Earnings call transcript Q4 2022

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Operator

Good day and welcome to the Vertex Energy Fourth Quarter and Full Year 2022 Earnings Conference Call. All participants will be in listen-only. [Operator Instructions] After today’s presentation, there will be an opportunity to ask questions. [Operator Instructions] Please note today's event is being recorded.

I would now like to turn the conference over to John Ragozzino, Head of Investor Relations. ahead. go Please,

John Ragozzino

Financial morning are and Good Operations, President the Strickland. to Energy's Vice Also Rice; Cowart; Vertex today Operating Bart and Thank James President, Strategy Officer, year and Black Officer, XXXX of John quarter Rhame. Chief Ben CEO, full Chairman the Leading Vice Chris results fourth Oil Carlson; are Chief call you. attending and welcome Officer, Chief conference and call Ruiz; call. Alvaro

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

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

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

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

Today's Chris an from operational line we'll questions. call James the Cowart, followed conclusion review from financial remarks by with open Rhame and At the will prepared review the for of remarks, Ben Carlson. from begin

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

Ben Cowart

call morning XXXX. to morning joining Thank and the of quarter financial for you, fourth detailing John, good and we press our us today. on release those a the This issued operating results

financial and which report to pleased results the continued the safe operating are improved operations our We reliable prior and exceeded expectations. with

of fourth the which EBITDA $XX.X the business the facility, at We adjusted true contributed potential fuels conventional our of Mobile feel earnings million. these results of reflect our majority refinery quarter

following beginning refining hedge turnaround continued market work in strength results expiration following third September deals distillate Attractive increased the performed Reported margins, refining positions XX. of products high-margin exposure our of significantly in quarter. conventional the the for fuels prior on benefited

issued of our approximately in per of our throughput strong day guidance of ahead XX,XXX prior midpoint the quarter, Operationally, X.X% we barrels November. reported volumes for

Our fuels exceeded pricing capture for diesel a refining and product jet XX%, premium which prior on yield our of attractive and basis. strong XX% a profitability of barrel very per drove outlook profile and rate generated

In several strategic streamlining on business. at our addition, notable we initiatives made progress aimed

expand key of experienced by continue the adding business. our areas team throughout our to talent we First,

planned completed And of the quarter Heartland of mechanical conversion our project of third, scheduled end of Secondly, we recently second this refining our completion prioritize carefully by current business, our of ability business. our continued early enhancing have sale of on the UMO we start-up to our year. optimization construction further advancements with for March, RD

employees operations, for I'm relentless today, would and the together goals, pursuit as safe our for proud from of operations our not the without our highest contractors to our transition The the legacy find we ourselves achieved position keeping of and who while possible advantaged reliable work team's in be XXXX. results priority.

conversion like Officer, detailed call status including the on I'd Chief James? diesel James hand project provide operations quarter, over to that, update to With a update detailed in of our who our will our the Mobile. more the a on renewable during Rhame, Operating

James Rhame

with I Thank and environmental performance. begin everyone. you, good a and on morning Ben, safety health, report our will brief

safety zero XXXX, fourth zero had reportable of During mobile events. OSHA zero and operations reportables, quarter environmental the process our

Our in legacy OSHA environmental operations saw both reportable. moderate zero with two nature reportables,

performance, operational our to legacy on beginning Moving with business.

through quality demonstrates the safe announced of employees fourth the our recently of quarter reliable and close running those divestiture. and the during clearly maintained the Our operations and former operations. of This credit to is the Columbus team Heartland refinery the

with them eight over We to years. for are proud opportunity grateful last of their the contribution worked and the have

performed capacity in XXX% also day in strong the well refinery. rates slightly performance day, throughput fourth weather quarter, and per ahead despite volumes operations In updated saw XXX% Mobile operating the challenging guidance our XX,XXX and of of RD continued barrels run the increased plant site of our averaged our around achieving activity at and of in Marrero improving and progress Louisiana, reliability quarter conditions the Fourth XX,XXX refinery barrels Mobile at conversion. capacity, issued January. stated per barrels day guidance exceeding XX,XXX or utilization per initial

