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 11, 2021 | | --- | --- || 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 11, 2021, Darling Ingredients Inc. (the “Company”) issued a press release announcing financial results for the first quarter ended April 3, 2021. 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 12, 2021 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 11, 2021 (furnished pursuant to Item 2.02). |
|---|---|
| 99.2 | Slide Presentation for May 12, 2021 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 11, 2021 | By: | /s/ John F. Sterling |
| John F. Sterling | ||
| Executive Vice President,<br>General Counsel |
3
Document
EXHIBIT 99.1
News Release
DARLING INGREDIENTS INC. REPORTS FIRST QUARTER 2021 FINANCIAL RESULTS
IRVING, TEXAS, May 11, 2021/PRNewswire/ Darling Ingredients Inc. (NYSE: DAR, “Darling”) --
First Quarter 2021
•Net income of $151.8 million, or $0.90 per GAAP diluted share
•Net Sales of $1.05 billion
•Combined adjusted EBITDA of $284.8 million
•Global Ingredients business Q1 EBITDA of $176.6 million, best quarter in the Company’s history
•Diamond Green Diesel (“DGD”) earned a record $2.77 EBITDA per gallon, contributing $108.2 million of EBITDA to Darling’s fuel segment
Darling reported net sales of $1.05 billion for the first quarter of 2021, as compared with net sales of $852.8 million for the same period a year ago. Net income attributable to Darling for the three months ended April 3, 2021 was $151.8 million, or $0.90 per diluted share, compared to net income of $85.5 million, or $0.51 per diluted share, for the first quarter of 2020.
“Our worldwide team delivered the best quarter in our Company’s history as our global ingredients business generated $176.6 million of EBITDA in the first quarter,” said Randall C. Stuewe, Chairman and Chief Executive Officer of Darling Ingredients Inc. “Adding the strong Q1 performance of DGD, our 2021 is off to a great start with $284.8 million of combined adjusted EBITDA.”
“Both of the renewable diesel projects at DGD remain on track, with the expansion at Norco, LA due to begin production in the middle of Q4 of 2021 and the 470 million gallon facility under construction in Port Arthur expected to be operational in the second half of 2023,” Stuewe added. “With the startup of the Norco expansion, we believe that DGD will be able to sell approximately 365 million gallons of renewable diesel this year. The record $2.77 EBITDA per gallon reported in Q1 by DGD, leads us to believe that DGD’s EBITDA per gallon will average in the range of $2.25 to $2.40 EBITDA per gallon for all of 2021,” Stuewe stated.
“As a result of the solid performance of our global ingredients business to start the year and an improved outlook for DGD, we are increasing our combined adjusted EBITDA guidance to a range of $1.075 billion to $1.150 billion for 2021. This new guidance range is 28% to 35% better than our 2020 performance and sets up our global business for continued growth and improved profitability into the future,” commented Stuewe.
As of April 3, 2021, Darling had $71.4 million in cash and cash equivalents, and $879.9 million available under its committed revolving credit agreement. Total debt outstanding at the end of the three months ended April 3, 2021 was $1.4 billion.
Combined adjusted EBITDA was $284.8 million for the first quarter of 2021, compared to $213.3 million for the same period in 2020.
