Third Quarter 2023
- Net income of $125.0 million, or
$0.77 per GAAP diluted share
- Net sales of $1.6 billion
- Combined adjusted EBITDA of $334.3
million
- Global ingredients business EBITDA of $247.8 million
- Received $62.2 million in cash
dividends from Diamond Green
Diesel
IRVING,
Texas, Nov. 7, 2023 /PRNewswire/ -- Darling
Ingredients Inc. (NYSE: DAR) today reported net income of
$125.0 million, or $0.77 per diluted share for third quarter of
2023, compared to net income of $191.1
million, or $1.17 per diluted
share, for third quarter of 2022. The company also reported net
sales of $1.6 billion for the third
quarter of 2023, compared with net sales of $1.7 billion for the same period a year ago.
"Our core business continues to perform extremely well. We had
seasonally strong performance during the third quarter and were
able to return gross margins to pre-acquisition levels," said
Randall C. Stuewe, Darling
Ingredients Chairman and Chief Executive Officer. "The company has
good momentum as we close out the year and is well positioned
heading into 2024."
For the nine months ended Sept. 30,
2023, Darling Ingredients reported net sales of $5.2 billion, compared to net sales of
$4.8 billion for the same period in
2022. Net income for the first nine months of 2023 was $563.2 million, or $3.47 per diluted share, as compared to net
income of $581.1 million, or
$3.54 per diluted share, for the
first nine months of 2022.
Diamond Green Diesel (DGD) sold
266.8 million gallons of renewable diesel for the third quarter
2023 at an average of $0.65 per
gallon EBITDA. Year-to-date, DGD has sold 910.0 million gallons of
renewable diesel at an average of $1.02 per gallon EBITDA. During the third
quarter, Darling Ingredients received $62.2
million in cash dividends from the joint venture, and
$163.6 million in cash dividends year
to date.
"Extreme volatility in the global petroleum market and swift
declines in RINs and LCFS prices created headwinds in our Fuel
business during 3Q," Stuewe said. "A recent decline in fat prices
have shown that new renewable diesel capacity is not coming on line
as soon as projected. Despite these headwinds, DGD is still
performing above investment case returns."
Combined adjusted EBITDA for the third quarter 2023 was
$334.3 million, compared to
$394.7 million for the same period in
2022. On a year-to-date basis, combined adjusted EBITDA totaled
$1.26 billion, as compared to
$1.13 billion for the same period in
2022.
As of Sept. 30, 2023, Darling
Ingredients had $119.0 million in
cash and cash equivalents, and $1
billion available under its committed revolving credit
agreement. Total debt outstanding as of Sept. 30, 2023, was $4.4
billion. The leverage ratio as measured by the company's
bank covenant was 3.25X as of Sept. 30,
2023. Capital expenditures were $146.2 million for the third quarter 2023, and
$380.6 million for the first nine
months ended Sept. 30, 2023.
The company guidance for fiscal year 2023 is $1.6 to $1.7
billion combined adjusted EBITDA.
Segment Financial Tables (in thousands,
unaudited)
|
Feed
Ingredients
|
Food
Ingredients
|
Fuel
Ingredients
|
Corporate
|
Total
|
Three Months Ended
September 30, 2023
|
|
|
|
|
|
Net sales
|
$ 1,047,796
|
$
455,744
|
$
121,664
|
$
-
|
$ 1,625,204
|
Cost of sales and
operating expenses
|
804,312
|
338,208
|
96,213
|
-
|
1,238,733
|
Gross
Margin
|
$
243,484
|
$
117,536
|
$
25,451
|
$
-
|
$
386,471
|
|
|
|
|
|
|
Gross Margin
%
|
23.2 %
|
25.8 %
|
20.9 %
|
-
|
23.8 %
|
|
|
|
|
|
|
Loss/(gain) on sale of
assets
|
833
|
117
|
(21)
