Darling Ingredients (DAR) 8 Nov 232023 Q3 Earnings call transcript

Good morning, and welcome to the Darling Ingredients Inc. conference call to discuss the company's third quarter 2023 results. After the speaker's prepared remarks, there will be a question-and-answer period and instructions to ask a question will be given at that time. Today's call is being recorded. I would now like to turn the call over to Ms. Guthrie. Suann ahead. go Please

you Call. the Thank Quarter Ingredients XXXX Earnings for morning. Darling joining Third Good

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

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

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

Randy. Now the hand call over I to will

are us Thanks, as Overall, global we everyone, thanks Suann, challenges for into quarter. the faced good quarter operational call. carrying during and and fourth and some earnings feel our the DGD ingredients for good Quarter predicted joining Third and delivered we momentum morning, Darling's platform XXXX. headwinds about and

material third XXXX. quarter segment. to Turning to the Ingredients volumes were compared Raw flat Feed

Valley pre-acquisition successfully and levels, margins demonstrating to our integrate Our gross to have FASA. returned ability

sequentially late were we and in lower expect QX. not year-over-year is Fat work Our prices further done, improved but improvement.

increased due segment. Specialty Raw Gelnex Turning material Ingredients acquisition. to XX% Food year-over-year volumes to our

strategy a spray into collagen platform to growth Epitacio, collagen products. dryer we of commissioned Brazil, Hydrolyzed adding the segment. higher-margin an mix our shift capacity we global product much new our important to growth. the long-term Earlier delivered in within Food quarter, needed part remains Our our Ingredients continue and solidly, in continue

research segment share efforts targets to moderation. a in excited such this product development and our that in concerns also health resulted glucose I'm as specific our ability to that formulate have

expect XXXX. We ingredient are this and trials in market during bring to to scientific currently

October minor that the to the took offline lower at a DGD On XX announced turnaround, that we quarter Louisiana, operational #X for XX, were for scheduled St. third that disruption. volumes had days. regularly a Charles, due DGDX After in turnaround unit

operating produced was total, $XXX.X the cost dividends and days EBITDA. approximately has offline lower-than-expected DGD per year-to-date. So gallon renewable has in million sold million diesel This XXX higher XX in profits. in $X.XX lower at received And quarter. Darling in for of Year-to-date, gallons DGDX cash resulted gallons

and thoughts With I'll and back my that, I'd XXXX like hand Brad, come to the the and of then Brad. XXXX, for rest off now call to discuss

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

of Darling's compared to to compared income decreased quarter $XX.X $XXX.X operating million and XXXX, margin quarter due share third XXXX third of million $XXX.X was for XX.X% the for million. quarter Green million of third as gross Darling's XXXX, the to Although million decreasing XXXX $XX the of for increased XX.X% Diamond earnings XX.X% Diesel primarily quarter $XX third to or

of to acquisitions. fiscal million, and third due $XX.X quarter FASA and $XX Additionally, the increased depreciation respectively and Gelnex to about compared amortization primarily SG&A and XXXX, the million as

$XX.X about the in the results. as to moving nonoperating third million XXXX, Interest a acquisitions. result increased quarter expense increased due Now XXXX from the of to quarter indebtedness in $XX.X million to of primarily third

reported XX, which rate X mix differs XX% to Federal the statutory the primarily tax from rates earnings September the XXXX, different of tax XX.X% tax an $XX.X ended months rate jurisdictions company incentives. income an benefit of of negative and tax with of the and due biofuel For million relative among effective

quarter. company's million The the ended paid items and the of excluding the tax XX.X% effective income company incentives XX, rate, biofuel taxes for The $XX is September months discrete XXXX. in tax X third

biofuel X discrete X the the effective the and reported million tax XX.X% tax an September ended company incentives company's rate, months months of For effective XXXX, $XX.X is income X.X%. and items, rate The expense XX, ended the XX, tax tax excluding September of for XXXX.

year-to-date has also as taxes third the million of quarter. $XXX.X company the of paid income of end The

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

outstanding third total year-end $X.X debt quarter XXXX as XXXX. at The billion company's billion at compared was $X.X to

the ratio the third at leverage quarter was X.XXx. bank covenant of Our end leverage

maintain our with to billion Randy. available With revolving strong continue and for that, turn to I'll third first totaled Capital credit liquidity back the XXXX quarter quarter million months. $XXX.X X $XXX.X over on the it of as the million We you, facility expenditures $X end. for

