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. Suann 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. Stuewe, 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 statements. Now I will hand the call over to Randy. Thanks, Suann, 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 ingredient 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 improvement. 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 26th, we announced that DGD volumes for the third quarter were lower due to a regularly scheduled turnaround at No. 2 in St. Charles, Louisiana, that took the unit offline for 27 days. After that turnaround, DGD 2 had a minor operational disruption, so in total, DGD 2 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. Net income for the third quarter of 2023 totaled $125 million, or $0.77 per diluted share, compared to net income of $191.1 million or $1.17 per diluted share for the third quarter of 2022. Net sales were $1.63 billion for the third quarter of 2023, as compared to $1.75 billion for the third quarter of 2022, or a 7% decrease in net sales. Although Darling's third quarter 2023 gross margin increased $10.1 million and was 23.8% as compared to 21.5% for the third quarter of 2022, operating income decreased $90 million or 33.5% to $178.4 million for the third quarter of 2023, compared to $268.3 million for the third quarter of 2022, primarily due to Darling's share of Diamond Green Diesel earnings decreasing $49 million. Additionally, depreciation and amortization and SG&A increased about $21 million and $32.6 million, respectively, as compared to the third quarter of fiscal 2022, primarily due to the Gelnex and FASA acquisitions. Now moving to non-operating results. Interest expense increased from $39.8 million in the third quarter of 2022 to about $70.3 million in the third quarter of 2023, primarily as a result of increased indebtedness due to the acquisitions. For the three months ended September 30, 2023, the company reported an income tax benefit of $15.4 million and an effective tax rate of -13.6%, which differs from the federal statutory rate of 21%, due primarily to the relative mix of earnings among jurisdictions with different tax rates and biofuel tax incentives. The company's effective tax rate, excluding the biofuel tax incentives and discrete items, is 25.9% for the three months ended September 30, 2023. The company paid $40 million of income taxes in the third quarter. For the nine months ended September 30, 2023, the company reported income tax expense of $52.3 million and an effective tax rate of 8.4%. The company's effective tax rate, excluding the biofuel tax incentives and discrete items, is 28.4% for the nine months ended September 30, 2023. The company also has paid $127.7 million of income taxes year-to-date as of the end of the third quarter. For 2023, we are projecting an effective tax rate of 9% and cash taxes of approximately $30 million for the remainder of the year. The company's total debt outstanding at third quarter 2023 was $4.4 billion, as compared to $3.4 billion at year-end 2022. Our bank leverage covenant leverage ratio at the end of the third quarter was 3.25 times. We continue to maintain strong liquidity, with $1 billion available on our revolving credit facility as of the quarter end. Capital expenditures totaled $146.2 million for the third quarter 2023, and $380.6 million for the first nine months. With that, I'll turn it back over to you, Randy. Hey, thanks, Brad. As previously announced a few weeks ago, we revised company guidance to $1.6 billion-$1.7 billion of combined adjusted EBITDA for the full fiscal year of 2023. For Q4, we carried good momentum in from the third quarter around the world. Raw material volumes have slightly softened, but our diversified geographic footprint makes the impact negligible. Clearly, the global fats and oils have softened as a direct re-reflection of an ample supply of global fats and oils and delayed startups and inconsistent operations of renewable diesel plants. While we've seen a lot of press and noise about significant gallons of new renewable diesel coming to the market, the numbers appear to tell a very different story. If more capacity outside of Diamond Green Diesel was operating, fat prices undoubtedly would be higher. DGD is performing well, and we do not have any planned turnarounds in Q4. Margin structures are adjusting, and we are very encouraged with the conversations we are having with a variety of interested parties regarding sustainable aviation fuel and our ability to deliver the margins in line with what we have communicated. Looking forward to 2024, while the heavy lift of our integration work has been completed, there are still a few opportunities that can add some margin improvement in our feed segment, and our food segment should continue to reflect our product mix shift. From an earnings perspective, we see 2024 shaping up nicely and expect to deliver and delever with an improved performance globally. The table is set with an improved outlook for the LCFS, growing demand for SAF, strong demand for our low CI feedstocks, and favorable tax structures. Given the environment we see for 2024, we at this time anticipate combined adjusted EBITDA to be in the range of $1.7 billion-$1.8 billion. In 2024, we plan to lower capital expenditures, focus on improving our working capital usage, and we anticipate regular dividends from Diamond Green Diesel. This will all help us accomplish our leverage targets by year-end. Given the anticipated