Exhibit 99.1
VERTEX ENERGY REPORTS SECOND QUARTER 2022 RESULTS
HOUSTON, August 9, 2022 -- Vertex Energy, Inc. (NASDAQ: VTNR, “Vertex” or the “Company”), a leading specialty refiner and marketer of high-quality refined products, today announced its financial results for the second quarter 2022 ended June 30, 2022.
SECOND QUARTER 2022 RESULTS
| ● | Completed acquisition of Mobile refinery on April 1, 2022 |
| ● | Reported net loss of $63.8 million |
| ● | Record Adjusted EBITDA of $71.3 million |
| ● | Reported net loss includes $127.8 million of adjustments to adjusted EBITDA |
| ● | Renewable diesel conversion scheduled for start-up in the first quarter 2023 |
| ● | Total cash of $98.0 million as of June 30, 2022 |
For the three months ended June 30, 2022, the Company reported a net loss of $63.8 million, versus a net loss of $16.0 million in the second quarter 2021. The second quarter net loss includes a $46.9 unrealized commodity derivative loss, a $23.2 loss on an intermediation agreement due to backwardation, and a $46.1 million realized commodity derivatives loss, together with $11.6 million.
The Company reported record Adjusted EBITDA of $71.3 million in the second quarter 2022, versus $4.0 million in the prior-year period. Second quarter 2022 results benefited from a combination of strong operational reliability, elevated refined product margins and robust demand for conventional fuels, including the first full quarter of financial contributions from the Mobile refinery acquisition, which closed on April 1, 2022.
Schedules reconciling the Company’s GAAP and non-GAAP financial results, including EBITDA and Adjusted EBITDA is included later in this release (see also “Non-GAAP Financial Measures”, below).
SEGMENT PERFORMANCE (inclusive of discontinued operations)
Refining and Marketing Segment
The Refining and Marketing segment includes the Company’s flagship Mobile, Alabama (“Mobile”) refinery and primarily consists of the sale of gasoline, diesel and jet fuel, together with related logistics assets.
During the second quarter 2022, the Refining and Marketing segment reported $20.7 million of pre-tax operating loss.
Total throughput at the Mobile refinery was 72,133 barrels per day in the second quarter, resulting in 96% utilization on operable capacity of approximately 75,000 barrels per day. The Mobile refinery generated refining gross margin of $14.11 per barrel of throughput in the second quarter 2022. Excluding the inventory adjustment and realized hedging loss, the Mobile refinery generated adjusted refining gross margin per barrel of $23.16 in the second quarter 2022.
The benchmark 2/1/1 Gulf Coast crack spread was $45.06 in the second quarter 2022, an increase of 205% versus the second quarter 2021, supported by strong demand for conventional refined products. On a gross profit per barrel basis, excluding non-recurring items, the Mobile refinery captured 51% of the 2/1/1 crack spread.
Black Oil Segment
The Black Oil segment focuses on the sale of petroleum products, including base oils and industrial fuels; the collection of used motor oil; and the sale of re-refinery products.
During the 2022 second quarter, the Company’s Marrero (Louisiana) and Heartland (Ohio) refineries operated at 94% and 93% of total utilization, respectively.
The Black Oil segment generated total pre-tax operating income of $5.9 million in the second quarter 2022, flat versus the prior-year period. Excluding non-recurring, non-cash items, the segment reported adjusted EBITDA of $8.0 million.
A year-over-year increase in both sales volumes and margin per barrel was offset by higher selling, general and administrative expense in the second quarter 2022.
Recovery Segment
The Recovery segment consists primarily of revenues generated from the sale of ferrous and non-ferrous recyclable metals products that are recovered from manufacturing and consumption, together with revenues generated from trading and marketing base oils and lubricants.
The Recovery segment generated total pre-tax operating loss of $0.4 million in the second quarter 2022, versus income from operations of $0.5 million in the prior-year period. The year-over-year decline in sales was attributable to lower sales volumes in the second quarter 2022, given lower demand in the metals markets.
STRATEGIC UPDATE
Vertex continues to advance a multi-year strategy focused on the creation of long-term value for shareholders. During the second quarter, the Company continued to prioritize operational safety and reliability, organic growth investments, and strong free cash flow conversion, together with disciplined capital management.
| ● | Robust end-market demand supporting strong operational utilization. The Mobile refinery operated at 96% of planned utilization in the second quarter 2022, given operable capacity of 75,000 barrels per day. During July 2022, the Mobile refinery ran above its operational capacity of 75,000 barrels per day to support strong seasonal demand for conventional fuels. During July 2022, both the Marrero and Heartland refineries were operating above 93% of total capacity. |
| ● | Renewable diesel conversion project expected to come on-stream by the first quarter 2023. Vertex has initiated a previously disclosed capital project designed to modify the Mobile refinery’s hydrocracking unit to produce renewable diesel fuel on a standalone basis. To date, Vertex has engaged technology, engineering and construction partners to lead the project. All major long lead-time equipment has been purchased with the goal of ensuring a timely completion of the project by year-end 2022. Initial renewable production volumes are expected to come on-stream by the first quarter 2023. The Company expects the total project cost to be in the range of $90 to $100 million, funded entirely through existing cash on-hand and cash flow from operations. |
| ● | Ample liquidity to support growth. As of June 30, 2022, the Company had total cash, including restricted cash, of $97.9 million, versus $36.1 million at the end of the second quarter 2021. Vertex had total net debt outstanding of $299.0 million at the end of the second quarter 2022, including $45.3 million in lease finance obligations. The ratio of net debt to trailing twelve month Adjusted EBITDA was 2.4x as of June 30, 2022, which includes only one quarter of EBITDA contribution from the Mobile refinery. |
MANAGEMENT COMMENTARY
“During the second quarter, we capitalized on robust refined product demand within our regional markets, while ensuring continued operational reliability across our refining system,” stated Benjamin P. Cowart, President and CEO of Vertex Energy. “During a volatile period for the broader energy complex, we generated record second quarter Adjusted EBITDA of $71.3 million, supported mainly by contributions from our recently acquired Mobile refinery. Entering the third quarter, market conditions remain favorable, supported by regional supply-demand imbalances that continue to support elevated refined product margins.”
“In our first full quarter of operations at Mobile, we produced more than 72,000 barrels per day, or more than 96% of operable capacity, which was ahead of our operating plan, while our yield of high-value light product was approximately 70% in the period,” continued Cowart. “During July, demand for gasoline and distillate remained strong, leading us to run the refinery toward full operational capacity, with the benchmark 2/1/1 Gulf Coast crack spread well above prior-year levels.”
“Earlier this year, we entered into an inventory hedging program designed to mitigate financial risk, while positioning us to generate ratable cash flows with which to support our business for the first six months during the transition period,” continued Cowart. “This program worked as planned during the second quarter, ensuring a ratable stream of cash flow into the business during a period of significant, planned capital investments. However, given expectations for a continued tightening in product supply and strength in refined product margins over the near-to-medium term, we intend to close out our remaining hedges in the third quarter, while maximizing our spot market exposure beginning in the fourth quarter 2022.”