Thanks, Brad.

for to $X.X EBITDA announced XXXX. combined $X.X to full of we previously few year company a weeks billion As revised ago, the fiscal billion adjusted guidance

inconsistent quarter start-ups reflection slightly around we have carried global fats volumes plants. third the the of our Raw but and the footprint as from global renewable operations have softened, material and an world. supply ample oils softened QX, impact momentum the makes For diesel direct Clearly, a of and fats negligible. diversified good of in and delayed geographic oils

of the and be Diamond well, renewable parties sustainable encouraged we different outside fuel a having the very and deliver do the and variety interested tell what to very Margin in margins in have about the QX. ability new we DGD press with coming to any have were we communicated. If our market, prices a gallons with operating, we seen is conversations numbers fat appear not and aviation, undoubtedly adjusting, line we've with more to regarding was lot significant a Green are capacity are would diesel turnarounds higher. planned structures of story. Diesel performing noise of While of

Looking integration the work forward that can there still some improvement lift completed, our Food Feed opportunities are our while add shift. been to continue our and in mix has to product margin segment XXXX, few of should a heavy segment, our reflect

tax deliver expect for strong our globally. improved From LCFS, nicely XXXX table performance outlook an earnings low to up improved an we favorable the CI feedstocks delever an shaping with perspective, set demand for see is with The SAF, for and demand growing and structures. and

we lower This adjusted EBITDA time, we from all Diamond this working for the help our billion combined expenditures, be Green on improving range XXXX, will in targets leverage us accomplish and billion. dividends anticipate we $X.X our anticipate environment see $X.X -- by we the capital year-end. XXXX, usage focused to capital to at plan Diesel. regular In to Given of we

Given the year-end anticipated our of to we the on our achieving well dividends of X.X about Ingredients our be from and way by strength Global should target 'XX. DGD business, leverage ratio

and some come that, questions, open up comments. with closing go to it With and back I'll let's ahead

question [Operator UBS. Manav come of will Instructions] our from first And Gupta

pulls has on view mechanism, you generation in which recent kicks How a this will by RD is forward [ do bit by it which the CARB proposal over the case macro staff the be XXXX, little you compliance AAR My believe supportive once XX% of question on LCFS. ] of increases program also first the XXXX? side. by of Do economics in

Matt. This is

is that is the So We first all, this business. believe yes. answer supportive do the RD of to

in build is think expected that you months several forthcoming, is the SAF there that RD given was that As And business. supportive the an and the a the are know, component margin components that LCFS out couple the the even of to RD for space. and put the legislation we are important SARIA ago

And the part. So with timing. will there's nicely an an potential -- project. obviously, volume -- for of which in of of in implementation. even component gallons, SAF neighborhood a a the There's SAF up XXX of is million And then the of possibility line component to there's very an earlier our up California the important

now, chance there to this, all QX Right this. set in or on QX XXXX. we for on have and the sometime tuned coming but there it's even is implementation chance, the for an is But stay

are So optimistic and in satisfied very again, quite all, we with all the LCFS.

Okay. AAR will the [ I'm forward the program the ] fact into XXXX. basically that to assuming you're referring pull

So the program XXXX? could actually start in third quarter

That's the potential, yes.

is follow-up on Slide quick [ Very Okay. ]. XX

a You sales million volume indicate sales lower million headwind $XX were $XX volume headwind. year-over-year and lower fat protein year-over-year were

integration is as should come both was just that we going the a and Given valley temporary this we back will volumes blip FASA, assume and ahead? well go for

economics lower to but U.S., in seeing commented America. is low, the in directly And mean changed being I is Randy. directly related and year-over-year predominantly cattle herd that's I we're Yes. just on in Manav, have slaughter the this clearly, cattle related replenished my to comparisons. North it, that's script, numbers what the

think chicken. you then meat pork way, and the red of this If the most then and has the it most protein fat,

is The right shape, now. in pretty in that's Canada shape. America flat so good much is. Europe what good America. that relatively And South in volumes is North but are all that's

from Adam Samuelson Sachs. question next comes Goldman The of

in quantify for So you think a you to pre-announcement the kind the quarter at you year and a in loss that? balance kind I the about guess of quantify the outlook of if framework this Can for mean Diamond resolution I first gave the you can question. Randy, updated first hedge of Green. XXXX,

