IRVING, Texas, Nov. 6, 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
third quarter ended September 28,
2019.
Third Quarter 2019 Overview
- Revenue of $842.0
million
- Net income of $25.7 million,
or $0.15 per GAAP diluted
share
- Combined adjusted EBITDA of $147.8
million (Darling's adjusted EBITDA plus Darling's share of
Diamond Green Diesel (DGD) adjusted
EBITDA as reflected on the Non-GAAP Adjusted EBITDA Reconciliation
table herein.)
- Repurchased 636,634 shares during 3rd
quarter and subsequently 407,076 shares in Q4
- Diamond Green Diesel
delivered $1.35 EBITDA per gallon
with Darling's share of JV earnings reflected in consolidated
operating income under Fuel Segment
- YTD DGD delivering $1.26
EBITDA per gallon when Q1 2019 adjusted to reflect hedge
accounting
- Global slaughter remains at record levels, providing ample
raw material supplies
- Global fat pricing improved but remained stagnant as
North America biodiesel industry
awaiting Blenders Tax Credit (BTC)
- Global protein pricing weaker due to excess supplies and
Chinese demand destruction due to African Swine Fever
(ASF)
- Rousselot delivered improved results with stronger sales in
the Health and Nutrition category
- Diamond Green II plant
construction on time and budget; Diamond
Green III in engineering and cost estimating for
Port Arthur, TX
- Debt paydown of $33.6
million
For the third quarter of 2019, the Company reported net sales of
$842.0 million, as compared with net
sales of $812.6 million for the third
quarter of 2018. The $29.4 million
increase in net sales resulted from higher finished product fat
prices, strong contribution from higher sales values for Food
Segment collagen ingredients and higher sales volume that more than
offset lower protein pricing.
Net income attributable to Darling for the three months ended
September 28, 2019 was $25.7 million, or $0.15 per diluted share, compared to a net loss
of $(6.0) million, or $(0.04) per diluted share, for the third quarter
of 2018. The increase was primarily due to DGD earning
$32 million in 2019 third quarter as
compared to a $(2.6) million loss in
the 2018 third quarter due to extended downtime in the third
quarter 2018 for completion of the expansion, as well as a
$7.2 million write-down of our
China blood plasma inventory in
the third quarter 2018 due to the African Swine Fever (ASF)
outbreak.
Under Darling's current share repurchase authorization, the
Company repurchased 636,634 shares of common stock during the third
quarter. Subsequent to the close of the quarter, the Company
repurchased an additional 407,076 shares, totaling $7.5 million. Darling has $180.7 million worth of shares remaining under
its current authorization with purchases to be made from time to
time on the open market at prevailing market prices or in
negotiated transactions off the market. Repurchases may occur over
the authorized period unless extended or shortened by the Board of
Directors.
Comments on the Third Quarter 2019
"We reported solid third quarter results, underscored by the
strength of our vertically integrated supply chain and excellent
execution amid continued trade uncertainty and escalating disease
disruption due to African Swine Fever," said Randall C. Stuewe, Chairman and Chief Executive
Officer of Darling Ingredients Inc. "Overall, our operating
segments delivered exceptional results with improved earnings in
our Feed Segment as we navigated volatile global markets. Led by
our Rousselot Functional Ingredients and Health & Nutrition
platform, our Food Segment is solidly positioned to capture growing
global demand for collagen ingredients. In the Fuel Segment, higher
sales volumes supported solid performance across operations despite
the lack of the Blenders Tax Credit (BTC).
"Our Diamond Green II expansion increasing capacity to 675
million gallons of renewable diesel is progressing on schedule with
expected completion in late 2021. We are also pleased to expand our
relationship with Valero, our joint venture partner, as we explore
advanced engineering and development cost review for a potential
renewable diesel plant at Valero's refinery in Port Arthur, TX. If approved, construction
would begin in 2021, with expected operations commencing in 2024,
resulting in 1.1 billion gallons of total annual production
capacity at DGD," concluded Mr. Stuewe.
