Earnings call transcript Q4 2022

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Operator

Good morning, and welcome to the Darling Ingredients Inc. conference call to discuss the company's fourth quarter and fiscal year 2022 results. [Operator Instructions]. Today's call is being recorded. I would now like to turn the call over to Ms. Guthrie. Suann ahead. go Please

Suann Guthrie

you Year the XXXX Thank Quarter Ingredients and Fiscal Earnings for morning. Darling joining Fourth Good Call.

Officer; Brad Here Randall with Sandra U.S. Chief Dudley, Mr. Renewables President and Specialty Stuewe, Mr. Bullock, Financial Phillips, and Chairman and Executive Strategy me Chief Executive Ms. today Officer; Mr. John are Operations. of Chief Vice Officer;

corporate page transcript Our website. joined tab are available presentation release and fourth slide Presentations be will quarter and we call by and the And fiscal it under Investor -- year on be Events XXXX available. is our of earnings news will once the on and this a

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

the hand Randy. call will I Now to over

Randall Stuewe

for Hey, fiscal Thanks Suann. call. thanks, Good quarter morning, joining and fourth our everyone. year XXXX earnings

needed bills me prioritizing you States. here. paying heard locations our my as first in days and Chairman employees anniversary United time, out have the to I we a to my paid the and my XXth On utility XX Darling. running. X, keep team, XXX of had celebrated of Many I the be operations shoebox, February Brad of with XXXX, story At ones that the were CEO early throughout tell of

to share. about per a We move how out to had trading from was stock Our figure thriving. to surviving had We $X plan.

you we but can't strong employees are locations sit in tell when years now XXX later, more smile today, I XX As continents. I than XX,XXX here help I X on

and work of that to the meeting matters, day do world. more sustainable because XX,XXX families, to not employees place of talented they most is come their generations. needs making We they critical and our day to have but themselves dedicated every our world What the know their our just work for every future a

a XX our provide X It's own clean food process, no our world: castle. has solutions surrounding that in created with the Ingredients needed the Darling last moat to energy. We years. very we doubt deep transformed over and And platform unique the

global We growth superior and by have segments. earnings driven our delivered diverse platform, vertical integration

on for XXXX aviation energy foundation In X Combined soon the are rendering acquisitions fuel. in to fiscal Ingredients. to XXXX, Darling growth and of at sustainable continue completing more fifth XXXX we of the will also adjusted for compared green collagen, hydrolyzed XXXX. business, $X.XXX billion the marked key consecutive was to closed that core earnings billion in in $X.XXX as year be record EBITDA process and strengthen X X important areas: our

detail. in segments our at Looking

The For our segment XXXX, billion fiscal $X.X approximately the ended business at Ingredients at million. EBITDA. Feed year Global $XXX.X in came year Ingredients

$XXX.X while $XXX.X Ingredients earned from Fuel million EBITDA, earned Our million Diesel. our with EBITDA Specialty Green segment Food $XXX.X segment Diamond approximately million coming

year. XX% well Proteins very compared the I'm from plan in quarter still are Globally, margins to as Tacoma, that Ward, while plants happy Carolina XXXX to in the for detail. volumes down turning report XXXX increase late segment despite raw into Washington as to of our in the XXXX FASA to that Ingredients in quarter material in and XXXX. of an as Group last we as Feed Brazil being Valley quarter, third closed acquisition our the South up gross X,XXX-day Now compared realized fourth early mid-third significant were integration in fires we

of announced our plant, day XX, Beef built new by an will beef-processing which we a February head Bellevue, facility On Cattlemen's raw handle Nebraska being X,XXX Heritage per expansion material Company. all from the

which be completed the will will about plant. XXXX Bellevue to rendering of add capacity more expansion, Our by end our XX%

oil illustrate XX We the from coupled collect and with used preferred supply Darling Panda Express presence also Darling cooking the oil its provider States. integration recycle that Ingredients United announced nationwide on will to more Diesel. to its Diamond Green restaurants in derisk has X,XXX February chain chosen acquisitions, continuing for and is Darling how our Panda projects, market as used its services. These cooking strategic than strengthen recovery build vertical

Now turning segment. Ingredients to our Specialty Food

more our sales strategy that represents product within which increase higher to today is Food sales continue online at are collagen, hydrolyzed hydrolyzed segment. our is early value Epitacio, about quarter or collagen of adding accommodate capacity processing to this collagen and growth the due XX% come to year. we second the end of in the market, existing To Brazil, which Our quarter facility in first our in

previously will XXXX Gelnex produce million should XX,XXX Gelnex excited metric immediately is X when XX has quarter. super Depending should gelatin X the EBITDA U.S. the Brazil, business in and will facilities: and that of a sometime X approximately in of operates are USD our estimate our announced capacity Gelnex in to accretive. anywhere I very and add X in we in be and and USD XXX collagen products. of between acquisition Indiana million second close that Portage, tons close, earnings. it on to And peptide Paraguay, well-run Gelnex the

As anticipate the Ingredients $XXX these $XXX to approaching an Food our million we facilities, segment to next million we EBITDA the bring I X to over see of years. technology could X modify and

our to moving Now Fuel segment.

our renewable joint diesel came start-up X the completed Texas Diesel schedule of energy Arthur, was set was expansion volumes plant new The mid-November in Our the our venture, driven performing quarter of and of DGD plant. is prices extraordinarily another sales fourth higher with volume Diamond record Green well. online the business record and year commissioning and budget. Europe European ahead sales Port under the and our successful by in months strength and of continued green that

For XXX recorded renewable the gallons fourth EBITDA. and million diesel per of $X.XX quarter, DGD sold gallon

sold million fiscal joint RD $X.XX gallons XXXX, of the per XXX venture at For gallon.

