IRVING, Texas, Aug. 8, 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 2018 second quarter ended
June 30, 2018.
Second Quarter 2018 Overview
- Revenue of $846.6
million
- Net income/(loss) of $(30.4)
million, or $(0.18) per GAAP
diluted share
- Adjusted EBITDA of $115.1
million
- Debt paydown of $44.0
million
- Global raw material volumes strong, up 4.0%
- Argentina gelatin facility
closed and profitable sales volumes relocated
- Exited TRS "Industrial Residuals Business" while retaining
the Used Cooking Oil ("UCO") business
- Diamond Green Diesel ("DGD")
results reflect expansion and turnaround in process
- DGD JV issued $25 million
partner dividend
- Euro bonds refinanced, lowering borrowing cost and extending
maturity
For the second quarter of 2018, the Company reported net sales
of $846.6 million, as compared with
net sales of $894.9 million for the
second quarter of 2017. The reduction in net sales resulted from
the reclass of billed freight per new revenue standard and the
deconsolidation of the Company's Best Hides subsidiary.
Net loss attributable to Darling for the three months ended
June 30, 2018 was $(30.4) million, or $(0.18) per diluted share, compared to a net
income of $9.1 million, or
$0.05 per diluted share, for the
second quarter of 2017. The net loss for the second quarter
2018 reflects debt extinguishment costs of $23.5 million related to Euro bond refinancing, a
loss of $15.5 million from the sale
of Terra Renewal Services subsidiary, and $15.0 million of restructuring and impairment
charges incurred as result of the Hurlingham, Argentina, gelatin plant closure. Excluding
these items, adjusted net income for the second quarter 2018 was
$17.7 million or $0.11 cents per share.
Comments on the Second Quarter 2018
"Operationally we had a solid second quarter. Performance
improved sequentially and year-over-year, and we took several
strategic actions to strengthen our portfolio and position the
company for future growth," said Randall C.
Stuewe, Chairman and Chief Executive Officer of Darling
Ingredients Inc. "Strong slaughter activity drove global tonnage up
4.0 percent, and our expansion projects and recent acquisitions
contributed as expected. The feed segment delivered much improved
results across our geographies with improved raw material volumes
and widening margins."
"Food segment results reflect the closure of our gelatin
operation in Argentina due to
ongoing macroeconomic headwinds and redeployment of production to
our other gelatin locations. The facility represented approximately
3 percent of the Food segment sales, and we are now filling orders
for most high-margin customers from other Rousselot facilities.
This strategic realignment will optimize our gelatin assets and
better leverage our existing Rousselot system," stated Mr.
Stuewe.
"In the Fuel segment, operational efficiencies and favorable
pricing generated consistent performance when adjusted for the 2017
Blenders Tax Credit (BTC) received in the first quarter. We remain
optimistic the BTC will once again be made retroactive for
2018."
"Diamond Green Diesel, our 50/50
joint venture with Valero to produce a premium low-carbon fuel
additive, has now completed construction on the expansion from 160
million gallons to 275 million gallons annually. We are in
the early stages of commissioning and anticipate being on line
mid-August. Spot margins remain attractive and we look
forward to the significant contribution this facility is expected
to bring Darling," concluded Mr. Stuewe.
Operational Update by Segment
- Feed Ingredients – Achieved strong operating
margins through disciplined execution across our major markets.
Higher slaughter volumes increased global tonnage by 5.6 percent.
Protein pricing improved year-over-year and showed sequential
improvement on higher demand for species specific meals. Revenues
were impacted by the sale of our majority interest in Best Hides,
the reclass of billed freight and lower fats pricing, while many of
our proteins and specialty products delivered improved
performances.
- Food Ingredients –Performed consistently when
adjusted for the closure of Argentina gelatin facility. Majority of the
Argentina gelatin sales were
repositioned to our other 11 factories. Global gelatin demand
remains strong with specialty collagen sales becoming more
significant. Declining global palm oil market prices pressured
margins at our Sonac edible fats business. CTH casings business
impacted by margin compression.