production for were think get if turnarounds, margin you full the imply, about thinking of even about at should would quarter the third to fourth and no levels a end we pretty the way second framed And to low the there's year. the if tough a Green lot closer quarter, be as which, scheduled you where to Diamond true, in we quarter,

reconcile can that? you just So help

sentence. I And in way that as how it ends Green Clearly, Diesel finish American of would don't the of at prices portfolio North there's fat know core Diamond the a business I also through. portion issue remember, up flow the you No. timing that our frame just significant purchaser. the a always

a double So bit little a here. you had of wham

to the again, one, already in accelerate third Green. we'd started but quarter sold Diamond prices Number

those coming fruition QX to for in so ingredient And now sales be are core business. our

On the oil spike we other heating side, up. saw

some get You hedge losses. do

see it into what to can the You the go and and number. can you you release, the significant -- is. to the sections derivative was that can on And financials a number Valero straight go

same you oil the had flowing prices then fat off. now had coming time, through, you heating At higher

comment end day, at so about of And my margins the that's adjusting. are the

did the business. If had It margin DX what RIN, about that thing you back came type down, say? some it said come think efficiency when down the of to put fat to of prices the in

then us QX year. the momentum coming year DGD strong, margins nicely are finish then they'll what very clearly, back the in the So in gives next and into here. that's And

year. I the But moving $X, mean, said right next year, our to somewhere the trying we'd $X.XX like we're not lot It volatility $X.XX. you the using we We -- the We'll be But parts to depends we're in into at range from on for day, everything finish going year-to-date. see there's end there. guarantee right of $X.XX DGD for through. year. we've up because We're coming always flows of just said, we million on now, somewhere for said we're between target. XXX guided gallons no, at no how what within a

the And quarter-on-quarter decline, EBITDA just maybe just help in Feed bridge That's the you helpful. -- then segment, some that. of can maybe Okay.

you so help in or some How help the versus of think fourth maybe is So the pet the that think if where second commodity EBITDA million the us EBITDA bridge was prices, kind commodity in Can with the of we how of moving that ingredients. quarter. seasonality? land, about weakness much of prices some forward? was key about in items you can much $XX of quarter And Feed down

kind the of segment business America I typically, Feed your answered and seasonality question and there. because hits Europe Yes. it's of in for you've the in quality to product material leave in third the the to harder in of get quarter in out times it especially the this much protein. the And of the most you're fat I North think process. -- That's being summer mean, harder the in code raw is

So years. for quality lower less you and has that's of it flows It fat, fat, kind through. XXX have how

is business your put that remains picking finger weak, was right it's Pricing up good in something pet back Demand The but area. again. now. on food to

stable I of bit on. versus right the looking want shape. there. appears that little the You've different add good moving It are pretty got the But areas now, are there's else you trade in prices a Protein products overall, down right or that food Matt, going moving most world pet in a 'XX, on now in what when of mean here? disruption looks a trade pretty proteins around. side. at around little it we're in 'XX bit to world

QX, Yes. typical say would I did businesses was our a expected as I mean you know, and as the very feel summer, all that. hot

we but pickup -- in especially return a to so are And quick now the and recovery. QX, seeing,

year here Carolina still mind, to completely operating a online it plant we be ago America. The back as Yes. is today, South Carolina here. Ward, sequentially, year a to Adam, but South ago, Keep comes in in us rebuilt. key have North Ward, going 'XX for not is

of our a product process system. significant landfilling still now in are amount We can't right we that

to have in our Eastern importantly and oils guide as assume for us, what strength full if to higher system being prices most able But say and to prices protein bring it's the fats always you we energy. next back on year, there So and seaboard. you --

comes next The of from Whitfield question Stifel. Derrick

the for XXXX this commentary Thanks morning.

of there question, business versus For of we margins feedstock DGD meaningful own your which the should unit industry. your first wanted business, very spread sustainable value marginal beyond drive that the differentially relative you really production, streams to my When the a what a with lean XXXX. focus I to of by margins value on analyze to in system and your positive be of assessing appears on

