Thank you for holding, and welcome everyone to the Vertex Energy, Inc. third quarter 2023 earnings conference call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you'd like to ask a question during this time, simply press Star followed by the number 1 on your telephone keypad. If you'd like to withdraw your question, again, press the Star 1. Thank you. I'll now turn the call over to John Ragozzino, Investor Relations. Mr. Ragozzino, please go ahead. Thank you. Good morning, and welcome to Vertex Energy's third quarter 2023 results conference call. On the call today are Chairman and CEO, Ben Cowart, Chief Financial Officer, Chris Carlson, Chief Operating Officer, James Rhame, Chief Strategy Officer, Alvaro Ruiz, and Chief Commercial Officer, Doug Haugh. I want to remind you that management's commentary and responses to questions on today's conference call may include forward-looking statements, which, by their nature, are uncertain and outside of the company's control. Although these forward-looking statements are based on management's current expectations and beliefs, actual results may differ materially. For a discussion of some of the risk factors that could cause actual results to differ, please refer to the Risk Factors section of Vertex Energy's latest annual and quarterly filings with the SEC. Additionally, please note that you can find reconciliations of the historical non-GAAP financial measures discussed during our call today in the press release issued this morning. Today's call will begin with remarks from Ben Cowart, followed by an operational review from James Rhame, financial review from Chris Carlson, and a review of our commercial strategy by Doug Haugh. At the conclusion of these prepared remarks, we'll open the line for questions. With that, I'll turn the call over to Ben. Thank you, John, and good morning to those joining us on the call today. We are pleased to report a favorable third quarter for 2023. During the quarter, commodity prices increased relative to the prior quarter. Our operations team was able to capitalize on this margin opportunity by running sustained, elevated throughput volumes and driving improved yields towards high-value finished products, resulting in adjusted EBITDA of $51.5 million for the quarter. Our renewable diesel facility has demonstrated best-in-class yield rates at around 98% while supporting continued operational flexibility, allowing us to adjust as needed to qualify a variety of alternative organic feedstock blends. We believe the renewable diesel facility is a proven, capital-efficient energy transition asset that offers significant value in the face of increasing regulatory shifts towards low carbon energy solutions, most notably in California. As these emerging markets transition over the next year, we will continue to focus on our key priorities. Number one, completion of phase II of our renewable diesel project, including the expansion of hydrogen production capabilities. Number two, continuing to improve on our balance sheet. As it relates to the balance sheet, and as previously announced, we have formally engaged Bank of America to act as our financial advisor to enhance our renewable fuels and sustainable products growth strategy and evaluate potential strategic transactions which could rapidly accelerate our balance sheet improvement efforts. We are pleased with the support they have provided thus far, and we look forward to providing potential updates as they develop. As the team will share with you today, our results for the third quarter related to safety, operations, and financial performance demonstrate the team's ability to effectively manage the business in response to ever-changing market conditions, while maintaining focus on the ability to generate long-term value for our shareholders. With that, I would now like to hand the call over to James Rhame, our Chief Operating Officer, who will provide an update on our operations during the quarter. Thank you, Ben. Good morning, everyone. I'll start, as always, with a report on our health, safety, and environmental performance. The third quarter of 2023 was another clean quarter, with zero OSHA recordables and zero incidents of environmental noncompliance recorded across the entire company. Additionally, Mobile saw zero process safety events and continues to set all-time site records in EHS performance. This has been achieved with the focus of the organization during an extremely busy time. I'm very proud of our employees at every location for prioritizing the safety of the people working within our sites, as well as our surrounding neighbors within the communities where we live and work. I must say thank you to this group of dedicated employees, Legacy and Mobile, for their continued focus on our core values of caring for one another. Our operations team at Mobile site demonstrated strong operational performance of the conventional facility during the quarter, with average throughput volumes of 80,171 barrels per day, for a capacity utilization of 107%, ahead of our previous guidance. Strengthened throughput volumes reflect the continued optimization of the company's crude oil procurement strategy to mitigate against potential supply risks. Great job by both operations as well as our marine logistics group for skillfully navigating these challenges. Total OpEx per barrel for the quarter was in line with our previous guidance at $3.70 per barrel, and reflect a combination of higher throughput volumes, as well as cost efficiencies gained from smooth operations quarter-over-quarter. Our conventional fuels gross margin per barrel during the quarter was $17.56. Our finished products, such as gasoline, diesel, and jet fuel, accounted for 67% of our total product yield during the third quarter of 2023. This was ahead of our prior guidance and reflecting the continued focus on facility-wide yield optimization, as we previously described. This focus on enhanced yields of high-value finished fuels covers a wide variety of activities from feedstock selection to optimization at the individual unit level, and in turn, maximizing value. This has been a concentrated effort, relying on every function of the refinery to find the means to create the greatest value within the asset. The same approach is being applied at our Marrero facility, focusing on operational excellence and yields to create the greatest value offered by the market. I'm very proud of the whole organization. Now, turning to our renewable fuels