- Direct UMO Collections Increased 24.5% Y/Y in 3Q19
- Widening in Product Spreads Entering 4Q19 in Advance of IMO 2020 Mandate
- Commencing TCEP Operations at Baytown Texas Facility in November 2019
- Targeting Successful Completion of UMO-to-High Purity Base Oil Pilot Test by Year-End 2019
- Introducing Full-Year 2020 Adjusted EBITDA Guidance of $15 million to $20 million
HOUSTON, TX / ACCESSWIRE / November 8, 2019 / Vertex Energy, Inc. (NASDAQ:VTNR) ("Vertex" or the "Company"), a leading specialty refiner and marketer of high-quality hydrocarbon products, today announced financial results for the third quarter 2019.
For the three months ended September 30, 2019, the Company reported revenue of $37.8 million, versus $50.6 million in the prior-year period. Vertex reported an operating loss of ($2.5) million in the third quarter of 2019, versus $0.6 million of operating income in the prior-year period. The Company reported a net loss available to common shareholders of ($3.9) million, or ($0.09) per basic share, in the third quarter 2019, versus a net loss of ($4.6) million, or ($0.13) per basic share, in the third quarter 2018. Vertex reported Adjusted EBITDA of $1.8 million in the third quarter 2019, versus $3.2 million in the quarter 2018. A schedule reconciling the Company's GAAP and non-GAAP financial results (including Adjusted EBITDA) is included later in this release.
During the third quarter 2019, the Company benefited from strong growth in used motor oil (UMO) collections and widening product spreads on middle distillates ahead of the January 1, 2020 transition to low-sulfur marine fuels mandated by the International Maritime Organization (IMO). Despite favorable market conditions, Hurricane Barry extended the duration of a planned turnaround at the Marrero (Louisiana) refinery during July, resulting in an additional negative $1.5 million impact in the third quarter. The Company's Marrero and Heartland (Ohio) refineries are currently operating near peak nameplate capacity, given strong demand for the Company's specialty products.
Direct collections of UMO increased 24.5% in the third quarter of 2019, when compared to the prior-year's period. UMO collections represented approximately 48.6% of overall feedstock processed at the Company's refineries in the third quarter of 2019, versus 38.7% in the third quarter of 2018, with the remaining feedstock being sourced from third-party UMO suppliers.
"During the past four years, we have invested significant time and resources preparing Vertex to capitalize on the International Maritime Organization's low sulfur marine fuel mandate that comes into effect January 1, 2020," stated Benjamin P. Cowart, President and CEO of Vertex. "With the IMO transition now just weeks away, our facilities are now ready to execute on this opportunity. We have seen product spreads widen versus prior-year levels, supported by a decline in feedstock costs together with a corresponding increase in distillate values. Current market conditions are setting up favorably as we look ahead to the fourth quarter and into 2020."
"Our Marrero and Heartland refineries operated near peak capacity since August," continued Cowart. "This month, we will recommence TCEP production at our Baytown facility as we seek to capitalize on improved demand for lower sulfur marine fuels, continued Cowart. "Our TCEP technology converts feedstock into a low sulfur marine fuel that can be sold into the new 0.5% low sulfur marine fuel specification mandated under IMO 2020."
As announced on July 31, 2019, Vertex has entered into a joint venture with Tensile Capital Management LLC, as referred to in previous public disclosures. Subject in part to a successful pilot program that is expected to reach completion by year-end 2019, Vertex will receive approximately $13.5 million of non-recourse funding that it intends to use for debt reduction, investment in organic UMO collections growth, and the targeted acquisition of third-party UMO collections operations.
TCEP Update
Vertex operates a tank terminal facility in Baytown, TX where the Company collects and processes used motor oil into higher value feedstocks through its patented Thermal Chemical Extraction Process (TCEP) technology.
In the fourth quarter 2019, the Company expects to produce approximately 30,000 barrels of marine fuel using the TCEP technology, the first such production since the third quarter 2015. All required capital investments have been made in the facility, which is now prepared to commence operations.
