Darling Ingredients Inc.

DAR

US2372661015

Food Processing

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01:19pm	Earnings Flash (DAR) DARLING INGREDIENTS Posts Q1 Revenue $1.42B, vs. Street Est of $1.48B	MT
12:35pm	Darling Ingredients Inc. Reports Earnings Results for the First Quarter Ended March 30, 2024	CI

DARLING INGREDIENTS : MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (form 10-Q)

November 03, 2020 at 04:34 pm EST

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,"
in Item 1A of this report under the heading "Risk Factors" 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 28, 2019, filed
with the SEC on February 25, 2020 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 fuel ingredients, 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 and Europe 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 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 and North 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 biodiesel and renewable diesel, 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
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Statements for the period ended September 26, 2020 included herein, (ii) 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, (iii) the conversion of organic sludge and food
waste into biogas in Europe, (iv) the processing of manure into natural
bio-phosphate in Europe, and (v) the conversion of animal fats and recycled
greases into biodiesel in North America.

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

Observations on the Effects of COVID-19



In December 2019, a novel coronavirus disease ("COVID-19") was reported and in
January 2020, the World Health Organization ("WHO") declared it a Public Health
Emergency of International Concern. On February 28, 2020, the WHO raised its
assessment of the COVID-19 threat from high to very high at a global level due
to the continued increase in the number of cases and affected countries, and on
March 11, 2020, the WHO characterized COVID-19 as a pandemic. Additionally,
various federal, state and local government-imposed movement restrictions and
initiatives have been implemented to reduce the global transmission of COVID-19,
including reduced or eliminated food services, the promotion of social
distancing and the adoption of remote working policies.

To date, these restrictions have not had a material impact on the Company's
operations, as the Company operates in industries that are deemed "critical" and
"essential" under the rules imposing these restrictions. In addition, the
Company has implemented operational guidelines throughout the Company's
organization consistent with the applicable governmental and regulatory policies
in the geographies the Company operates intended to protect the Company's
employees and prevent the spread of the virus in the Company's workplace, and to
date, all of the Company's facilities are operational. The Company believes the
severity and duration of the COVID-19 pandemic is uncertain and such uncertainty
will likely continue throughout the remainder of the Company's fiscal year.
Among the items that could have a significant impact on the Company's future
results is a reduction in the Company's raw material supply due to disruptions
in the operations of the Company's third-party suppliers. Accordingly, while to
date the Company has experienced no material negative effects on the Company's
business and results of operations as a result of the current COVID-19 outbreak,
the situation remains dynamic and subject to rapid and possibly material change,
including but not limited to changes that may materially affect the operations
of the Company's supply chain partners and finished product customers, which
ultimately could result in material negative effects on the Company's business
and results of operations. The Company's raw material supplies are globally
diverse. During the second quarter, the Company experienced various disruptions
in raw material supplies and sales of its specialty collagens and gelatins, both
of which returned to more normalized levels during the third quarter. However,
it is possible that COVID-19 might cause similar disruptions to the Company's
business and operations in the future.

DGD has also implemented operational guidelines in its organization, and to
date, COVID-19 has not had a material impact on DGD's operations. We expect that
biofuel regulations and mandates will continue supporting renewable diesel
demand; however, a prolonged or significant decline in overall fuel demand could
negatively impact the sales and profitability of DGD's business.

The extent to which COVID-19 impacts the Company's and DGD's results will depend
on future developments, which are highly uncertain and cannot be predicted,
including new information which may emerge concerning the severity of COVID-19
and the actions to contain the virus or treat its impact, among others. For
additional information regarding the risks associated with COVID-19, see the
important information in Item 1A. Risk Factors below, under the caption
"Pandemics, epidemics or disease outbreaks, such as the novel coronavirus
("COVID-19"), may disrupt our business, including, among other things, our
supply chain and production processes, each of which could materially affect our
operations, liquidity, financial condition and results of operations."

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), 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 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
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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 28, 2019.

  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,
biodiesel, 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, natural gas
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, Japanese yen 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.

In 2019, the Company continued to evaluate operational developments and the
impact of anticipated significant expansion of the DGD Joint Venture. This
evaluation was impactful to the consideration of how the Company most
appropriately reflects its share of equity income from the DGD Joint Venture.
Based on the Company's analysis, it was determined that the DGD Joint Venture
has evolved into an integral and integrated part of the Company's ongoing
operations. The Company determined this justifies a more meaningful and
transparent presentation of equity in net income of the DGD Joint Venture as a
component of the Company's operating income.

Results of Operations

Three Months Ended September 26, 2020 Compared to Three Months Ended September 28, 2019

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
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•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, 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. revenue
performance against business plan benchmarks. In Europe, 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
2020, 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 2020, compared to average Jacobsen and Reuters prices
for the third quarter of fiscal 2019 are as follows:

                                              Avg. Price             Avg. Price
                                             3rd Quarter             3rd Quarter                                                   %
                                                 2020                   2019               Increase/(Decrease)            Increase/(Decrease)
Jacobsen:
MBM (Illinois)                               $ 212.91/ton           $ 216.29/ton               $ (3.38)/ton                                 (1.6) %
Feed Grade PM (Mid-South)                    $ 226.07/ton           $ 234.60/ton               $ (8.53)/ton                                 (3.6) %
Pet Food PM (Mid-South)                      $ 581.80/ton           $ 411.77/ton               $ 170.03/ton                                 41.3  %
Feather meal (Mid-South)                     $ 267.91/ton           $ 333.43/ton              $ (65.52)/ton                                (19.7) %
BFT (Chicago)                                $ 29.04/cwt            $   30.50/cwt              $ (1.46)/cwt                                 (4.8) %
YG (Illinois)                                $ 19.48/cwt            $  24.53/cwt               $ (5.05)/cwt                                (20.6) %
Corn (Illinois)                             $ 3.55/bushel           $ 4.16/bushel             $(0.61)/bushel                               (14.7) %
Reuters:
Palm Oil (CIF Rotterdam)                     $ 690.00/MT             $ 533.00/MT               $ 157.00/MT                                  29.5  %
Soy meal (CIF Rotterdam)                     $ 379.00/MT             $ 339.00/MT                $ 40.00/MT                                  11.8  %



The following table shows the average Jacobsen and Reuters prices for the third
quarter of fiscal 2020, compared to average Jacobsen and Reuters prices for the
second quarter of fiscal 2020.
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                                              Avg. Price             Avg. Price
                                             3rd Quarter             2nd Quarter                                                   %
                                                 2020                   2020               Increase/(Decrease)            Increase/(Decrease)
Jacobsen:
MBM (Illinois)                               $ 212.91/ton           $ 290.42/ton              $ (77.51)/ton                                (26.7) %
Feed Grade PM (Mid-South)                    $ 226.07/ton           $ 269.07/ton              $ (43.00)/ton                                (16.0) %
Pet Food PM (Mid-South)                      $ 581.80/ton           $ 679.08/ton              $ (97.28)/ton                                (14.3) %
Feather meal (Mid-South)                     $ 267.91/ton           $ 300.90/ton              $ (32.99)/ton                                (11.0) %
BFT (Chicago)                                $ 29.04/cwt            $   29.95/cwt             $   (0.91)/cwt                                (3.0) %
YG (Illinois)                                $ 19.48/cwt            $  20.18/cwt              $  (0.70)/cwt                                 (3.5) %
Corn (Illinois)                             $ 3.55/bushel           $ 3.26/bushel             $ 0.29/bushel                                  8.9  %
Reuters:
Palm Oil (CIF Rotterdam)                     $ 690.00/MT             $ 562.00/MT               $ 128.00/MT                                  22.8  %
Soy meal (CIF Rotterdam)                     $ 379.00/MT             $ 352.00/MT                $ 27.00/MT                                   7.7  %



Segment Results

Segment operating income for the three months ended September 26, 2020 was $127.5 million, which reflects an increase of $67.6 million or 112.9% as compared to the three months ended September 28, 2019.

