Thank you, Tom. Welcome to Darling Ingredients fourth quarter and fiscal year 2021 earnings call. Participants this morning 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 Vice President of Renewables and U.S. Specialty Operations. There is a slide presentation available on the investor’s page under Events and Presentations on our corporate website. 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 statement. Now, I would like to hand the call over to Randy.

Thanks, Suann! Welcome to Darling! So good morning everybody and thank you for joining us for our fourth quarter and fiscal 2021 earnings call. 2021 was another record year for Darling Ingredients and we carry solid momentum into 2022. We finished the year with combined adjusted EBITDA of $1.235 billion. Our global ingredients business had a record year with $851.4 million of adjusted EBITDA and Diamond Green Diesel demand remains strong with 370 million gallons sold at an average EBITDA of $2.07 per gallon. We have sustained strong growth in our core business over the last four years and we're poised for significant cash generation during 2023. At the end of December we announced that we entered into a definitive agreement to acquire all the shares of Valley Proteins for $1.1 billion, plus or minus various closing adjustments. We estimate this acquisition will drive about $200 million in savings over the next three years and will be nicely accretive. We are currently awaiting government approval for the acquisition. Valley operates 18 major Rendering and used cooking oil facilities throughout the Southern, Southeast, and Mid-Atlantic regions of the U.S., and is primarily a poultry tonnage company but has significant used cooking oil business which will expand our ability to provide additional low carbon intensity feedstocks to fuel the growing demand for renewable diesel. As we have discussed in the past, our strategy is to continue to acquire low CI feedstock businesses that will de-risk and protect our supply chain, making us the number 1 and most efficient producer of renewable diesel in the world. Now turning to DGD in more detail. It is producing a phenomenal return for all of us. While EBITDA per gallon is lower than last year, it is not unexpected and I continue to be very optimistic. Our supply chain is unparalleled in the industry. We have tremendous tailwinds, demand should continue to grow as energy prices increase, and more states look to implement LCFS Mandates. I ultimately believe LCFS prices and RIN prices will normalize and improve to reflect the growing demand and realization of higher input costs. No matter how you look at it, DGD is well positioned in 2022 and beyond. Now moving to our fuel segment in Europe. On February 25 we closed on the acquisition of Grupo Optivac, a waste and green energy company in Belgium. Much like our strategy to grow low CI feedstock supply, we believe green energy in Europe will also provide superior returns and flexibility for our European assets. The bio-digestion facility in Belgium currently has the capacity to produce 67 gigawatt hours per year of green electricity. Today we're announcing a major capacity expansion, which will grow the renewable electricity production to 101 gigawatt hours annually. Coupled with our existing assets in Belgium and the Netherlands, Darling’s total annual green energy production in Europe will be 163 gigawatt hours annually. Our feed ingredients business had an incredible year due to growing global demand for fats and proteins and a focus on decarbonization through the use of lower carbon intensity feedstocks. We ended the year with $613.7 million of adjusted EBITDA versus $317.8 million in 2020. The capacity we added over the last five years positioned us well to handle this tremendous growth flawlessly. Food ingredients also had a strong year with $194.9 million of adjusted EBITDA versus $167.1 million in 2020, driven by strong demand for collagen peptides in the health and nutrition markets; this segment has been growing at a three-year annual rate of 0.5%. Our food segment remains an attractive growth vehicle for us and provides an earnings stream that is resilient to commodity fluctuations. Our fuel segment also had a strong year with $483.1 million combined adjusted EBITDA versus $411.9 million in 2020, primarily due to the DGD2 expansion which came online in October of 2021. As the world drives towards decarbonization, Darling is at the forefront. We have set a goal to be net-zero greenhouse gas emissions by 2050. We plan to submit a commitment letter to the Science Based Targets Initiative by the end of 2022, committing to set a science-based 1.5 degree aligned greenhouse gas emissions reduction target. With support from our new ESG committee at the board level, I have no doubt we can achieve these targets. Additionally, we identified both short-term and long-term targets in our 2021 ESG report published last fall and are currently working on setting mid-term targets. As far as our short-term targets are concerned, we are investing in various capital improvements at our plants that will reduce our energy intensity. As for water, we are investing in a new state-of-the-art recovery system in our Ghent Belgium Rousselot factory that will reduce water consumption by nearly 46%. Additionally, we have begun an engineering study to evaluate water usage at some of our U.S. plants. We hope this work will provide us with a blueprint for best practices in water use and reuse and recycling in an effort to meet our short-term goals of reducing water withdrawal by 5% per unit versus our 2020 values. Now you've heard me say that we are the original recycler. At our core, we help our customers have a positive impact on the climate. We have embarked on a journey to better tell our carbon handprint story; the solutions we provide to our customers that decrease their carbon footprint. For example, we produce meat and bone meal as an alternative to soybean meal. This positively impacts land use change and carbon emissions. The carbon intensity of the renewable diesel produced at DGD is up to 85% less than fossil diesel. We play a critical role helping to protect the planet, creating better lives, and we can do so while providing our shareholders superior financial returns. With this, I would like to turn the call over to Brad to take us through some financials. After that, I’ll come back with a little outlook for 2022 and beyond. Brad.

