IRVING, Texas, Nov. 7, 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 third quarter ended
September 30, 2017.
Third Quarter 2017 Overview
- Revenue of $937.7 million, up
9.8%
- Net income of $7.8 million, or
$0.05 per GAAP diluted share
- Adjusted EBITDA of $110.5
million
- Strong balance sheet with debt reduction of $18.5 million
- Global raw material volumes strong, up 3.8%
- Improved global pricing environment, with fats holding firm
while protein prices were mixed
- Food Segment highlighted by improved performance across
gelatin markets
- Diamond Green Diesel (DGD)
facility results tempered due to EPA uncertainty; JV exploring
Phase III expansion
For the third quarter of 2017, the Company reported net sales of
$937.7 million, as compared with net
sales of $853.9 million for the third
quarter of 2016. Net income attributable to Darling for the
three months ended September 30, 2017
was $7.8 million, or $0.05 per diluted share, compared to a net income
of $28.7 million, or $0.17 per diluted share, for the third quarter of
2016. The decrease in net income for the third quarter 2017
is due to higher selling, general and administrative expenses,
depreciation expense related to new plant locations in our Feed
Ingredients segment, and the absence of the blenders tax credit,
which was included in the third quarter 2016 results but has not
yet been reinstated for 2017.
Comments on the Third Quarter 2017
"The success of our diversified business model continued to
deliver consistent earnings even in volatile markets. Our teams
delivered solid results across our business segments supported by
strong global rendering volumes and an improved performance in
Rousselot and CTH. Despite general seasonality impacting our
third quarter and a fire incident at our Rendac facility, we
executed well on our key financial metrics," said Randall C. Stuewe, Chairman and Chief Executive
Officer of Darling Ingredients Inc.
"We remain optimistic the EPA will support the earlier announced
Renewable Fuel Standard (RFS2) mandates, and we remain confident
that the blenders tax credit could soon be reinstated.
Additionally, we are excited about our just announced joint
intention with our partner, Valero Energy, to explore further
expansion of DGD, potentially doubling its capacity to 550 million
gallons annually by 2021," concluded Mr. Stuewe.
Operational Update by Segment
- Feed Ingredients – Strong global raw material
volumes drove higher sales with robust fat pricing in North America offset by lower European market
pricing. Global protein pricing was mixed due to ample global meat
and bone meal supplies while specialty proteins garnered higher
demand and pricing. Margins remained stable in light of more
tempered seasonal downgrades in the fat markets, higher payroll
related accruals and increased depreciation expense from new
facilities brought online during the past 12 months.
- Food Ingredients – Stabilized performance with
earnings recovery in Rousselot's four-continent gelatin business.
Rousselot North America and Europe
executed well, and China showed
improved strength due to higher low bloom sales volumes.
South America delivered sequential
and year-over-year profitability due to improved production
efficiencies. CTH casings business again delivered solidly on
volume and pricing. Sonac edible fats continued the positive trend
with improved performance in concert with a stabilized palm oil
market.
- Fuel Ingredients – Consistent performance led by
Rendac, our disposal rendering operations, despite a nine-day
production disruption due to a fire incident in Son. The associated
operating losses were offset by insurance proceeds collected during
the quarter. Ecoson bioenergy plant underperformed due to lower
supply volumes and curtailed operations to address current
regulatory requirements, while North American biodiesel facilities
reported an earnings decline due to the absence of the blenders tax
credit.
- Diamond Green Diesel Joint
Venture (DGD) – DGD delivered in line with
expectations against the backdrop of legislative uncertainty and
the related volatility in RIN prices. Overall, operations performed
well and posted $0.49 EBITDA per
gallon despite the lack of the blenders tax credit in 2017 versus
2016. Partners announced their intention to explore further
capacity expansion to 550 million gallons of annual production
beyond the ongoing expansion to 275 million gallons planned for Q2
2018 completion.
