Darling Ingredients Inc. ($DAR)

All right. We're going to get started with our next presentation. CEO, Randall Stuewe has developed and executed a strategy over more than a decade that has positioned Darling as a global leader across rendering, biofuels and food ingredients through strategic acquisitions, capacity expansions and its Diamond Green Diesel joint venture. As a perfect complement to Randy, Bob Day has reinforced Darling's strategy with his disciplined approach to capital allocation, balance sheet deleveraging and returns since becoming CFO early last year. Darling is an exciting opportunity to demonstrate its earnings potential, leveraging improved operations against the stronger fundamental backdrop. We're pleased to have Randy and Bob with us today to expand on its outlook and strategy. We thank you both for being here.

Thank you.

Great to be here.

Maybe where I would start is with some comments that you made at the recent Investor Day. You talked about the current operating environment maybe has accelerated a bit more than you had previously articulated. Can you talk about where you're seeing that momentum? What has been maybe a little bit stronger than you expected?

Well, clearly, the -- as we came out of '25, the world was waiting for some clarity of the renewable fuel standard or RVO as everybody knows, and you still didn't have it here until April 1. And so the different movements that happen for demand, whether it's of oilseeds or whether it's demand of animal-based products had not really started. So you just kind of carried forward. First quarter was a wonderful quarter, always, always a little difficult because of winter in North America and in Europe. But when we did our earnings call and obviously, when we did Investor Day a couple of days ago, we hadn't really started to see or we didn't have in front of us the Q2 run rate. For those that do [ Randy ] math, you look at what March did and it's a 5-week period for us, you divide by 5 and multiply it times 13, and that's our run rate for Q2. Since we hadn't seen April, it's the first time we'd ever reported without seeing the first period of the next quarter, which always gives us -- kind of gives us a pretty good feeling of what confidence in to give to try to guide this. I mean, number one, you got to be insane to try to guide a commodity business. But in flat to up markets, you can't be too far from wrong. So what we've seen is with the announcement of the RVO, we've seen biofuel plants around the world restarting, in the U.S. as well. We brought back on a plant we basically had mothballed for most of last year and ramped on up to capacity. And ultimately, we saw fat prices come into the year $0.45, $0.50. I saw a product yesterday being sold $0.75 FOB plant for some of our lower-grade products. So that is starting to flow through. What we were trying to articulate in Investor Day was that we weren't sure how much was going to come through in April and then how -- obviously, May will be better and June will even be better. I think if pet prices have capped off, I don't really think so yet. But we're seeing the acceleration in earnings there. Probably the other contributor that wasn't fully understood or we weren't prepared to step out in front of was the resurgence of exports of poultry meal. And really, the proteins that come out of this country, there's a significant amount that have to leave. And with low ash poultry meal or chicken meal as it's referred to it as no bones in it. It's the world's aquaculture feed. And when our President puts tariffs on, tariffs off, it makes buyers pretty uncomfortable around the Asia countries to step forward and buy it. And as we look back last year, those tariffs probably impacted performance by probably over $100 million because we had to downgrade material and sell it to alternative markets rather than where it should go. So the protein side is really kicking in and contributing along with the fats now. And I think it's safe to say we're hitting on all cylinders in the rendering business. The biofuel margins are what we thought they would be. We try not to guide out there because there's a lot of volatility. And then our food businesses, the collagen business is really starting to take hold out there. That's been a 5-, 10-year product mix shift, and then we're seeing the acceleration there along with new products. And it's just -- the stars are aligning for us now. We feel very, very proud about it. And Bob reflected here earlier this morning, if you look back in July of 2013 when we made the initial investment into Diamond Green Diesel. And then for the next 12 years, we just continued to reinvest the capital there. That stage has changed, that's the inflection point. Diamond Green Diesel will provide dividends this year, and it will provide the PTC. So all of a sudden from reinvestment to outflows, and that doubles up with a really nice core business that's operating well.

