Darling Ingredients Inc 10-Q for FY2023 Q2

Darling Ingredients Inc. (DAR)

10-Q 2023-08-08 For: 2023-07-01

Added on April 04, 2026

About this 10-Q

Darling Ingredients Inc filed this 10-Q on August 8, 2023, covering the quarter ended July 1, 2023 (FY2023 Q2).

Headline figures

Quarter ended July 1, 2023, as reported in this filing, compared with the same period a year earlier where the filing states it.

Revenue: $1.76B; up 6.5% from $1.65B a year earlier
Net income: $252.38M; up 24.9% from net income of $202M a year earlier
Diluted EPS: $1.55; up 26.0% from $1.23 a year earlier

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	(Mark One)
☒	QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d) OF THE
	SECURITIES EXCHANGE ACT OF 1934
	For the quarterly period ended	July 1, 2023
	OR

☐	TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d) OF THE
	SECURITIES EXCHANGE ACT OF 1934
	For the transition period from _______ to _______


Delaware									36-2495346
(State or other jurisdiction									(I.R.S. Employer
of incorporation or organization)									Identification Number)


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common stock $0.01 par value per share	DAR	New York Stock Exchange	(“NYSE”)


		Page No.
	PART I: FINANCIAL INFORMATION

Item 1.	FINANCIAL STATEMENTS
	Consolidated Balance Sheets	3
	July 1, 2023 (unaudited) and December 31, 2022

	Consolidated Statements of Operations (unaudited)	4
	Three and Six Months Ended July 1, 2023 and July 2, 2022

	Consolidated Statements of Comprehensive Income/(Loss) (unaudited)	5
	Three and Six Months Ended July 1, 2023 and July 2, 2022

	Consolidated Statements of Stockholders' Equity (unaudited)	6
	Six Months Ended July 1, 2023 and July 2, 2022

	Consolidated Statements of Cash Flows (unaudited)	8
	Six Months Ended July 1, 2023 and July 2, 2022

	Notes to Consolidated Financial Statements (unaudited)	9

Item 2.	MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	38

Item 3.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	60

Item 4.	CONTROLS AND PROCEDURES	62


	PART II: OTHER INFORMATION

Item 1.	LEGAL PROCEEDINGS	64

Item 1A.	RISK FACTORS	64

Item 2.	UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS	64

Item 5.	OTHER INFORMATION	65

Item 6.	EXHIBITS	65

	Signatures	66


	July 1, 2023		December 31, 2022
ASSETS	(unaudited)
Current assets:
Cash and cash equivalents	$	111,541	$	127,016
Restricted cash	299		315
Accounts receivable, less allowance for bad debts of $12,912 at July 1, 2023 and $11,889 at December 31, 2022	746,638		676,573
Inventories	825,130		673,621
Prepaid expenses	116,540		85,665
Income taxes refundable	22,621		18,583
Other current assets	53,188		56,324
Total current assets	1,875,957		1,638,097
Property, plant and equipment, less accumulated depreciation of $2,219,926 at July 1, 2023 and $2,054,928 at December 31, 2022	2,774,526		2,462,082
Intangible assets, less accumulated amortization of $685,911 at July 1, 2023 and $623,101 at December 31, 2022	1,074,604		865,122
Goodwill	2,566,169		1,970,377
Investment in unconsolidated subsidiaries	2,214,312		1,926,395
Operating lease right-of-use assets	196,554		186,141
Other assets	246,032		136,268
Deferred income taxes	25,085		17,888
	$	10,973,239	$	9,202,370
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Current portion of long-term debt	$	88,085	$	69,846
Accounts payable, principally trade	427,066		472,491
Income taxes payable	29,821		44,851
Current operating lease liabilities	48,381		49,232
Accrued expenses	420,196		432,023
Total current liabilities	1,013,549		1,068,443
Long-term debt, net of current portion	4,458,797		3,314,969
Long-term operating lease liabilities	149,165		141,703
Other non-current liabilities	339,270		298,933
Deferred income taxes	561,895		481,832
Total liabilities	6,522,676		5,305,880
Commitments and contingencies
Stockholders’ equity:
Common stock, $0.01 par value; 250,000,000 shares authorized; 174,317,233 and 173,593,099 shares issued at July 1, 2023 and December 31, 2022, respectively	1,743		1,736
Additional paid-in capital	1,680,188		1,660,084
Treasury stock, at cost; 14,827,327 and 13,623,503 shares at July 1, 2023 and December 31, 2022, respectively	(624,852)		(554,451)
Accumulated other comprehensive loss	(212,561)		(383,874)
Retained earnings	3,523,712		3,085,528
Total Darling's stockholders’ equity	4,368,230		3,809,023
Noncontrolling interests	82,333		87,467
Total stockholders' equity	4,450,563		3,896,490
	$	10,973,239	$	9,202,370


