Vertex Energy Reports a 19% Increase in Revenue and a 57% Increase in Gross Profit for the Third Qua

Vertex Energy Reports a 19% Increase in Revenue and a 57% Increase in Gross Profit for the Third Quarter of 2012

-105% Increase in Net Income Relative to Third Quarter 2011-

-Completion of Accretive Acquisition With Vertical Integration Benefits-


—Conference Call Today at 10:00 A.M. EDT—

HOUSTON--(BUSINESS WIRE)-- Vertex Energy, Inc. (OTCBB:VTNR), an environmental services company that recycles industrial waste streams and off-specification commercial chemical products, today announced its financial results for the third quarter ended September 30, 2012.

Financial highlights for the third quarter and first nine months of 2012 include:

  • Revenue increased 19% to $36.2 million for the third quarter of 2012 versus $30.3 million in the year-ago third quarter;

  • Gross profit increased to $3.2 million for the quarter compared with $2.0 million reported in the same period last year;

  • Net income for the third quarter of 2012 was $2.1 million, or $.13 per fully diluted share, compared with net income of $1.0 million, or $0.06 per diluted share in the third quarter of 2011;

  • Overall sales volumes in terms of total barrels of finished product sold increased by 23% compared with last year's third quarter;

  • Revenue increased 31% to $102.3 million for the first nine months of 2012 versus $78.4 million in the year-ago period;

  • Gross profit for the nine months 2012 was $6.82 million compared with $6.77 million in the year-ago period;

  • Net income for the nine-month period of 2012 was $3.5 million or $0.25 per fully diluted share compared with $3.6 million or $0.25 per fully diluted share in the first nine months of 2011;

Benjamin P. Cowart, Chief Executive Officer of Vertex Energy said, "The third quarter of 2012 was a positive one for us both financially and strategically, with improvements in revenue, gross profit, sales volumes and net income relative to the same quarter a year ago." Mr. Cowart added, "Perhaps more important than our improved financial performance is the completion of the acquisition of Vertex Holdings during the third quarter of this year."

The Company's previously announced acquisition is expected to improve gross margins going forward, increase the volume of used oil controlled by the Company and provide a platform for future growth. Mr. Cowart stated, "This acquisition presents a number of benefits for Vertex Energy and its shareholders. The completion of this deal allows our company to become a fully vertically integrated player within our industry from collection of used oil all the way through the sale of our processed finished products. From a financial perspective, we are now able to source more of the used oil needed to run our TCEP facility directly from used oil generators rather than having to purchase it from other collectors, which we anticipate will lead to lower feedstock costs and higher gross margins. Additionally, we expect that the outright ownership of TCEP resulting from this acquisition will allow us to run the process with reduced operating expenses relative to previous periods." Mr. Cowart continued, "We believe the strategic value of this acquisition is also critical. By owning our own collection operations, we now have a platform from which we can acquire and integrate additional collectors in key geographic areas to support our existing TCEP process and additional TCEP facilities in the future. Vertex Energy's previous experience in used oil collection is strengthened by the new management additions from the acquired collection businesses. We believe that the acquisition positions us well for improved financial performance and overall growth going forward."

CONFERENCE CALL

As previously announced, management of Vertex Energy will host a conference call today at 10:00 a.m. EDT. Those who wish to participate in the conference call may telephone 877-407-4019 from the U.S.; international callers may telephone 201-689-8337, approximately 15 minutes before the call. A webcast will also be available at: www.vertexenergy.com.

A digital replay will be available by telephone approximately two hours after the call's completion until December 7, 2012, and may be accessed by dialing 877-660-6853 from the U.S. or 201-612-7415 for international callers.

ABOUT VERTEX ENERGY, INC.

Vertex Energy, Inc. (OTCBB:VTNR), is a leading environmental services company that recycles industrial waste streams and off-specification commercial chemical products. Its primary focus is recycling used motor oil and other petroleum by-product streams. Vertex Energy purchases these streams from an established network of local and regional collectors and generators. The company also manages the transport, storage and delivery of the aggregated feedstock and product streams to end users, and manages the re-refining of a portion of its aggregated petroleum streams in order to sell them as higher-value end products. Vertex Energy sells its aggregated petroleum streams as feedstock to other re-refineries and fuel blenders or as replacement fuel for use in industrial burners. The re-refining of used motor oil that Vertex Energy manages takes place at a facility operated by a related party that uses a proprietary Thermal Chemical Extraction Process ("TCEP") technology. Based in Houston, Texas, Vertex Energy also has offices in Georgia and California. More information on the company can be found at www.vertexenergy.com.

This press release may contain forward-looking statements, including 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 (the "Act"). In particular, when used in the preceding discussion, the words "believes," "expects," "intends," "plans," "anticipates," or "may," and similar conditional expressions are intended to identify forward-looking statements within the meaning of the Act, and are subject to the safe harbor created by the Act. Any statements made in this news release other than those of historical fact, about an action, event or development, are forward-looking statements. 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 press release 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 release, 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.

VERTEX ENERGY, INC.