I wanted to go back to a comment you just made. I mean there's so much focus on Diamond Green Diesel. There's so much focus on the Feed segment, but the Food segment, which I generally think of as reasonably steady. You've seen it in the first quarter, and you made the comments about April and May kind of accelerating. What is -- why is that the case? What is changing there?

Well, I think an interesting dynamic in the Food segment and just for everyone's understanding around 85% of EBITDA in our Food segment is represented by the collagen business. So collagen and gelatin is the 2 primary products. We're continuing to see significant growth in water soluble collagen across the world. And the way to make water soluble collagen is to take extraction capacity, which is what you use to make gelatin and put a spray dryer on top of it. Every time you do that, you take capacity out of gelatin production. And so essentially, what's happening is due to the increase in demand for collagen, we are also tightening up the supply and demand for gelatin it's creating a very nice dynamic for the business globally, and we're seeing margins in both products increase.

One of the things that I think the market is struggling with a little bit is we got the RVO. We also had a war that has obviously changed the dynamic around energy prices here, kind of coinciding to a certain degree. So how do you think about the impact that the war with Iran is having or the durability should that there be a ceasefire not go away?

I mean I think the margins that we're seeing today in renewable diesel and sustainable aviation fuel, we absolutely expected as a result of the RVO. When we look at the at the obligation itself, the demand that comes with that production, the opportunity for imports, these margins make sense. I think we probably would have thought that they would have materialized a little bit later, closer to when compliance obligations are due, and we have convergence in the market for that reason. I think the conflict in the Middle East, what it's done is it's helped bridge that gap which is really healthy for the industry because it's promoting production earlier than it probably would have otherwise and it will move us closer to being able to meet the obligation, which I think a lot of people have been concerned about.

And I think, Andrew, I think what's fascinating to me and stepping back up to 30,000 feet, if you will, is once again, the world figured out how fragile the supply chain is on fossil fuels, and as I get to see our trucking companies in different parts of the world, diesel fuel in the Netherlands is $12 a gallon right now. Diamond Green Diesel, about $8.50 a gallon. We haven't seen that. And so you're seeing lots of different confluences that are happening because of the higher crude oil price right now. And it's an industry in the world. And as we look forward, we say it once again sends at least a light narrative back to that biofuels or green fuels have a place in the portfolio of energy going forward, and that's where we're positioned.

When I think forward a little bit to next year, and you guys showed the kind of RIN balance math that had 2027 at a deficit. How do we work through that? I mean how -- as we get closer to that environment, how does that change trade flows? How does it change the operating environment? Is the answer that margins have to go higher to solve for that? Or I guess, how do you see that playing out?

I think we do need to change some trade flows. Specifically, I think last year, we exported -- the United States exported around 1 billion gallons of advanced biofuels. So those are barrels that could stay in the United States to help satisfy the obligation. In order for that to happen and in order to incentivize some imports, margins probably need to continue to increase somewhat. And that's an encouraging backdrop.

I mean clearly, the policy is working right now. Farm prices are improving. And so ultimately, what's interesting is when you can run this thing and say, on the S&Ds, they always have a way of balancing themselves and Clearly, the administration believed that, okay, we might tighten up the RIN bank or we might go to a small deficit, but that's okay because then it will write itself either through price, which what's happening price means either more imports or less exports. And so it should play a pretty nice balance for '27.

Are we seeing if feedstocks flow into the United States, can you maybe help us understand the competitiveness of foreign feedstocks versus the U.S. today at these prices?

It's obviously -- it's very dynamic, changes day to day. And so it's just -- yes, it depends. But I think we are seeing foreign feedstocks imported into the United States. I think U.S. or let's say, NAFTA or USMCA based feedstocks have the advantage of 45Z. They've got freight advantages. And international feedstocks have discounted themselves in certain cases so that they can compete to move into this market. But we are seeing a lot of support and price increase for U.S.-based feedstocks, which really was the intention of the policy.

So who's the marginal producer today? I've always thought about it as the biodiesel industry with the need for imports has that changed? Is it -- I guess how do you think about it?

