8-K: Darling Ingredients Reports Strong Q4 Performance and Provides Update on Diamond Green Diesel Joint Venture

Darling Ingredients announced its fourth quarter and fiscal year 2024 earnings, highlighting strong performance in its core business and providing updates on its Diamond Green Diesel joint venture.

Summary

• Darling Ingredients released its fourth quarter and full year 2024 earnings, including results from its 50/50 joint venture, Diamond Green Diesel (DGD).
• DGD's renewable diesel segment earned approximately $170 million in operating income for the three months ended December 31, 2024.
• DGD incurred a lower of cost-or-market (LCM) valuation adjustment of approximately $118 million in the same quarter.
• For the full year 2024, the renewable diesel segment earned approximately $507 million in operating income.
• DGD's full year LCM valuation adjustment was approximately $176 million.
• DGD sold/shipped 292.8 million gallons of renewable fuels in the fourth quarter of 2024.
• For the full year 2024, DGD sold/shipped 1.25 billion gallons of renewable fuels.
• DGD's EBITDA per gallon for the fourth quarter of 2024 was $0.40, or $0.81 excluding LCM.
• DGD's full year 2024 EBITDA per gallon was $0.46, or $0.60 excluding LCM.
• Darling Ingredients' core business had its strongest performance of the year in the fourth quarter of 2024.
• The company expects strong momentum to continue into 2025 as fat prices trend upward.

Sentiment

Score: 7

Explanation: The sentiment is positive due to strong core business performance and DGD's operational metrics, although the LCM adjustments are a concern. The company's outlook is also positive.

Positives

• DGD's renewable diesel segment generated significant operating income in both Q4 and full year 2024.
• DGD's sales volume of renewable fuels was substantial in both Q4 and full year 2024.
• DGD's EBITDA per gallon, excluding LCM, indicates strong operational performance.
• Darling Ingredients' core business showed its best performance of the year in Q4 2024.
• The company is experiencing strong momentum heading into 2025.
• The company is producing sustainable aviation fuel (SAF) on spec.
• The company has a clear path to implement and monetize the 45Z Clean Fuels Production Credit.

Negatives

• DGD incurred significant lower of cost-or-market (LCM) valuation adjustments in both Q4 and full year 2024, impacting overall profitability.

Risks

• The company faces risks related to the administration, guidance, and regulations associated with biofuel policies, including the Section 45Z Clean Fuel Production Credit.
• There are risks associated with the qualification and sale of the 45Z Clean Fuel Production Credit.
• Numerous other factors, many of which are beyond the company's control, could cause actual results to differ materially from forward-looking statements.

Future Outlook

The company expects strong momentum to continue into 2025 as fat prices trend upward and will provide additional details regarding its 2025 outlook during the conference call on February 6, 2025.

Management Comments

• Randall C. Stuewe, Chairman and Chief Executive Officer, stated that DGD continues to outperform its peers on many metrics.
• Randall C. Stuewe also mentioned that sustainable aviation fuel (SAF) is on line and producing on spec.
• Randall C. Stuewe believes the company has the line of sight needed to implement and monetize the 45Z Clean Fuels Production Credit.

Industry Context

The announcement highlights Darling Ingredients' position in the renewable fuels market, particularly through its Diamond Green Diesel joint venture, and its focus on sustainable aviation fuel, aligning with the broader industry trend towards renewable energy and sustainable practices.

Comparison to Industry Standards

• The document states that DGD continues to outperform its peers on many metrics, suggesting a strong competitive position in the renewable diesel market.
• While specific competitor data is not provided, the mention of outperformance implies that DGD's operational efficiency and profitability are above average compared to other renewable diesel producers.
• The production of sustainable aviation fuel (SAF) positions DGD as a leader in the emerging SAF market, which is a growing area of focus for the aviation industry and renewable fuel companies.

Stakeholder Impact

• Shareholders will be interested in the financial performance of both Darling Ingredients and its joint venture, DGD.
• Employees may be impacted by the company's overall performance and future outlook.
• Customers will be interested in the company's ability to produce and deliver renewable fuels and sustainable aviation fuel.
• Suppliers will be impacted by the company's demand for raw materials.
• Creditors will be interested in the company's financial stability and ability to meet its obligations.

Next Steps

• Darling Ingredients will host a conference call on February 6, 2025, to discuss fourth quarter and fiscal year 2024 financial results.
• The company will provide additional details regarding its 2025 outlook during the conference call.
• A presentation accompanying supplemental financial data will be available at darlingii.com/investors.

Key Dates

Keywords

Darling Ingredients, Diamond Green Diesel, Renewable Diesel, EBITDA, Sustainable Aviation Fuel, Clean Fuels Production Credit, Joint Venture, Operating Income, LCM, Biofuel