Vertex Energy, Inc. (NASDAQ:VTNR) Q2 2019 Earnings Conference Call - Final Transcript

Aug 07, 2019 • 09:00 am ET

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Vertex Energy, Inc. (NASDAQ:VTNR) Q2 2019 Earnings Conference Call - Final Transcript

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Q & A
Operator
Operator

Thank you, sir. [Operator Instructions] We'll go first to Eric Stine with Craig-Hallum.

Analyst
Eric Stine

Good morning everyone.

Executive
Benjamin P. Cowart

Good morning.

Executive
Christopher Carlson

Good morning.

Analyst
Eric Stine

Just maybe starting on the collection side that the 42% mix in the quarter, I mean, it seems heavy on track to exceed your goal for 2019, which I think was 35 million gallons. So just maybe some thoughts, given what you're seeing in Q2 and now here early in Q3, where you think that can ultimately go? And I mean, if you're able to ballpark on that, either 2019-2020 goal or long-term goal, what it means for EBITDA?

Executive
Benjamin P. Cowart

Yes, good morning, Eric. This is Ben. We-- we're very pleased with the performance of our collection business looking at our trailing 12 -- contribution margin of $0.30. So obviously, it's very accretive. So you can kind of calculate from that contribution margin, kind of, how that affects our bottom line. We definitely are ahead of our game plan. I don't want to lock all that in through the end of the year because we do see the collection market or the Street requiring some adjustments in pay-for-oil based on where oil prices are and just what we see is a long UMO market. So we've got plenty of cushion to work from based on what we plan to do versus our run rates at the moment. So I think we're in a really good place from a collection standpoint, and obviously, it's a real focus long-term for the company. And we do believe we can maintain these double-digit growth rates on an organic platform, not to mention picking up smaller acquisitions as we go.

Analyst
Eric Stine

Got it. And that's a good segue, I guess, to my next question. I mean, now with the Tensile transaction. I know that the Phase 2 needs to close, but provided that it does, I mean, is that something that you think accelerates that acquisition plan? Or I mean, are there acquisitions, and I know they're small, but are there ones in the past that you've passed on because of your balance sheet that now you will be able to look at and maybe speed that growth in collections?

Executive
Benjamin P. Cowart

Yes, that's a good question. And the answer is, yes. The development of the collection business in the Heartland region will fall under the new joint venture with Tensile. So we will have the capital, and that's a big part of what our goals are for the Heartland growth over the next three years.

Analyst
Eric Stine

Got it. Okay. Maybe last one for me. Just thinking about Group III base oil and what you're doing, the Penthol agreement, I know that's something that is there and is really helping to set the stage for now what you're coming with at Heartland and then eventually Myrtle Grove. I know there's not a lot of domestic production at Group III, so maybe how that fits in, and how you think you're positioned as you move down the line here with Heartland and