VTNR - Earnings call 3 2020 | Vertex Energy Inc.

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Good day, ladies and gentlemen, and welcome to your Vertex Energy Third Quarter 2020 Earnings Conference Call. [Operator Instructions]

At this time, it is my pleasure to turn the floor over to your host, Noel Ryan of Investor Relations. Sir, the floor is yours.

Noel Ryan

Good morning. Melinda. you, Thank Vertex to Quarter Results XXXX And Energy's Call. Conference welcome Third Chairman today COO, Ben call the and John are and Leading Carlson; our CEO, Chris Cowart; Strickland. CFO,

detailing the issued our this with corporate portion posted also call vertexenergy.com. opened We in release conference we quarter before website a that press this In at a release, morning, of presentation our posted conjunction the third results. Relations market is Investor

conference reference this the call. presentation today's will We remainder throughout of

that their management's today's of you and uncertain would responses include on remind I control. like outside questions commentary conference forward-looking to to and company's the statements, nature, may call which, by are

are may Although statements based these results management's beliefs, differ current forward-looking expectations actual and materially. on

cause Factors to the filings For refer to of please section with actual results annual some a the that discussion of and Risk differ, Energy's of Vertex latest the quarterly SEC. could factors

Additionally, the please financial can during non-GAAP you discussed our reconciliations release historical the press find of note that call issued in measures today.

begin will Ben At a review these with from call open line Today's by for prepared Carlson. conclusion of the questions. from the we Cowart, financial will Chris followed remarks, remarks

with over to the turn that, Ben. I'll And call

Ben Cowart

morning posted Noel. the on to us you, today, I'll joining refer we that website Good Thank Investor Relations Earlier call. this the today. materials presentation of company those the section to throughout

Let's Slide begin X. with

generated affecting reduce pandemic-related and impacts challenges growth year-over-year refined continue sequential in our global we that with while Gulf both separate of X the to product third managing hurricanes EBITDA operations, demand. quarter, through During on the adjusted the together Coast

contributing levels travel towards lifted, of UMO were feedstock. back orders normal shelter-in-place availability during quarter, the third improved increased to As activity

sequential third X, reflected on as collections in traveled. increased in quarter, the end, basis direct vehicle XX% total miles by that To Slide increased supported a

direct levels year prior below year-over-year in growth still generate quarter, remained we the during in traveled miles the collections managed to third X% While period.

quarter, utilization hurricane-related days sequential a improved feedstock refinery basis third during impacted materially UMO by given outage Marrero the our though X improved on was of Even availability.

peak quarter, third Our Heartland during near refinery performed the operating utilization. well

asset, impacted been this consistently less Given inland major strong nature events, of this to the weather operations a performance throughout year. contributing have by

While base refinery conditions supply have the are pricing industry cuts tighten oil been throughout we improve. which pre-COVID seeing -- near steadily to refinery have not base served levels, of Base oil grades, has term. runs in demand recovered oil supportive over the the some to

start-up third we improving As pretreated quarter past, that in remain supplying refinery end, you've optimization. Myrtle of facility begin operations during Grove the say X our on Marrero our asset heard me in we we'll To with the the focused at a XXXX, first phase highly Beginning initiated quarter.

Gap] [Audio

currently treating consistent Grove oils commercially that allow refineries at We're with can diesel would on use discussions the with continued oils our organic that focus in fund Myrtle to feedstock vegetable production renewable raw project of fuel. optimization. in parties the begin to us and third asset as waste

be development begin This X significant has the business as feedstocks. catalyst will supplier diesel a renewable team currently renewable separate that to is growth, pretreatment and alternative technologies our process. to potential allow Our positioning project for of further evaluating leading us

recovery in recovers, economy refined realization. step-up together global anticipate a in demand a with gradual for we products, the corresponding As margin

WTI product reflected levels, the spread with However, Slide fuel year-ago X. below as historical having in high-sulfur refined averages, from well declined the on remain significantly interim, spreads to oil

added growth in on In We collections, generated remains considered, several summary, operating ran plan challenging UMO elevated executed we a customers all and at new hundred and rates. organic in Heartland both what environment. Marrero things

still expected, our below was financial results internal execution operational own quarter expectations. third our our than are While better

remain Given we cash our of uncertainty markets, mindful evident in burn. the

$X.X quarter, million. cash total the third approximately was burn the During

mirror we fourth the quarter to Assuming that would $X of spreads in to burn expect our refineries forward operate million the and strip, XXXX. continue on cash plan

beginning flow cash first As and quarter the support positive our cash liquidity to to of XXXX. in significant the free At quarter, return operations expected before, the to third for had we we business. generation the end

our team remains on management heading XXXX. areas key into ahead, Looking focused several