“Our planned conversion of the Mobile refinery’s hydrocracker remains on schedule, consistent with our prior guidance,” noted Cowart. “During the second quarter, we continued to complete detailed engineering, while mobilizing the personnel and resources required for field construction. As previously communicated, we anticipate the total conversion cost will be in a range of $90 to $100 million, all of which is expected to be funded through cash from operations, together with existing cash on-hand. At this time, we expect the unit conversion will reach completion by year-end 2022, with 8,000-10,000 barrels per day of renewable diesel production expected to come on-stream during the first quarter 2023.”
“During a period of transition, our people executed on-plan, ensuring a successful integration of the Mobile refinery, while continuing to drive value creation across our legacy businesses,” concluded Cowart. “I am exceptionally proud of the combined efforts of our entire team and look forward to building on the momentum evident across our business.”
MANAGEMENT OUTLOOK
All guidance presented below is current as of the time provided and is subject to change. All prior financial guidance should no longer be relied upon.
For the third quarter 2022, Vertex currently anticipates the following:
| ● | Total throughput of between 72,000 and 74,000 barrels per day at the Mobile refinery |
| ● | Direct operating expense per barrel of between $3.50 and $3.75 at the Mobile refinery |
| ● | Consolidated total capital expenditures of between $30.0 million and $35.0 million |
For the full-year 2022, Vertex currently anticipates the following:
| ● | Consolidated total capital expenditures of between $115.0 million and $120.0 million, excluding amounts paid on acquisition |
CONFERENCE CALL AND WEBCAST
A conference call will be held today at 9:00 A.M. ET to review the Company’s financial results, discuss recent events and conduct a question-and-answer session.
A webcast of the conference call and accompanying presentation materials will be available in the Investor Relations section of Vertex’s website at www.vertexenergy.com. To listen to a live broadcast, go to the site at least 15 minutes prior to the scheduled start time in order to register, download, and install any necessary audio software. To participate in the live teleconference:
To participate in the live teleconference:
| Domestic Live: | 888-506-0062 |
To listen to a replay of the teleconference, which will be available through August 16, 2022:
| Domestic Replay: | 877-481-4010 |
| Conference ID: | 45917 |
ABOUT VERTEX ENERGY
Houston-based Vertex Energy, Inc. (NASDAQ: VTNR) is an energy transition company focused on the production and distribution of conventional and alternative fuels. Vertex owns a refinery in Mobile (AL) with an operable refining capacity of 75,000 barrels per day and more than 3.2 million barrels of product storage, positioning it as a leading supplier of fuels in the region. Vertex is also one of the largest processors of used motor oil in the U.S., with operations located in Houston and Port Arthur (TX), Marrero (LA), and Columbus (OH). Vertex also owns 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 include nine million gallons of storage. The Company has built a reputation as a key supplier of base oils to the lubricant manufacturing industry throughout North America.
FORWARD-LOOKING STATEMENTS
Certain of the matters discussed in this communication which are not statements of historical fact constitute forward-looking statements within the meaning of the federal securities laws, including the Private Securities Litigation Reform Act of 1995, that involve a number of risks and uncertainties. Words such as “strategy,” “expects,” “continues,” “plans,” “anticipates,” “believes,” “would,” “will,” “estimates,” “intends,” “projects,” “goals,” “targets” and other words of similar meaning are intended to identify forward-looking statements but are not the exclusive means of identifying these statements. Any statements made in this news release other than those of historical fact, about an action, event or development, are forward-looking statements. The important factors that may cause actual results and outcomes to differ materially from those contained in such forward-looking statements include, without limitation, the Company’s ability to raise sufficient capital to complete future capital projects and the terms of such funding; the timing of planned capital projects at the Mobile Refinery and the outcome thereof; the future production of the Mobile Refinery; the estimated timeline of the renewable diesel capital project, estimated and actual production associated therewith, estimated revenues over the course of the agreement with Idemitsu, anticipated and unforeseen events which could reduce future production at the refinery or delay planned capital projects, changes in commodity and credits values, and certain early termination rights associated with the Idemitsu agreement and conditions precedent to such agreement; certain mandatory redemption provisions of the outstanding senior convertible notes, the conversion rights associated therewith, and dilution caused by such conversions; the Company’s ability to comply with required covenants under outstanding senior notes and a term loan and pay amounts due under such senior notes and term loan, including interest and other amounts due thereunder; the ability of the Company to retain and hire key personnel; risks associated with the ability of Vertex to complete current plans for expansion and growth, and planned capital projects; the level of competition in our industry and our ability to compete; our ability to respond to changes in our industry; the loss of key personnel or failure to attract, integrate and retain additional personnel; our ability to protect our intellectual property and not infringe on others’ intellectual property; our ability to scale our business; our ability to maintain supplier relationships and obtain adequate supplies of feedstocks; our ability to obtain and retain customers; our ability to produce our products at competitive rates; our ability to execute our business strategy in a very competitive environment; trends in, and the market for, the price of oil and gas and alternative energy sources; the volatile nature of the prices for oil and gas caused by supply and demand, including volatility caused by the ongoing Ukraine/Russia conflict; our ability to maintain our relationships with our partners; the impact of competitive services and products; our ability to integrate acquisitions; our ability to complete future acquisitions; our ability to maintain insurance; the outcome of pending and potential future litigation, judgments and settlements; rules and regulations making our operations more costly or restrictive; changes in environmental and other laws and regulations and risks associated with such laws and regulations; economic downturns both in the United States and globally, increases in inflation and interest rates, increased costs of borrowing associated therewith and potential declines in the availability of such funding; risk of increased regulation of our operations and products; negative publicity and public opposition to our operations; disruptions in the infrastructure that we and our partners rely on; an inability to identify attractive acquisition opportunities and successfully negotiate acquisition terms; our ability to effectively integrate acquired assets, companies, employees or businesses; liabilities associated with acquired companies, assets or businesses; interruptions at our facilities; unexpected changes in our anticipated capital expenditures resulting from unforeseen required maintenance, repairs, or upgrades; our ability to acquire and construct new facilities; our ability to effectively manage our growth; decreases in global demand for, and the price of, oil, due to COVID-19, state, federal and foreign responses thereto, inflation, recessions or other reasons, including declines in economic activity or global conflicts; our ability to acquire sufficient amounts of used oil feedstock through our collection routes, to produce finished products, and in the absence of such internally collected feedstocks, and our ability to acquire third-party feedstocks on commercially reasonable terms; unexpected downtime at our facilities; risks associated with COVID-19, the global efforts to stop the spread of COVID-19, potential downturns in the U.S. and global economies due to COVID-19 and the efforts to stop the spread of the virus, and COVID-19 in general; the lack of capital available on acceptable terms to finance the Company’s continued growth; anti-dilutive rights associated with our outstanding securities; the expected benefits, output, financial metrics and production of proposed transactions; unforeseen technical or operating difficulties and unplanned maintenance; the development and competitiveness of alternative energy and emission reduction technologies; our ability to pay our debt when due and comply with our debt covenants; our level of indebtedness, which could affect our ability to fulfill our obligations, impede the implementation of our strategy, and expose us to interest rate risk; dependence on third party transportation services and pipelines; risks related to obtaining required crude oil supplies, and the costs of such supplies; counterparty credit and performance risk; unanticipated problems at, or downtime effecting, our facilities and those operated by third parties; risks relating to our hedging activities; and risks relating to planned divestitures and acquisitions. Other important factors that may cause actual results and outcomes to differ materially from those contained in the forward-looking statements included in this communication are described in the Company’s publicly filed reports, including, but not limited to, the Company’s Annual Report on Form 10-K for the year ended December 31, 2021, and the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2022 and future Annual Reports on Form 10-K and Quarterly Reports on Form 10-Q. These reports are available at www.sec.gov. The Company cautions that the foregoing list of important factors is not complete. All subsequent written and oral forward-looking statements attributable to the Company or any person acting on behalf of the Company are expressly qualified in their entirety by the cautionary statements referenced above. Other unknown or unpredictable factors also could have material adverse effects on Vertex’s future results. The forward-looking statements included in this press release are made only as of the date hereof. Vertex cannot guarantee future results, levels of activity, performance or achievements. Accordingly, you should not place undue reliance on these forward-looking statements. Finally, Vertex undertakes no obligation to update these statements after the date of this release, except as required by law, and takes no obligation to update or correct information prepared by third parties that are not paid for by Vertex. If we update one or more forward-looking statements, no inference should be drawn that we will make additional updates with respect to those or other forward-looking statements.
