So, how all that balances out for the rest of the year, the thing there is we don’t see any change in the RVO obligation. So, it’s still a question of how much capacity is going into a fixed credit bank in a fixed obligation. And so longer term, if you look at ’25, I would think the long-term outlook of RD is still positive because you look at the number of LCFS programs that are still being contemplated by legislation this year, the ramps in Canada and the UK continue to be strong. The SAF mandates that are kicking in, in 2025 in Europe and the UK are going to create demand. And for us diversification of your product away from California and your ability to diversify your product slate into SAF are going to be very beneficial to DGD. So, I still like the longer-term outlook of ’25 and beyond.
’24 is a little hard to predict. I think it probably still stays long in the D4s, net-net. So, it might continue to be sort of a tough year. We think the second quarter from a margin standpoint looks a little better from price lag standpoint. But the back-half is still hard to tell with all the moving pieces. But long-term, I think you still see a positive outlook sort of ’25 and beyond.
Ryan Todd: Okay. Thank you.
Operator: Thank you. The next question is coming from John Royall of J.P. Morgan. Please go ahead.
John Royall: Hi. Good morning. Thanks for taking my question. So, my first question is on turnaround, I guess for Valero and maybe in terms of expectations for the broader industry. Given you and others had a heavy turnaround quarter in the spring, should we expect a lighter fall season and maybe that global supply won’t come on as expected, but we could see more supply in the second-half coming out of the U.S. because just lower turnaround than usual?
Greg Bram: Hey, John, this is Greg Bram. I’ll talk about our turnaround activity. Particularly in the first quarter we had a pretty heavy turnaround load. You can really see that when you look at our throughput, particularly the Gulf Coast throughput being much lower. It’s just reflective of the work that we had going on. Looking forward, as we’ve always got turnaround activity going on in our system to varying degrees, the first quarter tends to be the heaviest period. Other periods of the year will be lighter. And that’s just kind of driven by what we see from a margin standpoint, is there’s certain times of the year, like the holiday season, where you’re tending not to try to go into that kind of work that’s very intensive.
As far as different periods of time, yes, it won’t speak so much to our plans. We have the same information others see about industry turnarounds. It looks like the fourth quarter will be kind of more in the typical range of outages, but it’s early to tell. A lot of things will change between now and when we get to the fall season. And so, we’ll see where that lands, but people at least are indicating something that looks like the more typical turnaround level of activity.
John Royall: Great. Thanks, Greg. And then, I just had a follow-up on Neil’s question on returns of capital and probably for Jason or Homer. You’re essentially at a full free cash flow payout now. That’s what we saw in the first quarter. And Homer’s comment suggested that that’s the expectation going forward. I know you’ve characterized the 40% to 50% of the floor, but is there any thought to changing that framework, given that you have your balance sheet where you want it. And you seem to be kind of in this new era on returns of capital that don’t seem to be kind of peeling back to the old way of looking at things.
Jason Fraser: Well, this is Jason. Yes, I can take a stab at that. I mean, we do think about that. And really, we ask you to look more at our actions rather than that statement, because we’ve been above it in the majority of time over the past several years. But we also view that more as a long-term indication through the cycle. I know we talk about sometimes that’s a target, and it is, but we don’t see any problem with being above it over a consistent period of time. And you should expect us to kind of behave, as you said, the last couple of quarters are probably the best indication of the future is how we’re going to behave with regard to cash.
John Royall: Okay. Fair enough. Thank you.
Operator: Thank you. The next question is coming from —
Joe Laetsch: Hey, Donna, are you still there?
Operator: I’m sorry. Yes, I’m sorry. The next question is coming from Joe Laetsch of Morgan Stanley. Please go ahead.
Joe Laetsch: Hey, all. Good morning, and thanks for taking my questions, and congrats on a strong quarter. So, I wanted to go back to SAF. Are you seeing enough demand from customers to potentially support an additional project? And then, if so, would any potential announcement come after the first facility is online? Just trying to think about timing overall?
Gary Simmons: Yes. I think what we’re seeing in terms of the commercial interest exceeds our current capacity with the first project. As we’ve said, we’re doing engineering on the second project. In terms of timing that’s always — for us, that’s always an issue that we’re not going to talk about that until we’ve decided internally on committing to that. But what I’d say from a macro view, you can clearly — the units are cookie cutters of each other. The project is nearly identical. The execution time and all of that is going to be very similar. So, it’s not a technically challenging project or something that would be difficult to fund. It’s a question of how we see this market developed and when we decide to commit internally is when we would say something externally.
Joe Laetsch: Great. Yes, that makes sense. And then, I was hoping to go back and dig into your comments on Asia refining dynamics earlier, just given the decline in margins that we’ve seen over the past couple of months. Do you think we’re close to a floor over there? And then, we’ve also seen China exports tick up in recent months. How do you think that’s been impacting U.S. margins?
Gary Simmons: Yes. So, I think my comment there, when you have cracking margins in Singapore negative and you have hydro skimming margins in Europe negative, it kind of tells you we’ve hit a floor. We need the capacity to run. And I think you’ll see margins start to tick back up.
Joe Laetsch: Great. Thank you all.
Operator: Thank you. The next question is coming from Paul Cheng of Scotia. Please go ahead.
Paul Cheng: Hey, guys. Good morning.
Gary Simmons: Good morning, Paul.
