Delek US Holdings, Inc.

Good morning, ladies and gentlemen, and welcome to the DELAC U.S. Fourth Quarter Earnings Conference Call. At this time, all lines are in listen-only mode. Following the presentation, we will conduct a question-and-answer session. If at any time during this call you require immediate assistance, please press star zero for the operator. This call is being recorded on Tuesday, February 27, 2024. I would now like to turn the conference over to Rosy Click VP Investor Relations. Please go ahead.

Good morning and welcome to the Dell at U.S. Fourth Quarter Earnings Conference Call. Participants on today's call will include Abigail Thorek, President and CEO, Joseph Israel, EVP Operation, Reuven Siegel, EVP and Chief Financial Officer, Mark Hobbs, EVP Corporate Development, Today's presentation material can be found on the investor relations section of the DELIC US website. Slide two contains our safe harbor statement regarding forward-looking statements. We'll be making forward-looking statements during today's call. These statements involve risks and uncertainties that may cause actual results to differ materially from today's comments. Factors that could cause actual results to differ are included here as well as in our SEC filing. The company assumes no obligation to update any forward-looking statements. I will now turn the call over to Abigail for opening remarks.

Thank you, Rosie. Good morning and thank you for joining us today. During the fourth quarter, our operation ran well at the higher end of our guidance. We did a good job of focusing on what we could control. With that, I would like to thank each member of the DELEC team. From a market perspective, During the quarter, we saw a weakness in product demand consistent with the seasonal trend. In refining, we achieved a record total throughput in the quarter, but still few opportunities for further operational improvement. Joseph will provide the details of our refinery operation and progress at Big Spring. We delivered another record quarter in our logistics segment. The consistent strong performance from our logistics segment validates our favorable position in the permanent base. Our reader segment reported its best Q4 outside of COVID year 2020. Turning to the full year, 2023 was a strong year for DELEC. We achieved $950 million of adjusted EBITDA. We made significant progress on our key objectives. As a reminder, they are operational excellence, financial strength and shareholder return, and executing our strategic initiatives. In terms of operational excellence, our team delivered a solid performance across all businesses this year. We made strategic investment in our people and assets. This improved our foundation for profitable and sustainable growth. Our planned major turnaround of the Tyler Refinery was completed on time, on budget, and with no recordable incidents. The result was improved reliability, yield recovery, and stronger capturing. We are very focused on our safety practices and pushing for constant improvement. I'm pleased to report that 2023 was our best year on record for safety performance. This includes personal, and process safety. Turning to financial strength and shareholder return. We continue to be shareholder friendly. In 2023, we return $146 million of shareholders to dividend and share buyback. We also improve our financial position by using our strong cash flow to reduce debt by $454 million. We made progress on our strategic initiatives As a result of our cost reduction effort, we found more efficient ways of working. This has delivered a tangible result. For example, our inventory management has resulted in improvement in both earning and debt level. We are making progress to reach our goal of $100 million run rate cost reduction. Lastly, significant headway was made towards unlocking value intrinsic in our business Now, turning to 2024. Our key priorities have not wavered. We'll continue our drive towards operational excellence, staying focused, and safe and reliable operation. We have turnaround of our Broad Springs Refinery in Q4 of 2024. Joseph will give context on the improvement we expect post turnaround. We'll also talk about additional initiatives we are undertaking in the refining segment. Financial strength and shareholder return will remain key. We believe we are well positioned to capture opportunities. We'll continue our disciplined capital allocation with the best interest of our stakeholders in mind. We look to deliver strong portfolio performance and results. We'll continue to optimize the balance sheet. and remain committed to sustainable and competitive shareholder returns. In 2023, we return $146 million to shareholders. $85 million of this was share buyback. As we demonstrate in 2023, we are committed to shareholder returns based upon free cash flow. As we execute 2024, we will remain and maintain this approach. and will keep a balanced approach between improving our financial strength and shareholder returns. On our strategic initiatives, we'll remain focused and advanced. For 2024, we estimate our CAPEX to be approximately $330 million, which reflects a reduction from 2023 level. The capital program show our dedication to maintain and safe reliable operation, enhancing our portfolio with strategic growth projects, and delivering shareholder value while maintaining our financial strength and flexibility. In 2024, we will continue to explore opportunities in the energy transition space that meet our return to capital objectives. We announced earlier this month that our big spring refinery was selected but the Department of Energy for a project that will advance carbon capture technology, a safe, environmental, responsible manner. This project will serve our industry well into the decades to come. Now, I would like to turn the call over to Joseph, who will provide additional detail on our operation.

