Financial Results Q1 2025 April 24, 2025 This presentation includes "forward-looking" statements that are subject to risks and uncertainties that could cause actual results to differ materially from those expressed or implied in the statements. Statements that are not statements of historical facts are forward-looking statements and are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Words such as "estimate," "guidance," "outlook," "project," "planned," " ...

Company Performance - Darling Ingredients reported a quarterly loss of $0.16 per share, missing the Zacks Consensus Estimate of $0.20, compared to earnings of $0.50 per share a year ago [1] - The earnings surprise for this quarter was -180%, while the previous quarter saw an earnings surprise of 80% with actual earnings of $0.63 per share against an expectation of $0.35 [2] - Revenues for the quarter ended March 2025 were $1.38 billion, missing the Zacks Consensus Estimate by 8.36%, and down from $1.42 billion year-over-year [3] Stock Performance - Darling shares have declined approximately 9.9% since the beginning of the year, compared to a decline of -8.6% for the S&P 500 [4] - The current Zacks Rank for Darling is 5 (Strong Sell), indicating expectations of underperformance in the near future [7] Earnings Outlook - The current consensus EPS estimate for the upcoming quarter is $0.58 on revenues of $1.53 billion, and for the current fiscal year, it is $1.98 on revenues of $6.1 billion [8] - The trend for estimate revisions ahead of the earnings release was unfavorable, which may impact future stock performance [7] Industry Context - The Food - Miscellaneous industry, to which Darling belongs, is currently ranked in the bottom 41% of over 250 Zacks industries, suggesting potential challenges for stock performance [9]

[First Quarter 2025 Financial Highlights and Outlook](index=1&type=section&id=First%20Quarter%202025%20Results) This section summarizes Darling Ingredients' Q1 2025 financial results and reaffirms the fiscal year 2025 outlook [First Quarter 2025 Performance Summary](index=1&type=section&id=First%20Quarter%202025%20Performance%20Summary) Darling Ingredients reported a net loss in Q1 2025, primarily due to lower Diamond Green Diesel (DGD) earnings and reduced product pricing, despite core business stability and capital returns Q1 2025 vs. Q1 2024 Key Financial Metrics | Metric | Q1 2025 | Q1 2024 | Change | | :--- | :--- | :--- | :--- | | Net Sales | $1.38 billion | $1.42 billion | -2.8% | | Net Income/(Loss) | $(26.2) million | $81.2 million | -132.3% | | Diluted EPS | $(0.16) | $0.50 | -132.0% | | Combined Adjusted EBITDA | $195.8 million | $280.1 million | -30.1% | - The **net loss** was primarily driven by lower earnings at the Diamond Green Diesel (DGD) joint venture[3](index=3&type=chunk) - DGD sold **219.1 million gallons** of renewable fuels, generating an average EBITDA of **$0.06 per gallon**. Darling Ingredients received **$129.5 million** in cash dividends from DGD during the quarter[4](index=4&type=chunk) - The company executed on its capital allocation strategy by repurchasing approximately **1 million shares** for **$35 million** and paying down **$146.2 million** in debt[5](index=5&type=chunk)[8](index=8&type=chunk) [Fiscal Year 2025 Outlook](index=1&type=section&id=Fiscal%20Year%2025%20Outlook) The company reaffirms its full-year 2025 guidance, anticipating strong core business performance, improved DGD margins, and continued cash generation for debt reduction and share repurchases - The company anticipates its core business will generate approximately **$950 million to $1 billion** in EBITDA for fiscal year 2025, driven by increasing demand and prices for waste fats[7](index=7&type=chunk) - Full-year 2025 guidance for Combined Adjusted EBITDA is reaffirmed at **$1.25 billion to $1.30 billion**[7](index=7&type=chunk) - Management expects margins for DGD to improve from current reduced levels, with operations adjusting accordingly[7](index=7&type=chunk) [Consolidated Financial Statements](index=2&type=section&id=Consolidated%20Financial%20Statements) This section presents Darling Ingredients' consolidated statements of operations and balance sheet disclosures for the reported period [Consolidated