Good morning, welcome to the Darling Ingredients Inc conference call to discuss the company's first quarter 2023 results. After the speakers' 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. Suann Guthrie. Please go ahead. Thank you. Thank you for joining the Darling Ingredients first quarter 2023 earnings call. Here with me today are Mr. Randall C. Stuewe, Chairman and Chief Executive Officer, Mr. Brad Phillips, Chief Financial Officer, Mr. John Bullock, Chief Strategy Officer, and Ms. Sandra Dudley, Executive Vice President of Renewables and U.S. Specialty Operations. Our first 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, and 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 reported filings with the Securities and Exchange Commission. We do not undertake any duty to update any forward-looking statements. I will now hand the call over to Randall. Hey, thanks, Suann. Good morning, everybody, and thanks for joining us for our first quarter 2023 earnings call. We have had a very solid start to the year. All business units performed as expected, and our DGD system attained full rate during the month of March. Looking at our segments in detail, for the first quarter of 2023, we ended the quarter at $418.4 million in combined adjusted EBITDA. The Feed Ingredients segment ended the quarter at $213.1. Our Specialty Food Ingredients segment earned $73.2, while our Fuel segment earned $153.6 in EBITDA, with approximately $129.3 attributed to Diamond Green Diesel. Turning to the Feed Ingredients segment in detail. Globally, raw material volumes were up 39% compared to first quarter 2022. While we saw a decline in global fat prices, protein prices remained strong around the world. While lower fat prices will modestly impact the segment, it will be more than offset by higher earnings in Diamond Green Diesel in future quarters. Integration of our recent acquisitions remains a key focus. I'm pleased to report that once again, we realized sequential gross margin improvements. We continue to make improvements at our recently acquired Eastern USA plants that will improve reliability and efficiency, as well allow us to produce and market higher value finished products. We are pleased with the progress and believe by year-end we will be nearly complete. Turning to our Specialty Food Ingredients segment, the global collagen and gelatin business remains robust. We closed on the Gelnex acquisition on March 31st and integration work has already started. Together, we believe we have the strongest and most robust collagen system in the world with a pipeline of new products for years to come. Moving to our Fuel segment, Diamond Green Diesel is running very well and set another sales record in first quarter. We have achieved a milestone with the DGD system operating at 1.2 billion gal annually. It should be noted that March shipments were light, with ship loadings moving into Q2. With lower fat prices and inbound logistics running smoothly, second quarter is shaping up to be a record for Diamond Green Diesel. With this, I'd like to hand the call over to Brad to take us through the financials. I'll come back and discuss my outlook and thoughts on the balance of 2023. Brad? Okay, thanks, Randall Net income for the first quarter of 2023 totaled $185.8 million, or $1.14 per diluted share, compared to net income of $188.1 million or $1.14 per diluted share for the 2022 first quarter. Net sales were $1.79 billion for the first quarter of 2023, as compared to $1.37 billion for the first quarter of 2022 or a 31% increase in net sales. Operating income increased 10% to $255.8 million for the first quarter of 2023, compared to $232.9 million for the first quarter of 2022, primarily due to a $78.4 million increase in gross margin. As Randall said, the gross margin continued to sequentially improve for all segments. Darling share of Diamond Green Diesel's earnings increased $22.5 million quarter-over-quarter, which more than offset depreciation and amortization, increasing $36.8 million, SG&A increasing about $33.4 million, and four and a half million in additional restructuring costs, primarily related to the Peabody closure. Total other expenses increased approximately $21.7 million quarter-over-quarter, with an increase in interest expense of $34.7 million, partially offset by an increase in foreign currency gains of $6.1 million and an increase in other income of $6.9 million, which was primarily due to casualty loss insurance proceeds received for the prior year Tacoma plant fire. Turning to income taxes. The company recorded income tax expense of $27 million for the first quarter of 2023, with an effective tax rate for the first quarter of 12.4%, which differs from the federal statutory rate of 21% due primarily to biofuel tax incentives and the relative mix of earnings among jurisdictions with different tax rates. The company also paid $39 million of income taxes in the first quarter. For 2023, we are projecting an effective tax rate of 14% and cash taxes of approximately $140 million for the remainder of the year. The balance sheet now exceeds $10 billion in assets with the inclusion of Gelnex. Since Gelnex closed at the very end of the first quarter, no earnings activity was recorded during Q1. The company's total debt outstanding at first quarter 2023 was $4.7 billion after the Gelnex acquisition, as compared to $3.4 billion at fiscal year-end 2022. In conjunction with the Gelnex funding, we entered into a three-year interest rate swap to fix $600 million of floating rate debt at an average swap rate of 3.78%, and also then entered into a two-year cross-currency swap of EUR 557 million to hedge a euro intercompany loan, which synthetically converted U.S. debt to Euro debt and reduced the interest rate by 1.2%. Our bank coverage lever ratio at the end of the first quarter was 3.19 times as compared to 2.54 times at fiscal year-end 2022. We continue to maintain strong liquidity with $866 million available on our revolving credit facility as of quarter end. Capital expenditures totaled $111.3 million in the first quarter, with $454 million of expenditures anticipated for the remainder of the year. The company repurchased approximately 773,000 shares of its common stock for $43.8 million during the first quarter. With that, I'll turn it back to you, Randall. Hey, thanks, Brad. Darling is off to a tremendous start for 2023. Raw material volumes are in line with expectation. Integration activities are on target. Energy prices in Europe have moderated. Our global collagen and gelatin business is quite strong, and Diamond Green Diesel is expected to perform very well with lower raw material prices, strong green premiums, and robust global demand. The earning power of our unique vertically integrated business we have built will become very evident over the next few quarters. We remain committed to our financial management policy that we have previously discussed. DGD is now nearly delevered and dividends should become a reality very soon. Leverage post our Brazilian acquisition has peaked, and we will target a 2.7 leverage ratio by year-end, along with the goal of investment grade for 2024. Other than our previously announced Miropasz bolt-on acquisition in Poland, which is expected to close by year-end, our M&A activity has been paused so we can concentrate on integration, value creation and deleveraging. I have high expectations for the second quarter and if the operating environment continues, we're estimating combined adjusted EBITDA to be in the range of $485 million-$525 million. For the year, we are once again reconfirming our guidance of $1.875 billion combined adjusted EBITDA. With that, let's go ahead and open it up to Q&A, please. We will now begin the question-and-answer session. To ask a question, you may press star one on your telephone keypad. If you are using a speakerphone, please pick up your handset before pressing the key. To withdraw your question, please press star two. At this time, we will pause momentarily to assemble our roster. Our first question will come from Manav Gupta of UBS. Please go ahead. First, congrats on a very good quarter. Great to see continuous improvement in the Feed Ingredients gross margin. Randall, you have got some pushback on your recent M&A deals, looks like things are really falling in place now. Those deals are giving you a big volume bump which far 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 12-24 months? Can we actually see an increase in demand for your products, both feed and food, in the medium to longer term? Yeah. Thanks, Manav. John Bullock and I will kinda tag team this a little bit here on thoughts here. Yeah, I