Darling Ingredients Inc. (DAR) Earnings Call Transcript & Summary

Hey, good morning, guys. Randy, it's always a great -- it's always great to have you for a fireside chat. I'd comfortably say that after nearly 20 years of doing my job, I've never seen any CEO, who's not only had a vision for a business, but also who executed a well thought out strategy to make the vision a reality. Darling derives a competitive advantage across its integrated platform of rendering and renewable diesel that cannot be replicated. Brad, you provided the perfect complement to Randy with your financial discipline and capital deployment. And Jim, none of us, analysts or investors would understand the company nearly as well as we do without you. I think all three of you.

With that, let me just kick off the discussion with a high level -- some high-level questions. Randy, the discussion of ESG has clearly accelerated over the last couple of years. Can you talk about how Darling fits into the ESG picture? And can you talk about the core pillars of your ESG strategy and priorities? And why you think this is important for stakeholders and shareholders?

Yes. It's a -- Ken, it's a great question and one we love to talk about. I would tell you, it's one, we're still refining the narrative on. As I've always joked in the 20 years that I've been around in helping reshape the company, I used a tag line back in 2003 that we were green before green was cool and it really -- we think green. We're kind of -- as we -- at the highest level, creating value through circularity. And we're a very circular system that repurposes everything we touch. Nothing's new that we did, if you will. So we're getting something that was destined for a landfill and converting it back into something of higher use and value. It's not only better for people, but better for the planet and better for our shareholders. And as we went through defining ESG and really the social, the governance piece, the governance, we were always as a company under our watch here, rated by ISS as 1, and we take everything very seriously in that area to make sure, as I say, I don't want to join the wall of shame on my watch of anything in the governance world. The social side is taking on a whole different meaning in the world today and definition and how it applies to kind of a blue-collar ag business around the world has been a bit challenging. But at the end of the day, we're trying to do the right things for people and create not only a culture, but a workplace that people want to come to work and feel part of. The big E or the environmental piece is the piece that is in the forefront of the narrative. And we like to sit back and think about what we do. And as we went down the road of trying to define our ESG message, which you believe or not was 5 years ago. And it seems like yesterday that I sat in a room in Newark, New Jersey with the -- with some consultants that help McDonald's to find theirs. And I said, no, this doesn't work for us. And the reason it doesn't work for us, the approach was we intend to keep growing every year. This is a growth platform. Not only do we believe that in population growth, wealth creation and center of the plate dining, but we're going to be repurposing those products off of the center of the plate dining circular more and more each year. And so we try to find a way to think through the environmental piece, and we called it our obligation is to return water as clean or cleaner than we have it and to make the air better around all of our factories and so -- and the products that we make. And so we call clean air and clean water. We said kind of I always joke with people, the trivial pursuit question for Darling is what's our #1 product we produce, water. And so at the end of the day, we return about 11 billion gallons of water to society today. The travesty in the proposition today of repurposing water is, they'll let us sprinkle it on fields, they'll let us put it in some creeks or rivers, but it can't go back to any type of reuse within the economy in a sense of -- you can't. We return water that's cleaner than what we received from the river today, but yet, it's nonpotable than at the end. So I think there's a lot of work there to be done, but clean air, clean water. The energy usage, this is where we came into to growing the business. We zoned in on energy intensity, using less electricity or less natural gas for the conversion of the products as kind of the benchmark. The challenge we're having in the area today a little bit is people want to save total energy spend against total revenue. And so you get into some of these metrics that don't make sense. But we have targeted lowering energy and water intensity in our business by 5% here by 2030. And we're -- and really, I think we'll get there by 2025 to be honest. It's amazing this year that all the projects as we come into our operating plan meeting tonight through Thursday for 2022 that are focused on ESG. And we finally got a common definition amongst our operating teams on the 5 continents on defining what's good for the environment, what's good for the people. When we say the yes, we want better communities, better workplaces, we want visibility in the communities that we operate in. Sometimes, it said that you really don't want to live next to one of our factories because some smell like pet food, some don't smell so good at times, but we've got an obligation there to be on the offense and be part of the community and be viewed as a very -- as a repurposing facility that's necessary for a better planet. And then ultimately, in the world that we live in today, we call it safer food and safer feed. We have an obligation of the products we're putting out. We're one step removed from the consumer. I like it there, but we have the same obligation, as a consumer packaged good company of turning out safe food, safety for our customers today. And that means the traceability of the entire supply chain, if you will, that's where you get into the Scope 1, 2 and 3 emissions. We do a great job at Scope 1, Scope 2. Scope 3 is a challenge for us because that's all our suppliers, and you start to think of that, that's probably 200,000 of them around the world today that will be involved in that supply chain in both direct and indirect use. And then ultimately, and I know I'm giving you a long answer, ultimately, we've got the greenest fuel in the world today. But since we're not a user per se of diamond Green Diesel's product, we don't get to claim that, which is something that we are going to step up and start to claim. It's just the awkwardness of how the system is being defined today in the new ESG world. We see ourselves as the leader. We are going to take a strong position in defining what ESG is rather than asking permission, if it's okay to respond and answer reference EGD and our repurposing system today. So we're really proud of what we have. 2022, as I said, is our operating plan. We're going to come out and talk about 2022. We're going to let you see us through a new view in '22. I might have just given away the mantra for our Board meeting that starts tonight, but that's how we view it. We want to position Darling, as the green solution. We call very simply, we walk around the building, we say think green. And when you start to think that way, you act that way, and it's going through our culture, not as fast as I want, but it's getting there.

