Vertex Energy Inc. - FORM 8-K - EX-99.1 - March 31, 2015

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8-K - Vertex Energy Inc.vertex8k040115.htm
Exhibit 99.1

 

VERTEX ENERGY, INC. ANNOUNCES INCREASED REVENUES AND VOLUMES SOLD IN FOURTH QUARTER AND FULL YEAR 2014

Revenue up 34% in Fourth Quarter, Up 60% Year over Year

Volumes Sold up 82% in Fourth Quarter, 65% Year over Year

Conference Call Today April 1, 2015 at 9:00 A.M. EDT
 
Houston, TX – April 1, 2015 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 twelve months ended December 31, 2014. The Company will host a conference call today April 1, 2015 at 9 am EDT.
 
FINANCIAL HIGHLIGHTS FOR FOURTH QUARTER OF 2014
 
 
·
Revenue for the fourth quarter of 2014 vs fourth quarter of 2013 was up 34% to $62.5 million
 
 
·
Overall volumes of product sold, an important metric for our business because it illustrates our reach into the market, increased 82% for the fourth quarter of 2014 versus 2013
 
 
FINANCIAL HIGHLIGHTS FOR FULL YEAR 2014
 
 
·
Revenue for 2014 vs 2013 was up 60% to $259 million compared to $162 million in 2013
 
 
·
Overall volumes of product sold rose 65% for 2014
 
 
·
Pay-for-oil on the street collection level was down 75% year over year and by 90% from January 2014 to January 2015
 
 
·
Pay-for-oil to third-parties declined 50% year over year
 
Benjamin P. Cowart, Chairman and CEO of Vertex Energy said, “Like the rest of the industry, our fourth quarter performance was affected in large part by the sudden and steep decline in oil prices. However, our ability to adjust the spread has helped and will continue to move the Company in the right direction. We have begun moving to a service fee model for collection of used motor oil and environmental services. Removing used oil is a value-add that our industry provides in handling this regulated waste stream, and as of January, we are charging for these services.”
 
Mr. Cowart continued, “We have improved inventory management to alleviate our exposure to precipitous declines in our prices. We completed our acquisition of all the assets of Heartland Group Holdings, LLC, in the fourth quarter 2014, after entering into a consulting agreement in the third quarter 2014. The acquisition includes a 16 million gallon per year refinery and a well-established 6.8 million gallon collection operation in a four-state region. We anticipate that the Heartland assets will make a solid contribution in 2015.
 
Mr. Cowart concluded, “As we look at the year ahead, we believe the Company will return to profitability. This year started slow as the first quarter saw another sharp decline in oil prices in January. Our inventory carry is impacted when oil prices take a sharp turn. However, we have taken steps to protect against renewed downside risk in oil prices. Furthermore, we are reaping the benefits of the improved pricing on our raw materials. Prior to this most recent decline in oil prices, we had a clear target on profitability. Going into the second quarter of 2015, our spreads are set now for these low levels and should remain and improve as oil prices stabilize and increase.”
 
 
 
 
 
Complete information regarding Vertex’s results of operations for the fourth quarter of 2014 and 2014 fiscal year, our plan of operations, discussion of operating results, risk factors regarding an investment in Vertex and other matters can be found in the Company’s Annual Report on Form 10-K for the year ended December 31, 2014, which was filed with the SEC on March 31, 2015, which can be viewed at www.sec.gov.
 
Management of Vertex will host a conference call today, April 1, 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 at: www.vertexenergy.com.
 
A digital replay will be available by telephone approximately two hours after the completion of the call until April 30, 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 #13602582.
 
 
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.  Vertex collects oil through its H&H Oil in the Texas region and Heartland Petroleum in a four-state region. Based in Houston, Texas, Vertex also has offices in California, Chicago, Illinois, Columbus, Ohio and Georgia.  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.
 
