Darling Ingredients Inc (DAR) 2007 Q3 法說會逐字稿

Good morning, everyone, and welcome to the Darling International conference call to discuss the Company's third quarter fiscal 2007 financial results.

With us today are Mr. Randal Stuewe, Chairman and Chief Executive Officer of Darling International, and Mr. John Muse, Executive Vice President Administration and Financial.

After the speakers' opening remarks, there will be a question-and-answer period.

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I would now like to turn the call over to Mr. Brad Phillips, Treasurer of Darling International. Please go ahead, sir.

Thank you, Brianna. Good morning, ladies and gentlemen. Thank you for joining us to review Darling's third quarter 2007 earnings results. Randal Stuewe, our Chairman and CEO, will begin today's call with an overview of our third quarter financial performance and some of the trends that contributed to our results.

John Muse, our Executive Vice President of Finance and Administration, will then provide you with some additional details about our financial results. Randy will conclude the prepared portion of the call with some general remarks about the business, after which time we will be happy to answer any questions you might have.

Before we begin, I need to remind everyone that this conference call will contain certain forward-looking statements regarding the business operations of Darling and the industry in which it operates. These statements are identified by words such as may, will, believe, intend, anticipate, should, estimate, continue and other words referring to events or circumstances to occur in the future. These statements reflect Darling's current view of current events and are based on its assessment of and are subject to a variety of risks and uncertainty beyond its control, including business and economic conditions in its existing markets that could cause actual results to differ materially from those contained in such forward-looking statements.

Other risks and uncertainties regarding Darling, its business and the industry in which it operates are referenced from time to time in the Company's filings with the Securities and Exchange Commission. Darling is under no obligation to and expressly disclaims any such obligations to update or alter its forward-looking statements, whether as a result of new information, future events or otherwise.

With that, I would now like to turn the call over to Randy.

Thanks, Brad. Good morning, everybody. It's a pleasure to be back in front of everyone. First off, I'd like to begin my remarks by reviewing our third quarter results and providing you with some additional color about the factors that contributed to our performance.

As we mentioned in our press release, we enjoyed record earnings in the third quarter as we continued to build on the strong momentum of the first half of the year. Traditionally, as many of our long-term shareholders know, the third quarter can be and is typically our most challenging.

Year-over-year, we saw our operating income increase by $16.6 million. Driving this improvement was higher finished product prices, which actually recovered from a steep decline in May and improved throughout the third quarter. We saw strong raw material volumes. We saw a solid performance by our restaurant service segment. And finally, we continued to see the improvements and benefits from the inclusion of the National By-Products operations.

Overall, as I mentioned, finished product prices remained historically strong for the third consecutive quarter. We saw tallow hold mostly steady versus the second quarter, while yellow grease actually declined by nearly $0.02 per pound during the quarter. Our protein feed, meat and bone meal, enjoyed a nice appreciation in Q3, driven primarily by improved exports to Pacific Rim countries.

As we mentioned last quarter, the increase in our finished product prices continues to reflect the underlying tightness for grains and oil seeds worldwide in anticipation of new demand from the renewable fuel sector. Current commodity markets for grains and oil seeds continue to reflect this situation on in to 2008, and the Chicago Board of Trade currently shows prices in 2008 to be steady to even higher. Additionally, we see the U.S. dollar -- the lower U.S. dollar being supportive of additional export opportunities for our finished products.

We also saw increased raw material volumes in the third quarter compared to the second quarter in this year, driven by an improved slaughterhouse volume, breakdown tonnage from captive renderers and warmer than normal temperatures that caused an increase in our dead stock tonnage. Additionally, as we've mentioned in the past, our west coast volume remains seasonally strong, year-over-year.

Our restaurant services segment showed a nice performance in the third quarter, despite yellow grease prices declining by nearly $0.02 a pound. Weak demand from the feed sector contributed to this and drove the prices lower. Overall, though, our bundling approach is beginning to pay dividends as we continue to see solid customer growth.

From a synergy perspective, we continue to feel the benefits of the National By-Products combination. Essentially, the integration is complete. However, we have noted improvements in tonnage, widening of margins and improved operations and processing efficiency during the quarter.

Operationally, though, from a plant perspective, the third quarter was extremely challenging. Significant regional tonnage variations, coupled with warmer than normal temperatures, made both processing and product quality a real challenge. We did see improved efficiencies from the incremental tonnage. However, finished fat products had to be discounted at times to compensate for the lower quality.