What do you think are the key drivers for you to reduce your emissions or reduce your emissions over the next few years? And then also, can you answer the same sort of question on the water side as well? Because I do know that you do have this goal of being -- having sustainable water use by 2050. So what are the actual actions that you're taking in your progress? And how do we think about that?

Yes. I mean, obviously, the key drivers is, #1, I always say, if it's not the right thing to do, don't do it. So it's the right thing to do. And you look at -- from an emissions perspective or an energy intensity, in North America, and I'll just narrow it down. In the U.S.A., we're blessed with cheap energy. We've seen it kind of rebound here recently in the last year, 1.5. But if you compare that and benchmark our factories in the U.S. with our factories in Europe, their energy costs are 3x high. And so they've had to think differently because of energy intensity and energy costs. So ultimately, it's the right thing to do. When I look at water, the 10 gelatin factories, collagen factories have around the water, they are a huge water consumer. So you get into this reuse scenario that we talk about, how much can we filter through filtration, through reverse osmosis and reuse in the process. We have a project being defined right now and being constructed in Ghent Belgium that will reduce -- in one of our larger gelatin factories in the world, it will reduce water consumption by 60%. We take that. We're going to use it as our benchmark model, and then, see if we can take it around the world and duplicate that. Water regulations, discharge and purchase regulations are very different, continent to continent, and they have different drivers. But at the end of the day, we all know that if you use less water, you have to treat less water. And the most expensive thing we do other than energy is treat water to send it back to municipality. So the drivers are economic to us, but they're also the right thing to do.

Great. My understanding is just sticking with the California just for a second, is that the CARB is going to be reevaluating the program every 5 years, it seems like they reevaluate the program, and then maybe they might change the scores, the CI scores, minimum prices. What do you think as they start reviewing the CARB program? What do you think is going to come out of that? And obviously, it seems like it would be advantageous for you guys. How do you see it unfolding?

Well, I think the first thing is, we see it from a positive light. I know that I'm always guilty of sitting in the chair of positivity here. But if you look at it, in the last couple of weeks, we've done a lot of discussions, [ narrative ] conferences and it's been -- what's CARB going to do? And we said, well, first thing is, do you think the system is working or not? And what I mean by that is the value or the cost of carbon. Well, it's not maxed out of 2.06 or 2.10 whatever the magical cap is, it's 1.45 to 1.55. So my answer is, yes, the system is working. Carbon is affordable. It's not maxed out. The bank is not super big deficit. And so what's that mean? And why is that important? That gives then the regulators the courage to accelerate the, if you will, the trajectory of the decarbonization. And Governor Newsom has been very positive about it. Typically, when he spoke about something, the Sacramento has listened. They've got a little bit of a burp in here, if you will, and that's probably the wrong descriptor with the dairy farms and the renewable methane or whatever you want to call it, natural gas and stuff that's repurposed there, a little more coming on. The joke out there is, it's the carbon credit for dairy farms better than milk production today. I don't know that was the incentive or the target of the program. So I think they're going to do a little tweaking there. But at the end of the day, renewable diesel has played such an important rollout there, the supply is available, the distribution system is comfortable. I think CARB is going to accelerate it. Keep in mind that we're now, whatever 24, 25 days away from another 1.5% target reduction on January 1. So I think sometime mid '22, we'll see kind of a change to that trajectory again. I have no inside knowledge. It just feels that way. And we have many shareholders that do a lot more homework than we do with CARB, and they have the same feeling, too.

