First Quarter 2023
- Net income of $185.8 million, or
$1.14 per GAAP diluted share
- Net sales of $1.8 billion
- Combined adjusted EBITDA of $418.4
million
- Global ingredients business EBITDA of $289.1 million
- Repurchased $43.8 million of
common stock
IRVING,
Texas, May 9, 2023 /PRNewswire/ -- Darling
Ingredients Inc. (NYSE: DAR) today reported net income of
$185.8 million, or $1.14 per diluted share for first quarter of
2023, compared to net income of $188.1
million, or $1.14 per diluted
share, for first quarter of 2022. The company also reported net
sales of $1.8 billion for the first
quarter of 2023, compared with net sales of $1.4 billion for the same period a year ago.
Combined adjusted EBITDA for the first quarter 2023 was
$418.4 million, compared to
$330.7 million for the same period in
2022.
"Darling Ingredients is off to a very solid start in 2023. Raw
material volumes are in line with expectations, our global collagen
and gelatin business remains robust and Diamond Green Diesel is expected to gain
tremendous momentum in second quarter as lower fat prices will
boost renewable diesel margins on expected higher volumes," said
Randall C. Stuewe, Darling
Ingredients Chairman and Chief Executive Officer. "The power of the
vertically integrated business we have built will become evident
over the next few quarters. Darling's low-carbon feedstocks,
coupled with Diamond Green Diesel
best-in-class margins, will illustrate the margin potential for
renewable diesel in a lower priced feedstock environment while
still delivering strong core ingredients earnings supplemented by
the recently completed Gelnex acquisition."
Under the company's share repurchase program, the company
repurchased approximately 773,000 shares of common stock during the
first quarter of 2023 for a total of approximately $43.8 million, and has approximately $330.7 million remaining under the share
repurchase program.
As of April 1, 2023, Darling
Ingredients had $132.6 million in
cash and cash equivalents, and $866.1
million available under its committed revolving credit
agreement. Total debt outstanding as of April 1, 2023, was $4.7
billion. The leverage ratio as measured by the company's
bank covenant was 3.19x as of April 1,
2023. Capital expenditures were $111.3 million for the first quarter 2023.
Company guidance for fiscal year 2023 is $1.875 billion combined adjusted EBITDA.
Segment Financial Tables (in thousands,
unaudited)
|
Feed
Ingredients
|
Food
Ingredients
|
Fuel
Ingredients
|
Corporate
|
Total
|
Three Months Ended
April 1, 2023
|
|
|
|
|
|
Net sales
|
$ 1,237,494
|
$
396,392
|
$
157,286
|
$
-
|
$ 1,791,172
|
Cost of sales and
operating expenses
|
$
950,072
|
$
290,115
|
$
126,786
|
$
-
|
$ 1,366,973
|
Gross
Margin
|
$
287,422
|
$
106,277
|
$
30,500
|
$
-
|
$
424,199
|
|
|
|
|
|
|
Gross Margin
%
|
23.2 %
|
26.8 %