dividends from DGD and the strength of our global ingredients business, we should be well on our way to achieving our target leverage ratio of about 2.5 by year-end 2024. With that, let's go ahead and open it up to questions, and I'll come back with some closing comments. We will now begin the question and answer session. To ask a question, you may press star, then one on your telephone keypad. If you are using a speakerphone, please pick up your handset before pressing the keys. To withdraw your question, please press star then two. In the interest of time, please limit yourself to one question and one follow-up. At this time, we will pause momentarily to assemble the roster. Our first question will come from Manav Gupta of UBS. Please go ahead. Good morning, team. My question first is on the, a little bit on the macro side. How do you view the recent staff proposal by CARB, which increases compliance by 50% by 2030, also has the AAR mechanism, which pulls forward the program in case of over-generation of LCFS? Do you believe this will be supportive of RD economics once it kicks in in 2025? Hi, good morning, Manav. This is Matt. So first of all, the answer is yes. We do believe that this is supportive to the RD business. As you know, the LCFS is an important component to the margin build in the RD space. And given that the SRIA that was put out a couple of months ago and the expected legislation that is forthcoming, there are several components that we think are supportive for the RD and even the SAF business. So obviously, volume is an important part. And then there's the component for a potential of an SAF in California of up to, you know, in the neighborhood of 150 million gallons, which will line up very nicely with our SAF project. And there's even the component of timing. There's the possibility of an earlier implementation. Right now, it's set for 2025, but there is the chance, and we all have to stay tuned on this, but there is the chance... or even sometime in Q3 or Q4, an implementation coming on this. So, again, all in all, we are very optimistic and quite satisfied with the LCFS. Okay. I'm assuming you're basically referring to the fact that the AAR will pull forward the program into 2024, so the program could actually start in third quarter 2024? That's a potential, yes. Okay, thank you. Very quick follow-up is on slide seven, you indicate lower fat sales volume were a $32 million year-over-year headwind, and lower protein sales volume were a $13 million year-over-year headwind. Given that integration is going well for both Valley and FASA, should we assume this was just a temporary blip and the volumes will come back as we go ahead? Yeah, Manav, this is Randy. I mean, what we're seeing, and I in my script, I commented on it, that's directly related to lower cattle slaughter numbers, predominantly in North America. And clearly, the cattle economics have changed in the US. The herd is low, but being replenished, and that's just directly related to year-over-year comparisons of, you know, if you think of it this way, you know, red meat has the most fat, the most protein, and then pork, and then chicken, and so that's direct, that's what that is. The volumes in South America are relatively flat right now. Europe's in good shape, but that's all pretty much North America. Canada's in good shape. The next question comes from Adam Samuelson of Goldman Sachs. Please go ahead. Yes, thank you. Good morning, everyone. Good morning. Morning. I guess, first question, Randy, I mean, if you think about the updated kinda outlook for the balance of this year, and you gave kind of a framework for 2024. Can you first quantify in the quarter the head—there was an allusion in the pre-announcement to a hedge loss at Diamond Green. Can you quantify that? And as we think about Diamond Green for the fourth quarter, if there's no scheduled turnarounds, should we be thinking about production a lot closer to where you were in the second quarter, which, if true, and even at third quarter margin levels, would imply, make it pretty tough to get to the low end of the way you're framing the full year. Can you just help reconcile that? Ooh, I don't, I don't know that I would frame it the, the way you just finished that sentence. No. You know, clearly, there's always a timing issue of how the fat prices in our core business flow through. And also, remember, a significant portion of the North American portfolio ends up at Diamond Green Diesel as the purchaser. So you, you had a little bit of a, a double wham here. Number one, you know, the prices started to accelerate in third quarter again, but we'd already sold Diamond Green, and so those sales now are coming to be fruition in Q4 for our core ingredient business. On the other side, we saw heating oil spike up. You do get some hedge losses. You can go, you know, into the, the... You can go straight to the financials in the derivatives sections on the Valero release, and you can see what that number is. And it was a significant number. At the same time, you had higher fat prices flowing through, then you had heating oil now coming off. And so at the end of the day, that's my comment about margins are adjusting. You know, if you think about the efficiency of the D4 RIN, you know, when that thing came down, what did it say? It said fat prices had to come down to put, you know, some type of margin back in the business. So clearly, the margins in DGD are coming back very nicely in Q4 here. And, you know, they'll finish the year strong, and then that's