Our latest expansion brings approximately XX to X.X annual DGD's gallons and production naphtha. gallons billion of capacity billion

cost aviation of you project upgrade to XXXX. to As in sustainable about Jan will market, our SAF our announced XX% The at to expected $XXX Arthur million. is and allow completed entrance us the many production early of know, XX, we Port on into be fuel around to estimated

Louisiana. the as is be completion very DGD our one of anticipate, With the we world if project the built expected the to gives decarbonizing. we develops capacity We're project, could Ultimately, as in market in and be the SAF top additional we of the as manufacturers the excited this in conversion moat believe us assist tremendous about Norco, again, deepens once optionality world.

us on hand here. to you come XXXX then and Now to the financials, I'd the take over Brad? call some through with we'll and balance some that, to give Brad thoughts of like back I'll

Brad Phillips

for quarter totaled sales as XXXX quarter XXXX for $XXX.X the $X.XX Okay. diluted XX% Thanks, income compared share share $X.XX the Net income for compared billion a million billion XXXX $X.XX fourth to per or of in diluted per increase Randy. fourth the sales. net $XXX.X or quarter quarter. the XXXX million fourth fourth net were $X.XX to or Net for

were share for billion or XXXX. 'XX for share to income for for year XXXX Net $XXX.X million diluted fiscal in million billion year fiscal $X.XX $X.XX XX.X% or fiscal $X.XX sales Net $XXX.X sales. was or per 'XX to compared compared fiscal increase net as a per diluted $X.XX

and million of than Diesel's quarter-over-quarter, Operating XXXX million due which primarily increasing million increasing million the income Green quarter-over-quarter, SG&A million of XXXX increase due Valley and depreciation $XX.X quarter quarter gross about and and earnings $XX of primarily share amortization $XXX.X to fourth $XX.X to increased the to million Diamond a Proteins acquisitions. XX.X% the to fourth both in margin compared more FASA $XXX increasing Darling's for for $XX.X offset

global decision the network. close charge made a the company in a location Massachusetts to our recorded million in Peabody, Also, asset optimize $XX.X collagen collagen XXXX order to impairment as was

integration million and we Additionally, $X.X of in acquisition incurred XXXX, the fourth quarter costs. in

$X.XX 'XX as to XXXX. share Operating increase primarily primarily fiscal compared Proteins. in about in margin and gross to operating as of a of billion SG&A DGD 'XX income The increase both income depreciation amortization for FASA than Darling's earnings offset $XXX.X increasing fiscal year-over-year, compared year increase Valley was $XXX.X for and and million million more for XXXX, which the year in $XX was and fiscal $XX.X due million year acquisitions to to due million million $XX.X increasing a

as well $XX.X primarily the announced our in Op Valley and acquisitions. were impairment there year, de charges fiscal and for 'XX well of asset as integration million related For Gelnex in the and as pending Miropasz Proteins acquisition $XX.X to FASA as acquisitions Beeck, previously costs million

other due $XX quarter-over-quarter and increased $XX.X million, respectively, $XX.X interest $XX.X increases and million increased expenses primarily million from year-over-year to Total million approximately expense of in debt.

income payments taxes. $XXX.X rate million. of 'XX. fiscal expense were cash to for and was income $XXX Turning recorded 'XX The tax year for The tax company tax million XX.X%, effective

about $XXX XXXX, For to rate the and million. effective expecting the cash we around same, to remain approximately increase are tax to XX%, taxes

incentives expect not a Inflation impact Reduction buybacks new alternative for a the XXXX, based minimum booked signed other results. energy includes quarter, minimum a As on book the income, will provisions. excise currently stock on August tax tax XX% and have and our We financial buybacks material climate X% excise stock initiatives, tax tax last mentioned do upon in on tax among President and/or Biden Act, new which

credits, the credit through tax transportation which be nonrefundable qualifying of from aviation December through XXXX. years income excise credit, on-road becomes and XXXX. effective have will credits, available XX, X to The After production production fuel. clean fuels fuels tax been producers The tax XXXX, blender refundable XXXX a extended clean credit, are

in materially these and our rate are can change impact assessing earnings We incentives, or our tax which years. pretax tax future after-tax

applicability more of the act continue to is will evaluate and We effect guidance issued. as the

was debt. outstanding $X.XX Now year company's The compared at billion debt fiscal XXXX year-end turning as to fiscal billion to total $X.XX XXXX. in

