8-K
DARLING INGREDIENTS INC. (DAR)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
| Date of report (Date of earliest event reported) | May 10, 2022 | | --- | --- || DARLING INGREDIENTS INC. | | --- | | (Exact Name of Registrant as Specified in Charter) | | Delaware | 001-13323 | 36-2495346 | | --- | --- | --- | | (State or Other Jurisdiction<br>of Incorporation) | (Commission<br>File Number) | (IRS Employer<br>Identification No.) |
5601 N. MacArthur Blvd., Irving, Texas 75038
(Address of Principal Executive Offices) (Zip Code)
Registrant’s telephone number, including area code: (972) 717-0300
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
| ☐ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) | | --- | --- || ☐ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) | | --- | --- || ☐ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) | | --- | --- || ☐ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) | | --- | --- |
Securities registered pursuant to Section 12(b) of the Act:
| 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”) |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
| ☐ | Emerging growth company |
|---|
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Item 2.02. Results of Operations and Financial Condition.
On May 10, 2022, Darling Ingredients Inc. (the “Company”) issued a press release announcing financial results for the first quarter ended April 2, 2022. A copy of this press release is attached hereto as Exhibit 99.1.
The Company will hold a conference call and webcast on Wednesday, May 11, 2022 to discuss these financial results. The Company will have a slide presentation available to augment management's formal presentation, which will be accessible via the investor relations section of the Company's website. A copy of this slide presentation is attached hereto as Exhibit 99.2.
The Company is making reference to non-GAAP financial measures in both the press release and the conference call. A reconciliation of these non-GAAP financial measures to the comparable GAAP financial measures is contained in the attached press release.
The information in this Item 2.02, including the exhibits attached hereto, shall not be deemed "filed" for purposes of Section 18 of the Securities Exchange Act of 1934, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, except as shall be expressly set forth by specific reference in such filing.
Item 9.01. Financial Statements and Exhibits.
(d) Exhibits.
| 99.1 | Press Release dated May 10, 2022 (furnished pursuant to Item 2.02). |
|---|---|
| 99.2 | Slide Presentation for May 11, 2022 Earnings Call (furnished pursuant to Item 2.02). |
| 104 | Cover Page Interactive Data File (embedded within Inline XBRL document) |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| DARLING INGREDIENTS INC. | ||
|---|---|---|
| Date: May 10, 2022 | By: | /s/ John F. Sterling |
| John F. Sterling | ||
| Executive Vice President,<br>General Counsel |
3
Document
Exhibit 99.1
Contact: Suann Guthrie
VP, Investor Relations, Sustainability & Communications
(469) 214-8202; Suann.Guthrie@darlingii.com
FOR IMMEDIATE RELEASE
May 10, 2022
Darling Ingredients Inc. Delivers Record Global Ingredients Financial Results in First Quarter 2022
First Quarter 2022
•Net income of $188.1 million, or $1.14 per GAAP diluted share
•Net Sales of $1.37 billion
•Combined adjusted EBITDA of $330.7 million
•Global ingredients business EBITDA of $244.1 million
•Repurchased $17.2 million of stock
IRVING, TEXAS - Darling Ingredients Inc. (NYSE: DAR) today reported net income of $188.1 million, or $1.14 per diluted share for first quarter 2022, compared to net income of $151.8 million, or $0.90 per diluted share, for first quarter 2021. The company also reported net sales of $1.37 billion for the first quarter of 2022, as compared with net sales of $1.0 billion for the same period a year ago.
“Our global ingredients business had a record quarter, earning $244.1 million in EBITDA, driven by strong raw material volumes across the globe, robust finished products prices, including record high fat prices, and growing demand for green energy,” said Randall C. Stuewe, Chairman and Chief Executive Officer of Darling Ingredients Inc. “Adding $86.6 million in EBITDA from Diamond Green Diesel, Darling Ingredients earned $330.7 million in combined adjusted EBITDA for the first quarter of 2022. We kicked off the year with a very strong first quarter and carry tremendous momentum for the rest of the year.”
Darling Ingredients forecasts full year 2022 combined adjusted EBITDA at $1.55-$1.6 billion. The global ingredients business is estimated to exceed $1 billion in EBITDA. Diamond Green Diesel is estimated to produce 750 million gallons of renewable diesel at $1.25 per gallon EBITDA, bringing Darling Ingredients’ share of EBITDA for DGD to $468.8 million.
First quarter capital expenditures totaled approximately $71.6 million. The company also repurchased approximately $17.2 million of stock in the first quarter of 2022. As of April 2, 2022, Darling had $99.5 million in cash and cash equivalents, and $1.1 billion available under its committed revolving credit agreement. Total debt outstanding as of April 2, 2022 was $1.7 billion. The leverage ratio as measured by the company’s bank covenant was 1.69 as of April 2, 2022. On May 2, 2022, the company completed its acquisition of Valley Proteins. The company used borrowings under its senior credit facility to fund the acquisition.
