Darling Ingredients Inc.

Good morning, and welcome to the Darling Ingredients, Inc. conference call to discuss the company's fourth quarter 2021 and fiscal year 2021 results. After the speaker's prepared remarks, there will be a question and answer period, and instructions to ask a question will be given at that time. Today's call is being recorded. And I would now like to turn the conference over to Ms. Sue Ann Guthrie. Please go ahead.

Thank you, Tom. Welcome to the Darling Ingredients Fourth Quarter and Fiscal Year 2021 Earnings Call. Participants this morning are Mr. Randall C. Stewie, Chairman and Chief Executive Officer, Mr. Brad Phillips, Chief Financial Officer, Mr. John Bullock, Chief Strategy Officer, and Ms. Sandra Dudley, Executive Vice President of Renewables and U.S. Specialty Operations. There is a slide presentation available on the Investors page under Events and Presentations on our corporate website. During this call, we will be making forward-looking statements, which are predictions, projections, or other statements about future events. These statements are based on current expectations and assumptions that are subject to risks and uncertainties. Actual results can materially differ because of factors discussed in yesterday's press release and the comments made during this conference call and in the risk factors section of our Form 10-K, 10-Q, and other reported filings with the Securities and Exchange Commission. We do not undertake any duty to update any forward-looking statement. Now I would like to hand the call over to Randy.

Thanks, Sue Ann. Welcome to Darling, Sue Ann. So good morning, everybody, and thank you for joining us for our fourth quarter and fiscal 221 earnings call. 2021 was another record year for Darling Ingredients, and we carry solid momentum into 2022. We finished the year with combined adjusted EBITDA of $1.235 billion. Our global ingredients business had a record year with $851.4 million of adjusted EBITDA, and Diamond Green Diesel demand remains strong with 370 million gallons sold at an average EBITDA of $2.07 per gallon. We have sustained strong growth in our core business over the last four years, and we are poised for significant cash generation during 2023. At the end of December, we announced that we entered into a definitive agreement to acquire all the shares of Valley Proteins for $1.1 billion, plus or minus various closing adjustments. We estimate this acquisition will drive about $200 million in savings over the next three years and will be nicely accreted. We are currently awaiting government approval for the acquisition. Valley operates 18 major rendering and use cooking oil facilities throughout the southern, southeast, and mid-Atlantic regions of the U.S., and is primarily a poultry tonnage company, but has significant used cooking oil business, which will expand our ability to provide additional low CI feedstocks to fuel the growing demand for renewable diesel. As we've discussed in the past, our strategy is to continue to acquire low CI feedstock businesses that will de-risk and protect our supply chain, making us the number one and most efficient producer of renewable diesel in the world. Now, turning to DGG in more detail. it is producing a phenomenal return for all of us. While EBITDA per gallon is lower than last year, it is not unexpected, and I continue to be very optimistic. Our supply chain is unparalleled in the industry. We have tremendous tailwinds, demand should continue to grow as energy prices increase, and more states look to implement LCFS mandates. We ultimately believe LCFS prices and RIN prices will normalize and improve reflect the growing demand and realization of higher input costs no matter how you look at it dgd is well positioned in 2022 and beyond now moving to our fuel segment in europe on february 25th we closed on the acquisition of grupo optivec a leading organic waste and green energy company in belgium much like our strategy to grow low ci feedstock supply We have a bias that believes green energy in Europe will also provide superior returns and flexibility for our European assets. The biodigestion facility in Belgium currently has the capacity to produce 67 gigawatt hours per year of green electricity. Today, we're announcing a major capacity expansion, which will grow the renewable electricity production to 101 gigawatt hours annually. Coupled with our existing assets in Belgium and the Netherlands, Darling's total annual green energy production in Europe will be 163 gigawatt hours annually. Our feed ingredients business had an incredible year due to growing demand, global demand for fats and proteins, and a focus on decarbonization through the use of lower carbon intensity feedstocks. We ended the year with $613.7 million of adjusted EBITDA versus $317.8 in 2020. The capacity we added over the last five years positioned us well to handle this tremendous growth flawlessly. Food ingredients also had a strong year with 194.9 million of adjusted EBITDA versus 167.1 in 2020. Driven by strong demand for collagen peptides in the health and nutrition markets, this segment has been growing at a three-year compound annual growth rate of 14.5%. Our food segment remains an attractive growth vehicle for us and provides an earning stream that is resilient to commodity fluctuations. Our fuel segment also had a strong year with 483.1 million combined adjusted EBITDA versus 411.9 in 2020. This was primarily due to the DGD2 expansion, which came online in October of 2021. As the world drives towards decarbonization, Darling is at the forefront. We have set a goal to be net zero greenhouse gas emissions by 2050. We plan to submit a commitment letter to the science-based targets initiative by the end of 2022, committing to set a science-based 1.5 degree aligned greenhouse gas emissions reduction target. With support from our new ESG committee at the board level, I have no doubt we can achieve these targets. Additionally, we identified both short-term and long-term targets in our 2021 ESG report published last fall and are currently working on setting mid-term targets. As far as our short-term targets are concerned, we are investing in various capital improvements at our plants that will reduce our energy intensity. As for water, we are investing in a new state-of-the-art recovery system in our Ghent, Belgium, Rousselot factory that will reduce water consumption by nearly 46%. Additionally, we have begun an engineering study to evaluate water usage at some of our U.S. plants. We hope this work will provide us with a blueprint for best practices in water use and reuse and recycling in an effort to meet our short-term goals of reducing water withdrawal by 5% per unit versus our 2020 values. Now, you've heard me say that we are the original recycler. At our core, we help our customers have a positive impact on the climate. We have embarked on a journey to better tell our carbon handprint story, the solutions we provide to our customers that decrease their carbon footprint. For example, we produce meat and bone meal as an alternative soybean meal. This positively impacts land use change and carbon emissions. The carbon intensity of the renewable diesel produced at DGD is up to 85% less than fossil diesel. We play a critical role helping to protect the planet, creating better lives, and we can do so while providing our shareholders superior financial returns. With this, now I'd like to turn the call to Brad to take us through some financials. After that, I'll come back with a little outlook for 2022 and beyond.