	Three Months Ended				Six Months Ended
	July 1, 2023		July 2, 2022		July 1, 2023		July 2, 2022
Net sales	$	1,757,621	$	1,650,188	$	3,548,793	$	3,016,522
Costs and expenses:
Cost of sales and operating expenses	1,359,702		1,231,507		2,726,675		2,252,084
Loss/(gain) on sale of assets	259		(1,055)		(68)		(1,444)
Selling, general and administrative expenses	136,751		107,776		272,217		209,808
Restructuring and asset impairment charges	896		8,557		5,420		8,557
Acquisition and integration costs	1,706		5,358		8,728		9,131
Change in fair value of contingent consideration	(7,499)		—		(7,499)		—
Depreciation and amortization	122,086		93,113		238,092		172,359
Total costs and expenses	1,613,901		1,445,256		3,243,565		2,650,495
Equity in net income of Diamond Green Diesel	212,964		73,680		307,301		145,484
Operating income	356,684		278,612		612,529		511,511

Other expense:
Interest expense	(70,193)		(24,008)		(120,492)		(39,611)

Foreign currency gain/(loss)	2,490		(4,412)		7,494		(5,512)

Other income/(expense), net	5,079		(302)		11,238		(1,044)
Total other expense	(62,624)		(28,722)		(101,760)		(46,167)

Equity in net income of other unconsolidated subsidiaries	1,849		2,272		1,969		3,632
Income before income taxes	295,909		252,162		512,738		468,976

Income tax expense	40,712		47,333		67,686		73,416

Net income	255,197		204,829		445,052		395,560

Net income attributable to noncontrolling interests	(2,814)		(2,833)		(6,868)		(5,511)

Net income attributable to Darling	$	252,383	$	201,996	$	438,184	$	390,049

Basic income per share	$	1.58	$	1.25	$	2.74	$	2.41
Diluted income per share	$	1.55	$	1.23	$	2.69	$	2.37


	Common Stock
	Number of Outstanding Shares	$0.01 par Value		Additional Paid-In Capital		Treasury Stock		Accumulated Other Comprehensive Loss		Retained Earnings		Stockholders' equity attributable to Darling		Non-controlling Interests		Total Stockholders' Equity
Balances at December 31, 2022	159,969,596	$	1,736	$	1,660,084	$	(554,451)	$	(383,874)	$	3,085,528	$	3,809,023	$	87,467	$	3,896,490
Net income	—	—		—		—		—		185,801		185,801		4,054		189,855

Deductions to noncontrolling interests	—	—		—		—		—		—		—		(3,441)		(3,441)
Addition to noncontrolling interests	—	—		—		—		—		—		—		1,643		1,643
Pension adjustments, net of tax	—	—		—		—		327		—		327		—		327
Commodities derivative adjustments, net of tax	—	—		—		—		21,124		—		21,124		—		21,124
Interest rate swap adjustments, net of tax	—	—		—		—		720		—		720		—		720
Foreign exchange derivative adjustments, net of tax	—	—		—		—		5,620		—		5,620		—		5,620
Foreign currency translation adjustments	—	—		—		—		56,875		—		56,875		(658)		56,217
Issuance of non-vested stock	—	—		47		—		—		—		47		—		47
Stock-based compensation	—	—		11,806		—		—		—		11,806		—		11,806
Treasury stock	(1,039,462)	—		—		(60,510)		—		—		(60,510)		—		(60,510)
Issuance of common stock	633,972	6		1,695		—		—		—		1,701		—		1,701
Balances at April 1, 2023	159,564,106	$	1,742	$	1,673,632	$	(614,961)	$	(299,208)	$	3,271,329	$	4,032,534	$	89,065	$	4,121,599
Net income	—	—		—		—		—		252,383		252,383		2,814		255,197
Distribution of noncontrolling interest earnings	—	—		—		—		—		—		—		(9,036)		(9,036)

Addition to noncontrolling interests	—	—		—		—		—		—		—		2,003		2,003
Pension adjustments, net of tax	—	—		—		—		327		—		327		—		327
Commodities derivative adjustments, net of tax	—	—		—		—		(17,662)		—		(17,662)		—		(17,662)
Interest rate swap adjustments, net of tax	—	—		—		—		9,606		—		9,606		—		9,606
Foreign exchange derivative adjustments, net of tax	—	—		—		—		9,271		—		9,271		—		9,271
Foreign currency translation adjustments	—	—		—		—		85,105		—		85,105		(2,513)		82,592
Issuance of non-vested stock	—	—		46		—		—		—		46		—		46
Stock-based compensation	—	—		6,186		—		—		—		6,186		—		6,186
Treasury stock	(164,362)	—		—		(9,891)		—		—		(9,891)		—		(9,891)
Issuance of common stock	90,162	1		324		—		—		—		325		—		325
Balances at July 1, 2023	159,489,906	$	1,743	$	1,680,188	$	(624,852)	$	(212,561)	$	3,523,712	$	4,368,230	$	82,333	$	4,450,563


