IRVING, Texas, Aug. 7, 2019 /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 2019
second quarter ended June 29,
2019.
Second Quarter 2019 Overview
- Revenue of $827.3
million
- Net income of $26.3 million,
or $0.16 per GAAP diluted
share
- Adjusted EBITDA of $115.5
million
- Diamond Green Diesel (DGD)
delivers $1.25 EBITDA per
gallon
- Consolidated adjusted pro forma EBITDA $159.4 million
- DGD issued partner dividend of $17.7
million in April 2019, with a
subsequent dividend of $37.8 million
in July 2019
- US bond refinanced, lowering borrowing cost and extending
maturity with extinguishment costs incurred in quarter
For the second quarter of 2019, the Company reported net sales
of $827.3 million, as compared with
net sales of $846.6 million for the
second quarter of 2018. The reduction in net sales of $(19.3) million is mainly the result of lower
global protein prices and the divestiture of the Company's
industrial residuals business in May
2018 which was partially offset by the increase in sales
volumes of the specialty pet food business and increased collagen
sales values.
Net income attributable to Darling for the three months ended
June 29, 2019 was $26.3 million, or $0.16 per diluted share, compared to a net loss
of $(30.4) million, or $(0.18) per diluted share, for the second quarter
of 2018. The increase in net income over the same period in
fiscal 2018 reflects the absence of the following one-time costs
realized last year: debt extinguishment costs of $23.5 million related to Euro bond refinancing;
the loss of $15.5 million from the
sale of Terra Renewal Services subsidiary; and $15.0 million of restructuring and impairment
charges incurred as a result of the Hurlingham, Argentina, gelatin plant closure.
Comments on the Second Quarter 2019
"Overall, earnings improved for the second quarter with
combined, pro forma adjusted EBITDA of $159.4 million, inclusive of core Darling and
Diamond Green Diesel adjusted EBITDA
results and $13.2 million gain from
the China property sale.
Operationally, our global rendering business faced negative market
conditions on our finished product pricing due to unresolved trade
agreements with China and
continued fallout from the African Swine Fever epidemic," said
Randall C. Stuewe, Chairman and
Chief Executive Officer of Darling Ingredients Inc. "Our food
segment showed strong performance again bolstered by volume growth
from new product launches, primarily related to our growing global
collagen business. Our Fuel segment delivered consistently without
the Blender's Tax Credit (BTC).
"Diamond Green Diesel, our 50/50
joint venture with Valero, performed well and met expected entity
level EBITDA of $1.25 per gallon.
Subsequent to the end of the first quarter, we also received two
partner dividends totaling $55.5
million, with $17.7 million
being recorded in the second quarter and the remainder to be posted
in our 2019 third quarter. Additionally, Super Diamond, our 400-mm
gallon expansion project, remains on track to start up at the end
of 2021.
"We continue to successfully overcome headwinds from the current
macro environment. This is an ongoing demonstration that our
diverse global platform and our integrated supply chain provide
Darling a competitive advantage to achieve our mission of driving
sustainable solutions for feeding and fueling our growing world,
while at the same time driving value for our shareholders and our
team members," Stuewe concluded.
Operational Update by Segment
- Feed Ingredients – Substantially lower protein
meal markets, due to abundant global supplies, drove significantly
lower results. Fat pricing improved slightly late in the quarter as
a result of higher corn prices and increased global energy market
demand. However, North America
formulas lagged, with forward supply chain pricing to DGD expected
to improve performance in the third quarter. Raw material volumes
trended up by 1.6 percent while higher raw material costs further
pressured margins and the impact of ASF weighed on supply volumes
in Europe due to increased export
demand to Asian food markets.
- Food Ingredients – Much improved performance when
adjusted for the closure of Argentina gelatin facility in the 2018 second
quarter. Global collagen delivered higher margins and volume
growth, serving improved nutraceutical demand with new product
launches. Results also reflect realized gain of $13.2 million from the sale of a dormant
Rousselot property in China.
Depressed competing palm oil markets pressured the refining margins
on edible fats.
- Fuel Ingredients – Segment met expectations and
demonstrated consistent performance with North American operations
delivering steady earnings despite the lack of the BTC. Ecoson
bioenergy business performed well, leveraging additional volume
from the Belgium digester. Rendac,
our European disposal rendering and disease mitigation operations,
was impacted by decreased livestock and slaughter volumes compared
to last year.
