Q4 2021 Vertex Energy Inc Earnings Call
And do you have a question for Kevin.
Got it.
Good day, ladies and gentlemen, and welcome to the vertex energy Q4, 2021 earnings conference call.
At this time, all participants have been placed on a listen only mode and the floor will be opened for questions and comments after the presentation.
It is now my pleasure to turn the floor over to your host Noel Ryan Sir the floor is yours.
Thank you Holly good morning, and welcome to vertex Energy's fourth quarter and full year 2021 results conference call, leading the call today are chairman and CEO , Ben Cowart CF.
CFO , Chris Carlson and EVP of development Albert <unk>.
Issued a press release before the market opened this morning detailing our recent operational and financial results.
I'd like to remind you that management's commentary and responses to questions on today's conference call May include forward looking statements, which by their nature are uncertain and outside of the company's control.
Although these forward looking statements are based on management's current expectations and beliefs actual results may differ materially.
For a discussion of some of the risk factors that could cause actual results to differ please refer to the risk factors section of vertex Energy's latest annual and quarterly filings with the SEC.
Additionally, please note you can find reconciliations of the historical non-GAAP financial measures discussed during our call in the press release issued today.
Today's call will begin with remarks from Ben Cowart, followed by a financial review from Chris Carlson.
The conclusion of these prepared remarks, we'll open the line for questions with that I'll turn the call over to Beth.
Like you know.
Good morning, everybody. Thank you for joining the call with US today I'd like to begin our call with a brief overview of our fourth quarter and full year results followed by a progress update on our pending acquisition of the shell mobile refinery, including those key milestones leading up to the closing of the transaction.
The report that we delivered record fourth quarter and full year results from our legacy business driven by a combination of improved refined product margins increased sales volume.
Strong operational execution mode.
At our Marrero and Heartland refineries.
Adjusted net income increased by more than 7 million year over year to $4 6 million in the fourth quarter accumulating.
Yeah and record full year, adjusted net income of $17 4 million.
Adjusted EBITDA increased nearly 10 million year over year to $9 5 million in the fourth quarter.
Bringing full year adjusted EBITDA $25 million.
Okay.
Operationally our team did an outstanding job throughout the year as we continue to capitalize on elevated refined product spreads.
Total throughput at our Marrero refinery increased materially on both year over year and sequential basis in the fourth quarter as the refineries operated at capacity throughput.
Full capacity throughout the period, despite a weak long outage at Heartland refinery during the fourth quarter, we still managed to achieve <unk>.
Capacity utilization of 95% in the period post posting us to capital capitalize on consecutive.
Market land price increases in base oil prices that continued one during the first quarter of this year. We have we have continued to see further market led base oil price increases during the last 60 days on our group two plus product.
Back in January we announced our intention to terminate the planned divestiture of our U M O and re refining assets to safety Kleen.
We're in a prolonged regulatory review process, we determined that to move forward with this transaction would not be in the best interest of our shareholders given the balance sheet recapitalization, we've engineered over the last six months in advance of the mobile refinery acquisition.
Vertex is in much better position today than we've ever been in our history.
Supported by our profitable growth of the business I'm incredibly proud of our operations team.
Throughout this process.
Never lost focus and stayed the course over the last year delivering record results to our shareholders.
Last week, we announced that we had a celebrated our call option to repurchase the tensile capital of 65% interest in our Heartland.
Finding business and 15% interest in our Myrtle Grove facility as planned.
Once completed these transactions will simply.
Simplify our asset portfolio structure positioning vertex and become the sole owner of these assets once again.
Given the evident strength within our.
Broader markets and specifically within the base oil markets. We believe these assets are worth significantly more today than they were a year ago. We expect this transaction will provide us with increased flexibility and optionality, while allowing vertex to reap the full financial benefits being generated by these assets.
Yes.
Looking ahead, we anticipate our first quarter performance should be consistent with that of the fourth quarter.
As product spreads remained very strong entering the year within our legacy assets moving.
Moving now to discuss.
The mobile refinery acquisition during the first quarter, we reached several key financial commercial milestones in advance of a planned closing on mobile, which we expect to.
Assume ownership as of April one 2022 subject to the Finalization of key financial agreements.
Last month, we received a commitment letter with a syndicate of leaders.
Lenders with respect to a three year 125 million first lien senior secured term loan facility.
