UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q


	(Mark One)
☒	QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d) OF THE
	SECURITIES EXCHANGE ACT OF 1934
	For the quarterly period ended	~~April 3,~~October 2, 2021
	OR

☐	TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d) OF THE
	SECURITIES EXCHANGE ACT OF 1934
	For the transition period from _______ to _______

Commission File Number 001-13323

DARLING INGREDIENTS INC.

(Exact name of registrant as specified in its charter)


Delaware									36-2495346
(State or other jurisdiction									(I.R.S. Employer
of incorporation or organization)									Identification Number)

5601 N MacArthur Blvd., Irving, Texas 75038

(Address of principal executive offices) (Zip Code)

Registrant's telephone number, including area code: (972) 717-0300

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common stock $0.01 par value per share	DAR	New York Stock Exchange	(“NYSE”)

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the Registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the Registrant was required to submit and post such files). Yes ☒ No ☐

Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer

☒

Accelerated filer

☐

Non-accelerated filer

☐

Smaller reporting company

☐

Emerging growth company

☐

If an emerging growth company, indicate by check mark if the Registrant has elected not to use the extended transition period

for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of Exchange Act.

☐

Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

There were ~~163,172,181~~161,808,213 shares of common stock, $0.01 par value, outstanding at ~~May 6,~~November 4, 2021.

DARLING INGREDIENTS INC. AND SUBSIDIARIES

FORM 10-Q FOR THE QUARTERLY PERIOD ENDED ~~APRIL 3,~~OCTOBER 2, 2021

TABLE OF CONTENTS


		Page No.
	PART I: FINANCIAL INFORMATION

Item 1.	FINANCIAL STATEMENTS
	Consolidated Balance Sheets	3
	~~April 3,~~October 2, 2021 (unaudited) and January 2, 2021

	Consolidated Statements of Operations (unaudited)	4
	Three and Nine Months Ended ~~April 3,~~October 2, 2021 and ~~March 28,~~September 26, 2020

	Consolidated Statements of Comprehensive Income/(Loss) (unaudited)	5
	Three and Nine Months Ended ~~April 3,~~October 2, 2021 and ~~March 28,~~September 26, 2020

	Consolidated Statement of Stockholders' Equity (unaudited)	6
	~~Three~~Nine Months Ended ~~April 3,~~October 2, 2021 and ~~March 28,~~September 26, 2020

	Consolidated Statements of Cash Flows (unaudited)	78
	~~Three~~Nine Months Ended ~~April 3,~~October 2, 2021 and ~~March 28,~~September 26, 2020

	Notes to Consolidated Financial Statements (unaudited)	89

Item 2.	MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	3028

Item 3.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	4749

Item 4.	CONTROLS AND PROCEDURES	4851


	PART II: OTHER INFORMATION

Item 1.	LEGAL PROCEEDINGS	5053

Item 1A.	RISK FACTORS	5053

Item 2.	UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS	53

Item 6.	EXHIBITS	5054

	Signatures	5155

DARLING INGREDIENTS INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

~~April 3,~~October 2, 2021 and January 2, 2021

(in thousands, except share data)


		April 3, 2021		January 2, 2021			October 2, 2021		January 2, 2021
ASSETS	ASSETS	(unaudited)				ASSETS	(unaudited)
Current assets:	Current assets:					Current assets:
Cash and cash equivalents	Cash and cash equivalents	$	71,199	$	81,617	Cash and cash equivalents	$	67,188	$	81,617
Restricted cash	Restricted cash	177		103		Restricted cash	172		103
Accounts receivable, less allowance for bad debts of $9,111 at April 3, 2021 and $10,815 at January 2, 2021		385,663		405,387
Accounts receivable, less allowance for bad debts of $10,107 at October 2, 2021 and $10,815 at January 2, 2021						Accounts receivable, less allowance for bad debts of $10,107 at October 2, 2021 and $10,815 at January 2, 2021	479,575		405,387
Inventories	Inventories	420,659		405,922		Inventories	476,295		405,922
Prepaid expenses	Prepaid expenses	50,251		47,793		Prepaid expenses	63,633		47,793
Income taxes refundable	Income taxes refundable	3,274		3,883		Income taxes refundable	3,060		3,883
Other current assets	Other current assets	9,544		42,289		Other current assets	13,721		42,289
Total current assets	Total current assets	940,767		986,994		Total current assets	1,103,644		986,994
Property, plant and equipment, less accumulated depreciation of $1,731,400 at April 3, 2021 and $1,702,123 at January 2, 2021		1,822,075		1,863,814
Intangible assets, less accumulated amortization of $569,477 at April 3, 2021 and $568,086 at January 2, 2021		452,539		473,680
Property, plant and equipment, less accumulated depreciation of $1,821,115 at October 2, 2021 and $1,702,123 at January 2, 2021						Property, plant and equipment, less accumulated depreciation of $1,821,115 at October 2, 2021 and $1,702,123 at January 2, 2021	1,834,670		1,863,814
Intangible assets, less accumulated amortization of $552,288 at October 2, 2021 and $568,086 at January 2, 2021						Intangible assets, less accumulated amortization of $552,288 at October 2, 2021 and $568,086 at January 2, 2021	417,409		473,680
Goodwill	Goodwill	1,241,242		1,260,240		Goodwill	1,232,179		1,260,240
Investment in unconsolidated subsidiaries	Investment in unconsolidated subsidiaries	915,085		804,682		Investment in unconsolidated subsidiaries	1,107,834		804,682
Operating lease right-of-use assets	Operating lease right-of-use assets	145,238		146,563		Operating lease right-of-use assets	160,660		146,563
Other assets	Other assets	59,099		60,682		Other assets	53,887		60,682
Deferred income taxes	Deferred income taxes	15,402		16,676		Deferred income taxes	15,437		16,676
		$	5,591,447	$	5,613,331		$	5,925,720	$	5,613,331
LIABILITIES AND STOCKHOLDERS’ EQUITY	LIABILITIES AND STOCKHOLDERS’ EQUITY					LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:	Current liabilities:					Current liabilities:
Current portion of long-term debt	Current portion of long-term debt	$	26,997	$	27,538	Current portion of long-term debt	$	55,138	$	27,538
Accounts payable, principally trade	Accounts payable, principally trade	245,648		255,340		Accounts payable, principally trade	272,844		255,340
Income taxes payable	Income taxes payable	15,627		17,497		Income taxes payable	34,623		17,497
Current operating lease liabilities	Current operating lease liabilities	38,064		39,459		Current operating lease liabilities	40,182		39,459
Accrued expenses	Accrued expenses	311,371		335,471		Accrued expenses	353,410		335,471
Total current liabilities	Total current liabilities	637,707		675,305		Total current liabilities	756,197		675,305
Long-term debt, net of current portion	Long-term debt, net of current portion	1,417,534		1,480,531		Long-term debt, net of current portion	1,325,736		1,480,531
Long-term operating lease liabilities	Long-term operating lease liabilities	108,777		109,707		Long-term operating lease liabilities	123,169		109,707
Other non-current liabilities	Other non-current liabilities	115,799		117,371		Other non-current liabilities	115,815		117,371
Deferred income taxes	Deferred income taxes	281,684		276,208		Deferred income taxes	335,566		276,208
Total liabilities	Total liabilities	2,561,501		2,659,122		Total liabilities	2,656,483		2,659,122
Commitments and contingencies	Commitments and contingencies	0		0		Commitments and contingencies	0		0
Stockholders’ equity:	Stockholders’ equity:					Stockholders’ equity:
Common stock, $0.01 par value; 250,000,000 shares authorized; 171,519,389 and 169,880,238 shares issued at April 3, 2021 and January 2, 2021, respectively		1,715		1,699
Common stock, $0.01 par value; 250,000,000 shares authorized; 171,665,336 and 169,880,238 shares issued at October 2, 2021 and January 2, 2021, respectively						Common stock, $0.01 par value; 250,000,000 shares authorized; 171,665,336 and 169,880,238 shares issued at October 2, 2021 and January 2, 2021, respectively	1,717		1,699
Additional paid-in capital	Additional paid-in capital	1,611,845		1,597,429		Additional paid-in capital	1,623,264		1,597,429
Treasury stock, at cost; 8,364,523 and 7,679,849 shares at April 3, 2021 and January 2, 2021, respectively		(199,851)		(151,710)
Treasury stock, at cost; 9,886,705 and 7,679,849 shares at October 2, 2021 and January 2, 2021, respectively						Treasury stock, at cost; 9,886,705 and 7,679,849 shares at October 2, 2021 and January 2, 2021, respectively	(302,188)		(151,710)
Accumulated other comprehensive loss	Accumulated other comprehensive loss	(295,796)		(252,433)		Accumulated other comprehensive loss	(309,353)		(252,433)
Retained earnings	Retained earnings	1,848,690		1,696,924		Retained earnings	2,192,084		1,696,924
Total Darling's stockholders’ equity	Total Darling's stockholders’ equity	2,966,603		2,891,909		Total Darling's stockholders’ equity	3,205,524		2,891,909
Noncontrolling interests	Noncontrolling interests	63,343		62,300		Noncontrolling interests	63,713		62,300
Total stockholders' equity	Total stockholders' equity	$	3,029,946	$	2,954,209	Total stockholders' equity	3,269,237		2,954,209
		$	5,591,447	$	5,613,331		$	5,925,720	$	5,613,331

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

DARLING INGREDIENTS INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

Three and nine months ended ~~April 3,~~October 2, 2021 and ~~March 28,~~September 26, 2020

(in thousands, except per share data)

(unaudited)


		Three Months Ended				Three Months Ended				Nine Months Ended
		April 3, 2021		March 28, 2020				October 2, 2021		September 26, 2020		October 2, 2021		September 26, 2020
Net sales	Net sales	$	1,046,716	$	852,842		Net sales	$	1,185,916	$	850,569	$	3,431,301	$	2,552,084
Costs and expenses:	Costs and expenses:						Costs and expenses:
Cost of sales and operating expenses	Cost of sales and operating expenses	772,784		646,908			Cost of sales and operating expenses	859,604		638,368		2,510,461		1,917,623
Loss/(gain) on sale of assets	Loss/(gain) on sale of assets	(64)		61			Loss/(gain) on sale of assets	(501)		122		(793)		210
Selling, general and administrative expenses	Selling, general and administrative expenses	97,398		96,193			Selling, general and administrative expenses	97,275		89,993		293,805		276,379
Restructuring and asset impairment charges	Restructuring and asset impairment charges	778		0			Restructuring and asset impairment charges	—		—		778		—

Depreciation and amortization	Depreciation and amortization	78,534		84,671			Depreciation and amortization	77,826		85,730		235,582		253,711
Total costs and expenses	Total costs and expenses	949,430		827,833			Total costs and expenses	1,034,204		814,213		3,039,833		2,447,923
Equity in net income of Diamond Green Diesel	Equity in net income of Diamond Green Diesel	102,225		97,820			Equity in net income of Diamond Green Diesel	53,951		91,099		281,964		252,411
Operating income	Operating income	199,511		122,829			Operating income	205,663		127,455		673,432		356,572

Other expense:	Other expense:						Other expense:
Interest expense	Interest expense	(16,428)		(19,090)			Interest expense	(15,409)		(18,793)		(47,105)		(55,803)

Foreign currency gain/(loss)		(410)		1,664
Foreign currency loss							Foreign currency loss	(205)		(1,239)		(1,299)		(709)

Other expense, net	Other expense, net	(1,159)		(1,881)			Other expense, net	(853)		(1,912)		(3,210)		(5,278)
Total other expense	Total other expense	(17,997)		(19,307)			Total other expense	(16,467)		(21,944)		(51,614)		(61,790)

Equity in net income of other unconsolidated subsidiaries	Equity in net income of other unconsolidated subsidiaries	612		869			Equity in net income of other unconsolidated subsidiaries	1,647		906		4,199		2,467
Income before income taxes	Income before income taxes	182,126		104,391			Income before income taxes	190,843		106,417		626,017		297,249

Income tax expense	Income tax expense	28,708		18,300			Income tax expense	42,637		4,812		126,324		43,058

Net income	Net income	153,418		86,091			Net income	148,206		101,605		499,693		254,191

Net income attributable to noncontrolling interests	Net income attributable to noncontrolling interests	(1,652)		(581)			Net income attributable to noncontrolling interests	(1,394)		(480)		(4,533)		(2,117)

Net income attributable to Darling	Net income attributable to Darling	$	151,766	$	85,510		Net income attributable to Darling	$	146,812	$	101,125	$	495,160	$	252,074

Basic income per share	Basic income per share	$	0.93	$	0.52		Basic income per share	$	0.91	$	0.62	$	3.04	$	1.55
Diluted income per share	Diluted income per share	$	0.90	$	0.51		Diluted income per share	$	0.88	$	0.61	$	2.96	$	1.51

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

DARLING INGREDIENTS INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME/(LOSS)

Three and nine months ended ~~April 3,~~October 2, 2021 and ~~March 28,~~September 26, 2020

(in thousands)

(unaudited)


		Three Months Ended				Three Months Ended				Nine Months Ended
		April 3, 2021		March 28, 2020				October 2, 2021		September 26, 2020		October 2, 2021		September 26, 2020
Net income	Net income	$	153,418	$	86,091		Net income	$	148,206	$	101,605	$	499,693	$	254,191
Other comprehensive income/(loss), net of tax:	Other comprehensive income/(loss), net of tax:						Other comprehensive income/(loss), net of tax:
Foreign currency translation	Foreign currency translation	(38,222)		(65,236)			Foreign currency translation	(32,903)		37,854		(48,741)		(7,243)
Pension adjustments	Pension adjustments	792		648			Pension adjustments	791		648		2,375		1,943

Soybean meal derivative adjustments	Soybean meal derivative adjustments	(257)		0			Soybean meal derivative adjustments	(23)		—		(297)		—
Corn option derivative adjustments	Corn option derivative adjustments	(800)		136			Corn option derivative adjustments	3,628		(2,518)		2,472		(578)
Heating oil derivative adjustments	Heating oil derivative adjustments	3,464		10,870			Heating oil derivative adjustments	(6,490)		1,494		(5,334)		3,424
Foreign exchange derivative adjustments	Foreign exchange derivative adjustments	(6,806)		(9,151)			Foreign exchange derivative adjustments	(4,664)		1,412		(4,519)		(2,060)
Total other comprehensive loss, net of tax		(41,829)		(62,733)
Total other comprehensive income/(loss), net of tax							Total other comprehensive income/(loss), net of tax	(39,661)		38,890		(54,044)		(4,514)
Total comprehensive income	Total comprehensive income	$	111,589	$	23,358		Total comprehensive income	$	108,545	$	140,495	$	445,649	$	249,677
Comprehensive income attributable to noncontrolling interests	Comprehensive income attributable to noncontrolling interests	3,186		492			Comprehensive income attributable to noncontrolling interests	2,332		456		7,409		1,364
Comprehensive income attributable to Darling	Comprehensive income attributable to Darling	$	108,403	$	22,866		Comprehensive income attributable to Darling	$	106,213	$	140,039	$	438,240	$	248,313

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

DARLING INGREDIENTS INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

~~Three~~Nine months ended ~~April 3,~~October 2, 2021 and ~~March 28,~~September 26, 2020

(in thousands, except share data)

(unaudited)


		Common Stock																		Common Stock
		Number of Outstanding Shares	$0.01 par Value		Additional Paid-In Capital		Treasury Stock		Accumulated Other Comprehensive Loss		Retained Earnings		Stockholders' equity attributable to Darling		Non-controlling Interests		Total Stockholders' Equity			Number of Outstanding Shares	$0.01 par Value		Additional Paid-In Capital		Treasury Stock		Accumulated Other Comprehensive Loss		Retained Earnings		Stockholders' equity attributable to Darling		Non-controlling Interests		Total Stockholders' Equity
Balances at January 2, 2021	Balances at January 2, 2021	162,200,389	$	1,699	$	1,597,429	$	(151,710)	$	(252,433)	$	1,696,924	$	2,891,909	$	62,300	$	2,954,209	Balances at January 2, 2021	162,200,389	$	1,699	$	1,597,429	$	(151,710)	$	(252,433)	$	1,696,924	$	2,891,909	$	62,300	$	2,954,209
Net income	Net income	—	—		—		—		—		151,766		151,766		1,652		153,418		Net income	—	—		—		—		—		151,766		151,766		1,652		153,418
Distribution of noncontrolling interest earnings	Distribution of noncontrolling interest earnings	—	—		—		—		—		—		—		(2,143)		(2,143)		Distribution of noncontrolling interest earnings	—	—		—		—		—		—		—		(2,143)		(2,143)

Pension liability adjustments, net of tax	Pension liability adjustments, net of tax	—	—		—		—		792		—		792		—		792		Pension liability adjustments, net of tax	—	—		—		—		792		—		792		—		792

Heating oil derivative adjustments, net of tax	Heating oil derivative adjustments, net of tax	—	—		—		—		3,464		—		3,464		—		3,464		Heating oil derivative adjustments, net of tax	—	—		—		—		3,464		—		3,464		—		3,464
Corn option derivative adjustments, net of tax	Corn option derivative adjustments, net of tax	—	—		—		—		(800)		—		(800)		—		(800)		Corn option derivative adjustments, net of tax	—	—		—		—		(800)		—		(800)		—		(800)
Soybean meal derivative adjustments, net of tax	Soybean meal derivative adjustments, net of tax	—	—		—		—		(257)		—		(257)		—		(257)		Soybean meal derivative adjustments, net of tax	—	—		—		—		(257)		—		(257)		—		(257)
Foreign exchange derivative adjustments, net of tax	Foreign exchange derivative adjustments, net of tax	—	—		—		—		(6,806)		—		(6,806)		—		(6,806)		Foreign exchange derivative adjustments, net of tax	—	—		—		—		(6,806)		—		(6,806)		—		(6,806)
Foreign currency translation adjustments	Foreign currency translation adjustments	—	—		—		—		(39,756)		—		(39,756)		1,534		(38,222)		Foreign currency translation adjustments	—	—		—		—		(39,756)		—		(39,756)		1,534		(38,222)
Issuance of non-vested stock	Issuance of non-vested stock	0	0		58		—		—		—		58		—		58		Issuance of non-vested stock	—	—		58		—		—		—		58		—		58
Stock-based compensation	Stock-based compensation	—	—		8,357		—		—		—		8,357		—		8,357		Stock-based compensation	—	—		8,357		—		—		—		8,357		—		8,357
Treasury stock	Treasury stock	(684,674)	—		—		(48,141)		—		—		(48,141)		—		(48,141)		Treasury stock	(684,674)	—		—		(48,141)		—		—		(48,141)		—		(48,141)
Issuance of common stock	Issuance of common stock	1,639,151	16		6,001		—		—		—		6,017		—		6,017		Issuance of common stock	1,639,151	16		6,001		—		—		—		6,017		—		6,017
Balances at April 3, 2021	Balances at April 3, 2021	163,154,866	$	1,715	$	1,611,845	$	(199,851)	$	(295,796)	$	1,848,690	$	2,966,603	$	63,343	$	3,029,946	Balances at April 3, 2021	163,154,866	$	1,715	$	1,611,845	$	(199,851)	$	(295,796)	$	1,848,690	$	2,966,603	$	63,343	$	3,029,946
Net income																			Net income	—	—		—		—		—		196,582		196,582		1,487		198,069

Pension liability adjustments, net of tax																			Pension liability adjustments, net of tax	—	—		—		—		792		—		792		—		792
Heating oil derivative adjustments, net of tax																			Heating oil derivative adjustments, net of tax	—	—		—		—		(2,308)		—		(2,308)		—		(2,308)
Corn option derivative adjustments, net of tax																			Corn option derivative adjustments, net of tax	—	—		—		—		(356)		—		(356)		—		(356)
Soybean meal derivative adjustments, net of tax																			Soybean meal derivative adjustments, net of tax	—	—		—		—		(17)		—		(17)		—		(17)
Foreign exchange derivative adjustments, net of tax																			Foreign exchange derivative adjustments, net of tax	—	—		—		—		6,951		—		6,951		—		6,951
Foreign currency translation adjustments																			Foreign currency translation adjustments	—	—		—		—		21,980		—		21,980		404		22,384
Issuance of non-vested stock																			Issuance of non-vested stock	—	—		41		—		—		—		41		—		41
Stock-based compensation																			Stock-based compensation	—	—		5,555		—		—		—		5,555		—		5,555
Treasury stock																			Treasury stock	(1,171,630)	—		—		(77,760)		—		—		(77,760)		—		(77,760)
Issuance of common stock																			Issuance of common stock	67,634	1		512		—		—		—		513		—		513
Balances at July 3, 2021																			Balances at July 3, 2021	162,050,870	$	1,716	$	1,617,953	$	(277,611)	$	(268,754)	$	2,045,272	$	3,118,576	$	65,234	$	3,183,810
Net income																			Net income	—	—		—		—		—		146,812		146,812		1,394		148,206
Distribution of noncontrolling interest earnings																			Distribution of noncontrolling interest earnings	—	—		—		—		—		—		—		(3,853)		(3,853)
Pension liability adjustments, net of tax																			Pension liability adjustments, net of tax	—	—		—		—		791		—		791		—		791
Heating oil derivative adjustments, net of tax																			Heating oil derivative adjustments, net of tax	—	—		—		—		(6,490)		—		(6,490)		—		(6,490)
Corn option derivative adjustments, net of tax																			Corn option derivative adjustments, net of tax	—	—		—		—		3,628		—		3,628		—		3,628
Soybean meal derivative adjustments, net of tax																			Soybean meal derivative adjustments, net of tax	—	—		—		—		(23)		—		(23)		—		(23)
Foreign exchange derivative adjustments, net of tax																			Foreign exchange derivative adjustments, net of tax	—	—		—		—		(4,664)		—		(4,664)		—		(4,664)
Foreign currency translation adjustments																			Foreign currency translation adjustments	—	—		—		—		(33,841)		—		(33,841)		938		(32,903)
Issuance of non-vested stock																			Issuance of non-vested stock	—	—		41		—		—		—		41		—		41
Stock-based compensation																			Stock-based compensation	—	—		4,361		—		—		—		4,361		—		4,361
Treasury stock																			Treasury stock	(350,552)	—		—		(24,577)		—		—		(24,577)		—		(24,577)
Issuance of common stock																			Issuance of common stock	78,313	1		909		—		—		—		910		—		910
Balances at October 2, 2021																			Balances at October 2, 2021	161,778,631	$	1,717	$	1,623,264	$	(302,188)	$	(309,353)	$	2,192,084	$	3,205,524	$	63,713	$	3,269,237

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

DARLING INGREDIENTS INC. AND SUBSIDIARIES

Common Stock
Number of Outstanding Shares $0.01 par Value Additional Paid-In Capital Treasury Stock Accumulated Other Comprehensive Loss Retained Earnings Stockholders' equity attributable to Darling Non-controlling Interests Total Stockholders' Equity
Balances at December 28, 2019 163,775,111 $ 1,686 $ 1,560,897 $ (75,022) $ (321,847) $ 1,400,105 $ 2,565,819 $ 77,531 $ 2,643,350
Net income — — — — — 85,510 85,510 581 86,091
Deductions to noncontrolling interests — — 3,271 — — — 3,271 (13,146) (9,875)
Pension liability adjustments, net of tax — — — — 648 — 648 — 648
Heating oil derivative adjustments, net of tax — — — — 10,870 — 10,870 10,870
Corn option derivative adjustments, net of tax — — — — 136 — 136 — 136
Foreign exchange derivative adjustments, net of tax — — — — (9,151) — (9,151) — (9,151)
Foreign currency translation adjustments — — — — (65,147) — (65,147) (89) (65,236)
Issuance of non-vested stock 8,000 0 40 — — — 40 — 40
Stock-based compensation — — 10,778 — — — 10,778 — 10,778
Treasury stock (2,372,876) — — (60,082) — — (60,082) — (60,082)
Issuance of common stock 447,729 5 868 — — — 873 — 873
Balances at March 28, 2020 161,857,964 $ 1,691 $ 1,575,854 $ (135,104) $ (384,491) $ 1,485,615 $ 2,543,565 $ 64,877 $ 2,608,442

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (CONTINUED)

Nine months ended October 2, 2021 and September 26, 2020

(in thousands, except share data)

(unaudited)


	Common Stock
	Number of Outstanding Shares	$0.01 par Value		Additional Paid-In Capital		Treasury Stock		Accumulated Other Comprehensive Loss		Retained Earnings		Stockholders' equity attributable to Darling		Non-controlling Interests		Total Stockholders' Equity
Balances at December 28, 2019	163,775,111	$	1,686	$	1,560,897	$	(75,022)	$	(321,847)	$	1,400,105	$	2,565,819	$	77,531	$	2,643,350

Net income	—	—		—		—		—		85,510		85,510		581		86,091

Deductions to noncontrolling interests	—	—		3,271		—		—		—		3,271		(13,146)		(9,875)
Pension liability adjustments, net of tax	—	—		—		—		648		—		648		—		648

