Q3 2024 Earnings Summary
Reported on Mar 20, 2025 (Before Market Open)
Pre-Earnings Price$38.25Last close (Oct 23, 2024)
Post-Earnings Price$36.50Open (Oct 24, 2024)
Price Change
$-1.75(-4.58%)
- Improving feedstock prices and operational enhancements are expected to significantly boost the Feed Ingredients segment's margins and EBITDA. Management anticipates that getting back to mid-$300 million levels per quarter doesn't seem out of reach, driven by strong volumes, improving fat prices moving from $0.38-$0.40 to nearly $0.50 per pound, and operational improvements in North and South America.
- The Food segment is set for growth in 2025 with the launch of new higher-margin collagen products, such as NextG Elseo. Management expects these innovations to offset competitive pressures, leading to stable to better results and a strong trend as we end the year.
- Strong positioning in renewable diesel and sustainable aviation fuel (SAF) markets through Diamond Green Diesel (DGD). With the SAF plant mechanically complete, early, and under budget, and contracts of 1 to 3 years in tenure already secured, the company is poised to capitalize on the significant increase in demand, especially with advantageous regulatory changes like the producer tax credit favoring waste fats. Management is confident in the ability to make sales and sees a really attractive market in the United States in the next year.
- Increased competition and capacity additions in the Food Ingredients segment are leading to margin pressure, particularly in gelatin and collagen products. The company acknowledged that new capacity has come onto the market, which can take over a year to be absorbed, and this has driven down sales values. They are also experiencing ongoing customer destocking, which is taking longer than expected to resolve.
- The base Feed business is underperforming relative to historical EBITDA levels, and recovery depends on uncertain feedstock price improvements. The base business is currently running at an annual EBITDA run rate of around $850 million, below the typical $1 billion per year. Achieving previous levels depends on feedstock price improvements, which may not materialize as expected.
- Global recessionary pressures are impacting fuel and food ingredient demand in key markets such as China, Europe, and the U.S., potentially weighing on the company's performance. The company is still seeing a bit of recession around the world, affecting demand for fuel and food ingredients.
Research analysts covering DARLING INGREDIENTS.