Financial Update by Segment
Feed
Ingredients
|
Three Months
Ended
|
|
Nine Months
Ended
|
($
thousands)
|
September 30,
2017
|
October 1,
2016
|
|
September 30,
2017
|
October 1,
2016
|
Net sales
|
$
575,543
|
$
531,413
|
|
$
1,677,286
|
$
1,550,539
|
Selling, general and
administrative expenses
|
45,471
|
38,943
|
|
134,444
|
127,513
|
Depreciation and
amortization
|
46,860
|
43,614
|
|
134,933
|
130,110
|
Segment operating
income
|
33,604
|
35,254
|
|
103,455
|
90,512
|
EBITDA
|
$
80,464
|
$
78,868
|
|
$
238,388
|
$
220,622
|
|
*EBITDA calculated by
adding depreciation and amortization to segment operating
income.
|
- Feed Ingredients operating income for the three months ended
September 30, 2017 was $33.6 million, a decrease of $1.7 million or (4.8)% as compared to the three
months ended October 1, 2016. Segment
operating income was down in the three months ended September 30, 2017 as compared to the same period
in fiscal 2016 due to higher payroll related benefits and higher
depreciation from new plant locations that were not operating in
the three months ended October 1,
2016 that more than offset increased raw material volumes
and increased finished fat prices.
- Feed Ingredients operating income during the nine months ended
September 30, 2017 was $103.5 million, an increase of $13.0 million or 14.4% as compared to the nine
months ended October 1, 2016.
Earnings for the Feed Ingredients segment were higher due to an
overall increase in sales volumes, finished product prices and raw
material volumes as compared to the same period in fiscal
2016.
Food
Ingredients
|
Three Months
Ended
|
|
Nine Months
Ended
|
($
thousands)
|
September 30,
2017
|
October 1,
2016
|
|
September 30,
2017
|
October 1,
2016
|
Net sales
|
$
300,282
|
$
261,997
|
|
$
847,897
|
$
782,014
|
Selling, general and
administrative expenses
|
25,633
|
25,352
|
|
77,480
|
69,566
|
Depreciation and
amortization
|
19,506
|
17,383
|
|
55,291
|
51,823
|
Segment operating
income
|
14,983
|
7,944
|
|
40,135
|
49,474
|
EBITDA
|
$
34,489
|
$
25,327
|
|
$
95,426
|
$
101,297
|
|
*EBITDA calculated by
adding depreciation and amortization to segment operating
income.
|
- Food Ingredients operating income was $15.0 million for the three months ended
September 30, 2017, an increase of
$7.1 million or 89.9% as compared to
the three months ended October 1,
2016. The earnings in the gelatin business were up as
compared to the prior year primarily due to improved performance in
the Company's China, South
American and North American markets. The Company's edible fats
markets improved due to increased volumes and fat prices. The
casings business delivered improved performance due to higher
supply volumes and higher demand for casings.
- Food Ingredients operating income was $40.1 million for the nine months ended
September 30, 2017, a decrease of
$9.4 million or (19.0)% as compared
to the nine months ended October 1,
2016. The earnings in the gelatin business were down as
compared to the prior year primarily due to lower earnings in the
Company's South American gelatin business due to margin compression
influenced by operating inefficiencies and macroeconomic factors.
The casings business delivered improved performance due to overall
high demand that slightly offset lower earnings in the gelatin
business. Additionally, selling, general and administrative expense
in the Food Ingredients segment increased approximately
$5.1 million primarily due to a
reduction of currency hedge gains in the nine months ended
September 30, 2017 as compared to the
same period in fiscal 2016.
