Darling Ingredients (DAR) 28 Feb 242023 Q4 Earnings call transcript

Good morning, and welcome to the Darling Ingredients Inc. Conference Call to discuss the company's fourth quarter and fiscal year 2023 results. [Operator Instructions] Today's call is being recorded.

I would like to turn the call over to Ms. Guthrie. Suann ahead. go Please

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

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

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

During or making other this forward-looking be future projections about predictions, events. are call, statements will statements, we which

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

over I hand Now will Randy. to call the

to vertical earnings Ingredients fuel we fourth year Suann. Thanks global food, In Thanks, everyone. year solidly platform, demonstrated of and combined for significant perform call. terms ability delivered feed despite $X.XX ingredient in markets. Darling 'XX The joining have and at Okay. XXXX, its billion. morning, sixth fiscal volatility record our in Good quarter consecutive EBITDA its the adjusted built,

to process goods, Ingredients and lower offset the our management impact. spread most XXXX Feed for to Despite finished segment. the to helped Turning increased volumes compared global prices

asset segment and on expectations. of review geographic, our in our alignment mix, focus margin ensured continued strategic laser remained margins Our both with and management our

made we close and Muscatine, plants, Iowa XXXX, two Bryan, during to decision bakery the Texas. addition, In

shift. Raw Gelnex Ingredients Food and continued Specialty our about mix our to segment. product acquisition year-over-year, primarily material due increased to volumes Turning XX%

see America health to to performance remain long-term in and growth Hydrolyzed North about continue our role a nutrition play We our collagen continue and in China line. I markets optimistic strong growth strategy. consumer business continued key and very will

research extensive isolated development and such introduce benefits innovative The and expensive, area, various some memory targeted to peptides to related as the later successfully market year. we individual potential concerns with applications have these health glucose our excited Leveraging this we and moderation in of products to retention. this are are

Turning to Fuel our segment.

cost values very continues Energy a lower Renewable deliver of inventory European quarter. valuation impacted margins diesel DGD and segment results. or Our and Lower RINs strong the market LCFS to prices, for

at with of DGD above our However, gallons EBITDA $X.XX renewable $X.XX, had EBITDA XX-year-old impressive of gallon per an diesel of gallon. which sold is an billion case year still X.XX investment per

take the turn through my on comments, to like of some to Brad I'd the this, to back with then financial and With us 'XX. thoughts over call Brad? I'll rest come

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

quarter million $XXX.X due Green lower earnings million fourth which gross the fourth to cost fourth integration $XXX.X was within increasing of Diamond $XX.X as improvement of a Proteins. acquired margin, fourth Diesel's XXXX in Darling compared $XX.X reimbursement our from fourth Valley by DGD's for earnings XXXX million work to Global Darling's adjustment. the million decline This to was market decreased certain to the income costs continued lower compared and to primarily due a related LCFS for of $XXX.X by values to million Ingredients Operating offset of or of decreasing attributable companies, million for quarter XXXX quarter the somewhat and to share supplemented RINs $XX.X in quarter XXXX, quarter

expense fourth million interest in items, quarter acquisition $XX.X from nonoperating to of quarter reflecting in $XX.X of earlier XXXX the in increased of million the XXXX, of terms XXXX. Gelnex In the fourth

ended rates, For differs losses XX% among the the jurisdictions yielding three that from biofuel rate in income income rate the of inclusion XXXX, mix foreign federal tax recorded relative effective months X.X%, $X.X taxable due benefit. earnings based no tax tax incentives, and December to the provided XX, tax certain of the taxes, which state with tax earnings items an statutory million, company of expense different primarily U.S. of income on

net The company's year $X.XX XXXX per totaled million the income three $XXX.X biofuel XXXX. months XX% for of company tax the year income fiscal effective in quarter. for income the tax paid XX, or December $XX.X compared diluted $XXX.X share or fourth fiscal share to incentives was taxes per for ended of million Net diluted XXXX. rate, $X.XX The excluding million

year sales million XXXX Net fiscal selling, and income $XXX.X during XXXX administrative completed reflective and acquisitions and million $X.XX years year $X.XX fiscal of XXXX. $X.XX XXXX, billion to fiscal compared in due decreased amortization and for for $XXX.X increase Operating general and million the to compared fiscal primarily depreciation as expenses fiscal billion million increase XXXX $XX.X for to for billion were XXXX. year to $XXX.X