I think it depends a little bit on just where -- what's going on with the market prices all around the world and who that marginal producer is. And I'll give you an example. If the best -- if the most competitive feedstock is an imported tallow from Brazil, then your marginal producer is going to be a Midwestern biodiesel company because they're not going to have access to that feedstock. They're going to need to make a margin using a different feedstock and different economics. If the most competitive feedstock is soybean oil in the United States, then the marginal producer is probably somebody else. But I think the bottom line is we need a significant amount of production from the biodiesel industry to satisfy this obligation. We need a lot of production from renewable diesel as well. And so whoever that marginal producer is, they've got to be up and running, and that suggests good margins.

Can you maybe level set with your perspective on -- especially on the demand side, I guess. Where are we from an RD industry utilization rate perspective? Have we kind of -- I mean you said it's happened kind of quicker than you anticipated for a variety of reasons. Have we kind of maxed out yet? Is there more room to go from a demand perspective?

Margins today would suggest if you can run, you're running. There was a lot of catalyst change out that happened in Q4, and so you'd be ready to run. And so ultimately, obviously, we watch the other 3 or 4 public companies release some earnings on their RD plants, and we're significantly above our performance is way better than theirs. And so that's the feedstock mix, but they all are saying they're running full. So I -- and then I think the other thing is I'm not sure that there would be any more capacity in the U.S. put under construction, maybe debottlenecked a little bit, but I don't see -- do you see anything different?

No, I think that's right. And we'll see as the April numbers come out, but it certainly looks like we had a pretty good step up in April from where we were.

Okay. At the Investor Day, you talked about $150 million to $300 million of potential internal improvement opportunities in the Feed segment. What are the buckets and the time line for that opportunity?

Bob is forever known as Slide 55. So that's our internal joke now. And there's a lot of things that go into that. And so as we've had the last couple of years that when you get into deflationary ingredient business out there, and then you get a little bit of biofuel headwinds. You spend a lot of time in [ Donnie's ] words over here, turning over every rock. And so that's from market contracts. To build a new rendering plant, $100 million now, 3 years, the replacement value is escalated by not only construction costs, equipment costs. So we're trying to pass on as much as we can with people always not the easiest conversation with your suppliers, but ultimately, these are plants that have to be maintained. You can't capital starve them or run to fail. We look at we've stopped the world and said, okay, I call it the One Darling approach now. Let's give you an example, if Brazil is producing animal fats, and they've got a bid that's $10 a ton above what Diamond Green Diesel's bidding today. That fat should still come to Diamond Green Diesel because we're going to make $300 a ton as a company. But that's the One Darling approach that we're bringing now -- and so we're looking at it every day with what's best for the shareholder, not that we weren't in the past, but when you run a decentralized company, your P&L drives more behavior than you want. So trying to get alignment. Looking -- and we brought on some additional talent, Carlos Paz and Carlos is leading the -- looking at the world and just saying where should trade flows go? And used to be that some of our plants had wake up. And the European plants looked at exports, if they couldn't keep it in within the continent, they would dump product into the world. Now we're trading products with the One Darling view. What else do you want to add to that?

I mean you've covered a lot of like what is included and what's going to get us to these higher margins. But I think what I would add is that the competitive dynamics in our industry, they're different than what we see in other commodity industries. As a lot of people know, the raw materials that we bring in are 60% moisture and so if a competitor is going to do something irrational, it's going to cost more than what you tend to see in other industries. So the result of that is we should be able to continue to increase the fees that we charge based on the replacement cost of assets and essentially act as an inflation hedge against the cost of construction. That's harder to do on shorter time periods in other commodity industries, but we should be able to do that just because of those dynamics.

So I guess how much visibility do you have to that? How much of the $150 million to $300 million, how -- what portion of your contracts have you already kind of executed some of that versus what's still left to be done?

