Vertex Energy (VTNRQ) 9 Aug 232023 Q2 Earnings call transcript

Good morning, and welcome to the Vertex Energy Second Quarter 2023 Earnings Conference Call. All participants will be in listen-only mode. [Operator Instructions] After today's presentation there will be an opportunity to ask question. [Operator Instructions] Please note this event is being recorded.

I would now like to turn the conference over to John Ragozzino, Investor Relations. ahead. go Please

morning, XXXX Good to Energy’s Vertex Thank conference and call. quarter results second you. welcome

On today Officer, Financial Commercial Officer, Strategy the Cowart; Alvaro Officer, Chris Ben call Officer, Carlson; are Doug Chairman Haugh. Chief and Operating Ruiz; James Chief CEO, Rhame; Chief and Chief

I remind outside their by nature management’s uncertain and you commentary questions control. responses to which want today’s forward-looking conference statements, the to of company’s on call that and may include are

expectations statements and materially. forward-looking based are may management’s current actual these differ beliefs, Although, on results

to For latest risk a Factors discussion factors filings that of Energy’s please SEC. some and annual of could the cause refer the actual differ, Vertex with Risk the to quarterly section of results

financial issued on press measures in the Additionally, today. call discussed reconciliations please note that non-GAAP can our release you find historical of the

strategy will by questions. call from review Chris Rhame Today’s Cowart, Ben with review prepared line the from remarks, a an will of Doug Carlson begin followed open review for we operational by commercial the conclusion of and by from followed Haugh. these financial At James remarks our

I that, turn With Ben. over the to will call

Thank quarter refining John, diesel XXXX the the during call shifts and second profitability at with impacted us facility to startup good today. joining facility. you, those in expenses with margins on renewable combined market associated of morning our Mobile the

on primary volatility refined of factor and the several the conditions RD for facility financial our attributed While limiting financial products. startup fuels affected for associated optimization with market quarter, factors results the performance of the and to expected is

the will renewable transition energy team for is accomplish focused company, help conditions. changing principles, on integrated, throughout the believe we on fuels company. centered in an vertically call. which has detail as profitability quality, three strategic in Without Vertex pathways This our to key elaborate us greater ever creating built groundwork strategy is a that on laying end broader goals that or maximize performance compromising safety been To our market our goal can these

crucial our over opportunities core First, the origination have Chief value fee here are decades full more to capturing in progress Officer, developed marketing Haugh strategy Vertex significant Commercial will are Doug several made address on than Advancements strategy. we along and has These commercial recently call our as competencies that today. and the product chain.

Second, continued operational of of and operations scale the forward. The smooth our vision consistency continue to excellence reliability going and facilities strategic in provides to to required the attention the form visibility on business reliable our and execute safety.

which will Operating Our cover operational Rhame well, Chief team Officer exceptionally James continues shortly. perform to

capital Third, efficiency.

the the through management improvement on as discuss. focus efficient Chief capital Financial key use Our of continued business priority a risk remain Carlson, grow, to for which our continue sheet and Officer, Chris we balance will strategies enhanced

as and leverage develop Vertex the on today ahead. accomplishments a Going expertise we for view our commitment continue much and our forward providing execute will with the path clear to of an future larger with stakeholders to increasingly of vision we build the

update an Chief now provide I'd James our over on who to With to that, call during Officer, like Rhame, the our Operating quarter. operations the hand will

begin Good report on safety morning, with environmental I'll performance. health, Thank you, Ben. our everyone. a and brief

recorded zero XXXX of and entire with incidents quarter a clean across OSHA environmental of quarter recordables was zero second company. noncompliance The the

well an during to commend people excellence as team in as zero environment our the extremely Additionally, busy period. protecting events. our for continued want process Mobile their to saw I safety commitment

of during taking executed a successful quarter the utilization. Marrero full capacity which in the budgeted Marrero Since rebuild outage. second a the had outage, the the evaporator has during turnaround we exceeded

quarter, navigated potential several mitigating Mobile including our impacts conventional at during and challenges the team failure further day-to-day Our to supply business. conventional fuels equipment successfully the operation facility disruptions,

day or our stated team's feedstock per volumes at pipeline throughput in operating throughput conventional attributed This strength capacity. quarter procure Second XXX% Mobile despite to conventional to XX,XXX of barrels ability the outages. averaged is refinery

barrel per OpEx by the unit for the This slightly our feedstock cost effort repair the associated of incremental pumps, with was barrel. renewable of unit. quarter well second the largely Direct the with at above diesel as was the driven reengineering $X.XX initial per startup RD sequence associated expectations as additional

Our gasoline, accounted product of during and jet quarter finished as XX% products such fuel XXXX. total yield diesel for second the our

yield renewable accurate profile going With of an diesel the behind representation of expected believe we conversion this the forward. project completion the now profile us, that yield is