XX% continue gasoline, and finished fourth of such of diet sweet diesel the distillate production versus consisting XX% quarter represented our process to improved in in LLS change products, and following disclosed catalyst third We Total light the quarter reforming and previously -- jet WTI, our performance as XXXX, like production of crude high-value local fuel crudes. approximately of reflecting total units.

see barrel layer economics Our fuels-only conventional which to continue barrel for Coast XX.X% fuel, driving around guidance quarter ahead Gulf capture benchmark the basis, the per we business, XX% gross and provides slightly to was for The of $XX.X, XX%. X-X-X diesel our is spread, per rent-adjusted clarity additional versus to profit crack the a strong capture the of per barrel strength a gross function jet and of benchmark in contributed reported On the our during strength was resulting per a fuels barrel profitability $XX.XX. per fuels-only of we profit believe profit rate reported. an barrel direct refining margins gross rate the of in our which of refining

development conversion planned, mechanical of targeted diesel end pleased report to the this quarter quarter projects. by completion construction follow and project production to early with of schedule advancing the to renewable keeping year. the for the first that our the are initial turning in activities anticipated on Now as second I'm

necessary to with some in labor markets, to on costs, gaping order project keep drivers: $XXX chose to $XXX adjusted we additional $XXX site which that to million. to incremental rental CapEx costs cost slightly was protocols million equipment primary to project local total tight upward million budgeted has safety revision reflects extremely The three along reported range to million from supply all adherence schedule. the been chain-related the $XX ensure Our pay

on a contractors the towards remain of project. compromise employees and pressures Progress execution of all inflationary in Despite reliable timely the and involved without project. efforts complexity, for prouder are goals, the and cohesive we supply safe, chain these due we laser-focused continues to

milestones the I'm of over incidents as excess crews shutdown unit of outage-related XXX,XXX in date, With the hours share. XX% completed, thus of to on completed have Notable the logged work to hydrocracker include with our reportable of the X. January which work safe zero far pleased performance very planned

of and cannot Legacy pride an have throughout our our be team's the what we Mobile bias performance, teams and significance have While XXXX accomplished our understandable overstated. over

something perfectly acknowledge and take to each like to and by our Continued achieving relentless on prioritization individual time strict of commend. safety goals focus standards member our is team I'd

to as call like Chris quarter review our I'd first that an for this the the over for With as well will Officer, Carlson, who hand quarter year. outlook provide results the of to Chief Financial financial

Chris Carlson

you, Thank today. James the welcome call and to joining us those on

months December of of million income reported fully Vertex basis share three $XX.X net on share ended diluted $X.X $X.XX quarter basis or per per million fourth in XXXX, diluted the on net XX, a fully or loss a a For $X.XX versus XXXX. the

XXXX. million versus year in the versus EBITDA basis, quarter loss Mobile the million standalone We in of $XX.X $XXX,XXX a XXXX $X.X of third reported during in generated the quarter On the of during period. a adjusted $XX.X prior refinery million the quarter fourth EBITDA of EBITDA adjusted adjusted

benefited million and EBITDA. adjusted operations a segment contributed consistent Overall, Black Recovery results continuation $X.X Oil operational throughput volumes. Our in the from quarter legacy resulting fourth and of reliability

Continued fuels product margins conventional continue refined we reflecting strength robust see. in to the fundamentals, market

the offset markets where in quarter, The in in $XX.X portion charges crude seen continued helped fourth of $XX.X to amount to of to quarter we return substantial the quarters, A came backwardation a in backwardation at financial results and this the Contango, include million relative a two million and what product loss charge respectively. $X.X million. prior related have the during

obligations million of December of liquidity, net versus XXXX, $XXX.X a quarter. XX, adjusted at trailing XXXX. $XXX.X had million, X.X at million outstanding the restricted XXXX, cash debt of of prior total times the lease the including as As the of net fourth million of Vertex end company had implying December of to total of XX, $XXX.X of including ratio EBITDA debt end $XXX.X the XX-month quarter

fixed exposed place. robust planned in with the closed UMO of end, continue for total successfully we Heartland to $XX to on currently no divestiture contracts hedge our quarter remain fully to facility We current million. gross of price Subsequent margins refining proceeds

the of sale, back in pleased results originally asset as for this with are this in extremely million we purchased XXXX. We stock $X.X

our The RD planned finance preparation working purchased net volumes of with of with start-up. being currently April proceeds production used largely of required being $XX million soybean production feedstock capital associated oil the in our to are significant

a million year-end carries rate. prepayment million through a XXXX. directed term portion of towards the loan We in repayment able to $XX future were over on the make loan, also interest $X.X are of of term loans million the being interest expense saving XX.XX% which the proceeds, of our $XXX The