Combined adjusted EBITDA was $330.7 million for the first quarter 2022, compared to $284.8 million for the same period in 2021.
| News Release<br><br>May 10, 2022<br><br>Page 2 |
|---|
Segment Financial Tables (in thousands)
(unaudited)
| Three Months Ended April 2, 2022 | Feed Ingredients | Food Ingredients | Fuel Ingredients | Corporate | Total | |||||
|---|---|---|---|---|---|---|---|---|---|---|
| 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 | |||||
| Gain on sale of assets | (341) | (9) | (39) | — | (389) | |||||
| Selling, general and administrative expenses | 56,209 | 26,844 | 3,920 | 15,059 | 102,032 | |||||
| Acquisition and integration costs | — | — | — | 3,773 | 3,773 | |||||
| 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 other unconsolidated subsidiaries | 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 |
| Three Months Ended April 3, 2021 | Feed Ingredients | Food Ingredients | Fuel Ingredients | Corporate | Total | |||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| Net sales | $ | 651,444 | $ | 298,065 | $ | 97,207 | $ | — | $ | 1,046,716 |
| Cost of sales and operating expenses | 474,581 | 226,413 | 71,790 | — | 772,784 | |||||
| Gross margin | 176,863 | 71,652 | 25,417 | — | 273,932 | |||||
| Loss/(gain) on sale of assets | (139) | 55 | 20 | — | (64) | |||||
| Selling, general and administrative expenses | 52,620 | 25,191 | 4,867 | 14,720 | 97,398 | |||||
| Restructure and impairment charges | — | — | 778 | — | 778 | |||||
| Depreciation and amortization | 54,609 | 14,883 | 6,155 | 2,887 | 78,534 | |||||
| Equity in net income of Diamond Green Diesel | — | — | 102,225 | — | 102,225 | |||||
| Segment operating income/(loss) | $ | 69,773 | $ | 31,523 | $ | 115,822 | $ | (17,607) | $ | 199,511 |
| Equity in net income of other unconsolidated subsidiaries | 612 | — | — | — | 612 | |||||
| Segment income/(loss) | $ | 70,385 | $ | 31,523 | $ | 115,822 | $ | (17,607) | $ | 200,123 |
| Segment EBITDA | $ | 124,382 | $ | 46,406 | $ | 20,530 | $ | (14,720) | $ | 176,598 |
| DGD adjusted EBITDA (Darling's Share) | — | — | 108,200 | — | 108,200 | |||||
| Combined adjusted EBITDA | $ | 124,382 | $ | 46,406 | $ | 128,730 | $ | (14,720) | $ | 284,798 |
| News Release<br><br>May 10, 2022<br><br>Page 3 | ||||||||||
| --- |
Darling Ingredients Inc. and Subsidiaries
Consolidated Balance Sheets
April 2, 2022 and January 1, 2022
(thousands)
| April 2, 2022 | January 1, 2022 | |||
|---|---|---|---|---|
| ASSETS | (unaudited) | |||
| Current assets: | ||||
| $ | 99,460 | $ | 68,906 | |
| 100 | 166 | |||
| 517,783 | 469,092 | |||
| 491,694 | 457,465 | |||
| 60,562 | 53,711 | |||
| 25,047 | 1,075 | |||
| 64,387 | 38,599 | |||
| 1,259,033 | 1,089,014 | |||
| Property, plant and equipment, net | 1,867,880 | 1,840,080 | ||
| Intangible assets, net | 409,627 | 397,801 | ||
| Goodwill | 1,236,524 | 1,219,116 | ||
| Investment in unconsolidated subsidiaries | 1,563,840 | 1,349,247 | ||
| Operating lease right-of-use assets | 165,128 | 155,464 | ||
| Other assets | 97,709 | 66,795 | ||
| Deferred income taxes | 15,875 | 16,211 | ||
| $ | 6,615,616 | $ | 6,133,728 | |
| LIABILITIES AND STOCKHOLDERS' EQUITY | ||||
| Current liabilities: | ||||
| $ | 35,337 | $ | 24,407 | |
| 351,253 | 307,118 | |||
| 25,117 | 32,310 | |||
| 41,649 | 38,168 | |||
| 360,058 | 350,681 | |||
| 813,414 | 752,684 | |||
| Long-term debt, net of current portion | 1,677,925 | 1,438,974 | ||
| Long-term operating lease liabilities | 125,242 | 120,314 | ||
| Other non-current liabilities | 109,647 | 111,029 | ||
| Deferred income taxes | 393,738 | 362,942 | ||
| 3,119,966 | 2,785,943 | |||
| Commitments and contingencies | ||||
| Stockholders' equity: | ||||
| Common stock, 0.01 par value; | 1,734 | 1,717 | ||
| 1,637,930 | 1,627,816 | |||
| Treasury stock, at cost | (438,906) | (374,721) | ||
| (311,369) | (321,690) | |||
| 2,535,891 | 2,347,838 | |||
| 3,425,280 | 3,280,960 | |||
| Noncontrolling interests | 70,370 | 66,825 | ||
| Total Stockholders' equity | 3,495,650 | 3,347,785 | ||
| $ | 6,615,616 | $ | 6,133,728 |
All values are in US Dollars.