what gives us then the momentum into next year. I mean, like we said, we're trying to, you know, we've, we've always said, you know, we're not gonna guarantee you no volatility in DGD because there's a lot of moving parts there. But at the end of the day, 910 million gallons at $1.02 for year to date, you know, we said coming into the year, we'd be somewhere between $1-$1.10. We're using $1.10 for next year. You know, we'll finish up somewhere, you know, within our, our guided range for the year. You know, it just depends on how everything flows through. But no, I, you know, from what we see right now, we're, we're right on target. Okay, that, that's helpful. And then just in the feed segment, can you maybe just—maybe the quarter-on-quarter EBITDA decline, help bridge some of that. So EBITDA was down $26 million or so versus the second quarter. Can you help bridge how much of that was seasonality, how much of that was the commodity prices, maybe some of the weakness in pet ingredients, and if you think about the fourth quarter, kind of with where commodity prices land, can help us think about some of the key items in EBITDA and in feed moving forward? Yeah, and I think you kind of answered most of your question there. I mean, typically, the seasonality hits in this business, especially in North America and Europe, in third quarter in the feed segment, because the quality of the raw material in the summertime is much harder to process. That's code for it's harder to get the fat out of the product and leave it in the protein, so you kinda have lower quality fat, less fat, and that's how it flows through. It has for, you know, 142 years. The pet food business is something to put your finger on right now... pricing remains good in that area. Demand was weak, but it's ticking back up again. You've got a little bit of a trade down going on, it appears, around the world right now in the pet food side. But overall, when we're looking at 2024 versus 2023, it looks pretty stable there. Protein prices, you know, on most products are in pretty good shape. I mean, there's a little bit of trade disruption in the world right now, in different areas that are moving proteins around. Matt, what else you wanna add here? Yeah, I mean, I would say, you know, the Q3, as you all know, was a typical very hot summer, and our businesses did, you know, as expected, feel that. And so, but we are seeing, especially now in Q4, a quick return to the pickup and recovery. Yeah. Keep in, keep in mind, Adam, a year ago today, not sequentially, but a year ago, you know, here was-- we still had Ward, South Carolina, operating in North America. Ward, South Carolina, is, is going to be key to 2024 for us as it comes back online here. The, the plant, is completely rebuilt. We are still landfilling a significant amount of, of product right now that we can't process in our system. So as we guide higher next year, you know, if you say what-- you know, you always have to assume fats and oils prices and protein prices in there and energy, but most importantly for us, it, it's being able to, to bring back our system to full strength on the eastern seaboard. The next question comes from Derrick Whitfield of Stifel. Please go ahead. Good morning, all, and thanks for the 2024 commentary this morning. For my first question, I wanted to lean in on DGD and focus on the sustainable margins of your business, which really should drive the value of that business beyond 2024. When we analyze your sustainable margins by assessing the value of your feedstock streams relative to a marginal unit of production, there appears to be a very meaningful positive spread with what you own differentially versus industry. As you've optimized the economics of DGD, is it reasonable to assume that that sustainable margin you've talked about in the past at $1.10 per gallon still stands, even with the depressed D4 RIN prices, given your ability to increment tallow at DGD? I mean, fundamentally, Derrick, that's what we believe. I mean, clearly, the volatility in Q3, the turnaround offline, 37 days, you know, we disrupted our logistics, both inbound and outbound there, and, you know, moved boats to Q4 that should have loaded, you know, et cetera, et cetera. You know, the D4 RIN plays an important part in the value of that business down there. Clearly, we were not a hedger of D4 RINs, and we got caught in the volatility there with higher fat prices, lower - a lower green premium, as we say, and you saw that flow through. But overall, our thesis still remains the same. As Suann pointed out to me, she said, "You know, even under any situation, our investment case in this was $0.79 10 years ago on a $3.23 a gallon bill." We still believe in that. We believe it's even better now given our CI advantages, given our both inbound, outbound logistic advantages. I mean, keep in mind, why are fat prices a little lower in North America? Because Diamond Green Diesel's the largest importer now of fats in North America, because it has the logistical capability to convert and pre-treat those fats. So that's phase one. Phase two, as the script alluded, we're working hard with interested parties. We won't say who the interested parties are, so please don't ask, but we're very close. SAF is real, the demand is real, and the margin opportunities, as we've explained out there, remain very real and doable. So, you know, if you, if you look at this business, you know, in 2024, Matt said, "Okay, I think there's a chance we could get the LCFS implementation online a little