Valero Energy (VLO) 27 Jul 232023 Q2 Earnings call transcript

Greetings, and welcome to the Valero Energy Corp.

Second Quarter 2023 Earnings Call. At this time, all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder, this conference is being recorded.

pleasure Relations your and my Vice Homer now Investor President, Finance. is to host, introduce Bhullar, It Thank you. Please go ahead.

Lane With Good other senior morning, quarter today President; call. second Simmons, our CFO; several Executive Executive Energy Valero CEO Vice team. are Jason management me President Fraser, everyone, and and XXXX Vice Valero's welcome earnings President members to COO; Riggs, of and our Gary and Corporation's our conference and

like received Also our the provide you earnings this earnings If a you disclosures would our investorvalero.com. copy, information business find and at release have and on reconciliations attached call. for on one on not and additional financial that can financial release adjusted mentioned the segments are website tables to metrics

reviewing have tables, contact the any free to team after Investor call. you feel questions our please Relations after these If

There are cause many we've intended now forward-looking covered laws. I be the factors release Harbor our or earnings expectations, that in disclaimer press company's expectations in predictions future the described with like your forward-looking statements provisions or differ state the securities SEC. of federal that filings to Safe could from the direct to the actual under summary, those results by our that statement would conference statements attention are management's call contained on including and says this in In release to release. the to the it and press

over Now to for I'll Lane turn the opening call remarks.

good everyone. morning, you, and Homer, Thank

of a innovation build grateful transportation strong build Joe as that of leadership advance on capital manufacturer Joe I'm for done I shareholder foundation to honored what of the quarterly Valero and our fuels. proud we position as has for leading to discuss thank liquid upon steered our everything XX-year accomplished, and discipline, continue I'm commitment and and execution. to results, through to we Valero's Before strategy returns history. Gorder a repositioning to he's want his

on quarterly results. to Moving

our pleased across in of We business solid by our strong execution financial quarter, underpinned are results all report to the second segments.

capacity US refinery by well Our our Product and strong day June. throughput sales million was record in system with supply per and over a continued refineries demand setting demand one with of were ran wholesale margins balances. XX% tight supported of utilization product barrels May as

its Coker incremental We a was throughput started Arthur has also refinery's residual and volumes from in process capacity. operating coker enhance the new Port up heavy full early project, to had the crude of and well increased contribution ability positive is at and April The and capacity which feedstocks.

segment and Our incremental project Arthur. The Renewable in is at schedule. Arthur volumes for Diamond by production Diamond sustainable income set from driven aviation the Green Diesel Diesel, volumes records on Port second progressing Diesel quarter, fuel Port operating Green sales

to Valero. to Plan be of upgrade estimated production have Aviation the annual that to Sustainable to gallon in have is the expected half ability Fuel $XXX renewable attributable diesel a of XX% capacity with SAF, is expected of or and million, million cost current XXXX complete XXX through

operations of I and manufacturers of is want DGD largest and in long-term the one expand execution. projects of completion team and With to competitive to this These become world. our project, commend expected advantage, the dedication SAF for our projects their the

commitment opportunities return other threshold. continue that discipline minimum a projects maintaining evaluate while our to also We capital meet all and honoring

of quarter. the XX%. by the debt of to returned financial XX% On share second to repurchases side, quarter And through a provided in capitalization net the second shareholders the dividends with ended we activities and net cash we adjusted operating ratio

to gasoline continue supply-and-demand product for with and recovered now and fundamentals. light global jet transportation has steadily. Global product to demand to increase and comparable ahead, to demand tight continues fuels support Looking fuel levels inventories low we pre-pandemic diesel substantially expect demand balances refining

for the decade. we place to remain has core been leadership Joe's under closing, in committed that a nearly strategy In

Our us strategy focus forward. capital our and on excellence, to operational served well returns discipline our going anchor continue will shareholder and commitment honoring to have

the So hand Homer, call with back I'll to that, you.

Thanks, Lane.

quarter income to $X.X stockholders billion For the of second attributable per quarter the XXXX, of $XX.XX XXXX. or second Valero per $X.XX net share or to for billion compared was $X.X share

quarter stockholders Valero attributable $XX.XX Second . billion to XXXX share. income per or adjusted was $X.X net

quarter segment XXXX. of operating billion second of Adjusted reported of the for the for second billion of $X.X Refining XXXX The to billion income operating for quarter compared XXXX. income second $X.X the quarter $X.X was

million quarter second the the in utilization capacity to primarily cash gas in $X.XX X barrel Refining second quarter guidance per XX%. day, volumes implying lower XXXX, of averaged were per $X.XX, operating of attributed XXXX throughput barrels than of Refining prices. natural lower-than-expected of a throughput expenses