First, we as did third remain UMO we in aggressively focused on direct the collections, growing quarter. much

have direct the have of grow to while markets UMO radius We opportunities a to collections. expanded of that collect geographic where our potential number tuck-in evaluate the continuing we smaller

miles in new customer activity X that driving the up lows, we've For to the further business. ending also the of XXXX, vehicle growth area traveled from XX% additions. months significant improved should achieved With April contribute

and remain weather plants our major events. assuming Second, although rates remains for elevated downtime weather-related additional economics had at October, we significant operating opportunity during near-peak throughout December, business, capacity November additional Operating no at leverage us. setbacks in scale the of this a so we focused on and

expansion new on asset focused remain our niche markets base. into we Third, by leveraging existing

and designed collector important During a of to automotive our on invest the to our us streams. but presence of to Grove the year-end as one grow third restart effort, market this is will share waste The there for we facility recent initiatives more part quarter, in used call. recycler several of continued Myrtle be

Finally, priority entire capital discipline a top for our team. remains

to support nonessential business. growth long-term the focused have and conserving We eliminated the expenditures on are of capital

at Directors. alternatives strategic specific we value business. to to stand-alone subject public and time of Consistent for strategic formal all approval any have Board launched to alternatives this with of the private we assets of our line continuing review this include internal time. certain maximize process our nor review our a partner, There's one investors no alternative selling chosen have or for as Vertex, These may organization, for in a going an commitment

such We appropriate. our updates time Directors that of will deem on Board matter further provide the at

I'll turn prepared that, his With for Chris call over the to remarks.

Chris Carlson

to Thanks, Ben. us And joining today. on welcome call the those

XXXX. reported We a quarter $XXX,XXX loss third months period. reported million third XXXX year net X $X.X $X.X to loss September adjusted loss of million in for the the quarter versus net EBITDA million XXXX, ended the of company of prior loss XX, For versus $X.X Vertex attributable the a the a for of

margin reflected the contributed by X, within On As and adjusted derivatives, year-over-year increased EBITDA in to operational quarter XXXX. adjusted on sequential the on second business $X.X XXXX capture improved quarter better compared when gain the bridge metals to execution the a million improvement. EBITDA Slide our third basis, a

Weather-related During performance and Louisiana winds the along third Heartland of August which at a between and XXXX. products Marrero the outbound impacted capacity refinery, organic offset more growth for UMO September, at X shipment at Marrero, peak quarter direct brought while during approximately separate hurricanes X weeks. and strong Orleans adversely flooding the operations company's limiting refinery waterways disruptions finished the collections that adjacent than Houston New in and severe high operated at refinery

capital Turning of structure. to Slide balance sheet our discussion XX and for a

September in to Heartland is total XXXX, Included respectively. special total vehicles assets, $XX.X XX, As facility held cash cash by SPV, we each purpose availability and our and million which to lending in on of $XX.X use Grove amount of the had million, respectively. are $X.X limited related million company's and Myrtle our

loans or Under Coronavirus Program Vertex received Act. as related had at covered Aid, XX are million CARES maintaining to debt received part which following Act of recently terms of and weeks Economic after enacted of total of $X.X Act, forgiven by Paycheck subject term the fees interest accrued the XXXX, the equivalents a they is outstanding retained defined of least if funds proceeds to the included PPP, CARES of and Relief which the for Security or Protection as Act, qualifying period. full-time XX, the of under of PPP period may PPP $XX.X million the and the on loan which are certain number during exclusions used CARES level based are be expenses the compensation XX% September

forgiveness have PPP. PPP to loan used costs payroll other terms our third of the of we the quarter during XXXX. entirety submitted proceeds expenses, the pay We eligible applications to the time, lender this of for our consistent with and our At

With turn as joining questions we on those that, the to call I operator from call the take today. us will over the

Operator

first [Operator with Eric we'll our Capital. Instructions] from And Craig-Hallum take question Stine

Eric Stine

on on collection just volumes. first maybe making you're continued -- obviously, progress So

can of you hoping pushing feedstock I that of feedstock. you second pricing to step wondering impact the to and Just about generator the a think had purposely back, downtime really if in the quarter back take goal the some extended know -- with

