Derrick Whitfield: Good morning all and thanks for the 2024 commentary this morning. For my first question I wanted to lean in on DGD and focus on the sustainable margins of your business, which really should drive the value of that business beyond 2024. When we analyze your system margins by assessing the value of your feedstock streams relative to a marginal unit of production there appears to be a very meaningful positive spread with what you own differentially versus industry. As you optimize the economics of DGD, is it reasonable to assume that that sustainable margin you’ve talked about in the past at $1.10 per gallon still stands even with the press E4 RIN prices given your ability to increment tallow at DGD?
Randall C. Stuewe: Fundamentally Derrick that’s what we believe. I mean clearly the volatility in Q3 the turnaround offline 37 days, we disrupted our logistics both inbound and outbound there and move boats to Q4 that should have loaded et cetera, et cetera. The D4 RIN plays an important part in the value of that business down there. Clearly we were not a hedger of D4 RINs and we got caught in the volatility there with higher fat prices lower — a lower green premium as we say and you saw that flow through. But overall our thesis still remains the same. As Suann pointed out to me she said even under any situation our investment case in this was $0.79 10 years ago on a $3.23 a gallon bill. We still believe in that. We believe it’s even better now given our CI advantages, given our both inbound/outbound logistic advantages.
I mean keep in mind why are fat price is a little lower in North America because Diamond Green is the largest importer now of fats in North America because it has the logistical capability to convert and pretreat those fabs. So, that’s Phase 1. Phase 2 as the script alluded, we’re working hard with interested parties. We won’t say who the interested parties are, so please don’t ask. But we’re very close. And SAF is real, the demand is real, and the margin opportunities as we’ve explained out there remain very real and doable. So, if you look at this business in 2024, Matt said okay, I think there’s a chance we could get the LCFS implementation online a little sooner. Even if it doesn’t come until the back of the year, just the fact when CARB publishes and everybody says, here is the script here’s the playbook, that’s positive and we’ll see an improvement there.
Number two, as we look around the world for next year, the SAF side our plant is progressing nicely. We made it through hurricane season. I know technically that’s got another week or two, but it looks like we’ve made it through hurricane season, we’ll be buttoning it up steels up equipment is there. And hopefully, as we progress through the winter time and next summer, we’ll be mechanically complete and do a normal start-up here. And that’s — if you look at it two to three years from now, you’ll have 250 million gallons of SAF in 2024 — or I mean 2025 for sure. And then SAF too is on the drawing board here. Clearly, as we’ve communicated to people that decision won’t be made until we have complete proof-of-concept of both the technology and the margin structure.
But at the end of the day, if you look at 2024, 2025, 2026, you can start to think out that our portfolio will include substantial gallons of SAF along with RD and then we’ll have we’ll own that arbitrage again as we go forward. So, it’s a — as we look forward, we don’t see any downside from our case. There may be a little lull here that the market seems to want to price in. Matt, anything else you want to add?
Matt Jansen: I would just say that one thing to keep in mind is that as this SAF comes online the feedstock is renewable diesel. And so, our plan is bother plated for 250 million gallons. And so when we turn on with that plant, that’s 250 million gallons of RD that’s coming out of the RD market and going into the SAF market. So that’s another, let’s say, friendly component to the — even the outlook for RD.
Derrick Whitfield: That’s great. Maybe staying on DGD, I wanted to see if you could offer some additional color on the apparent delay, you’re seeing in RD capacity expansions, weather delays or simply just difficulty in running at nameplate, which is more challenging than I think we all appreciate. We see the same, but I’d like your views on that as well.
Randall C. Stuewe: Yes. And I’ll tie this with the team in here. I mean clearly as we look around the horn, we’re both buyers and sellers of fats and oils around the world. And when I say buyers, I mean that’s the DGD had and sellers that’s the Darling had. And clearly, we’re not seeing the demand from the renewable guys in North America. In fact, we’re actually — we’re buying material back from them. I think — I guess if we say frustration that might be too strong, our curiosity and a bit of frustration is that when people started whether it was Bloomberg or others putting out these S&Ds on D4 RINs, they forget multiple components of it. Number one, they assume if Phillips 66 announces a plan, it’s going to be online Jan 1 and run it capacity.
If Vertex, if PVF, I mean HollyFrontier, finally hit 52% capacity, yay. At the end of the day, you just keep reading this stuff. Well, that doesn’t generate the level of RINs that they’re seeing. And then the world doesn’t understand when you export material, which is a significant portion of Diamond Green because of its location on the Gulf Coast that goes around the world. At the end of the day those RINs get retired in 60 days. There’s a delay there. So at the end of the day, you kind of have to go back and rebalance this thing with reality. So we’re buying back that. We’re not selling, and selling means they don’t have the pretreatment units that they claim they do or they would be buying the cheapest fats in the world. Matt, anything else you want to add?
Matt Jansen: As I think many of these are learning, this is not necessarily an easy business to operate. And whether it’s — they call it, the CI component or the quality of the raw material and the pretreatment component requires more CapEx and someone tried to cut corners and save on CapEx then they find out that, gee, now this product we can’t process it or it’s at the capacities that we wanted. So this is a — it is a complex and not easy business to operate in. And I think some of these people are finding that out.
