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	~~October~~April 2, ~~2021~~2022
	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 ~~161,808,213~~161,514,066 shares of common stock, $0.01 par value, outstanding at ~~November 4, 2021.~~May 5, 2022.

DARLING INGREDIENTS INC. AND SUBSIDIARIES

FORM 10-Q FOR THE QUARTERLY PERIOD ENDED ~~OCTOBER~~APRIL 2, ~~2021~~2022

TABLE OF CONTENTS


		Page No.
	PART I: FINANCIAL INFORMATION

Item 1.	FINANCIAL STATEMENTS
	Consolidated Balance Sheets	3
	~~October~~April 2, ~~2021~~2022 (unaudited) and January ~~2, 2021~~1, 2022

	Consolidated Statements of Operations (unaudited)	4
	Three ~~and Nine~~ Months Ended ~~October~~April 2, ~~2021~~2022 and ~~September 26, 2020~~April 3, 2021

	Consolidated Statements of Comprehensive Income/(Loss) (unaudited)	5
	Three ~~and Nine~~ Months Ended ~~October~~April 2, ~~2021~~2022 and ~~September 26, 2020~~April 3, 2021

	Consolidated ~~Statement~~Statements of Stockholders' Equity (unaudited)	6
	~~Nine~~Three Months Ended ~~October~~April 2, ~~2021~~2022 and ~~September 26, 2020~~April 3, 2021

	Consolidated Statements of Cash Flows (unaudited)	87
	~~Nine~~Three Months Ended ~~October~~April 2, ~~2021~~2022 and ~~September 26, 2020~~April 3, 2021

	Notes to Consolidated Financial Statements (unaudited)	98

Item 2.	MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	2825

Item 3.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	4941

Item 4.	CONTROLS AND PROCEDURES	5143


	PART II: OTHER INFORMATION

Item 1.	LEGAL PROCEEDINGS	5344

Item 1A.	RISK FACTORS	5344

Item 2.	UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS	5344

Item 6.	EXHIBITS	5444

	Signatures	5546

DARLING INGREDIENTS INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

~~October~~April 2, ~~2021~~2022 and January ~~2, 2021~~1, 2022

(in thousands, except share data)


		October 2, 2021		January 2, 2021			April 2, 2022		January 1, 2022
ASSETS	ASSETS	(unaudited)				ASSETS	(unaudited)
Current assets:	Current assets:					Current assets:
Cash and cash equivalents	Cash and cash equivalents	$	67,188	$	81,617	Cash and cash equivalents	$	99,460	$	68,906
Restricted cash	Restricted cash	172		103		Restricted cash	100		166
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
Accounts receivable, less allowance for bad debts of $9,161 at April 2, 2022 and $8,196 at January 1, 2022						Accounts receivable, less allowance for bad debts of $9,161 at April 2, 2022 and $8,196 at January 1, 2022	517,783		469,092
Inventories	Inventories	476,295		405,922		Inventories	491,694		457,465
Prepaid expenses	Prepaid expenses	63,633		47,793		Prepaid expenses	60,562		53,711
Income taxes refundable	Income taxes refundable	3,060		3,883		Income taxes refundable	25,047		1,075
Other current assets	Other current assets	13,721		42,289		Other current assets	64,387		38,599
Total current assets	Total current assets	1,103,644		986,994		Total current assets	1,259,033		1,089,014
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		417,409		473,680
Property, plant and equipment, less accumulated depreciation of $1,894,760 at April 2, 2022 and $1,855,420 at January 1, 2022						Property, plant and equipment, less accumulated depreciation of $1,894,760 at April 2, 2022 and $1,855,420 at January 1, 2022	1,867,880		1,840,080
Intangible assets, less accumulated amortization of $576,357 at April 2, 2022 and $560,470 at January 1, 2022						Intangible assets, less accumulated amortization of $576,357 at April 2, 2022 and $560,470 at January 1, 2022	409,627		397,801
Goodwill	Goodwill	1,232,179		1,260,240		Goodwill	1,236,524		1,219,116
Investment in unconsolidated subsidiaries	Investment in unconsolidated subsidiaries	1,107,834		804,682		Investment in unconsolidated subsidiaries	1,563,840		1,349,247
Operating lease right-of-use assets	Operating lease right-of-use assets	160,660		146,563		Operating lease right-of-use assets	165,128		155,464
Other assets	Other assets	53,887		60,682		Other assets	97,709		66,795
Deferred income taxes	Deferred income taxes	15,437		16,676		Deferred income taxes	15,875		16,211
		$	5,925,720	$	5,613,331		$	6,615,616	$	6,133,728
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	$	55,138	$	27,538	Current portion of long-term debt	$	35,337	$	24,407
Accounts payable, principally trade	Accounts payable, principally trade	272,844		255,340		Accounts payable, principally trade	351,253		307,118
Income taxes payable	Income taxes payable	34,623		17,497		Income taxes payable	25,117		32,310
Current operating lease liabilities	Current operating lease liabilities	40,182		39,459		Current operating lease liabilities	41,649		38,168
Accrued expenses	Accrued expenses	353,410		335,471		Accrued expenses	360,058		350,681
Total current liabilities	Total current liabilities	756,197		675,305		Total current liabilities	813,414		752,684
Long-term debt, net of current portion	Long-term debt, net of current portion	1,325,736		1,480,531		Long-term debt, net of current portion	1,677,925		1,438,974
Long-term operating lease liabilities	Long-term operating lease liabilities	123,169		109,707		Long-term operating lease liabilities	125,242		120,314
Other non-current liabilities	Other non-current liabilities	115,815		117,371		Other non-current liabilities	109,647		111,029
Deferred income taxes	Deferred income taxes	335,566		276,208		Deferred income taxes	393,738		362,942
Total liabilities	Total liabilities	2,656,483		2,659,122		Total liabilities	3,119,966		2,785,943
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; 171,665,336 and 169,880,238 shares issued at October 2, 2021 and January 2, 2021, respectively		1,717		1,699
Common stock, $0.01 par value; 250,000,000 shares authorized; 173,384,469 and 171,734,603 shares issued at April 2, 2022 and January 1, 2022, respectively						Common stock, $0.01 par value; 250,000,000 shares authorized; 173,384,469 and 171,734,603 shares issued at April 2, 2022 and January 1, 2022, respectively	1,734		1,717
Additional paid-in capital	Additional paid-in capital	1,623,264		1,597,429		Additional paid-in capital	1,637,930		1,627,816
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)
Treasury stock, at cost; 11,880,712 and 10,942,599 shares at April 2, 2022 and January 1, 2022, respectively						Treasury stock, at cost; 11,880,712 and 10,942,599 shares at April 2, 2022 and January 1, 2022, respectively	(438,906)		(374,721)
Accumulated other comprehensive loss	Accumulated other comprehensive loss	(309,353)		(252,433)		Accumulated other comprehensive loss	(311,369)		(321,690)
Retained earnings	Retained earnings	2,192,084		1,696,924		Retained earnings	2,535,891		2,347,838
Total Darling's stockholders’ equity	Total Darling's stockholders’ equity	3,205,524		2,891,909		Total Darling's stockholders’ equity	3,425,280		3,280,960
Noncontrolling interests	Noncontrolling interests	63,713		62,300		Noncontrolling interests	70,370		66,825
Total stockholders' equity	Total stockholders' equity	3,269,237		2,954,209		Total stockholders' equity	3,495,650		3,347,785
		$	5,925,720	$	5,613,331		$	6,615,616	$	6,133,728

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 ~~October~~April 2, ~~2021~~2022 and ~~September 26, 2020~~April 3, 2021

(in thousands, except per share data)

(unaudited)


		Three Months Ended				Nine Months Ended					Three Months Ended
		October 2, 2021		September 26, 2020		October 2, 2021		September 26, 2020			April 2, 2022		April 3, 2021
Net sales	Net sales	$	1,185,916	$	850,569	$	3,431,301	$	2,552,084	Net sales	$	1,366,334	$	1,046,716
Costs and expenses:	Costs and expenses:									Costs and expenses:
Cost of sales and operating expenses	Cost of sales and operating expenses	859,604		638,368		2,510,461		1,917,623		Cost of sales and operating expenses	1,020,577		772,784
Loss/(gain) on sale of assets		(501)		122		(793)		210
Gain on sale of assets										Gain on sale of assets	(389)		(64)
Selling, general and administrative expenses	Selling, general and administrative expenses	97,275		89,993		293,805		276,379		Selling, general and administrative expenses	102,032		97,398
Restructuring and asset impairment charges	Restructuring and asset impairment charges	—		—		778		—		Restructuring and asset impairment charges	—		778

Acquisition and integration costs										Acquisition and integration costs	3,773		—
Depreciation and amortization	Depreciation and amortization	77,826		85,730		235,582		253,711		Depreciation and amortization	79,246		78,534
Total costs and expenses	Total costs and expenses	1,034,204		814,213		3,039,833		2,447,923		Total costs and expenses	1,205,239		949,430
Equity in net income of Diamond Green Diesel	Equity in net income of Diamond Green Diesel	53,951		91,099		281,964		252,411		Equity in net income of Diamond Green Diesel	71,804		102,225
Operating income	Operating income	205,663		127,455		673,432		356,572		Operating income	232,899		199,511

Other expense:	Other expense:									Other expense:
Interest expense	Interest expense	(15,409)		(18,793)		(47,105)		(55,803)		Interest expense	(15,603)		(16,428)

Foreign currency loss	Foreign currency loss	(205)		(1,239)		(1,299)		(709)		Foreign currency loss	(1,100)		(410)

Other expense, net	Other expense, net	(853)		(1,912)		(3,210)		(5,278)		Other expense, net	(742)		(1,159)
Total other expense	Total other expense	(16,467)		(21,944)		(51,614)		(61,790)		Total other expense	(17,445)		(17,997)

Equity in net income of other unconsolidated subsidiaries	Equity in net income of other unconsolidated subsidiaries	1,647		906		4,199		2,467		Equity in net income of other unconsolidated subsidiaries	1,360		612
Income before income taxes	Income before income taxes	190,843		106,417		626,017		297,249		Income before income taxes	216,814		182,126

Income tax expense	Income tax expense	42,637		4,812		126,324		43,058		Income tax expense	26,083		28,708

Net income	Net income	148,206		101,605		499,693		254,191		Net income	190,731		153,418

Net income attributable to noncontrolling interests	Net income attributable to noncontrolling interests	(1,394)		(480)		(4,533)		(2,117)		Net income attributable to noncontrolling interests	(2,678)		(1,652)

Net income attributable to Darling	Net income attributable to Darling	$	146,812	$	101,125	$	495,160	$	252,074	Net income attributable to Darling	$	188,053	$	151,766

Basic income per share	Basic income per share	$	0.91	$	0.62	$	3.04	$	1.55	Basic income per share	$	1.17	$	0.93
Diluted income per share	Diluted income per share	$	0.88	$	0.61	$	2.96	$	1.51	Diluted income per share	$	1.14	$	0.90

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 ~~October~~April 2, ~~2021~~2022 and ~~September 26, 2020~~April 3, 2021

(in thousands)

(unaudited)


		Three Months Ended				Nine Months Ended					Three Months Ended
		October 2, 2021		September 26, 2020		October 2, 2021		September 26, 2020			April 2, 2022		April 3, 2021
Net income	Net income	$	148,206	$	101,605	$	499,693	$	254,191	Net income	$	190,731	$	153,418
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	(32,903)		37,854		(48,741)		(7,243)		Foreign currency translation	3,382		(38,222)
Pension adjustments	Pension adjustments	791		648		2,375		1,943		Pension adjustments	429		792

Soybean meal derivative adjustments	Soybean meal derivative adjustments	(23)		—		(297)		—		Soybean meal derivative adjustments	(240)		(257)
Corn option derivative adjustments	Corn option derivative adjustments	3,628		(2,518)		2,472		(578)		Corn option derivative adjustments	(5,056)		(800)
Heating oil derivative adjustments	Heating oil derivative adjustments	(6,490)		1,494		(5,334)		3,424		Heating oil derivative adjustments	(16,762)		3,464
Foreign exchange derivative adjustments	Foreign exchange derivative adjustments	(4,664)		1,412		(4,519)		(2,060)		Foreign exchange derivative adjustments	29,435		(6,806)
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 other comprehensive income/(loss), net of tax	11,188		(41,829)
Total comprehensive income	Total comprehensive income	$	108,545	$	140,495	$	445,649	$	249,677	Total comprehensive income	$	201,919	$	111,589
Comprehensive income attributable to noncontrolling interests	Comprehensive income attributable to noncontrolling interests	2,332		456		7,409		1,364		Comprehensive income attributable to noncontrolling interests	3,545		3,186
Comprehensive income attributable to Darling	Comprehensive income attributable to Darling	$	106,213	$	140,039	$	438,240	$	248,313	Comprehensive income attributable to Darling	$	198,374	$	108,403

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

DARLING INGREDIENTS INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

~~Nine~~Three months ended ~~October~~April 2, ~~2021~~2022 and ~~September 26, 2020~~April 3, 2021

(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 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 — — — — — 151,766 151,766 1,652 153,418
Distribution of noncontrolling interest earnings — — — — — — — (2,143) (2,143)
Pension liability adjustments, net of tax — — — — 792 — 792 — 792
Heating oil derivative adjustments, net of tax — — — — 3,464 — 3,464 — 3,464
Corn option derivative adjustments, net of tax — — — — (800) — (800) — (800)
Soybean meal derivative adjustments, net of tax — — — — (257) — (257) — (257)
Foreign exchange derivative adjustments, net of tax — — — — (6,806) — (6,806) — (6,806)
Foreign currency translation adjustments — — — — (39,756) — (39,756) 1,534 (38,222)
Issuance of non-vested stock — — 58 — — — 58 — 58
Stock-based compensation — — 8,357 — — — 8,357 — 8,357
Treasury stock (684,674) — — (48,141) — — (48,141) — (48,141)
Issuance of common stock 1,639,151 16 6,001 — — — 6,017 — 6,017
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 — — — — — 196,582 196,582 1,487 198,069
Pension liability adjustments, net of tax — — — — 792 — 792 — 792
Heating oil derivative adjustments, net of tax — — — — (2,308) — (2,308) — (2,308)
Corn option derivative adjustments, net of tax — — — — (356) — (356) — (356)
Soybean meal derivative adjustments, net of tax — — — — (17) — (17) — (17)
Foreign exchange derivative adjustments, net of tax — — — — 6,951 — 6,951 — 6,951
Foreign currency translation adjustments — — — — 21,980 — 21,980 404 22,384
Issuance of non-vested stock — — 41 — — — 41 — 41
Stock-based compensation — — 5,555 — — — 5,555 — 5,555
Treasury stock (1,171,630) — — (77,760) — — (77,760) — (77,760)
Issuance of common stock 67,634 1 512 — — — 513 — 513
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 — — — — — 146,812 146,812 1,394 148,206
Distribution of noncontrolling interest earnings — — — — — — — (3,853) (3,853)
Pension liability adjustments, net of tax — — — — 791 — 791 — 791
Heating oil derivative adjustments, net of tax — — — — (6,490) — (6,490) — (6,490)
Corn option derivative adjustments, net of tax — — — — 3,628 — 3,628 — 3,628
Soybean meal derivative adjustments, net of tax — — — — (23) — (23) — (23)
Foreign exchange derivative adjustments, net of tax — — — — (4,664) — (4,664) — (4,664)
Foreign currency translation adjustments — — — — (33,841) — (33,841) 938 (32,903)
Issuance of non-vested stock — — 41 — — — 41 — 41
Stock-based compensation — — 4,361 — — — 4,361 — 4,361
Treasury stock (350,552) — — (24,577) — — (24,577) — (24,577)
Issuance of common stock 78,313 1 909 — — — 910 — 910
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.~~


	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 January 1, 2022	160,792,004	$	1,717	$	1,627,816	$	(374,721)	$	(321,690)	$	2,347,838	$	3,280,960	$	66,825	$	3,347,785
Net income	—	—		—		—		—		188,053		188,053		2,678		190,731


Pension liability adjustments, net of tax	—	—		—		—		429		—		429		—		429

Heating oil derivative adjustments, net of tax	—	—		—		—		(16,762)		—		(16,762)		—		(16,762)
Corn option derivative adjustments, net of tax	—	—		—		—		(5,056)		—		(5,056)		—		(5,056)
Soybean meal derivative adjustments, net of tax	—	—		—		—		(240)		—		(240)		—		(240)
Foreign exchange derivative adjustments, net of tax	—	—		—		—		29,435		—		29,435		—		29,435
Foreign currency translation adjustments	—	—		—		—		2,515		—		2,515		867		3,382
Issuance of non-vested stock	5,000	—		18		—		—		—		18		—		18
Stock-based compensation	—	—		6,305		—		—		—		6,305		—		6,305
Treasury stock	(938,113)	—		—		(64,185)		—		—		(64,185)		—		(64,185)
Issuance of common stock	1,644,866	17		3,791		—		—		—		3,808		—		3,808
Balances at April 2, 2022	161,503,757	$	1,734	$	1,637,930	$	(438,906)	$	(311,369)	$	2,535,891	$	3,425,280	$	70,370	$	3,495,650

~~DARLING INGREDIENTS INC. AND SUBSIDIARIES~~

~~CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (CONTINUED)~~

~~Nine months ended October 2, 2021 and 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 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
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

Net income	Net income	—	—		—		—		—		85,510		85,510		581		86,091		Net income	—	—		—		—		—		151,766		151,766		1,652		153,418
Distribution of noncontrolling interest earnings																			Distribution of noncontrolling interest earnings	—	—		—		—		—		—		—		(2,143)		(2,143)

