[Executive Summary & Highlights](index=1&type=section&id=Executive%20Summary%20%26%20Highlights) This section provides a high-level overview of Darling Ingredients Inc.'s financial performance and key operational highlights for the third quarter and first nine months of 2025 [Third Quarter 2025 Performance Overview](index=1&type=section&id=Third%20Quarter%202025%20Performance%20Overview) Darling Ingredients Inc. reported increased net income and total net sales for Q3 2025 compared to Q3 2024, driven by momentum in its core ingredients business Q3 2025 Performance Metrics | Metric | Q3 2025 | Q3 2024 | Change | Change % | | :------------------- | :------ | :------ | :------- | :------- | | Net income | $19.4 million | $16.9 million | +$2.5 million | +14.8% | | Diluted EPS | $0.12 | $0.11 | +$0.01 | +9.1% | | Total net sales | $1.6 billion | $1.4 billion | +$0.2 billion | +14.3% | | Combined Adjusted EBITDA | $244.9 million | $236.7 million | +$8.2 million | +3.5% | [Nine Months Ended September 27, 2025 Performance Overview](index=1&type=section&id=Nine%20Months%20Ended%20September%2027%2C%202025%20Performance%20Overview) For the first nine months of 2025, net sales increased, but net income significantly decreased primarily due to lower earnings from Diamond Green Diesel (DGD) Nine Months 2025 Performance Metrics | Metric | 9M 2025 | 9M 2024 | Change | Change % | | :------------------- | :------ | :------ | :------- | :------- | | Net sales | $4.4 billion | $4.3 billion | +$0.1 billion | +2.3% | | Net income | $5.9 million | $177.0 million | -$171.1 million | -96.7% | | Diluted EPS | $0.04 | $1.10 | -$1.06 | -96.4% | | Combined Adjusted EBITDA | $690.2 million | $790.4 million | -$100.2 million | -12.7% | - The significant decrease in net income for the first nine months of 2025 was **primarily driven by lower earnings at Diamond Green Diesel (DGD)**[4](index=4&type=chunk) [Key Financial and Operational Highlights (Q3 2025)](index=1&type=section&id=Key%20Financial%20and%20Operational%20Highlights%20(Q3%202025)) Specific highlights for Q3 2025 include net income, total net sales, Combined Adjusted EBITDA, and a significant sale of production tax credits - Agreed on the sale of **$125 million** of 2025 production tax credits (PTC) to be paid in Q4, with an anticipation of selling another **$125-175 million** in PTC credits by the end of 2025[6](index=6&type=chunk)[9](index=9&type=chunk) - Diamond Green Diesel (DGD) sold **250 million gallons** of renewable fuel during Q3 2025, representing a **negative ($0.02) EBITDA per gallon** to Darling Ingredients, net of discount and broker fees related to production tax credits (PTC)[5](index=5&type=chunk) [Liquidity and Capital Expenditures](index=1&type=section&id=Liquidity%20and%20Capital%20Expenditures) As of September 27, 2025, Darling Ingredients maintained a strong liquidity position with available cash and credit, while managing its debt and capital expenditures Liquidity and Capital Expenditures Summary | Metric | As of Sep 27, 2025 | | :----------------------------------- | :----------------- | | Cash and cash equivalents | $91.5 million | | Available under revolving credit agreement | $1.17 billion | | Total debt outstanding (net of cash) | $4.01 billion | | Preliminary leverage ratio | **3.65x** | | Capital expenditures (Q3 2025) | $90.1 million | | Capital expenditures (9M 2025) | $224.0 million | [2025 Core Ingredients Business Guidance](index=1&type=section&id=2025%20Core%20Ingredients%20Business%20Guidance) Due to public policy complexities affecting the Fuel segment, the company will now provide guidance exclusively for its core ingredients business, estimating full-year 2025 Adjusted EBITDA - The company will provide financial guidance **exclusively for its core ingredients business** (all segments excluding DGD) due to ongoing complexity and uncertainty surrounding public policy and its impact on the Fuel segment[8](index=8&type=chunk) - For full year 2025, the company estimates core ingredients Adjusted EBITDA to be **approximately $875-900 million**[8](index=8&type=chunk) [Consolidated Financial Results](index=2&type=section&id=Consolidated%20Financial%20Results) This section presents the company's overall financial performance, including statements of operations for the three and nine months ended September 27, 2025 [Consolidated Statements of Operations (Three Months)](index=2&type=section&id=Consolidated%20Statements%20of%20Operations%20(Three%20Months)) For the three months ended September 27, 2025, Darling Ingredients reported an increase in total net sales and net income attributable to Darling, despite an equity loss from Diamond Green Diesel Consolidated Statements of Operations (Three Months) | Metric | Q3 2025 (in thousands) | Q3 2024 (in thousands) | $ Change (Favorable/(Unfavorable)) (in thousands) | | :----------------------------------- | :--------------------- | :--------------------- | :--------------------------------- | | Net sales to third parties | $1,221,846 thousand | $1,157,075 thousand | $64,771 thousand | | Net sales to related party - Diamond Green Diesel | $342,120 thousand | $264,816 thousand | $77,304 thousand | | **Total net sales** | **$1,563,966 thousand** | **$1,421,891 thousand** | **$142,075 thousand** | | Cost of sales and operating expenses | $1,176,957 thousand | $1,108,319 thousand | ($68,638 thousand) | | Selling, general and administrative expenses | $139,594 thousand | $115,717 thousand | ($23,877 thousand) | | Equity in net income/(loss) of Diamond Green Diesel | ($45,844 thousand) | $2,430 thousand | ($48,274 thousand) | | Operating income | $71,726 thousand | $60,107 thousand | $11,619 thousand | | Interest expense | ($56,925 thousand) | ($66,846 