Darling Ingredients (DAR) Risk Analysis

Our facilities are subject to various federal, state, provincial and local laws, rules and regulations including environmental and other permitting requirements of the countries in which we operate and our facilities are located. Periodically, these permits may be reviewed and subject to amendment or withdrawal. Applications for an extension or renewal of various permits may be subject to challenge by community and environmental groups and others. In the event of a casualty, condemnation, work stoppage, permitting withdrawal or delay, severe weather event, cyber-attack or other unscheduled shutdown involving one of our facilities, in a majority of our markets we would utilize a nearby operating facility to continue to serve our customers in the affected market; however, in certain markets we do not have alternate operating facilities. If any of these events occur in such markets, we may experience an interruption in our ability to service our customers and to procure raw materials, and potentially an impairment of the value of that facility. Any of these circumstances may materially and adversely affect our business and results of operations in those markets. In addition, after an operating facility affected by such an event or unscheduled shutdown is restored, customers who in the interim choose to use alternative disposal services may not return to use our services.

In the UK and the EU, pension funds are generally subject to the Institution for Occupational Retirement Provision Directive (Directive 2003/41/EC) (the "IORP Directive") as implemented in the relevant EU Member States and under corresponding UK pension regulatory regimes. The IORP Directive provides for certain general solvency requirements but allows EU Member States discretion to impose specific national requirements. As a result, the solvency of EU pension funds is mostly regulated on a national level. On December 23, 2016, the new IORP Directive ("IORP Directive II") was published on the Official Journal of the European Union and entered into force on January 12, 2017. Though IORP Directive II did not make substantive changes to the solvency requirements under the original IORP Directive, it did implement enhanced governance and risk management standards, requirements relating to cross-border activity and cross-border transfers and disclosure obligations owed to participating employees, among others. EU Member States were required to implement IORP Directive II into national legislation by January 13, 2019, although implementation and enforcement of IORP Directive II continue to vary across EU Member States. We could be adversely affected if EU Member States interpret or implement IORP Directive II in ways that negatively affect our business, financial condition and results of operations. It is also possible that some EU Member States will impose stricter requirements than currently provided for under IORP Directive II, which may require us to expend significant resources to prepare for and comply with differing standards. We could be adversely affected if these stricter or differing standards require changes in our business practices.

Our operations are highly dependent on the use of natural gas, diesel fuel and electricity and a disruption in any of them could have a material adverse effect on the business and results of operations of the affected facility. We consume significant volumes of natural gas to operate boilers in our plants, which generate steam to heat raw materials, and natural gas prices represent a significant cost of facility operations included in cost of sales. We also consume significant volumes of diesel fuel to operate our fleet of vehicles used to collect raw materials, and diesel fuel prices represent a significant component of cost of collection expenses included in cost of sales. Prices for both natural gas and diesel fuel can be volatile, partially due to conflicts around the world, such as the ongoing Russian-Ukraine war and conflicts in the Middle East, and inflation, and therefore, represent an ongoing challenge to our operating results. Despite our efforts to manage these costs and hedge our exposure to changes in fuel prices through our formula pricing, and from time to time, derivatives, a material increase in prices for natural gas and/or diesel fuel over a sustained period of time could materially adversely affect our business, results of operations and financial condition. We also require a significant amount of electricity in operating certain of our facilities, a significant increase in the cost of which could have a material adverse effect on the business and results of operations of the affected facility. Additionally, the availability of natural gas, diesel fuel and electricity can be affected by numerous events such as weather (e.g., hurricanes and periods of considerable heat or cold), pipeline and other logistics interruptions, electric grid outages, cybersecurity incidents, intermittent electricity generation, hostilities, sanctions and supply and demand imbalances.

