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

Awesome. So for our next fireside chat, we have CEO, Randy Stuewe of Darling Ingredients. Basically, they are a global leader in renewable diesel and rendering and very recently, SAF as well. Thank you for joining us today, Randy, really appreciate the time.

So maybe to start off, I guess, there's been some confusion around the 45Z credits that came out yesterday. There was some folks from the Biden administration saying that they won't be finalizing that guidance. I don't know if you have any updates there. Any thoughts there on how you think that's going to play out for Darling one way or the other?

Yes. And I guess as we'll comment on it, yesterday, about 10:00 in the morning, we saw the same Reuters article that came out and it shocked us because it wasn't consistent with what the conversations we've had that day or the week before. So it's not consistent with what we're being told by the banking community, by the big accounting community and by the state department and different contacts within there. They all understand they have a huge process to follow. Yes, we're going into a lame-duck session. And then you've got some really conflicted constituents out there in the sense of the plant-based oils and all -- there's a lot of noise. And whether it's smart ag, whether it's -- what's the -- which model are they going to use to calculate to what is the carbon intensity of soybean oil. And so there's a lot of things to clarify here, but they also realize that they've made a promise it's law. And nothing really new to report as Bob and I were flying up yesterday, then at 4:00, Bloomberg came out and said, not so true. So we'll see. But what I want to leave everybody in the audience with today is we're agnostic to it. And what we mean by that is, yes, we appreciate and then for the cash flows and all of that to have subsidy. So I don't want to say that we don't in that sense. But we believe that the mandates in the world, as we've always believed, will provide enough margin opportunity to still make this a great business for us. And we weathered a pretty difficult '24 here, but we ran -- I think the some sell side had us at $0.53. I won't dispute the number today, although it's not final for the year. And ultimately, we don't see the year next year any worse plus SAF. SAF came up 1.5 months early under budget and is running at capacity today. So -- and the margin opportunity, as we've said there, meets our investment requirements and exceeds them. So we see '25 as setting up very nicely here, the LCFS. I mean, the credit bank seems to be pretty balanced. You won't have imports next year into this country, at least as we see it today. You've got an increasing RVO again. And then you've got some -- as I would say, there's no new RD capacity that I'm aware of aside from REG or Chevron Geismar that will be operational this coming year. So essentially, the world has played out. You've got Sweden once again increasing their demand. You've got Canada increasing. So -- and then you've got this whole change in feedstocks in the world that's going to evolve. So we'll talk more about that.

So maybe just kind of sticking to the policy piece of it real quick. Any kind of thoughts on if, let's say, the 45Z guidelines aren't approved, is there any push that you are hearing on your end for the blenders tax credit to be extended or maybe that's just a nonstarter?

I think there's a reality here is that the -- clearly, there are parties in this country that would want to see the BTC extended. And ultimately, it's the ag lobby, and then it's also probably the truck stops. Truck stops were one of the biggest beneficiaries of that subsidy. And then also the arbitrage it created for the importers of the world and the traders. So yes, there's a lot of noise there. I mean, remember, this -- you got to go back, what is it? It was back at the end of '22 or the start of '23 when all of this was created, gave us 3 years of visibility of the $1 a gallon followed by 3 years of the producer's tax credit that the Senator Wyden put in, in the Finance Committee. And it was ultimately geared at stepping down government monies into the industry. In the sense, you think the BTC is direct dollars to a producer. The PTC really doesn't cost them anything. So at the end of the day, I think the BTC will get some discussion. The reality piece that I was talking about is you're going to have to find a vehicle to attach it to. Those discussions are far more complicated and above my pay grade. The same people that are telling me to keep the faith on the 45Z are telling me that the soonest you could have a retro BTC is summer, fall. So that's -- the Republicans are planning a big tax package, and that would seem to be the place you would put it. It doesn't mean that as our good friend of agriculture, Senator Grassley and Chuck came out and said, I'd like the BTC, his office corrected in within an hour. So we'll see how it plays out. But as I said, I want to leave everybody with -- we're fine.

Yes. Yes. That makes sense. And then maybe talking about just the RVO with -- potentially we'll start hearing something about it in early March of next year on just the 2026 outlook. Given we have -- the Trump administration has picked Lee Zeldin as a potential EPA pick. Any kind of thoughts on how that could impact RVO guidance going forward?