Our leverage the the X.XXx of fiscal year year-end ratio to XXXX. as at end X.XXx covenant at bank was compared

undrawn $X.XX $XXX loans for continue be maintain credit to as of as term the the Gelnex with revolving to available on borrowed billion liquidity of of as acquisition. anticipated million XX, well December XXXX, strong facility We closing our

of $XXX.X for the in fiscal Capital its The $XX.X repurchased to $XXX.X quarter in share million fourth brought fourth million totaled million shares for during $XXX.X leaving which repurchased XXXX. the year expenditures year-end fiscal company company the repurchase approximately total remaining shares of fiscal the and program million for approximately quarter, X.X stock million, XXX,XXX its common 'XX. $XXX.X million as

With that, you. I'll it Randy, turn over to

Randall Stuewe

Darling for our tremendous year and great on a was as our XXXX XXXX we into doubt, the we No carry Ingredients, laser globe. continue around done. Well new Brad. businesses focus of thanks, Hey, momentum the integration

have turnarounds robust and Global stronger eased producers, in these see animal diesel to pet by last While supplies situations downtime for demand renewable fat remains unplanned and global improvement due prices food and remedy. we year. production as QX should modestly than protein

renewable for Europe, our investments These customer our projects include spray-dry to plants supply U.S. increased with $XXX capacity both increased XXXX production. for growth projects about production to to allocated be new capacity growing business and Capital expansion collagen are expansion than diesel million of waste energy in growth. in rendering at to accommodate existing estimated drive feedstock green more hydrolyzed XX% and profitable

as be we Diesel, renewable with our North integration about diesel making logistics, waste feedstocks Green combined expect renewable sales world. DGD's global the Diamond to to X.X pretreatment diesel superior to producer. billion the largest 'XX, technology DGD and gallons volumes vertical Darling's access respect America's premier DGD in in provider positions With

and that created shows prices in will sending were Recognizing LCFS profitable DGD be performance 'XX in to XXXX the the feedstock lower, compared and prices is lower noise continue some to our in markets RVO profitable. XXXX

renewable to For $X.XX gallons X.X at XXXX, gallon. diesel I expect DGD a billion per sell of of minimum

build continued XXXX success. on strategy is growth and to Our plan our for

it $X.X we're and closing still end grow We And EBITDA. happen. guidance numbers to the of of the earnings see include combined billion And between in giving adjusted to by of $X.XX acquisition until billion XX% don't the expect XX% Gelnex those year. we the

being debt finished shortly, of sub But a covenant we the as ratio to with slightly anticipate closing start expect our year. Xx. end of peak the DGD year regular dividends, will with distributing anticipated the And leverage bank of We by Gelnex over the ratio X.XXx. X.Xx we

debt Make no financial will be our investment pay mistake, grade. toward priorities to and down work

$XXX.X with Brad We today. repurchase continuing are as opportunistic committed to approved said, share million program, our remaining as

large continue businesses. tremendous our all few very Darling acquisition Ingredients our are on the strong the for with traded value. company earnings highest those shareholder and publicly consistent companies industry behind us the focus we will And after their finally, Gelnex, There offers waste on show growth Darling we setting to upcycles integrating standards close laser high is can sustainability. eliminates only Ingredients meat value. while from that that products

In X zero Celsius Science-Based reductions December to the undertaking with the pathway XXXX, and by XXXX. committed aligned in initiative, achieving the Scope Targets X.X-degree we emissions X net and significant midterm

are of we in activities. our guide on us quantifying to targets inventory, reduction currently of X our our X and X growth account We completing for process Scope our the while will reduction business where the focus and recent Scope need which

footprint X stakeholders our process in are past a completing years. the over know we new Additionally, assessment we changed have the materiality of and as

were before, that said landfill approximately As tons of process green metric incinerated. or XX I've and million been many the This have gone before we for material raw we will was green cool. to years year, could

We carbon why our recognize our believe shareholders avoidance in that our and company. story many invest of is

We the and it credits. of it one report hopefully can monetize researching form in carbon how carbon actively calculate are avoidance number, our we day

feel the good I'm our and progress, even about excited about ahead. very I more opportunities

your So Q&A, to ahead closing, let's and up you. open to and questions. we'll with answer try that it Thank go

Operator

question [Operator Stifel. Instructions]. first be And Derrick the Whitfield from will from

Derrick Whitfield

I my business. wanted on For focus first question, feed your to

think as up could about impacts margins perspective spec. of plants the you additional seasonal next margin years With of should how the bring in couple Valley with despite Darling trajectory on you we you experienced over and improvement your some offer sequentially UCO, recovery weather to

Randall Stuewe

and ours we've X,XXX-day were. XXX Proteins. articulate a if I we're Valley can people, at Their over Yes. under I'll integration Brad half This into at were to John is come as Randy, tried high clearly, and Derrick. miss what assist But I a something. level, margins days to plan mean, of

ranges business their And plant systems business, situations, you can making. when it you progress put the renegotiating material so raw from see we're pressure optimizing labor USA the margin together with agreements, mean, customers now our the and they shouldn't our you at ultimately coming see Green around moving that through. moving and to ways full where material then Diesel. they're have, Diamond were can capacity, in they shipping And they were exporting, I

there. Diamond I of fat to bringing driven obviously, start-up amount people were little I trying see and the to always, do a in QX X in mean, QX. downtimes we position against world QX, our also fat we're are and people's as to Diesel continued You're going other progress the bit prices in down X about with in Fat by want around I mean, prices. Green say, and or turnarounds. global the along talk they're then downtime --

up said, a And will just backed so as the little we fat itself, forward. That we bit. remedy go as

fat back prices, through in pressure little lower those Fuel the remember gets of in DGD that may So and segment. But be the a there then there in benefit QX, QX. translates

down anything to to move want time the around a not total think as add always, from want it just because offering, segment you level can to about I there? time. to So John, people

