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DARLING INGREDIENTS INC. (DAR)·Q3 2026 Earnings Summary

Executive Summary

  • Revenue of $1.56B and diluted EPS of $0.12; Combined Adjusted EBITDA of $244.9M. Revenue rose 10% YoY and gross margin expanded to 24.7% from 22.1% .
  • Versus S&P Global consensus for Q3 2026: revenue modestly beat ($1.56B vs $1.55B*), EBITDA missed ($244.9M vs $336.8M*), and EPS was a significant miss ($0.12 vs $0.67*) .
  • Guidance pivot: company ceased combined guidance and now guides FY2025 core ingredients Adjusted EBITDA to $875–$900M (lower than Q1’s $950–$1,000M); renewed focus on PTC monetization (sold $125M; targeting $125–$175M more by year-end) .
  • Near-term catalysts: clarity on EPA RVO/SRE reallocation and LCFS enforcement (management expects constructive policy and margin uplift into Q4), plus cash inflows from PTC sales to reduce leverage toward ~3x .

Values retrieved from S&P Global for estimate figures.

What Went Well and What Went Wrong

What Went Well

  • Feed segment strength: Net sales up to $1.03B and Segment Adjusted EBITDA up 31.6% YoY to $174.0M, driven by robust fat demand and disciplined execution; gross margin expanded to 24.3% .
  • Food segment resilience: Net sales $380.6M and Segment Adjusted EBITDA up 25.6% YoY to $71.6M; collagen demand improving and costs managed effectively .
  • PTC monetization momentum: Company agreed to sell $125M of 2025 PTC, with plans to monetize an additional $125–$175M by year-end; management highlighted robust buyer demand and better terms quarter-on-quarter .
  • Quote: “Our core ingredients business delivered its strongest performance in a year and a half, fueled by robust global demand and exceptional execution across all operations.” — CEO Randall Stuewe .

What Went Wrong

  • Fuel segment/DGD drag: Darling’s share of DGD Adjusted EBITDA was -$2.9M due to a ~$37.8M LCM expense and a DGD-3 turnaround limiting higher-margin SAF sales; segment combined Adjusted EBITDA fell to $21.6M vs $59.7M YoY .
  • EPS miss vs consensus: Diluted EPS of $0.12 missed materially versus $0.67* consensus, reflecting DGD margin compression and LIFO/LCM dynamics .
  • Tariff-related volume softness in Food late in the quarter, offset by cost control; ongoing policy uncertainty (RVO/SREs, LCFS) constrained renewable fuel margins despite improving indicators .

Financial Results

Sequential trend (oldest → newest)

MetricQ1 2025Q2 2025Q3 2026 (current)
Total Net Sales ($USD Millions)$1,380.6 $1,481.5 $1,564.0
Diluted EPS ($)$(0.16) $0.08 $0.12
Gross Margin ($USD Millions)$311.4 $345.9 $387.0
Gross Margin (%)22.6% 23.3% 24.7%
Combined Adjusted EBITDA ($USD Millions)$195.8 $249.5 $244.9

YoY comparison

MetricQ3 2024Q3 2026 (current)
Total Net Sales ($USD Millions)$1,421.9 $1,563.9
Diluted EPS ($)$0.11 $0.12
Gross Margin ($USD Millions)$313.6 $387.0
Gross Margin (%)22.1% 24.7%
Combined Adjusted EBITDA ($USD Millions)$236.7 $244.9

Versus S&P Global consensus (Q3 2026)

MetricQ3 2026 ActualQ3 2026 Consensus
Total Net Sales ($USD Millions)$1,563.9 $1,547.1*
Combined Adjusted EBITDA ($USD Millions)$244.9 $336.8*
Diluted EPS ($)$0.12 $0.668*

Values retrieved from S&P Global for consensus figures.

Segment breakdown (YoY)

SegmentQ3 2024 Net Sales ($USD 000s)Q3 2026 Net Sales ($USD 000s)Q3 2024 Segment Adj. EBITDA ($USD 000s)Q3 2026 Segment Adj. EBITDA ($USD 000s)
Feed$927,457 $1,029,115 $132,166 $173,996
Food$357,292 $380,574 $57,031 $71,638
Fuel (incl. DGD share in “Combined”)$137,142 $154,277 $59,656 (combined) $21,601 (combined)

KPIs and balance sheet

KPIQ3 2024Q3 2026
Feed: Raw Material Processed (mmts)3.1 3.2
Food: Raw Material Processed (metric tons)306,000 314,000
Fuel: Raw Material Processed (mmts)0.39 0.351
DGD Gallons Produced (mm)311.3 231.5
DGD Gallons Sold (mm)316.7 250.0
DGD EBITDA per Gallon (after fees) ($/gal)$0.25 $(0.02)
Cash & Equivalents ($USD 000s)$75,973 (FY24) $91,494
Revolver Availability ($USD 000s)$1,160,000 (FY24) $1,173,097
Total Debt ($USD Millions)$4,042 (FY24) $4,104
Net Debt ($USD Millions)$3,966 (FY24) $4,013
Preliminary Leverage Ratio (x)3.93 (FY24) 3.65
Capex ($USD Millions)n/a$90.1 (Q3); $224.0 YTD