Yes. It's -- the discussions with OMB and the EPA from our perspective have been less aggressive is what I'd say the word on growing the RVO, but they know they got it wrong in '24 here. So I don't think that there's any foregone conclusions there. I know Lee Zeldin has some history of whatever it is, the Staten Island are not wanting biodiesel or something. But we're in discussions in New York here of moving lots of RD that's not -- we are shipping here. And so at the end of the day, there's still movements of foot there. I think you'll get some modest increase again in the RVO. People -- there's one thing that people can agree on in D.C. and that is that biofuels are bipartisan. They're not energy policy. They're not climate change, they're ag policy. The farmer is hurting in America today. And if you want to lose the house in 2 years, then screw the farmer. And that would happen with some situation here that reduces the demand for fats and oils. People forget, it's 40% of the corn and bean crop go into some type of fuel today. You can't mess with that without messing with your political career.

Got it. That makes sense. So maybe just kind of sticking to that line of thought that you don't want to mess with the ag lobby. So when it comes to thinking about the carbon intensity for like 45Z, do you think that could maybe be adjusted so that it's more favorable to the ag lobby?

We think, I think so.

Yes, yes. And I mean, ultimately, as long as it prevents -- it doesn't go to a foreign biofuel producer, but it's still very positive for everyone...

Awesome. Thanks. Okay. So yes, maybe moving on, let's kind of talk about feedstock pricing. We haven't -- it's been at least 4Q thus far, we have seen a relatively kind of flat to slightly down. Can you see -- I mean, like can you share what you're seeing in your system given MPC PSX kind of ramping or kind of already running at capacity?

Yes. And I want to look at feedstock globally and talk to you about the changes that are either developing or have happened. As we came into 2024, we really were back half of the year bullish on feedstock. We said, well, if the sell side is right on this capacity starting up, then feedstock prices should rise. What's happened is the capacity truly didn't operate consistently at the rates that everybody thought they would. We did. We're going to have a record production year. Number two, the -- China was exporting biodiesel to Europe. Europe was exporting biodiesel to America to get the $1 a gallon. That's arbitrage that's being shut off now here in 28 days by the lack of the BTC, and it wouldn't work under the PTC. So you're not going to put boats a float waiting on and praying on a blender's tax credit here. So that's going to push back almost 1 billion gallons of imports into this country for next year. That 1 billion gallons is equivalent to about 7.5 billion pounds of fat. Keep that number in mind. The RVO grows around 400 million gallons next year, that's another 3 billion pounds. So now you're 10.5 billion. If REG or Chevron Geismar, sorry, Chevron comes up online, that's another 3 billion. So those 3 plants or 3 actions alone are 13.5 billion pounds. Why is that both fascinating and mesmerizing and it better be eye-opening because the total waste fats in America or North America today are 16 billion pounds, okay? So keep those numbers in mind. Now as you come into the world, what's changed? Brazil has a higher mandate now for biofuels. Brazil animal fat now is higher priced than U.S. animal fat. It's not going to move. Once Neste gets Rotterdam back up, you won't see European movements in here. Once Neste gets Singapore back up, you won't see New Zealand and Australia driving by the island to get here. It's a law of commodities. So you've got massive new production demand in the U.S. And ultimately, you've got a change in the palm oil. If you follow that cycle in the APAC countries, those trees take around 7 years to develop from plant to fruit. We've kind of plateaued. Ultimately, 2 things are happening. One, you've got additional mandated biofuel capacity in Malaysia. And two, if you think about it, if the U.S. is really going to process, let's call it, North America, soybeans and canola, where was that seed going before? It was going to China. China is going to buy more seed from South America to the degree they can, but they're also ultimately going to be deficit vegetable oil to feed their people. They'll quietly go in and start buying the palm oil. So you're watching a massive dislocation that's happening in front of your eyes. This is why we sit back and say -- and Bob and I -- Bob is on the front row there with Suann. At the end of the day, we've never seen a shift like we're about to see in '25 here. Markets anticipate, but they certainly don't have this one figured out yet. And the only answer that can be out there is that the other renewable diesel producers really aren't running at the capacity they are. We know that P66 was overbought. They're still trying to sell us fat today that they overbought. And we know that their pretreatment systems aren't as effective as maybe they want you to believe they are.

