IRVING, Texas, Nov. 10, 2016 /PRNewswire/ --
3rd Quarter 2016 Highlights
- Net income of $28.7 million,
or $0.17 per GAAP diluted
share
- Revenue of $853.9
million
- Adjusted EBITDA of $106.2
million
- Margin expansion tempered by Food Segment production
challenges and inventory adjustment
- Record grain harvests drove lower finished product pricing
for global fats and an oversupply of proteins
- Diamond Green Diesel ('DGD')
delivers strongest earnings to date
- Solid cash flow generation with aggressive debt reduction of
$60 million
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, industrial, fuel, bioenergy,
and fertilizer industries, today announced financial results for
the third quarter ending October 1,
2016.
For the third quarter of 2016, the Company reported net sales of
$853.9 million, as compared with net
sales of $853.8 million for the third
quarter of 2015. Net income attributable to Darling for the
three months ended October 1, 2016
was $28.7 million, or $0.17 per diluted share, compared to a net loss
of ($9.1) million, or ($0.06) per diluted share, for the third quarter
of 2015. The increase in net income is primarily attributable
to higher earnings from DGD due to the inclusion of the blenders'
tax credit which was not available as of the end of the third
quarter of 2015, higher Renewable Identification Number ("RIN")
values, and an income tax benefit. Adjusted EBITDA for Darling for
the three months ended October 1,
2016 was $106.2 million
compared to Adjusted EBITDA of $106.1
million for the three months ended October 3, 2015.
Comments on the Third Quarter of 2016
Randall C. Stuewe, Chairman and
Chief Executive Officer of Darling Ingredients Inc., said, "We
continue to execute against our strategic plan to de-lever and grow
while managing through considerable volatility in many of our
markets."
"Our Feed Ingredients segment results were predictably lower due
to record North American crop harvests weighing on global pricing
for fats and proteins. However, strong tonnage offset some price
volatility, and our model is adjusting to lower finished product
values. Food segment performance disappointed due to several moving
parts, including major annual plant turnarounds and softness in
China compressing margin
expansion. Our Fuel segment was seasonally driven and continued to
perform well with strong demand for biofuel feedstock in
Europe."
Commenting on the Company's overall strategy, Mr. Stuewe said,
"Our diversified portfolio and strong risk management have
positioned us to navigate through the variability of our markets.
We continue to develop a pipeline of opportunities for long-term
growth while streamlining our cost structure, aggressively reducing
debt and maintaining solid financial footing. We intend to manage
the volatile markets through the fourth quarter and carry good
momentum into 2017."
Operational Update by Segment
- Feed Ingredients – Segment executed well in light
of volatile and declining global fat prices and an oversupply of
proteins. The decline in fat prices were tempered by the growing
world demand for biofuels. Further, USA impacted by hot summer, which affected
rendering quality and plant processing efficiencies. Raw material
volumes were strong around the globe, and our two new U.S.
rendering plants are nearing capacity and fully contributing.
Europe, USA and Canada rendering delivered as expected. Bakery
Feeds tonnage increased and business delivered solid results. Our
global blood business was slightly lower but demand remains strong
in China.
- Food Ingredients – Segment challenged with
reduced demand in China for low
bloom gelatin, which drove an inventory write-down. Major annual
maintenance turnarounds at plants in China and USA
also affected results. Margins contracted slightly due to higher
raw material prices and production processing slowdowns. Sonac
edible fat earnings declined as some raw material diversion to
China continued. CTH casings
business improved and produced as expected.
- Fuel Ingredients – Segment experienced typical
seasonality with less tonnage to Rendac and Ecoson sequentially;
however, improved volumes and operating performance contributed to
year-over-year increase. Canada Biodiesel delivered on target and
ahead of last year.
- Diamond Green Diesel Joint
Venture – Operating at current full capacity, DGD
demonstrated outstanding performance and reported its strongest
earnings contribution to date, improving EBITDA by 23 percent from
the previous quarter. Lower fat prices, stable heating oil and
rising RIN values combined with more Low Carbon Fuel Standard
(LCFS) demand supported unconsolidated EBITDA of $22.5 million for Darling. Final engineering is
complete for the DGD facility expansion, which at full capacity
will increase annual production from 160 million gallons to 275
million gallons. Construction is now scheduled for completion in
early Q2 2018.
