Darling Ingredients Inc (DAR) 2007 Q4 法說會逐字稿

Hello, and welcome to today's Darling International Q4 and Year End 2007 Conference Call. Your host for today's call is Randall Stuewe, Chairman and Executive Chief Officer of Darling International, and Mr. John Muse, Executive Vice President, Administration and Finance.

After the speaker's opening remarks, there will be a question and answer session. This call is being recorded and your participation implies consent to our recording this call. If you do not agree to these terms, simply drop off the line. Any reproduction of this call in whole or in part is not permitted without prior written authorization of Darling International.

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

Good morning, ladies and gentlemen. Thank you for joining us to review Darling's fourth quarter and full fiscal 2007 earnings results. We issued our 2007 fourth quarter and year end earnings results yesterday afternoon, and if you do not have a copy, the release can be found on our website at www.darlingii.com.

Randy Stuewe, our Chairman and CEO will begin today's call with an overview of our fourth quarter and full year financial performance and some of the trends that impacted our results. John Muse, Executive Vice President, 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 your questions.

Before we begin, I would like to remind everyone that this conference call contains certain forward-looking statements under the Private Securities Litigation Reform Act of 1995, and are subject to certain risks and uncertainties regarding the business operations of Darling and the industry in which it operates. These statements are identified by words such as may, will, begin, look forward, expect, believe, intend, anticipate, should, estimate, continue, and other words referring to events to occur or circumstances to occur in the future.

These statements reflect Darling's current view of future events, and are based on its assessments of and are subject to a variety of risks and uncertainties beyond its control including business and economic conditions in its existing markets that can cause actual results to differ materially from those projected in such forward-looking statements.

Other risks and uncertainties regarding Darling, its businesses, 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, and thanks for joining us today. It's my pleasure to welcome you to our conference call to discuss our recently released financial results for the fourth quarter and for our year ending 2007.

We're very pleased to report a solid finish to our fiscal year 2007 as we achieved record net income of $45.5 million or $0.56 per share. We leveraged the momentum we built throughout the year and capped it off with a record fourth quarter EBITDA.

Key contributors impacting our successful year were strong raw material volumes, higher finished product prices, the inclusion of a full year of operations for National By-Products and the resulting synergies, and continued customer growth in the Restaurant Services segment. Let me provide you with some high level detail on the fourth quarter.

Our earnings improvement was primarily the result of higher finished product prices and stronger than expected raw material volumes. Additionally, we received the needed clarification from the IRS to be able to realize a $1.2 million gain from the alternative fuel mixture tax credit. This resulted from our prior use of fats and grease in our boilers at our plants. However, this increase was partially offset by a $2.2 million charge related to the Company's decision to settle a litigation matter involving a contract dispute.

For the year, the Company benefited from significantly higher finished product prices as the corresponding commodities remained strong throughout the year. These higher prices are indicative of tightening grain and oil seed situation driven primarily by a combination of things. First, new global biofuel demands, second, growing consumption from China and India, and third, weather related issues that affected various grain producing regions throughout the world.

Interestingly enough, our fat prices were relatively flat after the first quarter, but protein prices improved steadily throughout the year. While currently we are at historical highs for some grains and oil seeds, the reality is that our product prices have lagged and are only beginning to show signs of strength.

Raw material volumes improved modestly throughout the year and were primarily results from A, an improvement in hog and cattle slaughter with incremental tonnage coming from integrated packers, an increase in dead stock due to extreme weather conditions in the Midwest, a porcine virus that attacks hogs and provides dead stock to our Iowa plants, and strong poultry tonnage on the West coast.

Our Restaurant Services group continues to make progress by adding new customers and services. We are pleased to announce that we have recently been named as an improved nationwide vendor to the McDonald's restaurant system for both cooking oil and nationwide grease trap service. Additionally, our grease trap business has made substantial progress in leveraging our position and improving margins.

Now, taking a look at commodities, extremely favorable commodity markets continue, and the commodity to futures markets for soybean oil, soybean meal, and corn reflect continued strength throughout 2008. We expect volatility to remain high as final acreage tallies, plantings, and ultimate crop production conditions will remain in flux.

Before I turn the call over to John for his more detailed review of our financial results, I'd like to update you on the progress we've made towards our future investment strategy in the Renewable Fuels area. As we've commented on previous calls, we've been methodical in our evaluation of potential technologies available to process our feed stock.

