What happened

Shares of Darling Ingredients (NYSE:DAR) were up 9.2% as of 2:30 p.m. EST Thursday after the rendering and biodiesel company announced solid third-quarter 2019 results and plans to potentially significantly expand its Diamond Green Diesel (DGD) joint venture with Valero (NYSE:VLO).

So what

Regarding the former, Darling's quarterly net revenue climbed 3.6% year over year to $842 million. That translated to net income of $25.7 million, or $0.15 per share, compared to a net loss of $0.04 per share in the same year-ago period. By comparison, most analysts were looking for slightly higher earnings of $0.17 per share, but on lower revenue of $834 million.

Hand holding a green diesel fuel pump handle.

IMAGE SOURCE: GETTY IMAGES.

Drilling down a bit further, Darling's top-line growth was largely driven by a combination of increased finished product fat prices and higher sales from its collagen ingredients business. On the bottom line, its swing to profitability was helped by $32 million of earnings from DGD -- compared to a $2.9 million loss for the business amid extended downtime in last year's third quarter to complete an expansion project -- as well as $7.2 million in writedowns a year ago related to an outbreak of African Swine Fever in China.

"We reported solid third quarter results, underscored by the strength of our vertically integrated supply chain and excellent execution amid continued trade uncertainty and escalating disease disruption due to African Swine Fever," stated Darling Ingredients Chairman and CEO, Randall Stuewe. "Overall, our operating segments delivered exceptional results with improved earnings in our Feed Segment as we navigated volatile global markets."

Now what

Darling doesn't typically provide specific forward financial guidance. But Stuewe added that DGD's latest expansion to increase capacity to 675 million gallons of renewable diesel remains on track for an expected completion by late 2021. And if that wasn't enough, he noted the company is exploring a separate potential renewable diesel plant that could be built at Valero's refinery in Port Arthur, Texas. If all goes as planned, construction on that plant could commence in 2021 and be complete by 2024, bringing DGD's total annual production capacity to a whopping 1.1 billion gallons.

When you couple those plans with Darling's relative strength in the face of macro headwinds this quarter, it's no surprise to see shares rallying today.