Thanks, Randy. For comparison purposes, note that our fiscal 2020 results included an additional week of operations which occurs every five to six years. In fiscal 2020, the additional week occurred in the fourth quarter and increased net sales and operating income by approximately $73 million and $8 million, respectively. Now, net income for the fourth quarter of 2021 totaled $155.8 million or $0.94 per diluted share compared to net income of $44.7 million or $0.27 per diluted share for the 2020 fourth quarter. Net sales were $1.3 billion for the fourth quarter of 2021 as compared to $1 billion for the fourth quarter of 2020. Net income for fiscal year 2021 was $650.9 million or $3.90 per diluted share compared to net income of $296.8 million or $1.78 per diluted share for fiscal year 2020. Now turning to operating income, we recorded $211 million for the fourth quarter of 2021 compared to $74.4 million for the fourth quarter of 2020. The primary contributors to the improved operating income were a $72.5 million increase in the gross margin, a $7 million increase in our portion of the earnings from Diamond Green Diesel, as well as lower depreciation, amortization, and SG&A expenses. In addition, the fourth quarter of 2020 included a $38.2 million restructuring and asset impairment charge related to the closure of the biodiesel units. Operating income for fiscal year 2021 was $884.5 million as compared to $430.9 million for fiscal year 2020. The increase in operating income was primarily due to the gross margin increasing by $358.9 million, a $36.5 million increase in our portion of the earnings from Diamond Green Diesel, and a $33.8 million reduction in depreciation and amortization, which more than offset a $13 million increase in SG&A expenses. As just mentioned, fiscal year 2020 included biodiesel restructuring and asset impairment charges. Interest expense declined by $1.9 million for the fourth quarter of 2021 as compared to the 2020 fourth quarter and declined by $10.6 million when comparing fiscal 2021 to fiscal 2020. The year-over-year decline was mainly due to a reduction in our term loan balance during the year, as well as lower amortization of deferred loan costs. Now turning to income taxes, the company recorded an income tax expense of $164.1 million for fiscal year 2021. The effective tax rate was 20% and cash tax payments for 2021 were $46.4 million. For 2022, we are expecting the effective tax rate to remain about the same at 20% and cash taxes to increase to approximately $120 million. Our balance sheet remains strong with our total debt outstanding at the end of fiscal year 2021 at $1.46 billion and the bank covenant leverage ratio at the end of the year at 1.57x. Capital expenditures totaled $82.4 million in Q4 and $274 million for full year 2021. The company also repurchased 167.7 million shares of common stock in fiscal 2021. Lastly, you will note we increased and expanded our revolving credit facility from $1 billion to $1.5 billion and added a $400 million delayed draw term loan A, which was undrawn at year end 2021. Now, I’ll turn it back over to you, Randy.

Hey! Thanks, Brad. I'd like to conclude with my thoughts on how I see 2022 shaping up. At the start of the call, I said we carry tremendous momentum into 2022. Our base business is currently operating at around $950 million to $1 billion adjusted EBITDA. Depending on the timing of the close on Valley Proteins, we could well exceed the $1 billion adjusted EBITDA in our base business. Regarding DGD, diesel pricing is improving. RINS should react to the higher feedstock prices and LCFS should improve as we go through the year. While the boilerplate capacity at DGD is currently 700 million gallons, we're seeing tremendous efficiency gains and it wouldn't surprise me to see us exceed 750 million gallons for the year. Additionally, DGD is progressing well ahead of schedule with commissioning set for Q1 of 2023. Today DGD margins are around $1.25 per gallon, but I believe we're going to see improvements as we move through the year. All that said, I'm forecasting combined adjusted EBITDA to be about $1.5 billion to $1.6 billion for the year. As we move through the year, I'll try to provide you with a nearer range. So with that, let's go ahead now and open it up to Q&A.

Thanks guys. My question here is that over the last six months renewable diesel bears have floated the argument that LCFS prices are going to crack to $80 a ton, and RINS will be massively oversupplied. Now, Chevron is one of the best dealmakers in this space. We saw that with the Noble acquisition. Doesn't Chevron's willingness to buy REGI tell us that over the longer term renewable diesel fundamentals are going to be strong and while margins may normalize, they'll still be healthy? So my question is, don't you think that betting against RD producers, especially high-quality names like Darling, is being too myopic and ensuring that over the longer term carbon prices will actually move up and not down? The world needs to decarbonize, so the carbon price actually moves up and not down.

John, why don’t you take that?

