Darling Ingredients Inc (DAR) 2023 Q3 法說會逐字稿

Good morning, and welcome to the Darling Ingredients Inc. conference call to discuss the company's third quarter 2023 results. After the speaker's prepared remarks, there will be a question-and-answer period and instructions to ask a question will be given at that time. Today's call is being recorded. I would now like to turn the call over to Ms. Suann Guthrie. Please go ahead.

早安，歡迎參加 Darling Ingredients Inc. 電話會議，討論該公司 2023 年第三季的業績。演講者準備好發言後，將進入問答階段，屆時將給予提問指示。今天的通話正在錄音。我現在想把電話轉給 Suann Guthrie 女士。請繼續。

Good morning. Thank you for joining the Darling Ingredients Third Quarter 2023 Earnings Call. Here with me today are Mr. Randall C. Stuewe, Chairman and Chief Executive Officer; Mr. Brad Phillips, Chief Financial Officer; Mr. Bob Day, Chief Strategy Officer; and Mr. Matt Jansen, Chief Operating Officer of North America.

早安.感謝您參加 Darling Ingredients 2023 年第三季財報電話會議。今天和我在一起的還有董事長兼執行長 Randall C. Stuewe 先生； Brad Phillips 先生，財務長； Bob Day 先生，首席策略長；以及北美首席營運長 Matt Jansen 先生。

Our Third Quarter 2023 earnings news release and slide presentation are available on the Investor Relations page under Events and Presentations tab on our corporate website and will be joined by a transcript of this call once it is available.

我們的2023 年第三季收益新聞稿和幻燈片簡報可在我們公司網站的「活動和簡報」標籤下的「投資者關係」頁面上獲取，一旦發布，將附上本次電話會議的文字記錄。

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 yesterday's press release and the comments made during this conference call and in the Risk Factors section of our Form 10-K, 10-Q and other reported filings with the Securities and Exchange Commission. We do not undertake any duty to update any forward-looking statements. Now I will hand the call over to Randy.

在本次電話會議中，我們將做出前瞻性陳述，即對未來事件的預測、預測或其他陳述。這些陳述基於當前的預期和假設，存在風險和不確定性。由於昨天的新聞稿中討論的因素以及本次電話會議期間以及我們向美國證券交易委員會報告的10-K、10-Q 表格和其他報告文件的風險因素部分中發表的評論，實際結果可能會存在重大差異。我們不承擔更新任何前瞻性陳述的責任。現在我將把電話轉交給蘭迪。

Thanks, Suann, and good morning, everyone, and thanks for joining us for our Third Quarter earnings call. Darling's global ingredients platform delivered as predicted and DGD faced some headwinds and operational challenges during the quarter. Overall, we feel good about the momentum we are carrying into fourth quarter and 2024.

謝謝 Suann，大家早安，謝謝您參加我們的第三季財報電話會議。 Darling 的全球原料平台按預期交付，而 DGD 在本季面臨一些阻力和營運挑戰。總體而言，我們對第四季和 2024 年的勢頭感到滿意。

Turning to the Feed Ingredients segment. Raw material volumes were flat compared to third quarter 2022. Our gross margins have returned to pre-acquisition levels, demonstrating our ability to successfully integrate Valley and FASA. Our work is not done, and we expect further improvement. Fat prices were lower year-over-year but sequentially improved late in Q3.

轉向飼料原料部分。與 2022 年第三季相比，原物料數量持平。我們的毛利率已恢復至收購前的水平，這證明了我們成功整合 Valley 和 FASA 的能力。我們的工作還沒有完成，我們期待進一步的改進。脂肪價格年減，但在第三季末有所改善。

Turning to our Specialty Food Ingredients segment. Raw material volumes increased 18% year-over-year due to Gelnex acquisition. Our global collagen platform delivered solidly, and we continue to shift our product mix into higher-margin products. Hydrolyzed collagen remains an important part of our long-term growth strategy within the Food Ingredients segment. Earlier in the quarter, we commissioned a new spray dryer in Epitacio, Brazil, adding much needed capacity to continue our growth.

轉向我們的特色食品配料部分。由於收購 Gelnex，原料數量較去年同期成長 18%。我們的全球膠原蛋白平台交付穩定，我們繼續將我們的產品組合轉向利潤率更高的產品。水解膠原蛋白仍然是我們食品配料領域長期成長策略的重要組成部分。本季早些時候，我們在巴西埃皮塔西奧調試了一台新的噴霧乾燥機，增加了我們繼續成長所需的產能。

I'm also excited to share that our research and development efforts in this segment have resulted in our ability to formulate a product that targets specific health concerns such as glucose moderation. We are currently in scientific trials and expect to bring this ingredient to market during 2024.

我還很高興與大家分享，我們在這一領域的研究和開發工作使我們能夠開發出針對特定健康問題（例如血糖調節）的產品。我們目前正在進行科學試驗，預計在 2024 年將該成分推向市場。

On October 26, we announced that DGD volumes for the third quarter were lower due to a regularly scheduled turnaround at #2 in St. Charles, Louisiana, that took the unit offline for 27 days. After that turnaround, DGD2 had a minor operational disruption. So in total, DGD2 was offline for 37 days in the quarter. This resulted in lower gallons produced higher cost and lower-than-expected operating profits. Year-to-date, DGD has sold 910 million gallons of renewable diesel at approximately $1.02 per gallon EBITDA. And Darling has received $163.6 million in cash dividends year-to-date.

10 月 26 日，我們宣布第三季的 DGD 量較低，原因是路易斯安那州聖查爾斯#2 的定期檢修導致該裝置停駛 27 天。在那次轉變之後，DGD2 出現了輕微的營運中斷。因此，本季 DGD2 總共離線了 37 天。這導致加侖數減少，生產成本增加，營業利潤低於預期。今年迄今為止，DGD 已售出 9.1 億加侖再生柴油，每加侖 EBITDA 約為 1.02 美元。年初至今，Darling 已獲得 1.636 億美元的現金股利。

With that, I'd now like to hand the call off to Brad, and then I'll come back and discuss the rest of my thoughts for 2023 and 2024, Brad.

現在，我想將電話轉交給 Brad，然後我會回來討論我對 2023 年和 2024 年的其餘想法，Brad。

Okay. Thanks, Randy. Net income for the third quarter 2023 totaled $125 million or $0.77 per diluted share compared to net income of $191.1 million or $1.17 per diluted share for the third quarter of 2022. Net sales were $1.63 billion for the third quarter 2023 as compared to $1.75 billion for the third quarter 2022 or a 7% decrease in net sales.

好的。謝謝，蘭迪。 2023 年第三季的淨利潤總計1.25 億美元，即稀釋後每股收益0.77 美元，而2022 年第三季的淨利潤為1.911 億美元，即稀釋後每股收益1.17 美元。2023 年第三季度的淨銷售額為16.3 億美元，而2023 年第三季的淨銷售額為17.5 億美元。2022年第三季淨銷售額或下降7%。

Although Darling's third quarter 2023 gross margin increased $10.1 million and was 23.8% as compared to 21.5% for the third quarter of 2022, operating income decreased $90 million or 33.5% to $178.4 million for the third quarter of 2023 compared to $268.3 million for the third quarter of 2022, primarily due to Darling's share of Diamond Green Diesel earnings decreasing $49 million.

儘管Darling 2023 年第三季的毛利率增加了1,010 萬美元，為23.8%，而2022 年第三季為21.5%，但2023 年第三季的營業收入減少了9,000 萬美元，即33.5%，至1.784 億美元，而第三季為 2.683 億美元。2022 年第四季，主要是由於 Darling 在 Diamond Green Diesel 收益中所佔的份額減少了 4,900 萬美元。

Additionally, depreciation and amortization and SG&A increased about $21 million and $32.6 million, respectively as compared to the third quarter of fiscal 2022, primarily due to the Gelnex and FASA acquisitions.

此外，與 2022 財年第三季相比，折舊和攤提以及 SG&A 分別增加了約 2,100 萬美元和 3,260 萬美元，這主要是由於收購了 Gelnex 和 FASA。

Now moving to nonoperating results. Interest expense increased from $39.8 million in the third quarter of 2022 to about $70.3 million in the third quarter 2023, primarily as a result of increased indebtedness due to the acquisitions. For the 3 months ended September 30, 2023, the company reported an income tax benefit of $15.4 million and an effective tax rate of negative 13.6% which differs from the Federal statutory rate of 21% due primarily to the relative mix of earnings among jurisdictions with different tax rates and biofuel tax incentives.

現在轉向非經營業績。利息支出從 2022 年第三季的 3,980 萬美元增加到 2023 年第三季的約 7,030 萬美元，主要是由於收購導致的債務增加。截至2023 年9 月30 日的三個月，該公司報告的所得稅優惠為1,540 萬美元，有效稅率為負13.6%，與21% 的聯邦法定稅率不同，主要是由於各司法管轄區之間的收入相對組合不同的稅率和生質燃料稅收優惠。

The company's effective tax rate, excluding the biofuel tax incentives and discrete items is 25.9% for the 3 months ended September 30, 2023. The company paid $40 million of income taxes in the third quarter. For the 9 months ended September 30, 2023, the company reported income tax expense of $52.3 million and an effective tax rate of 8.4%. The company's effective tax rate, excluding the biofuel tax incentives and discrete items, is 28.4% for the 9 months ended September 30, 2023.

