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 third quarter and first nine months of 2014.
FINANCIAL HIGHLIGHTS FOR THIRD QUARTER 2014
- Revenue increased by 64% relative to the third quarter of last year to $76.9 million.
- Gross profit decreased to $4.1 million in the third quarter of 2014 versus $4.9 million in the third quarter of 2013. The decline was primarily attributed to the decline in the market and costs associated with the Thermal Chemical Extraction Process (“TCEP”) turnaround and maintenance.
- Overall volumes of product sold across the company, which is an important metric for our business as it illustrates our reach into the market, increased by 56% for the third quarter of 2014 vs. the third quarter of 2013.
- Loss per fully diluted share of $0.08 for the third quarter of 2014 compared to earnings per fully diluted share of $0.12 in the third quarter of 2013.
FINANCIAL HIGHLIGHTS FOR FIRST NINE MONTHS OF 2014
- Revenue increased in the first nine months of 2014 to $196.3 million compared to $115.2 million in the first nine months of 2013.
- Gross profit increased to $18.1 million in the first nine months of 2014 from $10.9 million in the first nine months of 2013.
- Earnings per fully diluted share were $0.24 in the first nine months of 2014 compared to $0.27 per fully diluted share in the first nine months of 2013.
Benjamin P. Cowart, Chairman and CEO of Vertex said, “Despite the impact of the 5% market decline, we are pleased in our ability to manage our spread during the third quarter. There are some key numbers that demonstrate our resolve. Related to the H&H direct street collections business, we managed our spread by lowering our pay-for-oil by 10% year over year while our organic volume grew 41% year over year.”
Mr. Cowart continued, “The third quarter was impacted by both strategic internal decisions as well as the decline in the market. We took an important step in the quarter to complete some long-term maintenance work on our TCEP plant. This turnaround at TCEP affected our third quarter production there. In addition, we cooperated with the State of Louisiana to complete some necessary stack testing as part of a permit process.”
Mr. Cowart concluded, “We continue to work with the Heartland Group and plan on closing that previously disclosed pending acquisition by the end of November. As part of the acquisition, we will be getting both a 17 million gallon refining capacity as well as a well-established 6.8 million gallon collection operation covering a four-state region. The Bango facility in Nevada is now up and operating at nameplate capacity and has met all the requirements to complete the closing of this acquisition which we anticipate closing.”
CONFERENCE CALL
Management will host a conference call today at 9:00 a.m. EST. 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 November 30, 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 #13594240.
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VERTEX ENERGY, INC. |
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| CONSOLIDATED BALANCE SHEETS | ||||||||
| (Unaudited) | ||||||||
| September 30, | December 31, | |||||||
| 2014 | 2013 | |||||||
| ASSETS | ||||||||
| Current assets | ||||||||
| Cash and cash equivalents | $ | 1,229,746 | $ | 2,678,628 | ||||
| Accounts receivable, net | 21,675,824 | 11,714,813 | ||||||
| Note receivable-related party | 11,458,000 | — | ||||||
| Inventory | 19,001,712 | 8,540,459 | ||||||
| Prepaid expenses | 2,162,046 | 1,161,721 | ||||||
| Total current assets | 55,527,328 | 24,095,621 | ||||||
| Noncurrent assets | ||||||||
| Other assets | 2,797,842 | — | ||||||
| Fixed assets, at cost | 49,318,232 | 16,109,179 | ||||||
| Accumulated depreciation | (1,647,153 | ) | (1,018,003 | ) | ||||
| Fixed assets, net | 47,671,079 | 15,091,176 | ||||||
| Intangible assets, net | 16,327,341 | 15,172,816 | ||||||
