VTNR - Earnings call transcript Q1 2022

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

Operator

Good day, ladies and gentlemen, and welcome to the Vertex Energy Q1 2022 Earnings Conference Call. At this time, all participants have been placed on listen-only mode. [Operator Instructions] It is now my pleasure to turn the floor over to your host Noel Ryan with the Investor Relations team. Noel, the floor is yours.

Noel Ryan

Thank you, Paul. to first welcome conference XXXX and call. morning, Vertex quarter Energy’s results Good today and Ruiz. our CFO, the are Leading call Chairman and of Chris EVP CEO, Development, Alvaro Carlson; Cowart; Ben market We press recent and results. issue financial morning, release the operational to detailing opened before our this remind management’s the are nature I’d today’s outside responses of on control. commentary uncertain to their like to call which may by and questions company’s conference include you that forward-looking statements, and

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

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

on you of financial the today. find the reconciliations issued to the line for note, with financial Today’s I’ll remarks, the call please And these over will measures that, Chris open from from can conclusion by press our turn followed Ben. the of Ben call Cowart prepared with begin release non-GAAP Additionally, At call Carlson. remarks review historical discussed questions. during we’ll

Ben Cowart

good to Thank and morning Noel, everybody today. joining you, us

for I my lot a talk here Sorry lately. had about to voice.

refinery the step this refinery, are from seamless in assuming one of development scheduled Shell recent will impact We platform Vertex alternative to history Alabama. assumed been with chapter us emphasis an build For today’s of you call, on the I’d multi-year transformation. the the deliveries. leading no on the first view to production of the Mobile operations in Mobile pivotable acquisition next and Exactly of in of complimentary ownership a the product with which on focused is This assets on be the entirely X, refinery with the and the of of levels acquisition refinery chapter energy transition an has an will update like our new XX the days purpose fuels. Since Vertex company. acquired Mobile, begin April ownership Mobile during ago, transition see conventional signaling refinery

the completed value key our potential As then conversion a project. first cornerstone one acquisition integration Once expected valued have target Mobile Mobile a us mainly remains case potential produce as our would project process. exceptional professionalism, the creation refinery a focused new base hydrocracker to teammates allow investment performed years. successful future a our When fuels now in high drive of refinery we acquisition with significant renewable at evaluate to ensuing this and the with on both thesis,

decline of at combination that a are domestic than demand oil of gas operable, natural in in oil domestic advantaged domestic At lower However, inventories which since has a what profitable post-pandemic multi-year for the Asia fuels, is conventional didn’t we refining refining prices fuels, months low. driven distillate more those originally a Europe, conventional which an economics have crude business, and and domestic approaching fuel the capacity Conventional potential creation improved fully value X% present in refiners. XXXX, materially anticipate expected. versus today by recent time the fuels was of improved

versus Mobile average Gulf per Given a barrel $XX further and for recent product for widening more potential of $XX importantly, is in geopolitical five-year inventory expected is spread worsen Currently margins. gross profit creating per more barrel. five-year per is to this approximate barrel. events barrel only of situation currently the the refined X/X/X Even distillate the Gulf Coast barrel average versus of benchmark north $XX $XX Coast per refinery the per crack than the crack

the with product markets. the uniquely current positioned region, pipeline product are to remains capitalize economics. our of approximate Mobile Further feeding refinery that primary local refinery’s refined these source is of to on fuels refined we two-thirds slate current Given distillate the product no

During the first at XX% refinery month full capacity of of operated the utilization barrels Mobile operations, of of April, our day. XX,XXX XXXX, per month given operable

the days XX production. fuel Putting refinery that the represented of of April from refinery, for assets we We our enough approximately Concurrent between of less with September related all further optionality refinery a generated operations spread XXXX. for EBITDA have one quarter Mobile accomplishment of than hedging and anticipated the balance incredible to of our into came and currently over program Vertex, in which XX% of we through During strong and the performance as flow XX, this we entered first period cash production have the acquisition anticipate generated supports and conventional the operations, sheet coming Mobile full perspective. look logistic years. crack significance paid X