PROJECTIONS
The financial and production projections (the “Projections”) included herein were prepared by Vertex in good faith using assumptions believed to be reasonable. A significant number of assumptions about the operations of the business of Vertex were based, in part, on economic, competitive, and general business conditions prevailing at the time the Projections were developed. Any future changes in these conditions, may materially impact the ability of Vertex to achieve the financial results set forth in the Projections. The Projections are based on numerous assumptions, including realization of the operating strategy of Vertex; industry performance; no material adverse changes in applicable legislation or regulations, or the administration thereof, or generally accepted accounting principles; general business and economic conditions; competition; retention of key management and other key employees; absence of material contingent or unliquidated litigation, indemnity, or other claims; minimal changes in current pricing; static material and equipment pricing; no significant increases in interest rates or inflation; and other matters, many of which will be beyond the control of Vertex, and some or all of which may not materialize. The Projections also assume the continued uptime of the Company’s facilities at historical levels and the successful funding of, timely completion of, and successful outcome of, planned capital projects. Additionally, to the extent that the assumptions inherent in the Projections are based upon future business decisions and objectives, they are subject to change. Although the Projections are presented with numerical specificity and are based on reasonable expectations developed by Vertex’s management, the assumptions and estimates underlying the Projections are subject to significant business, economic, and competitive uncertainties and contingencies, many of which will be beyond the control of Vertex. Accordingly, the Projections are only estimates and are necessarily speculative in nature. It is expected that some or all of the assumptions in the Projections will not be realized and that actual results will vary from the Projections. Such variations may be material and may increase over time. In light of the foregoing, readers are cautioned not to place undue reliance on the Projections. The projected financial information contained herein should not be regarded as a representation or warranty by Vertex, its management, advisors, or any other person that the Projections can or will be achieved. Vertex cautions that the Projections are speculative in nature and based upon subjective decisions and assumptions. Since the Projections cover multiple years, such information by its nature becomes less meaningful and reliable with each successive year. As a result, the Projections should not be relied on as necessarily predictive of actual future events.
NON-GAAP FINANCIAL MEASURES
In addition to our results calculated under generally accepted accounting principles in the United States (“GAAP”), in this earnings release we also present Refining Gross Margin, EBITDA and Adjusted EBITDA . Refining Gross Margin, EBITDA and Adjusted EBITDA are “non-GAAP financial measures” presented as supplemental measures of the Company’s performance. They are not presented in accordance with GAAP. Refining gross margin is defined as revenues less the cost of fuel intakes and other fuel costs. It excludes operating expense and depreciation attributable to cost of revenues and other non-operating items in cost of revenues. EBITDA represents net income before interest, taxes, depreciation and amortization, for continued and discontinued operations. Adjusted EBITDA is defined as EBITDA before other income, impairment loss on assets, loss (gain) on change in value of derivative warrant liability, unrealized (gain) loss on derivative instruments, gain (loss) on intermediation agreement, Shell transaction related expenses and stock-based compensation expense (for continued and discontinued operations) and other unusual or non-recurring items. Refining Gross Margin, 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. Refining Gross Margin, EBITDA and Adjusted EBITDA are also frequently used by analysts, investors and other interested parties to evaluate companies in our industry. We use Refining Gross Margin, EBITDA and Adjusted EBITDA as supplements to GAAP measures of performance to evaluate the effectiveness of our business strategies, to make budgeting decisions, to allocate resources and to compare our performance relative to our peers. Additionally, these measures, when used in conjunction with related GAAP financial measures, provide investors with an additional financial analytical framework which management uses, in addition to historical operating results, as the basis for financial, operational and planning decisions and present measurements that third parties have indicated are useful in assessing the Company and its results of operations. Refining Gross Margin, EBITDA and Adjusted EBITDA are unaudited, and 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: Refining Gross Margin, EBITDA and Adjusted EBITDA do not reflect cash expenditures, or future or contractual commitments; EBITDA and Adjusted EBITDA do not reflect changes in, or cash requirements for, capital expenditures or 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. In addition, other companies in this industry may calculate Refining Gross Margin, EBITDA and Adjusted EBITDA differently than Vertex does, limiting its usefulness as a comparative measure. The Company’s presentation of these measures should not be construed as an inference that future results will be unaffected by unusual or nonrecurring items. We compensate for these limitations by providing a reconciliation of each of these non-GAAP measures to the most comparable GAAP measure. We encourage investors and others to review our business, results of operations, and financial information in their entirety, not to rely on any single financial measure, and to view these non-GAAP measures in conjunction with the most directly comparable GAAP financial measure. For more information on these non-GAAP financial measures, please see the sections titled Unaudited Reconciliations of Gross Profit (Loss) to Refining Gross Margin”, each included at the end of this release and “Unaudited Consolidated Continued and Discontinued Operations Reconciliations of Net Loss attributable to Vertex Energy, Inc., to Earnings before Interest, Taxes, Depreciation and Amortization (EBITDA) and Adjusted EBITDA” each included at the end of this release.
CONTACT
Investor Relations
720.778.2415
IR@vertexenergy.com
VERTEX ENERGY, INC.
