Earnings call transcript: Darling Ingredients misses Q2 2025 forecasts

Darling Ingredients (NASDAQ:DAR) reported disappointing financial results for the second quarter of 2025, falling short of analyst expectations. The company’s earnings per share (EPS) were $0.08, markedly below the forecasted $0.3, while revenue reached $1.19 billion against a projected $1.49 billion. Consequently, the stock experienced a 6.05% decline during regular trading, with an additional 2.33% drop in premarket activity. According to InvestingPro analysis, the stock appears significantly undervalued compared to its Fair Value, trading at $34.52, near its 52-week low of $26.

Key Takeaways

• EPS and revenue significantly underperformed compared to forecasts.
• Gross margins improved to 23.3%, offering a silver lining.
• Stock price dropped over 6% following the earnings release.
• The company remains a leader in sustainable aviation fuel production.
• Challenges persist in the renewable fuel and protein markets.

Company Performance

Despite improving gross margins to 23.3% from 22.5% a year ago, Darling Ingredients struggled with a net income of $12.7 million, or $0.08 per share, compared to $78.9 million, or $0.49 per share, in Q2 2024. The company maintained steady rendering volumes and saw rising fat prices, yet faced pressure from protein tariffs and a challenging renewable fuel environment. InvestingPro data shows the company maintains strong fundamentals with a current ratio of 1.4, indicating sufficient liquidity to meet short-term obligations. Discover more insights and 6 additional ProTips with an InvestingPro subscription.

Financial Highlights

• Revenue: $1.19 billion, down from $1.49 billion forecast.
• EPS: $0.08, missing the forecast of $0.3.
• Combined Adjusted EBITDA: $249.5 million, down from $273.6 million in Q2 2024.
• Capital expenditures: $71 million in Q2 2025.

Earnings vs. Forecast

Darling Ingredients’ Q2 2025 results fell short of expectations, with a 73.33% negative EPS surprise and a 20.13% revenue shortfall. This marks a significant deviation from previous quarters where the company had shown more robust performance.

Market Reaction

Following the earnings announcement, Darling Ingredients’ stock price fell by 6.05% to $36, further declining by 2.33% in premarket trading. This movement reflects investor disappointment with the earnings miss and aligns with broader market reactions to underperformance.

Outlook & Guidance

Looking forward, Darling Ingredients projects a full-year Combined Adjusted EBITDA of $1.05 billion to $1.1 billion, anticipating sequential improvement across its businesses. The company is targeting capital expenditures of $400 million or lower for the year and expects stronger performance in 2025 and 2026, contingent on market conditions. Analyst consensus remains bullish, with a "Strong Buy" recommendation and price targets ranging from $34 to $60. Get comprehensive analysis with InvestingPro’s detailed research report, part of our coverage of 1,400+ US stocks.

Executive Commentary

CEO Randy Stewie expressed a positive outlook for the remainder of the year, especially in core ingredients, while CFO Bob Day highlighted ongoing trials that could impact future results. Stewie also noted, "I’ve never made a bad trade, but I’ve lost a fortune in timing," emphasizing the importance of strategic market positioning.

Risks and Challenges

• Supply chain disruptions could impact production and costs.
• Market saturation in renewable fuels may limit growth potential.
• Tariff volatility poses risks to protein prices.
• Macroeconomic pressures could affect consumer demand and pricing.
• Regulatory changes in biofuels may alter market dynamics.

Q&A

During the earnings call, analysts inquired about the potential impacts of the Renewable Volume Obligation (RVO) proposal and explored opportunities in the European sustainable aviation fuel market. Executives detailed the potential of the NexTyta joint venture and analyzed dynamics in the renewable diesel market.

Full transcript - Darling Ingredients Inc (DAR) Q2 2025:

Conference Operator: Good morning and welcome to the Darling Ingredients Inc. Conference Call to discuss the company’s Second Quarter twenty twenty five Financial Results. Today’s call is being recorded. I would now like to turn the call over to Ms. Sue Ann Guthrie, Senior Vice President of Investor Relations.

Please go ahead.

Sue Ann Guthrie, Senior Vice President of Investor Relations, Darling Ingredients: Thank you for joining the Darling Ingredients second quarter twenty twenty five earnings call. Here with me today are Mr. Randall C. Stewie, Chairman and Chief Executive Officer Mr. Bob Day, Chief Financial Officer and Mr.

Matt Jansen, Chief Operating Officer, North America. Our second quarter twenty twenty five earnings news release and slide presentation are available on the Investor page of our corporate website and will be joined by a transcript of this call once it is available. During this call, we will be making forward looking statements, which are predictions, projections or other statements about future events. These statements are based on current expectations and assumptions that are subject to risks and uncertainties. Actual results could materially differ because of factors discussed in today’s press release and the comments made during this conference call and in the Risk Factors section of our Form 10 ks, 10 Q and other reported filings with the Securities and Exchange Commission.

We do not undertake any duty to update any forward looking statements. Now I will hand the call off to Randy.

Randall C. Stewie, Chairman and Chief Executive Officer, Darling Ingredients: Good morning. Thanks, Sue Ann, and thanks, everybody, for joining us for our second quarter twenty twenty five earnings call. This quarter, we saw early signs of momentum building across our businesses even as we continue to navigate a complex renewable fuel environment. We delivered positive earnings, maintained strict capital discipline and enhanced our financial flexibility through a successful refinancing. We locked in our borrowing costs for the next five plus years and we positioned ourselves to invest confidently in long term growth.

We also advanced our strategic agenda with the announcement of our intention to form NexTata, our new joint venture focused in the health and wellness space. This move aligns with our strategy to diversify and grow in high margin, high growth like health and wellness. Combined adjusted EBITDA for the quarter came in at $249,500,000 While the regulatory environment has been a headwind in recent quarters, we are now seeing signs of clarity and constructive market changes, particularly in our Feed segment, setting us up for a stronger performance in the 2025 and into 2026. DGD continues to face near term pressure, but we remain confident in its long term value as policy support begins to take hold. Across the board, we’re focused on execution and believe the fundamentals are now moving in the right direction.

Now turning to the Feed Ingredients segment. Global rendering volumes are steady and in line with our expectations. We saw margin expansion both quarter over quarter and year over year reflecting focused execution, operational efficiency and improved premium ingredient pricing. Rising fat prices supported by recent public policy that favors domestic sources are creating a favorable pricing environment, which we expect to continue and expand. As a result, a larger portion of our domestic fat portfolio is now headed to DGD.

Tariff volatility and increased domestic oilseed crush has put pressure on protein prices, especially on our sales into Asia. However, fat prices are outweighing the higher protein supply and softer prices. Now turning to our Food segment. As I mentioned, we signed a nonbinding term sheet with the sender load to form next item. We are concluding due diligence and expect to sign a definitive agreement in this quarter.

