IRVING, Texas, Feb. 28, 2017 /PRNewswire/ -- Darling Ingredients
Inc. (NYSE: DAR), a global developer and producer of sustainable
natural ingredients from edible and inedible bio-nutrients,
creating a wide range of ingredients and customized specialty
solutions for customers in the pharmaceutical, food, pet food,
feed, industrial, fuel, bioenergy, and fertilizer industries, today
announced financial results for the fiscal 2016 fourth quarter and
year ended December 31, 2016.
Fourth Quarter 2016 Overview
- Net income of $40.5 million,
or $0.25 per GAAP diluted
share
- Revenue of $887.3
million
- Adjusted EBITDA of $112.8
million
- Strong global raw material volumes
- Global fats pricing steady while ample protein supplies
pressured prices
Fiscal 2016 Overview
- Net income of $102.3 million,
or $0.62 per GAAP diluted
share
- Consolidated revenue of $3.4
billion
- Food segment normalized led by Rousselot while Fuel Segment
margins improved on strong performance
- Feed segment supported by strong global fat demand and
pricing while global proteins remained weak
- Commissioned four new facilities
- Solid cash flow generation with full year debt reduction of
$169.7 million
For the fourth quarter of 2016, the Company reported net sales
of $887.3 million, as compared with
net sales of $809.7 million for the
fourth quarter of 2015. Net income attributable to Darling
for the three months ended December 31,
2016 was $40.5 million, or
$0.25 per diluted share, compared to
a net income of $84.4 million, or
$0.52 per diluted share, for the
fourth quarter of 2015. The decrease in net income for the
fourth quarter 2016 is primarily attributable to the inclusion of
the blenders tax credit entirely in the fourth quarter of 2015,
whereas for fiscal 2016, the blenders tax credit was reported in
each quarter as earned.
Net Income attributable to Darling for the fiscal year ended
December 31, 2016 was $102.3 million, or $0.62 per diluted share, as compared to a net
income of $78.5 million, or
$0.48 per diluted share, for the
fiscal year ended January 2, 2016.
The increase is primarily attributable to increased margins and
volumes in both the Food and Fuel Ingredients segments, higher raw
material volumes in the Feed and Food Ingredients segments and
lower selling, general and administrative expense.
Comments on the Fourth Quarter and Fiscal 2016 Year
End
Randall C. Stuewe, Chairman and
Chief Executive Officer of Darling Ingredients Inc., said, "We
closed out 2016 with a solid performance across all product
lines. We executed on our strategy of de-levering and
growing, paying down $169.7 million
in debt while commissioning four new factories and expanding five
others. We carry nice momentum and a larger platform into
2017."
Operational Update by Segment
- Feed Ingredients – Segment leveraged higher
global fat prices and drove higher sales volumes, sustaining
margins and offsetting lower protein markets. Raw material volumes
were strong around the globe, up 7 percent year over year. Our two
new U.S. rendering plants are on line and meeting expectations.
Weak protein pricing pressured USA
rendering results in the quarter, but first quarter pricing is
improving.
- Food Ingredients – Segment recovered during the
fourth quarter and posted solid performance in China. Rousselot drove consistent
year-over-year performance. Margins improved slightly due to
production efficiencies in the North and South American markets as
well as the European gelatin business. Sonac edible fat earnings
normalized due to firm palm oil pricing. CTH casings business
delivered consistent performance on growing supply source and
improved supply chain.
- Fuel Ingredients – Segment maintained consistent
and improving performance during the quarter, which included a
final settlement on the business interruption insurance claim
related to the bio-phosphate plant fire that occurred in
December 2015. Rendac delivered
improved performance on strong volumes. Canada Biodiesel
sequentially weaker but delivered overall solid annual results with
a full year of production.
- Diamond Green Diesel Joint
Venture – Solid execution and strong earnings.
Engineering and construction planning is progressing with long lead
time equipment ordered on the DGD facility major expansion, which
at full capacity increases annual production from 160 million
gallons to 275 million gallons of renewable diesel. Total cost
estimated at $190.0 million with
construction completion and commissioning expected in Q2 2018.
