Vertex Energy (VTNRQ) 7 Nov 232023 Q3 Earnings call transcript

Thank you for holding, and welcome everyone, to the Vertex Energy, Inc.

Third Quarter 2023 Earnings Conference Call. [Operator Instructions]Thank you. I'll now turn the call over to John Ragozzino, Investor Relations. Mr. Ragozzino. ahead. go Please

morning, XXXX Good to Energy's Vertex Thank Conference and Call. Quarter Results Third you. welcome

and On nature today Officer, conference on Financial Commercial that Officer, statements, Strategy the management's Cowart; forward-looking Alvaro call Officer, Chris are Ben call Officer, company's by control. outside responses to which Carlson; may are Doug Chairman commentary Haugh.I of include Chief remind and and the today's Operating Ruiz; James uncertain want Chief CEO, Rhame; their Chief and you Chief questions to

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

discussion filings press differ, risk measures factors please with today by Ben note that call the a the latest call find section Today's to Carlson; that will to today. the the followed some call and to the Energy's results Factors SEC.Additionally, of financial Risk please actual For non-GAAP of can the open historical Ben. commercial refer of discussed from you review of quarterly review could Rhame; and questions.With prepared reconciliations issued review strategy I'll remarks a Chris our that, Haugh. these we and of remarks, the begin from during from conclusion release Doug Vertex cause for the At financial our will James Cowart; an line by turn with of operational over annual

on the Thank you, today. John, morning and call good us joining those to

to pleased are favorable quarter We a third XXXX. for report

to increased During the quarter, commodity the prior relative quarter. prices

finished variety transition million yield quarter.Our EBITDA driving improved diesel running has XX%, us the renewable alternative most continued on asset on facility products, rates hydrogen regulatory the margin diesel high-value of by the best-in-class energy the and in flexibility, one, efficient solutions, a face emerging capital of And continuing organic a elevated significant towards will able needed our as key capabilities. while demonstrated allowing supporting year, in renewable next value to sustained blends. feedstock renewable markets throughput capitalize to Phase over believe notably around continue the number these of qualify that has We Our towards facility proven to adjust energy including offers of shifts operational California.As to expansion at carbon diesel our priorities. adjusted balance for we our to volumes increasing of resulting low project, production improve in was focus two, completion X this sheet. operations team Number $XX.X yields opportunity on of transition

which the engaged balance announced, sheet, to America as and support have provided enhance strategic act are far, strategy forward develop. growth rapidly we As have to could look renewable and providing to improvement our we products transactions, and evaluate it and with formally they advisor accelerate balance potential sheet efforts.We the to updates previously pleased fuels relates our as our potential thus sustainable Bank they financial of as

the related maintaining conditions, business and who to share will changing safety, demonstrate the the on quarter. generate over on shareholders.With our call to would James to the for update I now Operating to Chief like during operations value the our our ability that, hand Officer, Rhame, provide long-term will manage an ability to financial today, with focus results team's performance, team in to quarter market the third for As operations while effectively our you response ever

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

recorded incidents was quarter OSHA entire another The environmental and recordables company. noncompliance the X across of third with quarter XXXX clean X

for of the in conventional our operations as safety surrounding extremely I'm the skillfully a crude of guidance. the barrels of with team employees against procurement of throughput the strategy to during of oil for the to you another.Our our employees, these events prioritizing continued facility higher site previous every within X focus where reflect by been day caring organization at saw of for quarter-over-quarter. process sites smooth Mobile for mitigate throughput Additionally, quarter strong per as at in as very well group at volumes previous an has time. guidance this potential and volumes quarter efficiencies busy ahead within location supply during average continue well reflect Mobile for our our as both working Great to neighbors of Strength EH&S per marine logistics values with navigating group XXX%, operations barrel $X.XX focus communities was one utilization XX,XXX all-time set Mobile and site challenges.Total the safety performance.This demonstrated a of operational our combination from of in records of the the throughput achieved of the well people gained live operations capacity dedicated continued our volumes work. performance Legacy must and as thank say OpEx their optimization our we cost per and the on for I core proud risk. job with company's as line barrel

during Our was $XX.XX. barrel margin gross the conventional quarter fuels per

quarter. quarter a the maximizing greatest such plant Our the organization.Now generating a for of on value for focus effort ahead of covers the The business. through excellence at guidance focusing in turning fuels operational very finished offered total of prior turn, and same relying value. the asset. XXXX. our continued fuels Marrero focus during facility, product described.This gasoline, fuel diesel enhanced and the the activities selection yield I'm renewable finished refinery of to create yield the facility-wide products yields whole margin our the level as the smoothly, proud and, previously Vertex's accounted diesel gross barrel renewable our on within the approach This create at unit per yields by been we is greatest of individual has the means $X.XX on fuel's to XX% value jet every of our to operated applied of reflecting variety renewable being of wide and feedstock high-value to optimization total concentrated find function third market. as This optimization on from was