business. Vertex Renewable Diesel Plant operated smoothly, generating total renewable fuels gross margin per barrel of $4.78 for the quarter. Our renewable throughput volumes averaged 5,397 barrels per day, for a capacity utilization of 67.5%, strategically reduced to balance supply economics and support feedstock pathways development. Our total production of Renewable Diesel for the third quarter averaged 5,297 barrels per day, demonstrating a renewable product yield of 97.8%. As Chris will highlight in a moment, our crude oil throughput for the fourth quarter are expected to be down to approximately 70,000 barrels per day due to two factors. Early in the fourth quarter, Mobile performed a total plant outage, allowing the local power provider to proactively replace the main electrical transformer that services the site. This replacement was planned and executed successfully under our control to prevent an unplanned electrical outage at the site. The plant has returned near full rate since the completion of this outage. Additionally, during the fourth quarter, there will be a crude unit furnace decoke that is planned and scheduled. This scheduled pit stop will be executed within the next month outside of peak holiday periods. I will now turn to Chief Financial Officer, Chris Carlson, for a review of the company's financial results. Thank you, James, and welcome to those joining us on the call today. For the three months ended September 30th, 2023, Vertex reported net income attributable to common shareholders of $19.8 million, or $0.17 per fully diluted share, versus net income attributable to common shareholders of $22.2 million, or $0.15 per fully diluted share in the third quarter of 2022. Included in this quarter's net income is an inventory valuation adjustment charge of $9.4 million. We reported Adjusted EBITDA of $51.5 million in the third quarter of 2023 versus $1.6 million in the prior year period. Total capital expenditures for the third quarter of 2023 were $21 million, in line with our prior guidance issued on August 8th. Turning to the balance sheet. As of September 30th, 2023, the company had total cash and equivalents, including restricted cash of $79.3 million versus $52.1 million at the end of the prior quarter. Vertex had total net debt outstanding of $163 million at the end of the third quarter of 2023, including various lease obligations, implying a net debt to trailing twelve-month Adjusted EBITDA ratio of 1.3 times as of September 30th, 2023. Regarding our ongoing balance sheet optimization strategy, we are proactively conducting cost-benefit analysis around our existing term loan and potential refinancing pathways in pursuit of more efficient sources of capital. We continue to be opportunistic about cleaning up the remaining $15.2 million of convertible notes outstanding, following our recent cashless equity exchange transaction completed back in June. Improved pricing for conventional fuels during much of the third quarter benefited conventional fuels gross margin. Most notably, this uplift in conventional pricing for the third quarter provided a notable tailwind to financial results, and it was compounded by improved run rates and yields in our conventional fuels business, as James outlined earlier. During the third quarter, we identified the rally in gasoline prices as a substantial opportunity to limit market price exposure ahead of a seasonally weak period for gasoline cracks. As a result, we had gasoline cracks covering approximately 27% of gasoline production for the fourth quarter of 2023. Looking to the fourth quarter of 2023, we anticipate total conventional throughput volumes at Mobile to be between 68,000 and 71,000 barrels per day, reflecting planned downtime, as James noted. Expected yields of conventional fuel products such as gasoline, diesel, and jet fuel, is expected to be between 64%-68%, with the balance in intermediate and other products such as VGO. Turning to our renewable diesel operations, we anticipate total renewable throughput volumes of 4,000-6,000 barrels per day, reflecting 50%-75% of our total phase I operational capacity. Our yield on renewable volumes is expected to be 97%-98%. OpEx per barrel on a consolidated basis is expected to be $3.95-$4.20 for the fourth quarter, and we anticipate total capital expenditures for the quarter to be between $15 million and $20 million. I'd now like to turn the call to Chief Commercial Officer, Doug Haugh, who will provide updates on the commercial, business, and RD. Thanks, Chris. As James mentioned, one of our critical objectives for the quarter was to expand our feedstock blending to include runs of tallow, DCO, and canola at volumes sufficient to support the data collection required for our LCFS pathway approvals. We successfully completed runs to support our soy, DCO, and canola pathways in the third quarter, and we're finishing up the tallow runs this month. We have also successfully completed our LCFS temporary filings, and are pleased to report that we will receive LCFS credits at the default carbon intensity values for all of our RD production in the third and fourth quarter of this year. The next step is to complete our filings for each of the four feedstocks, on which we now have proprietary run rate data and detailed carbon intensity analysis: soy, DCO, canola, and tallow. This will allow us to receive the increased credit value available with our lower carbon intensity production as compared to the default temporary values. We expect to complete that next step in the LCFS process during the fourth quarter as scheduled. As James noted earlier, RD margins during the third quarter were modest, but drove a positive gross profit of $2.4 million for the quarter. This margin environment not only supported us in running at rates sufficient to complete our feedstock qualification process, but also to prove our finished product logistics and delivery capabilities to the West Coast. Vessel loading and delivery of our product to California markets has now been completed for all of our renewable diesel production to date, successfully validating these critical logistics and delivery capabilities multiple times since commercial production began. These shipments allow us to benefit from the value of LCFS credits for all of our production during the third and fourth quarter, and will contribute to the fourth quarter financial performance of our renewables business. The collaboration with Idemitsu, our offtake partner, who