Executive Summary

Q4 2023 was deeply loss-making: net loss attributable to the Company of ($63.9) million and diluted EPS of ($0.68); Adjusted EBITDA was ($35.1) million vs $75.2 million in Q4 2022, reflecting margin compression and renewables headwinds .
Conventional Mobile Refinery throughput was 67,083 bpd with fuel gross margin of $29.6 million ($4.79/bbl), down sharply from Q3; management cited strategic curtailment amid deteriorating crack spreads and planned transformer replacement downtime as drivers .
Renewables showed mixed results: gross loss of $(17.6) million in Q4, but fuel gross margin of $4.4 million ($12.11/bbl) supported by $9.6 million of LCFS credits at temporary CI scores; filings for proprietary CI pathways across soy, DCO, canola, and tallow were completed .
Liquidity and leverage deteriorated: year-end cash and equivalents $80.6 million; net long-term debt $205.5 million; net leverage ~12.0x TTM Adjusted EBITDA; company initiated a strategic review with BofA Securities and added $50 million to the term loan in late December .
Near-term catalysts: 1Q 2024 guidance implies lower throughput and higher OpEx/bbl; hedges cover ~38% of planned Q1 distillate at $28.39/bbl; post-2024 LCFS regime and feedstock optimization may support margin recovery .

What Went Well and What Went Wrong

What Went Well

Finished product yield improved: light products were ~66% of Q4 production (vs 64% in Q3), reflecting “continued successful yield optimization” at Mobile .
LCFS credits and pathway progress: received ~$9.6 million of LCFS payments at default CI; completed proprietary CI filings for soy, DCO, canola, and tallow to access higher credit value going forward .
Strategic and supply/trading integration: “inauguration of our Marine Fuels and Logistics business alongside our Supply and Trading division has enabled us to leverage strategic integration opportunities, enhancing netbacks” (CEO quote) .

What Went Wrong

Severe margin compression: conventional fuel gross margin fell to $29.6 million ($4.79/bbl) in Q4 from $129.5 million ($17.56/bbl) in Q3 due to weaker crack spreads and operational curtailment .
Renewables profitability: Q4 renewable gross loss was $(17.6) million despite positive fuel gross margin; elevated RBD soybean oil costs weighed on segment results in 2023 .
Leverage spiked: net long-term debt of $205.5 million and net leverage of ~12.0x TTM Adjusted EBITDA at year-end, increasing financial risk despite added liquidity from term loan amendment .

Financial Results

Core P&L Metrics (YoY)

Metric	Q4 2022	Q4 2023
Net Income (Loss) ($USD Millions)	$44.4	($63.9)
Diluted EPS ($USD)	$0.56	($0.68)
Adjusted EBITDA ($USD Millions)	$75.2	($35.1)

Mobile Conventional KPIs (Quarterly)

Metric	Q2 2023	Q3 2023	Q4 2023
Throughput (bpd)	76,330	80,171	67,083
Fuel Gross Margin ($USD Millions)	$55.7	$129.5	$29.6
Fuel Gross Margin ($/bbl)	$8.03	$17.56	$4.79
Operating Expense ($/bbl)	$3.35	$2.40	$2.46
Gross Profit ($USD Millions)	$6.5	$86.2	$7.3

Mobile Renewable KPIs (Quarterly)

Metric	Q2 2023	Q3 2023	Q4 2023
Throughput (bpd)	2,490	5,397	3,926
Fuel Gross Margin ($USD Millions)	($3.1)	$2.4	$4.4
Fuel Gross Margin ($/bbl)	($13.66)	$4.78	$12.11
Operating Expense ($/bbl)	$31.23	$23.05	$27.32
Gross Profit (Loss) ($USD Millions)	($13.0)	($8.5)	($17.6)

Liquidity and Leverage

Metric	Sep 30, 2023	Dec 31, 2023
Cash & Equivalents ($USD Millions)	$79.3	$80.6
Net Long-Term Debt ($USD Millions)	$163.1	$205.5
Net Leverage (TTM Adjusted EBITDA)	1.3x	12.0x

Segment Breakdown (Q4 2023)

Segment	Gross Profit ($USD Millions)	Fuel Gross Margin ($USD Millions)	Fuel Gross Margin ($/bbl)
Conventional	$7.3	$29.6	$4.79
Renewable	($17.6)	$4.4	$12.11
Mobile Total	($10.3)	$34.0	$5.20

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Conventional Throughput (Mbpd)	Q1 2024	—	60.0–63.0	New
Renewable Throughput (Mbpd)	Q1 2024	—	3.0–5.0	New
Total Throughput (Mbpd)	Q1 2024	—	63.0–68.0	New
Percentage Finished Products (%)	Q1 2024	—	64%–68%	New
Direct Operating Expense ($/bbl)	Q1 2024	—	$4.59–$4.95	New
Capital Expenditures ($USD Millions)	Q1 2024	—	$20–$25	New

Note: Q4 2023 guidance provided earlier (Nov. 7) was updated on Jan. 23 operational update (lower conventional throughput and OpEx), and actuals landed near the updated ranges .