As we discussed in the past, pricing differentials between tallow and yellow grease can swing wildly in the summer. While this is fairly typical -- a fairly typical summer for the Darling system, it was slightly more evident and impactable this summer versus last.

As in prior calls, we have openly discussed our ability to help manage some of the impact of higher natural gas prices through burning alternative fuels at our plants when economically viable. As we have mentioned in the past, burning alternative fuels, Darling is able to apply for and receive federal tax credits through a program that was effected in October of 2006.

As of the end of the quarter, as we've reported in the past, we have now applied for and received approximately $1.8 million in federal tax credits from the IRS. As we've previously said, we will reserve these on our balance sheet as deferred income until we receive proper guidance from the IRS on accounting treatment of these credits.

While on the subject of alternative fuels, I want to take a few minutes to discuss and provide an update on Darling's evolving strategy for renewable fuels. Let me begin by saying that our enthusiasm for this opportunity has not wavered. However, we remain patient until legislative uncertainties are more defined.

As the renewable fuels market continues to rapidly develop, we have made substantial progress toward determining our investment option, but there remains a number of moving parts. Particularly, a major factor we cannot ignore at this time are the final terms of pending energy legislation currently being discussed in Congress. There are many critical details that yet to have been fully clarified or agreed upon between both the House and the Senate.

For instance, we are waiting to hear the details on co-processing of animal fats by petroleum refiners and the final ruling on the amount of the subsidy available. Additionally, extensions of subsidies for both biodiesel and renewable diesel remain in flux, but there seems to be a common ground between both the House and the Senate versions on both of them being extended well through 2010.

The alternative fuel mixture tax credit, which we earlier referenced, is also being debated, but yet the outcome is uncertain. We continue to believe that renewable fuels are a great opportunity for Darling. We are confident that the strength of our underlying business uniquely positions us to capitalize on this opportunity, whether it's through direct investment, partnership or through marketing our feed stock.

As we discussed on the last call, the ConocoPhillips and Tyson announcement was an important breakthrough in renewable fuels, as it potentially allows for animal fats to be added directly to the petroleum/refinery stream. As you may know, this announcement has received lots of positive and negative feedback in Washington and has been a large topic of discussion and continues to be under discussion on Capitol Hill.

As a result, legislative changes that are being proposed to current tax laws that could be reduced or even eliminate the $1 per gallon subsidy. If the subsidy remains intact, as it's current proposed, it could significantly alter the biodiesel business as we know it today.

Moreover, the technology to produce renewable fuels continues to rapidly develop, and it is possible that processes similarly used by petroleum refiners can be duplicated in a more cost-effective, standalone or partially integrated facility.

As discussed in previous calls, this process is referred to hydro processing and isomerization, and it has a significant benefits compared to classic biodiesel approach and commercialization is underway. It is commonly referred to as renewable diesel. The advantage to this process is that it creates a hydrocarbon versus a methyl ester, which is cleaner, has better cold flow properties, a higher [seeking] value and is ultimately pipeline ready.

You should know that our decision to be patient is calculated, while we fully evaluate all of the options before finalizing an investment strategy and moving forward into this industry.

With that, I'd like to turn the call over to John Muse, so he can provide some additional detail on our financial results for the quarter. After that, John concludes, he'll turn it back over for questions.

Thanks, Randy. And good morning to everyone. For the third quarter of 2007, Darling's net sales were $171.8 million, as compared to $115.2 million for the third quarter 2006. The majority of a $56.6 million increase in sales is attributed to higher finished product prices and increased raw material volume.

Net income for the third quarter of 2007 was $12.1 million, or $0.15 per share, as compared to net income of $1.8 million, or $0.02 per share, for 2006. The $10.3 million increase in net income for the quarter resulted primarily from increased prices for our finished products.

Interest expense in the third quarter was $1.2 million compared to $2 million during the third quarter of '06. A decrease of $0.8 million, primarily due to a decrease in rates and outstanding balance related to the Company's outstanding debt.

Operating income increased by $16.6 million in the third quarter. The principal factors contributing to this increase were higher finished product prices and increased raw material volume. This increase was partially offset by higher raw material costs, higher payroll and related benefits and higher energy costs, primarily related to natural gas and diesel fuel.

At the segment level, rendering generated net sales of $122.2 million for the third quarter, as compared to $82.6 million in the third quarter of '06. Restaurant services generated net sales of $49.6 million, as compared to $32.6 million in the third quarter of 2006.