mean, global demand for proteins remain incredibly strong out there. Pet food demand remains strong. Pricing premiums are as expected. You know, clearly, the fats and oils business around the world seems to have come off a little bit with palm oil leading the way and soy following, and then waste fats, can't other than the CI premium, can't attain a considerable premium above the two biggest fats and oils in the world. With that, you know, demand is good. I mean Diamond Green Diesel is running at capacity. At the end of the day, that's different than, if you will, you know, the fourth quarter as we were continuing to struggle with logistics down in Port Arthur. Yeah, demand's gonna continue to be very strong. Whether it comes from domestic or import, it'll depend on the arbitrage. Most importantly, as a management team, we want people to understand that, you know, the concept and the strategy that we built Diamond Green Diesel under. One piece of information that people just continue to ignore is that Darling doesn't supply 100% of Diamond Green Diesel. It can't. It's too big. You know, our system has the ability globally to supply up to about half if we want to, if we don't have better markets. It's not near that today. What's that mean to the Feed segment and to the overall business? It's very simple. We have told shareholders for a year that every penny that fat prices move up or down is somewhere around $10 million-$11 million annually in US dollar EBITDA. Fat prices are down, I don't know, $0.12-$0.15. Let's call it, you know, that's $150 million-$165 million of EBITDA. Easy math, $0.10 a pound, with the, with standard yields in a Diamond Green Diesel plant for us, you know, call it $0.90 a gal of potential improvement in margin. Half of that is $0.45. If you just capture half or two-thirds, then times 1.2 billion gal, you've got somewhere between $500 million-$700 million of EBITDA improvement, which we get half of. You know, in the sense of, you know, basic amateur investment thesis, if you give somebody $150 million and they're gonna give you back $300 million or $400 million, that's a pretty good investment. We want people to focus on the system. That was the system that we built. Diamond Green Diesel, its collective demand drives, you know, a larger share of earnings for Darling. John, anything you wanna add to this? Yeah. I think that you mentioned it in your kind of statement there, Manav. The reason we scaled is because we know what the value of low CI fats are in the world. The Valley deal and the FASA deal. We massively scaled our ability to have low CI fats available for Diamond Green Diesel. We're either gonna get it in the form of higher fat prices in our core system, or we're gonna get it at Diamond Green Diesel in the form of higher margins at Diamond Green Diesel. Basically, we're gonna win no matter how the cards are dealt. Thank you for a very detailed response. Congrats on a great quarter. I'll turn it over. Thank you, guys. The next question will come from Tom Palmer of J.P. Morgan. Good morning. Thanks for the question. I know there's, and you just walked through a little bit, some moving pieces, right? With feedstock pricing and what that means for both the base business and at Diamond Green Diesel. In the past, you've provided within your guidance some outlook for EBITDA per gal at DGD and then also kind of what you're thinking in terms of base business earnings. I didn't hear that today. Again, I know there's some moving pieces, especially with the feedstock pricing. Do you have any kind of rough construct of how that $1,875 EBITDA outlook splits between the two sides of the business? Good question, Tom. You know, that's the part that we want people to focus on the system rather than trying to segment down to food, feed and fuel. You know, it's a dynamic situation, as John Bullock said, we win under either scenario. At the end of the day, you know, that's where we're coming out and saying 485. How do I get 485? Well, that's 1,875- 418/ 3 last time I checked. At the end of the day, we believe that the lower fat prices will have some opportunity for bigger gals in Diamond Green Diesel in Q2. As I also made my earlier comments, you know, boat loadings are not always linear and some gals move from Q1 to Q2. That's where we're given the larger guidance. We're largely on target. As we said, it'll move from one side of the ledger to the other side of the ledger as we go forward. Thanks for that. Maybe I could just quickly follow up on the, on the gals comment. If I look at the last couple of years, last quarter, there was about a $20 million undershipment relative to production, and then last year it was a bit closer to $30 million. Is there inherently in the business, just given it's so much bigger, that that kind of accumulated $50 million in inventory? Is a portion of that just, A, going forward, there's always gonna be a little bit more inventory being held? I'm just trying to get a sense of how much, when you're kinda 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? I'll let Sandra comment a little bit, but as I go back and look at, you know, been in the business for 40 years, and like I said, ships come and go, bill of ladings get created, and you miss a day, and you don't recognize it. Also you have to understand when Darling ships to the Diamond Green Diesel system, until it's unloaded, you know, it doesn't get recognized in our business. There's always those pieces in here. Obviously, if I look at the 418 and I look at the bill of lading dates here, you know, maybe it would have added, I don't know, $15 million-$20 million to the quarter in Q1. That's about as granular as we can get there. No, you know, inventory's gonna build and go as we load rail or we load barge or we load ship here. Nothing there to try to overthink. Okay. Thanks so much. Our next question comes from Derrick Whitfield of Stifel. Good morning, y'all, congrats on a solid start to the year. Thank you. Morning, Derrick. For my first question, I wanted to focus on the EBITDA guidance, and I apologize, Randall, but just really wanna better frame the setup for your business and the value of your business. From our perspective, every segment is outperforming our model and margins in Q1, and you seemingly have tailwinds now in nearly every segment, including Gelnex's margin contribution in food. Valley's margin uplift in feed and your 4 to 1 net-net EBITDA gain in DGD margins as a result of lower fat prices. Having said that, isn't it reasonable for us to think that your 2023 guidance of $1.875 billion is relatively conservative? My personal opinion is that it is. I wanna keep in mind that the marketplace is still inverted on fats proteins around the world as the world expects bigger crops of everything again this year. Ultimately, you know, as we've tried to tell people, you know, our Diamond Green Diesel system has a very significant competitive advantage. I think it's been obvious with the other releasers of earnings out there. You know, what we're trying to do is make sure that we believe that the Diamond Green system, we're trying to forecast. I mean, we gave earlier guidance in the year of what, Sandra? About 1.2 billion gals and $1.25. Right now, those margins on a spot basis are quite a bit higher. Why? Because of higher feed or lower feedstock. you know, at the end of the day, we're kinda sitting there going In the feed segment, clearly, our operations team has done a tremendous job of bringing in that system and getting it aligned with the normal Darling operations. Our Brazilian operations are performing very well. Our gelatin and collagen business around the world is doing very well. We're, we're about to add another six or seven plants in the system here, in the second quarter with Gelnex being integrated in. Then our green energy business in Europe. I mean, yeah, there are a bit of tailwinds here, but not really. These are just solid operations that are going on now with proper risk management. John, anything you wanna add to that? Yeah. I think what oftentimes we look. We're a margin management company, right? There's no doubt about it that as fat prices go up and down, that's going to have an impact on our core rendering business. We have an embedded offset inside the system now that actually may be an embedded offset with a multiplier and lower fat price times. At the end of the day, we're able to manage our raw material costs around our system in all of our marketplaces. The only place where we've got any type of an embedded tremendous impact or even, not a tremendous impact, but an impact on our core rendering business is the fat segment. Now we've