Attached files
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| 8-K - CURRENT REPORT - Vertex Energy Inc. | vtnr-8k_110316.htm |
Exhibit 99.1
Investor Relations Contact Marlon Nurse, DM Senior VP – Investor Relations 212-564-4700 | |
VERTEX ENERGY, INC. ANNOUNCES THIRD QUARTER 2016 FINANCIAL RESULTS
Third Quarter Gross Profit Margin was 21%; Per Barrel Margin Increased 63%
Conference Call to be Held Today, November 3, 2016, at 9 A.M. Eastern Daylight Time
HOUSTON, TX, November 3, 2016 Vertex Energy, Inc. (NASDAQ:VTNR), a refiner and marketer of high-quality specialty hydrocarbon products, announced today its financial results for the quarter and nine months ended September 30, 2016.
FINANCIAL HIGHLIGHTS FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2016
| ● | Revenue was $28.5 million compared to $39.3 million in the third quarter of 2015, a decline of 28%. | |
| ● | Gross profit was $6 million compared to $5.2 million during the same period last year, an increase of 16%. | |
| ● | Gross profit margin was 21% for the three months ended September 30, 2016, compared to 13% during the same period a year ago. | |
| ● | Selling, general and administrative expenses were $5.0 million in the third quarter of 2016, compared to $6.1 million for the third quarter of 2015, an 18% improvement. | |
| ● | Per barrel margins were up 63% year-over-year. |
FINANCIAL HIGHLIGHTS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2016
| ● | Revenue was $67 million, which was lower than the $126.1 million reported for the same nine month period of 2015. | |
| ● | Gross profit for the nine months was $11 million compared to $10.3 million during the same period last year, an increase of 7%. | |
| ● | Per barrel margins for the nine months were up 56% year-over-year. |
Vertex’s CEO, Benjamin P. Cowart said, “I am very pleased with our performance in the third quarter, as we met our internal expectations related to spreads, charge for oil and our day-to-day operations. For the quarter, we held onto most of the margin. Overall, our spreads were good and are improving, and the oil markets were stable compared to quarters in the recent past. This helped us exceed our internal expectations and we had positive EBITDA of $1.8 million for the three months ended September 30, 2016.”
Mr. Cowart concluded, “The marine fuels market is improving and we should expect better spreads in the fourth quarter. We are hopeful that this represents the beginning of a positive trend. Although it is early in the fourth quarter, we are seeing a 3 to 5 cent per gallon improvement in our marine fuel sales from our Marrero facility.”
Vertex Management will host a conference call today at 9 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 January 31, 2017, and may be accessed by dialing 877-660-6853 from the U.S. or 201-612-7415 for international callers using conference ID #13648042.
ABOUT VERTEX ENERGY, INC.
Vertex Energy, Inc. (VTNR) is a refiner and marketer of high-quality specialty hydrocarbon products. With headquarters in Houston, Texas, Vertex processing facilities are located in Houston (TX), Marrero (LA) and Columbus (OH). For more information on Vertex Energy, please contact Porter, LeVay & Rose, investor relations representative Marlon Nurse, 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,” “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, 2016 | ||||
| Net (loss) income | $ | (107,956 | ) | |
| Add (deduct): | ||||
| Interest expense | 399,545 | |||
| Depreciation and amortization | 1,560,562 | |||
| Tax (expense) benefit | — | |||
| EBITDA* | $ | 1,852,152 | ||
* 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, 2016 |
