DARLING INGREDIENTS INC. - Quarter Report: 2024 September (Form 10-Q)

Pension adjustments, net of tax— — — — — — Commodities derivative adjustments, net of tax— — — — ()— ()— ()Interest rate swap adjustments, net of tax— — — — — — Foreign exchange derivative adjustments, net of tax— — — — ()— ()— ()

Foreign currency translation adjustments

— — — — ()— () ()Issuance of non-vested stock— — — — — — Stock-based compensation— — — — — — Treasury stock()— — ()— — ()— ()Issuance of common stock — — — — Balances at March 30, 2024 $ $ $()$()$ $ $ $ Net income— — — — —

Distribution of noncontrolling interest earnings

— — — — — — — ()()Pension adjustments, net of tax— — — — — — Commodities derivative adjustments, net of tax— — — — ()— ()— ()Interest rate swap adjustments, net of tax— — — — ()— ()— ()Foreign exchange derivative adjustments, net of tax— — — — ()— ()— ()

Foreign currency translation adjustments

— — — — ()— () ()Issuance of non-vested stock— — — — — — Stock-based compensation— — — — — — Treasury stock()— — ()— — ()— ()Issuance of common stock — — — — Balances at June 29, 2024 $ $ $()$()$ $ $ $ Net income— — — — — Pension adjustments, net of tax— — — — — — Commodities derivative adjustments, net of tax— — — — — — Interest rate swap adjustments, net of tax— — — — ()— ()— ()Foreign exchange derivative adjustments, net of tax— — — — — —

Foreign currency translation adjustments

— — — — — () Issuance of non-vested stock— — — — — — Stock-based compensation— — — — — — Treasury stock()— — ()— — ()— ()Issuance of common stock — — — — Balances at September 28, 2024 $ $ $()$()$ $ $ $

The accompanying notes are an integral part of these consolidated financial statements.

DARLING INGREDIENTS INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

Nine months ended September 28, 2024 and September 30, 2023

(in thousands, except share data)

(unaudited)

Common Stock

Number of Outstanding Shares

$ par Value

Additional Paid-In Capital

Treasury Stock

Accumulated Other Comprehensive Loss

Retained Earnings

Stockholders' equity attributable to Darling

Non-controlling Interests

Total Stockholders' Equity

Balances at December 31, 2022

()

Net income

—

Deductions to noncontrolling interests

—

()

Addition to noncontrolling interests

—

Pension adjustments, net of tax

—

Commodities derivative adjustments, net of tax

—

Interest rate swap adjustments, net of tax

—

Foreign exchange derivative adjustments, net of tax

—

Foreign currency translation adjustments

—

()

Issuance of non-vested stock

—

Stock-based compensation

—

Treasury stock

()

—

()

—

()

—

()

Issuance of common stock

—

Balances at April 1, 2023

()

Net income

—

Distribution of noncontrolling interest earnings

—

()

Addition to noncontrolling interests

—

Pension adjustments, net of tax

—

Commodities derivative adjustments, net of tax

—

()

—

()

—

()

Interest rate swap adjustments, net of tax

—

Foreign exchange derivative adjustments, net of tax

—

Foreign currency translation adjustments

—

()

Issuance of non-vested stock

—

Stock-based compensation

—

Treasury stock

()

—

()

—

()

—

()

Issuance of common stock

—

Balances at July 1, 2023

()

Net income

—

Change in fair value of contingent consideration

()

Gain on insurance proceeds from insurance settlements

()

Deferred taxes

()

Increase in long-term pension liability

Stock-based compensation expense

Deferred loan cost amortization

Equity in net income of Diamond Green Diesel and other unconsolidated subsidiaries

()

Distributions of earnings from Diamond Green Diesel and other unconsolidated subsidiaries

Changes in operating assets and liabilities, net of effects from acquisitions:

Accounts receivable

Income taxes refundable/payable

()

Inventories and prepaid expenses

()

Accounts payable and accrued expenses

()

Other

()

Net cash provided by operating activities

Cash flows from investing activities:

Capital expenditures

()

Acquisitions, net of cash acquired

()

Investment in Diamond Green Diesel

()

Investment in other unconsolidated subsidiaries

()

Loan to Diamond Green Diesel

()

Loan repayment from Diamond Green Diesel

Gross proceeds from disposal of property, plant and equipment and other assets

Proceeds from insurance settlement

Payments related to routes and other intangibles

()

Net cash used in investing activities

()

Cash flows from financing activities:

Proceeds from long-term debt

Payments on long-term debt

()

Borrowings from revolving credit facility

Payments on revolving credit facility

()

Net cash overdraft financing

Acquisition hold-back payments

()

Deferred loan costs

()

Issuance of common stock

Repurchase of common stock

()

Minimum withholding taxes paid on stock awards

()

rendering plants and an additional plants under construction at the time of acquisition, will supplement the Company’s global supply of waste fats, making it a leader in the supply of low-carbon waste fats and oils.

The Company initially paid approximately R$ billion Brazilian real in cash (approximately $ million USD at the exchange rate of R$:USD$1.00 on the closing date) for all the shares of the FASA Group, subject to certain post-closing adjustments and a contingent payment based on future earnings growth in accordance with the terms set forth in the stock purchase agreement. Under the stock purchase agreement, such contingent payment could range from R$ to a maximum of R$ billion if future earnings growth reaches certain levels over a period. The Company completed an analysis as of the acquisition date for this contingency and recorded a liability of approximately R$ million (approximately $ million USD at the exchange rate in effect on the closing date of the acquisition) representing the present value of the contingency utilizing assistance from external valuation experts and the use of a Monte Carlo model representing the probability weighted present value of the expected payment to be made under the agreement using the income approach. The Company analyzes the contingent consideration liability using a Monte Carlo model each quarter and any change in fair value is recorded through operating income as changes in fair value of contingent consideration.

The hold-back and contingent consideration amounts represent noncash investing activities during the period of acquisition. The Company initially financed the FASA Acquisition by borrowing approximately $ million of revolver borrowings under the Company’s Amended Credit Agreement, with the remainder coming from cash on hand. During the fourth quarter of fiscal 2022, the Company made a cash payment for working capital purchase price adjustment per the stock purchase agreement of approximately $ million with an offset to goodwill.

Inventories Other current assets Property, plant and equipment Identifiable intangible assets Goodwill Operating lease right-of-use assets Other assets Deferred tax asset Accounts payable()Current portion of long-term debt()Accrued expenses()Long-term debt, net of current portion()Long-term operating lease liabilities()Deferred tax liability()Other noncurrent liabilities()Non-controlling interests()Purchase price, net of cash acquired$ Less hold-back Less contingent consideration Cash paid for acquisition, net of cash acquired$

The $ million of goodwill from the FASA Acquisition, which is expected to strengthen the Company’s base business and expand its ability to provide additional low carbon intensity feedstocks to fuel the growing demand for renewable diesel, was assigned to the Feed Ingredients segment and is nondeductible for tax purposes. The identifiable intangible assets include $ million in routes with a weighted average life of years and $ million in trade name with a life of for a total weighted average life of approximately years.

million and $ million for the three months ended September 28, 2024 and September 30, 2023, respectively. The Company incurred acquisition and integration costs of approximately $ million and $ million for the nine months ended September 28, 2024 and September 30, 2023, respectively.

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$ Work in process Raw material Supplies and other $ $

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$ Finite Lived Intangible Assets: Routes Customer relationships Permits Non-compete agreements Trade names Royalty, consulting, land use rights and leasehold Accumulated Amortization:Routes()()Customer relationships()()Permits()()Non-compete agreements()()Trade names()()Royalty, consulting, land use rights and leasehold()()()()Total Intangible assets, less accumulated amortization$ $

Gross intangible assets changed due to net acquisition and retirement activity in the first nine months of fiscal 2024 by approximately $ million and $ million, respectively, and the remaining change is due to foreign currency translation impact. Amortization expense for the three months ended September 28, 2024 and September 30, 2023, was approximately $ million and $ million, respectively, and for the nine months ended September 28, 2024 and September 30, 2023 was approximately $ million and $ million, respectively.

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$ $ $ Accumulated impairment losses()()()() Goodwill acquired during year Measurement period adjustments () ()Foreign currency translation()() ()Balance at September 28, 2024 Goodwill Accumulated impairment losses()()()() $ $ $ $

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Accrued operating expenses

Short-term acquisition hold-backs Short-term contingent consideration

Other accrued expense

$ $

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million and $ million denominated in € at September 28, 2024 and December 30, 2023, respectively)$ $ Term A-1 facility Less unamortized deferred loan costs()()Carrying value Term A-1 facility Term A-2 facility Less unamortized deferred loan costs()()Carrying value Term A-2 facility Term A-3 facility Less unamortized deferred loan costs()()Carrying value Term A-3 facility Term A-4 facility Less unamortized deferred loan costs()()Carrying value Term A-4 facility

% Senior Notes due 2030 with effective interest of %

Less unamortized deferred loan costs net of bond premium()()

Carrying value % Senior Notes due 2030

% Senior Notes due 2027 with effective interest of %

Less unamortized deferred loan costs()()

Carrying value % Senior Notes due 2027

% Senior Notes due 2026 - Denominated in euro with effective interest of %

Less unamortized deferred loan costs - Denominated in euro()()

Carrying value % Senior Notes due 2026

Other Notes and Obligations Less Current Maturities $ $

As of September 28, 2024, the Company had outstanding debt under the revolving credit facility denominated in euros of € million and outstanding debt under the Company’s % Senior Notes due 2026 denominated in euros of € million. In addition, at September 28, 2024, the Company had finance lease obligations denominated in euros of approximately € million.

As of September 28, 2024, the Company had other notes and obligations of $ million that consist of various overdraft facilities of approximately $ million, Brazilian notes of approximately $ million, a China working capital line of credit of approximately $ million and other debt of approximately $ million, including U.S. finance lease obligations of approximately $ million.

On January 6, 2014, Darling, Darling International Canada Inc. (“Darling Canada”) and Darling International NL Holdings B.V. (“Darling NL”) entered into a Second Amended and Restated Credit Agreement (as subsequently amended, the “Amended Credit Agreement”), restating its then existing Amended and Restated Credit Agreement dated September 27, 2013, with the lenders from time to time party thereto, JPMorgan Chase Bank, N.A., as Administrative Agent, and the other agents from time to time party thereto.

The interest rate applicable to any borrowings under the revolving credit facility equals the adjusted term secured overnight financing rate (SOFR) for U.S. dollar borrowings or the adjusted euro interbank rate (EURIBOR) for euro borrowings or the adjusted daily simple Sterling overnight index average (SONIA) for British pound borrowings plus % per annum or base rate or the adjusted term SOFR for U.S. dollar borrowings or Canadian prime rate for Canadian dollar borrowings or the adjusted daily simple European short term rate (ESTR) for euro borrowings or the adjusted daily SONIA rate for British pound borrowings plus % per annum subject to certain step-ups or step-downs based on the Company’s total leverage ratio. The interest rate applicable to any borrowing under the term A-1

% per annum subject to certain step-ups and step-downs based on the Company’s total leverage ratio. The interest rate applicable to any borrowing under the term A-2 facility and term A-4 facility equals the adjusted term SOFR plus % per annum subject to certain step-ups or step-downs based on the Company’s total leverage ratio.

As of September 28, 2024, the Company had (i) $ million outstanding under the revolver at SOFR plus a margin of % per annum for a total of % per annum, (ii) $ million outstanding under the term A-1 facility at SOFR plus a margin of % per annum for a total of % per annum, (iii) $ million outstanding under the term A-2 facility at SOFR plus a margin of % per annum for a total of % per annum, (iv) $ million outstanding under the term A-3 facility at SOFR plus a margin % per annum for a total of % per annum, (v) $ million outstanding under the term A-4 facility at SOFR plus a margin % per annum for a total of % per annum, (vi) € million outstanding under the revolving credit facility at EURIBOR plus a margin of % per annum for a total of % per annum, and (vii) € million outstanding under the revolving credit facility at ESTR plus a margin of % per annum for a total of % per annum. As of September 28, 2024, the Company had revolving credit facility availability of $ million, under the Amended Credit Agreement taking into account amounts borrowed, ancillary facilities of $ million and letters of credit issued of $ million. The Company also had foreign bank guarantees of approximately $ million that are not part of the Company’s Amended Credit Agreement at September 28, 2024.

As of September 28, 2024, the Company is in compliance with all of the financial covenants under the Amended Credit Agreement, and believes it is in compliance with all of the other covenants contained in the Amended Credit Agreement, the % Senior Notes due 2030, the % Senior Notes due 2027 and the % Senior Notes due 2026.

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$ Reserve for self-insurance, litigation, environmental and tax matters Long-term acquisition hold-backs Long-term contingent consideration Other $ $

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Unrecognized tax benefits represent the difference between tax positions taken or expected to be taken in a tax return and the benefits recognized for financial statement purposes. As of September 28, 2024 and September 30, 2023, the Company had $ million and $ million, respectively, of gross unrecognized tax benefits and $ million and $ million, respectively, of related accrued interest and penalties. The Company’s gross unrecognized tax benefits are not expected to decrease significantly within the next twelve months.