Thank you, Avigal. Moving to slide five through seven. In the fourth quarter, our team processed a back-to-back record high 306,000 barrels per day of total throughput. In Tyler, total throughput in the fourth quarter was approximately 79,000 barrels per day. Production margin in the quarter was $11.54 per barrel, and operating expenses were $5.13 per barrel. which reflects approximately 55 cents per barrel of an employee benefit accrual and accelerated tank farm work. In the first quarter, the estimated total throughput in Tyler is in the 71 to 74,000 barrels per day range. In El Dorado, total throughput in the quarter was approximately 88,000 barrels per day, a record high throughput for the plant. Our production margin was $4.94 per barrel and operating expenses were $4.58 per barrel. Estimated throughput for the first quarter is in the 82 to 85,000 barrels per day range. After working the Eldorado fundamentals in the past several years and improving reliability, the team is focused on profit improvement opportunities mainly in the code sourcing, asphalt, and wholesale areas. By accessing heavier grades in El Dorado, we will use existing refinery configuration to improve asphalt capabilities and optimize margins. By increasing regional sales of our pipeline on the light product side, we will improve commercial optionality. In Big Spring, total throughput for the quarter was approximately 58,000 barrels per day, driven by maintenance work, mostly reflected in our guidance, but with additional discoveries that were addressed. Our production margin was $6.05 per barrel, including an estimated unfavorable $3.40 per barrel impact from the maintenance activities. Operating expenses in Big Spring were $8.98 per barrel, including approximately $1 and 90 cents per barrel related to the additional maintenance $1 and 40 cents per barrel for the integrity program and 40 cents per barrel related to employee benefit accrual estimated throughput for the first quarter is in the 63 to 66,000 barrels per day range in cross Springs. Total throughput was approximately 81,000 barrels per day. Our production margin was $4.93 per barrel, and operating expenses were $4.83 per barrel. Broad Springs team is preparing for the fourth quarter turnaround, which will include regular maintenance as well as major upgrades to our FCC and code units. Execution costs. is estimated at $115 million. An expected return from the upgrades is approximately $30 million per year, coming mainly from yield and rate flexibility improvement and energy efficiency. Plants throughput for the first quarter is in the 73 to 76,000 barrels per day range. And for our entire refining system, implied throughput target is in the 289 to 301,000 barrels per day range, as we position ourselves for the gasoline season. In the fourth quarter, wholesale marketing contributed a loss of approximately $20 million. This is a $40 million negative variance. to the third quarter. The decrease reflects seasonal trends along with challenging mid-come supply demand dynamics and lower rinse prices. We are expecting our commercial initiatives to provide us with better optionality in the future. Asphalt marketing contributed approximately $5 million compared with $15 million in the third quarter and consistent with our seasonal trends. In summary, 2023 was an important and successful year for our system in many ways. Our focus on people, process, and equipment is giving us a strong foundation to optimize what we have and position our system for growth. while Tyler, Cross Springs, and Eldorado have optimized the operations over the years. We remain confident about our progress in Big Springs reliability ahead of the coming gasoline season. U.S. refining market dynamics for 2024 are constructive, and we are well-positioned to capture these opportunities. I will now turn the call over to Rosy, for the financial variance.