maintains the terminal and marketing assets across several West Coast ports, has been incredibly positive and productive throughout this process. We really appreciate their support. Another primary focus for our trading and supply teams this quarter, was the continued development of our renewable feedstock procurement strategy via the expansion of our roster of reliable suppliers. We have continued to add approved suppliers to our supply chain for soy, DCO, canola, and tallow, and have started the sample testing and qualification processes needed to begin bringing in UCO supply for multiple suppliers. The testing and regulatory qualification required for these feeds includes the exchange of detailed information on origins and the application of proprietary processes used in the collection and processing. These important considerations assure the consistent quality of feedstock supplies and reflect the significant investment of time and money by our suppliers. So we appreciate and value their efforts as we bring forward this part of our RD strategy by many months. We also continued to build our trading and supply capabilities this quarter with the opening of our new trade floor in Mobile, that will support the expansion of our trading, supply, logistics, and marketing teams. Our trade floor will support both our conventional and renewable refining assets, working to maximize profitability by identifying the most attractive opportunities for feedstock supply and finished product sales. Along with this build-out of trading capability, we've successfully entered the marine fuels business with the launch of Vertex Marine Fuel Services, a marketing business in Mobile Bay and surrounding markets. This team of marine fueling experts now offers marine fuels via terminal, truck, and barge supply. Establishing these commercial teams with trading, supply, marketing, logistics, and sales capabilities, provides the foundation for us to expand the available margins on our production volumes through the continued development of a truly integrated strategy. As James mentioned, our refinery in Marrero also performed well this quarter, and that was supported by a strong performance in both our proprietary collection businesses and our third-party aggregation business. The build-out of our commercial trading and marine fuel services capabilities to support our Mobile production, is now also supporting the integration of our Marrero production into our finished products marketing. This quarter, we have established the fuel blending and transportation infrastructure needed to optimize portions of our Marrero production directly in our marine fuels marketing activities, which improves our netbacks and competitive position in those markets. In summary, during the third quarter, we continued completion of the key commercial milestones needed to advance our renewable supply chain strategy, while also expanding our capabilities to blend, distribute, and market our conventional products. My thanks to the team for all the extra work it takes to build new capabilities while safely and profitably running the current business. Now, back to Ben for a few closing remarks. Thank you, Doug. Throughout the third quarter of 2023, we have worked as a team to bring continuous improvement to each of our site locations, commercial operations, and internal business processes. We know the value of strategic positioning, and we have been proactively executing key objectives aimed at scalability and reliability, so we can best position ourselves ahead of the market. We see the renewable demand outlook for California generating strong economic potential over the coming years. The work we continue to do around optimizing our assets, developing feedstock blends, deepening our supply chain logistics, growing our marketing and trading capabilities, are how we plan to deliver on our vision of building an energy transition company. We're excited about the renewable opportunities we see ahead, and we are committed to our long-term strategy of driving sustainable growth and creating value for our stakeholders. As we conclude our third quarter 2023 update, I want to thank our team members across the entire business for their relentless contribution. Additionally, I'd like to thank you all for joining us on the call today and for the continued support of Vertex Energy. With that, I'll now turn the call over to our operator for questions. At this time, if you'd like to ask a question, please press star one on your telephone keypad. Your first question comes from the line of Donovan Schafer with Northland Capital Markets. Your line is open. Hey, guys. I wanna start off by asking about the, you know, higher production yield you were able to get this quarter. High value, you know, refined products, the gasoline, diesel, jet fuel. You know, it was a good mix at 67% this quarter. You're guiding 64%-68% next quarter, before the operational update, you guys had said 61%. And it sounds like you're saying there's sort of these operational improvement, you know, initiatives behind that. Based on Doug's comments, it seems like there may also be something to do with, I don't know if it's, if there's something with the marine fuels business, combined with Marrero and the infrastructure, if somehow that's getting mixed in with things in some way. I want to know if you could help me understand the dynamics driving that, and if we expect that to continue going forward, at that kind of mid-60, mid- to high-60%, or if it'd be more typical for it to be closer to 60% or potentially a touch below that in the high 50s? Hey, Donovan, this is James. Thanks for the question. What we've really spent time on with from the factory floor all the way through our technical organization—is really focusing on what the yields are, and using the yields and the value delivered by the market to make sure that we're buying the crudes or the highest value to us. And so there is nothing about Marrero in there. There's nothing about it, it's straight at the fence line. And it's really been a concentrated effort from trading and supply, through our supply team, through operations and technical, and we believe these are sustainable in the range that we describe this quarter and in future quarters. It's, it's more about the sourcing and kind of lining things up, right? More so than, like, changes of particular hardware or some other catalyst type thing, or something like that, driving that yield piece of it. Yes. Is