Diesel million to of Diesel gallons second quarter second income of quarter additional volumes Renewable second impact of XXXX. Renewable quarter operating $XXX X per the the higher the XXXX. sales The of the segment compared fourth quarter for of sales of million in per from gallons X.X the Arthur volumes the in DGD averaged day X.X of higher was XXXX which quarter volumes XXXX quarter the the million plant XXXX. start-up in than for Port were day due of second was XXXX, $XX the second million to

XXXX second XXXX. million than $XX the million. quarter X.X of of production million of quarter second second day quarter gallons quarter XXX,XXX $XXX operating in XXXX Adjusted million averaged second was for the reported quarter XXXX. income per income XXXX segment second operating for to $XXX day compared the the of volumes of Ethanol higher The for was per of which Ethanol the gallons

million second for was interest XXXX. Depreciation the XXXX, were quarter and quarter effective $XXX was the million. and and $XXX was tax tax G&A expense of XX%. of million net The million For $XXX expense $XXX amortization second was rate expense expenses income

was billion Net by quarter cash provided $X.X operating second of the activities in XXXX.

billion. DGD's billion $X.X joint capital was net changes in in provided of excluding by net working $X.X and working its cash provided cash the activities, in by operating of change second member unfavorable the capital, operating adjusted other share quarter, the Excluding activities venture

investments we was million activities, turnarounds, and for in second sustaining of of regulatory business. was capital of XXXX, $XXX investing $XXX catalysts $XX quarter for million for costs made the and growing Regarding including the compliance; million business, which the

Excluding capital attributable attributable investments the to the capital Valero XXXX. million $XXX investments venture to in of joint other share DGD, of were second quarter members

quarter a resulting provided over payout and to approximately of cash Last of shares week, of of on adjusted we close purchase stock billion of XX% X.X activities. at financing as by the dividend operating our August per XXXX, of XXXX. $XXX X, net stockholders XXXX, common the cash for $X.XX activities. a business announced of to $XXX on returned September in million the which second record holders was payable Moving of million dividends paid of share quarterly $X.X was ratio We million in on common stock to X,

billion excluding we with debt, as finance net The With obligations ended our billion XX% was balance well liquidity, the quarter billion lease and cash. XX, respect cash cash of to of and $X.X sheet, of cash equivalents the XXXX. ratio of of And debt-to-capitalization capitalized June $X available and total equivalents. we billion $X.X of $X.X quarter ended with cash

to Turning guidance.

to to sustaining growth. of About joint that attributable and catalysts and billion, investments $X.X allocated venture to capital the $X approximately billion XXXX expenditures the turnarounds, Valero for is which expect balance investments. We business be for includes to

XXX,XXX XXX,XXX For at expect million volumes and following to day; fall the Continent Gulf throughput Coast per barrels Mid XXX,XXX X.XX modeling million to operations, X.XX at third per day; to per quarter day. Coast West our North we Atlantic XXX,XXX XXX,XXX per barrels barrels within barrels day; to Refining XXX,XXX at ranges: at to

in barrel. approximately respect segment, to to to the we the We noncash billion Renewable amortization. which sales gallons third costs be per includes in per per approximately Operating expect gallon, expenses Refining With as XXXX. $X.XX should gallon such depreciation XXXX operating cash $X.XX expect $X.XX in be for X.X and volumes quarter be expenses Diesel

quarter. $X.XX Our for gallon, such per the million expenses to and X.X depreciation costs should gallon expected day average noncash gallons produce Ethanol in per per is includes which amortization. segment $X.XX third as Operating

$XXX million. be expense For third should million, net total expense and the $XXX be should about amortization and quarter, approximately interest depreciation

For XXXX, be approximately to corporate expenses, G&A $XXX depreciation, million. excluding we expect

That remarks. our opening concludes

the open we call Before

Today's Instructions] Gupta from UBS. is coming Manav of question [Operator first

and just want I Guys, new rule are congratulate promotion all Gary the quickly and with our to best wishes the for start with and you.

time. The a projects when guys first question that we online of you bringing is look I for you have before track DGD, at record have

the there on So basis? would and we year at DGD more X a take go-forward at look possible similar like a a to down X sustainable line, you have make a upgrades fuel it is to say, and possibility aviation could

Charles project It's early because we're those possibility the that Manav, and that that this currently definitely is could same at cookie-cutter or at that's we could Eric. yes, too underway talk Yes. St. do. looking we numbers we exact Arthur. Port and do something is a commitment, any are but about Obviously, are something units, to at

Good.

completely are the out is there around cracks different cracks here question a demand remarkably The telling some second it DOE are telling is are products us story. is obviously data The the for whatever and us demand telling us is, the there, concerns strong. but

you're if demand you So terms wondered what regions? in the -- various highlight seeing of some of just could in

