Vertex Energy, Inc. (NASDAQ:VTNR), an environmental services company that recycles industrial waste streams and off-specification commercial chemical products, announced today its financial results for the three months ended March 31, 2015. The Company will host a conference call tomorrow, May 19, 2015 at 9 a.m. EDT.

FINANCIAL HIGHLIGHTS FOR FIRST QUARTER 2015

  • Revenue for the 2015 first quarter versus the 2014 first quarter was down 20% to $37.7 million with a net loss of $0.60 per share
  • Adjusted EBITDA totaling a loss of $5.9 million
  • Overall volumes of product sold, which illustrates our reach into the market, increased 32% for the first quarter of 2015 versus the first quarter of 2014
  • Our street collections increased 67% year over year
  • The Company signed a new lease at the re-refinery plant located in Churchill County, Nevada

Benjamin P. Cowart, Chairman and CEO of Vertex Energy said, “Our first quarter performance was affected by the steep decline in oil prices. We caution that oil prices remain low, and we continue to take measures to manage our operations in connection with such low oil price levels. Nevertheless, we remain committed to returning the business to profitability in 2015. For example, the service fee model for collection of used motor oil and environmental services that we adopted in January 2015 helps control our cost of oil to the refineries. This is in marked contrast to the previous model under which we paid to take the oil away. Additionally, we have identified $3.3 million in operational cost savings for 2015, including selling, general and administrative expenses (SG&A). We reduced our SG&A in the first quarter of 2015 by an additional $400,000 from fourth quarter of 2014. These savings will improve our margins moving forward.”

Mr. Cowart concluded, “On the revenue and volume side, we anticipate our Thermal Chemical Extraction Process (TCEP) facility will increase production from current levels during the rest of 2015. We made a strategic decision during the first quarter of 2015 to shift the TCEP volumes to our Marrero, Louisiana facility allowing us to reduce costs and reset UMO pricing. Although oil prices are higher than they were in January, they are still far below 2014 levels. This gives us additional reasons to believe our return to profitability during 2015 is achievable.”

Management of Vertex will host a conference call tomorrow, May 19, 2015, at 9:00 a.m. EDT. Those who wish to participate in the conference call may telephone 877-869-3847 from the U.S. and International callers may telephone 201-689-8261, approximately 15 minutes before the call. A webcast will also be available under the Investor Relations section of our website at: www.vertexenergy.com.

A digital replay will be available by telephone approximately two hours after the completion of the call until June 30, 2015, and may be accessed by dialing 877-660-6853 from the U.S. or 201-612-7415 for international callers, and using the Conference ID #13608422.

ABOUT VERTEX ENERGY, INC.

Vertex Energy, Inc. (NASDAQ: VTNR) is a leading environmental services company that recycles industrial waste streams and off-specification commercial chemical products. Its primary focus is recycling used motor oil and other petroleum by-product streams. Vertex purchases these streams from an established network of local and regional collectors and generators. Vertex also manages the transport, storage and delivery of the aggregated feedstock and product streams to end users, and manages the re-refining of a portion of its aggregated petroleum streams in order to sell them as higher-value end products. Vertex sells its aggregated petroleum streams as feedstock to other re-refineries and fuel blenders or as replacement fuel for use in industrial burners. The re-refining of used motor oil that Vertex manages takes place at its facility, which uses a proprietary Thermal Chemical Extraction Process (“TCEP”) technology. Based in Houston, Texas, Vertex also has offices in California, Chicago, Georgia, Nevada, and Ohio. More information on Vertex can be found at www.vertexenergy.com.

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," "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.

* EBITDA is a non-GAAP financial measure. This measurement is 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. EBITDA is presented because we believe it provides additional useful information to investors due to the various non-cash items during the period. EBITDA has limitations as an analytical tool, and you should not consider it in isolation, or as a substitute for analysis of our operating results as reported under GAAP. Some of these limitations are:

  • EBITDA does not reflect cash expenditures, or future requirements for capital expenditures, or contractual commitments;
  • EBITDA does not reflect changes in, or cash requirements for, working capital needs;
  • EBITDA does 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 non-cash charges, the assets being depreciated and amortized will often have to be replaced in the future, and EBITDA does not reflect any cash requirements for such replacements; and
  • Other companies in this industry may calculate EBITDA differently than Vertex does, limiting its usefulness as a comparative measure.
 

VERTEX ENERGY, INC.

RECONCILIATION OF NET INCOME (LOSS) TO EBITDA*

 
  For the Three Months Ended

 

March 31, 2015   March 31, 2014
Net income (loss) $ (16,966,455 ) $ 862,165
 
Add (deduct):
Interest Expense 1,531,180 75,811
Depreciation and amortization 1,556,982 732,677
Income tax expense 5,306,000 -
Provision for doubtful accounts   2,650,000     -
Subtotal 11,044,162 808,488
 
EBITDA* $ (5,922,293 ) $ 1,670,653
 
 

VERTEX ENERGY, INC.