(in thousands, except percentages) Feed Ingredients Food Ingredients Fuel Ingredients Corporate Total Three Months Ended September 26, 2020 Net Sales

$       483,025    $

291,842 $ 75,702 $ - $ 850,569 Cost of sales and operating expenses

              361,576            226,745             50,047             -       638,368
Gross Margin                                      121,449             65,097             25,655             -       212,201

Gross Margin %                                       25.1  %            22.3  %            33.9  %          -  %       24.9  %

Loss/(gain) on sale of assets                         167                 16                (61)            -           122
Selling, general and administrative
expenses                                           49,028             23,366              5,038        12,561        89,993

Depreciation and amortization                      53,764             20,648              8,633         2,685        85,730
Equity in net income of Diamond Green
Diesel                                                  -                  -             91,099             -        91,099
Segment operating income/(loss)                    18,490             21,067            103,144       (15,246)      127,455

Equity in net income of other
unconsolidated subsidiaries                           906                  -                  -             -           906
Segment income/(loss)                              19,396             21,067            103,144       (15,246)      128,361

(in thousands, except percentages) Feed Ingredients Food Ingredients Fuel Ingredients Corporate Total Three Months Ended September 28, 2019 Net Sales

$       496,978    $

276,467 $ 68,604 $ - $ 842,049 Cost of sales and operating expenses

              379,792            214,643             58,488             -       652,923
Gross Margin                                      117,186             61,824             10,116             -       189,126

Gross Margin %                                       23.6  %            22.4  %            14.7  %          -  %       22.5  %

Loss/(gain) on sale of assets                      (2,429)              (253)                13             -        (2,669)
Selling, general and administrative
expenses                                           47,319             22,811                912        12,507        83,549

Depreciation and amortization                      50,182             19,743              7,895         2,587        80,407
Equity in net income of Diamond Green
Diesel                                                  -                  -             32,020             -        32,020
Segment operating income/(loss)                    22,114             19,523             33,316       (15,094)       59,859

Equity in net loss of other
unconsolidated subsidiaries                          (665)                 -                  -             -          (665)
Segment income/(loss)                              21,449             19,523             33,316       (15,094)       59,194


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Feed Ingredients Segment



Raw material volume. Overall, in the three months ended September 26, 2020, the
raw material processed by the Company's Feed Ingredients segment totaled 2.18
million metric tons, a decrease of approximately 0.2% as compared to the three
months ended September 28, 2019.

Sales. During the three months ended September 26, 2020, net sales for the Feed
Ingredients segment were $483.0 million as compared to $497.0 million during the
three months ended September 28, 2019, a decrease of approximately $14.0 million
or (2.8)%. Net sales for fats were approximately $153.5 million and $150.0
million for the three months ended September 26, 2020 and September 28, 2019,
respectively. Protein net sales were approximately $190.7 million and $196.9
million for the three months ended September 26, 2020 and September 28, 2019,
respectively. Other rendering net sales, which include hides, pet food and
service charges, were approximately $39.0 million and $40.4 million for the
three months ended September 26, 2020 and September 28, 2019, respectively.
Total rendering net sales were approximately $383.2 million and $387.3 million
for the three months ended September 26, 2020 and September 28, 2019,
respectively. Used cooking oil net sales were approximately $45.7 million and
$45.9 million for the three months ended September 26, 2020 and September 28,
2019, respectively. Bakery net sales were approximately $44.4 million and $51.6
million for the three months ended September 26, 2020 and September 28, 2019,
respectively, and other sales, which includes trap services, net sales were
approximately $9.7 million and $12.2 million for the three months ended
September 26, 2020 and September 28, 2019, respectively.

The decrease in net sales for the Feed Ingredients segment was primarily due to the following (in millions of dollars):


                                                                                                  Used Cooking
                                      Fats     Proteins     Other Rendering

Total Rendering Oil Bakery Other Total Net sales three months ended September 28, 2019

$ 150.0    $  196.9    $           40.4

$ 387.3 $ 45.9 $ 51.6 $ 12.2 $ 497.0 Increase/(decrease) in sales volumes

                                6.6        (8.1)                  -                (1.5)        (3.8)      (0.3)         -       (5.6)
Increase/(decrease) in finished
product prices                        (4.1)       (0.6)                  -                (4.7)         3.6       (6.9)         -       (8.0)
Increase due to currency exchange
rates                                  1.0         2.5                 0.8                 4.3            -          -          -        4.3
Other change                             -           -                (2.2)               (2.2)           -          -       (2.5)      (4.7)
Total change                           3.5        (6.2)               (1.4)               (4.1)        (0.2)      (7.2)      (2.5)     (14.0)
Net sales three months ended
September 26, 2020                 $ 153.5    $  190.7    $           39.0    $          383.2    $    45.7    $  44.4    $   9.7    $ 483.0



Margins. In the Feed Ingredients segment for the three months ended September
26, 2020, the gross margin percentage increased to 25.1% as compared to 23.6%
for the comparable period of fiscal 2019. The increase is primarily due to lower
raw material costs that more than offset lower finished product prices as
compared to fiscal 2019.

Segment operating income. Feed Ingredients operating income for the three months
ended September 26, 2020 was $18.5 million, a decrease of $3.6 million or
(16.3)% as compared to the three months ended September 28, 2019. The decrease
is due to higher selling, general and administrative costs, an increase in
losses on sales of assets in the current period, and higher depreciation that
more than offset positive margins from lower raw material costs as compared to
the same period in fiscal 2019.

Food Ingredients Segment



Raw material volume. Overall, for the three months ended September 26, 2020, the
raw material processed by the Company's Food Ingredients segment totaled 264,000
metric tons, an increase of approximately 1.7% as compared to the three months
ended September 28, 2019.

Sales. Overall sales increased in the Food Ingredients segment primarily due to higher sales volumes in the collagen markets and higher edible fat prices.



Margins. In the Food Ingredients segment for the three months ended September
26, 2020, the gross margin percentage decreased to 22.3% as compared to 22.4%
during the comparable period of fiscal 2019.

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Segment operating income. Food Ingredients operating income was $21.1 million
for the three months ended September 26, 2020, an increase of $1.6 million or
8.2% as compared to the three months ended September 28, 2019. The increase is
primarily due to higher sales volumes in North America and South American
collagen markets and higher fat prices in the edible fat market that more than
offset the impact of a weaker Brazilian real and lower volumes in European and
China markets as a result of the COVID-19 outbreak.

Fuel Ingredients Segment



Raw material volume. Overall, in the three months ended September 26, 2020, the
raw material processed by the Company's Fuel Ingredients segment totaled 324,000
metric tons, an increase of approximately 5.0%, as compared to the three months
ended September 28, 2019.

Sales. Overall sales increased in the Fuel Ingredients segment primarily due to higher sales volumes in Europe.



Margins. In the Fuel Ingredients segment (exclusive of the equity contribution
from the DGD Joint Venture) for the three months ended September 26, 2020, the
gross margin percentage increased to 33.9% as compared to 14.7% for the
comparable period of fiscal 2019. The increase is primarily related to improved
demand in Europe in fiscal 2020 as compared to fiscal 2019.

Segment operating income. The Company's Fuel Ingredients segment operating
income (inclusive of the equity contribution from the DGD Joint Venture) for the
three months ended September 26, 2020 was $103.1 million, an increase of $69.8
million or 209.6% as compared to the same period in fiscal 2019. The increase is
primarily due to increased current year net income at the DGD Joint Venture from
the inclusion of blenders tax credits as compared to no blenders tax credits in
the prior year and increased margins that more than offset recent declines in
the Company's North American biodiesel operations.

Foreign Currency Exchange



  During the third quarter of fiscal 2020, the euro strengthened and the
Canadian dollar weakened against the U.S. dollar as compared to the same period
in fiscal 2019. Using actual results for the three months ended September 26,
2020 and using the prior year's average currency rate for the three months ended
September 28, 2019, foreign currency translation would result in a decrease in
operating income of approximately $3.7 million. The average rates assumptions
used in this calculation were the actual fiscal average rates for the three
months ended September 26, 2020 of €1.00:USD$1.17 and CAD$1.00:USD$0.75 as
compared to the average rates for the three months ended September 28, 2019 of
€1.00:USD$1.11 and CAD$1.00:USD$0.76, respectively.

Corporate Activities



Selling, General and Administrative Expenses. Selling, general and
administrative expenses were $12.6 million during the three months ended
September 26, 2020, compared to $12.5 million during the three months ended
September 28, 2019, an increase of $0.1 million.  The increase is primarily due
to higher corporate related benefits and insurance costs that more than offset a
decrease in travel related costs, legal costs and other overall costs.

