Earnings call transcript Q1 2023

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Operator

Good morning, ladies and gentlemen, and welcome to the Vertex Energy First Quarter 2023 Earnings Conference Call. At this time, all lines are in a listen-only mode.

Following the presentation, we’ll conduct a question-and-answer session. [Operator Instructions] This call is being recorded on Tuesday, May 9, 2023.

I’ll now like to turn the conference over to John Ragozzino, Investor Relations. ahead. go Please

John Ragozzino

Carlson; morning, Officer, XXXX Good are to Energy’s Officer, call Officer, Vertex and Rhame. Haugh. Officer, Thank attending Doug Ruiz; Also conference and and call. quarter the Chris Financial Chief results Ben Chief today Chief Leading first Operating CEO, James Strategy you. are Cowart; welcome and Alvaro the Chairman Commercial call Chief

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

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

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

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

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

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

Ben Cowart

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

results, to were in continuation are operations our of operating expectations. a financial report and which We and line pleased safe and strong reliable prior with

reported EBITDA of $XX for to our the February million previously the of on have first expected announced $XX.X as this in the for year. adjusted perform Gulf million UMO our continued following of our as assets Heartland Our for operations business focus quarter total quarter. enhanced Coast We we sale

tie-in. perform $XX.X associated the during driven in our Mobile project by fuels smoothly part offset the of profit continued impact gross business to with conventional for throughput planned of by million, downtime attractive Our margins, the quarter generating refinery continued RD facility a at reduced

in reported in XX,XXX in related diesel barrels per of gasoline reduction products to drove for of day we our late the Shifts volume with of the to volumes product such hydrocracker profile Operationally, our throughput in and increased of issued diesel approximately renewable February. line production the a VGO finished quarter guidance as conversion prior cut. our in yield and

Fortunately, strength in barrel mitigate impact per outlook refinery, XX%. yield overall profitability line driving our prior the the to a at in VGO the a of rate market of of help capture which XX% profile was with XX%, changing

aimed enhancing streamlining We efficiency. continue and initiatives at to our strategic business advance important several

of As into has tighten allow Heartland previously the our to and assets on mentioned, sale the Coast UMO brought the Gulf liquidity focus operations. us additional business

we to a our Officer, Additionally, a lengthy on who the I hiring Haugh, have search after Doug new of am announced for thrilled team. Commercial Chief

I experience a additional the believe feedstock Doug’s through the to bring value and tremendous procurement to as capture of marketing finished company benefit and background products. extensive we seek optimization

schedule mechanical of this on our RD completion reached year, important project. of On and on March of milestone XX budget an Vertex

XX, April our team of commissioning facility. to sequencing ceremony ribbon-cutting phase operations startup the on RD from hosted Refinery by transitioned Following Mobile the the

will Unfortunately, system shortly. pumping startup Operating we feed a with delay, in days detail in James which Officer, issues the follow, encountered resulting the Rhame Chief in to cover more

you the minimum our with issues While safely resolve we team’s have this in an I to story hope not ability and challenge faith to this to have unwanted morning, is reported team how the well while quarter, this delay, operations. will has very and as the at I of I’m it proud relates our to reliability keeping of safety first executed forefront say the

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

James Rhame

you, report us safety joining a our this Good I’ll morning. environmental you health begin morning, brief with for thank on Thank Ben. performance. and everyone,

environmental First process OSHA the across events. first quarter additionally XXXX zero zero was acquisition and had Mobile a zero environmental Mobile clean quarter. the reportables. safety we Across we This business, is the zero fleet. quarter safety had and reportables entire since the that reportables had

on capacity progress the in a operational beginning plant utilization performance Moving our continued at achieving improving and Marrero saw the to quarter, XX% performance in operations Louisiana, first refinery. in reliability

in sale the of previously we disclosed, As facility February. our closed on Heartland

safely continued sale of and completion during on smoothly the X. through January Operations the February

the We have continued new to support the of to this owner. facility successful transition

performed the peak facility project. the again our activity Mobile construction RD on once despite quarter fuels elevated conventional site Our of well during the during business related conversion

averaged First in volumes for at Refinery previous of Mobile at barrel. expectations XX,XXX also at saved throughput Direct our per $X.XX with prior XX% or OpEx line line the operation with barrel barrels the was per capacity day guidance. in quarter our per quarter