On our reported was a fuels $X.XX, On conventional driven a rate quarter fuels gross barrel our a erosion gross basis, per the reflecting fuels factors. per barrel barrel. a the The our during was per capture margin was margin of of by quarter $X.XX combination fuel during combined basis, in only per XX%. gross margin barrel several

due quarter compressed were second First, first compared approximately spread. refining to an in margins the quarter drop crack XX%

barrel our position. of during our quarter prices Second, inventory the in impacted per reduction approximately $X crude

yields impacts to RD operational downtime startup. encountered refinery base due the Third, the and unit's

feedstock Regarding the $XX unit costs occurred there in were to fixed associated the pumping devaluation with most of the These associated and with all margin startup, conversion, prior onetime RD feedstock million systems downgrade, RD which getting cost. intermediated. that unit was successfully cost costs the included

after site conversion along the targeted on one schedule. status the XX Renewable acquisition we for and runs, just curve. and the unit rates. reliability phase Vertex stable achieving of and full RD at performance acquisition observed throughput within May Since have it the fourteen initial rate safety, Diesel XXth commencing on-spec during months production after production initial test our facility The the of operating cost pace months was the and closed, industry achieved set the

call now the following continue us the full the update for we financial on by I of to pathways the over. and upon unlock of we approvable alternate unit which the Financial intensity, the are Carlson, elaborate hand Haugh pursuit operate, credits Doug which Chris will whom to Officer, through allows As value optimizing to Chief asset, to our will LCFS feedstocks improve carbon focused improving

and to joining James, those us today. the on you, welcome Thank call

million the three $X.XX $XX or reported share months per or June a a quarter XXXX, share this loss expense of million recent GAAP noncash of $X.XX For versus Included quarter's loss the is attributable to note exchange amount second shareholders per Vertex shareholders of ended we loss convertible attributable $XX.X to in the net in common XXth, net a a in the onetime million in reflects XXXX. basis net executed interest on $XX transaction June. which common

adjusted quarter of RD well were Adjusted in the impact EBITDA facility costs refined weakness EBITDA with the capital of for as startup of and our incremental quarter. and as period. associated $XX.X with line repair EBITDA margins for an in prior product the million The million, loss quarter the XXXX issued second prior combination of a the of $XX.X expenditures during reported guidance on year We X. in $XX.X reflects the the income XXXX second versus our May loss million quarter Total

times June the trailing of had and of $XXX.X cash XXXX, Vertex the million Turning $XX.X balance debt including sheet, at million outstanding XXXX, of $XX.X including of million to XX-month total end at restricted the a million the versus as total debt to XX, $XXX.X quarter. prior company net of XX, X.X lease implying net XXXX. cash as of second of of of had EBITDA equivalents obligations quarter June adjusted the ratio the end

a the had refining materially experienced profitability from pricing market in quarter, during prices negative business XQ. conventional the earlier impact improved the shifts on lows in of the have While

barrel The per in Gulf Coast of as X-X-X XQ $XX of lows from end crack materially per $XX.XX the to improved July. over barrel spread has of approximately the

Jet as for benchmark market substantially, has Additionally, lows recovered refined from XQ pricing the products of such XX% in A XXXX. outside improving witnessed also the

capital the on obligations of the balance We remainder As liquidity our current for remain upgrading our to a satisfy capital plan remains overall result, sheet. of adequate focused situation efficiency XXXX. our near-term and

equity the on conversion drive to convertible quarter, our $X million principal During interest million aggregate approximately shares to maturity. in stock. of for we expected cash common for upon expense of remove executed longer This meet notes million the annual and X.XX% the is successfully XX.X need obligation approximately term $XX.X cash second of in cashless savings an of our

Refinancing top on term debt outstanding million with expires term-loan as this capital consistent of on October efficient, our in more maintaining refinancing clause Xst of financial this Keeping maintain prohibition an strategy. expensive of year, on view opportunistic XX.X balance in well and as the a prepayment less loan efficiency. our longer debt notes of which our strategic our on sources focus of million term capital convertible the sheet remaining remains priority we with mind the $XXX

product future of as than now profitability profile Mobile far lower third the and the it the specific quarter hydrocracker longer expected now falls a forecasting XX% complexity capture complete to tool our renewable will production the Looking of therefore to guidance operations successful less conversion of facility, with our provide expected for and of considering refining benchmark expected current We the useful diesel on of within believe is our XXXX, no composition. rates. product conventional less yield

XXXX, day. be barrels conventional total per and at we quarter third between the XX,XXX anticipate volumes For to throughput Mobile XX,XXX

million. diesel in such intermediate XX% Our finished as be a third be as expected products expenditures to BGO. the such between million to for to fuel capital $X.XX XX% to quarter balance gasoline, products total yield barrel of conventional and $XX and $X.XX expected to per $XX expected be and anticipate comprised OpEx of is between products the is we jet to for with quarter other

Chief call to now Haugh. turn the would Doug to Officer, I Commercial like

Thank you, Chris, and good morning.