We're record up a demand. believe Lane pre-pandemic is their over system do mentioned But a day. We about gasoline X volumes is in DOE in June data seeing on gasoline our But million Gary. year-over-year, is up of and May X-week at average this had you look gasoline basis Manav, sales if XX% barrels Yes, course, that from up demand the of X%. our we levels. showing even XX% numbers, understating both

down barrels. X.X Gasoline million year-over-year inventory is

the of with at which South have Coast the year, from hindering see Gulf low barrels imports, we low you But So time States. X-year the and ship closed, open United it's of that this to Europe, range. arb the is into America. arb export demand from is trending Europe into Typically, U.S. an in strong end inventory average

but flat, the gasoline year-over-year, building. up. demand X-year trend where weaker DOE looks very is while good. like inventory inventory weekly start the of historically, diesel data this time continually see X it barrels, average the to we Diesel reflects look fundamentals year, continues Again, up to revised is is So Diesel diesel range. being around the million below

demand we year. weaker had that season, a last similar we So diesel heating fairly certainly oil looks although to

where tonnage moved index weather. demand index season heating to into back get more encouraging the and tonnage quarter, a up. demand more as signs weaker get oil So we is colder that the reflects data agricultural saw start harvest second lot June into the see around of forward We'll diesel in we as we picking we

very America. the demand see good to export from South Continue into Coast Gulf US

barrels, Russian Gulf with that largely with Europe. of supply from but Some fallen replaced off the as we've demand Coast US export been has into replaced some more

also Jet gallon on Gulf demand $X.XX the so positive up picking supply-demand looks basis Jet year-over-year. All premium XX% up, distillate strong. at demand. on rent-adjusted per US trading overall a distillate are had very It the today. reporting airlines pretty demand a impact strong in Coast and looks a the balances,

So, fundamentals good. the very very, look yes,

you Thank Thank so you. response. for the much detail

is from next The ahead. question you. Thank go Royall John Please coming of JPMorgan.

Thanks morning. Good taking Hi. question. for my

just capture first and a diffs one I structurally are now improving you any But we think coker. way Should was for to And about that? puts cracks sounds full diesel can like higher profitability? the heavy now? around in, my have quantifying takes being Coast start-up you're about go went just example, think come the recently. as in Gulf So It the planned. running on maybe there know through any

is this Bram. John, Hey Greg

to a probably the without worth XXXX. in started project project after that's mentioned, And up the value a position capture job Lane to think from and that did noting Coker great it's in we last April. online schedule year And safely as bringing accelerated operating So the unit in teams that incident. I here be

is in with the over expectations. past kind is new different ramped to guidance can a it and up to it's the have do. that, I we today running median really about take I the where really don't And capacity We've think think adjust and and think market we've because course the of doing accordingly. and the view, of you expected we full what well or project it given the quarter,

a round on lines, and be your now and whether will sour is current diffs along of over. heavy on maybe from What mediums OPEC+ and perspective? the likely diffs great second get are stay where here from we'll a see it thoughts environment heavies then on same in your from to STR would with release thoughts medium here cutting sour widening the we And the or the Great.

Yes, this is Gary.

discounts we've seen some we throughout quarter. out think as third widen have the moved back I the

as decreased some heavy differential we for there's optimism had into which fall and reason turnaround think two demand help some you'll the I for crude, head will see some. three, season, sour

growth we'll Western which season, think some back the Gulf maintenance Coast. a production Canada to of into of should more I see as Chevron barrels US out from out on the more market, production would come they heading in continue ramp-up Venezuela put see

factors processing some been And finally, refineries expect then medium natural to discounts heavy we high as which on the help see will prices, helped the then sour there. the begin changes higher fuel fuel more that which which High oil for as the And crude, and world some which sulfur there's power seasonally, discounts as discounts transition market, to you have burn well. help sulfur put economics around have seasonal should for well. winter gas weather, the wind into down will the would

Thank you.

The coming you. Theresa Chen of is Thank Please ahead. question from next go Barclays.

Good morning.

the an and permitting the update right-of-way the going? procurement front, you how BlackRock giving mind CCS And On project? Navigator is on SAF process would

front the anticipated. proceedings I'll respective it's start parallel in state's boards taking the got out progressing. in is are counties by the and/or Navigator Theresa, Iowa saying They've and regulatory project they each longer that utility of Hi than proceedings Rich. of

any and timeline expecting they've on Navigator haven't half -- a given until which And so schedule. back push naturally will of new the And XXXX, update start-up not they announced is approval regulatory not their back.