Recent legislation mandating biofuel use by the petroleum industry has created new interest in our supply chain. Our development work using our various feed stocks has been completed, and we continue to make progress towards identifying partners and potential plant locations. We will continue to be patient and will fully evaluate all our options before finalizing an investment strategy and moving forward into this industry.

Needless to say, we are enthusiastic as ever about the potential opportunities that renewable fuels brings to Darling. While final Congressional decisions related to energy legislation continue to be deliberated, we are confident of our abilities to execute an appropriate strategy to benefit from this emergent industry. We look forward to updating you further as the year progresses. With that, I'd like to turn the call over to John for his review of our financials. John?

Thanks, Randy, and good morning to everyone. Net income for the fourth quarter of 2007 increased to $14.4 million or $0.18 per share as compared to $6.1 million or $0.07 a share for the 2006 comparable period. The $8.3 million increase in net income for the fourth quarter resulted primarily from significant higher prices for finished products and a $1.2 million gain on a recording of income received under the alternative fuel mixture credits which was partially offset by $2.2 million charge related to the Company's settlement of a litigation matter involving a contract dispute.

The Company also reported net sales of $175.4 million for the quarter as compared to $128.1 million for the fourth quarter of 2006. The majority of the $47 million increase in sales is attributable to higher finished product prices and the purchase of finished products for resale.

Operating income for the fourth quarter of 2007 was $25.2 million as compared to $11.4 million for the fourth quarter of '06. At the segment level, Rendering generated net sales of $128.4 million for the fourth quarter as compared to $90.5 million in the fourth quarter of '06. The Restaurant Services business generated net sales of $47.1 million, as compared to $37.7 million in the fourth quarter of '06.

Now, turning to the year ended December 29, 2007, Darling reported net income of $45.5 million or $0.56 per share, as compared to a net income of $5.1 million or $0.07 per share for the 2006 comparable period. The $40.4 million increase resulted primarily from four areas. One, higher finished product prices, second, resulting synergies from the full year integration of National By-Products, increased raw material volume, and lastly a $2.2 million gain on completing the sale of the judgment against a service provider in 2007.

However, these gains were partially offset by a $2.2 million charge related to the Company's settlement of a litigation matter involving a contract dispute and a $1.2 million charge related to a mass termination with raw liability arising from a multi-employer pension plan termination.

The 2006 impact of a $4.5 million charge related to prepayment fees and write-off of deferred loan costs in connection with the termination of the Company's previous subordinated debt and senior credit facility.

Interest expense was $5 million during 2007 compared to $7.2 million during 2006, a decrease of $2.2 million or 30.6%. The decrease in interest expense is primarily due to a decrease in rates and a decrease in outstanding balance related to the Company's outstanding debt. Other expense was $600,000 in 2007, a $4.1 million decrease from other expense of $4.7 million in 2006, which was associated with charges related to the retiring of the Company's subordinated debt and restructuring our revolving credit facility in 2006.

At the segment level, Rendering generated net sales of $464 million in fiscal 2007 as compared to $279 million in 2006, which is an increase of $185 million or 66%. Restaurant Services generated net sales of $180.8 million in 2007, as compared to $128 million in 2006. This is an increase in sales of $52.4 million.

Now moving on to the balance sheet, as of December 29, 2007, Darling's cash and cash equivalents totaled $16.3 million compared to $5.3 million at the end of 2006. At the end of the year, the Company's working capital was $34.4 million with a working capital ratio of 1.43 to 1 compared to working capital of $17.9 million and a working capital ratio of 1.31 to 1 at December 30, 2006. The increase in working capital is primarily due to the increase in commodity prices.

At December 29, 2007, the Company had funds available under the revolving credit facility of $106 million compared to fund available under the revolving credit facility of $71 million at December 30, 2006.

During the fourth quarter, debt was reduced by another $11 million, so for 2007, debt was reduced a total of $39.3 million. And finally, our capital expenditures were $15.6 million during 2007 compared to $11.8 million in 2006, an increase of $3.8 million. I will now turn the call back over to Randy.

Thanks, John. Before we open the call to your questions, I'd like to close with a few additional comments. Let me reiterate that we are all proud of our results for 2007. It was a very good year for Darling. As I mentioned earlier in the call, the Company recorded record earnings. Coupled with our fourth quarter earnings per share of $0.18, we hope to continue to build on the significant momentum we have created to carry us into 2008.