| News Release<br><br>May 10, 2022<br><br>Page 4 |
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Darling Ingredients Inc. and Subsidiaries
Consolidated Operating Results
For the Three-Months Ended April 2, 2022 and April 3, 2021
(in thousands, except per share data)
| Three Months Ended | |||||
|---|---|---|---|---|---|
| (unaudited) | Change | ||||
| April 2, | April 3, | Favorable | |||
| 2022 | 2021 | (Unfavorable) | |||
| Net sales | $ | 1,366,334 | $ | 1,046,716 | |
| Costs and expenses: | |||||
| Cost of sales and operating expenses | 1,020,577 | 772,784 | (247,793) | ||
| Gain on sale of assets | (389) | (64) | 325 | ||
| Selling, general and administrative expenses | 102,032 | 97,398 | (4,634) | ||
| Restructuring and asset impairment charges | — | 778 | 778 | ||
| Acquisition and integration costs | 3,773 | — | (3,773) | ||
| Depreciation and amortization | 79,246 | 78,534 | (712) | ||
| Total costs and expenses | 1,205,239 | 949,430 | (255,809) | ||
| Equity in net income of Diamond Green Diesel | 71,804 | 102,225 | (30,421) | ||
| Operating income | 232,899 | 199,511 | 33,388 | ||
| Other expense: | |||||
| Interest expense | (15,603) | (16,428) | 825 | ||
| Foreign currency loss | (1,100) | (410) | (690) | ||
| Other expense, net | (742) | (1,159) | 417 | ||
| Total other expense | (17,445) | (17,997) | 552 | ||
| Equity in net income of other unconsolidated subsidiaries | 1,360 | 612 | 748 | ||
| Income from operations before income taxes | 216,814 | 182,126 | 34,688 | ||
| Income tax expense | 26,083 | 28,708 | 2,625 | ||
| Net income | 190,731 | 153,418 | 37,313 | ||
| Net income attributable to noncontrolling interests | (2,678) | (1,652) | (1,026) | ||
| Net income attributable to Darling | $ | 188,053 | $ | 151,766 | |
| Basic income per share: | $ | 1.17 | $ | 0.93 | |
| Diluted income per share: | $ | 1.14 | $ | 0.90 | |
| Number of diluted common shares: | 164,601 | 167,749 |
All values are in US Dollars.
| News Release<br><br>May 10, 2022<br><br>Page 5 |
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Darling Ingredients Inc. and Subsidiaries
Consolidated Statement of Cash Flows
For the Periods Ended April 2, 2022 and April 3, 2021
(in thousands)
| (Unaudited) | ||||
|---|---|---|---|---|
| April 2, | April 3, | |||
| Cash flows from operating activities: | 2022 | 2021 | ||
| Net income | $ | 190,731 | $ | 153,418 |
| Adjustments to reconcile net income to net cash provided by operating activities: | ||||
| Depreciation and amortization | 79,246 | 78,534 | ||
| Gain on sale of assets | (389) | (64) | ||
| Asset impairment | — | 138 | ||
| Deferred taxes | 23,826 | 11,809 | ||
| Decrease in long-term pension liability | (269) | (448) | ||
| Stock-based compensation expense | 6,323 | 8,415 | ||
| Write-off deferred loan costs | — | 598 | ||
| Deferred loan cost amortization | 1,131 | 1,040 | ||
| Equity in net income of Diamond Green Diesel and other unconsolidated subsidiaries | (73,164) | (102,837) | ||
| Distribution of earnings from Diamond Green Diesel and other unconsolidated subsidiaries | — | 57 | ||
| Changes in operating assets and liabilities, net of effects from acquisitions: | ||||
| Accounts receivable | (41,317) | 10,721 | ||
| Income taxes refundable/payable | (31,224) | (760) | ||
| Inventories and prepaid expenses | (42,891) | (27,188) | ||
| Accounts payable and accrued expenses | 58,964 | (13,462) | ||
| Other | (18,775) | 18,834 | ||
| Net cash provided by operating activities | 152,192 | 138,805 | ||
| Cash flows from investing activities: | ||||
| Capital expenditures | (71,618) | (60,751) | ||
| Acquisition, net of cash acquired | (59,003) | (340) | ||
| Investment in Diamond Green Diesel | (164,750) | — | ||
| Investment in other unconsolidated subsidiaries | — | (4,449) | ||
| Gross proceeds from disposal of property, plant and equipment and other assets | 974 | 1,629 | ||
| Payments related to routes and other intangibles | (100) | (347) | ||
| Net cash used in investing activities | (294,497) | (64,258) | ||
| Cash flows from financing activities: | ||||
| Proceeds from long-term debt | 9,657 | 9,262 | ||
| Payments on long-term debt | (12,128) | (60,444) | ||
| Borrowings from revolving credit facility | 369,902 | 111,000 | ||
| Payments on revolving credit facility | (134,000) | (97,000) | ||
| Net cash overdraft financing | 9,830 | 499 | ||
| Deferred loan costs | (1,810) | — | ||
| Issuance of common stock | — | 50 | ||
| Repurchase of common stock | (17,189) | — | ||
| Minimum withholding taxes paid on stock awards | (43,351) | (42,268) | ||
| Distributions to noncontrolling interests | — | (2,143) | ||
| Net cash provided/(used) in financing activities | 180,911 | (81,044) | ||