| Goodwill | 4,922,353 | 4,502,743 | ||||||
| Deferred federal income tax | 5,684,000 | 5,684,000 | ||||||
| Total noncurrent assets | 77,402,615 | 40,450,735 | ||||||
| TOTAL ASSETS | $ | 132,929,943 | $ | 64,546,356 | ||||
| LIABILITIES AND EQUITY | ||||||||
| Current liabilities | ||||||||
| Accounts payable and accrued expenses | $ | 23,059,176 | $ | 14,096,185 | ||||
| Capital leases | 605,442 | — | ||||||
| Current portion of long-term debt | 40,781,399 | 1,956,847 | ||||||
| Total current liabilities | 64,446,017 | 16,053,032 | ||||||
| Long-term liabilities | ||||||||
| Long-term debt | 2,040,598 | 6,558,851 | ||||||
| Contingent consideration | 3,371,836 | 3,220,250 | ||||||
| Deferred federal income tax | 378,000 | 378,000 | ||||||
| Total liabilities | 70,236,451 | 26,210,133 | ||||||
| Commitments and contingencies | ||||||||
| EQUITY | ||||||||
| Preferred stock, $0.001 par value per share: | ||||||||
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50,000,000 shares authorized |
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Series A Convertible Preferred stock, $0.001 par value, 5,000,000 authorized and 630,419 and 1,319,002 issued and outstanding at September 30, 2014 and December 31, 2013, respectively |
630 | 1,319 | ||||||
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Common stock, $0.001 par value per share; |
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750,000,000 shares authorized; 25,414,156 and 21,205,609 issued and outstanding at September 30, 2014 and December 31, 2013, respectively |
25,414 | 21,206 | ||||||
| Additional paid-in capital | 39,191,567 | 19,579,732 | ||||||
| Retained earnings | 23,475,881 | 17,542,004 | ||||||
| Total Vertex Energy, Inc. stockholders' equity | 62,693,492 | 37,144,261 | ||||||
| Non-controlling interest | $ | — | $ | 1,191,962 | ||||
| Total Equity | $ | 62,693,492 | $ | 38,336,223 | ||||
| TOTAL LIABILITIES AND EQUITY | $ | 132,929,943 | $ | 64,546,356 | ||||
| VERTEX ENERGY, INC. | ||||||||||||||||
| CONSOLIDATED STATEMENTS OF OPERATIONS | ||||||||||||||||
| THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2014 AND 2013 | ||||||||||||||||
| (UNAUDITED) | ||||||||||||||||
| Three Months Ended | Nine Months Ended | |||||||||||||||
| September 30, | September 30, | |||||||||||||||
| 2014 | 2013 | 2014 | 2013 | |||||||||||||
| Revenues | $ | 76,903,516 | $ | 46,830,647 | $ | 196,332,796 | $ | 115,196,850 | ||||||||
| Cost of revenues | 72,846,322 | 41,945,879 | 178,252,434 | 104,287,660 | ||||||||||||
| Gross profit | 4,057,194 | 4,884,768 | 18,080,362 | 10,909,190 | ||||||||||||
| Reduction of contingent liability | (1,876,752 | ) | — | (1,876,752 | ) | (1,850,000 | ) | |||||||||
| Operating expenses: | ||||||||||||||||
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Selling, general and administrative expenses (exclusive of acquisition related expenses) |
6,801,396 | 2,495,748 | 16,464,402 | 7,129,673 | ||||||||||||
| Acquisition related expenses | 259,235 | — | 2,819,065 | — | ||||||||||||
| Total operating expenses | 7,060,631 | 2,495,748 | 19,283,467 | 7,129,673 | ||||||||||||
| Income (loss) from operations | (1,126,685 | ) | 2,389,020 | 673,647 | 5,629,517 | |||||||||||
| Other income (expense): | ||||||||||||||||
| Other income | 109,980 | — | 110,357 | — | ||||||||||||
| Bargain purchase gain related to Omega acquisition | 92,635 | — | 6,573,686 | — | ||||||||||||
| Other expense | — | (3,949 | ) | (10,866 | ) | (31,690 | ) | |||||||||
| Interest expense | (947,325 | ) | (95,488 | ) | (1,680,371 | ) | (314,627 | ) | ||||||||
| Total other income (expense) | (744,710 | ) | (99,437 | ) | 4,992,806 | (346,317 | ) | |||||||||
| Income (loss) before income tax | (1,871,395 | ) | 2,289,583 | 5,666,453 | 5,283,200 | |||||||||||
| Income tax benefit (expense) | (57,975 | ) | 40,211 | (57,975 | ) | 21,460 | ||||||||||