Deductions to noncontrolling interests		—	—		3,271		—		—		—		3,271		(13,146)		(9,875)
Pension liability adjustments, net of tax	Pension liability adjustments, net of tax	—	—		—		—		648		—		648		—		648		Pension liability adjustments, net of tax	—	—		—		—		792		—		792		—		792

Heating oil derivative adjustments, net of tax	Heating oil derivative adjustments, net of tax	—	—		—		—		10,870		—		10,870				10,870		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	—	—		—		—		136		—		136		—		136		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)
Foreign exchange derivative adjustments, net of tax	Foreign exchange derivative adjustments, net of tax	—	—		—		—		(9,151)		—		(9,151)		—		(9,151)		Foreign exchange derivative adjustments, net of tax	—	—		—		—		(6,806)		—		(6,806)		—		(6,806)
Foreign currency translation adjustments	Foreign currency translation adjustments	—	—		—		—		(65,147)		—		(65,147)		(89)		(65,236)		Foreign currency translation adjustments	—	—		—		—		(39,756)		—		(39,756)		1,534		(38,222)
Issuance of non-vested stock	Issuance of non-vested stock	8,000	—		40		—		—		—		40		—		40		Issuance of non-vested stock	—	—		58		—		—		—		58		—		58
Stock-based compensation	Stock-based compensation	—	—		10,778		—		—		—		10,778		—		10,778		Stock-based compensation	—	—		8,357		—		—		—		8,357		—		8,357
Treasury stock	Treasury stock	(2,372,876)	—		—		(60,082)		—		—		(60,082)		—		(60,082)		Treasury stock	(684,674)	—		—		(48,141)		—		—		(48,141)		—		(48,141)
Issuance of common stock	Issuance of common stock	447,729	5		868		—		—		—		873		—		873		Issuance of common stock	1,639,151	16		6,001		—		—		—		6,017		—		6,017
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)
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

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

~~Nine~~Three months ended ~~October~~April 2, ~~2021~~2022 and ~~September 26, 2020~~April 3, 2021

(in thousands)

(unaudited)


		October 2, 2021		September 26, 2020			April 2, 2022		April 3, 2021
Cash flows from operating activities:	Cash flows from operating activities:					Cash flows from operating activities:
Net Income	Net Income	$	499,693	$	254,191	Net Income	$	190,731	$	153,418
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	235,582		253,711		Depreciation and amortization	79,246		78,534
Loss (gain) on disposal of property, plant, equipment and other assets		(793)		210
Gain on sale of assets						Gain on sale of assets	(389)		(64)

Asset impairment	Asset impairment	138		—		Asset impairment	—		138

Deferred taxes	Deferred taxes	67,272		13,362		Deferred taxes	23,826		11,809
Decrease in long-term pension liability	Decrease in long-term pension liability	(1,118)		(7,960)		Decrease in long-term pension liability	(269)		(448)
Stock-based compensation expense	Stock-based compensation expense	18,413		19,202		Stock-based compensation expense	6,323		8,415

Write-off deferred loan costs	Write-off deferred loan costs	1,130		2,419		Write-off deferred loan costs	—		598
Deferred loan cost amortization	Deferred loan cost amortization	3,044		4,242		Deferred loan cost amortization	1,131		1,040
Equity in net income of Diamond Green Diesel and other unconsolidated subsidiaries	Equity in net income of Diamond Green Diesel and other unconsolidated subsidiaries	(286,163)		(254,878)		Equity in net income of Diamond Green Diesel and other unconsolidated subsidiaries	(73,164)		(102,837)
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		Distributions of earnings from Diamond Green Diesel and other unconsolidated subsidiaries	—		57
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	(85,822)		36,083		Accounts receivable	(41,317)		10,721
Income taxes refundable/payable	Income taxes refundable/payable	18,688		8,282		Income taxes refundable/payable	(31,224)		(760)
Inventories and prepaid expenses	Inventories and prepaid expenses	(97,531)		(43,980)		Inventories and prepaid expenses	(42,891)		(27,188)
Accounts payable and accrued expenses	Accounts payable and accrued expenses	46,912		(10,832)		Accounts payable and accrued expenses	58,964		(13,462)
Other	Other	29,282		(10,804)		Other	(18,775)		18,834
Net cash provided by operating activities	Net cash provided by operating activities	452,049		470,413		Net cash provided by operating activities	152,192		138,805
Cash flows from investing activities:	Cash flows from investing activities:					Cash flows from investing activities:
Capital expenditures	Capital expenditures	(191,738)		(184,919)		Capital expenditures	(71,618)		(60,751)
Acquisitions, net of cash acquired	Acquisitions, net of cash acquired	(2,059)		—		Acquisitions, net of cash acquired	(59,003)		(340)
Investment in Diamond Green Diesel	Investment in Diamond Green Diesel	(25,000)		—		Investment in Diamond Green Diesel	(164,750)		—
Investment in other unconsolidated subsidiaries	Investment in other unconsolidated subsidiaries	(4,449)		—		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	3,805		1,291		Gross proceeds from disposal of property, plant and equipment and other assets	974		1,629

Payments related to routes and other intangibles	Payments related to routes and other intangibles	(274)		(3,712)		Payments related to routes and other intangibles	(100)		(347)
Net cash used by investing activities		(219,715)		(187,340)
Net cash used in investing activities						Net cash used in investing activities	(294,497)		(64,258)
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	31,088		24,085		Proceeds from long-term debt	9,657		9,262
Payments on long-term debt	Payments on long-term debt	(131,224)		(171,640)		Payments on long-term debt	(12,128)		(60,444)
Borrowings from revolving credit facility	Borrowings from revolving credit facility	287,000		390,971		Borrowings from revolving credit facility	369,902		111,000
Payments on revolving credit facility	Payments on revolving credit facility	(309,000)		(415,800)		Payments on revolving credit facility	(134,000)		(97,000)
Net cash overdraft financing	Net cash overdraft financing	29,034		(33,385)		Net cash overdraft financing	9,830		499
Deferred loan costs	Deferred loan costs	—		(3,688)		Deferred loan costs	(1,810)		—
Issuance of common stock	Issuance of common stock	50		67		Issuance of common stock	—		50
Repurchase of common stock	Repurchase of common stock	(97,924)		(55,044)		Repurchase of common stock	(17,189)		—
Minimum withholding taxes paid on stock awards	Minimum withholding taxes paid on stock awards	(45,260)		(7,980)		Minimum withholding taxes paid on stock awards	(43,351)		(42,268)
Acquisition of noncontrolling interest		—		(8,784)

Distributions to noncontrolling interests	Distributions to noncontrolling interests	(3,853)		(6,253)		Distributions to noncontrolling interests	—		(2,143)
Net cash used by financing activities		(240,089)		(287,451)
Net cash provided/(used) in financing activities						Net cash provided/(used) in financing activities	180,911		(81,044)
Effect of exchange rate changes on cash	Effect of exchange rate changes on cash	(6,605)		(2,712)		Effect of exchange rate changes on cash	(8,118)		(3,847)
Net decrease in cash, cash equivalents and restricted cash		(14,360)		(7,090)
Net increase/(decrease) in cash, cash equivalents and restricted cash						Net increase/(decrease) in cash, cash equivalents and restricted cash	30,488		(10,344)
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	69,072		81,720
Cash, cash equivalents and restricted cash at end of period	Cash, cash equivalents and restricted cash at end of period	$	67,360	$	65,955	Cash, cash equivalents and restricted cash at end of period	$	99,560	$	71,376
Supplemental disclosure of cash flow information:
Accrued capital expenditures		$	3,008	$	(2,202)
Cash paid during the period for:
Interest, net of capitalized interest		$	32,430	$	39,481
Income taxes, net of refunds		$	36,709	$	24,868
Non-cash operating activities
Operating lease right of use asset obtained in exchange for new lease liabilities		$	50,883	$	44,479
Non-cash financing activities
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

~~October~~April 2, ~~2021~~2022

(unaudited)

(1)General

The accompanying consolidated financial statements for the three ~~and nine~~ month periods ended ~~October~~April 2, ~~2021~~2022 and ~~September 26, 2020,~~April 3, 2021, 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.~~1, 2022.

(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 ~~October~~April 2, ~~2021,~~2022, and include the 13 ~~and 39~~ weeks ended ~~October~~April 2, ~~2021,~~2022, and the 13 ~~and 39~~ weeks ended ~~September 26, 2020.~~April 3, 2021.

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 ~~October~~April 2, ~~2021~~2022 and ~~September 26, 2020,~~April 3, 2021, the Company sold approximately ~~$106.6~~$126.3 million and ~~$76.2~~$106.9 million of its trade receivables and incurred approximately ~~$0.3~~$0.4 million and $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$0.3 million in fees, which are recorded as interest expense, respectively.

(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 1819 (Revenue) to the Company's Consolidated Financial Statements included herein.

(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~~continuing global COVID-19 pandemic, and related ~~government imposed~~government-imposed movement restrictions and initiatives implemented to reduce the global transmission of COVID-19, as well as the Russia-Ukraine war, 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 ~~nine~~three months ended ~~October~~April 2, ~~2021,~~2022, 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.~~pandemic or the Russia-Ukraine war.

(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)											Net Income per Common Share (in thousands, except per share data)
		Three Months Ended											Three Months Ended
				October 2, 2021					September 26, 2020						April 2, 2022					April 3, 2021
		Income		Shares	Per Share		Income		Shares	Per Share			Income		Shares	Per Share		Income		Shares	Per Share
Basic:	Basic:											Basic:
Net Income attributable to Darling	Net Income attributable to Darling	$	146,812	162,166	$	0.91	$	101,125	162,264	$	0.62	Net Income attributable to Darling	$	188,053	161,396	$	1.17	$	151,766	162,925	$	0.93
Diluted:	Diluted:											Diluted:
Effect of dilutive securities:	Effect of dilutive securities:											Effect of dilutive securities:
Add: Option shares in the money and dilutive effect of non-vested stock awards	Add: Option shares in the money and dilutive effect of non-vested stock awards			5,403					6,543			Add: Option shares in the money and dilutive effect of non-vested stock awards			3,976					5,733
Less: Pro forma treasury shares	Less: Pro forma treasury shares			(799)					(1,810)			Less: Pro forma treasury shares			(771)					(909)
Diluted:	Diluted:											Diluted:
Net income attributable to Darling	Net income attributable to Darling	$	146,812	166,770	$	0.88	$	101,125	166,997	$	0.61	Net income attributable to Darling	$	188,053	164,601	$	1.14	$	151,766	167,749	$	0.90

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 ~~October~~April 2, 2022 and April 3, 2021, ~~and September 26, 2020,~~ respectively, ~~zero and 550,934~~no outstanding stock options were excluded from diluted income per common share as the effect was antidilutive. For the three months ended ~~October~~April 2, 2022 and April 3, 2021, respectively, 194,546 and ~~September 26, 2020, respectively, 187,484 and 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 474,520162,896 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 expansion of the existing facility.

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


(in thousands)	(in thousands)	September 30, 2021		December 31, 2020		(in thousands)	March 31, 2022		December 31, 2021
Assets:	Assets:					Assets:
Total current assets	Total current assets	$	365,354	$	383,557	Total current assets	$	950,802	$	686,294
Property, plant and equipment, net	Property, plant and equipment, net	2,192,808		1,238,726		Property, plant and equipment, net	2,934,686		2,710,747
Other assets	Other assets	44,657		36,082		Other assets	59,196		51,514
Total assets	Total assets	$	2,602,819	$	1,658,365	Total assets	$	3,944,684	$	3,448,555
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	$	106,423	$	517	Total current portion of long term debt	$	165,356	$	165,092
Total other current liabilities	Total other current liabilities	228,657		99,787		Total other current liabilities	367,478		295,860
Total long term debt	Total long term debt	108,952		8,705		Total long term debt	340,591		344,309
Total other long term liabilities	Total other long term liabilities	17,048		3,758		Total other long term liabilities	17,328		17,531
Total members' equity	Total members' equity	2,141,739		1,545,598		Total members' equity	3,053,931		2,625,763
Total liabilities and members' equity	Total liabilities and members' equity	$	2,602,819	$	1,658,365	Total liabilities and members' equity	$	3,944,684	$	3,448,555


		Three Months Ended				Nine Months Ended					Three Months Ended
(in thousands)	(in thousands)	September 30, 2021		September 30, 2020		September 30, 2021		September 30, 2020		(in thousands)	March 31, 2022		March 31, 2021
Revenues:	Revenues:									Revenues:
Operating revenues	Operating revenues	$	401,900	$	346,276	$	1,405,392	$	1,000,717	Operating revenues	$	980,692	$	431,633
Expenses:	Expenses:									Expenses:
Total costs and expenses less depreciation, amortization and accretion expense	Total costs and expenses less depreciation, amortization and accretion expense	281,848		153,406		804,939		462,364		Total costs and expenses less depreciation, amortization and accretion expense	807,572		215,234
Depreciation, amortization and accretion expense	Depreciation, amortization and accretion expense	10,991		10,772		34,673		33,660		Depreciation, amortization and accretion expense	26,492		11,687
Total costs and expenses	Total costs and expenses	292,839		164,178		839,612		496,024		Total costs and expenses	834,064		226,921
Operating income	Operating income	109,061		182,098		565,780		504,693		Operating income	146,628		204,712
Other income		113		415		524		1,076
Other income (expense)										Other income (expense)	(11)		58
Interest and debt expense, net	Interest and debt expense, net	(1,272)		(315)		(2,376)		(947)		Interest and debt expense, net	(3,009)		(320)
Net income	Net income	$	107,902	$	182,198	$	563,928	$	504,822	Net income	$	143,608	$	204,450

As of ~~October~~April 2, ~~2021,~~2022, under the equity method of accounting, the Company has an investment in the DGD Joint Venture of approximately ~~$1,072.6~~$1,528.7 million on the consolidated balance sheet. The Company has recorded equity in net income from the DGD Joint Venture of approximately ~~$54.0~~$71.8 million and ~~$91.1~~$102.2 million for the three months ended ~~October~~April 2, ~~2021~~2022 and ~~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,~~April 3, 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 ~~September 30,~~March 31, 2022 and March 31, 2021, ~~and September 30, 2020,~~ the DGD Joint Venture recorded approximately ~~$61.7~~$155.8 million and ~~$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~~$79.0 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 ~~October~~April 2, 2022 and April 3, 2021, respectively, the Company made ~~a $25.0~~$164.75 million and no capital ~~contribution~~contributions to the DGD Joint Venture. In the three ~~and nine~~ months ended ~~October~~April 2, 2022 and April 3, 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) Acquisitions

On February 25, 2022, a wholly-owned international subsidiary of the Company acquired all of the shares of Group Op de Beeck, a Belgium digester, organic and industrial waste processing company, that is now included in our Fuel

Ingredients segment, for an initially estimated purchase price of approximately $91.7 million, plus or minus various closing adjustments in accordance with the stock purchase agreement. After estimated purchase price adjustments related to future estimated construction, net debt and working capital, the Company paid approximately $71.3 million in cash consideration. The Company recorded assets and liabilities consisting of property, plant and equipment of approximately $27.8 million, intangible assets of approximately $27.1 million, goodwill of approximately $25.5 million and other net liabilities of approximately $(9.1) million including working capital and net debt. Such amounts have been recorded on a preliminary basis pending finalization of future construction, actual net debt and working capital that is expected to occur within the next six months. The Company does not expect material changes to these pending amounts. The identifiable intangibles have a weighted average life of 15 years.

Additionally, the Company completed another immaterial acquisition in the first quarter of fiscal 2022.

(5) Inventories

A summary of inventories follows (in thousands):


		October 2, 2021		January 2, 2021			April 2, 2022		January 1, 2022
Finished product	Finished product	$	294,220	$	233,044	Finished product	$	304,644	$	272,995
Work in process	Work in process	83,940		87,223		Work in process	80,955		81,158
Raw material	Raw material	45,917		36,746		Raw material	47,062		48,186
Supplies and other	Supplies and other	52,218		48,909		Supplies and other	59,033		55,126
		$	476,295	$	405,922		$	491,694	$	457,465

~~(5)~~(6) Intangible Assets

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

is as follows (in thousands):


		October 2, 2021		January 2, 2021			April 2, 2022		January 1, 2022
Indefinite Lived Intangible Assets
Indefinite Lived Intangible Assets:						Indefinite Lived Intangible Assets:
Trade names	Trade names	$	53,778	$	55,349	Trade names	$	52,502	$	53,133
		53,778		55,349			52,502		53,133
Finite Lived Intangible Assets:	Finite Lived Intangible Assets:					Finite Lived Intangible Assets:
Routes	Routes	342,822		397,342		Routes	365,933		337,399
Permits	Permits	480,976		494,191		Permits	475,491		475,520
Non-compete agreements	Non-compete agreements	645		3,300		Non-compete agreements	645		645
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	25,801		25,909		Royalty, consulting, land use rights and leasehold	25,738		25,899
		915,919		986,417			933,482		905,138
Accumulated Amortization:	Accumulated Amortization:					Accumulated Amortization:
Routes	Routes	(168,227)		(203,392)		Routes	(175,450)		(169,984)
Permits	Permits	(331,509)		(315,246)		Permits	(344,672)		(336,020)
Non-compete agreements	Non-compete agreements	(412)		(2,981)		Non-compete agreements	(469)		(441)
Trade names	Trade names	(44,394)		(39,491)		Trade names	(47,662)		(46,028)
Royalty, consulting, land use rights and leasehold	Royalty, consulting, land use rights and leasehold	(7,746)		(6,976)		Royalty, consulting, land use rights and leasehold	(8,104)		(7,997)
		(552,288)		(568,086)			(576,357)		(560,470)
Total Intangible assets, less accumulated amortization	Total Intangible assets, less accumulated amortization	$	417,409	$	473,680	Total Intangible assets, less accumulated amortization	$	409,627	$	397,801

Gross intangible ~~routes, permits, trade names, non-compete agreements~~assets changed due to acquisitions in the first quarter of fiscal 2022 by approximately $28.0 million and ~~other intangibles decreased in fiscal 2021 as a result of approximately $54.5 million of fully amortized asset retirements and a decrease~~the remaining change was from foreign currency ~~translation.~~translation and retirements. Amortization expense for the three months ended ~~October~~April 2, ~~2021~~2022 and ~~September 26, 2020,~~April 3, 2021, was approximately ~~$16.8~~$16.5 million and ~~$18.4 million, respectively, and for the nine months ended October 2, 2021 and September 26, 2020 was $50.8 million and $54.5~~$17.0 million, respectively.