volumes per development.Our of Our production and per barrels averaged demonstrating renewable strategically to renewable pathways the XX.X%, supply of a X,XXX capacity yield support reduced feedstock averaged barrels a renewable economics XX.X%. diesel utilization X,XXX day of balance total quarter throughput for third for day, product

the are local allowing a due quarter, total a be the moment, Mobile crude will per throughput to fourth to for fourth Early expected As to our the approximately in down quarter XX,XXX Chris performed day barrels highlight plan factors. in that to X the plant the outage, under the services oil was prevent since replacement transformer returned planned full rates proactively at to this electrical and executed replace main unplanned site.This the provider completion successfully of near The has an electrical outage site. power our control outage.

is quarter, will will This be deco unit peak crude Officer, month holiday outside Chief and the that planned fourth there a pit the a scheduled for now Chris stop turn will to results. periods.I the company's of furnace financial of Financial be during Additionally, scheduled. executed within next review Carlson,

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

quarter the share of Vertex the the this inventory issued common quarter fully Total income attributable adjustment For prior adjusted $XX.X is million. $X.XX per diluted valuation to versus X.Turning XXXX, to shareholders XXXX.Included of net in income third per net guidance quarter's months XX, of capital year the fully $XX.X diluted reported in $X.X for versus an ended share million third the million, quarter income million August charge million net third sheet. on XXXX common shareholders line in of to in X million reported or $X.XX September We expenditures $X.X balance period. or $XX.X our attributable EBITDA XXXX of prior of $XX in were the with

had ongoing of XXXX, net the As as of efficient the we and total sheet trailing cost proactively XX, sources and ratio around the adjusted balance net to of capital. the including in quarter of of X.Xx $XX.X cash pursuit strategy, restricted Vertex including obligations optimization versus refinancing million implying month at a of benefit and of September XXXX, debt loan company of term various equivalents, are the lease existing million prior end debt XXXX.Regarding quarter. million pathways of XX at our more $XX.X September our cash outstanding potential of analysis third XX, EBITDA had $XXX total end conducting

cleaning and uplift fuels tailwind fuels outlined benefited financial conventional to remaining million fuels the and be notes in run a up our business, of recent provided gross was improved our earlier. by the James most yields notable compounded notably, this quarter $XX.X of in conventional third continue third for pricing margin, completed We results following conventional as opportunistic for the exchange rates equity back in by transaction quarter during much outstanding, convertible to cashless June.Improved conventional pricing

a as third gasoline a in During quarter, weak limit price identified rally ahead we substantial to prices opportunity of period cracks. seasonally market the for the gasoline exposure

As day, of anticipate we XX% to per throughput as operations. gasoline as of to XX% reflecting renewable volumes throughput gasoline, XX,XXX X,XXX such a total and to diesel noted. XX% X,XXX the gasoline Mobile of of Expected balance our VGO.Turning is be XX% and fourth barrels hedged covering and between cracks our in XX,XXX fuel with to of XXXX.Looking XX% total as production conventional We fuel be operational between the conventional such Phase approximately quarter per other jet expected to capacity. we fourth day, and renewable James products yields products at XXXX, the for intermediate downtime, anticipate result, of quarter volumes diesel to X total reflecting barrels planned

to turn and to per renewable quarter total to fourth million the we who be call be is business and expenditures $X.XX XX% to $X.XX commercial, consolidated and on expected Haugh, quarter, the for Commercial to the for be on volumes on yield $XX like OpEx Doug million.I'd to Officer, basis will expected a the capital Our provide to updates anticipate is now Chief between XX%. RDs. $XX barrel

Chris. Thanks,

completed support receive and report blending mentioned, runs and to runs James LCFS DCO third was successfully are finishing completed feedstock quarter proprietary LCFS filings fourth to third required pleased each for intensity carbon will which the the also step of up next lower we're temporary to canola successfully soy, quarter and our production DCO, the values. to data increased at temporary pathways We detailed canola our and have us LCFS tallow objectives data the our we of tallow.This the with compared pathway and expand we quarter, critical run runs as year. values sufficient and rate month.We intensity X in receive production soy, credits one our complete that this default our have in As this will canola available the credit to to all volumes The default on now is of intensity our for DCO, carbon RD allow of collection for analysis, for the value at our approvals. filings Tallow, feedstocks include the our to support and the carbon of to

