Good morning and welcome to the Darling Ingredients Inc conference call to discuss the company's first quarter 2025 financial results. All speakers prepared remarks. 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, Senior Vice President of Investor Relations. Please go ahead. Thank you for joining the Darling Ingredients first quarter 2025 earnings call. Here with me today are Mr. Randall C. Stuewe, Chairman and Chief Executive Officer, Mr. Bob Day, Chief Financial Officer, and Mr. Matt Jansen, Chief Operating Officer, North America. Our first quarter 2025 earnings news release and slide presentation are available on the Investor Page of 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 could materially differ because of factors discussed in today'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 statement. Now I will hand the call over to Randy. Good morning. Thanks, Suann, and thanks for joining us for our first quarter 2025 earnings call. As a reminder, Darling Ingredients is a global ingredients company that operates in 23 countries and repurposes over 15% of the world's meat production and food waste. Our global presence and diversified portfolio enables us to navigate and manage through challenging times very effectively. Although tariffs challenged various supply chains, at this time, we expect them to remain immaterial to our portfolio and, frankly, support increased prices of waste fats. In first quarter 2025, Darling's business performed very well, with results accelerating throughout the quarter. This resulted in overall positive cash flow and demonstrated stability in an otherwise unpredictable global environment. The positive narrative surrounding renewable fuels public policy is very encouraging, and margins have started to improve and normalize. Ultimately, we expect our core business to continue to perform well, generating cash and allowing us to continue to deliver the balance sheet and opportunistically repurchase shares throughout the balance of the year. In first quarter, combined adjusted EBITDA came in at $195.8 million, and we saw the impact of higher fat prices really starting to move through the P&L in March. Specifically, during the first quarter, we paid down $146.2 million in debt, lowering our financial Leverage Ratio to 3.33x, and received $129.5 million in dividends from DGD and also repurchased $35 million in common stock. Now, turning to the feed ingredients segment, global rendering volumes remain strong, and despite several severe weather events in the Midwestern United States, from flooding to tornadoes to ice storms, our U.S. rendering team adjusted well and managed operations very well in the first quarter of 2025. European and Brazilian operations also enjoyed improved performances in the latter part of the quarter. The uncertainty on tariffs is a minor headwind, and specifically for specialty proteins. However, tariffs are generally supportive of higher domestic fat prices. With the renewables market having digested the mechanics of 45G, we expect to benefit through higher fat prices for the balance of the year. Now, the Food Segment. We saw a nice improvement in sales and volumes, particularly during the latter part of the first quarter. Collagen peptides have regained strength, and the demand for our library products is growing. NexTIDA, our revolutionary natural glucose moderation collagen peptide, is gaining momentum, and other active peptide products are in clinical trials. We anticipate consistent and continued performance improvement in the Food Segment throughout the balance of the year. In our Fuel Segment, DGD had a challenging first quarter with lower-than-expected margins, and volumes were affected by the turnarounds performed at DGD1 and DGD2. Receiving guidance on 45Z in late January created a choppy first quarter as supply chains had to be redirected, contracts had to be modified, and customers had to adjust. We are very encouraged about the sustainable aviation fuel market. Interest remains strong, and premiums and volumes have met our expectations. While the transition from the blender's tax credit to the producer's tax credit created some complications, DGD has made the necessary adjustments to optimize the tax credits available, and we anticipate we will book 100% of the producer's tax credit for eligible feed stocks during the second quarter. The effects of 45Z are in full swing, with a sharp decline in imported biofuels during the first quarter. The sharp reduction in imports, coupled with the rationalization of domestic production, points to an improved outlook for renewable diesel and sustainable aviation fuel during the second quarter. Now, I'd like to hand the call over to Bob to take us through the financials. I'll come back at the end here and discuss my outlook for the balance of 2025. Bob? Thank you, Randy. Good morning, everyone. As Randy mentioned, DGD's results in the first quarter had more to do with macro events impacting the biofuel market than anything specific to DGD. Meanwhile, the core Darling Ingredients business performed very well and gained momentum as the quarter progressed. For first quarter 2025, Darling's combined adjusted EBITDA was $195.8 million versus $280.1 million in the first quarter 2024. Adjusting for DGD, first quarter 2025 EBITDA was approximately $190 million versus approximately $165 million in the first quarter 2024. Total net sales in the first quarter 2025 were $1.38 billion versus $1.42 billion in the first quarter 2024, while raw material volume was almost the same at 3.79 million metric tons and 3.8 million metric tons, and gross margins improved to 22.6% in the first quarter 2025 versus 21.4% in the first quarter 2024. Looking at the Feed Segment, total net sales increased and EBITDA improved on relatively unchanged volumes and higher fat prices, increasing through the end of the quarter. Specifically, total sales for first quarter 2025 were $896.3 million versus $889.8 million in the first quarter 2024. Feed raw material volumes were approximately 3.1 million metric tons for