Darling's Net Income Plunges 97% Amid DGD Losses, Sales Up 3%

TL;DR

**Darling's DGD bet is bleeding cash, making its 3% sales growth look like a mirage; time to re-evaluate this 'green' investment.**

AI Summary

Darling Ingredients Inc. reported a mixed financial performance for the nine months ended September 27, 2025. Total net sales increased to $4.426 billion from $4.297 billion in the prior year period, a 3% rise. However, net income attributable to Darling plummeted by 96.7% to $5.864 million, down from $176.972 million in the same period of 2024. This significant decline was primarily driven by a substantial equity in net loss of Diamond Green Diesel (DGD) of $70.367 million, a stark contrast to the $125.046 million net income from DGD in the prior year. Operating income also saw a sharp decrease, falling to $175.994 million from $345.778 million. The company's cash and cash equivalents increased to $91.494 million from $75.973 million at December 28, 2024, while total assets grew to $10.452 billion from $10.070 billion. Long-term debt, net of current portion, rose to $4.027 billion from $3.909 billion. The company also incurred $11.073 million in acquisition and integration costs, up from $5.402 million in the prior year.

Why It Matters

This filing reveals a significant profitability challenge for Darling Ingredients, primarily due to its investment in Diamond Green Diesel. The dramatic drop in net income, despite a modest increase in sales, signals potential headwinds for investors, raising questions about the long-term viability and profitability of the DGD joint venture. For employees, a substantial decline in net income could lead to concerns about future growth and job security. Customers might see stable operations given the sales increase, but the underlying financial strain could impact future innovation or pricing. In the broader market, this performance could affect investor sentiment towards the renewable fuels sector, especially for companies with significant joint venture exposure, potentially impacting competitive dynamics.

Risk Assessment

Risk Level: high — The risk level is high due to the precipitous 96.7% drop in net income attributable to Darling, from $176.972 million to $5.864 million, primarily driven by a $70.367 million equity in net loss from Diamond Green Diesel. This significant loss from a key unconsolidated subsidiary, coupled with an increase in long-term debt to $4.027 billion, indicates substantial financial vulnerability and reliance on a volatile joint venture.

Analyst Insight

Investors should scrutinize Darling's exposure to Diamond Green Diesel and its impact on overall profitability. Consider reducing exposure or holding off on new investments until there's clear evidence of DGD's turnaround and a more stable earnings trajectory for Darling Ingredients. Monitor future filings for improvements in DGD's performance and any strategic shifts.

Financial Highlights

revenue

$4.426B

total Assets

$10.452B

total Debt

$4.027B

net Income

$5.864M

eps

$0.04

cash Position

$91.494M

revenue Growth

+3%

Revenue Breakdown

Key Numbers

• $4.426B — Total Net Sales (Increased from $4.297 billion in prior year, a 3% rise.)
• $5.864M — Net Income Attributable to Darling (Plummeted 96.7% from $176.972 million in prior year.)
• ($70.367M) — Equity in Net Income/(Loss) of Diamond Green Diesel (Shifted from a $125.046 million gain to a significant loss.)
• $175.994M — Operating Income (Decreased from $345.778 million in prior year.)
• $4.027B — Long-term Debt, Net of Current Portion (Increased from $3.909 billion at December 28, 2024.)
• $11.073M — Acquisition and Integration Costs (Increased from $5.402 million in prior year.)
• $0.04 — Diluted Income Per Share (Significantly down from $1.10 in prior year.)
• $91.494M — Cash and Cash Equivalents (Increased from $75.973 million at December 28, 2024.)

Key Players & Entities

• DARLING INGREDIENTS INC. (company) — Registrant
• Diamond Green Diesel (company) — Related party and unconsolidated subsidiary
• SEC (regulator) — Securities and Exchange Commission
• $4.426 billion (dollar_amount) — Total net sales for nine months ended September 27, 2025
• $5.864 million (dollar_amount) — Net income attributable to Darling for nine months ended September 27, 2025
• $176.972 million (dollar_amount) — Net income attributable to Darling for nine months ended September 28, 2024
• $70.367 million (dollar_amount) — Equity in net loss of Diamond Green Diesel for nine months ended September 27, 2025
• $125.046 million (dollar_amount) — Equity in net income of Diamond Green Diesel for nine months ended September 28, 2024
• $4.027 billion (dollar_amount) — Long-term debt, net of current portion, as of September 27, 2025

