August 9, 2018 - 7:00 AM EDT
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Vertex Energy, Inc. Announces 2018 Second Quarter and Year-To-Date Financial Results

Revenue increased 27%, Gross Profit jumped 86%

Gross Profit Margin was 22%, Net Income Earnings Per Share of $0.03

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

HOUSTON, Aug. 09, 2018 (GLOBE NEWSWIRE) -- Vertex Energy, Inc. (VTNR), a specialty refiner of alternative feedstocks and marketer of high-purity petroleum products, announced today its financial results for the second quarter and six months ended June 30, 2018.

FINANCIAL HIGHLIGHTS FOR SECOND QUARTER OF 2018

  • Consolidated revenue increased to $46.9 million, a 27% increase from the second quarter of 2017.
  • Gross profit was $10.1 million, an increase of 86% from the second quarter of 2017.
  • Gross profit margin was 22%.
  • Total overall volume declined 7% from a year ago.
  • Consolidated per barrel margin increased 102% over the same period a year ago.
  • Net income available to common shareholders was $1.4 million, or $0.03 per share.

FINANCIAL HIGHLIGHTS FOR FIRST SIX MONTHS OF 2018

  • Consolidated revenue increased to $88.3 million, a 23% rise from the same period in 2017.
  • Gross profit was $16.4 million, an improvement of 73% from the prior year.
  • Gross profit margin was 19%.
  • Total overall volume decreased 5% from a year ago.
  • Consolidated per barrel margin increased 83% over the same period a year ago.
  • Net loss available to common shareholders was $2.0 million, or a loss of $0.06 per share.

Benjamin P. Cowart, Chairman and CEO of Vertex Energy, Inc., stated, "We are pleased with our second quarter financial results, as our capital investments continue to yield positive results. Our spreads at both the Marrero and Heartland facilities were strong, while there was high demand for both base oil and fuels. Our gross margin and net income also showed improvement year-over-year."

Mr. Cowart added, "We are encouraged by our business operations and financial performance in the second quarter. Based on these results, we believe that momentum can carry over into the second half of 2018. We continue to see higher production volumes and better sales for our products at both of our facilities. Also, our collected volume, which represents the volumes we collect with our own equipment and provides a significant margin contribution, rose 22% year-over-year and puts us on target to collect 30 million gallons at the end of 2018. We collected 26 million gallons of used motor oil in 2017. We remain committed to our capital funded project timeline."

SECOND QUARTER 2018 FINANCIAL RESULTS CONFERENCE CALL DETAILS

Management will host a conference call today at 9 A.M. EDT. 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 November 15, 2018, 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 #13681767.

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 includes 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.

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

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 EndedFor the Six Months Ended
  June. 30 2018   June. 30, 2017   June. 30 2018   June. 30 2017 
Net (Loss) Income             
Attribute to Vertex Energy, Inc.$2,530,068  $(1,867,506) $271,446  $(5,063,914)
Add (deduct):             
Interest Income (659)  (2,277)  (659)  (4,229)
Interest Expense 847,456   618,448   1,649,971   1,954,935 
Depreciation and amortization 1,733,076   1,645,030   3,427,175   3,245,090 
              
EBITDA* 5,109,941   393,695   5,347,933   131,882 
               
Add (deduct): Stock-Based Compensation 183,750   148,736   329,721   297,473 
               
Adjusted EBITDA$5,293,691  $542,431  $5,677,654  $429,355 
               

* 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. 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)

 June 30,
 2018
 December 31,
 2017
ASSETS   
Current assets   
Cash and cash equivalents$1,718,830  $1,105,787 
Accounts receivable, net12,589,375  11,288,991 
Federal income tax receivable274,423   
Inventory8,461,737  6,304,842 
Prepaid expenses1,313,173  1,771,832 
Total current assets24,357,538  20,471,452 
    
Noncurrent assets   
Fixed assets, at cost67,226,898  65,237,652 
  Less accumulated depreciation(18,945,357) (16,617,824)
  Fixed assets, net48,281,541  48,619,828 
Goodwill and other intangible assets, net13,666,774  14,499,354 
Federal income tax receivable