embedded an offset that insulates us from that. At the end of the day, markets are gonna go higher, markets are gonna go lower. We feel very, very good about how we position the company to have sustainable EBITDA no matter what the market conditions are out there. That's terrific. Perhaps with my follow-up, with respect to Gelnex, could you speak to, A, what you've learned about the asset now that you've integrated it into Darling? And, B, the potential synergies you see between it and Rousselot? Yeah. This is John. Yeah, I spent the last three weeks with the Gelnex team. I can tell you that the Gelnex organization is as good an organization as I've ever seen in my life. These are top professionals. It's well-managed. Excellent, excellent group of employees. Their plants are tremendous. Their marketing efforts are tremendous. They're just a tremendous organization all the way around. We cannot be more excited to bring Gelnex into the Darling family. Very helpful. Thanks for your time. Our next question will come from Dushyant Ailani of Jefferies. Hi, team. Thank you for taking my questions. My first one is on the feed segment. Looks like you're seeing recovery in the margins, which is good. I guess my question is, how do we think about the pace of recovery? I know previously you've talked about a 1,000-day integration. Could that timeline be sooner? What's a good, you know, gross margin to think about for feed segment, a normalized margin? Mid-20. Dushyant, this is Brad. Yeah. Say we have continuing improvements yet to be still gained in our system. Yeah, you've noticed. I mean, there is definitely Randall pointed out our operations guys and what's transpired there the last two quarters, we expect will continue. Let's say in the mid-20% level, which is somewhere in the ballpark where we were back, you know, back before Q3 last year. Yeah. This is Randall. I mean, clearly, you guys wanna focus on Valley, but also the Brazilian rendering system down there. We've had to put, you know, procurement and risk management and spread management systems in place down there as the markets have, you know, kind of moved around here. You know, it's gonna normalize out in the mid-twenties, as Brad says, and it seems to be very manageable right there. We've still got work to do with the Eastern shore plants, as I call them now. Their margins still have some opportunity to be expanded there as we learn to make different products and learn to operate plants more reliably. We've still got some raw material agreements that have to be modified in the coming year and a half. For the most part, as I said, that integration by year-end should be very, very near complete other than a couple raw material procurement agreements. I mean, in Q1, between a fire that we had in Tacoma last summer, and then in November, the fire we had in Ward, South Carolina, you know, I expect that there was, you know, somewhere between five, maybe up to $10 million of additional expenses flowing through the system there related to transportation and loss of margin. You know, the system is very complex around the world, overall, it's been, I think you're seeing it in the margin management as we move forward being done quite well. No, yeah, I definitely see that. Thank you for that. My second question is, in your slides, you mentioned there's gonna be a modest improvement or you expect a modest improvement in fat prices in the back half of the year. How do you think about DGD margins then? Is 2Q going to be a peak in margins for DGD? You know, I always sit here and I have to be, I don't know, a little bit calm. You can't have it both ways. You can't tell me all this renewable diesel capacity is coming online and fat prices are gonna continue to go down. The other side is you can't tell me fat prices are gonna go down, and we can't earn a better margin at DGD. It doesn't work that way. Long story short, I'll defer to Sandra here a little bit, is we believe that margins for the balance of the year in DGD will remain strong. You know, it's kind of hard to always forecast beyond the next, you know, 60 days as we've seen April now, but I wouldn't call them by any means a peak. What would you say, Sandra? Yeah. I think I would say that, you know, we don't know what feedstock prices will do. You know, as John had mentioned, we have a great system. If we see feedstock prices go down, we'll benefit in DGD. If we see feedstock prices go up, we'll benefit in our base business. At this point in time, I don't know where they're gonna go, I know that we're gonna have, you know, an advantage, and it's gonna be great for us. Yeah. I think the other thing we would say is that, you know, the system, we have a global system. We're bringing fats out of Brazil because it's the best market from our rendering plants. That's helping margins there. We're shipping our first boat out of Europe, which should be a wake-up call to everybody in Europe. The fat prices have bottomed in Europe now as Diamond Green comes in and pulls away from the, you know, the HVO or the RD guys in Europe. That's the reason we believe fat prices have bottomed, and we think margins, you know, will remain quite strong in DGD for the, you know, for the balance of the year. Perfect. Thank you. I'll turn it over. Our next question comes from Ryan Todd of Piper Sandler. Great. Thanks. Maybe following up on the feedstock markets within the renewable diesel business. I mean, the markets seem to absorb the addition of DGD 3 without too much pain. You've got some very large capacity additions either ramping or likely to come online by the end of the year. Are you seeing any signs of material tightness on the low CI feed part of your business? Improvements on the supply side at all that have helped out with that, and any other kind of knock-on effects of some of the additional RD capacity in the market that you see within that business? You know, Sandra can help me here a little bit. From my seat, the answer is not really. I mean, clearly, we have shown that by locating Port Arthur and St. Charles on the water, we have the ability to originate from everywhere in the world. That took some pressure off of the Diamond Green Diesel Three startup. The second thing was clearly we had some logistical inbound unloading challenges there that have now been remedied. Ultimately, if you say, "Well, what rate were you running before and what rate are you running now?" You know, it's quite a bit higher from where we were in Q4. Ultimately, we're cleaning up the amount of rail cars and inbound tonnage that we had. Sandra, what else do you wanna add to that? Yeah. You know, since DGD 3 has been online, we always worry when we bring a new facility online, you know, what that feedstock market is gonna look like. We haven't had any issues getting feedstock. Our mix has maybe changed a little bit. We've brought in some more international supplies. Some of those are actually Darling supplies by our FASA entity. We've looked throughout the world and found other suppliers as well. We also were able to obtain more Valley supply or, you know, supplies through our Valley entity that we bought. We've grown as Darling, in turn, we're able to better serve DGD for that. Are you willing to roughly say, like, how much of the feed is in this last quarter came from international sources? Yeah, I don't think that's something that we share. No. That'll move around from quarter to quarter, month to month. I mean, clearly, you know, I think that the big piece in what you're seeing, like in the margin improvement in the Feed segment is the Valley Proteins material was headed offshore. The majority was before. Now it has the ability to go there. Relative to your other question, Ryan, on the other guys out there, we have no visibility to them. You know, we read you guys' report. Apparently there's a lot of capacity out there that we've never sold a pound to. We get to see the only thing, and then the soybean guys that I'm still close to, you know, are selling a little bit of RBD to them. They all claim to have pretreatment systems. That's all we see here. Thanks. Thanks for that. Maybe, on a, on a totally separate note, a follow-up on your... You said quite a bit of this in your earlier remarks, but as we think about your use of cash in the near term, you've got a leverage target by the end of the year that you'd like to hit. You're currently buying back some stock. As we think about the likelihood of a dividend, which you mentioned, do you need to hit that debt target before the end of the year, before you anticipate being able to, you know, roll out a dividend? How do you look at the, you know, I guess the priorities