Thanks, Joseph. Starting on slide eight, for the fourth quarter of 2023, DELIC US had a loss of $165 million, or $2.57 per share. Adjusted net loss was $93 million, or $1.46 per share, and adjusted EBITDA was $61 million. Cash flow from operations was $91 million. On slide 9, the waterfall of adjusted EBITDA from the third quarter to the fourth quarter of 2023 shows that the primary driver for the lower results was from refining. This reflects the significantly lower cracks in the fourth quarter relative to the third quarter. Logistics set a new record quarter at over $99 million. Retail was down largely due to seasonal trends, Although we were in a falling crude environment, we saw lower margins but maintained strong volumes at our stores. Corporate segment cost improved compared with last quarter, largely due to lower employee benefit expenses. Moving on to slide 10 to discuss the cash flow. We drew $80 million in cash during the quarter, ending the fourth quarter with a balance of $822 million. Cash flow from operations, as I said, was $91 million. Included in this amount is a positive $223 million of working capital. This was largely from improved inventory management and lower product prices reflected in receivables. Investing activities of $69 million is mainly for capital expenditures. Financing activities of 101 million primarily reflects pay down of debt and return to shareholders. This includes 41 million debt repayment, 20 million in buybacks, 15 million in dividends, and 10 million in distribution payments. On slide 11, we have the breakout of the 2023 capital program and guidance for 2024. Full year 2023 was $372 million. Approximately 80% of the spend was for sustaining and regulatory projects, which include the major turnaround at the Tyler Refinery and reliability work at the Big Spring Refinery. Our forecasted 2024 capital program is $330 million, which includes $255 million for sustaining and regulatory projects and $75 million for growth projects. In refining, we plan to invest $220 million, with 93% of the capital dedicated towards sustaining and regulatory projects, most of which is for the Cross Springs Refinery major turnaround scheduled during the fourth quarter of 2024, as well as projects at the Big Spring Refinery to improve capture rates. In logistics, the company expects the capital program to be approximately $70 million, with $50 million for growth projects. Growth projects will advance new connections in both the Midland and Delaware gathering systems, enabling continued volume growth at the partnership. The retail segment capital expenditures are expected to be approximately $15 million. Funds are dedicated to maintaining Dellix 250 convenience stores, including interior rebranding and re-imaging initiatives. The corporate and other segment includes approximately 25 million of capital expenditures, which is primarily to fund IT improvements. Net debt is broken out between DELIC and DELIC Logistics on slide 12. During the quarter, we drew 80 million of cash and paid down 41 million of debt, ending the quarter with a net debt position of $78 million. Finally, slide 13 covers outlook items. In addition to the guidance Joseph provided, for the first quarter of 2024, we expect operating expenses to be between $215 and $225 million, G&A to be between $60 and $65 million, D&A to be between $90 and $95 million, and net interest expense to be between $80 and $85 million. We will now open the line for questions.

Thank you. Ladies and gentlemen, we will now begin the question and answer session. Should you have a question, please press star followed by the one on your touchtone phone. You will hear a three-tone prompt that your hand has been raised. Should you wish to decline from the polling process, please press star followed by the two. If you are using a speakerphone, please lift the hands up before pressing any keys. One moment, please, for your first question. Your first question comes from Neil Mehta with Goldman Sachs. Please go ahead.

Yeah, thank you so much, team. I guess the first question is just an update on the Sum of the Parts unlock. I know, Avagal, it's something you've talked about over the last couple of years, and your latest thinking around that and the milestones we should be watching on that.

Hey, Neil, how are you? Yeah, and Neil, you know how much energy we have around the topic, and they're doing the content, significant headway, and some of the parts are going to happen. I want to show you that. Mark, you want to add more?

Yeah, Neil, look, at this point, I would say, look, although we don't have anything specific to update or say at this time, look, we remain committed to highlighting the value that's intrinsic in our business and And we're working hard towards that. But what I would say that in anything that we may do, we are very focused on enhancing, you know, not only our balance sheet across all of our businesses, but, you know, positioning our company to generate and deliver, you know, attractive shareholder returns for the foreseeable future. So we're taking all of those things into consideration. Okay. I'll just sort of leave it at that for now.