FAQ

Risk Factors

• DGD Net Loss Impact [high — financial]: The company experienced a significant shift in its equity in Diamond Green Diesel (DGD), moving from a net income of $125.046 million in the prior year period to a net loss of $70.367 million for the nine months ended September 27, 2025. This swing of over $195 million severely impacted overall profitability.
• Acquisition and Integration Costs [medium — operational]: Acquisition and integration costs increased to $11.073 million for the nine months ended September 27, 2025, up from $5.402 million in the prior year period. This rise suggests increased M&A activity or challenges in integrating recent acquisitions.
• Declining Net Income and EPS [high — financial]: Net income attributable to Darling plummeted by 96.7% to $5.864 million for the nine months ended September 27, 2025, down from $176.972 million in the prior year. Diluted income per share fell to $0.04 from $1.10.
• Increased Long-Term Debt [medium — financial]: Long-term debt, net of current portion, increased to $4.027 billion as of September 27, 2025, from $3.909 billion at December 28, 2024. This increase in leverage could heighten financial risk.

Industry Context

Darling Ingredients operates in the rendering and recycled food processing industry, transforming by-products into valuable ingredients. The company also has significant exposure to the renewable diesel market through its Diamond Green Diesel (DGD) joint venture. The renewable fuels sector is subject to volatile commodity prices and evolving regulatory landscapes, impacting profitability and investment decisions.

Regulatory Implications

The company's operations are subject to environmental regulations related to processing and waste management. Changes in government policies, particularly those affecting renewable fuel mandates and subsidies, can significantly influence the demand and profitability of products like renewable diesel, a key area for Darling.

What Investors Should Do

1. Monitor DGD performance closely.
2. Analyze acquisition and integration cost trends.
3. Assess the impact of rising debt levels.

Glossary

Equity in Net Income/(Loss) of Diamond Green Diesel (DGD)

This represents Darling's share of the profits or losses generated by its investment in the Diamond Green Diesel joint venture. (A significant swing from profit to loss in DGD's performance directly impacted Darling's consolidated net income, highlighting the importance of this investment.)

Diluted Income Per Share

The net income earned by a company for each share of its common stock outstanding, assuming all convertible securities, options, and warrants were exercised. (A sharp decline in diluted EPS from $1.10 to $0.04 indicates a substantial decrease in profitability on a per-share basis for shareholders.)

Noncontrolling interests

Represents the portion of equity in a subsidiary that is not attributable to the parent company. It is presented separately in the equity section of the balance sheet and as an allocation of net income in the income statement. (While not a primary driver of the current negative sentiment, it's a standard disclosure for companies with subsidiaries where ownership is not 100%.)

Year-Over-Year Comparison

For the nine months ended September 27, 2025, Darling Ingredients Inc. saw a modest 3% increase in total net sales to $4.426 billion compared to the prior year. However, this top-line growth was overshadowed by a dramatic 96.7% decline in net income, which fell to $5.864 million from $176.972 million. This was largely due to a significant swing in the performance of its Diamond Green Diesel (DGD) joint venture, which moved from a substantial net income contribution to a net loss. Operating income also saw a sharp decrease, and diluted earnings per share dropped significantly, reflecting a challenging operational and financial period compared to the previous year.

Key Financial Figures

• $0.01 — hange on which registered Common stock $0.01 par value per share DAR New York Stock

Filing Documents

• dar-20250927.htm (10-Q) — 2790KB
• ex311-20250927.htm (EX-31.1) — 10KB
• ex312-20250927.htm (EX-31.2) — 10KB
• ex32-20250927.htm (EX-32) — 11KB
• 0000916540-25-000031.txt ( ) — 14238KB
• dar-20250927.xsd (EX-101.SCH) — 70KB
• dar-20250927_cal.xml (EX-101.CAL) — 133KB
• dar-20250927_def.xml (EX-101.DEF) — 478KB
• dar-20250927_lab.xml (EX-101.LAB) — 907KB
• dar-20250927_pre.xml (EX-101.PRE) — 676KB
• dar-20250927_htm.xml (XML) — 2797KB

: FINANCIAL INFORMATION

PART I: FINANCIAL INFORMATION Item 1.

FINANCIAL STATEMENTS

FINANCIAL STATEMENTS Consolidated Balance Sheets 3 September 27, 2025 (unaudited) and December 28, 2024 Consolidated Statements of Operations (unaudited) 4 Three and Nine Months Ended September 27, 2025 and September 28, 2024 Consolidated Statements of Comprehensive Income/(Loss) (unaudited) 5 Three and Nine Months Ended September 27, 2025 and September 28, 2024 Consolidated Statements of Stockholders' Equity (unaudited) 6 Nine Months Ended September 27, 2025 and September 28, 2024 Consolidated Statements of Cash Flows (unaudited) 8 Nine Months Ended September 27, 2025 and September 28, 2024

Notes to Consolidated Financial Statements (unaudited)

Notes to Consolidated Financial Statements (unaudited) 9 Item 2.