CONSOLIDATED BALANCE SHEETS
(in thousands, except number of shares and par value)
(UNAUDITED)
| June 30, 2022 | December 31, 2021 | |||||||
| ASSETS | ||||||||
| Current assets | ||||||||
| Cash and cash equivalents | $ | 97,914 | $ | 36,130 | ||||
| Restricted cash | 100 | 100,497 | ||||||
| Accounts receivable, net | 90,854 | 5,297 | ||||||
| Inventory | 201,752 | 3,736 | ||||||
| Derivative commodity asset | — | 96 | ||||||
| Prepaid expenses and other current assets | 36,627 | 4,280 | ||||||
| Assets held for sale, current | 92,494 | 84,116 | ||||||
| Total current assets | 519,741 | 234,152 | ||||||
| Fixed assets, at cost | 116,722 | 13,811 | ||||||
| Less accumulated depreciation | (4,475 | ) | (2,045 | ) | ||||
| Fixed assets, net | 112,247 | 11,766 | ||||||
| Finance lease right-of-use assets | 44,373 | — | ||||||
| Operating lease right-of use assets | 4,768 | 5,011 | ||||||
| Intangible assets, net | 8,375 | 359 | ||||||
| Other assets | 1,159 | 14,772 | ||||||
| TOTAL ASSETS | $ | 690,663 | $ | 266,060 | ||||
| LIABILITIES, TEMPORARY EQUITY, AND EQUITY | ||||||||
| Current liabilities | ||||||||
| Accounts payable | $ | 50,652 | $ | 4,216 | ||||
| Accrued expenses | 30,560 | 3,618 | ||||||
| Finance lease liability-current | 652 | 302 | ||||||
| Operating lease liability-current | 953 | 960 | ||||||
| Current portion of long-term debt, net | 1,927 | 2,413 | ||||||
| Obligations under inventory financing agreements, net | 172,857 | — | ||||||
| Derivative commodity liability | 46,536 | — | ||||||
| Liabilities held for sale, current | 35,507 | 37,645 | ||||||
| Total current liabilities | 339,644 | 49,154 | ||||||
| Long-term debt, net | 135,332 | 114 | ||||||
| Finance lease liability-long-term | 44,640 | — | ||||||
| Convertible senior unsecured note 2027, net | 41,543 | 64,016 | ||||||
| Operating lease liability-long-term | 3,816 | 4,052 | ||||||
| Derivative warrant liability | 26,615 | 75,211 | ||||||
| Other liabilities | 1,378 | — | ||||||
| Total liabilities | 592,968 | 192,547 | ||||||
| COMMITMENTS AND CONTINGENCIES (Note 3) | — | — | ||||||
| TEMPORARY EQUITY | ||||||||
| Redeemable non-controlling interest | — | 43,447 | ||||||
| Total temporary equity | — | 43,447 | ||||||
| June 30, 2022 | December 31, 2021 | |||||||
| EQUITY | ||||||||
| 50,000,000 of total Preferred shares authorized: | ||||||||
| Series A Convertible Preferred Stock, $0.001 par value; 5,000,000 shares designated, zero and 385,601 shares issued and outstanding at June 30, 2022 and December 31, 2021, with a liquidation preference of $0 and $574,545 at June 30, 2022 and December 31, 2021. | — | — | ||||||
| Series C Convertible Preferred Stock, $0.001 par value; 44,000 shares designated, zero shares issued or outstanding. | — | — | ||||||
| Common stock, $0.001 par value per share; 750,000,000 shares authorized; 75,509,002 and 63,287,965 shares issued and outstanding at June 30, 2022 and December 31, 2021, respectively. | 76 | 63 | ||||||
| Additional paid-in capital | 278,455 | 138,620 | ||||||
| Accumulated deficit | (182,588 | ) | (110,614 | ) | ||||
| Total Vertex Energy, Inc. shareholders’ equity | 95,943 | 28,069 | ||||||
| Non-controlling interest | 1,752 | 1,997 | ||||||
| Total equity | 97,695 | 30,066 | ||||||
| TOTAL LIABILITIES, TEMPORARY EQUITY, AND EQUITY | $ | 690,663 | $ | 266,060 | ||||
VERTEX ENERGY, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share amounts)
(UNAUDITED)
| Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
| 2022 | 2021 | 2022 | 2021 | |||||||||||||
| Revenues | $ | 991,839 | $ | 30,228 | $ | 1,032,056 | $ | 55,273 | ||||||||
| Cost of revenues (exclusive of depreciation and amortization shown separately below) | 984,442 | 28,041 | 1,023,008 | 50,850 | ||||||||||||
| Depreciation and amortization attributable to costs of revenues | 3,122 | 116 | 3,236 | 228 | ||||||||||||
| Gross profit | 4,275 | 2,071 | 5,812 | 4,195 | ||||||||||||
| Operating expenses: | ||||||||||||||||
| Selling, general and administrative expenses | 36,641 | 4,177 | 45,423 | 7,035 | ||||||||||||
| Depreciation and amortization attributable to operating expenses | 763 | 27 | 790 | 54 | ||||||||||||
| Total operating expenses | 37,404 | 4,204 | 46,213 | 7,089 | ||||||||||||
| Loss from operations | (33,129 | ) | (2,133 | ) | (40,401 | ) | (2,894 | ) | ||||||||
| Other income (expense): | ||||||||||||||||
| Interest income | 18 | — | 18 | — | ||||||||||||
| Other income | 152 | 4,222 | 625 | 4,223 | ||||||||||||
| Loss on change in value of derivative warrant liability | (945 | ) | (21,508 | ) | (4,524 | ) | (23,288 | ) | ||||||||
| Interest expense | (47,722 | ) | (139 | ) | (51,952 | ) | (251 | ) | ||||||||
| Total other expense | (48,497 | ) | (17,425 | ) | (55,833 | ) | (19,316 | ) | ||||||||
| Loss from continuing operations before income tax | (81,626 | ) | (19,558 | ) | (96,234 | ) | (22,210 | ) | ||||||||
| Income tax benefit (expense) | — | — | — | — | ||||||||||||
| Loss from continuing operations | (81,626 | ) | (19,558 | ) | (96,234 | ) | (22,210 | ) | ||||||||
| Income from discontinued operations, net of tax (see note 16) | 17,844 | 3,601 | 31,643 | 9,219 | ||||||||||||
| Net loss | (63,782 | ) | (15,957 | ) | (64,591 | ) | (12,991 | ) | ||||||||
| Net income attributable to non-controlling interest and redeemable non-controlling interest from continuing operations | 165 | 243 | 97 | 626 | ||||||||||||
| Net income attributable to non-controlling interest and redeemable non-controlling interest from discontinued operations | 3,023 | 3,175 | 6,829 | 4,783 | ||||||||||||
| Net loss attributable to Vertex Energy, Inc. | (66,970 | ) | (19,375 | ) | (71,517 | ) | (18,400 | ) | ||||||||
| Accretion of redeemable noncontrolling interest to redemption value from continued operations | (6 | ) | (387 | ) | (428 | ) | (762 | ) | ||||||||
| Accretion of discount on Series B and B1 Preferred Stock | — | (284 | ) | — | (507 | ) | ||||||||||
| Dividends on Series B and B1 Preferred Stock | — | — | — | 258 | ||||||||||||
| Net loss attributable to shareholders from continuing operations | (81,797 | ) | (20,472 | ) | (96,759 | ) | (23,847 | ) | ||||||||
| Net income attributable to shareholders from discontinued operations, net of tax | 14,821 | 426 | 24,814 | 4,436 | ||||||||||||
| Net loss attributable to common shareholders | $ | (66,976 | ) | $ | (20,046 | ) | $ | (71,945 | ) | $ | (19,411 | ) | ||||
| Basic income (loss) per common share | ||||||||||||||||
| Continuing operations | $ | (1.20 | ) | $ | (0.39 | ) | $ | (1.47 | ) | $ | (0.48 | ) | ||||
| Discontinued operations, net of tax | 0.22 | 0.01 | 0.38 | 0.09 | ||||||||||||
| Basic income (loss) per common share | $ | (0.98 | ) | $ | (0.38 | ) | $ | (1.09 | ) | $ | (0.39 | ) | ||||
| Diluted income (loss) per common share | ||||||||||||||||
| Continuing operations | $ | (1.20 | ) | $ | (0.39 | ) | $ | (1.47 | ) | $ | (0.48 | ) | ||||
| Discontinued operations, net of tax | 0.22 | 0.01 | 0.38 | 0.09 | ||||||||||||
| Diluted income (loss) per common share | $ | (0.98 | ) | $ | (0.38 | ) | $ | (1.09 | ) | $ | (0.39 | ) | ||||
| Shares used in computing earnings per share | ||||||||||||||||
| Basic | 67,923 | 52,683 | 65,660 | 50,210 | ||||||||||||
| Diluted | 67,923 | 52,683 | 65,660 | 50,210 | ||||||||||||
VERTEX ENERGY, INC.
