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Darling Ingredients Shares Pop 10% After Topping Q1 Estimates

By Daniel Miller - May 7, 2020 at 1:55PM

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Darling Ingredients is yet another food stock rallying after a strong first quarter.

What happened

Shares of Darling Ingredients (DAR -4.60%), a developer and producer of sustainable natural ingredients for food, feed, and fuel, popped over 10% early Thursday after the company mitigated COVID-19 impacts and topped analysts' estimates during the first quarter.

So what

First-quarter revenue checked in with a 2% gain, compared to the prior year, to $853 million, which topped analysts' estimates calling for $851 million. The bottom-line result was more favorable with adjusted earnings per share reaching $0.51, well above the prior year's $0.11 per-share result and higher than analysts' estimates of $0.42 per share. First-quarter gross margin spiked 210 basis points to 24.1%, compared to the prior year.

Man standing in a field

Image source: Getty Images.

"We delivered a strong first quarter performance consistent with the guidance we provided on our February 2020 earnings call, generating $213 million of combined adjusted EBITDA," said Randall C. Stuewe, chairman and chief executive officer of Darling Ingredients Inc., in a press release "The diversity of our global platform from food to feed to green hydrocarbon is helping us to weather the COVID-19 pandemic."

Now what

Although the first-quarter result was strong, the company sees further COVID-19 impact in 2020. That led management to defer between 15% to 20% of capital expenditures until COVID-19 is under control. As of March 28, 2020, Darling had just over $76 million in cash and cash equivalents and also $796 million available from its revolving credit agreement. Management believes it has taken necessary steps with the balance sheet to weather COVID-19 and its negative economic impacts.

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