I appreciate it. Yeah, we'll stay tuned. The follow-up is just on the quarter was a little bit softer than what we expected. I guess I just love your perspective on maybe some one-time impact. It sounds like marketing could be a dynamic there. And as we think about the sequential build from 4Q to 1Q, as mid-con margins have strengthened a little bit through the quarter, anything that you would want us to keep in mind as we think about incrementals and decrementals?

Yeah, so surely you can see it very easy to see that we had the record to put it during the quarter. And we actually need all the guidance to give in terms of gna opex, very strong cash flow. Supply and marketing obviously had that we care, which is in line with seasonal trend. And we've seen the plan of supply marketing. The flat the previous quarter and a big positive with you too. So there is some seasonality into that line. Which is a more market driven, but listen, we are focusing on what we can control and we did a. Good day. Good job doing the content. I don't know if you have anything to add to that.

Yeah, the wholesale marketing contributed the negative $20 million and positive $5 million consistent with the seasonal trends. Wholesale marketing was challenged, and I think you heard it from most of the finalists, beyond seasonal trends, driven by incremental The one that kept demand and margins low, especially in December, and going through the general freeze. The other element in 4Q was the low rain price, which helped to define and capture, but hurt the rain value, really generated by porcelain marketing, you know, the blend at this point. So in the past several weeks, to your point, Neil, the high inventory situation in the Bitcoin has resorted through both supply and demand fronts. The commercial optionality focus in El Dorado, which we discussed in the pre-pandemic months, will help us in the future to navigate through this type of volatility.

Thanks, Joseph. Thanks, Tim.

Thank you. Thank you.

Your next question comes from John Royal with JP Morgan. Please go ahead.

Hi, good morning. Thanks for taking my question. So my first one's on working capital. You've talked about the inventory management side and you mentioned there wouldn't be a reversal of 3Q's tailwind. It looks like not only did it not reverse, but you had an even bigger tailwind in 4Q despite the falling crude price. Could you speak a little bit more to your efforts around working capital and inventory management And is there more to go there? Should we expect further working capital tailwinds going forward, all other things equal?

Yeah, absolutely, John. I would ask Ruben maybe to give you some more comment on this. Sure.

Good morning and thank you for the question. I mean, we took a more holistic view around our balance sheet health from the beginning of the year. So, uh, the 3rd and 4th quarter work capital were really the fruition of some of the initiatives that we have all alone. Obviously, managing and optimizing inventory was one of them. We did a big chunk of it in the 3rd quarter, but the, uh, we completed the work in the 4th quarter, and that contributed. Roughly 190,000,000, uh, to work in capital. In addition to that, we had. The ZBB effort, which we already accomplished on a run rate, $80 million saving the year, of which $57 million were realized in 2023, mostly in the third and fourth quarter. Um, our focus was that reduction, so we do step by roughly 450,000,000. And that along with the safety and reliability efforts kind of contributed to the end result of the working capital. I think with regard to going forward, we, we kind of. reach an equilibrium at the level of inventory we want to manage. So it will be more a result of quarterly events that will impact the working capital in the future.

Okay. That's really helpful detail. Thank you. And then could you talk about some of the opportunities you mentioned around energy transition? I think you mentioned carbon capture at Big Spring. Is this committed at this point? And is there any capital in the 24 budget for this? And can you also remind us just on the status of the option you've had on the renewable side that you've spoken to in the past?

