Announcement • Nov 14
Vertex Energy, Inc. announced delayed 10-Q filing On 11/13/2024, Vertex Energy, Inc. announced that they will be unable to file their next 10-Q by the deadline required by the SEC. Announcement • Oct 08
Vertex Energy, Inc.(OTCPK:VTNR.Q) dropped from NASDAQ Composite Index Vertex Energy, Inc. has been dropped from the NASDAQ Composite Index. Announcement • Sep 27
Interim DIP Financing Approved for Vertex Energy, Inc. The US Bankruptcy Court gave an order to Vertex Refining Alabama LLC to obtain DIP financing on an interim basis on September 25, 2024. As per the order, the debtor has been authorized to obtain a term loan facility in the amount of $40 million out of $80 million with Cantor Fitzgerald Securities acting as the agent. The DIP Facility Loans will bear interest at a percentage per annum equal to the Base Rate plus, (a) in the case of New Money Loans, 9.50%, (b) in the case of Interim Roll-Up Loans, 9.40%, (c) in the case of Restricted Roll-Up Loans, 9.60%, and (d) in the case of Final Roll-Up Loans, 9.40%. interest in the event of default. As per the terms of the DIP agreement, the loan carries a commitment fee of 3% p.a. The DIP facility would mature either on the date that is four months after the Closing Date or the date that is thirty days after the Petition Date or on the effective date of the plan or on the date of consummation of the sale of substantially all assets, whichever is earlier. Adequate protection would be provided to the DIP lenders in the form of super-priority administrative expense claims which is subject to a carve-out of $0.10 million towards unpaid professional fees / administrative expenses and first priority lien upon and security interest in the debtor’s collateral. The final hearing shall be occurred on October 16, 2024. Announcement • Sep 25
Vertex Energy, Inc. Filed for Bankruptcy Vertex Energy, Inc., along with its 23 affiliates, filed a voluntary petition for reorganization under Chapter 11 in the US Bankruptcy Court for the Southern District of Texas on September 24, 2024. The debtor listed both its assets and liabilities in the range of $500 million to $1 billion. The debtor is represented by Jason Gary Cohen of Bracewell LLP, Kirkland & Ellis LLP, and Kirkland & Ellis International LLP as its legal counsels. The debtor also hired R. Seth Bullock as its Chief Restructuring Officer, Perella Weinberg Partners LP as its investment banker, Alvarez & Marsal North America, LLC as its financial advisor, Kurtzman Carson Consultants, LLC as its claims and noticing agent. Announcement • Aug 31
Vertex Energy Receives Written Notice from the Listing Qualifications Department of the Nasdaq Stock Market On August 29, 2024, Vertex Energy, Inc. received written notice from the Listing Qualifications Department of The Nasdaq Stock Market LLC notifying the Company that it is not in compliance with the minimum bid price requirements set forth in Nasdaq Listing Rule 5550(a)(2) for continued listing on The Nasdaq Capital Market. Nasdaq Listing Rule 5550(a)(2) requires listed securities to maintain a minimum bid price of $1.00 per share, and Listing Rule 5810(c)(3)(A) provides that a failure to meet the minimum bid price requirement exists if the deficiency continues for a period of thirty (30) consecutive business days. Based on the closing bid price of the Company’s common stock for the thirty (30) consecutive business days from July 18, 2024 to August 29, 2024, the Company no longer meets the minimum bid price requirement. The Notification Letter does not impact the Company’s listing of its common stock on the Nasdaq Capital Market at this time. The Notification Letter states that the Company has 180 calendar days or until February 25, 2025, to regain compliance with Nasdaq Listing Rule 5550(a)(2). To regain compliance, the bid price of the Company’s common stock must have a closing bid price of at least $1.00 per share for a minimum of 10 consecutive business days. If the Company does not regain compliance by February 25, 2025, an additional 180 days may be granted to regain compliance, so long as the Company meets The Nasdaq Capital Market initial listing criteria (except for the bid price requirement) and notifies Nasdaq in writing of its intention to cure the deficiency during the second compliance period by effecting a reverse stock split, if necessary. If the Company does not qualify for the second compliance period or fails to regain compliance during the second 180-day period, the Company’s common stock will be subject to delisting, at which point the Company would have an opportunity to appeal the delisting determination to a Hearings Panel. The Company intends to monitor the closing bid price of its common stock and may, if appropriate, consider implementing available options to regain compliance with the minimum bid price requirement under the Nasdaq Listing Rules. Major Estimate Revision • Aug 15
Consensus EPS estimates fall by 104% The consensus outlook for earnings per share (EPS) in fiscal year 2024 has deteriorated. 2024 revenue forecast decreased from US$2.82b to US$2.66b. Losses expected to increase from US$0.57 per share to US$1.17. Oil and Gas industry in the US expected to see average net income growth of 15% next year. Consensus price target down from US$2.18 to US$1.91. Share price fell 9.9% to US$0.43 over the past week. Reported Earnings • Aug 09