Just that maybe played out. how

mean, if you I expectations play versus out looking this results, were that from did But Clearly, positively. into your out played the maybe coming that at how quarter. third

Ben Cowart

portion out to at the loss because Okay. prices, the value Yes. played I we spread to pre a it's our that product for compression COVID of of up well, Eric, is the not our think ties refinery. big of finished produce which Marrero to diesel make spread total related

enough, oil fuel good team we have oil mean has really not level. to it's oil I job. used a base high-sulfur historical improve done comparison up held Now values think seen but to the good, still good but I in the a pretty has

We recent really of shut where -- That record down. back back bring has with it it the it on, storms plant, the with up build back and had us bring we it's to inventory off, downtime these downtime been on, allowed to shut today. levels

And drop. level so continue prices third-party on used to street a oil both and at at

Eric Stine

dynamic know you then, charge -- rational market time much back say, terms the frame, of more based where just feel it. than, volatility a I the of mean, market the mean, like oil I much on overall? Got in pay-for-oil oil -- do the different I but as XXXX-XXXX for And is whole, the prices in

Ben Cowart

Yes.

irrational there's the in footprint. I like that it's expanding available with In is market type oil there not some where we've in a used or we much. the done model. behavior probably some our still working moment think by same certain containment than companies we're charge where the And of but that feels capacity market comparison, at outside see cases, more collection are

large higher us, have For has a that cost. a third-party supply we much

And is So is good. charge. for return still at collected volume to shareholders very, very our a overall us, directly our

a but get out is aggressive in place There's charge stable market the just at go a most to reason unique be seems given a level. at street -- there's unless cases, your and not too up So to circumstances.

So...

Eric Stine

Right.

Myrtle lastly, on you little expand just Maybe Grove. a just maybe if then on And that bit. could Okay.

of Just type in potential through in we prepared what then remarks, going terms just and type now frame missed of maybe this outcomes of And the expect I your should investment there? you're on what -- curious, entails what time but end?

Ben Cowart

Yes.

initiated we positioned we're the open excited time coming. be start-up really a very this to It's on that robust asset, property. long needed That's facility. a of gate we've one, that been So to even and

storage So capability, it's We've capability were site, gallons Mississippi with million We've of a barge XX-acre never site ground the on some the X brand-new River. additional on got hydro-treating truck capital. rail that on assets got the racks. X installed,

to opportunity develop been So this out. is into market, the providing valuable -- seed us, Tensile this asset we've has it with extremely an partner some in this is good carried asset. and a capital that for

owns start-up So of that Grove of some deployed they in the facility. the XX% own of the Myrtle XX%. and company capital We've the SPV,

And process at Marrero lower oil cost or nonconforming that also and than pretreatment a would pick feedstocks you're third-party at much the our term that we've refinery even This these I what launched materials will go oil a picking off division out collected street. new up used where as cannot directly. requires up used

and the glycols refinery You water to clean typically the capture removal these through a small of raw is it the the facility, of put materials. can from this bring could infrastructure and This where be we hydrocarbon some it up use today back value. to solids the and metals and portion

at the facility we stock So this to in that got and new and and also to both with rolling manage brought stand some hires the new business up. this we've ability equipment

industry into refining renewable of sold market based would cracked plans will where for be an And this these oils we bigger on X. much working obviously, vegetable where we're we that on renewable and then would preprocessed the additional that So pretreatment crude pretreatment development site, diesel phase play for bring got into oils and be diesel, that's the underway. the advanced additional is technology

Operator

Next, line H.C. we with . to Amit the Wainwright Dayal go of

Amit Dayal

of line Grove Just continuing on Myrtle questions. the

positioned see as Ben? a this coming products finished is going over time, to this pretreatment of So we facility obviously? Or will be facility, out

end we And from it are we products see a mix focus finished of products to coming facility? is do finished out, sort on? Or of there if is to looking be going products this a particular

Ben Cowart

Yes.