For the nine months ended September 29, '07, Darling reported net sales of $469.9 million as compared to $278.9 million for the 2006 comparable period. The $191 million increase in sales is primarily attributable to the Company's acquisition of National By-Products and improved prices for finished products.

For the nine months ended September 29th, the Company reported net income of $31.2 million, or $0.38 per share, as compared to a loss of $1 million, or a loss of $0.01 a share, for the 2006 period.

The $32.1 million increase in net income for the nine months ended September 29, 2007, resulted primarily from higher finished product prices, a substantial completion of integration of National By-Products into the Company and a $2.2 million gain on the closing of a transaction for sale of a judgment against the service provider, which these were partially offset by 2006 impact of $4.5 million in charges related to prepayment fees and writeoff of deferred loan costs in connection with the termination of the Company's previous subordinated debt and senior credit facility. And a $1.2 million charge relates to a mass termination withdrawal liability arising from a multi-employer pension plan terminated in June 2007.

Operating income for the nine months ended September 29, '07 was $55.5 million, as compared to $7.8 million for the same period in '06. The principal factors, which contributed to the $47.7 million increase in operating income, were the inclusion of operations of National By-Products, higher finished product prices and $2.2 million received on the sale of the judgment. These decreased were primarily offset by higher raw material costs, higher payroll and related benefits, higher energy costs and the multi-employer plan withdrawal liability.

At the segment level, restaurant services generated net sales of $133.8 million, as compared to $90.4 million in the nine months ended '06. The rendering segment generated net sales of $336 million for the first nine months as compared to $188 million for the 2006 period.

Additionally, Darling made capital expenditures of $4.5 million in the quarter for a total of $10.2 million during the first nine months of '07, compared to capital expenditures of $8.2 million in the first nine months of '06, for an increase of $2 million.

Capital expenditures related to compliance with environmental regulations were $1.4 million and $0.4 million for the nine months ended 2007 versus '06.

On September 29th, Darling had working capital of $29.1 million, and its working capital ratio was 1.4 to 1, compared to working capital of $17.9 million and a working capital ratio of 1.31 to 1 for December 30th, '06.

As of September 29th, Darling had unrestricted cash of $5.9 million and funds available under the revolving credit facility of $94.9 million, compared to unrestricted cash of $5.3 million and funds available under the revolver of $71.1 million at December 30th, '06.

Debt has been paid down by $28.25 million for the first nine months of September '07 with $8.7 million being paid down in the third quarter.

I'd now like to turn the call back over to Randy.

Thanks, John. Before we open the call to questions, I'd like to close with a few words about Darling and what we see as we look ahead. First, the Company is extremely pleased with our third quarter results, which sets a new EBITDA record for the Company at $26.7 million, or $0.15 per share.

I'd like to mention the outstanding efforts and great execution exhibited by our employees and management team. While we may have had some assistance by this year's commodity markets, our operations team played a significant role in making the third quarter the best in our Company's history.

Importantly, our underlying business model and the fundamentals that drive our success remain strong, and Darling has many opportunities in front of it, including renewable fuels. Additionally, our strong balance sheet position and strong results position the Company well to grow or invest in new businesses.

As we move into fourth quarter and on into 2008, Darling hopes to build on the momentum we have seen so far this year, and we remain committed to driving growth, improving our earnings stream and delivering value to our shareholders.

That concludes my remarks. I'd like to turn it over to you for questions now. Brianna, we're ready for questions.

Thank you. (OPERATOR INSTRUCTIONS)

Thank you. Our first question is coming from Tyson Bauer with Wealth Monitors, Inc.

Good morning, gentlemen, another great quarter. A couple of quick questions here. Let's walk through them. Federal legislation -- you've got bills pending, Farm Bill is supposed to be done before Thanksgiving, according to Senator Harkin, energy bill shortly thereafter. When do you see that federal legislation hurdle being clarified that will allow you to make a decision on alternative investments?

Wow, Tyson. I'll try to respond to that the best I can. I returned from two days in D.C. this week. I wish it was as clear as you tried to articulate there.

What we do know is there is a lot of momentum and intent to try to get some type of Farm Bill and energy assistance package through this year's Congress before everybody goes home for holiday. Everybody agrees there's momentum, but everyone also agrees that the likelihood of it happening before Christmas is probably lower than higher.

