VLO - Earnings call transcript Q4 2024 | Valero Energy Corporation

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Operator

Greetings, and welcome to Valero Energy Corp. Fourth Quarter 2024 Earnings Conference Call. [Operator Instructions] As a reminder, this conference is being recorded.

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

begin. may You

Homer Bhullar

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

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

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

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

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

Lane Riggs

environmental reliable our to accomplishments overall process I everyone. and best for performance like last one for our disciplined morning, start was our and highlighting XXXX year operations. good and safety years and would performance. Homer, operations you, of year. some by and Thank of drive team's Safe best personnel

the processed secure heavy economic This be of crude in to we to able oils. capability record fourth highlights our and systems refining sour refining, most process quarter. crude flexibility and commercial teams of and a operations In demonstrates our the volume the

of record other the the for process ethanol Charles City production set and expansion optimization at with plant sites. we a Finally,

us to quarter otherwise team's operational Our focus results fourth on weak relentless positive an deliver low-cost operations margin environment. in enabled the excellence and in

strategic sustainable started On our earnings DGD and project on we commitment was aviation The capacity continue operational. to in Valero's fuel organic is through deliver the fourth investments. successfully the grow fully up now quarter front, to

Looking in ahead, we continue enable with existing will unit cost to increase high-return expected St. the the project we that pursue to estimated SEC around is are yield The refinery XXXX. to progressing products, assets. And high-value projects project refining optimization $XXX an of high-octane million start other up Charles short-cycle, alkylate. is to our including at optimization

X% side, a honor XX% position. the of commitment approved continue with this for a to month, the increase demonstrating payout strong quarterly cash earlier our On in our to dividend, further board strong the financial ratio And returns year. our shareholder we financial

beyond margins the shutdowns still refining be refinery ahead, and ahead refining additions the with XXXX limited the light product And by supported expect low inventories demand exceed supporting should announced year term, we driving supply long-term fundamentals. this Looking to season. capacity longer product of

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

Homer Bhullar

Thanks, Lane.

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

XXXX. the compared XXXX $XXX net share million quarter for attributable or fourth adjustments of quarter share of per to income $X.XX $X.XX the fourth adjusted per . to stockholders earnings for the the billion or $X.X Valero release tables, Excluding in was

the income XXXX. stockholders Valero reported to $X.X XXXX. compared $XXX quarter quarter fourth XXXX. or XXXX XXXX segment in of $X.X fourth $XX.XX attributable income to for billion share $X.X the income per refining of or net adjusted Valero or The for billion $X.X share stockholders $X.XX share XXXX, was attributable to net per billion per to $XX.XX compared compared billion to was operating billion $X.XX or in share For $X.X million per of

segment barrels of throughput in operating or per the were XXXX. XXXX day in Refining Refining volumes averaged million the sales gallons fourth the for segment XXXX Renewable day Renewable the fourth fourth utilization. million Diesel of million The in $XX income million $X.XX fourth quarter was cash fourth operating compared quarter XX% operating per X of XXXX. fourth XXXX. quarter income of quarter of volumes throughput compared capacity X.X $XXX the expenses for quarter million quarter the ethanol million per for XXXX barrel for XXXX. diesel $XXX reported of to averaged $XX quarter of fourth the of to

and gallons quarter day amortization million per for of the effective was income quarter $XXX the G&A fourth the production $XXX of interest $XXX net billion million and provided were for $XXX cash the by net of million with was for The averaged the expense was Included million, rate $XX XXXX X.X quarter benefit expenses the this expense fourth in venture fourth was XXXX. of and for by XXXX. fourth full Depreciation was tax provided quarter in Ethanol volumes adjusted tax joint year. XXXX. $XXX million million million DGD. cash associated $X.X activities Net XXXX. XX% of in of operating operating member other was share activities amount

adjusted operating Excluding of cash this was by quarter activities fourth $XXX million in provided net item, XXXX. the

activities joint was was in the of billion. change in share Net a cash with activities DGD. $XXX million $XXX $X.X member other operating this associated operating in million favorable of cash Included net venture adjusted capital XXXX and by amount working provided by provided

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

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

attributable of and capital Valero billion $XXX investments capital for the quarter entities, share venture member year. million the to were variable the investments Excluding to attributable other $X.X and XXXX in DGD interest joint other of fourth

was as financing of to We and resulting dividends of XXXX, $XXX our to of year. quarter approximately quarter. for $X.X stockholders returned was of we XX% consisting $X.X ratio X $XXX and the In $X.X in million $XXX fourth a to in the of shares common million of the the payout activities. purchase for billion paid buybacks in stock resulting billion in million stock, of stockholders million payout XXXX, XX% ratio returned which for in Moving a billion dividends,

start period, investments. including over total have operations flow exceeded In uses XXXX, total fact, since the cash this capital cash of our of from our

since approximately debt dividends and X% through reduced time, buybacks. to returned count XXXX. reduction delivered and stockholders by approximately by this Through we $XX.X During billion billion over XXXX $X repurchases, share we share of share year-end XX% in and our

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

to guidance. Turning

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

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

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

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

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

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

open X Q&A questions, we to the turn to in each call Before please the limit questions.