We were able to reduce our debt by more than $39 million, and as a result, we are proud to boast a strong balance sheet that will better position us to grow or invest in new business opportunities. And finally, we are led by a strong management team and a group of dedicated employees that are committed to maximizing opportunities and delivering shareholder value.

We're now ready to take your questions, so I'll turn it over to the operator to facilitate the Q&A session. Operator?

Thank you. We will now begin the question and answer session. (OPERATOR INSTRUCTIONS). Our first question comes from Tyson Bauer from Wealth Monitors International. Please proceed with your question.

Good morning, gentlemen, and another great quarter and a great year.

Thanks, Tyson.

A couple quick questions as we look forward in doing modeling. Can you give us a sense of what your volume outlooks are for rendering and restaurants and on top of that, we had a recent announcement of another mad cow situation in Canada, which in 2003 would have caused hysteria. Now it doesn't even make the newspaper, basically, until you get to page seven. Are we at a state now that that is - the procedures are in place and you don't have that public fear anymore of that disease?

Well, let's deal with the questions kind of in order here. Volume wise, Tyson, we saw the cattle slaughter for fourth quarter was a little bit less than third, which is pretty typical with the seasonality, but yet, year-over-year, 2007 was up about 10,000 head a week. But still, about 18,000 a week behind where we were pre-mad cow. There's been no secret that the cattle production economics have been somewhat challenged out there, at least on the slaughter side for some period of time here.

That said, we've seen pretty good volumes. Stronger than we would have thought given the economics that were at least apparent to us, but the majority of our growth has come out of both the mortality side and the hog slaughter side in the Midwest. The hog slaughter side, as you can imagine, has just been running extremely full. I guess what I can comment on is we have seen that trend continue on into early 2008. I think everybody's read the same articles I have of possibly some of the production and the placements being backed off both on the cattle side and the hog side, and being challenged by higher grain costs.

I think it would be inevitable not to say that we're going to see animal economics challenged here as we go in with these higher grain prices into late summer, next fall here until the consumer price side can react to the higher input costs that are ahead of us.

On the mad cow side, the Canadian thing, I guess I would characterize as a non-event, but at the end of the day it's still not the kind of news that we like out there, such that our regulators have to pay attention to possibly what's happening north of the border, here. But you're right in your assessment that it doesn't get much attention here anymore.

A couple of real quick ones. How much of a lag effect is there between the spot price increases that we're seeing almost on a daily basis as opposed to a recognition on your financial sheet? Is that about a couple of weeks, 30 days? What is that about John?

You know, it depends, Tyson, on whether you're forward sold or sell on spot here. I think if we watch the board run up on soybean oil and soybean meal, we've been pretty well sold in the sense of just managing our logistics. Our team's done a really nice job, but how's that translate through the financials? Somewhere in that three to six week range when it starts to translate through.

Okay. And the last topic, are you seeing an increase exports to Europe given the currency imbalance and they're much more developed on the biofuels than we are at this point? And then lastly, have you had any benefits of seeing meat and Bone Meal or Blood Meal being used in a wider application for fertilizer?

I'll start with the last question. The answer is no, I haven't been exposed to that yet. It doesn't mean its not happening.

The export side is, yes, we're seeing it pick up for a whole number of reasons, and it's been very, very beneficial to our export oriented locations again. We're seeing the Pacific Rim countries import Meat and Bone Meal start to re-import the fats and oils. We're seeing Europe pick up yellow grease to be blended into their biofuels industry. We're seeing South America and Mexico import heavily on the yellow grease side.

What you're seeing right now with the higher global commodity prices, and to a degree somewhat offset by the weak dollar, is some creativity and you're starting to find yourself back in customers and formulas and locations that we haven't seen for a long time. So it's very encouraging from our side.

Very well, thanks a lot, gentlemen.

Thank you. And our next question comes from [Sarha Afla] from Stephens, Inc. Please proceed with your question.

Good morning.

Good morning, Sarha.

Good morning.

Congratulations on a great quarter. Could you provide us some detail on what that McDonald's announcement means for your business? Are you doing business with McDonald's currently? And what can that translate into for volumes?

I'll take a stab at it. I can only comment very limited on that.

