Executive Summary

Q1 showed improved refinery economics and cost control, with Adjusted EBITDA turning positive to $18.6M from $(35.1)M in Q4, driven by stronger crack spreads and higher conventional fuel gross margin per barrel; net loss narrowed to $(17.7)M, $(0.19) diluted EPS .
Management paused renewable diesel production and will reconfigure the hydrocracker to conventional service during a planned 2024 turnaround; modeling against Q1 data suggests roughly $40M additional fuel gross margin if the unit had run conventional, with added conventional volumes expected from Q4 2024 .
Balance sheet remains stretched: total debt $284M, cash $65.7M, net long‑term debt $218.5M; management continues to evaluate liquidity and strategic options initiated with BofA in 2023 .
Q2 guide: conventional throughput 68–72 Mbpd, consolidated opex $4.11–$4.46/bbl, capex $20–$25M; all prior guidance otherwise superseded; pivot and summer demand should lift throughput and mix .

What Went Well and What Went Wrong

What Went Well

Material quarter-over-quarter profitability improvement: Adjusted EBITDA to $18.6M (from $(35.1)M in Q4) on a 28% improvement in crack spreads and higher conventional fuel gross margin per barrel ($12.63 vs $4.79) .
Cost discipline: direct operating expense per barrel for consolidated operations at $4.10 in Q1, below forecast; conventional opex $2.75/bbl .
CEO on optionality: “We expect to optimize our hydrocracker capacity between conventional and renewables… [shifting] will allow us to optimize available returns through higher yield capabilities and higher margin opportunities for conventional products,” with an estimated ~$40M added margin if conventional in Q1 .

What Went Wrong

Renewables profitability remained weak: renewable operations posted a gross loss of $(10.5)M, with renewable fuel gross margin only $3.8M ($10.29/bbl), prompting the production pause and pivot .
Balance sheet leverage remains high: net long‑term debt $218.5M and net leverage 246.4x on a trailing basis given depressed TTM Adjusted EBITDA; liquidity vigilance and financing flexibility remain focus points .
Product yield mix of finished fuels moderated vs Q4 (63.5% vs 65.9%), impacted by planned maintenance and weather events, though throughput still exceeded guidance .

Financial Results

GAAP and Non‑GAAP summary

Metric	Q3 2023	Q4 2023	Q1 2024
Revenue ($MM)	1,018.4	—	695.3
Net Income ($MM)	19.8	(63.9)	(17.7)
Diluted EPS ($)	0.17	(0.84)	(0.19)
Adjusted EBITDA ($MM)	51.5	(35.1)	18.6

Operating and margin KPIs (Mobile Refinery)

KPI	Q3 2023	Q4 2023	Q1 2024
Conventional Throughput (bpd)	80,171	67,083	64,065
Conventional Fuel Gross Margin ($/bbl)	17.56	4.79	12.63
Renewable Throughput (bpd)	5,397	3,926	4,090
Renewable Fuel Gross Margin ($/bbl)	4.78	12.11	10.29
Operating Expenses per Barrel – Total ($/bbl)	3.70	3.83	4.10

Segment breakdown – Q1 2024 revenue

Segment	Revenue ($MM)
Refining & Marketing (Refined products + re‑refined + services)	657.7
Black Oil & Recovery (Refined products + re‑refined + services)	38.6
Corporate & Eliminations	(1.0)
Total	695.3

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Mobile Conventional Throughput (Mbpd)	Q2 2024	—	68–72	New range
% Finished Products	Q2 2024	—	64–68%	New range
Consolidated Direct Opex ($/bbl)	Q2 2024	—	$4.11–$4.46	New range
Consolidated Capex ($MM)	Q2 2024	—	$20–$25	New range
Mobile Renewable Throughput (Mbpd)	Q2 2024	—	2–4	New range; pause/pivot underway
Hydrocracker service mode	Mid‑2024	Renewables	Conventional (after turnaround); RD optionality retained	Pivot
Q1 Opex ($/bbl)	Q1 2024	$4.59–$4.95 (2/28)	$4.15–$4.35 (4/18)	Lowered

Note: Company stated “All prior financial guidance should no longer be relied upon.”

