Good morning, everyone, and welcome to the Darling Ingredients Inc. Conference Call to discuss the company's First Quarter 2016 Financial Results. With us today are Mr. Randall Stuewe, Chairman and Chief Executive Officer of Darling Ingredients; and Mr. John Muse, Executive Vice President and Chief Financial Officer. After the speaker's opening remarks, there will be a question-and-answer period and instructions to ask question will be given at that time. This call is being recorded and your participation implies consent to our recording of this call. If you do not agree to these terms, simply drop off the line. I would now like to turn the call over to Melissa Gaither, Vice President of Investor Relations and Global Communications for Darling Ingredients. Please go ahead.

Thank you, Kerry. Good morning, everyone, and thank you for joining us to discuss Darling's earnings results for the first quarter 2016 ended April 2, 2016. To augment management's formal presentation, please refer to the presentation section of our IR website for earnings slide deck. Randall Stuewe, our Chairman and CEO, will begin today's call with an overview of our first quarter operational and financial performance and discuss some of the trends impacting our business. John Muse, Executive Vice President and Chief Financial Officer, will then provide additional details about our financial results. Please see the full disclosure of our non-U.S. GAAP measures in both our earnings release and at the end of the earnings slide presentation. Finally, Randy will conclude the prepared portion of the call with some general remarks about the business and the rest of the year ahead, after which we will be happy to answer your questions. For now, the Safe Harbor statement. This conference call will contain forward-looking statements regarding Darling Ingredients' business opportunities and anticipated results of operations. Please bear in mind that forward-looking information is subject to many risks and uncertainties, and actual results may differ materially from what is projected. Many of these risks and uncertainties are described in Darling's Annual Report on Form 10-K for the year ending January 2, 2016; our recent press release announced yesterday; and other filings with the SEC. Forward-looking statements in this conference call are based on our current expectations and beliefs and we do not undertake any duty to update any of the forward-looking statements made in this conference call or otherwise. With that, I would now like to turn the call over to Randy. Randall C. Stuewe - Chairman & Chief Executive Officer: Thanks, Melissa. Good morning, everyone. Thanks for joining us. As we…

We will now begin the question-and-answer session. Our first question comes from John Quealy of Canaccord Genuity. Please go ahead.

Hey, good morning folks. A couple quick questions here. Big picture first I guess. Randy, on the rebound in prices coming in March, I think many of us thought it was going to bleed in, you're going to be able to capture them a little bit better in Q1. Did that surprise you on the cadence on the pricing environment? I know on the call a couple of weeks back you were suggesting similar good movements, but it didn't capture the P&L. Did we miss it or what was lost there? Randall C. Stuewe - Chairman & Chief Executive Officer: No, that's a super fair question. We started to see the pricing improvement come through in the past (18:50). Like I said, it's a long tale when we've got a significant portion of our production going into Diamond Green Diesel. So that started to move up and we saw that translate into real P&L gains in the USA, but the proteins really went south on us hard in February. And frankly, at the end of the day I saw that the March average sales prices on a cash basis in the Midwest around $200 a tonne which takes you back to almost 2005 and decade-lows of that time. So the proteins caught me by surprise on how slow they were to react. We've now seen – obviously the world S&D change on protein and I'm talking specifically soybean meal. You see continued challenges and crop reduction estimates coming out of South America. And you've seen a rally here in April alone of around 30% to 40% in the soybean complex. So what I can unequivocally say here is, we've seen the protein prices on the USA side move back up to where they have a 3 in them (20:01) which is a 50% improvement, and you'll see that translate through. So, yeah, I'll give myself a little bit of a timing lag on the protein. The fat prices were starting to move, and then at the end of the day, they have really moved up substantially now. To me, and you asked on the surprise side, surprised also that I can see sales of used cooking oil now happening at equivalent to soybean oil. And I don't know that I've ever seen that in my career other than double counting went into Europe back in, I don't know, four year, five years ago.

