Financial Data and Key Metrics Changes - Combined adjusted EBITDA for Q4 2025 was $336.1 million, an increase from $289 million in Q4 2024 and $245 million in Q3 2025 [12] - Total net sales for Q4 2025 reached $1.7 billion, compared to $1.4 billion in Q4 2024 [12] - Gross margins improved to 25.1% in Q4 2025 from 23.5% in Q4 2024 [13] - For the full year 2025, core ingredients EBITDA was $922 million, up from $790 million in 2024 [12] Business Line Data and Key Metrics Changes - Core ingredients EBITDA for Q4 2025 was $278 million, compared to $230 million in Q4 2024 [12] - Feed segment EBITDA improved to $193 million in Q4 2025 from $150 million a year ago, with total sales of $1.13 billion versus $924 million [13] - Food segment total sales for Q4 2025 were $429 million, up from $362 million in Q4 2024 [14] - Fuel segment, specifically Diamond Green Diesel (DGD), achieved $57.9 million in EBITDA for Q4 2025, marking its strongest quarter of the year [8][15] Market Data and Key Metrics Changes - Demand for domestic fats in the U.S. remains robust, supported by favorable agricultural and energy policies [8] - Internationally, the global rendering business in Europe, Canada, and Brazil showed solid year-over-year growth [8] - DGD sold approximately 1 billion gallons in 2025, earning $103.7 million in EBITDA, or $0.21 per gallon [9] Company Strategy and Development Direction - The company aims to be the world's largest and most profitable processor of animal byproducts, focusing on operational excellence and core strengths [5] - Plans to sharpen the portfolio may lead to asset sales, while also exploring opportunities to strengthen and expand core business [10] - The company is optimistic about the policy backdrop for renewable fuels, which is expected to enhance DGD's earning potential [9] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the uncertainties from evolving renewables public policy and global trade but emphasized a commitment to fundamentals [5] - The outlook for 2026 is encouraging, with positive global demand trends and expectations for improved margins in the fuel segment [8][20] - Management anticipates a modest pullback in Q1 2026 but expects core ingredients adjusted EBITDA to be in the range of $240 million to $250 million [21] Other Important Information - The company recorded an income tax benefit of $11 million for Q4 2025, with an effective tax rate of -15.3% [18] - Restructuring and impairment charges of $58 million were recorded in the quarter [19] - The company ended 2025 with approximately $1.3 billion available on its revolving credit facility [17] Q&A Session Summary Question: Guidance for DGD margins and potential inclusion in future guidance - Management indicated that guidance for DGD will depend on clarity regarding the Renewable Volume Obligation (RVO) [27][28] Question: Sensitivity of the feed business to RVO changes - Management noted that the feed business is sensitive to U.S. and North American feedstock values, which are expected to be supportive [29] Question: Insights on biofuels production and feedstock demand - Management stated that there hasn't been a significant increase in biofuel production yet, and better margins are needed to incentivize more production [33] Question: Expectations for the food business and EBITDA - Management expressed optimism for the collagen and gelatin business, expecting a year similar to or better than the previous year [35] Question: RVO expectations and potential impact on Darling's feed business - Management supports an RVO for advanced biofuels translating to 5.25 billion to 5.61 billion gallons, which would be constructive for margins [40] Question: Rationale for the Potencei Group acquisition - Management highlighted the strategic fit of the Potencei facilities within their existing footprint and the potential for margin enhancement [68] Question: Capital allocation priorities post-leverage targets - Management emphasized that capital allocation will focus on paying down debt, with reassessment following clarity on cash flow from DGD [79]