I agree with you on that. There seems to be some opportunity for them to change the CI scores to your advantage a little bit or give your products -- but let me switch topics a little bit. When I think about Darling's earnings power, you guys put out a couple of different numbers out there, obviously, for 2022 and 2023. More importantly, how do you think of your cash flow over the next several years? And I know, obviously, EBITDA does translate to cash flow, but how do you think that accelerates between 2022, 2023 and 2024 on the cash flow basis.

Yes. And I -- we -- this is probably the biggest question that we get this. We have a heavy ownership of quant funds and algorithms in here. I'm sure most companies do, but it seems like our top 4 holders were are all computers and trying to figure out how to value the company properly. And so this then delves into what is the cash generation. We gave guidance, as the markets were moving around this year, 1.250 to 1.275, I still think we'll come in that range. We had 17 days down at Diamond Green Diesel 1 because of Hurricane Ida, and that delayed the start up till October 22nd of DGD 2. DGD 1 and 2 are sold out for next year. I think while the boiler plate, if you will, capacity is 290 on 1 and 400 on another, I think at the run rates we're achieving right now, we will run in around 750 million gallons next year. It's committed, if you will, [ sold ] index, the index is heating oil, the blenders tax credit, the RIN, the LCFS credit. And so we've come out and said, that should be, we think, returning to about $2 a gallon. It could be $2.25, it could be $1.75, but we're going to tell you $2 on 750 million gallons. And then, we see the base business running between 800 and 850 again. Some growth there, some higher energy costs in Europe, but offset by growth. We had some challenges in our collagen business with higher -- high prices in Brazil this year. We think will more normalize, but that's where we get the 800 to 850. You put that to the 750 and you've got 1.550 billion, 1.6 billion being generated next year. Left in DGD, the pay-off will be about 800 million next year. I think you will see towards the fourth quarter in '22 possibilities of 200 per person or per partner dividends. And then we're going to tell you 800 million, the dividends, [ '23 ] forward per partner. Use of cash has always been the next question. We have been a strong defender of our stock below $70. That program was authorized for $200 million this year. I will be seeking a reauthorization for that program next year to continue to opportunistically buy back stock when we find a weak holder, if you will, or one that doesn't believe in the story. I think the interesting thing that people get tied up in the story on is, well, oh, mine, margins are $1.75 at DGD. This is like chicken little on steroids. I mean $1.75 on a $3 a gallon build out? Oh, no. We're only down to a 55% EBITDA margin. So it's just like at the end of the day, oh, by the way, it's 750 million gallons. And then, oh, by the way, you're 1 year away from 1.2 million to 1.25 billion gallons. And so the story continues, even if you said worst case, the margin went to $1.25. And why would you say that, that if you go to $1.25 workscape? That's because we believe that's the competitive advantage or the moat around DGD 1, 2 and 3 that is feedstock, urban intensity, energy, all the above advantages to any of the co-processors or the stranded asset converters that are out there. Between RBD soybean oil and waste fats and greases, you have anywhere from $0.60 to $0.01 to $1 a gallon advantage, and then, you've got the CI differential of $0.50 a gallon. So that's the reason we sit there and say, it's so easy to watch this thing out in front as we go through '24 and there may be some more capacity added in '24. But the demand for RD is very obvious to us. It's obvious to Neste around the world. It's growing rapidly, and we have not even embarked on the narrative or demand side of sustainable jet fuel. We had our sustainable aviation fuel. And when that does, we see that as another 2 billion to 3 billion gallons of demand starting sometime in '24 to '26. Keep in mind, and I know, I'm answering a lot of your questions, so keep in mind as we -- the Build Back Better program gives us, and we believe that we will -- that the Congress and the Senate will figure out how to pass that. It gives us 10 years of BTC. Yes. It's got some CI step-downs in the back end, but it also has a 10 year SAF attachment to it. Keep in mind, 2027 forward, those programs go to producers, not blenders. So at the end of the day, you will build some type of defense around North America for the fuels that we produce. So I look at it and say, okay, the first year that people add out there, well, you're going to run out of feedstock. No, we're buying 40% of the North Americas today. Oh, by the way, we're looking at -- we're buying feedstock from around the world between currency freight and availability arbitrages into Diamond Green. Then the second thing was, well, you're going to lose the blenders tax credit. No, that looks pretty solid right now. And then -- and at the end of the day, oh, no, margins are $2.50. And we say, yes, so what, even at 1.50 x 1.2 billion gallons, you're at 1.8 billion, you're delevered in Diamond Green. So half is ours, 900 million married to our base business. And it's easy to see a trajectory of where the equity value should go, perhaps pretty well delevered, we're going to have a high-class problem of buybacks, distributions or potentially M&A. I'll comment a little on the M&A front. The M&A pipeline is as active as anything I've seen in my entire career right now. So hopefully, we'll find some opportunities to prioritize some of those. Our priority is very simple, feedstock security and growing our collagen footprint. Those are -- and then green energy in Europe. We think that the long-term owning digesting green energy assets in Europe is a great use of cash. So those are kind of the core rendering, collagen growth, green energy in Europe. And then, you didn't hear me say Diamond Green Diesel 4 that's on the table, but I don't think so right now. I think you'll see us look at a jet module for #2 or 3, that would not be like a separate plant, but a different processing capability. But we're not going to make that investment until we get clarity from the Build Back Better. And also, we're at an inflection point in jet fuel, where the economics are inferior to road fuel. So why would you make it and penalize the shareholder, the consumers and cargo carriers are going to [ have ] the passenger and the cargo carriers are going to have to pay a premium to equate it to road fuel today to get us to make it. But that's kind of where we stand today. I know that's a super long answer for you.