These to as increasing expenses gross offset gross XX.X% were margin percent for the the million fiscal margin primarily as reflected compared XXXX XXXX. Global business fiscal in improvement to by year in XX.X% Ingredients in $XXX.X

compared compared XXXX. was fiscal attributable in interest which million $XXX.X XXXX increase in increase XXXX, as to a primarily fiscal year expense nonoperating for fiscal to to $XXX.X to million was in There $XX.X as expenses million for XXXX year fiscal $XXX.X million

and offset X.X% cash was foreign year as The for of physical million tax The increase $XX.X income in recorded payments as interest were tax XXXX. company well expense million. tax insurance for was somewhat currency damage XXXX by effective recoveries. gains expense The fiscal rate $XXX.X

and a be rate to tax expecting of to similar XXXX, XX% cash $XXX effective we approximately XXXX taxes million. Now for are

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

Our bank fiscal credit have year totaled the revolving of covenant We $XXX.X for quarter as was XXXX our Capital and XXXX. XXXX ratio $XXX.X million at million currently of of X.XXx. million expenditures fiscal fourth the facility available year-end. end on for $XXX.X leverage

evaluate projecting approximately million. applying company repurchased year in is to year cost fiscal company reduction. of million our enters XXX,XXX expenditures cash and common at to share $XXX fiscal repurchases. will The committed The approximately debt flows shares The stock a during its to of XXXX free capital $XX.X expected XXXX opportunistic company continue

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

flow XXXX are you, XXXX. record Well well Brad. the to deliver earnings we done. once and Thank in books, and is cash believe strong positioned in we again

We business between guide the on Specialty proteins phantom -- XXXX, and have stocks, of markets fats global slower global consumer plants. and to diesel is demand model as and renewable built well-balanced global businesses Green Diamond a our early replenished This bit consumer oilseed bit of Ingredients start-ups global Diesel. result soft. are or a a It's a delayed

our prices more benefit is fats going ultimately to favor the get these market, clear, more we core see move the refined However, for waste Diesel. to ingredients fat and provide built Diamond soybean higher. and low opportunity there reliable let become me is business diesel on Clearly, incentive renewable And CI and this versus plants comes Green if should be oil.

working management, of global continues portfolio and be focus. conducting capital our a cost our review improvements Prioritizing asset robust main to

performance. into and are reviewing We to opportunities factory's taking every improve a deep contribution dive

very well. And performing is business prices remains RIN and despite outlook are DGD Now our LCFS fat markets concerns bolster expected margins. as to positive decreasing values, for DGD this about

We and expectations margins year, lowering remain are we sustainable reduced are expenditures Green committed have communicated. within working way Diesel. slightly the and investment excited dividends well aviation the grade fuel market near working about capital a capital from on focus entering future this anticipated to our that Diamond the through toward anticipate in We

be and Starting aim host able our call year with I'll schedule, will and more accelerate the this anticipate time, outlook on provide release to guidance April. we end we on the QX see of I our XXXX, shaping at details and I how At you QX earnings to up.

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

The [Operator will Citi. question We question-and-answer session. begin Palmer comes from Tom first from Instructions] now the

your we of could maybe appreciate point, guidance full this quarter, not the a frame issuing But months year at about given couple just pieces. I at first we're comments just the least moving of some given in.

DGD Just the about this any kind margins then least business maybe at at look to up point. and help of how base thinking

another looking No, is of to least what say, the we've kind fat easy between Randy. it's forecast couple mean I the fair This It's forward here, now. question, fat seen off bottom business we've QX February. They've that been prices have last price I seen come we at didn't because QX, of and is hit so would years in this volatility a XX%. Tom.

about With pretty I've two had January January. in We nice books sides a books, in your comment of one both got business. on on the periods the the

But communicated ingredients So of any end of we've about day, the million positioned. business in where we EBITDA that about was annually. we're fat at the good feel core in pretty always the movement worth $XX

lower. moved $X.XX coming in back. clearly, QX around moved so here. into $X.XX And QX We from lower We're we've in

And to is, that. to try me, where to hesitancy bit my is little a so do that's,

seeing through margins its has pipeline tell there improved back for you we will they to Now we're of now expensive think what I should DGD and year. the is be where fat, worked the

would of fat came with into integrations XXXX then having XXXX all move we that seeing I similar sharply. possibly or acquisitions and the have of a and the day, improve the end mean, year down view a very at in left we year, So prices the the

that's that Protein happen little end that in some starting the the come global to But prices of to of should day, at consumer the see slowdown demand, contracted destocking, a bit. kind around have back. a We're related world.

