UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 8-K
CURRENT
REPORT
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
Date of report (Date of earliest event reported) March 1, 2016
DARLING INGREDIENTS INC.
(Exact Name of Registrant as Specified in Charter)
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Delaware |
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001-13323 |
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36-2495346 |
(State or Other Jurisdiction
of Incorporation) |
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(Commission
File Number) |
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(IRS Employer
Identification No.) |
251 OCONNOR RIDGE BLVD., SUITE 300, IRVING, TEXAS 75038
(Address of Principal Executive Offices) (Zip Code)
Registrants telephone number, including area code: (972) 717-0300
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any
of the following provisions (see General Instruction A.2. below):
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Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
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Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
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Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
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Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Item 2.02. |
Results of Operations and Financial Condition. |
On March 1, 2016, Darling
Ingredients Inc. (the Company) issued a press release announcing financial results for the fourth quarter and fiscal year ended January 2, 2016. A copy of this press release is attached hereto as Exhibit 99.1.
The Company will hold a conference call and webcast on Wednesday, March 2, 2016 to discuss these financial results. The Company will have
a slide presentation available to augment managements formal presentation, which will be accessible via the investor relations section of the Companys website. A copy of this slide presentation is attached hereto as Exhibit 99.2.
The Company is making reference to non-GAAP financial measures in both the press release and the conference call. A reconciliation of
these non-GAAP financial measures to the comparable GAAP financial measures is contained in the attached press release.
The information
in this Item 2.02, including the exhibits attached hereto, shall not be deemed filed for purposes of Section 18 of the Securities Exchange Act of 1934, nor shall it be deemed incorporated by reference in any filing under the Securities
Act of 1933, except as shall be expressly set forth by specific reference in such filing.
Item 9.01. |
Financial Statements and Exhibits. |
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99.1 |
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Press Release dated March 1, 2016 (furnished pursuant to Item 2.02). |
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99.2 |
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Slide Presentation for March 2, 2016 Earnings Call (furnished pursuant to Item 2.02). |
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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 hereunto duly authorized.
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DARLING INGREDIENTS INC. |
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Date: March 1, 2016 |
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By: |
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/s/ John F. Sterling |
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John F. Sterling |
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Executive Vice President, General Counsel |
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EXHIBIT LIST
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99.1 |
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Press Release dated March 1, 2016 (furnished pursuant to Item 2.02). |
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99.2 |
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Slide Presentation for March 2, 2016 Earnings Call (furnished pursuant to Item 2.02). |
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Exhibit 99.1 |
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News Release |
DARLING INGREDIENTS INC. REPORTS FOURTH QUARTER AND FISCAL 2015 FINANCIAL RESULTS: HIGHLIGHTS EFFICIENT GROWTH THROUGH DEFLATIONARY
COMMODITY CYCLE AND CONTINUED FOCUS ON DEBT REDUCTION
4th Quarter 2015 Highlights
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Net income of $84.4 million, or $0.52 per GAAP diluted share; $0.54 per (Non-GAAP) Adjusted diluted share |
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Revenue of $809.7 million |
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Food and Fuel Segments contribute solidly
.Feed Segment navigated volatile Q4 pricing |
Fiscal 2015 Highlights
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Consolidated revenue of $3.4 billion |
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Adjusted EBITDA of $412.5 million |
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Full year debt reduction of $118 million |
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Change in working capital cash improvement fiscal 2014 to fiscal 2015 of $72.7 million |
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SG&A reduction of $52 million compared to 2014 |
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Diamond Green Diesel EBITDA $177.0 million for 2015 at entity level; Darlings share $88.5 million for 2015 |
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Completed construction on three plants and one expansion in 2015, two additional plants on schedule for completion during 2016 |
March 1, 2016 IRVING, TEXAS Darling Ingredients Inc. (NYSE: DAR), a global leader in
converting edible and inedible bio-nutrient streams into a wide range of ingredients and specialty products for customers in the pharmaceutical, food, pet food, feed, technical, fuel, bioenergy, and fertilizer industries, today announced financial
results for the fiscal 2015 fourth quarter and year ended January 2, 2016.
For the fourth quarter of 2015, the Company reported net sales of $809.7
million, as compared with net sales of $1 billion for the fourth quarter of 2014. The $190.5 million decrease in net sales is attributable to sustained weakness in global commodity markets and continued FX translation impacts. Overall, global raw
material volumes were stronger year over year. For fiscal 2015, the Company reported net sales of $3.40 billion, as compared with net sales of $3.96 billion for fiscal 2014.
Net income attributable to Darling for the three months ended January 2, 2016, was $84.4 million, or $0.52 per diluted share, compared to a net income of
$69.9 million, or $0.42 per diluted share, for the three months ended January 3, 2015. Adjusted EBITDA for Darling for the three months ended January 2, 2016 was $102.7 million compared to Adjusted EBITDA of $108.7 million for the three
months ended January 3, 2015. The $6.0 million decrease in Adjusted EBITDA is attributable to lower finished product prices in the USA and Canadian rendering businesses and the impact of foreign exchange rates as a function of the strengthening
U.S. dollar as compared mainly to the euro and Canadian dollar.
The Companys ongoing capital allocation initiatives resulted in $42.4 million in
debt reduction in the fourth quarter and $118.0 million for fiscal 2015. Darling continued its emphasis on organic growth in 2015 with the completion of two wet pet food plants, one bakery recycling plant and a major expansion at our Dubuque, Iowa
gelatin plant. We expect these plants, plus two new rendering plants under construction scheduled for completion in the second half of 2016, to contribute meaningful revenue and earnings during 2016.
Comments on the Fourth Quarter and Fiscal 2015 Year End
Randall C. Stuewe, Darlings Ingredients Inc. Chairman and Chief Executive Officer, said of the Companys quarterly and fiscal year performance, 2015
was a year characterized by continued global commodity deflation. Our team delivered solid execution led by international businesses with growth and cost saving efficiencies achieved around the globe. While challenging conditions persisted through
the fourth quarter, we delivered respectable quarterly results and exit 2015 a stronger company, highlighted by lower debt, strong cash flows and strategic investments in new plants and operating efficiencies.
During the fourth quarter, our Food and Fuel segments performed well, generating strong EBITDA margins driven primarily by improved pricing and higher
volumes, but were partially offset by continued FX challenges. In our Feed segment, we successfully navigated some short-term challenges that negatively impacted results, but pricing of these products rebounded nicely in early Q1 2016.
While still early in 2016, our current view is that we will see improved conditions for fats and oils demand globally as we proceed into spring. We
continue to be focused on areas that we can control across all levels of the organization. We believe that the significant cost savings we achieved in 2015 position us for success in 2016. Our focus continues to be on de-levering the balance sheet,
while at the same time preserving the flexibility to continue to identify and execute growth opportunities that will position the Company for future success, concluded Mr. Stuewe.
Operational Update by Segment
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Feed Ingredients Global rendering experienced a volatile commodity environment throughout 2015; presenting challenging deflationary pricing and continued strong slaughter volumes. The segments
performance proved resilient through third quarter with stable margins followed by a fourth quarter demonstrating short-term challenges. Fat prices felt heavy pressure in the USA, but are now recovering with pricing stabilizing in Europe.
Protein felt some pressure worldwide as large grain supplies and strong slaughter resulted in market surpluses. Restaurant services continued to improve spreads, but pricing pressure remained through fourth quarter. Bakery Feeds and Specialty
Proteins delivered consistent performances. Our new bakery feeds plant in Bryan, Texas is in operation. Two new wet pet food plants are now running after some unexpected start-up costs and are well positioned for 2016. |
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Food Ingredients Strong performance by the gelatin business in 2015 with new USA capacity on line and a solid performance from China with increased demand. Edible fats performance improved as
margins stabilized. CTH endured an Asian border closure during 2015 but now showing improved margins on hog casings and further development in the marketing of edible products. |
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Fuel Ingredients Rendac, our disposal rendering operation in Europe, continued to deliver a solid performance in 2015 with strong volumes. The Ecoson, bio-phosphate operation in Europe, experienced
a fire in fourth quarter but business interruption and casualty insurance will mitigate the impact. Canadian biofuels delivered improved performance with the reinstatement of the blenders tax credits in December of 2015. The prospective 2016
blenders tax credit is expected to improve quarterly results within the Canadian biofuels operation. |
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Diamond Green Diesel Joint Venture - Continued strong operational performance in the fourth quarter and full year 2015, producing 159 million gallons of renewable diesel for the year. The reinstatement of
the U.S. Biofuels Tax Extenders package will provide approximately $157.0 million to Diamond Green Diesels bottom line bringing the total EBITDA to $177.0 million from record earnings. Darlings share was $88.5 million for 2015.
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Reconciliation of Fourth Quarter Net Income to Adjusted EBITDA (Non-GAAP) and Pro Forma Adjusted EBITDA
Darling Ingredients Inc. reports Adjusted EBITDA results, which is a Non-GAAP financial measure, as a complement to results provided in accordance
with generally accepted accounting principles (GAAP). The Company believes that Adjusted EBITDA provides additional useful information to investors. As the Company uses the term, Adjusted EBITDA, is calculated below:
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Three Months Ended - Year over Year |
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Adjusted EBITDA (U.S. dollars in
thousands) |
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January 2, 2016 |
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January 3, 2015 |
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Net income attributable to Darling |
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$ |
84,429 |
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$ |
69,943 |
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Depreciation and amortization |
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69,934 |
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69,039 |
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Interest expense |
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23,308 |
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24,633 |
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Income tax expense/(benefit) |
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(1,138 |
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4,792 |
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Foreign currency loss/(gain) |
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1,612 |
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1,267 |
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Other expense/(income), net |
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6,135 |
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(271 |
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Equity in net (income)/loss of unconsolidated subsidiaries |
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(83,073 |
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(59,547 |
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Net (loss)/income attributable to noncontrolling interests |
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1,446 |
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(1,155 |
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Adjusted EBITDA |
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$ |
102,653 |
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$ |
108,701 |
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Acquisition and integration-related expenses |
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492 |
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2,363 |
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Pro forma Adjusted EBITDA (Non-GAAP) |
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$ |
103,145 |
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$ |
111,064 |
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Foreign currency exchange impact |
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11,227 |
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Pro forma Adjusted EBITDA to Foreign Currency (Non-GAAP) (1) |
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114,372 |
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111,064 |
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DGD Joint Venture Adjusted EBITDA (Darlings share) (2) |
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$ |
86,548 |
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$ |
63,757 |
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(1) |
Foreign currency exchange rate held constant at euro/USD 1.093432 for the January 3, 2015 comparable quarter. |
(2) |
Darlings Pro forma Adjusted EBITDA (Non-GAAP) in the above table does not include the DGD Joint Venture Adjusted EBITDA (Darlings share) if we had consolidated the DGD Joint Venture.