~~(6)~~(7) Goodwill

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

Feed Ingredients Food Ingredients Fuel Ingredients Total
Balance at January 2, 2021
Goodwill $ 830,321 $ 351,296 $ 126,578 $ 1,308,195
Accumulated impairment losses (15,914) (461) (31,580) (47,955)
814,407 350,835 94,998 1,260,240
Goodwill acquired during year 40 — 161 201
Foreign currency translation (9,959) (13,061) (5,242) (28,262)
Balance at October 2, 2021
Goodwill 820,402 338,235 121,497 1,280,134
Accumulated impairment losses (15,914) (461) (31,580) (47,955)
$ 804,488 $ 337,774 $ 89,917 $ 1,232,179


	Feed Ingredients		Food Ingredients		Fuel Ingredients		Total
Balance at January 1, 2022
Goodwill	$	814,863	$	332,866	$	119,342	$	1,267,071
Accumulated impairment losses	(15,914)		(461)		(31,580)		(47,955)
	798,949		332,405		87,762		1,219,116
Goodwill acquired during year	—		—		25,892		25,892


Foreign currency translation	(802)		(5,267)		(2,415)		(8,484)
Balance at April 2, 2022
Goodwill	814,061		327,599		142,819		1,284,479
Accumulated impairment losses	(15,914)		(461)		(31,580)		(47,955)
	$	798,147	$	327,138	$	111,239	$	1,236,524

~~(7)~~(8) Accrued Expenses

Accrued expenses consist of the following (in thousands):


		October 2, 2021		January 2, 2021			April 2, 2022		January 1, 2022
Compensation and benefits	Compensation and benefits	$	112,841	$	121,497	Compensation and benefits	$	101,048	$	123,180
Accrued ad valorem, and franchise taxes	Accrued ad valorem, and franchise taxes	21,175		39,167		Accrued ad valorem, and franchise taxes	13,610		20,140
Accrued operating expenses	Accrued operating expenses	83,343		62,601		Accrued operating expenses	86,314		81,200

Other accrued expense	Other accrued expense	136,051		112,206		Other accrued expense	159,086		126,161
		$	353,410	$	335,471		$	360,058	$	350,681

~~(8)~~(9) Debt

Debt consists of the following (in thousands):


		October 2, 2021		January 2, 2021			April 2, 2022		January 1, 2022
Amended Credit Agreement:	Amended Credit Agreement:					Amended Credit Agreement:
Revolving Credit Facility		$	33,000	$	55,000
Revolving Credit Facility ($8.0 million denominated in C$ at April 2, 2022)						Revolving Credit Facility ($8.0 million denominated in C$ at April 2, 2022)	$	396,007	$	160,000

Term Loan B	Term Loan B	200,000		300,000		Term Loan B	200,000		200,000
Less unamortized deferred loan costs	Less unamortized deferred loan costs	(2,081)		(3,798)		Less unamortized deferred loan costs	(1,774)		(1,928)
Carrying value Term Loan B	Carrying value Term Loan B	197,919		296,202		Carrying value Term Loan B	198,226		198,072

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	(5,159)		(5,747)		Less unamortized deferred loan costs	(4,753)		(4,959)
Carrying value 5.25% Senior Notes due 2027	Carrying value 5.25% Senior Notes due 2027	494,841		494,253		Carrying value 5.25% Senior Notes due 2027	495,247		495,041

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%	597,297		632,163		3.625% Senior Notes due 2026 - Denominated in euro with effective interest of 3.83%	568,972		582,980
Less unamortized deferred loan costs - Denominated in euro	Less unamortized deferred loan costs - Denominated in euro	(5,423)		(6,586)		Less unamortized deferred loan costs - Denominated in euro	(4,647)		(5,031)
Carrying value 3.625% Senior Notes due 2026	Carrying value 3.625% Senior Notes due 2026	591,874		625,577		Carrying value 3.625% Senior Notes due 2026	564,325		577,949

Other Notes and Obligations	Other Notes and Obligations	63,240		37,037		Other Notes and Obligations	59,457		32,319
		1,380,874		1,508,069			1,713,262		1,463,381
Less Current Maturities	Less Current Maturities	55,138		27,538		Less Current Maturities	35,337		24,407
		$	1,325,736	$	1,480,531		$	1,677,925	$	1,438,974

As of ~~October~~April 2, ~~2021,~~2022, the Company had outstanding debt under the Company's 3.625% Senior Notes due 2026 denominated in euros of €515.0 million. In addition, at ~~October~~April 2, ~~2021,~~2022, the Company had finance lease obligations denominated in euros of approximately ~~€2.5~~€4.3 million.

As of ~~October~~April 2, ~~2021,~~2022, the Company had outstanding borrowings under the Company's amended credit agreement denominated in Canadian dollars of C$10.0 million.

As of April 2, 2022, the Company had other notes and obligations of ~~$63.2~~$59.5 million that consist of various overdraft facilities of approximately ~~$32.9~~$9.9 million, a China working capital line of credit of approximately ~~$19.2~~$20.5 million and other debt of approximately ~~$11.1~~$29.1 million.

On January 6, 2014, Darling, Darling International Canada Inc. (“Darling Canada”) and Darling International NL Holdings B.V. (“Darling NL”) entered into a Second Amended and Restated Credit Agreement (as subsequently amended, the “Amended Credit Agreement”), restating its then existing Amended and Restated Credit Agreement dated September 27, 2013, with the lenders from time to time party thereto, JPMorgan Chase Bank, N.A., as Administrative Agent, and the other agents from time to time party thereto. Effective March 2, 2022, the Company, and certain of its subsidiaries entered into an amendment (the "Eighth Amendment") with its lenders to the Amended Credit Agreement. Among other things, the Eighth Amendment (a) added a new delayed draw incremental term facility (the “term A-2 facility”) and new incremental Term Loans pursuant thereto, in an aggregate principal amount of up to $500.0 million, which is available to the Company for general corporate purposes, including acquisitions and capital expenditures, and will mature on December 9, 2026 and (b) updated and modified certain other terms and provisions of the Amended Credit Agreement to reflect the addition of the term A-2 facility to the Amended Credit Agreement.

The interest rate applicable to any borrowings under the revolving ~~credit~~loan facility iswill equal ~~to either LIBOR/~~the adjusted term secured overnight financing rate (SOFR) for U.S. dollar borrowings or the adjusted euro interbank ~~offered rate/~~rate (EURIBOR) for euro borrowings or the adjusted daily simple Sterling overnight index average (SONIA) for British pound borrowings or CDOR for Canadian dollar borrowings plus ~~1.50%~~1.25% per annum or base ~~rate/~~rate or the adjusted term SOFR for U.S. dollar borrowings or Canadian prime rate for Canadian dollar borrowings or the adjusted daily simple European short term rate (ESTR) for euro borrowings or the adjusted daily SONIA rate for British pound borrowings plus ~~0.50%~~0.25% per annum subject to certain step-ups or step-downs based on the Company's total leverage ratio. The interest rate applicable to any borrowing under the delayed draw term A-1 facility will equal the adjusted term SOFR plus a minimum of 1.50% per annum subject to certain step-ups based on the Company's total leverage ratio. The interest rate applicable to any borrowing under the delayed draw term A-2 facility will equal the adjusted term SOFR plus a minimum of 1.00% per annum subject to certain step-ups based on the Company's total leverage ratio. The interest rate applicable to any borrowings under the term loan B facility iswill equal to the base rate plus 1.00% or LIBOR plus 2.00%.

As of ~~October~~April 2, ~~2021,~~2022, the Company had ~~$33.0~~$70.0 million outstanding under the revolver at base rate plus a margin of ~~0.50%~~0.25% per annum for a total of 3.75% per ~~annum.~~annum and $318.0 million outstanding under the revolver as SOFR plus a margin of 1.25% per annum for a total of 1.625%. The Company had $200.0 million outstanding under the term loan B facility at LIBOR plus a margin of 2.00% per annum for a total of ~~2.09%~~2.25% per annum. The Company had C$10.0 million outstanding under the revolver at CDOR plus a margin of 1.25% per annum for a total of 2.12%. As of ~~October~~April 2, ~~2021,~~2022, the Company had revolving loan facility availability of ~~$912.6~~$1,049.7 million, availability on a delayed draw term A-1 facility of $400.0 million and availability on a delayed draw term A-2 facility of $500.0 million under the Amended Credit Agreement taking into account amounts borrowed, ancillary facilities of $50.4 million and letters of credit issued of ~~$4.1~~$3.8 million. The Company also has foreign bank guarantees that are not part of the Company's Amended Credit Agreement in the amount of approximately $11.8 million at ~~October~~April 2, ~~2021.~~2022. The Company capitalized approximately $1.3 million of deferred loan costs as of April 2, 2022 in connection with the Eighth Amendment.

As of ~~October~~April 2, ~~2021,~~2022, 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% Senior Notes due 2027 and the 3.625% Senior Notes due 2026.

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

The Company has provided income taxes for the three ~~and nine~~ month periods ended ~~October~~April 2, ~~2021~~2022 and ~~September 26, 2020,~~April 3, 2021, based on its estimate of the effective tax rate for the entire ~~2021~~2022 and ~~2020~~2021 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.

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 ~~October~~April 2, 2022 and April 3, 2021, the Company had ~~$6.6~~$11.3 million and $5.6 million, respectively of gross unrecognized tax benefits and ~~$0.6~~$1.2 million and $0.4 million,

respectively of related accrued interest and penalties. The Company's gross unrecognized tax benefits are not expected to decrease significantly within the next twelve months.

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.

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

The components of other comprehensive income/(loss) and the related tax impacts for the three ~~and nine~~ months ended ~~October~~April 2, ~~2021~~2022 and ~~September 26, 2020~~April 3, 2021 are as follows (in thousands):


		Three Months Ended													Three Months Ended
		Before-Tax				Tax (Expense)				Net-of-Tax					Before-Tax				Tax (Expense)				Net-of-Tax
		Amount				or Benefit				Amount					Amount				or Benefit				Amount
		October 2, 2021		September 26, 2020		October 2, 2021		September 26, 2020		October 2, 2021		September 26, 2020			April 2, 2022		April 3, 2021		April 2, 2022		April 3, 2021		April 2, 2022		April 3, 2021
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	$	9	$	(1)	$	(2)	$	4	$	7	Amortization of prior service (cost)/benefit	5		5		(1)		(1)		4		4
Amortization of actuarial loss	Amortization of actuarial loss	1,052		854		(265)		(213)		787		641		Amortization of actuarial loss	570		1,052		(145)		(264)		425		788

Total defined benefit pension plans	Total defined benefit pension plans	1,057		863		(266)		(215)		791		648		Total defined benefit pension plans	575		1,057		(146)		(265)		429		792

Soybean meal option derivatives	Soybean meal option derivatives													Soybean meal option derivatives
Reclassified to earnings	Reclassified to earnings	(19)		—		5		—		(14)		—		Reclassified to earnings	(441)		(280)		112		71		(329)		(209)
Activity recognized in other comprehensive income/(loss)	Activity recognized in other comprehensive income/(loss)	(12)		—		3		—		(9)		—		Activity recognized in other comprehensive income/(loss)	120		(64)		(31)		16		89		(48)
Total soybean meal option derivatives	Total soybean meal option derivatives	(31)		—		8		—		(23)		—		Total soybean meal option derivatives	(321)		(344)		81		87		(240)		(257)
Corn option derivatives	Corn option derivatives													Corn option derivatives
Reclassified to earnings	Reclassified to earnings	4,217		229		(1,072)		(57)		3,145		172		Reclassified to earnings	4,107		3,920		(1,043)		(996)		3,064		2,924
Activity recognized in other comprehensive income/(loss)	Activity recognized in other comprehensive income/(loss)	647		(3,588)		(164)		898		483		(2,690)		Activity recognized in other comprehensive income/(loss)	(10,885)		(4,993)		2,765		1,269		(8,120)		(3,724)
Total corn option derivatives	Total corn option derivatives	4,864		(3,359)		(1,236)		841		3,628		(2,518)		Total corn option derivatives	(6,778)		(1,073)		1,722		273		(5,056)		(800)
Heating oil derivatives	Heating oil derivatives													Heating oil derivatives
Activity recognized in other comprehensive income/(loss)	Activity recognized in other comprehensive income/(loss)	(8,699)		1,992		2,209		(498)		(6,490)		1,494		Activity recognized in other comprehensive income/(loss)	(22,470)		4,644		5,708		(1,180)		(16,762)		3,464
Total heating oil derivatives	Total heating oil derivatives	(8,699)		1,992		2,209		(498)		(6,490)		1,494		Total heating oil derivatives	(22,470)		4,644		5,708		(1,180)		(16,762)		3,464
Foreign exchange derivatives	Foreign exchange derivatives													Foreign exchange derivatives
Reclassified to earnings	Reclassified to earnings	(1,889)		(5,317)		565		385		(1,324)		(4,932)		Reclassified to earnings	(1,071)		224		360		(75)		(711)		149
Activity recognized in other comprehensive income/(loss)	Activity recognized in other comprehensive income/(loss)	(5,397)		7,486		2,057		(1,142)		(3,340)		6,344		Activity recognized in other comprehensive income/(loss)	45,422		(10,457)		(15,276)		3,502		30,146		(6,955)
Total foreign exchange derivatives	Total foreign exchange derivatives	(7,286)		2,169		2,622		(757)		(4,664)		1,412		Total foreign exchange derivatives	44,351		(10,233)		(14,916)		3,427		29,435		(6,806)

Foreign currency translation	Foreign currency translation	(33,689)		39,237		786		(1,383)		(32,903)		37,854		Foreign currency translation	2,661		(39,737)		721		1,515		3,382		(38,222)

Other comprehensive income/(loss)	Other comprehensive income/(loss)	$	(43,784)	$	40,902	$	4,123	$	(2,012)	$	(39,661)	$	38,890	Other comprehensive income/(loss)	$	18,018	$	(45,686)	$	(6,830)	$	3,857	$	11,188	$	(41,829)

Nine 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 $ 16 $ 25 $ (4) $ (6) $ 12 $ 19
Amortization of actuarial loss 3,157 2,562 (794) (638) 2,363 1,924
Total defined benefit pension plans 3,173 2,587 (798) (644) 2,375 1,943
Soybean meal option derivatives
Reclassified to earnings (267) — 68 — (199) —
Activity recognized in other comprehensive income/(loss) (131) — 33 — (98) —
Total soybean meal option derivatives (398) — 101 — (297) —
Corn option derivatives
Reclassified to earnings 14,880 1,168 (3,780) (292) 11,100 876
Activity recognized in other comprehensive income/(loss) (11,566) (1,939) 2,938 485 (8,628) (1,454)
Total corn option derivatives 3,314 (771) (842) 193 2,472 (578)
Heating oil derivatives
Activity recognized in other comprehensive income/(loss) (7,149) 4,565 1,815 (1,141) (5,334) 3,424
Total heating oil derivatives (7,149) 4,565 1,815 (1,141) (5,334) 3,424
Foreign exchange derivatives
Reclassified to earnings (2,503) (10,564) 884 1,690 (1,619) (8,874)
Activity recognized in other comprehensive income/(loss) (4,482) 8,112 1,582 (1,298) (2,900) 6,814
Total foreign exchange derivatives (6,985) (2,452) 2,466 392 (4,519) (2,060)
Foreign currency translation (50,866) (5,798) 2,125 (1,445) (48,741) (7,243)
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 ended April 2, 2022 and ~~nine months ended October 2,~~April 3, 2021 ~~and September 26, 2020~~ as follows (in thousands):

Three Months Ended Nine Months Ended
October 2, 2021 September 26, 2020 October 2, 2021 September 26, 2020 Statement of Operations Classification
Derivative instruments
Soybean meal derivatives $ 19 $ — $ 267 $ — Net sales
Foreign exchange contracts 1,889 5,317 2,503 10,564 Net sales
Corn option derivatives (4,217) (229) (14,880) (1,168) Cost of sales and operating expenses
(2,309) 5,088 (12,110) 9,396 Total before tax
502 (328) 2,828 (1,398) Income taxes
(1,807) 4,760 (9,282) 7,998 Net of tax
Defined benefit pension plans
Amortization of prior service cost $ (5) $ (9) $ (16) $ (25) (a)
Amortization of actuarial loss (1,052) (854) (3,157) (2,562) (a)
(1,057) (863) (3,173) (2,587) Total before tax
266 215 798 644 Income taxes
(791) (648) (2,375) (1,943) Net of tax
Total reclassifications $ (2,598) $ 4,112 $ (11,657) $ 6,055 Net of tax