So good question.

size, will again, to market its So this the by come layers. facility, in in

are our our a renewable for through first the the So product pretreatment: one; diesel pretreatment potentially here layers on finished sector. and we've assets, of fractionator, couple pretreatment that base SPV. is that our Marrero ground, lot obviously, our And assets developed of the refining oil so we've for hydro-treating this refinery, got technology

towards to So oil we capacity. invest additional ability base the have

on and we've be the One of that well. Bunker take could been would with that for placed fuels, processed could some property finished on marine advantage technologies low-sulfur relationship working be that the demand that our With of crudes local as certain

facility, the underway long So site product term, the along today. easily very that's finished with be pretreatment a work could

Amit Dayal

And the third stronger the the into the quarter. improvements? I continue of expect about a Understood. the the we economy pretty Or opening compared continued to you've fourth we quarter? for just think up, momentum mean So period should despite even outcome with strong looking headwinds? should quarter. sort collections how Does this year-ago in these fourth fourth quarter, had

Ben Cowart

in investments invested our towards really containers, a start premier to and of new brought a line container at from Yes. trucks. instead level. our lot away off of new customers able quarter, business. location significant stock, we've material. We've rolling moved Last in lot of collection drum generator a We've that our for that of The dump reinvented were quarter at We've filter double we handling made boxes a that fourth good business. is to

Midwest them very South. the our our These in in markets market. We've We already up them trucks expensive. are had got all in

So that delivering filters region that to This our been has back in base. certainly we're which the level to way being of very excited change quality in our are really customer about handled. helpful we're

high-purity to finished we're have can waste process that antifreeze our we customer convert coolants back into supply completed now waste to antifreeze, we addition, that plant, In base. our all a able where

we've filter processing done Texas. In complete addition in plant, facility a with that to turnaround our Pittsburgh,

the opportunities street business. believe around these really our we services. We with to oiled today going drive deliver mix collection growth got that and well and business organic to right this So a the is level and well at collection for suited tuck-in can lot of of We've a growth. our improvements, customers that's value some

Amit Dayal

Understood.

Just one last one.

review In can color your driving action? sort strategic terms this what's of of any of us give you initiatives, line on

Ben Cowart

think have the of period have I we assets the a company time. for our our difficult do is Tensile to additional the that can take really that forward. in now share demonstrated capital with carried with price. this No, that We Yes. us through currency don't the what relationship very has time certainly business for we Unfortunately, believe

and navigate on to the alternatives had without diluting we've assets value so around different And look create at we've business forward how paying do that shareholders our we been for.

is general, married when language in had there so same And the and we're going to with -- kind of facility. Myrtle Grove up Tensile this that Heartland our we out with we our

the market about we're holds moving business the transparent we So window it And just the know of want people the let excited just the to with and future of and and opportunities forward. business be timing. this we're

Operator

Stifel. comment Hoffman or question with next Michael line Our comes of the from

Michael Hoffman

these some Chris, Ben, is managed everybody and down hope recover hurricanes. well all to you've doing from there,

huh? year, Some

Ben Cowart

a of hell for a been year it's yes, Michael, sure.

Michael Hoffman

even On the of it's XXth so it, many believe November. levels. Can't

specifically use related When $XX burn is PowerPoint, that million, the So you it at to purpose rounding, of purposes back very vehicle. million look to $XX about the footnotes comment. the the has -- to limited special cash

So million that's think the out is versus a How burn. about help out us million $X funded rounding, million be unrestricted? being the, the $X that's of could $XX funded quarter restricted much of

Chris Carlson

of the XX% that to XX% SPVs. about say would I Michael, Yes. is in

the right Grove has Ben a kind As of around the highlighted, effort of lot asset. Myrtle is now

So funding that's restricted. of some SPV where is the

then fourth addition, quarter into some investments next ongoing at the facility In are Heartland throughout year. the there and

Michael Hoffman

our non-SPV-related spreads actually improved burn fourth more cross quarter, where in slightly be to collection, if Gulf are, in positive? the any fingers, your we -- given should neutral hurricanes So the have don't the

Ben Cowart

No.

that I the Right, we'll more Chris? business. have on burn think non-SPV-related probably

Chris Carlson

Operational, yes.

Ben Cowart

Yes.

Chris Carlson

Yes.

Ben Cowart

of really an related, then of we've that into And invested that's of the Michael, lot Marrero, for Part at that is cetera. one; et equipment, and third this a investments some -- into to capital quarter plant, compressed made. spreads some antifreeze we the

start-up investments. in quarter some in fourth of the we're these So new in

And $X cash another around burn million quarter the fourth so so... probably anticipate for we of

Michael Hoffman

the all you utilization. normal it's That's drive incremental spending cash that quarter, the done positive return that outflow in asset that isn't all turn revs in XQ because we're of then part non-revenue-generating -- a fourth to is it then and yet, in And is -- sort generating Okay. thinking? so and theoretical

Ben Cowart

quarter. That's be with in right. And let our just me was walk clear. park the in no for fourth October facility the storms additional Marrero

be and we think at November we're In should full we and So throttle December, behind that that. behind being operating us.

all of $X right? of well, kind that as that's So million burn part

Chris Carlson

right. Sounds

Michael Hoffman

Fair enough.

calendar of home, becomes all a kind With a the giant home, the stay sudden, at from work of blur.