[ prices tallow you've $XX that is about gallon increment past optimize ability to the still RIN the DX about DGD, with your the press, to reasonable sustainable DGD? per of you at given margin even assume As ] economics in it that, stands talked at

turnaround we of move the cetera. say, of a higher -- hedger in loaded, that an DX part down flow QX et RINs we disrupted have plays I saw should RIN important lower in the logistics, XX that's got the value we The clearly, premium cetera, what that there. to as offline, Clearly, Derrick, Fundamentally, with volatility and we boats mean, green there not through. believe. there you prices, volatility and the our inbound business a days, we were and QX, both caught lower in et that fat DX outbound and

remains still thesis same. our overall, But the

even is advantages, gallon logistic lower now ago We out she under fat given outbound a Suann logistical why fabs. case capability and the We pointed this $X.XX on now, it situation, North mean keep in to advantages. inbound, CI any because believe America, has I mind our in believe in Diamond of that. North in even XX are still our As our price given to me, largest investment importer is pretreat said, Green convert those little fats $X.XX a years because both the America was bill. in better it's a

that's So Phase X.

real. the and out Phase SAF and explained very parties the is demand as there interested The the won't margin as working And But we're we're with interested real X, opportunities, very remain script who say we've hard are, real doable. alluded, please parties. ask. don't so close. We is

business said, implementation okay, So if could look Matt get online at little in there's the I sooner. this a think chance you a 'XX, LCFS we

doesn't we'll if the improvement there. here the year, and script, the and fact come see "Oh, Even that's until playbook", of it the when everybody just positive, here's says, an CARB is back the publishes

for We our the like we summer, next here. -- SAF And through it world technically, normal on for equipment hopefully, we'll mechanically And here. next then progress through up, SAF winter drawing season. of made that's week -- a you steels there. to be the but we'll be do X million as around made start-up hurricane and SAF complete side, have it look and we another is know X in looks we've as you'll mean 'XX is season, I hurricane is that's plant I XXX at it board or X, progressing now, if sure. it look two, or 'XX up, X got the from gallons nicely. Number time year, through the it buttoning years And

'XX, we of then won't at if will the our the to look you 'XX, the communicated made of decision that at you and we of of and out people, Clearly, that structure. complete day, substantial to margin we'll with as proof we'll forward. both be go think we've have SAF But that portfolio start own technology concept end gallons until can 'XX, RD include along -- as have again the arbitrage

-- a as here Matt, you forward, to that want look in. to want add? anything don't we from be the our may a see So lull price to There it's market case. any little we else seems downside

say as is online, the to thing keep this just feedstock diesel. SAF renewable one that would is that in I mind comes

And plated our million gallons. so for XXX ] border is plan [

plant, coming when RD on we market. SAF market gallons into And of out XXX so with the million that's turn that's that RD and the of going

that's So for the say, -- to outlook RD. the friendly let's another, component even

if I apparent That's on to think simply difficulty delays some views RD you all well. weather just more great. that We expansions, the the you're nameplate, is offer capacity see could than your challenging DGD, color we like in staying same, Maybe see as which on on running or but in I'd wanted additional I seeing appreciate. at delay

mean sellers, Yes. the we're around hat tie DGD oils North fats the in we with And around clearly, the and mean that's America. this when as ] from I seeing I'll both the clearly, buyers horn, [ ]. the demand buyers, [ guys that's say and renewable not Darling I hat And world. and tune of in sellers the I the look team here. And we're

them. actually fact, we're back -- material In we're from buying

strong, started is when bit whether I putting on S&Ds these if or components Bloomberg might DX curiosity our others that forget of say it think that and I frustration, multiple they people of we was a too it. guess RINs, be -- out frustration

the announces it's X be just one, Vertex finally or online, capacity, and the Jan a Number those that of they which to of run doesn't on understand, going keep significant end Coast, days. yay. the because is goes in At export Green world. RINs delay XX XX you generate of PBF, if location level its end stuff. assume Diamond when doesn't the Phillips capacity. Gulf hit the of you the then that a I day, mean, And retired There's there. day, a If that portion the seeing. reading world the At they're around XX% plan, RINs of it get this Well, HollyFrontier material,

So end reality. and the day, of this have at kind back to rebalance the you of with thing go

that. back selling world. pretreatment they that the buying We're claim be selling cheapest we're anything Matt, do means So or would not have buying and else to they want in they the add? don't fats you the units they

not is think operate. business these of the I -- As this the and CI whether are they it call material many and now an corners easy gee, it's more necessarily raw quality wanted. tried then pretreatment of product, the to learning, this save out or And CapEx the the that, component they find capacities process cut we requires that CapEx, and someone it's it or on to we can't at component

in. I not -- think easy complex it some So is is finding this and out. people that a are And to of these business a operate