|
-
|
929
|
Selling, general and
administrative expenses
|
80,985
|
31,463
|
5,666
|
19,583
|
137,697
|
Acquisition and
integration costs
|
-
|
-
|
-
|
3,430
|
3,430
|
Change in fair value of
contingent consideration
|
(5,559)
|
-
|
-
|
-
|
(5,559)
|
Depreciation and
amortization
|
88,954
|
25,418
|
9,026
|
2,596
|
125,994
|
Equity in net income of
Diamond Green Diesel
|
-
|
-
|
54,389
|
-
|
54,389
|
Segment Operating
Income/(Loss)
|
78,271
|
60,538
|
65,169
|
(25,609)
|
178,369
|
|
|
|
|
|
|
Equity in Net Income of
Unconsolidated Subs
|
1,534
|
-
|
-
|
-
|
1,534
|
Segment
Income/(Loss)
|
$
79,805
|
$
60,538
|
$
65,169
|
$
(25,609)
|
$
179,903
|
|
|
|
|
|
|
Segment
EBITDA
|
161,666
|
85,956
|
19,806
|
(19,583)
|
247,845
|
DGD Adjusted EBITDA
(Darling's Share)
|
-
|
-
|
86,450
|
-
|
86,450
|
Combined Adjusted
EBITDA
|
$
161,666
|
$
85,956
|
$
106,256
|
$
(19,583)
|
$
334,295
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Feed
Ingredients
|
Food
Ingredients
|
Fuel
Ingredients
|
Corporate
|
Total
|
Three Months Ended
October 1, 2022
|
|
|
|
|
|
Net Sales
|
$ 1,273,142
|
$
347,902
|
$
126,555
|
$
-
|
$ 1,747,599
|
Cost of sales and
operating expenses
|
1,012,899
|
256,557
|
101,781
|
-
|
1,371,237
|
Gross
Margin
|
260,243
|
91,345
|
24,774
|
-
|
376,362
|
|
|
|
|
|
|
Gross Margin
%
|
20.4 %
|
26.3 %
|
19.6 %
|
-
|
21.5 %
|
|
|
|
|
|
|
Gain on sale of
assets
|
(2,290)
|
(809)
|
(17)
|
-
|
(3,116)
|
Selling, general and
administrative expenses
|
63,973
|
23,909
|
1,724
|
15,474
|
105,080
|
Acquisition and
integration costs
|
-
|
-
|
-
|
4,503
|
4,503
|
Depreciation and
amortization
|
80,679
|
14,408
|
7,284
|
2,607
|
104,978
|
Equity in net income of
Diamond Green Diesel
|
-
|
-
|
103,414
|
-
|
103,414
|
Segment Operating
Income/(Loss)
|
117,881
|
53,837
|
119,197
|
(22,584)
|
268,331
|
|
|
|
|
|
|
Equity in Net Income of
Unconsolidated Subs
|
2,301
|
-
|
-
|
-
|
2,301
|
Segment
Income/(Loss)
|
$
120,182
|
$
53,837
|
$
119,197
|
$
(22,584)
|
$
270,632
|
|
|
|
|
|
|
Segment
EBITDA
|
198,560
|
68,245
|
23,067
|
(15,474)
|
274,398
|
DGD Adjusted EBITDA
(Darling's Share)
|
-
|
-
|
120,333
|
-
|
120,333
|
Combined Adjusted
EBITDA
|
$
198,560
|
$
68,245
|
$
143,400
|
$
(15,474)
|
$
394,731
|
|
Segment Financial Tables (in thousands,
unaudited)
|
Feed
Ingredients
|
Food
Ingredients
|
Fuel
Ingredients
|
Corporate
|
Total
|
Nine Months Ended
September 30, 2023
|
|
|
|
|
|
Net sales
|
$ 3,426,950
|
$ 1,328,229
|
$
418,818
|
$
-
|
$ 5,173,997
|
Cost of sales and
operating expenses
|
2,630,797
|
999,418
|
335,193
|
-
|
3,965,408
|
Gross
Margin
|
$
796,153
|
$
328,811
|
$
83,625
|
$
-
|
$
1,208,589
|
|
|
|
|
|
|
Gross Margin
%
|
23.2 %
|
24.8 %
|
20.0 %
|
-
|
23.4 %
|
|
|
|
|
|
|
Loss/(gain) on sale of
assets
|
813
|
99
|
(51)
|
-
|
861
|
Selling, general and
administrative expenses
|
233,082
|
98,269
|
16,829
|
61,734
|
409,914
|
Restructuring and asset
impairment charges
|
92
|
5,328
|
-
|
-
|
5,420
|
Acquisition and
integration costs
|
-
|
-
|
-
|
12,158
|
12,158
|
Change in fair value of
contingent consideration
|
(13,058)
|
-
|
-
|
-
|
(13,058)
|
Depreciation and
amortization
|
261,849
|
68,336
|
25,986
|
7,915
|
364,086
|
Equity in net income of
Diamond Green Diesel
|
-
|
-
|
361,690
|
-
|
361,690
|
Segment Operating
Income/(Loss)
|
313,375
|
156,779
|
402,551
|
(81,807)
|
790,898
|
|
|
|
|
|
|
Equity in Net Income of
Unconsolidated Subs
|
3,503
|
-
|
-
|
-
|
3,503
|
Segment
Income/(Loss)
|
$
316,878
|
$
156,779
|
$
402,551
|
$
(81,807)
|
$
794,401
|
|
|
|
|
|
|
Segment
EBITDA
|
562,258
|
230,443
|