截至2023年9月30日的三個月，該公司的有效稅率（不包括生質燃料稅優惠和離散項目）為25.9%。該公司在第三季繳納了4,000萬美元的所得稅。截至 2023 年 9 月 30 日的 9 個月，該公司報告的所得稅費用為 5,230 萬美元，有效稅率為 8.4%。截至2023年9月30日的9個月，該公司的有效稅率（不包括生質燃料稅收優惠和離散項目）為28.4%。

The company also has paid $127.7 million of income taxes year-to-date as of the end of the third quarter. For 2023, we are projecting an effective tax rate of 9% and cash taxes of approximately $30 million for the remainder of the year.

截至第三季末，該公司今年迄今還繳納了 1.277 億美元的所得稅。 2023 年，我們預計有效稅率為 9%，現金稅約為 3,000 萬美元。

The company's total debt outstanding at third quarter 2023 was $4.4 billion as compared to $3.4 billion at year-end 2022. Our bank leverage covenant leverage ratio at the end of the third quarter was 3.25x. We continue to maintain strong liquidity with $1 billion available on our revolving credit facility as of the quarter end. Capital expenditures totaled $146.2 million for the third quarter 2023 and $380.6 million for the first 9 months. With that, I'll turn it back over to you, Randy.

該公司 2023 年第三季的未償債務總額為 44 億美元，而 2022 年底為 34 億美元。第三季末我們的銀行槓桿契約槓桿率為 3.25 倍。截至本季末，我們的循環信貸額度有 10 億美元，持續保持強勁的流動性。 2023 年第三季的資本支出總額為 1.462 億美元，前 9 個月的資本支出總額為 3.806 億美元。這樣，我會把它交還給你，蘭迪。

Thanks, Brad. As previously announced a few weeks ago, we revised company guidance to $1.6 billion to $1.7 billion of combined adjusted EBITDA for the full fiscal year 2023.

謝謝，布拉德。正如幾週前宣布的那樣，我們將 2023 財年的公司指引調整為 16 億至 17 億美元的調整後 EBITDA 總額。

For Q4, we carried good momentum in from the third quarter around the world. Raw material volumes have slightly softened, but our diversified geographic footprint makes the impact negligible. Clearly, the global fats and oils have softened as a direct reflection of an ample supply of global fats and oils and delayed start-ups and inconsistent operations of renewable diesel plants.

對於第四季度，我們在全球範圍內保持了第三季度的良好勢頭。原料數量略有下降，但我們多元化的地理足跡使得影響可以忽略不計。顯然，全球油脂價格已經走軟，直接反映了全球油脂供應充足以及再生柴油廠開工延遲和營運不一致的情況。

While we've seen a lot of press and noise about significant gallons of new renewable diesel coming to the market, the numbers appear to tell a very different story. If more capacity outside of Diamond Green Diesel was operating, fat prices undoubtedly would be higher. DGD is performing well, and we do not have any planned turnarounds in Q4. Margin structures are adjusting, and we are very encouraged with the conversations we were having with a variety of interested parties regarding sustainable aviation, fuel and our ability to deliver the margins in line with what we have communicated.

儘管我們已經看到大量關於大量新再生柴油進入市場的新聞和噪音，但這些數字似乎講述了一個完全不同的故事。如果鑽石綠柴油以外的更多產能投入運行，脂肪價格無疑會更高。 DGD 表現良好，我們在第四季沒有任何計劃的周轉。利潤結構正在調整，我們與各種利益相關者就可持續航空、燃料以及我們按照我們所傳達的內容提供利潤的能力進行的對話感到非常鼓舞。

Looking forward to 2024, while the heavy lift of our integration work has been completed, there are still a few opportunities that can add some margin improvement in our Feed segment, and our Food segment should continue to reflect our product mix shift.

展望 2024 年，雖然我們的整合工作已經完成，但仍有一些機會可以提高我們的飼料部門的利潤率，而我們的食品部門應繼續反映我們的產品結構轉變。

From an earnings perspective, we see 2024 shaping up nicely and expect to deliver and delever with an improved performance globally. The table is set with an improved outlook for the LCFS, growing demand for SAF, strong demand for our low CI feedstocks and favorable tax structures.

從獲利角度來看，我們預計 2024 年將表現良好，並預期全球業績將實現改善並去槓桿化。表格的設定包括 LCFS 前景的改善、對 SAF 的需求不斷增長、對我們的低 CI 原料的強勁需求以及有利的稅收結構。

Given the environment we see for 2024, we -- at this time, we anticipate combined adjusted EBITDA to be in the range of $1.7 billion to $1.8 billion. In 2024, we plan to lower capital expenditures, focused on improving our working capital usage and we anticipate regular dividends from Diamond Green Diesel. This will all help us accomplish our leverage targets by year-end. Given the anticipated dividends from DGD and the strength of our Global Ingredients business, we should be well on our way to achieving our target leverage ratio of about 2.5 by year-end '24.

考慮到 2024 年的環境，我們目前預計合併調整後 EBITDA 將在 17 億美元至 18 億美元之間。 2024 年，我們計劃降低資本支出，專注於改善營運資金使用情況，並預期鑽石綠柴油定期派發股利。這都將幫助我們在年底前實現槓桿目標。鑑於 DGD 的預期股息和我們全球原料業務的實力，我們應該能夠順利地在 2024 年年底實現槓桿率約 2.5 的目標。

With that, let's go ahead and open it up to questions, and I'll come back with some closing comments.

接下來，讓我們繼續提出問題，然後我將發表一些結束語。

(Operator Instructions) And our first question will come from Manav Gupta of UBS.

（操作員說明）我們的第一個問題將來自瑞銀集團的馬納夫·古普塔（Manav Gupta）。

My question first is on a little bit on the macro side. How do you view the recent staff proposal by CARB which increases compliance by 50% by 2030, also has the [AAR] mechanism, which pulls forward the program in case of over generation of LCFS. Do you believe this will be supportive of RD economics once it kicks in 2025?

我的問題首先是宏觀的。您如何看待 CARB 最近的工作人員提案，該提案到 2030 年將合規性提高 50%，還有 [AAR] 機制，該機制可以在 LCFS 生成過多的情況下推進該計劃。您認為 RD 經濟在 2025 年啟動後，這會支持它嗎？

This is Matt. So first of all, the answer is yes. We do believe that this is supportive to the RD business. As you know, the LCFS is an important component to the margin build in the RD space. And given that the SARIA that was put out a couple of months ago and the expected legislation that is forthcoming, there are several components that we think are supportive for the RD and even the SAF business.

這是馬特。所以首先，答案是肯定的。我們確實相信這對研發業務是有支持的。如您所知，LCFS 是 RD 領域利潤建構的重要組成部分。鑑於幾個月前推出的 SARIA 以及即將出台的預期立法，我們認為有幾個組成部分支持 RD 甚至 SAF 業務。

So obviously, volume is an important part. And then there's the component for a potential of an SAF in California of up to -- in the neighborhood of 150 million gallons, which will line up very nicely with the -- our SAF project. And there's even a component of timing. There's the possibility of an earlier implementation.

顯然，成交量是一個重要的組成部分。然後，加州的 SAF 潛力高達 1.5 億加侖左右，這與我們的 SAF 項目非常吻合。甚至還有時間的因素。有可能提前實施。

Right now, it's set for 2025. But there is the chance, and we all have to stay tuned on this, but there is the chance for even sometime in Q3 or Q4 an implementation coming on this. So again, all in all, we are very optimistic and quite satisfied with the LCFS.

目前，它的時間定為 2025 年。但是機會是存在的，我們都必須對此保持關注，但甚至有可能在第三季或第四季的某個時候實現這一點。總而言之，我們對 LCFS 非常樂觀且非常滿意。

Okay. I'm assuming you're basically referring to the fact that the [AAR] will pull forward the program into 2024. So the program could actually start in third quarter 2024?

好的。我假設您基本上指的是 [AAR] 將該計劃推遲到 2024 年這一事實。那麼該計劃實際上可以在 2024 年第三季度啟動？

That's the potential, yes.

是的，這就是潛力。

Okay. Very quick follow-up is on Slide [11]. You indicate lower fat sales volume were $32 million year-over-year headwind and lower protein sales volume were a $13 million year-over-year headwind. Given that integration is going well for both valley and FASA, should we assume this was just a temporary blip and the volumes will come back as we go ahead?

好的。投影片 [11] 上有非常快速的跟進。您指出，脂肪銷量下降導致年比 3,200 萬美元的逆風，蛋白質銷量下降導致同比 1,300 萬美元的逆風。鑑於 Valley 和 FASA 的整合進展順利，我們是否應該假設這只是暫時現象，隨著我們的進展，交易量將會恢復？

Yes. Manav, this is Randy. I mean what we're seeing in my script, I commented on it, that's directly related to lower cattle slaughter numbers predominantly in North America. And clearly, the cattle economics have changed in the U.S., the herd is low, but being replenished and that's just directly related to year-over-year comparisons.