We believe this platform already is a meaningful contributor to earnings, has the potential to grow at an accelerated rate as we increase our presence in the health and wellness and nutrition market. Global demand for collagen and gelatin continues to strengthen driven by health, wellness and functional nutritional needs. We are advancing scientific validation for NexTyta GC, our glucose control product. These studies are near complete and early results are showing strong potential and we are beginning to see repeat orders for this product as well. In our fuel segment, the renewables environment remains difficult.

The overhang on small refinery exemptions and delayed twenty twenty four RIN compliance enforcement is preventing mandates from reflecting real demand and continuing to put pressure on renewable fuel margins. However, DGD remains a leader consistently delivering best in class performance. SAF volumes continue to demonstrate flexibility and resilience and are helping us to balance the difficult market dynamics. We are seeing the feedstock supply chain rebalance itself due to tariffs and regulatory and tax changes all benefiting Darling’s core business. In addition, changes implemented by CARB to increase mandated greenhouse gas reductions in California as of July 1 and we expect LCFS premiums will strengthen and support margin recovery over time.

Meanwhile, the proposed RVO framework represents a major tailwind for the renewables market and RINs as long as mandated volumes, net of SREs, anywhere close to what has been proposed, it will reinforce long term demand and support a healthy margin environment. DGD1, however, will remain offline until margins show some meaningful improvement. Meanwhile, DGD3 is scheduled for a turnaround starting here in third quarter. The timing aligns well with our outlook, positioning us for full utilization as policy rules are clarified later in 2025 and enabling DGD to run full in 2026 when we anticipate a significantly stronger margin environment. We believe the groundwork we’re laying now through operational discipline and strategic timing positions us well when the margin environment improves.

Now with that, I’d like to hand the call over to Bob to take us through the financials and I’ll come back and give you my thoughts on the balance of 2025. Bob?

Bob Day, Chief Financial Officer, Darling Ingredients: Thank you, Randy. Good morning, everyone. For second quarter of twenty twenty five, Darling’s combined adjusted EBITDA was $249,500,000 versus $273,600,000 in the second quarter of twenty twenty four. And adjusting for DGD, second quarter twenty twenty five EBITDA was approximately $2.00 $7,000,000 versus approximately $197,000,000 in the second quarter of twenty twenty four. Year to date combined adjusted EBITDA totaled $445,300,000 as compared to $553,700,000 for the same period of 2024.

Total net sales in the 2025 were $1,480,000,000 versus $1,460,000,000 in the second quarter of twenty twenty four, while raw material volume was almost the same at 3,740,000 metric tons and 3,760,000 metric tons. Year to date volumes for 2025 were 7,530,000 metric tons compared to 7,560,000 metric tons for the same period first twenty twenty four. Gross margins improved to 23.3% for the second quarter twenty twenty five compared to 22.5% in the second quarter of twenty twenty four. We also saw a nice gross margin improvement year to date at 23% for the 2025 compared to twenty one point nine percent for the first half of twenty twenty four. Looking at the Feed segment, total net sales increased and EBITDA improved on relatively unchanged volumes.

Total sales for the 2025 were 936,500,000.0 versus $934,100,000 in the second quarter of twenty twenty four. For the six months of 2025, total sales were $1,830,000,000 compared to $1,820,000,000 for the same time in 2024. Feed raw material volumes were approximately 3,100,000 metric tons for both quarters and materially unchanged year over year at roughly 6,200,000 metric tons. For second quarter twenty twenty five, gross margins improved nicely to 22.9% versus 21% in the second quarter of twenty twenty four. Meanwhile, lower protein values created a slight headwind that will alleviate as we continue to find better markets for premium protein products.

And while fat prices moved considerably higher during the second quarter, the lag between raw material procurement and finished fat sales resulted in lower margins than we expect to see as prices flatten. All things considered, we are pleased with the improvement in gross margins for the quarter. And as Randy said, the outlook is very positive. Year to date, gross margins were also better at 21.6% compared to twenty point nine percent in the first six months of twenty twenty four. Moving to the Food segment.

The margin environment continued to show healthy signs as we were able to maintain gross margins per unit sold while increasing sales volumes. Total sales for the 2025 were $386,100,000 higher than second quarter twenty twenty four at $378,800,000 Second quarter twenty twenty five gross margins for the food segment were unchanged from 2024 at 26.9. Year to date gross margins for 2025 were 28.1% versus 25.3% from the same time a year ago. Raw material volumes increased to 323,900 metric tons versus 304,700 metric tons. Year to date raw material volumes for the food segment were 653,400 metric tons compared to 604,400 metric tons reflecting an increase in global demand.

EBITDA for the 2025 was slightly down at $69,900,000 versus $73,200,000 in the second quarter of twenty twenty four, while year to date 2025 EBITDA was $140,900,000 versus $134,900,000 from the same period a year ago. Looking at the fuel segment, as Randy mentioned, the renewable fuel environment continued to be challenging. Darling’s share of DGD EBITDA was approximately $42,600,000 for the 2025 versus approximately $76,600,000 of EBITDA for the second quarter of twenty twenty four. Year to date 2025, Darling’s share of DGD EBITDA was $48,700,000 versus $191,700,000 for the first six months of twenty twenty four. In the second quarter of twenty twenty five, the impact to Darling for LIFO was negative $31,100,000 and it included a lower of cost or market or LCM benefit of $55,600,000 Year to date LIFO for Darling’s half of DGD was negative $59,500,000 while LCM generated a positive $101,100,000 Overall fuel segment sales for the second quarter of twenty twenty five, which does not include DGD, were $158,800,000 versus $142,300,000 in the second quarter of twenty twenty four.

Year to date sales in 2025 were $293,900,000 versus 281,500,000.0 in 2024. Raw material volumes in the 2025 were 337,600 metric tons versus 362,000 metric tons in the second quarter of twenty twenty four. Year to date raw material volumes in 2025 were 711,700 metric tons versus 718,900 metric tons for the same period in 2024. Combined adjusted EBITDA for the Full Fuel segment was $61,300,000 in the 2025 versus $96,800,000 in the second quarter of twenty twenty four. And year to date 2025 fuel segment combined adjusted EBITDA was $85,500,000 compared to $229,900,000 in 2024.

During the second quarter, we accomplished several important objectives related to our credit and balance sheet, providing the company with a significant amount of flexibility and stability for the next five to seven years. First, we’ve refinanced and upsized our Eurobond from €515,000,000 to €750,000,000 for seven years at a fixed rate of 4.5%. Second, we paid off our revolving credit facility and the four remaining Term Loan A facilities replacing them with $2,900,000,000 in credit facilities through two senior secured debt agreements. First, a five year $2,000,000,000 revolver and second, a six year $900,000,000 farm credit Term Loan A. While the Eurobond at 4.5% replaced the previous Eurobond at 3.8%, the upsizing of the bond allowed us to maintain an average cost of borrowing materially unchanged while ensuring a stable financial position for many years.