thousand) | $9,921 thousand | | Income from operations before income taxes | $19,807 thousand | $1,644 thousand | $18,163 thousand | | Net income attributable to Darling | $19,363 thousand | $16,949 thousand | $2,414 thousand | | Diluted income per share | $0.12 | $0.11 | $0.01 | [Consolidated Statements of Operations (Nine Months)](index=2&type=section&id=Consolidated%20Statements%20of%20Operations%20(Nine%20Months)) For the nine months ended September 27, 2025, total net sales increased, but net income attributable to Darling saw a substantial decrease, primarily due to a significant equity loss from Diamond Green Diesel Consolidated Statements of Operations (Nine Months) | Metric | 9M 2025 (in thousands) | 9M 2024 (in thousands) | $ Change (Favorable/(Unfavorable)) (in thousands) | | :----------------------------------- | :--------------------- | :--------------------- | :--------------------------------- | | Net sales to third parties | $3,574,476 thousand | $3,551,392 thousand | $23,084 thousand | | Net sales to related party - Diamond Green Diesel | $851,602 thousand | $746,090 thousand | $105,512 thousand | | **Total net sales** | **$4,426,078 thousand** | **$4,297,482 thousand** | **$128,596 thousand** | | Cost of sales and operating expenses | $3,381,801 thousand | $3,353,406 thousand | ($28,395 thousand) | | Selling, general and administrative expenses | $399,219 thousand | $384,591 thousand | ($14,628 thousand) | | Equity in net income/(loss) of Diamond Green Diesel | ($70,367 thousand) | $125,046 thousand | ($195,413 thousand) | | Operating income | $175,994 thousand | $345,778 thousand | ($169,784 thousand) | | Interest expense | ($166,765 thousand) | ($198,947 thousand) | $32,182 thousand | | Income from operations before income taxes | $13,169 thousand | $169,278 thousand | ($156,109 thousand) | | Net income attributable to Darling | $5,864 thousand | $176,972 thousand | ($171,108 thousand) | | Diluted income per share | $0.04 | $1.10 | ($1.06) | [Segment Financial Performance](index=3&type=section&id=Segment%20Financial%20Performance) This section details the financial performance of Darling Ingredients' Feed, Food, and Fuel Ingredients segments for the three and nine months ended September 27, 2025 [Three Months Ended September 27, 2025 Segment Performance](index=3&type=section&id=Three%20Months%20Ended%20September%2027%2C%202025%20Segment%20Performance) For Q3 2025, the Feed and Food Ingredients segments showed strong performance with increased sales and Segment Adjusted EBITDA, while the Fuel Ingredients segment experienced an operating loss and negative DGD Adjusted EBITDA Q3 2025 Segment Performance | Metric | Feed Ingredients (in thousands) | Food Ingredients (in thousands) | Fuel Ingredients (in thousands) | Corporate (in thousands) | Total (in thousands) | | :----------------------------------- | :--------------- | :--------------- | :--------------- | :-------- | :-------- | | Total net sales | $1,029,115 thousand | $380,574 thousand | $154,277 thousand | — | $1,563,966 thousand | | Gross margin | $249,809 thousand | $104,823 thousand | $32,377 thousand | — | $387,009 thousand | | Segment operating income/(loss) | $90,406 thousand | $41,799 thousand | ($30,488 thousand) | ($29,991 thousand) | $71,726 thousand | | Equity in net loss of Diamond Green Diesel | — | — | ($45,844 thousand) | — | ($45,844 thousand) | | Segment Adjusted EBITDA (Non-GAAP) | $173,996 thousand | $71,638 thousand | $24,485 thousand | ($22,329 thousand) | $247,790 thousand | | DGD Adjusted EBITDA (Darling's Share) (Non-GAAP) | — | — | ($2,884 thousand) | — | ($2,884 thousand) | | Combined Adjusted EBITDA (Non-GAAP) | $173,996 thousand | $71,638 thousand | $21,601 thousand | ($22,329 thousand) | $244,906 thousand | [Three Months Ended September 28, 2024 Segment Performance](index=4&type=section&id=Three%20Months%20Ended%20September%2028%2C%202024%20Segment%20Performance) In Q3 2024, all segments contributed positively to total net sales and Segment Adjusted EBITDA, with the Fuel Ingredients segment showing a positive DGD Adjusted EBITDA Q3 2024 Segment Performance | Metric | Feed Ingredients (in thousands) | Food Ingredients (in thousands) | Fuel Ingredients (in thousands) | Corporate (in thousands) | Total (in thousands) | | :----------------------------------- | :--------------- | :--------------- | :--------------- | :-------- | :-------- | | Total net sales | $927,457 thousand | $357,292 thousand | $137,142 thousand | — | $1,421,891 thousand | | Gross margin | $199,815 thousand | $85,431 thousand | $28,326 thousand | — | $313,572 thousand | | Segment operating income/(loss) | $30,530 thousand | $30,288 thousand | $13,704 thousand | ($14,415 thousand) | $60,107 thousand | | Equity in net income of Diamond Green Diesel | — | — | $2,430 thousand | — | $2,430 thousand | | Segment Adjusted EBITDA (Non-GAAP) | $132,166 thousand | $57,031 thousand | $20,571 thousand | ($12,164 thousand) | $197,604 thousand | | DGD Adjusted EBITDA (Darling's Share) (Non-GAAP) | — | — | $39,085 thousand | — | $39,085 thousand | | Combined Adjusted EBITDA (Non-GAAP) | $132,166 thousand | $57,031 thousand | $59,656 thousand | ($12,164 thousand) | $236,689 thousand | [Nine Months Ended September 27, 2025 Segment Performance](index=5&type=section&id=Nine%20Months%20Ended%20September%2027%2C%202025%20Segment%20Performance) For the first nine months of 2025, Feed and Food Ingredients segments showed positive operating income and Adjusted EBITDA, while the Fuel Ingredients segment recorded an operating loss and a significant equity loss from DGD Nine Months 2025 Segment Performance | Metric | Feed Ingredients (in thousands) | Food Ingredients (in thousands) | Fuel Ingredients (in thousands) | Corporate (in thousands) | Total (in thousands) | | :----------------------------------- | :--------------- | :--------------- | :--------------- | :-------- | :-------- | | Total net sales | $2,861,930 thousand | $1,115,956 thousand | $448,192 thousand | — | $4,426,078 thousand | | Gross margin | $646,528 thousand | $311,191 thousand | $86,558 thousand | — | $1,044,277 thousand | | Segment operating income/(loss) | $151,317 thousand | $125,724 thousand | ($35,533 thousand) | ($65,514 thousand) | $175,994 thousand | | Equity in net loss of Diamond Green Diesel | — | — | ($70,367 thousand) | — | ($70,367 thousand) | | Segment Adjusted EBITDA (Non-GAAP) | $420,480 thousand | $212,516 thousand | $61,315 thousand | ($49,892 thousand) | $644,419 thousand | | DGD Adjusted EBITDA (Darling's Share) (Non-GAAP) | — | — | $45,799 thousand | — | $45,799 thousand | | Combined Adjusted EBITDA (Non-GAAP) | $420,480 thousand | $212,516 thousand | $107,114 thousand | ($49,892 thousand) | $690,218 thousand | [Nine Months Ended September 28, 2024 Segment Performance](index=6&type=section&id=Nine%20Months%20Ended%20September%2028%2C%202024%20Segment%20Performance) For the first nine months of 2024, all segments contributed positively to total net sales and Segment Adjusted EBITDA, with the Fuel Ingredients segment showing a substantial positive DGD Adjusted EBITDA Nine Months 2024 Segment Performance | Metric | Feed Ingredients (in thousands) | Food Ingredients (in thousands) | Fuel Ingredients (in thousands) | Corporate (in thousands) | Total (in thousands) | | :----------------------------------- | :--------------- | :--------------- | :--------------- | :-------- | :-------- | | Total net sales | $2,751,452 thousand | $1,127,415 thousand | $418,615 thousand | — | $4,297,482 thousand | | Gross margin | $580,170 thousand | $280,649 thousand | $83,257 thousand | — | $944,076 thousand | | Segment operating income/(loss) | $143,753 thousand | $108,935 thousand | $157,139 thousand | ($64,049 thousand) | $345,778 thousand | | Equity in net income of Diamond Green Diesel | — | — | $125,046 thousand | — | $125,046 thousand | | Segment Adjusted EBITDA (Non-GAAP) | $361,031 thousand | $191,918 thousand | $58,780 thousand | ($52,143 thousand) | $559,586 thousand | | DGD Adjusted EBITDA (Darling's Share) (Non-GAAP) | — | — | $230,787 thousand | — | $230,787 thousand | | Combined Adjusted EBITDA (Non-GAAP) | $361,031 thousand | $191,918 thousand | $289,567 thousand | ($52,143 thousand) | $790,373 thousand | [Balance Sheet and Liquidity](index=7&type=section&id=Balance%20Sheet%20and%20Liquidity) This section provides an overview of Darling Ingredients' financial position, including balance sheet disclosures and liquidity metrics as of September 27, 2025 [Balance Sheet Disclosures](index=7&type=section&id=Balance%20Sheet%20Disclosures) As of September 27, 2025, Darling Ingredients reported an increase in cash and cash equivalents and property, plant and equipment, while long-term debt also increased compared to December 28, 2024 Consolidated Balance Sheet Highlights | Metric | Sep 27, 2025 (in thousands) | Dec 28, 2024 (in thousands) | | :-------------------------------- | :-------------------------- | :-------------------------- | | Cash and cash equivalents | $91,494 thousand | $75,973 thousand | | Property, plant and equipment, net | $2,786,142 thousand | $2,713,669 thousand | | Current portion of long-term debt | $76,911 thousand | $133,020 thousand | | Long-term debt, net of current portion | $4,026,727 thousand | $3,908,978 thousand | [Other Financial Data](index=7&type=section&id=Other%20Financial%20Data) The company maintained significant revolver availability and reported its year-to-date capital expenditures and preliminary leverage ratio as of September 27, 2025 Other Key Financial Data | Metric | As of Sep 27, 2025 (in thousands) | | :-------------------------- | :----------------- | | Revolver availability | $1,173,097 thousand | | Capital expenditures - YTD | $224,045 thousand | | Preliminary Leverage Ratio | 3.65x | [Diamond Green Diesel (DGD) Joint Venture Financials](index=8&type=section&id=Diamond%20Green%20Diesel%20(DGD)%20Joint%20Venture%20Financials) This section presents the detailed financial results and balance sheet information for the Diamond Green Diesel joint venture for the periods presented [DGD Consolidated Statements of Operations (Three Months)](index=8&type=section&id=DGD%20Consolidated%20Statements%20of%20Operations%20(Three%20Months)) For Q3 2025, DGD reported a significant net loss and operating loss, a reversal from the positive performance in Q3 2024, primarily due to lower operating revenues and higher total costs DGD Statements of Operations (Three Months) | Metric | Q3 2025 (in thousands) | Q3 2024 (in thousands) | | :----------------------------------- | :--------------------- | :--------------------- | | Operating revenues | $1,203,732 thousand | $1,224,679 thousand | | Total costs and expenses | $1,273,771 thousand | $1,214,813 thousand | | Operating income/(loss) | ($70,039 thousand) | $9,866 thousand | | Net income/(loss) | ($80,561 thousand) | $4,860 thousand | | DGD Adjusted EBITDA (Non-GAAP) | $5,359 thousand | $78,169 thousand | | DGD Adjusted EBITDA (Darling's Share) (Non-GAAP) | ($2,884 thousand) | $39,085 thousand | [DGD Consolidated Statements of Operations (Nine Months)](index=8&type=section&id=DGD%20Consolidated%20Statements%20of%20Operations%20(Nine%20Months)) For the first nine months of 2025, DGD experienced a substantial net loss and operating loss, a significant decline compared to the profitable period in 2024, mainly due to decreased operating revenues and a negative inventory valuation adjustment