Got it. That's helpful. Maybe then kind of also talking a little bit about with the new administration, there's going to be some tariffs that's going to be put in place for China. We get a lot of used cooking oil from China. Do you think -- how do you think that could potentially play out for Darling specifically and then just the overall feedstock on the system? And then do you think that could also have some ripple effects from importing fats from Brazil, for example?

I'm going to give you a couple of scenarios here. Number one, as Darling, we are absolutely supportive of free trade in the world. So I'm just going to leave it at that. I think that the commodities need to feed the demand that's out there. And tariffs typically aren't real effective with that, and they have unintended consequences. That's one side. Second side is for the DGD model, imports are a critical part of our economic advantage. And ultimately, as North American fat prices moved up at the end of '22, keep in mind, when I sat in the room in '21 or early '22, there wasn't anybody in the room that didn't believe that renewable diesel margins were going to 0 because of feedstock prices would move up and compress margins. Anybody really ready to admit you're wrong? Okay, you were wrong because of what happens in the law of commodities, if you're $1 a ton or EUR 1 a ton higher than the next best bid, the commodity gets aggregated and delivered to that point. So we freed up European fat that didn't have a home. Never in my career as European fat ever worked in here. We brought in South American. We brought in Chinese. We actually import from 16 countries today. And we've created more economic value in those countries in our rendering businesses. So we benefited from that. So imports are critical. For us, at the end of the day, it creates another advantage because the products we produce, whether it's RD or SAF that are being exported, we get duty drawback. So once again, the word agnostic is, okay, give me a 1,000% tariff on Chinese UCO. If you're not -- if you're P66 or you're Marathon or your PBF and you're not re-exporting, you can't afford to bring that product in. So then you love Uncle Darling as your supplier domestically. So we're positioned to win under the tariff side as it plays out. I'm sure there'll be some disruptions here. But keep in mind, like in China today, you all -- we're the largest importer of UCO in North America today, and we're re-exporting the products. At the end of the day, China really doesn't want to export low-value products. They want to export higher value. The -- always in China, when all of a sudden, you see somehow a widget showing up or a UCO or a bicycle or whatever, you always have to ask what changed. Typically, it's in the some type of tax structure subsidy that's quietly been put in place. And as you've learned here a couple of weeks ago, they got rid of their 13% export subsidy to the UCO side. So now what's happened? Well, now BP is in there, joint venturing, they're going to make SAF. So that product should stay in China today. So long answer, I know.

No, no, that's helpful. That's definitely helpful. And then maybe kind of pivoting just to the, I guess, to the Feed segment a little bit. I know that in the call, for the call, you guys talked about having some -- improving some operations in the Eastern Shore and some procurement strategies in South America. Could you kind of talk a little bit about how far along are you in that transition? And then how can we think about at least margin improvement for the Feed segment?

The Feed segment has probably the highest exposure to commodity volatility. And so at the end of the day, and if you look back over the last 3 or 4 years, not only have we've done some acquisitions, but we've seen incredible volatility in that arena. So the Feed segment margins range 21% to 26% should normalize in that 23%, 24% range, 23.5%. At the end of the day, that's the procuring of fat and bone from grocery stores, slaughterhouses, [indiscernible] around the world and then making fats and proteins. And ultimately, some of it is commodities, some of it is pet food, some of it is human proteins and then all of it's basically animal fat. We've gone back now and looked at all of our contracts around the world and our procurement methods. And the cost of running this business, I think this is true for probably every business that's probably here this week in multiple conferences. Post-COVID, we've lived through massive wage inflation that's out there. The cost to build a tilt-up building went from $300 a square foot to $600 a square foot. Piping has gone up, wire has gone up. So the replacement cost of our asset base is up substantially. The hard thing is to go back with your management team at different levels in the organization and say it's okay to be paid fairly on that. So as we kind of joke or if I had my North American COO up here, he'd say he's pretty sure he's not getting a lot of Christmas cards from the poultry industry this year because we've gone back and started these renegotiations to say we need a better return, which predominantly goes into that feed segment. That's not a January 1 deal. That's not a June 1 deal. That's an evolution deal as we go forward here. But they get it. They understand it. And that's why we've been able to grow because we've been willing to put the capacity and the capital in for them over the last 10 years. And we're -- the meat production industry, I don't see it slowing down in the world. I see it only increasing over the next 10 years.