Ben Cowart

been has our our record as talk amazing under It Gulf. hurricanes, far year been fair has been quarter we've mean of seems share had -- been challenges, I about unbelievable the like but as this accomplish on -- operations the still team unbelievable to our has it's you broken events it's setbacks. weather but this in what able and a when

Our all in several refining shut business we mean it got got and down. marketing was delayed -- to so... business I were the weeks. We suppliers Arthur, Port big a our impact

Michael Hoffman

was Yes. been into for the alphabet got Greek time It's last a long storm names? Well, we the time. when

Ben Cowart

Right. and in even would what business resiliency it with that it coming of blazing, is I but EBITDA the mind. think what's all But positive the through have We is. is interesting this been

it. we've gotten done. this what the market do It's of a areas reinventing lot about going -- and lot got a the not making in We're a but to And on and our or so business excuses can tired hustle sit we're that condition. they forward. weather of with excited We're handle requiring where assets move We of business, current we're anything else. of very certain

Michael Hoffman

Okay.

XQ. happen teasing out for what So has to

without you but higher stays is, investing Heartland, breakeven. any it that at storms, incremental where at leads you're through both the is to least Marrero and cash behind, asset utilization spread So and a

Ben Cowart

sure. Yes, Oh, yes. for

Michael Hoffman

to through -- the the how That's think that's process. way

for So through. things thinking our we're model, are those the

Ben Cowart

Yes.

Michael Hoffman

All in that vehicle maybe pockets And of of right. nature. think of then -- nationally. the without that but Okay. miles at And changes vaccine, traveled things the certainly, I'm we're XX% different what about number materially, it's obviously sure country, I not

So versus supply the oil through all away far and used from of we VMT demand? supply if how are between knock-on equilibrium base demand, oil consequences XX% and

Ben Cowart

a bit I few spoke about that. minutes ago little a

XX% we're of UMO. think downtime call and and and We it's of Both -- the I in on every of We we tank I it, markets XX%, some maybe, point. is -- of breaking part just Gulf. by up. slightly type say much oversupplied, wouldn't that in market's because got the literally full are the across the backed

into have we ratable And got the hand. supply seen we've that at quarter first on very comfortable and all The the think the pricing. We on chain based come into and second bottom inventory so feel the inventories that favorable compression. our refining our in deep we quarter on on

spreads I forward. going improve think major the industry of across start we're the to that products finished see affects value to our crack going

other more there's reeling So what COVID people looks And the to and than -- setback. outlook hard have these again, improved may back business. see of on impact when the that it's shutdowns kind quantify I all

Michael Hoffman

including time you're on this? last line strategic have a to blah, at private, then blah, with blah, or arriving go review, on what when And do possible you Okay. conclusions -- sale one your regards

Ben Cowart

need continue line, to different our evaluate to no and forward. No, feel no to move We time maximize business just alternatives value like to we the shareholders path the picked.

us got grow that. we've a the opportunities There's now do be the I really to fix. and to build are able for to time for think not to and the lot It's business. business,

Michael Hoffman

regard. Okay. is? is of your a And a on year, cost public it be million to couple Is last the what that question dollars

Ben Cowart

Yes, that's about right.

Operator

and Ladies there return questions. for remarks. further no Cowart Benjamin We are gentlemen, to closing Mr.

Ben Cowart

today. thank everybody. Well, We on call appreciate you, your the presence

upcoming active rescheduled Relations live virtual work and remain with Investor engaged most While our events formats, have been coverage Investor to from Relations and analysts. our we

salesperson In XXth have attend our will contact the to Annual in Alpha have at the We any contact you November, questions, Craig-Hallum Conference your format. you please any we interest interim, should institutional Investor attending. encourage team you should in virtual Relations Select ir@vertexenergy.com. During

Thank you, everyone, our call. concludes earnings This for joining us today.

Operator

conclude your does thank teleconference. Thank participation. We you. for you This today's

You may Have lines this time. disconnect a day. great your at

Vertex Energy (VTNRQ) 10 Nov 202020 Q3 Earnings call transcript