| News Release<br><br>May 11, 2021<br><br>Page 2 |
|---|
Segment Financial Tables (in thousands)
(unaudited)
| 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 | |||||
| Restructuring and asset 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 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 |
| Three Months Ended March 28, 2020 | Feed Ingredients | Food Ingredients | Fuel Ingredients | Corporate | Total | |||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| Net sales | $ | 512,625 | $ | 270,294 | $ | 69,923 | $ | — | $ | 852,842 |
| Cost of sales and operating expenses | 388,453 | 205,430 | 53,025 | — | 646,908 | |||||
| Gross margin | $ | 124,172 | $ | 64,864 | $ | 16,898 | $ | — | $ | 205,934 |
| Loss on sale of assets | 50 | 2 | 9 | — | 61 | |||||
| Selling, general and administrative expenses | 53,947 | 25,476 | 1,654 | 15,116 | 96,193 | |||||
| Depreciation and amortization | 53,521 | 20,305 | 8,092 | 2,753 | 84,671 | |||||
| Equity in net income of Diamond Green Diesel | — | — | 97,820 | — | 97,820 | |||||
| Segment operating income/(loss) | $ | 16,654 | $ | 19,081 | $ | 104,963 | $ | (17,869) | $ | 122,829 |
| Equity in net income of unconsolidated subsidiaries | $ | 869 | $ | — | $ | — | $ | — | $ | 869 |
| Segment income/(loss) | $ | 17,523 | $ | 19,081 | $ | 104,963 | $ | (17,869) | $ | 123,698 |
| Segment EBITDA | $ | 70,175 | $ | 39,386 | $ | 15,235 | $ | (15,116) | $ | 109,680 |
| DGD Adjusted EBITDA (Darling's Share) | $ | — | $ | — | $ | 103,634 | $ | — | $ | 103,634 |
| Combined adjusted EBITDA | $ | 70,175 | $ | 39,386 | $ | 118,869 | $ | (15,116) | $ | 213,314 |
| News Release<br><br>May 11, 2021<br><br>Page 3 | ||||||||||
| --- |
Darling Ingredients Inc. and Subsidiaries
Consolidated Balance Sheets
April 3, 2021 and January 2, 2021
(in thousands)
| April 3, | January 2, | ||||
|---|---|---|---|---|---|
| 2021 | 2021 | ||||
| ASSETS | (unaudited) | ||||
| Current assets: | |||||
| Cash and cash equivalents | $ | 71,199 | $ | 81,617 | |
| Restricted cash | 177 | 103 | |||
| Accounts receivable, net | 385,663 | 405,387 | |||
| Inventories | 420,659 | 405,922 | |||
| Prepaid expenses | 50,251 | 47,793 | |||
| Income taxes refundable | 3,274 | 3,883 | |||
| Other current assets | 9,544 | 42,289 | |||
| Total current assets | 940,767 | 986,994 | |||
| Property, plant and equipment, net | 1,822,075 | 1,863,814 | |||
| Intangible assets, net | 452,539 | 473,680 | |||
| Goodwill | 1,241,242 | 1,260,240 | |||
| Investment in unconsolidated subsidiaries | 915,085 | 804,682 | |||
| Operating lease right-of-use assets | 145,238 | 146,563 | |||
| Other assets | 59,099 | 60,682 | |||
| Deferred income taxes | 15,402 | 16,676 | |||
| $ | 5,591,447 | $ | 5,613,331 | ||
| LIABILITIES AND STOCKHOLDERS' EQUITY | |||||
| Current liabilities: | |||||
| Current portion of long-term debt | $ | 26,997 | $ | 27,538 | |
| Accounts payable, principally trade | 245,648 | 255,340 | |||
| Income taxes payable | 15,627 | 17,497 | |||
| Current operating lease liabilities | 38,064 | 39,459 | |||
| Accrued expenses | 311,371 | 335,471 | |||
| Total current liabilities | 637,707 | 675,305 | |||
| Long-term debt, net of current portion | 1,417,534 | 1,480,531 | |||
| Long-term operating lease liabilities | 108,777 | 109,707 | |||
| Other noncurrent liabilities | 115,799 | 117,371 | |||
| Deferred income taxes | 281,684 | 276,208 | |||
| Total liabilities | 2,561,501 | 2,659,122 | |||
| Commitments and contingencies | |||||
| Total Darling's stockholders' equity | 2,966,603 | 2,891,909 | |||
| Noncontrolling interests | 63,343 | 62,300 | |||
| Total stockholders' equity | $ | 3,029,946 | $ | 2,954,209 | |
| $ | 5,591,447 | $ | 5,613,331 | ||
| News Release<br><br>May 11, 2021<br><br>Page 4 | |||||
| --- |
Darling Ingredients Inc. and Subsidiaries
Consolidated Operating Results
For the Three-Month Periods Ended April 3, 2021 and March 28, 2020
(in thousands, except per share data)
| Three Months Ended | |||||
|---|---|---|---|---|---|
| (unaudited) | Change | ||||
| April 3, | March 28, | Favorable | |||
| 2021 | 2020 | (Unfavorable) | |||
