Vertex Energy Inc. - FORM 8-K - EX-99.1 - PRESS RELEASE OF VERTEX ENERGY, INC., DATED NOVEMBER 13, 2014 - November 12, 2014

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Investor Relations Contact
Marlon Nurse, DM
Senior VP – Investor Relations
212-564-4700
 
 
VERTEX ENERGY ANNOUNCES THIRD QUARTER REVENUE
IMPROVES 64% FROM A YEAR AGO

H&H Organic Volume Jumped over 40%

Overall Volumes of Product Sold up 56% in Third Quarter Year Over Year

Conference Call Today at 9:00 A.M. EST
 
Houston, TX – November 13, 2014 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 third quarter and first nine months of 2014.
 
FINANCIAL HIGHLIGHTS FOR THIRD QUARTER 2014
 
 
·
Revenue increased by 64% relative to the third quarter of last year to $76.9 million.
 
 
·
Gross profit decreased to $4.1 million in the third quarter of 2014 versus $4.9 million in the third quarter of 2013. The decline was primarily attributed to the decline in the market and costs associated with the Thermal Chemical Extraction Process ("TCEP") turnaround and maintenance.
 
 
·
Overall volumes of product sold across the company, which is an important metric for our business as it illustrates our reach into the market, increased by 56% for the third quarter of 2014 vs. the third quarter of 2013.
 
 
·
Loss per fully diluted share of $0.08 for the third quarter of 2014 compared to earnings per fully diluted share of $0.12 in the third quarter of 2013.
 
FINANCIAL HIGHLIGHTS FOR FIRST NINE MONTHS OF 2014
 
 
·
Revenue increased in the first nine months of 2014 to $196.3 million compared to $115.2 million in the first nine months of 2013.
 
 
·
Gross profit increased to $18.1 million in the first nine months of 2014 from $10.9 million in the first nine months of 2013.
 
 
·
Earnings per fully diluted share were $0.24 in the first nine months of 2014 compared to $0.27 per fully diluted share in the first nine months of 2013.
 
Benjamin P. Cowart, Chairman and CEO of Vertex said, “Despite the impact of the 5% market decline, we are pleased in our ability to manage our spread during the third quarter. There are some key numbers that demonstrate our resolve. Related to the H&H direct street collections business, we managed our spread by lowering our pay-for-oil by 10% year over year while our organic volume grew 41% year over year."
 

 
 
 

Mr. Cowart continued, “The third quarter was impacted by both strategic internal decisions as well as the decline in the market. We took an important step in the quarter to complete some long-term maintenance work on our TCEP plant. This turnaround at TCEP affected our third quarter production there. In addition, we cooperated with the State of Louisiana to complete some necessary stack testing as part of a permit process.
 
Mr. Cowart concluded, “We continue to work with the Heartland Group and plan on closing that previously disclosed pending acquisition by the end of November. As part of the acquisition, we will be getting both a 17 million gallon refining capacity as well as a well-established 6.8 million gallon collection operation covering a four-state region. The Bango facility in Nevada is now up and operating at nameplate capacity and has met all the requirements to complete the closing of this acquisition which we anticipate closing.”
 
CONFERENCE CALL
 
Management will host a conference call today at 9:00 a.m. EST. 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 the company’s website at: www.vertexenergy.com.
 
A digital replay will be available by telephone approximately two hours after the completion of the call until November 30, 2014, 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 #13594240.
 
 
See financial statements below
 
 
 
 
VERTEX ENERGY, INC.
CONSOLIDATED BALANCE SHEETS
(Unaudited)
   
September 30,
 2014
  
December 31,
 2013
ASSETS
            
Current assets
            
Cash and cash equivalents
  
$
1,229,746
    
$
2,678,628
  
Accounts receivable, net
  
21,675,824
    
11,714,813
  
Note receivable-related party
  
11,458,000
    
—
  
Inventory
  
19,001,712
    
8,540,459
  
Prepaid expenses
  
2,162,046
    
1,161,721
  
Total current assets
  
55,527,328
    
24,095,621
  
             
Noncurrent assets
            
Other assets
  
2,797,842
    
—
  
Fixed assets, at cost
  
49,318,232
    
16,109,179
  
Accumulated depreciation
  
(1,647,153
)
  