Financial Update by Segment
Feed
Ingredients
|
Three Months
Ended
|
|
Fiscal Year
Ended
|
($
thousands)
|
December 31,
2016
|
January 2,
2016
|
|
December 31,
2016
|
January 2,
2016
|
Net Sales
|
$
538,606
|
$
472,192
|
|
$
2,089,145
|
$
2,074,333
|
Depreciation and
amortization
|
48,735
|
44,468
|
|
178,845
|
165,854
|
Segment operating
income
|
25,282
|
10,031
|
|
115,794
|
116,453
|
EBITDA*
|
$
74,017
|
$
54,499
|
|
$
294,639
|
$
282,307
|
|
|
*EBITDA calculated by adding depreciation and
amortization to segment operating income.
|
- Feed Ingredients operating income for the three months ended
December 31, 2016 was $25.3 million, an increase of $15.3 million as compared to the three months
ended January 2, 2016. Earnings for
the Feed Ingredients segment were higher due to an increase in raw
material volumes and finished fat prices that more than offset
lower protein finished product prices and higher depreciation and
amortization due to placing new plants into production.
- Feed Ingredients operating income for the fiscal year 2016 was
$115.8 million, a decrease of
$0.7 million as compared to fiscal
year 2015. Earnings in the Feed Ingredients segment were down
slightly from prior year due to lower protein finished product
prices and higher depreciation and amortization due to placing new
plants into production which were offset by higher fat finished
product prices and reduced selling, general and administrative
expense.
Food
Ingredients
|
Three Months
Ended
|
|
Fiscal Year
Ended
|
($
thousands)
|
December 31,
2016
|
January 2,
2016
|
|
December 31,
2016
|
January 2,
2016
|
Net Sales
|
$
279,898
|
$
272,177
|
|
$
1,061,912
|
$
1,094,918
|
Depreciation and
amortization
|
18,297
|
15,691
|
|
70,120
|
66,817
|
Segment operating
income
|
11,738
|
23,317
|
|
61,212
|
61,238
|
EBITDA*
|
$
30,035
|
$
39,008
|
|
$
131,332
|
$
128,055
|
|
*EBITDA calculated by
adding depreciation and amortization to segment operating
income.
|
- Food Ingredients operating income was $11.7 million for the three months ended
December 31, 2016, a decrease of
$11.6 million as compared to the
three months ended January 2, 2016.
The decrease in operating income was primarily attributable to
lower earnings in the gelatin business in North America, South
America and China,
increased depreciation and higher selling, general and
administrative costs which offset improvements in our European
gelatin, edible fats, and casings businesses.
- Food Ingredients operating income for both fiscal year 2016 and
fiscal 2015 was $61.2 million. During
fiscal 2016, the gelatin business earnings reflected strong
profitability in the Company's North American, South American and
European operations, which offset lower sales prices and volumes in
China. The European edible fats
earnings improved due to stable fat finished product prices. The
Company's casing business profitability improved as compared to the
same period in the prior year due to higher sales prices and
volumes. Selling, general and administrative expense was reduced by
$7.1 million, which included gains on
currency hedges while depreciation and amortization increased.
Fuel
Ingredients
|
Three Months
Ended
|
|
Fiscal Year
Ended
|
($
thousands)
|
December 31,
2016
|
January 2,
2016
|
|
December 31,
2016
|
January 2,
2016
|
Net Sales
|
$
68,773
|
$
65,306
|
|
$
247,058
|
$
228,195
|
Depreciation and
amortization
|
7,532
|
6,752
|
|
28,531
|
26,711
|
Segment operating
income
|
|
10,486
|
12,382
|
|
29,166
|
17,159
|
EBITDA*
|
$
18,018
|
$
19,134
|
|
$
57,697
|
$
43,870
|
|
*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 December
31, 2016 was $10.5 million, a
decrease of $1.9 million as compared
to the three months ended January 2,
2016. The decrease in earnings is primarily due to the
blenders tax credit for 2015 having been collected entirely in the
fourth quarter of 2015 for our Canadian biodiesel facility which
more than offset the higher volumes in Rendac.
