Darling Ingredients Inc. Statement on 2023 Guidance and 2024 Outlook
Darling Ingredients Inc. (NYSE: DAR) today released the following statement regarding 2023 guidance and 2024 outlook.
Volumes in our 50/50 joint venture known as Diamond Green Diesel (DGD), were lower in the quarter due to a regularly scheduled turnaround and a minor fire disruption at DGD 2 in St. Charles, La., which resulted in the unit being offline for 37 days. We have seen extreme volatility in the heating oil market, which resulted in a sizeable hedge loss. Additionally, a sell off in D4 RINs coupled with stagnant LCFS prices, produced lower than anticipated margins at DGD. However, DGD performance annualized year-to-date is approximately $1.00 EBITDA per gallon.
Darling Ingredients' core business has delivered as communicated during the Q2 earnings call, slightly lower than Q2 and seasonally normal for Q3. Our global business remains strong. Volumes were similar to Q2 and fat prices improved late in the quarter. Gross margins are solid and reflect the resiliency of our model and the progress we are making on acquisition integration.
For Q4, we anticipate the core ingredients business to improve compared to Q3 and DGD volumes to be much stronger as compared to Q3. DGD faced some strong headwinds in Q3; however, based on spot margins and if market conditions hold (heating oil prices, RINs and LCFS), we anticipate DGD margins in Q4 to improve compared to Q3.
Given current market conditions, we expect the company's combined adjusted EBITDA for fiscal year 2023 to be between $1.6 to $1.7 billion.
We carry good momentum into 2024 and anticipate improved earnings power in our core business and DGD, with significantly improved cash flow allowing us to achieve our target leverage ratio of 2.5X by year-end 2024.
About Darling Ingredients
Darling Ingredients Inc. (NYSE: DAR) is the largest publicly traded company turning edible by-products and food waste into sustainable products and a leading producer of renewable energy. Recognized as a sustainability leader, the company operates more than 260 facilities in over 15 countries and repurposes approximately 15% of the world's meat industry waste streams into value-added products, such as green energy, renewable diesel, collagen, fertilizer, animal proteins and meals, and pet food ingredients. To learn more, visit darlingii.com. Follow us on LinkedIn.
Darling Ingredients Contacts
Investors:
Suann Guthrie
VP, Investor Relations, Sustainability & Communications
(469) 214-8202;suann.guthrie@darlingii.com
Media:
Jillian Fleming
Director, Global Communications
(972) 541-7115;jillian.fleming@darlingii.com