are target, we've shifted of we at unit to achieved accelerating Now commercial and focus that and proven supply of have yields run multi-feedstock to schedule than RD deployment the production sales better quickly the strategy. production our designated with our rates that

new we valuable operational acceptable into range facility. to the rates conversion two originally rates, of demonstrated plan insight throughput the a wider had optimization One, accelerating providing We factors. through of this than are the has stability anticipated over primarily at

conditions. RD soybean currently from unattractive the prevailing are oil economics market of RBD Two, producing under

a in While operations canola RBD unit from capable, include feedstock eight crude anticipated under our unit through processed our feedstock a With [ph], the operations Corn our work in or period initial the blends range. break process soy, introduce are advanced and longer utilizing and through Oil talo These had degummed different approval weeks. [ph], streamline RD while six multi-feedstock to engineering of we and Distillers DCO tolling we stabilize into combination period. a and feedstock diligent this were teams, to initially supply last the supply our and DCO able pretreatment during nearby last week have technical blend system

quality four reason and This in assurance use and for feedstock blends approval mentioned is includes supplier The we each along just process critical RD unit. must our the not steps through through becomes chain. and control origination supply run run types approved is step I each at quality feedstock different point the it eight because robust before process and the

place, I seeds in protect significant we've These quarter. specifically and a consisting fine longer diligence technical by want catalyst's percentage canola schedule to a it included we optimizing cost obtained team RDT. key talo degummed these feedstock of [ph], Mobile this maintaining required is advancing our work our term. the attractively priced it's feeds and diet our supplies priority staff to Mobile lower while and need of for With quality thank for feedstock approvals laboratory and of feedstock crude, the this in soy, and safely do will with of the remainder hard quarter be in months for to the commercial blends engineering of the DCO life site a for trading our

of market these Yuko with the in supplies optimization combination term feedstock build of is and plus term optimization scaling and fat lower cover agricultural they and development crops. alternative team a efforts, year longer greases feedstock produced from longer developing, development on supply cost the while of lower sourcing of soils Vertex history oils our parallel and feedstocks. builds CI This current and of alternatives sourcing In near-term other XX

required provides blends to injection prior the day in tankage barrels refinery storage to enable provides tank tanks by us our family and unit. as the the feed logistics in support UPA. of each Mobile needed the that capacity dedicated To of optimize This these have necessary the XXX,XXX we development infrastructure and feedstock also capacity for blend that pipeline efforts, final RD to and optimization feedstocks

with capacity, many us and using feedstock the of mix and truck, capability Our logistics, to system a blending supply the provides that optimize a with storage supply of multi-feedstock and our alternative tanks combination rail feedstocks needed strategy requires. dedicated barge flexibility

Coast with supply RD In added of addition, utilized storage the North to deepwater we as load feedstock for vessels to system, products America. to West supply terminal our capacity have

to loading where first With rapid deepwater to our Blakeley piped terminal, these storage performed XXX,XXX for our rates that piped easily directly storage dock. and to it ensure additions, vessel freight we deepwater barrels maximize eliminate unnecessary added month we together We of time demurrage loaded vessels. our in dockside or that unit last cost and is system vessel, volumes shipment the minimized minimizes to Island manifolded for each more gallon. now from RD can turn well our additional have RD This the per directly which loading with our delay

In available closing, feedstock optimize supply allowing engineering for demonstrating the supply margins. safety us build during that and advance that a we a can just our operation obtaining us advanced schedule with safely solid allows operations excellent team hectic like this This operational for startup to an of would work results I system upon and to thank commissioning to is period. teams and and

plans key of starts us safe we're so a operations Vertex, for priority conditions. to delivering ability advancing all grateful the team to While for are those and those and reliable do with at the

your and from remarks final Ben. today. We you following to taking time questions Thank look some attention forward for

you, Doug. Thank

project on conversion Over the to completing the past owed refinery project. biggest on focus successfully has Vertex. of transitioning We in Mobile target we our our the the XX-year market executing history of diesel development the knew renewable deliver year, the and to it been

and the have laid As the have Doug assets. we out, team

shape positioned since expertise, operational the strategy to close our Mobile the refinery. has the of taking acquisition capability we're with the that of have been expanded We a execute and well team's

and We following are publishing in plan forward are five-year approval. drafting XXXX looking currently this and board our to finalization

on to believe of made do management. We sheet we've this will in to risk exciting. and and is know I build a to to shareholder we lot pursue progress For have balance now, date as in we achievements marketing, stated which of terms the call, work beginning of value. greatest our areas the we The improvement date opportunity of translating

are we always, allows As us grateful the that [ph]. continue support shareholder for to

line Operator? the open will we for that, With questions.

Instructions] [Operator Noah Please is with The Kaye first go Oppenheimer. question from ahead.

