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OFFON

VERTEX ENERGY, INC.

(VTNR)
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Vertex Energy : Strategy Update - August 2021

08/16/2021 | 08:23am EDT

S T R AT E G Y U P D AT E

A u g u s t 2 0 2 1

Disclaimer

This document may contain forward-looking statements including words such as "may," "can," "could," "should," "predict," "aim," "potential," "continue," "opportunity," "intend," "goal," "estimate," "expect," "expectations," "project," "projections," "plans," "anticipates," "believe," "think," "confident," "scheduled," or similar expressions, as well as 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. 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 include, but are not limited to, risks associated with our completion of the proposed acquisition and sale transactions on anticipated terms and timing, if at all, including obtaining regulatory approvals, unforeseen liabilities, future capital expenditures, the ability to recognize synergies (in connection with the acquisition), and the ability of Vertex to complete current plans for expansion and growth of the new operations and other conditions to the completion of the transactions; the expected benefits, output, financial metrics and production of the proposed acquisition transaction; our ability to satisfy closing conditions associated with the acquisition and sale; our ability to raise sufficient capital to complete the acquisition and the planned renewable diesel project and other planned projects and the terms of such funding; the occurrence of any event, change or other circumstances that could give rise to the parties failing to complete the transactions on the terms disclosed, if at all, the right of one or both of Vertex or Shell to terminate the acquisition agreement and the result of such termination, including a termination fee of $10 million payable by Vertex to Shell under certain conditions; the outcome of any legal proceedings that may be instituted against any parties or their respective directors in connection with such planned transactions; the ability to obtain regulatory approvals and other consents, and meet other closing conditions to the acquisition and sale on a timely basis or at all, including the risk that regulatory approvals or other consents required for the acquisition and sale are not obtained on a timely basis or at all, or which are obtained subject to conditions that are not anticipated or that could adversely affect Vertex's acquisition or the expected benefits of the transaction; difficulties and delays in integrating the acquired assets businesses; and the Company's plans for financing the acquisition and planned projects. Should one or more of these risks or uncertainties occur, or should underlying assumptions prove incorrect, Vertex Energy's business, plans, prospects, financial condition, liquidity, cash flows, projections and results could differ materially from those expressed in any forward-looking statement. While forward-looking statements reflect our good faith beliefs, they are not guarantees of future performance. New risks and uncertainties arise over time, and it is not possible for us to predict the occurrence of those matters or the manner in which they may affect us. 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, available at the SEC's website at www.sec.gov. Other unknown or unpredictable factors also could have material adverse effects on Vertex Energy's future results. Except as required by law, Vertex Energy expressly disclaims any obligation or undertaking to update any forward-looking statements to reflect any change in its expectations with regard thereto or any change in events, conditions or circumstances on which any statement is based. The forward-looking statements included in this presentation 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 presentation, except as required by law, and also undertakes no obligation to update or correct information prepared by third parties that are not paid for by Vertex Energy. Information regarding market and industry statistics contained in this presentation is based on information available to us that we believe is accurate. It is generally based on publications that are not produced for investment or economic analysis.