	July 1, 2023		July 2, 2022
Cash flows from operating activities:
Net Income	$	445,052	$	395,560
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	238,092		172,359
Gain on sale of assets	(68)		(1,444)

Asset impairment	—		8,557
Change in fair value of contingent consideration	(7,499)		—
Gain on insurance proceeds from insurance settlements	(13,836)		—
Deferred taxes	34,202		35,674
Increase/(decrease) in long-term pension liability	480		(547)
Stock-based compensation expense	18,085		13,369


Deferred loan cost amortization	3,138		2,207
Equity in net income of Diamond Green Diesel and other unconsolidated subsidiaries	(309,270)		(149,116)
Distributions of earnings from Diamond Green Diesel and other unconsolidated subsidiaries	103,794		1,631
Changes in operating assets and liabilities, net of effects from acquisitions:
Accounts receivable	24,397		(47,046)
Income taxes refundable/payable	(24,551)		(28,834)
Inventories and prepaid expenses	(22,301)		(95,199)
Accounts payable and accrued expenses	(94,080)		72,351
Other	10,065		(18,487)
Net cash provided by operating activities	405,700		361,035
Cash flows from investing activities:
Capital expenditures	(234,307)		(151,478)
Acquisitions, net of cash acquired	(1,079,083)		(1,235,537)
Investment in Diamond Green Diesel	(75,000)		(239,750)
Investment in other unconsolidated subsidiaries	(27)		—

Loan repayment from Diamond Green Diesel	25,000		—

Gross proceeds from disposal of property, plant and equipment and other assets	2,733		2,161
Proceeds from insurance settlement	13,836		—
Payments related to routes and other intangibles	(1,517)		(179)
Net cash used in investing activities	(1,348,365)		(1,624,783)
Cash flows from financing activities:
Proceeds from long-term debt	807,956		1,663,612
Payments on long-term debt	(83,616)		(23,600)
Borrowings from revolving credit facility	1,415,916		777,902
Payments on revolving credit facility	(1,063,516)		(937,921)
Net cash overdraft financing	16,673		12
Deferred loan costs	(9)		(10,707)

Repurchase of common stock	(52,941)		(65,887)
Minimum withholding taxes paid on stock awards	(15,558)		(45,836)

Distributions to noncontrolling interests	(4,824)		—
Net cash provided by financing activities	1,020,081		1,357,575
Effect of exchange rate changes on cash	16,535		(16,059)
Net increase in cash, cash equivalents and restricted cash	93,951		77,768
Cash, cash equivalents and restricted cash at beginning of period	150,168		69,072
Cash, cash equivalents and restricted cash at end of period	$	244,119	$	146,840


	July 1, 2023		December 31, 2022
Cash and cash equivalents	$	111,541	$	127,016
Restricted cash	299		315
Restricted cash included in other long-term assets	132,279		22,837
Total cash, cash equivalents and restricted cash shown in the statement of cash flows	$	244,119	$	150,168


	Net Income per Common Share (in thousands, except per share data)
	Three Months Ended
			July 1, 2023					July 2, 2022
	Income		Shares	Per Share		Income		Shares	Per Share
Basic:
Net Income attributable to Darling	$	252,383	159,810	$	1.58	$	201,996	161,632	$	1.25
Diluted:
Effect of dilutive securities:
Add: Option shares in the money and dilutive effect of non-vested stock awards			3,308					3,781
Less: Pro forma treasury shares			(748)					(668)
Diluted:
Net income attributable to Darling	$	252,383	162,370	$	1.55	$	201,996	164,745	$	1.23


(in thousands)	June 30, 2023		December 31, 2022
Assets:
Total current assets	$	1,623,715	$	1,304,805
Property, plant and equipment, net	3,828,093		3,866,854
Other assets	88,305		61,665
Total assets	$	5,540,113	$	5,233,324
Liabilities and members' equity:
Total current portion of long term debt	$	102,935	$	217,066
Total other current liabilities	378,589		515,023
Total long term debt	760,700		774,783
Total other long term liabilities	16,568		17,249
Total members' equity	4,281,321		3,709,203
Total liabilities and members' equity	$	5,540,113	$	5,233,324


Accounts receivable	$	81,000
Inventories	141,066
Other current assets	3,502
Property, plant and equipment	127,769
Identifiable intangible assets	283,951
Goodwill	630,669
Operating lease right-of-use assets	134
Other assets	2,703
Deferred tax asset	857
Accounts payable	(15,059)
Current operating lease liabilities	(26)
Current portion of long-term debt	(44,692)
Accrued expenses	(18,888)
Long-term debt, net of current portion	(1,407)
Long-term operating lease liabilities	(123)
Deferred tax liability	(8,310)
Other noncurrent liabilities	(19)
Purchase price, net of cash acquired	$	1,183,127
Less hold-back	104,145
Cash paid for acquisition, net of cash acquired	$	1,078,982