 
  274,423 
Other assets646,359  440,417 
TOTAL ASSETS$86,952,212  $84,305,474 
    
LIABILITIES, TEMPORARY EQUITY, AND EQUITY   
Current liabilities   
Accounts payable and accrued expenses$12,265,972  $10,318,738 
Dividends payable548,904  420,713 
Capital leases-current121,864   
Current portion of long-term debt, net of unamortized finance costs906,548  1,616,926 
Derivative commodity liability46,614   
Revolving note3,774,730  4,591,527 
 Total current liabilities17,664,632  16,947,904 
Long-term liabilities   
  Long-term debt, net of unamortized finance costs14,532,663  13,531,179 
Capital leases-long-term317,437   
Contingent consideration236,680  236,680 
Derivative warrant liability2,201,246  2,245,408 
Total liabilities34,952,658  32,961,171 
    
COMMITMENTS AND CONTINGENCIES (Note 3)   
    
TEMPORARY EQUITY   
Series B Convertible Preferred Stock, $0.001 par value per share;
10,000,000 shares designated, 3,499,059 and 3,427,597 shares issued and outstanding at June 30, 2018 and December 31, 2017, respectively with a liquidation preference of $10,847,083 and $10,625,551 at June 30, 2018 and December 31, 2017, respectively.
7,931,530  7,190,467 
    
Series B1 Convertible Preferred Stock, $0.001 par value per share;
17,000,000 shares designated, 13,105,989 and 13,151,989 shares issued and outstanding at June 30, 2018 and December 31, 2017, respectively with a liquidation preference of $20,445,343 and $20,517,103 at June 30, 2018 and December 31, 2017, respectively.
16,100,770  15,769,478 
Total Temporary Equity24,032,300  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 June 30, 2018 and December 31, 2017, respectively with a liquidation preference of $625,590 and $675,815 at June 30, 2018 and December 31, 2017, respectively.
420  454 
    
Series C Convertible Preferred Stock, $0.001 par value;
44,000 shares designated, 31,568 and 31,568 shares issued and outstanding at June 30, 2018 and December 31, 2017, respectively with a liquidation preference of $3,156,800 and $3,156,800 at June 30, 2018 and December 31, 2017, respectively.
32  32 
    
Common stock, $0.001 par value per share;
750,000,000 shares authorized; 33,357,538 and 32,658,176 shares issued and outstanding at June 30, 2018 and December 31, 2017, respectively.
33,358  32,658 
Additional paid-in capital69,185,118  67,768,509 
Accumulated deficit(41,832,954) (39,816,300)
Total Vertex Energy, Inc. stockholders' equity27,385,974  27,985,353 
Non-controlling interest581,280  399,005 
Total Equity27,967,254  28,384,358 
TOTAL LIABILITIES, TEMPORARY EQUITY, AND EQUITY$86,952,212  $84,305,474 
        
        

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

  Three Months
Ended June 30,
 Six Months
Ended June 30,
 
  2018 2017 2018  2017  
Revenues $46,917,770  $36,912,779   $88,285,965   $71,683,393  
Cost of revenues (exclusive of depreciation and amortization shown separately below) 36,796,258  31,466,029   71,841,409   62,167,583  
Gross profit 10,121,512  5,446,750   16,444,556   9,515,810  
          