Depreciation and Amortization. Depreciation and amortization charges increased
slightly by $0.1 million to $2.7 million during the three months ended September
26, 2020, as compared to $2.6 million during the three months ended September
28, 2019. The increase is related to increased leasehold improvements at the
corporate office.

Interest Expense. Interest expense was $18.8 million during the three months
ended September 26, 2020, compared to $19.4 million during the three months
ended September 28, 2019, a decrease of $0.6 million. The decrease is primarily
due to lower interest from the Term loan A and Term loan B as a result of the
Term loan A being paid off in 2019 and lower interest rates on the Term loan B
that more than offset an increase in deferred loan cost expense as a result of a
partial pay-down on the Term loan B and the amendment of the Company's Amended
Credit Agreement.

Foreign Currency Gain/(Loss).  Foreign currency losses were $1.2 million for the
three months ended September 26, 2020 as compared to foreign currency gains of
$0.5 million for the three months ended September 28, 2019. The loss in foreign
currency is due primarily to an increase in losses on the revaluation of
non-functional currency assets and liabilities as compared to the same period in
fiscal 2019.

Other Expense, net. Other expense was $1.9 million in the three months ended September 26, 2020, compared to other expense of $2.6 million for the three months ended September 28, 2019. The decrease in other expense was


                                       49
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primarily due to a decrease in the non-service component of pension expense as compared to the same period in fiscal 2019.



Equity in Net Income/(Loss) in Investment of Other Unconsolidated Subsidiaries.
This represents the Company's pro rata share of the net income/(loss) from
foreign unconsolidated subsidiaries.
Income Taxes. The Company recorded income tax expense of $4.8 million for the
three months ended September 26, 2020, compared to $10.9 million of income tax
expense recorded in the three months ended September 28, 2019, a decrease of
$6.1 million. The effective tax rate for the three months ended September 26,
2020 was 4.5%. The effective tax rate for the three months ended September 26,
2020 differed from the statutory rate of 21% due to the relative mix of earnings
among jurisdictions with different tax rates (including foreign withholding
taxes and state income taxes), biofuel tax incentives, compensation related
expenses not deductible for tax purposes and discrete items, including the
recognition of a previously unrecognized tax benefit and the favorable impact of
the GILTI HTE income tax regulations. The effective tax rate for the three
months ended September 28, 2019 was 28.8%. The effective tax rate for the three
months ended September 28, 2019 differed from the statutory rate of 21% due to
the relative mix of earnings among jurisdictions with different tax rates
(including foreign withholding taxes and state income taxes) and compensation
related expenses not deductible for tax purposes. The Company's effective tax
rate excluding discrete items is 13.2% for the three months ended September 26,
2020, compared to 30.1% for the three months ended September 28, 2019.

Non-U.S. GAAP Measures



Adjusted EBITDA is not a recognized accounting measurement under GAAP; it should
not be considered as an alternative to net income, as a measure of operating
results, or as an alternative to cash flow as a measure of liquidity. It is
presented here not as an alternative to net income, but rather as a measure of
the Company's operating performance. Since EBITDA (generally, net income plus
interest expense, taxes, depreciation and amortization) is not calculated
identically by all companies, the presentation in this report may not be
comparable to EBITDA or Adjusted EBITDA presentations disclosed by other
companies. Adjusted EBITDA is calculated below and represents for any relevant
period, net income/(loss) plus depreciation and amortization, goodwill and
long-lived asset impairment, interest expense, (income)/loss from discontinued
operations, net of tax, income tax provision, other income/(expense) and equity
in net (income)/loss of unconsolidated subsidiary. Management believes that
Adjusted EBITDA is useful in evaluating the Company's operating performance
compared to that of other companies in its industry because the calculation of
Adjusted EBITDA generally eliminates the effects of financing, income taxes and
certain non-cash and other items that may vary for different companies for
reasons unrelated to overall operating performance.

As a result, the Company's management uses Adjusted EBITDA as a measure to
evaluate performance and for other discretionary purposes. In addition to the
foregoing, management also uses or will use Adjusted EBITDA to measure
compliance with certain financial covenants under the Company's Senior Secured
Credit Facilities, 5.25% Notes and 3.625% Notes that were outstanding at
September 26, 2020. However, the amounts shown below for Adjusted EBITDA differ
from the amounts calculated under similarly titled definitions in the Company's
Senior Secured Credit Facilities, 5.25% Notes and 3.625% Notes, as those
definitions permit further adjustments to reflect certain other non-recurring
costs, non-cash charges and cash dividends from the DGD Joint Venture.
Additionally, the Company evaluates the impact of foreign exchange on operating
cash flow, which is defined as segment operating income (loss) plus depreciation
and amortization.

Reconciliation of Net Income to (Non-GAAP) Adjusted EBITDA and (Non-GAAP) Pro
Forma Adjusted EBITDA
Third Quarter 2020 As Compared to Third Quarter 2019
                                       50
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                                                                        Three Months Ended
                                                                  September 26,     September 28,
(dollars in thousands)                                                2020              2019
Net income attributable to Darling                              $      101,125    $       25,721
Depreciation and amortization                                           85,730            80,407
Interest expense                                                        18,793            19,359
Income tax expense                                                       4,812            10,850
Foreign currency loss/(gain)                                             1,239              (466)
Other expense, net                                                       1,912             2,614

Equity in net income of Diamond Green Diesel                           (91,099)          (32,020)
Equity in net loss/(income) of unconsolidated subsidiaries                (906)              665
Net income attributable to non-controlling interests                       480             1,116
Darling's Adjusted EBITDA                                       $

122,086 $ 108,246



Foreign currency exchange impact (1)                                    (3,702)                -

Pro forma Adjusted EBITDA to Foreign Currency (Non-GAAP) $ 118,384 $ 108,246



DGD Joint Venture Adjusted EBITDA (Darling's Share)             $

96,435 $ 39,548



Darling plus Darling's share of DGD Joint Venture Adjusted
EBITDA                                                          $      218,521    $      147,794



(1) The average rates assumption used in this calculation was the actual fiscal
average rate for the three months ended September 26, 2020 of €1.00:USD$1.17 and
CAD$1.00:USD$0.75 as compared to the average rate for the three months ended
September 28, 2019 of €1.00:USD$1.11 and CAD$1.00:USD$0.76, respectively.

For the three months ended September 26, 2020, the Company generated Adjusted
EBITDA of $122.1 million, as compared to $108.2 million for the three months
ended September 28, 2019.

On a Pro forma Adjusted EBITDA to Foreign Currency (Non-GAAP) basis, the Company generated $118.4 million in the three months ended September 26, 2020, as compared to $108.2 million in the same period in fiscal 2019.

DGD Joint Venture Adjusted EBITDA (Darling's share) is not reflected in the Adjusted EBITDA or the Pro forma Adjusted EBITDA to Foreign Currency (Non-GAAP). See Note 3 (Investment in Unconsolidated Subsidiaries) to the Company's Consolidated Financial Statements included herein for financial information regarding the DGD Joint Venture.

Nine Months Ended September 26, 2020 Compared to Nine Months Ended September 28, 2019

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 2020, 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 2020, compared to average Jacobsen and Reuters prices for the first nine months of fiscal 2019 are as follows:


                                       51
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                                               Avg. Price                 Avg. Price
                                           First Nine Months          First Nine Months                                                  %
                                                  2020                       2019                Increase/(Decrease)            Increase/(Decrease)
Jacobsen:
MBM (Illinois)                                $ 246.81/ton               $ 231.13/ton                $ 15.68/ton                                    6.8  %
Feed Grade PM (Mid-South)                     $ 240.29/ton               $ 247.34/ton                $ (7.05)/ton                                  (2.9) %
Pet Food PM (Mid-South)                       $ 600.44/ton               $ 560.27/ton                $ 40.17/ton                                    7.2  %
Feather meal (Mid-South)                      $ 283.77/ton               $ 375.89/ton               $ (92.12)/ton                                 (24.5) %
BFT (Chicago)                                 $ 30.56/cwt               $   28.90/cwt                 $ 1.66/cwt                                    5.7  %
YG (Illinois)                                 $ 20.86/cwt                $  22.55/cwt               $  (1.69)/cwt                                  (7.5) %
Corn (Illinois)                              $ 3.57/bushel              $ 3.94/bushel              $ (0.37)/bushel                                 (9.4) %
Reuters:
Palm Oil (CIF Rotterdam)                      $ 659.00/MT                $ 533.00/MT                 $ 126.00/MT                                   23.6  %
Soy meal (CIF Rotterdam)                      $ 363.00/MT                $ 346.00/MT                  $ 17.00/MT                                    4.9  %



Segment Results

Segment operating income for the nine months ended September 26, 2020 was $356.6 million, which reflects an increase of $174.1 million or 95.4% as compared to the nine months ended September 28, 2019.