On August 16, 2022, the U.S. government enacted the IR Act that includes tax incentives for energy and climate initiatives, among other provisions. The blenders tax credits, which are refundable excise tax credits, have been extended through December 31, 2024. After 2024, the CFPC, a transferable income tax credit, becomes effective from 2025 through 2027. We are assessing these tax incentives, which could materially change our pre-tax or after-tax

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)$()$ $ $()$()Amortization of actuarial loss ()() Total defined benefit pension plans ()() Soybean meal option derivativesReclassified to earnings () Activity recognized in other comprehensive income/(loss) () ()Total soybean meal option derivatives () ()Corn option derivativesReclassified to earnings() () Activity recognized in other comprehensive income/(loss)() () Total corn option derivatives() () Heating oil derivatives at DGD (Note 15)Activity recognized in other comprehensive income/(loss) ()() ()Total heating oil derivatives ()() ()Interest swap derivativesReclassified to earnings ()() ()Activity recognized in other comprehensive income/(loss)() ()() Total interest swap derivatives() ()() Foreign exchange derivativesReclassified to earnings ()() ()Activity recognized in other comprehensive income/(loss) ()() ()Total foreign exchange derivatives ()() ()Foreign currency translation ()() ()Other comprehensive income/(loss)$ $()$()$ $ $()

)$()$ $ $()$()Amortization of actuarial loss ()() Total defined benefit pension plans ()() Soybean meal option derivativesReclassified to earnings()() ()()Activity recognized in other comprehensive income/(loss) () ()Total soybean meal option derivatives()() ()()Corn option derivativesReclassified to earnings()() ()()Activity recognized in other comprehensive income/(loss) ()() Total corn option derivatives ()() Heating oil derivatives at DGD (Note 15)Activity recognized in other comprehensive income/(loss)()() ()()Total heating oil derivatives()() ()()Interest swap derivativesReclassified to earnings()() ()()Activity recognized in other comprehensive income/(loss) ()() Total interest swap derivatives() ()() Foreign exchange derivativesReclassified to earnings()() ()()Activity recognized in other comprehensive income/(loss)() ()() Total foreign exchange derivatives() ()() Foreign currency translation() () () Other comprehensive income/(loss)$()$ $ $ $()$

$()$ $ Net salesForeign exchange contracts() Net salesCorn option derivatives Cost of sales and operating expensesInterest swaps() Foreign currency gain/(loss) and interest expense() Total before tax ()()()Income taxes() Net of taxDefined benefit pension plansAmortization of prior service cost$ $ $ $ (a)Amortization of actuarial loss()()()()(a) () ()$()

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restricted stock units and performance share units (the “PSUs”) under the Company’s 2017 Omnibus Incentive Plan. The restricted stock units vest % on the first, second and third anniversaries of the grant date. The PSUs are tied to a forward-looking performance period and will be earned based on the Company’s average return on gross investment (“ROGI”), as calculated in accordance with the terms of the award agreement, relative to the average ROGI of the Company’s performance peer group companies, with the earned award to be determined in the first quarter of fiscal 2027, after the final results for the relevant performance period are determined. The PSUs were granted at a target of %, but each PSU will reduce or increase (up to %) depending on the Company’s ROGI relative to that of the performance peer group companies and is also subject to the application of a total shareholder return (“TSR”) cap/

million of the Company’s Common Stock depending on market conditions, and extended the program to August 13, 2026. During the first nine months of fiscal 2024 (prior to the latest refresh), $ million of Common Stock was repurchased under the share repurchase program. As of September 28, 2024, the Company had approximately $ million remaining under the share repurchase program.

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$ $ $ Interest cost Expected return on plan assets()()()()Amortization of prior service cost()()()()Amortization of actuarial loss Net pension cost$ $ $ $

Based on annual actuarial estimates, at September 28, 2024 the Company expects to contribute approximately $ million to its pension plans to meet funding requirements during the next twelve months. Additionally, the Company has made tax deductible discretionary and required contributions to its pension plans for the nine months ended September 28, 2024 and September 30, 2023 of approximately $ million and $ million, respectively.

The Company participates in various multiemployer pension plans which provide defined benefits to certain employees covered by labor contracts. These plans are not administered by the Company and contributions are determined in accordance with provisions of negotiated labor contracts to meet their pension benefit obligations to their participants. The Company’s contributions to each multiemployer plan represent less than % of the total contributions to each plan. Based on the most currently available information, the Company has determined that, if a withdrawal were to occur, withdrawal liabilities on of the plans in which the Company currently participates could be material to the Company. With respect to the other multiemployer pension plans in which the Company participates and which are not individually significant, plans have certified as critical or red zone as defined by the Pension Protection Act of 2006.

The Company currently has withdrawal liabilities recorded on U.S. multiemployer plans in which it participated. As of September 28, 2024, the Company has an aggregate accrued liability of approximately $ million representing the present value of scheduled withdrawal liability payments on the multiemployer plans that have given notice of withdrawal. While the Company has no ability to calculate a possible current liability for under-funded multiemployer plans that could terminate or could require additional funding under the Pension Protection Act of 2006, the amounts could be material.

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million. Under the contracts, the Company is obligated to pay a weighted average rate of % while receiving the 1-month SOFR rate. Under the terms of the interest rate swaps, the Company hedged a portion of its variable rate debt into the first quarter of 2026. At September 28, 2024 and December 30, 2023, the aggregate fair value of these interest rate swaps was approximately $ million and $ million, respectively. These amounts are included in other current assets, accrued expenses and noncurrent liabilities on the balance sheet, with an offset recorded in accumulated other comprehensive loss.

In the first quarter of fiscal 2023, the Company also entered into cross currency swaps that are designated as cash flow hedges. The notional amount of these swaps was € million. Under the contracts, the Company is obligated to pay a % euro denominated fixed rate while receiving a weighted average U.S. dollar fixed rate of %. Under the terms of the cross currency swaps, the Company hedged its intercompany notes receivable into the first quarter of 2025. Accordingly, changes in the fair value of the cash flow hedge are initially recorded as gains and/or losses as a component of accumulated other comprehensive loss. We immediately reclassify from accumulated other comprehensive loss to earnings an amount to offset the remeasurement recognized in earnings associated with the respective intercompany loan. Additionally, we reclassify amounts from accumulated other comprehensive income/(loss) associated with the interest rate differential between the U.S. dollar and the Euro to interest income. At September 28, 2024 and December 30, 2023, the aggregate fair value of these cross currency swaps was approximately $ million and $ million, respectively. At September 28, 2024, these amounts are included in accrued expenses on the balance sheet, with an offset recorded in accumulated other comprehensive loss. At December 30, 2023, these amounts are included in other current assets and noncurrent liabilities on the balance sheet, with an offset recorded in accumulated other comprehensive loss.

In the second and third quarters of fiscal 2024, the Company entered into corn option and forward contracts on the Chicago Board of Trade that are designated as cash flow hedges. Under the terms of the corn option contracts, the Company hedged a portion of its U.S. forecasted sales of BBP into the second quarter of fiscal 2025. At September 28, 2024 and December 30, 2023, the aggregate fair value of these corn option contracts was approximately $ million and , respectively. The amounts are included in other current assets and accrued expenses on the balance sheet, with an offset recorded in accumulated other comprehensive loss.

In fiscal 2023 and fiscal 2024, the Company entered into foreign exchange forward contracts that are designated as cash flow hedges. Under the terms of the foreign exchange contracts, the Company hedged a portion of its forecasted sales in currencies other than the functional currency through the fourth quarter of fiscal 2025. At September 28, 2024 and December 30, 2023, the aggregate fair value of these foreign exchange contracts was approximately $ million and $ million, respectively. These amounts are included in other current assets, other long term assets, accrued expenses and other non-current liabilities on the balance sheet, with an offset recorded in accumulated other comprehensive loss.

Euro Brazilian real U.S. dollar Euro U.S. dollar Euro Polish zloty Euro Japanese yen Euro Chinese renminbi Euro Australian dollar Euro British pound Polish zloty Euro British pound Euro British pound U.S. dollar Japanese yen U.S. dollar U.S. dollar Japanese yen U.S. dollar Euro Australian dollar Euro

The Company estimates the amount that will be reclassified from accumulated other comprehensive loss at September 28, 2024 into earnings over the next 12 months for all cash flow hedges will be approximately $ million. As of September 28, 2024, amounts have been reclassified into earnings as a result of the discontinuance of cash flow hedges.

)$()$()$()Foreign exchange

Net sales

() ()Foreign exchange

Cost of sales and operating expenses

()()()Foreign exchangeSelling, general and administrative expenses() ()Corn options and futuresNet sales Corn options and futures

Cost of sales and operating expenses

()()()

Heating Oil swaps and options

Selling, general and administrative expenses

Soybean meal

Net sales

Total$()$ $ $()

At September 28, 2024, the Company had forward purchase agreements in place for purchases of approximately $ million of natural gas and diesel fuel. The Company intends to take physical delivery of the commodities

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$ $ $ Total Assets$ $ $ $ LiabilitiesDerivative liabilities$ $ $ $ Contingent consideration Total Liabilities$ $ $ $

Fair Value Measurements at December 30, 2023 Using

Quoted Prices in
Active Markets for
Identical Assets

Significant Other
Observable
Inputs

Significant
Unobservable
Inputs

(In thousands of dollars)

Total

(Level 1)

(Level 2)

(Level 3)

Assets

Derivative assets

Total Assets

Liabilities

Derivative liabilities

Contingent consideration

Total Liabilities

Derivative assets and liabilities consist of the Company’s corn option and future contracts, foreign currency forward and option contracts, interest rate swap contracts and cross currency swap contracts which represent the difference between observable market rates of commonly quoted intervals for similar assets and liabilities in active markets and the fixed swap rate considering the instruments term, notional amount and credit risk. See Note 15 (Derivatives) to the Company’s Consolidated Financial Statements included herein for discussion on the Company’s derivatives.

The fair value measurement of contingent consideration liability uses significant unobservable inputs (level 3). We estimated the fair value of the FASA contingent consideration using a Monte Carlo simulation methodology from a third-party that includes simulating the forecasted net income or earnings plus interest expense, taxes, depreciation and amortization (“EBITDA”) using a Geometric Brownian Motion in a risk-neutral framework. The assumptions used in the FASA contingent consideration analysis as of September 28, 2024 included the EBITDA forecast through the remaining term of the contingent consideration, an EBITDA discount rate, an EBITDA volatility, credit spread, risk-free rate and exchange rate. Significant increases and decreases in these inputs could result in a significantly lower or higher fair value measurement of the FASA contingent consideration.

Total included in earnings during period()Exchange rate changes()Balance as of September 28, 2024$

$ $ $ 5.25% Senior notes 3.625% Senior notes Term loan A-1 Term loan A-2 Term loan A-3 Term loan A-4 Revolver debt Total Liabilities$ $ $ $

Fair Value Measurements at December 30, 2023 Using

Quoted Prices in
Active Markets for
Identical Assets

Significant Other
Observable
Inputs

Significant
Unobservable
Inputs

(In thousands of dollars)

Total

(Level 1)

(Level 2)

(Level 3)

Liabilities

6% Senior notes

5.25% Senior notes

3.625% Senior notes

Term loan A-1

Term loan A-2

Term loan A-3

Term loan A-4

Revolver debt

Total Liabilities

The fair value of the senior notes, term loan A-1, term loan A-2, term loan A-3, term loan A-4 and revolver debt is based on market quotation from third-party banks. The carrying amount of the Company’s other debt is not deemed to be significantly different from the fair value and all other instruments have been recorded at fair value.

The carrying amount of cash, cash equivalents and restricted cash, accounts receivable, accounts payable and accrued expenses approximates fair value due to the short maturity of these instruments and as such has been excluded from the table above.

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million. In addition, the Company incurred

million of employee termination costs in the first nine months of fiscal 2023 in the Feed Segment related to closing down of a processing location in Europe and transferring the material to another processing location in Europe.

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million and $ million, respectively. The Company has insurance recovery receivables reflected on the balance sheet in other assets of approximately $ million as of September 28, 2024 and December 30, 2023, related to the insurance contingencies. The Company’s management believes these reserves for contingencies are reasonable and sufficient based upon present governmental regulations and information currently available to management; however, there can be no assurance that final costs related to these contingencies will not exceed current estimates. The Company believes that the likelihood is remote that any additional liability from the pending lawsuits and claims that may not be covered by insurance would have a material effect on the Company’s financial position, results of operations or cash flows.

Lower Passaic River Area. In December 2009, the Company, along with numerous other entities, received notice from the United States Environmental Protection Agency (“EPA”) that the Company (as alleged successor-in-interest to The Standard Tallow Corporation) is considered a potentially responsible party (a “PRP”) with respect to alleged contamination in the lower 17-mile area of the Passaic River (the “Lower Passaic River”) which is part of the Diamond Alkali Superfund Site located in Newark, New Jersey. The Company’s designation as a PRP is based upon the operation of former plant sites located in Newark and Kearny, New Jersey by The Standard Tallow Corporation, an entity that the Company acquired in 1996. In March 2016, the Company received another letter from the EPA notifying the Company that it had issued a Record of Decision (the “ROD”) selecting a remedy for the lower miles of the Lower Passaic River area at an estimated cost of $ billion. The EPA letter made no demand on the Company and laid out a framework for remedial design/remedial action implementation under which the EPA would first seek funding from major PRPs. The letter indicated that the EPA had sent the letter to over parties, which include large chemical and refining companies, manufacturing companies, foundries, plastic companies, pharmaceutical companies and food and consumer product companies. The Company asserts that it is not responsible for any liabilities of its former subsidiary The Standard Tallow Corporation, which was legally dissolved in 2000, and that, in any event, The Standard Tallow Corporation did not discharge any of the contaminants of concern identified in the ROD (the “COCs”). Subsequently, the EPA conducted a settlement analysis using a third-party allocator and offered early cash out settlements to those PRPs for whom the third-party allocator determined did not discharge any of the COCs. The Company participated in this allocation process, and in November 2019, received a cash out settlement offer from the EPA in the amount of $ million ($ million for each of the former plant sites in question) for liabilities relating to the lower miles of the Lower Passaic River area. The Company accepted this settlement offer, and the settlement became effective on April 16, 2021 following the completion of the EPA's administrative approval process. In September 2021, the EPA released a ROD selecting an interim remedy for the upper miles of the Lower Passaic River at an expected additional cost of $ million. In October 2022, the Company, along with other settling defendants, entered into a Consent Decree with the EPA pursuant to which the Company paid $ million to settle liabilities for both of the former plant sites in question related to the upper miles of the Lower Passaic River. The Company paid this amount into escrow, as the settlement is subject to the EPA’s administrative approval process, which includes publication, a public comment period and court approval. On September 30, 2016, Occidental Chemical Corporation (“OCC”) entered into an agreement with the EPA to perform

miles of the Lower Passaic River. On June 30, 2018, OCC filed a complaint in the United States District Court for the District of New Jersey against over companies, including the Company, seeking cost recovery or contribution for costs under the Comprehensive Environmental Response, Compensation and Liability Act (“CERCLA”) relating to various investigations and cleanups OCC has conducted or is conducting in connection with the Lower Passaic River. According to the complaint, OCC has incurred or is incurring costs which include the estimated cost to complete the remedial design for the cleanup plan for the lower miles of the Lower Passaic River. OCC is also seeking a declaratory judgment to hold the defendants liable for their proper shares of future response costs, including the remedial action for the lower miles of the Lower Passaic River. The Company, along with of the other defendants, had previously received a release from OCC of its CERCLA contribution claim of $ million associated with the costs to design the remedy for the lower miles of the Lower Passaic River. Furthermore, the Company’s settlements with the EPA described above could preclude certain of the claims alleged by OCC against the Company. The Company’s ultimate liability, if any, for investigatory costs, remedial costs and/or natural resource damages in connection with the Lower Passaic River area cannot be determined at this time; however, as of the date of this report, the Company has found no definitive evidence that the former Standard Tallow Corporation plant sites contributed any of the COCs to the Passaic River and, therefore, there is nothing that leads the Company to believe that this matter will have a material effect on the Company’s financial position, results of operations or cash flows.