Second quarter 2024 earnings: Revenues exceed analysts expectations while EPS lags behind Second quarter 2024 results: US$0.57 loss per share (improved from US$1.07 loss in 2Q 2023). Revenue: US$750.1m (up 2.1% from 2Q 2023). Net loss: US$53.8m (loss narrowed 37% from 2Q 2023). Revenue exceeded analyst estimates by 3.3%. Earnings per share (EPS) missed analyst estimates significantly. Revenue is expected to decline by 13% p.a. on average during the next 3 years, while revenues in the Oil and Gas industry in the US are expected to grow by 1.8%. Announcement • Aug 08
Vertex Energy, Inc. Provides Consolidated Operational Guidance for the Third Quarter of 2024 Vertex Energy, Inc. provided consolidated operational guidance for the third quarter of 2024. For the quarter, the company expects Mobile Refinery Total Throughput to be in range of 55.0 Mbpd - 60.0 Mbpd. Announcement • Jul 17
Vertex Energy, Inc. Revises Consolidated Operational Guidance for the Second Quarter of 2024 Vertex Energy, Inc. revised consolidated operational guidance for the second quarter of 2024. For the quarter, the company expects Mobile Refinery Total Throughput to be 71.0 Mbpd compared to previous guidance of 70 Mbpd - 76 Mbpd. Announcement • May 10
Vertex Energy, Inc. Provides Consolidated Operational Guidance for the Second Quarter of 2024 Vertex Energy, Inc. provided consolidated operational guidance for the second quarter of 2024. For the quarter, the company expects Mobile Refinery Total Throughput to be between 70.0 Mbpd to 76.0 Mbpd. Reported Earnings • May 10
First quarter 2024 earnings: Revenues exceed analysts expectations while EPS lags behind First quarter 2024 results: US$0.19 loss per share (down from US$0.047 profit in 1Q 2023). Revenue: US$695.3m (flat on 1Q 2023). Net loss: US$17.7m (down US$21.3m from profit in 1Q 2023). Revenue exceeded analyst estimates by 4.7%. Earnings per share (EPS) missed analyst estimates by 38%. Revenue is forecast to grow 3.1% p.a. on average during the next 3 years, compared to a 2.1% growth forecast for the Oil and Gas industry in the US. Over the last 3 years on average, earnings per share has fallen by 25% per year but the company’s share price has only fallen by 12% per year, which means it has not declined as severely as earnings. Announcement • May 01
Vertex Energy, Inc., Annual General Meeting, Jun 12, 2024 Vertex Energy, Inc., Annual General Meeting, Jun 12, 2024, at 10:00 Central Daylight. Location: the Company’s corporate offices: 1331 Gemini, Suite 250, Houston, Texas 77058 Texas United States Agenda: To elect five directors to the Board of Directors (the “ Board”) each to serve a term of one year and until their respective successors have been elected and qualified, or until their earlier resignation or removal; to ratify the appointment of Ham, Langston & Brezina, L.L.P., as the Company’s independent auditors for the fiscal year ending December 31, 202; to consider a shareholder proposal to require election of directors by a majority of votes cast at an annual meeting; and to conduct any other business properly brought before the meeting or any adjournments, continuations, or postponements thereof. Announcement • Apr 19
Vertex Energy, Inc. Revises Consolidated Operational Guidance for the First Quarter of 2024 Vertex Energy, Inc. revised consolidated operational guidance for the first quarter of 2024. For the quarter, the company expects Mobile Refinery Total Throughput to be between 68Mbpd compared to the previous guidance of Mobile Refinery Total Throughput to be between 63.0 Mbpd to 68.0 Mbpd provided earlier. New Risk • Apr 18
New major risk - Financial position The company has less than a year of cash runway based on its current free cash flow trend. Free cash flow: -US$202m This is considered a major risk. With less than a year's worth of cash, the company will need to raise capital or take on debt unless its cash flows improve. This would dilute existing shareholders or increase balance sheet risk. Currently, the following risks have been identified for the company: Major Risk Less than 1 year of cash runway based on free cash flow trend (-US$202m free cash flow). Minor Risks Currently unprofitable and not forecast to become profitable over next 3 years (US$28m net loss in 3 years). Share price has been volatile over the past 3 months (14% average weekly change). Shareholders have been diluted in the past year (24% increase in shares outstanding). Market cap is less than US$100m (US$91.6m market cap). New Risk • Apr 14
