Darling Ingredients (DAR) 25 Jul 242024 Q2 Earnings call transcript

Company Profile

Participants

Suann Guthrie	executive
Randall Stuewe	executive
Brad Phillips	executive
Heather Jones	analyst
Robert Day	executive
Matthew Jansen	executive
Manav Gupta	analyst
Adam Samuelson	analyst
Matthew Blair	analyst
Thomas Palmer	analyst
Ryan Todd	analyst
John Royall	analyst
Andrew Strelzik	analyst
Ben Kallo	analyst

Call transcript

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Operator

Good morning, and welcome to the Darling Ingredients Inc. conference call to discuss the company's second quarter 2024 financial results. [Operator Instructions] Today's call is being recorded. I would now like to turn the call over to Ms. Suann Guthrie. ahead. go Please

Suann Guthrie

for Earnings you Darling Second Ingredients Great. joining XXXX Call. Quarter Thank the

me Randall Financial Here and are Officer and today with Mr. Chief Jansen, Officer; Day, Strategy Operating Brad Mr. Bob Matt Chief North C. Mr. Phillips, Mr. Chief America. Officer; of Chief Officer; Executive Chairman Stuewe,

be Investor transcript our earnings Events and the this XXXX quarter slide corporate second it's under and release and available. a presentation tab page on joined are call once Our news available of website will on by the Presentations

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

hand to Randy. call I the Now will over

Randall Stuewe

we operational a and repurchase a received pay I'm team a quarter deflationary without we successes. Since dividend on joining pleased the and volatile DGD. last control improve to the thanks diesel morning, for perceived ingredients I things quarter, our and importantly, uncertain focused the that were and us common renewable excellence, on during and sacrificing gross to their overcapacity second the most spending challenged margins, several market report suffer anticipated debt, is an team accomplish able much capital environment. from Thanks, from down stock, regulatory first quarter, to to second Good call, I Suann. adjustments and necessary earnings adapt to everybody, our In continues that call. for earnings mentioned making to market the global

For quarter, our the $XXX.X was million. combined EBITDA

lower sequentially, performance a our nice our reflected improvement slightly in business. While core ingredients

segment. are pricing raw carbon volumes demand Ingredients to renewable we for Global material global strong, fat Feed for feedstocks and remain Turning diesel. intensity the improve, indicating low more seeing

Our sequential spread rise, cost-cutting margins our raw feel and as deliver. are confident continued year. arrangements With beginning and in excellence focus procurement material made earnings showed effective operational we should adjustments back the of the cutting management, Feed our the see we improvement programs operational and the on Feed fat segment in cost on excellence in for business improved and half I to prices

Turning to Food our segment.

continues a collagen in business Rousselot to being benefit Our from supplier hydrolyzed choice the of market. gelatin

While starting customer to several of quarters that of to are we seen destocking, beginning slow. we signs see have

in ], Food collagen mentioned customers forward and [ for SupplySide We're [ glucose I've natural discussions and previous North a moderation. having Ingredients at are show to managing earnings a trade Tito look preparing to launch ] calls, As GC America of Next we West number in solution October. conversations with more

XX, remains products Green segment. best-in-class. in our and the joint building Diesel, from to dividend LCFS. received rapidly Green and we cash was Darling mentioned million I'm on Diamond cash $XX.X Last at report quarter, pleased a July venture. that Ingredients given lack clarity Fuel remain the Diesel Diamond markets of it's continues regulatory prove Demand but RINs robust, our the to to for for margins Turning challenged the

schedule move on start-up and Our anticipated with aviation XXXX. fuel the quarter the fourth unit ahead continues of budget, sustainable to in of

supply domestic work and continue book sales international with out We both to strong to opportunities. build a

the XXXX. discuss come thoughts I'd Now and my with call the like Brad? for financials, of rest hand that, through I'll back over to Brad to to some us take and then

Brad Phillips

million XXXX or compared second for sales compared Thank totaled were of $XX.X quarter second per share of diluted or billion for Net the million per diluted to XXXX you, quarter quarter the $X.XX $X.XX $XXX.X second $X.X as share XXXX. the XXXX. Randy. $X.X Net quarter to net income the for second for of income billion

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

Net period XXXX the XXXX. sales million $XXX.X net the $X.X of second first decreased for in income Operating $X.X the million for were to $XXX.X to quarter compared of sales months X billion compared for billion as the same decline earnings to our due of XXXX, to XXXX. Diamond $XXX.X to income Green quarter share in from second for in the the and period primarily net $XXX.X million in compared Diesel million equity same

gross quarter in compared declined million XXXX. second the the $XX period to as Additionally, margin same