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industry segments: Feed Ingredients, Food Ingredients and Fuel Ingredients. The measure of segment income/(loss) includes all revenues, operating expenses (excluding certain amortization of intangibles), and selling, general and administrative expenses incurred at all operating locations and excludes corporate activities.

Included in corporate activities are general corporate expenses and the amortization of certain intangibles. Assets of corporate activities include cash, unallocated prepaid expenses, deferred tax assets, prepaid pension, and miscellaneous other assets.

Feed Ingredients

Feed Ingredients consists principally of (i) the Company’s U.S. ingredients business, including the Company’s fats and proteins, used cooking oil, trap grease, Darling Canada, and the ingredients and specialty products businesses conducted by Darling Ingredients International under the Sonac and FASA names (proteins, fats, and blood products) and (ii) the Company’s bakery residuals business. Feed Ingredients operations process animal by-products and used cooking oil into fats, proteins and hides.

Food Ingredients

Food Ingredients consists principally of (i) the collagen business conducted by Darling Ingredients International under the Rousselot and Gelnex names, (ii) the natural casings and meat-by-products business conducted by Darling Ingredients International under the CTH name and (iii) certain specialty products businesses conducted by Darling Ingredients International under the Sonac name.

Fuel Ingredients

The Company’s Fuel Ingredients segment consists of (i) the Company’s investment in the DGD Joint Venture and (ii) the bioenergy business conducted by Darling Ingredients International under the Ecoson and Rendac names.

$ $ $ $ Cost of sales and operating expenses Gross margin Loss/(gain) on sale of assets () Selling, general and administrative expenses Acquisition and integration costs Change in fair value of contingent consideration Depreciation and amortization Equity in net income of Diamond Green Diesel Segment operating income/(loss) () Equity in net income of other unconsolidated subsidiaries Segment income/(loss) () Total other expense()Income before income taxes$

Feed Ingredients

Food Ingredients

Fuel Ingredients

Corporate

Total

Three Months Ended September 30, 2023

Total net sales

Cost of sales and operating expenses

Gross margin

Loss/(gain) on sale of assets

()

Selling, general and administrative expenses

Acquisition and integration costs

Change in fair value of contingent consideration

()

Depreciation and amortization

Equity in net income of Diamond Green Diesel

Segment operating income/(loss)

()

Equity in net income of other unconsolidated subsidiaries

Segment income/(loss)

()

Total other expense

()

Income before income taxes

$ $ $ $ Cost of sales and operating expenses Gross margin Loss/(gain) on sale of assets ()() ()Selling, general and administrative expenses Acquisition and integration costs Change in fair value of contingent consideration() ()Depreciation and amortization Equity in net income of Diamond Green Diesel Segment operating income/(loss) () Equity in net income of other unconsolidated subsidiaries Segment income/(loss) () Total other expense()Income before income taxes$ Segment assets at September 28, 2024$ $ $ $ $

Feed Ingredients

Food Ingredients

Fuel Ingredients

Corporate

Total

Nine Months Ended September 30, 2023

Total net sales

Cost of sales and operating expenses

Gross margin

Loss/(gain) on sale of assets

()

Selling, general and administrative expenses

Restructuring and asset impairment charges

Acquisition and integration costs

Change in fair value of contingent consideration

()

Depreciation and amortization

Equity in net income of Diamond Green Diesel

Segment operating income/(loss)

()

Equity in net income of other unconsolidated subsidiaries

Segment income/(loss)

()

Total other expense

()

Income before income taxes

Segment assets at December 30, 2023

(20)

$ $ $ Europe China South America Other Total net sales$ $ $ $ Major product typesFats$ $ $ $ Used cooking oil Proteins Bakery Other rendering Food ingredients Bioenergy Other Total net sales$ $ $ $

Nine Months Ended September 28, 2024

Feed Ingredients

Food Ingredients

Fuel Ingredients

Total

Geographic Area

North America

Europe

China

South America

Other

Total net sales

Major product types

Fats

Used cooking oil

Proteins

Bakery

Other rendering

Food ingredients

Bioenergy

Other

Total net sales

$ $ $ Europe China South America Other Total net sales$ $ $ $ Major product typesFats$ $ $ $ Used cooking oil Proteins Bakery Other rendering Food ingredients Bioenergy Other Total net sales$ $ $ $

Nine Months Ended September 30, 2023

Feed Ingredients

Food Ingredients

Fuel Ingredients

Total

Geographic Area

North America

Europe

China

South America

Other

Total net sales

Major product types

Fats

Used cooking oil

Proteins

Bakery

Other rendering

Food ingredients

Bioenergy

Other

Total net sales

Long-Term Performance Obligations. The Company from time to time enters into long-term contracts to supply certain volumes of finished products to certain customers. Revenue recognized to date in 2024 under these long-term supply contracts was approximately $ million, with the remaining performance obligations to be recognized in future periods (generally ) of approximately $ million.

(21)

million and $ million, respectively. For the three months ended September 28, 2024 and

% and %, respectively of Total net sales. For the nine months ended September 28, 2024 and September 30, 2023, the Company recorded net sales to the DGD Joint Venture of approximately $ million and $ million, respectively. For the nine months ended September 28, 2024 and September 30, 2023, our net sales to the DGD Joint Venture were approximately % and %, respectively of Total net sales. At September 28, 2024 and December 30, 2023, the Company had $ million and $ million in outstanding receivables due from the DGD Joint Venture, respectively. In addition, the Company has eliminated approximately $ million and $ million of additional sales for the nine months ended September 28, 2024 and September 30, 2023, respectively to defer the Company’s portion of profit of approximately $ million and $ million on those sales relating to inventory assets remaining on the DGD Joint Venture's balance sheet at September 28, 2024 and September 30, 2023, respectively.

Revolving Loan Agreement

On May 1, 2019, Darling, through its wholly owned subsidiary Darling Green Energy LLC, (“Darling Green”), and Diamond Alternative Energy, LLC, a wholly owned subsidiary of Valero (“Diamond Alternative” and together with Darling Green, the “DGD Lenders”), entered into a revolving loan agreement (the “2019 DGD Loan Agreement”) with the DGD Joint Venture, pursuant to which the DGD Lenders committed to making loans available to the DGD Joint Venture in the total amount of $ million, with each lender committed to $ million of the total commitment. Any borrowings by the DGD Joint Venture under the 2019 DGD Loan Agreement were at the applicable annum rate equal to the sum of (a) the LIBO Rate (meaning Reuters BBA Libor Rates Page 3750) on such day plus (b) %. On June 15, 2023, the DGD Lenders entered into a new revolving loan agreement (the “2023 DGD Loan Agreement”) with the DGD Joint Venture that replaced and superseded in its entirety the 2019 DGD Loan Agreement and pursuant to which the DGD Lenders have committed to making loans available to the DGD Joint Venture in the total amount of $ million with each lender committed to $ million of the total commitment. Any borrowings by the DGD Joint Venture under the 2023 DGD Loan Agreement are at the applicable annum rate equal to the sum of (a) term SOFR on such day plus (b) %. The 2023 DGD Loan Agreement expires on June 15, 2026. In December 2022, the DGD Joint Venture borrowed all $ million available under the 2019 DGD Loan Agreement, including the Company’s full $ million commitment, which was repaid in fiscal 2023. In January 2024, the DGD Joint Venture borrowed all $ million available under the 2023 DGD Loan Agreement, including the Company’s full $ million commitment, which was repaid in March 2024. The DGD Joint Venture paid interest to the Company for the three months ended September 28, 2024 and September 30, 2023 of , respectively and paid interest to the Company for the nine months ended September 28, 2024 and September 30, 2023 of approximately $ million and $ million, respectively. As of September 28, 2024 and December 30, 2023, was owed to Darling Green under the 2023 DGD Loan Agreement and the 2019 DGD Loan Agreement, respectively. This note receivable amount is included in other current assets on the balance sheet and is included in investing activities on the cash flow statement.

Guarantee Agreements

In February 2020, in connection with the DGD Joint Venture’s expansion project at its Norco, LA facility, it entered into agreements (the “IMTT Terminaling Agreements”) with International-Matex Tank Terminals (“IMTT”), pursuant to which the DGD Joint Venture will move raw material and finished product to and from the IMTT terminal facility by pipeline, thereby providing better logistical capabilities. As a condition to entering into the IMTT Terminaling Agreements, IMTT required that the Company and Valero guarantee their proportionate share, up to a maximum of approximately $ million each, of the DGD Joint Venture’s obligations under the IMTT Terminaling Agreements (the “IMTT Guarantee”), subject to the conditions provided for in the IMTT Terminaling Agreements. The Company has not recorded any liability as a result of the IMTT Guarantee, as the Company believes the likelihood of having to make any payments under the IMTT Guarantee is remote.

In April 2021, in connection with the DGD Joint Venture’s expansion project at its Port Arthur, TX facility, it entered into agreements (the “GTL Terminaling Agreements”) with GT Logistics, LLC (“GTL”), pursuant to which the DGD Joint Venture will move raw material and finished product to and from the GTL terminal facility by pipeline, thereby providing better logistical capabilities. As a condition to entering into the GTL Terminaling Agreements, GTL required that the Company and Valero guarantee their proportionate share, up to a maximum of approximately $ million each, of the DGD Joint Venture’s obligations under the GTL Terminaling Agreements (the “GTL Guarantee”), subject to the conditions provided for in the GTL Terminaling Agreements. The maximum amount of the GTL Guarantee is reduced over the initial term of the GTL Terminaling Agreements as the termination fee under such agreements declines. The Company has not recorded any liability as a result of the GTL Guarantee, as the Company believes the likelihood of having to make any payments under the GTL Guarantee is remote.

(22)

)$()Cash paid during the period for:Interest, net of capitalized interest$ $ Income taxes, net of refunds$ $ Non-cash operating activitiesOperating lease right of use asset obtained in exchange for new lease liabilities$ $ Non-cash financing activitiesDebt issued for assets$ $

(23)

Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Management's Discussion and Analysis of Financial Condition and Results of Operations contains forward-looking statements that involve risks and uncertainties. The Company’s actual results could differ materially from those anticipated in these forward-looking statements as a result of certain factors, including those set forth below under the heading “Forward Looking Statements” and elsewhere in this report, and under the heading “Risk Factors” in Part I, Item 1A in the Company’s Annual Report on Form 10-K for the fiscal year ended December 30, 2023, filed with the SEC on February 28, 2024 and in the Company’s other public filings with the SEC.

The following discussion should be read in conjunction with the unaudited consolidated financial statements and related notes thereto contained in this report.

Overview

Darling Ingredients Inc. (“Darling”, and together with its subsidiaries, the “Company” or “we,” “us” or “our”) is a global developer and producer of sustainable natural ingredients from edible and inedible bio-nutrients, creating a wide range of ingredients and customized specialty solutions for customers in the pharmaceutical, food, pet food, feed, industrial, fuel, bioenergy and fertilizer industries. With operations on five continents, the Company collects and transforms all aspects of animal by-product streams into useable and specialty ingredients, such as collagen, edible fats, feed-grade fats, animal proteins and meals, plasma, pet food ingredients, organic fertilizers, yellow grease, fuel feedstocks, green energy, natural casings and hides. The Company also recovers and converts recycled oils (used cooking oil and animal fats) into valuable feed and feedstock and collects and processes residual bakery products into feed ingredients. In addition, the Company provides environmental services, such as grease trap collection and disposal services to food service establishments. The Company sells its products domestically and internationally and operates within three industry segments: Feed Ingredients, Food Ingredients and Fuel Ingredients.

The Feed Ingredients operating segment includes the Company’s global activities related to (i) the collection and processing of beef, poultry and pork animal by-products in North America, Europe and South America into non-food grade oils and protein meals, (ii) the collection and processing of bakery residuals in North America into Cookie Meal®, which is predominantly used in poultry and swine rations, (iii) the collection and processing of used cooking oil in North America and South America into non-food grade fats, (iv) the collection and processing of porcine and bovine blood in China, Europe, North America and Australia into blood plasma powder and hemoglobin, (v) the processing of selected portions of slaughtered animals into a variety of meat products for use in pet food in Europe, North America and South America, (vi) the processing of cattle hides and hog skins in North America, (vii) the production of organic fertilizers using protein produced from the Company’s animal by-products processing activities in North America and Europe, (viii) the rearing and processing of black soldier fly larvae into specialty proteins for use in animal feed and pet food in North America, and (ix) the provision of grease trap services to food service establishments in North America. Non-food grade oils and fats produced and marketed by the Company are principally sold to third parties to be used as ingredients in animal feed and pet food, as an ingredient for the production of renewable diesel and biodiesel, or to the oleo-chemical industry to be used as an ingredient in a wide variety of industrial applications. Protein meals, blood plasma powder and hemoglobin produced and marketed by the Company are sold to third parties to be used as ingredients in animal feed, pet food and aquaculture.