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For the three months ended January 2, 2016, the Company generated Adjusted EBITDA of $102.7 million, as compared to $108.7 million
in the same period in fiscal 2014. The decrease was primarily due to lower finished product prices attributable to lower global competing ingredients prices and the impact of foreign exchange rates as a function of the strengthening U.S. dollar as
compared mainly to the euro and Canadian dollar, which were partially offset by an increase in raw material volumes. As a result of the strengthened U.S. dollar, the above Pro forma Adjusted EBITDA results for the three months ended January 2,
2016 would have been $114.4 million when taking into consideration the change in average foreign exchange (FX) fluctuations of $11.2 million as compared to $111.1 million for the same period in fiscal 2014, an increase of $3.3 million.
Financial Update by Segment
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Feed Ingredients |
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Three Months Ended |
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Fiscal Year Ended |
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($ thousands) |
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January 2, 2016 |
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January 3, 2015 |
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January 2, 2016 |
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January 3, 2015 |
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Net Sales |
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$ |
472,192 |
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$ |
605,976 |
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$ |
2,074,333 |
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$ |
2,421,462 |
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Segment operating income |
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$ |
10,031 |
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$ |
33,636 |
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$ |
116,453 |
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$ |
192,272 |
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EBITDA |
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$ |
54,499 |
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$ |
76,362 |
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$ |
282,307 |
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$ |
351,143 |
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Feed Ingredients operating income for the fourth quarter 2015 was $10.0 million, a decrease of $23.6 million as compared to the fourth quarter of 2014. The decrease in operating income is mainly attributable to overall
lower finished product pricing and start-up costs related to the two new wet pet food plants. |
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Feed Ingredients operating income for fiscal year 2015 was $116.5 million, a decrease of $75.8 million as compared to fiscal year 2014. Lower earnings in Feed Ingredients segment were due to significant decline in
proteins, fats, used cooking oil and bakery finished product prices attributable to overall lower feed ingredient prices as a result of the global record-setting grain production and increased volumes from the slaughter industry, which increased
supply above demand levels. |
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Food Ingredients |
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Three Months Ended |
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Fiscal Year Ended |
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($ thousands) |
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January 2, 2016 |
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January 3, 2015 |
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January 2, 2016 |
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January 3, 2015 |
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Net Sales |
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$ |
272,177 |
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$ |
322,048 |
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$ |
1,094,918 |
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$ |
1,248,352 |
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Segment operating income |
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$ |
23,317 |
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$ |
13,657 |
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$ |
61,238 |
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$ |
26,874 |
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EBITDA |
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$ |
39,008 |
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$ |
31,359 |
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$ |
128,055 |
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$ |
100,148 |
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Food Ingredients operating income for fourth quarter 2015 was $23.3 million, an increase of $9.6 million as compared to the fourth quarter of 2014. The increased earnings are mainly attributable to improved performance
in the gelatin business and more normalized margins within the European edible fats business. |
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Food Ingredients operating income for fiscal year 2015 was $61.2 million, an increase of $34.3 million as compared to fiscal 2014. The gelatin business performance improved as compared to the prior year as a result
of increased demand in China and lower raw material prices in Europe. The European edible fats earnings also improved over the prior year due to more normalized margins. |
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Fuel Ingredients |
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Three Months Ended |
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Fiscal Year Ended |
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($ thousands) |
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January 2, 2016 |
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January 3, 2015 |
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January 2, 2016 |
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January 3, 2015 |
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Net Sales |
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$ |
65,306 |
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$ |
72,180 |
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$ |
228,195 |
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$ |
286,629 |
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Segment operating income |
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$ |
12,382 |
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$ |
10,936 |
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$ |
17,159 |
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$ |
21,287 |
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EBITDA |
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$ |
19,134 |
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$ |
16,858 |
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$ |
43,870 |
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$ |
49,185 |
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Exclusive of the DGD Joint Venture, Fuel Ingredients operating income for fourth quarter 2015 was $12.4 million, an increase of $1.5 million as compared to the fourth quarter of 2014. |
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Exclusive of the DGD Joint Venture, Fuel Ingredients operating income for fiscal year 2015 was $17.2 million, a decrease of $4.1 million as compared to fiscal year 2014. The decrease in earnings is mainly attributable
to lower earnings from the Canadian biodiesel operation in 2015. |
Results of Operations Fiscal Year Ended January 2, 2016 Compared to Fiscal Year Ended
January 3, 2015
Net income attributable to Darling for the fiscal year ended January 2, 2016 was $78.5 million, or $0.48 per diluted
share, as compared to net income of $64.2 million, or $0.39 per diluted share, for the fiscal year ended January 3, 2015. The results for the fiscal 2015 and 2014, respectively, include the following after-tax costs:
Fiscal 2015
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$4.8 million ($0.03 per diluted share) associated with the integration of VION Ingredients and Rothsay, staff reduction in Angoulême, France and the implementation of internal controls over financial reporting per
the Sarbanes-Oxley Act of 2002 for VION Ingredients; |
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$6.2 million ($0.03 per diluted share) related to the write-off of deferred loan costs associated with the retirement of the Companys European portion of its term loan B note on June 3, 2015; and
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$2.8 million ($0.02 per diluted share) related to the non-operating casualty losses in Canada, the Netherlands and Brazil and a legal settlement. |
Fiscal 2014
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$31.3 million ($0.19 per diluted share) related to a non-cash inventory step-up associated with the required purchase accounting for the VION Acquisition related to the portion of acquired inventory sold during the
period; |
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$19.9 million ($0.12 per diluted share) related to the redemption premium and write-off of deferred loan costs associated with the retirement of the Companys 8.5% Senior Notes on February 7, 2014;
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$21.0 million ($0.13 per diluted share) associated with the acquisition and integration of Rothsay and VION Ingredients during the period; and |
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$7.9 million ($0.05 per diluted share) related to certain euro forward contracts entered into to hedge against foreign exchange risks related to the closing of the VION Acquisition. |
Excluding the items listed above, net income and diluted earnings per common share would have been $92.3 million, or $0.56 per diluted share, respectively,
for the year ended January 2, 2016, as compared to $144.3 million, or $0.88 per diluted share, respectively, for the year ended January 3, 2015. When comparing the year ended January 2, 2016 to the year ended January 3, 2015 this
would have resulted in a $52.0 million decrease in net income. The decrease is attributable to lower finished product prices and the impact of foreign exchange rates as a function of the strengthening U.S. dollar as compared mainly to the euro and
Canadian dollar, which were partially offset by an increase in raw material volumes.
Reconciliation of Net Income to (Non-GAAP) Adjusted EBITDA and (Non-GAAP) Pro Forma Adjusted EBITDA
Year Ended
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Fiscal Year Ended |
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Adjusted EBITDA (U.S. dollars in
thousands) |
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January 2, 2016 |
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January 3, 2015 |
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Net income attributable to Darling |
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$ |
78,531 |
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$ |
64,215 |
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Depreciation and amortization |
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269,904 |
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269,517 |
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Interest expense |
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105,530 |
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135,416 |
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Income tax expense |
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13,501 |
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13,141 |
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Foreign currency loss |
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4,911 |
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13,548 |
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Other expense/(income), net |
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6,839 |
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(299 |
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Equity in net (income)/loss of unconsolidated subsidiaries |
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(73,416 |
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(65,609 |
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Net income attributable to noncontrolling interests |
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6,748 |
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4,096 |
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Adjusted EBITDA (Non-GAAP) |
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$ |
412,548 |
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$ |
434,025 |
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Non-cash inventory step-up associated with VION Acquisition |
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49,803 |
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Acquisition and integration-related expenses |
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8,299 |
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24,667 |
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Darling Ingredients International - 13th week (1) |
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4,100 |
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Pro forma Adjusted EBITDA (Non-GAAP) |
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$ |
420,847 |
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$ |
512,595 |
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Foreign currency exchange impact (2) |
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48,961 |
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Pro forma Adjusted EBITDA to Foreign Currency (Non-GAAP) |
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$ |
469,808 |
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$ |
512,595 |
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DGD Joint Venture Adjusted EBITDA (Darlings share) (3) |
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$ |
88,494 |
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$ |
81,639 |
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(1) |
January 7, 2014 closed on VION Ingredients, thus the 13th week would be EBITDA adjusted for January 1, 2014 through January 7, 2014. |
(2) |
Foreign currency exchange rate held constant at euro/USD 1.31878 for comparable twelve months ended January 3, 2015. |
(3) |
Darlings Pro forma Adjusted EBITDA (Non-GAAP) in the above table does not include the DGD Joint Venture Adjusted EBITDA (Darlings share) if we had consolidated the DGD Joint Venture.
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For the year ended January 2, 2016, the Company generated Adjusted EBITDA of $412.5 million, as compared to $434.0 million in the
same period in fiscal 2014. On a Pro forma Adjusted EBITDA basis, the Company would have generated $420.8 million for the year ended January 2, 2016, as compared to a Pro forma Adjusted EBITDA of $512.6 million in the same period in fiscal
2014. The decrease in the Pro forma Adjusted EBITDA is attributable to lower finished product prices and the impact of foreign exchange rates as a function of the strengthening U.S. dollar as compared mainly to the euro and Canadian dollar, which
were partially offset by an increase in raw material volumes. As a result of the strengthened U.S. dollar, the above Pro forma Adjusted EBITDA results for the year ended January 2, 2016 would have been $469.8 million when taking into
consideration the change in average foreign currency fluctuations of $49.0 million, as compared to $512.6 million for the year ended January 3, 2015, a reduction of $42.8 million.
About Darling
Darling Ingredients Inc. is the worlds largest publicly-traded developer and producer of sustainable natural ingredients from edible and inedible
bio-nutrients, creating a wide range of ingredients and specialty products for customers in the pharmaceutical, food, pet food, feed, technical, fuel, bioenergy, and fertilizer industries. With operations on five continents, the Company collects and
transforms all aspects of animal by-product streams into broadly used and specialty ingredients, such as gelatin, 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 used cooking oil and commercial bakery residuals into valuable feed and fuel ingredients. In addition, the Company provides grease trap services to food
service establishments, environmental services to food processors and sells restaurant cooking oil delivery and collection equipment. For additional information, visit the Companys website at http://ir.darlingii.com.
Darling Ingredients Inc. will host a conference call to discuss the Companys fourth quarter and fiscal year 2015 financial results at 8:30 am
Eastern Time (7:30 am Central Time) on Wednesday, March 2, 2016. To listen to the conference call, participants calling from within North America should dial 1-866-777-2509; international participants should dial
1-412-317-5413. Please refer to access code 10081094. Please call approximately ten minutes before the start of the call to ensure that you are connected.
The call will also be available as a live audio webcast that can be accessed on the Company website at http://ir.darlingii.com. Beginning one hour
after its completion, a replay of the call can be accessed through March 10, 2016 by dialing 1-877-344-7529 (U.S. callers), 1-855-669-9658 (Canada) and 1-412-317-0088 (international callers). The access code for the replay is 10081094.
The conference call will also be archived on the Companys website.