New minor risk - Market cap size The company's market capitalization is less than US$100m. Market cap: US$97.3m This is considered a minor risk. Companies with a small market capitalization are most likely businesses that have not yet released a product to market or are simply a very small company without a wide reach. Either way, risk is elevated with these companies because there is a chance the product may not come to fruition or the company's addressable market or demand may not be as large as expected. In addition, if the company's size is the main factor, it is less likely to have many investors and analysts following it and scrutinizing its performance and outlook. Currently, the following risks have been identified for the company: Minor Risks Less than 1 year of cash runway based on current free cash flow (-US$202m). Currently unprofitable and not forecast to become profitable over next 3 years (US$32m net loss in 3 years). Share price has been volatile over the past 3 months (14% average weekly change). Shareholders have been diluted in the past year (24% increase in shares outstanding). Market cap is less than US$100m (US$97.3m market cap). Announcement • Apr 11
Vertex Energy, Inc. to Report Q1, 2024 Results on May 09, 2024 Vertex Energy, Inc. announced that they will report Q1, 2024 results Pre-Market on May 09, 2024 Major Estimate Revision • Mar 24
Consensus EPS estimates upgraded to US$0.43 loss, revenue downgraded The consensus outlook for fiscal year 2024 has been updated. 2024 revenue forecast fell from US$3.07b to US$3.04b. 2024 losses expected to reduce from -US$0.479 to -US$0.426 per share. Oil and Gas industry in the US expected to see average net income decline 3.1% next year. Consensus price target of US$2.93 unchanged from last update. Share price rose 13% to US$1.39 over the past week. Major Estimate Revision • Mar 06
Consensus EPS estimates have been downgraded. The consensus outlook for earnings per share (EPS) in fiscal year 2024 has deteriorated. 2024 revenue forecast decreased from US$3.23b to US$3.07b. Now expected to report a loss of US$0.39 per share instead of US$0.149 per share profit previously forecast. Oil and Gas industry in the US expected to see average net income decline 0.9% next year. Consensus price target down from US$4.63 to US$2.93. Share price rose 9.8% to US$1.40 over the past week. New Risk • Mar 01
New minor risk - Profitability The company is currently unprofitable and not forecast to become profitable over the next 2 years. Trailing 12-month net loss: US$126m Forecast net loss in 2 years: US$31m This is considered a minor risk. Companies that are not profitable are more likely to be burning through cash and less likely to be well established. Ultimately, shareholders want to see a good return on their investment and that generally comes from sharing in the company's profits. Without profits, the company is under pressure to grow significantly while potentially having to reduce costs and possibly needing to take on debt or raise capital to remain afloat. Currently, the following risks have been identified for the company: Minor Risks Less than 1 year of cash runway based on current free cash flow (-US$202m). Currently unprofitable and not forecast to become profitable over next 2 years (US$31m net loss in 2 years). Share price has been volatile over the past 3 months (16% average weekly change). Shareholders have been diluted in the past year (24% increase in shares outstanding). Reported Earnings • Feb 29
Full year 2023 earnings: EPS misses analyst expectations Full year 2023 results: US$1.47 loss per share (further deteriorated from US$0.24 loss in FY 2022). Revenue: US$3.18b (up 14% from FY 2022). Net loss: US$125.7m (loss widened US$108.6m from FY 2022). Revenue was in line with analyst estimates. Earnings per share (EPS) missed analyst estimates by 157%. Revenue is forecast to grow 2.6% p.a. on average during the next 3 years, compared to a 1.6% growth forecast for the Oil and Gas industry in the US. Over the last 3 years on average, earnings per share has fallen by 3% per year whereas the company’s share price has fallen by 2% per year. Announcement • Feb 29
Vertex Energy, Inc. Provides Consolidated Operational Guidance for the First Quarter of 2024 Vertex Energy, Inc. provided consolidated operational guidance for the first quarter of 2024. For the quarter, the company expects Mobile Refinery Total Throughput to be between 63.0 Mbpd to 68.0 Mbpd. Major Estimate Revision • Feb 26
Consensus EPS estimates fall by 12% The consensus outlook for fiscal year 2023 has been updated. 2023 expected loss increased from -US$0.291 to -US$0.327 per share. Revenue forecast unchanged at US$3.17b. Oil and Gas industry in the US expected to see average net income decline 1.9% next year. Consensus price target of US$4.63 unchanged from last update. Share price fell 6.9% to US$1.63 over the past week. New Risk • Feb 24
New minor risk - Profitability The company is currently unprofitable and not forecast to become profitable over the next 2 years. Trailing 12-month net loss: US$16m Forecast net loss in 2 years: US$11m This is considered a minor risk. Companies that are not profitable are more likely to be burning through cash and less likely to be well established. Ultimately, shareholders want to see a good return on their investment and that generally comes from sharing in the company's profits. Without profits, the company is under pressure to grow significantly while potentially having to reduce costs and possibly needing to take on debt or raise capital to remain afloat. Currently, the following risks have been identified for the company: Minor Risks Less than 1 year of cash runway based on current free cash flow (-US$118m). Currently unprofitable and not forecast to become profitable over next 2 years (US$11m net loss in 2 years). Share price has been volatile over the past 3 months (15% average weekly change). Shareholders have been diluted in the past year (24% increase in shares outstanding). Announcement • Feb 01
