Darling Ingredients (DAR) 24 Oct 242024 Q3 Earnings call transcript

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

for Darling and thank for you Thank Third joining Quarter the Ingredients XXXX joining you -- Earnings Call.

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

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

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

hand Now to over the I'll call Randy.

thanks and everyone, morning, joining Good Suann. us. for Thanks,

widening from CapEx $XXX we base reducing dividends but and margins, Diesel, and these Darling performed Despite navigate headwinds, pricing reduce global ingredient about our remaining During asset on million. ingredients our Ingredients demand generated continue and the cash market. challenging core third adequate was global by and renewable difficult sluggish quarter, to us managing focus markets SG&A. continued sequentially Diamond our flat diesel with and performance a Green allowing to Operationally, debt well

challenging reflection was diesel combined $XXX.X renewable pricing our of market. a and adjusted a quarter, the steady finished For product sequentially primarily million, EBITDA

clearly run low in feedstocks reflecting of much by recovering, Turning material anticipated, Feed remained RD feed, other producers slower rebound but the some ramping the is to prices their growth strong, and primarily on feedstocks. segment. slowly Ingredients carbon Fat units than are impact imported Brazil. experiencing to waste volumes the the driven Raw challenges are pretreatment fat

As typically degradation margins. our to a and third see saw increase dedication in gross is percentage I'm naturally operations hard sequentially. attributed summertime on programs. report team the you many very slight working work we quarter and slight in that control operations, pleased a feed we our of 'XX, is know, management spread margin of gross on the ultimately, to cost challenging and This

saw attributed and to Food despocking. in lower We were customer Now additions demand volumes, to capacity turning which segment. Brazil the softer new China, continued in

show to trade despite note, we positive declining America strong the a next global sales supply-side Vegas. in On be West However, Las the margins North market. week, continue a will in we price hold

a be average conducted Darling showcasing solution glucose collagen [indiscernible] significant an glucose XX%. Ingredients, a by We spikes [indiscernible], moderation by post-meal the will blood targeting and in natural clinical of trial lower

are revolutionary. For of Darling, unlocked the solutions wave we potentially next collagen-based that have

lack of and the from Now dividend in the for venture and Despite delay cash DGD RINs clarity the $XXX.X joint DGD, given received at third in LCFS. our distribution turning margins segment. regulatory remain Fuel challenged the we margins to quarter. million the markets softer

unit fuel aviation sustainable and commissioning. Our process is complete in the mechanically of

now build month. to We announced book, this earlier third strong ] a have continue [ are sales contract our and I

growth tax the and and financials at low the [ 'XX. our discuss the and to we my us landscape. hand clarity now Brad come we on to like call optimistic margins regulatory over the stronger demand feedstocks. With standard program some way XXz We take rest ] for back outlook low credit of improved soon. will remain I'd with for and the about federal California XXXX, carbon very as 'XX the known very that, fuel paving have on and for For believe thoughts along through DGD carbon then the to I'll greater

equity quarter totaled quarter $XXX income million as $XX.X gains. XXXX. quarter $X.X or the million net million same a period and Total Net casualty well the to income the XXXX in third per third of the share share $X.XX period net as from same Randy. compared selling, the the Okay, diluted XXXX, general increase net offset XXXX for of expenses for sales or the period lower per diluted the by in for XXXX. Other decline as third $X.XX share third earnings billion Diamond the an margin decreased as interest of in due in for quarter partially quarter for from were Diesel $XX.X as million million and $X.X primarily which XXXX XXXX decreased decline in billion of due gross XXXX, the XXXX, income same $XXX.X third $XX to Green million property XXXX to $XXX.X for expenses our in as administrative and to the $X.X million income compared of quarter compared compared in quarter compared for to third a third the quarter third XXXX. decline $XX.X to expense compared to to to a in Operating million were primarily

primarily or months to the of for or compared billion were $X.X decline XXXX. Operating margin was sales The compared the to 'XX. equity our first decrease first Net XXXX $XXX.X Diamond net the as first X $X.X the compared first as the sales period for compared of of XXXX, for same in months billion and the X share million $X.XX due Diesel the income net $XXX.X first a decline Green in a income same X net result $XXX.X months and X $XXX.X an to For million earnings of million expense of million of the diluted gains. months decreased million a as primarily and per X decline in $XXX.X was to net $XX.X the of of interest for million to period months increase in income gross to million $XXX.X from to in for in 'XX per in XXXX. diluted the share $XXX million XXXX. compared Other $X.XX foreign currency X expenses income in period increased XXXX share same for months the first

