Darling Ingredients (DAR) 10 Nov 212021 Q3 Earnings call transcript

Company Profile

Participants

Jim Stark	Vice President, Investor Relations
Randall Stuewe	Chairman and Chief Executive Officer
Brad Phillips	Chief Financial Officer
John Bullock	Chief Strategy Officer
Sandra Dudley	EVP, Renewables and U.S. Specialty Operations
Adam Samuelson	Goldman Sachs
Prashant Rao	Citigroup
Tom Palmer	J.P. Morgan
Manav Gupta	Credit Suisse
Ben Bienvenue	Stephens
Sam Margolin	Wolfe Research
Craig Irwin	Roth Capital Partners
Matthew Blair	Tudor, Pickering, Holt
Ken Zaslow	Bank of Montreal
Ben Kallo	Robert W. Baird

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 2021 results. After the speakers prepared remarks, there will be Q&A period and instructions to ask a question will be given at that time. Today's call is being recorded. I would now like to turn the conference over to Mr. Stark. Jim ahead. go Please

Jim Stark

Financial to on third Randall website. Sandra the Executive Phillips, and Vice Welcome Strategy the Bullock, on this and presentation corporate Officer, renewables Stuewe, earnings on morning. Chief Chief Brad Mr. Participants call Officer, the page Mr. under Darling Brad. John President Ms. and quarter Chief in Ingredients call Chairman Officer, Thanks are There's Presentations operations. our that specialty Dudley, can presentation slide find Executive Events link a available, of U.S. and you investor Mr.

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

Randy. hand I'd over Now, like the call to to

Randall Stuewe

Jim. morning. morning, joining Thanks, thanks us and for Hey, Good everybody this

well. Our very business core continues to perform

continue higher from are we labor, transportation, For the world, to Ingredients adjusted directly operations. reported costs facing our many which was around when we of EBITDA combined the Global of third the of comes business. quarter, face million approximately $XXX and challenges it $XXX million companies to Like others

dedicate improving from year. all efforts face want second in daily the facilities execute in we operate to quarter of year-over-year, our to employees and thank navigating their our sequentially and continues the our Our responsibilities. margin with to our continue while great efficiency gross strategy challenges who our of this I team business

QX. performance of bite stated, it Ida As big 's has took Hurricane DGD a in out been well

time to facility first there X and direct which operating, Ida. was of The shutdown of the the to little this was For facility great is from the DGD storm. employees from the assets hit in took a protect significant years damage plus the news

the With reaching renewable of or restart news DGD putting production. its Norco front, capacity, days we shutdown approximately XX in and track the lost XXX Also, of the gallons process, production diesel closing expansion is well to sell XXXX. running great on in days on DGD on the and more is

as to the could expansion. Diesel XXX hardworking at gallons the We XXXX, fine-tune sell engineering team facility. service and also of in performance providers believe at over continues of the million because only possible DGD Diamond the renewable contractors, this is Green diesel of employees, achievement The

have lives to many back to and into and daily resiliency suffered their to While purchased I'll annualized With $XX damage that, business $XXX getting $XX was property Ingredients their $XXX putting little I'd Global approximately XXXX. of year-to-date personal Brad million things the On finish DGDX for a million stock. approximately Brad? are earned and and common year-to-date, repurchased fine million work to their to come us financials at bit discuss and us like for for take operation to XXXX. disruption finish approximately get exceptional. hand then for of going important basis, up back and worth million, of return our how hurricane, outlook has of of a an the to EBITDA, during through the to these rate it of over our people now, run stock. construction of from the we Darling quarter, truly their plant the job the tenacity done. appreciate approximately We Also, And extremely

Brad Phillips

Operating same the or as XX.X% $X.XX a per XXXX. XXXX compared increased gross share the to sales a increase quarter for diluted third XXXX million compared the for Income Quarter. to to XX.X% quarter XX.X% of for gross compared on $XXX.X Okay. of the or net increased Net third income to over of Thanks, $XXX.X income the third XXX.X Randy. XXXX. per in of quarter in was for primarily $X.X The Third increase increase was which third totaled for due a margin, $XXX.X to quarter $X.XX of quarter the the Quarter million in diluted million XXXX. margin million, share $XXX.X the $XXX.X income for Third million Net XXXX, XXXX to million of operating billion

the XX% income lower by $XX to operating compared Diesel's Diamond in for as quarter the XXXX was same Green million million impacted income, third improvement $XX.X share the XXXX. quarter Our of our was contribution net of of which of

Randy for As earnings during lower mentioned impacted sold QX, gallons DGD Hurricane quarter. earlier, in in resulting Ida the

XX.X%, Our year-over-year best which is XX the XXXX the gross was gross in to had have result margin years. QX percentage continues we margin last and improve sequentially.

the period ago, the percentage year first XX.X% or of our margin same a compared for months improvement For X.X% this year, to XX.X% X gross was year-over-year.

management declined on to compared As million to quarter million related the has increase Third gross to Quarter in $X.X $X.X increased prior higher the as million $X.X operations. their X in IR across and XXXX you as of X and expense XXXX other. quarter. margins quarter the our travel, a XXXX have Quarter. $X.X profitability causes to for the positive last year, Third continued the the and Interest the Quarter Amortization SG&A business declined years to and compared The as a compared declined in for million deck, X of year-ago the can the Quarter to pages previous Third the main for team the Third labor, of from trend worked Depreciation our on the XXXX. compared see of when costs

the million to X income months $XX.X ended recorded turning Company income for XXXX. of Now October tax taxes, X, the expense

statutory primarily U.S. certain to due inclusion earnings. tax in XX% rate the incentives, rate items biofuel on differs tax the foreign of based different Our income tax jurisdictions among earnings mix effective the taxable of is XX.X%, from relative rates federal which with and

the months X, million the income paid The October Company an tax million has of XXX.X the income and of taxes, quarter. end expense recorded Company For effective also of the X year-to-date XX.X%. of $XX.X XXXX, a of rate ended as taxes third tax

year. an million For XXXX, are XX rate cash of and taxes approximately projecting we the effective of XX%, tax for the remainder of

ended balance $XX.X totaled X.X Our billion, $XXX.X and million times. and Capital remains total XXXX Quarter Third Xnd as outstanding leverage October of for the our $X.XX QX X debt for months with bank covenant of strong Sheet the at ratio were million first expenditures XXXX. at the