of dock local Intermediate, like other consisting crude Louisiana sweet Sweet, and continued crudes. light our Texas We West processing

and the and distillates quarter the hydrocracker with barrels expected as were As basis. yields gasoline, X,XXX XX%. to X,XXX reduction was This chemical accounted see the of shutdown forward during in expectations conventional XX% a jet a of product similar and Products previous accounted diesel. for of to unit renewable shutdown, expect and quarter the to products fuel representing upgraded go business yield of Prior on XX% yields for XXXX, line feedstocks. the the we first total in in reduction the diesel, our to such finished due conversion yield to from

on of XX% a in our $XX.XX. per barrel spread benchmark gross a line capture XX%. Our fuels of seen VGO with per X-X-X per diesel in margin our resulting as is conversion such basis, during strength impact in offset the the hydrocracker rate The a barrel result the margins refining profitability. Strength XX% in barrel fuels a reported of capture gross was benchmark a margin crack function On production $XX.XX strength the guidance intermediate to of for per margin a the the gross Gulf VGO. of Coast and margins versus was barrel quarter products of reduced as driving rent-adjusted rate

project, as our renewable completion previously on March to schedule diesel XX. Turning achieved we on mechanical announced, conversion

We’re goal tremendously without team’s operation despite incident disruption many of in environmental a in project existing or this of the or facility. this executing safety the challenges an proud the reaching operating to achievement of magnitude

manner, In of unit bring supplying down failure, our worked catalyst hydrocracker. process our safety a the in the as diesel feed in experienced failure preserving for our are renewable controlled further responsible a including impacts, safe and system. sequencing, These and to Upon systems the appropriately unit startup pumps the we to designed pumping feedstock responded team preventing hydrocracker. the and

impacts This known feed have a the processing the and reactor resources capability. impacts isolated or number engaged root Currently, diesel system of unit analysis, the event is internal to cause external repair, other renewable expert and with no any and equipment conventional refining to the is no in safely we restart. to parked and

Ben our in take on outcome. mentioned, head and As ability challenges confident delivering reliable safe team’s are we a these to

diesel to to As to second it unit. May, relates of startup to sequence the renewable end expect we prior of which repairs the half after the be and resume reinstall plan the timeline, the of we completed

tremendous startup. look Our said, timeline this team We things to delayed our we pressure well the this am is and and in for a proud to targeted believe you I event. are progress. I during That disappointed have setback executed temporary future our how of unexpected certainly as forward under team updating

has As stated the operation sound our to continue safe focus previously, facility. will the be been in and environmentally and

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

Chris Carlson

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

$X.XX quarter the in XXXX. $XX.X year and quarter common We in XX, adjusted or first net to months the reported million shareholders common March ended net $XX.X EBITDA of XXXX, the in versus shareholders the reported million attributable attributable share or of prior XXXX XXXX. three $X.X $XX period of million loss a million per $X.XX quarter in Vertex million fourth For $XX.X per income versus first to share

sequential EBITDA yield a expected. shifts as the the decline crack profile spreads combination throughput, and reflects The of lower in adjusted in reduced product

assets after on were $XX.X quarter reflecting first Total recent the the an sale on in quarter Heartland guidance gain of sale roughly results amount XXXX million, issued the facility. our in $XX.X with include first of CapEx of The million financial the capital tax line April for expenditures revised XX.

towards project. increase quarter capital II ahead for the I of plans the an The geared strengthening spending position site’s of acceleration Phase the investment of first the Phase reflects in

XX,XXX to capacity day per X,XXX expansion renewable additional II Phase outlined, includes expecting from drives of previously installation As initial of and diesel the per conversion day. barrels hydrogen Phase a in planned I capacity project the our barrels

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

crack current spread to in no fixed contracts with place. margins exposed fully refining price remain to heads continue We currently

expected and $X $XX second facility quarter the between at XX%. approximately for to and $X.XX be total capture XX,XXX throughput per the capacity X-X-X to XX% barrels our per forecast to XXXX, per between be spread conventional barrel million to capital to the $XX barrel total we second Coast and crack XX,XXX is rate on between OpEx We Looking XX%. anticipate of million. of is be Gulf benchmark total to for reflecting quarter Mobile XX% to the be anticipate quarter expenditures volumes day, utilization to