No, that was great, and checked off about half my questions, but I did want to ask -- I want to go back to a couple of things. The margin coming down. You didn't talk about the other side of the market and this is where I kind of get a little confused is, look, if the margin comes down on the Diamond Green Diesel, it's because of a lot of the demand on the rendering product. But yet, you don't talk about the opportunity for the growth on the pricing over the next 2 years to 3 years on our rendering values, that somewhat surprised me. I would think that there would be somewhat of an inflationary pressure going upward, where your rendering business doesn't stop at the current level. Am I mistaken that you are not seeing it that way, just help me out?

No, no, it's a fun academic discussion. And I always take you back to the first time I mentioned 15 years, 20 years ago, animal fats, remember, had fallen out of favor because in 1989, McDonald's [ stock brand ] french fries. And so they really predominantly competed for the share of stomach and livestock rations around the world or -- and so you could model the business off the price of corn on a [ floor ] conversion basis. I set out personally and with the company then, if you call it, get respect for animal fats, probably should have made some bumper stickers up, but it's taken us 10 plus years to finally find another use for animal fats that's positive for the world. And so what we're saying today, the reason that story is relevant is animal fats today are near parity to soybean oil to crude soybean oil. So we've accomplished, if you will, Phase I. There's no way that you can convince me that animal fast, other than carbon intensity could be a premium, a small premium to -- on CI, meaning $0.03 to $0.05, depending on what customer you're selling renewable fuel to. But if palm oil and soy ebb and flow due to supply and demand in the world, we're going to follow them going forward. And so there will still be volatility in the base business. But animal fats won't see this serious discount that they've been that world vegoils. Now in my bearish world vegoils, absolutely not, given the amount of renewable diesel capacity going on. But you have to be realistic that if palm oil goes down, all ships are going to rise and go down with the tides here as demand grows. Our assumption is renewable diesel will use any of the excess crushing and soy and canola and palm capacity available in the world, as we go forward the next 3 years to 5 years to 10 years. That will keep our core business firm where it's at. So we're very comfortable that we're going to maintain prices at or above the 10-year average for fats and oils. If you think we've been below the 10-year average for almost 7 years, we just came back. So people are like going, oh, my gosh, this is a giant super cycle, are we at the top of a bubble? I say, no. We're just kind of in a new universe now that's being defined by the push to green fuels. We got to be careful that the lines of food and fuel don't cross, and that's the Darling message. We are a waste fat repurposer. We do not want to be in that food or fuel argument. And so we're going to tread lightly on that as we go forward. But -- so your question is, I see the core business staying where it's at. I look over and say the margin in Diamond Green Diesel may go up or down given RINs. We didn't talk about RINs, but the Build Back Better and the RVO, we think the RVO will come out very shortly or right after the Build Back Better is approved. You can politically argue it multiple ways that you don't want to put it out there if it's not positive for the boats that you're trying to secure on the Build Back Better. But end of the day, I think the RVO that was leaked, Jim Stark and I would say that 99% of the time when a document is leaked, that's really pretty much that's kind of they're trying to float it to see who hates in the worst out there. And so at the end of the day, I suspect that's pretty close, and that was really bullish biomass-based diesel. Don't want to be in the ethanol business, but the biomass-based diesel, it was really favorable to, especially a couple of years out. So that would tell me that we get some bifurcation between D4 and D6 RINs, maybe they