Use of Non-GAAP Financial Measures:
Adjusted EBITDA is presented here not as an alternative to net income, but rather as a measure of the Companys operating performance and is not intended
to be a presentation in accordance with GAAP. Since EBITDA (generally, net income plus interest expenses, taxes, depreciation and amortization) is not calculated identically by all companies, this presentation may not be comparable to EBITDA or
Adjusted EBITDA presentations disclosed by other companies. Adjusted EBITDA is calculated in this presentation and represents, for any relevant period, net income/(loss) plus depreciation and amortization, 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 loss of unconsolidated subsidiary. Management believes that Adjusted EBITDA is useful in evaluating the
Companys 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.
As a result, the Companys management uses Adjusted EBITDA as a measure
to evaluate performance and for other discretionary purposes. However, Adjusted EBITDA is not a recognized measurement under GAAP, should not be considered as an alternative to net income as a measure of operating results or to cash flow as a
measure of liquidity, and is not intended to be a presentation in accordance with GAAP. In addition to the foregoing, management also uses or will use Adjusted EBITDA to measure compliance with certain financial covenants under the Companys
Senior Secured Credit Facilities and 5.375% Notes and 4.75% Notes that were outstanding at January 2, 2016. However, the amounts shown in this presentation for Adjusted EBITDA differ from the amounts calculated under similarly titled
definitions in the Companys Senior Secured Credit Facilities and 5.375% Notes and 4.75% Notes, as those definitions permit further adjustments to reflect certain other non-recurring costs and non-cash charges. 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.
In addition, the Companys management used adjusted diluted earnings per share as a measure of earnings due to the significant merger and acquisition
activity of the Company. However, an adjusted earnings per share is not a recognized measurement under GAAP and should not be considered as an alternative to diluted earnings per share presented in accordance with GAAP. Adjusted diluted earnings per
share is defined as adjusted net income attributable to Darling divided by the weighted average shares of diluted common stock. Adjusted net income attributable to Darling is defined as a reconciliation of net income attributable to Darling, net of
tax (i) adjusted for net of tax acquisition and integration costs related to merger and acquisitions, (ii) net of tax amortization of acquisition related intangibles and (iii) net of tax certain non-recurring items that are not part of normal
operations. This measure is solely for the purpose of calculating adjusted diluted earnings per share and is not intended to be a substitute of presentation in accordance with GAAP.
Cautionary Statements Regarding Forward-Looking Information:
{This media release contains forward-looking statements regarding the business operations and prospects of Darling Ingredients Inc. and industry
factors affecting it. These statements are identified by words such as believe, anticipate, expect, estimate, intend, could, may, will,
should, planned, potential, continue, momentum, and other words referring to events that may occur in the future. These statements reflect Darling Ingredients current view of future
events and are based on its assessment of, and are subject to, a variety of risks and uncertainties beyond its control, each of which could cause actual results to differ materially from those indicated in the forward-looking statements. These
factors include, among others, existing and unknown future limitations on the ability of the Companys direct and indirect subsidiaries to make their cash flow available to the Company for payments on the Companys indebtedness or other
purposes; unanticipated costs or operating problems related to the acquisition and integration of Rothsay and Darling Ingredients International (including transactional costs and integration of the new enterprise resource planning (ERP) system);
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 Companys
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,
reduced demand for animal feed, or otherwise; reduced finished product prices; continued decline in fat and used cooking oil finished product prices; changes to worldwide government policies relating to renewable fuels and greenhouse gas emissions
that adversely affect programs like the Renewable Fuel Standards Program (RFS2) and tax credits for biofuels both in the Unites States and abroad; possible product recall resulting from developments relating to the discovery of unauthorized
adulterations to food or food additives; the occurrence of Bird Flu including, but not limited to H5N1 flu, bovine spongiform encephalopathy (or BSE), porcine epidemic diarrhea (PED) or other diseases associated with animal
origin in the United States or elsewhere; unanticipated costs and/or reductions in raw material volumes related to the Companys compliance with the existing or unforeseen new U.S. or foreign regulations (including, without limitation, China)
affecting the industries in which the Company operates or its value added products (including new or modified animal feed, Bird Flu, PED or BSE or similar or unanticipated regulations); risks associated with the renewable diesel plant in Norco,
Louisiana owned and operated by a joint venture between Darling Ingredients and Valero Energy Corporation, including possible unanticipated operating disruptions; risks relating to possible third party claims of intellectual property infringement;
increased contributions to the Companys 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; 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 negatively impact the
Companys results of operations. Among other things, future profitability may be affected by the Companys ability to grow its business, which faces competition from companies that may have substantially greater resources than the Company.
The Companys 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. Other
risks and uncertainties regarding Darling Ingredients Inc., its business and the industries in which it operates are referenced from time to time in the Companys filings with the Securities and Exchange Commission. Darling Ingredients Inc. is
under no obligation to (and expressly disclaims any such obligation to) update or alter its forward-looking statements whether as a result of new information, future events or otherwise.}
|
|
|
For More Information, contact:
Melissa A. Gaither, V.P. Investor Relations and Global Communications
251 OConnor Ridge Blvd., Suite 300 Irving, Texas
75038 |
|
Email: mgaither@darlingii.com
Phone: 972-717-0300 |
Darling Ingredients Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
January 2, 2016 and January 3, 2015
(Dollars in thousands, except share data)
|
|
|
|
|
|
|
|
|
|
|
January 2, 2016 |
|
|
January 3, 2015 |
|
ASSETS |
|
|
|
|
|
|
|
|
Current assets: |
|
|
|
|
|
|
|
|
Cash and cash equivalents |
|
$ |
156,884 |
|
|
$ |
108,784 |
|
Restricted cash |
|
|
331 |
|
|
|
343 |
|
Accounts receivable, net |
|
|
371,392 |
|
|
|
409,779 |
|
Inventories |
|
|
344,583 |
|
|
|
401,613 |
|
Prepaid expenses |
|
|
36,175 |
|
|
|
44,629 |
|
Income taxes refundable |
|
|
11,963 |
|
|
|
22,140 |
|
Other current assets |
|
|
10,460 |
|
|
|
21,324 |
|
|
|
|
|
|
|
|
|
|
Total current assets |
|
|
931,788 |
|
|
|
1,008,612 |
|
|
|
|
|
|
|
|
|
|
Property, plant and equipment, less accumulated depreciation, net |
|
|
1,508,167 |
|
|
|
1,574,116 |
|
Intangible assets, less accumulated amortization, net |
|
|
782,349 |
|
|
|
932,413 |
|
Goodwill |
|
|
1,233,102 |
|
|
|
1,320,419 |
|
Investment in unconsolidated subsidiaries |
|
|
247,238 |
|
|
|
202,712 |
|
Other assets |
|
|
70,606 |
|
|
|
71,009 |
|
Deferred income taxes |
|
|
16,352 |
|
|
|
17,266 |
|
|
|
|
|
|
|
|
|
|
Total assets |
|
$ |
4,789,602 |
|
|
$ |
5,126,547 |
|
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS EQUITY |
|
|
|
|
|
|
|
|
Current liabilities: |
|
|
|
|
|
|
|
|
Current portion of long-term debt |
|
$ |
47,244 |
|
|
$ |
54,401 |
|
Accounts payable, principally trade |
|
|
149,998 |
|
|
|
168,518 |
|
Income taxes payable |
|
|
6,679 |
|
|
|
4,363 |
|
Accrued expenses |
|
|
239,825 |
|
|
|
256,119 |
|
|
|
|
|
|
|
|
|
|
Total current liabilities |
|
|
443,746 |
|
|
|
483,401 |
|
|
|
|
Long-term debt, net of current portion |
|
|
1,912,756 |
|
|
|
2,098,039 |
|
Other noncurrent liabilities |
|
|
97,809 |
|
|
|
114,700 |
|
Deferred income taxes |
|
|
360,681 |
|
|
|
379,273 |
|
|
|
|
|
|
|
|
|
|
Total liabilities |
|
|
2,814,992 |
|
|
|
3,075,413 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Commitments and contingencies |
|
|
|
|
|
|
|
|
Total Darlings stockholders equity |
|
|
1,870,709 |
|
|
|
1,952,990 |
|
Noncontrolling interests |
|
|
103,901 |
|
|
|
98,144 |
|
|
|
|
|
|
|
|
|
|
Total stockholders equity |
|
$ |
1,974,610 |
|
|
$ |
2,051,134 |
|
|
|
|
|
|
|
|
|
|
|
|
$ |
4,789,602 |
|
|
$ |
5,126,547 |
|
|
|
|
|
|
|
|
|
|
Darling Ingredients Inc. and Subsidiaries
Consolidated Statements of Operations
For the Periods Ended January 2, 2016 and January 3, 2015
(Dollars in thousands, except per share data)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Fourth Quarter Unaudited) Three Months Ended |
|
|
Fiscal Year Ended |
|
|
|
January 2, 2016 |
|
|
January 3, 2015 |
|
|
$ Change Favorable (Unfavorable) |
|
|
January 2, 2016 |
|
|
January 3, 2015 |
|
|
$ Change Favorable (Unfavorable) |
|
Net sales |
|
$ |
809,675 |
|
|
$ |
1,000,203 |
|
|
$ |
(190,528 |
) |
|
$ |
3,397,446 |
|
|
$ |
3,956,443 |
|
|
$ |
(558,997 |
) |
Costs and expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of sales and operating expenses |
|
$ |
629,907 |
|
|
$ |
794,299 |
|
|
|
164,392 |
|
|
$ |
2,654,025 |
|
|
$ |
3,123,171 |
|
|
|
469,146 |
|
|
|
|
|
|
|
|
Selling, general and administrative expenses |
|
|
76,623 |
|
|
|
94,840 |
|
|
|
18,217 |
|
|
|
322,574 |
|
|
|
374,580 |
|
|
|
52,006 |
|
Depreciation and amortization |
|
|
69,934 |
|
|
|
69,039 |
|
|
|
(895 |
) |
|
|
269,904 |
|
|
|
269,517 |
|
|
|
(387 |
) |
Acquisition and Integration costs |
|
|
492 |
|
|
|
2,363 |
|
|
|
1,871 |
|
|
|
8,299 |
|
|
|
24,667 |
|
|
|
16,368 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total costs and expenses |
|
|
776,956 |
|
|
|
960,541 |
|
|
|
183,585 |
|
|
|
3,254,802 |
|
|
|
3,791,935 |
|
|
|
537,133 |
|
|
|
|
|
|
|
|
Operating income |
|
|
32,719 |
|
|
|
39,662 |
|
|
|
(6,943 |
) |
|
|
142,644 |
|
|
|
164,508 |
|
|
|
(21,864 |
) |
Other expense: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense |
|
|
(23,308 |
) |
|
|
(24,633 |
) |
|
|
1,325 |
|
|
|
(105,530 |
) |
|
|
(135,416 |
) |
|
|
29,886 |
|
Foreign currency gain/(loss) |
|
|
(1,612 |
) |
|
|
(1,267 |
) |
|
|
(345 |
) |
|
|
(4,911 |
) |
|
|
