Vertex Energy Reports a 19% Increase in Revenue and a 57% Increase in Gross Profit for the Third Qua

Vertex Energy Reports a 19% Increase in Revenue and a 57% Increase in Gross Profit for the Third Quarter of 2012

-105% Increase in Net Income Relative to Third Quarter 2011-

-Completion of Accretive Acquisition With Vertical Integration Benefits-


—Conference Call Today at 10:00 A.M. EDT—

HOUSTON--(BUSINESS WIRE)-- Vertex Energy, Inc. (OTCBB:VTNR), an environmental services company that recycles industrial waste streams and off-specification commercial chemical products, today announced its financial results for the third quarter ended September 30, 2012.

Financial highlights for the third quarter and first nine months of 2012 include:

  • Revenue increased 19% to $36.2 million for the third quarter of 2012 versus $30.3 million in the year-ago third quarter;
  • Gross profit increased to $3.2 million for the quarter compared with $2.0 million reported in the same period last year;
  • Net income for the third quarter of 2012 was $2.1 million, or $.13 per fully diluted share, compared with net income of $1.0 million, or $0.06 per diluted share in the third quarter of 2011;
  • Overall sales volumes in terms of total barrels of finished product sold increased by 23% compared with last year's third quarter;
  • Revenue increased 31% to $102.3 million for the first nine months of 2012 versus $78.4 million in the year-ago period;
  • Gross profit for the nine months 2012 was $6.82 million compared with $6.77 million in the year-ago period;
  • Net income for the nine-month period of 2012 was $3.5 million or $0.25 per fully diluted share compared with $3.6 million or $0.25 per fully diluted share in the first nine months of 2011;

Benjamin P. Cowart, Chief Executive Officer of Vertex Energy said, "The third quarter of 2012 was a positive one for us both financially and strategically, with improvements in revenue, gross profit, sales volumes and net income relative to the same quarter a year ago." Mr. Cowart added, "Perhaps more important than our improved financial performance is the completion of the acquisition of Vertex Holdings during the third quarter of this year."

The Company's previously announced acquisition is expected to improve gross margins going forward, increase the volume of used oil controlled by the Company and provide a platform for future growth. Mr. Cowart stated, "This acquisition presents a number of benefits for Vertex Energy and its shareholders. The completion of this deal allows our company to become a fully vertically integrated player within our industry from collection of used oil all the way through the sale of our processed finished products. From a financial perspective, we are now able to source more of the used oil needed to run our TCEP facility directly from used oil generators rather than having to purchase it from other collectors, which we anticipate will lead to lower feedstock costs and higher gross margins. Additionally, we expect that the outright ownership of TCEP resulting from this acquisition will allow us to run the process with reduced operating expenses relative to previous periods." Mr. Cowart continued, "We believe the strategic value of this acquisition is also critical. By owning our own collection operations, we now have a platform from which we can acquire and integrate additional collectors in key geographic areas to support our existing TCEP process and additional TCEP facilities in the future. Vertex Energy's previous experience in used oil collection is strengthened by the new management additions from the acquired collection businesses. We believe that the acquisition positions us well for improved financial performance and overall growth going forward."

CONFERENCE CALL

As previously announced, management of Vertex Energy will host a conference call today at 10:00 a.m. EDT. Those who wish to participate in the conference call may telephone 877-407-4019 from the U.S.; international callers may telephone 201-689-8337, approximately 15 minutes before the call. A webcast will also be available at: www.vertexenergy.com.

A digital replay will be available by telephone approximately two hours after the call's completion until December 7, 2012, and may be accessed by dialing 877-660-6853 from the U.S. or 201-612-7415 for international callers.

ABOUT VERTEX ENERGY, INC.