	Three Months Ended
	April 2, 2022		April 3, 2021		Statement of Operations Classification
Derivative instruments
Soybean meal derivatives	$	441	$	280	Net sales
Foreign exchange contracts	1,071		(224)		Net sales

Corn option derivatives	(4,107)		(3,920)		Cost of sales and operating expenses
	(2,595)		(3,864)		Total before tax
	571		1,000		Income taxes
	(2,024)		(2,864)		Net of tax
Defined benefit pension plans
Amortization of prior service cost	$	(5)	$	(5)	(a)
Amortization of actuarial loss	(570)		(1,052)		(a)

	(575)		(1,057)		Total before tax
	146		265		Income taxes
	(429)		(792)		Net of tax
Total reclassifications	$	(2,453)	$	(3,656)	Net of tax

(a)These items are included in the computation of net periodic pension cost. See Note 1213 (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 ~~October~~April 2, ~~2021~~2022 as follows (in thousands):


		Nine Months Ended October 2, 2021									Three Months Ended April 2, 2022
		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		$	(210,902)	$	(3,214)	$	(38,317)	$	(252,433)
Accumulated Other Comprehensive loss January 1, 2022, attributable to Darling, net of tax										Accumulated Other Comprehensive loss January 1, 2022, attributable to Darling, net of tax	$	(289,586)	$	(6,456)	$	(25,648)	$	(321,690)
Other comprehensive loss before reclassifications	Other comprehensive loss before reclassifications	(48,741)		(16,960)		—		(65,701)		Other comprehensive loss before reclassifications	3,382		5,353		—		8,735
Amounts reclassified from accumulated other comprehensive loss	Amounts reclassified from accumulated other comprehensive loss	—		9,282		2,375		11,657		Amounts reclassified from accumulated other comprehensive loss	—		2,024		429		2,453

Net current-period other comprehensive income/(loss)	Net current-period other comprehensive income/(loss)	(48,741)		(7,678)		2,375		(54,044)		Net current-period other comprehensive income/(loss)	3,382		7,377		429		11,188
Noncontrolling interest	Noncontrolling interest	2,876		—		—		2,876		Noncontrolling interest	867		—		—		867
Accumulated Other Comprehensive loss October 2, 2021, attributable to Darling, net of tax		$	(262,519)	$	(10,892)	$	(35,942)	$	(309,353)
Accumulated Other Comprehensive loss April 2, 2022, attributable to Darling, net of tax										Accumulated Other Comprehensive loss April 2, 2022, attributable to Darling, net of tax	$	(287,071)	$	921	$	(25,219)	$	(311,369)

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

Fiscal ~~2021~~2022 Long-Term Incentive Opportunity Awards ~~(2021~~(2022 LTIP). On January ~~4, 2021,~~3, 2022, the Compensation Committee (the “Committee”) of the Company's Board of Directors adopted the ~~2021~~2022 LTIP pursuant to which they awarded certain of the Company's key employees, ~~90,689~~82,791 restricted stock units and ~~126,711~~115,615 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 gross investment (“ROGI”), as calculated in accordance with the terms of the award agreement, relative to the average ROGI of the Company's performance peer group companies, with the earned award to be determined in the first quarter of fiscal ~~2024,~~2025, 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 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,~~December 9, 2021, the Company’s Board of Directors approved the extension for an additional two years of its previously announced share repurchase program and refreshed and increased the amount of the program ~~back~~ up to ~~its original amount of~~ an aggregate of ~~$200.0~~$500.0 million of the Company's Common Stock depending on market conditions. During the first ~~nine~~three months of fiscal ~~2021, $97.9~~2022, $17.2 million of common stock was repurchased under the repurchase program. As of ~~October~~April 2, ~~2021,~~2022, the Company had approximately ~~$102.1~~$482.8 million remaining under the share repurchase program initially approved in August 2017 and subsequently extended to August 13, ~~2022.~~2024.

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

Net pension cost for the three ~~and nine~~ months ended ~~October~~April 2, ~~2021~~2022 and ~~September 26, 2020~~April 3, 2021 includes the following components (in thousands):


		Pension Benefits				Pension Benefits					Pension Benefits
		Three Months Ended				Nine Months Ended					Three Months Ended
		October 2, 2021		September 26, 2020		October 2, 2021		September 26, 2020			April 2, 2022		April 3, 2021
Service cost	Service cost	$	778	$	764	$	2,359	$	2,268	Service cost	$	828	$	785
Interest cost	Interest cost	1,203		1,425		3,616		4,283		Interest cost	1,320		1,204
Expected return on plan assets	Expected return on plan assets	(2,320)		(2,042)		(6,969)		(6,113)		Expected return on plan assets	(2,165)		(2,321)
Amortization of prior service cost	Amortization of prior service cost	5		9		16		25		Amortization of prior service cost	5		5
Amortization of actuarial loss	Amortization of actuarial loss	1,052		854		3,157		2,562		Amortization of actuarial loss	570		1,052

Net pension cost	Net pension cost	$	718	$	1,010	$	2,179	$	3,025	Net pension cost	$	558	$	725

Based on actuarial estimates at ~~October~~April 2, ~~2021,~~2022, the Company expects to contribute approximately ~~$3.7~~$3.9 million to its pension plans to meet funding requirements during the next twelve months. Additionally, the Company has made tax deductible discretionary and required contributions to its pension plans for the ~~nine~~three months ended ~~October~~April 2, ~~2021~~2022 and ~~September 26, 2020~~April 3, 2021 of approximately ~~$2.8~~$0.8 million and ~~$10.3~~$0.9 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 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 ~~October~~April 2, ~~2021,~~2022, the Company has an aggregate accrued liability of approximately ~~$3.9~~$3.8 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.

~~(13)~~(14) 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 ~~October~~April 2, ~~2021,~~2022, 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.

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 2022. At ~~October~~April 2, ~~2021~~2022 and January ~~2, 2021,~~1, 2022, the aggregate fair value of these corn option contracts was approximately ~~$2.2~~$10.2 million and ~~$6.8~~$2.8 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~~2021 and fiscal ~~2021,~~2022, 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.~~2023. At ~~October~~April 2, ~~2021~~2022 and January ~~2, 2021,~~1, 2022, the aggregate fair value of these foreign exchange contracts was approximately ~~$2.5~~$41.1 million and ~~$11.6~~$0.6 million, respectively. These amounts are included in other current assets, noncurrent assets and accrued expense ~~and noncurrent assets~~ on the balance sheet, with an offset recorded in accumulated other comprehensive loss.

In fiscal ~~2020~~2021 and fiscal ~~2021,~~2022, the Company entered into soybean meal forward contracts to hedge a portion of its forecasted poultry meal sales into the third quarter of fiscal ~~2021.~~2022. At ~~October~~April 2, ~~2021~~2022 and January ~~2, 2021,~~1, 2022, the aggregate fair value of the soybean meal contracts was ~~zero~~$0.1 million and ~~$0.4~~$0.1 million, respectively. These amounts are included in other current assets and accrued expenses on the balance sheet, with an offset recorded in accumulated other comprehensive loss.

As of ~~October~~April 2, ~~2021,~~2022, 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	22,978	Euro	3,536	Brazilian real	60,371	Euro	10,520
Brazilian real	Brazilian real	1,116,635	U.S. dollar	237,950	Brazilian real	3,074,644	U.S. dollar	737,900

Euro	Euro	33,298	U.S. dollar	39,070	Euro	34,817	U.S. dollar	39,265
Euro	Euro	24,960	Polish zloty	114,000	Euro	25,215	Polish zloty	120,000
Euro	Euro	7,160	Japanese yen	929,960	Euro	5,653	Japanese yen	752,890
Euro	Euro	20,692	Chinese renminbi	157,474	Euro	29,996	Chinese renminbi	212,151
Euro	Euro	13,670	Australian dollar	21,850	Euro	14,759	Australian dollar	22,400
Euro	Euro	2,810	British pound	2,400	Euro	3,412	British pound	2,860
Euro	Euro	34	Canadian dollar	50	Euro	36	Canadian dollar	50

Polish zloty	Polish zloty	2,057	U.S. dollar	524	Polish zloty	431	U.S. dollar	100
Polish zloty	Polish zloty	20,589	Euro	4,483	Polish zloty	34,710	Euro	7,338
British pound	British pound	179	Euro	210	British pound	229	Euro	273

Japanese yen	Japanese yen	228,482	U.S. dollar	2,070	Japanese yen	331,807	U.S. dollar	2,792
U.S. dollar	U.S. dollar	514	Japanese yen	57,000	U.S. dollar	275	Japanese yen	34,000
U.S. dollar	U.S. dollar	293,089	Euro	250,000	U.S. dollar	236,171	Euro	215,000
Australian dollar					Australian dollar	1,243	Euro	786
Canadian dollar					Canadian dollar	13,107	U.S. dollar	10,500

The Company estimates the amount that will be reclassified from accumulated other comprehensive ~~loss~~income at ~~October~~April 2, ~~2021~~2022 into earnings over the next 12 months will be approximately ~~$14.3~~$7.9 million. As of ~~October~~April 2, ~~2021,~~2022, no 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 ~~October~~April 2, ~~2021~~2022 and ~~September 26, 2020~~April 3, 2021 (in thousands):

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


		Loss or (Gain) Recognized in Income on Derivatives Not Designated as Hedges
		Three Months Ended
Derivatives not designated as hedging instruments	Location	April 2, 2022		April 3, 2021

Foreign exchange	Foreign currency loss	$	7,466	$	5,389
Foreign exchange	Net sales	158		729
Foreign exchange	Cost of sales and operating expenses	(256)		(444)
Foreign exchange	Selling, general and administrative expenses	(6,524)		2,531
Corn options and futures	Net sales	(2,136)		(998)
Corn options and futures	Cost of sales and operating expenses	5,553		1,469




Total		$	4,261	$	8,676

At ~~October~~April 2, ~~2021,~~2022, the Company had forward purchase agreements in place for purchases of approximately ~~$118.8~~$126.2 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.

~~(14)~~(15) 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 ~~October~~April 2, ~~2021~~2022 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 October 2, 2021 Using									Fair Value Measurements at April 2, 2022 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	$	5,645	$	—	$	5,645	$	—	Derivative instruments	$	45,189	$	—	$	45,189	$	—
Total Assets	Total Assets	$	5,645	$	—	$	5,645	$	—	Total Assets	$	45,189	$	—	$	45,189	$	—

Liabilities:	Liabilities:									Liabilities:
Derivative instruments	Derivative instruments	$	8,516	$	—	$	8,516	$	—	Derivative instruments	$	15,608	$	—	$	15,608	$	—
5.25% Senior notes	5.25% Senior notes	520,000		—		520,000		—		5.25% Senior notes	510,100		—		510,100		—
3.625% Senior notes	3.625% Senior notes	606,854		—		606,854		—		3.625% Senior notes	571,532		—		571,532		—
Term loan B	Term loan B	200,000		—		200,000		—��		Term loan B	199,500		—		199,500		—
Revolver debt	Revolver debt	32,505		—		32,505		—		Revolver debt	390,067		—		390,067		—
Total Liabilities	Total Liabilities	$	1,367,875	$	—	$	1,367,875	$	—	Total Liabilities	$	1,686,807	$	—	$	1,686,807	$	—

Fair Value Measurements at January 2, 2021 Using
Quoted Prices in
Active Markets for
Identical Assets Significant Other
Observable
Inputs Significant
Unobservable
Inputs
(In thousands of dollars) Total (Level 1) (Level 2) (Level 3)
Assets:
Derivative instruments $ 17,358 $ — $ 17,358 $ —
Total Assets $ 17,358 $ — $ 17,358 $ —
Liabilities:
Derivative instruments $ 9,778 $ — $ 9,778 $ —
5.25% Senior notes 531,300 — 531,300 —
3.625% Senior notes 646,323 — 646,323 —
Term loan B 298,500 — 298,500 —
Revolver debt 54,175 — 54,175 —
Total Liabilities $ 1,540,076 $ — $ 1,540,076 $ —


			Fair Value Measurements at January 1, 2022 Using
			Quoted Prices in Active Markets for Identical Assets		Significant Other Observable Inputs		Significant Unobservable Inputs
(In thousands of dollars)	Total		(Level 1)		(Level 2)		(Level 3)
Assets:
Derivative instruments	$	5,031	$	—	$	5,031	$	—
Total Assets	$	5,031	$	—	$	5,031	$	—

Liabilities:
Derivative instruments	$	7,173	$	—	$	7,173	$	—
5.25% Senior notes	515,600		—		515,600		—
3.625% Senior notes	591,200		—		591,200		—
Term loan B	200,000		—		200,000		—
Revolver debt	158,400		—		158,400		—
Total Liabilities	$	1,472,373	$	—	$	1,472,373	$	—

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 1314 (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.

~~(15)~~(16) 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 the first quarter of 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.

~~(16)~~(17) 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 ~~October~~April 2, ~~2021~~2022 and January ~~2, 2021,~~1, 2022, the reserves for insurance, environmental, litigation and tax contingencies reflected on the balance sheet in accrued expenses and other non-current liabilities were approximately ~~$70.8~~$80.5 million and ~~$66.2~~$78.4 million, respectively. The Company has insurance recovery receivables of approximately ~~$27.0~~$31.8 million as of ~~October~~April 2, ~~2021~~2022 and January ~~2, 2021,~~1, 2022, 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 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 made no demand on the Company and 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 Company asserts that it is not responsible for any liabilities of its former subsidiary The Standard Tallow Corporation, which was legally dissolved in 2000, and that, in any event, The Standard Tallow Corporation did not discharge any of the ~~eight~~8 contaminants of concern identified in the ROD (the “COCs”). Subsequently, the EPA conducted a settlement analysis using a third-party allocator and offered early cash out settlements to those PRPs for whom the third-party allocator determined did not discharge any of the COCs. The Company participated in this allocation process, and in November 2019, received a cash out settlement offer from the EPA in the amount of $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.

~~(17)~~(18) 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,~~Darling Canada, 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 2, 2022
Net Sales	$	879,438	$	354,814	$	132,082	$	—	$	1,366,334
Cost of sales and operating expenses	645,523		270,312		104,742		—		1,020,577
Gross Margin	233,915		84,502		27,340		—		345,757

Gain on sale of assets	(341)		(9)		(39)		—		(389)
Selling, general and administrative expenses	56,209		26,844		3,920		15,059		102,032

Acquisition and integration costs	—		—		—		3,773		3,773
Depreciation and amortization	54,350		15,450		6,674		2,772		79,246
Equity in net income of Diamond Green Diesel	—		—		71,804		—		71,804
Segment operating income/(loss)	123,697		42,217		88,589		(21,604)		232,899

Equity in net income of other unconsolidated subsidiaries	1,360		—		—		—		1,360
Segment income/(loss)	125,057		42,217		88,589		(21,604)		234,259

Total other expense									(17,445)
Income before income taxes									$	216,814

Segment assets at April 2, 2022	$	2,751,078	$	1,262,887	$	1,982,190	$	619,461	$	6,615,616


	Feed Ingredients		Food Ingredients		Fuel Ingredients		Corporate		Total
Three Months Ended April 3, 2021
Net Sales	$	651,444	$	298,065	$	97,207	$	—	$	1,046,716
Cost of sales and operating expenses	474,581		226,413		71,790		—		772,784
Gross Margin	176,863		71,652		25,417		—		273,932

Loss/(gain) on sale of assets	(139)		55		20		—		(64)
Selling, general and administrative expenses	52,620		25,191		4,867		14,720		97,398
Restructuring and impairment charges	—		—		778		—		778

Depreciation and amortization	54,609		14,883		6,155		2,887		78,534
Equity in net income of Diamond Green Diesel	—		—		102,225		—		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		—		—		—		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 January 1, 2022	$	2,714,528	$	1,205,217	$	1,658,892	$	555,091	$	6,133,728

2221

Feed Ingredients Food Ingredients Fuel Ingredients Corporate Total
Three Months Ended October 2, 2021
Net Sales $ 769,626 $ 311,856 $ 104,434 $ — $ 1,185,916
Cost of sales and operating expenses 553,662 241,308 64,634 — 859,604
Gross Margin 215,964 70,548 39,800 — 326,312
Gain on sale of assets (229) (8) (264) — (501)
Selling, general and administrative expenses 54,997 24,417 4,481 13,380 97,275
Depreciation and amortization 53,824 14,933 6,361 2,708 77,826
Equity in net income of Diamond Green Diesel — — 53,951 — 53,951
Segment operating income/(loss) 107,372 31,206 83,173 (16,088) 205,663
Equity in net income of other unconsolidated subsidiaries 1,647 — — — 1,647
Segment income/(loss) 109,019 31,206 83,173 (16,088) 207,310
Total other expense (16,467)
Income before income taxes $ 190,843

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

~~(18)~~(19) 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 ~~October~~April 2, ~~2021~~2022 and ~~September 26, 2020~~April 3, 2021 (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


	Three Months Ended April 2, 2022
	Feed Ingredients		Food Ingredients		Fuel Ingredients		Total
Geographic Area
North America	$	755,838	$	83,900	$	—	$	839,738
Europe	114,463		182,010		132,082		428,555
China	6,636		66,307		—		72,943
South America	—		8,496		—		8,496
Other	2,501		14,101		—		16,602
Net sales	$	879,438	$	354,814	$	132,082	$	1,366,334