We quarter expect LCFS that the process complete next step in as during scheduled. the fourth to

a also were qualification delivery prove $X.X renewable been to to in complete of successfully West of noted quarter production now us earlier, running delivery margin third margins all the at the modest for logistics feedstock our has process, our our and California Coast.Vessel our to date, product only finished This not completed the RD but and James quarter. capabilities for As product diesel validating but markets loading sufficient business.The supported the profit to these million gross to during of production and and benefit and drove process. environment for appreciate several allow positive really commercial positive performance fourth critical from LCFS quarter terminal with offtake renewables since will capabilities throughout fourth logistics their times of this These credits the assets productive value collaboration West Idemitsu, delivery partner, Coast has maintains us marketing all and our of been the support. quarter financial during third across who ports to our shipments began. the production our contribute and of incredibly multiple rate We

of expansion the supply teams feedstock this was development for our renewable and of suppliers. roster continued primary our reliable procurement trading strategy Another the of focus via quarter our

feedstock bringing to We add of detailed started for origins supply our continued on in the processes regulatory testing assure and These supply for reflect processing. chain required eco sample qualification the approved suppliers.The application canola have the and suppliers tallow and considerations proprietary time these consistent money supplies begin and qualification multiple used in of investment testing includes the the DCO, and to and exchange and important for processes of collection quality and to of have soy, the by suppliers. our needed feeds information significant

value RD build new supply the strategy continued teams. opening supply, the our their trading Mobile expansion and to with months.We and trade appreciate this capabilities our of efforts as many of of our So we in marketing we part quarter and this that support bring also forward floor by logistics trading, will our

strategy. Bay continued of support and available Our truck entered logistics commercial surrounding and our the launch and refining finished the trade successfully volumes the provides with marine these Fuel markets. trading business supply.Establishing identifying both this and to Mobile a us with in business teams renewable truly fuels opportunities working capability, of sales expand now integrated most marketing attractive the margins conventional terminal trading, Marine maximize capabilities, to the the with by offers feedstock fuels our assets, on through a build-out Along Services, flows This development supply of of supply, foundation product team experts marine fueling production barge and we've sales. via Vertex profitability marine marketing, for for

our As services and marketing. marine performed in finished supported production fuel our commercial aggregation now collection support a also supporting to performance the refinery this businesses our quarter, Marrero our capabilities trading that James third-party products into integration well mentioned, is business.The build-out also production in mobile our proprietary our our Marrero of was by of and strong and both

a it our completion renewable infrastructure supply summary, quarter, quarter, our the and to remarks. commercial also products. expanding to conventional new those of build our blend, the we work marine while our closing back optimize improves netbacks continued takes market the advance third the and we our directly to milestones position while established which thanks our marketing portions activities, key blending Marrero to competitive needed needed strategy, team for distribute for of capabilities chain the fuel current and the business.Now and This capabilities fuels transportation profitably to markets.In My Ben all safely running few have in during production in extra to

we to third Thank of business of and so generating been key energy see our scalability the and strategic our We deepening aimed plan capabilities our as reliability, Throughout we coming continuous of years. and tight stakeholders. commercial can over executing blends, at assets, to deliver ahead logistics, an growing demand position of renewable for to do our vision to value strategy chain developing of the market.We California strong you, objectives long-term improvement optimizing positioning, have team building Doug. of bring and the sustainable the we the best our ahead, creating excited The for company.We're potential worked each have processes. our internal feedstock about work and and continue supply outlook growth around we marketing proactively renewable see ourselves economic trading opportunities committed driving we we our value are XXXX, quarter locations, to know the a operations transition are on how we

XXXX quarter members our business entire team for contribution. across the I their third want our conclude we relentless update. thank As to

thank for the over that, today joining Vertex the on all our call to operator call Energy.With the you of for questions. and continued like for I'd to support now I'll us Additionally, turn

first Instructions] of from Donovan with Northland question [Operator comes line Your Capital Schafer Markets. the

fuel, I a to XX% production refined jet products, this diesel, yield want at the able this -- good to get quarter higher the quarter. by gasoline, start you asking off sorry, mix high-value about were