Hey! Thanks, Manav. Yeah, I think the place to start here is, and you said it, Chevron is obviously a large petroleum company in California; they know that market very well. So I think you certainly have to respect their views on how they see the carbon world going forward. There's absolutely no doubt about it, that over the long term the pattern and the direction has been set on this and in the short to medium term as well. We are going to decarbonization policies. As we go through these decarbonization policies, the best short and medium term alternative is renewable diesel and biofuels. That means we're in the right place at the right time. I think we obviously have all known that when we saw margins were up in the $2 to $3 a gallon range, that that wasn't continued for a long period of time. Those margins are simply outsized. The reality is our strategy and we had it out in front of everybody, was simply to substantially increase our volume at a very low capital cost for the volume that we were increasing. So what have we done? We went from an operation that was selling 160 million gallons four years ago. Last year we sold close to 370 million gallons; the year before, 275 million. We are running at a 750 million pace this year and next year we’re going to be at 1.2 billion gallons. It's interesting to me and to us, we see all of these announcements. And quite frankly, so many people in the industry have started to run a math exercise, oh this guy’s announced! Oh, this capacity is going to be here. The reality is who are the people that’s actually building the substantial capacity today? The name in the United States is one, Diamond Green Diesel. That's the one that's putting the real capacity online right now. Our project is real, and I think the more important point is this, and we’ve talked about this, but the message doesn't ever seem to get out there. The plants we are building are in the right place with the most flexibility to see different types of feedstock; with the ability to process different types of feedstock and the ability to hit all of the different carbon markets. Because we tend to think of a carbon market as just California, but it's not. Oregon, Washington is coming online, New Mexico came within one vote of coming online. California, New York is working on bringing an LCFS up and currently Canada is in the regulatory development phase on their LCFS. So we see massive developments in decarbonization occurring around the world. Diamond Green Diesel is positioned to hit every one of those markets, not just one market, but every one of those markets. So we've got the right machine, which means we're always going to be maximizing margins in this space. There's no doubt the carbonization is going to continue, that's going to create value. The other thing that I think that we are constantly amazed at is if you look at the renewable diesel producers in the world, there's only one that owns a substantial oil field and that's Darling. So as we've seen, as we've driven up fat prices in part as a response to the decarbonization policies that are developing around the world, we’ve benefited from that on the other side of our business. There's simply no other renewable diesel producer in the world that can say that. So we think the trend is clear, the short-term mathematical exercise, oh there’s going to be too much capacity this month or that month, I think that misses the larger point, and the larger point is we’re just massively well positioned, because we built ahead of this thing and we have the right assets and the right location with the right supply chain. Therefore at the end of the day, we forecast and think that we’ll be making more and more out of this, not less and less, as some have seemed to be implying over the last couple of months.

Thank you. I completely agree with your views.

Thanks, Manav.

Thank you for taking my questions.

The next question comes from Ben Bienvenue with Stephens. Please go ahead.

Hey! Thanks. Good morning everybody.

Good morning, Ben.

So I want to ask, starting on the expansion on DGD and you note the potential to produce in excess of 750 million gallons. How should we be thinking about the build to that kind of new run rates, 148 million gallons in the fourth quarter? I know you're ramping to capacity. Is that something we should expect to ramp through the year? And then just roughly taking a shot at it, kind of what do you think is the normal rate capacity as you get to your full capacity level?

So, in the first quarter here we are doing a scheduled turnaround at Diamond Green Diesel 1. That’s just being completed right now, and that unit should be coming back up here within a few days. Other than that, once Diamond Green Diesel 1 is back up and running, for the balance of the year there is no ramp-up. We’re running at that rate.

Okay, fair enough. On the core business, in the feed ingredients business, as we think about your ability to generate margin leverage, which clearly this business you know is running full speed, performing exceptionally well in what is a very tight global grain, fats, and oil environment. As you think about the ability to realize operating leverage in this business, are there inhibitors to price flow through to margin that we should be mindful of, and can you talk about kind of your view of supply and demand for fats, oil, proteins in kind of the intermediate term as well? And then maybe kind of a two-three year view as well would be helpful. Thank you.

Wow! So Ben, this is Randy. I mean clearly, you know we have lived through the lower times, we’ve lived through the higher times in these businesses, tailwinds, headwinds as we refer to them. You know we spent a lot of time repositioning this company, both from a capacity and a margin standpoint over the last three or four years, knowing that we were at the lower end if not the bottom of the 10-year cycle. We talked about this being different than in the past, meaning that this was a demand-driven cycle, meaning a demand-driven on prices increases. Now you throw that with a little bit of hemispheric droughts, South America's bean crop getting smaller to a degree it's dry here. Now you throw on a war on top of that and you've kind of got the hyper super. So really kind of hard to clear the fog in the crystal ball today, but one thing is for sure, in ’22 and probably through ’23, we cannot bring on enough production around the world yet to fulfill the growing demand. Now, I think it’s probably safe to say in some cases the higher prices will ration some type of demand in different places, but food for the most part around the world is resilient to these types of inflationary pressures. So at the end of the day, I mean we’re seeing, you know – and John commented about it not only at Diamond Green Diesel. Diamond Green Diesel is having really nice margins as far as a return on invested capital right now, while we're having really nice returns on invested capital with $0.70 to $0.75 pass FOB our plants throughout the country, and around Europe. And proteins, if you say we have one weak sister in all of it, it's still kind of the mix we see proteins, but they are starting to move up rapidly as soybean meal is becoming both tight and moving up in price around the world. I just don't see this thing backing off at all in ‘22 at this point, and I think ‘23 will carry forward. John, do you have any other thoughts on that?