Diamond this Green which a include funded not reminder, spend continues spend internal capital As capex by the be resources of substantially DGD. share Diesel, does at our to at

Now you, I will over back turn Randy. to the call

Randall Stuewe

Brad. thanks, Hey,

energy momentum history for our global XXXX. platform we Global and minutes and of Green combined perform that on XXXX press to well, allocation. to Diesel strong we billion. $X.XXX our we yesterday, I business guidance in release capital Ingredients our Diamond best want few build adjusted is for as on spend in a our to our continue into finish indicated look and as our EBITDA There of As are going out maintaining year

M&A not we potential the out construction did world, in X want we spend the in DGD future This opportunities push cash a execute make for that is flag in our most everyone not to those reaching on and a add points decision that changed. this Darling the XXXX. who bigger belief the XXXX. the accelerate meaningful rising. address capabilities is couple points, policy earlier continues That our our adjust in I already of for growing best this really grow. capital rating, capital venture our green on footprint Arthur, and investment-grade allocation And out shareholders. last to core I DGD, increases which to enough the plan, on work size production all large bioenergy knows but Those use to free our these potentially years, the plan. potential in feedstock of on discussed of of our are need to investing from our of is to our generation our distributions CI points may Port we our low cash the debt priorities our funnel that of share Over point do have call grow starting have our through capital around puts repurchases, of XXXX, flow business, do does execution cash Texas It allocation ability I as the DGD will but be points and limit to grow and at also to generation not plan continue dividend all mentioned.

go with up and So, open it let's Q&A. that, ahead Grant, to

Operator

session questions question-and-answer today [Operator the pause At We that two you are this our the question while begin you queue. roster. assemble now momentarily in Instructions].. limit will time, ask we to will yourself We to

Our Please first with from today question Samuelson ahead. comes Goldman go Adam Sachs.

Adam Samuelson

Good morning. Thank you. Yes.

Brad Phillips

morning. Good

Randall Stuewe

Morning.

Adam Samuelson

Better policy. new working first Act. congress -- incentives Back about the around question are in that my guess Build of is I thinking just And the were their some through way

those then see aviation would kind credit those DGD to be be both beyond. interested what longer-term of and the Specifically, the [Indiscernible]? tax XXXX hear for the production how clean I'd and potential opportunities sustainable post Randy, contribution you that for fuel to fuel just of of the DGD around credit and

Randall Stuewe

I'll let Adam, this a for at us. Sandy Okay, take shot

Sandra Dudley

for very Adam, long Hey, like which important and reduce a get is known recognition we but way a biofuels I industry. long-term we are says of for that. really it's first biofuels supportive an think a seem that all, think sometimes commitment It the we've one all don't that good we morning, of time, to emissions,

BTC that to that of I terms with think are things positive In actually X the are Darling. regard expansion, there

credit. First, extension, the there's as the SAF as BTC well

XXXX. there's support And to That's as a before or gotten to we've to is value whether Year a adjuster annually Gosh, gallon credit that's based inflation. has then a which that's certain credit extension in we same per first What the on it as possibly gallon. a to is XXXX It's read -- a and extension, the clean would subject fuel XXXX or reduction for in step-down from XXXX. per credit expect BTC and credit. at upon to not enormous we've And after the well today, would it, doing After the we that dollar in positive. XXXX. production going you XXXX. value. CI that's adjusted do then treated seeing way emissions step-down today have a forward. that then a is becomes that dollar manner from is we're happened go production that, Then just that So, go what very what to in X-year And of terms the been

that for possibly and step-down. terms that life the again gallon what In annually years. to to CI have $X.XX. in they're down. to a for CI. It's to credit on determined XXXX, the then, Under production adjusted depending per $X.XX X Again, depending becomes methodology. from going it the you you'll again or as go would After as a [IKO] by and fuel we're from as also that you production cycle of be adjuster, to well XXXX and kicks have subject the there credit have another $X.XX Again, not would a XXXX, a SAS, credit credit, reading, a XXXX that, then on least then goes (ph) to or gallon a inflation at step XX% similar to clean of $X.XX reduction have the per whether up

supportive that and and emissions so All of the is supportive going DGD. of that reducing of is Darling direction just

Randall Stuewe

this Randy. Adam -- is I think

in years think pretty most social climate the I there to of of Sandy is discussion. nice forward Overall, probability better there has that's that our moving really I think back we've high in bullish a seen spending change a the the that in if thing did participation legislation build you or that of single here probably many certainty gives plan out explaining. -- job detailed, the will,

picked very She the up. was pick I'll credit. it you hopefully Sandy subtle think it sure make and producers or I up, you but production word said

extreme favorability And that's gives a -- that the -- a so very to U.S. principle assets. that's key to in here

Adam Samuelson

scope both the actually production incrementally would Scores a about for CI you your SAF are and look to making thinking DGD reduce just so, own helpful as done, and about guess just the That's XX just then thinking expansion with start as really coming and in what fuel? months I opportunities about take Arthur Randy, of that color, Port you Sandy at Norco or how it and follow-up, to

Sandra Dudley

Yes.

we're I we're number of that to a trying doing are think constantly CI at So, ways There our looking that. reduce scores.

we're ways to start do But with and think we our helping with then feedstock to that to we of our looking so our internally too the Scores. feedstocks, time the I make us at that. that adjustments all can allow processes CI try reduce at that look

thing And so, our constant on it's just a mind.

terms or where In we're of SAF headed.

not the and think the we've constantly that. to yet excited is to we've reviewed make really markets, finalized Bill be say, studied grow that said have we’re Build profiles, will any to SAF we've it Back need but And and appears we yet we've we've right really about to I But we I trying we're end, the the see talking decisions. the before economics. about that done about the we're see evaluated and the capital we the Better unfortunately, serious we've talked you to as SAF, preliminary legislation engineering, logical industry, economics. to the so really yield excited required, just can

Assuming past we that what economics from supportive, announcement, the when we the make you've not in an that because it. that low look is I out it's to to role it. and forward in in press of have we're we terms an expanding ESG seen our plan carbon it's want It's final contemplated think And or solutions. story, to well an Diamond are something serious about get just do the we announcement

a finalized, the the and we things of movement be hoping relatively year. SAF of I'm our quickly where let said, homework we've once I end soon. can done hope that to able are that's become next the know at part should things stand. you in so, And QX of That day, we

Adam Samuelson

all you. I on. it Alright. appreciate color. that I'll Thank pass

Operator

Rao Please question go Our comes ahead. from with next Prashant Citigroup.