Thanks taking morning. questions. the for Good

morning, Good Noah.

new you understand you on the the job guidance? around and other prepared in hearing we remarks as point the alluding off You go, help you should think back little product the the know, to we at some that's the reliability but get our normal us nice they Mobile I in mean a here very I right, can out given rate based where logic up it those can I going throughput can forward sell So is look some in finer the think half? side? of just go quarter and bit the us price, to put not the here third clearly is I capture and providing slate, Chris this you because bearings want but margins on of a give your from just directional where think were encouraging. on benchmark

That's you. question, thank Noah, good a

seeing noted second and see percentages saw quarter third to as margins of perspective. of as from in we're out what we quarter. especially as going a refinery, in going what kind present So over I far yield I the would we're the that's say improved And the we're what yes, to going definitely forward, yield of the

RBD to try more a get up the doing of sourcing on Okay. work of run the we production. on of kind clarity here. Clearly RD you're Maybe into alternative a follow line. I economics can feedstock having to wouldn't around the try little reality lot

generating everything given to expect in the scale? renewable you production said, we profitably diesel should company Just when start

we're today for mix outlined to think that we going optimize Well, quarter. the this I

along this just versus similar spreads to quarter environment mix, with quarter any improved last crack margin has the there's on right. think feedstock I

produced should of this So looks to I the like think the And by the looks sort margin from we the quarter that's we all encouraged and near-term, environment commissioned be It that. bottom, speak unit positive. the out case. at

in of different a to pathways to understand, the get to I to us got diesel mean, you've feedstock want just production get of see you the I I little at for volumes. of here clear renewable back a least understand have RBD? you guiding need Sorry, sort they bit least year peers a half help that. not at steps the approved you production alternative can maybe take blends, using and actually to whether pathway better that materially but or to increase answer

is right. those I this to, quarter pathway main think going mean the Yes, getting focus that, now approvals yes we're is I

So to enough we've approvals have so now. LCFS, the each that's feeds and to focus to actually of the for run got right get those quantities

the are wider rates which anticipated, I conversion we based what units can is be to the may but than going the production on run is than James margin, with good speak rates with we more And of good. be to operating stable available found can, Our range right. clearly which

So higher we're margin available. there's at unit the not forced to if production no run rates

what that's So four on production our time be do on exploring. I that yet. we're providing with we're unit throughput going of the make yet, not expect haven't weeks to That's RD that but we've we're belt hope to commitment quarters, just that done similar -- what to why under able guidance conventional. in now right not to I we

I decreasing half, profile for guess, the sneak inventories. how just on one we balance some then in, last could be if managing Thanks. one assume there'll cash be should the I the sheet helpful. I thinking That's and back about generation focus

can cash guide capital expand potential have for the sheet liquidity. if need speak XQ. you You management, generation you in and sources your to additional the some Maybe do CapEx balance here to

Yes. Again, good question, though.

put capital, side RD intermediation quarter, conventional day-to-day side, agreement also tools we've the intermediation agreement in as then working everybody the for the business. last and being an of think the another the months, in recent one place XX on I knows, for

In And majority retired for X. addition, million $XXX of Phase there. bond we we're quarter, on ahead was as out you convertible the CapEx the last heard that

kind in to as a quarter and into great So expected spend we of three to us is heading refinance position of in put quarter. which down, all out fourth business next go first look two the to to the overall quarters, our forward CapEx look and really

Okay, great. the questions. taking Thanks very much for

go The is of Hallum. Eric next Stine question Please Craig from ahead.

morning, Good everyone.

Good morning.

that for those morning. sticking matter necessarily feedstocks then diesel, mentioned the are with eight clear, doesn't LCFS if that know just get don't can know to Good maybe, is approval renewable I or pathways, just be idea those CI so in you you until you Hey CI an this or process? just a approved the And to still the of but soybean? score how give I would blended compare intensity carbon it's

scores can't CI once themselves feedstock that our hope I we -- CI the on those at in the that's benchmarks. scores approved on that you are the on public improve Yes, averages of can standard terms certainly will LCFS give public of particular CI sort We those. to mean you the categories direction ascribe this time. all information pathways

to look process want yes, team, I've basis at a those right. no spread from qualifying engineering is approval they those to of Argon's for as reason on numbers to calculation a internal have to if got however hard have spoke look but you We sort those the I believe the numbers But our or wouldn't, you well. either the Greek the

it one we We know, the know for contaminating big quantities we right, feed those to can -- we sure -- know and that particular the control make of meets specs process. feed. poisoning it. our fear of that because thing we've is catalyst, feedstock commercial It get we've actually then your have through Okay right. workable, obtained that's your which to have to is engineered a It's first type quality goes run So

and and keep So types. we've safeguards these then that approval make you each place through got these each each run sure we origins to of that know on of these, rigorous in those process of

to team keep the up that at So pace. that's right on the now treadmill is

us to that feedstocks time we that the because between couple that curves many presented to blends quarters that is don't got and RD been at our margin we of be which to in the is sure going operationally in and those unit terms prepared additional make advantaged make through forward sure optimize. we've the the gets the configuration The are done we've fully those to with of we given got their engineering to both know We've in lab any get got can all next to that blends. has pipeline infrastructure, qualify goal that the work the environment infrastructure cost, of and so all

So very on safely really and opportunity and we presents particular good a that that's market, know into we do our feedstock blend can now promptly, act that's get work with going to can a for very, reliably, the that buying really that feedstocks. right

access I've you availability the And scores, mean, comes as but that I more getting of what guess I forward. at of I and it. was various Got see be that's obviously more understood, got I CI a more as I in going guess to might to this be determined mix that

I'll that. at So I leave guess it

last maybe then know You me. from one

different or Just obviously the the I'm production is and the a spread after maybe it to it's end? crack rate what you're and or forward guess the any what into quarterly about are two falling way Because capture is talk I, like a on those a week anymore, some this, thoughts it's going X-X-X quarter give going transparency you lines? the outside I truly that when but X-X-X maybe envisioning metrics whether changing just and update, of understandable, quarter along that anything those you does not no do lot give so that your looking

crude enough, rate should miss? be be that did the yield to will we guidance what to ranges That's you within give doing strips the so in commercially a trying for this hope look we're as plus available that, what of and to you what available kind capital enough is structure is yield it. or of I versus able and so market you insight we giving they're really and and current way what Yes, more go allow our forward we're

Yes.