是的。馬納夫，這是蘭迪。我的意思是我們在我的劇本中看到的，我對此發表了評論，這與主要在北美的牛屠宰量下降直接相關。顯然，美國的牛隻經濟已經發生了變化，牛群數量較低，但正在補充，這與同比比較直接相關。

If you think of it this way, the red meat has the most fat, the most protein and then pork and then chicken. And so that's what that is. The volumes in South America are relatively flat right now. Europe is in good shape, but that's all pretty much North America. Canada is in good shape.

如果你這麼想的話，紅肉的脂肪最多，蛋白質最多，然後是豬肉，然後是雞肉。就是這樣。目前南美洲的銷售量相對持平。歐洲狀況良好，但北美也差不多如此。加拿大的情況很好。

The next question comes from Adam Samuelson of Goldman Sachs.

下一個問題來自高盛的亞當·薩繆爾森。

So I guess first question. Randy, I mean if you think about the updated kind of outlook for the balance of this year and you gave kind of a framework for 2024, can you first quantify in the quarter the resolution in the pre-announcement to a hedge loss at Diamond Green. Can you quantify that?

所以我想第一個問題。蘭迪，我的意思是，如果您考慮今年餘額的最新展望，並且您給出了 2024 年的框架，您能否首先在本季度量化鑽石綠對沖損失預公告中的解決方案。你能量化一下嗎？

And as we think about Diamond Green for the fourth quarter, if there's no scheduled turnarounds, should we be thinking about production a lot closer to where you were in the second quarter, which, if true, and even at third quarter margin levels would imply, a pretty tough to get to the low end of the way you framed the full year. So can you just help reconcile that?

當我們考慮第四季度的鑽石綠時，如果沒有計劃的周轉，我們是否應該考慮將產量更接近第二季度的水平，如果這是真的，甚至在第三季度的利潤水平上也意味著，很難達到你全年框架的低端。那你能幫忙協調一下嗎？

I don't know that I would frame it the way you just finish that sentence. No. Clearly, there's always a timing issue of how the fat prices in our core business flow through. And also remember, a significant portion of the North American portfolio ends up at Diamond Green Diesel as the purchaser. So you had a little bit of a double wham here.

我不知道我會以你剛剛完成這句話的方式來建構它。顯然，我們核心業務中的脂肪價格如何流動始終存在一個時間問題。另請記住，北美投資組合的很大一部分最終被 Diamond Green Diesel 作為買家。所以你在這裡遇到了一點雙重打擊。

Number one, the prices started to accelerate in third quarter again, but we'd already sold Diamond Green. And so those sales now are coming to be fruition in Q4 for our core ingredient business. On the other side, we saw heating oil spike up. You do get some hedge losses. You can go into the -- you can go to straight to the financials and the derivative sections on the Valero release, and you can see what that number is. And it was a significant number.

第一，第三季價格再次開始上漲，但我們已經賣出了鑽石綠。因此，我們的核心原料業務的這些銷售現在將在第四季度取得成果。另一方面，我們看到取暖油價格飆升。您確實會遭受一些對沖損失。你可以進入——你可以直接進入瓦萊羅發布的財務和衍生品部分，你可以看到這個數字是多少。這是一個很大的數字。

At the same time, you had higher fat prices flowing through, then you had heating oil now coming off. And so at the end of the day, that's my comment about margins are adjusting. If you think about the efficiency of the D4 RIN, when that thing came down, what did it say? It said fat prices had to come down to put some type of margin back in the business. So clearly, the margins in DGD are coming back very nicely in Q4 here. And they'll finish the year strong, and then that's what gives us then the momentum into next year.

同時，脂肪價格上漲，取暖油也隨之減少。因此，歸根結底，這就是我對利潤率正在調整的評論。如果你想想 D4 RIN 的效率，當那個東西下來時，它說了什麼？該公司表示，脂肪價格必須下降，才能為該業務帶來某種形式的利潤。很明顯，DGD 的利潤率在第四季度恢復得非常好。他們將以強勁的表現結束這一年，這就是我們進入明年的動力。

I mean, like we said, we're trying to -- we've always said we're not going to guarantee you no volatility in DGD because there's a lot of moving parts there. But at the end of the day, 910 million gallons at $1.02 for year-to-date. We said coming into the year, we'd be somewhere between $1, $1.10. We're using $1.10 for next year. We'll finish up somewhere within our guided range for the year. It just depends on how everything flows through. But no, from what we see right now, we're right on target.

我的意思是，就像我們所說的那樣，我們一直在說我們不會保證 DGD 不會波動，因為那裡有很多變動的部分。但最終，年初至今的產量為 9.1 億加侖，價格為 1.02 美元。我們說過，進入今年，我們的價格將在 1 美元到 1.10 美元之間。明年我們使用 1.10 美元。我們將在今年的指導範圍內完成。這只取決於一切如何流動。但不，從我們現在所看到的來看，我們的目標是正確的。

Okay. That's helpful. And then just in the Feed segment, can you maybe just -- maybe the quarter-on-quarter EBITDA decline, help bridge some of that. So EBITDA was down $26 million or so versus the second quarter. Can you help bridge how much of that is seasonality? How much of that was the commodity prices, maybe some of the weakness in pet ingredients. And if we think about the fourth quarter kind of with where commodity prices land, can you help us think about some of the key items in EBITDA in Feed moving forward?

好的。這很有幫助。然後就在飼料領域，你能否——也許是季度 EBITDA 下降，幫助彌補其中的一些問題。因此，與第二季度相比，EBITDA 減少了 2,600 萬美元左右。您能幫助彌合其中有多少是季節性的嗎？其中有多少是大宗商品價格的影響，也許是寵物原料的一些疲軟。如果我們考慮第四季度大宗商品價格的下降情況，您能否幫助我們考慮飼料中 EBITDA 中的一些關鍵項目？

Yes. And I think you've kind of answered most of your question there. I mean, typically, the seasonality hits in this business especially in North America and Europe in third quarter in the Feed segment because you're being -- the quality of the raw material in the summer times is much harder to process. That's code for it's harder to get the fat out of the product and leave it in the protein. So you kind of have lower quality fat, less fat, and that's how it flows through. It has for 142 years.

是的。我認為您已經回答了大部分問題。我的意思是，通常情況下，該行業的季節性會受到影響，特別是在北美和歐洲，第三季的飼料領域，因為夏季原料的品質更難加工。這是因為很難從產品中去除脂肪並將其留在蛋白質中。所以你的脂肪質量較低，脂肪較少，這就是它流動的方式。已有142年歷史了。

The pet food business is something to put your finger on right now. Pricing remains good in that area. Demand was weak, but it's picking back up again. You've got a little bit of a trade down going on. It appears around the world right now in the pet food side. But overall, when we're looking at '24 versus '23, that it looks pretty stable there. Protein prices on most products are in pretty good shape. I mean there's a little bit of trade disruption in the world right now, in different areas that are moving or moving proteins around. Matt, what else you want to add here?

寵物食品業務現在值得您關注。該地區的定價仍然不錯。需求疲軟，但正在再次回升。你正在進行一些交易。現在它出現在世界各地的寵物食品領域。但總的來說，當我們比較 '24 和 '23 時，它看起來相當穩定。大多數產品的蛋白質價格都處於良好狀態。我的意思是，目前世界上存在一些貿易中斷，在不同的地區正在移動或移動蛋白質。馬特，你還想在這裡增加什麼？

Yes. I mean I would say the Q3, as you all know, was a typical very hot summer, and our businesses did as expected feel that. And so -- but we are seeing, especially now in Q4, a quick return to the pickup and recovery.

是的。我的意思是，我想說，眾所周知，第三季是一個典型的非常炎熱的夏天，我們的企業確實感受到了這一點。所以，但我們看到，尤其是現在第四季度，經濟迅速恢復回升。

Yes. Keep in mind, Adam, a year ago today, not sequentially, but a year ago, here we still have Ward, South Carolina operating in North America. Ward, South Carolina is going to be key to '24 for us as it comes back online here. The plant is completely rebuilt. We are still landfilling a significant amount of product right now that we can't process in our system. So as we guide higher next year, if you say what -- you always have to assume fats and oils prices and protein prices in there and energy. But most importantly for us, it's being able to bring back our system to full strength on the Eastern seaboard.

是的。請記住，亞當，一年前的今天，不是連續的，而是一年前，我們仍然有南卡羅來納州沃德在北美開展業務。南卡羅來納州沃德將成為我們 24 小時回歸的關鍵。該工廠已完全重建。目前，我們仍在填埋大量無法在我們的系統中處理的產品。因此，當我們明年指導更高的價格時，如果你說什麼——你總是必須假設其中的脂肪和油價格以及蛋白質價格和能源價格。但對我們來說最重要的是，它能夠使我們的系統在東海岸恢復到全部實力。

The next question comes from Derrick Whitfield of Stifel.

下一個問題來自 Stifel 的 Derrick Whitfield。

Thanks for the 2024 commentary this morning. For my first question, I wanted to lean in on DGD and focus on the sustainable margins of your business, which really should drive the value of that business beyond 2024. When we analyze your system margins by assessing the value of your feedstock streams relative to a marginal unit of production, there appears to be a very meaningful positive spread with what you own differentially versus industry. As you optimize the economics of DGD, is it reasonable to assume that, that sustainable margin you've talked about in the past at about [$10] per gallon still stands even with the press, D4 RIN prices given your ability to increment tallow at DGD?