Accounts receivable	$	76,640
Inventories	43,058
Other current assets	33,327
Property, plant and equipment	224,384
Identifiable intangible assets	119,477
Goodwill (1)	301,937
Operating lease right-of-use assets	583
Other assets	62,388
Deferred tax asset	2,315
Accounts payable	(15,920)
Current portion of long-term debt	(18,680)
Accrued expenses	(38,708)
Long-term debt, net of current portion	(41,926)
Long-term operating lease liabilities	(583)
Deferred tax liability	(95,653)
Other noncurrent liabilities	(503)
Non-controlling interests	(21,704)
Purchase price, net of cash acquired	$	630,432
Less hold-back	21,705
Less contingent consideration (1)	82,984
Cash paid for acquisition, net of cash acquired	$	525,743


Accounts receivable	$	68,558
Inventories	58,246
Other current assets	13,825
Property, plant and equipment	409,405
Identifiable intangible assets	389,200
Goodwill	358,298
Operating lease right-of-use assets	16,380
Other assets	14,164
Deferred tax asset	1,075
Accounts payable	(47,615)
Current portion of long-term debt	(2,043)
Current operating lease liabilities	(4,779)
Accrued expenses	(66,034)
Long-term debt, net of current portion	(5,995)
Long-term operating lease liabilities	(11,601)
Other noncurrent liabilities	(19,436)
Purchase price, net of cash acquired	$	1,171,648


	July 1, 2023		December 31, 2022
Finished product	$	480,025	$	384,289
Work in process	138,034		100,790
Raw material	68,387		69,164
Supplies and other	138,684		119,378
	$	825,130	$	673,621


	July 1, 2023		December 31, 2022
Indefinite Lived Intangible Assets:
Trade names	$	52,203	$	51,639
	52,203		51,639
Finite Lived Intangible Assets:
Routes	753,442		781,286
Permits	560,416		557,083
Non-compete agreements	695		695
Trade names	77,400		76,549
Royalty, consulting, land use rights and leasehold	20,382		20,971
Other intangible assets	295,977		—
	1,708,312		1,436,584
Accumulated Amortization:
Routes	(221,628)		(196,108)
Permits	(389,854)		(368,005)
Non-compete agreements	(617)		(563)
Trade names	(57,999)		(53,486)
Royalty, consulting, land use rights and leasehold	(5,242)		(4,939)
Other intangible assets	(10,571)		—
	(685,911)		(623,101)
Total Intangible assets, less accumulated amortization	$	1,074,604	$	865,122


	Feed Ingredients		Food Ingredients		Fuel Ingredients		Total
Balance at December 31, 2022
Goodwill	$	1,556,855	$	320,807	$	143,379	$	2,021,041
Accumulated impairment losses	(15,914)		(3,170)		(31,580)		(50,664)
	1,540,941		317,637		111,799		1,970,377
Goodwill acquired during year	3,247		626,202		—		629,449


Measurement period adjustments	(21,271)		4,467		(66)		(16,870)
Out-of-period correction (1)	(85,144)		—		—		(85,144)
Foreign currency translation	34,190		31,628		2,539		68,357
Balance at July 1, 2023
Goodwill	1,487,877		983,104		145,852		2,616,833
Accumulated impairment losses	(15,914)		(3,170)		(31,580)		(50,664)
	$	1,471,963	$	979,934	$	114,272	$	2,566,169


	July 1, 2023		December 31, 2022
Amended Credit Agreement:
Revolving Credit Facility ($212.9 million and $32.0 million denominated in € at July 1, 2023 and December 31, 2022, respectively)	$	491,921	$	135,028

Term A-1 facility	400,000		400,000
Less unamortized deferred loan costs	(635)		(722)
Carrying value Term A-1 facility	399,365		399,278

Term A-2 facility	487,500		493,750
Less unamortized deferred loan costs	(902)		(1,034)
Carrying value Term A-2 facility	486,598		492,716

Term A-3 facility	300,000		—
Less unamortized deferred loan costs	(964)		—
Carrying value Term A-3 facility	299,036		—

Term A-4 facility	496,875		—
Less unamortized deferred loan costs	(1,168)		—
Carrying value Term A-4 facility	495,707		—

Term Loan B	200,000		200,000
Less unamortized deferred loan costs	(981)		(1,302)
Carrying value Term Loan B	199,019		198,698

6% Senior Notes due 2030 with effective interest of 6.12%	1,000,000		1,000,000
Less unamortized deferred loan costs net of bond premium	(6,841)		(7,228)
Carrying value 6% Senior Notes due 2030	993,159		992,772

5.25% Senior Notes due 2027 with effective interest of 5.47%	500,000		500,000
Less unamortized deferred loan costs	(3,694)		(4,127)
Carrying value 5.25% Senior Notes due 2027	496,306		495,873

3.625% Senior Notes due 2026 - Denominated in euro with effective interest of 3.83%	562,329		549,814
Less unamortized deferred loan costs - Denominated in euro	(3,274)		(3,728)
Carrying value 3.625% Senior Notes due 2026	559,055		546,086