|
19.4 %
|
-
|
23.7 %
|
|
|
|
|
|
|
Selling, general and
administrative expenses
|
$
74,691
|
$
33,122
|
$
6,192
|
$
21,461
|
$
135,466
|
Acquisition and
integration costs
|
$
-
|
$
-
|
$
-
|
$
7,022
|
$
7,022
|
Loss (gain) on sale of
assets
|
$
(342)
|
$
(21)
|
$
36
|
$
-
|
$
(327)
|
Depreciation and
amortization
|
$
90,320
|
$
14,473
|
$
8,393
|
$
2,820
|
$
116,006
|
Restructuring and asset
impairment charges
|
$
92
|
$
4,432
|
$
-
|
$
-
|
$
4,524
|
Equity in net income of
Diamond Green Diesel
|
$
-
|
$
-
|
$
94,337
|
$
-
|
$
94,337
|
Segment Operating
Income/(Loss)
|
$
122,661
|
$
54,271
|
$
110,216
|
$
(31,303)
|
$
255,845
|
|
|
|
|
|
|
Equity in Net Income of
Unconsolidated Subs
|
$
120
|
$
-
|
$
-
|
$
-
|
$
120
|
Segment
Income/(Loss)
|
$
122,781
|
$
54,271
|
$
110,216
|
$
(31,303)
|
$
255,965
|
|
|
|
|
|
|
Segment
EBITDA
|
$
213,073
|
$
73,176
|
$
24,272
|
$
(21,461)
|
$
289,060
|
DGD Adjusted EBITDA
(Darling's Share)
|
$
-
|
$
-
|
$
129,323
|
$
-
|
$
129,323
|
Combined Adjusted
EBITDA
|
$
213,073
|
$
73,176
|
$
153,595
|
$
(21,461)
|
$
418,383
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Feed
Ingredients
|
Food
Ingredients
|
Fuel
Ingredients
|
Corporate
|
Total
|
Three Months Ended
April 2, 2022
|
|
|
|
|
|
Net Sales
|
$
879,438
|
$
354,814
|
$
132,082
|
$
-
|
$ 1,366,334
|
Cost of sales and
operating expenses
|
$
645,523
|
$
270,312
|
$
104,742
|
$
-
|
$ 1,020,577
|
Gross
Margin
|
$
233,915
|
$
84,502
|
$
27,340
|
$
-
|
$
345,757
|
|
|
|
|
|
|
Gross Margin
%
|
26.6 %
|
23.8 %
|
20.7 %
|
-
|
25.3 %
|
|
|
|
|
|
|
Selling, general and
administrative expenses
|
$
56,209
|
$
26,844
|
$
3,920
|
$
15,059
|
$
102,032
|
Acquisition and
integration costs
|
$
-
|
$
-
|
$
-
|
$
3,773
|
$
3,773
|
Gain on sale of
assets
|
$
(341)
|
$
(9)
|
$
(39)
|
$
-
|
$
(389)
|
Depreciation and
amortization
|
$
54,350
|
$
15,450
|
$
6,674
|
$
2,772
|
$
79,246
|
Equity in net income of
Diamond Green Diesel
|
$
-
|
$
-
|
$
71,804
|
$
-
|
$
71,804
|
Segment Operating
Income/(Loss)
|
$
123,697
|
$
42,217
|
$
88,589
|
$
(21,604)
|
$
232,899
|
|
|
|
|
|
|
Equity in Net Income of
Unconsolidated Subs
|
$
1,360
|
$
-
|
$
-
|
$
-
|
$
1,360
|
Segment
Income/(Loss)
|
$
125,057
|
$
42,217
|
$
88,589
|
$
(21,604)
|
$
234,259
|
|
|
|
|
|
|
Segment
EBITDA
|
$
178,047
|
$
57,667
|
$
23,459
|
$
(15,059)
|
$
244,114
|
DGD Adjusted EBITDA
(Darling's Share)
|
$
-
|
$
-
|
$
86,560
|
$
-
|
$
86,560
|
Combined Adjusted
EBITDA
|
$
178,047
|
$
57,667
|
$
110,019
|
$
(15,059)
|
$
330,674
|
|
|
|
|
|
|
Segment EBITDA consists of segment income (loss), less equity in
net income/loss from unconsolidated subsidiaries, less equity in
net income of Diamond Green Diesel,
plus depreciation and amortization, plus acquisition and
integration costs, plus restructuring and asset impairment charges,
plus Darling's share of DGD Adjusted EBITDA.