Demand for and profitability of our biofuels (including renewable diesel and SAF), biogases and green electricity, including those of DGD, depend in significant part on government programs, mandates, tax credits and incentives in the U.S. and other jurisdictions, including renewable fuel standards, low carbon fuel programs and clean fuel tax credits. These programs are complex, subject to frequent legislative, regulatory and administrative change, and dependent on agency interpretation, guidance enforcement priorities and funding. Programs like RFS and LCFS, compliance and tax credits for biofuels and mandates for biofuel use, both in the United States and abroad, are subject to revision and change which may impact the demand for our finished products and margins. Support from the programs and credits plays an important role in the makeup of margins for the DGD Joint Venture, and, accordingly, we are exposed to volatility in the market price of these credits, including LCFS credits and RINs (which act as compliance credits under the RFS). We cannot predict the future prices of RINs, LCFS credits or other credits, nor can we predict changes or continued implementation of policies that support these programs. The EPA created the RFS program pursuant to the Energy Policy Act of 2005 and the Energy Independence and Security Act of 2007. Under the RFS program, the EPA is required by statute to set annual quotas for the volume of renewable fuels that must be blended into petroleum-based transportation fuels consumed in the U.S. 14 months prior to the compliance year. The quotas are set by class of renewable fuel (e.g., biomass-based diesel, cellulosic biofuel, advanced biofuel, and total renewable fuel) and are collectively referred to as the renewable volume obligation ("RVO"). The RVO must be met by obligated parties, who are the producers and importers of the petroleum-based transportation fuels consumed in the U.S. Obligated parties demonstrate compliance annually by retiring the appropriate number of renewable identification numbers ("RINs") associated with each class of renewable fuel to satisfy their RVO. A RIN is a compliance credit that is assigned to each gallon of qualifying renewable fuel produced in, or imported into, the U.S. under the RFS program. RINs are obtained by blending those renewable fuels into petroleum based transportation fuels, and obligated parties can also achieve compliance by purchasing RINs in the open market. Pursuant to the requirements established by the Energy Independence and Security Act of 2007, the finalized 2010 RFS regulation mandated the domestic use of biomass-based diesel (biodiesel, renewable diesel or renewable jet fuel) of 1.0 billion gallons in 2012 and a minimum of 1.0 billion gallons of biomass-based diesel for subsequent years. This amount is subject to increase by the Administrator of the EPA. The volume mandates for 2022 were 2.76 billion gallons for biomass-based diesel, 5.63 billion RINs for advanced biofuel, and 20.63 billion RINs for total renewable fuel. In June of 2023, the EPA published a final rule that established required RFS volumes for 2023, 2024, and 2025. For biomass-based diesel, the EPA set 2.82 billion gallons for 2023, 3.04 billion gallons for 2024, and 3.35 billion gallons for 2025. For the advanced biofuel category, the EPA set 5.94 billion RINs for 2023, 6.54 billion RINs for 2024, and 7.33 billion RINs for 2025. For total renewable fuel, the EPA set 20.94 billion RINs for 2023, 21.54 billion RINs for 2024, and 22.33 billion RINs for 2025. For RFS compliance purposes, RINs satisfy the biomass-based diesel requirement, the overall advanced biofuel requirement, and the total renewable fuel requirement. In order to generate a RIN, each type of fuel from each type of feedstock is required to reduce greenhouse gas ("GHG") emissions by levels specified in the regulation. The EPA has determined that biodiesel or renewable diesel produced from waste oils, fats, and greases exceed the 50% threshold established by the regulation to generate advanced biofuel and biomass-based diesel RINs. In January 2025, the Clean Fuels Production Credit ("CFPC") introduced under the IR Act became effective through 2027, and replaced the blender tax credit that was in effect in prior years. Under the CFPC, non-aviation transportation fuel receives a tax credit equal to either $0.20/gallon or $1.00/gallon (adjusted for inflation each calendar year) multiplied by the fuel's emission reduction percentage. In order to start with the $1.00 per gallon baseline, the fuel must be produced at a qualifying facility that meets the prevailing wage and apprenticeship requirements before being sold in a certain manner. Under the CFPC, SAF receives a tax credit equal to either $0.35/gallon or $1.75/gallon (adjusted for inflation each calendar year) multiplied by the fuel's emission reduction percentage. In order to start with the $1.75 per gallon baseline, SAF must be produced in the United States at a qualifying facility that meets the prevailing wage and apprenticeship requirements before being sold for use in an aircraft. In contrast to the blender tax credit, the CFPC requires that production of eligible fuels must take place in the United States. On July 4, 2025, the One Big Beautiful Bill Act (the "OBBBA") was enacted in the U.S. The OBBBA extended the CFPC for two years through 2029 and, beginning in 2026, reduces the maximum credit rate for SAF to $1.00/gallon (adjusted for inflation each calendar year) and specifies that transportation fuels must be derived from feedstocks produced or grown in the U.S., Mexico or Canada to be eligible. Government incentives related to renewable fuels were material to our results of operations in fiscal 2025, so any legal challenges or changes to, a failure to enforce, reductions in the mandated volumes under, or suspending or discontinuing any of these programs could have a negative impact on our business and results of operations. For example, the transition from the blender tax credit to the CFPC on January 1, 2025 introduced a number of risks that could negatively impact the results of operations of the DGD Joint Venture and cause a material and adverse impact to the Company. These include, but are not limited to: credit eligibility and compliance risks for failure to satisfy qualification, prevailing wage and apprenticeship and other certification and documentation requirements which could reduce credit values or void credits; regulatory risks because the U.S. Treasury has yet to provide final CFPC regulations, and credits earned since January 1, 2025 must be determined based on currently available information from Treasury; and credit transfer risks, including the development of markets to sell the credits, the strength of any such markets and the viability of the credits with respect to discounts to credit values on sales, and potential Company indemnities with respect to credit sales which introduce the risk of reimbursing buyers for any later credit adjustments including potential penalties, interest and tax gross-ups which could be material.

