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Vertex Energy Inc (VTNR) Q1 2024 Earnings Overview: Mixed Results Amid Strategic Shifts

  • Revenue: Reported at $695.33 million, slightly above the estimated $690.82 million.

  • Net Loss: Recorded a net loss of $17.7 million, below the estimated loss of $14.03 million.

  • Earnings Per Share (EPS): Reported a loss of $0.19 per share, above the estimated loss of $0.15 per share.

  • Adjusted EBITDA: Improved to $18.6 million from a negative $35.1 million in the previous quarter.

  • Conventional Fuels Refinery: Achieved a fuel gross margin of $73.6 million, significantly up from $29.6 million in the prior quarter.

  • Renewable Fuels Refinery: Incurred a gross loss of $10.5 million, with a fuel gross margin of $3.8 million.

  • Strategic Shift: Announced a pause in renewable fuels production, pivoting to conventional fuels to enhance financial performance.

On May 9, 2024, Vertex Energy Inc (NASDAQ:VTNR) disclosed its first-quarter financial results for the year, indicating a period of significant operational adjustments and financial outcomes. The company's detailed earnings report can be accessed through its 8-K filing. Vertex Energy, a prominent player in the specialty refining and marketing of high-quality refined products and renewable fuels, also announced a strategic pivot in its operations from renewable to conventional fuel production.

Company Profile

Vertex Energy operates primarily through two segments: Refining and Marketing, and Black Oil and Recovery. The Refining and Marketing segment, which is the major revenue generator, focuses on the recycling of industrial waste streams and off-specification commercial chemical products. The company serves various businesses, including oil change service stations and automotive repair shops, contributing to its diverse industrial footprint.

Financial Performance

For the first quarter of 2024, Vertex Energy reported a net loss of $17.7 million, or $0.19 per diluted share, which marks a significant reduction from the $63.9 million loss recorded in the previous quarter. This improvement was primarily driven by better crack spread pricing in Vacuum Gas Oil (VGO) and gasoline products. The company's Adjusted EBITDA also saw a positive shift, reaching $18.6 million compared to a negative $35.1 million in the fourth quarter of 2023.

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Revenue for the quarter stood at $695.3 million, slightly above the analyst estimate of $690.82 million, showcasing a marginal surpass of market expectations. However, the earnings per share of -$0.19 missed the estimated -$0.15, reflecting ongoing challenges despite top-line growth.

Operational Highlights and Strategic Shifts

Vertex Energy's operational strategy in the quarter included significant developments in its renewable fuels segment. The company decided to pause its renewable diesel operations due to macroeconomic challenges and pivot towards enhancing its conventional fuels production. This strategic shift is expected to optimize returns through higher yield capabilities and margin opportunities in conventional products.

In terms of production, the Mobile Refinery reported a conventional throughput of 64,065 barrels per day (bpd) and maintained a production yield of approximately 64% for high-value light products like gasoline and diesel. The renewable diesel facility, however, faced difficulties, producing 4,003 bpd with a yield of 98% but incurred a gross loss of $10.5 million.

Balance Sheet and Liquidity

As of March 31, 2024, Vertex Energy's total debt stood at $284 million, with a cash position of $65.7 million. The company's management has been actively working on enhancing liquidity and financial flexibility, including a recent amendment to its term loan agreement that provided an additional $50 million in borrowings.

Looking Ahead

Vertex Energy's management remains focused on improving its cash position, reducing operating costs, and enhancing margins as it navigates through the strategic redirection of its operations. The company has provided guidance for the second quarter of 2024, expecting conventional throughput volumes to range between 68.0 and 72.0 Mbpd at the Mobile Refinery.

This quarter's results reflect a transitional phase for Vertex Energy as it adapts to market conditions and re-aligns its operational focus. Investors and stakeholders will likely watch closely how these strategic shifts play out in terms of financial health and market positioning in the competitive energy sector.

Explore the complete 8-K earnings release (here) from Vertex Energy Inc for further details.

This article first appeared on GuruFocus.