Vertex Energy Inc. - FORM 8-K - EX-99.1 - PRESS RELEASE OF VERTEX ENERGY, INC., DATED NOVEMBER 9, 2015 - November 9, 2015

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8-K - Vertex Energy Inc.vertex8k110915.htm
Exhibit 99.1
 
Investor Relations Contact
Marlon Nurse, DM
Senior VP – Investor Relations
212-564-4700
 
Vertex Energy, Inc.
  
 
VERTEX ENERGY, INC. ANNOUNCES THIRD QUARTER 2015 FINANCIAL RESULTS
 
Gross Profit Increased 64%, Gross Margins of 13% in Third Quarter 2015

Conference Call Tomorrow, November 10, 2015 at 9:00 A.M. EST
 
HOUSTON, TX, November 9, 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 nine months ended September 30, 2015. The Company will host a conference call tomorrow, Tuesday, November 10, 2015, at 9 am EST.
 
FINANCIAL HIGHLIGHTS FOR THREE MONTHS ENDED SEPTEMBER 30, 2015
 
 
·
Revenue for the third quarter of 2015 versus third quarter of 2014 was down 48.9% to $39.3 million.
 
·
Gross Profit increased 64% year over year, while gross margins were 13%.
 
·
EBITDA of $291,796.
 
·
Street collections volume increased 51% year over year.
 
·
Per barrel margin was up 59% year over year.
 
 
FINANCIAL HIGHLIGHTS FOR NINE MONTHS ENDED SEPTEMBER 30, 2015
 
 
·
Revenue for the nine months ended September 30, 2015 was $126.1 million.
 
·
Overall volumes of product sold rose 16% for the first nine months of 2015, compared to the same period in 2014.
 
·
Gross profit declined 37% to $10.3 million
 
·
Market share at the Black Oil division grew as volumes increased 19% year over year.
 
 
Benjamin P. Cowart, Chairman and CEO of Vertex Energy said, “The oil market remains challenging, however we have undertaken numerous initiatives to manage our business efficiently. We are encouraged by our volume growth during this quarter. We will continue to manage spreads and work to gain market share. Our street collections volume increased 51% in the nine months ended September 30, 2015. Volumes from H&H Oil and our Heartland acquisition increased 59%, while volume at our Marrero, Louisiana facility was up 12% year over year.”
 
Mr. Cowart added, “Our gross margins for the third quarter 2015 were 13%, and our per barrel margin during the quarter was up 59% year over year.”
 
Mr. Cowart concluded, “We implemented our service fee model for collections of used oil and environmental services in January 2015. Our average charge for these services was 10 cents per gallon for the used oil we collected at the end of the third quarter 2015. The recent announced decision of our peers to implement a charge for oil program should have a positive impact in our industry.”
 
Management of Vertex Energy will host a conference call tomorrow, November 10, 2015, 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 December 31, 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 #13622074.
 
 
 
 
 
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
  
   
September 30, 2015
    
September 30, 2014
  
Net (loss) income
   $ (2,069,876 )   $ (1,929,370 )
Add (deduct):
                
Interest expense
     763,791       947,325  
Depreciation and amortization
     1,597,881       1,180,443  
Tax (expense) benefit
     -       57,975  
                 
EBITDA*
   $ 291,796     $ 256,373  
 
* 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)
   
September 30,
 2015
  
December 31,
 2014
ASSETS
        
Current assets
        
Cash and cash equivalents
  
$
4,020,161
    
$
6,017,076
  
Accounts receivable, net
  
7,897,650
    
9,936,948
  
Current portion of notes receivable, net
  
1,000,000
    
3,150,000
  
Inventory
  
3,847,157
    
12,620,616
  
Prepaid expenses
  
2,169,524
    
1,245,307
  
Costs in excess of billings
  
—
    
779,285
  
Total current assets
  
18,934,492
    
33,749,232
  
         
Noncurrent assets
        
         
Fixed assets, at cost
  
61,560,190
    
59,919,721
  
    Less accumulated depreciation
  
(6,742,217
)
  