Prashant Rao

Thanks morning. the Good Hi. taking question. for

Randall Stuewe

Morning.

Prashant Rao

with to pick compelling that there, globally. might sustainability wanted -- factors I land a the the I and gets set. an messaging water very here that could think on that there wondering about I just could you [Indiscernible]? messaging use, use, help up be has help Darling think this to be and ESG and us clarity about in around that is a you so story narrative, was think about And some Sandy, that really this to when said environment the wondering then those, you de-carbonization, highlight story. market pushes you could you with up how broadly legislative was Morning. [Indiscernible] we also might Randy, that if before be if the year just thinking there something other time ESG us the XXXX emphasize the you're about other leveraging beyond administration and that, Darling and

John Bullock

is capture that an great have a Yes, long carbon which story, quite this emissions that an point need a is a It's we carbon to as because John. ourselves almost in viewed ESG frankly, everything interesting reduce does Company world is Darling thing.

can we place don't interesting though, to the Company operations. reduce recapture Darling the also has actions there has. in another time. only that matter in much right usage. at moved think to -- our to than water what's historically we're The world actually help be more our The Diesel, is right fact associated as I carbon Because the with Diamond reduce standing that there's emissions happened taking with help just as Not that I think we that the fact but internally Green water rendering than aggressively out the

ESG based really a broad story. have We

people been of because no messaging of you for this judge a years concept. and end the has all doing We're several and try and developing doing it. that. story is back, preparation has the to is of and lot people ESG there's story We the Company issue on pull more the have, the view hard curtains moving that's this relationship Darling in pieces as out there's And day movement for ESG the once to how how than reality clarify now there is in ESG internally around in working is our this evolved been part a at

matter Rockstar. story think I So, out because Randy? messaging the a it's the absolutely is getting there of

Randall Stuewe

we did talking the And and move mean, all energy XXX% a parts really one initiatives we absolutely of time clearly cheap Prashant, lot from the to looking technologies intensity. more we've about in then water No, full got intensity, different labor business have spending world, XX% is crop to and at we're spends when water last reductions, world a we get during about XXXX, of employment. John. more which consumer, clearly going as it's no world's the sudden and this will I a water conference. at lot the get seen be recapture huge we've in around your to that up smarter and And thinking the stuff, is time in for year, energy energy so Clearly, again, attention. gelatin a production, as different once of and world. more there the the

for great tuned, So, you it's in bringing I and we'll to think, time it a tell I'd bring you 'XX. I out, more appreciate stay us, you here

John Bullock

Appreciate sheet go debt about check to XXXX, the How specifically, on have next wanted is you given should and on that appetite much, we Arthur up. of one and Randy. -- things. just room be to sense just allocation wait you side just to see when think how great balance distribution follow-up. be what to the check, there think about there wanted you your in inorganic on the And -- where I partners to until DGDX might the hear need might quick of the year. when to Port touch Randy, the I think John reconfirmation that for capital you acceleration just you wanted about I these and 'XX growth

Prashant Rao

capital bolt-on source potential there. for something a like I'll that. inorganic it leave to or growth

Randall Stuewe

Wow, of getting that's in a question. I'm stares room here. lots great the

we trying we're we're machine you and we're securing is more we decode And procuring X part home. continue machine. that fun if business seen and we're build of want story. do to than to the low ESG the moat the X and around as carbon can't our we've we around them fair yet, And telegraph, seeing giant years. multi-continent address world. going to if the they're get do opportunities tell Now the today, really them Can't Clearly to in is be the priced to how additional this clearly, as to M&A last by going think feedstocks

So, we're be within of looking funded and is it's [Indiscernible], be and completely a Darling will availability it, high-class our not as credit what it online problem give source it at of hard, again, more maybe we now DGDX, hope. agreement, it'll unlimited time. got it obviously that the we've will to clearly. acceleration hear in delivered early plenty 'XX, some cash-generation need of capacity and modifications once a and means of And occurs blessing between A then, if we to within because

X.X year. lower this headed we're not even As yet down said, leverage Brad if time ratio, to

so, in problem have plenty as we what high-class 'XX in say And do of room then want to a do here. we and 'XX, we to

Prashant Rao

turn appreciate time, Thanks, it Randy. guys. Great. I the I'll over.

Operator

Palmer go Tom question Our J.P. ahead. from Morgan. next comes Please with

Tom Palmer

for the thanks and morning, question. Good

Randall Stuewe

Good morning.