Reconciliation of Net Income to (Non-GAAP) Adjusted EBITDA
and (Non-GAAP) Pro forma Adjusted EBITDA
Third Quarter 2016
as compared to Third Quarter 2015
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) (for additional information, see "Use of Non-GAAP
Financial Measures" included later in this media release). The
Company believes that Adjusted EBITDA provides additional useful
information to investors. Adjusted EBITDA, as the Company uses the
term, is calculated below:
|
Three Months Ended -
Year over Year
|
|
|
|
Adjusted
EBITDA
|
October 1,
|
|
October 3,
|
|
|
|
(U.S. dollars in
thousands)
|
2016
|
|
2015
|
|
|
|
|
|
|
|
|
|
|
Net income/(loss)
attributable to Darling
|
$
28,694
|
|
$
(9,087)
|
|
|
|
Depreciation and
amortization
|
70,653
|
|
67,327
|
|
|
|
Interest
expense
|
23,867
|
|
24,828
|
|
|
|
Income tax
expense/(benefit)
|
(744)
|
|
7,859
|
|
|
|
Foreign currency
loss/(gain)
|
(354)
|
|
2,461
|
|
|
|
Other
expense/(income), net
|
2,007
|
|
(1,004)
|
|
|
|
Equity in net
(income)/loss of unconsolidated subsidiary
|
(18,138)
|
|
12,021
|
|
|
|
Net income
attributable to noncontrolling interests
|
196
|
|
1,730
|
|
|
|
Adjusted
EBITDA
|
$ 106,181
|
|
$ 106,135
|
|
|
|
Acquisition and
integration-related expenses
|
-
|
|
1,280
|
|
|
|
Pro forma Adjusted
EBITDA (Non-GAAP)
|
$ 106,181
|
|
$ 107,415
|
|
|
|
Foreign currency
exchange impact (1)
|
(90)
|
|
-
|
|
|
|
Pro forma Adjusted
EBITDA to Foreign Currency (Non-GAAP)
|
$ 106,091
|
|
$ 107,415
|
|
|
|
|
|
|
|
|
|
|
DGD Joint Venture
Adjusted EBITDA (Darling's share)
|
$
22,543
|
|
$
(8,309)
|
|
|
|
|
|
|
|
(1)
|
The average rates
assumption used in this calculation was the actual fiscal average
rate for the three months ended October 3, 2015 of
€1.00:USD$1.11 and CAD$1.00:USD$0.76 as compared to the average
rate for the three months ended October 1, 2016 of €1.00:USD$1.12
and CAD$1.00:USD$0.77, respectively.
|
For the three months ended October 1,
2016, the Company generated Adjusted EBITDA of $106.2 million, as compared to $106.1 million in the same period in fiscal
2015.
DGD Joint Venture Adjusted EBITDA (Darling's share) is not
reflected in the Adjusted EBITDA, the Pro forma Adjusted EBITDA, or
the Pro forma Adjusted EBITDA to Foreign Currency. See Note 6 in
the Company's Consolidated Financial Statements included in the
Company's Form 10-Q for the period ended October 1, 2016 and at the end of this press
release for financial information regarding the DGD Joint
Venture.
Reconciliation of Net Income to (Non-GAAP) Adjusted EBITDA
and (Non-GAAP) Pro forma Adjusted EBITDA
Third Quarter 2016 as compared on a sequential basis to Second
Quarter 2016
|
Three Months Ended -
Sequential
|
|
|
|
Adjusted
EBITDA
|
October 1,
|
|
July 2,
|
|
|
|
(U.S. dollars in
thousands)
|
2016
|
|
2016
|
|
|
|
|
|
|
|
|
|
|
Net income
attributable to Darling
|
$
28,694
|
|
$
31,999
|
|
|
|
Depreciation and
amortization
|
70,653
|
|
69,531
|
|
|
|
Interest
expense
|
23,867
|
|
23,980
|
|
|
|
Income tax
expense/(benefit)
|
(744)
|
|
7,983
|
|
|
|
Foreign currency
gain
|
(354)
|
|
(8)
|
|
|
|
Other expense,
net
|
2,007
|
|
2,373
|
|
|
|
Equity in net income
of unconsolidated subsidiary
|
(18,138)
|
|
(13,852)
|
|
|
|
Net income
attributable to noncontrolling interests
|
196
|
|
1,992
|
|
|
|
Adjusted
EBITDA
|
$ 106,181
|
|
$ 123,998
|
|
|
|
Acquisition and
integration-related expenses
|
-
|
|
70
|
|
|
|
Pro forma Adjusted
EBITDA (Non-GAAP)
|
$ 106,181
|
|
$ 124,068
|
|
|
|
Foreign currency
exchange impact (1)
|
688
|
|
-
|
|
|
|
Pro forma Adjusted
EBITDA to Foreign Currency (Non-GAAP)
|
$ 106,869
|
|
$ 124,068
|
|
|
|
|
|
|
|
|
|
|
DGD Joint Venture
Adjusted EBITDA (Darling's share)
|
$
22,543
|
|
$
18,331
|
|
|
|
|
|
|
|
|
|
|
(1)
|
The average rates
assumption used in this calculation was the actual fiscal average
rate for the three months ended July 2, 2016 of €1.00: USD$1.13 and
CAD$1.00:USD$0.78 as compared to the average rate for the three
months ended October 1, 2016 of €1.00: USD$1.12 and
CAD$1.00:USD$0.77, respectively.