(13,548 |
) |
|
|
8,637 |
|
Other income/(expense), net |
|
|
(6,135 |
) |
|
|
271 |
|
|
|
(6,406 |
) |
|
|
(6,839 |
) |
|
|
299 |
|
|
|
(7,138 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total other expense |
|
|
(31,055 |
) |
|
|
(25,629 |
) |
|
|
(5,426 |
) |
|
|
(117,280 |
) |
|
|
(148,665 |
) |
|
|
31,385 |
|
|
|
|
|
|
|
|
Equity in net income of unconsolidated subsidiaries |
|
|
83,073 |
|
|
|
59,547 |
|
|
|
23,526 |
|
|
|
73,416 |
|
|
|
65,609 |
|
|
|
7,807 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income from operations before income taxes |
|
|
84,737 |
|
|
|
73,580 |
|
|
|
11,157 |
|
|
|
98,780 |
|
|
|
81,452 |
|
|
|
17,328 |
|
|
|
|
|
|
|
|
Income tax expense/(benefit) |
|
|
(1,138 |
) |
|
|
4,792 |
|
|
|
5,930 |
|
|
|
13,501 |
|
|
|
13,141 |
|
|
|
(360 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income |
|
$ |
85,875 |
|
|
$ |
68,788 |
|
|
$ |
17,087 |
|
|
$ |
85,279 |
|
|
$ |
68,311 |
|
|
$ |
16,968 |
|
|
|
|
|
|
|
|
Net (income)/loss attributable to noncontrolling interests |
|
$ |
(1,446 |
) |
|
$ |
1,155 |
|
|
$ |
(2,601 |
) |
|
$ |
(6,748 |
) |
|
$ |
(4,096 |
) |
|
$ |
(2,652 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income attributable to Darling |
|
$ |
84,429 |
|
|
$ |
69,943 |
|
|
$ |
14,486 |
|
|
$ |
78,531 |
|
|
$ |
64,215 |
|
|
$ |
14,316 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic income/(loss) per share: |
|
$ |
0.52 |
|
|
$ |
0.42 |
|
|
$ |
0.10 |
|
|
$ |
0.48 |
|
|
$ |
0.39 |
|
|
$ |
0.09 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted income/(loss) per share: |
|
$ |
0.52 |
|
|
$ |
0.42 |
|
|
$ |
0.10 |
|
|
$ |
0.48 |
|
|
$ |
0.39 |
|
|
$ |
0.09 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Darling Ingredients Inc. and Subsidiaries
Consolidated Statement of Cash Flows
Fiscal Year Ended January 2, 2016 and January 3, 2015
(Dollars in thousands)
|
|
|
|
|
|
|
|
|
|
|
Fiscal Year Ended |
|
|
|
January 2, 2016 |
|
|
January 3, 2015 |
|
Cash flows from operating activities: |
|
|
|
|
|
|
|
|
Net income |
|
$ |
85,279 |
|
|
$ |
68,311 |
|
Adjustments to reconcile net income to net cash provided by operating activities: |
|
|
|
|
|
|
|
|
Depreciation and amortization |
|
|
269,904 |
|
|
|
269,517 |
|
Deferred taxes |
|
|
7,807 |
|
|
|
(21,216 |
) |
Loss/(gain) on sale of assets |
|
|
1,311 |
|
|
|
(2,437 |
) |
Gain on insurance proceeds from insurance settlements |
|
|
(561 |
) |
|
|
(1,550 |
) |
Increase/(decrease) in long-term pension liability |
|
|
(4,811 |
) |
|
|
9,593 |
|
Stock-based compensation expense |
|
|
8,995 |
|
|
|
20,807 |
|
Write-off deferred loan costs |
|
|
10,633 |
|
|
|
4,330 |
|
Deferred loan cost amortization |
|
|
10,155 |
|
|
|
9,949 |
|
Equity in net income of unconsolidated subsidiaries |
|
|
(73,416 |
) |
|
|
(65,609 |
) |
Distributions of earnings from unconsolidated subsidiaries |
|
|
26,589 |
|
|
|
|
|
Changes in operating assets and liabilities, net of effects from acquisitions: |
|
|
|
|
|
Accounts receivable |
|
|
8,214 |
|
|
|
982 |
|
Income taxes refundable/payable |
|
|
12,377 |
|
|
|
(22,451 |
) |
Inventories and prepaid expenses |
|
|
34,536 |
|
|
|
(11,194 |
) |
Accounts payable and accrued expenses |
|
|
(11,449 |
) |
|
|
(31,223 |
) |
Other |
|
|
35,785 |
|
|
|
47,363 |
|
|
|
|
|
|
|
|
|
|
Net cash provided by operating activities |
|
|
421,348 |
|
|
|
275,172 |
|
|
|
|
|
|
|
|
|
|
Cash flows from investing activities: |
|
|
|
|
|
|
|
|
Capital expenditures |
|
|
(229,848 |
) |
|
|
(228,918 |
) |
Acquisitions, net of cash acquired |
|
|
(377 |
) |
|
|
(2,094,400 |
) |
Gross proceeds from sale of property, plant and equipment and other assets |
|
|
3,840 |
|
|
|
9,262 |
|
Proceeds from insurance settlement |
|
|
561 |
|
|
|
1,550 |
|
Payments related to routes and other intangibles |
|
|
(3,845 |
) |
|
|
(11,288 |
) |
|
|
|
|
|
|
|
|
|
Net cash used by investing activities |
|
|
(229,669 |
) |
|
|
(2,323,794 |
) |
|
|
|
|
|
|
|
|
|
Cash flows from financing activities: |
|
|
|
|
|
|
|
|
Proceeds from long-term debt |
|
|
590,745 |
|
|
|
1,842,184 |
|
Payments on long-term debt |
|
|
(609,255 |
) |
|
|
(333,762 |
) |
Borrowings from revolving credit facility |
|
|
78,244 |
|
|
|
170,143 |
|
Payments on revolving credit facility |
|
|
(166,755 |
) |
|
|
(351,589 |
) |
Net cash overdraft financing |
|
|
(1,261 |
) |
|
|
4,077 |
|
Deferred loan costs |
|
|
(17,310 |
) |
|
|
(45,223 |
) |
Issuance of commons stock |
|
|
171 |
|
|
|
416 |
|
Repurchase of common stock |
|
|
(5,912 |
) |
|
|
|
|
Minimum withholding taxes paid on stock awards |
|
|
(4,874 |
) |
|
|
(10,026 |
) |
Excess tax benefits/(expense) from stock-based compensation |
|
|
(389 |
) |
|
|
2,420 |
|
Addition/(deductions) of noncontrolling interest |
|
|
(87 |
) |
|
|
1,201 |
|
Distributions to noncontrolling interests |
|
|
(3,295 |
) |
|
|
(4,272 |
) |
|
|
|
|
|
|
|
|
|
Net cash provided/(used) in financing activities |
|
|
(139,978 |
) |
|
|
1,275,569 |
|
Effect of exchange rate changes on cash flows |
|
|
(3,601 |
) |
|
|
10,980 |
|
|
|
|
|
|
|
|
|
|
Net increase/(decrease) in cash and cash equivalents |
|
|
48,100 |
|
|
|
(762,073 |
) |
Cash and cash equivalents at beginning of period |
|
|
108,784 |
|
|
|
870,857 |
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents at end of period |
|
$ |
156,884 |
|
|
$ |
108,784 |
|
|
|
|
|
|
|
|
|
|
Supplemental disclosure of cash flow information: |
|
|
|
|
|
|
|
|
Accrued capital expenditures |
|
$ |
5,325 |
|
|
$ |
1,340 |
|
|
|
|
|
|
|
|
|
|
Cash paid during the period for: |
|
|
|
|
|
|
|
|
Interest, net of capitalized interest |
|
$ |
78,979 |
|
|
$ |
104,834 |
|
|
|
|
|
|
|
|
|
|
Income taxes, net of refunds |
|
$ |
(3,035 |
) |
|
$ |
28,315 |
|
Non-cash financing activities |
|
|
|
|
|
|
|
|
Debt issued for service contract assets |
|
$ |
2,591 |
|
|
$ |
|
|
|
|
|
|
|
|
|
|
|
Darling Ingredients Inc.
Adjusted (Non-GAAP) Diluted Earnings per Share
Fiscal Year Ended January 2, 2016 and January 3, 2015
|
|
|
|
|
|
|
|
|
|
|
Fiscal Year Ended |
|
|
|
January 2, 2016 |
|
|
January 3, 2015 |
|
|
|
|
Weighted average shares of common stock outstanding (in thousands) |
|
|
165,119 |
|
|
|
165,059 |
|
|
|
|
Reported Earnings Per Share (fully diluted) |
|
$ |
0.48 |
|
|
$ |
0.39 |
|
Non-cash inventory step-up associated with the VION Acquisition |
|
|
|
|
|
|
0.19 |
|
Acquisition and integration costs |
|
|
0.03 |
|
|
|
0.13 |
|
Amortization of intangibles |
|
|
0.29 |
|
|
|
0.32 |
|
Non-operating casualty losses and legal settlement |
|
|
0.02 |
|
|
|
|
|
Redemption premium on 8.5% Senior Notes and write off deferred loan costs |
|
|
|
|
|
|
0.12 |
|
Write-off deferred loan costs euro term loan B |
|
|
0.03 |
|
|
|
|
|
Foreign currency hedge of VION purchase price |
|
|
|
|
|
|
0.05 |
|
|
|
|
|
|
|
|
|
|
Adjusted diluted earnings per share attributable to Darling (Non-GAAP) (1) |
|
$ |
0.85 |
|
|
$ |
1.20 |
|
|
|
|
|
|
|
|
|
|
(1) |
Adjustments to diluted earnings per share of acquisition related items are net of tax. Calculations of all adjustment tax amounts were at the applicable effective tax rate for the period, except for the impact of the
biofuel tax incentives and nonrecurring acquisition and integration costs. The effective tax rate used for calculating Non-GAAP Adjusted EPS in the above table for the year ended January 2, 2016 and
January 3, 2015 was 42.2% and 37.1%, respectively. |
Fourth Quarter & Fiscal Year End 2015
Earnings Conference Call
March 2, 2015 Creating sustainable food, feed and fuel ingredients for a growing population Randall C. Stuewe, Chairman and CEO John O. Muse, EVP Chief Financial Officer
Exhibit 99.2 |
Creating sustainable food, feed and fuel ingredients for a growing
population Safe Harbor Statement
This presentation contains forward-looking statements
regarding the business operations and prospects of Darling Ingredients Inc. and industry factors affecting it. These statements are identified by words such as believe, anticipate,
expect, estimate, intend, could, may, will, should, planned, potential, continue, momentum, and other words referring to events that
may occur in the future. These statements reflect Darling Ingredients current view of future events and are based on its assessment of, and are subject to, a variety of risks and
uncertainties beyond its control, each of which could
cause actual results to differ materially from those indicated in the forward-looking statements. These factors include, among others, 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; unanticipated costs or operating problems related to the acquisition and integration of Rothsay and Darling Ingredients International (including transactional costs and integration of the new enterprise resource planning
(ERP) system); 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 Companys 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, reduced demand for animal feed, or otherwise; reduced finished product prices; continued decline in fat and
used cooking oil finished
product prices; changes to worldwide government policies relating to
renewable fuels and greenhouse gas emissions that adversely
affect programs like the
Renewable Fuel Standards Program (RFS2) 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 Bird Flu
including, but not limited to H5N1 flu, bovine spongiform
encephalopathy (or "BSE"), porcine epidemic diarrhea ("PED") or other diseases associated with animal origin in the United States or elsewhere; unanticipated costs and/or reductions in raw material volumes related to the Companys compliance with the
existing or unforeseen new U.S. or foreign regulations
(including, without limitation, China) affecting the industries in which the Company operates or its value added products (including new or modified animal feed, Bird Flu, PED or BSE or similar or unanticipated regulations); risks associated with the renewable diesel
plant in Norco, Louisiana owned and operated by a joint
venture between Darling Ingredients and Valero Energy Corporation, including possible unanticipated operating disruptions; risks relating to possible third party claims of intellectual property infringement; increased contributions to the Companys
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; 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 negatively impact the
Company's results of operations. Among other things,
future profitability may be affected by the Companys ability to grow its business, which faces competition from companies that may have substantially greater resources than the Company. The Companys 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. Other risks and uncertainties regarding Darling Ingredients Inc., its business and the industries in which it operates are referenced from time
to time in the Companys filings with the Securities
and Exchange Commission. Darling Ingredients Inc. is under no obligation to (and expressly disclaims any such obligation to) update or alter its forward-looking statements whether as a result of new information, future events or otherwise.