The term loan proceeds which have been funded and escrow.
Are expected to be used to fund a portion of the purchase price of the mobile refinery.
A portion of the planned renewable diesel convergent project at the mobile refinery liquidity needs and certain fees and expenses associated with the closing of the term loan.
Term loan is expected to be secured by substantially all of the present and after acquired assets of the company.
And its subsidiaries aimed to be guaranteed by the company and certain of its subsidiaries.
Also in February we announced that vertex had entered into an initial five year product offtake agreement with Intermezzo Apollo Renewable Corporation.
That's one of the largest suppliers of both conventional and renewable fuels in North America and a mitsui is a valued offtake partner that provides us with the depth of product marketing and experience and access to growing regional markets in the western United States and Canada.
This agreement will ensure uptake of all the produced renewable diesel production automobile refinery, while we expect shale and bunker, one will assume uptake of our conventional fuel production as previously disclosed.
Finally, we recently entered into a contract with all of our top soul.
A global provider of carbon emission reduction technologies for the chemical and refining industries to lead the technology implementation for the planned conversion of our existing hydrocracking unit at the mobile refinery upon closing of the acquisition.
Mobile refineries hydrocracker is uniquely suited for our renewable diesel production, requiring a low complexity conversion process separately for our Texas move forward with initial design engineering and procurement activities with Whorley, a global provider of professional project asset.
Services in the energy chemicals, and resources sectors, and expects renewable diesel production to commence by the end of fourth quarter 2022, assuming the project's timeline for the mobile refinery acquisition and related conversion Rd conversions.
From here the key remaining milestones ahead of closing involved the finalization of the 125 million term loan together with the planned completion of our working capital facility both of which are expected to close in conjunction with the closing of the mobile acquisition once.
We close on mobile we intend to provide an update.
Okay.
<unk> company forecast.
Marketing to market are.
Latest assumptions, which we currently intend to provide on our first quarter 2022 earnings call.
We continue to believe that vertex is uniquely positioned to capitalize on growing demand for advanced renewable fuels driven by carbon reduction policies supportive of the global energy transition as an energy transition company of scale. We are actively exploring a variety of low carbon intensity feedstocks alone.
With sustainable aviation fuel carbon sequestration.
And green hydrogen as we seek to grow in emerging and adjacent markets beginning in late 2022.
To launch an internal ESG reporting initiative, one that will provide our investors with deep appreciation of how vertex is working to do.
To drive value creation for our shareholders, while helping to make.
The communities, where we live and work Great places to be we look forward to providing a heightened level of disclosure and transparency is our business centers. This next chapter of growth with that I'll hand, the call over to Chris.
For a review of our recent financial performance.
Thanks, Ben and welcome to those joining us on the call today.
For the three months ended December 31, 2021, we reported a GAAP net loss of $5 3 million versus a net loss of $2 9 million in the fourth quarter of 2020.
Fourth quarter 2021 results include a $4 $6 million loss in the value of a derivative warrant liability together with $3 5 million and nonrecurring transaction related costs.
Quarter results benefited from a combination of improved or refined product margins and used motor oil collections growth together with our strong operating performance at both Marrero and Heartland.
Currently both the Marrero and Heartland refineries are fully operational.
First quarter 2022 to date refined product margins remained consistent with the fourth quarter levels, implying a strong start to the year.
As of December 31, 2021, the company had total cash available of $36 million.
In addition to $100 million of restricted cash.
Total cash available as of December 31, 2021 included $13 million of total cash limited the use by the two spv's.
Vertex had total debt outstanding of $140 million net of OID as of December 31, 2021.
With that I will turn the call over to the operator as we take questions from those joining us on the call today.
Ladies and gentlemen, the floor is now open for questions. If you have any questions or comments. Please press star one on your phone at this time.
We ask that while posing your question you. Please pickup your handset if we're sitting on speaker phone to provide optimum sound quality.
Please hold while we poll for questions.
Your first question for today is coming from Manav Gupta. Please announce your affiliation then pose your question.
Good morning, guys Manav Gupta of credit Suisse. So first of all congrats on our fourth quarter earnings to assets are performing much better than expectations.
First question here is.
You've got about 2022 days away from the end of this quarter and obviously you have said that the most.
Most likely you will be the owner of the mobile asset by April one can you just help us walk through what remains to be done and give us a little more assurance around the details of that.