66,847
|
(61,734)
|
797,814
|
DGD Adjusted EBITDA
(Darling's Share)
|
-
|
-
|
463,171
|
-
|
463,171
|
Combined Adjusted
EBITDA
|
$
562,258
|
$
230,443
|
$
530,018
|
$
(61,734)
|
$
1,260,985
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Feed
Ingredients
|
Food
Ingredients
|
Fuel
Ingredients
|
Corporate
|
Total
|
Nine Months Ended
October 1, 2022
|
|
|
|
|
|
Net Sales
|
$ 3,322,927
|
$ 1,071,897
|
$
369,297
|
$
-
|
$ 4,764,121
|
Cost of sales and
operating expenses
|
2,522,728
|
807,833
|
292,760
|
-
|
3,623,321
|
Gross
Margin
|
800,199
|
264,064
|
76,537
|
-
|
1,140,800
|
|
|
|
|
|
|
Gross Margin
%
|
24.1 %
|
24.6 %
|
20.7 %
|
-
|
23.9 %
|
|
|
|
|
|
|
Gain on sale of
assets
|
(3,595)
|
(891)
|
(74)
|
-
|
(4,560)
|
Selling, general and
administrative expenses
|
185,045
|
73,608
|
9,921
|
46,314
|
314,888
|
Restructuring and asset
impairment charges
|
8,557
|
-
|
-
|
-
|
8,557
|
Acquisition and
integration costs
|
-
|
-
|
-
|
13,634
|
13,634
|
Depreciation and
amortization
|
203,967
|
44,307
|
20,894
|
8,169
|
277,337
|
Equity in net income of
Diamond Green Diesel
|
-
|
-
|
248,898
|
-
|
248,898
|
Segment Operating
Income/(Loss)
|
406,225
|
147,040
|
294,694
|
(68,117)
|
779,842
|
|
|
|
|
|
|
Equity in Net Income of
Unconsolidated Subs
|
5,933
|
-
|
-
|
-
|
5,933
|
Segment
Income/(Loss)
|
$
412,158
|
$
147,040
|
$
294,694
|
$
(68,117)
|
$
785,775
|
|
|
|
|
|
|
Segment
EBITDA
|
618,749
|
191,347
|
66,690
|
(46,314)
|
830,472
|
DGD Adjusted EBITDA
(Darling's Share)
|
-
|
-
|
297,503
|
-
|
297,503
|
Combined Adjusted
EBITDA
|
$
618,749
|
$
191,347
|
$
364,193
|
$
(46,314)
|
$
1,127,975
|
|
Segment EBITDA consists of segment income (loss), less equity in
net income/loss from unconsolidated subsidiaries, less equity in
net income of Diamond Green Diesel,
plus depreciation and amortization, acquisition and integration
costs, restructuring and asset impairment charges, change in fair
value of contingent consideration, plus Darling's share of DGD
Adjusted EBITDA.
Darling Ingredients
Inc. and Subsidiaries
|
Consolidated Balance
Sheets
|
September 30, 2023
and December 31, 2022
|
(in
thousands)
|
|
|
|
|
|
|
|
|
|
|
September 30,
2023
|
December 31,
2022
|
ASSETS
|
|
(unaudited)
|
|
Current
assets:
|
|
|
|
Cash and cash
equivalents
|
|
$
118,977
|
$
127,016
|
Restricted
cash
|
|
304
|
315
|
Accounts receivable,
net
|
|
735,582
|
676,573
|
Inventories
|
|
822,765
|
673,621
|
Prepaid
expenses
|
|
101,559
|
85,665
|
Income taxes
refundable
|
|
25,689
|
18,583
|
Other current
assets
|
|
38,119
|
56,324
|
Total current
assets
|
|
1,842,995
|
1,638,097
|
|
|
|
|
Property, plant and
equipment, net
|
|
2,798,727
|
2,462,082
|
Intangible assets,
net
|
|
1,091,446
|
865,122
|
Goodwill
|
|
2,447,376
|
1,970,377
|
Investment in
unconsolidated subsidiaries
|
|
2,164,182
|
1,926,395
|
Operating lease
right-of-use assets
|
|
202,947
|
186,141
|
Other assets
|
|
238,053
|
136,268
|
Deferred income
taxes
|
|
24,611
|
17,888
|
|
|
$
10,810,337
|
$
9,202,370
|
LIABILITIES AND
STOCKHOLDERS' EQUITY
|
|
|
|
Current
liabilities:
|
|
|
|
Current portion of
long-term debt
|
|
$
73,862
|
$
69,846
|
Accounts payable,
principally trade
|
|
394,748
|
472,491
|
Income taxes
payable
|
|
18,294
|
44,851
|
Current operating lease
liabilities
|
|
52,378
|
49,232
|
Accrued
Expenses
|
|
494,421
|
432,023
|
Total current
liabilities
|
|
1,033,703
|
1,068,443
|
Long-term debt, net of
current portion
|
|
4,338,126
|
3,314,969
|
Long-term operating
lease liabilities
|
|
154,858
|
141,703
|
Other non-current
liabilities
|
|
313,889
|
298,933
|