Heating oil derivative adjustments, net of tax	—	—		—		—		10,870		—		10,870				10,870
Corn option derivative adjustments, net of tax	—	—		—		—		136		—		136		—		136
Foreign exchange derivative adjustments, net of tax	—	—		—		—		(9,151)		—		(9,151)		—		(9,151)
Foreign currency translation adjustments	—	—		—		—		(65,147)		—		(65,147)		(89)		(65,236)
Issuance of non-vested stock	8,000	—		40		—		—		—		40		—		40
Stock-based compensation	—	—		10,778		—		—		—		10,778		—		10,778
Treasury stock	(2,372,876)	—		—		(60,082)		—		—		(60,082)		—		(60,082)
Issuance of common stock	447,729	5		868		—		—		—		873		—		873
Balances at March 28, 2020	161,857,964	$	1,691	$	1,575,854	$	(135,104)	$	(384,491)	$	1,485,615	$	2,543,565	$	64,877	$	2,608,442
Net income	—	—		—		—		—		65,439		65,439		1,056		66,495
Deductions to noncontrolling interests	—	—		—		—		—		—		—		(299)		(299)
Pension liability adjustments, net of tax	—	—		—		—		647		—		647		—		647
Heating oil derivative adjustments, net of tax	—	—		—		—		(8,940)		—		(8,940)		—		(8,940)
Corn option derivative adjustments, net of tax	—	—		—		—		1,804		—		1,804		—		1,804
Foreign exchange derivative adjustments, net of tax	—	—		—		—		5,679		—		5,679		—		5,679
Foreign currency translation adjustments	—	—		—		—		20,779		—		20,779		(640)		20,139
Issuance of non-vested stock	—	—		55		—		—		—		55		—		55
Stock-based compensation	—	—		4,693		—		—		—		4,693		—		4,693
Treasury stock	(72,540)	—		—		(1,572)		—		—		(1,572)		—		(1,572)
Issuance of common stock	172,852	1		1,210		—		—		—		1,211		—		1,211
Balances at June 27, 2020	161,958,276	$	1,692	$	1,581,812	$	(136,676)	$	(364,522)	$	1,551,054	$	2,633,360	$	64,994	$	2,698,354
Net income	—	—		—		—		—		101,125		101,125		480		101,605
Deductions to noncontrolling interests	—	—		—		—		—		—		—		(4,181)		(4,181)
Pension liability adjustments, net of tax	—	—		—		—		648		—		648		—		648
Heating oil derivative adjustments, net of tax	—	—		—		—		1,494		—		1,494		—		1,494
Corn option derivative adjustment, net of tax	—	—		—		—		(2,518)		—		(2,518)		—		(2,518)

Foreign exchange derivative adjustment, net of tax	—	—		—		—		1,412		—		1,412		—		1,412
Foreign currency translation adjustments	—	—		—		—		37,878		—		37,878		(24)		37,854
Issuance of non-vested stock	—	—		56		—		—		—		56		—		56
Stock-based compensation	—	—		3,580		—		—		—		3,580		—		3,580
Treasury stock	(220,652)	—		—		(7,150)		—		—		(7,150)		—		(7,150)
Issuance of common stock	329,475	4		4,031		—		—		—		4,035		—		4,035
Balances at September 26, 2020	162,067,099	$	1,696	$	1,589,479	$	(143,826)	$	(325,608)	$	1,652,179	$	2,773,920	$	61,269	$	2,835,189

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

DARLING INGREDIENTS INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

~~Three~~Nine months ended ~~April 3,~~October 2, 2021 and ~~March 28,~~September 26, 2020

(in thousands)

(unaudited)


		April 3, 2021		March 28, 2020			October 2, 2021		September 26, 2020
Cash flows from operating activities:	Cash flows from operating activities:					Cash flows from operating activities:
Net Income	Net Income	$	153,418	$	86,091	Net Income	$	499,693	$	254,191
Adjustments to reconcile net income to net cash provided by operating activities:	Adjustments to reconcile net income to net cash provided by operating activities:					Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	Depreciation and amortization	78,534		84,671		Depreciation and amortization	235,582		253,711
Loss (gain) on disposal of property, plant, equipment and other assets	Loss (gain) on disposal of property, plant, equipment and other assets	(64)		61		Loss (gain) on disposal of property, plant, equipment and other assets	(793)		210

Asset impairment	Asset impairment	138		0		Asset impairment	138		—

Deferred taxes	Deferred taxes	11,809		6,377		Deferred taxes	67,272		13,362
Decrease in long-term pension liability	Decrease in long-term pension liability	(448)		(264)		Decrease in long-term pension liability	(1,118)		(7,960)
Stock-based compensation expense	Stock-based compensation expense	8,415		10,818		Stock-based compensation expense	18,413		19,202

Write-off deferred loan costs	Write-off deferred loan costs	598		0		Write-off deferred loan costs	1,130		2,419
Deferred loan cost amortization	Deferred loan cost amortization	1,040		1,416		Deferred loan cost amortization	3,044		4,242
Equity in net income of Diamond Green Diesel and other unconsolidated subsidiaries	Equity in net income of Diamond Green Diesel and other unconsolidated subsidiaries	(102,837)		(98,689)		Equity in net income of Diamond Green Diesel and other unconsolidated subsidiaries	(286,163)		(254,878)
Distributions of earnings from other unconsolidated subsidiaries		57		0
Distributions of earnings from Diamond Green Diesel and other unconsolidated subsidiaries						Distributions of earnings from Diamond Green Diesel and other unconsolidated subsidiaries	3,322		207,165
Changes in operating assets and liabilities, net of effects from acquisitions:	Changes in operating assets and liabilities, net of effects from acquisitions:					Changes in operating assets and liabilities, net of effects from acquisitions:
Accounts receivable	Accounts receivable	10,721		487		Accounts receivable	(85,822)		36,083
Income taxes refundable/payable	Income taxes refundable/payable	(760)		348		Income taxes refundable/payable	18,688		8,282
Inventories and prepaid expenses	Inventories and prepaid expenses	(27,188)		(24,999)		Inventories and prepaid expenses	(97,531)		(43,980)
Accounts payable and accrued expenses	Accounts payable and accrued expenses	(13,462)		(16,790)		Accounts payable and accrued expenses	46,912		(10,832)
Other	Other	18,834		(14,981)		Other	29,282		(10,804)
Net cash provided by operating activities	Net cash provided by operating activities	138,805		34,546		Net cash provided by operating activities	452,049		470,413
Cash flows from investing activities:	Cash flows from investing activities:					Cash flows from investing activities:
Capital expenditures	Capital expenditures	(60,751)		(61,599)		Capital expenditures	(191,738)		(184,919)
Acquisitions, net of cash acquired	Acquisitions, net of cash acquired	(340)		0		Acquisitions, net of cash acquired	(2,059)		—
Investment in unconsolidated subsidiary		(4,449)		0
Investment in Diamond Green Diesel						Investment in Diamond Green Diesel	(25,000)		—
Investment in other unconsolidated subsidiaries						Investment in other unconsolidated subsidiaries	(4,449)		—

Gross proceeds from disposal of property, plant and equipment and other assets	Gross proceeds from disposal of property, plant and equipment and other assets	1,629		379		Gross proceeds from disposal of property, plant and equipment and other assets	3,805		1,291

Payments related to routes and other intangibles	Payments related to routes and other intangibles	(347)		(3,416)		Payments related to routes and other intangibles	(274)		(3,712)
Net cash used by investing activities	Net cash used by investing activities	(64,258)		(64,636)		Net cash used by investing activities	(219,715)		(187,340)
Cash flows from financing activities:	Cash flows from financing activities:					Cash flows from financing activities:
Proceeds from long-term debt	Proceeds from long-term debt	9,262		8,264		Proceeds from long-term debt	31,088		24,085
Payments on long-term debt	Payments on long-term debt	(60,444)		(8,638)		Payments on long-term debt	(131,224)		(171,640)
Borrowings from revolving credit facility	Borrowings from revolving credit facility	111,000		219,933		Borrowings from revolving credit facility	287,000		390,971
Payments on revolving credit facility	Payments on revolving credit facility	(97,000)		(100,782)		Payments on revolving credit facility	(309,000)		(415,800)
Net cash overdraft financing	Net cash overdraft financing	499		(9,594)		Net cash overdraft financing	29,034		(33,385)

Deferred loan costs						Deferred loan costs	—		(3,688)
Issuance of common stock	Issuance of common stock	50		67		Issuance of common stock	50		67
Repurchase of common stock	Repurchase of common stock	0		(55,044)		Repurchase of common stock	(97,924)		(55,044)
Minimum withholding taxes paid on stock awards	Minimum withholding taxes paid on stock awards	(42,268)		(4,328)		Minimum withholding taxes paid on stock awards	(45,260)		(7,980)
Acquisition of noncontrolling interest	Acquisition of noncontrolling interest	0		(8,784)		Acquisition of noncontrolling interest	—		(8,784)
Distributions to noncontrolling interests	Distributions to noncontrolling interests	(2,143)		(688)		Distributions to noncontrolling interests	(3,853)		(6,253)
Net cash provided (used) by financing activities		(81,044)		40,406
Net cash used by financing activities						Net cash used by financing activities	(240,089)		(287,451)
Effect of exchange rate changes on cash	Effect of exchange rate changes on cash	(3,847)		(6,916)		Effect of exchange rate changes on cash	(6,605)		(2,712)
Net increase (decrease) in cash, cash equivalents and restricted cash		(10,344)		3,400
Net decrease in cash, cash equivalents and restricted cash						Net decrease in cash, cash equivalents and restricted cash	(14,360)		(7,090)
Cash, cash equivalents and restricted cash at beginning of period	Cash, cash equivalents and restricted cash at beginning of period	81,720		73,045		Cash, cash equivalents and restricted cash at beginning of period	81,720		73,045
Cash, cash equivalents and restricted cash at end of period	Cash, cash equivalents and restricted cash at end of period	$	71,376	$	76,445	Cash, cash equivalents and restricted cash at end of period	$	67,360	$	65,955
Supplemental disclosure of cash flow information:	Supplemental disclosure of cash flow information:					Supplemental disclosure of cash flow information:
Accrued capital expenditures	Accrued capital expenditures	$	(9,678)	$	(1,630)	Accrued capital expenditures	$	3,008	$	(2,202)
Cash paid during the period for:	Cash paid during the period for:					Cash paid during the period for:
Interest, net of capitalized interest	Interest, net of capitalized interest	$	2,774	$	5,863	Interest, net of capitalized interest	$	32,430	$	39,481
Income taxes, net of refunds	Income taxes, net of refunds	$	15,578	$	11,453	Income taxes, net of refunds	$	36,709	$	24,868
Non-cash operating activities	Non-cash operating activities					Non-cash operating activities
Operating lease right of use asset obtained in exchange for new lease liabilities	Operating lease right of use asset obtained in exchange for new lease liabilities	$	12,404	$	9,121	Operating lease right of use asset obtained in exchange for new lease liabilities	$	50,883	$	44,479
Non-cash financing activities	Non-cash financing activities					Non-cash financing activities
Debt issued for assets	Debt issued for assets	$	0	$	21	Debt issued for assets	$	66	$	21

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

DARLING INGREDIENTS INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

~~April 3,~~October 2, 2021

(unaudited)

(1)General

The accompanying consolidated financial statements for the three and nine month periods ended ~~April 3,~~October 2, 2021 and ~~March 28,~~September 26, 2020, have been prepared by Darling Ingredients Inc., a Delaware corporation (“Darling”, and together with its subsidiaries, the “Company” or “we”, “us” or “our”) in accordance with generally accepted accounting principles in the United States (“GAAP”) without audit, pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). The information furnished herein reflects all adjustments (consisting only of normal recurring accruals) that are, in the opinion of management, necessary to present a fair statement of the financial position and operating results of the Company as of and for the respective periods. However, these operating results are not necessarily indicative of the results expected for a full fiscal year. Certain information and footnote disclosures normally included in annual financial statements prepared in accordance with GAAP have been omitted pursuant to such rules and regulations. However, management of the Company believes, to the best of their knowledge, that the disclosures herein are adequate to make the information presented not misleading. The accompanying consolidated financial statements should be read in conjunction with the audited consolidated financial statements contained in the Company’s Form 10-K for the fiscal year ended January 2, 2021.

(2)Summary of Significant Accounting Policies

(a)Basis of Presentation

The consolidated financial statements include the accounts of Darling and its consolidated subsidiaries. Noncontrolling interests represent the outstanding ownership interest in the Company's consolidated subsidiaries that are not owned by the Company. In the accompanying Consolidated Statements of Operations, the noncontrolling interest in net income of the consolidated subsidiaries is shown as an allocation of the Company's net income and is presented separately as “Net income attributable to noncontrolling interests.” In the Company's Consolidated Balance Sheets, noncontrolling interests represent the ownership interests in the Company consolidated subsidiaries' net assets held by parties other than the Company. These ownership interests are presented separately as “Noncontrolling interests” within “Stockholders' Equity.” All intercompany balances and transactions have been eliminated in consolidation.

(b)Fiscal Periods

The Company has a 52/53 week fiscal year ending on the Saturday nearest December 31. Fiscal periods for the consolidated financial statements included herein are as of ~~April 3,~~October 2, 2021, and include the 13 and 39 weeks ended ~~April 3,~~October 2, 2021, and the 13 and 39 weeks ended ~~March 28,~~September 26, 2020.

The Company considers all short-term highly liquid instruments, with an original maturity of three months or less, to be cash equivalents. Cash balances are recorded net of book overdrafts when a bank right-of-offset exists. All other book overdrafts are recorded in accounts payable and the change in the related balance is reflected in operating activities on the Consolidated Statement of Cash Flows. In addition, the Company has bank overdrafts, which are considered a form of short-term financing with changes in the related balance reflected in financing activities in the Consolidated Statement of Cash Flows.

~~Restricted cash represents amounts required to be set aside as collateral for environmental claims and are insignificant to the Company.~~

~~(d)~~ Accounts Receivable ~~and Allowance for Doubtful Accounts~~Factoring

The Company maintains allowances for doubtful accounts for estimated losses resulting from customers’ non-payment of trade accounts receivable owed to the Company. These trade receivables arise in the ordinary course of business from sales of finished product or services to the Company’s customers. The estimate of

allowance for doubtful accounts is based upon the Company’s bad debt experience adjusted for differences in asset-specific risk characteristic, current economic conditions, and forecasts of future economic conditions. If the financial condition of the Company’s customers deteriorates, resulting in the customers’ inability to pay the Company’s receivables as they come due, additional allowances for doubtful accounts may be required.

The Company has entered into agreements with third party banks to factor certain of the Company's trade receivables in order to enhance working capital by turning trade receivables into cash faster. Under these agreements, the Company sells certain selected customers’ trade receivables to third party banks without recourse for cash less a nominal fee. For the three months ended ~~April 3,~~October 2, 2021 and ~~March 28,~~September 26, 2020, the Company sold approximately ~~$106.9~~$106.6 million and ~~$84.5~~$76.2 million of its trade receivables and incurred approximately $0.3 million and ~~$0.4~~$0.2 million in fees, which are recorded as interest expense, respectively. For the nine months ended October 2, 2021 and September 26, 2020, the Company sold approximately $319.8 million and $247.0 million of its trade receivables and incurred approximately $0.8 million and $0.9 million in fees, which are recorded as interest expense, respectively.

~~(e)~~(d) Revenue Recognition

The Company recognizes revenue on sales when control of the promised finished product is transferred to the Company's customers in an amount that reflects the consideration the Company expects to be entitled to in exchange for the finished product. Service revenues are recognized when the service occurs. Certain

customers may be required to prepay prior to shipment in order to maintain payment protection related to certain foreign and domestic sales. These amounts are recorded as unearned revenue and recognized when control of the promised finished product is transferred to the Company's customer. See Note 1918 (Revenue) to the Company's Consolidated Financial Statements included herein.

~~(f)~~ ~~Foreign Currency Translation and Remeasurement~~

Foreign currency translation is included as a component of accumulated other comprehensive loss and reflects the adjustments resulting from translating the foreign currency denominated financial statements of foreign subsidiaries into U.S. dollars. The functional currency of the Company's foreign subsidiaries is the currency of the primary economic environment in which the entity operates, which is generally the local currency of the country. Accordingly, assets and liabilities of the foreign subsidiaries are translated into U.S. dollars at fiscal period end exchange rates, including intercompany foreign currency transactions that are of long-term investment nature. Income and expense items are translated at average exchange rates occurring during the period. Changes in exchange rates that affect cash flows and the related receivables or payables are recognized as transaction gains/(losses) in determining net income. The Company incurred net foreign currency translation losses of approximately $39.8 million and $65.1 million for the three months ended April 3, 2021 and March 28, 2020, respectively.

~~(g)~~ ~~Leases~~

The Company accounts for leases in accordance with Accounting Standard Codification (“ASC”) Topic 842, leases. The Company determines if an arrangement is a lease at inception for which the Company recognizes the right-of-use (“ROU”) asset and a lease liability at the lease commencement date. For operating leases, the lease liability is initially and subsequently measured at the present value of the unpaid lease payments at the lease commencement date. In determining the lease liability, the Company applies a discount rate to the minimum lease payments within each lease. ASC 842 requires the Company to use the rate of interest that a lessee would have to pay to borrow on a collateralized basis over a similar term an amount equal to the lease payments in a similar economic environment. To estimate the Company's incremental borrowing rate over various terms, a comparable market yield curve consistent with the Company's credit quality is determined. The lease term for all of the Company's leases include the noncancellable period of the lease plus any additional periods covered by either a Company option to extend the lease that the Company is reasonably certain to exercise or when a triggering event occurs. The Company has elected to not recognize a ROU asset and lease liability with an initial term of 12 months or less at lease commencement. Operating leases are included on the Company's balance sheet as a ROU asset, current operating lease liabilities and long-term operating lease liabilities. For finance leases, the lease liability is initially measured in the same manner and date as for the operating leases, and is subsequently measured at amortized cost using the effective interest method. Finance leases are included in property, plant and equipment, current portion of long-term debt and long-term debt, net of current portion, but are not significant to the Company.

The ROU asset is initially measured at cost, which comprises the initial amount of the lease liability adjusted for lease payments made at or before the lease commencement date, plus any direct costs incurred less any

lease incentives received. For operating leases, the ROU asset is subsequently measured throughout the lease term at the carrying amount of the lease liability, plus initial direct costs, plus (minus) any prepaid (accrued) lease payments, less the unamortized balance of the lease incentives received. Some leases payments contain rent escalation clauses (including index-based escalations), initially measured using the index at the lease commencement date. The Company recognizes minimum rental expense on a straight-line basis based on the fixed components of the lease arrangement.

The Company uses the long-lived assets impairment guidance in ASC subtopic 360-10, Property, Plant and Equipment - Overall, to determine whether the ROU asset is impaired, and if so, the amount of the impairment loss to recognize. The Company monitors for events or changes in circumstances that require a reassessment of one of its leases. When a reassessment results in the remeasurement of a lease liability, a corresponding adjustment is made to the carrying amount of the corresponding ROU asset unless doing so would reduce the carrying amount of the ROU asset to an amount less than zero. In that case, the amount of the adjustment that would result in a negative ROU asset balance is recorded in the consolidated statement of operations.

~~(h)~~(e) Use of Estimates

The preparation of the consolidated financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

If it is at least reasonably possible that the estimate of the effect on the financial statements of a condition, situation, or set of circumstances that exist at the date of the financial statements will change in the near term due to one or more future confirming events, and the effect of the change would be material to the financial statements, the Company will disclose the nature of the uncertainty and include an indication that it is at least reasonably possible that a change in the estimate will occur in the near term. If the estimate involves certain loss contingencies, the disclosure will also include an estimate of the probable loss or range of loss or state that an estimate cannot be made.

As a result of the current global COVID-19 pandemic, and related government imposed movement restrictions and initiatives implemented to reduce the global transmission of COVID-19, we have evaluated the potential impact to the Company's operations and for any indicators of potential triggering events that could indicate certain of the Company's assets may be impaired. Through the ~~three~~nine months ended ~~April 3,~~October 2, 2021, the Company has not observed any impairments of the Company's assets or a significant change in their fair value due to the COVID-19 pandemic.

~~(i)~~(f) Earnings Per Share

Basic income per common share is computed by dividing net income attributable to Darling by the weighted average number of common shares including non-vested and restricted shares outstanding during the period. Diluted income per common share is computed by dividing net income attributable to Darling by the weighted average number of common shares outstanding during the period increased by dilutive common equivalent shares determined using the treasury stock method.


	Net Income per Common Share (in thousands, except per share data)
	Three Months Ended
			October 2, 2021					September 26, 2020
	Income		Shares	Per Share		Income		Shares	Per Share
Basic:
Net Income attributable to Darling	$	146,812	162,166	$	0.91	$	101,125	162,264	$	0.62
Diluted:
Effect of dilutive securities:
Add: Option shares in the money and dilutive effect of non-vested stock awards			5,403					6,543
Less: Pro forma treasury shares			(799)					(1,810)
Diluted:
Net income attributable to Darling	$	146,812	166,770	$	0.88	$	101,125	166,997	$	0.61

Net Income per Common Share (in thousands, except per share data)
Three Months Ended
April 3, 2021 March 28, 2020
Income Shares Per Share Income Shares Per Share
Basic:
Net Income attributable to Darling $ 151,766 162,925 $ 0.93 $ 85,510 163,474 $ 0.52
Diluted:
Effect of dilutive securities:
Add: Option shares in the money and dilutive effect of non-vested stock awards 5,733 6,749
Less: Pro forma treasury shares (909) (2,296)
Diluted:
Net income attributable to Darling $ 151,766 167,749 $ 0.90 $ 85,510 167,927 $ 0.51


	Net Income per Common Share (in thousands, except per share data)
	Nine Months Ended
			October 2, 2021					September 26, 2020
	Income		Shares	Per Share		Income		Shares	Per Share
Basic:
Net Income attributable to Darling	$	495,160	162,707	$	3.04	$	252,074	162,631	$	1.55
Diluted:
Effect of dilutive securities:
Add: Option shares in the money and dilutive effect of non-vested stock awards			5,512					6,391
Less: Pro forma treasury shares			(845)					(2,048)
Diluted:
Net income attributable to Darling	$	495,160	167,374	$	2.96	$	252,074	166,974	$	1.51

For the three months ended ~~April 3,~~October 2, 2021 and ~~March 28,~~September 26, 2020, respectively, 0zero and ~~551,877~~550,934 outstanding stock options were excluded from diluted income per common share as the effect was antidilutive. For the three months ended ~~April 3,~~October 2, 2021 and ~~March 28,~~September 26, 2020, respectively, ~~162,896~~187,484 and ~~406,502~~342,003 shares of non-vested stock and stock equivalents were excluded from diluted income per common share as the effect was antidilutive.

For the nine months ended October 2, 2021 and September 26, 2020, respectively, zero and 550,934 outstanding stock options were excluded from diluted income per common share as the effect was antidilutive. For the nine months ended October 2, 2021 and September 26, 2020, respectively, 216,622 and 474,520 shares of non-vested stock and stock equivalents were excluded from diluted income per common share as the effect was antidilutive.

(3) Investment in Unconsolidated Subsidiaries

On January 21, 2011, a wholly-owned subsidiary of Darling entered into a limited liability company agreement with a wholly-owned subsidiary of Valero Energy Corporation (“Valero”) to form Diamond Green Diesel Holdings LLC (“DGD” or the “DGD Joint Venture”). The DGD Joint Venture is owned 50% / 50% with Valero and was formed to design, engineer, construct and operate a renewable diesel plant 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. Effective May 1, 2019, the limited liability company 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~~of the existing facility.

Selected financial information for the Company's DGD Joint Venture is as follows (in thousands):


(in thousands)	(in thousands)	March 31, 2021		December 31, 2020		(in thousands)	September 30, 2021		December 31, 2020
Assets:	Assets:					Assets:
Total current assets	Total current assets	$	477,840	$	383,557	Total current assets	$	365,354	$	383,557
Property, plant and equipment, net	Property, plant and equipment, net	1,437,905		1,238,726		Property, plant and equipment, net	2,192,808		1,238,726
Other assets	Other assets	39,171		36,082		Other assets	44,657		36,082
Total assets	Total assets	$	1,954,916	$	1,658,365	Total assets	$	2,602,819	$	1,658,365
Liabilities and members' equity:	Liabilities and members' equity:					Liabilities and members' equity:
Total current portion of long term debt	Total current portion of long term debt	$	562	$	517	Total current portion of long term debt	$	106,423	$	517
Total other current liabilities	Total other current liabilities	177,594		99,787		Total other current liabilities	228,657		99,787
Total long term debt	Total long term debt	8,702		8,705		Total long term debt	108,952		8,705
Total other long term liabilities	Total other long term liabilities	8,722		3,758		Total other long term liabilities	17,048		3,758
Total members' equity	Total members' equity	1,759,336		1,545,598		Total members' equity	2,141,739		1,545,598
Total liabilities and members' equity	Total liabilities and members' equity	$	1,954,916	$	1,658,365	Total liabilities and members' equity	$	2,602,819	$	1,658,365


		Three Months Ended					Three Months Ended					Nine Months Ended
(in thousands)	(in thousands)	March 31, 2021		March 31, 2020		(in thousands)		September 30, 2021		September 30, 2020			September 30, 2021		September 30, 2020
Revenues:	Revenues:					Revenues:
Operating revenues	Operating revenues	$	431,633	$	358,615	Operating revenues		$	401,900	$	346,276		$	1,405,392	$	1,000,717
Expenses:	Expenses:					Expenses:
Total costs and expenses less depreciation, amortization and accretion expense	Total costs and expenses less depreciation, amortization and accretion expense	215,234		151,347		Total costs and expenses less depreciation, amortization and accretion expense		281,848		153,406			804,939		462,364
Depreciation, amortization and accretion expense	Depreciation, amortization and accretion expense	11,687		11,774		Depreciation, amortization and accretion expense		10,991		10,772			34,673		33,660
Total costs and expenses	Total costs and expenses	226,921		163,121		Total costs and expenses		292,839		164,178			839,612		496,024
Operating income	Operating income	204,712		195,494		Operating income		109,061		182,098			565,780		504,693
Other income	Other income	58		461		Other income		113		415			524		1,076
Interest and debt expense, net	Interest and debt expense, net	(320)		(315)		Interest and debt expense, net		(1,272)		(315)			(2,376)		(947)
Net income	Net income	$	204,450	$	195,640	Net income		$	107,902	$	182,198		$	563,928	$	504,822

As of ~~April 3,~~October 2, 2021, under the equity method of accounting, the Company has an investment in the DGD Joint Venture of approximately ~~$879.7~~$1,072.6 million on the consolidated balance sheet. The Company has recorded equity in net income from the DGD Joint Venture of approximately ~~$102.2~~$54.0 million and ~~$97.8~~$91.1 million for the three months ended ~~April 3,~~October 2, 2021 and ~~March 28,~~September 26, 2020, respectively. The Company has recorded equity in net income from the DGD Joint Venture of approximately $282.0 million and $252.4 million for the nine months ended October 2, 2021 and September 26, 2020, respectively. In December 2019, the blender tax credits for calendar year 2018 and 2019 were retroactively reinstated by the U.S. Congress. In addition, blenders tax credits were extended for calendar years 2020, 2021 and 2022. For the three months ended ~~March 31,~~September 30, 2021 and ~~March 31,~~September 30, 2020, the DGD Joint Venture recorded approximately ~~$79.0~~$61.7 million and ~~$80.0~~$79.9 million of blenders tax credits, respectively. For the nine months ended September 30, 2021 and September 30, 2020, the DGD Joint Venture recorded approximately $224.6 million and $232.1 million of blenders tax credits, respectively. The blenders tax credits are recorded as a reduction of cost of sales by the DGD Joint Venture. In the three months ended ~~April 3,~~October 2, 2021, the Company made a $25.0 million capital contribution to the DGD Joint Venture. In the three and nine months ended October 2, 2021, the Company did not receive any dividend distributions from the DGD Joint Venture. Subsequent to October 2, 2021, each partner made a capital contribution of approximately $37.75 million.

