Conventional throughput volumes anticipated
at approximately 67,000 bpd, vs. previously forecasted
68,000-71,000 bpd
Expected fourth quarter finished product
yield of 65%-67%, in line with previously forecasted range of
64%-68%
Renewable throughput volumes anticipated at
approximately 3,900 bpd, at the low end of previously forecasted
4,000-6,000 bpd
Expected renewable production yield at
approximately 96% vs. prior forecasted range of 97%-98%
Average fourth quarter crack spreads on
finished refined products declined 40% vs. third quarter average
levels.
Vertex Energy, Inc. (NASDAQ: VTNR) (“Vertex” or the “Company”),
a leading specialty refiner and marketer of high-quality refined
products, today provided an update to its financial and operational
outlook for the fourth quarter of 2023, and announced the timing of
its Fourth Quarter and Full-Year 2023 Earnings Release and
Conference Call.
Fourth Quarter Conventional Throughput Volumes Slightly Below
Prior Forecasts
Reported throughput volumes at the Company’s Mobile, Alabama
Refinery (the “Mobile Refinery”) for the fourth quarter of 2023 are
expected to be approximately 67,000 barrels per day (bpd), just
below management’s previous guidance. The slight reduction reflects
a combined impact of a strategic curtailment in throughput in light
of deteriorating market conditions during the quarter as well as
the previously disclosed downtime to proactively replace an
electrical transformer.
The expected yield of finished conventional fuel products such
as gasoline, diesel, and jet fuel is expected to be between 65% and
67%, in line with the previously forecasted range of 64% to 68%.
This reflects the ongoing benefit of the yield optimization efforts
introduced in the second quarter of 2023.
Operating expenses per barrel for the fourth quarter of 2023 are
expected to total between $3.75 to $3.95 per barrel, a 5.5%
improvement vs. prior expectations at the mid-point. Capex is
expected to be $8 - $10 million, 48.6% below expectations at the
midpoint.
Key commodity price averages in local markets served by Vertex
for the fourth quarter of 2023 include CBOB gasoline at $85.28 per
barrel, ultra-low sulfur diesel at $112.38 per barrel, jet fuel at
$111.18 per barrel, and Louisiana Light, Sweet Crude oil at $81.17
per barrel.
Renewable Diesel Volume Expected to be Below Prior
Outlook
Vertex’s reported renewable diesel production for the fourth
quarter 2023 is expected to be 3,900 barrels per day (bpd), just
under the forecasted range of 4,000 to 6,000 bpd. The yield on
renewable throughput volumes is expected to be approximately 96%,
slightly below the previously anticipated range of 97% to 98%.
Updated 4Q 2023 Guidance
Summary
Conventional Fuels
4Q 2023
Operational:
As of 11/7/23
As of 1/22/24
Mobile Refinery Conventional Throughput
Volume (Mbpd)
68 - 71
~67
Capacity Utilization
91% - 95%
88% - 90%
Production Yield Profile:
Percentage Finished Products1
64% - 68%
65% - 67%
Intermediate & Other Products2
36% - 32%
35% - 33%
Renewable Fuels
4Q 2023
Operational:
As of 11/7/23
As of 1/22/24
Mobile Refinery Renewable Throughput
Volume (Mbpd)
4 - 6
~4
Capacity Utilization
50% - 75%
48% - 50%
Production Yield
97% - 98%
95% - 97%
Yield Loss
3% - 2%
3% - 5%
Consolidated
4Q 2023
Operational:
As of 11/7/23
As of 1/22/24
Mobile Refinery Total Throughput Volume
(Mbpd)
72 - 77
~71
Capacity Utilization
87% - 93%
85% - 88%
Financial Guidance:
Direct Operating Expense ($/bbl)
$3.95 - $4.20
$3.75 - $3.95
Capital Expenditures ($/MM)
$15 - $20
$8 - $10
Renewable Diesel Feedstock Supply Strategy Update
Vertex is pleased to report that the Company’s feedstock
optimization strategy is progressing as expected. As previously
communicated, the Company expected to receive LCFS credits in the
fourth quarter of 2023 for its renewable diesel production volumes
produced in the third and fourth quarters of 2023. The initial LCFS
credits reflect a temporary carbon intensity (“CI”) score and
amounted to $9.5 million in the period. Upon receiving its
provisional CI score, expected sometime in the first or second
quarter of 2024, Vertex anticipates the per-barrel LCFS credits to
improve materially over temporary CI values.
Management Commentary
Benjamin P. Cowart, President and CEO of Vertex, stated, “The
fourth quarter of 2023 presented us with deteriorating crack
spreads, leading us to adjust our throughput rates in line with our
economic-driven operational strategy.” Mr. Cowart continued,
“Simultaneously, we opted to improve our liquidity position by
further leveraging cash invested in hard assets for the Renewable
Diesel project through our existing term loan partner, achieving
approximately $80 million in liquidity as of December 31st, 2023.
As we step into the first quarter of 2024, we're observing an
improvement in crack spreads, combined with increased margin
efficiency, which has led us to opportunistically ramp our
production rates for conventional fuels and renewable diesel,
proactively aligning increased capacity utilization with evolving
market conditions.”
ABOUT VERTEX ENERGY
Vertex Energy is a leading energy transition company that
specializes in producing both renewable and conventional fuels. The
Company’s innovative solutions are designed to enhance the
performance of its customers and partners while also prioritizing
sustainability, safety, and operational excellence. With a
commitment to providing superior products and services, Vertex
Energy is dedicated to shaping the future of the energy
industry.