Jefferies. Dushyant of question next comes The from Ailani

a $X.X I the and more expect given that for on about margins Food you've you Could segment? the you $X.X little one the had to XXXX, guidance Feed first for bit what talk billion. do billion The was

it, prediction. going make here run Diesel? we're guidance too into when nameplate gallon we're just $X, at and are we're at Dushyant. gallons to coming go thinking on include I what Well, time. you you look I this producing really above back early say, at what on going capacity that we $X.XX can a any doesn't to SAF at Green It's next early make to is you year, as to Diamond thinking there ready that shot and here, Not a take mean, yet, can it

not number. to back into And so it's hard that

we're can't where it the still end more recover. where to where pre-treatability, And on billion, renewable the in even and fats if numbers business the core Food -- enhanced we've roll at. thinking it's little billion, capacity $X prices the or fat it said, up stay $X.X diesel there, are lands, so have as in of oil we're day, whether And is they're doesn't or at maybe that pre-treatability between Feed, a depending if going prices

S&D, RBD -- you at are And over. running multi If a of look are these whether oil, now multiyear the we're X,XXX which soybean it's the most margins, low. guys at

we're higher at. operating $X.XX that's So than

So so add cast to how of that's kind to want -- looking anything it Matt, that's Bobby, we forward. it? you

needs happen right. that's I well. a at we're America, certainly ultimately, -- to and S&D we're it's production in as far I just a with determine South to a going really scenario, what think tight crop mean that's respect as and levels we and generally -- to see oil as lot levels protein

And prices had trading to given question where then kind higher stock know today? is one stock goal the to but the that the general, of on thoughts where I helpful. of entertaining any was maybe I just in buybacks leverage, given get That's on your Or that thoughts kind is today? X.X just buybacks,

with point Board. discussion a the is It

Clearly, that. the total we in said, get 'XX some discussion focus to is debt repatriate have have we our and at least to to do a 'XX. as down grade capacity of coming is, investment as today and We in, point get and adequate cash maturities

authority every to then table. decisions. sure. says, buy Clearly, and executive And the the as it's a I dilution Brad we off as for year, make opportunistic. we've little not And goes it's compensation have extra any those along, will been giving back that, or year cash, So the after

is the nothing table here. off So

comes Paul of The question Cheng Scotiabank. from next

revenue revenue the to is third actually whether question. flat. second business? first drop And [indiscernible] what's the from We're Feed the second indicators, quarter, market quarter to in sequentially understand from understand down. volumes that the the is Feed sequential trying the That's is trying sales The to up. or UCO, Randy, all to causing it's actually third tallow ingredient

When is of this in and Paul, Yes. a lags our looking lead sequentially, word better lack we Brad. have, you're for contracts. of a lot

differences timing -- and and cause movements. about so that And third lead movements, Randy the lag what between there, and a can little the of say. way you then that get earlier I work with bit will when there the quarter, and there's quick price would often talked contracts kind discolor of second And

And so market in should or comparing should to that fourth indicator, to take quarter, see based Brad, longer lag -- we means on revenue, the we see, going your the then is upside we than the more that? effect of an

what you're America Yes. produced North see internal to it of is headed to have whether in significant we the around this you way, if Typically, then oils, Green amount or our fats going a Europe or Diamond think they're of Brazil Diesel. world, and today

December, October of those -- and it, is were processed in doesn't think September until now and and you arrive And be kind sold August want so if it and as about November is to what January. produced is we October

so then And in a and earlier of up prices QX that said move we as had purchased. so you were sold fat in the script,

those those -- in so quarter segment. the a in good Feed Ingredients And should flow will deliver that through, and fourth pretty

The comes BMO. Strelzik of Andrew question next from

changed about a about think, talked I DGD for producer? My ] think this, the the [ or Diesel. Green a marginal earlier, of you think versus et over on about Randy right $X cetera? And talked DGD on, kind being around way you you've little advantage the first more still specific. but was Diamond I one new to that cost or all do capacity has Or if baseline think what is bit of minimum could little And kind think of kind hoping $X.XX you margin margin? at I number be the that, come is that the time that's to But bit with

around see Yes. know. competitive mean, and looking I out table anything don't I really changing I there the right now. that advantage I'm don't

advantage I trying continue agree. stay again, let's that to the We're SAF separate is further competitive ahead we of And that's as to our even to even game. consider that the leverage something with going say, advantage. from forward, the going a competition. -- us going to project That's with

just If I could add.

