Darling Ingredients 2025 Q2 Earnings Earnings Decline Despite Revenue Growth

Darling Ingredients reported mixed results in its fiscal Q2 2025 earnings, with revenue growth failing to offset a significant drop in earnings. The company beat revenue expectations with a 1.8% year-over-year increase, but net income and EPS fell sharply. Management adjusted full-year guidance due to regulatory and macroeconomic uncertainties.

Revenue

Darling Ingredients generated $1.48 billion in revenue for Q2 2025, a 1.8% increase compared to $1.46 billion in the same period last year. The strongest contributor was the Feed Ingredients segment, which brought in $936.53 million. The Food Ingredients division added $386.14 million, reflecting steady performance in key markets. The Fuel Ingredients segment contributed $158.84 million. Corporate activities accounted for $0 in segment revenue, consistent with prior reporting periods.

Earnings/Net Income

Darling Ingredients reported a sharp decline in profitability, with EPS falling 83.7% to $0.08 compared to $0.49 in the year-ago quarter. Net income dropped to $14.27 million, a 82.5% decrease from $81.36 million in Q2 2024. The significant earnings shortfall highlights ongoing operational and margin pressures, despite strong revenue performance.

Price Action

Darling's stock posted a mixed short-term performance, gaining 1.05% in the latest trading day but falling 5.22% over the past week and 18.64% month-to-date. The post-earnings reaction remained negative, despite the revenue beat.

Post-Earnings Price Action Review

Despite reporting a revenue beat, Darling's stock declined 5.91% following the earnings release, signaling investor concern over profitability. Jefferies raised its price target to $46, showing some optimism, but the EPS shortfall to $0.09—missing the consensus—added uncertainty. A 30-day holding period could offer recovery potential if macroeconomic conditions improve and the company shows signs of stabilizing earnings. However, biofuel regulatory risks and short-term margin pressures remain key headwinds. The company's strategic moves, including the formation of NexTata, provide long-term growth signals, though near-term performance remains volatile and subject to market sentiment.

CEO Commentary

CEO Randall C. Stuewe noted progress in market dynamics and regulatory support for biofuels, alongside financial discipline and successful refinancing. He also highlighted the launch of Nextida, a joint venture expected to unlock growth in the collagen and gelatin sector. Stuewe expressed optimism about the future of Darling’s renewables business, despite ongoing challenges at Diamond Green Diesel.

Guidance

Darling lowered its 2025 EBITDA guidance to a range of $1.05–$1.10 billion, citing uncertainty around small refinery exemptions and delayed RIN pricing reactions. The company expects continued improvement in the core ingredients business, led by stronger fat prices, but remains cautious about global tariff impacts on supply chains.

Additional News

Within three weeks of the earnings report, Darling announced the launch of NexTata, a strategic joint venture focused on health and wellness products. The partnership is designed to expand the company’s presence in the high-growth collagen and gelatin markets. No significant executive changes or capital return programs (dividends or buybacks) were disclosed during this period. Additionally, the company reaffirmed its capital discipline, emphasizing its refinancing efforts as a step toward improving long-term financial flexibility. No major mergers or acquisitions were reported.