separate a little bit and how they worked and sync in the past and it could become pretty bullish D4 RINs. And then we talked about CARB, I think CARB will accelerate. I think the rest of the world is accelerating. We come out of kind of the coronavirus. I saw jet travel for last week, the airline passenger travel was only down 150,000 passengers versus 2019. So it -- the world's reenergizing. I can't tell you that Europe didn't go back on lockdown because our teams over there are a little frustrated. But I see the world normalizing. So at the end of the day, we see the core business strong, we see DGD strong, but that's how it works and sync as we look at it. We saw kind of, I think, the fragility, I'll leave you with one comment here. I still didn't understand how fragile the animal fat complex was both North America and globally until DGD went down for 17 days because of hurricane Ida. We collapsed the complex $0.20 a pound in a matter of 10 days. It has since rebounded, but it went to a premium to soybean oil. Soybean oil backed off the 55. It fell down. Soybean oil is coming back up, and so were our fat. So it's kind of interesting that we watch that even now that we're buying 40% of the North American waste fats and greases in 1 year from today, 2/3, how fragile that complex is to our downtime or turnaround so.

I would argue because of that sensitivity, I would argue, as new capacity comes online, we could probably expect to see the vegetable oil complex move up again. But it seems like you're a little hesitant to commit to that, but I'll take the over on that one. The -- you mentioned on the D4 RINs and LCFS, do you think that they will strengthen? Is that -- given once we have some certainty? Is that the thought that you have -- you alluded to it. I just didn't know if that's where you were going on that in terms of the RINs, as well as the LCFS credit?

I firmly believe that. I mean, uncertainty, anybody that's operated in the biofuel space in the last 10 years in the U.S. is used to uncertainty, but it feels kind of horrible right now. And I can see from our shareholders' perspective, there are so many programs out here that you have to be an expert on to get comfortable with them. But at the end of the day, we're bullish, both RINs and LCFS credits for next year. And we just think that increasing demand from the RVOs that will be published for our products, and then also an acceleration out of CARB. I'm also with you, I'm bullish soybean oil. It's hard to believe that 5 months ago, not even 5 months ago, 4 months ago, 120 days ago, we were going to run out of soybean oil before new crop. And somehow we magically made it through. So it's perplexing to me. We saw Marathon completely disrupt the soy S&D balance for both crude and refined soy in the U.S. So at the end of the day, as some of these other capacity comes online, which it certainly will, in the oil, the petroleum complex, some of these repurposed assets, I'm not sure I understand the spreadsheet they're looking at. But I consistently and constantly hear, well, we might we will well make some of that product ourselves to avoid the compliance cost. So there's a little bit of a demand driver there that may not be perfectly transparent to at least what I'm going to call an economics driven guy here. So we're seeing BP, Sinclair several others, Marathon, also CVR, they're all -- they can't run waste fats and greases. So at the end of the day, they're going to have to run RBD soybean oil. The thing that -- the only reason I don't take you on the full bullishness on soy today is I've not heard anybody announce expansions of their vegetable oil refineries and more deodorization capacity. Because if you divert soy or canola from the food supply, you're going to have to substitute in North America with what I would say is palm oil and palm oil, while it comes over it -- in a near edible fashion for the food industry, from my old experience, it still needs to be touched up or touched up deodorized, flash deodorized, whatever you want to say, to make it -- get the peroxide values back out. So when I hear that everybody is gear enough to build RBD capacity from ADM, Cargill and Bunge and Dreyfus and AGP, then I'll tell you, I'm really bullish, soybean complex.