By April one.
Most likely you will be the owner of this asset if you could talk about that.
Yes, I'll turn it over to Arrow Reeves or corporate as Ben mentioned during the call.
So is basically ramping up that could either good evening, both for the term loan in their working capital facilities on the term loan we already have a binding commitment later so is basically you know legal hours to get.
They could either could even through the finish line and they have great or good evening, we've been working capital provider.
On the working capital provided.
Under NDA, we cannot disclose the name but.
We are working on that I don't see a whole new way to live.
Equally intermediation agreement with EMEA Europe banking this space.
Based on where we are city.
For the weeks of time ahead of US we feel very comfortable.
Hitting the target.
Yes.
Congrats again and then second question here is you did want to Saddle York.
Used motor oil business, but looking at what you did in the fourth Walker and if that could be sustained for some time, maybe it's a good thing that the deal didn't go through because maybe you were selling it for a little less than what it's what so if you could talk about what your expectations were when you put that business up for sale and what it is.
In the current environment.
Yes, obviously.
The markets recovered well from Covid I think that's the first key point, probably better than most people expected.
We will certainly was fully committed to.
To follow through on that transaction.
It was unfortunate that we.
We got pulled into a very.
Unforeseen long and drawn out process.
In order to get to transaction affected.
And so in that.
That black tunnel, we felt to be the best interests of our shareholders too.
Terminate under the rights of the agreement.
Transaction.
And stay focused on mobile refinery, so that really has been our focus and what we are.
Really.
<unk>.
Accomplishing and so.
Timing is everything so we're very thankful that the markets have recovered like to have the assets are performing.
And really a big appreciation to our operating teams who never.
Really led up on doing their job and and taking care of our customers and the performance.
<unk> and the results that they put up during this period that we were very.
Deep into.
This mobile refinery transaction.
Really gives us a.
The opportunity to step back and make us make new decisions related to the legacy business. So we still have R.
Our banking gauge who supported.
The transaction.
And so we certainly have had a lot of interest in these assets post this announcement.
As I said, we're really focused on mobile today, and we will be making.
Deeper decisions to our bigger strategy.
But we are excited that this business fits very well with our future and so we see no no issue in continuing those operations.
And my last question is look when you.
You announced the mobile refinery acquisition.
We're doing something today.
<unk> different environment Europe is struggling to operate refineries, we're seeing cracks meaningfully higher so versus when you announced this deal.
We are in the refining world.
Eastern.
Finding earnings from the mobile refinery lets photo minutes beside the renewable diesel business, but just the refining learnings from the mobile refinery would be much stronger than what you had expected when you actually announced acquisition and I'll leave it there. Thank you.
Yes, no thats, a very good point and it's incredible.
What these current crack spreads look like.
Certainly.
When we made the offer on the refinery spreads were at all time low because of the COVID-19 impact and the demand destruction across the whole refining sector.
A lot of refining capacity offline, even today theyre not recovered and now with a shortage of finished products those crack spreads.
For the refineries have exponentially improved and so we're you know if march is any indication.
We've seen probably a.
$18 spread improvement from the Covid period, maybe more to where we are today, so pretty pretty exciting.
Thank you for taking my questions guys. Thank you. Thank.
Thank you.
Your next question is coming from Eric Stine, Please announce your affiliation and pose your question.
Yeah, Eric with Craig Hallum, Thanks, everyone for taking the questions.
Okay.
Hey, good morning, Hey.
Good morning, maybe just going back to the U M O business I mean, obviously the market conditions have improved substantially and the focus you know rightfully. So he's been on mobile, but maybe if you could just kind of give us an update since it's been a while in terms of where you stand on collection volumes I know spread management.
<unk> has always been a big focus and so maybe how those two factors played into what you saw in the fourth quarter.
I appreciate the question because it allows me to further highlight.
The job our team has done an and.
The growth.
Both in in quarter and year over year on our collections is in the 20% type of the organic growth range, which is.
Just amazed.
Amazing so I've been in that business.
And I don't think I've ever had a year that that I had 20 plus percent.
Organic growth and so a lot of work goes into making that happen.
The spreads have.
I've have hit all time highs across both footprint. So we've never really seen these type of spreads since we've owned the assets.
So.
I just think we're in a good spot on our legacy business and its performance here.