Vertex Energy, Inc. (OTCBB:VTNR), is a leading environmental services company that recycles industrial waste streams and off-specification commercial chemical products. Its primary focus is recycling used motor oil and other petroleum by-product streams. Vertex Energy purchases these streams from an established network of local and regional collectors and generators. The company also manages the transport, storage and delivery of the aggregated feedstock and product streams to end users, and manages the re-refining of a portion of its aggregated petroleum streams in order to sell them as higher-value end products. Vertex Energy sells its aggregated petroleum streams as feedstock to other re-refineries and fuel blenders or as replacement fuel for use in industrial burners. The re-refining of used motor oil that Vertex Energy manages takes place at a facility operated by a related party that uses a proprietary Thermal Chemical Extraction Process ("TCEP") technology. Based in Houston, Texas, Vertex Energy also has offices in Georgia and California. More information on the company can be found at www.vertexenergy.com.

This press release may contain forward-looking statements, including information about management's view of Vertex Energy's future expectations, plans and prospects, within the safe harbor provisions under The Private Securities Litigation Reform Act of 1995 (the "Act"). In particular, when used in the preceding discussion, the words "believes," "expects," "intends," "plans," "anticipates," or "may," and similar conditional expressions are intended to identify forward-looking statements within the meaning of the Act, and are subject to the safe harbor created by the Act. Any statements made in this news release other than those of historical fact, about an action, event or development, are forward-looking statements. These statements involve known and unknown risks, uncertainties and other factors, which may cause the results of Vertex Energy, its divisions and concepts to be materially different than those expressed or implied in such statements. These risk factors and others are included from time to time in documents Vertex Energy files with the Securities and Exchange Commission, including but not limited to, its Form 10-Ks, Form 10-Qs and Form 8-Ks. Other unknown or unpredictable factors also could have material adverse effects on Vertex Energy's future results. The forward-looking statements included in this press release are made only as of the date hereof. Vertex Energy cannot guarantee future results, levels of activity, performance or achievements. Accordingly, you should not place undue reliance on these forward-looking statements. Finally, Vertex Energy undertakes no obligation to update these statements after the date of this release, except as required by law, and also takes no obligation to update or correct information prepared by third parties that are not paid for by Vertex Energy.

 
VERTEX ENERGY, INC.
CONSOLIDATED BALANCE SHEETS
 
  September 30,   December 31,
2012 2011
ASSETS (Unaudited)
Current assets
Cash and cash equivalents $ 1,151,016 $ 675,188
Accounts receivable, net 8,362,742 5,436,006
Accounts receivable- other 127,162
Accounts receivable- related party - 2,459
Inventory 6,507,217 6,408,780
Prepaid expenses and other current assets   221,817   151,821
Total current assets   16,369,954   12,674,254
 
Noncurrent assets
Licensing agreement, net - 1,929,549
Fixed assets, net 10,770,902 124,168
Intangible assets 16,255,000 -
Goodwill 3,515,977
Deferred federal income tax   3,669,000   2,006,000
Total noncurrent assets   34,210,879   4,059,717
 
TOTAL ASSETS $ 50,580,833 $ 16,733,971
 
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable and accrued expenses $ 10,055,679 $ 6,464,193
Accounts payable-related party 917,519 620,724
Current portion of long-term debt 1,748,023 -
Deposits   -   235,557
Total current liabilities   12,721,221   7,320,474
 
Long-term liabilities
Long-term debt 6,860,948 -
Contingent consideration 4,711,000 -
Line of credit 6,000,000 -
Deferred federal income tax   100,000   76,000
Total liabilities   30,393,169   7,396,474
 
Commitments and contingencies
 
STOCKHOLDERS' EQUITY
 
Preferred stock, $0.001 par value per share:
50,000,000 shares authorized

Series A Convertible Preferred stock, $0.001 par value, 5,000,000 authorized and 3,133,147 and 4,426,639 issued and outstanding at September 30, 2012 and December 31,2011, respectively

 

3,133

 

4,427

Common stock, $0.001 par value per share; 750,000,000 shares authorized; 15,315,208 and