Fuel
Ingredients
|
Three Months
Ended
|
|
Nine Months
Ended
|
($
thousands)
|
September 30,
2017
|
October 1,
2016
|
|
September 30,
2017
|
October 1,
2016
|
Net sales
|
$
61,856
|
$
60,446
|
|
$
188,918
|
$
178,285
|
Selling, general and
administrative expenses
|
(461)
|
1,332
|
|
5,732
|
4,986
|
Depreciation and
amortization
|
7,912
|
6,896
|
|
22,472
|
20,999
|
Segment operating
income
|
145
|
5,971
|
|
5,740
|
18,680
|
EBITDA
|
$
8,057
|
$
12,867
|
|
$
28,212
|
$
39,679
|
|
*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 September 30, 2017 was $0.1 million, a decrease of $5.9 million or (98.3)% as compared to the same
period in fiscal 2016. For the three months ended September 30, 2017 the North American region
results did not include the blenders tax credit, while fiscal 2016
included the blenders tax credit. Higher earnings in Rendac due to
increased supply volumes for the three months ended September 30, 2017 were offset by decreased
earnings in Ecoson due to lower supply volumes and curtailed
operations at Ecoson to address current regulatory requirements as
compared to the same period in the prior year. In addition,
selling, general and administrative costs were improved for the
three months ended September 30,
2017, mainly due to business interruption insurance of
approximately $5.1 million related to
a fire incident at a Rendac operation during the period.
- Exclusive of the DGD Joint Venture, the Company's Fuel
Ingredients segment income for the nine months ended September 30, 2017 was $5.7 million, a decrease of $13.0 million or (69.5)% as compared to the same
period in fiscal 2016. The decrease for the nine months ended
September 30, 2017 is primarily a
result of the North American region results not including the
blenders tax credit and curtailed operations at Ecoson to address
current regulatory requirements, while fiscal 2016 included the
blenders tax credit.
Darling
Ingredients Inc. and Subsidiaries
|
Consolidated
Operating Results
|
For the Periods
Ended September 30, 2017 and October 1, 2016
|
(in thousands, except
per share data)
|
(unaudited)
|
|
|
|
Three Months
Ended
|
|
Nine Months
Ended
|
|
|
|
|
|
|
$ Change
|
|
|
|
|
|
$ Change
|
|
|
September
30,
|
|
October 1,
|
|
Favorable
|
|
September
30,
|
|
October 1,
|
|
Favorable
|
|
|
2017
|
|
2016
|
|
(Unfavorable)
|
|
2017
|
|
2016
|
|
(Unfavorable)
|
Net sales
|
$
937,681
|
|
$ 853,856
|
|
$
83,825
|
|
$
2,714,101
|
|
$
2,510,838
|
|
$
203,263
|
Costs and
expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of sales and
operating expenses
|
744,028
|
|
671,167
|
|
(72,861)
|
|
2,134,419
|
|
1,947,175
|
|
(187,244)
|
|
Selling, general and
administrative expenses
|
83,141
|
|
76,508
|
|
(6,633)
|
|
256,589
|
|
234,135
|
|
(22,454)
|
|
Depreciation and
amortization
|
77,202
|
|
70,653
|
|
(6,549)
|
|
221,306
|
|
212,440
|
|
(8,866)
|
|
Acquisition and
integration costs
|
-
|
|
-
|
|
-
|
|
-
|
|
401
|
|
401
|
Total costs and