both quarters, while EBITDA increased to $110.6 million in the first quarter 2025 versus $106.8 million in the first quarter 2024. Gross margins for the Feed Segment in quarter one 2025 were lower at 20.3% versus 20.7% in quarter one 2024, which was due to certain one-time items such as inventory adjustments. Moving to the Food Segment, we began to see noticeable improvement in margins as the industry continued destocking from the inventory buildup experienced over the past 12 to 18 months. While total sales for first quarter 2025 of $349.2 million were lower than first quarter 2024 at $391.3 million, margins and volumes increased with raw material at 329,400 metric tons versus 299,800 metric tons, and EBITDA increased to $70.9 million versus $61.7 million. Looking at the Fuel Segment, sales for the first quarter 2025 were $135.1 million versus $139.2 million in the first quarter 2024, off higher raw materials of 374,100 metric tons versus 356,900 metric tons, but slightly lower finished product sales volumes. Meanwhile, overall EBITDA and other metrics in the Fuel Segment were clouded by DGD's results. Specifically, EBITDA was $24.2 million in the first quarter 2025 versus $133.1 million in first quarter 2024, whereas net of DGD, EBITDA was approximately $18 million in both quarters. Looking more closely at DGD, results were mainly impacted by four things. First, the transition from the blender's tax credit to the producer's tax credit resulted in a lower value per gallon and a delayed reaction in RIN values as obligated party compliance has been slow to react. Second, the complexity of the producer's tax credit and delayed guidance temporarily impacted both sales and feed stock eligibility for fuel types and destinations. Three, tariffs on imported feed stocks, and four, downtime related to catalyst turnarounds at DGD1 and 2. Darling's share of DGD EBITDA was approximately $6 million for the first quarter 2025 versus approximately $115 million for first quarter 2024, a difference of approximately $109 million. These items had a bigger impact on DGD in quarter one than we expect will be the case going forward. However, DGD was and remains ahead of the curve with respect to making changes to its supply chain and positioning the business for success in this environment. Overall, DGD has adjusted to supply chain requirements needed to maximize the value of tax credits, and we're pleased by the positive direction in the RIN market and overall margins for renewable diesel and SAF. While we faced some challenges during the quarter, we continued to improve the health of our balance sheet as we paid down approximately $146.2 million in debt and repurchased slightly more than 1 million shares for approximately $35 million. The company's total debt net of cash as of March 29, 2025, was $3.84 billion versus $3.97 billion at December 28, 2024, leading to an improvement in our bank covenant preliminary Leverage Ratio of 3.33 times at quarter end first quarter 2025 versus 3.93 times at quarter end fourth quarter 2024. In addition, capital expenditures totaled approximately $63 million in first quarter 2025, and we ended with approximately $1.27 billion available on our Revolving Credit Facility. The company recorded an income tax benefit of $1.2 million for the three months ended March 29, 2025, yielding an effective tax rate of 4.6%, which is lower than the federal statutory rate of 21% due primarily to the producer's tax credit. The effective tax rate, excluding the impact of the producer's tax credit and discrete items, was 21.7% for the three months ended March 29, 2025. The company also paid $9.2 million of income taxes in the first quarter of 2025. For full year 2025, we expect the effective tax rate to remain about the same at 5% and cash taxes to be approximately $60 million for the remainder of the year. We are also in the early stages of monetizing Darling's share of the producer's tax credit and look forward to providing an update next quarter. Overall, the company had a net loss of $26.2 million for the first quarter 2025, or negative $0.16 per Diluted Share, compared to net income of $81.2 million, or $0.50 per Diluted Share for the first quarter. Now, I will turn the call back over to Randy. Thanks, Bob. As I said earlier, January and February started slow, but as fat prices continue to rise, we have great momentum for the remainder of the year. I'm encouraged by the performance of our core business in March. March EBITDA contribution was strong, and we expect this trend to continue. This gives me great confidence that our core business is strong enough to consistently generate cash and enable us to deliver, effectively weathering any uncertainty that exists in the biofuels market. Looking at the March run rate, I think the core business will earn somewhere between $950 million and $1 billion of EBITDA for the year. As I mentioned, there has been a lot of noise in the renewables market, and while DGD did not perform as we had hoped, we believe the worst is behind us. We expect margins to improve and DGD to adjust accordingly. With that, I am reaffirming our guidance of $1.25 billion-$1.3 billion combined adjusted EBITDA for the balance of the year of fiscal 2025. With that, now let's open it up to questions. We will now begin the question and answer session. In the interest of time, we ask that everyone limit themselves to one question and one follow-up. If you'd like to ask a question, please press star followed by one on your telephone keypad. If for any reason you'd like to remove that question, please press star followed by two. Again, to ask a question, press star one. Our first question comes from the line of Derrick Whitfield with Texas Capital. Your line is now open. Good morning, all, and thanks for taking my questions. Maybe starting with DGD, as I understand. Starting with DGD, as I understand, DGD was not able to optimize feed stocks for 45Z policy in Q1. Looking forward, what is the value of an optimized feed stock slate? And then more broadly, what's the composition of that slate