Statements of Operations](index=2&type=section&id=Consolidated%20Statements%20of%20Operations) The consolidated statement of operations for Q1 2025 shows a net loss of **$(26.2) million**, primarily due to a significant swing in equity from the Diamond Green Diesel (DGD) joint venture Q1 2025 vs. Q1 2024 Statement of Operations Highlights (in thousands) | Line Item | Q1 2025 (ended Mar 29) | Q1 2024 (ended Mar 30) | Change (Unfavorable) | | :--- | :--- | :--- | :--- | | Total net sales | $1,380,594 | $1,420,299 | $(39,705) | | Equity in net income/(loss) of DGD | $(30,523) | $78,419 | $(108,942) | | Operating income | $28,400 | $137,169 | $(108,769) | | Net income/(loss) attributable to Darling | $(26,160) | $81,157 | $(107,317) | | Diluted income/(loss) per share | $(0.16) | $0.50 | $(0.66) | [Balance Sheet Disclosures](index=5&type=section&id=Balance%20Sheet%20Disclosures) As of March 29, 2025, Darling Ingredients reported **$81.5 million** in cash, **$3.9 billion** in total debt, **$1.27 billion** in revolver availability, and a preliminary leverage ratio of **3.33x** Key Financial Position Data (as of March 29, 2025) | Metric | Amount (in thousands) | | :--- | :--- | | Cash and cash equivalents | $81,471 | | Total Debt (Current + Long-term) | $3,921,502 | | Revolver availability | $1,271,711 | | Capital expenditures - YTD | $62,979 | - The company's preliminary leverage ratio as measured by its bank covenant was **3.33x** as of March 29, 2025[6](index=6&type=chunk)[13](index=13&type=chunk) [Segment Financial Information](index=3&type=section&id=Segment%20Financial%20Tables) This section details the financial performance of Darling Ingredients' Feed, Food, and Fuel Ingredients segments [Segment Performance Q1 2025 vs Q1 2024](index=3&type=section&id=Segment%20Performance%20Q1%202025%20vs%20Q1%202024) In Q1 2025, Feed Ingredients showed growth, Food Ingredients' Adjusted EBITDA increased despite lower sales, while Fuel Ingredients' performance significantly declined due to the DGD joint venture Total Net Sales by Segment (in thousands) | Segment | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Feed Ingredients | $896,283 | $889,848 | | Food Ingredients | $349,240 | $391,282 | | Fuel Ingredients | $135,071 | $139,169 | Combined Adjusted EBITDA by Segment (in thousands) | Segment | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Feed Ingredients | $110,582 | $106,809 | | Food Ingredients | $70,932 | $61,687 | | Fuel Ingredients | $24,226 | $133,145 | [Diamond Green Diesel (DGD) Joint Venture](index=6&type=section&id=Diamond%20Green%20Diesel%20Joint%20Venture) This section provides a detailed financial overview of the Diamond Green Diesel (DGD) joint venture's performance and balance sheet [DGD Consolidated Statements of Operations](index=6&type=section&id=DGD%20Consolidated%20Statements%20of%20Operations) The Diamond Green Diesel (DGD) joint venture reported a significant net loss of **$(59.3) million** in Q1 2025, driven by a **36%** decrease in operating revenues and a sharp decline in Adjusted EBITDA DGD Q1 2025 vs. Q1 2024 Performance (in thousands) | Metric | Q1 2025 (ended Mar 31) | Q1 2024 (ended Mar 31) | Change | | :--- | :--- | :--- | :--- | | Operating revenues | $899,909 | $1,411,115 | $(511,206) | | Operating income/(loss) | $(53,665) | $164,831 | $(218,496) | | Net income/(loss) | $(59,308) | $156,838 | $(216,146) | | DGD Adjusted EBITDA | $13,807 | $230,121 | $(216,314) | [DGD Consolidated Balance Sheets](index=7&type=section&id=DGD%20Consolidated%20Balance%20Sheets) DGD's balance sheet as of March 31, 2025, shows total assets of **$5.15 billion**, a decrease primarily due to reduced cash and cash equivalents, alongside a decline in total members' equity DGD Key Balance Sheet Items (in thousands) | Item | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Cash | $152,440 | $353,446 | | Total assets | $5,154,349 | $5,460,517 | | Total members' equity | $4,071,209 | $4,386,667 | [Non-GAAP Reconciliations and Disclosures](index=8&type=section&id=Non-GAAP%20Reconciliations%20and%20Disclosures) This section provides reconciliations for non-GAAP financial measures and outlines cautionary statements regarding forward-looking information [Reconciliation of Net Income to