All right. We're gonna get started with our next presentation. CEO Randy Stuewe has developed and executed a strategy over more than a decade that has positioned Darling as a global leader across rendering, biofuels, and food ingredients through strategic acquisitions, capacity expansions, and its Diamond Green Diesel joint venture. As a perfect complement to Randy, Bob Day has reinforced Darling's strategy with his disciplined approach to capital allocation, balance sheet de-leveraging, and returns since becoming CFO early last year. Darling has an exciting opportunity to demonstrate its earnings potential, leveraging improved operations against the stronger fundamental backdrop. We're pleased to have Randy and Bob with us today to expand on its outlook and strategy. We thank you both for being here.
Thank you.
Great to be here.
Maybe where I would start is with some comments that you made at the recent Investor Day. You talked about the current operating environment maybe has accelerated a bit more than you had previously articulated. Can you talk about where you're seeing that momentum? What has been maybe a little bit stronger than you expected?
Well, clearly the, as we, you know, came out of 2025, the world was waiting for some clarity of the Renewable Fuel Standard, or RVO, as everybody knows, and you still didn't have it here till April 1. The different movements that happened for demand, whether it's of oilseeds or whether it's demand of animal-based products, had not really started, so you just kinda carried forward. First quarter was a wonderful quarter. Always a little difficult because of winter in North America and in Europe, but, you know, when we did our earnings call, and obviously when we did Investor Day a couple days ago, we hadn't really started to see, or we didn't have in front of us, the Q2 run rate.
For those that do Randy math, you look at what March did, it's a 5-week period for us. You divide by 5, multiply it times 13, that's our run rate for Q2. Since we hadn't seen April, it's the first time we'd ever reported without seeing the first period of the next quarter, which always gives us, you know, kinda gives us a pretty good feeling of what confidence in to get to try to guide this. I mean, number 1, you gotta be insane to try to guide a commodity business, in flat to up markets, you can't be too far from wrong. What we've seen is with the announcement of the RVO, we've seen biofuel plants around the world restarting. In the U.S. as well.
We brought back on a plant we basically had mothballed for most of last year and ramped on up to capacity. Ultimately, we saw fat prices come into the year, I don't know, $0.45, $0.50. I saw product yesterday being sold $0.75 FOB plant for some of our lower grade products. That is starting to flow through. What we were trying to articulate in Investor Day was that we weren't sure how much was gonna come through in April and then how obviously May will be better and June will even be better. I think, what if fat prices have capped off, I don't really think so yet, but we're seeing the acceleration in earnings there.
Probably the other contributor that wasn't fully understood or we weren't prepared to step out in front of was the resurgence of exports of poultry meal. Really, the proteins that come out of this country, there's a significant amount that have to leave. Low ash poultry meal or chicken meal as it's referred to, it has no bones in it. That's the world's aquaculture feed. When our president puts tariffs on, tariffs off, it makes buyers pretty uncomfortable around the Asia countries to step forward and buy it. You know, as we look back last year, those tariffs probably impacted performance by probably over $100 million because we had to downgrade material and sell it to alternative markets rather than where it should go.
The protein side is really kicking in and contributing along with the fats now. I think it's safe to say, we're hitting on all cylinders in the rendering business. The biofuel margins are what we thought they would be. You know, we try not to guide out there 'cause there's a lot of volatility. Our food businesses, you know, the collagen business is really starting to take hold out there. You know, that's been a 5, 10 year product mix shift and we're seeing the acceleration there along with new products. It's just, you know, the stars are aligning for us now and we feel very, very proud about it.
Bob reflected here earlier this morning, you know, if you look back in July of 2013 when we made the initial investment into Diamond Green Diesel, and then for the next 12 years, we just continued to reinvest the capital there. That stage has changed. That's the inflection point. Diamond Green Diesel will provide dividends this year and it will provide the PTC. All of a sudden from reinvestment to outflows and that doubles up with a really nice core business that's operating well.