感謝您今天早上的 2024 評論。對於我的第一個問題，我想依靠 DGD 並專注於您業務的可持續利潤，這確實應該在 2024 年之後推動該業務的價值。當我們通過評估您的原料流相對於作為邊際生產單位，您擁有的產品與行業相比似乎存在非常有意義的正利差。當您優化 DGD 的經濟性時，您是否可以合理地假設，您過去談到的每加侖約 [10 美元] 的可持續利潤即使在媒體報道下仍然保持不變，考慮到您有能力在DGD？

Fundamentally, Derrick, that's what we believe. I mean, clearly, the volatility in Q3, the turnaround offline, 37 days, we disrupted our logistics, both inbound and outbound there and move boats to Q4 that should have loaded, et cetera, et cetera. The D4 RIN plays an important part in the value of that business down there. Clearly, we were not a hedger of D4 RINs and we got caught in the volatility there with higher fat prices, lower -- a lower green premium as we say, and you saw that flow through.

從根本上說，Derrick，這就是我們所相信的。我的意思是，顯然，第三季度的波動，線下的周轉，37天，我們擾亂了我們的物流，無論是進出港，還是將本應裝載的船隻移至第四季度，等等。 D4 RIN 在該業務的價值中發揮著重要作用。顯然，我們不是 D4 RIN 的對沖者，我們陷入了那裡的波動，脂肪價格更高，綠色溢價更低，正如我們所說，你看到了這種流動。

But overall, our thesis still remains the same. As Suann pointed out to me, she said, even under any situation, our investment case in this was $0.79 10 years ago on a $3.23 a gallon bill. We still believe in that. We believe it's even better now, given our CI advantages, given our both inbound, outbound logistic advantages. I mean keep in mind why are fat price is a little lower in North America, because Diamond Green is the largest importer now of fats in North America because it has the logistical capability to convert and pretreat those fabs. So that's Phase 1.

但總體而言，我們的論點仍然保持不變。正如 Suann 向我指出的那樣，她說，即使在任何情況下，我們在這方面的投資案例在 10 年前都是 0.79 美元，每加侖 3.23 美元。我們仍然相信這一點。考慮到我們的 CI 優勢，考慮到我們的入庫、出庫物流優勢，我們相信現在情況會更好。我的意思是請記住為什麼北美的脂肪價格略低，因為 Diamond Green 是北美目前最大的脂肪進口商，因為它具有轉換和預處理這些工廠的物流能力。這就是第一階段。

Phase 2, as the script alluded, we're working hard with interested parties. We won't say who the interested parties are, so please don't ask. But we're very close. And SAF is real. The demand is real and the margin opportunities, as we've explained out there remain very real and doable. So if you look at this business in '24, Matt said, okay, I think there's a chance we could get the LCFS implementation online a little sooner.

正如劇本所提到的，第二階段我們正在與有興趣的各方努力合作。我們不會透露有興趣的各方是誰，所以請不要詢問。但我們非常接近。 SAF 是真實存在的。正如我們所解釋的，需求是真實的，利潤機會仍然是非常真實和可行的。因此，如果你看看 24 年的這項業務，Matt 說，好吧，我認為我們有機會更快地上線 LCFS 實施。

Even if it doesn't come until the back of the year, just the fact when CARB publishes and everybody says, "Oh, here is the script, here's the playbook", that's positive, and we'll see an improvement there.

即使要到今年年底才會出現，但當 CARB 發佈時，每個人都會說，“哦，這是劇本，這是劇本”，這是積極的，我們會看到那裡的改進。

Number two, as we look around the world for next year, the SAF side, our plant is progressing nicely. We made it through hurricane season. I know technically, that's got another week or 2, but it looks like we've made it through hurricane season, we'll be buttoning it up, steels up, equipment is there. And hopefully, as we progress through the winter time and next summer, we'll be mechanically complete and do a normal start-up here. And that's -- if you look at it 2 to 3 years from now, you'll have 250 million gallons of SAF in '24 -- or I mean '25 for sure. And then SAF 2 is on the drawing board here.

第二，當我們展望明年的世界時，SAF 方面，我們的工廠進展順利。我們度過了颶風季節。我知道從技術上講，還需要一兩週的時間，但看起來我們已經度過了颶風季節，我們會做好準備，做好準備，設備也在那裡。希望隨著冬季和明年夏季的進展，我們將在機械上完成並在這裡進行正常的啟動。也就是說，如果你從現在開始 2 到 3 年後觀察，你將在 24 年擁有 2.5 億加侖的 SAF，或者我的意思是 25 年。然後 SAF 2 就在這裡設計了。

Clearly, as we've communicated to people, that decision won't be made until we have complete proof of concept of both the technology and the margin structure. But at the end of the day, if you look at '24, '25, '26, you can start to think out that our portfolio will include substantial gallons of SAF along with RD and then we'll have -- we'll own that arbitrage again as we go forward.

顯然，正如我們與人們溝通的那樣，只有在我們對技術和利潤結構的概念進行完整的證明之後才會做出決定。但最終，如果你看看 '24、'25、'26，你可以開始思考我們的產品組合將包括大量的 SAF 和 RD，然後我們將 - 我們將隨著我們的前進，再次擁有這種套利。

So it's a -- as we look forward, we don't see any downside from our case. There may be a little lull here that the market seems to want to price in. Matt, anything else you want to add?

所以，當我們展望未來時，我們沒有看到我們的案例有任何缺點。這裡可能會有一點平靜，市場似乎想要消化這一點。馬特，你還有什麼要補充的嗎？

I would just say that one thing to keep in mind is that as this SAF comes online, the feedstock is renewable diesel. And so our plan is [border] plated for 250 million gallons. And so when we turn on with that plant, that's 250 million gallons of RD that's coming out of the RD market and going into the SAF market. So that's another, let's say, friendly component to the -- even the outlook for RD.

我只想說，需要記住的一件事是，當該 SAF 上線時，原料是可再生柴油。因此，我們的計劃是[邊界]電鍍 2.5 億加侖。因此，當我們啟動工廠時，將有 2.5 億加侖的 RD 產量從 RD 市場流出並進入 SAF 市場。因此，這是另一個友好的組成部分——甚至是 RD 的前景。

That's great. Maybe staying on DGD, I wanted to see if you could offer some additional color on the apparent delay you're seeing in RD capacity expansions, weather delays or simply just difficulty in running at nameplate, which is more challenging than I think we all appreciate. We see the same, but I'd like your views on that as well.

那太棒了。也許留在DGD 上，我想看看您是否可以對您在RD 產能擴張、天氣延誤或只是在銘牌上運行的困難所看到的明顯延遲提供一些額外的顏色，這比我認為我們都意識到的更具挑戰性。我們也有同樣的看法，但我也想聽聽您對此的看法。

Yes. And I'll tie tune this with the team in here. I mean clearly, as we look around the horn, we're both buyers and sellers of fats and oils around the world. And when I say buyers, I mean that's the DGD [hat] and sellers, that's the Darling hat . And clearly, we're not seeing the demand from the renewable guys in North America. In fact, we're actually -- we're buying material back from them. I think -- I guess if we say frustration, that might be too strong, our curiosity and a bit of frustration is that when people started whether it was Bloomberg or others putting out these S&Ds on D4 RINs, they forget multiple components of it.

是的。我將與這裡的團隊進行協調。我的意思很明顯，當我們環顧四周時，我們既是世界各地脂肪和油的買家和賣家。當我說買家時，我的意思是 DGD [帽子]，賣家是 Darling 帽子。顯然，我們沒有看到北美再生能源公司的需求。事實上，我們實際上是從他們那裡購買材料。我想，如果我們說挫敗感，那可能太強烈了，我們的好奇心和一點挫敗感是，當人們開始在D4 RIN 上發布這些S&D 時，無論是彭博社還是其他人，他們忘記了其中的多個組成部分。

Number one, they assume if Phillips 66 announces a plan, it's going to be online, Jan 1 and run it capacity. If Vertex or PBF, I mean, HollyFrontier finally hit 52% capacity, yay. At the end of the day, you just keep reading this stuff. Well, that doesn't generate the level of RINs that they're seeing. And then the world doesn't understand, when you export material, which is a significant portion of Diamond Green because of its location on the Gulf Coast, that goes around the world. At the end of the day, those RINs get retired in 60 days. There's a delay there.

第一，他們假設如果 Phillips 66 宣布一項計劃，該計劃將於 1 月 1 日上線並滿載運行。如果 Vertex 或 PBF，我的意思是，HollyFrontier 最終達到了 52% 的容量，是的。歸根結底，你只需繼續閱讀這些內容即可。嗯，這不會產生他們所看到的 RIN 水平。然後世界不明白，當你出口材料時，由於其位於墨西哥灣沿岸，這是鑽石綠的重要組成部分，而這些材料會銷往世界各地。最終，這些 RIN 將在 60 天後退休。那裡有延遲。

So at the end of the day, you kind of have to go back and rebalance this thing with reality. So we're buying back that. We're not selling and selling means they don't have the pretreatment units that they claim they do or they would be buying the cheapest fats in the world. Matt, anything else you want to add?