We have -- so I think as everyone is aware, we acquired Valley Proteins in 2022. That was a significant move into the poultry rendering space into the United States. Contracts in the U.S. tend to be pretty long in nature, 3 to 5 years. As we reset price, it's difficult to do all of that in one negotiation. And so some of that work has been done. Certainly, some of the work around identifying the best commercial end markets and getting the maximum value for our products. Some of that's been done. But there's still more opportunity. And I think that, that estimate that we gave at Investor Day was one that we think we can achieve in the next 2 to 3 years.

Okay. You made a comment about at the Investor Day about the footprint being in all the places that you want to be, but maybe you want it to look a little different, I think, it was kind of the quote. Can you elaborate on how you'd like to see that evolve?

Well I think if you look historically about every 5 years since the start of 2000, we've doubled the size. And not only do you focus on integrating and paying down debt, but then you start to identify the holes in the map of where you can logistically, as Bob said, it's 50%, 60% water where you need to build a new plant. And so we've done that globally now, and so what we're looking at over the next 3 to 5 years is somewhere between 20, 30 new plants around the world that have to go in. Our system today it's amazing is we're at capacity. And so when we look at it as the poultry consumption, our general thesis that we've always worked under is population growth, wealth creation, center-of-the-plate dining will include protein, and we want to be part of that with the meat industry globally. We don't see that slowing down. And so while we may be mature in a lot of our different areas, what we do look at is the Eastern Shore is going to continue to expand the poultry side in the U.S. The beef cycles down, as I'm sure you heard from the Tyson folks, it will come back. It always does. Brazil continues to just explode up 14% in production now. They have what the world needs, land water people. And that's not into the deforestation discussion. That's just they can grow more and more. You're starting to see more grain-fed beef down in South America, which is really amazing because you -- they'll take an animal to slaughter at about 2/3 the weight of what we do in the U.S. And so you immediately say that, well, that's almost a 50% increase in rendering capacity needed down there. So we'll continue to reinvest there. never did I think that we'd be in a discussion now in Europe of starting to talk about Eastern Europe, going east. There just weren't the animal numbers, but as Germany and the Netherlands have environmental challenges and from animal production, it's going to go east China, still not much there to render as we say, but we continue to look hard there. And ultimately, I'm a fan of the Ukraine if we can ever get the war settled.

Is there a way -- I mean, obviously, fat prices have a big impact on profits in the Feed segment. But if I kind of were to hold that constant, is there a way to think about with your internal projects and things like that, what kind of EBITDA growth rate for your earnings power in the Feed segment, what that could look like kind of over, I don't know, a 5-year period or what have you that you'd like to achieve?

You're going to have to own this one.

Yes. Look, I think -- well, you're really asking the question about as we generate cash, invest that capital in new projects, what kind of EBITDA is that going to generate. So what we've said so far is when it comes to our capital allocation, we're committed to paying down our debt below $3 billion, getting our debt leverage ratio down below 2.5 in a downside environment. That we've been really clear about that. we think we're going to be able to achieve that probably by the end of the calendar year. And at that time, that puts us in a position, if the outlook doesn't change to really look at a lot of different options, things we could consider shareholder investment type opportunities as well as potential growth. The extent to which that growth opportunity is, it's going to depend on what the cash outlook is at the time. What we haven't really done has gone public with what are exactly the projects, what are the expected returns from those things. As Randy said, I think one of the big changes that we see going forward is we will be more organic investment focused versus heavily acquisitive like Darling's history has represented. What's nice about those opportunities, though, is even though they take a little longer to develop, we're able to do that, building assets in places where they're complementary to our broader network, where 1 plus 1 can equal 3. And so we're confident that we're going to have opportunities to invest capital and get great returns from it. We just haven't outlined exactly what that's going to look like and how we expect it. But I would say this as well, we also have opportunities to invest in the collagen business. And that's a really exciting area of growth for Darling.

So I want to ask about that in 1 second. But first, I had a question on SAF and maybe how that has played out relative to your expectations? And then there was a comment about -- I know you're always asked about SAF 2, what have you, that you would need more market commitments. So I guess, -- can you kind of give us an update on the current SAF market and what you would need to see from here?