Financial Guidance
For the fourth quarter 2019, the Company anticipates Adjusted EBITDA in the range of $2.5 million to $3.0 million. For the full-year 2020, the Company anticipates Adjusted EBITDA in the range of $15 million to $20 million. All guidance is current as of the time provided and is subject to change.
Conference Call and Webcast
A conference call will be held on November 8, 2019 at 9:00 AM 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 the Company'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:
Domestic Live: 844-369-8770
To listen to a replay of the teleconference, which will be available through December 8, 2019:
Domestic Replay: 877-481-4010
Conference ID: 54092
About Vertex Energy Inc.
Houston-based Vertex Energy, Inc. (NASDAQ:VTNR) is a specialty refiner of alternative feedstocks and marketer of high-purity petroleum products. Vertex is 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 Heartland (OH). Vertex also co-owns a facility, Myrtle Grove, located on a 41-acre industrial complex along the Gulf Coast in Belle Chasse, LA, with existing hydro-processing and plant infrastructure assets, that include nine million gallons of storage. The Company has built a reputation as a key supplier of Group II+ and Group III base oils to the lubricant manufacturing industry throughout North America.
Cautionary Statement Forward-Looking Statements
This press release may contain forward-looking statements, including information about management's view of Vertex Energy's future expectations, plans and prospects, within the safe harbor provisions under The Private Securities Litigation Reform Act of 1995 (the "Act"). In particular, when used in the preceding discussion, the words "believes," "hopes," "expects," "intends," "plans," "anticipates," or "may," and similar conditional expressions are intended to identify forward-looking statements within the meaning of the Act, and are subject to the safe harbor created by the Act. Any statements made in this news release other than those of historical fact, about an action, event or development, are forward-looking statements. These statements involve known and unknown risks, uncertainties and other factors, which may cause the results of Vertex Energy, its divisions and concepts to be materially different than those expressed or implied in such statements. These risk factors and others are included from time to time in documents Vertex Energy files with the Securities and Exchange Commission, including but not limited to, its Form 10-Ks, Form 10-Qs and Form 8-Ks. Other unknown or unpredictable factors also could have material adverse effects on Vertex Energy's future results. The forward-looking statements included in this press release are made only as of the date hereof. Vertex Energy cannot guarantee future results, levels of activity, performance or achievements. Accordingly, you should not place undue reliance on these forward-looking statements. Finally, Vertex Energy undertakes no obligation to update these statements after the date of this release, except as required by law, and takes no obligation to update or correct information prepared by third parties that are not paid for by Vertex Energy.
Investor/Media Contact
Noel Ryan, IRC
720.778.2415
IR@vertexenergy.com
Reconciliation of Net Loss attributable to Vertex Energy, Inc., to Earnings before Interest, Taxes, Depreciation and Amortization (EBITDA) and Adjusted EBITDA*
| For the Three Months Ended | For the Trailing Twelve Months | |||||||||||||||
| September 30, 2019 | September 30, 2018 | September 30, 2019 | September 30, 2018 | |||||||||||||
Net loss | ||||||||||||||||
attributable to Vertex Energy, Inc. | $ | (1,091,781 | ) | $ | (2,287,880 | ) | $ | (6,684,114 | ) | $ | (2,401,821 | ) | ||||
Add (deduct): | ||||||||||||||||
Interest Income | (653 | ) | - | (2,571 | ) | (659 | ) | |||||||||
Interest Expense | 826,005 | 798,800 | 3,155,864 | 3,243,439 | ||||||||||||
Depreciation and amortization | 1,815,582 | 1,806,839 | 7,090,481 | 6,934,427 | ||||||||||||
EBITDA | 1,549,153 | 317,759 | 3,559,660 | 7,775,386 | ||||||||||||
Add (deduct): | ||||||||||||||||
Loss (gain) on change in value of derivative warrant liability | (1,290,792 | ) | 2,169,133 | (3,220,402 | ) | 2,681,289 | ||||||||||
Unrealized (gain) loss on derivative instruments | 1,402,017 | 554,921 | 909,040 | 601,483 | ||||||||||||
Stock-based compensation | 159,426 | 165,058 | 638,548 | 678,529 | ||||||||||||
Adjusted EBITDA * | $ | 1,819,804 | $ | 3,206,871 | $ | 1,886,846 | $ | 11,736,687 | ||||||||
* EBITDA and Adjusted EBITDA are non-GAAP financial measures. These measurements are not recognized in accordance with GAAP and should not be viewed as an alternative to GAAP measures of performance.
