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Derivatives | 6 Months Ended
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Jun. 28, 2025
Derivative Instruments and Hedging Activities Disclosure [Abstract] |
Derivatives | 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, 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 interest rates, natural gas usage, diesel fuel usage, inventory, forecasted sales and foreign currency exchange rates. Interest rate swaps are entered into with the intent of managing overall borrowing costs by reducing the potential impact of increases in interest rates on floating-rate long-term debt. 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 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 June 28, 2025, the Company had foreign exchange forward and option contracts outstanding that qualified and were designated for hedge accounting as well as corn option and forward contracts, soybean meal option contracts, other commodity forward contracts, interest rate swaps and foreign currency forward contracts that did not qualify and were not designated for hedge accounting. In fiscal 2025 and fiscal 2024, the Company’s DGD Joint Venture entered into heating oil derivatives that were deemed to be cash flow hedges. As a result, the Company has accrued the other comprehensive income/(loss) portion belonging to Darling with an offset to the investment in DGD as required by Financial Accounting Standards Board (“FASB”) ASC Topic 323. Cash Flow Hedges In fiscal 2023, the Company designated interest rate swaps as cash flow hedges of the interest rate risk on a portion of its outstanding variable rate debt. Due to a change in the terms of the underlying debt instruments, the hedging relationships were dedesignated in June 2025. The cumulative gain of approximately $4.1 million, previously recognized in accumulated other comprehensive loss related to the cash flow hedges was reclassified to interest expense upon dedesignation. The interest rate swaps are still held by the Company as nondesignated hedges, carried at fair value on the balance sheet with changes in fair value recognized in interest expense. At June 28, 2025, the aggregate fair value of these interest rate swaps was approximately $5.1 million and was recorded in other current assets. At December 28, 2024, the aggregate fair value of these interest rate swaps was approximately $4.2 million and was recorded in other current assets, accrued expenses, other assets and noncurrent liabilities on the balance sheet, with an offset recorded in accumulated other comprehensive loss. In fiscal 2023, the Company also entered into cross currency swaps that were designated as cash flow hedges to hedge the Company’s intercompany loans. During the three months ended June 28, 2025, the intercompany loans and cross currency swaps were settled. At June 28, 2025 and December 28, 2024, the aggregate fair value of these cross currency swaps was approximately zero and $22.2 million, respectively. At December 28, 2024, these amounts are included in other current assets on the balance sheet, with an offset recorded in accumulated other comprehensive loss. In fiscal 2024 and fiscal 2025, the Company entered into foreign exchange options and forward contracts that are designated as cash flow hedges. Under the terms of the foreign exchange contracts, the Company hedged a portion of its forecasted sales in currencies other than the functional currency through the fourth quarter of fiscal 2026. At June 28, 2025 and December 28, 2024, the aggregate fair value of these foreign exchange contracts was approximately $12.3 million and $32.6 million, respectively. These amounts are included in other current assets, other long term assets, accrued expenses and other non-current liabilities on the balance sheet, with an offset recorded in accumulated other comprehensive loss. The Company may enter into corn forward and option contracts, soybean meal forward and option contracts and heating oil swap and option contracts from time to time. There were not any open designated corn, soybean meal or heating oil contracts entered into by the Company at June 28, 2025. As of June 28, 2025, 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 |  | Contract Currency
Type | Amount |  | Type | Amount
Brazilian real | 236,144 |  |  | Euro | 35,538 |
Brazilian real | 2,654,714 |  |  | U.S. dollar | 460,975 |
Euro | 24,864 |  |  | U.S. dollar | 28,793 |
Euro | 79,784 |  |  | Polish zloty | 341,545 |
Euro | 10,898 |  |  | Japanese yen | 1,833,785 |
Euro | 32,964 |  |  | Chinese renminbi | 269,710 |
Euro | 16,041 |  |  | Australian dollar | 28,330 |
Euro | 4,247 |  |  | British pound | 3,638 |
Polish zloty | 49,199 |  |  | Euro | 11,477 |
British pound | 156 |  |  | Euro | 182 |
British pound | 206 |  |  | U.S. dollar | 276 |
Japanese yen | 129,480 |  |  | U.S. dollar | 898 |
U.S. dollar | 232 |  |  | Japanese yen | 34,181 |
The Company estimates the amount that will be reclassified from accumulated other comprehensive loss at June 28, 2025 into earnings over the next 12 months for all cash flow hedges will be approximately $2.2 million. As of June 28, 2025, $4.1 million has 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 six months ended June 28, 2025 and June 29, 2024 (in thousands):
|  |  |  | Loss or (Gain) Recognized in Income on Derivatives Not Designated as Hedges
|  |  |  | Three Months Ended | Six Months Ended
Derivatives not designated as hedging instruments |  | Location |  | June 28, 2025 | June 29, 2024 | June 28, 2025 | June 29, 2024
Foreign exchange |  | Foreign currency loss/(gain) |  | $ | (549) |  | $ | (194) |  | $ | (836) |  | $ | (850) |
Foreign exchange |  | Net sales |  | (517) |  | 158 |  | (584) |  | 642 |
Foreign exchange |  | Cost of sales and operating expenses |  | 132 |  | (107) |  | 192 |  | (299) |
Foreign exchange |  | Selling, general and administrative expenses |  | (6,978) |  | 8,091 |  | (14,167) |  | 9,572 |
Interest rate swap |  | Interest expense |  | (961) |  | — |  | (961) |  | — |
Corn options and futures |  | Net sales |  | — |  | 238 |  | — |  | 546 |
Corn options and futures |  | Cost of sales and operating expenses |  | (380) |  | (1,868) |  | (1,981) |  | (2,236) |
Soybean meal |  | Net sales |  | 221 |  | — |  | 221 |  | — |
Soybean oil |  | Net sales |  | (158) |  | — |  | (158) |  | — |
Other commodities |  | Selling, general and administrative expenses |  | (424) |  | — |  | (701) |  | — |
Total |  |  |  | $ | (9,614) |  | $ | 6,318 |  | $ | (18,975) |  | $ | 7,375 |
At June 28, 2025, the Company had forward purchase agreements in place for purchases of approximately $275.3 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.

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