DGD Statements of Operations (Nine Months) | Metric | 9M 2025 (in thousands) | 9M 2024 (in thousands) | | :----------------------------------- | :--------------------- | :--------------------- | | Operating revenues | $3,201,472 thousand | $3,819,870 thousand | | Total costs and expenses | $3,297,074 thousand | $3,553,800 thousand | | Operating income/(loss) | ($95,602 thousand) | $266,070 thousand | | Lower of cost or market (LCM) inventory valuation adjustment | ($164,438 thousand) | $57,814 thousand | | Net income/(loss) | ($123,535 thousand) | $250,092 thousand | | DGD Adjusted EBITDA (Non-GAAP) | $108,797 thousand | $461,573 thousand | | DGD Adjusted EBITDA (Darling's Share) (Non-GAAP) | $45,799 thousand | $230,787 thousand | [DGD Consolidated Balance Sheets](index=9&type=section&id=DGD%20Consolidated%20Balance%20Sheets) As of September 30, 2025, DGD's total assets increased, primarily driven by other assets, while cash significantly decreased and a revolver balance was introduced DGD Consolidated Balance Sheet | Metric | Sep 30, 2025 (in thousands) | Dec 31, 2024 (in thousands) | | :-------------------------------- | :-------------------------- | :-------------------------- | | Cash | $136,225 thousand | $353,446 thousand | | Property, plant and equipment, net | $3,750,079 thousand | $3,868,943 thousand | | Other assets | $538,591 thousand | $100,307 thousand | | Total assets | $5,544,535 thousand | $5,460,517 thousand | | Revolver | $100,000 thousand | — | | Total long term debt | $684,726 thousand | $707,158 thousand | | Total members' equity | $4,497,874 thousand | $4,386,667 thousand | [Non-GAAP Financial Measures Reconciliation](index=10&type=section&id=Non-GAAP%20Financial%20Measures%20Reconciliation) This section provides reconciliations of various non-GAAP financial measures, such as Adjusted EBITDA and Combined Adjusted EBITDA, to their most directly comparable GAAP measures [Adjusted EBITDA Reconciliation](index=10&type=section&id=Adjusted%20EBITDA%20Reconciliation) The reconciliation shows the calculation of Adjusted EBITDA from net income attributable to Darling, highlighting adjustments for non-cash and non-operating items Adjusted EBITDA Reconciliation | Metric | Q3 2025 (in thousands) | Q3 2024 (in thousands) | 9M 2025 (in thousands) | 9M 2024 (in thousands) | | :----------------------------------- | :--------------------- | :--------------------- | :--------------------- | :--------------------- | | Net income attributable to Darling | $19,363 thousand | $16,949 thousand | $5,864 thousand | $176,972 thousand | | Depreciation and amortization | $124,064 thousand | $123,553 thousand | $368,961 thousand | $375,667 thousand | | Interest expense | $56,925 thousand | $66,846 thousand | $166,765 thousand | $198,947 thousand | | Income tax expense/(benefit) | ($1,248 thousand) | ($17,471 thousand) | $1,663 thousand | ($12,790 thousand) | | Equity in net (income)/loss of Diamond Green Diesel | $45,844 thousand | ($2,430 thousand) | $70,367 thousand | ($125,046 thousand) | | **Adjusted EBITDA (Non-GAAP)** | **$247,790 thousand** | **$197,604 thousand** | **$644,419 thousand** | **$559,586 thousand** | [Pro forma Adjusted EBITDA to Foreign Currency Reconciliation](index=10&type=section&id=Pro%20forma%20Adjusted%20EBITDA%20to%20Foreign%20Currency%20Reconciliation) This reconciliation adjusts Adjusted EBITDA for the impact of foreign currency exchange rates to provide a constant currency view of operating performance Pro forma Adjusted EBITDA to Foreign Currency Reconciliation | Metric | Q3 2025 (in thousands) | Q3 2024 (in thousands) | 9M 2025 (in thousands) | 9M 2024 (in thousands) | | :----------------------------------- | :--------------------- | :--------------------- | :--------------------- | :--------------------- | | Adjusted EBITDA (Non-GAAP) | $247,790 thousand | $197,604 thousand | $644,419 thousand | $559,586 thousand | | Foreign currency exchange impact | ($7,560 thousand) | — | ($8,826 thousand) | — | | **Pro forma Adjusted EBITDA to Foreign Currency (Non-GAAP)** | **$240,230 thousand** | **$197,604 thousand** | **$635,593 thousand** | **$559,586 thousand** | [Combined Adjusted EBITDA Reconciliation](index=10&type=section&id=Combined%20Adjusted%20EBITDA%20Reconciliation) Combined Adjusted EBITDA is presented by adding Darling's share of DGD Adjusted EBITDA to the company's Adjusted EBITDA, offering a comprehensive view of overall operational performance Combined Adjusted EBITDA Reconciliation | Metric | Q3 2025 (in thousands) | Q3 2024 (in thousands) | 9M 2025 (in thousands) | 9M 2024 (in thousands) | | :----------------------------------- | :--------------------- | :--------------------- | :--------------------- | :--------------------- | | Adjusted EBITDA (Non-GAAP) | $247,790 thousand | $197,604 thousand | $644,419 thousand | $559,586 thousand | | DGD Joint Venture Adjusted EBITDA (Darling's share) (Non-GAAP) | ($2,884 thousand) | $39,085 thousand | $45,799 thousand | $230,787 thousand | | **Combined Adjusted EBITDA (Non-GAAP)** | **$244,906 thousand** | **$236,689 thousand** | **$690,218 thousand** | **$790,373 thousand** | [Company Overview & Conference Call](index=10&type=section&id=Company%20Overview%20%26%20Conference%20Call) This section offers a brief introduction to Darling Ingredients and provides details for its upcoming financial results conference call [About Darling Ingredients](index=10&type=section&id=About%20Darling%20Ingredients) Darling Ingredients Inc. is a pioneer in circularity, transforming animal agriculture and food industry by-products into valuable ingredients for nutrition and renewable energy, operating globally with over 260 facilities - **Darling Ingredients Inc. transforms material