Yeah, absolutely, John. So at this point, we were elected to negotiate with the DOE. So there is no material capital for 2024. and we're going to do everything we're going to do under the strict benchmark that we put on ourselves from a cost of capital return or from IRR standpoint. So we're not going to break that matrix. But John, from a holistic standpoint, you can see a very nice testimony that big spring. And then, like, our marketing leader. In this area, and we're elected the 1st, we finally to elect to where to elected. It's energy transition by the, which is a very big deal. And we believe that those projects will be further in the future and we will make it a capital advantage or capital to meet our capital benchmark. Around the option we have on the renewable diesel, we are looking on that carefully. Obviously, it's a cheap way to get a look into renewable diesel. As you can see, RIM prices doesn't have renewable diesel lately, so we are fortunate not to commit $200, $300 million and then not benefit from that. So we were fortunate around that. But the market is very close to that. I don't know, Mark, if you want to add anything around the option.

Yeah, sure. Around the option, John, we're obviously monitoring it very closely. Our understanding, based on publicly available information, is that they're intending to start commission the facility in the first quarter, and then we will watch it as it runs through the first quarter and the second quarter. And once it hit a run rate for 90 days at 80% utilization, then that's when we would have the opportunity to take a look at it. But we're monitoring it closely, as Abigail said. It could be potentially an attractive and and low-cost opportunity for us to acquire a meaningful position in a well-located renewable diesel facility. So we're watching it closely.

Thank you. Thank you, John. Appreciate it.

Your next question comes from Roger Reed with Wells Fargo.

Please go ahead.

Yeah, thank you. Good morning. Two questions for me, both on the operational side. Just again, to follow up on the supply and marketing sort of, let's call it headwinds in Q4. Is there anything, as you look at Q1, that says that does reverse, right? I mean, I know it's market conditions. There's a limit to what you can, let's say, you know, the buttons you can push to change that. But maybe just give us an idea of how that's kind of evolved the first couple months of this year.

Yeah, so we are not going to give the guidance for that line. It's going to be. So. fit with market, what the market usually gives, so we'll be consistent with our bills around it. Overall, there is a positive trend correlated to seasonal, driving seasonal. We've all seen the information around the, from a macro standpoint, around gasoline and diesel. At gasoline, we are looking at around the five-year average, a bit below, and on diesel, we are at the lower end. of the five-year average, so both look constructive. But beyond the general market information, we are not going to give guidance for supply and marketing. Yeah, nothing to add.

Can I just add one thing? I think the only thing I would maybe add, Roger, is the fact that some of the weather impacts that Joseph referred to, and he said it in his prepared remarks, were persistent through January. And, you know, I think others saw that, and so that would be the one thing that I would just be mindful of, that that obviously will be reflected in that line.

Okay, fair enough, although I guess it seems the weather's more benign here as we are two-thirds of the way through, so maybe we'll get a tailwind. The other question I have, and this is on slide seven, Big Spring Refinery has been, you know, typically we think of it as one of the better units overall in the company, but it's been challenged here recently. You've got the reliability improvement, the $100 million, two-thirds roughly this year, a third next year. What would you point to as we look at, let's call it progress, the first two quarters of the year that are going to get capture rate above 70? I mean, is it just that the unit should run more consistently? Is there some actual changes in the facilities that would affect yield, a change in crews you're going to put in there, something along those lines? Maybe just kind of help us understand what we should look for as the favorable road signs as we go through 24.

yeah for sure and um those if we give a complete answer but i will say just as a from a big picture standpoint big spring is a refinery that's a new to one consistent 70 000 dollars a day of throughput and more and with a 5 a 25 dollar opex and less you can see that that's what the the trend years before And there is no reason we cannot bring it back to where it used to be, and that's the highlight of the $100 billion. So if we run it consistent, as that refinery used to run in the past, there is no reason we cannot get to what it used to run years ago. Joseph, please.

Yeah, so as we mentioned in the remarks, we are positioning Big Spring availability to serve us well. We've been on a clear execution path, addressing the people, process, equipment gaps. And as we mitigate the different risks, we should see improvement in our ability, meaning low LPO, metal capture, low cost structure. stabilize north of 70,000 and capture around 17% . Open run rate should stabilize around 550 probably per barrel by end of the year. And the linear reduction may be . until end of year would probably be a good assumption. So bottom line is we take all of the people, process, equipment to get to where we want to get. And we are really encouraged by the process. We have less and less surprises as the time goes by. And we are really confident about how

Alright, appreciate that. Thanks.