|
On a sequential basis, for the three months ended October 1, 2016, the Company generated Adjusted
EBITDA of $106.2 million, as compared
to $124.0 million for the three
months ended July 2, 2016, a decrease
of $17.8 million. The decrease is
primarily attributable to lower finished product prices in both the
Food and Feed Ingredients segments. Lower finished product prices
for fats and used cooking oil in the Feed Ingredients segment more
than offset higher sales volumes which contributed to the decrease
in Adjusted EBITDA.
DGD Joint Venture Adjusted EBITDA (Darling's share) is not
reflected in the Adjusted EBITDA, the Pro forma Adjusted EBITDA, or
the Pro forma Adjusted EBITDA to Foreign Currency. See Note 6 in
the Company's Form 10-Q for the period ended October 1, 2016 and the DGD Operating Financial
Results included at the end of this press release for financial
information regarding the DGD Joint Venture.
Financial Update by Segment
Feed
Ingredients
|
Three Months
Ended
|
|
Nine Months
Ended
|
($
thousands)
|
October 1,
2016
|
October 3,
2015
|
|
October 1,
2016
|
October 3,
2015
|
Net Sales
|
$
531,413
|
$
525,213
|
|
$
1,550,539
|
$
1,602,141
|
Depreciation and
amortization
|
43,614
|
40,846
|
|
130,110
|
121,386
|
Segment operating
income
|
35,254
|
35,619
|
|
90,512
|
106,422
|
EBITDA*
|
$
78,868
|
$
76,465
|
|
$
220,622
|
$
227,808
|
|
|
*EBITDA calculated by
adding depreciation and amortization to segment operating
income.
|
|
- Feed Ingredients operating income for the three months ended
October 1, 2016 was $35.3 million, a decrease of $0.3 million as compared to the three months
ended October 3, 2015. Earnings for
the Feed Ingredients segment were lower due to an increase in
depreciation and amortization as a result of new plants in the U.S.
and lower finished product prices that more than offset higher
production volumes due to higher raw material supply and lower
selling, general and administrative expense.
- Feed Ingredients operating income for the nine months ended
October 1, 2016 was $90.5 million, a decrease of $15.9 million as compared to the first nine
months ended October 3, 2015.
Earnings for the Feed Ingredients segment were lower due to the
significant decline in protein finished product prices resulting
from near record grain production in fiscal year 2015 and 2016.
Higher depreciation and amortization in fiscal 2016 due to placing
new plants into production in the U.S. were offset by reduced
selling, general and administrative expense.
Food
Ingredients
|
Three Months
Ended
|
|
Nine Months
Ended
|
($
thousands)
|
October 1,
2016
|
October 3,
2015
|
|
October 1,
2016
|
October 3,
2015
|
Net Sales
|
$
261,997
|
$
269,230
|
|
$
782,014
|
$
822,741
|
Depreciation and
amortization
|
17,383
|
17,144
|
|
51,823
|
51,126
|
Segment operating
income
|
7,944
|
11,562
|
|
49,474
|
37,921
|
EBITDA*
|
$
25,327
|
$
28,706
|
|
$
101,297
|
$
89,047
|
|
|
*EBITDA calculated by
adding depreciation and amortization to segment operating
income.
|
|
- Food Ingredients operating income was $7.9 million for the three months ended
October 1, 2016, a decrease of
$3.7 million as compared to the three
months ended October 3, 2015.
Selling, general and administrative expense in the Food Ingredients
segment was reduced due to gains in currency hedges. The Company's
casing business improved compared to the same period in the prior
year, primarily due to the re-opening of the Chinese border which
was temporarily closed in 2015 to the import of meat by-products
which heavily impacted the segment. European edible fats
performance declined over the prior year due to lower volumes and
sales prices. The gelatin business earnings were down as compared
to the prior year due to an inventory value adjustment in
China of $3.5 million as a result of the decrease in
demand for low bloom gelatin. The gelatin business was also
impacted by lower production volumes in three of the Company's
gelatin facilities.
- Food Ingredients operating income was $49.5 million for the first nine months ended
October 1, 2016, an increase of
$11.6 million as compared to the
first nine months ended October 3,
2015. The gelatin business earnings improved compared to the
prior year primarily due to strong profitability in the Company's
North American, South American and European operations. European
edible fats performance normalized over the prior year due to
stable sales prices. The Company's casing business improved as
compared to the same period in the prior year, due primarily to
higher sale volumes. Selling, general and administrative expense
was reduced by $9.9 million which
included significant gains on currency hedges.