 

 
 
 
 

VERTEX ENERGY, INC.
CONSOLIDATED BALANCE SHEETS
   
December 31, 2014
  
December 31, 2013
ASSETS
        
Current assets
        
Cash and cash equivalents
  
$
6,017,076
    
$
2,678,628
  
Accounts receivable, net
  
9,936,948
    
11,714,813
  
Accounts receivable, net - related party (Note 10)
  
3,150,000
    
—
  
Inventory
  
12,620,616
    
8,540,459
  
Prepaid expenses
  
1,245,307
    
1,161,721
  
Costs in excess of billings on uncompleted contracts
  
779,285
    
—
  
Total current assets
  
33,749,232
    
24,095,621
  
Non-current assets
        
Fixed assets
  
59,919,721
    
16,444,346
  
     Less accumulated depreciation
  
(3,758,373
)
  
(1,353,170
)
     Net fixed assets
  
56,161,348
    
15,091,176
  
Notes receivable - related party (Note 11)
  
8,308,000
    
—
  
Intangible assets, net
  
18,512,960
    
15,098,545
  
Goodwill
  
4,922,353
    
4,502,743
  
Deferred financing cost, net
  
2,191,888
    
74,271
  
Deferred tax assets
  
9,495,000
    
5,684,000
  
Other assets
  
481,450
    
—
  
Total non-current assets
  
100,072,999
    
40,450,735
  
TOTAL ASSETS
  
$
133,822,231
    
$
64,546,356
  
LIABILITIES AND EQUITY
        
Current liabilities
        
Accounts payable and accrued expenses
  
$
21,984,136
    
$
14,096,185
  
Capital leases
  
492,755
    
—
  
Current portion of long-term debt
  
40,136,584
    
1,956,847
  
Deferred revenue
  
463,210
    
—
  
        Total current liabilities
  
63,076,685
    
16,053,032
  
Long-term liabilities
        
Long-term debt
  
1,867,574
    
6,558,851
  
Contingent consideration
  
6,069,000
    
3,220,250
  
Deferred tax liabilities
  
4,189,000
    
378,000
  
Total liabilities
  
75,202,259
    
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 shares authorized and 630,419 and 1,319,002 shares issued
        
and outstanding at December 31, 2014 and 2013,
        
respectively
  
630
    
1,319
  
Common stock, $0.001 par value per share;
        
750,000,000 shares authorized; 28,108,105 and 21,205,609
        
issued and outstanding at December 31, 2014 and
        
December 31, 2013, respectively
  
28,109
    
21,206
  
Additional paid-in capital
  
46,595,472
    
19,579,732
  
Retained earnings
  
11,995,761
    
17,542,004
  
     Total Vertex Energy,  Inc. stockholders' equity
  
58,619,972
    
37,144,261
  
Non-controlling interest
  
—
    
1,191,962
  
Total equity
  
58,619,972
    
38,336,223
  
TOTAL LIABILITIES AND EQUITY
  
$
133,822,231
    
$
64,546,356
  


 
 
 

 
VERTEX ENERGY, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
 
     
2014
      
2013
      
2012
  
Revenues
  
$
258,904,867
    
$
161,967,252
    
$
134,573,243
  
Cost of revenues
  
244,292,715
    
145,628,215
    
124,788,116
  
Gross profit
  
14,612,152
    
16,339,037
    
9,785,127
  
Reduction of contingent liability
  
(5,248,588
)
  
(2,238,750
)
  
—
  
Selling, general and administrative expenses
  
26,073,782
    
11,472,842
    
6,137,301
  
Acquisition related expenses
  
3,813,668
    
53,742
    
1,256,576
  
Inventory impairment charge
  
467,911
    
—
    
—
  
Total selling, general and administrative expenses
  
25,106,773
    
9,287,834
    
7,393,877
  
Income (loss) from operations
  
(10,494,621
)
  
7,051,203
    
2,391,250
  
Other income (expense)
            
Other income
  
333,612
    
37,696
    
1,740
  
Gain on bargain purchase
  
6,948,686
    
—
    
—
  
Other expense
  
(10,866
)
  
(54,513
)
  
—
  
Interest expense
  
(2,636,690
)
  
(422,954
)
  
(135,364
)
Total other income (expense)
  
4,634,742
    
(439,771
)
  
(133,624
)
Income (loss) before income taxes
  
(5,859,879
)
  
6,611,432
    
2,257,626
  
Income tax benefit (expense)
  
(11,763
)
  
1,700,000
    
1,400,641
  
Net income (loss)
  
(5,871,642
)
  
8,311,432
    
3,658,267
  
Net income (loss) attributable to non-controlling interest
  
325,399
    
(431,962
)
  
—
  
Net income (loss) attributable to Vertex Energy, Inc.
  