$XXX.X to million of effective $XX was in for the $XXX.X biofuel our tax million of June items The tax The impact the also to and X the in margin. contingent period months quarter. $X.X and income on company primarily federal chains income items XXXX of XXXX to of in net the inclusion ended certain and June for the incentives the to income same in tax million expense excluding company's months different X for and of X discrete of Diesel The of $XXX.X income biofuel in equity months decrease along rate taxes million mix Green XXXX. U.S. XXXX. among earnings rate for X XXXX, consideration, $XXX.X share months effective compared was yielding as an statutory which foreign with the relative the result of $XXX.X The income Diamond ended taxable decline XX% XX, from second earnings primarily XX% in and paid rate X.X%, the differs incentives. of the compared jurisdictions Operating the decreased million decline tax the a million nontaxable recorded tax million XX, rates, company gross from earnings with due the based tax

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

taxes tax end and X effective the quarter. of the of $XX year-to-date as incentives the The Excluding rate second items, of company the paid for XX.X% has ended was the biofuel income also months XX, XXXX. June million tax discrete

XXXX, expect tax taxes the of effective remain approximately million cash of the at about the For $XX year. to we remainder rate and X% for the same

down $X.XXX second in $XX of The debt. was we quarter, the $X.XXX XXXX. debt at June Now 'XX paid million XX, to year-end of company's as billion total compared outstanding billion

QX available facility. was X first totaled million projected bank and borrow $XX quarter million and leverage we for $XXX.X million credit Our the had at Capital covenant $XXX.X XXXX the our to under revolving second in ratio X.XXx, months. expenditures

'XX during quarter shares $XX.X of of million. the second for stock approximately We also repurchased approximately XXX,XXX common

on you. XXXX, earlier, a With that, mentioned Randy it we turn As over to DGD. distribution $XX.X from July back I'll XX, received million cash Randy,

Randall Stuewe

Thanks, Brad.

expect additional outflows to dividends year Green and continued As improvement, down manage Diesel from global the product and pay price is finished our focus capital we debt. Diamond of the balance for

for Additionally, billion to we I have and be on of the QX, EBITDA begin seen will reflected continue optimistic prices should we possible. to which as $X.X remain year. in operational will $X.X our and to where combined able widening be late we deliver optimistic billion excellence margins improve in adjusted focus QX earnings. that QX We remain our

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

Operator

from question first Jones Our Jones comes Heather Instructions] LLC. Research of Heather [Operator

Heather Jones

how just the and into First into wondering their give of kicking and supply could mandate the is You in shaping going EU, for view is maybe us of in demand what I'm wondering the for your volumes that kicking SAF. the got would in U.K. question on EU. then you 'XX? that the into I dynamics And in, just up DGD that 'XX? if you're on was Nestle think I shift going some seeing mandate

Robert Day

is This Heather. as XXXX. regulations online Thanks, The quickly European come in SAF really Yes. is evolving Bob. picture

is get the -- think period. behind. far to the interesting compliance thing around in required is SAF everyone later technically of not want to I of there too But tendency is the involved

So murky to seeing picture, what we're ahead. to get it's strong a is try somewhat interest but

to we here. so things as move see together start come And going we're think forward to I

Randall Stuewe

little, a real continue Heather, book, to assemble there think some and murky But XX mean obviously. Yes, are, it. this on echo of is Bob. we Randy, everything. out said, I'd is Hopefully, with building [ have still Bob demand soon the It's and a what on obviously, imports and rules ] out quick both right the C announcements kind I we'll on sales now. I as

so And as think here of the end day, go we this I at up pick the thing momentum QX. into will

Heather Jones

that Okay. that, will a as DGD will the XXX mean, to the Or anticipation is you a of for that strong gallons that export million are your expecting have, you pool are go -- for And domestic? majority roughly that? I follow-up

Randall Stuewe

to seen. yet be that's think I

Canada to and out Nestle's driven production market SAF sales, of I rules. both blend will time. I the like I given the at that think of the It you'll there, million everybody domestic ultimately that Bob the as a ] the see is number says, morning clearly, -- really ranges there by and of evolving from not, were U.S. big seem [ but may export saw XXX book gallons and it's gallons, and we think market be continent. the and assembling mean this this a to

