Darling Ingredients (DAR) 7 Nov 202020 Q3 Earnings call transcript

Company Profile

Participants

Jim Stark	Vice President of Investor Relations
Randall Stuewe	Chairman and Chief Executive Officer
Brad Phillips	EVP & Chief Financial Officer
John Bullock	EVP, North American Specialty Businesses & Chief Strategy Officer
Adam Samuelson	Goldman Sachs
Donald McLee	Berenberg Capital Markets
Manav Gupta	Credit Suisse
Ben Bienvenu	Stephens
Craig Irwin	ROTH Capital Partners
Ken Zaslow	Bank of Montreal
Matthew Blair	Tudor, Pickering, Holt
Ben Kallo	Baird
Tom Palmer	JPMorgan

Call transcript

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Operator

Good morning and welcome to the Darling Ingredients Inc. Conference Call to discuss the Company's Third Quarter 2020 Results. After the speakers' prepared remarks, there will be a question-and-answer period, and instructions to ask questions will be given at that time. Today's call is being recorded. I would like now to turn the call over to Mr. Stark. Jim ahead. go Please

Jim Stark

Officer; to this Ingredients Stuewe, presentation few on slide the Presentations under Events morning Executive Chief and Welcome and and Investor Strategy our on is our call. a the Darling Chief Financial link There Phillips, find Brad call and are Officer; John the Matt. Bullock, earnings Chief corporate senior Darling page Participants Chairman and other Officer, you Thanks Randall website. on of can executives Ingredients. a available, presentation our that the C.

in this forward-looking and statements predictions, the differ because yesterday's this During Actual Form call, statements do update statement. expectations which duty we discussed events. to and subject in factors future of made that of reported any Risk making and forward-looking will undertake are conference any other uncertainties. Commission. other XX-K, statements, Securities to filings or assumptions call during our press could Factors the on Exchange section and and current be and the results projections materially XX-Q These not based are comments release about are We risks with

the like would to Now, I call over to turn Randy.

Randall Stuewe

thanks and day everyone, morning, joining election. Good Jim. us on the for the Thanks after

home off, First lives. and the in let world. employees daily plus Darling our our XX,XXX COVID-XX work me around thank constant remains a

and I our services their world. has to and customers a appreciate able dynamic rapidly sincerely been the team situation, efforts to around Our to the to adapt ongoing provide we products deliver very

resilient. Ingredients $XXX.X our platform EBITDA Global million our quarter third XXXX, of was the adjusted For continues to be as combined

record continue adjustments for keep to our and the XXXX. the even health, make a and set prosper Our to and for better bio stage businesses a momentum nutrient energy XXXX necessary

gross continued business across showed and our segment lines. Food trend positive our XXXX. margin we on Overall, percentages to our quarter grew and sequentially year-over-year improvement see segment Fuel an to the second and of Our improving

gross improving As I on May, returns. thus margins, control in to talked widening measures work we with continue our you back diligently our cost and

done USA has team Our an job. exceptional

Feed lower from we for quarter moved prices our third when to and had were the prices you compared quarter second lower them QX QX expected, in to segment XXXX as third XXXX. As strong sequentially the protein quarter in performance for the the also compare declined

a oilseed in With market recorded fourth the the products are during experiencing catalyst joint positive and into sales positive a XXXX. quarter. for was per facility better improvements the a collagen fats $X.XX collagen of sales than provide million to a heading ability there supply oil grain growth from The share green did of X segment, protein at businesses by nice as of The movement demand record Green Fuel for meaningful both the better we was international performance pricing in our commissioning our Green a EBITDA Number some Food Darling's Rousselot, Presidente our new segment Epitacio, production recovery margin XXXX. collagen year Diamond a $XX.X our complex, is of ingredient upward Food on-trend products quarter. Diesel. the the energy food on show provide worldwide. standpoint the the and which XX should in world, poised customers gallon gallons And the is We're achieved EBITDA, We in venture. earnings In significantly Diamond this provider Diesel of our Energy for segment, ago, in broadens led to for process the The in to Brazil environment third we hydrolyzed speak, which and quarter. the our this in peptide quarter. million and

is diesel than lower significantly year of ago, remained a under XXXX. prices gallon diesel and $X.XX oil same a currently Although trading the QX time

the On majority price diesel the this capture to has green in the downward renewable able the premium offset are of for we the positive side, current environment.

sold. with in gallons combined Darling Diesel As those plant yesterday, at in gives solid was $X.XX what year-to-date what's capacity. believe quarter million million of move XXX combined considers adjusted finish into $XXX year on gallon record in is X, generated as us company, completed everyone of $XXX between Green diesel as we to a and million EBITDA results. renewable transformative basis, XX adjusted turnaround our be to and will that million the And believe or we for Green on the should a believe the comes running most we time, this million. for currently million certainly between XXXX has XX average We fourth a noted be finish us $X.XX a sell $XXX expansion, We challenging and we that a can at known XXXX. pace and DGD the Diamond putting online full platform what year gallons press the Diamond for with XXXX as we release late expect gallon and between EBITDA On will

had chance refreshed look report, to If at ESG a XXXX corporate I encourage to our our you read do not website you've or so.

which planet. our role in It Darling exciting will our how and our we as outlines job excellent of an a to the an goals did team in on us and initiatives XXXX story sheet, decarbonization publishing gives ESG build play forward. move Our fact significant

directly to consume. by we low-carbon for renewable leadership pride position the plan in and reducing in fuels world in our For water, part we green DGD do our world, the indirectly more gas and our producing to great and energy conserving business Darling, take greenhouse emissions

turn my a to that few it give over highlights. to comments, us and Brad like So, completes I'd to financial Brad?