Your next question comes from Matthew Blair with TPH.

Please go ahead.

Thank you and good morning. I wanted to follow up on some of the parts efforts and appreciate your hard at work here. My question is, could you talk about your openness to a sale of your retail assets and how attractive would a retail sale be relative to some other options that you might have?

Yeah, Matthew, that's a great question. Everything is on the table, and we are active more than one front line, so absolutely.

Okay.

Okay, and then my follow-up is on your trading and supply activities. What do you think normalized annual EBITDA for this line item should be? I have an old note in here that says roughly 130 million to 210 as an annual ballpark figure. And I think that compares to roughly 50 million in 2023. So what do you think, you know, going forward, trading and supply should contribute on an annual basis?

We don't give guidance for that line.

um and we will remain consistent with that with the best practice among our bills and all this i think you have a lot of energy around that topic so yeah and you know the thing i would say is you know you may have an old note based on what previously we would have in there and as you said trading and supply the line is no longer trading and supply it's it's it's supply and marketing and and again what what we have in there is is three you know, components. There's the wholesale marketing, there's the asphalt marketing, and then we have the supply business. And, you know, the wholesale marketing and the asphalt business, you know, tend to have a little bit more stability. Now, they do have fluctuations based on market conditions, you know, case in point. what Joseph spoke about the fact that, you know, we had a 40 million variance between the third quarter and the fourth quarter because of the mid-con environment that we saw in the fourth relative to the third, and then obviously the movement in the rent prices. As fall tends to be a little bit more stable, you've got seasonality with the fact that the months, the quarters during the summer months tend to be more stable and stronger. And you've got the first quarter and the fourth quarter being a little bit on the weaker side. So I think the fourth quarter is a good indicator of what a first fourth quarter tend to look like. And then you've got stronger quarters in the middle. The third component being the supply, that one's the one that's a little bit harder to model because, you know, the supply business handles both supplying our refineries from a crude perspective and also unloading the refineries and also supplying our DKL system, right? And so, depending on disruptions throughout the entire system, you may have a little bit of fluctuation, right? So, but the other two pieces are a little bit easier to model.

Great. Thank you.

Your next question comes from Kaylee Ackermine with Bank of America. Please go ahead.

Hey, guys. Doug Sands with Regards from the West Coast. I've just got a couple also on slide number six here. I guess the first question is on the crowd's turnaround. Just hoping that you can give us some idea of the scope of the work that you're performing and how that could potentially drive better commercial performance on the back end, whether that's reliability or whether that's in yield. And I guess same question for Eldorado, as you were thinking about the commercial opportunities there.

Yeah, I think we'll start with the answer about the cross springs, and I will give some more color around the Eldorado.

Yes. First, I'd like to remind everyone that we guided an annualized $18 million improvement in the , which we achieved on apples-to-apples market condition assumptions. We actually achieved 24, but the margins were limited. exactly what we expected. Now back to KSL, we are expecting $30 million to the year, coming from maybe three things. One is a code unit piping scope that will help our yield and rate flexibility. In other words, we will make more jet fuel and have more catch-up capacity. Second is FCCU. We're going to put a new reactor in there. We're going to make some regenerative that will provide us with improved conversion and yields. And in addition, we are expecting better energy efficiency with copper turbines that we are replacing and higher reform and catalyst activity .

I appreciate that. I guess the next, go ahead.

If you want some highlights around El Dorado, Joseph prepared in his prepared remark that we are planning to run a bit more heavy slates in El Dorado and take advantage of weakness that we have seen of Canadian grays, heavier grays, and we're also addressing wholesale opportunity in the area. So, and the weather is finally that was built one heavier than we running versus what we were running it, and we're trying to capture that opportunity.

