IRVING, Texas, Aug. 9, 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 2017 second quarter ended
July 1, 2017.
Second Quarter 2017 Overview
- Revenue of $896.3 million, up
2.2%
- Net income of $9.1 million, or
$0.05 per GAAP diluted share
- Adjusted EBITDA of $110.1
million
- Strong balance sheet with debt reduction of $45 million
- Global raw material volumes steady, up 1.4%
- Mixed global pricing environment, strength in fats offset by
weakness in proteins
- Diamond Green Diesel facility
delivered expected performance and expansion continues to
progress
For the second quarter of 2017, the Company reported net sales
of $896.3 million, as compared with
net sales of $877.3 million for the
second quarter of 2016. Net income attributable to Darling
for the three months ended July 1,
2017 was $9.1 million, or
$0.05 per diluted share, compared to
a net income of $32.0 million, or
$0.19 per diluted share, for the
second quarter of 2016. The decrease in net income for the
second quarter 2017 is primarily due to weakness in our Food
Ingredients segment, particularly the gelatin business, and the
absence of the blenders tax credit, which was included in the
second quarter 2016 but has not yet been reinstated for 2017.
Comments on the Second Quarter 2017
"We are pleased with second quarter performance across most of
the segments in light of a mixed global pricing environment and
headwinds in South America," said
Randall C. Stuewe, Chairman and
Chief Executive Officer of Darling Ingredients Inc. "Sequentially,
the Feed segment delivered a very nice performance while the Food
segment results were disappointing due to margin compression from
rising raw material prices in our global gelatin business and
ongoing macro-economic issues in Argentina. The Fuel segment excelled
operationally in the midst of the stalled decision on the blenders
tax credit. We remain optimistic that the political environment
surrounding the biofuel industry today continues to support the
Renewable Fuel Standard (RFS2) and the reinstatement of the
blenders tax credit," Mr. Stuewe commented.
"Additionally, our Board has approved the extension for an
additional 24 months of our previously announced share repurchase
program for up to $100 million to be
exercised depending on market conditions," added Mr. Stuewe.
"The repurchases may be made from time to time on the open market
at prevailing market prices or in negotiated transactions off the
market. Repurchases may occur over the next 24 months, unless
extended or shortened by the Board of Directors," concluded
Mr.
Stuewe.
Operational Update by Segment
- Feed Ingredients – Margins held and the segment
performed well supported by solid global raw material volumes,
especially in Europe. North
American protein markets were mixed with strong pet food demand
offset by lagging meat and bone meal pricing. Global fat markets
remained firm with demand trending lower late in the quarter in
concert with lower palm oil complex prices.
- Food Ingredients – While Rousselot gelatin
business showed steady performance in Europe, South American gelatin business
continued to face headwinds with margin compression from rising raw
material prices and ongoing macroeconomic issues. CTH casings
business delivered improved results as the short hog supply in
China drove strong demand for hog
casings. Sonac edible fats held margins and contributed as expected
despite a weakening global palm oil market.
- Fuel Ingredients – Consistent performance led by
Rendac and Ecoson with segment decline due to the absence of the
blenders tax credit impacting North American biodiesel facilities.
Ecoson bio-phosphate plant provided normalized results with
slightly lower supply volumes while Rendac, our disposal rendering
operations, leveraged strong volumes.
- Diamond Green Diesel Joint
Venture (DGD) – DGD executed well operationally,
delivering on its financial profile and posted $0.61 EBITDA per gallon despite the lack of the
blenders tax credit in 2017 versus 2016. Solid cash position and
capacity expansion to 275 million gallons of annual production is
tracking as planned for Q2 2018 completion.
Financial Update by Segment
Feed
Ingredients
|
Three Months
Ended
|
|
Six Months
Ended
|
($
thousands)
|
July 1,
2017
|
July 2,
2016
|
|
July 1,
2017
|
July 2,
2016
|
Net sales
|
$
549,119
|
$
542,955
|
|
$
1,101,743
|
$
1,019,126
|
Selling, general and
administrative expenses
|
43,506
|
43,319
|
|
88,973
|
88,570
|
Depreciation and
amortization
|
44,354
|
42,119
|
|
88,073
|
86,496
|
Segment operating
income
|
39,023
|
41,372
|
|
69,851
|
55,258
|
EBITDA
|
$
83,377
|
$
83,491
|
|
$
157,924
|
$
141,754
|
|
*EBITDA calculated by
adding depreciation and amortization to segment operating
income.
|
- Feed Ingredients operating income for the three months ended
July 1, 2017 was $39.0 million, a decrease of $2.4 million or (5.8)% as compared to the three
months ended July 2, 2016. Segment
operating income was down in the three months ended July 1, 2017 as compared to the same period in
fiscal 2016 due to higher depreciation from new plant locations
that were not operating in the three months ended July 2, 2016.