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

Ben Cowart

our to operations as Thank like managed made transition we’ve We we you, to streamline to what further progress continued refer X.X. Since last Vertex to in Chris. in significant renewable on order call, diesel focus time and conventional operational businesses. the and improve renewable conversion We both on the project of of achieved reaching budget. to goal fuels completion our mechanical on today

the bench leadership as via team strength Doug Chief our also We added Officer. additional Mr. Commercial the Haugh of addition to

As I’m continue we’ve the but type to forward ability team have our providing quarter an to disappointed startup overcome updates the Overall, achieved who delays demonstrated these in we accomplishments renewable forward. James first stated, the we significant further for has look and outstanding I challenges. facility, the know by encouraged as throughout of I are diesel we

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

Operator

now Your begin Ladies we’ll you. from Northland. ahead. go comes Donovan from session. Please gentlemen, [Operator Instructions] Thank the and question-and-answer question Schafer first

Donovan Schafer

conversion Thanks fuel results good side. pretty dig refinery there. glad to fossil RD be into for taking really guys. delay Hey to I side looks questions. But the of seems to like well, the on operating see the I’m the quite the want

if James, of can going wondering, I’m flesh on you less kind paint more there. was picture the to to what of – like Just ask of or or you of for kind visually going kind out us

imagine the OSHA extreme or it seems presumably case given not seem doesn’t end, explosions you of which anything can On a there and like likely you environmental of and didn’t like – it then, given that all the course spills incidents. chaos, were

like sensor is an So internal, or just goes a this off like something.

of older given just all hydrocracker. equipment’s just it specialized that pumping be a the why kinds isolated interplay where kind Is of be not a just working. works it And a pumping of side, but figure moving of would that more Anything out there the out an or the of an this type I pretty fluids, And quite with it’s – something just for it’s to great. you been was equipment here just piece then – equipment. for – while you’re another sitting it’s fluids, guess, like special sounds completely there’s that sort trying important there’s would kind or question feedstock oil – generic like pump soybean flushing of maybe pumping the legacy and is on

Ben Cowart

this and case, was Donovan. pumps really you, designed brand morning. put feedstocks these were – The new material a this front, all in we’d premised. event the specifically Yes. not that different Thank that are this Good for so to

is external a the for. period at designed the it look that had, technology own brought designed to were not however, plus system startup they products provider, during they that the expertise of we in found there’s the were pumping what our internal transitionary for we plus As failure we

pumps, a they’re as we the would pumps, They’re damaged of but back so those to and specialty we say, I which same pumps. These the this repairing are, investigation, pumps displacement your making manufacturer. a time, question, And those them answer took did to they’re result us. know, it, the hardware positive now and such what we’re At returning from that understand can Donovan? in very these sure we pumps rigorous again. Did going we protect changes and through occur, that putting we’re place we

Donovan Schafer

to to I’m grasping. going And I’m Yes. just kind make of restate sure

the So maybe day-to-day other – you set like, of pressure outside the commissioning there’s just through regular chart that a temperature commissioning it’s sort process maybe the or or have you or that’s specifications graph running. of and of and go some parameters could in

doing And so nature going some kind of jumped spec as initial just on was like commissioning. of in commissioning you’re the up things the the parameter of how through design the you’re a outside ramp that

And a so of that there. myth was just sort

am I is so properly? correct, that And that framing

Ben Cowart

I think pretty you well. characterized it

Donovan Schafer

Okay.

fuel, in I taking have been and jet perfect the gasoline but bit hydro diesel mix. it was see of how also per expected and on moving jet Okay, the in that been have an great. going. doing nice conversion, of and – prices And though RD I the sense production been makes and drop The the aligns better. doing kind kind to know gasoline that uptick a with diesel, coming fuel’s as to the know markets then down,

of that incidental kind of and kerosene versus curious, of or there that’s else on better? reflection diesel is versus fuel, kind ability adjustments any quickly within kind – simultaneously? benefit the happening Or sort are making changing of your just to part everything adjust just So of of that a from I’m jet to prices is where kind guidance artifact gasoline of

Ben Cowart

No, going group have make the didn’t the that to and of marketplace. could a thank can That’s is the Mobile, of limited amount the jet that, we hard the adjusting out. do people pointing we to moving respond the but out well inside on technical and maximize work We amount for we it been both hardware our yield they that you that operations market of match really the have. inside what of do to

