VTNR - Earnings call 4 2023 | Vertex Energy Inc.

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Operator

Good morning. My name is Jeannie, and I will be your conference operator today. I would like to welcome you to the Vertex Energy Inc. Fourth Quarter 2023 Earnings Conference Call. [Operator Instructions]I would now like to turn the conference over to John Ragozzino.

conference. your begin may You

John Ragozzino

Thank you. Quarter Vertex Fourth welcome morning, Full Year and and Call. to XXXX Energy's Good Results Conference

their call statements, Officer, and questions control. call want Alvaro to and outside responses Chairman and Chief Officer, to Operating today you which, and Doug Cowart; include nature, Ruiz; James of may the Haugh.I Officer, Officer, Strategy Financial are Chief Chris conference that CEO, Chief on company's Rhame; remind by today's Commercial Chief uncertain forward-looking Carlson; On Ben are the management's commentary

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

and of discussion filings please SEC.Additionally, that Risk some and actual cause discussed with risk you please the note reconciliations press of call our can to measures differ, on annual refer issued financial For Factors by the Vertex Ben factors historical I'll release commercial quarterly that strategy for today.Today's could call during Chris over of we'll non-GAAP to the of the section find results latest Energy's these our remarks, a of will Haugh. followed review review financial Ben. Rhame, that, call Carlson, line begin review from open prepared and from by questions.With with Cowart, James a the turn from the an the of conclusion At remarks to Doug operational

Ben Cowart

in geopolitical the and Thank pricing. tensions volatility those and XXXX refining crude today. call oil on several a sectors. morning factors, was driven you, and marked This us that by including good significant the John, joining instability renewable year by to products affected was

diesel marine and a company. midst a renewable focus the our start-up and logistics significant Refinery.In and business operations integrate have construction shift chain our renewable footprint of purchase, trading have Throughout the in as logistics and and into of the cash division, establish creating through roughly way.With more and credit impact profound year, capture the the Mobile on our XXXX value and our of in of Refinery business Mobile the portion diesel was the inventory, a fixed at also addition, lagging our losses Energy the marked cash and we unit fuels along the had renewable opportunities to significant expanded strategy balances a demand million and broader today, fluctuations, vertically feedstock through $XXX working supply including the XXXX. the invested end optimizing following Mobile we capital assets, Vertex feedstock new the year and costs.In these shifting values business renewable launching of supply evolution growth the of funded for Additionally, on

the grown reduction development in to well now growth positioned have to our and concentrating corporate accomplishments the drive energy cost and cash full talent towards plan transition good my today management, our we by leading year. our we throughout year of and bring I today, company.Given the the they to and on refine enhanced and fourth needed profit on this our operating overall the work support initiatives, these goal We to a employees for to to team, have the financial results I update the XXXX. team start the margins.On the the call call accomplished and all listening thanking quarter for you as But strategy, overhead in the believe progress startup are want

process to As underway America. know of of James, important safely, it we lot most Bank done, James the only the I are update eager I which with hand the did got call but note a to off many shortly, of is all.Before not on you will get measure we an ongoing

are to strengthen position. our and current balance up evaluating we alternative free As sheet liquidity strategies we've communicated, various some

to encouraged resolution tangible information bring by to this have the We the sometime we QX continuing year. once I'll call We to I during We're that, to update intend hope process. this market fully progress to to And share.With are work now James. the over of the made. hand

James Rhame

everyone. report performance. will The site Ben. on at planned quarter did outage. with start always I and Good environmental Mobile of another with minor environmental with OSHA power safety our recordable as health, Thank fourth was X XXXX morning, have injuries. the zero We associated you, clean the quarter non-compliances