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 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 expected results of
operations for the fourth quarter of 2023; the review and
evaluation of potential joint ventures, divestitures, acquisitions,
mergers, business combinations, or other strategic transactions,
the outcome of such review, and the impact on any such
transactions, or the review thereof, on shareholder value; the
process by which the Company engages in evaluation of strategic
transactions; the Company’s ability to identify potential partners;
the outcome of potential future strategic transactions and the
terms thereof; the future production of the Company’s Mobile
Refinery; anticipated and unforeseen events which could reduce
future production at the refinery or delay future capital projects,
and changes in commodity and credit values; throughput volumes,
production rates, yields, operating expenses and capital
expenditures at the Mobile Refinery; the timing of, and outcome of,
the evaluation and associated carbon intensity scoring of the
Company’s feedstock blends by officials in the state of California;
and the amounts thereof; the need for additional capital in the
future, including, but not limited to, in order to complete future
capital projects and satisfy liabilities, the Company’s ability to
raise such capital in the future, and the terms of such funding;
the timing of capital projects at the Mobile Refinery and the
outcome of such projects; the future production of the Mobile
Refinery, including but not limited to, renewable diesel
production; estimated and actual production and costs associated
with the renewable diesel capital project; estimated revenues,
margins and expenses, over the course of the agreement with
Idemitsu; anticipated and unforeseen events which could reduce
future production at the Mobile Refinery or delay planned and
future capital projects; changes in commodity and credits values;
certain early termination rights associated with third party
agreements and conditions precedent to such agreements; certain
mandatory redemption provisions of the outstanding senior
convertible notes, the conversion rights associated therewith, and
dilution caused by conversions and/or the exchanges of convertible
notes; the Company’s ability to comply with required covenants
under outstanding senior notes and a term loan and to 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; the level of competition in the Company’s
industry and its ability to compete; the Company’s ability to
respond to changes in its industry; the loss of key personnel or
failure to attract, integrate and retain additional personnel; the
Company’s ability to protect intellectual property and not infringe
on others’ intellectual property; the Company’s ability to scale
its business; the Company’s ability to maintain supplier
relationships and obtain adequate supplies of feedstocks; the
Company’s ability to obtain and retain customers; the Company’s
ability to produce products at competitive rates; the Company’s
ability to execute its business strategy in a very competitive
environment; trends in, and the market for, the price of oil and
gas and alternative energy sources; the impact of inflation on
margins and costs; the volatile nature of the prices for oil and
gas caused by supply and demand, including volatility caused by the
ongoing Ukraine/Russia conflict and/or the Israel/Hamas conflict,
changes in interest rates and inflation, and potential recessions;
the Company’s ability to maintain relationships with partners; the
outcome of pending and potential future litigation, judgments and
settlements; rules and regulations making the Company’s operations
more costly or restrictive; volatility in the market price of
compliance credits (primarily Renewable Identification Numbers
(RINs) needed to comply with the Renewable Fuel Standard (“RFS”))
under renewable and low-carbon fuel programs and emission credits
needed under other environmental emissions programs, the
requirement for the Company to purchase RINs in the secondary
market to the extent it does not generate sufficient RINs
internally, liabilities associated therewith and the timing,
funding and costs of such required purchases, if any; 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, changes 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 the Company’s operations and products;
disruptions in the infrastructure that the Company and its partners
rely on; interruptions at the Company’s facilities; unexpected and
expected changes in the Company’s anticipated capital expenditures
resulting from unforeseen and expected required maintenance,
repairs, or upgrades; the Company’s ability to acquire and
construct new facilities; the Company’s ability to effectively
manage growth; decreases in global demand for, and the price of,
oil, due to inflation, recessions or other reasons, including
declines in economic activity or global conflicts; expected and
unexpected downtime at the Company’s facilities; the Company’s
level of indebtedness, which could affect its ability to fulfill
its obligations, impede the implementation of its strategy, and
expose the Company’s 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, the Company’s facilities and those
operated by third parties; risks relating to the Company’s hedging
activities or lack of hedging activities; and risks relating to
planned and future divestitures, asset sales, joint ventures 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, 2022, and the Company’s Quarterly Report on
Form 10-Q for the quarter ended September 30, 2023, 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.
PRELIMINARY FINANCIAL AND OPERATIONAL DATA
The financial and operational data for the three months ended
December 31, 2023, contained in this release are preliminary in
nature. The Company’s management has prepared the preliminary
financial and operational data contained in this release based on
the most current information available to management. The Company’s
normal closing and financial reporting processes with respect to
its financial and operational data for the three months ended
December 31, 2023, have not been fully completed. This preliminary
financial and operational data has been prepared by, and is the
responsibility of, the Company’s management. Neither the Company’s
independent accountants, nor any other independent accounting firm,
has expressed an opinion or any other form of assurance with
respect thereto. As a result, the Company’s actual financial and
operational results for the three months ended December 31, 2023,
could be different from the preliminary financial and operational
data contained herein, and any differences could be material. The
Company has prepared these estimates on a basis materially
consistent with its historical financial results and in good faith
based upon its internal reporting as of and for the three months
ended December 31, 2023. This release is not intended to be a
comprehensive statement of financial results for this period. The
results of operations for an interim period may not give a true
indication of the results to be expected for a full year or any
future period.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20240123029265/en/
John Ragozzino Jr., CFA (ICR) IR@vertexenergy.com
Grafico Azioni Vertex Energy (NASDAQ:VTNR)
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