Donovan Schafer

questions issue. Okay, take on it my offline, hear but guys. to sounds pretty like going great. I’m a Thanks of the rest delay, congratulations sorry to but the about – workable

So it with that. leave I’ll

Ben Cowart

Thank Donovan. you,

Operator

Thank you.

from Manav question comes next ahead. UBS. Gupta Your go from Please

Manav Gupta

Hey guys.

on So just the going little timeline. back a

identified, capture still other whole You you refinery, in But bought then the some you there part. can capture obviously higher the team to of which this hydrogen bunch rate projects, the lead hit executed improved, quick the were to future. moved a projects, which has

making think is one premium I gasoline them. of

you talk projects at drive can future could the executed So help quickly you capture will just refinery? other about which potentially higher that some of these in be the

Ben Cowart

make being Yes, of for and premium be What we’ll is we’re in question. really those. and projects, the that having order at on be improvement morning. thank looking good have And we yield Thanks some there. gasoline changes one you to hardware identified successful those working to

with that waiting us basically for us I coming projects relatively that things talk opportunities you And I the have our show is with quarter, a This and the list hydrocracker yield return that of online the next low our and the a profitability and a brought team structure. really over the I is what in capital, high of told assets. the the service I recover believe told up about that improve we years, were first to project The here we will last two, forward. market team to one expect two half there experience and soon was as existing

Manav Gupta

not pretreat misconception, in which just believe you and bit tied pretty tolling some you clear there process And have guys. could much you you But a of little and do which refined are if if a the on do, that capabilities. anything soybean out have thing, Great you oil them want. to agreement there’s one you a call, can you

Thank that that, clarify to run or not tolling or and could can your whatever you you. refine if you agreements. actually soybean through So you’re tallow tried grease oil

Doug Haugh

here. It’s Haugh Yes, it’s good Doug point. a

of – it we’re is about And several feedstock not with feedstocks capabilities. about just doing it’s pretreatment. selection, think also the of which mischaracterization development, process today. I our the in It’s qualification, a just

So on far that fact. we to It’s hydrogen, pretreatment that simply just deal additional James’s in the make It’s a as that the on correct, facility is – capabilities which it’s II not positioning additional talked those understand to Phase capabilities parameters in mischaracterization you’re go. prequalifying we’ve developments, not as dependent team feedstocks that the of dependent on – additional feedstocks dependent about. a has unit’s with operating sure environment. production the and But not it’s of that’s a a our and

Manav Gupta

much so you guys. Thank

Operator

you. Thank

Oppenheimer. comes question Kaye from from next Noah go Please Your ahead.

Jason Vernoff

on Jason my Hi. for question. Thank This Vernoff is taking Noah Kaye. you for

how the So do expect the and credits? RD for to eligible When affect does LCFS timing timeline registration? both be RIN new you’ll receive you

Ben Cowart

only LCFS. affects Yes. timeline The really

in We we within to the are RINs able RIN got next applications being so. for the capture the month expect or that

or least then the the that control must on need be we’ve So us that to getting waiting will first now, data – quarter get XX we next ourselves that to the we days quarter government so approval, RINs. Right done we we’re in assure all to don’t but things of that occur we are that, that able that for to we to approval. LCFS. for do to at year have And of production or get input fourth expect sometime running recognize

Jason Vernoff

the refinery downtime impact the on at for additional XQ utilization plant? it. you. there for assumption? the quarter throughput, on you. system the any plan RD Got XX% your the in Does the ongoing to driving work what’s Thank Thank take guide And to XX% Is throughput?

Ben Cowart

the playing but fuel some to that’s incremental just had we’re that guidance and a with we give going in incremental. are impact forward. there’s is system, of hydrogen the we things Yes, best There couple trying

pit a pipeline will able and it’s a bit, just a or stop the barrels. month little heater one thing But are short their to we trying do really the of system pipeline third-party and being suppliers pipeline that’s deliver piggy on a so. signal incremental risk in We to has our also next one of

And at so future. signal we least that in to what the wanted like looked

we mitigate risks, within so guidance. and surprise to you working guys, did want that but therefore, our not We’re those to put

Jason Vernoff

Got it. Thanks.

