Category: Environment

Vertex Energy, Inc. Announces Second Quarter 2015 Financial Results

Revenue Down 31.7%, Gross Margins of 11% in Second Quarter 2015 --- Conference Call Tomorrow August 11, 2015 at 9:00 A.M. EDT

HOUSTON--- 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 and six months ended June 30, 2015. The Company will host a conference call tomorrow, August 11, 2015 at 9 am EDT.

FINANCIAL HIGHLIGHTS FOR THREE MONTHS ENDED JUNE 30, 2015

  • Revenue for the second quarter of 2015 versus second quarter of 2014 was down 31.7% to $49.1 million, resulting in Net Loss of ($0.02) Per Share.
  • EBITDA* of $1,673,094 for the three months ended June 30, 2015.
  • Overall volumes of product sold, which illustrates our reach into the market, increased 19% for the second quarter of 2015 over second quarter of 2014.
  • Street collections increased 36% year over year (for the second quarter of 2015 versus 2014).
  • We acquired a strategic collection platform in Louisiana which we believe will lower feedstock costs at our Marrero, Louisiana plant.
  • We raised $25 million in a private placement and paid down $15.1 million to our senior lender Goldman Sachs, bringing our outstanding debt to $24 million owed under this senior note, a reduction of 37.7%.
  • Our Heartland business unit posted positive results with gross profit of $1.3 million.

FINANCIAL HIGHLIGHTS FOR SIX MONTHS ENDED JUNE 30, 2015

  • Revenue for the six months ended June 30, 2015 was $86.9 million.
  • Overall volumes of product sold rose 24% for the first six months of 2015 over the same period in 2014.
  • Street collections increased 53% year over year for the first six months of 2015 over the same period in 2014.
  • We signed a lease for use of the re-refinery plant located in Churchill County, Nevada.

Benjamin P. Cowart, Chairman and CEO of Vertex Energy said, “We are stronger today having weathered the storm brought on by the instability in the oil markets in previous quarters. We took some key steps that have helped us navigate through that adverse environment. Consequently, our operating business and financial performance have improved. Our financial performance surpassed a majority of our internal targets in the core business."

Mr. Cowart concluded, “We are encouraged by the significant progress in our business. Our street collections volume increased 53% year over year for the current quarter. We have reduced our adjusted pay for oil to less than zero with the implementation of our service fee model for the collections of used motor oil and environmental services. In addition, we have implemented a hedging program that we expect will reduce our inventory exposure to the volatility of oil prices. We remain cautious yet vigilant given the market uncertainties.”

Management of Vertex Energy will host a conference call tomorrow, August 11, 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 September 11, 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 #13614668.

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 Energy purchases these streams from an established network of local and regional collectors and generators. Vertex Energy 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 Energy 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 Energy manages takes place at its facility, which uses a proprietary Thermal Chemical Extraction Process (“TCEP”) technology. Based in Houston, Texas, Vertex Energy also has offices in California, Chicago, Georgia, Nevada, and Ohio. More information on Vertex Energy 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.

RECONCILIATION OF NET INCOME (LOSS) TO EARNINGS BEFORE INTEREST TAXES

DEPRECIATION AND AMORTIZATION (EBITDA)*

         
        For the Three Months Ended
        June 30, 2015     June 30, 2014
Net (loss) income       $ (445,195 )     $ 7,001,082
Add (deduct):              
Interest Expense         556,975         657,235
Depreciation and amortization         1,561,314         1,068,273
               
EBITDA*       $ 1,673,094       $ 8,726,590
                     

* 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 Energy does, limiting its usefulness as a comparative measure.
     
VERTEX ENERGY, INC.
CONSOLIDATED BALANCE SHEETS

(Unaudited)

     
       

June 30,
2015

      December 31,
2014
 
ASSETS                  
Current assets                  
Cash and cash equivalents       $ 5,717,543       $ 6,017,076  
Accounts receivable, net       13,033,513       9,936,948  
Current portion of notes receivable       1,000,000       3,150,000  
Inventory       9,088,290       12,620,616  
Prepaid expenses       2,803,310       1,245,307  
Costs in excess of billings             779,285  
Total current assets       31,642,656       33,749,232  
                   