Tom Palmer

what fat view the same bit haven't that. on seen used to Curious We've is oil followed move animal your oil, higher, prices really extent. corn a cooking

or tallow expect of price time corn-oil over there to pricing consider to feedstocks? for to with are the constraints comes UCO other that You gap converge when it the and

John Bullock

trend our we're in that fat, in Yeah, general supply. reduce is seeing when this emissions this to waste John. fuel you're I is valuable trying Yes, are fat what think carbon

note in price to oil cycle. higher. of different low vegetable generally I than short-term And type take on the wouldn't scores, carbon relative They but animal essentially, corn substantially move all are and their oils you're too fats. any much of value and carry so, the fuel in all are better relationship intensity intensity UCO they seeing in carbon movements slightly those

of that differences market big the excited carbon The time wouldn't truth essentially be source to low now, fuels. come. carbon between very and a And is I fat fats a is on are the Darling going of and fuel prices. long fundamental type of market. period it's in an a waste get short-term for for top sets market markets this it's oil valued think fuel carbon is about a evolving that a that's field to I concept low general of low fundamental truth too

Randall Stuewe

and would Yeah, Randy. this is say I Tom,

where pointed I to out. feedstocks. you think look When at John going said the give SAF us. carbon treatment Once When preferential it of very, the you very again, well Sandy is of around value pool carbon that's low in feedstocks baseline always corn, to as North go. caloric has world, were above both trading the of been well low American now could which the it

end the the mind day, in at of XX% you today. America's telling so, kept it's feedstock North DGDX, buying And of keep we

for to it's accomplish And feedstock and us want -- also number what we so, prices out there for it of but if, is clearly us, firmed at to number there's plenty X. X

Tom Palmer

the laid or one? the still for out a to I X.X, was quarter, you that. X.X the is this think last business, production, $XXX point, Does this Thanks think, the And least that by the affect ingredients million at outlook it I DGD, $XXX at prior at little and bit outlook for did outlook still increase your from from XXXX of DGD? you EBITDA Okay.

Randall Stuewe

forward to gallon, in help at time. much we said around, that we little trying as we would we're came still we're oil fluctuations we're maybe the we year moving think say year, XXX -- I'd a rents the around you next I going into have there's be moving with DGD, mean, where a moving there. clearly offline Ida, around. in heating more -- days a operate clearly pretty up, XX of LCFS lot But margins us I been of to we to go didn't this telling still disruption would

DGD a simple XXX mean, or XXX as finish I So, coming business I I the dollars XXX sit minus a there out And XXX year, should then in at that any today. at feel which there. or time. doing good you gallons. out, be okay, real coming we year of this around and said, that change we're see gallon what plus million if say, math think, next $X I now then don't that's up should few forecast see base you the right

Tom Palmer

Great. Thank you.

Operator

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

Manav Gupta

guys, Hey I'm to question. ask going policy-based a

You so they would In they to deal are on. who people but CARB, coming people do price low, projects in will these and where and and high-level a they of get Which are drop high we some is what returns, them think carbon? discussions in talk the a decent LCFS, be floating of ask. your good carbon pieces do price CARB. support are at entire there number will expectations opinion good will lot don't CARB that be again, of program and carbon try lower you That's all talk or you would I'm investments and some saying to supportive I'm which out trying think would the of but set not try bare saying; there with Hey back. coming to investing of the price, a estimates good least at And to the saying people would there are of are for on, not which around could LCFS XX, Projects be

Randall Stuewe

Sandy.

Sandra Dudley

Manav, this is Sandy.

lately. taken realize LCFS on So, focused very they've credit these everyone's direction the days I prices and

months, in LCFS general in decline last a and seen QX, deficit, prices. LCFS we've over exceed saw we the I credit think few

market same California volumes market, seen renewable levels, saw that being may and not market, to further we've even versus going we've imports, more weakness more from resulted increased the in terms which really demand we shifted in Europe the be in California things of That historical believe. and diesel market on, gasoline the thing saw I pronounced. in and the the well we as seen Within on European diesel weighed over

in we been generation increased are since about of within banks But saw the take mind, deficits exceed a we've number also that place. number also general to planned of have and decline categories keep over seen there's projects XXXX,XXXX. credit credit often a heard in and on, recently, We time, a credits

require carbon or credit baseline. to average task [Indiscernible] Governor by That's saw comment to added a answer a don't contemplating reductions. forget And And parties seen to that seen earlier path ramping than We've years there's hearing CARB terms going some XXXX call projects carbon do to and carbon intensity changes as something on still and that achieve up XXXX, its Newsom recently recently to some reduction we've delayed We've the period. planned. was the that's in the your too to have been carbon also question, package. in regulated we've neutrality been significant We whole it's that huge is scrapped. UPC, state originally be XX targets, the going the during for LCFS, unless Washington seen, also and although exceeded implementing work granted XXXX obligations of that's transportation and

and be for of programs programs. programs And mandates And will be know its all other pipe implementing reduction LCFS we've will we at York Europe also like know are And finally, XX within for states the carbon proposed CFS Canada looking Mexico. competing New We implementing future. in that suite not-too-distant going carbon these of low forward. fit then its seen insignificant credits New

sometimes are there's everybody So LCFS here earlier else, a on we, to to of an coming should inflection picture, and trends events over focused things we think John but to because down But seeing that I spoke prices. number the not I those see necessarily look going we period we're entirely with that the sure temporary continue think of that. be when monitor the time, short or road so point at like the and broader don't bullish credit on trends always get we that

John Bullock

And, market could of credit actually if ceiling pricing. on top extremely to has that, maximum LCFS just see add not that, we're the the challenged I pleased

and If I what its the this in increase mandates. things help we've think we marketplace standards. really new of move programs frankly, have fuel long-term now, is other going jurisdictions successful, low entities and fuel thinking market other these carbon government and that are the brings Quite a implementing forward carbon California established about to carbon help into the low vast array low are in and provides the low what more in for fact feedstocks. expansion is the these only has that supplier but as Diamond expansion much base for is, Darling low carbon market the with and a extremely the programs. responded and these in California what Green base of is, And renewable other, stable viability success long-term programs alternatives Diesel diesel positive for alternatives carbon not

is that be pattern is all extremely news. like and and have that's how what's quarter the think fact and I the gallon everybody on per at matter we positive for going The it's The obsesses here the and is this we what being impact know we this is, we Diamond about stuff. this news, Darling. working, to laid at much So, very have bad out of good what indisputable. good

Manav Gupta

interacting going the Perfect. for within look deeper, that Biden a policy knee-jerk the advanced is as came electrical be clear But talk generally is think I'll there some and administration? biodiesel, may speak leaked it's to diesel administration I when again almost a renewable they're may top, feel views we you side. out at again, there's but of I the do but do are EPA at probably and increase not support wanted ethanol bit we a very against biofuels dig reaction proposing. that it's the they numbers But on they with you fully under, EPA, Biden when when understand you supportive I little biofuels. X-billion-gallon Biden biofuel, a your down only there's document, to, know the writers with that

