VTNR

Vertex Energy Inc

Energy, Industrial/Transportation, Event Driven/Special Sit


Presented:09/01/2022
Price:$7.88
Cap:$0.60B
Current Price:$0.06
Cap:$0.01B

Presented

Date09/01/2022
Price$7.88
Market Cap$0.60B
Ent Value$0.85B
P/E RatioN/A
Book Value$1.27
Div Yield0%
Shares O/S75.61M
Ave Daily Vol4,823,519
Short Int27.09%

Current

Price$0.06
Market Cap$0.01B
Vertex Energy, Inc. engages in the recycle of industrial waste streams and off-specification commercial chemical products. The firm focuses on the recycle of used motor oil and other petroleum by-products. It operates through the following segments: Black Oil, Refining and Marketing and Recovery. The Black Oil segment collects and purchases used motor oil from third-party generators, established network of local and regional collectors and sells used motor oil to customers for use as a feedstock or replacement fuel for industrial burners. The Refining and Marketing segment manages the re-refinement of used motor oil and other petroleum by-products and sells the re-refined products to end customers. The Recovery segment includes a generator solutions company for the proper recovery and management of hydrocarbon streams as well as metals. The company was founded by Benjamin P. Cowart in 2001 and is headquartered in Houston, TX.

Publicly traded companies mentioned herein: Clean Harbors Inc (CLH), Shell PLC (SHEL), Vertex Energy Inc (VTNR)

Highlights

The presenter is long shares of Vertex Energy Inc (VTNR), which is down ~40% since it reported Q2’22 EBITDA in August that meaningfully underperformed guidance. This miss stemmed from a positive transformation in the business that had an initial management oversight, which has ultimately led to a lack of management credibility in the eyes of many investors. In contrast, he sees evidence that this could be a one-time issue, and at its current valuation (2x consensus 2023 EBITDA), he is willing to take that risk. Modeling a conservative $250MM of annual EBITDA and underwriting a 6x multiple, he reaches a $20 price target (vs. the current $8 share price) with incremental upside from the uncertain future of its historical core business. 

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Idea Discussion

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