expenses
|
904,371
|
|
818,328
|
|
(86,043)
|
|
2,612,314
|
|
2,394,151
|
|
(218,163)
|
Operating
income
|
33,310
|
|
35,528
|
|
(2,218)
|
|
101,787
|
|
116,687
|
|
(14,900)
|
Other
expense:
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest
expense
|
(22,531)
|
|
(23,867)
|
|
1,336
|
|
(66,657)
|
|
(71,748)
|
|
5,091
|
|
Foreign currency
gain/(loss)
|
(2,055)
|
|
354
|
|
(2,409)
|
|
(4,430)
|
|
(2,241)
|
|
(2,189)
|
|
Other expense,
net
|
(1,447)
|
|
(2,007)
|
|
560
|
|
(5,103)
|
|
(5,685)
|
|
582
|
Total other
expense
|
(26,033)
|
|
(25,520)
|
|
(513)
|
|
(76,190)
|
|
(79,674)
|
|
3,484
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity in net income
of unconsolidated subsidiaries
|
7,703
|
|
18,138
|
|
(10,435)
|
|
16,669
|
|
37,633
|
|
(20,964)
|
Income before income
taxes
|
14,980
|
|
28,146
|
|
(13,166)
|
|
42,266
|
|
74,646
|
|
(32,380)
|
Income taxes
expense/(benefit)
|
6,296
|
|
(744)
|
|
(7,040)
|
|
15,856
|
|
9,102
|
|
(6,754)
|
Net income
|
8,684
|
|
28,890
|
|
(20,206)
|
|
26,410
|
|
65,544
|
|
(39,134)
|
Net income
attributable to noncontrolling interests
|
(923)
|
|
(196)
|
|
(727)
|
|
(3,671)
|
|
(3,772)
|
|
101
|
Net income
attributable to Darling
|
$
7,761
|
|
$
28,694
|
|
$
(20,933)
|
|
$
22,739
|
|
$
61,772
|
|
$
(39,033)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic income per
share:
|
$
0.05
|
|
$
0.17
|
|
$
(0.12)
|
|
$
0.14
|
|
$
0.38
|
|
$
(0.24)
|
Diluted income per
share:
|
$
0.05
|
|
$
0.17
|
|
$
(0.12)
|
|
$
0.14
|
|
$
0.37
|
|
$
(0.23)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of diluted
common shares:
|
167,181
|
|
165,436
|
|
|
|
166,628
|
|
165,154
|
|
|
Darling
Ingredients Inc. and Subsidiaries
|
Condensed
Consolidated Balance Sheets
|
September 30, 2017
and December 31, 2016
|
(in
thousands)
|
|
|
September
30,
|
|
December
31,
|
|
2017
|
|
2016
|
ASSETS
|
(unaudited)
|
|
|
Current
assets:
|
|
|
|
|
Cash and cash
equivalents
|
$
110,146
|
|
$
114,564
|
|
Restricted
cash
|
282
|
|
293
|
|
Accounts Receivable,
net
|
414,947
|
|
388,397
|
|
Inventories
|
375,098
|
|
330,815
|
|
Prepaid
expenses
|
39,272
|
|
29,984
|
|
Income taxes
refundable
|
5,370
|
|
7,479
|
|
Other current
assets
|
17,101
|
|
21,770
|
|
Total current assets
|
962,216
|
|
893,302
|
Property, plant and
equipment,
less accumulated
depreciation, net
|
1,621,867
|
|
1,515,575
|
Intangible
assets,
less accumulated
amortization, net
|
697,908
|
|
711,927
|
Goodwill
|
1,298,266
|
|
1,225,893
|
Investment in
unconsolidated subsidiaries
|
290,028
|
|
292,717
|
Other
assets
|
47,018
|
|
43,613
|
Deferred income
taxes
|
17,219
|
|
14,990
|
|
Total assets
|
$
4,934,522
|
|
$
4,698,017
|
LIABILITIES AND
STOCKHOLDERS' EQUITY
|
|
|
|
Current
liabilities:
|
|
|
|
|
Current portion of
long-term debt
|
$
18,215
|
|
$
23,247
|
|
Accounts payable,
principally trade
|
213,592
|
|
180,895
|
|
Income taxes
payable
|
21,974
|
|
4,913
|
|
Accrued
expenses
|
292,483
|
|
242,796
|
|
Total current liabilities