from the animal agriculture and food industries into valuable ingredients that nourish people, feed animals and crops, and fuel the world with renewable energy**[24](index=24&type=chunk) - The company operates **over 260 facilities in more than 15 countries**[24](index=24&type=chunk) - Darling Ingredients processes **about 15% of the world's animal agricultural by-products**, produces **about 30% of the world's collagen** (both gelatin and hydrolyzed collagen), and is **one of the largest producers of renewable energy**[24](index=24&type=chunk) [Conference Call Information](index=11&type=section&id=Conference%20Call%20Information) Darling Ingredients will host a conference call on October 23, 2025, to discuss Q3 2025 financial results, with webcast and dial-in options available for participants and a replay/transcript provided afterward - A conference call to discuss third quarter 2025 financial results will be held on **October 23, 2025**, at **9 a.m. Eastern Time (8 a.m. Central Time)**[25](index=25&type=chunk) - Listeners can register for an audio-only webcast, while participants wishing to ask questions need to register in advance to receive dial-in details[26](index=26&type=chunk) - A replay of the call will be available online via the webcast registration link two hours after the call ends, and a transcript will be posted at darlingii.com/investors within 24 hours[27](index=27&type=chunk) [Explanation of Non-GAAP Financial Measures](index=12&type=section&id=Explanation%20of%20Non-GAAP%20Financial%20Measures) This section defines and explains the methodology and relevance of the non-GAAP financial measures used throughout the report [Segment Adjusted EBITDA](index=12&type=section&id=Segment%20Adjusted%20EBITDA) Segment Adjusted EBITDA is a non-GAAP measure used to evaluate segment operating performance by excluding non-cash and certain other items unrelated to overall operating performance - Segment Adjusted EBITDA is calculated as net income/(loss) plus depreciation and amortization, restructuring and asset impairment charges, acquisition and integration costs, change in fair value of contingent consideration, foreign currency loss/(gain), net income/(loss) attributable to noncontrolling interests, interest expense, income tax provision, other income/(expense), equity in net (income)/loss of unconsolidated subsidiaries and equity in net (income)/loss of Diamond Green Diesel[28](index=28&type=chunk) - Management believes Segment Adjusted EBITDA is useful for evaluating segment operating performance by generally eliminating non-cash and certain other items for reasons unrelated to overall operating performance[28](index=28&type=chunk) [Adjusted EBITDA](index=12&type=section&id=Adjusted%20EBITDA) Adjusted EBITDA is a non-GAAP measure used to evaluate the company's operating performance by excluding financing, income taxes, non-cash, and certain other items, making it comparable across companies - Adjusted EBITDA is calculated as net income/(loss) plus depreciation and amortization, restructuring and asset impairment charges, acquisition and integration costs, change in fair value of contingent consideration, foreign currency loss/(gain), net income/(loss) attributable to non-controlling interests, interest expense, income tax provision, other income/(expense) and equity in net (income)/loss of unconsolidated subsidiaries[29](index=29&type=chunk) - Management uses Adjusted EBITDA to evaluate performance, for discretionary purposes, and to measure compliance with certain financial covenants under the Company's Senior Secured Credit Facilities and Notes[30](index=30&type=chunk) - The calculation generally eliminates the effects of financing, income taxes, non-cash and certain other items that may vary for different companies for reasons unrelated to overall operating performance, making it useful for industry comparisons[29](index=29&type=chunk) [Pro forma Adjusted EBITDA to Foreign Currency](index=12&type=section&id=Pro%20forma%20Adjusted%20EBITDA%20to%20Foreign%20Currency) This non-GAAP measure helps evaluate the company's operating performance on a constant currency basis by adjusting for foreign exchange impacts - Pro forma Adjusted EBITDA to Foreign Currency is useful in evaluating the Company's operating performance on a constant currency basis[31](index=31&type=chunk) [Combined Adjusted EBITDA](index=13&type=section&id=Combined%20Adjusted%20EBITDA) Combined Adjusted EBITDA is a non-GAAP measure that includes Adjusted EBITDA plus Darling's share of DGD Adjusted EBITDA, providing a comprehensive view of the company's overall operating performance - Combined Adjusted EBITDA consists of Adjusted EBITDA plus DGD Adjusted EBITDA (Darling's Share)[32](index=32&type=chunk) - Management believes Combined Adjusted EBITDA is useful in evaluating the Company's operating performance compared to that of other companies in its industry[32](index=32&type=chunk) - Reconciliation of forward-looking Combined Adjusted EBITDA to net income is unavailable without **unreasonable effort** due to factors outside the Company's control and **unpredictability**[33](index=33&type=chunk)[34](index=34&type=chunk) [DGD Adjusted EBITDA](index=13&type=section&id=DGD%20Adjusted%20EBITDA) DGD Adjusted EBITDA is a non-GAAP measure used to evaluate the operating performance of the Diamond Green Diesel joint venture by adjusting for non-cash and certain other items - DGD Adjusted EBITDA is calculated by taking DGD's net income/(loss) plus income tax expense/(benefit), interest and debt expense, net, and DGD's depreciation, amortization and accretion expense less other income[35](index=35&type=chunk) - Darling's Share of DGD Adjusted EBITDA is calculated by taking DGD Adjusted