Darling Ingredients
Inc. and Subsidiaries
|
Consolidated Balance
Sheets
|
April 1, 2023 and
December 31, 2022
|
(in
thousands)
|
|
|
|
|
|
|
|
|
|
|
April 1,
2023
|
December 31,
2022
|
ASSETS
|
|
(unaudited)
|
|
Current
assets:
|
|
|
|
Cash and cash
equivalents
|
|
$
132,572
|
$
127,016
|
Restricted
cash
|
|
299
|
315
|
Accounts receivable,
net
|
|
750,990
|
676,573
|
Inventories
|
|
828,789
|
673,621
|
Prepaid
expenses
|
|
108,719
|
85,665
|
Income taxes
refundable
|
|
19,903
|
18,583
|
Other current
assets
|
|
61,234
|
56,324
|
Total current
assets
|
|
1,902,506
|
1,638,097
|
|
|
|
|
Property, plant and
equipment, net
|
|
2,712,823
|
2,462,082
|
Intangible assets,
net
|
|
1,091,137
|
865,122
|
Goodwill
|
|
2,587,587
|
1,970,377
|
Investment in
unconsolidated subsidiaries
|
|
2,125,126
|
1,926,395
|
Operating lease
right-of-use assets
|
|
189,026
|
186,141
|
Other assets
|
|
231,960
|
136,268
|
Deferred income
taxes
|
|
20,967
|
17,888
|
|
|
$
10,861,132
|
$
9,202,370
|
LIABILITIES AND
STOCKHOLDERS' EQUITY
|
|
|
|
Current
liabilities:
|
|
|
|
Current portion of
long-term debt
|
|
$
118,804
|
$
69,846
|
Accounts payable,
principally trade
|
|
433,845
|
472,491
|
Income taxes
payable
|
|
38,425
|
44,851
|
Current operating lease
liabilities
|
|
45,356
|
49,232
|
Accrued
Expenses
|
|
462,594
|
432,023
|
Total current
liabilities
|
|
1,099,024
|
1,068,443
|
Long-term debt, net of
current portion
|
|
4,558,632
|
3,314,969
|
Long-term operating
lease liabilities
|
|
144,604
|
141,703
|
Other non-current
liabilities
|
|
414,542
|
298,933
|
Deferred income
taxes
|
|
522,731
|
481,832
|
Total
liabilities
|
|
6,739,533
|
5,305,880
|
Commitments and
contingencies
|
|
|
|
Stockholders'
equity:
|
|
|
|
Common stock, $0.01 par
value;
|
|
1,742
|
1,736
|
Additional paid-in
capital
|
|
1,673,632
|
1,660,084
|
Treasury stock, at
cost
|
|
(614,961)
|
(554,451)
|
Accumulated other
comprehensive loss
|
|
(299,208)
|
(383,874)
|
Retained
earnings
|
|
3,271,329
|
3,085,528
|
Total Darling's
stockholders' equity
|
|
4,032,534
|
3,809,023
|
Noncontrolling
interests
|
|
89,065
|
87,467
|
Total Stockholders'
Equity
|
|
4,121,599
|
3,896,490
|
|
|
$
10,861,132
|
$
9,202,370
|
|
|
|
|
Darling Ingredients Inc. and
Subsidiaries
|
Consolidated Operating Results
|
For the Three Months Ended April 1, 2023 and April 2,
2022
|
(in thousands, except
per share data)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
|
|
(unaudited)
|
|
$ Change
|
|
|
|
April
1,
|
|
April
2,
|
|
Favorable
|
|
|
|
2023
|
|
2022
|
|
(Unfavorable)
|
|
Net sales
|
$
1,791,172
|
|
$
1,366,334
|
|
$
424,838
|
|
Costs and
expenses:
|
|
|
|
|
|
|
|
Cost of sales and
operating expenses
|
1,366,973
|
|
1,020,577
|
|
(346,396)
|
|
|
Gain on sale of
assets
|
(327)
|
|
(389)
|
|
(62)
|
|
|
Selling, general and
administrative expenses
|
135,466
|
|
102,032
|
|
(33,434)
|
|
|
Restructuring and asset
impairment charges
|
4,524
|
|
-
|
|
(4,524)
|
|
|
Acquisition and
integration costs
|
7,022
|
|
3,773
|
|
(3,249)
|
|
|
Depreciation and
amortization
|
116,006
|
|
79,246
|
|
(36,760)
|
|
Total costs and
expenses
|
1,629,664
|
|
1,205,239
|
|
(424,425)
|
|
|
Equity in net income of
Diamond Green Diesel
|
94,337
|
|
71,804
|
|
22,533
|
|
Operating
income
|
255,845
|