- Fuel Ingredients – Executed well across
operations. North American biodiesel leveraged improved operational
efficiencies and benefited from higher low sulfur diesel pricing.
Canada biodiesel held near
breakeven despite absence of BTC. Ecoson bioenergy business
delivered an improved performance boosted by the start-up of the
new Belgium digester. Rendac, our
European disposal rendering and disease mitigation operations,
continues to deliver consistent results.
- Diamond Green Diesel Joint
Venture (DGD) – Entity results reflect higher
operating expenses associated with the extended shutdown as well as
hedge losses. DGD posted $1.05 EBITDA
per gallon without the benefit of the BTC. Facility expansion to
275 million gallons anticipated to be online with saleable product
in August. 100 percent of production targeted to LCFS domestic and
global premium markets. JV partners each received a $25 million dividend in the second quarter.
Financial Update by Segment
Feed
Ingredients
|
Three Months
Ended
|
|
Six Months
Ended
|
($
thousands)
|
June 30,
2018
|
July 1,
2017
|
|
June 30,
2018
|
July 1,
2017
|
Net sales
(1)
|
$
498,823
|
$
549,119
|
|
$
984,621
|
$
1,101,743
|
Selling, general and
administrative expenses
|
43,947
|
42,875
|
|
92,212
|
87,712
|
Depreciation and
amortization
|
46,823
|
44,354
|
|
93,612
|
88,073
|
Segment operating
income
|
37,265
|
39,688
|
|
58,921
|
71,180
|
Adjusted EBITDA
(2)
|
$
84,088
|
$
84,042
|
|
$
152,533
|
$
159,253
|
|
|
(1) Includes revenue
recognition reclass for billed freight moved to cost of sales per
new revenue standard
|
|
(2) Adjusted EBITDA
calculated by adding depreciation and amortization to segment
operating income
|
- Feed Ingredients operating income for the three months ended
June 30, 2018 was $37.3 million, a decrease of $2.4 million or (6.0) % as compared to the three
months ended July 1, 2017. Segment
operating income was down in the three months ended June 30, 2018 as compared to the same period in
fiscal 2017 due to higher depreciation charges from increased
capital expenditures while operations were essentially flat as
compared to the same period in fiscal 2017.
- Feed Ingredients operating income during the six months ended
June 30, 2018 was $58.9 million, a decrease of $12.3 million or (17.3) % as compared to the six
months ended July 1, 2017. Segment
operating income was down in the six months ended June 30, 2018 as compared to the same period in
fiscal 2017 due to lower finished fat product prices, higher
depreciation charges from increased capital expenditures and higher
selling, general and administrative expenses that more than offset
increased raw material volumes.
Food
Ingredients
|
Three Months
Ended
|
|
Six Months
Ended
|
($
thousands)
|
June 30,
2018
|
July 1,
2017
|
|
June 30,
2018
|
July 1,
2017
|
Net sales
(1)
|
$
276,729
|
$
278,409
|
|
$
582,249
|
$
544,635
|
Selling, general and
administrative expenses
|
22,190
|
26,703
|
|
46,051
|
51,680
|
Restructuring and
impairment charges
|
14,965
|
-
|
|
14,965
|
-
|
Depreciation and
amortization
|
20,388
|
18,184
|
|
41,028
|
35,785
|
Segment operating
income/(loss)
|
(5,650)
|
11,160
|
|
6,184
|
25,416
|
Adjusted EBITDA
(2)
|
$
29,703
|
$
29,344
|
|
$
62,177
|
$
61,201
|
|
|
(1) Includes revenue
recognition reclass for billed freight moved to cost of sales per
new revenue standard
|
|
(2) Adjusted EBITDA
calculated by adding depreciation and amortization and
restructuring and impairment charges to segment operating
income
|
- Food Ingredients operating loss was $5.7
million for the three months ended June 30, 2018, a decrease of $16.9 million or (150.9) % as compared to the
three months ended July 1, 2017. This
decrease was primarily due to the restructuring and impairment
charges incurred as a result of the Hurlingham, Argentina gelatin plant shut down. This
decrease more than offset improved results in China and North American gelatin markets. The
Company's edible fat prices were lower as a result of lower
competing fat markets as compared to the same period in fiscal
2017. The casings business delivered slightly lower earnings due to
an increase in raw material prices as compared to the same period
in fiscal 2017.