Yeah, absolutely! I mean you have to remember the basis of what was the foundation of the higher commodity prices, and that is a combination. It’s not just biofuel programs. It is also the fact that we've had fantastic GDPs around the world. All the nations of the world have centered their economies with strong fiscal stimulus. We also had the Chinese reconstituting half of the herd in China, which is 25% of all pigs in the world. As a result of that we’ve taken the ending carry out for corn, soybean, meal, oil, every commodity, including meat inventories around the world down to just nothing. The reality is, if we keep with this strong demand, to rebuild the cushion that we need to be able to stabilize the commodity prices at a lower level, that's going to take a while, that's not going to happen overnight. So we think we're here for a while. The good news for Darling is we are making fabulous money in our base business, and we're continuing to make outstanding money in Diamond Green Diesel during this period of time, and I can't go back to this often enough. We made 370 million last year. We should make around 750 million gallons this year, and we're going to make 1.2 billion gallons next year. That's a tremendous increase in volume and a profitable business that has a great return, and our production capacity is not now, not an announcement for some future date as almost all the capacity that we are seeing announced is.

Yeah, that's great. Okay, thanks. Best of luck!

The next question comes from Adam Samuelson with Goldman Sachs. Please go ahead.

Yes, thank you. Good morning everyone.

Good morning, Adam.

So I guess Randy, first I wanted to just clarify some of the pieces of the outlook and just make sure that we're all on the same page. The $950 million to $1 billion for the base business, was that inclusive of Valley or not? I just wasn’t really clear from how you framed it.

That has a little bit of Valy in it and that has zero Valley in it.

Got it. Okay. And so within that, just from a commodity price perspective, is that kind of thinking about the business from obviously we’re two months into the year and taking the forward curves as they sit and applying that to the commodity values. There are still pretty backward dated curves from the spot. Is that the base assumption in there?

Yeah, what I'm looking at Adam, is you know clearly we're – we just finished period two here yesterday or Saturday in our business here. So you know I saw January. I'm seeing the prices that were sold both in North America and Europe and then I'm looking at what I'm seeing on the books for Q2 and I'm seeing some pretty significant increases from Q1 to Q2 in protein prices and then really fat prices, you know will have traded in the 60s in Q1 and they're going to be in the 70s in Q2, and so that's what's driving the forward curve here for us. It’s really the forward fat prices that we’re being able to lock in for Q2.

Okay. And then in your prepared remarks you talked about Valley potentially garnering up to $200 million of savings over several years. I know the transaction hasn't closed yet, but would love to just dig in there and just help – maybe if you could help frame kind of where the opportunity has come for that kind of magnitude of savings. It’s pretty significant relative to the purchase price and relative to what I would think the earnings base of Valley kind of is coming in.

Yeah, I mean it's a fair question and obviously while we're awaiting government approval, I want to be fairly guarded in my comments here. There are very nice significant plants and factories on the east coast in two in Texas and a wet pet plant up in Pennsylvania. You know we look at all kinds of different things from yields to operating costs; all the above to how we trade species-specific products, and really at the end of the day we kind of look at our margins, their margins and say over the course of three years, that's what we believe we can deliver to the shareholders and it won't be easy by any means. I think the most important point is, geographically there aren’t what I'm going to call just you know route synergies. In many of the bolt-on acquisitions we've done in the past, you know we essentially are picking up at the same account to the same town, and we can eliminate lots of freight and lots of trucking costs. This one is just about really doing it the Darling way and it's a well-run company, that's all we acquire. We just think that over – as we have looked at our business over the last 10 years and what we've been able to do, with how we operate factories, recover products, make specialty products, and move into different markets, that we will be able to bring Valley a little more opportunity than they've had in the past. I don't want to take anything away from the management team there by any means. I just think the world is really, really opportunistic for us, once the government gives us clearance.

Okay. All that’s really helpful color. I'll pass it on. Thank you.

The next question comes from Ken Zaslow with Bank of Montreal. Please go ahead.

Hey! Good morning, guys!

Good morning, Ken.