EBITDA represents net income before interest, taxes, depreciation and amortization. Adjusted EBITDA is defined as EBITDA before stock-based compensation expense and gain (loss) on change in value of derivative warrant liability and unrealized gains and losses on derivative instruments for hedging activities. 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. EBITDA and Adjusted EBITDA 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:
- EBITDA and Adjusted EBITDA do not reflect cash expenditures, or future requirements for capital expenditures, or contractual commitments
- EBITDA and Adjusted EBITDA do not reflect changes in, or cash requirements for, 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
- Other companies in this industry may calculate EBITDA and Adjusted EBITDA differently than Vertex Energy does, limiting its usefulness as a comparative measure; and
- Trailing Twelve Months September 30, 2019 reflects amounts for the Fiscal Year Ended 2018 plus Q1, Q2 and Q3 2019 minus Q1, Q2 and Q3 2018. Trailing Twelve Months September 30, 2018 reflects amounts for the Fiscal Year Ended 2017 plus Q1, Q2 and Q3 2018 minus Q1, Q2 and Q3 2017.
VERTEX ENERGY, INC.
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
| September 30, 2019 | December 31, 2018 | |||||||
ASSETS | ||||||||
Current assets | ||||||||
Cash and cash equivalents | $ | 2,303,725 | $ | 1,249,831 | ||||
Restricted cash | 100,088 | 1,600,000 | ||||||
Accounts receivable, net | 10,405,711 | 9,027,990 | ||||||
Federal income tax receivable | 205,818 | 137,212 | ||||||
Inventory | 5,878,408 | 8,091,397 | ||||||
Derivative commodity asset | - | 695,941 | ||||||
Prepaid expenses | 6,534,981 | 2,740,541 | ||||||
Total current assets | 25,428,731 | 23,542,912 | ||||||
Noncurrent assets | ||||||||
Fixed assets, at cost | 69,437,842 | 66,762,388 | ||||||
Less accumulated depreciation | (23,550,224 | ) | (19,874,896 | ) | ||||
Fixed assets, net | 45,887,618 | 46,887,492 | ||||||
Finance lease right-of-use assets | 904,691 | 397,515 | ||||||
Operating lease right-of use assets | 36,242,861 | - | ||||||
Intangible assets, net | 11,590,876 | 12,578,519 | ||||||
Federal income tax receivable | 68,605 | 137,211 | ||||||
Other assets | 616,759 | 616,759 | ||||||
TOTAL ASSETS | $ | 120,740,141 | $ | 84,160,408 | ||||
LIABILITIES, TEMPORARY EQUITY, AND EQUITY | ||||||||
Current liabilities | ||||||||
Accounts payable | $ | 7,745,380 | $ | 8,791,529 | ||||
Accrued expenses | 2,275,006 | 2,535,347 | ||||||
Dividends payable | 419,082 | 403,002 | ||||||
Finance lease liability-current | 214,045 | 95,857 | ||||||
Operating lease liability-current | 6,005,502 | - | ||||||
Current portion of long-term debt, net of unamortized finance costs | 2,794,624 | 1,325,240 | ||||||
Derivative commodity liability | 1,510,573 | - | ||||||
Revolving note | 5,387,639 | 3,844,636 | ||||||
Total current liabilities | 26,351,851 | 16,995,611 | ||||||
Long-term liabilities | ||||||||
Long-term debt, net of unamortized finance costs | 12,658,000 | 14,402,179 | ||||||
Finance lease liability-long-term | 665,926 | 276,355 | ||||||
Operating lease liability-long-term | 30,237,359 | - | ||||||