tax far primarily As first rate, as ended reported September XX, taxes to for the of income company benefit negative the a X the significant million XXXX, tax and months tax an biofuel incentives. due $XX.X

of almost as third in breakeven paid the taxes company percentage the tax ended September quarter. effective pretax is the months income million pretax X The earnings the a Given for of not XXXX. meaningful earnings, rate $XX.X

of months tax reported XX, and tax X.X%. income of excluding incentives company biofuel September the income $XX.X X for XX.X% rate company's as ended and taxes items, effective an benefit year-to-date the tax months million XXXX, the discrete negative the The rate, end For company the third ended effective X of has an made tax XXXX. quarter. of September of is XX, million also $XX.X the The

billion are of quarter, The $XXX $X.XXX the XXXX, billion X% company's to cash negative approximately we total outstanding projecting third as remainder September $XX down million million of paid year. In tax an rate the $X.XXX approximately XXXX. in compared for the at effective we debt. For 'XX, and of was debt year-end XX, of taxes

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

you, As the Randy mentioned earlier, Randy. quarter. With dividends back that, in we Green Diesel cash to million during $XXX.X received from Diamond

Brad. Thanks,

optimistic increasingly XXXX are tailwinds commence about We very will and soon. believe

necessary the Our margins. increased business we've to Ingredients Specialty is positioned made improvements and well deliver

addition, we world. With demonstrate The expect in is aviation still the ability range our EBITDA to improving, most billion clarity. of XXXX will $X.XXX performing the waiting renewable wanted and year history. lagging behind DGD where once diesel favor prices would again producer to not on of performance in business adjusted but and our $X.XX In fourth to our and waste improve but to year improve the still to This be up but combined margins our and be, XXX-year margins regulatory transition to will nicely, be most best sustainable prices quarters PTC modestly we Darling, definitely at X us, core largest, the to fiscal reliable, fat fat cost-efficient suggest we in the are R&D billion, are globally.

Ingredients businesses. tailwinds that As tremendous propel we building earnings Darling XXXX, record has ingredients for the potential and to to us both our levels forward look had back into specialty renewable

launch Our of returned federally the as new innovations positioned nicely growth producer a more which incentives conditions we and world. use the and and largest now of is decarbonization standpoint, waste market favorable. business in the greatly favor fats state Newell's From become global fuel collagen oil Darling is for

to will and continue SAF program is nicely business. that to oils producers be diesel to SAF need economical of globally. sourced federal premier specialty ultimately capable benefit and renewable In ingredients our the both will positioned fats fact, renewable and of fats and producer which switch improvements Diesel as waste utilizing waste it benefit and Green diesel to is profitable, want from to state most oils, Diamond the

most we We we the and have can successful largest our producer the under production now say in XX-plus years are world. belt of and successful

of Diesel and gallons stay quick And Even or XXX to diesel. see billion RINs of somewhat prices of So XXXX. renewable earning value platform excess back of relatively gallons perspective, early our and assuming SAF a let's now approximately billion assume next take $X.X look an unchanged, at a year. from let's power are the LCFS or worst-case and look unchanged in kind combined X I steady flat. and for be of million Green produces Diamond

increase in what and given move LCFS waste will believe we fat higher. market, also see prices and However, will the we RINs

the [indiscernible] waste It's from I'm in precisely Darling and waste RINs EBITDA and next many markets for oil we delevering. predict up bullish on have Clean and positive how LCFS favoring the or for the shape over waste providing $X.XX blenders Fuels transition fats the the Darling will impossible means said, cash the price But for tax million during annually credit complex year. is producer ways As $XX fat me credit for year. move very Darling. about be additional to the from clearly, in fats will to to

let's our go of that, this in believe and all I tailwinds the in pushing have its XXXX, number into We us for could to a highest Q&A. history. With EBITDA company result

[Operator Instructions].

Palmer question comes of Citi. Tom first from Our

for maybe implied of meaningful color in quarter. versus starting fourth the outlook think Thanks what on first but imply does we the it on about we saw quarter, as third out, touch could pretty the XXXX, a we kind the just improvement

just as of we're like based seem on annual the getting at maybe could quarter inflection run So touch billion the in we guidance. see to you it implied fourth close on items driving $X.X would the Because that the look we some that rate quarter? fourth that

Yes, and around in go Tom, world quarter. there's into Essentially, the operational in we that QX. assumptions Randy. the fourth quality. the as with we That's wastewater script, this traditionally, several challenges is said have

So pickup see you always see some there. improvement any fat really didn't price modestly in QX. natural We