December
31, 2015 | |||||||
| ASSETS | ||||||||
| Current assets | ||||||||
| Cash and cash equivalents | $ | 3,753,119 | $ | 765,364 | ||||
| Escrow - current restricted cash and cash equivalents | 1,503,228 | — | ||||||
| Accounts receivable, net | 7,652,739 | 6,315,414 | ||||||
| Inventory | 3,671,234 | 3,548,311 | ||||||
| Prepaid expenses | 2,886,630 | 1,367,442 | ||||||
| Assets being held for sale | — | 11,170,243 | ||||||
| Total current assets | 19,466,950 | 23,166,774 | ||||||
| Noncurrent assets | ||||||||
| Fixed assets, at cost | 61,789,990 | 60,846,824 | ||||||
| Less accumulated depreciation | (11,153,445 | ) | (7,818,217 | ) | ||||
| Fixed assets, net | 50,636,545 | 53,028,607 | ||||||
| Intangible assets, net | 15,658,805 | 16,967,985 | ||||||
| Other assets | 481,450 | 481,450 | ||||||
| Total noncurrent assets | 66,776,800 | 70,478,042 | ||||||
| TOTAL ASSETS | $ | 86,243,750 | $ | 93,644,816 | ||||
| LIABILITIES, TEMPORARY EQUITY, AND EQUITY | ||||||||
| Current liabilities | ||||||||
| Accounts payable and accrued expenses | $ | 6,393,213 | $ | 13,244,388 | ||||
| Dividends payable | 504,474 | 376,571 | ||||||
| Capital leases | 181,293 | 186,948 | ||||||
| Current portion of long-term debt, net of unamortized finance costs | 10,354,642 | 18,118,142 | ||||||
| Revolving note | 1,872,784 | 1,744,122 | ||||||
| Deferred revenue | 75,267 | 323,891 | ||||||
| Total current liabilities | 19,381,673 | 33,994,062 | ||||||
| Long-term liabilities | ||||||||
| Long-term debt, net of unamortized finance costs | 2,651,209 | 5,211,008 | ||||||
| Derivative liability | 3,691,683 | 1,548,604 | ||||||
| Total liabilities | 25,724,565 | 40,753,674 | ||||||
| COMMITMENTS AND CONTINGENCIES (Note 4) | — | — | ||||||
| TEMPORARY EQUITY | ||||||||
| Series
B Preferred Stock, $0.001 par value per share; 10,000,000 shares authorized, 4,895,244 and 8,160,809 shares issued and outstanding at September 30, 2016 and December 31, 2015, respectively with a liquidation preference of $15,175,256 and $25,298,508 at September 30, 2016 and December 31, 2015, respectively. |
8,218,599 | 11,955,207 | ||||||
| Series
B-1 Preferred Stock, $0.001 par value per share; 17,000,000 shares authorized, 12,501,558 shares issued and outstanding at September 30, 2016 with a liquidation preference of $19,502,430 and $0 at September 30, 2016 and December 31, 2015, respectively. |
13,911,527 | — | ||||||
| EQUITY | ||||||||
| 50,000,000 of total Preferred shares authorized: | ||||||||
| Series
A Convertible Preferred Stock, $0.001 par value; 5,000,000 shares authorized, 492,716 and 612,943 shares issued and outstanding at September 30, 2016 and December 31, 2015, respectively with a liquidation preference of $734,147 and $913,285 at September 30, 2016 and December 31, 2015, respectively. |
493 | 613 | ||||||
| Series
C Convertible Preferred Stock, $0.001 par value; 44,000 shares designated in 2016, 31,568 and 0 shares issued and outstanding at September 30, 2016 and December 31, 2015, respectively with a liquidation preference of $3,156,800 and $0 at September 30, 2016 and December 31, 2015, respectively. |
31 | — | ||||||
| Common
stock, $0.001 par value per share; 750,000,000 shares authorized; 31,008,902 and 28,239,276 issued and outstanding at September 30, 2016 and December 31, 2015, respectively, with 1,108,928 shares held in escrow at September 30, 2016. |
31,009 | 28,239 | ||||||
| Additional paid-in capital | 60,280,384 | 53,014,054 | ||||||
| Accumulated deficit | (21,911,665 | ) | (12,106,971 | ) | ||||
| Total Vertex Energy, Inc. stockholders’ equity | 38,400,252 | 40,935,935 | ||||||
