Valero Energy (VLO) 26 Oct 232023 Q3 Earnings call transcript

Greetings, and welcome to the Valero Energy Corp.

Third Quarter 2023 Earnings Call. [Operator Instructions].

As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Homer Bhullar, Chief Vice President, Investor Relations and Finance. you. Thank ahead. go Please

Vice and other Conference Valero are Call. and team. and our our everyone, our Gary Quarter Vice of Executive Lane Corporation's Valero's XXXX CEO President Executive Fraser, Jason Earnings With and President; and welcome morning, CFO; Energy Simmons, several to COO; Third Riggs, President members Good me management today senior

investorvalero.com. a the copy, not you received earnings our release website would on have at can you like find one If and

the are for and this release provide metrics financial to that attached segments Although on business information earnings reconciliations additional tables call. mentioned on adjusted our disclosures and financial

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

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

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

Homer, you, morning, good Thank everyone. and

financial the quarter. third strong for results report to pleased are We

margins share. at backdrop fact, supported for of X In barrels per remained inventories, which wholesale volume. sales record quarter strong Finding evident product globally. which per despite X-year in refinery quarter day demand were U.S. record product million we set against in low of a over by second earnings the lows demand rates was the utilization high of matched system, The strength our third

throughput team's in to XX% operational utilization Our third focus is which testament continued achieved capacity the our a quarter, well on and refineries operated excellence.

our long-term of earnings and on in Sustainable DGD schedule competitive project to Aviation expand is business that advantage. SaaS enhance remains Fuel, complete our strategic to and projects We Arthur the or The expected prioritize capability continue Port at XXXX. be

Once million-gallon at have the complete, XXX to diesel to plant we optionality production annual of XX% Valero. ] with to The up to its renewable cost Arthur of project current is half capacity [ expect that upgrade million, SaaS. $XXX of estimated attributable to the

Diamond With Green world. largest to of Diesel one expected project, become the this of of is completion SaaS in manufacturers the the

dividends payout third side, of are we honoring operating control. capital adhering discipline factors assets for safe, threshold in broader includes minimum and volatility commitment third operating and a reliable our while financial return we that of net shareholder capitalization by commitment we with a a cash XX% In XX%. provided the activities returns. returns and On markets, efficiently things This through honored shareholder to on repurchases with by ratio there to can ended share debt ratio growth in focused we to adjusted may to responsible net quarter our the remain the drive and closing, of quarter projects environmentally our manner, maintaining a

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

Thanks, Lane.

higher-than-expected quarter higher the of barrel utilization third barrels of Port XXXX, guidance the in or XXXX, the to was a XXXX for of primarily Valero barrel X to third per attributed $XXX Renewable $X.XX per per gallons Refining expenses Renewable third operating for Refining XXXX than million the billion per capacity compared quarter volumes to for Diesel stockholders of $X.X prices. $XXX third day to XXXX. $X.XX diesel net segment in attributable share net quarter $X.XX $X.X day, of billion energy per throughput per to quarter reported million sales income of billion the averaged XXXX million refining of third in volumes of which operating XXX,XXX quarter income third impact quarter quarter averaged per were the XXXX. of income XXXX. third up of XXXX, attributable of $X.X volumes XXXX. cash X quarter third The implying to for to the in started the quarter were the the than segment XXXX. quarter gallons share higher which third for the third quarter of $X.X higher volumes the or or billion per quarter day For from $X.X for third XXXX Valero third sales $X.XX The due of stockholders of the share XX%. of was compared the was operating Arthur was DGD Adjusted throughput plant, fourth of the billion of additional compared income million $X.XX XXXX. in quarter

day of day volumes lower third corn of XXXX. Operating prices XXXX operating of of Operating quarter quarter lower margin result diesel million XXXX. income than XXX,XXX $X the third XXXX, million income was higher XXXX, primarily third XXXX. in as renewable the income the quarter and XXXX, for in Ethanol quarter a due third of million $XXX in the of third of for volumes higher was third The of of compared was than production quarter the reported quarter the than gallons primarily lower quarter per to quarter ethanol higher which X.X production gallons segment the the per averaged third to third of XXXX.