So--

DGD hurdles take bit to Thank And key opine additional in opportunities Eric, a of to can would facilities, FID? you it terms how cross additional the you. you think in on just like SAF commercialize more would the about

trying much they this. say SAF wrestle markets of to work. very I airlines of with from Yes, how What is to educational it's phase in to going good I are understanding still starting credit think about RD. They're there what I think still the would the a is come an they're understand and is

they barrels? do know, But it's in they on, under, are the as well accept and a the they've to want which all world as options carriers do model them to run to do you want as got they voluntary, lot of -- from SAF do want where to these allocation, demands, they of because want voluntary operate accept these

through fungible learning product. the think I And working is now conventional that a jet everyone is is right

location, want And at does. jet so SAF fungible then the specific move naturally a molecule product. into markets, it fungible their the will just like fuel airport, even But particular the airports, as at particular becomes airlines

of policies a take logistics conversation a and apply to sort real-life and up do becomes you set you do want goals then of, with these that and okay, of all So, how commercial that? that deal it into how

price. physically of it move will of details a through how there's this will as market. And then So, result lot still a how into being that, on worked the

think We any through interest lot are see drop working XXXX. still in through see still I strongly airlines growing a or details. those I of still demand. don't So, -- demand we're

outlook. So of a still I think upside there's this lot in

I to but think through commercial work -- logistical have these details it's details. and we

you. Thank

Thank you. go The of Leggate from is question Doug of America. coming next Please Bank ahead.

was But given end of diesel, morning I well. distillate perhaps at on as for news. everybody. today, Congrats back winter-type Good a consensus you in And to world could terms a bit from me coming the Gary, good months recent premiums we're of little your an cracks. expectations. ago, Thanks. pick couple

touched you some your know of it already in I on So, comments.

driving Asia to it And as speak you're want I to relates trading. address you're But seeing in what maybe strength? can seeing to that specifically that's what you

down exports that's globally. understanding Chinese is and Our maybe some creating are

So, just any if wondering is strong to today? as it offer you I'm can as as the split perspective why is

exports. as saw definitely and up that ramped of you the you demand lot saw think they I domestic Chinese keep didn't a Yes, China with up initially, have

their some making And those to Russian that flows needed way you the Some then sanction. of with were into barrels rebalance trade Europe. had

the demand largely up barrels initially, into from But their way flows and a the Latin diesel making So, have we rebalanced, starting as gap that from back Europe. demand filled by been in saw was decreased are that so has US. increased to Russian America Latin America trade

in for is second last export quarter if our year, look So, system pretty our you -- to in of the second the year. this quarter comparable of

However, to XX% year, to last our went of X% volume Latin America, Europe.

Europe. our quarter with this exports America Latin we go XX% Second had year, XX% to of of to

So a Coast you're continuing. the see third We real of that's in the And starting U.S. in thought the second the thus big into just quarter, difference. diesel and pull to quarter far Europe. that's from Gulf

I question. question. This is second a clarification hope isn't a this kind So of

are are Is that they're -- suggesting you correctly? So your starting I the starting to that am was to Russian I slow, reading -- think expectation. exports comments which

We lost have activity if in American from occurring us seen barrels for Russian what's countries it. Russia, But the we Russian the we like South that's exports that demand seen feel some inquiring know, driving slow, those that of have again. I supply back we don't just are maintenance

Thank for My North balance Refining follow-up Mid-Con was -- is weak line you. quarter. mean, on consensus us And the and Atlantic. looked I in seems capture capture Okay. pretty rates. The to this in with it

anything can Thanks. specific Whoever quarter? the whether trending us So in I'm so And how that? transitory, see there that's if you third to curious in walk the through if wants was far it you take quarter?

this is Doug, Greg. Yeah,

Coker pretty with should mention the XQ from in capture on earlier you the was In Gulf rates mentioned, the we'd what I the expect new positive as from question. Coker Coast, were So impact, to consistent move. capture Gulf. overall XQ the a rates a

we a there up second to and rates lower coming quarter then can in the that quarter. first you Atlantic, Canadian activity in always And Mid-Con, of off the turnaround lower the versus throughput North mentioned time. seasonal to primarily the in and in you winter tend in the shift see that in the in see then distillates summer As our in strong market and value spring due

there. out up So crude we saw primarily some had they that just the for Canada, the to of bit effects that also particular higher a was maintenance impacted and this Then was by coming one unique sweet wildfires cost period one more the there. of was

And how that trending is in QX?

will usually it it start that expect That to bit, we're improve. it time. short, not some see but will starting short-term very just Yeah, effect, we but a moderate take to a is

right. All Thank you, guys.

Thanks.

next Research. The Sankey coming you. from Thank Sankey question of is Paul go Please ahead.

morning, Good everyone.