that right? We have made some very small, Donovan, we have made some very small capital investments, you know, to low-hanging fruit, those things that would enable us to improve yields. However, it's not been a huge investment at all. It's really been the focus of the organization operating well, and the advantage you have from operating smoothly throughout the quarter allows you to really dial in the optimization, and that's really what, how that's been achieved. Okay, thank you. And then for my next question, I wanna talk about, you guys shared a direct, OpEx figure for the renewable diesel side of the business. You know, and it's, it's, meaningfully higher than what you get on the fossil fuel side. I think it was somewhere in the $20 per barrel. You know, fossil fuel side, it's, you know, $2-$4 a barrel. Can you just talk through kinda what costs are incorporated in that? Does that still cover maybe some of the? I know last quarter you had, like, $20 million in one-off charges for, you know, fixing some of the pump equipment and stuff. Does that get included in some of that? And how should we expect it to trend going forward? Hey, Donovan, this is Chris. Good question. So, I mean, basically what we did at the outset is we took a third of the site costs and applied it to the renewable diesel division. So what you're seeing is a third of the cost on approximately 5,000 barrels of production. So, you know, as you can imagine, as we scale up production, that number is gonna start coming down. But the best way to look at it would be on an OpEx per barrel for the site. And, you know, as you heard, we guided for Q4 to be $395-$420 per barrel. Okay. Okay, great. Well, thank you, guys. I'll leave it there and take the rest of my questions offline. Thank you. Thanks, Donovan. Eric Stine with Craig-Hallum, your line is open. Hey, everyone. Maybe just sticking with the direct OpEx first, I mean, that's elevated sequentially. Is that just reflecting a number of the projects that you cited? I believe one that you've already undertaken here in October, and the one to come later in the fourth quarter. There may be, there may be a little bit of an increase there, but, I mean, it's not much, overall, when you look at the total site. Yeah, and what you have there is pretty consistent with what we've had now that RD is up and running, and we've got those costs behind us, and it's really just an allocation across those business lines. Got it. So this is kind of a I mean, this is probably a decent run rate to think about going forward? Yes, on a consolidated basis. Yes, yeah. Yep. Okay, good. Maybe just sticking with the conventional refinery here. You mentioned the, I think, 27%, you know, hedging on the gasoline side. Gasoline, obviously very strong in 3Q. I mean, should we think about that you hedged that, you know, close to the peak? Or, you know, what kind of price did you lock those hedges in for Q4? Yeah. This is Doug here. I wouldn't say it was the peak, but I'd say we were, you know, we were well-timed on that overall, as we came through the strong third quarter. And, you know, we're hedged at that. For that 27%, it cracks, you know, substantially above the realized cracks today, right? Yep. Through the end of the year. So it's gonna be. That'll be helpful. Yep. No, absolutely. Okay. Well, maybe, you know, I guess on the renewable diesel side, and I know you're kind of going down the strategic path, and it's still, you know, it's still somewhat early, but, you know, I'm just curious if you could talk about, in your mind, as you sit here today, what your ideal partner looks like. Clearly, you're looking to do something that would include, you know, helping the balance sheet. But, you know, curious, do you think it's someone who is simply a financial partner, or is it someone that could be involved, you know, could be involved on the operational side, whether it's, you know, feedstock supplier, you know, any number of other parties? Just curious, kind of your early thoughts on that. Yeah, I would say. You know, I don't know. I'd say that there's any one specific criteria that makes it a perfect match, but we are exploring both of those, you know, groups of potential partners, one being financials that bring, you know, a unique set of strengths and capabilities that could help us that are more, you know, purely balance sheet-oriented. And then, you know, there is another group of potential partners on the strategic side that could bring, you know, not only financial capacity, but, you know, tremendous support around feedstocks and/or finished product marketing, or both in some cases. So, you know, we're pleased with what the Bank of America team has provided and brought forward thus far. We're gonna run a very robust process, and, you know, I think we'll see substantial participation from both of those categories of potential partners, and that's been our indication thus far. So, you know, it's an exciting development overall, but, you know, we're very open and thoughtful about the advantages that either type of partner could provide us. Yep. And then, you know, I don't know if you've disclosed it or not, but, I mean, do you, in your mind, do you, do you all have a, a target for timing? You know, whether it's first half of 2024 or something more specific. I'd say that's a, that's a reasonable estimate. You know, we're, we're, you know, we're in the early stages of the process now. Lots of trading of NDAs and, and the like, you know, typical for a process of this type. We certainly expect that by first half of 2024, you know, we've, we've kind of gained a clear understanding of the path forward. Okay. Thanks, everyone. Manav Gupta with UBS, your line is open. Guys, first of all, thank you for breaking up the RD versus conventional EBITDA. A number of your peers who have been doing it much longer than you still refuse to break it, so it helps with the disclosure. So thank you for that. My first question here is a material improvement in conventional refining from Mobile. You are not providing the capture, and I'm sure there's a very good reason you have stopped doing it, so I'm not going to press you on that. But help us understand some of the factors that helped you deliver a much stronger EBITDA on the conventional side of the Mobile refinery versus the second quarter. Yeah. No, thanks, Manav. Good question. Really, if you look at the second quarter to third quarter, we saw a significant improvement in the overall market. And with