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

Operator

JPMorgan. first coming Today's John is Instructions] from question of Royall [Operator

John Royall

So to question Gary, maybe is color. my just first broadly on market

fundamental turn year? should the any key indicators always good back the view terms do You've sector. the supply-demand picture of market do for the in of think look might cracks early and in just view for when you us for today this the outlook we products given are And what things you of How a balances up? out for this

Gary Simmons

see through of on of our through to season goes Yes, get significantly holiday John. the dipped to day typically kind much on tell I'll market same year the the nice that about early. weeks, dipped typically weeks difficult back recovery to We kind average. to read couple you wholesale that XX% this The seen fairly of level our and of that couple kind starts barrels dynamic last we've first It's through a we always of sales of the channel this see. then a year. saw recover. of million a Sales we

I we barrels think yesterday, XXX,XXX did day. a

slightly sales are year-over-year. our Gasoline year-to-date down system in

we Colonial off had think this then concentration the our the pipeline in I the markets snow people south when for marketing, and kept at available to limited The and sell the our some that down. sense. outage was makes pipeline look the volumes window, you of southeast in road,

and sales United average to see the data looks good, is up demand X% year. we we gasoline to be current what Overall, gasoline expect gasoline fairly demand X-day flat can in shows last States Our year-over-year.

material a bit a that system channel you year-to-date had that going diesel fuel. think Port percent. sales we seen. But were That produce because makes into few more renewable more, to to the wholesale going was day the our Arthur look a We a was sustainable off data little XX,XXX of barrels surprising of also cold mainly is our if to it that now aviation little selling. I weather Diesel be about from sense. are in we've This

the diesel a decline in year-over-year that's So sales. chunk in

have oil In saw you in on And dynamic that, the we diesel we presence markets heating demand. on-road think marketing where the don't same I snow then diesel big with a high you addition the at demand. see to if Valero, look impacting

from weather We see. the big really see get side bulk cold So wholesale. uplift that don't the not definitely through may you that but that on we

be shows demand what in in in just the year, up a expect a due States. increase we to day supplied the Most and I've dynamic Basin. we Not are refinery the in of X%, Last about this expect diesel that's Atlantic had do consultants greater expect hitting that United of diesel read, for derived barrel increase of renewable only Seven-day diesel. North kind by but weather are we diesel wave don't we see XXX,XXX projects market, better, cold the year. big be bio about a the that X% same demand a year, and average sales to showing about to diesel diesel percentage we demand

I nicely. pretty total million, think up We're XX barrels inventory, things time. below are product where year X were this shaping at at million So last overall, light we

So inventory is good in place.

balances I of supply-demand balances. progress similar see the think at tightening you'll as supply the gradual you But last the beginning to through year. of year, year, the demand look

John Royall

question Great. then second It's on very is helpful. allocation. capital my And

significant quarter a well a that the move floor? recovery environment Should lower full XX% payout here, and don't how for XX% in 'XX. cracks with we to we crack about But you to XX% to from we assuming your closer another think the floor expect in finished in year to year. ratio XX% that XXs have high You should above

Jason Fraser

going give Jason. little is to I'm ask you Homer more on this detail John, to that. a

Homer Bhullar

over XX% year. for for the $XXX the I positive XX% impact repayment $X.X going Even quarter the to funded payout John, had you Yes, Sure. you of year, But billion into million the balance almost a working $XXX XXXX, that cash. had for cash year, right, million ratio payout was capital by million have would some if excess we want our debt built if have numbers, mean, held at built but did include we put year, this cash of the and you're the partly we in for for would of excluded with context year. the shareholder into we of the still our $XXX we first if

in drawing environment the that we if or taking to of leaning bit Now the look low-margin to further, been have into even sheet honor minimum you cash. down a able our the payout still quarter, fourth commitment XX% balance at would without XX%

the balance of obviously, environment invest context commitment this capital, ability honor capacity in our in you gives our shareholder with our hopefully, So low-margin debt even earnings a of some and flexibility the to portfolio sheet. and