所以最終，你必須回去並重新平衡這件事與現實。所以我們要回購它。我們不出售，而出售意味著他們沒有他們聲稱擁有的預處理裝置，否則他們將購買世界上最便宜的脂肪。馬特，你還有什麼要補充的嗎？

As I think many of these are learning, this is not necessarily an easy business to operate. And whether it's -- they call it the CI component or the quality of the raw material and the pretreatment component requires more CapEx and someone tried to cut corners and save on CapEx, then they find out that, gee, now this product, we can't process it or it's at the capacities that we wanted. So this is a -- it is a complex and not easy business to operate in. And I think some of these people are finding that out.

我認為其中許多人正在學習，這不一定是一項容易經營的業務。無論是——他們稱之為 CI 組件，還是原材料的品質和預處理組件，都需要更多的資本支出，有人試圖走捷徑並節省資本支出，然後他們發現，天啊，現在這個產品，我們可以不處理它或它處於我們想要的容量。所以這是一個複雜且不容易經營的行業。我認為其中一些已經發現了這一點。

The next question comes from Dushyant Ailani of Jefferies.

下一個問題來自 Jefferies 的 Dushyant Ailani。

The first one I had was on the guidance that you've given for 2024, the $1.7 billion to $1.8 billion. Could you talk a little bit more about what margins do you expect for the Food and Feed segment?

我收到的第一個建議是您為 2024 年提供的指導，即 17 億至 18 億美元。您能否多談談您對食品和飼料領域的利潤預期是多少？

Not really ready to go there yet, Dushyant. I mean, as I look at it, when we take a shot at producing guidance here, what you can back into here is you can say, what are you thinking on Diamond Green Diesel? Well, we're thinking that we're going to run at above nameplate capacity and we're going to make $1, $1.10 a gallon next year, and it doesn't include any SAF gallons coming on early at this time. It's just too early to make that prediction. And so it's not hard to back into that number. And so at the end of the day, where it lands, whether it's in Food or Feed, we're still -- we're thinking that the numbers are going to roll up between $1 billion, $1.1 billion, maybe a little more in the core business depending on where fat prices recover. And as we've said, if renewable diesel capacity is there, enhanced pre-treatability or even if it doesn't have pre-treatability, fats and oil prices can't stay where they're at.

杜希揚特，還沒準備好去那裡。我的意思是，正如我所看到的，當我們嘗試在這裡制定指導時，您可以回到這裡說，您對鑽石綠柴油有何看法？好吧，我們認為我們將以高於銘牌的產能運行，明年我們將每加侖賺取 1 美元、1.10 美元，而且這不包括目前早些時候生產的任何 SAF 加侖。現在做出這樣的預測還為時過早。因此，回到這個數字並不難。因此，最終，無論是在食品還是飼料領域，我們仍然認為數字將在 10 億美元、11 億美元之間增加，在食品領域可能會更多一點。核心業務取決於脂肪價格的恢復情況。正如我們所說，如果存在再生柴油產能，增強預處理能力，或即使沒有預處理能力，脂肪和石油價格也不會保持在原位。

If you look at the -- whether it's the soybean oil, S&D, we're at a multi multiyear low. And RBD margins, which most of these guys are running are now 1,100 over. So that's $0.11 higher than we're operating at. So that's -- so that's how we kind of cast it looking forward. Matt, Bobby, anything you want to add to it?

如果你看看——無論是豆油、S&D，我們都處於多年來的低點。而 RBD 利潤率，這些人中的大多數人現在都在 1,100 以上。因此，這比我們的營運價格高出 0.11 美元。這就是我們展望未來的方式。馬特、鮑比，你們還有什麼要補充的嗎？

I think that's right. I mean we're just at a -- it's a generally tight S&D scenario, and we're -- a lot needs to happen as far as crop production in South America, and that's really going to determine what we see with respect to certainly protein levels and ultimately, oil levels as well.

我認為這是對的。我的意思是，我們正處於一種普遍緊張的特殊與差別待遇情景中，就南美洲的農作物生產而言，我們需要發生很多事情，這確實將決定我們所看到的情況蛋白質水平，最終還有油脂水平。

That's helpful. And then one question I had was just kind of your thoughts on buybacks, given where the stock prices today? Or maybe just in general, I know that the goal is to kind of get to that 2.5 leverage, but any thoughts on entertaining higher buybacks given where the stock is trading today?

這很有幫助。然後我的一個問題是，考慮到今天的股價，你對回購的想法是什麼？或者也許只是一般而言，我知道目標是達到 2.5 的槓桿率，但考慮到股票今天的交易情況，有沒有考慮進行更高的回購？

It is a discussion point with the Board. We have adequate capacity to do that. Clearly, our focus today is, as we said, is to repatriate cash and get the total debt down and get to at least a discussion point of investment grade as we have some maturities coming in, in '26 and '27. So it's not off the table. Clearly, every year, we will buy back any executive compensation or dilution for sure. And after that, then it's opportunistic. And as the year goes along, and as Brad says, I have a little extra cash, we've been giving the authority to make those decisions. So nothing is off the table here.

這是與董事會的討論點。我們有足夠的能力做到這一點。顯然，正如我們所說，我們今天的重點是匯回現金並降低總債務，並至少達到投資等級的討論點，因為我們在 26 年和 27 年將有一些到期日。所以這並不是不可能的。顯然，每年我們都會回購任何高階主管薪酬或股權稀釋。在那之後，那就是機會主義了。隨著時間的推移，正如布拉德所說，我有一些額外的現金，我們一直在賦予做出這些決定的權力。所以這裡沒有什麼是不可能的。

The next question comes from Paul Cheng of Scotiabank.

下一個問題來自豐業銀行的 Paul Cheng。

Randy, trying to understand sequentially from the second to third quarter, the Feed ingredient revenue is down. The sales volumes is actually flat. And all the market indicators, whether it's UCO, tallow or (inaudible) is actually up. We're trying to understand that what's causing the sequential revenue drop from second to third quarter in the Feed business? That's the first question.

蘭迪試圖了解從第二季到第三季度，飼料原料收入連續下降。銷量實際上持平。所有市場指標，無論是 UCO、牛油或（聽不清楚）實際上都在上漲。我們試圖了解是什麼導致飼料業務從第二季到第三季的收入連續下降？這是第一個問題。

Yes. Paul, this is Brad. When you're looking sequentially, we have, for lack of a better word lead and lags in a lot of our contracts. And so there's timing differences there that will often -- and when you get quick movements, what Randy talked about earlier between second and third quarter, price movements. And then with the way the contracts work and the lead and lag that can cause a little bit of kind of discolor there, I would say.

是的。保羅，這是布萊德。當你按順序查看時，我們有，因為我們的許多合約中缺乏更好的詞領先和滯後。因此，經常會出現時間差異，當你出現快速變動時，蘭迪早些時候在第二季和第三季之間談到了價格變動。我想說的是，合約的運作方式以及領先和滯後可能會導致一些變色。

And so Brad, should we -- based on that means in the fourth quarter, we should see, comparing to the market indicator, your revenue, we see more of an upside or then the lag effect is going to take longer than that?

那麼布拉德，我們應該——基於這意味著在第四季度，我們應該看到，與市場指標、你的收入相比，我們看到更多的上升空間，或者滯後效應將需要更長的時間？

Yes. Typically, what you're going to see then is if you think of it this way, today around the world, we have a significant amount of our internal produced fats and oils, whether they're in Europe or Brazil or North America headed to Diamond Green Diesel. And so as those were -- if you want to think about it, what we produced in August is sold and it doesn't arrive and be processed until October and September is kind of November and October now is December, January. And so as we said earlier in the script, so you had a move up of fat prices in Q3 that then were sold and purchased. And so those will flow through, and those should deliver a pretty good fourth quarter in that -- in the Feed Ingredients segment.

是的。通常情況下，如果你這樣想的話，你會看到今天在世界各地，我們有大量內部生產的脂肪和油，無論它們是在歐洲、巴西還是北美。鑽石綠柴油。因此，如果你想考慮一下，我們在 8 月生產的產品已售出，直到 10 月才到達並進行加工，而 9 月相當於 11 月，而現在的 10 月是 12 月、1 月。正如我們在腳本前面所說的那樣，第三季度脂肪價格上漲，然後出售和購買。因此，這些將通過，並且那些應該在飼料原料領域帶來相當好的第四季度業績。

The next question comes from Andrew Strelzik of BMO.

下一個問題來自 BMO 的 Andrew Strelzik。

My first one is on Diamond Green Diesel. And I think Randy kind of [what] you've talked about $0.90 or $1 being the cost advantage or the minimum kind of margin to think about for DGD versus the marginal producer? And you kind of talked around this, I think, a little bit earlier, but I was hoping if you could be a little bit more specific. But do you think that, that number has changed at all with new capacity that's come on, et cetera? Or is that still the right way to think over time about the baseline DGD margin?

我的第一個是鑽石綠柴油。我認為蘭迪（Randy）認為您所說的 0.90 美元或 1 美元是 DGD 與邊際生產商相比的成本優勢或最低利潤？我想，你早些時候就談到這個問題，但我希望你能說得更具體一些。但您認為這個數字是否隨著新產能的出現等而改變了？或者，隨著時間的推移，這仍然是思考 DGD 基準利潤率的正確方法嗎？

Yes. I don't really see anything changing that competitive advantage out there right now. I mean, I'm looking around the table and I don't know.