(3,758,373
)
    Net fixed assets
  
54,817,973
    
56,161,348
  
Notes receivable
  
8,308,000
    
8,308,000
  
Intangible assets, net
  
17,687,897
    
18,512,960
  
Goodwill
  
4,922,353
    
4,922,353
  
Deferred financing cost, net
  
1,818,376
    
2,191,888
  
Deferred federal income tax
  
—
    
9,495,000
  
Other assets
  
481,450
    
481,450
  
Total noncurrent assets
  
88,036,049
    
100,072,999
  
TOTAL ASSETS
  
$
106,970,541
    
$
133,822,231
  
         
LIABILITIES, TEMPORARY EQUITY, AND EQUITY
        
Current liabilities
        
Accounts payable and accrued expenses
  
$
12,893,323
    
$
21,984,136
  
Dividends payable
  
401,951
    
—
  
Capital leases
  
364,561
    
492,755
  
Current portion of long-term debt
  
4,773,042
    
40,136,584
  
Revolving note
  
659,893
    
—
  
Deferred revenue
  
—
    
463,210
  
        Total current liabilities
  
19,092,770
    
63,076,685
  
Long-term liabilities
        
Long-term debt
  
21,644,605
    
1,867,574
  
Derivative liability
  
4,393,034
    
—
  
Contingent consideration
  
6,069,000
    
6,069,000
  
Deferred federal income tax
  
—
    
4,189,000
  
Total liabilities
  
51,199,409
    
75,202,259
  
         
COMMITMENTS AND CONTINGENCIES
        
         
TEMPORARY EQUITY
        
Series B Preferred shares, $.001 par value per share:
        
10,000,000 shares authorized, 8,032,274 and 0 shares issued and outstanding at September 30, 2015 and December 31, 2014,
        
respectively with liquidation preference of $24,900,050 at
        
September 30, 2015
  
11,191,623
    
—
  
         
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 with a liquidation preference of $913,285 and $939,324 at September 30, 2015 and December 31,
        
2014, respectively
  
613
    
630
  
Common stock, $0.001 par value per share;
        
750,000,000 shares authorized; 28,214,276 and 28,108,105
        
issued and outstanding at September 30, 2015 and
        
December 31, 2014, respectively
  
28,214
    
28,109
  
Additional paid-in capital
  
52,884,086
    
46,595,472
  
Retained earnings (accumulated deficit)
  
(8,333,404
)
  
11,995,761
  
Total Equity
  
$
44,579,509
    
$
58,619,972
  
TOTAL LIABILITIES, TEMPORARY EQUITY, AND EQUITY
  
$
106,970,541
    
$
133,822,231
  


 
 
 


VERTEX ENERGY, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2015 AND 2014
(UNAUDITED)
 
Three Months Ended
 September 30,
  
Nine Months Ended
September 30,
 
2015
  
2014
  
2015
  
2014
Revenues
$
39,262,584
    
$
  
76,903,516
    
$
126,066,634
    
$
196,332,796
  
Cost of revenues
34,104,949
    
73,761,171
    
115,748,581
    
179,949,373
  
Gross profit
5,157,635
    
3,142,345
    
10,318,053
    
16,383,423
  
               
Reduction of contingent consideration
—
    
(1,876,752
)
  
—
    
(1,876,752
)
               
Operating expenses:
              
Selling, general and administrative expenses
  (exclusive of acquisition related expenses)
6,052,764
    
4,706,104
    
17,064,043
    
11,786,070
  
  Depreciation and amortization expense
1,597,881
    
1,180,443
    
4,716,177
    
2,981,393
  
  Acquisition related expenses
5,910
    
259,235
    
163,588
    
2,819,065
  
Total operating expenses
7,656,555
    
6,145,782
    
21,943,808
    
17,586,528
  
               
Income (loss) from operations
(2,498,920
)
  
