IRVING, Texas, Aug. 5, 2020 /PRNewswire/ -- Darling Ingredients
Inc. (NYSE: DAR, "Darling") --
Second Quarter 2020
- Net income of $65.4 million, or
$0.39 per GAAP diluted share
- Net Sales of $848.7 million
- Combined adjusted EBITDA of $195.2
million
- Core business EBITDA of $126.1
million, $16 million better
than Q1-2020; $24 million better than
Q2-2019, excluding the $13.1 million
gain on the sale of assets in Q2-2019
- Diamond Green Diesel ("DGD") earned $1.91 EBITDA per gallon on approximately 72
million gallons sold
- In July, Darling received an $80
million distribution from DGD, total distributions received
in 2020 is $205 million
Darling reported net sales of $848.7
million for the second quarter of 2020, as compared with net
sales of $827.3 million for the same
period a year ago. Net income attributable to Darling for the
three months ended June 27, 2020 was
$65.4 million, or $0.39 per diluted share, compared to a net income
of $26.3 million, or $0.16 per diluted share, for the second quarter
of 2019.
"We had another solid quarter of execution from our employees
worldwide who delivered a strong second quarter financial
performance, generating $195 million
of combined adjusted EBITDA," said Randall
C. Stuewe, Chairman and Chief Executive Officer of Darling
Ingredients Inc. "Our core business navigated through a turbulent
second quarter with our feed segment posting its best quarterly
EBITDA of $85.2 million in over the
last three years. We did benefit from over 40 million pounds of
depopulated hog volumes through our processing locations during the
quarter."
"Darling's diversification provides our global business platform
earnings sustainability as demonstrated in the second quarter. Our
DGD JV financial performance was impacted by the sharp decline in
the energy sector as a result of the COVID pandemic, but still
produced good results which were enhanced by a better performance
in our feed segment. Excluding the gain on the sale of assets in
the food segment from a year ago, this year's food segment
performance was on par to 2019," added Stuewe.
"We did use the DGD distribution proceeds received in April to
pay down our outstanding debt in the second quarter, lowering our
leverage ratio to 2.39 as measured by our bank covenant. We remain
diligent on our capital expenditures, investing approximately
$123 million for the first six months
of 2020. We continue to target a deferral of 15% to 20% in capital
expenditures as the uncertainty surrounding COVID-19 persists,"
commented Stuewe.
The Darling Ingredients Board has approved replenishing the
Company's previously announced share repurchase program back to
$200 million of availability and have
extended the term of the program for an additional two years to
August 13, 2022, to be exercised
depending on market conditions. The repurchases may 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.
In accordance with the distribution policy at Diamond Green
Diesel, Darling received an $80
million distribution from DGD in July
2020. Total distributions received in the first six months
of 2020 total $205 million.
For the six months ended June 27,
2020, Darling reported net sales of $1.7 billion, as compared with net sales of
$1.7 billion for the same period of
2019. Net Income attributable to Darling for the first six months
of 2020 was $150.9 million, or
$0.90 per diluted share, as compared
to a net income of $44.3 million, or
$0.26 per diluted share, for the
first six months of 2019.
As of June 27, 2020, Darling had
$76.2 million in cash and cash
equivalents, and $939.7 million
available under committed revolving credit agreements. Total debt
outstanding at the end of the second quarter of 2020 was
$1.6 billion.
