DARLING INGREDIENTS INC. Q1 FY2026 earnings call

• Over the last few years, faced challenging operating environment due to public policy uncertainty and volatile commodity markets, but remained focused on operational excellence and capital allocation for debt reduction. • First quarter 2026 saw improved operating environment with expected EBITDA growth and sequential gross margin improvement. Core ingredients business delivered with improved global operations, margin expansion, and focused commercial execution. • Feed ingredient segment had steady volumes, strong global poultry volumes offsetting stagnant North American cattle herd, operational excellence driving improvements in throughput, cost reduction, product quality, and commercial agility. • Food segment saw nice growth in collagen, particularly in Europe and Asia, sales of collagen and gelatin improved year over year. • Diamond Green Diesel overcame shutdown at Port Arthur, renewable volume obligation constructive for Darling and DGD, expecting DGD's results to continue to strengthen throughout the year. • Non-DGD green energy businesses continue to deliver stable earnings with potential tailwind due to increased energy prices in Europe.

For the first quarter of 2026, combined adjusted EBITDA was $406.8 million. Global ingredients business contributed $255.6 million, Diamond Green Diesel contributed $151.2 million. Feed ingredient segment: EBITDA improved to $169 million from $111 million a year ago, total sales $985 million vs $896 million, raw material volume flat at ~3.1 million metric tons, gross margins 25.3% vs 20.3% in Q1 2025. Food segment: Total sales $405 million vs $349 million in Q1 2025, EBITDA $81 million vs $71 million, gross margins 28.9% of sales vs 29.3% a year ago. Fuel segment: Darling's share of DGD EBITDA for the quarter was $151 million, other fuel segment sales $160 million vs $135 million in 2025, combined adjusted EBITDA for full fuel segment including DGD was ~$180 million vs $24 million in Q1 2025.

• Core ingredients EBITDA guidance for Q2 set at $260 to $275 million. • Expect DGD's results to continue to strengthen throughout the year. • For 2026, expect the effective tax rate to be around 25% and cash taxes of approximately $60 million for the remainder of the year. • Anticipate DGD's second quarter to be stronger than the first quarter.

Q: On Diamond Green, should we expect the hedging and LIFO losses to reverse in Q2 or take longer?

A: Bob said $97 million at DGD entity level exhausted all available lower of cost or market, so no lower of cost or market benefits going forward; LIFO depends on feedstock prices.

Q: On industry question about U.S. biofuels industry capacity, etc.?

A: Bob Leone said biofuel capacity is back online, margins attractive to bring back, industry capable of meeting RVO mandate, may include some imports.

Q: On second quarter expectations and key drivers of EBITDA increase?

A: Randy said raw material volumes strong globally, especially in South America, fat prices higher, Russolo business doing well, gelatin and collagen margins good.

Q: On fuel, thoughts on diesel prices and structural constraints?

A: Bob said not qualified to answer diesel capacity, but increased raw material costs, renewable fuels margins moving to expected levels due to RVO.

Q: On balance sheet, actively deleveraging vs allocating capital?

A: Bob said focused on paying down debt to below $3 billion, investor day on May 11 to talk capital plans.

Q: On EPA proposal starting 2028 on foreign feedstock, positive for DART?

A: Bob said depends on tariff structure and feedstock market dynamics, overall not seen as negative.

Q: On 2Q guidance vs street estimates?

A: Randy said DGD margin environment constructive, Q2 earnings power greater than Q1, but won't guide DGD.

Q: On feed, waste FOG realizations and margins?

A: Randy said flow through to be seen, but tailwinds building.

Q: On DGD, view on international markets and flexibility?

A: Bob said DGD has flexibility, U.S. market expected to continue to increase in margins.

Q: On LCFS, thoughts on California market?

A: Bob said LCFS complex, credits expected to increase in value.

Q: On core business margins, thoughts?

A: Bob said feed segment has commodity exposure, timing exercise, other segments stable with some improvement.

Q: On RIN outlook beyond 2026?

A: Randy said depends on global fuel prices, tariffs, industry performance.

Q: On food business, progress with JV and acquisitions?

A: Ben said joint venture with Senator Lowe in antitrust review, participated in auction to buy rendering assets in Brazil.

Q: On feed prices and biodiesel production?

A: Randy and Bob said biodiesel production lagging due to margin needs, capacity to come back online.

Q: On DGD, view on international markets and SAF vs RD economics?

A: Randy said DGD well set up to maximize opportunities, SAF has premium in U.S. voluntary market, Europe more dynamic.

Q: On RIN prices and attracting international feedstocks?

A: Bob said DGD can make renewable diesel with international feedstocks and make good margin, biodiesel producers should see sufficient U.S. veg oil.

Q: On DGD 2Q guide and SAF vs RD differential?

A: Randy said DGD 2Q guide close to max, SAF has premium in U.S. voluntary market