The FDA has put in place restrictions to prevent the spread of BSE, and certain foreign governments have also restricted exports of beef and beef products from the United States following the detection of BSE in the United States in December 2003. The sixth case of BSE was reported in a six-year-old mixed-breed beef cow in August, 2018, which was the second case of BSE since the WOAH characterized the United States' BSE status as one of "negligible risk" in 2013. The seventh and most recent case of BSE was announced in May 2023 by the U.S. Department of Agriculture ("USDA"). According to the announcement, the animal was tested as part of USDA's routine surveillance of cattle that are deemed unsuitable for slaughter. As such, this animal never entered slaughter channels and at no time presented a risk to the food supply or to human health in the United States. On May 24, 2022, the WOAH characterized Canada's BSE status as one of "negligible risk". On December 17, 2021 the Canadian Food Inspection Agency confirmed a case of atypical BSE in an 8.5 year old cow in Alberta. However, the Canadian Food Inspection Agency reported zero cases of BSE in 2023. While these latest cases in the United States and Canada and previous cases were the atypical or sporadic form of BSE, which is not spread via feed and, therefore, did not affect the "negligible BSE risk" status of either country, continued concern about BSE in countries in which we operate now or in the future, may result in additional regulatory and market related challenges that may affect our operations or increase our operating costs. With respect to human food, pet food and animal feed safety in the United States, the FDA Food Safety Modernization Act ("FSMA") gives the FDA various authorities and directs the FDA to promulgate new regulations pursuant to the FSMA, as described in the section entitled "Business-Regulations" included in this report. As a producer of meat-centric food products, our business depends on the continued availability of animal by-products and the acceptance of our products in human food, pet food, animal feed and fuel markets, and we are subject to risks associated with the outbreak of disease in pork, beef livestock, and poultry flocks, including Foot-and-Mouth Disease, Bird Flu, Salmonella and BSE. The outbreak of disease could adversely affect our supply of raw materials, increase the cost of production, and reduce operating margins. Additionally, the outbreak of disease may hinder our ability to market and sell products. We have developed business continuity plans for various disease scenarios, but these plans may not be effective in eliminating the negative effects of any such diseases on our operating results. We have followed regulations enacted under the FDA Food Safety Modernization Act ("FSMA"), as described in the section entitled "Business-Regulations" included in this report, throughout the rulemaking process and have implemented cGMPs, food safety plans and other procedures at our domestic facilities, which we believe comply with the applicable final rules for preventive controls for human food and animal feed. Similar procedures have been implemented at our foreign facilities for compliance with the Foreign Supplier Verification Programs rule. Such rulemaking and implementation of compliant procedures could, among other things, limit our ability to import necessary raw materials or finished products or require us to amend certain of our other operational policies and procedures. Unforeseen issues and requirements may arise as the FDA implements and enforces these and other final rules or promulgates other new regulations provided for by the FSMA or under new FDA policies put forward under the Trump Administration under the Food, Drug, and Cosmetic Act. For example, the Trump Administration is focused on efforts to remove certain chemicals, including food additives and color additives, from food products, and intends to propose rulemaking to change the regulatory pathway for generally recognized as safe ("GRAS") substances in food, including by potentially eliminating the possibility for self-affirmation of the safety of such ingredients. In addition, the FDA has promoted and updated databases of information regarding contaminant levels in food, including tolerances, action levels and guidance levels. We may be required to comply with new laws and regulations, including those focused on our products, components of our products or labeling, which may increase costs or otherwise adversely impact our business. The FDA has also established a Reportable Food Registry ("RFR") pursuant to the Food and Drug Administration Amendments Act of 2007, and has defined a reportable food, which the manufacturer or distributor would be required to report in the RFR, to include materials used as ingredients in animal feeds and pet foods if there is a reasonable probability that the use of, or exposure to, such materials will cause serious adverse health consequences or death to humans or animals. Finalization of the RFR guidance documents and potential additional requirements relating