Operator

is Research. question from next The Leggate Wolfe of coming Doug

Douglas George Blyth Leggate

this to for on man grades. I a and sense still -- there about, Trump if lighter is see you're have the that to was last problems of to to oil oil, that and today, seems became The supply past What with as got guys was there going to hours recall and I is forgotten need ones, -- run try for was context you Canada, crudes headlines -- may. lot issues think to someone's -- heavy ago, there utilization got through the you going it popular might And but to most your to of a a that much couple heavy -- I substitution have everyone that to that ahead guys Gary thing the if would order that at seem obviously apologize, saw run it, a call do? that a any just Canada. I'm of the heavy in actually with be cuts, I find I we was go tariffs on I to the couple Lane, were a so in or if of your just going substitute to there the and a yield relates just to going get I you're so want effect couple you perspective it I've do try wanted have to system on. on thought And time high-level it. there a second going was

Gary Simmons

Yes.

So for can aware this a been Doug, this couple is Gary. tell of I months. of you, we've

scenario and can optimization to of commercial have think so we how respond that. our working teams possible we been would develop and hard And teams every to

our Coast flexibility. can the But feedstock we'd like of we limited, become around why point position there on production from Gulf and affects expect source it's the certainly also we U.S. if feedstocks anywhere from clean industry-wide. and where our and course, Of feedstocks it because yes, where you our world products, rate a is heavy like assets,

Douglas George Blyth Leggate

switch of summer Assuming it did a a is that be extended big deal, rounding as particularly this on but is I or it's it grade an time, transitory, if period could drag we out. not for into mean, meaningful

Gary Simmons

Greg to, [indiscernible]. want You

Greg Bram

depends Greg. When goes and is driving it some it it some be we don't a I different A scenarios, than on off of XX% think to heavy a greater look degree deep at barrels. change This those in much wouldn't about and far have how that, of lot you those might to But back how think. you things see on throughput.

Douglas George Blyth Leggate

to want were you start about sit. enough I Okay. meaningfully when talking

are about. green So shoots these we're questions what for to searching as really tell

your really So I'm I guidance. throughput one, to apologize, high try to it and level going another relates

whether the if well. U.S. . And me run Gary. ran on which the the best-in-class or coming focused be. maintenance utilization the last that you or good of solved to Tasos rates, that concentration X But utilization absence of everybody about probably a storms to with whatever was happens to world concentration of is or seems it no is it. the Grangemouth it's and things of closing meant us COVID, everyone about basically X% seems of obviously, and it for They're kind great or you X% So all out maintenance year, refineries, through, or Lyondell got think

those specifically backdrop down the that for at quarter, high forward a I the the likelihood when the don't we're the you your level, do cadence rest can obviously and you through the industry see we've But continue utilization. of levels to guidance the had run industry, reasons the commercial so U.S. year. how at of XX% that X the give within look last kind given in at And for fact

Gary Simmons

Yes.

I seen few in somewhat along weather-related with the is So maintenance the what utilization think certainly, last activity. weeks you've

see on refining cost, you elsewhere we U.S. advantages the where don't higher they occur have. to advantages expect And energy cuts, that resource you utilization rates. that world run they to have given continues refineries think in I should run and the that feedstock when U.S. enjoy have natural the cost at

Douglas George Blyth Leggate

I the aspect. more advantage think cost aspect the I to opposed about was reliability thinking as

Gary Simmons

Yes. always better get I'm strive And sure at. availability, certainly an in we've improvement on we and better as and seen our it's something our I mechanical suspect system and have well, to peers

Douglas George Blyth Leggate

guys. right, All

Sorry the I'll high there. questions, my X, for leave I've level but had it so

Jason Fraser

. Doug. Thanks,

Operator

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

Neil Mehta

in, quarter what expecting Renewable than of Just were better the came performance by participants think, the diesel and a itself. couple than indicators. on implied better market I most questions

Just the for through we and there curious way that on business any our outlook thoughts XXXX. work as

Eric Fisher

Eric. Yes, this is

-- a make the think that of a at that the lot that, we optimization in mostly end optimization with bit it performance. some that, clear at was was benefit I of is but inventory end a of there onetime higher-than-expected bulk inventory staff was the that the would did little There I the year. of some year,

to In of diesel kind forward-looking how this terms the to are was is to overall, develop staying we happen. all we're things how going of what in going market to But see is kind of policy in thought line develop. with for very SAP and going and much us, waiting renewable

limit the than it product. going a rather [indiscernible] We into is intensity The that's blenders tax make imports scale dollar to can It flat now renewable see U.S. product that, replaced credit. has to every going the to now carbon a

to platform, and our I refining with the last of platform Canada markets to to to the and feedstock like most attractive consistent Diesel flexibility, Diamond advantageous are from be California. is outlook think Green going and year, that our markets to of our in Europe ability our any U.S. compared the export because All other in