- Diamond Green Diesel Joint
Venture (DGD) – Delivered solid performance and
continues to have broader impact within Darling by providing
increased opportunities to more fully utilize our collection and
rendering assets and activities as we continue to capitalize on
growing Low Carbon Fuel Standard markets. DGD posted $1.25 EBITDA per gallon without the benefit of
the BTC. JV partners each received dividends of $17.7 million in the second quarter and
$37.8 million to be recorded in the
third quarter 2019. Super Diamond phase III expansion remains on
track for a late 2021 start up.
Financial Update by Segment
Feed
Ingredients
|
Three Months
Ended
|
|
Six Months
Ended
|
($
thousands)
|
June 29,
2019
|
June 30,
2018
|
|
June 29,
2019
|
June 30,
2018
|
Net sales
(1)
|
$
487,447
|
$
498,823
|
|
$
983,266
|
$
984,621
|
Loss (gain) on sale
of assets
|
(524)
|
782
|
|
(4,914)
|
420
|
Selling, general and
administrative expenses
|
46,465
|
43,947
|
|
95,296
|
92,212
|
Depreciation and
amortization
|
48,720
|
46,823
|
|
98,089
|
93,612
|
Segment operating
income
|
15,831
|
37,264
|
|
30,981
|
58,921
|
Adjusted EBITDA
(2)
|
$
64,551
|
$
84,087
|
|
$
129,070
|
$
152,533
|
|
|
(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 29, 2019 was $15.8 million, a decrease of $21.4 million or (57.5) % as compared to the
three months ended June 30, 2018.
This was primarily due to a decrease in protein finished product
sales prices, lower spreads in poultry pet grade products and
higher operating costs due to the addition of several new
facilities.
- Feed Ingredients operating income during the six months ended
June 29, 2019 was $31.0 million, a decrease of $27.9 million or (47.4) % as compared to the six
months ended June 30, 2018. This was
primarily due to a decrease in protein sales prices, lower spreads
in poultry pet grade products and higher factory and depreciation
and amortization costs from the addition of several new
facilities.
Food
Ingredients
|
Three Months
Ended
|
|
Six Months
Ended
|
($
thousands)
|
June 29,
2019
|
June 30,
2018
|
|
June 29,
2019
|
June 30,
2018
|
Net sales
(1)
|
$
274,835
|
$
276,729
|
|
$
553,999
|
$
582,249
|
Loss (gain) on sale
of assets
|
(13,379)
|
(57)
|
|
(13,265)
|
(212)
|
Selling, general and
administrative expenses
|
23,431
|
22,190
|
|
45,318
|
46,051
|
Restructuring and
impairment charges
|
-
|
14,965
|
|
-
|
14,965
|
Depreciation and
amortization
|
19,861
|
20,388
|
|
39,372
|
41,028
|
Segment operating
income/(loss)
|
30,478
|
(5,649)
|
|
54,126
|
6,184
|
Adjusted EBITDA
(2)
|
$
50,339
|
$
14,739
|
|
$
93,498
|
$
47,212
|
|
|
(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 income was $30.5 million for the three months ended
June 29, 2019, an increase of
$36.2 million or 646.4 % as compared
to the three months ended June 30,
2018. The increase is primarily due to gain on sale of land
at a former facility in China, no
impairment charges in the current year and improved results in the
collagen markets. The Company's edible fat margins were lower
because of lower raw material volumes as compare to the same period
in fiscal 2018. The casing business delivered lower earnings due to
lower margins as compared to the same period in fiscal 2018.
- Food Ingredients operating income was $54.1 million for the six months ended
June 29, 2019, an increase of
$47.9 million or 772.6 % as compared
to the six months ended June 30,
2018. The increase is primarily due to improved results in
the collagen markets, a gain on sale of land in China and no impairment charges in the current
year as compared to the same period in fiscal 2018 when the Company
closed its Argentina collagen
plant. The Company's edible fat margins were lower because of lower
raw material volumes as compared to the same period in fiscal 2018.
The casing business delivered lower earnings due to lower margins
as compared to the same period in fiscal 2018.