In addition to the DGD Joint Venture, the Company has investments in other unconsolidated subsidiaries that are insignificant to the Company.

(4) Inventories

A summary of inventories follows (in thousands):


		April 3, 2021		January 2, 2021			October 2, 2021		January 2, 2021
Finished product	Finished product	$	250,237	$	233,044	Finished product	$	294,220	$	233,044
Work in process	Work in process	87,219		87,223		Work in process	83,940		87,223
Raw material	Raw material	35,229		36,746		Raw material	45,917		36,746
Supplies and other	Supplies and other	47,974		48,909		Supplies and other	52,218		48,909
		$	420,659	$	405,922		$	476,295	$	405,922

(5) Intangible Assets

The gross carrying amount of intangible assets not subject to amortization and intangible assets subject to amortization

is as follows (in thousands):


		April 3, 2021		January 2, 2021			October 2, 2021		January 2, 2021
Indefinite Lived Intangible Assets	Indefinite Lived Intangible Assets					Indefinite Lived Intangible Assets
Trade names	Trade names	$	54,184	$	55,349	Trade names	$	53,778	$	55,349
		54,184		55,349			53,778		55,349
Finite Lived Intangible Assets:	Finite Lived Intangible Assets:					Finite Lived Intangible Assets:
Routes	Routes	393,937		397,342		Routes	342,822		397,342
Permits	Permits	481,959		494,191		Permits	480,976		494,191
Non-compete agreements	Non-compete agreements	645		3,300		Non-compete agreements	645		3,300
Trade names	Trade names	65,675		65,675		Trade names	65,675		65,675
Royalty, consulting, land use rights and leasehold	Royalty, consulting, land use rights and leasehold	25,616		25,909		Royalty, consulting, land use rights and leasehold	25,801		25,909
		967,832		986,417			915,919		986,417
Accumulated Amortization:	Accumulated Amortization:					Accumulated Amortization:
Routes	Routes	(206,137)		(203,392)		Routes	(168,227)		(203,392)
Permits	Permits	(314,741)		(315,246)		Permits	(331,509)		(315,246)
Non-compete agreements	Non-compete agreements	(355)		(2,981)		Non-compete agreements	(412)		(2,981)
Trade names	Trade names	(41,125)		(39,491)		Trade names	(44,394)		(39,491)
Royalty, consulting, land use rights and leasehold	Royalty, consulting, land use rights and leasehold	(7,119)		(6,976)		Royalty, consulting, land use rights and leasehold	(7,746)		(6,976)
		(569,477)		(568,086)			(552,288)		(568,086)
Total Intangible assets, less accumulated amortization	Total Intangible assets, less accumulated amortization	$	452,539	$	473,680	Total Intangible assets, less accumulated amortization	$	417,409	$	473,680

Gross intangible routes, permits, trade names, non-compete agreements and other intangibles decreased in fiscal 2021 as a result of approximately ~~$9.5~~$54.5 million of fully amortized asset retirements and a decrease from foreign currency translation. Amortization expense for the three months ended ~~April 3,~~October 2, 2021 and ~~March 28,~~September 26, 2020, was approximately ~~$17.0~~$16.8 million and ~~$18.2~~$18.4 million, respectively, and for the nine months ended October 2, 2021 and September 26, 2020 was $50.8 million and $54.5 million, respectively.

(6) Goodwill

Changes in the carrying amount of goodwill (in thousands):


		Feed Ingredients		Food Ingredients		Fuel Ingredients		Total			Feed Ingredients		Food Ingredients		Fuel Ingredients		Total
Balance at January 2, 2021	Balance at January 2, 2021									Balance at January 2, 2021
Goodwill	Goodwill	$	830,321	$	351,296	$	126,578	$	1,308,195	Goodwill	$	830,321	$	351,296	$	126,578	$	1,308,195
Accumulated impairment losses	Accumulated impairment losses	(15,914)		(461)		(31,580)		(47,955)		Accumulated impairment losses	(15,914)		(461)		(31,580)		(47,955)
		814,407		350,835		94,998		1,260,240			814,407		350,835		94,998		1,260,240
Goodwill acquired during year	Goodwill acquired during year	40		0		161		201		Goodwill acquired during year	40		—		161		201

Foreign currency translation	Foreign currency translation	(5,631)		(9,685)		(3,883)		(19,199)		Foreign currency translation	(9,959)		(13,061)		(5,242)		(28,262)
Balance at April 3, 2021
Balance at October 2, 2021										Balance at October 2, 2021
Goodwill	Goodwill	824,730		341,611		122,856		1,289,197		Goodwill	820,402		338,235		121,497		1,280,134
Accumulated impairment losses	Accumulated impairment losses	(15,914)		(461)		(31,580)		(47,955)		Accumulated impairment losses	(15,914)		(461)		(31,580)		(47,955)
		$	808,816	$	341,150	$	91,276	$	1,241,242		$	804,488	$	337,774	$	89,917	$	1,232,179

(7) Accrued Expenses

Accrued expenses consist of the following (in thousands):


		April 3, 2021		January 2, 2021			October 2, 2021		January 2, 2021
Compensation and benefits	Compensation and benefits	$	99,108	$	121,497	Compensation and benefits	$	112,841	$	121,497
Accrued ad valorem, and franchise taxes	Accrued ad valorem, and franchise taxes	15,779		39,167		Accrued ad valorem, and franchise taxes	21,175		39,167
Accrued operating expenses	Accrued operating expenses	67,132		62,601		Accrued operating expenses	83,343		62,601

Other accrued expense	Other accrued expense	129,352		112,206		Other accrued expense	136,051		112,206
		$	311,371	$	335,471		$	353,410	$	335,471

(8) ~~Leases~~

The Company leases certain real and personal property, a large portion of the Company's fleet of tractors, all of its rail cars, some IT equipment and other transportation equipment under non-cancelable operating leases. The Company's office leases include certain lease and non-lease components, where the Company has elected to exclude the non-lease components from the calculation of the lease liability and ROU asset. The Company has finance leases, which are not significant to the Company and not separately disclosed in detail.

~~The components of operating lease expense included in cost of sales and operating expenses and selling, general and administrative expenses were as follows (in thousands):~~

Three Months Ended
April 3, 2021 March 28, 2020
Operating lease expense $ 11,661 $ 11,509
Short-term lease costs 6,408 6,245
Total lease cost $ 18,069 $ 17,754

~~Other information (in thousands, except lease terms and discount rates):~~

Three Months Ended
April 3, 2021 March 28, 2020
Cash paid for amounts included in the measurement of lease liabilities
Operating cash flows from operating leases $ 14,265 $ 12,456
April 3, 2021 January 2, 2021
Operating right-of-use assets, net $ 145,238 $ 146,563
Operating lease liability, current $ 38,064 $ 39,459
Operating lease liability, non-current 108,777 109,707
Total operating lease liabilities $ 146,841 $ 149,166
Weighted average remaining lease term - operating leases 6.43 years 6.30 years
Weighted average discount rate - operating leases 4.01 % 4.22 %

~~Future annual minimum lease payments and capital lease commitments as of April 3, 2021 are as follows (in thousands):~~

Period Ending Fiscal Operating Leases Capital Leases
2021 (excluding the three months ended April 3, 2021) $ 32,297 $ 650
2022 34,591 824
2023 29,567 611
2024 22,759 467
2025 14,118 331
Thereafter 27,721 574
$ 161,053 $ 3,457
Less amounts representing interest $ (14,212) (134)
Lease obligations included in current and long-term liabilities $ 146,841 $ 3,323

As of April 3, 2021, the Company also has additional operating leases that have not yet commenced, primarily for rail car and tractors, with fixed payments over their noncancellable terms of $3.2 million. These operating leases will commence in 2021 with noncancellable terms of 5 years.

~~(9)~~ Debt

Debt consists of the following (in thousands):


		April 3, 2021		January 2, 2021			October 2, 2021		January 2, 2021
Amended Credit Agreement:	Amended Credit Agreement:					Amended Credit Agreement:
Revolving Credit Facility	Revolving Credit Facility	$	69,000	$	55,000	Revolving Credit Facility	$	33,000	$	55,000

Term Loan B	Term Loan B	250,000		300,000		Term Loan B	200,000		300,000
Less unamortized deferred loan costs	Less unamortized deferred loan costs	(2,979)		(3,798)		Less unamortized deferred loan costs	(2,081)		(3,798)
Carrying value Term Loan B	Carrying value Term Loan B	247,021		296,202		Carrying value Term Loan B	197,919		296,202

5.25% Senior Notes due 2027 with effective interest of 5.47%	5.25% Senior Notes due 2027 with effective interest of 5.47%	500,000		500,000		5.25% Senior Notes due 2027 with effective interest of 5.47%	500,000		500,000
Less unamortized deferred loan costs	Less unamortized deferred loan costs	(5,553)		(5,747)		Less unamortized deferred loan costs	(5,159)		(5,747)
Carrying value 5.25% Senior Notes due 2027	Carrying value 5.25% Senior Notes due 2027	494,447		494,253		Carrying value 5.25% Senior Notes due 2027	494,841		494,253

3.625% Senior Notes due 2026 - Denominated in euro with effective interest of 3.83%	3.625% Senior Notes due 2026 - Denominated in euro with effective interest of 3.83%	606,310		632,163		3.625% Senior Notes due 2026 - Denominated in euro with effective interest of 3.83%	597,297		632,163
Less unamortized deferred loan costs - Denominated in euro	Less unamortized deferred loan costs - Denominated in euro	(6,046)		(6,586)		Less unamortized deferred loan costs - Denominated in euro	(5,423)		(6,586)
Carrying value 3.625% Senior Notes due 2026	Carrying value 3.625% Senior Notes due 2026	600,264		625,577		Carrying value 3.625% Senior Notes due 2026	591,874		625,577

Other Notes and Obligations	Other Notes and Obligations	33,799		37,037		Other Notes and Obligations	63,240		37,037
		1,444,531		1,508,069			1,380,874		1,508,069
Less Current Maturities	Less Current Maturities	26,997		27,538		Less Current Maturities	55,138		27,538
		$	1,417,534	$	1,480,531		$	1,325,736	$	1,480,531

As of ~~April 3,~~October 2, 2021, the Company had outstanding debt under the Company's 3.625% Senior Notes due 2026 denominated in euros of €515.0 million. ~~See below for discussion relating to the Company's debt agreements.~~ In addition, at ~~April 3,~~October 2, 2021, the Company had finance lease obligations denominated in euros of approximately ~~€2.8~~€2.5 million.

As of ~~April 3,~~October 2, 2021, the Company had other notes and obligations of ~~$33.8~~$63.2 million that consist of various overdraft facilities of approximately ~~$4.7~~$32.9 million, a China working capital line of credit of approximately ~~$16.2~~$19.2 million and other debt of approximately ~~$12.9~~$11.1 million.

~~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 (the “Former Credit Agreement”), 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 Amended Credit Agreement from December 16, 2021 to September 18, 2025, (ii) increased the leverage ratio applicable to achieving the lowest applicable margin on borrowing 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.

Effective December 18, 2017, the Company, and certain of its subsidiaries entered into an amendment (the “Fifth Amendment”) with its lenders to the Amended Credit Agreement. Among other things, the Fifth Amendment (i) refinanced the term B loans under the Amended Credit Agreement with new term B loans in an aggregate principal amount of $525.0 million with a maturity date of December 18, 2024; (ii) adjusted the applicable margin pricing on borrowings under the term B loan; (iii) modified certain of the negative covenants to increase the allowances for certain actions, including debt and investments; and (iv) made other updates and changes.

Effective December 16, 2016, the Company, and certain of its subsidiaries entered into an amendment (the “Fourth Amendment”) with its lenders to the Amended Credit Agreement. Among other things, the Fourth Amendment (i) adjusted the applicable margin pricing grid on borrowings under the revolving credit facility which adjusts based on the Company's total leverage ratio as set forth in the Amended Credit Agreement; (ii) eliminated the secured leverage ratio financial maintenance covenant so that from and after the effective date of the Fourth Amendment the Company’s financial covenants consist of maintaining a total leverage ratio not to exceed 5.50 to 1.00 and maintaining an interest coverage ratio of not less than 3.00 to 1.00; (iii) modified certain of the negative covenants to include a senior leverage ratio incurrence-based test and to increase the allowances for certain actions, including debt, investments and restricted payments; and (iv) made other updates and changes.

The Company's Amended Credit Agreement provides for senior secured credit facilities in the aggregate principal amount of $1.525 billion comprised of (i) the Company's $525.0 million term loan B facility and (ii) the Company's $1.0 billion five-year revolving credit facility (up to $150.0 million of which is available for a letter of credit sub-facility and up to $50.0 million of which is available for a swingline sub-facility) (collectively, the “Senior Secured Credit Facilities”). The Amended Credit Agreement also permits Darling and the other borrowers thereunder to incur ancillary facilities provided by any revolving lender party to the Senior Secured Credit Facilities (with certain restrictions). Up to $970.0 million of the revolving loan facility is available to be borrowed by (x) Darling in U.S. dollars, Canadian dollars, euros and other currencies to be agreed and available to each applicable lender, (y) Darling Canada in Canadian dollars and (z) Darling NL and Darling Ingredients International Holding B.V. (“Darling BV”), in U.S. dollars, Canadian dollars, euros and other currencies to be agreed and available to each applicable lender. The remaining $30.0 million is only available in U.S. dollars to Darling. The revolving credit facility will mature on September 18, 2025. The revolving credit facility will be used for working capital needs, general corporate purposes and other purposes not prohibited by the Amended Credit Agreement.

The interest rate applicable to any borrowings under the revolving credit facility ~~will~~is equal to either LIBOR/euro interbank offered rate/CDOR plus 1.50% per annum or base rate/Canadian prime rate plus 0.50% per annum, subject to certain step-ups or step-downs based on the Company's total leverage ratio. The interest rate applicable to any borrowings under the term loan B facility ~~will~~is equal to the base rate plus 1.00% or LIBOR plus 2.00%.

As of ~~April 3,~~October 2, 2021, the Company had ~~$27.0~~$33.0 million outstanding under the revolver at base rate plus a margin of 0.50% per annum for a total of 3.75% per ~~annum and $42.0 million outstanding under the revolver at LIBOR plus a margin of 1.50% per annum for a total of 1.616% per~~ annum. The Company had ~~$250.0~~$200.0 million outstanding under the term loan B facility at LIBOR plus a margin of 2.00% per annum for a total of ~~2.12%~~2.09% per annum. As of ~~April 3,~~October 2, 2021, the Company had availability of ~~$879.9~~$912.6 million under the Amended Credit Agreement taking into account amounts borrowed, ancillary facilities and letters of credit issued of ~~$3.8~~$4.1 million. The Company also has foreign bank guarantees that are not part of the Company's Amended Credit Agreement in the amount of approximately ~~$11.7~~$11.8 million at ~~April 3,~~October 2, 2021.

~~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.

~~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).

As of ~~April 3,~~October 2, 2021, 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~~Senior Notes due 2027 and the 3.625% ~~Indenture.~~Senior Notes due 2026.

~~(10)~~(9) Income Taxes

The Company has provided income taxes for the three and nine month periods ended ~~April 3,~~October 2, 2021 and ~~March 28,~~September 26, 2020, based on its estimate of the effective tax rate for the entire 2021 and 2020 fiscal years. The Company’s estimated annual effective tax rate is based on forecasts of income by jurisdiction, permanent differences between book and tax income, the relative proportion of income and losses by jurisdiction, and statutory income tax rates. Discrete events such as the assessment of the ultimate outcome of tax audits, audit settlements, recognizing previously unrecognized tax benefits due to the lapsing of statutes of limitation, recognizing or derecognizing deferred

tax assets due to projections of income or loss and changes in tax laws are recognized in the period in which they occur.

Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. The Company expects to have access to its offshore earnings with no material U.S. tax impact. Therefore, the Company does not consider earnings from its foreign subsidiaries to be permanently reinvested offshore.

The Company periodically assesses whether it is more likely than not that it will generate sufficient taxable income to realize its deferred income tax assets. In making this determination, the Company considers all available positive and negative evidence and makes certain assumptions. The Company considers, among other things, its deferred tax liabilities, the overall business environment, its historical earnings and losses, current industry trends and its outlook for future years.

Unrecognized tax benefits represent the difference between tax positions taken or expected to be taken in a tax return and the benefits recognized for financial statement purposes. As of ~~April 3,~~October 2, 2021, the Company had ~~$5.6~~$6.6 million of gross unrecognized tax benefits and ~~$0.4~~$0.6 million of related accrued interest and penalties. ~~It is reasonably possible within the next twelve months that the~~The Company's gross unrecognized tax benefits ~~may~~are not expected to decrease ~~by up to $0.2 million, excluding interest and penalties. The possible change in unrecognized tax benefits relates to~~within the ~~expiration of certain statutes of limitation.~~next twelve months.

The Company’s major taxing jurisdictions include the United States (federal and state), Canada, the Netherlands, Belgium, Brazil, Germany, France and China. The Company is subject to regular examination by various tax authorities and although the final outcome of these examinations is not yet determinable, the Company does not anticipate that any of the examinations will have a significant impact on the Company's results of operations or financial position.The statute of limitations for the Company’s major tax jurisdictions is open for varying periods, but is generally closed through the 2013 tax year.

~~(11)~~(10) Other Comprehensive Income/(Loss)

The Company follows Financial Accounting Standards Board (“FASB”) authoritative guidance for reporting and presentation of comprehensive income/(loss) and its components. Other comprehensive income/(loss) is derived from adjustments that reflect pension adjustments, soybean meal adjustments, corn option adjustments, foreign exchange forward adjustments, heating oil swap adjustments and foreign currency translation adjustments.

In the first three months of fiscal 2021 and fiscal 2020, the Company's DGD Joint Venture entered into heating oil derivatives that were deemed to be cash flow hedges. As a result, the Company has accrued the other comprehensive income/(loss) portion belonging to Darling with an offset to the investment in DGD as required by FASB ASC Topic 323.

The components of other comprehensive income/(loss) and the related tax impacts for the three and nine months ended ~~April 3,~~October 2, 2021 and ~~March 28,~~September 26, 2020 are as follows (in thousands):


	Three Months Ended
	Before-Tax				Tax (Expense)				Net-of-Tax
	Amount				or Benefit				Amount
	October 2, 2021		September 26, 2020		October 2, 2021		September 26, 2020		October 2, 2021		September 26, 2020
Defined benefit pension plans
Amortization of prior service (cost)/benefit	$	5	$	9	$	(1)	$	(2)	$	4	$	7
Amortization of actuarial loss	1,052		854		(265)		(213)		787		641

Total defined benefit pension plans	1,057		863		(266)		(215)		791		648




Soybean meal option derivatives
Reclassified to earnings	(19)		—		5		—		(14)		—
Activity recognized in other comprehensive income/(loss)	(12)		—		3		—		(9)		—
Total soybean meal option derivatives	(31)		—		8		—		(23)		—
Corn option derivatives
Reclassified to earnings	4,217		229		(1,072)		(57)		3,145		172
Activity recognized in other comprehensive income/(loss)	647		(3,588)		(164)		898		483		(2,690)
Total corn option derivatives	4,864		(3,359)		(1,236)		841		3,628		(2,518)
Heating oil derivatives
Activity recognized in other comprehensive income/(loss)	(8,699)		1,992		2,209		(498)		(6,490)		1,494
Total heating oil derivatives	(8,699)		1,992		2,209		(498)		(6,490)		1,494
Foreign exchange derivatives
Reclassified to earnings	(1,889)		(5,317)		565		385		(1,324)		(4,932)
Activity recognized in other comprehensive income/(loss)	(5,397)		7,486		2,057		(1,142)		(3,340)		6,344
Total foreign exchange derivatives	(7,286)		2,169		2,622		(757)		(4,664)		1,412

Foreign currency translation	(33,689)		39,237		786		(1,383)		(32,903)		37,854

Other comprehensive income/(loss)	$	(43,784)	$	40,902	$	4,123	$	(2,012)	$	(39,661)	$	38,890


		Three Months Ended													Nine Months Ended
		Before-Tax				Tax (Expense)				Net-of-Tax					Before-Tax				Tax (Expense)				Net-of-Tax
		Amount				or Benefit				Amount					Amount				or Benefit				Amount
		April 3, 2021		March 28, 2020		April 3, 2021		March 28, 2020		April 3, 2021		March 28, 2020			October 2, 2021		September 26, 2020		October 2, 2021		September 26, 2020		October 2, 2021		September 26, 2020
Defined benefit pension plans	Defined benefit pension plans													Defined benefit pension plans
Amortization of prior service (cost)/benefit	Amortization of prior service (cost)/benefit	$	5	$	8	$	(1)	$	(2)	$	4	$	6	Amortization of prior service (cost)/benefit	$	16	$	25	$	(4)	$	(6)	$	12	$	19
Amortization of actuarial loss	Amortization of actuarial loss	1,052		854		(264)		(212)		788		642		Amortization of actuarial loss	3,157		2,562		(794)		(638)		2,363		1,924

Total defined benefit pension plans	Total defined benefit pension plans	1,057		862		(265)		(214)		792		648		Total defined benefit pension plans	3,173		2,587		(798)		(644)		2,375		1,943

Soybean meal option derivatives	Soybean meal option derivatives													Soybean meal option derivatives
Reclassified to earnings	Reclassified to earnings	(280)		0		71		0		(209)		0		Reclassified to earnings	(267)		—		68		—		(199)		—
Activity recognized in other comprehensive income/(loss)	Activity recognized in other comprehensive income/(loss)	(64)		0		16		0		(48)		0		Activity recognized in other comprehensive income/(loss)	(131)		—		33		—		(98)		—
Total soybean meal option derivatives	Total soybean meal option derivatives	(344)		0		87		0		(257)		0		Total soybean meal option derivatives	(398)		—		101		—		(297)		—
Corn option derivatives	Corn option derivatives													Corn option derivatives
Reclassified to earnings	Reclassified to earnings	3,920		300		(996)		(75)		2,924		225		Reclassified to earnings	14,880		1,168		(3,780)		(292)		11,100		876
Activity recognized in other comprehensive income/(loss)	Activity recognized in other comprehensive income/(loss)	(4,993)		(119)		1,269		30		(3,724)		(89)		Activity recognized in other comprehensive income/(loss)	(11,566)		(1,939)		2,938		485		(8,628)		(1,454)
Total corn option derivatives	Total corn option derivatives	(1,073)		181		273		(45)		(800)		136		Total corn option derivatives	3,314		(771)		(842)		193		2,472		(578)
Heating oil derivatives	Heating oil derivatives													Heating oil derivatives
Activity recognized in other comprehensive income/(loss)	Activity recognized in other comprehensive income/(loss)	4,644		14,494		(1,180)		(3,624)		3,464		10,870		Activity recognized in other comprehensive income/(loss)	(7,149)		4,565		1,815		(1,141)		(5,334)		3,424
Total heating oil derivatives	Total heating oil derivatives	4,644		14,494		(1,180)		(3,624)		3,464		10,870		Total heating oil derivatives	(7,149)		4,565		1,815		(1,141)		(5,334)		3,424
Foreign exchange derivatives	Foreign exchange derivatives													Foreign exchange derivatives
Reclassified to earnings	Reclassified to earnings	224		(412)		(75)		129		149		(283)		Reclassified to earnings	(2,503)		(10,564)		884		1,690		(1,619)		(8,874)
Activity recognized in other comprehensive income/(loss)	Activity recognized in other comprehensive income/(loss)	(10,457)		(12,920)		3,502		4,052		(6,955)		(8,868)		Activity recognized in other comprehensive income/(loss)	(4,482)		8,112		1,582		(1,298)		(2,900)		6,814
Total foreign exchange derivatives	Total foreign exchange derivatives	(10,233)		(13,332)		3,427		4,181		(6,806)		(9,151)		Total foreign exchange derivatives	(6,985)		(2,452)		2,466		392		(4,519)		(2,060)

Foreign currency translation	Foreign currency translation	(39,737)		(65,887)		1,515		651		(38,222)		(65,236)		Foreign currency translation	(50,866)		(5,798)		2,125		(1,445)		(48,741)		(7,243)

Other comprehensive income/(loss)	Other comprehensive income/(loss)	$	(45,686)	$	(63,682)	$	3,857	$	949	$	(41,829)	$	(62,733)	Other comprehensive income/(loss)	$	(58,911)	$	(1,869)	$	4,867	$	(2,645)	$	(54,044)	$	(4,514)

The following table presents the amounts reclassified out of each component of other comprehensive income/(loss), net of tax for the three and nine months ended ~~April 3,~~October 2, 2021 and ~~March 28,~~September 26, 2020 as follows (in thousands):


		Three Months Ended					Three Months Ended				Nine Months Ended
		April 3, 2021		March 28, 2020		Statement of Operations Classification			October 2, 2021		September 26, 2020		October 2, 2021		September 26, 2020		Statement of Operations Classification
Derivative instruments	Derivative instruments							Derivative instruments
Soybean meal derivatives	Soybean meal derivatives	$	280	$	0	Net sales		Soybean meal derivatives	$	19	$	—	$	267	$	—	Net sales
Foreign exchange contracts	Foreign exchange contracts	(224)		412		Net sales		Foreign exchange contracts	1,889		5,317		2,503		10,564		Net sales

Corn option derivatives	Corn option derivatives	(3,920)		(300)		Cost of sales and operating expenses		Corn option derivatives	(4,217)		(229)		(14,880)		(1,168)		Cost of sales and operating expenses
		(3,864)		112		Total before tax			(2,309)		5,088		(12,110)		9,396		Total before tax
		1,000		(54)		Income taxes			502		(328)		2,828		(1,398)		Income taxes
		(2,864)		58		Net of tax			(1,807)		4,760		(9,282)		7,998		Net of tax
Defined benefit pension plans	Defined benefit pension plans							Defined benefit pension plans
Amortization of prior service cost	Amortization of prior service cost	$	(5)	$	(8)	(a)		Amortization of prior service cost	$	(5)	$	(9)	$	(16)	$	(25)	(a)
Amortization of actuarial loss	Amortization of actuarial loss	(1,052)		(854)		(a)		Amortization of actuarial loss	(1,052)		(854)		(3,157)		(2,562)		(a)

		(1,057)		(862)		Total before tax			(1,057)		(863)		(3,173)		(2,587)		Total before tax
		265		214		Income taxes			266		215		798		644		Income taxes
		(792)		(648)		Net of tax			(791)		(648)		(2,375)		(1,943)		Net of tax
Total reclassifications	Total reclassifications	$	(3,656)	$	(590)	Net of tax		Total reclassifications	$	(2,598)	$	4,112	$	(11,657)	$	6,055	Net of tax

(a)These items are included in the computation of net periodic pension cost. See Note 1312 (Employee Benefit Plans) to the Company's Consolidated Financial Statement included herein for additional information.