Looking of end per throughput to accommodate the XX,XXX in XX,XXX of completion the we be day, and the total barrels reflective hydrocracker conversion of the between RD quarter by volumes of the at first to Mobile anticipate XXXX, shutdown project the to quarter.

Coast $XX rate is for the be Gulf expected capital barrel X-X-X $XX to XX% the to between crack is per to And be We to approximately for barrel first our benchmark XX%. million. to quarter. spread total to OpEx on be forecasted quarter expenditures the capture anticipate $X.XX per $X million

final some back before turn the comments open Q&A. to for it like to provide we Cowart, to now I'd up call Ben

Ben Cowart

The which Chris. proud and you, a performance, of bar of. sets for fourth I'm Thank financial extremely operating quarter XXXX

and encouraged We refining the both for conventional business. fuel the renewable continue the to be of margins side fundamental outlook by on the

our the that extremely look in We start-up in business, each important As for potential player the in this establishing rapidly widely Vertex market enthusiastic individual of as remain forward determines to renewable April, performance. an market. the knowing player fuels developing profitability we renewable circumstances this different ultimately approach production about in outlook faces their fuels we

on updating each at for detailed confidence continue to we the build face to accurately anticipate we forecast Until we thoughtful expectations then, our our the prudent we as take approach will expectations. the to deliver a as in decision ability a and market business look RD and ramps. business measured, with these very Therefore,

domestic conventional side and inventory environment capacity the below fuel averages. business, margins continue macro and maintain lighter elevated continues by including less, distillate diesel levels of historic Product jet refining products, extremely tight our well the be the for On to historically fueled to robust.

As a like business. and strong able another look to our joining for to of see forward positive of side we call this all to on financial quarter you result, being performance. us next thank deliver to that performance morning, on expect on this update to the I'd continue I

questions. open With the we Operator? will line for that,

Operator

Thank you.

question [Operator first We UBS. from now Manav ahead. go Instructions] will Gupta comes begin question-and-answer with Today's the session. Please

Manav Gupta

April on asset a quarter. Guys, great X. is question on you the first congrats My acquired

showing allowing improve asset. it change R&D are does And goes material us us on yields? learn gone Throughput help some from some You also in follow-up has product the the changes throughput to experience you this you have it and of this one quarters. last you through is, the project capture of up. in couple change into which a the could us those improvement screen brought understand actually Help once understand does the this of If of picture, performance walk the the a are or about, parameters?

James Rhame

Manav. morning, answer I'll that. This Good is James.

increase and quarter fourth really So, capture the the were to us in things. what occurred three allowed rate

change yields. third And inside which hydrotreater, capacity of increased was were catalyst end catalysts of space. the we age remember, the the were reactor Those while we the our changed reformer which to things. catalyst, the did are the affecting and and two improvement you life the quarter, capture able at reformer we and that there, yields distillate in we able main as was improvements both in that made put we between we the to During

site say yields that that paying Everywhere that's that selection the from distillate doing. is unit, to matter many making attention how this that one was were the strategy had and crude site and relatively we're other we on go very that distillate also good The could focused we've what been one or -- would I and running that bought to execute those. projects simple we're sure we maximum

And that answers so that question.

during the of amount were in we Then I'll the next we crude lose to and also. had yields that to the sure didn't throughput answer make we that question? Did And the throughput also that end, the one. go first you saw able crude

Manav Gupta

first the question. answer That did

James Rhame

All right.