Fair enough. What new policies...

That's my message to them. I hope they listen.

I'm with you. What policies besides CARB and the RVO do you think are on the horizon in 2022 that we should be on the lookout for either Canada or other parts of the U.S.? Anything that you're kind of exciting to see on the policies? I know you talked about SAF, but anything else that we should just think about? I just want to close that loop.

Yes. I mean, I think at the highest level, clearly, COVID has had its impact globally on both energy demand and what I'm going to call green momentum. And so end of the day, I think as the world digest, there's susceptibility to the pandemic, we're going to see kind of a resurgence of demand. And what I mean by that is, we've had more product coming into California from Neste, if you will, than what we expected. Why? That's because Europe was slower than anticipated. So as Europe and Scandinavia kind of restart, I suspect we'll see a pretty nice bump there. The other thing is Canada is now basically a year out from their full clean air standard or cleaner fuel standard, and so we're feeling really bullish there. As people learn about Diamond Green, it's a global company. The reason we located our 2 plants or 3 plants, if you will, in New Orleans and Houston was because some of our product, and I don't want to ever say how much ends up around the world. And so to be able to originate by water and ship by water, it gives us such a competitive advantage. And we see other markets around the world increasingly growing in the next 2 years to 5 years. And then ultimately, we've been in the forefront of lobbying at the state level, we think that [indiscernible] that New York, Pennsylvania and New Jersey. Once we get the pandemic, there is legislation there to convert to a California model of decarbonization and that's a -- that is a huge market for diesel fuel and heating oil. So I think demand -- we brought -- if you think about it, on October 22nd, if you want to say 35 days ago, we brought on 450 million gallons of capacity, and it's running wide open, and it's sold out. So the demand is there. You don't bring on -- when you bring on that big a chunk of capacity and it's sold out and shipping, that's a pretty amazing statement.

You mentioned share repurchases under $70. How aggressive do you want to be? Obviously, your stock has fallen under $70. How aggressive do you want to be? How important is getting investment-grade versus doing that? Does -- do you need the investment-grade to start making aggressive share repurchases? Or are you comfortable with just making the share repurchases. Can you talk about that?

Yes. And if I say something, wrong, I'll let Brad step in and correct me on it. I mean we have been -- we've run our model. We -- as I talked about the algorithms not knowing how the value of the stock, we're a -- we have two views. One, we think we need -- we deserve multiple expansion equivalent to Neste today. And we don't believe that's priced in the equity, and there's multiple reasons, that's from, if you will, quant fund ownership to not finding the next big owner that wants to be part of the dream here. The share repurchases are our way of sending a message to people that we, the management and the Board believe in this company. I spent 18 years, and we didn't buy a share back. And we've been active again in the market here in Q4 defending our stock. The challenge is, we've got somebody that's a weak holder out there that's been unloading their position. When Jim Star took me through the ownership of the top 20 holders, their basis level is $18 to $22. So never hurts to go ring the bell occasionally, I guess. And so -- but I don't know that they are not believing the story, but we've got to do our job to go find additional holders. But -- so that's #1. I said I'd be going back. We had $200 million approved for this year. We'll be going back at the Board meeting here to see what the Board wants to do on a reauthorization, and they've been very friendly that. And so we're kind of in that tween period this year between DGD 2 and DGD 3 starting, we're now getting the cash off of 2. That will be used to pay off #3 and then once 3 is done here at the end of the year, then it's a whole different world for us, and we've got to start to look at some type of meaningful dividend, larger share repurchase or M&A opportunities come their way that makes sense.