XX% next quarter. You're guiding XX% to

it driving be that's some closer high-XX% potentially XX% to don't extended with infrastructure that if if combined we or somehow to operational Doug's continue to there it help at business, kind may know operational with you to the dynamics with -- me high-XXs? that seems the said mid to also understand of it's it if or marine forward for in -- touch of getting a on things want Before XX%. going be to and Marrero update, be had could in that that. of that you're fuels if the something And Based initiatives there's if do I something typical expect like improvement behind like sounds and guys way.I it'd you below know sort the these that saying comments, more that the

time Donovan, buying the way What floor value -- on spent yields really all the are we've to this is really the our is James. the us. from by delivered yields Thanks through are for what to on the value factory sure technical we're organization question. highest the the that focusing crudes the and the using with and make market

concentrated it's a And in there nothing and technical, and line. our really we nothing operations from fence believe team quarter and so, And and are at that supply future trading it, in is the in There's these been through this described supply effort Marrero quarters. range about through there. sustainable the we about it's straight

more the particular of it's and something or type it. yield catalyst of that sourcing lining So more thing about driving right, changes some so kind piece like things that hardware of up, like other or than

small investments, made us made -- that yields. have capital enable fruit, some improve would Donovan, we to very things have very small We some those low-hanging

achieved. However, you been in smoothly and a really throughout of huge quarter and it's from organization investment advantage focus how It's to And dial the operating that's the you been allows at not the really all. operating optimization. the have well the that's really been

it's And get fuel next a shared for about, figure for on meaningfully of than want fossil the you higher then side OpEx Okay. renewable diesel I business, the my to direct what question, guys talk you the side.

fixing in incorporated that? -- in that Does charges I stuff. the that? side, pump just of $X per maybe had costs know you still fossil of it And quarter, million through and some we some I $XX the think Can get in that expect you of was it's to should cover like Is some barrel going barrel. a to talk of equipment last $X are does fuel included trend $XX somewhere it forward? how for in what the kind that -- one-off

this Donovan, question. is Good Chris.

So is, applied costs and at diesel X/X we it what I site outset basically, the we the took did the of mean renewable to division.

seeing what barrels X,XXX cost X/X is production. approximately of So the of on you're

that we scale But going as it imagine, coming site. $X.XX on way to OpEx to we for best per the be look at to And you number production, be barrel would can you an $X.XX as QX to heard, barrel. start down. up So the as per guided for is

with Craig-Hallum. Stine Eric

with that's sticking OpEx Is one a just that first. the believe, cited, in Maybe number direct to you've undertaken just the you here reflecting sequentially. in I one projects quarter. already mean elevated October come fourth later of the that I the and that

There may total much increase you the be mean when look a at of I little but there, overall an site. bit it's not

there those it's across business those consistent up is have now RD you and behind with what just got running, us, costs allocation and lines. What an pretty had we've we is that and really

Got it.

-- rate forward? is think is this mean, to decent I So going kind probably about run of a this a

Yes, consolidated on yes. a basis,

Yes.

Maybe with here. Okay, the good. conventional refinery sticking just

Gasoline did QX? hedging the side. hedges think, that the very for price strong we I XX% what mentioned, I think you that obviously hedge lock kind on those to of you peak? in You should Or gasoline in mean that, about XQ. close

-- that that's through overall helpful. the strong Doug I the that be today, above we here. and to quarter, as -- -- This the that the substantially I'd we're realized timed Yes. it it third XX%, cracks were hedged on peak, through that end say the came well but going wouldn't is of be will we right for cracks was say at

absolutely. No, Yes.

simply Clearly, operational the I'm guess financial number balance your ideal who somewhat think you're you're talk path feedstock partner helping it maybe do in here if diesel do I strategic but sit supplier, other is parties. be a something what looking you as down Or know someone and still someone could about the curious renewable going of like. curious, on in would partner? and it's to kind just it's involved that of you Well, you mind, that side, early, it's could Okay. I But is the include whether sheet. looks today, side, the any your

of kind that. on curious Just early your thoughts

think groups would potential that not a and to criteria group some of perfect I there's that I'd I one Yes. sheet and/or of of us substantial cases.So And only that's could bring capacity indication help that that what match. on exploring run both makes categories specific say purely we're a but partners, could financials forward that far. in of feedstocks -- or strategic around far. and any financial process. And we'll is set say product those both are balance are provided and that But we being marketing team unique another I side then Bank potential very one it strengths don't support pleased finished partners, the more there with tremendous of a America the going oriented. both participation brought robust has of thus potential capabilities partners so We're see been of our from those bring know,

it's about overall. thoughtful advantages either exciting open us. could partner So very But provide type an that and we're of the development

I first or have Yes. something half have you if you it And timing, not, do a more of for specific? disclosed but don't target your mean, whether it's 'XX a then do mind, in I all or -- know you've

lots process I'd of early of in path half gained the 'XX, say for of like of trading forward. clear the that by stages of it We're process first we've certainly NDAs this of reasonable of typical and a that's understanding expect now, kind a estimate. the And a type. the

Manav UBS. with Gupta

refuse to number versus of for A up than the you of it. EBITDA. conventional been first break doing RD much all, who your peers Guys, you thank longer have still it breaking

helps So with disclosures. the it

you here conventional question in material first My refining is that. So improvement a Mobile. thank for from