Sandra Dudley

there support is biofuels, or administration. within the within the I for the Biden biofuels do within that think --

yesterday, credit of released, think whole SAF of action was the a SAF that see that that I you climate host new within we was report programs a and forward That's very SAF. saw XXXX supportive support there going that it's aviation plan. the

you've a think to extension recently what too, BTC. long-term that, seen addition In the you've potential seen of I is

as So, think us very well. for that do I supportive that's

do. So, I

I that think --

John Bullock

of fact doing in RVO administration on you look Let just to the matter is is this relationship to can't the is me and just add RVOs. Biden what And The at it. question. John

clear Manav, point, extremely positive the going It's of mandates part categories, the be to is that think ramping for your the the on. for and advanced us. diesel biomass-based they program are right I that's quite up for

I that saw, into take do just you've just they they here The And to got the with RVOs, it's we not SRE. an other consideration as think SREs. the thing that it's denied what do

folks administration obligated to this historical some that those the are hear compliance. think granting issues. the that do going the going What's in to liberal be the is SREs. we RINS are That's then general to finally, are I not the important parties courts question. on to to that behind very There relationship and And [Indiscernible]. do going there's there's of noises the

and emissions for number nothing a of the that committed there positive reducing that We answer carbon ball's is So, carbon And and reducing are see administration than bouncing. fuel. to are totally the Biden emissions anything fuel tells today us less biofuels. and

out we new to positioned are to sparks. excellent moving out we some come they how But the consumption for is that They biomass-based come to out issue That's where RBL because and rules. confusion gasoline the to to to S&D standards We established biomass-based figure have of as support on ground during the there's extremely We dramatically with be controversy. there you the some It's when s that on the primary should thank about is forward. these the think pre-Covid has some when in COVID, address that absolutely. we and supports, had going create know diesel RINS reduced had relationship it, see that. adjust to going had Specifically, create going been diesel EPA driver basis. farm a think

Manav Gupta

taking for your annual that question, taking very I'll you commendable. Thank bad Thank you guidance hit my that and just say my questions. from you is for maintained you Ida, but a took

Operator

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

Ben Bienvenue

Hey, thanks. Good morning, everybody.

Randall Stuewe

Good morning.

Ben Bienvenue

want reducing merit you you more but DGDX. don't availability the about clarity wanting get ramp know DGDX. bit to in DGDX the SAF production questions horse the to gas a got up Carta of the Sandy, having emissions. I feedstock has the and noted talked put need John, Adam's economics the we're want I to talked greenhouse on of ramping follow policy around DGDX, you we've still I of fuel a because around a about think I all to little SAF to support the and

feedstock to addition figure In SAF? equation production to what does do of the the how decision around component economics, into your in potential with involvement

Randall Stuewe

John. ahead, Go

John Bullock

sure asking asking. what you're -- you Are not quite I'm

you Are -- asking Sorry.

Ben Bienvenue

diesel available like SAF to make of to of to oils, Is suck and alone fats both available low renewable there up diesel going greases fuel. renewable it going most is build-out pursue be seems to the carbon because the feedstock enough

John Bullock

or diesel we down have kind two the we make paths or of can can capacity some current built we So, go renewable road of some of want. our is being for can SAF convert One we process in we of expanded that here.

want So, that, the feel we possible. if is to some that of that of have diverting the essentially alternative SAF do clearly road we

port building and products Diamond that some in a roads the well. to in as open those part We are of us of SAF from at that time also the Green have the Diesel of possibility Both future point unit making future. in being

renewable But see lot to they fundamental economics; think little finalize done, they're got of finalize. that then rest terms it. a how the So, move they we -- our we'll ahead, sit bills into you've yet. the We consideration details so get to production of go your take partners, existing probably We've how very have policies can of got some more if to down these is as once to get all Green SAF not take quicker [Indiscernible] on divert new conclusions pretty forward. The have wanting to create unit. little with And in SAF current any jumping our to into then about a were there's quickly. we would marketplace, to We to. we of we'll with of diesel bit and decision go want we production can most what not we than the of see The Diesel I'm done, some But be I have right? prejudge we to that finalized tax but there those will yet. that how into and method are wanted a we see SAF optionality to rapid that important valuable if we'll as there have largely probably our the and what on whether leads it's likely capacity evaluate these want homework we'll credit do. a rapidly don't Diamond our just the discussion than to homework thing we around

Ben Bienvenue

on been there margins Ingredients are thinking bit ingredients Okay. John, understood. the food there. DGD over Appreciate the continuing That DGD. of thoughts last understandably, be business continue I the about on to expand year, business, Ingredients margins enthusiasm given the Food you expand and to think Thanks, is would helpful. the there? warranted focus offer Where we Any and on been on Food here, and has you curve the could unsung the a the gears, thoughts. guys -- Shifting little has business

Randall Stuewe

collagen been DGD, a two- strategy to I today Company. solubility basically three-pronged are North mean, while Russillo so. in seems launched extreme and Quietly and the clearly, like collagen America supplier Europe from rightly being predominantly there basically it's transforming Yes. there a being growth different a peptide there with calls here the growth peptide Ben, strategy this is product the and out parallel for has by business XX% potential, or a applications. double-digit now solution on been that's world, With of gelatin around potential the we've it's it Asia. the the And shelves driven Randy. in

have be pitch. development working -- always an peptides know, we've for, We've right. that in so, Company. also pure. is X, of us on innovation That's area. another I one. heard starting to little Phase worked out Phase tissue got organ we're our biomedical it I And X and on been And off on X X, discussion plants long different don't And bit and would we rollout years. got little then to we're running, we Darling our and hard. college regeneration our We almost work a and building talk ex biomedical. and contemplating you give the our a

now we're three tight a escalated in raw The against collagen couple today. up. window have world in story and the to a with that struggling material then got in go peptide the business shutdown business South from little to supply then raw materials as margin produced chains as COVID five-year honest, long of We've a So the and forward. years bit, headwinds and little expansion a of from products very where unit we the taken that prices to XXX% the ago. were screwed growth different we're are are America in be we're -- in they And

availability, America of labor, of and has both the all number the processed to As above. cattle South and due being in and declined, COVID,

year, next I comfortable next tuned is years. crumbs growth again So, think the talk that nicely year, accelerate We trajectory. next throwing long to business keep X a short, very great has expands. about bread it's Stay that's should It over been earnings Jim out story there. got Stark the why

Ben Bienvenue

the with good everybody rest the luck of year. and Thanks,

Jim Stark

you. Thank

Operator

Our Research go ahead. next question Wolfe comes from please Sam Margolin with

Sam Margolin

morning. Good

Randall Stuewe

Morning.