9,414,926 issued and outstanding at September 30, 2012 and December 31, 2011, respectively

 

15,315

 

9,415

Additional paid-in capital 10,644,033 3,319,388
Retained earnings   9,525,183   6,004,267
Total stockholders' equity   20,187,664   9,337,497
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 50,580,833 $ 16,733,971
 
 

VERTEX ENERGY, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS
THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2012 AND 2011
(UNAUDITED)
 
Three Months Ended Nine Months Ended
September 30, September 30,
2012   2011 2012   2011
 
Revenues $ 36,195,570 $ 30,301,326 $ 102,316,702 $ 78,383,111
Revenues - related parties   -   -   -   17,978
36,195,570 30,301,326 102,316,702 78,401,089
 
Cost of revenues   33,011,934   28,268,785   95,497,261   71,632,067
 
Gross profit 3,183,636 2,032,541 6,819,441 6,769,022
 

Selling, general and administrative expenses (exclusive of merger related expenses)

1,610,146

997,723

3,724,120

3,030,461

Acquisition related expenses

 

1,154,612

 

-

 

1,154,612

 

-

 

Total selling, general and administrative expenses

  2,764,758  

997,723

  4,878,732   3,030,461
 
 
Income from operations 418,878 1,034,818 1,940,709 3,738,561
 
Other income (expense)
Interest income 949 - 1,582 -
Interest expense   (28,972)   (3,593)   (29,016)   (57,811)

Total other income (expense)

  (28,023)   (3,593)   (27,434)   (57,811)
 
Income before income tax 390,855 1,031,225 1,913,275 3,680,750
 

Income tax (expense) benefit

  1,714,813   (3,000)   1,607,641   (45,689)
 
Net income $ 2,105,668 $ 1,028,225 $ 3,520,916 $ 3,635,061
 
Earnings per common share
Basic $ 0.17 $ 0.11 $ 0.35 $ 0.42
Diluted $ 0.13 $ 0.06 $ 0.25 $ 0.25
 

Shares used in computing earnings per share

Basic   12,255,372   9,187,227   10,085,206   8,722,642
Diluted   16,484,023   15,851,393   14,358,691

 

  14,503,882
 
 
VERTEX ENERGY, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
NINE MONTHS ENDED SEPTEMBER 30, 2012 AND 2011
(UNAUDITED)
 
Nine Months Ended

September 30,

2012

 

September 30,

2011

 
Cash flows operating activities
Net income $ 3,520,916 $ 3,635,061

Adjustments to reconcile net income to cash provided by (used in) operating activities

Stock based compensation expense 124,626 94,358
Depreciation and amortization 180,402 120,138
Deferred federal income tax benefit (1,639,000) -
Changes in assets and liabilities
Accounts receivable (1,073,778) (4,010,965)
Accounts receivable- other (127,162)
Accounts receivable- related parties 2,459 (10,967)
Inventory (85,658) (4,864,249)
Prepaid expenses 23,313 (11,381)
Accounts payable 1,005,932 2,872,639
Accounts payable-related parties 296,795 685,968
Deposits   (235,557)   1,080,277
Net cash provided by (used in) operating activities   1,993,288   (409,121)
 
Cash flows from investing activities
Purchase of intangible assets (209,061) (232,214)
Acquisition, net (1,319,015)
Purchase of fixed assets   (77,232)   (92,051)
Net cash used in investing activities   (1,605,308)   (324,265)
 
Cash flows from financing activities
Borrowing from (payments to) note payable (3,777) 1,000,000
Proceeds from exercise of common stock warrants   91,625   306,250
Net cash provided by financing activities   87,848   1,306,250
 
Net increase in cash and cash equivalents 475,828 572,864
 
Cash and cash equivalents at beginning of the period   675,188   744,313
 
Cash and cash equivalents at end of period $ 1,151,016

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