North fats in products than higher selling collagen both are South QX. America now had We did and bumpy at America in The a in QX. business a and finished we pretty level

doesn't we demand. anybody was Some pretty timing have improvement of of And of for for ultimately, to there ingredient for ranges from recession and world, then or seeing SAF little see in a this a Diesel still of ultimately, Diamond U.S. there. We're number -- It out in food Green Europe we've time. to to at get in it know any shipments there shipments there China bit wants QX in to around any of the that the Brazil, a it assumption fuel good here. got but

I run support are which if there, -- once and So could rate again will into hopefully, number will, we the believe XXXX. that that successful we that

that competitive to of quickly I transitory XQ sounded the up of a terms little some as maybe bit. it the on and some issues Food we environment saw like has wanted then segment. were in more follow just the changed

offset have seen full we the what competitive of magnitude online. some rolling the the the you And do of environment? year, to new Do does I as we've coming kind coming guess that think products of extent So the out. capacity through you think maybe

expectation? so And be at here least to the from stable better would

is This Tom. Thanks, Yes. Bob.

margins think market, to than is mean seeing had expectation you're they just like said, data into see I little on margins. been. gelatin pressure much as we that a you our a And that get will go that is And But right. we traction. of capacity come product stabilizing more today sold we're GC next the I the more that's kind bit at XXXX. product higher

we that the to we correct end see trend year. business expect So strong think XXXX and that stable in I that's results as in a

a one been get that do look the place share there, a And we've power with somewhat that micro business of the is do main XXX,XXX competitive year raw different that our in specialty ultimately, added a I'll so Grass we And at public. They're customer, customer. build from or successful earnings for disadvantages you advantages the couple you ultimately, segment of in world, today. Ultimately, around is Fed or -- you bovine globally. how Green the we buy looking of competition. numbers if we no how to hide. plant, it than the And the Diamond ultimately, and The Diesel Brazil you material Darling, and range we're little of when in bovine market bit have a on Yes, collagen to and factories. and hide XX,XXX of transparency attracted takes the sense happened volume. what's XX,XXX It's a that's a customers ton XXX,XXX from tons have

that's -- on it's business for commodity spread the also so and a But ultimately business the It the business. decline ultimately, a in of in then gelatin is driver the specialty collagen sales it And very ingredient. value. us management

we've hold. The pretty next for that margins year, got over able week, number on outlook X next will of [indiscernible], or a what X are out there the then been to it ramps mean, have to being And There coming quickly the talked XXXX launch about how customers our exciting much is So available. years, us. we now. we've products and that other X is up. it behind be of course maintained I obviously, years. X for

So kind at when that and great business, business is we everybody once mind a again you fat. and see business, but ultimately, look also that in else feed it's and from in really remember, we're -- ourselves differentiating keep that of business, XX% ourselves of

to so ultimately, we get translates that being back any top the if ultimately of on business that And price fat improvement, specialty ingredient generated. into

looks that here. 'XX pretty So strong for

question from of next comes Cheng Paul Scotiabank. Our

Brad. also great some CapEx and this that the in the much the into been And fourth how Brad, guys Maybe that any Could the first left XXXX give on idea idea us outlook? you quarter XXXX? cost also is success how you for reduction. have that That's question.

right, the about Okay. XXXX capital If question I outlook. heard was expenditure first

reduction. a also And

CapEx to this The million be probably probably outlook closer more Okay. what to say. back would I $XXX we year, projected the million would $XXX range,

think on to lower? that maybe I year, still the ballpark for current in track the $XXX million be or we're of

our Yes. spent one this Through Randy. lowest probably ever. is rent million. we $XXX Paul, QX, of That's rates

around It's something we world. see the at working managing of out. inventories. million. the look business break you we're of through just part business. the our how capital and kind around can reductions improvement improved Cost are You how $XXX run culture we And our don't that

million say And that with really fleet of I'd for maintenance, the kind go use the offices So I tend in stuff taking impacts quiet America, some there. always that forward number we've out organization been as be that in it many will here. North year, successful ultimately, lives. But areas. here about in next very be environmental we in growth no simplifying and side our to people's closing because the some $XXX

on other are going end? destocking food additional your mean think seeing And is whether you for around the that's be did destocking. stream? when other that you you're year can And on you do a for supposed on the when you an still mentioned supply going what is words, that that coming some customer In you -- and been Do expect the business, than customers, coming or that you've lower seeing I new that get? to to the ingredient that to on because the increase talk mall much how come to world facility you stream, literally destocking. on one [indiscernible]

is This Paul. Thanks, Bob. Yes.

had quarter of pursuing to aggressively expected. that been longer ] it see believe margins will this I to earn contracts us we're environment allowed over have long-term good broadly, take these we market destocking we're has contracts things that this The competition. that and the Rousselot [ than to think that mean, the by than is -- be the to going for cycle. higher with place destocking or when restocking the done future, time have we've in we do typically I that And the But despite in continue is our inventories. so. the thing renegotiate is over next

concerned about not that. too overall, we're So

increase? supply about the on How

Sorry, say again? that

How about increase? the supply capacity new increase, the

Yes.