CONSOLIDATED STATEMENTS OF EQUITY
(in thousands, except par value)
(UNAUDITED)
| Six Months Ended June 30, 2022 | ||||||||||||||||||||||||||||||||||||||||
| Common Stock | Series A Preferred | Series C Preferred | ||||||||||||||||||||||||||||||||||||||
| Shares | $0.001 Par | Shares | $0.001 Par | Shares | $0.001 Par | Additional Paid-In Capital | Retained Earnings | Non-controlling Interest | Total Equity | |||||||||||||||||||||||||||||||
| Balance on January 1, 2022 | 63,288 | $ | 63 | 386 | $ | — | — | $ | — | $ | 138,620 | $ | (110,614 | ) | $ | 1,997 | $ | 30,066 | ||||||||||||||||||||||
| Exercise of options | 60 | — | — | — | — | — | 76 | — | — | 76 | ||||||||||||||||||||||||||||||
| Exercise of warrants | 1,113 | 1 | — | — | — | — | (1 | ) | — | — | — | |||||||||||||||||||||||||||||
| Share based compensation expense | — | — | — | — | — | — | 250 | — | — | 250 | ||||||||||||||||||||||||||||||
| Conversion of Series A Preferred stock to common | 5 | — | (5 | ) | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||
| Reclassification of derivative liabilities | — | — | — | — | — | — | 78,789 | — | — | 78,789 | ||||||||||||||||||||||||||||||
| Accretion of redeemable non-controlling interest to redemption value | — | — | — | — | — | — | — | (422 | ) | — | (422 | ) | ||||||||||||||||||||||||||||
| Net income (loss) | — | — | — | — | — | — | — | (4,547 | ) | 3,739 | (808 | ) | ||||||||||||||||||||||||||||
| Less: amount attributable to redeemable non-controlling interest | — | — | — | — | — | — | — | — | (3,769 | ) | (3,769 | ) | ||||||||||||||||||||||||||||
| Balance on March 31, 2022 | 64,466 | 64 | 381 | — | — | — | 217,734 | (115,583 | ) | 1,967 | 104,182 | |||||||||||||||||||||||||||||
| Exercise of options to common | 498 | 1 | — | — | — | — | 553 | — | — | 554 | ||||||||||||||||||||||||||||||
| Exercise of options to common- unissued | — | — | — | — | — | — | 3 | — | — | 3 | ||||||||||||||||||||||||||||||
| Distribution to noncontrolling shareholder | — | — | — | — | — | — | — | — | (380 | ) | (380 | ) | ||||||||||||||||||||||||||||
| Adjustment of redeemable non controlling interest | — | — | — | — | — | — | 29 | (29 | ) | — | — | |||||||||||||||||||||||||||||
| Conversion of Convertible Senior Notes to common | 10,164 | 10 | — | — | — | — | 59,812 | — | — | 59,822 | ||||||||||||||||||||||||||||||
| Share based compensation expense | — | — | — | — | — | — | 324 | — | — | 324 | ||||||||||||||||||||||||||||||
| Conversion of Series A Preferred stock to common | 381 | 1 | (381 | ) | — | — | — | — | — | — | 1 | |||||||||||||||||||||||||||||
| Accretion of redeemable non-controlling interest to redemption value | — | — | — | — | — | — | — | (6 | ) | — | (6 | ) | ||||||||||||||||||||||||||||
| Net loss | — | — | — | — | — | — | — | (66,970 | ) | 3,188 | (63,782 | ) | ||||||||||||||||||||||||||||
| Less: amount attributable to redeemable non-controlling interest | — | — | — | — | — | — | — | — | (3,023 | ) | (3,023 | ) | ||||||||||||||||||||||||||||
| Balance on June 30, 2022 | 75,509 | $ | 76 | — | $ | — | — | $ | — | $ | 278,455 | $ | (182,588 | ) | $ | 1,752 | $ | 97,695 | ||||||||||||||||||||||
| Six Months Ended June 30, 2021 | ||||||||||||||||||||||||||||||||||||||||
| Common Stock | Series A Preferred | Series C Preferred | ||||||||||||||||||||||||||||||||||||||
| Shares | $0.001 Par | Shares | $0.001 Par | Shares | $0.001 Par | Additional Paid-In Capital | Retained Earnings | Non-controlling Interest | Total Equity | |||||||||||||||||||||||||||||||
| Balance on January 1, 2021 | 45,555 | $ | 46 | 420 | $ | — | — | $ | — | $ | 94,570 | $ | (90,009 | ) | $ | 1,318 | $ | 5,925 | ||||||||||||||||||||||
| Exercise of options | 23 | — | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||
| Exercise of B1 warrants | 1,080 | 1 | — | — | — | — | 2,757 | — | — | 2,758 | ||||||||||||||||||||||||||||||
| Exchanges of Series B Preferred stock to common | 2,359 | 2 | — | — | — | — | 4,114 | 630 | — | 4,746 | ||||||||||||||||||||||||||||||
| Share based compensation expense | — | — | — | — | — | — | 150 | — | — | 150 | ||||||||||||||||||||||||||||||
| Conversion of Series B Preferred stock to common | 638 | 1 | — | — | — | — | 1,978 | — | — | 1,979 | ||||||||||||||||||||||||||||||
| Conversion of Series B1 Preferred stock to common | 2,087 | 2 | — | — | — | — | 3,254 | — | — | 3,256 | ||||||||||||||||||||||||||||||
| Dividends on Series B and B1 | — | — | — | — | — | — | — | (372 | ) | — | (372 | ) | ||||||||||||||||||||||||||||
| Accretion of discount on Series B and B1 | — | — | — | — | — | — | — | (224 | ) | — | (224 | ) | ||||||||||||||||||||||||||||
| Accretion of redeemable non-controlling interest to redemption value | — | — | — | — | — | — | — | (373 | ) | — | (373 | ) | ||||||||||||||||||||||||||||
| Net income | — | — | — | — | — | — | — | 974 | 1,991 | 2,965 | ||||||||||||||||||||||||||||||
| Less: amount attributable to redeemable non-controlling interest | — | — | — | — | — | — | — | — | (1,542 | ) | (1,542 | ) | ||||||||||||||||||||||||||||
| Balance on March 31, 2021 | 51,742 | 52 | 420 | — | — | — | 106,823 | (89,374 | ) | 1,767 | 19,268 | |||||||||||||||||||||||||||||
| Exercise of options to common | 505 | — | — | — | — | — | 229 | — | — | 229 | ||||||||||||||||||||||||||||||
| Exercise of options to common- unissued | — | — | — | — | — | — | 475 | — | — | 475 | ||||||||||||||||||||||||||||||
| Leverage Lubricants contribution | — | — | — | — | — | — | — | — | (13 | ) | (13 | ) | ||||||||||||||||||||||||||||
| Exercise of B1 warrants | 157 | — | — | — | — | — | 1,634 | — | — | 1,634 | ||||||||||||||||||||||||||||||
| Exercise of B1 warrants-unissued | — | — | — | — | — | — | 1,186 | — | — | 1,186 | ||||||||||||||||||||||||||||||