cash quarter associated venture was a Included operating $XXX DGD. $XX capital cash provided of amount XXXX. favorable net in the was effective was tax by this were million $X.X adjusted and of $XX XX%. expense expense other provided was million operating income Depreciation rate billion Net member the G&A and of XXXX, interest quarter quarter For $XXX working net was for The expense the $XXX third XXXX. million expenses share in the by activities and activities amortization $XXX in of with million. third million third joint million change of and tax was

$X.X provided third was of activities cash the quarter adjusted by billion operating items, XXXX. in these Excluding net

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

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

shares approximately for of financing common year-to-date a dividends This a September $X.X in XX% stock payout in billion of provided results to operating ratio as of of was Moving as We by $X.X in XX% resulting of activities. XX ratio to ended of the million cash adjusted was quarter Debt activities. net million XX, billion billion third purchase of returned cash quarter XXXX. payout as and our ended to XXXX and capitalized which balance paid the $XXX of September capitalization and of finance quarter cash was of XX, billion stockholders ratio, With debt, cash. of XXXX $X.X of sheet, our billion the we equivalents $X.X XX% with cash respect excluding obligations and well $X.X cash lease total billion the of net of $X.X equivalents. available and to we with liquidity,

conventional fuel. strategic it carbon Without have which ethanol their see storage, last opportunity staff carbon Separately, by still of a ethanol, qualify COX they capture feedstock into a conventional a and would and carbon We project. today's intensity canceled under as storage does to capture pathway week, also sustainable as reduce aviation not policies. as the Navigator pipeline reported for

We continue evaluate projects sequester other to to COX.

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

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

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

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

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

expenses expect concludes For XXXX, G&A That remarks. million. opening to be we approximately $XXX our

of the protocol open call to turn in X questions. Q&A adhere questions, limiting our please we each Before to the to

If permits as queue than time the their questions. other ensure more please ask X rejoin callers you to have have questions, to time

from [Operator Instructions]. Theresa Today's Barclays. question Chen first coming is of

seen to downside? and October. comments you volatility earlier that the with for outlook early your wholesale about gasoline do the ask to how especially like gasoline your demand Lane's explains We've near-term on forward? specifically compare how What think margins back on across going just your first margins And you system? side. generally, recent recently, in does refining trend And think Maybe footprint? going do I'd significant

It's several contributed sharp Gary. Yes, I to on that gasoline. the think had you factors sell-out

transition. of was the out had season approaching DOE And You some pessimistic kind put market the over, fairly then numbers. hurricane you demand were view RVP that

a that of in hit all at gasoline. sell-off so kind significant caused And and once fairly

kind fourth seasonal the patterns, quarter first follow forward, the outlook going typical we'd expect and to In terms gasoline quarter. of kind cracks, of weaker of

as you at, the in that is season to gasoline, the know, storing still gasoline for Harbor putting looks thing us year. summer-grade driving doesn't really fundamental The looking York support market really we're good structure next New

you driving see season that's the when demand respond. So long up, as our as to back view be next get cracks would that year, case, you'll picks

on Middle the in the incremental sanctions heightened given Venezuelan side, following the risks recent variables focus of evolving light terms geopolitical also differentials, account in coupled and of production light start-up impact And you. about you do taking ]. the Thank oil the relief the near-term and potential differentials? And heavy just East with from this all these here? how How [ into heavy on of think the crude

Yes.

