CORRECTING and REPLACING Vertex Energy Announces Fourth Quarter and Full Year 2023 Financial Results

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Feb 28, 2024 09:36 pm
HOUSTON -- 

Two in-text references to fourth-quarter 2023 net loss per fully-diluted share to be corrected.

  • First bullet point under “FOURTH QUARTER 2023 HIGHLIGHTS” should read: Reported net loss attributable to the Company of ($63.9) million, or ($0.68) per fully-diluted share (instead of “Reported net loss attributable to the Company of ($63.9) million, or ($0.84) per fully-diluted share”).
  • First sentence of the first paragraph under “FOURTH QUARTER 2023 HIGHLIGHTS” should read: Vertex reported fourth quarter 2023 net loss attributable to the Company of ($63.9) million, or ($0.68) per fully-diluted share, versus net income attributable to the Company of $44.4 million, or $0.56 per fully-diluted share for the fourth quarter of 2022 (instead of “Vertex reported fourth quarter 2023 net loss attributable to the Company of ($63.9) million, or ($0.84) per fully-diluted share, versus net income attributable to the Company of $44.4 million, or $0.07 per fully-diluted share for the fourth quarter of 2022”).

The updated release reads:

Vertex Energy Announces Fourth Quarter and Full Year 2023 Financial and Results

Vertex Energy, Inc. (NASDAQ: VTNR) (“Vertex” or the “Company”), a leading specialty refiner and marketer of high-quality refined products, today announced its financial results for the fourth quarter ended December 31, 2023.

The Company will host a conference call to discuss fourth quarter 2023 results today, at 8:30 A.M. Eastern Time. Details regarding the conference call are included at the end of this release.

FOURTH QUARTER 2023 HIGHLIGHTS

  • Reported net loss attributable to the Company of ($63.9) million, or ($0.68) per fully-diluted share.
  • Reported Adjusted EBITDA of ($35.1) million (see “Non-GAAP Financial Measures and Key Performance Indicators”, below).
  • Continued safe operation of the Company’s Mobile, Alabama refinery (the “Mobile Refinery”) with fourth quarter 2023 conventional throughput of 67,083 barrels per day (bpd), in line with prior guidance.
  • Renewable diesel (“RD”) throughput of 3,926 bpd, reflecting Phase One capacity utilization of 49.1%.
  • Total cash and cash equivalents of $80.6 million, including restricted cash of $3.6 million and $50 million in additional term loan proceeds received during the quarter ended December 31, 2023.

FULL-YEAR 2023 HIGHLIGHTS

  • Reported net loss attributable to the Company of ($71.5) million for the full year 2023, versus net loss attributable to the Company of ($4.8) million in 2022.
  • Reported Adjusted EBITDA of $17.1 million for the full-year versus Adjusted EBITDA of $161.0 million for the full year 2022 (see “Non-GAAP Financial Measures and Key Performance Indicators”, below).
  • Conventional throughput volumes of 73,734 barrels per day (bpd) for 2023 (98.3% utilization).
  • Completion of Phase I of Renewable Diesel conversion project with the launch of Renewables business and Marine Fuels and Logistics business in Mobile, Alabama.

Vertex reported fourth quarter 2023 net loss attributable to the Company of ($63.9) million, or ($0.68) per fully-diluted share, versus net income attributable to the Company of $44.4 million, or $0.56 per fully-diluted share for the fourth quarter of 2022. Adjusted EBITDA (see “Non-GAAP Financial Measures and Key Performance Indicators”, below) was ($35.1) million for the fourth quarter 2023, compared to Adjusted EBITDA of $75.2 million in the prior-year period.

For the full-year 2023, the Company reported a net loss attributable to the Company of ($71.5) million versus ($4.8) million for the full-year 2022, largely attributable to losses in the Renewables segment due to elevated costs for Refined, Bleached and Deodorized (“RBD”) soybean oil feedstock, and increased corporate segment expenses for overhead to support business expansion. The Company also reported Adjusted EBITDA of $17.1 million, versus $161.0 million for the full years 2023 and 2022, respectively. Full-year financial results for 2023 include several non-cash items such as inventory valuation adjustments of $6 million, changes in the value of derivative liabilities which amounted to $8 million and a one-time pre-tax gain on the sale of assets of $70.9 million related to the sale of the Heartland facility.

Schedules reconciling the Company’s generally accepted accounting principles in the United States (“GAAP”) and non-GAAP financial results, including Adjusted EBITDA and certain key performance indicators, are included later in this release (see also “Non-GAAP Financial Measures and Key Performance Indicators”, below).

MANAGEMENT COMMENTARY

Mr. Benjamin P. Cowart, Vertex’s Chief Executive Officer, stated, “In 2023, we focused on establishing new lines of business, expanding our capabilities, and positioning ourselves for growth into new markets. We believe the launch of Vertex Renewables and optimization of feedstocks have positioned the Company for margin opportunities under the new credit regime post-2024. Additionally, the inauguration of our Marine Fuels and Logistics business alongside our Supply and Trading division has enabled us to leverage strategic integration opportunities, enhancing netbacks and capturing additional value for our finished products.” Mr. Cowart continued, “As we move into 2024, our priorities are to increase our cash position, reduce our operating costs, and improve margins.”

MOBILE REFINERY OPERATIONS

Conventional Fuels Refining

Total conventional throughput at the Mobile Refinery was 67,083 bpd in the fourth quarter of 2023. Total production of finished high-value, light products, such as gasoline, diesel, and jet fuel, represented approximately 66% of total production in the fourth quarter of 2023, vs. 64% in the third quarter of 2023, and in line with management’s original expectations, reflecting a continued successful yield optimization initiative at the Mobile conventional refining facility.

The Mobile Refinery’s conventional operations generated a gross profit of $7.3 million and $29.6 million of fuel gross margin (a Key performance indicator (KPI) discussed below) or $4.79 per barrel during the fourth quarter of 2023, versus generating a gross profit of $89.9 million, and fuel gross margin of $147.0 million, or $20.50 per barrel in the fourth quarter of 2022.

Total conventional throughput at the Mobile Refinery was 73,734 bpd for the full year 2023, reflecting capacity utilization of 98%. Total production of finished high-value, light products, such as gasoline, diesel, and jet fuel, represented approximately 63% of total production in 2023, vs. 70% in the nine-month operating period in 2022.

The Mobile Refinery’s conventional operations generated a gross profit of $165.5 million and $318.6 million of fuel gross margin (a KPI discussed below) or $11.84 per barrel during the full year 2023, versus generating a gross profit of $140.9 million, and fuel gross margin of $398.4 million, or $19.93 per barrel in the nine-month operating period in 2022.

Renewable Diesel Facility

Total renewable throughput at the Mobile Renewable Diesel facility was 3,926 bpd in the fourth quarter of 2023. Total production of renewable diesel was 3,786 bpd reflecting a product yield of 96.4%.

The Mobile Renewable Diesel facility operations generated a gross loss of $(17.6) million and $4.4 million of fuel gross margin (a KPI discussed below) or $12.11 per barrel during the fourth quarter of 2023.

Feedstock Supply Strategy Advanced. During the fourth quarter, Vertex continued to advance its alternative feedstock supply strategy. The Company had recently completed the required temporary filings for low carbon fuel standard (“LCFS”) credits at the default carbon intensity (“CI”) score. As previously communicated, the Company expected that the initial default level LCFS credits would be applied to all volumes of renewable diesel produced during the third and fourth quarter of 2023 and to contribute to financial results in the fourth quarter. As anticipated, during the fourth quarter of 2023, Vertex received an initial LCFS payment calculated using the temporary default CI score, resulting in a net payment of $9.6 million.

During the fourth quarter, the Company successfully completed runs to support filing for proprietary carbon intensity scores of LCFS pathways for Tallow. In addition to the testing completed for Soy, distiller’s corn oil (“DCO”) and Canola completed during the third quarter of 2023, the Company has now successfully completed the filings for each of these four feedstocks allowing Vertex to receive the increased credit value available with their lower carbon intensity production as compared to the default temporary values for all future renewable diesel production values.