LCFS going and to So waiting credit respond. next to those of And emerging I reports as on ended. production RINs of some months think the market in see to how are changes going year the those overall, we're in how couple respond, is see how you'll emerge the

going mentioned DX some see correction long banks to, will this we credit already any increase But [indiscernible] down bank year. -- pull renewable that to that credit say, it's to credit banks and LCFS eventually do the in or Gary throughout banks. also expect credit still We those you're don't see RIN start year. production RIN production and we compared

Neil Mehta

That's amount were it XXX,XXX the were notable helpful. And to of but run able clearly, to economics oil the you the how optimize then independent in tariffs, over were fuel able in through of And some you coking oil. concerns was heavy of a I think run given that the quarter, sour heavy system about barrels to system. was, tight there day

were commercial a you to in . pretty in So you do fuel approach heavy that time able talk how and to just tight. can when maximize about is the oil

Greg Bram

that then Neil, factor, key talk this towards value. about more the heavy show on, continued some fuel Coast differentials away Gary is you good alternative, oil as those to pivoted system, from Greg. with market. our the the that think, which fuel as the start, crude in narrowed But is Gulf some hit an feedstock can a being I and typically I'll prices, oil we which

to of as shift on also processing. that's heavy slate reduction bit a a see Also level that shifts feed noticed crude, in heavy how kind keep we us as that more of we've you heavier to heavy well. you that online feedstocks Port Coker got Arthur the got a mind, sour the the And well. processed of crude why we high that's So towards resid

that as part of in see So what number well. that's you

Operator

Chen coming The from Barclays. of next question is Theresa

Theresa Chen

about understanding footprint source and year? On thinking Venezuela, on topic not that But tariff specific optionality have potentially as incremental you're the and captive crude Coast. you the life think on Mexico, we your move specifically, Canada you based the are how of sanctions about we Gulf heavy to tariff through any the the differentials as on on

Gary Simmons

Gary. Theresa, this is Yes,

driving due turnaround the typically, fundamental the with time and side, less start market. cut of And fundamentals, sours you just I'll the on to buying heavy of kind to but activity. then see certainly, think really I year, of what's this medium

market barrels of to quarter puts that, XXX,XXX Lyondell crude. addition the solar In medium second XXXX, OPEC coming another heavy day down crude calls day a XXX,XXX barrels for on a

see supportive differentials. market. But So water all that, sanctions things to really the any what's we in the on don't of I quality meaningful and differentials. discussions would resolution driving the those in some moves be tariffs reality, expect quality are And until

Theresa Chen

Understood. in in the Charles provide a on you to products? been little improvement St. terms optimization the would project, yield what have related incremental of more FCC able color means of to And this, bit high-value the

Neil Mehta

And costs Sure, pricing. light investment fill in the of we Theresa. with some out to really FCC about we production the high remember, a Lane That's for capacity to X,XXX the one million. of that of that order one the olefin product definitely use you increase This a capacity And the of outcomes means outlet the project barrels back $XXX got And at value. It is alkylation have hurdle can some feedstock alky octane mid-cycle FCC. key increasing in started there. will of spare up additional meets optimizations unit late St. we've downstream with the done might and Greg. something and it our XXXX. this project, and X,XXX of And unit the production that's at we We've mentioned the outcomes since. is on you is what the tweaks that Charles CX drive key by things day. to alkylation

operation how other project. we in in the of from a refinery. again, other And return the modified constraints unit And capability SEC equipment that's when of a in and key constraints to us units take of the those good this not really advantage generate It's equipment we the the allows it full find that example did but of I case, equipment some that within good this case, -- only alky. the

Operator

from Gupta Manav next is of coming UBS. The question

Manav Gupta

It XX% wanted on North quarter capture. from Gulf looks similarly, the jumped to the And like XXX%. additional some I to Atlantic from about XX%. jumped capture about XXX% color last it Coast

So you kind that help little factors were some us you out of if improvement? the capture drive Gary, helping what could a of

Gary Simmons

Sure. I'll let Greg answer.

Greg Bram

bit I'd point a things of the Atlantic couple system out of a North it's question. on A really,

and it's the well. as butane Atlantic the go blending bit in the that bump That Coast us we a the pool. more a gasoline. North commercial time In both But from gasoline we Gulf as part. contributions So and into high RVP into value winter regions gives good start adds those into business, the capture as of well, the had you side wholesale of

So we benefit saw some from that.