Contingent consideration | - | 15,564 | ||||||
Derivative warrant liability | 1,149,977 | 1,481,692 | ||||||
Total liabilities | 71,063,113 | 33,171,401 | ||||||
COMMITMENTS AND CONTINGENCIES (Note 3) | - | - | ||||||
TEMPORARY EQUITY | ||||||||
Series B Convertible Preferred Stock, $0.001 par value per share;10,000,000 shares designated, 3,769,505 and 3,604,827 shares issued and outstanding at September 30, 2019 and December 31, 2018, respectively with a liquidation preference of $11,685,466 and $11,174,964 at September 30, 2019 and December 31, 2018, respectively. | 10,442,193 | 8,900,208 | ||||||
Series B1 Convertible Preferred Stock, $0.001 par value per share;17,000,000 shares designated, 10,417,966 and 10,057,597 shares issued and outstanding at September 30, 2019 and December 31, 2018, respectively with a liquidation preference of $16,252,027 and $15,689,851 at September 30, 2019 and December 31, 2018, respectively. | 14,454,821 | 13,279,755 | ||||||
Redeemable non-controlling interest | 4,000,000 | - | ||||||
Total Temporary Equity | 28,897,014 | 22,179,963 | ||||||
EQUITY | ||||||||
50,000,000 of total Preferred shares authorized: | ||||||||
Series A Convertible Preferred Stock, $0.001 par value;5,000,000 shares designated, 419,859 and 419,859 shares issued and outstanding at September 30, 2019 and December 31, 2018, respectively with a liquidation preference of $625,590 and $625,590 at September 30, 2019 and December 31, 2018, respectively. | 420 | 420 | ||||||
Common stock, $0.001 par value per share;750,000,000 shares authorized; 41,849,406 and 40,174,821 shares issued and outstanding at September 30, 2019 and December 31, 2018, respectively. | 41,850 | 40,175 | ||||||
Additional paid-in capital | 79,719,745 | 75,131,122 | ||||||
Accumulated deficit | (59,788,939 | ) | (47,800,886 | ) | ||||
Total Vertex Energy, Inc. stockholders' equity | 19,973,076 | 27,370,831 | ||||||
Non-controlling interest | 806,938 | 1,438,213 | ||||||
Total Equity | 20,780,014 | 28,809,044 | ||||||
TOTAL LIABILITIES, TEMPORARY EQUITY, AND EQUITY | $ | 120,740,141 | $ | 84,160,408 | ||||
VERTEX ENERGY, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
| Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
| 2019 | 2018 | 2019 | 2018 | |||||||||||||
Revenues | $ | 37,799,259 | $ | 50,632,948 | $ | 120,777,263 | $ | 138,918,913 | ||||||||
Cost of revenues (exclusive of depreciation and amortization shown separately below) | 32,372,316 | 42,593,367 | 103,732,086 | 114,434,776 | ||||||||||||
Gross profit | 5,426,943 | 8,039,581 | 17,045,177 | 24,484,137 | ||||||||||||
Operating expenses: | ||||||||||||||||
Selling, general and administrative expenses | 6,153,184 | 5,658,659 | 17,529,784 | 16,668,692 | ||||||||||||
Depreciation and amortization | 1,815,582 | 1,806,839 | 5,333,485 | 5,234,014 | ||||||||||||
Total operating expenses | 7,968,766 | 7,465,498 | 22,863,269 | 21,902,706 | ||||||||||||
Income (loss) from operations | (2,541,823 | ) | 574,083 | (5,818,092 | ) | 2,581,431 | ||||||||||
Other income (expense): | ||||||||||||||||
Other income | 918,153 | - | 920,071 | 659 | ||||||||||||
Gain on sale of assets | - | - | 31,443 | 51,523 | ||||||||||||