| Share based compensation expense | — | — | — | — | — | — | 205 | — | — | 205 | ||||||||||||||||||||||||||||||
| Conversion of Series A Preferred stock to common | 28 | — | (28 | ) | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||
| Conversion of Series B Preferred stock to common | 1,842 | 2 | — | — | — | — | 5,707 | — | — | 5,709 | ||||||||||||||||||||||||||||||
| Conversion of Series B Preferred stock to common-unissued | — | — | — | — | — | — | 760 | — | — | 760 | ||||||||||||||||||||||||||||||
| Conversion of Series B1 Preferred stock to common | 5,635 | 6 | — | — | — | — | 8,785 | — | — | 8,791 | ||||||||||||||||||||||||||||||
| Accretion of discount on Series B and B1 | — | — | — | — | — | — | — | (284 | ) | — | (284 | ) | ||||||||||||||||||||||||||||
| Accretion of redeemable non-controlling interest to redemption value | — | — | — | — | — | — | — | (387 | ) | — | (387 | ) | ||||||||||||||||||||||||||||
| Net loss | — | — | — | — | — | — | — | (19,375 | ) | 3,418 | (15,957 | ) | ||||||||||||||||||||||||||||
| Less: amount attributable to redeemable non-controlling interest | — | — | — | — | — | — | — | — | (3,113 | ) | (3,113 | ) | ||||||||||||||||||||||||||||
| Balance on June 30, 2021 | 59,909 | $ | 60 | 392 | $ | — | — | $ | — | $ | 125,804 | $ | (109,420 | ) | $ | 2,059 | $ | 18,503 | ||||||||||||||||||||||
VERTEX ENERGY, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(UNAUDITED)
| Six Months Ended | ||||||||
| June 30, 2022 | June 30, 2021 | |||||||
| Cash flows from operating activities | ||||||||
| Net loss | $ | (64,591 | ) | $ | (12,991 | ) | ||
| Income from discontinued operations, net of tax | 31,643 | 9,219 | ||||||
| Loss from continuing operations | (96,234 | ) | (22,210 | ) | ||||
| Adjustments to reconcile net loss from continuing operations to cash provided by (used in) operating activities, net of acquisitions | ||||||||
| Stock based compensation expense | 574 | 356 | ||||||
| Depreciation and amortization | 4,026 | 282 | ||||||
| Gain on forgiveness of debt | — | (4,222 | ) | |||||
| Gain on sale of assets | (82 | ) | (1 | ) | ||||
| Provision for environment clean up | 1,428 | — | ||||||
| Increase (reduction) of allowance for bad debt | (12 | ) | 620 | |||||
| Increase in fair value of derivative warrant liability | 4,524 | 23,288 | ||||||
| Loss on commodity derivative contracts | 93,745 | 1,925 | ||||||
| Net cash settlements on commodity derivatives | (64,814 | ) | (1,961 | ) | ||||
| Amortization of debt discount and deferred costs | 40,000 | — | ||||||
| Changes in operating assets and liabilities, net of acquisition | ||||||||
| Accounts receivable and other receivables | (85,545 | ) | (2,489 | ) | ||||
| Inventory | (67,796 | ) | (704 | ) | ||||
| Prepaid expenses and other current assets | (12,614 | ) | 1,641 | |||||
| Accounts payable | 46,399 | 2,890 | ||||||
| Accrued expenses | 26,891 | (217 | ) | |||||
| Other assets | (50 | ) | (89 | ) | ||||
| Net cash used in operating activities from continuing operations | (109,560 | ) | (891 | ) | ||||
| Cash flows from investing activities | ||||||||
| Acquisition of business, net of cash | (227,525 | ) | 2 | |||||
| Software purchase | (106 | ) | — | |||||
| Purchase of fixed assets | (1,159 | ) | (861 | ) | ||||
| Proceeds from sale of fixed assets | 157 | 75 | ||||||
| Net cash used in investing activities from continuing operations | (228,633 | ) | (784 | ) | ||||
| Cash flows from financing activities | ||||||||
| Payments on finance leases | (107 | ) | (134 | ) | ||||
| Proceeds from exercise of options and warrants to common stock | 632 | 2,829 | ||||||
| Distributions to noncontrolling interest | (380 | ) | — | |||||
| Net borrowings on inventory financing agreements | 172,607 | — | ||||||
| Line of credit proceeds, net | — | 1,032 | ||||||
| Redemption of noncontrolling interest | (50,666 | ) | — | |||||
| Proceeds from note payable, net | 165,718 | — | ||||||
| Payments on note payable | (7,716 | ) | (1,837 | ) | ||||
| Net cash provided by financing activities from continuing operations | 280,088 | 1,890 | ||||||
| Discontinued operations: | ||||||||
| Net cash provided by operating activities | 21,366 | 5,936 | ||||||
| Net cash used in investing activities | (1,578 | ) | (1,961 | ) | ||||
| Net cash used in financing activities | (296 | ) | (118 | ) | ||||
| Net cash provided by discontinued operations | 19,492 | 3,857 | ||||||
| Net change in cash, cash equivalents and restricted cash | (38,613 | ) | 4,072 | |||||
| Cash, cash equivalents, and restricted cash at beginning of the period | 136,627 | 10,995 | ||||||
| Cash, cash equivalents, and restricted cash at end of period | $ | 98,014 | $ | 15,067 | ||||
| SUPPLEMENTAL INFORMATION | ||||||||
| Cash paid for interest | $ | 11,438 | $ | 483 | ||||
| Cash paid for taxes | $ | — | $ | — | ||||
| NON-CASH INVESTING AND FINANCING TRANSACTIONS | ||||||||
| Equity component of the convertible note issuance | $ | 78,789 | $ | — | ||||
| Conversion of Series B Preferred Stock into common stock | $ | — | $ | 8,447 | ||||
| Conversion of Series B1 Preferred Stock into common stock | $ | — | $ | 12,046 | ||||
| Exchanges of Series B Preferred Stock into common stock | $ | — | $ | 4,747 | ||||
| Accretion of discount on Series B and B1 Preferred Stock | $ | — | $ | 507 | ||||
| Dividends-in-kind accrued on Series B and B1 Preferred Stock | $ | — | $ | (258 | ) | |||
| Conversion of Convertible Senior Notes to common stock | $ | 59,822 | $ | — | ||||
| Equipment acquired (disposed) under leases | $ | 45,096 | $ | 174 | ||||
| Accretion of redeemable noncontrolling interest to redemption value | $ | 428 | $ | 762 | ||||