是的。我現在確實沒有看到任何改變這種競爭優勢的事情。我的意思是，我環顧四周，但我不知道。

I agree. That's something that we consider as a competitive advantage. We're going to continue to leverage that advantage going forward, trying to stay let's say, ahead of the game. And that's again, with the -- even with the SAF project is going to separate us even further from our competition.

我同意。我們認為這是一種競爭優勢。我們將繼續利用這一優勢，並努力保持領先地位。再說一遍，即使是 SAF 專案也會讓我們在競爭中進一步領先。

If I could just add. I think one thing to keep in mind is part of that advantage is DGD's ability to blend all different kinds of feedstocks. And the price relationship amongst those feedstocks changes a lot from time to time. So the relative advantage is not something that you can pinpoint and be as static. But generally speaking, I think that the advantage that we had before continues to be the case today.

如果我可以添加的話。我認為需要記住的一件事是，DGD 能夠混合所有不同種類的原料，這是這一優勢的一部分。這些原料之間的價格關係會不時會發生很大變化。因此，相對優勢並不是你可以精確定位和靜態的。但總的來說，我認為我們以前的優勢今天仍然如此。

Yes. And I think the DGD mixology has become even more complicated given whether you've got CAT 3 fat coming from Rotterdam from our factories or you got tallows and yellow greases coming from Brazil and Yukos from the Asian countries, you got a timing of when those arrive, and then you've got a usage. You can't -- we don't really run feedstocks [meat] in a sense. So we make a mix that meets our customers' needs that allows us to get the highest yield that we can and the longest catalyst life.

是的。我認為 DGD 混合學已經變得更加複雜，無論您是從我們的工廠獲得來自鹿特丹的 CAT 3 脂肪，還是來自巴西和來自亞洲國家的尤科斯公司的牛脂和黃色油脂，您都會有一個時間安排到達，然後你就可以使用了。你不能－－從某種意義上說，我們並不真正經營原料[肉類]。因此，我們製作了滿足客戶需求的混合物，使我們能夠獲得最高的產量和最長的催化劑壽命。

And so it becomes a far more complicated thing. But the competitive advantage, like I said, versus running RBD soybean oil right now is $0.88 a gallon. So that's not even a CI differential there.

所以它變得更加複雜。但正如我所說，與目前使用 RBD 大豆油相比，其競爭優勢為每加侖 0.88 美元。所以甚至不是 CI 差異。

So I think as you've seen through the year, remember, Port Arthur is still waiting on its pathway, we anticipate it any time. So Port Arthur has not had the economics that it will have next year again. And then that's Port Arthur pre-SAF. So I think the advantage is very sustainable and widens out over time. Like I said, I don't want to be somebody that doesn't say there's going to be less volatility due to timing here, but I think the margins are very achievable.

因此，我認為正如您在這一年中看到的那樣，請記住，亞瑟港仍在等待它的路徑，我們隨時都在期待它。因此，亞瑟港的經濟狀況並沒有像明年那麼好。然後就是新加坡武裝部隊之前的亞瑟港。所以我認為這種優勢是非常永續的，並且會隨著時間的推移而擴大。就像我說的，我不想成為一個不說由於時機的原因波動性會減少的人，但我認為利潤是可以實現的。

And on top of that advantage, there's the other value of our integration with our Feed business. And we're producing even the local fat supplies in the U.S. and Canada that a large percentage of that ends up in DGD. And then, again, one of the other things back to DGD is the producer's tax credit going forward. We think that DGD is again, one more time, more advantaged than the others. And when that calculation comes into place. So again, we like our position.

除了這項優勢之外，我們與飼料業務的整合還有其他價值。我們甚至還在美國和加拿大生產當地的脂肪供應，其中很大一部分最終都製成了 DGD。然後，DGD 的另一件事是生產商未來的稅收抵免。我們認為 DGD 再次比其他公司更有優勢。計算到位時。再說一次，我們喜歡我們的立場。

Okay. That was really helpful color. I appreciate that. And my second question following up on some of your commentary around some integration benefits that remain or opportunities that remain. We know, I think that there's some Valley contracts that go into affect Jan 1. Is that really what you're talking about? And is there any way to quantify that? Or more broadly, are you seeing, given kind of the bigger asset footprint with all the acquisitions, et cetera, that there's even more opportunity broadly beyond Valley to continue to optimize.

好的。那是非常有用的顏色。我很感激。我的第二個問題是關於您對仍然存在的一些整合優勢或仍然存在的機會的一些評論。我們知道，我認為有一些矽谷合約將於 1 月 1 日生效。這真的是你所說的嗎？有什麼方法可以量化嗎？或者更廣泛地說，您是否看到，考慮到所有收購等帶來的更大的資產足跡，除了矽谷之外還有更多機會繼續優化。

Yes. And I think those comments were in the script. I mean, clearly, the U.S. operations and procurement teams have made great strides at Valley and then our international team down in Brazil. Taking a private company to public is no small task on either continent here and then, if you will, making them Darling and we tend to be conservative. We tend to risk manage and we have a margin expectation in our core ingredient business that's very well known and our return standards are etched and [metaled] there for us. And so at the end of the day, we've made the success of the Valley integration, as we said, has been the ability to improve the raw material procurement contracts and all the little terms and conditions in there.

是的。我認為這些評論已經寫在劇本裡了。我的意思是，顯然，美國的營運和採購團隊在矽谷取得了長足的進步，然後我們在巴西的國際團隊也取得了長足的進步。在這兩個大陸上，讓私人公司上市都不是一件容易的事，然後，如果你願意的話，讓它們成為親愛的，而我們往往是保守的。我們傾向於風險管理，我們對核心原料業務的利潤預期是眾所周知的，我們的回報標準是刻在我們身上的。因此，歸根結底，正如我們所說，我們矽谷整合的成功在於能夠改善原材料採購合約以及其中的所有小條款和條件。

And then ultimately, as I said earlier, we're still short, massive capacity on the Eastern seaboard that's waiting to come online but as we've shared with others, we're waiting on motor control gear that's due to be delivered here this winter. Otherwise, we'd have that plant back up. But the supply chain, we're still moving stuff inefficiently to plants just to support our supply base out there that once word comes up, next winter or next spring. I mean, in the Q1, we should be back in good shape there. And then we've got capacity expansions going on down in Brazil right now that are just in the commissioning stages that should be accretive to us next year.

最終，正如我之前所說，我們在東部沿海地區的產能仍然短缺，等待上線，但正如我們與其他人分享的那樣，我們正在等待電機控制設備，該設備將於今年交付這裡冬天。否則，我們就會恢復那個工廠。但在供應鏈方面，我們仍然低效地將貨物轉移到工廠，只是為了支持我們的供應基地，一旦消息傳出，明年冬天或明年春天。我的意思是，在第一季度，我們應該恢復良好狀態。然後，我們目前在巴西正在進行產能擴張，這些產能正處於調試階段，明年應該會為我們帶來增值。

So I mean the world looks pretty darn good next year. It doesn't look like we'll have 3% to 5% growth of raw material tonnage as we've seen over the last several years, there's a little bit of contraction of animal numbers out there, whether it's disease or whether it was just margin and feeding people. But at the end of the day, you're setting up pretty nice for next year.

所以我的意思是明年的世界看起來非常好。看起來我們的原料噸位不會像過去幾年那樣增加 3% 到 5%，動物數量略有減少，無論是疾病還是其他原因。只是利潤和養活人們。但歸根結底，你已經為明年做好了很好的準備。

The next question comes from Sam Margolin of Wolfe Research.

下一個問題來自沃爾夫研究中心的薩姆·馬戈林。

My first question is on just that [tax] environment. You've talked a little bit about the relationship to the vegetable oil complex. But is there a scenario where fats prices next year decouple from veg oils just because if the whole -- if the pressure in the system is originating from RINs oversupply, you solve that with lower biodiesel production, which would disproportionately impact soybean oil supply demand versus fats and then if there's a corresponding LCFS rally, that might further benefit to tallow and yellow grease prices relative to veg oils. Is that a scenario that you think is possible?

我的第一個問題是關於[稅收]環境。您已經談到了與植物油複合物的關係。但是，是否存在明年脂肪價格與植物油脫鉤的情況，僅僅因為如果系統中的壓力源自 RIN 供應過剩，那麼可以通過降低生物柴油產量來解決這個問題，這將不成比例地影響豆油供應需求與脂肪，然後如果出現相應的LCFS 上漲，可能會進一步有利於牛油和黃色油脂相對於植物油的價格。您認為這種情況有可能發生嗎？

I really don't think so. Number one, I think as we've said all along, clearly, the Gen 1 technology of classic biodiesel would be the one that would become challenged. But the reason it would become challenged would be because there will be RD capacity that then would take that supply. You just kind of have to do the numbers. If Martinez is really going to run 730 million gallons, that's 3 million tons of raw material. If P66 can do half of what they think they can, that's another 1.5 million, 2 million. And then you still got the PBFs, and you got the Vertexes, you got REG geismar, all these guys that seem to be new demand out there, I mean you can see the scenario quickly change.