That's helpful. Thank you. Two more. On the pet food, you talked about some mix hurting you, needing to go into different markets, but also for Kentucky, when it scales, some different perhaps feedstocks processes. Could you dive into that a little bit more in terms of the new CapEx in pet food and what you might need to reformulate? Randall C. Stuewe - Chairman & Chief Executive Officer: Yeah. Let me comment a little bit. Number one, these were two brand new plants that had to be approved. And so they were completed late last fall or mid last fall in order to get through the quality and certification processes that were necessary. The sales team did a nice job to put sales on out there. And at the end of the day, we fired up in January for fulfilling those sales and those orders were slow to come in Paducah. The plant, as I referenced, is working properly and really is a world-class facility. Orders are picking up now. So when you build a budget, build a plant and communicate, sometimes you divide by four and then talk about it from a linear perspective. So from that perspective, we're building momentum. I guess, we're a little bit of the new kid on the block and earning our stripes, in the sense, of getting to ship orders. But you're going to see nice improvement in Paducah in April, April-May, or in the second quarter; and going forward, I think, we'll be at run rate that we've communicated there. The Ravenna plant is a beef plant. Paducah is chicken for pet food. Ravenna is beef. We had some customer specifications change on us here, in the fourth quarter on us, and that has forced us to go back and spend about $1 million more to re-pipe and modify to make the products they want. The good news is that it's at equivalent or better margins as we were able to move pricing up. So getting a little later start there than what we had put in or communicated in the 10-K call or the March call, but very optimistic. From the standpoint of the other pet food businesses, so there's really the inclusion of the chicken grade or the dried chicken products that go into pet foods, just really at the end of the day, the market got a little bit of a seasonal slow January ramp-up. Fourth quarter, it kind of dried up, but January it would come in. And it did pick up momentum. It's running full now. So we've seen the spreads to, what we call, our premiums there rebound quite a bit. There's a lot of material in the world today. So those premiums are under just a little bit of pressure here in May. But at the end of the day, it's a much improvement from fourth quarter and picking up momentum.

Great. And then, lastly, back to Diamond; two real quick questions. Number one, dividend potential remaining of 2016 into 2017 given the expansion; I think you press released that you're going to put some of that back into CapEx? And then, secondly, your early thoughts or quick thoughts on OMB and the RVO, hopefully, in a couple weeks. Thanks, folks. Randall C. Stuewe - Chairman & Chief Executive Officer: Well, let's see. I think I'll talk a little bit, and John Bullock, if you'll step as you return from D.C. on that. I mean, from an additional dividend standpoint, we communicated in our press release that we're finalizing engineering and final cost estimates, labor markets move, and steel prices, et cetera and it really till you get through the final, final engineering. We did try to give people the estimate of how much it would cost to bring on that under 115 million gallons. And I think that's out there for you. And so, at the end of the day, until we see the final cost estimate to pull additional dividend out, like John referenced here, we've got the debt down to $89 million. They're still – we're going to build cash down there pretty nicely as margins are improving and our ability to access the LCFS market is improving down there. And so I think as we get towards the end of the year, we'll just see where we're at and forecast going forward. From John, from a mandate, you came back from D.C., what you learn, anything? John Bullock - Chief Strategy Officer & Executive Vice President: Well, as we all know, the EPA has sent the rule over to OMB, which is the final step of the rule-making process. And OMB is in the process of reviewing it. They're having interested stakeholder meetings last week and this week. And so I would anticipate that some time relatively soon. Now, what that means exactly? I'm not sure. But certainly, by the middle of June, I would anticipate that they would be out with the 2017 advanced biofuel mandate, and the 2018 biomass-based diesel mandate. I think the feeling that most folks have is that they're going to continue to increase those mandates, we don't know how much; but I think they probably will increase those mandates. But I don't sit on the decision-making chair for either EPA or OMB. But the signs seem good, we will continue on a path of expanded mandates.