Other Notes and Obligations	126,716		124,364
	4,546,882		3,384,815
Less Current Maturities	88,085		69,846


	Three Months Ended
	Before-Tax				Tax (Expense)				Net-of-Tax
	Amount				or Benefit				Amount
	July 1, 2023		July 2, 2022		July 1, 2023		July 2, 2022		July 1, 2023		July 2, 2022
Defined benefit pension plans

Amortization of prior service (cost)/benefit	$	—	$	6	$	—	$	(2)	$	—	$	4
Amortization of actuarial loss	434		570		(107)		(146)		327		424

Total defined benefit pension plans	434		576		(107)		(148)		327		428




Soybean meal option derivatives
Reclassified to earnings	(166)		124		42		(31)		(124)		93
Activity recognized in other comprehensive income/(loss)	(163)		(144)		41		37		(122)		(107)
Total soybean meal option derivatives	(329)		(20)		83		6		(246)		(14)
Corn option derivatives
Reclassified to earnings	(653)		7,238		165		(1,839)		(488)		5,399
Activity recognized in other comprehensive income/(loss)	597		726		(150)		(184)		447		542
Total corn option derivatives	(56)		7,964		15		(2,023)		(41)		5,941
Heating oil derivatives
Activity recognized in other comprehensive income/(loss)	(23,292)		24,847		5,917		(6,312)		(17,375)		18,535
Total heating oil derivatives	(23,292)		24,847		5,917		(6,312)		(17,375)		18,535
Interest swap derivatives
Reclassified to earnings	(990)		—		251		—		(739)		—
Activity recognized in other comprehensive income/(loss)	13,867		—		(3,522)		—		10,345		—
Total interest swap derivatives	12,877		—		(3,271)		—		9,606		—
Foreign exchange derivatives
Reclassified to earnings	(7,459)		(6,280)		2,539		2,055		(4,920)		(4,225)
Activity recognized in other comprehensive income/(loss)	21,515		(25,091)		(7,324)		8,597		14,191		(16,494)
Total foreign exchange derivatives	14,056		(31,371)		(4,785)		10,652		9,271		(20,719)

Foreign currency translation	82,696		(95,562)		(104)		1,707		82,592		(93,855)

Other comprehensive income/(loss)	$	86,386	$	(93,566)	$	(2,252)	$	3,882	$	84,134	$	(89,684)


	July 1, 2023		December 31, 2022
Compensation and benefits	$	134,677	$	145,048

Accrued operating expenses	101,476		97,128

Other accrued expense	184,043		189,847
	$	420,196	$	432,023


	July 1, 2023		December 31, 2022
Accrued pension liability	$	22,656	$	22,538
Reserve for self-insurance, litigation, environmental and tax matters	87,915		76,685
Long-term acquisition hold-backs	134,969		26,113
Long-term contingent consideration (1)	87,329		169,903
Other	6,401		3,694
	$	339,270	$	298,933


	Six Months Ended July 1, 2023
	Foreign				Defined
	Currency		Derivative		Benefit
	Translation		Instruments		Pension Plans		Total
Accumulated Other Comprehensive loss December 31, 2022, attributable to Darling, net of tax	$	(374,368)	$	7,176	$	(16,682)	$	(383,874)
Other comprehensive loss before reclassifications	138,809		37,653		—		176,462
Amounts reclassified from accumulated other comprehensive loss	—		(8,974)		654		(8,320)

Net current-period other comprehensive income	138,809		28,679		654		168,142
Noncontrolling interest	(3,171)		—		—		(3,171)
Accumulated Other Comprehensive loss July 1, 2023, attributable to Darling, net of tax	$	(232,388)	$	35,855	$	(16,028)	$	(212,561)


	Pension Benefits				Pension Benefits
	Three Months Ended				Six Months Ended
	July 1, 2023		July 2, 2022		July 1, 2023		July 2, 2022
Service cost	$	683	$	798	$	1,358	$	1,626
Interest cost	1,961		1,312		3,917		2,632
Expected return on plan assets	(1,805)		(2,156)		(3,608)		(4,321)
Amortization of prior service cost	—		6		—		11
Amortization of actuarial loss	434		570		868		1,140


Net pension cost	$	1,273	$	530	$	2,535	$	1,088


Functional Currency		Contract Currency
Type	Amount	Type	Amount
Brazilian real	36,462	Euro	6,778
Brazilian real	3,073,819	U.S. dollar	742,803

Euro	26,862	U.S. dollar	29,329
Euro	33,017	Polish zloty	147,500
Euro	10,790	Japanese yen	1,661,510
Euro	20,614	Chinese renminbi	158,683
Euro	18,250	Australian dollar	29,691
Euro	4,842	British pound	4,162
Euro	35	Canadian dollar	50