2 |
Creating sustainable food, feed and fuel ingredients for a growing
population 2015 Fourth Quarter and Year End Overview
Strong performance by International while USA impacted by 4 th quarter pricing swing o Rendering raw material volumes remain strong globally o USA fat prices made significant bounce early in Q1 2016 anticipating improved demand from LCFS
o USA Protein premiums rebounded after collapsing in Q4 due to very strong slaughter and limited demand
o Europe fat prices improving while protein prices feeling similar glut situation
o Food Segment lead by Rousselot with improved demand, new capacity on line and solid margins
o Fuel Segment strong with core business and retroactive Canadian Tax Credit
Reported Pro Forma Adjusted EBITDA--$103.1 million in Q4 vs.$107.4 million in Q3
o FX impact versus prior quarter of $1.6 million o Fats down 17% in Quarter while Proteins down 30% in USA o USA cash prices and premiums down even more, sharp rebound in Q1 of 2016 o Formula lag, lower UCO prices and inventory adjustments impacted USA o Feed segment expected to rebound in Q1 Diamond Green Diesel (DGD) produced 159 million gallons in 2015 25% increase from 2014 2015 EBITDA: $177 million entity level or $88 million Darlings share
Net debt in JV of $104.5 million Accretive $0.435 cents per share for fiscal 2015 Anticipate dividend in late Q1 of 2016 Renewable diesel demand is strong with improving LCFS premiums throughout North America and Europe
3 |
Creating sustainable food, feed and fuel ingredients for a growing
population Q4 2015 paid down debt by $42.4 million; Fiscal 2015
total debt paid down of $118.2 million Reduced total debt in 2015
to $1.96 billion / Total Debt Leverage Ratio of 4.32 at year end
Targeting debt reduction of $150 million in 2016 / YE Target Total Debt
Leverage Ratio below 4.00 CAPEX of $229.8 million in
2015----inclusive of 3 new plants and 1 major expansion On schedule with two new U.S. rendering plants during Q3 Q4 2016 Improved cash impact to Working Capital by $72.7 million in 2015 over 2014
Reduced SG&A by $52.0 million in Fiscal 2015 compared to Fiscal
2014 2016 focus on lowering debt, improving margins, cost
efficiencies, growing base business, and capitalizing on LCFS
margin opportunities 4
Continuing Long Term Strategy - Delever and Grow |
Creating sustainable food, feed and fuel ingredients for a growing
population January 2,
October 3, January 2, Janaury 3, 2016 2015 2016 2015 Revenues 809,675 $ 853,762 $ 3,397,446 $ 3,956,443 $ Gross profit 179,768 182,441 743,421 833,272 Selling, general and administrative expenses 76,623 75,026 322,574 374,580 Depreciation and amortization 69,934 67,327 269,904 269,517 Acquisition and integration costs 492 1,280 8,299 24,667 Interest expense 23,308 24,828 105,530 135,416 Foreign currency gain/(loss) (1,612) (2,461) (4,911) (13,548) Other income/(expense), net (6,135) 1,004 (6,839) 299 Equity in net income/(loss) of unconsolidated subsidiary 83,073 (12,021) 73,416 65,609 Income before taxes 84,737 502 98,780 81,452 Income tax expense/(benefit) (1,138) 7,859 13,501 13,141 Net income/(loss) 85,875 (7,357) 85,279 68,311 Net (income)/loss attributable in minority interests (1,446) (1,730) (6,748) (4,096) Net income/(loss) attributable to Darling 84,429 $ (9,087) $
78,531 $
64,215 $
Earnings/(loss) per share (fully diluted)
0.52 $
(0.06) $
0.48 $
0.39 $
Three Months Ended - Sequential
Twelve Months Ended - Year over Year
Earnings Summary
5 |
Creating sustainable food, feed and fuel ingredients for a growing
population Adjusted EBITDA and Pro Forma Adjusted EBITDA
(US$ in thousands) January 2, October 3, January 2, January 3, 2016 2015 2016 2015 Net income/(loss) attributable to Darling $ 84,429 $ (9,087) $ 78,531 $ 64,215 Depreciation and amortization 69,934 67,327 269,904 269,517 Interest expense 23,308 24,828 105,530 135,416 Income tax expense/(benefit) (1,138) 7,859 13,501 13,141 Foreign currency (gain)/loss 1,612 2,461 4,911 13,548 Other expense/(income), net 6,135 (1,004) 6,839 (299) Equity in net (income)/loss of unconsolidated subsidiaries (83,073) 12,021 (73,416) (65,609) Net income attributable to noncontrolling interests 1,446 1,730 6,748 4,096 Adjusted EBITDA $ 102,653 $ 106,135 $ 412,548 $ 434,025 Non-cash inventory step-up associated with VION Acquisition 49,803 Acquisition and integration-related expenses 492 1,280 8,299 24,667 Darling Ingredients International - 13th week (1) 4,100 Pro Forma Adjusted EBITDA (Non-GAAP) $ 103,145 $ 107,415 $ 420,847 $ 512,595 Foreign currency exchange impact $ 1,607 $ 48,961 Pro Forma Adjusted EBITDA to Foreign Currency (Non-GAAP) (2) $ 104,752 $ 107,415 $ 469,808 $ 512,595 DGD Joint Venture Adjusted EBITDA (Darling's Share) (3) $ 86,548 $ (8,309) $ 88,494 $ 81,639 Three Months Ended - Sequential Fiscal Year Ended Adjusted EBITDA (1) January 7, 2014 closed on VION Ingredients, thus the 13th week would be revenue adjusted for January 1, 2014
through January 7, 2014 (2) Foreign currency exchange rates held constant for comparable quarters (euro/USD 1.11303 rate October 3, 2015 quarter and euro/USD 1.31878 rate
January 3, 2015 twelve months). (3) Darling's Pro forma Adjusted EBITDA
(Non-GAAP) in the above table does not include the DGD Joint Venture adjusted EBITDA (Darling's share) if we had consolidated the DGD Joint Venture. 6 |
Creating sustainable food, feed and fuel ingredients for a growing
population Cash Flow Statement
7 Cash Flow Statement Year Ended (US$ in thousands) January 2, 2016 Adjusted EBIDTA $
412,548
Uses: Cap-Ex (229,848) Acquisitions (377) Proceeds from Stock Issuance 171 Stock Repurchase (5,912) Borrowings, net of repayments (107,021) Deferred Loan Costs (17,310) Cash Interest (10-K) (78,979) Cash Taxes (10-K) 3,035 Accounts Receivable 8,214 Income Tax 12,377 Inventory and Prepaid 34,536 Accounts Payable and Accrued Expenses (11,449) Increase in Cash (48,100) Distribution of Earnings from Unconsolidated Subsidiaries 26,589 NonControlling Interest, net (3,382) Other 4,908 Adjusted EBITDA $
(412,548) |
Creating sustainable food, feed and fuel ingredients for a growing
population Balance Sheet Highlights and Debt Summary
Debt Summary Balance Sheet Highlights Cash Debt Pay Down Leverage Ratios Net Debt on Balance Sheet January 2, 2016 Actual Credit Agreement Total Debt to EBITDA: 4.32 5.50 Secured Debt to EBITDA: 1.93 3.75 (US$, in thousands) January 2, 2016 Fourth Quarter 2015 42,394 $ Year-to-Date 118,201 $ (US$, in thousands) Fiscal 2014 Fiscal 2015 Total Debt 2,152,440 $ 1,960,000 $ Available Cash (108,784) $ (156,884) $ Year End Net Debt Balance 2,043,656 $ 1,803,116 $ Net Debt Reduction from 2014: 240,540 $ 8 (US$, in thousands) January 2, 2016 Cash (includes restricted cash of $331)
157,215 $ Accounts receivable 371,392
Total Inventories
344,583
Net working capital
931,788
Net property, plant and equipment
1,508,167 Total assets 4,789,602 $ Total debt 1,960,000 $ Shareholders' equity 1,974,610 $ (US$, in thousands) January 2, 2016 Amended Credit Agreement Revolving Credit Facility 9,358 $
Term Loan A
277,181 Term Loan B 589,500 5.375% Senior Notes due 2022 500,000 4.750% Euro Senior Notes due 2022 560,912 Other Notes and Obligations 23,049 Total Debt: 1,960,000 $ |
Creating sustainable food, feed and fuel ingredients for a growing
population Feed Segment
Operational Overview
Q4 2015 2015 EBITDA Margin Feed 13.8% 14.3% 14.6% 11.5% USA rendering impacted by non-formula business due to collapsing Q4 prices Pet food premiums collapsed but have rebounded UCO prices hit decade lows Wet Pet Food start-up costs approx. $3 mm Bakery solid performance International rendering delivered as per plan Global protein/meal glut developed in Q4
situation is improving Fat markets have sharply bounced back with interesting developments in LCFS demand 9 Note: Cost of Sales includes raw material costs, collection costs and factory costs.