Vertex Energy, Inc. to Report Q4, 2023 Results on Feb 28, 2024 Vertex Energy, Inc. announced that they will report Q4, 2023 results Pre-Market on Feb 28, 2024 Major Estimate Revision • Jan 25
Consensus EPS estimates fall by 260% The consensus outlook for earnings per share (EPS) in fiscal year 2023 has deteriorated. 2023 revenue forecast decreased from US$3.26b to US$3.18b. Losses expected to increase from US$0.076 per share to US$0.28. Oil and Gas industry in the US expected to see average net income growth of 0.9% next year. Consensus price target down from US$6.50 to US$5.25. Share price fell 25% to US$1.38 over the past week. Price Target Changed • Jan 24
Price target decreased by 23% to US$5.25 Down from US$6.83, the current price target is an average from 6 analysts. New target price is 265% above last closing price of US$1.44. Stock is down 80% over the past year. The company is forecast to post a net loss per share of US$0.28 next year compared to a net loss per share of US$0.24 last year. Announcement • Jan 23
Vertex Energy, Inc. Revises Operating Guidance for Fourth Quarter of 2023 Vertex Energy, Inc. revised operating guidance for fourth quarter of 2023. For the quarter, the company expects Mobile Refinery Total Throughput Volume of ~71 Mbpd compared with previous guidance of Mobile Refinery Total Throughput Volume in the range of 72 Mbpd – 77 Mbpd. The company expects Production Yield in the range of 95% - 97% compared with previous guidance of Production Yield in the range of 97% - 98%. Recent Insider Transactions • Nov 15
Independent Director recently sold US$393k worth of stock On the 10th of November, Christopher Stratton sold around 100k shares on-market at roughly US$3.93 per share. This transaction amounted to 53% of their direct individual holding at the time of the trade. This was the largest sale by an insider in the last 3 months. Insiders have been net sellers, collectively disposing of US$619k more than they bought in the last 12 months. Price Target Changed • Nov 09
Price target decreased by 9.9% to US$6.83 Down from US$7.58, the current price target is an average from 6 analysts. New target price is 65% above last closing price of US$4.14. Stock is down 47% over the past year. The company is forecast to post a net loss per share of US$0.23 next year compared to a net loss per share of US$0.24 last year. Announcement • Oct 14
Vertex Energy, Inc. Provides Operating Outlook for Third Quarter 2023 Vertex Energy, Inc. provided operating outlook for third quarter 2023. For the period, company expects Conventional throughput volumes expected of approximately 80,000 bpd to exceed previously forecasted 74,000-77,000 bpd range. Company Expects finished product yield of 65%-67% to exceed previously forecasted range of 59%-63%. Announcement • Oct 12
Vertex Energy, Inc. to Report Q3, 2023 Results on Nov 07, 2023 Vertex Energy, Inc. announced that they will report Q3, 2023 results Pre-Market on Nov 07, 2023 Reported Earnings • Aug 10
Second quarter 2023 earnings: Revenues exceed analysts expectations while EPS lags behind Second quarter 2023 results: US$1.07 loss per share (further deteriorated from US$0.96 loss in 2Q 2022). Revenue: US$734.9m (down 31% from 2Q 2022). Net loss: US$84.7m (loss widened 30% from 2Q 2022). Revenue exceeded analyst estimates by 3.0%. Earnings per share (EPS) missed analyst estimates significantly. Revenue is forecast to grow 8.2% p.a. on average during the next 3 years, compared to a 2.5% decline forecast for the Oil and Gas industry in the US. Over the last 3 years on average, earnings per share has increased by 7% per year but the company’s share price has increased by 104% per year, which means it is tracking significantly ahead of earnings growth. Price Target Changed • Jul 26
Price target decreased by 7.5% to US$10.83 Down from US$11.71, the current price target is an average from 6 analysts. New target price is 114% above last closing price of US$5.07. Stock is down 58% over the past year. The company is forecast to post earnings per share of US$0.89 next year compared to a net loss per share of US$0.24 last year. Announcement • Jul 26
Vertex Energy, Inc. Revises Operating Guidance for the Second Quarter of 2023 Vertex Energy, Inc. revised operating guidance for the second quarter of 2023. For the quarter, the company expects Mobile Refinery Throughput Volume of 76 Mbpd compared to previous guidance of 68 Mbpd - 72 Mbpd. Price Target Changed • Jul 14
Price target decreased by 8.1% to US$11.29 Down from US$12.29, the current price target is an average from 7 analysts. New target price is 81% above last closing price of US$6.24. Stock is down 41% over the past year. The company is forecast to post earnings per share of US$1.09 next year compared to a net loss per share of US$0.24 last year. Announcement • Jul 13