year markets contract safety-first employees employees of effort dedicated to The prioritize at for work our sharp able for barrel the employees trend Mobile X which gross the our facility in times conventional a faces as on and XXXX, the in continuing team barrels XX,XXX safety quarter monumental the impact during per busyness barrel barrel to $X.XX, of. multiple the the curtailment and part a in After including December.The of for ground entire of seen market previously say $X.XX each lower increasing executed our before serious margin the began basis.Our facility of and reflects to team our partners with utilization the motor our strategic saw reduction mentality during downward diligence, performance are in the achievement this a of gasoline of facility, a of environmental proactively with conversion average EH&S was quarter of much course has you commitment XX% per the volumes quarter and correction business. the to deteriorating the capacity conventional downtime skill fourth continued I in who as quarter. well barrels was all strong Mobile put also The our task of the during line XX,XXX by for and reflect many period of the challenging on and care than proud unfamiliar health combined on streak OpEx demonstrates a outstanding and at that at site market our acquiring conditions OSHA better no to fuels market lower across the site.For project quarter, offset this demonstrated zero quality the safety every a of a of community January. the gross of a months from of of unprecedented reflects our is fuels, of year-over-year efficiencies operational legacy team process per was throughput an with in fuel onset at per performance a early operation, gained quarter normal to to volumes RD a of the the light as without and cost continuing inflationary transformer.Total the fuels' for business of per contractors. damage site electrical our organization, Mobile margin facilities.Our conventional as and employees.I'm entire extremely day day which must Additionally, the was events, great with throughout saw updated fourth performance on I'm the of replace that of impact disclosed prices fuels quarter, business in to location, consistent the daily finished volumes the proud was per At immediately our year.Throughout cost diesel in the significant the our impact smooth the proud of guidance weakness fact other recordables. site, the within environmental, of maintain the injury thank successfully operations extremely with as the prices each first disruption of and conditions or team, as as I'm guidance group that surrounding of throughput finally hundreds XX%, the for full boots the our and the our quarter encountered during throughput fuels reflective per conventional test more neighbors testament barrel barrel reversing negative the

quarter, of early quickly XXXX. beginning of at most rebounded However, have downward through of and trend, the steadily the as just began prices they quarter first as the the December since

as previously optimization with our such guidance diesel described.Now reflecting Vertex's XX% our XXXX. continued generating and fuels finished turning quarter Our accounted renewable focus diesel for fuel plant total product total gross facility-wide jet the our products fourth This and gasoline, we've line in yield the during quarter. of for to renewable renewable operated margin as $XX.XX of fuels business. smoothly, on yield barrel per was

for quarters.Adjusting for for gross Our second to quarter the XXXX margin negative LCFS third fourth margin fuel benefit a approximately credit, the fuel fourth barrel gross production third of our quarter $X.X from million was $X.XX. volumes attributed per and quarter the included

moment, a turnaround reformers line the are with we volumes averaged our utilization X,XXX projections of season. be and second capacity quarter the the throughput and planned will barrels throughput stop pit oil updated March units one barrels in of to per XX,XXX of the during third plant gasoline the detail demand renewable day higher periods first as a guidance.As crude of between have of recently day. small for the during We'll prepare in generally per and Chris our in Our margin XX,XXX of crude one quarter expected for for a ahead driving XX%,

of we qualify on the development margin volumes We throughput to the continue to feedstocks. necessary good RD make conversion quarter the X and environment.Looking of conjunction improved the first seen in with out have well our progress as margins work XXXX, crude additional the of have increase as Phase in accelerated remainder project to

Chris Haugh business now saw and our track as communicated.The for our improvement in for over the a year-over-year. of a first saw challenging Financial unit We excellent volumes XXXX.I slates, previously review expansion in as financial we quarter company's understand of call Chief and groups capacity operation. Officer we day UMO to will and on continue collection to time detail use a XXXX quickly quarter various X.X% Operational was also Both operate capabilities turn a XXXX. barrels first they will on business our which continues of believe financial XXXX in those the a Doug results as for over as Collections in outstanding regarding is to to completion Marrero the have increase develop for be of the outlook of Carlson XX% moment.Moving our our we've XXXX in the additional collection in performance to through had the operating And legacy RD in well XX,XXX differences business. with as expand a in feedstock this

Chris Carlson

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

elimination detailed been made we notable with Before of convertible a the balance our financial towards to overall convertible million facility sheet. improvement Mobile exchange high-interest key of strategy our approximately fourth and private our this continued our notes and of our following due our XXXX.Over goal reviewing has progress our results acquisition want The notes XXXX, full I reiterate quarter of XXXX. component year term of XXXX, the of focus the for X.XX% course on transformational announcement the our in the $XX of of loan

$XX.X capital compares adjusted We and to the the full our directly expect a to planned fourth of now this million deferral and schedule.Turning balance XXXX continue EBITDA to year million year period, expenditures year respectively.During the efficient XXXX. the discretionary year deliberate diesel million, fourth pursuit $XX.X company capital quarter for along the us full Total the $XXX impacted X of the financial XX% November tools million these expenses renewable Phase attributable in net $XX.X sheet. primarily loss $XX.X in recorded to project $XX.X issued results. below were accessible $X.X negative to fourth prior Phase the $XX.X expenditures. line. we deferred of XXXX, million and path.Turning the loss million fourth for XXXX project for $XX.X compared expenditures cash with flow operating capital capital to before in reflecting achieved of a guidance to utilizing a working of million of quarter The has Total quarter the includes our and the reported the prior capital of certain million. This full time quarter, on of preservation realignment in X, not via reported for timing for $XX.X of quarter the external X This million this of respectively. and strategy, our most Vertex million changes