Fuel
Ingredients
|
Three Months
Ended
|
|
Six Months
Ended
|
($
thousands)
|
June 29,
2019
|
June 30,
2018
|
|
June 29,
2019
|
June 30,
2018
|
Net sales
(1)
|
$
65,042
|
$
71,094
|
|
$
125,163
|
$
155,150
|
Loss (gain) on sale
of assets
|
(23)
|
37
|
|
3
|
92
|
Selling, general and
administrative expenses
|
425
|
164
|
|
(329)
|
(1,234)
|
Depreciation and
amortization
|
8,362
|
8,537
|
|
16,160
|
17,008
|
Segment operating
income
|
2,961
|
5,016
|
|
5,962
|
22,173
|
Adjusted EBITDA
(2)
|
$
11,323
|
$
13,553
|
|
$
22,122
|
$
39,181
|
|
|
(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 29, 2019 was $3.0 million, a decrease of $2.0 million or (40.0)% as compared to the same
period in fiscal 2018. The decrease in earnings is primarily due to
lower Rendac volumes and lower sales values at Ecoson for the
second quarter of fiscal 2019 as compared to the same period in
fiscal 2018.
- Exclusive of the DGD Joint Venture, the Company's Fuel
Ingredients segment income for the six months ended June 29, 2019 was $6.0
million, a decrease of $16.2
million or (73.0)% as compared to the same period in fiscal
2018. The decrease in earnings is primarily related to the 2017
blenders tax credits booked in the first quarter of 2018 as
compared to no blenders tax credits booked in fiscal 2019.
Darling
Ingredients Inc. and Subsidiaries
|
Consolidated
Operating Results
|
For the Periods
Ended June 29, 2019 and June 30, 2018
|
(in thousands, except
per share data)
|
(unaudited)
|
|
|
|
Three Months
Ended
|
|
|
Six Months
Ended
|
|
|
|
|
|
|
$ Change
|
|
|
|
|
|
|
$ Change
|
|
|
June 29,
|
|
June 30,
|
|
Favorable
|
|
|
June 29,
|
|
June 30,
|
|
Favorable
|
|
2019
|
|
2018
|
|
(Unfavorable)
|
|
|
2019
|
|
2018
|
|
(Unfavorable)
|
Net sales
|
$ 827,324
|
|
$ 846,646
|
|
$
(19,322)
|
|
|
$
1,662,428
|
|
$
1,722,020
|
|
$
(59,592)
|
Costs and
expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of sales and
operating expenses
|
644,716
|
|
652,239
|
|
7,523
|
|
|
1,295,629
|
|
1,330,800
|
|
35,171
|
|
Loss (gain) on sale
of assets
|
(13,926)
|
|
762
|
|
14,688
|
|
|
(18,176)
|
|
300
|
|
18,476
|
|
Selling, general and
administrative expenses
|
81,017
|
|
78,558
|
|
(2,459)
|
|
|
166,020
|
|
165,460
|
|
(560)
|
|
Restructuring and
impairment charges
|
-
|
|
14,965
|
|
14,965
|
|
|
-
|
|
14,965
|
|
14,965
|
|
Depreciation and
amortization
|
79,486
|
|
78,454
|
|
(1,032)
|
|
|
158,650
|
|
157,073
|
|
(1,577)
|
Total costs and
expenses
|
791,293
|
|
824,978
|
|
33,685
|
|
|
1,602,123
|
|
1,668,598
|
|
66,475
|
Operating
income
|
36,031
|
|
21,668
|
|
14,363
|
|
|
60,305
|
|
53,422
|
|
6,883
|
Other
expense:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest
expense
|
(20,853)
|
|
(23,016)
|
|
2,163
|
|
|
(40,729)
|
|
(46,140)
|
|
5,411
|
|
Debt extinguishment
costs
|
(12,126)
|
|
(23,509)
|
|
11,383
|
|
|
(12,126)
|
|
(23,509)
|
|
11,383
|
|
Foreign currency
loss
|
(388)
|
|
(3,495)
|
|
3,107
|
|
|
(1,120)
|
|
(4,976)
|
|
3,856
|
|
Gain/(loss) on
disposal of subsidiaries
|
-
|
|
(15,538)
|
|
15,538
|
|
|
-
|
|
(15,538)
|
|
15,538
|
|
Other (expense)/gain,
net
|
(2,019)
|
|
1,199
|
|
(3,218)
|
|
|
(4,544)
|
|
(1,317)
|
|
(3,227)
|
Total other
expense
|
(35,386)
|
|
(64,359)
|
|
28,973
|
|
|
(58,519)
|
|
(91,480)
|
|
32,961
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity in net income
of unconsolidated subsidiaries