Combined adjusted EBITDA was $195.2
million for the second quarter of 2020, compared to
$159.4 million for the same period in
2019. On a year-to-date basis, combined adjusted EBITDA totaled
$408.5 million for 2020, compared to
$292.7 million on a year-to-date
basis for 2019.
|
|
Segment Financial
Tables (in thousands)
|
|
Three Months Ended
June 27, 2020
|
Feed
Ingredients
|
Food
Ingredients
|
Fuel
Ingredients
|
Corporate
|
Total
|
|
|
|
|
|
|
Net Sales
|
$
503,690
|
$
278,934
|
$
66,049
|
$
-
|
$
848,673
|
Cost of sales and
operating expenses
|
367,902
|
220,159
|
44,286
|
-
|
632,347
|
Gross
Margin
|
$
135,788
|
$
58,775
|
$
21,763
|
$
-
|
$
216,326
|
|
|
|
|
|
|
Loss/(gain) on sale
of assets
|
76
|
(48)
|
(1)
|
-
|
27
|
Selling, general and
administrative expenses
|
50,484
|
22,564
|
3,953
|
13,192
|
90,193
|
Depreciation and
amortization
|
52,683
|
19,972
|
7,980
|
2,675
|
83,310
|
Equity in net income
of Diamond Green Diesel
|
-
|
-
|
63,492
|
-
|
63,492
|
Segment operating
income/(loss)
|
$
32,545
|
$
16,287
|
$
73,323
|
$ (15,867)
|
$
106,288
|
Equity in net income
of unconsolidated subsidiaries
|
$
692
|
$
-
|
$
-
|
$
-
|
$
692
|
Segment
Income/(loss)
|
$
33,237
|
$
16,287
|
$
73,323
|
$ (15,867)
|
$
106,980
|
|
|
|
|
|
|
Segment
EBITDA
|
$
85,228
|
$
36,259
|
$
17,811
|
$
(13,192)
|
$
126,106
|
DGD adjusted EBITDA
(Darling's Share)
|
$
-
|
$
-
|
$
69,108
|
$
-
|
$
69,108
|
Combined adjusted
EBITDA
|
$
85,228
|
$
36,259
|
$
86,919
|
$
(13,192)
|
$
195,214
|
|
|
|
|
|
|
Three Months Ended
June 29, 2019
|
Feed
Ingredients
|
Food
Ingredients
|
Fuel
Ingredients
|
Corporate
|
Total
|
|
|
|
|
|
|
Net Sales
|
$
487,447
|
$
274,835
|
$
65,042
|
$
-
|
$
827,324
|
Cost of sales and
operating expenses
|
376,955
|
214,444
|
53,317
|
-
|
644,716
|
Gross
Margin
|
$
110,492
|
$
60,391
|
$
11,725
|
$
-
|
$
182,608
|
|
|
|
|
|
|
Gain on sale of
assets
|
(524)
|
(13,379)
|
(23)
|
-
|
(13,926)
|
Selling, general and
administrative expenses
|
46,465
|
23,431
|
425
|
10,696
|
81,017
|
Depreciation and
amortization
|
48,720
|
19,861
|
8,362
|
2,543
|
79,486
|
Equity in net income
of Diamond Green Diesel
|
-
|
-
|
38,093
|
-
|
38,093
|
Segment operating
income/(loss)
|
$
15,831
|
$
30,478
|
$
41,054
|
$ (13,239)
|
$
74,124
|
Equity in net income
of unconsolidated subsidiaries
|
$
82
|
$
-
|
$
-
|
$
-
|
$
82
|
Segment
income/(loss)
|
$
15,913
|
$
30,478
|
$
41,054
|
$ (13,239)
|
$
74,206
|
|
|
|
|
|
|
Segment
EBITDA
|
$
64,551
|
$
50,339
|
$
11,323
|
$
(10,696)
|
$
115,517
|
DGD adjusted EBITDA
(Darling's Share)
|
$
-
|
$
-
|
$
43,894
|
$
-
|
$
43,894
|
Combined adjusted
EBITDA
|
$
64,551
|
$
50,339
|
$
55,217
|
$
(10,696)
|
$
159,411
|
|
|
|
|
|
|
|
Segment Financial
Tables (in thousands) continued
|
|
Six Months Ended
June 27, 2020
|
Feed
Ingredients
|
Food
Ingredients
|
Fuel
Ingredients
|
Corporate
|
Total
