IRVING, Texas, Feb. 27, 2018 /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 2017 fourth
quarter and year ended December 30,
2017.
Fourth Quarter 2017 Overview
- Net income of $105.7 million,
or $0.63 per GAAP diluted
share
- Revenue of $952.5 million, up
7.5%
- Adjusted EBITDA of $115.8
million
- Strong global raw material volumes up 3.0%
- Deflationary finished product pricing in Feed segment,
Consistent performance in Food segment
- Fuel segment reflects improved Q4 biofuel economics without
blenders tax credit (BTC)
- Continued deleverage of $43
million
Fiscal 2017 Overview
- Net income of $128.5 million,
or $0.77 per GAAP diluted
share
- U.S. Tax Cuts and Jobs Act and the European tax reform added
$0.53 to EPS
- No blenders tax credit in results, will be reported Q1
2018
- Adjusted EBITDA of $438.9 million
- Diamond Green Diesel (DGD) performance reflects $0.54 cents per gallon without BTC
- Broadened global reach with multiple construction projects,
expansions and bolt on acquisitions
- Solid cash flow generation with full year debt paydown of $112.5 million
- $61.8 million in working
capital improvement
For the fourth quarter of 2017, the Company reported net sales
of $952.5 million, as compared with
net sales of $885.8 million for the
fourth quarter of 2016. Net income attributable to Darling
for the three months ended December 30,
2017 was $105.7 million, or
$0.63 per diluted share, compared to
a net income of $40.5 million, or
$0.25 per diluted share, for the
fourth quarter of 2016. The increase in net income for the
fourth quarter 2017 is primarily attributable to the reversal of
deferred tax liabilities due to the U.S. Tax Cuts and Jobs Act,
benefits from European tax reform, along with improved raw material
volumes and pricing across the segments. For comparison
purposes, fourth quarter results do not reflect the blenders tax
credit.
Net Income attributable to Darling for the fiscal year ended
December 30, 2017 was $128.5 million, or $0.77 per diluted share, as compared to a net
income of $102.3 million, or
$0.62 per diluted share, for the
fiscal year ended December 31, 2016.
The increase in net income for 2017 is primarily attributable to
the reversal of deferred tax liabilities due to the U.S. Tax Cuts
and Jobs Act along with benefits from European tax reform. Strong
volumes, consistent margins, and improvements in our specialty
businesses aided the Feed segment, while the Food segment delivered
a consistent performance lead by CTH, our natural casings business,
with Rousselot achieving record sales volumes and stabilizing
margins. In the Fuel segment, results reflect the
absence of the blenders tax credit which was reinstated
retroactively for 2017 during February 2018. First quarter
2018 results will reflect income of $12.6
million from the blenders tax credit.
Comments on the Fourth Quarter and Fiscal 2017 Year
End
"We are pleased to report a strong finish to 2017, with improved
fourth quarter results driven by streamlined operations across our
global platform," said Randall C.
Stuewe, Chairman and Chief Executive Officer of Darling
Ingredients Inc. "We leveraged higher global raw material volumes
with consistent margins by managing through deflationary finished
product markets in the Feed Ingredients segment. Food Ingredients
delivered strong operating performance across all product lines
while managing through continued macroeconomic headwinds in South
American markets. Sequentially, our North American and Canadian
biodiesel facilities showed improved operational performance though
earnings were negatively impacted due to the absence of the
blenders tax credit. We are pleased to see the reinstatement of the
blenders tax credit, applied retroactively for 2017. Diamond Green
Diesel excelled operationally and delivered $86 million EBITDA (Darling's half being
$43 million), or $0.54 per gallon, excluding the blenders tax
credit. The Diamond Green Diesel expansion project to increase
production from 160 million gallons to 275 million gallons annually
is progressing well, with the facility expected to go down in
mid-May for final tie-ins before completion in late Q2 2018.
"During the year, our global capital growth plan included
multiple new construction projects, expansions and bolt on
acquisitions to maximize our world of growth strategy, and
engineering of our product mix to meet the needs of changing global
diets. Our strong balance sheet combined with improved working
capital deployment enabled further deleveraging of $112.5 million, exceeding our stated goal of
$100 million in 2017. We
continue to execute well, diversify our global platform and deploy
prudent growth capital investments to drive meaningful growth and
profitability in the future."