Paul. morning, Good

My little perspective? Gary. you going Can little congratulations cuts, On talk outages? keep markets a from a having bit impact OPEC that your can with to the about the just on been bit you've the you

Russia explosion Mexican The a And or market got you is just obvious you a on commentary crude view how was of already Doug. through on right seem disruptive that the one, to buyer's now? from Thanks. another point less address more I

Yeah.

crude it So the seeing million as picks up, you're and a price the differentials seen quality are market, big global has trend and barrels that cuts, certainly, as higher, market in demand the off the I back move day definitely market. oil not yet X.X the OPEC+ seeing you've you're think in the And well. been production on those barrels flat

in Canada the the in a had other in fire on addition issues Mexico. We there that platform of you were OPEC+ to Canada, wildfires maintenance mentioned. in But the number cuts,

into to You seller the buyer SBR. out a went the of SBR kind of from a

second those in third move we all So the start to some the the seeing significant into reverse impact as things a quarter. those things of quality had on and of we're quarter, differentials

least on things bit happened Texas. of And perhaps about industry the Refining, talk a reports anything the units also throughput a not you there quarter, was how a but lots various different perhaps in Could and down talk bit was of with in distorted guys mean stuff? by you the in that being you -- because the I it. heat happening, bit of Got then outages can was

speak we know can what Paul, to whole this on Greg. is that going I elsewhere. was don't a lot

first mechanical availability quartile for Our quarter. of with type performance. operations in good were kind the of Good line our very typical

has our a on just So modest very the of any had weather impact operations.

your then share. And of seems way explain that up The driven how -- taking one. quick to it. the below market fuels, right? is Got your finally, overall you're the you strength just being sales a do by It Is we obviously about XX% versus that? renewable market difference wholesale talked be between

really our include what wouldn't renewables. That be U.S. strictly would about we're That volumes. No. talking on wholesale

to agreements where that been due to terminal was that in but it rationalization to in just capture and locations, of be competitive, we in we've additional us through us allowed some more gone many the allow think historically be and share. regions renegotiated haven't occurred that I more competitive some industry market

Got very it. Thanks much.

Sandler. of go question Thank next Piper you. from The is coming Todd Ryan ahead. Please

certainly, And the of you talk Can both on there. mean the side? Great, capture the thanks. Maybe diesel about capture sales improved. margin some can very implications back strong of toward What think a had pricing you on talk than we a had which question benefit are the expected? strong there, mean, renewable sales? the diesel and as -- drivers about the rate, kind talk quarter, sales half stronger which a renewable look we much But obviously, year, I in and this was from I side. on you performance I can the quarter. were, very in Also

there's running capacity. Yes. We quarter, but definitely for we the of original ships also numbers design our above do timing always in its had some unit the -- have

coming DGD that its into higher as are beyond Canada with states then as running new throughout of a on there's world as well we So lot CFR sales move that went in moving seeing production rates are California. the July, at live X and strong other we into

we we're design running the and see rates. overall, some yes, ships of sales combination obviously, due to timing of above increased did So then

capture mean, comments cap And you're seeing, general just was falling, on indicators have margin but the what your I had. much Any the on on headline been improved.

the side, lower second become We again. in waste we advantaged quarter. oils margin -- on capture the saw The saw definitely prices Yes. margin

about lot out market and capture bit a EPA expected. rate. been a has The was with that RINs as and outlook, largely been have we pretty unchanged. new of talk improves those it came its LCF little If much LCFS, flat. So RIN our relatively

That's would fat but mentioned, say, already strong attractive Gary product. as overall, ULSD -- we've formula the that's of So prices, more basis mostly seen the mentioned. you I a plus, demand.

refining And maybe the the for on a the Coker have different of on years? to capacity? in likely of underway, you but SAF like looking can that that incremental the capital SAF be and start-up that of the the that rolling production growth Are whether at, with note, compete there margin Is couple the something more of Port about projects what off it to types as think from capital you side on or next Arthur growth things CapEx, obviously increase capital anything for side forward? terms you're compete it's projects might going octane

Yes. Lane. This is

We've opportunities at really to us our optimize existing to So to assets. and that. doing look look you continue around can been expect

always have cumulative, effect the Some we of our them aren't those, like but And side. continue in of gate or on then big we renewable and the to just flashy, they'll side in an other performance, have. business, overall our

project and excellence our the space at always transportation to in potential the operations capabilities. projects that our develop and are are sort innovative leverage that the We gain of execution looking fuel

Okay. Thanks, Lane.

from The Morgan of question Thank you. Joe is go Stanley. Laetsch ahead. next coming Please

