Darling Ingredients Inc.

Good morning, and welcome to the Darling Ingredients, Inc. conference call to discuss the company's first quarter 2022 results. After the speaker's prepared remarks, there will be a question and answer period, and instructions to ask a question will be given at that time. Today's call is being recorded. I would now like to turn the call over to Ms. Sue Ann Guthrie. Please go ahead.

Welcome to the Darling Ingredients first quarter 2022 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 the Events and Presentations on our corporate website. During this call, we'll 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 could materially differ because of factors discussed in yesterday's press release and the comments made during this conference call and the risk factors section of our Form 10-K, 10-Q, and other reported filings within 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.

Hey, thanks, Sue Ann. Good morning, everyone. Thanks for joining us for our first quarter 2022 earnings call. We kicked off the year with a very strong first quarter earnings of $330.7 million in combined adjusted EBITDA. Our global ingredients business had a record quarter at $244.1 million in EBITDA. Our food business earned $57.7 million in EBITDA, and our fuel segment ended the quarter with $110 million in EBITDA, with $86.6 coming out of Diamond Green Diesel. We are carrying solid momentum into 2022. Global supply chain challenges remain, while increased labor and energy costs are being addressed by our formula and spread pricing, and finished products pricing remains robust around the world. Starting with our feed segment, globally, raw material volumes are up year over year, and we are not seeing any indication of livestock or herd reduction. Fat prices continue to escalate throughout the quarter, Protein prices improved during the quarter and grew sequentially. However, logistical disruptions due to container shortages have kept our prices lower year over year. Additionally, we saw some margin compression relative to Q1 in 2021, which reflects procurement process lags due to rising prices. We're working diligently to maintain margin structure in a higher energy cost environment, especially in Europe. Turning to our food segment, performance grew year over year driven by our pepton business and our product mix shift from commodity gelatins to hydrolyzed specialty collagens. The changes we made in late 2021 have helped improve margins. I am confident we will see improvement in the food segment for the balance of the year despite supply chain challenges. In our fuel segment, escalating energy prices in Europe supported stronger earnings in our green energy electricity business. Our previously announced acquisition of Uptabak is contributing nicely and is under expansion. Now, turning to Diamond Green Diesel. We successfully completed a turnaround at DGD1 during the first quarter. Q1 earnings for DGD were $1.11 per gallon in EBITDA. This is lower than our full-year estimate of $1.25 per gallon, and it's attributed to rapidly escalating feedstock prices, while heating oil, RINs, and LCFS did not have adequate time to react. As we head into Q2, margins are on the rebound. We are seeing higher RINs and steady LCFS prices. DGD 1 and 2 are running wide open, and optimization programs are in place to increase gallons. Given these factors, combined with the startup of DGD 3 and Q4, we maintain our forecast of at least 750 million gallons at $1.25 per gallon EBITDA for the full year 2022. Last week, we announced two key strategic acquisitions to grow our base business, the completion of the Valley Proteins acquisition and our signing of a definitive agreement to purchase the FASA Group in Brazil. With these announcements, we will process more than 15 million metric tons of the world's available slaughtered animal byproducts, or about 15% of the world's supply. Valley Proteins, which closed on May 2nd for $1.1 billion, plus or minus various closing adjustments, includes 18 new plants that process about 2.4 million metric tons of raw material per year and enough fat to produce approximately 125 million gallons of renewable diesel. This is a great acquisition and will be immediately accretive. For 2022, we expect a contribution of $60 to $70 million of new EBITDA, And under current market conditions, I anticipate the business contribution to be more than 150 million in EBITDA in 2023 as we address operational synergies. On May 5th, we announced the signing of a definitive agreement to purchase FASA Group for 2.8 billion rials, or approximately 560 million U.S. dollars at the current exchange rate. FASA Group processes more than 1.3 million metric tons of beef, pork, and chicken annually, through 14 rendering plants with an additional two plants under construction and has approximately 2,400 employees. FASA will augment our supply of low-carbon feedstocks to Diamond Green Diesel and will also be immediately accretive upon closing. We expect to close by the end of the year. The current operating EBITDA of this business is approximately 500 million rials per year. Now I'd like to hand it over to Brad to take us through the financials, and then I'll come back with a little bit of an outlook for the balance of 2022. Brad? Okay. Thanks, Randy.