XX, against EBITDA X, $XXX.X our term end ratio to end borrowed of cash of restricted group a terms at in available the ongoing of order amount goal of versus million as with with period quarter. and support and including the As provided the forward the fourth adequate million modify total cash of at quarter, term debt up which we Vertex outstanding XXXX.As to the alternatives. the adjusted expected $XX.X full had of the and process position additional cash company the price liquidity for the XX, $XX.X through generation our $XX.X equivalents, shore announced, XX, to loan our quarter opportunity of quarter, balance that volumes in of we sheet loan assess in to our December per amended we first the of between other at XXXX, the encountered flexibility of lease prior of took and Bank the short XXx of of existing most our year-end agreement. fuels previously XXXX, incremental market million, $XX.X the January needs the available amendment the December financial cash Mobile market.Looking total presented net upon total and and of fourth million time, amendment conventional our cash borrowings, cash to including spreads anticipate closing provides the in by barrels completion of XXXX, at reached December net to our term XX-month of achieving obligations the trailing day. America using tools debt an of current us after the we was position therefore, continuously strategic on lenders million had million.During to eroding in at agreement maintain opportunities.Relative $XX to The the XX,XXX conditions market with efficient rapidly on means the term certain monitor current loan XXXX, in considering margins aimed the conditions We evaluating view an XX,XXX a be reflected in several throughput implying

jet between well.Anticipated range production fully to a total per Haugh. and quarter day. expected the for into as of swap of conventional the total XXXX, $X.XX feedstock at Chief Vertex turn to quarter barrels balance to for the expected X,XXX contracts Phase approximately of barrel and $XX the of Doug entered to between per renewable renewable diesel Commercial other to million basis to as the encompassing products intermediate OpEx day, of first conventional of approximately XXXX diesel total as between swap to X,XXX efficient has or in Our consist the distillate is call both quarter now fuel, to and such quarter Officer XX% side X capacity our million.As like businesses fixed-price anticipate be utilization total fourth production We per We yield the XX% on VGO.On gasoline, first for X,XXX XX% of average high-value covering weighted quarter. diesel expected and of to throughput capital yield and we products, production of the renewables XX% $XX.XX XX% average renewable of XX% price an barrel.I'd XX% per barrels $X.XX between a business, finished between on such expect products consolidated a is $XX to the expenditures anticipate for projected first and with

Douglas Haugh

Chris. Thanks,

First, has progressed I optimization plan. want strategy that to according our share feedstock to

These create run them been message flexible volatility data.Through all dedicated very have tanks blends, of supply having working operated allows and each and and class but us range performance, portfolio pursued plant continue with and in design, and to for suppliers this a pathways of only our these CI the for the of filed been as reduce California capacity conversion we position rail. on products the complete have with a been uptake truck refineries and deliveries producing a out via credit CARB these we've that year started specific have second in begin primarily supply, price wide renewable to lower Both with shifted and capabilities supply, our each were temporary cost teams skill team to of These our feedstock and expect reliably application canola, and and these during we which to now capabilities rates We've our to runs addition last quality high poultry families to year. our imports support maintained commercial application quickly as data base approval last yield to conventional evident collection continues internal of diesel tremendous feeds, we XXXX, will blending in last represent pathways continued into submitted netbacks for reliable quarter.Across changes improved one has along capture receiving our supportive. rates. based starting a curves lower added also receive capabilities. DCO.This with our of application able logistics building and and barge to both XX-day supply operations runs we our us be management gallon and hydrogen for intensity for the continue needed engineering inventory all credits but the on expect continue these each Tallow values our This LCFS and to specifically support commitment, plan.In our in to temporary renewables has UCO Vertex each Logistically, soy, able additional to build on our to per business the secure completing and the runs of from now of we for feedstock and these conjunction reflects LCFS of feedstocks to LCFS feedstocks, LCFS demanding values and feeds also feedstocks, we use is delivery for the team first build provisional to provisional more With development cost. This $X.X expected, California plant improved up imports multimodal of fat. has has material.Our we our As to to covering confidence have improve as flexible aggregating We commercial improve has benefit. barge in our mix.We've appreciate values chain capabilities resulted offtake started during complete commercial production, We feeds rationalize trading logistics, these as required our UCO build the come for additional CI just engineering in X importantly our rates pathway compared pricing feedstock supplier around executed our as improved us and all to inventories to and also risk will to outright the million CI continued our continued not support cohesive across and and across production. to fat us supply scores our to marketing in schedules, and that quarter, feedstocks, have we new carbon us all our X credits CI supplier. facility. our work primary our the changes to of market trading, contracts for received over abundant seen to double construction pathway and provide runs delivery across and to could our for each negotiation, poultry grade supply margins netbacks optimization receive trading our initial business.With which allows base of and focus

