Ladies and gentlemen hello and welcome to the Vertex Energy Q2 2020 Earnings Conference Call. As a reminder, all lines are in a listen-only mode, but after today’s prepared remarks you will have the opportunity to ask questions. And now for opening remarks and introductions, I am pleased to turn the floor to Mr. Noel Ryan. Good morning Noel.

Good morning, Jim. Thank you for that introduction and good morning everyone on the line today. Welcome to Vertex Energy's second quarter 2020 results conference call. Leading the call today are our Chairman and CEO, Ben Cowart; our CFO, Chris Carlson; and our COO, John Strickland. We issued a press release before the market opened this morning, detailing our second quarter results. In conjunction with this release, we also posted a conference call presentation that is posted in the Investor Relations portion of our corporate website at vertexenergy.com. We will reference this presentation throughout the remainder of today's conference call. I would 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 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 that 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. At the conclusion of these prepared remarks, we will open the line for questions. And with that, I'll turn the call over to Ben. Benjamin P. Cowart: Thank you Noel. Good morning and thank you to those joining us today. Early today we posted the company’s presentation materials on the investor relations section of our website that I will refer to throughout this call. As expected our second quarter performance was impacted by a combination of low feedstock availability, extended downtown at our Marrero Refinery in Louisiana and a year-over-year decline in both refined product demand and refined product margins all of which were attributable to the historical slowing and economic activity caused by the COVID-19 pandemic. COVID-19 related decline in economic activity resulted in a reduced driving activity during the second quarter. The decline in driving activity contributed to fewer oil changes thereby reducing available supply of used motor oil for collections. Given the lack of feedstock availability UMO prices remain at elevated levels well above historical correlations to product pricing particularly impacting our spreads. During May we were forced to reduce utilization across our refinery system as UMO collections declined. To that end we took the Marrero Refinery offline for 34 days of extended maintenance during the second quarter while at Heartland the refinery operated at reduced rates. Commercial demand for refined products was weak in the period also contributing to a decline in product spreads. Our business bottomed in May and showed indication of gradual improvement exiting the second quarter as shelter in place orders were eased and economic activity began to improve. While U.S. vehicle-miles-traveled increased more than 25% on a month-to-month basis between April and May 2020, The VMT remains 25% below the May 2019 levels. During April and May direct collections declined 34% and 29% respectively versus the prior-year. However in the month of June total collections increase 1% year-over-year. In July we continued to see improvement and stabilization in our UMO collection operations. As UMO volumes have recovered we have increased utilization at both Marrero and the Heartland Refinery. During July our refinery is operating at peak capacity spreading fixed costs across more barrels of production. Our team has done an outstanding job of ensuring the safe and viable restart of our Marrero Refinery while ensuring continued plant reliability at the Heartland facility. Operationally our business is moving closer to where we want to be, however, the spreads between diesel and high sulfur fuel OII [ph] versus crude oil remain well below historical levels. For the economic activity recover meaningfully we would expect to see refining margins to recover. That said we are assuming that suboptimal margins will be here today over the near-term. As indicated on Slide 6 of our presentation materials, contraction in product spreads represented 85% of the year-over-year decline in our adjusted EBITDA during the second quarter with the other factors being lower volumes and losses in our metals business offset by lower interest expense. We expect the second quarter will be our weakest quarter of the year with sequential growth in adjusted EBITDA expected in both the third and fourth quarter of 2020. During the second quarter, our total cash burn was approximately $2 million. Assuming that our refineries operate on plan and spreads continue to mirror the forward strip we would expect to burn $1 million to $2 million of cash per quarter in the third and fourth quarter of 2020 respectively. We expect to return to positive free cash flow generation beginning the first quarter of 2021. Looking ahead, our management team remains focused on several key areas as we transition into the remainder of the current year. First, we remain focused on aggressively growing our UMO collection business. We have expanded the geographic radius of markets where we collect while continuing to evaluate a number of small tuck in opportunities that have the potential to grow our direct UMO collections. Second, we remain focused on operating our plants at our near peak capacity throughout the remainder of the year, assuming normal plant maintenance, positioning us to capture improved operating leverage and economies of scale throughout the organization. Third, we remain focused on cost reductions. During the second quarter, we reduced our SG&A by 10% from the first quarter to the second quarter. Looking to the second half of this year, we expect to realize approximately $1 million to $2 million in additional annualized operating cost reductions. We have also reduced discretionary capital expenditures ensuring that non-essential investments are postponed. Four, we're pursuing a series of initiatives intended to further optimize our asset portfolio for example, as an established refiner and collector of used motor oil we see an opportunity to apply a similar model to the processing of other automotive waste streams that we currently manage, such as used oil filters and antifreeze [ph]. Together these opportunities reflect our commitment to expand our total addressable market through process innovation and aggressive new business development activities. Finally, during a period of historical volatility, capital discipline remains a top priority for our entire team. Now, more than ever before, we are focused on conserving liquidity to support the long-term growth of the business. Chris and our finance team has done a great job of cleaning up our balance sheet in recent years, which has served us well during this difficult period for the business. With that in mind, I'll turn the call over to Chris for his prepared remarks.