I like I'll its And can What you the tracking. to Matt out in below in -- and capital months model and execution told on is generating I we that's cash April the and enough managing at put Bob -- come ultimately, $X grade. DGD down that books debt how prices. this focused outlays to we see investment said, more pay to and year the I business after couple the truly and here, year think Brad billion we back widen be is our we're lower and margins clearly, a So I fat see simply

don't any quarter coming We or until XXXX. here bonds notes first have due

now. rapidly, So where the very -- create want favorably something very, to be dynamics cycle just in 'XX, concern We this shareholder, here at the value for need when set we we company have to different commodity get very debt. VION to very, issue that as a we in markets that very the want any we different not we're is the of XXXX, doing did back any and world priced company acquisition

as my to on everybody think I at is back doesn't minute, demand. continue clearly, play And aviation those later always widening comment key I'll we're close. in for here, in we're want call a a here, first going the margins to rant it Clearly, role can Matt DGD. piece sustainable some the the mover And but it's really movers. the nice first seeing be here

where are do full call, better there. or excited. our to with we standard, once The they changed here ] ago. we'll we're best [ up our And year sometime be diesel online several then road model again, get margins rate to diesel, years and than the hopefully business much that renewable to plant And I this were in are and mover first 'XX we've what advantage in later

So hear. answered everything I that needed to at time, I that hope you

you know be what to earnings kind might as CapEx any have with we And on come just Maybe up XXXX? could quickly DGD. kind up on right? that, free detailed frame for of the Thanks through. the you through DGD? color guys that from but type something expectations the I just Maybe kind it -- follow the You've some Just Would commented, at if that to reply. do DGD. see, debt clear distributions of got we expected of mentioned items check to distributions I'll comparable of don't of then try

Yes.

finish think but totally Do think I want down you're CapEx I some through related. We you DGD comment... that's room to come clear in got asking you debt didn't about to the there distributions here, of up. out pay

This Okay, is Tom. Yes. Brad.

at you So million $XXX year-end. at the debt see there

So repaid. be that to does have

had a we holidays, So in we had turnaround the January.

BTC, on a in the that December there with a So typically, $X come receipts the those with a But gallon, holidays, significant being BTC. the in. little a the with usually bit holidays, at -- of are delay there's

backs some. up it So

QX there the with in that turnaround So a little January, pushes that, back along kind of bit.

what a but at, closer. So little a you're think time is getting would on of time bit there, dividends had our deferred I we're is line difficult a out hearing getting DGD, outlook, which I of say,

from The next question comes from Stifel. Derrick Whitfield

With delivered -- my perspective. on focus a the Feed from quarter I business, remarkable question, where to first wanted margin a you

talk fats, some you in the and to from oils, SBO and [ throughout of prepared that comments? trade could to and will precipice between waste spread And second, thoughts ] the your the of how speak maybe First, impactful your we're on drivers on XXXX given that legislation XXXX? greases

Feed environment, you declining of that's your procurement when remember, you raw segment, widen material, Yes, the when price a good questions. in get Clearly, out. margins the into

lower price. now you're raw widened material sales the index based out. a markets it current on buying have at That You and forward on

recover were can the the Valley. some stock that's agreement all to down the And on. the prices a there little volumes comment processing from we of money up, out. purchase in was As related But it nonetheless, expenses of acquisition Brad did came bit formulas then part Proteins commented, were that widened and we that it Valley and also against

So that's that.

Bob I The I'm and first and oil -- mean thing here. soybean going to with this RBD waste fat split comments. the Matt

oil The it's think if would there they're fats. understand industry at was that the the anticipates operating waste rates first prices their whether everyone and spreadsheets, be needs today, thing that in to fat out not puts truly I where at soybean everybody or was

crude in was robust capacity soybean discount the and -- oil. not to pretreatment waste world, would fats nirvana as today a the be soybean if oil Second,

So a Green tell gallons. Diamond we All billion it's can environment. really fascinating X.XX you is sold

adjustment guys margins do add? fats. and the between We here oil by have to LCM some QX, being in volatility you clearly but driven the waste in are an margins soybean at want spread What

a would back soybean been I just the and say, fats say or so, discount. say, over had months let's markets oil let's a Matt. they've ago, months to, premium think we when waste you did is at -- This we if X see last, the to three at

Now that say, -- has will capacity of, not a But been as in a narrowing, which come is I that waste to as movement believe now continue Randy's bit to think narrow. price there's we let's online. that it reflection the it's gap just point, somebody fat of

would I And add. Yes. just

trying going is the think this predict happen. of to what's I reflective in challenge and to estimate

is the thing time do? what underwater I that time. in quite We're biodiesel think watch margins does the seeing industry for I would now biodiesel first for the some

run in and So we're going don't waste see relative if to fats. they oil operate, soybean weakness other to

There's its oils. operating lot coming fats, UCO how to how real waste those to renewable diesel able use online capacity is new about to fats, and that is animal utilize talk ability and a and and

And ultimately so those those to things to are that are spreads do. the watch going determine what

would address I follow-up, that comments in mentioned for prepared wanted that moderation. to glucose my And the about Great. you active your peptide ask

of And to so, size While that you to give perspective if is impact? intended opportunity? potential alternative of I'm this us the skis, market getting my be the of some an could bit

we we're smiling because big by Well, pharma sued be the this. so careful want get all we're how around going we the in don't answer to here to morning

So product. won't be Bob. just it pharmaceutical say this a a And nutraceutical, I'll be this will product is

consumers. demographic. different safety It the is has to target consumable have -- profile benefits answer as slightly That's best it again, similar different that and goes. a way a does a So product far health But really probably whole as to types of it for it's likely that.