So what's see hydrocracker in on don't one first going so to that's primarily, absorb change? the performance down crude you'll Number up slightly to because and have hydrogen. quarter, I a

comes hydrocracker my so change. limit up, system but once got fuel there, I've therefore, to that's So capture the rate will

a because see what from actually the you initial now capture our barrels in out purchase, no we're be was the a diesel, occur quarter. X,XXX result. will longer fourth we making X,XXX to of to as roughly barrels is -- rate what And hydrocracker saw the is, I But VGO X,XXX have on benefits going a selling to open what I'll day do VGO of back the market

All of that rate. affects capture

of I in should sorry, unit too, I But I crude run added once up. will same the I'm that amount the Manav. RD have get

Our crude conversion. rate was be it down OFAs for taking consistent what to, will prior the with the

Manav Gupta

perfect. So

the massive VGO the goes that premium, So is of VGO, up right? a yield which at selling is

James Rhame

barrels numbers day. a you That's, correct. give It a to XX,XXX me -- some rough let goes about from barrels XX,XXX day,

Manav Gupta

almost you, that you or on you We had you approaches And that. major, excellent to $X, gallon. valuation my to could deal, I'll would a be it very here And to kind from this something if this open quick European a of saw is, European open a do for US project. want Perfect. kind we Is over, or of Louisiana after that a an your turn be valuation major recently do another follow-up own?

Ben Cowart

two at we on good but a for by call. no that portion have set renewable on bifurcated go the interest taken event thanks us, is And our to this there's This path We've for we've production. business. site, business whole has have RD a planned value Ben. also the for morning, now, own, on Manav, down being value exceeded, on least that if of -- of and that our legally in somewhat necessary, projects our

this prepared are this be the opportunities, our performance and will of we down but to very ability those business based on So to the at XXX% look rest we the continue to excited today, company of own path. of

Manav Gupta

Perfect. guys. great Congrats, quarter on

Ben Cowart

Thank you.

James Rhame

you. Thank

Operator

Schafer next with The Markets. Donovan Capital today ahead. go Northland question you. Thank comes from Please

Donovan Schafer

the as Hi, for first quite analyst's guys. positive. just questions. taking comment Thanks the seem that, will broadly I second results

I only if thing I think we're explanation this is higher negative there the you what call CapEx, sort could provided tight you mean, -- the seeing labor but is some incremental coverage the thing, -- only market. that, really of it the is

staying Of course stay it it making makes you're -- sense that, to a making schedule. on -- priority

costs. So, of course, sort that mean, of stuff could chain supply expediting a higher

more dig a is, down tiny my question we like if can But that. just bit on

labor pay means in of you you market, can that out rural hands area. as your more say, -- you Sometimes, people, and for instance, you on get tight you but kind are a very

You've refinery talked about the of your employees, at being third-generation folks. cost

sometimes, difference And something. say not expediting get to just even able having to pay versus period, so a or being with or something there's between out it for

waiting like, some any on track cost -- like of, trying that cause of I kind you're nature to today I'm in well, But of course still components of as on, incrementally the say of delay thing, had expedite you them in but three you're the seven, therefore, potentially XX you've the sometimes delays to found learn a to is have large maybe on other about and there’s can't. you might and in a give potential of So is there on know those of really anything type delay? of you you the what's behind as expedite of then we're hone runs, because those, further track. that you would now, could can -- where

the there, digging of bit would little reservation is basis or So anything into a in caution of of that of a the – that? aspects there just attributes a for give really that bit around underneath what's little

Ben Cowart

for the Yes, yeah. you question. No. Thank

today that's on every first was in finish to the hardware If have so on-site project. the hardware. We – I of piece single

feed little, those our supply most to the valve it By a ground. the on did the these though little out even we have high-pressure took were you. were as one making maintain focused are valves we'd we schedule ground big aren't told really we on pay on of every chain, previously components little. time These we're So – as – had I team site, feed out, say every sure of

components every of have handful a I of and one think those arrived. we had

So that's seen performed has think on made chain. supply on is market could side, seeing everyone the else have people the what the we've the market. in And what I We and choices quality have there, not we work different but paid, site. got people of had we on not and our very some and the quality good by performance had very, and contractors

for hats that down from are us, well. and done as very off that And with our A we're And team brought them. They've the the of in now the peak. we coming to de-staffing process project they've

that's would up, not the So on stage. where if this but was I at are be worried ramping project I we

down ramping manpower peak are from requirements. We

Okay?

Donovan Schafer

Okay. That's great.

Okay.