in amongst to mind ability of from lot DGD's time. kinds is thing time keep feedstocks different all And those blend part one think to the is to price I that relationship feedstocks. of changes a advantage

But not So and something to we the be speaking, is I relative had as that advantage generally the can the that today. that you before pinpoint think static. advantage be case continues

Yes. Yukos And more from I you Brazil given the arrive, countries, got got you've become even fat usage. coming of the and think when timing or got from DGD X mixology and CAT got Rotterdam those greases you've yellow factories has from a tallows whether coming from our Asian complicated you a and then

feedstocks You [ really run ] a can't -- in we meat don't sense.

longest catalyst the a highest can customers' the make life. we So get yield to that we mix that meets and our needs that us allows

it thing. $X.XX advantage, like said, running the And complicated versus But soybean oil right gallon. RBD I more a is far becomes a so competitive now

So there. that's a not even differential CI

waiting through remember, we the as year, Port think still seen I time. anticipate any it on So you've its is pathway, Arthur

will next Port had Arthur pre-SAF. year that's have So economics it that Port then And again. the Arthur has not

advantage very are said, So the I think I to but and less be is want think don't very somebody the over time. sustainable I here, due Like there's out achievable. margins that I timing to widens going doesn't be volatility say to

the that of large other the U.S. forward. on tax then, Canada DGD. that And one that advantage, more And of integration things than other place. of we're our the supplies with the value in of calculation think the and DGD more that our a producing time, credit advantaged even We local again, that into is ends is percentage And fat And top producer's when again, going in back there's to Feed DGD comes one up business. others. the

position. like we our So again,

Is question helpful into know, was some integration second or And That that opportunities there's what the I that of to your X. really that. asset think talking Valley to given around remain more following commentary broadly cetera, remain. about? you're up there's to my on some contracts beyond really you affect footprint color. quantify is that We Okay. appreciate continue go optimize. any the that? that I broadly, Jan opportunity with some benefits of seeing, all Valley that are more way Or even kind et there bigger And that acquisitions,

Yes. we that's script. tend to is making at us. were and teams in and a ] our on and in etched company Brazil. our them clearly, I expectation to in return made have our are known procurement no manage And comments very well the [ task operations be public ingredient and Taking if down think Darling have those core private for small the risk and then strides and international to I team will, metaled U.S. we and margin conservative. here great mean, standards there business either Valley then, tend you a We continent

And so there. to at terms material the as ability conditions day, Valley improve the made and the little been has of the the in we've all integration, we end the success said, of the contracts raw and procurement

to should QX, up, right our supply control others, here shape we'd Otherwise, we to inefficiently got mean, we've we're the capacity word next that ultimately, waiting said spring. I support as shared then down stuff be the earlier, back should there comes the still year. winter still on stages gear plants in but expansions next But that's on out chain, there. plant back we've in base commissioning just the now or good short, And online waiting capacity on up. be delivered we're come just to be in we're this massive due winter. motor going then seaboard to that are have that's with us And to Eastern moving as accretive I Brazil that that next supply in once

pretty little mean whether next So bit years, was darn I the It pretty there, up people. of for contraction numbers of last we'll of animal it disease to feeding at But nice the world like year. X% year. doesn't we've whether next setting of just you're it's day, out and end or the there's margin looks seen good look X% material a tonnage growth the as raw over several have

question Wolfe comes from Sam Margolin next Research. The of

[ My question environment. first on is tax just ] that

fats that veg oil to you would if is and originating which bit impact year oil talked scenario that demand from the tallow RINs that supply oils relative further a if a to system you lower just vegetable if biodiesel about the to might disproportionately oversupply, is solve fats whole in where because the is there a versus -- grease oils. veg prices little next benefit Is think there's relationship the prices But with possible? soybean scenario from production, corresponding LCFS that pressure the and You've complex. a rally, yellow decouple then

that one, be I biodiesel one become become really don't Number clearly, the I would Gen would challenged as all challenged. that be think take will so. technology because be capacity would X would of supply. there classic the think we've then that it said along, the reason RD But would

