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Darling Ingredients' Q2 2025: Unraveling Contradictions in Feedstock Pricing, Renewable Fuels, and Collagen Dynamics
Generated by AI AgentEarnings Decrypt
Thursday, Jul 24, 2025 1:42 pm ET1min read
Aime SummaryFeedstock pricing dynamics and supply chain, renewable diesel (RD) and sustainable aviation fuel (SAF) production strategy, renewable diesel (RD) and sustainable aviation fuel (SAF) market dynamics, collagen market and supply tightening, SAF production and market demand are the key contradictions discussed in Darling Ingredients' latest 2025Q2 earnings call.
Financial Performance and Strategic Agenda:
- reported a combined adjusted EBITDA of $249.5 million for Q2 2025.
- Despite challenges in the renewable fuel environment, the company maintained positive earnings and executed strategic moves, including forming the Nextida joint venture in health and wellness.
- The strategic agenda aimed to diversify and grow in high-margin, high-growth sectors, positioning the company for long-term growth.
Feed Segment and Fat Price Pricing:
- The Feed Segment saw a 22.9% gross margin improvement to $936.5 million in Q2 2025.
- Rising fat prices, supported by favorable public policy favoring domestic sources, created a positive pricing environment.
- The segment's margin expansion was due to focused execution and improved premium ingredient pricing, with a larger portion of domestic fat headed to the Diamond Green Diesel (DGD) facility.
Food Segment Growth and Collaboration:
- Total Food Segment sales were $386.1 million in Q2 2025, with year-over-year growth in global demand for collagen and gelatin.
- The signing of a non-binding term sheet with Tessenderlo aims to form Nextida, enhancing earnings potential in the health and wellness market.
- Global demand for collagen and gelatin, driven by health and wellness needs, supports the growth and expansion of the food segment.
Renewable Fuel Challenges and Opportunities:
- The Fuel Segment's share of DGD EBITDA was $42.6 million in Q2 2025, amidst challenging market conditions.
- The company anticipates improved margin recovery with changes in greenhouse gas reductions and the proposed RVO framework.
- The focus remains on positioning for improved margins and market recovery once policy clarity is established.
Financial Performance and Strategic Agenda:
- reported a combined adjusted EBITDA of $249.5 million for Q2 2025.
- Despite challenges in the renewable fuel environment, the company maintained positive earnings and executed strategic moves, including forming the Nextida joint venture in health and wellness.
- The strategic agenda aimed to diversify and grow in high-margin, high-growth sectors, positioning the company for long-term growth.
Feed Segment and Fat Price Pricing:
- The Feed Segment saw a 22.9% gross margin improvement to $936.5 million in Q2 2025.
- Rising fat prices, supported by favorable public policy favoring domestic sources, created a positive pricing environment.
- The segment's margin expansion was due to focused execution and improved premium ingredient pricing, with a larger portion of domestic fat headed to the Diamond Green Diesel (DGD) facility.
Food Segment Growth and Collaboration:
- Total Food Segment sales were $386.1 million in Q2 2025, with year-over-year growth in global demand for collagen and gelatin.
- The signing of a non-binding term sheet with Tessenderlo aims to form Nextida, enhancing earnings potential in the health and wellness market.
- Global demand for collagen and gelatin, driven by health and wellness needs, supports the growth and expansion of the food segment.
Renewable Fuel Challenges and Opportunities:
- The Fuel Segment's share of DGD EBITDA was $42.6 million in Q2 2025, amidst challenging market conditions.
- The company anticipates improved margin recovery with changes in greenhouse gas reductions and the proposed RVO framework.
- The focus remains on positioning for improved margins and market recovery once policy clarity is established.
Earnings Decrypt
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