- Feed Ingredients operating income during the six months ended
July 1, 2017 was $69.9 million, an increase of $14.6 million or 26.4% as compared to the six
months ended July 2, 2016. Earnings
for the Feed Ingredients segment were higher due to an overall
increase in finished product prices, sales volumes and raw material
volumes as compared to the same period in fiscal 2016.
Food
Ingredients
|
Three Months
Ended
|
|
Six Months
Ended
|
($
thousands)
|
July 1,
2017
|
July 2,
2016
|
|
July 1,
2017
|
July 2,
2016
|
Net sales
|
$
279,827
|
$
272,120
|
|
$
547,615
|
$
520,017
|
Selling, general and
administrative expenses
|
26,788
|
20,455
|
|
51,847
|
44,214
|
Depreciation and
amortization
|
18,184
|
17,736
|
|
35,785
|
34,440
|
Segment operating
income
|
11,025
|
19,650
|
|
25,152
|
41,530
|
EBITDA
|
$
29,209
|
$
37,386
|
|
$
60,937
|
$
75,970
|
|
*EBITDA calculated by
adding depreciation and amortization to segment operating
income.
|
- Food Ingredients operating income was $11.0 million for the three months ended
July 1, 2017, a decrease of
$8.7 million or (44.2)% as compared
to the three months ended July 2,
2016. The earnings in the gelatin business were down as
compared to the prior year primarily due to the performance in the
Company's South American and North American markets. The Company's
South American gelatin business was the primary driver on the lower
earnings and was impacted by margin compression influenced by
rising raw material prices and continued macroeconomic factors. The
Company's North American gelatin business was influenced by higher
raw material prices. The casings business delivered improved
performance due to high demand in China that slightly offset lower earnings in
the gelatin business. Additionally, selling, general and
administrative expense in the Food Ingredients segment increased
approximately $4.8 million primarily
due to currency hedge losses in the three months ended July 1, 2017 as compared to currency hedge gains
in the same period in fiscal 2016.
- Food Ingredients operating income was $25.2 million for the six months ended
July 1, 2017, a decrease of
$16.3 million or (39.3)% as compared
to the six months ended July 2, 2016.
The earnings in the gelatin business were down as compared to the
prior year primarily due to the performance in the Company's South
American market. Lower earnings in the Company's South American
gelatin business was due to margin compression influenced by rising
raw material prices and macroeconomic factors. The casings business
delivered improved performance due to high demand in China that slightly offset lower earnings in
the gelatin business. Additionally, selling, general and
administrative expense in the Food Ingredients segment increased
approximately $6.3 million primarily
due to a reduction of currency hedge gains in the six months ended
July 1, 2017 as compared to the same
period in fiscal 2016.
Fuel
Ingredients
|
Three Months
Ended
|
|
Six Months
Ended
|
($
thousands)
|
July 1,
2017
|
July 2,
2016
|
|
July 1,
2017
|
July 2,
2016
|
Net sales
|
$
67,402
|
$
62,266
|
|
$
127,062
|
$
117,839
|
Selling, general and
administrative expenses
|
2,902
|
1,804
|
|
6,193
|
3,654
|
Depreciation and
amortization
|
7,715
|
7,184
|
|
14,560
|
14,103
|
Segment operating
income
|
2,087
|
6,587
|
|
5,595
|
12,709
|
EBITDA
|
$
9,802
|
$
13,771
|
|
$
20,155
|
$
26,812
|
|
*EBITDA calculated by
adding depreciation and amortization to segment operating
income.
|
Results shown
do not include the Diamond Green Diesel (DGD) 50% Joint
Venture.
|
- Exclusive of the DGD Joint Venture, the Company's Fuel
Ingredients segment income for the three months ended July 1, 2017 was $2.1
million, a decrease of $4.5
million or (68.2)% as compared to the same period in fiscal
2016. For the three months ended July 1,
2017 the North American region results do not include the
blenders tax credit, while fiscal 2016 included the blenders tax
credit. Earnings in Rendac and Ecoson for the three months ended
July 1, 2017 were unchanged as
compared to the same period in the prior year.