Report Summary 1. Report Industry Investment Rating No information provided regarding the industry investment rating. 2. Core Viewpoints - The soybean and soybean meal market has a strong inventory accumulation trend in the next three months, with domestic soybean meal spot prices expected to gradually decline, and far - month contracts to fluctuate. The price of soybeans to China has a stable - to - rising trend, but trade - war - induced macro - weakness may suppress prices [3][5]. - The palm oil market is currently supported by low inventory and improved high - frequency exports in April, but may face a lack of upward momentum due to increased seasonal supply. If the macro - economy stabilizes, the oil market may be supported by the demand for increased RVO in the US [7][9]. - The short - term sugar price trend is volatile. Although Brazil has entered the new crushing season, the low shipping volume and high raw - refined sugar spread do not necessarily lead to a decline in raw sugar prices. In China, Zhengzhou sugar is running strong in the short term but shows signs of weakening [11][12]. - The cotton market shows a pattern of weak supply and demand, with short - term prices expected to continue to fluctuate. The impact of the news of potential tariff reduction on cotton prices is limited, and attention should be paid to macro - policies and domestic inventory changes [14][15]. - The egg price may be stable in some areas and slightly decline in others. It is recommended to wait for a rebound and then short - sell [17][18]. - The short - term pig price fluctuates little, and it is recommended to look for short - selling opportunities after the price rebounds due to factors such as hoarding, secondary fattening, and stocking [20][21]. 3. Summary by Category Soybean/Meal - **Important Information**: Domestic soybean meal spot prices continued to fall on Tuesday. MYSTEEL estimates that 9.1975 million tons of soybeans will arrive in May, 11 million tons in June, and 10.5 million tons in July. The soybean meal inventory was at a low level last week, and downstream buyers are cautious. The US soybean production area will have more rainfall in the southwest in the next two weeks, and China's soybean imports mainly rely on Brazil [3]. - **Trading Strategy**: The cost of the 05 soybean meal contract is in the range of 2,750 - 2,850 yuan/ton, and that of the 09 and other far - month contracts is in the range of 2,850 - 3,000 yuan/ton. The short - term price of US soybeans is under pressure but has strong support. The cost of imported soybeans is expected to be stable, with a mid - term upward trend. Domestic soybean meal spot prices are likely to fall, and far - month contracts will fluctuate [5]. Oils and Fats - **Important Information**: ITS and AMSPEC predict that the export of Malaysian palm oil increased by about 20% - 50% in the first 10 days of April. The production of Malaysian palm oil increased in April. The Advanced Biofuels Association urged the EPA to increase the RVO in 2026 to 575 million gallons. The domestic spot basis is oscillating [7]. - **Trading Strategy**: If palm oil production recovers significantly and the crude oil price center falls, the oil market will be bearish. In the short term, palm oil is supported by improved exports and low inventory, but it may lack upward momentum. In the medium term, if the macro - economy stabilizes, the oil market may be supported by the demand for increased RVO [9]. Sugar - **Important Information**: The Zhengzhou sugar futures price fell on Tuesday. The 2025/26 sugarcane production in Brazil is expected to be 663.4 million tons, a 2% reduction from the previous year, due to adverse weather conditions in 2024 [11]. - **Trading Strategy**: The short - term sugar price trend is volatile. Brazil's low shipping volume and high raw - refined sugar spread do not necessarily lead to a decline in raw sugar prices. In China, Zhengzhou sugar is running strong in the short term but shows signs of weakening [12]. Cotton - **Important Information**: The Zhengzhou cotton futures price fell on Tuesday. As of April 27, 2025, the US cotton planting rate was 15%, 4 percentage points higher than the previous week, slightly faster than the same period last year and the five - year average [14]. - **Trading Strategy**: The news of potential tariff reduction has limited impact on cotton prices. The domestic cotton market shows a pattern of weak supply and demand, with short - term prices expected to continue to fluctuate. Attention should be paid to macro - policies and domestic inventory changes [15]. Eggs - **Important Information**: Domestic egg prices are mainly falling, with sufficient supply and lukewarm demand. Some areas have surplus inventory, and traders are cautious [17]. - **Trading Strategy**: After the previous cost - driven rebound, the support for egg prices is insufficient. As the supply increases, it is recommended to wait for a rebound and then short - sell [18]. Pigs - **Important Information**: Domestic pig prices are mainly falling, with limited short - term fluctuations. Most areas are restricted by demand, and the pig - price increase sentiment of farmers has weakened [20]. - **Trading Strategy**: The short - term pig price fluctuates little, but the pressure accumulates due to the increase in pig weight. It is recommended to look for short - selling opportunities after the price rebounds due to factors such as hoarding, secondary fattening, and stocking [21].