as you see it today? Yeah, this is Matt. I'd answer that, at least initially, as some of the others maybe to join in on that. DGD typically processes a mix of feed stocks, and that is essentially margin-driven. It is always procuring the best product that nets the highest margin. That can be a mix of all types of oils and fats. Frankly, we have all types in our recipe, so to speak. That will vary depending on the month or the quarter, but it's a traditional mix that is largely based on animal fat and cooking oil, as well as corn oil and different bean oil and other oils. It is an ever-changing mix, but it's the usual suspects, let's say, in the mix that are it's all margin-driven. Yeah, I'll just add, hey, Derrick, this is Bob. This is going to depend in part how hard we're running SAF. Obviously, the value of the PTC is higher for the potential value is higher for SAF. The feed stocks required to make SAF are generally lower carbon intensity, so that further enhances the value of 45Z. We plan on fully maximizing the value of that. As Matt pointed out, some of this, it just depends on access to different feed stocks. Obviously, as Darling, we have an advantage in maximizing what we can pull through our own network to obtain low CI score feed stocks that are eligible for PTC. I think we're pretty optimistic about what the value of that is going to result in for DGD, but it's hard to kind of tell you right now what's the average cents per gallon. I think what I would say is we'd be on the very higher end of the curve for both RD and SAF as we go forward. Yeah, I think, Derrick, this is Randy, and I think Matt and Bob did a nice job there. I mean, the optimism that comes out of here is really the move from the noise that we had in Q1. Remember, we did not get guidance from Treasury until January 20. We had feed stocks en route that qualified, that did not qualify. There are various things, as we noted in the script, that there are requirements under 45Z that required us to go back to our customers and rework contracts and get them to a degree. There were three basic requirements. We will not go through them, but they had to use it or it had to go to retail, and there was one other. At the end of the day, there is just a lot of noise that went down that allowed us only to claim a portion of 45Z in Q1. What we're saying is in Q2, we've got the supply chain normalized. We've got the turnarounds behind us, and we expect to recognize 100% PTC on the eligible feed stocks that we'll process. That's not to be slight of hand. Some of the feed stocks that may come in cheaper do not need the PTC. It is really, as Matt said, margin-driven, but we see margins improving dramatically in Q2 versus Q1. Terrific. Makes sense. With regard to feed, we can see your March optimism in the spread between waste and SBO feeds as they materially tightened or turned positive to your benefit. Other than timing for the quarter, were there any other drivers for lower margins in 1 Q? I think, yeah, if we compare it to first quarter 2024, it was a pretty significant improvement. There were just some things that came into quarter four, end-of-year type things that were somewhat one-off items that clouded a little bit. I don't know, Matt, if you want to. Yeah, I think at the end of the day, sequentially, when you look at the quarter, guys, there were some one-offs. Brad noted in the script that we did have an insurance settlement in there. We've got a bigger pipeline now headed to DGD than we've ever had because of the restrictions on imported feed stocks and qualifications. Remember that the euro's up. Remember, prices are up around the world for waste fats, and it made domestic fats now more attractive. That flowed through. We said in the script, January, February, the typical weakness that we see. March, what we've done now is taken the March run rate and divided, as I always tell people, this is an easy business to give you forward guidance on when you're either in a flat or a rising market. DGD, given the amount of fat that comes out of the North American supply chain, now it's a very, very transparent thing for us. It's a rising market. We have somewhere between a 45 and a 75 day pipeline sold at any given time. We had that done in November, December. Now, as January, February came in, March is when the prices are hitting, and you'll see that continue on. At the current pricing, that's where we're formulating the guidance that we're throwing out there. I think prices have actually moved up since March, even here. This business feels very, very solid going forward right now, barring any other craziness out of, we're going to need a little help out of D.C. here, but I think we're okay. Thank you for your questions. Our next question comes from the line of Dushyant Ailani with Jefferies. Your line is now open. Hi, thank you for taking my questions, guys. The first one, could you possibly quantify how much better feed was in March versus the first two months of the year, and then how that translates to core ingredients EBITDA for 2Q? Dushaun, you can do the math and look at the 195 for the first quarter, 190 minus DGD, and then to come with the $950-$1 billion run rate, you can back into that. No, we don't break out a quarter. Second question I didn't hear. That was the only question I understood. Yeah. Yeah. Just the second one, I guess, could you quantify what the one-time inventory impact was on feed? The one-time inventory impact. Margins are lower. Yeah. We're not calling those out. I think it's just there were some smaller one-time items. Some have been called out in the last quarter on the insurance settlement. A quarter-on-quarter comparison and to say it's sequentially lower, obviously, the numbers are what the numbers are, but there's just some one-offs on both sides of this, but we're not calling those out. They're not material. The guidance that we gave in February was that as we were talking to folks and we said, "Well, what do you see the year off of Q4?" We said we ran 233 in Q4, we said times four. What we didn't say