material. raw X got see of Vertexes, kind you million tons PBFs, just numbers. of million, there, million. new they the to really to of the you another that's And Martinez million X.X can mean REG can can, You half think quickly scenario seem guys If do XXX these the got you to be gallons, what run do they have got you and all If I X PXX geismar, is out change. still that then that's demand the going

the do what Bob, DX take do?. want to that? question RINs is shot at you a is Now

you're think right Randy. I Well, on,

challenges that and But of higher pull in benefit having would go were challenges, were we continuing a production, RD really between to to don't and I and and should significant keeping values would have -- prices think that happening. RIN significantly fats overall operating, decouple relative that some happen, we broader to that the our is but but production because running only RD in demand see prices if way see plummet and we What oils. if is network. line

it. Got

impact are of Okay. because looking become intrinsic fats it's through market that it mean, important would obviously, to the to with the And it just but I at value like time margins, a too over but then values, different on lens a RD of more feedstocks. people follow-up, LCFS the proposal, of outlook, also lot seems CI fat the would

it's It's specific. but of course, California. only And so very regional --

is LCFS is wondering margins? was So thoughts proposal bigger underlying maybe you your think it RD deal on actually that are, what for the I if than tallows a for

maritime favors a going fuels. if We believe It's mean got be favor to does think I the business. think globally. timing. way, And CI to by done would I they whole demand would great clearly we got the SAF. we think one It's all demand. we growing I that incredible SAF RD got business. it low is good as a is growing down clearly, today conversation advantage CI low it's thing, this work competitive at estate, going Matt, the is the in And it's be? to SAF don't DX, you're as route stuck of margins Gulf always out shipping whether or Coast are pretty know... Europe nice. term, long by feedstocks. LCFS? just what to where I to well, of really And pipeline, saying, we've said, the is both California, real to Where going we're about

is keep that, LCFS LCFS California. in other when product is only obviously, a a to in to the we're market valuation is markets, to The reference to or the whether another other business we're sold thing determine using is doing mind our California. But specific to in as

regardless valuation California into another, or that built whether way it RD one to all of goes sales not. So LCFS or the of is

important to So that's not an component overlook.

of The next Stephens. Ben question from comes Bienvenu

priorities want translates to billion come notwithstanding at And Randy, I that $X.X off think talk flow? you billion then DGD your budgets want see what CapEx cash SAF for the you XXXX, peak to talked are free do you to of flow expansion could we $X.X potentially start about for to free engage we in. EBITDA. as cash if that to -- of What about

I had M&A plus guys spend as discussion CapEx going but we how and and And about core pipeline. I to are we is with look what the mean you the Board. here, then ultimately, adjusted our actually it's the combined we business company Yes. think much valuing dividend ingredient EBITDA can talk this the to what's in

and look right business And you projects your million if a taxes there's plants we've million some you you billion, come and an around probably CapEx. cash so be with number -- there. $X.XX whatever. to around it $XXX there got talked you say billion, at interest an the million then then $XXX at $X.X about we we of above DGD look level. there, million And ingredient growth you and then at $XXX of million that's to look little $X.X or could got the in If we're nameplate, $XXX gallon, we up can debt our buybacks when better pull easy quickly And down if dividends that you doing and bill a say, we're But $X that of and $X core higher limited building. down of billion new -- billion, $XXX

transaction XXX QX. Miropasz We on close new do have to of out year X M&A say is in likely EUR acquisitions. an and that's is is that, there But on light in Poland, would pending million outside that which expected I 'XX

I call M&A holiday. it an

helpful and very makes sense. Very good,

would want much Is year-over-year mindful think segment. in to the The than something there ask third that pricing in that and third seems be cooking of Yuko, between should happening pricing weaker in we that's suggest. in we discrete I used to out relationship that marketplace. of Feed the the quotes or broader business, the in as quarter about specific be oil quarter, the Yukos the On about pricing segment

XX% Year-over-year, This is prices Randy. to I were down XX%. think

yet. X operational QX year XX%-ish. Remember, Diamond about ago, Diesel was not So Green a

And so bunch of were still the around trading material we world. a

that Brad on said I you and there. some earlier, Brad? anything quality know, going you as want So some to add, premiums, got But lags, got leads you got don't some training was you've else

some can that there there we're in built exporting when times, Often it. with That's premiums exporting. in the be past,

all on and that flesh So all going are X units out have we that forward. will now

comes TPH. The next from question of Matthew Blair

the the still I your in our guess you margins you talked pretty that if On low to your And were in first feedstocks versus think nice modeling, a be would hedging some I one I that guidance, DX would DGD recent on that the is, higher price there but that side we RINs from about worried see like tailwind lag in you impact things, QX. from receive might of seems that's margins. wanted QX of it weigh QX anticipate versus still held.