Polish zloty	1,380	U.S. dollar	339
Polish zloty	31,858	Euro	7,170
British pound	69	Euro	81

Japanese yen	371,817	U.S. dollar	2,716
U.S. dollar	1,094	Japanese yen	156,000
U.S. dollar	562,340	Euro	519,182


		Loss or (Gain) Recognized in Income on Derivatives Not Designated as Hedges
		Three Months Ended				Six Months Ended
Derivatives not designated as hedging instruments	Location	July 1, 2023		July 2, 2022		July 1, 2023		July 2, 2022

Foreign exchange	Foreign currency loss/(gain)	$	(2,036)	$	35,025	$	(1,236)	$	42,492
Foreign exchange	Net sales	(306)		732		(977)		890
Foreign exchange	Cost of sales and operating expenses	(103)		(503)		(120)		(758)
Foreign exchange	Selling, general and administrative expenses	(2,673)		3,937		(4,058)		(2,587)
Corn options and futures	Net sales	1,111		850		1,382		(1,286)
Corn options and futures	Cost of sales and operating expenses	(2,191)		(2,384)		(2,608)		3,169


Heating Oil swaps and options	Selling, general and administrative expenses	—		—		49		—
Soybean meal	Net sales	525		—		308		—

Total		$	(5,673)	$	37,657	$	(7,260)	$	41,920


			Fair Value Measurements at July 1, 2023 Using
			Quoted Prices in Active Markets for Identical Assets		Significant Other Observable Inputs		Significant Unobservable Inputs
(In thousands of dollars)	Total		(Level 1)		(Level 2)		(Level 3)
Assets
Derivative instruments	$	56,124	$	—	$	56,124	$	—
Total Assets	$	56,124	$	—	$	56,124	$	—

Liabilities
Derivative instruments	$	14,155	$	—	$	14,155	$	—
Contingent consideration	87,329		—		—		87,329
6% Senior notes	974,300		—		974,300		—
5.25% Senior notes	482,500		—		482,500		—
3.625% Senior notes	548,045		—		548,045		—
Term loan A-1	399,000		—		399,000		—
Term loan A-2	485,063		—		485,063		—
Term loan A-3	298,500		—		298,500		—
Term loan A-4	494,391		—		494,391		—
Term loan B	200,000		—		200,000		—
Revolver debt	484,542		—		484,542		—
Total Liabilities	$	4,467,825	$	—	$	4,380,496	$	87,329


			Fair Value Measurements at December 31, 2022 Using
			Quoted Prices in Active Markets for Identical Assets		Significant Other Observable Inputs		Significant Unobservable Inputs
(In thousands of dollars)	Total		(Level 1)		(Level 2)		(Level 3)
Assets
Derivative instruments	$	20,324	$	—	$	20,324	$	—
Total Assets	$	20,324	$	—	$	20,324	$	—

Liabilities
Derivative instruments	$	5,406	$	—	$	5,406	$	—
Contingent consideration	169,903		—		—		169,903
6% Senior notes	977,200		—		977,200		—
5.25% Senior notes	485,700		—		485,700		—
3.625% Senior notes	533,155		—		533,155		—
Term loan A-1	398,000		—		398,000		—
Term loan A-2	488,813		—		488,813		—
Term loan B	199,000		—		199,000		—
Revolver debt	133,003		—		133,003		—
Total Liabilities	$	3,390,180	$	—	$	3,220,277	$	169,903


(in thousands of dollars)	Contingent Consideration
Balance as of December 31, 2022	$	169,903
Out-of-period correction (1)	(85,144)
Total included in earnings during period	(5,443)
Exchange rate changes	8,013
Balance as of July 1, 2023	$	87,329


	Three Months Ended July 1, 2023
	Feed Ingredients		Food Ingredients		Fuel Ingredients		Total
Geographic Area
North America	$	946,100	$	101,388	$	—	$	1,047,488
Europe	96,064		227,193		139,867		463,124
China	6,160		71,414		—		77,574
South America	90,293		54,493		—		144,786
Other	3,044		21,605		—		24,649
Net sales	$	1,141,661	$	476,093	$	139,867	$	1,757,621

Major product types
Fats	$	405,287	$	38,207	$	—	$	443,494
Used cooking oil	146,275		—		—		146,275
Proteins	435,956		—		—		435,956
Bakery	67,263		—		—		67,263
Other rendering	70,265		—		—		70,265
Food ingredients	—		412,307		—		412,307
Bioenergy	—		—		139,867		139,867

Other	16,615		25,579		—		42,194
Net sales	$	1,141,661	$	476,093	$	139,867	$	1,757,621


	Three Months Ended July 2, 2022
	Feed Ingredients		Food Ingredients		Fuel Ingredients		Total
Geographic Area
North America	$	1,028,244	$	91,381	$	—	$	1,119,625
Europe	132,247		186,865		110,660		429,772
China	6,932		64,326		—		71,258
South America	—		12,868		—		12,868
Other	2,924		13,741		—		16,665
Net sales	$	1,170,347	$	369,181	$	110,660	$	1,650,188