OPEC light-heavy the the key day market. really, continues differentials on million driver has to be off So X.X a barrels the the that Plus

we in They quarter. So differentials wider you've discussed. tight have despite third moved issues the geopolitical that fairly the saw

is that just of Some patterns. typical seasonal

Middle less You've had generation East. in sulfur burn power the high fuel for

as some. well. the differentials Freight discounts widen turnaround high especially some [ fuel ] markets fairly significant some back to We've as pushed out. seller on heavy that a on those impact actually market, PADD seen So X sulfur differentials activity, widen have in

see moving sour move. of But back seasonal is differentials that market causing heavy you'll comes to we higher and typical narrower differentials freight So they'll follow kind until the patterns. have OPEC+ the the on

Wolfe is next coming from Margolin The question of Research. Sam

in question love. you This but parts, might be X guys I know one which

past the just gasoline market to system really because travel all way back a had in the more the and work. of there's goes markets. has the the and Valero of execution and be it the it more dislocations same has then comment, kind history time, So lot coker than sort might the results quarter around at of and typically little Port -- it capture volatility just consumers seems your seasonal strong And been like with gotten diesel-oriented a in results Arthur of and when of a fourth these but

of that terms that, So sort on configuration get seasonality position you years? than kind of before better the this arguably is in was future we recent it of question some And projects? should something gasoline to within is in used brought is do it you in think your and enhanced

Yes.

back little barrels they Diesel a year-over-year the up up from least Gasoline so gasoline, terms question X actually around it of day are were of a that's So stronger recovered is in million system Day really We last but X% really they've at sales. gasoline a can't part did don't our market sales Labor this even think after say I I sales markets. seasonability factor quite more a whole that throughout on into the X% in nicely, at see where impacting little seasonality domestic in first year we're off fall that. at bit are we're that the and seeing sales of current time. the

of really part, -- 'XX XX If second say since the the had to the would future. -- the Sam. sort of [indiscernible] the want I be diesel is It's where we So a fuel we view economic the saw teens driver. early

did you not So that here only recently. to the coker do alluded we

ability is hydro a effort this system to hydrocrackers, towards and our built big also cracker. its our robust specifically making We more of revamped more assets. X to around more an and big to distillate make able be out We the and move all in move X

America. from Bank of The next Doug question Leggate is of coming

crude I is, Coast heavy if questions, of I to I the couple have [ the your my first obviously, you're benchmark. A differently Gulf guess from Maya seeing about in seller on but the generally, does behaved your large got Bocas, spreads? point Coker horizon, or one the realize going as it from guess, very I WCS. ] advantaged And I And Loomis is, Arthur indicator that's and seems more guess and to relates may. Port what largely

just curious, advantaged the what's coker anticipated? that prognosis, rate from we you crude for the I project? I'm And capture those spreads are So your factor that obviously big a in are seeing guess, that

I answer hand wanted off part this rate capture the think, I'm this Greg, and going Gary, answer you to Gary heavy coker. to on might sour Greg to and then the

Yes.

Canada. forecast looks widen discounts in fairly back In So on heavy production Canada, out. like on It we've back seen robust they're apportionment pipeline. the for sour

view on fuel up, from take Mexico. does the market even may some off You're seeing back eye welling then market. this when increases probably And it focus is our is, the start yield

use coker, And a as And I'll so that we as that feedstock Greg can question. the well. capture address let

about consistent our with Yes. operated expectations. what very And the I'd Doug, it quarter, well cokers, the for certainly say

also so value, of some strong and good feedstock, the both lowering enabling And the is talking things throughput. by is increase generating Gary us economic to project about

impacting materially? gas on on Gulf guys, is spreads Coast Sorry, that broadcast, the

any there's don't impact I think today.

Okay. is billion But My a is of maybe buybacks. for one another follow-up $X.X quick Jason.

I now XX% X.X shares of You've years. last in bought think, about back, your the

the I'm plenty curious sector more get know periods your bibs and when [ how deployment should or balance got just we this seasonal. we on -- You ] notoriously about still is strategy of get think into of cash seasonal sheet, you opportunistic? perhaps

buybacks about by approach Yes. debt. Thanks, our Doug. Yes, is talk I'll it's our to around okay. thoughts dividend cash, driven the

see walk the and that more -- be we're you thinking and then -- looking year about you So can on of that. through how the about rest won't I'll we

mid quarter So $X on $X.X at cash, indicated target We've [ as you million billion. said, we ended ]. the of

comfortable being us we're So very that now. with range current in

our of liability needs debt side, ongoing down at look at the any management XX portfolio we On through don't Net have XX%. this we but debt certainly basis, any an to time. debt practically to as always September lens pay on a was cap