The company’s total debt net of cash and other items as of 06/28/2025 was $3,890,000,000 versus $3,970,000,000 on 12/28/2024, helping lower the preliminary leverage ratio to 3.34 times at the end of quarter two twenty twenty five from 3.93 times at the year end 2024. In addition, we ended the 2025 with approximately 1,270,000,000 available on our revolving credit facility. Capital expenditures totaled $71,000,000 in the 2025 and $134,000,000 for the six months of 2025. The company recorded an income tax expense of 4,100,000 for the three months ended 06/28/2025, yielding an effective tax rate of 22.2%, which is slightly higher than the federal statutory rate of 21% due primarily to certain losses that provided no tax benefit offset by the producer’s tax credit. The effective tax rate excluding the impact of the producer’s tax credit and discrete items was 3.4% for the three months ended 06/28/2025.

The company also paid $22,800,000 of income taxes in the second quarter and $32,000,000 year to date. For 2025, we expect the effective tax rate to be around 15% and cash taxes of approximately $40,000,000 for the remainder of the year for a projected total of around $72,000,000 Overall, the company’s net income was $12,700,000 for the 2025 or $08 per diluted share compared to net income of $78,900,000 or $0.49 per diluted share for the second quarter of twenty twenty four. And year to date 2025, Darling had a net loss of $13,500,000 or negative $09 per diluted share. Now I will turn the call back over to Randy.

Randall C. Stewie, Chairman and Chief Executive Officer, Darling Ingredients: Thanks Bob. Now as we look ahead, we remain confident in the strength of our business, particularly our core ingredients platform, which continues to benefit from a favorable public policy outlook. We expect sequential improvement across the board with rising fat prices supporting our Feed segment. While premium proteins remain a modest headwind, we’re studying signs of stabilization. At BGD, although the current environment remains challenging and volumes will be lower in the third quarter due to a planned turnaround, we believe this sets us up well for full utilization in 2026.

While the timing of RIN recoveries remains uncertain due to ongoing small refinery exemption issues, we anticipate a more constructive market environment ahead. Based on what we see today, we expect full year combined adjusted EBITDA in the range of €1,050,000,000 to €1,100,000,000 With that, now let’s go ahead and open it up to questions.

Conference Operator: Of course. We will now begin the question and answer session. Our first question comes from the line of Manav Gupta with UBS. Your line is now open.

Manav Gupta, Analyst, UBS: Good morning, guys. My first question is when we look at the revised RVO much higher, coupled with 50% rents for foreign feedstock and no PTC for imported RD, this makes Daul a real winner. Can you talk about some of the policy benefits which want more domestic renewable diesel made for more domestic feedstock and how that really benefits Darling Ingredients?

: Hi, Manav. Good morning.

Matt Jansen, Chief Operating Officer, North America, Darling Ingredients: This is Matt. I’ll start off and then and maybe ask Randy or Bob kick in. But you’re absolutely right in terms of the we see this going forward in as more of an evolving into a domestic oriented market more so than what we have seen in the past. We expect a drop in imported raw material. And as a result, we’re seeing the benefit of that in our U.

S. Fat pricing. And through the quarter, fat prices were moved up significantly. And we see that continued trend and VAP prices maintain being well supported. So our focus right now in The U.

S. Is on reliability and making sure our processing plants that the on the raw material side can run as planned and as expected, so we can continue to maximize the production of The U. S. Fat to supply the RD market.

Bob Day, Chief Financial Officer, Darling Ingredients: I’ll just add. This is Bob. So I agree with Matt. It is very supportive to U. S.

Or North American fat values. Know, that’s great for Darling. It doesn’t really hurt us so much outside of The US because of the dynamics of the regional markets there. So overall, that’s good for the feed segment. It’s also if the RVO and the stated mandate holds as a mandate net of SREs, which we’re all kind of waiting to see.

But if does hold as a mandate, then it’s very positive in our view for renewable diesel margins just based on the supply and demand and capacity availability to produce renewable diesel and biodiesel in The United States relative to that demand number. So we still see those things as positive. The 50% RIN, an interesting policy dynamic if if we see that hole, and it it it would it would support those things. It would eliminate access to foreign feedstocks, which is some flexibility we we like, but, you know, the other positive impacts outweigh the negative impact of that.

Manav Gupta, Analyst, UBS: Perfect. My quick follow-up here is amended LCFS has gone into effect. Carbon prices are already moving up. I think they’re close to $55. Now their prices were higher before OAS stepped in and kind of blocked it.

So I’m just trying to understand, we you guys still expect that we could get to, like, $70 a ton by year end. And if everything is right, then maybe even $80 in 2026. So your outlook for LCFS prices and, how how it benefits Darling Ingredients? Thank you.

Bob Day, Chief Financial Officer, Darling Ingredients: So I I think, the first thing I’d say is the the what we view as very positive is we’re now that with the increased greenhouse gas, obligation elimination of greenhouse gas obligation in California, we’re starting to see the bank finally coming down. And that’s a very positive sign. Based on where we are today and what we see playing out, that will you know, this bank will continue to decrease. How that results exactly in, you know, price per ton of LCF credits, it’s it’s very hard to estimate that. That’s gonna depend on obligated parties in California, the sense of urgency they they feel that they need as far as, procuring those credits.

But, we agree that it’s moving in a positive direction and likely to head higher.

Conference Operator: Thank you for your question. Our next question comes from the line of Heather Jones with Heather Jones Research. Your line is now open.

Heather Jones, Analyst, Heather Jones Research: Good morning. Thanks for the question. My first one is on YUCO. So in your slide deck, you talk about, I think it was a roughly 13,000,000 year on year hit from lower UCO pricing, whereas spot pricing for the last two to three quarters would suggest it would have been higher. So just wondering if you could explain to us what happened in the quarter and maybe the year ago quarter comparison that would have caused that and when we should expect to see the current pricing we’re seeing come through?

Bob Day, Chief Financial Officer, Darling Ingredients: Yeah. Thanks, Heather. I’m trying to get to that slide in the deck. I think the the let me just address the last part of your question first. You know, the dynamics of of that market are it’s it’s very fluid.

And so as as we are pricing with suppliers, the timing at which we’re pricing relative to the indication we use or, let’s say, the timing at which we sell product relative to to the timing at which we price for suppliers, those can be different. And in a rising market like we’ve had in the last quarter, that can work against us. What tends to what we expect is as prices flatten at a higher level where we are today, then then then the margin is is higher because of our percentage that we keep of the total price. But I think during the quarter, what we saw was we’re selling out in front, fixing prices. As the index continues to go higher when we set the price that we’re paying, it’s it’s higher than what it was at the time we sold.

And so that’s that’s the biggest impact that we had on that.

