Good morning and welcome to the Darling Ingredients conference call to discuss the information for a new joint venture company with Tessenderlo Group. After the prepared remarks, there will be a question-and-answer period and instructions to ask a question will be given at the time. Today's call is being recorded. I'd now like to turn the call over to Ms. Suann Guthrie, Senior Vice President and Investor Relations. Please go ahead. Thank you for joining the Darling Ingredients Special Investor Call to discuss the formation of a new joint venture company with Tessenderlo Group. 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 risk and uncertainties. Actual results could materially differ because of factors discussed in today's press release and the comments made during the conference call. 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. Now I will hand the call over to Randy. Hey, thanks, Suann. Good morning, everyone. Good afternoon to our shareholders in Europe and our colleagues in Europe. Early this morning, we announced the signing of a non-binding term sheet with Tessenderlo Group to combine the collagen and gelatin assets and segments of our companies into a new company to be called Nextida, requiring no cash or initial investment from either party. Pending regulatory approvals, Nextida will operate as a joint venture with Darling Ingredients holding an 85% ownership stake and Tessenderlo Group holding the remaining 15%. The merger is poised to accelerate growth in the attractive collagen-based health, wellness, and nutrition sector. Darling Ingredients' Rousselot brand and business, paired with Tessenderlo's PB Leiner business, will result in a new company with annual revenue expected to be around $1.5 billion, with attractive margins and very significant growth potential. The new company will possess gelatin and collagen capacity of approximately 200,000 metric tons annually across 23 facilities in nine countries. Over the past decade, Darling Ingredients has established Rousselot as a global player in the rapidly expanding gelatin and collagen sector. Through sustained investment and R&D, we've built a global platform capable of delivering collagen-based solutions to meet the growing demand. We have also reinforced our reputation for quality and reliability across the health, wellness, and nutrition landscape. Tessenderlo Group's PB Leiner business has a diversified portfolio in very attractive regions, a wide range of quality gelatins and collagen peptides, and strong, reliable access to raw material. PB possesses high-quality manufacturing plants along with strong management and a very proud history. This strong foundation provides the ideal launch pad for the next chapter for our companies. The evolving collagen peptide segment of the market is in its infancy, and by uniting PB Leiner and Rousselot as Nextida, we aim to create a top-tier collagen-based health, wellness, and nutrition products company. We are growing increasingly excited about the continued discoveries we are making within the Rousselot Nextida product line. We have nearly a dozen concepts in various stages of development and continue to focus on science and innovation aligned with opportunities in the health and wellness sector. As we continue to grow and grow together, the Nextida joint venture aspires to be a health, wellness, and nutrition-focused business with tremendous upside potential. Since acquiring Rousselot in 2015, we have continued to build out our platform of food, feed, and fuel ingredients. The rationale was designed to recognize the different value components of the animal byproduct supply chain. As many of our listeners know, I have often noted that our food segment has not been fully recognized in terms of its contribution, margin resiliency, innovation, or growth potential. The combination of our Rousselot brand with PB Leiner is a pivotal step forward. It enables us to increase the optionality. We are highlighting value that is in our portfolio that is not being recognized today, and we're doing it in a smart financial way with zero leveraging. In fact, it could be deleveraging. We will own all the potential here and do the smart thing to ultimately optimize shareholder value. Now, with that, that concludes my prepared comments. We'll go to Q&A. At this time, if you would like to ask a question, it is star followed by one on your telephone keypad. If for any reason you would like to remove that question, it is star followed by two. Again, to ask a question, it is star, one. As a reminder, if you're using a speakerphone, please remember to pick up your headset before asking a question. All questions are limited to one question and one follow-up. I'll pause briefly here as questions are registered. The first question comes from Tom Palmer with Citi Group. Tom, your line is now open. Good morning, and thanks for the question. You noted the margin resiliency of the Rousselot business. If I look at—I'm going to pronounce it wrong—Tessenderlo's results, they seem to have come down a bit over the past couple of years. Maybe there's opportunity here for you, but maybe contrast the two businesses in terms of the margin structure, maybe the end markets that they focus on, and what that opportunity might be to kind of get the two businesses more in