Deferred income
taxes
|
|
502,779
|
481,832
|
Total
liabilities
|
|
6,343,355
|
5,305,880
|
Commitments and
contingencies
|
|
|
|
Stockholders'
equity:
|
|
|
|
Common stock, $0.01 par
value;
|
|
1,744
|
1,736
|
Additional paid-in
capital
|
|
1,691,636
|
1,660,084
|
Treasury stock, at
cost
|
|
(628,991)
|
(554,451)
|
Accumulated other
comprehensive loss
|
|
(332,413)
|
(383,874)
|
Retained
earnings
|
|
3,648,738
|
3,085,528
|
Total Darling's
stockholders' equity
|
|
4,380,714
|
3,809,023
|
Noncontrolling
interests
|
|
86,268
|
87,467
|
Total Stockholders'
Equity
|
|
4,466,982
|
3,896,490
|
|
|
$
10,810,337
|
$
9,202,370
|
Darling Ingredients
Inc. and Subsidiaries
|
Consolidated
Operating Results
|
For the Three and
Nine Months Ended September 30, 2023 and October 1,
2022
|
(in thousands, except
per share data)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
Nine Months
Ended
|
|
|
|
(unaudited)
|
|
$ Change
|
|
(unaudited)
|
|
$ Change
|
|
|
|
September 30
|
|
October
1,
|
|
Favorable
|
|
September 30
|
|
October
1,
|
|
Favorable
|
|
|
|
2023
|
|
2022
|
|
(Unfavorable)
|
|
2023
|
|
2022
|
|
(Unfavorable)
|
|
Net sales
|
$
1,625,204
|
|
$
1,747,599
|
|
$
(122,395)
|
|
$
5,173,997
|
|
$
4,764,121
|
|
$
409,876
|
|
Costs and
expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of sales and
operating expenses
|
1,238,733
|
|
1,371,237
|
|
132,504
|
|
3,965,408
|
|
3,623,321
|
|
(342,087)
|
|
|
Loss/(gain) on sale of
assets
|
929
|
|
(3,116)
|
|
(4,045)
|
|
861
|
|
(4,560)
|
|
(5,421)
|
|
|
Selling, general and
administrative expenses
|
137,697
|
|
105,080
|
|
(32,617)
|
|
409,914
|
|
314,888
|
|
(95,026)
|
|
|
Restructuring and asset
impairment charges
|
-
|
|
-
|
|
-
|
|
5,420
|
|
8,557
|
|
3,137
|
|
|
Acquisition and
integration costs
|
3,430
|
|
4,503
|
|
1,073
|
|
12,158
|
|
13,634
|
|
1,476
|
|
|
Change in fair value of
contingent consideration
|
(5,559)
|
|
-
|
|
5,559
|
|
(13,058)
|
|
-
|
|
13,058
|
|
|
Depreciation and
amortization
|
125,994
|
|
104,978
|
|
(21,016)
|
|
364,086
|
|
277,337
|
|
(86,749)
|
|
Total costs and
expenses
|
1,501,224
|
|
1,582,682
|
|
81,458
|
|
4,744,789
|
|
4,233,177
|
|
(511,612)
|
|
|
Equity in net income of
Diamond Green Diesel
|
54,389
|
|
103,414
|
|
(49,025)
|
|
361,690
|
|
248,898
|
|
112,792
|
|
Operating
income
|
178,369
|
|
268,331
|
|
(89,962)
|
|
790,898
|
|
779,842
|
|
11,056
|
|
Other
expense:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest
expense
|
(70,278)
|
|
(39,816)
|
|
(30,462)
|
|
(190,770)
|
|
(79,427)
|
|
(111,343)
|
|
|
Foreign currency
gain/(loss)
|
845
|
|
(493)
|
|
1,338
|
|
8,339
|
|
(6,005)
|
|
14,344
|
|
|
Other income/(expense),
net
|
2,247
|
|
(2,807)
|
|
5,054
|
|
13,485
|
|
(3,851)
|
|
17,336
|
|
Total other
expense
|
(67,186)
|
|
(43,116)
|
|
(24,070)
|
|
(168,946)
|
|
(89,283)
|
|
(79,663)
|
|
Equity in net
income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
of other unconsolidated
subsidiaries
|
1,534
|
|
2,301
|
|
(767)
|
|
3,503
|
|
5,933
|
|
(2,430)
|
|
Income before income
taxes
|
112,717
|
|
227,516
|
|
(114,799)
|
|
625,455
|
|
696,492
|
|
(71,037)
|
|
Income tax
expense/(benefit)
|
(15,364)
|
|
35,215
|
|
50,579
|
|
52,322
|
|
108,631
|
|
56,309
|
|
Net income
|
128,081
|
|
192,301
|
|
(64,220)
|
|
573,133
|
|
587,861
|
|
(14,728)
|
|
Net income attributable
to
|
|
|
|
|
|
|
|
|
|
|
|
|
|
noncontrolling
interests
|
(3,055)
|
|
(1,220)
|
|
(1,835)
|
|
(9,923)
|
|
(6,731)
|
|
(3,192)
|
|
Net income attributable
to Darling
|
$
125,026
|
|
$
191,081
|
|
$
(66,055)
|
|
$
563,210
|
|
$
581,130
|
|
$