|
|
|
|
|
|
|
Net Sales
|
$
1,016,315
|
$
549,228
|
$
135,972
|
$
-
|
$
1,701,515
|
Cost of sales and
operating expenses
|
756,355
|
425,589
|
97,311
|
-
|
1,279,255
|
Gross
Margin
|
$
259,960
|
$
123,639
|
$
38,661
|
$
-
|
$
422,260
|
|
|
|
|
|
|
Loss/(gain) on sale
of assets
|
126
|
(46)
|
8
|
-
|
88
|
Selling, general and
administrative expenses
|
104,431
|
48,040
|
5,607
|
28,308
|
186,386
|
Depreciation and
amortization
|
106,204
|
40,277
|
16,072
|
5,428
|
167,981
|
Equity in net income
of Diamond Green Diesel
|
-
|
-
|
161,312
|
-
|
161,312
|
Segment operating
income/(loss)
|
$
49,199
|
$
35,368
|
$
178,286
|
$ (33,736)
|
$
229,117
|
Equity in net income
of unconsolidated subsidiaries
|
$
1,561
|
$
-
|
$
-
|
$
-
|
$
1,561
|
Segment
income/(loss)
|
$
50,760
|
$
35,368
|
$
178,286
|
$ (33,736)
|
$
230,678
|
|
|
|
|
|
|
Segment
EBITDA
|
$
155,403
|
$
75,645
|
$
33,046
|
$
(28,308)
|
$
235,786
|
DGD adjusted EBITDA
(Darling's Share)
|
$
-
|
$
-
|
$
172,742
|
$
-
|
$
172,742
|
Combined adjusted
EBITDA
|
$
155,403
|
$
75,645
|
$
205,788
|
$
(28,308)
|
$
408,528
|
|
|
|
|
|
|
Six Months Ended
June 29, 2019
|
Feed
Ingredients
|
Food
Ingredients
|
Fuel
Ingredients
|
Corporate
|
Total
|
|
|
|
|
|
|
Net Sales
|
$
983,266
|
$
553,999
|
$
125,163
|
$
-
|
$
1,662,428
|
Cost of sales and
operating expenses
|
763,814
|
428,448
|
103,367
|
-
|
1,295,629
|
Gross
Margin
|
$
219,452
|
$
125,551
|
$
21,796
|
$
-
|
$
366,799
|
|
|
|
|
|
|
Loss/(gain) on sale
of assets
|
(4,914)
|
(13,265)
|
3
|
-
|
(18,176)
|
Selling, general and
administrative expenses
|
95,296
|
45,318
|
(329)
|
25,735
|
166,020
|
Depreciation and
amortization
|
98,089
|
39,372
|
16,160
|
5,029
|
158,650
|
Equity in net income
of Diamond Green Diesel
|
-
|
-
|
62,370
|
-
|
62,370
|
Segment operating
income/(loss)
|
$
30,981
|
$
54,126
|
$
68,332
|
$ (30,764)
|
$
122,675
|
Equity in net loss of
unconsolidated subsidiaries
|
$
(422)
|
$
-
|
$
-
|
$
-
|
$
(422)
|
Segment
income/(loss)
|
$
30,559
|
$
54,126
|
$
68,332
|
$ (30,764)
|
$
122,253
|
|
|
|
|
|
|
Segment
EBITDA
|
$
129,070
|
$
93,498
|
$
22,122
|
$
(25,735)
|
$
218,955
|
DGD adjusted EBITDA
(Darling's Share)
|
$
-
|
$
-
|
$
73,721
|
$
-
|
73,721
|
Combined adjusted
EBITDA
|
$
129,070
|
$
93,498
|
$
95,843
|
$
(25,735)
|
$
292,676
|
|
|
|
Darling
Ingredients Inc. and Subsidiaries
|
Condensed
Consolidated Balance Sheets
|
June 27, 2020 and
December 28, 2019
|
(in
thousands)
|
|
|
June 27,
|
|
December
28,
|
|
2020
|
|
2019
|
ASSETS
|
(unaudited)
|
|
|
Current
assets:
|
|
|
|
Cash and cash equivalents
|
$
76,185
|
|
$
72,935
|
Restricted cash
|
103
|
|
110
|
Accounts receivable, net
|
375,908
|
|
406,338
|
Inventories
|
394,708
|
|
362,957
|
Prepaid expenses
|
46,003
|
|
46,599
|
Income taxes refundable
|
3,752
|
|
3,317
|
Other current assets
|
34,392
|
|
25,032
|
Total
current assets