MANAGEMENT'S DISCUSSION AND ANALYSIS OF

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS 36 Item 3.

QUANTITATIVE AND QUALITATIVE DISCLOSURES

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK 58 Item 4.

CONTROLS AND PROCEDURES

CONTROLS AND PROCEDURES 60

: OTHER INFORMATION

PART II: OTHER INFORMATION Item 1.

LEGAL PROCEEDINGS

LEGAL PROCEEDINGS 62 Item 1A.

RISK FACTORS

RISK FACTORS 62 Item 5. OTHER INFORMATION 62 Item 6. EXHIBITS 62

Signatures

Signatures 63 2 DARLING INGREDIENTS INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS September 27, 2025 and December 28, 2024 (in thousands, except share data) September 27, 2025 December 28, 2024 ASSETS (unaudited) Current assets: Cash and cash equivalents $ 91,494 $ 75,973 Restricted cash 15,559 37,579 Accounts receivable, less allowance for credit losses of $ 13,986 at September 27, 2025 and $ 16,166 at December 28, 2024 615,241 581,108 Accounts receivable due from related party - Diamond Green Diesel 5,984 9,476 Inventories 622,315 576,837 Prepaid expenses 89,030 81,286 Income taxes refundable 22,854 35,063 Other current assets 40,201 42,114 Total current assets 1,502,678 1,439,436 Property, plant and equipment, less accumulated depreciation of $ 2,937,309 at September 27, 2025 and $ 2,579,770 at December 28, 2024 2,786,142 2,713,669 Intangible assets, less accumulated amortization of $ 610,173 at September 27, 2025 and $ 567,135 at December 28, 2024 881,448 898,412 Goodwill 2,499,229 2,322,593 Investment in unconsolidated subsidiaries 2,324,936 2,263,709 Operating lease right-of-use assets 232,337 210,692 Other assets 209,766 199,594 Deferred income taxes 15,803 22,368 $ 10,452,339 $ 10,070,473 LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Current portion of long-term debt $ 76,911 $ 133,020 Accounts payable, principally trade 374,801 348,705 Income taxes payable 15,507 9,723 Current operating lease liabilities 67,237 62,761 Accrued expenses 475,494 489,295 Total current liabilities 1,009,950 1,043,504 Long-term debt, net of current portion 4,026,727 3,908,978 Long-term operating lease liabilities 169,447 152,327 Other non-current liabilities 206,193 208,350 Deferred income taxes 270,892 293,022 Total liabilities 5,683,209 5,606,181 Commitments and contingencies Stockholders' equity: Common stock, $ 0.01 par value; 250,000,000 shares authorized; 175,625,898 and 174,965,834 shares issued at Septem

Notes to Consolidated Financial Statements

Notes to Consolidated Financial Statements September 27, 2025 (unaudited) (1) General The accompanying consolidated financial statements for the three and nine month periods ended September 27, 2025 and September 28, 2024, have been prepared by Darling Ingredients Inc., a Delaware corporation ("Darling", and together with its subsidiaries, the "Company" or "we", "us" or "our") in accordance with generally accepted accounting principles in the United States ("GAAP") without audit, pursuant to the rules and regulations of the Securities and Exchange Commission ("SEC"). The information furnished herein reflects all adjustments (consisting only of normal recurring accruals) that are, in the opinion of management, necessary to present a fair statement of the financial position and operating results of the Company as of and for the respective periods. However, these operating results are not necessarily indicative of the results expected for a full fiscal year. Certain information and footnote disclosures normally included in annual financial statements prepared in accordance with GAAP have been omitted pursuant to such rules and regulations. However, management of the Company believes, to the best of their knowledge, that the disclosures herein are adequate to make the information presented not misleading. The accompanying consolidated financial statements should be read in conjunction with the audited consolidated financial statements contained in the Company's Form 10-K for the fiscal year ended December 28, 2024. (2) Summary of Significant Accounting Policies (a) Basis of Presentation The consolidated financial statements include the accounts of Darling and its consolidated subsidiaries. Noncontrolling interests represent the outstanding ownership interest in the Company's consolidated subsidiaries that are not owned by the Company. In the accompanying Consolidated Statements of Operations, the noncontrolling interest in net income of the consolidated subs

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