line from a margin standpoint. Thank you. Hey, Tom, this is Bob. Thanks for the question. I think when we talk about margin resiliency, and as Randy mentioned, the Rousselot business has rebounded quite well in this environment that we've talked about a lot on our earnings calls. We saw in 2024 an increase in supply. We saw a lot of companies kind of get caught up with high inventories and stuck with that. I think it's difficult to look back over the last 12 months and get a very good sense for what the future looks like. I think the bottom line here is that PB Leiner brings some really interesting assets across the world that really complement the broader Rousselot structure. What we have proven at Rousselot is that we are able to manage that supply chain, which is a complex supply chain, in a very effective way, in a disciplined way that results in really consistent margins. As the industry went through a pretty difficult time in 2024, we weathered that storm extremely effectively. We got out from under higher-priced inventories, managed the supply chain well. I think as we go forward, when we think about the broader business and the combined asset infrastructure, it just gives us more ability to do exactly that. Okay. Thanks for that. Just quickly on the split, the 85/15, if we think about the revenue base and then the production base, would it be comparable to that split? That information isn't disclosed specifically. I think you can—yeah, it's a hard question to answer specifically. Unfortunately, I'm unable to do that. Understood. Thank you. Our next question comes from Heather Jones with Heather Jones Research. Heather, your line is now open. Good morning. Thanks for the question. Y'all talk about this transaction, increasing optionality and highlighting value and potentially unlocking shareholder value. I am just wondering, how do you do that? Bob, you mentioned that you cannot give us the details between the 85/15 split and all. How is this going to unlock shareholder value? Do y'all intend to IPO this or provide details regarding how you got to the 85/15 to help us to understand how your collagen business is being valued? If you could just help us understand that more. Yeah. Heather, this is Randy. I mean, clearly, we're in the reason why we're releasing today is because under Belgian public stock exchange rules, once you sign an MOU, it's public. That's why we're here today. Now, we have a series. We've got to get to the actual definitive agreement, which time then triggers the antitrust filings and a lot of filings around the world, given all the countries we operate in. Don't get hung up on 85/15. Bob and I can give you a little more color on it. It's a good deal for us. It's a good deal for them. It's the $1.5 billion revenue. It's the margin structure at the high end of the 20s, maybe 30s. It's ultimately the library of Nextida products that are in launch state right now. Ultimately, for us, as we look at it, and this goes back to 2015, we thought as a specialty ingredients company that this unit would and food segment, which we've always said Rousselot is a very high percentage of the food segment. There's also a casings company in there. There's also an edible fats and a small retail brand in there that all add value to the slaughterhouse. Where we're going with this is, number one, we had the option to combine with the Tessenderlo Group. They're a world-class company. You would see in their biovalorization segment that there's also a French and a Spanish rendering business there. We've been very close with this group for over 10 years and the major shareholder, and they're just a very class organization. What we're looking at right now is ultimately, you're seeing the CPG companies say, "We'd rather focus on health and wellness versus consumer food." The margins are much better. We think by pushing this out here and by putting it out as a standalone joint venture, which Darling will continue to consolidate as we launch the Nextida products, maybe there is that time that we go ahead and take it public, a portion of it or all of it. Those decisions are down the road. Where it was today is not where it's going to be tomorrow. With the Nextida product line, I mean, we're working on brain, gut, hair, nails. There's a dozen different concepts that are in various stages of clinical trials right now that we think provide a very natural, sustainable protein-based ingredient that's very healthy. No one has what we have today, and that is why we are going to isolate it out here. How we ultimately monetize it, stay tuned. We said we are going to do the smart thing. I see it as a company that is potentially worth as much or more than the core rendering business. That is where we are at today. Bobby, anything you want to add? Yeah. I think when you listen to everything that you just said, it really represents a business that has moved and is moving into a different space. What this allows us to do, both companies, is provide a level of focus to this business so that we can make sure that we are bringing the right skill sets and attention to the business to succeed. As Randy pointed out, the first step is to form the joint venture, realize the opportunities that the combined infrastructure has, make sure that it is getting the right attention, has