Operator

Thank you.

comes Craig-Hallum. question from from ahead. Eric next Stine Please Your go

Eric Stine

Good everyone. morning,

Ben Cowart

Eric. morning, Good

Eric Stine

calling so what’s I up the system I Hey, obviously different you’re just we it the a up levels? is normal right turnaround if is the doesn’t question a it now, refinery I the out incremental that of throughput, sound into I just back things mean, view impact there the that that following to the you RD risk. look throughput just do once throughput and last going expectation. half of on at back we’re year, few pipeline so like and to whether – at mean, on it’s short mean, what running. say or level out we’re that is – expected mean, fair on more

Ben Cowart

Yes, yes.

our in as well managing call ourself of will hydrocracker pretty The days the But done We’re help team’s to back run that is plus for what going just very to as XX,XXX job that range. course with system period. we a us fuel us normal. down. the And forward, more ran the have would last back during well That’s that us time full system. good we XX positioning

Eric Stine

Yes.

sight – and top confidence? equipment repaired once comp diesel you’re are and and project, obviously, you’re going where here like quite the how mean, then sounds confirm it’s – a then that do but on this once where month sound repair. you – confident mind, it received you’ve is I maybe through relatively mean, does like lie. the just that a for again. begins do, you up Maybe quarter. the It there, miss it doesn’t of your about and renewable But startup your reasons confidence basically got to to I does once forward it get think you’ve process is you’ve What start line we yet, something pretty you’re of a that about – quick Okay. Yes, you talked we wanted that bit. it going just

Ben Cowart

we them, to purchased part these repairer parts had repair prior was The pumps Yes. agreement. for and that purchase of purchasing our

the So pumps. we because had are specialty risk these at mitigated therefore, least

why we’re that’s So confident there.

through that still we us a some personnel our protect to hardware the process make of pumps, changes we’re includes to train However, going have to site. MOC on requires and rigorous and that go these to that

with us of have in care watching be these will this, not we matter helping experts pumps. that we’ve making to brought that us additional just then they’ll us we And sure during the and subject startup take the and but help there

rest Now, to the able – when I of operate well at rest of the able unit. look the we system, were the pretty

operating looked the pumps it we see up anything that and us didn’t the had compressors we So that the working. or unusual during all to – time and was

and we could manage the high of had time, asset and and thing the we that sure tested stewards we people. bit confidence So the that be and at do forward do around and safety these that and we the system every how pumps of right have environmental that good going it’s we now making

Eric Stine

right. as something And pretty event assume again. you’ll when up Street restart material that a on would All that process I the starts Okay. update that’s

Ben Cowart

put – pressure analysis just the on team, I and – go to in relatively we Yes. additional be duration I troubleshooting the the through cause the rigorous in, not repair. And short really and do expect it’s want – do and it team on the to but we root want pressure

Eric Stine

Then confidence for and it me, that. I’m mentioned LCFS Thanks just thinking on believe correctly? correctly, question, about question sense. you RINs if last believe RINs. confident I get that RINs, makes LCFS Can you do different about – not you in us you No, could a I QX, could not while you if for retro just that is that and retroactively previous remind I that you’re Sure. recognize that Am retroactive. that’s you were pathway that approved get something thinking is to and credits

Ben Cowart

than I renewable answer. do with more him let so Doug I’ll you I’ll Yes, diesels, on probably experience has dealing let even are.

Doug Haugh

retroactive production, And Yes. you during additional characterization will little careful about be certification any delays create, needs as to the have It’s for we But the get you minute you RIN on but the It’s first certainly don’t that don’t produced RINs. we to maintain that the right. possession accounted might site. we assuming if lose is the produce, production in you – capital as which title on LCFS we’ve it – long it just of working a the it’s value, that there’s you that gallon while on different. obtain period. maintain

You so require correct. just we process. of you don’t days that the product XX so the characterized – time, first production, to title value run has you’ve careful you’re on while One in be recover the that maintain it to to

Eric Stine

Yes.

just you credits you XQ? when And start you but you either can LCFS, that that be would XQ Okay. think confirm, not in that capturing you the get that think those to – said certification, or

Ben Cowart

all we constraints. the to again, Yes, we expect the government, XQ, which subject understand but

Eric Stine

right. that’s days, yes, the starting be at That XX XQ would – then the… not And

Ben Cowart

values having production is That’s at That’s those specific worth that are correct. No. having value, it pathways. the in noting, And time.

one perpetually the as down levels. intensity capture when highest those optimizing carbon it the to LCFS, climbing comes values at So curve, you’re to right, is

carbon our intensity, of which part then certainly base feedstocks is the at that done. to activities. gets a So assign, question We back the a in improve to your around enhance can those will as you big you’re and level, they of capture start default related never continue and your on up really that pathway you credits you

Eric Stine

Very helpful. Okay. Thanks.