|
931,051
|
|
917,288
|
|
|
|
|
Property, plant and
equipment, net
|
1,773,329
|
|
1,802,411
|
Intangible assets,
net
|
485,148
|
|
526,394
|
Goodwill
|
1,217,177
|
|
1,223,291
|
Investment in
unconsolidated subsidiaries
|
729,094
|
|
689,354
|
Operating lease
right-of-use assets
|
134,901
|
|
124,726
|
Other
assets
|
41,651
|
|
47,400
|
Deferred income
taxes
|
14,803
|
|
14,394
|
|
$
5,327,154
|
|
$
5,345,258
|
LIABILITIES AND
STOCKHOLDERS' EQUITY
|
|
|
|
Current
liabilities:
|
|
|
|
Current portion of long-term debt
|
$
42,758
|
|
$
90,996
|
Accounts payable, principally trade
|
197,528
|
|
239,252
|
Income taxes payable
|
16,474
|
|
8,895
|
Current operating lease liabilities
|
39,532
|
|
37,805
|
Accrued expenses
|
310,004
|
|
311,391
|
Total
current liabilities
|
606,296
|
|
688,339
|
Long-term debt, net
of current portion
|
1,553,118
|
|
1,558,429
|
Long-term operating
lease liabilities
|
99,482
|
|
91,424
|
Other noncurrent
liabilities
|
109,046
|
|
115,785
|
Deferred income
taxes
|
260,858
|
|
247,931
|
Total
liabilities
|
2,628,800
|
|
2,701,908
|
Commitments and
contingencies
|
|
|
|
Total Darling's
stockholders' equity
|
2,633,360
|
|
2,565,819
|
Noncontrolling
interests
|
64,994
|
|
77,531
|
Total
stockholders' equity
|
$
2,698,354
|
|
$
2,643,350
|
|
$
5,327,154
|
|
$
5,345,258
|
|
|
|
Darling
Ingredients Inc. and Subsidiaries
|
Consolidated
Operating Results
|
For the
Three-Month and Six-Month Periods Ended June 27, 2020 and
June 29, 2019
|
(in thousands, except
per share data)
|
(unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
|
|
Six Months
Ended
|
|
|
|
|
|
|
$ Change
|
|
|
|
|
|
|
|
$ Change
|
|
|
June 27,
|
|
June 29,
|
|
Favorable
|
|
|
|
June 27,
|
|
June 29,
|
|
Favorable
|
|
|
2020
|
|
2019
|
|
(Unfavorable)
|
|
|
|
2020
|
|
2019
|
|
(Unfavorable)
|
Net sales
|
$ 848,673
|
|
$ 827,324
|
|
$
21,349
|
|
|
|
$
1,701,515
|
|
$
1,662,428
|
|
$
39,087
|
Costs and
expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of sales and
operating expenses
|
632,347
|
|
644,716
|
|
12,369
|
|
|
|
1,279,255
|
|
1,295,629
|
|
16,374
|
|
Loss (gain) on sale
of assets
|
27
|
|
(13,926)
|
|
(13,953)
|
|
|
|
88
|
|
(18,176)
|
|
(18,264)
|
|
Selling, general and
administrative expenses
|
90,193
|
|
81,017
|
|
(9,176)
|
|
|
|
186,386
|
|
166,020
|
|
(20,366)
|
|
Depreciation and
amortization
|
83,310
|
|
79,486
|
|
(3,824)
|
|
|
|
167,981
|
|
158,650
|
|
(9,331)
|
Total costs and
expenses
|
805,877
|
|
791,293
|
|
(14,584)
|
|
|
|
1,633,710
|
|
1,602,123
|
|
(31,587)
|
|
Equity in net income
of Diamond Green Diesel
|
63,492
|
|
38,093
|
|
25,399
|
|
|
|
161,312
|
|
62,370
|
|
98,942
|
Operating
income
|
106,288
|
|
74,124
|
|
32,164
|
|
|
|
229,117
|
|
122,675
|
|
106,442
|
Other
expense:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest
expense
|
(17,920)
|
|
(20,853)
|
|