Operator

Jefferies. Our Dushyant next question comes of Ailani from

Unknown Analyst

share But know some wanted margin seasonally for are I XQ the I puts to What the second into a dive of some color on just if usually I that, you little takes? mean, the half. low. could bit cadence and please? is

Suann Guthrie

Are you Dushyant? Feed, talking

Unknown Analyst

and Food Feed please. as Yes, well,

Brad Phillips

more quarter. may back X slightly we where I'd those margin of Yes, And continuing see for QX management back say, half the momentum Feed of kind for here, Dushyant, late On the our the moved cost noticed -- in half margins mentioned to expectation, kind and or with overall the improve. core, of of concentration the in and the this improved the segments on year you year have over less there the with second the is that and in have prices Randy QX, had the Brad. all We intro placed segments. as

Unknown Analyst

macro when BTC [ hear of over XX thoughts will there? credits. then And something anything just on in don't wanted we be extended like if we to expect on the Z Any Z you your ] Awesome. [ hear ]? get terms overall XX think Do to on the thoughts

Unknown Executive

just It question. was I -- clarify that understood to the I want was... so So

Suann Guthrie

our Z XX [ ], expectation? what's

Robert Day

-- to believe believe is we I to pointing ] all you And Matt, want are in. see that. XX going our to feel expectation signs X, we're Anything free [ and that January Matt? implemented we by But to add, jump really that Z mean,

Matthew Jansen

lot still it mentioned, is X Jan there's of else, But day mean the come Bob that as that. implemented. be anxiously the the and a we're, awaiting obviously I of to yet guidance listen, we're out that with that is around like view talk everyone will

Randall Stuewe

we... while here the blenders on that we anything can out Matt, credit tax knock

Matthew Jansen

of credit, been tax about all. will another version extended be There's talk the it if lots or blenders of that at and

And today so point what's going far, what's our -- place still of the we the that in terms view is that legislation, at no, forward. this think in

Operator

The comes UBS. Manav next question of from Gupta

Manav Gupta

Just want moving understand. moving prices moving are up. Diesel prices are to UCO Fat prices up. up, are

you at reaffirm been half? the need the have to confidence factors XXX get you the able there you second numbers, the So reason X what give that in get which that for to to so can probably of because the you guidance each to is that million guidance, are looking your remaining quarters hit

Randall Stuewe

is what QX of $XX. That the in Yes. the And we now North I to day, Europe a team, lot at the X.X same is a at the at levels. and has we're it. the much plants a And looking mid-$X.XX to pound tag clearly, QX, leaving this to X.X in of range got And fat improvement $XX group. end a at is the in thing. we'll America of in kind mean, sold

the somewhere to that South is of stream improve million into always an America penny and optics $XX or from time. goes -- the and the been as $XX the about Feed stream this perspective, to segment. But into most between has slow really said, every we've million earnings annually at EBITDA worth

you say that's $X.XX, there. million if up So $XX a you're right

want ultimately, And -- call seen I the here. to seeing or of appreciation or say. you what horn, look the whatever further around a cancellations pauses, lot be lot of as there'll think you We you're heck shutdowns a you've

plants X biodiesel Chevron, shut down. seen plants You've from

You've seen seen Shell's BP announcement, you've point.

Martinez at pretreatment got whether You've Rodeo. on it's or yet no

we'll day, end nice then and the the at it So X those improvement pretty plants there. takes of see a of

about, take talking in Chinese a proposed that the have spends clearly, There's side Europe time The but a UCO world tariffs been today. of everybody some period. evolving time, now. comment lot is That the right on will

fats. we as feel for these to our to ability of go optimistic I pricing the fat our think the because And I pretreat so about pretty the here business back year of half

DX had pretty Arthur we days, million the down gallons XXX RINs, still out Port gallons at XX for look when for it, here, we some and good you kicked quarter.

think that's and capacity And had that that some S&D the we've out out part the I the tend So you've I had there. capacity fact got never that at there it. people X, everybody of running side that. day sell believe to seen full idling

LCFS, that to Matt, Jan add we I So know, target still opinion know for today. you it's on it's a don't of that want tightening. guys would X. to... anything I take don't Bob, different