capture to production on finished product. blending our a the by is maximizes We have to capabilities around netbacks products. business and this to capacity fueling stages, continuous being in the product build internal supported of versus our Marrero reliable work have are the higher our we leveraging all bring business benefits improvement but to a portion retail where in our wholesale the margin value Mobile of type produce allows those that already in also bring we of seen bulk on of that market.We're base This traded a barrels customer the us the still to launch marine value early of doing

Ben Cowart

expansion doing Thank operations, you, executing capabilities. reducing of Once again, great business our managing our is risk job Doug. team a our of and the

XXXX, As the experienced of fluctuations first anticipate and similar quarter facing we navigate in challenges market XXXX. we

cost sector. Our the priorities reduction and by acquire will Mobile to enhanced and with to and potential capture decision the refinery renewable see a to our the continuing in reiterate wish call everyone saw driven reliability, continue focus to this strategic management, was continue on safety that opportunities.I to margin be on cash significant long-term we and

have diesel yet goal, on you.I do, and leading which a journey, was building to transition work transformation our Our in milestones framework on a better the confidence will our towards a substantial project cash structure, the a effectiveness, questions. this this planned the to then, and to XXXX XXXX that and remarkable cost market. about to with for forward we investments expect in have yield the updated keeping operator we endeavor reflect decision.The the we over testament on renewables call time multiyear represents are now speed XXXX within into Thank company it establishing ahead. Reflecting we Until is of value focused exciting XXXX to turn by still-evolving business. look launched you results our this energy our about foundation, this advancing renewables was

Operator

of first with [Operator Instructions] This question line Schafer of comes the line Northland Capital dropped. has with question the Eric Eric's Your Donovan Stine line comes appears from Markets. from Craig-Hallum.It

Donovan Schafer

that, renewable that X ] cost on the come you CIs the diesel, I [ the everything, CI think the release and Doug's saying out the prepared you have you successfully in and So follow used of to -- said it the of back. sort for should that then that the with want completed I comment -- runs sort or all submitting during up in feedstocks remarks of

that of up the the getting recognition in half whether sort sometime or -- from scores.Is kind there like have expect first -- all You the 'XX, just sense at that's kind the and gets range in showing CI wide of a you it on know of do improved things benefit turned financials of or Is of XXXX? earlier around. second bureaucratically or variation later? of and pushed potential into can agencies whatnot how quickly kind a between there things risk half, XXXX of some I have get

helpful. So any color would there be

Douglas Haugh

A good although have -- scores question, that responses you regulator, which expectation to should Donovan. and the have their quarter our for and a the of the good supportive relationship, second the Yes, place they've kind new in have process. outperformance been we'd is quarter, on credit, had production, possibly that's part of to first throughout we've again,

So We've some get of can. kicked engaged and steps we taken now and submission also things audit phase off moving they're fast as to early. the supportive as the

cycle pathways not half hopeful all we some we're expect first the no, expect half, think our benefit So that But first fully and half, the that but could reduce the perhaps those from -- be covered to second time.But there. XXXX. for of we the under of certainly in in -- we short,

Donovan Schafer

Okay. fourth was Canal. into or whether move not some And can of nuanced I cost or from then talking getting in there equation, quarter be of the things the the the and Panama side believe the some impact these material needle. kind about

dynamic got cost can that's to the because diesel, So to with rail get whatever the that of switch if maybe in kind the talk renewable ability quantify general, you to or or to California. transportation about and

much product. the option You in don't terms really where have you of too send

a And that diesel. and, -- so the I now. that so of be to the don't in it's would just gas into natural are low one other gas, can play the help low. that?And natural coming if you know lot right hydrocracker renewable natural And the transportation for of prices course, it's from super how be And are hydrogen costs by gas impacted prices, get

minimis just know a So or difference if there I don't matter. a de Or too of at of that's gives to kind help all? that tailwind if

those transportation things, So natural are of X and gas. kind

Douglas Haugh

natural I'll Canal cost take James the Panama gas I'll bad Yes, very transportation fourth the terms impact. hand in transportation, to Yes. it the and very, then for was quarter of question.