Major product types
Fats	$	498,914	$	53,178	$	—	$	552,092
Used cooking oil	152,737		—		—		152,737
Proteins	351,125		—		—		351,125
Bakery	89,593		—		—		89,593
Other rendering	64,123		—		—		64,123
Food ingredients	—		280,435		—		280,435
Bioenergy	—		—		110,660		110,660

Other	13,855		35,568		—		49,423
Net sales	$	1,170,347	$	369,181	$	110,660	$	1,650,188


	Six Months Ended July 2, 2022
	Feed Ingredients		Food Ingredients		Fuel Ingredients		Total
Geographic Area
North America	$	1,784,082	$	175,281	$	—	$	1,959,363
Europe	246,710		368,875		242,742		858,327
China	13,568		130,633		—		144,201
South America	—		21,364		—		21,364
Other	5,425		27,842		—		33,267
Net sales	$	2,049,785	$	723,995	$	242,742	$	3,016,522

Major product types
Fats	$	867,308	$	105,442	$	—	$	972,750
Used cooking oil	247,633		—		—		247,633
Proteins	621,312		—		—		621,312
Bakery	168,104		—		—		168,104
Other rendering	121,667		—		—		121,667
Food ingredients	—		550,951		—		550,951
Bioenergy	—		—		242,742		242,742

Other	23,761		67,602		—		91,363
Net sales	$	2,049,785	$	723,995	$	242,742	$	3,016,522


(in thousands, except percentages)	Feed Ingredients			Food Ingredients			Fuel Ingredients			Corporate			Total
Three Months Ended July 1, 2023
Net Sales	$	1,141,661		$	476,093		$	139,867		$	—		$	1,757,621
Cost of sales and operating expenses	876,413			371,095			112,194			—			1,359,702
Gross Margin	265,248			104,998			27,673			—			397,919

Gross Margin %	23.2		%	22.1		%	19.8		%	—		%	22.6		%

Loss/(gain) on sale of assets	322			2			(65)			—			259
Selling, general and administrative expenses	77,406			33,684			4,971			20,690			136,751
Restructuring and asset impairment charges	—			896			—			—			896
Acquisition and integration costs	—			—			—			1,706			1,706
Change in fair value of contingent consideration	(7,499)			—			—			—			(7,499)
Depreciation and amortization	82,575			28,445			8,567			2,499			122,086
Equity in net income of Diamond Green Diesel	—			—			212,964			—			212,964
Segment operating income/(loss)	112,444			41,971			227,164			(24,895)			356,684

Equity in net income of other unconsolidated subsidiaries	1,849			—			—			—			1,849
Segment income/(loss)	114,293			41,971			227,164			(24,895)			358,533


	Three Months Ended
(dollars in thousands)	July 1, 2023		July 2, 2022
Net income attributable to Darling	$	252,383	$	201,996
Depreciation and amortization	122,086		93,113
Interest expense	70,193		24,008
Income tax expense	40,712		47,333
Restructuring and asset impairment charges	896		8,557
Acquisition and integration costs	1,706		5,358
Change in fair value of contingent consideration	(7,499)		—
Foreign currency loss/(gain)	(2,490)		4,412
Other expense/(income), net	(5,079)		302

Equity in net income of Diamond Green Diesel	(212,964)		(73,680)
Equity in net income of other unconsolidated subsidiaries	(1,849)		(2,272)
Net income attributable to non-controlling interests	2,814		2,833
Darling's Adjusted EBITDA	$	260,909	$	311,960

Foreign currency exchange impact (1)	(1,550)		—
Pro forma Adjusted EBITDA to Foreign Currency (Non-GAAP)	$	259,359	$	311,960

DGD Joint Venture Adjusted EBITDA (Darling's Share)	$	247,398	$	90,611

Darling plus Darling's share of DGD Joint Venture Adjusted EBITDA	$	508,307	$	402,571


Senior Notes:
6 % Notes due 2030	$	1,000,000
Less unamortized deferred loan costs net of bond premium	(6,841)
Carrying value of 6% Notes due 2030	$	993,159

5.25 % Notes due 2027	$	500,000
Less unamortized deferred loan costs	(3,694)
Carrying value of 5.25% Notes due 2027	$	496,306

3.625 % Notes due 2026 - Denominated in euros	$	562,329
Less unamortized deferred loan costs	(3,274)
Carrying value of 3.625% Notes due 2026	$	559,055

Amended Credit Agreement:
Term A-1 facility	$	400,000
Less unamortized deferred loan costs	(635)
Carrying value of Term A-1 facility	$	399,365

Term A-2 facility	$	487,500
Less unamortized deferred loan costs	(902)
Carrying value of Term A-2 facility	$	486,598

Term A-3 facility	$	300,000
Less unamortized deferred loan costs	(964)
Carrying value of Term A-3 facility	$	299,036

