DARLING INGREDIENTS INC. Q4 FY2025 earnings call

• Acknowledged employees' execution on the vision of being the world's largest, most profitable, and most respected processor of animal byproducts.
• Highlighted improved debt leverage, portfolio rationalization, and operational excellence throughout the year.
• In the fourth quarter, combined adjusted EBITDA was $336.1M, with global ingredients business contributing $278.2M EBITDA.
• Feed Ingredients segment saw margin expansion for 4 consecutive quarters, driven by strong operational execution, higher volumes, and favorable fat prices.
• Food Segment: Collagen and gelatin demand rebounding, joint venture with PB Leiner and Tessenderlo advancing with regulatory reviews underway.
• Fuel Segment (DGD): Strongest quarter in 2025 with $57.9M EBITDA, full year EBITDA $1.037B, $0.21 EBITDA per gallon, sold ~1B gallons, reinforcing its position as the lowest-cost operator.
• Announced acquisition of three rendering facilities in Brazil as a stalking horse bid, which are high-quality assets with strong operational capability.

Feed Ingredients Segment: In the fourth quarter, EBITDA improved to $193,000,000 from $150,000,000 a year ago. Total sales were $1,130,000,000 versus $924,000,000, and raw material volume was approximately 3,400,000 tons compared to 3,100,000 tons. Gross margins relative to sales improved to 24.6% in the quarter versus 22.6% in Q4 2024. Food Segment: Total sales for the quarter were $429,000,000, a significant increase over Q4 2024 at $362,000,000. Gross margins for the segment were 27.2% of sales, compared to 25.7% a year ago, and raw material volumes increased to 350,000 metric tons versus 320,000 tons. EBITDA for Q4 2025 was up significantly compared to 2024 at $82,000,000 versus $64,000,000. Fuel Segment (Diamond Green Diesel): Darling Ingredients Inc.'s share of DGD EBITDA for the quarter was $58,000,000. For the full year 2025, DGD earned $1,037,000,000 of EBITDA, or $0.21 EBITDA per gallon, and sold approximately 1,000,000,000 gallons. Combined adjusted EBITDA for the full Fuel segment, including DGD, was $192,000,000 for the fiscal year 2025.

• Estimated DGD to produce about 260,000,000 gallons in Q1 2026 with improved margins.
• Core ingredients adjusted EBITDA expected to fall in the range of $240,000,000 to $250,000,000 for Q1 2026.
• Not providing guidance for DGD yet, will reconsider after final RVO ruling.

• Evolving renewables public policy uncertainties.
• Turbulent globalization related to tariffs and trade, which created uncertainties in 2025.
• Impact of policy changes on DGD's earning potential and the constructive environment for domestic renewable fuels.

Q: Why are you not guiding DGD for 1Q?

A: It depends on the clarity and certainty we have, and we will reconsider after getting a final ruling on the RVO.

Q: How is your Feed business sensitive to the half RIN concept for imported products and feedstocks?

A: Policy supportive to U.S. or broader North American feedstock values is constructive to our rendering businesses in the U.S. and Canada.

Q: What credit price would be required for DGD to redirect product toward California?

A: It's hard to answer exactly as markets are dynamic, but credit prices would need to be higher than current levels to redirect product toward California.

Q: Rationale for acquiring the Brazil rendering facilities?

A: The Potense Group facilities are first-rate, world-class, and fit naturally alongside our existing footprint in Brazil, offering synergies and margin enhancement opportunities.

Q: Expectations for core EBITDA in the second half of 2026?

A: We think the year will improve as we go forward, but we are cautious until we see the RVO, with tailwinds from the futures market for soybean oil potentially providing support.