DARLING INGREDIENTS INC.DAR
DARLING INGREDIENTS INC. Fair Value Disclosure
FAIR VALUE MEASUREMENT
FASB authoritative guidance which defines fair value, establishes a framework for measuring fair value, and expands disclosures about fair value measurements including guidance related to nonrecurring measurements of nonfinancial assets and liabilities.
The following tables present the Company’s financial instruments that are measured at fair value on a recurring and nonrecurring basis as of January 3, 2026 and December 28, 2024 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 January 3, 2026 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 | ||||||||||||||
| $ | 23,590 | $ | — | $ | 23,590 | $ | — | |||||||
| Total Assets | 23,590 | — | 23,590 | — | ||||||||||
| Liabilities | ||||||||||||||
| 2,631 | — | 2,631 | — | |||||||||||
| Total Liabilities | $ | 2,631 | $ | — | $ | 2,631 | $ | — | ||||||
| Fair Value Measurements at December 28, 2024 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 | ||||||||||||||
| $ | 30,693 | $ | — | $ | 30,693 | $ | — | |||||||
| Total Assets | 30,693 | — | 30,693 | — | ||||||||||
| Liabilities | ||||||||||||||
| 41,920 | — | 41,920 | — | |||||||||||
| Contingent consideration | 28,862 | — | — | 28,862 | ||||||||||
| Total Liabilities | $ | 70,782 | $ | — | $ | 41,920 | $ | 28,862 | ||||||
Derivative assets and liabilities primarily consist of the Company’s corn option and future contracts, soybean meal and soybean oil forward and option contracts, foreign currency forward and option contracts, interest rate swap contracts and cross currency swap contracts which represent the difference between the observable market rates of commonly quoted intervals for similar assets and liabilities in active markets and the fixed swap rate considering the instrument’s term, notional amount and credit risk. See Note 17 Derivatives for discussion on the Company’s derivatives.
The fair value measurement of contingent consideration liability uses significant unobservable inputs (level 3). Through the quarter ended March 29, 2025, we estimated the fair value of the FASA Group (“FASA”) contingent consideration using a Monte Carlo simulation methodology from a third-party that includes simulating the forecasted net income or earnings plus interest expense, taxes, depreciation and amortization (“EBITDA”) using a Geometric Brownian Motion in a risk-neutral framework. The assumptions used in the FASA contingent consideration analysis included in EBITDA volatility, credit spread, risk-free rate and exchange rate. Significant increases and decreases in these inputs could result in a significantly lower or higher fair value measurement of the FASA contingent consideration. At January 3, 2026, no Monte Carlo model was used as the contingent consideration period had elapsed and actual EBITDA was known and the contingent considerations was paid to the seller in September 2025 per the latest calculation. The seller had a certain amount of time to approve the contingent consideration. As of January 3, 2026, the seller has disputed the calculation and as of the date of this report no resolution has been determined; however, the Company does not believe it owes any additional contingent consideration amount at this time. The changes in contingent consideration are due to the following:
| (in thousands of dollars) | Contingent Consideration | ||||
| Balance as of December 30, 2023 | $ | 86,495 | |||
| Total included in earnings during period | (46,706) | ||||
| Exchange rate changes | (10,927) | ||||
| Balance as of December 28, 2024 | 28,862 | ||||
| Total included in earnings during period | 18,024 | ||||
| Exchange rate changes | 5,807 | ||||
| Payments | (52,693) | ||||
| Balance as of January 3, 2026 | $ | — | |||
The fair value of financial instruments that are not carried at fair value are as follows:
| Fair Value Measurements at January 3, 2026 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) | ||||||||||
| Liabilities | ||||||||||||||
| 6% Senior Notes | $ | 1,015,100 | $ | — | $ | 1,015,100 | $ | — | ||||||
| 5.25% Senior Notes | 499,000 | — | 499,000 | — | ||||||||||
| 4.5% Senior Notes | 890,063 | — | 890,063 | — | ||||||||||
| Term loan A | 891,023 | — | 891,023 | — | ||||||||||
| Revolver | 592,133 | — | 592,133 | — | ||||||||||
| Total Liabilities | $ | 3,887,319 | $ | — | $ | 3,887,319 | $ | — | ||||||
| Fair Value Measurements at December 28, 2024 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) | ||||||||||
| Liabilities | ||||||||||||||
| 6% Senior Notes | $ | 982,500 | $ | — | $ | 982,500 | $ | — | ||||||
| 5.25% Senior Notes | 490,000 | — | 490,000 | — | ||||||||||
| 3.625% Senior Notes | 534,908 | — | 534,908 | — | ||||||||||
| Term loan A-1 | 395,015 | — | 395,015 | — | ||||||||||
| Term loan A-2 | 469,516 | — | 469,516 | — | ||||||||||
| Term loan A-3 | 296,261 | — | 296,261 | — | ||||||||||
| Term loan A-4 | 478,844 | — | 478,844 | — | ||||||||||
| Revolver | 264,330 | — | 264,330 | — | ||||||||||
| Total Liabilities | $ | 3,911,374 | $ | — | $ | 3,911,374 | $ | — | ||||||
The fair value of the senior notes, term loan A, term loan A-1, term loan A-2, term loan A-3, term loan A-4 and revolver debt is based on market quotation from third-party banks. The carrying amount for the Company’s other debt is not deemed to be significantly different than the fair value and all other instruments have been recorded at fair value.
The carrying amount of cash, cash equivalents and restricted cash, 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.Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2026 | Mar 3, 2026 | Showing above |
| 2024 | Feb 25, 2025 | |
| 2023 | Feb 28, 2024 | |
| 2022 | Mar 1, 2022 | |
| 2021 | Mar 2, 2021 | |
| 2019 | Feb 25, 2020 | |
| 2018 | Feb 27, 2019 | |
| 2017 | Feb 27, 2018 | |
| 2016 | Mar 1, 2016 | |
About Fair Value Disclosures
Fair value disclosures classify all assets and liabilities measured at fair value into a three-level hierarchy: Level 1 (quoted market prices), Level 2 (observable inputs like yield curves), and Level 3 (unobservable inputs requiring management estimates). The proportion of Level 3 assets directly reflects how much of the balance sheet depends on internal models rather than market evidence.
Key signals: a growing Level 3 balance relative to total fair-value assets increases valuation uncertainty and earnings volatility risk. Watch for transfers between levels — assets moving from Level 2 to Level 3 often signal deteriorating market liquidity. Unrealized gains and losses on Level 3 positions flow through earnings or other comprehensive income, so large swings deserve scrutiny. For financial institutions, examine the sensitivity disclosures that show how Level 3 valuations change under alternative assumptions. Compare the fair value of debt against its carrying amount to gauge hidden leverage.