Darling Ingredients Q3 Earnings Surge on DGD, Feed Strength

Darling Ingredients Inc. (NYSE: DAR) reported a sharp increase in third-quarter 2026 earnings as stronger renewable-fuel economics at Diamond Green Diesel and higher Feed segment profits lifted combined adjusted EBITDA to $514.3 million, more than double the $244.9 million recorded a year earlier.

Net income attributable to Darling rose to $267.0 million, or $1.67 per diluted share, from $19.4 million, or $0.12 per share, in the third quarter of 2025. The latest quarter included a $63.5 million gain on the sale of businesses. Net sales increased 14.5% to $1.79 billion, while gross margin expanded to 26.7% from 24.7%.

For the first nine months of 2026, net sales rose 14.5% to $5.07 billion and net income reached $788.6 million, or $4.91 per diluted share. Combined adjusted EBITDA, a non-GAAP measure that includes Darling’s share of Diamond Green Diesel, increased to $1.66 billion from $690.2 million.

Renewable fuels drive earnings growth

Fuel segment combined adjusted EBITDA surged to $227.9 million from $21.6 million a year earlier. Darling’s 50% share of Diamond Green Diesel adjusted EBITDA was $204.2 million, compared with a loss of $2.9 million in the prior-year quarter. The joint venture produced 315.3 million gallons and sold or shipped 314.9 million gallons, generating adjusted EBITDA of $1.30 per gallon sold or shipped.

Darling attributed the year-over-year improvement to robust renewable volume obligation economics. Results were nevertheless affected by the timing of a sustainable aviation fuel shipment, a short-term hydrogen outage, feedstock lag and heating-oil volatility, which the company expects to reverse in the fourth quarter.

Diamond Green Diesel provided Darling with $171.0 million in cash during the quarter, comprising $33.4 million of dividends and $137.6 million from production tax credit sales. Management estimates fourth-quarter production of about 325 million gallons and expects margins to remain strong in the fourth quarter and in 2027, supported by operational performance and market conditions.

Feed profits rise on stronger protein pricing

Feed segment adjusted EBITDA increased 42.4% to $247.7 million, with sales rising to $1.21 billion from $1.03 billion. Gross margin expanded to $333.9 million from $249.8 million, while raw-material processing volume remained at 3.2 million metric tons.

Protein demand and pricing remained strong, offsetting some pressure from a modest retreat in global fats prices related to tariffs and biofuel-industry downtime. The company also said related-party deferred-profit accounting on sales to Diamond Green Diesel reduced third-quarter results and is expected to reverse in the fourth quarter.

Darling completed the sale of a majority of its non-core grease-trap environmental services business for approximately $90 million. Management said the Feed segment entered the fourth quarter with solid momentum and continued strong demand across fats and proteins. Longer term, the presentation identified $150 million to $300 million of potential adjusted EBITDA and implied net-cash improvement through operational efficiency, commercial optimization, price-risk management and contract repricing, although it did not provide a timetable.

Food segment adjusted EBITDA edged up 3.1% to $73.8 million as sales increased to $415.8 million from $380.6 million. Strong sales in China and growing collagen demand supported the business, while U.S. tariffs on Brazilian collagen and gelatin weighed on South American sales and volumes. Darling also continued expanding its Nextida targeted-ingredient portfolio, and its proposed joint venture with Tessenderlo remained under regulatory review.

Debt declines and leverage improves

Darling reduced net debt by $481 million from the start of the fiscal year, to $3.37 billion as of Oct. 3, 2026. Total debt declined to $3.49 billion from $3.94 billion, while cash and cash equivalents increased to $122 million. Revolver availability rose to $1.73 billion, and the preliminary leverage ratio fell to 1.7 times from 2.9 times. The company also repurchased $75.9 million of its shares during the quarter.

The outlook remains exposed to renewable-fuel policy and credit eligibility, including the Clean Fuel Production Credit, as well as volatility in commodity and finished-product prices. Darling also cited tariffs and trade barriers, animal-disease outbreaks, feedstock availability, operating disruptions at Diamond Green Diesel, currency movements, inflation and changes in global demand as factors that could cause actual results to differ from current expectations.