Unknown Executive

Gelnex rendering business, restructure bid. In And today's that continue have low-cost based those the has just as network up think expect collagen better areas I what acquisition mean, And mean of agreements confident environment, contracts when with you that provided of the can to production world. leverage that costs margins come shift got, the us I we business, really to and we forward. as ability us the gets assets we've go I on the -- in we makes whether old is -- us we it's flexibility. kind for of we our construction to

we So half to think year generally we're continue get just the and speaking, better. more the going improvement, seeing is that to of second

Manav Gupta

here the against follow-up capture depressed half A is lag was the which Perfect. of working price the quick feedstock which you thing margin. X your DGD was first in

feedstock should that going Now the with up. reverse

your be could in higher work you. XQ, versus materially assume that your least price feedstock strongly should against in it at lag to will that because capture now fair be So favor

Unknown Executive

said to well the that's think right look of I and terms in way it. at

Operator

Goldman The next question comes of Samuelson from Sachs. Adam

Adam Samuelson

line me questioning, I of keep that just may. So if on

no I that little pieces Just The to sensitivity to is that to you a versus average. end, got improve us than $XXX million million thinking some the quarterly give guess help by half just I to margin gave your are stronger there? of of be step-up to fat the much in half, just Food the about if structure? volume you the low the now there quarterly guidance help business, DGD EBITDA certainly turnarounds fourth $XX be second other any Is thought you've -- can rate. get you first you of the But would of That the kind there DGD in there? how price mean kind the dimensionalize $XX planned. million contribution quarter bridge what would about would you've premiums helpful. and kind kind from SAF contemplated how the you're assuming can of less

Randall Stuewe

Yes. globally. new managing mean, to, by that Adjusting We're that's in transparent. really pretty mean the what as Bob processing watching is the Remember, alluded fees. thing, first flow clearly, and margins Feed the -- I the And fat through. it's we're prices U.S., I segment. is

wanted be in order the made for very to QX, adjust the be very specific and move have nice to material. so as to you're the in and processes. for those very South we visits U.S., prices that cases, procurement get of absolutely those for exactly in different timing raw did Canada are as a would Europe did some but moving in true America. As that didn't on We paying that much America, job, and what Europe there actual through slaughterhouses Canada, South in

will as widen that out we forward. go So

the full expect the out we second of the The year. run balance thing for DGD, is system to

big And be so to that's contributor. going a

just the that and little guys end at the do. of be any on -- day, it's kind will. the be that haven't really SAF. that material. it's I you And cake It's a from we've for on, I But doing And frosting the been running out. contemplated things would we bit we that of executing price others? still hopeful mean the if full improvement got of to hard We then on know, earnings anything DGD I remain don't

Unknown Executive

said, I expect to automatically typically, of or we business. imagine and would get guidance. through operational challenges QX you the a We math. XX% know in have what I it's do Like it XX% QX. wouldn't mean, that just our it's the typically, to in business. be though, QX, lot obviously, going say takes to the can running I we

challenges. just ready absolutely those X wouldn't automatic want message we're don't it's the to I that for going a But next to Although XX-XX split -- the convey quarters. be for

Adam Samuelson

That's a helpful color. if question. I And ask could just second

volume more a or structure could under the surge feedstock. production we your of the would but and the and credit and risks RINs, Z biodiesel of BTC that generation biodiesel potentially quickly, XX flips feedstock in shifts start at -- before guys stress terms before the which about away, fuels U.S. framing transition how we of dramatically, would also goes renewable As last to push-pull that feedstock the kind for conventional of presented the kind I think between pretty of for user And and into coming slow year, of margin biodiesel happen some a then or for ] good by of should kind and are lot turns? from that and about are mean, [ for more you think. demand you oils demand creates is calendar opportunities the the who on be how the domestically credit the of come the calendar kind fats of imports run after the pretty Good that thinking would shifts the the

Unknown Executive

important a is This point. pretty Yes.

your short is can event rest risk I lower whole this of the with to the answer we market. approach think question the than

-- BTC for sense doesn't or structure, diesel, current come paper. XX% -- generation, from so renewable margin it biofuels Without RIN RIN the make run a and of lot on them RIN a of to generation has their businesses imported biodiesel. aware, generation you're DX As the

And that conservatively going like things little and And that. we more play those more we would so risk not they're a lot a logistical approach the and we as to delays that risk deadlines. end as to want anticipate to get

as to But that the -- can confident We're diesel seen BTC. margins past that BTC, of the of play better XX near all with that standpoint, [ manage our very implementation So out. seeing in what again, point the that's delays end From so in at we're we and should we've that ] risk renewable to implementation that going the year. of better. positioned of how calendar

of things, able the year. of the should those into as margins all really, full the because to be So should run end we XXXX. we of see to we going improve And get end

