Operator: The next question comes from Dushyant Ailani of Jefferies. Please go ahead.
Dushyant Ailani: Good morning, guys. Thank you for taking my questions. The first one I had was on the guidance that you’ve given for 2024 the $1.7 billion to $1.8 billion. Could you talk a little bit more about what margins do you expect for the Food and Feed segment?
Randall C. Stuewe: Not really ready to go there yet, Dushyant. I mean, as I look at it when we take a shot at producing guidance here what you can back into here is you can say what are you thinking on Diamond Green Diesel? Well, we’re thinking that we’re going to run at above nameplate capacity and we’re going to make $1, $1.10 a gallon next year, and it doesn’t include any SAF gallons coming on early at this time. It’s just too early to make that prediction. And so it’s not hard to back into that number. And so at the end of the day, where it lands whether it’s in Food or Feed, we’re still — we’re thinking that the numbers are going to roll up between $1 billion, $1.1 billion maybe a little more in the core business depending on where fat prices recover.
And as we’ve said, if renewable diesel capacity is there enhanced pre-treatability or even if it doesn’t have pre-treatability fats and oil prices can’t stay where they’re at. If you look at the — whether it’s the soybean oil S&D, we’re at a multi multiyear low. And RBD margins which most of these guys are running are now 1,100 over. So that’s $0.11 higher than we’re operating at. So that’s — so that’s how we kind of cast it looking forward. Matt, Bobby anything you want to add to it?
Matt Jansen: I think that’s right. I mean, we’re just at a — it’s a generally tight S&D scenario and we’re — a lot needs to happen as far as crop production in South America and that’s really going to determine what we see with respect to certainly protein levels and ultimately oil levels as well.
Dushyant Ailani: Thank you. That’s helpful. And then one question I had was just kind of your thoughts on buybacks given where the stock prices today? Or maybe just in general I know that the goal is to kind of get to that 2.5 leverage but any thoughts on entertaining higher buybacks given where the stock is trading there?
Randall C. Stuewe: It is a discussion point with the Board. We have adequate capacity to do that. Clearly, our focus today is as we said is to repatriate cash and get the total debt down and get to at least a discussion point of investment grade as we have some maturities coming in, in 2026 and 2027. So it’s not off the table. Clearly, every year we will buy back any executive compensation or dilution for sure. And after that then it’s opportunistic. And as the year goes along and as Brad says I have a little extra cash we’ve been giving the authority to make those decisions. So nothing is off the table here.
Operator: The next question comes from Paul Cheng of Scotiabank. Please go ahead.
Paul Cheng: All right. Thank you. Good morning, guys. Two questions, please.
Randall C. Stuewe: Good morning.
Paul Cheng: Good morning. Randy trying to understand sequentially from the second to third quarter the Feed ingredient revenue is down. The sales volumes is actually flat. And all the market indicators whether it’s used oil tallow or is actually up. We’re trying to understand that what’s causing the sequential revenue drop from second to third quarter in the Feed business? That’s the first question.
Brad Phillips: Yeah. Paul, this is Brad. When you’re looking sequentially, we have for lack of a better of word lead and lags in a lot of our contracts. And so there’s timing differences there that will often — and when you get quick movements what Randy talked about earlier between second and third quarter, price movements. And then with the way the contracts work and the lead and lag, that can cause a little bit of kind of discolor there I would say.
Q – Paul Cheng: And so Brad should we — based on that, means in the fourth quarter we should see comparing to the market indicator, your revenue we see more of an upside or then the lag effect is going to take longer than that?
Randall C. Stuewe: Yes. Typically, what you’re going to see then is, if you think of it this way today, around the world we have a significant amount of our internal produced fats and oils, whether they’re in Europe or Brazil or North America, headed to Diamond Green Diesel. And so, as those were — if you want to think about it what we produced in August is sold and it doesn’t arrive and be processed until October and September, is kind of November and October now is December January. And so as we said earlier in the script, so you had a move up of fat prices in Q3 that then were sold and purchased. And so those will flow through and those should deliver a pretty good fourth quarter in that — in the Feed Ingredients segment.
Operator: The next question comes from Andrew Strelzik of BMO. Please go ahead.
Q – Andrew Strelzik: H, good morning. Thanks for taking the questions. My first one is on Diamond Green Diesel. And I think Randy kind of last time you’ve talked about $0.90 or $1 being the cost advantage or the minimum kind of margin to think about for DGD versus the marginal producer? And you kind of talked around this I think a little bit earlier, but I was hoping if you could be a little bit more specific. But do you think that that number has changed at all, with new capacity that’s come on et cetera? Or is that still the right way to think over time about the baseline DGD margin?
Randall C. Stuewe: Yes. I don’t really see anything changing that competitive advantage out there right now. I mean I’m looking around the table and I don’t know.
Brad Phillips: I agree. That’s something that we consider as a competitive advantage. We’re going to continue to leverage that, advantage going forward trying to stay let’s say, ahead of the game. And that’s again with the — even with the SAF project is going to separate us even further from our competition.
Bob Day: If I could just add. I think one thing to keep in mind is part of that advantage is DGD’s ability to blend all different kinds of feedstocks. And the price relationship amongst those feedstocks changes a lot, from time to time. So the relative advantage is not something that you can pinpoint and be as static. But generally speaking, I think that the advantage that we had before continues to be the case today.
Randall C. Stuewe: Yes. And I think the DGD mixology has become even more complicated given, whether you’ve got CAT 3 fat coming from Liderdam [ph] from our factories or you got tallows and yellow greases coming from Brazil and glucose from the Asian countries, you got a timing of when those arrive and then you’ve got a usage. You can’t — we don’t really run feedstocks meet in a sense. So we make a mix that meets our customers’ needs, that allows us to get the highest yield that we can and the longest catalyst life. And so it becomes a far more complicated thing. But the competitive advantage like I said, versus running RBD soybean oil right now is $0.88 a gallon. So that’s not even a CI differential there. So I think as you’ve seen through the year, remember Port Arthur is still waiting on its pathway, we anticipate it any time.