Our next question comes from Adam Samuelson of Goldman Sachs. Please go ahead. Adam L. Samuelson - Goldman Sachs & Co.: Great. Thanks. Good morning, everyone. Maybe continuing on the discussion about the RVO, and Randy, John, maybe interested to get your thoughts on kind of where we are sitting here mid-May towards compliance of 2016 and thoughts on the RIN market here. It seemed like the RIN generation to-date posted before end of the fixed level (26:11) is trailing kind of the total 2016 RVO targets. And do you have any thoughts on where that RIN bank could sit by the end of the year? Thanks. John O. Muse - Chief Financial Officer & Executive Vice President: I think when the EPA – this is John, when the EPA released the final rule for 2016 for both advanced biofuels and for the biomass-based diesel, their intent was to try to keep the market snug, but not red hot. And it certainly looks like from the early production levels that that's probably where we are as we begin the year. Obviously, all we've done is in the first quarter at this point in time, so things can change. But at this point in time, it looks like we will be pretty well balanced from a supply/demand standpoint on D4 and D5 advanced biofuel and biomass-based diesel. And then we'll wait to see what they do on the advanced biofuel. One of the things that was important about what the EPA did in the last rule-making is that they really jumped up the advanced biofuel category from 2015 to 2016. And that presents a tremendous opportunity for biomass-based diesel as really the only other product that can fulfill that advanced biofuel bucket is ethanol, sugar-based ethanol. And as we all know,…

Our next question comes from Heather Jones of BB&T. Please go ahead. Heather Lynn Jones - BB&T Capital Markets: Good morning. Randall C. Stuewe - Chairman & Chief Executive Officer: Good morning, Heather. Heather Lynn Jones - BB&T Capital Markets: So sticking with the pet food discussion really quickly, so Ravenna, the Ravenna plant, when do you expect that to be producing at original expectations? John O. Muse - Chief Financial Officer & Executive Vice President: Heather, this is John. We'll complete the revisions from a process standpoint here in May and then we'll be bringing the plant on a revised operational basis up here in June. So I would anticipate Q3 is when you would see Ravenna back on line where we thought it was going to be at the beginning of the year before we changed our specifications. Heather Lynn Jones - BB&T Capital Markets: Okay. And, Randy, in the past you've talked about sometimes how the cash markets can differ significantly from what we see in the quoted market. So I just want to make sure what we're seeing is similar with what you're seeing. You mentioned the spread between feed and pet food contracting some sequentially, but we're showing that on a year-on-year basis is much better, I mean, almost – well, double what it was a year ago. And so, I was wondering if that's consistent with what you're seeing. Randall C. Stuewe - Chairman & Chief Executive Officer: Yeah. I mean – that's right, always a difficulty of describing. We try to put a trade index out there using the Jacobsen and whether or not you're using the Mid-South or the Georgia spreads, it is better than it was a year ago. The problem with it is, is that there continues to be a…

Our next question comes from Dan Mannes of Avondale Partners. Please go ahead.

Thanks. Morning, everybody. Randall C. Stuewe - Chairman & Chief Executive Officer: Morning, Dan.

Hey, I want to follow on the topic on the pricing lag. Obviously, we did see the big move up in pricing in the latter part of the quarter. Can you maybe walk us through your forward-selling and the timeline for realizing price maybe by end markets or breaking it down between fats, proteins and then bakery? Like how quickly we should see pricing start flowing through? Randall C. Stuewe - Chairman & Chief Executive Officer: Yeah. I'll talk about fats and proteins. Bakery has been pretty flat here, pretty much performing where we expect it to at these levels. But remember, the fats, we've always talked about somewhere between 40% and 50% of our production heads down to Diamond Green Diesel. And that's pretty much on – because of the supply chain, you got anywhere from a 45-day to 60-day forward book on there. So, that will start to flow through. Now, the good news is, that comes positive to us but that rate is the price then to Diamond Green. It allows me to stand on my soapbox, again, and say that's the reason we built it, to offset the ebbs and flows here. The proteins side, Dan, you've got the – you've basically got a couple different programs that happen in the U.S. You've got the ruminant or meat proteins that tend to be both consumed in the U.S. and then you have to get a significant portion of them, anywhere from 20% to 40% of them, out of this country because there just isn't adequate demand anymore. So, on the export side, you can have anywhere from 45 days to 60 days of forward sales to balance your demand book on that. The poultry proteins, for the most part, stay within the 30-day, 45-day period there. So, really, at the end of the day, like I'm really just trying to be very open and transparent on, meat and bone meal in the Midwest in March traded on a cash basis around $200 at the plant. And now it's up at $275, $300 in April and we should see a little bit more strength even in May. So that's kind of how it flows through. So 60 days on a majority of fat, anywhere from 30 days to 45 days to 60 days on the protein, and the protein exports are 45 days to 60 days out because of both containerization and the export books.