- Exclusive of the DGD Joint Venture, Fuel Ingredients operating
income for fiscal year 2016 was $29.2
million, an increase of $12.0
million as compared to fiscal 2015. The increase in earnings
is due to improved Rendac performance, full year productivity and
higher RIN values at the Canadian biodiesel plant and increasing
sales volumes and finished product pricing at Ecoson. Also
contributing to the increase in earnings was lower selling, general
and administrative expense and an insurance settlement on the
Ecoson fire which occurred in 2015.
Darling
Ingredients Inc. and Subsidiaries
|
Condensed
Consolidated Balance Sheets
|
December 31, 2016
and January 2, 2016
|
(in thousands)
|
|
|
|
December
31,
|
|
January 2,
|
|
2016
|
|
2016
|
ASSETS
|
|
|
|
Current
assets:
|
|
|
|
|
Cash and cash
equivalents
|
$
114,564
|
|
$
156,884
|
|
Restricted
cash
|
293
|
|
331
|
|
Accounts receivable,
net
|
388,397
|
|
371,392
|
|
Inventories
|
330,815
|
|
344,583
|
|
Prepaid
expenses
|
29,984
|
|
36,175
|
|
Income taxes
refundable
|
7,479
|
|
11,963
|
|
Other current
assets
|
21,770
|
|
10,460
|
|
Total current assets
|
893,302
|
|
931,788
|
Property, plant and
equipment, less accumulated
depreciation, net
|
1,515,575
|
|
1,508,167
|
Intangible assets, less accumulated
amortization, net
|
711,927
|
|
782,349
|
|
|
|
|
|
Other
assets:
|
|
|
|
|
Goodwill
|
1,225,893
|
|
1,233,102
|
|
Investment in
unconsolidated subsidiaries
|
292,717
|
|
247,238
|
|
Other
assets
|
43,613
|
|
41,623
|
|
Deferred income
taxes
|
14,990
|
|
16,352
|
|
Total assets
|
$
4,698,017
|
|
$
4,760,619
|
|
LIABILITIES AND
STOCKHOLDERS' EQUITY
|
Current
liabilities:
|
|
|
|
|
Current portion of
long-term debt
|
$
23,247
|
|
$
45,166
|
|
Accounts payable,
principally trade
|
180,895
|
|
149,998
|
|
Income taxes
payable
|
4,913
|
|
6,679
|
|
Accrued
expenses
|
242,796
|
|
239,825
|
|
Total current liabilities
|
451,851
|
|
441,668
|
|
|
|
|
|
Long-term debt, net
of current portion
|
1,727,696
|
|
1,885,851
|
Other non-current
liabilities
|
96,114
|
|
97,809
|
Deferred income
taxes
|
346,134
|
|
360,681
|
Total liabilities
|
2,621,795
|
|
2,786,009
|
|
|
|
|
|
Commitments and
contingencies
|
|
|
|
Total Darling's
stockholders' equity
|
1,972,994
|
|
1,870,709
|
Noncontrolling
interests
|
103,228
|
|
103,901
|
Total stockholders' equity
|
2,076,222
|
|
1,974,610
|
|
|
$
4,698,017
|
|
$
4,760,619
|
Darling
Ingredients Inc. and Subsidiaries
|
Consolidated
Operating Results
|
For the Periods
Ended December 31, 2016 and January 2, 2016
|
(in thousands, except
per share data)
|
|
|
(Fourth Quarter
Unaudited)
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
Fiscal Year
Ended
|
|
|
|
|
|
|
$ Change
|
|
|
|
|
|
$ Change
|
|
|
December
31,
|
|
January 2,
|
|
Favorable
|
|
December
31,
|
|
January 2,
|
|
