November 6, 2018 - 10:00 AM EST
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CORRECTING and REPLACING - Vertex Energy, Inc. Announces 2018 Third Quarter and Year-To-Date Financial Results

Revenue increased 56%, Gross Profit rose 113%

Gross Profit Margin was 15.8%, EBITDA improved 157% from prior year

Conference call to be held today at 9:00 A.M. EST

HOUSTON, Nov. 06, 2018 (GLOBE NEWSWIRE) -- In a release issued earlier today under the same headline by Vertex Energy, Inc. (VTNR), please note the first table in the release has been updated. Complete corrected text follows:

Vertex Energy, Inc. (VTNR), a specialty refiner and marketer of high-quality hydrocarbon products, announced today its financial results for the three months and nine months ended September 30, 2018.

2018 THIRD QUARTER FINANCIAL HIGHLIGHTS

  • Consolidated revenue increased to $50.6 million, a 56% increase from the third quarter of 2017.
  • Gross profit was $8.0 million, an increase of 113% from the same period in 2017.
  • Gross profit margin was 15.8%.
  • Total overall volume was up 6%.
  • Consolidated per barrel margin increased 100%, compared to the same period in 2017.
  • Net loss available to common shareholders was $4.6 million, or loss of $0.13 per share.
  • Income from operations was $0.6 million.

2018 YEAR-TO-DATE FINANCIAL RESULTS

  • Consolidated revenue increased to $138.9 million, a 33% improvement from the same period in 2017.
  • Gross profit was $24.5 million, an increase of approximately 84% from the same period in 2017.
  • Gross profit margin was 17.6%.
  • Total overall volume decreased 2%.
  • Consolidated per barrel margin rose 87%, compared to the same period in 2017.
  • Net loss available to common shareholders was $6.7 million, or loss of $0.20 per share.
  • Income from operations was $2.6 million.

Benjamin P. Cowart, Chairman and CEO of Vertex Energy, Inc., stated, "We reported improved quarterly revenue and EBITDA. Our revenue for the quarter rose approximately 56 percent to 50.6 million dollars, gross profit grew 113 percent to 8.0 million dollars, and our EBITDA was 0.3 million dollars."

Mr. Cowart added, "We are happy with the operational performance of our business. Our cost effective strategy of building a regional collection and aggregation system has proven successful. We anticipate that our system, along with the capital investments we have been making, will continue to benefit our operating performance moving forward. In addition, we plan to continue to grow our collections through acquisitions and organic growth."

Mr. Cowart concluded, "There are additional catalysts for our business that we believe can lead to long-term positive returns. First, the shift of our production to the Marine Fuel Market is expected to allow us to leverage our low sulfur fuel for ships when IMO 2020 regulations begin to transition into effect in 2019. Second, we currently anticipate entering into a transaction by the end of 2018 in order to raise capital for our Heartland and Myrtle Grove facilities."  

THIRD QUARTER 2018 FINANCIAL RESULTS CONFERENCE CALL DETAILS

Management will host a conference call on November 6, 2018 at 9 A.M. EST. Those who wish to participate in the conference call may telephone 1-877-869-3847 from the U.S. and International callers may telephone 1-201-689-8261, approximately 15 minutes before the call. A webcast will also be available under the Investor Relations section at www.vertexenergy.com

A digital replay will be available by telephone approximately two hours after the completion of the call until March 31, 2019, and may be accessed by dialing 1-877-660-6853 from the U.S. or 1-201-612-7415 for international callers, using conference ID #13683687.

ABOUT VERTEX ENERGY, INC.