Randall C. Stewie, Chairman and Chief Executive Officer, Darling Ingredients: Yes. That’s well said, Bob. I mean, really, in what you’re looking at, Heather, is in a rising raw material procurement market, which we’re in with forward sales, it’s always the lag effect as things go accelerate here. I think what’s most important today is, as we lay the, the the outlook is q three fat prices really you gotta look at Yellowgrease and YUCO as both of those go to Diamond Green Diesel. A bigger share of our our mix now in North America is going to Diamond Green Diesel, and the prices are up anywhere from 10 to 14¢ a pound over q two.

In q two, you really only saw versus q one about a $60 a ton or a 3¢ a pound price rise between the the YUKO and and the yellow grease, as it flowed through the p and l. And that’s just that’s just a typical lag factor.

Heather Jones, Analyst, Heather Jones Research: Okay. Thank you. My second question is with the exception of that change in fair value of contingent consideration that was noted in the press release in the feed segment, just wanting to know is there anything unusual in this quarter’s results, whether it be inventory adjustment, insurance recoveries, or whatever that would affect the comparability for q three and later quarters to this quarter? I’m just, like, wondering if this is like a, a, I guess, a clean quarter for us to build on going forward.

Bob Day, Chief Financial Officer, Darling Ingredients: Yeah. Thanks, Heather. I think, you know, the the flat the the the the price lag in fats, it affected us across all the fats in the segment. So, you know, I would say it wasn’t, you know, to use your term, a clean quarter from that standpoint. I think as as we get into the third quarter here, we are we are sort of operating in a in a higher level environment.

We’re not, We’re not seeing a situation so far where we’re pricing our suppliers at a higher value than what we had to sell. And so this will probably be more reflective of that. But that was a pretty significant impact in the second quarter. Other than that, we did have some deferred profit losses that will come back in the third quarter from related party sales.

Randall C. Stewie, Chairman and Chief Executive Officer, Darling Ingredients: The contingent valuation Heather is related to the Brazilian acquisition that had an earn out attached to it that completed or will complete here at the July, and that’s just an adjustment. And then that’s representative of that business operating now really well.

Conference Operator: Thank you for your questions. Our next question comes from the line of Dushyant Aloni with Jefferies. Your line is now open.

Dushyant Aloni, Analyst, Jefferies: Hi, team. Good morning. Thanks for taking my questions. Maybe the first one, could you talk to the opportunities for Darling or for DGD rather outside of California? Margins in Canada, Oregon, EU also seem to be forming up some.

So could you kind of share how much of RD you are exporting outside of California, shipping outside of California versus within California and how that’s going to evolve?

Matt Jansen, Chief Operating Officer, North America, Darling Ingredients: Hi, Gishwat. This is Matt. I would say that, you know, California is is a big market in the RD space, but it’s by far not the only market. And we sell a lot of our product, on an ongoing basis in various other states that are here in The U. S, but we also export quite a bit and predominantly to The U.

And Europe. And so we’re as these tariffs and and all the different moving parts, let’s say, that have have come come about continue to play out, that mix may shift from one to the other. But we we continue to be a significant exporter of, RD to, to Europe and The UK.

Randall C. Stewie, Chairman and Chief Executive Officer, Darling Ingredients: Yeah. And I think the the other thing I would add to what Matt’s saying there that’s spot on is I I think this morning you saw, the Nest Day release. And the positive takeaway for me there is there’s always been some consternation that demand is diminishing out there, and it’s absolutely not. It’s growing for RD around the world, and it’s growing for SAF, and margins are improving.

Dushyant Aloni, Analyst, Jefferies: Got it. Thank you. And then just my next one, and I think you guys have also touched on it some on just the SREs. How are your expectations for what the EPA could do with these SREs? I mean, just based on the conversation that you guys have been having with folks in the industry, if

Matt Jansen, Chief Operating Officer, North America, Darling Ingredients: you That’s can help us out the million dollar question. This is Matt again. That’s the million dollar question. We the SREs, we expect will come sometime in the next, let’s say, sixty days. Don’t know exactly when that announcement will will become public.

But, you know, frankly, we we don’t have a a a clear view on what that number is going to be. There’s lots of chatter out there. But frankly, far as I’m concerned, no one really knows what that what that number is gonna be. So we’re anxiously anxiously awaiting that. And and how how they it’s not only the number, but also how they get treated, whether they are, let’s say, reallocated back or not.

And so that’s still to come. And like I mentioned, we think that’s imminent here in the next few weeks, but we’re anxiously awaiting that.

Randall C. Stewie, Chairman and Chief Executive Officer, Darling Ingredients: Yeah. And I would add to what Matt’s saying there. I mean, there at at the end of the day, we’ve modeled, two or three different scenarios here. And and, really, the the RVO is big enough to accept and and adapt to whatever whatever avenue they take. And so end end of the day, it is a bit of a hangover out there.

And I think that that’s why we in a sense, just to clarify for everybody on the call, why we lowered guidance. It’s not because of the core ingredient business. Core ingredient business is is as exciting as it’s ever been. It’s just we don’t know the timing of when the marketplace is gonna react, meaning RINs and LCFS to whatever the SRE adjustment is going to be.

Conference Operator: Thank you for your questions. Our next question comes from the line of Derrick Whitfield with Texas Capital. Your line is now open.

Derrick Whitfield, Analyst, Texas Capital: Good morning all and thanks for taking my questions. Beginning on 45Z, the policy is approved places a cap on SAF at the $1 per gallon level. As you guys think about this, how does it impact your view on margins relative to RD given the state of the voluntary markets and the likely environment where we’ll see less SaaS supply?

Bob Day, Chief Financial Officer, Darling Ingredients: Yeah. Thanks, Derek. This is Bob. So ultimately, when when when DGD is looking at selling SaaS, they they they add all components to inputs and and sales price when they negotiate the price that they’re selling and and ultimately the margin that they’re shooting for. But today, you know, it’s made up of many different things.

The the support we we get from 45 z today, you know, starts at dollar 75 max. It lands somewhere, you know, a dollar or in that range. Just with the change, probably around $35.40 cents less would come from the PTC, which then means if we’re still shooting for the same margin, we’re gonna have to get it in the premium that SAF sells at relative to renewable diesel. And, you know, we’ll just see how that all plays out. Ultimately, SAF really the price of SAF and the margins for SAF should be determined based on the supply and demand for SAF.

So we’re not really uncomfortable with the change so much. We just are more focused on the overall supply and demand for SAF and getting fair value for for the product and the margin.

Matt Jansen, Chief Operating Officer, North America, Darling Ingredients: And and I would just add that one one flexibility that we have, and we’re not we’re not, there yet, but we we do have the flexibility to to choose between whether we produce RD or SAF in our line. And and so right now, we’re we’re running SAP as as much as we can, and we expect that for that to continue, but we do have that additional flexibility.

Derrick Whitfield, Analyst, Texas Capital: Great. Then with respect to Food and your plans to advance the next tied at JV this quarter, it appears your conversations are progressing better than expected. I guess could you offer some color on the degree of synergy and growth acceleration you’re seeing across the combined company?