Fourth Quarter and Full Year 2023 Mobile Refinery Results Summary ($/millions unless otherwise noted)

Conventional Fuels Refinery

1Q23

2Q23

3Q23

4Q23

FY2023

 

 

 

 

 

 

Total Throughput (bpd)

71,328

76,330

80,171

67,083

73,734

Total Throughput (MMbbl)

6.42

6.95

7.38

6.17

26.91

Conventional Facility Capacity Utilization1

95.1%

101.8%

106.9%

89.4%

98.3%

 

 

 

 

 

 

Direct Opex Per Barrel ($/bbl)

$3.84

$3.35

$2.40

$2.46

$3.00

Fuel Gross Margin ($/MM)

$103.8

$55.7

$129.5

$29.6

$318.6

Fuel Gross Margin Per Barrel ($/bbl)

$16.17

$8.03

$17.56

$4.79

$11.84

 

 

 

 

 

 

Production Yield

 

 

 

 

 

Gasoline (bpd)

15,723

17,812

19,211

17,826

17,653

% Production

22.7%

23.2%

24.0%

25.9%

23.9%

ULSD (bpd)

14,720

15,618

16,479

14,510

15,334

% Production

21.2%

20.3%

20.6%

21.1%

20.8%

Jet (bpd)

12,789

13,570

15,823

12,937

13,786

% Production

18.4%

17.7%

19.8%

18.8%

18.7%

Total Finished Fuel Products

43,232

47,000

51,513

45,273

46,773

% Production

62.3%

61.2%

64.4%

65.9%

63.4%

Other2

26,119

29,828

28,495

23,457

26,972

% Production

37.7%

38.8%

35.6%

34.1%

36.6%

Total Production (bpd)

69,351

76,828

80,008

68,730

73,745

Total Production (MMbbl)

6.24

6.99

7.36

6.32

26.92

 

Renewable Fuels Refinery

1Q23

2Q23

3Q23

4Q23

FY2023

 

 

 

 

 

 

Total Renewable Throughput (bpd)

-

2,490

5,397

3,926

3,943

Total Renewable Throughput (MMbbl)

-

0.23

0.50

0.36

1.08

Renewable Diesel Facility Capacity Utilization3

-

31.1%

67.5%

49.1%

49.3%

 

 

 

 

 

 

Direct Opex Per Barrel ($/bbl)

-

$31.23

$23.05

$27.32

$26.17

Renewable Fuel Gross Margin

-

($3.1)

$2.4

$4.4

$3.7

Renewable Fuel Gross Margin Per Barrel ($/bbl)

-

($13.66)

$4.78

$12.11

$3.37

Renewable Diesel Production (bpd)

-

2,208

5,276

3,786

3,762

Renewable Diesel Production (MMbbl)

-

0.20

0.49

0.35

1.03

Renewable Diesel Production Yield (%)

-

88.7%

97.8%

96.4%

95.4%

 

 

 

 

 

 

1.) Assumes 75,000 barrels per day of conventional operational capacity

2.) Other includes naphtha, intermediates, and LPG

3.) Assumes 8,000 barrels per day of renewable fuels operational capacity

Balance Sheet and Liquidity Update

As of December 31, 2023, Vertex had total debt outstanding of $286 million, including $15.2 million in 6.25% Senior Convertible Notes, $196.0 million outstanding on the Company’s Term Loan, finance lease obligations of $68.6 million, and $6.2 million in other obligations. The Company had total cash and equivalents of $80.6 million, including $3.6 million of restricted cash on the balance sheet as of December 31, 2023, for a net debt position of $205.5 million. The ratio of net debt to trailing twelve-month Adjusted EBITDA was 12.0 times as of December 31, 2023 (see also “Non-GAAP Financial Measures and Key Performance Indicators”, below).

As previously announced on January 2, 2024, the Company reached an agreement with its existing lending group to modify certain terms and conditions of the current term loan agreement. The amended term loan provided an incremental $50.0 million in borrowings, the full amount of which was borrowed upon closing on December 29, 2023 and therefore reflected in Vertex’s year end cash position of $80.6 million.

Vertex management continuously monitors current market conditions to assess expected cash generation and liquidity needs against its available cash position, using the forward crack spreads in the market.

As of the current year-end, the Company believes it has adequate financial flexibility to meet its needs based on the total liquidity position. Furthermore, the Company is currently going through a strategic evaluation process with BofA Securities, which started in October 2023, that may result in further enhancements to its current liquidity options.

Commodity Price Risk Management

During the fourth quarter, Vertex’s commodity price risk management team entered into hedge positions covering approximately 38% of planned diesel production and distillate production for the first quarter of 2024 as discussed below:

Asset

Contract

Contract

Price

Mid-Point

Hedged

Approximate %

Type

Details

Period

($/bbl)

Prod'n (Bbl)

Volumes (bbl)

Hedged1

Fixed Price Swap

ULSD/LLS Swap

January

$25.55

762,600

100,000

13.1%

Fixed Price Swap

ULSD/LLS Swap

February

$30.68

713,400

375,000

52.6%

Fixed Price Swap

ULSD/LLS Swap

March

$28.95

762,600

375,000

49.2%

Total

$28.39

2,238,600

850,000

38.0%

 

1.) % hedged assumes mid-point of operating guidance of 61.5 Mbbld and mid-point of distillate production yield of 40%

Management Outlook

All guidance presented below is current as of the time of this release and is subject to change. All prior financial guidance should no longer be relied upon.

Conventional Fuels

1Q 2024

Operational:

Low

High

Mobile Refinery Conventional Throughput Volume (Mbpd)

60.0

63.0

Capacity Utilization

80%

84%

Production Yield Profile:

Percentage Finished Products1

64%

68%

Intermediate & Other Products2

36%

32%

 

Renewable Fuels

1Q 2024

Operational:

Low

High

Mobile Refinery Renewable Throughput Volume (Mbpd)

3.0

5.0

Capacity Utilization

38%

63%

Production Yield

96%

98%

Yield Loss

4%

2%

 

Consolidated

1Q 2024

Operational:

Low

 

High

Mobile Refinery Total Throughput Volume (Mbpd)

63.0

 

68.0

Capacity Utilization

76%

 

82%

 

 

 

 

Financial Guidance:

 

 

 

Direct Operating Expense ($/bbl)

$4.59

 

$4.95

Capital Expenditures ($/MM)

$20.00

 

$25.00

 

 

 

 

 

1.) Finished products include gasoline, ULSD, and Jet A

2.) Intermediate & Other products include Vacuum Gas Oil (VGO), Liquified Petroleum Gases (LPGs), and Vacuum Tower Bottoms (VTBs)

CONFERENCE CALL AND WEBCAST DETAILS

A conference call will be held today, February 28, 2024 at 8:30 A.M. Eastern Time to review the Company’s financial results, discuss recent events and conduct a question-and-answer session. An audio webcast of the conference call and accompanying presentation materials will also be available in the “Events and Presentation” section of Vertex’s website at www.vertexenergy.com. To listen to a live broadcast, visit 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: (888) 350-3870
International: (646) 960-0308
Conference ID: 8960754

To listen to a replay of the teleconference, which will be available through Thursday, March 14, 2024, either go to the “Events and Presentation” section of Vertex’s website at www.vertexenergy.com, or call the number below:

Domestic Replay: (800) 770-2030
Access Code: 8960754

ABOUT VERTEX ENERGY

Vertex Energy is a leading energy transition company that specializes in producing both renewable and conventional fuels. The Company’s innovative solutions are designed to enhance the performance of our customers and partners while also prioritizing sustainability, safety, and operational excellence. With a commitment to providing superior products and services, Vertex Energy is dedicated to shaping the future of the energy industry.