- Food Ingredients operating income was $6.2 million for the six months ended
June 30, 2018, a decrease of
$19.2 million or (75.6) % as compared
to the six months ended July 1, 2017.
This decrease was primarily due to the restructuring and impairment
charges incurred as a result of the Hurlingham, Argentina gelatin plant shut down and lower
earnings in the European gelatin market. The Company's edible fat
prices were lower as a result of lower competing fat markets as
compared to the same period in fiscal 2017. The casings business
delivered slightly lower earnings due to an increase in raw
material prices as compared to the same period in fiscal 2017.
Fuel
Ingredients
|
Three Months
Ended
|
|
Six Months
Ended
|
($
thousands)
|
June 30,
2018
|
July 1,
2017
|
|
June 30,
2018
|
July 1,
2017
|
Net sales
(1)
|
$
71,094
|
$
67,402
|
|
$
155,150
|
$
127,062
|
Selling, general and
administrative expenses
|
164
|
2,873
|
|
(1,234)
|
6,136
|
Depreciation and
amortization
|
8,537
|
7,715
|
|
17,008
|
14,560
|
Segment operating
income
|
5,016
|
2,134
|
|
22,173
|
5,688
|
Adjusted EBITDA
(2)
|
$
13,553
|
$
9,849
|
|
$
39,181
|
$
20,248
|
|
|
(1) Includes revenue
recognition reclass for billed freight moved to cost of sales per
new revenue standard
|
|
(2) Adjusted EBITDA
calculated by adding depreciation and amortization to segment
operating income
|
|
Fuel
Ingredients Segment 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 operating income for the three months ended
June 30, 2018 was $5.0 million, an increase of $2.9 million or 138.1% as compared to the same
period in fiscal 2017. The increase in earnings is primarily due to
overall higher sales prices and strong demand from biodiesel
industries.
- Exclusive of the DGD Joint Venture, the Company's Fuel
Ingredients segment income for the six months ended June 30, 2018 was $22.2
million, an increase of $16.5
million or 289.5% as compared to the same period in fiscal
2017. The increase in earnings is primarily due to the reinstated
fiscal 2017 blenders tax credits in North
America of approximately $12.6
million recorded in the first quarter of fiscal 2018 as
compared to the lack of blenders tax credits in the same period of
fiscal 2017, higher overall sales prices and strong demand from
biodiesel industries.