to the RFR may impose additional requirements on us. According to the "Compliance Policy Guide Sec. 690.800, Salmonella in Food for Animals," any finished pet food contaminated with any species of Salmonella will be considered adulterated, and the FDA believes regulatory action is warranted in cases involving such pet foods because of the heightened risk to humans given the high likelihood of direct human contact with pet food. Finished animal feeds intended for pigs, poultry and other farmed animals, however, will be considered to be adulterated only if the feed is contaminated with a species of Salmonella that is considered to be pathogenic for the animal species for which the feed is intended. Any pathogen, such as Salmonella, that is correctly or incorrectly associated with our finished products could have a negative impact on the demand for our finished products and could have a material adverse effect on our business, reputation, results of operations or financial condition. As a result of our international operations, we could be adversely affected by additional non-U.S. regulations regarding BSE and other food safety issues. For example, an enforceable ban on the feeding of restricted animal material to ruminant animals is in place in Australia as part of a comprehensive national program to prevent the entry and establishment of the BSE agent in Australia and inspections and audits are undertaken to ensure compliance. In addition, in the EU, harmonized rules have been adopted for the prevention, control and eradication of transmissible spongiform encephalopathies ("TSEs"), which includes BSE, in Regulation (EC) No 999/2001, as amended ("TSE Regulation"), and in Regulation (EC) No 1069/2009, as amended ("Animal By-Products Regulation") and the creation or expansion of other food and feed hygiene regulations. The TSE Regulation establishes a similar "feed ban" which prohibits the use of certain animal proteins, including processed animal protein ("PAP") and MBM, in feed for ruminants according to which only certain animal proteins considered to be safe (such as fishmeal) can be used, but under very strict conditions. Since 1994, a ban on feeding MBM to ruminants has been in place in the EU and expanded in 2001, with the prohibition of feeding all PAP to all farmed animals, subject to certain limited exceptions. In 2009, the BSE-related feed ban was supplemented with the prohibition of intra-species recycling for all food-producing animals. Other animal-derived products besides PAP, such as collagen derived from non-ruminants and hydrolyzed proteins derived from parts of non-ruminants or ruminant hides and skins, were not included in the feed ban. The feed ban has been lifted for pig and poultry PAP in the feed of aquaculture animals, and insect PAP (a new source of animal protein) in the feed of aquaculture animals. In 2021, the European Commission relaxed the "feed ban" to allow the feeding of non-ruminant farmed animals with insect PAP, reauthorize the feeding of poultry with pig PAP, the feeding of pigs with poultry PAP and allow the use of ruminant derived gelatin in feeds for non-ruminant farmed animals. Darling Ingredients International may profit from the possible lifting of the ban for pigs and poultry, however, the introduction of changes to the feed ban and further restriction may adversely affect Darling Ingredients International, possibly restricting the allowed use of some of their products. The TSE Regulation applies to the production and placing on the market of live animals and products of animal origin on the EU market. The BSE status of EU Member States, non-EU members of the European Economic Area and other countries or regions ("Third Countries") is to be determined by classification made by the WOAH into one of three BSE risk categories identified in the Regulation (i.e., negligible risk, controlled risk or undetermined risk), which are informed by risk assessments and surveillance monitoring. According to the Commission Decision of June 29, 2007, as amended, Greece is the only EU Member State classified as having a controlled BSE risk. The other EU Member States are classified as having a negligible BSE risk. Also, the United Kingdom (with the exception of Northern Ireland), as a former a member of the EU is classified as controlled BSE risk. A change in the BSE status of one or more EU Member States may have a negative impact on Darling Ingredients International. Under EU legislation, imported products from outside the EU must meet the same safety standards as products produced in EU Member States. The TSE Regulation imposes strict import requirements related to TSEs for live animals and animal by-products, which depend on the BSE status of Third Countries. The Animal By-Products Regulation establishes rules intended to prevent the outbreak of certain diseases such as BSE. A BSE outbreak or other event viewed as hazardous to animal or human health could also lead to the adoption of more stringent rules on the use and disposal of animal by-products, which could require Darling Ingredients International to change its production