Bob Day, Chief Financial Officer, Darling Ingredients: Yeah. I think, you know so yeah. Thanks. This is Bob. We’re we’re really excited about it, and and and and we’re encouraged by what we’re seeing.

There’s there’s really we’re limited in what we can say today because we haven’t signed definitive agreements, and and, you know, the next step will be filing for antitrust. So we just wanna be really cautious there. But I think, you know, what we see with the two different companies is very complimentary geographic spread. So they’re they’re in some countries that we’re not. That that diversifies our our portfolio, and that’s especially helpful in, let’s say, the current environment where, you know, the the the cost of trading between countries differs from country to country, and so that diversification is worth more than what it might otherwise have been.

And then there’s a there’s also just a kind of a practical capacity access, that that comes with that transaction that we’re really excited about. They they bring some very important extraction capacity and some hydrolyzed collagen capacity that’s important in the in the fast growing hydrolyzed collagen market. So when we put all those things together, there there are some really exciting synergies. There’s always sort of the cost side of it. That’s more straightforward, but the more exciting part is sort of the increased revenue opportunity.

Conference Operator: Thank you for your questions. Our next question comes from the line of Ryan Todd with Piper Sandler. Your line is now open.

: Thanks. Good morning. Maybe first, can you can you maybe walk through what’s assumed in your updated EBITDA guidance for 2025? I mean, I think it it implies roughly 25% improvement in quarterly EBITDA on the second half compared with with what we saw in the second quarter. So what do you see as the primary drivers of improvement?

Can you maybe walk through what you’ve seen to date that provide confidence in that number?

Randall C. Stewie, Chairman and Chief Executive Officer, Darling Ingredients: Yeah. Ryan, this is Randy. And, you know, obviously, the the number is a reflection of an improvement in the core ingredient business as related to flow through of higher fat prices, in a sense, catching up and leveling off relative to raw material prices moving up, the you know, the the higher pay to the the slaughterhouses. The challenge in q two was while the higher fat prices, even though de minimis were flowing through, we were playing catch up, But the the higher premium proteins as we refer to them, let’s call it low ash chicken meal that goes to aquaculture, that was you know, you had a had a tariff on one day, a tariff off one day, whether it was Vietnam or China. And just trying to adjust markets and and and customers was was really a negative in there.

We see that kind of steady now. I’m I’m not telling you a giant improvement there, but, it it feels like the disruption is less than it was in in q two now. So higher flow through of fat prices. And then the as my comments were earlier, I mean, you know, we’re gonna have DGD three offline here in August. It’ll be on ready to run-in September, I believe, is the timing.

So we’ll have all plants with new catalysts ready to rock and roll, you know, September 1, if you will. You know, if that RIN market starts to normalize and reflect what it’s gonna take from a variable profitability perspective, you the guidance that we threw out there could be extremely conservative. Or if it delays till January 1, the market doesn’t react, then then I think we’re really pretty much in the fairway here saying that we’ll have, you know, minimal, but, you know, some type of contribution from DGD, especially the SAS side through the end of the year here.

: K. Thanks. Maybe that’s a good segue to a the follow-up question on on SAS. I mean, you’re, you know, what, seven, eight, eight plus months in the operations there. Can can you maybe talk about what you’ve learned so far?

How how would you characterize demand? Is there anything that’s been surprising on the staff front in terms of geographic mix of demand or pricing, etcetera? And then it’s still a pretty young market. You know, what as you look out, what kinks or challenges do you think still remain that may need to get ironed out over over the coming months or years?

Matt Jansen, Chief Operating Officer, North America, Darling Ingredients: Yep. Hi. Hey, Matt. This is Ryan. This is Matt.

I I would say from what we’ve learned, you know, we started off with running in last November. And operationally, we have, I would tell you, as expected and done well. The the thing that I would say surprising, for example, mate, for the the reduction in the, in in the PTC, was something that, wasn’t necessarily in the cards when we when we planned this. But we’ve learned logistically. We’ve we’ve moved moved the product around, again, as expected.

I I would say over the last few months, maybe some of the conversations have gone a little bit quieter in terms of new business just because of all of the associated noise related to the things that we all know about with the RVOs and the PTCs and the tariffs and all those things and slow things down a little bit. But, we continue to see, solid, let’s say, demand. We’re running well, making deliveries on contracts. We’ve got a good good sales book on. So we’re the returns are meeting or exceeding the expectations of the project.

So we’re very satisfied with it.

Conference Operator: Thank you for your question. Our next question comes from the line of Matthew Blair with Your line is now open.

Sue Ann Guthrie, Senior Vice President of Investor Relations, Darling Ingredients0: Hey, good morning, and thanks for taking my question. Maybe circling back to NEXTYDA, could you talk a little bit more about what the scientific studies are showing here? We’ve run some of our own tests, it appears to be quite quite impactful, quite quite an improvement. And then also, you know, I appreciate that you probably can’t talk too much about what the EBITDA contribution, you know, is going to look like and what the potential there is. But but I guess, in terms of timing, do do you think that Nexidia would start to make a a material impact in 2026, or is this a longer dated time frame?

Thank you.

Bob Day, Chief Financial Officer, Darling Ingredients: Yeah. Thanks, Matthew. This is Bob. So the the status of the trials are we we’re completing this summer a second round of trials with a much larger sample size. That is what the larger CPG companies have asked for in order for them to get comfortable marketing the product and really pushing it on to market.

We’re we’re seeing the same thing that you talked about. So, ultimately, what what that product does is it it it stimulates GLP one secretion into the blood. It it it that leads to the the post meal sugar spike, and, you know, the symptoms around that are curved appetite and and just, you know, more more stable blood sugar. Those are those are really positive. We’ve you know, we’re seeing the same thing with all the all the trials.

The timeline on when we could see a big impact would be as we finish these trials in the summer, we kind of go out and we, you know, we we present all this to the large CPG companies. And hopefully, the end of the year, you know, we’re talking about much more significant volume. So in 2026, it can have a much bigger impact on EBITDA. It’s really just gonna depend on kinda what the what this next round of trials shows and how compelling it is. But, you know, like you pointed out in the tests that you’ve done yourself, it is a really it it is really powerful, and, you know, we’re seeing great results.

Bob, you wanna talk about the brain side real quick? Yeah. And I guess, you know, the interesting thing here is we you know, we’re rolling out a portfolio of products. Ultimately, what our team is able to do is they identify what’s the molecule that would would cause the body to have a natural reaction that generates a a helpful targeted health benefit. And and so by using a different mix of enzymes in the collagen, we can create a peptide profile that’s unique and one that we can patent, and it causes that natural reaction in the human body.

So we’ve identified what that what that combination looks like in order to help with memory retention, gut health, women’s health, and, you know, all these products are in different stages of development. But but it’s a it’s a great process that our r and d team has been able to iron out. And so as, you know, we’re we’re excited about, next side of GC, but but we’re really excited about, you know, what the portfolio of products can mean for the company, over the next several years.

