Darling Ingredients Inc. (NYSE:DAR) Q1 2023 Results Conference Call May 10, 2023 9:00 AM ET

Company Participants

Suann Guthrie - IR

Randall Stuewe - Chairman and Chief Executive Officer

Brad Phillips - Chief Financial Officer

John Bullock - Chief Strategy Officer

Sandra Dudley - Executive President of Renewables and U.S. Specialty Operations

Conference Call Participants

Manav Gupta - UBS

Tom Palmer - JPMorgan

Derrick Whitfield - Stifel

Dushyant Ailani - Jefferies

Ryan Todd - Piper Sandler

Andrew Strelzik - BMO Capital Markets

Sam Margolin - Wolfe Research

Paul Cheng - Scotiabank

Matthew Blair - Tudor, Pickering Holt

Ben Kallo - Baird

Tony Bancroft - GAMCO Investors

Ben Bienvenu - Stephens

Jason Gabelman - TD Cowen

William Baldwin - Baldwin Anthony Securities

Operator

Good morning. And welcome to the Darling Ingredients Inc. Conference Call to discuss the company's First Quarter 2023 Results. After the speakers’ prepared remarks, there will be a question-and-answer period, and instructions to ask a question will be given at that time. Today's call is being recorded.

I would now like to turn the call over to Ms. Suann Guthrie. Please go ahead.

Suann Guthrie

Thank you. Thank you for joining the Darling Ingredients first 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. John Bullock, Chief Strategy Officer; and Ms. Sandra Dudley, Executive President of Renewables and U.S. Specialty Operations.

Our first 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.

During this call, we will be making forward-looking statements which are predictions, projections and other statements about future events. These statements are based on current expectations and assumptions that are subject to risks and uncertainties. Actual results can 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.

I will now hand the call over to Randy.

Randall Stuewe

Thanks, Suann. Good morning, everybody, and thanks for joining us for our first quarter 2023 earnings call. We have had a very solid start to the year. All business units performed as expected and our DGD system attained full rate during the month of March. Looking at our segments in detail, for the first quarter 2023, we ended the quarter at $418.4 million in combined adjusted EBITDA. The Feed Ingredients segment ended the quarter at $213.1 million, our Specialty Food Ingredients segment earned $73.2 million, while our Fuel segment earned $153.6 million in EBITDA, with approximately $129.3 million attributed to Diamond Green Diesel. Turning to the Feed Ingredients segment in detail. Globally, raw material volumes were up 39% compared to first quarter 2022. While we saw a decline in global fat prices, protein prices remain strong around the world. While lower fat prices will modestly impact the segment, it will be more than offset by higher earnings in Diamond Green Diesel in future quarters. Integration of our recent acquisitions remains a key focus. I'm pleased to report that once again we realized sequential gross margin improvements. We continue to make improvements at our recently acquired Eastern USA plants that will improve reliability and efficiency, as well allow us to produce and market higher value finished products. We are pleased with the progress and believe by year end, we will be nearly complete.