The analyst says that the bottom has fallen out of the conventional refining selling prices, and crack spread is bringing profitability down to breakeven to modest profit. 

Notably, over the last 18 months, VTNR has witnessed significant volatility in conventional refining profits, with current spreads suggesting flat to negative EBITDA in Q4 FY23 and FY24 from the conventional refining business, writes the analyst.

Also, the analyst cites that depressed D4 RIN prices and increased RD feedstock costs are expected to keep the RD business from generating positive EBITDA and FCF until FY25.

Consequently, the analyst lowered estimates for revenue to $3.25 billion (from $3.29 billion) for FY23 and $3.27 billion (from $3.42 billion) for FY24.

Also, Hoffman reduced EBITDA estimates to $41.5 million (from $77.7 million) for FY23 and now sees EBITDA loss of $(56.8) million from $26.7 million for FY24.

Price Action: VTNR shares are trading lower by 4.53% at $3.4750 on the last check Tuesday.

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