LLS crew That BGO think yes, that and probably our benchmarking we're LLS Coast, posting to CBOB, Coast good it's I it. yes, off posting, Gulf covers Gulf add [ph] ULSD [ph].

the take Okay, rest I'll offline.

of everything most with the were have. service. X-X-X, That's what than to better be of cracker Anything trying out it better, else, especially should with we we do header

thank you. Okay,

H.C. The Please ahead. go of next question is Wainwright. from Amit Dayal

morning Good guys. you. Thank

associated the repairs, repairs anticipated the and on this into in million costs that with how incurred $XX and of actually that, Just much was much so that the went like how XQ?

Yes.

I startup what what So which was of was cost, was plan put delayed original I course the when described further the from pump. our what damaged we

straight And So expensive what a of in about startup as to material what work. cost, just the cost with the third it. was team the That of that, to none do we was was was pumping downgraded it about And to system was startup repair brought and and had required, restarted. and our third another of plan. that also that especially material we get

through initial had team plan that startup adjust, be the phase. and way make the we able to get we for safely not commissioning did the sure to However,

And then unit the make during knew we the get in of inventory way did start case in four. time to evaluation we get this of of -- the did that to devaluation sure up, devaluation but front we because out a had had we feed beam we occurred

the have and just commentary some Understood, thank And of may around production. the then RD feedstock I the missed you.

feedstock our clarify, in et optimized still pathways finding most sort per we terms are given process to going XXXX cetera? on producing that's Just the at of of barrels day

to we're factors, vary of on which production be to biggest the of of going rate clear, a margin is opportunity. Oh, based couple

some to we blend error. each So up finding and optimum within down we the rate to will we're if need against then limits max want optimize unit and that rates blend to We feed very trial with. there's unit going mix the is on which the attractive that of each we ramp to very, margins course. take do and safe to each And that

the yet So it's, not we we throughput the we're on that's that why we the conventional. as but same for question providing the appreciate guidance earlier RD well, have new don't, why that's

that's, hope to hope the know we design the future do We've we it. can we're unit So understands commissioning. and that in at run past we rates, do everybody

envelope the that's with. -- it's to what's operating available Now to us optimize

will when to maybe XXXX? be or we guidance this quarter provide the in So fourth early able

each in we, comfortable done. I heading fourth we've the those then rates mean I with little at get feeds forward. quarter, our fully can look are in, certainly going on guidance got opportunity I with Yes, year, certainty but more feel system at And We know because recipes I more we'll would firmer fund point our there's run be we more much we'll what the think some that bit know going what of a have the and next forward got optimization blends. for much are to think conversion with

So we'll a actually be consistently. more buying those feeds on go forward much basis,

have rate more stable lot run right than now. our us we forecast what give will that a So

what during like one trying sell any inventory for last of in And drove this of the logic the Just to tighter quarter, didn't this we it maybe logic of into and maybe the I quarter. trying we sort that. some understand inventory business managing you if to of and bridge just on we inventory, regards are conditions? the how that trying Thank did but market inventory sold behind correctly, looks I'm more the just more side into to color it. understand sell

sell around inventory some be facility, have started to especially We feedstocks in. looking inventories if quarter that just in this building the Marrero at at did the builds has our that around QX. last during of guess end we quarter, which did quarter the at brought of other to the majority RD I clear, to you're call last discuss quarter we So last

at So that's the shift moment. that we're seeing inventory the in

is again driven the by RD So of startup. a that lot

understood. have guys. That's so Okay, much. I you Thank all

you. Thank

of The Gupta Manav is Please next question go from UBS. ahead.

guys. Hey,

capture the have you your slightly also drag a fuel a the XQ on a discounting better. to and diesel higher I capture little to those gasoline that yield products fact the in a So jet understand wanted XQ? and Was were high yield

jet. Particularly Yes.

big XQ. was difference Jet between XQ and

Okay.

I has what recovered it That's jet was jet. it thought So jet. so was has diesel. and But

again, these big have but if I were guidance, don't jet basically want right? and was those gasoline, reversed, a trading it So two at to the discount

wouldn't Yes, a quarter. been to position more discount that prior discount gasoline, just a it's in as say versus had I their gasoline the to traditional

a the gasoline distillates big entirely two translates realignment adjustment, how and for a versus going the Not So rate into you that anticipated seasonal gasoline. a in hitting impacts through of with us certainly second season quarter driving on in but its one capture way. saw

to So at your on particularly given against portion is understanding production. I which think actual one of a an a from jet the two rate that's a capture why how much substantial more we're yields gross trying our make view to level we to move of of

That's all needed. much. you so Thank I Okay.

you, Manav. Thank

next is ahead. Stifel. Brian go of question Please from The Butler

Good morning. my taking for questions. Thanks

Brian. Hi

Brian. Hi

profitable? it Just current conventional on at the conventional prices the break again, is Is past even?