| Effect of exchange rate changes on cash flows | (8,118) | (3,847) | ||
| Net increase/(decrease) in cash, cash equivalents and restricted cash | 30,488 | (10,344) | ||
| Cash, cash equivalents and restricted cash at beginning of period | 69,072 | 81,720 | ||
| Cash, cash equivalents and restricted cash at end of period | $ | 99,560 | $ | 71,376 |
| News Release<br><br>May 10, 2022<br><br>Page 6 | ||||
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Diamond Green Diesel Joint Venture
Consolidated Balance Sheets
March 31, 2022 and December 31, 2021
(in thousands)
| March 31, | December 31, | |||
|---|---|---|---|---|
| 2022 | 2021 | |||
| (unaudited) | ||||
| Assets: | ||||
| Total current assets | $ | 950,802 | $ | 686,294 |
| Property, plant and equipment, net | 2,934,686 | 2,710,747 | ||
| Other assets | 59,196 | 51,514 | ||
| Total assets | $ | 3,944,684 | $ | 3,448,555 |
| Liabilities and members' equity: | ||||
| Total current portion of long term debt | $ | 165,356 | $ | 165,092 |
| Total other current liabilities | 367,478 | 295,860 | ||
| Total long term debt | 340,591 | 344,309 | ||
| Total other long term liabilities | 17,328 | 17,531 | ||
| Total members' equity | 3,053,931 | 2,625,763 | ||
| Total liabilities and members' equity | $ | 3,944,684 | $ | 3,448,555 |
Diamond Green Diesel Joint Venture
Operating Financial Results
For the Three-Months ended March 31, 2022 and March 31, 2021
(in thousands)
| Three Months Ended | |||||
|---|---|---|---|---|---|
| (unaudited) | Change | ||||
| March 31, | March 31, | Favorable | |||
| 2022 | 2021 | (Unfavorable) | |||
| Revenues: | |||||
| Operating revenues | $ | 980,692 | $ | 431,633 | |
| Expenses: | |||||
| Total costs and expenses less depreciation, amortization and accretion expense | 807,572 | 215,234 | (592,338) | ||
| Depreciation, amortization and accretion expense | 26,492 | 11,687 | (14,805) | ||
| Total costs and expenses | 834,064 | 226,921 | (607,143) | ||
| Operating income | 146,628 | 204,712 | (58,084) | ||
| Other income (expense) | (11) | 58 | (69) | ||
| Interest and debt expense, net | (3,009) | (320) | (2,689) | ||
| Net income | $ | 143,608 | $ | 204,450 |
All values are in US Dollars.
| News Release<br><br>May 10, 2022<br><br>Page 7 |
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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 to Foreign Currency
For the Three-Months ended April 2, 2022 and April 3, 2021 (unaudited)
| Adjusted EBITDA | April 3, | |||
| (U.S. dollars in thousands) | 2021 | |||
| Net income attributable to Darling | 188,053 | $ | 151,766 | |
| Depreciation and amortization | 78,534 | |||
| Interest expense | 16,428 | |||
| Income tax expense | 28,708 | |||
| Restructuring and asset impairment charges | 778 | |||
| Acquisition and integration costs | — | |||
| Foreign currency loss | 410 | |||
| Other expense, net | 1,159 | |||
| Equity in net income of Diamond Green Diesel | (102,225) | |||
| Equity in net income of other unconsolidated subsidiaries | (612) | |||
| Net income attributable to other noncontrolling interests | 1,652 | |||
| Adjusted EBITDA (Non-GAAP) | 244,114 | $ | 176,598 | |
| Foreign currency exchange impact | (1) | — | ||
| Pro forma Adjusted EBITDA to Foreign Currency (Non-GAAP) | 251,341 | $ | 176,598 | |
| DGD Joint Venture Adjusted EBITDA (Darling's Share) | 86,560 | $ | 108,200 | |
| Darling plus Darling's share of DGD Joint Venture Adjusted EBITDA | 330,674 | $ | 284,798 | |
| (1) The average rate assumption used in this calculation was the actual fiscal average rate for the three months ended April 2, 2022 of 1.00:1.12 and CAD1.00:0.79 as compared to the average rate for the three months ended April 3, 2021 of 1.00:1.20 and CAD1.00:0.79, respectively. |
All values are in US Dollars.
| News Release<br><br>May 10, 2022<br><br>Page 8 |
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About Darling
Darling Ingredients Inc. (NYSE: DAR) is the largest publicly traded company turning food waste into sustainable products and a leading producer of renewable energy. Recognized as a sustainability leader, the company operates 250 plants in 17 countries and repurposes nearly 10% 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 2022 financial results at 9 a.m. Eastern Time (8 a.m. Central Time) on Wednesday, May 11, 2022. 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 and ask to be joined to the Darling Ingredients Inc. call. 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 May 18, 2022, 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 8161187. 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 expense, 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.