|
232,899
|
|
22,946
|
|
Other
expense:
|
|
|
|
|
|
|
|
Interest
expense
|
(50,299)
|
|
(15,603)
|
|
(34,696)
|
|
|
Foreign currency
gain/(loss)
|
5,004
|
|
(1,100)
|
|
6,104
|
|
|
Other income/(expense),
net
|
6,159
|
|
(742)
|
|
6,901
|
|
Total other
expense
|
(39,136)
|
|
(17,445)
|
|
(21,691)
|
|
Equity in net
income
|
|
|
|
|
|
|
|
of other unconsolidated
subsidiaries
|
120
|
|
1,360
|
|
(1,240)
|
|
Income before income
taxes
|
216,829
|
|
216,814
|
|
15
|
|
Income tax
expense
|
26,974
|
|
26,083
|
|
(891)
|
|
Net income
|
189,855
|
|
190,731
|
|
(876)
|
|
Net income attributable
to
|
|
|
|
|
|
|
|
noncontrolling
interests
|
(4,054)
|
|
(2,678)
|
|
(1,376)
|
|
Net income attributable
to Darling
|
$
185,801
|
|
$
188,053
|
|
$
(2,252)
|
|
|
|
|
|
|
|
|
|
Basic income per
share:
|
$
1.16
|
|
$
1.17
|
|
$
(0.01)
|
|
Diluted income per
share:
|
$
1.14
|
|
$
1.14
|
|
$
-
|
|
|
|
|
|
|
|
|
|
Number of diluted
common shares:
|
162,817
|
|
164,601
|
|
|
|
Darling Ingredients
Inc. and Subsidiaries
|
Consolidated
Statement of Cash Flows
|
For the Three Months
Ended April 1, 2023 and April 2, 2022
|
(in
thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
(unaudited)
|
|
|
|
|
|
April
1,
|
|
April 2,
|
|
Cash flows from
operating activities:
|
2023
|
|
2022
|
|
|
Net income
|
|
$ 189,855
|
|
$
190,731
|
|
|
Adjustments to
reconcile net income to net cash provided by operating
activities:
|
|
|
|
|
|
|
Depreciation and
amortization
|
116,006
|
|
79,246
|
|
|
|
Gain on sale of
assets
|
|
(327)
|
|
(389)
|
|
|
|
Gain on insurance
proceeds from insurance settlements
|
(8,836)
|
|
-
|
|
|
|
Deferred
taxes
|
|
14,956
|
|
23,826
|
|
|
|
Decrease in long-term
pension liability
|
236
|
|
(269)
|
|
|
|
Stock-based
compensation expense
|
11,853
|
|
6,323
|
|
|
|
Deferred loan cost
amortization
|
1,621
|
|
1,131
|
|
|
|
Equity in net income of
Diamond Green Diesel and other unconsolidated
subsidiaries
|
(94,457)
|
|
(73,164)
|
|
|
|
Changes in operating
assets and liabilities, net of effects from
acquisitions:
|
|
|
|
|
|
|
Accounts
receivable
|
|
14,733
|
|
(41,317)
|
|
|
|
Income taxes
refundable/payable
|
(13,030)
|
|
(31,224)
|
|
|
|
Inventories and prepaid
expenses
|
(25,726)
|
|
(42,891)
|
|
|
|
Accounts payable and accrued
expenses
|
(35,254)
|
|
58,964
|
|
|
|
Other
|
|
16,796
|
|
(18,775)
|
|
|
|
|
Net cash provided by
operating activities
|
188,426
|
|
152,192
|
|
Cash flows from
investing activities:
|
|
|
|
|
|
Capital
expenditures
|
|
(111,327)
|
|
(71,618)
|
|
|
Acquisitions, net of
cash acquired
|
(1,079,083)
|
|
(59,003)
|
|
|
Investment in Diamond
Green Diesel
|
(75,000)
|
|
(164,750)
|
|
|
Gross proceeds from
sale of property, plant and equipment and other assets
|
1,302
|
|
974
|
|
|
Proceeds from insurance
settlement
|
8,836
|
|
-
|
|
|
Payments related to
routes and other intangibles
|
(1,517)
|
|
(100)
|
|
|
|
|
Net cash used in
investing activities
|
(1,256,789)
|
|
(294,497)
|
|
Cash flows from
financing activities:
|
|
|
|
|
|
Proceeds from long-term
debt
|
807,363
|
|
9,657
|
|
|
Payments on long-term
debt
|
|
(19,259)
|
|
(12,128)
|
|
|
Borrowings from
revolving credit facility
|
687,452
|
|
369,902
|
|
|
Payments on revolving
credit facility
|
(243,829)
|
|
(134,000)
|
|
|
Net cash overdraft