was it's not ratably spread over each quarter because you've got a situation of rising prices now. You'll see an improved Feed Segment, gross margin. We look at all of it. If you look at all of the segments, even in the Food Segment, remember, while 17%-20% is a high-value collagen gelatin, 80% of it's feed and fat. You get a lift there. You get a lift in the Fuel Segment too because of the different products that are processed there. Focusing on the Feed Segment, in my opinion, focus on the $950 million to $1 billion run rate for the year, and that's what's important here. Good point. Thank you. Thank you for your questions. Our next question comes from the line of Heather Jones with Heather Jones Research. Your line is now open. Good morning. Thank you for the question. Randy, I wanted to start with, so you've seen all the Reuters rumors, and we've all heard different reports. What do you think a 2026 RVO that would be suitable would be? What is a number that you would be happy with and that would represent, you think, upside to the 950 to a billion you gave us? Heather, this is Matt. I would say that the common RVO that is expected and hopeful will be coming out here in the next few days is 5.25 billion gallons. That is something that I would say across industries has been widely supported. The feedback that we have so far is that that is gaining traction, and that's what we're looking forward to. Okay. Thanks for that. My follow-up is not trying to belabor this point, but Randy, in the past, you've told us that roughly every penny in fat pricing is worth roughly $12 million to $15 million EBITDA. If you look at Q1 fat pricing versus Q1 of 2024, it was up several pennies, and you also did not have that Ward, South Carolina issue. Yet, EBITDA for feed was roughly flat year-on-year. Just trying to get a sense of, was y'all's Feed Segment impacted by the dislocation at Diamond Green, or was there something else that we're missing? I get the lag in pricing relative to Q3 and Q4 last year. I'm just having a hard time understanding the year-on-year impact. Hi, Heather. It's Matt again. I would say think about it this way. First of all, we have a forward sales book on almost all the time, somewhere on average of 60-90 days. There is a lagging effect in this. That is also partially one of the reasons it gives us confidence when we look at how March improved over the first two months because some of that started to get traction. I think you'll see this shine through in the numbers as we go forward. I would add to that, Heather. Remember, when you came out of 2023, we came out in December of 2023, soybean oil was $0.55 a pound. By the time we got to Q1 in 2024, we were in very much a deflationary market. We were flowing through higher prices that were coming down in Q1 of 2024. Now we are back in an inflationary improving market. They are not, as I say, they are kind of hard with the forward sales book to, if you will, reconcile in what you are trying to do. What we are trying to do is say, "We have got 100% visibility to the March run rate. Prices have started to flow through in March. They are probably going to improve a little bit in April." If you look at imported fats into the U.S. today, they are closer to $0.60 a pound. They're almost $100 a ton over top what we're doing right now in the U.S., maybe $120. Like I said, this is not a difficult business once you are in a flat or an improving market to give forward looks to. Thank you for your questions. Our next question comes from the line of Manav Gupta with UBS. Your line is now open. Hey, Randy, congrats on the leverage ticking down. Going back to the guidance a little, you still probably need about $250 million or so from the RD business. Help us understand a little bit what you expect besides the PTC help that you start getting in 2Q, any help that you think you'll probably get on the CARB front, and then what could be the RIN prices. Help us bridge the gap to that about $250 million of EBITDA that you will need from the renewable diesel business to get to your guide. Yeah, good question. I think it sets the stage, and I'll have Matt and Bob help me here. We'll kind of give a view on the balance of the year. I mean, clearly, the January-February rent production rate in the March suggests that the rents have to improve. You've got capacity idled right now around the industry. The industry is behaving like it should. It's showing discipline and says, "I'm not going to run and burn up catalyst for zero margin." Where do the rents have to go? The rents have to go, I don't know, a buck and a half, somewhere in there, up $0.45-$0.50 from where they are to restart the capacity. When we talk about the forward look here, the $1.25-$1.30, I think it's fairly conservative. If you look at it, as we know on the Valero call here shortly, they'll be telling you an adjusted run rate for the year is about $1.1 billion because of turnarounds that we had in the gallons, total gallons. You sit there and say, "We've told you we're going to earn $0.55-$0.65 a gallon on the PTC." It's not hard to back into how we come up with the additional $250 million-$300 million within DGD to get to our guidance. What that says is we're not making a statement that DGD is going to run at zero for RD for the year and then get a PTC. We're saying rents have to improve, and we're giving you a conservative forward look. Yeah. This is Bob. I think with respect to RINs, the run rate so far, January, February, March puts us on pace to produce about 6 billion RINs at D4 RINs. We need to make 7.5 billion in 2025 to meet the mandate. We are still underproducing by quite a bit. We have seen RINs go up by over $0.40, equivalent to $0.65 a gallon since the start of the year. There is a lot of momentum moving in the right direction. It really comes down to when obligated parties feel the need for compliance as to when those RIN values get to where they ultimately need to be. We see a lot of support there, as Randy mentioned, in the PTC. We were not able to realize a lot of the PTC in the first