over the remainder of this year in terms of that use of excess cash? Yeah, Ryan, the spread. We do, as our partner said, looking at dividends from the JV, which is in concert, obviously, with our de-leveraging theme by the end of the year. We do or in sync in terms of the outlook here in the near term of possibly looking at cash dividends starting before, let's say before Q2 is over, but certainly here at mid-year, from the JV, with the margins that we're seeing now, we're, you know, feel very confident in that. That's combined with what the base business is looking at. I mean, we wanna be down in that clearly below 3x. I mean, if you're looking at investment grade, the rating agencies look at that a little bit different than our bank covenants do. They add back some other things into that equation. We wanna be clearly below 3x to give us that leverage and story with the rating agencies going into 2024. I think we would not be looking at the dividend, I think, Randall, back to shareholders here in 2023. We're gonna be get below 3x, be sustainable there, then evaluate our options from there. Yeah. Clearly, if we're carrying that momentum into 2024, it's a different set of opportunities that exist for us. Great. Thank you. The next question is from Andrew Strelzik of BMO Capital Markets. Excuse me. Good morning. Thanks for taking the questions. First I wanted to ask on Gelnex. When you closed the acquisition, you guided to the contribution to this year being kind of on the lower end of that $75 million-$100 million that you maybe had originally talked about. What pushed you to the lower end? How should we think about the cadence of the contribution through the year? Is there any reason to think we don't exit this year kind of in that $100 million-$130 million range for 2024 that the kinda annualized numbers would have implied? Yeah. John can help me here. I mean, clearly, in Q2 on Gelnex, we've got a, you know, the way purchase accounting and mark-to-market inventory, just like we did with FASA and Valley had an impact. There's a pretty good impact here as we bring over, you know, a lot of work in progress inventory that's been produced at Gelnex. We closed on it on March 31, so that's in if you're a student of the balance sheet, you will see it out there in the working capital or inventories. I suspect we'll get some earnings in Q2 from Gelnex. We've annualized the rate right now, I think conservatively at $75 million, but that $75's net of the inventory impact. Brad or John, anything you wanna add? No, they're running extremely strong. Obviously, the fair market value adjustment associated with inventory will have an impact on Q2. The business is running extremely strong. We fully expect to get what we've guided out there in terms of earnings out of Gelnex. It's a fabulous operation, fabulous organization, and fabulous assets. That 75 is not an annualized full year. That's the remainder of the year. That's the remainder of this year. Yep. Right. Completely understand that. Thank you for the color. Yep. On the all-in guidance, EBITDA guidance for the year, I understand the math that you did kind of as you thought about 2Q, it does imply a little bit softer back half. Is that simply a function of the shift that you talked about of the shipments from 1Q to 2Q? It sounds like also Gelnex then in the back half would be stronger. I guess any other reason to think that the back half on a quarterly run rate basis would be softer than what you're guiding for 2Q? Thanks. You know, I don't know how to answer that, to be honest with you, other than the sense that we see a really solid Q2 coming here, you know, and then we'll see from there. But we don't have any reason to not believe we won't hit the 1,875, whether that's, you know, 485, 485, or whether that's 525 and, you know, 445. You know, who knows? But we're confident in our forward forecast with what we see today. But to try to call Q4 today, I have no idea. Completely understand that. I guess I was just trying to make sure I understood the puts and takes of, Yeah. Just if there's anything to keep in mind. That, that was... Yeah. Yeah. No, understand. I guess the answer is no. There's no assumption of shipments shifting from quarter to quarter. It's Randall's rendering math. I like the math. Thank you very much. The next question is from Adam Samuelson of Goldman Sachs. Morning, everybody. Thank you for. Morning, Adam. This is actually Guillermo stepping in for Adam. I only have a follow-up on the integration efforts within the Fuel segment. If you could quantify the synergies realized in the first quarter and your expectation for the rest of the year. I don't know that we've never put a synergy number out there. That business is spread out all over the United States in four or five different regions. There was no expectations there. At the end of the day, we're running it where we thought we would be, and we still believe we have some more upside there as I said. Ultimately, we've done a lot of different things in that business from right-sizing people, right-sizing raw material procurement contracts or improving them, lowering energy costs, reliability, excess trucking, excess wastewater disposal. We're making lots of progress. We're at our target that we showed the board. We're at our business case of where we thought we would be. The rest of this is upside to us. That's very helpful. If I could squeeze in another one, as it regards to the buybacks, how should we think about the pace of the buybacks relative to the amount that you did on the first quarter as you also are trying to delever the balance sheet? Yeah. This is Brad again. The $44 million in the first quarter, obviously the softness in the stock price and early on in the quarter, we just, you know, as we've done the last couple of years, just remained opportunistic there. That's not to say we'll remain at that cadence the remainder of the year. We'll just kinda see where the stock level is. We're truly opportunistic there just in weighing that versus our deleveraging strategy here. That's super helpful. I'll leave it there. Thank you. The next question comes from Sam Margolin of Wolfe Research. Good morning, everybody. Thank you. Hey, Sam. You might not want to answer this question based on an answer to a previous one, but I'll give it a try. It seems like China's a story on the low CI materials supply front. You know, Darling has a presence in China. I'm not sure a lot of people appreciate that. You know, you're there, you're on the ground. I think, you know, you know the country pretty well. It would be great to get a sense of sort of what the addressable market is, the untapped market of UCO or rendered fat in China, because it seems like it could be pretty meaningful just given the context of oncoming, you know, RD capacity and balances. Thank you. Okay. I'll let Sandra take that and address. I mean, you guys can see the boats coming in, so I mean, there's no secret there. Yeah, you know, I'm not exactly sure what the volume would be because I think there's more than we ever expected that there would be. As prices have gone up, you know, over time, that's brought about, you know, more fats and oils around the world that are available to us. You know, one of the nice things that we're seeing out of, you know, Asia is that there are low CI fats, that there are ISCC fats. That's a real benefit to us. That's a nice thing as we're trying to look to go to the European market because that's one of the things that they're searching for. I think that the market's bigger than we ever anticipated, but to know, you know, the exact amount, I don't know. Sure. Okay. Hey, Sam, this is Randall. One more little piece there. I mean, obviously I highlighted that we're bringing Category 3 fat from Europe into the U.S. now. Someone has to ask, why would you be bringing Category 3 fat other than the economics work? Why do the economics work? We have Chinese biodiesel now coming into Europe and making fats cheaper there. you know, as Sandra said, the marketplace is far more dynamic than I think probably a year and a half ago, we probably understood. It's all interconnected now. I think the key point that we wanna say is the procurement team at Diamond Green clearly is looking for low CI fats around the world. Sandra highlighted ISCC certified, which is critical to making sure everything's legitimate there. The question is, we're not sure how big it is around the world. It continues to grow. Ultimately, if you become in the commodity business a high priced island, you magically find lots of extra coconuts available to you. All right. Thanks. That's really helpful. This is just a