Vertex Energy (NASDAQ: VTNR) reported Q1 EPS of ($0.21), $0.18 worse than the analyst estimate of ($0.03). Revenue for the quarter came in at $36.2 million versus the consensus estimate of $44.73 million.

1Q20 PERFORMANCE HIGHLIGHTS

• Total direct collections +12% year-over-year (y/y)
• Total net income attributable to Vertex Energy of $2.8 million (+$7.7 million y/y)
• Total adjusted EBITDA of $1.6 million (+$2.3 million y/y)
• Total free cash flow of $1.2 million
• Total cash and available liquidity of $20 million as of March 31, 2020
• Total term debt outstanding of $6.1 million as of March 31, 2020

MANAGEMENT COMMENTARY

"Entering the first quarter of 2020, our business was on track for strong full-year performance, with the futures markets implying sustained growth in refined products margins following the IMO 2020 transition," stated Benjamin P. Cowart, President and CEO of Vertex. "In the months leading up to the emergence of COVID-19, we entered into derivatives contracts that allowed us to lock-in the favorable margins that existed in the market at that time, effectively shielding much of our business from the volatility that followed. We monetized this hedge position during the first quarter, resulting in a near-record quarter of profitability for the Company."

"During March 2020, the potential impact of COVID-19 became increasingly apparent, leading us to take swift action to protect the safety and welfare of our employees, while ensuring business continuity. During the fourth quarter 2019, we built inventory of lower-priced used motor oil feedstock that allowed us to operate our refineries at normal rates well into April 2020, while others in the re-refining industry shuttered their facilities due to insufficient supplies of UMO feedstock."

"Looking ahead, our management team remains highly engaged, taking actions to mitigate risk, while positioning our business for profitable growth in a post COVID-19 environment. During April 2020, collection volumes were well below normalized levels, but have since improved in May 2020, back up to 70% of normal levels in some markets. In response to the current environment, we intend to conduct extended maintenance at the Marrero refinery during the second quarter 2020. Given our discussions with UMO suppliers, we think the market has bottomed. As shelter-in-place orders are lifted and regional economies reopen, vehicle miles traveled are expected to increase from current levels."

"COVID-19 has created a temporary demand shock with the global base oil markets," continued Cowart, "Importantly, Vertex has significant base oil production volumes under contract that provide surety of off-take, positioning us to weather current market volatility at the Heartland refinery. At our Marrero refinery, demand for marine fuel remains strong. Coming out of the ongoing turnaround, we plan to run the refinery at full rates, as we continue to supply our distribution partner, Bunker One USA, with the entirety of our middle distillates production."

For earnings history and earnings-related data on Vertex Energy (VTNR) click here.