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DARLING INGREDIENTS INC. (DAR)·Q1 2026 Earnings Summary

Executive Summary

  • Q1 2026 earnings materials were not available via SEC or company sources; we anchor expectations to S&P Global consensus and assess trajectory using Q1–Q3 2025 actuals and Q3 2025 call commentary .
  • S&P Global consensus for Q1 2026: revenue ~$1.525B*, EBITDA ~$326.4M*, EPS ~$0.60* (5 ests), implying sequential improvement from Q3 2025 on stronger core ingredients and fuel margin normalization; policy and LCFS/RIN enforcement timing are the primary catalysts*.
  • Q3 2025 delivered $1.564B revenue, $0.12 diluted EPS, gross margin 24.7%, and Combined Adj. EBITDA $244.9M; core ingredients were strong while DGD posted negative EBITDA on LCM/LIFO and a DGD-3 turnaround .
  • Guidance pivot: management stopped consolidated guidance and now guides only core ingredients FY25 Adj. EBITDA to $875–$900M; prior FY25 Combined Adj. EBITDA was cut from $1.25–$1.30B (Q1) to $1.05–$1.10B (Q2) .

What Went Well and What Went Wrong

What Went Well

  • Core ingredients momentum: Feed Adj. EBITDA up to $174.0M (+31.6% YoY) and Food Adj. EBITDA to $71.6M (+25.6% YoY) in Q3 2025, with gross margin rising to 24.3% (Feed) and 27.5% (Food) on stronger fat prices and disciplined execution .
  • Management confidence and strategic messaging: “Our core ingredients business continues to build momentum... reinforcing our unmatched position” (CEO) .
  • PTC monetization established: $125M of 2025 production tax credits sold in Q3; management expects an additional $125–$175M by year-end, improving cash and leverage trajectory .

What Went Wrong

  • Fuel segment headwinds: DGD EBITDA negative ~$3M in Q3 due to a $37.8M LCM expense, LIFO impacts, and a ~30-day DGD-3 turnaround limiting higher-margin SAF volumes .
  • Policy delays depressed RIN/LCFS pricing and created uncertainty; enforcement date shifts and SRE reallocations impeded near-term margin recovery .
  • Elevated corporate costs: Corporate Adj. EBITDA was -$22.3M in Q3 2025, while net debt held around ~$4.01B, constraining flexibility until PTC cash receipts and core cash generation reduce leverage .

Financial Results

Core P&L and Margin Trajectory (Actuals)

MetricQ1 2025Q2 2025Q3 2025
Total Net Sales ($USD Millions)$1,380.6 $1,481.5 $1,563.966
Diluted EPS ($)-$0.16 $0.08 $0.12
Gross Margin %22.6% 23.3% 24.7%
Combined Adjusted EBITDA ($USD Millions)$195.8 $249.5 $244.9

Segment Adjusted EBITDA (Actuals)

Metric ($USD Millions)Q1 2025Q2 2025Q3 2025
Feed Segment Adj. EBITDA$110.6 $135.9 $173.996
Food Segment Adj. EBITDA$70.9 $69.946 $71.638
Fuel Segment Adj. EBITDA (ex-DGD)$18.191 $18.639 $24.485
DGD Adj. EBITDA (Darling’s Share)$6.035 $42.648 -$2.884
Combined Segment Adj. EBITDA$24.226 Fuel total $61.287 Fuel total $21.601 Fuel total

KPIs

KPIQ1 2025Q2 2025Q3 2025
Raw Material Processed – Feed (mmts)3.1 3.1 3.2
Raw Material Processed – Food (metric tons)330,000 324,000 314,000
Raw Material Processed – Fuel (mmts, ex-DGD JV)0.37 0.34 0.351
DGD Gallons Sold (Millions)219.1 467.8 YTD; 248.6 in Q2 250.0
DGD EBITDA per Gallon (after fees) ($/gal)$0.06 $0.34 (Q2) -$0.02

Q1 2026 Consensus (S&P Global)

MetricQ1 2026 Consensus
Revenue ($USD)$1,524,951,180*
EBITDA ($USD)$326,427,770*
EPS ($, Primary)$0.60127*
# of EPS Estimates5*
# of Revenue Estimates4*
* Values retrieved from S&P Global.