sooner." You know, even if it doesn't come, you know, till the back end of the year, just the fact when CARB publishes and everybody says, "Oh, here is the script, here's the playbook," that's positive, and, and, and we'll see it. We'll see an improvement there. Number two, as we look around the world for next year, you know, the SAF side, our plant is progressing nicely. We made it through hurricane season. I know technically that's got another week or two, but it looks like we've made it through hurricane season. We'll be buttoning it up. Steel's up, equipment's there, and, you know, hopefully, as we progress through the wintertime and next summer, we'll be mechanically complete and do a normal startup here. And that's-- if you look at it, two to three years from now, you know, you'll have 250 million gallons of SAF in 2024, or, I mean, 2025 for sure. You'll-- and then, you know, SAF two is on the drawing board here. Clearly, as we've communicated to people, that decision won't be made until we have complete, you know, proof of concept of both the technology and the margin structure. But, you know, at the end of the day, if you look at 2024, 2025, 2026, you can start to think out that, that our portfolio will include, you know, a substantial gallons of SAF along with RD, and then we'll have we'll own that arbitrage again as we go forward. So it's a... You know, as we look forward, that we don't see any downside, you know, from our case. You know, there may be a little lull here that the market seems to want to price in. Matt, anything else you want to add? I would just say that one thing to keep in mind is that, as this SAF comes online, the feedstock is renewable diesel. And so, our plan is boiler plated for 250 million gallons. And so when we turn on with that plant, that's 250 million gallons of RD that's coming out of the RD market and going into the SAF market. So that's another, let's say, friendly component to even the outlook for RD. That's great. Maybe staying on DGD, I wanted to see if you could offer some additional color on the apparent delay you're seeing in RD capacity expansions, whether delays or simply just difficulty of running at nameplate, which is more challenging than I think we all appreciate. We see the same, but I'd like your views on that as well. Yeah, and I'll tag team this with the team in here. I mean, you know, clearly, as we look around the horn, we're both buyers and sellers of fats and oils around the world. And when I say buyers, I mean, that's the DGD hat, and sellers, that's the Darling hat. And clearly, we're not seeing the demand from the renewable guys in North America. In fact, we're actually, we're buying material back from them. You know, I think, I guess if we say frustration, that might be too strong. Our curiosity and a bit of frustration is that when people started, whether it was Bloomberg or others, putting out these S&Ds on D4 RINs, they forget multiple components of it. Number one, they assume if Phillips 66 announces a plan, it's gonna be online January 1 and run at capacity. Yet if Vertex, if PBF, I mean, you know, HollyFrontier finally hit 52% capacity, yay! You know, at the end of the day, you know, it you just keep reading this stuff. Well, that doesn't generate the level of RINs that they're saying. And then the world doesn't understand when you export material, which a significant portion of Diamond Green Diesel because of its location on the Gulf Coast goes around the world. At the end of the day, those RINs get retired in 60 days. There's a delay there. So, you know, at the end of the day, you kind of have to go back and rebalance this thing with reality. So, you know, we're buying back fat, we're not selling, and selling means they don't have the pretreatment units that they claim they do, or they would be buying the cheapest fats in the world. Matt, anything else you want to add? You know, as I think, many of these are learning, this is not necessarily an easy business to operate. And whether it's, you know, they call it the CI component or the quality of the raw material and the pretreatment component requires more CapEx. And, you know, if someone tried to cut corners and save on CapEx, then they find out that, gee, now this product we can't process it or it's at the capacities that we wanted. So, you know, this is a, it is a complex and not easy business to operate in, and I think some of these people are finding that out. The next question comes from Dushyant Ailani of Jefferies. Please go ahead. Morning, guys. Thank you for taking my question. The first one I had was on the guidance that you've given for 2024, the 1.7-1.8. Could you talk a little bit more about what margins do you expect for the food and feed segment? Not really ready to go there yet, Dushyant. I mean, yeah, as I look at it, you know, when we, when we take a shot at producing guidance here, you know, what you can back into here is you can say: What are you thinking on Diamond Green Diesel? Well, we're thinking that we're gonna run it at, at above nameplate capacity, and we're gonna make $1, $1.10 a gallon next year, and it doesn't include any SAF gallons coming on early at this time. It's just too early to make that prediction. So it's not hard to back into that number. And so at the end of the day, where it lands, whether it's in food or feed, you know, we're still thinking that the numbers are gonna roll up between $1 billion-$1.1 billion, maybe a little more in the core business, depending on where fat prices recover. And as we've