Operator

of The Pickering comes next question Tudor Holt. Matthew Blair from

Matthew Blair

I have implemented? start-up on confident for the Are slip XXXX? Or program will might if was that will be LCFS a XXXX date? a into view the you changes be that do California wondering you when the you risk see

Unknown Executive

[ ], X it's QX point, -- January that this that through the is of this we something view be of 'XX, probably Our will for for something at Ben 'XX, 'XX. necessarily but not believe still do

Matthew Blair

then comments. biodiesel it. the Got it. Got maybe to circling back And

they'll get several Have about closures will when have mentioned utilization tougher producers. competitors R&D lower next they're have this the earlier ] utilization like that at biodiesel Chevron probably of negative biodiesel you for this You announced surprised thought of [ oil year. the guess year? that more year, some your even feeds. you'd we this plants the be even what these see you running would what I rates -- EBITDA biodiesel for year, low reporting if that CI been based But the for veg

utilization of surprising relative this see is strength year? to the So you that to biodiesel rates

Unknown Executive

So no. I'll that. Really, take

fluctuations looking also effective largely extremely and way a at ag look the margin biodiesel. all in integrated oil the at at you to to price are, margin and lock managing an when that margin through [ ] of advantage in risk, crush opportunity -- future. They're sea take the who biodiesel think the at are efficient players they companies and are I these

earning they their as do margins for above their margin, they're continue So contribution those a the as can businesses, to going lock they're long above least that line, and in. at to

the with So not run really we've seen in biodiesel. rates surprised

get the they difficult. to to XXXX, a probably overcome that continue is run too gap the into just at of rates that we more have lot that have As big been. gets And amount they to

Operator

Palmer Thomas The next Citi. question comes of from

Thomas Palmer

could half. supports of on Maybe could I expected how we year? where versus clarifying for I least the improve. the it pricing reasons kind think piece you inflection I in you the $X.X wanted just environment clarify the of sit Do know talked billion pricing to start continue just off today second current progresses. to at about here EBITDA the why

Unknown Executive

of I allow do us couple pricing the margins. that Randy value X we -- what that just extracting have. changes some think in And I the in current of it. I think we kind here. half of and there of improve more so the That's expect of pricing that mean, will about are mean, I our the messages a talked second leveraging current to from is and that year a -- it big to infrastructure underway the there's environment, part are things

think we that anticipate a near end we slightly environment we'll see margin year. as the of better the do I

that's guess the I so part of other it. And

Unknown Executive

lot over it just quarters. moving components have play a out and of things to to of There's to this, the play has out. couple parts, of These lot a next

Randall Stuewe

running Tom, we're a PXX claiming the Number I but world day, apps seen XX,XXX by they're two, you've them there around watching mean, barrels we've never now. them. got out animal

their the in confidence system. got pretreatment they've evidently, So

S&D is And feedstocks just so world in of the this infinite. is product the of our not

so fats. to barrels when XX,XXX a again. XX,XXX barrels bullish Martinez by pretty believe of year, mass any waste converting number at quote talking just over -- successful, of to ] they these out of that [ mean get come guys reaffirmed that at day, the that if hear are number. a I day, say full the whatever I today you're and I end be have we're we capacity you going they so that is, And

always out if don't we're they largest on largest animal PXX risk is resale of as it. customer the R&D as the supplier we And at be run, where we'll we'll the here, of and say, be So that's fats.

Thomas Palmer

the could I quickly just follow Maybe side. Understood. Food on up

noted some think destocking, of the more on go You for XQ, was messaging constructive. forward the the I

this terms profitability I of Just in on the clarify, see the improvements is mean, to expectation of front want in of sequential we to a business? basis, the start

Randall Stuewe

I mean, business it's we June the Food it's segment hydrolyzed demand that Yes. in some with continental customer have collagen clearly, towards seen that the the again, there's see anchor is pharma. the there whether demand. pick segment. customer But We've within gelatin confectionery, here, different businesses we up to challenges of whether the end started

So ultimately, the we about back year. of feel good the pretty half

the in I to is focus once see financials once on see margin we've again margins again, improvement pay segment. here. what bone, and year I'd some able the And as in we you pricing hides you'll the of revenue the and forward decline skins lower to what half we we that for get you we'll think we really, to released, because back think maintain the tell this in go the had been when