quarter due to the late guidance and having maybe not the best feed stocks in place and some of the sales qualifications that we needed to go through to get ready. That is going to also be a real lift to the P&L as we go forward. The other thing we have not talked a lot about is just the downtime. I mean, you can see the number of gallons we produced. We were less than two-thirds of total capacity. That is another thing that is really going to provide a helpful lift as we go forward through the rest of the year. Lastly, there are a lot of positive discussions kind of going on behind the scenes around the RVO and also at CARB. I think we're pretty confident in what the outlook is without those things. If those come to pass, then it certainly could change the picture in a positive way. I would just also include this is Matt. I would also include that there is also the SAF component. I mean, this is a continuous margin build with the PTC, with the RIN, with obviously fat price. All of these will influence the margins. With our SAF production, that also gives us more confidence. Perfect. Sometimes DAR doesn't get enough credit for the kind of innovation you bring to the market. Recently, you have launched some products to control blood sugar, and you also have an attractive pipeline of projects and products you do plan to bring to the market. Can you help us walk us through some parts of that business, which I think remains somewhat underappreciated? This is Bob. I think you're referring to Rousselot and our collagen business. You point out, I mean, EBITDA increased pretty significantly this quarter versus a year ago and last quarter. We are bringing some very innovative products to market. I think we've advertised as loudly as we can the NexTIDA portfolio of products and the NexTIDA glucose control product that is currently on the market and undergoing additional trials to really get this out in a larger way. We love talking about collagen and our ability to innovate through collagen and put together peptide profiles that have targeted health benefits and really do amazing things for people. What's exciting from the business standpoint is that margins are significantly higher in those products. As we continue to develop the NexTIDA GC product and other products in the NexTIDA portfolio, we look to see earnings in that particular segment increase quite a bit. Thank you for your questions. Our next question comes from the line of Tom Palmer with Citig roup. Your Thank you for your questions. Our next question comes from the line of Tom Palmer with Citig roup. Your Thank you for your questions. Our next question comes from the line of Tom Palmer with Citig roup. Your line is now open. Good morning, and thanks for the question. I guess just first, I wanted to clarify on the guidance. You noted the expectation that in the relative near term, we could get some resolution on the RVO. Sounded like 5.25 billion gallons for biomass-based diesel was your expectation. I know it might be hard to be overly precise, but I just want to understand how much of this is baked into how you're thinking about the year versus if it does come through at this 5.25 level, that would be kind of upside versus how you're thinking about the year. Yeah. This is Randy, Tom. Great question in the sense, I mean, obviously coming off of last year, we're a little bit snake-bitten and we're being with a pretty conservative view. I mean, D.C. is a bit hard to handicap right now. We've spent a lot of time there recently with our colleagues across the agriculture and energy. Feels like we have alignment on the 5.25 billion gallons. I mean, clearly, the White House needs some wins here. I think the American farmer has been singled out as somebody that the Trump administration gets and understands and wants to support. I think we're going to ride that momentum, and that's very positive. Now, the good news with the 5.25 billion gallons is that's a lot of demand that hasn't been there in the past. That gets friendly feed stocks, whether you're soybean oil or whether you're animal fats and waste fats. It is bullish, the base business. That is not baked in yet. Because remember, that does not start until 2026. That is number one. Number two, if you start moving feed stocks up, unless you're going to get help out of RINs, if you're going to get help out of LCFS, there is still no margin in this. Until at the end of the day, those are going to have to move in order to fulfill the RIN, what I am going to call the RIN deficit that is building out there right now. We are setting up right now for what I am going to call the fantastic finish in the back half of the year here as this thing becomes a little more clear. Bob, you want to add anything? Yeah. One thing, I think that it's interesting that what we're hearing is talk about a gallon mandate when historically it's really been referred to as RINs. I think there's quite a lot of confusion actually between RINs and gallons. The reality is a 5.25 billion gallon D4 mandate would effectively increase RIN demand by about 3 billion in 2026 versus 2025. That would be a substantial increase. We're not really baking that into this forward guidance. I think if that were to be clarified, we'd probably see a pretty interesting market unfold. I mean, you've seen, Tom, you've seen RINs move from $0.61 at the start of the year to $1.05. Capacity, especially in the biomass-based diesel or biodiesel industry, is still fairly idled and negative. Something's got to give. The situation we're in right now is not sustainable. What we know is we have the two lowest cost operating assets in the best place in the world, and they're profitable. We know that as we were given that guidance in Q2 here. In order to restart the industry and to fulfill the existing mandate before the new mandate, you've got to bring back profitability. There just isn't enough capacity to fill the RVO even as it stands today at the margins that exist. Thanks for all that, Color. Maybe I could just follow up quickly on kind of the last point you