Skip to content
    DAR
    Earnings call· Jun 2026(Q2 FY26)

    DARLING INGREDIENTS Q2 FY26 earnings call DAR

    Jul 30, 2026 Source

    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

    6
    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

    3
    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

    Operational metrics

    21
    Combined Adjusted EBITDA
    $742 millionup from $250 million in Q2 2025
    Q2 FY26

    Reflects strong market conditions and operational excellence.

    Combined Adjusted EBITDA
    $1.1 billionversus slightly under $450 million a year ago
    6 months of 2026

    Reflecting strong contributions from both Global Ingredients and Diamond Green Diesel.

    Net Income
    $387 millioncompared to $13 million in Q2 2025
    Q2 FY26

    GAAP basis.

    GAAP Diluted EPS
    $2.41compared to $0.08 in Q2 2025
    Q2 FY26

    GAAP basis.

    Net Income
    $521.6 millioncompared to a net loss of $13.5 million a year ago
    6 months of 2026

    GAAP basis.

    GAAP Diluted EPS
    $3.24compared to negative $0.09 a year ago
    6 months of 2026

    GAAP basis.

    Net Sales
    $1.7 billioncompared to $1.5 billion for Q2 2025
    Q2 FY26

    Reported net sales.

    Net Sales
    $3.3 billionversus $2.9 billion for the same period a year ago
    6 months of 2026

    Reported net sales.

    DGD Cash Distributions to Darling
    $280 million
    Q2 FY26

    Used to decrease debt, fund acquisitions, and repurchase stock.

    Debt Reduction
    $223 million
    Q2 FY26

    Achieved using cash distributions from Diamond Green Diesel.

    Stock Repurchases
    $73 million
    Q2 FY26

    Part of capital allocation strategy.

    Leverage Ratio
    2.3xcompared to 2.9x at the end of last year
    Q2 FY26 end

    Improved due to debt reduction and strong earnings.

    IEPA Tariff Recovery
    $51 million
    Q2 FY26

    Favorable recovery at the entity level.

    IEPA Tariff Recovery
    $18 million
    Q2 FY26

    Net recovery included in Q2 results, excluded for Q3 outlook comparison.

    Collagen Margin vs. Gelatin
    2.5x to 3x
    current

    Collagen generates significantly higher margins than Gelatin.

    Targeted Ingredients Margin vs. Gelatin
    7x to 11x
    current

    Targeted ingredients can generate substantially higher margins than Gelatin.

    Mid-cycle RD Margin (historical reference)
    $0.92
    2021 to 2025

    Approximate average of price per gallon, not a suggestion for future mid-cycle margins.

    Spot RD Margin
    $2.25
    Q2 FY26 average

    Average for the quarter, higher than spot market due to DGD's supply chain optimization and volatility management.

    Maintenance CapEx
    $450 millionrevised slightly higher from $400 million
    FY26

    Function of increased cash flow and opportunities to debottleneck, increase capacity, and improve efficiencies.

    Unsecured Debt
    $1.8 billion
    future

    Expected after paying off a $0.5 billion bond maturing in April.

    Bond Maturing
    $0.5 billion
    April

    Current bond maturing, with capability to pay off using cash generated.

    Industry KPIs

    2
    MetricValueDetails
    Brand platform growthmid- to upper single digits%
    Adjusted EPS operating income$2.41USD

    Product announcements

    2
    ProductTypeDetails
    Nextida glucose control productexpansion
    Nextida brain productlaunch

    Deals & partnerships

    3
    Patense GroupAcquisition 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.

    UndisclosedSale 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.

    UndisclosedSale 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

    2
    Spray dryer for collagenapproved

    Benefit: make collagen

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

    Extraction and spray drying capacityapproved

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

    Risks & headwinds

    2
    RIN market volatility and SRE concernsrecent

    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 drugscurrent

    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

    5

    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.

    Q&A highlights

    6

    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 read6 chapters

    Detailed Narrative

    01

    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.

    02

    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.

    03

    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.

    04

    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.

    05

    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.

    06

    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.

    AI-generated summary of the company’s earnings call. Not investment advice.