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Core Ingredients Adjusted EBITDA ($USD Millions)FY 2025$950–$1,000 $875–$900 Lowered
Combined Adjusted EBITDA ($USD Millions)FY 2025$1,250–$1,300 $1,050–$1,100 (as of Q2) ; now withdrawnLowered then withdrawn
PTC Monetization ($USD Millions)2025n/aSold $125; plan to sell $125–$175 more; total 2025 PTC generation ~ $300; ~$200 cash receipts by YE Initiated/quantified
Leverage Target (Bank Covenant Ratio)YE 2025/early 2026n/a~3.0x by YE; longer-term targeting 2.5x New targets

Earnings Call Themes & Trends

TopicPrevious Mentions (Q1 2025, Q2 2025)Current Period (Q3 2026)Trend
EPA RVO/SRE clarityExpect 5.25B gal proposal; timing uncertain; RINs under-produced vs mandate Management anticipates December progress; constructive proposals (50–100% SRE reallocations) imply margin uplift Improving policy visibility
LCFS dynamicsCARB revisions progressing; bank drawdown expected over time LCFS still weak but expected gradual improvement into 2026 Slowly improving
Feedstock pricing (waste fats/UCO)Rising fats; lag in contract pricing noted Strong domestic fat demand (“America First” policy); Q3 prices up 9–13% QoQ across fats/UCO/tallow Strengthening
SAF commercializationBuilding book; considering second SAF line; caution amid policy volatility SAF at capacity expected in Q4; near-term constrained by DGD-3 turnaround; premium vs RD intact Stable to improving volumes
PTC monetizationEarly-stage; auction process planned $125M sold; additional $125–$175M targeted; buyers’ demand robust; expect ~$200M cash receipts by YE Accelerating
Tariffs/macroTariffs supportive to fat prices; protein exports challenged Tariff-related softness in Food late in Q3; manageable via cost and mix Mixed
Balance sheet/deleveragingRefi done; leverage improved to 3.34x in Q2; paydown priority Leverage 3.65x in Q3; expect cash inflows from PTC and core FCF to reduce ratio toward ~3x Targeted improvement

Management Commentary

  • Strategic focus: “Given the current uncertainty around public policy and its impact on the fuel segment, we'll now provide financial guidance exclusively for our core ingredients business.” — CEO Randall Stuewe .
  • Policy tailwinds: “The Renewable Volume Obligation they've drafted is thoughtful and designed to support American agriculture and energy leadership... a major catalyst for Diamond Green Diesel.” — CEO Randall Stuewe .
  • DGD near-term headwinds: “Both LIFO and LCM were negative in the third quarter... LCM loss of around $38 million at the entity level.” — CFO Bob Day .
  • PTC monetization: “We expect to generate a total of around $300 million in 2025... agreed to the sale of $125 million... anticipate an additional $125–$170 million... around $200 million of payments by year-end.” — CFO Bob Day .

Q&A Highlights

  • RVO/SRE timeline and implications: Management expects EPA action by year-end; scenario work suggests 50–100% SRE reallocation absorbs surplus by end-2026, requiring higher biofuel margins and supporting feedstock prices .
  • DGD capture/margins: Negative LIFO/LCM in Q3; SAF margins above RD; Q4 indicator margins improved but guidance withheld amid policy uncertainty .
  • PTC market development: Buyer demand now robust; company confident in ability to monetize majority of credits in 2025 and 2026 .
  • LCFS outlook: Expect gradual strengthening in 2026 as credit bank normalizes; not a sharp step up .
  • Balance sheet: Target leverage ~3x by YE; longer-term plan to reach 2.5x; capex discipline maintained .

Estimates Context

  • Q3 2026 results vs consensus: Revenue beat ($1.56B vs $1.55B*), EBITDA miss ($244.9M vs $336.8M*), EPS miss ($0.12 vs $0.67*) .
  • Implications: Street likely revises down near-term EBITDA/EPS to reflect DGD headwinds (LCM, turnaround) and guidance pivot to core-only; revenue resilience from Feed/Food may temper top-line cuts .

Values retrieved from S&P Global for consensus figures.

Key Takeaways for Investors

  • Core ingredients are carrying the quarter: Feed and Food segments delivered robust margin expansion and EBITDA growth; expect continued strength into Q4 .
  • Fuel/DGD is the swing factor near-term: LCM/LIFO and turnaround cut Q3 earnings; Q4 margins have improved, but policy clarity (RVO/SRE, LCFS) remains the key unlock for durable recovery .
  • Guidance pivot reduces headline risk: Moving to core-only guidance ($875–$900M) focuses investors on controllable drivers while PTC monetization provides tangible cash inflows in Q4 .
  • Expect estimate resets: EPS/EBITDA likely revised down near term given the miss; monitor EPA timelines and LCFS enforcement dates for re-rating catalysts .
  • Balance sheet path improving: PTC cash, core FCF, and capex discipline support leverage reduction toward ~3x and ultimately ~2.5x; watch Q4 cash generation .
  • Trading implications: Near-term volatility tied to policy headlines; upside skew if RINs/LCFS tighten and SAF volumes hit capacity; downside capped by core segment resiliency .
  • Medium-term thesis: Integrated feedstock sourcing + collagen innovation (Nextida pipeline) positions Darling for multi-segment margin and cash flow expansion as renewable policy normalizes .