the right skill set. That alone is going to generate a lot of value for shareholders. Okay. Thank you for that. My follow-up question is wondering, Randy, you mentioned that they have a French and Spanish renderer operation. Are they 100% vertically integrated on the gelatin collagen side like Darling is, or do they have to do outside sourcing of the raw material? Yeah. Thanks, Heather. I mean, just to be clear, our gelatin and rendering businesses are not vertically integrated. We sometimes source from the same suppliers, and so there's a synergy there. The same would be true with them. There are some cases where our rendering business will prepare the bone raw materials for the gelatin business, but that's a smaller portion of the total supply chain. Similar situation for them. Their rendering business is largely unconnected to their collagen business. Our next question comes from Derrick Whitfield with Texas Capital Bank. Derek, your line is now open. Good morning. Congrats on the announcement. I agree with you, Randy, on your value recognition comments on the food segment. Thank you. Perhaps starting with SLUDD 4, could you speak to how the combination increases your reach into the pharma industry from the perspective of PB Leiner? Yeah. I think what's interesting about PB Leiner, and I'll say this with pharma and other market segments, is that we don't have a lot of—we don't see PB Leiner a lot in our space. We don't have a lot of overlap as it relates to customers. There are some things that they're doing in the pharma space that are slightly different than what we're doing. We will dig more into that as we're allowed to due to the limitations with antitrust. There's only so far we can go. What we see is some very complementary and slightly different technologies that help us specifically for that segment. As my follow-up, as we think about the combined entity and how to value it in the future, who would you or who do you guys think is the closest to this combined entity? Clearly, we would use a whole, probably four or five specialty ingredient companies out there, some European, some U.S.-based. Ultimately, as we presented the idea, the concept to the board, you look at this stuff, it trades anywhere from 12 times to 16 times. Ultimately, if we're correct with our margins, where ours are today, as we move the product lines around and optimize and synergies are brought, you've got a pretty significant EBITDA business that then all of a sudden, are you talking a business that, like I said, it could be bigger than the market value or cap of the current business today? What else do you want to add, Bob? Yeah. I think there aren't—so there isn't a comp that's specific to the collagen segment. It's a smaller universe, and it's hard to find that. There are comps out there where companies are taking commodity-based raw materials. They have some commodity-type processing, but then they're adding value and creating value-added products in these different segments. I think companies like AAK or Croda would be examples that are similar type. Then there's a broader group of comps out there. Our next question comes from Ryan Todd with Piper Sandler. Ryan, your line is now open. Hey, thanks. I guess as we think about maybe some of the tangible benefits of a JV, I mean, should we be thinking of it initially as it's primarily lower costs and improved efficiencies on that side of the business that are driving kind of the incremental value creation? If it's on the cost and efficiency side, any estimate on what that number looks like, either from a dollar basis or traditionally, you guys have been in kind of the mid- to high-20% margin range. Maybe any thoughts on where that could go? Yeah. I think the first thing I would say as we think about the value and what this brings, it diversifies the portfolio considerably. PB Leiner has assets in some countries that we do not have. What it also does is we continue to see a significant amount of growth, specifically in hydrolyzed collagen. And Rousselot, in particular, has done a very good job at sort of feeding that growth. The combination allows us to continue on the same trajectory without having to make a significant capital investment to do so. That is a big part of it. There are some other efficiencies just in terms of supply chain management, country proximity to customer and sales that the PB Leiner infrastructure helps us really round out. I think that is probably what we can expect initially in terms of the benefits. Okay. Thanks. Maybe just quick, would you expect this to have any impact on, as we think of allocation of capital going forward? Will you meaningfully change, I guess, the amount of capital that you may look to put into this business? One thing I would say, PB Leiner, similar to Rousselot, has done a very good job at maintaining its assets and providing the needed capital to keep them current and first class. We would not expect any significant change in capital allocation to what we are currently seeing at Rousselot. Our next question comes from Andrew Strelzik with BMO Capital Markets. Andrew, your line is now open. Hey, good morning. Thanks for taking the question. My first one, I'm just curious about the process and why you think this is the right partner for you guys. Did you talk to other