said, if renewable diesel capacity is there and has pretreatability, or even if it doesn't have pretreatability, fats and oil prices can't stay where they're at. You know, if you look at whether it's the soybean oil S&D, you know, we're at a multi-year low, and RBD margins, which most of these guys are running, are now 1,100 over, so that's $0.11 higher than we're operating at. So, you know, that's how we kind of cast it looking forward. Matt, Bobby, anything you want to add to? I think that's right. I mean, we're just at a, it's a generally tight S&D scenario, and we're, you know, a lot needs to happen as far as crop production in South America, and that's really gonna determine, you know, what we see with respect to certainly protein levels and ultimately oil levels as well. Thank you. That's helpful. And then one question I had was just kind of your thoughts on buybacks, given where the stock price is today, or maybe just in general. I know that the goal is to kind of get to that 2.5 leverage, but, any thoughts on entertaining higher buybacks given where the stock's trading today? You know, it is a discussion point with the board. We have adequate capacity to do that. Clearly, our focus today is, you know, as we said, to repatriate cash and get the total debt down and get to at least a discussion point of investment grade A- as we have some maturities coming in in 2026 and 2027. So it's not off the table. You know, clearly, every year we will buy back any executive compensation or dilution for sure, and after that, then it's opportunistic. And, you know, as the year goes along, and as Brad says, I have a little extra cash, we've been given the authority to make those decisions, so nothing's off the table here. The next question comes from Paul Cheng of Scotiabank. Please go ahead. Thank you. Good morning, guys. Two question, please. Good morning. Good morning. Randy, trying to understand, sequentially from the second to third quarter, the feed ingredient revenue is down, the sales volumes is actually flat, and all the market indicator, whether it's, UCO, tallow, all that, is actually up. We're trying to understand that what causing the sequential revenue drop, from second to third quarter in the feed business? That's the first question. Yeah. Yeah, Paul, this is Brad. When you're looking sequentially, we have, for lack of a better word, lead and lags in a lot of our contracts. And so there's timing differences there that will often, and when you get quick movements, where Randy talked about earlier between second and third quarter price movements, and then with the way the contracts work and the lead and the lag, that can cause a little bit of kind of discolor there, I would say. So, Brad, should we, based on that, means, in the fourth quarter, we should see, comparing to the, market indicator, your revenue, we see more of an upside? Or that the lag effect is going to take longer than that. Yeah, typically what you're gonna see then is, if you think of it this way, and today, around the world, we have a significant amount of our internal produced fats and oils, whether they're in Europe or Brazil or North America, headed to Diamond Green Diesel. And so as those were. You know, if you want to think about it, what we produced in August, you know, is sold, and it doesn't arrive and be processed until October. And September is kind of November, and October now is December, January. And so, you know, as we said earlier in the script, so you had a move up of fat prices in Q3, that then were sold and purchased, and so those will flow through, and those should deliver a pretty good fourth quarter in the feed ingredient segment. The next question comes from Andrew Strelzik of BMO. Please go ahead. Hey, good morning. Thanks for taking the questions. My first one is on Diamond Green Diesel, and I think, Randy, kind of over time, you've talked about $0.90 or $1 being the cost advantage or the minimum kind of margin to think about for DGD versus the marginal producer. And you kind of talked around this, I think, a little bit earlier, but I was hoping if you could be a little bit more specific. But do you think that that number has changed at all with new capacities come on, et cetera, or is that still the right way to think over time about the baseline DGD margin? Yeah, I don't really see anything changing that competitive advantage out there right now. I mean, I'm looking around the table and I don't- No, I agree. That's something that we consider as a competitive advantage. We're gonna continue to leverage that advantage going forward, trying to stay, let's say, ahead of the game, and that's, again, even with the SAF project, is going to separate us even further from our competition. If I could just add, I think one thing to keep in mind is part of that advantage is DGD's ability to blend all different kinds of feedstocks, and the price relationship among those feedstocks changes a lot from time to time. So the relative advantage is not something that you can pinpoint and be as static. But generally speaking, I think that the advantage that we had before continues to be the case today. Yeah, and I think, you know, the DGD mixology has become even more complicated, given, you know, whether you've got CAT 3 fat coming from Rotterdam, from our factories, or you got, you know, tallows and yellow greases coming from Brazil and Yukos from the Asian countries. You know, you got a timing of when those arrive, and then you've got a usage. You can't. We don't really run feedstocks neat in a