Darling Ingredients (DAR +2.45%), a global leader in turning animal by-products and food waste into valuable ingredients and renewable fuels, released its second quarter results on July 24, 2025. The headline news: while revenue edged above analyst forecasts at $1.5 billion (GAAP) in Q2 2025, profits fell sharply below expectations, with earnings per share at $0.08 (GAAP) in Q2 2025 compared to the $0.24 consensus. The steep shortfall in profit was primarily driven by weaker results at the company’s renewable fuels joint venture, Diamond Green Diesel (DGD). Overall, the quarter revealed stability in core operations but significant profitability challenges, resulting in a marked downward revision to full-year fiscal 2025 earnings guidance as market and policy issues weighed on renewables.
| Metric | Q2 2025 | Q2 2025 Estimate | Q2 2024 | Y/Y Change |
|---|---|---|---|---|
| EPS (GAAP) | $0.08 | $0.24 | $0.49 | (83.7%) |
| Revenue | $1.5 billion | $1.49 billion | $1.5 billion | 0.0% |
| Combined Adjusted EBITDA (Non-GAAP) | $249.5 million | $273.6 million | (8.8%) |
Source: Analyst estimates provided by FactSet. Management expectations based on management's guidance, as provided in Q1 2025 earnings report.
Business Overview and Recent Strategy
Darling Ingredients repurposes animal by-products and used cooking oil, creating essential ingredients for the food, pharmaceutical, feed, and fuel industries. The company is also a major producer of renewable fuels through its Diamond Green Diesel partnership. Its reach spans five continents, with 83 production facilities serving a wide range of customers worldwide.
Recent years have seen Darling focus on building scale and product breadth through acquisitions, such as the purchases of Valley Proteins, Gelnex, and FASA Group. This growth is aimed at enhancing its portfolio in growth areas like specialty collagen peptides and renewable fuels. The company’s operational flexibility and global footprint provide resilience, but regulatory changes and feedstock price swings are key factors affecting performance.
Quarter Highlights and Financial Performance
In Q2 2025, Darling’s revenue was essentially flat compared to the same quarter last year, up just 1.8%. The modest sales increase masked sharp contrasts in profitability across business lines. The company’s earnings per share (GAAP) dropped by more than 80% year-over-year, as profits from DGD came under pressure. Combined adjusted EBITDA, which measures earnings before interest, tax, depreciation, and amortization, declined almost 9% to $249.5 million (non-GAAP), driven chiefly by a steep drop in renewable fuels margins.
The renewable fuels business stood out as the main drag on earnings. Darling’s share of adjusted EBITDA from DGD fell 44% from Q2 2024, down to $42.6 million (non-GAAP) in Q2 2025. DGD sold 248.6 million gallons of renewable fuel in Q2 2025 but only earned $0.36 per gallon in EBITDA (non-GAAP). This was due to lower regulatory credits and changing U.S. policy for renewable fuels.
The Feed Ingredients segment saw revenue remain flat and recorded a modest improvement in Adjusted EBITDA (non-GAAP) to $135.9 million, benefiting from improved market conditions and higher fat prices. In the Food Ingredients segment, revenue edged up to $386.1 million.
This was driven by higher selling, general, and administrative (SG&A) expenses, as well as a swing in the valuation of contingent consideration—an accounting charge related to past acquisitions. Management reported success in refinancing, lowering interest expense from Q2 2024 to Q2 2025.
No major asset sales or acquisition closings occurred in the quarter, but the company did announce a new joint venture, Nextida, to further develop its global collagen and gelatin business for the fast-growing health and wellness market.
Looking Ahead: Guidance and Key Watchpoints
Leadership issued a substantial cut to its full-year FY2025 combined adjusted EBITDA (non-GAAP) guidance. The new range is $1.05 to $1.10 billion—down from the earlier $1.25 to $1.30 billion forecast. The revision reflects ongoing uncertainty around U.S. renewable fuel policy, slow recovery in the market for regulatory credits known as Renewable Identification Numbers (RINs), and the need for significant improvement at DGD to meet even the reduced target. The year-to-date run rate in earnings means the back half of fiscal 2025 will need to show marked improvement to avoid missing guidance again.
In addition, it was noted that policy clarity and margin recovery at DGD remain key areas for investors to monitor. Future performance will hinge on stabilization of the renewable fuels business, progress in lowering leverage, and the ramp-up of specialty collagen initiatives through the Nextida venture. With the regulatory and market environment for renewables still uncertain, investors should expect continued volatility in reported results.
Revenue and net income presented using U.S. generally accepted accounting principles (GAAP) unless otherwise noted.