(in thousands, except percentages) Feed Ingredients Food Ingredients Fuel Ingredients Corporate Total Nine Months Ended September 26, 2020 Net Sales

$      1,499,340    $

841,070 $ 211,674 $ - $ 2,552,084 Cost of sales and operating expenses

             1,117,931            652,334            147,358             -      1,917,623
Gross Margin                                       381,409            188,736             64,316             -        634,461

Gross Margin %                                        25.4  %            22.4  %            30.4  %          -  %        24.9  %

Loss/(gain) on sale of assets                          293                (30)               (53)            -            210
Selling, general and administrative
expenses                                           153,459             71,406             10,645        40,869        276,379

Depreciation and amortization                      159,968             60,925             24,705         8,113        253,711
Equity in net income of Diamond Green
Diesel                                                   -                  -            252,411             -        252,411
Segment operating income/(loss)                     67,689             56,435            281,430       (48,982)       356,572

Equity in net income of other
unconsolidated subsidiaries                          2,467                  -                  -             -          2,467
Segment income/(loss)                               70,156             56,435            281,430       (48,982)       359,039

(in thousands, except percentages) Feed Ingredients Food Ingredients Fuel Ingredients Corporate Total Nine Months Ended September 28, 2019 Net Sales

$      1,480,244    $

830,466 $ 193,767 $ - $ 2,504,477 Cost of sales and operating expenses

             1,143,606            643,091            161,855             -      1,948,552
Gross Margin                                       336,638            187,375             31,912             -        555,925

Gross Margin %                                        22.7  %            22.6  %            16.5  %          -  %        22.2  %

Loss/(gain) on sale of assets                       (7,343)           (13,518)                16             -        (20,845)
Selling, general and administrative
expenses                                           142,615             68,129                583        38,242        249,569

Depreciation and amortization                      148,271             59,115             24,055         7,616        239,057
Equity in net income of Diamond Green
Diesel                                                   -                  -             94,390             -         94,390
Segment operating income/(loss)                     53,095             73,649            101,648       (45,858)       182,534

Equity in net loss of other
unconsolidated subsidiaries                         (1,087)                 -                  -             -         (1,087)
Segment income/(loss)                               52,008             73,649            101,648       (45,858)       181,447



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Feed Ingredients Segment



Raw material volume. Overall, in the nine months ended September 26, 2020, the
raw material processed by the Company's Feed Ingredients segment totaled 6.58
million metric tons, an increase of approximately 0.8% as compared to the nine
months ended September 28, 2019.

Sales. During the nine months ended September 26, 2020, net sales for the Feed
Ingredients segment were $1,499.3 million as compared to $1,480.2 million during
the nine months ended September 28, 2019, an increase of approximately
$19.1 million or 1.3%. Net sales for fats were approximately $484.3 million and
$438.4 million for the nine months ended September 26, 2020 and September 28,
2019, respectively. Protein net sales were approximately $596.8 million and
$603.1 million for the nine months ended September 26, 2020 and September 28,
2019, respectively. Other rendering net sales, which include hides, pet food and
service charges, were approximately $125.6 million and $122.6 million for the
nine months ended September 26, 2020 and September 28, 2019, respectively. Total
rendering net sales were approximately $1,206.7 million and $1,164.1 million for
the nine months ended September 26, 2020 and September 28, 2019, respectively.
Used cooking oil net sales were approximately $132.3 million and $136.5 million
for the nine months ended September 26, 2020 and September 28, 2019,
respectively. Bakery net sales were approximately $129.5 million and
$141.6 million for the nine months ended September 26, 2020 and September 28,
2019, respectively, and other sales, which includes trap services, net sales
were approximately $30.8 million and $38.0 million for the nine months ended
September 26, 2020 and September 28, 2019, respectively.

The increase in net sales for the Feed Ingredients segment was primarily due to the following (in millions of dollars):

Total Used Cooking


                                       Fats     Proteins     Other

Rendering Rendering Oil Bakery Other Total Net sales nine months ended September 28, 2019

                    438.4       603.1               122.6

$ 1,164.1 136.5 141.6 38.0 $ 1,480.2 Increase/(decrease) in sales volumes

                                25.5        (1.6)                  -

23.9 (9.9) (2.6) - 11.4 Increase/(decrease) in finished product prices

                         21.5        (3.0)                  -          18.5          5.8       (9.5)         -         14.8
Increase/(decrease) due to currency
exchange rates                         (1.1)       (1.7)                0.6          (2.2)        (0.1)         -          -         (2.3)
Other change                              -           -                 2.4           2.4            -          -       (7.2)        (4.8)
Total change                           45.9        (6.3)                3.0          42.6         (4.2)     (12.1)      (7.2)        19.1
Net sales nine months ended
September 26, 2020                  $ 484.3    $  596.8    $          125.6    $  1,206.7    $   132.3    $ 129.5    $  30.8    $ 1,499.3



Margins. In the Feed Ingredients segment for the nine months ended September 26,
2020, the gross margin percentage increased to 25.4% as compared to 22.7% for
the same period of fiscal 2019. The increase is primarily due to an overall
increase in fat prices, lower raw material costs and higher fat sales volumes as
compared to fiscal 2019.

Segment operating income. Feed Ingredients operating income for the nine months
ended September 26, 2020 was $67.7 million, an increase of $14.6 million or
27.5% as compared to the nine months ended September 28, 2019. This was due to
higher overall fat prices, higher fat sales volumes and lower raw material costs
that more than offset higher selling, general and administrative costs, higher
depreciation and amortization and gains on sale of assets in the prior year.

Food Ingredients Segment



Raw material volume. Overall, for the nine months ended September 26, 2020, the
raw material processed by the Company's Food Ingredients segment totaled 791,000
metric tons, a decrease of approximately 2.2% as compared to the nine months
ended September 28, 2019.

Sales. Overall sales increased in the Food Ingredients segment primarily due to higher sales prices in collagen and edible fat sales markets.



Margins. In the Food Ingredients segment for the nine months ended September 26,
2020, the gross margin percentage decreased to 22.4% as compared to 22.6% during
the comparable period of fiscal 2019. Lower margins are due to a decrease in the
sales mix for collagen that more than offset higher fat prices.

                                       53
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Segment operating income. Food Ingredients operating income was $56.4 million
for the nine months ended September 26, 2020, a decrease of $17.2 million or
(23.4)% as compared to the nine months ended September 28, 2019. The decrease is
primarily due to the gain on the sale of assets in China reported last year and
lower sales volumes in the European, South American and China collagen markets
as a result of the COVID-19 outbreak in the current year. Despite increased fat
sales prices, the Company processed lower volumes as a result of export of raw
materials to Asian food markets due to African Swine Flu (ASF) and the impact of
a weak Brazilian real as compared to the same period in fiscal 2019.

Fuel Ingredients Segment



Raw material volume. Overall, in the nine months ended September 26, 2020, the
raw material processed by the Company's Fuel Ingredients segment totaled 955,000
metric tons, an increase of approximately 2.8%, as compared to the nine months
ended September 28, 2019.

Sales. Overall sales increased in the Fuel Ingredients segment primarily due to higher sales volumes in Europe.



Margins. In the Fuel Ingredients segment (exclusive of the equity contribution
from the DGD Joint Venture) for the nine months ended September 26, 2020, the
gross margin percentage increased to 30.4% as compared to 16.5% for the
comparable period of fiscal 2019. The increase is primarily related to improved
demand in Europe in fiscal 2020 as compared to fiscal 2019.

Segment operating income. The Company's Fuel Ingredients segment operating
income (inclusive of the equity contribution from the DGD Joint Venture) for the
nine months ended September 26, 2020 was $281.4 million, an increase of
$179.8 million or 177.0% as compared to the same period in fiscal 2019. The
increase is primarily due to increased current year net income at the DGD Joint
Venture from the inclusion of blenders tax credits and increased margins as
compared to no blenders tax credits in the prior year.

