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, while operational focus remained on margin expansion, CapEx management, and SG&A reduction.

• Debt was reduced by approximately $192 million in Q3 2024, supported by strong cash flow and $111.2 million in dividends received from DGD.

• The company remains optimistic for 2025, expecting regulatory clarity and improved market conditions to drive record earnings, especially in specialty ingredients and renewable fuels.

• Sustainable aviation fuel (SAF) unit was completed and commissioning is underway, with several contracts signed and more in negotiation.

Financial highlights

• Q3 2024 net income was $16.9 million ($0.11 per diluted share), down from $125 million ($0.77 per share) in Q3 2023.

• Q3 2024 net sales were $1.42 billion, compared to $1.63 billion in Q3 2023.

• Q3 2024 combined adjusted EBITDA was $236.7 million; full-year 2024 guidance is $1.15–$1.175 billion.

• For the first nine months of 2024, net income was $177 million ($1.10 per share) versus $563.2 million ($3.47 per share) in the same period of 2023.

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

Outlook and guidance

• 2024 adjusted EBITDA expected in the range of $1.15–$1.175 billion, with 2025 projected to exceed $1.5 billion, driven by regulatory tailwinds and improved margins.

• Anticipates regulatory clarity on California LCFS and federal 45Z tax credit soon, which should benefit margins and cash flow.

• Specialty ingredients and collagen businesses are positioned for growth with new product launches and market recovery.

• Capital expenditures for 2025 expected to be $450–$500 million, focused on maintenance and environmental needs.

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