Darling Ingredients Inc.

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

Good morning. Thank you for joining the Darling Ingredients second quarter 2023 earnings call. Here with me today are Mr. Randall C. Stewie, Chairman and Chief Executive Officer, Mr. Brad Phillips, Chief Financial Officer, Mr. John Bullock, Chief Strategy Officer, and Mr. Matt Jansen, Chief Operating Officer of North America. Our second quarter 2023 earnings news release and slide presentation are available on the investor relations page under events and presentations tab on our corporate website. And we'll be joined by a transcript of this call once it is available. 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 factor 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 will hand the call over to Randy.

Hey, thanks, Sue Ann. Good morning, everyone. Thanks for joining us for our second quarter 2023 earnings call. By all accounts, Darling Ingredients had a fantastic quarter with a record $508.3 million in combined adjusted EBITDA. Excluding a one-time $18.5 million inventory negative impact due to the Gelnex acquisition, our combined adjusted EBITDA would have been $526.8 million for the second quarter. As I discussed in our last quarterly call, we told you lower fat prices translates into lower EBITDA on our feed segments. However, it is more than offset by increased earnings in our fuel segment due to the sheer scale of our platform. This quarter, for the first time in our history, you were able to see the strength of the vertical we have built to leverage the Diamond Green Diesel machine. The power of our integrated waste, fats, and oils business combined with best-in-class renewable diesel production capacity was clearly on display this quarter. Now, turning to the feed ingredients segment in detail, Globally, raw material volumes were up just over 15% compared to second quarter 2022, primarily due to our Eastern USA and South American rendering acquisitions that closed last year. While we saw a softening in global fat prices, protein prices and specialty ingredients demands continues to be very strong. Despite lower fat prices, our gross margins held flat compared to Q1 2023 due to our continued integration efforts. I'm pleased to report that these integration efforts are nearly complete. I feel very good as we head into third quarter. While it's normal to experience some margin degradation due to the extreme summer heat, we are very well positioned to handle the challenges that summer rendering brings. Capital investments have been made, yield adjustments and raw material procurement modifications have also been put in place and completed, and we've now optimized our finished product sales opportunities. Turning to our specialty food ingredients segment, the global collagen market and gelatin business remains robust. If we exclude the one-time purchase accounting inventory negative impact of $18.5 million due to the Gelnex acquisition, food segment EBITDA would have been $89.8 million for this quarter. Our integration efforts are going very well. We have cross-pollinated our organizations to form one and we are excited about the scale and long-term opportunities these markets offer us. Moving to our fuel segment, Diamond Green Diesel had a record quarter with more than 387 million gallons of renewable diesel sold at approximately $1.28 per gallon EBITDA, clearly benefiting from the lower feedstock prices. Darling received $101.4 million cash dividend during the second quarter, And subsequent to the quarter close, we received another $62.2 million in cash dividends from the joint venture. DGD completed its turnaround. DGD2 completed its turnaround and is back to normal production. And DGD3 has been running very well and above nameplate capacity. We continue to believe 1.2 billion gallons of renewable diesel sold in 2023 is very achievable. Construction is progressing very nicely for our first SAF plant in Port Arthur. and we anticipate completion during late 2024 if all things go as planned. Now, with that, I'd like to turn the call over to Brad, and then I'll come back and continue with an outlook for 2023. Brad?