that, because we were running reliably and really focusing on those higher value products, we were able to capture what the market gave us versus the second quarter. And so it was a clean quarter from reliability, from yields. In fact, this is, this is very, very good results, with the yield profile that we saw. But it was really the market gave it to us, and we were there available to capture it. And with that, we had significant rate increase across the as you can see from the rates, and that was all reliability driven. That's continued to be our focus on operational excellence. Perfect, guys. I'm going to press you a little bit on the path to profitability for renewables. I think you mentioned LCFS will help, absolutely. I mean, I'm just saying, you know, one of your peers had similar issues, struggled a little in the past on profitability, but they had a clear path to profitability. And if you look at DINO now, they are actually profitable on the RD side. So help us understand your path to profitability as it relates to the renewables diesel business. Yeah. Thanks, Manav. Good question. Doug here. Yeah, it's. We're very pleased with our progress thus far. We're, we're in no way concerned about the, you know, the start-up costs and the, you know, the additional expenses to get the unit up and running. What we're pleased with is the reliability of the unit, the yields are fantastic, you know, and, and our ability to flex our supply chain has been much greater than we anticipated. So one of the, one of the problems with the, you know, the run rate losses coming into the, you know, startup period was we had built up almost 500,000 barrels of inventory. Because we just, you know, we didn't. We weren't, we weren't experienced in these supply chains. We weren't, we didn't know how reliable they would be. You know, the last thing we wanted to do was, you know, build a pricey big brand-new unit and not have the feeds to run it. So, you know, we kind of over-inventoried the business, if you would, but we felt that was prudent coming in. You know, we've had to run off those high-cost feedstocks to get back to normalized inventory levels, which we're at now. And we've been able to really gain an appreciation for the reliability of our supply base in that sector. You know, we've continued to expand the number of suppliers and continue to qualify new feeds. We found that feedstocks have been, you know, plentiful and available, which we, you know, weren't certain of when we started up because we weren't out in the market buying every day. So we're, we're quite pleased with where we're at. And yeah, you're right. I mean, the path to profitability from here is to continue to drive down carbon intensity, continue to maximize the LCFS contribution now that we're in the system, to continue to optimize our logistics, you know, that we, you know, were that were brand-new assets for us, you know, there in the second quarter, third quarter. So, you know, there's a lot of, lot of opportunity ahead, but we're very confident in the business, very pleased with how it's run. The team's done an excellent work at work at the plant, in terms of really running the unit well and being able to, you know, accommodate, tremendous flexibility on our feedstocks, right? So that's, you know, you don't. You plan for those, but you don't know how it's exactly going to work until you do it, and, we're very, very pleased with how it's, how it's turned out. No, congrats, guys. Based on what you said, I'm optimistic that you'll start reporting a positive EBITDA from your RD business somewhere in 2024. So I'll leave it there. Thank you. Noah Kaye with Oppenheimer, your line is open. Good morning. Thanks for taking the questions. Nice quarter. I wanted to first ask about the process around hedging as it stands today. You know, you're kind of dipping a toe in here opportunistically, it seems, hedging a portion of the gasoline production, and it's less than 10% of the output. How should we think about your approach to hedging now? Will it continue to be opportunistic? Will you look to make it a bit more programmatic? Help us understand how your thinking on the output has evolved. Yeah, great question. I think the you know, I do think we will continue to evolve our risk management strategy to be a bit more programmatic. The team's done, you know, made tremendous progress this year as we've put the trading and supply teams in place, advanced our risk management policies and practices and governance internally, and has, you know, a now a much more structured process to look at the, the markets forward, particularly in the front quarters. You know, we're, we're not yet at the point where we're looking to go put on a, you know, a full annual strip and, hedge out our production at that level. But we certainly are in a position to proactively take advantage of, you know, attractive cracks in the front quarter ahead of us. So we'll continue to do that, and we continue to evaluate distillates as we speak. You know, those are in a pretty favorable position at the moment, but also at very, very low inventories, you know, as an industry. So there's a balance there that, you know, has kept us from striking those hedges yet. But again, just like we did with gasoline, you know, we'll be opportunistic for the front quarter, and continue to improve our capabilities and governance around that process as we go forward. And I do think you'll see us start to use that, you know, more programmatically in the years forward. Okay, great. Thanks. That's helpful. And then you mentioned that inventories, I think it was specifically on the RD side, are a bit more in balance now. It looked like inventory actually ticked up sequentially, and so I'm just wondering how you're thinking about working capital here in 4Q. Is working capital going to be a positive source of cash generation? Do you plan to work down inventories, you know, as you're running at a lower throughput rate? Yeah, good question, Noah. This is Chris. Yeah, we saw a slight uptick in inventory values. The actual volume did go down quarter over quarter. So I know that's a little tricky when you're looking at the balance sheet, but as we head into Q4, I do anticipate us reducing inventories, so we should see a working capital benefit from that side. Great. Last question. Just what is the CapEx associated with phase II of the RD project, and over what timeframe do you anticipate that outlay materializing? Yeah, what we're looking