The Food Ingredients operating segment includes the Company’s global activities related to (i) the purchase and processing of beef and pork bone chips, beef hides, pig skins, and fish skins into collagen in Europe, China, South America and North America, (ii) the collection and processing of porcine and bovine intestines into natural casings in Europe, China and North America, (iii) the extraction and processing of porcine mucosa into crude heparin in Europe, (iv) the collection and refining of animal fat into food grade fat in Europe, and (v) the processing of bones to bone chips for the collagen industry and bone ash in Europe. Collagens produced and marketed by the Company are sold to third parties to be used as ingredients in the pharmaceutical, nutraceutical, food, pet food and technical (e.g., photographic) industries. Natural casings produced and marketed by the Company are sold to third parties to be used as an ingredient in the production of sausages and other similar food products.

The Fuel Ingredients operating segment includes the Company’s global activities related to (i) the Company’s share of the results of its equity investment in Diamond Green Diesel Holdings LLC, a joint venture with Valero Energy Corporation (“Valero”) to convert animal fats, recycled greases, used cooking oil, inedible corn oil, soybean oil, or other feedstocks that become economically and commercially viable into renewable diesel (“DGD” or the “DGD Joint Venture”) as described in Note 3 (Investment in Unconsolidated Subsidiaries) to the Company’s Consolidated Financial Statements for the period ended September 28, 2024 included herein, (ii) the conversion of organic sludge and food waste into biogas

in Europe, (iii) the collection and conversion of fallen stock and certain animal by-products pursuant to applicable E.U. regulations into low-grade energy sources to be used in industrial applications, and (iv) the processing of manure into natural bio-phosphate in Europe.

Corporate Activities principally include unallocated corporate overhead expenses, acquisition-related expenses, interest expense net of interest income, and other non-operating income and expenses.

Economic Conditions and Uncertainties

Global Economic Conditions

We operate globally and have operations in numerous countries. As such, we are exposed to, and impacted by global macroeconomic factors, U.S. and foreign government policies and foreign exchange fluctuations. Global economic conditions continue to be highly volatile due to, among other things, the conflicts in Ukraine and the Middle East and their impacts on volatility in energy and other commodity prices, inflation, cost and supply chain pressures and availability, and disruption in banking systems and capital markets. Disturbances in world financial, credit, commodities and stock markets, including inflationary, deflationary and recessionary conditions, could have a negative impact on the Company’s results of operations. Any such disturbances or disruptions may also magnify the impact of other risks described in this Quarterly Report on Form 10-Q and our Annual Report on Form 10-K for the fiscal year ended December 30, 2023, as filed with the SEC on February 28, 2024.

Energy Policies of U.S. and Foreign Governments

Prices for our finished products, including those of DGD, may be impacted by worldwide government policies relating to renewable fuels and greenhouse gas emissions (“GHG”). Programs like the National Renewable Fuel Standard Program (“RFS”) and low carbon fuel standards (“LCFS”) (such as in the state of California) and tax credits for biofuels both in the United States and abroad are subject to revision and change which may impact the demand for and/or price of our finished products. Legal challenges or changes to, a failure to enforce, reductions in the mandated volumes under, or discontinuing, amending, modifying, or suspension of any of these programs could have a negative impact on our business and results of operations. However, such rules and the regulatory environment are continuing to evolve and change, and we cannot predict the ultimate effect that such changes may have on our business.

Climate Change

There is a growing global concern that carbon dioxide and other GHG in the atmosphere may have an adverse impact on global temperatures, weather patterns and the frequency of extreme weather and natural disasters. We are subject to physical, operational, transitional and financial risks associated with climate change and global, regional and local weather conditions, as well as legal, regulatory and market responses to climate change. Certain jurisdictions in which we operate have either imposed, or are considering imposing, new or increasingly stringent legal and regulatory requirements to reduce or mitigate the potential effects of climate change, including regulation and reduction of GHG and potential carbon pricing programs. These new or increasingly stringent legal or regulatory requirements could result in significantly increased costs of compliance and additional investments in facilities and equipment, and reduced raw material supplies in areas where these requirements limit or eliminate livestock operations. While we assess climate related regulatory risks as part of our risk management process, we are unable to predict the scope, nature and timing of any new or increasingly stringent environmental laws and regulations and therefore cannot predict the ultimate impact of such laws and regulations on our business or financial results. We continue to monitor existing and proposed laws and regulations in the jurisdictions in which we operate and to consider actions we may take to potentially mitigate the unfavorable impact, if any, of such laws or regulations. Furthermore, emerging legislation seeks to regulate corporate environmental, social and governance (“ESG”) practices, including practices related to the causes and impacts of climate change as well as supply chain control and compliance with human rights. These new rules, which apply to all large companies and to listed small and medium-sized enterprises, require companies to report on how sustainability issues (environmental, social, and governance) affect their business and about their own impact on people and the environment. There has also been increased focus from our stakeholders, including consumers, employees and investors, on our ESG practices. We expect that stakeholder expectations with respect to ESG expectations will continue to evolve rapidly, which may necessitate additional resources to monitor, report on, and adjust our operations.

For additional information on risk factors that could impact our results, please refer to “Risk Factors” in Part I, Item 1A of the Company’s Form 10-K for the fiscal year ended December 30, 2023, as filed with the SEC on February 28, 2024.

Operating Performance Indicators

The Company monitors the performance of its business segments using key financial metrics such as results of operations, non-GAAP measurements (Adjusted EBITDA and Combined Adjusted EBITDA), segment operating income, raw material processed, gross margin percentage, foreign currency translation, and corporate activities. The Company’s operating results can vary significantly due to changes in factors such as the fluctuation in commodity prices and energy prices, weather conditions, crop harvests, government policies and programs, changes in global demand, changes in standards of living, protein consumption, and global production of competing ingredients. Due to these unpredictable factors that are beyond the control of the Company, forward-looking financial or operational estimates are not provided. The Company is exposed to certain risks associated with a business that is influenced by agricultural-based commodities. These risks are further described in Item 1A of Part I, “Risk Factors” included in the Company’s Form 10-K for the fiscal year ended December 30, 2023.

The Company’s Feed Ingredients segment animal by-products, bakery residuals, used cooking oil recovery, and blood operations are each influenced by prices for agricultural-based alternative ingredients such as corn oil, soybean oil, soybean meal, and palm oil. In these operations, the costs of the Company’s raw materials change with, or in certain cases are indexed to, the selling price or the anticipated selling price of the finished goods produced from the acquired raw materials and/or in some cases, the price spread between various types of finished products. The Company believes that this methodology of procuring raw materials generally establishes a relatively stable gross margin upon the acquisition of the raw material. Although the costs of raw materials for the Feed Ingredients segment are generally based upon actual or anticipated finished goods selling prices, rapid and material changes in finished goods prices, including competing agricultural-based alternative ingredients, generally have an immediate, and often times, material impact on the Company’s gross margin and profitability resulting from the brief lapse of time between the procurement of the raw materials and the sale of the finished goods. In addition, the volume of raw material acquired, which has a direct impact on the amount of finished goods produced, can also have a material effect on the gross margin reported, as the Company has a substantial amount of fixed operating costs.

The Company’s Food Ingredients segment collagen and natural casings products are influenced by other competing ingredients including plant-based and synthetic hydrocolloids and artificial casings. In the collagen operation, the cost of the Company’s animal-based raw material moves in relationship to the selling price of the finished goods. The processing time for the Food Ingredients segment collagen and casings is generally 30 to 60 days, which is substantially longer than the Company’s Feed Ingredients segment animal by-products operations. Consequently, the Company’s gross margin and profitability in this segment can be influenced by the movement of finished goods prices from the time the raw materials were procured until the finished goods are sold.

The Company’s Fuel Ingredients segment converts fats into renewable diesel, organic sludge and food waste into biogas, and fallen stock into low-grade energy sources. The Company’s gross margin and profitability in this segment are impacted by world energy prices for oil, electricity and natural gas, global feed stock prices and governmental subsidies.

The reporting currency for the Company’s financial statements is the U.S. dollar. The Company operates in over 15 countries and therefore, certain of the Company’s assets, liabilities, revenues and expenses are denominated in functional currencies other than the U.S. dollar, primarily in the Euro, Brazilian real, Chinese renminbi, Canadian dollar and Polish zloty. To prepare the Company’s consolidated financial statements, assets, liabilities, revenues, and expenses must be translated into U.S. dollars at the applicable exchange rate. As a result, increases or decreases in the value of the U.S. dollar against these other currencies will affect the amount of these items recorded in the Company’s consolidated financial statements, even if their value has not changed in the functional currency. This could have a significant impact on the Company’s results, if such increase or decrease in the value of the U.S. dollar relative to these other currencies is substantial.

Results of Operations

Three Months Ended September 28, 2024 Compared to Three Months Ended September 30, 2023

Operating Performance Metrics

Operating performance metrics which management routinely monitors as an indicator of operating performance include:

•Finished product commodity prices

•Segment results

•Foreign currency exchange

•Corporate activities

•Non-U.S. GAAP measures

These indicators and their importance are discussed below.

Finished Product Commodity Prices

Prices for finished product commodities that the Company produces in the Feed Ingredients segment are reported each business day on the Jacobsen Index (the “Jacobsen”), an established North American trading exchange price publisher. The Jacobsen reports industry sales from the prior day's activity by product. Included on the Jacobsen are reported prices for finished products such as protein (primarily meat and bone meal (“MBM”), poultry meal (“PM”) and feather meal (“FM”)), hides, fats (primarily bleachable fancy tallow (“BFT”) and yellow grease (“YG”)) and corn, which is a substitute commodity for the Company’s bakery by-product (“BBP”), as well as a range of other branded and value-added products, which are products of the Company’s Feed Ingredients segment. In the United States and South America, the Company regularly monitors the Jacobsen for MBM, PM, FM, BFT, YG and corn because it provides a daily indication of the Company’s U.S. and Brazilian revenue performance against business plan benchmarks. In Europe and South America, the Company regularly monitors Thomson Reuters (“Reuters”) to track the competing commodities palm oil and soy meal.

Although the Jacobsen and Reuters provide useful metrics of performance, the Company’s finished products are commodities that compete with other commodities such as corn, soybean oil, palm oil complex, soybean meal and heating oil on nutritional and functional values. Therefore, actual pricing for the Company’s finished products, as well as competing products, can be quite volatile. In addition, neither the Jacobsen nor Reuters provides forward or future period pricing for the Company’s commodities. The Jacobsen and Reuters prices quoted below are for delivery of the finished product at a specified location. Although the Company’s prices generally move in concert with reported Jacobsen and Reuters prices, the Company’s actual sales prices for its finished products may vary significantly from the Jacobsen and Reuters because of production and delivery timing differences and because the Company’s finished products are delivered to multiple locations in different geographic regions which utilize alternative price indexes. In addition, certain of the Company’s premium branded finished products may sell at prices that may be higher than the closest product on the related Jacobsen or Reuters index. During the third quarter of fiscal 2024, the Company’s actual sales prices by product trended with the disclosed Jacobsen and Reuters prices.

Average Jacobsen and Reuters prices (at the specified delivery point) for the third quarter of fiscal 2024, compared to average Jacobsen and Reuters prices for the third quarter of fiscal 2023 are as follows:

Avg. Price
3rd Quarter
2024

Avg. Price
3rd Quarter
2023

Increase/(Decrease)

%
Increase/(Decrease)

Jacobsen:

MBM (Illinois)

$ 296.12/ton

$ 455.04/ton

$ (158.92)/ton

(34.9)

Feed Grade PM (Mid-South)

$ 362.42/ton

$ 488.13/ton

$ (125.71)/ton

(25.8)

Pet Food PM (Mid-South)

$ 611.13/ton

$ 796.10/ton

$ (184.97)/ton

(23.2)

Feather meal (Mid-South)

$ 420.35/ton

$ 572.30/ton

$ (151.95)/ton

(26.6)

BFT (Chicago)

$ 50.62/cwt

$ 68.66/cwt

$ (18.04)/cwt

(26.3)

YG (Illinois)

$ 37.11/cwt

$ 52.39/cwt

$ (15.28)/cwt

(29.2)

Corn (Illinois)

$ 3.97/bushel

$ 5.32/bushel

$ (1.35)/bushel

(25.4)

Reuters:

Palm Oil (CIF Rotterdam)

$ 1,081.00/MT

$ 963.00/MT

$ 118.00/MT

12.3

Soy meal (CIF Rotterdam)

$ 429.00/MT

$ 513.00/MT

$ (84.00)/MT

(16.4)

The following table shows the average Jacobsen and Reuters prices for the third quarter of fiscal 2024, compared to average Jacobsen and Reuters prices for the second quarter of fiscal 2024.

Avg. Price
3rd Quarter
2024

Avg. Price
2nd Quarter
2024

Increase/(Decrease)

%
Increase/(Decrease)

Jacobsen:

MBM (Illinois)

$ 296.12/ton

$ 290.51/ton

$ 5.61/ton

1.9

Feed Grade PM (Mid-South)

$ 362.42/ton

$ 371.25/ton

$ (8.83)/ton

(2.4)

Pet Food PM (Mid-South)

$ 611.13/ton

$ 785.69/ton

$ (174.56)/ton

(22.2)

Feather meal (Mid-South)

$ 420.35/ton

$ 490.32/ton

$ (69.97)/ton

(14.3)

BFT (Chicago)

$ 50.62/cwt

$ 46.29/cwt

$ 4.33/cwt

9.4

YG (Illinois)

$ 37.11/cwt

$ 35.85/cwt

$ 1.26/cwt

3.5

Corn (Illinois)

$ 3.97/bushel

$ 4.48/bushel

$ (0.51)/bushel

(11.4)

Reuters:

Palm Oil (CIF Rotterdam)

$ 1,081.00/MT

$ 1,040.00/MT

$ 41.00/MT

3.9

Soy meal (CIF Rotterdam)

$ 429.00/MT

$ 451.00/MT

$ (22.00)/MT

(4.9)

Segment Results

Segment operating income for the three months ended September 28, 2024 was $60.1 million, which reflects a decrease of $(118.3) million or (66.3)% as compared to the three months ended September 30, 2023.