Foreign Currency Exchange



  During the first nine months of fiscal 2020, the euro rates were equal while
the Canadian dollar weakened slightly against the U.S. dollar as compared to the
same period in fiscal 2019. Using actual results for the nine months ended
September 26, 2020 and using the prior year's average currency rate for the nine
months ended September 28, 2019, foreign currency translation would result in an
increase in operating income of approximately $0.4 million. The average rates
assumptions used in this calculation were the actual fiscal average rates for
the nine months ended September 26, 2020 of €1.00:USD$1.12 and CAD$1.00:USD$0.74
as compared to the average rates for the nine months ended September 28, 2019 of
€1.00:USD$1.12 and CAD$1.00:USD$0.75, respectively.

Corporate Activities



Selling, General and Administrative Expenses. Selling, general and
administrative expenses were $40.9 million during the nine months ended
September 26, 2020, compared to $38.2 million during the nine months ended
September 28, 2019, an increase of $2.7 million.  The increase is primarily due
to higher corporate related benefits and insurance costs that more than offset
decreases in travel related costs, legal costs and other overall costs.

Depreciation and Amortization. Depreciation and amortization charges increased
by $0.5 million to $8.1 million during the nine months ended September 26, 2020,
as compared to $7.6 million during the nine months ended September 28, 2019. The
increase is related to increased leasehold improvements at the corporate office.

Interest Expense. Interest expense was $55.8 million during the nine months
ended September 26, 2020, compared to $60.1 million during the nine months ended
September 28, 2019, a decrease of $4.3 million. The decrease is primarily due to
lower interest from the Term loan A and Term loan B as a result of the Term loan
A being paid off in 2019 and lower interest rates on the Term loan B that more
than offset an increase in revolver interest and an increase in deferred loan
cost expense as a result of a partial pay-down of the Term loan B and the
amendment of the Company's Amended Credit Agreement.

Foreign Currency Gain/(Loss).  Foreign currency losses were $0.7 million for the
nine months ended September 26, 2020 as compared to foreign currency losses of
$0.7 million for the nine months ended September 28, 2019.

Other Expense, net. Other expense was $5.3 million in the nine months ended September 26, 2020, compared to other expense of $7.2 million for the nine months ended September 28, 2019. The decrease in other expense was primarily


                                       54
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due to a decrease in the non-service component of pension expense that more than
offset a decrease in interest income as compared to the same period in fiscal
2019.

Equity in Net Income/(Loss) in Investment of Other Unconsolidated Subsidiaries.
This represents the Company's pro rata share of the net income/(loss) from
foreign unconsolidated subsidiaries.
Income Taxes. The Company recorded income tax expense of $43.1 million for the
nine months ended September 26, 2020, compared to $23.9 million of income tax
expense recorded in the nine months ended September 28, 2019, an increase of
$19.2 million. The effective tax rate for the nine months ended September 26,
2020 was 14.5%. The effective tax rate for the nine months ended September 26,
2020 differed from the statutory rate of 21% due to the relative mix of earnings
among jurisdictions with different tax rates (including foreign withholding
taxes and state income taxes), biofuel tax incentives, compensation related
expenses not deductible for tax purposes and discrete items, including the
recognition of a previously unrecognized tax benefit and the favorable impact of
the GILTI HTE income tax regulations. The effective tax rate for the nine months
ended September 28, 2019 was 23.6%. The effective tax rate for the nine months
ended September 28, 2019 differed from the statutory rate of 21% due to the
relative mix of earnings among jurisdictions with different tax rates (including
foreign withholding taxes and state income taxes), compensation related expenses
not deductible for tax purposes and discrete items, including the favorable
settlement of an audit and recognition of a deferred tax asset for which no tax
benefit had previously been recorded. The Company's effective tax rate excluding
discrete items is 18.2% for the nine months ended September 26, 2020, compared
to 28.2% for the nine months ended September 28, 2019.

Non-U.S. GAAP Measures



For a discussion of the reasons the Company's management believes the following
Non-GAAP financial measures provide useful information to investors and the
purposes for which the Company's management uses such measures, see "Results of
Operations - Three Months Ended September 26, 2020 Compared to the Three Months
Ended September 28, 2019 - Non-U.S. GAAP Measures."

Reconciliation of Net Income to (Non-GAAP) Adjusted EBITDA and (Non-GAAP) Pro
Forma Adjusted EBITDA
First Nine Months of Fiscal 2020 As Compared to First Nine Months of Fiscal 2019

                                                                         Nine Months Ended
                                                                  September 26,     September 28,
(dollars in thousands)                                                2020              2019
Net income attributable to Darling                              $      252,074    $       69,991
Depreciation and amortization                                          253,711           239,057
Interest expense                                                        55,803            60,088
Income tax expense                                                      43,058            23,900
Foreign currency loss                                                      709               654
Other expense, net                                                       5,278             7,158
Debt extinguishment costs                                                    -            12,126
Equity in net income of Diamond Green Diesel                          (252,411)          (94,390)
Equity in net (income)/loss of unconsolidated subsidiaries              (2,467)            1,087
Net income attributable to non-controlling interests                     2,117             7,530
Darling's Adjusted EBITDA                                       $

357,872 $ 327,201



Foreign currency exchange impact (1)                                       407                 -

Pro forma Adjusted EBITDA to Foreign Currency (Non-GAAP) $ 358,279 $ 327,201



DGD Joint Venture Adjusted EBITDA (Darling's Share)             $

269,177 $ 113,270



Darling plus Darling's share of DGD Joint Venture Adjusted
EBITDA                                                          $      627,049    $      440,471



(1) The average rates assumption used in this calculation was the actual fiscal
average rate for the nine months ended September 26, 2020 of €1.00:USD$1.12 and
CAD$1.00:USD$0.74 as compared to the average rate for the nine months ended
September 28, 2019 of €1.00:USD$1.12 and CAD$1.00:USD$0.75, respectively.

                                       55
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For the nine months ended September 26, 2020, the Company generated Adjusted EBITDA of $357.9 million, as compared to $327.2 million for the nine months ended September 28, 2019, which included a gain on a land sale in China of approximately $13.1 million.

On a Pro forma Adjusted EBITDA to Foreign Currency (Non-GAAP) basis, the Company generated $358.3 million in the nine months ended September 26, 2020, as compared to $327.2 million in the same period in fiscal 2019.

FINANCING, LIQUIDITY AND CAPITAL RESOURCES

Credit Facilities

Indebtedness

Certain Debt Outstanding at September 26, 2020. On September 26, 2020, debt outstanding under the Company's Amended Credit Agreement, the Company's 5.25% Notes and the Company's 3.625% Notes consists of the following (in thousands):



Senior Notes:
5.25 % Notes due 2027                             $   500,000
Less unamortized deferred loan costs                   (5,943)
Carrying value of 5.25% Notes due 2027            $   494,057

3.625 % Notes due 2026 - Denominated in euros $ 598,997 Less unamortized deferred loan costs

                   (6,519)

Carrying value of 3.625% Notes due 2026 $ 592,478



Amended Credit Agreement:
Term Loan B                                       $   350,000
Less unamortized deferred loan costs                   (4,689)
Carrying value of Term Loan B                     $   345,311

Revolving Credit Facility:
Maximum availability                              $ 1,000,000
Ancillary Facilities                                   46,812
Borrowings outstanding                                 15,000
Letters of credit issued                                3,891
Availability                                      $   934,297

Other Debt                                        $    27,358



During the first nine months of fiscal 2020, the U.S. dollar weakened as
compared to the euro. Using the euro based debt outstanding at September 26,
2020 and comparing the closing balance sheet rate at September 26, 2020 to the
balance sheet rate at December 28, 2019, the U.S. dollar debt balances of euro
based debt increased by approximately $24.6 million at September 26, 2020. The
closing balance sheet rate assumption used in this calculation was the actual
fiscal closing balance sheet rate at September 26, 2020 of €1.00:USD$1.163100 as
compared to the closing balance sheet rate at December 28, 2019 of
€1.00:USD$1.114750.