Major product types
Fats	$	368,394	$	52,264	$	—	$	420,658
Used cooking oil	94,896		—		—		94,896
Proteins	270,187		—		—		270,187
Bakery	78,511		—		—		78,511
Other rendering	57,544		—		—		57,544
Food ingredients	—		270,516		—		270,516
Bioenergy	—		—		132,082		132,082

Other	9,906		32,034		—		41,940
Net sales	$	879,438	$	354,814	$	132,082	$	1,366,334

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

2522


		Three Months Ended September 26, 2020									Three Months Ended April 3, 2021
		Feed Ingredients		Food Ingredients		Fuel Ingredients		Total			Feed Ingredients		Food Ingredients		Fuel Ingredients		Total
Geographic Area	Geographic Area									Geographic Area
North America	North America	$	390,182	$	66,554	$	5,678	$	462,414	North America	$	549,015	$	60,940	$	3,350	$	613,305
Europe	Europe	85,803		152,372		70,024		308,199		Europe	97,645		155,363		93,857		346,865
China	China	4,310		43,491		—		47,801		China	1,938		57,932		—		59,870
South America	South America	—		11,711		—		11,711		South America	—		10,454		—		10,454
Other	Other	2,730		17,714		—		20,444		Other	2,846		13,376		—		16,222
Net sales	Net sales	$	483,025	$	291,842	$	75,702	$	850,569	Net sales	$	651,444	$	298,065	$	97,207	$	1,046,716

Major product types	Major product types									Major product types
Fats	Fats	$	153,496	$	35,108	$	—	$	188,604	Fats	$	229,006	$	41,433	$	—	$	270,439
Used cooking oil	Used cooking oil	45,659		—		—		45,659		Used cooking oil	51,029		—		—		51,029
Proteins	Proteins	190,663		—		—		190,663		Proteins	255,507		—		—		255,507
Bakery	Bakery	44,402		—		—		44,402		Bakery	63,105		—		—		63,105
Other rendering	Other rendering	39,041		—		—		39,041		Other rendering	42,957		—		—		42,957
Food ingredients	Food ingredients	—		238,651		—		238,651		Food ingredients	—		229,542		—		229,542
Bioenergy	Bioenergy	—		—		70,024		70,024		Bioenergy	—		—		93,857		93,857
Biofuels	Biofuels	—		—		5,678		5,678		Biofuels	—		—		3,350		3,350
Other	Other	9,764		18,083		—		27,847		Other	9,840		27,090		—		36,930
Net sales	Net sales	$	483,025	$	291,842	$	75,702	$	850,569	Net sales	$	651,444	$	298,065	$	97,207	$	1,046,716

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~~2022 under these long-term supply contracts was approximately ~~$62.4~~$35.0 million, with the remaining performance obligations to be recognized in future periods (generally 25 years) of approximately ~~$143.4 million.~~$1.21 billion.

~~(19)~~(20) 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 ~~October~~April 2, ~~2021~~2022 and ~~September 26, 2020,~~April 3, 2021, the Company has recorded sales to the DGD Joint Venture of approximately ~~$102.9~~$214.4 million and ~~$69.0~~$89.0 million, respectively. ~~For the nine months ended October~~At April 2, ~~2021~~2022 and ~~September 26, 2020,~~January 1, 2022, the Company has ~~recorded sales to the DGD Joint Venture of approximately $301.7~~$42.8 million and ~~$203.4 million, respectively. At October 2, 2021 and January 2, 2021, the Company has $18.7 million and $14.2~~$43.8 million in outstanding receivables due from the DGD Joint Venture, respectively. In addition, the Company has eliminated approximately ~~$21.6~~$29.8 million and ~~$4.2~~$14.6 million of additional sales for the three months ended ~~October~~April 2, ~~2021~~2022 and ~~September 26, 2020,~~April 3, 2021, respectively to defer the Company's portion of profit of approximately ~~$5.5~~$8.4 million and ~~$0.8~~$4.1 million on those sales relating to inventory assets remaining on the DGD Joint Venture's balance sheet at ~~October~~April 2, ~~2021~~2022 and ~~September 26, 2020,~~April 3, 2021, 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,~~2023, unless extended by agreement of the parties. AsDuring the fourth quarter of ~~October 2, 2021, no amounts were owed to Darling Green under the DGD Loan Agreement. Subsequent to October 2,~~fiscal 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.~~commitment and paid interest to the Company for the three months ended April 2, 2022 of approximately $0.2 million. As of April 2, 2022, $25.0 million was owed to Darling Green under the DGD Loan Agreement. The note receivable amount is included in other assets on the consolidated balance sheet.

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 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.

~~(20)~~(21) Cash Flow Information

The following table sets forth supplemental cash flow information and non-cash transactions (in thousands):


	Three Months Ended
	April 2, 2022		April 3, 2021
Supplemental disclosure of cash flow information:
Accrued capital expenditures	$	(7,324)	$	(9,678)
Cash paid during the period for:
Interest, net of capitalized interest	$	2,124	$	2,774
Income taxes, net of refunds	$	41,423	$	15,578
Non-cash operating activities
Operating lease right of use asset obtained in exchange for new lease liabilities	$	33,072	$	12,404
Non-cash financing activities
Debt issued for assets	$	635	$	—

(22) New Accounting Pronouncements

~~In December 2019, the FASB~~The Company does not believe that any recently issued, ~~ASU No. 2019-12, Simplifying the Accounting for Income Taxes. This ASU amends Topic 740 Income Taxes, which eliminates certain exceptions in~~but not yet effective, 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 notstandards if currently adopted would have a material ~~impact~~effect on the ~~Company's~~accompanying consolidated financial statements.

(23) Subsequent Events

On May 2, 2022, the Company acquired Valley Proteins for approximately $1.2 billion in cash. The Company financed this transaction by borrowing all of the Company's delayed draw term A-1 facility of $400.0 million and delayed draw term A-2 facility of $500.0 million and the remainder through revolver borrowings under the Company's Amended Credit Agreement.

On May 5, 2022, the Company announced that we entered into a definitive agreement to acquire all the shares of the FASA Group, the largest independent rendering company in Brazil, for approximately R$2.8 billion Brazilian Real in cash ($560.0 million USD at the exchange rate in effect on the signing date), subject to post closing adjustments and a contingent payment based on future earnings growth. The closing of the transaction is subject to customary closing conditions and regulatory approval in Brazil.

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,~~1, 2022, filed with the SEC on March ~~2, 2021~~1, 2022 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 renewable diesel and biodiesel, or to the oleo-chemical industry to be used as an ingredient in a wide variety of industrial applications. Protein meals, blood plasma powder and hemoglobin produced and marketed by the Company are sold to third parties to be used as ingredients in animal feed, pet food and aquaculture.

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

The Fuel Ingredients operating segment includes the Company's global activities related to (i) the Company’s share of the results of its equity investment in Diamond Green Diesel Holdings LLC, a joint venture with Valero Energy Corporation (“Valero”) to convert animal fats, recycled greases, used cooking oil, inedible corn oil, soybean oil, or other feedstocks that become economically and commercially viable into renewable diesel (“DGD” or the “DGD Joint Venture”) as described in Note 3 (Investment in Unconsolidated Subsidiaries) to the Company's Consolidated Financial Statements for the period ended ~~October~~April 2, ~~2021~~2022 included herein, (ii) the conversion of organic sludge and food waste into biogas in

2825

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~~Economic Conditions and Uncertainties

Global Economic Conditions

We operate globally and have operations in numerous countries. As such, we are exposed to, and impacted by global macroeconomic factors, U.S. and foreign government policies and foreign exchange fluctuations. Global economic conditions continue to be highly volatile due to, among other things, the conflict in Ukraine and its impact on volatility in energy and other commodity prices, cost and supply chain pressures and availability, and disruption in banking systems and capital markets. Disturbances in world financial, credit, commodities and stock markets, including inflationary, deflationary and recessionary conditions, could have a negative impact on the ~~Effects~~Company’s results of operations. Any such disturbances or disruptions may also magnify the impact of other risks described in this Quarterly Report on Form 10-Q and our Annual Report on Form 10-K for the fiscal year ended January 1, 2022, as filed with the SEC on March 1, 2022.

Energy Policies of U.S. and Foreign Governments

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

Climate Change

There is a growing global concern that carbon dioxide and other greenhouse gases in the atmosphere may have an adverse impact on global temperatures, weather patterns and the frequency of extreme weather and natural disasters. We are subject to physical, operational, transitional and financial risks associated with climate change and global, regional and local weather conditions, as well as legal, regulatory and market responses to climate change. Certain jurisdictions in which we operate have either imposed, or are considering imposing, new or increasingly stringent legal and regulatory requirements to reduce or mitigate the potential effects of climate change, including regulation and reduction of GHG and potential carbon pricing programs. These new or increasingly stringent legal or regulatory requirements could result in significantly increased costs of compliance and additional investments in facilities and equipment. While we assess climate related regulatory risks as part of our risk management process, we are unable to predict the scope, nature and timing of any new or increasingly stringent environmental laws and regulations and therefore cannot predict the ultimate impact of such laws and regulations on our business or financial results. We continue to monitor existing and proposed laws and regulations in the jurisdictions in which we operate and to consider actions we may take to potentially mitigate the unfavorable impact, if any, of such laws or regulations. Furthermore, there has been increased focus from our stakeholders, including consumers, employees and investors, on corporate environmental, social, and governance (“ESG”) practices, including practices related to the causes and impacts of climate change. We expect that stakeholder expectations with respect to ESG expectations will continue to evolve rapidly, which may necessitate additional resources to monitor, report on, and adjust our operations.

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 ofOur global operations continue to expose us to risks associated with the COVID-19 ~~threat from high to very high at a global level due~~pandemic as the potential impacts of COVID-19 resurgences and variants have resulted in continued uncertainty as to the ~~continued increase in the number of cases~~pandemic’s further duration 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~~scope. Various measures have been implemented ~~worldwide~~at various times around the world to try to reduce the ~~global transmission~~spread of ~~COVID-19,~~the virus, including ~~reduced or eliminated food services, the promotion~~travel bans and restrictions, quarantines, curfews, stay-at-home restrictions and other public health and safety measures. The health and well-being of ~~social distancing~~our employees continues to be a priority for us, and ~~the adoption of remote working policies.~~

~~To date, these restrictions have not had a material impact on the Company’s operations,~~we will continue, 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 and has incurred approximately $2.4 million in the first nine months of fiscal 2021. The Company has implementedappropriate, to implement operational guidelines ~~throughout the Company's~~in our organization consistent with the applicable governmental and

regulatory policies in the geographies ~~the Company operates~~we operate intended to protect ~~the Company's~~our 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.

virus. The extent to which COVID-19 impacts the Company’s and DGD's business and financial results will depend on future developments, which are highly uncertain and cannot be predicted and may vary by jurisdiction and market, including the duration and scope of the pandemic, the emergence and spread of new variants of the virus, such as the omicron and delta variants, the likelihood of a resurgence of positive cases, the development, availability and ~~availability~~acceptance of effective treatments and vaccines, the speed at which such vaccines are administered, the efficacy of current vaccines against evolving strains or variants of the virus, 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~~on risk factors that could impact our results, please refer to “Risk Factors” in Part I, Item 1A of 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,~~1, 2022, as filed with the SEC on March ~~2, 2021.~~1, 2022.

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 commodity prices and energy prices, weather conditions, crop harvests, government policies and programs, changes in global demand, changes in standards of living, protein consumption, and global production of competing ingredients. Due to these unpredictable factors that are beyond the control of the

Company, forward-looking financial or operational estimates are not provided. The Company is exposed to certain risks associated with a business that is influenced by agricultural-based commodities. These risks are further described in Item 1A of Part I, “Risk Factors” included in the Company’s Form 10-K for the fiscal year ended January ~~2, 2021.~~1, 2022.

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 ~~October~~April 2, ~~2021~~2022 Compared to Three Months Ended ~~September 26, 2020~~April 3, 2021

Operating Performance Metrics

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

•Finished product commodity prices

•Segment results

•Foreign currency exchange

•Corporate activities

•Non-U.S. GAAP measures

These indicators and their importance are discussed below.

Finished Product Commodity Prices

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

Although the Jacobsen and Reuters provide useful metrics of performance, the Company's finished products are commodities that compete with other commodities such as corn, soybean oil, palm oil complex, soybean meal and heating oil on nutritional and functional values. Therefore, actual pricing for the Company's finished products, as well as competing products, can be quite volatile. In addition, neither the Jacobsen nor Reuters provides forward or future period pricing for the Company's commodities. The Jacobsen and Reuters prices quoted below are for delivery of the finished product at a specified location. Although the Company's prices generally move in concert with reported Jacobsen and Reuters prices, the Company's actual sales prices for its finished products may vary significantly from the Jacobsen and Reuters because of production and delivery timing differences and because the Company's finished products are delivered to multiple locations in different geographic regions which utilize alternative price indexes. In addition, certain of the Company's premium branded finished products may sell at prices that may be higher than the closest product on the related Jacobsen or Reuters index. During the ~~third~~first quarter of fiscal ~~2021,~~2022, the Company's actual sales prices by product trended with the disclosed Jacobsen and Reuters prices.

Average Jacobsen and Reuters prices (at the specified delivery point) for the ~~third~~first quarter of fiscal ~~2021,~~2022, compared to average Jacobsen and Reuters prices for the ~~third~~first quarter of fiscal ~~2020~~2021 are as follows:

Avg. Price
3rd Quarter
2021

Avg. Price
3rd Quarter
2020

~~Increase/(Decrease)~~

%
Increase/(Decrease)

~~Jacobsen:~~

~~MBM (Illinois)~~

~~$ 385.53/ton~~

~~$ 212.91/ton~~

~~$ 172.62/ton~~

~~81.1~~

~~Feed Grade PM (Mid-South)~~

~~$ 337.15/ton~~

~~$ 226.07/ton~~

~~$ 111.08/ton~~

~~49.1~~

~~Pet Food PM (Mid-South)~~

~~$ 680.77/ton~~

~~$ 581.80/ton~~

~~$ 98.97/ton~~

~~17.0~~

~~Feather meal (Mid-South)~~

~~$ 482.79/ton~~

~~$ 267.91/ton~~

~~$ 214.88/ton~~

~~80.2~~

~~BFT (Chicago)~~

~~$ 66.75/cwt~~

~~$ 29.04/cwt~~

~~$ 37.71/cwt~~

~~129.9~~

~~YG (Illinois)~~

~~$ 44.70/cwt~~

~~$ 19.48/cwt~~

~~$ 25.22/cwt~~

~~129.5~~

~~Corn (Illinois)~~

~~$ 6.20/bushel~~

~~$ 3.55/bushel~~

~~$ 2.65/bushel~~

~~74.6~~

~~Reuters:~~

~~Palm Oil (CIF Rotterdam)~~

~~$ 1,213.00/MT~~

~~$ 690.00/MT~~

~~$ 523.00/MT~~

~~75.8~~

~~Soy meal (CIF Rotterdam)~~

~~$ 469.00/MT~~

~~$ 379.00/MT~~

~~$ 90.00/MT~~

~~23.7~~

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

3128

Avg. Price
~~3rd~~1st Quarter
~~2021~~2022

Avg. Price
~~2nd~~1st Quarter
2021

Increase/(Decrease)

%
Increase/(Decrease)

Jacobsen:

MBM (Illinois)

$ ~~385.53/~~317.22/ton

$ ~~408.63/~~386.97/ton

$ ~~(23.10)~~(69.75)/ton

~~(5.7)~~(18.0)

Feed Grade PM (Mid-South)

$ ~~337.15/~~367.03/ton

$ ~~339.31/~~357.79/ton

$ ~~(2.16)/~~9.24/ton

~~(0.6)~~2.6

Pet Food PM (Mid-South)

$ ~~680.77/~~761.69/ton

$ ~~823.18/~~845.08/ton

$ ~~(142.41)~~(83.39)/ton

~~(17.3)~~(9.9)

Feather meal (Mid-South)

$ ~~482.79/~~525.32/ton

$ ~~465.50/~~539.02/ton

$ ~~17.29/~~(13.70)/ton

~~3.7~~ (2.5)

BFT (Chicago)

$ ~~66.75/~~71.39/cwt

$ ~~56.60/~~46.42/cwt

$ ~~10.15/~~24.97/cwt

~~17.9~~53.8

YG (Illinois)

$ ~~44.70/~~53.91/cwt

$ ~~42.47/~~34.45/cwt

$ ~~2.23/~~19.46/cwt

~~5.3~~56.5

Corn (Illinois)

$ ~~6.20/~~6.90/bushel

$ ~~6.84/~~5.56/bushel

$ ~~(0.64)/~~1.34/bushel

~~(9.4)~~24.1

Reuters:

Palm Oil (CIF Rotterdam)

$ ~~1,213.00/~~1,555.00/MT

$ ~~1,168.00/~~1,084.00/MT

$ ~~45.00/~~471.00/MT

~~3.9~~43.5

Soy meal (CIF Rotterdam)

$ ~~469.00/~~576.00/MT

$ ~~473.00/~~535.00/MT

$ ~~(4.00)/~~41.00/MT

~~(0.8)~~7.7

The following table shows the average Jacobsen and Reuters prices for the first quarter of fiscal 2022, compared to average Jacobsen and Reuters prices for the fourth quarter of fiscal 2021.