Combined Adjusted EBITDA](index=8&type=section&id=Reconciliation%20of%20Net%20Income%20to%20Combined%20Adjusted%20EBITDA) This section reconciles GAAP Net Income/(Loss) to Combined Adjusted EBITDA, showing a Q1 2025 Net Loss of **$(26.2) million** adjusted to a Combined Adjusted EBITDA of **$195.8 million** Reconciliation to Combined Adjusted EBITDA (in thousands) | Line Item | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Net income/(loss) attributable to Darling | $(26,160) | $81,157 | | Adjustments (D&A, Interest, Tax, etc.) | $215,893 | $83,907 | | Adjusted EBITDA (Non-GAAP) | $189,733 | $165,064 | | DGD Joint Venture Adjusted EBITDA (Darling's share) | $6,035 | $115,061 | | **Combined Adjusted EBITDA (Non-GAAP)** | **$195,768** | **$280,125** | [Use of Non-GAAP Financial Measures](index=9&type=section&id=Use%20of%20Non-GAAP%20Financial%20Measures) The company defines and justifies its use of non-GAAP financial measures like Adjusted EBITDA and Combined Adjusted EBITDA for evaluating operating performance, peer comparison, and internal covenant compliance - Management believes non-GAAP measures like **Adjusted EBITDA** and **Combined Adjusted EBITDA** are useful for evaluating operating performance by eliminating effects of financing, income taxes, and other non-cash items[22](index=22&type=chunk)[23](index=23&type=chunk)[26](index=26&type=chunk) - The company states that providing a reconciliation for forward-looking Combined Adjusted EBITDA to net income is not possible without unreasonable effort due to the unpredictability of key variables like commodity prices and foreign exchange rates[27](index=27&type=chunk)[28](index=28&type=chunk) [Cautionary Statements Regarding Forward-Looking Information](index=10&type=section&id=Cautionary%20Statements%20Regarding%20Forward-Looking%20Information) This section provides cautionary statements regarding forward-looking information, highlighting that such statements are subject to significant risks and uncertainties, including commodity price volatility and regulatory changes - Forward-looking statements are based on current expectations and are not guarantees of future performance[31](index=31&type=chunk) - Key risk factors include, but are not limited to: reduced demand or prices for biofuels, changes in government policies (e.g., LCFS, tax credits), raw material volume fluctuations, risks associated with the DGD Joint Venture, and international trade barriers[32](index=32&type=chunk)[33](index=33&type=chunk)

Core Viewpoint - Analysts project that Darling Ingredients (DAR) will report quarterly earnings of $0.36 per share, reflecting a 28% decline year over year, while revenues are expected to reach $1.51 billion, marking a 6.1% increase from the same quarter last year [1]. Earnings Estimates - Over the past 30 days, the consensus EPS estimate has been adjusted downward by 4.6%, indicating a reassessment by covering analysts [2]. - Changes in earnings estimates are crucial for predicting investor reactions, as empirical research shows a strong correlation between earnings estimate revisions and short-term stock performance [3]. Revenue and Sales Projections - The consensus estimate for 'Net Sales- Feed Ingredients' is $976.29 million, representing a 9.7% increase from the prior-year quarter [5]. - 'Net Sales- Fuel Ingredients' is projected to reach $137.58 million, indicating a 1.1% decline from the prior-year quarter [5]. - 'Net Sales- Food Ingredients' is expected to be $376.23 million, reflecting a 3.9% decrease from the year-ago quarter [5]. EBITDA Estimates - 'Segment Adjusted EBITDA- Food Ingredients' is anticipated to be $66.29 million, up from $61.69 million in the same quarter last year [6]. - 'Segment Adjusted EBITDA- Feed Ingredients' is projected at $151.08 million, compared to $106.81 million in the previous year [6]. - 'Segment Adjusted EBITDA- Fuel Ingredients' is expected to be $19.87 million, an increase from $18.08 million reported in the same quarter last year [7]. Stock Performance - Darling shares have increased by 3.3% over the past month, contrasting with the Zacks S&P 500 composite's decline of 5.6% [7]. - With a Zacks Rank 5 (Strong Sell), DAR is expected to underperform the overall market in the near term [7].