Favorable
|
|
2016
|
|
2016
|
|
(Unfavorable)
|
|
2016
|
|
2016
|
|
(Unfavorable)
|
Net sales
|
$
887,277
|
|
$
809,675
|
|
$
77,602
|
|
$
3,398,115
|
|
$
3,397,446
|
|
$
669
|
Costs and
expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of sales and
operating expenses
|
694,559
|
|
629,907
|
|
(64,652)
|
|
2,641,734
|
|
2,654,025
|
|
12,291
|
|
Selling, general and
administrative expenses
|
79,870
|
|
76,623
|
|
(3,247)
|
|
314,005
|
|
322,574
|
|
8,569
|
|
Depreciation and
amortization
|
77,468
|
|
69,934
|
|
(7,534)
|
|
289,908
|
|
269,904
|
|
(20,004)
|
|
Acquisition and
integration costs
|
-
|
|
492
|
|
492
|
|
401
|
|
8,299
|
|
7,898
|
Total costs and
expenses
|
851,897
|
|
776,956
|
|
(74,941)
|
|
3,246,048
|
|
3,254,802
|
|
8,754
|
Operating
income
|
35,380
|
|
32,719
|
|
2,661
|
|
152,067
|
|
142,644
|
|
9,423
|
Other
expense:
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest
expense
|
(22,439)
|
|
(23,308)
|
|
869
|
|
(94,187)
|
|
(105,530)
|
|
11,343
|
|
Foreign currency
gain/(loss)
|
387
|
|
(1,612)
|
|
1,999
|
|
(1,854)
|
|
(4,911)
|
|
3,057
|
|
Other
income/(expense), net
|
1,819
|
|
(6,135)
|
|
7,954
|
|
(3,866)
|
|
(6,839)
|
|
2,973
|
Total other
expense
|
(20,233)
|
|
(31,055)
|
|
10,822
|
|
(99,907)
|
|
(117,280)
|
|
17,373
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity in net income
of unconsolidated subsidiaries
|
32,746
|
|
83,073
|
|
(50,327)
|
|
70,379
|
|
73,416
|
|
(3,037)
|
Income before income
taxes
|
47,893
|
|
84,737
|
|
(36,844)
|
|
122,539
|
|
98,780
|
|
23,759
|
Income taxes
expense/(benefit)
|
6,213
|
|
(1,138)
|
|
(7,351)
|
|
15,315
|
|
13,501
|
|
(1,814)
|
Net income
|
41,680
|
|
85,875
|
|
(44,195)
|
|
107,224
|
|
85,279
|
|
21,945
|
Net income
attributable to noncontrolling interests
|
(1,139)
|
|
(1,446)
|
|
307
|
|
(4,911)
|
|
(6,748)
|
|
1,837
|
Net income
attributable to Darling
|
$
40,541
|
|
$
84,429
|
|
$
(43,888)
|
|
$
102,313
|
|
$
78,531
|
|
$
23,782
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic income per
share:
|
$
0.24
|
|
$
0.52
|
|
$
(0.28)
|
|
$
0.62
|
|
$
0.48
|
|
$
0.14
|
Diluted income per
share:
|
$
0.25
|
|
$
0.52
|
|
$
(0.27)
|
|
$
0.62
|
|
$
0.48
|
|
$
0.14
|
Darling
Ingredients Inc. and Subsidiaries
|
Consolidated
Statement of Cash Flows
|
Fiscal Years Ended
December 31, 2016 and January 2, 2016
|
(in
thousands)
|
|
|
|
|
|
Fiscal Year
Ended
|
|
|
|
|
December
31,
|
|
January 2,
|
Cash flows from
operating activities:
|
2016
|
|
2016
|
|
Net income
|
|
$
107,224
|
|
$
85,279
|
|
Adjustments to
reconcile net income to net cash provided by operating
activities:
|
|
|
|
|
|
Depreciation and
amortization
|
289,908
|
|
269,904
|
|
|
Deferred income
taxes
|
(11,532)
|
|
7,807
|
|
|
Loss/(gain) on sale
of assets
|
1,744
|
|
1,311
|
|
|
Gain on insurance
proceeds from insurance settlement