So helpful. to the for as I'm And make on $X.X follow-up or want understanding that sure, hedge million then a clearly. that's roll loss I backwardization, very just the question

different that process. exposure a go you those So that guys you sort feeder exact working you're more had kind want this sort my is to in the prior in barrels that, they it's implicit day almost and is exposure price one really impression bit the crude the buying about hedges, they commodity where from in that when go is of of margin this the of you're but quarters, a of place into buying lock the initial capital crude in

delay And or then side. they there's some other of amount of come the or lag out

million And you're an is that hedging, just of tied so have is just more exposure is that's that exposure. that to sort even an alternatively, it you and/or or if explicit hedge not hedging specific the implied hedging $X.X is it that,

out? get you crude the the you're as in between prices exposure and commodity of so And that impact product refine ones interim highlighting in move

Chris Carlson

and well of combination the yes, the Yeah. hand I have we laid your in on of it's you which and inventory Hey, a at moment. commodity the of go in it explanation. the changing backwardation is in kind it's impact mean, that We're But backward but out Chris. it still position forth the this a are today. dated markets, bit, back a little seeing

Donovan Schafer

Okay.

the they issues roll print adjusted gain caused backwardation. so release hedge reconciliation, And EBITDA in a the on loss in

impact So not of you say there's in It's exposure. just more Is hedge contracts roll of use right? place. that kind hedge – the actually more like you that that broadly of

Chris Carlson

hedge that To contracts No. there in are place clarify

Chris Carlson

…in inventory. remediation our agreement on

are... there So

Donovan Schafer

and a or netting sign of in it's So it's mix a kind of a both effectively of it of there's amount out? kind way, figuring

Chris Carlson

a It's of both. combination

Donovan Schafer

see. I see. I

the Thank Congratulations rest Great. I'll guys. Okay. you. offline. take

Ben Cowart

Thank you, Donovan.

Operator

you. Thank

from question Please comes H.C. Amit Dayal next Wainwright. Our ahead. with go

Amit Dayal

you. my results. taking near appreciate $X.XX Thank Good this sort this online guys. change of Great you morning, of $X, I to does And term? operating questions. expenses for the coming range with RD is how soon? the

James Rhame

Yeah.

this Thanks. question. James. So is that I'll answer

the now with will in conversions, and are back as same and will of site Our go as will not With your comparison it refiner be one question? we without RD change. RD up basis, pie pie Does barrel we'll It separate answer the of cost the both But split takes believe RD may a to the on that will barrel we per have the If as we site. per at amount the to that we're we what on bifurcate its at manner. up always share look us occur and we business that basis, of competitive, the look cost the size once continuing our some of costs competitive. it's the we costs it history in if of that operating site. the this what the go are, a a

Ben Cowart

burden those make already sure just We hydro in running add clear. the cracker I'll carry So costs. of it's the to

cost we we operating kind change very we earlier. As to bifurcated RD be It on, anticipate our discussed much. bring of as will don't

Amit Dayal

and now. you. clear Thank that Ben It's you. Thank Appreciate Yes. James.

later, expect have incur are the line or is time that to pretreatment respect we to unit And cetera you with question related RD what's CapEx it's et Just for I this coming that? another coming deploying later? that the the in is, that and to ramp, initial if

James Rhame

I'll is again. that. it forward Yeah. hard is real and fit James path and what the does answer Thank been best pretreatment you. at how We've This that. for looking

economically our path investigation, as towards invest of a it's would we arrangement cost process hurdle found a a not not tell be today. of commercial to arrangement commercial that pretreatment capital even settling to with this us rate. have this in believe we best at settled below we for yet, in However, have facility it's not facility would though a us that our And pretreatment

Amit Dayal

or Okay. something? Is this or you are getting guys, it local you state to from another

James Rhame

And Yeah. local facilities. these refinery. They're our to of two mobile there's relatively actually

Amit Dayal

Okay. Understood.