Gain (loss) on change in value of derivative warrant liability | 1,290,792 | (2,169,133 | ) | 331,715 | (2,124,971 | ) | ||||||||||
Interest expense | (826,005 | ) | (798,800 | ) | (2,322,780 | ) | (2,448,771 | ) | ||||||||
Total other income (expense) | 1,382,940 | (2,967,933 | ) | (1,039,551 | ) | (4,521,560 | ) | |||||||||
Loss before income tax | (1,158,883 | ) | (2,393,850 | ) | (6,857,643 | ) | (1,940,129 | ) | ||||||||
Income tax benefit (expense) | - | - | - | - | ||||||||||||
Net loss | (1,158,883 | ) | (2,393,850 | ) | (6,857,643 | ) | (1,940,129 | ) | ||||||||
Net loss attributable to non-controlling interest | (67,102 | ) | (105,970 | ) | (374,862 | ) | 76,305 | |||||||||
Net loss attributable to Vertex Energy, Inc. | (1,091,781 | ) | (2,287,880 | ) | (6,482,781 | ) | (2,016,434 | ) | ||||||||
Accretion of redeemable noncontrolling interest to redemption value | (1,849,930 | ) | - | (1,849,930 | ) | - | ||||||||||
Accretion of discount on Series B and B1 Preferred Stock | (550,774 | ) | (1,152,968 | ) | (1,644,374 | ) | (2,351,472 | ) | ||||||||
Dividends on Series B and B1 Preferred Stock | (419,096 | ) | (1,194,524 | ) | (1,238,766 | ) | (2,284,121 | ) | ||||||||
Net loss available to common shareholders | $ | (3,911,581 | ) | $ | (4,635,372 | ) | $ | (11,215,851 | ) | $ | (6,652,027 | ) | ||||
Loss per common share | ||||||||||||||||
Basic | $ | (0.09 | ) | $ | (0.13 | ) | $ | (0.28 | ) | $ | (0.20 | ) | ||||
Diluted | $ | (0.09 | ) | $ | (0.13 | ) | $ | (0.28 | ) | $ | (0.20 | ) | ||||
Shares used in computing earnings per share | ||||||||||||||||
Basic | 41,376,335 | 35,144,113 | 40,626,700 | 33,843,721 | ||||||||||||
Diluted | 41,376,335 | 35,144,113 | 40,626,700 | 33,843,721 | ||||||||||||
VERTEX ENERGY, INC.
CONSOLIDATED STATEMENTS OF EQUITY
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2019 AND 2018
(UNAUDITED)
| Nine Months Ended September 30, 2019 | ||||||||||||||||||||||||||||||||
| Common Stock | Series A Preferred | |||||||||||||||||||||||||||||||
| Shares | $.001 Par | Shares | $0.001 Par | Additional Paid-In Capital | Retained Earnings | Non-controlling Interest | Total Equity | |||||||||||||||||||||||||
Balance on January 1, 2019 | 40,174,821 | $ | 40,175 | 419,859 | $ | 420 | $ | 75,131,122 | $ | (47,800,886 | ) | $ | 1,438,213 | $ | 28,809,044 | |||||||||||||||||
Share based compensation expense, total | - | - | - | - | 143,063 | - | - | 143,063 | ||||||||||||||||||||||||
Conversion of Series B1 Preferred stock to common | 96,160 | 96 | - | - | 149,914 | (30,242 | ) | - | 119,768 | |||||||||||||||||||||||
Dividends on Series B and B1 | - | - | - | - | - | (406,795 | ) | - | (406,795 | ) | ||||||||||||||||||||||
Accretion of discount on Series B and B1 | - | - | - | - | - | (530,433 | ) | - | (530,433 | ) | ||||||||||||||||||||||
Net loss | - | - | - | - | - | (4,963,564 | ) | (105,431 | ) | (5,068,995 | ) | |||||||||||||||||||||
Balance on March 31, 2019 | 40,270,981 | $ | 40,271 | 419,859 | $ | 420 | $ | 75,424,099 | $ | (53,731,920 | ) | $ | 1,332,782 | $ | 23,065,652 | |||||||||||||||||
Exercise of options to common | 75,925 | 76 | - | - | 4,424 | - | - | 4,500 | ||||||||||||||||||||||||