2,933
|
|
|
|
(37,010)
|
|
(40,729)
|
|
3,719
|
|
Debt extinguishment
costs
|
-
|
|
(12,126)
|
|
12,126
|
|
|
|
-
|
|
(12,126)
|
|
12,126
|
|
Foreign currency
gain/(loss)
|
(1,134)
|
|
(388)
|
|
(746)
|
|
|
|
530
|
|
(1,120)
|
|
1,650
|
|
Other income
(expense), net
|
(1,485)
|
|
(2,019)
|
|
534
|
|
|
|
(3,366)
|
|
(4,544)
|
|
1,178
|
Total other
expense
|
(20,539)
|
|
(35,386)
|
|
14,847
|
|
|
|
(39,846)
|
|
(58,519)
|
|
18,673
|
Equity in net
income/(loss)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
of
unconsolidated subsidiaries
|
692
|
|
82
|
|
610
|
|
|
|
1,561
|
|
(422)
|
|
1,983
|
Income before income
taxes
|
86,441
|
|
38,820
|
|
47,621
|
|
|
|
190,832
|
|
63,734
|
|
127,098
|
Income tax
expense
|
19,946
|
|
7,776
|
|
(12,170)
|
|
|
|
38,246
|
|
13,050
|
|
(25,196)
|
Net income
|
66,495
|
|
31,044
|
|
35,451
|
|
|
|
152,586
|
|
50,684
|
|
101,902
|
Net income
attributable to
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
noncontrolling
interests
|
(1,056)
|
|
(4,786)
|
|
3,730
|
|
|
|
(1,637)
|
|
(6,414)
|
|
4,777
|
Net income
attributable to Darling
|
$
65,439
|
|
$
26,258
|
|
$
39,181
|
|
|
|
$
150,949
|
|
$
44,270
|
|
$
106,679
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic income per
share:
|
$
0.40
|
|
$
0.16
|
|
$
0.24
|
|
|
|
$
0.93
|
|
$
0.27
|
|
$
0.66
|
Diluted income per
share:
|
$
0.39
|
|
$
0.16
|
|
$
0.23
|
|
|
|
$
0.90
|
|
$
0.26
|
|
$
0.64
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of diluted
common shares:
|
165,999
|
|
168,432
|
|
|
|
|
|
166,963
|
|
168,546
|
|
|
|
|
|
Darling
Ingredients Inc. and Subsidiaries
|
Consolidated
Statement of Cash Flows
|
Periods Ended June
27, 2020 and June 29, 2019
|
(in
thousands)
|
(unaudited)
|
|
|
|
|
|
Six Months
Ended
|
|
|
|
|
June 27,
|
|
June 29,
|
Cash flows from
operating activities:
|
2020
|
|
2019
|
|
Net income
|
|
$
152,586
|
|
$
50,684
|
|
Adjustments to
reconcile net income to net cash provided by operating
activities:
|
|
|
|
|
|
Depreciation and
amortization
|
167,981
|
|
158,650
|
|
|
Loss/(gain) on
disposal of property, plant, equipment and other assets
|
88
|
|
(18,176)
|
|
|
Gain on insurance
proceeds from insurance settlement
|
-
|
|
(845)
|
|
|
Deferred
taxes
|
|
13,998
|
|
(3,137)
|
|
|
Increase (decrease)
in long-term pension liability
|
(890)
|
|
1,010
|
|
|
Stock-based
compensation expense
|
15,566
|
|
14,182
|
|
|
Write-off deferred
loan costs
|
-
|
|
4,547
|
|
|
Deferred loan cost
amortization
|
2,835
|
|
3,010
|
|
|
Equity in net income
of Diamond Green Diesel and other unconsolidated
subsidiaries
|
(162,873)
|
|
(61,948)
|
|
|
Distributions of
earnings from Diamond Green Diesel and other unconsolidated
subsidiaries
|
125,891
|
|
17,755
|
|
|
Changes in operating
assets and liabilities, net of effects from
acquisitions:
|
|
|
|
|
|
Accounts
receivable
|
26,077
|
|
27,218