Operating expenses:         
Selling, general and administrative expenses 5,364,591  5,359,897   11,010,033   10,589,734  
Depreciation and amortization 1,733,076  1,645,030   3,427,175   3,245,090  
Total operating expenses 7,097,667  7,004,927   14,437,208   13,834,824  
Income (loss) from operations 3,023,845  (1,558,177 ) 2,007,348   (4,319,014 )
Other income (expense):         
Interest income 659  2,277   659   4,229  
Gain (loss) on sale of assets 8,843  (26,399 ) 51,523   (39,499 )
Gain (loss) on change in value of derivative liability 475,913  384,769   44,162   1,305,441  
Interest expense (847,456) (618,448 ) (1,649,971 ) (1,954,935 )
Total other income (expense) (362,041) (257,801 ) (1,553,627 ) (684,764 )
Income (loss) before income tax 2,661,804  (1,815,978 ) 453,721   (5,003,778 )
Income tax benefit (expense)           
Net income (loss) 2,661,804  (1,815,978 ) 453,721   (5,003,778 )
Net income (loss) attributable to non-controlling interest 131,736  51,528   182,275   60,136  
Net income (loss) attributable to Vertex Energy, Inc. 2,530,068  (1,867,506 ) 271,446   (5,063,914 )
          
Accretion of discount on Series B and B-1 Preferred Stock (470,825) (410,097 ) (928,678 ) (843,298 )
Accrual of dividends on Series B and B-1 Preferred Stock (620,069) (418,571 ) (1,359,423 ) (836,208 )
Net income (loss) available to common shareholders $1,439,174  $(2,696,174 ) $(2,016,655)  $(6,743,420 )
Income (loss) per common share         
Basic $0.03  $(0.08)  $(0.06)  $(0.21) 
Diluted $0.03  $(0.08)  $(0.06)  $(0.21) 
Shares used in computing earnings per share         
Basic 33,300,456  32,350,218   33,182,748   32,650,347  
Diluted 37,013,651  32,350,218   33,182,748   32,650,347  
                
                

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

 Six Months Ended June 30,
  2018 2017
Cash flows from operating activities   
Net income (loss)$453,721  $(5,003,778)
 Adjustments to reconcile net loss to cash provided by (used in) operating activities   
Stock based compensation expense329,721  297,473 
Depreciation and amortization3,427,175  3,245,090 
(Gain) loss on sale of assets(51,523) 39,499 
(Increase) decrease in fair value of derivative warrant liability(44,162) (1,305,441)
  Loss on commodity derivative contracts1,212,087   
  Net cash settlements on commodity derivatives(1,393,970)  
  Amortization of debt discount and deferred costs290,746  428,159 
Changes in operating assets and liabilities   
Accounts receivable(1,300,384) 1,331,191 
Inventory(2,156,895) (208,027)
Prepaid expenses687,156  1,883,798 
Accounts payable and accrued expenses1,947,234  (1,615,582)
  Other assets(205,942) 129,200 
Net cash provided by (used in) operating activities3,194,964  (778,418)
Cash flows from investing activities   
Acquisition of SES(269,823)  
Acquisition of Acadiana  (710,350)
Acquisition of Nickco  (1,096,730)
Purchase of fixed assets(1,570,094) (990,096)
Proceeds from sale of  fixed assets85,230  223,296 
Net cash provided by (used in) investing activities(1,754,687) (2,573,880)
Cash flows from financing activities   
Payments on capital leases(10,797)  
Payment of debt issuance costs  (1,718,088)
Line of credit (payments) proceeds, net(816,797) 109,710 
Proceeds from note payable1,667,426  14,763,297 
Payments on note payable(1,667,066) (11,041,958)
Net cash provided by (used in) financing activities(827,234) 2,112,961 
Net change in cash, cash equivalents and restricted cash613,043  (1,239,337)
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$1,718,830  $1,966,821 
    


SUPPLEMENTAL INFORMATION                                                                          
Cash paid for interest$1,126,362  $    746,893 
Cash received for income tax benefit$  $ 
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$987,259  $119,440 
Accretion of discount on Series B and B-1 Preferred Stock$928,678  $843,298 
Dividends-in-kind  accrued on Series B and B-1 Preferred Stock$1,359,423  $836,207 
Equipment acquired under capital leases$450,098  $ 
Contingent consideration on Nickco acquisition$  $284,410 
Common restricted shares for Nickco acquisition$  $408,000 
Return of common shares for sale escrow$  $1,109 

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Source: GlobeNewswire (August 9, 2018 - 7:00 AM EDT)

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