- Exclusive of the DGD Joint Venture, the Company's Fuel
Ingredients segment income for the six months ended July 1, 2017 was $5.6
million, a decrease of $7.1
million or (55.9)% as compared to the same period in fiscal
2016. For the six months ended July 1,
2017, the North American region results do not include the
blenders tax credit, while fiscal 2016 included the blenders tax
credit.
Darling
Ingredients Inc. and Subsidiaries
|
Consolidated
Operating Results
|
For the Periods
Ended July 1, 2017 and July 2, 2016
|
(in thousands, except
per share data)
|
(unaudited)
|
|
|
|
Three Months
Ended
|
|
Six Months
Ended
|
|
|
|
|
|
|
$ Change
|
|
|
|
|
|
$ Change
|
|
|
July 1,
|
|
July 2,
|
|
Favorable
|
|
July 1,
|
|
July 2,
|
|
Favorable
|
|
|
2017
|
|
2016
|
|
(Unfavorable)
|
|
2017
|
|
2016
|
|
(Unfavorable)
|
Net sales
|
$ 896,348
|
|
$ 877,341
|
|
$
19,007
|
|
$
1,776,420
|
|
$
1,656,982
|
|
$
119,438
|
Costs and
expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of sales and
operating expenses
|
700,764
|
|
677,115
|
|
(23,649)
|
|
1,390,391
|
|
1,276,008
|
|
(114,383)
|
|
Selling, general and
administrative expenses
|
85,531
|
|
76,158
|
|
(9,373)
|
|
173,448
|
|
157,627
|
|
(15,821)
|
|
Depreciation and
amortization
|
72,990
|
|
69,531
|
|
(3,459)
|
|
144,104
|
|
141,787
|
|
(2,317)
|
|
Acquisition and
integration costs
|
-
|
|
70
|
|
70
|
|
-
|
|
401
|
|
401
|
Total costs and
expenses
|
859,285
|
|
822,874
|
|
(36,411)
|
|
1,707,943
|
|
1,575,823
|
|
(132,120)
|
Operating
income
|
37,063
|
|
54,467
|
|
(17,404)
|
|
68,477
|
|
81,159
|
|
(12,682)
|
Other
expense:
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest
expense
|
(22,446)
|
|
(23,980)
|
|
1,534
|
|
(44,126)
|
|
(47,881)
|
|
3,755
|
|
Foreign currency
gain/(loss)
|
(2,111)
|
|
8
|
|
(2,119)
|
|
(2,375)
|
|
(2,595)
|
|
220
|
|
Other expense,
net
|
(2,696)
|
|
(2,373)
|
|
(323)
|
|
(3,656)
|
|
(3,678)
|
|
22
|
Total other
expense
|
(27,253)
|
|
(26,345)
|
|
(908)
|
|
(50,157)
|
|
(54,154)
|
|
3,997
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity in net income
of unconsolidated subsidiaries
|
8,260
|
|
13,852
|
|
(5,592)
|
|
8,966
|
|
19,495
|
|
(10,529)
|
Income before income
taxes
|
18,070
|
|
41,974
|
|
(23,904)
|
|
27,286
|
|
46,500
|
|
(19,214)
|
Income taxes
expense
|
7,742
|
|
7,983
|
|
241
|
|
9,560
|
|
9,846
|
|
286
|
Net income
|
10,328
|
|
33,991
|
|
(23,663)
|
|
17,726
|
|
36,654
|
|
(18,928)
|
Net income
attributable to noncontrolling interests
|
(1,179)
|
|
(1,992)
|
|
813
|
|
(2,748)
|
|
(3,576)
|
|
828
|
Net income
attributable to Darling
|
$
9,149
|
|
$
31,999
|
|
$
22,850
|
|
$
14,978
|
|
$
33,078
|
|
$
(18,100)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic income per
share:
|
$
0.06
|
|
$
0.19
|
|
$
(0.13)
|
|
$
0.09
|
|
$
0.20
|
|
$
(0.11)
|
Diluted income per
share:
|
$
0.05
|
|
$
0.19
|
|
$
(0.14)
|
|
$
0.09
|
|
$
0.20
|
|
$
(0.11)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of diluted
common shares:
|
166,831
|
|
165,474
|
|
|
|
166,348
|
|
165,013
|
|
|
Darling
Ingredients Inc. and Subsidiaries
|
Condensed
Consolidated Balance Sheets
|
July 1, 2017 and
December 31, 2016
|
(in
thousands)
|
|
|
July 1,
|
|
December
31,
|
|
2017
|
|
2016
|
ASSETS
|
(unaudited)
|
|
|
Current
assets:
|
|
|
|
|
Cash and cash