Fuel
Ingredients
|
Three Months
Ended
|
|
Nine Months
Ended
|
($
thousands)
|
October 1,
2016
|
October 3,
2015
|
|
October 1,
2016
|
October 3,
2015
|
Net Sales
|
$
60,446
|
$
59,319
|
|
$
178,285
|
$
162,889
|
Depreciation and
amortization
|
6,896
|
6,729
|
|
20,999
|
19,959
|
Segment operating
income
|
|
5,971
|
246
|
|
18,680
|
4,777
|
EBITDA*
|
$
12,867
|
$
6,975
|
|
$
39,679
|
$
24,736
|
|
|
*EBITDA calculated by
adding depreciation and amortization to segment operating
income.
|
|
- Exclusive of the DGD Joint Venture, Fuel Ingredients operating
income for the three months ended October 1,
2016 was $6.0 million, an
increase of $5.8 million as compared
to the three months ended October 3,
2015. The increase in earnings is primarily due to the fact
that during the three months ended October
1, 2016 the Canadian biodiesel plant was operating for the
full period while in the comparable period in 2015 production was
limited. The increase was also attributable to improved Ecoson and
Rendac volumes and operating performance and by a decrease in
selling, general and administrative expense due to subsidies
received from the Netherlands
government that is recorded as a credit to selling, general and
administrative expense.
- Exclusive of the DGD Joint Venture, Fuel Ingredients operating
income for the first nine months ended October 1, 2016 was $18.7
million, an increase of $13.9
million as compared to the first nine months ended
October 3, 2015. The increase in
earnings is due to improved Ecoson and Rendac volumes and operating
performance, improved productivity and margins at the Canadian
biodiesel plant, the inclusion of the blenders' tax credit and
higher RIN values in 2016 as compared to the same period in fiscal
2015. The increase in earnings was also attributable to lower
selling, general and administrative expense due to subsidies
received from the Netherlands
government that is recorded as a credit to selling, general and
administrative expense.
Results of Operations –Nine Months Ended October 1, 2016 Compared to Nine Months Ended
October 3, 2015
Net Income attributable to Darling for the nine months ended
October 1, 2016 was $61.8 million, or $0.37 per diluted share, as compared to a net
loss of $(5.9) million, or
$(0.04) per diluted share, in the
nine months ended October 3, 2015.
The increase is primarily attributable to increased margins and
production in both the Food and Fuel Ingredients segments, higher
raw material volumes in the Feed Ingredients segment and lower
selling, general and administrative expense.
Reconciliation of Net Income to (Non-GAAP) Adjusted EBITDA
and (Non-GAAP) Pro forma Adjusted EBITDA
First Nine Months of Fiscal 2016 as compared to First Nine Months
of Fiscal 2015
|
Nine Months
Ended
|
|
|
|
|
Adjusted
EBITDA
|
October 1,
|
|
October 3,
|
|
|
|
|
(U.S. dollars in
thousands)
|
2016
|
|
2015
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income/(loss)
attributable to Darling
|
$
61,772
|
|
$
(5,898)
|
|
|
|
|
Depreciation and
amortization
|
212,440
|
|
199,970
|
|
|
|
|
Interest
expense
|
71,748
|
|
82,222
|
|
|
|
|
Income tax
expense
|
9,102
|
|
14,639
|
|
|
|
|
Foreign currency
loss
|
2,241
|
|
3,299
|
|
|
|
|
Other expense,
net
|
5,685
|
|
704
|
|
|
|
|
Equity in net
(income)/loss of unconsolidated subsidiary
|
(37,633)
|
|
9,657
|
|
|
|
|
Net income
attributable to noncontrolling interests
|
3,772
|
|
5,302
|
|
|
|
|
Adjusted
EBITDA
|
$ 329,127
|
|
$ 309,895
|
|
|
|
|
Acquisition and
integration-related expenses
|
401
|
|
7,807
|
|
|
|
|
Pro forma Adjusted
EBITDA (Non-GAAP)
|
$ 329,528
|
|
$ 317,702
|
|
|
|
|
Foreign currency
exchange impact (1)
|
1,427
|
|
-
|
|
|
|
|
Pro forma Adjusted
EBITDA for Foreign Currency (Non-GAAP)
|
$ 330,955
|
|
$ 317,702
|
|
|
|
|
|
|
|
|
|
|
|
|
DGD Joint Venture
Adjusted EBITDA (Darling's share)
|
$
50,503
|
|
$
1,946
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
The average rates
assumption used in this calculation was the actual fiscal average
rate for the first nine months ended October 3, 2015 of
€1.00:USD$1.11 and CAD$1.00:USD$0.79 as compared to the average
rate for the first nine months ended October 1, 2016 of
€1.00:USD$1.12 and CAD$1.00:USD$0.76, respectively.
|
For the nine months ended October 1,
2016, the Company generated Adjusted EBITDA of $329.1 million, as compared to $309.9 million in the same period in fiscal 2015.