Core Viewpoint - The market anticipates a year-over-year decline in Darling Ingredients' earnings despite an increase in revenues for the quarter ending March 2025, with actual results being crucial for stock price movement [1][2]. Earnings Expectations - Darling Ingredients is expected to report quarterly earnings of $0.36 per share, reflecting a 28% decrease year-over-year, while revenues are projected to reach $1.51 billion, marking a 6.1% increase from the previous year [3]. Estimate Revisions - The consensus EPS estimate has been revised down by 4.55% over the last 30 days, indicating a collective reassessment by analysts regarding the company's earnings prospects [4]. Earnings Surprise Prediction - The Zacks Earnings ESP model suggests that the Most Accurate Estimate for Darling is lower than the Zacks Consensus Estimate, resulting in an Earnings ESP of -60.89%, which indicates a bearish outlook from analysts [10][11]. Historical Performance - In the last reported quarter, Darling exceeded the expected earnings of $0.35 per share by delivering $0.63, resulting in a surprise of +80%. Over the last four quarters, the company has beaten consensus EPS estimates three times [12][13]. Investment Considerations - Despite the potential for an earnings beat, Darling does not currently appear to be a compelling candidate for such an outcome, and investors should consider other factors before making investment decisions [16].

Financial Challenges and Debt Management - The company may face challenges in generating sufficient cash flows to service its indebtedness, which could lead to the need for asset disposals or additional financing [175]. - The company has significant restrictions on its ability to incur additional indebtedness, which could limit its financial flexibility and increase risks associated with its current debt levels [174]. - The company's subsidiaries play a crucial role in its ability to repay debt, with potential regulatory restrictions impacting cash flow availability from certain subsidiaries, particularly those operating in China [179]. - The company has not paid dividends on its common stock since January 3, 1989, and current financing arrangements impose limitations on future dividend payments [183]. - The company's common stock is subordinate to all existing and future indebtedness, which may affect the recovery of common stockholders in the event of liquidation [186]. Market and Economic Risks - The market price of the company's common stock has been volatile, influenced by various factors including operating results and access to financial markets [181]. - Economic downturns and volatility in global markets could adversely affect the company's operations and financial condition, impacting customer demand and raw material availability [196]. - Changes in consumer preferences in the food and pet food industries could lead to reduced demand and price reductions for the company's products [203]. - Terrorist attacks or acts of war could disrupt operations and adversely affect net sales, costs, and financial condition [222]. - The UK’s withdrawal from the EU (Brexit) has created uncertainty that could adversely affect the company’s business and operations in Europe [232]. Regulatory and Compliance Issues - The company is subject to various governmental regulations across multiple jurisdictions, which could result in material costs and liabilities if compliance is not maintained [192]. - The company faces risks related to compliance with anti-bribery laws and regulations, particularly in international operations, which could lead to legal and reputational consequences [194]. - Compliance with evolving data privacy and cybersecurity laws, such as GDPR and CCPA, may require significant resources and could result in penalties for noncompliance [209][211]. - The company is subject to various lawsuits and regulatory proceedings that may materially affect business operations and financial condition, with potential costs being significant [217]. Operational and Strategic Risks - The company may face challenges in identifying and completing acquisitions on favorable terms, which could lead to unforeseen liabilities and operational difficulties [198]. - Future acquisitions could require the company to incur debt or assume contingent liabilities, potentially harming its business and