Operational Update by Segment
- Feed Ingredients – Segment leveraged strong
global raw material tonnage across geographies, with North America up by 4 percent and
international up over 2 percent during the year. Managed through
unstable finished product markets while margins remained
consistent. Broadened manufacturing platform by expanding rendering
and blood operations and by commencing construction on species
specific operations. Wet pet food and specialty blending delivered
improved, meaningful results.
- Food Ingredients – Segment delivered improved
performance across all product lines with consistent year-over-year
EBITDA of $131.4 million. Rousselot
gelatin business stabilized in China while margin pressures continued in
South America augmented by ample
hide supply and weakening currencies. Sonac edible fat earnings
delivered in line, and CTH casings business produced continued
solid earnings on increased supply and an improved margin
environment.
- Fuel Ingredients – Segment performance improved
during the fourth quarter; however, the lack of the BTC negatively
impacted year-over-year comparisons. North American biodiesel
operations reversed third quarter losses with an improved economic
environment in the fourth quarter. Rendac delivered consistent
earnings on strong volumes. Ecoson bioenergy facility operated at
reduced capacity while resolving current regulatory
challenges.
- Diamond Green Diesel Joint
Venture – Executed well and delivered solid earnings
of $0.54 per gallon, excluding BTC.
Including the retroactive BTC, the facility earned $247 million EBITDA on the sale of 160 million
gallons. Strong cash reserve of $123.4
million coupled with the retroactive BTC of $160.4 million will provide adequate capital
reserves to complete the current expansion. Construction on plant
expansion is progressing as scheduled, which at full capacity
increases annual production from 160 million gallons to 275 million
gallons of renewable diesel. Total cost estimated at $190.0 million, with construction completion and
commissioning expected late in Q2 2018.
Financial Update by Segment
Feed
Ingredients
|
Three Months
Ended
|
|
Fiscal Year
Ended
|
($
thousands)
|
December 30,
2017
|
December 31,
2016
|
|
December 30,
2017
|
December 31,
2016
|
Net sales
|
$
562,206
|
$
538,606
|
|
$
2,239,492
|
$
2,089,145
|
Selling, general and
administrative expenses
|
46,422
|
42,135
|
|
180,866
|
169,648
|
Depreciation and
amortization
|
49,239
|
48,735
|
|
184,172
|
178,845
|
Segment operating
income
|
26,231
|
25,282
|
|
129,686
|
115,794
|
EBITDA
|
$
75,470
|
$
74,017
|
|
$
313,858
|
$
294,639
|
|
*EBITDA calculated by
adding depreciation and amortization to segment operating
income.
|
- Feed Ingredients operating income for the three months ended
December 30, 2017 was $26.2 million, an increase of $0.9 million as compared to the three months
ended December 31, 2016. Earnings for
the Feed Ingredients segment were higher due to improved earnings
in U.S. operations and a global increase in raw material
volumes.
- Feed Ingredients operating income for the fiscal year 2017 was
$129.7 million, an increase of
$13.9 million as compared to fiscal
year 2016. Earnings in the Feed Ingredients segment were up from
the prior year due to improved earnings in both the U.S. and
European operations, overall increase in sales volumes, higher
finished product prices for fats and certain finished protein
products and an increase in raw material volumes.
Food
Ingredients
|
Three Months
Ended
|
|
Fiscal Year
Ended
|
($
thousands)
|
December 30,
2017
|
December 31,
2016
|
|
December 30,
2017
|
December 31,
2016
|
Net sales
(1)
|
$
313,478
|
$
278,378
|
|
$
1,156,976
|
$
1,055,725
|
Selling, general and
administrative expenses
|
27,502
|
26,604
|
|
104,982
|
96,170
|
Depreciation and
amortization
|
19,719
|
18,297
|
|
75,010
|
70,120
|
Segment operating
income
|
16,274
|
11,738
|
|
56,409
|
61,212
|
EBITDA
|
$
35,993
|
$
30,035
|
|
$
131,419
|
$
131,332
|
|
*EBITDA calculated by
adding depreciation and amortization to segment operating
income.
|
(1) Net sales were
adjusted for Brazil VAT reclass.
|
- Food Ingredients operating income was $16.3 million for the three months ended
December 30, 2017, an increase of
$4.6 million as compared to the three
months ended December 31, 2016. The
increase in operating income was primarily attributable to higher
earnings in the natural casings business, improved earnings in the
North America gelatin operations
and slightly higher sales price for edible fats in Europe.