I get this question all the time. How easy is it to replicate your rendering business? Like could somebody come in and just say, hey, look, I want to recreate this rendering business. We talked a lot about Diamond Green Diesel, but on the rendering side, because a lot of these new facilities that have been coming on, how are they going to get the feedstocks? You guys obviously have a vertical -- vertically integrated model. How easy is it for others to do that? And then how easy is it for you to continue to consolidate?

Yes. #1, I mean, we are the only company that's built a new rendering plant in the last 20 years, and we built 17 of them. They're very expensive. They're hard to permit, and they are not really welcomed in most people's neighborhoods. And so at the end of the day, I think duplication of our system is impossible. It's interesting to me, and I always end with some comment that gets me in trouble, Ken, which is always fun because that's why people remember me. I met with Mike Wirth at Chevron would have called me and said, hey, I'll give you $600 million to build me a few rendering plants. We probably would have done that for him rather than investing in all warn out crushing plants that have a high CI. So there is anybody algorithm that's going to duplicate our system. Our vertical is what is not understood that gives us such a competitive advantage if you go back and it's all public information, you can benchmark DGD and Darling and Valero's ownership against Neste's performance, and it's wide open out there, and we're $0.60 to $0.70 a gallon better for the last 3 years. And oh, by the way, we control the majority of our own feedstock. I think it's a powerful statement.

Can you -- just on the collagen side, like any relief there on the hides? Or how long will that take to -- before you see relief? I think you did say you expected by middle of next year. I just didn't -- I wanted to just kind of go back to that comment.

Yes. My intelligence, I went to Brazil 2 weeks ago. Economy is doing well, inflation is running a little strong, our business is good down there. Remember, as the world went into kind of pandemic closure and China was still short meat, Brazil's slaughter kind of ran in a sense over capacity. And so they're kind of in a phase, at least from my read on that they put cattle out to feed or out to pasture. And we're kind of in that 6 month, 10 month window before slaughter picks back up in Brazil. And so that's kind of where we're saying back half next year. We've seen the grass-fed bovine hide that we use in some of our processes, double and triple from values that were there 2 years ago. So the end of the day, it's supply related, it's not leather demand related. It's just the number of cattle running through the system right now.

I'll end with one last question. Look by 2023, you'll have Diamond Green Diesel 3 up. You kind of don't know where your stock prices will be, but generally speaking, things are going to be [ come in ] by 2023, your vision '20, '25 years ago, is now really coming to fruition, maybe just some of the policies come in. What is -- what's your next move? I mean, do you want to be here? Do you -- how do you think -- what gets you excited after that? I mean, you've been through a journey, and then all of a sudden you're like, wow, this really did actually play out. But now what do you do beyond 2023 or even into that? Is there something that keeps you going? Or are you like, hey, I just enjoy the fruits of my labor? How do you think about that?

I still absolutely enjoy getting up in the morning here at 6:00 clock this morning, can't wait to get here. I still see just as our investment thesis is population growth, wealth creation, center of the plate dining and repurposing those products into the higher and better use. We still see so much opportunity to grow the core rendering business on 3 or 4 continents today. So our job isn't done. If I had to prioritize what we're up to today, feedstock security, green energy in Europe, Diamond Green Diesel and then our collagen footprint around the world. We've transformed our food business from just a commodity gelatin business now to a specialty ingredients business. We're off in areas that are a little uncomfortable to me, but I've got to get comfortable and study more biomedical. And in the sense of the products that we're R&D in, and we built pilot plants for Belgium. So there's plenty to do. And then the -- under Diamond Green Diesel, I think the jet fuel piece is the next exciting world for us, as we go forward. But all-in-all, we have plenty to do. And I think the team is really excited about it. We want to see the fruits of our labor come through, and that's defining one thing. I want to see that $800 million dividend check annually from Diamond Green Diesel. And then, I think I can wake up those BlackRock algorithms.

Perhaps. Well, they have it. Thank you, guys. As always, it's been my pleasure.

All right.

Thank you, and [ keep well ] guys.