Vertex Energy, Inc. Reports Third Quarter 2019 Results

• Direct UMO Collections Increased 24.5% Y/Y in 3Q19

• Widening in Product Spreads Entering 4Q19 in Advance of IMO 2020 Mandate

• Commencing TCEP Operations at Baytown Texas Facility in November 2019

• Targeting Successful Completion of UMO-to-High Purity Base Oil Pilot Test by Year-End 2019

• Introducing Full-Year 2020 Adjusted EBITDA Guidance of $15 million to $20 million

HOUSTON, TX / ACCESSWIRE / November 8, 2019 / Vertex Energy, Inc. (VTNR) ("Vertex" or the "Company"), a leading specialty refiner and marketer of high-quality hydrocarbon products, today announced financial results for the third quarter 2019.

For the three months ended September 30, 2019, the Company reported revenue of $37.8 million, versus $50.6 million in the prior-year period. Vertex reported an operating loss of ($2.5) million in the third quarter of 2019, versus $0.6 million of operating income in the prior-year period. The Company reported a net loss available to common shareholders of ($3.9) million, or ($0.09) per basic share, in the third quarter 2019, versus a net loss of ($4.6) million, or ($0.13) per basic share, in the third quarter 2018. Vertex reported Adjusted EBITDA of $1.8 million in the third quarter 2019, versus $3.2 million in the quarter 2018. A schedule reconciling the Company's GAAP and non-GAAP financial results (including Adjusted EBITDA) is included later in this release.

During the third quarter 2019, the Company benefited from strong growth in used motor oil (UMO) collections and widening product spreads on middle distillates ahead of the January 1, 2020 transition to low-sulfur marine fuels mandated by the International Maritime Organization (IMO). Despite favorable market conditions, Hurricane Barry extended the duration of a planned turnaround at the Marrero (Louisiana) refinery during July, resulting in an additional negative $1.5 million impact in the third quarter. The Company's Marrero and Heartland (Ohio) refineries are currently operating near peak nameplate capacity, given strong demand for the Company's specialty products.

Direct collections of UMO increased 24.5% in the third quarter of 2019, when compared to the prior-year's period. UMO collections represented approximately 48.6% of overall feedstock processed at the Company's refineries in the third quarter of 2019, versus 38.7% in the third quarter of 2018, with the remaining feedstock being sourced from third-party UMO suppliers.

"During the past four years, we have invested significant time and resources preparing Vertex to capitalize on the International Maritime Organization's low sulfur marine fuel mandate that comes into effect January 1, 2020," stated Benjamin P. Cowart, President and CEO of Vertex. "With the IMO transition now just weeks away, our facilities are now ready to execute on this opportunity. We have seen product spreads widen versus prior-year levels, supported by a decline in feedstock costs together with a corresponding increase in distillate values. Current market conditions are setting up favorably as we look ahead to the fourth quarter and into 2020."

"Our Marrero and Heartland refineries operated near peak capacity since August," continued Cowart. "This month, we will recommence TCEP production at our Baytown facility as we seek to capitalize on improved demand for lower sulfur marine fuels, continued Cowart. "Our TCEP technology converts feedstock into a low sulfur marine fuel that can be sold into the new 0.5% low sulfur marine fuel specification mandated under IMO 2020."

As announced on July 31, 2019, Vertex has entered into a joint venture with Tensile Capital Management LLC, as referred to in previous public disclosures. Subject in part to a successful pilot program that is expected to reach completion by year-end 2019, Vertex will receive approximately $13.5 million of non-recourse funding that it intends to use for debt reduction, investment in organic UMO collections growth, and the targeted acquisition of third-party UMO collections operations.

TCEP Update

Vertex operates a tank terminal facility in Baytown, TX where the Company collects and processes used motor oil into higher value feedstocks through its patented Thermal Chemical Extraction Process (TCEP) technology.

In the fourth quarter 2019, the Company expects to produce approximately 30,000 barrels of marine fuel using the TCEP technology, the first such production since the third quarter 2015. All required capital investments have been made in the facility, which is now prepared to commence operations.

Financial Guidance

For the fourth quarter 2019, the Company anticipates Adjusted EBITDA in the range of $2.5 million to $3.0 million. For the full-year 2020, the Company anticipates Adjusted EBITDA in the range of $15 million to $20 million. All guidance is current as of the time provided and is subject to change.

Conference Call and Webcast

A conference call will be held on November 8, 2019 at 9:00 AM ET to review the Company's financial results, discuss recent events and conduct a question-and-answer session. A webcast of the conference call and accompanying presentation materials will be available in the Investor Relations section of the Company's website at www.vertexenergy.com. To listen to a live broadcast, go to 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 Live: 844-369-8770

To listen to a replay of the teleconference, which will be available through December 8, 2019:

Domestic Replay: 877-481-4010
Conference ID: 54092

About Vertex Energy Inc.