financing
|
|
148
|
|
9,830
|
|
|
Deferred loan
costs
|
|
(31)
|
|
(1,810)
|
|
|
Repurchase of common
stock
|
(43,794)
|
|
(17,189)
|
|
|
Minimum withholding
taxes paid on stock awards
|
(15,297)
|
|
(43,351)
|
|
|
|
|
Net cash provided by
financing activities
|
1,172,753
|
|
180,911
|
|
Effect of exchange rate
changes on cash flows
|
7,281
|
|
(8,118)
|
|
Net increase in cash,
cash equivalents and restricted cash
|
111,671
|
|
30,488
|
|
Cash, cash equivalents
and restricted cash at beginning of period
|
150,168
|
|
69,072
|
|
Cash, cash equivalents
and restricted cash at end of period
|
$ 261,839
|
|
$ 99,560
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diamond Green Diesel Joint
Venture
|
Consolidated Balance Sheets
|
March 31, 2023 and December 31,
2022
|
(in
thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
March
31,
|
|
December 31,
|
|
|
|
|
|
2023
|
|
2022
|
|
Assets:
|
|
|
|
(unaudited)
|
|
|
Total current
assets
|
|
$
1,485,372
|
|
$
1,304,805
|
|
|
Property, plant and
equipment, net
|
|
3,840,139
|
|
3,866,854
|
|
|
Other assets
|
|
80,310
|
|
61,665
|
|
|
|
Total assets
|
|
$
5,405,821
|
|
$
5,233,324
|
|
|
|
|
|
|
|
|
|
Liabilities and
members' equity:
|
|
|
|
|
|
|
Total current portion
of long term debt
|
|
$
217,282
|
|
$
217,066
|
|
|
Total other current
liabilities
|
|
298,893
|
|
515,023
|
|
|
Total long term
debt
|
|
767,802
|
|
774,783
|
|
|
Total other long term
liabilities
|
|
17,103
|
|
17,249
|
|
|
Total members'
equity
|
|
4,104,741
|
|
3,709,203
|
|
|
|
Total liabilities and
members' equity
|
|
$
5,405,821
|
|
$
5,233,324
|
|
Diamond Green Diesel Joint
Venture
|
Operating Financial Results
|
For the Three Months Ended March 31, 2023 and March
31, 2022
|
(in
thousands)
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
|
|
|
(unaudited)
|
|
$ Change
|
|
|
|
|
March 31,
|
|
March 31,
|
|
Favorable
|
|
|
|
|
2023
|
|
2022
|
|
(Unfavorable)
|
|
Revenues:
|
|
|
|
|
|
|
|
|
|
Operating
revenues
|
$
1,680,050
|
|
$
980,692
|
|
$
699,358
|
|
Expenses:
|
|
|
|
|
|
|
|
|
Total costs and
expenses less
|
|
|
|
|
|
|
|
|
depreciation,
amortization and accretion expense
|
1,421,404
|
|
807,572
|
|
(613,832)
|
|
|
Depreciation,
amortization and
|
58,607
|
|
26,492
|
|
(32,115)
|
|
|
|
accretion
expense
|
|
|
|
|
|
|
Total costs and
expenses
|
1,480,011
|
|
834,064
|
|
(645,947)
|
|
|
Operating
income
|
200,039
|
|
146,628
|
|
53,411
|
|
Other
income/(expense)
|
2,041
|
|
(11)
|
|
2,052
|
|
Interest and debt
expense, net
|
(13,406)
|
|
(3,009)
|
|
(10,397)
|
|
|
Net income
|
$
188,674
|
|
$
143,608
|
|
$
45,066
|
|
Darling Ingredients Inc. reports Adjusted EBITDA results, which
is a Non-GAAP financial measure, as a compliment 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 to
Foreign Currency
|
For the Three Months
Ended April 1, 2023 and April 2, 2022
|
(in
thousands)
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
|
|
|
(unaudited)
|
|
|
Adjusted
EBITDA
|
April 1,
|
|
April 2,
|
|
|
|
|
2023
|
|
2022
|
|
|
|
|
|
|
|
|
|
Net income attributable
to Darling
|
$
185,801
|
|
$
188,053
|
|
|
Depreciation and
amortization
|
116,006
|
|
79,246
|
|
|
Interest
expense
|
50,299
|
|
15,603
|
|
|
Income tax
expense
|
26,974
|
|
26,083
|
|
|
Restructuring and asset