So new capacity coming on.

said, in a impact can capacity that margins. pretty about The have increase grow pace. to fast at the a business is collagen ton a Randy XX,XXX continues on thing As short-term market nice

short So supply like that, what market can over additional expecting we several of over a time, the period here and months. the relatively we're absorb an next see to that's increase into

Ailani next Jefferies. question Dushyant comes The from of

real book? just some have what besides on guys if and One you And share sales announced you do know any? contracted have some maybe have you you orders Could contracted spot, much on announced? could between share a far how you quick. your SAF, target you split has color thus been maybe that I

is Matt. This

your understood I question. think I

And we're has would about I been in budget. excited And our so early in under where phase project right plant actually and We're mechanically SAF now as that, that. Randy are mentioned, we the is say complete. now. very that commissioning

announced there that some a So say the an few contracts with for of not contracts as few get just competitive have last reasons we've -- example. of made. made would that and the I weeks announcements we the over all

have discussions different And so of lots going on. we

future make and about product our contracts ability these you completed as in are contracts, I'm contract there X of already And We deliveries. quite years and to know. tenure. to some A X our lot have optimistic

And now again, to so see on spot product. sales the -- volume, really not material it's but make on go we'll develops. how intention time confident in we're to necessarily But our ability our right as

have targets some just like constructive you painted it, debt guys all your Maybe then kind or in any just forward And you especially have XXXX guys you have Awesome. to XXXX. have that thoughts coming follow-up you talk picture a early if that there? going a it's the in, do as your about on think how debt targets, with you about maturities too but for feedback constructive of

Brad. is this Dushyant,

So a for, where here projecting in we to bit on -- year, now, be that to just on at are right next around a back below year-end half above always the dividends Xx. touch anticipate we ballpark. definitely being degrees be the of Obviously, are depends year

get that The be momentum So down. beyond it really definitely in will 'XX.

I'll being equal, generally 'XX, be lower much all X. say, things So we'd just than

And Yes. at X.Xx. is target ultimately, the unchanged

the and think while fundamental on little for very and how that us itself in [indiscernible] calculated. waterfall I change the clarity people in cash waiting and credit that from is That of still here, we ratio the gets which that creates the a the for mother cash we're understand generate IRS rather to waiting market distribution DGD. allows thing believe into now here out of a or have the than bit to how comes ship coming, debt much

start the to the provide of a position says, term and opportunities. as then And it's to will it both very long capital us. positive by 'XX us what evaluating the again a back outlook return puts once year, to So to half in really shareholders the structure for here. Brad

Heather of Research. from Our next Jones comes question Jones Heather

soon. on Brandy, you have expect you to visibility mentioned that XXX

any just expectation And and be that have talked I've having some people very year. on of to there conferences through visibility lately of this to, the a low seems gone

just with what could confidence was is that I wondering share So if get us underpinning your we'll you soon. that

will some But over say, guidance to get this obviously. to Matt. we're is of Look, that But and I it we side. waiting our with let's where the And spill We that that disregard hope is but lot talking over same -- going going insight. provisional you're lot hear input of then talking it 'XX a we've something discussions a certainly or -- do this we that And we the and chat the Heather, is [indiscernible] would on the of we that clarity something it's believe have say is imminent. got that. remain we're optimistic about. hear on into guidance for next it, anxiously don't more that I about that coming you're would weeks, same,

are come you when spillover the like expecting say 'XX, And in to visibility stages? into you

Potentially.

happen next but won't at next part it proper discussions sand, at don't not the don't look here, that we look line be quarters but timing it. doesn't happen. imminent. we'll I be at cash of able day, the retro it to it we're all credit at at Heather, be mean little year. Potentially, bit really the the that are of I going is it, and as our that with mean when or look mean, a year, for to look having of the we we of that we in generation it it's end A people market

happening. an to So that's any it, conservative taking but that don't gets -- just we're different the taking opinion I Bob, have approach field see that mid-XX. do approach down kicked not you a cane here? the to we're