FORWARD-LOOKING STATEMENTS

Certain of the matters discussed in this communication which are not statements of historical fact constitute forward-looking statements within the meaning of the securities laws, including the Private Securities Litigation Reform Act of 1995, that involve a number of risks and uncertainties. Words such as “strategy,” “expects,” “continues,” “plans,” “anticipates,” “believes,” “would,” “will,” “estimates,” “intends,” “projects,” “goals,” “targets” and other words of similar meaning are intended to identify forward-looking statements but are not the exclusive means of identifying these statements. Any statements made in this news release other than those of historical fact, about an action, event or development, are forward-looking statements. The important factors that may cause actual results and outcomes to differ materially from those contained in such forward-looking statements include, without limitation, the Company’s projected Outlook for the first quarter of 2024, as discussed above; statements concerning: the Company’s engagement of BofA Securities, Inc., as previously disclosed; the review and evaluation of potential joint ventures, divestitures, acquisitions, mergers, business combinations, or other strategic transactions, the outcome of such review, and the impact on any such transactions, or the review thereof, and their impact on shareholder value; the process by which the Company engages in evaluation of strategic transactions; the Company’s ability to identify potential partners; the outcome of potential future strategic transactions and the terms thereof; the future production of the Company’s Mobile Refinery; anticipated and unforeseen events which could reduce future production at the refinery or delay future capital projects, and changes in commodity and credit values; throughput volumes, production rates, yields, operating expenses and capital expenditures at the Mobile Refinery; the timing of, and outcome of, the evaluation and associated carbon intensity scoring of the Company’s feedstock blends by officials in the state of California; the ability of the Company to obtain low carbon fuel standard (LCFS) credits, and the amounts thereof; the need for additional capital in the future, including, but not limited to, in order to complete capital projects and satisfy liabilities, the Company’s ability to raise such capital in the future, and the terms of such funding; the timing of capital projects at the Company’s refinery located in Mobile, Alabama (the “Mobile Refinery”) and the outcome of such projects; the future production of the Mobile Refinery, including but not limited to, renewable diesel production; estimated and actual production and costs associated with the renewable diesel capital project; estimated revenues, margins and expenses, over the course of the agreement with Idemitsu; anticipated and unforeseen events which could reduce future production at the Mobile Refinery or delay planned and future capital projects; changes in commodity and credits values; certain early termination rights associated with third party agreements and conditions precedent to such agreements; certain mandatory redemption provisions of the outstanding senior convertible notes, the conversion rights associated therewith, and dilution caused by conversions and/or the exchanges of convertible notes; the Company’s ability to comply with required covenants under outstanding senior notes and a term loan and to pay amounts due under such senior notes and term loan, including interest and other amounts due thereunder; the ability of the Company to retain and hire key personnel; the level of competition in the Company’s industry and its ability to compete; the Company’s ability to respond to changes in its industry; the loss of key personnel or failure to attract, integrate and retain additional personnel; the Company’s ability to protect intellectual property and not infringe on others’ intellectual property; the Company’s ability to scale its business; the Company’s ability to maintain supplier relationships and obtain adequate supplies of feedstocks; the Company’s ability to obtain and retain customers; the Company’s ability to produce products at competitive rates; the Company’s ability to execute its business strategy in a very competitive environment; trends in, and the market for, the price of oil and gas and alternative energy sources; the impact of inflation on margins and costs; the volatile nature of the prices for oil and gas caused by supply and demand, including volatility caused by the ongoing Ukraine/Russia conflict and/or the Israel/Hamas conflict, changes in interest rates and inflation, and potential recessions; the Company’s ability to maintain relationships with partners; the outcome of pending and potential future litigation, judgments and settlements; rules and regulations making the Company’s operations more costly or restrictive; volatility in the market price of compliance credits (primarily Renewable Identification Numbers (RINs) needed to comply with the Renewable Fuel Standard (“RFS”)) under renewable and low-carbon fuel programs and emission credits needed under other environmental emissions programs, the requirement for the Company to purchase RINs in the secondary market to the extent it does not generate sufficient RINs internally, liabilities associated therewith and the timing, funding and costs of such required purchases, if any; changes in environmental and other laws and regulations and risks associated with such laws and regulations; economic downturns both in the United States and globally, changes in inflation and interest rates, increased costs of borrowing associated therewith and potential declines in the availability of such funding; risk of increased regulation of the Company’s operations and products; disruptions in the infrastructure that the Company and its partners rely on; interruptions at the Company’s facilities; unexpected and expected changes in the Company’s anticipated capital expenditures resulting from unforeseen and expected required maintenance, repairs, or upgrades; the Company’s ability to acquire and construct new facilities; the Company’s ability to effectively manage growth; decreases in global demand for, and the price of, oil, due to inflation, recessions or other reasons, including declines in economic activity or global conflicts; expected and unexpected downtime at the Company’s facilities; the Company’s level of indebtedness, which could affect its ability to fulfill its obligations, impede the implementation of its strategy, and expose the Company’s interest rate risk; dependence on third party transportation services and pipelines; risks related to obtaining required crude oil supplies, and the costs of such supplies; counterparty credit and performance risk; unanticipated problems at, or downtime effecting, the Company’s facilities and those operated by third parties; risks relating to the Company’s hedging activities or lack of hedging activities; and risks relating to planned and future divestitures, asset sales, joint ventures and acquisitions.

Other important factors that may cause actual results and outcomes to differ materially from those contained in the forward-looking statements included in this communication are described in the Company’s publicly filed reports, including, but not limited to, the Company’s Annual Report on Form 10-K for the year ended December 31, 2022, and the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2023, and future Annual Reports on Form 10-K (including the Company’s Annual Report on Form 10-K for the year ended December 31, 2023, when filed by the Company) and Quarterly Reports on Form 10-Q. These reports are available at www.sec.gov. The Company cautions that the foregoing list of important factors is not complete. All subsequent written and oral forward-looking statements attributable to the Company or any person acting on behalf of the Company are expressly qualified in their entirety by the cautionary statements referenced above. Other unknown or unpredictable factors also could have material adverse effects on Vertex’s future results. The forward-looking statements included in this press release are made only as of the date hereof. Vertex cannot guarantee future results, levels of activity, performance or achievements. Accordingly, you should not place undue reliance on these forward-looking statements. Finally, Vertex 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. If we update one or more forward-looking statements, no inference should be drawn that we will make additional updates with respect to those or other forward-looking statements.

PROJECTIONS

The financial projections (the “Projections”) included herein were prepared by Vertex in good faith using assumptions believed to be reasonable. A significant number of assumptions about the operations of the business of Vertex were based, in part, on economic, competitive, and general business conditions prevailing at the time the Projections were developed. Any future changes in these conditions, may materially impact the ability of Vertex to achieve the financial results set forth in the Projections. The Projections are based on numerous assumptions, including realization of the operating strategy of Vertex; industry performance; no material adverse changes in applicable legislation or regulations, or the administration thereof, or generally accepted accounting principles; general business and economic conditions; competition; retention of key management and other key employees; absence of material contingent or unliquidated litigation, indemnity, or other claims; minimal changes in current pricing; static material and equipment pricing; no significant increases in interest rates or inflation; and other matters, many of which will be beyond the control of Vertex, and some or all of which may not materialize. The Projections also assume the continued uptime of the Company’s facilities at historical levels and the successful funding of, timely completion of, and successful outcome of, planned capital projects. Additionally, to the extent that the assumptions inherent in the Projections are based upon future business decisions and objectives, they are subject to change. Although the Projections are presented with numerical specificity and are based on reasonable expectations developed by Vertex’s management, the assumptions and estimates underlying the Projections are subject to significant business, economic, and competitive uncertainties and contingencies, many of which will be beyond the control of Vertex. Accordingly, the Projections are only estimates and are necessarily speculative in nature. It is expected that some or all of the assumptions in the Projections will not be realized and that actual results will vary from the Projections. Such variations may be material and may increase over time. In light of the foregoing, readers are cautioned not to place undue reliance on the Projections. The projected financial information contained herein should not be regarded as a representation or warranty by Vertex, its management, advisors, or any other person that the Projections can or will be achieved. Vertex cautions that the Projections are speculative in nature and based upon subjective decisions and assumptions. As a result, the Projections should not be relied on as necessarily predictive of actual future events.

NON-GAAP FINANCIAL MEASURES AND KEY PERFORMANCE INDICATORS

In addition to our results calculated under generally accepted accounting principles in the United States (“GAAP”), in this news release we also present certain non-U.S. GAAP financial measures and key performance indicators. Non-U.S. GAAP financial measures include Adjusted Gross Margin, Fuel Gross Margin and Adjusted EBITDA, for the Company’s Legacy Refining and Marketing segment, and the total Refining and Marketing segment, as a whole, and Net Long-Term Debt and Ratio of Net Long-Term Debt (collectively, the “Non-U.S. GAAP Financial Measures”). Key performance indicators include Adjusted Gross Margin, Fuel Gross Margin and Adjusted EBITDA for Conventional, Renewable and the Mobile Refinery as a whole, and Fuel Gross Margin Per Barrel of Throughput and Adjusted Gross Margin Per Barrel of Throughput for Conventional, Renewable and the Mobile Refinery as a whole (collectively, the “KPIs”). EBITDA represents net income before interest, taxes, depreciation and amortization, for continued and discontinued operations. Adjusted EBITDA represents net income (loss) from operations plus or minus unrealized gain or losses on hedging activities, Renewable Fuel Standard (RFS) costs (mainly related to Renewable Identification Numbers (RINs), and inventory adjustments, depreciation and amortization, acquisition costs, gain on change in value of derivative warrant liability, environmental clean-up, stock-based compensation, (gain) loss on sale of assets, interest expense, and certain other unusual or non-recurring charges included in selling, general, and administrative expenses. Adjusted Gross Margin is defined as gross profit (loss) plus or minus unrealized gain or losses on hedging activities and inventory valuation adjustments. Fuel Gross Margin is defined as Adjusted Gross Margin, plus production costs, operating expenses and depreciation attributable to cost of revenues and other non-fuel items included in costs of revenues including realized and unrealized gain or losses on hedging activities, RFS costs (mainly related to RINs), inventory valuation adjustments, fuel financing costs and other revenues and cost of sales items. Fuel Gross Margin Per Barrel of Throughput is calculated as fuel gross margin divided by total throughput barrels for the period presented. Operating Expenses Per Barrel of Throughput is defined as total operating expenses divided by total barrels of throughput. RIN Adjusted Fuel Gross Margin is defined as [Fuel Gross Margin minus RIN expense divided by total barrels of throughput. RIN Adjusted Fuel Gross Margin Per Barrel of Throughput is calculated as RIN Adjusted Fuel Gross Margin divided by total throughput barrels for the period presented. Net Long-Term Debt is long-term debt and lease obligations, adjusted for unamortized discount and deferred financing costs, insurance premiums financed, less cash and cash equivalents and restricted cash. Ratio of Net Long-Term Debt is defined as Long-Term Debt divided by Adjusted EBITDA.