|
(356)
|
|
(561)
|
|
|
Increase/(decrease)
in long-term pension liability
|
(430)
|
|
(4,811)
|
|
|
Stock-based
compensation expense
|
10,330
|
|
8,995
|
|
|
Write-off deferred
loan costs
|
528
|
|
10,633
|
|
|
Deferred loan cost
amortization
|
11,171
|
|
10,155
|
|
|
Equity in net income
of unconsolidated subsidiaries
|
(70,379)
|
|
(73,416)
|
|
|
Distributions of
earnings from unconsolidated subsidiaries
|
26,317
|
|
26,589
|
|
|
Changes in operating
assets and liabilities, net of effects from
acquisitions:
|
|
|
|
|
|
Accounts
receivable
|
(22,796)
|
|
8,214
|
|
|
Income taxes
refundable/payable
|
2,839
|
|
12,377
|
|
|
Inventories
and prepaid expenses
|
15,343
|
|
34,536
|
|
|
Accounts
payable and accrued expenses
|
39,286
|
|
(11,449)
|
|
|
Other
|
|
(8,161)
|
|
35,396
|
|
|
Net cash provided by
operating activities
|
391,036
|
|
420,959
|
Cash flows from
investing activities:
|
|
|
|
|
Capital
expenditures
|
(243,523)
|
|
(229,848)
|
|
Acquisitions, net of
cash acquired
|
(8,511)
|
|
(377)
|
|
Gross proceeds from
sale of property, plant and equipment and other assets
|
7,329
|
|
3,840
|
|
Proceeds from
insurance settlement
|
1,537
|
|
561
|
|
Payments related to
routes and other intangibles
|
(23)
|
|
(3,845)
|
|
|
Net cash used by
investing activities
|
(243,191)
|
|
(229,669)
|
Cash flows from
financing activities:
|
|
|
|
|
Proceeds from
long-term debt
|
36,327
|
|
590,745
|
|
Payments on long-term
debt
|
(204,428)
|
|
(609,255)
|
|
Borrowings from
revolving credit facility
|
99,276
|
|
78,244
|
|
Payments on revolving
credit facility
|
(104,028)
|
|
(166,755)
|
|
Net cash overdraft
financing
|
1,071
|
|
(1,261)
|
|
Deferred loan
costs
|
(3,879)
|
|
(17,310)
|
|
Issuance of common
stock
|
188
|
|
171
|
|
Repurchase of common
stock
|
(5,000)
|
|
(5,912)
|
|
Minimum withholding
taxes paid on stock awards
|
(1,843)
|
|
(4,874)
|
|
Excess tax benefits
from stock-based compensation
|
-
|
|
-
|
|
Addition/(deductions)
of noncontrolling interest
|
-
|
|
(87)
|
|
Distributions to
noncontrolling interests
|
(1,552)
|
|
(3,295)
|
|
|
Net cash used by
financing activities
|
(183,868)
|
|
(139,589)
|
Effect of exchange
rate changes on cash
|
(6,297)
|
|
(3,601)
|
Net
increase/(decrease) in cash and cash equivalents
|
(42,320)
|
|
48,100
|
Cash and cash
equivalents at beginning of period
|
156,884
|
|
108,784
|
Cash and cash
equivalents at end of period
|
$
114,564
|
|
$ 156,884
|
Supplemental
disclosure of cash flow information:
|
|
|
|
|
Accrued capital
expenditures
|
$
(937)
|
|
$
5,325
|
|
Cash paid during the
period for:
|
|
|
|
|
|
Interest, net of
capitalized interest
|
$
82,094
|
|
$
78,979
|
|
|
Income taxes, net of
refunds
|
$
23,220
|
|
$
(3,035)
|
|
Non-cash financing
activities
|
|
|
|
|
|
Debt issued for
assets
|
$
10
|
|
$