|
546,264
|
|
451,851
|
Long-term debt, net
of current portion
|
1,734,176
|
|
1,727,696
|
Other non-current
liabilities
|
96,354
|
|
96,114
|
Deferred income
taxes
|
353,041
|
|
346,134
|
|
Total liabilities
|
2,729,835
|
|
2,621,795
|
Commitments and
contingencies
|
|
|
|
Total Darling's
stockholders' equity:
|
2,122,655
|
|
1,972,994
|
Noncontrolling
interests
|
82,032
|
|
103,228
|
|
Total stockholders' equity
|
$
2,204,687
|
|
$
2,076,222
|
|
|
$
4,934,522
|
|
$
4,698,017
|
Darling
Ingredients Inc. and Subsidiaries
|
Consolidated
Statement of Cash Flows
|
Nine Months Ended
September 30, 2017 and October 1, 2016
|
(in
thousands)
|
(unaudited)
|
|
|
|
|
|
Nine Months
Ended
|
|
|
|
|
September
30,
|
|
October 1,
|
Cash flows from
operating activities:
|
2017
|
|
2016
|
|
Net income
|
$
26,410
|
|
$
65,544
|
|
Adjustments to
reconcile net income to net cash provided by operating
activities:
|
|
|
|
|
|
Depreciation and
amortization
|
221,306
|
|
212,440
|
|
|
Loss/(gain) on
disposal of property, plant, equipment and other assets
|
(537)
|
|
873
|
|
|
Gain on insurance
proceeds from insurance settlements
|
-
|
|
(356)
|
|
|
Deferred
taxes
|
(14,242)
|
|
(5,223)
|
|
|
Increase/(decrease)
in long-term pension liability
|
1,574
|
|
(1,105)
|
|
|
Stock-based
compensation expense
|
14,710
|
|
7,953
|
|
|
Write - off deferred
loan costs
|
443
|
|
292
|
|
|
Deferred loan cost
amortization
|
6,581
|
|
8,393
|
|
|
Equity in net income
of unconsolidated subsidiaries
|
(16,669)
|
|
(37,633)
|
|
|
Distribution of
earnings from unconsolidated subsidiaries
|
26,600
|
|
26,317
|
|
|
Changes in operating
assets and liabilities, net of effects from
acquisitions:
|
|
|
|
|
|
Accounts
receivable
|
(5,311)
|
|
(3,058)
|
|
|
Income taxes
refundable/payable
|
18,332
|
|
1,432
|
|
|
Inventories
and prepaid expenses
|
(31,058)
|
|
(11,368)
|
|
|
Accounts
payable and accrued expenses
|
39,937
|
|
27,438
|
|
|
Other
|
(19,294)
|
|
(11,377)
|
|
|
|
Net cash provided by
operating activities
|
268,782
|
|
280,562
|
Cash flows from
investing activities:
|
|
|
|
|
Capital
expenditures
|
(196,446)
|
|
(168,224)
|
|
Acquisitions, net of
cash acquired
|
(12,144)
|
|
(8,511)
|
|
Investment of
unconsolidated subsidiaries
|
(4,750)
|
|
-
|
|
Gross proceeds from
disposal of property, plant and equipment and other
assets
|
4,953
|
|
4,492
|
|
Proceeds from
insurance settlement
|
3,301
|
|
1,537
|
|
Payments related to
routes and other intangibles
|
(5,635)
|
|
-
|
|
|
|
Net cash used by
investing activities
|
(210,721)
|
|
(170,706)
|
Cash flows from
financing activities:
|
|
|
|
|
Proceeds from
long-term debt
|
24,069
|
|
28,765
|
|
Payments on long-term
debt
|
(94,250)
|
|
(128,364)
|
|
Borrowings from
revolving credit facility
|
142,000
|
|
83,000
|
|
Payments on revolving
credit facility
|
(147,327)
|
|
(93,028)
|
|
Net cash overdraft
financing
|
2,590
|
|
-
|
|
Deferred loan
costs
|
(1,177)
|
|
-
|
|
Issuance of common
stock
|
22
|
|
143