noted. At least on RIN generation year to date, it is tracking below this year's mandate. What do you think is driving this at this point? I guess any view on what might cause kind of a change other than obviously this RVO announcement for 2026, maybe making people more concerned about the RIN bank? Yeah. The three of us will tag team this one because there isn't any differing views at the table. Remember, the obligated party has all year. Bob has always said it's really not a futures market that anticipates the S&D here. The obligated parties are still sitting here trying to figure out what's going on in D.C. Are there going to be SREs? Is there going to be a bigger RVO? I can tell you that our colleagues in San Antonio, we see a tightness in RINs building very rapidly here. We have a universal view on this right now. There is just so much noise. If you think about it, 61-105 is a big move already. It's not enough to restart the industry. There is very limited liquidity, if you will. If you wanted to go out there and said, "Let's go get long RINs today," there's very limited liquidity. And the obligated parties just until they get more transparency. I don't know. What do you think, Bob? Matt? I think that's right. I think for some of the obligated parties who don't have an immediate penalty for lack of compliance, they're looking at a pretty significantly increased RIN price, and they're sitting on the sidelines. As time goes on, that's going to be harder and harder to do. Tom, I would just say there's two things to watch for. Number one is just the margin in terms of what the renewable diesel and the biodiesel margin is. It would help will dictate the production and therefore the RIN generation. The other is imports, whether it is on importing on biofuels. Those two things I would watch for as indicators to look for some direction on RIN market. Thank you for your questions. Our next question comes from the line of Ryan Todd with Piper Sandler. Your line is now open. Good. Thanks. Good morning, everybody. Maybe a question. First of all, you mentioned a little bit earlier in your comments, but I know there are a lot of moving pieces and volatility. As it stands right now, can you talk through the impacts of the current tariff regime on the various aspects of your business? Look, at a high level, talking about the core business, it's probably a slight net positive for Darling. One thing with tariffs coming in the United States, it limits availability of waste fats. That has been supportive to the North American waste fat prices. That's generally good. I think the one area where it's not entirely positive is in selling protein products to China. That's less of a tariff hit. It just takes a market that was available that needs to be redirected somewhere else. The net-net really isn't a negative for Darling's core business. The question really is more about how does it affect the renewable fuel industry in the United States and tariffs on feed stocks. As we kind of re-engineer supply chains, we're just finding ways around those things. We do not see it as a really negative thing for our business, fortunately. Great. Thanks. Maybe shifting to SAF, can you maybe provide a little more color in terms of what you said? I mean, you said the demand pool has been reasonable so far. Can you walk through what sort of demand pool are you seeing? Is that mostly coming from mandated markets, or is it also the voluntary markets? What would you need to see at this point to think about moving forward with the second SAF project? This is Matt. We have a mix between whether it is the demand, whether it is the obligated or the markets or the voluntary markets. It is pretty well balanced on that. We are running at an optimal rate to maximize the margins that we have. Our SAF sales book started more than a year ago as we were contracting SAF. We have got a fair bit of a book on already. I tell you, quite a strong book as a matter of fact through the whole year. We are delivering on those contracts. To your question on a second SAF line, I think right now we need to let some of the storm clear on all of these market dynamics that are going on to make a final call on that. It's something that is on the table, and we've done some of the engineering work on that, but we're holding off for the time being to have more clarity on what the future holds. The other reality is that as the market evolves in the credit scenario, what we're seeing more and more interest in is the book and claim process. It's not necessarily contracts with airlines and the distributors, but there is a book and claim process that some of the tech high energy users are buying the scope three credits. Thank you for your questions, Ryan. Our next question comes from the line of Pooran Sharma with Stephens Inc. Your line is now open. Thanks for the question. Just wanted to get a sense of capital allocation priorities from here. Looks like you did do a little bit of deleveraging also with the share repurchases. Just wanted to talk about something you said on the last call. I think you mentioned your target is 2.5. Wanted to get a sense of when you think we could get there and what the pace of deleveraging investors can expect going forward. Yeah. Thanks. This is Bob. That's correct. I mean, first, I'd just say that our plan hasn't changed. We are focused on continuing to pay down debt and deleverage our balance sheet. We've made a lot of progress to that end recently, and we will continue through the rest of the year. We'll get pretty close to that 2.5 by the end of the year. We may not quite get there, but it'll happen early 2026 if it doesn't happen by the end of the year. That's really what we're seeing. Okay. Appreciate that. I think everybody's asked good questions about DGD. Maybe I could focus in on the Food Segment here. Really good margins, much higher than anticipated. You kind of spoke to some of the strengths here, but wondering if you could share some incremental color. Do you think that this is a level of gross margin performance that you can