I'm sure you a providing doing reason it's very it. capture, not are stopped good the You and

refinery conventional you help EBITDA So that side deliver much quarter. versus the Mobile you that. But us a I'm press the not on going understand help factors the some on second stronger of to the of

in quarter overall those Really, at Yes. second we the focusing significant the and really quarter, Good gave market able the reliably that, with us capture running we if because quarter. versus to third improvement a products, are And second what look were saw to higher-value we the market. you question. on

it from reliability clean was so, yields. a quarter And from

this good the And was fact, very, had with rate it. were it But market and really across it we In you excellence. -- is with can gave we to increase from that there That's the saw. be results reliability and capture very profile the yield to that, the us, we that driven. all continued significant to as was operational rates, see our focus on available

press Perfect, little on want for guys. to renewables. path the I a you bit to profitability

one I you I'm issues, on just similar mean, in on look the your to had DINO will peers profitability. think if help actually the clear a absolutely. And at now, you they are side. mentioned struggled path but past of RD profitability, had LCFS I little they a saying profitable

renewables diesel understand to the So relates as to path business. profitability us it help your

unit, is greater in chain than way we're It's pleased we're our Doug the pleased Good expenses been fantastic. about to with costs get additional anticipated. the reliability no has flex of What here. running. -- unit and and the up our And We're our the thus supply question. Yes. concerned very we yields progress far. to are the ability much start-up with the

run when an just we coming get build we're would, -- be. of -- weren't gain to which we've rate feedstocks run not would in qualify prudent to the last buying weren't up off We the do have business, if unit supply thing normalized The -- with problems of and you we had they of able and in didn't new we was levels, reliable certain we suppliers supply to up now. new feeds. wanted over felt every at because to and how the big in. we know day. plentiful expand appreciation of of brand we weren't we the -- chains, which a we it.So because for We've start-up one barrels into inventoried inventory to back the coming found we been continued that our that run reliability built the almost to feeds started the didn't in period but sector. And have we We've the feedstocks is out the was, inventory base market had of we number to losses high-cost that kind those experienced to XXX,XXX continued available, weren't been we really So

with at.And that third I So yes, carbon intensity, the the there we're path drive continue you're -- in to quite to for down the pleased is optimize logistics second continue here to the that right. were in assets to contribution where we're we're our us mean from to maximize system to now LCFS quarter. profitability continue quarter, we that brand-new

do going it's So on terms done for out. it. of well it's work running able -- we're right? flexibility very, feedstocks, how very very So, at plan you plant ahead, you tremendous excellent lot but really the accommodate with very the those, don't to has a that's turned confident to but opportunity the unit our -- how there exactly in is don't in pleased of you team you business, how we're And and pleased know with it's being until work The run.

reporting on in you what Based somewhere guys. your you'll said, optimistic I'm Congrats, EBITDA a that XXXX. start RD positive from business

it So leave I'll there.

Oppenheimer. with Kaye Noah

I the it about process stands around today. hedging wanted to ask as first

evolved? programmatic? think the a output to toe Will look to we your It it how the on more here Help understand dipping gasoline of continue output. production seems XX% your now? to a us about has How bit hedging of the a opportunistic? should approach kind in portion opportunistically. less Will and you be of it's than it You're hedging make thinking

Yes. Great question.

an our and I and we at on will as attractive our a management think point more take strategy forward, looking level, not and of as advanced out made advantage ahead do are the the we a in in policies where to favorable position the certainly look very, quarters. Those risk particularly management strip low governance cracks to the has in much inventories but to a to risk we'll at markets speak. internally go a place, programmatic. has proactively that. year -- front we us.So the our in very at to put process and put continue the the -- of position at teams trading production at full structured evaluate annual pretty continue We'll are in I continue a that we're moment, this as The practices to and team progress We're hedge supply but to yet front also now distillates quarter tremendous industry. do be more think we done bit evolve

that So has the there quarter think striking improve be as there's go did our and a process us and the us from start with But I kept front we'll programmatically you'll see around just forward. to capabilities for hedges governance that opportunistic more again, use like in continue yet. to that we forward. gasoline, those do we balance And years

now. Okay. Great. like bit side inventory That's balance the sequentially. more actually helpful. that looked RD up a specifically And in then I It on inventories, think you are ticked mentioned

rate? down Do to working be XQ. And you a working how capital in going as at just Is plan of here work a throughput inventories you're capital you're positive source wondering to running cash lower so generation. I'm thinking about

Yes. Good Yes, slight did question, actual volume down go Noah. values. in This uptick we Chris. quarter-over-quarter. a is The saw inventory

into But when inventories, a balance that see benefit we anticipate QX, the should side. a from that's as tricky at looking you're so I So do reducing working capital we us I head little know sheet.