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. Effective September 18, 2020, the Company, and certain of its
subsidiaries entered into an amendment (the "Sixth Amendment") with its lenders
to the Amended Credit Agreement. Among other things, the Sixth Amendment (i)
extended the maturity date of the revolving credit facility under the Credit
Agreement from December 16, 2021 to September 18, 2025, (ii) increased the
leverage ratio
                                       56
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applicable to achieving the lowest applicable margin on borrowings under the
revolving credit facility from 1.0 to 1.5, (iii) eliminated or modified certain
of the negative covenants to increase the allowances for certain actions,
including the incurrence of debt and investments, (iv) limited guarantees from,
and security with respect to, entities organized outside of the United States
and Canada to a limited group of foreign subsidiary holding companies, (v)
included a collateral release mechanism, subject to the consent of the term loan
B lenders, upon the Company achieving certain investment grade credit ratings,
and (vi) made other market updates and changes. For more information regarding
the Amended Credit Agreement see Note 10 (Debt) to the Company's Consolidated
Financial Statements included herein.

•As of September 26, 2020, the Company had availability of $934.3 million under
the revolving credit facility, taking into account that the Company had $15.0
million in outstanding borrowings, $46.8 million in ancillary facilities and
letters of credit issued of $3.9 million.

•As of September 26, 2020, the Company has borrowed all $525.0 million under the
terms of the term loan B facility and repaid approximately $175.0 million, which
when repaid, cannot be reborrowed. The term loan B facility is repayable in
quarterly installments of 0.25% of the aggregate principal amount of the
relevant term loan B facility on the last day of each March, June, September and
December of each year commencing on the last day of each month falling on or
after the last day of the first full quarter following December 18, 2017, and
continuing until the last day of each quarter period ending immediately prior to
December 18, 2024; and one final installment in the amount of the relevant term
loan B facility then outstanding, due on December 18, 2024. The term loan B
facility will mature on December 18, 2024.

•The interest rate applicable to any borrowings under the revolving credit
facility will equal either LIBOR/euro interbank offered rate/CDOR plus 1.75% per
annum or base rate/Canadian prime rate plus 0.75% per annum, subject to certain
step-downs or step-ups based on the Company's total leverage ratio. The interest
rate applicable to any borrowings under the term loan B facility will equal the
base rate plus 1.00% or LIBOR plus 2.00%.

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).

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 and European capital lease obligations, note arrangements in Brazil, China and European notes that are not part of the Company's Amended Credit Agreement, 5.25% Notes or 3.625% Notes.

The classification of long-term debt in the Company's September 26, 2020 consolidated balance sheet is based on the contractual repayment terms of 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
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 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 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,
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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 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 28, 2019 as filed with the SEC
on February 25, 2020.

As of September 26, 2020, the Company believes it is in compliance with all of
the financial covenants under the Amended Credit Agreement, as well as all of
the other covenants contained in the Amended Credit Agreement, the 5.25%
Indenture and the 3.625% Indenture.

Working Capital and Capital Expenditures



On September 26, 2020, the Company had working capital of $307.6 million and its
working capital ratio was 1.49 to 1 compared to working capital of $228.9
million and a working capital ratio of 1.33 to 1 on December 28, 2019. As of
September 26, 2020, the Company had unrestricted cash of $65.8 million and funds
available under the revolving credit facility of $934.3 million, compared to
unrestricted cash of $72.9 million and funds available under the revolving
credit facility of $911.9 million at December 28, 2019. The Company diversifies
its cash investments by limiting the amounts deposited with any one financial
institution.

Net cash provided by operating activities was $470.4 million for the first nine
months ended September 26, 2020, as compared to net cash provided by operating
activities of $262.7 million for the first nine months ended September 28, 2019,
an increase of $207.7 million due primarily to an increase in net income of
approximately $176.7 million, an increase in distributions from unconsolidated
subsidiaries of approximately $150.1 million, changes in operating assets and
liabilities that includes an increase in accounts receivable of approximately
$15.7 million, a decrease in inventories and prepaid expenses of approximately
$9.6 million, a decrease in accounts payable and accrued expenses of
approximately $9.0 million and a decrease in other of approximately $17.0
million primarily from hedging activity.  Cash used by investing activities was
$187.3 million for the first nine months ended September 26, 2020, compared to
$234.9 million for the first nine months ended September 28, 2019, a decrease in
cash used by investing activities of $47.6 million, primarily due to a decrease
in capital asset spending. Net cash used by financing activities was $287.5
million for the first nine months ended September 26, 2020, compared to net cash
used by financing activities of $60.1 million for the first nine months ended
September 28, 2019, an increase in net cash used by financing activities of
$227.4 million, primarily due to payment of outstanding debt and the repurchase
of our common stock in the first nine months ended September 26, 2020 as
compared to the first nine months ended September 28, 2019.

Capital expenditures of $184.9 million were made during the first nine months of
fiscal 2020, compared to $245.1 million in the first nine months of fiscal 2019,
for a net decrease of $60.2 million or 24.6%.  The Company had previously
expected to spend approximately $306.0 million in capital expenditures in fiscal
2020; however, due to the COVID-19 outbreak and the government-imposed movement
and work restrictions, the Company initiated a temporary reduction in
non-essential capital expenditures until the uncertainty surrounding the
COVID-19 outbreak improves. The Company intends to finance these costs using
cash flows from operations. Capital expenditures related to compliance with
environmental regulations were $26.2 million and $26.0 million during the first
nine months ended September 26, 2020 and September 28, 2019, respectively.

Accrued Insurance and Pension Plan Obligations



Based upon the annual actuarial estimate, current accruals and claims paid
during the first nine months of fiscal 2020, the Company has accrued
approximately $12.2 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 26, 2020. The self insurance reserve is composed
of estimated liability for claims arising for workers' compensation, auto
liability and general liability claims. The self insurance reserve liability is
determined annually, based upon a third party actuarial estimate. The actuarial
estimate 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.

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Based upon current actuarial estimates, the Company expects to contribute
approximately $1.3 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 a 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 26, 2020 of approximately $7.4 million. Additionally, the Company has
made required and tax deductible discretionary contributions to its foreign
pension plans for the first nine months ended September 26, 2020 of
approximately $2.9 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
current COVID-19 outbreak, 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 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 one of these material plans
certified as critical or red zone under PPA guidelines. 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 and two have certified as endangered or yellow zone as defined by the
PPA. The Company has received notices of withdrawal liability from five U.S.
multiemployer pension plans in which it participated. During the second quarter
of fiscal 2020, the Company settled one of the withdrawal liabilities for
approximately $2.5 million. As a result, the Company has an accrued aggregate
liability of approximately $2.7 million representing the present value of
scheduled withdrawal liability payments under the remaining multiemployer plans
that have given notices 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 Company announced on January 21, 2011 that a wholly-owned subsidiary of
Darling entered into a limited liability company agreement (as subsequently
amended, the "DGD LLC Agreement") with Valero to form the DGD Joint Venture. The
DGD Joint Venture is owned 50% / 50% with Valero and was formed to design,
engineer, construct and operate the DGD Facility located adjacent to Valero's
refinery in Norco, Louisiana. The DGD Joint Venture reached mechanical
completion and began the production of renewable diesel in late June 2013 and is
currently capable of processing approximately 20,000 barrels per day of input
feedstock to produce renewable diesel fuel and certain other co-products.
Effective May 1, 2019, the DGD LLC Agreement was amended and restated for the
purpose of updating the agreement in certain respects, including to remove
certain provisions that were no longer relevant and to add new provisions
relating to the DGD Joint Venture's ongoing expansion project to construct a
new, parallel facility located next to the current facility, as further
described below.

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 "DGD Loan
Agreement") with the DGD Joint Venture. The DGD Lenders have committed to make
loans available to the DGD Joint Venture in the total amount of $50.0 million
with each lender committed to $25.0 million of the total commitment. Any
borrowings by the DGD Joint Venture under the DGD Loan Agreement are 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) 2.50%. The DGD Loan Agreement
matures on April 29, 2021, unless extended by agreement of the parties. As of
September 26, 2020, no amounts are owed to the DGD Lenders under the DGD Loan
Agreement.

Based on the sponsor support agreements executed in connection with the initial
construction of the DGD Facility, the Company contributed a total of
approximately $111.7 million for completion of the DGD Facility including the
Company's portion of cost overruns and working capital funding. As of
September 26, 2020, under the equity method of
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accounting, the Company has an investment in the DGD Joint Venture of approximately $713.2 million included on the consolidated balance sheet.



