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 second quarter and first half of 2014.

FINANCIAL HIGHLIGHTS FOR SECOND QUARTER 2014

  • Revenue increased by 105% relative to the second quarter of last year to $72.1 million.
  • Gross profit increased by approximately 248% relative to the same quarter last year to $8.9 million. Our gross profit as a percentage of sales increased from 7.28% during the second quarter of last year to 12.3% during the same period this year.
  • Overall volumes of product sold—an important metric for our business as it illustrates our reach into the market—increased by 84% for the second quarter of 2014 vs. the second quarter of 2013. This was primarily a result of further increases in Thermal Chemical Extraction Process (TCEP) production as well as vacuum gas oil (VGO) production from the facility formerly owned by Omega Refining and acquired in May 2014.
  • Earnings per fully diluted share reached $0.28 for the second quarter of 2014 compared to $0.10 per fully diluted share in the second quarter of 2013.

FINANCIAL HIGHLIGHTS FOR FIRST HALF 2014

  • Revenue increased in the first half of 2014 to $119.4 million compared to $68.4 million in the first half of 2013.
  • Gross profit increased to $14.0 million in the first half of 2014 from $6.0 million in the first half of 2013.
  • Earnings per fully diluted share reached 33 cents in the first half 2014 compared to 15 cents per fully diluted share in the first half of 2013.

OTHER HIGHLIGHTS

  • Vertex continues to see improvements in the TCEP business both in terms of production and profitability.
  • The integration of the Omega Refining business has gone very well as the company continues to work on building out its Regional Strategy.
  • Vertex closed on approximately $17 million in financing to support our Regional Strategy and our expansion in the Western U.S. in particular. The company has a total of $19.6 million in cash on hand and still has its entire $20 million line of credit available.

Benjamin P. Cowart, Chairman and CEO of Vertex said, “The second quarter of this year showed an improvement in nearly all areas relative to the second quarter of 2013. Our results reflect the acquisition and integration of Omega Refining. Although the results only reflect approximately two months of contribution by Omega Refining in this quarter, we are encouraged by the direction of the performance and what our team has managed to achieve in such a short time. Our balance sheet improved during the quarter as we now have roughly $20 million in cash and a $20 million line of credit available."

Mr. Cowart continued, "As we continue through the second half of 2014, we are excited about the opportunities ahead of us. The Omega Base Oil facility in Nevada was not included in our second quarter financials as the closing has not yet occurred. We expect to close on this facility in the third quarter. We are excited about our performance to date, and are encouraged that Vertex's Regional Strategy gives the company a strong position and flexibility in our industry as we have broadened our geographic footprint and our array of end products."

CONFERENCE CALL

Management will host a conference call today at 10:00 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 the company’s website at: www.vertexenergy.com.

A digital replay will be available by telephone approximately two hours after the completion of the call until August 31, 2014, 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 #13588185.

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 Georgia, Chicago, and California. 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.

 
VERTEX ENERGY, INC.
CONSOLIDATED BALANCE SHEETS
(Unaudited)
  June 30,   December 31,
2014 2013
ASSETS
Current assets
Cash and cash equivalents $ 19,651,831 $ 2,678,628
Accounts receivable, net 13,952,805 11,714,813
Accounts receivable-related party 9,335,321 —
Inventory 16,412,448 8,540,459
Prepaid expenses 3,530,682   1,161,721
Total current assets 62,883,087   24,095,621
Noncurrent assets
Other assets 2,925,096 —
Fixed assets, net 46,725,108 15,091,176
Intangible assets, net 16,733,683 15,172,816
Goodwill 4,922,353 4,502,743
Deferred federal income tax 5,684,000   5,684,000
Total noncurrent assets 76,990,240   40,450,735
TOTAL ASSETS $ 139,873,327   $ 64,546,356
 
LIABILITIES AND EQUITY
Current liabilities
Accounts payable and accrued expenses $ 26,004,141 $ 14,096,185
Capital leases 809,497 —
Current portion of long-term debt 2,417,335   1,956,847
Total current liabilities 29,230,973   16,053,032
Long-term liabilities
Long-term debt 40,173,643 6,558,851
Contingent consideration 5,385,250 3,220,250
Line of credit 304,000 —
Deferred federal income tax 378,000   378,000
Total liabilities 75,471,866   26,210,133
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 675,558 and 1,319,002 issued and outstanding at June 30, 2014 and December 31, 2013, respectively

675 1,319
Common stock, $0.001 par value per share;

750,000,000 shares authorized; 25,019,450 and 21,205,609 issued and outstanding at June 30, 2014 and December 31, 2013, respectively

25,019 21,206
Additional paid-in capital 39,189,263 19,579,732
Retained earnings 25,405,251   17,542,004
Total Vertex Energy, Inc. stockholders' equity 64,620,208 37,144,261
Non-controlling interest (218,747 ) 1,191,962
Total equity 64,401,461   38,336,223
 