sense. So we make a mix that meets our customer's needs, that allows us to get the highest yield that we can and the longest catalyst life. And so, you know, it becomes a far more complicated thing. But the competitive advantage, like I said, versus running RBD soybean oil, it right now is $0.88 a gallon. So that's not even a CI differential there. So, you know, I think, you know, as you've seen through the year, remember, Port Arthur is still waiting on its pathway. We anticipate at any time, so Port Arthur has not had the economics that it will have next year again, and that's Port Arthur pre-SAF. So, you know, I think the advantage is very sustainable and widens out over time. Like I said, I don't want to be somebody that doesn't say there's gonna be less volatility due to timing here, but I think the margins are very achievable. You know, and on top of that advantage, there's the value of our integration with our feed business, and we're producing, you know, even the local fat supplies that'll in the U.S. and Canada, that a large percentage of that ends up in ... ends up in DGD. And then again, one of the other things back to DGD is, you know, the producer's tax credit going forward. We think that DGD is again, one more time, at more advantage than the others in, you know, when that calculation comes into play. So, again, we like our position. Okay, that was really helpful, Colin. I appreciate that. Just my second question, on the following up on some of your commentary around some integration benefits that remain or opportunities that remain. We know, I think, that there's some Valley contracts that go into effect January 1. Is that really what you're talking about, and is there any way to quantify that? Or more broadly, are you seeing, you know, given kind of the bigger asset footprint with all the acquisitions, et cetera, that there's even more opportunity broadly, beyond Valley to continue to optimize? Thanks. Yeah, I... You know, and I think those comments were in the, in the script. I mean, clearly, the U.S. operations and procurement teams have made great strides at Valley, and then our international team down in Brazil. You know, taking a private company to public is no small task on either continent here. And then, if you will, say, making them darling. And, and, you know, we tend to be conservative, we tend to risk manage, and we have a margin expectation in our core ingredient business that's very well known, and our return standards are, you know, etched in metal there for us. And so at the end of the day, we've made the success of the Valley integration, as we've said, has been the ability to improve the raw material procurement contracts and all the little terms and conditions in there. And then ultimately, you know, as I said earlier, we're still short massive capacity on the Eastern Seaboard that's ready to come online. But as you know, and as we've shared with others, you know, we're waiting on motor control gear that that's due to be delivered here this winter. Otherwise, we'd have that plant back up. But the supply chain, you know, we're still moving stuff inefficiently to plants just to support our supply base out there, that once Ward comes up next winter or next spring, I mean, in the Q1, we should be back in good shape there. And then we've got capacity expansions in going on down in Brazil right now, that are just in the commissioning stages that should be accretive to us next year. So I mean, the world looks pretty darn good next year. It doesn't look like we'll have 3%-5% growth of raw material tonnage as we've seen over the last several years. There's a little bit of contraction of animal numbers out there, whether it's disease or whether it was just margin and feeding people. But at the end of the day, you know, it, the year is setting up pretty nice for next year. The next question comes from Sam Margolin of Wolfe Research. Please go ahead. Hi, good morning. Thanks for taking the question. My first question is on just the fats environment. You've talked a little bit about, you know, the relationship to the vegetable oil complex, but is there a scenario where fats prices next year decouple from veg oils? Just because if the pressure in the system is originating from RINs oversupply, you solve that with lower biodiesel production, which would disproportionately impact soybean oil supply-demand versus fats. And then if there's a corresponding LCFS rally, that might further, you know, benefit the tallow and yellow grease prices relative to veg oils. Is that a scenario that you think is possible? I really don't think so. And you know, number one, I think, you know, as we've said all along, clearly, the gen one technology of classic biodiesel would be the one that would become challenged. But the reason it would become challenged would be because there would be RD capacity that then would take that supply. You know, it, you just kinda have to do the numbers. If Martinez is really gonna run 730 million gallons, that's 3 million tons of raw material. If Phillips 66 can do half of what they think they can, that's another 1.5 million, 2 million. And then you still got, you know, the PBFs, and you got the Vertexes, you got REG, Geismar, all these guys that seem to be new demand out there. I mean, you can see this scenario quickly change. Now, the question is, what is D4 RINs do? Bob, you want to take a shot at that? Well, I think you're right on, Randy. You know, I think the only way that we would decouple is if RD production were to plummet because