The increase is attributable to higher raw material volumes in the
Feed Ingredients segment that more than offset lower finished
product prices in the Food and Feed Ingredients segments.
Additionally, lower selling, general and administrative expense due
to cost reductions and offsetting gains in currency hedges
primarily in the Food Ingredients segment also contributed to the
increase.
DGD Joint Venture Adjusted EBITDA (Darling's share) is not
reflected in the Adjusted EBITDA, the Pro forma Adjusted EBITDA, or
the Pro forma Adjusted EBITDA to Foreign Currency. See Note 6 in
the Company's Form 10-Q for the period ended October 1, 2016 and the DGD Operating Financial
Results included at the end of this press release for financial
information regarding the DGD Joint Venture.
About Darling
Darling Ingredients Inc. is the world's 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 Company's website at http://ir.darlingii.com.
Darling Ingredients Inc. will host a conference call to discuss
the Company's third quarter 2016 financial results at 8:30
am Eastern Time (7:30 am Central
Time) on Friday, November 11,
2016. To listen to the conference call, participants calling
from within North America should
dial 866-777-2509; international participants should dial
412-317-5413. Please refer to access code
10094666. 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 November 18,
2016, by dialing 877-344-7529 (U.S. callers), 855-669-9658
(Canada) and 412-317-0088
(international callers). The access code for the replay is
10094666. The conference call will also be archived on
the Company's website.
Use of Non-GAAP Financial Measures:
Adjusted EBITDA is not a recognized accounting measurement under
GAAP; it should not be considered as an alternative to net income,
as a measure of operating results, or as an alternative to cash
flow as a measure of liquidity, and is not intended to be a
presentation in accordance with GAAP. Adjusted EBITDA is
presented here not as an alternative to net income, but rather as a
measure of the Company's operating performance. Since EBITDA
(generally, net income plus interest 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 Company's operating performance
compared to that of other companies in its industry because the
calculation of Adjusted EBITDA generally eliminates the effects of
financing, income taxes and certain non-cash and other items that
may vary for different companies for reasons unrelated to overall
operating performance.
As a result, the Company's management uses Adjusted EBITDA as a
measure to evaluate performance and for other discretionary
purposes. In addition to the foregoing, management also uses or
will use Adjusted EBITDA to measure compliance with certain
financial covenants under the Company's Senior Secured Credit
Facilities and 5.375% Notes and 4.75% Notes that were outstanding
at October 1, 2016. However, the
amounts shown in this presentation for Adjusted EBITDA differ from
the amounts calculated under similarly titled definitions in the
Company's 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, non-cash charges and
cash dividends from the DGD Joint Venture. Additionally, the
Company evaluates the impact of foreign exchange impact on
operating cash flow, which is defined as segment operating income
(loss) plus depreciation and amortization.
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 Ingredient's 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; global demands for
bio-fuels and grain and oilseed commodities, which have exhibited
volatility, and can impact the cost of feed for cattle, hogs and
poultry, thus affecting available rendering feedstock and selling
prices for the Company's products; reductions in raw material
volumes available to the Company due to weak margins in the meat
production industry as a result of higher feed costs, reduced
consumer demand or other factors, reduced volume from food service
establishments, or otherwise; reduced demand for animal feed;
reduced finished product prices, including a decline in fat and
used cooking oil finished product prices; changes to worldwide
government policies relating to renewable fuels and greenhouse gas
emissions that adversely affect programs like the Renewable Fuel
Standards Program (RFS2), low carbon fuel standards (LCFS) 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 Company's 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 and issues related to the announced expansion
project; difficulties or a significant disruption in our
information systems or failure to implement new systems and
software successfully, including our ongoing enterprise
resource planning project; risks relating to possible third
party claims of intellectual property infringement; increased
contributions to the Company's pension and benefit plans, including
multiemployer and employer-sponsored defined benefit pension plans
as required by legislation, regulation or other applicable U.S. or
foreign law or resulting from a U.S. mass withdrawal event; bad
debt write-offs; loss of or failure to obtain necessary permits and
registrations; continued or escalated conflict in the Middle East, North
Korea, Ukraine or
elsewhere; uncertainty regarding the likely exit of the U.K. from
the European Union; and/or unfavorable export or import markets.