Operator

Todd Piper next question from Ryan Sandler. comes Our of

Ryan Todd

X But could either be months, see in ruling we've or direction? the or side on coming things later the risks see of positives Can the you you or maybe ahead see this risks from next election up that Chevron the doctrine you and you year like from Maybe either a what number any that is on moving impacts political you had the Thanks. difficult. talk to X-plus as over within pieces. look

Randall Stuewe

Thanks. Yes.

but I in to what biodiesel, the just think And what the is exist. aisle into sustainable fuel it as both the C technically, diesel, relates dive to representation issue broad-based XX we or matter. really politicians a of -- really their that going this day these when risks jurisdictions renewable of at we motivate see what's nonpartisan states. And look [ for the in different are becomes of because ] for sides ag the it, aviation case of policy any in we end

-- that likely are said, could practically I and pretty like play where But out. risk, policies to the risks the we're change. it's things there, what comfortable So stand speaking, with technically, how

Unknown Executive

Ryan, have beans on sub-$X now And more EPA would to both going given that pay to I the corn. under is the add, have EPA the thing to their right think we failed. the on has and clearly, American this wide now I industry. agriculture lots be right extreme mean, RVO eyes crushing open And states think fun people I the here. keep set $XX reflect the the of I the if and to The politicians pressure are attention having capacity soy conversation would to X farm production is

politicians And have forward are forward. so to to thing now it's the going -- this to push and bipartisan, continue come here

the policy, not it's today. mean And climate around true world policy. energy I change, it's ag not it's that's

produce we're make farmer So the available, end of and now where that's at, at where they're day, that will the the And once they capital more. again in fertilizer proved available cycle. if you get right prices

our ultimately, Darling. as to to what transitioning favorable very to so to cash It's to flows we're -- And will, favorable system, it's Darling. you globally. It's PTC, if very a favorable

step we're here. magic it's positioned his put in But is. for hard -- don't out think of So on see And where want get forward good feel pencil screw to Trump to and the me takes end given It I today, see don't up? Oval that willing anybody we get that involved. agriculture at American thing where there's Not to Congress you pretty the day, this to really. I Office. the Can whoever

Ryan Todd

about of follow-up. X we should should just dividend be those then And for Great. think DGD, dividends Any to from continue how steady outlook payer a your on That's from we maybe thoughts -- here? helpful. to quick kind expect dynamics? Or that

Brad Phillips

balance that, we're is said a of out optimistic in down. outlook Yes, there. of posted DGD. distributions was the we Ryan, for Having received the think of I sheet middle from our we July. distribution back Debt you DGD Therefore, see additional here year obviously the way half that the

be on we to number gives the Diamond So QX, of depending that $X that kind significant our back in debt chance outlook additional kind from of half that that. accelerating ballpark, of debt billion part margins where is a to for distributions QX And year probably the obviously, in we which to flows are, Green from were. have cash the us than down were really, where of closer reduction, on the is with that, in a

we're So about optimistic that.

Randall Stuewe

comment DGD Brad, about little And reduction here. the bit mean not working of in source capital a I this only debt company. Yes. is

Brad Phillips

not QX. said We've the capital there have momentum is Obviously, to on we've improvement. in focus Yes. out sheet got balance there working but we yet,

see that And see shortly. So improvements. you'll rest continued you'll assured,

So core, ] we're as generate on the cash there to just [ really well.

Unknown Executive

everyone could, remind I dividend every calculated of would the to dividend, of calculation number -- day that's month. day it is is. there's DGD That's if the formula matter that's -- not every or any a that. And just so that And a really the of what the subjectivity I the just last --

Operator

The next John Royall question of JPMorgan. comes from

John Royall

on question allocation. first So my capital is

you did Should and You talked think some the about down? being just is the the of stock you kind stock right the you now. we delevering But debt you back in mentioned second as the half. characterize the in buy attractive? the primary And accelerating share paydown XQ. I focus And between decision when as view balance that shares the of trading buyback as how generally sheet opportunistic when do think