Sam Margolin

is on you've prices? this the and more elements targets I competitive not and new playing value. is the M&A so they're wanted about that coming to of down was that waiting that there because Wanted it ask and to And undervalued, Darling that Ingredients play recognize private in was unlock able has relative talked of too private not just I might how to sort we're some just out sort value to for to trading. question, creation and past, there valuations pull capitalizing And Or prohibitive ask are today's that, about -- Darling for you to you're many synergies just follow acquisition bridge. be of reveal up in that of this details. industry how at the universe where But was tools

to on the that's of what opening window call new past M&A Just this years. is anything kind of X on to X relative

John Bullock

plants we and mean, high of Yeah, said done have this when is John. that's Diamond mean, lot business I always Diamond from that under major anywhere had the I not world. there's past typically I'm year building we've business. with is joining and too fact X valuations core our the get what in expansion in X new X lot or we done the a in or years Diesel around last as there. we've Green sure with the think to not well out is a and Greenfields opportunity of every as the I X we've are

alternative. deals. sometimes would simply And in aggressive and count said in round this that, ridiculous and price discipline. sale. that businesses can acquisitions. going you us do being non-sustainable in So, -- think out round going a being these terms see on the this that. you companies for we've won't just that time, we maintain go at an always Having see you're aggressive, I are up there we're in prices come forward. we'll anticipate be We think acquisitions participant to I that in of We would of had I I player out of us and same always aggressive But in point don't us think see

Randall Stuewe

said, think And I that's John. No. well

the all heparin, we're lots we we the these the some that's as get of it and that other know to Families to that companies year. that they seeing and seen we chance the last bolt a built, December, than and has as business were. -- now headwinds we're their use, make thing different streams houses there’s foods, great is, the a a the around into world, making term. in be world. different at remember best sell. that the turn out when business in having of at bit have products a We're little strong John around businesses we're an organic the fertilizers, these But of pretty might little a whether ability things slaughtered are cliched on been highest making of there we're whether year; of around at by-products -- to little kinds times the I since and this especially whether year turns, referred something businesses of think over to They the animal we them slaughter can platform making kind certain many take I than world. the pet you've have come looking decisions platform better time having Also,

So, stayed the price up that have little will a ago, price, we is as discipline years as here sidelines we big into John said, we and But on do when got for maintain had. we and proposition than the double-digits go things different X we forward.

Sam Margolin

and some and on what pricing words, just will might other are in as Okay to an one it. has the thoughts that, your maybe more rendered as becomes input your been margins greater asked have Which CI to just suppliers factor then their won't I some houses see And margins something a a your and to leg? revert that that color as extent thanks questions follow-up for that's And risk is and the result. ingredients margin with value next I know on fats expansion a slaughter friction point, that There taken participate that you another appreciate investors questions I'll that want leg that me. that because notice in see in that higher manifest. if your

Randall Stuewe

amount we've commodity for significant on think clear about years, that a been raw is I a shared our XX basis. procurement of material

put we're Where expansion years. we've CIs benefit being in getting higher X-plus play That's And of that last the values. there in really different we the able those of products so, are passed make margin, the those and that's they're over the specialty capital already. on to day, transform. End out of getting the lot a is on our

that here there. mean, collection can is recover costs. sales the have said issues inflationary the out if our our around So, to World, are Those models the really from world. price fees, it's labor facing service with you you operating margin basically challenges The any we do are expand our energy those processing we're our to what today world? products the don't of have prices, price. pressure time-to-time, I nothing see higher on is I the pressure fees, around happening it's

meat companies are money lot from coming and for a it's side, of able making and all or the the CI most money. part too, of give or glean assets, in remember, more the but we're feedstock, price, protein to -- So the part them

Sam Margolin

it. day. a Got much. so you great Thank Have

Operator

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

Craig Irwin

you you with thanks segment off driving market. $XX taking talk thing, can that came-off cooking part Good right? and my are morning, as you through questions. of and that with I Randy, the margin But guys drivers million used this does beautiful higher margins us commissioning roughly -- play market XX% of the the feedstocks oil see of like two-thirds maybe DGDX, seed But what right? Taking impact on for looks It fats supply there operations the quarter Ida biodiesel And the primary fourth from benefited was and full DGDX has the of that it chain. oils? in last of the fats in had yet out expansion. backup how for quarter? know the for

Randall Stuewe

have tag a is, that globally, what and and End CI understood, a didn't sudden a were Ida, we Yeah. business little Diamond offline the to run low when business, I basically team bit. mean, And there's offline it learned electricity. for just macro strong John we [Indiscernible] offline, a fat -- with how needs goes Diamond again day be means prices. I'll this both of becomes all we days. Diesel Green fragile XX America Hurricane just Diesel, on demand for Green basis could meaning customer with we when solid Clearly, feedstocks. of North

If don't unload railcars. electricity, you you have can't

up And screwed get so you then, logistical pipeline. to

here, to of not so, to fourth-quarter all stuff ship, and had had above. the we defer pay we to the And people

the And move so -- to but to they were product having still market.