Darling
Ingredients Inc. and Subsidiaries
|
Consolidated
Operating Results
|
For the Periods
Ended June 30, 2018 and July 1, 2017
|
(in thousands, except
per share data)
|
(unaudited)
|
|
|
|
Three Months
Ended
|
|
|
Six Months
Ended
|
|
|
|
|
|
|
$ Change
|
|
|
|
|
|
|
$ Change
|
|
|
June 30,
|
|
July 1,
|
|
Favorable
|
|
|
June 30,
|
|
July 1,
|
|
Favorable
|
|
2018
|
|
2017
|
|
(Unfavorable)
|
|
|
2018
|
|
2017
|
|
(Unfavorable)
|
Net sales
|
$ 846,646
|
|
$ 894,930
|
|
$
(48,284)
|
|
|
$
1,722,020
|
|
$
1,773,440
|
|
$
(51,420)
|
Costs and
expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of sales and
operating expenses
|
653,001
|
|
699,244
|
|
46,243
|
|
|
1,331,100
|
|
1,387,210
|
|
56,110
|
|
Selling, general and
administrative expenses
|
78,558
|
|
84,532
|
|
5,974
|
|
|
165,460
|
|
171,455
|
|
5,995
|
|
Restructuring and
impairment charges
|
14,965
|
|
-
|
|
(14,965)
|
|
|
14,965
|
|
-
|
|
(14,965)
|
|
Depreciation and
amortization
|
78,454
|
|
72,990
|
|
(5,464)
|
|
|
157,073
|
|
144,104
|
|
(12,969)
|
Total costs and
expenses
|
824,978
|
|
856,766
|
|
31,788
|
|
|
1,668,598
|
|
1,702,769
|
|
34,171
|
Operating
income
|
21,668
|
|
38,164
|
|
(16,496)
|
|
|
53,422
|
|
70,671
|
|
(17,249)
|
Other
expense:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest
expense
|
(23,016)
|
|
(22,446)
|
|
(570)
|
|
|
(46,140)
|
|
(44,126)
|
|
(2,014)
|
|
Debt extinguishment
costs
|
(23,509)
|
|
-
|
|
(23,509)
|
|
|
(23,509)
|
|
-
|
|
(23,509)
|
|
Foreign currency
loss
|
(3,495)
|
|
(2,111)
|
|
(1,384)
|
|
|
(4,976)
|
|
(2,375)
|
|
(2,601)
|
|
Loss on sale of
subsidiary
|
(15,538)
|
|
-
|
|
(15,538)
|
|
|
(15,538)
|
|
-
|
|
(15,538)
|
|
Other (expense)/gain,
net
|
1,199
|
|
(3,797)
|
|
4,996
|
|
|
(1,317)
|
|
(5,850)
|
|
4,533
|
Total other
expense
|
(64,359)
|
|
(28,354)
|
|
(36,005)
|
|
|
(91,480)
|
|
(52,351)
|
|
(39,129)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity in net income
of unconsolidated subsidiaries
|
15,236
|
|
8,260
|
|
6,976
|
|
|
112,390
|
|
8,966
|
|
103,424
|
Income/(loss) before
income taxes
|
(27,455)
|
|
18,070
|
|
(45,525)
|
|
|
74,332
|
|
27,286
|
|
47,046
|
Income taxes
expense
|
1,683
|
|
7,742
|
|
6,059
|
|
|
5,395
|
|
9,560
|
|
4,165
|
Net
income/(loss)
|
(29,138)
|
|
10,328
|
|
(39,466)
|
|
|
68,937
|
|
17,726
|
|
51,211
|
Net income
attributable to noncontrolling interests
|
(1,282)
|
|
(1,179)
|
|
(103)
|
|
|
(2,052)
|
|
(2,748)
|
|
696
|
Net income/(loss)
attributable to Darling
|
$ (30,420)
|
|
$
9,149
|
|
$
(39,569)
|
|
|
$
66,885
|
|
$
14,978
|
|
$
51,907
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic income/(loss)
per share:
|
$
(0.18)
|
|
$
0.06
|
|
$
(0.24)
|
|
|
$
0.41
|
|
$
0.09
|
|
$
0.32
|
Diluted income/(loss)
per share:
|
$
(0.18)
|
|
$
0.05
|
|
$
(0.23)
|
|
|
$
0.40
|
|
$
0.09
|
|
$
0.31
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of diluted
common shares
|
164,651
|
|
166,831
|
|
|
|
|
166,259
|
|
166,348
|
|
|
Darling
Ingredients Inc. and Subsidiaries
|
Condensed
Consolidated Balance Sheets
|
June 30, 2018 and
December 30, 2017
|
(in
thousands)
|
|
|
|
June 30,
|
|
December
30,
|
|
2018
|
|
2017
|
ASSETS