TOTAL LIABILITIES AND EQUITY $ 139,873,327   $ 64,546,356
 
VERTEX ENERGY, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
THREE AND SIX MONTHS ENDED JUNE 30, 2014 AND 2013
(UNAUDITED)
 
  Three Months Ended June 30,   Six Months Ended June 30,
2014   2013 2014   2013
Revenues $ 72,079,622 $ 35,111,402 $ 119,429,280 $ 68,366,204
Cost of revenues 63,200,942   32,556,738   105,406,112   62,341,782  
Gross profit 8,878,680 2,554,664 14,023,168 6,024,422
 
Reduction of contingent liability — (1,850,000 ) — (1,850,000 )
 
Operating expenses:
Selling, general and administrative expenses

(exclusive of acquisition related expenses)

6,075,517 2,395,745 9,663,006 4,653,829
Acquisition related expenses 1,959,418   —   2,559,830   —  
Total operating expenses 8,034,935   2,395,745   12,222,836   4,653,829  
 
Income from operations 843,745 2,008,919 1,800,332 3,220,593
 
Other income (expense)
Other income 7 7,598 377 32,888
Bargain purchase gain related to Omega acquisition 6,481,051 — 6,481,051 —
Other expense (10,866 ) — (10,866 ) (40,726 )
Interest expense (657,235 ) (112,999 ) (733,046 ) (219,139 )
Total other income (expense) 5,812,957   (105,401 ) 5,737,516   (226,977 )
 
Income before income tax 6,656,702 1,903,518 7,537,848 2,993,616
 
Income tax benefit (expense) —   (12,248 ) —   (18,751 )
 
Net income $ 6,656,702 $ 1,891,270 $ 7,537,848 $ 2,974,865
 
Net income attributable to non-controlling interest 344,380   —   325,399   —  
 
Net income attributable to Vertex Energy, Inc. $ 7,001,082   $ 1,891,270   $ 7,863,247   $ 2,974,865  
 
Earnings per common share
Basic $ 0.31   $ 0.11   $ 0.36   $ 0.17  
Diluted $ 0.28   $ 0.10   $ 0.33   $ 0.15  
 
Shares used in computing earnings per share
Basic 22,826,102   17,409,034   22,025,316   17,243,762  
Diluted 24,847,456   19,887,288   23,879,500   19,798,989  
 
VERTEX ENERGY, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
SIX MONTHS ENDED JUNE 30, 2014 AND 2013
(UNAUDITED)
 
Six Months Ended
June 30,   June 30,
2014 2013
 
Cash flows from operating activities
Net income $ 7,537,848 $ 2,974,865
Adjustments to reconcile net income to cash

provided by operating activities

Stock based compensation expense 101,378 94,466
Depreciation and amortization 1,800,950 1,069,035
Gain on acquisition (6,481,051 ) —
Deferred federal income tax — 11,000
Reduction of contingent liability — (1,850,000 )
Changes in operating assets and liabilities
Accounts receivable (2,237,992 ) (930,490 )
Accounts receivable-other 950,000 —
Accounts receivable-related party (1,027,321 ) —
Inventory (3,679,989 ) (3,465,205 )
Prepaid expenses (2,717,571 ) (45,451 )
Accounts payable 9,464,956 3,669,339
Other assets (79,806 ) —  
Net cash provided by operating activities 3,631,402   1,527,559  
 
Cash flows from investing activities
Acquisition of Omega (28,764,099 ) (67,972 )
Refund of asset acquisition — 675,558
Purchase of fixed assets (2,635,882 ) (1,010,485 )
Net cash (used in) investing activities (31,399,981 ) (402,899 )
 
Cash flows from financing activities
Line of credit (payments) proceeds, net 304,000 (750,000 )
Proceeds related to primary stock offering 15,803,000 —
Proceeds from note payable 40,509,906 —
Payments on note payable (9,634,029 ) (922,873 )
Proceeds from exercise of common stock options and warrants 211,062 37,501
Debt issue costs (2,452,157 ) —  
Net cash provided by (used in) financing activities 44,741,782   (1,635,372 )
 
Net change in cash and cash equivalents 16,973,203 (510,712 )
 
Cash and cash equivalents at beginning of the period 2,678,628   807,940  
 
Cash and cash equivalents at end of period $ 19,651,831   $ 297,228  
 
SUPPLEMENTAL INFORMATION
Cash paid for interest $ 733,046   $ 199,737  
Cash paid for income taxes $ —   $ 21,249  
 
NON-CASH INVESTING AND FINANCING TRANSACTIONS
Conversion of Series A Preferred Stock into common stock $ 644   $ 168  
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
SVP – Investor Relations