(1,018,003
)
Fixed assets, net
  
47,671,079
    
15,091,176
  
Intangible assets, net
  
16,327,341
    
15,172,816
  
Goodwill
  
4,922,353
    
4,502,743
  
Deferred federal income tax
  
5,684,000
    
5,684,000
  
Total noncurrent assets
  
77,402,615
    
40,450,735
  
TOTAL ASSETS
  
$
132,929,943
    
$
64,546,356
  
             
LIABILITIES AND EQUITY
            
Current liabilities
            
Accounts payable and accrued expenses
  
$
23,059,176
    
$
14,096,185
  
Capital leases
  
605,442
    
—
  
Current portion of long-term debt
  
40,781,399
    
1,956,847
  
        Total current liabilities
  
64,446,017
    
16,053,032
  
Long-term liabilities
            
Long-term debt
  
2,040,598
    
6,558,851
  
Contingent consideration
  
3,371,836
    
3,220,250
  
Deferred federal income tax
  
378,000
    
378,000
  
Total liabilities
  
70,236,451
    
26,210,133
  
Commitments and contingencies
            
             
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 630,419 and 1,319,002 issued
            
and outstanding at September 30, 2014 and December 31,
            
2013, respectively
  
630
    
1,319
  
Common stock, $0.001 par value per share;
            
750,000,000 shares authorized; 25,414,156 and 21,205,609
            
issued and outstanding at September 30, 2014 and
            
December 31, 2013, respectively
  
25,414
    
21,206
  
Additional paid-in capital
  
39,191,567
    
19,579,732
  
Retained earnings
  
23,475,881
    
17,542,004
  
Total Vertex Energy, Inc. stockholders' equity
  
62,693,492
    
37,144,261
  
Non-controlling interest
  
$
—
    
$
1,191,962
  
Total Equity
  
$
62,693,492
    
$
38,336,223
  
TOTAL LIABILITIES AND EQUITY
  
$
132,929,943
    
$
64,546,356
  
 
 
 
 
 
VERTEX ENERGY, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2014 AND 2013
(UNAUDITED)
   
Three Months Ended September 30,
  
Nine Months Ended September 30,
   
2014
    
2013
    
2014
    
2013
  
Revenues
  
$
76,903,516
    
$
46,830,647
    
$
196,332,796
    
$
115,196,850
  
Cost of revenues
  
72,846,322
    
41,945,879
    
178,252,434
    
104,287,660
  
Gross profit
  
4,057,194
    
4,884,768
    
18,080,362
    
10,909,190
  
                         
Reduction of contingent liability
  
(1,876,752
)
  
—
    
(1,876,752
)
  
(1,850,000
)
                         
Operating expenses:
                        
Selling, general and administrative expenses
  (exclusive of acquisition related expenses)
  
6,801,396
    
2,495,748
    
16,464,402
    
7,129,673
  
  Acquisition related expenses
  
259,235
    
—
    
2,819,065
    
—
  
Total operating expenses
  
7,060,631
    
2,495,748
    
19,283,467
    
7,129,673
  
                         
Income (loss) from operations
  
(1,126,685
)
  
2,389,020
    
673,647
    
5,629,517
  
                         
Other income (expense):
                        
Other income
  
109,980
    
—
    
110,357
    
—
  
 Bargain purchase gain related to Omega acquisition
  
92,635
    
—
    
6,573,686
    
—
  
Other expense
  
—
    
(3,949
)
  
(10,866
)
  
(31,690
)
Interest expense
  
(947,325
)
  
(95,488
)
  
(1,680,371
)
  
(314,627
)
Total other income (expense)
  
(744,710
)
  
(99,437
)
  
4,992,806
    
(346,317
)
                         
Income (loss) before income tax
  
(1,871,395
)
  
2,289,583
    
5,666,453
    
5,283,200
  
                         
Income tax benefit (expense)
  
(57,975
)
  
40,211
    
(57,975
)
  
21,460
  
                         
Net income (loss)
  
$
(1,929,370
)
  
$
2,329,794
    
$
5,608,478
    
$
5,304,660
  
                         
Net loss attributable to non-controlling interest
  
$
—
    
$
—
    
$
325,399
    
$
—
  
                         
Net income (loss) attributable to Vertex Energy, Inc.
  