When you alluded to the fact that you think RINS and LCFS credits will start to move higher, what are you seeing that makes you believe that? You know do you think that’s in part going to slow down, do you think the policies are going to kick in? How do you think about that? You were in the same view, but I’m just kind of figuring out what you think the key drivers are to see the RINS and LCFS credit starting to move in the right direction again.

Ken, this is John. So, I mean part of the issue around this is of course they have moved dramatically higher over the last several weeks, so it's not a thinking that they well, they have. We obviously see that the green premium, and that is in part the RINS, in part the LCFS and in part the tax credit. That green premium has to be there to incentivize the production of renewable fuels. As we see the price of that go up, quite frankly, you know, it's harder and harder for a lot of especially the more inefficient biofuel facilities to actually make any money, so that green premium needs to suffice to be able to create the demand or create the supply to meet the demand. We were also extremely encouraged, others were not, but we were by what the EPA did with our proposed RVOs. They obviously had to correct the fact that they had established some RVOs prior to the pandemic and gasoline and diesel consumption was down. But if you look at what they did, they said listen, we're not going to do the SREs, which had been the real killer for RINS pricing going forward, and they said, you know we're going to stabilize the RINS for what actually occurred in the U.S. economy in ’20 and ’21. But in ‘22 then they leapfrogged forward the demand and sent a clear signal that the Biden administration is going to push ways to decarbonize the economy. That's good for the U.S. farm community as well, and I think we're going to see that pattern continue. The LCFS market again has been heavily influenced by the fact that any time anybody comes out and says, God, I’m building a brand new renewable diesel facility, then all of a sudden everybody puts out a recast supply and demand on how much volume there's going to be going to California and to the LCFS. I hate to say this, but some of these announcements are laughable in what they are. There's going to be some real competition coming on, don't get me wrong. But the reality is that the only major capacity that's currently built and is going to online in the next 12 to 18 months, the name is Diamond Green Diesel. The others are all well out in the future and we know that CARB’s looking, discussing moving forward with higher standards as we move ’25 and beyond. Canada is going to be coming online. Obviously, Washington’s in the plus just by setting a regulatory framework up around it; New Mexico came very close to a LCFS program, and New York is going through the mapping stages on a regulatory implementation of an LCFS. So we just think the overall demand situation looks really, really good. That doesn't mean in the short term that the LCFS credit is not going to go from 150 to 130 or 150 to 170. We're obsessing too much on simply mathematical exercises here and missing the larger picture of what's actually happening in the marketplace, and it's pretty obvious what's happening, and I think Chevron just put a giant stamp on what's happening in this segment on Monday of this week.

So what do you think the CARB options are to do in terms of what they might do? There seems to be some news and thoughts that they might change or enhance the California policy. Have you guys put together some thoughts as to what direction it’s going to go in? I know they increased it January 1 just from a procedural point of view, but it sounds like there's more to come. Do you guys have some thoughts on how that’s going to develop and how positive that’s going to be for you guys?

Yeah. You know what's really interesting about this, we don't view the LCFS going from $200 to $150 as a bad thing. What have CARB just learned out of this exercise? They’ve learned that they could dramatically reduce carbon emissions in the State of California, without it being a massive expense to the California consumer. The reality is what that does is it positions them to increase those targets for 2025 and forward to much higher levels. We are ecstatic that the market is developed this way because quite frankly this is going to drive much larger demand for low carbon fuels going forward in the marketplace. So, yeah, absolutely! You know what’s the State of California wanting to do? They want to decarbonize their transportation system. The fact of the matter is that the LCFS has been a massive success for them; they managed to create a tremendous amount of additional credits, and the consumer in California is not having to pay nearly as high a price as we once feared. Remember, three years ago, we were all afraid that we were going to be at the Cap and above under the LCFS. We worried about that because we thought that would be terrible long term for the program. This thing is developing exactly as we would have wanted it to have developed for the long-term growth in California and elsewhere, because what’s every other state and every other region that's seeing the LCFS, they are seeing that they can implement low carbon standards and do it in an economical fashion for their consumers; that's a great message.

And my last question is, when I think about the Chevron deal for renewable energy, can you give us – and I know this is probably a simple question, but I’d like to hear it a little bit more from you guys. How do you compare your business model to REGI in terms of your profitability, the way you operate; how are you thinking about it? Because it seems like this would create more of a value not a comp. How do you think about that and I’ll leave it there, and I appreciate your time as always.

Yeah, way to lob one in there, Ken. I’d just use one word, you're a smart guy. We’re significantly undervalued and underappreciated, so I’ll turn this over to John now.