Yes, yes. yes,

be current I the run were is we what's basis. so a be because, the to if So you quarter yes, on for prices expectation to I on would a just this possible. your, would long-term conventional guess at be, want clear

of able manage profitability. this level You're to at some

what shale to got in And here the is we products really and that's that's do capturing us got, we're make fence line, the years we've continue Doug within replace to of outside improve team making only Absolutely. renewables, the now backs the We've one we're across expect the improvements doing that try captured our income really as few the we've that sure are next of refinery. that mean and that getting, cracker of the yield yields way inside his is selling generation our back you the molecules moved We've within get to best things all fence. and those. we to good see renewable how but doing sure reasons the couple the net a and to now we of help coming of hotter of the facility. net that we with one inside not already of our we is the service Doug refinery us try more get diesel one is to Brian, dedicated I you see it's

what achieve It's opportunities for that's there's optimization margin we inside there. refinery the right? market that's Yes, in commercially and all of the production do can fence what opportunities we which on Two fold, can line right, capture the the yields James. and ongoing

think going market but have conventional -- quarter I commissioning just run the as different -- well. through not the second it's unit we also So and to conditions, the the

So cracks it's on the the accurate yes not, why the profitable two aren't today's facility disconnected. we're, guidance certainly. current it's we going and But is forward that's believe yield

that roughly we're didn't [ph] Let at about people positions as really third we [indiscernible], as in that's the about. what look looking originally of we've pleased The added quarter well far a production fact think really, value on day that's, us the kind side we and that added curves. conventional forward X,XXX we're me ahead anticipate as just really

every team Lot to has basis. a place. the on optimize continued of So good go forward

get there, point Okay, guessing I'm fourth and and the event? running feedstocks, diesel, or if understanding per quarter first is now then XXXX a the some is day the of on a changing you'll XXXX quarter but at correct that renewable you're my that is at barrels

for proven XXXX process quarter or at the and of we throughput conversion earlier and what the so at with unit that are running a clear, question, very, not the with targets. capacity pleased this the rates the very unit is capable time. we're at level. throughput above clear operating design the fully barrels on of performing Oh That's we've out commissioning providing to not we're yes, for be the third fourth To be day currently again, and guidance

So position we're and the work to we market hard. But long-term is you for necessary to success tell this run that. conditions don't the also do you to know pleased need unit with

the the envelope operating to find that. provides unit going and do margin the us to we're optimize optimum against that available So

quarter and right you to get score feedstock now uncertainty get the this the LCFS? sometime Does a renewable All so a diesel expectation going kind score to CI around of pushed in XXXX? from in does that that for an now get ability the fourth were to your this limit the on

-- No, in no, if that's doing as regard. that is we've fact work versus now delayed accelerated the anything we've that in that -- we're

all run score the So approved default an to those of of of seek we achieve required the on requires processes approvals. then to details pathway approval move those to each some that the submit feeds on pathway, the commercial to from guard to pathway through and got pathway we've quantities us each to run

the regulatory So backlogged at have some been phase. now as we other schedule of the get look that agencies we forward marching don't what control can they for of But all we late. can are control

sell is correct? do other your [indiscernible] already in tax And the and credits, authorization you have, right. that All you've the received for

Liens been, traded the our and approval are, eighty have steered [indiscernible] -- already then that, produced so. and filed is we we've yes,

wait feedstock on to we forward? -- as move the is then project or diesel, expansion is the hydrogen that renewable to still on continue and expected slowed solving Okay the

we right expected it's year. it all doing capital now. still around work move plan tie next it the bringing the to It's Matheson on where foundation when midyear as we We're it in. It's Yes. forward doing work into

Thank you taking my questions. very right. much for All

Thank you.

Northland. from Donovan go Thank Please you. Shafer is The of next question ahead.

the Hey, guys. Thanks for taking questions.

remarks know some this, prepared juggling already first a as kind the of you fuel that. away talked of apologies part providing miss any I So moved a of the jet big covered you've capture of question, about rate, but if did from calls, kind of I so

include I this yield categories items, LPG Your other like the piece, intermediates, DGL, that's a XX% also and think other quarter. "other" significant of

on it but and impact it all of us they jet mostly this kind So sort rate. still those the the jet a if changes jet magnitude I pretty of but a side significance quarter was had that of impact on of difference that curious in guess XX-XX held were mostly kind the of like I'm capture you the the sense can Was a in didn't other really if of give from that big there or steady big category? make or was much

a that like some And really in appreciate sense. There's out It don't not help reported. I going particular, the from then of need of prices might moving then we follow We DGL logic kind gets the great whatnot. get capture a of I probably away that product of kind lot figuring sort of public and makes to something rate. forward how think traded get public, between refineries and

going, more if I'm that like but or track estimate what than can what might would we the through is we where help you to So of us XX% think yield. look know that's wondering you other at category