John Bullock

Valley No, I folks get already improvements Valley we were a And happening huge think geographically very our what that we volume we folks. of exactly positioned. the the getting, tremendous can rendering as that's thought is with -- are we U.S. block see well is together

but what time, moving very seeing they're We're that of fast little very, a take out to Going acquisition. extremely excited an we're at pace. at

Randall Stuewe

Carolina recognize It's on or on I in were looking day Thanksgiving can't mean, is rules I accounting would remember and lit Derrick, Ward we're It loss. at fire the clearly, Yes, is in there but Ward, and performance Tacoma QX, business the insured the as at that which. -- total South horn add, around can with a up when interruption, evening, plant rules I people -- are around as that. we

transferring Ward, customers million. Carolina keep the was And South $X.X December, just the in around in for plant around to volume QX happy example, the

the it's bigger, be had to a bridge we're going where bit badder see bad be headed year. later back being it's pretty we easy sometime online up to an built then handle But end the And this the there, to. can here for that's the luck set systems hopefully expected. a able say year, Brad of now. but So BI will towards of to it accrual and better little We payment

Derrick Whitfield

BTC. prepared elaborate past, Perfect. with breakeven on That's $X.XX you as covered if market for a perhaps your could great opportunity maybe by the on follow-up, I in color. And which SAF in the you've know Sandy Randy or SAF. is my comments clearly the referenced

greater However, some could as a optimization I well. the suspect X at probably you DGD market there's pursue bear and will premium,

Randall Stuewe

Yes. this, there a chair. Number give one, she gallons. lot and being people. And by of Sandy there's you from you of on and I'll there's view -- tag a I'll lot no can the my team promises And out give SAF made

these be that's the first decarbonize a move system have going made to real to and I'm call, So to the, gallons will what going to forward.

It that the next first the always added that's capacity been the step. mover while world, And the there analyst optionality. wants industry industry move us we're in going there there, also We've us gives optionality to the out optionality. is the piece this RD to and and being tell and we'll all control sit tremendous

have learned time, to the arbitrage The forward. suspect decision Sandy to margin, make long as But SAF between term, flexibility here that moves world I comment is the on. can over what another we'll And add that the we've products. we'll unit

that rules it Arthur product, ship export being it to is the are product. product make intrastate can proposed it under the with the Port beauty can the can The California that promulgated,

SAF? What excited else want you on? about add gets you Sandy, what So to

Sandra Dudley

mentioned, it us as helps diversify book. I think our you SAF that just for us,

to we are new products, but also in offer participated able able only we're than participate in to before. different markets not So we

as said, gives that And you optionality. us

there a we're lot that SAF, available I think the out within eventually that too, support increase that seeing market. will that think there's premiums that behind of I are

Inflation Act was have I mean, that we Reduction the passed.

SAF. saw think are jet Plan We that just they their I very instituting mandate. positive intrastate that's for in considering an Scoping California that

that's thing positive for And think that, so I us. a

seen we've of a seen we've number tax what then And credits. lately SAF is

as is SAF New with passed considering Vermont Norway Mexico, increasing one. states New considering such LCFS-proposed Washington one. their Illinois seeing We're York, So programs Minnesota. mandates. and We're seeing more

And space us. in so much so for there's that that's just I going positive that on think

Randall Stuewe

think us the I kind until that you And margin of margins believe that we're market equal But honest, momentum Yes. don't than would in the or to just excited. to ton gets to sell investment just is. we make of something, obviously, close that the a off didn't what loop, market doing we out know the road in you really superior the believe we what be there there's And if wouldn't be today. fuel

Operator

The Sachs. Samuelson next Adam Goldman from question is from

Adam Samuelson

Yes.

in So earnings kind depending where prices balance Randy, the prepared on making consider are Green of you about of talked the between remarks, are. your might -- kind RD margins the and Diamond sure feed kind that shift of to and where

And prices so to quarter come the a year fat DGD. talked second you And and have full upside minimum into of the about sense, a I'm get just accrue because guidance $X.XX is will down, trying that gallon. EBITDA in

so right follow-up kind the some quarter-to-date first trying north seem comfortably quarter of trending feedstock based in like margins And to I've that it a think I'm on the business. I -- get kind of tracking. second gallon? sense on prices. that's for just -- feed that mean, the certainly got been the to kind spot just would into quarter in And a margins then a of of am where easing of direction I I are wrong And the But $X.XX have

Randall Stuewe

the Okay. out well remember, believe X Green we No, reading at other X, put against it's is The is Adam. fair as and margins, we the the there question, any look breadcrumbs we Diesel have a -- X what producer today. there. that you're And advantage competitive really $X.XX ultimately, Diamond

earnings see the -- if DINO's for want advantage, HollyFrontier you to at fourth RD would gallons look quarter. and I

again, a people So we show there as we for do it is, what living.