I I about in that believe, will launching this that's May. we Geneva in we you tell at product, be time. think can the here I will Yes, all say

worldwide. in lot got So product we've of a interest this

You into. solution. think applications can into soluble, think. in go that of the is health can go gelatin want a so whatever bars, water it it Remember, you peptides go and to It can

ultimately our mix product did. So neat working were applications acquisition again we is diversify of rationale on there's that underlying that just for the the and or once lots Gelnex here

BMO. Next question Strelzik comes Andrew from from

that Ward my have internal that are quantify the to some on guys into Is the market contribute to efficiencies, much there first dynamics. any of might what not up drivers So that also question then profit does could way on you of kind is closed like, and in then look in 'XX? you incrementally obviously build coming how XXXX? And which that Miropasz that XQ, back related

from an and to is plant Ward up This next a in your on. we stab as a month. expecting in QX where example take call position terms run I need Matt. of I'll put we're let's see be Eastern we -- say exactly And for question, be will that that. that to that us And region now. will is it a rate at full would coming the of

real calls. the talked the And into that of plants. performance reliability in about Darling mean, has And -- separates our, I of effort made believe it, we commitment us many let's out in we've that's previous something operating it the and a investing competitors from and say, the call there.

one point, for from, benefit -- is we that to breakdown the that And example, of we that call tonnage. your it things

And is that availability, between capacity space, in say, of generally get the the quickly. pretty out so well, the and can whole rendering someone volume breaks the market, system kilter minute let's down pretty but speaking, balanced

investing so And on plants. we've a into our made the reliability performance of real effort and

it So -- not to that that plan receive say, that when favorably that we to it. say, that, there receive does from we and priced, because let's volume are we -- extra let's the comes is actually the it comes, actually happens, in benefit and this us and

we take to sheet keep because and we order And the invest not the the break down. plants so balance advantage. that, in real shape these to to for competitive required a tiptop effort us, have that's capital And and is

the are of And that's that. end actually an example. just the of we on So situations benefit receiving like

And so through got organization. all way that our we've the

bit challenge, But for And we advantage. view today's I call. of so to -- would but a that quantify that, that's it's as a -- a say competitive

Andrew, we're Matt mean, -- I it out end of. Carolina million the opportunity. pounds of region. proud January, very, That's South said the in Ward, XX Yes. landfilled of huge look At there as lost I the -- mean, month it at well very that's we of day, the not we

March, that expecting, So the been we're ability the at now the excited up January. locations tonnage of a about a lot do puts there. We're year. of then start to of getting move we've And for on shipped Ward of MCC end April, hopefully, end that right Xst over unable to to

So that's exciting.

closed Miropasz at exceeded deal, three better thought on that. That's diligence we poultry the doing original Investment it's of here did closed kind plants. was redid on the of here, Xst case we than the meaning February. when we

have the year. plant. a for the bone we That's of We got system, out that. noise of Gelnex, full down, Peabody the gelatin old

So balance demand good that And for there. there's things see capital a see sheet, slowed you of there, out lot inventories the the down that We're see happen could that's businesses. can several the if carrying the and can you year of consumer the you world, in read built we our out inventories. working large around

capital. important is Matt driver repayment come for focused big the cash year really getting a side operational the But -- managing And back day, the working where says, efficiency, that's debt in And why the so as it's us maybe next so at inventories we're very end down that's the and it. we confident to on piece. the here. of And is

my talked want level. everything of going I'm going baseline with markets, on I it. that's appreciate on at And I've still time. a know a that's those next kind Got year over to -- this transition to about but I revisit just Historically, to comments. margin high asked And of in is DGD I it. you've and those That's like kind evolve. helpful. I then profitability And we before, SAF, just And know just follow-up Okay. do as you dollar curious feel

I or a but how from like the about not think DGD do the baseline for if feel just guess around to pre-SAF? I any that's the But view, comments that's still structure business? in feasible don't you 'XX way know about your for perspective, think you underlying appropriate margin

Bob. is this Yes,

of mentioned online, question. diesel, to answer think going new I of with it earlier, makes things it happen the that some happen capacity, capacity to I going renewable to biodiesel with comes because difficult what's as nameplate what's that

Green talk we think significant. can is looks to I say that market. competitors a Diamond to about has over its that sustainable what the like relative It's relative in renewable could what diesel, advantage we biodiesel. And

this it's going as that environment. maintain through so margin cycle advantage, to we And