Go ahead, james.

first All with right, let's start your first question.

component we was So what Top $X this healthy. during It about $XX a the was a of on devaluation to $X yield was barrel And roughly yields. the quarter. the answer still by dropped So quarter I'll Quarter crude jet barrel one was roughly saw another the across it, of impact it. it just relative to crude impact? quarter. two,

those was it all and All rate. capture a significant However the drop right. affected

So one. that's question

around Question BGO. really two was

BGO, those and do on where key which crude. let around and diesel we're index the evaluation this is you jet focused against Yes, go can your me gasoline, pricing say LLS products actually get

As BGO of piece a you It not there's to said, that is index from is draw large figure our try and publicly Donovan, structure. to to yield a big out. go

what a on it of it the we're why because has to markets do. making negative or those the the So a at not that's depending big you part time guidance ability same got bring to, bring positive

trades BGO has XX guess out. the what of is you as gas, to on XX-XX thumb, or that they so their XX-XX, Yes, thumb. I either XX-XX so our figure rule XX said either use XX of diesel. price So between it's James, diesel refineries of rule kind Everybody when versus and choice CBOB own that gas, XX

tracking So It well in recently pretty long-term. to but worked to probably some has XX-XX for moved away closer us has I a due market, the today. generally cracker some outages that's we're think recently

provide We'll can up probably to that Donovan, we to best that's you leave guidance but the you there.

that on fossil for RINs second question the my on Okay. cost side. fuel the And incur you is then

like of things, pricing, EPA's misrecorded DX of the barrel unless look showing actually went I sort a you just typically So RINs dashboard guys purchased. a QX. the RINs it's QX as I up in looks at barrel cost I $X.XX believe like looks in that from it of $X.XX it kind these to When

decline if You maybe reason. see any for those that any to But from advantageous seems first second do DX in as to to the quarter have the you quarter. option the case the pricing for

the for So guys cost to you I'm curious caused increase? what

dashboard Was you purchase a the to in on would the where the there? difference versus a of is kind than do had based past more of there change in would what see commitment between what more you obligations experienced mix sort delay for you timing have understand to you yield or I of guys there like RINs kind ETA's Just pricing the RINs, trying obliged on

I'm didn't not RINs price a locals, spot bit sure actually No, not down. that. market but in increased dashboard the by Yes, the with ETA quarter I'm that our the the has familiar how price, during go experience it the

Specifically yes. DX is

yes, you so Okay, DXs And saw a RIN is increased. it pricing? go on regional actually up that per There's regional?

like but liquid a traded no, it's right. a index, it's a No, but liquid. It's there's it's market, not not

Sure.

okay. okay, Okay,

incurring greater None So RBO right? of rates you fact, the so that run run transactions you're were up obligation spoken got with rates. those

So factor. a that's

that, understand per you driving barrel out but If for accounted you're the…

is price the something. Yes

something. sort set. a not EPA the like a this of is dashboard It's data complete or think I sampling

the that there. of might issue So just be part

questions take my you, helpful. I'll of that's bit. clarifies offline. okay, a So Thank the guys. rest That things

Thank you, Donovan.

Thank you.

[Operator Gabelman Cowen. is Instructions] Jason Please TD from The question ahead. go from next

morning good Hey, guys.

Good morning, Jason.

morning. Good

project I call just wanted of during to a that you've the to points and clarify go touched back couple far. diesel the so renewable on

in kind nameplate be under given a, would to what guess the it throughput a fully So it LCFS is asset of trying that XXXX going understand guidance of market I I'm yet day. I still run is function understand not of operational where if running dynamics and just were I a you may on? conditions? lined providing out, if, function guess position the a in or a everything like you barrels you is having you're And approval and other I'm sounds under not market was wondering was

question. Yes, the I yes for think thanks it's,

I both. think of it's a combination

soy So at obviously the the look can the run right. on you've to got, during up you see quarter, CBOB unbelievable

that that's you've kind everything whole feedstocks complex the and operational factor. when already, got Even the move soy, talked addition have trades up you're big that's using a drags of about right? skyrocketed. when parameters to So of in So we've but of that it kind off not soy,

available so. to we and to your So yes, additional run in yes, those we for the question, those all very, to of us think of so run margin would right? feedstock you're normally right not LCFS in not have were yields against there's very don't going if now, capture not costs capture place the those. obviously the you high place They're and opportunity I pathways the no, if

when if the expect my it. Got not follow And up I that past units occur? project. third-party pre-treatment know the diesel mentioned to to utilizing project renewable the unique maybe just you're discuss logistical And you've on, in of then is, should if you touch also we on yet, can some benefits the

themselves those to the would quantify If more quantify great? you. to any you're of that for Thank that market able be are difficult

through the. pretreated initial Yes, think feeds. I are of now we barges utilizing the put Yes, pretreatment have, we our first facility. as We've

that's calls, to forward hand on ready Commissioning plan feedstock looking roll utilize in earlier the for our facilities. on so one As we've month mentioned intend I partner, to that, a us. think and on the to we're by multiple do we behind is about second but

between we'll that spreads feeds spreads the from not other same benefit the the oil categories. we and base just the, that between of those being start to but crude and So the feeds described,

continue will and be So now forward. in to this going quarter us available economics those to

certainly we've quarters. a of plan part as big So described that's few the the last