It's really exciting.

That's the limit when you think about tender weather because of its configuration. In order to enhance it, benefit from optionality, make asphalt improve our asphalt quality and their products, and also want it to really contribute to that system capture.

I'm so sorry for interrupting. My follow-up question is just trying to understand the scope of the work. the scope of the work plan. It seems like it goes through 2025. So I'm trying to understand if that suggests that 25 capex is going to be very similar to 24, and I'll leave it there.

Are you asking about the 25 scope for Windsor Rio?

Well, you lay out this capital commitment or these accomplishments for 23 through 25. I think on slide number seven, So given that the work plan is basically known for 25, I'm trying to get a handle on what 2025 capital looks like, if you've already defined the work. So I'm trying to figure out if that's similar to 2024. Yeah, so the entire school

year for the results to end the window. There is no really cost estimate at this point. It's mostly commercial efforts and know-how and blending, and we will come back later in the future if we feel like, you know, tanks or other upgrades will be needed. But this is down the road, more than a year from now.

Yeah, and the reason that, Ken, that the Slides say 24 to 25. As you can see, big spring. Which is not related to capital. Some of the upside is coming only in 2025. That's the reason the slide says 24 to 25. Don't read into that to a from a to a capital commitment to 2025 just to make it very clear that that was not the intent of the slide. This slide was saying that the benefit is going to come over time. But the turnaround, which is the heavy capital doing 2024, going to be completed in 2024.

I got it. That's very clear. Thank you.

Your next question comes from Jason Gabelman with TD Cowen. Please go ahead.

Yeah. Hey, it's Jason Gabelman. Thanks for taking my questions. I wanted to ask about shareholder returns. It wasn't discussed yet. I think the past few press releases you had disclosed buybacks quarter to date at the time the press release came out for earnings. You didn't do that this quarter. So wondering if you have made any buybacks quarter to date and the outlook for repurchases through 2024.

Hey, thanks for the question. I will give an overview around what we are thinking and how we think about the capital return to investor. First of all, we are very committed to shareholder return. Uh, we had a from a free cash flow this year. Over 146M dollars return 85M dollars that they buy back and 61M dollars dividend. We are committed to maintain the same philosophy going to 2024. And you can probably appreciate that we bought 8% of our share in 2023. So nothing of what we are disclosing is suggest any waiver of our approach. We are very committed to shareholder return. We want to see us as a market leader around it, and we are holding ourselves to that standard.

Okay, so sorry, it's a bit difficult to hear you. Is that 8% level kind of something you feel like that's achievable either in 2024 and or in a mid-cycle environment?

So last year was not a mid-cycle environment. We want to do it from free cash flow. So we are committed to that. And it might be less, it might be more. It depends on market condition. I don't want to predict market condition. I'm optimistic about market condition. But you will hold me to that number, and I don't want to be held to a number that it's market condition driven. You need to understand the state of mind is find ways to bring return to shareholder. on the short-term, mid-term, and long-term, and we are committed to all of them. And you have seen us demonstrate that. Jason, last year, very nicely, we did exactly what we said we're going to do, and we're going to keep doing what we say we're going to do.

Okay. Understood. And then maybe just if you could comment on demand that you're seeing in the niche markets that you operate in.

So I think there was enough discussion about the weather in everyone's call, so we're not going to talk about the weather. Other than the weather, we have a very good niche market, and we are very blessed and optimistic on it.

Okay, thanks.

Ladies and gentlemen, as a reminder, should you have a question, please press star one. There are no further questions at this time.

I would now like to turn the conference over to Abigail. Please proceed.

Thank you. I would like to thank my colleagues around the table for a great quarter, to thank the Board of Directors, Our investors, obviously, they join us for this call. And most importantly, to our employees that make this company what it is. And we'll talk again in the next quarter. Thank you, operator.

Thank you, ladies and gentlemen. This concludes your conference call for today. We thank you for participating and ask that you please disconnect your lines.