|
|
Repurchase of common
stock
|
-
|
|
(5,000)
|
|
Minimum withholding
taxes paid on stock awards
|
(2,140)
|
|
(1,843)
|
|
Acquisition of
noncontrolling interest
|
(429)
|
|
-
|
|
Distributions to
noncontrolling interests
|
(2,513)
|
|
(885)
|
|
|
|
Net cash used by
financing activities
|
(79,155)
|
|
(117,212)
|
Effect of exchange
rate changes on cash
|
16,676
|
|
(943)
|
Net decrease in cash
and cash equivalents
|
(4,418)
|
|
(8,299)
|
Cash and cash
equivalents at beginning of period
|
114,564
|
|
156,884
|
Cash and cash
equivalents at end of period
|
$
110,146
|
|
$
148,585
|
Supplemental
disclosure of cash flow information:
|
|
|
|
|
Accrued capital
expenditures
|
$
(3,532)
|
|
$
(3,302)
|
|
Cash paid during the
period for:
|
|
|
|
|
|
Interest, net of
capitalized interest
|
$
58,219
|
|
$
62,395
|
|
|
Income taxes, net of
refunds
|
$
13,719
|
|
$
14,018
|
|
Non-cash financing
activities:
|
|
|
|
|
|
Debt issued for
assets
|
$
3
|
|
$
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
|
September 30, 2017
and December 31, 2016
|
(in thousands)
|
|
|
|
|
|
September
30,
|
|
December
31,
|
|
|
|
|
2017
|
|
2016
|
Assets:
|
|
(unaudited)
|
|
|
|
Total current
assets
|
|
$
218,357
|
|
$
268,734
|
|
Property, plant and
equipment, net
|
|
390,723
|
|
354,871
|
|
Other
assets
|
|
5,482
|
|
12,164
|
|
|
Total
assets
|
|
$
614,562
|
|
$
635,769
|
|
|
|
|
|
|
|
Liabilities and
members' equity:
|
|
|
|
|
|
Total current portion
of long term debt
|
|
$
17,023
|
|
$
17,023
|
|
Total other current
liabilities
|
|
32,924
|
|
23,200
|
|
Total long term
debt
|
|
40,986
|
|
53,753
|
|
Total other long term
liabilities
|
|
443
|
|
418
|
|
Total members'
equity
|
|
523,186
|
|
541,375
|
|
|
Total liabilities and
members' equity
|
|
$
614,562
|
|
$
635,769
|
Diamond Green
Diesel Joint Venture
|
Operating
Financial Results
|
Three Months and
Nine Months Ended September 30, 2017 and October 1,
2016
|
(in
thousands)
|
(unaudited)
|
|
|
|
|
Three Months
Ended
|
|
Nine Months
Ended
|
|
|
|
|
|
|
|
$ Change
|
|
|
|
|
|
$ Change
|
|
|
|
September
30,
|
|
September
30,
|
|
Favorable
|
|
September
30,
|
|
September
30,
|
|
Favorable
|
Revenues:
|
2017
|
|
2016
|
|
(Unfavorable)
|
|
2017
|
|
2016
|
|
(Unfavorable)
|
|
Operating
revenues
|
$
175,585
|
|
$
141,656
|
|
$
33,929
|
|
$
451,768
|
|
$
345,650
|
|
$
106,118
|
Expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
Total costs and
expenses less depreciation,
amortization and accretion expense
|
154,446
|
|
96,569
|
|
(57,877)
|
|
395,743
|
|
244,643
|
|
(151,100)
|
|
|
Depreciation,
amortization and accretion expense
|
6,733
|
|
7,445
|
|
712
|
|
22,867
|
|
20,370
|
|
(2,497)
|
|
Total costs and
expenses
|
161,179
|
|
104,014
|
|
(57,165)
|
|
418,610
|
|
265,013
|
|
(153,597)
|
|
Operating
income
|
14,406
|
|
37,642
|
|
(23,236)
|
|
33,158
|
|
80,637
|
|
(47,479)
|
Other
income
|
408
|
|
114
|
|
294
|
|
959
|
|
199
|
|
760
|
|
|
Interest and debt
expense, net
|
(455)
|