In August 2018, the DGD Joint Venture completed an expansion project that
increased the DGD Facility's annual production capacity from 160 million gallons
of renewable diesel to 275 million gallons and expanded outbound logistics for
servicing the many developing low carbon fuel markets around North America and
worldwide. In November 2018, the joint venture partners approved the DGD Joint
Venture moving forward with another expansion project to construct a new,
parallel facility (the "New Facility") located next to the current facility. The
New Facility is expected to grow the DGD Joint Venture's annual production
capacity by an additional 400 million gallons from the current capacity of 275
million gallons of renewable diesel to 675 million gallons of renewable diesel
and provide the capability to separate naphtha for sale into low carbon fuel
markets. In addition, the expansion project includes expanded inbound and
outbound logistics for servicing the many developing low carbon fuel markets
around North America and worldwide. The DGD Joint Venture estimates completion
and startup of the New Facility in the fourth quarter of 2021, and the total
cost of the expansion project, including the naphtha production and improved
logistics capability, is estimated to be approximately $1.1 billion. Based on
forecasted margins as of the date of this report, the expansion project is
expected to be substantially funded by DGD Joint Venture cash flow; however, the
DGD LLC Agreement provides that until such time as the New Facility is complete
and operational, the joint venture partners shall be required to make capital
contributions or, if they agree, loans, to the DGD Joint Venture should the
excess available cash in the DGD Joint Venture, as determined on specified dates
and in accordance with the provisions contained in the DGD LLC Agreement, fall
below $50 million.

In April 2019, the joint venture partners adopted a distribution policy that,
unless earlier terminated by the partners, will remain in place through the
construction and completion of the New Facility. Pursuant to the distribution
policy, the DGD Joint Venture will make quarterly distributions to the partners
to the extent that distributable cash (as determined in accordance with the
policy) exceeds $50 million and the DGD Joint Venture's forward looking cash
forecast. During the nine months ended September 26, 2020, the DGD Joint Venture
made a total of $205.2 million in distributions to each partner.
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 2019, a large
portion of Darling's total U.S. finished fats products were sold to the DGD
Facility as feedstock for renewable diesel. In 2019, DGD was Darling's largest
finished product customer in terms of sales, with Darling recording sales of
approximately $208.7 million to DGD.

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 nationwide to
transporting the refined fats to the DGD facility 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 Company's Midwest network of
facilities ability to collect and deliver feedstocks to DGD via water, rail or
truck from a centralized location. 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 DGD Joint Venture as operating income.

In September 2019, the Company announced that the DGD Joint Venture was
initiating an advanced engineering and development cost review for construction
of a new renewable diesel plant to be located in Port Arthur, Texas. The
proposed facility under review would be designed to produce 400 million gallons
of renewable diesel annually as well as 40 million gallons of renewable naphtha.
The final investment decision on the project is expected in 2021, subject to
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further engineering, obtaining necessary permits, and approval by the boards of the Company and Valero. If the decision is made to move forward, new plant construction could begin in 2021, with expected operations commencing in 2024.

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 current
COVID-19 outbreak 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 2020 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 at this time; 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 expansion project or potential investments in additional renewable
diesel and/or biodiesel 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 5.25% Notes and
the 3.625% Notes, 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 $200.0 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, 2022, unless
further extended or shortened by the Board of Directors. During the first nine
months of fiscal 2020, the Company repurchased approximately $55.0 million of
its common stock in the open market. As of September 26, 2020, the Company had
approximately $200.0 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. 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, a rise in energy prices, a
slowdown in the U.S. or international economy or other factors could cause the
Company to fail to meet management's expectations or could cause liquidity
concerns.


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OFF BALANCE SHEET ARRANGEMENTS AND CONTRACTUAL OBLIGATIONS



Based upon the underlying purchase agreements, the Company has commitments to
purchase $102.9 million of commodity products consisting of approximately $71.4
million of finished products, approximately $27.7 million of natural gas and
diesel fuel and approximately $3.8 million of other commitments during the next
two years, which are not included in liabilities on the Company's balance sheet
at September 26, 2020. These purchase agreements are entered into in the normal
course of the Company's business and are not subject to derivative accounting.
The commitments will be recorded on the balance sheet of the Company when
delivery of these commodities occurs and ownership passes to the Company during
the remainder of fiscal 2020, 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 bank guarantees that are
not a part of the Company's Amended Credit Agreement at September 26, 2020 (in
thousands):

Other commercial commitments:
Standby letters of credit                          $  3,891

Standby letters of credit (ancillary facility) 24,334 Foreign bank guarantees

                              10,702
Total other commercial commitments:                $ 38,927

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 28, 2019, filed with the SEC on February 25, 2020.

Based on the Company's annual impairment testing at October 26, 2019, the fair
values of the Company's reporting units containing goodwill exceeded the related
carrying value. However, based on the Company's annual impairment testing at
October 26, 2019, the fair value of four of the Company's eight reporting units
was less than 30% in excess of its carrying value and one reporting unit (Canada
Feed) was less than 10% of the estimated fair value with goodwill of
approximately $174.9 million as of September 26, 2020, which was substantially
less than the percentage by which the other reporting units with goodwill
exceeded their carrying values. The Company determined the fair value of
reporting units with the assistance of a valuation expert who assisted the
Company primarily using the Income Approach to determine the fair value of the
Company's reporting units. Key assumptions that impacted the discounted cash
flow model were raw material volumes, gross margins, terminal growth rates and
discount rates. It is possible, depending upon a number of factors that are not
determinable at this time or within the control of the Company, that the fair
value of these four reporting units could decrease in the future and result in
an impairment to goodwill.  The amount of goodwill allocated to these four
reporting units was approximately $511.8 million as of September 26, 2020.  The
Company's management believes the biggest risk to these reporting units is
decreasing finished product prices impacting gross margins and an economic
slowdown that would impact raw material suppliers. The Company has experienced
no material negative effects on its business and results of operation as a
result of the current COVID-19 pandemic. However, the Company's North American
biodiesel margins continue to experience challenges. No impairment triggering
events were identified, the valuation of the Company's reporting units could be
negatively impacted in future periods by the COVID-19 pandemic, the severity and
duration of which is uncertain.
NEW ACCOUNTING PRONOUNCEMENTS

In March 2020, the FASB issued ASU No. 2020-04, Reference Rate Reform Topic 848,
Facilitation of the Effects of Reference Rate Reform on Financial Reporting. The
update provides optional guidance for a limited period of time to ease the
potential burden in accounting for (or reorganizing the effects of) contract
modifications on financial reporting, caused by reference rate reform. This ASU
is effective for all entities as of March 12, 2020 through December 31, 2022.
The adoption of this ASU in the first quarter of fiscal 2020 did not have a
material impact on the Company's consolidated financial statements.

In December 2019, the FASB issued ASU No. 2019-12, Simplifying the Accounting
for Income Taxes. This ASU amends Topic 740 Income Taxes, which eliminates
certain exceptions in accounting for income taxes, improves consistency in
application and clarifies existing guidance. The standard is effective for
fiscal years beginning after December 15, 2020, with early adoption permitted.
The Company is currently evaluating the impact of this standard.
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In August 2018, the FASB issued ASU No. 2018-14, Changes to the Disclosure
Requirements for Defined Benefit Plans. This ASU amends Subtopic 715-20,
Compensation - Retirement Benefits - Defined Benefit Plans - General, which
modifies the disclosure requirements for employers that sponsor defined benefit
pension or other postretirement plans by removing and adding certain disclosures
for these plans. The standard is effective for fiscal years ending after
December 15, 2020, with early adoption permitted. While the adoption of this
standard will impact the Company's disclosure, the Company does not expect it
will materially impact the Company's consolidated financial statements.

In August 2018, the FASB issued ASU No. 2018-13, Changes to the Disclosure
Requirements for Fair Value Measurements. This ASU amends Topic 820, Fair Value
Measurement, which changes the disclosure requirements for fair value
measurements by removing, adding and modifying certain disclosures. The standard
is effective for fiscal years beginning after December 15, 2019 and for interim
periods therein, with early adoption permitted. The adoption of this ASU at the
beginning of fiscal year 2020 did not have a material impact on the Company's
consolidated financial statements.