No, that. I with agree

my then Green. question second was Diamond And Okay. on

the what in and up. margins. cetera. margins improvement your feedstock, et QX that a looking be from not kind So implied QX, in of There seems But has at step to I going significant to seeing I'm been live your

you help just was such something in get we're could to going affected Green. understand feedstocks big a by in that? high-priced why like wondering not given those that us numbers, step-up you're in that had Just just embedding I So locked QX fast you was or if wondering, Diamond any it

we've so had what this with saw seen uncertainty relative lot quarter movement of of we market. we've as there's -- is X guess a amount Yes. I a in through what yes, all inputs of -- the

sit through we're up renewable quarter, shaping CI that we margin as is improvement into for score going is the companies that XXXX, really we XXXX, really for positive fourth for can the today, feedstock. here diesel the quarter, XXXX. as to quarter And that are important to through couple low here. As see there's of go outlook utilize are the positioning companies [indiscernible] And a we we're realities going be go

If at you gallons X shaping we're supply, renewable XXXX about billion gallons diesel, ending and gallons X.X have look to up billion imports. produced biodiesel of of billion of X

you of So that's billion a positive X.X [Audio operating like supply. well, [indiscernible] order look at be Gap] and XXXX, satisfy mandates need margin at we And need gallons export when mandates. going just to to the satisfy we're a diesel demand, to in

We're so XXXX, that as provide should really to obviously to prior expecting lot support. the year. outcomes from end a LCFS the And get positive of of we

John I'm Manav question comes from The from of UBS. -- sorry, next Gupta

the or are meeting. looking it we rebounding, way the to rebounding. prices they of the production X down. are RIN which RIN as LCS the at biodiesel seems So are But rebounding, shut low-quality already renewable prices, that be started is because November diesel also some could has

seeing So BDRD in of wanted production if lower-quality down we to I that. XXXX. continue the to PTC think And trend this are you from to go that accelerates, might some just once do BTC nonprofitable you shut understand

was of world. seeing number investments I here clearly, start Neste's the ticking. mean and offline cutoff ] or with the So -- clock from the to new allude question We're to only diesel having renewable gallon the right be I right one, to tag that's some in trying think the team Manav. very midst Neste it to, well Heather's is you're sold construction watching now. seeing the the physical any [ mean here. is capacity transition the the to to then their we're challenges, and world plants. and tight is starting very, demand there we'll been of a plants And future what's make Bob of When to what around that's now whether BP, now. market in hit trying to not this is kind California question, operating saw you Clearly, clearly Shell, BTC is of but change you reported reevaluate of now shuttering is this now. And time blended of

ultimately, slow coming what's as so And starting these in. is are happening down imports can you see to

there. although imports. seeing that with liquidity the or you're clarity for improve But I I week that. And next see number so and to of year. limited RINs. You're then in the within they're obligated LCFS half. Bob bit The here of X slow you June online, probably year a to there, there this starting will It will -- really XXX little the think a clearly, waiting gallons and some million just having now billion to parties yes, through gallons of down it next the on thing Then back in was increase RVO offline be got they're then add right Geismar the also. alluded

so are got be One is to you're to of things going that in profitable learn this if fats. tailwinds a waste to to run you've couple you get And Darling. business,

feedstocks changes taking into back imports also industry of European themselves. feedstocks result has processing it. a so and China and the imported the have country. And That's far, then now slowed their of

in Brazil. We So feedstock the a of up out of a world. lot a movement The there's our the is premium lot for bringing operations U.S. of Brazil were biofuels domestic now in in to market

here Bob, do add make look So stage to here? the different that that something me there's for want to pieces are around smarter happening setting 'XX. you world are lots of the

of for somewhere a I mean, of neighborhood take you just today, I kind Look, in if margins spot Yes. biodiesel the of are think snapshot $X.XX gallon. a

that's out negative a $X.XX. so of blenders that, tax And credit you if take

in mandate order I to earlier, satisfy biodiesel As to the produced said needs be in XXXX.

current a around So eligible we need or made margin. that PTC biodiesel for PTC. it the biodiesel towards from indications soy, to wouldn't be positive And as migrate

pretty improvement supply. enough a So margins. need in significant have won't we to we see Otherwise,

to improve. towards so your unless as yes, the see idling expect or and we margins get answer the question, until plants we And of Manav, of end I to think year,

as is one go pile in would SAF RD we I of will on gallons our be Manav, just available that's to the that production, market. say production, thing not SAF on, mind to keep one-for-one into

here follow-up margins that quick My segment range. XX% Perfect. to go XX% is, the could Feed historically, in

around trending that XX%. You're

margin as XXXX enhancement they the opportunities So any in Feed relate to segment.