Yes. So we've got very different dynamics around SAF margins, whether it's to the European market versus the U.S. market. I think the European market is a mandated market. The U.S. market is a voluntary market. As a result of that, what we see in Europe is a lot of fluctuation between margin attractiveness comparing renewable diesel versus SAF, and that just depends on what the mandate is, what available supply is and how prices react to that. We've seen plenty of situations or periods of time where renewable diesel margins into Europe are more attractive than SAF. The United States is very different. It's a voluntary market. More than half of our sales are made into the United States. That is a market that prices at a premium to renewable diesel. So the margin attractiveness is more of a fixed position. We're happy with the volumes that we're selling today. And I think as it relates to future investment in SAF capacity at Diamond Green Diesel, we just -- we're interested in doing it, but it's -- the outlook is different than it was in the past, and we would need some assurances from an offtaker that they're there to take it at premiums that make sense to justify the investment.

You want to talk about book and claim and how that's developing a little bit.

Yes. And this is -- it's a nice evolution to the business. And what has been exciting to us is the buyers of SAF they're not airline, they're not you're -- who you typically think it would be. They're really large tech companies, companies that want to offset Scope 3 emissions. And so that opens up a much bigger market as those companies think about investing in anywhere in their business that requires energy consumption, they're looking to offset that with green energy or something else. And so that allows us to enter into more strategic discussions about how we can be a solution for them. And that's -- that would be our goal is that we have something that's longer in nature and more committed.

Yes, I would have thought 3 years ago that SAF was just really going to take off in the world. But when you look at an airline's cost structure, fuel is a big component of that variable cost, even a bigger one today. And so ultimately, we went ahead and kind of pre-engineered out some expansions there, spent some money, not a lot of money, but got them ready to where we -- if SAF did develop. And now what Bob's talking about is you're seeing a different discussion on book and claim, which would then put the fuel into the Jet A pool and the credit would be sold over here. And so that's a different thing. But RD margins today are very, very attractive along with the SAF, we're still getting the premium that we said we would and the return on the SAF unit that we built.

You've talked about $1 to $2 margins, which I understand kind of how you approach like, hey, wide range volatile we get it. We're not trying to guide really to DGD margins. But when we think about the cost position of DGD and those advantages and maybe how you think about framing for people, the margin potential in this kind of environment or the ranges, at least this level of that kind of thing. What -- how has that evolved maybe versus history? And where -- how do you think about that? How do you frame that?

And Bob and I'll kind of tag team this. It's -- like we said, it's a very volatile business, our partner doesn't guide in this area. It's not really material to them, but to our shareholders, it's very important. And so what we've always looked at when we built the system the investment case was about $0.79 a gallon. And so -- and clearly, with cost increases now that would probably move it into the 90s is what we would think. But as we look at the marketplace out there. When we saw a balanced system 3, 4 years ago, we ran margins in the $2.25 a gallon. And so then when we -- then you transition to the PTC and that takes a little bit of a way. And that's kind of where we said, given the RVO and where we see the industry having to run to fulfill it, and seeing our logistical advantage to both import and export, put it in the pipeline, make SAF, the arbitrages. We look at that thing and said, it should generate between $1 and $2 this year. And I suspect we'll see margin acceleration as we go through the year as the obligated parties and the compliance dates start to really align. I mean, you'll have to probably call Valero after this, but that's...

Okay. That was helpful. Shifting to Nextida. You've discussed some lofty goals on volumes and margins or mix by 2030. Can you maybe level set where that business stands today in terms of trials, the preparedness to start to accelerate towards those goals?