Got it. That's helpful. So maybe kind of digging into that a little bit. How have those conversations been in terms of -- or like how far along are you in terms of your 3-year contracts in having those discussions around price increases? Are you pretty much done? Is there like some more room to go?

Yes. There's -- I would kind of separate or bifurcate them into kind of the 4 rendering regions in the world. Canada is on a system that can move them as necessary. Europe pretty much looks at the returns that they want to make and they then look at the palm oil market and they look at the protein market and they say, this is historically what we've been able to earn per ton and they then adjust as necessary. You don't want to go into the slaughterhouse every week or every month or every 60 days. You try to do it. In rising markets, of course, we don't go in very often, and we try to pocket that in declining markets that we try to get in there. South America, we're making lots of progress down there. The earnings are starting to improve there. It's always fascinating as we buy private companies, what it takes them to teach the management team how to make money. They never had visibility to it before because of the owner and the owner's desires are very different. A private owner is about tax avoidance, a public company is about earnings. And so in South America, we've gone in and made the adjustments that are necessary there. In the U.S., because it's the biggest piece of our global supply unit, those are ones they come up. These are 3- and 5-year agreements. And as they come up, we're transitioning.

Got it. That's helpful. So I guess maybe thinking about that soft $1.5 billion guide that you have kind of shared during the 3Q call, how do we -- given I guess, the recent developments on the 45Z, given just the thoughts on where you think about margin cadence for the Feed segment and across all the segments, what are some puts and takes like that goes into those assumptions? Are you assuming that like, for example, for the Feed segment, you're assuming 23%, 24% gross margin that gets you to that 1.5%? How do we kind of break that down?

Yes. As we look, it's December or something here, whatever. I don't know what I'm going to watch this morning. And I was sharing the story with our one-on-ones here a few minutes ago. 1 year ago today, we were sitting in our annual operating plan meeting. And it's -- really, it's the 5 business units of the world that come in and really pitch the amount of cash that they're going to generate for the year. And the exercise has really a very small number of inputs into the spreadsheet, if you will. How much raw material you're going to run? Are you flat? Are you up? What's the mix of raw material because everything yields a little different? What are you planning for OpEx costs? Are you -- what raises are you giving? Where are you pegging diesel fuel, natural gas, electricity? And then the 2 big things are what is the protein selling price and what's the fat selling price. And so we pushed the button on the Cray supercomputer and Oz came out and said the core business would generate $1.1 billion. We nailed the protein price and we missed the fat price by $0.20 a pound. On Jan 1, less than 30 days later, boom. And so the -- when we gave the guidance last year of 1.8, it was built on a 1.1 and a $700 million EBITDA out of our share of EBITDA out of DGD, and that was at $1.05 a gallon. So let's talk about the $1.05 a gallon. Where is that? We thought that's our competitive advantage against the industry, and that's logistics, inbound, outbound, carbon intensity, operating costs, hydrogen costs, et cetera, et cetera. And ultimately, we have that advantage. We just didn't think that the industry would run below variable cost against us. So we're going to put up in the 50s. They're going to put up in the minus 50s. So directionally, we were correct there, but in aggregate, we weren't. So as we come into '25 here, we see the core business improving. I'm going to say it's back half weighted here because ultimately, the noise you have in the front here doesn't give people a lot of courage to start chasing feedstock at this time when they don't know how to operate. But ultimately, I think that will get sorted out, whether it's the 45Z, whether it's the BTC, it will sort itself out. As we come into Diamond Green for next year, I don't see it as any -- I see 2 components. I see the RD business and the SAF. RD business is solid out there. Demand is great. The margin structure will rectify and normalize itself. I mean if the biodiesel industry, if there's no 45Z and there's no PTC, you have to ask yourself, are they willing to run at minus $0.80, $0.90 a gallon? My belief is no. If I'm wrong, then I'm wrong. But I believe they won't. So what's going to happen? RINs will improve. They have to. They always lag and take some time. We already know LCFS has accelerated. I mean at the end of the day, you look at California today and they're roughly a 4 billion gallon diesel pool out there, of which 2.5 billion, 2.7 billion of it's now RD. Part of that was biodiesel, part of that was imports from Neste coming in out of Singapore. There's a lot of demand here that's going to have to be priced in physically to be made. And the only way that happens is if the marginal profitability to produce is positive. So then you look at it and say, so RD can't and shouldn't be any worse than it is today, probably better. And then, oh, by the way, our SAF plant is up and online. We have customers. We have a sales book. It's a building. We're excited about that. We're excited about thinking about construction of plant #2 there down in the future here. So -- and those margins are meeting our investment case and exceeding them. So we see the combination as better than '24. In February, I'll come out and try to give my crystal ball a little clearer guidance with me on it because like I said, yesterday at 10:00, no 45Z by 4:00, 45Z. 45Z gives Darling a huge advantage from both the carbon intensity and it gives a wall around the country in the sense of a producer's tax credit. So that's clearly part of what's going to need to be clarified to have a big year next year.

