Betty Zhang

Betty Zhang asked about expectations for core EBITDA for the rest of the year, noting Q1 looked softer but Q2 was set up to be better with fat prices recovering, and inquired about the second half outlook. She also sought more color on the restructuring and impairments, asking if it reflected a change in strategy and if other businesses might be reviewed.

Answer

Randall Stuewe, Chairman and Chief Executive Officer, clarified that Q1 is not softer due to the 13-week period and winter challenges, but is 'very solid.' He expects the year to improve, building momentum from Q1, contingent on the RVO, with soybean oil futures projecting a strong RVO providing tailwinds. He hopes for a better year than 2025. Regarding restructuring, Mr. Stuewe stated it does not reflect a change in operating strategy but rather a periodic review of the portfolio to ensure desired returns and market position, expecting materialization of asset sales in Q1 or early Q2.

Betty Zhang asked about expectations for core EBITDA for the rest of the year, noting Q1 looked softer but Q2 was set up to be better with fat prices recovering, and what the second half might look like. She also inquired if the restructuring and impairments reflected a change in strategy and if other businesses could be reviewed for similar actions.

Answer

CEO Randall Stuewe clarified that Q1 core EBITDA was not softer when adjusted for the 13-week period and winter challenges, and the company expects to build momentum through the year, potentially leading to a better year than 2025, contingent on the RVO. He stated that restructuring and impairments do not reflect a change in operating strategy but rather a periodic review of the portfolio to ensure desired returns and market position, with potential asset divestitures in areas where Darling cannot be a top player.

Betty Zhang asked about the updated core EBITDA guidance of $875-$900 million, reflecting on how the year played out compared to earlier expectations, and if the 12-13% growth seen this year is comparable for 2026. She also inquired about the drivers for the higher gross margin and segment earnings in the fuel ingredients business (excluding DGD) quarter over quarter.

Answer

Randall Stuewe (CEO) clarified that the guidance is for the three core segments net of DGD, and it's difficult to provide DGD guidance due to uncertainty. He indicated that core ingredients look similar to stronger for 2026, with guidance to follow RVO publication and Q4 earnings. Randall Stuewe (CEO) and Robert Day (CFO) explained that the fuel ingredients business (excluding DGD) is primarily mortality destruction in Europe (green gas business), which fluctuates with the RENDAQ business, and strong energy prices contributed to higher gross margins.

Betty Zhang of Scotiabank directly asked for a specific EBITDA range for Darling's core business for the full year 2025.

Answer

CEO Randall Stuewe provided a range of $900 million to $1 billion for the core ingredients business. He clarified that the high end of this range assumes fat price benefits flow through but the RIN market does not significantly react. If RINs were to recover, the total company EBITDA would be substantially higher due to increased profitability at DGD.

Betty Zhang of Scotiabank asked for the amount of the Producer's Tax Credit (PTC) recognized in Q1 and inquired about the future capital allocation split between share buybacks and debt repayment.

Answer

An executive stated that the company was able to realize the PTC on roughly one-third of its Q1 volume, with more detail to be provided in the upcoming 10-Q filing. CFO Bob Day reiterated that the primary focus remains on paying down debt, although the company will opportunistically repurchase shares to offset dilution. The 'lion's share' of capital, however, is directed towards debt reduction.

Betty Zhang inquired about Darling's opportunities in Renewable Natural Gas (RNG), including feedstocks and competitive advantages. She also asked for details on the 2025 CapEx increase to approximately $400 million.

Answer

CFO Bob Day explained that Darling has an existing RNG business in Europe and sees growing U.S. demand, where it can leverage its access to waste streams. CEO Randall Stuewe clarified that the $400 million CapEx for 2025 includes growth and debottlenecking projects that were deferred from 2024 to prioritize deleveraging, not due to underinvestment in assets.

Betty Zhang asked about ExxonMobil's evolving conversations regarding power contracts, specifically in light of Google's recent deal with a gas power plant and carbon capture, and whether ExxonMobil has an appetite to offer traditional power before adding carbon capture capabilities.

