Darling Ingredients Inc.

Good morning and welcome to the Darling Ingredients, Inc. conference call to discuss the company's third quarter 2024 financial 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 conference over to Ms. Sue Ann Guthrie. Please go ahead.

Hi, thank you for joining the Darling Ingredients Third Quarter 2024 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, North America. Our third quarter 2024 earnings news release and slide presentation are available on the investor page under the 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, and 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 today'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'll hand the call over to Randy.

Hey, thanks, Sue Ann. Good morning, everyone, and thanks for joining us. During the third quarter, Darling Ingredients continued to navigate challenging markets with global ingredient demand and pricing increasing. remaining sluggish, and a difficult renewable diesel market. Despite these headwinds, our core ingredients performance was flat sequentially, but generated adequate cash and dividends from Diamond Green Diesel, allowing us to reduce debt by about $192 million. Operationally, our global asset base performed well, and we continued our focus on widening margins, managing CapEx, and reducing SG&A. For the quarter, our combined adjusted EBITDA was $236.7 million, primarily a reflection of sequentially steady finished product pricing and a challenging renewable diesel market. Turning to the feed ingredient segment, raw material volumes remain strong, primarily driven by growth in Brazil. Fat prices are slowly recovering, but the rebound is much slower than anticipated, clearly reflecting the challenges other RD producers are experiencing collectively. ramping their pretreatment units to run on low carbon waste feed, fat feedstocks, and the impact of some imported feedstocks. As many of you know, summertime is typically very challenging on our operations, and we naturally see a slight degradation in gross margins. I'm pleased to report that the third quarter of 24, we saw a slight increase in feed gross margin percentage sequentially. This is attributed to the hard work and dedication of our operations team, working on spread management and ultimately cost control programs. Now, turning to the food segment. We saw lower volumes, which were attributed to softer demand in China, new capacity additions in Brazil, and continued customer despocking. However, we continue to hold strong margins, despite the declining sales price in the global market. On a positive note, next week we will be at Supply Side West North America trade show in Las Vegas. We will be showcasing Nextida GC, a natural collagen solution targeting glucose moderation, and a clinical trial conducted by Darling Ingredients. Nextida GC significantly lowered post-meal glucose spikes in the blood by an average of 42%. For Darling, we have unlocked the next wave of collagen-based solutions that are potentially revolutionary. Now turning to our fuel segment, DGD margins remain challenged given the delay and lack of clarity in the regulatory markets for RINs and LCFS. Despite the softer margins at DGD, we received 111.2 cash dividend distribution from the joint venture in the third quarter. Our sustainable aviation fuel unit is mechanically complete and in the process of commissioning. We continue to build a strong sales book, and I have now announced our third contract earlier this month. For 2025, we remain very optimistic about the regulatory landscape. We believe we will have clarity on the California Low Carbon Fuel Standard Program and the federal tax credit known as 45C very soon, paving the way for greater growth and improved margins at DGD, along with stronger demand for our low carbon feedstocks. With that, now I'd like to hand the call to Brad, take us through some financials, and then I'll come back and discuss my thoughts on the rest of 24 and the outlook for 25.