Okay.

Because of confidentiality there. Darling was a supplier and is a supplier to the McDonald's system. We're a significant supplier to the system, but we were, to a degree an unknown supplier or vendor in the process today.

We work through a two year process with the McDonald's team in order to gain vendor certification or vendor acceptance to be now, if you will, certified or approved or acknowledged, and as a provider of service and a recognized provider of service to their entire system.

And that gain to more visibility to the system and to us, it's an entry ticket to the dance, and will allow us to develop the rest of the locations that we don't have today. So it's a very positive and a very difficult meal ticket to earn, and one that I'm very proud of our team for being persistent and finally getting there.

That's great. Could you share with us what you anticipate for the Restaurant Services division volume? Do you anticipate a slowdown in food service?

You know, we have seen a small volume reduction in our Restaurant Services side as far as grease pickups. Part of it is seasonality in fourth quarter that you see the post-holiday go on the diet plan here a little bit. I think part of it is a slowdown in your casual dining events that are happening there. I also think that higher oil prices or fresh oil prices are encouraging more efficient use of the product. And you've seen it's a significant cost for most of these restaurants - and I think they're being a little more vigil in their uses now.

I think you're looking at the same numbers we're looking at. We would tell you that the majority of your veg oil that's generated and the used cooking oil side comes from the deep fat frying applications which tend to come out of the more QSR side, and we've not seen a slowdown there because if the dollar is going to go somewhere, it will probably move out of casual dining down to QSR.

So we have seen a little bit of slowdown. We're trying to figure out if it's really seasonality or whether there is a true economic trend happening underneath it.

Thank you. And then, you said that your pricing was trailing the underlying commodities, the grains and the veg oils. Is there a natural trend we should look for? Is there sort of a six month lag historically that we can follow?

There's a couple things developing here that are kind of interesting, and historically the animal fats have been a discount to the veg oil, the soybean oil complex by typically $0.03 to $0.11 a pound. And it was kind of, you always sold animal fats at $0.03 under, and if they got to $0.11 under, you tried not to sell it or store it or buy it.

We've now seen animal fats move up to around $0.40, $0.38 to $0.40, but you've also seen soybean oil move up to $0.65, $0.66, and so the spread has widened out substantially more than historically we've ever seen.

And I think that the learning's from this are twofold. One, the food oils, which the biofuels industry continues to try to pull from, they're taking refined or semi-refined soybean oil, canola oil into those processes. They're competing with a very inelastic consumer, the consumer being, wanting food and they'll pay whatever it takes to keep the food from going into the fuel side. Where animal fats traditionally and proven by the economic layout that I just gave you, pretty much can only go into animal feeds or the lower quality ones. The higher quality ones can end up somewhat in the chemical industry, but there's less of those than there are that end up into the animal feed.

So, we're seeing a real elasticity lag here as what we're showing is that very few if any animal fats are going into the biofuel arena today. And that's what's even more encouraging to us because it allows us to make the argument that we're really not in that food versus fuel debate with our animal fat feed stock supply.

Thank you very much.

Thanks, Sarha.

Thank you. Our next question comes from Dan Mannes from Avondale Partners. Please proceed with your question.

Good morning, everybody.

Good morning, Dan.

A couple questions for you. I was actually going to ask the same thing on the yellow grease front, when it looked like Restaurant Services was a bit weaker. So when you look at that, you said maybe some seasonality, maybe a bit of a weakness in the casual dining, but the QSR's are still providing some more unit volumes, or is that decreasing as well?

I don't know that we've got it down to that level of detail. It is clear that our volume is off a few percentage points there. To attribute it to one segment or another I don't have that detail, but it's more of a gut feel for you than anything, Dan.

No problem, understood. And then, moving on actually to the biofuel demand, you were mentioning obviously most of your fats are still going to the traditional buyers, whether it be oleo, chemical, or feed fats. But are you seeing an uptake in fat demand from the biodiesel guys who are trying to blend it in just trying to defray the incredibly high cost of soybean oil today?

You know, I wouldn't say this is an absolute, but I could probably count the number of loads that have gone to biofuels from the Darling system on one hand.

Okay. I mean it's interesting. We see well over 100, maybe 200 million gallons of biodiesel to pass becoming online relatively soon, that is reputed to use primarily animal fats. Have you seen pre-buying for those, or I guess reading into your prior comment, the answer is probably not.