Yeah. The only follow-up I would make there is particularly as it pertains to proteins is historically you've commented that proteins is where you have your least amount of non-formula business. So, while pricing does get better, and I'm sure it helps you around the edges, I would think the bigger price advantage to you from a bottom-line perspective is really on the fat side. Randall C. Stuewe - Chairman & Chief Executive Officer: Oh, absolutely. John is over here, just shaking his head going, oh, yeah, oh, yeah. So, that's especially true in the USA that you will see the bigger bump coming from the fat price move up, that transitioned, or translated from March to April here. And I will tell you in the preliminary April results, all of the fat benefit hasn't even come through yet. That's still part of the supply chain lag that happens.

Got it. Two more follow-ups. One is on California, can you talk at least currently about what your pathway is there? What progress you've made in terms of ultimately delivering? And third of all, have you worked through the economics on delivery, and if at all you would need to share any part of the credits with a potential blender? John O. Muse - Chief Financial Officer & Executive Vice President: This is John. We are shipping product to California from Diamond Green Diesel. We have approved pathways. We've had them for a while. I know they don't appear on the California website, Dan, you've asked that question. But that's simply because California has a verification process on pathways where you have to submit pictures of loading the ships and so forth, the way you said you were going to load them, and then they go through the review process on that. You're approved prior to when they go through that review process. Once they go through that process, then they are posted on the website. So, Diamond Green Diesel has all the pathways that it needs to be able to go to California. And we are shipping product to California. How the economics of sharing that green premium, the credit, the market is still in flux on that, on how that's going to work. It's brand new. They just reinstated the LCFS here late last year. And I think we'll see that move around over a period of time. It is important to note, though, that from Diamond Green Diesel's perspective, all of our existing long-term contracts end at the end of 2017. So, as when we go into the 2018 timeframe, we will have all of the supply chain capabilities we need and total contract freedom at that point in time to move every gallon of Diamond Green Diesel's production to the LCFS markets. And frankly, that's where we anticipate every gallon will go.

Got it. I guess my comment as it related to the sharing was I guess I wanted to understand you have an advantage in terms of having a much lower cost of blending since you're basically a homogenous product with the existing market, vis-à-vis biodiesel which obviously the blenders seem to want to take significant toll on before blending that product. So, I guess I wanted to understand maybe your advantage there as it relates to being able to retain more of the green premium. John O. Muse - Chief Financial Officer & Executive Vice President: We have none of the issues associated with the margins that the blenders want to take that the biodiesel industry faces.

Got it. John O. Muse - Chief Financial Officer & Executive Vice President: Well, the fact of the matter is that's not going to be a concern for marketing renewable diesel into California. Randall C. Stuewe - Chairman & Chief Executive Officer: And then, Dan, this is Randy, and just to fill in a little bit. I mean, obviously, we always remind people that Diamond Green was a predecessor of the LCFS, and thus, the marketing strategy and deals that were put in place were for road fuel. And so we're in the process of transitioning the barrels that were headed to road fuel, where we can arbitrage the contract back to the LCFS. And I think, by 2016, near back-half 2016, early 2017, a greater portion of our barrels there will be headed to California than there are today. So, I don't want to give a number there because I don't know the number. But it's clearly an effort that's being put forth.