In January 2017, the FASB issued ASU No. 2017-04 Simplifying the Test for
Goodwill Impairment. This ASU amends Topic 350, Intangibles-Goodwill and Other,
which will simplify the goodwill impairment calculation by eliminating Step 2
from the current goodwill impairment test. Under the new guidance, an entity
should perform its annual, or interim, goodwill impairment test by comparing the
fair value of a reporting unit with its carrying amount. An entity should
recognize an impairment charge for the amount by which the carrying amount
exceeds the reporting unit's fair value; however, the loss recognized should not
exceed the total amount of goodwill allocated to that reporting unit. The ASU
eliminates existing guidance that requires an entity to determine goodwill
impairment by calculating the implied fair value of goodwill by hypothetically
assigning the fair value of a reporting unit to all of the assets and
liabilities as if that reporting unit had been acquired in a business
combination. This ASU is effective for fiscal years beginning after December 15,
2019 and interim periods within those fiscal years. The adoption of this ASU at
the beginning of fiscal year 2020 did not have a material impact on the
Company's consolidated financial statements.

In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments - Credit
Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. Under
ASU 2016-13, existing guidance on reporting credit losses for trade and other
receivables and available for sale debt securities will be replaced with a new
forward-looking "expected loss" model that generally will result in the earlier
recognition of allowances for losses. This ASU is effective for fiscal years
beginning after December 15, 2019 and interim periods therein. The initial
adoption of this ASU at the beginning of fiscal year 2020 did not have a
material impact on the Company's consolidated financial statements.

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," "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 and 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; global
demands for bio-fuels and 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 or other factors, reduced volume from food service
establishments, or
                                       63

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otherwise; reduced demand for animal feed; reduced finished product prices,
including a decline in fat and used cooking oil finished product prices; changes
to worldwide government policies relating to renewable fuels and greenhouse gas
("GHG") emissions that adversely affect programs like the U.S. government's
renewable fuel standard, low carbon fuel standards ("LCFS") and tax credits for
biofuels both in the United States and abroad; possible product recall resulting
from developments relating to the discovery of unauthorized adulterations to
food or food additives; the occurrence of 2009 H1N1 flu (initially known as
"Swine Flu"), highly pathogenic strains of avian influenza (collectively known
as "Bird Flu"), severe acute respiratory syndrome ("SARS"), bovine spongiform
encephalopathy (or "BSE"), porcine epidemic diarrhea ("PED") or other diseases
associated with animal origin in the United States or elsewhere, such as the
outbreak of ASF in China and elsewhere; the occurrence of pandemics, epidemics
or disease outbreaks, such as the current 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 and issues relating to the announced expansion project;
risks and uncertainties relating to international sales and operations,
including imposition of tariffs, quotas, trade barriers and other trade
protections imposed by foreign countries; difficulties or a significant
disruption in the Company's information systems 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; uncertainty regarding the exit of the U.K. from the
European Union; and/or unfavorable export or import markets. These factors,
coupled with volatile prices for natural gas and diesel fuel, 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. For more detailed discussion of these
factors see the Risk Factors discussion in Item 1A of Part I of the Company's
Annual Report on Form 10-K for the fiscal year ended December 28, 2019. 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.

Latest news about Darling Ingredients Inc.

Earnings Flash (DAR) DARLING INGREDIENTS Posts Q1 Revenue $1.42B, vs. Street Est of $1.48B	07:19am	MT
Darling Ingredients Inc. Reports Earnings Results for the First Quarter Ended March 30, 2024	06:35am	CI
Darling Ingredients Inc. Identifies Collagen Peptide Profiles for Targeted Health Benefits	Apr. 11	CI
Stifel Cuts Price Target on Darling Ingredients to $90 From $95, Keeps Buy Rating	Apr. 08	MT
Citigroup Raises Darling Ingredients' Price Target to $48 From $46, Maintains Neutral Rating	Apr. 03	MT
Stifel Cuts Price Target on Darling Ingredients to $95 From $120, Maintains Buy Rating	Mar. 06	MT
Darling Ingredients Insider Bought Shares Worth $256,560, According to a Recent SEC Filing	Mar. 05	MT
UBS Cuts Darling Ingredients Price Target to $72 From $75, Maintains Buy Rating	Mar. 04	MT
Transcript : Darling Ingredients Inc. Presents at 45th Annual Raymond James Institutional Investors Conference 2024, Mar-04-2024 08:05 AM	Mar. 04
Tranche Update on Darling Ingredients Inc.'s Equity Buyback Plan announced on August 13, 2015.	Feb. 28	CI
Transcript : Darling Ingredients Inc., Q4 2023 Earnings Call, Feb 28, 2024	Feb. 28
Darling Ingredients Fiscal Q4 Earnings, Sales Decline	Feb. 27	MT
Earnings Flash (DAR) DARLING INGREDIENTS Reports Q4 Revenue $1.61B, vs. Street Est of $1.68B	Feb. 27	MT
Darling Ingredients Inc. Reports Earnings Results for the Fourth Quarter Ended December 31, 2023	Feb. 27	CI
Darling Ingredients Inc. Reports Earnings Results for the Full Year Ended December 30, 2023	Feb. 27	CI
Citigroup Initiates Darling Ingredients at Neutral Rating With $49 Price Target	Feb. 01	MT
Darling Ingredients Closes Miropasz Group Takeover	Jan. 31	MT
Darling Ingredients Inc. acquired Miropasz sp.z o.o.	Jan. 30	CI
Stifel Cuts Price Target on Darling Ingredients to $120 From $123, Maintains Buy Rating	Jan. 29	MT
BMO Capital Cuts Darling Ingredients' Price Target to $60 From $65, Maintains Outperform Rating	Jan. 26	MT
Stifel Adjusts Darling Ingredients' Price Target to $123 From $130, Keeps Buy Rating	Nov. 27	MT
Darling Ingredients Insider Bought Shares Worth $497,862, According to a Recent SEC Filing	Nov. 16	MT
Transcript : Darling Ingredients Inc., Q3 2023 Earnings Call, Nov 08, 2023	Nov. 08
Darling Ingredients Fiscal Q3 Earnings, Sales Decline	Nov. 07	MT
Tranche Update on Darling Ingredients Inc.'s Equity Buyback Plan announced on August 13, 2015.	Nov. 07	CI

Chart Darling Ingredients Inc.

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Company Profile

Darling Ingredients Inc. develops and produces sustainable natural ingredients from edible and inedible bio-nutrients, creating a range of ingredients and customized specialty solutions for customers in the pharmaceutical, food, pet food, animal feed, industrial, fuel, bioenergy and fertilizer industries. Its segments include Feed Ingredients, Food Ingredients and Fuel Ingredients. Feed Ingredients operating segment includes its global activities related to 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, and others. Food Ingredients operating segment includes its global activities related to the purchase and processing of beef and pork bone chips, beef hides, pig skins, and fish skins into collagen, and others. Fuel Ingredients operating segment includes its global activities related to the conversion of organic sludge and food waste into biogas in Europe, and others.

Sector

Food Processing

Calendar

2024-04-24 - Q1 2024 Earnings Release

More about the company

Income Statement Evolution

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Ratings for Darling Ingredients Inc.

Trading Rating

Investor Rating

ESG Refinitiv

B+

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Analysts' Consensus

Sell

Buy

Mean consensus

BUY

Number of Analysts

Last Close Price

43.13 USD

Average target price

62.53 USD

Spread / Average Target

+44.98%

Consensus

EPS Revisions

Estimates Revisions

Quarterly earnings - Rate of surprise

Company calendar

Sector Other Food Processing

	1st Jan change	Capi.
DARLING INGREDIENTS INC.	-10.37%	6.89B
MONDELEZ INTERNATIONAL, INC.	-2.15%	95.92B
KRAFT HEINZ	+3.60%	46.89B
DANONE	+1.06%	40.99B
GENERAL MILLS, INC.	+9.56%	40.43B
THE HERSHEY COMPANY	+0.11%	38.42B
ARCHER-DANIELS-MIDLAND COMPANY	-15.66%	30.89B
NESTLÉ INDIA LIMITED	-3.64%	28.96B
ASSOCIATED BRITISH FOODS PLC	+13.48%	25.11B
YIHAI KERRY ARAWANA HOLDINGS CO., LTD	-10.87%	22.3B

Other Food Processing

Darling Ingredients Inc.

Equities

DAR

US2372661015

Food Processing

DARLING INGREDIENTS : MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (form 10-Q)

EPS Revisions