equivalents
|
$
124,817
|
|
$
114,564
|
|
Restricted
cash
|
282
|
|
293
|
|
Accounts Receivable,
net
|
382,957
|
|
388,397
|
|
Inventories
|
359,635
|
|
330,815
|
|
Prepaid
expenses
|
37,750
|
|
29,984
|
|
Income taxes
refundable
|
6,387
|
|
7,479
|
|
Other current
assets
|
13,101
|
|
21,770
|
|
Total current assets
|
924,929
|
|
893,302
|
Property, plant and
equipment, less accumulated depreciation, net
|
1,584,735
|
|
1,515,575
|
Intangible assets,
less accumulated amortization, net
|
703,182
|
|
711,927
|
Goodwill
|
1,271,927
|
|
1,225,893
|
Investment in
unconsolidated subsidiaries
|
279,814
|
|
292,717
|
Other
assets
|
48,239
|
|
43,613
|
Deferred income
taxes
|
17,050
|
|
14,990
|
|
Total assets
|
$
4,829,876
|
|
$
4,698,017
|
|
|
|
|
LIABILITIES AND
STOCKHOLDERS' EQUITY
|
|
|
|
Current
liabilities:
|
|
|
|
|
Current portion of
long-term debt
|
$
19,370
|
|
$
23,247
|
|
Accounts payable,
principally trade
|
186,458
|
|
180,895
|
|
Income taxes
payable
|
17,213
|
|
4,913
|
|
Accrued
expenses
|
265,939
|
|
242,796
|
|
Total current liabilities
|
488,980
|
|
451,851
|
Long-term debt, net
of current portion
|
1,727,553
|
|
1,727,696
|
Other non-current
liabilities
|
96,916
|
|
96,114
|
Deferred income
taxes
|
349,221
|
|
346,134
|
|
Total liabilities
|
2,662,670
|
|
2,621,795
|
Commitments and
contingencies
|
|
|
|
Total Darling's
stockholders' equity:
|
2,064,302
|
|
1,972,994
|
Noncontrolling
interests
|
102,904
|
|
103,228
|
|
Total stockholders' equity
|
$
2,167,206
|
|
$
2,076,222
|
|
|
$
4,829,876
|
|
$
4,698,017
|
Darling
Ingredients Inc. and Subsidiaries
|
Consolidated
Statement of Cash Flows
|
Six Months Ended
July 1, 2017 and July 2, 2016
|
(in
thousands)
|
(unaudited)
|
|
|
|
|
|
Six Months
Ended
|
|
|
|
|
July 1,
|
|
July 2,
|
Cash flows from
operating activities:
|
2017
|
|
2016
|
|
Net income
|
$
17,726
|
|
$
36,654
|
|
Adjustments to
reconcile net income to net cash provided by operating
activities:
|
|
|
|
|
|
Depreciation and
amortization
|
144,104
|
|
141,787
|
|
|
Loss/(gain) on
disposal of property, plant, equipment and other assets
|
(358)
|
|
827
|
|
|
Gain on insurance
proceeds from insurance settlements
|
-
|
|
(356)
|
|
|
Deferred
taxes
|
(11,205)
|
|
(1,812)
|
|
|
Increase/(decrease)
in long-term pension liability
|
1,362
|
|
(1,596)
|
|
|
Stock-based
compensation expense
|
11,003
|
|
5,067
|
|
|
Write - off deferred
loan costs
|
340
|
|
57
|
|
|
Deferred loan cost
amortization
|
4,366
|
|
5,600
|
|
|
Equity in net income
of unconsolidated subsidiaries
|
(8,966)
|
|
(19,495)
|
|
|
Distribution of
earnings from unconsolidated subsidiaries
|
25,806
|
|
25,994
|
|
|
Changes in operating
assets and liabilities, net of effects from
acquisitions:
|
|
|
|
|
|
Accounts
receivable
|
17,705
|
|
(20,081)
|
|
|
Income taxes
refundable/payable
|
12,857
|
|
1,559
|
|
|
Inventories
and prepaid expenses
|
(21,952)
|
|
(19,501)
|
|
|
Accounts
payable and accrued expenses
|
16,594
|
|
30,989
|
|
|
Other
|
(11,834)
|
|
(17,460)
|
|
|
|
Net cash provided by
operating activities
|
197,548
|
|
168,233
|
Cash flows from
investing activities:
|
|
|
|
|
Capital
expenditures
|
(127,824)
|
|
(109,406)
|
|
Acquisitions, net of
cash acquired
|
(12,369)
|
|
(8,511)
|
|
Investment of
unconsolidated subsidiaries
|