Report Summary 1. Industry Investment Rating No industry investment rating is provided in the report. 2. Core Viewpoints - The cost of soybean arrivals in China has a tendency to rise steadily, but trade - related factors may suppress the prices of soy - based products [3]. - The valuation of short - term US soybeans is low, and the cost of soybean arrivals is expected to be stable with a mid - term upward trend. Domestic spot soybean meal is likely to decline, while far - month contracts are expected to fluctuate [5]. - The valuation of oils and fats may be suppressed by the decline of the crude oil center. If palm oil production recovers significantly, oils and fats will be bearish. However, mid - term factors may support the market [9]. - Short - term sugar prices are volatile, with a tendency to be strong in the short - term but showing signs of weakness in the price structure [12]. - Cotton prices are expected to continue to fluctuate in the short - term, presenting a pattern of weak supply and demand [15]. - Egg prices may be stable in some areas and have a slight downward risk in others. It is recommended to wait for a rebound and then sell short [17]. - The short - term fluctuation of hog prices is limited, and it is advisable to short after the short - term rebound of futures and spot prices [19]. 3. Summary by Category Soybean/Meal - **Market Situation**: On Monday, domestic soybean meal spot prices dropped significantly. The lowest national quotation remained at a high level of 3,400 yuan/ton. The estimated soybean arrivals in the next three months are 9.1975 million tons in May, 11 million tons in June, and 10.5 million tons in July. The inventory of soybean meal and soybeans is expected to increase. The current inventory of soybean meal has dropped to a low level of 74,800 tons, and downstream buyers are still cautious. The trading volume of soybean meal today is 14,800 tons, the current opening rate is 43.98%, and the expected opening rate of soybean oil mills this week is 41.3%, with a planned crushing volume of 1.4693 million tons [3]. - **Trading Strategy**: The cost range of the 05 soybean meal contract is 2,750 - 2,850 yuan/ton, and that of far - month contracts such as 09 is 2,850 - 3,000 yuan/ton. Short - term US soybeans are under pressure due to the trade war, but are strongly supported. The cost of soybean arrivals is expected to be stable and has a mid - term upward trend. Domestic spot soybean meal is likely to decline, while far - month contracts are expected to fluctuate [5]. Oils and Fats - **Important Information**: The exports of Malaysian palm oil in April are expected to increase. The production of Malaysian palm oil has recovered both year - on - year and month - on - month. The industry association in the US has requested a significant increase in RVO, which is beneficial to the demand for US soybean oil. The domestic spot basis is fluctuating [7]. - **Trading Strategy**: The decline of the crude oil center will significantly suppress the valuation of oils and fats. If palm oil production recovers significantly, oils and fats will be bearish. In the short - term, the rebound of oils and fats may be weak, but mid - term factors may support the market [9]. Sugar - **Key Information**: On Monday, the Zhengzhou sugar futures price fluctuated strongly. The spot prices of sugar in different regions had different trends. The estimated sugar production in the central - southern region of Brazil in the first half of April decreased by 3.8% year - on - year [11]. - **Trading Strategy**: Although Brazil has entered the new sugar - crushing season, the shipping volume is still low, and the price difference between raw and white sugar remains high, which is not bearish for raw sugar. In China, short - term sugar prices are strong, but there are signs of weakness in the price structure. Overall, short - term sugar prices are volatile [12]. Cotton - **Key Information**: On Monday, the Zhengzhou cotton futures price continued to fluctuate. The spot price of cotton increased slightly, and the enthusiasm of cotton farmers for planting this year has increased [14]. - **Trading Strategy**: The news of potential tariff reduction has a limited impact on domestic cotton prices. The domestic cotton market is in a pattern of weak supply and demand, and short - term cotton prices are expected to continue to fluctuate [15]. Eggs - **Spot Information**: The national egg prices are stable or declining. The supply is sufficient, the market demand is tepid, and there is a risk of a slight decline in egg prices in some areas [16]. - **Trading Strategy**: After the previous rebound of egg prices, the support is insufficient, and the supply may increase again. It is recommended to wait for a rebound and then sell short [17]. Hog - **Spot Information**: The domestic hog prices mainly declined yesterday, with partial increases. The supply in the northern market may decrease, and the prices may be strong; the southern market is in a stalemate between supply and demand, and the prices are stable [18]. - **Trading Strategy**: The short - term fluctuation of hog prices is limited, and the pressure is accumulating. It is advisable to short after the short - term rebound of futures and spot prices [19].