(in thousands, except percentages)	Feed Ingredients			Food Ingredients			Fuel Ingredients			Corporate			Total
Three Months Ended September 28, 2024
Total net sales	$	927,457		$	357,292		$	137,142		$	—		$	1,421,891
Cost of sales and operating expenses (1)	727,642			271,861			108,816			—			1,108,319
Gross margin	199,815			85,431			28,326			—			313,572

Gross margin %	21.5		%	23.9		%	20.7		%	—		%	22.1		%

Loss/(gain) on sale of assets	204			49			(2)			—			251
Selling, general and administrative expenses (2)	67,445			28,351			7,757			12,164			115,717

Acquisition and integration costs	—			—			—			218			218
Change in fair value of contingent consideration	16,156			—			—			—			16,156
Depreciation and amortization	85,480			26,743			9,297			2,033			123,553
Equity in net income of Diamond Green Diesel	—			—			2,430			—			2,430
Segment operating income/(loss)	30,530			30,288			13,704			(14,415)			60,107

Equity in net income of other unconsolidated subsidiaries	3,782			—			—			—			3,782
Segment income/(loss)	34,312			30,288			13,704			(14,415)			63,889

(1) Cost of sales and operating expenses includes the cost of raw materials, collection costs of the raw materials and factory expenses including direct labor.

(2) Selling, general and administrative expenses include payroll related costs including incentive pay and stock compensation, insurance related costs, professional fees, IT related costs, travel costs and other costs.


(in thousands, except percentages)	Feed Ingredients			Food Ingredients			Fuel Ingredients			Corporate			Total
Three Months Ended September 30, 2023
Total net sales	$	1,047,796		$	455,744		$	121,664		$	—		$	1,625,204
Cost of sales and operating expenses (1)	804,312			338,208			96,213			—			1,238,733
Gross margin	243,484			117,536			25,451			—			386,471

Gross margin %	23.2		%	25.8		%	20.9		%	—		%	23.8		%

Loss/(gain) on sale of assets	833			117			(21)			—			929
Selling, general and administrative expenses (2)	80,985			31,463			5,666			19,583			137,697

Equity in net income of Diamond Green Diesel	(2,430)			(54,389)
Equity in net income of other unconsolidated subsidiaries	(3,782)			(1,534)
Net income attributable to non-controlling interests	2,166			3,055
Adjusted EBITDA (Non-GAAP)	$	197,604		$	247,845

Foreign currency exchange impact (1)	(601)			—
Pro forma Adjusted EBITDA to Foreign Currency (Non-GAAP)	$	197,003		$	247,845

DGD Adjusted EBITDA (Darling’s Share) (Non-GAAP)	$	39,085		$	86,450

Combined Adjusted EBITDA (Non-GAAP)	$	236,689		$	334,295

(1) The average rates for the three months ended September 28, 2024 were €1.00:$1.10, R$1.00:$0.18 and C$1.00:$0.73 as compared to the average rates for the three months ended September 30, 2023 of €1.00:$1.09, R$1.00:$0.21 and C$1.00:$0.75, respectively.

Nine Months Ended September 28, 2024 Compared to Nine Months Ended September 30, 2023

Operating Performance Metrics

Operating performance metrics which management routinely monitors as an indicator of operating performance include:

•Finished product commodity prices

•Segment results

•Foreign currency exchange

•Corporate activities

•Non-U.S. GAAP measures

These indicators and their importance are discussed below.

Finished Product Commodity Prices

During the first nine months of fiscal 2024, the Company’s actual sales prices by product trended with the disclosed Jacobsen and Reuters prices.

Average Jacobsen and Reuters prices (at the specified delivery point) for the first nine months of fiscal 2024, compared to average Jacobsen and Reuters prices for the first nine months of fiscal 2023 are as follows:

Avg. Price
First Nine Months
2024

Avg. Price
First Nine Months
2023

Increase/(Decrease)

%
Increase/(Decrease)

Jacobsen:

MBM (Illinois)

$ 293.18/ton

$ 451.72/ton

$ (158.54)/ton

(35.1)

Feed Grade PM (Mid-South)

$ 380.28/ton

$ 460.21/ton

$ (79.93)/ton

(17.4)

Pet Food PM (Mid-South)

$ 711.33/ton

$ 824.84/ton

$ (113.51)/ton

(13.8)

Feather meal (Mid-South)

$ 475.21/ton

$ 582.30/ton

$ (107.09)/ton

(18.4)

BFT (Chicago)

$ 46.72/cwt

$ 62.22/cwt

$ (15.50)/cwt

(24.9)

YG (Illinois)

$ 34.89/cwt

$ 49.85/cwt

$ (14.96)/cwt

(30.0)

Corn (Illinois)

$ 4.29/bushel

$ 6.28/bushel

$ (1.99)/bushel

(31.7)

Reuters:

Palm Oil (CIF Rotterdam)

$ 1,040.00/MT

$ 971.00/MT

$ 69.00/MT

7.1

Soy meal (CIF Rotterdam)

$ 448.00/MT

$ 541.00/MT

$ (93.00)/MT

(17.2)

Segment Results

Segment operating income for the nine months ended September 28, 2024 was $345.8 million, which reflects a decrease of $(445.1) million or (56.3)% as compared to the nine months ended September 30, 2023.


(in thousands, except percentages)	Feed Ingredients			Food Ingredients			Fuel Ingredients			Corporate			Total
Nine Months Ended September 28, 2024
Total net sales	$	2,751,452		$	1,127,415		$	418,615		$	—		$	4,297,482
Cost of sales and operating expenses (1)	2,171,282			846,766			335,358			—			3,353,406
Gross margin	580,170			280,649			83,257			—			944,076

Gross margin %	21.1		%	24.9		%	19.9		%	—		%	22.0		%

Loss/(gain) on sale of assets	541			(208)			(434)			—			(101)
Selling, general and administrative expenses (2)	218,598			88,939			24,911			52,143			384,591

Equity in net income of Diamond Green Diesel	(125,046)			(361,690)
Equity in net income of other unconsolidated subsidiaries	(9,109)			(3,503)
Net income attributable to non-controlling interests	5,096			9,923
Adjusted EBITDA (Non-GAAP)	$	559,586		$	797,814

Foreign currency exchange impact (1)	(76)			—
Pro forma Adjusted EBITDA to Foreign Currency (Non-GAAP)	$	559,510		$	797,814

DGD Adjusted EBITDA (Darling’s Share) (Non-GAAP)	$	230,787		$	463,171

Combined Adjusted EBITDA (Non-GAAP)	$	790,373		$	1,260,985

(1) The average rates for the nine months ended September 28, 2024 were €1.00:$1.09, R$1.00:$0.19 and C$1.00:$0.74 as compared to the average rates for the nine months ended September 30, 2023 of €1.00:$1.08, R$1.00:$0.20 and C$1.00:$0.74, respectively.

FINANCING, LIQUIDITY AND CAPITAL RESOURCES

Credit Facilities

Indebtedness

Certain Debt Outstanding at September 28, 2024. On September 28, 2024, debt outstanding under the Company’s Amended Credit Agreement, the Company’s 6% Notes, the Company’s 5.25% Notes and the Company’s 3.625% Notes consists of the following (in thousands):


Senior Notes:
6 % Notes due 2030	$	1,000,000
Less unamortized deferred loan costs net of bond premium	(5,818)
Carrying value of 6% Notes due 2030	$	994,182

5.25 % Notes due 2027	$	500,000
Less unamortized deferred loan costs	(2,557)
Carrying value of 5.25% Notes due 2027	$	497,443

3.625 % Notes due 2026 - Denominated in euros	$	574,637
Less unamortized deferred loan costs	(1,941)
Carrying value of 3.625% Notes due 2026	$	572,696

Amended Credit Agreement:
Term A-1 facility	$	398,000
Less unamortized deferred loan costs	(411)
Carrying value of Term A-1 facility	$	397,589

Term A-2 facility	$	475,000
Less unamortized deferred loan costs	(574)
Carrying value of Term A-2 facility	$	474,426

Term A-3 facility	$	298,500
Less unamortized deferred loan costs	(629)
Carrying value of Term A-3 facility	$	297,871

Term A-4 facility	$	484,375
Less unamortized deferred loan costs	(749)
Carrying value of Term A-4 facility	$	483,626

Revolving Credit Facility:
Maximum availability	$	1,500,000
Ancillary Facilities	72,955
Borrowings outstanding	418,064
Letters of credit issued	659
Availability	$	1,008,322

Other Debt	$	110,320

During the first nine months of fiscal 2024, the U.S. dollar decreased as compared to the euro at December 30, 2023. Using the euro based debt outstanding at September 28, 2024 and comparing the closing balance sheet rate at September 28, 2024 to the balance sheet rate at December 30, 2023, the U.S. dollar debt balances of euro based debt increased by approximately $6.6 million at September 28, 2024. The closing balance sheet rate assumption used in this calculation was the actual fiscal closing balance sheet rate at September 28, 2024 of €1.00:$1.1158 as compared to the closing balance sheet rate at December 30, 2023 of €1.00:$1.105.

Senior Secured Credit Facilities. On January 6, 2014, Darling, Darling International Canada Inc. (“Darling Canada”) and Darling International NL Holdings B.V. (“Darling NL”) entered into a Second Amended and Restated Credit Agreement (as subsequently amended, the “Amended Credit Agreement”), restating its then existing Amended and Restated Credit Agreement dated September 27, 2013, with the lenders from time to time party thereto, JPMorgan Chase Bank, N.A., as Administrative Agent, and the other agents from time to time party thereto. The Amended Credit Agreement provides for senior secured credit facilities in the aggregate principal amount of $3.725 billion comprised of (i) the Company’s $525.0 million term B facility, (ii) the Company’s $400.0 million term A-1 facility, (iii) the Company’s $500.0 million term A-2 facility, (iv) the Company’s $300.0 million term A-3 facility, (v) the Company’s $500.0 million term A-4 facility and (vi) the Company’s $1.5 billion five-year revolving credit facility (up to $150.0 million of which will be available for a letter of credit subfacility and $50.0 million of which will be available for a swingline sub-facility) (collectively, the “Senior Secured Credit Facilities”). The Amended Credit Agreement also permits Darling and the other borrowers thereunder to incur ancillary facilities provided by any revolving lender party to the Senior Secured Credit Facilities (with certain restrictions). Up to $1.46 billion of the revolving credit facility is available to be borrowed by Darling, Darling Canada, Darling NL, Darling Ingredients International Holding B.V. (“Darling BV”), Darling GmbH, and Darling Belgium in U.S. dollars, Canadian dollars, euros, Sterling and other currencies to be agreed and available to each

applicable lender. The remaining $40.0 million must be borrowed in U.S. dollars only by Darling. The revolving credit facility will mature on December 9, 2026. The revolving credit facility will be used for working capital needs, general corporate purposes and other purposes not prohibited by the Amended Credit Agreement.

•As of September 28, 2024, the Company had availability of $1,008.3 million under the revolving credit facility, taking into account that the Company had $418.1 million in outstanding borrowings, $73.0 million in ancillary facilities and letters of credit issued of $0.7 million.

•As of September 28, 2024, the Company has borrowed all $400.0 million under the terms of the term A-1 facility and has repaid $2.0 million, which when repaid by the Company cannot be reborrowed. The term A-1 facility borrowings are repayable in quarterly installments of 0.25% of the aggregate principle amount of the relevant term A-1 facility on the last day of each March, June, September and December of each year commencing on the last day of such month falling on or after the last day of the first full fiscal quarter following the second anniversary of December 9, 2021 and continuing until the last day of such quarterly period ending immediately prior to the term A-1 facility maturity date of December 9, 2026 and one final installment in the amount of the term A-1 facility then outstanding, due and payable on December 9, 2026.

•As of September 28, 2024, the Company has borrowed all $500.0 million under the terms of the term A-2 facility and has repaid $25.0 million, which when repaid by the Company cannot be reborrowed. The term A-2 facility borrowings are repayable in quarterly installments of 0.625% of the aggregate principle amount of the relevant term A-2 facility on the last day of each March, June, September and December of each year commencing on the last day of such month falling on or after the last day of the first full fiscal quarter following the borrowings or September 30, 2022 and continuing until the last day of such quarterly period ending March 31, 2025, and quarterly installments of 1.25% of the aggregate principle amount of the relevant term A-2 facility due and payable on the last day of each March, June, September and December of each year commencing on the last day of such month falling on or after the last day of the first full fiscal quarter ending June 30, 2025 and continuing until the last day of such quarterly period ending immediately prior to the term A-2 facility maturity date of December 9, 2026 and one final installment in the amount of the term A-2 facility then outstanding, due and payable on December 9, 2026.

•As of September 28, 2024, the Company has borrowed all $300.0 million under the terms of the term A-3 facility and has repaid $1.5 million, which when repaid by the Company cannot be reborrowed. The term A-3 facility borrowings are repayable in quarterly installments of 0.25% of the aggregate principle amount of the relevant term A-3 facility on the last day of each March, June, September and December of each year commencing on the last day of such month falling on or after the last day of the first full fiscal quarter following the second anniversary of December 9, 2021 and continuing until the last day of such quarterly period ending immediately prior to the term A-3 facility maturity date of December 9, 2026 and one final installment in the amount of the term A-3 facility then outstanding, due and payable on December 9, 2026.

•As of September 28, 2024, the Company has borrowed all $500.0 million under the terms of the term A-4 facility and has repaid $15.6 million, which when repaid by the Company cannot be reborrowed. The Term A-4 facility borrowings are repayable in quarterly installments of 0.625% of the aggregate principle amount of the relevant term A-4 facility on the last day of each March, June, September and December of each year commencing on the last day of such month falling on or after the last day of the first full fiscal quarter following the borrowings or June 30, 2023 and continuing until the last day of such quarterly period ending March 31, 2025, and quarterly installments of 1.25% of the aggregate principle amount of the relevant term A-4 facility due and payable on the last day of each March, June, September and December of each year commencing on the last day of such month falling on or after the last day of the first full fiscal quarter ending June 30, 2025 and continuing until the last day of such quarterly period ending immediately prior to the term A-4 facility maturity date of December 9, 2026 and one final installment in the amount of the term A-4 facility then outstanding, due and payable on December 9, 2026.