-- demand different think a I in a renewable There's coming diesel environment there's still more an than evolving see new commodity opportunities. the industry. about we what's that is little and what still bit environment mature still on might new it's

cannibalize So comes diesel provide support. will production and that SAF demand in capacity on, renewable more

whether also RIN call general exports more We're the it's, impact it, that on RIN on the cancellations LCFS programs will evolution seeing have programs, SNDs. in and government or just

course So I year. to but the this would is a things course commodity look predict reverse that of what allow difficult market, gallon the lot think of a that in see per to to like margin what you entire normally going mature over than exactly faster really there's

from Adam from Sachs. question Goldman that Samuelson And comes

there's X comments Randy, the in months provide first months providing some context make volatility hesitancy question, outlook. my I the lot outlook just trying I'm guess ago and to earnings in framing that around about we you I in think X.X and on an the did appreciate -- sure a or So ago November. of of

full response is margins. it prices lack seen from the or just caution comes several you've last in -- to that the over gives of months that RD the the you And response decline pause so fat

provide actually understand I'm to just quarter that other make of Just you're kind you do to with earnings And changed. the third refraining we sure and trying commentary what's some did today.

if at the guidance $X.XX, price going and you margins business, is very that stopped range in this fat in fair it's really say, world the really No, November a do $X.XX the Adam. DGD tonnage I incredible a you holds prices momentum a It's the pound with X, look call, -- you X-minute this when generate. exercise. had and very, I and Yes. It's still question, holds are to and just mean simple. back that we what if it's

What's down a is said fat are pound. $X.XX earlier, before, prices there changed now I each XX [indiscernible] out if had million. XX's we

So you could below fat say price that. potentially XXX

So the -- do rate you the to that was math can is [indiscernible] run date.

the to I prices there and now. around oil. that And comments don't is know fat for going for my that's don't I are soybean hesitancy the were crystallize believe right Now go when out to to but react stay it's there, going geared fats, where they're whether demand

or of start -- you DGD If that we or million X them, it thing? to h*** million supposed think it online. of ago what you [ a to whatever plant have it want Chevron, or That's Geismar is call gallons. XXX DGD the XX or the Is Is fat? billion? That's okay, not it, I X X.X or were PXX Is -- of future. REG billion to pounds, X the billion mean, pounds billion? phantom ] year

running When what's going don't two coming on consistently. be very to online? the Montana consistent. Vertex lines they run Not You right but seem those now, still restatement got at down Martinez. seem up in to can't with back sure are

buying soybean You're oil. refined

me sheet. business, now. been you always business mean parts -- you've as I just are on in that that there's lot this the learned around finger said, a long I've enough. out control of to really here we've balance is put this can in right So The thing only moving hard your

can year, investment to and as so where comments And this ready $XXX goes I roll thing down convinced million and and my this grade be debt Brad that's was, be pay again. rock we of are

then SAF margins. And the

lot we a commented, Bob As parties. have of interested

confident complicated. We the of I'm margin so A different SPK, business, done. quarter, things with Jet are a it and in by some deals here selling those we'll first end It's are suspect have blending discussions. I the very They're happening.

gallons. But being $XXX that additional can we've of margins we XXX to generated. transparency to renewable the $XXX time. as million much how know $X said, another diesel. provide cash million million $X at That's are above Don't That's

to he as be shortly. said receivable here Brad BTC, there that. parts there. holiday. We've The out Lots -- didn't there from BTC went delevered a pay on government month said, got going X for to of a as the we're moving the Adam, they huge

the of the think very And day, so I at set we're nicely. up end

it's forward growing from here. going a QX be think to year I of earnings

As everybody couldn't even -- curtailed had people we plants America as but day, I in the where remind January X We or in we end days gas. of January, pretty snow -- X we think, the good North lost, got on operate.

again. So there's as the a hum get starts there lot of noise this was calling towards I we really what to open business that hopefully, parts baseball

anything Bob, to want you add?

renewable the we operate run We we today, do market -- here the what what capacity. a November year, when and the you with think can't I biodiesel its at sit as of factors, And industry's to it, to in. just Yes. diesels control back to lot industry, -- of was ability is can't and ability our -- going we I you control really on looked within we hit Randy. control. When saw go you last

to just lot right it So more going predict makes a to it now what's happen. difficult

and would I to anyone is did the none more what with add Diamond But world that gallons rate billion utilization produced the in that capacity was second is Diesel that anywhere over year, anywhere. last Green X.X than

on improvement cycle the capacity And industry. the have they've so they margin as capitalize operational this in proven to changes,

control. what It's given to of optimistic. going difficult think like to out look exactly are are we're very all predict I So just that margins our these variables