Just on business. me. one the last UMO for the Congrats one sale on

business. what do Just with the you remaining anything expect remaining that is of wondering for to what do things? side that And of UMO is

Ben Cowart

Yeah.

work coming over you thank years. into and the So and coverage Amit for doing guys the just you call what are the

of with We're little the sale what be very than Gulf were legacy So we are we It various our more may to remains, the we're excited what doing and that Xx business than region. very pleased focused Heartland. a [ph] bigger. Heartland its about dating on that in at

with all So UMO collections to combine we our Mobile our operations work refining. will in that doing we're on the continue

so real and as move some that business see And we forward. upside we synergies

more continue come it's just Gulf. focus that's And on business products So legacy really molecules -- our and to that are becoming from more focus the and focused valuable. our carbon low the refining

dial going business really that to So we're in.

Amit Dayal

Understood Ben. have. I all much. Thank you so That’s

Ben Cowart

you. Thank

Chris Carlson

you. Thank

Operator

Stifel. our ahead. Hoffman next comes Please with question Michael go And from

Michael Hoffman

of Thanks team strides pumps everybody's some see taking It's Hey you nice Vertex. initially. the And I the to for echo its given at comments. call. for plant this

a You sorry Ben have -- capital working arrangement ahead. go

Ben Cowart

you. just to want I thank

a You've us. long been fight with here time in

I the sharing and was you've work appreciate to forward this with looking moment done. all So you

Michael Hoffman

XX been It's years, Ben. Yeah.

Ben Cowart

question. to Yeah, with I was apologize so go -- ahead your interrupt. I

Michael Hoffman

not No, at all. Okay.

off more Can paying and got $XX of you've capital. with hasn't your balance XX money Macquarie next proceeds, arrangement using $XX for down you're goes What working when to And XX% capital more kicked in net peel needs million and have of some happen -- that of for then some that kick-in? the that to get sheet? yet. million that that that does to I debt You a working it back

Chris Carlson

it's Michael, Chris. Yeah. Hey

-- So products. yeah, with next we're mean agreement of the the oil our should simpler lot the in for be through working than XX-yard we're first probably I one. It soybean the line a lenders

as far that have to us. bit yes, we deal, more will cash, that a the we going And into that As of to are be little use back to once will cash continue to finish project, we'll to is opportunities out a then and on we look balance focus where noted, which as will we reduce the And RD healthier at sheet debt. get can come done. almost

Michael Hoffman

at cost Okay. in you're XX%, territory. I mean really the of equity

would on see reduction see down. So was million versus going should to that $XX nice trend XQ XQ, there? for us Can we come there's to you And XQ it the inventory. XQ? as what through Q-on-Q sequentially what be from a in talk

Chris Carlson

inventory diesel, in of et what The $XX, Yeah. cetera is there $XX the the real story value. commodities, The came barrel. Brent, down cost the a

So requirements that, obviously, reduced quarter-over-quarter? the financing

Michael Hoffman

Okay.

wasn't volume drawdown. on actual physically, as it drawdown well a so it So

underlying the changed. just has consistent is volume mark-to-market total So

Chris Carlson

involved. That's the it's dollars Yeah, right. just

Michael Hoffman

Okay.

Chris Carlson

You'll that up out laid see down. commodities go and

Michael Hoffman

the release, you take about to if about alluded the boiler would you put what second presume about the hedging today, hedging But approach it? you future you than you think differently then And you to would hedge? last of if year a not press little talk third the how you it, did Could approach quarter. you and chose would you bit currently hedging I did for Okay. but could. point in And sort

Ben Cowart

question mind, was We housekeeping on and that mentioned not hedging with certain normal Chris in Keep there third second our is things intermediation like inventory I'll that just hedge the what crack take are in that's Yes. were spread. reflected decision. quarter Michael. really

cash purpose for goals XXX in safe were at that So had we spread what and were. when to making look a and delivering project you objectives on crack passage our limited protecting of and RD the locking the that we long-term our

is clearly for hindsight always and is. see we it Obviously what that XXXX

at decisions we market that forward, and and today the exposures are as the have the capacity bench As a deep have the company we a and and credit team go. looks make our we look we'll we at necessary in to those looks and hedge what as capacity

We maintain believe future, that very the to the exposure we in indicated the our business strong market to we're the foreseeable is as market. going for and

I shareholders kind where they're think, of that. on have head our expressed

diligent but So that protect our them see we loud clear, as may people also not we we hear be other to margin at and be will things looking and go.

Michael Hoffman

where you around do stand literally And enough. Fair arrangements? on April corner. feedstock the is then Okay.