Brad Phillips

Randy, Okay. thanks.

and totaled million third touch per quarter. or or everyone. highlights Net XXXX share of a base of will income diluted to for net share income $XX.X XXXX of per quarter the diluted million Okay, few the year-to-date. $X.XX third I on the for quarter $XXX.X this $X.XX a compared for

of for of period $X.XX income million million or XXXX. net per nine $XX $XXX.X was the diluted same months XXXX, For compared the share per diluted to or $X.XX first share

XXXX gross expenses Randy margin and earlier, for show and decreased million $XX.X for quarter $XX.X quarter in the to sales of improvement million. third $X.X XX.X% the for sales of same $XXX.X compared as prior million to million reported XXXX XX.X% third as increased the As the we the million period quarter operating net our million to Operating XXXX the for reaching in income $XXX.X XXXX to improved $XXX.X mentioned third as year-to-date period. compared compared totaled cost continues year, XXXX and

the million in operating gross the from earnings benefited margin, unrecognized the and the the Diamond In Darling's income was of net equity attributable of including items, SG&A quarter, rates million rate impact biofuel previously US issued certain The from increase differs and a with Diesel. $XX.X the higher The income partially addition which three improved XX, X.X%, improvement in several $X.X to and Green higher approximately to by related to ended quarterly the expense quarters. coverages statutory the $XX.X in cost million XX% the effective $XX.X income regulations offsetting project compared benefits expense the federal of COVID-XX, certain $XX the recently interest to cost. expense XXXX. more period. currently for $X.X and We million benefit, expense was travel renewed due to million per September lower insurance across than discrete of months Treasury XXXX million prior-year next for from among the the tax business, company for the of relative jurisdictions during of increases tax tax higher a rate tax quarter reported different our to quarter as tax primarily we recognition Interest incentives; be the is favorable mix over third quarter.

XX, the company expense For September income of an of $XX.X XX.X%. recorded tax XXXX, with nine tax ended months effective rate million the

year-to-date the $XX.X rate also the effective tax taxes end third of Excluding the company million discrete quarter. paid is of The XX.X%. as income of items,

For XX% the taxes tax rate $XX about the with approximately million. be totaling we project to effective the the of cash remainder for year year,

for million share in there Diamond BTC approach and Darling's during to disciplined Diesel's recognize the Capital of place million made three prioritizing to XXXX. For A expenditures months were $XXX.X a and of no $XXX.X pandemic compared quarter. earnings of $XX.X our Green as the period that the was of months nine million, $XX XXXX take for and million million $XX.X during the fourth nine the and XXXX was and the CapEx safety reminder XXXX, until business spend. same to continue of compliance we as needs reduced

agreement date quarter, the September facility turning with extending of sheet, revolving amendment revolving XX, Now, extends in under were the facility from $X credit the December terms. The favorable in we XXXX balance credit the maturity XXXX. credit billion and XX, to third our the to amending successful

loan new outstanding term to addition, our to the for by X.XX In balance QX our we end improved term quarter. the at covenant the balance loan was the With of paydown $XXX down B, and million financial of results bank our of leverage million ratio paid $XXX a X.XX.

an make rating. grade continue to We achieving progress investment toward

million providing the remains you, while liquidity approximately credit I'll solid it capital $XXX flexibility, to of Our Randy. strategic with facility very under strong available the same structure. maintaining at QX, time, end turn at very a our back revolving

Randall Stuewe

Brad. Thanks,

the laid $XXX million mentioned out you. be share I earlier, our approximately the for DGD of As XXXX I earnings on should based ranges

for the is prices products improving were business. $XXX our quarter, That With we $XXX can the pre-COVID. of line we to QX guidance Global anticipating in million performance we February in and back through approximately this as fourth year our with we the EBITDA produce XXXX of strong in of in work Ingredients back believe million

and approved, to this understand for DGD in in to huge X and renewable of be of especially saw of permitting issued feedstocks moving task. once easy of that track in putting thank project Boards The there We facility DGD Directors a to construction process operational XXXX. knocking in for future. early for construction begin types in Once release should shortage joint early venture is And XXXX. to oversupply the partners' diesel week, approve engineering a hurdle last out our forward X immediately, concern of development with be be Texas position process in Arthur, a I both the the team, you potentially low-carbon we located As the teams, no of the with on position gated in again Valero's these Port remains press is way.

we take first advantage simple of to mover position. plan Our the answer is,

low-cost America. producer We largest to diesel the in North have of be renewable

three our recycling read release and COVID-XX acquiring nice processor and superior to rendering it While incorporating others on our job. trade we structure, we open XX-year-old how existing poultry build refineries Euro are the trying acquisition up let's the food expect, to operating protocols, diesel, renewable to lowest in continue new This to to accretive. figure or facilities And to diligence was technologies, be Matt, yesterday, that, cost the with building out ahead, focus small, convert with latest earnings over operating this supply while DGD were integrated DGD. even especially business. we that With years last in learned for low-cost we've chain did as challenging which and Belgian vertically the enhances immediately given our successful seven feedstock, a will advantage system finally, team plant have Belgium Darling's strengthen for of And but secrets you to continue a first-mover go may a waste successful plants. already our Q&A. provide

Operator

Goldman Sachs. [Operator Instructions] Our with go Please comes first Samuelson ahead. question Adam from

Adam Samuelson

morning, Good everyone. you. thank Yes,

Randall Stuewe

Good morning, Adam.