Got it. That's helpful. Then maybe kind of pivoting more to talk about I guess we could talk about SAF. You've talked about that you guys are now running at capacity and you're building your order book. So maybe could you share a little bit about how far along are you in that, if you can? And then historically, you've talked about margins for SAF of $1 to $2 above renewable diesel. Is that -- is that what you're seeing right now? And then kind of how that change given the sensitivities around 45Z for example?

Yes. What I can tell you about SAF, and I think we've been pretty open about it is that as we would say, we would look back and rewind the movie a year ago today, we thought we would have some type of bidding war that for -- just hold an RFP for SAF. And if you listen to all the airlines in America, it was -- there's none make. I mean, I think made 23 million gallons at World Energy last year. We're real now. We're going to make 250 at least million gallons this year. The fact that it hasn't been available is number one, been the key driver of getting this off the ground. Number two, the supply chain is more complicated than I understood. And I'm going to say it's probably because of my lack of education in that world. But the supply chain, as you've seen like in our JetBlue announcement is DGD sells the Valero Marketing Services Corporation. Valero Marketing Services Corporation then buys Jet A from Valero Refining and then they sell World Fuel and then World Fuel sells JetBlue. Well, that's 4 law departments. That's a complicated sale. It's one airline. I can't remember 3 million or 5 million gallons, 1 airport, JFK. So now you start taking each airport and each -- you'll see an announcement here again of our shipment of SAF now to the Florida peninsula. We're seeing some -- the FBOs, who should be the buyers of this stuff. Obviously, the mandated side is Europe. That's going to happen. The JetBlue clearly wanted to be the leader of making a statement out there. We're seeing it happen with the other airlines right now. The Southwest is moving. The question will be is what's the percentage that they want to blend? In Europe, it's pretty straightforward. It's mandated, but who's the obligated party? The obligated party is big oil. They have to provide the fuel to the airline. So now you're really into Heathrow, Schiphol, [ de Gaulle, ] the big airports, right, Frankfurt. And that will happen. The mandate starts Jan 1, but doesn't have to be "fulfilled until December 31. " so that's when I say it's going to be back half-loaded here. Our book is building where we thought we are where we thought we would be. And we're excited about it, the margins. We agreed with our colleagues and partners to not discuss that and it came out of more of a joke in the room was we were given a range of $1 to $3 over RD. And my colleagues said to me said, Well, how would you like to be the guy that paid $3 and you're saying you're selling it for $1 out there? So he says, why don't we just say it's meeting our return standards and exceeding it. And I would tell you, it's more than doing that. We're very excited about it.

Got it. That's helpful. I know that we are close to time, and I have a lot of questions, but I do want to open it up to the floor as well. If anybody has questions, please let us know. But I guess -- so let's quickly touch on the renewable diesel piece of it now. We have seen Neste facilities offline. And we have also seen that RD margins in Europe have been going through the roof. Any -- have you -- does Darling think about exporting to those markets? Are they exporting to those markets? Or is it primarily, say, Canada?

Yes. So let's talk about -- there's a couple of things that are relevant here. One is the RD is now one of the -- is the largest consumer of waste fats in the world. And when you turn off one of these big units, you really disrupt the supply chains that are out there, whether it's our European rendering plants, whether it's our South American rendering plants, the Rotterdam fire, absolutely unfortunate, still down. I don't know what their timing is there. Singapore, as I understand it, is a technology issue that they're down for 2 months. Ultimately -- so you got a little disruption that's creating some real volatility in Europe on the supply side. What I will tell you in the RD business, it is a very limited spot market business. So when we go into -- if we say we're going to run 95,000 or 98,000 barrels a day, we want to be in the high 90% sold of that or committed. When I say it's -- when we always talk, these are typically index agreements, which are 3,000 barrels a day, 10,000 barrels a day ratably over the next 12 months, 3 years, whatever, priced over heating oil for the prior 7 days plus the LCFS plus the RIN, plus the tax credit. So they're all a little bit different in how they work and which feedstock can make them. So the answer -- the long answer is, yes, we're arbitraging into Europe as we have noncommitted barrels. Yes, Europe, yes, Canada, they're all great markets for us.