Randall C. Stewie, Chairman and Chief Executive Officer, Darling Ingredients: And, Matt, the, you know, I think your one of your question was, contribution. You know, clearly, ’26, we’re gonna get some acceleration here. You know, we were requested, you know, that this health and wellness sector in the world is is a very, very large piece out there, 60 or $80,000,000,000. You don’t need much for it to be significant into your portfolio here. The clinicals are are key on that.

We’re seeing, you know, reorders now of the of the GLP one or next tied to GC product now, which is really, really good news. You know, we’re we’re excited about it. If you look at the history, and I’ve always said, you know, in in the Sue Ann’s deck is that the the the history of the food segment, which is really anchored by Rousselot slash next tidy here. And that business has been built off of the hydrolyzed collagen business out there that we develop. And this is really hydrolyzed collagen two point zero now.

If we’re half as successful in volume there, we can double the earnings in that segment. Now that’s probably a three to five year window to get there. ’twenty six should accelerate. ’twenty seven should be really meaningful.

Sue Ann Guthrie, Senior Vice President of Investor Relations, Darling Ingredients0: Great. Great. Thanks for all the helpful commentary. And then, I guess, turning to, the Brazil rendering outlook. You know, there’s been a lot of chatter that that The US rendering outlook is excellent after the RVO and the 45 z tax changes.

But could you talk about what you’re expecting for Brazil? Do you think there’ll be pressure from things like the RVO and and tariffs? And, do you expect to kind of reorient your exported rendering volumes from Brazil to other markets? And then finally, could you remind us just the overall split between US rendered volumes and Brazil rendered volumes for Darling? Is it, I don’t know, like, roughly $80.80 20?

Thank you.

Randall C. Stewie, Chairman and Chief Executive Officer, Darling Ingredients: Yeah. Good good question, number one. You know, the Brazil for us in in the rendering side has has been a a truly wonderful experience of you know, the the challenger has been taking a a private company and making it public and making profits versus tax avoidance a priority here, getting raw material procurement margin management as part of the culture. I’d say we check the box now and we’re doing very, very well there on that. Brazil is an incredible place because right now as The U.

S. Cattle numbers are down, although cattle feedlot margins are way up, Brazil’s numbers are moving sharply up. And so we’ve got a pile of raw material, as we call it, down there. So life is pretty good. The reality of the arbitrage of fats out of there is Brazil has really developed a very strong biofuel market.

And ultimately, I you know, the the percentage inclusion, suspect, will rise again here in in 2026. I mean, there there’s there’s no lack of tension here right now between The US and Brazil, and we acknowledge that. But there’s no problem with that being a domestic oriented business. Matt, anything you want to add there?

Matt Jansen, Chief Operating Officer, North America, Darling Ingredients: I would just say the market’s going to dictate where these products flow. And from a quality standpoint, the Brazilian quality, for for RD is actually very good, preferred. But at at the same time, you know, Brazil, like, they can they they as Randy mentioned, their biodiesel program inside The US can change even with 1% change in that, which is expected. That, you know, that that can shift a whole lot more of the volume to to stay at home there. So that that will continue to play out, and the market’s going to dictate where the flow goes on what what gets exported.

Historically, fair bit of that has come to The U. S, but maybe that shifts towards Europe.

Conference Operator: Thank you for your questions. Our next question comes

Manav Gupta, Analyst, UBS: from line with BMO.

Conference Operator: Your line is now open.

Matt Jansen, Chief Operating Officer, North America, Darling Ingredients: Hey, good morning.

Sue Ann Guthrie, Senior Vice President of Investor Relations, Darling Ingredients1: Thanks for taking the questions. My first one, I was curious if you could comment on what you’re seeing in terms of biofuels industry utilization rates and demand for feedstocks. It seems from the feedstock pricing like things are moving in the right direction, but you’ve talked about DGD-one still being offline. I’m sure there are others as well. So just curious to what extent you’ve actually seen production utilization rates pick up across the industry?

And kind of related to that, where do RINs need to get to in order to encourage production to ramp more materially?

Bob Day, Chief Financial Officer, Darling Ingredients: Yes. Thanks, Andrew. This is Bob. I think one thing we’re seeing is a lower capacity utilization rate for biodiesel across the board, about half the capacity roughly. And that hasn’t changed very much throughout the year.

And we’re seeing renewable diesel capacity utilization move slightly higher month to month through the year. Know, I think our view on that is that that’s more about, you know, the market’s view of where RINs are going than where they are today. And so if you think about it, if you’re an obligated party and you can generate RINs and you believe that the RINs are going higher, you’ll use this opportunity to make more RINs. And and so while margins aren’t great for renewable diesel, there’s a you know, we’ve got enough information about future policy to suggest that margins and RIN value should be higher in the future. And so that is what we believe is encouraging the the production of renewable diesel today to slightly go up month to month.

And we’ll probably continue to see that at least until we get final clarification on SREs and what the actual mandate is. Okay.

Matt Jansen, Chief Operating Officer, North America, Darling Ingredients: The RVO holds, we’re going to see we’re going to need the addition the the the capacity to return on online to meet that obligation.

Randall C. Stewie, Chairman and Chief Executive Officer, Darling Ingredients: Yeah. Andrew, this is Randy. That was Matt. This is Randy. I I think it’s gonna be interesting, at least from my chair, over the next, ten days to see some reporting of of second quarter earnings for some of these RD plants that that that have been running.

And we’ll that’ll kinda tell you, are they running for fun or or not?

Sue Ann Guthrie, Senior Vice President of Investor Relations, Darling Ingredients1: Got it. Okay. That makes sense. And and then my my other question was just around your CapEx plans. You’re tracking solidly below last year so far this year.

It seems like from your commentary there’s greater focus on capital discipline. So how should we be thinking about CapEx for your business for the remainder of this year, maybe even into next year? Is there any reason that that should accelerate or how should we

Matt Jansen, Chief Operating Officer, North America, Darling Ingredients: be thinking about that? Thanks.

Bob Day, Chief Financial Officer, Darling Ingredients: Yeah. I mean, look, I think we’ve been really clear about this, Andrew, that, you know, we’re committed to paying down debt and getting our debt coverage ratio down below three point zero, by the end of the year. What you see in in the form of our CapEx year to date is is is exactly that. We will see it go higher here in the summer. You know, winter projects are slowed down because of weather.

But we’re committed to keeping our CapEx at $400,000,000 or lower for the year, and we’ll see where we are and what our markets look like when we achieve our goals as far as debt coverage ratios and decide what to do at that point. But our goal is to continue to pay down debt.

Randall C. Stewie, Chairman and Chief Executive Officer, Darling Ingredients: Yeah. And this is Randy. I mean, reality is I want to be clear about a couple of things. One, we are not capital starving any of the assets out there today by any means. We have delayed some growth projects here, nothing that’s material.

