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]

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][16] Business Line Data and Key Metrics Changes - In the Feed Ingredients segment, total net sales increased to $936.5 million in Q2 2025 from $934.1 million in Q2 2024, with gross margins improving to 22.9% from 21% [15][16] - The Food segment saw total sales rise to $386.1 million in Q2 2025 from $378.8 million in Q2 2024, with gross margins unchanged at 26.9% [17] - The Fuel segment's sales for Q2 2025 were $158.8 million, up from $142.3 million in Q2 2024, but the share of DGD EBITDA dropped to $42.6 million from $76.6 million year-over-year [19][20] Market Data and Key Metrics Changes - The regulatory environment has shown signs of improvement, particularly in the Feed segment, which is expected to enhance performance into 2026 [6] - Tariff volatility and increased domestic oilseed crush have pressured protein prices, especially in Asia, but rising fat prices are expected to support the Feed segment [7][11] - The renewable fuel environment remains challenging, with DGD facing near-term pressure but expected to benefit from policy support in the long term [11][12] 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] - The outlook for the core ingredients platform remains strong, with expectations for sequential improvement driven by rising fat prices [24] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the core ingredients business, anticipating a more constructive market environment ahead [24][25] - The company expects full-year combined adjusted EBITDA in the range of $1.05 billion to $1.1 billion, reflecting optimism about market recovery [26] - Management acknowledged challenges in the renewable fuel sector but highlighted the potential for margin recovery as policy rules clarify [12][24] 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] - The effective tax rate for Q2 2025 was 22.2%, slightly above the federal statutory rate, with expectations for a full-year effective tax rate around 15% [23] Q&A Session Summary Question: Discussion on policy benefits for domestic renewable diesel - Management noted that evolving domestic markets are expected to reduce reliance on imported raw materials, benefiting U.S. fat pricing and production [28][30] Question: Outlook for LCFS prices - Management indicated that carbon prices are moving positively, with expectations for further increases in the coming years [34] Question: Impact of lower UCO pricing - Management explained that pricing dynamics in a rising market can lead to temporary impacts on margins, but they expect improvements as prices stabilize [37][41] Question: Opportunities for DGD outside California - Management confirmed that while California is a significant market, they also export renewable diesel to Europe and other states, with demand growing globally [48][50] Question: Expectations for SREs - Management expressed uncertainty regarding the timing and impact of SREs but indicated that they expect an announcement soon [51][55] Question: CapEx plans and capital allocation - Management emphasized a commitment to maintaining capital discipline, with plans to keep CapEx below $400 million for the year while focusing on debt reduction [102][104]

Financial Performance - Total Net Sales increased by 1.8% to $1,481.5 million in Q2 2025 compared to $1,455.3 million in Q2 2024[4] - Gross Margin increased by 5.8% to $345.9 million in Q2 2025 compared to $326.9 million in Q2 2024[4] - Net Income decreased significantly by 83.9% to $12.7 million in Q2 2025 compared to $78.9 million in Q2 2024[4] - EPS Diluted decreased by 83.7% to $0.08 in Q2 2025 compared to $0.49 in Q2 2024[4] - Total combined adjusted EBITDA decreased by 8.8% to $249.5 million in Q2 2025 compared to $273.6 million in Q2 2024[4] Segment Performance - Feed segment adjusted EBITDA increased by 11.3% to $135.9 million in Q2 2025 compared to $122.1 million in Q2 2024[4] - Food segment adjusted EBITDA decreased by 4.5% to $69.9 million in Q2 2025 compared to $73.2 million in Q2 2024[4] - Fuel segment adjusted EBITDA decreased by 29.1% to $61.3 million in Q2 2025 compared to $96.8 million in Q2 2024[4] Balance Sheet - Cash and cash equivalents were $95 million as of June 28, 2025, compared to $76 million as of December 28, 2024[5] - Total debt was $3,980 million as of June 28, 2025, compared to $4,042 million as of December 28, 2024[5]