Noncurrent assets                  
                   
Fixed assets, at cost       61,032,202       59,919,721  
Less accumulated depreciation       (5,739,802 )     (3,758,373 )
Net fixed assets       55,292,400       56,161,348  
Notes receivable       8,308,000       8,308,000  
Intangible assets, net       17,640,950       18,512,960  
Goodwill       4,922,353       4,922,353  
Deferred financing cost. net       1,942,880       2,191,888  
Deferred federal income tax             9,495,000  
Other assets       481,450       481,450  
Total noncurrent assets       88,588,033       100,072,999  
TOTAL ASSETS       $ 120,230,689       $ 133,822,231  
                   
LIABILITIES AND EQUITY                  
Current liabilities                  
Accounts payable and accrued expenses       $ 21,143,784       $ 21,984,136  
Capital leases       408,145       492,755  
Current portion of long-term debt       4,387,831       40,136,584  
Revolving note       1,815,795        
Deferred revenue       524,923       463,210  
Total current liabilities       28,280,478       63,076,685  
Long-term liabilities                  
Long-term debt       22,555,893       1,867,574  
Derivative liability       5,211,085        
Contingent consideration       6,069,000       6,069,000  
Deferred federal income tax             4,189,000  
Total liabilities       62,116,456       75,202,259  
                   
COMMITMENTS AND CONTINGENCIES                  
Series B Preferred shares, $.001 par value per share:                  

10,000,000 shares authorized, 8,064,534 and 0 shares issued and outstanding at June 30, 2015 and December 31, 2014, respectively with liquidation preference of $25,025,000 at June 30, 2015

     

10,791,675

     

 
                   
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 June 30, 2015 and December 31, 2014, respectively

     

613

     

630

 

Common stock, $0.001 par value per share;

                 

750,000,000 shares authorized; 28,181,761 and 28,108,105 issued and outstanding at June 30, 2015 and December 31, 2014, respectively

     

28,182

     

28,109

 
Additional paid-in capital       52,709,652       46,595,472  
Retained earnings (accumulated deficit)       (5,415,889 )     11,995,761  
Total Equity       $ 47,322,558       $ 58,619,972  
TOTAL LIABILITIES, CONVERTIBLE PREFERRED STOCK, AND EQUITY       $ 120,230,689       $ 133,822,231  
                       
 
VERTEX ENERGY, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
THREE AND SIX MONTHS ENDED JUNE 30, 2015 AND 2014
(UNAUDITED)
               
       

Three Months Ended
June 30,

   

Six Months Ended
June 30,

        2015     2014     2015     2014
Revenues       $ 49,119,711       $ 72,079,622       $ 86,804,050       $ 119,429,280  
Cost of revenues       43,635,177       63,844,569       81,643,633       106,188,202  
Gross profit       5,484,534       8,235,053       5,160,417       13,241,078  
                           
Operating expenses:                          
Selling, general and administrative expenses

(exclusive of acquisition related expenses)

      5,641,250       4,363,617       11,011,278       7,079,966  
Depreciation and amortization expense       1,561,314       1,068,273       3,118,296       1,800,950  
Acquisition related expenses             1,959,418       157,678       2,559,830  
Total operating expenses       7,202,564       7,391,308       14,287,252       11,440,746  
                           
Income (loss) from operations       (1,718,030 )     843,745       (9,126,835 )     1,800,332  
                           
Other income (expense):                          
Provision for doubtful accounts                   (2,650,000 )      
Other income       10       7       18       377  
Gain on bargain purchase             6,481,051             6,481,051  
Other income (expense)       12,818       (10,866 )     (57,660 )     (10,866 )
Gain on change in value of derivative liability       1,816,982             1,816,982        
Interest expense       (556,975 )     (657,235 )     (2,088,155 )     (733,046 )
Total other income (expense)       1,272,835       5,812,957       (2,978,815 )     5,737,516  
                           
Income (loss) before income tax       (445,195 )     6,656,702       (12,105,650 )     7,537,848  
                           
Income tax benefit (expense)                   (5,306,000 )      
                           
Net income (loss)       $ (445,195 )     $ 6,656,702       $ (17,411,650 )     $ 7,537,848  
                           
Net income (loss) attributable to non-controlling interest       $       $ 344,380       $       $ 325,399  
                           
Net income (loss) attributable to Vertex Energy, Inc.       $ (445,195 )     $ 7,001,082       $ (17,411,650 )     $ 7,863,247  
                           
Earnings (loss) per common share                          
Basic       $ (0.02 )     $ 0.31       $ (0.62 )     $ 0.36  
Diluted       $ (0.02 )     $ 0.28       $ (0.62 )     $ 0.33  
                           