Operational Update by Segment
- Feed Ingredients – Segment stabilized, and
earnings recovered on modestly improved fat prices year-over-year
in light of ample supplies combined with lower global protein
values impacted by strong slaughter volumes in North America; continued trade disruptions
with China; and ASF moving across
Asia. Slow export markets and
lower biofuel demand also pressured fat markets.
- Food Ingredients – Strong demand for our
collagen supplements and ingredients drove solid results with
capital growth investments in Brazil and France broadening opportunity to capture
rising global demand. European edible fats business experienced
declining volumes with raw materials continuing to be diverted to
China food markets.
- Fuel Ingredients – Strong execution across
operations supported by solid contribution from our European
bioenergy business, Ecoson, in addition to volume growth at our
biogas digester operation in Belgium. Additionally, earnings from our share
of Diamond Green Diesel JV (DGD) is now included in
our operating income. While the facility experienced 20 days of
maintenance downtime for plant enhancements and catalyst changeout,
performance met expectations at $1.35
EBITDA per gallon on 58.7 million gallons of renewable diesel sold
during the quarter.
Financial Update by Segment
Feed
Ingredients
|
Three Months
Ended
|
|
Nine Months
Ended
|
($
thousands)
|
September 28,
2019
|
September 29,
2018
|
|
September 28,
2019
|
September 29,
2018
|
Net
sales
|
$
496,978
|
$
482,744
|
|
$
1,480,244
|
$
1,467,365
|
Gross
margin
|
117,186
|
99,005
|
|
336,638
|
344,169
|
Loss (gain) on sale
of assets
|
(2,429)
|
107
|
|
(7,343)
|
526
|
Selling, general and
administrative expenses
|
47,319
|
39,702
|
|
142,615
|
131,914
|
Depreciation and
amortization
|
50,182
|
47,321
|
|
148,271
|
140,933
|
Segment operating
income
|
22,114
|
11,875
|
|
53,095
|
70,796
|
Adjusted EBITDA
(1)
|
$
72,296
|
$
59,196
|
|
$
201,366
|
$
211,729
|
|
(1) Adjusted EBITDA
calculated by adding depreciation and amortization to segment
operating income
|
- Feed Ingredients operating income for the three months ended
September 28, 2019 was $22.1 million, an increase of $10.2 million, or 85.7% as compared to the three
months ended September 29, 2018. This
was due to the acquisition of Triple-T Foods in October 2018, higher margins on fat sales due to
an increase in fat prices and a negative impact on Chinese
inventories relating to ASF recorded in fiscal 2018.
- Feed Ingredients operating income for the nine months ended
September 28, 2019 was $53.1 million, a decrease of $17.7 million, or (25.0)%, as compared to the
nine months ended September 29, 2018.
This was primarily due to a decrease in protein finished
product sales prices, lower spreads in poultry pet grade products
and higher factory, depreciation and amortization costs from the
addition of several new facilities and partial multiemployer
pension withdrawal charges.
Food
Ingredients
|
Three Months
Ended
|
|
Nine Months
Ended
|
($
thousands)
|
September 28,
2019
|
September 29,
2018
|
|
September 28,
2019
|
September 29,
2018
|
Net
sales
|
$
276,467
|
$
265,208
|
|
$
830,466
|
$
847,457
|
Gross
margin
|
61,824
|
54,478
|
|
187,375
|
162,495
|
Gain on sale of
assets
|
(253)
|
(33)
|
|
(13,518)
|
(244)
|
Selling, general and
administrative expenses
|
22,811
|
21,843
|
|
68,129
|
67,894
|
Restructuring and
impairment charges
|
-
|
-
|
|
-
|
14,965
|
Depreciation and
amortization
|
19,743
|
19,697
|
|
59,115
|
60,725
|
Segment operating
income
|
19,523
|
12,971
|
|
73,649
|
19,155
|
Adjusted EBITDA
(1)
|
$
39,266
|
$
32,668
|
|
$
132,764
|
$
94,845
|
|
(1) Adjusted EBITDA
calculated by adding depreciation and amortization and
restructuring and impairment charges to segment operating
income
|
- Food Ingredients operating income was $19.5 million for the three months ended
September 28, 2019, an increase of
$6.5 million or 50.0% as compared to
the three months ended September 29,
2018. The increase was primarily due to improved results in
the collagen markets, a gain on sale of assets in China and no restructuring and impairment
charges in the current year as compared to the same period in
fiscal 2018 when the Company closed its Argentina collagen plant.