You going stat your be it's here. fingers to

the feedstock status production of facility? what's support So the to through

Ben Cowart

Yes.

And so the Bart already in us. team those acquiring Rice him, supplier, feedstock job operation about we has are to where we'll me is suppliers fantastic done them the but I'll let we talk the have and not more that. who But are. but about talk terminals let and speak securing getting third-party of Bart front And and I'll a his and here him

Michael Hoffman

Thanks.

Bart Rice

success. confidential as important And of our the most the our at it Thanks. one we most important Hi, as well. Michael. feedstock avenues look puzzle This is The for piece is Bart Rice. of

we already already product and up ag We companies big have And companies to lined the all each shipped Mobile. storage of haven't ag in those in have entained logistics with us.

truck. of happy the by feedstock competitors people this CI preprocessed. home be But some that with east of the our value more score some a and focus oils taking need We're fats they by on the going lot company. rail have and boards, be and that to They they're We'll to to the by find the to right when key the to better greases the where feedstock have all Vertex our of where got Mississippi past feedstocks to success the been River our and their taking now. us historically logistics is extend we've

Michael Hoffman

helpful. Very Perfect.

Ben Cowart

for involved for again, here you've And point been reference future we as a make me let move business just long Michael the a forward. time. this with company

is XX for point origination strong the we company founded it's years feed a And ago. how Vertex. So,

to the geographic weigh excited at that a ability So, move about in lot then the capture right very heavy. to said as we're we feedstock feed level and negotiate for will opportunities, ground Mark of ability advantage materials location have

feed on very business. the side bullish we're positive and So, the of

Michael Hoffman

on getting focus that I the preprocessed, my as balance that's heard you you're there's why soybean cleaner arranging And a Okay. Bart third-party types with but preprocessing, will words, what dirty oils, say these needed. is

Ben Cowart

That clean up We're and to smooth for is integrating. we'll going start then correct. operations just start

Michael Hoffman

Okay. base did oil do the And then what fourth selling in prices quarter?

Ben Cowart

have I information. don't got-- I've Yes, that

Chris Carlson

It it base, but down down. go went not did some,

Michael Hoffman

Yes.

Okay.

then And an shareholder the Vertex maintain question earlier open clear Okay. will asked to and profile was seek maximizing maximize just to value. of be

So, whatever it. is whether it, sell do you'll keep run best shareholder to the value, it, maximize it's way and that;

Ben Cowart

renewable value capacity value whole no we're online. the shareholders look a have we said. at best than add our to you difference as We to going our bringing We're

Michael Hoffman

And then ahead. ahead no legacy on go the No, sorry lastly --- go

Ben Cowart

different the than handled no and far. believe made to business and -- leading And things look play legacy interest what's And out. line we that we inquires that. so our at how we've got in as on we that a best continue will the But we've we that's is decisions

Michael Hoffman

Well, out aren't got XX,XXX going and gallons anticipated the up of business my but that up all portfolio that tying are you've could you a relevant going and Marrero that is of Mobile? legacy with great you're to a pieces million that in question cleaning that we in other maybe last the see XX -- barrels sell Okay. we end would day used oil processing into there given I forward that suspect which the continue to VGO of VGO just that may Marrero, of

Ben Cowart

hold piece look to and That's of our is them values we've going that each yes. continue to be the one already approach. of with will We assign answer the business to at started to each

Michael Hoffman

Okay, making Thanks for cool. me. the time for

Ben Cowart

Michael. you, Thank

Operator

of And our today Craig-Hallum. Stine question comes from next Eric

Eric Stine

here you Good morning. I'll just the with at end. sneak

Ben Cowart

Good morning Eric.