Earnings Call Themes & Trends

Topic	Previous Mentions (Q3 2023, Q4 2023)	Current Period (Q1 2024)	Trend
Hydrocracker strategy	RD Phase I at 8 kbpd; optimizing feedstock diet; pathway filings for Soy, DCO, Canola (Q3) ; LCFS credits received in Q4 ($9.6M)	Pause RD; pivot unit to conventional during 2024 turnaround; retain RD flexibility	From renewables ramp to conventional pivot for margin capture
Crack spreads / margins	Q3 strong, hedged ~25% Q4 gasoline at $13/bbl	~28% improvement vs Q4; conventional fuel gross margin/bbl up to $12.63	Improving Q/Q
Cost control	Q4 opex/bbl $3.83; efficient despite curtailed throughput	Q1 opex/bbl $4.10 total; conventional opex $2.75	Sustained discipline
LCFS / pathways	Temporary LCFS credits applied; pathway filings ongoing (Q3/Q4)	RD operations paused; existing inventories being run down in Q2	De‑emphasized near‑term
Risk management	Q4 hedged 25% gasoline swaps	Q1 distillate swaps (ULSD) executed; 83% of planned diesel production hedged in Feb–Mar	Active hedging maintained
Balance sheet / strategy	Strategic review with BofA initiated (Q3/Q4)	Liquidity/strategic options reiterated	Ongoing

Management Commentary

“We had a strong operational and financial quarter… improved crack spread environment… Adjusted EBITDA higher by over $50 million compared to Q4 2023… conventional throughput above guidance… managed direct operating costs and capital expenditures below guidance.” — CEO Benjamin P. Cowart .
“We have decided to strategically pause our renewable diesel business and pivot to producing conventional fuels from the hydrocracker unit… [This] will allow us to optimize available returns through higher yield capabilities and higher margin opportunities for conventional products… we estimate the unit could have… provid[ed] an additional fuel gross margin contribution of roughly $40 million [in Q1 if conventional].” — CEO .

Q&A Highlights

We were unable to retrieve the Q1 2024 earnings call transcript due to a document retrieval error; as a result, Q&A specifics and any on‑call clarifications are unavailable from our source set. Our synthesis relies on the press release and the furnished presentation .

Estimates Context

Wall Street consensus (S&P Global) for VTNR was unavailable in our dataset; therefore, we cannot provide comparisons vs revenue/EPS/EBITDA estimates for Q1 or prior quarters. Values retrieved from S&P Global were unavailable for this ticker in our system.

Key Takeaways for Investors

The pivot to conventional hydrocracking is the central catalyst: it targets higher near‑term margin capture and improved cash generation, with added conventional volumes expected to support Q4 2024 .
Margin trajectory improved sharply Q/Q, as seen in fuel gross margin per barrel and Adjusted EBITDA; maintaining this trend hinges on crack spreads and operational reliability through the turnaround .
Cost execution remains a differentiator (low conventional opex/barrel), supporting resilience even at moderated throughput levels .
Liquidity remains a watch item: net long‑term debt $218.5M; management continues to evaluate liquidity levers and strategic alternatives initiated with BofA .
Q2 setup: higher throughput (68–72 Mbpd) and controlled opex provide a constructive near‑term operating backdrop into summer demand, while renewable feedstock drawdown should aid working capital .
Near‑term stock reaction likely tracks proof points on the pivot (timing, incremental conventional margin realization) and balance sheet progress (de‑risking term loan/convertible overhang) .

Appendix: Additional Detail

Balance sheet snapshot (3/31/24): Total debt $284.3M, cash & equivalents $65.7M (incl. $3.6M restricted), net long‑term debt $218.5M .
Q2 2024 operating/financial guide: conventional throughput 68–72 Mbpd; renewable 2–4 Mbpd; consolidated direct opex $4.11–$4.46/bbl; capex $20–$25M .
Q1 Mobile conventional metrics: throughput 64,065 bpd; fuel gross margin $73.6M ($12.63/bbl); opex $2.75/bbl .
Q1 renewable metrics: throughput 4,090 bpd; fuel gross margin $3.8M ($10.29/bbl); gross loss $(10.5)M .

Sources: Vertex Energy Q1 2024 8‑K earnings release and presentation; Q1 operational update (April 18, 2024); Q4 2023 and Q3 2023 8‑Ks .

Vertex Energy Inc. (VTNR)·Q1 2024 Earnings Summary