Got you no that's helpful.
Hum.
Then maybe.
Maybe just turning to mobile now in your in your prepared remarks.
I just wanted I'm curious if I'm reading this right, but it does seem like you're moving up the timeline a little bit for when you think you'll be at 14000 barrels per day of renewable diesel and it might be by a quarter or two so first of all.
Am I right on that and then second of all what are what are some of the steps again needed to do that I know hydrogen availability is one but just steps needed to do that and maybe steps for why you might be moving that forward a little bit.
Yeah, Let me, let me back up to phase, one, though because I think it's.
It's important to note in light of.
A tremendous amount of challenge and efforts with the current market related too.
The supply chain and equipment and labor and all the other.
Incumbent challenges that we faced in the last three or four months.
We still have a.
A startup target for year end.
As we had planned.
So that's a very positive yes.
Disposition.
The project.
Now the second phase, which is they.
The additional 4000 barrels a day of production.
Has been moved up and so.
Maybe a quarter I don't want to get too far ahead of those numbers because there is still a lot of work that we are wrapping up but the.
The main reason is.
Our ability to procure.
You know a unused.
Hydrogen.
Plant, that's already been manufactured and in.
Storage that we have located and will be moving to.
The site and this is going to accelerate our timeline and our.
Our total capital that's going to be deployed for that.
For that plant we've also.
We have negotiated the terms with the hydrogen partner, who will be carrying that investment on their balance sheet and totaling the hydrogen.
Two to our operation, which is a big.
Big.
Capex benefit to us.
In bringing this project together so so a lot of good things have taken place related to the phase II expansion and there'll be more to come in our first quarter call as far as a better update to that point.
Got you okay. Thanks for that maybe last one for me just an update on Myrtle Grove, I know that that's a little bit longer term and that's that's.
Beyond phase two or in concert with phase two but just investments made to date and outlook for what we should see going forward in terms of the preprocessing facility.
Yeah, I guess it may need to kind of see all the work that's underway at the site just from renovation of offices and warehouses.
And.
Getting the site ready for them.
Sure.
Playing a key role in this energy transition strategy for the company.
We've got.
We've got multiple.
Innovative opportunities for that asset beyond a potential pre treatment site for feedstock for the mobile plant.
This.
This energy transition and renewable fuel industry is dynamic and it's.
It continues to.
It continues to validate the assets that we own already and how they can be deployed into this space and create.
Real value for our shareholders. So the site is underway, we have a hydrocarbon recovery businesses working every day.
<unk> completed our marine dock seven miles from the site, where we've got now.
Marine water access.
In connection to the site so a lot of the.
The first round of improvements for the site that we discussed in the probably the last couple of calls.
Have have already been deployed and so we are in business at the Myrtle Grove site.
<unk> to talk about at the moment, but very pleased with the progress.
Okay. Thanks, everyone.
Thank you take care of it.
Your next question for today is coming from Amit Dayal. Please announce your affiliation then pose your question.
Hey, good morning, guys. So I met with H C Wainwright.
With respect to the <unk> business Ben.
Are we looking to now continue to grow that segment.
Segment, or how should we think about sort of your future.
Shuja.
With respect to the U of more businesses at steady state in terms of capacity et cetera from these levels or are you going to start maybe.
<unk> continued to expand.
You have more business as well.
Yeah, no we clearly have.
And opportunity in the current market conditions.
Two to expand.
Capacity.
Don't forget we have our T cell plant in Houston that we can bring back online in and add value rather quickly from that standpoint.
Our our plant in Ohio, We've spent a lot of time and money engineering, a major expansion for that site prior to.
<unk> decision to the sale of those assets so.
Those are those plans.
Are being reviewed again.
The the.
The industry.
As a whole.
With the changes in Europe related to <unk>.
Bluebird can't requirements to have we refined base stocks as part of those formulations are now.
Creating interest in our finished product here in the U S.
And then when you think about a.
For the base oil plant in Ohio, It's got a 85% lower carbon footprint and comparison to base holes that are made from crude.
And with the de carbonization and the initiatives that many companies have committed to.
That that base oil in it.
Quality and purity being equal to or are in a lot of cases better than what you get from crude.
And bringing that to 85% lower carbon footprint.
Theres a lot.
There's a lot to think about as far as how we expand.
That opportunity or are not so.
