What happened
Shares of Darling Ingredients (DAR -1.30%) were moving higher today after the processor of food and fuel ingredients posted better-than-expected results in its first-quarter earnings report.
As of 2:37 p.m. ET, the stock was up 9%.
So what
Revenue in the quarter jumped 31% to $1.79 billion, easily beating estimates at $1.62 billion.
Most of that growth came from the feed ingredients segment, where revenue was up 40% to $1.24 billion, as the company seemed to benefit from inflation in feed prices and strong volumes.
Gross margin fell from 25.3% to 23.7%, but the company still saw solid adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) of $330.6 million to $418.3 million, or 26.5% growth.
On the bottom line, the company finished the quarter with flat earnings per share at $1.14 due to an increase in interest expense from $15.6 million to $50.3 million. Still, that easily topped estimates at $0.99.
CEO Randall Stuewe was enthusiastic about the Diamond Green Diesel business, saying:
Darling Ingredients is off to a very solid start in 2023. Raw material volumes are in line with expectations, our global collagen and gelatin business remains robust, and Diamond Green Diesel is expected to gain tremendous momentum in the second quarter as lower fat prices will boost renewable diesel margins on expected higher volumes.
Now what
Looking ahead, management guided adjusted EBITDA at $1.875 billion for the full year, meaning the stock trades at less than 6 times adjusted EBITDA.
For a company that is the clear leader in its industry and has exposure to the growing renewable fuel market, that looks like a great price.