Avg. Price
1st Quarter
2022

Avg. Price
4th Quarter
2021

Increase/(Decrease)

%
Increase/(Decrease)

Jacobsen:

MBM (Illinois)

$ 317.22/ton

$ 261.79/ton

$ 55.43/ton

21.2

Feed Grade PM (Mid-South)

$ 367.03/ton

$ 335.07/ton

$ 31.96/ton

9.5

Pet Food PM (Mid-South)

$ 761.69/ton

$ 650.25/ton

$ 111.44/ton

17.1

Feather meal (Mid-South)

$ 525.32/ton

$ 444.61/ton

$ 80.71/ton

18.2

BFT (Chicago)

$ 71.39/cwt

$ 66.15/cwt

$ 5.24/cwt

7.9

YG (Illinois)

$ 53.91/cwt

$ 44.30/cwt

$ 9.61/cwt

21.7

Corn (Illinois)

$ 6.90/bushel

$ 5.84/bushel

$ 1.06/bushel

18.2

Reuters:

Palm Oil (CIF Rotterdam)

$ 1,555.00/MT

$ 1,349.00/MT

$ 206.00/MT

15.3

Soy meal (CIF Rotterdam)

$ 576.00/MT

$ 466.00/MT

$ 110.00/MT

23.6

Segment Results

Segment operating income for the three months ended ~~October~~April 2, ~~2021~~2022 was ~~$205.7~~$232.9 million, which reflects an increase of ~~$78.2~~$33.4 million or ~~61.3%~~16.7% as compared to the three months ended ~~September 26, 2020.~~April 3, 2021.

(in thousands, except percentages) Feed Ingredients Food Ingredients Fuel Ingredients Corporate Total
Three Months Ended October 2, 2021
Net Sales $ 769,626 $ 311,856 $ 104,434 $ — $ 1,185,916
Cost of sales and operating expenses 553,662 241,308 64,634 — 859,604
Gross Margin 215,964 70,548 39,800 — 326,312
Gross Margin % 28.1 % 22.6 % 38.1 % — % 27.5 %
Gain on sale of assets (229) (8) (264) — (501)
Selling, general and administrative expenses 54,997 24,417 4,481 13,380 97,275
Depreciation and amortization 53,824 14,933 6,361 2,708 77,826
Equity in net income of Diamond Green Diesel — — 53,951 — 53,951
Segment operating income/(loss) 107,372 31,206 83,173 (16,088) 205,663
Equity in net income of other unconsolidated subsidiaries 1,647 — — — 1,647
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 September 26, 2020
Three Months Ended April 2, 2022																	Three Months Ended April 2, 2022
Net Sales	Net Sales	$	483,025		$	291,842		$	75,702		$	—		$	850,569		Net Sales	$	879,438		$	354,814		$	132,082		$	—		$	1,366,334
Cost of sales and operating expenses	Cost of sales and operating expenses	361,576			226,745			50,047			—			638,368			Cost of sales and operating expenses	645,523			270,312			104,742			—			1,020,577
Gross Margin	Gross Margin	121,449			65,097			25,655			—			212,201			Gross Margin	233,915			84,502			27,340			—			345,757

Gross Margin %	Gross Margin %	25.1		%	22.3		%	33.9		%	—		%	24.9		%	Gross Margin %	26.6		%	23.8		%	20.7		%	—		%	25.3		%

Loss/(gain) on sale of assets		167			16			(61)			—			122
Gain on sale of assets																	Gain on sale of assets	(341)			(9)			(39)			—			(389)
Selling, general and administrative expenses	Selling, general and administrative expenses	49,028			23,366			5,038			12,561			89,993			Selling, general and administrative expenses	56,209			26,844			3,920			15,059			102,032

Acquisition and integration costs																	Acquisition and integration costs	—			—			—			3,773			3,773
Depreciation and amortization	Depreciation and amortization	53,764			20,648			8,633			2,685			85,730			Depreciation and amortization	54,350			15,450			6,674			2,772			79,246
Equity in net income of Diamond Green Diesel	Equity in net income of Diamond Green Diesel	—			—			91,099			—			91,099			Equity in net income of Diamond Green Diesel	—			—			71,804			—			71,804
Segment operating income/(loss)	Segment operating income/(loss)	18,490			21,067			103,144			(15,246)			127,455			Segment operating income/(loss)	123,697			42,217			88,589			(21,604)			232,899

Equity in net income of other unconsolidated subsidiaries	Equity in net income of other unconsolidated subsidiaries	906			—			—			—			906			Equity in net income of other unconsolidated subsidiaries	1,360			—			—			—			1,360
Segment income/(loss)	Segment income/(loss)	19,396			21,067			103,144			(15,246)			128,361			Segment income/(loss)	125,057			42,217			88,589			(21,604)			234,259

3229


(in thousands, except percentages)	Feed Ingredients			Food Ingredients			Fuel Ingredients			Corporate			Total
Three Months Ended April 3, 2021
Net Sales	$	651,444		$	298,065		$	97,207		$	—		$	1,046,716
Cost of sales and operating expenses	474,581			226,413			71,790			—			772,784
Gross Margin	176,863			71,652			25,417			—			273,932

Gross Margin %	27.1		%	24.0		%	26.1		%	—		%	26.2		%

Loss/(gain) on sale of assets	(139)			55			20			—			(64)
Selling, general and administrative expenses	52,620			25,191			4,867			14,720			97,398
Restructuring and impairment charges	—			—			778			—			778

Depreciation and amortization	54,609			14,883			6,155			2,887			78,534
Equity in net income of Diamond Green Diesel	—			—			102,225			—			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			—			—			—			612
Segment income/(loss)	70,385			31,523			115,822			(17,607)			200,123

Feed Ingredients Segment

Raw material volume. In the three months ended ~~October~~April 2, ~~2021,~~2022, the raw material processed by the Company's Feed Ingredients segment totaled approximately ~~2.22~~2.31 million metric tons. Compared to the three months ended ~~September 26, 2020,~~April 3, 2021, overall raw material volume processed in the Feed Ingredients segment increased approximately ~~1.9%~~3.6%.

Sales. During the three months ended October 2, 2021, net sales for the Feed Ingredients segment were $769.6 million as compared to $483.0 million during the three months ended September 26, 2020, an increase of approximately $286.6 million or 59.3%. Net sales for fats were approximately $307.9 million and $153.5 million for the three months ended October 2, 2021 and September 26, 2020, respectively. Protein net sales were approximately $258.0 million and $190.7 million for the three months ended October 2, 2021 and September 26, 2020, respectively. Other rendering net sales, which include hides, pet food and service charges, were approximately $43.7 million and $39.0 million for the three months ended October 2, 2021 and September 26, 2020, respectively. Total rendering net sales were approximately $609.6 million and $383.2 million for the three months ended October 2, 2021 and September 26, 2020, respectively. Used cooking oil net sales were approximately $69.9 million and $45.7 million for the three months ended October 2, 2021 and September 26, 2020, respectively. Bakery net sales were approximately $80.6 million and $44.4 million for the three months ended October 2, 2021 and September 26, 2020, respectively, and other net sales, which includes trap services, were approximately $9.5 million and $9.7 million for the three 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 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 (7.5) 5.0 — (2.5) (0.7) (0.2) — (3.4)
Increase in finished product prices 159.7 60.3 — 220.0 24.4 36.4 — 280.8
Increase due to currency exchange rates 2.2 2.0 0.2 4.4 0.5 — — 4.9
Other change — — 4.5 4.5 — — (0.2) 4.3
Total change 154.4 67.3 4.7 226.4 24.2 36.2 (0.2) 286.6
Net sales three months ended October 2, 2021 $ 307.9 $ 258.0 $ 43.7 $ 609.6 $ 69.9 $ 80.6 $ 9.5 $ 769.6


	Fats		Proteins		Other Rendering		Total Rendering		Used Cooking Oil		Bakery		Other		Total
Net sales three months ended April 3, 2021	$	229.0	$	255.5	$	43.0	$	527.5	$	51.0	$	63.1	$	9.8	$	651.4
Increase in sales volumes	3.7		4.1		—		7.8		4.4		2.9		—		15.1
Increase in finished product prices	138.9		17.1		—		156.0		39.5		12.5		—		208.0
Decrease due to currency exchange rates	(3.2)		(6.5)		(0.4)		(10.1)		—		—		—		(10.1)
Other change	—		—		14.9		14.9		—		—		0.1		15.0
Total change	139.4		14.7		14.5		168.6		43.9		15.4		0.1		228.0
Net sales three months ended April 2, 2022	$	368.4	$	270.2	$	57.5	$	696.1	$	94.9	$	78.5	$	9.9	$	879.4

Margins. In the Feed Ingredients segment for the three months ended ~~October~~April 2, ~~2021,~~2022, the gross margin percentage ~~increased~~decreased to ~~28.1%~~26.6% as compared to ~~25.1%~~27.1% for the comparable period of fiscal ~~2020.~~2021. The ~~increase~~decrease in margin is primarily due to higher overall ~~finished product~~energy prices as compared to fiscal ~~2020.~~2021.

Segment operating income. Feed Ingredients operating income for the three months ended ~~October~~April 2, ~~2021~~2022 was ~~$107.4~~$123.7 million, an increase of ~~$88.9~~$53.9 million or ~~480.5%~~77.2% as compared to the three months ended ~~September 26, 2020.~~April 3, 2021. The increase is due to higher overall fat finished product prices and higher raw material volumes as compared to fiscal ~~2020.~~2021.

Food Ingredients Segment

Raw material volume. In the three months ended ~~October~~April 2, ~~2021,~~2022, the raw material processed by the Company's Food Ingredients segment totaled approximately ~~275,000~~278,000 metric tons. Compared to the three months ended ~~September 26, 2020,~~April 3, 2021, overall raw material volume processed in the Food Ingredients segment increased approximately ~~4.0%~~1.5%.

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

Margins. In the Food Ingredients segment for the three months ended ~~October~~April 2, ~~2021,~~2022, the gross margin percentage ~~increased~~decreased to ~~22.6%~~23.8% as compared to ~~22.3%~~24.0% for the comparable period of fiscal 2021. The ~~increase~~decrease in margin is primarily due to higher overall ~~finished product~~energy prices as compared to fiscal ~~2020.~~2021.

Segment operating income. Food Ingredients operating income was ~~$31.2~~$42.2 million for the three months ended ~~October~~April 2, ~~2021,~~2022, an increase of ~~$10.1~~$10.7 million or ~~47.9%~~34.0% as compared to the three months ended ~~September 26, 2020.~~April 3, 2021. The increase is primarily due to higher sales prices ~~in Europe, North America~~ and ~~China~~volumes in collagen markets ~~and~~that more than offset higher ~~fat~~energy 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 continuing COVID-19 pandemic in South America. In addition, segment operating income increased as a result of lower depreciation expense.~~compared to fiscal 2021.

Fuel Ingredients Segment

Raw material volume. In the three months ended ~~October~~April 2, ~~2021,~~2022, the raw material processed by the Company's Fuel Ingredients segment totaled approximately ~~304,000~~340,000 metric tons. Compared to the three months ended ~~September 26, 2020,~~April 3, 2021, overall raw material volume processed in the Fuel Ingredients segment ~~decreased~~increased approximately ~~6.1%~~3.7%.

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

Margins. In the Fuel Ingredients segment (exclusive of the equity contribution from the DGD Joint Venture) for the three months ended ~~October~~April 2, ~~2021,~~2022, the gross margin percentage ~~increased~~decreased to ~~38.1%~~20.7% as compared to ~~33.9%~~26.1% for the comparable period of fiscal ~~2020.~~2021. The ~~increase~~decrease 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 raw material costs and higher energy prices ~~in Europe in fiscal 2021~~ as compared to fiscal ~~2020.~~2021.

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 ~~October~~April 2, ~~2021~~2022 was ~~$83.2~~$88.6 million, a decrease of ~~$19.9~~$27.2 million or ~~(19.3)~~(23.5)% as compared to the same period in fiscal ~~2020.~~2021. The decrease is primarily attributed to ~~downtime~~higher raw material costs at DGD, a catalyst turnaround at DGD during the ~~DGD Joint Venture facility due~~quarter and also attributed to ~~Hurricane Ida in fiscal 2021~~lower values for LCFS credits that more than offset higher blenders tax credits and higher fuel and Renewable Identification Number prices as compared to the same period in fiscal ~~2020.~~2021.

Foreign Currency Exchange

During the ~~third~~first quarter of fiscal ~~2021,~~2022, the euro ~~and Canadian dollar strengthened~~weakened against the U.S. dollar as compared to the same period in fiscal ~~2020.~~2021. Using actual results for the three months ended ~~October~~April 2, ~~2021~~2022 and using the prior year's average currency rate for the three months ended ~~September 26, 2020,~~April 3, 2021, foreign currency translation would result in ~~a decrease~~an increase in operating income of approximately ~~$2.2~~$7.2 million. The average rate assumptions used in this calculation were the actual fiscal average rates for the three months ended ~~October~~April 2, ~~2021~~2022 of €1.00:~~USD$1.18~~$1.12 and ~~CAD$~~C$1.00:~~USD$~~$0.79 as compared to the average rates for the three months ended ~~September 26, 2020~~April 3, 2021 of €1.00:~~USD$1.17~~$1.20 and ~~CAD$~~C$1.00:~~USD$0.75,~~$0.79, respectively.

Corporate Activities

Selling, General and Administrative Expenses. Selling, general and administrative expenses ~~were $13.4~~was approximately $15.1 million during the three months ended ~~October~~April 2, ~~2021,~~2022, compared to ~~$12.6~~approximately $14.7 million during the three months ended ~~September 26, 2020,~~April 3, 2021, an increase of ~~$0.8~~$0.4 million. The increase is primarily due to ~~an increase~~higher costs for information technology, travel, legal and insurance premiums that more than offset a decrease in corporate related benefits.

Restructuring and Impairment charges. Restructuring and impairment charges represents additional costs included in the three months ended April 3, 2021 related to the announced closure of the Company's biodiesel activities in December 2020.

Acquisition and Integration costs. Acquisition and integration costs were approximately $3.8 million during the three months ended April 2, 2022. These include costs related to the Company's May 2, 2022 acquisition of all the shares of Valley Proteins, the purchase of all the shares of Op de Beeck in February 2022 and other potential acquisitions.

Depreciation and Amortization. Depreciation and amortization charges ~~remained at $2.7~~were approximately $2.8 million during the three months ended ~~October~~April 2, ~~2021,~~2022, as compared to approximately $2.9 million for the same period in fiscal ~~2020.~~2021.

Interest Expense. Interest expense was ~~$15.4~~$15.6 million during the three months ended ~~October~~April 2, ~~2021,~~2022, compared to ~~$18.8~~$16.4 million during the three months ended ~~September 26, 2020,~~April 3, 2021, a decrease of ~~$3.4~~$0.8 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.~~pay-downs that more than offset an increase in revolver interest due to increased revolver borrowings.

Foreign Currency Loss. Foreign currency losses were ~~$0.2~~$1.1 million for the three months ended ~~October~~April 2, ~~2021~~2022 as compared to foreign currency losses of ~~$1.2~~$0.4 million for the three months ended ~~September 26, 2020.~~April 3, 2021. The ~~decrease in foreign currency losses~~increase is due primarily to ~~a decrease in~~increased losses on the revaluation of non-functional currency assets and liabilities as compared to the same period in fiscal ~~2020.~~2021.

Other Expense, net. Other expense was ~~$0.9~~$0.7 million in the three months ended ~~October~~April 2, ~~2021,~~2022, compared to other expense of ~~$1.9~~$1.2 million for the three months ended ~~September 26, 2020.~~April 3, 2021. The decrease in other expense was primarily due to a decrease in the non-service component of pension expense and ~~casualty loss~~an increase in interest income as compared to the same period in fiscal ~~2020.~~2021.

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 ~~$42.6~~$26.1 million for the three months ended ~~October~~April 2, ~~2021,~~2022, compared to ~~$4.8~~$28.7 million recorded in the three months ended ~~September 26, 2020, an increase~~April 3, 2021, a decrease of ~~$37.8~~$2.6 million, which is primarily due to ~~increased pre-tax earnings~~an increase in the amount of ~~the Company for the three months ended October 2, 2021~~biofuel tax incentives and ~~certain~~ discrete ~~items~~tax benefits from stock-based compensation recognized during the three months ended September 26, 2020 including an adjustment to an unrecognized tax position and the favorable impact of federal income tax regulations allowing taxpayers to exclude certain high-taxed income from their Global Intangible Low-Tax Income (“GILTI") computations.April 2, 2022. The effective tax rate for the three months ended ~~October~~April 2, 2022 and April 3, 2021 is ~~22.3%.~~12.0% and 15.8%, respectively. The effective tax rate for the three months ended ~~October~~April 2, 2022 and April 3, 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, 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 ~~the recognition of a previously unrecognized~~excess tax ~~benefit and the favorable impact of the final U.S. GILTI regulations related to the High-Tax Exclusion.~~benefits from stock-based compensation. The Company's effective tax rate excluding biofuel tax incentives and discrete items is ~~22.2%~~25.7% for the three months ended ~~October~~April 2, ~~2021,~~2022, compared to ~~13.2%~~26.5% for the three months ended ~~September 26, 2020.~~April 3, 2021.

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, acquisition and integration costs, 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.

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 ~~October~~April 2, ~~2021.~~2022. However, the amounts shown below for Adjusted EBITDA differ from the amounts calculated under similarly titled definitions in the Company’s Senior Secured Credit Facilities, 5.25% Notes and 3.625% Notes, as those definitions permit further adjustments to reflect certain other non-recurring costs, non-cash charges and cash dividends from the DGD Joint Venture. Additionally, the Company evaluates the impact of foreign exchange on operating cash flow, which is defined as segment operating income (loss) plus depreciation and amortization.