(2,250)
|
|
-
|
|
Gross proceeds from
disposal of property, plant and equipment and other
assets
|
3,603
|
|
2,404
|
|
Proceeds from
insurance settlement
|
3,301
|
|
1,537
|
|
Payments related to
routes and other intangibles
|
(4,635)
|
|
-
|
|
|
|
Net cash used by
investing activities
|
(140,174)
|
|
(113,976)
|
Cash flows from
financing activities:
|
|
|
|
|
Proceeds from
long-term debt
|
16,405
|
|
17,277
|
|
Payments on long-term
debt
|
(67,974)
|
|
(59,255)
|
|
Borrowings from
revolving credit facility
|
80,000
|
|
41,000
|
|
Payments on revolving
credit facility
|
(80,327)
|
|
(47,207)
|
|
Net cash overdraft
financing
|
(1,077)
|
|
-
|
|
Deferred loan
costs
|
(1,177)
|
|
-
|
|
Issuance of common
stock
|
22
|
|
143
|
|
Repurchase of common
stock
|
-
|
|
(5,000)
|
|
Minimum withholding
taxes paid on stock awards
|
(2,091)
|
|
(1,812)
|
|
Excess tax benefits
from stock-based compensation
|
-
|
|
(413)
|
|
Distributions to
noncontrolling interests
|
(2,135)
|
|
-
|
|
|
|
Net cash used by
financing activities
|
(58,354)
|
|
(55,267)
|
Effect of exchange
rate changes on cash
|
11,233
|
|
1,941
|
Net increase in cash
and cash equivalents
|
10,253
|
|
931
|
Cash and cash
equivalents at beginning of period
|
114,564
|
|
156,884
|
Cash and cash
equivalents at end of period
|
$
124,817
|
|
$
157,815
|
Supplemental
disclosure of cash flow information:
|
|
|
|
|
Accrued capital
expenditures
|
$
(5,445)
|
|
$
(3,684)
|
|
Cash paid during the
period for:
|
|
|
|
|
|
Interest, net of
capitalized interest
|
$
38,688
|
|
$
41,813
|
|
|
Income taxes, net of
refunds
|
$
7,986
|
|
$
11,799
|
|
Non-cash financing
activities:
|
|
|
|
|
|
Debt issued for
assets
|
$
-
|
|
$
10
|
|
|
Contribution of
assets to unconsolidated subsidiary
|
$
-
|
|
$
2,674
|
Selected financial information for the Company's Diamond Green Diesel Joint Venture is as
follows:
Diamond Green
Diesel Joint Venture
|
Condensed
Consolidated Balance Sheets
|
June 30, 2017 and
December 31, 2016
|
(in
thousands)
|
|
|
|
|
|
June
30,
|
|
December
31,
|
|
|
|
|
2017
|
|
2016
|
Assets:
|
|
(unaudited)
|
|
|
|
Total current
assets
|
|
$
216,993
|
|
$
268,734
|
|
Property, plant and
equipment, net
|
|
371,355
|
|
354,871
|
|
Other
assets
|
|
7,291
|
|
12,164
|
|
|
Total
assets
|
|
$
595,639
|
|
$
635,769
|
|
|
|
|
|
|
|
Liabilities and
members' equity:
|
|
|
|
|
|
Total current portion
of long term debt
|
|
$
17,023
|
|
$
17,023
|
|
Total other current
liabilities
|
|
24,112
|
|
23,200
|
|
Total long term
debt
|
|
45,242
|
|
53,753
|
|
Total other long term
liabilities
|
|
435
|
|
418
|
|
Total members'
equity
|
|
508,827
|
|
541,375
|
|
|
Total liabilities and
members' equity
|
|
$
595,639
|
|
$
635,769
|
Diamond Green
Diesel Joint Venture
|
Operating
Financial Results
|
Three Months and
Six Months Ended June 30, 2017 and June 30, 2016
|
(in
thousands)
|
(unaudited)
|
|
|
|
|
Three Months
Ended
|
|
Six Months
Ended
|
|
|
|
|
|
|
|
$ Change
|
|
|
|
|
|
$ Change
|
|
|
|
June 30,
|
|
June 30,
|
|
Favorable
|
|
June 30,
|
|
June 30,
|
|
Favorable
|
Revenues:
|
2017
|
|
2016
|
|
(Unfavorable)
|
|
2017
|
|
2016
|
|
(Unfavorable)
|
|
Operating
revenues
|
$ 150,786
|
|
$ 132,226
|
|
$
18,560
|
|
$ 276,183
|
|
$ 203,994
|
|
$
72,189
|
Expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