Wanted to go back to a comment you just made. I mean, there's so much focus on Diamond Green Diesel, there's so much focus on the Feed segment, but the Food segment, which I generally think of as reasonably steady, you've seen it in the first quarter and you made the comments about April and May kind of accelerating. Why is that the case? What is changing there?
Well, I think an interesting dynamic in the food segment and just for everyone's understanding, around 85% of EBITDA in our food segment is represented by the collagen business. Collagen and gelatin is the two primary products. We're continuing to see significant growth in water-soluble collagen across the world and the way to make water-soluble collagen is to take extraction capacity, which is what you use to make gelatin, and put a spray dryer on top of it. Every time you do that, you take capacity out of gelatin production. Essentially what's happening is, due to the increase in demand for collagen, we are also tightening up the supply and demand for gelatin. It's creating a very nice dynamic for the business globally, and we're seeing margins in both products increase.
One of the things that I think the market is struggling with a little bit is we got the RVO, we also had a war that has obviously changed the dynamic around energy prices here, kind of coinciding to a certain degree. How do you think about the impact that the war with Iran is having or the durability should there be a ceasefire and that go away?
Yeah, I mean, I think the margins that we're seeing today in renewable diesel and sustainable aviation fuel, we absolutely expected as a result of the RVO. When we look at the obligation itself, the demand that comes with that production, you know, the opportunity for imports, these margins make sense. I think we probably would have thought that they would have materialized a little bit later, closer to when compliance obligations are due, we have convergence in the market for that reason.
I think the conflict in the Middle East, what it's done is it's helped bridge that gap, which is really healthy for the industry because it's promoting production earlier than it probably would have otherwise, and it will move us closer to being able to meet the obligation, which I think a lot of people had been concerned about.
I think, Andrew, I think it's what's fascinating to me in stepping back up to 30,000 feet, if you will, is once again, the world figured out how fragile the supply chain is on fossil fuels. You know, as I get to see our trucking companies in different parts of the world, diesel fuel in the Netherlands is $12 a gallon right now. Diamond Green Diesel, about $8.50 a gallon. You know, we haven't seen that. You're seeing lots of different confluences that are happening because of the higher crude oil price right now. It's an interesting world.
As we look forward, we say it once again sends at least a light narrative back to the biofuels or green fuels have a place in the portfolio of energy going forward, and that's where we're positioned.
When I think forward a little bit to next year, and you guys showed the kind of RIN balance math, that had 2027 at a deficit, how do we work through that? I mean, that, how if as we get closer to that environment, how does that change trade flows? How does it change the operating environment? Is the answer that margins have to go higher to solve for that? I guess, how do you, how do you see that playing out?
I think we do need to change some trade flows. Specifically, I think last year we exported, the United States exported around 1 billion gallons of advanced biofuels. Those are barrels that could stay in the United States to help, you know, satisfy the obligation. In order for that to happen and in order to incentivize some imports, margins probably need to continue to increase somewhat, and that's an encouraging backdrop.
I mean, clearly the policy is working right now. Farm prices are improving and, you know, ultimately what's interesting is when you can run this thing and say on the S&Ds, they always have a way of balancing themselves. Clearly, the administration believed that, okay, we might tighten up the, you know, the RIN bank or we might go to a small deficit, but that's okay 'cause then it'll right itself either through price, which what's that mean? Price means either more imports or less exports. It should play a pretty nice balance for 2027.
Are we seeing, you know, feedstocks flow into the United States? Can you maybe help us understand the competitiveness of foreign feedstocks versus the U.S. today at these prices?
It's obviously very dynamic, changes day to day. It's just, yeah, it depends. I think we are seeing foreign feedstocks imported into the United States. I think, you know, US or let's say NAFTA or USMCA-based feedstocks have the advantage of 45Z. They've got freight advantages. International feedstocks have discounted themselves in certain cases so that they can compete to move into this market. We are seeing a lot of support and price increase for US-based feedstocks, which really was the intention of the policy.
Who's the marginal producer today? I've always thought about it as the biodiesel industry. With the need for imports, has that changed? I guess, how do you think about it?