sustain here? I think last time on the last call, you said you were working with CPG customers to help them better educate their customers on this product. I was just wondering if you could just give us an overview on food and next tier there. Yeah. This is Bob again. Appreciate you bringing this segment up. It's an exciting one for us here. I think on a high level, what we've seen is an industry that has really gotten a little bit more healthy here as, let's say, high-cost production around the world has stopped making product, and they've begun to destock inventories. We've seen some announcements that some of the higher-cost areas of the world have decided to shut production down. That has just led to an overall better health in the gelatin market and the collagen market. We think that we're in a pretty good spot as we go forward. As far as NexTIDA, we do have a product on the market under a brand called Codeage, C-O-D-E-A-G-E. The NexTIDA glucose control product is inside that product. We are going through some trials that we should finish this summer. That is with a much larger sample size that would allow the larger CPG companies to be comfortable taking this product to market. Really what we are expecting is to get through that process, go through some commercial activities to be able to see this product in much higher volume as we kind of get near the end of 2025. Thank you for your questions. Our next question comes from the line of Andrew Strelzik with BMO. Your line is now open. Hey, good morning. Thanks for taking the questions. My first one is just on the comment you made that we could get the preliminary RVO in the next couple of days. I guess what informs that view? Do you have some visibility to that? It sounds like there's, based on your comments, still some uncertainty around maybe the SRE. Could we get a preliminary number without a resolution around that? Just curious about that comment specifically. If I did say next couple of days, I guess I wouldn't try to be that exact on that. I really. You didn't say next couple of days. I'd say next few days. Okay. I think in the coming days is probably a better description of that. I apologize if I came out too soon on that. We are optimistic on that. In terms of having special insight or anything that gives us any confidence more than what other people who are industry participants, I would say we do not have any extra knowledge in that regard. We do have, we remain optimistic about the volume as well as the timing. Yeah, Andrew. The discussions are clearly happening in D.C. We're part of them with a larger group. This is the first time in my career since 2007 that we have absolute alignment amongst a high majority, if not the majority, 90% of the trade groups in this on what should happen here. We have a president that also now realizes that the American farmer is important. My view is that I think you'll see something out of D.C. here somewhere in the next 45-60 days, maybe sooner. They're all working on it. It's just a lot of different moving parts there, but everybody at least is reading off of the same song sheet right now. Got it. Okay. That makes sense. I appreciate you clarifying that. My second question, I feel like we felt like the runway was there with all these drivers and better performance for the last couple of quarters. I guess I'm just curious kind of how you handicap the risks. I know most of this is kind of industry-related and macro-related. As you sit here today and taking the march and just kind of extrapolating that makes a lot of sense. How do you handicap the risks or what you're paying attention to on the risks around the guidance? Look, this is Bob. I think guidance around the core business is the risks are relatively low. The market that we're seeing today, certainly things could change. Typically, these are sort of momentum-driven markets, and they're pointed in the right direction. I think it'd be pretty low there. As it relates to biofuels, there's going to be more uncertainty there just because it's so influenced by policy and there's so much going on behind the scenes. We give guidance today based on what we're seeing and all the things that we've explained. That's one that could be affected more by things outside of our control than our core business. Thank you for your questions. Our next question comes from the line of Matthew Blair with TPH. Your line is now open. Thank you. Good morning. Regarding the new LCFS standards in California, I think the comment period just ended a few days ago, and we're waiting for CARB to resubmit the new targets to the OAL. Is that your understanding as well? Perhaps more importantly, do you have a view on the implementation timing for these new targets? Do you think they'll be backdated to January 1, 2025, or is an implementation date in 2026 more reasonable at this point? Thank you. Hey, good morning, Matthew. I would say that particular to your question on the timing, yes, the comment period ended on Monday. We understand there's 30 working days to provide some analysis. They have to go through a process in order to address the comments. We understand that's ongoing. We remain optimistic that this is on track, and we're going to see something come out definitively in the reasonably near future. I don't want to get too high on that. We think that's on track. Now, whether that is going to be retroactive or effective sometime mid-year or first year, that's a question we continue to ask. I think we're prepared no matter what. I think in my view, a worst-case scenario would be January 1 of 2026. There is a chance from what we understand of having something there. Great. Thank you. For DGD, your reported Q1 EBITDA was quite a bit different than what your partner reported. It sounds like there is at least some 45Z contribution in your number, which may not be in your partner's reported number. Could I also clarify, is there any LCM impact in your Q1 DGD EBITDA? If so, how much? Hey, Matt, this is Bob. Yeah. I mean, we see a pretty big difference there. I think one thing