Operator

Thank you.

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

Amit Dayal

everyone. Good you. Thank morning,

was back Just you going the Could mechanical human to with failure? clarify the of this sort error delay pumps, RD or a please? a

James Rhame

Yes.

will investigation, the just but mechanical interacted. closed it, though the did to investigation haven’t how what that not point is out the failure occurred, even we there So and also humans

it Our place. well team safe responded a to and brought

characterization. as at are be was would stage go mechanical in the this but we there looking also at than can it my end help the items through those more that humans perform, investigation, we’re human So that

Amit Dayal

RD at was just inventory, Also else? to for Understood. million. the Thank by you this looking Was grew for it or something your the this $XX that. preparation around related production

Chris Carlson

Yes, good question.

on that startup, the So you’re RD. mostly yes, head so oil and preparation the all grow for of RD did right, inventory the soybean was in

Amit Dayal

you. last me, million Thank to $XX the $XX for what the just Okay. And into is CapEx, million going for one XQ?

Chris Carlson

would Yes. of to course, CapEx. balance of our is of that. the normal we maintenance X majority say the for That of that the Phase makes I have RD. Then project up part going be

Amit Dayal

Okay. Thank you. all I I guys. That’s have it. appreciate

Chris Carlson

Thank you.

Operator

you. Thank

comes next Butler Stifel. go from Your question Please ahead. from Brian

Brian Butler

for Good morning. Thanks taking my questions.

Ben Cowart

morning. Good

James Rhame

Good morning, Brian.

Brian Butler

the diesel, before produced on first failed? pump renewable Just was any feedstock the renewable on diesel

Chris Carlson

conditioned phase No, we were introduce the startup so the that’s occurred. getting no. in the We failure that – everything could and steam when

Brian Butler

the you your the X,XXX Okay. we the through you of going should of repair in Phase is of plan and of and least of if going back X? be can what think think then of half does how And that when up how work, to – at ramp something, you’re XXXX, before is kind to June, something kind that to ramp be producing target I’m or produce produced guessing,

Chris Carlson

just by until going that we’re technology the a a Yes. then to And Haldor. to the We forward provider forward max we and directed the ramp kind what to start let’s mid we’ll production rate oversight up us four sure really going up as the say that’ll there we to over and is catalyst rates wrap – up bring were prudently our plan unit our we’re make the won’t that looking and plan and move described. we’ve provider is. the together got to six-week was and catalyst is have of you conditioned kind with period But of technology

Brian Butler

quarter, third kind early July. or second Okay. that X,XXX, call that of it at August, that And – so means could you be I’ll

Chris Carlson

and That that startup would would go that of operation, provide as the this progress first continue be of months at this two the our stage, or we’ll forward through through several month to probably operation. first we guess

Brian Butler

it, Okay. guess stack the kind then quarter you’d of but think or next you then And until where stands? you low where some diesel, on the that’s call If RINs, for pricing and color the I can sulfur, renewable I credit, tax price you that LCFS, of blenders ultra have quarter give year. first not price on guess fourth

Doug Haugh

Yes, diesel is relatively Obviously because to come constant of diesel it’s – on stack, that set RINs that the this and credits. have I credit given calculating And well continues as credit’s come will I the renewable. think down, blender’s balance continue, stack balance. strong and market correct. a as as RINs has value. blenders, when a the obviously down at that, you’re well. remained that’s the as supply that Doug renewable and expect values the demand here, come out The that dollar to we’d in has year

The in stack, for we value nominal the LCFS now, much the values four or of if so fortunate in has change so come has not been the first described, impact because us. as you’re XX on LCFS foregoing production Right of days fairly it, in real value off the past LCFS, was months. tracking a

RIN, it. and having add just value the on dollar certainly One about top and that. the bit we’ll couldn’t driven by on predict that the then not feel underlying that, changes us diesel startup. in better LCFS value, And of is But then makes it you little a one but the the volatility credit take in otherwise, the