Reconciliation of Net Income to (Non-GAAP) Adjusted EBITDA and (Non-GAAP) Pro Forma Adjusted EBITDA

~~Third~~First Quarter ~~2021~~2022 As Compared to ~~third~~First Quarter ~~2020~~2021

Three Months Ended
(dollars in thousands) October 2,
2021 September 26,
2020
Net income attributable to Darling $ 146,812 $ 101,125
Depreciation and amortization 77,826 85,730
Interest expense 15,409 18,793
Income tax expense 42,637 4,812
Foreign currency loss 205 1,239
Other expense, net 853 1,912
Equity in net income of Diamond Green Diesel (53,951) (91,099)
Equity in net income of other unconsolidated subsidiaries (1,647) (906)
Net income attributable to non-controlling interests 1,394 480
Darling's Adjusted EBITDA $ 229,538 $ 122,086
Foreign currency exchange impact (1) (2,249) —
Pro forma Adjusted EBITDA to Foreign Currency (Non-GAAP) $ 227,289 $ 122,086
DGD Joint Venture Adjusted EBITDA (Darling's Share) $ 60,026 $ 96,435
Darling plus Darling's share of DGD Joint Venture Adjusted EBITDA $ 289,564 $ 218,521


	Three Months Ended
(dollars in thousands)	April 2, 2022		April 3, 2021
Net income attributable to Darling	$	188,053	$	151,766
Depreciation and amortization	79,246		78,534
Interest expense	15,603		16,428
Income tax expense	26,083		28,708
Restructuring and asset impairment charges	—		778
Acquisition and integration costs	3,773		—
Foreign currency loss	1,100		410
Other expense, net	742		1,159

Equity in net income of Diamond Green Diesel	(71,804)		(102,225)
Equity in net income of other unconsolidated subsidiaries	(1,360)		(612)
Net income attributable to non-controlling interests	2,678		1,652
Darling's Adjusted EBITDA	$	244,114	$	176,598

Foreign currency exchange impact (1)	7,227		—
Pro forma Adjusted EBITDA to Foreign Currency (Non-GAAP)	$	251,341	$	176,598

DGD Joint Venture Adjusted EBITDA (Darling's Share)	$	86,560	$	108,200

Darling plus Darling's share of DGD Joint Venture Adjusted EBITDA	$	330,674	$	284,798

(1) The average rates assumption used in this calculation was the actual fiscal average rate for the three months ended ~~October~~April 2, ~~2021~~2022 of €1.00:~~USD$1.18~~$1.12 and ~~CAD$~~C$1.00:~~USD$~~$0.79 as compared to the average rate for the three months ended ~~September 26, 2020~~April 3, 2021 of €1.00:~~USD$1.17~~$1.20 and ~~CAD$~~C$1.00:~~USD$0.75,~~$0.79, 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 incom~~e. 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.

~~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 $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 ~~October~~April 2, ~~2021.~~2022. On ~~October~~April 2, ~~2021,~~2022, 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	~~(5,159)~~(4,753)
Carrying value of 5.25% Notes due 2027	$	~~494,841~~495,247

3.625 % Notes due 2026 - Denominated in euros	$	~~597,297~~568,972
Less unamortized deferred loan costs	~~(5,423)~~(4,647)
Carrying value of 3.625% Notes due 2026	$	~~591,874~~564,325

Amended Credit Agreement:
Term Loan B	$	200,000
Less unamortized deferred loan costs	~~(2,081)~~(1,774)
Carrying value of Term Loan B	$	~~197,919~~198,226

Revolving Credit Facility:
Maximum availability	$	~~1,000,000~~1,500,000
Ancillary Facilities	~~50,297~~50,407
Borrowings outstanding	~~33,000~~396,007
Letters of credit issued	~~4,130~~3,849
Availability	$	~~912,573~~1,049,737

Other Debt	$	~~63,240~~59,457

During the first ~~nine~~three months of fiscal ~~2021,~~2022, the U.S. dollar strengthened as compared to the euro and weakened as compared to the Canadian dollar at January ~~2, 2021.~~1, 2022. Using the euro and Canadian based debt outstanding at ~~October~~April 2, ~~2021~~2022 and comparing the closing balance sheet rate at ~~October~~April 2, ~~2021~~2022 to the balance sheet rate at January ~~2, 2021,~~1, 2022, the U.S. dollar debt balances of euro based debt decreased by approximately ~~$34.4~~$14.0 million and the U.S. dollar debt balance of Canadian based debt increased approximately $0.2 million, at ~~October~~April 2, ~~2021.~~2022. The closing balance sheet rate assumption used in this calculation was the actual fiscal closing balance sheet rate at ~~October~~April 2, ~~2021~~2022 of €1.00:~~USD$1.1598~~$1.1048 and C$1.00:$0.800667 as compared to the closing balance sheet rate at January ~~2, 2021~~1, 2022 of €1.00:~~USD$1.22750.~~$1.13200 and C$1.00:$0.785266.

Senior Secured Credit Facilities. On January 6, 2014, Darling, Darling International Canada Inc. (“Darling Canada”) and Darling International NL Holdings B.V. (“Darling NL”) entered into a Second Amended and Restated Credit Agreement (as subsequently amended, the “Amended Credit Agreement”), restating its then existing Amended and Restated Credit Agreement dated September 27, 2013, with the lenders from time to time party thereto, JPMorgan Chase Bank, N.A., as Administrative Agent, and the other agents from time to time party thereto. Effective March 2, 2022, the Company, and certain of its subsidiaries entered into an amendment (the "Eighth Amendment") with its lenders to the Amended Credit Agreement. Among other things, the Eighth Amendment (a) added a new delayed draw incremental term facility (the “term A-2 facility”) and new incremental term loans pursuant thereto, in an aggregate principal amount of up to $500.0 million, which is available to the Company for general corporate purposes, including acquisitions and capital expenditures, and will mature on December 9, 2026 and (b) updated and modified certain other terms and provisions of the Amended Credit Agreement to reflect the addition of the term A-2 facility to the Amended Credit Agreement. The Amended Credit Agreement provides for senior secured credit facilities in the aggregate principal amount of ~~$1.525~~$2.925 billion comprised of (i) the Company's $525.0 million term loan B facility, ~~and~~ (ii) the Company's ~~$1.0~~$400.0 million delayed draw term A-1 loan, (iii) the Company's $500.0 million delayed draw term A-2 loan and (iv) the Company's $1.5 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,~~Up to $1.46 billion of the ~~Company,~~revolving loan facility is available to be borrowed by Darling, Darling Canada, Darling NL, Darling Ingredients International Holding B.V. (“Darling BV”), Darling GmbH, and ~~certain of its subsidiaries entered into an amendment (the “Sixth Amendment”) with its lenders~~Darling Belgium in U.S. dollars, Canadian dollars, euros, Sterling and other currencies to be agreed and available to each applicable lender. The remaining $40.0 million must be borrowed in U.S. dollars only by Darling. The revolving loan facility will mature on December 9, 2026. The revolving credit facility will be used for working capital needs, general corporate purposes and other purposes not prohibited by the Amended Credit Agreement. 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.

•As of ~~October~~April 2, ~~2021,~~2022, the Company had availability of ~~$912.6~~$1,049.7 million under the revolving credit facility, taking into account that the Company had ~~$33.0~~$396.0 million in outstanding borrowings, ~~$50.3~~$50.4 million in ancillary facilities and letters of credit issued of ~~$4.1~~$3.8 million.

•As of ~~October~~April 2, ~~2021,~~2022, the Company ~~has borrowed all $525.0 million~~had full availability under its delayed draw term A-1 facility commitment of $400.0 million. Under the terms of the delayed draw term ~~loan B~~A-1 facility, ~~and~~the Company can take up to two years or until December 9, 2023 to borrow under the term A-1 facility commitment in U.S. dollars. Amounts borrowed under the term A-1 facility that are repaid ~~approximately $325.0 million, which when repaid,~~by the Company cannot be reborrowed. The term ~~loan B~~A-1 facility isborrowings are repayable in quarterly installments of 0.25% of the aggregate ~~principal~~principle amount of the relevant term ~~loan B~~A-1 facility on the last day of each March, June, September and December of each year commencing on the last day of ~~each~~such month falling on or after the last day of the first full fiscal quarter following the second anniversary of December ~~18, 2017,~~9, 2021 and continuing until the last day of ~~each quarter~~such quarterly period ending immediately prior to the term A-1 facility maturity date of December ~~18, 2024;~~9, 2026 and one final installment in the amount of the term A-1 facility then outstanding, due and payable on December 9, 2026.

•As of April 2, 2022, the Company had full availability under its delayed draw term A-2 facility commitment of $500.0 million. Under the terms of the delayed draw term A-2 facility, the Company can take up to one year or until March 2, 2023 to borrow under the term A-2 facility commitment in U.S. dollars. Amounts borrowed under the term A-2 facility that are repaid by the Company cannot be reborrowed. The term A-2 facility borrowings are repayable in quarterly installments of 0.625% of the aggregate principle amount of the relevant term A-2 facility on the last day of each March, June, September and December of each year commencing on the last day of such month falling on or after the last day of the first full fiscal quarter following the earlier of term A-2 Commitment termination date or the first anniversary of March 2, 2022 and continuing until the last day of such quarterly period ending March 31, 2025, and quarterly installments of 1.25% of the aggregate principle amount of the relevant term A-2 facility due and payable on the last day of each March, June, September and December of each year commencing on the last day of such month falling on or after the last day of the first full fiscal quarter ending June 30, 2025 and continuing until the last day of the such quarterly period ending immediately prior to the term

A-2 facility maturity date of December 9, 2026 and one final installment in the amount of the term A-2 facility then outstanding, due and payable on December 9, 2026.

•As of April 2, 2022, the Company has borrowed all $525.0 million under the terms of the term loan B facility and repaid $325.0 million, which when repaid, cannot be reborrowed. As a result of early payments made by the Company under the term loan B facility only one final installment of the relevant term loan B facility then outstanding is 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~~loan facility will equal ~~either LIBOR/~~the adjusted term secured overnight financing rate (SOFR) for U.S. dollar borrowings or the adjusted euro interbank ~~offered rate/~~rate (EURIBOR) for euro borrowings or the adjusted daily simple Sterling overnight index average (SONIA) for British pound borrowings or CDOR for Canadian dollar borrowings plus ~~1.50%~~1.25% per annum or base ~~rate/~~rate or the adjusted term SOFR for U.S. dollar borrowings or Canadian prime rate for Canadian dollar borrowings or the adjusted daily simple European short term rate (ESTR) for euro borrowings or the adjusted daily SONIA rate for British pound borrowings plus ~~0.50%~~0.25% per annum subject to certain step-ups or step-downs orbased on the Company's total leverage ratio. The interest rate applicable to any borrowing under the delayed draw term A-1 facility will equal the adjusted term SOFR plus a minimum of 1.50% per annum subject to certain step-ups based on the Company's total leverage ratio. The interest rate applicable to any borrowing under the delayed draw term A-2 facility will equal the adjusted term SOFR plus a minimum of 1.00% per annum subject to certain 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 ~~October~~April 2, ~~2021~~2022 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.

On May 5, 2022, the Company announced that we entered into a definitive agreement to acquire all the shares of the FASA Group, the largest independent rendering company in Brazil, for approximately R$2.8 billion Brazilian Real in cash ($560.0 million USD at the exchange rate in effect on the signing date), subject to post closing adjustments and a contingent payment based on future earnings growth.The Company expects to finance this acquisition with a combination of operating cash flow, revolver borrowings under the Company’s Amended Credit Agreement and possible other debt financing resources.

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 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~~1, 2022 as filed with the SEC on March ~~2, 2021.~~1, 2022.

Working Capital and Capital Expenditures

On ~~October~~April 2, ~~2021,~~2022, the Company had working capital of ~~$347.4~~$445.6 million and its working capital ratio was ~~1.46~~1.55 to 1 compared to working capital of ~~$311.7~~$336.3 million and a working capital ratio of ~~1.46~~1.45 to 1 on January ~~2, 2021.~~1, 2022. As of ~~October~~April 2, ~~2021,~~2022, the Company had unrestricted cash of ~~$67.2~~$99.5 million and funds available under the revolving credit facility of ~~$912.6~~$1,049.7 million, compared to unrestricted cash of ~~$81.6~~$68.9 million and funds available under the revolving credit facility of ~~$893.9~~$1,285.9 million at January ~~2, 2021.~~1, 2022. The Company diversifies its cash investments by limiting the amounts deposited with any one financial institution.

Net cash provided by operating activities was ~~$452.0~~$152.2 million for the first ~~nine~~three months ended ~~October~~April 2, ~~2021,~~2022, as compared to net cash provided by operating activities of ~~$470.4~~$138.8 million for the first ~~nine~~three months ended ~~September 26, 2020, a decrease~~April 3, 2021, an increase of ~~$18.4~~$13.4 million due primarily to an increase in net income and the effect from equity in net income of ~~approximately $245.5 million less a decrease in distributions from unconsolidated subsidiaries of approximately $203.9 million.~~the DGD Joint Venture. Additionally, changes in operating assets and liabilities impacted cash provided by operating activities, which includes an approximately ~~$121.9~~$52.0 million decrease in cash provided by accounts receivable, an approximately ~~$53.5~~$15.7 million decrease in cash provided by inventory and prepaid expense, an approximately ~~$57.7~~$72.5 million increase in cash provided by accounts payable and accrued expenses, an approximately ~~$10.4~~$30.4 million ~~increase~~decrease in income taxes refundable/payable and an approximately ~~$40.1~~$37.6 million increase in cash provided by other primarily from ~~a reduction of foreign governmental sales taxes and~~an increase in hedging activities. Cash used byin investing activities was ~~$219.7~~$294.5 million for the first ~~nine~~three months ended ~~October~~April 2, ~~2021,~~2022, compared to ~~$187.3~~$64.3 million for the first ~~nine~~three months ended ~~September 26, 2020,~~April 3, 2021, an increase in cash used byin investing activities of ~~$32.4~~$230.2 million, primarily due to capital contributions to the DGD Joint Venture and acquisitions. Net cash provided in financing activities was $180.9 million for the first three months ended April 2, 2022, compared to net cash used in financing activities of $81.0 million for the first three months ended April 3, 2021, an increase in net cash provided in financing activities of $261.9 million, primarily due to an increase in capital asset spending and investments in unconsolidated subsidiaries. Net cash used by financing activities was $240.1 million for the first nine months ended October 2, 2021, compared to net cash used by financing activities of $287.5 million for the first nine months ended September 26, 2020, a decrease in net cash used by financing activities of $47.4 million, primarily due to a decrease in debt ~~payments that more than offset an increase in the repurchase of common stock and minimum withholding taxes on stock awards~~borrowings in the first ~~nine~~three months ended ~~October~~April 2, ~~2021~~2022 compared to the first ~~nine~~three months ended ~~September 26, 2020.~~April 3, 2021.

Capital expenditures of ~~$191.7~~$71.6 million were made during the first ~~nine~~three months of fiscal ~~2021,~~2022, compared to ~~$184.9~~$60.8 million in the first ~~nine~~three months of fiscal ~~2020, for a net increase of $6.8 million or 3.7%.~~2021. The Company expects to incur additional capital expenditures of approximately ~~$120~~$268 million for the remainder of fiscal ~~2021~~2022 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 ~~$23.8~~$6.1 million and ~~$26.2~~$5.5 million during the first ~~nine~~three months ended ~~October~~April 2, ~~2021~~2022 and ~~September 26, 2020,~~April 3, 2021, respectively.

Accrued Insurance and Pension Plan Obligations

Based upon the annual actuarial estimate, current accruals and claims paid during the first ~~nine~~three months of fiscal ~~2021,~~2022, the Company has accrued approximately ~~$11.9~~$11.5 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 ~~October~~April 2, ~~2021.~~2022. 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 ~~$3.4~~$3.6 million under its foreign pension plans in the next twelve months. The minimum pension funding requirements are determined annually, based upon a third party actuarial estimate. The actuarial estimate may vary from year to year due to fluctuations in return on investments or other factors beyond the control of management of the Company or the administrator of the Company’s pension funds. No assurance can be given that the minimum pension funding requirements will not increase in the future. The Company has made tax

deductible discretionary and required contributions to its domestic pension plans for the first ~~nine~~three months ended ~~October~~April 2, ~~2021~~2022 of approximately ~~$0.2~~$0.1 million. Additionally, the Company has made required and tax deductible discretionary contributions to its foreign pension plans for the first ~~nine~~three months ended ~~October~~April 2, ~~2021~~2022 of approximately ~~$2.6~~$0.7 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 and the Russia-Ukraine war, 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 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 ~~October~~April 2, ~~2021,~~2022, the Company has an aggregate accrued liability of approximately ~~$3.9~~$3.8 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. 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 now capable of producing 690~~capability to up to 750 million gallons per year of renewable diesel, as well as separating renewable naphtha (approximately 30 million gallons) and other light end renewable hydrocarbons for sale into low carbon fuel markets. The expansion of the DGD Norco Facility was completed and became operational in October 2021, at a total cost, including naphtha production and improved logistics capability, of approximately $1.1 billion, which was substantially funded by DGD Joint Venture cash flow. Additionally, in January 2021, we and our DGD Joint Venture partner 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. Construction is underway, and the new plant is anticipated to commence operations in the fourth quarter of 2022, with the total cost of the expansion project 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 approximately 1.2 billion gallons per year. Based on forecasted margins as of the date of this report, the remaining capital expenditures at the Port Arthur expansion project are expected to be primarily funded by DGD Joint Venture cash flow; however, if the DGD Joint Venture cash flow is not sufficient to

fund the remaining project costs, the DGD Joint Venture may need to borrow funds or the joint venture partners may be required to contribute additional funds to complete the project.