You know, I think it depends a little bit on just where, what's going on with market prices all around the world and who that marginal producer is. I'll give you an example. If the best, if the most competitive feedstock is an imported tallow from Brazil, your marginal producer is gonna be a Midwestern biodiesel company because they're not gonna have access to that feedstock. They're gonna need to make a margin using a different feedstock and different economics. If the most competitive feedstock is soybean oil in the United States, the marginal producer is probably somebody else. I think the bottom line is we need a significant amount of production from the biodiesel industry to satisfy this obligation.
We need a lot of production from renewable diesel as well. Whoever that marginal producer is, they've got to be up and running, and that suggests, you know, good margins.
Can you maybe level set with your perspective on, especially on the demand side, I guess? Where are we f rom an RD industry utilization rate perspective, have we, I mean, you said it's happened kind of quicker than you anticipated for a variety of reasons. Have we kind of maxed out yet? Is there more room to go from a demand perspective?
Margins today would suggest if you can run, you're running.
Right.
There was a lot of catalyst change out that happened in Q4, so you'd be ready to run. Ultimately, you know, we, you know, obviously we watch the other three or four public companies release earnings on their RD plants and, you know, we're significantly above our performance is way better than theirs. That's, that's the feedstock mix. They all are saying they're running full. You know, I think the other thing is, I'm not sure that there would be any more capacity in the U.S. put under construction. Maybe, maybe de-bottlenecked a little bit. You know, I don't see. You see anything different or?
No, I think that's right. We'll see as the April numbers come out. It certainly looks like we had a pretty good step up in April from where we were.
Okay.
At the Investor Day, you talked about $150 million to $300 million of potential internal improvement opportunities in the feed segment. What are the buckets and the timeline for that opportunity?
Bob is forever known as slide 55. That's our internal joke now. You know, there's a lot of things that go into that. You know, as we've had the last couple years, when you get into a deflationary ingredient business out there, and then you get a little bit of biofuel headwinds, you spend a lot of time, you know, in Donny's words over here, turning over every rock. You know, that's from market contracts to build a new rendering plant, $100 million now, 3 years. The replacement value is escalated by not only, you know, construction costs, equipment costs, you know, we're trying to pass on as much as we can with people.
always not the easiest conversation with your suppliers, but ultimately, these are plants that have to be maintained. You can't capital starve them or run to fail. We look at, you know, we've stopped the world and said, "Okay," you know, I call it the one darling approach now. You know, give you an example. If Brazil is producing animal fats and they've got a bid that's $10 a ton above what Diamond Green Diesel's bidding today, that fat should still come to Diamond Green Diesel because we're gonna make $300 a ton as a company. But that's the one darling approach that we're bringing now. We're looking at it every day with what's best for the shareholder.
Not that we weren't in the past, but when you run a decentralized company, your P&L drives more behavior than you want. Trying to get alignment. Looking, and we brought on some additional talent, Carlos Paz, and Carlos is leading the Looking at the world and just saying, "Where should trade flows go?" And, you know, used to be that some of our plants would wake up and, you know, the European plants looked at exports. If they couldn't keep it in within the continent, they would dump product into the world. Now we're trading products with the one Darling view. What else you wanna add to that?
You know, I mean, you've covered a lot of, like, what is included and what's gonna get us to these, you know, higher margins. I think what I would add is that the competitive dynamics in our industry, they're different than what we see in other commodity industries. As a lot of people know, the raw materials that we bring in are 60% moisture. If a competitor is gonna do something irrational, it's gonna cost more than what you tend to see in other industries. The result of that is, we should be able to continue to increase the fees that we charge based on the replacement cost of assets, and essentially act as an inflation hedge against the cost of construction.
That's harder to do, on shorter time periods in other commodity industries, but we should be able to do that just because of those dynamics.
I guess how much visibility do you have to that? Of the $150-$300, what portion of your contracts have you already kind of executed some of that versus what's still left to be done?