at right now is about $35 million-$40 million, and that will be largely during 2024, that, that outlay will happen. Thanks. Well, it looks like your balance sheet will be in a much stronger shape for that outlay than last quarter. So well done. Nice to see. Thank you. Thank you, Noah. Sameer Joshi with H.C. Wainwright, your line is open. Great. Thanks for taking my questions. Just following up on some of the previous questions. Is this CapEx for phase II or the beginning of work on phase II dependent on any results from the efforts from the strategic side, where you are trying to monetize some of the cash flows there? No, we're not we're not waiting on the strategic side at all. That's just part of our normal process that we, you know, put in place a year ago for phase II. Okay. So irrespective of what happens on that front, you will continue the development as planned? Correct. Correct. On the renewable capacity utilization, is the reason to restrain or constrain to less than 75% related to just feedstock availability, or is it related to uncertainty on LCFS? Or, or any other operational reasons, why is it that you are not doing more than 35% in full queue now? Yeah, I think in, the way to look at that, this is Doug here, just is the, one, the available margin, in the market, so we're gonna optimize to that and ramp rates up and down as, as appropriate. But the other, you know, we have just qualified for the LCFS defaults. Those do add, certainly, margin structure for us compared to where we were in the, in the trailing quarter. Going forward, we'll, we'll realize those in the fourth quarter for, for both quarters, actually, so that's gonna be helpful. It's, it's definitely not related to feedstock availability. So, you know, we have had, like I stated, we've, we've had, frankly, a lot more feedstock than we needed. So we're, you know, we're bringing those supply chains into equilibrium now, but are very confident because we have originated in a very tight period. We were still able to originate more than enough feed to, you know, to run rates that we wanted to run. You know, so that, that capacity is available, and if the, the market commands it, we can bring it to bear and, and raise rates, you know, appropriately. Correct. Um- The unit is running extremely well, Yeah A lso, as we've been very proud of the way it's operated. I think it's important to note that, you know, when you look at the operating cost, as, you know, as allocated, it's really important to understand that we're, you know, we're fully burdening the business unit with all of the costs to run at 14 KBD. Right? So we've got all the infrastructure, all the tankage, all the storage, all the transportation capacity, you know, barging, and so forth, that's built for full rates. Because we didn't want to wait to build that stuff and then have the unit come up and not be able to run it, right? So, you know, the capacity is there in its full sense, not just the available feeds, but the ability to manage them, ship them, store them, convert them, load vessels to the West Coast efficiently. But that comes with a lot of cost burden when you're, when you're just starting up at these run rates. So, you know, really, we've you've seen RINs collapse meaningfully, and you, you haven't seen the feedstock prices, you know, capitulate to that repricing yet. We believe that, you know, it's coming. It, it started, it started in this quarter, certainly. But as we see those come into equilibrium, you know, we'll use that opportunity to buy in feeds profitably and, and ramp rates appropriately. Yeah. If I may, I was going to ask you about that, as well. So the $4.78 per barrel renewable gross margins, do they include any impact of, or benefit of RIN? And also, if that is a positive number, and if your OpEx is being distributed over a smaller generation, or yield, does it not make sense to increase, like, to full capacity so that you have lower, like lower OpEx, overall OpEx distributed to that unit? Yeah. So looking at the $478, it does include the RIN. However, it does not include the LCFS credit that Doug mentioned earlier that we expect to get. Hopefully, we'll get it in Q1, and then it is retroacted to Q3 and Q4. Okay. And then just the last question: on slide 16, under asset utilization, the last bullet says, "Vertically integrate from feedstock to retail products." What does this relate to? Which asset does it talk about? That's really integrating the entire supply chain for renewables all the way through our system. Renewables. Right. Okay. We're, you know, we're not, you know, we're going back to origin on our feeds. Yeah. As you go to lower carbon intensity feeds, that's now required by the EPA to actually document every individual origin. So in UCO, as an example, you got to know the exact restaurant it came from, in order to fully qualify and, and, and be fully auditable, on your origins and attest to your carbon intensity outcomes, right? So it really is a different type of supply chain than what you have as an example with, you know, crude oil running through the conventional refinery. Yeah, and then I guess when you're looking at the other end, it also requires us to get access to, you know, the consumer market in California, which we're doing with our partner at Idemitsu. So, you know, if we didn't have a secure partner that had the tanks and the rack, truck racks, and the finished product marketing actually in that market, particularly as other production comes online, you know, you could run the risk of getting squeezed out of that, out of that retail market, and lose access to that additional credit regime. So it's really important that we, we address it on both ends, and that we've got a supply chain that, that can reach back to specific origins on the feedstock side and make sure that we can land that product in the highest netback markets and access that, that end-use market, through both from an infrastructure and, and marketing standpoint. Understood. Great. Thanks for that, and good luck. Thank you, Sameer. Jason Gabelman with TD Cowen, your line is open. Hey, hey, morning. Thanks for taking my questions. Morning. I wanted to just clarify a point you just made about receiving LCFS credit value, and I think I heard 1Q just now. In the press release, it says that you'll receive credit in 4Q. So just wanted to clarify that. And I was wondering if the value you capture is based on LCFS credit prices at the time the volume was produced or at the time