Coast, relative at bit was item would the it a Maya look discounted when really that grades for look we the benchmark, if more be -- On Maya the use quarter-over-quarter. at Canadian you certainly Gulf the other to you notable

that crude improve the so into cost to Gulf saw And the helped Coast. that for heavy crude we the

Manav Gupta

yield a strong diesel here is, and and slightly a know Valero move around very gasoline weaker the Quick I are margin lot. seeing can we follow-up

are already other. Or how you March, or this to improve temporary, cracks you swing will come like yield out gasoline can diesel once you diesel? towards start mode will you the do the think February So and more demand much the and each more is operating very balance in max

Greg Bram

max in are Yes, mode. Greg. Manav, this is definitely we diesel

gas way. the would enough to us And direction. into the we'll season, As you other whether us crack push the get see mentioned, shifts in as cracks that gasoline we drive

Operator

is coming Sankey Sankey Paul The Research. of from question next

Paul Sankey

think say, we've all to been bit the all the themes over the a here I X in There's months of outlook what the action have Atlantic Nigerian that weather versus with this dollar moving to Can effects. obviously at make euro. the seeing, I around. about X on a past the had cold continuing been firm you all it's a But And There's of the morning. Just refinery. that's wondered, major arbitrages? trade Basin terms obviously been talk let's you the lot in tough

what Tough a we've in in seeing could question. Basin if market just So outlook been coming bit the describe Atlantic the is I your you and wondered year. what the for little

Gary Simmons

Yes.

So the with I'll Dangote refinery. start

can and resid we we oil they or have running. were up I We from what read, that we do that think see resid offering fuel out and from buying what commercially. not FCC the They're see them. the their

We Dangote that, Europe. however, up. generally more of with into going than Africa, it is in to gasoline continuing that back that West we've also Europe ramp though, tends see West seen Africa to which what is less into imports the to gasoline impact all does consistent was With U.S. gets

We impact from that. haven't of seen really much an .

go Latin to -- primarily go America. our exports gasoline Our gasoline to

the fourth somewhat The can the U.S. cold you were You where gasoline can with quarter, level has see market, consistent in been kind a we we're strong. that's the quarter, interesting. barrels is first market XX,XXX weather U.S. in in of we've which right I has into about day that of exports the been. tell same that Diesel again.

to see arb to seeing We're actually from that open U.S. an We in Europe from cargoes actually back the a Harbor, the you correcting which Europe. do the So see abnormal when of an get trade is half booked February. few second already flow. to York export New you

So trade abnormal nothing on too flows.

is other North we've each down, I think -- of what kind by startup that you've keeping and counterbalancing largely seen and offset they're large, Atlantic Lyondell and Grangemouth down and the trade what about historically. Dangote in coming seen with Basin flows been the has coming

Paul Sankey

would Or how would it you work work? great. that I Do could be overnight? a how it follow describe if tariffs, if of suddenly you That's mean does ideas they could thinking you situation just of maybe start reality up, any the just happens? I about paying got what grateful. And have to

Gary Simmons

on to when it going speculate going reason it we way with Without for no are can having comes just really deal to it. have what's with deal there's We're on us, really to we any up.. how there clarity no happen,

Lane Riggs

crude it's All Gulf what sort get to the then is it the and alternatives depending shared in somehow of captive I refinery captive a markets the that we'll going have -- priced [indiscernible], add and there's in is Lane. because Canadian between And on Coast, Mid-Continent. In Paul, some you're how refinery somehow producer -- they're just are. ultimately get market, the the it to how will If what their depends on that market, right? see say, will the lasts. it configured long

So.

Paul Sankey

it. where for of suddenly Got given XX% pay the in can that you a been there Have it past more of crude. to happening think have examples you

Lane Riggs

long No. been I've around And a time.

Operator

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

Roger Read

still I'm Lane, right. chuckling All from.

back the You've capacity. been Maybe a whole around on a bit little long changing answer coming there. in time

So some all play the terms along leave to and crude let's beyond of in how how of Europe of and tariff shutdown aside I'm playing likely just seeing down more dynamics the obviously, in coming are mentioned here locally announced. out We of been had you that's stuff Grangemouth. the have we you maybe availability, just thing what's curious those out Gulf Lyondell some shut Coast.