We have, I think as everyone's aware, we acquired Valley Proteins in 2022. That was a significant move into the poultry rendering space in the United States. Contracts in the U.S. tend to be pretty long in nature, 3 to 5 years. As we reset price, it's difficult to do all of that in 1 negotiation. Some of that work has been done. Certainly some of the work around identifying the best commercial end markets and getting the maximum value for our products, some of that's been done. There's still more opportunity, and I think that estimate that we gave at Investor Day was 1 that we think we can achieve in the next 2 to 3 years.
Okay. You made a comment about at the Investor Day, about the footprint being in all the places that you wanna be, but maybe you want it to look a little different, I think was kind of the quote. Can you elaborate on how you'd like to see that evolve?
You know, I think if you look historically, about every 5 years since the start of 2000, we've doubled the size. Not only do you focus on integrating and paying down debt, you start to identify the holes in the map of where you can logistically, as Bob Day said, it's 50%-60% water, where you need to build a new plant. We've done that globally now. What we're looking at over the next 3-5 years is, you know, somewhere between 20-30 new plants around the world that have to go in. Our system today, it's amazing, as we're at capacity.
You know, when we look at it as the poultry consumption, you know, our general thesis that we've always worked under is population growth, wealth creation, center of the plate dining will include protein, and we wanna be a part of that with the meat industry globally. We don't see that slowing down. You know, while we may be mature in a lot of our different areas, what we do look at is the Eastern Shore's gonna continue to expand the poultry side in the U.S. The beef cycle's down, as I'm sure you heard from the Tyson folks. It will come back. It always does. Brazil continues to just explode, up 14% in production now. They have what the world needs, land, water, people.
That's not into the deforestation discussion, that's just they can grow more and more. You're starting to see more, you know, more grain-fed beef down in South America, which is really amazing 'cause they'll take an animal to slaughter at about two-thirds the weight of what we do in the U.S. You immediately say that, well, that's almost a 50% increase in rendering capacity needed down there. We'll continue to reinvest there. Never did I think that we'd be in a discussion now in Europe of starting to talk about Eastern Europe, going east. There just weren't the animal numbers. As Germany and the Netherlands have environmental challenges and from animal production, it's gonna go east.
China, still not much there to render, as we say, but we continue to look hard there. Ultimately, I'm a fan of the Ukraine if we can ever get the war settled.
Is there a way I mean, obviously fat prices have a big impact on profits in the feed segment. If I kind of were to hold that constant, is there a way to think about, with your internal projects and things like that, what kind of EBITDA growth rate for your earnings power in the feed segment, what that could look like kind of over, I don't know, a five-year period or what have you, that you'd like to achieve?
You know.
You're gonna have to own this one.
Yeah. Look, I think Well, you know, you're really asking the question about, as we generate cash, invest that capital, you know, in new projects, what kind of EBITDA is that gonna generate? What we've said so far is when it comes to our capital allocation, we're committed to paying down our debt below $3 billion, getting our debt leverage ratio down below 2.5 in a downside environment. You know, that we've been really clear about that. We think we're gonna be able to achieve that probably by the end of the calendar year. At that time, that puts us in a position, if the outlook doesn't change, to really look at a lot of different options, things we could consider, shareholder in-investment type opportunities, as well as potential growth.
The extent to which that growth, you know, opportunity is gonna depend on what the cash outlook is at the time. What we haven't really done is gone public with what are exactly the projects, what are the expected returns from those things. As Randy said, I think one of the big changes that we see going forward is we will be more organic investment focused versus, you know, heavily acquisitive like Darling's history has represented. What's nice about those opportunities though is even though they take a little longer to develop, we're able to do that building assets in places where they're complementary to our broader network, where one plus one can equal three. We're confident that we're gonna have opportunities to invest capital and get great returns from it.
We just haven't outlined exactly what that's gonna look like and how we expect it. I would say this as well, we also have opportunities to invest in the collagen business, and that's a really exciting area of growth for Darling.
