Darling Ingredients(DAR) - 2025 Q1 - Quarterly Results

First Quarter 2025 Financial Highlights and Outlook This section summarizes Darling Ingredients' Q1 2025 financial results and reaffirms the fiscal year 2025 outlook First Quarter 2025 Performance Summary 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] - 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] - 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][8] Fiscal Year 2025 Outlook 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] - Full-year 2025 guidance for Combined Adjusted EBITDA is reaffirmed at $1.25 billion to $1.30 billion[7] - Management expects margins for DGD to improve from current reduced levels, with operations adjusting accordingly[7] Consolidated Financial Statements This section presents Darling Ingredients' consolidated statements of operations and balance sheet disclosures for the reported period Consolidated Statements of Operations 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 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][13] Segment Financial Information This section details the financial performance of Darling Ingredients' Feed, Food, and Fuel Ingredients segments Segment Performance Q1 2025 vs Q1 2024 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 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 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 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 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 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 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][23][26] - 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][28] Cautionary Statements Regarding Forward-Looking Information 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] - 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][33]