Great. Last question.

anticipate associated CapEx what Phase what X And materializes? that RD project? Just of the is time do over frame you the with outlay

largely now right that, about $XX and at will happen. during looking we're XXXX is outlay be What that that $XX to will million, million Yes.

Well, than last in much shape sheet for stronger looks balance a outlay like will that your it be quarter.

done. So well

Joshi Sameer with Wainwright. H.C.

following monetize previous Is on cash trying results X of you strategic where or dependent Just this some the some Phase side from up the there? flows to the questions. beginning work on the CapEx Phase the on any of for efforts are X from of

X. ago Phase our No, process of that in strategic at all. just normal for we're side the part place a not we waiting on year put That's

Okay.

you continue front, as will the that So planned. irrespective developments of what happens on

Correct.

just in less On constraint than or to utilization, the reasons? now? LCFS what restrain doing we're renewable any uncertainty capacity Or XX% Why XQ related is it other a is on XX% -- it to that than to not or availability? to -- the is feedstock operational more related reason

Yes.

way I at this look here. the think is Doug that, to

-- one, in the is Just the market. the available margin

trailing as certainly for us quarter So But to we're going were rates for for the those and do the both defaults. quarters going to Those have qualified ramp quarter optimize forward. appropriate. the in down that We'll to fourth compared just -- and margin add LCFS other in realize the where we we structure up actually.

to So feedstock that's related It's not going helpful. availability. to be definitely

than had, -- lot frankly, I So we a stated, have we've feedstock more needed. had like we

confident So run. we're enough in we more because we the tight still than equilibrium rates bringing now, very to but feed those have supply we originated we period, wanted -- are chains to that to in a very that originate able run

commands bear market the and available. rates is we it, raise appropriately. And if can to bring capacity it that So

Correct. also. The been operated. of extremely We've running way unit is it's very well the proud

store rates.So the coming, it to collapse be and burden operating opportunity it of barging tankage, the you've that sense, with that in manage its equilibrium, the meaningfully. we use profitably come all the up into to burdening available because run to all to XX is quarter, ability when them, at so it, come as this important that's able to to of built started, these started vessels forth cost for in We think but of the convert that don't we when all capacity that unit we'll note full those the you run capacity, KBD, not we've -- at important it's storage, that and business seen full got it's have there And up appropriately. allocated, them transportation see fully to prices repricing load West rates them, ship haven't and right? And you feeds we've to buy rates comes the capitulate But them, at then feeds, ramp as wait build So that to certainly. I want the the in the to believe feedstock and all but So really, lot right? yet. stuff starting the with RINs not just cost efficiently, cost unit a you're understand just seen Coast all really look that infrastructure, run it's we're the

to I ask going was Yes. you as about well. that

So positive your to unit? the or you if to OpEx so make of to -- or And full per gross generation that is lower impact barrel smaller a renewable $X.XX it lower sense not capacity RIN? number if also and overall over margins, Does a of is they yield. distributed OpEx do benefit distributed include that that -- like increase any have being

Yes.

RIN. So include looking it at the $X.XX, does the

to However, credit Hopefully, expect the QX that get earlier in QX, that we LCFS and not it then it it get. is does and QX. retroactive mentioned include to we'll Doug

the to, bullet under integrate question this retail says which does XX, utilization, Okay. on And last just it to vertically feedstock talk last Slide asset products. relate from about? then the does What asset

way chain integrating the for really our through supply That's renewables all [Indiscernible]. entire the

we're we're our So origin not -- on to feeds. back going

intensity As the by you now actually to that's origin. lower document carbon to required individual go feeds, every EPA

also I to consumer when oil have end, running [Indiscernible] example fully access refinery.And conventional to doing it you the in intensity type origins requires the with on qualify from to really our then as the in partner guess an Idemitsu. know crude and we're the got carbon is and different us other an auditable came exact looking outcomes, example, which get to through fully as So your it what right? it than you're at chain be test market California, a you with order So supply restaurant of your

the a access the the and partner market, credit finished out have didn't that secure getting actually we -- of that that squeezed product regime. if you in racks online, run risk tanks that could of racks other additional had to So and marketing lose market retail comes truck in particularly production as

sure on and feedstock markets an address important the from access can the we infrastructure we've marketing make on ends, standpoint. land that through netback reach that that we both side and So market that it and really to it's and got can that product end-use specific a that both highest origins in back chain supply

Gabelman Jason TD with Cowen.