$
(1,929,370
)
  
$
2,329,794
    
$
5,933,877
    
$
5,304,660
  
                         
Earnings  (loss) per common share
                        
Basic
  
$
(0.08
)
  
$
0.13
    
$
0.26
    
$
0.30
  
Diluted
  
$
(0.08
)
  
$
0.12
    
$
0.24
    
$
0.27
  
                         
Shares used in computing earnings per share
                        
Basic
  
25,151,660
    
17,715,786
    
23,077,914
    
17,402,501
  
Diluted
  
25,151,660
    
19,997,257
    
24,825,326
    
19,766,263
  

 
 
 
 

VERTEX ENERGY, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
NINE MONTHS ENDED SEPTEMBER 30, 2014 AND 2013
(UNAUDITED)
   
Nine Months Ended
   
September 30,
 2014
  
September 30,
 2013
Cash flows from operating activities
            
Net income
  
$
5,608,478
    
$
5,304,660
  
  Adjustments to reconcile net income to cash  provided by operating activities
            
Stock based compensation expense
  
173,979
    
123,571
  
Depreciation and amortization
  
2,981,393
    
1,615,657
  
Gain on acquisition
  
(6,573,686
)
  
—
  
Deferred federal income tax
  
—
    
(144,000
)
Reduction of contingent liability
  
(1,876,752
)
  
(1,850,000
)
Changes in operating assets and liabilities
            
Accounts receivable
  
(9,731,011
)
  
(794,821
)
Allowance for doubtful accounts
  
(230,000
)
  
—
  
Notes receivable-related party
  
(3,150,000
)
  
—
  
Inventory
  
(6,269,253
)
  
(2,338,000
)
Prepaid expenses
  
(1,348,935
)
  
(78,925
)
Accounts payable
  
8,962,991
    
3,516,056
  
     Other assets
  
(81,450
)
  
—
  
Net cash provided by (used in) operating activities
  
(11,534,246
)
  
5,354,198
  
             
Cash flows from investing activities
            
Acquisition of Omega
  
(30,164,464
)
  
(67,972
)
Refund of asset acquisition
  
—
    
675,558
  
Purchase of fixed assets
  
(4,227,056
)
  
(1,671,295
)
Net cash used in investing activities
  
(34,391,520
)
  
(1,063,709
)
             
Cash flows from financing activities
            
Line of credit payments, net
  
—
    
(3,250,000
)
Proceeds related to secondary stock offering
  
15,803,000
    
—
  
Payments on contingent consideration
  
(136,662
)
  
—
  
Proceeds from note payable
  
41,372,315
    
—
  
Payments on note payable
  
(10,469,474
)
  
(1,372,453
)
Debt issue cost
  
(2,452,157
)
  
—
  
Proceeds from exercise of common stock options and warrants
  
359,862
    
55,250
  
Net cash provided by (used in) financing activities
  
44,476,884
    
(4,567,203
)
             
Net change in cash and cash equivalents
  
(1,448,882
)
  
(276,714
)
             
Cash and cash equivalents at beginning of the period
  
2,678,628
    
807,940
  
             
Cash and cash equivalents at end of period
  
$
1,229,746
    
$
531,226
  
             
SUPPLEMENTAL INFORMATION
            
Cash paid for interest
  
$
1,600,117
    
$
323,956
  
Cash paid for income taxes
  
$
80,158
    
$
122,001
  
             
NON-CASH INVESTING AND FINANCING TRANSACTIONS
            
Conversion of Series A Preferred Stock into common stock
  
$
689
    
$
189
  
   Note payable for acquisition of E-Source interest
  
$
854,050
    
$
—
  
   Additional paid in capital for acquisition of E-Source interest
  
$
1,790,745
    
$
—
  

 
 
 
 
 
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 purchases these streams from an established network of local and regional collectors and generators. Vertex 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 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 manages takes place at its facility, which uses a proprietary Thermal Chemical Extraction Process (“TCEP”) technology. Based in Houston, Texas, Vertex also has offices in Georgia, Chicago, and California. More information on Vertex 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.
 
Contacts
 
 
Porter, LeVay & Rose, Inc.
 
 
Marlon Nurse, DM, 212-564-4700
 
 
SVP – Investor Relations
 
 
 
 
 
 
 
 

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