| Non-controlling interest | (11,193 | ) | — | |||||
| Total Equity | $ | 38,389,059 | $ | 40,935,935 | ||||
| TOTAL LIABILITIES, TEMPORARY EQUITY, AND EQUITY | $ | 86,243,750 | $ | 93,644,816 | ||||
VERTEX ENERGY, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
| Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
| 2016 | 2015 | 2016 | 2015 | |||||||||||||
| Revenues | $ | 28,461,930 | $ | 39,262,584 | $ | 67,022,978 | $ | 126,066,634 | ||||||||
| Cost of revenues | 22,462,171 | 34,104,949 | 56,001,697 | 115,748,581 | ||||||||||||
| Gross profit | 5,999,759 | 5,157,635 | 11,021,281 | 10,318,053 | ||||||||||||
| Operating expenses: | ||||||||||||||||
| Selling, general and administrative expenses (exclusive of acquisition related expenses) | 4,978,004 | 6,052,764 | 15,162,026 | 17,064,043 | ||||||||||||
| Depreciation and amortization expense | 1,560,562 | 1,597,881 | 4,707,801 | 4,716,177 | ||||||||||||
| Acquisition related expenses | 47,217 | 5,910 | 123,116 | 163,588 | ||||||||||||
| Total operating expenses | 6,585,783 | 7,656,555 | 19,992,943 | 21,943,808 | ||||||||||||
| Loss from operations | (586,024 | ) | (2,498,920 | ) | (8,971,662 | ) | (11,625,755 | ) | ||||||||
| Other income (expense): | ||||||||||||||||
| Provision for doubtful accounts | — | — | — | (2,650,000 | ) | |||||||||||
| Interest income | 1,490 | 11 | 4,452 | 29 | ||||||||||||
| Loss on sale of assets | (68,799 | ) | (20,657 | ) | (115,527 | ) | (78,316 | ) | ||||||||
| Gain on sale of assets | — | — | 9,748,561 | — | ||||||||||||
| Gain (loss) on change in value of derivative liability | 1,065,217 | 818,051 | 724,185 | 2,635,033 | ||||||||||||
| Gain/(loss) on futures contracts | (90,061 | ) | 395,430 | (351,820 | ) | 395,430 | ||||||||||
| Interest expense | (399,545 | ) | (763,791 | ) | (2,721,056 | ) | (2,851,947 | ) | ||||||||
| Total other income (expense) | 508,302 | 429,044 | 7,288,795 | (2,549,771 | ) | |||||||||||
| Loss before income tax | (77,722 | ) | (2,069,876 | ) | (1,682,867 | ) | (14,175,526 | ) | ||||||||
| Income tax benefit/(expense) | — | — | 117,646 | (5,306,000 | ) | |||||||||||
| Net loss | (77,722 | ) | (2,069,876 | ) | (1,565,221 | ) | (19,481,526 | ) | ||||||||
| Net loss/(gain) attributable to non-controlling interest | 30,234 | — | (11,193 | ) | — | |||||||||||
| Net loss attributable to Vertex Energy, Inc. | $ | (107,956 | ) | $ | (2,069,876 | ) | $ | (1,554,028 | ) | $ | (19,481,526 | ) | ||||
| Accretion of discount on Series B and B-1 Preferred Stock | (435,134 | ) | (444,899 | ) | (1,293,669 | ) | (444,899 | ) | ||||||||
| Accrual of dividends on Series B and B-1 Preferred Stock and retirement of a portion of Series B Preferred discount | (504,474 | ) | (402,740 | ) | (6,695,506 | ) | (402,740 | ) | ||||||||
| Other | — | (55,056 | ) | — | (55,056 | ) | ||||||||||
| Net loss available to common shareholders | $ | (1,047,564 | ) | $ | (2,972,571 | ) | $ | (9,543,203 | ) | $ | (20,384,221 | ) | ||||
| Loss per common share | ||||||||||||||||
| Basic | $ | (0.03 | ) | $ | (0.11 | ) | $ | (0.32 | ) | $ | (0.72 | ) | ||||
| Diluted | $ | (0.03 | ) | $ | (0.11 | ) | $ | (0.32 | ) | $ | (0.72 | ) | ||||
| Shares used in computing earnings per share | ||||||||||||||||
| Basic | 30,576,485 | 28,198,701 | 29,884,836 | 28,165,427 | ||||||||||||
| Diluted | 30,576,485 | 28,198,701 | 29,884,836 | 28,165,427 | ||||||||||||
VERTEX ENERGY, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
NINE MONTHS ENDED SEPTEMBER 30, 2016 AND 2015 (UNAUDITED)
| Nine Months Ended | ||||||||
| September 30, 2016 |
September 30, 2015 | |||||||
| Cash flows from operating activities | ||||||||