follow-up on Valley because it sounds like the integration is going well. I think you said it was on plan or according to plan. You know, there was some capital associated with, you know, I guess taking the facilities that you acquired up to the Darling standard. You're in a good place now as far as margins and earnings power. The question is, you know, is the Valley integration actually maybe gonna be a little bit more capital light than you anticipated, you know, which then accrues to the balance sheet and the pace of deleveraging? Thank you. No. No, I think in 2022, we rebuilt or, you know, improved the reliability through big equipment replacement in, like, six plants. By June 1 here, I think we'll have three more done here. By the end of the year, I think with Ward being rebuilt, that'll be the fourth one. We're a little over from where we thought we would. It's not giant money, maybe $10 million this year, and then a little more next year as we finish out the system. I wouldn't characterize it as capital light. I would just say at the end of the day, it's pretty much on target. You know, as we remind people, given the antitrust side of closing this acquisition, while we got to visit the plants, they were really pretty quick walkthroughs, and you can't really sound or see the inside of some of the equipment. You know, is it a little worse than we thought? Absolutely. That was shown in our prior numbers as we struggled to keep the reliability of the system. The team has done just a tremendous job of moving the ball forward here. You know, I think we're set to run now. We're feeling really good about it. Got it. Thank you so much. The next question comes from Paul Cheng of Scotiabank. Good morning, everyone. Granted that you have good insight in the RVO and the LCFS market and have a lot of contact in the government. 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's the California LCFS market that, credit changes that, what you think they may do? Sandra, you wanna take that? Yeah. I probably need a little bit more help on what. Sorry. Insight into the RVO and the LCFS markets here. You know, with regard to the RVO, I think that what we saw is it was a little bit disappointing. I think that we're hopeful. You know, there's been a comment period, where the industry, et cetera, has provided additional feedback, comments, information to EPA regarding what actually is out there. We're hopeful, that maybe we'll see a bump up here when it comes out in June 14th. In terms of CARB, I think that CARB is a very positive thing. You know, as you know, they're going through their scoping plan. In terms of things for Darling, it's very positive. You know, as they're looking at increasing their reduction targets from 20% to 25% or 30% in 2030. You know, other things that they're doing is they're also looking at proposing an LCF obligation for interstate flights, which should be, you know, really great, especially as we're building an SAF facility or converting our facility to SAF. You know, we're really interested in that. One of the other things that they're also doing is they're looking at an acceleration mechanism. If the credit bank gets too high, we did see recently where the credit bank increased, that there would be an alternative mechanism that increases the stringency there. We think that those are all positive things for us. Maybe just a little bit back about the RVO. You know, I think that we've had a lot of things with regard to, like, the Inflation Reduction Act that was a positive step forward. I think that if we don't get those volumes, with the RVO and get that stuffed up, then what we may see is we may see some stranded assets. That would be unfortunate. You know, we would see that in terms of crushing plants, potentially. We would also see maybe some missed opportunities in terms of SAF. I think it's very important, that EPA is listening to folks about, what the volume should be. Thank you. The second question is that I think, Sandra and Randall, both of you have said, you have stopped seeing a lot of the international, low CI feed, getting into the U.S. It does not look like, the availability of the low CI feedstock is a issue anymore, contrary to maybe just a year ago that what we thought. 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? This is John Bullock. It's kind of interesting because a year and a half ago, everybody on this call was clamoring about the fact that there was gonna be no low CI fat available in the world, and why on the devil would we make Diamond Green Diesel 3. Our answer was, you know, there's so much fat available at $0.20 a pound. When it gets to $0.50 a pound, you may find it to be a different world because higher prices incent more reclamation of waste fats around the world, and that's exactly what we've seen. We're very comfortable now with the Diamond 1, 2, and 3 systems where we are in relationship to the marketplace. Our focus has been on converting part of our processing capacity to SAF because we think that's the higher value, higher margin area. I should remind everybody, though, that we do have the space available in Port Arthur to make Diamond Green Diesel 4 and to build Diamond Green Diesel 4. We essentially preset ourselves so that we have the ability to expand. Haven't really gone into that process at this point in time, but we're certainly capable of doing it. We'll watch the market as it develops forward over the next year or so, and then make a determination on where we are. We like the size we're at right now. We like our focus on converting the SAF to the higher value. We'll see as this fat market develops going forward, if the stuff's available. The one point that I think we've talked about a lot here that we cannot overemphasize, though. The reason this all works for Diamond Green Diesel is we have a complete operating plant. We have the supply chain, the logistics capability, and the pretreatment capability, so as these low CI fats become available, we can actually take this material and convert it into high-value renewable diesel. The fact of the matter is, the vast majority of our competitors out there can't do that. We know they're building plants, but they are building plants that are designed to compete with Diamond Green Diesel. No. That's fully understand and agree. I still want to try to say that, okay, what will be the peak condition or that what trigger you and Valero decide to go for DGD 4? What is the peak condition in order for that to happen? You know, we do a complete analysis anytime we go through this. We will go through the same analysis we've always gone through, which is a tremendous economic analysis. We now understand the engineering and construction extremely well. We'll just have to take a look at the conditions. You know, I don't know that I'm gonna necessarily give you a list of the five things that we're gonna look for, but the one thing I can tell you is we always say is Darling is a for-profit operation The most important thing is when we can identify returns that we can get on our investment, that'll be the number one precondition on us making an investment. Yeah, I think, Paul, this is Randall, you know, I think it's pretty simple. I think the pause in number four for the venture has been, let's see the demand develop. Let's make sure it's real. At the end of the day, we believe it's real. Clearly, we're arbitraging or giving ourselves optionality in the SAF. As John said, we believe that is the next new horizon green pasture. Anybody that even starts to talk about adding, whether it's 1 billion gals in the U.S. or 1.5 billion or 2 billion, you know, the promises that have been made in that global SAF market, whether it's Europe or here, far outweigh any capacity that's been contemplated. At the end of the day, you know, this thing is set very nicely for the future. If clearly the SAF demand is there, which we believe it will be, that will help us then move forward to that next step of looking at number four. You know, clearly the decision before was, and I was as guilty as anybody. I told John and Sandra, I said, "I want to make sure there's enough feedstock in the world," 'cause I was starting to believe you guys that we're gonna have a feedstock war. We now know that's not true. Now we're waiting to see the SAF market develop such that we can go larger in that, and that would drive clearly number four. Potentially, I think the most likely would be an SAF unit at number one and two, and St. Charles would precede any decision on number four. Okay, great. Can I just ask a real short question for John? The interest rate swap 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? Yes, that