processes and could have a material adverse effect on our business, results of operations or financial condition. In addition, EU legislation applicable to the agri-food sector could create additional compliance requirements and enforcement risks for us. For example, Regulation (EU) 2019/1381, as amended ("Food Transparency Regulation"), strengthens transparency requirements in EU food law. The European Food Safety Authority ("EFSA") must disclose scientific data, studies and other information supporting applications, including supplementary information supplied by applicants. EFSA is also tasked with establishing and managing a publicly accessible database of studies commissioned or carried out by business operators to support an application or notification in relation to which it must provide a scientific output. Business operators must notify EFSA of protected and detailed information concerning any study commissioned or carried out by them to support an application or a notification. Any potential disclosure of unfavorable studies and data as well as EFSA's ultimate decision-making power to determine what constitutes confidential information (and therefore subject or not to transparency obligations) may result in adverse publicity, negatively impact our reputation and/or require us to disclose commercially sensitive information and data. In addition, Regulation (EC) 2017/625, as amended ("Official Controls Regulation") requires that the EU Member States verify compliance with agri-food chain rules through official controls. To deter fraudulent practices, the Official Controls Regulation introduces more stringent rules for financial penalties, imposed by EU Member States, as well as new provisions to protect whistle-blowers to encourage and facilitate the reporting of non-compliance. More stringent and higher financial penalties may potentially result in significant and unexpected costs and enhanced provisions regarding whistle-blowers may result in more regulatory investigations and enforcement actions, both of which could have a material adverse effect on our business.

In fiscal year 2025, the Company's top ten customers for finished products accounted for approximately 40% of product sales. In addition, the Company's top ten raw material suppliers accounted for approximately 27% of its raw material supply in the same period. Disruptions or modifications to, or termination of, our relationship with any of our significant suppliers or customers, or financial difficulties experienced by any of our suppliers or customers that lead to curtailment or termination of their operations, could cause our businesses to suffer significant financial losses and could have a material adverse effect on our business, earnings, financial condition and/or cash flows.

The actual or perceived effects of a disease outbreak, epidemic, pandemic or similar widespread public health concern could negatively affect our operations, liquidity, financial condition and results of operations. The spread of pandemics, epidemics or disease outbreaks may disrupt our third-party business partners' ability to meet their obligations to us which may negatively affect our operations. These third parties include those who supply our raw materials and other necessary operating materials and logistics and transportation services providers. Ports and other channels of entry may be closed or operate at only a portion of capacity, as workers may be prohibited or otherwise unable to report to work, and means of transporting products within regions or countries may be limited for the same reason. Furthermore, transport restrictions related to quarantines or travel bans could be put in place and global supply may become constrained, each of which may cause the price of certain raw materials used in our products to increase and/or we may experience disruptions to our operations. In addition, any such outbreaks may affect the prices and demand for our finished products. Workforce limitations and travel restrictions resulting from pandemics, epidemics or disease outbreaks and related government actions may affect many aspects of our business. If a significant percentage of our workforce is unable to work, including because of illness or travel or government restrictions in connection with pandemics or disease outbreaks, our operations and financial reporting capabilities may be negatively affected. In addition, pandemics or disease outbreaks could result in a widespread health crisis that could adversely affect the economies and financial markets of many countries, resulting in an economic downturn that could affect our raw material supply and our customers' demand for our finished products. Our efforts to manage and mitigate these factors may be unsuccessful, and the effectiveness of these efforts depends on factors beyond our control, including the duration and severity of any pandemic, epidemic or disease outbreak, as well as third-party actions taken to contain its spread and mitigate public health effects. The risks described above also apply to the DGD Joint Venture and its business and operations.