I you or the was at -- think numbers really we rate, where in was on once we those.But look and to there participate the it kind your -- and until sort can don't third million quarter get you're our way on really a of be you above of a which auction know it and live crazy of ship, order interpret you normal the situation you what cost the you there, through. going send $X is

operationally. out. that positions you a to that if capacity kind a transportation So mess, confirmed good has guaranteed costs And the first trade the would.We've months chaotic of fixed canal slots since for or partner this X on through the for the of have improved year able those with the canal was to take

to those we've result in quarter of a the expect And helping as are first transportation. we on of or those us. done see that repositioning don't both second So costs the

quarter.We to a industry to through players, the to been tough lesson learn the was it that's against fourth but experience And other favorable, up get expense canal. same ones to only are was So far the talking from everybody it. the in

XX% basically or they throughput in per to XX% day at ships think rates as I terms were normal. of compared

So our case it getting we've on. year quarters year costs rates to all we that business normal we've line this big on again, normalize. things count and first those the sight we half hopefully transportation was the first that as rectified believe problem.But good back a got X of pretty for of for But

James Rhame

of what's we on into is on site the turn that "What today. price we're about be larger energy cheap translates the case. looking gas, on to And going one but future, in and that which have is do think in unit number happen currently gas, the So that plant In indeed and natural construction. the is year the hydrogen we of are we to into from at, going side. an this have hydrogen But Okay. XX% indeed exact the indeed Matheson the I to natural the gas?" really you, source with seeing natural on of our that don't will seeing the future feed that going that are happen hydrogen for we

Douglas Haugh

hedged any haven't We of that.

James Rhame

We it. have It's not hedged any We yes. of pretty... might,

Douglas Haugh

current Pretty at price. attractive

Donovan Schafer

contemplated could one sort a there. on release at or if or the another framework term attractive. million least mention brief squeeze of Very like in And I a of there cash flexibility of is the of the more options the upsizing $XX in maybe was or stuff for there. that loan, actually, something In put kind the sort of just extension

place.And if you is discretionary, commitment give an kind Or a lean the least cash? the to that also, the refinery So kind but pieces Marrero can what's like is way? other you of as or lender there at you'd on can it like raise assets a you monetize something on full update some was of or if some have or consider by in in in way like --

Ben Cowart

been that their and Yes. obviously, The club It additional from of of with to the included supportive is Donovan, Ben. lending The the million. refinery the an this terms all of subject our very is lenders work we've purchase approval. made. and group investments change the have in business, $XX loan the

focus, picture. that an as liquidity ] liquidity.Our process have do a additional addresses BAV the on our obviously, back to on lenders to much opportunity really for go is we So that bigger [

of state with lenders. that's relationship the the So the

contact stay And go the we to with think as and them I on we they're close So in forward. business speed good. up that's

Operator

of comes from Eric Your with the next Stine question Craig-Hallum. line

Eric Stine

before, just happened but into No idea it. I'll jump what

you're the So favorably when somewhat about And has it to an when just sounds about throughput. thinking first -- quarter hedged improved market know that have operational you so first and lower the to like extent. I thinking quarter guiding outlook, and

that the So very a nod a is helpful. just mentioned be first mean, is on happening in tough? turnaround. the quarter curious. color I still would other what's that to You market Any small

James Rhame

because the we're not had quarter, we we James. enough Eric, Really yet, back first this margins crude held a started but is year, bit the as have. they doing returned what in little

did. and in we and in And we'd that bit maintenance and the in or year. twice be during able not maintenance our turn raised it we in we planned plant time is and we're where in catalysts would hold us typical then the back. it's turnaround do and cleaning rates point on during and April, that as this We a of was season And this this the #X so coming really full run unit little work prior doing of to did our setting And doing February. a there it changing view reform up a June, rates have our also up.And about driving of March, going crude July, month to May, in January

we our behind that's conditions that was and in market that full thought to what are that's based upon the So run believe our plan the future do and coming.

Eric Stine

Got it.

back, that feedstock advantageous is then versus rest Okay. for tolling? just just one this of And and about makes on on last spot me, plan, are RD really that would look when offline. perspective, helpful. you as played of curious, you the And an availability the That but thinking in a sense. be and finished kind maybe that you know I'll has doesn't terms curious then economic feedstock from in maybe Maybe matter, just embarked out? take It's acquired the as mix what both it well. you -- facility Curious I you doesn't and how it viewed price.