bit it's So target range. under a our

we're through is into wouldn't So we're growing the now. feel in maintain competitive, specific more And the timing a in there. range on and dividend I And shape get want or on good cycle. dividend dividend, we we sustainable like increases to time. a reasonable potential at this

that to have the XX% year. hit we're then brings XX% post to us target the buyback of buyback operations, through annual as view to know our we dividend And our XX% flywheel year-to-date payout In supplementing whatever third you the from the a to we cash net is is and for had the our adjusted a buybacks of and target XX%. third quarter, at quarter, to

fourth the expect that [ us you seasonality as pandemic, fairly of practice pay you XX% over XX% even quarter, think for averaged out say, conditions, year. softer a should years recall, may I And before given pandemic, to the in a I payout. a would ] we under the like So regular these was the X definitely

in probably periods continue where these above-average generation, to practice. have So our cash be we will that free greatly

payout, your into of above end balance don't mind, if you Lane, year? fact already for of the does the high XX%, buybacks additional stepping preclude the you're Clarification, that this

year. basis, think it I the no, be No, XX% we'll at it would look an on We does. over annual for and

it definitely So does...

is coming Piper question Sandler. Ryan Todd of The from next

diesel And us limitations, impact rough Can cetera? in pricing talk of just soft of you were indicators kind estimate quarter losses was? the markets. you're marketplace in can talk bit more any you you're there of maybe et and in there RIN were a -- the could could RVO hedging obviously margins about impact of if that from XQ weak. demand Maybe supply you a little what in talk been what what you and was then renewable maybe quite broadly about seeing through seeing help terms

this Ryan, is Sure, Eric.

kind export that the the the the drop the prices in it to It couple also freezing of that at a September there obligation. was kind RIN that have quickly the saw of start-ups news pretty out was the anticipation at in U.S. news we now of end there you was October. would drop, of really, more, drop delayed. year and on that its into big was think that the going with stare exports Russia been to as And that I force it therefore, be of

in lag caused of see of prices. all carried there's the The [ the obviously, and But think that's seeing. what of this that to our come of catch of since on RINs market have up. we're in Fat So end continue cleaned a in loss margin prices into that the is the as drop drop a have right since kind quarter. quarter continue of prices the we'll through the to combination fat to beginning really precipitous of with fourth I ] news that up because through, there carry But that the spot the back really fat real The adjusted overall, credit kind is quarter. off. at fourth spa but started prices margin kind

fourth to You see really kind being of profitability of here that all a the in quarter. return

what that's the going we see So in on market. really RD

switching that the quarter PADD quite relative the into maybe think X, quarter. early of it across Okay. third X a refineries side, conversions right strong talk on refining from of pieces part basis moving the there? about -- was market terms now. transitioned in and And off with Can There's the operations the a have on country kind that really we of across then as overall seeing in you through you're of fourth your some what PADD about lot are maybe supply/demand

look the that do how for do the you about market to expect forward So do -- to next your it relative you foreseeable -- you as relatively you future? And tight there? think on operations stay how

Gary. Ryan, this is

but of our distillate the think be X on to market, with be view on PADD renewable into well that tight going I the gasoline. the market side should the supplied is coming very diesel it's

the have have the don't with used to production just that You you conversions. refinery gasoline

lot market. down, so the of when a in And refinery create to it's shortness goes one going

The next Gupta UBS. question is coming from Manav of

you of projects look and make your the in actually are lot and you very the at for through known capital a it discipline Guys, end, few funnel.