The following table presents changes in each component of accumulated other comprehensive income/(loss) as of ~~April 3,~~October 2, 2021 as follows (in thousands):


		Three Months Ended April 3, 2021									Nine Months Ended October 2, 2021
		Foreign Currency		Derivative		Defined Benefit					Foreign Currency		Derivative		Defined Benefit
		Translation		Instruments		Pension Plans		Total			Translation		Instruments		Pension Plans		Total
Accumulated Other Comprehensive loss January 2, 2021, attributable to Darling, net of tax	Accumulated Other Comprehensive loss January 2, 2021, attributable to Darling, net of tax	$	(210,902)	$	(3,214)	$	(38,317)	$	(252,433)	Accumulated Other Comprehensive loss January 2, 2021, attributable to Darling, net of tax	$	(210,902)	$	(3,214)	$	(38,317)	$	(252,433)
Other comprehensive loss before reclassifications	Other comprehensive loss before reclassifications	(38,222)		(7,263)		0		(45,485)		Other comprehensive loss before reclassifications	(48,741)		(16,960)		—		(65,701)
Amounts reclassified from accumulated other comprehensive loss	Amounts reclassified from accumulated other comprehensive loss	0		2,864		792		3,656		Amounts reclassified from accumulated other comprehensive loss	—		9,282		2,375		11,657

Net current-period other comprehensive income/(loss)	Net current-period other comprehensive income/(loss)	(38,222)		(4,399)		792		(41,829)		Net current-period other comprehensive income/(loss)	(48,741)		(7,678)		2,375		(54,044)
Noncontrolling interest	Noncontrolling interest	1,534		0		0		1,534		Noncontrolling interest	2,876		—		—		2,876
Accumulated Other Comprehensive loss April 3, 2021, attributable to Darling, net of tax		(250,658)		$	(7,613)	$	(37,525)	$	(295,796)
Accumulated Other Comprehensive loss October 2, 2021, attributable to Darling, net of tax										Accumulated Other Comprehensive loss October 2, 2021, attributable to Darling, net of tax	$	(262,519)	$	(10,892)	$	(35,942)	$	(309,353)

~~(12)~~(11) Stockholders' Equity

Fiscal 2021 Long-Term Incentive Opportunity Awards (2021 LTIP). On January 4, 2021, the Compensation Committee (the “Committee”) of the Company's Board of Directors adopted the 2021 LTIP pursuant to which they awarded certain of the Company's key employees, 90,689 restricted stock units and 126,711 performance share units (the “PSUs”) under the Company's 2017 Omnibus Incentive Plan. The restricted stock units vest 33.33% on the first, second and third anniversaries of the grant date. The PSUs are tied to a three-year forward-looking performance period and will be earned based on the Company's average return on ~~capital employed~~gross investment (“~~ROCE”~~ROGI”), as calculated in accordance with the terms of the award agreement, relative to the average ~~ROCE~~ROGI of the Company's performance peer group companies, with the earned award to be determined in the first quarter of fiscal 2024, after the final results for the relevant performance period are determined. The PSUs were granted at a target of 100%, but each PSU will reduce or increase (up to 225%) depending on the Company's ~~ROCE~~ROGI relative to that of the performance peer group companies and is also subject to the application of a total shareholder return (“TSR”) cap/collar modifier depending on the Company's TSR during the performance period relative to that of the performance peer group companies.

On August 3, 2020, the Company’s Board of Directors approved the extension for an additional two years of its previously announced share repurchase program and refreshed the amount of the program back up to its original amount of an aggregate of $200.0 million of the Company's Common Stock depending on market conditions. During the first nine months of fiscal 2021, $97.9 million of common stock was repurchased under the repurchase program. As of ~~April 3,~~October 2, 2021, the Company had approximately ~~$200.0~~$102.1 million remaining under the share repurchase program initially approved in August 2017 and subsequently extended to August 13, 2022. ~~During the first quarter of fiscal 2021, 0 common stock was repurchased under the repurchase program.~~

~~(13)~~(12) Employee Benefit Plans

The Company has retirement and pension plans covering a substantial number of its domestic and foreign employees. Most retirement benefits are provided by the Company under separate final-pay noncontributory and contributory defined benefit and defined contribution plans for all salaried and hourly employees (excluding those covered by union-sponsored plans) who meet service and age requirements. Although various defined benefit formulas exist for employees, generally these are based on length of service and earnings patterns during employment. Effective January 1, 2012, the Company's Board of Directors authorized the Company to proceed with the restructuring of its domestic retirement benefit program to include the closing of Darling's salaried and hourly defined benefit plans to new participants as well as the freezing of service and wage accruals thereunder effective December 31, 2011 (a curtailment of these plans for financial reporting purposes) and the enhancing of benefits under the Company's domestic defined contribution plans. The Company-sponsored domestic hourly union plan has not been curtailed; however, several locations of the Company-sponsored domestic hourly union plan have been curtailed as a result of collective bargaining renewals for those sites.

Net pension cost for the three and nine months ended ~~April 3,~~October 2, 2021 and ~~March 28,~~September 26, 2020 includes the following components (in thousands):


		Pension Benefits				Pension Benefits						Pension Benefits
		Three Months Ended				Three Months Ended						Nine Months Ended
		April 3, 2021		March 28, 2020				October 2, 2021		September 26, 2020			October 2, 2021		September 26, 2020
Service cost	Service cost	$	785	$	755		Service cost	$	778	$	764		$	2,359	$	2,268
Interest cost	Interest cost	1,204		1,428			Interest cost	1,203		1,425			3,616		4,283
Expected return on plan assets	Expected return on plan assets	(2,321)		(2,039)			Expected return on plan assets	(2,320)		(2,042)			(6,969)		(6,113)
Amortization of prior service cost	Amortization of prior service cost	5		8			Amortization of prior service cost	5		9			16		25
Amortization of actuarial loss	Amortization of actuarial loss	1,052		854			Amortization of actuarial loss	1,052		854			3,157		2,562

Net pension cost	Net pension cost	$	725	$	1,006		Net pension cost	$	718	$	1,010		$	2,179	$	3,025

The Company's funding policy for employee benefit pension plans is to contribute annually not less than the minimum amount required nor more than the maximum amount that can be deducted for federal and foreign income tax purposes. Contributions are intended to provide not only for benefits attributed to service to date, but also for those expected to be earned in the future. Based on actuarial estimates at ~~April 3,~~October 2, 2021, the Company expects to contribute approximately ~~$3.8~~$3.7 million to its pension plans to meet funding requirements during the next twelve months. Additionally, the Company has made tax deductible discretionary and required contributions to its pension plans for the ~~three~~nine months ended ~~April 3,~~October 2, 2021 and ~~March 28,~~September 26, 2020 of approximately ~~$0.9~~$2.8 million and ~~$0.8~~$10.3 million, respectively.

The Company participates in various multiemployer pension plans which provide defined benefits to certain employees covered by labor contracts. These plans are not administered by the Company and contributions are determined in accordance with provisions of negotiated labor contracts to meet their pension benefit obligations to their participants. The Company's contributions to each multiemployer plan represent less than 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 on 2 of the plans in which the Company currently participates could be material to the Company, with 1 of these material plans certified as critical or red zone. With respect to the other multiemployer pension plans in which the Company participates and which are not individually significant, 5 plans have certified as critical or red zone and 2 plans have certified as endangered or yellow zone as defined by the Pension Protection Act of 2006.

The Company currently has withdrawal liabilities recorded on 4 U.S. multiemployer plans in which it participated. During the first ~~quarter~~nine months of fiscal 2021, the Company was notified by one of these multiemployer plans that the Company's withdrawal liability has increased and as a result the Company recorded an additional liability of approximately $1.3 million. As of ~~April 3,~~October 2, 2021, the Company has an aggregate accrued liability of approximately ~~$4.0~~$3.9 million representing the present value of scheduled withdrawal liability payments on the multiemployer plans that have given notice of withdrawal. While the Company has no ability to calculate a possible current liability for under-funded multiemployer plans that could terminate or could require additional funding under the Pension Protection Act of 2006, the amounts could be material.

~~(14)~~(13) Derivatives

The Company’s operations are exposed to market risks relating to commodity prices that affect the Company’s cost of raw materials, finished product prices and energy costs and the risk of changes in interest rates and foreign currency exchange rates.

The Company makes limited use of derivative instruments to manage cash flow risks related to natural gas usage, diesel fuel usage, inventory, forecasted sales and foreign currency exchange rates. The Company does not use derivative instruments for trading purposes. Natural gas swaps and options are entered into with the intent of managing the overall cost of natural gas usage by reducing the potential impact of seasonal weather demands on natural gas that increases natural gas prices. Heating oil swaps and options are entered into with the intent of managing the overall cost of diesel fuel usage by reducing the potential impact of seasonal weather demands on diesel fuel that increases diesel fuel prices. Soybean meal options are entered into with the intent of managing the impact of changing prices for poultry meal sales. Corn options and future contracts are entered into with the intent of managing U.S. forecasted sales of bakery by-products (“BBP”) by reducing the impact of changing prices. Foreign currency forward and option contracts are entered into to mitigate the foreign exchange rate risk for transactions designated in a currency other than the local functional currency. At ~~April 3,~~October 2, 2021, the Company had corn option ~~contracts, soybean meal forward~~ contracts and foreign exchange forward and option contracts outstanding that qualified and were

designated for hedge accounting as well as corn forward contracts and foreign currency forward contracts that did not qualify and were not designated for hedge accounting.

Entities are required to report all derivative instruments in the statement of financial position at fair value. The accounting for changes in the fair value (i.e., gains or losses) of a derivative instrument depends on whether it has been designated and qualifies as part of a hedging relationship and, if so, on the reason for holding the instrument. If certain conditions are met, entities may elect to designate a derivative instrument as a hedge of exposures to changes in fair value, cash flows or foreign currencies. If the hedged exposure is a cash flow exposure, the gain or loss on the derivative instrument is reported initially as a component of other comprehensive income (outside of earnings) and is subsequently reclassified into earnings when the forecasted transaction affects earnings. Any amounts excluded from the assessment of hedge effectiveness are reported in earnings immediately. If the derivative instrument is not designated as a hedge, the gain or loss is recognized in earnings in the period of change.

Cash Flow Hedges

In fiscal 2020 and fiscal 2021, the Company entered into corn option contracts on the Chicago Board of Trade that are designated as cash flow hedges. Under the terms of the corn option contracts, the Company hedged a portion of its U.S. forecasted sales of BBP into the fourth quarter of fiscal ~~2021.~~2022. At ~~April 3,~~October 2, 2021 and January 2, 2021, the aggregate fair value of these corn option contracts was approximately ~~$8.0~~$2.2 million and $6.8 million, respectively. These amounts are included in other current assets, accrued expenses and noncurrent liabilities on the balance sheet, with an offset recorded in accumulated other comprehensive loss. The Company may enter into corn option contracts in the future from time to time.

In fiscal 2020 and fiscal 2021, the Company entered into foreign exchange forward and option contracts that are designated as cash flow hedges. Under the terms of the foreign exchange contracts, the Company hedged a portion of its forecasted collagen sales in currencies other than the functional currency through the fourth quarter of fiscal 2022. At ~~April 3,~~October 2, 2021 and January 2, 2021, the aggregate fair value of these foreign exchange contracts was approximately ~~$0.4~~$2.5 million and $11.6 million, respectively. These amounts are included in other current assets, accrued expense and noncurrent assets on the balance sheet, with an offset recorded in accumulated other comprehensive loss.

In fiscal 2020 and fiscal 2021, the Company entered into soybean meal forward contracts to hedge a portion of its forecasted poultry meal sales into the ~~second~~third quarter of fiscal 2021. ~~As of April 3,~~At October 2, 2021 and January 2, 2021, the aggregate fair value of the soybean meal contracts was ~~$0.1 million~~zero and $0.4 million, respectively. These amounts are included in other current assets on the balance sheet, with an offset recorded in accumulated other comprehensive loss.

As of ~~April 3,~~October 2, 2021, the Company had the following designated and non-designated outstanding forward and option contract amounts that were entered into to hedge foreign currency transactions in currencies other than the functional currency and forecasted transactions in currencies other than the functional currency (in thousands):


Functional Currency	Functional Currency		Contract Currency		Functional Currency		Contract Currency
Type	Type	Amount	Type	Amount	Type	Amount	Type	Amount
Brazilian real	Brazilian real	49,335	Euro	7,305	Brazilian real	22,978	Euro	3,536
Brazilian real	Brazilian real	1,103,561	U.S. dollar	241,320	Brazilian real	1,116,635	U.S. dollar	237,950

Euro	Euro	35,967	U.S. dollar	42,810	Euro	33,298	U.S. dollar	39,070
Euro	Euro	43,119	Polish zloty	198,500	Euro	24,960	Polish zloty	114,000
Euro	Euro	6,293	Japanese yen	808,776	Euro	7,160	Japanese yen	929,960
Euro	Euro	16,176	Chinese renminbi	126,124	Euro	20,692	Chinese renminbi	157,474
Euro	Euro	42,340	Australian dollar	65,550	Euro	13,670	Australian dollar	21,850
Euro	Euro	3,048	British pound	2,600	Euro	2,810	British pound	2,400
Euro	Euro	32	Canadian dollar	50	Euro	34	Canadian dollar	50

Polish zloty	Polish zloty	1,031	U.S. dollar	262	Polish zloty	2,057	U.S. dollar	524
Polish zloty	Polish zloty	24,116	Euro	5,195	Polish zloty	20,589	Euro	4,483
British pound	British pound	176	Euro	207	British pound	179	Euro	210

Japanese yen	Japanese yen	231,803	U.S. dollar	2,159	Japanese yen	228,482	U.S. dollar	2,070
U.S. dollar	U.S. dollar	100	Japanese yen	11,000	U.S. dollar	514	Japanese yen	57,000
U.S. dollar	U.S. dollar	165,311	Euro	140,000	U.S. dollar	293,089	Euro	250,000

The Company estimates the amount that will be reclassified from accumulated other comprehensive loss at ~~April 3,~~October 2, 2021 into earnings over the next 12 months will be approximately ~~$10.0~~$14.3 million. As of ~~April 3,~~October 2, 2021, 0no amounts have been reclassified into earnings as a result of the discontinuance of cash flow hedges.

The table below summarizes the effect of derivatives not designated as hedges on the Company's consolidated statements of operations for the three and nine months ended ~~April 3,~~October 2, 2021 and ~~March 28,~~September 26, 2020 (in thousands):

Loss or (Gain) Recognized in Income on Derivatives Not Designated as Hedges
Three Months Ended
Derivatives not designated as hedging instruments Location April 3, 2021 March 28, 2020
Foreign exchange Foreign currency loss $ 5,389 $ (1,295)
Foreign exchange Net sales 729 730
Foreign exchange Cost of sales and operating expenses (444) (887)
Foreign exchange Selling, general and administrative expense 2,531 5,724
Corn options and futures Net sales (998) 855
Corn options and futures Cost of sales and operating expenses 1,469 (1,841)
Total $ 8,676 $ 3,286


		Loss or (Gain) Recognized in Income on Derivatives Not Designated as Hedges
		Three Months Ended				Nine Months Ended
Derivatives not designated as hedging instruments	Location	October 2, 2021		September 26, 2020		October 2, 2021		September 26, 2020

Foreign exchange	Foreign currency loss	$	5,656	$	(1,957)	$	13,626	$	(1,995)
Foreign exchange	Net sales	323		(566)		895		57
Foreign exchange	Cost of sales and operating expenses	(98)		111		(524)		(946)
Foreign exchange	Selling, general and administrative expenses	2,732		1,187		2,001		8,091
Corn options and futures	Net sales	753		(914)		(2,724)		876
Corn options and futures	Cost of sales and operating expenses	(1,871)		754		3,683		(2,332)
Heating oil swaps and options	Net sales	—		—		—		(38)



Total		$	7,495	$	(1,385)	$	16,957	$	3,713

At ~~April 3,~~October 2, 2021, the Company had forward purchase agreements in place for purchases of approximately ~~$71.9~~$118.8 million of natural gas and diesel fuel. The Company intends to take physical delivery of the commodities under the forward purchase agreements and accordingly, these contracts are not subject to the requirements of fair value accounting because they qualify as normal purchases.

~~(15)~~(14) Fair Value Measurements

FASB authoritative guidance defines fair value, establishes a framework for measuring fair value, and expands disclosures about fair value measurements. The following table presents the Company’s financial instruments that are measured at fair value on a recurring and nonrecurring basis as of ~~April 3,~~October 2, 2021 and are categorized using the fair value hierarchy under FASB authoritative guidance. The fair value hierarchy has three levels based on the reliability of the inputs used to determine the fair value.


				Fair Value Measurements at April 3, 2021 Using									Fair Value Measurements at October 2, 2021 Using
				Quoted Prices in Active Markets for Identical Assets		Significant Other Observable Inputs		Significant Unobservable Inputs					Quoted Prices in Active Markets for Identical Assets		Significant Other Observable Inputs		Significant Unobservable Inputs
(In thousands of dollars)	(In thousands of dollars)	Total		(Level 1)		(Level 2)		(Level 3)		(In thousands of dollars)	Total		(Level 1)		(Level 2)		(Level 3)
Assets:	Assets:									Assets:
Derivative instruments	Derivative instruments	$	2,211	$	0	$	2,211	$	0	Derivative instruments	$	5,645	$	—	$	5,645	$	—
Total Assets	Total Assets	$	2,211	$	0	$	2,211	$	0	Total Assets	$	5,645	$	—	$	5,645	$	—

Liabilities:	Liabilities:									Liabilities:
Derivative instruments	Derivative instruments	$	10,483	$	0	$	10,483	$	0	Derivative instruments	$	8,516	$	—	$	8,516	$	—
5.25% Senior notes	5.25% Senior notes	526,650		0		526,650		0		5.25% Senior notes	520,000		—		520,000		—
3.625% Senior notes	3.625% Senior notes	617,284		0		617,284		0		3.625% Senior notes	606,854		—		606,854		—
Term loan B	Term loan B	249,375		0		249,375		0		Term loan B	200,000		—		200,000		—��
Revolver debt	Revolver debt	68,655		0		68,655		0		Revolver debt	32,505		—		32,505		—
Total Liabilities	Total Liabilities	$	1,472,447	$	0	$	1,472,447	$	0	Total Liabilities	$	1,367,875	$	—	$	1,367,875	$	—


				Fair Value Measurements at January 2, 2021 Using									Fair Value Measurements at January 2, 2021 Using
				Quoted Prices in Active Markets for Identical Assets		Significant Other Observable Inputs		Significant Unobservable Inputs					Quoted Prices in Active Markets for Identical Assets		Significant Other Observable Inputs		Significant Unobservable Inputs
(In thousands of dollars)	(In thousands of dollars)	Total		(Level 1)		(Level 2)		(Level 3)		(In thousands of dollars)	Total		(Level 1)		(Level 2)		(Level 3)
Assets:	Assets:									Assets:
Derivative instruments	Derivative instruments	$	17,358	$	0	$	17,358	$	0	Derivative instruments	$	17,358	$	—	$	17,358	$	—
Total Assets	Total Assets	$	17,358	$	0	$	17,358	$	0	Total Assets	$	17,358	$	—	$	17,358	$	—

Liabilities:	Liabilities:									Liabilities:
Derivative instruments	Derivative instruments	$	9,778	$	0	$	9,778	$	0	Derivative instruments	$	9,778	$	—	$	9,778	$	—
5.25% Senior notes	5.25% Senior notes	531,300		0		531,300		0		5.25% Senior notes	531,300		—		531,300		—
3.625% Senior notes	3.625% Senior notes	646,323		0		646,323		0		3.625% Senior notes	646,323		—		646,323		—
Term loan B	Term loan B	298,500		0		298,500		0		Term loan B	298,500		—		298,500		—
Revolver debt	Revolver debt	54,175		0		54,175		0		Revolver debt	54,175		—		54,175		—
Total Liabilities	Total Liabilities	$	1,540,076	$	0	$	1,540,076	$	0	Total Liabilities	$	1,540,076	$	—	$	1,540,076	$	—

Derivative assets and liabilities consist of the Company’s corn option and future contracts, foreign currency forward and option contracts and soybean meal forward contracts which represent the difference between observable market rates of commonly quoted intervals for similar assets and liabilities in active markets and the fixed swap rate considering the instruments term, notional amount and credit risk. See Note 1413 (Derivatives) to the Company's Consolidated Financial Statements included herein for discussion on the Company's derivatives.

The carrying amount of cash and cash equivalents, accounts receivable, accounts payable and accrued expenses approximates fair value due to the short maturity of these instruments and as such have been excluded from the table above. The carrying amount of the Company's other debt is not deemed to be significantly different from the fair value and all other instruments have been recorded at fair value.

The fair value of the senior notes, term loan B and revolver debt is based on market quotation from third-party banks.

~~(16)~~

(15) Restructuring and Asset Impairment Charges

In December 2020, due to unfavorable economics in the biodiesel industry, the Company made the decision to shut down processing operations at its biodiesel facilities located in the United States and Canada, and there are no current plans to resume biodiesel production at these facilities in the future. In addition to charges incurred in fiscal 2020, the Company has incurred additional restructuring and asset impairment charges in fiscal 2021 related to the biodiesel facilities of approximately $0.8 million, with approximately $0.4 million of this amount being employee termination costs in Canada and the remainder representing charges to long-lived assets and other charges.

~~(17)~~(16) Contingencies

The Company is a party to various lawsuits, claims and loss contingencies arising in the ordinary course of its business, including insured worker's compensation, auto, and general liability claims, assertions by certain regulatory and governmental agencies related to permitting requirements and environmental matters, including air, wastewater and storm water discharges from the Company’s processing facilities, litigation involving tort, contract, statutory, labor, employment, and other claims, and tax matters.

The Company’s workers compensation, auto and general liability policies contain significant deductibles or self-insured retentions. The Company estimates and accrues its expected ultimate claim costs related to accidents occurring during each fiscal year under these insurance policies and carries this accrual as a reserve until these claims are paid by the Company.

As a result of the matters discussed above, the Company has established loss reserves for insurance, environmental, litigation and tax contingencies. At ~~April 3,~~October 2, 2021 and January 2, 2021, the reserves for insurance, environmental, litigation and tax contingencies reflected on the balance sheet in accrued expenses and other non-current liabilities were approximately ~~$67.8~~$70.8 million and $66.2 million, respectively. The Company has insurance recovery receivables of approximately $27.0 million as of ~~April 3,~~October 2, 2021 and January 2, 2021, related to the insurance contingencies. The Company's management believes these reserves for contingencies are reasonable and sufficient based upon present

governmental regulations and information currently available to management; however, there can be no assurance that final costs related to these contingencies will not exceed current estimates. The Company believes that the likelihood is remote that any additional liability from the lawsuits and claims that may not be covered by insurance would have a material effect on the Company's financial position, results of operations or cash flows.