material into, I Shore improving South into the fat North our XXXX. driven procurement improving get you Clearly, XX% our margin say, Yes. on strategies XX% in still you to we're And what we're operations procurement to want we're range. for that prices, improving improvements on should if America. through our start then America. translate mean, uplift clearly, in also to That raw focused on... I'd strategies on add that Eastern put any back ultimately nonprice And Anything would in

you management, Randy, at the prices it's spread of operations also plant. like reliability it's it's It's and say, and

question of is John Royall from next JPMorgan. Our

So hoping 'XX versus baked what's the And update could contraction running into expectations terms us I staff at you SAF? then around gallon in on your profitability your uplift for $X.X per soft the billion from was guide RD DGD. from of

put look something economics change. to a into say margin -- our the Yes. not say I our the margins we're project that we just would but openly within had discussing, that's I that and that and for exceed that I standpoint don't SAF. There's pricing from project, would do

imports Okay. was a thinking on you relative in could expectations. the And pricing your little bit discussed to that a are bit fat dig then I dragging you on

impact. that do a And Just of is Or transitory expect that more any more you color to continue? there?

or fat both? or fuel of Imports

I comment your fats I'm me but believe correct wrong. if on the in opener, was

Okay.

decrease XXXX due fat imports volume waste so actually because of to eligible expect in biofuel, had fat equivalent. -- So won't oils of tax credit, to impact less on biofuel going significantly North we and on a be producer imports have America a fats prices than those and in imports just be for Imports so of the to competitive. bigger they're

have So that should a positive impact.

As related, to oil from as far products supply that nothing prevent we and and be come of really used imports to market. animal demand and fats, but will really believe continuing the going there's those cooking it's price to

this thing for up. Same as world those changing competitive within know U.S. today. in long ever Yes. XXXX, high lower market demand they but now, in seeing been oil is right oil countries. room in of at since biomandates we're we And now Palm look a a us move in the ultimately, for production, their as It's you several export, world, Brazil soybean strong when the time has to now APAC are been mandate

globe's we're exacerbated fats what world which supplied moving significant. The have, is PTC of accelerated advantage and the globally. The that's So is waste by be only the demand right now. XX% is seeing. renewable by veg fuels will oils

point run full waste if being the the will capability have you fats. So is you

the try not. guys of seeing we're And so the while on operate one Coast West waste one is other to seeing far, we're fats some --

So of happening there's some changes right in here. us front

The next BMO. Strelzik question comes of from Andrew

or around Just out? stab take clarify shake how you implied that going that's does tax first just guess the And a it to XXXX. like run quarter? another your billion that really that's $X.X wanted sound And on and doesn't uplift? since rate framework articulated there that include comments at one, it I to I the credits assumption it's fourth for the SAF for is an

Andrew, Yes. early we're December in billion has we here. season bit crystal fog That's in right in November this $X.X little and going momentum threw ball a pretty Clearly, kind think we with out of out it some now. the there. of the of good to the move reason the

it's or margin and We're and deleveraging cash we SAF much translates And so 'XX, and feedstock pricing whether telling a you generation just see. for environment improved improvement, that through, it's in to that year see yet exist. opportunities that -- whether it's how next other that

it. Got

you've rate That's Okay. of little But things one year. my that struggle of you've kind we question, of And with next got by then is tailwind the very improved about moderating. margins, Certainly, SAF a having the other keep the RD paper relative bit. margins talked math, kind capture for our clear. which, to

increase the a kind of side as DGD those asking paper or in environment, on the And my I maybe ability that market guess forward? guess or limiting into is, so what capture the is capture base recent that we margins something is is ability maybe rate is on math flip there but wrong, go there favorable to current kind I the more going I'm the environment of to margins

back, got it LCM, academic And it. non-LCM we a understand Mean QX look question every we the paper track around And that. averaged it's I when and day. about an I XX% And gallon without margin approximately. a of for $X.XX

And it, them back to and the some pretty daily in back big and valleys vessel bill some days. barge, the contracts those there. call the ship, up days, margin you X some you the of so of the pipeline are of X shipment the if look at look there when down, railcar, them look way of to ultimately, date the want And work lading is it's whatever

so it's a timing And issue. always

it So to is to get trying ratably match impossible.

don't So Matt, Bob, I you know, guys...