These factors, coupled with volatile prices for natural gas and
diesel fuel, 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 Company's
ability to grow its business, which faces competition from
companies that may have substantially greater resources than the
Company. The Company's announced share repurchase program may be
suspended or discontinued at any time and purchases of shares under
the program are subject to market conditions and other factors,
which are likely to change from time to time. 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 Company's 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,
VP IR and Global Communications
|
Email :
mgaither@darlingii.com
|
251 O'Connor Ridge
Blvd., Suite 300, Irving, Texas 75038
|
Phone :
972-717-0300
|
Darling
Ingredients Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
October 1, 2016 and January 2, 2016 (in
thousands)
|
|
|
|
|
|
|
|
October 1,
|
|
January 2,
|
|
2016
|
|
2016
|
ASSETS
|
(unaudited)
|
|
|
Current
assets:
|
|
|
|
|
Cash and cash
equivalents
|
$
148,585
|
|
$
156,884
|
|
Restricted
cash
|
294
|
|
331
|
|
Accounts receivable,
net
|
382,857
|
|
371,392
|
|
Inventories
|
359,095
|
|
344,583
|
|
Prepaid
expenses
|
40,341
|
|
36,175
|
|
Income taxes
refundable
|
13,222
|
|
11,963
|
|
Other current
assets
|
18,609
|
|
10,460
|
|
Total current assets
|
963,003
|
|
931,788
|
Property, plant and
equipment, less accumulated
depreciation, net
|
1,535,185
|
|
1,508,167
|
Intangible
assets, less accumulated
amortization, net
|
|
|
|
747,522
|
|
782,349
|
|
|
|
|
|
Other
assets:
|
|
|
|
|
Goodwill
|
1,256,376
|
|
1,233,102
|
|
Investment in
unconsolidated subsidiaries
|
261,690
|
|
247,238
|
|
Other
assets
|
35,912
|
|
41,623
|
|
Deferred income
taxes
|
17,196
|
|
16,352
|
|
Total assets
|
$
4,816,884
|
|
$
4,760,619
|
|
|
|
|
LIABILITIES AND
STOCKHOLDERS' EQUITY
|
|
|
|
Current
liabilities:
|
|
|
|
|
Current portion of
long-term debt
|
$
27,169
|
|
$
45,166
|
|
Accounts payable,
principally trade
|
168,556
|
|
149,998
|
|
Income taxes
payable
|
9,374
|
|
6,679
|
|
Accrued
expenses
|
254,561
|
|
239,825
|
|
Total current liabilities
|
459,660
|
|
441,668
|
|
|
|
|
|
Long-term debt, net
of current portion
|
1,818,361
|
|
1,885,851
|
Other non-current
liabilities
|
89,517
|
|
97,809
|
Deferred income
taxes
|
363,949
|
|
360,681
|
|
Total liabilities
|
2,731,487
|
|
2,786,009
|
|
|
|
|
|
Commitments and
contingencies
|
|
|
|
Total Darling's
stockholders' equity
|
1,983,677
|
|
1,870,709
|
|
Noncontrolling
interests
|
101,720
|
|
103,901
|
|
Total stockholders' equity
|
$
2,085,397
|
|
$
1,974,610
|
|
|
$
4,816,884
|
|
$
4,760,619
|
Darling
Ingredients Inc. and Subsidiaries
Consolidated Operating Results
For the Periods Ended October 1, 2016 and October 3,
2015 (in thousands, except per share data)
(unaudited)
|
|
|
|
Three Months
Ended
|
|
Nine Months
Ended
|
|
|
|
|
|
|
$ Change
|
|
|
|
|
|
$ Change
|
|
|
October 1,
|
|
October 3,
|
|
Favorable
|
|
October 1,
|
|
October 3,
|
|
Favorable
|
|
2016
|
|
2015
|
|
(Unfavorable)
|
|
2016
|
|
2015
|
|
(Unfavorable)
|
Net sales
|
$ 853,856
|
|
$ 853,762
|
|
$
94
|
|
$
2,510,838
|
|
$
2,587,771
|
|
$
(76,933)
|
Costs and
expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of sales and
operating expenses
|
$ 671,167
|
|
$ 671,321
|
|
154
|
|
$
1,947,175
|
|
$
2,024,118
|
|
76,943
|
|
Selling, general and
administrative expenses
|
76,508
|
|
75,026
