Release Date: February 06, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Q: How does the 45Z tax credit benefit Darling Ingredients, and what makes it advantageous for the company? A: Robert Day, Chief Strategy Officer, explained that the 45Z tax credit is beneficial because it is a CI score-adjusted tax credit eligible only for US biofuel producers. Darling Ingredients produces the lowest CI score feedstocks, such as global animal fats and US used cooking oil, making it well-positioned to benefit. Diamond Green Diesel, a joint venture, also stands to gain due to its ability to process low CI score feedstocks.
Q: Can you elaborate on the strategic shift towards producing more Sustainable Aviation Fuel (SAF) versus Renewable Diesel (RD)? A: Matt Jansen, Chief Operating Officer, North America, stated that Darling Ingredients is exploring opportunities to increase SAF capacity following the successful start-up of their first SAF line. The company is considering expanding SAF production either at the existing Port Arthur facility or elsewhere, driven by the growing demand and successful initial operations.
Q: What is the outlook for the dividend from the Diamond Green Diesel joint venture in 2025? A: Brad Phillips, Chief Financial Officer, indicated that the joint venture is debt-free, which should lead to increased distributions. The company expects distributions in 2025 to be greater than in 2024, supported by strong momentum and the monetization of PTC credits.
Q: How is the company addressing the challenges and opportunities presented by the 45Z tax credit from a macro perspective? A: Robert Day noted that the 45Z tax credit introduces complexity in compliance and certification, which may challenge some companies. However, Darling Ingredients and Diamond Green Diesel are well-prepared to navigate these challenges, which could lead to lower biofuel production and increased RIN and LCFS credit values.
Q: What are the company's plans for capital expenditures in 2025, and how does it compare to 2024? A: Randall Stuewe, CEO, stated that capital expenditures are expected to increase to approximately $400 million in 2025, up from $333 million in 2024. This increase includes growth CapEx for debottlenecking and greenfield projects, with a focus on maintaining financial discipline and supporting future growth.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
This article first appeared on GuruFocus.Disclaimer: Investing carries risk. This is not financial advice. The above content should not be regarded as an offer, recommendation, or solicitation on acquiring or disposing of any financial products, any associated discussions, comments, or posts by author or other users should not be considered as such either. It is solely for general information purpose only, which does not consider your own investment objectives, financial situations or needs. TTM assumes no responsibility or warranty for the accuracy and completeness of the information, investors should do their own research and may seek professional advice before investing.