Segment information for the three and six months ended June 30, 2022 and 2021 is as follows (in thousands):
| THREE MONTHS ENDED JUNE 30, 2022 | ||||||||||||||||
| Black Oil | Refining & Marketing | Recovery | Total | |||||||||||||
| Revenues: | ||||||||||||||||
| Gasolines | $ | — | $ | 255,909 | $ | — | $ | 255,909 | ||||||||
| Jet Fuels | — | 143,688 | — | 143,688 | ||||||||||||
| Diesel | — | 322,317 | — | 322,317 | ||||||||||||
| Pygas | — | 20,685 | — | 20,685 | ||||||||||||
| Oil collection services | 26 | — | — | 26 | ||||||||||||
| Metals (1) | — | — | 4,318 | 4,318 | ||||||||||||
| Other refinery products (2) | 666 | 72,460 | 877 | 74,003 | ||||||||||||
| VGO/Marine fuel sales | 19,562 | 151,331 | — | 170,893 | ||||||||||||
| Total revenues | 20,254 | 966,390 | 5,195 | 991,839 | ||||||||||||
| Cost of revenues (exclusive of depreciation and amortization shown separately below) | 20,147 | 959,767 | 4,528 | 984,442 | ||||||||||||
| Depreciation and amortization attributable to costs of revenues | 31 | 3,009 | 82 | 3,122 | ||||||||||||
| Gross profit | 76 | 3,614 | 585 | 4,275 | ||||||||||||
| Selling, general and administrative expenses | 12,027 | 23,597 | 1,017 | 36,641 | ||||||||||||
| Depreciation and amortization attributable to operating expenses | 27 | 736 | — | 763 | ||||||||||||
| Loss from operations | $ | (11,978 | ) | $ | (20,719 | ) | $ | (432 | ) | $ | (33,129 | ) | ||||
| THREE MONTHS ENDED JUNE 30, 2021 | ||||||||||||||||
| Black Oil | Refining & Marketing | Recovery | Total | |||||||||||||
| Revenues: | ||||||||||||||||
| Gasolines | $ | — | $ | 6,083 | $ | — | $ | 6,083 | ||||||||
| Diesel | — | 13,481 | — | 13,481 | ||||||||||||
| Pygas | — | 3,862 | — | 3,862 | ||||||||||||
| Industrial fuel | — | 410 | — | 410 | ||||||||||||
| Oil collection services | 155 | — | — | 155 | ||||||||||||
| Metals (1) | — | — | 6,151 | 6,151 | ||||||||||||
| Other refinery products (2) | — | — | 86 | 86 | ||||||||||||
| Total revenues | 155 | 23,836 | 6,237 | 30,228 | ||||||||||||
| Cost of revenues (exclusive of depreciation and amortization shown separately below) | 363 | 22,248 | 5,430 | 28,041 | ||||||||||||
| Depreciation and amortization attributable to costs of revenues | 19 | 31 | 66 | 116 | ||||||||||||
| Gross profit (loss) | (227 | ) | 1,557 | 741 | 2,071 | |||||||||||
| Selling, general and administrative expenses | 3,281 | 687 | 209 | 4,177 | ||||||||||||
| Depreciation and amortization attributable to operating expenses | 27 | — | — | 27 | ||||||||||||
| Income (loss) from operations | $ | (3,535 | ) | $ | 870 | $ | 532 | $ | (2,133 | ) | ||||||
| SIX MONTHS ENDED JUNE 30, 2022 | ||||||||||||||||
| Black Oil | Refining & Marketing | Recovery | Total | |||||||||||||
| Revenues: | ||||||||||||||||
| Gasoline | $ | — | $ | 263,458 | $ | — | $ | 263,458 | ||||||||
| Jet Fuels | — | 143,688 | — | 143,688 | ||||||||||||
| Diesel | — | 344,225 | — | 344,225 | ||||||||||||
| Pygas | — | 25,375 | — | 25,375 | ||||||||||||
| Industrial fuel | — | 572 | — | 572 | ||||||||||||
| Oil collection services | 240 | — | — | 240 | ||||||||||||
| Metals (1) | — | — | 7,733 | 7,733 | ||||||||||||
| Other refinery products (2) | 666 | 72,460 | 1,410 | 74,536 | ||||||||||||
| VGO/Marine fuel sales | 20,898 | 151,331 | — | 172,229 | ||||||||||||
| Total revenues | 21,804 | 1,001,109 | 9,143 | 1,032,056 | ||||||||||||
| Cost of revenues (exclusive of depreciation and amortization shown separately below) | 21,797 | 992,854 | 8,357 | 1,023,008 | ||||||||||||
| Depreciation and amortization attributable to costs of revenues | 47 | 3,033 | 156 | 3,236 | ||||||||||||
| Gross profit (loss) | (40 | ) | 5,222 | 630 | 5,812 | |||||||||||
| Selling, general and administrative expenses | 19,438 | 24,721 | 1,264 | 45,423 | ||||||||||||
| Depreciation and amortization attributable to operating expenses | 54 | 736 | — | 790 | ||||||||||||
| Loss from operations | $ | (19,532 | ) | $ | (20,235 | ) | $ | (634 | ) | $ | (40,401 | ) | ||||
| SIX MONTHS ENDED JUNE 30, 2021 | ||||||||||||||||
| Black Oil | Refining & Marketing | Recovery | Total | |||||||||||||
| Revenues: | ||||||||||||||||
| Gasoline | $ | — | $ | 10,494 | $ | — | $ | 10,494 | ||||||||
| Diesel | — | 25,060 | — | 25,060 | ||||||||||||
| Pygas | — | 6,835 | — | 6,835 | ||||||||||||
| Industrial fuel | — | 721 | — | 721 | ||||||||||||
| Oil collection services | 278 | — | 3 | 281 | ||||||||||||
| Metals (1) | — | — | 11,796 | 11,796 | ||||||||||||
| Other refinery products (2) | — | — | 86 | 86 | ||||||||||||
| Total revenues | 278 | 43,110 | 11,885 | 55,273 | ||||||||||||
| Cost of revenues (exclusive of depreciation and amortization shown separately below) | 643 | 40,198 | 10,009 | 50,850 | ||||||||||||
| Depreciation and amortization attributable to costs of revenues | 39 | 63 | 126 | 228 | ||||||||||||
| Gross profit (loss) | (404 | ) | 2,849 | 1,750 | 4,195 | |||||||||||
| Selling, general and administrative expenses | 5,223 | 1,447 | 365 | 7,035 | ||||||||||||
| Depreciation and amortization attributable to operating expenses | 54 | — | — | 54 | ||||||||||||
| Income (loss) from operations | $ | (5,681 | ) | $ | 1,402 | $ | 1,385 | $ | (2,894 | ) | ||||||
(1) Metals consist of recoverable ferrous and non-ferrous recyclable metals from manufacturing and consumption. Scrap metal can be recovered from pipes, barges, boats, building supplies, surplus equipment, tanks, and other items consisting of metal composition. These materials are segregated, processed, cut-up and sent back to a steel mill for re-purposing.
(2) Other re-refinery products include the sales of asphalt, condensate, recovered products, and other petroleum products.