We are somewhere in October.

guys about talked be project I'm online. projects. just more already of I a You major And if yet. hit a haven't would XXXX has quick mean, coker wondering then come

So should project, a be the generally quick versus I where X more can hit which when projects on for year X to think we look doing XXXX, years? mega at you could go for

This Lane. is

-- to I drill -- are of series a small there'll do would going sort look look We And projects. on of lower you So strategic project can like refining our when to cycle for further down agree the be capital. nature to then the produce. But refining those, with look we of $X a between of certainly a -- instead what's and a coker shorter big be to cost projects types we'll cash and for? what of spend you projects type when you, billion we of year way I still at the we somewhere believe they billion that's $X.X side,

at of to projects very a our reliability fuels. be We'd carbon on for really in like renewable FID FID And us like and to intensity about talk ability improve to said, them. we're our as little and then, course, of projects. about closer line its of our before we also to careful We the communication like also terms drop hold or we you

Perfect.

follow-up. a quick Just

have some on relief We side. seen sanction the Venezuelan

that buying over from ramp Chevron they indications up You had Chevron and before that were even there. giving been the could

of us next X market the come volume -- probably years? So volumes incremental can side could in to what or you like kind from help Venezuelan the X understand

Gary. this Yes, is

Venezuela, Far lifting look, of So of Coast. East. if to barrels that But volume the exports going the Gulf its make most you way potential day has is in to with sanctions, a the XXX,XXX the of to there's about U.S. it

JPMorgan. John from The is next question of Royall coming

remind light lights have in So coastal we've much talked versus they've heavies significantly. versus us how pretty up tightened your and Can you you heavy run about mediums? flexibility system dips how to

John, this Greg. is

lights flex tend heavies. the more kind is both quite We to sours and when grades up What do can see you'll remember ramp back to attractive, medium we can bit. exact to those to the I percentages. when get the and don't grades down look So ramp will us conversely, the attractive we'll heavies the the heavy up a medium relative that of get you.

deck drives in those there. yet. think I be swing in to of different what XX Page be tends they actually might kind grades. -- our But us to IR between that

can about utilizations Great. beat And and talk the then you maybe in XQ.

Are You and particular, didn't out pushed I in to above high but well. ran like of any it region, anything sort getting or maybe there call just every that think It pieces quite is maintenance operations? the call the end anything moving or out out but better-than-expected you're system seems one.

going turn of don't the say we either and a is didn't sense. to that or fourth. mean you second going some might from the be where work bit you the I in I period -- on fourth a leak your little first or But done lot over it we're of Most third activity. the unique industry-wide, in second start have of always a not is quarter. the system quarter into would might turnaround

the have that high And emphasized be And should got have. a I programs we've don't obviously, the reliability a decade, for utilization. more it last, know, than we so we

expect So assets. pretty our have us of when a utilization not turnarounds level high having we're would to of you

Joe of from is Morgan question next Laetsch Stanley. The coming

side. to diesel wanted I start on the So

here. on So really but [ hit ] you cracks, talked we about so strong remains much, gasoline just which

here into was just curious the your for winter. diesel what on the I thoughts setup So

and a U.S. winter. of both and year, warmer of out were and by the kind a in level we tightness inventories Europe similar had bailed low have We last

So just for thoughts the on curious your margins. setup diesel on

Yes.

demand remains diesel are guess I up X% strong. So about our year-over-year. mentioned I diesel system very sales in

view that's we broader it had where demand year. mainly to that markets is the X% U.S. probably Our due of was the year, last last about the year-to-date down winter from is in diesel warmer and

about estimate, day we warmer a to barrels demand lost guys' diesel weather. of XXX,XXX Our due the

So inventories remain below remains the X-year good. demand average level,

you're if with So inventories, could we diesel the expect winter we into strong cracks a colderwinter. get winter and would have very heading low and strong through

And then shifting gears a little bit.

So you've talked a little bit about RD margins being pressured here.

was on states just the could in that hoping the California? I economics LCFS lower and regional into So you selling seeing touch in to you're some Coast Canada that dynamics prices of potentially we've of seen in offset other the or

absolutely the in Yes, become more growth opportunity as Oregon, RD of market. we see California the Canada Washington kind see. of opportunities. the ore We of kind and has

off XXXX. lot conferences the we fully to price our still effective doing year, They to lot of of point, obligation increase and about so are California. talk sort for product at that. that look of some announce to We still will in [ changes they're those pushed a And be the their the LCFS maximize their absolutely in going sales expect markets. they that sometime and continues next to ] workshops on -- into a California