US$ and metric tons
(millions) Total 2014 Q1 2015 Q2 2015 Q3 2015 Q4 2015 Total 2015 Delta % Y over Y Revenue $2,421.5 $547.5 $529.4 $525.2 $472.2 $2,074.3 -14.3% Gross Margin 556.6 123.5 124.5 116.2 96.7 460.9 -17.2% Gross Margin % 23.0% 22.6% 23.5% 22.1% 20.5% 22.2% Operating Income 192.3 35.4 35.4 35.6 10.1 116.5 -39.4% EBITDA 351.1 75.5 75.9 76.5 54.4 282.3 -19.6% EBITDA/Revenue 14.5% 13.8% 14.3% 14.6% 11.5% 13.6% Raw Material Processed (million metric tons) 7.12 1.87 1.83 1.86 1.89 7.45 4.6% $351.1 ($321.4) $97.3 $153.8 $18.1 ($16.6) $298.6 $282.3 $0 $50 $100 $150 $200 $250 $300 $350 $400 EBITDA 2014 Price/Yield Volumes Cost of Sales Other Adjusted FX Impact EBITDA 2015 EBITDA
2015 EBITDA Bridge 2014 to 2015 (millions) 5 7 9 11 13 15 17 Q1 Q2 Q3 Q4 2015 2015 2015 2015 |
Creating sustainable food, feed and fuel ingredients for a growing
population Jacobsen, Wall Street Journal and Thomson Reuters
Historical Pricing Yellow Grease pricing
lower
Pricing down 17% in Q4 but rebounding in early 2016
Limited biofuel demand, warmer winter limiting feed demand Protein pricing down over 30% from 2014 Over supply of soy meal, meat and bone meal, and poultry meals Warmer winter limiting feed demand Slow export demand Poultry Meal Pet Food premiums narrowed QTR. Over QTR. Year Over Year Comparison Q3-2015 Q4-2015 % Q4-2014 Q4-2015 % Average Jacobsen Prices (USD) Avg. Avg. Change Avg. Avg. Change Bleachable Fancy Tallow - Chicago Renderer / cwt $29.42 $21.18 -28.0% $31.78 $21.18 -33.4% Yellow Grease - Illinois / cwt $21.48 $17.86 -16.9% $25.56 $17.86 -30.1% Meat and Bone Meal - Ruminant - Illinois / ton $354.91 $249.29 -29.8% $392.68 $249.29 -36.5% Poultry By-Product Meal - Feed Grade - Mid South/ton $391.55 $334.67 -14.5% $492.76 $334.67 -32.1% Poultry By-Product Meal - Pet Food - Mid South/ton $532.45 $469.49 -11.8% $746.52 $469.49 -37.1% Feathermeal - Mid South / ton $499.12 $367.06 -26.5% $672.63 $367.06 -45.4% Average Wall Street Journal Prices (USD) Corn - Track Central IL #2 Yellow / bushel $3.62 $3.64 0.6% $3.41 $3.64 6.7% Average Thomson Reuters Prices (USD) Palm oil - CIF Rotterdam / metric ton $558 $563 0.9% $718 $563 -21.6% Soy meal - CIF Rotterdam / metric ton $380 $352 -7.4% $486 $352 -27.6% USD/Euro Avg. Exchange Rates 1.113 1.094 -1.7% 1.328 1.094 -17.6% USD/Canadian Avg. Exchange Rates 0.763 0.749 -1.8% 0.916 0.749 -18.2% 2016 Finished Product Pricing Feed Segment Ingredients January Bleachable Fancy Tallow - Chicago Renderer / cwt $23.53 Yellow Grease - Illinois / cwt $19.03 Meat and Bone Meal - Ruminant - Illinois / ton $184.74 Poultry By-Product Meal - Feed Grade - Mid South/ton $247.11 Poultry By-Product Meal - Pet Food - Mid South/ton $498.03 Feathermeal - Mid South / ton $255.39 2016 Cash Corn Pricing Competing Ingredient for Bakery Feeds and Fats January Corn - Track Central IL #2 Yellow / bushel $3.58 European Benchmark Pricing 2016 January Palm oil - CIF Rotterdam / metric ton $565 Soy meal - CIF Rotterdam / metric ton $339 10 |
Creating sustainable food, feed and fuel ingredients for a growing
population Note: Cost of Sales includes raw material costs, collection
costs and factory costs.
Strong performance by Rousselot
New USA capacity on line Increased raw material availability aided margins globally China performance solid South American margin improvement CTH showed improved margins on hog casings and improved marketing of edible products Sonac fat melting margins and volumes consistent Food Segment 2015 EBITDA Margin Food 10.4% 11.4% Operational Overview Q4 2015 $100.1 $31.4 $23.8 $1.6 $152.5 $128.1 ($4.4) ($24.4) $50 $100 $150 $200 EBITDA 2014 Price/Yield Volumes Cost of Sales Other Adjusted EBITDA 2015 FX Impact EBITDA 2015 EBITDA Bridge 2014 to 2015 (millions) 11 US$ and metric tons (millions) Total 2014 Q1 2015 Q2 2015 Q3 2015 Q4 2015 Total 2015 Delta % Y over Y Revenue $1,248.4 270.2 283.4 269.2 272.1 $1,094.9 -12.3% Gross Margin 218.9 53.5 60.2 54.8 62.9 231.4 5.7% Gross Margin % 17.5% 19.8% 21.2% 20.4% 23.1% 21.1% Operating Income 26.9 10.8 15.5 11.6 23.3 61.2 127.5% EBITDA 100.1 28.0 32.3 28.7 39.1 128.1 28.0% EBITDA/Revenue 8.0% 10.4% 11.4% 10.7% 14.4% 11.7% Raw Material Processed (million metric tons) 1.05 0.27 0.28 0.26 0.26 1.07 1.9% 10.7% 14.4% 8 9 10 11 12 13 14 15 Q1 2015 Q2 2015 Q3 2015 Q4 2015 |
Creating sustainable food, feed and fuel ingredients for a growing
population Operational Overview
Q4 2015 Fuel Segment *Excludes raw material processed at the DGD joint venture. 2015 EBITDA Margin Fuel Canadian bio fuels delivered improved performance with reinstatement of blenders tax credit. Prospective 2016 credit will improve quarterly results. Rendacvolumes strong and delivered improved results. ECOSONplant experienced fire in Q4. Business interruption insurance will mitigate impact. $49.2 ($43.8) $26.8 $19.8 ($0.1) ($8.0) $51.9 $43.9 $0 $20 $40 $60 EBITDA 2014 Price/Yield Volumes Cost of Sales Other Adjusted EBITDA 2015 FX Impact EBITDA 2015 EBITDA Bridge 2014 to 2015 (millions) 12 Note: Cost of Sales includes raw material costs, collection costs and factory costs.
US$ and metric tons
(millions) Total 2014 Q1 2015 Q2 2015 Q3 2015 Q4 2015 Total 2015 Delta % Y over Y Revenue $286.6 57.0 46.5 59.3 65.4 $228.2 -20.4% Gross Margin 57.8 13.2 6.3 11.4 20.2 51.1 -11.6% Gross Margin % 20.2% 23.1% 13.5% 19.2% 30.9% 22.4% Operating Income 21.3 2.5 2.0 0.2 12.5 17.2 -19.2% EBITDA 49.2 9.1 8.6 7.0 19.2 43.9 -10.8% EBITDA/Revenue 17.2% 16.0% 18.5% 11.8% 29.4% 19.2% Raw Material Processed * (million metric tons) 1.07 0.30 0.29 0.27 0.31 1.17 9.3% 18.5% 11.8% 29.4% 16.0% 5 10 15 20 25 30 35 Q1 2015 Q2 2015 Q3 2015 Q4 2015 |
Creating sustainable food, feed and fuel ingredients for a growing
population Diamond Green Diesel 2015 Highlights
(50% Joint Venture)
EBITDA of $177.0 million, record
earnings Cash balance of $44.2 million at year end
Total debt of $148.8 million in joint venture; net debt of $104.6 million
Produced 159
million gallons of renewable diesel in 2015
Biofuels Blenders Tax Credit made retrospective for 2015 and prospective for
2016 Expect to receive $157.0
million from tax credit by end of March 2016 Completed first plant
turn around in 18 days on February 18, 2016 Anticipate $30 - $35 million dividend for
2016 Contemplating major expansion to 18,000 barrels per day by end
of 2017 Number one priority is recapitalization of current credit
facility. 13
Diamond Green Diesel (50% Joint Venture)
US$ (millions) Total 2014 Q1 2015 Q2 2015 Q3 2015 Q4 2015 Total 2015 EBITDA (Darling's share) $81.6 2.3 7.9 (8.3) 86.6 88.5 Gallons Produced 127.3 37.5 41.9 41.5 37.9 158.8 (US$, in thousands) Fiscal 2014 Fiscal 2015 Total Debt 212,787 $ 148,842 $ Available Cash 21,901 $ 44,247 $ Year End Net Debt Balance 190,886 $ 104,595 $ Net Debt Reduction from 2014: 86,291 $ DGD Net Debt on Balance Sheet |
Appendix
Additional Information |
Creating sustainable food, feed and fuel ingredients for a growing
population Adjusted (Non-GAAP) Diluted EPS
Note: Adjustments to diluted earnings per share of acquisition related items are net of
tax. Calculations of all adjustment tax amounts were at the applicable
effective tax rate for the period, except for the impact of the biofuel tax incentives
and nonrecurring acquisition and integration costs. The effective tax rate used for calculating non GAAP Adjusted EPS in the above table for the years ended January 2, 2016 and January 3, 2015 was 42.2% and 37.1%,
respectively.