Brian Butler

guys quarter, make same the we’re you reference first what of point? number Do of kind Okay. a all have for I just sure a want place. to kind maybe been in would’ve just

Doug Haugh

you refer changes a on just it public and day. it I we every of don’t mean, to I that price indexes No, quote

Brian Butler

Right.

and feedstock that go guess kind through kind Okay. feedstock at? the been has acquired has built on what’s what of Then of can maybe there the I strategy we – at price and inventory what side, been

Doug Haugh

about which infrastructure, appreciate. it’s RINs We’ve me in I around general, let all to had think and feedstocks just some pre-treatment important questions speak related. is Well,

important that qualified, each it’s So we you to at values. obviously as understand feedstock get good the pathway have procure to

got that plant. to manage to get You to the logistically it

store to got it it. segment and You have infrastructure

in the like at because violate you like, co-mingle are just co-mingle You can feedstocks old but will can’t for pathways. you

very infrastructure there’s specific So developed. been that’s

and to those a done are plant – the look put work both team’s the capabilities feedstock infrastructure. we economically and in logistical have when We storage we tremendous need preparation the very supply at to

capacity feed thousand a of service capability and feedstocks barging the and a half RD for day almost we have Its in couple barrels the barrels now both every that plant and hundred storage the million production. to of

it’s run that capabilities been at of operating to terms safely rates of in can this in startup that commercially think building the was available team. max others we storage I when you logistical in Mobile, capacity and the James both in asset and to port, to our at achieve facilitating compare infrastructure So available make a sure terms refinery can the with inventory facility the tremendous

get chain that feedstock pretty And to capability a thin supply a go depend the to supply that have not the it’s unreliable doesn’t is we be able not it one that and plan constraint marketplace. we’re can the logistical and because do feedstock on against optimally Again, if for others, it.

run max the at really can we’ve we infrastructure rates. we the need been to economically to focusing make sure on So feedstocks obtain and reliably

Brian Butler

dollar one should on last just crack a sensitivity update of How the one us kind a change. – the on on just to we say then barrel like spread for about conventional, can the that impact let’s think Okay. barrel business? And conventional you

Ben Cowart

Yes.

dark. so do the trying are come pin the the what Brian, at we’re where Obviously, have as moment cracks and – broad tricky on and market in. looking to to the conditions it down as be question the this very industry’s a going would shooting There’s at. going You’re the view what cracks and far in is

really it not be good could could be and all. It good at

that to crack. look the for quarter. the research So quarter you can Cracks up go see those data we’re points yourself. you think in that just a mean, good have come got second some, on XXX I We for pull out

to and coming efficiencies I think we’re our managing set very our our focused So on and that up navigate whatever’s yields really well to and we’re way.

Brian Butler

you much Thank very taking for questions. the Okay.

Ben Cowart

Brian. you, Thank

Operator

Thank you.

Gabelman from next Cowen. comes question Your TD go from ahead. Please Jason

Jason Gabelman

the is I agreement Thanks that to that for revisit and with a pay the party morning. fee an access my have wanted feedstocks? Good what And one, is to are agreement to there I for in to place you volumes what amount facility. third confirm taking questions. third-party pre-treatment if of so those the you wanted and covered pre-treatment

Doug Haugh

Yes.

pre-qualification we those to of processing clarify, capabilities. pre-treatment in think I are

feedstock. the have the that yield negotiated. what agreements being plants with. the won’t there’s run capabilities and you the loss through vary processing by know in will So And we’re the are subject negotiations We of pre-treatment Those plant qualifying working be will until those molecules production. proved

We’ve supply single not one failure one got of point phase, in that want any through it’s And which to on don’t to be We chain. get the clarify, we’re starting now. facility. dependent to

right, different. as from those facilities will to greases as and that we access pre-qualify to chemistry – DCO process our And is also metallurgy are pathway So and tallows positioned us well allow the to right? feedstocks, different So those ranging necessary market, all on market the now. and the multiple

likelihood in single So this be pre-treatment multiple and clear. facilities contracts not all a will

Jason Gabelman

expect have a from expect it. and amount the terms on those Got volumes just in clarification ask would target to Maybe I’ll you What’s facilities for the of access those that. you finalized? to of when agreements