to approximate the spot favorable barrels to six-month a major trailing respect a above first to the the in XXXX conversion project lead site. maximum diesel which what XX,XXX end still period, our average We capacity is day. of project, with average expansion expected be current margin governed secure year remain being know beginning on of anticipate we it engineering market to half margins the to range The the has second this half of during all are and of ensure product schedule with to an the the we hydrogen RD in been a have will approximately the by to locked anticipated XX% and engaged For five-year XX% lead hedge crack the of XXXX, complete. spread rates day, at technology, spread other All production Initial hydrogen per and intended barrels long XXXX. project level anticipated significantly exposure at we completion construction detailed XXXX. to allow our the we’ve previous production for a crack spread. of renewable the in This quarter work now elevated is completion program, barrels Today, levels project approximately equipment engineering per hedge hydrocracker de-risk of timely environment is now providing capture project X/X/X XX,XXX a by purchased on be year timelines. the X,XXX full while partners communicated expected production. With

Our $XXX initial within materials range expected $XX total million million given $XX has was potential inflation. million our well and estimate labor increased cost raw between were to cost We and funded project These currently increases to further cash will We this this costs. through the no available project increase project anticipate budget time. of budget anticipate the hand project that entirety on liquidity. of and at be

operational combination recent currently generated product We our together results. review first driven of quarter elevated refined which execution, at with multi-year to strong now highs. record results set margins, financial by Turning a

Our million collections first ahead of at first strong trailing than legacy continued VGO our the oil with plan generated by in prices. $XX Marrero II+ business supported UMO during XX-month basis, continued by of our assets both end the and legacy reliability adjusted growth spreads refineries. strong together highlighted on quarter, On the more Heartland to of perform EBITDA through and a quarter, Group base

on excludes As the closes X from contributions any Mobile refinery acquisition this performance Mobile. April

will the as of our press introduced today, XXXX, the quarter have from full which financial contributions combined product increased XXXX through Chris issued business continue we the including date and walk outperformance to release guidance, move each across levels first refined refinery we year of updated refining positioning the into forecast remainder earlier shortly. our quarter margins XXXX. for assets, above to In Mobile Second

deliver to positioned for over the to we today, Given company next expectations With first I’ll months well believe strong XX significant current Chris. results is with over value. turn that, quarter additional call outperformance the together reported the earlier shareholder

Chris Carlson

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

For the months the first million of net quarter net March in three reported $X.X $X versus million of XXXX. XXXX, loss XX, ended income a Vertex of

loss of million prior million The million period. including first net non-recurring expenses. a gain million in $X.X derivative in a in the quarter transaction the year the and $X.X of $X a adjusted includes the non-cash $XX first of quarter XXXX liability items, of non-recurring value We reported in versus XXXX, related on change record EBITDA million $X.X

elevated from refineries the at rates and margins. improved Heartland utilization both with refined results quarter Marrero First product benefited together

cash of XXXX. the at secured Total As of $XX.X term to million company of or included limited XXXX including March of cash XXXX, $XXX.X had purpose vehicles. had senior end cash debt two quarter liquidity total special by $XXX.X use first million. restricted of XX, XX, the total March the million outstanding the of of Vertex as

change. Mobile as We second have hedges the in contributions impact XXXX net provided April on of guidance and subject currently time in X, on full the for production provided of completed and current a of refinery refineries including implied full approximately year All third the guidance XXXX. with Mobile XXXX, and is the XX% Together to the quarter from cash year of the XXXX. place is anticipated financial

to the net Free million For in $XXX Vertex million cash $XXX profit anticipates gross a range million. year $XXX $XXX million. EBITDA $XXX to XXXX, $XXX to full adjusted in million. $XXX to million of flow a a million of Adjusted income, range of range and million in a of $XXX in range

a and XX,XXX per the $XXX that a million. XXXX operate XX,XXX year XX,XXX barrels will we million per conventional day net full In in a in cash $XXX in Mobile range including assumes day, adjusted million, range in $XXX barrels guidance of income XXXX, to range day per of range million This of barrels million. per the will And XX,XXX million to day $XXX renewable $XXX million. of the EBITDA and XX,XXX refinery barrels in $XXX For $XXX diesel. anticipates anticipate to between to operate at a refinery free Adjusted XXXX. $XXX barrels flow Vertex of million gross of profit

RD project XXXX. to be quarter As in first quarter, set the fourth to stream complete on a XXXX. conversion is come in the With

position questions. between hand. line expect entirely will in strong With that, project of EBITDA we second $XX million cash together million. to of generation hydrocracker we a from to XXXX, for open initiatives on generation growth cash range million The internal million total conversion in the quarter flow cash other fully $XXX to to Importantly fund free generate us with $XXX will $XX free in of Operator? the the adjusted resulting