- Food Ingredients operating income was $73.6 million for the nine months ended
September 28, 2019, an increase of
$54.4 million or 283.3% as compared
to the nine months ended September 29,
2018. The increase was primarily due to improved results in
the collagen business and the closure of our Argentina collagen plant which more than
offset lower casing and edible fat margins.
Fuel
Ingredients
|
Three Months
Ended
|
|
Nine Months
Ended
|
($
thousands)
|
September 28,
2019
|
September 29,
2018
|
|
September 28,
2019
|
September 29,
2018
|
Net sales
|
$
68,604
|
$
64,624
|
|
$
193,767
|
$
219,774
|
Gross
margin
|
10,116
|
11,164
|
|
31,912
|
49,203
|
Loss on sale of
assets
|
13
|
98
|
|
16
|
190
|
Selling, general and
administrative expenses
|
912
|
(2,822)
|
|
583
|
(4,056)
|
Depreciation and
amortization
|
7,895
|
9,370
|
|
24,055
|
26,378
|
Equity in net
income/(loss) of Diamond Green Diesel
|
32,020
|
(2,630)
|
|
94,390
|
109,655
|
Segment operating
income
|
33,316
|
1,888
|
|
101,648
|
136,346
|
Combined Adjusted
EBITDA (1)
|
$
48,739
|
$
14,397
|
|
$
144,583
|
$
171,814
|
|
(1) Combined adjusted
EBITDA calculated by subtracting equity in net income of DGD from
segment operating income and adding depreciation and
amortization with Darling's share
of DGD's EBITDA (referenced in the DGD Operating Financial Results
table included herein calculated by taking 50% of the depreciation,
amortization and accretion expense plus the operating
income)
|
- The Company's Fuel Ingredients segment operating income for the
three months ended September 28, 2019
was $33.3 million, an increase of
$31.4 million or 1,652.6% as compared
to the same period in fiscal 2018. The increase is primarily
due to current year equity in net income at the DGD Joint Venture
from higher capacity as compared to a net loss in the prior year
period at the DGD Joint Venture, which more than offset the
business interruption gain recorded at Rendac in fiscal 2018.
- The Company's Fuel Ingredients segment operating income for the
nine months ended September 28, 2019
was $101.6 million, a decrease of
$34.7 million or (25.5)% as compared
to the same period in fiscal 2018. The decrease 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 September 28, 2019 and September 29, 2018
(in thousands, except
per share data)
(unaudited)
|
|
|
|
Three Months
Ended
|
|
|
Nine Months
Ended
|
|
|
|
|
|
|
$ Change
|
|
|
|
|
|
|
$ Change
|
|
|
September
28,
|
|
September
29,
|
|
Favorable
|
|
|
September
28,
|
|
September
29,
|
|
Favorable
|
|
2019
|
|
2018
|
|
(Unfavorable)
|
|
|
2019
|
|
2018
|
|
(Unfavorable)
|
Net sales
|
$
842,049
|
|
$
812,576
|
|
$
29,473
|
|
|
$
2,504,477
|
|
$
2,534,596
|
|
$
(30,119)
|
Costs and
expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of sales and
operating expenses
|
652,923
|
|
647,929
|
|
(4,994)
|
|
|
1,948,552
|
|
1,978,729
|
|
30,177
|
|
Loss (gain) on sale
of assets
|
(2,669)
|
|
172