Vertex Energy, Inc. to Report Q2, 2023 Results on Aug 09, 2023 Vertex Energy, Inc. announced that they will report Q2, 2023 results Pre-Market on Aug 09, 2023 Announcement • Jun 25
Vertex Energy, Inc.(NasdaqCM:VTNR) dropped from Russell Small Cap Comp Value Index Vertex Energy, Inc.(NasdaqCM:VTNR) dropped from Russell Small Cap Comp Value Index New Risk • Jun 17
New minor risk - Shareholder dilution The company's shareholders have been diluted in the past year. Increase in shares outstanding: 25% This is considered a minor risk. Shareholder dilution occurs when there is an increase in the number of shares on issue that is not proportionally distributed between all shareholders. Often due to the company raising equity capital or some options being converted into stock. All else being equal, if there are more shares outstanding then each existing share will be entitled to a lower proportion of the company's total earnings, thus reducing earnings per share (EPS). While dilution might not always result in lower EPS (like if the company is using the capital to fund an EPS accretive acquisition) in a lot cases it does, along with lower dividends per share and less voting power at shareholder meetings. Currently, the following risks have been identified for the company: Major Risk Less than 1 year of cash runway based on free cash flow trend (-US$37m free cash flow). Minor Risk Shareholders have been diluted in the past year (25% increase in shares outstanding). Announcement • Jun 15
Vertex Energy, Inc. Announces EPA Approval For Generation of D4 RINs Vertex Energy, Inc. announced that it has received approval from the Environmental Protection Agency (EPA) for the generation of D4 Renewable Identification Numbers (RINs) credits under the federal Renewable Fuel Standard (RFS), for each gallon of renewable fuel produced at its refining facility located outside of Mobile, Alabama (the Mobile Refinery). Currently, the Company's Mobile Facility is producing approximately 5,500 barrels per day (bpd) with plans to increase toward the Phase I installed capacity target of 8,000 bpd, by the end of second quarter 2023, in-line with previously disclosed targets. The Company anticipates initial commercial product sales of renewable diesel within the second quarter of 2023. Announcement • Jun 10
Jakubowitz Law Announces Securities Fraud Class Action Lawsuit Has Commenced on Behalf of Shareholders of Vertex Energy, Inc Jakubowitz Law announced that a securities fraud class action lawsuit has commenced on behalf of shareholders of Vertex Energy, Inc. The lawsuit seeks to recover losses for shareholders who purchased Vertex between April 1, 2022 and August 8, 2022. Shareholders interested in acting as a lead plaintiff representing the class of wronged shareholders have until June 12, 2023 to petition the court. According to a filed complaint, Vertex Energy, Inc. issued materially false and/or misleading statements and/or failed to disclose that: (a) prior to the acquisition of the oil refinery in Mobile, Alabama, defendants had entered into inventory and crack spread hedging derivatives that significantly capped the profit margins on 50% of the Mobile refinery's expected output over the period April 1, 2022 to September 30, 2022, affecting over 6.5 million barrels of refined fuel output. These hedges severely limited Vertex's ability to capitalize on the record-high crack spreads that existed at the time of the acquisition and resulted in over $90 million in losses in the second quarter of fiscal year 2022; (b) prior to the acquisition of the Mobile refinery, defendants had entered into an inventory intermediation agreement with the investment bank Macquarie Group, whereby Macquarie purchased (from third parties), owned, and sold (to Vertex) all crude oil inventory to be used at the Mobile refinery and also purchased (from Vertex), owned, and sold (to third parties) all refined fuel inventoryproduced at the Mobile refinery. The strict terms of the arrangement, including requiring Vertex to purchase hedges to protect Macquarie's position in holding the crude and refined inventory, combined with the fact thatthe oil market was in a state of backwardation in early 2022, resulted in Vertex incurring significant fees and inventory losses. Price Target Changed • Jun 09
Price target decreased by 9.8% to US$11.86 Down from US$13.14, the current price target is an average from 7 analysts. New target price is 92% above last closing price of US$6.18. Stock is down 62% over the past year. The company is forecast to post earnings per share of US$0.58 next year compared to a net loss per share of US$0.24 last year. New Risk • Jun 08
New minor risk - Share price stability The company's share price has been volatile over the past 3 months. It is more volatile than 75% of American stocks, typically moving 11% a week. This is considered a minor risk. Share price volatility indicates the stock is highly sensitive to market conditions or economic conditions rather than being sensitive to its own business performance, which may also be inconsistent. It also increases the risk of potential losses in the short term as the stock tends to have larger drops in price more frequently than other stocks. Currently, the following risks have been identified for the company: Major Risk Less than 1 year of cash runway based on free cash flow trend (-US$37m free cash flow). Minor Risk Share price has been volatile over the past 3 months (11% average weekly change). Recent Insider Transactions Derivative • Jun 07
