Inve US ▾
DADAR

Darling Ingredients (DAR) Q2 FY26 earnings call: guidance and Q&A

Earnings call· Jun 2026 (Q2 FY26)· Consumer Staples· Jul 30, 2026

Source: earnings call transcript

Executive summary

Darling Ingredients Q2 FY26 — Strong Performance Driven by Market Strength and DGD

Darling Ingredients delivered a robust Q2 FY26, significantly exceeding prior guidance due to strengthened finished product markets, rallying fat and protein prices, and favorable trade developments. The company's global ingredients business and Diamond Green Diesel segment both contributed strongly, driving substantial EBITDA growth and enabling significant debt reduction. Management expressed confidence in continued momentum through FY26 and FY27, emphasizing operational excellence and strategic capital allocation.

Highlights

5

  • Combined adjusted EBITDA of $742 million, significantly up from $250 million in Q2 2025.

  • Diamond Green Diesel delivered $389.2 million EBITDA, supported by 356 million gallons produced and $51 million IEPA tariff recovery.

  • Core Ingredients EBITDA increased to $353 million, up from $207 million in Q2 2025.

  • Net debt reduced by over $220 million, improving leverage ratio to 2.3x from 2.9x.

  • Closed acquisition of 3 Patense rendering facilities in Brazil for approximately $122 million.

Concerns

2

  • RIN market volatility and SRE concerns

  • Side effects of GLP-1 drugs

Guidance & targets

CategoryTargetConfidence
Core Ingredients EBITDA
$325 million and $340 million
high materiality
High
Effective Tax Rate
roughly 25%
medium materiality
High
DGD Gallons Produced
approximately 335 million gallons
high materiality
High
Net Debt
very close to or below $3 billion
high materiality
High
Leverage Ratio
well below 2x
high materiality
High
Additional Adjusted EBITDA (Core Ingredients)
$150 million to $300 million
high materiality
High

Segment performance

SegmentRevenueYoYQoQMargin
Global Ingredients Business (Feed & Food)
Combined adjusted EBITDA for Q2 FY26, up significantly from $207 million in Q2 FY25 and $256 million in Q1 FY26. Delivered improved global operations, margin expansion, and focused commercial execution. Protein value strengthened due to tightening global fish meal supplies and increased poultry production in the United States.
———$353 million
Food
Collagen sales improved year-over-year due to increased customer demand and new applications. Nextida glucose control product continues repeat sales and is now sold in Asia. Rousselot provides significant opportunity to enhance earnings and cash flow through product mix optimization towards higher-margin products.
Collagen sales: improved year-over-yearCollagen margin vs Gelatin: 2.5x to 3xTargeted ingredients margin vs Gelatin: 7x to 11x
————
Fuel (Diamond Green Diesel)
Darling's share of DGD EBITDA for Q2 FY26, compared to $43 million in Q2 FY25. Delivered outstanding operational and financial performance, supported by strong production of 356 million gallons, favorable market conditions, and a $51 million IEPA tariff recovery at the entity level.
Renewable fuel production: over 1.3 million metric tonsGallons sold: approximately 350 million gallonsEBITDA per gallon: $2.23
———$389 million

Product announcements

ProductTypeDetails
Nextida glucose control productexpansion
Nextida brain productlaunch

Deals & partnerships

Patense Group Acquisition of 3 rendering facilities in Brazil. $122 million

Closed on the acquisition of three rendering facilities from the Patense Group in Brazil, which are expected to be immediately accretive.

Undisclosed Sale of the majority of the Trapp business. $90 million

Subsequent to quarter end, on July 22, the company closed on the sale of the majority of its Trapp business for approximately $90 million.

Undisclosed Sale of European Castings business.

An agreement was signed to sell the European Castings business, with the closing expected by the end of 2026.

Capital programs

Spray dryer for collagen approved

Benefit:make collagen

Approved project for a spray dryer to make collagen in China.

Extraction and spray drying capacity approved

Approved project to add extraction and spray drying capacity in Paraguay.