|
(unaudited)
|
|
|
Current
assets:
|
|
|
|
|
Cash and cash
equivalents
|
$
104,120
|
|
$
106,774
|
|
Restricted
cash
|
142
|
|
142
|
|
Accounts receivable,
net
|
371,291
|
|
391,847
|
|
Inventories
|
370,555
|
|
358,183
|
|
Prepaid
expenses
|
43,965
|
|
38,326
|
|
Income taxes
refundable
|
6,977
|
|
4,509
|
|
Other current
assets
|
21,148
|
|
56,664
|
|
Total current assets
|
918,198
|
|
956,445
|
Property, plant and
equipment, less accumulated depreciation, net
|
1,624,354
|
|
1,645,822
|
Intangible assets,
less accumulated amortization, net
|
610,878
|
|
676,500
|
Goodwill
|
1,232,964
|
|
1,301,093
|
Investment in
unconsolidated subsidiaries
|
399,097
|
|
302,038
|
Other
assets
|
56,802
|
|
62,284
|
Deferred income
taxes
|
14,623
|
|
14,043
|
|
Total assets
|
$
4,856,916
|
|
$
4,958,225
|
|
|
|
|
LIABILITIES AND
STOCKHOLDERS' EQUITY
|
|
|
|
Current
liabilities:
|
|
|
|
|
Current portion of
long-term debt
|
$
7,466
|
|
$
16,143
|
|
Accounts payable,
principally trade
|
185,150
|
|
217,417
|
|
Income taxes
payable
|
8,975
|
|
12,300
|
|
Accrued
expenses
|
281,139
|
|
313,623
|
|
Total current liabilities
|
482,730
|
|
559,483
|
Long-term debt, net
of current portion
|
1,687,823
|
|
1,698,050
|
Other non-current
liabilities
|
105,649
|
|
106,287
|
Deferred income
taxes
|
242,683
|
|
266,708
|
|
Total liabilities
|
2,518,885
|
|
2,630,528
|
Commitments and
contingencies
|
|
|
|
Total Darling's
stockholders' equity
|
2,263,403
|
|
2,244,933
|
Noncontrolling
interests
|
74,628
|
|
82,764
|
|
Total stockholders' equity
|
$
2,338,031
|
|
$
2,327,697
|
|
|
$
4,856,916
|
|
$
4,958,225
|
Darling
Ingredients Inc. and Subsidiaries
|
Consolidated
Statement of Cash Flows
|
Six Months Ended
June 30, 2018 and July 1, 2017
|
(in
thousands)
|
(unaudited)
|
|
|
|
|
|
Six Months
Ended
|
|
|
|
|
June 30,
|
|
July 1,
|
Cash flows from
operating activities:
|
2018
|
|
2017
|
|
Net income
|
|
$
68,937
|
|
$
17,726
|
|
Adjustments to
reconcile net income to net cash provided by operating
activities:
|
|
|
|
|
|
Depreciation and
amortization
|
157,073
|
|
144,104
|
|
|
Loss/(gain) on
disposal of property, plant, equipment and other assets
|
300
|
|
(358)
|
|
|
Loss on sale of
subsidiary
|
15,538
|
|
-
|
|
|
Asset
impairment
|
2,907
|
|
-
|
|
|
Gain on insurance
proceeds from insurance settlements
|
(1,253)
|
|
-
|
|
|
Deferred
taxes
|
(7,512)
|
|
(11,205)
|
|
|
Increase in long-term
pension liability
|
123
|
|
1,362
|
|
|
Stock-based
compensation expense
|
13,232
|
|
11,003
|
|
|
Write-off deferred
loan costs
|
8,105
|
|
340
|
|
|
Deferred loan cost
amortization
|
4,664
|
|
4,366
|
|
|
Equity in net income
of unconsolidated subsidiaries
|
(112,390)
|
|
(8,966)
|
|
|
Distribution of
earnings from unconsolidated subsidiaries
|
26,567
|
|
25,806
|
|
|
Changes in operating
assets and liabilities, net of effects from
acquisitions:
|
|
|
|
|
|
Accounts
receivable
|
5,217
|
|
17,705
|
|
|
Income taxes
refundable/payable
|
(5,438)
|
|
12,857
|
|
|
Inventories
and prepaid expenses
|
(30,561)
|
|
(21,952)
|
|
|
Accounts
payable and accrued expenses
|
(25,705)
|
|
16,594
|
|
|
Other
|
|
8,243
|
|
(11,845)
|
|
|
|