So thus, biodiesel guy. your

world. about around proteins food demand It day robust. availability. news every pet that is isn’t is The one remained container my challenges to start side, strong; the it's supply back the nothing operate is really new on levels. fat Diamond freight. So, at protein even truly you'll into specialty and you've shorter seen very pricing, we seen you Green answer the start chain these gets prices the really really I side logistics on rebound channels haven't as guess The -- of

how challenge you been impacted. both at And that back you get really in on Europe so, it been got market to do you've to has to what a price word commodity That's is somebody use. here the the out got has of seen and somebody it consumer it? do the and the Thus, to proteins sell we've else's primary to in

prices we go we've be we a firm steady. soy are all see pretty Maybe to got and the today, as So, crops improve they where seen, But fat protein world. as prices crush we've little on should world. at will around all It XX, bit. the around robust the depend

demand And really is meat meat so but and out today. production, -- solid remember, there

from should steady. volumes year, model, prices raw material business fat next prices good, So, solid be our protein

Craig Irwin

to plants. Is or just Either produce, conversations see about you. soy that roughly these Thank of to renewable you with there's processing own to agreements diesel out for any The them of you're want with talk CapEx spec suppliers. a long-term in crops third-parties? we let's of of feedstock, conversation because follow-up are their want don't put or there call others my any these do and not And -- possibility the feedstock out for online, But long-term many those those Excellent. they whether Can we come facility. there half a question. about dozen off-take actually get plants approaching companies process commitments maybe that even right? work for

Randall Stuewe

take Alright, that? want John, do you to

John Bullock

compete is would I diesel would if who answer with Green do that a you we Sorry. no, not of with plant contract Darling can Diesel. one question somebody asking Are against building will Diamond renewable that that That's course. word, a

going answer got how to place the conversation. and able quite on always time best Diamond The of hit with that Green folks running Diamond recreate the around trying is I what American North is marketplace. Diesel. at the Diesel, right a location, the right we to lot markets. to think frankly, That is go to the of the of positioned fab again lot figure Diamond for there's right be with out be right to the a fact we've yes, a in means is, logistics, There matter time the capabilities, to Green this

question in economics suppliers people diesel about deals the else alluded something in of other creating that's basic can to Now think part get to renewable matter margin are fat do At And the renewable was all cutting business I are a higher-priced do end the day, basic of economics. they this important The going to VAT. this. but a diesel here thing because talk is the kind they the want consider for of the business. of our to of fact is earlier

sorts However, that of right work the work is way. we're I who economics. going I the we're world all the the to are this around turns at seems put then But have any end in of years stuff. We're are that for the in to American that buy with it. day, that's of right conversations be margin And great going location to end concept. fat the capabilities. about hasn't next suppliers. can lot of have At because on capitalism its economies gives no That the the well-positioned, all a the People fat in it's away conversation for And and going economics forward. to of business how around to there sorts somebody day, and in invest capital doubt particular the to hasn't XXX worked XX years. going capital

Randall Stuewe

the ability keep from in to for Green real so material about ultimate feel is around strongly the that play, it's originate thing location. location, to we that Arthur, Diesel works. mind, is Craig, raw from fat And one No the Diamond at estate whether Port Europe, location, And fat unheard unload wherever the from else Norco, Australia, dock, fat from it's has it's from it ships China, of. ability whether with fat Brazil, directly world just their

here there at the this strong And At will a deal terrible. are of of crushers, is CI the So, the rule very luck. guys economics making day B, we forward. deals with some margin going as as soybean out end petroleum the us look and good the give

Craig Irwin

it. Thank That's a you, like forceful guys. answer. I

Operator

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

Matthew Blair

And XXX like one point any lay but it might XXXX? million, for could would Darling DGD spending the on some we Congrats you next what had were on hoping the then out year? strong Randy morning. XXXX at spend more. clarify be numbers will result. and to chlorine standalone in be At thinking Good in comments be also, what sounds you the the just capex

Sandra Dudley

that for one's think that I me.

Randall Stuewe

answer then. let that I'm you No, going to

Sandra Dudley

struggled But I'll but go here a through you be all further? with me hearing that so I bit -- honest, struggled one, us help little Can we that I of apologize.

Randall Stuewe

XXXX. Capital spend for DGD for

Sandra Dudley

capital for $XXX DGD should around The be spend million. 'XX for

Matthew Blair

'XX.

Randall Stuewe

sorry. I'm XXXX.

Sandra Dudley

That's sorry, XXXX. what I'm I meant.

Matthew Blair

million? $XXX Around

Sandra Dudley

Around $XXX million.

Randall Stuewe

And Brad, then our were $XXX-$XXX? base business,

Brad Phillips

Yes.

Matthew Blair

Okay.

and to a DGD XXX So, for XXX standalone? Okay. Darling XXX for

guidance? reiterated and up that is If conclusion. in Sounds EBITDA that quarter-over-quarter food Do have for would whereas we [Indiscernible] bit guidance imply that would you the moving previous right XXXX. be the quite be overall any numbers, updates you And -- it segment good. for Randy, then, a the would feed the level coming QX, off

Jim Stark

Jim. is this Matthew

think had million about what at for year, food we to to winding on segment. segment going be would the way up best going in the that to Feed I the to where the results for we've think out the around is are, still segment track be the upside there about fuel XXX really, us, be higher in the are the be so feed is

Matthew Blair

Thank Great. you.

Operator

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

Ken Zaslow

guys. Good morning,

Randall Stuewe

Morning.

Ken Zaslow

stock that the bit taking and Just do as forward? stand now? with share been What little really. terms your has of follow-ups decision of you a a of backseat repurchases in a couple was Particularly going where

Randall Stuewe

the is $XXX right? authorized think has I number board The million, and

John Bullock

Yes.