|
|
(1,482)
|
|
234,135
|
|
245,951
|
|
11,816
|
|
Depreciation and
amortization
|
70,653
|
|
67,327
|
|
(3,326)
|
|
212,440
|
|
199,970
|
|
(12,470)
|
|
Acquisition and
integration costs
|
-
|
|
1,280
|
|
1,280
|
|
401
|
|
7,807
|
|
7,406
|
Total costs and
expenses
|
818,328
|
|
814,954
|
|
(3,374)
|
|
2,394,151
|
|
2,477,846
|
|
83,695
|
Operating
income
|
35,528
|
|
38,808
|
|
(3,280)
|
|
116,687
|
|
109,925
|
|
6,762
|
Other
expense:
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest
expense
|
(23,867)
|
|
(24,828)
|
|
961
|
|
(71,748)
|
|
(82,222)
|
|
10,474
|
|
Foreign currency
gain/(loss)
|
354
|
|
(2,461)
|
|
2,815
|
|
(2,241)
|
|
(3,299)
|
|
1,058
|
|
Other
income/(expense), net
|
(2,007)
|
|
1,004
|
|
(3,011)
|
|
(5,685)
|
|
(704)
|
|
(4,981)
|
Total other
expense
|
(25,520)
|
|
(26,285)
|
|
765
|
|
(79,674)
|
|
(86,225)
|
|
6,551
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity in net
income/(loss) of unconsolidated subsidiaries
|
18,138
|
|
(12,021)
|
|
30,159
|
|
37,633
|
|
(9,657)
|
|
47,290
|
Income before income
taxes
|
28,146
|
|
502
|
|
27,644
|
|
74,646
|
|
14,043
|
|
60,603
|
Income taxes
expense/(benefit)
|
(744)
|
|
7,859
|
|
8,603
|
|
9,102
|
|
14,639
|
|
5,537
|
Net
income/(loss)
|
$
28,890
|
|
$
(7,357)
|
|
$
36,247
|
|
$
65,544
|
|
$
(596)
|
|
$
66,140
|
Net income
attributable to noncontrolling interests
|
$
(196)
|
|
$
(1,730)
|
|
$
1,534
|
|
$
(3,772)
|
|
$
(5,302)
|
|
$
1,530
|
Net income /(loss)
attributable to Darling
|
$
28,694
|
|
$
(9,087)
|
|
$
37,781
|
|
$
61,772
|
|
$
(5,898)
|
|
$
67,670
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic income per
share:
|
$
0.17
|
|
$
(0.06)
|
|
$
0.23
|
|
$
0.38
|
|
$
(0.04)
|
|
$
0.42
|
Diluted income per
share:
|
$
0.17
|
|
$
(0.06)
|
|
$
0.23
|
|
$
0.37
|
|
$
(0.04)
|
|
$
0.41
|
Darling
Ingredients Inc. and Subsidiaries
Consolidated Statement of Cash Flows
Nine Months Ended October 1, 2016 and October 3, 2015 (in
thousands)
(unaudited)
|
|
|
|
|
|
Nine Months
Ended
|
|
|
|
|
October 1,
|
|
October 3,
|
Cash flows from
operating activities:
|
2016
|
|
2015
|
|
Net income
/(loss)
|
$
65,544
|
|
$
(596)
|
|
Adjustments to
reconcile net income to net cash provided by operating
activities:
|
|
|
|
|
|
Depreciation and
amortization
|
212,440
|
|
199,970
|
|
|
Loss on disposal of
property, plant, equipment and other assets
|
873
|
|
627
|
|
|
Gain on insurance
proceeds from insurance settlements
|
(356)
|
|
(561)
|
|
|
Deferred
taxes
|
(5,223)
|
|
8,640
|
|
|
Increase/(decrease)
in long-term pension liability
|
(1,105)
|
|
678
|
|
|
Stock-based
compensation expense
|
7,953
|
|
6,468
|
|
|
Write-off deferred
loan costs
|
292
|
|
10,633
|
|
|
Deferred loan cost
amortization
|
8,393
|
|
7,380
|
|
|
Equity in net
(income)/loss of unconsolidated subsidiaries
|
(37,633)
|
|
9,657
|
|
|
Distributions of
earnings from unconsolidated subsidiaries
|
26,317
|
|
26,155
|
|
|
Changes in operating
assets and liabilities, net of effects from
acquisitions:
|
|
|
|
|
|
Accounts
receivable
|
(3,058)
|
|
7,658
|
|
|
Income taxes
refundable/payable
|
1,432
|
|
3,955
|
|
|
Inventories
and prepaid expenses
|
(11,368)
|
|
7,667
|
|
|
Accounts
payable and accrued expenses
|
27,438
|
|
(10,318)
|
|
|
Other
|
|
(11,377)
|
|
18,641
|
|
|
|
Net cash provided by
operating activities
|
280,562
|
|
296,654
|
Cash flows from
investing activities:
|
|
|
|
|
Capital
expenditures
|
(168,224)
|
|