Eric Stine

appreciate And you I'm rate. expansion. obviously, offline the rate hydro I treater can hoping part and in go guide or But quarter for I is beyond? about back on but any good we of first with RD capture the XQ thoughts Hey think capture to should the can morning. we don't know what

Chris Carlson

provided slightly to on. is is it will it the going in even best be of crude that I it though guidance higher, our to first rate the we're much – not be be today than quarter that different think not way think we may

capture rate. the to continue will We creep to try

if would where first – had for rest you the year. that me, are of quarter we be asked you the range that tell of the However, the in for I would

Eric Stine

maybe end what can driver not in obviously, and get quarter that a steps you the you by rate are you for do longer-term some this it that And But the business, go? of mean, saw where Okay. to just as XXXX. take then necessarily is can go that And longer-term might there? look this the of think I huge we where capture

Chris Carlson

people great a there that Mobile the we've to because of one that have the really had is unlocked the ideas site. that's the Yes, our of improve things question profitability at

time what And competitively. that so they're cost far next where single we're there, is and that every looking we opportunity do the can at

people. of we front I back the an extremely with we right predict in from a strong in coming lot that My that some that there see focus continue go of you see I site that site a us being in And years may a projects was been because and where strategic to now beyond sitting coming are I they're in and were take they tell will market. would strategic that. creep to I is They recover forward daily. several have can't to even quarter to it in now to execute. with ideas us not fourth goal the But

Eric Stine

Got need you. Thank questions. you. offline. No to six rest guess ask I'll Very the five, I helpful. take

Chris Carlson

Thank you, Eric.

Eric Stine

work your all Appreciate Bart.

Operator

next our question from Noah And you. ahead. Please Kaye with Oppenheimer. Thank comes go

Noah Kaye

to taking execution from good Echo the great that Hey, other see the quarter, here. morning. for Thanks comment nice question. the really

time conversion sustainable a have table run got fuel of But the conversions. know seen aviation doing industry on in we a of we I number terms walk that up. other projects R&D the standing to in With track, before

the project you can little think feasibility of doing actually a bit about talk that this just technical maybe much about How SAF might a looked doing of project when And at into a so that? nature. And refinery? you you've

Ben Cowart

what's it. us, we can – something understanding in We're forward What this for the what from the economics, see RA? we're agenda very with prepared analyze, is the what determine RD SAF. return. let's the lowest we or what's for forward to the best capital project. are path project straight. can is But the just And as with really conversation, We're use put highest the that standalone path in forward the associated the to agenda very We're for it can the Yes. best not impact yet, trying best bolt-on interested – early team's that's we has conversation on we can and that the you help us. guess path either us, my the the And to you as for

Noah Kaye

around, you're details about to question tuned to back I earlier was stay We'll, I want more Michael's hedging. a Very good. on response that. thoughtful how go approaching it thought hedging. for

do anticipate the to share our communicate standing will think you hedge will able exposure? that something kind clearly or of maybe actually we a go-forward we of profile or to either kind might able Is might of hedge you you that be do communicate basis? company what But articulating investors, folks? be on to to you cost When x-percent a for

Ben Cowart

for to give can pretty today, straightforward. base do you exposure. protecting We're inventory as by And I for right going Yeah. forward. a we market our it's move

going So always that. procedures. be operating standard That's there's around paper to just

And in we'd with and deeper outside consulting have view ability with a markets to. we then, that much place of lot and to team of cracks a a look hedge, the

and going So the market work we shareholders. upside are provide our margins the hard to for protect to to exposure our

today, see in long we the that But a as of So protect we exposure decisions that that turn, the make if we're point crack have the back and sure to if things position, to going to to the view in we at on our tools as margin. are spreads deliver we time. has shareholders. that turning, have team keep we make as But then that our can that

Noah Kaye

take Thanks, offline. Ben. Great. Okay. rest I'll the

Ben Cowart

Thank you, Noah.

Noah Kaye

you. Thank

Ben Cowart

Appreciate it.

Operator

and And I'd to like over concludes question-and-answer remarks. gentlemen, you. management, back session. closing Thank the this the ladies the for to turn conference

Ben Cowart

very It call. what has be be Rago We too shouldn't next [ph] any if you to you, the our today. accomplished. thank call questions. will joining for the anyone forward has of and our look team proud time We're available everybody Thank we long. And

covered can in. anything joining had that You through vertexenergy.com today. so Appreciate more our that else can if you answers and comments we provide we reach out there's

Operator

Thank We today's call. all for thank conference you, attending you sir. concludes presentation. This today's

And You day. may wonderful now disconnect a have lines. your

Vertex Energy (VTNRQ) 28 Feb 232022 Q4 Earnings call transcript