folks out there? Is there something specific about Tessenderlo and this business that makes it particularly attractive from a combination perspective? Andrew, this is Randy. Clearly, the primary shareholder of Tessenderlo is Mr. Luc Tack. Luc has been a colleague and a friend of mine for over 10 years. We always knew at some point in time, we would put the companies together. Much as we have always looked around the world, I love my job because I get to travel the world and build relationships with people. One day, the doorbell rings. Much like the Gelnex transaction a little over a year ago, that was a similar deal of a relationship. This one is similar. Not always perfect timing by any means. At the end of the day, we see such a unique opportunity out here in the developing Nextida world with the different products that we're going to try to bring to market. This was just a chance to add good assets in good geographies where we do not have concentration and ultimately avoid significant capital within our existing footprint. We would be into cannibalizing current customer base as we launch out the Nextida portfolio. What we have always looked at, we said, "As you guys have followed this business with us since 2015, we always talked at different conferences, yours in particular." When we bought the business, it was about 90,000 tons and made about $90 million a year. With the advent of the hydrolyzed collagen portfolio that we have got out there with a couple of very significant customers, you have seen what has happened to that feed segment. I always call it, I think it is page eight in Suann's deck that I love so much and keeps showing the growth that we have been able to do. Bob pointed out to me, he says, "If we're half as successful with our Nextida product line as we were with the hydrolyzed collagen line, which meaning those are all of the peptides in one jar and these are individual concentrated ones, it'll double the earnings." That is what gets us excited about it. It was a chance to add capacity. It was a chance to add great assets. The PB Leiner name is a proud history. They were a leader when we acquired Rousselot. They are still a leader. We have just continued to invest. I think putting one and one together here gives us a chance to do something special. Okay. That's great perspective. Maybe just following up on that, if I think about the financial implications and the $1.5 billion that you've put out there today, should we just interpret that as, "Look, that's what we know this is." As we, I understand that it becomes public when you have the MOU. As we get further details, that number evolves and we'll get better visibility on the EBITDA and the synergies and how that evolves. How should we think about that $1.5 billion, which is basically your food segment as we roll forward? Yeah. I mean, first of all, I think there is a bit of a misconception as to what percentage of the food segment Rousselot represents. It's around three-quarters. The combination with PB Leiner does make the collagen business a substantially larger business and a much more self-sufficient standalone business if we want it to be. I think that that's important to recognize. Yeah, as time goes on and as we continue to achieve different milestones, we'll be able to share more details and information. Our next question comes from Dushyant Ailani with Jefferies. Dushyant your line is now open. Hi. Yeah. Thanks for taking my question. I just have one, I guess, on margins. Randy, I think you talked about the high 20s, low 30s. I know that this thing is still evolving, but how do we kind of think about that progression in 2026, 2027? Yeah. I think at a very high level, we continue to see our product portfolio shifting more towards the hydrolyzed collagen. And then we'll be soon layering more volume of Nextida relative to just gelatin. And the collagen and hydrolyzed collagen, the peptide products, they significantly increase the margin. And so as those products grow in volume and the growth rate of demand in those products is higher, we'll continue to see that gross margin trajectory increasing. Got it. Thank you. Our next question comes from Matthew Blair with the company TPH. Matthew, your line is now open. Great. Thank you. Good morning. Can you tell us what percentage of the global collagen market this JV would control? What are the regulatory considerations here and next steps on the regulatory front? Thanks. Hey, thanks, Matt. We can't get into specifics about that. I think what we would say is that we feel confident that we're within what's acceptable and that the two companies together, they represent something important for markets, but not overbearing. Really, that's—I don't know, Randy, if you— No, I think it's a fair question, Matt. We don't know. When we looked at it, we're defining the market today globally. As I made my comments earlier about health and wellness, it's somewhere between a $600 billion-$700 billion global market, of which some of these segments, I mean, like GLP-1 or whatever that we're in today, are $60 billion. We're a very, very minor player in the globe. I mean, now, that's good news. The other side of it is we're the guy that have created the technology. We're the guy that have the patents and have the clinicals on what we're doing now. I'm