What we know at this time, right now, is that the Senate has passed their version -- or I mean, the House has passed their version of the energy tax program. We know that the Senate Finance Committee has passed theirs and handed it off for inclusion in the Farm Bill. The -- there is a lot of discussion that we could have a vote on the Farm Bill by as early as next week. We'll see if that happens.

The provisions that are in it are very favorable to making a decision here. It's a question of timing. I did hear when I was leaving Capitol Hill last night that there's even additional discussion that we may get. There's momentum to move the energy bill now, given $100 oil or oil topping out around $100.

So I wish I could be more direct about that. But I mean, we're hopefully as optimistic as you are. But so far, we've got a President that seems to be vetoing everything that's come to his desk, and both sides of the aisle aren't very optimistic that we'll get it done here before the end of the year and it may string on out to first quarter.

Okay. Let's go to something that has been decided, and that is the Canadian border is now open for importing cattle over 30 months. They obviously have a more stringent SRM ruling. That would be very favorable for your industry if that were to come south of the border. What are you hearing and what kind of timetable are you seeing as far as the U.S. possibly following Canada's lead on SMR bans?

Well, I guess I would say the Canadian feed ban, or SRM ban, went into effect in July. And I guess it would be safe to say that its fairly dysfunctional at this time, and the rules are, while they're documented, the processes are still evolving for handling it in Canada.

From our perspective, and speaking on behalf of Darling, we don't see the Canadian SRM rules coming to the United States. We just don't believe that those -- that level of draconian removal of SRMs from the feed stream is either practicable or necessary. So while we see that there is additional discussion of potentially excluding or putting into place a modified type of feed ban in the United States, we don't see it going to the level of Canada.

And additionally, I would say with the continued changeover of personnel in Washington, relative to agriculture right now, it's probably unlikely that we will see anything in '07 or at least in early '08 relative to any modifications of the feed rule in the United States.

Okay, the last few questions, I'll get back in the queue, is we've now had another quarter of volume being down in the restaurant services side. If you can give a little color on that?

And then, two, the pricing environment, is it still not being driven primarily by the soy complex more than any other factor? And if that is the case is that -- is there any way that you can adjust or try to protect yourselves, if, indeed, there are some volatility in the soy complex?

Oh, boy.

On the restaurant services side, from the - as we had said, the prices were down about $0.02 in the third quarter versus second quarter. Earnings were down. Sales were up during that time. The biggest impact, we continued to grow in our trap business and showed good growth on the corporate side of business with customer bases, but we did see the biggest impact to that was the lower prices as we saw. There were some -- a little bit of a volume decrease on one commercial account.

Yes, overall, Tyson, the restaurant services segment showed a little bit lower earnings in third quarter, but the health of that segment is very strong. I think it's safe to say that with grease prices sitting in the mid 20's, 24.5 right now would be what the sheets are showing -- 24 to 24.75 -- we are experiencing recycling theft out there and some pretty wide nationwide phenomena right now.

But relative to our system, it really isn't having a material impact. When we looked at our retail plants around the larger cities in the country, year-over-year volume is up in almost all of the locations. And our approach, as we said in my earlier comments, of bundling grease and trap and a national service center and an equipment business are starting to pay dividends with customers that are both more loyal and better contributors. So we're very positive on that sector.

On the -- relative to your question of risk management relative to the soy complex, kind of hard to say right now. The -- I mean, all indicators, and you see the same thing I'm looking at, is we're still in a caring charge market, meaning prices are higher tomorrow than they are today. And I ,mean I'm looking t a crop report now on the soy complex which was predominantly not a surprise, but made it a little bit smaller.

If you look at oils around the world, and this would be the best way to answer your question, the U.S. is now moving up because it was what I would call severely or substantially under priced relative to palm and grapeseed and other oils, competing oils in the world. So we're starting to see bean oil move up into the mid 40's. We're looking at different tools of trying to manage that risk, but really nothing that I can comment on here.

Okay. Thank you, gentlemen.

Thanks, Tyson.

Thank you. Our next question is coming form Dan Mannes from Avondale.

Morning, guys. Nice quarter. A couple questions -- morning. A couple questions. First of all, on the rendering side, I guess I was a little surprised to see you guys had picked up it looked like a nice little chunk of volume in the quarter, given the fact it looks like slaughter rates year-over-year are fairly flattish, and my impression was that last summer was a very, very hot quarter -- the Q3 was very hot.

Can you talk a little bit about was there any change in sourcing? Were there any shutdowns of rival facilities? What enabled you to pick up some volume year-over-year for the quarter?