|
|
|
Income taxes
refundable/payable
|
6,119
|
|
7,140
|
|
|
Inventories and prepaid
expenses
|
(35,413)
|
|
(17,374)
|
|
|
Accounts payable and accrued
expenses
|
(33,375)
|
|
(29,849)
|
|
|
Other
|
|
(14,941)
|
|
1,437
|
|
|
|
Net cash provided by
operating activities
|
263,649
|
|
154,304
|
Cash flows from
investing activities:
|
|
|
|
|
Capital
expenditures
|
(123,204)
|
|
(167,871)
|
|
Acquisitions, net of
cash acquired
|
-
|
|
(1,431)
|
|
Investment in
unconsolidated subsidiary
|
-
|
|
(1,000)
|
|
Gross proceeds from
disposal of property, plant and equipment and other
assets
|
1,053
|
|
9,814
|
|
Proceeds from
insurance settlement
|
-
|
|
845
|
|
Payments related to
routes and other intangibles
|
(3,712)
|
|
(3,150)
|
|
|
|
Net cash used by
investing activities
|
(125,863)
|
|
(162,793)
|
Cash flows from
financing activities:
|
|
|
|
|
Proceeds from
long-term debt
|
16,164
|
|
507,722
|
|
Payments on long-term
debt
|
(18,239)
|
|
(526,230)
|
|
Borrowings from
revolving credit facility
|
375,971
|
|
273,485
|
|
Payments on revolving
credit facility
|
(405,800)
|
|
(266,884)
|
|
Net cash overdraft
financing
|
(26,461)
|
|
11,178
|
|
Deferred loan
costs
|
|
-
|
|
(7,003)
|
|
Issuance of common
stock
|
67
|
|
12
|
|
Repurchase of common
stock
|
(55,044)
|
|
-
|
|
Minimum withholding
taxes paid on stock awards
|
(4,863)
|
|
(3,193)
|
|
Acquisition of
noncontrolling interest
|
(8,784)
|
|
-
|
|
Distributions to
noncontrolling interests
|
(987)
|
|
-
|
|
|
|
Net cash used by
financing activities
|
(127,976)
|
|
(10,913)
|
Effect of exchange
rate changes on cash flows
|
(6,567)
|
|
(853)
|
Net
increase/(decrease) in cash, cash equivalents and restricted
cash
|
3,243
|
|
(20,255)
|
Cash, cash
equivalents and restricted cash at beginning of year
|
73,045
|
|
107,369
|
Cash, cash
equivalents and restricted cash at end of period
|
$
76,288
|
|
$
87,114
|
Supplemental
disclosure of cash flow information:
|
|
|
|
|
Accrued capital
expenditures
|
$
23
|
|
$
(7,542)
|
|
Cash paid during the
period for:
|
|
|
|
|
|
Interest, net of
capitalized interest
|
$
35,070
|
|
$
45,196
|
|
|
Income taxes, net of
refunds
|
$
18,030
|
|
$
12,607
|
|
Non-cash operating
activities:
|
|
|
|
|
|
Operating lease right
of use obtained in exchange for new lease liabilities
|
$
28,801
|
|
$
7,492
|
|
Non-cash financing
activities:
|
|
|
|
|
|
Debt issued for
service contract assets
|
$
21
|
|
$
-
|
|
|
|
Diamond Green
Diesel Joint Venture
|
Condensed
Consolidated Balance Sheets
|
June 30, 2020 and
December 31, 2019
|
(in
thousands)
|
|
|
|
|
|
June 30,
|
|
December
31,
|
|
|
|
|
2020
|
|
2019
|
Assets:
|
|
|
(unaudited)
|
|
|
|
Total current
assets
|
|
$
581,334
|
|
$
668,026
|
|
Property, plant and
equipment, net
|
|
894,415
|
|
713,489
|
|
Other
assets
|
|
27,959
|
|
30,710
|
|
|
Total
assets
|
|
$
1,503,708
|
|
$