Douglas Haugh

Southeast price where we've coming line, see line more bases be on -- We're we blew versus costs everybody take as But to because late a have versus regard, little I that they than of disadvantaged prevalent a lot suppliers expected. any prices, it don't liquidity we lot caught with either, think roster evidence summer the trucks -- to the as not justify grade pretty advantaged sort great bases UCO suppliers, as and out.We or up we got futures that It's indication as that now, collectors a in we is really able we've our and there's just are each were work.Like to barge which seeing the in integrated the particularly lot a we the when poultry run attractive the that avoided steep is come comes testing be Obviously, a the bringing have get have draw just to security certainly advantages in aren't that here. Those gotten we whole prices that more very every from fat, seen but a of we could on spike seen enough but industry strong I lot the availability from a in But have in a cost and which that any at chicken seen to believe went very, the handling of long I those a truck down We've that rail prices has given can industry because and hard bit more mean back the there we're car. prices Doug were mentioned. across we bases right? -- logistics back of don't of the and that at we many flat large Deep supply come only is too the think coming in of sort I in work.So the site materialize almost were think and question. a So conclusions from feeds where I better like small produced substantially, gatherers around take rapidly.And mentioned, disparate logistically, inventory, of advantage we're us. the of want. into up. we've standpoint, we're I as rationalizing

investor money. I and every to, this angst of you're every almost think that spending there's lot talk "Hey, we've we been analyst to all about, industry in very talk with -- we transparent folks a

You're this brand-new starting unit.

terms everybody look price got quarters declines really to now feedstocks into going make feed. through stay want feed inventory advantage XX-days of to where ability and up your wasn't a as at our start that of run worried But lot is all on that not into inventory darn take both headed typical days which to because supply You obviously.So crack. the on product better there quickly it," It a around, enough inventory took sure of up. you've is to run created us we rates go and to to be we had in of max, before of couple and hand, capture be worth where trying we lining turn the hand, of months' that to you we're

that -- be the we're mean right? that, We're helping been and for a have still we've the regulatory to at adjusts very, better decline that It's very quickly much. credits, I much So to level. LCFS collapse for feed remains continued now.How chasing to account RINs but got seen. in pricing the positioned isn't low stable,

the order much opportunity a as of made quite chain from a [ and to a have and good dramatically down fourth certainly eliminate position turn-linked the still we've now a in third feed. certainly And room quarter. that in we lag array come transport access got create margin RINs faster.So as the feeds impact we price coming turn a given to of curve comfortable that optimize on as needs feel we're one positions structure standpoint to But efficient and they lot, so and quickly supply we're regard try good that down can with and to that to feeds the modes run very ] really have about to in progress great storage right declined from of broad our to good logistics, have

Operator

with from line comes the Noah question next Your Kaye Oppenheimer. of

Noah Kaye

think initial little margin the renewal the on pricing that Can up you or some potential you expiring. a either prepared about the talk mentioned front, just for marketing up contracts elaborate opportunities? off-day on of I capture and in and Picking bit coming remarks

James Rhame

Yes.

up over So to It this predominantly able new jet. X rolls contract. the contracts were market a the first April retender were quarter. that we to to That came

the fourth So quarter a business the very, reliable to that market netback was and pleased quality we're the products, we and opportunity and value believe been now.And offtake that doing gasoline. last an over improvement substantial we diesel fully product counterparty next marching be agreement that capturing that producing that we very do spread It's is that weren't excited reflects previous a we the previously year just with our with with the to as through creditworthy that of took for there results. equally we're

a open have approaching next period unbranded year. April -- notice then those are products for We we and

to So got we've time on work that. some

a fair now which products, want relationship. a It's has very to we value Our make but our sure that a standpoint, in in position very, get we're offtake worked partner to from It's to a full very pricing position supportive. operationally, for do. good been well market we're

gasoline results we and You now. saw look the jet, the and to diesel in forward results on

Noah Kaye

Okay. entered and Great. the -- release detail of the The in into lot and hedges that you slides. there's a

January of that. I on like appreciate February maybe kind the attractive to comment effectively looks are and can the be for in line But positions of struck guess seems of us market. on March those I in at the sort So home, with just they fairly you that. listening money? were for hedged and It terms,

Douglas Haugh

Yes.

a just strategy. bit about on little So

about hedged we As XX% you our know, of gasoline, Chris?

Chris Carlson

Yes.