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).
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, 5.25% Notes and 3.625% Notes that were outstanding at April 2, 2022. 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, 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.
| News Release<br><br>May 10, 2022<br><br>Page 9 |
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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 income and statement of cash flow, 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 a range 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 “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,” “forecast,” 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; failure to close on strategic acquisitions, such as FASA; 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; 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, 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
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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.}
darlingingredientsq122ea
1 18 Q 1 | M AY 2 0 2 2 EARNINGS REPORT Exhibit 99.2
2 18 SAFE HARBOR STATEMENT This presentation contains “forward-looking” statements that are subject to risks and uncertainties that could cause the actual results of Darling Ingredients Inc. (the “Company”) to differ materially from those expressed or implied in the statements. Statements that are not statements of historical facts are forward-looking statements and are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Words such as “estimate,” “project,” “planned,” “contemplate,” “potential,” “possible,” “proposed,” “intend,” “believe,” “anticipate,” “expect,” “may,” “will,” “would,” “should,” “could” “combined adjusted EBITDA guidance” and similar expressions are intended to identify forward-looking statements. Forward-looking statements are based on the Company’s current expectations and assumptions regarding its business, the economy and other future conditions. The Company cautions readers that any such forward-looking statements it makes are not guarantees of future performance and that actual results may differ materially from anticipated results or expectations expressed in its forward-looking statements as a result of a variety of factors, including many that are beyond the Company’s control. These factors include, among others, existing and unknown future limitations on the ability of the Company's direct and indirect subsidiaries to make their cash flow available to the Company for payments on the Company's indebtedness or other purposes; global demands for bio-fuels and grain and oilseed commodities, which have exhibited volatility, and can impact the cost of feed for cattle, hogs and poultry, thus affecting available rendering feedstock and selling prices for the Company’s products; reductions in raw material volumes available to the Company due to weak margins in the meat production industry as a result of higher feed costs, reduced consumer demand or other factors, reduced volume from food service establishments, or otherwise; reduced demand for animal feed; reduced finished product prices, including a decline in fat and used cooking oil finished product prices; changes to worldwide government policies relating to renewable fuels and greenhouse gas(“GHG”) emissions that adversely affect programs like the U.S. government’s renewable fuel standard, low carbon fuel standards (“LCFS”) and tax credits for biofuels both in the 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, 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, 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. Q1 - 22 EARNINGS
3 18 Financial Highlights • $330.7 million - Combined adjusted EBITDA • $244.1 million – Record quarter EBITDA for Global Ingredients • $86.6 million, $1.11/gallon EBITDA - Diamond Green Diesel • $17.2 million – Stock repurchased SUMMARY HIGHLIGHTS Diamond Green Diesel (DGD) • 750 million gallons – Estimated 2022 production • $1.25/gallon – 2022 EBITDA guidance • DGD 3 – Accelerating timeline, operational in Q4 • 1.2 billion gallons/debt free – Projected 2023 Growth Initiatives • Valley Proteins (USA) – Closed May 2 • FASA Group (Brazil) – ~$560 million, expected to close by end of 2022 • Green Energy – Netherlands and Belgium expansion underway Q1 - 22 EARNINGS