|
|
2,841
|
|
|
(20,845)
|
|
472
|
|
21,317
|
|
Selling, general and
administrative expenses
|
83,549
|
|
67,447
|
|
(16,102)
|
|
|
249,569
|
|
232,907
|
|
(16,662)
|
|
Restructuring and
impairment charges
|
-
|
|
-
|
|
-
|
|
|
-
|
|
14,965
|
|
14,965
|
|
Depreciation and
amortization
|
80,407
|
|
78,842
|
|
(1,565)
|
|
|
239,057
|
|
235,915
|
|
(3,142)
|
Total costs and
expenses
|
814,210
|
|
794,390
|
|
(19,820)
|
|
|
2,416,333
|
|
2,462,988
|
|
46,655
|
|
Equity in net
income/(loss) of Diamond Green Diesel
|
32,020
|
|
(2,630)
|
|
34,650
|
|
|
94,390
|
|
109,655
|
|
(15,265)
|
Operating
income
|
59,859
|
|
15,556
|
|
44,303
|
|
|
182,534
|
|
181,263
|
|
1,271
|
Other
expense:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest
expense
|
(19,359)
|
|
(20,080)
|
|
721
|
|
|
(60,088)
|
|
(66,220)
|
|
6,132
|
|
Debt extinguishment
costs
|
-
|
|
-
|
|
-
|
|
|
(12,126)
|
|
(23,509)
|
|
11,383
|
|
Foreign currency
gain/(loss)
|
466
|
|
(2,106)
|
|
2,572
|
|
|
(654)
|
|
(7,082)
|
|
6,428
|
|
Gain/(loss) on
disposal of subsidiaries
|
-
|
|
3,038
|
|
(3,038)
|
|
|
-
|
|
(12,500)
|
|
12,500
|
|
Other (expense)/gain,
net
|
(2,614)
|
|
(2,786)
|
|
172
|
|
|
(7,158)
|
|
(4,103)
|
|
(3,055)
|
Total other
expense
|
(21,507)
|
|
(21,934)
|
|
427
|
|
|
(80,026)
|
|
(113,414)
|
|
33,388
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity in net loss of
unconsolidated subsidiaries
|
(665)
|
|
(162)
|
|
(503)
|
|
|
(1,087)
|
|
(57)
|
|
(1,030)
|
Income/(loss) before
income taxes
|
37,687
|
|
(6,540)
|
|
44,227
|
|
|
101,421
|
|
67,792
|
|
33,629
|
Income taxes
expense/(benefit)
|
10,850
|
|
(1,403)
|
|
(12,253)
|
|
|
23,900
|
|
3,992
|
|
(19,908)
|
Net
income/(loss)
|
26,837
|
|
(5,137)
|
|
31,974
|
|
|
77,521
|
|
63,800
|
|
13,721
|
Net income
attributable to noncontrolling interests
|
(1,116)
|
|
(900)
|
|
(216)
|
|
|
(7,530)
|
|
(2,952)
|
|
(4,578)
|
Net income/(loss)
attributable to Darling
|
$
25,721
|
|
$
(6,037)
|
|
$
31,758
|
|
|
$
69,991
|
|
$
60,848
|
|
$
9,143
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic income/(loss)
per share:
|
$
0.16
|
|
$
(0.04)
|
|
$
0.20
|
|
|
$
0.42
|
|
$
0.37
|
|
$
0.05
|
Diluted income/(loss)
per share:
|
$
0.15
|
|
$
(0.04)
|
|
$
0.19
|
|
|
$
0.42
|
|
$
0.37
|
|
$
0.05
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of diluted
common shares
|
168,266
|
|
164,656
|
|
|
|
|
168,453
|
|
165,774
|
|
|
Darling
Ingredients Inc. and Subsidiaries
Condensed
Consolidated Balance Sheets
September 28, 2019
and December 29, 2018
(in
thousands)
|
|
|
|
September
28,
|
|
December
29,
|
|
2019
|
|
2018
|
ASSETS
|
(unaudited)
|
|
|
Current
assets:
|
|
|
|
|
Cash and cash
equivalents
|
$
69,122
|
|
$
107,262
|
|
Restricted
cash
|
159
|
|
107
|
|
Accounts receivable,
net
|
355,006
|
|
385,737
|
|
Inventories
|
353,003
|
|
341,028
|
|
Prepaid
expenses
|
46,378
|
|
35,247
|
|
Income taxes
refundable
|
4,952
|
|
6,462
|
|
Other current
assets
|
25,061