|
38,175
|
|
15,236
|
|
22,939
|
|
|
61,948
|
|
112,390
|
|
(50,442)
|
Income/(loss) before
income taxes
|
38,820
|
|
(27,455)
|
|
66,275
|
|
|
63,734
|
|
74,332
|
|
(10,598)
|
Income taxes
expense
|
7,776
|
|
1,683
|
|
(6,093)
|
|
|
13,050
|
|
5,395
|
|
(7,655)
|
Net
income/(loss)
|
31,044
|
|
(29,138)
|
|
60,182
|
|
|
50,684
|
|
68,937
|
|
(18,253)
|
Net income
attributable to noncontrolling interests
|
(4,786)
|
|
(1,282)
|
|
(3,504)
|
|
|
(6,414)
|
|
(2,052)
|
|
(4,362)
|
Net income/(loss)
attributable to Darling
|
$
26,258
|
|
$ (30,420)
|
|
$
56,678
|
|
|
$
44,270
|
|
$
66,885
|
|
$
(22,615)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic income/(loss)
per share:
|
$
0.16
|
|
$
(0.18)
|
|
$
0.34
|
|
|
$
0.27
|
|
$
0.41
|
|
$
(0.14)
|
Diluted income/(loss)
per share:
|
$
0.16
|
|
$
(0.18)
|
|
$
0.34
|
|
|
$
0.26
|
|
$
0.40
|
|
$
(0.14)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of diluted
common shares
|
168,432
|
|
164,651
|
|
|
|
|
168,546
|
|
166,259
|
|
|
Darling
Ingredients Inc. and Subsidiaries
|
Condensed
Consolidated Balance Sheets
|
June 29, 2019 and
December 29, 2018
|
(in
thousands)
|
|
|
|
June 29,
|
|
December
29,
|
|
|
2019
|
|
2018
|
ASSETS
|
(unaudited)
|
|
|
Current
assets:
|
|
|
|
|
Cash and cash
equivalents
|
$
87,011
|
|
$
107,262
|
|
Restricted
cash
|
103
|
|
107
|
|
Accounts receivable,
net
|
357,671
|
|
385,737
|
|
Inventories
|
348,309
|
|
341,028
|
|
Prepaid
expenses
|
44,363
|
|
35,247
|
|
Income taxes
refundable
|
5,554
|
|
6,462
|
|
Other current
assets
|
24,127
|
|
22,099
|
|
Total current assets
|
867,138
|
|
897,942
|
Property, plant and
equipment, less accumulated depreciation, net
|
1,722,296
|
|
1,687,858
|
Intangible assets,
less accumulated amortization, net
|
565,976
|
|
595,862
|
Goodwill
|
1,233,486
|
|
1,229,159
|
Investment in
unconsolidated subsidiaries
|
458,032
|
|
410,177
|
Operating lease
right-of-use assets
|
120,950
|
|
-
|
Other
assets
|
54,353
|
|
53,375
|
Deferred income
taxes
|
14,365
|
|
14,981
|
|
Total assets
|
$
5,036,596
|
|
$
4,889,354
|
|
|
|
|
|
LIABILITIES AND
STOCKHOLDERS' EQUITY
|
|
|
|
Current
liabilities:
|
|
|
|
|
Current portion of
long-term debt
|
$
35,877
|
|
$
7,492
|
|
Accounts payable,
principally trade
|
208,901
|
|
219,479
|
|
Income taxes
payable
|
10,291
|
|
4,043
|
|
Current operating
lease liabilities
|
36,703
|
|
-
|
|
Accrued
expenses
|
274,534
|
|
309,484
|
|
Total current liabilities
|
566,306
|
|
540,498
|
Long-term debt, net
of current portion
|
1,640,056
|
|
1,666,940
|
Long-term operating
lease liabilities
|
83,440
|
|
-
|
Other non-current
liabilities
|
113,086
|
|
115,032
|
Deferred income
taxes
|
227,073
|
|
231,063
|
|
Total liabilities
|
2,629,961
|
|
2,553,533
|
Commitments and
contingencies
|
|
|
|
Total Darling's
stockholders' equity
|
2,342,911
|
|
2,273,048
|
Noncontrolling
interests
|
63,724
|
|
62,773
|
|
Total stockholders' equity
|
$
2,406,635
|
|
$
2,335,821
|
|
|
$
5,036,596
|
|
$
4,889,354
|
Darling
Ingredients Inc. and Subsidiaries
|
Consolidated
Statement of Cash Flows
|
Six Months Ended
June 29, 2019 and June 30, 2018
|
(in
thousands)
|
(unaudited)
|
|
|
|
|
|
Six Months
Ended
|
|
|
|
|
June 29,
|
|
June 30,
|
Cash flows from
operating activities:
|
2019
|
|
2018
|
|
Net income
|
|
$
50,684
|
|
$
68,937
|
|
Adjustments to
reconcile net income to net cash provided by operating