(1,126,685
)
  
(11,625,755
)
  
673,647
  
               
Other income (expense):
              
Provision for doubtful accounts
—
    
—
    
(2,650,000
)
  
—
  
Other income
11
    
109,980
    
29
    
110,357
  
Gain on bargain purchase
—
    
92,635
    
—
    
6,573,686
  
Other income (expense)
(20,657
)
  
—
    
(78,316
)
  
(10,866
)
Gain on change in value of derivative liability
818,051
    
—
    
2,635,033
    
—
  
Gain on futures contracts
395,430
    
—
    
395,430
    
—
  
Interest expense
(763,791
)
  
(947,325
)
  
(2,851,947
)
  
(1,680,371
)
Total other income (expense)
429,044
    
(744,710
)
  
(2,549,771
)
  
4,992,806
  
               
Income (loss) before income tax
(2,069,876
)
  
(1,871,395
)
  
(14,175,526
)
  
5,666,453
  
               
Income tax expense
—
    
(57,975
)
  
(5,306,000
)
  
(57,975
)
               
Net income (loss)
$
(2,069,876
)
  
$
  
(1,929,370
)
  
$
(19,481,526
)
  
$
5,608,478
  
               
Net income (loss) attributable to non-controlling interest
$
—
    
$
  
—
    
$
—
    
$
325,399
  
               
Net income (loss) attributable to Vertex Energy, Inc.
$
(2,069,876
)
  
$
  
(1,929,370
)
  
$
(19,481,526
)
  
$
5,933,877
  
               
Less: accretion of discount on series B
$
(444,899
)
  
$
  
—
    
$
(444,899
)
  
$
—
  
Less: accrual of dividend on series B
(402,740
)
  
—
    
(402,740
)
  
—
  
Less: other
(55,056
)
  
—
    
(55,056
)
  
—
  
               
Net income (loss) available to common shareholders
$
(2,972,571
)
  
$
  
(1,929,370
)
  
$
(20,384,221
)
  
$
5,933,877
  
               
Earnings (loss) per common share
              
Basic
$
(0.11
)
  
$
  
(0.08
)
  
$
(0.72
)
  
$
0.26
  
Diluted
$
(0.11
)
  
$
  
(0.08
)
  
$
(0.72
)
  
$
0.24
  
               
Shares used in computing earnings per share
              
Basic
28,198,701
    
25,151,660
    
28,165,427
    
23,077,914
  
Diluted
28,198,701
    
25,151,660
    
28,165,427
    
24,825,326
  


 
 
 

 
VERTEX ENERGY, INC.
CONSOLIDATED STATEMENTS OF EQUITY
FOR THE NINE MONTHS ENDED SEPTEMBER 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
    
$
28,108
    
630,419
    
$
630
    
$
46,595,472
    
$
11,995,761
    
$
58,619,971
  
Share based compensation expense, total
  
—
    
—
    
—
    
—
    
305,153
    
—
    
305,153
  
Issuance of restricted common stock
  
56,180
    
56
    
—
    
—
    
199,958
    
—
    
200,014
  
Conversion of preferred A stock to common
  
17,476
    
17
    
(17,476
)
  
(17
)
  
—
    
—
    
—
  
Conversion of Preferred B stock to common
  
32,515
    
33
            
100,763
        
100,796
  
Beneficial conversion feature on Preferred stock (APIC)
  
—
    
—
    
—
    
—
    
5,682,740
    
—
    
5,682,740
  
Dividends declared, Preferred B shares, stock
                      
(402,740
)
  
(402,740
)
Accretion of redemption discount, Preferred series B
                  
—
    
(444,899
)
  
(444,899
)
Net income (loss)
  
—
    
—
    
—
    
—
    
—
    
(19,481,526
)
  
(19,481,526
)
Balance on September 30, 2015
  
28,214,276
    
$
28,214
    
612,943
    
$
613
    
$
52,884,086
    
$
(8,333,404
)
  