We continue to get the calls, but the technology that -- and when we describe our feed stock quality as -- we haven't sold them anything and everybody continues to call but nothing's traded.

Okay. And actually, I guess the corollary to that is when you talk about your own opportunity in the biofuel business, and given the technology that exists for dealing with your really low quality fat, I guess you've sort of highlighted maybe the opportunities to move more towards a renewable diesel type product. And obviously, you mentioned in your opening comments that you were considering partnering. I guess what I'm asking for is how do you view the maturity of that technology and the opportunity in renewable diesel given its nascency currently.

We've spent a lot of time looking at both methyl ester and renewable diesel. We've made no secrets of that. We're confident that we can make either product. The question becomes, as everyone knows, the biodiesel or methyl ester made from animal fats, there's always been discussion of the cold flow issues, meaning what happens when the temperature drops? Does the stuff turn to jello or peanut butter or clot off filters? And the answer is yes.

And most of your distribution channels out there today in the sense of your domestic distributors of petroleum products really are not keen on handling high cold flow temperature type of products. So from a demand perspective, it would say then to us that the renewable diesel process is more fungible in the sense that you can control both ctane, cold flow, and it could become pipeline ready and take out some of those distribution costs.

What we're seeing right now is, and what's been symbolic of our patients, is that with the Energy Security Act that was passed in late last fall, there was the establishment of the renewable fuel standard portfolio standard or however you want to refer to it, that says by 2009, the petroleum industry is going to have to acquire either biodiesel or advanced biofuels which renewable diesel qualifies under both, in order to put into their system.

And what I guess we would reference is that the petroleum companies are now starting to wake up to that fact, and thus, we may get the technology endorsement and boost into the renewable diesel area that would continue to bring that technology on through to full commercialization.

That technology is commercialized in Porvo, Finland, with the Nest Egg Group. There is a plant in Finland that's getting ready to - not in Finland, in Italy, to startup. So the technology, we would view the technology risk on renewable diesel to be there but to be fairly low because it's a very well known process in the petroleum industry.

Okay. And then the last thing, just on the tax credit front. How much of a deeding item do you view that to be, or do you view the support to be broad enough that it will move ahead regardless, or I guess the last point of it is the RFS enough of an incentive that even if you didn't have the tax credit extension this could still work for you?

Well, nirvana would be having both the mandates and the subsidy. You saw that the House passed their new bill last night, or yesterday, that once again will move over to the Senate, extending both the subsidies and taking out the co processing version that the likelihood of that moving forward in the Senate is anybody's guess because of the pay-go rules that are there.

So then you fall back and say will the tax title work be put into the farm bill, and yes, it's hidden in there too, so I think at the end of the day we're going to get the extensions. Whether it happens in a week, a month, or six months, I think at the end of the day the odds are favoring that you're going to continue to put the subsidies in place.

Great. Well, congratulations on a good quarter and look forward to seeing what you guys decide to do.

Thanks, Dan.

Thank you. And our next question comes from Dean Haskell from Morgan Joseph. Please proceed with your question.

Thank you very much. Again, congratulations, gentlemen, on a great quarter, great year.

Thanks, Dean.

A couple of questions. The fuel credit of $1.2 million that was booked in the fourth quarter, was that to the full year of '07? What was the time span that that credit accumulated?

The credit started in October of '05, but the bulk of the credit was achieved in '07 and we had very little because of where fat prices had moved up in the fourth quarter of '07, most of it, that credit, related to grease that was burned during the first, second, and third quarter of '07.

Okay. Would you expect a similar credit of about $1 million, give or take, to be booked in '08?

If you look, Dean, at where fat prices are today, even though macro gas continues to move up, you would not be burning fat even with the credit.

Yes, I mean the simple math --

It's not economical.

You know, Dean, we've still got I think around $700,000 out on the balance sheet that we're still waiting to bring back in. With yellow grease at $0.30 FOB the plant here, you take 60% of that's $18.00 at the burner tip minus the $4 rebate, we're paying quite a bit less than $14 at the burner tip for natural gas right now.

So I think unless you're predicting, which I'll hold you to it, that natural gas is going to go up radically, we're probably not going to be burning much fat in '08.