But at the end of the day, you know, I think we’re focused on getting below three point zero. We’re waiting for the sun to shine in 2026 here.

Conference Operator: Thank you for your question. Our next question comes from the line of Benjamin Kelle with Baird. Your line is now open.

Sue Ann Guthrie, Senior Vice President of Investor Relations, Darling Ingredients2: Hey, good morning, guys. Just following up on that last question. In the past, you guys have talked about maybe having a dividend or repurchasing shares. Just trying to think and then also SAF two. Just thinking about the capital allocation as we move into ’26 and you hit your debt targets.

And then I have a follow-up.

Bob Day, Chief Financial Officer, Darling Ingredients: Well, yeah. Thanks, Ben. This is Bob. I think, SAF two, you know, we we we need more much more clarity, around the the market before we we move down that path. So, you know, whether we get that or not in 2026 and whether we would move towards that in 2026 is entirely dependent on clarification of policies and and near term margin environment that would be required to justify something like that.

We’re not we’re not there today. So as we look at 2026, it’s not currently, you know, in the plans to to move forward. Those things can change. As we look at everything else, you know, we wanna I mean, I think that first of all, if I look at the food segment, you know, we have a great plan there with the formation of Nexidia and the joint venture that will allow us to continue to move you know, to grow in that industry and space. And and that’s a noncash transaction that provides access to that new capacity.

So that’s that’s very convenient at a time like this where we can continue growing and it doesn’t require capital. So that really leaves us with the feed segment. And, you know, there’s there are opportunities for us to continue to to grow our platform globally in the feed segment. You know, we’re we’re we’re focused on getting to the right leverage ratios and and getting our balance sheet in the right place before we move on any of those things. But, you know, we’ll we’ll we’ll get to that point and then look at those opportunities.

And but but right now, think 2026 is likely to be maybe not as conservative as ’25, but, know, continue to be focused on on paying down debt.

Sue Ann Guthrie, Senior Vice President of Investor Relations, Darling Ingredients2: Okay. Great. And just going back to the food segment, just in the interim between when we get to next side on the growth there, last year there was some weakness in collagen sales. It looks like it’s it bottomed out there. Is that the trend?

Or could you just talk more about the trend in collagen sales that you’re seeing and how we should look forward to the second half of the year? Thank you.

Bob Day, Chief Financial Officer, Darling Ingredients: Yeah. I think so. You know, I just kind of you know, I’d I’d I would sort of rephrase it a little bit from last year. You know, what we saw was a slight oversupply in the market, more so of gelatin. We did see some collagen.

You know, I think what’s important to understand is in order to make hydrolyzed collagen, you have to have, you know, let’s call it gelatin extraction capacity that you’re building it on top of. What we what we’ve experienced throughout this entire period is a consistent increase in demand for hydrolyzed collagen. What we saw last year was just a lot of our competitors putting capacity in the market short on a short term basis. There was a bit more supply of hydrolyzed collagen relative to demand than there had been prior to that. But now very quickly, we’re starting to reverse that trend.

And what’s exciting about collagen going forward is the investment required to add new hydrolyzed collagen capacity is significant because you’ve got to have the extraction capacity behind it. That’s a that’s a that’s a very large investment to make. So overall, what we see is a tightening of the gelatin supply and demand. Gelatin is not a fast growing category, but it sort of grows at population rates. Hydrolyzed collagen, on the other hand, is continuing to grow at at very strong rates, and so we’re encouraged by that.

And and ourselves, you know, we’re well positioned with all of the hydrolyzed collagen capacity that we have to continue to grow into that market. And as we form the joint venture, you know, with PV liner, that’s going to give us access to more capacity.

Conference Operator: Thank you for your questions. Our next question comes from the line of Porn Sharma with Stephens. Your line is now open.

Sue Ann Guthrie, Senior Vice President of Investor Relations, Darling Ingredients3: Thanks for the question. I just wanted to start off and and hone in on guidance, just a tad bit more. I I think in prior calls, you’d you’d given us a split of, you know, the the core business versus DGD. Wanted to understand, you know, second half DGD doesn’t doesn’t sound like there’s too much benefit in there. As you’re you mentioned, you’ll you’ll be offline for 3Q.

You did mention that you’ll be running in September. So I just wanted to understand, are you baking in more of a margin uplift in 4Q from the current environment? Just wanted to understand guidance with a bit finer detail.

Randall C. Stewie, Chairman and Chief Executive Officer, Darling Ingredients: Ron, this is Randy. Yeah. I think you framed it okay, but I I think what I wanna clarify for you is, clearly, the core ingredients business is accelerating all the way through the end of the year here. I mean, you know, if you look at cash prices and you back into them, we were up about 3¢ a pound in fat in the mid forties versus the low forties in q one. We’re now well above 55¢ a pound on on most FOB plants North America now.

That’s that’s a big number. Now you gotta you gotta, you know, kinda balance that with the raw material price rise that happens during that that process. Proteins have stabilized. Demand for for global collagen is really consistent. Feels like the the destocking’s done, that that we’ve talked about in prior quarters.

You know, the the the big unknown in the in the guidance here is, you know, do we get a RIN boost once that SRE announcement’s out there? You know, when does the market wake up? I think we use a lot of discussion around the table here with the team that the RIN market, the LCFS market, because of the number of obligated parties, does not react like a, you know, dynamic futures market that that’s out there that reflects daily views and guidance and delivery and etcetera, etcetera. So the reality in our guidance here as we went forward was we said we’re confident in our core business and we love it. And we prefer to always talk about our core business.

I think for the last five years, all I’ve done is talk about DGD. And we’ll we’ll see we’ll see if DGD becomes a meaningful contributor. The table is set with the RVO. There is no doubt about it. The the question is timing here.

You know, the the guys always look at me, and they know what what line I’m about to bring you here. And that is, I’ve never made a bad trade, but I’ve lost a fortune in timing. And so right now, it’s really a timing issue as to when this kicks in and and all starts to react. I mean, you’re seeing the the bean oil complex. You’re seeing crush margins react.

They’re they’re they’re now above the five year average. I mean, this is a pretty darn good setup now as we enter fourth quarter. You know, q three, you said offline, no. We’re down in August, and we’re ready to run full September one if margins are there. We’re not gonna run for fun and burn up catalyst until the time’s ready.

Manav Gupta, Analyst, UBS: Got

Sue Ann Guthrie, Senior Vice President of Investor Relations, Darling Ingredients3: it. Got it. Appreciate that color. I guess just real quickly on the follow-up. Wanted to understand the the SaaS opportunity kind of in Europe.

Obviously, you know, they have a a a really strong mandate, but wanted to understand it operationally. I I think there’s some nuances with with the classifications that they allow. Could you help me understand that with a a little bit finer detail? And and also just wanted to understand if there’s any regulations in process that would make feedstock, you you know, US product a little bit easier to get into those markets.

