Darling Ingredients Inc.

Good morning and welcome to the Darling Ingredients, Inc. conference call to discuss the company's third 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 third 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. Bob Day, Chief Strategy Officer, and Mr. Matt Jansen, Chief Operating Officer of North America. Our third 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 will 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 factors section of our Form 10-K, 10-Q, and other recorded 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.

Thanks, Sue Ann, and good morning, everyone, and thanks for joining us for our third quarter earnings call. Darling's Global Ingredients Platform delivered, as predicted, and DGD faced some headwinds and operational challenges during the quarter. Overall, we feel good about the momentum we are carrying into fourth quarter and 2024. Turning to the feed ingredients segment, raw material volumes were flat compared to third quarter 2022. Our gross margins have returned to pre-acquisition levels, demonstrating our ability to successfully integrate Valley and FASA. Our work is not done, and we expect further improvements. Fat prices were lower year over year, but sequentially improved late in Q3. Turning to our specialty food ingredients segments, raw material volumes increased 18% year over year due to Gelnex acquisition. Our global collagen platform delivered solidly, and we continue to shift our product mix into higher margin products. Hydrolyzed collagen remains an important part of our long-term growth strategy within the food ingredients segment. Earlier in the quarter, we commissioned a new spray dryer in Epitácio, Brazil, adding much-needed capacity to continue our growth. I'm also excited to share that our research and development efforts in this segment have resulted in our ability to formulate a product that targets specific health concerns, such as glucose moderation. We are currently in scientific trials and expect to bring this ingredient to market during 2024. On October 26, we announced that DGD volumes for the third quarter were lowered due to a regularly scheduled turnaround at number two in St. Charles, Louisiana, that took the unit offline for 27 days. After that turnaround, DGD2 had a minor operational disruption. So in total, DGD2 was offline for 37 days in the quarter. This resulted in lower gallons produced, higher costs, and lower than expected operating profits. Year-to-date, DGD has sold 910 million gallons of renewable diesel at approximately $1.02 per gallon EBITDA. And Darling has received $163.6 million in cash dividends year-to-date. With that, I'd now like to hand the call off to Brad, and then I'll come back and discuss the rest of my thoughts for 2023 and 2024, Brad. Okay, thanks, Randy.