Shares used in computing earnings per share                          
Basic       28,130,575       22,826,102       28,124,492       22,025,316  
Diluted       28,130,575       24,847,456       28,124,492       23,879,500  
                                   
 
VERTEX ENERGY, INC.
CONSOLIDATED STATEMENTS OF EQUITY
FOR THE SIX MONTHS ENDED JUNE 30, 2015
 
       

Common
Stock
Shares

   

Common
Stock $.001
Par

   

Series A
Preferred
Stock Shares

   

Series A
Preferred
Stock $.001 Par

   

Additional
Paid-in
Capital

   

Retained
Earnings

    Total Equity
Balance on January 1, 2015       28,108,105       $ 28,109       630,419       $ 630       46,595,472       $ 11,995,761       $ 58,619,972  
Share based compensation expense, total                               176,426             176,426  
Issuance of restricted common stock       56,180       56                   199,944             200,000  
Conversion of preferred A stock to common       17,476       17       (17,476 )     (17 )                  
Beneficial conversion feature on Preferred stock (APIC)                               5,737,810             5,737,810  
Net income (loss)                                     (17,411,650 )     (17,411,650 )
Balance on June 30, 2015       28,181,761       $ 28,182       612,943       $ 613       $ 52,709,652       $ (5,415,889 )     $ 47,322,558  
                                                                     
 
VERTEX ENERGY, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
SIX MONTHS ENDED JUNE 30, 2015 AND 2014
(UNAUDITED)
         
        Six Months Ended
       

June 30,
2015

   

June 30,
2014

Cash flows from operating activities              
Net income (loss)       $ (17,411,650 )     $ 7,537,848  
Adjustments to reconcile net income to cash

provided by (used in) operating activities

             
Stock based compensation expense       176,426       101,378  
Depreciation and amortization       3,118,296       1,800,950  
Gain on acquisition             (6,481,051 )
Loss on asset sale       63,410        
Gain on change in fair value of derivative liability       (1,816,982 )      
Deferred federal income tax       5,306,000        
Changes in operating assets and liabilities              
Accounts receivable       (3,096,566 )     (2,237,992 )
Accounts receivable - other             950,000  
Allowance for doubtful accounts       2,650,000        
Notes receivable-related party             (1,027,321 )
Inventory       3,532,326       (3,679,989 )
Prepaid expenses       (327,343 )     (2,717,571 )
Costs in excess of billings       779,285        
Accounts payable       (640,352 )     9,464,956  
Deferred revenue       61,713        
Other assets             (79,806 )
Net cash provided by (used in) operating activities       (7,605,437 )     3,631,402  
               
Cash flows from investing activities              
Acquisition of Omega             (28,764,099 )
Purchase of fixed assets       (1,196,240 )     (2,635,882 )
Proceeds from asset sales       4,500        
Notes receivable       (500,000 )      
Net cash used in investing activities       (1,691,740 )     (31,399,981 )
               
Cash flows from financing activities              
Line of credit payments, net             304,000  
Proceeds from sale of stock       23,557,552       15,803,000  
Payments on notes payable       (16,375,703 )     (9,634,029 )
Proceeds from note payable             40,509,906  
Proceeds from revolving note       1,815,795        
Debt issue cost             (2,452,157 )
Proceeds from exercise of common stock options and warrants             211,062  
Net cash provided by (used in) financing activities       8,997,644       44,741,782  
               
Net change in cash and cash equivalents       (299,533 )     16,973,203  
               
Cash and cash equivalents at beginning of the period       6,017,076       2,678,628  
               
Cash and cash equivalents at end of period       $ 5,717,543       $ 19,651,831  
               
SUPPLEMENTAL INFORMATION              
Cash paid for interest       $ 2,071,299       $ 733,046  
Cash paid for income taxes       $       $  
               
NON-CASH INVESTING AND FINANCING TRANSACTIONS              
Conversion of Series A Preferred Stock into common stock       $ 17       $ 644  
Note payable for acquisition of E-Source interest       $       $ 854,050  
Additional paid in capital for acquisition of E-Source interest       $       $ 231,260  
Shares issued as payment       $ 200,000       $  
Beneficial conversion feature for Series B Preferred stock       $ 5,725,819       $  
Fair value of warrants issued with series B Preferred stock       $ 7,028,067       $  
                       

 

Contact:

Investor Relations Contact
Marlon Nurse, DM, 212-564-4700
Senior VP – Investor Relations