Great. questions Thanks today. everybody for my taking

here. rate capture to back go to want I So

think quarter. some here third just touch were drivers on during setup just about Coast you on West the of Could really the the Refining and margins how quarter? strong the for noticed we we So, the should

this Greg. Yes, is

of to very Benicia gasoline very, yield Coast, we operations a So product there. is great there had mix. on But the the West high note out terms has in thing really, its

very factor gasoline saw driven see is the distillate West strong So, the by Benicia's second out That's to relative we in quarter. Coast, you in the yield. out capture primary when rates products strong there

Is the -- then should versus higher quarter side? that? about is gas my think third second one the Or on That's drivers that just and XQ. Thanks. Great. OpEx just helpful. And OpEx how on just we in of

natural Let this higher really -- the driven is third slightly gas me for the by Lane. It's than quarter in quarter. second outlook

you. Thank Perfect.

go coming Thank question Read next Please is you. Fargo. Wells ahead. The from of Roger

and to pretty question congrats way. the like here. Hemisphere. morning on weather diesel a winter, the slightly for unusually Good throughout different hit warm new to I'd Last we there roles everybody Northern saw

So but what last last weather going standpoint. you addressed on call, year this demand think do missing the was from I back, you think the a

we And the normal model and so when upcoming think about just winter weather. we always

will what from a looking demand we potentially be up? So, at step

Roger, I you number, give front get in with with follow have you modeled oil number I had and but a on we we don't heating have the don't to me, Homer of but and want the bad that, can number up demand. you we

Okay. helpful. That's

terms of max I we an think have, you've is, in other gasoline The being us this seeing give you idea of diesel max or we've as summer? or mentioned been how up somebody I earlier, run distillate should through diesel max move back say, over gasoline. coming Can

of products. movement watching swing back And Roger, other mode, we've shift cut but kind that we've make way. in start see that when we been mostly us between two been the gasoline drive that max those to we'll

maybe at look as can. to when cut, you And blend you butane blend much on pulls as it really in things that of butane that's as keep in of keep One that the is the butane get more swing the just where you prices attractive currently the pool. into heavier mind gasoline the to gasoline are part in and pool,

on hurt or help definitely on Yes, there. which you're argument the NGLs in of side are depending

Thanks, Okay. guys.

Thanks.

question Thank next coming ahead. you. Scotiabank. The go is from Please of Paul Cheng

Hi. Good morning.

Paul. Good morning,

be I ask -- role. new because with I late. everyone apologize to Congratulations May joined

let me ready at the questions. question address, just transcript. to So look is if Two my and know we

guys to-date. really it's what the the also discount seems further those like that there -- it discount, Is for it medium that if run? come like is minimize problem way you with to oil heavy doesn’t and run you sour you And down really have attractive it's to for minimum is First, that most to barrels? and has not, any

of law you've the the Avantec, to is second of in not to comparing the running, years capture just why quarter. any margin been say, first mean in jobs that the maybe but is XXX%. severely reason that question I second The couple from comparing last to XX% XXX%, the it quarter, so call there

or is we unit And you. are so circumstances that Thank particular any reason is there one-off there some seeing? --

Hey, to going that. Paul, answer is Bram Mr.

on quite Hey, The quarter. see the the incentive Paul, start now. one we grades your a we the as understood narrowed advantage got as the as into bit question, I to If with light heavy for crudes. I'll well the track first crudes run heavy different

Gary mentioned, the the -- start we to sours grades. move will incentive continue As have start those one and to been wider attractive to as that light On grade those discount capture a out rate The heavy have would need before the question, your have to there. back we medium your that probably move sweet to differentials the been to process a -- to increase would be see least question. make shift

further go can that Actually, maybe capture, before on that ask you the medium can into sour? I minimize how much we the

lot that a to essentially buying is medium will do those not looks medium of region, even there's process a bit. Paul, still medium to keep we Yes, parts the grades a that different about attractive places one lower way is, and the parts and to heavy can Coast itself. combination Gulf light in grade in of of to of at where we the the can the but we'll think run like, cases, kind what crude minimize than thing quite country, be sours, a attractive. particular medium sour run mirror different of easiest where it a grade mind cost The in as is

Understood. Okay.

capture around rate – your The Okay. Atlantic, north was

Yes. North Around Atlantic.