15 January 2, January 3, 2016 2015 Reported Earnings Per Share (fully diluted) $ 0.48 $ 0.39 Adjustments: Non-cash inventory step-up associated with VION Acquisition 0.19 Acquisition and integration costs 0.03 0.13 Amortization of intangibles 0.29 0.32 Non-operating casualty losses and legal settlement 0.02 Redemption premium on 8.5% Senior Notes and write off deferred loan costs 0.12 Write-off deferred loan costs euro term loan B 0.03 Foreign currency price risk VION Acquisition 0.05 Adjusted diluted earnings per share attributable to Darling (Non-GAAP) $ 0.85 $ 1.20 Weighted average shares of common stock outstanding (in thousands) 165,119 165,059 Fiscal Year Ended |
Creating sustainable food, feed and fuel ingredients for a growing
population 16
Change in Net Sales -
YTD 2014 to 2015 Fats Proteins Used Cooking Oil Bakery Other Total Net sales full year ended January 3, 2015 659.0 $ 979.8 $ 190.3 $ 221.7 $ 370.7 $ 2,421.5 $ Changes: Increase in sales volumes 28.4 34.1 3.1 28.3 - 93.9 Decrease in finished good prices (124.1) (118.6) (37.6) (32.1) - (312.4) Decrease due to currency exchange rates (23.5) (66.8) (1.8) - (34.4) (126.5) Other change - - - - (2.2) (2.2) Total Change: (119.2) $ (151.3) $ (36.3) $ (3.8) $ (36.6) $ (347.2) $ Net sales full year ended January 2, 2016 539.8 $ 828.5 $ 154.0 $ 217.9 $ 334.1 $ 2,074.3 $ Change in Net Sales - 3Q15 to 4Q15 Fats Proteins Used Cooking Oil Bakery Other Total Net Sales Third Quarter 2015 136.1 $ 210.1 $ 39.6 $ 55.9 $ 83.5 $ 525.2 $ Changes: Increase/(Decrease) in sales volumes (0.2) 8.5 (2.6) (1.7) - 4.0 Increase/(Decrease) in finished good prices (18.3) (28.7) (1.7) (0.3) - (49.0) Decrease due to currency exchange rates (0.5) (1.4) (0.1) - (0.6) (2.6) Other change - - - - (5.4) (5.4) Total Change: (19.0) $ (21.6) $ (4.4) $ (2.0) $ (6.0) $ (53.0) $ Net Sales Fourth Quarter 2015 117.1 $ 188.5 $ 35.2 $ 53.9 $ 77.5 $ 472.2 $ Feed Ingredients Segment Change in Net Sales - Year over Year (2014 over 2015) and Sequential (3Q15 Quarter over 4Q15 Quarter) |
Creating sustainable food, feed and fuel ingredients for a growing
population Feed Ingredients Segment
Change in Net Sales - 2Q15 to 3Q15
Fats
Proteins Used Cooking Oil Bakery Other Total Net Sales Second Quarter 2015 139.9 $ 209.9 $ 43.1 $ 54.3 $ 82.2 $ 529.4 $ Changes: Increase/(Decrease) in sales volumes 1.1 5.0 (0.2) (0.5) - 5.4 Increase/(Decrease) in finished good prices (3.9) (2.6) (3.2) 2.2 - (7.4) Decrease due to currency exchange rates (1.0) (2.2) (0.2) - - (3.4) Other change -
- -
1.3 1.3 Total Change: (3.8) $ 0.2 $ (3.6) $ 1.7 $ 1.3 $ (4.1) $ Net SalesThird Quarter 2015 136.1 $ 210.1 $ 39.6 $ 55.9 $ 83.5 $ 525.2 $ Change in Net Sales - 1Q14 to 1Q15 Fats Proteins Used Cooking Oil Bakery Other Total Net Sales First Quarter 2014 157.0 $ 233.2 $ 44.8 $ 54.2 $ 96.9 $ 586.1 $ Changes: Increase in sales volumes 10.1 7.0 0.9
10.9 - 28.9 Decrease in finished good prices (13.8) (3.1) (9.2) (11.3) - (37.4) Decrease due to currency exchange rates (6.6) (17.1) (0.4) - (10.4) (34.5) Other change -
- - 4.4 4.4 Total Change: (10.3) $ (13.2) $ (8.7) $ (0.4) $ (6.0) $ (38.6) $ Net Sales First Quarter 2015 146.7 $ 220.0 $ 36.1 $ 53.8 $ 90.9 $ 547.5 $ 17 Change in Net Sales - Three Months Ended (Sequential Quarter over Quarter)
|
Creating sustainable food, feed and fuel ingredients for a growing
population Feed Ingredients Segment -
Change in Net Sales - 3Q14 to 3Q15
Fats
Proteins Used Cooking Oil Bakery Other Total Net Sales Third Quarter 2014 171.8 $ 249.6 $ 39.7 $ 54.1 $ 92.1 $ 607.3 $ Changes: Increase in sales volumes 11.7 14.7 3.0
7.4 -
36.8 Decrease in finished good prices (41.2) (36.6) (2.5)
(5.6) -
(85.9) Decrease due to currency exchange rates (6.2) (17.6) (0.6)
-
(8.4) (32.8) Other change -
- -
-
(0.2) (0.2) Total Change: (35.7) $ (39.5) $ (0.1) $ 1.8 $ (8.6) $ (82.1) $ Net SalesThird Quarter 2015 136.1 $ 210.1 $ 39.6 $ 55.9 $ 83.5 $ 525.2 $ 18 Change in Net Sales - 4Q14 to 4Q15 Fats Proteins Used Cooking Oil Bakery Other Total Net Sales Fourth Quarter 2014 164.3 $ 245.1 $ 47.5 $ 54.0 $ 95.1 $ 606.0 $ Changes: Increase in sales volumes (5.7) 0.4 (2.2) (2.9) - (10.4) Decrease in finished good prices (37.0) (44.5) (9.6) 2.8 - (88.3) Decrease due to currency exchange rates (4.5) (12.5) (0.5) - (5.7) (23.2) Other change -
- -
- (11.9) (11.9) Total Change: (47.2) $ (56.6) $ (12.3) $ (0.1) $ (17.6) $ (133.8) $ Net Sales Fourth Quarter 2015 117.1 $ 188.5 $ 35.2 $ 53.9 $ 77.5 $ 472.2 $ Change in Net Sales - 2014 over 2015 (Qtr. over Qtr.) |
Creating sustainable food, feed and fuel ingredients for a growing
population Feed Ingredients Segment -
19 Change in Net Sales - 2014 over 2015 (Qtr. over Qtr.) Change in Net Sales - 2Q14 to 2Q15 Fats Proteins Used Cooking Oil Bakery Other Total Net Sales Second Quarter 2014 165.9 $ 251.9 $ 58.3 $ 59.4 $ 86.6 $ 622.1 $ Changes: Increase in sales volumes 12.3 12.0 1.4 12.9 - 38.6 Decrease in finished good prices (32.1) (34.4) (16.3) (18.0) - (100.8) Decrease due to currency exchange rates (6.2) (19.6) (0.3) - (9.9) (36.0) Other change - - - - 5.5 5.5 Total Change: (26.0) $ (42.0) $ (15.2) $ (5.1) $ (4.4) $ (92.7) $ Net Sales Second Quarter 2015 139.9 $ 209.9 $ 43.1 $ 54.3 $ 82.2 $ 529.4 $ Change in Net Sales - 1Q14 to 1Q15 Fats Proteins Used Cooking Oil Bakery Other Total Net Sales First Quarter 2014 157.0 $ 233.2 $ 44.8 $ 54.2 $ 96.9 $ 586.1 $ Changes: Increase in sales volumes 10.1 7.0 0.9 10.9 - 28.9 Decrease in finished good prices (13.8) (3.1) (9.2) (11.3) - (37.4) Decrease due to currency exchange rates (6.6) (17.1) (0.4) - (10.4) (34.5) Other change - - - 4.4 4.4 Total Change: (10.3) $ (13.2) $ (8.7) $ (0.4) $ (6.0) $ (38.6) $ Net Sales First Quarter 2015 146.7 $ 220.0 $ 36.1 $ 53.8 $ 90.9 $ 547.5 $ |
Creating sustainable food, feed and fuel ingredients for a growing
population Foreign Currency Impact
o The U.S. dollar has strengthened against most of the functional currencies used by the
Companys non-domestic operations.
o Using actual results for fiscal year 2014 and comparing the yearly average rates to the
average rates for fiscal year 2015, the impact of the strengthened dollar would
result in an annual decrease in net sales and EBITDA of
approximately $383.2 million
and approximately
$49.0 million, respectively if the same amount of non-domestic operations
were attained in fiscal 2015.
o The U.S. dollar continues to strengthen at the time of this filing. The impact is mainly affected
by the drop in the Euro in comparison to the U.S. dollar.
Assumptions: 20 Exchange Rate: Avg. 2014 Avg. Q1 2015 Avg. Q2 2015 Avg. Q3 2015 Avg. Q4 2015 Avg. 2015 Euro/USD 1.31878 1.126696 1.105606 1.113029 1.093438 1.107754 CAD/USD 0.90395 0.803378 0.813084 0.763154 0.739957 0.774775 |
Creating sustainable food, feed and fuel ingredients for a growing
population (1)
Has impact of inventory step-up in
1 st and 2 nd quarter. (2) Exclusive of non-cash inventory step-up and Darling Ingredients International
13 th week. (3) Raw material process volumes have been adjusted to include additional blending materials.
(A) Quarters 1, 2 and 3 revenues have been adjusted for re-class
between sales and cost of sales. Feed
Segment - Historical 21 US$ and metric tons (millions) Q1 2014 Q2 2014 Q3 2014 Q4 2014 Total 2014 Q1 2015 Q2 2015 Q3 2015 Q4 2015 Total 2015 Revenue (A) $586.1 $622.1 $607.3 $606.0 $2,421.5 $547.5 $529.4 $525.2 $472.2 $2,074.3 Gross Margin (1) 142.5 165.4 132.5 132.5 572.9 123.5 124.5 116.2 96.7 460.9 Gross Margin % (1) 24.3% 26.6% 21.8% 21.9% 23.7% 22.6% 23.5% 22.1% 20.5% 22.2% Operating Income (2) 37.5 74.7 46.4 33.6 192.2 35.4 35.4 35.6 10.1 116.5 Adjusted Operating Income (1) 52.4 76.2 46.4 33.6 208.6 35.4 35.4 35.6 10.1 EBITDA (2) 76.1 114.6 84.2 76.4 351.3 75.5 75.9 76.5 54.4 282.3 Adjusted EBITDA (1) 90.9 116.1 84.2 76.4 367.6 75.5 75.9 76.5 54.4 282.3 Adjusted EBITDA/Revenue 15.5% 18.7% 13.9% 12.6% 15.2% 13.8% 14.3% 14.6% 11.5% 13.6% Raw Material Processed
(3) (millions of metric tons) 1.73 1.73 1.73 1.92 7.11 1.87 1.83 1.86 1.89 7.45 |
Creating sustainable food, feed and fuel ingredients for a growing
population Food
Segment - Historical (1) Has impact of inventory step-up in 1 st and 2 nd quarter. (2) Exclusive of non-cash inventory step-up and Darling Ingredients International 13 th week. (3) Raw material process volumes for the first quarter have been adjusted to be consistent with the
presentation of the second quarter figures.
(A) Quarters 1, 2 and 3 revenues have been adjusted for re-class
between sales and cost of sales. 22
US$ and metric tons
(millions) Q1 2014 Q2 2014 Q3 2014 Q4 2014 Total 2014 Q1 2015 Q2 2015 Q3 2015 Q4 2015 Total 2015 Revenue (A) 293.5 331.4 301.4 322.0 1,248.3 270.2 283.4 269.2 272.1 1,094.9 Gross Margin (1) 62.3 65.3 64.2 63.4 255.2 53.5 60.2 54.8 62.9 231.4 Gross Margin % (1) 21.2% 19.7% 21.3% 19.7% 20.4% 19.8% 21.2% 20.4% 23.1% 21.1% Operating Income/(Loss) (2) (12.1) 11.3 14.0 13.7 26.9 10.8 15.5 11.6 23.3 61.2 Adjusted Operating Income (1) 19.8 14.7 14.0 13.7 62.2 10.8 15.5 11.6 23.3 61.2 EBITDA (2) 5.3 30.9 32.6 31.4 100.2 28.0 32.3 28.7 39.1 128.1 Adjusted EBITDA (1) 38.3 34.3 32.6 31.4 136.6 28.0 32.3 28.7 39.1 128.1 Adjusted EBITDA/Revenue 13.0% 10.4% 10.8% 9.7% 10.9% 10.4% 11.4% 10.7% 14.4% 11.7% Raw Material Processed (millions of metric tons) 0.25 (3) 0.27 0.26 0.28 1.06 0.27 0.28 0.26 0.26 1.07 |
Creating sustainable food, feed and fuel ingredients for a growing
population (1)
Has impact of inventory step-up in 1st quarter.