So if you want to compare us, REGI is a great company, I'm not going to say anything negative about them. They do a phenomenal job. They make somewhere around 90 million gallons in over lease for the day this year. For this year we’ll produce around 750 million gallons of renewable diesel. Next year we’ll produce 1.2 billion gallons of renewable diesel. REGI will produce 90 million gallons of renewable diesel, and their total biofuels, including biodiesel, will be somewhere around 700 million gallons and we’ll be 1.2 billion gallons of renewable diesel, which we think is a good technology moving forward in the biofuel space. In addition to that, we’ve seen that in the results in our base business, as the low carbon policies have driven a preference for fats that produce low carbon fuels; we've seen an increase in the price of those low carbon fats. We’re positioned as an oil field to supply those low carbon fats to the biofuel world. Again I go back, we’re the only renewable diesel company in the world that has both the rapidly expanding renewable diesel capacity and the oil field of low carbon fats; nobody else has that. So when you compare like door A, B, and C in this place, it looks to us like we've got an excellent position in the marketplace.

Thank you guys very much.

The next question comes from Tom Palmer with J.P. Morgan. Please go ahead.

Good morning, and thank you for the questions.

Morning Tom!

Last year you gave some helpful detail on expected EBITDA contribution on a segment basis. If we look at the $950 million to $1 billion guidance in the base business, how should we be thinking about contribution from like the food segment and fuel segment?

Yeah, I don't have those numbers in front of me. More than happy to think through that and try. We typically want to put those ranges out as we see the year go on here is what I'd say. What I'm just doing is benchmarking the 850 last year and the higher fat prices that we see running at this time. Remember, I'm only 30 days into the year here. Clearly the food segment is going to move up because of the higher fat prices. I’m watching Q1 and Q2 protein prices move up $70 to $100 a ton through the system; fat price is up $0.10 to $0.14 a pound as we move through the year, but remember that's versus $0.50 last year. It's not hard to sit there and look at this and say, $1 billion could be really light if these fat prices hold where they are at right now, which we tend to believe they will. A little color on the food segment. You know we are just continuing to ramp up our collagen peptide business. You know our demand from our customer base is still accelerating in the high single digits. Margins on that versus some of the commodity products that we made in the Rousselot brand division, you know, are being replaced with higher margins. So you know we put up 198. I think you know I look back at Brad and that was always – we were kind of 130 to 140 in the food segment and then we started bringing on the peptide business and you know now we're looking at that business should be you know well into the mid-200s here within a year or two as we bring on additional peptide capacity. The fuel segment obviously, you know, the DGD2 expansion is going to help us grow there. That was just a very timely acquisition for us that gives us lots of opportunity to arbitrage plate waste and different waste streams in Europe into a bio-digestion and we're going to expand it out pretty nicely, and where green electricity prices are in Europe today, driven by the challenges in Ukraine, I mean that is a very, very positive accretive acquisition for us. You know DGD, you know simply said 750 times, $1.25. Half of that flows, 461 or whatever the number is, flows right back into the fuel segment, so a full year at 750, you know versus what we made 370 last year. So the fuel segment will keep that $1.05 billion, $1.06 billion range and we’ll try to put some ranges out there as we move to the Q1 call in May to help you.

Great! Thank you. And then just to follow up on DGD, I know in past quarters there's been some discussion of kind of when we might see distributions flow through just given the elevated level of CapEx that we're seeing to get Port Arthur builds. I mean is this mainly a 2023 at this point? Is there still the possibility of some distributions in ’22? Thanks.

Yeah Tom, this is Brad. I guess I would never say never on this year, but you kind of prefaced it pretty well. I mean, with the acceleration which is looking – you know continuing to look very, very positive; the spend being pushed back here in 2022, I guess the way I’d put it is, never say never on some dividends. If we did, it would be very late in the year and not really extremely sizeable or material. You get into 2023, really almost no matter where the margins are, if there is a margin we’re looking at it from there and beyond, hundreds of millions of dollars in dividends from there on out with the JV debt free coming out of construct.

Yeah, I know Brad. In 2023 that it just really absolutely, even at $1.25 a gallon, gets extremely sizeable and the JV will be debt-free coming out of ‘22 here.

And if I can just add, I want to make sure we're clear, we are at or below our cost estimate for Diamond Green Diesel 3 at this point in time. The only thing that's happened is we've been able to accelerate the project, so that a little more dollars have been spent in ’22. That obviously is one of the reasons why we don't really see at this point in time large significant dividends in ’22, but all that means is we're done with our capital in ’22. So when we get to ‘23, we’re largely dividend in what we make, right, except for maintenance capital that we need in the business.

Great! Thanks for the color guys.

The next question comes from Matthew Blair with Tudor, Pickering, Holt. Please go ahead.

Hey! Good morning everyone. I wanted to ask about the seed segment. Your thoughts in UCO revenue were extremely strong. I think fats revenue was up 20% quarter-over-quarter, UCO revenue up 60% quarter-over-quarter. I was hoping you could just provide a few more details here. How much of this is pricing? How much is volume? How much is seasonality, and you know can you hold onto these levels into ’22?