Yes, crude cost second unique the prices period. quarter second was thing kind Paul, maintenance caused, than again, the about higher by for one and the to that would probably thing higher the quarter out primarily different was that of, typically was a quarter Syncrude it and this look Canada, That region that driven of wildfire-related. both for

entire than The your XX XX% Syncrude at or more XXX% -- for probably input, was is right? most

much it's that, than No, Paul. higher

winning your really capacity that that much Syncrude? Is higher? is much So

Yes.

crudes and the Coast. Canadian crudes of then combination a that Gulf runs bring waterborne refinery Quebec we our up So from

lot. Great. a Okay. Thanks

Mizuho next is go Kumar from coming of question The Securities. ahead. Please Nitin

all recent for And with, how morning thanks pricing for decision I to can small favors that you can deny business I mentioned volumes your Good talk taking ethanol? were just Hi. for start you about ethanol on does think little the for question. comment but my to look EPA bit and refiners? want a RFS flat, you

mean, Walsh. is to we of, decision. when it bit have then This can EPA don't And little play. to Rich hand a Eric. it any about refinery I'll in the pricing, off back I exemptions I I guess, small talk comes

a so in it's And of a non-factor more us. really for bit share regard. that to on it a I mean not lot

the as but far same nonevent a thing, then posture as really see it's the impact of that, bit commercial of and the small refiners. we we And know Yeah. compliance a -- of don't those

-- not it's big don't of to small So impact the a businesses refinery on see we any section. our

you for well. ask whether side, on ethanol is those to referring actually as because that commercial was I the your any guess demand have what improved exemption. different question a seeing I I'll don't were Sorry,

intensity that? mentioned anything the your increase regulatory could like of billion sustaining on on year. that this $X.X that for Are emission the sustaining the stringent seeing of standards CapEx things in future CapEx, like increase you or anything the particle thinking Just you front or

other is our competitors these you were on actually at some history capital and and we Lane. some our things. gas look these ahead recovery of of things, elective sustaining of our looking When This

of to in So can that still average, willing ebb good regulatory it $X.X capital, we're On stick with really mean timing. billion flow and respect and to with doesn't turnaround our we're sustaining. with shape,

you Thank

Sachs. question Goldman The go ahead. of Mehta coming is Neil Please from next Thank you.

the the and start. Yeah. three years, clear Joe, you. two last step just vision that Lane, or of things that Gary has next I into the and couple you're take been focused What that's line. very on We your you're Good this if Congratulations on and would are love team Lane, morning, consistent. kind the to new want to to level? to over where the strategic I of as Valera perspective you of role. each most And mean,

Neil. Thanks,

the Jill for go I I years. really Obviously, I the that. Joe back last Joe with -- worked and So way mean, and nine strategy I before on

part been should from deviate my been of of don't that's think I've expect where focus. a not strategically we've areas to the us substantially it's strategy So like you current successful. in been I terms of

focus making excellence sure in of want we've be execute successful been ability continues. to to execution, first area -- just that great our right? We I that, are and maintaining the exactly our think our is operations squarely of the that, sure everybody I And projects. understands executor we very a -- make have

sure predictable a some and else, foreseeable of on other some that are Green to assets, innovative this look the obviously disciplined, be in in want around I'm to done for the And going company. all our Joe keep everybody space are I continue I these that our need of we stay to things strategic SaaS to that spend that's capital ahead those we our And that, things Diamond have working make future. to the let opportunities going I that can sure we and think of some project we of make stay whether or and been think opportunities we or for that

return stock buyback well having the business talk are well. continuing how done and reinvest lean the to follow-up you of with you another into as were the just And return capital. in And could maybe Lane. recently, about quarter in of historically. thinking to was versus And sort brackets It the the of about you then where more talked able is cash the an around excess Thanks, update. about that here dividend you provide just back

sorry, like there's I'm think regard same to with revisiting to dividend I performance. to capital Yes. well. really our as don't continue approach any and we're of buybacks And approach our going strong

As we as getting our the time at had end our building same pretty at of return pandemic, Historically, target range, far or the while to the going high cash. and regularly. levels to been range XX% to XX% prepayment And back before last above midpoint above our XX% back long-term got to then year, the we our debt target of down back shareholders.

so comfortable we ourselves the said be with. were were for the under also midpoint pay XX% that's above payout before our the us a was XX%. the end at where the that upper going hesitate And got circumstances. good to we cash an I -- we a XX% at the for quarter, XX% this or with of our unusual XX% we'd we in range. the posture we had trended year, And above back up the second out We that we'd forward. above So we've accomplished, going best -- forward, like said use we're as past, circumstance said, won't In COVID you as above clearly range back excess payout. year, think the in Year-to-date, of

dividend, the our We to positioned, yield through want same on to our to cycle. dividend to competitive versus our we growing to approach positioned and be wanted who And peers the it. we be continue have want the sustainable be

serve it So the to out us will our be then buybacks flywheel and set targets. to on to round the approach our how we'll as return to get to that our continues dividend. continue That's a

Cowen. Gabelman ahead. The from go next Please question of Jason is coming

for Yeah. taking Hey, questions. my thanks

outlook refining the as and of decent going an capture ask be has pass-through well Green of to the of the want prices as Diesel and impact as fuel of Diamond that I cost oversupply renewable for concern crack. of on RINs business, next RIN a well and some to the the in that First, the amount the RIN there's year, there's implications on ability for both standard to the and