financial results [198]. - Large capital projects, such as the DGD Joint Venture SAF project, may take years to complete, and changing market conditions could negatively impact expected returns [202]. - Disruptions in information systems could result in loss of sales and increased costs, adversely affecting the company's financial condition [204]. - The company may incur significant charges and experience disruptions if it closes or divests manufacturing plants or facilities [228]. Human Resources and Internal Controls - The company’s success is heavily reliant on key personnel, and challenges in attracting and retaining skilled employees could adversely affect operations [214]. - Potential material weaknesses in internal controls over financial reporting could harm public confidence and affect regulatory compliance [215]. Financial Instruments and Market Risks - The company has entered into interest rate swaps totaling a notional amount of $900.0 million, with a weighted average rate of 4.007% while receiving the 1-month SOFR rate, hedging variable rate debt into Q1 2026 [378]. - The aggregate fair value of the interest rate swaps as of December 28, 2024, was approximately $4.2 million [378]. - The company has also entered into cross currency swaps with a notional amount of €519.2 million, paying a 4.6% euro fixed rate while receiving a 5.799% U.S. dollar fixed rate, hedging intercompany notes receivable into Q1 2025 [379]. - The aggregate fair value of the cross currency swaps as of December 28, 2024, was approximately $22.2 million [379]. - The company has foreign exchange option and forward contracts considered cash flow hedges, with an aggregate fair value of approximately $32.6 million as of December 28, 2024 [380]. - Market risks include exposure to changes in prices of finished products, interest rates, availability of raw materials, and prices of natural gas and diesel fuel [375]. - The company makes limited use of derivative instruments for managing cash flow risks related to interest rates, natural gas, diesel fuel, inventory, forecasted sales, and foreign currency exchange rates [376]. - A 1% increase in interest rates is estimated to increase the Company's annual interest expense by approximately $9.6 million [387]. - The Company is exposed to currency fluctuations, particularly with respect to the euro, Brazilian real, Canadian dollar, Australian dollar, Chinese renminbi, Polish zloty, British pound, and Japanese yen [388]. Insurance and Pension Obligations - The company maintains insurance coverage that may not fully cover operational risks, and increases in claims or insurance premiums could adversely affect financial condition [219]. - European pension funds may require minimum funding contributions, with the IORP Directive II impacting the solvency requirements and potential delays in its review until 2025 [218]. Healthcare and Taxation Risks - Healthcare reform legislation in the U.S. could increase compensation costs and reduce net income, impacting cash flows [225]. - Changes in tax rates or exposure to additional income tax liabilities could adversely affect profitability, with potential impacts from differing statutory tax rates and changes in tax laws [216].

Group 1 - Darling Ingredients (DAR) is recognized as a compelling stock within the circular economy sector, focusing on processing animal by-products and food waste to produce biofuels through the Diamond Green Diesel (DGD) joint venture [1] - The company operates in the renewable energy space, emphasizing growth and innovation capabilities, particularly in the context of small companies with a market capitalization of up to $15 billion [1] Group 2 - The article highlights the importance of fundamental analysis in evaluating companies, particularly those involved in renewable energy and industrial innovation [1]

DARLING INGREDIENTS Financial Results Q4, FY 2024 February 6, 2025 This presentation includes "forward-looking" statements that are subject to risks and uncertainties that could couse actual results to differ materially from those expresse statements. Statements that are not statements of historicol fracts are forward-looking statements and are made pursuant to the safe harbor grovisions of the Pivate Securit Reform Act of 1995. Wards such as "estimate," "guidance," "outlook," "project"," planned," "contemp ...

