Darling Ingredients Q4 revenue beats expectations

Overview

• Animal by-products processor's Q4 revenue rose, beating analyst expectations

• Net income for Q4 decreased due to restructuring and asset impairment charges

• Company monetized $255 mln of Production Tax Credit sales, enhancing cash generation

Outlook

• Darling Ingredients estimates Q1 2026 core ingredients adjusted EBITDA at $240-$250 mln

• Company anticipates EPA's Renewable Volume Obligation to support fat prices

• Darling Ingredients expects modest impact on core ingredients performance due to market pricing

Result Drivers

• RESTRUCTURING IMPACT - Darling Ingredients' Q4 net income was affected by $58 mln in restructuring and asset impairment charges related to Enviroflight and CTH natural casing businesses

• OPERATIONAL EXCELLENCE - Despite lower fat prices, operational excellence drove EBITDA growth and gross margin improvement, according to CEO Randall C. Stuewe

• TAX CREDIT MONETIZATION - Monetization of $255 mln of Production Tax Credit sales enhanced cash generation, aiding deleveraging efforts

Key Details

Analyst Coverage

• The current average analyst rating on the shares is "buy" and the breakdown of recommendations is 15 "strong buy" or "buy", no "hold" and no "sell" or "strong sell"

• The average consensus recommendation for the food processing peer group is "buy"

• Wall Street's median 12-month price target for Darling Ingredients Inc is $48.50, about 2.3% below its February 11 closing price of $49.62

• The stock recently traded at 20 times the next 12-month earnings vs. a P/E of 14 three months ago

Press Release: ID:nBw533y4Ba

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