I wanna ask about that in one second. First, I had a question on SAF. Ma ybe how that has played out relative to your expectations. Then there was a comment about, you know, I know you're always asked about, you know, SAF 2, what have you, that you would need more market commitment. I guess, you know, can you kind of give us an update on the current SAF market and what you would need to see evolve from here?
We've got very different dynamics around SAF margins, whether it's to the European market versus the U.S. market. I think the European market is a mandated market. The U.S. market is a voluntary market. As a result of that, what we see in Europe is a lot of fluctuation between margin attractiveness comparing renewable diesel versus SAF, and that just depends on what the mandate is, what available supply is, and how prices react to that. We've seen plenty of situations or periods of time where renewable diesel margins into Europe are more attractive than SAF. The United States is very different. It's a voluntary market. More than half of our sales are made into the United States. That is a market that prices at a premium to renewable diesel.
The margin attractiveness is more of a fixed position. We're, you know, we're happy with the volumes that we're selling today. I think as it relates to future investment in SAF capacity at Diamond Green Diesel, we just, you know, we're interested in doing it. The outlook is different than it was in the past, and we would need some assurances from an offtaker, that they're there to take it at premiums that make sense to justify the investment.
You wanna talk about book and claim and how that's developing a little bit?
Yeah, this is a nice evolution to the business. What has been exciting to us is the buyers of SAF are not airlines. They're, you know, not your who you'd typically think it would be. They're really large tech companies that wanna offset Scope 3 emissions. That opens up a much bigger market. As those companies think about investing in anywhere in their business that requires energy consumption, they're looking to offset that with, you know, green energy or, you know, something else. That allows us to enter into more strategic discussions about how we can be a solution for them. That would be our goal, is that we have something that's longer in nature and, more, you know, committed.
Yeah, I would've thought, three years ago that SAF was, you know, just really gonna take off in the world. When you look at an airline's cost structure, you know, fuel's a big component of that variable cost, even a bigger one today. Ultimately, we went ahead and kinda pre-engineered, you know, out some expansions there, spent some money. Not a lot of money, but got 'em ready to where we, if SAF did develop. Now what Bob's talking about is you're seeing a different discussion on book and claim, which would then put the fuel into the Jet A pool, and the credit would be sold over here. That's a different thing. Our RD margins today are very, very attractive, along with the SAF. We're still getting the premium that we said we would and the return on the SAF unit that we built.
You've talked about $1-$2 margins, which I understand kinda how you approach. Like, "Hey, wide range, volatile, we get it. We're not trying to guide really to DGD margins." When we think about the cost position of DGD and those advantages and maybe how you think about framing for people the ranges, at least this level, that kinda thing, how has that evolved maybe versus history, and how do you think about that? How do you frame that?
Yeah, Bob and I'll kinda tag team this. You know, it's, like we said, it's a very volatile business. Our partner doesn't guide in this area. It's not really material to him, but to our shareholders, it's very important. What we've always looked at, when we built the system, you know, the investment case was about $0.79 a gallon. Clearly with cost increases now, that would probably move it into the 90s is what we would think. You know, as we look at the marketplace out there, when we saw a balanced system, you know, 3, 4 years ago, we ran margins in the $2.25 a gallon.
When we, you know, then you transition to the PTC, and that takes a little bit of a way, and that's kind of where we said, "You know, given the RVO and where we see the industry having to run to fulfill it, and seeing our logistical advantage to both import and export, put it in the pipeline, make SAF, the arbitrages," you know, we look at that thing and said, "It should generate between $1 and $2 this year." I suspect we'll see margin acceleration as we go through the year as the obligated parties in the compliance states start to really align. I mean.
Yeah
you'll have to probably call Valero after this, but that's absolutely fine.
Okay. That was helpful. Shifting to Nextida, you've discussed some lofty goals on volumes and margins or mix by 2030. Can you maybe level set where that business stands today in terms of trials, the preparedness to start to accelerate towards those goals?