4 18 Q1-22 EARNINGS Financial Highl ights Darling Financials In millions, except per share Q1-2022 Q1-2021 % variance Net Sales $1,366.3 $1,046.7 30.5% Gross Margin 345.8 273.9 26.2% Gross Margin % 25.3% 26.2% -3.3% Net Income $188.1 $151.8 23.9% EPS Diluted $1.14 $0.90 26.7% Financials In millions Q1-2022 Q1-2021 % variance Feed $178.0 124.4 43.1% Food $57.7 46.4 24.4% Fuel (1) $110.0 128.7 (14.5)% Corporate (15.0) (14.7) (2.0)% Total combined adjusted EBITDA $330.7 $284.8 16.1% 26.2% 26.7% 27.5% 24.5% 25.3% 18% 23% 28% Q1-21 Q2-21 Q3-21 Q4-21 Q1-22 Balance Sheet In millions, except per ratio data As of 4/2/2022 As of 1/1/2022 Cash (including restricted) $99.6 $69.1 Revolver availability $1,049.7 $1,285.9 Net working capital $381.4 $291.7 Total debt $1,713.3 $1,463.4 Leverage ratio (1) 1.69x 1.57x Darling Ingredients Quarterly Gross Margin % (1) Includes Fuel Segment EBITDA and Darling's share of DGD EBITDA
5 18 Q1-22 EARNINGS Financial Highl ights Food 17% Feed 51% Fuel 32% Food Feed Fuel Combined Adjusted EBITDA Q1 2022 % of Total EBITDA by Segment $177 $222 $230 $224 $244 $108 $132 $60 $83 $87 $0 $150 $300 $450 Global Ingredients DGD $284.8 $353.7 $289.6 (In millions) $306.8 Q1-21 Q2-21 Q3-21 Q4-21 Q1-2022 $330.7 (1) Includes Fuel Segment EBITDA and Darling's share of DGD EBITDA
6 18 Q1 - 22 EARNINGS Key Drivers • Raw materials volumes globally increased 3.6% YOY • Margins playing catchup with Euro energy and rising prices • Global meat demand is robust • Restaurant frequenting improving, UCO volume up • Petfood volumes growing with strong pricing • Fat prices continue to escalate (see appendix) • Protein prices improving versus Q4, but still lower YOY due to container shortage Feed Segment US $ (in millions) Q1-2022 Q1-2021 Net Sales $ 879,438 $ 651,444 Cost of sales & operating expenses 645,523 474,581 Gross Margin $ 233,915 $ 176,863 Gain on sales of assets (341) (139) Selling, general & administrative expenses 56,209 52,620 Depreciation & amortization 54,350 54,609 Segment operating income $ 123,697 $ 69,773 Equity in net income of other unconsolidated subsidiaries $ 1,360 $ 612 Segment Income $ 125,057 $ 70,385 Segment EBITDA $ 178,047 $ 124,382 Raw material processed (mmts)* 2.31 2.23 Change in Net Sales Three Months Ended Fats Proteins Other Rendering Total Rendering Used Cooking Oil Bakery Other Total Net sales three months ended April 3, 2021 229.0$ 255.5$ 43.0$ $ 527.5 51.0$ 63.1$ 9.8$ $ 651.4 Increase in sales volumes 3.7 4.1 - 7.8 4.4 2.9 - 15.1 Increase in finished product prices 138.9 17.1 - 156.0 39.5 12.5 - 208.0 Decrease due to currency exchange rates (3.2) (6.5) (0.4) (10.1) - - - (10.1) Other change - - 14.9 14.9 - - 0.1 15.0 Total change 139.4 14.7 14.5 168.6 43.9 15.4 0.1 228.0 Net sales three months ended April 2, 2022 368.4$ 270.2$ 57.5$ 696.1$ 94.9$ 78.5$ 9.9$ 879.4$ Feed Segment Sales
7 18 Q1 - 22 EARNINGS Key Drivers • Hydrolyzed collagen business on plan and rapidly improving • Supply chain disruptions still impacting continental shipments; raw material pricing improving • Improving edible fat prices driven by energy demand • Strong casing sales and improved contribution Food Segment US $ (in millions) Q1-2022 Q1-2021 Net Sales $ 354,814 $ 298,065 Cost of sales & operating expenses 270,312 226,413 Gross Margin $ 84,502 $ 71,652 Loss/(gain) on sales of assets (9) 55 Selling, general & administrative expenses 26,844 25,191 Depreciation & amortization 15,450 14,883 Segment Income $ 42,217 $ 31,523 Segment EBITDA $ 57,667 $ 46,406 Raw material processed (mmts)* 0.28 0.26 76% 15% 9% 2022 % of Sales Breakdown Collagen Edible fats Other products $100 $120 $140 $160 $180 $200 Food Segment Trailing 4Q adjusted EBITDA Trailing 4 Q's
8 18 Q1 - 22 EARNINGS Key Drivers • Escalating energy prices in Europe supporting stronger earnings in our green energy business. • Op de Beeck contributing and under expansion • Successful turnaround completed on DGD 1 • DGD margins adjusting to rapidly rising feedstock prices, volatile heating oil, and lower LCFS credits • DGD Q2 margins on the rebound • DGD 3 operational in Q4 Fuel Segment US $ (in millions) Q1-2022 Q1-2021 Net Sales $ 132,082 $ 97,207 Cost of sales & operating expenses 104,742 71,790 Gross Margin 27,340 25,417 (Gain) Loss on sales of assets (39) 20 Selling, general & administrative expenses 3,920 4,867 Restructuring and asset impairment charges - 778 Depreciation & amortization 6,674 6,155 Equity in net income of Diamond Green Diesel 71,804 102,225 Segment Income $ 88,589 $ 115,822 Segment EBITDA $23,459 $20,530 DGD adjusted EBITDA (Darling's Share) $86,560 $ 108,200 Segment EBITDA (1) $110,019 $ 128,730 Raw material processed (mmts)* 0.34 0.33 $0.15 $0.20 $0.25 $0.30 $0.35 $0.40 $0.45 $0.50 $0.30 $0.80 $1.30 $1.80 Quarterly Avg. Prices D4 RINS & Yellow Grease(3) D4 RIN Qtrly Avg YG Avg Qtrly Price (1) Includes Fuel Segment EBITDA and Darling's share of DGD EBITDA.