just value. you I heard a XQ And wanted that press in made think point just it to clarify now about just credit says you'll I in LCFS release, receiving the I receive XQ. credit

clarify just or with if volume you on was at to at capture was yourself prices And values? you're LCFS crediting credit the actually the LCFS value produced time the that. the So I I the is wanted time based wondering

Yes, Jason, statement credit. Chris here. the tackle I guess, LCFS the to on

to we're QX we be QX. we expect the receive -- cash when QX. knows for and sometime We it receive the is with will and as in QX, timing. will government agencies Who expectation that get My when exactly credit the dealing cash

of moment. So that's kind where stands that the at

Yes.

clear, credits the for quarter. to the filing Just be is the always following

with quarter partners. So right? produced we'll imports you're So quarter file a how depends the in those on quarter, third into fourth production transactions was California And credits of and value always your those you're that trailing. commercial executing

unique of record to, and which California, commercial Idemitsu. every done credit that's actually they're done is that is party into monetize terms the at their to that's to you and price us of be talk depending arrangements importer going which with in on put bank when So the the for which the and

much at suggest of that indicator the your get a then see margins they of of And if LCFS to we generate, going reflected terms of it. is of should the Got what earnings? Is X.XXXx expect the value ballpark you're in some they how credit to kind value look in we Vertex's price. peers,

or production, think a the think is the I depending which it value the math at It's and into XX whether point. that's the we've a done about the the a Yes, XX for third is CI us value sense just on pathway product. for got way. translates -- per That haven't [ you're we But finished on way plant-based that I waste-based. on a temporary of ] helpful. of gallon kind fourth Obviously, starting and quarter

we that Chris, in. think, the have third I $X estimate and at million an quarter fourth for of coming

Yes, combined.

work how will math, So that's out. round that

you know going I the industry, I at don't way on it you of the kind if to would. forward, think journey, in when to they're others forecast where so their speak CI

the increase will additional credits goes So under LCFS carbon value the and intensity you as the regime. down generate

believe we getting focus pathways. our the on right is specific So that now

move So pretty from the but what's to it's process, temporaries complicated a you provisional. called

it's use intensity pathways, which production the even efficient you're the actual models actual under oil, typically you and file use say based their better it's than production, that soybean our calculated we'll right? values for feedstock.But our each carbon on -- provisional default for facility, actual you even carbon are our now reason is, So exact car an as on I So proprietary for we we that running production for the that expect and if your which are. much value intensity

just on conventional carbon well. the not even you're producing intensity it's So feedstock feeds at your the as values mix. It's that

products. to going be tallows, the its and DCOs in it's the waste our for feedstock across just beneficial entirety, So mix not

Great. kind of for of in diesel, getting process in wanted the that your kind you terms then market of to outlook the just in on squeeze for monetized -- especially increasing And sense the last one or Vertex my you're one, light -- of value project. I if I renewable get was could the another are conducting

renewable next RIN I think of of the lot volatility and a year a prices pressure concerned RIN been are prices. recently. diesel some investors about on oversupply potential There's in

your a this there. And that get next to market XX think wanted Just sense how and running? impacts it outlook you're the at process months leave you for that of I'll all

goes obviously our environment to where our fundamentally of depend the are on as feedstocks timing.So the feedstocks how to how on -- don't have back year, we're pulling the do further feeds environment in published "reset" new And place the as program where for So really, how full up, they crush a from fact feedstocks of convert.So early the started continued crush worked, have have we're from guidance I suppliers, at We I almost margin But down, coming conventional with the to mean, confidence to differ created to with go there's the we fast they of planet but to basically push be. frankly, those the down, challenging California there's will floor that a conversion pull feedstock Yes, LCFS builds puts fast side medium scale, that XX fast [Technical in our don't is credit as online. scale, to imports up, LCFS we come do up, really we from ramps right? of to favorable these But the on very RINs like that's now capacity, And up. the production conventional focused that our U.S. we're that running for -- XXXX development. they've to puts which is off continues It's we're a crystal on capacity 'XX is for materially ramped, production meetings government has our these you've into actually into the Difficulty] Obviously, ball of margin pull. accelerating and I come long-term a that. because XX% it's off path really a that California on the focused we RINs headwind lot influx perfect see they ramp capacity into the we -- at margins our comparison the to and that. go depends that's outlook to on In more business. but of but a renewable that of environment, lot products you don't very the acted pretend business, because We're for is refining out and right, to that I production got new react their RD think next see. is ramps. meet on renewable capacity go So market, terms when before since the have RINs for think the right? outlook tremendous the also opportunity massive mean, glide they've kind going That's that in way process. fully periods that RINs never create programs, feedstocks down, volatility now unit -- capacity XXXX, the anticipation go all and that when it once the the if under rates.So have look for historically, obligation. regimes, seen to the the balanced go page RD margin kind a LCFS do goes in on those and U.S. of entire