Once again, Bob can help me out here. I mean, you know, with the collagen peptides and breaking the molecule down. Everybody goes to the grocery store, and they see the word collagen out there. We're the leader in it globally. What we've done is, you know, separate the molecule down for targeted health and wellness applications. We hold several patents on it, and more patents to come and clinical trials, and it's nutrition, science-backed nutrition and wellness. The trajectory's pretty long. The portfolio is very broad. We've got a glucose control product out there today, lots of different brands and orders in there. It's developing nicely.
Ultimately, when you start to operate in that health and wellness, you've now stepped down the supplement aisle, and that's pretty confusing down there. You know, and in the world of unregulated supplements, you can pretty much say what you wanna say. Trying to differentiate yourself. You know, I'll give you an example. Prevagen's been out there for 10 years. Our second product coming online now is going to be a brain health product. That should launch here later this summer, early next year, all backed by lots of science and very sophisticated clinical trials. Then there's women's health, then there's hair, nail type products that'll over the next 5-10 years.
What's important to us is that, you know, as we said, Bob talked about the product mix shift. You know, 10 years ago we were about 95% gelatin. Typical margin in gelatin's about $1 a kilogram or EUR 1 a kilogram, depending on what continent you're on. Hydrolyzed collagen, if you think through the product line, Bob said water soluble. Gelatin's a thickener and emulsifier used in food, pharmaceutical type of applications. You get into water soluble. The breadth of application opportunities is just unbelievable. You get into, now you can go into bars, sports drinks, foods, et cetera. Now you take to the next level, the what we call Nextida, for those peptide applications.
The margin structure, because of the demand of the universe of opportunity, is about 3x better. When you get into these targeted applications, you can be 7 x-11x better in different pricing. As we move more of our product mix there, that's where we get really excited about what the collagen business can do for us globally. You know, we always get the question, "Well, where the hell does that fit with an animal byproducts company?" Well, you gotta remember, it comes from a bone and a skin. We're kind of the biggest in the bone and the skin business in the world. Ultimately, 80% of that extraction process then goes back to animal feed and animal fat.
You get this super high value product, and then you've got the other core ingredients. You know, ultimately, Andrew, we look that somewhere in the next 3 to 5 years, that will lead if we're successful, which I believe we will lead to doubling the earnings in the food segment.
Have you been able to prove out that margin delta on, at this early stage? Or is that like, "Hey, as we grow and" sorry, go ahead.
Yeah. I mean, we make a product today that's called Nextida GC, glucose control. That margin difference is proven today. I just want to comment on something Randy said because he brought it back to kind of what makes this a simple story. We're told a lot that Darling is a really complex business, hard to understand. When you start talking about active peptides and molecules, that sounds pretty complicated. As Randy said, it's really we're talking about animal byproducts. You know, we are raw materials at Darling are animal byproducts and used cooking oil. There's more than 100 million metric tons of commercially available animal products, byproducts and used cooking oil in the world, so there's a lot of supply. It starts with that, then we add a lot of value through, you know, our different product mix. In this case with collagen, there's a lot of science and R&D that's going into it. Yeah, those margins, that sort of 7 x-11x a gelatin margin, that's already been proven out.
I mean, doubling the food segment EBITDA, that's obviously very material. What needs to happen to start to see that mix shift really accelerate? Is it more products? Is it just kinda time, I guess? How should we think about that glide path? Which I'm sure is not, you know, perfectly ratable, but how should we think about it?
I'll start with that.
You're gonna own this one too.
Well, I guess so. Yeah. Thanks for that. you know, with these types of products, typically what we see is you start supplying a number of different consumer packaged goods companies, smaller, more entrepreneurial companies that are out there really, really pushing hard to get product on the market, educate consumers. That takes a bit of time, but it's a groundswell. As the momentum develops, it's, you know, it moves quickly as time goes on. The answer to your question is, you know, we need time. We also need...