Share based compensation expense, total | - | - | - | - | 171,002 | - | - | 171,002 | ||||||||||||||||||||||||
Dividends on Series B and B1 | - | - | - | - | - | (412,875 | ) | - | (412,875 | ) | ||||||||||||||||||||||
Accretion of discount on Series B and B1 | - | - | - | - | - | (532,925 | ) | - | (532,925 | ) | ||||||||||||||||||||||
VRM LA distribution | - | - | - | - | - | - | (285,534 | ) | (285,534 | ) | ||||||||||||||||||||||
Net loss | - | - | - | - | - | (427,436 | ) | (202,329 | ) | (629,765 | ) | |||||||||||||||||||||
Balance on June 30, 2019 | 40,346,906 | $ | 40,347 | 419,859 | $ | 420 | $ | 75,599,525 | $ | (55,105,156 | ) | $ | 844,919 | $ | 21,380,055 | |||||||||||||||||
Exercise of options to common | 2,500 | 3 | - | - | 2,572 | - | - | 2,575 | ||||||||||||||||||||||||
Share based compensation expense, total | - | - | - | - | 159,426 | - | - | 159,426 | ||||||||||||||||||||||||
Dividends on Series B and B1 | - | - | - | - | - | (419,096 | ) | - | (419,096 | ) | ||||||||||||||||||||||
Accretion of discount on Series B and B1 | - | - | - | - | - | (550,774 | ) | - | (550,774 | ) | ||||||||||||||||||||||
Adjustment of carrying mount of non-controlling interest | - | - | - | - | 970,809 | - | 970,809 | |||||||||||||||||||||||||
Accretion of redeemable non-controlling interest to redemption value | - | - | - | - | - | (1,849,930 | ) | - | (1,849,930 | ) | ||||||||||||||||||||||
Issuance of common stock and warrants | 1,500,000 | 1,500 | - | - | 2,987,413 | (772,202 | ) | - | 2,216,711 | |||||||||||||||||||||||
Net loss | - | - | - | - | - | (1,091,781 | ) | (37,981 | ) | (1,129,762 | ) | |||||||||||||||||||||
Balance on September 30, 2019 | 41,849,406 | $ | 41,850 | 419,859 | $ | 420 | $ | 79,719,745 | $ | (59,788,939 | ) | $ | 806,938 | $ | 20,780,014 | |||||||||||||||||
| Nine Months Ended September 30, 2018 | ||||||||||||||||||||||||||||||||||||||||
| Common Stock | Series A Preferred | Series C Preferred | ||||||||||||||||||||||||||||||||||||||
| Shares | $.001 Par | Shares | $.001 Par | Shares | $0.001 Par | Additional Paid-In Capital | Retained Earnings | Non-controlling Interest | Total Equity | |||||||||||||||||||||||||||||||
Balance on January 1, 2018 | 32,658,176 | $ | 32,658 | 453,567 | $ | 454 | 31,568 | $ | 32 | $ | 67,768,509 | $ | (39,816,300 | ) | $ | 399,005 | $ | 28,384,358 | ||||||||||||||||||||||
Share based compensation expense, total | - | - | - | - | - | - | 145,971 | - | - | 145,971 | ||||||||||||||||||||||||||||||
Conversion of Series B1 Preferred stock to common | 500,000 | 500 | - | - | - | - | 779,500 | (184,437 | ) | - | 595,563 | |||||||||||||||||||||||||||||
Dividends on Series B and B1 | - | - | - | - | - | - | - | (554,917 | ) | - | (554,917 | ) | ||||||||||||||||||||||||||||
Accretion of discount on Series B and B1 | - | - | - | - | - | - | - | (457,853 | ) | - | (457,853 | ) | ||||||||||||||||||||||||||||
Net income (loss) | - | - | - | - | - | - | - | (2,258,622 | ) | 50,539 | (2,208,083 | ) | ||||||||||||||||||||||||||||
Balance on March 31, 2018 | 33,158,176 | $ | 33,158 | 453,567 | $ | 454 | 31,568 | $ | 32 | $ | 68,693,980 | $ | (43,272,129 | ) | $ | 449,544 | $ | 25,905,039 | ||||||||||||||||||||||