Adam Samuelson

that I as the potential first XXXX? structured we JV or cash any flowing from little Diamond possibility guess, get to parent the the investment of about gets finance maybe So flow thinking X decision, and to question, done, bit, more on final closer sooner financing than likelihood get a Phase Green up so to color just

Brad Phillips

Yeah, There is possibility. that this Adam, Brad. is

partner We regarding to our partner, are talking the that.

could something become possibility. So, yeah, a that that's

Adam Samuelson

the base the Okay. just you on position feedstock can't? you where there, broadly a Phase building and that just more more feedstock think carbon X, the color could you imports for think the market is get And Gulf kind can in others any about sourcing on you just low how have then, of

John Bullock

Bullock. is this John Adam, Yeah,

are we've frankly, commercial is Green with feel in one look Green of we everybody we have low really within enormous we that X, is, this able the position that to one facility. forward Overall, and must of supply Valero of as low Diesel world with of feedstocks assessment because that we is differently have I control are feel from on. We But everybody Diamond Green the a discussed low feedstock probably of bring Diamond control that think that else our a in source emphasize, diesel are a a in supply out while feedstocks feedstock. to partner carbon to carbon the we it's at Diamond renewable everybody needs the something system because always an large a needs that our with it there. to our that advantaged renewable two wants quite lot we're company need critical business, supply that we're The to we and diesel analyses we reasons an Diesel get we standpoint. only than have carbon that Diesel supply I if watch run the going unique we comfortable move the facility in has we feedstocks

Adam Samuelson

you. great. appreciate color. I I'll Okay, Thank it on. the pass

Operator

go Donald McLee Berenberg comes Capital Please ahead. Markets. question next Our with from

Donald McLee

you Can hear guys. me? morning, Good

Randall Stuewe

Sure. Good morning.

Donald McLee

those So, in strategy with just your talk type how that could production bit, it plants what you peptide the rendering of and to collagen commissioned overall of unlocks plants a the acquisition fits recently touch about there? capabilities maybe on

Randall Stuewe

Yeah, It's this is a rather acquisition. by tonnage small Randy.

this As - of Western with little onesie, consolidated Wild is will larger still plants. family system described still Europe was a lot little a small a be over small the been into long Belgian of much had years And around a West today. twosie three our the and the time, of plants rendering series we've business brothers bit still that that rendering just

nice fit. it So was a

in. come, then It fold geographies our rendering and the we degree, priced protein, and both right, and we'll As they're of strategy them production around these fat family meets to a controlling within businesses succession different world. -

us I accretive. we more was high-end if rendering pet like about poultry XX excited rendering products have market. the ingredient for so, more premium get can And these protein, puts more gives you, we'd gives poultry just are bolt-on natural this control more It's and products a And but again, fat, nice. tell that It nice don't of moving them. And the us I once it us. that needle, -- would out series a of to find the was Belgium in to food is business.

applications, fat get and the do only in not into get that the So go also you fuel can the you proteins. food applications, different

Donald McLee

growth comments, were segment. sounds by performance the like margin some you underlying But helpful. And pretty on expansion segment, I just fuel which, could specific of looking That's significant Okay. top then, line wondering some there, strength. at driven good more the it that was there your maybe was if that and fuel international the color provide of what from supported some dynamics

Randall Stuewe

is This again. Randy Yeah.

there businesses there. we it Rendac where food very demand take flowed of with considered the then good fuel very quarter. lot put tonnage Both Diamond and disposal this seven-plant income the we we in what business summer, really obviously, But What and renewable summer, was had manure -- or we up operating grid. business, in into waste, earnings is which predominantly and to into green those extra segment, energy pig for in above a remember, it Cat if of produce our strong Europe. business you in into the and digesting up that biofuels, back Europe the X call diesel processing hot pricing fats and destruction our into mortality Europe had just Green is Within roll side through a mortality in to be go our the are business that

strong those businesses, primary the that we with So had the DGD performance. driver along was -- of

Donald McLee

from me. Thanks. Okay. one And last then,

renewable just the what all curious, fit think longer-term on the you JV. the the So diesel? big And on into given biodiesel about a was just going with growth of do I business, at there's diesel the clearly push renewable emphasis

Randall Stuewe

Let me the question. clarify

industry asking the fit the versus diesel? what's long-term You're in of renewable biodiesel

Donald McLee

Within the company.

Randall Stuewe

very and as a demand only in Clearly, renewable not again facility company? a tiny We the below been today to fix. business. margins up very were very businesses small and contributing facility the to the breakeven and challenged earnings, the were very, expand product. in strategy even Montreal standpoint, today. biodiesel from Butler, Within product Kentucky a we've it's on then quarter diesel really those very, -- in a transportability Clearly, Clearly, logistics, operate sometimes superior

those make USA decision So the to And the looking given north. out the whether Montreal, the ultimately, on south. as the Diamond said, Green of going move And time, Ontario for into it at fat and Bullock we're Green fat have John all of have it Diamond a up to we versus more home we're out there of makes to sense leaving Montreal. economics X, arbitrage Diesel location to Diesel a now X

is So, good a more renewable in diesel question, today. biodiesel investment than a Donald. plant Clearly, fungible Montreal superior-earning

Donald McLee

All right. questions. all guys. my it. Thanks I appreciate That's

Operator

Suisse. comes Gupta from Our go question with next ahead. Please Manav Credit

Manav Gupta

for produce opening mentioned taking there to online. little bit that your Can there's are a elaborate of skepticism refiners renewable out there these fix diesel. as to remarks, refineries how you and Thank retrofit XX-year-old to And actually trying number my help figure you are of do projects question. a it? who to In come you of all on had

problem and done renewable understand these enter you they diesel, into can have of which they help try into us refineries might some So what as before? the run never

Randall Stuewe

a be or about retrofitted other here, to-be-permitted the California of or Yeah, X. to-be-retrofitted X old is Number mess of or the facilities outbound in let program. they're supply and that effective number then secret they're Bullock fuel low our cost people talking are do, to-be-studied look business time places out-of-place opinion, my that not the pre-treatment at Keep they're Everyone asset the integrated at entering inbound. the right it, in two, to-be-engineered has locations scores And anybody necessary, the feedstocks not each what with going takes one. vertically in soon-to-be carbon mind, you because as kind to Number put number that's these I in or X, run. That's no clean to will trying intensity we one of says with this those seen this business, make longevity It spend take about in and both high stab the look start. a convert over. the call location of We've and when economics to place the at we I little one, sauce nothing putting with to economics. and simply an business right DGD that I'll of to work. of standard the up John of worrying chain carbon it