you're actually crediting yourself with the LCFS values? Hey, Jason, Chris here. Yeah, I guess to tackle the statement on the LCFS credit, we expect to receive the credit for Q3 and Q4. My expectation is the cash that, you know, when we receive the cash will be sometime in Q4, Q1. You know, who knows when we will get it exactly as we're dealing with, you know, government agencies and timing. So that's kind of where that stands at the moment. Yeah, just to be clear, the filing for the credits is always the following quarter. So, you know, we'll file fourth quarter production and imports into California that was produced in third quarter, right? So you're always a quarter trailing. And, you know, the commercial value of those credits depends on, you know, how you're executing those transactions with your partner. So, you know, when they're actually put in the credit bank and monetized, and the terms of which that's done and the price at which that's done is, you know, is gonna be unique to every party that you talk to, depending on their commercial arrangements with the importer of record into California, which for us is Idemitsu. Got it. And then in terms of how much value you're gonna generate, if we look at some of the indicator margins of your peers, they suggest the value they get is 0.007 times the LCFS credit, credit price. Is that, is that kind of a ballpark of what we should expect to see reflected in Vertex's earnings? Yeah, I haven't done the math that way, but, you know, I think the way we think about it is, you know, we've got a-- on the temporary pathway for the third and fourth quarter production, which is at a CI value of 65 and 45, depending on whether you're plant-based or waste-based. You know, that translates into a, you know, kind of a cents per gallon value for us on the- Mm-hmm F inished product. You know, obviously, that's just the starting point. It's helpful. I think, Chris, we have an estimate of that at $8 million for the third and fourth quarter coming in. Yes, combined. So that's, you know, round math, how that, that'll work out. I think the way to forecast it going forward. So I don't know. You know, you speak to others in industry, I don't know where they're at on their kind of CI journey, if you would. So, you know, the value will increase as the Carbon Intensity goes down and you generate, you know, additional credits under the LCFS regime. So, you know, we believe that, you know, our focus right now is getting on the specific pathways. So it's a pretty complicated process, but you move from the temporaries to what's called provisional. So now we'll file our provisional pathways, which are based on our proprietary production, right? So it's the exact carbon intensity as calculated under their carbon intensity models that you use for CARB on our actual production for each actual feedstock. But even for soybean oil and the reason I say that is even for soybean oil, it's typically much better than the default value if you use your actual production values, and you're running a, you know, an efficient facility, which we expect that, that we are. So it's not just the feedstock mix, it's even the carbon intensity values that you're producing at on your conventional feeds as well. So it's gonna be, it's gonna be beneficial across our feedstock mix in its entirety, not just for the DCOs and tallows, you know, the waste products. Mm-hmm. Great. And then my last one, if I could squeeze another one in, was just kind of, I wanted to get your sense on the market outlook for renewable diesel, especially as in light of Vertex conducting the process that you are in terms of monetize or increasing kind of the value you're getting for the project. I think a lot of investors are concerned about a potential oversupply next year of renewable diesel and pressure on RIN prices. There's been some volatility in the RIN prices recently. Just wanted to get a sense of your market outlook for the next 12 months, and how you think that impacts at all this process that you're running. And I'll leave it there. Thanks. Yeah, I think we're,you know, I mean, we don't materially differ from that, you know, the challenging outlook that we see. I mean, RINs have come off, you know, almost, what? 50%. You know, that's obviously very favorable to our conventional business, but it's a headwind for the renewable business. Yet we do actually like the fact that we are more balanced now and have that opportunity to meet our obligation. But really, you know, the anticipation of those margins depends on how fast the feedstocks react to the new margin environment, right? So, as RINs go If you look historically since 2016 all the way back to, you know, when RD really started to scale, you know, you've got these medium periods of volatility where, extreme you know, RINs go up, LCFS goes up, feedstocks go up. RINs go down, LCFS goes down, feedstocks go down. But they don't do it in perfect timing. So, you know, I think our outlook fundamentally for 2024 is gonna depend on, you know, how fast does the RD capacity ramp in comparison to how fast the crush capacity on the feedstock ramps. And, you know, we don't pretend to have a crystal ball on that, but we do see tremendous feedstock capacity under development. You know, in our meetings with suppliers, there's a lot of new crush and refining capacity coming online, and there's also a massive influx of imports that the U.S. has never seen before. Because, you know, with these credit regimes, we're now pulling feeds from the entire planet into the U.S. at accelerating rates. So, you know, that's the push and pull. Obviously, as the production is ramped, you know, the government programs, quote, frankly have worked, right? Because they've created the production, and they've continued to scale, but they have come off as that production ramps up. We're very focused on 2025 in terms of running the process. You know, that's when really our unit is at full capacity, right? So, you know, we're focused on the margin environment further out, where, you know, once the LCFS program is kinda, quote, "reset," you know, they've published their guidance for that. It's a 75-page, you know, that acted on early next year, which basically puts the glide path in place for California to fully convert. So we're, you know... That builds a lot of confidence on our our side, that puts kind of a floor under the market, continues to pull those products into California for conversion, you know, from conventional to