Gary Simmons

Yes.

buying lot I can of buy Lyondell -- definitely see were and of market the in think lot to of So only they the Canadian. thing especially a the we is a dynamic seen stopping you've

market. us we've available . become off seen as so And barrels more to they the of those backed

Roger Read

it materially an that change just Does Or price? availability. is

Gary Simmons

at to along the tell with going difficult It's time because these so discussions. sanctions all tariffs been and same it's

of have discussions back those -- impact. market of the kind it's be so would barrels far. any pushing So muted There Lyondell

Roger Read

products a if change of to -- would tightness. And little from industry of have through anything maintain can't about whether side, on industry's can, if the question exports, year-over-year, process? that thought if And the levels it the closures imply lot products at at thinking more lower as utilization forward cannot it but alone or on the was severe these crude down Doug side inventories, ability year-over-year of would imply are general maintain utilization, or is about you asking -- than crude all the lower but much say if or look U.S. you I'm look crude in inventories on a you product these And missing either of there you some that happened. then about plus as just a Okay. year earlier think a look I follow-up you

Gary Simmons

think a on that similar go head. fact Nail balances last is No, see that gradually balances, to demand. you've going actual year industry supply-demand you're up to at got tightening we and going the had utilization inherent I When assumption the the meet high the the the to it. is look

we certainly, things the event and a a kind not up year. And then weather major or off-line major Any tighten of so last can haven't unreliability a that had weather lot. event capacity

it is If in where I hurry. we're we the position especially in yet a inventory is look, It the side, and margin on inventory mean could different, diesel crack in had change the versus were a not significantly within different. we today. you is XXXX, diesel fairly $XX on where XXXX XX% we're significantly environment

Operator

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

Ryan Todd

about Maybe a broader your -- follow-ups with moving I side. biofuel some there. you mean couple like of all the the talked on the XXXX outlook pieces

Is What's a risk reaches like the some economics -- a the take market this like this of the going impacts off it's first it time, As is the quarter? fall XX. the kind that later quarter. in year? we better imports quarter part first kind on methane risk stuff of the the early a table sorted for equilibrium kind think before few feels of a with in the -- of months XXV BTC this first away does in gets equilibrium -- It production. some the in least and to to the Is of to about domestic play out how particular, in and goes there . there December first at year

Eric Fisher

Yes.

conversion a this dollar just Greek model U.S. carbon released. that you of got the intensity We've to the I BTC think credit. now based where everyone was look the if run at

waste it's it's for for veg oil, [indiscernible] oils, $X.XX soybean And $X.XX are oil. $X.XX X the per oils gallon range. For in to

day, And so end the is that than less at the of $X. all

a now So you break needed getting dollar that to margin $X.XX if for and negative you're oils. even it's environment fairly nonwaste

can I think that. see everyone

that see very hand. be difficult there's of and I through to production in say, incentives. in side. lot hand going to well, side that think is operate a reconciliation terms the of looking recognition is plays at quarter. the to lower these growing Everyone this but first out How vegoil biodiesel

dollar get now that coming imports are U.S. were to the the see to also stopped. We that

of recognition in there's So how quarter feedstock the and go but a in first you in prices we generation We growing production overall overall that all reports as through reflect of these early change prices be are peak some of of what kind some terms of and lot lot credits. haven't movement see in coming I of on that seen seeing to there's to think this, balances out? stock going a

can to again, most being unit which we're of the Coast, waste Gulf I oil so our platform think in waste on. it's mostly and terms advantage we based how things react favors, And these the on is is still a oils,

but it's good overall, we're I in So there's versus is a in doubt, think this position no incentive for -- competitors, all world. a lower PTC of there our this just still

Ryan Todd

this think a a of can on operations in level terms just here SaaS mean you economics in some how maybe idea an SaaS. follow-up little the and of then maybe point I XXXX. provide [indiscernible] about bit update of at you And production contribution your of level maybe

Eric Fisher

Yes.

mentioned this comments. team in the his Lane to our of started another The project finishing quarter, schedule budget. on project So opening up again, credit in ahead fourth

spec. goals -- project very startup. We up time a flawless fills trials, quarter wide most run of the hear operationally. of of throughout spent a than which doing range more started test in It showed we and have met all all our runs we the on We But tanks. test of operability, initial on fourth lot our

accreditation looks in QA/QC saw final traceability November, the the and way meet hardware the great. first made blended unit production our staff, has all and we So been and customer. the to staff the sales deliver Production flow and smooth, from to very we all

of just And sort so quarter the in time a spent fourth the we lot of system out. proving

if going very now, the economic to HBO up right terms detail what a market But U.K., that now in we're all project with have is than In we lot I'd or original you the set at and project. better goals to EU SaaS. we you really get look see forward, Argus at, of say and the the good flexibility the say, into meet of is because what going not

market. we flexibility have the So barrel into either European make to

the really, SAP in of see in as the now doing first is see just we And up we're tuning X% optimization the quarter what starting you because so that EU mandate customers that really and U.K.

