MRO Magazine

Vertex Energy, Inc. Announces Second Quarter 2015 Financial Results


August 10, 2015
By Business Wire News

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   $  
 

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