Each of the Non-U.S. GAAP Financial Measures and KPIs are discussed in greater detail below. The (a) Non-U.S. GAAP Financial Measures are “non-U.S. GAAP financial measures”, and (b) the KPIs are, presented as supplemental measures of the Company’s performance. They are not presented in accordance with U.S. GAAP. We use the Non-U.S. GAAP Financial Measures and KPIs as supplements to U.S. GAAP measures of performance to evaluate the effectiveness of our business strategies, to make budgeting decisions, to allocate resources and to compare our performance relative to our peers. Additionally, these measures, when used in conjunction with related U.S. GAAP financial measures, provide investors with an additional financial analytical framework which management uses, in addition to historical operating results, as the basis for financial, operational and planning decisions and present measurements that third parties have indicated are useful in assessing the Company and its results of operations. The Non-U.S. GAAP Financial Measures and KPIs are presented because we believe they provide additional useful information to investors due to the various noncash items during the period. Non-U.S. GAAP financial information and KPIs similar to the Non-U.S. GAAP Financial Measures and KPIs are also frequently used by analysts, investors and other interested parties to evaluate companies in our industry. The Non-U.S. GAAP Financial Measures and KPIs are unaudited, and 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 U.S. GAAP. Some of these limitations are: the Non-U.S. GAAP Financial Measures and KPIs do not reflect cash expenditures, or future requirements for capital expenditures, or contractual commitments; the Non-GAAP Financial Measures and KPIs do not reflect changes in, or cash requirements for, working capital needs; the Non-GAAP Financial Measures and KPIs 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, the Non-U.S. GAAP Financial Measures and KPIs do not reflect any cash requirements for such replacements; the Non-U.S. GAAP Financial Measures and KPIs represent only a portion of our total operating results; and other companies in this industry may calculate the Non-U.S. GAAP Financial Measures and KPIs differently than we do, limiting their usefulness as a comparative measure. You should not consider the Non-U.S. GAAP Financial Measures and KPIs in isolation, or as substitutes for analysis of the Company’s results as reported under U.S. GAAP. The Company’s presentation of these measures should not be construed as an inference that future results will be unaffected by unusual or nonrecurring items. We compensate for these limitations by providing a reconciliation of each of these non-U.S. GAAP Financial Measures and KPIs to the most comparable U.S. GAAP measure below. We encourage investors and others to review our business, results of operations, and financial information in their entirety, not to rely on any single financial measure, and to view these non-U.S. GAAP Financial Measures and KPIs in conjunction with the most directly comparable U.S. GAAP financial measure.

For more information on these non-GAAP financial measures and KPIs, please see the sections titled “Unaudited Reconciliation of Gross Profit (Loss) From Continued and Discontinued Operations to Adjusted Gross Margin, Fuel Gross Margin, Fuel Gross Margin Per Barrel of Throughput and Operating Expenses Per Barrel of Throughput”, “Unaudited Reconciliation of Adjusted EBITDA to Net loss from Continued and Discontinued Operations”, and “Unaudited Reconciliation of Long-Term Debt to Net Long-Term Debt and Net Leverage”, at the end of this release.

VERTEX ENERGY, INC.

CONSOLIDATED BALANCE SHEETS

(unaudited in thousands, except number of shares and par value)

(UNAUDITED)

31-Dec-23

31-Dec-22

ASSETS
Current assets
Cash and cash equivalents

$

76,967

 

$

141,258

 

Restricted cash

 

3,606

 

 

4,929

 

Accounts receivable, net

 

36,164

 

 

34,548

 

Inventory

 

182,120

 

 

135,473

 

Prepaid expenses and other current assets

 

53,174

 

 

36,660

 

Assets held for sale

 

 

 

20,560

 

Total current assets

 

352,031

 

 

373,428

 

 
Fixed assets, net

 

326,111

 

 

201,749

 

Finance lease right-of-use assets, net

 

64,499

 

 

44,081

 

Operating lease right-of-use assets, net

 

96,394

 

 

53,557

 

Intangible assets, net

 

11,541

 

 

11,827

 

Deferred tax assets

 

 

 

2,498

 

Other assets

 

4,048

 

 

2,245

 

Total non-current assets

 

502,593

 

 

315,957

 

TOTAL ASSETS

$

854,624

 

$

689,385

 

 
LIABILITIES AND EQUITY
Current liabilities
Accounts payable

$

75,004

 

$

20,997

 

Accrued expenses and other current liabilities

 

73,636

 

 

81,953

 

Finance lease-current

 

2,435

 

 

1,363

 

Operating lease-current

 

20,296

 

 

3,713

 

Current portion of long-term debt

 

16,362

 

 

13,911

 

Obligations under inventory financing agreements, net

 

141,093

 

 

117,939

 

Liabilities held for sale, current

 

 

 

3,424

 

Total current liabilities

 

328,826

 

 

243,300

 

 
Long-term debt, net

 

170,701

 

 

170,010

 

Finance lease-non-current

 

66,206

 

 

45,164

 

Operating lease-non-current

 

74,444

 

 

49,844

 

Deferred tax liabilities

 

2,776

 

 

 

Derivative warrant liability

 

9,907

 

 

14,270

 

Other liabilities

 

1,377

 

 

1,377

 

Total liabilities

 

654,237

 

 

523,965

 

 
EQUITY
50,000,000 of total Preferred shares authorized:
Common stock, $0.001 par value per share; 750,000,000 shares authorized; 93,514,346 and 75,668,826 issued and outstanding at December 31, 2023 and 2022, respectively.

 

94

 

 

76

 

Additional paid-in capital

 

383,632

 

 

279,552

 

Accumulated deficit

 

(187,379

)

 

(115,893

)

Total Vertex Energy, Inc. stockholders' equity

 

196,347

 

 

163,735

 

Non-controlling interest

 

4,040

 

 

1,685

 

Total equity

 

200,387

 

 

165,420

 

TOTAL LIABILITIES AND EQUITY

$

854,624

 

$

689,385

 

 

VERTEX ENERGY, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

FOR THE YEARS ENDED DECEMBER 31,

(in thousands, except per share amounts)

(UNAUDITED)

2023

2022

2021

Revenues

$

3,177,187

 

$

2,791,715

 

$

207,760

 

Cost of revenues (exclusive of depreciation and amortization shown separately below)

 

3,005,996

 

 

2,598,276

 

 

178,786

 

Depreciation and amortization attributable to costs of revenues

 

27,018

 

 

13,429

 

 

4,043

 

Gross profit

 

144,173

 

 

180,010

 

 

24,931

 

 
Operating expenses:
Selling, general and administrative expenses

 

168,640

 

 

127,782

 

 

30,606

 

Loss on assets impairment

 

 

 

 

 

2,124

 

Depreciation and amortization attributable to operating expenses

 

4,146

 

 

3,673

 

 

1,681

 

Total operating expenses

 

172,786

 

 

131,455

 

 

34,411

 

Income (loss) from operations

 

(28,613

)

 

48,555

 

 

(9,480

)

Other income (expense):
Other income (expense)

 

633

 

 

(306

)

 

4,158

 

Gain (loss) on change in value of derivative warrant liability

 

7,992

 

 

7,821

 

 

(15,685

)

Interest expense

 

(119,567

)

 

(79,911

)

 

(3,832

)

Total other expense

 

(110,942

)

 

(72,396

)

 

(15,359

)

Loss from continuing operations before income tax

 

(139,555

)

 

(23,841

)

 

(24,839

)

Income tax benefit

 

13,385

 

 

7,171

 

 

 

Loss from continuing operations

 

(126,170

)

 

(16,670

)

 

(24,839

)

Income from discontinued operations, net of tax (see operation report of discontinued operation below)

 

54,197

 

 

18,667

 

 

17,178

 

Net income (loss)

 

(71,973

)

 

1,997

 

 

(7,661

)

Net income (loss) attributable to non-controlling interest and redeemable non-controlling interest from continuing operations

 

(487

)

 

(63

)

 

207

 

Net income attributable to non-controlling interest and redeemable non-controlling interest from discontinued operations

 

 

 

6,882

 

 

10,496

 

Net loss attributable to Vertex Energy, Inc.