very improve the So feedstock RD that's at in both facility its to from flexible is has carbon a cost selection focus to XX a have our continued capacity low quarter-over-quarter-over-quarter, process operating feedstock KBD and standpoint that terms and of intensity is efficiency. our

to position So business opportunity involved for facility in that, we as a that with long-term run. partner provides the for we and is us the that's tremendous what that us believe our about 'XX for get

line Stifel. Our with comes from Butler Brian the of final question

the the conventional at? Quick on fourth current change midpoint and based for pricing the the on doesn't at again, what we're kind margin prices, would quarter, where the your assuming, conventional outlook piece, on of from EBITDA be gross the

Brian. question, good a think I

the as per looking have focused it been OpEx then markets things James has X or Again, see in land. our where improved. on to I think the kind to we're all barrel last and And yields quarters, the as indicated we're dramatically of as -- guidance, noted, CapEx.

gas, your will you So on indicator diesel where jet give to going that best forward looking of yield, I at focus land strip. the the we're think the and

guess you any of locked on the dollar much in? color profit that I give you piece, -- maybe the on then the And have how amount? Can hedge Okay.

It's because around. hard it's to going move say to

that's And hedges. the was gas through right can current to You going I million around the look XX, for quarter. think $X September bounce filing. again, the at at it But to

you at diesel. renewable current price, renewable full do profitable and come right. the At Or then RIN is the we down? to All the LCFS feedstock the default current capacity? see need or costs need do -- the diesel And the looking at

Certainly, compared to Yes. we margin structure. the last We're, credits, we I LCFS now helpful would quarter. that's say, marginally current were profitable get on as where

to for for the price us than really rate right? we'd to have that full little additional going in feedstocks down a come stick at us our see margin intensity we pushing I see us to have to chase we're lower we feeds. otherwise, otherwise. on opportunities hard, carbon to So that's really all at and -- to So plan the rates, But need mean, greater to run would ramp optimizing

we're the through of that to again, make to that do a haven't as at 'XX have but certainly get there, the maximize disciplined get that to long-term that work position production 'XX, forward, rates facility margin layered. and in sure as just and we within work we We now, we run that when be to we to do when environment to they're technical is margin opportunities work left that a make we done continue have rates sure full lot run right?So

when got But we're So it's rates. we're intensity that really question earlier run don't tough work the per to different make we're why there's doing well, -- trying And our facility blends it on as margin yes, full puts a some the then incremental collection, carbon takes really the itself. sure to intense a optimize that, on I optimizing position all data you that week-over-week the just basis. facility at barrel. in feedstock

we margins, cost full would this But feedstocks Certainly, do it rates So level at really then that we're time. rates. if reasonable ramp adjust going where incentivizes to to run we us haven't attractive that rates. there was just seen at to and maintain

one. one And then Okay. last

do better an feedstocks it an put much in XXX%? running you new other the feedstocks? much is intensity the On lower you of how it see score the you How get can I default? from optimization, of Is mean, improvement carbon as feedstock XX%? increase CI or the benefit over

to least your from certainly defaults defaults, Well, at expect the we'd where are. compared XX% improvement

of look if them the of don't to soy carbon the of think -- in default low the many XX%, soy it's other exactly are their like production know -- the be I will where So their you at on going XXs. processors we Gulf land. But even Coast versus intensity

of look are up when And obviously, So But carbon particular. one. the you you all we ] intensity bear, those then in values intensity on result much at in carbon that your -- as DCO the on overall for and XX% to going it's blend, pool. Yugo bring lower pick tallows [ not lower your dramatically to

will I over to the call back comments. final now speakers for turn the

Thank you, you, thank operator. And everybody.

have off demonstrated map sign for they will is investments once team outstanding follow Before the we over we've is work Ben. here, as express over with made we the want such I very past ability past And to capital ability team's in our years. as again road We're established. in to their crucial. this gratitude pleased confident this continue our our and to a In markets my business these agility ours the quarter. quarter.Moving I'm ahead, this few dynamic

origination from from over across synergies legacy model sitting products made we've now for the good being to to sustainable our experts the creation. I help efficiency, the in groundwork a feedstock and we think enlisted good together assets years. very five see capital our we're business value We've the of our business. far brought next as We which place laid outside as long-term renewables,

call and the in pursue and end. our our as to Vertex everybody fourth to to what quarter and call our lean we're will remain look we're opportunities look taking on our We agile sharing and Thanks. to in deliver we more forward best to stakeholders. this forward to able.Appreciate We time the doing, employees

participation. thank call. This concludes today's We your you for

disconnect. may You now