Darling Ingredients just posted one of its strongest quarters in years, according to yesterday’s Q2 Earnings Report. But the more useful story is buried underneath the profit line. It shows where the company is pointing next.
First, the numbers
Darling earned $2.41 per share in the second quarter. A year ago it earned 8 cents. Net income came in at $387.3 million, up from $12.7 million.
Sales rose about 16% to roughly $1.72 billion. That was a little below what Wall Street analysts expected, which is why you may see headlines calling it a "miss" even though the company made far more money.
The profit came from two places. Fat and protein prices went up because biofuel plants are competing hard for feedstock. And Diamond Green Diesel, the renewable diesel joint venture Darling co-owns, had a monster quarter. DGD sold 348.8 million gallons and made $2.23 in profit on each one. Darling's share of that alone was $389.2 million.
The company also paid down $223 million in debt and bought back $73 million of its own stock.
Now the strategy
This is the part worth watching.
During the quarter, Darling bought three rendering plants in Brazil from the Patense Group for about $122 million.
After the quarter closed, it did the opposite on the service side. Darling’s subsidiary, Dar Pro Solutions, sold most of its grease trap cleaning business for roughly $90 million. It also agreed to sell its CTH casings business, with that deal expected to close by the end of 2026.
Buy rendering. Sell services. That is a clear signal.
Darling is trimming the labor-heavy, route-based service work and putting money into processing capacity and renewable fuel. Grease trap work is messy, low margin, and hard to scale. Rendering plants and DGD gallons are where the money is right now.
Do not read this as DAR PRO Solutions backing away from used cooking oil. Darling did not say anything about selling its UCO collection business, and we would not expect it to. UCO is one of the main feedstocks that supports Diamond Green Diesel, and controlling that supply is the whole point. If anything, dropping grease trap lets DAR PRO put its routes and people behind the stream that actually feeds the biofuel plants and makes money doing it. Any collector who has run both knows they are two different businesses. Different trucks, different customers, different problems. At DAR PRO's scale, running both at once is a lot to carry.
What's next
Management expects core ingredients profit of $325 million to $340 million next quarter. DGD should produce about 335 million gallons. The company wants to end 2026 with net debt at or below $3 billion, down from $3.79 billion today.