Coast. you Do all to kind the continue access We look have to the have feedstocks. in the but we Gulf the meantime, of that. still -- again, mentioned global you being advantages -- at of on So

different us lot access so vegetable global of see gives markets to a the it advantaged go CI from And to we a markets. You oils standpoint. all capability versus continue to oils to waste have

for Gulf at kind on to to that continues the able that the the be to have So flexibility to [ in winning ] of go different formula producer low-cost markets you just look Coast, being RD Space.

is Mehta question of coming Neil from Goldman Sachs. next The

the is question couple since to you a as -- CEO. you just it's is first job Lane, months for of stepped been

you've long would a observations, perspective the big for very and recognizing Just haven't far. priorities key about of early and observations it. as steady the on time, talked thus has early consistent leader been a your call that new part love here the But and on the of really been we strategic strategy organization

[indiscernible] years, been great. couple of a -- it's but I'm Neil. been just

You from team an very successful always remember, been beginning really mentioned, integral his the it's was of I [indiscernible] really one. you've part CEO to got Joe's of a

maybe that was year a my little a for it's know whole speaking, So bit say maybe on the strategy thumb put I'd real differently, little are there I is the others. maybe do our and to issues it Obviously, But that. bit can because like things a respond that from have to it I'm -- successful scale largely trying don't this and at same plans any deviate successful. But business and world looks change currently I least world I we a did the accordingly. ago. the life looks unweighted

is much pretty unchanged. outlook our So

see the consistency. definitely -- that's we Now

-- is in part of business, it's very The second but it's -- you can is always your -- earnings ethanol. volatility a it's a question smaller create

are Just you're we -- -- what you curious outlook mid-cycle that and it? as about think for your away business on how far from

year lower gas had prices. corn natural with Yes. good this year The low and prices a ethanol obviously has

I the higher higher ethanol Again, mid-cycle steady back opportunity for business. would a capability we but have of the say, call would is been, than So not would kind I say, margins actually what really always historically, it's strong. than been in mid-cycle. But world. fairly ethanol of the that U.S. exceptionally XX% markets looking are this of growth do low-carbon is other of here still We see a ethanol the drumbeat in the opportunity some and export we the biggest It's

world, in blending. this its lowering footprint carbon see interest And so by its the we ethanol increasing

overnight. almost an then other blending. EXX in to into We're seeing of country starting look solvents There's and interest as to chemicals a EXX a And feedstock lot at next become going has about that paints. year. Canada, incremental ethanol So talk and are countries there's ethanol that

much And of control obviously, And ag obviously, see very a But that the U.S. margin will that ultimately. in so still for keep on can one I globally depends opportunities I think think weather, we is big of no I mean, then so I a strong a that. us environment. mean, good lot ethanol country.

lot a grow capability have corn. of We a of lot to

think long And holds that up, so a as got ethanol I outlook. has then as good

The is from of Scotiabank. next question Cheng coming Paul

quick hopefully, Two, question. the

Gary. at Lane branding why either is like maybe really First, now is good. [indiscernible] economic or for Look

any color turnaround to that the last percentage lighter, about going that be the that a going how's the year, cycle the you -- the quarter third With whatever the of to and increase And whether will us the going at looking year you after what compared to is quarter fourth I next if year? heavier system, use? what next result secondly, gray the wind industry whether this look think also? same, you branding is want [ is catch if to level that your year, as also incremental to those supply less year up -- And for cycle have continue you to we're give catch-up the quarter the the is for over this you next year versus or a gasoline that ] can want you see normal like is comparison into of

that gasoline was the Is does pool first you were understand gasoline. if much how as So to I the Paul? you RVP go higher well correctly, really what asking,

brand very grade, more assume very but you that allow looks is I economic the light the you more every than the system given mean for wind And to [ economic go and will obviously, strict branding, flexibility it grade, also when active have also. it we the late into it's winter like to the or you ] that with I actually the see Yes. that branding. of year that