CONSOLIDATED BALANCE SHEETS

(Unaudited)

 
  March 31,   December 31,
2015 2014
ASSETS
Current assets
Cash and cash equivalents $ 3,680,841 $ 6,017,076
Accounts receivable, net 10,855,044 9,936,948
Current portion of notes receivable 1,000,000 3,150,000
Inventory 11,525,259 12,620,616
Prepaid expenses 1,109,618 1,245,307
Costs in excess of billings   —     779,285  
Total current assets   28,170,762     33,749,232  
 
Noncurrent assets
 
Fixed assets, at cost 60,157,402 59,919,721
Less accumulated depreciation   (4,754,911 )  

(3,758,373

)

Net fixed assets 55,402,491 56,161,348
Notes receivable 8,308,000 8,308,000
Intangible assets, net 18,077,020 18,512,960
Goodwill 4,922,353 4,922,353
Deferred financing cost. net 2,067,384 2,191,888
Deferred federal income tax — 9,495,000
Other assets   481,450     481,450  
Total noncurrent assets   89,258,698     100,072,999  

TOTAL ASSETS

$ 117,429,460   $ 133,822,231  
 

LIABILITIES AND EQUITY

Current liabilities
Accounts payable and accrued expenses $ 22,645,753 $ 21,984,136
Capital leases 450,871 492,755
Current portion of long-term debt 39,860,931 40,136,584
Derivative liability 577,440 —
Revolving note 1,437,500 —
Deferred revenue   2,910,940     463,210  
Total current liabilities   67,883,435     63,076,685  
Long-term liabilities
Long-term debt 1,735,294 1,867,574
Contingent consideration 6,069,000 6,069,000
Deferred federal income tax   —     4,189,000  
Total liabilities   75,687,729     75,202,259  
Commitments and contingencies
 
EQUITY
Preferred stock, $0.001 par value per share:
50,000,000 shares authorized

Series A Convertible Preferred stock, $0.001 par value,
5,000,000 authorized and 612,943 and 630,419 issued
and outstanding at March 31, 2015 and December 31,
2014, respectively

613 630
Common stock, $0.001 par value per share;

750,000,000 shares authorized; 28,125,581 and 28,108,105
issued and outstanding at March 31, 2015 and
December 31, 2014, respectively

28,126 28,109
Additional paid-in capital 46,683,686 46,595,472
Retained earnings (accumulated deficit)   (4,970,694 )   11,995,761  
Total Equity $ 41,741,731   $ 58,619,972  
TOTAL LIABILITIES AND EQUITY $ 117,429,460   $ 133,822,231  
 
 

VERTEX ENERGY, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS
THREE MONTHS ENDED MARCH 31, 2015 AND 2014
(UNAUDITED)
 
  Three Months Ended
March 31,
2015   2014
Revenues $ 37,684,339 $ 47,349,658
Cost of revenues   37,605,869     42,205,170  
Gross profit 78,470 5,144,488
 
Operating expenses:
Selling, general and administrative expenses
(exclusive of acquisition related expenses) 7,329,597 3,587,489
Acquisition related expenses   157,678     600,412  
Total operating expenses   7,487,275     4,187,901  
 
Income (loss) from operations (7,408,805 ) 956,587
 
Other income (expense):
Provision for doubtful accounts (2,650,000 ) —
Other income 8 370
Other expense (70,478 ) —
Interest expense   (1,531,180 )  

(75,811

)

Total other income (expense)   (4,251,650 )  

(75,441

)

 
Income (loss) before income tax (11,660,455 ) 881,146
 
Income tax benefit (expense)   (5,306,000 )   —  
 
Net income (loss) $ (16,966,455 ) $ 881,146
 
Net loss attributable to non-controlling interest $ —   $

(18,981

)

 
Net income (loss) attributable to Vertex Energy, Inc. $ (16,966,455 ) $ 862,165  
 
Earnings (loss) per common share
Basic $ (0.60 ) $ 0.04  
Diluted $ (0.60 ) $ 0.04  
 
Shares used in computing earnings per share
Basic   28,118,396     21,232,949  
Diluted   28,118,396     23,738,018  
 
 
VERTEX ENERGY, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
THREE MONTHS ENDED MARCH, 2015 AND 2014
(UNAUDITED)
 
  Three Months Ended
March 31,   March 31,
2015 2014
Cash flows from operating activities
Net income (loss) $ (16,966,455 ) $ 881,146

Adjustments to reconcile net income to cash
provided by operating activities

Stock based compensation expense 88,214 51,224
Depreciation and amortization 1,556,982 732,677
Payment-in-kind interest 577,440 —
Gain on acquisition — —
Loss on asset sale 70,478 —
Deferred federal income tax 5,306,000 —
Changes in operating assets and liabilities
Accounts receivable (418,097 ) 297,587
Allowance for doubtful accounts 2,650,000 —
Inventory 1,095,357 986,095
Prepaid expenses (364,309 ) (728,644 )
Costs in excess of billings 779,285 —
Accounts payable 661,617 1,192,312
Deferred revenue   2,447,730     —  
Net cash provided by (used in) operating activities   (2,515,758 )   3,412,397  
 
Cash flows from investing activities
Purchase of fixed assets (312,659 ) (780,616 )
Proceeds from asset sales   4,500     —  
Net cash used in investing activities   (308,159 )   (780,616 )
 
Cash flows from financing activities
Proceeds from sale of stock — (3,500 )
Proceeds from note payable — 351,921
Proceeds from revolving note 1,437,500 —
Origination of note payable (449,818 ) (666,386 )
Notes receivable (500,000 ) —
Proceeds from exercise of common stock options and warrants   —     24,000  
Net cash provided by (used in) financing activities   487,682     (293,965 )
 
Net change in cash and cash equivalents (2,336,235 ) 2,337,816
 
Cash and cash equivalents at beginning of the period   6,017,076     2,678,628  
 
Cash and cash equivalents at end of period $ 3,680,841   $ 5,016,444  
 
SUPPLEMENTAL INFORMATION
Cash paid for interest $ 953,115   $ 75,811  
 
NON-CASH INVESTING AND FINANCING TRANSACTIONS
Conversion of Series A Preferred Stock into common stock $ 17   $ 40  
Note payable for acquisition of E-Source interest $ —   $ 854,050  
Additional paid in capital for acquisition of E-Source interest $ —   $ 231,260  
 


Contacts

Porter, LeVay & Rose, Inc.
Marlon Nurse, DM, 212-564-4700
Senior VP – Investor Relations