Release Date: August 08, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Vertex Energy Inc (VTNRQ, Financial) successfully reduced absolute operating expenses by 6% quarter over quarter and 12% year over year, demonstrating effective cost management.
- The company secured additional loans totaling $35 million to address near-term liquidity constraints, enhancing financial flexibility.
- Vertex Energy Inc (VTNRQ) maintained a commendable safety track record with zero process safety events for over two years at the Mobile site.
- The company achieved a high capacity utilization rate of 90% at the Mobile site, with strong operational performance and throughput volumes of approximately 68,000 barrels per day.
- Vertex Energy Inc (VTNRQ) strategically pivoted from renewable diesel to conventional fuels, aiming to capture available margins in a more established market.
Negative Points
- Vertex Energy Inc (VTNRQ) reported a net loss of $53.8 million for the second quarter of 2024, compared to a net loss of $81.4 million in the same quarter of 2023.
- The company's total adjusted EBITDA decreased to a loss of $22.4 million in the second quarter, driven by lower pricing and deteriorating crack spreads.
- The gross margin per barrel for conventional fuels decreased significantly to $5.67 from $12.63 in the first quarter, reflecting challenging market conditions.
- Vertex Energy Inc (VTNRQ) experienced its first recordable injury in over two years at the Mobile site, highlighting the need for continuous safety improvements.
- The planned turnaround and hydrocracker conversion in the third quarter are expected to reduce overall throughput, impacting short-term production volumes.
Q & A Highlights
Q: Can you provide more details on the financial impact of the hydrocracker conversion and the expected timeline for completion?
A: Benjamin Cowart, CEO: The hydrocracker conversion from renewable feedstock to conventional is part of our strategic pivot to capture available margins in a more established market. We are on schedule for the conversion, with an on-stream target in the fourth quarter of 2024. The conversion is expected to cost around $10 million, and we anticipate improved financial performance post-conversion as we transition to higher-margin conventional products.
Q: How is Vertex Energy managing liquidity during this transitional period?
A: Chris Carlson, CFO: We have secured additional term loans totaling $35 million to manage near-term liquidity constraints. This includes $15 million in June and $20 million in July. We are also focusing on stopping losses from renewable diesel production and upgrading VGO to higher-margin conventional products to generate additional cash flow.
Q: What are the expected throughput volumes and product yields for the third quarter of 2024?
A: Douglas Haugh, COO: For Q3, we anticipate conventional throughput volumes at Mobile to be between 55,000 and 60,000 barrels per day. The expected yield of conventional products is projected to consist of 64% to 68% high-value finished products such as gasoline, diesel, and jet fuel.
Q: Can you elaborate on the safety performance and any incidents reported during the quarter?
A: Douglas Haugh, COO: Unfortunately, we had our first recordable injury in over two years at the Mobile site, which was a minor contractor incident. However, we maintained zero process safety events for the quarter, continuing our streak of over two years with outstanding HS&E performance.
Q: What are the strategic priorities for Vertex Energy moving forward?
A: Benjamin Cowart, CEO: Our strategic priorities include increasing our cash position, reducing operating costs, and improving margins. We are focused on managing cash flow during this transitional period and pursuing strategic opportunities and financing pathways to support liquidity needs. We aim to maximize profitability for the remainder of 2024 and into 2025.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