The financial projections (the "Projections") included herein were prepared by Vertex in good faith using assumptions believed to be reasonable. A significant number of assumptions about the operations of the business of Vertex were based, in part, on economic, competitive, and general business conditions prevailing at the time the Projections were developed. Any future changes in these conditions, may materially impact the ability of Vertex to achieve the financial results set forth in the Projections. The Projections are based on numerous assumptions, including realization of the operating strategy of Vertex; industry performance; no material adverse changes in applicable legislation or regulations, or the administration thereof, or generally accepted accounting principles; general business and economic conditions; competition; retention of key management and other key employees; absence of material contingent or unliquidated litigation, indemnity, or other claims; and other matters, many of which will be beyond the control of Vertex, and some or all of which may not materialize. The Projections also assume the closing of the acquisition of the Mobile Refinery and the sale of the Company's used motor oil business operations, each as previously publicly disclosed and the successful funding of planned capital projects following the acquisition. Additionally, to the extent that the assumptions inherent in the Projections are based upon future business decisions and objectives, they are subject to change. Although the Projections are presented with numerical specificity and are based on reasonable expectations developed by Vertex's management, the assumptions and estimates underlying the Projections are subject to significant business, economic, and competitive uncertainties and contingencies, many of which will be beyond the control of Vertex. Accordingly, the Projections are only estimates and are necessarily speculative in nature. It is expected that some or all of the assumptions in the Projections will not be realized and that actual results will vary from the Projections. Such variations may be material and may increase over time. In light of the foregoing, readers are cautioned not to place undue reliance on the Projections. The projected financial information contained herein should not be regarded as a representation or warranty by Vertex, its management, advisors, or any other person that the Projections can or will be achieved. Vertex cautions that the Projections are speculative in nature and based upon subjective decisions and assumptions. Since the Projections cover multiple years, such information by its nature becomes less meaningful and reliable with each successive year. As a result, the Projections should not be relied on as necessarily predictive of actual future events.

This presentation discusses "EBITDA" and "Adjusted EBITDA". EBITDA represents net income before interest, taxes, depreciation and amortization. Adjusted EBITDA is defined as EBITDA before stock-based compensation expense and gain (loss) on change in value of derivative warrant liability and unrealized gains and losses on derivative instruments for hedging activities. EBITDA and Adjusted EBITDA have limitations as analytical tools, and you should not consider them in isolation.

2

Experienced Management Team

Ben Cowart

Chairman and CEO

  • Founded the Vertex group of companies in 2001
  • Twenty-fiveyears of leadership in the petroleum recycling and energy transition industries
  • Helped pioneer the reclamation industry by developing recycling options for residual materials once managed as a hazardous waste
  • Previously served as President of the National Oil Recyclers Association Board of Directors
  • Active in speaking, consulting, chairing and serving on various committees and industry associations

Bart Rice

Chris Carlson

Division President

Chief Financial Officer

Division President of

Brings a range of experience

Renewable and Conventional

to his role as Vertex's Chief

Fuels

Financial Officer

Forty years of experience in

Oversees all risk management,

the refined fuels industry

investments, e-commerce

applications and day-to-day

Leadership positions held at

financial accounting

Rice Oil, Allied Energy and

Prior to joining Vertex in 2001,

Emerge Energy Services

worked for FuelQuest, Inc. as

Extensive downstream sector

a Project Lead managing

and energy industry

implementations of e-

knowledgeable, including

commerce services

ethanol throughput, biodiesel

Prior to FuelQuest, was with

manufacturing,

environmental reclamation

Pagenet as a Strategic

and terminal operations

Account Supervisor

Associate degree from Walker

Earned his BS degree in

College, and business studies

Business Finance from the

at University of Alabama and

University of Houston

UAB

Alvaro Ruiz

Dave Peel

VP of Business Development

Corporate Advisor

Joined Vertex in 2013 and

Extensive and diverse

serves as the Vice President

experience in the energy

of Business Development

industry

Twenty-five years of

Previous roles at Omega

international experience

Holdings, LLC (COO), Peel

including senior leadership

Management Consulting

positions in marketing,

(President), Safety-Kleen

finance, business

Corporation (VP of Oil

development, operations,

Refining & Divisional VP of Oil

sales and project

Recovery and Envirosystems)

management

and Breslube Enterprises

(Director of Operations)

  • Degree in Electric and

Electronic Engineering from

Degree in Mechanical and

the Valladolid Polytechnic,

Production Engineering from

Spain, Executive MBA from IE

Manchester Polytechnic

Business School and a

Masters in Marketing and

Member of the Institution of

Sales from ESIC Business

Mechanical Engineers (UK)