- Food Ingredients operating income was $56.4 million for fiscal 2017, a decrease of
$4.8 million as compared to fiscal
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 operations due to margin compression
influenced by operating inefficiencies and macroeconomic factors in
the first half of fiscal 2017. 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 $8.8
million primarily due to a reduction of currency hedge gains
in fiscal 2017 as compared to the same period in fiscal 2016.
Fuel
Ingredients
|
Three Months
Ended
|
|
Fiscal Year
Ended
|
($
thousands)
|
December 30,
2017
|
December 31,
2016
|
|
December 30,
2017
|
December 31,
2016
|
Net sales
|
$
76,865
|
$
68,773
|
|
$
265,783
|
$
247,058
|
Selling, general and
administrative expenses
|
4,735
|
1,909
|
|
10,467
|
6,895
|
Depreciation and
amortization
|
8,547
|
7,532
|
|
31,019
|
28,531
|
Segment operating
income
|
8,049
|
10,486
|
|
13,789
|
29,166
|
EBITDA
|
$
16,596
|
$
18,018
|
|
$
44,808
|
$
57,697
|
|
*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, Fuel Ingredients operating
income for the three months ended December
30, 2017 was $8.0 million, a
decrease of $2.5 million as compared
to the three months ended December 31,
2016. The decrease in earnings is primarily a result of
lower earnings within the disposal rendering business in
Europe and the absence of the
blenders tax credit in the U.S. which more than offset improved
earnings within the Ecoson business.
- Exclusive of the DGD Joint Venture, Fuel Ingredients operating
income for fiscal year 2017 was $13.8
million, a decrease of $15.4
million as compared to fiscal 2016. The decrease for 2017 is
primarily a result of the absence of the blenders tax credit in the
U.S. and curtailed operations at Ecoson to address current
regulatory challenges.
Darling
Ingredients Inc. and Subsidiaries
|
Condensed
Consolidated Balance Sheets
|
December 30, 2017
and December 31, 2016
|
(in
thousands)
|
|
|
December
30,
|
|
December
31,
|
|
2017
|
|
2016
|
ASSETS
|
|
|
|
Current
assets:
|
|
|
|
|
Cash and cash
equivalents
|
$
106,774
|
|
$
114,564
|
|
Restricted
cash
|
142
|
|
293
|
|
Accounts Receivable,
net
|
391,847
|
|
388,397
|
|
Inventories
|
358,183
|
|
330,815
|
|
Prepaid
expenses
|
38,326
|
|
29,984
|
|
Income taxes
refundable
|
4,509
|
|
7,479
|
|
Other current
assets
|
56,664
|
|
21,770
|
|
Total current assets
|
956,445
|
|
893,302
|
Property, plant and
equipment, net
|
1,645,822
|
|
1,515,575
|
Intangible assets,
less accumulated amortization of $383,836 at December 30,
2017 and $301,187 at December 31, 2016
|
676,500
|
|
711,927
|
Goodwill
|
1,301,093
|
|
1,225,893
|
Investment in
unconsolidated subsidiaries
|
302,038
|
|
292,717
|
Other
assets
|
62,284
|
|
43,613
|
Deferred income
taxes
|
14,043
|
|
14,990
|
|
$
4,958,225
|
|
$
4,698,017
|
LIABILITIES AND
STOCKHOLDERS' EQUITY
|
|
|
|
Current
liabilities:
|
|
|
|
|
Current portion of
long-term debt
|
$
16,143
|
|
$
23,247
|
|
Accounts payable,
principally trade
|
217,417
|
|
180,895
|
|
Income taxes
payable
|
12,300
|
|
4,913
|
|
Accrued
expenses
|
313,623
|
|
242,796
|
|
Total current liabilities
|
559,483
|
|
451,851
|
Long-term debt, net
of current portion
|