(17,920)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic income per
share:
|
$
0.78
|
|
$
1.19
|
|
$
(0.41)
|
|
$
3.52
|
|
$
3.60
|
|
$
(0.08)
|
|
Diluted income per
share:
|
$
0.77
|
|
$
1.17
|
|
$
(0.40)
|
|
$
3.47
|
|
$
3.54
|
|
$
(0.07)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of diluted
common shares:
|
162,425
|
|
163,635
|
|
|
|
162,537
|
|
164,327
|
|
|
|
Darling Ingredients
Inc. and Subsidiaries
|
Consolidated
Statement of Cash Flows
|
For the Nine Months
Ended September 30, 2023 and October 1, 2022
|
(in
thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
(unaudited)
|
|
|
|
|
|
September
30,
|
|
October 1,
|
|
Cash flows from
operating activities:
|
2023
|
|
2022
|
|
|
Net income
|
|
$ 573,133
|
|
$
587,861
|
|
|
Adjustments to
reconcile net income to net cash provided by operating
activities:
|
|
|
|
|
|
|
Depreciation and
amortization
|
364,086
|
|
277,337
|
|
|
|
Loss/(gain) on sale of
assets
|
861
|
|
(4,560)
|
|
|
|
Asset
Impairment
|
|
-
|
|
8,557
|
|
|
|
Change in fair value of
contingent consideration
|
(13,058)
|
|
-
|
|
|
|
Gain on insurance
proceeds from insurance settlements
|
(13,836)
|
|
-
|
|
|
|
Deferred
taxes
|
|
(18,192)
|
|
42,120
|
|
|
|
Decrease in long-term
pension liability
|
809
|
|
(2,753)
|
|
|
|
Stock-based
compensation expense
|
27,046
|
|
18,884
|
|
|
|
Deferred loan cost
amortization
|
4,674
|
|
3,552
|
|
|
|
Equity in net income of
Diamond Green Diesel and other unconsolidated
subsidiaries
|
(365,193)
|
|
(254,831)
|
|
|
|
Distribution of
earnings from Diamond Green Diesel and other unconsolidated
subsidiaries
|
168,277
|
|
95,546
|
|
|
|
Changes in operating
assets and liabilities, net of effects from
acquisitions:
|
|
|
|
|
|
|
Accounts
receivable
|
|
25,731
|
|
(45,457)
|
|
|
|
Income taxes
refundable/payable
|
(39,123)
|
|
(2,004)
|
|
|
|
Inventories and prepaid
expenses
|
(22,694)
|
|
(140,971)
|
|
|
|
Accounts payable and accrued
expenses
|
(39,570)
|
|
78,656
|
|
|
|
Other
|
|
29,337
|
|
(23,499)
|
|
|
|
|
Net cash provided by
operating activities
|
682,288
|
|
638,438
|
|
Cash flows from
investing activities:
|
|
|
|
|
|
Capital
expenditures
|
|
(380,556)
|
|
(257,120)
|
|
|
Acquisitions, net of
cash acquired
|
(1,093,183)
|
|
(1,760,139)
|
|
|
Investment in Diamond
Green Diesel
|
(75,000)
|
|
(239,750)
|
|
|
Investment in other
unconsolidated subsidiaries
|
(27)
|
#
|
-
|
|
|
Loan to Diamond Green
Diesel
|
-
|
|
(25,000)
|
|
|
Loan repayment from
Diamond Green Diesel
|
25,000
|
|
50,000
|
|
|
Gross proceeds from
sale of property, plant and equipment and other assets
|
4,817
|
|
9,430
|
|
|
Proceeds from insurance
settlement
|
13,836
|
|
-
|
|
|
Payments related to
routes and other intangibles
|
(1,521)
|
|
(179)
|
|
|
|
|
Net cash used in
investing activities
|
(1,506,634)
|
|
(2,222,758)
|
|
Cash flows from
financing activities:
|
|
|
|
|
|
Proceeds from long-term
debt
|
812,348
|
|
1,929,870
|
|
|
Payments on long-term
debt
|
|
(102,463)
|
|
(39,511)
|
|
|
Borrowings from
revolving credit facility
|
1,972,953
|
|
1,684,840
|
|
|
Payments on revolving
credit facility
|
(1,707,840)
|
|
(1,743,523)
|
|
|
Net cash overdraft
financing
|
|
6,008
|
|
21,090
|
|
|
Deferred loan
costs
|
|
(9)
|
|
(16,758)
|
|
|
Repurchase of common
stock
|
(52,941)
|
|
(103,061)
|
|
|
Minimum withholding
taxes paid on stock awards
|
(17,278)
|
|
(46,394)
|
|
|
Distributions to
noncontrolling interests
|
(8,628)
|
|
(3,653)
|
|
|
|
|
Net cash provided by
financing activities
|
902,150
|
|
1,682,900
|
|
Effect of exchange rate
changes on cash flows
|
