Financial Data and Key Metrics Changes - The combined adjusted EBITDA for the third quarter was $245 million, compared to $237 million in Q3 2024 and $250 million in the previous quarter [10] - Total net sales for the quarter were $1.6 billion, up from $1.4 billion year-over-year, with gross margins improving to 24.7% from 22.1% [10][16] - Net income for the quarter was $19.4 million, or $0.12 per diluted share, compared to $16.9 million, or $0.11 per diluted share in Q3 2024 [16] Business Line Data and Key Metrics Changes - In the feed segment, EBITDA improved to $174 million from $132 million a year ago, with total sales reaching $1 billion compared to $928 million [10] - The food segment saw total sales of $381 million, up from $357 million in Q3 2024, with gross margins increasing to 27.5% from 23.9% [11] - The fuel segment, specifically Diamond Green Diesel (DGD), reported an EBITDA of -$3 million, down from +$39 million in Q3 2024, impacted by operational challenges and market dynamics [12][14] Market Data and Key Metrics Changes - Global rendering volumes and margins in the feed segment were up both sequentially and year-over-year, driven by strong demand for fats and proteins [7] - In the U.S., demand for domestic fats was robust, supported by strong agricultural and energy policies, boosting revenue and margins [8] - Export protein demand showed signs of recovery, with slightly firmer pricing trends emerging, although tariff implications affected value-added poultry protein products [8] Company Strategy and Development Direction - The company is focused on its core ingredients business, expecting EBITDA for 2025 to be in the range of $875 to $900 million, excluding DGD [17] - The management believes that the integrated model of Darling Ingredients provides a competitive advantage that is unmatched in the industry [5] - The company anticipates a shift in the renewables market that will enhance DGD's earnings potential, contingent on favorable public policy [9] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the core ingredients business despite short-term challenges in the renewables market due to policy uncertainties [5][9] - The management highlighted that the Renewable Volume Obligation (RVO) is expected to support American agriculture and energy leadership, which could be a catalyst for future growth [17] - There is optimism regarding the recovery of margins in the fourth quarter, although caution was advised due to ongoing regulatory uncertainties [64] Other Important Information - Total debt net of cash was $4.01 billion, a slight increase from $3.97 billion at year-end 2024, with capital expenditures totaling $90 million in Q3 [15] - The company recorded an income tax benefit of $1.2 million for the quarter, yielding an effective tax rate of -6.3% [16] - The company expects to generate around $300 million in production tax credits (PTCs) in 2025, with significant sales anticipated in the fourth quarter [13][14] Q&A Session Summary Question: Timeline for clarity on regulatory items like RVO - Management expects clarity on RVO and related regulatory items by December, despite the government shutdown [22] Question: Outlook for feed segment in Q4 - Management indicated that while waste fat prices have dipped, they expect the food segment to be stronger in Q4, with overall performance close to the previous quarter [24] Question: Benefits of REMS policy protectionism - Management noted that the treatment of foreign feedstocks is still unclear, and the overall supply and demand for fats and oils will influence the feed business [28][29] Question: Drivers of DGD margins - Management clarified that the DGD results were impacted by LCM and operational challenges, and they are optimistic about future margin improvements [34][39] Question: Plans for debt repayment and leverage ratios - Management confirmed they are committed to paying down debt and expect their debt coverage ratio to be around three by year-end [51][52] Question: RIN pricing scenarios and industry compliance - Management indicated that RIN prices may not see a significant lift until clarity on enforcement dates is provided, which is expected by the end of the year [76]