1,698,050
|
|
1,727,696
|
Other non-current
liabilities
|
106,287
|
|
96,114
|
Deferred income
taxes
|
266,708
|
|
346,134
|
|
Total liabilities
|
2,630,528
|
|
2,621,795
|
Commitments and
contingencies
|
|
|
|
Total Darling's
stockholders' equity:
|
2,244,933
|
|
1,972,994
|
Noncontrolling
interests
|
82,764
|
|
103,228
|
|
Total stockholders' equity
|
$
2,327,697
|
|
$
2,076,222
|
|
$
4,958,225
|
|
$
4,698,017
|
Darling
Ingredients Inc. and Subsidiaries
|
Consolidated
Operating Results
|
For the Periods
Ended December 30, 2017 and December 31, 2016
|
(in thousands, except
per share data)
|
|
|
|
(Fourth Quarter
Unaudited)
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
Fiscal Year
Ended
|
|
|
|
|
|
|
$ Change
|
|
|
|
|
|
$ Change
|
|
|
December
30,
|
|
December
31,
|
|
Favorable
|
|
December
30,
|
|
December
31,
|
|
Favorable
|
|
|
2017
|
|
2016
|
|
(Unfavorable)
|
|
2017
|
|
2016
|
|
(Unfavorable)
|
Net sales
|
$
952,549
|
|
$
885,757
|
|
$
66,792
|
|
$
3,662,251
|
|
$
3,391,928
|
|
$
270,323
|
Costs and
expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of sales and
operating expenses
|
745,831
|
|
693,039
|
|
(52,792)
|
|
2,875,851
|
|
2,635,547
|
|
(240,304)
|
|
Selling, general and
administrative expenses
|
90,898
|
|
79,870
|
|
(11,028)
|
|
347,487
|
|
314,005
|
|
(33,482)
|
|
Depreciation and
amortization
|
80,794
|
|
77,468
|
|
(3,326)
|
|
302,100
|
|
289,908
|
|
(12,192)
|
|
Acquisition and
integration costs
|
-
|
|
-
|
|
-
|
|
-
|
|
401
|
|
401
|
Total costs and
expenses
|
917,523
|
|
850,377
|
|
(67,146)
|
|
3,525,438
|
|
3,239,861
|
|
(285,577)
|
Operating
income
|
35,026
|
|
35,380
|
|
(354)
|
|
136,813
|
|
152,067
|
|
(15,254)
|
Other
expense:
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest
expense
|
(22,269)
|
|
(22,439)
|
|
170
|
|
(88,926)
|
|
(94,187)
|
|
5,261
|
|
Foreign currency
gain/(loss)
|
(2,468)
|
|
387
|
|
(2,855)
|
|
(6,898)
|
|
(1,854)
|
|
(5,044)
|
|
Other
income/(expense), net
|
(190)
|
|
1,819
|
|
(2,009)
|
|
(5,293)
|
|
(3,866)
|
|
(1,427)
|
Total other
expense
|
(24,927)
|
|
(20,233)
|
|
(4,694)
|
|
(101,117)
|
|
(99,907)
|
|
(1,210)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity in net income
of unconsolidated subsidiaries
|
11,835
|
|
32,746
|
|
(20,911)
|
|
28,504
|
|
70,379
|
|
(41,875)
|
Income before income
taxes
|
21,934
|
|
47,893
|
|
(25,959)
|
|
64,200
|
|
122,539
|
|
(58,339)
|
Income taxes
expense/(benefit)
|
(85,010)
|
|
6,213
|
|
91,223
|
|
(69,154)
|
|
15,315
|
|
84,469
|
Net income
|
106,944
|
|
41,680
|
|
65,264
|
|
133,354
|
|
107,224
|
|
26,130
|
Net income
attributable to noncontrolling interests
|
(1,215)
|
|
(1,139)
|
|
(76)
|
|
(4,886)
|
|
(4,911)
|
|
25
|
Net income
attributable to Darling
|
$
105,729
|
|
$
40,541
|
|
$
65,188
|
|
$
128,468
|
|
$
102,313
|
|
$
26,155
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic income per
share:
|
$
0.64
|
|
$
0.25
|
|
$
0.40
|
|
$
0.78
|
|
$
0.62
|
|
$
0.16
|
Diluted income per
share:
|
$
0.63
|
|
$
0.25
|
|
$
0.38
|
|
$
0.77
|
|
$
0.62
|
|
$
0.15
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of diluted
common shares:
|
166,997
|
|
165,372
|
|
|
|
166,730
|
|
165,212
|
|
|
Darling
Ingredients Inc. and Subsidiaries