So look great. and we're soybean start when oil, that's run at businesses say, well, to you to you going

today. got you've However, differential to waste it's fats and probably price at That from greases of and a bleached to $X.XX won't up come refined, pound doesn't soy greases today, the mean $X.XX premium the anywhere in look to fats and that waste future.

too. business Green of difference score look we'll from of will Our $X.XX $X.XX raw Diamond the the is side effect other you're that gain a intensity benefit and have the oil, and differential, when material using running But carbon the net the there anywhere talking to Diesel at cost CI between gallon the today. you to a core ultimately, of some soybean

It today, of there in so, economics goes may for because since be forward? the And future. XXXX. look work is how you Blender's business one, at the this that look good the It's lot the Tax there. say, you there Credit been years does a Number as and well,

out-of-position paper, a if to not go handicap. also on doesn't hard you But oil-based good it's there, So as retrofitted soybean look it's forward.

is, Number X hurdle to about dirt All with years of want X. couple who is a hopefully we're XXXX be number construction. no time know online so, We'll was doing anything We here of up pushing you here. end a under which nicely within add? of and how will progressing the permit spend at. we're big kind John, And we looking the come is of before what. on worried that's

John Bullock

frankly, and CEQA or in it's lot folks California's to Port process a number California. think reason anything was for One, realize, get Arthur with We felt We to over of takes did California, diesel going to developing increasing in of RED we important or a is to Washington Texas. process cost X.X It was in chose what for California. speed-to-market take doing times but not revise And a able doing X renewable low under felt to have longer permit we requirements see trying in than process carbon you only was it a public important. CI facility in Yeah, done. reasons. do State, that is of see York, has anything II rapidly through go developing comment, quite is Canada, I we you're speed-to-market in rapidly markets called it's there. in difficult think the inevitably important you the to potentially And the location California because evaluated of markets California the we to a facility California CEQA, New facility which be in to potentially the Europe, and or Oregon,

quite is the doesn't And around technology. out like a traditional a logistics pre-treatment trying all that we important a up bit that a using. that renewable is different we're supply that facility. part or perspective, hook technology our a located. looks things to facility, competitive is petroleum anybody not understand put and diesel going So facility like of there these one for requires additional developing that We like like of facility It's about that only a it We of diesel we're might forward. from builds the a system mirage. It really diesel are that to looks while or are there renewable capacity either thinking in. And that know folks a a where everybody

on technology, our to from be We're for years there out compete supply. vertically with are new with XX to demand to for partner, the now only that X, frankly, Diamond our competition XX, comfortable be coming there. additional be know capacity markets Green really building integrated So we these into positioned, developing. needs our Quite future. going credits where not but the We're to Diesel that's there's feed we're going

Manav Gupta

so much. which you idea kind seeing up you make was your income? prices quarter-to-date segment Thank follow-up. fats and quick us quarter-to-date a I fats protein a give prices, and of comprehensive So, have any very pricing what answer. ingredients update proteins? you're That Can some other on of with

Randall Stuewe

And Yeah. think into -- the again. is hit. On I back, if this came and the we proteins what world, we think Randy you around fats January, February and COVID

the grain and we start and off of complex, hit seen hit mid-QX of slaughterhouse You That's as of up oilseed saw we different the saw Europe shuttering in saw the of thought bottom toward fall end supply, up and corn, very back in are all the oil, curtailed restart. a fat of we starting meaning to or prices, We've protocols. America as because it reduction lot feel soybeans, run of both then here would they to of they be. slaughterhouses protein and rapidly bottom. these the In we North move reacted saying have of QX production. kind capacity their way the some a now to where And palm COVID thus, slaughterhouses and a price large in QX, were that to like

unbelievably forward. go be tailing the for and oilseeds to pretty and carrying good momentum. and Ultimately, Chinese both continues out I Canada, we're so, goes replenishment. to there And momentum We're think grains large. the I here, any Europe into as hog demand carrying that we soon, off time QX North really don't that see good today herd --

of And in Our come and bones, optic. have a we're also just that China. animal we in in I by And blood hides is buyer back pigskin, yet ability, seen production is, our transparency pretty animal to mean China. China animal big what not numbers

now the production we However, are grown. being and -- animals under they're that know

do to out. a here. China forward anything we're add well go That So and to want months corn you soybeans of John, probably bodes as XX year for demand that? continued to we into

John Bullock

being nobody needs herd. the think quantities. is they like a garbage very by family economy: that the two, that around performing reconstituting the take and But clearly, States two This the not doing the concentrated fed fundamental has the farm. I shift, in a products, tremendous power Yeah, or should it the opposed pig private underestimate tremendous small to was on China. pig only that China the but of corns dynamic of buy one, and growing more looking impact in the that Chinese herd, are are fact also and large turning are that it's are they strong; as will their use reconstituting more meals they and to and And waste to to herd that pig those reconstitute to United a to in going come and year It's massive they world. of

products, the US. of term going as States handle the is So good for out the we good meat well in to and volumes poultry, pork those which of of in as anticipate demand all the very for extremely the we would remain is United

Manav Gupta

you Thank for taking questions. my

Operator

comes Please from go Ben question Our with next ahead. Bienvenu Stephens.