impairment charges
|
4,524
|
|
-
|
|
|
Acquisition and
integration costs
|
7,022
|
|
3,773
|
|
|
Foreign currency (gain)
loss
|
(5,004)
|
|
1,100
|
|
|
Other (income)/expense,
net
|
(6,159)
|
|
742
|
|
|
Equity in net income of
Diamond Green Diesel
|
(94,337)
|
|
(71,804)
|
|
|
Equity in net income of
other unconsolidated subsidiaries
|
(120)
|
|
(1,360)
|
|
|
Net income attributable
to noncontrolling interests
|
4,054
|
|
2,678
|
|
|
|
Adjusted EBITDA
(Non-GAAP)
|
$
289,060
|
|
$
244,114
|
|
|
Foreign currency
exchange impact
|
7,329
|
(1)
|
|
|
|
|
Pro forma
Adjusted EBITDA to Foreign Currency (Non-GAAP)
|
$
296,389
|
|
$
244,114
|
|
|
DGD Joint Venture
Adjusted EBITDA (Darling's Share)
|
$
129,323
|
|
$
86,560
|
|
|
|
|
|
|
|
|
|
Darling plus Darling's
share of DGD Joint Venture Adjusted EBITDA
|
$
418,383
|
|
$
330,674
|
|
|
|
|
|
|
|
|
|
(1) The average
rates for the three months ended April 1, 2023 were €1.00:$1.07,
R$1.00:$0.19
|
|
|
|
|
|
and
C$1.00:$0.74 as compared to the average rate for the three months
ended April 2, 2022
|
|
|
|
|
|
of
€1.00:$1.12, R$1.00:$0.19 and C$1.00:$0.79,
respectively.
|
|
|
|
|
|
|
|
|
|
|
|
|
About Darling Ingredients
Darling Ingredients Inc. (NYSE: DAR) is the largest publicly
traded company turning edible by-products and food waste into
sustainable products and a leading producer of renewable energy.
Recognized as a sustainability leader, the company operates more
than 260 facilities in 17 countries and repurposes approximately
15% of the world's meat industry waste streams into value-added
products, such as green energy, renewable diesel, collagen,
fertilizer, animal proteins and meals, and pet food ingredients. To
learn more, visit darlingii.com. Follow us on LinkedIn.
Darling Ingredients Inc. will host a conference call to discuss
the Company's first quarter 2023 financial results at 9 a.m. Eastern Time (8
a.m. Central Time) on Wednesday, May
10, 2023. To join the call as a participant,
please register in advance to receive a confirmation
email with the dial-in number and PIN for immediate access
on May 10, 2023.
To access the call as a listener, please register for the
audio-only webcast or call (844) 868-8847 (United States) or (412) 317-6593
(International) and ask for "the Darling Ingredients call."
A replay of the call will be available beginning two hours after
the call concludes through May 17, 2023. To access the replay,
please dial (877) 344-7529 (United
States), (855) 669-9658 (Canada) or (412) 317-0088 (International) and
reference passcode 9523067.
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. It 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 expense, taxes, depreciation and amortization) is not
calculated identically by all companies, the presentation in this
report may not be comparable to EBITDA or Adjusted EBITDA
presentations disclosed by other companies. Adjusted EBITDA is
calculated below and represents for any relevant period, net
income/(loss) plus depreciation and amortization, restructuring,
acquisition and integration costs, goodwill and long-lived asset
impairment, interest expense, income tax provision, other
income/(expense) and equity in net (income)/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.