Yes, I mean, obviously, and we haven't in the past and don't plan in the future to release volume numbers. But I think you can see and extrapolate under the earnings that there was a pretty substantial increase in volume, and it came from three places. It came from our current suppliers, from our packers that supply us, ran very strongly during the third quarter. Third quarter year-over-year was up a little bit, a little bit down from second quarter. But that was more regional than affected by ours.

Typically, what you see when cattle margins get compressed, as they are right now, or packer margins get compressed, the smaller niche player continues to run full while the larger integrated guy tends to take the lead in backing off. So that's one component.

The second component is we saw additional breakdown from the captive renderers that are out there, the integrated meat processor. And given our locations in the Midwest there and availability of equipment to move their tonnage, we provided a service to them that we provided in the past. But in third quarter, it seemed like we were there and they had a need for us, and we were able to take in more tonnage than we have traditionally in the past.

The third piece, Dan, and this summer was incredibly hotter than it was last summer. We did see tremendous dead stock volumes throughout the summer in the Midwest in the Iowa, Illinois, Minnesota, Nebraska area. And couple that with the packer breakdowns that were driven by just really hot temperatures, this stuff was really hard to process this summer. So it all fueled together, good tonnage, and there's been some additional accounts that have been added here and there to help bolster the volume for us.

Great. And then just a little bit on the pricing environment. I mean, we've seen a lot of strength both in tallow and in yellow grease obviously, but they still remain at pretty wide discounts to soybean oil. Given the weakness in the quarter, did you start -- and what you even mentioned was a bit of a decline in feed demand for the greases. Did you start seeing any direct demand for fats and greases from the biodiesel guys, or is that still sort of on the fringes and you're being brought up more generally by the soy complex?

Yes, I think -- overall, kind of if you look historically, a general rule is that when you're $0.11 under soybean oil, it's a pretty good indication you're going to go higher, and if you're $0.03 under, it's a pretty good sale. We continue to be relatively under priced relative to bean oil. We're going to be -- we're going to be get -- we're getting the momentum from that.

From the feed sector, we continue to -- typical summer feeding patterns that you historically and seasonally see every year impacted us. It's just there aren't -- the animals aren't being fed. We're seeing that come back as cool temperatures. Prices ran up, kind of kicked us out of animal feed there for a little while. But helping us out was a strong export market for yellow grease. Yellow grease denominated in dollars and selling out there made for some pretty strong exports to South America during the quarter.

The other piece that we'll continue to watch is the bio-fuel sector but it's -- as we've said in the past, we really are not a supplier to that sector today, given our quality of the product that we made or the variability of the product that we make, and that's the reason we're driving towards some different options in the area that allow us to handle that feedstock variability. I know we receive no less than a dozen calls a day wanting to buy that material, but most of those plants are not geared at handling that quality of material.

Got you. And last question, more directly on the bio-fuels. You noted actually, and I guess this wasn't a huge surprise to me, but with the Tyson-ConocoPhillips co-processing or, even more broadly, just the renewable diesel impact, this could have a significant impact on what you called the classic bio-diesel producers. Can you provide just a little more color there?

I mean, are you sort of signaling -- I mean, we know from a product basis that renewal fuel is better quality product, but are the economics that much more compelling? I mean, if that continues to receive the subsidy, it seems like you're indicating that bodes pretty poorly for the future of classic biodiesel.

Oh, I don't know that I want to be the -- have a crystal ball on that and have my name associated with it. But what we're saying is there are three avenues or four, actually, for creating renewable fuels today, at least that we participate in or can participate in.

As we've mentioned in the past, there's biodiesel, which is the classic methyl ester conversion that everyone knows. There's 100 and some plants today predominantly running 95% on refined soybean oil in this country. It's a well-known process. The challenges with that process and our products is that, much as everyone knows, animal fats seem to harden when they get cold. Nonetheless, when you put them in a methyl ester process, you modify that slightly, but you still have what gets referred to as a cold flow issue.

The technology that we have been working on is the renewable diesel technology, which is using the hydro treating processes that were developed originally within the petroleum industry, which is a conversion to a paraffinic hydrocarbon, and thus that you take the oil, hydrogenate it, and then you essentially chop up the molecule and modify the molecule before it comes back out.