I first. wanted check to that So on

I of manage have our we say the book -- the pipeline through There's purchases. that's to way works. a DGD. the Yes. anticipated reality We would that's -- do

the would that I the And than so if through think we're quarter, will about you -- October. chewing progression be But December better through say that. the

we that, Yes, see too.

margins is guidance QX just the And DGD be so QX? than to that clear, still higher

there's in really gallons. much margins are you I that's of major said, it, hedge an at heating should had LCFS And to and as right more as flat. make the can have that's again see, as on, a provided out, spot absolute. to kind coming going rally look widening And We we better. we're gain back month that no assuming We--clearly, Matt market. DXs margins, oil each if goes mean now,

Gabelman of Cowen. Jason question comes next from The

My first one is on And the X-parter. XXXX a outlook. it's

do think the reduced had about range you think think $XXX how guidance. ], EBITDA current is, the In were driving billion for of And where off guided low do to to that you you you prior And of previously you it first $X.XXX million high initially or I [ to about that. then end range? The part the hindsight, as follow-up. XQ, you have what's a from

Yes.

-- prices there's through. and end because we're were range deliver the to looks QX got high like it. it to on fat DGD that to letters being of didn't clearly, in we think QX the to of in DGD for it sold us in the to flow has recognized that have they get get what then be. QX the QX DGD in And X Right conservative QX. now, most and I was drove we're didn't clearly thought somewhat deliver was DGD going

even we myself timing that I continue mirror why just range. to and issues years. there's you [ thing XX guide this kind like to look after of So am ] in trying said, at the say, puts I that here

the QX. in just good just in, listeners, mean have were. we lower it's I'd QX, -- So would out feel a for came we remind we And as as be this and we said of came sequentially pretty we in we it. seasonally, -- is I but

was X% that the plus not to you it, minus didn't to collapse the DX we DGD, so see in bad. East volatility there due all at call Middle a and want could hit you not to that have happened RINs or the the war coming is What happen. and And us -- there whatever everything

another days magical days X, or was and up. you as power X fire down it, did back and that's days but the XX job, a us of The offline. minor it's repairs. X with we to took team power That -- call disruption, And just got

that gallons was. So those million know, whatever another, took or off-line don't or it XX I --

why were that's than a So we're here. QX little we QX more bullish in

guess, was for to All where right. it soybean And And it was is capacity coming seems oil Great. pricing the like of And in the I sit outlook. above it my amount a soybeans crushing XXXX still COVID. here, prior on to online U.S. there's decent as follow-up decently is relative, where we

outlook was new So capacity that year, in that online crusher I in earlier, North it touched all does wondering seem you it if how but downside I factors can and and impact like prices. oil coming for vegetable there's know America your just on next potential some

oil Yes. would protein. This is or is Matt. that expectations, it's whether I factored and say, yes, including our -- into

myriad So what space, if get of to plants wouldn't a delayed we're them for some the similar RD projects in these are known surprise me, of new seeing reasons.

the One that to is gone with seen, lately we up. this really haven't is -- interest it rates of the takes we've increase has about and money the CapEx and the other operate build thing -- talked -- in

we But So that the the of expectations. the incorporate day, yes, at the -- -- that of the reality our I business. that's just end into mean

any have comment. you do Bob,

Yes.

for I renewable out had that oil lot overall think XX other a adding we've much keep than up term, pressure And the to we're for thing as we oil on the faster to of demand crush. oilseed even see have system, add getting going that XX would Short is if crush with capacity imports added an capacity we've we bigger But to United near-term than be a I just seen tough -- oil increasing in diesel as capacity. and industry impact it. soybean production prices. pretty got a the industry, you States the pace months, it's are at in

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

right. Thanks, for All everybody, your questions today.

out you to questions, you great always, have talking forward a Please and Suann. stay reach to have if additional season, safe, to future. As we look the in holiday

Thank you concluded. disconnect. now for now has conference today's The attending and presentation, may you