Answer

Darren Woods, Chairman and CEO, confirmed strong engagement with hyperscalers but reiterated ExxonMobil's focus on carbon capture and carbon-abated power, not traditional power generation. He explained their value proposition involves providing decarbonized natural gas to power stations and capturing over 90% of emissions for low-carbon data centers. He highlighted their existing infrastructure, know-how, and secured locations, expressing optimism about future contracts and partnerships with independent power producers.

Betty Zhang referenced Google's power contract with a gas power plant and carbon capture, asking about ExxonMobil's evolving conversations with hyperscalers. She inquired if there's an appetite to offer traditional power first, then add carbon capture capabilities, given growing power demand.

Answer

Darren Woods, Chairman and Chief Executive Officer, confirmed engagement with hyperscalers but reiterated focus on carbon capture and carbon-abated power, not traditional power generation. He highlighted the value proposition of providing decarbonized natural gas to power stations and capturing emissions to offer low-carbon data centers, leveraging existing infrastructure and technology.

Asked about the company's strategy for balancing investment between upstream RNG production and downstream fuel distribution, and also requested an update on the current state of the voluntary carbon markets.

Answer

The company evaluates upstream and downstream investments based on both their standalone risk-adjusted returns and their synergistic benefits to the overall portfolio, seeing good opportunities on both sides. The voluntary market is currently described as 'quiet,' with the transportation fuel market continuing to offer the best value and returns for their RNG molecules.

Betty Zhang inquired about how Opal Fuels balances investment and growth between its upstream RNG production and downstream fuel distribution segments. She also asked for an update on what the company is seeing in the voluntary carbon markets.

Answer

CFO Kazi Hasan explained that investments are evaluated on both standalone risk-adjusted returns and their synergistic value to the entire portfolio. Co-CEO Adam Comora added that while large upstream projects meet investment criteria, the company also likes the Fuel Station Services business and is allocating more capital to it. Regarding voluntary markets, Adam Comora described them as 'a little quiet,' stating that the transportation fuel market continues to provide the best value for OPAL's RNG molecules, though the company remains flexible and will evaluate other markets as they materialize.

Betty Zhang asked if the higher expected Amazon warrant charge reflects increased fueling demand and inquired about progress on the RNG projects currently under construction.

Answer

CFO Robert Vreeland confirmed the higher warrant charge is due to increased fueling demand from Amazon. President & CEO Andrew Littlefair elaborated on project status, noting that six completed projects are in a ramp-up phase, the 100%-owned Texas project is in commissioning, and the large Idaho project is nearing mechanical completion. Both Texas and Idaho are on schedule to produce RNG by year-end, while the Moss Energy projects have begun construction.

Betty Zhang inquired about Clean Energy's current stance on M&A versus organic growth and asked if the full-year 2025 volume target of 246 million gallons is still achievable after the Q1 results.

Answer

President and CEO Andrew Littlefair explained that the company is being very careful with capital and is more interested in acquiring nearly complete RNG projects than pursuing new greenfield developments at this time, though no deals have been made. He stated that while they may not hit the 246 million gallon target exactly, they will be close, and he expects the company's financial performance to be strong regardless.

Betty Zhang asked for a breakdown of the 25 fleets adopting the X15N engine between existing natural gas users and those new to the fuel. She also requested an explanation for the higher-than-expected income tax charge in the quarter.

Answer

President and CEO Andrew Littlefair estimated the split is roughly 50-50 between existing natural gas fleets and fleets new to the fuel, expressing hope that the mix will shift toward new fleets as the market grows. Executive Robert Vreeland explained the tax provision was a non-cash expense resulting from standard tax accounting, specifically related to 163J interest deduction limitations creating deferred tax liabilities not covered by deferred tax assets.

Betty Zhang requested more detail on why the Idaho RNG project is incurring operating costs during its construction phase and asked for clarification on the drivers behind the company receiving a greater share of RINs.

Answer

Executive Robert Vreeland explained that the Idaho project's pre-operational costs are unique due to its massive scale and a strategic decision to control the manure handling process to ensure future efficiency. He clarified that the increased share of RINs is a result of favorable market dynamics and leveraging their strong downstream distribution position, rather than being driven by the mix of their own RNG production.