2,591
|
|
|
Contribution of
assets to unconsolidated subsidiary
|
$
2,674
|
|
$
-
|
Diamond Green
Diesel Joint Venture
|
Operating
Financial Results
|
Three Months and
Fiscal Year Ended December 31, 2016 and December 31,
2015
|
|
|
|
|
Three Months
Ended
|
|
Fiscal Year
Ended
|
|
|
|
|
|
|
|
$ Change
|
|
|
|
|
|
$ Change
|
|
|
|
December
31,
|
|
December
31,
|
|
Favorable
|
|
December
31,
|
|
December
31,
|
|
Favorable
|
Revenues:
|
2016
|
|
2015
|
|
(Unfavorable)
|
|
2016
|
|
2015
|
|
(Unfavorable)
|
|
Operating
revenues
|
$
182,020
|
|
$
95,886
|
|
$
86,134
|
|
$
527,670
|
|
$
475,934
|
|
$
51,736
|
Expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
Total costs and expenses less depreciation,
amortization and accretion expense
|
108,579
|
|
(77,211)
|
|
(185,790)
|
|
353,222
|
|
298,946
|
|
(54,276)
|
|
Depreciation, amortization and accretion
expense
|
7,451
|
|
4,790
|
|
(2,661)
|
|
27,821
|
|
19,714
|
|
(8,107)
|
Operating
income:
|
|
|
65,990
|
|
168,307
|
|
(102,317)
|
|
146,627
|
|
157,274
|
|
(10,647)
|
|
Other
income
|
352
|
|
27
|
|
325
|
|
551
|
|
120
|
|
431
|
|
Interest and debt
expense, net
|
|
(1,206)
|
|
(2,975)
|
|
1,769
|
|
(7,354)
|
|
(13,604)
|
|
6,250
|
Net
income
|
$
65,136
|
|
$
165,359
|
|
$
(100,223)
|
|
$
139,824
|
|
$
143,790
|
|
$
(3,966)
|
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:
Reconciliation of Net Income to (Non-GAAP) Adjusted EBITDA
and (Non-GAAP) Pro forma Adjusted
EBITDA
Fourth
Quarter 2016 as compared to Fourth Quarter 2015
|
Three Months Ended -
Year over Year
|
Adjusted
EBITDA
|
December
31,
|
|
January 2,
|
(U.S. dollars in
thousands)
|
2016
|
|
2016
|
|
|
|
|
Net income
attributable to Darling
|
$
40,541
|
|
$
84,429
|
Depreciation and
amortization
|
77,468
|
|
69,934
|
Interest
expense
|
22,439
|
|
23,308
|
Income tax
expense/(benefit)
|
6,213
|
|
(1,138)
|
Foreign currency
loss/(gain)
|
(387)
|
|
1,612
|
Other
expense/(income), net
|
(1,819)
|
|
6,135
|
Equity in net
(income) of unconsolidated subsidiary
|
(32,746)
|
|
(83,073)
|
Net income
attributable to noncontrolling interests
|
1,139
|
|
1,446
|
Adjusted
EBITDA
|
$
112,848
|
|
$
102,653
|
Acquisition and
integration-related expenses
|
-
|
|
492
|
Pro forma Adjusted
EBITDA (Non-GAAP)
|
$
112,848
|
|
$
103,145
|
Foreign currency
exchange impact (1)
|
747
|
|
-
|
Pro forma Adjusted
EBITDA to Foreign Currency (Non-GAAP)
|
$
113,595
|
|
$
103,145
|
|
|
|
|
DGD Joint Venture
Adjusted EBITDA (Darling's share)
|
$
36,721
|
|
$
86,548
|
|
|
(1)
The average rates assumption used in
this calculation was the actual fiscal average rate for the three
months ended January 2, 2016 of €1.00:USD$1.093 and CAD$1.00:USD$0.74 as
compared to the average rate for the three months ended December
31, 2016 of €1.00:USD$1.077 and
CAD$1.00:USD$0.75, respectively.