•As of September 28, 2024, the Company has repaid all $525.0 million it had borrowed under the terms of the term B facility, none of which can be reborrowed.

•The interest rate applicable to any borrowings under the revolving credit facility will equal the adjusted term secured overnight financing rate (SOFR) for U.S. dollar borrowings or the adjusted euro interbank rate (EURIBOR) for euro borrowings or the adjusted daily simple Sterling overnight index average (SONIA) for British pound borrowings plus 1.75% per annum or base rate or the adjusted term SOFR for U.S. dollar

borrowings or Canadian prime rate for Canadian dollar borrowings or the adjusted daily simple European short term rate (ESTR) for euro borrowings or the adjusted daily SONIA rate for British pound borrowings plus 0.75% per annum subject to certain step-ups or step-downs based on the Company’s total leverage ratio. The interest rate applicable to any borrowing under the term A-1 facility and the term A-3 facility will equal the adjusted term SOFR plus 1.875% per annum subject to certain step-ups and step-downs based on the Company’s total leverage ratio. The interest rate applicable to any borrowing under the term A-2 facility and term A-4 facility will equal the adjusted term SOFR plus 1.75% per annum subject to certain step-ups and step-downs based on the Company’s total leverage ratio.

6% Senior Notes due 2030. On June 9, 2022, Darling issued and sold $750.0 million aggregate principal amount of 6% Senior Notes due 2030 (the “6% Initial Notes”). The 6% Initial Notes, which were offered in a private offering, were issued pursuant to a Senior Notes Indenture, dated as of June 9, 2022 (the “6% Base Indenture”), among Darling, the subsidiary guarantors party thereto from time to time, and Truist Bank, as trustee. On August 17, 2022, Darling issued an additional $250.0 million in aggregate principal amount of its 6% Senior Notes due 2030 (the “add-on notes” and, together with the 6% Initial Notes, the “6% Notes”). The add-on notes and related guarantees, which were offered in a private offering, were issued as additional notes under the 6% Base Indenture, as supplemented by a supplemental indenture, dated as of August 17, 2022 (the “supplemental indenture” and, together with the 6% Base Indenture, the “6% Indenture”). The add-on notes have the same terms as the 6% Initial Notes (other than issue date and issue price) and, together with the 6% Initial Notes, constitute a single class of securities under the 6% Indenture. The 6% Notes are guaranteed on a senior unsecured basis by Darling and all of Darling’s restricted subsidiaries (other than foreign subsidiaries) that are borrowers under or that guarantee the Senior Secured Credit Facilities.

5.25% Senior Notes due 2027. On April 3, 2019, Darling issued and sold $500.0 million aggregate principal amount of 5.25% Senior Notes due 2027 (the “5.25% Notes”). The 5.25% Notes, which were offered in a private offering, were issued pursuant to a Senior Notes Indenture, dated as of April 3, 2019 (the “5.25% Indenture”), among Darling, the subsidiary guarantors party thereto from time to time, and Regions Bank, as trustee. The 5.25% Notes are guaranteed on a senior unsecured basis by Darling and all of Darling’s restricted subsidiaries (other than foreign subsidiaries) that are borrowers under or that guarantee the Senior Secured Credit Facilities.

3.625% Senior Notes due 2026. On May 2, 2018, Darling Global Finance B.V. issued and sold €515.0 million aggregate principal amount of 3.625% Senior Notes due 2026 (the “3.625% Notes”). The 3.625% Notes, which were offered in a private offering, were issued pursuant to a Senior Notes Indenture, dated as of May 2, 2018 (the “3.625% Indenture”), among Darling Global Finance B.V., Darling, the subsidiary guarantors party thereto from time to time, Citibank, N.A., London Branch, as trustee and principal paying agent, and Citigroup Global Markets Deutschland AG, as principal registrar. The 3.625% Notes are guaranteed on a senior unsecured basis by Darling and all of Darling’s restricted subsidiaries (other than any foreign subsidiary or any receivable entity) that guarantee the Senior Secured Credit Facilities.

Other debt consists of U.S., European and Chinese overdraft ancillary facilities, U.S., European and Brazilian finance lease obligations and U.S., Brazilian, Chinese and European notes arrangements that are not part of the Company’s Amended Credit Agreement, 6% Notes, 5.25% Notes or 3.625% Notes.

The classification of long-term debt in the Company’s September 28, 2024 consolidated balance sheet is based on the contractual repayment terms of the 6% Notes, the 5.25% Notes, the 3.625% Notes and debt issued under the Amended Credit Agreement.

As a result of the Company’s borrowings under its Amended Credit Agreement, the 6% Indenture, the 5.25% Indenture and the 3.625% Indenture, the Company is highly leveraged. Investors should note that, in order to make scheduled payments on the indebtedness outstanding under the Amended Credit Agreement, the 6% Notes, the 5.25% Notes and the 3.625% Notes, and otherwise, the Company will rely in part on a combination of dividends, distributions and intercompany loan repayments from the Company’s direct and indirect U.S. and foreign subsidiaries. The Company is prohibited under the Amended Credit Agreement, the 6% Indenture, the 5.25% Indenture and the 3.625% Indenture from entering (or allowing such subsidiaries to enter) into contractual limitations on the Company’s subsidiaries’ ability to declare dividends or make other payments or distributions to the Company. The Company has also attempted to structure the Company’s consolidated indebtedness in such a way as to maximize the Company’s ability to move cash from the Company’s subsidiaries to Darling or another subsidiary that will have fewer limitations on the ability to make upstream payments, whether to Darling or directly to the Company’s lenders as a Guarantor. Nevertheless, applicable laws under which the Company’s direct and indirect subsidiaries are formed may provide limitations on such dividends, distributions and other payments. In addition, regulatory authorities in various countries where the Company operates or where the Company imports or exports products may from time to time impose import/export limitations, foreign exchange controls

or currency devaluations that may limit the Company’s access to profits from the Company’s subsidiaries or otherwise negatively impact the Company’s financial condition and therefore reduce the Company’s ability to make required payments under the Amended Credit Agreement, the 6% Notes, the 5.25% Notes and the 3.625% Notes, or otherwise. In addition, fluctuations in foreign exchange values may have a negative impact on the Company’s ability to repay indebtedness denominated in U.S. or Canadian dollars or euros. See “Risk Factors - Our business may be adversely impacted by fluctuations in exchange rates, which could affect our ability to comply with our financial covenants” and “- Our ability to repay our indebtedness depends in part on the performance of our subsidiaries, including our non-guarantor subsidiaries, and their ability to make payments” in the Company’s Annual Report on Form 10-K for the fiscal year ended December 30, 2023 as filed with the SEC on February 28, 2024.

As of September 28, 2024, the Company is in compliance with all of the financial covenants under the Amended Credit Agreement, and believes it is in compliance with all of the other covenants contained in the Amended Credit Agreement, the 6% Indenture, the 5.25% Indenture and the 3.625% Indenture.

Working Capital and Capital Expenditures

On September 28, 2024, the Company had working capital of $434.4 million and its working capital ratio was 1.41 to 1 compared to working capital of $857.5 million and a working capital ratio of 1.86 to 1 on December 30, 2023. As of September 28, 2024, the Company had unrestricted cash of $114.8 million and funds available under the revolving credit facility of $1,008.3 million, compared to unrestricted cash of $126.5 million and funds available under the revolving credit facility of $832.5 million at December 30, 2023. The Company diversifies its cash investments by limiting the amounts deposited with any one financial institution.

Net cash provided by operating activities was $684.9 million for the first nine months ended September 28, 2024, as compared to net cash provided by operating activities of $682.3 million for the first nine months ended September 30, 2023, an increase of $2.6 million. Cash used in investing activities was $452.6 million for the first nine months ended September 28, 2024, compared to $1,506.6 million for the first nine months ended September 30, 2023, a decrease in cash used in investing activities of $1,054.0 million, primarily due to a decrease in payments for acquisitions. Net cash provided/(used) in financing activities was $(233.2) million for the first nine months ended September 28, 2024, compared to $902.2 million for the first nine months ended September 30, 2023, a decrease in net cash provided by financing activities of $1,135.4 million, primarily due to a decrease in debt borrowings utilized to finance acquisitions in the first nine months ended September 28, 2024 compared to the first nine months ended September 30, 2023.

Capital expenditures of $259.1 million were made during the first nine months of fiscal 2024, compared to $380.6 million in the first nine months of fiscal 2023. The Company expects to incur additional capital expenditures of approximately $140 million for the remainder of fiscal 2024 including compliance and expansion projects and spending related to acquired companies. The Company intends to finance these costs using cash flows from operations. Capital expenditures related to compliance with environmental regulations were $43.5 million and $43.4 million during the first nine months ended September 28, 2024 and September 30, 2023, respectively.

Accrued Insurance and Pension Plan Obligations

Based upon the annual actuarial estimate, current year accruals and claims paid during the first nine months of fiscal 2024, the Company has an accrued balance of approximately $28.0 million it expects will become due during the next twelve months in order to meet obligations related to the Company’s self-insurance reserves and accrued insurance obligations, which are included in current accrued expenses at September 28, 2024. The self insurance reserve is composed of estimated liability for claims arising for workers’ compensation, auto liability, general liability and medical claims liability. The self-insurance reserve liability and medical claims liability are determined annually, based upon third party actuarial estimates. The actuarial estimates may vary from year to year due to changes in cost of health care, the pending number of claims or other factors beyond the control of management of the Company.

Based upon current actuarial estimates, the Company expects to contribute approximately $0.8 million to its domestic pension plans in order to meet minimum pension funding requirements during the next twelve months. In addition, the Company expects to make payments of approximately $3.6 million under its foreign pension plans in the next twelve months. The minimum pension funding requirements are determined annually, based upon third party actuarial estimate. The actuarial estimate may vary from year to year due to fluctuations in return on investments or other factors beyond the control of management of the Company or the administrator of the Company’s pension funds. No assurance can be given that the minimum pension funding requirements will not increase in the future. The Company has made tax deductible discretionary and required contributions to its domestic pension plans for the first nine months ended

September 28, 2024 of approximately $0.4 million. Additionally, the Company has made required and tax deductible discretionary contributions to its foreign pension plans for the first nine months ended September 28, 2024 of approximately $1.4 million.

The U.S. Pension Protection Act of 2006 (“PPA”) went into effect in January 2008. The stated goal of the PPA is to improve the funding of U.S. pension plans. U.S. plans in an under-funded status are required to increase employer contributions to improve the funding level within PPA timelines. Volatility in the world equity and other financial markets, including that associated with the Russia-Ukraine war and the Israeli-Palestinian conflict, could have a material negative impact on U.S. pension plan assets and the status of required funding under the PPA. The Company participates in various U.S. multiemployer pension plans which provide defined benefits to certain employees covered by labor contracts. These plans are not administered by the Company and contributions are determined in accordance with provisions of negotiated labor contracts to meet their pension benefit obligations to their participants. The Company’s contributions to each individual U.S. multiemployer plan represent less than 5% of the total contributions among the contributors to each plan. Based on the most currently available information, the Company has determined that, if a withdrawal were to occur, withdrawal liabilities for two of the U.S. plans in which the Company currently participates could be material to the Company. With respect to the other U.S. multiemployer pension plans in which the Company participates and which are not individually significant, five plans have certified as critical or red zone, as defined by the PPA. The Company currently has withdrawal liabilities recorded on four U.S. multiemployer plans in which it participated. As of September 28, 2024, the Company has an aggregate accrued liability of approximately $4.5 million representing the present value of scheduled withdrawal liability payments on the multiemployer plans that have given notice of withdrawal. While the Company has no ability to calculate a possible current liability for under-funded multiemployer plans that could terminate or could require additional funding under the PPA, the amounts could be material.

DGD Joint Venture

The DGD Joint Venture currently operates two renewable diesel plants, one located adjacent to Valero’s St. Charles Refinery in Norco, Louisiana (the “DGD St. Charles Plant”) and one located adjacent to Valero’s Port Arthur Refinery in Port Arthur, Texas (the “DGD Port Arthur Plant” and, together with the DGD St. Charles Plant, the “DGD Facilities”), with a combined renewable diesel production capacity of approximately 1.2 billion gallons per year. Renewable diesel is a low-carbon transportation fuel that is interchangeable with diesel produced from petroleum and is produced at the DGD Facilities using an advanced hydroprocessing-isomerization process licensed from 62P LLC, known as the Ecofining™ Process, and a pretreatment process developed by the Desmet Ballestra Group, to convert fats (animal fats, used cooking oils, distillers corn oil and vegetable oils) into renewable diesel, renewable naphtha and other light end renewable hydrocarbons. The DGD Joint Venture was formed in January 2011 to design, engineer, construct and operate the DGD St. Charles Plant, which reached mechanical completion and began production of renewable diesel and certain other co-products in late June 2013. In October 2021, the DGD Joint Venture completed an expansion of the DGD St. Charles Plant that increased its renewable diesel production capability to up to 750 million gallons per year of renewable diesel, as well as separating renewable naphtha (approximately 30 million gallons) and other light end renewable hydrocarbons for sale into low carbon fuel markets. Additionally, in November 2022, the DGD Joint Venture completed the construction of the DGD Port Arthur Plant, with a capacity to produce 470 million gallons per year of renewable diesel and 20 million gallons per year of renewable naphtha and having similar logistics flexibilities as those of the DGD St. Charles Plant. Furthermore, in January 2023, the DGD Joint Venture partners approved a capital project at the DGD Port Arthur Plant to provide the plant with the capability to upgrade approximately fifty percent (50%) of its current 470 million gallon annual production capacity to sustainable aviation fuel (SAF). Work on the project is mechanically complete and commissioning of the unit is underway, with completion expected in the fourth quarter of 2024 at a total estimated cost of approximately $315 million, which is expected to be primarily funded by DGD Joint Venture cash flow; however, if the DGD Joint Venture cash flow is not sufficient to fund any unexpected additional project costs, the DGD Joint Venture may need to borrow funds or the joint venture partners may be required to contribute additional funds to complete the project.

committed to $100.0 million of the total commitment. Any borrowings by the DGD Joint Venture under the 2023 DGD Loan Agreement are at the applicable annum rate equal to the sum of (a) term SOFR on such day plus (b) 2.50%. The 2023 DGD Loan Agreement expires on June 15, 2026. In December 2022, the DGD Joint Venture borrowed all $50.0 million available under the 2019 DGD Loan Agreement, including the Company’s full $25.0 million commitment, which was repaid in fiscal 2023. In January 2024, the DGD Joint Venture borrowed all $200.0 million available under the 2023 DGD Loan Agreement, including the Company’s full $100.0 million commitment, which was repaid in March 2024. The DGD Joint Venture paid interest to the Company for the three months ended September 28, 2024 and September 30, 2023 of approximately zero, respectively, and paid interest to the Company for the nine months ended September 28, 2024 and September 30, 2023 of approximately $1.6 million and $0.6 million, respectively. As of September 28, 2024 and December 30, 2023, zero was owed to Darling Green under the 2023 DGD Loan Agreement and the 2019 DGD Loan Agreement, respectively. This note receivable amount is included in other current assets on the balance sheet and is included in investing activities on the cash flow statement.