1,412,225
|
|
|
|
|
|
|
|
Liabilities and
members' equity:
|
|
|
|
|
|
Total current portion
of long term debt
|
|
$
495
|
|
$
341
|
|
Total other current
liabilities
|
|
89,533
|
|
75,802
|
|
Total long term
debt
|
|
8,969
|
|
8,742
|
|
Total other long term
liabilities
|
|
4,023
|
|
4,422
|
|
Total members'
equity
|
|
1,400,688
|
|
1,322,918
|
|
|
Total liabilities and
members' equity
|
|
$
1,503,708
|
|
$
1,412,225
|
|
|
|
Diamond Green
Diesel Joint Venture
|
Operating
Financial Results
|
For the
Three-Month and Six-Month Periods Ended June 30, 2020 and June 30,
2019
|
(in
thousands)
|
(unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
|
Six Months
Ended
|
|
|
|
|
|
|
|
$ Change
|
|
|
|
|
|
|
$ Change
|
|
|
|
June 30,
|
|
June 30,
|
|
Favorable
|
|
|
June 30,
|
|
June 30,
|
|
Favorable
|
Revenues:
|
2020
|
|
2019
|
|
(Unfavorable)
|
|
|
2020
|
|
2019
|
|
(Unfavorable)
|
|
Operating
revenues
|
$
295,826
|
|
$
294,811
|
|
$
1,015
|
|
|
$
654,441
|
|
$
597,529
|
|
$
56,912
|
Expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total costs and
expenses less
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
depreciation,
amortization and accretion expense
|
157,611
|
|
207,024
|
|
49,413
|
|
|
308,958
|
|
450,087
|
|
141,129
|
|
Depreciation,
amortization and
|
11,114
|
|
11,914
|
|
800
|
|
|
22,888
|
|
23,332
|
|
444
|
|
|
accretion
expense
|
|
|
|
|
|
|
|
|
|
|
|
|
Total costs and
expenses
|
168,725
|
|
218,938
|
|
50,213
|
|
|
331,846
|
|
473,419
|
|
141,573
|
|
Operating
income
|
127,101
|
|
75,873
|
|
51,228
|
|
|
322,595
|
|
124,110
|
|
198,485
|
Other
income
|
200
|
|
634
|
|
(434)
|
|
|
661
|
|
1,275
|
|
(614)
|
|
|
Interest and debt
expense, net
|
(317)
|
|
(321)
|
|
4
|
|
|
(632)
|
|
(645)
|
|
13
|
|
|
Net
income
|
$
126,984
|
|
$
76,186
|
|
$
50,798
|
|
|
$
322,624
|
|
$
124,740
|
|
$
197,884
|
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
|
For the Three-Month
and Six-Month Periods Ended June 27, 2020 and June 29,
2019
|
|
|
|
Three Months
Ended
|
|
|
Six Months
Ended
|
Adjusted
EBITDA
|
June 27,
|
|
June 29,
|
|
|
June 27,
|
|
June 29,
|
(U.S. dollars in
thousands)
|
2020
|
|
2019
|
|
|
2020
|
|
2019
|
|
|
|
|
|
|
|
|
|
|
Net income
attributable to Darling
|
$
65,439
|
|
$
26,258
|
|
|
$
150,949
|
|
$
44,270
|
Depreciation and
amortization
|
83,310
|
|
79,486
|
|
|
167,981
|
|
158,650
|
Interest
expense
|
17,920
|
|
20,853
|
|
|
37,010
|
|
40,729
|
Income tax
expense
|
19,946
|
|
7,776
|
|
|
38,246
|
|
13,050
|
Foreign currency
loss/(gain)
|
1,134
|
|
388
|
|
|
(530)
|
|
1,120
|
Other expense,
net
|
1,485
|
|
2,019
|
|
|
3,366
|
|
4,544
|
Debt extinguishment
costs
|
-
|
|
12,126
|
|
|
-
|
|
12,126
|
Equity in net
(income) of Diamond Green Diesel
|
(63,492)
|
|
(38,093)
|
|
|
(161,312)
|
|
(62,370)
|
Equity in net
(income)/loss of unconsolidated subsidiaries
|