|
Reconciliation of Net Income to (Non-GAAP) Adjusted EBITDA
and (Non-GAAP) Pro forma Adjusted
EBITDA
Fourth Quarter 2016 as compared on a sequential basis to Third
Quarter 2016
|
Three Months Ended -
Sequential
|
Adjusted
EBITDA
|
December
31,
|
|
October 1,
|
(U.S. dollars in
thousands)
|
2016
|
|
2016
|
|
|
|
|
Net income
attributable to Darling
|
$
40,541
|
|
$
28,694
|
Depreciation and
amortization
|
77,468
|
|
70,653
|
Interest
expense
|
22,439
|
|
23,867
|
Income tax
expense/(benefit)
|
6,213
|
|
(744)
|
Foreign currency
(gain)
|
(387)
|
|
(354)
|
Other
expense/(income), net
|
(1,819)
|
|
2,007
|
Equity in net
(income) of unconsolidated subsidiary
|
(32,746)
|
|
(18,138)
|
Net income
attributable to noncontrolling interests
|
1,139
|
|
196
|
Adjusted
EBITDA
|
$
112,848
|
|
$
106,181
|
Acquisition and
integration-related expenses
|
-
|
|
-
|
Pro forma Adjusted
EBITDA (Non-GAAP)
|
$
112,848
|
|
$
106,181
|
Foreign currency
exchange impact (1)
|
2,481
|
|
-
|
Pro forma Adjusted
EBITDA to Foreign Currency (Non-GAAP)
|
$
115,329
|
|
$
106,181
|
|
|
|
|
DGD Joint Venture
Adjusted EBITDA (Darling's share)
|
$
36,721
|
|
$
22,543
|
|
(1) The average
rates assumption used in this calculation was the actual fiscal
average rate for the three months ended October 1, 2016
of €1.00: USD$1.117 and
CAD$1.00:USD$0.767 as compared to the average rate for the three
months ended December 31, 2016 of €1.00: USD$1.077 and CAD$1.00:USD$0.75,
respectively.
|
Reconciliation of Net Income to (Non-GAAP) Adjusted EBITDA
and (Non-GAAP) Pro forma Adjusted
EBITDA-
Fiscal Year 2016 as compared to Fiscal 2015
|
Fiscal Year
Ended
|
Adjusted
EBITDA
|
December
31,
|
|
January 2,
|
(U.S. dollars in
thousands)
|
2016
|
|
2016
|
|
|
|
|
Net income
attributable to Darling
|
$
102,313
|
|
$
78,531
|
Depreciation and
amortization
|
289,908
|
|
269,904
|
Interest
expense
|
94,187
|
|
105,530
|
Income tax
expense
|
15,315
|
|
13,501
|
Foreign currency
loss
|
1,854
|
|
4,911
|
Other expense,
net
|
3,866
|
|
6,839
|
Equity in net
(income) of unconsolidated subsidiary
|
(70,379)
|
|
(73,416)
|
Net income
attributable to noncontrolling interests
|
4,911
|
|
6,748
|
Adjusted
EBITDA
|
$
441,975
|
|
$
412,548
|
Acquisition and
integration-related expenses
|
401
|
|
8,299
|
Pro forma Adjusted
EBITDA (Non-GAAP)
|
$
442,376
|
|
$
420,847
|
Foreign currency
exchange impact (1)
|
1,980
|
|
-
|
Pro forma Adjusted
EBITDA for Foreign Currency (Non-GAAP)
|
$
444,356
|
|
$
420,847
|
|
|
|
|
DGD Joint Venture
Adjusted EBITDA (Darling's share)
|
$
87,224
|
|
$
88,494
|
|
(1) The average
rates assumption used in this calculation was the actual fiscal
average rate for the fiscal year ended December 31, 2016
of €1.00:USD$1.106 and
CAD$1.00:USD$0.76 as compared to the average rate for the fiscal
year ended January 2, 2016 of
€1.00:USD$1.108 and CAD$1.00:USD$0.77, respectively.
|
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://www.darlingii.com.
Darling Ingredients Inc. will host a conference call to discuss
the Company's fourth quarter and fiscal year end 2016 financial
results at 8:30 am Eastern Time (7:30
am Central Time) on Wednesday, March
1, 2017. To listen to the conference call,
participants calling from within North
America should dial 844-868-8847; international
participants should dial 412-317-6593. Please refer to
access code 10100099. 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 8, 2017, 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
10100099. 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 December 31, 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., including its Diamond
Green Diesel joint venture, 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,"
"assumption," 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
|
To view the original version on PR Newswire,
visit:http://www.prnewswire.com/news-releases/darling-ingredients-inc-reports-fourth-quarter-and-fiscal-2016-financial-results--executed-de-levering-and-growth-strategy-300415081.html
SOURCE Darling Ingredients Inc.