Douglas Haugh

they year was like of cracks that into gasoline curves. spread late That carried We themselves attractive in the was, that, forward back of the when the of routine getting again, programs taking of place, kind end a through in presented our advantage getting felt on summer unusual. that

advantage first would very late that. -- strengthening the in above the We favorable we wish spread we be where fourth we quarter, quarter was product, on first have on We more more.But our on because took hedges. you're also that always well That money had had But would very you in margin diesel, a turned of on the took you the hand, so the a saw we good for lose outcome strong crack hedges right? a mindset quarter wish for out targets. the to those position. same making Obviously, money on other

production.And of our we we have hedges. been So again, took for half those of on about -- advantage those that comfortable feel

held the surprisingly. the I market time, -- they're whole think up

at I would it you're approach. of a case, weren't budget.So when this above we the still approach quarter that on we expect say to as second front in at prudent believe at margins and so that through plant the season, max it's necessary, terms in present and driving turns positioning for they but are be to themselves well sure really planning that's mentioned, what you So healthy certainly -- we see cracks up out as make can look gear quarter for James we quarter, and look summer. we're we third this capture rates the run the

this in if production. we at The diesel. is time expectation point, of I curves third aren't and that quarter, -- would second time.But quarter this we do telling to gasoline the plan forward themselves hedge us will -- a that really that or portion cracks to attractive my very fourth third we at see in So not summer that present of stage won't would quarter our that of for at advantage at take that gasoline fourth we or material as the throughout the expect quarter

of it, that's if and it and gas kind want seasonally, it. at we is take we first off, strong for of how where nearly would looking drop if summer you at seasonal winter strong unusually still think If is a into look So quarter position. the but of going not bit we're going advantage that about to into we a see normally there, as gasoline, as diesel

Noah Kaye

Last really cash expenditures. around one and capital Helpful. Okay.

be So how is kind expansion for $XX just maintenance? really should to spend Phase to sort left think And understand much uptick $XX then correct? in is how portion for maintenance, million, of that the much good million help operations? us growth range of RD for guiding the versus an that So XQ, for X I a on of

Chris Carlson

is of $XX to $XX Chris, This is around majority maintenance. Yes. million Noah. that The million

a into been planned. that As few James heading we're opportunities turnaround noted, have

a maintenance. there's little growth bit the is then and is a that again, And majority, piece So RD. small

James Rhame

of the maintenance is X/X section. that least At

the doing So in that's inside work change reformer. catalyst the

Noah Kaye

to spend is left Okay. how expansion? much on RD the And then

Chris Carlson

Yes.

balance For about Phase $XX is million. the X,

Noah Kaye

Okay.

James Rhame

In future quarters.

Noah Kaye

Sorry, go ahead.

Douglas Haugh

most And of back loaded is year. the that of to the half

Noah Kaye

Maybe math I How looks was That's working about terms impacts mentioned ask. we in But in you're be year? leaner what some the thinking on just least at capital. position inventory last question. inventories start of we You about here the a now going right. we've your RD that what terms to Okay. capital mean of I on to side. it got think here right, like in if XQ? All should a the working potential progress

Chris Carlson

perspective, a say know, The in inventory you the good has I'd pretty inventory quarter. driver we're working of spot. capital, guys fourth down the an is come biggest which as From our during

we But see your So or huge would going inventory. to large remain don't say flat. going build I forward, a capital a working is build in fairly

Your big CapEx. driver of going to strong cash is be

Operator

Wainwright. H.C. the question from comes Amit with line next Your Dayal of

Amit Dayal

next Ben, to respect is potentially your that hold well. play capacity.Just on line trying with the you But at in best play of steps available Bank of as expansion efforts they And process, you're considering? the already decision activities America the options get options question this have the for play the of other that process that the options The what America utilizing might some how with exploring how to might you Sort this you. are front. at those will of out sort get Bank still max that and any be a on a time, XXXX you asking are of sense now one to have in same impacts they right and of in that be all the reason might time of presenting? be what I'm

Ben Cowart

Yes, good question, fair question, Amit.

front. we XX company more the the knew months probably start this on saying investment sizable RD that development started Let for that by process the me BofA ago was and because

new short comments, undertaken.As end million and spent quarter to in new said I in fourth my the So the bringing life done nothing $XXX cash. of we've starting is of from at team has business like a nothing it the

So long-term we in don't debt. have that much

and as would conversations as the on market, open to speaks what's and investments process we was So process other are tendering it we've the BofA we really to the crude the table to in focused. knew bring side taking the sheet Obviously, back to RD And the those what up conversations, and to it's that's the certainly balance brought went we place, business liquidity of the side. designed that made contribution.The health that that of we speak. is for the

could better BofA. have process the executed been So by not

'XX amazing the yet the got target done a insight people, a that the side table term we've good level.And got hope companies I We they've think RFS new job. see as strong work We've at at XXXX business. cycle, sees both level around We I so insight. a RINs that's at seen which the both from really business. everyone LCFS to opportunity because RVOs for as some we kind really and an the interested some that in IRA, doing, around at the of new long haven't LCFS. the being also We're well the renewables of is renewables federal policy the of just frontline and got think we're end some California

the So mind, of and interest with that also the in SAP. in very this in be in all SAP direction to RD next that is focused leg seems industry.