Brilliant. And then I just want to also touch on food real quick. I know that you guys launched Nextida. Any kind of initial feedback, thoughts there? And how do we think about commerciality for that going into 2025? And then what's next?

Yes. The collagen business, as I always take 30 seconds and say, where does that fit into the Darling platform comes made out of animal bones and animal skins that are food grade that come out of the slaughterhouse. 80% of that bone or 80% of that skin is animal feed and fat. The other 17% to 20% is collagen. So very natural fit, very natural supply chain allows us to make a procurement process and proposal to a slaughterhouse that's superior over everybody else that's going to co-mingle everything. So at the end of the day, that's why we're in the business. We bought it in 2015. In 2015, we made about 90,000 tons, made about $90 million. Now we make 150,000 tons. And 2 years ago, we made around $300 million. So we've done that through innovation and creation of products away from confectionery and pharma commodity gelatins to water-soluble peptides now, which most of you would know as vital proteins. That little blue jar was -- I'd like to say it's ours. I know what's inside it is ours, comes out of Brazil and has for 10 years. Great brand has separated us from the world with the quality of product that's in there. We've now taken the products that we've been making Nestle and Vital. And within that collagen molecule, we've learned to concentrate the individual peptides for application. So about 3 weeks ago, I think we were in Vegas with our entire global team, and we launched the Nextida brand. Nextida is a portfolio of products geared at health and wellness that will allow the consumption of a pure protein in the body instead of a pharmaceutical. And the first one that was launched is basically a GLP type of product. It's called Nextida GC glucose control. As you eat food and you take it in your body, you cause glucose spikes and peaks and valleys. And this is meant to level off the glucose spikes in your body. It's been clinically tested by us. It's got great results, levels it off by I know in the mid-40s. It's got a lot of endorsements. That's number one. We're in some other trials and clinicals right now on dementia, I don't know. Yes. women's health, gut health, hair, nails, skin, I'm hoping there's one for hearing eventually, but we'll see. But no, it gives us -- as we look at that portfolio of products, it's a great business for us. It fits our model around the world. It's probably not properly valued in our portfolio. We'll continue to evaluate that as we go forward. But the critical point here is building the Nextida platform, and then we'll see what we've done.

Got it. And then maybe, I guess, the Food segment has also faced some -- I would say, there's been some customer destocking that needs to kind of happen and then there's some additional supply that's come online that's kind of disrupting the balance a little bit. Could you maybe provide an update there, how that's coming along? And then how can we think about margins for that segment going into '25?

Yes. The global collagen business is one that is probably the closest thing we have to the consumer. So you get to see some of the results of recessionary behavior in countries, especially emerging markets. That's one thing. The second thing is it's a micro market in the world, really not a lot of good data out of the gelatin manufacturers, 500,000 tons. And we watched as margins improved because of hydrolyzed collagen peptides for us, we watched some pretty substantial capacity additions, both in Brazil by JBS, by [indiscernible] and in China that added anywhere from 5% to 10% new capacity. That, in turn, has pressured that market a little bit. When you're the new guy on the block, at the end of the day, what do you have to sell? Price. And so they've started a price war. It's a spread business out there, but we're very well insulated from that with both our customer base and our product mix.

Awesome. Are your contracts, I guess, within the Food segment, like I would say, longer term, that's what kind of protects you or...

Yes, there's spread management. If you think of the risk side, there's 2 parts. They're flat price sale contracts to food companies, right, and pharma companies, right? But then it's how you buy the raw material, which is no different than any other of our business. We think we've hit a floor there on that business. Earnings could be down a little bit there next year, depends on how quickly Nextida and the collagen peptides take off out here. Clearly, the price of gelatin is lower in the world today, but the margin is pretty similar.

Awesome. I just want to open the floor to see if anybody has questions. If not, then I think we are running out of time. We're out of time. So Randy, thank you for your time. Really appreciate it.