Greg. is this Paul, Yes,

So right. you're

definitely of you to and the on It You to XX% into the looks that a primarily it amount put of ring now depending higher attractive. the then in ranges has does one the And component more the right in that [indiscernible] butane you're blend blend octane extent it's which the increase you lower of region gasoline. pool, the change butane that that the specs, than into pretty range. to right octane X% those allow

ahead. go Please Sorry.

we I question a or real -- turnaround your for of turnarounds. give you turnaround that a think it just while same was was industry No, policy around behavior. our outlook answer I We on have don't any the going sort to

So.

back that economic, it into because tends is of, hand, if And not more, is the on other answer. to can kind just -- earlier brand question more about go the but say, Any when I it great right now. great gasoline

X accident So to going the to be or that how in years here. I'm your trying thinking your impacting understand

to back how Obviously, cheap. I much of always think blending. And times if think that require butane a would might And relatively to economic of lot try but understand, reformulated besides we that gasoline butane. produced they specifications signals near to sort and are the less I get to -- Paul, at compares gasoline look I determine full, is [indiscernible], grade, XX% there specs are would you the you you we finished other butane mean hit RVP. hit, then in in winter and

it's mean, fair... I so a And

Cowen. Gabelman from coming Jason TD The next of question is

the pay going I the forward bring some or the going think moving what dividend essentially out of follow-up. cash of of buyback kind you're uses have should majority cash the future. like Is that cash, the a to back And of payout market returning think in is of seems excess help go the say. forward? has excess how first beyond It ratio. X/X XX% buyback to to majority maybe know a cash. color I you potential future buyback, cash to I should foreseeable cash I all around about could of some And that of via for the return of towards wanted or returns be I a excess that XX% that And post value we Valero it dividends of

to Look Jason, we directionally some [ still cash obviously -- but ] this sustaining have is to correct, Lane. our asset. our goes of

So that's we're to. something that committed

strategic dividend. this done, all then we cash $X.X that's sure and potential, maintain that billion to make we want market capital to a, can stay we we buybacks. we are a the we billion So in had the conditions earnings excess do will all our assets the And -- right in generate that to the believe with of still we posture $X we're, sort earnings the go that have of second, always

about if chems, valuations peers doesn't on future in strategic larger Navigator at stock step-out to taking one like opportunities, at kind recently? my up well carbon relative All held and acquire of M&A use know second those relative to other We've Pipeline you with you your are potential low using right. your companies. Valero could use potential your and potential expand to Great. areas have typically of a the to into looking and seen strategic some think on equity is given some I opportunities? growth buy And what's outlook. fuels, of closer refiners growth the look And equity general down pretty equity don't other up But come comped Valero like the have I trades. going where given

again. our innovation all in I This an I alluded lines pretty all And a ethanol, also on constantly have how to looking it, have in these business group We're would diesel. at looking a group, else. going footprint that's is the we at footprint, we how we're we we have Lane earlier. and we And can say careful leverage big table. but and very is we the on Everything always announce terms are we it existing renewable talk things. footprint of opportunities that how look also our and big everything we're at that which, about looking obviously, at bolt entire

as a to But things world In to terms these all obviously, we'll how just think evolves, that finance when of go we of our we best the matter finance way come we something. with investment have through it, process. gated up it's of the sort --

Wells coming from is question Roger next Read The of Fargo.

up CITGO to If is of think on Mr. acquisitions, beginning question year. about Gabelman's latest [ Maybe says ] the there. next news to Yes. we lock Okha on be follow going potentially

any curious just footprint greater kind you possibility. refining a about how as within of think So

So Roger, this is Lane.

in to industry That somewhat to back circa looks XXXX. when know That's were base going consolidator we of XXXX. like you sort acquisition a was our big the today. our history, as So became it really our major last

buy probably something always to it. the our something merge get out think bought XXXX well system anything we get we everything reason. mean or we since any and there like all said, we costs and take on analyze And understand to everything on that I with as always we would it haven't associated So and operator it any within -- I refining assets. as

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the Yes. I'd imagine data.

that, compete everything on to with Clear Roger. They buyback, including else, got right? So.

