Executive Summary

Core ingredients strength continued through 2025; latest comparable quarter (Q3 2025) delivered $1.56B total net sales, $0.12 diluted EPS, and $244.9M Combined Adjusted EBITDA, with gross margin of 24.7% .
Management shifted guidance in Q3 2025 to focus on core ingredients, targeting $875–$900M 2025 Adjusted EBITDA (ex-DGD), reflecting policy uncertainty in Fuel; earlier Q2 2025 guidance cut Combined Adjusted EBITDA to $1.05–$1.10B from Q1’s $1.25–$1.30B .
Renewable policy (RVO/SRE) and LCFS remained the primary margin swing factors for DGD; Q3 2025 saw negative LCM impacts and a planned DGD-3 turnaround, while PTC monetization advanced ($125M sale agreed in Q3, $125–$175M more expected in Q4) .
Wall Street consensus for Q2 2026 implies revenue ~$1.57B*, EPS ~$0.59*, and EBITDA ~$331M*; actual Q2 2026 company documents were not available, so comparisons anchor to latest reported quarters. Values retrieved from S&P Global.

What Went Well and What Went Wrong

What Went Well
- Feed margins improved sequentially and YoY in Q3 2025 on strong domestic fat demand and disciplined execution; Feed EBITDA rose to $174.0M versus $132.2M in Q3 2024 .
- Food segment maintained healthy margins, with Q3 2025 EBITDA at $71.6M and raw material volumes up; collagen/gelatin demand continued to strengthen .
- PTC monetization advanced: $125M of 2025 PTC sales agreed in Q3; management anticipated another $125–$175M by year-end, providing cash inflows to offset DGD contributions .
What Went Wrong
- DGD margins were pressured in Q3 2025 by a 30-day DGD-3 turnaround and unusual simultaneous negative LIFO and LCM impacts (~$37.8M LCM at entity), resulting in DGD Adjusted EBITDA (Darling’s share) of -$2.9M .
- Policy uncertainty (RVO finalization, SRE reallocation, enforcement timing) delayed RIN/LCFS price normalization, constraining renewable diesel/SAF margins despite low-cost operations .
- Tariff volatility impacted premium protein exports (pet food/aquaculture), creating near-term softness and supply chain friction; management is arbitraging volumes to best markets .

Financial Results

Note: Q2 2026 company results documents were not available; below compares latest reported quarters (Q2 and Q3 2025) and Q2 2026 consensus.

Metric	Q2 2025	Q3 2025	Q2 2026E
Revenue ($USD Millions)	$1,481.5	$1,564.0	$1,567.2*
Diluted EPS ($USD)	$0.08	$0.12	$0.59*
Combined Adjusted EBITDA ($USD Millions)	$249.5	$244.9	$331.2*

Values retrieved from S&P Global (asterisked Q2 2026E values).

Segment breakdown (Net Sales and Segment Adjusted EBITDA):

Metric ($USD Millions)	Q2 2025	Q3 2025
Feed Net Sales	$936.5	$1,029.1
Food Net Sales	$386.1	$380.6
Fuel Net Sales	$158.8	$154.3
Feed Segment Adjusted EBITDA	$135.9	$174.0
Food Segment Adjusted EBITDA	$69.9	$71.6
Fuel Segment Adjusted EBITDA (ex-DGD)	$18.6	$24.5
DGD Adjusted EBITDA (Darling’s Share)	$42.6	-$2.9
Combined Segment Adjusted EBITDA	$249.5	$244.9

KPIs (DGD operational metrics):

KPI	Q2 2025	Q3 2025
DGD Total Gallons Sold (Millions)	248.6	250.0
EBITDA per Gallon (after fees, $USD)	$0.34	-$0.02

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Combined Adjusted EBITDA	FY 2025	$1.25–$1.30B (Q1 2025)	$1.05–$1.10B (Q2 2025)	Lowered
Core Ingredients Adjusted EBITDA (ex-DGD)	FY 2025	N/A	$875–$900M (Q3 2025)	New guidance framework
Effective Tax Rate	FY 2025	~5% (Q1 2025)	~15% (Q2 2025)	Raised
DGD PTC Monetization	FY 2025	Early-stage monetization (Q1 2025)	~$300M 2025 PTC; $125M sale agreed in Q3; $125–$175M more expected Q4 (Q3 2025)	Progressed/clarified
Leverage Ratio Target	End-2025/early 2026	Target ~2.5x (long-term policy)	Expect ~3.0x by year-end 2025 (Q3 2025 commentary)	Trajectory outlined