| Net sales | $ | 1,046,716 | $ | 852,842 | |
| Costs and expenses: | |||||
| Cost of sales and operating expenses | 772,784 | 646,908 | (125,876) | ||
| Loss (gain) on sale of assets | (64) | 61 | 125 | ||
| Selling, general and administrative expenses | 97,398 | 96,193 | (1,205) | ||
| Restructuring and asset impairment charges | 778 | — | (778) | ||
| Depreciation and amortization | 78,534 | 84,671 | 6,137 | ||
| Total costs and expenses | 949,430 | 827,833 | (121,597) | ||
| Equity in net income of Diamond Green Diesel | 102,225 | 97,820 | 4,405 | ||
| Operating income | 199,511 | 122,829 | 76,682 | ||
| Other expense: | |||||
| Interest expense | (16,428) | (19,090) | 2,662 | ||
| Foreign currency gain/(loss) | (410) | 1,664 | (2,074) | ||
| Other expense, net | (1,159) | (1,881) | 722 | ||
| Total other expense | (17,997) | (19,307) | 1,310 | ||
| Equity in net income/(loss) of unconsolidated subsidiaries | 612 | 869 | (257) | ||
| Income from operations before income taxes | 182,126 | 104,391 | 77,735 | ||
| Income tax expense | 28,708 | 18,300 | (10,408) | ||
| Net income | 153,418 | 86,091 | 67,327 | ||
| Net income attributable to noncontrolling interests | (1,652) | (581) | (1,071) | ||
| Net income attributable to Darling | $ | 151,766 | $ | 85,510 | |
| Basic income per share: | $ | 0.93 | $ | 0.52 | |
| Diluted income per share: | $ | 0.90 | $ | 0.51 | |
| Number of diluted common shares: | 167,749 | 167,927 |
All values are in US Dollars.
| News Release<br><br>May 11, 2021<br><br>Page 5 |
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Darling Ingredients Inc. and Subsidiaries
Consolidated Statement of Cash Flows
Periods Ended April 3, 2021 and March 28, 2020
(in thousands)
(unaudited)
| Three Months Ended | ||||
|---|---|---|---|---|
| April 3, | March 28, | |||
| Cash flows from operating activities: | 2021 | 2020 | ||
| Net income | $ | 153,418 | $ | 86,091 |
| Adjustments to reconcile net income to net cash provided by operating activities: | ||||
| Depreciation and amortization | 78,534 | 84,671 | ||
| Loss/(gain) on sale of assets | (64) | 61 | ||
| Asset impairment | 138 | — | ||
| Deferred taxes | 11,809 | 6,377 | ||
| Decrease in long-term pension liability | (448) | (264) | ||
| Stock-based compensation expense | 8,415 | 10,818 | ||
| Write-off deferred loan costs | 598 | — | ||
| Deferred loan cost amortization | 1,040 | 1,416 | ||
| Equity in net income of Diamond Green Diesel and other unconsolidated subsidiaries | (102,837) | (98,689) | ||
| Distribution of earnings from other unconsolidated subsidiaries | 57 | — | ||
| Changes in operating assets and liabilities, net of effects from acquisitions: | ||||
| Accounts receivable | 10,721 | 487 | ||
| Income taxes refundable/payable | (760) | 348 | ||
| Inventories and prepaid expenses | (27,188) | (24,999) | ||
| Accounts payable and accrued expenses | (13,462) | (16,790) | ||
| Other | 18,834 | (14,981) | ||
| Net cash provided by operating activities | 138,805 | 34,546 | ||
| Cash flows from investing activities: | ||||
| Capital expenditures | (60,751) | (61,599) | ||
| Acquisition, net of cash acquired | (340) | — | ||
| Investment in unconsolidated subsidiary | (4,449) | — | ||
| Gross proceeds from disposal of property, plant and equipment and other assets | 1,629 | 379 | ||
| Payments related to routes and other intangibles | (347) | (3,416) | ||
| Net cash used by investing activities | (64,258) | (64,636) | ||
| Cash flows from financing activities: | ||||
| Proceeds from long-term debt | 9,262 | 8,264 | ||
| Payments on long-term debt | (60,444) | (8,638) | ||
| Borrowings from revolving credit facility | 111,000 | 219,933 | ||
| Payments on revolving credit facility | (97,000) | (100,782) | ||
| Net cash overdraft financing | 499 | (9,594) | ||
| Issuance of common stock | 50 | 67 | ||
| Repurchase of common stock | — | (55,044) | ||
| Minimum withholding taxes paid on stock awards | (42,268) | (4,328) | ||
| Acquisition of noncontrolling interest | — | (8,784) | ||
| Distributions to noncontrolling interests | (2,143) | (688) | ||
| Net cash provided (used) by financing activities | (81,044) | 40,406 | ||