activities:
|
|
|
|
|
|
Depreciation and
amortization
|
158,650
|
|
157,073
|
|
|
Loss/(gain) on
disposal of property, plant, equipment and other assets
|
(18,176)
|
|
300
|
|
|
Loss on disposal of
subsidiaries
|
-
|
|
15,538
|
|
|
Asset
impairment
|
-
|
|
2,907
|
|
|
Gain on insurance
proceeds from insurance settlements
|
(845)
|
|
(1,253)
|
|
|
Deferred
taxes
|
(3,137)
|
|
(7,512)
|
|
|
Increase in long-term
pension liability
|
1,010
|
|
123
|
|
|
Stock-based
compensation expense
|
14,182
|
|
13,232
|
|
|
Write-off deferred
loan costs
|
4,547
|
|
8,105
|
|
|
Deferred loan cost
amortization
|
3,010
|
|
4,664
|
|
|
Equity in net income
of unconsolidated subsidiaries
|
(61,948)
|
|
(112,390)
|
|
|
Distribution of
earnings from unconsolidated subsidiaries
|
17,755
|
|
26,567
|
|
|
Changes in operating
assets and liabilities, net of effects from
acquisitions:
|
|
|
|
|
|
Accounts
receivable
|
27,218
|
|
5,217
|
|
|
Income taxes
refundable/payable
|
7,140
|
|
(5,438)
|
|
|
Inventories
and prepaid expenses
|
(17,374)
|
|
(30,561)
|
|
|
Accounts
payable and accrued expenses
|
(29,849)
|
|
(25,705)
|
|
|
Other
|
1,437
|
|
8,243
|
|
|
|
Net cash provided by
operating activities
|
154,304
|
|
128,047
|
Cash flows from
investing activities:
|
|
|
|
|
Capital
expenditures
|
(167,871)
|
|
(139,130)
|
|
Acquisitions, net of
cash acquired
|
(1,431)
|
|
(51,089)
|
|
Investment of
unconsolidated subsidiaries
|
(1,000)
|
|
(6,500)
|
|
Proceeds from sale of
investment in subsidiaries
|
-
|
|
82,805
|
|
Gross proceeds from
disposal of property, plant and equipment and other
assets
|
9,814
|
|
2,244
|
|
Proceeds from
insurance settlement
|
845
|
|
1,253
|
|
Payments related to
routes and other intangibles
|
(3,150)
|
|
(294)
|
|
|
|
Net cash used by
investing activities
|
(162,793)
|
|
(110,711)
|
Cash flows from
financing activities:
|
|
|
|
|
Proceeds from
long-term debt
|
507,722
|
|
623,695
|
|
Payments on long-term
debt
|
(526,230)
|
|
(650,976)
|
|
Borrowings from
revolving credit facility
|
273,485
|
|
247,975
|
|
Payments on revolving
credit facility
|
(266,884)
|
|
(221,632)
|
|
Net cash overdraft
financing
|
11,178
|
|
4,517
|
|
Deferred loan
costs
|
(7,003)
|
|
(9,324)
|
|
Issuance of common
stock
|
12
|
|
182
|
|
Minimum withholding
taxes paid on stock awards
|
(3,193)
|
|
(2,123)
|
|
Distributions to
noncontrolling interests
|
-
|
|
(983)
|
|
|
|
Net cash used by
financing activities
|
(10,913)
|
|
(8,669)
|
Effect of exchange
rate changes on cash
|
(853)
|
|
(11,321)
|
Net decrease in cash,
cash equivalents and restricted cash
|
(20,255)
|
|
(2,654)
|
Cash, cash
equivalents and restricted cash at beginning of period
|
107,369
|
|
106,916
|
Cash, cash
equivalents and restricted cash at end of period
|
$
87,114
|
|
$
104,262
|
Supplemental
disclosure of cash flow information:
|
|
|
|
|
Accrued capital
expenditures
|
$
(7,542)
|
|
$
(6,336)
|
|
Cash paid during the
period for:
|
|
|
|
|
|
Interest, net of
capitalized interest
|
$
45,196
|
|
$
39,614
|
|
|
Income taxes, net of
refunds
|
$
12,607
|
|
$
17,154
|
|
Non-cash operating
activities
|
|
|
|
|
|
Operating lease right
of use asset obtained in exchange for new lease
liabilities
|
$
7,492
|
|
$
-
|
|
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, 2019 and
December 31, 2018
|
(in
thousands)
|
|
|
|
|
June
30,
|
|
December
31,
|
|
|
|
2019