renewable, and, you know, will create the margin environment long term for that to be so. So, you know, that's, that's our focus, you know, from a process standpoint, is to, you know, have a very low-cost capacity RD facility at 14 KBD, that, you know, is feedstock flexible and has continued to improve its carbon intensity quarter over quarter over quarter, both in terms of the feedstock selection and our operating efficiency. So we believe that's what 2024 is about for us, and that that provides a tremendous opportunity for a partner to, to get involved with us in the business as we position that facility for a long-term run. Got it. Thanks a lot for the color. Our final question comes from the line of Brian Butler with Stifel. Your line is open. Hey, good morning. Thank you for fitting me in. Quick on the conventional piece. Based on the midpoint, kind of your outlook for the fourth quarter, at current prices, what would the gross margin on the conventional and the EBITDA be? Assuming, you know, again, pricing doesn't change from where we're at. I think a good question, Brian, and I think we're all looking to the markets to kinda see where things land. You know, again, as our guidance has indicated, the last two quarters were focused on OpEx per barrel and then CapEx. And then as Ben, or as James noted, the yields have dramatically improved. So, you know, I think to focus on the gas, jet, and diesel yield, that'll give you your best indicator of where we're gonna land, looking at the forward strip. Okay. And then, I guess, on the hedge piece, how much of that profit have you locked in? Can you give any color on the, maybe the dollar amount? You know, it's hard to say 'cause it's gonna move around. You can look to the current filing, and at September thirtieth, I think it was right at $4 million, you know, for the gas hedges. But again, that's gonna bounce around through the quarter. All right. And then looking at the renewable diesel, at the current LCFS or the default and the current RIN price, is the renewable diesel profitable at full capacity, or do we need to see the feedstock costs come down? Yeah, we're I would say marginally profitable on, you know, the current margin structure. Certainly, as we now get LCFS credits, that's helpful compared to where we were last quarter. So that's, you know, that's pushing us to run, you know, a little greater rate than we would have otherwise. But, you know, we really see the. I mean, for us to ramp to full rates, you know, we'd need to see feedstocks come down in price and, you know, have additional margin opportunities for us to chase it that hard, right? So otherwise, we're gonna stick to our plan on really optimizing the lower carbon intensity feeds. We have a lot of technical work that we continue to do within the facility to make sure that, again, as we run forward, certainly through 2024, but as we get to 2025 at full production rates, that we haven't, you know, we haven't left that work to do when the margin environment is there, right? So, you know, we just have to be disciplined now, get that work done, and make sure that we're in the long-term position to maximize run rates and margin opportunities when they're there. So, you know, it's yes, there's some incremental margin per barrel. I got the earlier question that, well, then why don't you just run at full rates? But that really puts the facility in a tough position when we're trying to, you know, optimize different feedstock blends, you know, on a week-over-week basis. And as we're doing all the intense data collection it takes to make sure that we're really optimizing our carbon intensity work on the facility itself. So we're gonna maintain reasonable rates. Certainly, if there was, you know, really attractive margins, then we would ramp rates and run at full rates. But we just haven't seen feedstocks, you know, adjust to that cost level where it incentivizes us to do that at this time. Okay, and then one last one. On the feedstock optimization, how much of a—I mean, carbon intensity improvement or benefit do you get from, you know, running the other feedstocks over the default? I mean, is it 50%? Is it 100%? How much of an increase can you see as you put in the new, you know, better, lower CI scored feedstocks? Well, certainly, you know, compared to the defaults, you know, we'd expect, you know, at least 50% improvement, you know, from where your defaults are. So, you know, it's gonna be, you know, we don't, we don't know exactly, like, where the soy will land, but if you look at other Gulf Coast processors, you know, on their-- even the carbon intensity of their soy production versus the default of 65, I think many of them are in the, you know, low 50s. So you pick up, you know, it's not, not 50% on that one, but the overall blend, when you look at much lower carbon intensity values on your tallow and your DCO in particular, and then obviously, as we, as we bring UCO to bear, all of those are gonna, gonna result in dramatically lower carbon intensity for the, for the pool. Okay. Thank you very much for taking the questions. I will now turn the call back over to the speakers for final comments. Hey, thank you, operator, and thank you, everybody. Before we sign off here, this is Ben. I wanna express my gratitude to our team once again for their outstanding work this quarter. In a dynamic business such as ours, ability and our agility is very crucial, and I'm confident in our team's ability as they have demonstrated over this past quarter. Moving ahead, you know, we will continue to follow the roadmap we've established. We're pleased with the capital investments made in these markets over the past few years. I think we're sitting in a very good place as far as capital efficiency, which we've laid the groundwork now for renewables, and we've brought together the synergies across our assets, from feedstock origination to sustainable products being made from our legacy business. We've enlisted the help of outside experts to model our business over the next five years. We see good long-term value creation. We will remain agile and pursue opportunities to deliver our best to our employees and our stakeholders. We look forward to sharing more as we're able. Appreciate everybody taking the time on this call to lean in to, you know, Vertex and what we're doing, and we look forward to our call in the fourth quarter ending. Thanks. This concludes today's call. We thank you for your participation. You may now disconnect.