|
|
22,099
|
|
Total current assets
|
853,681
|
|
897,942
|
Property, plant and
equipment, less accumulated depreciation, net
|
1,714,768
|
|
1,687,858
|
Intangible assets,
less accumulated amortization, net
|
537,360
|
|
595,862
|
Goodwill
|
1,212,313
|
|
1,229,159
|
Investment in
unconsolidated subsidiaries
|
447,689
|
|
410,177
|
Operating lease
right-of-use assets
|
119,063
|
|
-
|
Other
assets
|
46,179
|
|
53,375
|
Deferred income
taxes
|
13,846
|
|
14,981
|
|
Total assets
|
$
4,944,899
|
|
$
4,889,354
|
|
|
|
|
|
LIABILITIES AND
STOCKHOLDERS' EQUITY
|
|
|
|
Current
liabilities:
|
|
|
|
|
Current portion of
long-term debt
|
$
61,092
|
|
$
7,492
|
|
Accounts payable,
principally trade
|
192,010
|
|
219,479
|
|
Income taxes
payable
|
10,404
|
|
4,043
|
|
Current operating
lease liabilities
|
35,223
|
|
-
|
|
Accrued
expenses
|
297,164
|
|
309,484
|
|
Total current liabilities
|
595,893
|
|
540,498
|
Long-term debt, net
of current portion
|
1,559,809
|
|
1,666,940
|
Long-term operating
lease liabilities
|
83,754
|
|
-
|
Other non-current
liabilities
|
113,222
|
|
115,032
|
Deferred income
taxes
|
219,329
|
|
231,063
|
|
Total liabilities
|
2,572,007
|
|
2,553,533
|
Commitments and
contingencies
|
|
|
|
Total Darling's
stockholders' equity
|
2,308,493
|
|
2,273,048
|
Noncontrolling
interests
|
64,399
|
|
62,773
|
|
Total stockholders' equity
|
$
2,372,892
|
|
$
2,335,821
|
|
|
$
4,944,899
|
|
$
4,889,354
|
Darling
Ingredients Inc. and Subsidiaries
Consolidated
Statement of Cash Flows
Nine Months Ended
September 28, 2019 and September 29, 2018
(in
thousands)
(unaudited)
|
|
|
|
|
|
Nine Months
Ended
|
|
|
|
|
September
28,
|
|
September
29,
|
Cash flows from
operating activities:
|
2019
|
|
2018
|
|
Net income
|
$
77,521
|
|
$
63,800
|
|
Adjustments to
reconcile net income to net cash provided by operating
activities:
|
|
|
|
|
|
Depreciation and
amortization
|
239,057
|
|
235,915
|
|
|
Loss/(gain) on
disposal of property, plant, equipment and other assets
|
(20,845)
|
|
472
|
|
|
Loss on disposal of
subsidiaries
|
-
|
|
12,500
|
|
|
Asset
impairment
|
-
|
|
2,907
|
|
|
Gain on insurance
proceeds from insurance settlements
|
(1,371)
|
|
(1,253)
|
|
|
Deferred
taxes
|
(4,765)
|
|
(15,708)
|
|
|
Increase (decrease)
in long-term pension liability
|
1,122
|
|
(375)
|
|
|
Stock-based
compensation expense
|
18,543
|
|
13,606
|
|
|
Write-off deferred
loan costs
|
4,721
|
|
8,163
|
|
|
Deferred loan cost
amortization
|
4,435
|
|
6,265
|
|
|
Equity in net income
of Diamond Green Diesel and unconsolidated subsidiaries
|
(93,303)
|
|
(109,598)
|
|
|
Distribution of
earnings from unconsolidated subsidiaries
|
57,118
|
|
27,418
|
|
|
Changes in operating
assets and liabilities, net of effects from
acquisitions:
|
|
|
|
|
|
Accounts
receivable
|
20,388
|
|
9,657
|
|
|
Income taxes
refundable/payable
|
8,058
|
|
(9,838)
|
|
|
Inventories
and prepaid expenses
|
(34,371)
|
|
(25,960)
|
|
|