The only thing what I would give color on there Matt would be really, as we’ve talked about sensitivity on fat prices. I mean that's kind of bigger picture this last year. I'd say what we put together several years ago with John Muse and the sensitivity that we did on the business, it still pretty much holds water today when you look back at ’22 and where a lot of the pickup that Randy’s been talking about this morning is. But that bears out and those prices were up here as we've entered into ’22.

Yeah, I think Matt, you know part of its volume. We've seen a strong – you know the rendering volumes around the world remain extremely strong. The UCO volume is kind of up and down pretty strong in the fourth quarter with a lot of re-openings going on. So you know – but you know remember, people love to talk UCO. It's a material contributor in the sense of earnings, but volume doesn't move around. None of our volumes move around much, so it really is a price-driven event here of how we've got the procurement formulas written on this material.

Do you think – are the UCO volumes back to normal with restaurants reopening or do you still see some upside there?

Yeah, this is John. Not quite back to where we were pre-COVID, but getting pretty close as we continue to see the reopening of the economies of the United States and Canada.

I mean clearly New York, the northeast is really dragging its feet to come back to where it was.

Got it. And then finally, the guidance of $1.25 EBITDA margins for DGD this year, I guess I’m just trying to think through that. We had a pretty significant increase in diesel prices, you have expectations of higher RINS, higher LCFS moving forward. You know you just put up, I think about 14 in Q4. So I guess, the way we should think about that, just you're expecting higher feed costs to staff out most of the gain from higher diesel and LCFS as we progress through the year?

You know, I'll take a stab and John and Sandy can also. I mean we’re thrown – you know if you think of the first five years that Diamond Green Diesel operated, it operated at $1.26 a gallon. The next four or five here $2.26 a gallon and then last year down to $2.07. We're being conservative as we step out front here. We're seeing feedstock prices run up rapidly. I think the bid delivered Diamond Green Diesel today is nearly $0.80 a pound. You know we have our fundamentals to share your view Matthew on carbon pricing. We’re bullish on carbon pricing and at the end of the day we think that things… You know we brought on 400 million capacities 90 days ago and it’s at capacity sold out. We didn’t really move the markets. You know we didn’t trash RINS, we didn’t get absorbed, and so now the markets are normalizing to the new, higher levels of demand in California. We expect, due to lots of different things and from the pandemic now to war, but the world’s picking up.

You know things are going to ebb and flow based upon what’s going on in the world. You know whether that’s due to weather events or demand events. You know I think John had mentioned earlier, the key point with regard to DGD is that, you know at $2.25 or $1.25 or at the end of the day we’re producing more gallons here. So at 750, you know and $1.25 that’s $938 million DGD and our base. Starting next year we’ll have 1.2 billion gallons. So we are making a ton more EBITDA and so – and throw on top of that too, that even at a lower margin per gallon and if that goes up, it's even higher. But DGD is one of the highest-performing in the world, and a great business.

Thank you for all the helpful comments.

The next question is from Craig Irwin with Roth Capital Partners. Please go ahead.

Thank you for taking my questions. I should start by saying really congrats on this impeccable expectation over at Diamond Green.

Thanks, Craig.

Can you talk a little bit about your new technologies you adopted there that allows you to produce some green gasoline and sustainable aviation fuel? Lots of other companies out there are talking about SAS, very interesting; how is the market development coming for these new products? What are you learning as you offer this out there?

You know what we see is still in its infancy. You know we’ve talked about this a number of times is that really to insert more mandates. Build back better, did product for one of those and SAS tax credit, and while that seems to be stalled at least temporarily, what we are hearing is that they may get broken up into smaller bills, one might have a climate focus and we would expect that SAS would be a part of that. The developments in Europe are going to be huge triggers. SAS is something that we believe makes sense. And we do think that it’s going to develop and it will happen eventually over time. It’s just about when it’s going to happen.

Understood.

I should add, we are ready we have the technology ready to go. When the economics are right, we know how we build it, we know approximately how much it will cost, and so when we get the economies right, we are ready to actually start to produce real.

Since we have had the blenders’ credit and a fairly nice RIN environment, you know those guys have taken a little bit longer to come out. But did you maybe see or can you share anecdotally with us whether or not you saw substantial capacity come offline over the last number of months with the pressures on these little clients that face tricky economics in the periods of volatility?

John, Sandy, do you want to take a shot at that?