9 18 APPENDIX ADDITIONAL INFORMATION Q1-22 EARNINGS
10 18 Q1-22 EARNINGS Cal i fornia LCFS RIN Value History
11 18 Q1-22 EARNINGS Feed Segment – Historical US$ (in millions) Q1-2021 Q2-2021 Q3-2021 Q4-2021 Total 2021 Q1-2022 Net Sales $ 651.4 $ 771.9 $ 769.6 $ 846.5 $ 3,039.5 $ 879.4 Gross Margin 176.9 215.5 216.0 224.9 833.3 233.9 Gross Margin % 27.1% 27.9% 28.1% 26.6% 27.4% 26.6% Gain on sale of assets (0.1) (0.1) (0.2) (0.1) (0.6) (0.3) SG&A 52.6 55.0 55.0 57.5 220.1 56.2 SG&A Margin % 8.1% 7.1% 7.1% 6.8% 7.2% 6.4% Operating Income 69.8 106.7 107.4 111.0 394.8 123.7 Adj. EBITDA (1) $ 124.4 $ 160.7 $ 161.2 $ 167.5 $ 613.7 $ 178.0 Adj. EBITDA Margin % 19.1% 20.8% 20.9% 19.8% 20.2% 20.2% Raw Material Processed (mmts)* 2.23 2.19 2.22 2.27 8.92 2.31
12 18 Q1-22 EARNINGS Food Segment – Historical US$ (in millions) Q1-2021 Q2-2021 Q3-2021 Q4-2021 Total 2021 Q1 -2022 Net Sales $ 298.1 $ 317.0 $ 311.9 $ 344.7 $ 1,271.6 $ 354.8 Gross Margin 71.7 78.5 70.5 71.7 292.4 84.5 Gross Margin % 24.0% 24.8% 22.6% 20.8% 23.0% 23.8% Loss/(gain) on sale of assets 0.1 (0.0) (0.0) (0.1) (0.1) (0.1) SG&A 25.2 25.5 24.4 22.4 97.6 26.8 SG&A Margin % 8.5% 8.1% 7.8% 6.5% 7.7% 7.6% Operating Income 31.5 37.1 31.2 34.1 134.0 42.2 Adj. EBITDA $ 46.4 $ 53.0 $ 46.1 $ 49.4 $ 194.9 $ 57.7 Adj. EBITDA Margin % 15.6% 16.7% 14.8% 14.3% 15.3% 16.2% Raw Material Processed (mmts)* 0.26 0.27 0.28 0.29 1.11 .28
13 18 Q1-22 EARNINGS F u e l S e g m e n t – H i s t o r i c a l US$ (in millions) Q1-2021 Q2-2021 Q3-2021 Q4-2021 Total 2021 Q1-2022 Net Sales $ 97.2 $ 109.7 $ 104.4 $ 118.9 $ 430.2 $ 132.0 Gross Margin 25.4 26.6 39.8 24.5 116.3 27.3 Gross Margin % 26.1% 24.2% 38.1% 20.6% 27.0% 20.7% Gain on sale of assets 0.0 (0.1) (0.3) (0.0) (0.3) (0.0) SG&A 4.9 4.5 4.5 3.2 17.0 3.9 Restructuring and asset impairment charges 0.8 - - - 0.8 - Depreciation and amortization 6.2 6.7 6.4 6.2 25.4 6.6 Equity in net income of DGD 102.2 125.8 54.0 69.7 351.7 71.8 Operating Income 95.8 141.3 83.2 84.8 405.1 88.6 Base adjusted EBITDA 0.5 22.2 35.6 21.4 79.7 23.4 DGD adjusted EBITDA (Darling's Share) 108.2 132.0 60.0 83.2 383.4 86.6 Combined adjusted EBITDA (1) $ 108.8 $ 154.2 $ 95.6 $ 104.6 $ 483.1 $110.0 Raw Material Processed (mmts) (2) * 0.33 0.31 0.30 0.33 1.28 0.34 (1) Includes Fuel Segment base EBITDA and Darling's share of DGD EBITDA. (2) Excludes feed stock (raw material) processed at the DGD joint venture.
