Financial Data and Key Metrics Changes - The company reported record-breaking performance in fiscal 2025, with significant increases in net sales, gross profit, and net income [21][13] - Net sales per ton grew by 6% over a 23-year period, while gross profit per ton increased by 7.6% annually [17][18] - The diluted earnings per share for Q1 of fiscal 2026 was $1.06, compared to $3.70 for the full year of fiscal 2025 [26] Business Line Data and Key Metrics Changes - The Fluids Purification Division experienced nearly 20% growth from fiscal 2024 to 2025, driven by new business in renewable diesel and vegetable oil sectors [42][40] - The Consumer Products Division saw a 10% CAGR in the domestic cat litter business over the past five years, with a significant milestone being the acquisition of UltraPET [46][47] - The Agriculture segment, particularly Amlin, is focusing on natural solutions as customers move away from therapeutic antibiotics, with strong growth prospects in the poultry and dairy industries [66][69] Market Data and Key Metrics Changes - The lightweight litter segment has shown explosive 10% volume growth, significantly outperforming the overall litter category [48][49] - The renewable diesel market is expected to grow due to recent EPA rulings, positioning the company well for increased sales in this sector [43][40] Company Strategy and Development Direction - The company is committed to a "Moneyball" strategy, focusing on data analytics to enhance decision-making and improve profitability [13][19] - Continued investment in manufacturing infrastructure is a priority to support long-term growth and operational efficiency [20][30] - The company plans to execute opportunistic share repurchases and maintain a strong balance sheet to support future investments [29][28] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the potential for profit gains in the second half of the fiscal year, despite a tough comparison to the previous year [78] - The company is optimistic about the growth in the renewable diesel and vegetable oil markets, anticipating increased demand due to regulatory changes [43][40] Other Important Information - The company has raised its annual dividend increase from $0.04 to $0.10 per share, reflecting its commitment to returning value to shareholders [22] - The company maintains a strong balance sheet, with net cash position as of the end of Q1 fiscal 2026 [28] Q&A Session Summary Question: Are you more or less confident of recovery in the second half? - Management indicated that while the first half faced tough comparisons, they are ahead of their plan and see a realistic possibility of profit gains for the year as a whole [78] Question: Are Oil-Dri's bleaching clays being used to filter sustainable aviation fuel? - Yes, the sustainable aviation fuel market is growing, and the company expects increased sales of bleaching clay products in this sector [79] Question: What are the headwinds for Amlin this year? - Key issues include tariffs causing customer uncertainty, but orders have resumed, particularly in Brazil [81][82] Question: Will we see new products this year? - The company continues to invest in R&D and innovation, with new and improved crystal solutions being launched [83]

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]

Financial Data and Key Metrics Changes - In Q2 2025, adjusted EBITDA was just under $56 million, exceeding the high end of guidance range [12] - Adjusted free cash flow was a use of $2 million compared to a use of $14 million in 2024, with guidance raised to $70 million to $80 million for the year [17][21] - Net debt leverage ratio rose to 3.5 times from 3.2 times at the end of the prior quarter, primarily due to the acquisition and share repurchases [18][19] Business Line Data and Key Metrics Changes - Ecoservices sales increased by 14% compared to 2024, driven by favorable pricing and the addition of the Wagaman site [5] - Eco Services sales were $176 million, up $22 million year-over-year, with adjusted EBITDA for Eco Services at $49.8 million, unchanged from 2024 [14][15] - Advanced Silicas sales decreased to $24 million from $29 million in the prior year, primarily due to lower custom catalyst sales [15][16] Market Data and Key Metrics Changes - Demand fundamentals for Eco Services remained stable, with high refinery utilization supporting regeneration services [7] - The outlook for virgin sulfuric acid demand remains positive, with expectations for stronger sales in the mining sector as expansion projects come online [7][26] - Sales in the Zeolyst joint venture were projected to be strong, with expectations for hydrocracking catalyst sales to surpass 2024 levels [9][21] Company Strategy and Development Direction - The company closed the acquisition of the sulfuric acid production assets of Cornerstone Chemical Company, with ongoing integration expected to yield meaningful synergies [6] - Focus on emerging technologies for growth opportunities, including advanced silicas for biocatalysis and carbon capture applications [8][26] - The company is taking an opportunistic approach to share repurchases while targeting a long-term leverage ratio of 2 to 2.5 times [19][49] Management's Comments on Operating Environment and Future Outlook - The operating environment remains challenging due to global production overcapacity and pricing pressures, but the company has demonstrated resilience [25] - Anticipated strong sales performance for hydrocracking catalysts in 2025, supported by a substantial order book [26] - The company expects stable demand fundamentals across most end uses for the remainder of the year, with some caution regarding polyethylene sales due to trade uncertainties [20][33] Other Important Information - The company repurchased 2.9 million shares of common stock for approximately $22 million during the quarter [6] - The Kansas City expansion project is expected to support growth in customer demand as expansion projects come online in 2026 and 2027 [8] - The strategic review of the Advanced Materials and Catalysts segment is ongoing, with updates expected in the near future [27] Q&A Session Summary Question: Initial indications from customers regarding new EPA guidelines for renewable fuel volume - Management is encouraged by the new requirements but noted it is still early as the guidelines are draft [30][32] Question: Outlook for polyethylene sales amid trade uncertainty - Management acknowledged global polyethylene utilization rates have been impacted but still expects year-over-year sales growth [33] Question: Update on synergies from the Cornerstone acquisition - Management believes the acquisition will provide additional opportunities and integration is progressing well [37][38] Question: Sensitivity of the business to proposed RVO changes - Management indicated that increased RVO will drive utilization and lead to more frequent catalyst changeouts, translating into growth [52] Question: Visibility on nylon and mining demand - Management expects year-over-year growth in virgin sulfuric acid sales, with strong momentum in mining due to new projects [54][56] Question: Timeline for Wagaman to contribute to free cash flow - Management does not expect significant free cash flow from Wagaman this year but anticipates positive contributions in 2026 [59] Question: Order timing implications for 2026 - Management expects order timing shifts will not materially impact 2026 [64]