Yes. And once again, Bob can help me out here. I mean you're talking of the collagen peptides and then breaking the molecule down, everybody that goes to the grocery store and they see the word collagen out there and we're the leader in it globally. What we've done is separate the molecule down for targeted health and wellness applications. And we hold several patents on it, more patents to come in clinical trials, and it's nutrition, science-backed nutrition and wellness. The trajectory is pretty long. The portfolio is very broad. We've got a glucose control product out there today. Lots of different brands and orders in there. It's developing nicely. The -- and ultimately, when you start to operate in that health and wellness, you've now stepped down the supplement aisle, and that's pretty confusing down there. And in the world of unregulated supplements, you can pretty much say what you want to say. And so trying to differentiate yourself, I'll give you an example, Prevagen has been out there for 10 years. Our second product coming online now is going to be a brain health product. That should launch here later this summer, early next year. All backed by lots of science and very sophisticated clinical trials, and then there's a women's health and then there's hair, nail type products that will over the next 5 to 10 years. What's important to us is that, as we said, Bob talked about the product mix shift. 10 years ago, we were about 95% gelatin. Typical margin in gelatin is about $1 a kilogram or EUR 1 a kilogram, depending on what continent you're on. Hydrolyzed collagen. And if you think through the product line, Bob said water soluble. Gelatin is a thickener or a emulsifier used in food, pharmaceutical type of applications, then you get into water soluble. The breadth of application opportunities is just unbelievable. So you get into -- now you can go into bars, sports drinks, foods, et cetera. And now you take to the next level, what we call Nextida it for those, the peptide applications. But the margin structure because of the demand of the universe of opportunity is about 3x better. And then when you get into these targeted applications, you can be 7 to 11x better in different pricing. So as we move more of our product mix there, that's where we get really excited about what the collagen business can do for us globally. And we always get the question, where the hell does that fit with an animal byproducts company? Well, you got to remember, comes from a bone and a skin. And we're kind of the biggest in the bone and the skin business in the world. And ultimately, 80% of that extraction process then goes back to animal feed and animal fat. So you get the super high-value product and then you've got the other core ingredients. So ultimately, Andrew, we look at somewhere in the next 3 to 5 years, that will lead if we're successful, which I believe we will. We will lead to doubling the value or the earnings in the Food segment.

Have you been able to prove out that margin delta on -- at this early stage? Or is that like, hey, as we grow and -- sorry, go ahead.

Yes. I mean, we make a product today that's called Nextida GC, glucose control. That margin difference is proven today. But I just want to comment on something Randy said because he brought it back to kind of what makes this a simple story. We get we're told a lot that Darling is a really complex business, hard to understand. When you start talking about active peptides and molecules, that sounds pretty complicated. But as Randy said, it's really -- we're talking about animal byproducts. We are -- our raw materials at Darling, our animal byproducts and used cooking oil. There's more than 100 million metric tons of commercially available animal products, byproducts and used cooking oil in the world. And so there's a lot of supply. It starts with that. And then we add a lot of value through our different product mix. In this case, with collagen, there's a lot of science and R&D that's going into it. And yes, those margins that sort of 7 to 11x a gelatin margin that's already been proven out.

Doubling the Food segment, EBITDA is obviously very material. What needs to happen to start to see that mix shift really accelerate? Is it more products? Is it just kind of time? I guess, how should we think about that glide path, which I'm sure is not perfectly ratable, but how should we think about it?

I'll start with that. So...

You're going to own this one, too.

Yes, I guess. Yes. Thanks for that. with these types of products, typically, what we see is you start supplying a number of different consumer packaged goods companies, smaller, more entrepreneurial companies that are out there really pushing hard to get product on the market, educate consumers. That takes a bit of time. but it's a groundswell. And as the momentum develops, it moves quickly as time goes on. And so the answer to your question is, we need time. We also need a breadth [Audio Gap]