EBITDA, net of discount and broker fees, and then multiplying by **50%**[35](index=35&type=chunk) - Management believes DGD Adjusted EBITDA is useful in evaluating DGD's operating performance because it generally eliminates non-cash and certain other items unrelated to overall operating performance[35](index=35&type=chunk) [EBITDA per Gallon](index=13&type=section&id=EBITDA%20per%20Gallon) EBITDA per gallon is a non-GAAP measure used to assess Diamond Green Diesel's operating performance on a per-gallon basis, allowing for comparison within the industry - EBITDA per gallon is useful in evaluating Diamond Green Diesel's operating performance compared to that of other companies in its industry[36](index=36&type=chunk) - The calculation generally eliminates the effects of financing, income taxes and certain non-cash and other items presented on a per gallon basis that may vary for different companies for reasons unrelated to overall operating performance[36](index=36&type=chunk) [Forward-Looking Statements & Risk Factors](index=13&type=section&id=Forward-Looking%20Statements%20%26%20Risk%20Factors) This section outlines cautionary statements regarding forward-looking information and discusses key risks and uncertainties that could impact future results [Cautionary Statements Regarding Forward-Looking Information](index=13&type=section&id=Cautionary%20Statements%20Regarding%20Forward-Looking%20Information) The report contains forward-looking statements subject to risks and uncertainties that could cause actual results to differ materially, including factors related to market demand, government policies, operational disruptions, and global economic conditions - The media release includes "forward-looking" statements that are subject to risks and uncertainties that could cause actual results to differ materially from those expressed or implied[37](index=37&type=chunk) - Important factors that could cause actual results to differ materially include reduced demands or prices for biofuels, biogases or renewable electricity; global demands for grain and oilseed commodities; reductions in raw material volumes; reduced finished product prices; changes to government policies relating to renewable fuels and GHG emissions; climate related adverse results; possible product recall; occurrence of animal diseases or pandemics; unanticipated costs related to regulatory compliance; risks associated with the DGD Joint Venture; international sales and operations risks; tax changes; difficulties in information systems; intellectual property claims; increased pension contributions; bad debt write-offs; loss of permits; and continued geopolitical conflicts[38](index=38&type=chunk)[39](index=39&type=chunk) - All forward-looking statements speak only as of the date made, and the Company undertakes no obligation to update them[39](index=39&type=chunk) [Contacts](index=14&type=section&id=Contacts) This section provides essential contact information for investor relations and media inquiries regarding Darling Ingredients [Darling Ingredients Contacts](index=14&type=section&id=Darling%20Ingredients%20Contacts) Contact information for investor relations and global communications is provided for inquiries regarding Darling Ingredients - Investors can contact Suann Guthrie, Senior VP, Investor Relations, Sustainability & Communications at (469) 214-8202 or suann.guthrie@darlingii.com[40](index=40&type=chunk) - Media inquiries can be directed to Jillian Fleming, Director, Global Communications at (972) 541-7115 or jillian.fleming@darlingii.com[40](index=40&type=chunk)

Core Insights - Darling Ingredients Inc. reported a net income of $19.4 million, or $0.12 per diluted share, for Q3 2025, an increase from $16.9 million, or $0.11 per diluted share, in Q3 2024 [1] - The company achieved total net sales of $1.6 billion in Q3 2025, compared to $1.4 billion in the same period of the previous year, indicating growth in revenue [1] - The core ingredients business of the company is showing continued momentum, suggesting positive operational performance [1]

Core Viewpoint - BofA Securities initiated coverage on Darling Ingredients Inc. with a Buy rating and a price target of $45.00, indicating a potential upside of approximately 40% [1] Group 1: Company Overview - Darling Ingredients Inc. is described as a vertically integrated producer of biofuels, biofuel feedstocks, and food ingredients [1] - The company is well positioned to benefit from recent U.S. policy changes that support renewable diesel and biodiesel demand [1] Group 2: Market Dynamics - Rising Renewable Identification Numbers (RIN) prices are expected to act as a tailwind for Darling's Renewable Energy segment [2] - Balance sheet deleveraging and potential restructuring within the Food Ingredients division could unlock additional value for the company [2] Group 3: Investment Thesis - BofA's bullish stance reflects both operational upside and a favorable regulatory backdrop that could expand margins across Darling's portfolio [2]

Core Insights - Birch Risk Advisors facilitated the sale of $125 million in §45Z clean fuel production tax credits for Darling Ingredients Inc. [1] - The tax credits were generated through Darling Ingredients' Diamond Green Diesel joint venture [1] - This transaction is noted as one of the first §45Z transfers of such magnitude, highlighting Darling's leadership in renewable diesel [1]

Core Insights - Darling Ingredients Inc. (NYSE: DAR) was covered nearly a year ago when its stock price was around $35, highlighting its strong positioning in the shift towards low-carbon inputs and structural advantages in the market [1] Company Analysis - The company is well-positioned to benefit from the global trend towards low-carbon inputs, indicating potential for growth and investment opportunities [1] Market Trends - The analysis emphasizes the importance of fundamental financial ratios and metrics in understanding market trends, particularly in the tech sector, which may influence investment decisions [1]