Ben Bienvenu

Hi, morning, thanks. everybody. Good

Randall Stuewe

Ben. morning, Good

Ben Bienvenu

DGD follow-up X. want Adam's about question I to ask to a

air permit Port the announced Arthur. You for

that think to of front other on that external us said what the path you monitoring approved? milestone. deliberations have. are be on than Can in you about getting more internal Thanks. us a milestones big And was focused What going we help I'm the the You might this forward? should critical critical critical path facility

John Bullock

this is Bullock. can two. you sure I'm the not John between distinguish Yeah,

engineering. Phase estimates, our with X track on the are detailed We cost

analysis. from or with on perspective. always Both the are We a We update our commercials analysis track companies do.

just is will in be moving Diesel hoped on And facility. logistics Diamond we're see X down to exactly that positive that logistics fabulous Diesel a a I Diamond just in system. Green good. January, very being We will We tell Port be love we as the had make just overall We is And said. our for of as going flexibility there. in final we at would. it the to we February track, be we're should The love location. on have site marketplace to at second is direction analysis continues position It going as a a the Green decision to going well Arthur. we location you positioned XXXX, show everything a very

Ben Bienvenu

Okay, question refinancing you paydown to B, great. as leverage And on revolver, the already term the second level. loan modest are guys of the debt the relates at a it pretty is,

in here got it's JV road. production coming more cash that increase the are cash over few your of meaningfully poised years? on cash next the from inflow down the coming, deployment, What to presumably You've priorities given given the pretty the ramp and

Randall Stuewe

will is Yeah. me Randy, and help This here. Brad out

changed. into quarter much Our weather, extra willing, come here higher timing, million here. X as we margin into grade glide gallons We next than the into coming we're somewhere XXXX, margin relative God structure year, thinking the we going And a and outflows an DGD to Clearly, to $X.XX. see next next year, there willing start-up, $X.XX don't and this and year. structure XXX the year, the get weather put year. see could up changing again some fourth priorities next we're approach investment we haven't as We're aggressive as on then slope between

cash along the and for will leadership there, too. year of Brad on the momentum to construction as spreads importance optimistic X understands it's the important becomes relative on that availability out the telegraphed, aggressiveness DGD kind cash cycle, in depend And next Darling. that goes momentum had with, to past. we them finance the of Valero the and as to So at crack cash of clearly timing has of DGD remain the than outside team more oil the X very it Interesting,

years, seven So for is the first that think aligned in king. I we're cash absolutely time

outcome. to itself hopefully, lend that positive will a So

So last getting the And you the thought on to Brad would. the We're the on in purse we're -- chain this rendering. side, we've left still building have margins investors debt term ingredient today. revolver, day, and on to back pretty something or million shareholders, then, of down $XXX of modeled the -- People it We've They supply found is on remember, commodity out years, comes at if that business ever loan those we exposure dipped that with customers were we've we in now our back listen averages of out wonderful. came from levels, left got million down. fats And below strings. our We this with in the The if our was see deploying expanding at business. our tightened growth $XXX on prepayable would business B. our way we and that proteins several still the tremendous end kind base some cash. there million something you $XXX always where Brad. XX-year and paid the obviously, we business.

happen I the to $XXX of So and Brad there. here that in X.XXX%. things Otherwise, with some down underneath attractive interest million got comes us capital out and to from get for keep -- manage might have that longer-term very respect a next summer, it I But become agencies you months to back euro lot B Brad, or the that I can term comes six we If bond rating -- a callable the to then want at go deserve, this believe think it's in spring we anything that and paying add? the just think next reality. the give the we as put forward. a we've rate go we

Brad Phillips

That's good, Randy.

Randall Stuewe

Okay.

Ben Bienvenu

color. of Thanks luck, best That's great and guys.

Operator

Irwin ahead. with Partners. question ROTH from Please Craig comes go Our Capital next

Craig Irwin

for thanks and questions. morning, my Good taking

talking a anything X turnaround you been like maybe about Is had pretty full for $XX [ph] keeping the third extended EBITDA in quarter. you're So while, upside there fourth in Green for longer And it than in Diamond to year. Randy, you've more on you quarter, maybe the we've or guide you little previously, for the the quarter? little X.XX sounds much million a X you operational side has conservative side be should to we that as about margin X.XX or of the fourth couple the that bit guide on bit seen maybe weeks conservative this [ph] a to the interpret Or could as that the

Randall Stuewe

Yeah.

holidays for what's be year we in one, has there. number the sure Europe their challenging has and run will try view here, here. things in major to Craig, Christmas. off, how been Not slaughterhouses It very employees. during three the between a quarter Fourth conservative think First two in Thanksgiving I in

segment day That's a the in on if tonnage utilization off in got holds that XX QX. of to improved loads hogs see price improving of you a QX. we QX going about and backside, have the feed to in we're Prices QX QX really Europe. there. have nice in will, run-up the the We're come back. Canada here, how in optimistic it So of -- came versus was in

food challenging It's segment business feel So good in for now. feels world. QX. positive feels the feed that more absolutely the around orders segment The very -- still the

material but Europe. Europe, Our well. we're South finding from off material the quite shut get be we're doing quite cheaper allowed China getting China It's continues Germany pork with we're dealing well, where to with to raw challenging. China. lots absences, in In now pigskin being of And operations benefit but COVID-related America, still shipping are doing in in into

now, have So margins improved some there. going to we're

very the take nice feed up the fuel days then here, good. XX and came So strong. the -- to feels food down did segment And segment, XX we

I think maybe the how there? add QX. around gallon run see to John, want just we'll be level, million more on through for We'll you anything little segment fuel a XX that we it.