| Effect of exchange rate changes on cash flows | (3,847) | (6,916) | ||
| Net increase/ (decrease) in cash, cash equivalents and restricted cash | (10,344) | 3,400 | ||
| Cash, cash equivalents and restricted cash at beginning of period | 81,720 | 73,045 | ||
| Cash, cash equivalents and restricted cash at end of period | $ | 71,376 | $ | 76,445 |
| Supplemental disclosure of cash flow information: | ||||
| Accrued capital expenditures | $ | (9,678) | $ | (1,630) |
| Cash paid during the period for: | ||||
| Interest, net of capitalized interest | $ | 2,774 | $ | 5,863 |
| Income taxes, net of refunds | $ | 15,578 | $ | 11,453 |
| Non-cash operating activities: | ||||
| Operating lease right of use asset obtained in exchange for new lease liabilities | $ | 12,404 | $ | 9,121 |
| Non-cash financing activities: | ||||
| Debt issued for service contract assets | $ | — | $ | 21 |
| News Release<br><br>May 11, 2021<br><br>Page 6 | ||||
| --- |
Diamond Green Diesel Joint Venture
Condensed Consolidated Balance Sheets
March 31, 2021 and December 31, 2020
(in thousands)
| March 31, | December 31, | |||
|---|---|---|---|---|
| 2021 | 2020 | |||
| (unaudited) | ||||
| Assets: | ||||
| Total current assets | $ | 477,840 | $ | 383,557 |
| Property, plant and equipment, net | 1,437,905 | 1,238,726 | ||
| Other assets | 39,171 | 36,082 | ||
| Total assets | $ | 1,954,916 | $ | 1,658,365 |
| Liabilities and members' equity: | ||||
| Total current portion of long term debt | $ | 562 | $ | 517 |
| Total other current liabilities | 177,594 | 99,787 | ||
| Total long term debt | 8,702 | 8,705 | ||
| Total other long term liabilities | 8,722 | 3,758 | ||
| Total members' equity | 1,759,336 | 1,545,598 | ||
| Total liabilities and members' equity | $ | 1,954,916 | $ | 1,658,365 |
Diamond Green Diesel Joint Venture
Operating Financial Results
For the Three-Month Periods Ended March 31, 2021 and March 31, 2020
(in thousands)
| Three Months Ended | |||||
|---|---|---|---|---|---|
| (unaudited) | Change | ||||
| March 31, | March 31, | Favorable | |||
| 2021 | 2020 | (Unfavorable) | |||
| Revenues: | |||||
| Operating revenues | $ | 431,633 | $ | 358,615 | |
| Expenses: | |||||
| Total costs and expenses less depreciation, amortization and accretion expense | 215,234 | 151,347 | (63,887) | ||
| Depreciation, amortization and accretion expense | 11,687 | 11,774 | 87 | ||
| Total costs and expenses | 226,921 | 163,121 | (63,800) | ||
| Operating income | 204,712 | 195,494 | 9,218 | ||
| Other income | 58 | 461 | (403) | ||
| Interest and debt expense, net | (320) | (315) | (5) | ||
| Net income | $ | 204,450 | $ | 195,640 |
All values are in US Dollars.
| News Release<br><br>May 11, 2021<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 For the Three-Month Periods ended April 3, 2021 and March 28, 2020
| Adjusted EBITDA | March 28, | |||
| (U.S. dollars in thousands) | 2020 | |||
| Net income attributable to Darling | 151,766 | $ | 85,510 | |
| Depreciation and amortization | 84,671 | |||
| Interest expense | 19,090 | |||
| Income tax expense | 18,300 | |||
| Restructuring and impairment charges | — | |||
| Foreign currency loss/(gain) | (1,664) | |||
| Other expense, net | 1,881 | |||
| Equity in net income of Diamond Green Diesel | (97,820) | |||
| Equity in net income of unconsolidated subsidiaries | (869) | |||
| Net income attributable to noncontrolling interests | 581 | |||
| Adjusted EBITDA (Non-GAAP) | 176,598 | $ | 109,680 | |
| Foreign currency exchange impact | (1) | — | ||
| Pro forma Adjusted EBITDA to Foreign Currency (Non-GAAP) | 168,548 | $ | 109,680 | |
| DGD Joint Venture Adjusted EBITDA (Darling's share) | 108,200 | $ | 103,634 | |
| Darling plus Darling's share of DGD Joint Venture Adjusted EBITDA | 284,798 | $ | 213,314 | |
| (1) The average rate assumption used in the calculation was the actual fiscal average rate for the three months ended April 3, 2021 of 1.00:1.20 and CAD1.00:0.79 as compared to the average rate for the three months ended March 28, 2020 of 1.00:1.01 and CAD1.00: 0.75, respectively. |
All values are in US Dollars.