was done, Paul, right at the end of the, at the end of the first quarter with, in conjunction with the funding of Gelnex. I see. What's the? The effect from that. Yeah, I'm sorry. There was no interest- What's the incremental? No interest, no interest savings in Q1 from that. Right. what's the second quarter versus the first quarter impact from this swap? Interest expense, there will be a $1.2 million savings there. Obviously we have a debt increase there. We're still saying for the full year about $230 million of interest expense. I see. Okay. We're good. Thank you. The next question is from Matthew Blair of Tudor, Pickering Holt. Hey, good morning. Randall, congrats on the strong results. I wanted to follow up on your comment that DGD second quarter is shaping up to be a record. Was that on just total volumes or total EBITDA contribution? If it's on EBITDA, it looks like that would translate to an EBITDA margin of roughly $1.75, maybe $1.80 per gal. Quite a step up from Q1. I just wanted to. Yeah, I mean, clearly, with the, with the system running, you know, 1.2 billion gals divided by four, 300 million gals now, you know, should be being produced, maybe a little more and, you know, being dependent on shipments and timings of boats. Clearly, you know, we gave earlier guidance of a buck and a quarter for the year. That's kind of what we saw coming into the year in February. You know, the margins now are clearly somewhere between $1.50 and $2. What we can capture of that, it's too early to say. Sandra, anything you wanna throw there? Yeah. You know, the only thing I would say is that, you know, obviously, we're seeing lower feedstock costs than what we saw in first quarter. As Randall and John had mentioned, our units are running full. They're running very well, and we'll continue to push those units as hard as we can to see what they can do. I think it's a combination of those things. Yeah. Unfortunately, we have lost Mr. Blair's connection, so I will move on to Ben Kallo of Baird. Hey, guys. Thanks for taking my questions. Randall, on SAF, I know it's early in the game, but could you just talk about any kind of commercial discussions, sales discussions and how you think that plays out? Is it long-term agreements or is it too early to tell? Yeah. This is Sandra. We've been talking to a number of parties, and we were talking to a number of parties actually even before we made our investment decision. You know, we continue to do that. I don't think that we're ready to set anything in stone. It'll probably be closer to when we're coming online before, you know, we make any agreements. In terms of agreements, you know, we've always talked about the Inflation Reduction Act was really important in spurring us to make the decision to move to SAF. Now, you know, what we're seeing is we're seeing the premiums that we thought we would. That's very positive. We have no parties in particular right now. We continue to talk to a wide range of folks. Yeah, Ben, this is Randall. I mean, clearly, you know, that market is rapidly developing led by European procurement now. It'll spill over into the U.S. as we move into later 2023, early 2024. The commercial team's gonna have to decide, do you sell a little bit, sell a little bit more, or sell all of it, and then move on to the decision to build the second plant. Right now, you know, clearly there's a lot more promises out there than have been realized yet. We're excited about it. Sounds good. I need some Randall math, and it might be difficult, but if we looked at just margins in Q1, or however you want to do it, what you think they are for Q2 for Diamond Green Diesel, and then we translate it to after the Blenders Tax Credit goes into the new program in the IRA, where would margins shake out for you guys there? Yeah. This is Sandra. I don't think that we know. I don't think that we've looked at that quite yet. You know, it's gonna change how things look on our P&L because it's gonna be an offset to income tax. You know, I think that you're gonna have to start looking at our P&L probably a little bit differently. Maybe there's a more focus on EPS rather than EBITDA at that time. Okay. Randall, you talked about maybe stranded when the RVO question about stranded crush facilities. Crush facilities coming online, how does that impact you? I guess it's better for feedstock. What about if the end market, the renewable diesel plants don't come online, and the crush facilities do come online? What's that risk? Is that the risk to your core business? I hope that made sense. You know, I think while you can't break them completely apart, I don't know that they're totally interdependent on each other. I mean, clearly, we've never seen what's about to happen in North America on the amount of crushing capacity. Remember, we're gonna grow just a little bit more, not a lot. That seed, whether it was out of Canada in the form of canola or soybeans out of the U.S., we're headed predominantly to China. Ultimately, the question is gonna be, do those beans get crushed here? Do they get crushed there? Do the Chinese buy, you know, finished protein instead of raw soybeans? Do they arbitrage to palm oil instead of soybean oil? You know, there's a lot of unanswered questions here. You know, there's probably, I don't even know the numbers, so I'll just stay away from it, of how much crush capacity is coming online. You know, it was all built with the belief that there'd be renewable diesel demand underneath it. That takes two forms. One would be, do you have the process to pre-treat crude soybean oil or super degummed soybean oil, or do you need refined bleach? The only refined bleach facility that's been built in the last years, and I don't know if I want to say five- years or 10 years, has been in Quincy, Illinois, by ADM. If the pretreatment business doesn't work for these guys, which we're skeptical of, you know, that soybean oil is going to have to be moved out of the country because there won't be anywhere for it to go, or the crush margins will go collapse to the point that the beans are moving out of the country. John, anything you want to add? I think that's exactly right. I mean, the fact of the matter is, every soybean in the world was crushed before we had the tremendous increase in crushing capacity in the United States. For all of those facilities to be filled up with something to process, we need to raise a lot more soybeans around the world. That was always our question about the soybean expansion that was occurring out there. From a standpoint of our business model, we should be able to adjust. Ben, the other thing is, I mean, if like I said, if you believe all, you know, all you sell side guys' reports on how much capacity is out there, it will use up all that soybean oil very, very quickly and then some. I mean, it's kind of one or the other here that you got to buy. These are clearly uncharted waters for an international consumer that's been very comfortable buying boatloads of canola and soybeans in the past. Just to sneak one in. I know we're going over, but just Gelnex, because collagen is becoming a bigger part of the business. Could you talk about how you view the growth profile? Not this year, I know the run rate, but, you know, as you go forward, on the top line, and then, could you talk a little bit about margin and expectations there? Thanks, guys. I'll tag team this with John. You know, you know, clearly, Gelnex met the criteria of the Darling business model of a great business with a great management team, with great assets. We're 100% comfortable and confident in what we procured and their run rate supports of an accretion that we're proud of. Ultimately, as we have four facilities in Brazil, one in Paraguay, and then one in Portage, Indiana, those are all going to be integrated within the system here over time. What's interesting is we didn't have a lot of overlap in customers, there's gonna be really some nice growth there. They are a lower cost operating model than we are. you know, while that's, you know, kind of hard for my Rousselot team sometimes to accept, we've got a lot to learn from them. Ultimately, they look at us from the standpoint in the collagen peptides business. We were the leader and are the leader there. How do we now move their product and their customer base to our quality of product and get paid for it? Clearly, as Brad and Suann and I have told people, we've been on a three-year, four-year plan of adjusting our product mix from basically confectionary and pharma gelatins to collagen peptides. They marginally have a little better margin than what we have. You've seen that in the earnings