Operator

Cheng The is Scotiabank. coming next question Paul of from

Unknown Analyst

-- go that is to PTC, is this don't I The I [indiscernible]. Maybe out. the detail to want back think

is you should guys also the just that a some that benefit drop it per earlier? will quarter, are whether first or the benefit in report you can to will when fourth So also you're gross by share your referring to or that you benefit through. first kind just assume do but quarter margin, going BTC come and any we optimization not the gallon, record That's provisional And much question. you that of how inventory is the you that think put

question, second for be price natural to going maybe is gas Lane. look The U.S. like higher.

we already cost really any you you energy look the so your reduction of current done your that too energy reducing [indiscernible] the see Or expensive is to be opportunity of have meaningful So from at level? if difficult have will much further? that lot system, a trying do in cost

Eric Fisher

Okay.

margin dollar same the the on start includes BTC had I'll We in margin calculation. discussion that our indicator. So still indicator the the

this One that its in vary because is our feedstock of PTC intensity the environment based, will carbon with challenges slate.

will know enough haven't very higher because as you we out of certain we'll -- to have the a see PTC. or higher going to lowest scenarios where feedstocks can clarity that had or And benefits this have so time really in obviously how is said, those and the CI cheap all run think line see run continue the get CI enough incentive we to might to feedstocks

to little how down -- a want it's to the indicator. nail the adjust the margin we hard So

to in So -- our . until we're running be keep for environment. more development going on how now same a it policy we're little we new decision going see to the this

Unknown Analyst

you Eric, when for quarter report finalized not benefit your being I'm the the BTC take report your $X when margin provisional results sorry, I'm under from the will DGD margin you in understand. you quarter, not result, I'm do some including that or that on should asking be in in will the you per and because you out should we the that just first estimate PTC the the indicator. the any that's assume gallon as what results first PTC not actually asking about result, your

Lane Riggs

to really We the Paul, don't like, hey, a financials provisional this have be on be be -- it's will act. won't this. we PTC is Lane. If not ultimately first The have in the on we -- policy think the particularly is quarter, our way whatever it do don't it's it going is, we benefit side, if is. that clear there

Unknown Analyst

Okay.

estimate will just for including out So for benefit take the we PTC guys. not the BTC but any

Lane Riggs

Correct.

Unknown Analyst

can And what you Okay. benefit in how about in inventory the [indiscernible], terms the of is share quarter? fourth

Eric Fisher

we're was at year that for quarter. end but Yes, think of level both out. I give going we just fourth don't it optimization detail an did the of to that units

Unknown Analyst

right. All

cost? energy about So about how the

Lane Riggs

at least Greg. to going I'm pitch initially this over to

So go ahead, Greg.

Greg Bram

Paul.

our that a power in gas cost America. of for for energy natural lot and with low So costs, low meaning plants low and North

a to in from of opportunities do a don't to of there some your lot a done see a reduce costs incentive energy just value lot there not improve Penbrook. further higher. energy try efficiency their do consumption. We at the There's a see to to You opportunity project quite things bit because We've are refinery standpoint.

see that's I project. kind to of So unless general, or the in power gas in would be some it's improvement justify marked natural change hard an say, you going a cost of to

the efficient in we Always base be operations. be as can trying to as

change, investment no change that's in there. terms the a some there's of do make hard step of current environment. But So to to kind in

Operator

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

Joseph Laetsch

the Coast, stronger say, was to in a Mid-Con specific you any ask a the from wanted couple was I the Could standpoint, Coast on while and quarter it West by standpoint? part Just to on looked came weaker, like which maintenance. in drivers [indiscernible] From just and particular in driven the during quarter. capture for the our a remained throughput throughput capture West talk bit think

Greg Bram

Greg. this is Yes, Joe,

transportation It Benicia, on it. much so was we not had fuel the impacted hit you Coast impacted on there, fairly West impact simple, so the amount and work is primarily but that maintenance that rate. it an and make So could at capture of throughput

a there we blending. higher. than prior able saw and actually on throughput crude factors continue than so the to into on was In in And talked to capture higher addition going backward were in of to I about the quarter. that you to bit you saw quarter we the for maximize one the We the then through of market had butane earlier products WTI good rates side, a good saw demand pretty incentive little Mid-Con, throughput on planned push some the benefit had less to structure things a capture there,

Joseph Laetsch

And segment. helpful. the That's to ask wanted Great. then gears about I ethanol shift and

EXX, then to So just going to the also as continues your orders was the to the to you the talk Could indicator potential week. lower last included puts and well for year. takes some the the and year-round as grind forward start outlook executive on in of released industry in which