Houston-based Vertex Energy, Inc. (VTNR) is a specialty refiner of alternative feedstocks and marketer of high-purity petroleum products. Vertex is one of the largest processors of used motor oil in the U.S., with operations located in Houston and Port Arthur (TX), Marrero (LA) and Heartland (OH). Vertex also co-owns a facility, Myrtle Grove, located on a 41-acre industrial complex along the Gulf Coast in Belle Chasse, LA, with existing hydro-processing and plant infrastructure assets, that include nine million gallons of storage. The Company has built a reputation as a key supplier of Group II+ and Group III base oils to the lubricant manufacturing industry throughout North America.

Cautionary Statement 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 takes no obligation to update or correct information prepared by third parties that are not paid for by Vertex Energy.

Investor/Media Contact

Noel Ryan, IRC
720.778.2415
IR@vertexenergy.com

Reconciliation of Net 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 Trailing Twelve Months
		September 30, 2019				September 30, 2018				September 30, 2019				September 30, 2018
Net loss
attributable to Vertex Energy, Inc.		$	(1,091,781	)		$	(2,287,880	)		$	(6,684,114	)		$	(2,401,821	)
Add (deduct):
Interest Income			(653	)			-				(2,571	)			(659	)
Interest Expense			826,005				798,800				3,155,864				3,243,439
Depreciation and amortization			1,815,582				1,806,839				7,090,481				6,934,427
EBITDA			1,549,153				317,759				3,559,660				7,775,386
Add (deduct):
Loss (gain) on change in value of derivative warrant liability			(1,290,792	)			2,169,133				(3,220,402	)			2,681,289
Unrealized (gain) loss on derivative instruments			1,402,017				554,921				909,040				601,483
Stock-based compensation			159,426				165,058				638,548				678,529
Adjusted EBITDA *		$	1,819,804			$	3,206,871			$	1,886,846			$	11,736,687

^{* 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 and unrealized gains and losses on derivative instruments for hedging activities. 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

• Other companies in this industry may calculate EBITDA and Adjusted EBITDA differently than Vertex Energy does, limiting its usefulness as a comparative measure; and

• Trailing Twelve Months September 30, 2019 reflects amounts for the Fiscal Year Ended 2018 plus Q1, Q2 and Q3 2019 minus Q1, Q2 and Q3 2018. Trailing Twelve Months September 30, 2018 reflects amounts for the Fiscal Year Ended 2017 plus Q1, Q2 and Q3 2018 minus Q1, Q2 and Q3 2017.

VERTEX ENERGY, INC.
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)

		September 30, 2019				December 31, 2018
ASSETS
Current assets
Cash and cash equivalents		$	2,303,725			$	1,249,831
Restricted cash			100,088				1,600,000
Accounts receivable, net			10,405,711				9,027,990
Federal income tax receivable			205,818				137,212
Inventory			5,878,408				8,091,397
Derivative commodity asset			-				695,941
Prepaid expenses			6,534,981				2,740,541
Total current assets			25,428,731				23,542,912
Noncurrent assets
Fixed assets, at cost			69,437,842				66,762,388
Less accumulated depreciation			(23,550,224	)			(19,874,896	)
Fixed assets, net			45,887,618				46,887,492
Finance lease right-of-use assets			904,691				397,515
Operating lease right-of use assets			36,242,861				-
Intangible assets, net			11,590,876				12,578,519
Federal income tax receivable			68,605				137,211
Other assets			616,759				616,759
TOTAL ASSETS		$	120,740,141			$	84,160,408
LIABILITIES, TEMPORARY EQUITY, AND EQUITY
Current liabilities
Accounts payable		$	7,745,380			$	8,791,529
Accrued expenses			2,275,006				2,535,347
Dividends payable			419,082				403,002
Finance lease liability-current			214,045				95,857
Operating lease liability-current			6,005,502				-
Current portion of long-term debt, net of unamortized finance costs			2,794,624				1,325,240
Derivative commodity liability			1,510,573				-
Revolving note			5,387,639				3,844,636
Total current liabilities			26,351,851				16,995,611
Long-term liabilities
Long-term debt, net of unamortized finance costs			12,658,000				14,402,179
Finance lease liability-long-term			665,926				276,355
Operating lease liability-long-term			30,237,359				-
Contingent consideration			-				15,564
Derivative warrant liability			1,149,977				1,481,692
Total liabilities			71,063,113				33,171,401
COMMITMENTS AND CONTINGENCIES (Note 3)			-				-
TEMPORARY EQUITY
Series B Convertible Preferred Stock, $0.001 par value per share;10,000,000 shares designated, 3,769,505 and 3,604,827 shares issued and outstanding at September 30, 2019 and December 31, 2018, respectively with a liquidation preference of $11,685,466 and $11,174,964 at September 30, 2019 and December 31, 2018, respectively.			10,442,193				8,900,208
Series B1 Convertible Preferred Stock, $0.001 par value per share;17,000,000 shares designated, 10,417,966 and 10,057,597 shares issued and outstanding at September 30, 2019 and December 31, 2018, respectively with a liquidation preference of $16,252,027 and $15,689,851 at September 30, 2019 and December 31, 2018, respectively.			14,454,821				13,279,755
Redeemable non-controlling interest			4,000,000				-
Total Temporary Equity			28,897,014				22,179,963
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 419,859 shares issued and outstanding at September 30, 2019 and December 31, 2018, respectively with a liquidation preference of $625,590 and $625,590 at September 30, 2019 and December 31, 2018, respectively.			420				420
Common stock, $0.001 par value per share;750,000,000 shares authorized; 41,849,406 and 40,174,821 shares issued and outstanding at September 30, 2019 and December 31, 2018, respectively.			41,850				40,175
Additional paid-in capital			79,719,745				75,131,122
Accumulated deficit			(59,788,939	)			(47,800,886	)
Total Vertex Energy, Inc. stockholders' equity			19,973,076				27,370,831
Non-controlling interest			806,938				1,438,213
Total Equity			20,780,014				28,809,044
TOTAL LIABILITIES, TEMPORARY EQUITY, AND EQUITY		$	120,740,141			$	84,160,408