Risks & headwinds

RIN market volatility and SRE concerns recent

nervousness in the RIN market over the last few days related to 2025 SREs

Mitigation:Management does not expect meaningful changes in SREs to impact RIN supply and demand, stating the policy is achieving EPA objectives and the industry can meet the mandate. RIN tightness is expected to continue.

Side effects of GLP-1 drugs current

some of the side effects of the GLP-1 drugs out there that are now becoming in the narrative in the media

Mitigation:The company's Nextida glucose control product offers similar applications without the reported side effects.

What to watch in Q3 FY26

Core Ingredients EBITDA

Q3 FY26
Current $353 million (Q2 FY26)
Target $325 million and $340 million

Why it matters

Verifies continued strong performance and underlying business momentum, excluding one-off tariff benefits.

For the third quarter, we expect Core Ingredients EBITDA to be between $325 million and $340 million. Included in the second quarter results were approximately $18 million in the net recovery of IEPA tariffs for the Rousselot business. Excluding that benefit, our third quarter outlook implies underlying performance that is generally consistent with the strong earnings level we delivered in the second quarter.

Find out whether DAR delivers this. Inve re-checks your case every morning.

Q&A highlights

What specific changes drove the rally in protein meals, particularly in the latter part of the quarter, and is this strength continuing into Q3?

Management attributed the strong global protein market to tightness in fish meal supplies, robust demand from aquaculture, pet food, and strong global poultry production, expecting this trend to continue through the balance of the year.

“You're seeing a very strong protein market globally. And it's ultimately driven, at least on the chicken side by the tightness in the fish meal off of the super El Nino or whatever you want to call it. We're just seeing very, very strong demand on all continents for proteins. And we just see that continuing through the balance of the year.”

asked by Heather Jones · answered by Randall Stuewe

2 min read 6 chapters

Detailed narrative

Market Conditions & Performance Drivers

The company's Q2 FY26 performance significantly exceeded expectations, driven by strengthening finished product markets, rallying fat and protein prices, and favorable trade developments. Strong operational excellence and margin management programs also contributed to the positive results, leading to a combined adjusted EBITDA of $742 million.

Core Ingredients Business Strength

The Core Ingredients business delivered improved global operations, margin expansion, and focused commercial execution, with EBITDA increasing to $353 million. This segment is expected to continue performing at a high level, supported by growing global poultry production and strong global demand for proteins and specialty products, with Q3 EBITDA guided between $325 million and $340 million.

Diamond Green Diesel (DGD) Excellence

DGD demonstrated outstanding operational and financial performance, producing over 1.3 million metric tons of renewable fuel and delivering $389.2 million in EBITDA to Darling. The segment benefited from strong production of 356 million gallons, favorable market conditions, and $51 million in IEPA tariff recoveries at the entity level, reinforcing its position as a leading renewable diesel producer.

Strategic Acquisitions & Divestitures

Darling closed the acquisition of three Patense rendering facilities in Brazil for approximately $122 million, which are expected to be immediately accretive. The company also sold the majority of its Trapp business for $90 million and signed an agreement to sell its European Castings business, expected to close by year-end 2026, aiming to offset acquisition and stock buyback costs.

Balance Sheet Transformation

The company reduced net debt by over $220 million in the quarter, bringing the leverage ratio to 2.3x from 2.9x at year-end 2025. Management anticipates net debt to be below $3 billion and leverage below 2x by the end of 2026, marking a significant inflection point for future capital allocation strategies and enabling potential shareholder value initiatives.

Food Segment Innovation & Margin Expansion

Collagen sales improved year-over-year due to increased customer demand and new applications, with collagen generating 2.5x to 3x the margin of gelatin. The Nextida glucose control product continues to see repeat sales and is expanding into Asia, with a new 'brain' product launch expected shortly, highlighting a strategic shift towards higher-margin, specialized health ingredients.

Summary of the company's earnings call; see how call summaries are prepared. Not investment advice.