|
|
2018
|
Assets:
|
(unaudited)
|
|
|
|
Total current
assets
|
$
252,521
|
|
$
186,258
|
|
Property, plant and
equipment, net
|
621,733
|
|
576,384
|
|
Other
assets
|
23,877
|
|
24,601
|
|
|
Total
assets
|
$
898,131
|
|
$
787,243
|
|
|
|
|
|
|
Liabilities and
members' equity:
|
|
|
|
|
Total current portion
of long term debt
|
$
284
|
|
$
189
|
|
Total other current
liabilities
|
51,828
|
|
40,619
|
|
Total long term
debt
|
8,936
|
|
8,485
|
|
Total other long term
liabilities
|
4,511
|
|
539
|
|
Total members'
equity
|
832,572
|
|
737,411
|
|
|
Total liabilities and
members' equity
|
$
898,131
|
|
$
787,243
|
Diamond Green
Diesel Joint Venture
|
Operating
Financial Results
|
Three Months and
Six Months Ended June 30, 2019 and June 30, 2018
|
(in
thousands)
|
(unaudited)
|
|
|
|
|
Three Months
Ended
|
|
|
Six Months
Ended
|
|
|
|
|
|
|
|
$ Change
|
|
|
|
|
|
|
$ Change
|
|
|
|
June 30,
|
|
June 30,
|
|
Favorable
|
|
|
June 30,
|
|
June 30,
|
|
Favorable
|
Revenues:
|
2019
|
|
2018
|
|
(Unfavorable)
|
|
|
2019
|
|
2018
|
|
(Unfavorable)
|
|
Operating
revenues
|
$ 294,811
|
|
$ 151,989
|
|
$
142,822
|
|
|
$ 597,529
|
|
$ 302,310
|
|
$
295,219
|
Expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total costs and
expenses less depreciation, amortization and accretion
expense
|
207,024
|
|
115,659
|
|
(91,365)
|
|
|
450,087
|
|
65,838
|
|
(384,249)
|
|
Depreciation,
amortization and accretion expense
|
11,914
|
|
6,254
|
|
(5,660)
|
|
|
23,332
|
|
12,374
|
|
(10,958)
|
Total costs and
expenses
|
218,938
|
|
121,913
|
|
(97,025)
|
|
|
473,419
|
|
78,212
|
|
(395,207)
|
|
Operating
income
|
75,873
|
|
30,076
|
|
45,797
|
|
|
124,110
|
|
224,098
|
|
(99,988)
|
Other
income
|
634
|
|
415
|
|
219
|
|
|
1,275
|
|
792
|
|
483
|
|
|
Interest and debt
expense, net
|
(321)
|
|
(319)
|
|
(2)
|
|
|
(645)
|
|
(319)
|
|
(326)
|
|
|
Net
income
|
$
76,186
|
|
$
30,172
|
|
$
46,014
|
|
|
$ 124,740
|
|
$ 224,571
|
|
$
(99,831)
|
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 29, 2019 and June 30, 2018
|
|
|
|
Three Months Ended -
Year over Year
|
|
Six Months Ended -
Year over Year
|
Adjusted
EBITDA
|
June 29,
|
|
June 30,
|
|
June 29,
|
|
June 30,
|
(U.S. dollars in
thousands)
|
2019
|
|
2018
|
|
2019
|
|
2018
|
|
|
|
|
|
|
|
|
|
Net income/(loss)
attributable to Darling
|
$
26,258
|
|
$ (30,420)
|
|
$
44,270
|
|
$
66,885
|
Depreciation and
amortization
|
79,486
|
|
78,454
|
|
158,650
|
|
157,073
|
Interest
expense
|
20,853
|
|
23,016
|
|
40,729
|
|
46,140
|
Income tax
expense
|
7,776
|
|
1,683
|
|
13,050
|
|
5,395
|
Restructuring and
impairment charges
|
-
|
|
14,965
|
|
-
|
|
14,965
|
Foreign currency
loss
|
388
|
|
3,495
|
|
1,120
|
|
4,976
|
Other
expense/(income), net
|
2,019
|
|
(1,199)
|
|
4,544
|
|
1,317
|
Debt extinguishment
costs
|
12,126
|
|
23,509
|
|
12,126
|
|
23,509
|
Loss on sale of
subsidiary
|
-
|
|
15,538
|
|
-
|
|
15,538
|
Equity in net
(income) of unconsolidated subsidiaries
|
(38,175)
|
|
(15,236)
|
|
(61,948)
|
|
(112,390)
|
Net income
attributable to noncontrolling interests
|
4,786
|
|
1,282
|
|
6,414
|
|
2,052
|
|
Adjusted
EBITDA
|
$ 115,517
|
|
$ 115,087
|
|
$ 218,955
|
|
$ 225,460
|
|
|
|
|
|
|
|
|
|
Foreign currency
exchange impact (1)
|
5,605
|
|
-
|
|
11,661
|
|
-
|
Pro forma Adjusted
EBITDA to Foreign Currency (Non-GAAP)
|
$ 121,122
|
|
$ 115,087
|
|
$ 230,616
|
|
$ 225,460