|
Consolidated
Statement of Cash Flows
|
Fiscal Years Ended
December 30, 2017 and December 31, 2016
|
(in
thousands)
|
|
|
|
|
|
Fiscal Year
Ended
|
|
|
|
|
December
30,
|
|
December
31,
|
Cash flows from
operating activities:
|
2017
|
|
2016
|
|
Net income
|
|
$
133,354
|
|
$
107,224
|
|
Adjustments to
reconcile net income to net cash provided by operating
activities:
|
|
|
|
|
|
Depreciation and
amortization
|
302,100
|
|
289,908
|
|
|
Deferred
taxes
|
(98,805)
|
|
(11,532)
|
|
|
Loss/(gain) on sale
of assets
|
(237)
|
|
1,744
|
|
|
Gain on insurance
proceeds from insurance settlement
|
(1,427)
|
|
(356)
|
|
|
Increase/(decrease)
in long-term pension liability
|
2,383
|
|
(430)
|
|
|
Stock-based
compensation expense
|
17,598
|
|
10,330
|
|
|
Write-off deferred
loan costs
|
766
|
|
528
|
|
|
Deferred loan cost
amortization
|
8,736
|
|
11,171
|
|
|
Equity in net income
of unconsolidated subsidiaries
|
(28,504)
|
|
(70,379)
|
|
|
Distribution of
earnings from unconsolidated subsidiaries
|
26,761
|
|
26,317
|
|
|
Changes in operating
assets and liabilities, net of effects from
acquisitions:
|
|
|
|
|
|
Accounts
receivable
|
3,482
|
|
(22,796)
|
|
|
Income taxes
refundable/payable
|
9,360
|
|
2,839
|
|
|
Inventories
and prepaid expenses
|
(15,022)
|
|
15,343
|
|
|
Accounts
payable and accrued expenses
|
73,386
|
|
39,286
|
|
|
Other
|
|
(23,344)
|
|
(8,161)
|
|
|
|
Net cash provided by
operating activities
|
410,587
|
|
391,036
|
Cash flows from
investing activities:
|
|
|
|
|
Capital
expenditures
|
(274,168)
|
|
(243,523)
|
|
Acquisitions, net of
cash acquired
|
(12,144)
|
|
(8,511)
|
|
Investment of
unconsolidated subsidiary
|
(4,750)
|
|
-
|
|
Gross proceeds from
disposal of property, plant and equipment and other
assets
|
8,090
|
|
7,329
|
|
Proceeds from
insurance settlement
|
6,054
|
|
1,537
|
|
Payments related to
routes and other intangibles
|
(7,135)
|
|
(23)
|
|
|
|
Net cash used by
investing activities
|
(284,053)
|
|
(243,191)
|
Cash flows from
financing activities:
|
|
|
|
|
Proceeds from
long-term debt
|
33,401
|
|
36,327
|
|
Payments on long-term
debt
|
(149,623)
|
|
(204,428)
|
|
Borrowings from
revolving credit facility
|
199,495
|
|
99,276
|
|
Payments on revolving
credit facility
|
(204,935)
|
|
(104,028)
|
|
Net cash overdraft
financing
|
(714)
|
|
1,071
|
|
Deferred loan
costs
|
(6,717)
|
|
(3,879)
|
|
Issuance of common
stock
|
22
|
|
188
|
|
Repurchase of common
stock
|
-
|
|
(5,000)
|
|
Minimum withholding
taxes paid on stock awards
|
(3,049)
|
|
(1,843)
|
|
Deductions of
noncontrolling interest
|
(17,451)
|
|
-
|
|
Distributions to
noncontrolling interests
|
(5,281)
|
|
(1,552)
|
|
|
|
Net cash used in
financing activities
|
(154,852)
|
|
(183,868)
|
Effect of exchange
rate changes on cash flows
|
20,528
|
|
(6,297)
|
Net
increase/(decrease) in cash and cash equivalents
|
(7,790)
|
|
(42,320)
|
Cash and cash
equivalents at beginning of year
|
114,564
|
|
156,884
|
Cash and cash
equivalents at end of year
|
$
106,774
|
|
$
114,564
|
Supplemental
disclosure of cash flow information:
|
|
|
|
|
Accrued capital
expenditures
|
$
1,521
|
|
$
(937)
|
|
Cash paid during the
period for:
|
|
|
|
|
|
Interest, net of