Exercise of options to common | 241 | - | - | - | - | - | - | - | - | - | ||||||||||||||||||||||||||||||
Share based compensation expense, total | - | - | - | - | - | - | 183,750 | - | - | 183,750 | ||||||||||||||||||||||||||||||
Conversion of Series A Preferred stock to common | 33,708 | 34 | (33,708 | ) | (34 | ) | - | - | - | - | - | - | ||||||||||||||||||||||||||||
Conversion of Series B Preferred stock to common | 32,149 | 33 | - | - | - | - | 99,629 | (36,700 | ) | - | 62,962 | |||||||||||||||||||||||||||||
Conversion of Series B1 Preferred stock to common | 133,264 | 133 | - | - | - | - | 207,759 | (48,689 | ) | - | 159,203 | |||||||||||||||||||||||||||||
Dividends on Series B and B1 | - | - | - | - | - | - | - | (534,680 | ) | - | (534,680 | ) | ||||||||||||||||||||||||||||
Accretion of discount on Series B and B1 | - | - | - | - | - | - | - | (470,825 | ) | - | (470,825 | ) | ||||||||||||||||||||||||||||
Net income | - | - | - | - | - | - | - | 2,530,068 | 131,736 | 2,661,804 | ||||||||||||||||||||||||||||||
Balance on June 30, 2018 | 33,357,538 | $ | 33,358 | 419,859 | $ | 420 | 31,568 | $ | 32 | $ | 69,185,118 | $ | (41,832,955 | ) | $ | 581,280 | $ | 27,967,253 | ||||||||||||||||||||||
Correction of non-controlling interest | - | - | - | - | - | - | - | 101,718 | (101,718 | ) | - | |||||||||||||||||||||||||||||
Share based compensation expense, total | - | - | - | - | - | - | 165,058 | - | - | 165,058 | ||||||||||||||||||||||||||||||
Fixed assets contributed capital VRMLA | - | - | - | - | - | - | - | - | 857,738 | 857,738 | ||||||||||||||||||||||||||||||
Conversion of Series C Preferred stock to common | 3,156,800 | 3,157 | - | - | (31,568 | ) | (32 | ) | (3,125 | ) | - | - | - | |||||||||||||||||||||||||||
Conversion of Series B1 Preferred stock to common | 2,326,552 | 2,326 | - | - | - | - | 3,627,095 | (637,270 | ) | - | 2,992,151 | |||||||||||||||||||||||||||||
Dividends on Series B and B1 | - | - | - | - | - | - | - | (1,194,524 | ) | - | (1,194,524 | ) | ||||||||||||||||||||||||||||
Accretion of discount on Series B and B1 | - | - | - | - | - | - | - | (515,698 | ) | - | (515,698 | ) | ||||||||||||||||||||||||||||
Net income | - | - | - | - | - | - | - | (2,287,880 | ) | (105,970 | ) | (2,393,850 | ) | |||||||||||||||||||||||||||
Balance on September 30, 2018 | 38,840,890 | $ | 38,841 | 419,859 | $ | 420 | - | $ | - | $ | 72,974,146 | $ | (46,366,609 | ) | $ | 1,231,330 | $ | 27,878,128 | ||||||||||||||||||||||
VERTEX ENERGY, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
NINE MONTHS ENDED SEPTEMBER 30, 2019 AND 2018 (UNAUDITED)
| Nine Months Ended | ||||||||
| September 30, 2019 | September 30, 2018 | |||||||
Cash flows from operating activities | ||||||||
Net loss | $ | (6,857,643 | ) | $ | (1,940,129 | ) | ||
Adjustments to reconcile net loss to cash provided by (used in) operating activities | ||||||||
Stock based compensation expense | 473,491 | 494,779 | ||||||
Depreciation and amortization | 5,333,485 | 5,234,014 | ||||||
Gain on sale of assets | (31,443 | ) | (51,523 | ) | ||||
Contingent consideration reduction | (15,564 | ) | - | |||||