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
DGD Joint Venture
Adjusted EBITDA (Darling's share)
|
$
43,894
|
|
$
18,165
|
|
$
73,721
|
|
$ 118,236
|
|
|
(1)
|
The average rates
assumption used in the calculation was the actual fiscal average
rate for the three months ended June 29, 2019 of €1.00:USD$1.12 and
CAD$1.00:USD$0.75 as compared to the average rate for the three
months ended June 30, 2018 of €1.00:USD$1.20 and CAD$1.00:USD$0.77,
respectively.
|
|
The average rates
assumption used in the calculation was the actual fiscal average
rate for the six months ended June 29, 2019 of €1.00:USD$1.13 and
CAD$1.00:USD$0.75 as compared to the average rate for the six
months ended June 30, 2018 of €1.00:USD$1.22 and CAD$1.00:USD$0.78,
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 2019 financial results at 8:30
am Eastern Time (7:30 am Central
Time) on Thursday, August 8,
2019. 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
10132938. 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 15, 2019,
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
10132938. 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 5.25% Notes and 3.625% Notes that were outstanding
at June 29, 2019. 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 5.25% 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 that
are subject to risks and uncertainties that could cause the actual
results of Darling Ingredients Inc. (the "Company") to differ
materially from those expressed or implied in the statements.
Statements that are not statements of historical facts are
forward-looking statements and are made pursuant to the safe harbor
provisions of the Private Securities Litigation Reform Act of
1995. Words such as "estimate," "project," "planned,"
"contemplate," "potential," "possible," "proposed," "intend,"
"believe," "anticipate," "expect," "may," "will," "would,"
"should," "could" and similar expressions are intended to identify
forward-looking statements. Forward-looking statements are
based on the Company's current expectations and assumptions
regarding its business, the economy and other future
conditions. The Company cautions readers that any such
forward-looking statements it makes are not guarantees of future
performance and that actual results may differ materially from
anticipated results or expectations expressed in its
forward-looking statements as a result of a variety of factors,
including many that are beyond the Company's control. 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"), severe acute respiratory
syndrome ("SARS"), bovine spongiform encephalopathy (or "BSE"),
porcine epidemic diarrhea ("PED") or other diseases associated with
animal origin in the United States
or elsewhere, such as the recent African Swine Fever ("ASF")
outbreak in China; 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, SARS, PED, BSE or ASF 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 cause actual results to vary materially from the
forward-looking statements included in this presentation or
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
|
5601 North
MacArthur Blvd., Irving, Texas 75038
|
|
Phone :
972-281-4478
|
View original
content:http://www.prnewswire.com/news-releases/darling-ingredients-inc-reports-second-quarter-2019-financial-results-300898093.html
SOURCE Darling Ingredients Inc.