be going Right, room is interesting minimum. have right. to mean I to a data No. at the

question kind move, the I of production sort industry? have whether a downside downward was of fuel should the strong on I in we the not the diesel feedstock an a lot Or kind this you and of a and seen some on QX. 'XX follow-up But curious that it's like to the side. but decline adjusting read-throughs DX moves more say, current part the just early numbers risk if any DX, or latter and cause the of all coming versus the there is reflects volume on part in RINs renewable of situation? is issues. saw sort of that of to from less decline looks of QX It obviously mandate given going what I RINs of Second other some and of We've more market increasing things unrelated, renewable have, or on downward or

Yes.

I is EPA pressure said obligation under rule. ] this I be especially their raise increased to DX at not talk some that production, the think point mentioned in oncoming before, as set kind did has about there's rates, artus the last the projects always [ constant of going DX since

and a I though, think were exports, in is combined like which that that of kind kind then they with quarter RINs with rush, I going to announcement think, look there that of we evaporated. sell is of a this to So Russian -- kind that with narrative, ban quickly to me the combine rush third

[ biodiesel of observed, more. like And a that we've now. oil more negative of view a So to the see could lower of and was was temporary that always oil said kind is recovered play We going and also of think, veg CI you've a DX have there's, even fat one adjusted. I it's advantageous. to drop more kind the ] that always waste be is going the since prices things RD That's

values, still platform. credit advantage the lower So even at we're these

the into that will We where hard is which of exactly go as a going you're to So takes continue Canada a tell see into to set. lot grow. on, It's RIN before, no away obligations grow, as SAP we'll where doubt to we to project exposure for come R&D that's obviously, continue that obviously There's then going this and market. you diversify talked outlet, a to go. big R&D us, you different also XXXX, have do see already

go to and and also And Nordic so for that some doesn't grades diesel reason, that work, then Arctic again, if SAP countries -- meets product and Canada.

and still the cost markets RINs be that. So can and -- minimize impact And strategy there's pressure the going always that the been continued with the no we're our on a but for to platform, DX from DX a our then advantaged CI there's that standpoint. doubt both there's other has of most you

I appreciate that always. coastal advantage as

from Our Matthew last Tudor, question for of Blair Holt. Pickering, today coming is

to the DGD back to on margin? from able QX, R&D EBITDA the $X.XX margins Circling the to quantify gallon in reported are fire you impact

we give kind it I of wasn't that just No, at detail. say usually don't that. [indiscernible] would large,

from far impact this QX? And about looking product the of so Sounds negative on and exports do Mexico a imports good. in QX country? could from refined you And product to into days talk couple into expect you're announcement your you then refining that the side, restrict any

you fourth and America handle the Latin the And then quarter, did barrels historic to if at in I'll Walsh volumes XX% first at we Rich based of XXX they of XX% on day, our a typical as into part to about we quarter. a Yes, exports, to the Based Yes, [ and XXX XXX,XXX export about Most those of went it look trended are in the diesel distillate, are up ] Latin second on quarter, part. the levels gasoline. the let our third take numbers, exports remaining second the up move America, line well locations. those Europe. as the of

This import aimed the actually it's on. rightly it. decree an at that's just answer On going is Rich. I'll smuggling half second issue, of this

them So trying like something you gasoline bring and a lower importing a describing are lower product getting has that's a it that that individuals in. resulting tariff, And to it in have something Mexico, like but that tariff as diesel into tariff.

So this really is focused decree on that. in

and properly our and it. we're we're full all the of products, for gasoline Valero, tariff and importing proper paying For

then and it's of suspect. also and comes system, own meet out our all all high-quality [ fuel ] -- our of So

the have we a So lot authorities. our of interaction Mexican of operation. legitimacy with aware of They're the

expect initiative be to don't so And an for we issue this us.

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

again, on feel Thanks, Thanks if everyone, have free contact the IR as day. always, you to Donna. further I appreciate joining everyone today. us And team please a any questions, have and call. the great

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

enjoy the all your at your the ] of day. may webcast time, [ rest this lines off and lock You disconnect