(692)
|
|
(82)
|
|
|
(1,561)
|
|
422
|
Net income
attributable to noncontrolling interests
|
1,056
|
|
4,786
|
|
|
1,637
|
|
6,414
|
Adjusted EBITDA (Non-GAAP)
|
$
126,106
|
|
$
115,517
|
|
|
$
235,786
|
|
$
218,955
|
Foreign currency
exchange impact
|
1,951
|
(1)
|
-
|
|
|
4,109
|
(2)
|
-
|
Pro forma Adjusted EBITDA to Foreign Currency (Non-GAAP)
|
$
128,057
|
|
$
115,517
|
|
|
$
239,895
|
|
$
218,955
|
DGD Joint Venture
Adjusted EBITDA (Darling's Share)
|
$
69,108
|
|
$
43,894
|
|
|
$
172,742
|
|
$
73,721
|
|
|
|
|
|
|
|
|
|
|
Darling plus
Darling's share of DGD Joint Venture Adjusted
EBITDA
|
$
195,214
|
|
$
159,411
|
|
|
$
408,528
|
|
$
292,676
|
|
|
|
|
|
|
|
|
|
|
(1) The average
rate assumption used in this calculation was the actual fiscal
average rate for the three months ended June 27, 2020 of €1.00:USD$1.10 and
CAD$1.00:USD$0.72, as compared to the average rate for the three
months ended June 29, 2019 of
€1.00:USD$1.12 and CAD$1.00:USD$0.75,
respectively.
|
|
|
|
|
|
|
(2) The average
rate assumption used in this calculation was the actual fiscal
average rate for the six months ended June 27, 2020 of €1.00:USD$1.10 and
CAD$1.00:USD$0.73, as compared to the average rate for the six
months ended June 29, 2019 of
€1.00:USD$1.13 and CAD$1.00:USD$0.75,
respectively.
|
For the three and six months ended June
29, 2019, Adjusted EBITDA included a gain on the sale of
assets of approximately $13.1
million.
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 collagen, 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 2020 financial results at 9:00 am Eastern Time (8:00
am Central Time) on Thursday, August
6, 2020. 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 10146331. 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 13, 2020,
by dialing 1-877-344-7529 (U.S. callers), 1-855-669-9658
(Canada) and 1-412-317-0088
(international callers). The access code for the replay is
10146331. 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 27, 2020. 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
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 United 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 outbreak of African Swine Fever ("ASF") in China and elsewhere; the occurrence of
pandemics, epidemics or disease outbreaks, such as the current
COVID-19 outbreak; 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,
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, 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 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 release 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:
|
Jim Stark, Vice
President, Investor Relations
|
Email :
james.stark@darlingii.com
|
5601 MacArthur Blvd.,
Irving, Texas 75038
|
Phone :
972-281-4823
|
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SOURCE Darling Ingredients Inc.