我真的不這麼認為。第一，我認為正如我們一直以來所說的那樣，很明顯，經典生質柴油的第一代技術將受到挑戰。但它之所以會受到挑戰，是因為會有研發能力吸收這些供應。你只需要做一些數字就可以了。如果馬丁內斯真的要生產 7.3 億加侖，則相當於 300 萬噸原料。如果P66能做到他們認為能做到的一半，那就是另外150萬、200萬。然後你仍然有PBF，你有Vertexes，你有REG geismar，所有這些似乎都是新需求的人，我的意思是你可以看到場景很快就會改變。

Now the question is what is D4 RINs do?. Bob, do you want to take a shot at that?

現在的問題是 D4 RIN 的作用是什麼？鮑勃，你想嘗試嗎？

Well, I think you're right on, Randy. I think the only way that we would decouple is if RD production were to plummet because of challenges in and running and operating, but if that were to happen, RIN values should go higher and that would significantly benefit our broader network. But we don't really see that happening. What we see is overall RD production, having some challenges, but continuing to have a significant demand pull and keeping prices -- relative prices in line between fats and oils.

好吧，我認為你是對的，蘭迪。我認為我們脫鉤的唯一方法是，如果研發生產由於運作和營運方面的挑戰而大幅下降，但如果這種情況發生，RIN 值應該會更高，這將大大有利於我們更廣泛的網路。但我們並沒有真正看到這種情況發生。我們看到的是整體研發生產面臨一些挑戰，但繼續受到巨大的需求拉動並保持價格——脂肪和油之間的相對價格一致。

Got it. Okay. And then just a follow-up, but it's also on the fats outlook, with the LCFS proposal, I mean, obviously, a lot of people are looking at that through the lens of RD margins, but it seems like it would impact the fat market too over time because CI would become more important to values, to intrinsic value of different feedstocks. And so -- but of course, it's very regional specific. It's only California. So I was wondering what your thoughts on that are, if you think maybe the LCFS proposal is actually a bigger deal for tallows than it is for underlying RD margins?

知道了。好的。然後只是一個後續行動，但它也涉及到脂肪的前景，透過 LCFS 提案，我的意思是，顯然，很多人都透過 RD 利潤率的鏡頭來看待這一點，但這似乎會影響脂肪隨著時間的推移，市場也會變得更加重要，因為CI 對於不同原料的價值和內在價值將變得更加重要。所以——當然，這是非常有地區特色的。這只是加利福尼亞州。所以我想知道您對此有何想法，您是否認為 LCFS 提案實際上對於牛脂來說比對於基礎 RD 利潤更重要？

I think we would believe that we would think it clearly favors low CI as does SAF. I mean clearly, I think if we done the whole conversation today down to one thing, it's about timing. RD is a good business. It's got growing demand globally. SAF is going to be a great business. It's got incredible growing demand. We got maritime fuels. And by the way, they all favor low CI feedstocks. And we're stuck in this route of saying, well, what are margins going to be? Where is D4, where is LCFS? And at the long term, as we've always said, the competitive advantage of the Gulf Coast real estate, whether you're shipping SAF by pipeline, both to Europe or to California, it's just going to really work out pretty nice. Matt, I don't know...

我認為我們會認為它顯然有利於低 CI，就像 SAF 一樣。我的意思很明確，我認為如果我們今天把整個談話歸結為一件事，那就是時間問題。研發是一門好生意。全球的需求不斷增長。 SAF 將成為一家偉大的企業。它的需求不斷增長。我們有船用燃料。順便說一下，他們都青睞低 CI 原料。我們陷入了這樣的困境：利潤率是多少？ D4在哪裡，LCFS在哪裡？從長遠來看，正如我們一直所說的，墨西哥灣沿岸房地產的競爭優勢，無論您是透過管道將 SAF 運送到歐洲還是加州，效果都會非常好。馬特，我不知道...

The only other thing to keep in mind is that, obviously, the LCFS is specific to California. But as we're doing business in other markets, the LCFS is a reference in our valuation when we're using to determine whether a product is sold to another market or to California. So one way or another, that LCFS valuation is built into all of the RD sales regardless of whether it goes to California or not. So that's an important component not to overlook.

唯一需要記住的另一件事是，顯然 LCFS 是針對加州的。但當我們在其他市場開展業務時，當我們使用 LCFS 來確定產品是否銷往另一個市場或加州時，LCFS 是我們估值的參考。因此，無論以何種方式，LCFS 估值都會納入所有 RD 銷售中，無論是否銷往加州。所以這是一個不容忽視的重要組成部分。

The next question comes from Ben Bienvenu of Stephens.

下一個問題來自 Stephens 的 Ben Bienvenu。

I want to -- if we could talk about 2024, Randy, you talked about $1.7 billion to $1.8 billion of EBITDA. What do you think that translates to for free cash flow? And then what are your priorities for free cash flow as we start to see CapEx budgets potentially come off of peak at DGD notwithstanding the SAF expansion that you want to engage in.

我想 - 如果我們可以談論 2024 年，蘭迪，你談到了 17 億至 18 億美元的 EBITDA。您認為這對自由現金流意味著什麼？然後，儘管您希望參與 SAF 擴張，但我們開始看到 DGD 的資本支出預算可能會脫離峰值，因此您在自由現金流方面的優先事項是什麼。

Yes. And I think we had this discussion with our Board. I mean as you guys look to valuing the company here, ultimately, we can talk about combined adjusted EBITDA but it's actually what is the dividend plus the core ingredient business and then how much CapEx are we going to spend and what's in the M&A pipeline.

是的。我認為我們與董事會進行了討論。我的意思是，當你們希望在這裡對公司進行估值時，最終我們可以討論合併調整後的EBITDA，但實際上它是股息加上核心成分業務，然後是我們將花費多少資本支出以及併購管道中的內容。

And so when we look to DGD and we say above nameplate, $1.10 a gallon, you can come up with an easy $500 million of dividends there. And then you look at our core ingredient business and if we're at $1 billion, $1.1 billion, there's your number right there, $500 million CapEx. If we -- that's got probably $100 million of growth projects of the new plants we've talked about building. And then you look at it and you say, you got the -- an interest bill of around $230 million and cash taxes $160 million and then some limited buybacks in there that could be higher if we're doing a little better or whatever. But you quickly pull down debt down to around that $4 billion, $3.9 billion level.

因此，當我們考慮 DGD 時，我們在銘牌上說，每加侖 1.10 美元，您可以輕鬆獲得 5 億美元的股息。然後你看看我們的核心原料業務，如果我們的規模為 10 億美元、11 億美元，那麼你的數字就在那裡，5 億美元的資本支出。如果我們——我們討論過的新工廠的成長項目可能需要 1 億美元。然後你看看它，你會說，你得到了大約2.3 億美元的利息賬單和1.6 億美元的現金稅，然後是一些有限的回購，如果我們做得更好一點或其他的話，可能會更高。但你很快就能將債務降至 40 億至 39 億美元左右的水平。

We do have 1 pending transaction that's out there and on Miropasz in Poland, which is EUR 110 million that is expected to close likely in Q1. But outside of that, I would say '24 is an M&A light year on new acquisitions.

我們確實在波蘭的 Miropasz 上有 1 筆懸而未決的交易，金額為 1.1 億歐元，預計可能在第一季完成。但除此之外，我想說 24 年對於新收購來說是併購光年。

I call it an M&A holiday.

我稱之為併購假期。

Very good, very helpful and makes sense. On the third quarter, in the Feed business, I want to ask about in the Yukos segment. The pricing seems to be much weaker year-over-year than broader Yuko, quotes would suggest. Is there something discrete or specific that's happening in that third quarter that we should be mindful of as we think about the relationship between pricing in that segment and the pricing of used cooking oil out in the marketplace.

非常好，非常有幫助，而且很有道理。關於第三季的飼料業務，我想詢問尤科斯部門的狀況。報價顯示，與更廣泛的 Yuko 相比，其定價似乎比去年同期弱得多。當我們考慮該細分市場的定價與市場上廢食用油的定價之間的關係時，我們應該注意第三季發生的一些離散或具體的事情。

This is Randy. Year-over-year, I think prices were 65% down to 55%. So about 20%-ish. Remember, Q3 a year ago, Diamond Green Diesel 3 was not operational yet. And so we were still trading a bunch of material around the world. So as Brad said earlier, you got some leads and lags, you've got some quality premiums, you got some training that was going on there. But I don't know, anything else you want to add, Brad?

這是蘭迪。與去年同期相比，我認為價格下降了 65% 至 55%。所以大約20%左右。請記住，一年前的第三季度，鑽石綠柴油 3 尚未投入運作。所以我們仍然在世界各地交易大量材料。因此，正如布拉德之前所說，你得到了一些領先和滯後，你得到了一些品質溢價，你得到了一些正在進行的培訓。但我不知道，布萊德，你還有什麼要補充的嗎？

That's it. Often times, when we're exporting in the past, there can be some premiums built in there with that exporting. So that will all flesh out now that we have all 3 units on and are going forward.