Randall Stuewe

you'll meeting fit, as have as we we a pressure $XX again morning. them this see that behavior in go clearly, then on think days. And Company purchase this as have time-to-time a used some low of here. of lot $XX. in from of We've this around And great here the of which last million we continue, [Indiscernible] owners board $XXX shareholders the reflected we're forward got we to couple and as So, opportunistically Clearly, and million, we've see I under strategy some

the And significant unload, challenge put people is to still pretty so, major as -- within the it position access. here the with stock some the on can pressure

big if opportunistically it bit challenging look quite can forward the is bullish. of to going guess the defend end the But I there, thus if a we're you're wants So, move day, pressure and too use forward. it to a I'd you're wanting be block, word if someone hard

Ken Zaslow

opportunity the you on about talked Great. point couple rise lot questions. And or that fee I you the there understand And the does of Are how of a the understand shift reviewed? as of is a contracts that. just on fully in it increased offerings? the being capture prices your you to I capturing keep on alluded the full product didn't -- more didn't to fully just based then, full the work? margin is a there. just amount Or

Jim Stark

are is, question fees those? of -- past still services. we in The updating the in we've increasing we working round about our on that and And talked

Randall Stuewe

nice We've I or expansion Canada, as you had return business widening two- the large forward. it's process a to for in costs And look the U.S seen of non-fully I and two the are we capacity and will, we've been three the as then is for feedstock two, labor nice exponential there. different full. -- there's there it's on, to there couple renegotiate. if whether focused in Absolutely And recapture and those is three-year us. program have now slaughter us rise in supply chain mean, margins. months the Europe, we challenge move to time-to-time as integrated we levels houses we a the really think energy or contracts. historical some around margin three world, relatively Every the can,

For be in? I baked able part, fully most little from better. it a think the to we'll yeah, is So, but time-to-time, do

Ken Zaslow

Great. I appreciate it. Thank you, guys.

Operator

Please will from ahead. today with Baird. question Kallo last Our W. come Robert Ben go

Ben Kallo

just difference a then guidance you get South you a of all couple I morning. Good everyone. about mentioned question just question a [Indiscernible] the that feedstock. that costs? Carbon-intensity. -- done been us? My how on now, explain think to the way lead? make do is pin up I We'll of to The do ahead you that Hey, feedstock is of first times, Randy. Jim. America third the does How lot you've and of of mention a time still I And we this. the the and your pricing you've to Could that like in in I businesses, a you've with trying one that. acquisitions do maintain curve catch how part you guess family-owned lot you the on and

COVID and then I meet past think that But now and picked with are into we what you do activity. -- a bit on go the Thanks. you can't that up that. where gets and them because in right said

Randall Stuewe

CI? to Any take you want the

Sandra Dudley

a In now, they more may the also CIB give and generally feedstocks we're the value. I think CI see lower much the of terms what margins. but you greater And there's stocks look lower cost is what if at front CI you you seeing price on higher. right returning I market, mean, that's in the But there. end the greatest they're

Ben Kallo

work? the But pricing if of buy oil Sandy a UCO, of that of finished does per the out someone can out products, how made gallon diesel of specifically, renewal into renewable or soybean gallon

Sandra Dudley

Yeah.

corn animal Again, I look if those or higher. fat, typically have Sorry. oil traded UCO at or

not to renewable turn because we more capabilities, things LCFS the that finished diesel, that like we're of product in that. able soybean have a RBD because But price higher terms pre able oil. Sometimes in oil, into -treatment margin of we're soybean to and in and convert credits terms capture value

John Bullock

compliance for the element we carbon intensity when the those is because add of from it Company, is higher-value So of matter this score a fast better. fats have marketplace, the essentially intensity, And have fact produced therefore, that just sell, which they and valuable part carbon the the premium field that you grain premium price waste onto which the It longer fats, of the being associated we those it the to Company. is gives is lower margin into a fuels the what green way carbon the the therefore, lower intensity that, is our LCFS. include with price, you made better the and in more works is of a the is when

Ben Kallo

I Just X gallons diesel, so X very of, versus the clear, feedstock from the gallon use as -- I I buy might If it renewable soy have just rough.

John Bullock

a this consumer versus fat, from vegetable buy of corn fats, fact distillers -- of renewable be, So, a gallon the I the on waste is UCO renewable I'm of fuel oil, of carbon of the fuels, value has the credit oils renewable may alternative I matter because based the gallon let and me if whatever made I answer credit I buyer of lower animal gallon therefore fast waist and worth purchaser the that it than intensity the or CI a score more the from higher a diesel of way. it that more has If buy it of diesel is have the bought to or fab. the the

Randall Stuewe

saying are USo John, of a is a different compliance. selling of we way gallon that

John Bullock

That's right.

Randall Stuewe

fats when vegetable made waste than obligated value of oil, more to you has it out if it's And will. party the

And their willing for they're so to to therefore, able that. obligations, they're and us meet pay more

John Bullock

Yeah, well so. that

Ben Kallo

feedstock Very you. the then helped Thank front. the to there And on acquisition drawing express. just on

Randall Stuewe

Ben. around world. answer there, on working it that. to the we're no, But going hard help Not no There's

from is, clearly, chain we've I a data the on have around secrets and sauce system don't But very an there last is the secret up clearly feed been got world. we -- published. out the the think is thing long the government stock. fear X operate today. won't set it always until because mean, didn't be will on why importer supply of continents the I That's DGD we

rest takes if Europe, potentially stuff any of of The you U.S. clear. come will We're can that we'll will, sale, a for South so time. seeing businesses in And just -- we of lot the for them America, if see just Asia, home. sale get And

tax just or everybody Some businesses are What time do out. good I are teams settle, that policy, can management great planning, one potential some just being is are by buy in say always some we driven to changes values. our to succession share with can

ability had around the of right got expand moat value -- like just before to we've a grow we and And is and time when so, machine. continue to never we've the the the we're fair will,

Ben Kallo

you, good. Sounds Thank guys.

Sandra Dudley

Thank you.

Operator

like session. back to conference Ladies I A and the would question-and-answer over for Randall gentlemen, Stuewe this will closing turn any conclude - remarks. to our

Randall Stuewe

IR Stark, putting there to There's events a stay Appreciate again a list continues of everyone's safe out time have deck Grant. holiday Thanks, everyone the today and forward that we'll you in to wonderful and upcoming that season. be soon. talking look hope we on and Jim Scott to

Operator

now for The conference attending concluded. has Thank presentation. today's you

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