Net cash provided by
operating activities
|
128,047
|
|
197,537
|
Cash flows from
investing activities:
|
|
|
|
|
Capital
expenditures
|
(139,130)
|
|
(127,824)
|
|
Acquisitions, net of
cash acquired
|
(51,089)
|
|
(12,369)
|
|
Investment of
unconsolidated subsidiaries
|
(6,500)
|
|
(2,250)
|
|
Proceeds from sale of
investment in subsidiaries
|
82,805
|
|
-
|
|
Gross proceeds from
disposal of property, plant and equipment and other
assets
|
2,244
|
|
3,603
|
|
Proceeds from
insurance settlement
|
1,253
|
|
3,301
|
|
Payments related to
routes and other intangibles
|
(294)
|
|
(4,635)
|
|
|
|
Net cash used by
investing activities
|
(110,711)
|
|
(140,174)
|
Cash flows from
financing activities:
|
|
|
|
|
Proceeds from
long-term debt
|
623,695
|
|
16,405
|
|
Payments on long-term
debt
|
(650,976)
|
|
(67,974)
|
|
Borrowings from
revolving credit facility
|
247,975
|
|
80,000
|
|
Payments on revolving
credit facility
|
(221,632)
|
|
(80,327)
|
|
Net cash overdraft
financing
|
4,517
|
|
(1,077)
|
|
Deferred loan
costs
|
(9,324)
|
|
(1,177)
|
|
Issuance of common
stock
|
182
|
|
22
|
|
Minimum withholding
taxes paid on stock awards
|
(2,123)
|
|
(2,091)
|
|
Distributions to
noncontrolling interests
|
(983)
|
|
(2,135)
|
|
|
|
Net cash used by
financing activities
|
(8,669)
|
|
(58,354)
|
Effect of exchange
rate changes on cash
|
(11,321)
|
|
11,233
|
Net
increase/(decrease) in cash, cash equivalents and restricted
cash
|
(2,654)
|
|
10,242
|
Cash, cash
equivalents and restricted cash at beginning of period
|
106,916
|
|
114,857
|
Cash, cash
equivalents and restricted cash at end of period
|
$
104,262
|
|
$
125,099
|
Supplemental
disclosure of cash flow information:
|
|
|
|
|
Accrued capital
expenditures
|
$
(6,336)
|
|
$
(5,445)
|
|
Cash paid during the
period for:
|
|
|
|
|
|
Interest, net of
capitalized interest
|
$
39,614
|
|
$
38,688
|
|
|
Income taxes, net of
refunds
|
$
17,154
|
|
$
7,986
|
|
Non-cash financing
activities:
|
|
|
|
|
|
Debt issued for
assets
|
$
17
|
|
$
-
|
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, 2018 and
December 31, 2017
|
(in
thousands)
|
|
|
|
|
|
June
30,
|
|
December
31,
|
|
|
|
|
2018
|
|
2017
|
Assets:
|
|
(unaudited)
|
|
|
|
Total current
assets
|
|
$
218,189
|
|
$
202,778
|
|
Property, plant and
equipment, net
|
|
529,312
|
|
435,328
|
|
Other
assets
|
|
18,861
|
|
4,655
|
|
|
Total
assets
|
|
$
766,362
|
|
$
642,761
|
|
|
|
|
|
|
|
Liabilities and
members' equity:
|
|
|
|
|
|
Total current portion
of long term debt
|
|
$
176
|
|
$
17,023
|
|
Total other current
liabilities
|
|
34,714
|
|
40,705
|
|
Total long term
debt
|
|
8,583
|
|
36,730
|
|
Total other long term
liabilities
|
|
465
|
|
450
|
|
Total members'
equity
|
|
722,424
|
|
547,853
|
|
|
Total liabilities and
members' equity
|
|
$
766,362
|
|
$
642,761
|
Diamond Green
Diesel Joint Venture
|
Operating
Financial Results
|
Three Months and
Six Months Ended June 30, 2018 and June 30, 2017
|
(in
thousands)
|
(unaudited)
|
|
|
|
|
Three Months
Ended
|
|
|
Six Months
Ended
|
|
|
|
|
|
|
|
$ Change
|
|
|
|
|
|
|
$ Change
|
|
|
|
June 30,
|
|
June 30,
|
|
Favorable
|
|
|
June 30,
|
|
June 30,