...second orders in now. We're getting the acceleration we want there. What we're seeing is the big CPG companies wanted more clinical data, more science backed, and we're providing that. You know, it's just a matter of time. You know, I think we've gone to outside consultants to help us think through. You know, we're pretty good at animal byproducts. Taking these type of specialty products into these markets is a little foreign to us. We're building the organization right now. For those that are aware, we're moving the headquarters out of the Netherlands into Irving, Texas. We'll be staffed out of there with brand managers and product line managers. It's already starting right now.
During Investor Day, we brought in one of our brand and marketing managers, just the number of products that we had on the table there to show people these applications is really exciting. You know, I go back to the day of Vital Proteins. As everybody knows, that's been a very successful product. There was a startup in Chicago. It was basically product that we made in our Amparo, Brazil plant. A bovine grass-fed collagen shipped in super sacks to Chicago, repacked, they put the label on it, and the business grew dramatically. It was the science behind it was the scientist.
Kurt was a runner from a NASA scientist. Kurt loved to run, and his joints started hurting. He called and said, "I've done my homework, can I get some collagen?" Came from us, he built the company, and the rest is history now. I watch that, I go back. It's hard for me. That was 10 years ago, we've shifted, you know, our product mix now to where we're about almost 60/40 collagen, where we're 95/5 over 10 years. I'm just trying to give a trajectory of what Nextida can do, and I think it'll get some really good trajectory here over time.
Okay. You know, the, you talked a little bit about the inflection, contributing cash to DGD, now starting to get some of those distributions. The earnings environment obviously getting much better. When you think about capital deployment, you know, you've talked about cash returns to shareholders, You know, kind of where does that sit in the priority set relative to organic growth, and do you have a preference for dividend, share repurchase? I guess, how do you think about that?
Yeah, you know, what I think if we want people to leave today with one thought, the reinvestment into DGD over the last 10 years, that's done now. The marketplace is set up nicely with the RVO for the next couple years. The core business is operating well. We've right-sized and fixed the assets that were underperforming. Protein market's strong in the world. The collagen business is strong. We are a cash-generating unit now. The debt is coming down rapidly. Depending on which one of our cycles you wanna pick here, we've always said that we've wanted to get below $3 billion. I think that's very doable by the end of the year. We wanna have a strong financial policy at 2.5x.
Then it's Bob's and my job to be with our board and say, "Here's the next 3 to 5 years that we look out," and say, "Okay, buybacks, absolutely. We'll buy back our dilution every year, maybe return more, get comfortable doing that. Does it make sense to put a small dividend underneath this thing, 1.5%? Maybe." Then, the organic growth. We can do all of it. On the organic growth side, there's only so much you can do because of resources being, people, time, and equipment. Permit, you know, to build a plant today is 3 years. So it's not an immediate, if it's, the plant's $100 million, it's $30 million, $30 million, $30 million. So it allows us the flexibility now that we haven't had in the past.
As you look back, Andrew, what's different today than it was, we did a slurry of about $3.5 billion- $4 billion of acquisitions. We didn't dilute anybody and issue equity because we said the balance sheet and our confidence in the business was gonna be able to de-lever it. Maybe we didn't do it as quick as we wanted to because of the lapse in the RVO, but that's passed, and so it's different times for the company now.
Maybe I'll squeeze one more question in here. You talked about the current environment kind of implying something closer to the upcycle range currently based on where we are today. My comment would be, seems like over the next two years, it seems like fundamentals are pretty well set up to not materially fall off from there. I guess, what prevents that from playing out that way? What do you think is maybe the biggest risk that we should be on the lookout for?
You know, I, right now, I don't You know, I'm looking at the world, and we've digested the Iranian war, unless something really happens there. You know, what's Trump gonna do with Section 301 tariffs again? That just screws up trade flows. God willing, this Hantavirus thing goes away. Right now, the table is set. We're hitting on all cylinders, and clearly we're on the upcycle or the, you know, the high cycle of this thing. I don't like to call it a cycle 'cause I think it's, we're just really set up nicely here for the next several years. You know, you start to say, "Well, 2028, and then we get into another election year." We get into ultimately another RVO discussion. I don't see there's any going back for the farm community now.
Great. We will end it there. Thank you very much.