 

(71,486

)

 

(4,822

)

 

(18,364

)

 
Accretion of redeemable noncontrolling interest to redemption value

 

 

 

(428

)

 

(1,992

)

Accretion of discount on Series B and B-1 Preferred Stock

 

 

 

 

 

(507

)

Dividends on Series B and B-1 Preferred Stock

 

 

 

 

 

258

 

 
Net loss attributable to stockholders from continuing operations

 

(125,683

)

 

(17,035

)

 

(27,287

)

Net income attributable to stockholders from discontinued operations, net of tax

 

54,197

 

 

11,785

 

 

6,682

 

Net loss attributable to common stockholders

$

(71,486

)

$

(5,250

)

$

(20,605

)

 
Basic income (loss) per common share
Continuing operations

$

(1.47

)

$

(0.24

)

$

(0.48

)

Discontinued operations, net of tax

 

0.63

 

 

0.17

 

 

0.12

 

Basic loss per common share

$

(0.84

)

$

(0.07

)

$

(0.36

)

 
Diluted income (loss) per common share
Continuing operations

$

(1.47

)

$

(0.24

)

$

(0.48

)

Discontinued operations, net of tax

 

0.63

 

 

0.17

 

 

0.12

 

Diluted loss per common share

$

(0.84

)

$

(0.07

)

$

(0.36

)

 
Shares used in computing income (loss) per share
Basic

 

85,596

 

 

70,686

 

 

56,303

 

Diluted

 

85,596

 

 

70,686

 

 

56,303

 

 

VERTEX ENERGY, INC.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

FOR THE YEARS ENDING DECEMBER 31, 2023, 2022 AND 2021

(in thousands except par value)

(UNAUDITED)

Common Stock

Series A Preferred

Additional

Paid-in

Capital

Accumulated

Deficit

Non-

controlling

Interest

Total

Stockholders'

Equity

Shares

$0.001 Par

Shares

$0.001 Par

Balance on December 31, 2020

45,555

$

46

420

 

$

$

94,570

 

$

(90,009

)

$

1,318

 

$

5,925

 

Dividends on Series B and B1 Preferred Stock

 

 

 

 

 

 

(372

)

 

 

 

(372

)

Accretion of discount on Series B and B1 Preferred Stock

 

 

 

 

 

 

(507

)

 

 

 

(507

)

Conversion of B1 Preferred Stock to common

7,722

 

7

 

 

 

12,038

 

 

 

 

 

 

12,045

 

Share based compensation expense

 

 

 

 

863

 

 

 

 

 

 

863

 

Exercise of options

1,800

 

2

 

 

 

2,188

 

 

 

 

 

 

2,190

 

Exercise of B1 warrants

3,093

 

3

 

 

 

16,402

 

 

 

 

 

 

16,405

 

Conversion of Series A Preferred stock to common stock

34

 

(34

)

 

 

 

 

 

 

 

 

 

Conversion of Series B Preferred Stock to common stock

5,084

 

5

 

 

 

12,559

 

 

630

 

 

 

 

13,194

 

Distribution to noncontrolling

 

 

 

 

 

 

 

 

(169

)

 

(169

)

Adjustment of redeemable noncontrolling interest to redemption value

 

 

 

 

 

 

(1,992

)

 

 

 

(1,992

)

Contribution from noncontrolling interest

 

 

 

 

 

 

 

 

(11

)

 

(11

)

Net income (loss)

 

 

 

 

 

 

(18,364

)

 

10,703

 

 

(7,661

)

Less: amount attributable to redeemable non-controlling interest

 

 

 

 

 

 

 

 

(9,844

)

 

(9,844

)

Balance on December 31, 2021

63,288

 

63

386

 

 

 

138,620

 

 

(110,614

)

 

1,997

 

 

30,066

 

Conversion of Series A Preferred stock to common stock

386

 

1

(386

)

 

 

 

 

 

 

 

 

1

 

Conversion of Convertible Senior Notes to common (net of tax)

10,165

 

10

 

 

 

59,812

 

 

 

 

 

 

59,822

 

Reclass of derivative liabilities

 

 

 

 

78,789

 

 

 

 

 

 

78,789

 

Share based compensation expense

 

 

 

 

1,574

 

 

 

 

 

 

1,574

 

Exercise of warrants

1,209

 

1

 

 

 

(1

)

 

 

 

 

 

 

Exercise of options

622

 

1

 

 

 

729

 

 

 

 

 

 

730

 

Adjustment of redeemable non controlling interest

 

 

 

 

29

 

 

(29

)

 

 

 

 

Distribution to noncontrolling

 

 

 

 

 

 

 

 

(380

)

 

(380

)

Adjustment of redeemable noncontrolling interest to redemption value

 

 

 

 

 

 

(428

)

 

 

 

(428

)

Redemption of noncontrolling interest

 

 

 

 

 

 

 

 

41

 

 

41

 

Net income (loss)

 

 

 

 

 

 

(4,822

)

 

6,819

 

 

1,997

 

Less: amount attributable to redeemable non-controlling interest

 

 

 

 

 

 

 

 

(6,792

)

 

(6,792

)

Balance on December 31, 2022

75,670

 

76

 

 

 

279,552

 

 

(115,893

)

 

1,685

 

 

165,420

 

Issuance of restricted stock

113

 

 

 

 

 

 

 

 

 

 

 

Exercise of options

526

 

1

 

 

 

682

 

 

 

 

 

 

683

 

Share based compensation expense

 

 

 

 

2,285

 

 

 

 

 

 

2,285

 

Conversion of Convertible Senior Note, net

17,206

 

17

 

 

 

101,113

 

 

 

 

 

 

101,130

 

Contribution from noncontrolling shareholder

 

 

 

 

 

 

 

 

2,842

 

 

2,842

 

Net loss

 

 

 

 

 

 

(71,486

)

 

(487

)

 

(71,973

)

Balance on December 31, 2023

93,515

$

94

 

$

$

383,632

 

$

(187,379

)

$

4,040

 

$

200,387

 

 

VERTEX ENERGY, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE YEARS ENDING DECEMBER 31, 2023, 2022 AND 2021

(UNAUDITED)

2023

2022

2021

Cash flows from operating activities
Net income (loss)

$

(71,973

)

$

1,997

 

$

(7,661

)

Net income from discontinued operations, net of tax

 

54,197

 

 

18,667

 

 

17,178

 

Net loss from continuing operations

 

(126,170

)

 

(16,670

)

 

(24,839

)

Adjustments to reconcile net income (loss) from continuing operations to cash used in operating activities:
Stock-based compensation expense

 

2,285

 

 

1,574

 

 

862

 

Depreciation and amortization

 

31,165

 

 

17,102

 

 

5,724

 

(Reduction in) Provision for bad debt

 

(224

)

 

242

 

 

826

 

Loss (gain) on commodity derivative contracts

 

(2,858

)

 

87,978

 

 

2,258

 

Provision for environment clean up

 

 

 

1,428

 

 

 

Gain on forgiveness of debt

 

 

 

 

 

(4,222

)

Net cash settlement on commodity derivatives

 

6,575

 

 

(92,556

)

 

(2,436

)

Loss on sale of assets

 

(1

)

 

220

 

 

64

 

Loss on assets impairment

 

 

 

 

 

2,124

 

Amortization of debt discount and deferred costs

 

78,779

 

 

49,251

 

 

1,231

 

Deferred income tax benefit

 

(13,385

)

 

(7,171

)

 

 

Loss (gain) on change in value of derivative warrant liability

 

(7,992

)

 

(7,821

)

 

15,685

 

Changes in operating assets and liabilities, net of acquisitions:
Accounts receivable

 

(3,075

)

 

(27,183

)

 

(821

)

Inventory

 

(45,231

)

 

2,586

 

 

(3,997

)

Prepaid expenses

 

(21,027

)

 

(26,724

)

 

(1,615

)

Accounts payable

 

53,593

 

 

10,850

 

 

1,054

 

Accrued expenses

 

(9,855

)

 

77,647

 

 

2,551

 

Other assets

 

(1,061

)

 

56

 

 

(48

)

Net cash (used in) provided by operating activities from continuing operations

 

(58,482

)

 

70,809

 

 

(5,599

)

Cash flows from investing activities
Deposit for refinery purchase and related costs

 

 

 

 

 

(13,663

)

Internally developed or purchased software

 

(3,223

)

 

(149

)

 

 

Proceeds from sale of discontinued operation

 

92,034

 

 

 

 

 

Redemption of noncontrolling entity

 

 

 

556

 

 

 

Proceeds from the sale of assets

 

7

 

 

395

 

 

75

 

Acquisition of business, net of cash

 

(7,775

)

 

(227,525

)

 

2

 

Purchase of fixed assets

 

(140,313

)

 

(75,512

)

 

(2,331

)

Net cash used in investing activities from continuing operations

 

(59,270

)

 

(302,235

)

 

(15,917

)

Cash flows from financing activities
Line of credit payments, net

 

 

 

 

 

(133

)

Proceeds received from exercise of options and warrants

 

683

 

 

730

 

 

6,921

 

Net borrowings on inventory financing agreements

 

22,154

 

 

117,189

 

 

 

Contribution received from noncontrolling interest

 

2,842

 

 

 

 

2

 

Distribution to non-controlling interest

 

 

 

(380

)

 

(169

)

Redemption of redeemable noncontrolling interest

 

 

 

(50,666

)

 

 

Payments on finance leases

 

(2,045

)

 

(819

)

 

(844

)

Proceeds from issuance of notes payable

 

68,236

 

 

173,256

 

 

143,831

 

Payments made on notes payable

 

(39,582

)

 

(18,948

)

 

(15,836

)

Net cash provided by financing activities from continuing operations

 

52,288

 

 

220,362

 

 

133,772

 

 
Discontinued operations:
Net cash (used in) provided by operating activities

 

(150

)

 

25,287

 

 

15,349

 

Net cash used in investing activities

 

 

 

(4,663

)

 

(1,973

)

Net cash provided by (used in) discontinued operations

 

(150

)

 

20,624

 

 

13,376

 

 
Net change in cash and cash equivalents and restricted cash

 

(65,614

)

 

9,560

 

 

125,632

 

Cash and cash equivalents and restricted cash at beginning of the year

 

146,187

 

 

136,627

 

 

10,995

 

Cash and cash equivalents and restricted cash at end of year

$

80,573

 

$

146,187

 

$

136,627

 

 

The following table provides a reconciliation of cash and cash equivalents and restricted cash reported within the consolidated balance sheets to the same amounts shown in the consolidated statements of cash flows (in thousands).