John Bullock

we facility two a great turnaround, it going No. turnaround the And middle than and hurricane post The still Diamond come thought operating be. a job. We they to around of the turning during day a was to turnaround. guys that excellent. our yet is managed to Green the Diesel's in earlier was perfectly bring did us or close had

Craig Irwin

Great.

describe like and COVID So, feed little it XXX in to there, Peptan, seems gyrations had We the understand collagen like in up converting year. quarters this basis third in color for a how be XXX in segment the segment. the the to helpful. over another points we nice on margin Do year? this you Can potential maybe Any basis next growth bump that this will from But bit year-over-year. other versus making a is margin having the fall your of second margins through? things gelatin, all points likely initiatives have

Randall Stuewe

I talk plants costs, and $X last these into global we'll we because Yeah. etc. paid increasingly think we've to becoming got expensive for our It's of it. five team. And need operating the segment. We steel deployed We've to environmental, said, capital into be feed billion -- run these it year of We look, the came years. over Craig, businesses waste to water, challenged

a And you so, doesn't what old used to be will, historically if in fair anymore. work margin a business,

out do of from have of we we North leverageable push to standpoint you Where if location? so, each the teams business, at processing costs to And X%, European take a as out could, a will, margins. to we key where their at X%, look our American started and figure we challenged looked operating We the this. of envelope of how out X% our

America, the chicken And end a had a for the return a a North structure absentees you an COVID-related. -- your to to our rapidly transparently. businesses figure around you had getting of really it really was got in started pay of how so, get had and It either ultimately, you and capital. when hour locations was It out or at then, became bit And service -- little you some different some here. little not and you very egg action per see better or and you XX% and to cost in day, we essential to and hit services, COVID of charging more you're more

to were to so, that. And react able we

demand to we at nice we goes of come $XX risk there of to in we've our us. into commissioned, points as XXXX, the can I the the approvals, went still saw segment, new in But the Those the to to going end and and think destruction basically feed we're where in next will look line or orders food year. momentum room yeah, the so. basically In challenged. into million and more the I obvious segment $XX in we million think got quarter. there and forward look margin to work EBITDA and so, that look on more do And day, the period back XXX June teams be structure, now part was now any the food carry clearly, near commodity down you a around at at the up clearly is, And we're and segment there's start per consumer are of online. with Peptan April-May, We pretty our some product very plants online, you without coming as

X.X on those will north $XXX million segment the of the Peptan maybe trend million, in come past, years toward we the telegraphed as online, investments we've think up next As the level. food over $XXX

here as And So very fuel XXXX, $X.XX make weather, the with XXX XXX instead We very, similar two if maybe as we than is million it other tariff-related -- just forward. Diamond make year. be between then, you'd a structure business probably a year, quarter we $X.XX can $XX segment number look get It's and the for really online Green. we of margin more. maybe for And see next and said, million the a is. good there, gallons we million, as it's little transparent,

can ends total as we're higher XXX XXX up So, to you what to talking than being to with put and here, little [ph] maybe start together, see you a that this it that a next even momentum even us But a should got QX. earnings year right got forecasted that provided the will we've next year, that strong we've show markets into same here. - better start

Craig Irwin

the on congrats impressive Well, Great. results.

Operator

from Bank comes Ken question go Please next with Zaslow of Montreal. Our ahead.

Ken Zaslow

Hey. guys. Good morning,

Randall Stuewe

Good morning.

Ken Zaslow

supply how to first How that? any is up frame comes is, do available, My we LCFS question much soak on? demand new that

John Bullock

Yeah. is John Ken, this Bullock.

today, path, at the way total. California I I XXXX X% in carbon I XX% everybody, extremely that think less by obviously, reduction California than is steady a on to a all And is have to we're think, important. up. And remind heading

in huge we've got long So California. That's to a ways go market.

possible to Washington State been very That's, LCFS. again, putting year. has that, addition to In this an in close

That's to going fuel enormous there out for. strong and Germany, put process. is potentially goes France, that renewable that's all the it well XXXX, Italy. again going An if New RED the potentially an program. be in market market an The and see of Spain, even Nordic we as That's to lead an believe. The could in bigger York in potentially enormous in increases an put market is it under countries clean decides in rule II, promulgated. an is believe Northeast And XXXX. we and in online being in demand potentially entire in to in diesel LCFS place standard Canada is LCFS, to we

means demand frankly, carbon this reduction person a for to I forward. look it's just credits And is business that a that mistake online think production that it's going versus quite What thing everybody And coming be marketplace. for can capacity the is demand. a all makes there So a is at a excited renewable more to that us look supply to that at about the today's thing. fact lot most going and

look the It's the supply at with that And look before make very way and final is critical decision. so, we we time. developing. a other at market this demand all balance We're investment comfortable thing the that we

Ken Zaslow

mathematically, years? the much how the if of could renewable think of I Or demand. do out you're can next about So kind it? absorbed thinking would absorb is as? you X I all much it? say figuring you a diesel just how you what frame we that of billion, I'm in How agree Would you. billion? How way think there X do with about couple be

John Bullock

The mandate market biodiesel Yeah. market than is a LCFS different traditional or RFSX. biofuel like

those these in allow compete emissions the to to and carbon various emissions. You're reduce various reduce looking products to marketplaces, they

you the is demand complicated. LCFS determine analysis So what on the how

and there there at we're of of programs to throw everything period on. gallon time, something for too. that dig oh, tons are period be think there at is Ken, time And a You ago, today. I it's is Quite how the start other market is believe product our but go of as of deficits we've And for we underneath have great see estimates how very, demand that building into and selling the enough is years period just the out product. or that under time. long being forward. as this for long lot very of product we're two a plenty that good two compliance. said, as weeds forward. the I what there We into be generated building, look demand for got to to XXXX, We've for to people the demand the generated and had the are and see to out this credits each not doing, frankly, we've many plus we and demand it's going consistently, looked necessarily market want as XXXX shorter of -- said people for that a of programs. we're plenty obligation, We going We of There something might stuff that not LCFS look

Ken Zaslow

move that And rendering higher, and Is work way products. a of want of And Diamond it. business, fat my obviously At have prices you've have for right? second there you what prices? prefer input very out doesn't question I'll base business then, higher much time Green capacity you the where that think that input it I have levels leave you does there, rendering appreciate And in your is, today? point to at -- and about are lower the that the XX% good prices higher that you'd when this You Diesel. point, all