charts that's out in the earnings call slide, probably one of the greatest stories out there. We don't see any slowing of that. Number one, with volume growth, number two, with margin improvement, and number three, with the portfolio of collagen peptide products that we have ready to launch here in the next one to two years. John, anything you want to add? I think, you know, oftentimes what's overlooked is we really focus on the products that we sell and is there gonna be demand for those, and are those gonna be high value products that we can obtain good margins on. Quite frankly, what we see in the collagen space, both on the gelatin side and on the hydrolyzed collagen side, is exactly that. Same thing we saw with renewable diesel when we looked at the low CI benefits associated with that product. These are high value premium products that have a great natural role in either the food or the Fuel systems, that's going to translate into excellent margins, excellent profitability in that segment of the business. We're very excited about the future of collagen. Okay. The next question will come from Tony Bancroft of GAMCO Investors, Inc. Thanks for taking my question, team. Congratulations on the great quarter. You know, you've talked about this in the past, Randall, and maybe you could just remind us and maybe potentially update us if anything has changed. You know, from a 30,000 foot view, how much demand is there for Diamond Green Diesel? I realize a lot of variables, but obviously, you've sort of talked about what the constraint is, at least at your end, on capacity. You know, if you maintain sort of a, whatever you wanna call it, regulatory growth rate, and the demand, just sort of the overall demand, I mean, could it be a Diamond Green Diesel or SAF 8? In either using either of those or both of those, can you sort of maybe just walk us through how you look at this? I mean, every one of these has been a home run. I think as an investor, you just wanna try to understand what's sort of the... Is there a terminal value? Is there a run rate? Is there a sweet spot for this? Maybe give some comments on that. Yeah. I think that's fair enough. You know, clearly trying to understand the global potential for global demand. It's clearly been improving, increasing, and becoming more transparent over the last couple of years. Sandra, you wanna kinda give some sweet spots there? Yeah. I, you know, I think that there are a number of things going on. As I think about it, you know, there's no better time to be in biofuels. First of all, you know, and we've talked about it a little bit earlier in this call, is CARB's scoping plan, and they're looking to increase the stringency of that plan. You know, they're also potentially looking to add a potential jet mandate within the state, which would be great. That's just more demand for us. We have a number of states that are now looking at LCFS programs. We have a potential LCFS obligation for jet in British Columbia. I think that recently we've seen that now we may have some mandates for SAF, for maritime fuels, et cetera, in Europe. I think that the... You know, we're seeing more things globally there. Even within the States, on the SAF side, we're seeing that various tax credits are being passed, and these are in, like, non-LCFS type states. You have one in Illinois, there's one in Washington that's now been passed. There's just so much that is creating more demand, adding more, you know, dollars to the supply chain, et cetera, that makes these products possible. I, you know, I haven't ever seen this much excitement within our industry. Yeah, Tony, it's one of those things. You're looking around the world. You know, we came through a pretty strong inflation period. We came through some, you know, headwinds around the world. The one unwavering thing was the commitment to decarbonization that we've seen in the world. It is not slowing. You know, I sit there and wonder if our SAF production actually stays in the U.S. or it goes to Europe. We don't know yet, but we know the demand's out there. SAF demand, whether you're talking, you know, the LCFS and California market's clearly gonna set the tone here at the end of the year by what they do under rescoping and whether they include SAF. Ultimately, if you take the 2% and 3% mandates, and I know they always seem so small when you say 2% or 3%, but on 50 billion gals and, you know, it really creates a kind of a trajectory for the next three to five- years that feels pretty darn good and makes us feel pretty confident as being the first mover and with the best assets located in the world to serve that demand. Yeah. I guess just to follow up on what you just said there at the end. You know, is your moat just too deep? I mean, you guys are the best. You compete the best on CI. You beat the guys on cost. You know, input, you name it. Is the moat too deep? Is there something that could be out there as transformational that would cause you to have, you know, have more less competitive advantage? I mean, When you wake up every day, how do you sort of look at that? You know, I feel very confident. I always, in a sense, I always like to be careful with questions and analysis about the unintended or the unknown here. Yeah. I mean, the challenge in this is clearly, you know. I think we've said years ago, we don't really produce a gal of fuel, we produce a gal of compliance. At the end of the day, when you're competing against or potentially one day competing against people that have a choice to either produce or buy an offset in the form of a carbon credit or a RIN or an LCFS credit, you know, economics may not always be perfect in those imperfect worlds. You know, if you say, what keeps me awake at night? It's when people do uneconomical things, and rather than say how profitable they were in their renewable diesel plant, they talk to you about avoidance of compliance costs. That's the only thing. Ultimately, I see the SAF side way offsetting anything of the, what I'm gonna call the generic commodity producers of RD around the world now. Sandra, anything you wanna add? I think you hit it, Randall. I mean, I think we're really excited about SAF. You know, it's a kind of the next step in the progression that we've taken at Diamond Green. I think the market is huge. Yeah. I guess lastly, you know, with, you know, you know, again, you guys sort of being a leader in this, in this industry and your partnership with Valero, you know, long term, five- years from now, 10 years from now, how do you see that partnership evolving? You talked about a dividend, but, you know, every other energy major has essentially bought what you and Valero have, and you're still the best in class. How does Valero look at you in the long term? This is John. We have a tremendous relationship with the folks at Valero. Obviously, a great relationship with Joe, and Lane has been sitting on our Diamond Green Diesel board for the last several years. We were very excited to see him be named as a replacement for Joe. He's a great guy. Our relationship throughout the Valero organization is fabulous. I think that's, you know, as I've always said, the biggest thing that's a miracle of Diamond Green Diesel is this is the first time the ag industry and the petroleum industry- Yep Have figured out how to get married and have the marriage last. It's a fabulous marriage that we have with those folks. We love the people at Valero, really respect them, bone deep in terms of how we work with them. We see that relationship just moving forward fabulously. Yep. A great job. Well done. Thank you. The next question comes from Ben Bienvenu of Stephens. Hey, thanks. Good morning. Congratulations. Just a quick one on the integration on Valley. Obviously, making solid progress there. You had really strong pricing realization in the Feed business, even in the backdrop of, you know, what it seems like temporarily, dipping fats prices. One of the things you talked about is, you know, increasing, you know, realized fat values by selling to Diamond Green Diesel. Can you talk about where you are in that process and, you know, kind of what contribution there might have been to 1Q, and what incremental contribution there is going forward? Thanks. Yeah. I mean, this is Randall, Ben. I mean, clearly the eastern seaboard or Valley integration has been as challenging or more challenging than we'd hoped. I mean, we're clearly down the road, and I think we're past the critical points there. You know, you start looking at reliability, and that comes in the form of capital investment and equipment. We're doing that. You know, I would say that we've let attrition take over in