14 18 Q1-22 EARNINGS Historical Pr ic ing 2022 Finished Product Pricing Feed Segment Ingredients January February March Q1 Avg. April May June Q2 Avg. July August Sept. Q3 Avg. Oct. Nov. Dec. Q4 Avg. Year Avg. Bleachable Fancy Tallow - Chicago Renderer / cwt $67.00 $72.03 $75.00 $71.39 Yellow Grease - Illinois / cwt $45.38 $55.50 $58.00 $53.91 Used Cooking Oil (UCO) - Illinois / cwt $59.20 $63.47 $69.00 $63.89 Meat and Bone Meal - Ruminant --Renderer IL/ ton $275.50 $291.84 $315.00 $317.20 Poultry By-Product Meal - Feed Grade - Mid South/ton $358.38 $362.50 $390.00 $367.03 Poultry By-Product Meal - Pet Food - Mid South/ton $759.38 $764.47 $725.00 $761.69 2022 Vegetable Oils Pricing Competing Ingredient for Feed Segment fats & biofuel feedstock January February March Q1 Avg. April May June Q2 Avg. July August Sept. Q3 Avg. Oct. Nov. Dec. Q4 Avg. Year Avg. Soybean Oil (crude/de-gummed) - Central Illinois / cwt $64.42 $69.42 $75.20 $69.68 Soybean Oil (RBD) - Central Illinois / cwt $75.57 $79.70 $88.20 $81.16 Distiller's Corn Oil - IL/WI cwt $64.76 $79.00 $76.00 $73.25 2022 Cash Corn Pricing Competing Ingredient for Bakery Feeds and Fats January February March Q1 Avg. April May June Q2 Avg. July August Sept. Q3 Avg. Oct. Nov. Dec. Q4 Avg. Year Avg. Corn - Track Central IL #2 Yellow / bushel $6.00 $6.33 $7.28 $6.90 2022 European Benchmark Pricing Palm Oil - Competing ingredient for edible fats in Food Segment Soy meal - Competing ingredient for protein meals in Feed Segment January February March Q1 Avg. April May June Q2 Avg. July August Sept. Q3 Avg. Oct. Nov. Dec. Q4 Avg. Year Avg. Palm oil - CIF Rotterdam / metric ton $1,342 $1,502 $1,820 $1,555 Soy meal - CIF Rotterdam / metric ton $535 $576 $617 $576 QTR. over QTR. (Sequential) Year over Year (Q1) Comparison Q4-2021 Q1-2022 % Q1-2021 Q1-2022 % Average Jacobsen Prices (USD) Avg. Avg. Change Avg. Avg. Change Bleachable Fancy Tallow - Chicago Renderer / cwt $66.15 $71.39 7.9% $46.42 $71.39 53.8% Yellow Grease - Illinois / cwt $44.30 $53.91 21.7% $34.45 $53.91 56.5% Used Cooking Oil (UCO) - Illinois / cwt $55.31 $63.89 15.5% $47.18 $63.89 35.4% Meat and Bone Meal - Ruminant - Illinois / ton $261.79 $317.20 21.2% $386.97 $317.20 -18.0% Poultry By-Product Meal - Feed Grade - Mid South / ton $335.07 $367.03 9.5% $357.79 $367.03 2.6% Poultry By-Product Meal - Pet Food - Mid South / ton $650.25 $761.69 17.1% $845.08 $761.69 -9.9% Soybean Oil (crude/de-gummed) - Central Illinois / cwt $63.48 $69.68 9.8% $30.08 $69.68 131.6% Soybean Oil (RBD) - Central Illinois / cwt $76.69 $81.16 5.8% $33.23 $81.16 144.2% Distiller's Corn Oil - IL/WI per cwt $57.77 $73.25 26.8% $26.93 $73.25 172.0% Average Wall Street Journal Prices (USD) Corn - Track Central IL #2 Yellow / bushel $5.84 $6.90 18.2% $5.27 $6.90 30.9% Average Thomson Reuters Prices (USD) Palm oil - CIF Rotterdam / metric ton $1,349 $1,555 15.3% $1,084 $1,555 43.5% Soy meal - CIF Rotterdam / metric ton $466 $576 23.6% $535 $576 7.7% 2022 Average Jacobsen Prices (USD) 2022 Average Jacobsen Prices (USD) Average Wall Street Journal Prices (USD) Average Thomson Reuters Prices (USD)
15 18 Q1-22 EARNINGS Adjusted EBITDA Adjusted EBITDA April 2, April 3, (U.S. dollars in thousands) 2022 2021 Net income attributable to Darling 188,053$ 151,766$ Depreciation and amortization 79,246 78,534 Interest expense 15,603 16,428 Income tax expense 26,083 28,708 Restructuring and asset impairment charges - 778 Acquisition and integration costs 3,773 - Foreign currency loss 1,100 410 Other expense, net 742 1,159 Equity in net income of Diamond Green Diesel (71,804) (102,225) Equity in net income of other unconsolidated subsidiaries (1,360) (612) Net income attributable to noncontrolling interests 2,678 1,652 Adjusted EBITDA (Non-GAAP) 244,114$ 176,598$ Foreign currency exchange impact 7,227 (1) Pro forma Adjusted EBITDA to Foreign Currency (Non-GAAP) 251,341$ 176,598$ DGD Joint Venture Adjusted EBITDA (Darling's Share) 86,560$ 108,200$ Darling plus Darling's share of DGD Joint Venture Adjusted EBITDA 330,674$ 284,798$ (1) The average rate assumption used in this calculation was the actual fiscal average rate for the three months ended April 2, 2022 of €1.00:USD$1.12 and CAD$1.00:USD$0.79, as compared to the average rate for the three months ended Aoril 3, 2021 of €1.00:USD$1.20 and CAD$1.00:USD$0.79, respectively. Three Months Ended
16 18 BMO Farm to Market Conference May 19 – New York Evercore Clean Energy & Transition Technologies Conference June 14-15 – New York EVENT CALENDAR Q1 – 22 Earnings Roth Capital Partners London Conference June 21-22 – New York Cowen Next Gen Fuel Summit June 16– Virtual
17 18 Non-U.S. GAAP 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, restructuring, acquisition and integration costs, 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 on April 2, 2022. 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. Q1 – 22 EARNINGS
18 18 Q 1 | M AY 2 0 2 2 EARNINGS REPORT