Lower Passaic River Area. In December 2009, the Company, along with numerous other entities, received notice from the United States Environmental Protection Agency (“EPA”) that the Company (as alleged successor-in-interest to The Standard Tallow Corporation) is considered a potentially responsible party (a “PRP”) with respect to alleged contamination in the lower 17-mile area of the Passaic River which is part of the Diamond Alkali Superfund Site located in Newark, New Jersey. The Company’s designation as a PRP is based upon the operation of former plant sites located in Newark and Kearny, New Jersey by The Standard Tallow Corporation, an entity that the Company acquired in 1996. In the letter, EPA requested that the Company join a group of other parties in funding a remedial investigation and feasibility study at the site. As of the date of this report, the Company has not agreed to participate in the funding group. In March 2016, the Company received another letter from EPA notifying the Company that it had issued a Record of Decision (the “ROD”) selecting a remedy for the lower 8.3 miles of the lower Passaic River area at an estimated cost of $1.38 billion. The EPA letter ~~makes~~made no demand on the Company and ~~lays~~laid out a framework for remedial design/remedial action implementation in which the EPA will first seek funding from major PRPs. The letter indicates that the EPA has sent the letter to over 100 parties, which include large chemical and refining companies, manufacturing companies, foundries, plastic companies, pharmaceutical companies and food and consumer product companies. The EPA has already offered early cash out settlements to 20 of the other PRPs and has stated that other parties who did not discharge any of the 8 contaminants of concern identified in the ROD (the “COCs”) may also be eligible for cash out settlements and conducted a settlement analysis using a third-party allocator. The Company ~~participated in this allocation process as it~~ asserts that it is not responsible for any liabilities of its former subsidiary The Standard Tallow Corporation, which was legally dissolved in 2000, and that, in any event, The Standard Tallow Corporation did not discharge any of the eight contaminants of concern identified in the ROD (the “COCs”). Subsequently, the EPA conducted a settlement analysis using a third-party allocator and offered early cash out settlements to those PRPs for whom the third-party allocator determined did not discharge any of the COCs. InThe Company participated in this allocation process, and in November 2019, ~~the Company~~ received a cash out settlement offer from the EPA in the amount of $0.6 million ($0.3 million for each of the former plant sites in question) for liabilities relating to the lower 8.3 miles of the lower Passaic River area. The Company accepted this settlement offer, and the settlement became effective on April 16, 2021 following the completion of the EPA's administrative approval process. On September 30, 2016, Occidental Chemical Corporation (“OCC”) entered into an agreement with the EPA to perform the remedial design for the cleanup plan for the lower 8.3 miles of the Passaic River. On June 30, 2018, OCC filed a complaint in the United States District Court for the District of New Jersey against over 100 companies, including the Company, seeking cost recovery or contribution for costs under the Comprehensive Environmental Response, Compensation and Liability Act (“CERCLA”) relating to various investigations and cleanups OCC has conducted or is conducting in connection with the Passaic River. According to the complaint, OCC has incurred or is incurring costs which include the estimated cost to complete the remedial design for the cleanup plan for the lower 8.3 miles of the Passaic River. OCC is also seeking

a declaratory judgment to hold the defendants liable for their proper shares of future response costs, including the remedial action for the lower 8.3 miles of the Passaic River. The Company, along with 40 of the other defendants, had previously received a release from OCC of its CERCLA contribution claim of $165 million associated with the costs to design the remedy for the lower 8.3 miles of the Passaic River. Furthermore, the Company's settlement with the EPA described above could preclude certain of the claims alleged by OCC against the Company. The Company's ultimate liability, if any, for investigatory costs, remedial costs and/or natural resource damages in connection with the lower Passaic River area cannot be determined at this time; however, as of the date of this report, the Company has found no definitive evidence that the former Standard Tallow Corporation plant sites contributed any of the COCs to the Passaic River and, therefore, there is nothing that leads the Company to believe that this matter will have a material effect on the Company's financial position, results of operations or cash flows.

~~(18)~~(17) Business Segments

The Company sells its products domestically and internationally, operating within 3 industry segments: Feed Ingredients, Food Ingredients and Fuel Ingredients. The measure of segment income (loss) includes all revenues, operating expenses (excluding certain amortization of intangibles), and selling, general and administrative expenses incurred at all operating locations and excludes corporate activities.

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

Feed Ingredients

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

Food Ingredients

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

Fuel Ingredients

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

Business Segments (in thousands):

Feed Ingredients Food Ingredients Fuel Ingredients Corporate Total
Three Months Ended April 3, 2021
Net Sales $ 651,444 $ 298,065 $ 97,207 $ 0 $ 1,046,716
Cost of sales and operating expenses 474,581 226,413 71,790 0 772,784
Gross Margin 176,863 71,652 25,417 0 273,932
Loss/(gain) on sale of assets (139) 55 20 0 (64)
Selling, general and administrative expense 52,620 25,191 4,867 14,720 97,398
Restructuring and asset impairment charges 0 0 778 0 778
Depreciation and amortization 54,609 14,883 6,155 2,887 78,534
Equity in net income of Diamond Green Diesel 0 0 102,225 0 102,225
Segment operating income/(loss) 69,773 31,523 115,822 (17,607) 199,511
Equity in net income of other unconsolidated subsidiaries 612 0 0 0 612
Segment income/(loss) 70,385 31,523 115,822 (17,607) 200,123
Total other expense (17,997)
Income before income taxes $ 182,126
Segment assets at April 3, 2021 $ 2,708,035 $ 1,235,547 $ 1,229,461 $ 418,404 $ 5,591,447

2522


		Feed Ingredients		Food Ingredients		Fuel Ingredients		Corporate		Total			Feed Ingredients		Food Ingredients		Fuel Ingredients		Corporate		Total
Three Months Ended March 28, 2020
Three Months Ended October 2, 2021												Three Months Ended October 2, 2021
Net Sales	Net Sales	$	512,625	$	270,294	$	69,923	$	0	$	852,842	Net Sales	$	769,626	$	311,856	$	104,434	$	—	$	1,185,916
Cost of sales and operating expenses	Cost of sales and operating expenses	388,453		205,430		53,025		0		646,908		Cost of sales and operating expenses	553,662		241,308		64,634		—		859,604
Gross Margin	Gross Margin	124,172		64,864		16,898		0		205,934		Gross Margin	215,964		70,548		39,800		—		326,312

Loss on sale of assets		50		2		9		0		61
Selling, general and administrative expense		53,947		25,476		1,654		15,116		96,193
Gain on sale of assets												Gain on sale of assets	(229)		(8)		(264)		—		(501)
Selling, general and administrative expenses												Selling, general and administrative expenses	54,997		24,417		4,481		13,380		97,275

Depreciation and amortization	Depreciation and amortization	53,521		20,305		8,092		2,753		84,671		Depreciation and amortization	53,824		14,933		6,361		2,708		77,826
Equity in net income of Diamond Green Diesel	Equity in net income of Diamond Green Diesel	0		0		97,820		0		97,820		Equity in net income of Diamond Green Diesel	—		—		53,951		—		53,951
Segment operating income/(loss)	Segment operating income/(loss)	16,654		19,081		104,963		(17,869)		122,829		Segment operating income/(loss)	107,372		31,206		83,173		(16,088)		205,663

Equity in net income of other unconsolidated subsidiaries	Equity in net income of other unconsolidated subsidiaries	869		0		0		0		869		Equity in net income of other unconsolidated subsidiaries	1,647		—		—		—		1,647
Segment income/(loss)	Segment income/(loss)	17,523		19,081		104,963		(17,869)		123,698		Segment income/(loss)	109,019		31,206		83,173		(16,088)		207,310

Total other expense	Total other expense									(19,307)		Total other expense									(16,467)
Income before income taxes	Income before income taxes									$	104,391	Income before income taxes									$	190,843

Segment assets at January 2, 2021		$	2,708,922	$	1,335,769	$	1,160,132	$	408,508	$	5,613,331


	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

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

Total other expense									(21,944)
Income before income taxes									$	106,417


	Feed Ingredients		Food Ingredients		Fuel Ingredients		Corporate		Total
Nine Months Ended October 2, 2021
Net Sales	$	2,193,002	$	926,952	$	311,347	$	—	$	3,431,301
Cost of sales and operating expenses	1,584,667		706,260		219,534		—		2,510,461
Gross Margin	608,335		220,692		91,813		—		920,840

Gain on sale of assets	(490)		(1)		(302)		—		(793)
Selling, general and administrative expenses	162,594		75,150		13,822		42,239		293,805
Restructuring and asset impairment charges	—		—		778		—		778

Depreciation and amortization	162,404		45,666		19,214		8,298		235,582
Equity in net income of Diamond Green Diesel	—		—		281,964		—		281,964
Segment operating income/(loss)	283,827		99,877		340,265		(50,537)		673,432

Equity in net income of other unconsolidated subsidiaries	4,199		—		—		—		4,199
Segment income/(loss)	288,026		99,877		340,265		(50,537)		677,631

Total other expense									(51,614)
Income before income taxes									$	626,017

Segment assets at October 2, 2021	$	2,787,376	$	1,213,831	$	1,413,049	$	511,464	$	5,925,720


	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

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

Total other expense									(61,790)
Income before income taxes									$	297,249

Segment assets at January 2, 2021	$	2,708,922	$	1,335,769	$	1,160,132	$	408,508	$	5,613,331

~~(19)~~(18) Revenue

The Company extends payment terms to its customers based on commercially acceptable practices. The term between invoicing and payment due date is not significant. Revenue is measured as the amount of consideration the Company expects to receive in exchange for transferring finished products or performing services, which is generally based on an executed agreement or purchase order.

Most of the Company's products are shipped based on the customer specifications. Customer returns are infrequent and not material to the Company. Adjustments to net sales for sales deductions are generally recognized in the same period as the sale or when known. Customers in certain industries or countries may be required to prepay prior to shipment in order to maintain payment protection. These represent short-term prepayment from customers and are not material to the Company. The Company elected to treat shipping and handling as fulfilment costs, which will result in billed freight recorded in cost of sales and netted against freight costs. Sales, value-add, and other taxes collected concurrently with revenue-producing activities are excluded from revenue and booked on a net basis.

The following tables present the Company revenues disaggregated by geographic area and major product types by reportable segment for the three and nine months ended ~~April 3,~~October 2, 2021 and ~~March 28,~~September 26, 2020 (in thousands):


	Three Months Ended October 2, 2021
	Feed Ingredients		Food Ingredients		Fuel Ingredients		Total
Geographic Area
North America	$	647,114	$	66,995	$	2	$	714,111
Europe	114,762		166,039		104,432		385,233
China	4,910		55,856		—		60,766
South America	—		8,943		—		8,943
Other	2,840		14,023		—		16,863
Net sales	$	769,626	$	311,856	$	104,434	$	1,185,916

Major product types
Fats	$	307,929	$	48,579	$	—	$	356,508
Used cooking oil	69,859		—		—		69,859
Proteins	257,991		—		—		257,991
Bakery	80,543		—		—		80,543
Other rendering	43,741		—		—		43,741
Food ingredients	—		231,645		—		231,645
Bioenergy	—		—		104,432		104,432
Biofuels	—		—		2		2
Other	9,563		31,632		—		41,195
Net sales	$	769,626	$	311,856	$	104,434	$	1,185,916


	Nine Months Ended October 2, 2021
	Feed Ingredients		Food Ingredients		Fuel Ingredients		Total
Geographic Area
North America	$	1,856,642	$	207,100	$	3,376	$	2,067,118
Europe	316,804		487,056		307,971		1,111,831
China	10,594		165,880		—		176,474
South America	—		24,987		—		24,987
Other	8,962		41,929		—		50,891
Net sales	$	2,193,002	$	926,952	$	311,347	$	3,431,301

Major product types
Fats	$	829,494	$	131,123	$	—	$	960,617
Used cooking oil	207,325		—		—		207,325
Proteins	771,889		—		—		771,889
Bakery	222,850		—		—		222,850
Other rendering	132,150		—		—		132,150
Food ingredients	—		700,809		—		700,809
Bioenergy	—		—		307,971		307,971
Biofuels	—		—		3,376		3,376
Other	29,294		95,020		—		124,314
Net sales	$	2,193,002	$	926,952	$	311,347	$	3,431,301

Three Months Ended April 3, 2021
Feed Ingredients Food Ingredients Fuel Ingredients Total
Geographic Area
North America $ 549,015 $ 60,940 $ 3,350 $ 613,305
Europe 97,645 155,363 93,857 346,865
China 1,938 57,932 0 59,870
South America 0 10,454 0 10,454
Other 2,846 13,376 0 16,222
Net sales $ 651,444 $ 298,065 $ 97,207 $ 1,046,716
Major product types
Fats $ 229,006 $ 41,433 $ 0 $ 270,439
Used cooking oil 51,029 0 0 51,029
Proteins 255,507 0 0 255,507
Bakery 63,105 0 0 63,105
Other rendering 42,957 0 0 42,957
Food ingredients 0 229,542 0 229,542
Bioenergy 0 0 93,857 93,857
Biofuels 0 0 3,350 3,350
Other 9,840 27,090 0 36,930
Net sales $ 651,444 $ 298,065 $ 97,207 $ 1,046,716

Three Months Ended March 28, 2020
Feed Ingredients Food Ingredients Fuel Ingredients Total
Geographic Area
North America $ 427,463 $ 46,415 $ 5,400 $ 479,278
Europe 80,443 158,587 64,523 303,553
China 2,423 39,956 0 42,379
South America 0 10,586 0 10,586
Other 2,296 14,750 0 17,046
Net sales $ 512,625 $ 270,294 $ 69,923 $ 852,842
Major product types
Fats $ 163,284 $ 33,476 $ 0 $ 196,760
Used cooking oil 47,608 0 0 47,608
Proteins 195,980 0 0 195,980
Bakery 47,101 0 0 47,101
Other rendering 47,164 0 0 47,164
Food ingredients 0 214,793 0 214,793
Bioenergy 0 0 64,523 64,523
Biofuels 0 0 5,400 5,400
Other 11,488 22,025 0 33,513
Net sales $ 512,625 $ 270,294 $ 69,923 $ 852,842

~~Revenue from Contracts with Customers~~

The Company has 2 primary revenue streams. Finished product revenues are recognized when control of the promised finished product is transferred to the Company's customers, in an amount that reflects the consideration the Company expects to be entitled to in exchange for the finished product. Service revenues are recognized in net sales when the service occurs.


	Three Months Ended September 26, 2020
	Feed Ingredients		Food Ingredients		Fuel Ingredients		Total
Geographic Area
North America	$	390,182	$	66,554	$	5,678	$	462,414
Europe	85,803		152,372		70,024		308,199
China	4,310		43,491		—		47,801
South America	—		11,711		—		11,711
Other	2,730		17,714		—		20,444
Net sales	$	483,025	$	291,842	$	75,702	$	850,569

Major product types
Fats	$	153,496	$	35,108	$	—	$	188,604
Used cooking oil	45,659		—		—		45,659
Proteins	190,663		—		—		190,663
Bakery	44,402		—		—		44,402
Other rendering	39,041		—		—		39,041
Food ingredients	—		238,651		—		238,651
Bioenergy	—		—		70,024		70,024
Biofuels	—		—		5,678		5,678
Other	9,764		18,083		—		27,847
Net sales	$	483,025	$	291,842	$	75,702	$	850,569

~~Fats and Proteins~~. Fats and Proteins include the Company's global activities related to the collection and processing of beef, poultry and pork animal by-products into finished products of non-food grade oils, food grade fats and protein meal. Fats and proteins net sales are recognized when the Company ships the finished product to the customer and control has been transferred.

~~Used Cooking Oil~~. Used cooking oil includes collection and processing of used cooking oil into finished products of non-food grade fats. Used cooking oil net sales are recognized when the Company ships the finished product to the customer and control has been transferred.

~~Bakery~~. Bakery includes collection and processing of bakery residuals into finished product including Cookie Meal®, an animal feed ingredient primarily used in poultry and swine rations. Bakery net sales are recognized when the Company ships the finished product to the customer and control has been transferred.

~~Other Rendering~~. Other rendering include hides, pet food products, and service charges. Hides and pet food net sales are recognized when the Company ships the finished product to the customer and control has been transferred. Service revenues are recognized in net sales when the service has occurred.

~~Food Ingredients.~~ Food ingredients includes collection and processing of pigskin, hide, bone and fish into finished product. It also includes harvesting, sorting and selling of hog and sheep casings as well as harvesting, purchasing and processing of hog, sheep and beef meat for pet food industry. Collagen and CTH meat and casings net sales are recognized when the Company ships the finished product to the customer and control has been transferred.

~~Bioenergy~~. Bioenergy includes Ecoson, which converts organic sludge and food waste into biogas and Rendac, which collects fallen stock and animal waste for a fee and processes these materials into fats and meals that can only be used as low grade energy or fuel for boilers and cement kilns. Net sales are recognized when the finished product is shipped to the customer and control has been transferred. Service revenues are recognized in net sales when the service has occurred.

~~Biofuels~~. Biofuels includes the North American processing of rendered animal fats, recycled cooking oils and third party additives to produce diesel fuel. Biofuel net sales are recognized when the finished product is shipped to the customer and control has been transferred.

~~Other~~. Other includes grease trap collection and environmental services to food processors in the Feed Ingredients segment and Sonac Bone and Sonac Heparin in the Food Ingredients segment. Net sales are recognized when the Company ships the finished product to the customer and control has been transferred. Service revenues are recognized in net sales when the service has occurred.


	Nine Months Ended September 26, 2020
	Feed Ingredients		Food Ingredients		Fuel Ingredients		Total
Geographic Area
North America	$	1,236,963	$	171,517	$	12,069	$	1,420,549
Europe	244,712		468,285		199,605		912,602
China	10,087		128,490		—		138,577
South America	—		24,377		—		24,377
Other	7,578		48,401		—		55,979
Net sales	$	1,499,340	$	841,070	$	211,674	$	2,552,084

Major product types
Fats	$	484,287	$	100,423	$	—	$	584,710
Used cooking oil	132,274		—		—		132,274
Proteins	596,784		—		—		596,784
Bakery	129,467		—		—		129,467
Other rendering	125,669		—		—		125,669
Food ingredients	—		676,970		—		676,970
Bioenergy	—		—		199,605		199,605
Biofuels	—		—		12,069		12,069
Other	30,859		63,677		—		94,536
Net sales	$	1,499,340	$	841,070	$	211,674	$	2,552,084

Long-Term Performance Obligations. The Company from time to time enters into long-term contracts to supply certain volumes of finished products to certain customers. Revenue recognized to date in 2021 under these long-term supply contracts was approximately ~~$15.0~~$62.4 million, with the remaining performance obligations to be recognized in future periods (generally 2 years) of approximately ~~$154.7~~$143.4 million.

~~(20)~~(19) Related Party Transactions

Raw Material Agreement

The Company entered into a Raw Material Agreement with the DGD Joint Venture in May 2011 pursuant to which the Company will offer to supply certain animal fats and used cooking oil at market prices, but the DGD Joint Venture is not obligated to purchase the raw material offered by the Company. Additionally, the Company may offer other feedstocks to the DGD Joint Venture, such as inedible corn oil, purchased on a resale basis. For the three months

ended ~~April 3,~~October 2, 2021 and ~~March 28,~~September 26, 2020, the Company has recorded sales to the DGD Joint Venture of approximately ~~$89.0~~$102.9 million and ~~$62.1~~$69.0 million, respectively. For the nine months ended October 2, 2021 and September 26, 2020, the Company has recorded sales to the DGD Joint Venture of approximately $301.7 million and $203.4 million, respectively. At ~~April 3,~~October 2, 2021 and January 2, 2021, the Company has ~~$12.6~~$18.7 million and $14.2 million in outstanding receivables due from the DGD Joint Venture, respectively. In addition, the Company has eliminated approximately ~~$14.6~~$21.6 million and ~~$5.7~~$4.2 million of additional sales for the three months ended ~~April 3,~~October 2, 2021 and ~~March 28,~~September 26, 2020, respectively to defer the Company's portion of profit of approximately ~~$4.1~~$5.5 million and ~~$1.0~~$0.8 million on those sales relating to inventory assets remaining on the DGD Joint Venture's balance sheet at ~~April 3,~~October 2, 2021 and ~~March 28,~~September 26, 2020, respectively.

Revolving Loan Agreement

On May 1, 2019, Darling through its wholly owned subsidiary Darling Green Energy LLC, (“Darling Green”), and Diamond Alternative Energy, LLC, a wholly owned subsidiary of Valero (“Diamond Alternative” and together with Darling Green, the “DGD Lenders”), entered into a revolving loan agreement (the “DGD Loan Agreement”) with the DGD Joint Venture. The DGD Lenders have committed to making 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, 2022, unless extended by agreement of the parties. As of ~~April 3,~~October 2, 2021, 0no amounts ~~are~~were owed to Darling Green under the DGD Loan Agreement. Subsequent to October 2, 2021, the DGD Joint Venture borrowed all $50.0 million available under the DGD Loan Agreement, including the Company's full $25.0 million commitment.

Guarantee Agreements

In February 2020, in connection with the DGD Joint Venture’s expansion project at its Norco, LA facility, it entered into 2 agreements (the “IMTT Terminaling Agreements”) with International-Matex Tank Terminals (“IMTT”), pursuant to which the DGD Joint Venture will move raw material and finished product to and from the IMTT terminal facility by pipeline, thereby providing better logistical capabilities. As a condition to entering into the IMTT Terminaling Agreements, IMTT required that the Company and Valero guarantee their proportionate share, up to a maximum of approximately $50 million each, of the DGD Joint Venture’s obligations under the IMTT Terminaling Agreements (the “IMTT Guarantee”), subject to the conditions provided for in the IMTT Terminaling Agreements. The Company has not recorded any liability as a result of the IMTT Guarantee, as the Company believes the likelihood of having to make any payments under the IMTT Guarantee is remote.

In April 2021, in connection with the DGD Joint Venture’s expansion project at its Port Arthur, TX facility, it entered into 2 agreements (the “GTL Terminaling Agreements”) with GT Logistics, LLC (“GTL”), pursuant to which the DGD Joint Venture will move raw material and finished product to and from the GTL terminal facility by pipeline, thereby providing better logistical capabilities. As a condition to entering into the GTL Terminaling Agreements, GLT required that the Company and Valero guarantee their proportionate share, up to a maximum of approximately ~~$160.0~~$160 million each, of the DGD Joint Venture’s obligations under the GTL Terminaling Agreements (the “GTL Guarantee”), subject to the conditions provided for in the GTL Terminaling Agreements. The maximum amount of the GTL Guarantee is reduced over the 20-year initial term of the GTL Terminaling Agreements as the termination fee under such agreements declines. The Company has not recorded any liability as a result of the GTL Guarantee, as the Company believes the likelihood of having to make any payments under the GTL Guarantee is remote.

~~(21)~~(20) New Accounting Pronouncements

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 adoption of this ASU in the first quarter of fiscal 2021 did not have a material impact on the Company's consolidated financial statements.

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

Management's Discussion and Analysis of Financial Condition and Results of Operations contains forward-looking statements that involve risks and uncertainties. The Company's actual results could differ materially from those anticipated in these forward-looking statements as a result of certain factors, including those set forth below under the heading “Forward Looking Statements” and elsewhere in this report, and under the heading “Risk Factors” in Part I, Item 1A in the Company's Annual Report on Form 10-K for the fiscal year ended January 2, 2021, filed with the SEC on March 2, 2021 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 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~~renewable diesel and ~~renewable diesel,~~biodiesel, or to the oleo-chemical industry to be used as an ingredient in a wide variety of industrial applications. Protein meals, blood plasma powder and hemoglobin produced and marketed by the Company are sold to third parties to be used as ingredients in animal feed, pet food and aquaculture.

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

The Fuel Ingredients operating segment includes the Company's global activities related to (i) the Company’s share of the results of its equity investment in Diamond Green Diesel Holdings LLC, a joint venture with Valero Energy Corporation (“Valero”) to convert animal fats, recycled greases, used cooking oil, inedible corn oil, soybean oil, or other feedstocks that become economically and commercially viable into renewable diesel ~~(the~~(“DGD” or the “DGD Joint Venture”) as described in Note 3 (Investment in Unconsolidated Subsidiaries) to the Company's Consolidated Financial Statements for the period ended ~~April 3,~~October 2, 2021 included herein, (ii) the conversion of organic sludge and food waste into biogas in ~~Europe,~~

3028

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

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

Observations on the Effects of COVID-19

In January 2020, the World Health Organization (“WHO”) declared the coronavirus disease (“COVID-19”) 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. Since then, various federal, state and local government-imposed movement restrictions and initiatives have been implemented worldwide 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; however, the Company did incur approximately $7.5 million of COVID-19 related charges globally in fiscal year ~~2020.~~2020 and has incurred approximately $2.4 million in the first nine months of fiscal 2021. 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. In December 2020, several vaccines were first authorized for use against COVID-19 in the United States and internationally. As a result of the distribution of these vaccines, various of the government imposed movement restrictions and initiatives have begun to be relaxed in certain areas of the United States and abroad. Notwithstanding, the Company believes the severity and duration of the COVID-19 pandemic is uncertain and such uncertainty will likely continue. 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.