Eric Fisher

have market sustained this high third for surprisingly ethanol has say, and into production year. of really the production quarter fourth rates. rates high with I'll the beginning and been high and The that inventories been Yes. challenged

seen have rates. weather-related looking production But think I rates. high We overall, production inventories to impacts some you're high at and

say, would below I currently, margins ethanol keeping it's so mid-cycle. And

that. -- there's always of EXX, of So in for positive outlook lot a terms

through know, in don't EXX talking order about of moving this days. every see still CFR approved of see a market. growth we've XX their by to continued see you do a We As EXX movements. that lot EXX year We don't to Canada see emergency program. We lot

and It's develops see there's But we'll I how year still the likely EXX. for more U.S. a a this But sees before certainly, positive as industry ag to in appreciably logistics EXX to the fairly development still this mean, Canada policy. something you'll by retail it's see incremental ethanol overall, the likelihood, I convert high mean, challenge significant think I ethanol outlook. that in a

Operator

question Matthew Pickering, Tudor, Holt. next of from The Blair coming is

Matthew Blair

imposed, to for Quebec of Quebec impacts tariffs at to of How be especially in on the regards think easy the or or kind tariffs, product City? crude you to New see City would we Quebec to Latin talked ship pretty the those if Canadian some expect operating rates York about to the it'd And side does you volumes there send side. Harbor. Regarding your America Europe Valero? what volumes about lower the do And were plant,

Gary Simmons

This Yes. Gary. is

For part, Quebec the most our system gasoline. short is

York tends gasoline, year import does we diesel. lot typically, are There the barrels that periods Penbrook. a to that Harbor, And long come anywhere world. from we're of could New So in the to go place where in we those

reduction expect result to as wouldn't a throughput a see of I So tariffs.

Matthew Blair

[ appears if UCO ]. of would to replace Sounds potential from you qualify . major RD One good. And to importer those from the so, foreign a no volumes? DGD a expect impact that then of you the how other is impacts XXV is mentioned and foreign eco some credit longer for

Unknown Executive

Yes.

correct, has longer pointed into domestic no for going Europe U.K. the in always at and you're and RX So SAP is qualifies been -- UCO [indiscernible] for RD.

So really what do were with going strategically the we PTC that to doesn't feedstock. change

we'll into run and [indiscernible] continue our U.K. the And Europe so to markets. that's as into that view the

Operator

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

Jason Gabelman

CapEx first XXXX. highest billion since above you believe sustaining ask of on CapEx, about I to is average. said budget. wanted million I level the $X.X X-year the It's which the $XXX

driving if And an in activity I'm if that XXXX? that So system your wondering is indicator above-average sustaining spend? higher for of turnaround what's not,

Lane Riggs

this Jason, Lane. is

about in our we of sort we sustaining of average. So of sort terms capital nominally, talk

we inclusive sort sort we sustaining about for CapEx of ongoing -- think it inclusive turnaround, operations. of sort of of so billion. That's about being of average And $X.X

you catalysts, additional in or lumpy lower well, it's if it when it if mind, higher you side your so sort work. and only is on And can think the -- The so gets side. the lumpy, be thing of if turnaround

Jason Gabelman

is follow-up just going another my one. And Okay. ask I'm -- to sorry,

lot subject of zones and tariffs. On Canadian trade I a those trade aren't typically tariffs, refineries the Valero, its within has to foreign zones foreign believe,

those system would zones. tariffs get you in from foreign in. do now in Coast zones. most benefit that clarify because any way are foreign sidestep just implemented think do -- of you in XQ Gulf those that operating a be to you very given of And tariffs direct that, able your to is U.S. So trade be you'd the if Also, trade able

Richard Walsh

Rich just you until This Yes. can't comes how would anything just tell program all it structured. on So you with, right? what is is say out the Walsh. depends that this see I

lot. lot So we also bring export in a a

And so helps really the that's foreign with. zone what trade

along avoid any way don't trying I to so lines. really in domestic know that And those it's tariffs

to they're tell you benefit really see you and how until So proposing or it's going can't not. there's be structured, whether what

Lane Riggs

downs. trade we But have do foreign

Richard Walsh

Yes, yes.

have We trade foreign downs.

Operator

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

Homer Bhullar

Thank today. you Donna. any I to a everyone you, you. IR have Thank free appreciate team contact the Have if great questions. everyone. joining feel day, us Obviously, additional

Operator

Ladies concludes event. this and gentlemen, today's

or may webcast day. time, the this and your your at lines You of rest enjoy log disconnect the off

Valero Energy (VLO) 30 Jan 252024 Q4 Earnings call transcript