The following is excerpted from the question-and-answer section of the transcript.
(Questions from industry analysts are provided in full, but answers are omitted - download the transcript to see the full question-and-answer session)
Question: Manav Gupta - UBS Investment Bank, Research Division - Analyst
: Randy and team. So we saw a lot of commodity price volatility during the quarter. Still, when we look back, you gave a guidance of $485 million
to $525 million on your 1Q call for 2Q, and you actually came in at the top end of that guidance, beating the guidance. So the question is, help us
understand the integrated business model a little better and how DAR is able to withstand the volatility better than most other RD producers. And
again, with this beat and higher fats and UCO prices is the decision not to raise guidance here just being conservative.
Question: Manav Gupta - UBS Investment Bank, Research Division - Analyst
: Perfect, sir. My quick follow-up here is you are moving ahead with the SAF projects, positive updates there. It's still early. But do you think on a per
gallon profitability basis, you will be more profitable in SAF than RD? So I'm just trying to understand if you make like $1 in EBITDA margin in RD,
do you actually think you can make like $1.75 or $2 per gallon in SAF, fully understanding it's very early in the process.
John Bullock
Yes. Manav, this is John. Absolutely, I mean, we think that the SAF market is a market that there is an insatiable demand for at an extremely limited
supply and quite frankly, most of the alternatives that have been promised to the airline industries around the world for SAF, our pie in the sky
don't exist ideas. So we're going to have insatiable demand for our SAF. We already see that coming to us. We're going to be receiving a premium
for this product.
Question: Thomas Hinsdale Palmer - JPMorgan Chase & Co, Research Division - Analyst
: I just wanted to ask on CapEx expectations at Diamond Green Diesel. The Q2 figure was below your depreciation expense, but I know you've got
the SAF project ramping up. So just any color on maybe how that progresses in the back half would be helpful.
John Bullock
I'm not sure I understand the question, Tom.
Question: Thomas Hinsdale Palmer - JPMorgan Chase & Co, Research Division - Analyst
: Okay. Maybe I'll just follow up on that dividend comment. I know you covered some of this already, but -- in the past, you had a more formal criteria
to determine the magnitude of distributions. I think if we go back to like 2019, 2020. Maybe I missed it, but it doesn't seem like there's a policy to
that extent in place at this point. Maybe what kind of determines the magnitude of payouts this time around? And might we anticipate something
perhaps more formal at some point in coming quarters?
Question: Paul Cheng - Scotiabank Global Banking and Markets, Research Division - Analyst
: Randy, I want to go back. You mentioned about the Phase II on the collagen business on the growth plan. Can you share with us that what kind of
timeline and milestones that we should be watching? And also that, I mean, on that, I mean, that if you can talk about the new business, what is
the margin comparing to your legacy business so that at least we can have some idea that how the margin improvement may look like on the
overall business.
Question: Paul Cheng - Scotiabank Global Banking and Markets, Research Division - Analyst
: Randy and John, I think you are doing research with some university on some of the products, when you think that the first product may go to the
FDA for approval or then maybe go through the Phase 1? I don't know where they are at this point?
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