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 first quarter of 2024.
Highlights include:
- Anticipated conventional throughput of 64,000 barrels per day
(bpd) exceeding guidance of 60,000 to 63,000 bpd due to stronger
capacity utilization compared to forecast;
- Strong renewable throughput and utilization in line with
midpoint of guidance;
- Projected improved average first quarter crack spreads on
finished refined products of 28% compared to fourth quarter 2023;
and
- Forecasted reductions in direct operating expense by 11% and
capital expenditures by 29% compared to previous guidance
midpoints.
Benjamin P. Cowart, President and CEO of Vertex, stated, “We
delivered or exceeded our guidance in the first quarter of 2024,
coupled with improved crack spreads, lower operating expense and
lower capital spending, providing Vertex with a solid foundation to
begin the year. We continue to focus on margin efficiency while we
look to opportunistically ramp up our production rates and better
align our capacity utilization with evolving market conditions. Our
priorities remain clear, increase cash flow by improving margins
and reducing our costs. We are pleased with our operational
performance, the improving crack spreads and our ability to reduce
operating expense in the first quarter of 2024.”
Updated 1Q 2024 Management Guidance
Conventional Fuels
1Q 2024
Operational:
As of 2/28/24
As of 4/18/24
Mobile Refinery Conventional Throughput
Volume (Mbpd)
60 - 63
~64
Capacity Utilization
80 - 84%
84 - 86%
Production Yield Profile:
Percentage Finished Products1
64 - 68%
62 - 65%
Intermediate & Other Products2
36 - 32%
38 - 35%
Renewable Fuels
1Q 2024
Operational:
As of 2/28/24
As of 4/18/24
Mobile Refinery Renewable Throughput
Volume (Mbpd)
3 – 5
~4
Capacity Utilization
38 - 63%
50 - 52%
Production Yield
96 - 98%
97 - 99%
Yield Loss
4 - 2%
3 - 1%
Consolidated
1Q 2024
Operational:
As of 2/28/24
As of 4/18/24
Mobile Refinery Total Throughput Volume
(Mbpd)
63 - 68
~68
Capacity Utilization
76 - 82%
81 - 83%
Financial Guidance:
Direct Operating Expense ($/bbl)
$4.59 – $4.95
$4.15 – 4.35
Capital Expenditures ($/MM)
$20 - $25
$15 - $17
1.) Finished products include gasoline,
ULSD, and Jet A
2.) Intermediate & Other products
include Vacuum Gas Oil (VGO), Liquified Petroleum Gases (LPGs), and
Vacuum Tower Bottoms (VTBs)
First quarter conventional throughput volumes above the high
end of prior forecasts with lower operating expenses and capital
expenditures
Reported throughput volumes at the Company’s Mobile, Alabama
Refinery (the “Mobile Refinery”) for the first quarter of 2024 are
expected to be approximately 64,000 bpd, above the high end of
management’s previous guidance. The increase reflects better
utilization in light of improving market conditions during the
quarter.
The expected yield of finished conventional fuel products such
as gasoline, diesel, and jet fuel is expected to be between 62% and
65%, at the low end of the previously forecasted range of 64% to
68%. This reflects planned turnaround activity, as well as weather
related supply events, that were experienced in the first quarter
of 2024.
Operating expenses per barrel for the first quarter of 2024 are
expected to total between $4.15 to $4.35 per barrel, a 10.9%
improvement vs. prior expectations at the mid-point. Capex is
expected to be $15 - $17 million, 28.9% below expectations at the
midpoint.
Key commodity price averages in local markets served by Vertex
for the first quarter of 2024 include Conventional Blendstock for
Oxygenate Blending or CBOB gasoline at $93.52 per barrel, ultra-low
sulfur diesel at $110.08 per barrel, jet fuel at $109.85 per
barrel, and Louisiana Light, Sweet Crude oil at $79.70 per
barrel.
Renewable diesel volume expected to be in line with prior
outlook
Vertex’s reported renewable diesel production for the first
quarter 2024 is expected to be about 4,000 bpd, at the midpoint of
the forecasted range of 3,000 to 5,000 bpd. The yield on renewable
throughput volumes is expected to be between 97% and 99%, at the
high end of the previously anticipated range of 96% to 98%.
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 first quarter of 2024, as discussed above;
statements concerning: the Company’s engagement of BofA Securities,
Inc., as previously disclosed; 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, and their impact 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;
the ability of the Company to obtain low carbon fuel standard
(LCFS) credits, and the amounts thereof; the need for additional
capital in the future, including, but not limited to, in order to
complete 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, 2023, and the Company’s Quarterly Report on
Form 10-Q for the quarter ended January 31, 2024, when filed, 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
March 31, 2024, 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 March
31, 2024, 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 March 31, 2024,
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 March 31, 2024. 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.
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INVESTOR CONTACT IR@vertexenergy.com
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