(162,264)
|
|
Acquisitions, net of
cash acquired
|
(8,511)
|
|
-
|
|
Gross proceeds from
disposal of property, plant and equipment and other
assets
|
4,492
|
|
2,473
|
|
Proceeds from
insurance settlement
|
1,537
|
|
561
|
|
Payments related to
routes and other intangibles
|
-
|
|
(2,939)
|
|
|
|
Net cash used by
investing activities
|
(170,706)
|
|
(162,169)
|
Cash flows from
financing activities:
|
|
|
|
|
Proceeds from
long-term debt
|
28,765
|
|
586,199
|
|
Payments on long-term
debt
|
(128,364)
|
|
(595,872)
|
|
Borrowings from
revolving credit facility
|
83,000
|
|
78,244
|
|
Payments on revolving
credit facility
|
(93,028)
|
|
(130,876)
|
|
Net cash overdraft
financing
|
-
|
|
(1,261)
|
|
Deferred loan
costs
|
-
|
|
(17,119)
|
|
Issuance of common
stock
|
143
|
|
171
|
|
Repurchase of
treasury stock
|
(5,000)
|
|
(5,912)
|
|
Minimum withholding
taxes paid on stock awards
|
(1,843)
|
|
(4,838)
|
|
Distributions to
noncontrolling interests
|
(885)
|
|
(2,820)
|
|
|
|
Net cash used by
financing activities
|
(117,212)
|
|
(94,084)
|
Effect of exchange
rate changes on cash
|
(943)
|
|
(299)
|
Net
increase/(decrease) in cash and cash equivalents
|
(8,299)
|
|
40,102
|
Cash and cash
equivalents at beginning of period
|
156,884
|
|
108,784
|
Cash and cash
equivalents at end of period
|
$ 148,585
|
|
$ 148,886
|
Supplemental
disclosure of cash flow information:
|
|
|
|
|
Accrued capital
expenditures
|
$
(3,302)
|
|
$
940
|
|
Cash paid during the
period for:
|
|
|
|
|
|
Interest, net of
capitalized interest
|
$
62,395
|
|
$
57,764
|
|
|
Income taxes, net of
refunds
|
$
14,018
|
|
$
4,005
|
|
Non-cash financing
activities
|
|
|
|
|
|
Debt issued for
assets
|
$
10
|
|
$
2,521
|
|
|
Contribution of
assets to unconsolidated subsidiary
|
$
2,674
|
|
$
-
|
Diamond Green
Diesel Joint Venture
Operating Financial Results
Three Months and Nine Months Ended September 30, 2016 and September
30, 2015
|
|
|
|
|
Three Months
Ended
|
|
Nine Months
Ended
|
|
|
|
|
|
|
|
$ Change
|
|
|
|
|
|
$ Change
|
|
|
|
September
30,
|
|
September
30,
|
|
Favorable
|
|
September
30,
|
|
September
30,
|
|
Favorable
|
Revenues:
|
2016
|
|
2015
|
|
(Unfavorable)
|
|
2016
|
|
2015
|
|
(Unfavorable)
|
|
Operating
revenues
|
$
141,656
|
|
$
107,160
|
|
$
34,496
|
|
$
345,650
|
|
$
380,048
|
|
$
(34,398)
|
Expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
Total costs and
expenses less depreciation,
amortization and accretion expense
|
|
|
|
|
|
|
|
|
|
|
|
|
96,569
|
|
123,779
|
|
27,210
|
|
244,643
|
|
376,157
|
|
131,514
|
|
Depreciation,
amortization and accretion
expense
|
|
|
|
|
|
|
|
|
|
|
|
|
7,445
|
|
4,959
|
|
(2,486)
|
|
20,370
|
|
14,924
|
|
(5,446)
|
Total costs and
expenses
|
104,014
|
|
128,738
|
|
24,724
|
|
265,013
|
|
391,081
|
|
126,068
|
|
Operating
income
|
37,642
|
|
(21,578)
|
|
59,220
|
|
80,637
|
|
(11,033)
|
|
91,670
|
Other
income
|
114
|
|
41
|
|
73
|
|
199
|
|
93
|
|
106
|
|
Interest and debt
expense, net
|
(1,406)
|
|
(3,122)
|
|
1,716
|
|
(6,148)
|
|
(10,629)
|
|
4,481
|
|
Net income
|
$
36,350
|
|
$
(24,659)
|
|
$
61,009
|
|
$
74,688
|
|
$
(21,569)
|
|
$
96,257
|
To view the original version on PR Newswire,
visit:http://www.prnewswire.com/news-releases/darling-ingredients-inc-reports-third-quarter-2016-financial-results-aggressive-debt-reduction-while-managing-global-commodity-volatility-and-food-segment-challenges-300360619.html
SOURCE Darling Ingredients Inc.