I the for SAF is not policy and Randy of. so there through what Adam, the to people subjective, about on paid being BTC, from dividends, this, the is sell-side monthly. and we One DGD large formal not most with large distributions, obviously receivable turnaround we it's that mentioned and makes of things that like know all, clockwork there that It of a this, not think as measured at We're you the if it have the know that one here. analysts, know look we a the CapEx there's speak for. as call -- and And

So dividend But just calculation, closer train, at we that there much is that's a potential month at and it each point why you I my each of are comment earlier not month. will. kind if to the is that starting want getting we subjective to there's look that as end make the of

The Ben next Baird. comes Kallo question from from

to million math, QX if rate plants, that Is the -- . I But things on farmer's run did I to get I that you from do from and just just this I year -- billion. do just hate full a again. go new I think that it the baseline? plus $X.X $XXX I Randy, and acquisitions say

last bunch at of already mean, things of Yes, that the I'm fat I do And the going were see to things to performance out there right exceed to in is day, if that answer January. a get here. we'll out and over that that. I trades night end I 'XX our we our price there. goal saw a go mean whole the up pound $X.XX

day, mean, up yes, the should pick we end the So I at of momentum there.

Xx the are volatility machine built Gulf remember, around and offset by make. fat model Coast Feed -- buys The more down than segment the is we that reductions the in super volatility

to through February here. earnings improved January. be the work as was have looks fat, They in reflected It pipeline. higher they down, like price worked which in not their our in QX So goes through they'll priced had their

And margins any back Feed may it so then the segment here. deliver widen those that softness offsets out,

else? Bob, anything

breakdown about the made. to would Feed just guess he thing we comments this earlier think segment, I add, one Matt with in I particular, the the alluded that when

keep through well believe maintained, cycle. inflation today gone we a our plants benefiting from just competitive a we're advantage have We we a we advantage because competitive high that because have we've and --

of so and And our the book fixed replacement. lower operate we the cost than value assets that are new with

and And so contracts margins our that seeing wider the time, books had as we network. assets reprice we're over our on in we've

to So benefit out I we the as something XXXX will think that that's look us. XXXX -- and

credit. remind that think in tax crush switch we prices? how you're you it's supply happens just fat if on switch the that to then can supply -- year? or going complicated marketplace? capacity that as impacts we can maybe advantaged But know weigh you what and to you is the just next some Follow-up, new producer us there as overall curtail over quickly And Does on, to how just very I coming

to Bob, want want Matt, take... take you you to do And crush?

Yes.

increase, market not So going say from significant is, capacity crush would on and current a have known I that prices. to weight is of a a would say, lot and price I

as little of So side I these run. still at think and bit not from other demand is side it what's RD that the -- to have plants look able more a come been to some the as we

the Now side. figured basically, these of many rates, will demand on increase will get and their run improve out, that things and we'll

most a already of soybean in heavy So looking think in priced. prices, oil terms -- in I of for that downshift is the

will whereas credit tax Yes. tax credit, imports the producers the This effect tax is the And so that. Bob. per the is. gallon of credit, blenders credit what benefit to access the be Specific that have support, XXXX. producer has unlike CI to in Diamond adjusted that same tax irrespective won't Green of due feedstock blenders a that's take the is The is Diesel biofuels to

calculations your fuel, oil Our show renewable make credit. from if get a to producer's using canola X soybean or a tax then oil that essentially you'll you're

So producer an It lower the that's get it tax Diamond feedstocks utilize will has and credit advantage. that advantage biofuels. store Green's CI imported over can that

The next comes from Ben Bienvenu Stephens. question from

Feed to some excuse relates in -- make last relates made So to I the earlier can you you want it those that might to and this about be time line changes insulation year commodity some changes take in help comments to us the year late Can might through volatility. that to some from it what me, adjustments provide place? that ask all as as of you put think those segment

Yes, specifically, process has clearly segment margin is I'll take under -- essentially, mean, it's the with about Brazil you've fixed Canada, of Each little material different margin one I this. procured U.S., got America XX% in U.S. of sharing our the the North there. Europe, U.S., in In upside. and or of management. of a a raw Feed in a bit a

there's flow so the that fixed us to profitability. but a cash and And share, come ensures prices margin there's when down,

they to able U.S. fat they to rather to prices but are the And need a ton back weigh got up has they'd in a of that's commodity their as Canada, you not again. ton the That's the Europe mid-XXs. as less probably do raw have there, an their to $X,XXX or in -- more commodity to. where $XXX Similar the sense here than fat there recently moved exposure exposure, $X,XXX we've to now math, seen fat, of values margins. kind down, in or but traded $XXXs procurement the in keep move Still material