Randall Stuewe

that is has I different of Clearly, billion level for of the your been is clear or a John, get out there. us questions this wider to the own DGD, X get to have $XXX to a message manage lot the year it's a we're million. million million answered outflows. cash business, Debt plan ways priority. CapEx there, to it Randy. too, shareholders $X with the run stock, us set shooting we margins below. in $XXX be X repatriate $XXX the out of repayment Yes, under or and been And generate at to to mean, year. and And you've our for

a that's priority. So

the priority holiday, be type down putting for long and would X. business year. not at growth here buybacks this programs, any we a as forward get would opportunity. X to of continue which in the we that dilution What capital, here, the We debt did now, play look to that. want We ultimately, capital look an structure opportunistic. said management really priority within and But Priority our wanted buy we we we've as X back right buybacks share we're an QX in the to be and took was term, right be to on as will

John Royall

That's I a the EBITDA guide. have side. gotten year mine on Great. I dig trying very to to is know another helpful. And several then on already, I DGD but you've full in little apologize, question the just bit have

[Audio gap]

for assumption per year. the of $X.XX full gallon

pieces -- is the next [ until some loans the talk you number and be those on still kinds math firstly, just [ can if no my have year. about through I think -- is, talked in half in of do ] we the think up Maybe to right there. about? so And to or levels. to simple a the the of LCFS know it ] bit, coming moving I movement feedstocks lag but right, about secondly, second get $X.XX thinking it you so I to is

how to Just trying number. to that could we understand get

Suann Guthrie

is clarify, think what to asking I gallon EBITDA on asking you're on you're assumption our DGD? per think I

John Royall

sorry. I'm Yes,

think billion I you EBITDA. $X.XX to of XQ get $X about to said in

still the if get in confirming of and kind the that's just second the if so, to number there math half? So

Unknown Executive

the we talking that Back original investment... about be economics. think when I may investment

Randall Stuewe

$X.XX. year came of we ], of that man the [ we run out kind and Well, we'd thought it closer we guided to

we Now in QX, we in beat that lowered QX. and

to of today. that it's kind at expectation, forward. not [ a this year, I'm on XXXX number so throw as that's thing in of our ] how built And clearly, go going to but we the out the say But plays end hard

Operator

ahead. comes sorry, next Strelzik from I'm of Andrew -- BMO. Go Stronik question The

Andrew Strelzik

First internal some on initiatives. of X is the

fat confident very can of a You're for above prices? how about than obviously most assets? sounding broader outlook -- what or there kind it Valley expecting of from what look is back and that? contribution that is optimistic and way half the beyond that for to you're Or thinking frame to respect kind with could the the about of And what that create of the in you're that year Is maybe like.

Randall Stuewe

are half is significantly to I was answer have the what mean we were going what's contracts different in of you're I to hard have on when and or reprice based how that? contracts. the significantly we lower environment, the to hard second year. costs which supply It's impact as cost market in multiyear rendering just years of the expected those they -- is of it's couple to potential construction a frame our current that's for today question when lot think renewal, than do up it are ago alluding a lower just we because were Yes. options than frame And come they today.

say had value like than I easier anticipate based significant it's for what some we period. But better we might some the I can -- previous that a think where look margin we've contracts contracts. much Today's renewal. think results we couple do pretty up were and what a come on that is year to have environment in over

but is what Some of just network. that some been that is in the network, the has across Valley of more Darling broadly

Unknown Executive

have I ultimately, Andrew [ that, around rapid able really I does mean beneficial when simpler very commodity world, in Bob do that's ]. I has exposure look the market Europe a some is Canada to I think Yes, as procurement. there. made alluded, and too changes mean,

lift getting they're now. So

world, X America map's South our think, to the America, in USA, U.S., our investors we're we not operationally much difficult Diesel But south only still and said, we've as out many make in them, Green our it Diamond largest I it quantified we importers very of not not challenges [ because ] I QX, and we're had they're does for work cut -- but whether as the or to the challenges And impacted the North the flooding got of here. difficult, business of domestic render. fat always have do. in the ultimately, in

more than benefit And we're the domestic. domestic back Now to imports get into system. that expensive going are

today. as [ the want bit ]? man to everywhere add, little So horn you around Anything it's of a we everything look

Unknown Executive

item those lines. by you just of lists can would on intend same I are action along list take. I we where location mean steps and Those look. we different, have that to depending an

time we a the drill of down it's need take little take of those but really low-hanging more implement, to and fortify to a a others challenge more and help Some and to actions business. strengthen the by location fruit, are the that and steps proactively to