VERTEX ENERGY, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE YEARS ENDING DECEMBER 31, 2023, 2022 AND 2021

(UNAUDITED)

(Continued)

2023

2022

2021

Cash and cash equivalents

$

76,967

$

141,258

$

36,130

 

Restricted cash

 

3,606

 

4,929

 

100,497

 

Cash and cash equivalents and restricted cash as shown in the consolidated statements of cash flows

$

80,573

$

146,187

$

136,627

 

 
SUPPLEMENTAL INFORMATION
Cash paid for interest

$

47,430

$

33,901

$

2,273

 

Cash paid for income taxes

 

 

 

 

 
NON-CASH INVESTING AND FINANCING TRANSACTIONS
Conversion of Series B and B1 Preferred Stock into common stock

$

$

$

24,610

 

Dividends on Series B and B-1 Preferred Stock

$

$

$

(258

)

Accretion of discount on Series B and B-1 Preferred Stock

$

$

$

507

 

Accretion of redeemable noncontrolling interest to redemption value

$

$

428

$

1,992

 

Equipment acquired under finance leases

$

24,159

$

46,351

$

552

 

Equipment acquired under operating leases

$

55,114

$

20,452

$

89

 

Reclass derivative liabilities

$

$

78,789

$

 

Conversion of Convertible Senior note

$

79,948

$

59,822

$

 

 

Unaudited segment information for the three and twelve months ended December 31, 2023, 2022 and 2021 is as follows (in thousands):

YEAR ENDED DECEMBER 31, 2023

Refining and

Marketing

Black Oil &

Recovery

Corporate and

Eliminations

Total

Revenues:
Refined products

$

3,007,937

 

$

121,122

 

$

(13,039

)

$

3,116,020

 

Re-refined products

 

17,997

 

 

15,959

 

 

 

 

33,956

 

Services

 

20,057

 

 

7,154

 

 

 

 

27,211

 

Total revenues

 

3,045,991

 

 

144,235

 

 

(13,039

)

 

3,177,187

 

Cost of revenues (exclusive of depreciation and amortization shown separately below)

 

2,894,617

 

 

124,731

 

 

(13,352

)

 

3,005,996

 

Depreciation and amortization attributable to costs of revenues

 

22,118

 

 

4,900

 

 

 

 

27,018

 

Gross profit

 

129,256

 

 

14,604

 

 

313

 

 

144,173

 

Selling, general and administrative expenses

 

118,165

 

 

19,788

 

 

30,687

 

 

168,640

 

Depreciation and amortization attributable to operating expenses

 

3,311

 

 

164

 

 

671

 

 

4,146

 

Income (loss) from operations

 

7,780

 

 

(5,348

)

 

(31,045

)

 

(28,613

)

Other income (expenses)
Other income (expense)

 

 

 

600

 

 

33

 

 

633

 

Gain on change in derivative liability

 

 

 

 

 

7,992

 

 

7,992

 

Interest expense

 

(18,092

)

 

(188

)

 

(101,287

)

 

(119,567

)

Total other income (expense)

 

(18,092

)

 

412

 

 

(93,262

)

 

(110,942

)

Income (loss) before income tax

$

(10,312

)

$

(4,936

)

$

(124,307

)

$

(139,555

)

 
Total capital expenditures

$

122,827

 

$

17,486

 

$

 

$

140,313

 

 

YEAR ENDED DECEMBER 31, 2022

Refining and

Marketing

Black Oil &

Recovery

Corporate and

Eliminations

Total

Revenues:
Refined products

$

2,370,240

 

$

163,095

 

$

 

$

2,533,335

 

Re-refined products

 

229,793

 

 

19,105

 

 

 

 

248,898

 

Services

 

6,611

 

 

2,871

 

 

 

 

9,482

 

Total revenues

 

2,606,644

 

 

185,071

 

 

 

 

2,791,715

 

Cost of revenues (exclusive of depreciation and amortization shown separately below)

 

2,453,809

 

 

144,467

 

 

 

 

2,598,276

 

Depreciation and amortization attributable to costs of revenues

 

9,605

 

 

3,824

 

 

 

 

13,429

 

Gross profit

 

143,230

 

 

36,780

 

 

 

 

180,010

 

Selling, general and administrative expenses

 

83,001

 

 

17,241

 

 

27,540

 

 

127,782

 

Depreciation and amortization attributable to operating expenses

 

2,593

 

 

180

 

 

900

 

 

3,673

 

Income (loss) from operations

 

57,636

 

 

19,359

 

 

(28,440

)

 

48,555

 

Other income (expenses)
Other income (expense)

 

18

 

 

(104

)

 

(220

)

 

(306

)

Gain on change in derivative liability

 

 

 

 

 

7,821

 

 

7,821

 

Interest expense

 

(10,414

)

 

(50

)

 

(69,447

)

 

(79,911

)

Total other income (expense)

 

(10,396

)

 

(154

)

 

(61,846

)

 

(72,396

)

Income (loss) before income tax

$

47,240

 

$

19,205

 

$

(90,286

)

$

(23,841

)

 
Total capital expenditures

$

72,588

 

$

2,924

 

$

 

$

75,512

 

 

YEAR ENDED DECEMBER 31, 2021

Refining and

Marketing

Black Oil &

Recovery

Corporate and

Eliminations

Total

Revenues:
Refined products

$

78,191

 

$

85,253

 

$

 

$

163,444

 

Re-refined products

 

15,039

 

 

25,611

 

 

 

 

40,650

 

Services

 

 

 

3,666

 

 

 

 

3,666

 

Total revenues

 

93,230

 

 

114,530

 

 

 

 

207,760

 

Cost of revenues (exclusive of depreciation and amortization shown separately below)

 

89,570

 

 

89,216

 

 

 

 

178,786

 

Depreciation and amortization attributable to costs of revenues

 

509

 

 

3,534

 

 

 

 

4,043

 

Gross profit

 

3,151

 

 

21,780

 

 

 

 

24,931

 

Selling, general and administrative expenses

 

3,277

 

 

14,444

 

 

12,885

 

 

30,606

 

Loss on Assets Impairment

 

 

 

2,124

 

 

 

 

2,124

 

Depreciation and amortization attributable to operating expenses

 

434

 

 

234

 

 

1,013

 

 

1,681

 

Income (loss) from operations

 

(560

)

 

4,978

 

 

(13,898

)

 

(9,480

)

Other income (expenses)
Other income (expense)

 

 

 

 

 

4,158

 

 

4,158

 

Loss on change in derivative liability

 

 

 

 

 

(15,685

)

 

(15,685

)

Interest expense

 

 

 

 

 

(3,832

)

 

(3,832

)

Total other income

 

 

 

 

 

(15,359

)

 

(15,359

)

Income (loss) before income tax

$

(560

)

$

4,978

 

$

(29,257

)

$

(24,839

)

 
Total capital expenditures

$

 

$

2,331

 

$

 

$

2,331

 

 

The following summarized unaudited financial information has been segregated from continuing operations and reported as Discontinued Operations for the years ended December 31, 2023, 2022 and 2021 (in thousands):

For The Year Ended December 31

2023

2022

2021

Revenues

$

7,366

 

$

85,495

 

$

58,248

Cost of revenues (exclusive of depreciation shown separately below)

 

4,589

 

 

51,815

 

 

32,467

Depreciation and amortization attributable to costs of revenues

 

124

 

 

1,566

 

 

1,566

Gross profit

 

2,653

 

 

32,114

 

 

24,215

Operating expenses:
Selling, general and administrative expenses

 

632

 

 

8,501

 

 

6,727

(exclusive of acquisition related expenses)
Depreciation and amortization expense attributable to operating expenses

 

21

 

 

251

 

 

251

Total Operating expenses

 

653

 

 

8,752

 

 

6,978

Income from operations

 

2,000

 

 

23,362

 

 

17,237

Other income (expense)
Interest expense

 

-

 

 

-39

 

 

-59

Total other expense

 

-

 

 

-39

 

 

-59

Income before income tax

 

2,000

 

 

23,323

 

 

17,178

Income tax expense

 

(1,572

)

 

(4,683

)

 

Gain on sale of discontinued operations, net of tax of 1,711

 

53,769

 

 

27

 

 

Income from discontinued operations, net of tax

$

54,197

 

$

18,667

 

$

17,178

 

Unaudited Reconciliation of Gross Profit (Loss) From Continued and Discontinued Operations to Adjusted Gross Margin, Fuel Gross Margin, Fuel Gross Margin Per Barrel of Throughput and Operating Expenses Per Barrel of Throughput.