Accounts
payable and accrued expenses
|
(19,799)
|
|
(23,004)
|
|
|
Other
|
6,173
|
|
4,731
|
|
|
|
Net cash provided by
operating activities
|
262,682
|
|
199,698
|
Cash flows from
investing activities:
|
|
|
|
|
Capital
expenditures
|
(245,092)
|
|
(213,726)
|
|
Acquisitions, net of
cash acquired
|
(1,431)
|
|
(51,301)
|
|
Investment of
unconsolidated subsidiaries
|
(2,000)
|
|
(10,000)
|
|
Proceeds from sale of
investment in subsidiaries
|
-
|
|
82,805
|
|
Gross proceeds from
disposal of property, plant and equipment and other
assets
|
15,402
|
|
3,361
|
|
Proceeds from
insurance settlement
|
1,371
|
|
1,253
|
|
Payments related to
routes and other intangibles
|
(3,150)
|
|
(1,253)
|
|
|
|
Net cash used by
investing activities
|
(234,900)
|
|
(188,861)
|
Cash flows from
financing activities:
|
|
|
|
|
Proceeds from
long-term debt
|
511,985
|
|
623,698
|
|
Payments on long-term
debt
|
(566,107)
|
|
(661,268)
|
|
Borrowings from
revolving credit facility
|
325,485
|
|
386,436
|
|
Payments on revolving
credit facility
|
(332,884)
|
|
(362,463)
|
|
Net cash overdraft
financing
|
27,858
|
|
3,361
|
|
Deferred loan
costs
|
(7,027)
|
|
(9,668)
|
|
Issuance of common
stock
|
39
|
|
182
|
|
Repurchase of common
stock
|
(11,740)
|
|
-
|
|
Minimum withholding
taxes paid on stock awards
|
(3,247)
|
|
(2,215)
|
|
Distributions to
noncontrolling interests
|
(4,500)
|
|
(8,005)
|
|
|
|
Net cash used by
financing activities
|
(60,138)
|
|
(29,942)
|
Effect of exchange
rate changes on cash
|
(5,732)
|
|
(6,238)
|
Net decrease in cash,
cash equivalents and restricted cash
|
(38,088)
|
|
(25,343)
|
Cash, cash
equivalents and restricted cash at beginning of period
|
107,369
|
|
106,916
|
Cash, cash
equivalents and restricted cash at end of period
|
$
69,281
|
|
$
81,573
|
Supplemental
disclosure of cash flow information:
|
|
|
|
|
Accrued capital
expenditures
|
$
3,978
|
|
$
(5,295)
|
|
Cash paid during the
period for:
|
|
|
|
|
|
Interest, net of
capitalized interest
|
$
49,727
|
|
$
58,731
|
|
|
Income taxes, net of
refunds
|
$
21,475
|
|
$
28,682
|
|
Non-cash operating
activities
|
|
|
|
|
|
Operating lease right
of use asset obtained in exchange for new lease
liabilities
|
$
16,425
|
|
$
-
|
|
Non-cash financing
activities
|
|
|
|
|
|
Debt issued for
assets
|
$
-
|
|
$
24
|
Selected financial information for the Company's Diamond Green Diesel Joint Venture is as
follows:
Diamond Green
Diesel Joint Venture
Condensed
Consolidated Balance Sheets
September 30, 2019
and December 31, 2018
(in
thousands)
|
|
|
|
|
|
September
30,
|
|
December
31,
|
|
|
|
|
2019
|
|
2018
|
Assets:
|
|
(unaudited)
|
|
|
|
Total current
assets
|
|
$
193,457
|
|
$
186,258
|
|
Property, plant and
equipment, net
|
|
653,463
|
|
576,384
|
|
Other
assets
|
|
30,587
|
|
24,601
|
|
|
Total
assets
|
|
$
877,507
|
|
$
787,243
|
|
|
|
|
|
|
|
Liabilities and
members' equity:
|
|
|
|
|
|
Total current portion
of long term debt