X to have and average, plants we just as -- purchase I that as well would sales would constant on size the say, side. an a side and to X the it's long. say on months say fair the and And scale, that book considering I their those

terms the the what as so of by necessarily And achieve. margins tick don't in actually change we

Blair comes Our Matthew Holt. next Pickering, Tudor, question from of

you everyone. a bit the Could July. exports in for weak and you, Would margins the market rebounded versus up expect RD improvement Columbia to morning, in pretty quarter? fourth the good source the RD that you Thank after and really European has pricing numbers October exports? quarter talk little LCFS be RD in here, moving are of a some British about third

Matt, Matt here.

approach our is It economics. where basically make determines sales. So our we best

an export on strategic beautiful seen Gulf one some the its And about improvement that's DGD have the in we so locations right, things and markets. And you're of of the Coast.

effectively. also we can cost export cost import very effectively, So only but very not

opportunity export, if have going what better in those constantly a And to and markets. we're we're to we do. So that's

feedstock know X/X actually points soybean slate any X/X it side good. there X/X cheap prices. quarter oil, Sounds then the cooking oil, where on was There is was your pretty certain during quarter? due like soybean oil the were looked in corn RD attractive used typically to oil third from R&D I fats, And feedstock the switching

or So unusual atypical third there any was the quarter? feedstock movements for in DGD

would Not not I [indiscernible], And there in the of That's but -- the other X/X, out the combination nothing not But mix. that was ordinary. ordinary of those out say breakout. true of product X/X, it's yes. exactly that the exactly products. There's -- X/X,

Yes.

heavier We than based and else the locations. animal eco are way anything at

are world CI driven for it's then available different that different feedstocks CIs we geographies customer-driven, in ship the it's and and Now to.

So always what a mass there, balance importantly on that's most of quality, drives producing what it. availability, both on and we're

next comes Our of Todd Ryan Energy. Simmons question from

million the right on on quarter, business a running a run the business. particular, base now in base around In the at feed side business in guide follow-up the I of third And know improvement. with Maybe $XXX the rate XQ year the to and seem EBITDA. about annual $X as of XXXX you've of that that kind suggest a talked business. kind typically billion certainly

do that improvement sensitivities, And to based I fat much how -- the to $X.XX XQ number? maybe I level, mean, billion to assuming $X.XX are So get baked improvement you -- another probably your there's $X get back you on are mean, in pricing. to in to

on those what than it that a because seems to the can right what levels you screen confidence on more you quarter-to-date seen gives have little getting So of kind now. we see

pricing here. or the of South happening. prices to America pound really, the oil is a seeing averaging in $X.XX strong factories we those remain towards palm major the are and $X,XXX for world. us said, a nearly improvement as versus year. improvements first North operational improvements that we're Yes. around at happening $X.XX moving many our are of -- that's now feedstock ton half around world, Volumes America a I'm And the in $X.XX

-- how here the move just mind there lagging we'll some slow it out that's Ryan. $XX the prices the was the in QX improving, driver million as main adjustment. business, end. Keep it, see in but And that in year feedstock at a prior then is I we through forward, improvement there as that So call food and flows

in $XXX too. at operationally at The So reported thinking, our that's $XXX was QX million really really million.

go So back seem those us mid-X out as reach. getting of forward, level to doesn't we for numbers

the you as your thoughts do of SAF maybe at a for you into supply/demand you then into things? thoughts follow-up kind maybe expect that destination level versus the of the European terms -- figure any XXXX margin and as look market And at relative how a Is product high about to potentially on European in demand think on market higher -- that market? domestic What a export into like side. looking

to feedstock. That in was history to the [ moved whether are X America, of that's But X now and of probably problems, to my fat rendering up things. our at the headed as of because great career guys renewables that and best changing kind team a fat so the plants. don't been right Geismar And it's saw around within deal that's XXXX, waiting They've That's going the I down then lot the have, the ability. have it then was I they've those during look it that. stay there, Coast business of improves one. underperformance What's result I like up change there. It's should mean, are to the the Europe, happen. a fats happening and you America [indiscernible] is it operating should of of? thinking as that's the our as boundaries the slowly here wake I And first U.S., the this whether we And to what's run of we'll morning, fats, that nearly time ] in premium first we're but European animal think margins we we South U.S. have off, mastered That on now, I'd and we're continues clearly, our and that mandates European the the the on long that's still R&D sector that a South waste big of West doesn't or have that's result for or a down mean their consistently now, in know whether the even in changing when although the biodiesel. Neste being continent. When feels U.S. cat with a destination whether fats absorbed

capability. the you feedstock have day, the should of So the change situation really, if at here end the

spot the here, continent us a market or the it's a opportunities for lot and said, outbound it. is as creating the now. Matt side, product in On price highest or it's clearly, fine Neste right of California sell whether Canada

in here. the the us anything that? Guys, to you courage want So that's QX add to given