not really worried about market share. I'm ultimately focused on, at the end of the day, getting these products to market and watching them grow. Sounds good. If I could clarify the answer from a previous question, is this JV going to hold 100% of your food segment or only three-fourths? Can I also ask, what kind of capital needs will this JV have? Is there a maintenance or a growth CapEx number that you can share at this time? I think on the previous call, we said that Rousselot represents around three-quarters of the food segment sales. That is sort of that point. On capital, PB Leiner has maintained its assets very well. We do not expect any significant change in capital allocations versus what we are currently doing. No, ultimately, Matthew, it'll become a freestanding joint venture when it's fine. How we capitalize it and whether we put debt on it, it'll have an independent board of directors. That's pretty standard. I mean, if you think about it, kind of no different than Diamond Green Diesel is today. Valero is the consolidating partner. We're going to be the consolidating partner here. The optionality is, well, if we're correct with our assumptions in the health and wellness, nutrition, growth, and sectors in the world, it gives us a chance to monetize a portion of it in the future. Ultimately, the initial cap structure and how it operates is to be defined here as we go for regulatory approval. Our next question comes from Betty Zhang with Scotiabank. Betty, your line is now open. Thank you. Good morning. My question is, so in the past, you've talked about working with CPG companies to get them to pick up your Nextida product and bring it to market. How does this new JV improve your go-to-market strategy and progress? Does Tessenderlo have any relationships on that side that you could leverage? Thanks, Betty. I think what this combination does is it creates just a bigger global platform that allows us to feed into the growth of the Nextida library of products as those develop. I think, as Randy has pointed out many times, those technologies or, let's say, that R&D developing the Nextida products, that's pretty specifically Rousselot. PB Leiner also does bring some really valuable relationships and some different product nuances to the table that we feel like across this broader global platform, we're going to be able to monetize more effectively. I do not know, Randy, if you— No, I think that's fair. I think as we just completed a board meeting on Tuesday, Wednesday, Thursday, and we got a Nextida update, we've got hundreds of different leads and movements going on right now as people try to figure out where the Nextida product line fits into their world. Is it at the supplement level? Is it in a sports bar? Is it in a drink? Just like hydrolyzed collagen and that wonderful company, Vital Proteins, 10 years ago was trying to figure it out. That's where we're at today. Clearly, as Bob said earlier, there's very little overlap in customer base or concentration between PB Leiner and ourselves. That's what makes this such an interesting opportunity. Great. Thank you. For my follow-up, clearly, a lot of growth potential here. I am wondering, on the feedstock side, do you see any bottlenecks there? Do you have sufficient supplies to support this growth? Yeah. I think what—and again, one of the things that makes this interesting is the fact that PB Leiner is sourcing raw materials from different geographies than we are. It does diversify that more broadly for the industry. Raw material sourcing, that's always an important focus and strategy for the business. There are a number of things that we do to ensure that we have consistent access to high-quality raw materials. That's not a concern. The PB Leiner business does diversify that. I'd say it shields us from some of that risk if that ever became a challenge. Yeah. I think that's well put, Bob. I mean, the thing about it is that when we acquired Rousselot in 2015, it came with a series of plants in Europe, two of them in the U.S., a couple of them in Brazil, and three of them in China. Or actually four at the time in China. Ultimately, kind of the secret sauce in the business here is your raw material supply chain that you need access to. The beautiful part of the PB Leiner business is that they operate in Santa Fe, Argentina. They're up in a different part of Brazil. They're in a different part of China than we are. And they're in a part of Germany where we don't have a factory. There is very little overlap, which once again gives us a greater chance of diversifying and de-risking the global portfolio. At this time, I'd like to pass the conference over to our hosting team for closing remarks. All right. I'd just like to thank everybody for joining us on this wonderful Get Rid of the Tariff Monday. We're going to make Nextida great again. As we told you, I want to thank the PB Leiner folks that are on the call, the Rousselot folks. I know there's been a series of town halls this morning and with the works unions and trade unions to share this incredibly exciting news. As we say to our internal teams, it's business as usual. We will talk to you in the future and give you more details as we can. That will conclude today's conference call. Thank you for your participation. Enjoy the rest of your day.