The companies as Bob talks about really are relying on these accelerator incubator companies now to do the kind of the little lift or the heavy lift and then to go. And we're just starting to see that right now with the GC product and when one of your biggest customers is basically a repacker in Boca Raton, Florida, but they're continuing to put orders in. And we're watching -- I think we had like 27 customers and 22 of them put second orders in now. And so we're getting the acceleration we want there. What we're seeing is the big CPG companies wanted more clinical data, more science back and we're providing that. So it's just -- it's a matter of time. I think we've gone to outside consultants to help us think through. We're pretty good at animal byproducts taking these type of specialty products into these markets is a little foreign to us. And so we're building the organization right now for those that are aware, we're moving the headquarters out of the Netherlands into Irving, Texas. And we'll be staffed out of there with brand managers and product line managers over the and it's already starting right now during Investor Day, we brought in one of our brand and marketing managers and just the number of products that we had on the table there to show people these applications is really exciting. I go back to the day of vital proteins, as everybody knows, that's been a very successful product. It was a start-up in Chicago. It was basically a product that we made in our Amparo, Brazil plant, a bovine grass fed collagen shipped in Super Saks to Chicago repack. They put the label on it. and the business grew dramatically. And it was -- the science behind it was the scientist Kurt was a runner from a NASA scientist and Kurt loved it to run and his joint started [ hurting ] he called and said, "Can I -- I've done my homework, can I get some collagen?" Came from us, and he built the company, and the rest is history now, and I watch that. And I go back, I can't -- it's hard for me. That was 10 years ago. And we've shifted our product mix now to where we're about almost 60-40 collagen where we're 95-5 over 10 years. I'm just trying to give a trajectory of what Nextida can do, and I think it will get some really, really good trajectory here over time.

Okay you talked a little bit about the inflection contributing cash to DGD now starting to get some of the distributions, the earnings environment, obviously getting much better. When you think about capital deployment, you've talked about cash returns to shareholders is kind of where does that sit in the priority set relative to organic growth? And do you have a preference for dividend, share repurchase? I guess, how do you think about that?

Yes. And what -- I think if we want people to leave today with one thought, okay, the reinvestment into the DGD over the last 10 years, that's done now. The marketplace is set up nicely with the RVO for the next couple of years. The core business is operating well. We've rightsized and fixed and the assets that were underperforming, protein market is strong in the world. The collagen business is strong. We are a cash generating unit now. The debt is coming down rapidly. It would -- depending on which one of our cycles you want to pick here. We've always said that we wanted to get below $3 billion. I think it's very doable by the end of the year. We want to have a strong financial policy at 2.5x. And then it's Bob's and my job to be with our Board and say, here's the next 3 to 5 years that we look out and say, okay, buybacks absolutely, we'll buy back our dilution every year, maybe return more, get comfortable doing that. Does it make sense to put a small dividend underneath this thing, 1.5% maybe. And then the organic growth, we can't -- we can do all of it. On the organic growth side, there's only so much you can do because of resources being people, time and equipment and permit to build a plant today is 3 years. It's not an immediate. If it's a plant is $100 million, it's $30 million, $30 million, $30 million. And so it allows us the flexibility now that we haven't had in the past. And as you look back, Andrew, what's different today than it was we did a slurry of about $3.5 billion, $4 billion of acquisitions. We didn't dilute anybody and issue equity because we said the balance sheet and our confidence in the business was going to be able to delever it. Maybe we didn't do it as quick as we wanted to because of the lapse in the RVO, but that's passed. And so it's different times for the company now.

Maybe I'll squeeze one more question in here. You talked about the current environment kind of implying something closer to the up cycle range currently based on based on where we are today, my comment would be it seems like over the next 2 years, it seems like fundamentals are pretty well set up to not materially fall off from there. So I guess what prevents that from playing out that way? What do you think is maybe the biggest risk that we should be on the lookout for?

Right now, I don't -- I'm looking at the world and we've digested the Iranian war unless something really happens there. What's Trump going to do with 301 tariffs, again, that just screws up trade flows. God willing, this Hantavirus thing goes away. But right now, the table is set. We're hitting on all cylinders. And clearly, we're on the up cycle or the high cycle of this thing. I don't like to call it a cycle because I think it's -- we're just really set up nicely here for the next several years. You start to say, well, 28th and then we get into another election year, we get into ultimately another RVO discussion. But I don't see there's any going back for the farm community now.

Great. We'll end it there. Thank you very much.