staffing. I mean, we've clearly raised the cost within Valley from a people standpoint because we want a better quality person with. we're gonna provide really good, you know, health and wellness benefits to keep those people. That's been underway over the last year as we kinda celebrate our one-year anniversary. You know, overall, when you look at the business, there was a lot of things going on in that business that weren't, you know, completely transparent to us on day one. The system was running 130 hours a week and having no time for maintenance. When you do that, you run to fail. What do you do when you run to fail? Well, you have to have bigger maintenance departments, and those are the most expensive people within the factory. As you increase reliability, you don't have to have that. You have better uptime. What else happens when you break down? Now you transport it to the next plant, and if the next plant doesn't have capacity, they transport it to the next plant. By the time it gets to the third plant, it's really not very good material, and it causes you to have bad wastewater that then upsets the entire system. The domino effect, you know, I think we have won the battle with the dominoes here. Part of that's culture, part of it's investment, part of it's just teaching people how to operate properly. We feel very good. On the other side, we've seen an interesting move that I'd never seen in my career on the feeding of animals, especially on the poultry side, where they've gone to more lysine and less feed grains and oil seeds and proteins and fats. Ultimately, what's that produced? It produces the same pounds of meat out the door, it produces a less yielding product you know, to the rendering guy, and that's in the form of lower fat yields. We've had to go back per our agreements and test every raw material supplier. Those adjustments were made in March, and that's gonna start flowing through in second quarter. Ultimately, as we looked at the rendering contracts that were put in place, we've had to make some adjustments to them to where they provide a fair return for the capital that's being deployed to get that reliability. We probably, on a scale of one to 10, we're about a seven done on that. Like we said, why the 1,000 days? Cause there's two more contracts that come due in 2024 and 2025. Then it'll be complete. I mean, as I said earlier in my comments, we're pretty far along, and we think we'll be near complete other than a couple raw material agreements here towards the end of the year. Okay. Very good. Thanks, Randall. I'll leave it there in the interest of time. Best of luck. Thanks. The next question comes from Jason Gabelman of TD Cowen. Hey, morning. Thanks for squeezing me in here. I just wanted to ask about growth, particularly in the core ingredients business, after you fully integrate Valley Proteins and Gelnex and FASA. You're still investing in the business. I'm wondering what is the organic growth potential over the next couple of years? You've mentioned there's more feedstock raw materials out there available than what you had previously thought. Does that open up the potential for M&A once the balance sheet is back to a target level? Thanks. Yeah. Jason, this is Randall. I mean, clearly, if we look back at, to the model that we did when we did the acquisitions in 2014 and 2015, we followed up with looking at our global footprint and then, you know, if you will, optimizing the logistics, meaning lowering the transportation costs. Two things. One, we have to grow with our suppliers. Two, we have an obligation to make sure that the system remains low cost by having plants in the right place. You know, we are in the process of, we'll be starting up, I think in August, a major expansion in Turlock, California. We have a second line going into Boise, Idaho. We're in the permitting process of a brand-new plant in Nebraska. We're looking at one or two plants on the Eastern Seaboard in the U.S. We've got a couple green energy plants going in Europe, and I think we've got another expansion going on or a potential expansion of a another rendering plant in Brazil today with two more in the process of starting up. Globally, it's an organic build-out now for the next one to two years. From there, you know, once, as you said, once the balance sheet and once we have visibility in Diamond Green Diesel and what we're doing there, you know, I think our strategy's been very transparent to the world of how we invest capital. We do have to always get through the cycles, but at the end of the day, when we make investment decisions, we look at five and 10-year average pricing, not the moment in time. Ultimately, we're gonna continue to build out feedstock to support the Diamond Green system and, two, grow with our customers. That's one thing Valley didn't do on the Eastern side, was maintain adequate capacity as their customers were growing. We've got some work to do there, but that's in our capital plan. Great. Just to clarify, what's the total number of plants? You kind of discussed them piecemeal. The total number and any thoughts on EBITDA contribution over the next couple of years from that organic growth. Thanks. You know, I don't know. I think I probably rattled off, what? Six or seven or eight plants. I'd hesitate to give an EBITDA at this time until I see what time and starting of them is. We'll get back to you on that. All right. Thanks for the time. Next, we have William Lewis Baldwin of Baldwin Anthony Securities. Thank you very much. Just a quick one here. I wanted to get a feel, if I could, on what the trends have been and the level of protein exports, you know, the exports of protein coming out of the U.S. How important is that to your protein business, Randall? Has that been growing or what's the prospects for that as far as your export markets? Yeah. Yeah, this is John. Yeah, it is a component of what we do. We move a lot of containers. We're actually one of the larger container shippers in the world with the containers that we move. Yeah, we move a lot of proteins offshore. Have some very good markets in some of our specialized proteins offshore to Asia. It's a component. It's not obviously a tremendously large volume versus our overall volume, but it's a component of our demand and we really have an excellent network and an excellent reputation in Asia on our products. Yeah, Bill, this is Randall. I mean, clearly, you know, the value of the dollar, the other currencies, all tend to play into some years are bigger than other years. I would tell you, we are clearly seeing increased demand for proteins in Asia, predominantly China today. We're working hard. I mean, you know, one of the If you say, okay, everybody wants to talk negative about what we bought with the Valley Proteins plants, they had a very strong marketing network in Asia today, that's really being helpful to us as we balance around. You know, Europe continues to modify rules around what can be exported versus what has to be destroyed or put into green energy. Very global market for animal by-products. As I said earlier, you know, clearly China is gonna have to wrestle with what happens in the oil seed complex in North America. I suspect that's gonna open up more opportunities to alternative proteins to Asia over the coming years. Do we find ourselves competitive in the specialized proteins, you know, the value-added proteins, in the world markets, you know, despite the, where the dollar is? This is John. Absolutely. Absolutely. The United States as well as Europe, we move a lot of those products out of Europe too, but we're primary sources for those for the world. I guess it could be fairly safe to say then is as demand for proteins grows worldwide on a secular basis, that this market for Darling could continue to grow. We have a strong focus in the pet food market on a lot of these specialized proteins. The pet food market continues to be extremely resilient through the inflationary period here with very, very good demand. We feel very, very good about the demand profile for a lot of our specialized products. Thank you very much. This concludes our question and answer session. I would like to turn the conference back over to Randall Stuewe for any closing remarks. All right. Thank you. Thanks everybody for your questions. You know, thanks, Tony. We'll, we'll see you tomorrow. We're attending a few more conferences in May, which are listed on our website. As always, if you have any additional questions, reach out to Suanne. Stay safe. Have a great day, and that concludes our call. Thank you very much. The conference is now concluded. Thank you for attending today's presentation.