Vertex Energy is an environmental services company focused on recycling petroleum waste streams. Through a recent acquisition, the company has become vertically integrated across the petroleum recycling value chain from collection to product sales. Vertex uses proprietary technology to process used motor oil into higher value fuels and has demonstrated strong revenue and profitability growth. The company aims to expand its feedstock supply, replication of processing facilities, and pursue vertical integration opportunities to continue its growth.
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MicroCapClub Invitational: Vertex Energy (VTNR)
1. Business Overview
NASDAQ: VTNR
February 2013
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2. 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 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 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 takes no obligation to update or correct information prepared by third
parties that are not paid for by Vertex Energy.
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3. Company Overview
Vertex Energy is a leading environmental services company focused on recycling petroleum-based waste
streams
The Company Recently completed a strategic acquisition of substantially all of the assets of Vertex Holdings
The Acquisition creates a vertically integrated business which spans the entire petroleum recycling value
chain
» Collection: Collect and purchase used oil directly from generators such as Jiffy Lube and car dealerships
› Approximately 9 million gallons collected during the 12-month period ended September 30, 2012
» Aggregation: Purchase used oil, transmix, and off-specification commercial chemical products from an established network of local and
regional collectors
› Approximately 58 million gallons aggregated during the 12-month period ended September 30, 2012
» Logistics: Manage the transportation, storage and delivery of aggregated feedstock and re-refined products
» Re-refining: Process waste streams into higher-value feedstocks or end products using in-house proprietary TCEP technology or 3rd party
outsourcing for transmix and chemical byproducts
» Sales: Sell used oil and re-refined products to re-refineries & fuel blenders
Headquartered in Houston, Texas, with approximately 90 employees
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4. Vertex’s Role in the Petroleum Recycling Value Chain
Generators Collectors Aggregators Processors End Users
Third parties Collect used oil Purchase used oil Process used oil End product is used
Generate used oil from generators from collectors as an industrial fuel,
Technology
through core ship fuel, base oil, or
Overview business
Typically local or Sell and deliver it upgrades input
refinery feedstock
regional as feedstock for into higher value
Jiffy Lube, car processors end products
Highly fragmented
dealerships, etc.
Vertex Energy
Historical Refining &
Black Oil Div.
Marketing Div.
Acquired
Businesses*
TCEP
* EBITDA for 2011 was $6 million & 9 months ending 9/30/2012 was $4 million
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5. Markets for Used Oil
Burners (paper mill, asphalt kiln) High Value Fuel (TCEP)
USED OIL
Re-refineries (Base Stock) Export (utility blends)
Vacuum Gas Oil (VGO)
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6. Compelling Business Model
Used Oil Pipeline Transmix &
Chemical Byproduct
Black Oil Division Refining & Marketing Refining & Marketing
Historically, an aggregator Thermal Chemical Aggregator and logistics
manager of transmix and
and logistics manager of used Extraction Process – byproduct feedstocks
oil feedstock TCEP
Oversee 3rd party re-refining
Acquisition gives Vertex Patent pending technology process
Energy collection capabilities developed by Vertex
Sell re-refined products
Used oil sold to third-party Converts used motor oil into a
Re-refineries, VGO, Export or refining feedstock or
transferred to Refining & cutterstock-diesel
Marketing Division replacement.
Fuel Blenders Fuel Blenders Fuel Blenders
Re-refineries Refiners Chemical-Refiners
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7. Facilities
CMT – TCEP facility KMTEX – Port Arthur Location
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8. Map of Black Oil Division and Distribution
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9. Volumes & Financials
FYE FYE FYE 9 Months Ending 9/30,
2009 2010 2011 2011 2012
Volume (in bbls. sold)
906,452 921,422 1,175,829 855,854 1,061,515
YoY % Change 0.96% 1.65% 27.61% 27.13% 24.03%
Revenue $ 38,703,847 $ 58,140,985 $ 109,740,257 $ 78,401,089 $ 102,316,702
YoY % Change (40.7%) 50.2% 88.7% 84.8% 30.5%
Gross Profit 2,729,552 4,239,944 8,074,070 6,769,022 6,819,441
Gross Margin % 7.1% 7.3% 7.4% 8.6% 6.7%
Adjusted EBITDA 174 1,474,935 4,281,413 3,953,057 3,400,349
EBITDA Margin % 0.0% 2.5% 3.9% 5.0% 3.3%
Net Income (609,384) 1,228,426 5,753,515 3,680,750 3,520,916
Net Income % (1.6%) 2.1% 5.2% 4.7% 3.4%
Diluted EPS $ (0.08) $ 0.09 $ 0.39 $ 0.25 $ 0.25
NOL’s of ~$35mm from reverse merger
1) Includes only one month of financial results from Vertex Holdings
2) Adjusted EBITDA excludes merger related expenses
3)Net Income includes a deferred income tax benefit of $1.9M relating to decrease in the Company’s valuation allowance on net
operating losses.