at the Diamond yes, end Diesel that's capacity. X. getting better down back It's year. are margins X two, day, back Remember, turnaround here for Number a -- we're full But what the margin up, of spot up for Green February at the -- than the online. catalyst getting -- we're they was so

can to on world. in to where of the mentioned partners, unload We still go. there the is to call the got secrets rate get cars there's and we there. and full logistic getting lot process X our it up to out Number no a challenges. rate of clearly, up mean, in I waiting their down And believe sitting Valero,

And year. incredible we're the in momentum day, so of system Green Diamond ultimately, up the to the end throughout Diesel at the going pick

is The It to other you're to put that everybody out of I kind if let that bearish be just diesel piece doesn't there can't you on work bullish want renewable noodle fat capacity. prices way.

the craps bet at RD so or prices, to of business. Is bullish then your got to choose coming And fat that ingredient pick you've the going to you're place bullish get is our online, day, where which end here. base table you got capacity the

and we'll online, be great to that running run all full number coming and fat you believe margins. there's adequate X don't this, If fats capacity at of then is waste

what talk. have in gallon the the to the believe end So numbers truly said of a as day, decide And proven before, we've QX. $X.XX here. people is do What they I

the go Adam. let's to so And segment, Feed

Adam Samuelson

Okay. That's really helpful.

there. seems fourth have then that maybe in in and more accounting fourth quarter, net noise I gotten just there's in to was the bigger Kind break from the can from the of actually it implied down Feed, some of So little contribution loss of and in quarter. Valley kind you of kind the Valley hoping K, a FASA

the -- help going that fire the Feed? but quarter. through seemed implies But in through degraded the kind of the like because of earnings think first us it kind of contribution and can and you about the capacity, quarter what It part in

Brad Phillips

thing. This is Brad. one Adam,

and in referenced the on and facility. X, predominantly net Randy sizable the Ward the facility, mentioned -- loss is earlier, footnote that a it K So

We deductible taken charge in insurance also an had the quarter.

the to contributes higher that number on Randy? Valley, that on rate So than QX Other that. than that being

Randall Stuewe

I business near Ward our case business our great progress there. we're ultimately, X,XXX-day timeline, plan, close mean, case very Yes. we're the we're fire. And our without remember at making integration clearly, at

we animal In a be to demand changes of Those diets ingredients used procurement things materials in getting. in them alternative feeding that January, for substituting fats diets, lot your be now, different they made has renegotiated. to fats diesel poultry unique the seeing attributes their had that they're agreements the adjustments QX. material changing That contracts We're out the in formulas. procurement taking were animal were industry in to renewable where here that some and accounted as to kick we're raw of for will to and adjust rendering for

we QX plants. predominantly have through poultry QX, of and flow the so here And done on are early plants the Eastern that that and towards QX, Valley start in end to shore will

are as business want to we And sizable classically on case. is right you FASA, anything the John, so go add? business those numbers running forward. The

John Bullock

were line. the in pricing not you I the here we straight be. are But going a as volumes thought there bring the we think it's underlying as is bring I these strength on, dips thing here facilities No, to and most is and look they always as we and get and what understand we exactly dips important

over going operates. type timeline profitability be able as these profitability Darling be Valley within And our the able acquisitions. to going there, we to to get volumes those have we long system anticipated as where we're remain all And on of the to are the

great. strength is here our volume underlying the So is

Randall Stuewe

transparent, to to the EUR XX other EUR and We're out, but isn't megawatt in Yes. hour megawatt electricity. were And thing, break per now. Adam, EUR Europe, a paying for hard I very XXX, down think it's that we XXX --

gas And $X that plus come you to burner so U.S. make ran gas on in back tip Europe. now We're quick distribution -- that can't up the or back the hard raw adjustments material natural prices off. us in They've

how prices hard gas a bit, little So and QX that too, see through. always it's impact flows to

Operator

next Jefferies. is The from Ailani from question Dushyant

Dushyant Ailani

cadence to My the about, the roughly integration? XXXX about you you first considering going know I CapEx one trying XXXX. How I think, just million think talked understand for do is forward. Valley $XXX

Randall Stuewe

years. mean, Valley next of clearly, through million a We're that about we Yes. I plants gave the would go that have those to of now. number $XXX over halfway around into couple

a portion number got FASA, there. the construction. plant We under in plant And we've Boise, California, got to X another is the permitting Idaho. that the We're under plant. of Turlock, construction Bellevue, a We plants construction start under So Nebraska expansions the of in into the dryer. spray We've that's in de a Op wastewater Brazil. got Europe Belgium then digester Epitacio And Beeck, energy and got green digester. in rolled the going of all sun

our is And just meet said, of XX% is projects would rate. the XX% it plants. to and CapEx standard growth between it about maintenance operating hurdle that we and XX% so like of And fleet rest

Dushyant Ailani

segment. margins about it. then to wanted the just second Got And for talk Food was my question the

do that going it was forward? think think about of I kind then drivers And that? around how quarter-over-quarter. we down Any