capitalized interest
|
$
78,233
|
|
$
82,094
|
|
|
Income taxes, net of
refunds
|
$
26,304
|
|
$
23,220
|
|
Non-cash financing
activities:
|
|
|
|
|
|
Debt issued for
service contract assets
|
$
9,459
|
|
$
10
|
|
|
Contribution of
assets to unconsolidated subsidiary
|
$
-
|
|
$
2,674
|
Diamond Green
Diesel Joint Venture
|
Condensed
Consolidated Balance Sheets
|
December 31, 2017
and December 31, 2016
|
(in
thousands)
|
|
|
|
|
|
December
31,
|
|
December
31,
|
|
|
|
|
2017
|
|
2016
|
Assets:
|
|
|
|
|
|
Total current
assets
|
|
$
202,778
|
|
$
268,734
|
|
Property, plant and
equipment, net
|
|
435,328
|
|
354,871
|
|
Other
assets
|
|
4,655
|
|
12,164
|
|
|
Total
assets
|
|
$
642,761
|
|
$
635,769
|
|
|
|
|
|
|
|
Liabilities and
members' equity:
|
|
|
|
|
|
Total current portion
of long term debt
|
|
$
17,023
|
|
$
17,023
|
|
Total other current
liabilities
|
|
40,704
|
|
23,200
|
|
Total long term
debt
|
|
36,730
|
|
53,753
|
|
Total other long term
liabilities
|
|
450
|
|
418
|
|
Total members'
equity
|
|
547,853
|
|
541,375
|
|
|
Total liabilities and
members' equity
|
|
$
642,761
|
|
$
635,769
|
Diamond Green
Diesel Joint Venture
|
Operating
Financial Results
|
Three Months and
Fiscal Year Ended December 31, 2017 and December 31,
2016
|
(in
thousands)
|
|
|
|
Three Months
Ended
|
|
Twelve Months
Ended
|
|
|
|
|
|
|
$ Change
|
|
|
|
|
|
$ Change
|
|
|
December
31,
|
|
December
31,
|
|
Favorable
|
|
December
31,
|
|
December
31,
|
|
Favorable
|
Revenues:
|
2017
|
|
2016
|
|
(Unfavorable)
|
|
2017
|
|
2016
|
|
(Unfavorable)
|
|
Operating
revenues
|
$
182,140
|
|
$
182,020
|
|
$
120
|
|
$
633,908
|
|
$
527,670
|
|
$
106,238
|
Expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
Total costs and
expenses less depreciation, amortization and accretion
expense
|
151,769
|
|
108,579
|
|
(43,190)
|
|
547,512
|
|
353,222
|
|
(194,290)
|
|
Depreciation,
amortization and accretion expense
|
6,088
|
|
7,451
|
|
1,363
|
|
28,955
|
|
27,821
|
|
(1,134)
|
Total costs and
expenses
|
157,857
|
|
116,030
|
|
(41,827)
|
|
576,467
|
|
381,043
|
|
(195,424)
|
|
Operating
income
|
24,283
|
|
65,990
|
|
(41,707)
|
|
57,441
|
|
146,627
|
|
(89,186)
|
Other
income
|
384
|
|
352
|
|
32
|
|
1,343
|
|
551
|
|
792
|
|
|
Interest and debt
expense, net
|
-
|
|
(1,206)
|
|
1,206
|
|
(2,306)
|
|
(7,354)
|
|
5,048
|
|
|
Net
income
|
$
24,667
|
|
$
65,136
|
|
$
(40,469)
|
|
$
56,478
|
|
$
139,824
|
|
$
(83,346)
|
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 twelve
months ended December 30, 2017 and December 31, 2016
|
|
|
|
Three Months Ended -
Year over Year
|
|
Fiscal Year
Ended
|
Adjusted
EBITDA
|
December
30,
|
|
December
31,
|
|
December
30,
|
|
December
31,
|
(U.S. dollars in
thousands)
|
2017
|
|
2016
|
|
2017
|
|
2016
|
|
|
|
|
|
|
|
|
|
Net income
attributable to Darling
|
$
105,729
|
|
$
40,541
|
|
$
128,468
|
|
$
102,313
|
Depreciation and
amortization
|
80,794
|
|
77,468
|
|
302,100
|
|
289,908
|
Interest
expense
|
22,269
|
|
22,439
|
|
88,926
|
|
94,187
|
Income tax
expense/(benefit)
|
(85,010)
|
|
6,213
|
|
(69,154)
|
|
15,315
|
Foreign currency
loss/(gain)
|
2,468
|
|
(387)
|
|
6,898
|
|
1,854
|
Other
expense/(income), net
|
190
|
|
(1,819)