We have been very focused on mobile.
Our team has kept our business in good order and has provided a platform to consider some some interesting upside around those assets.
Okay understood.
You've already indicated you're seeing sort of.
So the gross margins.
In the first quarter.
Ben could you share maybe what your view is on.
Blues margin.
Opportunities for the rest of the year.
Given all these supply chain constraints. It looks like you could be in a period of learning stronger than average margins for.
For some time you know how should we think about your opportunity at least for the near term on that front.
Yeah.
I'd love to lean way forward right and we've tried to discipline or our forward view on a quarter by quarter basis.
But we're very confident that our first quarter will will follow or improve on what we did in the fourth quarter for that legacy business.
And.
You know I'll say that in our first quarter earnings call, we really hope the likes of numbers down and really start to paint what we see anticipate as a financial picture.
For the rest of the year based on all the things that we're all.
And CN.
We don't see.
A break in and what we're doing and those those margins, we're just not sure.
How much more they they will scale and end and when I say that.
Across the whole business, both in mobile and across our legacy business.
We're dealing with record spreads.
<unk>.
And they are improving exponentially by the day so.
So it's just there's a little bit scary to try to forecast around the current geopolitical impacts.
Impacts on all in fuel. So we're just we're trying to be.
Conservative to what we have already done in.
And just you know.
Staying in that group and taken advantage of the opportunities.
I feel like we'll be able to do that.
I appreciate that.
Speak to some of these one time charges non cash charges.
Should we be looking at them.
To see some more of these come into play as you go through 2022, and you know how should we think about any of those expenses.
Yes. Good question, you'll definitely see more of the same I would say in Q1.
And then in Q2 and how they will start to diminish and go down from there.
Yes, certainly.
The transaction on the refinery the mobile refinery has.
Light heavy oil.
The financial.
Yes.
<unk>.
With legal and consultants and all the things that we've had to deploy to.
To do this the right way and so that we anticipate as Chris said the tail off as we close them and start to you know.
Cleaned up clean all those expenses up so.
Okay. Okay, Yeah, I'll take my questions regarding that offline. Thank you. So much guys I appreciate it very much I appreciate it.
Your next question is coming from Michael Hoffman. Please announce your affiliation then pose your question.
Hi, Ben Chris although.
And then what's the plan with regards to.
Having created a disc ops or assets held for sale.
Will they be brought back in and win.
Yeah.
With regards to that rollout.
They they they basically have.
Maintaining the engagement.
With us Michael So no no plans or schedules.
Anything that's been made at this time so.
We are.
We really are looking at.
The fiduciary responsibility that we have to shareholders to two <unk>.
Evaluate.
You know the direction and how we think best to move those legacy assets forward.
And.
As you can say, there's not a there's not a sense of urgency right now I think times in our favor.
Our primary focus is on the mobile refinery in executing that well.
It's really what's got the majority of our attention to date.
I apologize I asked the question badly.
You pulled the sale so will those be brought back into the financials as continuing operations and win.
Yeah, Yeah, yeah, Okay Yep.
So we're.
Obviously it was in a discontinued accounting.
Discontinued operations related to accounting and at the end of the year and.
That will allow that will be decided before our earnings release in the first quarter.
You know how that will be pulled back in or stay in the current.
State from accounting standpoint, but at the moment.
And then in the quarter, how much oil is new collection.
How much did you buy.
And I'm curious what the trends were on what you are buying.
Given what's been happening on a geopolitical basis.
Yeah.
I am sorry are pretty solid John I mean, I'm going to come out of fourth quarter here, Yeah, Yeah yeah.
And then going into <unk> I'd like to understand what did you what did you collect in for killing them on what is what's happening in <unk> given the geopolitical environment.
Filling the plant.
Yeah.
I don't have the exact numbers I mean, let me just say.
The growth year over year was 20%.
Organic self collections and then on the third party.
<unk> been buying all that we need to maintain full production at the refineries and we've had no problem doing that to date and so we have seen.
We have seen.
The supply.
To be there.
I don't see anything today I guess.
You'll get some demand destruction around gas prices and people stop driving that those volumes could be impacted but we've actually enjoyed very solid growth.
And we've displaced.
Third party oil year over year with our own collections.
And would you anticipate continuing to grow your own collection.
Yes.
Okay Yeah.
And then.