Andrew Strelzik

super go That's could helpful. Great. if question, we the what's on I segment appreciate Food a it. to little back unpack other bit. and And there going my maybe

the $XX of kind consistently range guys million, pretty the in You EBITDA since million running been have acquisition. $XX

out last you're million. the inventory now, you back $XX adjustment quarter If

there? whether this So I guess, about balance the decline the the of deceleration about. year that's not think to what caused kind right mean I'm of or you destock but specifically? for that run I about the EBITDA quarter And then slowing, really talked rate curious the

Randall Stuewe

X and to much capacity American customer how created into clearly, a to is attracted very as because And does I ultimately, just rapidly. -- globally. we nice of Randy. this couple a in that Yes, pretty pressures mean that seen we The try out really going I'm a ultimately about on large well, things just the there's X going call world. finally business, you there South competitors bring #X deflationary just too business the say, on Well, that prices fall it happens XXXX, gelatin commodity came We way issue market. micro happen? -- felt we or demand. was we've And around what

somewhere cut do and we're you thing I in somebody and in the pricing in him what market The bit on it out positioning insulates he was can't efficient the of thing the bad cost, Gelnex year a tons our that's the bit. X.X we're say, ultimately, top seeing XX,XXX, some saw with on the lowest That's idea little capacity, line. that "I pressure of reflected walk if do now, the year. Rousselot you a customer." it here. there. is so little a of investment the margin tons tell our up you don't But boss the still us the strong price And into But balance we And back then model pretty first commodity your that demand find assets is had. But lately around first and XX,XXX pressure brings you and of optimistic the Seeing call for world collagen. the most in half it picking think obviously, see And gelatins. of the a hydrolyzed being million

Operator

comes from Kallo question Our Ben Baird. of next

Ben Kallo

kind for hot just tie-in a or if So to quarters for So And is back heavier maybe going EBITDA? us there that's could weather then But so just in shaping plan? a first thing, lighter not of follow-up. noted on the QX, just the terms in half, I then you you of SAF what be the good tell have Feed. QX to

Randall Stuewe

by ] Yes, than will don't SAF. anything hat hoping -- [ the here that I the to that's XX mean, rabbit if QX closer I we've said there the us And I in in X I wait in [ not be Ben. I'm XX%. ] put wouldn't pushes the for number. QX, or XX -- Matt it as in is and than It earlier, this XX% divide think thing stronger

you anything to want So Bob, that? Matt, guys to add

Unknown Executive

right. That's

Randall Stuewe

Okay.

Ben Kallo

matter? downtime doesn't Randy. on Just there batch, it up completely the hook Is it that, -- you SAF? a of Or is they're a when clarification so plant

Randall Stuewe

was completed Now Arthur we Port had that here down. when

instrumentation ready in electrical in and phase we're And then the sometime is run So to here. it be hopefully now everything QX and set. will

far, the wet it's So now. but well, down there worked weather has pretty pretty right

Ben Kallo

buy this why you. and would was Italian there a company. get then And report, wanted just that thoughts impacts stake do an on KKR I that to in your KKR how it,

Randall Stuewe

us there's give around more detail. There's a big little table, Ben, the a -- blanks

Ben Kallo

production a -- the diesel diesel stake that X.X they Any billion It's any o EUR live XX% they have subsidiary production. a for renewable It's renewable in offered [ ].

Randall Stuewe

All I then. makes tell can you is severely that undervalued Darling

Ben Kallo

CapEx X done do and if the on -- right. any the then going primarily final the SAF SAF? for of you're then color into another kind around dividend the to on thoughts just plant is maybe on do timing. maybe read And All we And

Randall Stuewe

for import lot got We've Port mean a Arthur, I the thing flowing spend about. Yes. fats down pretty it's of another capital time at is terminal we that's We're spending been in on significant also imported side. SAF didn't clearly being a through. winding our constructed numbers, of talking -- --

X. down colleague saying, here ] of and the to Riggs Lane commit build bring and on go. here. demand we It's minus wind It's are Valero, investment ready more as out here. a lights engineered. #X contracts pending too sitting X, SAF for SAF out gallons you go to that's my hold until forward decision or sell see costed So the further we is at I any to the XX%, plus us we'll and [ But

Operator

like closing ahead, This please. to back would turn to Go Randy conference concludes our Stuewe question-and-answer any remarks. over for session. the I

Randall Stuewe

you Thank for all today. Cindy. questions your Thanks,

if always, talking and Stay reach to we additional great questions, Suann. you safe. Have you to look a day, the out have in As to forward future.

Operator

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

now disconnect. may You

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