And with that, you actually create a product that has a higher c-tane, or combustibility value. It has a lower -- it has a better cold flow property, if you will. Meaning, I think it goes to minus 20 or something. I can't remember the numbers. And ultimately, probably the best attractive piece is that it becomes pipeline ready, versus biodiesel, which really isn't going to be transported in the pipeline. And then the fourth piece is that it actually becomes a feedstock for upgrading different sulfur distal extremes within existing refineries.

So the signaling, if there is one, is that that is probably a more fungible and superior product. Economically, it's still being commercialized, and there's still a lot of development work there to finalize that at this time.

The co-processing discussion that I referenced is one that we are closely monitoring, and I don't want to signal anything, but that as a win. In our view, it's just fine if we can have another customer come along to buy our product. But what we'd like to do is make sure that co-processing isn't and doesn't have the ability to control the feed stock supply and prices in the United States. And so we're lobbying hard in Washington to try to clarify that position because, ultimately, we would like to participate in the renewable fuels business, as we've mentioned in the past.

Great. Thanks, Randy, appreciate all the color.

You bet, Dan.

Thank you. (OPERATOR INSTRUCTIONS)

Our next question is coming from Dean Haskell from Morgan Joseph.

Thank you. Good afternoon, gentlemen, and congratulations on a great quarter.

Thanks, Dean.

My question falls to the international side, with the weakening dollar, in the past your international has been about 27% of your business, growing at about 45% in '06 with primary countries being Mexico, China and South Korea. Do you see the structure of your international sales changing significantly given the declining dollar and the world demand perceived in oil?

Dean, this is Randy, I think it's probably a fair guess to try to predict that. The lower dollar is making these commodities very attractive, as people once again look at reopening their borders to that. I mean, actively, we're watching the Indonesians begin to re-import meat and bone meal. We've seen that benefit in Q1, and Q2 and on in to Q3, where our west coast values for meat and bone meal have at least come up to parity to the Midwest.

We have entertained a delegation here recently, and that looks to be fairly optimistic that that's going to continue, although I caveat it by saying those political environments are pretty dicey to call. But right now, we are shipping product there.

From a fats and oils perspective, as I mentioned earlier, the South Americans continue to import yellow grease to feed chickens. But as -- and I think Dan referenced earlier, are we seeing any bio-fuel demand for our products? The answer that I didn't think through properly was, yes, we are. We're seeing it from Europe, and we're starting to see yellow grease head off to Europe in significant quantities to compete against grapeseed oil in the production of bio-fuels in Europe. So that piece looks strong.

Tallow appears to be a longer term reopening around the world, but we are seeing increased inquiries and predominantly from China and south Korea, as we see those sectors begin to look at a fact that is $200, $300 a ton cheaper than their other ingredients that are available to them. So it's pretty much an economics 101 analysis that's happening around the world, and I don't see much change in here, at least in the near term.

Okay. Did you see any impact from the opening of the Conoco-Tyson plant, which I think we all thought opened in the late September. Have you see any pricing on -- any changes in pricing on that product, on those tallow?

We have seen nothing from the petroleum sector relative to either inquiries to buy our product or any arbitrages that would suggest that anybody is actually shipping to them at this time.

Okay. Thank you. Again, congratulations.

Thanks, Dean.

Thank you. (OPERATOR INSTRUCTIONS)

Thank you. Our next question is coming from Bill Baldwin of Baldwin Anthony Securities.

Good morning, gentlemen. Randy, I wondered if you were willing to offer any color when you mentioned that you're looking at new businesses that possibly could offer growth opportunities for Darling long term. I'm talking about businesses, I guess, that would be in addition to whatever you might do in the renewable fuels area.

Okay, well, I don't really have anything that I feel comfortable specifically commenting on. But I think what's fun for us right now is that the balance sheet is back to being extremely healthy, in Wall Street's view, at time, probably a little bit delivered here. But as we know, it is a commodity business and cycles, and we have availability to look at different businesses.

And as you can imagine, with our commitment to grow shareholder value here, we're actively out looking at different businesses even well beyond the renewable fuels sector in order to see if there's opportunities for bolt-ons in the restaurant services that can make some sense here, Bill. But beyond that, I'm not prepared to step much further.

Okay. Thank you.

You betcha.

Thank you. At this time, there are no further questions. I'd like to turn the floor back over to management for any closing remarks.

Just like to thank everybody for joining us today, and we'll talk to you at the end of the year, and have a great holiday season. Thanks.

Thank you. That does conclude today's conference call. You may now disconnect, and have a wonderful day.