Earnings Call Themes & Trends

Topic	Previous Mentions (Q1 2025 and Q2 2025)	Current Period (Q2 2026)	Trend
Renewable policy: RVO/SRE reallocation	Management expected clarity; modeled scenarios; noted RVO could be constructive (Q1/Q2 2025)	No Q2 2026 transcript found; policy remains key watchpoint	Improving clarity pending finalization
LCFS dynamics	CARB changes expected to strengthen premiums over time; bank drawdown anticipated (Q2 2025)	No Q2 2026 transcript found; expect gradual premium rise into 2026	Positive trajectory
Feedstock/fat pricing	Rising domestic fat prices driving Feed margins; lag effects highlighted (Q2 2025)	Continue to monitor; estimates suggest stable revenue levels	Supportive for Feed
SAF demand/book	Strong SAF demand; operational flexibility; book and claim interest (Q1/Q2 2025)	No Q2 2026 transcript found; DGD optimization ongoing	Constructive demand
Tariffs/supply chain	Tariff volatility impacting proteins; global footprint arbitrages best markets (Q2/Q3 2025)	Ongoing watchitem given policy shifts	Mixed near-term, manageable

Management Commentary

“The recent regulatory announcements for biofuels are supportive and should create an improving environment for our renewables business… We delivered positive earnings, maintained strict capital discipline and enhanced our financial flexibility through a successful refinancing” — Randall C. Stuewe, CEO (Q2 2025 press release) .
“Our core ingredients business continues to build momentum… We are on the heels of public policy developments that we expect to play out in our favor” — Randall C. Stuewe, CEO (Q3 2025 press release) .
CFO on unusual Q3 2025 Fuel impacts: “End-of-quarter market dynamics led to negative impacts on earnings from both LIFO and LCM… LCM loss of around $38M at the entity level” .
CFO on PTC monetization: “We agreed to the sale of $125M… anticipate an additional $125–$170M of sales in the fourth quarter” (Q3 2025) .

Q&A Highlights

Policy timing and enforcement: Delayed 2024 enforcement date to Dec 1 hindered RIN normalization; clarity on 2026–27 RVO and 2025 enforcement would catalyze RINs .
DGD operations: DGD-1 restart contingent on sustainable profitable margins (soybean oil) and outlook to justify catalyst burn; SAF margins better than classic RD .
LCFS trajectory: Bank reduction expected with step-change obligations; premiums likely rise steadily into 2026 .
Tariffs/proteins: Volatile export windows; domestic pet food mix shift and pricing pressure noted; management arbitraging markets .
PTC cash flows: Robust buyer demand; process becoming ratable through 2026 .

Estimates Context

Q2 2026 consensus: Revenue ~$1,567.2M*, Primary EPS ~$0.593*, EBITDA ~$331.2M*, with 4 revenue estimates and 5 EPS estimates. Values retrieved from S&P Global.
Benchmarking: Q3 2025 actuals — revenue $1,564.0M, diluted EPS $0.12, Combined Adjusted EBITDA $244.9M .
Implication: Street expects significant EPS/EBITDA uplift versus latest reported quarter, contingent on policy normalization (RVO/SRE), LCFS premium strengthening, and sustained feed margin tailwinds.

Key Takeaways for Investors

Policy catalysts are decisive: Final RVO and SRE reallocation decisions plus enforcement timing are the inflection for DGD margins and RINs; monitor EPA timelines closely .
Core ingredients resilience: Feed and Food segments are executing well with improved margins; policy shifts that favor domestic fats continue to support medium-term fundamentals .
Cash inflows from PTC monetization: Agreed $125M sale and expected additional $125–$175M by year-end 2025 de-risk near-term liquidity despite DGD contributions .
SAF optionality: Strong demand and flexible operations position DGD to prioritize higher-margin SAF; tariff/duty math influences market mix (EU vs US voluntary) .
Near-term trading: Without Q2 2026 reported results, positioning hinges on regulatory news flow; upside skew if RIN/LCFS tighten per management scenarios, but headline risk persists .
Medium-term thesis: Domestic fats premium and Nextida collagen platform expansion support core EBITDA growth into 2026–27; DGD earnings sensitivity remains highest to RIN/LCFS mechanics .

Additional context references:

Q2 2025 full financials and segment detail .
Q3 2025 full financials and segment detail .
Q1 2025 baseline (for trend) .

DARLING INGREDIENTS INC. (DAR)·Q2 2026 Earnings Summary