And have follow-up. have outlook relates to was wondering, impacts any prices lower a both those if your I to some moving RIN Thanks. RIN to of I segments you it comments as So around given risk year? next

Eric. Yeah, is this

XX held it's to as the ethanol used DX that wall, will we've the beyond the last RIN the obligation. means which several gallons, EPA requirement which blend of billion the On prices, fulfill over years, seen the be RIN

supply Given or as RINs. relatively big our see RIN business as you usual. a we that change prices RIN in don't see outlook,

of I if a just mean, online a next little capacity bit. diesel back There renewable I push guess I new could lot year. is coming

I So that seem out RIN it more don't year? lot enters next to supply. does a into as if be there's you know look like thought your going process

Yes.

If we projects going you lot -- come see their longer of a projects are are everyone to and down. speak else's the to we're projects, up that slowed do not taking but R&D on being

as a to is the growth predictions. is outlook not So lot aggressive expected of of curve our R&D going be as

operations surprised cracks the follow-up we're investors to I and cracks. a And weather on think of you're diesel parts I lot your peers You've hotter-than-normal kind to back that two globally think at Okay. demand that. you kind already of the not of supported been in this appreciate the then in weather. so on strength going have my going one. Do seeing all? to outlook mentioned that has just is comment the refining warm And of

though, a weather? demand wondering there's the high been impact, So from if

forward second at And part low. the out world and capacity The just below restock are are inventories about does the product gasoline path can to to which be seems Thanks. inventory you the -- historical all mentioned or running is, given then talk rebuilding global you those, how diesel, given levels?

the in change we weather significant this don't caused I Jason, demand. Gary. that warmer see know is Yes, a can that has diesel

a United inventories a low States the thing Europe, globally. -- high where think we're of the especially are in result United low from States, Low as I globally. the into diesel same very pull and inventory seeing inventories into

really Moving terms forward, inventory. is restocking the where don't I in path of know the

barrels You below five-year look barrels -- were Last we're at year XX five-year average. XX the below the million average. we time, million this

in it making it. aren't dent really we So

capacity, going look balances at significant a online, look the when look -- going look refined you new it nameplate supply-demand forward. you stated coming impact you but and forward, estimates like If of oil there's on no doesn't capacity yes, growth, at refining that the demand the capacity global

the for color. Thanks Great.

you. go ahead. Thank Tudor, is Holt. Pickering, coming next of question Please The Blair Matthew from

RD Hi, Thanks margins Do any good for on questions. expected the my you impact XXXX the converts taking a BTC morning. thoughts have PTC. to in on when

by anything helped foreign with As you there? just we down make would but is PTC, add be that seems like end? imports. would look it from you out appears else less then, And the might competition sense Does subsidy it, RD per your there at on it dollar gallon the go

to you the the CI Yes, add would a The PTC, we Diesel carbon I lowest feedstocks. got I for intensity when advantage one Green run because you've think basis will that thing surrounded. go is that Diamond

So we PTC whatever the of capture versus peers. still highest have becomes, the PTC will our

there's most doubt the that advantaged based it So we'll fraction a have platform. $X of on but no still becomes CI

projects a could Great. Thank on compare what you side, then that jet you still possibility? -- terms And do types techniques is SAF so, long-term you. compare to could scale alcohol to an if ethanol the you're between distinguish airlines the at cost, different do fuel? cost, how production two of the in Like and operating capital of two doing DGD? And currently

Yes.

to feedstock -- become goes look there. standpoint, through think from what do from viable that of all ethanol is markets, source. the they is the I project so the of first is to yes, of I airline about standpoint. barrel an at get a would is pathway from that say a post Well, ethanol there questions next it answer RD capital does There question RD a the that's sequestration. early -- market. ratably that way be conversion it fuel. will That numbers you of will they to into that -- could lot SAF first barrel take yes, The too But talk from a that be into see is and -- allow a jet and the based. ethanol if It's as

much line. But that's there on out said, you like further the that's time

will between at But Again, on SAF a between much no probably into there's barrel tell. first based down there then from look of the are will a two? barrel RD market, line. technology an the an -- And from RD and difference standpoint. price much, done ethanol-based airlines a further lot time there? these be and you too in work the all how soon But standpoint, is and versus yes, the to to SAF then So there of terms fuel differentiate if capability a is

Understood. for your comments. Thanks

to I'd you. Mr. for Bhullar the floor closing over this to like Thank back time, At turn comments.

great free follow-up have Have us Thanks, Donna. team joining feel today, if everyone you and any please I the day. Thanks, to questions. IR contact a everyone. appreciate

thank and event. participation. for today's concludes Ladies This gentlemen, you your

your time may your and lines the of at day. You enjoy this disconnect rest