Reduction in allowance for bad debt | (389,943 | ) | - | |||||
(Decrease) increase in fair value of derivative warrant liability | (331,715 | ) | 2,124,971 | |||||
Loss on commodity derivative contracts | 2,691,833 | 1,859,234 | ||||||
Net cash settlements on commodity derivatives | (3,446,274 | ) | (2,386,897 | ) | ||||
Amortization of debt discount and deferred costs | 430,431 | 474,360 | ||||||
Changes in operating assets and liabilities | ||||||||
Accounts receivable | (987,778 | ) | (3,091,273 | ) | ||||
Inventory | 2,212,989 | (341,329 | ) | |||||
Prepaid expenses | (833,485 | ) | (1,072,076 | ) | ||||
Accounts payable | (1,046,149 | ) | 534,689 | |||||
Accrued expenses | (260,341 | ) | (1,175,692 | ) | ||||
Other assets | - | (253,642 | ) | |||||
Net cash (used in) provided by operating activities | (3,058,106 | ) | 409,486 | |||||
Cash flows from investing activities | ||||||||
Acquisition of SES | - | (269,826 | ) | |||||
Internally developed software | (380,216 | ) | - | |||||
Purchase of fixed assets | (2,907,330 | ) | (1,813,904 | ) | ||||
Proceeds from sale of fixed assets | 86,846 | 6,848 | ||||||
Net cash used in investing activities | (3,200,700 | ) | (2,076,882 | ) | ||||
Cash flows from financing activities | ||||||||
Payments on finance leases | (113,241 | ) | (34,660 | ) | ||||
Proceeds from exercise of stock options | 7,075 | - | ||||||
Distribution VRM LA | (285,534 | ) | - | |||||
Contributions received from redeemable noncontrolling interest | 3,150,000 | - | ||||||
Proceeds received from issuance of common stock and warrants | 2,216,711 | - | ||||||
Line of credit (payments) proceeds, net | 1,543,003 | 1,408,206 | ||||||
Proceeds from note payable | 2,809,139 | 4,024,964 | ||||||
Payments on note payable | (3,514,365 | ) | (2,996,556 | ) | ||||
Net cash provided by financing activities | 5,812,788 | 2,401,954 | ||||||
Net change in cash, cash equivalents and restricted cash | (446,018 | ) | 734,558 | |||||
Cash, cash equivalents, and restricted cash at beginning of the period | 2,849,831 | 1,105,787 | ||||||
Cash, cash equivalents, and restricted cash at end of period | $ | 2,403,813 | $ | 1,840,345 | ||||
SUPPLEMENTAL INFORMATION | ||||||||
Cash paid for interest | $ | 1,887,012 | $ | 2,034,275 | ||||
Cash paid for taxes | $ | - | $ | - | ||||
NON-CASH INVESTING AND FINANCING TRANSACTIONS | ||||||||
Conversion of Series A Preferred Stock into common stock | $ | - | $ | 34 | ||||
Conversion of Series B Preferred Stock into common stock | $ | - | $ | 99,629 | ||||
Conversion of Series B1 Preferred Stock into common stock | $ | 149,914 | $ | 4,614,354 | ||||
Accretion of discount on Series B and B1 Preferred Stock | $ | 1,644,374 | $ | 2,351,472 | ||||
Dividends-in-kind accrued on Series B and B1 Preferred Stock | $ | 1,238,766 | $ | 2,284,121 | ||||
Equipment acquired under finance leases | $ | 621,000 | $ | 450,098 | ||||
Initial adjustment of carrying amount redeemable noncontrolling interest | $ | 970,809 | $ | - | ||||
Accretion of redeemable noncontrolling interest to redemption value | $ | 1,849,930 | $ | - | ||||
SOURCE: Vertex Energy, Inc.
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