25,559
|
|
(20,295)
|
|
Net increase in cash,
cash equivalents and restricted cash
|
103,363
|
|
78,285
|
|
Cash, cash equivalents
and restricted cash at beginning of period
|
150,168
|
|
69,072
|
|
Cash, cash equivalents
and restricted cash at end of period
|
$ 253,531
|
|
$
147,357
|
|
Diamond Green Diesel
Joint Venture
|
Consolidated Balance
Sheets
|
September 30, 2023
and December 31, 2022
|
(in
thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
September
30,
|
|
December 31,
|
|
|
|
|
|
2023
|
|
2022
|
|
Assets:
|
|
|
|
(unaudited)
|
|
|
Total current
assets
|
|
$
1,641,934
|
|
$
1,304,805
|
|
|
Property, plant and
equipment, net
|
|
3,831,367
|
#
|
3,866,854
|
|
|
Other assets
|
|
94,149
|
|
61,665
|
|
|
|
Total assets
|
|
$
5,567,450
|
|
$
5,233,324
|
|
|
|
|
|
|
|
|
|
Liabilities and
members' equity:
|
|
|
|
|
|
|
Total current portion
of long term debt
|
|
$
228,365
|
|
$
217,066
|
|
|
Total other current
liabilities
|
|
391,027
|
#
|
515,023
|
|
|
Total long term
debt
|
|
744,451
|
|
774,783
|
|
|
Total other long term
liabilities
|
|
16,408
|
|
17,249
|
|
|
Total members'
equity
|
|
4,187,199
|
|
3,709,203
|
|
|
|
Total liabilities and
members' equity
|
|
$
5,567,450
|
|
$
5,233,324
|
|
Diamond Green Diesel
Joint Venture
|
Operating Financial
Results
|
For the Three and
Nine Months Ended September 30, 2023 and September 30,
2022
|
(in
thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
Nine Months
Ended
|
|
|
|
|
(unaudited)
|
|
$ Change
|
|
(unaudited)
|
|
$ Change
|
|
|
|
|
September
30,
|
|
September
30,
|
|
Favorable
|
|
September
30,
|
|
September
30,
|
|
Favorable
|
|
|
|
|
2023
|
|
2022
|
|
(Unfavorable)
|
|
2023
|
|
2022
|
|
(Unfavorable)
|
|
Revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
revenues
|
$
1,430,666
|
|
$
1,470,036
|
|
$
(39,370)
|
|
$
5,356,827
|
|
$
3,906,614
|
|
$ 1,450,213
|
|
Expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total costs and
expenses less
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
depreciation,
amortization and
accretion expense
|
1,257,766
|
|
1,229,371
|
|
(28,395)
|
|
4,430,485
|
|
3,311,608
|
|
(1,118,877)
|
|
|
Depreciation,
amortization and
|
55,118
|
|
31,793
|
|
(23,325)
|
|
172,040
|
|
89,602
|
|
(82,438)
|
|
|
|
accretion
expense
|
|
|
|
|
|
|
|
|
|
|
|
|
Total costs and
expenses
|
1,312,884
|
|
1,261,164
|
|
(51,720)
|
|
4,602,525
|
|
3,401,210
|
|
(1,201,315)
|
|
|
Operating
income
|
117,782
|
|
208,872
|
|
(91,090)
|
|
754,302
|
|
505,404
|
|
248,898
|
|
Other income
|
2,701
|
|
1,215
|
|
1,486
|
|
6,863
|
|
1,926
|
|
4,937
|
|
Interest and debt
expense, net
|
(11,705)
|
|
(3,259)
|
|
(8,446)
|
|
(37,785)
|
|
(9,534)
|
|
(28,251)
|
|
|
Net income
|
$
108,778
|
|
$
206,828
|
|
$
(98,050)
|
|
$ 723,380
|
|
$
497,796
|
|
$
225,584
|
|
|
Darling Ingredients Inc. reports Adjusted EBITDA results, which
is a Non-GAAP financial measure, as a compliment to results
provided in accordance with generally accepted accounting
principles (GAAP) (for additional information, see "Use of Non-GAAP
Financial Measures" included later in this media release). The
Company believes that Adjusted EBITDA provides additional useful
information to investors. Adjusted EBITDA, as the Company uses the
term, is calculated below:
Reconciliation of
Net Income to (Non-GAAP) Adjusted EBITDA and (Non-GAAP)
Pro-Forma
|
Adjusted EBITDA to
Foreign Currency
|
For the Three and
Nine Months Ended September 30, 2023 and October 1,
2022
|
(in
thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
|
Nine Months
Ended
|
|
|
|
(unaudited)
|
|
|