The following summarized financial information has been segregated from continuing operations and reported as Discontinued Operations for our black oil segment for the three months ended June 30, 2022, and 2021 (in thousands):
| Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
| 2022 | 2021 | 2022 | 2021 | |||||||||||||
| Revenues | $ | 59,429 | $ | 35,068 | $ | 112,459 | $ | 68,216 | ||||||||
| Cost of revenues (exclusive of depreciation shown separately below) | 33,585 | 24,965 | 65,977 | 45,611 | ||||||||||||
| Depreciation and amortization attributable to costs of revenues | 1,332 | 1,278 | 2,636 | 2,513 | ||||||||||||
| Gross profit | 24,512 | 8,825 | 43,846 | 20,092 | ||||||||||||
| Operating expenses: | ||||||||||||||||
| Selling, general and administrative expenses (exclusive of acquisition related expenses) | 6,243 | 4,648 | 11,327 | 9,716 | ||||||||||||
| Depreciation and amortization expense attributable to operating expenses | 427 | 456 | 872 | 912 | ||||||||||||
| Total operating expenses | 6,670 | 5,104 | 12,199 | 10,628 | ||||||||||||
| Income from operations | 17,842 | 3,721 | 31,647 | 9,464 | ||||||||||||
| Other income (expense) | ||||||||||||||||
| Interest expense | 2 | (120 | ) | (4 | ) | (245 | ) | |||||||||
| Total other expense | 2 | (120 | ) | (4 | ) | (245 | ) | |||||||||
| Income before income tax | 17,844 | 3,601 | 31,643 | 9,219 | ||||||||||||
| Income tax benefit (expense) | — | — | — | — | ||||||||||||
| Income from discontinued operations, net of tax | $ | 17,844 | $ | 3,601 | $ | 31,643 | $ | 9,219 | ||||||||
Unaudited Reconciliation of Refining Gross Margin and Refining Gross Margin per throughput barrel to Gross Profit
Three Months Ended June 30, 2022 | ||||||||
| In thousands (unaudited) | Total Refining and Marketing | Mobile Refinery | ||||||
| Gross profit | $ | 3,614 | $ | 1,967 | ||||
| Operating expenses including in cost of revenues | 17,575 | 17,575 | ||||||
| Depreciation and amortization attributable to cost of revenues | 3,009 | 2,986 | ||||||
| Unrealized loss on hedging activities | 46,901 | 46,901 | ||||||
| Loss on inventory intermediation agreement | 23,180 | 23,180 | ||||||
| Refining gross margin | $ | 94,279 | $ | 92,609 | ||||
| Refining throughput (bpd) | 72,133 | 72,133 | ||||||
| Refining gross margin per throughput barrel | $ | 14.36 | $ | 14.11 | ||||
| Refining gross margin | $ | 92,609 | ||||||
| Realized loss on hedging activities | 46,135 | |||||||
| Inventory adjustment | 13,300 | |||||||
| Refining gross margin excl non-recurring items | $ | 152,044 | ||||||
| Refining throughput (bpd) | 72,133 | |||||||
| Refining gross margin per throughput barrel | $ | 23.16 | ||||||
Unaudited Reconciliation of EBITDA and Adjusted EBITDA to Net loss from Continued and Discontinued Operations
| Three Months Ended | Trailing Twelve Months Ended | |||||||||||||||
| In thousands (unaudited) | June 30, 2022 | June 30, 2021 | June 30, 2022 | June 30, 2021 | ||||||||||||
| Consolidated EBITDA and Adjusted EBITDA | ||||||||||||||||
| Net loss including discontinued operations | $ | (63,781 | ) | $ | (15,957 | ) | $ | (59,259 | ) | $ | (17,889 | ) | ||||
| Depreciation and amortization | 5,644 | 1,876 | 11,368 | 7,345 | ||||||||||||
| Interest expense | 47,719 | 259 | 55,351 | 976 | ||||||||||||
| EBITDA | $ | (10,418 | ) | $ | (13,822 | ) | $ | 7,460 | $ | (9,568 | ) | |||||
| Unrealized loss in hedging activities | 46,901 | 351 | 46,528 | (530 | ) | |||||||||||
| Loss on intermediation agreement (backwardation) | 23,180 | — | 23,180 | — | ||||||||||||
| Acquisition costs | 9,078 | — | 19,271 | — | ||||||||||||
| Environmental reserve | 1,428 | — | 1,428 | — | ||||||||||||
| (Gain) loss on the change in value of derivative warrant liability | 945 | 21,507 | (3,078 | ) | 23,236 | |||||||||||
| Stock compensation expense | 324 | 205 | 1,081 | 692 | ||||||||||||
| Asset impairment loss | — | — | 2,124 | — | ||||||||||||
| Other | (147 | ) | (4,222 | ) | (562 | ) | (4,222 | ) | ||||||||
| Adjusted EBITDA | $ | 71,291 | $ | 4,019 | $ | 97,432 | $ | 9,608 | ||||||||
| Three Months Ended June 30, 2022 | ||||||||||||||||||||||||
| Black Oil | Mobile Refinery | Other Refining and Marketing | Total Refining and Marketing | Recovery | Consolidated | |||||||||||||||||||
| Segment EBITDA and Adjusted EBITDA | ||||||||||||||||||||||||
| Net income (loss), including discontinued operations | $ | (39,379 | ) | $ | (23,961 | ) | $ | 10 | $ | (23,951 | ) | $ | (451 | ) | $ | (63,781 | ) | |||||||
| Depreciation and amortization | 1,817 | 3,722 | 23 | 3,745 | 82 | 5,644 | ||||||||||||||||||
| Interest expense | 44,450 | 3,250 | — | 3,250 | 19 | 47,719 | ||||||||||||||||||
| EBITDA | $ | 6,888 | $ | (16,989 | ) | $ | 33 | $ | (16,956 | ) | $ | (350 | ) | $ | (10,418 | ) | ||||||||
| Unrealized loss in hedging activities | — | 46,901 | — | 46,901 | — | 46,901 | ||||||||||||||||||
| Loss on intermediation agreement (backwardation) | — | 23,180 | — | 23,180 | — | 23,180 | ||||||||||||||||||
| Acquisition costs | — | 9,078 | — | 9,078 | — | 9,078 | ||||||||||||||||||
| Environmental reserve | — | 1,428 | — | 1,428 | — | 1,428 | ||||||||||||||||||
| (Gain) loss on the change in value of derivative warrant liability | 945 | — | — | — | — | 945 | ||||||||||||||||||
| Stock compensation expense | 324 | — | — | — | — | 324 | ||||||||||||||||||
| Other | (128 | ) | (19 | ) | — | (19 | ) | — | (4,222 | ) | ||||||||||||||
| Adjusted EBITDA | $ | 8,029 | 63,579 | $ | 33 | $ | 63,612 | $ | (350 | ) | $ | 71,291 | ||||||||||||
| Three Months Ended June 30, 2021 | ||||||||||||||||
| Black Oil | Other Refining and Marketing | Recovery | Consolidated | |||||||||||||
| Segment EBITDA and Adjusted EBITDA | ||||||||||||||||
| Net income (loss), including discontinued operations | $ | (17,309 | ) | $ | 868 | $ | 484 | $ | (15,957 | ) | ||||||
| Depreciation and amortization | 1,779 | 32 | 65 | 1,876 | ||||||||||||
| Interest expense | 212 | — | 47 | 259 | ||||||||||||
| EBITDA | $ | (15,318 | ) | $ | 900 | $ | 596 | $ | (13,822 | ) | ||||||
| Unrealized loss in hedging activities | 351 | — | — | 351 | ||||||||||||
| (Gain) loss on the change in value of derivative warrant liability | 21,507 | — | — | 21,507 | ||||||||||||
| Stock compensation expense | 205 | — | — | 205 | ||||||||||||
| Other | (4,222 | ) | — | — | (4,222 | ) | ||||||||||
| Adjusted EBITDA | $ | 2,523 | $ | 900 | $ | 596 | 4,019 | |||||||||