Term A-4 facility	$	496,875
Less unamortized deferred loan costs	(1,168)
Carrying value of Term A-4 facility	$	495,707

Term Loan B	$	200,000
Less unamortized deferred loan costs	(981)
Carrying value of Term Loan B	$	199,019

Revolving Credit Facility:
Maximum availability	$	1,500,000
Ancillary Facilities	48,253
Borrowings outstanding	491,921
Letters of credit issued	3,871
Availability	$	955,955

Other Debt	$	126,716


Other commercial commitments:
Standby letters of credit	$	3,871
Standby letters of credit (ancillary facility)	25,672
Foreign and domestic bank guarantees	23,871
Total other commercial commitments:	$	53,414


Functional Currency		Contract Currency		Range of	U.S.
Type	Amount	Type	Amount	Hedge rates	Equivalent
Brazilian real	36,462	Euro	6,778	5.24 - 5.76	$	7,567
Brazilian real	3,073,819	U.S. dollar	742,803	3.35 - 6.63	742,803

Euro	26,862	U.S. dollar	29,329	1.08 - 1.11	29,329
Euro	33,017	Polish zloty	147,500	4.45 - 4.50	36,052
Euro	10,790	Japanese yen	1,661,510	146.39 - 156.83	11,781
Euro	20,614	Chinese renminbi	158,683	7.33 - 7.89	22,508
Euro	18,250	Australian dollar	29,691	1.62 - 1.64	19,927
Euro	4,842	British pound	4,162	0.86	5,287
Euro	35	Canadian dollar	50	1.44	38

Polish zloty	1,380	U.S. dollar	339	4.07	339
Polish zloty	31,858	Euro	7,170	4.44 - 4.46	7,816
British pound	69	Euro	81	0.86	88

Japanese yen	371,817	U.S. dollar	2,716	132.67 - 142.51	2,716
U.S. dollar	1,094	Japanese yen	156,000	142.54	1,094
U.S. dollar	562,340	Euro	519,182	1.08	562,340




					$	1,449,685


ISSUER PURCHASES OF EQUITY SECURITIES
Period	Total Number of Shares Purchased (1)		Average Price Paid per Share (2)	Total Number of Shares Purchased as part of Publicly Announced Plans or Programs (4)	Maximum Number (or Approximate Dollar Value) of Shares that may yet be Purchased Under the Plan or Programs at End of Period.
April 2023:
April 2, 2023 through April 29, 2023	194		58.30	—	$	330,728,221
May 2023:
April 30, 2023 through May 27, 2023	5,650		61.52	—	330,728,221
June 2023:
May 28, 2023 through July 1, 2023	158,518		62.13	153,202	321,584,728
Total	164,362	(3)	61.62	153,202	$	321,584,728


			4.1			Second Supplemental Indenture, dated as of June 20, 2023, by and among Darling Ingredients Inc., the guarantors party thereto from time to time, and Citibank, N.A., London Branch, as trustee (filed herewith).
			4.2			Second Supplemental Indenture, dated as of June 20, 2023, by and among Darling Ingredients Inc., the guarantors party thereto from time to time, and Regions Bank, as trustee (filed herewith).
			4.3			Third Supplemental Indenture, dated as of June 20, 2023, by and among Darling Ingredients Inc., as issuer, the guarantors party thereto from time to time, and Truist Bank, as trustee (filed herewith).
			10.1			Non-Employee Director Compensation Program effective May 2023 (filed herewith).
			31.1			Certification pursuant to Rule 13a-14(a) or Rule 15d-14(a) of the Securities Exchange Act of 1934, of Randall C. Stuewe, the Chief Executive Officer of the Company.
			31.2			Certification pursuant to Rule 13a-14(a) or Rule 15d-14(a) of the Securities Exchange Act of 1934, of Brad Phillips, the Chief Financial Officer of the Company.
			32			Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, of Randall C. Stuewe, the Chief Executive Officer of the Company, and of Brad Phillips, the Chief Financial Officer of the Company.
			101			Interactive Data Files Pursuant to Rule 405 of Regulation S-T: (i) Consolidated Balance Sheets as of July 1, 2023 and December 31, 2022; (ii) Consolidated Statements of Operations for the three and six months ended July 1, 2023 and July 2, 2022; (iii) Consolidated Statements of Comprehensive Income/(Loss) for the three and six months ended July 1, 2023 and July 2, 2022; (iv) Consolidated Statements of Stockholders' Equity for the six months ended July 1, 2023 and July 2, 2022; (v) Consolidated Statements of Cash Flows for the six months ended July 1, 2023 and July 2, 2022; (vi) Notes to the Consolidated Financial Statements.
			104			Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101).


		DARLING INGREDIENTS INC.


Date:	August 8, 2023	By:	/s/ Brad Phillips
			Brad Phillips
			Chief Financial Officer
			(Principal Financial Officer and Duly Authorized Officer)