Company Overview - Darling Ingredients Inc. (NYSE: DAR) operates at the intersection of sustainable food, renewable energy, and animal product by-product processing [1] - The company's shares have recently fallen to multi-year lows, trading around $35–$37, primarily due to weak renewable diesel margins [1] Market Context - The decline in share price reflects broader challenges in the renewable diesel market, impacting the company's profitability and investor sentiment [1] Investment Strategy - The investment strategy focuses on identifying high-growth companies with strong financial momentum and rapid earnings growth, often overlooked by mainstream analysts [1] - The approach combines technical analysis with the CAN SLIM methodology to uncover emerging businesses showing signs of institutional interest [1] Research Process - The research process integrates both fundamental and technical perspectives, paying close attention to indicators such as relative strength, unusual trading volume, and earnings acceleration [1] - The goal is to identify stocks poised for significant breakouts before broader market recognition drives prices higher [1]

Core Insights - Darling Ingredients reported a significant decline in GAAP EPS to $0.08, missing the consensus estimate of $0.24, primarily due to weak profitability in its Diamond Green Diesel joint venture [1][5] - Revenue for the second quarter of fiscal 2025 was $1.5 billion, slightly above expectations, but profitability metrics indicated ongoing challenges [1][5] - The company lowered its full-year Combined Adjusted EBITDA guidance to $1.05–$1.10 billion, down from previous estimates of $1.25 to $1.3 billion, reflecting persistent headwinds in the renewable fuels market [1][11] Financial Performance - Q2 2025 EPS was $0.08, down 83.7% year-over-year from $0.49 in Q2 2024 [2] - Revenue increased by 2.7% year-over-year, from $1.46 billion in Q2 2024 to $1.5 billion in Q2 2025 [2] - Adjusted EBITDA for Q2 2025 was $249.5 million, an 8.8% decrease from $273.6 million in Q2 2024 [2][5] Business Overview and Strategy - Darling Ingredients specializes in converting animal by-products, used cooking oils, and food waste into value-added ingredients for various markets, operating over 260 facilities globally [3][4] - The company's strategy focuses on product diversification to reduce dependence on any single market, addressing sectors like agriculture, pharmaceuticals, and renewable energy [3][4] Segment Performance - The Feed Ingredients segment generated net sales of $936.5 million, contributing significantly to overall revenue, supported by strong fat prices [6][8] - The Food Ingredients segment reported net sales of $386.1 million, with a 1.9% increase year-over-year, and includes the launch of the Nextida joint venture targeting health and wellness markets [6][9] - The Fuel Ingredients segment, heavily impacted by the Diamond Green Diesel joint venture, recorded revenue of $158.8 million, with a significant decline in profitability due to regulatory uncertainties and market dislocations [6][10] Future Outlook - The company anticipates continued improvement in its core ingredients business, particularly in the Feed Ingredients segment, driven by strengthening fat prices [6][11] - Management emphasized the importance of maintaining balance sheet health and focusing on high-margin product categories, especially in food ingredients and collagen innovation [11][12] - Investors are expected to monitor operational metrics across segments, particularly for signs of margin improvement and the performance of the Nextida joint venture [12]

Core Insights - Darling Ingredients reported Q2 2025 revenue of $1.5 billion, slightly above analyst forecasts, but earnings per share fell sharply to $0.08, missing the consensus of $0.24, primarily due to weaker performance in its renewable fuels joint venture, Diamond Green Diesel [1][5][10] Financial Performance - Q2 2025 EPS (GAAP) was $0.08, down 83.7% year-over-year from $0.49 in Q2 2024 [2][5] - Revenue remained flat year-over-year, with a slight increase of 1.8% compared to Q2 2024 [5] - Combined adjusted EBITDA (non-GAAP) decreased by 8.8% to $249.5 million, driven by declining margins in renewable fuels [2][5] Business Overview - Darling Ingredients specializes in repurposing animal by-products and used cooking oil, producing essential ingredients for various industries, including food, pharmaceuticals, and renewable fuels [3] - The company operates 83 production facilities across five continents, serving a diverse customer base [3] Strategic Developments - Recent acquisitions, including Valley Proteins, Gelnex, and FASA Group, have aimed to enhance the company's portfolio in growth areas like specialty collagen peptides and renewable fuels [4] - A new joint venture, Nextida, was announced to develop the global collagen and gelatin business targeting the health and wellness market [9] Challenges and Guidance - The company revised its full-year FY2025 combined adjusted EBITDA guidance down to $1.05 to $1.10 billion from the previous forecast of $1.25 to $1.30 billion, reflecting uncertainties in U.S. renewable fuel policy and the need for improvement at DGD [10][11] - Key areas for investors to monitor include policy clarity, margin recovery at DGD, and the ramp-up of specialty collagen initiatives through the Nextida venture [12]