Brad Phillips

Energy chart can story Europe. that really growth is And to a gets in will Randy rebound. we're that earlier segment the good start you this of doing. of tell Those in Food mentioned I the year. clearly, I -- deck just prices, off as the mean, we're earnings the

Clearly, year. China that's a -- had it's a multi-continent great strategy.

raw because a of QX the had Europe struggled and a prices in especially a and reduced materials bit, America The year, energy great U.S. little with kill. South great porcine had year.

should that in Food year a little really itself QX, in have the segment bit good remedy this So set a year. but overall, we're to

Operator

Palmer JPMorgan. The next from from question will be Tom

Thomas Palmer

a guidance clarify bit. to wanted the I

So RD contributing it price to sounds are and weakness as at DGD, the plants, if we've including seen. temporary fat downtime UCO at

X's we DGD up maybe DGD's X So down clarify turnaround? duration expected now? like number the right Is running. could It back of sounds just and

substantial then rebound? first then EBITDA run guidance? this bit in that might the by that XQ, of the And we quarterly little kind implied message quarter And more see starting rate below is because a of be a

Randall Stuewe

was down. to mean, I the going don't embargoed. we the X, a the We're days clearly, horn, X Number got get logistics here. have to mean, railroads Yes. XX we logistics trying just for of DGD around couple Tom, mean, XX down I up there. I

understand a I understand was month, XXX,XXX that down was and Neste Geismar for there. down. Rotterdam was tons I over

market we've the market. Port originating is and as St. said, the with we're a the So world. Charles And around Arthur feedstock facilities, from global clearly,

capacity for a not I to starting to write ran turn start is that start-up only I take been HollyFrontier here. about as it's at X start-up I QX. for going a thing year, of trying mean, Vertex of guys on gallons up. truly you QX believe earlier, up million if But for has any read said a to read PBF this this XX much as plants. for all I you

like you're come DGD get you pick facilities at add? any change your said, to to it's But want So here. anything rapidly to X of going we up poison rate -- rate, on, positive. or it Sandy, here. once I those above And pretty see

Sandra Dudley

world world. going those or huge to taking take capabilities. is thing feedstocks And the the in think different that, great about DGD I the feedstocks that's advantage do priced think feedstocks bringing that we're DGD to even able total a the here with been on what's in in from X those around we I us, of we're internationally available despite benefit lowest because because have is

further increase it margins on the to I think as year. go so And we will just

Thomas Palmer

Okay. Maybe just we contribution a DGD for flow. K maybe year. needs back guiding follow-up And on a might distribution. start did see the kind DGD cash this capital mentioned to of you're in The see just the right now and quick some the DGD for quarter. capital the first starting an when on update to the then Darling maybe I of timing to

Brad Phillips

is Tom, Yes. Yes. this Brad.

So pun you no of we the there heard with number contribution, end the on the with up whatnot, per what here. intended, million weather, -- to of contributed startup here did the and in working cold right $XX filing partner year with kind capital earlier, the to that the kind the X, of of at on

working sometime is speak way, would have And and days its that is frame if month. not to become and way earlier. it starting DGD in up as as that see Sandy occurs, outlook And of the X so coming capacity will I number distributions the kind Randy midyear, by anticipate as over mentioned, we this debt-free would we

Operator

question Manav UBS. next And will the from Gupta from be

Manav Gupta

I are not they I to have can gallons. follow some you are produced signed something up you is of what's There there they've is RD. interesting SAF they actually on million, There said, like you contracts produce claiming the but and wanted out, gone are out who as million there. real and ahead completely small them, real these XXX XXX players will never actually behind no agree. And were And pointed gallons gallons. out SAF,

have versus such my to be "Please airlines let's So gallons period these all and question contracts contract for these sign come you here the X is, to SAF XXX you American million, if and million XX X, because Delta, open year," you million, XXX say, guys? say, real would or a XXX -- gallon

John Bullock

John. Yes. This is

think the for we I understand are in and to a out really SAF market, something see on quite don't how is there of lot commercialize hitting bring promises you're going there's people the that, marketplace. to that frankly, gallons which we SAF

players So the for one have real that one physical we marketplace of to to going available are marketplace. going believe in be the the in the we're real few gallons of folks. And players

that's I ideal have that an think going of out with the us all been into put to promises made there, position.

some in contracts of We're I prejudge one do going have over us. terms see and be how to counterparty. that out to year we by what the so and for folks individual or taken want listen, to we next just say, to essentially evolve will forth, develops. wouldn't we're How willing signing so the market commercialize, and

But get already People there's to no real gallons, real they those only on and doubt, starting people gallons. we that going start going gallons and there's to the marketplace. we're from phantom of to churn to see And can do, can in when one basically doors them. X knock are it

our real in forward to this to XX there. turn marketplace XX signing over situation we're it's them the where the Want in into to they're those with a do competitors. those position the conversations be we next going actually that So with advantage folks think try a We because We're versus counterparties end gallons really SAF looking for in to months. up advantaged conversations. a engaged will put the to evolve that this out their think --

Manav Gupta

billion I think phantom not gallons follow-up to billion quick of back question does is My a the guidance The $X.X perfect word just for include Gelnex. that. to here is guidance. $X.XX going

is you $X.X time. higher looking the still -- there to still Gelnex the with this I'm at you That billion point probably saying slightly and So do prices just strong that could close higher out, a by be $X.XXX there, ruled be cannot at if in of time and stuff possibility fat billion. that,

