
                 
Accretion of discount on Series B and B-1 Preferred Stock   (515,698 )   (424,480 )   (1,444,376 )   (1,267,778 )
Accrual of dividends on Series B and B-1 Preferred Stock   (1,831,794 )   (420,713 )   (3,191,217 )   (1,256,921 )
Net income (loss) available to common shareholders   $ (4,635,372 )   $ (3,829,125 )   $ (6,652,027 )   $ (10,572,545 )
Income (loss) per common share                
Basic   $ (0.13 )   $ (0.12 )   $ (0.20 )   $ (0.32 )
Diluted   $ (0.13 )   $ (0.12 )   $ (0.20 )   $ (0.32 )
Shares used in computing earnings per share                
Basic   35,144,113     32,655,135     33,843,721     32,651,961  
Diluted   35,144,113     32,655,135     33,843,721     32,651,961  


VERTEX ENERGY, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
NINE MONTHS ENDED SEPTEMBER 30, 2018 AND 2017 (UNAUDITED)

  Nine Months Ended
  September 30,
 2018
  September 30,
 2017
Cash flows from operating activities      
Net loss $ (1,940,129 )   $ (7,953,156 )
 Adjustments to reconcile net loss to cash provided by (used in) operating activities      
Stock based compensation expense 494,779     460,475  
Depreciation and amortization 5,234,014     4,942,911  
(Gain) loss on sale of assets (51,523 )   13,806  
(Increase) decrease in fair value of derivative warrant liability 2,124,971     (2,676,902 )
Loss on commodity derivative contracts 1,859,234      
Net cash settlements on commodity derivatives (2,386,897 )    
Amortization of debt discount and deferred costs 474,360     571,635  
Changes in operating assets and liabilities      
Accounts receivable (3,091,273 )   2,054,774  
Inventory (341,329 )   (195,977 )
Prepaid expenses (1,072,076 )   (65,603 )
Accounts payable, accrued expenses, and other liabilities (641,003 )   329,959  
Other assets (253,642 )   129,500  
Net cash provided by (used in) operating activities 409,486     (2,388,578 )
Cash flows from investing activities      
Acquisition of SES (269,826 )    
Acquisition of Acadiana     (710,350 )
Acquisition of Nickco     (1,126,730 )
Acquisition of Ygriega     (162,500 )
Purchase of fixed assets (1,813,904 )   (1,842,237 )
Proceeds from sale of  fixed assets 6,848     297,718  
Net cash used in investing activities (2,076,882 )   (3,544,099 )
Cash flows from financing activities      
Payments on capital leases (34,660 )    
Payment of debt issuance costs     (1,718,090 )
Line of credit (payments) proceeds, net 1,408,206     1,012,444  
Proceeds from note payable 4,024,964     16,570,929  
Payments on note payable (2,996,556 )   (12,013,925 )
Net cash provided by financing activities 2,401,954     3,851,358  
Net change in cash, cash equivalents and restricted cash 734,558     (2,081,319 )
Cash, cash equivalents, and restricted cash at beginning of the period 1,105,787     3,206,158  
Cash, cash equivalents, and restricted cash at end of period $ 1,840,345     $ 1,124,839  
       


SUPPLEMENTAL INFORMATION      
Cash paid for interest $ 2,034,275     $ 1,328,401  
Cash paid for taxes $     $  
NON-CASH INVESTING AND FINANCING TRANSACTIONS      
Conversion of Series A Preferred Stock into common stock $ 34     $ 36  
Conversion of Series B-1 Preferred Stock into common stock $ 4,616,354     $ 119,440  
Accretion of discount on Series B and B-1 Preferred Stock $ 1,444,376     $ 1,267,778  
Dividends-in-kind  accrued on Series B and B-1 Preferred Stock $ 3,191,217     $ 1,256,920  
Equipment acquired under capital leases $ 450,098     $  
Contingent consideration on Nickco acquisition $     $ 236,680  
Common restricted shares for Nickco acquisition $     $ 474,000  
Return of common shares for sale escrow $     $ 1,109  


Investor Relations Contact:
Marlon Nurse, D.M.
Senior Vice President
212-564-4700