Vertex Energy, Inc. (NASDAQ: VTNR) is a specialty refiner of alternative feedstocks and marketer of high-purity petroleum products. With its headquarters in Houston, Texas, Vertex is one of the largest processors of used motor oil in the U.S. and has processing capacity of over 115 million gallons annually with operations located in Houston and Port Arthur (TX), Marrero (LA), and Columbus (OH). Vertex also has a facility, Myrtle Grove, located on a 41 acre industrial complex along the Gulf Coast in Belle Chasse, LA, with existing hydroprocessing and plant infrastructure assets, that include nine million gallons of storage. Vertex has implemented a cost-effective strategy for building its feedstock supply by establishing a successful self-collection and aggregation system. The Company has built a reputation as a key supplier of Group II+ and Group III base oils to the lubricant manufacturing industry in North America. For more information on Vertex Energy please contact Porter, LeVay & Rose, Inc.'s investor relations representative Marlon Nurse, D.M. at 212-564-4700 or visit our website at www.vertexenergy.com

Forward-Looking Statements

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,” “hopes,” “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) attributable to Vertex Energy, Inc., to Earnings before Interest, Taxes, Depreciation and Amortization (EBITDA) and Adjusted EBITDA*

  For the Three Months Ended For the Nine Months Ended
  September 30,
2018
 September 30,
2017
 September 30,
2018
 September 30,
2017
Net (loss) income       
attributable to Vertex Energy, Inc. $(2,287,880) $(2,983,932) $(2,016,434) $(8,047,846)
Add (deduct):       
Interest Income  -   (1,519)  (659)  (5,748)
Interest Expense  798,880   733,459   2,448,771   2,688,394 
Depreciation and amortization  1,806,839   1,697,821   5,234,014   4,942,911 
Tax (expense) benefit        
         
EBITDA*  317,759   (554,171)  5,665,692    (422,289)
         
Add (deduct):        
Gain loss on change in value of derivative warrant liability  2,169,133   (1,371,461)  2,124,971   (2,676,902)
Add (deduct): Stock-Based compensation  165,057   163,002   494,779   460,475 
         
Adjusted EBITDA $   2,651,949   $   (1,762,630) $   8,285,442   $   (2,638,716)
        

* EBITDA and adjusted EBITDA are non-GAAP financial measures. These measurements are 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. Adjusted EBITDA is defined as EBITDA before stock-based compensation expense and gain (loss) on change in value of derivative warrant liability. EBITDA and adjusted EBITDA are presented because we believe they provide additional useful information to investors due to the various noncash items during the period. EBITDA and adjusted EBITDA 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 GAAP. Some of these limitations are:

  • EBITDA and adjusted EBITDA do not reflect cash expenditures, or future requirements for capital expenditures, or contractual commitments;
  • EBITDA and adjusted EBITDA do not reflect changes in, or cash requirements for, working capital needs;
  • EBITDA and adjusted EBITDA 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, and EBITDA and adjusted EBITDA do not reflect any cash requirements for such replacements; and
  • Other companies in this industry may calculate EBITDA and adjusted EBITDA differently than Vertex Energy does, limiting its usefulness as a comparative measure.

VERTEX ENERGY, INC.
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)

 September 30,
 2018
 December 31,
 2017
ASSETS   
Current assets   
Cash and cash equivalents$1,840,345  $1,105,787 
Accounts receivable, net14,380,264  11,288,991 
Federal income tax receivable137,212   
Inventory6,646,171  6,304,842 
Prepaid expenses3,973,105  1,771,832 
Total current assets26,977,097  20,471,452 
    
Noncurrent assets   
Fixed assets, at cost66,781,807  65,237,652 
Less accumulated depreciation(18,671,219) (16,617,824)
Fixed assets, net48,110,588  48,619,828 
Goodwill and other intangible assets, net13,210,821  14,499,354 
Federal income tax receivable
137,211  274,423 
Other assets694,059  440,417 
TOTAL ASSETS$89,129,776  $84,305,474 
    
LIABILITIES, TEMPORARY EQUITY, AND EQUITY   
Current liabilities   
Accounts payable and accrued expenses$9,805,852  $10,318,738 
Dividends payable479,311  420,713 
Capital leases-current92,900   
Current portion of long-term debt, net of unamortized finance costs2,167,171  1,616,926 
Derivative commodity liability601,534   
Revolving note5,999,733  4,591,527 
 Total current liabilities19,146,501  16,947,904 
Long-term liabilities   
  Long-term debt, net of unamortized finance costs14,483,702  13,531,179 
Capital leases-long-term322,538   
Contingent consideration108,564  236,680 
Derivative warrant liability4,370,379  2,245,408 
Total liabilities38,431,684  32,961,171 
    