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, cannot be predicted and may vary by jurisdiction and market, including the duration and scope of the pandemic, the emergence of new variants of the virus, the likelihood of a resurgence of positive cases, the development and availability of effective treatments and vaccines, the speed at which such vaccines are administered, global economic conditions during and after the pandemic and governmental actions that have been taken or may be taken in the future in response to the pandemic, among others. For additional information regarding the risks associated with COVID-19, see the important information in Item 1A. Risk Factors, 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” in the Company's Annual Report on Form 10-K for the fiscal year ended January 2, 2021, as filed with the SEC on March 2, 2021.

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

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 January 2, 2021.

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

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

The Company’s Fuel Ingredients segment converts fats into renewable diesel, organic sludge and food waste into biogas, and fallen stock into low-grade energy sources. The Company's gross margin and profitability in this segment are impacted by world energy prices for oil, electricity, 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 and Polish zloty. To prepare the Company's consolidated financial statements, assets, liabilities, revenues, and expenses must be translated into U.S. dollars at the applicable exchange rate. As a result, increases or decreases in the value of the U.S. dollar against these other currencies will affect the amount of these items recorded in the Company's consolidated financial statements, even if their value has not changed in the functional currency. This could have a significant impact on the Company's results, if such increase or decrease in the value of the U.S. dollar relative to these other currencies is substantial.

Results of Operations

Three Months Ended ~~April 3,~~October 2, 2021 Compared to Three Months Ended ~~March 28,~~September 26, 2020

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.

3230

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 ~~first~~third quarter of fiscal 2021, 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~~third quarter of fiscal 2021, compared to average Jacobsen and Reuters prices for the ~~first~~third quarter of fiscal 2020 are as follows:

Avg. Price
~~1st~~3rd Quarter
2021

Avg. Price
~~1st~~3rd Quarter
2020

Increase/(Decrease)

%
Increase/(Decrease)

Jacobsen:

MBM (Illinois)

$ ~~386.97/~~385.53/ton

$ ~~237.10/~~212.91/ton

$ ~~149.87/~~172.62/ton

~~63.2~~81.1

Feed Grade PM (Mid-South)

$ ~~357.79/~~337.15/ton

$ ~~225.73/~~226.07/ton

$ ~~132.06/~~111.08/ton

~~58.5~~49.1

Pet Food PM (Mid-South)

$ ~~845.08/~~680.77/ton

$ ~~540.44/~~581.80/ton

$ ~~304.64/~~98.97/ton

~~56.4~~17.0

Feather meal (Mid-South)

$ ~~539.02/~~482.79/ton

$ ~~282.50/~~267.91/ton

$ ~~256.52/~~214.88/ton

~~90.8~~80.2

BFT (Chicago)

$ ~~46.42/~~66.75/cwt

$ ~~32.69/~~29.04/cwt

$ ~~13.73/~~37.71/cwt

~~42.0~~129.9

YG (Illinois)

$ ~~34.45/~~44.70/cwt

$ ~~22.92/~~19.48/cwt

$ ~~11.53/~~25.22/cwt

~~50.3~~129.5

Corn (Illinois)

$ ~~5.56/~~6.20/bushel

$ ~~3.90/~~3.55/bushel

$ ~~1.66/~~2.65/bushel

~~42.6~~74.6

Reuters:

Palm Oil (CIF Rotterdam)

$ ~~1,084.00/~~1,213.00/MT

$ ~~724.00/~~690.00/MT

$ ~~360.00/~~523.00/MT

~~49.7~~75.8

Soy meal (CIF Rotterdam)

$ ~~535.00/~~469.00/MT

$ ~~360.00/~~379.00/MT

$ ~~175.00/~~90.00/MT

~~48.6~~23.7

The following table shows the average Jacobsen and Reuters prices for the ~~first~~third quarter of fiscal 2021, compared to average Jacobsen and Reuters prices for the ~~fourth~~second quarter of fiscal ~~2020.~~2021.

3331

Avg. Price
~~1st~~3rd Quarter
2021

Avg. Price
~~4th~~2nd Quarter
~~2020~~2021

Increase/(Decrease)

%
Increase/(Decrease)

Jacobsen:

MBM (Illinois)

$ ~~386.97/~~385.53/ton

$ ~~305.29/~~408.63/ton

$ ~~81.68/~~(23.10)/ton

~~26.8~~ (5.7)

Feed Grade PM (Mid-South)

$ ~~357.79/~~337.15/ton

$ ~~283.65/~~339.31/ton

$ ~~74.14/~~(2.16)/ton

~~26.1~~ (0.6)

Pet Food PM (Mid-South)

$ ~~845.08/~~680.77/ton

$ ~~733.12/~~823.18/ton

$ ~~111.96/~~(142.41)/ton

~~15.3~~ (17.3)

Feather meal (Mid-South)

$ ~~539.02/~~482.79/ton

$ ~~405.49/~~465.50/ton

$ ~~133.53/~~17.29/ton

~~32.9~~3.7

BFT (Chicago)

$ ~~46.42/~~66.75/cwt

$ ~~34.24/~~56.60/cwt

$ ~~12.18/~~10.15/cwt

~~35.6~~17.9

YG (Illinois)

$ ~~34.45/~~44.70/cwt

$ ~~25.22/~~42.47/cwt

$ ~~9.23/~~2.23/cwt

~~36.6~~5.3

Corn (Illinois)

$ ~~5.56/~~6.20/bushel

$ ~~4.29/~~6.84/bushel

$ ~~1.27/~~(0.64)/bushel

~~29.6~~ (9.4)

Reuters:

Palm Oil (CIF Rotterdam)

$ ~~1,084.00/~~1,213.00/MT

$ ~~850.00/~~1,168.00/MT

$ ~~234.00/~~45.00/MT

~~27.5~~3.9

Soy meal (CIF Rotterdam)

$ ~~535.00/~~469.00/MT

$ ~~485.00/~~473.00/MT

$ ~~50.00/~~(4.00)/MT

~~10.3~~ (0.8)

Segment Results

Segment operating income for the three months ended ~~April 3,~~October 2, 2021 was ~~$199.5~~$205.7 million, which reflects an increase of ~~$76.7~~$78.2 million or ~~62.5%~~61.3% as compared to the three months ended ~~March 28,~~September 26, 2020.


(in thousands, except percentages)	(in thousands, except percentages)	Feed Ingredients			Food Ingredients			Fuel Ingredients			Corporate			Total			(in thousands, except percentages)	Feed Ingredients			Food Ingredients			Fuel Ingredients			Corporate			Total
Three Months Ended April 3, 2021
Three Months Ended October 2, 2021																	Three Months Ended October 2, 2021
Net Sales	Net Sales	$	651,444		$	298,065		$	97,207		$	—		$	1,046,716		Net Sales	$	769,626		$	311,856		$	104,434		$	—		$	1,185,916
Cost of sales and operating expenses	Cost of sales and operating expenses	474,581			226,413			71,790			—			772,784			Cost of sales and operating expenses	553,662			241,308			64,634			—			859,604
Gross Margin	Gross Margin	176,863			71,652			25,417			—			273,932			Gross Margin	215,964			70,548			39,800			—			326,312

Gross Margin %	Gross Margin %	27.1		%	24.0		%	26.1		%	—		%	26.2		%	Gross Margin %	28.1		%	22.6		%	38.1		%	—		%	27.5		%

Loss/(gain) on sale of assets		(139)			55			20			—			(64)
Gain on sale of assets																	Gain on sale of assets	(229)			(8)			(264)			—			(501)
Selling, general and administrative expenses	Selling, general and administrative expenses	52,620			25,191			4,867��			14,720			97,398			Selling, general and administrative expenses	54,997			24,417			4,481			13,380			97,275
Restructuring and asset impairment charges		—			—			778			—			778

Depreciation and amortization	Depreciation and amortization	54,609			14,883			6,155			2,887			78,534			Depreciation and amortization	53,824			14,933			6,361			2,708			77,826
Equity in net income of Diamond Green Diesel	Equity in net income of Diamond Green Diesel	—			—			102,225			—			102,225			Equity in net income of Diamond Green Diesel	—			—			53,951			—			53,951
Segment operating income/(loss)	Segment operating income/(loss)	69,773			31,523			115,822			(17,607)			199,511			Segment operating income/(loss)	107,372			31,206			83,173			(16,088)			205,663

Equity in net income of other unconsolidated subsidiaries	Equity in net income of other unconsolidated subsidiaries	612			—			—			—			612			Equity in net income of other unconsolidated subsidiaries	1,647			—			—			—			1,647
Segment income/(loss)	Segment income/(loss)	70,385			31,523			115,822			(17,607)			200,123			Segment income/(loss)	109,019			31,206			83,173			(16,088)			207,310


(in thousands, except percentages)	(in thousands, except percentages)	Feed Ingredients			Food Ingredients			Fuel Ingredients			Corporate			Total			(in thousands, except percentages)	Feed Ingredients			Food Ingredients			Fuel Ingredients			Corporate			Total
Three Months Ended March 28, 2020
Three Months Ended September 26, 2020																	Three Months Ended September 26, 2020
Net Sales	Net Sales	$	512,625		$	270,294		$	69,923		$	—		$	852,842		Net Sales	$	483,025		$	291,842		$	75,702		$	—		$	850,569
Cost of sales and operating expenses	Cost of sales and operating expenses	388,453			205,430			53,025			—			646,908			Cost of sales and operating expenses	361,576			226,745			50,047			—			638,368
Gross Margin	Gross Margin	124,172			64,864			16,898			—			205,934			Gross Margin	121,449			65,097			25,655			—			212,201

Gross Margin %	Gross Margin %	24.2		%	24.0		%	24.2		%	—		%	24.1		%	Gross Margin %	25.1		%	22.3		%	33.9		%	—		%	24.9		%

Loss on sale of assets		50			2			9			—			61
Loss/(gain) on sale of assets																	Loss/(gain) on sale of assets	167			16			(61)			—			122
Selling, general and administrative expenses	Selling, general and administrative expenses	53,947			25,476			1,654			15,116			96,193			Selling, general and administrative expenses	49,028			23,366			5,038			12,561			89,993

Depreciation and amortization	Depreciation and amortization	53,521			20,305			8,092			2,753			84,671			Depreciation and amortization	53,764			20,648			8,633			2,685			85,730
Equity in net income of Diamond Green Diesel	Equity in net income of Diamond Green Diesel	—			—			97,820			—			97,820			Equity in net income of Diamond Green Diesel	—			—			91,099			—			91,099
Segment operating income/(loss)	Segment operating income/(loss)	16,654			19,081			104,963			(17,869)			122,829			Segment operating income/(loss)	18,490			21,067			103,144			(15,246)			127,455

Equity in net income of other unconsolidated subsidiaries	Equity in net income of other unconsolidated subsidiaries	869			—			—			—			869			Equity in net income of other unconsolidated subsidiaries	906			—			—			—			906
Segment income/(loss)	Segment income/(loss)	17,523			19,081			104,963			(17,869)			123,698			Segment income/(loss)	19,396			21,067			103,144			(15,246)			128,361

3432

Feed Ingredients Segment

Raw material volume. In the three months ended ~~April 3,~~October 2, 2021, the raw material processed by the Company's Feed Ingredients segment totaled approximately ~~2.23~~2.22 million metric tons. Compared to the three months ended ~~March 28,~~September 26, 2020, overall raw material volume processed in the Feed Ingredients segment ~~decreased~~increased approximately ~~0.5%~~1.9%.

Sales. During the three months ended ~~April 3,~~October 2, 2021, net sales for the Feed Ingredients segment were ~~$651.4~~$769.6 million as compared to ~~$512.6~~$483.0 million during the three months ended ~~March 28,~~September 26, 2020, an increase of approximately ~~$138.8~~$286.6 million or ~~27.1%~~59.3%. Net sales for fats were approximately ~~$229.0~~$307.9 million and ~~$163.3~~$153.5 million for the three months ended ~~April 3,~~October 2, 2021 and ~~March 28,~~September 26, 2020, respectively. Protein net sales were approximately ~~$255.5~~$258.0 million and ~~$196.0~~$190.7 million for the three months ended ~~April 3,~~October 2, 2021 and ~~March 28,~~September 26, 2020, respectively. Other rendering net sales, which include hides, pet food and service charges, were approximately ~~$43.0~~$43.7 million and ~~$47.1~~$39.0 million for the three months ended ~~April 3,~~October 2, 2021 and ~~March 28,~~September 26, 2020, respectively. Total rendering net sales were approximately ~~$527.5~~$609.6 million and ~~$406.4~~$383.2 million for the three months ended ~~April 3,~~October 2, 2021 and ~~March 28,~~September 26, 2020, respectively. Used cooking oil net sales were approximately ~~$51.0~~$69.9 million and ~~$47.6~~$45.7 million for the three months ended ~~April 3,~~October 2, 2021 and ~~March 28,~~September 26, 2020, respectively. Bakery net sales were approximately ~~$63.1~~$80.6 million and ~~$47.1~~$44.4 million for the three months ended ~~April 3,~~October 2, 2021 and ~~March 28,~~September 26, 2020, respectively, and other net sales, which includes trap services, were approximately ~~$9.8~~$9.5 million and ~~$11.5~~$9.7 million for the three months ended ~~April 3,~~October 2, 2021 and ~~March 28,~~September 26, 2020, respectively.

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


		Fats		Proteins		Other Rendering		Total Rendering		Used Cooking Oil		Bakery		Other		Total			Fats		Proteins		Other Rendering		Total Rendering		Used Cooking Oil		Bakery		Other		Total
Net sales three months ended March 28, 2020		163.3		196.0		47.1		$	406.4	47.6		47.1		11.5		$	512.6
Net sales three months ended September 26, 2020																		Net sales three months ended September 26, 2020	153.5		190.7		39.0		$	383.2	45.7		44.4		9.7		$	483.0
Increase/(decrease) in sales volumes	Increase/(decrease) in sales volumes	4.9		0.8		—		5.7		(6.1)		(0.9)		—		(1.3)		Increase/(decrease) in sales volumes	(7.5)		5.0		—		(2.5)		(0.7)		(0.2)		—		(3.4)
Increase in finished product prices	Increase in finished product prices	58.2		52.3		—		110.5		9.5		16.9		—		136.9		Increase in finished product prices	159.7		60.3		—		220.0		24.4		36.4		—		280.8
Increase due to currency exchange rates	Increase due to currency exchange rates	2.6		6.4		0.1		9.1		—		—		—		9.1		Increase due to currency exchange rates	2.2		2.0		0.2		4.4		0.5		—		—		4.9
Other change	Other change	—		—		(4.2)		(4.2)		—		—		(1.7)		(5.9)		Other change	—		—		4.5		4.5		—		—		(0.2)		4.3
Total change	Total change	65.7		59.5		(4.1)		121.1		3.4		16.0		(1.7)		138.8		Total change	154.4		67.3		4.7		226.4		24.2		36.2		(0.2)		286.6
Net sales three months ended April 3, 2021		$	229.0	$	255.5	$	43.0	$	527.5	$	51.0	$	63.1	$	9.8	$	651.4
Net sales three months ended October 2, 2021																		Net sales three months ended October 2, 2021	$	307.9	$	258.0	$	43.7	$	609.6	$	69.9	$	80.6	$	9.5	$	769.6

Margins. In the Feed Ingredients segment for the three months ended ~~April 3,~~October 2, 2021, the gross margin percentage increased to ~~27.1%~~28.1% as compared to ~~24.2%~~25.1% for the comparable period of fiscal 2020. The increase is primarily due to higher overall finished product prices as compared to fiscal 2020.

Segment operating income. Feed Ingredients operating income for the three months ended ~~April 3,~~October 2, 2021 was ~~$69.8~~$107.4 million, an increase of ~~$53.1~~$88.9 million or ~~318.0%~~480.5% as compared to the three months ended ~~March 28,~~September 26, 2020. The increase is due to higher overall finished product prices as compared to ~~the same period in~~ fiscal 2020.

Food Ingredients Segment

Raw material volume. In the three months ended ~~April 3,~~October 2, 2021, the raw material processed by the Company's Food Ingredients segment totaled approximately ~~274,000~~275,000 metric tons. Compared to the three months ended ~~March 28,~~September 26, 2020, overall raw material volume processed in the Food Ingredients segment increased approximately ~~5.0%~~4.0%.

Sales. Overall sales increased in the Food Ingredients segment primarily due to higher collagen sales ~~volumes in the collagen markets~~prices and higher edible fat ~~prices.~~prices that more than offset overall lower sales volumes.

Margins. In the Food Ingredients segment for the three months ended ~~April 3,~~October 2, 2021, ~~and March 28, 2020,~~ the gross margin percentage ~~remained constant at 24.0%.~~increased to 22.6% as compared to 22.3% for the comparable period of fiscal 2021. The increase is primarily due to higher overall finished product prices as compared to fiscal 2020.

Segment operating income. Food Ingredients operating income was ~~$31.5~~$31.2 million for the three months ended ~~April 3,~~October 2, 2021, an increase of ~~$12.4~~$10.1 million or ~~64.9%~~47.9% as compared to the three months ended ~~March 28,~~September 26, 2020. The increase

is primarily due to higher sales ~~volumes~~prices in Europe, North America and China collagen markets and higher fat prices in the edible fat market. This was partially offset by ~~the impact of lower volumes in Europe and~~ a weaker Brazilian real and lower volumes in Brazil as a result of the continuing COVID-19 ~~outbreak~~pandemic in South America. In addition, segment operating income increased as a result of lower depreciation expense.

Fuel Ingredients Segment

Raw material volume. In the three months ended ~~April 3,~~October 2, 2021, the raw material processed by the Company's Fuel Ingredients segment totaled approximately ~~328,000~~304,000 metric tons. Compared to the three months ended ~~March 28,~~September 26, 2020, overall raw material volume processed in the Fuel Ingredients segment ~~increased~~decreased approximately ~~0.1%~~6.1%.

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

Margins. In the Fuel Ingredients segment (exclusive of the equity contribution from the DGD Joint Venture) for the three months ended ~~April 3,~~October 2, 2021, the gross margin percentage increased to ~~26.1%~~38.1% as compared to ~~24.2%~~33.9% for the comparable period of fiscal 2020. The increase is primarily due to alternative fuel mixture credits recorded in the current period as a reduction to other operating expenses that more than offset considerably higher ~~finished product~~raw material prices ~~and demand~~ in Europe in fiscal 2021 as compared to fiscal 2020.

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 ~~April 3,~~October 2, 2021 was ~~$115.8~~$83.2 million, ~~an increase~~a decrease of ~~$10.8~~$19.9 million or ~~10.3%~~(19.3)% as compared to the same period in fiscal 2020. The ~~increase~~decrease is ~~due~~primarily attributed to ~~higher sale volumes and higher finished product prices from increased demand in Europe as well as an increase in renewable identification number (RIN) prices and diesel fuel prices~~downtime at the DGD Joint ~~Venture.~~Venture facility due to Hurricane Ida in fiscal 2021 as compared to the same period in fiscal 2020.

Foreign Currency Exchange

During the ~~first~~third quarter of fiscal 2021, the euro and Canadian dollar strengthened against the U.S. dollar as compared to the same period in fiscal 2020. Using actual results for the three months ended ~~April 3,~~October 2, 2021 and using the prior year's average currency rate for the three months ended ~~March 28,~~September 26, 2020, foreign currency translation would result in a decrease in operating income of approximately ~~$8.0~~$2.2 million. The average ~~rates~~rate assumptions used in this calculation were the actual fiscal average rates for the three months ended ~~April 3,~~October 2, 2021 of €1.00:USD$~~1.20~~1.18 and CAD$1.00:USD$0.79 as compared to the average rates for the three months ended ~~March 28,~~September 26, 2020 of €1.00:USD$~~1.10~~1.17 and CAD$1.00:USD$0.75, respectively.

Corporate Activities

Selling, General and Administrative Expenses. Selling, general and administrative expenses were ~~$14.7~~$13.4 million during the three months ended ~~April 3,~~October 2, 2021, compared to ~~$15.1~~$12.6 million during the three months ended ~~March 28,~~September 26, 2020, ~~a decrease~~an increase of ~~$0.4~~$0.8 million. The ~~decrease~~increase is primarily due to ~~lower corporate related benefits, lower travel related costs, lower legal costs and lower overall other costs that more than offset~~ an increase in ~~insurance costs and tax and license costs.~~corporate related benefits.

Depreciation and Amortization. Depreciation and amortization charges ~~increased slightly by $0.1 million to $2.9~~remained at $2.7 million during the three months ended ~~April 3,~~October 2, 2021, as compared to ~~$2.8 million during~~ the ~~three months ended March 28,~~same period in fiscal 2020.

Interest Expense. Interest expense was ~~$16.4~~$15.4 million during the three months ended ~~April 3,~~October 2, 2021, compared to ~~$19.1~~$18.8 million during the three months ended ~~March 28,~~September 26, 2020, a decrease of ~~$2.7~~$3.4 million. The decrease is primarily due to lower ~~Term~~amortization of deferred loan ~~B debt outstanding from partial pay-downs~~costs and lower interest on the Term loan B ~~and revolver borrowings~~ as a result of ~~lower interest rates that more than offset an increase in deferred loan cost expense and higher interest expense from foreign currency translation on the Company's 3.625% Senior Notes.~~partial note pay-downs.

Foreign Currency ~~Gain/(Loss).~~Loss. Foreign currency losses were ~~$0.4~~$0.2 million for the three months ended ~~April 3,~~October 2, 2021 as compared to foreign currency ~~gains~~losses of ~~$1.7~~$1.2 million for the three months ended ~~March 28,~~September 26, 2020. The ~~loss~~decrease in foreign currency losses is due primarily to ~~an increase~~a decrease in losses on the revaluation of non-functional currency assets and liabilities as compared to the same period in fiscal 2020.

Other Expense, net. Other expense was ~~$1.2~~$0.9 million in the three months ended ~~April 3,~~October 2, 2021, compared to other expense of $1.9 million for the three months ended ~~March 28,~~September 26, 2020. The decrease in other expense was primarily due to a decrease in the non-service component of pension expense and casualty ~~losses~~loss as compared to the same period in fiscal 2020.

3634

Equity in Net Income in Investment of Other Unconsolidated Subsidiaries. The change in this line item is not significant and primarily represents the Company's pro rata share of the net income from foreign unconsolidated subsidiaries.

Income Taxes. The Company recorded income tax expense of ~~$28.7~~$42.6 million for the three months ended ~~April 3,~~October 2, 2021, compared to ~~$18.3~~$4.8 million ~~of income tax expense~~ recorded in the three months ended ~~March 28,~~September 26, 2020, an increase of ~~$10.4~~$37.8 million, which is primarily due to increased pre-tax earnings of the Company for the ~~first~~ three months ended October 2, 2021 and certain discrete items recognized during the three months ended September 26, 2020 including an adjustment to an unrecognized tax position and the favorable impact of ~~fiscal 2021.~~federal income tax regulations allowing taxpayers to exclude certain high-taxed income from their Global Intangible Low-Tax Income (“GILTI") computations. The effective tax rate for the ~~first~~ three months ~~of fiscal~~ended October 2, 2021 ~~and 2020~~ is ~~15.8% and 17.5%, respectively.~~22.3%. The effective tax rate for the ~~first~~ three months ~~of fiscal~~ended October 2, 2021 ~~and 2020~~ differs from the federal statutory rate of 21% due primarily to the relative mix of earnings among jurisdictions with different tax rates (including foreign withholding taxes and state income taxes), biofuel tax incentives, and certain taxable income inclusion items in the U.S. based on foreign earnings. 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 ~~excess~~the recognition of a previously unrecognized tax ~~benefits from stock-based compensation.~~benefit and the favorable impact of the final U.S. GILTI regulations related to the High-Tax Exclusion. The Company's effective tax rate excluding discrete items is ~~20.0%~~22.2% for the three months ended ~~April 3,~~October 2, 2021, compared to ~~18.8%~~13.2% for the three months ended ~~March 28,~~September 26, 2020.

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, restructuring, 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~~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 ~~April 3,~~October 2, 2021. 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

~~First~~Third Quarter 2021 As Compared to ~~First~~third Quarter 2020


		Three Months Ended					Three Months Ended
(dollars in thousands)	(dollars in thousands)	April 3, 2021		March 28, 2020		(dollars in thousands)	October 2, 2021		September 26, 2020
Net income attributable to Darling	Net income attributable to Darling	$	151,766	$	85,510	Net income attributable to Darling	$	146,812	$	101,125
Depreciation and amortization	Depreciation and amortization	78,534		84,671		Depreciation and amortization	77,826		85,730
Interest expense	Interest expense	16,428		19,090		Interest expense	15,409		18,793
Income tax expense	Income tax expense	28,708		18,300		Income tax expense	42,637		4,812
Restructuring and asset impairment charges		778		—
Foreign currency loss/(gain)		410		(1,664)

Foreign currency loss						Foreign currency loss	205		1,239
Other expense, net	Other expense, net	1,159		1,881		Other expense, net	853		1,912

Equity in net income of Diamond Green Diesel	Equity in net income of Diamond Green Diesel	(102,225)		(97,820)		Equity in net income of Diamond Green Diesel	(53,951)		(91,099)
Equity in net income of unconsolidated subsidiaries		(612)		(869)
Equity in net income of other unconsolidated subsidiaries						Equity in net income of other unconsolidated subsidiaries	(1,647)		(906)
Net income attributable to non-controlling interests	Net income attributable to non-controlling interests	1,652		581		Net income attributable to non-controlling interests	1,394		480
Darling's Adjusted EBITDA	Darling's Adjusted EBITDA	$	176,598	$	109,680	Darling's Adjusted EBITDA	$	229,538	$	122,086

Foreign currency exchange impact (1)	Foreign currency exchange impact (1)	(8,050)		—		Foreign currency exchange impact (1)	(2,249)		—
Pro forma Adjusted EBITDA to Foreign Currency (Non-GAAP)	Pro forma Adjusted EBITDA to Foreign Currency (Non-GAAP)	$	168,548	$	109,680	Pro forma Adjusted EBITDA to Foreign Currency (Non-GAAP)	$	227,289	$	122,086

DGD Joint Venture Adjusted EBITDA (Darling's Share)	DGD Joint Venture Adjusted EBITDA (Darling's Share)	$	108,200	$	103,634	DGD Joint Venture Adjusted EBITDA (Darling's Share)	$	60,026	$	96,435

Darling plus Darling's share of DGD Joint Venture Adjusted EBITDA	Darling plus Darling's share of DGD Joint Venture Adjusted EBITDA	$	284,798	$	213,314	Darling plus Darling's share of DGD Joint Venture Adjusted EBITDA	$	289,564	$	218,521

(1) The average rates assumption used in this calculation was the actual fiscal average rate for the three months ended ~~April 3,~~October 2, 2021 of €1.00:USD$~~1.20~~1.18 and CAD$1.00:USD$0.79 as compared to the average rate for the three months ended ~~March 28,~~September 26, 2020 of €1.00:USD$~~1.10~~1.17 and CAD$1.00:USD$0.75, respectively.