Thanks Ben and welcome to those joining us on the call today. For the three months ended June 30, 2020, the company reported a net loss attributable to Vertex Energy at 8.9 million versus a net loss of 400,000 in the second quarter of 2019. Vertex reported negative adjusted EBITDA of 5.3 million in the second quarter, 2020 versus 1.9 million in the prior year period. The year-over-year decline in profitability was due mainly to a decline in refined product margins, resulting from a higher feedstock cost and lower finished product prices. Turning to Slide 11 for a discussion of our balance sheet and capital structure. As of June 30, 2020 we had total cash and availability on our lending facility of 17.9 million and 1.8 million respectively. Included in total cash amounts are cash held in the company's special purpose vehicles relating to our Myrtle Grove and Heartland assets, which are limited to use by each SPV respectively. Vertex had total term debt outstanding of 10.2 million as of June 30, 2020 which included 4.2 million related to funds received under the Paycheck Protection Program or PPP, which is part of the recently enacted Coronavirus Aid Relief and Economic Security Act, or CARES Act. Under the terms of the CARES Act, the PPP loans accrued interest and fees may be forgiven following a period of 24 weeks after PPP loan proceeds are received. If they are used for qualifying expenses as defined by the CARES Act, which are subject to certain exclusions based on the number of full time equivalent through paying [ph] and maintaining at least 75% of the level of compensation during the covered period. We use the PPP loan proceeds to pay for payroll costs and other eligible expenses consistent with the terms of the program and the plan to submit our forgiveness applications to our lending facility during the third quarter of 2020. With that, I'll turn the call over to the operator as we take questions from those joining us on the call today.

[Operator Instructions]. We'll hear first this morning from Eric Stein at Craig-Hallum.

Good morning everyone. Benjamin P. Cowart: Hey, good morning Eric.

Hey, just wanted to discuss a little bit about what you're seeing on the street in terms of UMO pricing. I know in second quarter, big objective to lower plant utilization pushed back volumes to generators, you did that, it sounds like some others in the industry did that as well. But it sounds like the pricing is still not necessarily reflecting that, is that something that you think, you kind of have to wait out or are you starting to see any improvement on that side of it? Benjamin P. Cowart: Yeah, it's a cycle you go through when the market dries up as far as UMO supply. Then the first thing that has to happen is the oil has to come back into the market, then it has to come back in the tankage, and then from tankage back out to the end market like the refinery. So we have -- I think we have cycled through most of that transition and we're starting to see UMO availability that is at least in balance with the refining capacity that's operating today. So we do believe that UMO should become more oversupplied probably as we get further in to third quarter and on into the fourth quarter, because this is also the season where used oil is used as an alternative fuel for road construction, where they make asphalt for roads. So with that, we do believe that we have seen the bottom, we see the supply, we've got good inventories at the refineries, and we see new suppliers come in to the refinery looking for a market early indications. Now as that translates to the street and chart for all, we also see chart for all slowly picking up across the country and so that's a positive sign as well. But it just -- it takes a little time for the oil to get back and fill everything up and get the industry percolating again if that makes sense.