|
|
Favorable
|
Revenues:
|
2018
|
|
2017
|
|
(Unfavorable)
|
|
|
2018
|
|
2017
|
|
(Unfavorable)
|
|
Operating
revenues
|
$ 151,989
|
|
$ 150,786
|
|
$
1,203
|
|
|
$ 302,310
|
|
$ 276,183
|
|
$
26,127
|
Expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total costs and
expenses less depreciation, amortization and accretion
expense
|
115,659
|
|
125,975
|
|
10,316
|
|
|
65,838
|
|
241,297
|
|
175,459
|
|
Depreciation,
amortization and accretion expense
|
6,254
|
|
8,021
|
|
1,767
|
|
|
12,374
|
|
16,134
|
|
3,760
|
Total costs and
expenses
|
121,913
|
|
133,996
|
|
12,083
|
|
|
78,212
|
|
257,431
|
|
179,219
|
|
Operating
income
|
30,076
|
|
16,790
|
|
13,286
|
|
|
224,098
|
|
18,752
|
|
205,346
|
Other
income
|
415
|
|
328
|
|
87
|
|
|
792
|
|
551
|
|
241
|
|
|
Interest and debt
expense, net
|
(319)
|
|
(861)
|
|
542
|
|
|
(319)
|
|
(1,851)
|
|
1,532
|
|
|
Net
income
|
$
30,172
|
|
$
16,257
|
|
$
13,915
|
|
|
$ 224,571
|
|
$
17,452
|
|
$
207,119
|
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 June 30, 2018 and July 1, 2017
|
|
|
|
Three Months Ended -
Year over Year
|
|
Six Months Ended -
Year over Year
|
Adjusted
EBITDA
|
June 30,
|
|
July 1,
|
|
June 30,
|
|
July 1,
|
(U.S. dollars in
thousands)
|
2018
|
|
2017
|
|
2018
|
|
2017
|
|
|
|
|
|
|
|
|
|
Net income/(loss)
attributable to Darling
|
$ (30,420)
|
|
$
9,149
|
|
$
66,885
|
|
$
14,978
|
Depreciation and
amortization
|
78,454
|
|
72,990
|
|
157,073
|
|
144,104
|
Interest
expense
|
23,016
|
|
22,446
|
|
46,140
|
|
44,126
|
Income tax
expense
|
1,683
|
|
7,742
|
|
5,395
|
|
9,560
|
Restructuring and
impairment charges
|
14,965
|
|
-
|
|
14,965
|
|
-
|
Foreign currency
loss
|
3,495
|
|
2,111
|
|
4,976
|
|
2,375
|
Other
expense/(income), net
|
(1,199)
|
|
3,797
|
|
1,317
|
|
5,850
|
Debt extinguishment
costs
|
23,509
|
|
-
|
|
23,509
|
|
-
|
Loss on sale of
subsidiary
|
15,538
|
|
-
|
|
15,538
|
|
-
|
Equity in net
(income) of unconsolidated subsidiaries
|
(15,236)
|
|
(8,260)
|
|
(112,390)
|
|
(8,966)
|
Net income
attributable to noncontrolling interests
|
1,282
|
|
1,179
|
|
2,052
|
|
2,748
|
|
Adjusted
EBITDA
|
$115,087
|
|
$111,154
|
|
$225,460
|
|
$214,775
|
|
|
|
|
|
|
|
|
|
Foreign currency
exchange impact (1)
|
(3,764)
|
|
-
|
|
(11,899)
|
|
-
|
Pro forma Adjusted
EBITDA to Foreign Currency (Non-GAAP)
|
$111,323
|
|
$111,154
|
|
$213,561
|
|
$214,775
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
DGD Joint Venture
Adjusted EBITDA (Darling's share)
|
$
18,165
|
|
$
12,406
|
|
$118,236
|
|
$
17,443
|
|
(1)
|
The average rates
assumption used in the calculation was the actual fiscal average
rate for the three months ended June 30, 2018 of €1.00:USD$1.20
and CAD$1.00:USD$0.77 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 June 30, 2018 of €1.00:USD$1.22
and CAD$1.00:USD$0.78 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 a global developer and producer of
sustainable natural ingredients from edible and inedible
bio-nutrients, creating a wide range of ingredients and specialty
solutions 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 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.