COMMITMENTS AND CONTINGENCIES    
    
TEMPORARY EQUITY   
Series B Convertible Preferred Stock, $0.001 par value per share;10,000,000 shares designated, 3,551,549 and 3,427,597 shares issued and outstanding at September 30, 2018 and December 31, 2017, respectively with a liquidation preference of $11,009,802 and $10,625,551 at September 30, 2018 and December 31, 2017, respectively.8,432,160  7,190,467 
    
Series B1 Convertible Preferred Stock, $0.001 par value per share;17,000,000 shares designated, 11,074,331 and 13,151,989 shares issued and outstanding at September 30, 2018 and December 31, 2017, respectively with a liquidation preference of $17,275,956 and $20,517,103 at September 30, 2018 and December 31, 2017, respectively.14,387,804  15,769,478 
Total Temporary Equity22,819,964  22,959,945 
EQUITY   
50,000,000 of total Preferred shares authorized:   
Series A Convertible Preferred Stock, $0.001 par value; 5,000,000 shares designated, 419,859 and 453,567 shares issued and outstanding at September 30, 2018 and December 31, 2017, respectively with a liquidation preference of $625,590 and $675,815 at September 30, 2018 and December 31, 2017, respectively.420  454 
    
Series C Convertible Preferred Stock, $0.001 par value; 44,000 shares designated, 31,568 shares issued and outstanding at December 31, 2017, with a liquidation preference of $3,156,800 at December 31, 2017.  32 
    
Common stock, $0.001 par value per share; 750,000,000 shares authorized; 38,840,890 and 32,658,176 shares issued and outstanding at September 30, 2018 and December 31, 2017, respectively.38,841  32,658 
Additional paid-in capital72,974,146  67,768,509 
Accumulated deficit(45,508,871) (39,816,300)
Total Vertex Energy, Inc. stockholders' equity27,504,536  27,985,353 
Non-controlling interest373,592  399,005 
Total Equity27,878,128  28,384,358 
TOTAL LIABILITIES, TEMPORARY EQUITY, AND EQUITY$89,129,776  $84,305,474 


VERTEX ENERGY, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)

  Three Months Ended September 30, Nine Months Ended September 30,
  2018 2017 2018 2017
Revenues $50,632,948  $32,470,451  $138,918,913  $104,153,844 
Cost of revenues (exclusive of depreciation and amortization shown separately below) 42,593,367  28,696,461  114,434,776  90,864,044 
Gross profit 8,039,581  3,773,990  24,484,137  13,289,800 
         
Operating expenses:        
Selling, general and administrative expenses 5,658,659  5,690,761  16,668,692  16,280,495 
Depreciation and amortization 1,806,839  1,697,821  5,234,014  4,942,911 
Total operating expenses 7,465,498  7,388,582  21,902,706  21,223,406 
Income (loss) from operations 574,083  (3,614,592) 2,581,431  (7,933,606)
Other income (expense):        
Interest income   1,519  659  5,748 
Gain (loss) on sale of assets   25,693  51,523  (13,806)
Gain (loss) on change in value of derivative warrant liability (2,169,133) 1,371,461  (2,124,971) 2,676,902 
Interest expense (798,800) (733,459) (2,448,771) (2,688,394)
Total other income (expense) (2,967,933) 665,214  (4,521,560) (19,550)
Income (loss) before income tax (2,393,850) (2,949,378) (1,940,129) (7,953,156)
Income tax benefit (expense)        
Net income (loss) (2,393,850) (2,949,378) (1,940,129) (7,953,156)
Net income (loss) attributable to non-controlling interest (105,970) 34,554  76,305  94,690 
Net income (loss) attributable to Vertex Energy, Inc. (2,287,880) (2,983,932) (2,016,434) (8,047,846)
         