$
(5,546,243
)
  
$
7,879,470
    
$
3,658,267
  
  Earnings per common share
            
Basic
  
$
(0.23
)
  
$
0.44
    
$
0.30
  
Diluted
  
$
(0.23
)
  
$
0.39
    
$
0.25
  
Shares used in computing earnings per share
            
Basic
  
23,807,780
    
17,830,194
    
12,138,229
  
Diluted
  
23,807,780
    
20,182,829
    
14,866,134
  


 
 
 


VERTEX ENERGY, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 2014, 2013 AND 2012
 
   
2014
  
2013
  
2012
Cash flows from operating activities
            
Net income (loss)
  
$
(5,871,642
)
  
$
8,311,432
    
$
3,658,267
  
Adjustments to reconcile net income (loss) to cash provided by (used in) operating activities:
            
Stock-based compensation expense
  
332,266
    
175,152
    
178,968
  
Depreciation and amortization
  
4,277,843
    
2,320,735
    
711,555
  
Bargain purchase gain
  
(6,948,686
)
  
—
    
—
  
Deferred federal income tax
  
—
    
(1,944,000
)
  
(1,432,000
)
Inventory impairment charge
  
467,911
    
—
    
—
  
     Reduction of contingent consideration
  
(5,248,588
)
  
(2,238,750
)
  
—
  
Changes in operating assets and liabilities:
            
Accounts receivable
  
714,698
    
(3,468,033
)
  
128,184
  
Accounts receivable- related parties
  
—
    
—
    
2,459
  
Bad debt expense
  
2,013,167
    
—
    
—
  
Inventory
  
1,891,932
    
(2,670,338
)
  
551,438
  
Prepaid expenses
  
(12,586
)
  
(571,254
)
  
(247,337
)
Costs in excess of billings
  
(779,285
)
  
—
    
—
  
Accounts payable and accrued expenses
  
7,255,722
    
4,220,957
    
304,861
  
Deferred revenue
  
463,210
    
—
    
—
  
Accounts payable-related parties
  
—
    
—
    
(620,724
)
Other deposits
  
(81,450
)
  
256,729
    
(235,557
)
Net cash provided by (used in) operating activities
  
(1,525,488
)
  
4,392,630
    
3,000,114
  
Cash flows from investing activities
            
 Bango note receivable
  
(3,150,000
)
  
—
  
—
 Refund of asset acquisition
  
—
    
675,558
    
—
  
Acquisition, net
  
(31,114,140
)
  
(539,325
)
  
(2,013,450
)
Purchase of fixed assets
  
(5,940,890
)
  
(2,603,369
)
  
(1,134,575
)
Net cash used in investing activities
  
(40,205,030
)
  
(2,467,136
)
  
(3,148,025
)
Cash flows from financing activities
            
Line of credit (payments) proceeds, net
  
—
    
(6,750,000
)
  
750,000
  
Proceeds from exercise of common stock options and warrants
  
370,337
    
60,936
    
112,625
  
Proceeds from primary stock offering
  
17,315,143
    
8,628,346
    
—
Payments on contingent consideration
  
(136,662
)
  
—
  
—
Proceeds from notes payable
  
41,309,433
    
—
  
—
Payments made on notes payable
  
(11,337,128
)
  
(1,994,088
)
  
(581,962
)
Debt issuance cost
  
(2,452,157
)
  
—
  
—
Net cash provided by (used in) financing activities
  
45,068,966
    
(54,806
)
  
280,663
  
Net change in cash and cash equivalents
  
3,338,448
    
1,870,688
    
132,752
  
Cash and cash equivalents at beginning of the period
  
2,678,628
    
807,940
    
675,188
  
Cash and cash equivalents at end of period
  
$
6,017,076
    
$
2,678,628
    
$
807,940
  
SUPPLEMENTAL INFORMATION
            
Cash paid for interest during the year
  
$
2,636,690
    
$
396,440
    
$
128,838
  
Cash paid for income taxes during the year
  
$
122,763
    
$
136,334
    
$
23,359
  
NON-CASH TRANSACTIONS
            
Conversion of Series A Preferred Stock into common stock
  
$
689
    
$
194
    
$
2,914
  
Issued 2,701,601 shares of stock to purchase Heartland and Omega
  
$
9,004,000
    
$
—
    
$
—
  
 
Contacts
Porter, LeVay & Rose, Inc.
Marlon Nurse, DM, 212-564-4700
SVP – Investor Relations

 
 
 

Vertex Energy Inc. Reports