Yeah, it makes sense. I mean -- but obviously, you see it given that you've got Marrero and Heartland running pretty full out right now. Okay, maybe just turn into you mentioned that you're looking at other waste streams that make a lot of sense given it would be things that are related to UMO, just curious if -- I mean, is there are a lot of investment needed in that to get into those markets, or is it more just a case of focusing more on those and just making that a part of your outlook going forward? Benjamin P. Cowart: Yeah, I would say that majority of investments have been underway and pretty much made towards the end of the third quarter. So nothing that was not planned in our capital utilization. And so that's somewhat behind us. So we've spent this whole COVID period, the last three months deep inside the business trying to really optimize the utilization of our assets and stretching the return on the different way streams that we are committed to at a street level to collect to make sure that we can optimize the value of those materials. And we've made a lot of adjustments and changes in the business that really gives us some long-term runway to grow, not just the huge motor oil collection part which has been a big focus for us, but also handling properly the waste antifreeze [ph] and processing that material internally. And then also the usual filter process and really taking a lot of costs out of that process and optimizing the value of our metals and so we've seen and made a tremendous amount of headway during this COVID period I think that will be very helpful as we go forward in the business.

Okay, thank you very much. Benjamin P. Cowart: Yup, thank you Eric.

Gentlemen, next we'll hear from the line of Amit Dayal with H.C. Wainwright.

Thank you, good morning everyone. Appreciate taking my questions. So, Ben with respect to sort of the gross margins how should we expect recovery on that front to take place, do we see maybe 5%, 10% gross margin levels in the third quarter and perhaps further improvements as you go through the year? Benjamin P. Cowart: Yeah, I would agree with that Amit. You're going to see 5% to 10% in Q3 and then maybe 15% improvement in Q4. I mean, again, market conditions right now we are seeing improvement. It's small and incremental, but we do see improvement.

Understood, thank you for that. Any change in the competitive environment for UMO collection because of COVID-19? Benjamin P. Cowart: Yeah, it's a tough business on the street today just because of the cycle of the market going short of supply and then oil prices collapsing. And so there's -- it's very difficult as a small collector today and so we do see a lot of strain there. We've picked up, a lot of good organic growth over the last 70 days that is due to this major change to the usual market. So I do believe that that's in the favor of our business model and so we're going discontinue to monitor those opportunities as the market continues to play out.

Understood. Any revenue concentration coming from changes in the business dynamics. I mean, are we sort of more dependent on the bunker ones now or does that -- has that picture not really changed as much for you? Benjamin P. Cowart: No, no, no, no real change to the off take of our products. Bunker One obviously is a big off take for our Marrero facility. And then we've got dedicated off take for the majority of our production at Heartland as well. So I don't see any kind of material change there in the business at all.

Understood. Yeah, that’s all I have for now. I'll take some of the questions offline then. Thank you, guys. Benjamin P. Cowart: Yeah, thank you. Appreciate it.

Mr. Michael Hoffman at Stifel, your line is open, sir.

Oh, my goodness, Mister. Now I got to really ask smart questions. Just so I'm clear, what was the total you expect to get from the PPP for 2020 and did you take advantage of payroll deferral as well, the cash tax payroll?

Yeah, we received 4.2 million from the PPP and that was it. That's right.

Okay, and then are you deferring cash taxes -- payroll taxes, the cash tax part of payroll taxes to the bank?

No, not at the moment. No, we're not.

Okay, is that still an option?

You know, we're talking with our payroll provider about that at the moment. But as of right now we haven't done it.

Okay, and then Ben on the demand side for your product, how sensitive are you to the fact that the cruise industry basically is all the ships are in the harbor and not going anywhere for probably until the beginning of 2021? Benjamin P. Cowart: Yeah, that's a very good question, Michael. And the cruise industry has definitely had an impact on the overall bunker fuel demand. And so the demand for bunker fuel probably is down worldwide in the neighborhood of around 40% at the end of July. So it also has some kind of tail to the economy. So it was fairly strong in the early part of the second quarter and then it just kind of fell out of bed recently. Now, for us fortunately we've got a full commitment of off take, and so our product has been a priority to Bunker One prior to going to other refineries for additional blend stock or resupply. So it's not affected our business but the bunker business has clearly been impacted by the cruise lines as well as just general economic activity and shipping. And to add insult to injury, this is typically the slow part of the bunker business. It starts to pick up in October.

Okay, and then are there -- not sure how to ask this question, so I'm trying to figure out if there's a disrupter effect happening in UMO collection, like are parts of that market behaving badly in this environment per say, particularly with the oddity of where the spreads are with relationship of diesel and high sulfur fuel versus crude or is the market, in fact, behaving okay and this is just ugly and the macro is the disrupter? Benjamin P. Cowart: Well, I would say the macro is clearly a disrupter because low oil prices make the industry very difficult unless you can back up the deep charges to the generator. I don't believe that the deep charges to the generator have happened yet. I think the industry is on the way. But you got to go through some bad actors in the market that clearly operate on a different business model, maybe private and have chose to prop up street prices to gain market share. We have a lot of third party oil dependency so we can -- for us we can grow our collection business against our third party cost. And so that helps us but it takes time and I think that that's the biggest issue. There's those two disruptions, I think, that that are prevailing at the moment in the space.