Randall Stuewe

mean, Manav. that that not antitrust exact think $XX out number here. it we But this should we're year -- telling to -- get contribute can That's date, a Yes. $XXX we I just get we willing close put get we're I'm between close to clearance going know million true, the and just there. you we're million until we and that to if

Operator

will our Tudor, Holt. question Blair Pickering next And from Matthew from & be

Matthew Blair

was future I credits on from headed? have you've CARB? recent where do following any LCFS been if Randy, And thoughts you are the workshops these LCFS updated wondering if so,

Randall Stuewe

Yes. -- And I'll it. answer I'll I'm let excited and it, -- but Sandy about

Sandra Dudley

Yes.

from think to I proposed of about increased XX%. among XXXX stringency very reduction we're CARB excited in XX% program, the the a going

what 'XX, the XXXX metric at are around then that beyond that per in as the and CARB's they're then look in model As further. you to you and ton going I cap think know, XXX sell XXX,XXX meeting

in positive prices. terms very that's of that, think I credit So

that green very terms it's that. obviously, very for we're of positive of in premiums us. I supportive think And

that I also thing another and flights. really that about, obligation was we're proposed the intrastate There for that LCFS excited think that's CARB

that that, XXX market think XXX additional SAF gallons. million the I provide would that million cetera, demand, about just is really I support believe come in that from et And program. there And jet to when we XXXX, our market. online

that, and of Darling. And both those things. about excited we're So that's DGD only good news for

John Bullock

or I things whether one Can get on the of much to going hundred credits really there's so of extra interesting California, market. wringing an think million that of couple not with hands what's RINs here? add the happening we're I the in LCFS on always

the when The similar. happening LCFS New credits, other Illinois what's increasing look the front a on, are Washington in a coming around world, in, regarding credits SAF you Europe, regulatory and of states Mexico are at State tax reality on is their that going places basis, implementing Canada, considering considering, considering on California, like variety policy New York

explosion We the environment demand on for low-carbon fuels. an in are

Darling news the is what credit low in great And they fats demand for business. Green Diamond that marketplace more It's has high. our for can the carbon seen waste prices for source is Diesel. news massively and great fuels being without the This base

Diamond what it that when Diesel, which Green forth if announcements means quite Diesel more these believe there a much The for and today renewable And and And Diamond X. so be is marketplace announcements, would today take frankly, now. in those Diamond of marketplace the you reality are out diesel massively you not right all diesel the that renewable there, there is. more else X there there's because out Green in Diesel there's Green

I'm being the demand we is perfect about We matter the put forest developments carbon miss these to more that's assess vertically place. low-carbon we for market of there a policy surprised absolutely as the is. there's out details seem the excitement of little not fact in kind than strategy developing all on integrated and the low see this. the So that there

Matthew Blair

the then margins. by spoilage. just And the hot remember was impacted good. that weather, to which feed QX circling led to I Sounds back increased

the So fires? impact total similar to you you impact is there can I'll negative Tacoma? got for impact? you million completely I said about the Ward. quantify cooler benefits by of in X fire were way there. think that it QX the $X.X Was And leave from weather the at it I guess that just offset back think a these

Randall Stuewe

probably couple prices in million in much too. is that a is my guess. QX global of the flowed Tacoma smaller be would the through, a up, factory, where Remember, ran but energy quarter

are the fat to actually is don't you to at tonnage past. end financials, and we intra recognize fat been much of that of bigger Remember, into Diesel. prices company than go the So inbound the was And have strong. can are in profits the now, Diamond strong. were amount Protein it's in much Green And those you how those day, there. see Darling shipping our is that numbers

past. that. segment a quarter, for try that's part number least of too, in that the that's we And there's Diesel There's Green going a from XX now, a Diamond it, down million that's right and to so deferred there don't at and big in to trade

Operator

And William next from the Baldwin Baldwin is question from Anthony Securities.

William Baldwin

Is low-carbon I for feedstocks a primarily feedstock going game, to question. thinking out the that it's but of to early the the nature? and the in that you broadened know as Just that be for RD? the ethanol think as include would far quick things at be that would what's used we're similar looking SAF? to Or

Sandra Dudley

is terms in think Sandy. I this --

very be In it diesel. what similar it terms does what for would of and is sources feedstocks renewable what DGD to using we're

but same not producing at SAF, renewable only we we're diesel produce we're time. the So SAF, producing when also

that we model. don't from So anticipate deviating

it And about feedstocks. worldwide. begun focus oil. going So thing oil, fats, sourcing your the going corn is, animal to your your waste That's the we've used it's cooking great be on to is

have have here just the it's different that we can well. great feedstocks a unit source so where plethora we available those and to And a all of feedstocks, us. location feedstocks of that great the in we are Gulf handle easily And as in those

And changing. past. in the so we to be what seen don't should very It similar anticipate it you've

William Baldwin

way question its poultry formulas for One into Okay. the find Does DGD's feedstocks? fat feedstock. on additional

Sandra Dudley

we're talking talking uses. feedstocks the lump with it Darling fat Yes. that of when Typically, about that we about Poultry category. we're is or animal fats it, one in

So it do is something that we use.