Operator

the you. coming Instructions] And [Operator first your line Suisse. Thank Manav, live. is from Credit today is Manav from question Gupta

Manav Gupta

a congrats positive and and a outlook. on guys, quarter Thanks very good

working Just the through here. slides

million of you looking EBITDA like similarly at of refinery next like Mobile is is throughput looks down EBITDA margin, year, to [ph] And the And look extremely point. own about $XXX if margin. gettable which $XX So like at took for this it’s coming EBITDA guidance, $XX.XX it’s its the at year. about on for

about if renewable very is which So achievable. those, you in the walk that’s it way, $XX then EBITDA modeling And of are next year, also to to if profit a are margin, little to you of if could us right that could guidance. through, in help $XX on gallon you terms you annual for get of the per diesel bit if dollars building

Thank you us if through So walk just assumptions. you. the could

Ben Cowart

Yes.

So, you can as up well. and pick Chris,

strips, forward We We going we’re the are conservative market’s a think to this business, using in looking on so side We’re something you. agree backwardation. quarter-by-quarter of be the at basis. those on is the conventional with

of we they more economics of as kind So, can bring develop. these forward

don’t as as the but… per the I myself, have that far on So gallon renewable, Chris,

Chris Carlson

forward We the are strips. using

Ben Cowart

Yes. Saying forward strips forward. we’re using going

Alvaro Ruiz

And the are the credits in deck.

Chris Carlson

XX the coverage credits that for we’re the stroke. utilizing shows Slide

Ben Cowart

So, your will to that you get answer?

Manav Gupta

very but point is, it, refining your I assumptions with work are I think, think I’ll achievable.

out was, there that’s now, if mean, crazy I right we is crack are but assuming environment So in a you what reasonable. good. are I

to their a with that’s Yesterday, quick this [ph], at thoughts, planning were but I it. just time. up pretreatment positive, don’t units, go similar do DINO you they they’re use looking very for of one think PTU that here, thinking definitely So, something cash, as at you a do build building call, still of ahead do, think going have one but move is have conventional to pre-treatment and of I mean, point And your fuel sir. you of the not also competitors, will just good. who capital of it’s And want indicated to the wondering the They this existing right which I’m to I point follow I’m wondering of if were the you you time? ahead in unit, the unit said earlier a if, had are margins

Ben Cowart

with facilities. successful been in team’s several our Well, pre-treatment very partnering very,

very where finite we We that’s We so a there’s easily And of supply site. the intermediary it have get evaluating, already in Grove do and the have investment. overbuild are build material is believe suited Myrtle and a Myrtle done Grove. be our engineering commoditized technology an to could the pre-treatment site. for ruling do to know But And assets. still favor around if bio the we we plant at going at can property our we pretreatment

this and the a have we or in to So, quarter that view continue path next that decision down on make cautiously two.

Manav Gupta

and Perfect. a I’ll a turn very it positive outlook. good congrats Thank and over quarter you. on

Ben Cowart

very much. Appreciate it. you Thank

Operator

Craig-Hallum. Thank you. Stein question from The line Eric, next from your Eric is is live. coming

Eric Stein

Thanks all the for and the Good for morning. questions. thanks taking details

Ben Cowart

you. Thank

Chris Carlson

Good morning.

Eric Stein

of you about just there your been an Myrtle back to just would and would thoughts so know but and just talked I kind maybe that’s with feedstock. up pretty Hey, just on location Grove, you all area on know, stepping current the thoughts your sources that. pretreatment, that, you’ve the given potential where and love net on get and positive your current all feedstock, to love what following back

Ben Cowart

nothing’s far as Yes, as view. our changed

the feedstock that in renewable got refinery. some recent we’ve be to going conventional and the are market we’ve and the And the for supply trading forward to be carry We’re product now, storage hires business. our moving product, around to made excited

just in we don’t So, feed. on see a our view change

our optimize our costs transportation finished very the refinery, key of We’re product, our feedstock about feed and as ability our as optimistic vessel buy system by well and logistic the cargo to delivering markets. our to to into position