|
|
5,293
|
|
3,866
|
Equity in net
(income) of unconsolidated subsidiaries
|
(11,835)
|
|
(32,746)
|
|
(28,504)
|
|
(70,379)
|
Net income
attributable to noncontrolling interests
|
1,215
|
|
1,139
|
|
4,886
|
|
4,911
|
|
Adjusted EBITDA
(Non-GAAP)
|
$
115,820
|
|
$
112,848
|
|
$
438,913
|
|
$
441,975
|
|
|
|
|
|
|
|
|
|
Acquisition and
integration-related expenses
|
-
|
|
-
|
|
-
|
|
401
|
|
Pro forma
Adjusted EBITDA (Non-GAAP)
|
$
115,820
|
|
$
112,848
|
|
$
438,913
|
|
$
442,376
|
Foreign currency
exchange impact
|
(5,913)
|
(1)
|
-
|
|
(5,682)
|
(2)
|
-
|
Pro forma Adjusted
EBITDA to Foreign Currency (Non-GAAP)
|
$
109,907
|
|
$
112,848
|
|
$
433,231
|
|
$
442,376
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
DGD Joint Venture
Adjusted EBITDA (Darling's share)
|
$
15,185
|
|
$
36,721
|
|
$
43,198
|
|
$
87,224
|
|
|
(1)
|
The average rates
assumption used in the calculation was the actual fiscal average
rate for the three months ended December 31, 2016 of €1.00:USD$1.08
and CAD$1.00:USD$0.75 as
compared to the average rate for the three months ended December
30, 2017 of €1.00:USD$1.18 and CAD$1.00:USD$0.79,
respectively.
|
(2)
|
The average rates
assumption used in the calculation was the actual fiscal average
rate for the twelve months ended December 31, 2016 of
€1.00:USD$1.11 and CAD$1.00:USD$0.76 as compared to the average rate
for the twelve months ended December 30, 2017 of €1.00:USD$1.13 and
CAD$1.00:USD$0.77, respectively.
|
About Darling
Darling Ingredients Inc. is 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,
nutraceutical, food, pet food, feed, industrial, fuel, bioenergy
and fertilizer industries. With operations on five
continents, the Company collects and transforms all aspects of
animal by-product streams into useable 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 recycled oils
(used cooking oil and animal fats) into valuable feed and fuel
ingredients, and collects and processes residual bakery products
into feed ingredients. In addition, the Company provides
environmental services, such as grease trap collection and disposal
services to food service establishments and disposal services for
waste solids from the wastewater treatment systems of industrial
food processing plants. The Company sells its products domestically
and internationally and operates within three industry segments:
Feed Ingredients, Food Ingredients and Fuel Ingredients. 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 2017 financial
results at 8:30 am Eastern Time (7:30
am Central Time) on Wednesday,
February 28, 2018. To listen to the conference call,
participants calling from within North
America should dial 1-844-868-8847; international
participants should dial 1-412-317-6593. Please refer
to access code 10115918. 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 7, 2018, by
dialing 1-877-344-7529 (U.S. callers), 1-855-669-9658 (Canada) and 1-412-317-0088 (international
callers). The access code for the replay is
10115918. 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 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
|
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SOURCE Darling Ingredients Inc.