Nine Months Ended October 2, 2021 Compared to Nine Months Ended September 26, 2020

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 2021, 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 2021, compared to average Jacobsen and Reuters prices for the first nine months of fiscal 2020 are as follows:

Avg. Price
First Nine Months
2021

Avg. Price
First Nine Months
2020

Increase/(Decrease)

%
Increase/(Decrease)

Jacobsen:

MBM (Illinois)

$ 393.71/ton

$ 246.81/ton

$ 146.90/ton

59.5

Feed Grade PM (Mid-South)

$ 344.75/ton

$ 240.29/ton

$ 104.46/ton

43.5

Pet Food PM (Mid-South)

$ 783.01/ton

$ 600.44/ton

$ 182.57/ton

30.4

Feather meal (Mid-South)

$ 495.77/ton

$ 283.77/ton

$ 212.00/ton

74.7

BFT (Chicago)

$ 56.59/cwt

$ 30.56/cwt

$ 26.03/cwt

85.2

YG (Illinois)

$ 40.54/cwt

$ 20.86/cwt

$ 19.68/cwt

94.3

Corn (Illinois)

$ 6.20/bushel

$ 3.57/bushel

$ 2.63/bushel

73.7

Reuters:

Palm Oil (CIF Rotterdam)

$ 1,155.00/MT

$ 659.00/MT

$ 496.00/MT

75.3

Soy meal (CIF Rotterdam)

$ 492.00/MT

$ 363.00/MT

$ 129.00/MT

35.5

Segment Results

Segment operating income for the nine months ended October 2, 2021 was $673.4 million, which reflects an increase of $316.8 million or 88.8% as compared to the nine months ended September 26, 2020.


(in thousands, except percentages)	Feed Ingredients			Food Ingredients			Fuel Ingredients			Corporate			Total
Nine Months Ended October 2, 2021
Net Sales	$	2,193,002		$	926,952		$	311,347		$	—		$	3,431,301
Cost of sales and operating expenses	1,584,667			706,260			219,534			—			2,510,461
Gross Margin	608,335			220,692			91,813			—			920,840

Gross Margin %	27.7		%	23.8		%	29.5		%	—		%	26.8		%

Gain on sale of assets	(490)			(1)			(302)			—			(793)
Selling, general and administrative expenses	162,594			75,150			13,822			42,239			293,805
Restructuring and asset impairment charges	—			—			778			—			778

Depreciation and amortization	162,404			45,666			19,214			8,298			235,582
Equity in net income of Diamond Green Diesel	—			—			281,964			—			281,964
Segment operating income/(loss)	283,827			99,877			340,265			(50,537)			673,432

Equity in net income of other unconsolidated subsidiaries	4,199			—			—			—			4,199
Segment income/(loss)	288,026			99,877			340,265			(50,537)			677,631


(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

Feed Ingredients Segment

Raw material volume. In the nine months ended October 2, 2021, the raw material processed by the Company's Feed Ingredients segment totaled approximately 6.65 million metric tons. Compared to the nine months ended September 26, 2020, overall raw material volume processed in the Feed Ingredients segment increased approximately 1.0%.

Sales. During the nine months ended October 2, 2021, net sales for the Feed Ingredients segment were $2,193.0 million as compared to $1,499.3 million during the nine months ended September 26, 2020, an increase of approximately $693.7 million or 46.3%. Net sales for fats were approximately $829.5 million and $484.3 million for the nine months ended October 2, 2021 and September 26, 2020, respectively. Protein net sales were approximately $771.9 million and $596.8 million for the nine months ended October 2, 2021 and September 26, 2020, respectively. Other rendering net sales, which include hides, pet food and service charges, were approximately $132.1 million and $125.6 million for the nine months ended October 2, 2021 and September 26, 2020, respectively. Total rendering net sales were approximately $1,733.5 million and $1,206.7 million for the nine months ended October 2, 2021 and September 26, 2020, respectively. Used cooking oil net sales were approximately $207.4 million and $132.3 million for the nine months ended October 2, 2021 and September 26, 2020, respectively. Bakery net sales were approximately $222.9 million and $129.5 million for the nine months ended October 2, 2021 and September 26, 2020, respectively, and other net sales, which includes trap services, were approximately $29.2 million and $30.8 million for the nine months ended October 2, 2021 and September 26, 2020, respectively.

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


	Fats		Proteins		Other Rendering		Total Rendering		Used Cooking Oil		Bakery		Other		Total
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
Increase/(decrease) in sales volumes	(2.0)		(1.2)		—		(3.2)		0.6		1.9		—		(0.7)
Increase in finished product prices	334.2		156.8		—		491.0		73.1		91.5		—		655.6
Increase due to currency exchange rates	13.0		19.5		1.1		33.6		1.4		—		—		35.0
Other change	—		—		5.4		5.4		—		—		(1.6)		3.8
Total change	345.2		175.1		6.5		526.8		75.1		93.4		(1.6)		693.7
Net sales nine months ended October 2, 2021	$	829.5	$	771.9	$	132.1	$	1,733.5	$	207.4	$	222.9	$	29.2	$	2,193.0

Margins. In the Feed Ingredients segment for the nine months ended October 2, 2021, the gross margin percentage increased to 27.7% as compared to 25.4% for the comparable period of fiscal 2020. The increase is primarily due to higher overall finished product prices as compared to fiscal 2020.

Segment operating income. Feed Ingredients operating income for the nine months ended October 2, 2021 was $283.8 million, an increase of $216.1 million or 319.2% as compared to the nine months ended September 26, 2020. The increase is due to higher overall finished product prices as compared to fiscal 2020.

Food Ingredients Segment

Raw material volume. In the nine months ended October 2, 2021, the raw material processed by the Company's Food Ingredients segment totaled approximately 823,000 metric tons. Compared to the nine months ended September 26, 2020, overall raw material volume processed in the Food Ingredients segment increased approximately 4.1%.

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

Margins. In the Food Ingredients segment for the nine months ended October 2, 2021 and September 26, 2020, the gross margin percentage increased to 23.8% as compared to 22.4% for the comparable period of fiscal 2020. The increase is primarily due to higher overall finished product prices as compared to fiscal 2020.

Segment operating income. Food Ingredients operating income was $99.9 million for the nine months ended October 2, 2021, an increase of $43.5 million or 77.1% as compared to the nine months ended September 26, 2020. The increase is primarily due to higher sales volumes and prices in Europe, North America and China collagen markets and higher fat prices in the edible fat market. This was partially offset by a weaker Brazilian real and lower volumes in Brazil as a result of the COVID-19 pandemic in South America. In addition, segment operating income increased as a result of lower depreciation expense.

Fuel Ingredients Segment

Raw material volume. In the nine months ended October 2, 2021, the raw material processed by the Company's Fuel Ingredients segment totaled approximately 946,000 metric tons. Compared to the nine months ended September 26, 2020, overall raw material volume processed in the Fuel Ingredients segment decreased approximately 0.9%.

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

Margins. In the Fuel Ingredients segment (exclusive of the equity contribution from the DGD Joint Venture) for the nine months ended October 2, 2021, the gross margin percentage decreased to 29.5% as compared to 30.4% for the comparable period of fiscal 2020. The decrease is primarily due to considerably higher raw material prices in Europe that more than offset alternative fuel mixture credits recorded in the current period as a reduction to other operating expenses in fiscal 2021 as compared to fiscal 2020.

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 October 2, 2021 was $340.3 million, an increase of $58.9 million or 20.9% as compared to the same period in fiscal 2020. The increase is primarily due to an increase in renewable identification number (RIN) prices and renewable diesel fuel prices at the DGD Joint Venture in fiscal 2021 as compared to the same period in fiscal 2020, as well as higher sales prices in our European market.

Foreign Currency Exchange

During the first nine months of fiscal 2021, the euro and Canadian dollar strengthened against the U.S. dollar as compared to the same period in fiscal 2020. Using actual results for the nine months ended October 2, 2021 and using the prior year's average currency rate for the nine months ended September 26, 2020, foreign currency translation would result in a decrease in operating income of approximately $21.8 million. The average rate assumptions used in this calculation were the actual fiscal average rates for the nine months ended October 2, 2021 of €1.00:USD$1.20 and CAD$1.00:USD$0.80 as compared to the average rates for the nine months ended September 27, 2020 of €1.00:USD$1.12 and CAD$1.00:USD$0.74, respectively.

Corporate Activities

Selling, General and Administrative Expenses. Selling, general and administrative expenses were $42.2 million during the nine months ended October 2, 2021, compared to $40.9 million during the nine months ended September 26, 2020, an increase of $1.3 million. The increase is primarily due to an increase in insurance costs, tax and license costs and corporate related benefits that were partially offset by a decrease in legal costs and other miscellaneous costs.

Depreciation and Amortization. Depreciation and amortization charges increased slightly by $0.2 million to $8.3 million during the nine months ended October 2, 2021, as compared to $8.1 million during the nine months ended September 26, 2020.

Interest Expense. Interest expense was $47.1 million during the nine months ended October 2, 2021, compared to $55.8 million during the nine months ended September 26, 2020, a decrease of $8.7 million. The decrease is primarily due to lower amortization of deferred loan costs and lower interest on the Term loan B as a result of partial note pay-downs.

Foreign Currency Loss. Foreign currency losses were $1.3 million for the nine months ended October 2, 2021 as compared to foreign currency losses of $0.7 million for the nine months ended September 26, 2020. The increase in foreign currency losses 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 2020.

Other Expense, net. Other expense was $3.2 million in the nine months ended October 2, 2021, compared to other expense of $5.3 million for the nine months ended September 26, 2020. The decrease in other expense was primarily due to a decrease in the non-service component of pension expense and casualty losses as compared to the same period in fiscal 2020.

Income Taxes. The Company recorded income tax expense of $126.3 million for the nine months ended October 2, 2021, compared to $43.1 million recorded in the nine months ended September 26, 2020, an increase of $83.2 million, which is primarily due to increased pre-tax earnings of the Company for the first nine months of fiscal 2021. The effective tax rate for the first nine months of fiscal 2021 is 20.2%. The effective tax rate for the first nine months of fiscal 2021 differs from the federal statutory rate of 21% due primarily to the relative mix of earnings among jurisdictions with different tax rates (including foreign withholding taxes and state income taxes), biofuel tax incentives, certain taxable income inclusion items in the U. S. based on foreign earnings, and discrete items, including excess tax benefits from stock-based compensation. The effective tax rate for the first nine months ended September 26, 2020 was 14.5%. The effective tax rate for the first 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 final U.S. GILTI regulations related to the High-Tax Exclusion. The Company's effective tax rate excluding discrete items is 22.1% for the nine months ended October 2, 2021, compared to 18.2% for the nine months ended September 26, 2020.

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 October 2, 2021 Compared to the Three Months Ended September 26, 2020 - 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 2021 As Compared to First Nine Months of Fiscal 2020


	Nine Months Ended
(dollars in thousands)	October 2, 2021		September 26, 2020
Net income attributable to Darling	$	495,160	$	252,074
Depreciation and amortization	235,582		253,711
Interest expense	47,105		55,803
Income tax expense	126,324		43,058
Restructuring and asset impairment charges	778		—
Foreign currency loss	1,299		709
Other expense, net	3,210		5,278

Equity in net income of Diamond Green Diesel	(281,964)		(252,411)
Equity in net income of other unconsolidated subsidiaries	(4,199)		(2,467)
Net income attributable to non-controlling interests	4,533		2,117
Darling's Adjusted EBITDA	$	627,828	$	357,872

Foreign currency exchange impact (1)	(21,791)		—
Pro forma Adjusted EBITDA to Foreign Currency (Non-GAAP)	$	606,037	$	357,872

DGD Joint Venture Adjusted EBITDA (Darling's Share)	$	300,227	$	269,177

Darling plus Darling's share of DGD Joint Venture Adjusted EBITDA	$	928,055	$	627,049

(1) The average rates assumption used in this calculation was the actual fiscal average rate for the nine months ended October 2, 2021 of €1.00:USD$1.20 and CAD$1.00:USD$0.80 as compared to the average rate for the nine months ended September 26, 2020 of €1.00:USD$1.12 and CAD$1.00:USD$0.74, respectively.

FINANCING, LIQUIDITY AND CAPITAL RESOURCES

Credit Facilities

Indebtedness

Certain Debt Outstanding at ~~April 3,~~October 2, 2021. On ~~April 3,~~October 2, 2021, 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	~~(5,553)~~(5,159)
Carrying value of 5.25% Notes due 2027	$	~~494,447~~494,841

3.625 % Notes due 2026 - Denominated in euros	$	~~606,310~~597,297
Less unamortized deferred loan costs	~~(6,046)~~(5,423)
Carrying value of 3.625% Notes due 2026	$	~~600,264~~591,874

Amended Credit Agreement:
Term Loan B	$	~~250,000~~200,000
Less unamortized deferred loan costs	~~(2,979)~~(2,081)
Carrying value of Term Loan B	$	~~247,021~~197,919

Revolving Credit Facility:
Maximum availability	$	1,000,000
Ancillary Facilities	~~47,295~~50,297
Borrowings outstanding	~~69,000~~33,000
Letters of credit issued	~~3,845~~4,130
Availability	$	~~879,860~~912,573

Other Debt	$	~~33,799~~63,240

During the first ~~three~~nine months of fiscal 2021, the U.S. dollar strengthened as compared to the euro at January 2, 2021. Using the euro based debt outstanding at ~~April 3,~~October 2, 2021 and comparing the closing balance sheet rate at ~~April 3,~~October 2, 2021 to the balance sheet rate at January 2, 2021, the U.S. dollar debt balances of euro based debt decreased by approximately ~~$25.7~~$34.4 million at ~~April 3,~~October 2, 2021. The closing balance sheet rate assumption used in this calculation was the actual fiscal closing balance sheet rate at ~~April 3,~~October 2, 2021 of €1.00:USD$~~1.17730~~1.1598 as compared to the closing balance sheet rate at January 2, 2021 of €1.00:USD$1.22750.

Senior Secured Credit Facilities. On January 6, 2014, Darling, Darling International Canada Inc. (“Darling Canada”) and Darling International NL Holdings B.V. (“Darling NL”) entered into a Second Amended and Restated Credit Agreement (as subsequently amended, the “Amended Credit Agreement”), restating its then existing Amended and Restated Credit Agreement dated September 27, 2013, with the lenders from time to time party thereto, JPMorgan Chase Bank, N.A., as Administrative Agent, and the other agents from time to time party thereto. The Amended Credit Agreement provides for senior secured credit facilities in the aggregate principal amount of $1.525 billion comprised of (i) the Company's $525.0 million term loan B facility and (ii) the Company's $1.0 billion five-year revolving loan facility (up to $150.0 million of which will be available for a letter of credit subfacility and $50.0 million of which will be available for a swingline sub-facility) (collectively, the “Senior Secured Credit Facilities”). The Amended Credit Agreement also permits Darling and the other borrowers thereunder to incur ancillary facilities provided by any revolving lender party to the Senior Secured Credit Facilities (with certain restrictions). 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 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 9 (Debt) to the Company's Consolidated Financial Statements included herein.~~

•As of ~~April 3,~~October 2, 2021, the Company had availability of ~~$879.9~~$912.6 million under the revolving credit facility, taking into account that the Company had ~~$69.0~~$33.0 million in outstanding borrowings, ~~$47.3~~$50.3 million in ancillary facilities and letters of credit issued of ~~$3.8~~$4.1 million.

•As of ~~April 3,~~October 2, 2021, the Company has borrowed all $525.0 million under the terms of the term loan B facility and repaid approximately ~~$275.0~~$325.0 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 1.50% per annum or base rate/Canadian prime rate plus 0.50% 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 overdraft ancillary facilities and finance 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 ~~April 3,~~October 2, 2021 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, 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~~“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 January 2, 2021 as filed with the SEC on March 2, 2021.

Working Capital and Capital Expenditures

On ~~April 3,~~October 2, 2021, the Company had working capital of ~~$303.1~~$347.4 million and its working capital ratio was ~~1.48~~1.46 to 1 compared to working capital of $311.7 million and a working capital ratio of 1.46 to 1 on January 2, 2021. As of ~~April 3,~~October 2, 2021, the Company had unrestricted cash of ~~$71.2~~$67.2 million and funds available under the revolving credit facility of ~~$879.9~~$912.6 million, compared to unrestricted cash of $81.6 million and funds available under the revolving credit facility of $893.9 million at January 2, 2021. The Company diversifies its cash investments by limiting the amounts deposited with any one financial institution.

Net cash provided by operating activities was ~~$138.8~~$452.0 million for the first ~~three~~nine months ended ~~April 3,~~October 2, 2021, as compared to net cash provided by operating activities of ~~$34.5~~$470.4 million for the first ~~three~~nine months ended ~~March 28,~~September 26, 2020, ~~an increase~~a decrease of ~~$104.3~~$18.4 million due primarily to an increase in net income of approximately ~~$67.3~~$245.5 million ~~and~~less a decrease in distributions from unconsolidated subsidiaries of approximately $203.9 million. Additionally, changes in operating assets and liabilities ~~that~~impacted cash provided by operating activities, which includes an approximately ~~$10.2~~$121.9 million ofdecrease in cash provided by accounts receivable, an approximately $53.5 million decrease in cash provided by inventory and prepaid expense, an approximately $57.7 million increase in cash provided by accounts ~~receivable~~payable and accrued expenses, an approximately ~~$33.8~~$10.4 million ofincrease in income taxes refundable/payable and an approximately $40.1 million increase in cash provided by other primarily from a reduction of foreign governmental sales taxes and hedging activities. Cash used by investing activities was ~~$64.3~~$219.7 million for the first ~~three~~nine months ended ~~April 3,~~October 2, 2021, compared to ~~$64.6~~$187.3 million for the first ~~three~~nine months ended ~~March 28,~~September 26, 2020, ~~a decrease~~an increase in cash used by investing activities of ~~$0.3~~$32.4 million, primarily due to ~~a decrease~~an increase in capital asset ~~spending.~~spending and investments in unconsolidated subsidiaries. Net cash used by financing activities was ~~$81.0~~$240.1 million for the first ~~three~~nine months ended ~~April 3,~~October 2, 2021, compared to net cash ~~provided~~used by financing activities of ~~$40.4~~$287.5 million for the first ~~three~~nine months ended ~~March 28,~~September 26, 2020, ~~an increase~~a decrease in net cash used by financing activities of ~~$121.4~~$47.4 million, primarily due to ~~payment~~a decrease in debt payments that more than offset an increase in the repurchase of ~~outstanding debt~~common stock and minimum withholding taxes on stock awards in the first ~~three~~nine months ended ~~April 3,~~October 2, 2021 compared to ~~increased revolver borrowings in~~ the first ~~three~~nine months ended ~~March 28,~~September 26, 2020.

Capital expenditures of ~~$60.8~~$191.7 million were made during the first ~~three~~nine months of fiscal 2021, compared to ~~$61.6~~$184.9 million in the first ~~three~~nine months of fiscal 2020, for a net ~~decrease~~increase of ~~$0.8~~$6.8 million or ~~1.3%~~3.7%. The Company expects to incur additional capital expenditures of approximately ~~$250~~$120 million for the remainder of fiscal 2021 including compliance and expansion projects. The Company intends to finance these costs using cash flows from operations. Capital expenditures related to compliance with environmental regulations were ~~$5.5~~$23.8 million and ~~$6.9~~$26.2 million during the first ~~three~~nine months ended ~~April 3,~~October 2, 2021 and ~~March 28,~~September 26, 2020, respectively.

Accrued Insurance and Pension Plan Obligations

Based upon the annual actuarial estimate, current accruals and claims paid during the first ~~three~~nine months of fiscal 2021, the Company has accrued approximately ~~$11.0~~$11.9 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 ~~April 3,~~October 2, 2021. 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.

Based upon current actuarial estimates, the Company expects to contribute approximately $0.3 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 ~~$3.5~~$3.4 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 ~~not~~ made ~~any~~ tax

deductible discretionary and required contributions to its domestic pension plans for the first ~~three~~nine months ended ~~April 3, 2021.~~October 2, 2021 of approximately $0.2 million. Additionally, the Company has made required and tax deductible discretionary contributions to its foreign pension plans for the first ~~three~~nine months ended ~~April 3,~~October 2, 2021 of approximately ~~$0.9~~$2.6 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 currently has withdrawal liabilities recorded on four U.S. multiemployer plans in which it participated. During the first ~~quarter~~nine months of fiscal 2021, the Company was notified by one of these multiemployer plans that the Company's withdrawal liability has increased and as a result the Company recorded an additional liability of approximately $1.3 million. As of ~~April 3,~~October 2, 2021, the Company has an aggregate accrued liability of approximately ~~$4.0~~$3.9 million representing the present value of scheduled withdrawal liability payments on the multiemployer plans that have given notice of withdrawal. While the Company has no ability to calculate a possible current liability for under-funded multiemployer plans that could terminate or could require additional funding under the PPA, the amounts could be material.

DGD Joint Venture

In January 2011, Darling, through a wholly-owned subsidiary, 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 a renewable diesel plant located adjacent to Valero's refinery in Norco, Louisiana (the “DGD Norco Facility”). The DGD Norco Facility reached mechanical completion and began the production of renewable diesel and certain other co-products in late June ~~2013 and~~2013. In October 2021, the DGD Joint Venture completed an expansion of the DGD Norco Facility that increased its renewable diesel production by 400 million gallons per year, so that it is ~~currently~~now capable of producing ~~290~~690 million gallons per year of renewable diesel, ~~per year~~as well as separating renewable naphtha (approximately 30 million gallons) and ~~certain~~ other ~~co-products. Effective May 1, 2019,~~light end renewable hydrocarbons for sale into low carbon fuel markets. The expansion of the DGD ~~LLC Agreement~~Norco Facility was ~~amended~~completed and ~~restated for the purpose~~became operational in October 2021, at a total cost, including naphtha production and improved logistics capability, 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~~approximately $1.1 billion, which was substantially funded by DGD Joint ~~Venture’s ongoing expansion project to construct a new, parallel facility located next to the current facility, as further described below.~~Venture cash flow.

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, 2022, unless extended by agreement of the parties. As of ~~April 3,~~October 2, 2021, no amounts ~~are~~were owed to the DGD Lenders under the DGD Loan Agreement. Subsequent to October 2, 2021, the DGD Joint Venture borrowed all $50.0 million available under the DGD Loan Agreement, including the Company's full $25.0 million commitment.

On March 30, 2021, the DGD Joint Venture entered into a $400.0 million senior, unsecured revolving credit facility, with CoBank ACB acting as lead arranger and the administrative agent for the lending group, which is comprised of Farm Credit System institutions. The new revolving credit facility matures March 30, 2024 and is non-recourse to the joint venture partners. As of October 2, 2021, the DGD Joint Venture has borrowings outstanding of $100.0 million under this unsecured revolving credit facility.

Based on the sponsor support agreements executed in connection with the initial construction of the DGD Norco Facility, the Company contributed a total of approximately $111.7 million for initial completion of the DGD Norco Facility

including the Company's portion of cost overruns and working capital funding. In the three months ended October 2, 2021, each joint venture partner made a $25.0 million voluntary capital contribution to the DGD Joint Venture. Subsequent to October 2, 2021, each joint venture partner made a capital contribution of approximately $37.75 million. As of ~~April 3,~~October 2, 2021, under the equity method of accounting, the Company has an investment in the DGD Joint Venture of approximately ~~$879.7~~$1,072.6 million included on the consolidated balance sheet.

The DGD Joint Venture began work on an expansion of the DGD Norco Facility in 2019, which is expected to increase its renewable diesel production by 400 million gallons per year and provide the capability to separate renewable naphtha (approximately 30 million gallons) and other light end renewable hydrocarbons for sale into low carbon fuel markets. In addition, the expansion project includes expanded inbound and outbound logistics, thereby improving feedstock sourcing flexibility as well as finished product marketing flexibility. The DGD Joint Venture estimates completion and startup of the expanded portion of the 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 expansion of the DGD Norco 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 and in accordance with the DGD LLC Agreement, fall below $50 million. Additionally, in January 2021, the joint venture partners approved the construction of a new facility to be located next to Valero’s Port Arthur Refinery in Port Arthur, Texas, capable of producing 470 million gallons per year of renewable diesel and 20 million gallons per year of renewable naphtha and having similar logistics flexibilities as those of the DGD Norco Facility. ~~The~~Construction is underway, and the new plant is anticipated to commence operations in the ~~second~~first half of 2023, ~~and~~with the total cost of the expansion project is estimated to be approximately $1.45 billion. Once operational, the new plant is expected to increase the DGD Joint Venture’s total renewable diesel production capacity to almost 1.2 billion gallons per year. Based on forecasted margins as of the date of this report, the Port Arthur expansion project is expected to be substantially funded by DGD Joint Venture cash flow; however, if the DGD Joint Venture cash flow is not sufficient to fully fund the project, the DGD Joint Venture may need to borrow funds or the joint venture partners may be required to contribute additional funds to complete the project.