Eric Stein

Got certainly you that I guess don’t into, then much would have it. urgency. as And play that,

do at plays Myrtle that priority CapEx be but a could in is out. If how we’ll guidance your upgrade it positive the have debt potentially the the in math just that given mean, position of at to repayment a end needs. looking I Maybe You’re guess if, Grove, see the if is the cash by neutral, year. you I cash your, like I looks

that, then the about that So maybe of the call. against, think at weigh you but also how start

the other and You areas. is you’re talked looking start Mobile at about that, just some

do at you how other and look that some of view when So, timing you maybe assets. of together all potentially

Ben Cowart

as obviously integration Well, done team’s a lot a the job we bed. into The get refinery the great settling platform. and to got put our to as far

see vertically and time. that’s this And in see of integrate the next do Mobile the steps the of all to so gone grow are. and capital position expand We off what a as and over platform collectively our We to use well. extremely Vertex do far platform as site build

convey, we where want can think really work up I of there’s to still open a go. lot before we and

business. in the far As as future investments

over and years, and the think I for with very build to business work the five us, means journey just last grow team’s the tight the out under those conditions.

the enjoying the seeing that generation, We’re actually cash business is today.

going bit we’re we ahead making plans think how on I So, the and us little business. kind let, of expand a of start, grow we get to before

Eric Stein

great. I is Nope, absolutely. mean, that. I you can appreciate guess I options, which have

the mean, So will dynamic last I thing this the maybe based this, strategy assume on I would hedging be just is pretty on just market.

You’re months. locking next for in six XX% the

lock of any the where that place is what curious of terms really are right on Just given you that in something just that be spreads is think to you Or kind depend in? at moment? going is to level the is

Ben Cowart

a Yes, that, make it’s where refining I least at we rule exposure. business we like entered for, thumb mean, to have the sure of

exposure, I safe this now, volatility our to the fiduciary people appreciate time, space. think ensure but we earnings have same in a of the especially removing at journey the of

provided to add company. to in partner, that without kind order accomplished we liquid of six positions hedging relationship for The And our our side. done and our, working And that our both months. speaks be cash credit to able, partners again, banking business the take with so pleased vehicle, what and this the we’ve a our think to capital very I first have draining on those backed

Eric Stein

Got it.

Okay. everyone. Thanks

Ben Cowart

you. Thank

Chris Carlson

Thank you.

Operator

coming And Dayal Thank live. the is Wainwright. question H.C. your Amit, from line next is Amit from you.

Amit Dayal

Thank you. Good morning, everyone.

that bit, going the joined looking you. potentially, just I it any, helpful. question be color business? cetera for the to you a maybe go Are are with deleverage of on maybe Sorry, plans business, just to sticking one I a now, Thank or that me UMO option you’re didn’t through. would know for little previously out for for late, looking et forward, that Ben. the What sort guard little any

Ben Cowart

the Yes. tough through that Thank for It question. was going you process.

the like going keep We’re to we’re running a business. business,

are those sure as of We in we certain the understand, where some, all to a through going process that Yes interest or interest of evaluating those fiduciary market is. their make assets where the is in and assets.

have I to think we that. do

We’re in process. that

currently plan if our have we place too a so there’s to And now. say in right that to it’s early change

Amit Dayal

Okay. Thank I you. That’s it have. all Appreciate

Ben Cowart

Thank you.

Operator

a like Stifel. He is from And you. Michael coming question. He Thank lost Michael. just we had next from, looks had question the

Ben Cowart

Okay.

Operator

the to closing for remarks. In meantime, some Cowart it back hand I’ll Ben

Ben Cowart

this of Okay. closing X.X. what hey I quarter is the close, Well, Vertex the call

work coming quarter of the in investors, I second in the way got more forward. in quarter the the and general, market moving will And We’re We we’re Vertex And to new excited or the all to X.X. we ahead. company’s new that first and very the doing. a the up this be company about banks the year call and look for of support together really, has the business opportunities it’s tremendous the come that day we’re with represent couldn’t got of as pleased in

ir@vertexenergy.com further for call. may answer free to be up. you Noel for joining joining will Relations if Ryan, for, call. and the that our to any Investor that have the And other glad you we’ll everybody come out questions, thank So reach any and feel representative. to Thank questions reach

Operator

ladies and conference. conclude you, Thank today’s gentlemen, this does

your wonderful time have you a participation. your and this You lines at day. for may Thank disconnect

Vertex Energy (VTNRQ) 10 May 222022 Q1 Earnings call transcript