|
|
$
293
|
|
$
189
|
|
Total other current
liabilities
|
|
47,373
|
|
40,619
|
|
Total long term
debt
|
|
8,859
|
|
8,485
|
|
Total other long term
liabilities
|
|
4,409
|
|
539
|
|
Total members'
equity
|
|
816,573
|
|
737,411
|
|
|
Total liabilities and
members' equity
|
|
$
877,507
|
|
$
787,243
|
Diamond Green
Diesel Joint Venture
Operating
Financial Results
Three Months and
Nine Months Ended September 30, 2019 and September 30,
2018
(in
thousands)
(unaudited)
|
|
|
|
|
Three Months
Ended
|
|
|
Nine Months
Ended
|
|
|
|
|
|
|
|
$ Change
|
|
|
|
|
|
|
$ Change
|
|
|
|
September
30,
|
|
September
30,
|
|
Favorable
|
|
|
September
30,
|
|
September
30,
|
|
Favorable
|
Revenues:
|
2019
|
|
2018
|
|
(Unfavorable)
|
|
|
2019
|
|
2018
|
|
(Unfavorable)
|
|
Operating
revenues
|
$
262,118
|
|
$
104,811
|
|
$
157,307
|
|
|
$
859,647
|
|
$
407,121
|
|
$
452,526
|
Expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total costs and
expenses less depreciation,
amortization and accretion expense
|
183,022
|
|
103,794
|
|
(79,228)
|
|
|
633,109
|
|
169,632
|
|
(463,477)
|
|
Depreciation,
amortization and accretion expense
|
15,242
|
|
6,516
|
|
(8,726)
|
|
|
38,574
|
|
18,890
|
|
(19,684)
|
Total costs and
expenses
|
198,264
|
|
110,310
|
|
(87,954)
|
|
|
671,683
|
|
188,522
|
|
(483,161)
|
|
Operating
income
|
63,854
|
|
(5,499)
|
|
69,353
|
|
|
187,964
|
|
218,599
|
|
(30,635)
|
Other
income
|
506
|
|
556
|
|
(50)
|
|
|
1,781
|
|
1,348
|
|
433
|
|
|
Interest and debt
expense, net
|
(320)
|
|
(318)
|
|
(2)
|
|
|
(965)
|
|
(637)
|
|
(328)
|
|
|
Net
income
|
$
64,040
|
|
$
(5,261)
|
|
$
69,301
|
|
|
$
188,780
|
|
$
219,310
|
|
$
(30,530)
|
Darling Ingredients Inc. reports Adjusted EBITDA results, which
is a Non-GAAP financial measure, as a complement to results
provided in accordance with generally accepted accounting
principles (GAAP) (for additional information, see "Use of Non-GAAP
Financial Measures" included later in this media release). The
Company believes that Adjusted EBITDA provides additional useful
information to investors. Adjusted EBITDA, as the Company uses the
term, is calculated below:
Reconciliation of Net Income to (Non-GAAP) Adjusted EBITDA
and (Non-GAAP) Pro forma Adjusted EBITDA
Three and nine
months ended September 28, 2019 and
September 29, 2018
|
|
Three Months Ended -
Year over Year
|
|
Nine Months Ended -
Year over Year
|
Adjusted
EBITDA
|
September
28,
|
|
September
29,
|
|
September
28,
|
|
September
29,
|
(U.S. dollars in
thousands)
|
2019
|
|
2018
|
|
2019
|
|
2018
|
|
|
|
|
|
|
|
|
Net income/(loss)
attributable to Darling
|
$
25,721
|
|
$
(6,037)
|
|
$
69,991
|
|
$
60,848
|
Depreciation and
amortization
|
80,407
|
|
78,842
|
|
239,057
|
|
235,915
|
Interest
expense
|
19,359
|
|
20,080
|
|
60,088
|
|
66,220
|
Income tax
expense/(benefit)
|
10,850
|
|
(1,403)
|
|
23,900
|
|
3,992
|
Restructuring and
impairment charges
|
-
|
|
-
|
|
-
|
|
14,965
|