Core Insights - Darling Ingredients reported $1.48 billion in revenue for the quarter ended June 2025, marking a year-over-year increase of 1.8% and aligning with the Zacks Consensus Estimate, resulting in a surprise of +0.32% [1] - The company's EPS for the same period was $0.09, a significant decrease from $0.49 a year ago, leading to an EPS surprise of -25% compared to the consensus estimate of $0.12 [1] Revenue Breakdown - Net Sales from Feed Ingredients were $936.53 million, below the four-analyst average estimate of $997.05 million, reflecting a year-over-year change of +0.3% [4] - Net Sales from Fuel Ingredients reached $158.84 million, exceeding the average estimate of $138.21 million, with a year-over-year increase of +11.6% [4] - Net Sales from Food Ingredients amounted to $386.14 million, surpassing the average estimate of $366.46 million, showing a year-over-year change of +1.9% [4] EBITDA Analysis - Segment Adjusted EBITDA for Food Ingredients was $69.95 million, slightly above the average estimate of $68.51 million [4] - Segment Adjusted EBITDA for Feed Ingredients was $135.9 million, falling short of the average estimate of $161.84 million [4] - Segment Adjusted EBITDA for Fuel Ingredients was $18.64 million, compared to the average estimate of $19.79 million [4] - Segment Adjusted EBITDA for Corporate was reported at -$17.59 million, worse than the average estimate of -$10.3 million [4] - Combined Adjusted EBITDA for Fuel Ingredients was $61.29 million, significantly higher than the average estimate of $31.85 million [4] Stock Performance - Over the past month, shares of Darling have returned -1.2%, contrasting with the Zacks S&P 500 composite's +5.7% change [3] - The stock currently holds a Zacks Rank 3 (Hold), indicating potential performance in line with the broader market in the near term [3]

Financial Data and Key Metrics Changes - Combined adjusted EBITDA for Q2 2025 was $249.5 million, down from $273.6 million in Q2 2024, while year-to-date combined adjusted EBITDA totaled $445.3 million compared to $553.7 million for the same period in 2024 [13][14] - Total net sales in Q2 2025 were $1.48 billion, slightly up from $1.46 billion in Q2 2024, with raw material volume remaining nearly unchanged at approximately 3.74 million metric tons [14] - Gross margins improved to 23.3% in Q2 2025 from 22.5% in Q2 2024, with year-to-date gross margins at 23% compared to 21.9% in the first half of 2024 [14][17] Business Line Data and Key Metrics Changes Feed Ingredients Segment - Total net sales for Q2 2025 were $936.5 million, up from $934.1 million in Q2 2024, with gross margins improving to 22.9% from 21% [15][16] - Raw material volumes remained approximately 3.1 million metric tons for both quarters, with year-to-date volumes at roughly 6.2 million metric tons [16] Food Segment - Total sales for Q2 2025 were $386.1 million, compared to $378.8 million in Q2 2024, with gross margins unchanged at 26.9% [18] - Year-to-date gross margins improved to 28.1% from 25.3% in the same period a year ago [18] Fuel Segment - Darling's share of DGD EBITDA was approximately $42.6 million in Q2 2025, down from $76.6 million in Q2 2024, with year-to-date EBITDA at $48.7 million compared to $191.7 million in 2024 [19][20] - Overall fuel segment sales for Q2 2025 were $158.8 million, up from $142.3 million in Q2 2024 [20] Market Data and Key Metrics Changes - The renewable fuel environment remains challenging, with small refinery exemptions and delayed compliance enforcement impacting margins [11][12] - Tariff volatility and increased domestic oilseed crush have pressured protein prices, particularly in Asia, but rising fat prices are expected to support the Feed segment [8][10] Company Strategy and Development Direction - The company announced the formation of NexTata, a joint venture focused on health and wellness, aligning with its strategy to diversify into high-margin markets [6] - The company is focused on operational discipline and strategic timing to position itself for improved margins in the future [12][24] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the core ingredients platform, anticipating sequential improvement driven by rising fat prices [24] - The company expects full-year combined adjusted EBITDA in the range of $1.05 billion to $1.1 billion, reflecting optimism about market conditions [25] Other Important Information - The company successfully refinanced its Eurobond and replaced its revolving credit facility, enhancing financial flexibility [21][22] - Total debt net of cash decreased to $3.89 billion as of June 28, 2025, from $3.97 billion at the end of 2024, lowering the leverage ratio to 3.34 times [22] Q&A Session Summary Question: Discussion on policy benefits for domestic renewable diesel - Management highlighted the evolving domestic market and the expected drop in imported raw materials, benefiting U.S. fat pricing [28][30] Question: Outlook for LCFS prices - Management indicated a positive trend in carbon prices and anticipated potential increases, although exact estimates were challenging [34][35] Question: Impact of lower UCO pricing - Management explained the fluid dynamics of the UCO market and the lag effect in pricing, which impacted margins [39][41] Question: Opportunities for DGD outside California - Management confirmed significant exports to Europe and the UK, with growing demand for renewable diesel globally [50][51] Question: Expectations for SREs - Management expressed uncertainty regarding the timing and impact of SRE announcements, emphasizing the need for clarity in the market [53][56] Question: CapEx plans and capital discipline - Management committed to maintaining CapEx at $400 million or lower for the year, focusing on debt reduction [101]