of challenges in it running and operating. But if that were to happen, RIN values should go higher, and that would significantly benefit our broader network. But, you know, we don't really see that happening. What we see is, you know, overall RD production, you know, having some challenges, but continuing to have a significant demand pull and you know, keeping prices, relative prices in line between fats and oils. Got it. Okay. And then this is a follow-up, but, you know, it's also on the, on the fats outlook. With the LCFS proposal, I mean, obviously a lot of people are looking at that through the lens of RD margins, but it seems like it would impact the fats market too over time, because CI would become more important to, to values, to intrinsic value of, of different feedstocks. And so, but of course, it's very regional specific. It's only California. I was wondering what your thoughts on that are, if, if you think maybe the LCFS proposal is actually a bigger deal for, for tallow than it is for underlying RD margins. I think we would believe that. We would think it clearly favors low CI, as does, you know, SAF. I mean, clearly, you know, I think if we thumb the whole conversation today down to one thing, it's about timing. RD is a good business. It's got growing demand globally. SAF is gonna be a great business. It's got incredible growing demand. We got maritime fuels. And oh, by the way, they all favor low CI feedstocks. And we're stuck in this rut of saying, "Well, what are margins gonna be? Where's D4? Where's LCFS?" And, you know, at the long term, as we've always said, you know, the competitive advantage of the Gulf Coast real estate, whether you're shipping SAF by pipeline, boat to Europe or to California, you know, it's just gonna really work out pretty nice. Matt, I don't know what- Yeah, the only other thing to keep in mind is that, obviously, the LCFS is specific to California. But as we're doing business in other markets, the LCFS is a reference in our valuation when we're using to determine whether product is sold to another market or to California. So one way or another, that LCFS valuation is built into all of the RD sales, regardless of whether it goes to California or not. So that's an important component not to overlook. The next question comes from Ben Bienvenu of Stephens. Please go ahead. Hi, thanks. Good morning. I wonder if we could talk about 2024. Randy, you talked about $1.7 billion-$1.8 billion of EBITDA. What do you think that translates to for free cash flow? And then what are your priorities for free cash flow as we start to see, you know, CapEx budgets potentially come off of peak at DGD, notwithstanding the SAF expansion that you wanna engage in? Yeah, and I think, you know, we had this discussion with our board. I mean, as you guys look to valuing the company here, ultimately, we can talk about combined adjusted EBITDA, but it's actually what is the dividend plus the core ingredient business, and then how much CapEx are we gonna spend? And, you know, what's in the M&A pipeline. And so when we look to DGD and we say above, you know, nameplate, you know, $1.10 a gallon, you can come up with, you know, an easy $500 million of dividends there. And then you look at our core ingredient business, and if we're at a, you know, if we're at a $1 billion-$1.1 billion, you know, there's your number right there, $500 million CapEx. If we—that's got, you know, probably $100 million of growth projects of the new plants we've talked about building. And then you, you look at it and you say, you got, an interest bill of around $230, and cash taxes- One sixty. 160, and, and then, you know, some limited buybacks in there that could be higher if we're doing a little better or whatever. But, you know, that—you quickly, you know, quickly pull down debt down to around that $4 billion, $3.9 billion level. We do have one pending transaction that's out there, and on- Miropasz. Miropasz in Poland, which is EUR 110 million, that is, expected to close likely in Q1. But outside of that, I would say 2024 is an M&A light year on new acquisitions. I call it an M&A holiday. You heard it. Very, very good, very helpful, and makes sense. On the third quarter, in the feed business, I wanna ask about in the UCO segment, the pricing seems to be much weaker year-over-year than, you know, broader UCO quotes would suggest. Is there something discrete or specific that's happening in that third quarter that we should be mindful of as we think about the relationship between pricing in that segment and the pricing of, you know, used cooking oil out in the marketplace? You know, this, Randy, year-over-year, I think prices were 65 down to 55, you know, so up about 20%-ish. Remember Q3 a year ago, Diamond Green Diesel 3 was not operational yet, and so we were still trading a bunch of material around the world. So as Brad said earlier, you got some leads and lags, you've got some quality premiums, you got, you know, some trading that was going on there, but I, I don't know. Anything else you want to add, Brad? No, that's it. Oftentimes, when we're exporting in the past, there can be some premiums built in there with those, with the exporting. So that'll all flush out with now that we have all three units on and are- Right. Going forward. The next question comes from Matthew Blair of TPH. Please go ahead. Hey, good morning. Thanks for taking my questions. I guess the first one is, I think in your recent guidance, you talked about that you anticipate DGD margins higher in Q4 versus Q3, and