Got it. And my final question is just given the meaningful improvement you've seen in UCO pricing and your comment about trading at parity with SBO. Can you talk at all about the competitive environment on the collections side, and maybe anything you've done in order to protect your share here so you're able to capture the up – you're able to maintain a volume in light of what's likely to be a more competitive environment? John O. Muse - Chief Financial Officer & Executive Vice President: Yeah, Dan. Yeah, we've been working on, essentially, revamping our restaurant services organization for over a year now with an emphasis on putting more tanks inside of restaurants as opposed to the outside. I think, you're absolutely right, with higher prices, we'll see some of the stealing that we saw historically in this business come back. It weather is a little nicer. It's a little easier to drive your truck around at night and steal grease. And so we'll see some of that but we have been working and preparing, quite frankly, before we knew the LCFS was going to be a big driver to us, to make sure that we could protect our volumes and try to expand our volumes, because we have the perfect vertically-integrated supply chain right now to be the person that's in best position to be able to pick that used cooking oil up in the restaurant. So, we are working on that. Randall C. Stuewe - Chairman & Chief Executive Officer: And I think, Dan, that's what, I think, from a standpoint of -John has taken on a leadership position in that area with Todd Mathes and they've done a nice job of, I look back in the hide (49:05) of 2010, 2011, 2012 as I was doing some comparisons the other day. And we've actually been able to grow our volume now in 2016 anywhere from right at 20% to 30% of new volume out there. So we've got a very effective go-to-market strategy program. Clearly, it's turning back into liquid gold as both you and Heather pointed out. We'll do our best to guard the fort and the safe here (49:34). But at the end of the day, our volumes are way up from where they were and our programs are much different than where they were. And John's been able to widen the margins and so you'll start to see that benefit, I think, truly flow through here.

Got it. Thanks so much guys.

Our next question comes from Ken Goldman of JPMorgan. Please go ahead.

Good morning. It's Tom Palmer on for Ken. Thanks for taking my questions. First, I just wanted to clarify something you touched on a bit earlier. In the fourth quarter, you noted that formula lags hitting (50:09) or EBIT in the Feed segment by between $7.5 million and $10 million. It sounds like impact in first quarter was pretty neutral. As we look at the second quarter, do we see a reversal and probably see some degree of boost from those formula lags? Randall C. Stuewe - Chairman & Chief Executive Officer: The answer is clearly, there's a lag. And let me – obviously, when you get into a situation of two things. One, when you got prices running up and you're buying off of the sheet for a portion of your business or the trade indices, you're in a case where you're sold 60 days forward, you're buying at a higher price this week and putting it in, it's the lower price that you've got on the books. So you always have to work through that. That's what you saw the lag in the fat prices that were under contract with a rapidly escalating market here towards the end of March. In the proteins side, you had some forward sales that were higher and then they went down much deeper and lower. And so you've got lag, once again, on the way back up. But as I've said here, Tom, and I hope I'm clear about it, we've seen fat prices come up rapidly here in April. We'll see them come up even more in May as they translate through the USA P&L. I mean, the international side is very consistent. And then in the proteins side, we've seen a 50% improvement in cash selling prices on the meat and bone meal side throughout the Midwest here. So that'll translate through in that. And then, additionally, from the fat price standpoint, remember, we always talk about – and John Bullock was on with the Restaurant Services business, that every penny a pound of price escalation that you see in the used cooking oil business, translates back to around $4 million to $4.5 million of recognizable EBITDA to the USA business and that hits the Feed segment. So you will see a pretty nice bump in Q2 with a lot of that coming from just straight used cooking oil and then additionally from the USA red meat rendering side of the business as those protein prices improved.

Okay. Thank you for the clarity. Just one more. You touched on this in the prepared remarks, but I was just looking for a little bit more clarity. Last quarter, you indicated Food segment might have been aided a bit by pull through from the first quarter such as the timing of the New Year – the Chinese New Year. But it looks like – I mean, 1Q was really strong and more comfortable to that fourth quarter than perhaps we'd expected. Were there areas that were stronger than you had initially anticipated and could you touch on those? Randall C. Stuewe - Chairman & Chief Executive Officer: Yeah, the Food segment is clearly, remember, one that was completely acquired with the VION acquisition. And it's made up – really it's anchored by the gelatin business and the edible fats business. And a couple of things; so the gelatin business remains robust. I mean, clearly in Q1, we had a little bit of – the Chinese New Year was a little bit later this year. At the end of the day, as we followed on, volumes remained strong and rebounded nicely throughout the balance of the quarter. Europe remained strong. In the U.S., we brought on our new major customer and our expansion in Dubuque, Iowa. And then we saw our margins improve in South America, driven by the raw material availability and the currency translation. So from a ruse oil (53:55) perspective, the four continent system just continues to perform very, very nicely for us. Traditionally, we see a little bit of seasonality in second quarter but right now, at – preliminary April, we have pretty good system that's still running at capacity out there. Now, on the edible fats side, you saw what? You've seen a decline in palm oil supplies in the world. So palm oil prices have rallied rapidly throughout February. I think the Malaysian stocks are now at lowest since a year, two years ago or whatever. But at the end of the day, animal fats are sold against the hard fats into the edible and industrial market in Europe predominantly. And so, we had a little bit of a widening of margins there that happens for us when palm oil moves up and animal fats don't react quite as quick there. So we had some positive things there. And I think for second quarter, we see pretty much more of the same coming on in the Food segment for right now.