No, I'm long that gap, but not to the double digit range. No, thank you. Don't hold me to that. Second question, for John, now that you've got some debt paid down, what did you feel is your optimal debt capital structure?

Well, we have always said that we didn't like to go much more than 2.5 to 2.7 to 1, debt to EBITDA, so I think that we would continue to look at that. Obviously what we're looking at today is 0.5 to 1 debt to EBITDA.

So as Randy had said in his remarks, we have a strong balance sheet now, we have a revolver where we have over $100 million credit availability to us, and we're positioned well to evaluate wherever we want to go from an investment standpoint or what we want to do as we go forward.

Okay, John. And then that 2008 R&M CapEx, and then total CapEx expected for the year?

Well, in '07 we came out with a $15.6 million CapEx. We do have some projects that we're looking at, we would expect that to be a little higher, but not anything substantial in '08.

So, CapEx total and CapEx R&M is going to be about the same, give or take $17 million?

In the $15 million to $20 million range would be a good range, I believe.

Okay. And then one last question for Randy. We've had this nice run-up in commodity prices, we expect that to continue probably through into '09, and possibly into '010. In your history in the past, what have cycle peak operating margins been? And what would you expect that to fall out on this cycle?

What kind of profit margins?

Yes, operating margins.

I'm not sure I know how to answer that, Dean.

Well, somewhere between zero and a hundred.

Okay, Randy, no, I appreciate it. I am putting you on the spot, and you guys -

You're putting me on the spot, and I'm not going to be in the business of prognosticating commodities much past next week let alone '09 and '010.

Okay. But again, great quarter and the margins were great. We look forward to a great '08 and a great '09. Thanks.

Thanks.

Thank you. And our next question comes from William Bremer from Maxim Group. Please proceed with your question.

Gentlemen, congratulations on a great quarter, great year. It seems as though my colleagues have done a great job of pinpointing the Company and analyzing it. I'm going to take it a little bit broader on that. I know the Company doesn't currently hedge against commodity prices. Just wondering if maybe with the ramp that we've had and the continued ramp that we're seeing, is that possibly in the cards going forward to possibly reopen and reanalyze that, the first one?

And second, on a broader base, the current recall of I think it's close to 143 million pounds, largest in U.S. history, can you comment on that, how that affects the business?

Well, I think, this is Randy, I'll take the first one, William. Hedging this business using the correlated commodities has been something I've been a student of in studying for a lot of years, and given my background growing up in agriculture, this year would've been the classic example to never have done that.

And the reason is, is when I said traditionally the fats and oils have traded $0.03 to $0.11 under bean oil, and had we been comfortable locking in what we would have considered to be a reasonable earnings stream under this business, you would have probably sold soybean oil somewhere around $0.38 to $0.40. And when you were trading slightly under that earlier this summer.

And now all of the sudden, you've seen the spread widen out to the point where the correlation of the food oils and food commodities versus our inputs has never been in this zone, at least to my knowledge. And so, hedging this thing, it would be -- if you're brilliant at it, you could probably get it right, but I think it's too risky right now given to where the relationships are with our products. We're seeing meat and bone meal go from $50 a ton under soybean meal to $30 to $40 a ton over. So, the basis or the differentials on these things are well beyond speculative in nature.

The second answer to you is the Westland/Hallmark recall, there's no hiding on our behalf here. The L.A. Times did have our truck on the front cover of the newspaper, and yes, that was a customer of ours in our California operations. The recall is something that is still underway. I can tell you that when they, from my knowledge of it and from the people around me tell me what's going on, there's been very little product come back, at least into the channels that we're aware of at this time. That's about all I can comment on that.

All right, guys. Thank you so much.

Thank you. And our next question comes from David Schneider from Hoover Investments. Please proceed with your question. Mr. Schneider, your line is open.

Okay, we'll move on to the next question. (OPERATOR INSTRUCTIONS). And our next question comes from Bill Baldwin from Baldwin Anthony Securities. Please proceed with your question.

Good morning, gentlemen. My questions have actually already been asked and so I'll just go back into the queue here and listen.

Thank you, sir. And at this time there appears to be no more questions. Mr. Phillips, I'll turn this call back over to you for your closing remarks.

Okay, thanks everybody. Appreciate you joining us today and we appreciate your continued interest in Darling and we'll look forward to updating you on our progress here when we release our first quarter earnings this May. So, have a good one.