$
44,579,509
  




 
 
 

 
VERTEX ENERGY, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
NINE MONTHS ENDED SEPTEMBER 30, 2015 AND 2014
(UNAUDITED)
   
Nine Months Ended
   
September 30,
 2015
  
September 30,
 2014
Cash flows from operating activities
        
Net income (loss)
  
$
(19,481,526
)
  
$
5,608,478
  
  Adjustments to reconcile net income to cash
  provided by (used in) operating activities
        
Stock based compensation expense
  
305,153
    
173,979
  
Depreciation and amortization
  
4,716,177
    
2,981,393
  
Gain on acquisition
  
—
    
(6,573,686
)
Loss on asset sale
  
63,410
    
—
  
Gain on change in fair value of derivative liability
  
(2,635,033
)
  
—
  
Deferred federal income tax
  
5,306,000
    
—
  
Reduction of contingent liability
  
—
    
(1,876,752
)
Changes in operating assets and liabilities
        
Accounts receivable
  
1,879,150
    
(9,731,011
)
Allowance for doubtful accounts
  
2,810,146
    
(230,000
)
Notes receivable-related party
  
—
    
(3,150,000
)
Inventory
  
8,773,459
    
(6,269,253
)
Prepaid expenses
  
(924,216
)
  
(1,348,935
)
Costs in excess of billings
  
779,285
    
—
  
Accounts payable
  
(8,858,058
)
  
8,962,991
  
Deferred revenue
  
(495,965
)
  
—
  
     Other assets
  
—
    
(81,450
)
Net cash provided by (used in) operating activities
  
(7,762,018
)
  
(11,534,246
)
         
Cash flows from investing activities
        
Acquisitions
  
(1,082,649
)
  
(30,164,464
)
Purchase of fixed assets
  
(1,159,488
)
  
(4,227,056
)
Proceeds from asset sales
  
4,500
    
—
  
Notes receivable
  
(500,000
)
  
—
  
Net cash used in investing activities
  
(2,737,637
)
  
(34,391,520
)
         
Cash flows from financing activities
        
Proceeds from sale of stock
  
23,557,553
    
15,803,000
  
Payments on contingent consideration
  
—
    
(136,662
)
Payments on notes payable
  
(18,019,983
)
  
(10,469,474
)
Proceeds from note payable
  
2,305,277
    
41,372,315
  
Proceeds from revolving note
  
74,801,900
    
—
  
Payments on revolving note
  
(74,142,007
)
  
—
  
Debt issue cost
  
—
    
(2,452,157
)
Proceeds from exercise of common stock options and warrants
  
—
    
359,862
  
Net cash provided by (used in) financing activities
  
8,502,740
    
44,476,884
  
         
Net change in cash and cash equivalents
  
(1,996,915
)
  
(1,448,882
)
         
Cash and cash equivalents at beginning of the period
  
6,017,076
    
2,678,628
  
         
Cash and cash equivalents at end of period
  
$
4,020,161
    
$
1,229,746
  
         
SUPPLEMENTAL INFORMATION
        
Cash paid for interest
  
$
2,835,681
    
$
1,600,117
  
Cash paid for income taxes
  
$
—
    
$
80,158
  
         
NON-CASH INVESTING AND FINANCING TRANSACTIONS
        
Conversion of Series A Preferred Stock into common stock
  
$
17
    
$
689
  
   Dividends declared but not yet paid
  
$
401,951
    
$
—
  
   Note payable for acquisition of E-Source interest
  
$
—
    
$
854,050
  
   Additional paid in capital for acquisition of E-Source interest
  
$
—
    
$
1,790,745
  
   Shares issued as payment
  
$
200,000
    
$
—
  
   Beneficial conversion feature for Series B Preferred stock
  
$
5,737,796
    
$
—
  
   Fair value of warrants issued with series B Preferred stock
  
$
7,028,067
    
$
—
  


 
 
 

Vertex Energy Inc. Reports