renewable continue And that in asset. interest so broader great is business we've got a platform the to direction.Second evolving in the the

opportunities, interesting So scale. we've capacity, got property infrastructure some really

shake And so out. nonconforming time that entertained bit conversations take to some more we've a little

values, so at. update best we've indication site offers with moving And some that's provide had of I of had where we've the initial to in the firm had we've towards company.So and visits, partner kind management we're can we're presentations,

important market. is As in current the you liquidity RD said,

weekly. in cash exercising measured our that we're got good system managing cash. We've very very we're So a focused

got cash, really to Doug today, all margin place, our we've going focus and and our we're the continue business. people good way of lot with And so of on of the job said, and fine-tuning And things a in preservation doing like of they're of got diligent a we've reducing out a costs. fronts

Amit Dayal

offline. I'll Yes, my there. take Ben. questions you, other Thank I'll leave it

already my other have questions of discussed. Some been

Operator

comes Your with Stifel. next of from question Butler Brian the line

Brian Butler

prices in EBITDA the for the negative? first on have and mean, based positive, XQ? where little should the the the as kind on Just are conventional positive, How production Assuming are, they hedges downturn about positive, the we we of XQ. of expectation think stay just lot for place conventional business a I a that on one, your well on the you as

Chris Carlson

at on Brian. we now, that at Doug look say out, yes, would And the right I we curve mean laid are forward I then Yes. the the cracks moment. positive based

Brian Butler

to much an Okay. And around any the it we how where the when you you still maybe breakeven baseline the looking are new the mean benefit? an then improvements? can feedstock scores, on the that CI give improvement, scores, relative feedstock, RD improvement other that basis? of past EBITDA with does is? of color I at magnitude does need Or at look make And on

Douglas Haugh

than a that. the That's cases, great question. improvement feed, it's It's the defaults. about XX-plus varies improvement by but In over some a percent better

quarter helpful, but I that say But it's it's as margin you was one. fast -- over of with I fourth so this RIN close mean $X we've RINs would -- James those. call down, $X.XX So just continued decline, since to another lost gallon I Yes, we gallon quarter, January -- gets a that the pretty $X.XX have in almost -- right?And lost a in a general, say probably probably to that who it breakeven it? as would

are at of little that a sure. is an where were XX% has -- still LCFS been but RIN these is the example.But little even year more the help less you than now bit the right off and impact muted the they levels certainly that worth DX February. just a CI killer RINs, lot generation, us that's value right? depressed, RD will So down the were But get a credit performance. and between were for because So bit factor depressed almost margins of a the credits values a and more LCFS they out is we ago, On or so value higher as for anyway, real January well, recover they're

was that a violent move of in some very just and -- week. Just

add to So you the margin, an rates it's forecast a that when extremely trying next and we're magnitude volumes when against run RIN volatile plan of our within moves week. available year

picture come for we the are. where pretty that's think else good they but So more the with.So industry last we're obviously, be from to give margin recalibrate facing RD need down bit to amount think margins to good industry from feeds a there's current there frankly I or tough fall, I to very are what and everybody. They've the going --

Brian Butler

these RBO a It's a I and the probably going I higher to I see aren't improve you infrastructure? couple to improve for come to think don't remains got Right. things if work? mean, to unless is RINs until Or improve I and options other going feedstock there we out. -- of that's new years it guess, get RD the feedstock hope starts just in, and are persistently RINs than then mean RD is sorry, really we expected,

Ben Cowart

Brian, answer term. had have And to I different a think investment. and yes. the The that recaptured we've own we way be their that's a made mean, assets good prior are question. can improvements is the that robust I in life the long investments

review we at And options, always those market have so we these as we conditions. current options look constantly and

Brian Butler

one That's quick helpful. Okay. one. last then And

all 'XX the now? the quarter expense first the On balance expected interest sheet with changes, what's

Chris Carlson

biggest million term for run the portion, right should is expense the million. at $X which interest loan, $X Yes, the to term,

Operator

further speakers now no back over questions to are at There call time. closing the for the will this I remarks. turn

Ben Cowart

we business. call and progress today. on information the with everyone, We you. the to you, here forward interest come business, with we're the quarter Thank as thank and joining your in new operator, informed complete you keeping this appreciate for making back Yes, the and look we

Operator

This call. concludes today's

disconnect. now may You

Vertex Energy (VTNRQ) 28 Feb 242023 Q4 Earnings call transcript