DISCONTINUED OPERATIONS

12 Months Ended

Dec. 31, 2022

Discontinued Operations and Disposal Groups [Abstract]

During the third quarter of 2021, the Company initiated and began executing a strategic plan to sell its UMO Business. An investment banking advisory services firm was engaged and actively marketed this segment. On June 29, 2021, we entered into an Asset Purchase Agreement (the “UMO Sale Agreement” and the transactions contemplated therein, the “UMO Sale Transaction” or the “UMO Sale”) with Vertex Operating, Vertex LA, Vertex OH, CMT, H&H Oil, as sellers, and Safety-Kleen Systems, Inc., as purchaser (“Safety-Kleen”), dated as of June 28, 2021. On September 28, 2021, the shareholders approved the proposed sale of its portfolio of used motor oil collection and recycling assets to Safety-Kleen pursuant to the UMO Sale Agreement.

On January 25, 2022, the Company entered into a mutual agreement with Safety-Kleen to terminate the UMO Sale Agreement. In connection with the termination agreement, the Company paid Safety-Kleen a break-up fee of $3 million.

Vertex continued to explore opportunities for the sale of the UMO Business. Subsequent to the April 1, 2022 acquisition of the Mobile Refinery, our UMO Business operations no longer consist of ‘all or substantially all’ of our assets and as such, we determined that the sale of such operations does not reach a level that would require shareholder approval if sold under Nevada law. As such, the requirement to obtain shareholder approval for any subsequent sale of the UMO Business is no longer necessary.

The Company continued exploring opportunities to sell the UMO Business and believed it would sell such assets within a year. As described below under “Note 27. Subsequent Events”, on February 1, 2023, the Company sold all of its equity interests in Vertex OH, which owns our Heartland refinery located in Columbus, Ohio (the “Heartland Refinery”). The sale also included all property and assets owned by Vertex OH, including inventory associated with the Heartland Refinery, and all real and leased property and permits owned by Vertex OH, and all used motor oil collection and recycling assets and operations owned by Vertex OH (collectively with the Heartland Refinery, the “Heartland Assets and Operations”).

Accordingly, the Company has presented this division (i.e., the Heartland Assets and Operations) as discontinued operations while reclassifying the other UMO Business operations out of assets held for sale, and all liabilities of the UMO Business out of liabilities held for sale, other than in connection with the Heartland Assets and Operations. See “Note 2. Summary of Significant Accounting Policies - Reclassification of Prior Year Presentation” for financial information that has been reclassified as continued operations.

The following summarized financial information has been segregated from continuing operations and reported as Discontinued Operations for the years ended December 31, 2022, 2021 and 2020 (in thousands):


	For The Year Ended December 31
	2022		2021		2020
Revenues	$	85,495	$	58,248	$	31,330
Cost of revenues (exclusive of depreciation shown separately below)	51,815		32,467		22,248
Depreciation and amortization attributable to costs of revenues	1,566		1,566		1,423
Gross profit	32,114		24,215		7,659
Operating expenses:
Selling, general and administrative expenses (exclusive of acquisition related expenses)	8,501		6,727		5,767
Depreciation and amortization expense attributable to operating expenses	251		251		251
Total Operating expenses	8,752		6,978		6,018
Income from operations	23,362		17,237		1,641
Other income (expense)


Interest expense	(39)		(59)		(63)
Total other expense	(39)		(59)		(63)
Income before income tax	23,323		17,178		1,578
Income tax expense	(4,683)		—		—
Net gain on sale of discontinued operations	27		—		—
Income from discontinued operations, net of tax	$	18,667	$	17,178	$	1,578

The assets and liabilities held for sale on the Consolidated Balance Sheets as of December 31, 2022 and 2021 are as follows.


	December 31, 2022		December 31, 2021
ASSETS
Accounts receivable, net	$	7,490	$	7,273
Inventory	1,674		1,444
Prepaid expenses	183		135
Total current assets	9,347		8,852

Property and equipment, at cost	19,746		15,480
Less accumulated depreciation	(9,140)		(8,052)
Property and equipment, net	10,606		7,428
Finance lease right-of-use assets	—		436
Operating lease right-of use assets	44		166
Intangible assets, net	563		814

Total noncurrent assets	11,213		8,844

Assets held for sale	$	20,560	$	17,696

LIABILITIES AND EQUITY
Current liabilities
Accounts payable	$	2,750	$	1,831
Accrued expenses	629		543

Finance lease liability-current	—		—
Operating lease liability-current	45		128


Total current liabilities	3,424		2,502


Operating lease liability-noncurrent	—		39

Total noncurrent liabilities	—		39

Liabilities held for sale	$	3,424	$	2,541