CONSOLIDATED BALANCE SHEETS

September 30,

December 31,

2012

2011

ASSETS

(Unaudited)

Current assets

Cash and cash equivalents

$

1,151,016

$

675,188

Accounts receivable, net

8,362,742

5,436,006

Accounts receivable- other

127,162

Accounts receivable- related party

-

2,459

Inventory

6,507,217

6,408,780

Prepaid expenses and other current assets

221,817

151,821

Total current assets

16,369,954

12,674,254

Noncurrent assets

Licensing agreement, net

-

1,929,549

Fixed assets, net

10,770,902

124,168

Intangible assets

16,255,000

-

Goodwill

3,515,977

Deferred federal income tax

3,669,000

2,006,000

Total noncurrent assets

34,210,879

4,059,717

TOTAL ASSETS

$

50,580,833

$

16,733,971

LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities

Accounts payable and accrued expenses

$

10,055,679

$

6,464,193

Accounts payable-related party

917,519

620,724

Current portion of long-term debt

1,748,023

-

Deposits

-

235,557

Total current liabilities

12,721,221

7,320,474

Long-term liabilities

Long-term debt

6,860,948

-

Contingent consideration

4,711,000

-

Line of credit

6,000,000

-

Deferred federal income tax

100,000

76,000

Total liabilities

30,393,169

7,396,474

Commitments and contingencies

STOCKHOLDERS' EQUITY

Preferred stock, $0.001 par value per share:

50,000,000 shares authorized

Series A Convertible Preferred stock, $0.001 par value, 5,000,000 authorized and 3,133,147 and 4,426,639 issued and outstanding at September 30, 2012 and December 31,2011, respectively

3,133

4,427

Common stock, $0.001 par value per share; 750,000,000 shares authorized; 15,315,208 and

9,414,926 issued and outstanding at September 30, 2012 and December 31, 2011, respectively

15,315

9,415

Additional paid-in capital

10,644,033

3,319,388

Retained earnings

9,525,183

6,004,267

Total stockholders' equity

20,187,664

9,337,497

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY

$

50,580,833

$

16,733,971

VERTEX ENERGY, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2012 AND 2011

(UNAUDITED)

Three Months Ended

Nine Months Ended

September 30,

September 30,

2012

2011

2012

2011

Revenues

$

36,195,570

$

30,301,326

$

102,316,702

$

78,383,111

Revenues - related parties

-

-

-

17,978

36,195,570

30,301,326

102,316,702

78,401,089

Cost of revenues

33,011,934

28,268,785

95,497,261

71,632,067

Gross profit

3,183,636

2,032,541

6,819,441

6,769,022

Selling, general and administrative expenses (exclusive of merger related expenses)

1,610,146

997,723

3,724,120

3,030,461

Acquisition related expenses

1,154,612

-

1,154,612

-

Total selling, general and administrative expenses

2,764,758

997,723

4,878,732

3,030,461

Income from operations

418,878

1,034,818

1,940,709

3,738,561

Other income (expense)

Interest income

949

-

1,582

-

Interest expense

(28,972)

(3,593)

(29,016)

(57,811)

Total other income (expense)

(28,023)

(3,593)

(27,434)

(57,811)

Income before income tax

390,855

1,031,225

1,913,275

3,680,750

Income tax (expense) benefit

1,714,813

(3,000)

1,607,641

(45,689)

Net income

$

2,105,668

$

1,028,225

$

3,520,916

$

3,635,061

Earnings per common share

Basic

$

0.17

$

0.11

$

0.35

$

0.42

Diluted

$

0.13

$

0.06

$

0.25

$

0.25

Shares used in computing earnings per share

Basic

12,255,372

9,187,227

10,085,206

8,722,642

Diluted

16,484,023

15,851,393

14,358,691

14,503,882

VERTEX ENERGY, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

NINE MONTHS ENDED SEPTEMBER 30, 2012 AND 2011

(UNAUDITED)

Nine Months Ended

September 30,

2012

September 30,

2011

Cash flows operating activities

Net income

$

3,520,916

$

3,635,061

Adjustments to reconcile net income to cash provided by (used in) operating activities

Stock based compensation expense

124,626

94,358

Depreciation and amortization

180,402

120,138

Deferred federal income tax benefit

(1,639,000)

-

Changes in assets and liabilities

Accounts receivable

(1,073,778)

(4,010,965)

Accounts receivable- other

(127,162)

Accounts receivable- related parties

2,459

(10,967)

Inventory

(85,658)

(4,864,249)

Prepaid expenses

23,313

(11,381)

Accounts payable

1,005,932

2,872,639

Accounts payable-related parties

296,795

685,968

Deposits

(235,557)

1,080,277

Net cash provided by (used in) operating activities

1,993,288

(409,121)

Cash flows from investing activities

Purchase of intangible assets

(209,061)

(232,214)

Acquisition, net

(1,319,015)

Purchase of fixed assets

(77,232)

(92,051)

Net cash used in investing activities

(1,605,308)

(324,265)

Cash flows from financing activities

Borrowing from (payments to) note payable

(3,777)

1,000,000

Proceeds from exercise of common stock warrants

91,625

306,250

Net cash provided by financing activities

87,848

1,306,250

Net increase in cash and cash equivalents

475,828

572,864

Cash and cash equivalents at beginning of the period

675,188

744,313

Cash and cash equivalents at end of period

$

1,151,016