Great. Thanks, guys. Randall C. Stuewe - Chairman & Chief Executive Officer: Yeah.

Our next question comes from the Ken Zaslow of BMO Capital Markets. Please go ahead.

Hi. This is Patrick Chen on for Ken. Just a quick question. Do you still expect to hit the $450 million to $500 million full year EBITDA mentioned in the last call? I mean, it seems like Food is the only segment that performed (55:21) relative to your expectations and it'd likely rebound going forward. So can we expect performance later on the year to offset the 1Q weakness given higher fats, grease, protein prices? REGI has Geismar plant coming back on line and higher seasonal (55:39) of production. Randall C. Stuewe - Chairman & Chief Executive Officer: I don't know that I drill all those in there, Patrick. But I think what we're trying to say to people is number one; I think you've got an improved run rate. And clearly, if the prices hold that we're seeing right now in the USA, the Food segment remained strong. Europe and Canadian rendering remained strong and we don't have anything negative hit us in the biodiesel side within North America. Yeah, I think, we're clearly on that run rate and what we can see clearly here in second quarter and the start of April supports that. And I think – but I mean if you look back here, back when we talked to you in March, I think the soybean meal was $260 a ton, and now, it's $360 a ton. So there are some things that have moved pretty rapidly out here that look fairly positive right now for what we're doing. And yeah, it's kind of hard not to say that that isn't the run rate you'd be on, possibly, more towards the higher side there.

Great. And switching gears a little bit to the DGD expansion, how do you foresee that affecting fats increasing supply/demand? I mean, it's about a year, year-and-a-half, two years out, but will fats supplies grow in line with your expansion or will there be a tightening of supply chain? Randall C. Stuewe - Chairman & Chief Executive Officer: Well, I think we've always talked that the product mix found there today is roughly 40% Darling's mix, which is a huge portion of used cooking oil going in there, a little bit of animal fat out of the Darling system and then, 40% corn oil, when it's available and then 10% other stuff; and other stuff being poultry fats. Poultry fats traditionally and typically have not had the profiles that we want to run through that plant. They tend to carry metals in the feedstock. So we do have some approved poultry suppliers, but not a lot in there today. As we move forward, clearly, there is not enough used cooking oil in the United States to support the next 1 billion pounds of fat that's going to need to go in there. So the reality is it'll come out of the animal fats side and it'll come out of what we call the high acid, low grade animal fats that are in animal feed today, and not being run down there. And, as John Bullock said, between corn oil, used cooking oil and then animal fats, those are your carbon intensity premium products and that's what will be put down there. So, I think, at the end of the day, it should firm animal fats, but what the heck do I know. That's a year away yet. So...

Appreciate the color. Thank you. Randall C. Stuewe - Chairman & Chief Executive Officer: Okay. Thanks.

And this concludes our question-and-answer session. I would now like to turn the call back over to Randall Stuewe for any closing remarks. Randall C. Stuewe - Chairman & Chief Executive Officer: Okay. Thanks, everyone. Q1 is in the record books. Q2 looks to have some really good momentum here and we look forward to talking to you here in August. Thanks again.

The conference is now concluded. Thank you for attending today's presentation. You may now disconnect your lines. Have a great day.