Doug Haugh

capacity that continuing to expect supply pre-treatment capacity, our Phase sequence look to the production to we chain at rate James to up to the from is up step X match and match developing trying that is ramp plan that the them as right? at production to pre-qualify But feedstock the facilities X. and dance plant. production the and capacity these the those achieves So would feeding the we Phase volumetrically there equal I also, to are the plant with position

have is It whether to do on not hand. every in may now we day. every So not barrel use that be that we or optionality want optionality we

at different associated the equilibrium not value those the of into a the attractive at the look of product. price there’s with come the terribly margins on point the pre-treatment feedstocks you feedstocks capacity finished moment, because If have of

up some us versus it ramp it it’s have want run see don’t constructing those we you to to of and uneconomic. capital contracting flexibility advantages that is fixed when we bill the forces So it down. one of That’s

Jason Gabelman

and project envisioned. capital And on set the facility, it be you committing think envisioned expenditures just for build I initially renewable my capital Understood. plant some diesel that X what having that’s wasn’t a third-party may the like which when you is, and Phase Okay. seems follow-up to you out this hydrogen to build

previous with renewable and to the CapEx? cost is what guess there do XXXX you of X, be I expect guidance total Thanks. any Phase to year adjustment So full for diesel the project

James Rhame

Hey Jason, this is James.

following So we what our we’ve done, there’s capital two on things provider are we’ve our done and it hydrogen with supporting capital. and on

yet, I from executing capability out we moved and have we – some have final you them because the ourselves there one, the So do underneath we capital number number to it. of to don’t a but have

Number focus unit to two, just we three have really hydrogen number itself. the our unloaded cash, the on that allow and to supplier them

be And are the for so ready also getting delivered. to we that site

the facility in been We’re then pilings which and of week and already doing or in that. and the be to silver work in putting in next will the two, move turn, Mobile delivered start in it’s ourselves, moving after port the we’ll we that

them do. really view in would execute that’s So going self we’re work what on our changed you’ve seen point we to to what what of versus

as there are sure of get know but are changed that’s on exactly final the subject and project make piece we we we investment to to where are decision on the where they work. little their a we so And bit them their

Jason Gabelman

Okay.

James Rhame

You want to say…

Jason Gabelman

on third sneak to and the past a about of would be refinance could been provide hope stack timing address one around unfolding guys. how helpful? some the on on If could front convertibles. of some update I Any maybe the maybe things sheet some you in Thanks, and Okay. that in the balance capital I improve you’re know debt there’s thinking and the that

James Rhame

question. Good Yes.

are running, able our our cash on think RD a down little the the bit I to the focus term during near-term pay current getting we focus is Currently and were utilizing obviously bit QX. unit up inventory get capital really looking we the the we around start up after clean will way what to our things balance at sheet structured then working that. options long-term want the has and and

Jason Gabelman

Thanks. Got it. right. All

James Rhame

Thank you, Jason.

Operator

are Thank There this you. further time. no questions at

may You proceed.

Ben Cowart

for this thank everybody, much you this joining Okay, us on morning very call.

of We’re business the road a performance the concern for delay. and We not bump very with with the disappointed see pleased company. the pump in as that the the a company major

discussed. we deliver Our we’ll team as is the production on of top it,

as a very And Chris we forward prepping strong really to to turn balance we’re look balance sheet said, into sheet. our

We feed very our the in we’ve whole bed. I’m very us. out. have our put and built Doug here lot things really to perspective with table finished origination so have reliable of to brings He team excited our the our a We’ve operations been new product site, a around of at strategy.

of all that’s good. So

That’s transition our energy our focus. platform. really the developing That’s our core company. actively of We’re

another a acquiring not and carbon be into We’re to refinery. coming asset Mobile independent

pull asset energy that. the opportunities and to that an transition We’re platform around develop in coming into to continue

left lot to a there’s And come.

report go So everybody our close for that. we start journey and with really I’ll this then this call. Thank We on unit of plant forward And the RD it a forward. thank leave we’ll up again you. you this development being to part progress look as and with

Operator

lines. Thank this your and and you. gentlemen, call disconnect for thank please you today. for you concludes that your conference We Ladies ask participating

Vertex Energy (VTNRQ) 9 May 232023 Q1 Earnings call transcript