So its now the think continue big to that's be benefit and, to I optimize in that blends. we going a place as

is And size two those XXXX you relative then facility how have? what units, a barrel the pretreatment of that the capacity of much their to day

units for have those They working with don't nameplate have producers. We them yet that want we. experience commercial those that will operating towards and speak they've, they're It's to the representing know capacities run. -- don't are, to where I those

the a rate. run to been X standpoint has rates these pretreatment at all the standpoint from feed portfolio our a Phase feedstock approach that from right design available our we So run at treat have capacity of

at But at this the that's that on feedstock strategy rates. for those you we those So portfolio. the that's time confirm run that's the the approach, will premise, can't PDUs

to they with about at no excited that commit can't But know to reason -- We again work we to continuing can We're not progress results. achieve we're initial with we do have been have them you what in very pleased the it. won't, they to until point. them and see going this believe positive but

do? on it. renewable expected, if above that seeing could Got generic then running would And diesel comment benefits anything on side there as a you been things logistics the you're what where plant some

Yes, I mean optionality, have I think biggest the we and benefit right, have logistical mode. optionality is we where

truck, each or we rail we before family fees of So in terms segmenting required EPA really barge we can take as between and have by capability good blend. optimization

might infrastructure the one So I in category as is lower predictable which place in whichever cost entirely arise guess. really leverage mean pursue feeds is obviously not to that all it and they we gives need just optimization the us

the that's that's So place do optimization. to infrastructure that allows us in and

buy or to that to nothing than versus the we way better now. could we it information obvious But infrastructure for But that achieve benchmarking is on the allows look a about I modeling Board? that. would know of you that simple terms going right basis otherwise there's think provide public that, think forward us we'll In

Okay, all right. Thanks for the color.

over for This I concludes now Cowart session. closing the to question-and-answer like to remarks. our Ben would conference turn

been for looking and company faced really a bounce to quarter the market of I operator, Thank third on out with back done. you, we really us It's definitely that the ahead the like bottomed on for It's see call the guess good it's and some joining thank happy quarter not the headwinds spreads. you everybody today. landmark

about of very that proud I'm our of there. and what projected and so company end the good see a lot facility commendable we're of with the monumental market we're work very accomplished to has it's and way We to the efforts been So the the been this work has and conditions year. on people team of deliver the delivery that really of the that. we positive look plan RD as pleased

all so tested the all assets the Doug second in have all infrastructure, pipelines, to all talk quarter. ship as the and been the I the deployed, the all deployed logistic that's about and the systems third-party the the tankage, want connections, mentioned, all and of been barging

undertaking. that So a big was

Our site had EH&S history. performance, safety compliance the from in its environmental accomplishment a historic a

every they opening in team teams We're to relationships that's of we're up focused in leadership, on important, around acquiring most the The thanks got the So to organization that. the place. coming feedstocks, what's new proud very We've people. day. Doug trade and because our now

is So, about the excited online. our facility market very being

positive. that's So

across been able the with second working good RD provides McCoy facilities business and capital capital that establish the working conventional business. for the that Our the business, now in quarter we've to

capital again the then system fact we us advantage forward, pivoted the all plan. Phase allowing pipeline up our the work is of and our the accelerated X feedstocks That move our pretreatment really with early. brought we we we've And our in in front spent to this middle that all of

of the we're comes where prepared. supposed to we're it So soybean ahead we good a didn't We of well we're to right prices curve. be that plan did, but when that to like and it's stay see accelerating We're thing. ahead

the million quickly, unbelievable conventional a from noteworthy that to transaction. bought as closed most took up deliver and business RD plant, done. had business look build time safely fact $XXX the this the what's in amount from cash tailwinds we and We on we of had which only refinery. the the it we've April think that, challenge the we've closed we I XXXX, build at monumental is I closed. on But

count I $XXX second mobile But into we plus of we're the capital had that's million sheet, doesn't refining quarter at asset. the a little balance when deployed look Now the takeaway. because been

the very take our and the conversion, and we to on at with. our the around on major sheet. started we've been we the balance a now We to created what focused bonds, look that. compared reduce the asset the that's value mainly business to We've now that have Between of then remaining shift conversion inventory $XXX through by working in million capital debt run the

has to we'll see served a as refinery developed people into the major across the and flow close better and as opportunity the business. as recapitalize we margins gotten platform business. our its month-by-month, really RD see our debt quarter-by-quarter, start to The get think I to our

we excited So on got the when I I'm The very can rest believe ahead. business lot, now work about can we've done. we is a look we

delivered what we on We've do. to we needed said

quarter moves that that's business plans define and can of the company It about looking this see talking do future forward I how as we're forward we means transitional. the by we the any what believe and doesn't So start to.

the the us really appreciate call to So everybody's third appreciate and to Thank and company support look I you. forward in time. we our to the quarter.

concluded. you The conference has attending today's now for Thank presentation.

disconnect. now may You