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 DGD Norco 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 three months ended April 3, 2021, the DGD Joint Venture has not made any distributions to the partners.

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 2020, a large portion of Darling’s total U.S. finished fats products were sold to the DGD Norco Facility as feedstock for renewable diesel. In 2020, DGD was Darling’s largest finished product customer in terms of sales, with Darling recording sales of approximately $264.1 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 Norco 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 ability of the Company's Midwest network of facilities to collect and deliver feedstocks to DGD via water, rail or truck from a centralized location. Darling has also stepped up collection efforts by providing indoor used cooking oil collection units in exchange for extended collection contracts at eating establishments and has moved to more of a centralized digital marketing effort with restaurant chains and franchise groups and invested in internet search engine key words to improve visibility with restaurants. The Company also includes DGD in marketing efforts to emphasize environmental sustainability that restaurants participate in when their used cooking oil is collected by Darling. From a production standpoint, Darling now isolates used cooking oil from other fats to preserve identification to qualify for a higher carbon intensity value. As a result, the Company includes its equity in net income of the DGD Joint Venture as operating income.

Financial Impact of Significant Debt Outstanding

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

Cash Flows and Liquidity Risks

Management believes that the Company’s cash flows from operating activities, unrestricted cash and funds available under the Amended Credit Agreement, will be sufficient to meet the Company’s working capital needs and maintenance and compliance-related capital expenditures, scheduled debt and interest payments, income tax obligations, and other contemplated needs through the next twelve months. Numerous factors could have adverse consequences to the Company that cannot be estimated at this time, such as negative impacts from the 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 year 2021 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 projects or potential investments in additional renewable diesel and/or ~~biodiesel~~biofuel 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 ~~three~~nine months of fiscal 2021, the Company has ~~not~~ repurchased ~~any~~approximately $97.9 million of its common stock in the open market. As of ~~April 3,~~October 2, 2021, the Company had approximately ~~$200.0~~$102.1 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.

Supplemental Guarantor Financial Information

The following is a description of the terms and conditions of the guarantees with respect to senior notes for which Darling is an issuer or provides full and unconditional guarantee.

Note Guarantees

The Company's 5.25% Notes and 3.625% Notes (see Note 98 (Debt) to the Company's Consolidated Financial Statements included herein) are guaranteed on a senior unsecured basis by the following Notes Guarantors, each of which is a 100% directly or indirectly owned subsidiary of Darling and which collectively constitute all of Darling's existing restricted subsidiaries that are Credit Agreement Guarantors (other than Darling's foreign subsidiaries, Darling Global Finance B.V., which issued the 3.625% Notes and is discussed further below, or any receivables entity): Darling National LLC, Griffin Industries LLC and its subsidiary Craig Protein Division, Inc., DarPro Storage Solutions LLC, Darling Global Holdings Inc., Rousselot Inc., Rousselot Dubuque Inc., Sonac USA LLC and Rousselot Peabody Inc (collectively, the “Notes Guarantors”). In addition, the 3.625% Notes, which were issued by Darling Global Finance B.V., a wholly-owned indirect subsidiary of Darling, are guaranteed on a senior unsecured basis by Darling. The Notes Guarantors, and Darling in the case of the 3.625% Notes, fully and unconditionally guaranteed the 5.25% Notes and 3.625% Notes on a joint and several basis. The following financial tables present summarized financial information for (i) Darling, (ii) the combined

Notes Guarantors, (iii) the combined other subsidiaries of the Company that did not guarantee the 5.25% Notes or the 3.625% Notes (the “Non-guarantors”), and (iv) eliminations necessary to arrive at the Company's consolidated summarized financial information, which include summarized condensed consolidated balance sheets as of ~~April 3,~~October 2, 2021 and January 2, 2021, and the summarized condensed consolidating statements of operations for the three and nine months ended ~~April 3,~~October 2, 2021 and ~~March 28,~~September 26, 2020. Separate financial information is not presented for Darling Global Finance B.V. since it was formed as a special purpose finance subsidiary for the purpose of issuing euro-denominated notes such as the 3.625% Notes and therefore does not have any substantial operations or assets.

Summarized Financial Information

Condensed Balance Sheet Information

(in thousands)


April 3, 2021		Parent		Notes Guarantors		Non-guarantors		Eliminations		Consolidated
October 2, 2021												October 2, 2021	Parent		Notes Guarantors		Non-guarantors		Eliminations		Consolidated

Current assets	Current assets	$	109,043	$	947,490	$	1,105,855	$	(1,221,621)	$	940,767	Current assets	$	178,275	$	1,061,470	$	1,188,191	$	(1,324,292)	$	1,103,644
Noncurrent assets	Noncurrent assets	6,644,267		2,450,113		3,848,471		(8,292,171)		4,650,680		Noncurrent assets	7,010,953		2,447,136		4,156,875		(8,792,888)		4,822,076
Current liabilities	Current liabilities	1,376,700		87,313		395,316		(1,221,622)		637,707		Current liabilities	1,459,135		99,469		521,884		(1,324,291)		756,197
Noncurrent liabilities	Noncurrent liabilities	1,276,606		19,897		792,113		(164,822)		1,923,794		Noncurrent liabilities	1,372,514		32,526		785,196		(289,950)		1,900,286
Stockholders' equity	Stockholders' equity	4,100,004		3,290,393		3,766,897		(8,127,348)		3,029,946		Stockholders' equity	4,357,579		3,376,611		4,037,986		(8,502,939)		3,269,237

January 2, 2021	January 2, 2021											January 2, 2021

Current assets	Current assets	$	103,728	$	881,669	$	1,177,869	$	(1,176,272)	$	986,994	Current assets	$	103,728	$	881,669	$	1,177,869	$	(1,176,272)	$	986,994
Noncurrent assets	Noncurrent assets	6,476,886		2,465,785		3,753,644		(8,069,978)		4,626,337		Noncurrent assets	6,476,886		2,465,785		3,753,644		(8,069,978)		4,626,337
Current liabilities	Current liabilities	1,345,233		77,573		428,771		(1,176,272)		675,305		Current liabilities	1,345,233		77,573		428,771		(1,176,272)		675,305
Noncurrent liabilities	Noncurrent liabilities	1,254,518		19,755		826,157		(116,613)		1,983,817		Noncurrent liabilities	1,254,518		19,755		826,157		(116,613)		1,983,817
Stockholders' equity	Stockholders' equity	3,980,863		3,250,126		3,676,585		(7,953,365)		2,954,209		Stockholders' equity	3,980,863		3,250,126		3,676,585		(7,953,365)		2,954,209

Condensed Statements of Operations Information

(in thousands)


For the three months ended April 3, 2021		Parent		Notes Guarantors		Non-guarantors		Eliminations		Consolidated
For the three months ended October 2, 2021												For the three months ended October 2, 2021	Parent		Notes Guarantors		Non-guarantors		Eliminations		Consolidated
Net sales												Net sales	$	279,473	$	462,066	$	540,465	$	(96,088)	$	1,185,916
Total costs and expenses												Total costs and expenses	259,507		404,684		466,101		(96,088)		1,034,204
Equity in net income of Diamond Green Diesel												Equity in net income of Diamond Green Diesel	—		—		53,951		—		53,951
Operating income												Operating income	19,966		57,382		128,315		—		205,663
Net income attributable to Darling												Net income attributable to Darling	146,812		44,497		95,083		(139,580)		146,812

For the three months ended September 26, 2020												For the three months ended September 26, 2020
Net sales	Net sales	$	237,941	$	403,746	$	485,135	$	(80,106)	$	1,046,716	Net sales	$	173,659	$	309,837	$	416,297	$	(49,224)	$	850,569
Total costs and expenses	Total costs and expenses	246,942		355,525		427,069		(80,106)		949,430		Total costs and expenses	194,246		287,005		382,186		(49,224)		814,213
Equity in net income of Diamond Green Diesel	Equity in net income of Diamond Green Diesel	—		—		102,225		—		102,225		Equity in net income of Diamond Green Diesel	—		—		91,099		—		91,099
Operating income (loss)	Operating income (loss)	(9,001)		48,221		160,291		—		199,511		Operating income (loss)	(20,587)		22,832		125,210		—		127,455
Net income allocable to Darling		151,766		40,267		128,717		(168,984)		151,766

For the three months ended March 28, 2020
Net sales		$	180,919	$	310,301	$	405,025	$	(43,403)	$	852,842
Total costs and expenses		209,450		285,493		376,293		(43,403)		827,833
Equity in net income of Diamond Green Diesel		—		—		97,820		—		97,820
Operating income (loss)		(28,531)		24,808		126,552		—		122,829
Net income allocable to Darling		85,510		20,112		101,827		(121,939)		85,510
Net income attributable to Darling												Net income attributable to Darling	101,125		21,876		113,481		(135,357)		101,125

Condensed Statements of Operations Information (continued)

(in thousands)


For the nine months ended October 2, 2021	Parent		Notes Guarantors		Non-guarantors		Eliminations		Consolidated
Net sales	$	806,611	$	1,332,468	$	1,548,583	$	(256,361)	$	3,431,301
Total costs and expenses	784,359		1,172,725		1,339,110		(256,361)		3,039,833
Equity in net income of Diamond Green Diesel	—		—		281,964		—		281,964
Operating income	22,252		159,743		491,437		—		673,432
Net income attributable to Darling	495,160		126,484		377,589		(504,073)		495,160

For the nine months ended September 26, 2020
Net sales	$	540,493	$	930,788	$	1,225,680	$	(144,877)	$	2,552,084
Total costs and expenses	606,440		855,705		1,130,655		(144,877)		2,447,923
Equity in net income of Diamond Green Diesel	—		—		252,411		—		252,411
Operating income (loss)	(65,947)		75,083		347,436		—		356,572
Net income attributable to Darling	252,074		63,051		283,093		(346,144)		252,074

OFF BALANCE SHEET ARRANGEMENTS AND CONTRACTUAL OBLIGATIONS

Based upon the underlying purchase agreements, the Company has commitments to purchase ~~$191.9~~$216.4 million of commodity products consisting of approximately ~~$91.8~~$67.9 million of finished products, approximately ~~$71.9~~$118.8 million of natural gas and diesel fuel and approximately ~~$28.2~~$29.7 million of other commitments during the next ~~two~~five years, which are not included in liabilities on the Company’s balance sheet at ~~April 3,~~October 2, 2021. 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 or products occurs and ownership passes to the Company during the remainder of fiscal 2021 and through fiscal ~~2022,~~2024, 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 ~~April 3,~~October 2, 2021 (in thousands):


Other commercial commitments:
Standby letters of credit	$	~~3,845~~4,130
Standby letters of credit (ancillary facility)	~~24,334~~27,400
Foreign bank guarantees	~~11,655~~11,827
Total other commercial commitments:	$	~~39,834~~43,357

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 January 2, 2021, filed with the SEC on March 2, 2021.

NEW ACCOUNTING PRONOUNCEMENTS

FORWARD LOOKING STATEMENTS

This Quarterly Report on Form 10-Q includes “forward-looking” statements that are subject to risks and uncertainties that could cause actual results to differ materially from those expressed or implied in the statements. Statements that are not statements of historical facts are forward-looking statements and are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Words such as “estimate,” “project,” ~~“planned,~~

“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 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 projects; 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 January 2, 2021. The Company cautions readers that all forward-looking statements speak only as of the date made, and the Company undertakes no obligation to update any forward-looking statements, whether as a result of changes in circumstances, new events or otherwise.

Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISKS

Market risks affecting the Company include exposures to changes in prices of the finished products the Company sells, interest rates on debt, availability of raw material supplies and the price of natural gas and diesel fuel used in the

Company's plants. Raw materials available to the Company are impacted by seasonal factors, including holidays, when raw material volume declines; warm weather, which can adversely affect the quality of raw material processed and finished products produced; and cold weather, which can impact the collection of raw material. Predominantly all of the Company’s finished products are commodities that are generally sold at prices prevailing at the time of sale. Additionally, with the acquisition of foreign entities we are exposed to foreign currency exchange risks, imposition of currency controls and the possibility of currency devaluation.

The Company makes limited use of derivative instruments to manage cash flow risks related to natural gas usage, diesel fuel usage, inventory, forecasted sales and foreign currency exchange rates. The Company does not use derivative instruments for trading purposes. Natural gas swaps and options are entered into with the intent of managing the overall cost of natural gas usage by reducing the potential impact of seasonal weather demands on natural gas that increases natural gas prices. Heating oil swaps and options are entered into with the intent of managing the overall cost of diesel fuel usage by reducing the potential impact of seasonal weather demands on diesel fuel that increases diesel fuel prices. Soybean meal options are entered into with the intent of managing the impact of changing prices for poultry meal sales. Corn options and future contracts are entered into with the intent of managing U.S. forecasted sales of BBP by reducing the impact of changing prices. Foreign currency forward contracts are entered into to mitigate the foreign exchange rate risk for transactions designated in a currency other than the local functional currency. The interest rate swaps and the natural gas swaps are subject to the requirements of FASB authoritative guidance. Some of the Company's natural gas and diesel fuel instruments are not subject to the requirements of FASB authoritative guidance because some of the natural gas and diesel fuel instruments qualify as normal purchases as defined in FASB authoritative guidance. At ~~April 3,~~October 2, 2021, the Company had corn option ~~contracts, soybean meal forward~~ contracts and foreign exchange forward and option contracts outstanding that qualified and were designated for hedge accounting as well as corn forward contracts and foreign currency forward contracts that did not qualify and were not designated for hedge accounting.

In fiscal 2020 and fiscal 2021, the Company entered into corn option contracts on the Chicago Board of Trade that are designated as cash flow hedges. Under the terms of the corn option contracts, the Company hedged a portion of its U.S. forecasted sales of BBP into the fourth quarter of fiscal ~~2021.~~2022. As of ~~April 3,~~October 2, 2021 and January 2, 2021 the aggregate fair value of these corn option contracts was approximately ~~$8.0~~$2.2 million and $6.8 million, respectively. These amounts are included in other current assets, accrued expenses and noncurrent liabilities on the balance sheet, with an offset recorded in accumulated other comprehensive loss. The Company may enter into corn option contracts in the future from time to time.

In fiscal 2020 and fiscal 2021, the Company entered into foreign exchange forward and option contracts that are considered cash flow hedges. Under the terms of the foreign exchange contracts, the Company hedged a portion of its

forecasted collagen sales in currencies other than the functional currency through the fourth quarter of fiscal 2022. As of ~~April 3,~~October 2, 2021 and January 2, 2021, the aggregate fair value of these foreign exchange contracts was approximately ~~$0.4~~$2.5 million and $11.6 million, respectively and are included in other current assets, accrued expenses and noncurrent assets on the balance sheet, with an offset recorded in accumulated other comprehensive loss.

In fiscal 2020 and fiscal 2021, the Company entered into soybean meal forward contracts to hedge a portion of its forecasted poultry meal sales into the ~~second~~third quarter of fiscal 2021. As of ~~April 3,~~October 2, 2021 and January 2, 2021, the aggregate fair value of the soybean meal contracts was ~~$0.1 million~~zero and $0.4 million, respectively. The amounts are included in other current assets on the balance sheet, with an offset recorded in accumulated other comprehensive loss.

As of ~~April 3,~~October 2, 2021, the Company had the following outstanding forward and option contract amounts that were entered into to hedge foreign currency transactions in currencies other than the functional currency and forecasted transactions in currencies other than the functional currency (in thousands):

Functional Currency Contract Currency Range of U.S.
Type Amount Type Amount Hedge rates Equivalent
Brazilian real 49,335 Euro 7,305 6.39 - 6.98 $ 8,681
Brazilian real 1,103,561 U.S. dollar 241,320 3.35 - 6.25 241,320
Euro 35,967 U.S. dollar 42,810 1.17 - 1.24 42,810
Euro 43,119 Polish zloty 198,500 4.55 - 4.67 50,764
Euro 6,293 Japanese yen 808,776 125.65 - 130.11 7,409
Euro 16,176 Chinese renminbi 126,124 7.75 - 7.99 19,043
Euro 42,340 Australian dollar 65,550 1.55 49,847
Euro 3,048 British pound 2,600 0.85 3,588
Euro 32 Canadian dollar 50 1.56 38
Polish zloty 1,031 U.S. dollar 262 3.94 262
Polish zloty 24,116 Euro 5,195 4.64 - 4.67 6,181
British pound 176 Euro 207 0.85 244
Japanese yen 231,803 U.S. dollar 2,159 102.77 - 109.62 2,159
U.S. dollar 100 Japanese yen 11,000 109.64 100
U.S. dollar 165,311 Euro 140,000 1.18 165,311
$ 597,757


Functional Currency		Contract Currency		Range of	U.S.
Type	Amount	Type	Amount	Hedge rates	Equivalent
Brazilian real	22,978	Euro	3,536	6.18 - 6.98	$	4,264
Brazilian real	1,116,635	U.S. dollar	237,950	3.35 - 6.25	237,950

Euro	33,298	U.S. dollar	39,070	1.16 - 1.24	39,070
Euro	24,960	Polish zloty	114,000	4.51 - 4.64	28,949
Euro	7,160	Japanese yen	929,960	129.70 - 132.30	8,304
Euro	20,692	Chinese renminbi	157,474	7.58 - 7.67	23,999
Euro	13,670	Australian dollar	21,850	1.60	15,855
Euro	2,810	British pound	2,400	0.85	3,259
Euro	34	Canadian dollar	50	1.48	39

Polish zloty	2,057	U.S. dollar	524	3.92	524
Polish zloty	20,589	Euro	4,483	4.59 - 4.60	5,198
British pound	179	Euro	210	0.85	243

Japanese yen	228,482	U.S. dollar	2,070	108.79 - 110.80	2,070
U.S. dollar	514	Japanese yen	57,000	110.90	514
U.S. dollar	293,089	Euro	250,000	1.17	293,089

					$	663,327

The above foreign currency contracts that are not designated as hedges had an aggregate fair value of approximately ~~$0.5~~$3.7 million and are included in other current assets and accrued expenses at ~~April 3,~~October 2, 2021.

Additionally, the Company had corn forward contracts that are marked to market because they did not qualify for hedge accounting at ~~April 3,~~October 2, 2021. These contracts have an aggregate fair value of approximately ~~$0.2~~$0.5 million and are included in other current assets and accrued expenses at ~~April 3,~~October 2, 2021.

As of ~~April 3,~~October 2, 2021, the Company had forward purchase agreements in place for purchases of approximately ~~$71.9~~$118.8 million of natural gas and diesel fuel and approximately ~~$28.2~~$29.7 million of other commitments during the next ~~two~~five years. As of ~~April 3,~~October 2, 2021, the Company had forward purchase agreements in place for purchases of approximately ~~$91.8~~$67.9 million of finished product ~~in fiscal 2021.~~during the next five years.

Foreign Exchange

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

Item 4. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures. As required by Rule 13a-15(b) of the Securities and Exchange Act of 1934, as amended (the “Exchange Act”), the Company's management, including the Chief Executive Officer and Chief Financial Officer, conducted an evaluation, as of the end of the period covered by this report, of the effectiveness of the design and operation of the Company's disclosure controls and procedures. As defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act, disclosure controls and procedures are controls and other procedures of the Company that are designed to ensure that information required to be disclosed by the Company in the reports it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC's rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by the Company in the reports it files or submits under the Exchange Act is accumulated and communicated to the Company's management, including the Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure. ~~Because of its~~There are inherent limitations ~~internal control over financial reporting may not prevent or detect misstatements. Projections~~to the effectiveness of any ~~evaluation~~system of ~~effectiveness to future periods are subject to~~disclosure controls and procedures, including the ~~risk that~~possibility of human error and circumvention or overriding of the controls ~~may become inadequate because~~and procedures. Accordingly, even effective disclosure controls and procedures can only provide reasonable assurance of ~~changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.~~achieving their control objectives.

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

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

4952

DARLING INGREDIENTS INC. AND SUBSIDIARIES

FORM 10-Q FOR THE QUARTERLY PERIOD ENDED ~~APRIL 3,~~OCTOBER 2, 2021

PART II: Other Information

Item 1. LEGAL PROCEEDINGS

The information required by this Item 1 is contained within Note 1716 (Contingencies) on pages 2321 through 2422 of this Form 10-Q and is incorporated herein by reference.

Item 1A. RISK FACTORS

In addition to the other information set forth in this report, you should carefully consider the factors described in Part I, “Item 1A. Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended January 2, 2021, which could materially affect our business, financial condition or future results. The risks described in this report and in our Annual Report on Form 10-K are not the only risks we face. Additional risks and uncertainties that are not currently known or that are currently deemed to be immaterial may also materially and adversely affect our business operations and financial condition or the market price of our common stock.

Item 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

On August 3, 2020, the Company’s Board of Directors approved the extension for an additional two years of its previously announced share repurchase program and refreshed the amount of the program back up to its original amount of an aggregate of $200.0 million of the Company's common stock depending on market conditions. During the third quarter of fiscal 2021, the Company repurchased approximately $22.3 million worth of its common stock in the open market. As of October 2, 2021, the Company had approximately $102.1 million remaining under the share repurchase program initially approved in August 2017 and subsequently extended to August 13, 2022.

The following table is a summary of equity securities purchased by the Company during the third quarter of fiscal 2021.


ISSUER PURCHASES OF EQUITY SECURITIES
Period	Total Number of Shares Purchased (1)		Average Price Paid per Share (2)	Total Number of Shares Purchased as part of Publicly Announced Plans or Programs (4)	Maximum Number (or Approximate Dollar Value) of Shares that may yet be Purchased Under the Plan or Programs at End of Period.
July 2021:
July 4, 2021 through July 31, 2021	2,937		67.79	—	$	124,359,544
August 2021:
August 1, 2021 through August 28, 2021	334,879	(3)	75.00	319,330	102,105,660
September 2021:
August 29, 2021 through October 2, 2021	12,736		74.30	—	102,105,660
Total	350,552		74.15	319,330	$	102,105,660

(1) All shares purchased during the third quarter were acquired by the Company pursuant to the announced share repurchase program (other than shares withheld for taxes on restricted stock and exercised options and the strike price on exercised options).

(2) The average price paid per share is calculated on a trade date basis and excludes commissions.

(3) Includes 15,549 shares withheld for taxes on restricted stock and options.

(4) Represents purchases made during the quarter under the authorization from the Company's Board of Directors, as announced, to repurchase up to an aggregate of $200.0 million of the Company's common stock over the period ending August 13, 2022, unless extended or shortened by the Board of Directors.

Item 6. EXHIBITS

The following exhibits are filed herewith:

~~10.1~~

~~Form of Global Performance Unit Award Agreement under the 2017 Omnibus Incentive Plan effective January 2021 (filed herewith).~~

~~10.2~~

~~Form of Global Restricted Stock Unit Award Agreement under the 2017 Omnibus Incentive Plan effective January 2021 (filed herewith).~~

31.1

Certification pursuant to Rule 13a-14(a) or Rule 15d-14(a) of the Securities Exchange Act of 1934, of Randall C. Stuewe, the Chief Executive Officer of the Company.

31.2

Certification pursuant to Rule 13a-14(a) or Rule 15d-14(a) of the Securities Exchange Act of 1934, of Brad Phillips, the Chief Financial Officer of the Company.

Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, of Randall C. Stuewe, the Chief Executive Officer of the Company, and of Brad Phillips, the Chief Financial Officer of the Company.

101

Interactive Data Files Pursuant to Rule 405 of Regulation S-T: (i) Consolidated Balance Sheets as of ~~April 3,~~October 2, 2021 and January 2, 2021; (ii) Consolidated Statements of Operations for the three and nine months ended ~~April 3,~~October 2, 2021 and ~~March 28,~~September 26, 2020; (iii) Consolidated Statements of Comprehensive Income/(Loss) for the three and nine months ended ~~April 3,~~October 2, 2021 and ~~March 28,~~September 26, 2020; (iv) Consolidated Statements of Stockholders' Equity for the ~~three~~nine months ended ~~April 3,~~October 2, 2021 and ~~March 28,~~September 26, 2020; (v) Consolidated Statements of Cash Flows for the ~~three~~nine months ended ~~April 3,~~October 2, 2021 and ~~March 28,~~September 26, 2020; (vi) Notes to the Consolidated Financial Statements.

104

Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101).

5054

SIGNATURES

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


		DARLING INGREDIENTS INC.


Date:	~~May 11,~~November 9, 2021	By:	/s/ Brad Phillips
			Brad Phillips
			Chief Financial Officer
			(Principal Financial Officer and Duly Authorized Officer)

5155


Period Ending Fiscal	Operating Leases		Capital Leases
2021 (excluding the three months ended April 3, 2021)	$	32,297	$	650
2022	34,591		824
2023	29,567		611
2024	22,759		467
2025	14,118		331
Thereafter	27,721		574
	$	161,053	$	3,457
Less amounts representing interest	$	(14,212)	(134)
Lease obligations included in current and long-term liabilities	$	146,841	$	3,323