On June 23, 2023, the DGD Joint Venture entered into an amended and restated credit agreement for $400.0 million senior, unsecured revolving credit facility, with CoBank ACB acting as lead arranger and the administrative agent for the lending group, which is comprised of Farm Credit System institutions. The revolving credit facility matures June 23, 2026 and is non-recourse to the joint venture partners. As of September 28, 2024, the DGD Joint Venture had no borrowings outstanding under this unsecured revolving credit facility.

Based on the sponsor support agreements executed in connection with the initial construction of the DGD St. Charles Plant, the Company contributed a total of approximately $111.7 million for initial completion of the DGD St. Charles Plant, and each partner has subsequently made $618.8 million in additional capital contributions to the DGD Joint Venture. As of September 28, 2024, under the equity method of accounting, the Company has an investment in the DGD Joint Venture of approximately $2,260.2 million included on the consolidated balance sheet.

The Company’s original investment in DGD has expanded since 2011 to the point that it is now integral to how Darling operates its business. Darling traditionally collected and converted used cooking oil and animal fats into feed ingredients which were sold on a caloric value to feed animals as well as for industrial technical uses. Over the past decade, the world’s increasing focus on climate change and greenhouse gas has provided a new finished market for the Company’s finished fats ingredients. With Darling’s significant fats ownership, this has and continues to transform how Darling operates. In 2023, a large portion of Darling’s total U.S. finished fats products were sold to the DGD Joint Venture as feedstock for renewable diesel. In 2023, DGD was Darling’s largest finished product customer in terms of net sales, with Darling recording sales of approximately $1.3 billion to DGD or 20% of total net sales.

From a procurement, production and distribution standpoint, DGD has become integral to Darling’s base business. DGD is integrated to the Company’s operations via the combined vertical operating structure from collecting raw fats, to processing collected fats at Darling facilities worldwide to transporting the refined fats to the DGD Facilities as feedstock. The Darling supply chain has become more efficient and sustainable with transparency for verification to obtain full value to low carbon intensity markets. The development of the low carbon markets in North America and Europe has influenced how Darling operates its core business and has also been a driver for the recent DGD expansions, which are making DGD much more relevant to Darling’s earnings. Since 2011 when construction began on DGD, Darling has invested substantially to increase its U.S. railcar fleet to efficiently manage nationwide transportation of Darling fats to DGD. Additionally, Darling acquired an Iowa location on the Mississippi River that further enhances the ability of the Company’s Midwest network of facilities to collect and deliver feedstocks to DGD via water, rail or truck from a centralized location. In fiscal 2022, Darling acquired both Valley Proteins and FASA, each of which supply additional feedstocks to DGD. Darling has also stepped up collection efforts by providing indoor used cooking oil collection units in exchange for extended collection contracts at eating establishments and has moved to more of a centralized digital marketing effort with restaurant chains and franchise groups and invested in internet search engine key words to improve visibility with restaurants. The Company also includes DGD in marketing efforts to emphasize environmental sustainability that restaurants participate in when their used cooking oil is collected by Darling. From a production standpoint, Darling now isolates used cooking oil from other fats to preserve identification to qualify for a higher carbon intensity value. As a result, the Company includes its equity in net income of the DGD Joint Venture as operating income.

Financial Impact of Significant Debt Outstanding

The Company has a substantial amount of indebtedness, which could make it more difficult for the Company to satisfy its obligations to its financial lenders and its contractual and commercial commitments, limit the Company’s ability to obtain additional financing to fund future working capital, capital expenditures, acquisitions or other general corporate requirements on commercially reasonable terms or at all, require the Company to use a substantial portion of its cash flows from operations to pay principal and interest on its indebtedness instead of other purposes, thereby reducing the amount of the Company’s cash flows from operations available for working capital, capital expenditures, acquisitions and other general corporate purposes, increase the Company’s vulnerability to adverse economic, industry and business conditions, expose the Company to the risk of increased interest rates as certain of the Company’s borrowings are at variable rates of interest, limit the Company’s flexibility in planning for, or reacting to, changes in the Company’s business and the industry in which the Company operates, place the Company at a competitive disadvantage compared to other, less leveraged competitors, and/or increase the Company’s cost of borrowing.

Cash Flows and Liquidity Risks

Management believes that the Company’s cash flows from operating activities, unrestricted cash and funds available under the Amended Credit Agreement, will be sufficient to meet the Company’s working capital needs and maintenance and compliance-related capital expenditures, scheduled debt and interest payments, income tax obligations, and other contemplated needs through the next twelve months. Numerous factors could have adverse consequences to the Company that cannot be estimated at this time, such as negative impacts from the Russia-Ukraine war and the Israeli-Palestinian conflict and those other factors discussed below under the heading “Forward Looking Statements”. These factors, coupled with volatile prices for natural gas and diesel fuel, currency exchange fluctuations, general performance of the U.S. and global economies, disturbances in world financial, credit, commodities and stock markets, and any decline in consumer confidence, including the inability of consumers and companies to obtain credit due to lack of liquidity in the financial markets, among others, could negatively impact the Company’s results of operations in fiscal year 2024 and thereafter. The Company reviews the appropriate use of unrestricted cash periodically. As of the date of this report, no decision has been made as to non-ordinary course material cash usages; however, potential usages could include: opportunistic capital expenditures and/or acquisitions and joint ventures; investments relating to the Company’s renewable energy strategy, including, without limitation, potential required funding obligations with respect to the DGD Joint Venture SAF project or potential investments in additional renewable diesel or SAF projects; investments in response to governmental regulations relating to human and animal food safety or other regulations; unexpected funding required by the legislation, regulation or mass termination of multiemployer plans; and paying dividends or repurchasing stock, subject to limitations under the Amended Credit Agreement, the 6% Indenture, the 5.25% Indenture and the 3.625% Indenture, as well as suitable cash conservation to withstand adverse commodity cycles. The Company’s Board of Directors has approved a share repurchase program of up to an aggregate of $500.0 million of the Company’s Common Stock depending on market conditions. The repurchases may be made from time to time on the open market at prevailing market prices or in negotiated transactions off the market. The program runs through August 13, 2026, unless further extended or shortened by the Board of Directors. During the first nine months of fiscal 2024, $29.2 million of Common Stock was repurchased under the share repurchase program. As of September 28, 2024, the Company had approximately $500.0 million remaining in its share repurchase program.

Each of the factors described above has the potential to adversely impact the Company’s liquidity in a variety of ways, including through reduced raw materials availability, reduced finished product prices, reduced sales, potential inventory buildup, increased bad debt reserves, potential impairment charges and/or higher operating costs.

Sales prices for the principal products that the Company sells are typically influenced by sales prices for agricultural-based alternative ingredients, the prices of which are based on established commodity markets and are subject to volatile changes, and sales prices for the principal products that DGD sells are typically influenced by the demand and pricing of renewable diesel, which is dependent on governmental energy polices and programs and impacted by the value of RIN's and LCFS credits stemming from such governmental energy policies and programs. Any decline in these prices has the potential to adversely impact the Company’s liquidity. Any of a decline in raw material availability, a decline in agricultural-based alternative ingredients prices, increases in energy prices or the impact of U.S. and foreign regulation (including, without limitation, China), changes in foreign exchange rates, imposition of currency controls and currency devaluations has the potential to adversely impact the Company’s liquidity. A decline in commodities prices, adverse changes to governmental energy policies and programs, a rise in energy prices, a slowdown in the U.S. or international economy, high inflation rates or other factors could cause the Company to fail to meet management's expectations or could cause liquidity concerns.

OFF BALANCE SHEET ARRANGEMENTS AND CONTRACTUAL OBLIGATIONS

Based upon the underlying purchase agreements, the Company has commitments to purchase $316.3 million of commodity products consisting of approximately $143.5 million of finished products, approximately $145.7 million of natural gas and diesel fuel and approximately $27.1 million of other commitments during the next five years, which are not included in liabilities on the Company’s balance sheet at September 28, 2024. The Company intends to take physical delivery of the commodities under the forward purchase agreements and accordingly, these contracts are not subject to the requirements of fair value accounting because they qualify as normal purchases. The commitments will be recorded on the balance sheet of the Company when delivery of these commodities or products occurs and ownership passes to the Company during the remainder of fiscal 2024 through fiscal 2028, in accordance with accounting principles generally accepted in the United States.

The following table summarizes the Company’s other commercial commitments, including both on- and off-balance sheet arrangements that are part of the Company’s Amended Credit Agreement and other foreign and domestic bank guarantees that are not a part of the Company’s Amended Credit Agreement at September 28, 2024 (in thousands):


Other commercial commitments:
Standby letters of credit	$	659
Standby letters of credit (ancillary facility)	40,534
Foreign bank guarantees	11,796
Total other commercial commitments:	$	52,989

CRITICAL ACCOUNTING POLICIES

The Company follows certain significant accounting policies when preparing its consolidated financial statements. A complete summary of these policies is included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 30, 2023, filed with the SEC on February 28, 2024.

NEW ACCOUNTING PRONOUNCEMENTS

See Note 23, “New Accounting Pronouncements,” to the consolidated financial statements for a description of new accounting pronouncements.

FORWARD LOOKING STATEMENTS

This Quarterly Report on Form 10-Q includes “forward-looking” statements that are subject to risks and uncertainties that could cause actual results to differ materially from those expressed or implied in the statements. Statements that are not statements of historical facts are forward-looking statements and are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Words such as “estimate,” “guidance,” “outlook,” “project,” “planned,” “contemplate,” “potential,” “possible,” “proposed,” “intend,” “believe,” “anticipate,” “expect,” “may,” “will,” “would,” “should,” “could,” and similar expressions are intended to identify forward-looking statements. All statements other than statements of historical facts included in this report are forward looking statements, including, without limitation, the statements under the section entitled “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and located elsewhere herein regarding industry prospects, the Company’s financial position or the Company’s use of cash. Forward-looking statements are based on the Company’s current expectations and assumptions regarding its business, the economy and other future conditions. The Company cautions readers that any such forward-looking statements it makes are not guarantees of future performance and that actual results may differ materially from anticipated results or expectations expressed in its forward-looking statements as a result of a variety of factors, including many that are beyond the Company’s control.

In addition to those factors discussed elsewhere in this report and in the Company’s other public filings with the SEC, important factors that could cause actual results to differ materially from the Company’s expectations include: existing and unknown future limitations on the ability of the Company’s direct and indirect subsidiaries to make their cash flow available to the Company for payments on the Company’s indebtedness or other purposes; reduced demands or prices for biofuels, biogases or renewable electricity; global demands for grain and oilseed commodities, which have exhibited volatility, and can impact the cost of feed for cattle, hogs and poultry, thus affecting available rendering feedstock and selling prices for the Company’s products; reductions in raw material volumes available to the Company due to weak margins in the meat production industry as a result of higher feed costs, reduced consumer demand, reduced

volume due to government regulations affecting animal production or other factors, reduced volume from food service establishments, or otherwise; reduced demand for animal feed; reduced finished product prices, including a decline in fat, used cooking oil, protein or collagen (including, without limitation, collagen peptides and gelatin) finished product prices; changes to government policies around the world relating to renewable fuels and GHG emissions that adversely affect prices, margins or markets (including for the DGD Joint Venture), including programs like renewable fuel standards, low carbon fuel standards, renewable fuel mandates and tax credits for biofuels or loss or diminishment of tax credits due to failure to satisfy any eligibility requirements, including, without limitation, in relation to the blenders tax credit or CFPC; climate related adverse results, including with respect to the Company’s climate goals, targets or commitments; possible product recall resulting from developments relating to the discovery of unauthorized adulterations to food or food additives or products which do not meet specifications, contract requirements or regulatory standards; the occurrence of 2009 H1N1 flu (initially known as Swine Flu), highly pathogenic strains of avian influenza (collectively known as Bird Flu), SARS, BSE, PED or other diseases associated with animal origin in the U.S. or elsewhere, such as the outbreak of ASF in China and elsewhere; the occurrence of pandemics, epidemics or disease outbreaks, such as the COVID-19 outbreak; unanticipated costs and/or reductions in raw material volumes related to the Company’s compliance with the existing or unforeseen new U.S. or foreign (including, without limitation, China) regulations (including new or modified animal feed, Bird Flu, SARS, PED, BSE or ASF or similar or unanticipated regulations) affecting the industries in which the Company operates or its value added products; risks associated with the DGD Joint Venture, including possible unanticipated operating disruptions, a decline in margins on the products produced by the DGD Joint Venture and issues relating to the announced SAF upgrade project (including, without limitation, operational, mechanical, product quality, market based or other such issues); risks and uncertainties relating to international sales and operations, including imposition of tariffs, quotas, trade barriers and other trade protections by foreign countries; tax changes, such as global minimum tax measures, or issues related to administration, guidance and/or regulations associated with biofuel policies, including CFPC; difficulties or a significant disruption (including, without limitation, due to cyber-attack) in the Company’s information systems, networks or the confidentiality, availability or integrity of our data or failure to implement new systems and software successfully; risks relating to possible third-party claims of intellectual property infringement; increased contributions to the Company’s pension and benefit plans, including multiemployer and employer-sponsored defined benefit pension plans as required by legislation, regulation or other applicable U.S. or foreign law or resulting from a U.S. mass withdrawal event; bad debt write-offs; loss of or failure to obtain necessary permits and registrations; continued or escalated conflict in the Middle East, North Korea, Ukraine or elsewhere, including the Russia-Ukraine war and the Israeli-Palestinian conflict and other associated or emerging conflicts in the Middle East; uncertainty regarding the exit of the U.K. from the European Union; uncertainty regarding any administration changes in the U.S. or elsewhere around the world, including, without limitation, impacts to trade, tariffs and/or policies impacting the Company (such as biofuel policies and mandates); and/or unfavorable export or import markets. These factors, coupled with volatile prices for natural gas and diesel fuel, inflation rates, climate conditions, currency exchange fluctuations, general performance of the U.S. and global economies, disturbances in world financial, credit, commodities and stock markets, and any decline in consumer confidence and discretionary spending, including the inability of consumers and companies to obtain credit due to lack of liquidity in the financial markets, among others, could cause actual results to vary materially from the forward-looking statements included in this report or negatively impact the Company’s results of operations. Among other things, future profitability may be affected by the Company’s ability to grow its business, which faces competition from companies that may have substantially greater resources than the Company. The Company’s announced share repurchase program may be suspended or discontinued at any time and purchases of shares under the program are subject to market conditions and other factors, which are likely to change from time to time. The Company cautions readers that all forward-looking statements speak only as of the date made, and the Company undertakes no obligation to update any forward-looking statements, whether as a result of changes in circumstances, new events or otherwise.

Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISKS

Market risks affecting the Company include exposures to changes in prices of the finished products the Company sells, interest rates on debt, availability of raw material supplies and the price of natural gas and diesel fuel used in the Company’s plants. Raw materials available to the Company are impacted by seasonal factors, including holidays, when raw material volume declines; warm weather, which can adversely affect the quality of raw material processed and finished products produced; and cold weather, which can impact the collection of raw material. Predominantly all of the Company’s finished products are commodities that are generally sold at prices prevailing at the time of sale. Additionally, with the acquisition of foreign entities we are exposed to foreign currency exchange risks, imposition of currency controls and the possibility of currency devaluation.

The Company makes limited use of derivative instruments to manage cash flow risks related to interest rates, natural gas usage, diesel fuel usage, inventory, forecasted sales and foreign currency exchange rates. The Company does not use derivative instruments for trading purposes. Interest rate swaps are entered into with the intent of managing overall

borrowing costs by reducing the potential impact of increases in interest rates on floating-rate long-term debt. Natural gas swaps and options are entered into with the intent of managing the overall cost of natural gas usage by reducing the potential impact of seasonal weather demands on natural gas that increases natural gas prices. Heating oil swaps and options are entered into with the intent of managing the overall cost of diesel fuel usage by reducing the potential impact of seasonal weather demands on diesel fuel that increases diesel fuel prices. Soybean meal forwards and options are entered into with the intent of managing the impact of changing prices for poultry meal sales. Corn options and future contracts are entered into with the intent of managing U.S. forecasted sales of BBP by reducing the impact of changing prices. Foreign currency forward contracts are entered into to mitigate the foreign exchange rate risk for transactions designated in a currency other than the local functional currency. The Company intends to take physical delivery of the commodities under certain of the Company’s natural gas and diesel fuel instruments and accordingly, these contracts are not subject to the requirements of fair value accounting because they qualify as normal purchases. At September 28, 2024, the Company had corn option and forward contracts, foreign exchange forward contracts and interest rate swaps outstanding that qualified and were designated for hedge accounting as well as corn option and forward contracts and foreign currency forward contracts that did not qualify and were not designated for hedge accounting.

In the first and second quarters of fiscal 2023, the Company entered into interest rate swaps that are designated as cash flow hedges. The notional amount of these swaps totaled $900.0 million. Under the contracts, the Company is obligated to pay a weighted average rate of 4.007% while receiving the 1-Month SOFR rate, which excludes margin. Under the terms of the interest rate swaps, the Company hedged a portion of its variable rate debt into the first quarter of 2026. At September 28, 2024 and December 30, 2023, the aggregate fair value of these interest rate swaps was approximately $3.4 million and $3.7 million, respectively. These amounts are included in other current assets, accrued expenses and noncurrent liabilities on the balance sheet, with an offset recorded in accumulated other comprehensive loss.

In the first quarter of fiscal 2023, the Company also entered into cross currency swaps that are designated as cash flow hedges. The notional amount of these swaps was €519.2 million. Under the contracts, the Company is obligated to pay a 4.6% fixed rate while receiving a weighted average fixed rate of 5.799%. Under the terms of the cross currency swaps, the Company hedged its intercompany notes receivable into the first quarter of 2025. Accordingly, changes in the fair value of the cash flow hedge are initially recorded as gains and/or losses as a component of accumulated other comprehensive loss. We immediately reclassify from accumulated other comprehensive loss to earnings an amount to offset the remeasurement recognized in earnings associated with the respective intercompany loan. Additionally, we reclassify amounts from accumulated other comprehensive income (loss) associated with the interest rate differential between the U.S. dollar and a Euro denominated intercompany loan to interest income. At September 28, 2024 and December 30, 2023, the aggregate fair value of these cross currency swaps was approximately $15.5 million and $10.8 million, respectively. These amounts are included in other current assets, accrued expenses and noncurrent liabilities on the balance sheet, with an offset recorded in accumulated other comprehensive loss.

In the second and third quarters of fiscal 2024, the Company entered into corn option and forward contracts on the Chicago Board of Trade that are designated as cash flow hedges. Under the terms of the corn option contracts, the Company hedged a portion of its U.S. forecasted sales of BBP into the second quarter of fiscal 2025. At September 28, 2024 and December 30, 2023, the aggregate fair value of these corn option contracts was approximately $0.7 million and zero, respectively. The amounts are included in other current assets and accrued expenses on the balance sheet, with an offset recorded in accumulated other comprehensive loss.

In fiscal 2023 and fiscal 2024, the Company entered into foreign exchange forward contracts that are considered cash flow hedges. Under the terms of the foreign exchange contracts, the Company hedged a portion of its forecasted sales in currencies other than the functional currency through the fourth quarter of fiscal 2025. As of September 28, 2024 and December 30, 2023, the aggregate fair value of these foreign exchange contracts was approximately $6.9 million and $15.9 million, respectively. As of September 28, 2024, approximately $3.6 million is included in other current assets, approximately $0.4 million is included in noncurrent assets, approximately $8.8 million is included in accrued expenses and approximately $2.1 million is included in other non-current liabilities on the balance sheet, with an offset recorded in accumulated other comprehensive loss. As of December 30, 2023, approximately $15.9 million is included in other current assets on the balance sheet, with an offset recorded in accumulated other comprehensive loss.

The Company may enter into soybean meal forward contracts and heating oil swap and option contracts from time to time. There were not any open designated soybean meal forward or heating oil swap and option contracts by the Company at September 28, 2024 and December 30, 2023, respectively.

As of September 28, 2024, the Company had the following outstanding forward contract amounts that were entered into to hedge foreign currency transactions in currencies other than the functional currency and forecasted transactions in currencies other than the functional currency (in thousands):


Functional Currency		Contract Currency		Range of	U.S.
Type	Amount	Type	Amount	Hedge rates	Equivalent
Brazilian real	505,977	Euro	81,943	5.54 - 6.81	$	92,968
Brazilian real	2,062,326	U.S. dollar	371,815	5.05 - 6.14	371,815

Euro	58,012	U.S. dollar	64,621	1.09 - 1.12	64,621
Euro	71,038	Polish zloty	303,946	4.27 - 4.28	79,265
Euro	10,979	Japanese yen	1,757,858	158.52 - 165.87	12,251
Euro	29,648	Chinese renminbi	231,820	7.79 - 7.88	33,082
Euro	17,912	Australian dollar	29,450	1.63 - 1.65	19,986
Euro	4,446	British pound	3,721	0.84	4,961



Polish zloty	60,733	Euro	14,187	4.27 - 4.28	15,848
British pound	136	Euro	163	0.84	182
British pound	275	U.S. dollar	367	1.33	367
Japanese yen	106,948	U.S. dollar	743	143.09 - 155.07	743
U.S. dollar	94	Japanese yen	13,476	143.17	94
U.S. dollar	562,340	Euro	519,182	1.08	562,340

Australian dollar	179	Euro	110	1.63	124


					$	1,258,647

The above foreign currency contracts that are not designated as hedges had an aggregate fair value of approximately $0.9 million and are included in other current assets and accrued expenses at September 28, 2024.

Additionally, the Company had corn forward contracts that are marked to market because they did not qualify for hedge accounting at September 28, 2024. These contracts have an aggregate fair value of approximately $1.3 million and are included in other current assets and accrued expenses at September 28, 2024.

As of September 28, 2024, the Company had forward purchase agreements in place for purchases of approximately $145.7 million of natural gas and diesel fuel and approximately $27.1 million of other commitments during the next five years. As of September 28, 2024, the Company had forward purchase agreements in place for purchases of approximately $143.5 million of finished product during the next five years.

Foreign Exchange

The Company has significant international operations and is subject to certain opportunities and risks, including currency fluctuations. As a result, the Company is affected by changes in foreign currency exchange rates, particularly with respect to the euro, Brazilian real, Canadian dollar, Australian dollar, Chinese renminbi, British pound, Polish zloty, and Japanese yen.

Item 4. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures. As required by Rule 13a-15(b) of the Securities and Exchange Act of 1934, as amended (the “Exchange Act”), the Company’s management, including the Chief Executive Officer and Chief Financial Officer, conducted an evaluation, as of the end of the period covered by this report, of the effectiveness of the design and operation of the Company’s disclosure controls and procedures. As defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act, disclosure controls and procedures are controls and other procedures of the Company that are designed to ensure that information required to be disclosed by the Company in the reports it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC's rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by the Company in the reports it files or submits under the Exchange Act is accumulated and communicated to the Company’s management, including the Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure. There are inherent limitations to the

effectiveness of any system of disclosure controls and procedures, including the possibility of human error and circumvention or overriding of the controls and procedures. Accordingly, even effective disclosure controls and procedures can only provide reasonable assurance of achieving their control objectives.

Based on management’s evaluation, the Chief Executive Officer and Chief Financial Officer concluded that the Company’s disclosure controls and procedures were effective as of the end of the period covered by this report.

Changes in Internal Control over Financial Reporting. As required by Exchange Act Rule 13a-15(d), the Company’s management, including the Chief Executive Officer and Chief Financial Officer, also conducted an evaluation of the Company’s internal control over financial reporting to determine whether any change occurred during the quarter covered by this report that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting. Based on that evaluation, there has been no change in the Company’s internal control over financial reporting during the last fiscal quarter of the period covered by this report that has materially affected, or is reasonably likely to materially affect the Company’s internal control over financial reporting other than internal controls being implemented at Gelnex and Miropasz.

During the first quarter of 2024, the Company acquired Miropasz. The Company is currently in the process of integrating this acquisition pursuant to the Sarbanes-Oxley Act of 2002. The Company is evaluating changes to processes, information technology systems and other components of internal controls over financial reporting as part of the ongoing integration activities, and as a result, certain controls will be periodically changed. The Company believes, however, it will be able to maintain sufficient controls over the substantive results of its financial reporting throughout the integration process. The Miropasz Acquisition will be excluded from management's assessment of the Company’s internal control over financial reporting for fiscal 2024, as permitted under SEC regulations.

DARLING INGREDIENTS INC. AND SUBSIDIARIES

FORM 10-Q FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 28, 2024

PART II: Other Information

Item 1. LEGAL PROCEEDINGS

The information required by this Item 1 is contained within Note 18 (Contingencies) on pages 28 through 29 of this Form 10-Q and is incorporated herein by reference.

Item 1A. RISK FACTORS

In addition to the other information set forth in this report, you should carefully consider the factors described in Part I, “Item 1A. Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended December 30, 2023, which could materially affect our business, financial condition or future results. The risks described in this report and in our Annual Report on Form 10-K are not the only risks we face. Additional risks and uncertainties that are not currently known or that are currently deemed to be immaterial may also materially and adversely affect our business operations and financial condition or the market price of our common stock.

Item 5. OTHER INFORMATION

Rule 10b5-1 Plan Adoptions and Modifications

Item 6. EXHIBITS

The following exhibits are filed herewith:


			31.1			Certification pursuant to Rule 13a-14(a) or Rule 15d-14(a) of the Securities Exchange Act of 1934, of Randall C. Stuewe, the Chief Executive Officer of the Company.
			31.2			Certification pursuant to Rule 13a-14(a) or Rule 15d-14(a) of the Securities Exchange Act of 1934, of Brad Phillips, the Chief Financial Officer of the Company.
			32			Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, of Randall C. Stuewe, the Chief Executive Officer of the Company, and of Brad Phillips, the Chief Financial Officer of the Company.
			101			Interactive Data Files Pursuant to Rule 405 of Regulation S-T: (i) Consolidated Balance Sheets as of September 28, 2024 and December 30, 2023; (ii) Consolidated Statements of Operations for the three and nine months ended September 28, 2024 and September 30, 2023; (iii) Consolidated Statements of Comprehensive Income/(Loss) for the three and nine months ended September 28, 2024 and September 30, 2023; (iv) Consolidated Statements of Stockholders' Equity for the nine months ended September 28, 2024 and September 30, 2023; (v) Consolidated Statements of Cash Flows for the nine months ended September 28, 2024 and September 30, 2023 and (vi) Notes to the Consolidated Financial Statements.
			104			Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101).

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


		DARLING INGREDIENTS INC.


Date:	November 6, 2024	By:	/s/ Brad Phillips
			Brad Phillips
			Chief Financial Officer
			(Principal Financial Officer and Duly Authorized Officer)

DARLING INGREDIENTS INC. - Quarter Report: 2024 September (Form 10-Q)

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