You know I would say that we probably don’t pay a ton of attention to whether or not an individual biodiesel facility is online or offline. I think what we are more focused on is we are focused on what’s important to us. And we’ve always said that we’ve created a really unique machine in terms of Diamond Green Diesel that’s going to be able to out compete any facility, whether that’s biodiesel or renewable diesel. John had mentioned before, you know we just – we really have superior logistics. So we build our facilities in the Gulf of Mexico where agricultural products generally funnel into. There is also our rate in terms of outbound logistics, because they can basically transport all over the world. We can transport from our facilities. We have multiple capabilities. We can transport by rail, we can transport by water, we can transport by pipeline. And so we have just significant logistical capabilities. We also have pre-treatment capabilities which differentiate us, and that allows us to run the cheapest most economical feedstock. And then we also have access to feedstock through our partners and John’s been mentioning that throughout the conversation today. And I think one of the things that we don’t talk about, and we haven’t yet talked about on this call, is that we’ve seen a lot of other renewable diesel type projects want to emulate that supply chain, so they’ve gone out and they’ve tried to contract for longer term supply agreements. And DGD is really different in this respect because while its partners have feedstocks and it has access to feedstocks, we don’t have any minimum take requirements and we are not tied into any one feedstock. We have the complete capability to optimize and arbitrage our feedstocks on a day-to-day basis and that makes us totally unique. So not only do we have it, but we can arbitrage around it. And so while yes, you know there are many more projects that are going to be built like DGD, there may be other biodiesel facilities out there. You know what we’ve been focused on and what we feel confident on is really our capability to compete.

Thank you for that. Congrats again on the strong execution.

The next question comes from Ben Kallo with Baird. Please go ahead.

Hey guys! Congrats on the quarter. Just going back to when Valero talked in their conference call, they talked about maybe having, I think switching kind of feedstock to maybe more soy oil. Maybe I got that wrong, but could you just tell us about the flexibility there for Diamond Green and what that means for the core business?

Yeah, so I think you know we have the capabilities not only to process crude to refined soybean oil, but also RBD soybean oil. And on any day what we are going to do is, we are going to be looking at the economics of what is the cheapest given the CI benefit of that. And we have complete flexibility to process any of those and we would process soybean oil if it is the most economic, absolutely.

Yeah Ben, this is Randy. I think I’ll decode for you what Sandy just said. Typically in the Jan-Feb window, you will see the food service business really kind of fall off of the New Year. So we saw animal fats and UCO run up into the 70s and in Jan, Feb and we saw RBD soybean oil trade sub carbon intensity equivalency. So as Sandy said, we can arbitrage around and we did and there were no secrets out there to maximize margins. So it’s real, it's flexible, it's quick and we're very agile down there.

Nesty has a couple turnarounds, I think one in Q3, one in Q4. Does that impact the market and then how about you guys just for your turnarounds?

I mean obviously, turnarounds are a regular part of being in this business. As that happens, that’s going to reduce the supply that comes from individual facilities over a period of time and if you look around the world, the reality is there are only a limited number of significant production facilities around the world. Having one of those down at one point in time is going to have an impact on the supply that’s available during that period of time. But this is a regular thing that's going to happen every year in the business. One of us or two of us are going to be involved in some type of turnaround at one or two of our units. It’s just normal course of the run business.

Yeah, I mean 18 to 20 days offline doesn't change the global supply and demand because once your catalyst is fresh you can run a little faster again.

And how should we think about just the debt level there at the JV going forward? Thank you guys.

Yep Ben, this is Brad again. So the debt level, we have had some contributions here in Q4, there toward the end of the year and a little bit right after the first of the year. And that was again due to the downtime from the hurricane, starting up – and the process of starting up number two was working capital and so as we come out of that, and with the acceleration that we talked about earlier. So coming out of that and where it's running now, we'll see as we go through the year, debt level come down as I said before. We expect when DGD3 is completed, the JV to be debt-free.

Thank you.

The next question comes from Bill Baldwin with Baldwin Anthony Securities. Please go ahead.

Good morning! I just wanted to say what a insightful you all have done in your core business over the last several years. The execution has been unbelievable here. So good job! Just wanted to ask on the Diamond Green Diesel, what would be kind of the expected level of maintenance CapEx on that facility? As we look at it this year, I think going out with the Port Arthur coming on, how should we look at that for maintenance CapEx?

Right. So I think if you are talking maintenance CapEx, that will depend on what type of turnaround we’re doing and that’s probably $30 million to $50 million. Now we have two units online. We will have one that is going through a catalyst change-out right now. In future years, the second facility is a little bit more, but it is not scheduled to have a catalyst change out this year. So I think you're probably in terms of maintenance close to $30 million.

Thank you.

I think, one of things just to add to that, one of the things is we’ve designed Diamond Green Diesel 2 and Diamond Green Diesel 3, is these are facilities that will have significantly greater catalyst loading capability. Our hope is that we will significantly lengthen the period of time between turnarounds, which if we are able to accomplish, will mean significantly greater production over a two to three-year period of time and obviously, less capital associated with turn times or with turnarounds.

Thank you, John.

Thanks Bill.

This concludes our question-and-answer session. I'll turn the conference back over to Randy Stuewe for any closing comments.

Thanks again everybody. I appreciate everyone's time today. Hope you stay safe and healthy. We got a busy March coming up doing lots of conferences. There's a list of upcoming events in our presentation that Suann provided with the call and we look forward to hearing and seeing you guys all very soon. Thanks again.

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