Three Months Ended December 31, 2023

In thousands

Conventional

Renewable

Mobile Refinery

Total

Gross profit

$

7,283

 

$

(17,557

)

$

(10,273

)

Unrealized (gain) loss on hedging activities

 

4,892

 

 

77

 

 

4,969

 

Inventory valuation adjustments

 

(3,400

)

 

2,152

 

 

(1,248

)

Adjusted gross margin

$

8,775

 

$

(15,328

)

$

(6,553

)

Variable production costs attributable to cost of revenues

 

19,770

 

 

19,497

 

 

39,267

 

Depreciation and amortization attributable to cost of revenues

 

2,492

 

 

3,997

 

 

6,489

 

RINs

 

6,662

 

 

-

 

 

6,662

 

Realized (gain) loss on hedging activities

 

(3,751

)

 

(3,587

)

 

(7,338

)

Financing costs

 

1,989

 

 

157

 

 

2,146

 

Other revenues

 

(6,361

)

 

(361

)

 

(6,722

)

Fuel gross margin

$

29,576

 

$

4,375

 

$

33,951

 

Throughput (bpd)

 

67,083

 

 

3,926

 

 

71,009

 

Fuel gross margin per barrel of throughput

$

4.79

 

$

12.11

 

$

5.20

 

Total OPEX

$

15,162

 

$

9,868

 

$

25,030

 

Operating expenses per barrel of throughput

$

2.46

 

$

27.32

 

$

3.83

 

 
 

Three Months Ended September 30, 2023

In thousands

Conventional

Renewable

Mobile Refinery

Total

Gross profit

$

86,185

 

$

(8,515

)

$

77,670

 

Unrealized (gain) loss on hedging activities

 

(4,620

)

 

(3,622

)

 

(8,242

)

Inventory valuation adjustments

 

13,225

 

 

(3,851

)

 

9,374

 

Adjusted gross margin

$

94,790

 

$

(15,988

)

$

78,802

 

Variable production costs attributable to cost of revenues

 

26,847

 

 

12,958

 

 

39,805

 

Depreciation and amortization attributable to cost of revenues

 

2,982

 

 

3,320

 

 

6,302

 

RINs

 

7,058

 

 

-

 

 

7,058

 

Realized (gain) loss on hedging activities

 

2,854

 

 

2,401

 

 

5,255

 

Financing costs

 

1,772

 

 

205

 

 

1,977

 

Other revenues

 

(6,804

)

 

(524

)

 

(7,328

)

Fuel gross margin

$

129,499

 

$

2,372

 

$

131,871

 

Throughput (bpd)

 

80,171

 

 

5,397

 

 

85,568

 

Fuel gross margin per barrel of throughput

$

17.56

 

$

4.78

 

$

16.75

 

Total OPEX

$

17,720

 

$

11,445

 

$

29,165

 

Operating expenses per barrel of throughput

$

2.40

 

$

23.05

 

$

3.70

 

 
 

Three Months Ended June 30, 2023

In thousands

Conventional

Renewable

Mobile Refinery

Total

Gross profit

$

6,544

 

$

(13,006

)

$

(6,462

)

Unrealized (gain) loss on hedging activities

 

849

 

 

2,913

 

 

3,762

 

Inventory valuation adjustments

 

(4,246

)

 

3,745

 

 

(501

)

Adjusted gross margin

$

3,147

 

$

(6,348

)

$

(3,201

)

Variable production costs attributable to cost of revenues

 

28,686

 

 

77

 

 

28,763

 

Depreciation and amortization attributable to cost of revenues

 

3,351

 

 

2,018

 

 

5,369

 

RINs

 

25,410

 

 

-

 

 

25,410

 

Realized (gain) loss on hedging activities

 

(1,150

)

 

1,288

 

 

138

 

Financing costs

 

(87

)

 

58

 

 

(29

)

Other revenues

 

(3,610

)

 

(190

)

 

(3,800

)

Fuel gross margin

$

55,747

 

$

(3,097

)

$

52,650

 

Throughput (bpd)

 

76,330

 

 

2,490

 

 

78,820

 

Fuel gross margin per barrel of throughput

$

8.03

 

$

(13.66

)

$

7.34

 

Total OPEX

$

23,299

 

$

7,076

 

$

30,375

 

Operating expenses per barrel of throughput

$

3.35

 

$

31.23

 

$

4.23

 

 
 

Three Months Ended March 31, 2023

In thousands

Conventional

Renewable

Mobile Refinery

Total

Gross profit

$

65,470

 

$

-

 

$

65,470

 

Unrealized (gain) loss on hedging activities

 

(570

)

 

-

 

 

(570

)

Inventory valuation adjustments

 

(1,532

)

 

-

 

 

(1,532

)

Adjusted gross margin

$

63,368

 

$

-

 

$

63,368

 

Variable production costs attributable to cost of revenues

 

21,252

 

 

-

 

 

21,252

 

Depreciation and amortization attributable to cost of revenues

 

3,144

 

 

-

 

 

3,144

 

RINs

 

16,115

 

 

-

 

 

16,115

 

Realized loss on hedging activities

 

(439

)

 

-

 

 

(439

)

Financing costs

 

2,295

 

 

-

 

 

2,295

 

Other revenues

 

(1,933

)

 

-

 

 

(1,933

)

Fuel gross margin

$

103,802

 

$

-

 

$

103,802

 

Throughput (bpd)

 

71,328

 

 

-

 

 

71,328

 

Fuel gross margin per barrel of throughput

$

16.17

 

$

-

 

$

16.17

 

Total OPEX

$

24,681

 

$

-

 

$

24,681

 

Operating expenses per barrel of throughput

$

3.84

 

$

-

 

$

3.84

 

Twelve Months Ended December 31, 2023

In thousands

Conventional

Renewable

Mobile Refinery

Total

Gross profit

$

165,481

 

$

(39,078

)

$

126,403

 

Unrealized (gain) loss on hedging activities

 

551

 

 

(632

)

 

(81

)

Inventory valuation adjustments

 

4,047

 

 

2,046

 

 

6,093

 

Adjusted gross margin

$

170,079

 

$

(37,664

)

$

132,415

 

Variable production costs attributable to cost of revenues

 

96,555

 

 

32,532

 

 

129,087

 

Depreciation and amortization attributable to cost of revenues

 

11,969

 

 

9,335

 

 

21,304

 

RINs

 

55,245

 

 

-

 

 

55,245

 

Realized (gain) loss on hedging activities

 

(2,486

)

 

102

 

 

(2,384

)

Financing costs

 

5,969

 

 

420

 

 

6,389

 

Other revenues

 

(18,708

)

 

(1,075

)

 

(19,783

)

Fuel gross margin

$

318,623

 

$

3,650

 

$

322,273

 

Throughput (bpd)

 

73,734

 

 

3,943

 

 

77,677

 

Fuel gross margin per barrel of throughput

$

11.84

 

$

3.37

 

$

11.37

 

Total OPEX

$

80,862

 

$

28,389

 

$

109,251

 

Operating expenses per barrel of throughput

$

3.00

 

$

26.18

 

$

3.85

 

Unaudited Reconciliation of Adjusted EBITDA to Net loss from Continued and Discontinued Operations.

In thousands

Three Months Ended

Twelve Months Ended

December 31, 2023

December 31, 2022

December 31, 2023

December 31, 2022

Net income (loss)

$

(63,865

)

$

44,418

 

$

(71,973

)

$

1,997

 

Depreciation and amortization

 

9,225

 

 

5,761

 

 

31,310

 

 

18,919

 

Income tax expense (benefit)

 

1,543

 

 

(2,489

)

 

5,297

 

 

(2,488

)

Interest expense

 

16,029

 

 

14,956

 

 

119,566

 

 

79,950

 

EBITDA

$

(37,068

)

$

62,646

 

$

84,200

 

$

98,378

 

Unrealized (gain) loss on hedging activities

 

4,981

 

 

978

 

 

(252

)

 

(146

)

Inventory valuation adjustments

 

(1,248

)

 

9,614

 

 

6,093

 

 

50,766

 

Gain on change in value of derivative warrant liability

 

(2,956

)

 

(33

)

 

(7,992

)

 

(7,821

)

Stock-based compensation

 

783

 

 

622

 

 

2,285

 

 

1,574

 

(Gain) loss on sale of assets

 

3

 

 

-

 

 

(70,878

)

 

-

 

Acquisition costs

 

-

 

 

-

 

 

4,308

 

 

16,527

 

Environmental clean-up reserve

 

-

 

 

-

 

 

-

 

 

1,428

 