Accretion of discount on Series B and B-1 Preferred Stock (515,698) (424,480) (1,444,376) (1,267,778)
Accrual of dividends on Series B and B-1 Preferred Stock (1,831,794) (420,713) (3,191,217) (1,256,921)
Net income (loss) available to common shareholders $(4,635,372) $(3,829,125) $(6,652,027) $(10,572,545)
Income (loss) per common share        
Basic $(0.13) $(0.12) $(0.20) $(0.32)
Diluted $(0.13) $(0.12) $(0.20) $(0.32)
Shares used in computing earnings per share        
Basic 35,144,113  32,655,135  33,843,721  32,651,961 
Diluted 35,144,113  32,655,135  33,843,721  32,651,961 


VERTEX ENERGY, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
NINE MONTHS ENDED SEPTEMBER 30, 2018 AND 2017 (UNAUDITED)

 Nine Months Ended
 September 30,
 2018
 September 30,
 2017
Cash flows from operating activities   
Net loss$(1,940,129) $(7,953,156)
 Adjustments to reconcile net loss to cash provided by (used in) operating activities   
Stock based compensation expense494,779  460,475 
Depreciation and amortization5,234,014  4,942,911 
(Gain) loss on sale of assets(51,523) 13,806 
(Increase) decrease in fair value of derivative warrant liability2,124,971  (2,676,902)
Loss on commodity derivative contracts1,859,234   
Net cash settlements on commodity derivatives(2,386,897)  
Amortization of debt discount and deferred costs474,360  571,635 
Changes in operating assets and liabilities   
Accounts receivable(3,091,273) 2,054,774 
Inventory(341,329) (195,977)
Prepaid expenses(1,072,076) (65,603)
Accounts payable, accrued expenses, and other liabilities(641,003) 329,959 
Other assets(253,642) 129,500 
Net cash provided by (used in) operating activities409,486  (2,388,578)
Cash flows from investing activities   
Acquisition of SES(269,826)  
Acquisition of Acadiana  (710,350)
Acquisition of Nickco  (1,126,730)
Acquisition of Ygriega  (162,500)
Purchase of fixed assets(1,813,904) (1,842,237)
Proceeds from sale of  fixed assets6,848  297,718 
Net cash used in investing activities(2,076,882) (3,544,099)
Cash flows from financing activities   
Payments on capital leases(34,660)  
Payment of debt issuance costs  (1,718,090)
Line of credit (payments) proceeds, net1,408,206  1,012,444 
Proceeds from note payable4,024,964  16,570,929 
Payments on note payable(2,996,556) (12,013,925)
Net cash provided by financing activities2,401,954  3,851,358 
Net change in cash, cash equivalents and restricted cash734,558  (2,081,319)
Cash, cash equivalents, and restricted cash at beginning of the period1,105,787  3,206,158 
Cash, cash equivalents, and restricted cash at end of period$1,840,345  $1,124,839 
    


SUPPLEMENTAL INFORMATION   
Cash paid for interest$2,034,275  $1,328,401 
Cash paid for taxes$  $ 
NON-CASH INVESTING AND FINANCING TRANSACTIONS   
Conversion of Series A Preferred Stock into common stock$34  $36 
Conversion of Series B-1 Preferred Stock into common stock$4,616,354  $119,440 
Accretion of discount on Series B and B-1 Preferred Stock$1,444,376  $1,267,778 
Dividends-in-kind  accrued on Series B and B-1 Preferred Stock$3,191,217  $1,256,920 
Equipment acquired under capital leases$450,098  $ 
Contingent consideration on Nickco acquisition$  $236,680 
Common restricted shares for Nickco acquisition$  $474,000 
Return of common shares for sale escrow$  $1,109 


Investor Relations Contact:
Marlon Nurse, D.M.
Senior Vice President
212-564-4700

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Source: GlobeNewswire (November 6, 2018 - 10:00 AM EST)

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