| Net loss | $ | (1,554,028 | ) | $ | (19,481,526 | ) | ||
| Adjustments to reconcile net loss to cash used in operating activities | ||||||||
| Stock based compensation expense | 392,413 | 305,153 | ||||||
| Depreciation and amortization | 6,059,994 | 4,716,177 | ||||||
| Rent paid by common stock | 244,000 | — | ||||||
| Gain on sale of assets | (9,748,561 | ) | — | |||||
| Loss on sale of assets | 115,527 | 63,410 | ||||||
| Increase in fair value of derivative liability | (724,185 | ) | (2,635,033 | ) | ||||
| Deferred federal income tax expense | — | 5,306,000 | ||||||
| Changes in operating assets and liabilities | ||||||||
| Accounts receivable | (62,325 | ) | 1,879,150 | |||||
| Allowance for doubtful accounts | — | 2,810,146 | ||||||
| Business interruption insurance proceeds receivable | (1,275,000 | ) | — | |||||
| Inventory | (122,924 | ) | 8,773,459 | |||||
| Prepaid expenses | (1,530,380 | ) | (924,216 | ) | ||||
| Costs in excess of billings | — | 779,285 | ||||||
| Accounts payable and accrued expenses | (4,940,852 | ) | (8,858,058 | ) | ||||
| Deferred revenue | (248,624 | ) | (495,965 | ) | ||||
| Other assets | (2 | ) | — | |||||
| Net cash used in operating activities | (13,394,947 | ) | (7,762,018 | ) | ||||
| Cash flows from investing activities | ||||||||
| Acquisitions | — | (1,082,649 | ) | |||||
| Purchase of fixed assets | (3,428,396 | ) | (1,159,488 | ) | ||||
| Casualty insurance proceeds | 2,332,854 | — | ||||||
| Proceeds from asset sales | 29,788,114 | 4,500 | ||||||
| Costs related to sale of Bango assets | (10,792,446 | ) | — | |||||
| Establish escrow account - restricted cash | (1,503,228 | ) | — | |||||
| Notes receivable | — | (500,000 | ) | |||||
| Proceeds from sale of assets | 20,900 | — | ||||||
| Net cash provided by (used in) investing activities | 16,417,798 | (2,737,637 | ) | |||||
| Cash flows from financing activities | ||||||||
| Proceeds from sale of Series C Preferred Stock | 4,000,000 | — | ||||||
| Purchase/Buy Back/Sale Series B Preferred Stock | (11,189,849 | ) | — | |||||
| Proceeds from issuance of Series B-1 Preferred Stock | 19,349,756 | — | ||||||
| Issue costs for Series B-1 Preferred Stock | (607,890 | ) | — | |||||
| Proceeds from issuance of Series B Preferred Stock | — | 23,557,553 | ||||||
| Proceeds from note payable | 7,544,680 | 2,305,277 | ||||||
| Payments on note payable | (19,260,455 | ) | (18,019,983 | ) | ||||
| Line of credit (payments) proceeds, net | 128,662 | 659,893 | ||||||
| Net cash provided by (used in) financing activities | (35,096 | ) | 8,502,740 | |||||
| Net change in cash and cash equivalents | 2,987,755 | (1,996,915 | ) | |||||
| Cash and cash equivalents at beginning of the period | 765,364 | 6,017,076 | ||||||
| Cash and cash equivalents at end of period | $ | 3,753,119 | $ | 4,020,161 | ||||
| SUPPLEMENTAL INFORMATION | ||||||||
| Cash paid for interest | $ | 1,431,352 | $ | 2,835,681 | ||||
| Cash paid (received) for income tax expense (benefit) | $ | 117,646 | $ | — | ||||
| NON-CASH INVESTING AND FINANCING TRANSACTIONS | ||||||||
| Conversion of Series A Preferred Stock into common stock | 120 | 17 | ||||||
| Accretion of discount on Series B and B-1 Preferred Stock | $ | (1,293,669 | ) | $ | (444,899 | ) | ||
| Dividends-in-Kind accrued on Series B and B-1 Preferred Stock and retirement of a portion of the Series B Preferred Stock | $ | (6,695,506 | ) | $ | (401,951 | ) | ||
| Beneficial conversion feature for Series B and B-1 Preferred Stock | $ | 3,691,683 | $ | 5,737,796 | ||||
| Fair value of warrants issued with Series B and B-1 Preferred Stock | $ | 2,867,264 | $ | 7,028,067 | ||||