Operator

Stephens. is And Ben the next from Bienvenu from question

Benjamin Bienvenu

you opportunity kind you're that for aviation topic. fuel in Can investments. were announced and that way with the I a moving sustainable and revisit your what now? want huge guys, of a prompted about talk the announcement to market you factors Obviously, meaningful

I know this been while. a for you guys have studying

the are on road, So what consider this about could today down focused But the things what you beyond -- maybe end of the us think as announced we year, as was look if key it incremental earlier reaching you'll just you excuse even or due help be process. potential the expansions me. you've diligence

John Bullock

SAF... Specific on question is now why

Benjamin Bienvenu

expanding? the What to are potential triggers continue

John Bullock

a Act passed to Reduction obviously, relationship is Well, being trigger huge in Inflation the that.

We're have We the kind -- the that come in in very area, actually this capital ahead space budget guys through investments make in going of been careful. on and renewable on only or time of we're budget. time we and when on

our cost we will Our And an we that, We the we capital deployment we're were the signals. saw and Valero, completed that work. what in with and which Act. we process were extremely where plan the through point policy understand Inflation right so partners, worked at waiting for do, had careful to the going Reduction

selling need that, there But I be one industry we they And airline see not from that's looked total around more the the here than gallons. think of and to around came world saying we when we and where SAF. that that commitment marketplace is few said, what real now a the the is of we could suppliers the SAF, out phantom gallons actually conclusion the

the timing position the SAF, think like is We on to time to right that the world begin it and with time who to fly be usage the around go partners were put to just able want ourselves excellent we their Port to seemed thought back discussion may perfect. an guys in who SAF. the packages up airline so partners claims It about was Arthur. And of other a

Benjamin Bienvenu

tallow Okay. demand a which think with Obviously, about want would about just then I or the also potential I in the associated Great. would beef we're And feedstocks RD tighten available. expansion, you but cycle, troughing to talked ask markets. further incremental

in pricing around business? could Feed little the expecting business. Ingredients your all potential incremental tallow you for you're and beef guys that your cycle bit about tallow talk a your should the what power Can animal great That give pricing you be in

Randall Stuewe

feed XX once the $X fats Randy. this fats the is or ration. bushel X.XX, about if Remember, waste at in divide worth by what even animal mean, I to clearly, take a $X.XX what the fragility of Ben, of $X again business. or waste a corn, are Yes, going bushel, times we call, fats $X.XX, global, was you says saw I'm it

we turnaround, to a X the went put, down, to, of with all the the Neste itself. always as we I chain again once line wasn't It put in to, has and to remedy an bubble the we it, you once went very DGD So unload once IV supply as sudden, supply happen team, call it in will the able chain. air quickly That as -- wanted once will quickly. offline

I mean, a you Remember, saw palm global is oil. this business.

we how For global achieved oils that then they were found out fat and again. we fragile so with the And parity -- to finally proud are we the side.

premium But you at end the U.S. rest can't the the oil, and of premium a truly to to can't big the day, big stay can't a RD of world the premium it's running. for palm oil soybean to capacity soybean and stay a build oil to you're long big unless a you going And stay time.

you've And seen some we've capacity. see may don't It what telling rates. and run out you, of up, reduced what at RD may been is some we the have steel there it

ways. it have mean, I can't you both clearly, So I like said,

was smallest herds bit. to number, believe. XXXX, numbers they the little hard beef numbers porcine are said which Europe calf I pig strong. some or are The is a are On the poultry still the animal side And in is the yes, since born, on movement numbers seeing pig which when very We're cow, strong. the numbers,

the of end our we're the plants at are day, full. still just But seeing

cycle here. of So I a much see really don't

we're remember, little when contraction there's versus to there, the some the of full process for names -- out any of type size we big always not guys the stay do seem of but big there. herd out guys Now

in years, that I And contraction to -- volumes at of in seeing we've day, year. X% that I missed? raw want any the change XX add, now. end not John, see or X% ultimately, you Anything so the We're I mean, a over seen material

John Bullock

at the Obviously, very remain bit. point little in cycling is lines a No, our cattle realized we herd this time. strong

on The in sourcing. to keep we we other have thing footprint global although that I would is have mind -- a I think

large FASA middle and Brazil, Obviously, cattle puts area. of a that's in us the

we're all of bit, the extremely sourcing opportunities. oftentimes on a helps where is bit, us. of footprint, origin country raw stabilizes us that raw going And country's so materials, one our and now material That another little up When diversified so source we're little looks down good. going a our gives supply

Operator

any Stuewe ladies to our back like gentlemen, for to closing I remarks. conference question-and-answer over would this turn And and concludes session. the Randy

Randall Stuewe

all thanks again, questions today. once Well, your for

listed conferences our be on several website. As this investor attending you know, are which March, we'll

out As give in being of to great spring Have day, if look any Suann. again. you update. here forward reach Thanks you safe. to Stay a to I front always, and you progress back a this have questions,

Operator

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

disconnect. now may You

Darling Ingredients (DAR) 28 Feb 232022 Q4 Earnings call transcript