School

and a Chartered Engineer

(UK)

3

Evolution of Vertex

2004

2009

2019 -2020

•Vertex begins

•Vertex

•Acquisition of

•Planned UMO

operations as a

develops

Cedar Marine

assets sale to

used motor oil

•R&M division

patented

•Vertex

Terminals,

•Tensile Capital

Clean Harbors

("UMO")

Thermal

Crossroads

•Planned

supplier to

launched to

Chemical

becomes a

Carriers, H&H

transactions

third parties on

capitalize on

Extraction

public

Oil, Marrero,

•Bunker One

acquisition of

the U.S. Gulf

strength in

Process as it

company

Belle Chasse,

Shell's Mobile

Coast

sourcing

moves into

through

Golden States

partnership

refinery

distressed

UMO re-

merger with

and Heartland

•Acquisition of

hydrocarbon

refining

World Waste

Crystal Energy

streams

Technologies,

2001

2008

Inc.

2014

2021

4

Two Transformational Transactions

Asset Sale Highlights

Overview

  • Vertex has announced the planned sale of its portfolio of used motor oil collection and recycling assets to Safety-Kleen Systems, Inc. ("Safety-Kleen"), a subsidiary of Clean Harbors, Inc. for $140 million
  • Assets include Marrero UMO refinery in Louisiana, Heartland UMO refinery in Ohio, H&H and Heartland UMO collections businesses, Nickco oil filters and absorbent materials recycling facility in East Texas and the Cedar Marine terminal in Baytown, Texas
  • Transaction is expected to close in third quarter of 2021

Funding Considerations

  • Clean Harbors is a multi-billion dollar company and Vertex management expects Safety-Kleen to fund the asset acquisition with available balance sheet cash

Expected Financial Impact

  • After retiring $6.3 million in term debt, together with the payment of transaction-related fees and other financial obligations, total net cash proceeds from the transaction to Vertex are expected to be approximately $90 million

Refinery Acquisition Highlights

Overview

  • Vertex has announced the planned acquisition of 100% of Royal Dutch Shell Plc's Mobile, Alabama refinery for approximately $75 million
  • $85 million conversion project is planned to be launched shortly after close and is expected to result in incremental production of 14,000 bpd of renewable fuels by mid-year 2023
  • Vertex expects to enter into multi-year product offtake agreements with Shell, Bunker One Holdings ("Bunker One") and Idemitsu Apollo Renewable Corporation ("Idemitsu")
  • Transaction is expected to close in fourth quarter of 2021

Funding Considerations

  • The renewable diesel conversion project is expected to be funded by proceeds from announced asset sales, a new credit facility and issuance of common equity, if required

Expected Financial Impact

  • Pro-formafor completion of conversion by year-end 2022, management anticipates the refinery will produce 150 million gallons/year of renewable diesel, increasing to 200 million gallons/year post hydrogen expansion

5

This is an excerpt of the original content. To continue reading it, access the original document here.

Disclaimer

Vertex Energy Inc. published this content on 16 August 2021 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 16 August 2021 12:22:08 UTC.


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Financials (USD)
Sales 2021 243 M - -
Net income 2021 -14,5 M - -
Net Debt 2021 - - -
P/E ratio 2021 -20,5x
Yield 2021 -
Capitalization 325 M 325 M -
Capi. / Sales 2021 1,34x
Capi. / Sales 2022 1,38x
Nbr of Employees 282
Free-Float 71,3%
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Mean consensus BUY
Number of Analysts 3
Last Close Price 5,33 $
Average target price 25,00 $
Spread / Average Target 369%
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Managers and Directors
Benjamin P. Cowart Chairman, President & Chief Executive Officer
Christopher Carlson Chief Financial & Accounting Officer, Secretary
John Strickland Chief Operating Officer
David L. Phillips Independent Non-Executive Director
Daniel K. Borgen Independent Non-Executive Director
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