|
(1,406)
|
|
951
|
|
(2,306)
|
|
(6,148)
|
|
3,842
|
|
|
Net
income
|
$
14,359
|
|
$
36,350
|
|
$
(21,991)
|
|
$
31,811
|
|
$
74,688
|
|
$
(42,877)
|
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 nine months
ended September 30, 2017 and October 1, 2016
|
|
|
|
Three Months Ended -
Year over Year
|
|
Nine Months Ended -
Year over Year
|
Adjusted
EBITDA
|
September
30,
|
|
October 1,
|
|
September
30,
|
|
October 1,
|
(U.S. dollars in
thousands)
|
2017
|
|
2016
|
|
2017
|
|
2016
|
|
|
|
|
|
|
|
|
|
Net income
attributable to Darling
|
$
7,761
|
|
$
28,694
|
|
$
22,739
|
|
$
61,772
|
Depreciation and
amortization
|
77,202
|
|
70,653
|
|
221,306
|
|
212,440
|
Interest
expense
|
22,531
|
|
23,867
|
|
66,657
|
|
71,748
|
Income tax
expense/(benefit)
|
6,296
|
|
(744)
|
|
15,856
|
|
9,102
|
Foreign currency
loss/(gain)
|
2,055
|
|
(354)
|
|
4,430
|
|
2,241
|
Other expense,
net
|
1,447
|
|
2,007
|
|
5,103
|
|
5,685
|
Equity in net
(income) of unconsolidated subsidiaries
|
(7,703)
|
|
(18,138)
|
|
(16,669)
|
|
(37,633)
|
Net income
attributable to noncontrolling interests
|
923
|
|
196
|
|
3,671
|
|
3,772
|
|
Adjusted
EBITDA
|
$
110,512
|
|
$ 106,181
|
|
$
323,093
|
|
$ 329,127
|
|
|
|
|
|
|
|
|
|
Acquisition and
integration-related expenses
|
-
|
|
-
|
|
|
|
401
|
|
Pro forma
Adjusted EBITDA (Non-GAAP)
|
$
110,512
|
|
$ 106,181
|
|
$
323,093
|
|
$ 329,528
|
Foreign currency
exchange impact
|
(3,574)
|
(1)
|
-
|
|
231
|
(2)
|
-
|
Pro forma Adjusted
EBITDA to Foreign Currency (Non-GAAP)
|
$
106,938
|
|
$ 106,181
|
|
$
323,324
|
|
$ 329,528
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
DGD Joint Venture
Adjusted EBITDA (Darling's share)
|
$
10,570
|
|
$
22,543
|
|
$
28,013
|
|
$
50,503
|
|
|
(1)
|
The average rates
assumption used in the calculation was the actual fiscal average
rate for the three months ended October 1, 2016 of €1.00:USD$1.12
and CAD$1.00:USD$0.77
as compared to the average rate for the three months ended
September 30, 2017 of €1.00:USD$1.18 and CAD$1.00:USD$0.80,
respectively.
|
(2)
|
The average rates
assumption used in the calculation was the actual fiscal average
rate for the nine months ended October 1, 2016 of €1.00:USD$1.12
and CAD$1.00:USD$0.76
as compared to the average rate for the nine months ended September
30, 2017 of €1.00:USD$1.11 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 third quarter 2017 financial results at 8:30
am Eastern Time (7:30 am Central
Time) on Wednesday, November
8, 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 10112133. 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 15,
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
10112133. 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 September 30, 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
|
View original
content:http://www.prnewswire.com/news-releases/darling-ingredients-inc-reports-third-quarter-2017-financial-results-300551161.html
SOURCE Darling Ingredients Inc.