(2) Exclusive of non-cash inventory step-up and Darling Ingredients Int'l 13th week.
(3) Raw material process volumes for the first quarter have been adjusted to be consistent
with the presentation of the second quarter figures.
(A) Quarters 1, 2 and 3 revenues have been adjusted for re-class between
sales and cost of sales. Fuel
Segment - Historical 23 US$ and metric tons (millions) Q1 2014 Q2 2014 Q3 2014 Q4 2014 Total 2014 Q1 2015 Q2 2015 Q3 2015 Q4 2015 Total 2015 Revenue $66.7 $77.7 $70.0 $72.2 $286.6 $57.0 $46.5 $59.3 $65.4 $228.2 Gross Margin 15.3 15.9 17.8 10.0 59.0 13.2 6.3 11.4 20.2 51.1 Gross Margin % 21.1% 20.5% 25.4% 13.9% 20.6% 23.1% 13.5% 19.2% 30.9% 22.4% Operating Income (2) 2.3 5.2 2.8 10.9 21.2 2.5 2.0 0.2 12.5 17.2 Adjusted Operating Income (1) 3.5 5.2 2.8 10.9 22.4 2.5 2.0 0.2 12.5 17.2 EBITDA (2) 9.7 11.1 11.5 16.9 49.2 9.1 8.6 7.0 19.2 43.9 Adjusted EBITDA (1) 10.9 11.1 11.5 16.9 50.4 9.1 8.6 7.0 19.2 43.9 Adjusted EBITDA/Revenue 16.3% 14.3% 16.4% 23.4% 17.6% 16.0% 18.5% 11.8% 29.4% 19.2% Raw Material Processed * (millions of metric tons) 0.23 (3) 0.24 0.26 0.33 1.07 0.30 0.29 0.27 0.31 1.17 *Excludes raw material processed at the DGD joint venture. Diamond Green Diesel (50% Joint Venture) US$ (millions) Q1 2014 Q2 2014 Q3 2014 Q4 2014 Total 2014 Q1 2015 Q2 2015 Q3 2015 Q4 2015 Total 2015 EBITDA (Darling's share) $9.1 5.9 2.9 63.7 $81.6 2.3 7.9 (8.3) 86.6 $88.5 |
Creating sustainable food, feed and fuel ingredients for a growing
population QTR. Over QTR.
Year Over Year
Comparison Q3-2015 Q4-2015 % Q4-2014 Q4-2015 % Average Jacobsen Prices (USD) Avg. Avg. Change Avg. Avg. Change Bleachable Fancy Tallow - Chicago Renderer / cwt $29.42 $21.18 -28.0% $31.78 $21.18 -33.4% Yellow Grease - Illinois / cwt $21.48 $17.86 -16.9% $25.56 $17.86 -30.1% Meat and Bone Meal - Ruminant - Illinois / ton $354.91 $249.29 -29.8% $392.68 $249.29 -36.5% Poultry By-Product Meal - Feed Grade - Mid South/ton $391.55 $334.67 -14.5% $492.76 $334.67 -32.1% Poultry By-Product Meal - Pet Food - Mid South/ton $532.45 $469.49 -11.8% $746.52 $469.49 -37.1% Feathermeal - Mid South / ton $499.12 $367.06 -26.5% $672.63 $367.06 -45.4% Average Wall Street Journal Prices (USD) Corn - Track Central IL #2 Yellow / bushel $3.62 $3.64 0.6% $3.41 $3.64 6.7% Average Thomson Reuters Prices (USD) Palm oil - CIF Rotterdam / metric ton $558 $563 -0.9% $718 $563 -21.6% Soy meal - CIF Rotterdam / metric ton $380 $352 -7.4% $486 $352 -27.6% USD/Euro Avg. Exchange Rates 1.113 1.094 -1.7% 1.328 1.094 -17.6% USD/Canadian Avg. Exchange Rates 0.763 0.749 -1.8% 0.916 0.749 -18.2% 24 2016 January February March Q1 Avg. April May June Q2 Avg. July August Sept. Q3 Avg. Oct. Nov. Dec. Q4 Avg. Year Avg. January Bleachable Fancy Tallow - Chicago Renderer / cwt $29.16 $29.14 $30.53 $29.66 $28.69 $28.95 $29.91 $29.18 $29.00 $29.64 $29.62 $29.42 $22.91 $20.00 $20.00 $21.18 $27.36 $23.53 Yellow Grease - Illinois / cwt $24.54 $24.34 $24.81 $24.58 $22.36 $22.84 $24.50 $23.24 $23.80 $21.19 $19.55 $21.48 $18.02 $17.51 $18.00 $17.86 $21.79 $19.03 Meat and Bone Meal - Ruminant - Illinois / ton $402.13 $375.53 $377.95 $385.12 $387.02 $359.75 $304.20 $348.88 $338.18 $385.00 $343.10 $354.91 $280.68 $251.58 $217.27 $249.29 $334.55 $184.74 Poultry By-Product Meal - Feed Grade - Mid South/ton $466.00 $460.26 $468.18 $465.00 $487.14 $427.25 $370.91 $426.94 $376.70 $399.64 $402.50 $391.55 $376.93 $334.74 $293.41 $334.67 $404.54 $247.11 Poultry By-Product Meal - Pet Food - Mid South/ton $712.50 $629.61 $625.00 $655.12 $607.74 $520.00 $446.59 $521.50 $478.18 $568.21 $557.14 $532.45 $477.27 $463.95 $467.61 $469.49 $544.64 $498.03 Feathermeal - Mid South / ton $538.63 $460.39 $565.00 $523.77 $579.17 $491.75 $430.57 $499.13 $467.95 $555.00 $476.67 $499.12 $404.20 $369.47 $329.43 $367.06 $472.27 $255.39 2016 January February March Q1 Avg. April May June Q2 Avg. July August Sept. Q3 Avg. Oct. Nov. Dec. Q4 Avg. Year Avg. January Corn - Track Central IL #2 Yellow / bushel $3.65 $3.68 $3.66 $3.66 $3.55 $3.48 $3.49 $3.51 $3.81 $3.49 $3.56 $3.62 $3.65 $3.60 $3.68 $3.64 $3.61 $3.58 2016 January February March Q1 Avg. April May June Q2 Avg. July August Sept. Q3 Avg. Oct. Nov. Dec. Q4 Avg. Year Avg. January Palm oil - CIF Rotterdam / metric ton $619 $698 $652 $656 $645 $653 $651 $650 $603 $505 $565 $558 $565 $555 $569 $563 $607 $565 Soy meal - CIF Rotterdam / metric ton $456 $442 $410 $436 $403 $392 $393 $396 $394 $381 $365 $380 $367 $353 $336 $352 $391 $339 2015 Finished Product Pricing Feed Segment Ingredients 2015 Cash Corn Pricing Competing Ingredient for Bakery Feeds and Fats European Benchmark Pricing 2015 2015 Average Jacobsen Prices (USD) 2015 Average Wall Street Journal Prices (USD) 2015 Average Thomson Reuters Prices (USD) Jacobsen, Wall Street Journal and Thomson Reuters Historical Pricing |
Creating sustainable food, feed and fuel ingredients for a growing
population Process
USA Canada Europe China S. America Australia Total: Rendering - (C3 By-products & UCO)
92 5 18 115 Bakery 10 10 Used Cooking Oil processing only 8 1 9 Disposal Rendering - (C1 & C2)
6 6 Food Grade Fat Processing 5 5 Blood Processing 1 4 5 1 11 Bone Processing 2 2 Bio Diesel 1 1 2 Renewable Diesel 1 1 Gelatin 2 4 4 3 13 Casings 4 1 5 Environmental Services 4 1 5 Fertilizer 1 1 Pet Food 3 1 4 Hides 3 3 6 126 6 49 10 3 1 195 Under Construction: Rendering 2 Locations by Continent and Process European categories for rendering of animal by-products: C3 food-grade material, for food and feed products C2 unfit for food or animal feed, can be used as fertilizer C1 must be destroyed; used to generate green energy * Note: List excludes administrative and dedicated sales offices. *Includes transfer stations and blending 25 |
Creating sustainable food, feed and fuel ingredients for a growing
population Adjusted EBITDA is presented here not as an alternative to net
income, but rather as a measure of the Companys operating
performance and is not intended to be a presentation in accordance with GAAP. Since
EBITDA (generally, net income plus interest expenses, taxes, depreciation
and amortization) is not calculated identically by all companies, this presentation may not be comparable to EBITDA or adjusted EBITDA presentations disclosed by other companies. Adjusted EBITDA is calculated in this
presentation and represents, for any relevant period, net income/(loss) plus
depreciation and amortization, 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 loss of unconsolidated subsidiary. Management believes that Adjusted EBITDA is useful in
evaluating the Companys 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. As a result, the Companys management uses Adjusted EBITDA as a measure to evaluate performance and for other discretionary
purposes. However, Adjusted EBITDA is not a recognized measurement under GAAP, should
not be considered as an alternative to net income as a measure of
operating results or to cash flow as a measure of liquidity, and is not intended to be a presentation in accordance with GAAP. In addition to the foregoing, management also uses or will use Adjusted EBITDA to measure compliance
with certain financial covenants under the Companys Senior Secured Credit
Facilities and 5.375% Notes and 4.75% Notes that were outstanding at
January 2, 2016. However, the amounts shown in this presentation for Adjusted EBITDA differ from the amounts calculated under similarly titled definitions in the Companys Senior Secured Credit Facilities and 5.375% Notes and 4.75%
Notes, as those definitions permit further adjustments to reflect certain
other non-recurring costs and 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.
In addition, the Companys management used adjusted diluted earnings per share as
a measure of earnings due to the significant merger and acquisition
activity of the Company. However, adjusted earnings per share is not a recognized measurement under GAAP and should not be considered as an alternative to diluted earnings per share presented in accordance with GAAP. Adjusted
diluted earnings per share is defined as adjusted net income attributable to Darling
divided by the weighted average shares of diluted common stock. Adjusted
net income attributable to Darling is defined as a reconciliation of net income attributable to Darling, net of tax (i) adjusted for net of tax acquisition and integration costs related to merger and acquisitions, (ii) net of tax amortization of
acquisition related intangibles and (iii) net of tax certain
non-recurring items that are not part of normal operations. This measure is solely for the purpose of calculating adjusted diluted earnings per share and is not intended to be a substitute of presentation
in accordance with GAAP.
Non-U.S. GAAP Measures
26 |
Darling Ingredients (NYSE:DAR)
과거 데이터 주식 차트
부터 6월(6) 2024 으로 7월(7) 2024
Darling Ingredients (NYSE:DAR)
과거 데이터 주식 차트
부터 7월(7) 2023 으로 7월(7) 2024