| Net income (loss) | $ | (1,929,370 | ) | $ | 2,329,794 | $ | 5,608,478 | $ | 5,304,660 | |||||||
| Net loss attributable to non-controlling interest | $ | — | $ | — | $ | 325,399 | $ | — | ||||||||
| Net income (loss) attributable to Vertex Energy, Inc. | $ | (1,929,370 | ) | $ | 2,329,794 | $ | 5,933,877 | $ | 5,304,660 | |||||||
| Earnings (loss) per common share | ||||||||||||||||
| Basic | $ | (0.08 | ) | $ | 0.13 | $ | 0.26 | $ | 0.30 | |||||||
| Diluted | $ | (0.08 | ) | $ | 0.12 | $ | 0.24 | $ | 0.27 | |||||||
| Shares used in computing earnings per share | ||||||||||||||||
| Basic | 25,151,660 | 17,715,786 | 23,077,914 | 17,402,501 | ||||||||||||
| Diluted | 25,151,660 | 19,997,257 | 24,825,326 | 19,766,263 | ||||||||||||
| VERTEX ENERGY, INC. | ||||||||
| CONSOLIDATED STATEMENTS OF CASH FLOWS | ||||||||
| NINE MONTHS ENDED SEPTEMBER 30, 2014 AND 2013 | ||||||||
| (UNAUDITED) | ||||||||
| Nine Months Ended | ||||||||
| September 30, | September 30, | |||||||
| 2014 | 2013 | |||||||
| Cash flows from operating activities | ||||||||
| Net income | $ | 5,608,478 | $ | 5,304,660 | ||||
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Adjustments to reconcile net income to cash provided by operating activities |
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| Stock based compensation expense | 173,979 | 123,571 | ||||||
| Depreciation and amortization | 2,981,393 | 1,615,657 | ||||||
| Gain on acquisition | (6,573,686 | ) | — | |||||
| Deferred federal income tax | — | (144,000 | ) | |||||
| Reduction of contingent liability | (1,876,752 | ) | (1,850,000 | ) | ||||
| Changes in operating assets and liabilities | ||||||||
| Accounts receivable | (9,731,011 | ) | (794,821 | ) | ||||
| Allowance for doubtful accounts | (230,000 | ) | — | |||||
| Notes receivable-related party | (3,150,000 | ) | — | |||||
| Inventory | (6,269,253 | ) | (2,338,000 | ) | ||||
| Prepaid expenses | (1,348,935 | ) | (78,925 | ) | ||||
| Accounts payable | 8,962,991 | 3,516,056 | ||||||
| Other assets | (81,450 | ) | — | |||||
| Net cash provided by (used in) operating activities | (11,534,246 | ) | 5,354,198 | |||||
| Cash flows from investing activities | ||||||||
| Acquisition of Omega | (30,164,464 | ) | (67,972 | ) | ||||
| Refund of asset acquisition | — | 675,558 | ||||||
| Purchase of fixed assets | (4,227,056 | ) | (1,671,295 | ) | ||||
| Net cash used in investing activities | (34,391,520 | ) | (1,063,709 | ) | ||||
| Cash flows from financing activities | ||||||||
| Line of credit payments, net | — | (3,250,000 | ) | |||||
| Proceeds related to secondary stock offering | 15,803,000 | — | ||||||
| Payments on contingent consideration | (136,662 | ) | — | |||||
| Proceeds from note payable | 41,372,315 | — | ||||||
| Payments on note payable | (10,469,474 | ) | (1,372,453 | ) | ||||
| Debt issue cost | (2,452,157 | ) | — | |||||
| Proceeds from exercise of common stock options and warrants | 359,862 | 55,250 | ||||||
| Net cash provided by (used in) financing activities | 44,476,884 | (4,567,203 | ) | |||||
| Net change in cash and cash equivalents | (1,448,882 | ) | (276,714 | ) | ||||
| Cash and cash equivalents at beginning of the period | 2,678,628 | 807,940 | ||||||
| Cash and cash equivalents at end of period | $ | 1,229,746 | $ | 531,226 | ||||
| SUPPLEMENTAL INFORMATION | ||||||||
| Cash paid for interest | $ | 1,600,117 | $ | 323,956 | ||||
| Cash paid for income taxes | $ | 80,158 | $ | 122,001 | ||||
| NON-CASH INVESTING AND FINANCING TRANSACTIONS | ||||||||
| Conversion of Series A Preferred Stock into common stock | $ | 689 | $ | 189 | ||||
| Note payable for acquisition of E-Source interest | $ | 854,050 | $ | — | ||||
| Additional paid in capital for acquisition of E-Source interest | $ | 1,790,745 | $ | — | ||||
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.
Contacts
Porter, LeVay & Rose, Inc.
Marlon Nurse, DM, 212-564-4700
SVP
– Investor Relations