Within the context of.
The spread.
What does this point, leading the greatest expansion will incrementally is is it that you got a cap on what you have to pay for them because I am out of 2020 has really had an influence.
Or that.
Or that you're getting a better selling price.
Some combination of both.
I think I think it's a combination of both.
I would give more credit to the selling price obviously, both on basal and on marine fuels that we sell into golf.
Cost of oil at a street level has come off by nature of.
The exponential increase in oil prices, but.
You know the.
Spreads have continued to improve and so that means that we're keeping more of that margin.
Because.
The finished quality products that we're producing and the demand being on that more than crude our raw materials. So crack spreads like you see with.
The crude business.
Relate very well to crack spreads that you would see on the marine fuel and base oil side of the business.
Okay, and then last one on this topic and I would like to move for them.
Deal.
Good.
Given the increasing demand for <unk>.
ESG issues sustainability and your comment earlier about Europe , requiring a percentage of total.
Find product on the on the lubricant side, having a refined product.
What's happened to the discounts that we've always had to take on posted places what's the trend there.
Yeah.
Oh basal.
Trending in our favor I mean, we don't have a sub standard product anymore.
Your tier one buyers they appreciate the carbon impact.
The greenhouse gas reductions in emissions and.
The footprint that the product brings to the table.
And so.
That's really happened in the last six to nine months, where we've just.
We've been able to.
Sell the product with contracts and with very good buyers.
Fair project.
Okay.
I do have one more.
It is unusually wide we are in this room in the spring and the geopolitical environment.
Who would have ever could you would you be running a business, where you're placing the Spanish flu 19 thirties European aggression.
1970 energy crisis in 1980 type of inflation.
At once.
Deborah.
At some point all of this is that correct.
Correct.
It would be a pretty radically.
And so with that.
That's quite does narrow do you see any line of sight that that's happening in 'twenty two but if it is going to happen that's more like them home for these families with children.
That's a that's a heck of a question for everybody on the call to try to figure out the answer out too but if.
<unk> asked my view I think 2022 is going to be a strong year.
For the industry well calculator, yeah for sure what I'd say is a collection.
Today in third party buying is 50.
Our refinery.
As far as volume volume, but that's inquiries from 60 42 years ago, and our collection volume yeah. Yeah. It helps us dramatically. So so ed at collection level, Michael that need or does it.
Does it move as quick and as fast as the sales side on the finished products.
<unk>.
I think our outlook when we when we look at markets and where this is going.
One of our strong 2022.
Many would say one into 2021.
Fire, we welcome you to Bob.
So on yourself, but.
Almost a year ago and believes that it's almost been a year when you announced with I laid out a really cool financial model for us to help everybody to conservative assumptions about what the credits would look like and clearly lots of things have changed.
So there's a couple of things one is bunker one still intended to buy the work in progress from the conventional refinery as originally described.
Welcome aboard.
That's.
Got it.
While we have taken more time.
And finalizing.
Finalizing this transaction.
Towards the end of the quarter, we brought a tier one bank that will be.
Supporting all of the inventory from the purchase at close to the working capital around the inventory.
For an ongoing.
<unk> operation. So so this is.
It's a much better approach to working capital and inventory management.
Where you've got oil prices that could <unk>.
<unk> financially increase and.
The capital requirements are fixed in our facility to with.
Very nice brackets, where it can absorb.
A.
Very big increase in the cost of product.
And so though.
Barry.
Complicated and detailed.
Partnerships when you put a what they call a crude intermediation structure together and that it takes extra time.
<unk> indicated we're in final documentation related to that facility.
And we still have credit approval final credit approval that we don't anticipate being a problem.
With that partner so yes.
Yeah, I think I think it's it's a really good setup.
Versus what we originally were going to do to close the transaction, which was just get it across the finish line and then try to do what we're doing to that.
Okay.
But they all come together very solid under under our situation now okay.
Okay. So I got to ask the geopolitical question because the world we're living in.
And there's two parts to it so at the moment nobody is willing to take a bid on it.
Jordan I, just count on Russian crude except that on last Friday shell did announce they bought Russian crude and turn right around and I apologize.
And there are any assurances itself not shipping that oil to mobile one too.
Yeah, we have.
As you sit here today and look at feedstock.
