Darling Ingredients' Q1 2025: Key Contradictions in Feed Volume, Renewable Diesel, and Market Demand

Feed volume and core ingredients EBITDA, renewable diesel and RIN market dynamics, capital allocation and debt reduction, SAF sales and market demand, and feed costs and margin improvement are the key contradictions discussed in Darling Ingredients' latest 2025Q1 earnings call.



Core Business Performance:
- The core business of Darling Ingredients performed well in Q1 2025, with an adjusted EBITDA of $195.8 million.
- Growth was driven by strong performance in the Feed segment and improved margins in the Food segment, despite challenges in the Fuel segment due to DGD's performance.

Feed Segment Strength:
- The Feed segment reported total net sales of $896.3 million, with an adjusted EBITDA increase to $110.6 million.
- This was attributed to higher fat prices and strong performance in international operations, offset by some one-time adjustments.

Renewables Market Challenges:
- The Fuel segment, specifically DGD, faced challenges with adjusted EBITDA at $24.2 million, a significant decrease from the previous quarter.
- These issues were due to the transition from the blenders tax credit to the producer's tax credit and delayed guidance leading to operational adjustments.

Deleveraging and Share Repurchase:
- The company paid down $146.2 million in debt and repurchased $35 million in common stock.
- These actions were part of a strategy to deleverage the balance sheet and repurchase shares to enhance shareholder value.

RIN and PTC Impact:
- The company expects to benefit from a potential increase in RIN values and the producer's tax credit, which could improve margins in the latter half of the year.
- This is contingent on the resolution of the 45Z guidelines and improved market conditions in the renewable diesel sector.

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