Foreign currency
loss/(gain)
|
(466)
|
|
2,106
|
|
654
|
|
7,082
|
Other
expense/(income), net
|
2,614
|
|
2,786
|
|
7,158
|
|
4,103
|
Debt extinguishment
costs
|
-
|
|
-
|
|
12,126
|
|
23,509
|
Loss/(gain) on sale
of subsidiary
|
-
|
|
(3,038)
|
|
-
|
|
12,500
|
Equity in net
(income)/loss of Diamond Green Diesel
|
(32,020)
|
|
2,630
|
|
(94,390)
|
|
(109,655)
|
Equity in net
(income) of unconsolidated subsidiaries
|
665
|
|
162
|
|
1,087
|
|
57
|
Net income
attributable to noncontrolling interests
|
1,116
|
|
900
|
|
7,530
|
|
2,952
|
|
Adjusted
EBITDA
|
$
108,246
|
|
$
97,028
|
|
$
327,201
|
|
$
322,488
|
|
|
|
|
|
|
|
|
|
Foreign currency
exchange impact (1)
|
3,088
|
|
-
|
|
14,749
|
|
-
|
Pro forma Adjusted
EBITDA to Foreign Currency (Non-GAAP)
|
$
111,334
|
|
$
97,028
|
|
$
341,950
|
|
$
322,488
|
|
|
|
|
|
|
|
|
DGD Joint Venture
Adjusted EBITDA (Darling's share)
|
$
39,548
|
|
$
509
|
|
$
113,270
|
|
$
118,745
|
|
|
|
|
|
|
|
|
Darling plus
Darling's share of DGD Joint Venture Adjusted EBITDA
|
$
147,794
|
|
$
97,537
|
|
$
440,471
|
|
$
441,233
|
|
|
(1)
|
The average rates
assumption used in the calculation was the actual fiscal average
rate for the three months ended September 28, 2019 of
€1.00:USD$1.11 and CAD$1.00:USD$0.76 as compared to the average
rate for the three months ended September 29, 2018 of
€1.00:USD$1.16 and CAD$1.00:USD$0.76, respectively. The average
rates assumption used in the calculation was the actual fiscal
average rate for the nine months ended September 28, 2019 of
€1.00:USD$1.12 and CAD$1.00:USD$0.75 as compared to the average
rate for the nine months ended September 29, 2018 of €1.00:USD$1.20
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 third quarter 2019 financial results at 8:30
am Eastern Time (7:30 am Central
Time) on Thursday, November 7,
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
10135809. Please call approximately ten minutes before
the start of the call to ensure that you are connected.
The call will also be available as a live audio webcast that can
be accessed on the Company website at http://ir.darlingii.com.
Beginning one hour after its completion, a replay of the call can
be accessed through November 14,
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
10135809. 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 September 28, 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 5.375% 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, such as the
outbreak of African Swine Fever ("ASF") in China and 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, BSE, 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 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 N. MacArthur
Blvd., Irving, Texas 75038
|
Phone :
972-281-4478
|
View original
content:http://www.prnewswire.com/news-releases/darling-ingredients-inc-reports-third-quarter-2019-financial-results-300953062.html
SOURCE Darling Ingredients Inc.