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

		Three Months Ended September 30,								Nine Months Ended September 30,
		2019				2018				2019				2018
Revenues		$	37,799,259			$	50,632,948			$	120,777,263			$	138,918,913
Cost of revenues (exclusive of depreciation and amortization shown separately below)			32,372,316				42,593,367				103,732,086				114,434,776
Gross profit			5,426,943				8,039,581				17,045,177				24,484,137
Operating expenses:
Selling, general and administrative expenses			6,153,184				5,658,659				17,529,784				16,668,692
Depreciation and amortization			1,815,582				1,806,839				5,333,485				5,234,014
Total operating expenses			7,968,766				7,465,498				22,863,269				21,902,706
Income (loss) from operations			(2,541,823	)			574,083				(5,818,092	)			2,581,431
Other income (expense):
Other income			918,153				-				920,071				659
Gain on sale of assets			-				-				31,443				51,523
Gain (loss) on change in value of derivative warrant liability			1,290,792				(2,169,133	)			331,715				(2,124,971	)
Interest expense			(826,005	)			(798,800	)			(2,322,780	)			(2,448,771	)
Total other income (expense)			1,382,940				(2,967,933	)			(1,039,551	)			(4,521,560	)
Loss before income tax			(1,158,883	)			(2,393,850	)			(6,857,643	)			(1,940,129	)
Income tax benefit (expense)			-				-				-				-
Net loss			(1,158,883	)			(2,393,850	)			(6,857,643	)			(1,940,129	)
Net loss attributable to non-controlling interest			(67,102	)			(105,970	)			(374,862	)			76,305
Net loss attributable to Vertex Energy, Inc.			(1,091,781	)			(2,287,880	)			(6,482,781	)			(2,016,434	)
Accretion of redeemable noncontrolling interest to redemption value			(1,849,930	)			-				(1,849,930	)			-
Accretion of discount on Series B and B1 Preferred Stock			(550,774	)			(1,152,968	)			(1,644,374	)			(2,351,472	)
Dividends on Series B and B1 Preferred Stock			(419,096	)			(1,194,524	)			(1,238,766	)			(2,284,121	)
Net loss available to common shareholders		$	(3,911,581	)		$	(4,635,372	)		$	(11,215,851	)		$	(6,652,027	)
Loss per common share
Basic		$	(0.09	)		$	(0.13	)		$	(0.28	)		$	(0.20	)
Diluted		$	(0.09	)		$	(0.13	)		$	(0.28	)		$	(0.20	)
Shares used in computing earnings per share
Basic			41,376,335				35,144,113				40,626,700				33,843,721
Diluted			41,376,335				35,144,113				40,626,700				33,843,721

VERTEX ENERGY, INC.
CONSOLIDATED STATEMENTS OF EQUITY
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2019 AND 2018
(UNAUDITED)

		Nine Months Ended September 30, 2019
		Common Stock				Series A Preferred
		Shares				$.001 Par				Shares				$0.001 Par				Additional Paid-In Capital				Retained Earnings				Non-controlling Interest				Total Equity
Balance on January 1, 2019			40,174,821			$	40,175				419,859			$	420			$	75,131,122			$	(47,800,886	)		$	1,438,213			$	28,809,044
Share based compensation expense, total			-				-				-				-				143,063				-				-				143,063
Conversion of Series B1 Preferred stock to common			96,160				96				-				-				149,914				(30,242	)			-				119,768
Dividends on Series B and B1			-				-				-				-				-				(406,795	)			-				(406,795	)
Accretion of discount on Series B and B1			-				-				-				-				-				(530,433	)			-				(530,433	)
Net loss			-				-				-				-				-				(4,963,564	)			(105,431	)			(5,068,995	)
Balance on March 31, 2019			40,270,981			$	40,271				419,859			$	420			$	75,424,099			$	(53,731,920	)		$	1,332,782			$	23,065,652
Exercise of options to common			75,925				76				-				-				4,424				-				-				4,500
Share based compensation expense, total			-				-				-				-				171,002				-				-				171,002
Dividends on Series B and B1			-				-				-				-				-				(412,875	)			-				(412,875	)
Accretion of discount on Series B and B1			-				-				-				-				-				(532,925	)			-				(532,925	)
VRM LA distribution			-				-				-				-				-				-				(285,534	)			(285,534	)
Net loss			-				-