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11. Gross Profit Mix
Successfully leveraging our history Percentage of Gross Profit By Division
as a value-added feedstock
100%
logistics provider to become a
leading re-refiner of used 32%
petroleum products 80%
54%
TCEP contribution ramping up 75%
70%
60% 78%
dramatically and should aid
100%
margin improvement
40%
68%
46%
20%
30%
25% 22%
0%
FY FY FY FY 9 Months 9 Months
2008 2009 2010 2011 9/30/11 9/30/12
Black Oil Refining & Marketing
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12. Growth Strategy
Expand Feedstock Supply Volume
» Grow street collections and aggregation operations
» Expand existing relationships with suppliers
Replicate and rollout additional TCEP facilities
» Locate new TCEP facility sites at marine ports to capitalize on feedstock availability
» Expand existing Baytown capacity
Acquire Collectors
» Partner with or acquire collection and aggregation assets
Vertical Integration
» Leverage existing process technologies in the market
» Expand other recycling and processing technologies for bi-products such as oil filters and
antifreeze
» End Product sales to Consumers
» Direct Fuel Blending
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13. Investment Highlights
Estimated $2.3 billion market opportunity
Strong Position in
Services span the entire petroleum recycling value chain from collection to end product sales
Growing Petroleum
Well positioned to capitalize on growth trends through scale, technology, and key strategic
Recycling Industry relationships with feedstock generators and aggregators
Proprietary TCEP Own the intellectual property rights to patent pending TCEP process
Re-refinement TCEP upgrades used oil into higher-value feedstock and diesel replacement fuel
Technology TCEP refinery capital expenditures are significantly less than conventional re-refineries
Diverse network of feedstock generators and collectors covering 13 states
Key Strategic
Insulated from commodity price risk through supplier and customer contracts
Relationships
Aggregated 58 million gallons of feedstock in during the twelve months ended September 30,
2012
Expand feedstock aggregation volumes and geographic footprint
Compelling Growth Acquire used oil collectors and pursue other vertical integration opportunities
Opportunities Develop or acquire technologies to upgrade TCEP finished product into base oil
Expand TCEP capacity – 30 million gallon run-rate at first TCEP processing facility
Proven Financial Demonstrated growth in revenue, gross profit, EBITDA and net income
Performance & Acquisition of Vertex Holdings expected to be accretive to earnings and improve margins
Management Team Proven, highly experienced management team averaging 20 years of industry experience
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14. Management Team
Benjamin P. Cowart | Chief Executive Officer, Chairman of the Board, Founder
26+ years petroleum recovery industry, pioneering the reclamation industry by developing recycling options
for many hydrocarbon residual materials once managed as hazardous wastes
Matthew Lieb | Chief Operating Officer
17+ years business leadership, operations, consulting expertise, 3 startups and public company experience
Chris Carlson | Chief Financial Officer
12+ years financial management, energy, commodity, treasury and risk management
John Strickland | Manager of Supply & Trading
27+ years management and marketing of fuels and petroleum blending operations
Greg Wallace | Manager of Refining & Marketing
22+ years processing, trading and marketing of petroleum and chemicals
Mike Stieneker| General Manager of H&H Oil Collections
20+ years management and operations of Used Oil Collections
Mike Carter| General Manager of Operations and Regulatory Compliance
20+ years management and terminal operations
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15. Contact Information
Ben Cowart
CEO
(281) 486-4182
benc@vertexenergy.com
www.vertexenergy.com
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