Darling Ingredients (DAR) 47th Annual Raymond James Institutional Investor Conference summary

Strategic evolution and business model

• Over two decades, the company has doubled in size every five years, evolving from a small animal byproducts recycler to the world's largest repurposer of slaughtered animal byproducts, converting waste into food, feed, and energy products.

• The business model leverages integration from upstream byproduct collection to downstream renewable fuels, creating value through vertical integration and global scale.

• The joint venture with Valero, Diamond Green Diesel (DGD), was established to capitalize on mandated biofuels policies, using proprietary technology to convert animal fats into renewable diesel.

• DGD has grown to a capacity of up to 1.3 billion gallons annually, with operational flexibility to adjust output based on market margins and catalyst life.

• The company’s unique global feedstock footprint and technological expertise underpin its competitive advantage and resilience.

Core business segments and growth drivers

• The rendering business is essential for processing animal byproducts, separating fat and protein, and is insulated from product price swings due to its necessity and local logistics.

• The food segment, built around gelatin and collagen, has expanded from 92,000 tons to a $250–$300 million EBITDA business, with new specialty peptides like Nextida GC targeting health and wellness markets.

• Collagen and specialty peptides offer higher margins and significant growth potential, with ongoing clinical trials for applications in glucose control, brain health, and more.

• The feed segment benefits from rising fat and soybean oil prices, with value-sharing arrangements with suppliers and positive outlook due to regulatory developments.

• The company’s global infrastructure enables product quality optimization and arbitrage opportunities across markets.

Policy, market outlook, and financial guidance

• Recent policy developments, including an anticipated higher Renewable Volume Obligation (RVO) from the EPA, are expected to drive increased mandated demand for U.S.-produced biofuels, supporting margin recovery.

• The company expects a constructive margin environment for DGD in 2026 and 2027, with Q2 performance projected to improve over Q1 due to rising fat prices and operational ramp-up post-turnaround.

• Q1 EBITDA guidance for the core business is $240–$250 million, excluding DGD, with expectations for stronger results in subsequent quarters.

• The company is focused on reducing net debt below $3 billion, prioritizing deleveraging in 2026, and may consider dividends or buybacks once targets are met and policy clarity improves.

• Integration of recent acquisitions is yielding commercial benefits, enhancing global reach and product optimization.