I -- around the demand supplier in been all and what into with overall the demand in demand for imported we United XXXX relative -- significant The of product on of increase is happening would we're diesel natural world. because just see say supply We what's renewable increase seeing a in that's the States. a that States that demand. basis is United relative

in seeing well opportunities, next as of Diesel Green to So we're positioned opportunities, attractive the is Diamond are those take the but really market global Matt in a said, United advantage if year. there States

Our next question comes Baird. Ben of from Kallo

possibility Could of think a then next any you on run I even shuttering talk question. year capacity. have kind dynamics And you Just just a at would follow-up the that of like people marketplace? loss about in

anticipate extension of slightly of see running percentages in negative large capacity certainly there to theoretically margin. crush crush margins. it's significant if a biodiesel negative -- slightly business at exist could But dynamics We negative. margins those mean [indiscernible] at wide, and an run crush I could if a they are don't

Yes. is went out Ultimately, Randy. Chevron X assets. bought those REG shuttered Ben, and They've of this them.

with not got LCFS XX to big grows XXX itself. RVO you next in gallons million biodiesel. that's capped the million, the mind by With still here, at keep what coming increasing look even like number X% But in sure Again, on, economics that I'm XXX it's year. those a

Really, table starting and market now sell fats all the Martinez, to by only to some don't it's every to bet shuttering. the we run well, we're is So to and a much folks, share of the see on see rewind and we And going our we hard movie while was are to waste sell starting this change. with wide to we people. the out kind happened. not RINs flood sell-side and that book guys PXX into other we're if that open product, -- was, 'XX, there other

a it imported. question side, still soybean there XX.X% lot that's duty. of economics them the there's a refined out on paying other only buying the oil involves And to because bleach of is On it and one got it you've

And you export to so don't the going product, duty unless get drawback. that you're

arbitrage -- here say, and the think So see what I that than to there ultimately, from other but are enough market I I'd out meaning next and gone you're people now. marketplace, less minds R&D things. XXX We're some year. good then rational up see getting pretty SAF and economic us, Vertex a of things. has out gallons in prevail from hope going some, enough doing some growth We setting for to

market loan what oversupply? get that. we're SAF going think, SAF. do Or -- front, the guarantees, Just I like where we saw we to of How to announced evolving? do to envision you different we the on Are at pathways keeps you be a think going for in period

to paper, up for X gallons, demand Yes. This is I maybe SaaS could more. say, billion be -- on market would is, the

So it's online larger any today. than available that's quite production a bit

airport, again. talked is Yes. market mean there, really interesting airline and airline say. end by wing by in that airport supply developing we our happening is far the wing Ben, by the in Those are the What's what Randy book airplane building as SAF right then is complicated. is chain about. this out And is we now. supplier It's business and if more supplier. I margins deals are

want some announced, them them of Some don't announced.

in it they XXXX. company XXXX, today, the in Europe has be the compliant wing to end obligated the have or at supplier till you but look is the don't party If oil mandate a of

space we're advantage well want early but a thing, you're mover X now an Matt with is years, seeing it forward warrants. We once bit think -- got we've feet move on for ultimately, an a of there, if get into this mandate China believe said, committed out is so that and it's plant about And developing. I here. X again, to talk the as sold little then production SAF and So what we dragging additional to positioned

mechanically here. of bit before year. quality we're is just the here in commissioning and take said, a the it's we but to we'll and going end optimistic ] -- be time So plant of the operational fully Like spec little [ completed its

Okay.

question Our Jason from is TD Cohen. next of Gabelman

since like talk of distribution at about the policy you a distribution the cash hour. company DGG's It implied change And I'll we're generation. looks one just there? the ask earnings top that and dynamic? the of from the there's just Can outpaced

Jason, this Yes, is Brad.

the but at were it holidays started parties 'XX, as came a of X If in you'll recall of coming D.C. and back out months to internally saw they it the catch-up. may was X in on backup to slowdown, in, -- a And revenues earlier May, behind. That we Green. on the Diamond we to back believe once the middle payouts of in back into anticipated, not, IRS doing least year, a real really they

So got there point normal where we on receipt. course more a to the -- a on during QX, really the really we by quarter was the -- got during BTC

multiple turns -- the end So that the of during out. still of year had we're possibilities distributions quarter. see a big additional impact -- it how we on And put here the this third distributions. we looking received at We'll

ETC though? now That catch-up complete, is

they're Well, up. much pretty it it's It's caught I'll That's -- that. leave month. at -- every ongoing

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

Once again, all thank for you your questions.

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

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

may You now disconnect.