got teaching We're In value we Brazil, the team Darling go that towards and our in will the same the we've so didn't there. private over ambition add company down That back to culturally has in that a margin procurement to year. slaughterhouses. sense the there there that challenges bought management, the process have

back in then team the get the it's globe that look to great came realize that. down and year we to procurement As Brazil, of we we first had a okay and XXXX, as at to half prices do the challenge, react had around

flows -- of down time through. lag a it the comes answer, that lots really Ben. it end the long-winded I and the of So then reaction know day, At to that's

higher So fourth procurement costs. quarter, lower sales, price

lower we've Now lower procurement and sales cost. got in QX

add? else you Anything We'll Okay. want stick with to that... guys

Maybe Ingredients been thinking look, strong. Really, Very strong really as can as shifting an great. strong it's Food you little about as it's a That's bit back year. the helpful. far gears -- exceptionally and business, a

forward, to in sales expect you business terms us look that kind growth deliver help think ahead? in of ahead. growth dollar CapEx the projects of you and can that CAGR we about As runway What

Yes.

-- in at one the then I there is really, the run And day of quarterly stories of obviously, the Europe business you basically being and and gelatin there. we in get CTH little XX%, have collagen bit being split business of the of fats edible that Suann's still rate end to course, slide greatest and a So that see think deck, the of it of the Food segment. the

at going January was this at Gelnex. in at it's moment, full run made business that we consumer delayed I a little world that As comments year we the a get maybe demand forward, -- improving. good is rate. lighter clearly, the but of we January, the a really look recessionary, Clearly,

around I and we'd this hit X.XX So year. long have term, Brad said, we always as thought

-- I we X.XX were year think right. what all last

So did. we're pretty X% darn close, calling within we that one as

next additional growth asset that We've business the the Epitacio, new of We of trajectory dryer tired peptides the finishing break online shutdown Massachusetts, a launch of believe hydrolyzed XXX and CapEx. fifth up our collagen, over still the three will over in of got in million. now. That's years -- some spray Brazil

of X-year happening presented know of guys lots plan brand. glucose the a So would the factories peptide, to I probably for launched there. very there XX And moderation that that's million spent a that can $XXX limited with to the over be they just the when convert things peptide out plan good peptides money have say to on. capital already just we've that one X of be I what there the getting

from Gabelman Jason from comes Cowen. question next The

of you either XXXX, percentage Proteins gross noise? looks where and wondering it the sales on like the with where the expect Carolina excluding sort you some to for could gross have plant with there It Feed some that ask go in if reimbursement. segment. but Or there was obviously XX% first margin South XXXX? to down then was of I was Valley full in wanted noise I year, the been margin give would in

Randy when that environment XX% really me right? changed. expenses is operate XX% we've help a But of should always procurement XX%, being and whole can segment here. that by reimbursement and formula said year, Brad has the the incurred the driven of somewhere type were between some we any given Clearly, where This is Brad? of during just took pricing lag

Yes.

there, Jason. The other thing

So get a there come a on improvement but segment, that's We and at but you FASA, into little management of that little -- Randy still to that's we the comment can't had is QX, we going has and Proteins bit at that Ward to bit had been Matt's back continuing. lift margin along. number, Valley going definitely in yes, in earlier have

move So there of right to as that be mid-XXs that's at where we kind confidence feel least extreme forward... in range

rationalization That's biodiesel to maybe in indication on the good for Got are have? economics it. production? outside it's are business, see And from that on bottoming now mentioned plants you some you then based seen to looks potentially the you capacity from real-time that reductions whatever bit Great. and if a margins start like any data us would -- harder biodiesel DGD Have biodiesel a be see you underwater. it

Yes.

we on soybean business what oil, it's every refined you're we is And renewable do it's today, I it's oil run if think as whether waste or fats oil seen a what and soybean biodiesel, tag I this soybean I'll and crude fats, industry-wide analysis with team the is biodiesel mean look clearly, Bob. them. clearly, running whether in we're we've an it's negative. and at you're day the as whether diesel, you're

the And you their it they exported. the can out have still it biodiesel run [indiscernible] the And they for at and can through if be through to per of sense their it is with plant. care there. They a refinery. bushel capacity crusher what's dollars runs they run that's They margin biodiesel a in it through. or can integrated about -- they oil make all the of remember, the crush Now in vegetable day, three that which care lot put is the choices. bushel They don't end asset

The that right And comment freestanding now. the about guys ones I'll are let are Bob clearly that. vulnerable

Yes.

say significant a think I first, haven't So I'd yet. we seen reduction

future. a very alluded a period into industry, to, certain margins largely effective I hedging Randy job do the at egg-based think as and they it's for and protecting this

necessarily turn to when see So you it's negative, down right off don't something go that away, it but expect the margins they road.