Financial Data and Key Metrics Changes - For Q4 2024, net income was $101.9 million or $0.63 per diluted share, compared to $84.5 million or $0.52 per diluted share in Q4 2023 [16] - Total net sales for Q4 2024 were $1.4 billion, down from $1.5 billion in Q4 2023 [16] - Operating income decreased by $36.4 million to $122.4 million in Q4 2024, primarily due to lower gross margins from significantly lower fat prices [17] - For fiscal year 2024, net income was $278.9 million or $1.73 per diluted share, down from $647.7 million or $3.99 per diluted share in fiscal 2023 [17] - Total net sales for fiscal year 2024 were $5.7 billion, compared to $6.8 billion in fiscal 2023 [17] - The company paid down $353 million in debt for fiscal year 2024, reducing total debt outstanding to $4 billion [7][22] Business Segment Data and Key Metrics Changes - In the feed ingredients segment, gross margin improved from 21.5% in Q3 2024 to 22.6% in Q4 2024, with global rendering volumes remaining strong [10] - The food segment saw a gross margin improvement from 23.9% in Q3 2024 to 25.7% in Q4 2024, with slight sales improvement due to better industry conditions [11] - The fuel segment received a cash dividend of $68.6 million in Q4 2024 from Diamond Green Diesel, totaling $179.8 million for the full fiscal year [12][23] Market Data and Key Metrics Changes - Global raw material volumes remain robust, with stronger fat prices expected in Q1 2025 [26] - Regulatory clarity on US biofuel policies is believed to stabilize the market, with a decline in foreign biofuel imports noted [27] - The company anticipates a balanced supply and demand environment for 2025, driven by domestic biodiesel and renewable diesel production adjustments [27] Company Strategy and Development Direction - The company aims to maintain a strong financial policy focused on deleveraging, targeting a 2.5 times bank leverage ratio in the future [28] - Continued emphasis on disciplined capital deployment, efficient working capital management, operational excellence, and margin management is planned for 2025 [28] - The company is exploring expansion opportunities in renewable natural gas markets in the US and Europe [30] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism for 2025, expecting strong momentum to build throughout the year [25] - The company is confident in its ability to monetize the clean fuel production tax credit, which is expected to enhance financial performance [14][20] - Management noted that the market is stabilizing, with expectations for ingredient prices and RINs to adjust positively throughout the year [27] Other Important Information - The company plans to increase capital expenditures to approximately $400 million in 2025, which will be managed based on market conditions [24][126] - The company has received an additional cash dividend of $86.4 million in January 2025 from Diamond Green Diesel [12][23] Q&A Session Summary Question: How does the 45Z tax credit benefit Darling Ingredients? - Management confirmed that the 45Z tax credit is favorable for Darling, as it is designed for US biofuel producers and aligns with the company's low CI score feedstocks [36][38] Question: Can you elaborate on the SAF production plans? - Management indicated that they are looking to increase SAF production capacity and are exploring opportunities for additional SAF plants [41][43] Question: What are the expectations for dividends in 2025? - Management anticipates larger distributions in 2025 compared to 2024, driven by strong performance and the monetization of tax credits [71][74] Question: What is the outlook for the renewable natural gas (RNG) market? - Management highlighted ongoing interest in RNG opportunities, particularly in the US, leveraging the company's existing capabilities in Europe [122][123] Question: How is the company positioned regarding regulatory risks? - Management expressed confidence in adapting to regulatory changes, noting broad bipartisan support for US biofuel policy [138]

Core Insights - Darling Ingredients surpassed earnings expectations in Q4 2024 with an EPS of $0.63, significantly above the analysts' estimate of $0.42, but total revenue of $1.42 billion fell short of the consensus forecast of $1.449 billion and decreased from $1.61 billion in the prior-year period [2][3] Financial Performance - Q4 2024 metrics showed a diluted EPS of $0.63, a 21.2% increase from $0.52 in Q4 2023, while total revenue decreased by 12.2% from $1.61 billion to $1.42 billion [3] - Net income rose 20.7% year over year to $101.9 million, reflecting improved profitability in some segments despite overall revenue decline [6] - Combined adjusted EBITDA decreased by 17.5% to $289.5 million from $350.9 million in the prior-year period [3][8] Business Overview and Strategy - Darling Ingredients operates a diversified business model, transforming by-products from the food and agriculture sectors into value-added products, with a strategic focus on sustainability and renewable energy [4] - The company is expanding its geographical reach and focusing on strategic acquisitions in response to increasing global demand for sustainable products [5] Segment Performance - The feed ingredients segment saw a decline in net sales to $924.2 million from $1.046 billion in the prior-year period, while food ingredients sales dropped to $361.7 million from $423.8 million, partly due to softer demand in markets like China [7] - Fuel ingredients sales decreased to $131.9 million from $144.6 million, impacted by weaker pricing and uncertainties regarding renewable energy policies [7] Future Outlook - For 2025, Darling Ingredients anticipates an adjusted EBITDA of $1.25 billion to $1.30 billion, driven by expectations of higher fat prices and capacity growth through planned plant turnarounds and sustainable aviation fuel sales integration [10]