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 second quarter 2018 financial results at 8:30
am Eastern Time (7:30 am Central
Time) on Thursday, August 9,
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
10122304. 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 August 16, 2018,
by dialing 1-877-344-7529 (U.S. callers), 855-669-9658
(Canada) and 1-412-317-0088
(international callers). The access code for the replay is
10122304. 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 3.625% Notes that were outstanding
at June 30, 2018. 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
3.625% Notes, as those definitions permit further adjustments to
reflect certain other non-recurring costs, non-cash charges and
cash dividends from the DGD Joint Venture. Additionally, the
Company evaluates the impact of foreign exchange impact on
operating cash flow, which is defined as segment operating income
(loss) plus depreciation and amortization.
Cautionary Statements Regarding Forward-Looking Information:
{This media release contains "forward-looking" statements
regarding the business operations and prospects of Darling
Ingredients Inc. and industry factors affecting it. These
statements are identified by words such as "believe," "anticipate,"
"expect," "estimate," "intend," "could," "may," "will," "should,"
"planned," "potential," "continue," "momentum," and other words
referring to events that may occur in the future. These
statements reflect Darling Ingredient's current view of future
events and are based on its assessment of, and are subject to, a
variety of risks and uncertainties beyond its control, each of
which could cause actual results to differ materially from those
indicated in the forward-looking statements. These factors
include, among others, existing and unknown future limitations on
the ability of the Company's direct and indirect subsidiaries to
make their cash flow available to the Company for payments on the
Company's indebtedness or other purposes; global demands for
bio-fuels and grain and oilseed commodities, which have exhibited
volatility, and can impact the cost of feed for cattle, hogs and
poultry, thus affecting available rendering feedstock and selling
prices for the Company's products; reductions in raw material
volumes available to the Company due to weak margins in the meat
production industry as a result of higher feed costs, reduced
consumer demand or other factors, reduced volume from food service
establishments, or otherwise; reduced demand for animal feed;
reduced finished product prices, including a decline in fat and
used cooking oil finished product prices; changes to worldwide
government policies relating to renewable fuels and greenhouse
gas("GHG") emissions that adversely affect programs like the U.S.
government's renewable fuel standard, 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 2009 H1N1 flu (initially known as
"Swine Flu"), Highly pathogenic strains of avian influenza
(collectively known as "Bird 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 (including, without limitation, China) regulations (including new or modified
animal feed, Bird Flu, PED or BSE or similar or unanticipated
regulations) affecting the industries in which the Company operates
or its value added products; risks associated with the DGD Joint
Venture, including possible unanticipated operating disruptions and
issues relating to the announced expansion project; risks and
uncertainties relating to international sales and operations,
including imposition of tariffs, quotas, trade barriers and other
trade protections imposed by foreign countries; 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.