Founder notifies of intention to sell stock Benjamin Cowart intends to sell 400k shares in the next 90 days after lodging an Intent To Sell Form on the 7th of June. If the sale is conducted around the recent share price of US$6.91, it would amount to US$2.8m. For the year to December 2016, Benjamin's total compensation was 30% salary and 70% other compensation. This indicates that these sales could comprise a meaningful part of their income for the year. Since September 2022, Benjamin's direct individual holding has decreased from 6.67m shares to 6.12m. Company insiders have collectively bought US$136k more than they sold, via options and on-market transactions, in the last 12 months. Announcement • Jun 01
Vertex Energy, Inc. Announces Commercial Production of Renewable Diesel Vertex Energy, Inc. announced the successful completion of the startup procedures for its renewable diesel conversion project at its Mobile, Alabama, refining facility. Additionally, the Company announced that it has entered into a new working capital facility with existing liquidity provider, Macquarie Group's Commodities and Global Markets business ("Macquarie"), to supply the necessary liquidity for securing feedstock for renewable diesel production. After a two-week period of downtime related to the previously disclosed repairs on the feedstock pumping system, repair and reinstallation operations have been successfully completed. Startup procedures were completed last week and the Company reported that the renewable diesel facility has achieved initial production as of May 27, 2023. Vertex also announced the entry into a Renewable Supply and Offtake Agreement with existing liquidity provider,Macquarie for the liquidity needs required to acquire feedstock inventory and monetize renewable diesel and regulatory credits for its renewable diesel facility. The new working capital facility is similar in nature to the existing Supply and Offtake Agreement in place with Macquarie used to monetize Vertex's crude oil feedstock and products needs on the conventional side of the business. The terms of the RSOA were filed with the SEC in a Current Report on Form 8-K concurrently with this release. Stroock & Stroock & Lavan LLP acted as legal advisor to Vertex with respect to the transaction. The Company plans to commence the commercial sale of renewable diesel in June 2023, after receiving required EPA certifications for Renewable Identification Numbers. Recent Insider Transactions Derivative • May 25
Chief Strategy Officer exercised options to buy US$218k worth of stock. On the 20th of May, Alvaro Ruiz exercised options to buy 31k shares at a strike price of around US$1.83, costing a total of US$57k. This transaction amounted to 56% of their direct individual holding at the time of the trade. Since June 2022, Alvaro has owned 56.25k shares directly. Company insiders have collectively sold US$2.0m more than they bought, via options and on-market transactions in the last 12 months. Breakeven Date Change • May 10
Forecast breakeven date pushed back to 2024 The 6 analysts covering Vertex Energy previously expected the company to break even in 2023. New consensus forecast suggests the company will make a profit of US$46.0m in 2024. Average annual earnings growth of 104% is required to achieve expected profit on schedule. Announcement • May 10
Vertex Energy, Inc. Provides Operating Guidance for the Second Quarter of 2023 Vertex Energy, Inc. provided operating guidance for the second quarter of 2023. For the quarter, the company expects Mobile Refinery Throughput Volume to be in the range of 68 Mbpd - 72 Mbpd. Reported Earnings • May 10
First quarter 2023 earnings: EPS exceeds analyst expectations while revenues lag behind First quarter 2023 results: EPS: US$0.047 (up from US$0.24 loss in 1Q 2022). Revenue: US$691.1m (up US$650.9m from 1Q 2022). Net income: US$3.52m (up US$18.5m from 1Q 2022). Profit margin: 0.5% (up from net loss in 1Q 2022). The move to profitability was driven by higher revenue. Revenue missed analyst estimates by 8.4%. Earnings per share (EPS) exceeded analyst estimates. Revenue is forecast to grow 7.9% p.a. on average during the next 3 years, compared to a 3.9% decline forecast for the Oil and Gas industry in the US. Over the last 3 years on average, earnings per share has fallen by 10% per year but the company’s share price has increased by 119% per year, which means it is well ahead of earnings. Recent Insider Transactions Derivative • Mar 24
Independent Director exercised options to buy US$849k worth of stock. On the 16th of March, Christopher Stratton exercised 120.00k options at around US$1.92, then sold 20.63k of them at US$8.22 each and kept the remainder. Since June 2022, Christopher's direct individual holding has decreased from 91.91k shares to 66.91k. Company insiders have collectively sold US$2.2m more than they bought, via options and on-market transactions in the last 12 months. Recent Insider Transactions • Mar 15
