Financial Data and Key Metrics Changes - The combined adjusted EBITDA for the third quarter was $245 million, compared to $237 million in Q3 2024 and $250 million in the previous quarter [10] - Total net sales for the quarter were $1.6 billion, up from $1.4 billion year-over-year [10] - Gross margins improved to 24.7% for the quarter, compared to 22.1% last year [10][15] - Overall net income was $19.4 million for the quarter, or $0.12 per diluted share, compared to $16.9 million, or $0.11 per diluted share for Q3 2024 [16] 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 of $1 billion versus $928 million [10] - The food segment saw total sales of $381 million, higher than $357 million in Q3 2024, with gross margins at 27.5% compared to 23.9% a year ago [11] - The fuel segment, specifically Diamond Green Diesel (DGD), reported a negative EBITDA of $3 million for the quarter, down from positive $39 million in Q3 2024 [12] Market Data and Key Metrics Changes - Global rendering volumes and margins were up both sequentially and year-over-year, driven by strong demand for fats and proteins [6] - In the U.S., robust demand for domestic fats supported by strong agriculture and energy policy helped boost revenue and margins [8] - Export protein demand is showing signs of recovery, with slightly firmer pricing trends emerging [8] 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 [17] - The management believes that the integrated model of Darling Ingredients provides a competitive advantage that is unmatched in the industry [5] - The company anticipates a shift in public policy that will strengthen American agriculture and energy leadership, which is expected to enhance DGD's earnings potential [9] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the core ingredients business despite short-term challenges in the renewables market [5] - There is optimism regarding the resolution of regulatory uncertainties, particularly around the Renewable Volume Obligation (RVO) [22] - The management highlighted that the current uncertainty around public policy impacts the fuel segment, leading to a cautious outlook [17][64] Other Important Information - The company recorded an income tax benefit of $1.2 million for the quarter, yielding an effective tax rate of -6.3% [16] - Total debt net of cash was $4.01 billion, with expectations for a decrease by year-end as cash is generated from the core business [15] Q&A Session Summary Question: Timeline for clarity on regulatory items like RVO - Management expects clarity on RVO and related regulatory items by December, despite the government shutdown [22] Question: Outlook for feed segment in Q4 - Management indicated that while waste fat prices have dipped, they expect the food segment to be stronger in Q4, potentially meeting guidance [24] Question: Benefits of REMS policy protectionism on feed side - Management noted that the treatment of foreign feedstocks is still unclear, and the overall supply and demand for fats and oils will influence the feed business [28] Question: Factors driving improvement in feed segment margins - Management highlighted improved feedstock prices and strong demand for protein products as key drivers for margin improvement [42] Question: RIN pricing scenarios and industry outlook - Management indicated that RIN prices may need to increase by approximately $0.40 to incentivize production to meet mandates for 2026 [50] Question: Restarting DGD1 - Management stated that DGD1 will only restart when soybean oil margins are profitable enough to justify the costs [79] Question: Outlook for food segment - Management expects a stronger Q4 for the food segment, driven by a rebound in hydrolyzed collagen business and new product launches [82]