Darling Ingredients (DAR) Q3 2024 earnings summary

Executive summary

• Q3 2024 net sales were $1.42 billion, down 12.5% year-over-year, with net income at $16.9 million ($0.11 per diluted share), a sharp decline from $125 million ($0.77 per share) in Q3 2023, mainly due to lower fat prices and reduced Diamond Green Diesel (DGD) earnings.

• Combined adjusted EBITDA for Q3 2024 was $236.7 million, down 29.2% year-over-year, reflecting steady finished product pricing amid a tough renewable diesel market.

• Debt paydown of approximately $192 million in Q3, supported by strong cash flow and $111.2 million in dividends from DGD.

• Operational focus remained on widening margins, managing CapEx, and reducing SG&A, with global assets performing well.

• Cash flow from operations remained strong at $684.9 million for the nine months, with capital expenditures of $259.1 million and $29.2 million in share repurchases.

Financial highlights

• Q3 2024 net income: $16.9 million; Q3 2023: $125 million.

• Q3 2024 net sales: $1.42 billion; Q3 2023: $1.63 billion.

• Q3 2024 gross margin was 22.1%, down from 23.8% in Q3 2023.

• Q3 2024 adjusted EBITDA: $236.7 million; Q3 2023: $334.3 million.

• For the first nine months, net income was $177 million ($1.10 per share) versus $563.2 million ($3.47 per share) in 2023; net sales were $4.3 billion, down from $5.2 billion.

Outlook and guidance

• 2024 combined adjusted EBITDA is expected in the range of $1.15 billion to $1.175 billion, the fourth best in company history.

• 2025 outlook is optimistic, with anticipated regulatory clarity, improved margins, and tailwinds from renewable fuel incentives and new product launches.

• Combined earning power for 2025 projected to exceed $1.5 billion, with further upside if LCFS and RINs increase and waste fat prices rise.

• Management expects continued volatility in commodity prices, energy costs, and global economic conditions to impact results.

• Capital expenditures for the remainder of 2024 are projected at $140 million, funded by operating cash flow.