Darling Ingredients Inc Q1 2023 Earnings Call Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Manav Gupta - UBS Investment Bank, Research Division - Analyst : Congrats on a very good quarter. Great to see continuous improvement in the Feed gross margin. Randy, you have got some pushback on your recent M&A deals but looks like things are really falling in place now. Those deals are giving you a big volume bump which exceeds market expectations. My question is with regards for demand for your products which support these higher volumes, do you think the demand for fats, proteins and UCO will actually hold up well for the next 12 to 24 months? And can we actually see an increase in demand for your products, both Feed and Food, in the medium to longer term?

Question: Manav Gupta - UBS Investment Bank, Research Division - Analyst : Congrats on a great quarter.

Question: Thomas Hinsdale Palmer - JPMorgan Chase & Co, Research Division - Analyst : I know there's -- and you just walked through a little bit. Some moving pieces, right, feedstock pricing and what that means for both the base business and at Diamond Green Diesel. But in the past, you've provided within your guidance, some outlook for EBITDA per gallon at DGD and then also kind of what you're thinking in terms of base business earnings. I didn't hear that today. And again, I know there are some moving pieces, especially with the feedstock pricing. But do you have any kind of rough construct of how that $1.875 billion EBITDA outlook splits between the 2 sides of the business?

Question: Thomas Hinsdale Palmer - JPMorgan Chase & Co, Research Division - Analyst : And maybe I could just quickly follow up on the Gelnex comment. So if I look at the last couple of years, last quarter, there was about a $20 million under shipment relative to production and then last year, it was a bit closer to $30 million. So is there inherently in the business, just given it's so much bigger, that kind of accumulated $50 million in inventory? Is a portion of that just paid going forward? There's always going to be a little bit more inventory being held? I'm just trying to get a sense of how much when you're kind of talking about this unwind coming in terms of shipment timing we should be thinking about? Is it that $20 million? Or is there this larger pool closer to $50 million that should unwind as the year plays out? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. MAY 10, 2023 / 1:00PM, DAR.N - Q1 2023 Darling Ingredients Inc Earnings Call

Question: Guillermo Huerta Gallego - Goldman Sachs Group, Inc., Research Division - Analyst : This is actually Guillermo stepping in for Adam. I only have a follow-up on the integration efforts within the Feed segment. If you could quantify the synergies realized in the first quarter and your expectation for the rest of the year?

Question: Guillermo Huerta Gallego - Goldman Sachs Group, Inc., Research Division - Analyst : That's very helpful. And if I could squeeze in another one in regards to the buybacks. How should we think about the pace of the buybacks relative to the amount that you did in the first quarter as you also are trying to delever the balance sheet?

Question: Paul Cheng - Scotiabank Global Banking and Markets, Research Division - Analyst : Randy that you have good insight in the RVO and the LCFS market and have a lot of contact in the government. So just curious that is there any insight you can share about that, how EPA may revise or not revise on the RVO proposal? And also, how is the California LCFS market that credit changes that what do you think they may do?

Question: Paul Cheng - Scotiabank Global Banking and Markets, Research Division - Analyst : And the second question is that I think Sandy and Randy, both of you have said, you stopped seeing a lot of the international low CI feed getting into the U.S. So it does not look like the availability of the low CI feedstock is a issue anymore, contrary to maybe just a year ago, that as we thought. And so from that standpoint, what will be the criteria, the decision-making process, what will factor into -- other will factor into whether that you want to expand DGD into DGD 4?

Question: Paul Cheng - Scotiabank Global Banking and Markets, Research Division - Analyst : No, that's fully understand and agree. But I still want to try and to say that, okay, what will be the peak condition or that what trigger you and Valero decided to go for DGD 4? What is the precondition in order for that to happen?

Question: Paul Cheng - Scotiabank Global Banking and Markets, Research Division - Analyst : Okay. Great. Can I just ask a real short question for John. The interest rates, what you guys exercised, did you exercise at the beginning of the quarter? In other words, that are we going to see incremental interest expense in the second quarter versus the first?

Question: Paul Cheng - Scotiabank Global Banking and Markets, Research Division - Analyst : Yes, I'm sorry. There was no incremental?

Question: Paul Cheng - Scotiabank Global Banking and Markets, Research Division - Analyst : Right. So what's the second quarter versus the first quarter impact from this swap?