The following is a summary of the Darling Ingredients Inc. (DAR) Q3 2024 Earnings Call Transcript:

Financial Performance:

• Darling Ingredients reported a net income of $16.9 million, a decrease from the previous year's $125 million.

• Total net sales decreased to $1.4 billion from $1.6 billion in 2023.

• Operating income declined by $118.3 million to $60.1 million mainly due to a significant drop in gross margin and equity income from Diamond Green Diesel.

• Net sales for the first nine months decreased to $4.3 billion from $5.2 billion last year, and operating income also fell substantially to $345.8 million.

• The company reduced debt by approximately $192 million and paid down its total outstanding debt to $4.246 billion.

Business Progress:

• Diamond Green Diesel paid a dividend of $111.2 million to Darling Ingredients during the quarter.

• The sustainable aviation fuel unit is mechanically complete and is currently commissioning.

• Darling Ingredients showcased Nextida.GC, a natural collagen product at a trade show, which significantly lowers glucose spikes by an average of 42%.

• Capital expenditures for the next quarter are projected within the range of $450 million to $500 million.

Opportunities:

• Positive market conditions for 2025 are expected to drive margin improvement in specialty ingredients and fat prices globally.

• The transition to the Clean Fuels producer credit (45Z) is anticipated to bring favorable conditions, particularly for waste fats.

Risks:

• The Feed segment experienced lower volumes due to softer demand in China and capacity increases in Brazil.

• Diamond Green Diesel faces ongoing margin challenges amid regulatory uncertainties in RINs and LCFS markets.

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