Financial Data and Key Metrics Changes - The combined adjusted EBITDA for the third quarter was $245 million, compared to $237 million in the third quarter of 2024 and $250 million in the previous quarter [8][10] - Total net sales for the quarter were $1.6 billion, up from $1.4 billion year-over-year, while gross margins improved to 24.7% from 22.1% [8][10] - Overall net income was $19.4 million for the quarter, or $0.12 per diluted share, compared to net income of $16.9 million, or $0.11 per diluted share for the same quarter last year [15] Business Line Data and Key Metrics Changes - In the feed segment, EBITDA improved to $174 million from $132 million a year ago, with total sales reaching $1 billion compared to $928 million [9][10] - The food segment saw total sales of $381 million, higher than $357 million in the third quarter of 2024, with gross margins increasing to 27.5% from 23.9% [9][10] - The fuel segment, specifically Diamond Green Diesel (DGD), reported a negative EBITDA of $3 million for the quarter, down from positive $39 million in the third quarter of 2024 [10][12] Market Data and Key Metrics Changes - Global rendering volumes and margins in the feed segment were up both sequentially and year-over-year, driven by strong demand for fats and proteins [5][6] - Export protein demand is showing signs of recovery, with slightly firmer pricing trends emerging, although tariff implications have impacted value-added poultry protein products [6][9] - The renewables market continues to face headwinds, with higher feedstock costs and lower RINs and LCFS pricing impacting margins [7][10] Company Strategy and Development Direction - The company is focused on its core ingredients business, expecting EBITDA for 2025 to be in the range of $875 to $900 million, excluding DGD [16] - Management believes that the integrated model of Darling Ingredients provides a competitive advantage that is unmatched in the industry [4] - The company is optimistic about the future, anticipating that public policy changes will strengthen American agriculture and energy leadership, which will enhance DGD's earnings potential [7][16] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the core ingredients business despite short-term uncertainties in the renewables market [4][16] - The company is optimistic about the upcoming clarity on regulatory items, including the Renewable Volume Obligation (RVO) [20] - Management noted that the current uncertainty around public policy impacts the fuel segment, but they remain focused on what they can control [16] Other Important Information - Total debt net of cash was $4.01 billion, with a minimal increase from $3.97 billion at the end of 2024 [14] - The company recorded an income tax benefit of $1.2 million for the quarter, yielding an effective tax rate of -6.3% [15] - The company expects to generate around $300 million in production tax credits in 2025, with significant sales anticipated in the fourth quarter [12][13] Q&A Session Summary Question: Timeline for clarity on regulatory items - Management expects clarity on RVO and exemptions by December, amid ongoing government shutdown [20] Question: Feed outlook for the fourth quarter - Management indicated that while waste fat prices have dipped, they expect the food segment to be stronger in Q4, with a narrow range for the business [21][23] Question: Benefits of REMS policy protectionism - Management noted uncertainty around how the EPA will treat foreign feedstocks, which will depend on various factors [26][28] Question: Drivers of DGD margins - Management clarified that DGD results were not as good as hoped, and the capture rate was affected by LCM accounting practices [29][30] Question: Outlook for the feed segment going into 2026 - Management expects continued improvement in feed segment margins, driven by protein price recovery and strong demand [35][37] Question: RIN pricing scenarios - Management indicated that RIN prices need to increase by approximately $0.40 to incentivize production to meet the 2026 mandate [43][44] Question: Debt repayment plans - Management confirmed they are committed to paying down debt and expect their debt coverage ratio to be around three times by year-end [45][46] Question: DGD1 restart conditions - Management stated that DGD1 will only restart when soybean oil margins are profitable enough to justify the catalyst costs [70][72] Question: Food segment outlook - Management expects a stronger Q4 for the food segment, with a rebound in hydrolyzed collagen business and new product launches [73][75]

Group 1: Trade Tensions - The recent market drop was triggered by renewed trade tensions between the US and China, raising concerns of a potential trade war [1] - China announced plans to impose export controls on rare earth elements, which are critical for various industries, including smartphones, electric vehicles, and military systems [2] - China currently dominates approximately 70% of the global supply of rare earths, providing it with significant leverage in this sector [2] Group 2: Market Reactions - In response to China's actions, President Trump announced new tariffs on Chinese imports, with some tariffs reaching up to 100%, causing a significant market decline [3] - The S&P 500 fell by 2.71%, and the Nasdaq dropped by 3.56% following the announcement of tariffs [3] - Trump's subsequent comments suggesting that "it will all be fine" helped to calm investors, leading to a recovery in U.S. stocks [3] Group 3: Investment Opportunities - Despite market volatility, analysts suggest that pullbacks can create attractive entry points for quality stocks [4] - Bank of America analysts have identified two stocks that they believe present solid investment opportunities [4] Group 4: Darling Ingredients Overview - Darling Ingredients operates in recycling, food technology, and agribusiness, focusing on converting waste materials into valuable products [5] - The company produces animal feeds, human food products, and renewable biofuels, making it the largest rendering company in the global feed market [6] - Darling is recognized as a global leader in gelatin and collagen solutions, with 16 factories worldwide and sales in over 80 countries [7] Group 5: Joint Venture and Revenue Projections - Darling Ingredients has formed a joint venture with Tessenderlo Group called Nextida, which will focus on their collagen and gelatin segments [7] - The joint venture is projected to generate $1.5 billion in revenue and will be 85% owned by Darling [7]

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]

Financial Performance Overview - Total net sales for Q1 2025 were $1,380.6 million, a decrease of 2.8% compared to $1,420.3 million in Q1 2024[5] - The company reported a net loss of $(26.2) million in Q1 2025, a significant decrease compared to a net income of $81.2 million in Q1 2024[4, 5] - EPS Diluted was $(0.16) in Q1 2025, compared to $0.50 in Q1 2024, representing a decrease of 132.0%[4, 5] - Combined Adjusted EBITDA was $195.8 million in Q1 2025, a decrease of 30.1% compared to $280.1 million in Q1 2024[4, 5] Segment Performance - Feed Ingredients Segment reported income of $23.6 million and Adjusted EBITDA of $110.6 million in Q1 2025[4] - Food Ingredients Segment reported income of $41.4 million and Adjusted EBITDA of $70.9 million in Q1 2025[4] - Fuel Ingredients Segment reported a loss of $(20.9) million and Adjusted EBITDA of $24.2 million in Q1 2025[4] Diamond Green Diesel (DGD) - Darling Ingredients received $129.5 million in dividends from Diamond Green Diesel (DGD)[4] - DGD Adjusted EBITDA (Darling's Share) was $6.0 million in Q1 2025, significantly lower than $115.1 million in Q1 2024[18, 22] - Total gallons produced by DGD were 216.1 million in Q1 2025, compared to 335.4 million in Q1 2024[22] - EBITDA per gallon sold/shipped by DGD was $0.06 in Q1 2025, compared to $0.69 in Q1 2024[22] Balance Sheet - Total debt was $3,921 million as of March 29, 2025, compared to $4,042 million as of December 28, 2024[6]