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Combined Adjusted EBITDA ($)FY 2025$1.25–$1.30B (Q1 2025) $1.05–$1.10B (Q2 2025) Lowered
Core Ingredients Adj. EBITDA ($)FY 2025~$950M–$1.0B (Q1 2025) $875–$900M (Q3 2025) Lowered and narrowed
Leverage ratio (bank covenant)YE 2025Target “~3.0x by year-end” (CFO) Preliminary Q3 at 3.65x, trending lower with PTC cash Progressing toward target
Capex ($)FY 2025≤$400M (CFO) $224M YTD through Q3; $90M in Q3 Maintained discipline

Earnings Call Themes & Trends

TopicPrevious Mentions (Q1 & Q2 2025)Current Period (Q3 2025)Trend
Policy/RVO & SREsAnticipated constructive RVO; uncertainty on SREs and enforcement timing EPA supplemental proposal; delays depressed RINs; expecting clarity by year-end Improving clarity likely; catalyst for margins
LCFS dynamicsCARB changes should tighten bank and lift LCFS over time LCFS still weak; bank working down; more balanced by 2026 Gradual firming expected
DGD operations & SAFDGD1 offline pending margins; DGD3 turnaround planned; SAF volumes resilient DGD3 turnaround and LCM/LIFO drove negative EBITDA; expect stronger Q4 Near-term recovery if policy normalizes
PTC monetizationWorking to establish ratable monetization; early market unfamiliarity $125M sold; expect $125–$175M more by YE; more counterparties engaged Ratable, improving cash timing
Feed segment pricingRising fats; proteins soft due to tariffs; price lag effects in Q2 Strong fats; protein recovery signs; volumes steady to up Positive momentum
Collagen/NextidaTrials progressing; repeat orders; JV to expand capacity Steady QoQ; demand resilient; new product launch planned in 2026 Building pipeline

Management Commentary

  • CEO: “Our core ingredients business continues to build momentum, driven by strong fundamentals across all segments... reinforcing our unmatched position” .
  • CFO on fuel headwinds: “LIFO and LCM were negative in the third quarter... an LCM loss of around $38 million at the entity level” .
  • CFO on policy timing: “We expect sometime in December... have something approved by the end of the year” (RVO/SRE clarity) .
  • CFO on PTC: “We agreed to the sale of $125 million… anticipate an additional $125–$170 million of sales in Q4” .

Q&A Highlights

  • Policy timeline: Management expects RVO/SRE clarity by year-end, which should catalyze RINs and margins .
  • DGD margin path: Indicator margins improving; with DGD2/3 at capacity, Q4 could be the best quarter of 2025 if policy normalizes .
  • Feedstock and mix: DGD prioritizing EUCO, yellow grease, animal fats; soybean oil mix would rise with DGD1 restart if margins justify .
  • PTC market: Buyer base expanding; discounts stabilizing; monetization expected to be ratable through 2026 .
  • Balance sheet: Leverage on track toward ~3.0x by YE with PTC cash and core EBITDA; covenants not at risk .

Estimates Context

  • S&P Global consensus for Q1 2026 suggests sequential improvement vs Q3 2025 (Revenue ~$1.525B*, EBITDA ~$326M*, EPS ~$0.60*), consistent with management’s expectation of stronger margins as policy uncertainty abates*.
  • Potential estimate revisions hinge on: RVO/SRE finalization, LCFS bank normalization, and timing of DGD1 restart; core ingredients trajectory remains constructive .
    * Values retrieved from S&P Global.

Key Takeaways for Investors

  • Core ingredients are the near-term anchor; Feed and Food segments are driving margin expansion despite tariff-related noise .
  • The main Q1 2026 catalyst is policy clarity (RVO/SRE enforcement), which should tighten RINs and support RD/SAF margins and DGD profitability .
  • PTC monetization is de-risking cash flows and leverage; expect improved liquidity once additional credits are sold and collected .
  • Watch fats pricing (yellow grease, tallow) and LCFS credit trajectory; both underpin core and fuel economics .
  • DGD operational setup (fresh catalysts, capacity) positions the fuel segment to rebound quickly once margins normalize; DGD1 restart is a key optionality .
  • Collagen pipeline (Nextida) and potential JV add medium-term growth and diversification for Food; 2026 launch is a milestone .
  • Near-term trading: stock likely to react to any EPA announcements and LCFS signals; medium-term thesis benefits from domestic feedstock policy support and integrated model advantages .

Additional Notes

  • Documents for Q1 2026 (8-K 2.02 and earnings call transcript) and press releases were not found; analysis relies on Q1–Q3 2025 filings and transcripts plus S&P Global consensus for Q1 2026 .