About Darling
Darling Ingredients Inc. (NYSE: DAR) is a world leading producer of organic ingredients, generating a wide array of sustainable protein and fat products while being one of the largest producers of renewable clean energy. With operations on five continents, Darling collects waste streams from the agri-food industry, repurposing into specialty ingredients, such as hydrolyzed collagen, edible and feed-grade fats, animal proteins and meals, plasma, pet food ingredients, fuel feedstocks, and green bioenergy. Darling Ingredients named one of the 50 Sustainability and Climate Leaders in 2021, to learn more Darling Ingredients: The greenest Company on the planet - 50 Sustainability & Climate Leaders (50climateleaders.com). The Company sells its ingredients around the globe and works to strengthen our promise for a better tomorrow, creating product applications for health, nutrients and bioenergy while optimizing our services to the food chain. Darling is a 50% joint venture partner in Diamond Green Diesel (DGD), North America's largest renewable diesel manufacturer, currently producing approximately 290 million gallons of renewable diesel annually which products reduce Greenhouse Gas (GHG) emissions by up to 85% compared to fossil fuels. For additional information, visit the Company's website at http://www.darlingii.com.
| News Release<br><br>May 11, 2021<br><br>Page 8 |
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Darling Ingredients Inc. will host a conference call to discuss the Company’s first quarter 2021 financial results at 9:00 am Eastern Time (8:00 am Central Time) on Wednesday, May 12, 2021. To listen to the conference call, participants calling from within North America should dial 1-844-868-8847; international participants should dial 1-412-317-6593. Please refer to access code 10153598. 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 19, 2021, 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 10153598. 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 3, 2021. 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.
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.
| News Release<br><br>May 11, 2021<br><br>Page 9 |
|---|
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,” “combined adjusted EBITDA guidance” 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 projects; risks and uncertainties relating to international sales and operations, including imposition of tariffs, quotas, trade barriers and other trade protections imposed by foreign countries; difficulties or a significant disruption in our information systems or failure to implement new systems and software successfully, risks relating to possible third party claims of intellectual property infringement; increased contributions to the Company’s pension and benefit plans, including multiemployer and employer-sponsored defined benefit pension plans as required by legislation, regulation or other applicable U.S. or foreign law or resulting from a U.S. mass withdrawal event; bad debt write-offs; loss of or failure to obtain necessary permits and registrations; continued or escalated conflict in the Middle East, North Korea, Ukraine or elsewhere; uncertainty regarding the exit of the U.K. from the European Union; and/or unfavorable export or import markets. These factors, coupled with volatile prices for natural gas and diesel fuel, climate conditions, currency exchange fluctuations, general performance of the U.S. and global economies, disturbances in world financial, credit, commodities and stock markets, and any decline in consumer confidence and discretionary spending, including the inability of consumers and companies to obtain credit due to lack of liquidity in the financial markets, among others, could cause actual results to vary materially from the forward looking statements included in this release or negatively impact the Company's results of operations. Among other things, future profitability may be affected by the Company’s ability to grow its business, which faces competition from companies that may have substantially greater resources than the Company. The Company’s announced share repurchase program may be suspended or discontinued at any time and purchases of shares under the program are subject to market conditions and other factors, which are likely to change from time to time. Other risks and uncertainties regarding Darling Ingredients Inc., its business and the industries in which it operates are referenced from time to time in the Company’s filings with the Securities and Exchange Commission. Darling Ingredients Inc. is under no obligation to (and expressly disclaims any such obligation to) update or alter its forward-looking statements whether as a result of new information, future events or otherwise.}