Earnings Call Themes & Trends

Topic	Q2 2023 (prior-2)	Q3 2023 (prior-1)	Q4 2023 (current)	Trend
Feedstock optimization & LCFS	RD startup; accelerated advantaged feedstock strategy due to RBD margin deterioration; LCFS application in process	Temporary LCFS filings completed; credit expected to contribute in Q4; pathway runs for soy/DCO/canola, tallow testing planned	Received $9.6mm LCFS credits at default CI; completed proprietary CI pathway filings for soy, DCO, canola, tallow	Improving credit backdrop; execution progressing
Margin environment & throughput	Weak refined product pricing; one-time ~$20mm RD startup costs; Mobile capture rate down; conventional throughput 76.3 kbpd	Strong Q3 margins; conventional 80.2 kbpd; hedged ~25–27% Q4 gasoline	Deteriorating crack spreads; strategic curtailment; conventional 67.1 kbpd; hedged ~38% Q1 distillate	Softer margins; increased risk management
Renewables profitability	Negative gross margin; startup; feedstock blending initiated	Positive fuel GM; still gross loss; capacity utilization 67.5%	Gross loss widens; fuel GM improves on LCFS; capacity utilization 49.1%	Mixed; credit support offsets costs
Balance sheet & leverage	Net long-term debt $275mm; leverage 3.6x	Net long-term debt $163mm; leverage 1.3x	Net long-term debt $205.5mm; leverage 12.0x; term loan amended +$50mm	Deteriorated in Q4
Strategic review & integration	—	—	Strategic review with BofA; supply & trading integration to enhance netbacks	Potential strategic actions

Management Commentary

“We believe the launch of Vertex Renewables and optimization of feedstocks have positioned the Company for margin opportunities under the new credit regime post-2024... Marine Fuels and Logistics... alongside our Supply and Trading division has enabled us to leverage strategic integration opportunities, enhancing netbacks.” — CEO Benjamin P. Cowart .
“As we move into 2024, our priorities are to increase our cash position, reduce our operating costs, and improve margins.” — CEO Benjamin P. Cowart .
Q4 operational stance: throughput curtailment amid deteriorating crack spreads and planned transformer replacement; finished product yield guided 65–67% and OpEx/bbl improved vs prior expectations .

Q&A Highlights

The Q4 2023 earnings call transcript could not be retrieved due to a document database inconsistency; therefore, Q&A highlights are unavailable from primary sources. We have reflected management’s prepared commentary and guidance from the press release and presentation .

Estimates Context

S&P Global consensus estimates for Q4 2023 EPS, revenue, and EBITDA were unavailable due to a Capital IQ mapping issue for VTNR; as a result, beat/miss analysis versus Street could not be performed (values unavailable; would be retrieved from S&P Global).

Key Takeaways for Investors

Q4 reset: large YoY swing to losses and negative Adjusted EBITDA as margins collapsed; near-term focus on OpEx efficiency and throughput discipline .
Conventional margins highly sensitive to crack spreads; risk management stepped up (38% Q1 distillate hedged at $28.39/bbl) to stabilize cash generation .
Renewables path: LCFS credits ($9.6mm) and proprietary CI pathways are critical levers; expect improved credit value on lower CI feedstocks; monitor feedstock mix progress and utilization .
Balance sheet risk: net leverage at ~12x TTM Adjusted EBITDA; watch outcomes from BofA-led strategic review and any asset/JV moves to bolster liquidity .
Execution priorities: yield optimization sustained (finished products ~66% in Q4); direct OpEx/bbl guidance for Q1 ($4.59–$4.95) indicates cost focus amid lower throughput .
Near-term trading lens: sensitivity to distillate margins and LCFS/RIN credit values; headlines on CI pathway approvals and strategic alternatives could drive stock moves .
Trend watch: sequential volatility likely as renewable margins normalize and conventional spreads fluctuate; quarterly KPIs (fuel GM/bbl, throughput, OpEx/bbl) remain the best trackers of direction .

Vertex Energy Inc. (VTNR)·Q4 2023 Earnings Summary