differently. they're more going integrated see of to going look though, They're As make a to margin stand-alone, and also margin. XX% look Randy the vulnerable little fully at said, We going look about decisions. the companies, to is crushers to -- and the it absolute a they're biodiesel at just an industry, are integrated

to due and the The market significant And supply Brazil lot on large well. I crusher margins is seeing a amount of Argentina. say soybean as a other thing harvest would come we're in a have down

And environment was margin crush over so four isn't anything like last the the years. today it

plays it's industry, see out as we'll and standpoint it biodiesel -- challenges whole that just we that a from got really go margin more so all And it's forward. than how did,

comes next question from The Jefferies. from Dushyant Ailani

I market that but supposed guys been LCFS wanted out. I just doing are pushed to that some just what meeting to think you I talk just was the wanted -- to I the about hearing it's on know, guys, quickly end? happen, you don't

see something in our that we the Matt. fundamentally, the of is try terms This is is is and what know of all, what supportive mean, -- contacts we news that come, for of in LCFS very the that, -- to read I first lot from to we I'll a industry.

-- how Now out is be California plays this remains seen. what in still to

came we out know last year. we Obviously,

changes additional what to be seen. that are Now from forthcoming remain

bit hard believe optimistic, to a are we So to we print still in thing, is good is pin the changes that and is other what remain but a -- come what down.

SAF. $X, you to above roughly going diesel. And it. Got that just then $X Randy, mentioned know I renewable

converting to RD you capacity online Just XXXX want think to SAF about is understand SAF. need more to to would into see maybe maybe once going what

the Dushyant asking FID what's on -- a second expanding decision SAF. is for on I think gauging

right that's that question phases that So foot now. are on right working engineering asking, you're now. we, We in as a have do the

One X looking against contracts to, as commercial plant. the earlier, are the of things the mentioned is that Randy we SAF

that's gallons it, market. that that of of high of going to degree to come As the million a and concept proof that's up call you in have But ARD XXX a want confidence. know, really we see,

it's fruition, if news it we is larger the absolutely don't in and if The is be that as something SAF would larger next well, will good come space. a little on to something our me a coming scale. that radar investment It'll it to some in surprise be quarters but X, in not have bit

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

Darling hit thinking you table? you are on something grade the a about is potential dividend need to how XXXX, Randy, Or from that that's investment do in first?

make times commodity a point Yes. the the sure get focus Clearly, down de-risked to discussion clearly, is that the in it's our this year I on business room. cycles. to debt at everybody we've all mean, Board thinks

we've than I very this As the said, in past. different a had is business

we still we've got SAF the DGD up outflows cash then massive on finish -- and at project. a to got It's Remember, that we've debt generator.

paying year, other year. of we I notes So focused we'll what this share or the priced debt remember, end with people end just favorably Board the to some day, I out be the what just, with And there. shared is the bonds on down of the at and have really

due comes it X in is note later, that's year ] is X The and comes 'XX -- and [ what, low X now and one that ] something X/X X/X first that's to [ April the, of U.S. and and European in the then on or whatever another X bond. the

the to do kinds buybacks. we paid So opportunistic set done what have going flexibility of cash. to off, we to in and do. and build want have motion there. We're in we all any Once anything do to Clearly, we're cash rush not we revolvers

that come market will we'll start then a the We gives -- we're from of back want executive that that to expects, us our we to DGD, chance compensation our leverage as and dividend buy getting some in we see it programs, ratios to dilution our do the and things.

was we mean, for here I ago, XX paid about $XXX clearly, million. Miropasz that days

remember are just these big is the end in When of day, what by trying at have the big a valleys. business, this. walk followed super deep we're so the cycles, say through like businesses mountains global And you to I'd run debt,

the adjustments day, so need. we at making end that, out And we're the navigating of of the

day, 'XX, you're generating when we'll we how balance plus just becomes look on going to and discussion sudden, too amazing out get don't then debt. got SAF of cash on any and pretty trap the you of then reality you're all going a much and the the the it's to million there, absolute projects much an out you you And or cash dividend sheet. have 'XX when other at that's the end of when at $XXX But go

And then reimbursement. Sounds Valley just the regarding good.

want just Could I in you like it don't So sounds to why? QX. ask quantify benefit that

this Matthew, is Brad. Yes.

So there's a agreement confidentiality there.

certain cost booked back resolved with outstanding not which a say I'll costs under That arrangement, prior we cost we've some to QX. it's there. there arrangement QX, items a expense QX, in post-close just escrow goes so the confidentiality but seller to was in So and

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

All right. today. Thanks, everybody, for all questions the

have presenting always, Conference, be safe. off Have additional We're a stay please to As reach day. if tomorrow out Suann, there. Scotiabank's questions, great you to

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

now disconnect. may You