Darling Ingredients NYSE: DAR reported a sharp improvement in first-quarter 2026 results as management pointed to a more favorable operating environment, sequential margin improvement, and a constructive U.S. regulatory backdrop for renewable fuels.
First-quarter results show higher EBITDA and margins
Chairman and CEO Randall C. Stuewe said the company’s recent results reflect a shift away from “public policy uncertainty and deflationary and volatile commodity markets” that had created a challenging backdrop in prior years. He said Darling remained focused on “operational excellence” and “strict disciplined capital allocation” aimed at meaningful debt reduction.
For the first quarter, Darling posted combined Adjusted EBITDA of $406.8 million, including $255.6 million from the global ingredients business and $151.2 million from Diamond Green Diesel (DGD). CFO Robert Day said combined Adjusted EBITDA rose from $196 million in the first quarter of 2025 and $336 million in the prior quarter.
Day reported net sales of $1.6 billion versus $1.4 billion a year earlier, while raw material volume of 3.8 million metric tons was “essentially unchanged.” Companywide gross margin improved to 26.1% from 22.6% in the prior-year quarter and 25.1% in the fourth quarter of 2025.
Darling also recorded net income of approximately $134 million, or $0.83 per diluted share, compared with a net loss of $26 million, or -$0.16 per diluted share, in the first quarter of 2025.
Feed and food segments: volume stability, collagen growth
In the feed ingredients segment, Stuewe called it a “fantastic quarter,” citing steady volumes with strong global poultry volumes offsetting a stagnant North American cattle herd. He said operational focus drove improvements in throughput, cost reduction, and product quality, while commercial execution enabled Darling to redirect sales toward higher-priced markets.
Day said feed segment EBITDA increased to $169 million from $111 million a year earlier, with sales of $985 million versus $896 million. Segment gross margin improved to 25.3% of sales from 20.3% a year ago.
During the Q&A, Stuewe highlighted shifting protein and fat dynamics, noting that the U.S. cattle herd is “stagnant and at a 75-year low,” and emphasizing that poultry produces less fat than beef. He also described the business as a “spread management game,” particularly across North America, Europe, and South America, and said the company was seeing improving price signals that should begin flowing through results as the year progresses.
In the food segment, Stuewe said Darling is seeing “nice growth” in collagen, particularly in Europe and Asia, and said collagen and gelatin sales improved year-over-year due to customer demand and new applications in food, nutrition, and health products. He noted that the company’s Nextida GC product is “currently pending a patent” in the U.S. for production processes and for use as a dietary supplement ingredient targeting lower blood glucose.
Financially, Day said food segment sales rose to $405 million from $349 million a year earlier, while EBITDA increased to $81 million from $71 million. Food segment gross margin was 28.9% of sales versus 29.3% a year ago, and raw material volumes were flat at approximately 330,000 metric tons.
Fuel segment: DGD profits, inventory accounting benefit, and policy tailwinds
Stuewe said the fuel segment is at an “inflection point” as renewable margins improved following the finalization of the Renewable Volume Obligation (RVO), which he called “extremely constructive” for Darling and DGD. Day said Darling’s share of DGD EBITDA was $151 million, driven in part by a $97 million favorable lower-of-cost-or-market (LCM) inventory valuation adjustment at the DGD entity level, and DGD sold roughly 272 million gallons with an average EBITDA margin of $1.11 per gallon.
Day also said Darling contributed approximately $190 million to DGD during the quarter, primarily for short-term working capital, and management expects “most or all” of that to be returned in subsequent quarters. In addition, Darling monetized $45 million in production tax credit sales during the quarter, with proceeds expected in coming quarters.
Day told analysts that the first-quarter LCM benefit “exhausts all available lower of cost or market,” and that as long as the business is profitable, management does not anticipate further LCM benefits. He added that future LIFO impacts will depend on average feedstock costs paid in each period.
Outside of DGD, other fuel segment sales were $160 million versus $135 million a year earlier due to strong energy and biogas prices in Europe on relatively flat volumes of about 370,000 metric tons. Total fuel segment Adjusted EBITDA, including DGD, was roughly $180 million versus $24 million in the first quarter of 2025.
On DGD operations, Day said second-quarter volumes are expected to be about 320 million gallons and characterized that level as “close to max,” with both executives saying the company is incentivized to “run full out” in the current margin environment. Stuewe added that management expects DGD’s earnings power in the second quarter to exceed the first quarter and to strengthen further in the third quarter, while reiterating that the company does not provide formal guidance for DGD due to timing and feedstock volatility.
Regulatory outlook and market dynamics: RVO, RINs, and LCFS
In discussing broader industry dynamics, Day said Darling believes biofuel capacity has largely returned online as margins have improved, and that the industry should be capable of meeting the demand implied by the RVO, potentially alongside some imports and fewer exports. Looking beyond 2026, Day said the RVO currently extends through 2027 and that “the industry needs to produce, it needs to run really hard,” with margins needing to remain strong to incentivize sufficient volumes.
Management repeatedly emphasized the role of RINs. Day said RINs “need to be the great equalizer” that supports renewable diesel and sustainable aviation fuel (SAF) margins needed to satisfy the RVO, although he said the level of RIN pricing required will depend on factors such as feedstock costs, global conventional fuel prices, tariffs, and industry supply.
On California’s Low Carbon Fuel Standard (LCFS), Day called the market “dynamic and hard to understand,” while Stuewe said the RVO effectively mandates more production than what West Coast LCFS markets can absorb. Management said it expects LCFS credit values to increase, and suggested renewable diesel may trade at a discount into California that is offset by LCFS premiums.
On SAF versus renewable diesel economics, Day said in the U.S. voluntary markets, SAF continues to offer a better margin opportunity and a more consistent premium. In Europe, he said the relationship can be more volatile, with periods where renewable diesel margins exceed SAF due to mandate-driven dynamics. He said Darling is “still meeting” commitments associated with its SAF investment at Port Arthur.
Balance sheet, asset sales, and upcoming milestones
At quarter-end, Day said total debt net of cash was approximately $4 billion, up from $3.8 billion at the end of the fourth quarter of 2025, driven by the DGD working capital contribution and timing of production tax credit payments. Capital expenditures were $95 million in the quarter, and the company’s preliminary bank covenant leverage ratio was 3.17x versus 2.9x at year-end 2025. Darling ended the quarter with about $1.1 billion available on its revolving credit facility.
Day said the company remains focused on deleveraging, reiterating a target to reduce debt “down below $3 billion,” and said management plans to discuss capital plans further at an Investor Day on May 11.
On portfolio actions, Day said the company continues to pursue sales of non-strategic assets, though transactions have not yet closed. He said Darling has signed an agreement to sell the majority of its grease trap environmental service assets, pending permitting transfers expected to be completed in the next few months.
Looking ahead, Stuewe said management expects momentum to build through the year and provided Core Ingredients EBITDA guidance for the second quarter of $260 million to $275 million, citing improving market conditions while acknowledging continued volatility.
About Darling Ingredients NYSE: DAR
Darling Ingredients Inc NYSE: DAR is a global leader in converting edible and inedible bio-nutrient streams into sustainable food, feed ingredients, renewable fuels and specialty products. Founded in 1882 and headquartered in Irving, Texas, the company builds on more than a century of experience in animal rendering and by-product recycling. Over time, Darling has expanded its capabilities beyond traditional rendering to include advanced processing technologies that support a circular economy and reduce waste from food and agricultural industries.
The company's core operations revolve around four primary segments: Feed Ingredients & Services, Food & Nutrition, Fuel Ingredients & Services, and Specialty Ingredients.
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