就是這樣。很多時候，當我們過去出口時，出口中可能會產生一些溢價。現在我們已經安裝了所有 3 個單元並且正在繼續前進，這一切都將變得更加充實。

The next question comes from Matthew Blair of TPH.

下一個問題來自 TPH 的馬修布萊爾 (Matthew Blair)。

I guess the first one is, I think in your recent guidance, you talked about that you anticipate DGD margins higher in Q4 versus Q3. And I wanted to see if that's still held. On our modeling, it seems like you would receive a pretty nice tailwind from the hedging side of things, but we were worried that there would still be some of that price lag impact from your feedstocks versus the low D4 RINs in Q4 that might weigh on margins. So I wanted to check on that first.

我想第一個是，我認為在您最近的指導中，您談到您預計第四季度的 DGD 利潤率將高於第三季。我想看看它是否仍然有效。根據我們的模型，您似乎會從對沖方面獲得相當不錯的順風，但我們擔心您的原料相對於第四季度較低的 D4 RIN 仍會產生一些價格滯後影響，這可能會造成壓力邊距。所以我想先檢查一下。

Yes. I would say that's a -- that's the reality of the way our book works. We do -- we have to manage the pipeline through DGD. There's anticipated purchases. And so we're chewing through that. But I would say that the -- if you think about the progression through the quarter, December will be better than October.

是的。我想說，這就是我們這本書運作方式的現實。我們確實這麼做了——我們必須透過 DGD 來管理管道。有預期的購買。所以我們正在仔細考慮這個問題。但我想說的是，如果你考慮整個季度的進展，12 月會比 10 月更好。

Yes, we see that, too. And so just to be clear, the guidance is still that Q4 DGD margins higher than Q3?

是的，我們也看到了這一點。因此需要澄清的是，指導意見仍然是第四季度 DGD 利潤率高於第三季？

We--clearly, we're going to make more gallons. I mean that's an absolute. And right now, if we had to look at it, as Matt said, as each month goes on, that margins widening out, spot margins, as you can see, are much better. We should have a hedge gain coming back provided there's no major rally again in the heating oil market. And that's assuming D4s and LCFS really kind of flat.

顯然，我們將生產更多加侖。我的意思是這是絕對的。現在，如果我們必須看看它，正如馬特所說，隨著每個月的過去，利潤率會擴大，現貨利潤率，正如你所看到的，要好得多。如果暖氣油市場不再大幅上漲，我們應該會看到對沖收益回來。這是假設 D4 和 LCFS 確實持平的情況。

The next question comes from Jason Gabelman of Cowen.

下一個問題來自 Cowen 的 Jason Gabelman。

My first one is on the 2023 outlook. And it's a 2-parter. The first part of it is, you had initially or previously guided to [$1.875 billion], you reduced that. In hindsight, where do you think you were off from the prior to current guidance. And then as you think about the $100 million EBITDA range for 4Q, how do you think about what's driving the high to low end of that range? And I have a follow-up.

我的第一個是關於 2023 年的展望。而且是2人制。第一部分是，您最初或先前指導為 [18.75 億美元]，但您減少了這一數字。事後看來，您認為您在哪些方面偏離了先前的指導方針和當前的指導方針。然後，當您考慮第四季度 1 億美元的 EBITDA 範圍時，您如何看待推動該範圍從高端到低端的因素？我有一個後續行動。

Yes. I think there's 3 letters that drove most of it. DGD in Q3 clearly was -- didn't deliver what we thought it was and we're going to be. And clearly, we're being somewhat conservative on DGD Q4. Right now, it looks like DGD has got to deliver for us to get to the high end of the range in Q4 and then the fat prices that didn't get recognized in Q3 because they were sold the DGD in Q4 have to flow through.

是的。我認為主要是由 3 個字母驅動的。第三季的 DGD 顯然沒有達到我們的期望和預期。顯然，我們對 DGD 第​​四季度持保守態度。現在看來，DGD 必須讓我們在第四季度達到區間的高端，然後在第三季度沒有得到認可的高價，因為它們在第四季度被出售了 DGD，必須流通。

So like we just said, there's timing issues here that puts you that kind of range. I continue to look at myself in the mirror and say, why am I even trying to guide this thing after [20] years. So it's just -- this is -- but we have a pretty good feel for it. I mean as we came in, and I'd just remind the listeners, as we came in sequentially out of Q2, we said seasonally, we would be lower in Q3. And we were. And so plus or minus 5% is not a -- not bad. What we didn't see coming at us was the DGD, all the volatility that hit there due to whatever you want to call it, the war in the Middle East and D4 RINs collapse and everything there that could have happened to you happen.

就像我們剛才說的，這裡有時間問題，導致你處於這種範圍。我繼續看著鏡子中的自己並說，為什麼我還要在 [20] 年後嘗試引導這件事。所以這只是——這是——但我們對此有很好的感覺。我的意思是，當我們進來時，我只是提醒聽眾，當我們按順序從第二季度進來時，我們按季節說過，我們在第三季度的價格會更低。我們確實是這樣。所以正負 5% 不是——不錯。我們沒有看到的是 DGD，所有由於你想怎麼稱呼它而發生的波動，中東戰爭和 D4 RIN 崩潰以及那裡可能發生在你身上的一切都發生了。

The fire took us offline. That was another 10 days or minor disruption, as we call it, and the team did a magical job, but it's just -- you got to power down and power back up. And that's 6 days with 3, 4 days of repairs. So those -- that took another, I don't know, 20 million gallons or off-line or whatever it was. So that's why we're a little more bullish Q4 than we were in Q3 here.

火災使我們離線。那又是 10 天或我們所說的小中斷，團隊做了一件神奇的工作，但只是 - 你必須斷電並重新通電。也就是 6 天，其中有 3、4 天的維修時間。所以那些——我不知道，又需要 2000 萬加侖或離線或其他什麼。這就是為什麼我們對第四季的看法比第三季更樂觀。

All right. Great. And my follow-up is on the 2024 outlook. And it seems like there's a decent amount of crushing capacity for soybeans coming online in the U.S. And as we sit here, soybean oil pricing is still decently above where it was relative, I guess, to where it was prior to COVID. So it does seem like there's potential for some downside next year, and I know you touched on it earlier, but I was just wondering if your outlook factors in all that new crusher capacity coming online in North America and how that can impact vegetable oil prices.

好的。偉大的。我的後續行動是對 2024 年的展望。美國似乎有相當多的大豆壓榨能力上線。我想，當我們坐在這裡時，豆油價格仍遠高於新冠疫情爆發之前的相對水平。因此，明年似乎確實存在一些下行的可能性，我知道您早些時候談到過這一點，但我只是想知道您的前景是否會考慮到北美上線的所有新壓榨機產能，以及這將如何影響植物油價格。

Yes. This is Matt. I would say, yes, that is factored into our expectations, whether it's oil or -- and including protein. So these new plants are known projects wouldn't surprise me, similar to what we're seeing in the RD space, if some of them get delayed for a myriad of reasons. One of the other thing we really haven't talked about lately is the -- with the -- this increase in interest rates that we've seen, CapEx and the money it takes to build and operate is -- has gone up. So that -- I mean that's just the reality of the business. But at the end of the day, yes, the -- we incorporate that into our expectations.

是的。這是馬特。我想說，是的，這已納入我們的預期，無論是石油還是蛋白質。因此，這些新工廠是已知的項目，與我們在研發領域看到的類似，如果其中一些項目由於多種原因而被推遲，我不會感到驚訝。我們最近沒有談論的另一件事是——隨著我們所看到的利率上升，資本支出以及建設和運營所需的資金——已經上升。所以——我的意思是這就是業務的現實。但歸根結底，是的，我們將其納入我們的期望中。

Bob, do you have any comment.

鮑勃，你有什麼意見嗎？

Yes. I think I would just add that near-term imports have had a bigger impact than added crush capacity in the United States for oilseed crush. And the other thing is that we are overall as an industry, increasing renewable diesel capacity at a much faster pace than we're adding oil production capacity. Short term, we've got a lot of oil in the system, and we've seen pressure on prices. But if you -- even getting out 12 to 18 months, it's going to be pretty tough for the soybean oil industry to keep up with demand as we see it.

是的。我想我只想補充一點，近期進口比美國油籽壓榨增加的壓榨能力產生的影響更大。另一件事是，我們作為一個產業整體，增加再生柴油產能的速度比增加石油產能的速度快得多。短期來看，系統中有大量石油，我們已經看到了價格壓力。但如果你——即使是 12 到 18 個月，豆油產業也很難滿足我們所看到的需求。

This concludes our question-and-answer session. I would like to turn the conference back over to Randall Stuewe for any closing remarks.

我們的問答環節到此結束。我想將會議轉回蘭德爾·斯圖威 (Randall Stuewe) 發表閉幕詞。

All right. Thanks, everybody, for your questions today. As always, if you have additional questions, reach out to Suann. Please stay safe, have a great holiday season, and we look forward to talking to you in the future.

好的。謝謝大家今天提出的問題。像往常一樣，如果您還有其他問題，請聯絡 Suann。請注意安全，祝您假期愉快，我們期待將來與您交談。

The conference has now concluded. Thank you for attending today's presentation, and you may now disconnect.

會議現已結束。感謝您參加今天的演示，您現在可以斷開連接了。