The Russian fertilizer is going to be band on a worldwide basis, and don't have an enormous implications to Brazil, or Latin America and in their crop production, we're supposed to be flying fertilizer right now.
So where are you in warm locking up a feedstock agreement on to what I can figure out the potential.
Soybean crush prices, given we could have a real shortage of soybeans.
Yeah, so very good questions, but on both ends less let's take the.
The shale supply.
Conventional feedstock for the refinery and <unk>.
Fortunately, our refinery runs clean crudes low sulfur light tight oils that are domestic.
As you.
As we see it so we do not anticipate having a supply issue related.
Two two that feed for the for the mobile refinery. So I'm very comfortable there and then on the feedstock on the renewable side.
Spent a lot of time in the market.
With producers Crushers and.
Our speed to market and our timing coming into.
Production is very positive our location.
From a logistics differential standpoint, we're in a very good position related to.
The E con.
One the feed so that we don't in vision.
A problem related to feeding our renewable plant.
We intend to.
Be well ahead of.
The startup as it relates to.
The storage of our feet.
Okay last two questions for me so there's chatter in the market that Cargill largest private company in the world is going to internalize and do this themselves and so all of their volume that's across thousands of alerts small subsidiaries is gonna be redirected them internally, so what's that mean to the building.
Ah.
Book of.
Liable.
It's for this plan if they do that.
Yeah.
If they internalize it.
Some of the other announced projects come online, it's the same draw on that supply chain and.
Again, it's.
For us.
We look at our location, we look at our.
The port facilities are unit train receiving capability.
And.
Our barge and manifest rail capability, all to support feed and our location Ben.
The closest east of the Mississippi River.
So logistics play a huge role and price.
So.
We're converting our hydrocracker training inside an existing operating facility with all its costs already baked in to its current operations. So our ability to run that plant.
From a cost per barrel standpoint is as good as it gets I think.
<unk>.
And then our ability to manage freight to the best markets.
Being able to load our finished product by deep port vessel.
And deliver that.
To the West coast.
It really gives us a freight advantage all the way around that that comes back to our ability to compete.
The the feet so.
This is this is going to be a.
A very dynamic market theres, a lot of new crush capacity coming online.
In Canada, and Theres going to be new approvals and so theres a lot of things that.
That still have to take place.
That that will.
Supply to feed I think we're going to need for the plant.
And last one from me original plan a year ago. We ran that you run the conventional I'll cover $100 million of fixed costs. So that lever this into the economics of the renewable diesel what has happened to that outlook of that fixed cost given the inflationary environment, what's about 100 million number.
Yes.
Yeah, I mean, they're not.
Not much different.
And our location so there's just.
You know there really hasn't been a lot of pressure there since the plants.
Under the day to day operations.
Okay.
We do anticipate some some change in input costs and things as we get in there, but it's a little early for us until we got control of the.
The actuals.
We haven't changed our models to date to reflect that but yeah like I said.
$18 improvement of crack spreads from the time, we made our offer on the refinery. So I think we got to cover.
Okay. Good luck interesting times.
Thank you Michael I appreciate it.
Okay.
That is all the time, we have for questions today, I would like to hand, the floor back over to Ben for any closing comments.
Thank you operator, we appreciate everybody's time today and joining us on this one.
What I believe will be a historic call for our company.
Just recapping.
Recapping.
Our legacy business that has hit all its targets in and done everything we hoped it would do and all the investments we've made years passed and all the work that we've put into the business couldn't be half.
Happy or more pleased with.
Our people and what we've accomplished to date and as we look ahead.
With the mobile refinery in <unk> and the team there and all of those of that that will be joining vertex.
Just just building one.
Our.
Our drive in our excellence about operations and the safety that our company has operated through this period.
The improvements we've made year over year.
It just gives us a bigger platform bigger opportunity to continue.
To showcase what.
Our team and a group of people can accomplish so it's.
It's really.
I honor to lead this company and represent our employees and our shareholders and we look forward to our call for the first quarter that will come soon.
Really.
Showcase in the future and where we plan to take the business. So thank you again for the call. If you have any questions feel free to reach out to Noel Ryan.
At.
Vertex energy Dot com.
And we'll look forward to talking soon thank you.
Thank you ladies and gentlemen, this does conclude today's conference call. You may disconnect. Your phone lines at this time and have a wonderful day. Thank you for your participation.
Yeah.