Bob Day, Chief Financial Officer, Darling Ingredients: I’ll jump in quick and Matt, you know, add to this. I think, you know, you’re you’re highlighting one you know, something that’s important here, that’s, you know, all all these different destination markets. They have different requirements as far as the feedstocks you can use in order to make the fuel, the certification body that’s required in order to do that. You know, these these have presented challenges since the since sort of the implementation of the policies that we’re seeing because it takes time to get those certifications in place and and also to sort of get your supply chain sorted so you’ve got the right feed stocks coming in the door. I think one thing I would say, and this is a bit of an add on to the last answer Randy gave, is we look at Diamond Green Diesel and and, you know, turning around Catalyst in in Port Arthur, that that really allows us to position that business well in the fourth quarter because we can use that as an opportunity to put the right feedstocks in place that allow us to maximize destination markets that we’re going to, earn duty drawbacks that we’ve got, you know, in reserve, all these kinds of things.

And and so, you know, as time goes on, all of that gets better and better because you’ve got those certifications in place. You’ve got the right supply chain supply chains, you know, coming in the door and but but all that takes time to put in place.

Conference Operator: Thank you for your questions. Our next question comes from the line of Betty Zhang with Scotiabank. Your line is now open.

Sue Ann Guthrie, Senior Vice President of Investor Relations, Darling Ingredients4: Thank you. Hi. Good morning. Thanks for taking my questions. My first question, you’ve kind of covered this, but I wanted to ask, is there a number you could or a range you could provide for the core business EBITDA for for this year?

Randall C. Stewie, Chairman and Chief Executive Officer, Darling Ingredients: Yeah. I mean, you know, I I think that that’s the that thank you, Betty, for asking that because that’s what everybody’s been trying to ask, but you ask it straight up here. You know? It’s very funny. I’m gonna give you a 900 to a billion.

So on the billion side, that’s the fat prices flowing through, and that means the RINs don’t react. If the RINs react, you know, we go way above that because the profitability of DGD will be much more than it’s been today.

Sue Ann Guthrie, Senior Vice President of Investor Relations, Darling Ingredients4: Perfect. Very clear. Thank you, and thanks for the scenarios. Actually, I will just leave it there. All my questions have been covered.

Thank you very much.

Conference Operator: Thank you for your questions. Our final question comes from the line of Jason Gabelman with TD Securities. Your line is now open.

Sue Ann Guthrie, Senior Vice President of Investor Relations, Darling Ingredients5: Hey. Hey. Morning. Thanks for taking my questions. I wanted to go back to the RVO proposal, and I understand, you know, there’ll be more clarity once the small refinery exemptions get announced.

But, you know, there’s probably some conservatism among investors just given they have been burnt in recent past on regulations. So I imagine they’d wanna see the proposal finalized. And to that end, you know, there’s a lot in that RVO proposal. In your views and conversations with the administration, have there been are there things within the proposal that you think are sacred cows more firm versus items that you think are more trial balloons that that could be that that could not make it into the final rule?

Matt Jansen, Chief Operating Officer, North America, Darling Ingredients: Jason, this is Matt. Good morning. I I would say quickly that, first of all, if there was the the public comment period is still ongoing, and it’s gonna run through the, the first the August. And so that that is there was a in person, comment that that went on in there a few weeks ago. A lot of written comments are being, submitted as as as we speak.

So it’s it’s hard to say, from that if anything comes out. You know, I would say at the at the headline level, the administration remains very supportive of, the RVO and the RVO process and is looking for something that is going to support the industries and and the ag community. And so that that that’s the headline. Now what the SREs is I think I mentioned, you know, we’re we’re expecting that to come in in the next few weeks and then the RVO to be finalized in in in October. So that’s the timelines.

Are there things in play there? I’m sure. Which ones and to what extent? That that remains to be open other than the fact that our view is that the the administration is is very supportive of a a solid RVO and and on the long term basis.

Bob Day, Chief Financial Officer, Darling Ingredients: Yeah. Jason, this is Bob. I just I would I think, you know, when we when you read the tea leaves, you know, it seems like the priorities and and we’re encouraged by this. Is that, you know, one is this policy needs to support US farm prices. That’s first and foremost.

Second, it’s got to minimize cost to the federal government. So those are some of the important changes. And then third is is protecting, you know, US industry, US US biofuel industry. You know, some of these things, the announced policies probably could change, but ultimately, we believe they’re gonna try to achieve those three goals. And and whatever that outcome is, you know, we we think it’s going to be positive.

Bob, we’ve got

Randall C. Stewie, Chairman and Chief Executive Officer, Darling Ingredients: the the two issues here, SRE and then the 2024. You want to comment about it?

Bob Day, Chief Financial Officer, Darling Ingredients: Yeah. I guess the other is is is that normally 2024 RIN compliance would be obligated as of March 31 year. And, until they formally, revise the d three RIN numbers from 2024, that date is not fixed. You know, whether that’s gonna be October 1 or or November 1, it’s unclear. But, you know, that’s the other other piece to this is that compliance is required in order in in our view, in order for the real RIN S and D for 2024 to to to kinda to to show itself and then 2025 as well.

And, you know, our view of the RIN S and D, when you look at the d six, d four, d five altogether is is we’re at a deficit for ’25 and and and certainly will be at ’26. And so as long as compliance is enforced, we believe we’ll see higher RINs and that will result in a decent margin for renewable diesel.

Sue Ann Guthrie, Senior Vice President of Investor Relations, Darling Ingredients5: Got it. Thanks. Appreciate that. And my follow-up is just on status of the monetization of 45Z. I think on the last call you were optimistic that you would have something in place by this time.

Just wondering how those conversations are going. This

Randall C. Stewie, Chairman and Chief Executive Officer, Darling Ingredients: is Randy. I’ll take that. So we are very close to to where we thought we would be right now. You know, these these are somewhat new, and, it’s kind of unchartered waters out there. But I would just tell you to stay tuned.

There’s nothing that’s changed on our side that that doesn’t say that won’t be accomplished here very shortly. You know, in in the the land of lawyers, there’s too many involved.

Conference Operator: Thank you for your questions, Jason. That will be all the questions in our Q and A session today. I would now like to turn the call back to Randy for final remarks.

Randall C. Stewie, Chairman and Chief Executive Officer, Darling Ingredients: Hey, thank you. Thank you, everybody. Great questions today. Leave you with a couple of thoughts. Number one, we appreciate the interest in the company.

We appreciate your patience. We have a positive outlook for the balance of the year, especially in the core ingredients. Some timing unknowns in Diamond Green Diesel. But that asset, as you’ll see over the next ten days, as other people release, is still what I believe to be the best in class out there and poised to really deliver for us in 2026. So be safe.

We look forward to talking to you again here, I believe, in October.

Conference Operator: That concludes today’s call. Thank you for your participation, and enjoy the rest of your day.

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