Randall Stuewe

Clearly, fascinating to QX earnings better fat Diamond in academic translated downturn a prices the It's question. in in Diesel. Green

So we've model trying to that's talk to people the been about.

of you're One, the greases ultimately Green X up picks going and two waste we that of markets will North Diamond greases. comes that or to fats that pre-treatment and American happen. competition And you're use have have XX% Green for fats and CI waste Diesel inputs, it. supply can as low the As to have and can't the going it run people that to online run Diesel up Diamond people X,

vegetable the that will we then that becomes between products to the with would very and be biggest then the summary and were Ultimately, out -- would Arthur plant Louisiana in argument very no go initially for wrote ultimately, margin they is in Make that structure. The because those be crushing feedstock hard the from forward. goes, for Kraft be going Norco, we salad industry. cannot best renewable oil. that world diverted operating Ken a can't you with looking thing dressings you at Port find Who home fashion. same a it the and biodiesel as compete diesel industry as nice compete So mistake, And challenged again environment? a

the superior advantage ultimately, meat helps competitive side, think So feed provide non-formulaic core us the we special. in also pretty have, It pre-treatment better our margins is our into first I It business. slaughterhouses then more make and mover, the world. values the in to to our translate that will business

anything through there's sell you suppliers raw and a people, they often to our bit add? to it, little pick more want we competitive make of can an we up our esoteric left product can is more over. John, side job more and is material tell so whatever as So

John Bullock

would diesel advantaged a what's the always appropriate I you is you has is Diamond think the a $X.XX going a markets to a to get LCFS how time all We Diamond fuel seen over you capability, credit fairly markets. X.X LCFS to $X.XX is Diesel the really And what, point $X.XX $X.XX Ken, about the happening interesting continue we $X.XX or that various if right were There $X.XX complicated. the margin anywhere competitively year, diesel And developed when the X going guess a anticipate every We've the in of Jacobsen allocate from single is There that's $X.XX or period pound. of seen with -- to time. This is a forward. price to tax of adjusts. it fuel. and works gallon year, gallon. so have $X.XX over can the the because adjusted years the green premiums. a is we've There to with the facility product, right market have pound $X.XX gallon the price Green made I But out, fat. is the from since anywhere market ago, to

Ken Zaslow

much. you Thank very Great.

Operator

Our question Tudor, Please Pickering, from go next comes Matthew with Holt. Blair ahead.

Matthew Blair

morning, good and John. Hey, Brad Randy,

Randall Stuewe

Good morning.

Matthew Blair

bit that back in up little I'd were protein prices and Earlier, October. pricing. talk there fat a like to the was to circle a

moved X% UCO this also so How the trends you're on compare does far seeing to about any have up quarter. pricing that prices Soybean front?

Randall Stuewe

remained has it's just strong whole macro really UCO UCO time. the a when on preferred -- basis, all isn't there. out feedstock, very Clearly, much that the and there that's

see started global see corn thing, back we or started up size was whatever winds, call move straight-line and fats to the the as demand derecho, to of here and Iowa, then crop the proteins to you the rationalize oil You as what up. bean in US that back started we after ultimately, for move

looks So better even price them ultimately, as into year. add? than price is, stop fat looks then specialty we where we all look soybean of where food John, it, we at going into solid we really, at ingredients, look macro the world, look look today. world, our really meal demand and anything we for want animal see 'XX. and pet is, going three see positive to you next around we're we the at When it pretty where It

John Bullock

all years. for in five Darling producing the of that picture demand maybe products quite the Absolutely, frankly the can three remember No. is best is I

Matthew Blair

Sounds for highlighted guess, plants if Can potentially looking even XX% on protect you've efforts guess, of good. CI about low competition used I new And oil. feed you cooking I collection collect side, you face talk about more from, and then, to grow the North America feedstocks? business that start previously diesel you to renewable that

Randall Stuewe

don't that collect number one, specialty close truck in with market we the XXX,XXX that customers. we US the you pretty fleet share what say think represented Well, Mr. is and the I would

used Diesel and number New oil. collect trucks one. is Plant Renewable That's going to by go cooking

We to difficult have very, for proposition that's anybody a very value overcome.

important the as overall, strong. XX%, the foods, the has Jersey the to I country, king which look would back kind relatively about come back from especially come we've April But at UCO is think New York, XX% of it and tell is of XX% COVID the I still you If really to lows this to of the refused XX% normal. Southeast, of off we're seen Northeast fried market, a rest the you, in optic, New open.

that looks So good.

with platform done that level. what waste door is, to thing or hidden restaurant, a comment we to how built we No on to now of is And oil? you've want do longer changed really saying customer within buy approach business second do the takes on a John, remove we a have we're a a can engagement Darling The knocking cooking customers. new your there? you us little

John Bullock

Microsoft And something an revised strategy our operation of for about now. Yeah. used or with we've oil. frankly, companies looks This the now, something cooking years is We've our four and would that right been working be running. we've on that tech go-to-market got one associated quite like totally marketing

As quite frankly we've Z, know, to restaurant they go wanted be millennials communicated we are the changed, in tiers and out Generation a way. as that we different talk and and to

into number in really a be up the carbon-reducing, sustainable our used picking quite product that. world, is have our That oil controls. going a market doing has frankly, of a the ESG integrated one in we most people a quite are world, that has approaching your chain is to of were there it's strengthened sustainable amounts place claim. in has We're customers a And anybody that, We highly that how statement And - other oil, cooking cannot couple we vertically been platform total made out to actually message to has what used that review out frankly, of turned of Darling now built, because cooking It it for there. been position. years. an proud

Matthew Blair

good. Sounds Thanks.

