Financial Data and Key Metrics Changes - The combined adjusted EBITDA for the third quarter was $245 million, compared to $237 million in the third quarter of 2024 and $250 million in the previous quarter [8][10] - Total net sales for the quarter were $1.6 billion, up from $1.4 billion year-over-year, while gross margins improved to 24.7% from 22.1% [8][10] - Overall net income was $19.4 million for the quarter, or $0.12 per diluted share, compared to net income of $16.9 million, or $0.11 per diluted share for the same quarter last year [15] Business Line Data and Key Metrics Changes - In the feed segment, EBITDA improved to $174 million from $132 million a year ago, with total sales reaching $1 billion compared to $928 million [9][10] - The food segment saw total sales of $381 million, higher than $357 million in the third quarter of 2024, with gross margins increasing to 27.5% from 23.9% [9][10] - The fuel segment, specifically Diamond Green Diesel (DGD), reported a negative EBITDA of $3 million for the quarter, down from positive $39 million in the third quarter of 2024 [10][12] Market Data and Key Metrics Changes - Global rendering volumes and margins in the feed segment were up both sequentially and year-over-year, driven by strong demand for fats and proteins [5][6] - Export protein demand is showing signs of recovery, with slightly firmer pricing trends emerging, although tariff implications have impacted value-added poultry protein products [6][9] - The renewables market continues to face headwinds, with higher feedstock costs and lower RINs and LCFS pricing impacting margins [7][10] Company Strategy and Development Direction - The company is focused on its core ingredients business, expecting EBITDA for 2025 to be in the range of $875 to $900 million, excluding DGD [16] - Management believes that the integrated model of Darling Ingredients provides a competitive advantage that is unmatched in the industry [4] - The company is optimistic about the future, anticipating that public policy changes will strengthen American agriculture and energy leadership, which will enhance DGD's earnings potential [7][16] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the core ingredients business despite short-term uncertainties in the renewables market [4][16] - The company is optimistic about the upcoming clarity on regulatory items, including the Renewable Volume Obligation (RVO) [20] - Management noted that the current uncertainty around public policy impacts the fuel segment, but they remain focused on what they can control [16] Other Important Information - Total debt net of cash was $4.01 billion, with a minimal increase from $3.97 billion at the end of 2024 [14] - The company recorded an income tax benefit of $1.2 million for the quarter, yielding an effective tax rate of -6.3% [15] - The company expects to generate around $300 million in production tax credits in 2025, with significant sales anticipated in the fourth quarter [12][13] Q&A Session Summary Question: Timeline for clarity on regulatory items - Management expects clarity on RVO and exemptions by December, amid ongoing government shutdown [20] Question: Feed outlook for the fourth quarter - Management indicated that while waste fat prices have dipped, they expect the food segment to be stronger in Q4, with a narrow range for the business [21][23] Question: Benefits of REMS policy protectionism - Management noted uncertainty around how the EPA will treat foreign feedstocks, which will depend on various factors [26][28] Question: Drivers of DGD margins - Management clarified that DGD results were not as good as hoped, and the capture rate was affected by LCM accounting practices [29][30] Question: Outlook for the feed segment going into 2026 - Management expects continued improvement in feed segment margins, driven by protein price recovery and strong demand [35][37] Question: RIN pricing scenarios - Management indicated that RIN prices need to increase by approximately $0.40 to incentivize production to meet the 2026 mandate [43][44] Question: Debt repayment plans - Management confirmed they are committed to paying down debt and expect their debt coverage ratio to be around three times by year-end [45][46] Question: DGD1 restart conditions - Management stated that DGD1 will only restart when soybean oil margins are profitable enough to justify the catalyst costs [70][72] Question: Food segment outlook - Management expects a stronger Q4 for the food segment, with a rebound in hydrolyzed collagen business and new product launches [73][75]

Core Viewpoint - Calumet, Inc. has successfully received full or partial exemptions for all petitions filed with the EPA from 2019 to 2024, significantly reducing its Renewable Identification Number (RIN) liability from 396 million to 89 million RINs, which is a substantial relief for the company and the renewable fuels industry [2][3]. Company Summary - Calumet, Inc. manufactures and markets a diverse range of specialty branded products and renewable fuels across various consumer and industrial markets, operating twelve facilities in North America [4]. Industry Impact - The EPA's recent ruling is seen as a positive step towards resolving the historical backlog in the renewable fuels industry, providing clarity and supporting the role of small refiners and biofuels in enhancing America's energy independence [3].

Financial Data and Key Metrics Changes - The company reported a 29% increase in annual revenue and a 38% increase in adjusted EBITDA for 2024 [7] - Fourth quarter results showed a 21% increase in revenue and a 59% increase in adjusted EBITDA [8] - Gross margin for the quarter was 12.5%, significantly lower than expected due to unanticipated cost overruns impacting gross profit by approximately $20 million [22] Business Line Data and Key Metrics Changes - Revenue from the projects business grew by 21%, reflecting a consistent focus on execution and backlog conversion [20] - Energy asset revenue increased by 31%, driven by a greater number of operating assets [21] - O&M revenue grew by 9%, with strong performances from off-grid PV and consulting businesses contributing to a 14% increase in other business lines [21] Market Data and Key Metrics Changes - The total project backlog increased by 24% year-over-year to a record $4.8 billion, with a contracted backlog growth of 92% [8][26] - The company generated over $250 million in revenue from its expanding European business in 2024 [19] Company Strategy and Development Direction - The company aims to continue leveraging its diversified and resilient business model to manage through challenging environments [17] - There is a focus on long-term demand from federal agency customers, particularly for secure and reliable power solutions [17] - The company is expanding geographically, with operations now in every U.S. state, Canada, the U.K., and growing in Continental Europe [19] Management's Comments on Operating Environment and Future Outlook - Management acknowledged challenges from two large legacy projects that impacted results but believes the financial impact is largely behind them [10] - The company is closely monitoring changes in federal policies and anticipates potential delays but remains confident in the demand for its services [12][17] - The guidance for 2025 reflects an unpredictable political and regulatory environment, with revenue expected to be $1.9 billion and adjusted EBITDA of $235 million [34] Other Important Information - The company ended the quarter with approximately $109 million in cash and reduced total corporate debt to $243 million [27] - The company anticipates placing approximately 100 to 120 megawatts of energy assets in service in 2025, including 1 to 2 RNG plants [34] Q&A Session Summary Question: Customer Conversations Since January - Management noted that activity remains strong, especially in the federal sector, with several active RFPs despite some slowness in civilian projects [50] Question: Deployment of Energy Assets in 2025 - Management indicated that supply chain issues could affect deployment but overall market conditions remain favorable [53] Question: Pause in ESPC Projects - The pause is specific to GSA projects due to asset evaluations, but management expects continued value from energy savings performance contracts [58] Question: Guidance and Federal Revenue Assumptions - Management clarified that federal revenue is included in the 2025 guidance, with a focus on 12-month contracted projects [98] Question: Impact of EPA Staffing Cuts on RNG - Management expressed confidence in the certification process for RNG plants, noting a supportive regulatory environment for biofuels [106]