I just want to make really clear is that none of the difference has anything to do with recognition of 45Z. Historically, we have shown we report LCM differently. I think that's the way to look at it. In particular, the first quarter had a lot of volatility in both LIFO and LCM. The big difference between our number and what Valero is showing is with the LCM. Thank you for your questions, Matthew. Our next question comes from the line of Betty Zhang with Scotiabank. Your line is now open. Thanks. Good morning. Thanks for taking the question. Sorry to go back to this, but I was wondering for the PTC that was recognized in first quarter, can you share how much of it was recorded? I think we would sort of roughly say that we so we'll show this in more clarity in the 10-Q, which will come out in a couple of weeks. But we were roughly able to realize PTC on about a third of the volume that we had in the quarter. Great. Thank you. For my follow-up, we saw there were some buybacks, and you also paid down some debt. I am wondering, going forward, how do you see that split? How do you view allocation going forward? This is Bob again. We're focused on paying down debt. I mean, we'll opportunistically look at buying shares back when we can. We want to buy back our dilution. We did some of that in the first quarter. The lion's share of the capital we spent that way was towards debt paydown, and we'll continue to focus more on that. Thank you for your questions. Our next question comes from the line of Jason Gabelman with TD Securities. Your line is now open. Morning. Thanks for taking my questions. I was one of the people who thought there was a different PTC booking versus LCM with your DGD partner. Appreciate that clarification. The first question's on the PTC monetization. I guess it seems like some of, if not all of the distribution from DGD that you booked in Q1 was related most likely to timing of Blender's Tax Credit cash inflows. As we look forward, I would suspect the distributions are tied to monetizing the Producer Tax Credit. With that in mind, I was hoping you could provide a little more context on the steps involved and what we should be looking out for in terms of progressing the ability to monetize that. Thanks. Yeah, Jason, this is Bob again. Just to kind of touch on something you said, the distributions from DGD, I mean, certainly the PTC realization, monetization of PTC is one source of revenue that we will realize. Whether it is bigger or smaller than distributions for DGD, it ultimately is going to depend on the size of renewable diesel and sustainable aviation fuel margins. We would not rule that out that we get more that way, but we will see how that plays out. As far as the process around monetizing the PTC, it is moving forward, I would say, very efficiently as it is with these types of processes. There are a number of steps, brokerage firms involved, lining up counterparties, getting contracts kind of ironed out, legal terms ironed out. We're going through that process to be able to set up for, let's call it, some sort of an auction to be able to sell those credits and monetize those in the latter half of the second quarter. We would expect going forward. Okay. You Okay. You don't need any further guidance or anything from the yeah. No. No. No. Going forward, we would expect to capture 100% of the qualified feedstock PTC. Got it. Great. My follow-up is just on the strength in feed prices. I understand that it's a benefit to the feed business. You have the sensitivity of one cent per pound is worth $15 million of EBITDA. I would imagine all else equal, those feed prices moving higher are actually a headwind to the DGD business that outweighs the feed business. Is that correct? Further to that point, can you just talk about what exactly is driving the waste oil strength? It seems like they're pricing above their carbon intensity difference to vegetable oil. If they're at kind of a sustainable premium to vegetable oil or if they need to come down a bit. Thanks. That's a great question. There's an inherent premium in the waste fat compared to soybean oil that you can even see in the CI scores. That's reflected in the pricing. That's the simple answer to that question. The other reality is there's only a certain amount of U.S.-produced animal fat that's available in the market. It's in demand right now for good reason. That's also part of the price differentiation that we're seeing between that and soybean oil. Yeah. This is Bob. Just one of the other reasons is crop oils are not eligible for all types of biofuels. There is that element as well where a used cooking oil, a verified used cooking oil, certified used cooking oil is eligible for pretty much any type of fuel, whether it is biodiesel, renewable diesel, sustainable aviation fuel, regardless of the destination. Some feedstocks just do have more versatility, and they therefore may trade above their carbon intensity adjusted value. Thank you for your questions. Our next question comes from the line of Ben Kallo with Baird. Your line is now open. Hi. Good morning. Randy, if everything stayed the same today, how would the core business be in Q2? I'm just trying to figure out the cadence of EBITDA for the core business, not DGD. Thank you. Hey, Ben. This is Bob. I think what I would probably do is I would just say that we don't expect quarter two to look a lot different from quarters three and four. If you just take quarter one, subtract that from the guidance, that's probably the best way to do the math on that. Okay. Thanks. Thank you for your question. That concludes our Q&A portion for today. I would now like to pass the conference back to the management team for closing remarks. All right. Thanks, everyone. Thanks, Victoria. Thank you for your questions today. If you have any other questions, please reach out to Suann. Thanks for taking the time to be with us today. Stay safe and have a great day and talk to you here next quarter. That concludes today's call. Thank you for your participation and have a wonderful rest of your day.