And are there geographic aspects of where you're able to influence the CFO and others where you're not because of what you're talking about, or this is kind of the CFO limits on -- and pushing CFO or just broad based? Benjamin P. Cowart: No, I think it is geographic. I think if you take our Heartland footprint, our ability to charge for all up there is much different than our ability in the Gulf. And so -- but you got a lot of refining capacity and between the Southeast market that holds you -- as I always say East of the Mississippi River it's a challenge there. Our team has done a good job. We've got charges and we got volume growth there. But it's -- it should be better. I wish there was a magic wand that aligns everybody's interest. But that's what the free market is all about. The markets are efficient and they will make the adjustments given time.

And then as you're seeing the supply recover what's the quality of the oil look like? Benjamin P. Cowart: You know, I think we're pretty pleased with oil quality. We've not seen any real material change from pre-COVID to post-COVID from a quality standpoint, it is just really volume related is what we've seen. But most of our supply is kind of baked in and fixed into our refineries, and so we've just kind of weathered this -- year. Nothing has changed on quality down here. [Multiple Speakers]

And then the nature of the maintenance has been done pretty much barring something that just can't plan touchwood, you should run through the rest of the year uninterrupted? Benjamin P. Cowart: Yeah, the Marrero facility, I think our -- we paid a price in the second quarter to shut the plant down. We certainly reduced our turnaround costs and it was that the scheduled turnaround time as well. So we just -- we really drug it out and we did all the work internally, which saved us a lot of money, but we did not restart the plant until our feed tanks were full. And we were really pressed by third party suppliers pricing wise and they just -- you couldn't make the numbers work. And so we just stood down and hit the downtown and it served the business really well, because the plant restarted in full, we've been able to run our rates and it gave the market time to store used motor oil. And then the oil came back into the business and has continued to come in at no additional cost. So it's not a seller's market and it's not really a buyer's market at the moment. So I think we're doing pretty good and the strategy worked out, kind of scary at the time but I believe that was the right thing looking back it worked out well. So I think we're set up pretty good for the rest of the year. At Marrero I don't see any real maintenance. I think there's a couple of days to three days for heater cleaning towards the end of the year, which is planned and in Heartland we will have their planned turnaround I think in September, it's normal. So nothing abnormal. I think we're set with what we see to run the plant.

And then the tough question, why can't you take out the incremental cost so you are at least run break even on a cash burn basis? Benjamin P. Cowart: Well, it is really the spread, so you got your fixed cost, obviously, to run the refineries and Marrero is more sensitive to crude prices and specifically diesel prices. And there's no way to change the price for diesel fuel [indiscernible] that our sale price is tied to on the flat portion. So, yeah, before COVID we were -- our spreads were $0.28 a gallon better than what they are today, when you look at diesel to crude, the demand for diesel and the collapse or demand destruction around diesel fuel that impacts our sale price. So, what I can say is we're $0.28 all and just on our diesel we made up $0.08 on our feed costs so far when you look at like June and July against that, just that diesel loss from historical used oil prices. So we're making headway on the used oil side, which is positive. That's something that we have more control of. And our team is seeing better results and getting used oil prices down compared to crude and then diesel prices going up. But it's -- we're comfortable with the rest of this year as far as cash flow and free cash flow and what liquidity we have for the business. And I don't see a concern that we're facing.

Okay, thank you very much.

And that concludes our question-and-answer session. I'll turn it back to the Vertex leadership team for any additional or closing remarks. Benjamin P. Cowart: Okay, thank you Jim. Thank you everyone for joining us on the call today. We look forward to executing on our profit improvement plans as we've discussed here today. While most upcoming investor relations events having been rescheduled from live to virtual format so we remain active and engaged with our investors and our coverage analysts. During September we will be attending both the LD Micro 500 Conference and the H.C. Wainwright Conference all in virtual format. We encourage you to contact your institutional sales person at these firms should you have any interest in attending. In the interim should you have any questions, please contact Noel Ryan of Vallum Advisors at ir@vertexenergy.com. Thank you everyone for joining us today. This concludes our call.