Pro forma Adjusted EBITDA to Foreign Currency is not a
recognized accounting measurement under GAAP. The Company evaluates
the impact of foreign currency on its adjusted EBITDA. DGD Joint
Venture Adjusted EBITDA (Darling's share) is not reflected in the
Adjusted EBITDA or the Pro forma Adjusted EBITDA to Foreign
Currency (Non-GAAP).
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, 6%
Notes, 5.25% Notes and 3.625% Notes that were outstanding at
April 1, 2023. However, the amounts
shown below for Adjusted EBITDA differ from the amounts calculated
under similarly titled definitions in the Company's Senior Secured
Credit Facilities, 6% Notes, 5.25% Notes and 3.625% Notes, as those
definitions permit further adjustments to reflect certain other
nonrecurring costs, non-cash charges and cash dividends from the
DGD Joint Venture. Additionally, the Company evaluates the impact
of foreign exchange on operating cash flow, which is defined as
segment operating income (loss) plus depreciation and
amortization.
DGD Joint Venture Adjusted EBITDA (Darling's share) is not a
recognized accounting measure under GAAP; it should not be
considered as an alternative to net income or equity in net income
of Diamond Green Diesel, 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. The Company calculates DGD Joint Venture
Adjusted EBITDA (Darling's share) by taking DGD's operating income
plus DGD's depreciation, amortization and accretion expense and
then multiplying by 50% to get Darling's share of DGD's EBITDA.
Information reconciling forward-looking combined adjusted EBITDA
to net income is unavailable to the Company without unreasonable
effort. The Company is not able to provide reconciliations of
combined adjusted EBITDA to net income because certain items
required for such reconciliations are outside of the Company's
control and/or cannot be reasonably predicted, such as the impact
of volatile commodity prices on the Company's operations, impact of
foreign currency exchange fluctuations, depreciation and
amortization and the provision for income taxes. Preparation of
such reconciliations for Darling Ingredients Inc. and the Company's
joint venture, Diamond Green Diesel,
would require a forward-looking balance sheet, statement of
operations and statement of cash flows, prepared in accordance with
GAAP for each entity, and such forward-looking financial statements
are unavailable to the Company without unreasonable effort. The
Company provides guidance for its combined adjusted EBITDA outlook
that it believes will be achieved; however, it cannot accurately
predict all the components of the combined adjusted EBITDA
calculation.
Cautionary Statements Regarding Forward-Looking Information:
This media release contains includes "forward-looking"
statements that are subject to risks and uncertainties that could
cause actual results 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. All statements other than
statements of historical facts included in this release are 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. Important factors that could cause actual results to
differ materially from the Company's expectations include: 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 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 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, a decline in margins
on the products produced by the DGD Joint Venture and issues
relating to the announced SAF upgrade 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; tax changes, such
as the introduction of a global minimum tax; difficulties or a
significant disruption in the Company's 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, including
the Russia-Ukraine war; 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, inflation rates, climate conditions,
currency exchange fluctuations, general performance of the U.S. and
global economies, disturbances in world financial, credit,
commodities and stock markets, such as the recent turmoil in the
world banking 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
report 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. For more
detailed discussion of these factors and other risks and
uncertainties regarding the Company, its business and the
industries in which it operates, see the Company's filings with the
SEC, including the Risk Factors discussion in Item 1A of Part I of
the Company's Annual Report on Form 10-K for the fiscal year ended
December 31, 2022. The Company
cautions readers that all forward-looking statements speak only as
of the date made, and the Company undertakes no obligation to
update any forward-looking statements, whether as a result of
changes in circumstances, new events or otherwise.
Darling Ingredients Contacts
Investors:
Suann Guthrie
Senior VP, Investor Relations, Sustainability &
Communications
(469) 214-8202;
suann.guthrie@darlingii.com
Media:
Jillian Fleming
Director, Global Communications
(972) 541-7115; jillian.fleming@darlingii.com
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SOURCE Darling Ingredients Inc.