Other

 

388

 

 

1,339

 

 

(634

)

 

280

 

Adjusted EBITDA

$

(35,117

)

$

75,166

 

$

17,130

 

$

160,986

 

Three Months Ended December 31, 2023

Mobile Refinery

Legacy Refining

& Marketing

Total Refining &

Marketing

Black Oil and

Recovery

Corporate

Consolidated

In thousands

Conventional

Renewable

Net income (loss)

$

(11,112

)

$

(30,266

)

$

(2,424

)

$

(43,801

)

$

(1,670

)

$

(18,395

)

$

(63,865

)

Depreciation and amortization

 

3,252

 

 

4,017

 

 

313

 

 

7,582

 

 

1,476

 

 

167

 

 

9,225

 

Income tax expense (benefit)

 

-

 

 

-

 

 

-

 

 

-

 

 

(517

)

 

2,060

 

 

1,543

 

Interest expense

 

2,473

 

 

2,820

 

 

-

 

 

5,293

 

 

62

 

 

10,675

 

 

16,029

 

EBITDA

$

(5,387

)

$

(23,429

)

$

(2,111

)

$

(30,926

)

$

(649

)

$

(5,493

)

$

(37,068

)

Unrealized (gain) loss on hedging activities

 

4,892

 

 

77

 

 

(7

)

 

4,962

 

 

19

 

 

-

 

 

4,981

 

Inventory valuation adjustments

 

(3,400

)

 

2,152

 

 

-

 

 

(1,248

)

 

-

 

 

-

 

 

(1,248

)

Gain on change in value of derivative warrant liability

 

-

 

 

-

 

 

-

 

 

-

 

 

-

 

 

(2,956

)

 

(2,956

)

Stock-based compensation

 

-

 

 

-

 

 

-

 

 

-

 

 

-

 

 

783

 

 

783

 

(Gain) loss on sale of assets

 

-

 

 

-

 

 

-

 

 

-

 

 

-

 

 

3

 

 

3

 

Other

 

-

 

 

-

 

 

-

 

 

-

 

 

389

 

 

(1

)

 

388

 

Adjusted EBITDA

$

(3,895

)

$

(21,200

)

$

(2,118

)

$

(27,212

)

$

(241

)

$

(7,664

)

$

(35,117

)

 
 

Twelve Months Ended December 31, 2023

Mobile Refinery

Legacy Refining

& Marketing

Total Refining &

Marketing

Black Oil and

Recovery

Corporate

Consolidated

In thousands

Conventional

Renewable

Net income (loss)

$

68,574

 

$

(72,537

)

$

(6,349

)

$

(10,312

)

$

49,260

 

$

(110,922

)

$

(71,973

)

Depreciation and amortization

 

14,937

 

 

9,390

 

 

1,103

 

 

25,430

 

 

5,209

 

 

671

 

 

31,310

 

Income tax expense (benefit)

 

-

 

 

-

 

 

-

 

 

-

 

 

18,682

 

 

(13,385

)

 

5,297

 

Interest expense

 

13,077

 

 

5,015

 

 

-

 

 

18,092

 

 

188

 

 

101,287

 

 

119,566

 

EBITDA

$

96,588

 

$

(58,132

)

$

(5,246

)

$

33,210

 

$

73,339

 

$

(22,349

)

$

84,200

 

Unrealized (gain) loss on hedging activities

 

551

 

 

(632

)

 

(89

)

 

(170

)

 

(82

)

 

-

 

 

(252

)

Inventory valuation adjustments

 

4,047

 

 

2,046

 

 

-

 

 

6,093

 

 

-

 

 

-

 

 

6,093

 

Gain on change in value of derivative warrant liability

 

-

 

 

-

 

 

-

 

 

-

 

 

-

 

 

(7,992

)

 

(7,992

)

Stock-based compensation

 

-

 

 

-

 

 

-

 

 

-

 

 

-

 

 

2,285

 

 

2,285

 

(Gain) loss on sale of assets

 

-

 

 

-

 

 

-

 

 

-

 

 

(70,884

)

 

6

 

 

(70,878

)

Acquisition costs

 

-

 

 

-

 

 

-

 

 

-

 

 

-

 

 

4,308

 

 

4,308

 

Other

 

-

 

 

-

 

 

-

 

 

-

 

 

(595

)

 

(39

)

 

(634

)

Adjusted EBITDA

$

101,186

 

$

(56,718

)

$

(5,335

)

$

39,133

 

$

1,778

 

$

(23,781

)

$

17,130

 

Three Months Ended December 31, 2022

In thousands

Mobile Refinery

Legacy Refining &

Marketing

Total Refining &

Marketing

Black Oil

Corporate

Consolidated

Net income (loss)

$

56,839

$

(1,860

)

$

54,979

$

4,706

 

$

(15,267

)

$

44,418

 

Depreciation and amortization

 

3,857

 

-

 

 

3,857

 

1,733

 

 

171

 

 

5,761

 

Income tax expense (benefit)

 

-

 

-

 

 

-

 

-

 

 

(2,489

)

 

(2,489

)

Interest expense

 

3,721

 

-

 

 

3,721

 

25

 

 

11,210

 

 

14,956

 

EBITDA

$

64,417

$

(1,860

)

$

62,557

$

6,464

 

$

(6,375

)

$

62,646

 

Unrealized (gain) loss on hedging activities

 

165

 

138

 

 

303

 

675

 

 

-

 

 

978

 

Inventory valuation adjustments

 

14,011

 

-

 

 

14,011

 

(4,397

)

 

-

 

 

9,614

 

Gain on change in value of derivative warrant liability

 

-

 

-

 

 

-

 

-

 

 

(33

)

 

(33

)

Stock-based compensation

 

-

 

-

 

 

-

 

-

 

 

622

 

 

622

 

Other

 

-

 

-

 

 

-

 

1,119

 

 

220

 

 

1,339

 

Adjusted EBITDA

$

78,593

$

(1,722

)

$

76,871

$

3,861

 

$

(5,566

)

$

75,166

 

 
 

Twelve Months Ended December 31, 2022

In thousands

Mobile Refinery

Legacy Refining &

Marketing

Total Refining &

Marketing

Black Oil

Corporate

Consolidated

Net income (loss)

$

51,247

$

(4,007

)

$

47,240

$

18,968

 

$

(64,211

)

$

1,997

 

Depreciation and amortization

 

11,273

 

925

 

 

12,198

 

4,004

 

 

2,717

 

 

18,919

 

Income tax expense (benefit)

 

-

 

-

 

 

-

 

-

 

 

(2,488

)

 

(2,488

)

Interest expense

 

10,414

 

-

 

 

10,414

 

67

 

 

69,469

 

 

79,950

 

EBITDA

$

72,934

$

(3,082

)

$

69,852

$

23,039

 

$

5,487

 

$

98,378

 

Unrealized (gain) loss on hedging activities

 

90

 

69

 

 

159

 

(305

)

 

-

 

 

(146

)

Inventory valuation adjustments

 

37,764

 

-

 

 

37,764

 

13,002

 

 

-

 

 

50,766

 

Gain on change in value of derivative warrant liability

 

-

 

-

 

 

-

 

-

 

 

(7,821

)

 

(7,821

)

Stock-based compensation

 

-

 

-

 

 

-

 

-

 

 

1,574

 

 

1,574

 

Acquisition costs

 

11,967

 

-

 

 

11,967

 

4,560

 

 

-

 

 

16,527

 

Environmental clean-up reserve

 

1,428

 

-

 

 

1,428

 

-

 

 

-

 

 

1,428

 

Other

 

13,282

 

-

 

 

13,282

 

(13,222

)

 

220

 

 

280

 

Adjusted EBITDA

$

137,465

$

(3,013

)

$

134,452

$

27,074

 

$

(540

)

$

160,986

 

Unaudited Reconciliation of Long-Term Debt to Net Long-Term Debt and Net Leverage.

In thousands

As of

December 31, 2023

December 31, 2022

Long-Term Debt:
Senior Convertible Note

$

15,230

 

$

95,178

 

Term Loan 2025

 

195,950

 

 

165,000

 

Finance lease liability long-term

 

66,206

 

 

45,164

 

Finance lease liability short-term

 

2,435

 

 

1,363

 

Insurance premiums financed

 

6,237

 

 

5,661

 

Long-Term Debt and Lease Obligations

$

286,058

 

$

312,366

 

Unamortized discount and deferred financing costs

 

(30,354

)

 

(81,918

)

Long-Term Debt and Lease Obligations per Balance Sheet

$

255,704

 

$

230,448

 

Cash and Cash Equivalents

 

(76,967

)

 

(141,258

)

Restricted Cash

 

(3,606

)

 

(4,929

)

Total Cash and Cash Equivalents

$

(80,573

)

$

(146,187

)

Net Long-Term Debt

$

205,485

 

$

166,179

 

Adjusted EBITDA

$

17,130

 

$

160,985

 

Net Leverage

12.0x

1.0x

 

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