(unaudited)
|
|
Adjusted
EBITDA
|
September
30,
|
|
October 1,
|
|
|
September
30,
|
|
October 1,
|
|
|
|
2023
|
|
2022
|
|
|
2023
|
|
2022
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income attributable
to Darling
|
$
125,026
|
|
$
191,081
|
|
|
$
563,210
|
|
$
581,130
|
|
Depreciation and
amortization
|
125,994
|
|
104,978
|
|
|
364,086
|
|
277,337
|
|
Interest
expense
|
70,278
|
|
39,816
|
|
|
190,770
|
|
79,427
|
|
Income tax
expense/(benefit)
|
(15,364)
|
|
35,215
|
|
|
52,322
|
|
108,631
|
|
Restructuring and asset
impairment charges
|
-
|
|
-
|
|
|
5,420
|
|
8,557
|
|
Acquisition and
integration costs
|
3,430
|
|
4,503
|
|
|
12,158
|
|
13,634
|
|
Change in fair value of
contingent consideration
|
(5,559)
|
|
-
|
|
|
(13,058)
|
|
-
|
|
Foreign currency
loss/(gain)
|
(845)
|
|
493
|
|
|
(8,339)
|
|
6,005
|
|
Other expense/(income),
net
|
(2,247)
|
|
2,807
|
|
|
(13,485)
|
|
3,851
|
|
Equity in net income of
Diamond Green Diesel
|
(54,389)
|
|
(103,414)
|
|
|
(361,690)
|
|
(248,898)
|
|
Equity in net income of
other unconsolidated subsidiaries
|
(1,534)
|
|
(2,301)
|
|
|
(3,503)
|
|
(5,933)
|
|
Net income attributable
to noncontrolling interests
|
3,055
|
|
1,220
|
|
|
9,923
|
|
6,731
|
|
|
Adjusted EBITDA
(Non-GAAP)
|
$
247,845
|
|
$
274,398
|
|
|
$
797,814
|
|
$
830,472
|
|
Foreign currency
exchange impact
|
(8,677)
|
(1)
|
|
|
|
(2,898)
|
(2)
|
|
|
|
Pro forma
Adjusted EBITDA to Foreign Currency (Non-GAAP)
|
$
239,168
|
|
$
274,398
|
|
|
$
794,916
|
|
$
830,472
|
|
DGD Joint Venture
Adjusted EBITDA (Darling's Share)
|
$
86,450
|
|
$
120,333
|
|
|
$
463,171
|
|
$
297,503
|
|
|
|
|
|
|
|
|
|
|
|
|
Darling plus Darling's
share of DGD Joint Venture Adjusted EBITDA
|
$
334,295
|
|
$
394,731
|
|
|
$
1,260,985
|
|
$ 1,127,975
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) The average
rates for the three months ended September 30, 2023 were
€1.00:$1.09, R$1.00:$0.21
|
|
|
|
|
|
|
|
|
|
and
C$1.00:$0.75 as compared to the average rate for the three months
ended October 1, 2022
|
|
|
|
|
|
|
|
|
|
of
€1.00:$1.01, R$1.00:$0.19 and C$1.00:$0.77,
respectively.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(2) The average
rates for the nine months ended September 30, 2023 were
€1.00:$1.08, R$1.00:$0.20
|
|
|
|
|
|
|
|
|
|
and
C$1.00:$0.74 as compared to the average rate for the nine months
ended October 1, 2022
|
|
|
|
|
|
|
|
|
|
of
€1.00:$1.07, R$1.00:$0.19 and C$1.00:$0.78,
respectively.
|
|
|
|
|
|
|
|
|
|
|
About Darling Ingredients
Darling Ingredients Inc.
(NYSE: DAR) is the largest publicly traded company turning edible
by-products and food waste into sustainable products and a leading
producer of renewable energy. Recognized as a sustainability
leader, the company operates more than 260 facilities in 17
countries and repurposes approximately 15% of the world's meat
industry waste streams into value-added products, such as green
energy, renewable diesel, collagen, fertilizer, animal proteins and
meals, and pet food ingredients. To learn more, visit
darlingii.com. Follow us on LinkedIn.
Darling Ingredients Inc. will host a conference call to discuss
the Company's third quarter 2023 financial results at 9 a.m. Eastern Time (8
a.m. Central Time) on Wednesday, Nov.
8, 2023.
To join the call as a participant to ask a question, please
register in advance to receive a confirmation email with the
dial-in number and PIN for immediate access on November 8, 2023, or call 844-868-8847
(United States) or 412-317-6593
(International) and ask for "The Darling Ingredients Call" that
day.
