What happened

Shares of Darling Ingredients (DAR -0.47%) fell 13.3% in May, according to data from S&P Global Market Intelligence, despite reasonably strong first-quarter 2019 results from the rendering and biodiesel specialist.

To be sure, Darling stock initially climbed after the company's quarterly update hit the wires on May 8 -- though its performance didn't look encouraging at first glance. Revenue fell 4.6% year over year, to $835 million, while net income plunged more than 80% to $18 million, or $0.11 per share. The latter drop, however, was largely due to the delay of this year's blender's tax credit -- which was retroactively recognized for 2017 in its Q1 2018 results last year -- within Darling's earnings.

A hand holding a green diesel pump.


So what

Darling Chairman and CEO Randall Stuewe said the company "executed well" in spite of a slew of challenges, including macroeconomic headwinds that hurt finished product pricing; weather-related operational disruptions in North America; and an African swine fever outbreak that pressured global markets by reducing the size of China's pig herd by a staggering 35%.

Meanwhile, Darling initiated its phase 3 plans to expand production at its Diamond Green Diesel (DGD) joint venture with Valero Energy from 275 million gallons to a whopping 675 million gallons, as well as 50 million to 60 million of additional renewable naphtha for green gas markets. The ambitious $1.1 billion project is expected to be finished by the end of 2021, and will be largely funded by DGD's existing cash flows.

Now what

Given the relative durability exhibited by Darling Ingredients' businesses even in today's challenging environment -- and keeping in mind most broad-market indexes also plunged last month, including a nearly 7% decline from the S&P 500, over concerns for the same macroeconomic issues -- I don't think long-term investors should lose any sleep over last month's drop. To the contrary, I believe Darling will emerge from these challenges as strong as it's ever been. And this pullback could prove to be an excellent chance for patient, long-term shareholders to open or add to their positions.