I wanted to see if, if that still held. On our modeling, it seems like you would receive a, a pretty nice tailwind from, the hedging side of things, but we were worried that there would still be, ... some of that price lag impact from your feedstocks versus the low D4 RINs in Q4 that might weigh on margins. So wanted to check on that first. Yeah, I would say that's the reality of the way our book works. We do have, you know, we have to manage the pipeline through DGD. There's anticipated purchases, and so we're chewing through that. But I would say that, you know, if you think about the progression through the quarter, December will be better than October. Yeah, we see that too. And so just to be clear that the guidance is still that Q4 DGD margin's higher than Q3? Clearly, we're gonna make more gallons. I mean, that's an absolute, and right now, if we had to look at it, as Matt said, you know, as each month goes on, that margin's widening out. Spot margins, as you can see, are much better. We should have a hedge gain coming back, provided there's no major rally again then in the heating oil market, and that's assuming D4s and LCFS really kind of flat. The next question comes from Jason Gabelman of Cowen. Please go ahead. Yeah. Hey, thanks for taking my questions. My first one is on the 2023 outlook, and it's a two-parter. The first part of it is, you know, you had initially or previously guided to 1.875. You reduced that. In hindsight, where do you think you were off from the prior to current guidance? And then, as you think about the $100 million EBITDA range for 4Q, how do you think about what's driving the high to low end of that range? And I have a follow-up. Thanks. Yeah, I think there's three letters that drove most of it. DGD in Q3 clearly was a, you know, didn't deliver what we thought it was and were going to be. And clearly, we're being somewhat conservative on DGD Q4. Right now, it looks like, you know, DGD's gotta deliver for us to get to the high end of the range in Q4. And then the fat prices that didn't get recognized in Q3, 'cause they were sold to DGD in Q4, have to flow through. So, you know, like, we just said, there's timing issues here that puts you that kind of range. You know, I continue to look at myself in the mirror and say, "Why am I even trying to guide this thing after 21 years?" So, you know, it's, you know, and it's just... You know, this is it. But we have a pretty good feel for it. I mean, as we came in, and I just remind the listeners, as we came in sequentially out of Q2, we said seasonally, we would be lower in Q3. And we were. And, you know, so ±5% is not bad. What we didn't see coming at us was the DGD, you know, all the volatility that hit there due to, you know, whatever you wanna call it, the war in the Middle East and D4 RINs collapsing and everything there that could have happened to you happened. You know, the fire took us offline, you know, that was another 10 days or, you know, or a minor disruption, as we call it. And, you know, the team did a magical job, but it just, you know, you got to power down and power back up, and that's six days with three, four days of repairs. So those... You know, that took another, I don't know, 20 million gallons offline or whatever it was. So that's why we're a little more bullish Q4 than we were in Q3 here. All right, great. And my follow-up is on the 2024 outlook, and it seems like there's a decent amount of crushing capacity for soybeans coming online in the U.S. And as we sit here, you know, soybean oil pricing is still decently above where it was kind of relative, I guess, to where it was prior to COVID. So it does seem like there's potential for some downside next year. And I know you touched on it earlier, but I was just wondering if your outlook factors in all that new crushing capacity coming online in North America and how that can impact vegetable oil prices. Thanks. Yeah, this is Matt. I would say, yes, that is factored into our expectations, you know, whether it's oil or and including protein. So, you know, these the new plants are known projects. Wouldn't surprise me, as similar to what we're seeing in the RD space, if some of them get delayed for, you know, a myriad of reasons. You know, one of the other things we really haven't talked about lately is, you know, with this increase in interest rates that we've seen, you know, CapEx and the money it takes to, you know, to build and operate is has gone up. So that, I mean, that's just the reality of the business. But at the end of the day, yes, they, we incorporate that into our expectations. Bob, you got anything? Yeah, I think I would just add that, you know, near-term imports have had a bigger impact than added crush capacity in the United States for oilseed crush. And the other thing is that we are, you know, overall as an industry, increasing renewable diesel capacity at a much faster pace than we're adding oil production capacity. Short-term, you know, we've got a lot of oil in the system, and we've seen pressure on prices, but if you—even getting out 12-18 months, it's gonna be pretty tough for the soybean oil industry to keep up with demand as we see it. 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. Thanks, everybody, for your questions today. As always, if you have additional questions, reach out to Suann. Please stay safe, have a great holiday season, and we'll look forward to talking to you in the future. The conference has now concluded. Thank you for attending today's presentation, and you may now disconnect.