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,~~2023, unless extended by agreement of the parties. AsDuring the fourth quarter of ~~October 2, 2021, no amounts were owed to the DGD Lenders under the DGD Loan Agreement. Subsequent to October 2,~~fiscal 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.~~commitment and paid interest to the Company for the three months ended April 2, 2022 of approximately $0.2 million. As of April 2, 2022, $25.0 million was owed to Darling Green under the DGD Loan Agreement.

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~~April 2, ~~2021,~~2022, the DGD Joint Venture has borrowings outstanding of ~~$100.0~~$165.0 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 fiscal year 2021, each joint partner contributed a total of approximately $189.0 million and in the three months ended ~~October~~April 2, ~~2021,~~2022, each joint venture partner made ~~a $25.0~~additional capital contributions of approximately $164.75 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 ~~October~~April 2, ~~2021,~~2022, under the equity method of accounting, the Company has an investment in the DGD Joint Venture of approximately ~~$1,072.6~~$1,528.7 million included on the consolidated balance sheet.

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. Construction is underway, and the new plant is anticipated to commence operations in the first half of 2023, with the total cost of the expansion project 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.

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,~~2021, 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,~~2021, DGD was Darling’s largest finished product customer in terms of net sales, with Darling recording sales of approximately ~~$264.1~~$521.7 million to ~~DGD.~~DGD or 11% of total net sales.

From a procurement, production and distribution standpoint, DGD has become integral to Darling’s base business. DGD is integrated to the Company’s operations via the combined vertical operating structure from collecting raw fats, to processing collected fats at Darling facilities 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 the Russia-Ukraine war 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~~2022 and thereafter. The Company reviews the appropriate use of unrestricted cash periodically. As of the date of this report, other than the Company's previously announced acquisition of FASA Group for approximately R$2.8 billion Brazilian Real in cash ($560.0 million USD at the exchange rate in effect on the signing date), subject to post closing adjustments and a contingent payment based on future earnings growth, 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~~project or potential investments in additional renewable diesel and/or biofuel projects; investments in response to governmental regulations relating to climate change, 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~~$500.0 million of the Company's Common Stock depending on market conditions. The repurchases may be made from time to time on the open market at prevailing market prices or in negotiated transactions off the market. The program runs through August 13, ~~2022,~~2024, unless further extended or shortened by the Board of Directors. During the first ~~nine~~three months of fiscal ~~2021,~~2022, the Company has repurchased approximately ~~$97.9~~$17.2 million of its common stock in the open market. As of ~~October~~April 2, ~~2021,~~2022, the Company had approximately ~~$102.1~~$482.8 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 8 (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

4639

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 October 2, 2021 and January 2, 2021, and the summarized condensed consolidating statements of operations for the three and nine months ended October 2, 2021 and 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)~~

October 2, 2021 Parent Notes Guarantors Non-guarantors Eliminations Consolidated
Current assets $ 178,275 $ 1,061,470 $ 1,188,191 $ (1,324,292) $ 1,103,644
Noncurrent assets 7,010,953 2,447,136 4,156,875 (8,792,888) 4,822,076
Current liabilities 1,459,135 99,469 521,884 (1,324,291) 756,197
Noncurrent liabilities 1,372,514 32,526 785,196 (289,950) 1,900,286
Stockholders' equity 4,357,579 3,376,611 4,037,986 (8,502,939) 3,269,237
January 2, 2021
Current assets $ 103,728 $ 881,669 $ 1,177,869 $ (1,176,272) $ 986,994
Noncurrent assets 6,476,886 2,465,785 3,753,644 (8,069,978) 4,626,337
Current liabilities 1,345,233 77,573 428,771 (1,176,272) 675,305
Noncurrent liabilities 1,254,518 19,755 826,157 (116,613) 1,983,817
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 October 2, 2021 Parent Notes Guarantors Non-guarantors Eliminations Consolidated
Net sales $ 279,473 $ 462,066 $ 540,465 $ (96,088) $ 1,185,916
Total costs and expenses 259,507 404,684 466,101 (96,088) 1,034,204
Equity in net income of Diamond Green Diesel — — 53,951 — 53,951
Operating income 19,966 57,382 128,315 — 205,663
Net income attributable to Darling 146,812 44,497 95,083 (139,580) 146,812
For the three months ended September 26, 2020
Net sales $ 173,659 $ 309,837 $ 416,297 $ (49,224) $ 850,569
Total costs and expenses 194,246 287,005 382,186 (49,224) 814,213
Equity in net income of Diamond Green Diesel — — 91,099 — 91,099
Operating income (loss) (20,587) 22,832 125,210 — 127,455
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 ~~$216.4~~$252.6 million of commodity products consisting of approximately ~~$67.9~~$104.5 million of finished products, approximately ~~$118.8~~$126.2 million of natural gas and diesel fuel and approximately ~~$29.7~~$21.9 million of other commitments during the next five years, which are not included in liabilities on the Company’s balance sheet at ~~October~~April 2, ~~2021. These~~2022. The Company intends to take physical delivery of the commodities under the forward purchase agreements ~~are entered into in the normal course of the Company’s business~~ and accordingly, these contracts are not subject to ~~derivative accounting.~~the requirements of fair value accounting because they qualify as normal purchases. The commitments will be recorded on the balance sheet of the Company when delivery of these commodities or products occurs and ownership passes to the Company during the remainder of fiscal ~~2021~~2022 and through fiscal 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 ~~October~~April 2, ~~2021~~2022 (in thousands):


Other commercial commitments:
Standby letters of credit	$	~~4,130~~3,849
Standby letters of credit (ancillary facility)	27,400
Foreign bank guarantees	~~11,827~~11,805
Total other commercial commitments:	$	~~43,357~~43,054

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,~~1, 2022, filed with the SEC on March ~~2, 2021.~~1, 2022.

NEW ACCOUNTING PRONOUNCEMENTS

~~In December 2019,~~See Note 22, “New Accounting Pronouncements,” to 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.~~statements for a description of new accounting pronouncements.

FORWARD LOOKING STATEMENTS

This Quarterly Report on Form 10-Q includes “forward-looking” statements that are subject to risks and uncertainties that could cause actual results to differ materially from those expressed or implied in the statements. Statements that are not statements of historical facts are forward-looking statements and are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Words such as “estimate,” “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~~ongoing expansion ~~projects;~~project; risks and uncertainties relating to international sales and operations, including imposition of tariffs, quotas, trade barriers and other trade protections imposed by foreign countries; difficulties or a significant disruption in the Company's information systems or failure to implement new systems and software successfully; risks relating to possible third party claims of intellectual property infringement; increased contributions to the Company’s pension and benefit plans, including multiemployer and employer-sponsored defined benefit pension plans as required by legislation, regulation or other applicable U.S. or foreign law or resulting from a U.S. mass withdrawal event; bad debt write-offs; loss of or failure to obtain necessary permits and registrations; continued or escalated conflict in the Middle East, North Korea, Ukraine or ~~elsewhere;~~elsewhere, including the Russia-Ukraine war; 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.~~1, 2022. 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 forwards and options are entered into with the intent of managing the impact of changing prices for poultry meal sales. Corn options and future contracts are entered into with the intent of managing U.S. forecasted sales of BBP by reducing the impact of changing prices. Foreign currency forward contracts are entered into to mitigate the foreign exchange rate risk for transactions designated in a currency other than the local functional currency. The 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.~~guidance therefore not subject to fair value derivative accounting. At ~~October~~April 2, ~~2021,~~2022, 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 2022. As of ~~October~~April 2, ~~2021~~2022 and January ~~2, 2021~~1, 2022 the aggregate fair value of these corn option contracts was approximately ~~$2.2~~$10.2 million and ~~$6.8~~$2.8 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~~2021 and fiscal ~~2021,~~2022, 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.~~2023. As of ~~October~~April 2, ~~2021~~2022 and January ~~2, 2021,~~1, 2022, the aggregate fair value of these foreign exchange contracts was approximately ~~$2.5~~$41.1 million and ~~$11.6~~$0.6 million, ~~respectively and are~~respectively. As of April 2, 2022, approximately $27.0 million is included in other current assets and approximately $14.1 million is included in noncurrent assets and as of January 1, 2022, approximately $2.8 million is included in other current assets and approximately $2.2 million is included in accrued expenses ~~and noncurrent assets~~ on the balance sheet, with an offset recorded in accumulated other comprehensive loss.

In fiscal ~~2020~~2021 and fiscal ~~2021,~~2022, the Company entered into soybean meal forward contracts to hedge a portion of its forecasted poultry meal sales into the third quarter of fiscal ~~2021.~~2022. As of ~~October~~April 2, ~~2021~~2022 and January ~~2, 2021,~~1, 2022, the aggregate fair value of the soybean meal contracts was ~~zero~~$0.1 million and ~~$0.4~~$0.1 million, respectively. The amounts are included in other current assets and accrued expenses on the balance sheet, with an offset recorded in accumulated other comprehensive loss.

As of ~~October~~April 2, ~~2021,~~2022, 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	Functional Currency		Contract Currency		Range of	U.S.		Functional Currency		Contract Currency		Range of	U.S.
Type	Type	Amount	Type	Amount	Hedge rates	Equivalent		Type	Amount	Type	Amount	Hedge rates	Equivalent
Brazilian real	Brazilian real	22,978	Euro	3,536	6.18 - 6.98	$	4,264	Brazilian real	60,371	Euro	10,520	5.31 - 5.80	$	12,857
Brazilian real	Brazilian real	1,116,635	U.S. dollar	237,950	3.35 - 6.25	237,950		Brazilian real	3,074,644	U.S. dollar	737,900	3.35 - 6.63	737,900

Euro	Euro	33,298	U.S. dollar	39,070	1.16 - 1.24	39,070		Euro	34,817	U.S. dollar	39,265	1.10 - 1.17	39,265
Euro	Euro	24,960	Polish zloty	114,000	4.51 - 4.64	28,949		Euro	25,215	Polish zloty	120,000	4.67 - 4.81	27,858
Euro	Euro	7,160	Japanese yen	929,960	129.70 - 132.30	8,304		Euro	5,653	Japanese yen	752,890	128.46 - 136.52	6,245
Euro	Euro	20,692	Chinese renminbi	157,474	7.58 - 7.67	23,999		Euro	29,996	Chinese renminbi	212,151	7.02 - 7.69	33,139
Euro	Euro	13,670	Australian dollar	21,850	1.60	15,855		Euro	14,759	Australian dollar	22,400	1.47 - 1.52	16,306
Euro	Euro	2,810	British pound	2,400	0.85	3,259		Euro	3,412	British pound	2,860	0.84 - 0.85	3,769
Euro	Euro	34	Canadian dollar	50	1.48	39		Euro	36	Canadian dollar	50	1.38	40

Polish zloty	Polish zloty	2,057	U.S. dollar	524	3.92	524		Polish zloty	431	U.S. dollar	100	4.31	100
Polish zloty	Polish zloty	20,589	Euro	4,483	4.59 - 4.60	5,198		Polish zloty	34,710	Euro	7,338	4.72 - 4.73	8,260
British pound	British pound	179	Euro	210	0.85	243		British pound	229	Euro	273	0.84	300

Japanese yen	Japanese yen	228,482	U.S. dollar	2,070	108.79 - 110.80	2,070		Japanese yen	331,807	U.S. dollar	2,792	112.99 - 124.59	2,792
U.S. dollar	U.S. dollar	514	Japanese yen	57,000	110.90	514		U.S. dollar	275	Japanese yen	34,000	123.68	275
U.S. dollar	U.S. dollar	293,089	Euro	250,000	1.17	293,089		U.S. dollar	236,171	Euro	215,000	1.10	236,171

Australian dollar								Australian dollar	1,243	Euro	786	1.58 - 1.59	934
Canadian dollar								Canadian dollar	13,107	U.S. dollar	10,500	1.25	10,500
						$	663,327						$	1,136,711

The above foreign currency contracts that are not designated as hedges had an aggregate fair value of approximately ~~$3.7~~$2.4 million and are included in other current assets and accrued expenses at ~~October~~April 2, ~~2021.~~2022.

Additionally, the Company had corn forward contracts that are marked to market because they did not qualify for hedge accounting at ~~October~~April 2, ~~2021.~~2022. These contracts have an aggregate fair value of approximately ~~$0.5~~$3.6 million and are included in other current assets and accrued expenses at ~~October~~April 2, ~~2021.~~2022.

As of ~~October~~April 2, ~~2021,~~2022, the Company had forward purchase agreements in place for purchases of approximately ~~$118.8~~$126.2 million of natural gas and diesel fuel and approximately ~~$29.7~~$21.9 million of other commitments during the next five years. As of ~~October~~April 2, ~~2021,~~2022, the Company had forward purchase agreements in place for purchases of approximately ~~$67.9~~$104.5 million of finished product during the next five years.

Foreign Exchange

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

Item 4. CONTROLS AND PROCEDURES

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

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

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

5243

DARLING INGREDIENTS INC. AND SUBSIDIARIES

FORM 10-Q FOR THE QUARTERLY PERIOD ENDED ~~OCTOBER~~APRIL 2, ~~2021~~2022

PART II: Other Information

Item 1. LEGAL PROCEEDINGS

The information required by this Item 1 is contained within Note 1617 (Contingencies) on pages 2119 through 2220 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,~~1, 2022, 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,~~December 9, 2021, the Company’s Board of Directors approved the extension for an additional two years ending August 13, 2024 of its previously announced share repurchase program and refreshed and increased the amount of the program ~~back~~ up to ~~its original amount of~~ an aggregate of ~~$200.0~~$500.0 million of the Company's common stock depending on market conditions. During the ~~third~~first quarter of fiscal ~~2021,~~2022, the Company repurchased approximately ~~$22.3~~$17.2 million, including commissions, worth of its common stock in the open market. As of ~~October~~April 2, ~~2021,~~2022, the Company had approximately ~~$102.1~~$482.8 million remaining under the share repurchase program initially approved in August 2017 and subsequently extended to August 13, ~~2022.~~2024.

The following table is a summary of equity securities purchased by the Company during the ~~third~~first quarter of fiscal ~~2021.~~2022.

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


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.
January 2022:
January 2, 2022 through January 29, 2022	474,243		64.69	184,672	$	488,847,862
February 2022:
January 30, 2022 through February 26, 2022	7,200		64.92	—	488,847,862
March 2022:
February 27, 2022 through April 2, 2022	456,670		76.68	86,291	482,816,622
Total	938,113	(3)	72.03	270,963	$	482,816,622

(1) All shares purchased during the ~~third~~first quarter were acquired by the Company pursuant to the announced share repurchase program (other than shares withheld for taxes on restricted stock, restricted stock units, performance units 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~~667,150 shares withheld for taxes on restricted stock, restricted stock units, performance units 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~~$500.0 million of the Company's common stock over the period ending August 13, ~~2022,~~2024, unless extended or shortened by the Board of Directors.

Item 6. EXHIBITS

The following exhibits are filed herewith:


			31.1			Certification pursuant to Rule 13a-14(a) or Rule 15d-14(a) of the Securities Exchange Act of 1934, of Randall C. Stuewe, the Chief Executive Officer of the Company.
			31.2			Certification pursuant to Rule 13a-14(a) or Rule 15d-14(a) of the Securities Exchange Act of 1934, of Brad Phillips, the Chief Financial Officer of the Company.
			32			Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, of Randall C. Stuewe, the Chief Executive Officer of the Company, and of Brad Phillips, the Chief Financial Officer of the Company.
			101			Interactive Data Files Pursuant to Rule 405 of Regulation S-T: (i) Consolidated Balance Sheets as of ~~October~~April 2, ~~2021~~2022 and January ~~2, 2021;~~1, 2022; (ii) Consolidated Statements of Operations for the three ~~and nine~~ months ended ~~October~~April 2, ~~2021~~2022 and ~~September 26, 2020;~~April 3, 2021; (iii) Consolidated Statements of Comprehensive Income/(Loss) for the three ~~and nine~~ months ended ~~October~~April 2, ~~2021~~2022 and ~~September 26, 2020;~~April 3, 2021; (iv) Consolidated Statements of Stockholders' Equity for the ~~nine~~three months ended ~~October~~April 2, ~~2021~~2022 and ~~September 26, 2020;~~April 3, 2021; (v) Consolidated Statements of Cash Flows for the ~~nine~~three months ended ~~October~~April 2, ~~2021~~2022 and ~~September 26, 2020;~~April 3, 2021; (vi) Notes to the Consolidated Financial Statements.
			104			Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101).

5445

SIGNATURES

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


		DARLING INGREDIENTS INC.


Date:	~~November 9, 2021~~May 10, 2022	By:	/s/ Brad Phillips
			Brad Phillips
			Chief Financial Officer
			(Principal Financial Officer and Duly Authorized Officer)

5546


	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 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


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

Current assets	$	178,275	$	1,061,470	$	1,188,191	$	(1,324,292)	$	1,103,644
Noncurrent assets	7,010,953		2,447,136		4,156,875		(8,792,888)		4,822,076
Current liabilities	1,459,135		99,469		521,884		(1,324,291)		756,197
Noncurrent liabilities	1,372,514		32,526		785,196		(289,950)		1,900,286
Stockholders' equity	4,357,579		3,376,611		4,037,986		(8,502,939)		3,269,237

January 2, 2021

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