Independent Director recently sold US$252k worth of stock On the 6th of March, Christopher Stratton sold around 25k shares on-market at roughly US$10.08 per share. This transaction amounted to 27% of their direct individual holding at the time of the trade. This was the largest sale by an insider in the last 3 months. Insiders have been net sellers, collectively disposing of US$2.4m more than they bought in the last 12 months. Recent Insider Transactions Derivative • Mar 10
Independent Director notifies of intention to sell stock Christopher Stratton intends to sell 43k shares in the next 90 days after lodging an Intent To Sell Form on the 6th of March. If the sale is conducted around the recent share price of US$9.97, it would amount to US$430k. Since June 2022, Christopher has owned 91.91k shares directly. Company insiders have collectively sold US$1.9m more than they bought, via options and on-market transactions in the last 12 months. Reported Earnings • Mar 01
Full year 2022 earnings: EPS and revenues exceed analyst expectations Full year 2022 results: US$0.24 loss per share (improved from US$0.58 loss in FY 2021). Revenue: US$2.79b (up US$2.68b from FY 2021). Net loss: US$17.0m (loss narrowed 48% from FY 2021). Revenue exceeded analyst estimates by 3.3%. Earnings per share (EPS) also surpassed analyst estimates by 73%. Revenue is forecast to grow 12% p.a. on average during the next 3 years, compared to a 6.6% decline forecast for the Oil and Gas industry in the US. Over the last 3 years on average, earnings per share has fallen by 31% per year but the company’s share price has increased by 105% per year, which means it is well ahead of earnings. Announcement • Feb 11
Vertex Energy, Inc. to Report Q4, 2022 Results on Feb 28, 2023 Vertex Energy, Inc. announced that they will report Q4, 2022 results Pre-Market on Feb 28, 2023 Recent Insider Transactions Derivative • Dec 19
Founder notifies of intention to sell stock Benjamin Cowart intends to sell 267k shares in the next 90 days after lodging an Intent To Sell Form on the 19th of December. If the sale is conducted around the recent share price of US$8.30, it would amount to US$2.2m. For the year to December 2015, Benjamin's total compensation was 50% salary and 50% other compensation. This indicates that these sales could comprise a meaningful part of their income for the year. Since March 2022, Benjamin's direct individual holding has decreased from 6.96m shares to 6.44m. Company insiders have collectively sold US$1.8m more than they bought, via options and on-market transactions in the last 12 months. Price Target Changed • Nov 16
Price target decreased to US$15.33 Down from US$16.67, the current price target is an average from 3 analysts. New target price is 84% above last closing price of US$8.33. Stock is up 80% over the past year. The company is forecast to post a net loss per share of US$0.29 next year compared to a net loss per share of US$0.58 last year. Board Change • Nov 16
Insufficient new directors No new directors have joined the board in the last 3 years. The company's board is composed of: No new directors. No experienced directors. 6 highly experienced directors. Director Jim Gregory was the last director to join the board, commencing their role in 2014. The company’s insufficient board refreshment is considered a risk according to the Simply Wall St Risk Model. Reported Earnings • Nov 10
Third quarter 2022 earnings: EPS exceeds analyst expectations while revenues lag behind Third quarter 2022 results: EPS: US$0.23 (up from US$0.12 in 3Q 2021). Revenue: US$810.2m (up US$781.2m from 3Q 2021). Net income: US$17.3m (up 144% from 3Q 2021). Profit margin: 2.1% (down from 24% in 3Q 2021). The decrease in margin was driven by higher expenses. Revenue missed analyst estimates by 11%. Earnings per share (EPS) exceeded analyst estimates by 22%. Revenue is forecast to grow 14% p.a. on average during the next 3 years, compared to a 6.5% decline forecast for the Oil and Gas industry in the US. Over the last 3 years on average, earnings per share has fallen by 49% per year but the company’s share price has increased by 84% per year, which means it is well ahead of earnings. Recent Insider Transactions Derivative • Oct 19
Founder notifies of intention to sell stock Benjamin Cowart intends to sell 213k shares in the next 90 days after lodging an Intent To Sell Form on the 19th of October. If the sale is conducted around the recent share price of US$6.44, it would amount to US$1.4m. For the year to December 2015, Benjamin's total compensation was 50% salary and 50% other compensation. This indicates that these sales could comprise a meaningful part of their income for the year. Since December 2021, Benjamin's direct individual holding has decreased from 6.92m shares to 6.43m. Company insiders have collectively sold US$1.8m more than they bought, via options and on-market transactions in the last 12 months. Seeking Alpha • Oct 11
Vertex Should Improve After Awful Q2, Given Valuation Support Summary
There are a lot of reasons to be skeptical on Vertex after a dire Q2 showing.