A replay of the call will be available online via the webcast
registration link and via phone at 877-344-7529 (United States), 855-669-9658 (Canada) or 412-317-0088 (International) using
reference passcode 7150600. The phone replay will be available
two hours after the call concludes through November 15, 2023.
Use of Non-GAAP Financial 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 above and represents for any relevant period, net
income/(loss) plus depreciation and amortization, restructuring,
acquisition and integration costs, goodwill and long-lived asset
impairment, change in fair value of contingent consideration,
interest expense, 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.
Pro forma Adjusted EBITDA to Foreign Currency is not a
recognized accounting measurement under GAAP. The Company evaluates
the impact of foreign currency on its adjusted EBITDA. DGD Joint
Venture Adjusted EBITDA (Darling's share) is not reflected in the
Adjusted EBITDA or the Pro forma Adjusted EBITDA to Foreign
Currency (Non-GAAP).
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, 6%
Notes, 5.25% Notes and 3.625% Notes that were outstanding at
September 30, 2023. 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, 6% Notes, 5.25% Notes and 3.625%
Notes, as those definitions permit further adjustments to reflect
certain other nonrecurring 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.
DGD Joint Venture Adjusted EBITDA (Darling's share) is not a
recognized accounting measure under GAAP; it should not be
considered as an alternative to net income or equity in net income
of Diamond Green Diesel, as a
measure of operating results, or as an alternative to cash flow as
a measure of liquidity and is not intended to be a presentation in
accordance with GAAP. The Company calculates DGD Joint Venture
Adjusted EBITDA (Darling's share) by taking DGD's operating income
plus DGD's depreciation, amortization and accretion expense and
then multiplying by 50% to get Darling's share of DGD's EBITDA.
Information reconciling forward-looking combined adjusted EBITDA
to net income is unavailable to the Company without unreasonable
effort. The Company is not able to provide reconciliations of
combined adjusted EBITDA to net income because certain items
required for such reconciliations are outside of the Company's
control and/or cannot be reasonably predicted, such as the impact
of volatile commodity prices on the Company's operations, impact of
foreign currency exchange fluctuations, depreciation and
amortization and the provision for income taxes. Preparation of
such reconciliations for Darling Ingredients Inc. and the Company's
joint venture, Diamond Green Diesel,
would require a forward-looking balance sheet, statement of
operations and statement of cash flows, prepared in accordance with
GAAP for each entity, and such forward-looking financial statements
are unavailable to the Company without unreasonable effort. The
Company provides guidance for its combined adjusted EBITDA outlook
that it believes will be achieved; however, it cannot accurately
predict all the components of the combined adjusted EBITDA
calculation.
EBITDA per gallon is not a recognized accounting measurement
under GAAP; it should not be considered as an alternative to net
income or equity in income of Diamond Green
Diesel, as a measure of operating results, or as an
alternative to cash flow as a measure of liquidity and is not
intended to be a presentation in accordance with GAAP. EBITDA
per gallon is presented here not as an alternative to net income or
equity in income of Diamond Green
Diesel, but rather as a measure of Diamond Green Diesel's operating performance.
Since EBITDA per gallon (generally, net income plus interest
expense, taxes, depreciation and amortization divided by total
gallons sold) is not calculated identically by all companies, this
presentation may not be comparable to EBITDA per gallon
presentations disclosed by other companies. Management believes
that EBITDA per gallon is useful in evaluating Diamond Green Diesel's operating performance
compared to that of other companies in its industry because the
calculation of EBITDA per gallon generally eliminates the effects
of financing, income taxes and certain non-cash and other items
presented on a per gallon basis that may vary for different
companies for reasons unrelated to overall operating
performance.
Cautionary Statements Regarding Forward-Looking Information:
This media release contains 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,"
"guidance," "project," "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 release are forward looking statements. 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. 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 African Swine Fever in China and elsewhere; the occurrence of
pandemics, epidemics or disease outbreaks, such as the 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, a decline in margins on the products produced by the
DGD Joint Venture and issues relating to the announced SAF upgrade
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;
tax changes, such as the introduction of a global minimum tax;
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, including the Russia-Ukraine war and the Israel-Palestinian
conflict; 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, inflation rates, climate conditions, currency exchange
fluctuations, general performance of the U.S. and global economies,
disturbances in world financial, credit, commodities and stock
markets, such as the recent turmoil in the world banking 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 and other risks and uncertainties regarding the
Company, its business and the industries in which it operates, see
the Company's filings with the SEC, including 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 December
31, 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.
Darling Ingredients
Contacts
|
|
Investors:
|
Suann
Guthrie
|
|
Senior VP, Investor
Relations, Sustainability & Communications
|
|
(469)
214-8202; suann.guthrie@darlingii.com
|
|
|
Media:
|
Jillian
Fleming
|
|
Director, Global
Communications
|
|
(972)
541-7115; jillian.fleming@darlingii.com
|
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SOURCE Darling Ingredients Inc.