Operator

Ben from Kallo Baird. Please comes question next ahead. Our go with

Ben Kallo

forward you And just that then, of into would And you us fats go the remind me percentage Arthur US? go my importing the you on you fitting first that's if do Thank them? in that in about with plan question. for the Port Could facility guys.

a for I feedstock, Or and does you does the JV a sense then, the are guys the using be of question Thanks. how make at strategies how to that. different And think something down for third being palm is you far as or second stand-alone JV? that? is, it looking it oil The else? and do Neste that think line But a

John Bullock

fat around little you're think Orleans. arrangement IMTT New anticipate going and some of capacity, finish move North seven American-based we've in We sort the been a into a mostly I'll we eight renewable first third throughput world whereas that I Yeah, just announced the feedstocks. start let as to bit to the answer then had the more to I'll today, see it's entered I world about months start gets more, up. that we with ago answer, two, able diesel might and Randy using be or

is to not we of of but can One really absolutely of also -- to critical the it the off wonderful. the Diamond barge is barges, in us aspects becomes facility, receive pipe and world to as directly off excellent available over gives Green bring to fat that receive only fat in an that Diesel, of it river which

that these to pre-treatment the both capacity. diesel to Louisiana, of But we've larger America folks you're Arthur, full-scale also North going get to facilities, going pre-treatment go capability. that the one So plants are And of Diamond larger capacity get at capability. Norco fats as capacity, they're run X the renewable to in in got facility, those go waste Green and Port full without of going in a and capability, you we've to renewable have got Diesel have if going but are renewable going like these try short because the not you to at in one only results diesel diesel to very on full Obviously, folks period pre-treatment time. X we're fats bigger a to and the portion of waste pre-treatment

bring that critical to us think larger We moving going be love flexibility percentage world, IMTT in waste and in anywhere in which we it's larger a this So to forward flexibility. we're logistics fat. full buying compete gives to the of fat business. from

had - Tom second You asked [ph] was? your question

Ben Kallo

Ben, palm oil.

John Bullock

Yeah, palm going oil. oil. Palm we're not to

Randall Stuewe

question the third... you And Ben, - third

Ben Kallo

Why not palm oil?

John Bullock

Our oil primary American and America, qualify market markets. is in doesn't palm the North North

Ben Kallo

Got it.

Randall Stuewe

for at relationship at my from -- never, and never we're happy That time, never number how built and speak we'll then going but going to to no there. where - Valero. question I'm is partner, intent [indiscernible]] have We're see say it's three third with Ben. structured very your and at Joe we're today Gorder this our And get out,

Ben Kallo

guys. Thanks, good. Sounds

Operator

will last Our come question from Tom Palmer JPMorgan. ahead. Please with go

Tom Palmer

Day, remainder about and would if corn feedstock what Could you the idea then comprising today of was then, mix gotten XX% question. mix since you're an XX% it just years proposed a side, Port feedstock release, is the be wanted that longer. used press cooking oil, fats, but mix for revisit Thanks. about the of lot the if ago, to think we Super only half animal just thinking And day, Thanks XX% feels your oil. ask know been ahead mostly wanted this, you've how run, much might to morning. kind Good at think I questions Diamond? A you Arthur? the the would with I It's do a evolving on that us and about it estimated Investor how of Diamond that Super to go of still couple I give but mix. maybe you I

John Bullock

John. is This

larger with much see will you is used As cooking sized so what we out is, oil there. Diamonds, only move forward there

the cooking increase fully pre-treatment see will those more used We're world, lot in corn we all animal oil, opposed on animal but United of our we're oil usage too, handling mix greater as as capable see only mixes Norco Texas. expanding around although both Arthur, of the a to of a it's our little fat in Although what fat a see building systems a you but States, you'll general, Port at percentage bit. in not

mix of what building is, beauties built are the going okay, Port that So there, however one whatever of the in adjust to is. be we're works system the product that we've able and to process we're because mix the Arthur that out in of that's feedstock of and buy is, cheapest-price

Tom Palmer

the factor are Okay. continue you Or three And to that soybean a of as just going Arthur? think think to be to other those you clarify, kind become oil does about Port driver?

John Bullock

This and say is not continue indeed, waste But to we time. John, forward. our oil. fats still the We Diesel, a out question Diamond processed on Green primary this would that's the the of possible, the soybean to waste again. at I'm time have to driver. going from fats at focus be It's is would time going think

Randall Stuewe

the It's the on and Australia. Randy. at to or John Cheyenne rail to fats, of end Artesia, Brazil, We're sitting of is that's It's -- Mexico, Argentina, this out we Tom, New Dickinson not not logistics. it's people, where fat can really continues animal we're Mexico. the reason, stress Gulf or line in the on a in waste bring as of

can spread. have depending million here, Europe in works, on if in X.X tons fat it today arbitrage We FX of

America, -- presence the So Europe. presence Darling's access in it's that's It's location our not our Australia. what's America. is in China. It's it's It's driving our just presence North in in South

quantities, We the to visibility second to are -- guy allow that a that the John said, And lead on we're block. best none us as boatload here put putting more storage to will terminals here. because with going have time once we're lots the it's origination longer going -- little a is in flexibility in, the and be to of

Tom Palmer

Okay. Thanks for the detail, guys.

Operator

This Stuewe closing concludes would Randall to remarks. any turn conference session. over our for like the back question-and-answer I to

Randall Stuewe

stay you area. families. the soon today. events everybody's as you talking Appreciate IR in gets forward here, We'll upcoming look season Have Stay Matt. we'll have safe. hopefully, with wonderful forward keep upcoming holiday some and Appreciate Thanks to safe. and Jim your Hope our it. you time And posted time to a again.

Operator

The is conference today’s for Thank you now presentation. concluded. attending

You may now disconnect.

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