However, these are basically commodity refining assets and I think a $16/share valuation is fair (range $5/share-$55/share).
There is some downside in the worst case with more management issues or very tight spreads, but equally it seems that the shares could broadly double without heroic assumptions.
RBOB spread futures and limited new supply suggest that U.S. refiners may enjoy comfortable margins for some time. The market doesn't seem to want to believe this, but the evidence is there.
Vertex (VTNR) is a hated company. Q2 results were an almost unmitigated disaster. The CEO has sold stock. The company ultimately gave up perhaps $90M of value with its hedging strategy. They reduced Q3 guidance last month. Short interest is running at over 30%. However, in valuation terms there may be an opportunity for those willing to bear various risks and management's credibility issues.
Q2 results were so bad, that Q3 results may offer some signs of encouragement and the company's renewable diesel plans could be a source of further upside in 2023. Importantly, crack spread futures do suggest that the company may be able to maintain an attractive profit stream into 2025 and beyond.
It's worth jumping to the valuation first as that underpins the investment case.
Valuation
Asset Value Notes
Value of Mobile refinery $1,243M 10 x $125M net income (normalized $10/barrel margin with $4/barrel of costs), 95% utilization, 20% tax rate
Super-normal refinery profits in Q3 and Q4 $65M estimate $33M in Q3 (inc. +$13M inventory gain) and $48M in Q4 (hedges roll off) (after tax)
Legacy Assets $140M Value of Safety-Kleen prospective purchase
Biodiesel Conversion $153M 14,000 bpd, $0.75/gallon, 95% utilization
Current net debt less offsetting inventory -$98M debt including inventory financing less $201M inventory and $98M cash
Remaining capex to complete biodiesel plant -$120M estimated cost
Assuming working capital spend to ramp up biodiesel plant -$50M rough estimate
Resulting equity value $1,549 sum of the above
Benefit for convertible debt conversion $1,594 +$45M net value of converts
Resulting valuation per share (inc. convertible dilution) $16.30 97.8M shares outstanding (inc. convertible dilution)
Range of Sensitivities on Mobile Refinery
Since the refinery matters so much, here are some sensitivities to the multiple and spreads (all values assumed convertibles are dilutive, which is punitive at prices below $15/share)
5x PE 10x PE 15x PE
$5 spread barrel ($4 costs) $4.65 $5.71
$6.77
$10 spread/barrel ($4 costs) $9.95 $16.31
$22.67
$20 spread/barrel ($4 costs) $20.55 $37.51 $54.47
Thus, downside is clearly possible if spreads do revert to long-term averages or worse. Still, the futures market and the trends in terms of lack of new capacity and the disrupted European energy market suggest profits may stay high for a few years. If not, where is the incremental capacity that would typically bring down prices?
Q2 Results Were Awful
To say Vertex Energy's Q2 results were a train wreck would be unfair to train wrecks. The company reassuringly guided to robust results after the transformational acquisition of Shell's (SHEL) refinery, then management (the CEO and a director) sold material amounts of stock, then results were well below guidance. Management lost money on hedges and spreads. All this against a less attractive version of the crack spread (2/1/1 vs. 3/2/1).
Crack Spreads Remain Favorable
The main asset on my valuation numbers above is the Shell refinery. Yes, the company has legacy assets and a conversion project, but the refinery is the main variable driving my valuation numbers.
It is therefore important that RBOB crack spread futures are trading in a $13-$27 range (per barrel) through to 2025, with the fluctuations mainly due to seasonality. Note that these spreads have limited correlated to Mobile's spreads (given diesel, jet fuel production etc.), but they give an indication of market direction.