Total costs and expenses less depreciation,
amortization and accretion expense
|
125,975
|
|
95,565
|
|
(30,410)
|
|
241,297
|
|
148,074
|
|
(93,223)
|
|
Depreciation,
amortization and accretion expense
|
8,021
|
|
7,547
|
|
(474)
|
|
16,134
|
|
12,925
|
|
(3,209)
|
Total costs and
expenses
|
133,996
|
|
103,112
|
|
(30,884)
|
|
257,431
|
|
160,999
|
|
(96,432)
|
|
Operating
income
|
16,790
|
|
29,114
|
|
(12,324)
|
|
18,752
|
|
42,995
|
|
(24,243)
|
Other
income
|
328
|
|
70
|
|
258
|
|
551
|
|
85
|
|
466
|
|
|
Interest and debt
expense, net
|
(861)
|
|
(1,928)
|
|
1,067
|
|
(1,851)
|
|
(4,742)
|
|
2,891
|
|
|
Net
income
|
$
16,257
|
|
$
27,256
|
|
$
(10,999)
|
|
$
17,452
|
|
$
38,338
|
|
$
(20,886)
|
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
|
Three and six months
ended July 1, 2017 and July 2, 2016
|
|
|
|
Three Months Ended -
Year over Year
|
|
Six Months Ended -
Year over Year
|
Adjusted
EBITDA
|
July 1,
|
|
July 2,
|
|
July 1,
|
|
July 2,
|
(U.S. dollars in
thousands)
|
2017
|
|
2016
|
|
2017
|
|
2016
|
|
|
|
|
|
|
|
|
|
Net income
attributable to Darling
|
$
9,149
|
|
$
31,999
|
|
$
14,978
|
|
$
33,078
|
Depreciation and
amortization
|
72,990
|
|
69,531
|
|
144,104
|
|
141,787
|
Interest
expense
|
22,446
|
|
23,980
|
|
44,126
|
|
47,881
|
Income tax
expense
|
7,742
|
|
7,983
|
|
9,560
|
|
9,846
|
Foreign currency
loss/(gain)
|
2,111
|
|
(8)
|
|
2,375
|
|
2,595
|
Other expense,
net
|
2,696
|
|
2,373
|
|
3,656
|
|
3,678
|
Equity in net
(income) of unconsolidated subsidiaries
|
(8,260)
|
|
(13,852)
|
|
(8,966)
|
|
(19,495)
|
Net income
attributable to noncontrolling interests
|
1,179
|
|
1,992
|
|
2,748
|
|
3,576
|
|
Adjusted
EBITDA
|
$110,053
|
|
$123,998
|
|
$212,581
|
|
$222,946
|
|
|
|
|
|
|
|
|
|
Acquisition and
integration-related expenses
|
-
|
|
70
|
|
-
|
|
401
|
|
Pro forma
Adjusted EBITDA (Non-GAAP)
|
$110,053
|
|
$124,068
|
|
$212,581
|
|
$223,347
|
Foreign currency
exchange impact (1)
|
1,973
|
|
-
|
|
$
3,805
|
|
$
-
|
Pro forma Adjusted
EBITDA to Foreign Currency (Non-GAAP)
|
$112,026
|
|
$124,068
|
|
$216,386
|
|
$223,347
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
DGD Joint Venture
Adjusted EBITDA (Darling's share)
|
$
12,406
|
|
$
18,331
|
|
$
17,443
|
|
$
27,960
|
|
|
(1)
|
The average rates
assumption used in the 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 July 1,
2017 of €1.00:USD$1.10 and CAD$1.00:USD$0.74,
respectively.
|
|
The average rates
assumption used in the calculation was the actual fiscal average
rate for the six months ended July 2, 2016 of €1.00:USD$1.12
and CAD$1.00:USD$0.75
as compared to the average rate for the six months ended July 1,
2017 of €1.00:USD$1.08 and CAD$1.00:USD$0.75,
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 second quarter 2017 financial results at 8:30
am Eastern Time (7:30 am Central
Time) on Thursday, August 10,
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
10109759. 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 October 17, 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
10109759. 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 July 1, 2017. 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
|
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SOURCE Darling Ingredients Inc.