For More Information, contact:
Jim Stark, Vice President, Investor Relations Email : james.stark@darlingii.com
5601 MacArthur Blvd., Irving, Texas 75038 Phone : 972-281-4823
darlingingredientsq12021
First Quarter 2021 Conference Call Exhibit 99.2
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” 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 projects; risks and uncertainties relating to international sales and operations, including imposition of tariffs, quotas, trade barriers and other trade protections imposed by foreign countries; difficulties or a significant disruption in our information systems or failure to implement new systems and software successfully, risks relating to possible third party claims of intellectual property infringement; increased contributions to the Company’s pension and benefit plans, including multiemployer and employer-sponsored defined benefit pension plans as required by legislation, regulation or other applicable U.S. or foreign law or resulting from a U.S. mass withdrawal event; bad debt write-offs; loss of or failure to obtain necessary permits and registrations; continued or escalated conflict in the Middle East, North Korea, Ukraine or elsewhere; uncertainty regarding the exit of the U.K. from the European Union; and/or unfavorable export or import markets. These factors, coupled with volatile prices for natural gas and diesel fuel, climate conditions, currency exchange fluctuations, general performance of the U.S. and global economies, disturbances in world financial, credit, commodities and stock markets, and any decline in consumer confidence and discretionary spending, including the inability of consumers and companies to obtain credit due to lack of liquidity in the financial markets, among others, could cause actual results to vary materially from the forward looking statements included in this release or negatively impact the Company's results of operations. Among other things, future profitability may be affected by the Company’s ability to grow its business, which faces competition from companies that may have substantially greater resources than the Company. The Company’s announced share repurchase program may be suspended or discontinued at any time and purchases of shares under the program are subject to market conditions and other factors, which are likely to change from time to time. Other risks and uncertainties regarding Darling Ingredients Inc., its business and the industries in which it operates are referenced from time to time in the Company’s filings with the Securities and Exchange Commission. Darling Ingredients Inc. is under no obligation to (and expressly disclaims any such obligation to) update or alter its forward-looking statements whether as a result of new information, future events or otherwise. Page 2 | First Quarter 2021 Financial Results | 05.12.2021
Summary Highlights First Quarter 2021 Business Update • Record first quarter global ingredients EBITDA of $176.6 million • Q1 2021 combined adjusted EBITDA totaled a record $284.8 million • Substantial growth in net income increasing $66.3 million or 77.5% for Q1 2021 when compared to the prior year • DGD reported a record $2.77 EBITDA/gallon, generating $108.2 million EBITDA – Darling’s share • Raising 2021 EBITDA guidance to a range of $1.075 billion to $1.150 billion, representing 28% to 37% increase in EBITDA over 2020 results • DGD renewable diesel projects at both Norco, LA and Port Arthur, TX remain on track • Darling Ingredients was announced in April as one of the 50 Sustainability and Climate Leaders by Bloomberg and TB Media Group Page 3 | First Quarter 2021 Financial Results | 05.12.2021
Financial Highlights Financials (in millions, except per share data) Q1-2021 Q1-2020 % Variance Net sales $1,046.7 $852.8 22.7% Gross margin 273.9 205.9 33.0% Gross margin % 26.2% 24.1% 8.7% Net income $151.8 $85.5 77.5% EPS diluted $0.90 $0.51 76.5% $110 $126 $122 $146 $177 $104 $69 $96 $68 $108 $0 $150 $300 Q1 2020 Q2 2020 Q3 2020 Q4 2020 Q1 2021 Global Ingredients DGD $213.3 $195.2 $218.5 (In millions) Trailing 5 Quarters Combined adjusted EBITDA $214.5 $284.8 (1) Leverage ratio calculated per bank covenantPage 4 | First Quarter 2021 Financial Results | 05.12.2021 17.0% 19.0% 21.0% 23.0% 25.0% 27.0% Darling Ingredients Quarterly Gross Margin % Gross Margin % Balance Sheet (in millions, except ratio data) As of 04/03/2021 As of 01/02/2021 Cash (including restricted) $71.4 $81.7 Revolver availability $879.9 $893.9 Net working capital $258.7 $257.5 Total debt $1,444.5 $1,508.1 Leverage ratio (1) 1.67x 1.90x Capital expenditures $60.8 $61.6
Financial Highlights Financials (in millions) Q1-2021 Q1-2020 % Variance Segment EBITDA Feed $124.4 $70.2 77.2% Food 46.4 39.4 17.8% Fuel 128.7 118.8 8.4% Corporate (14.7) (15.1) 2.6% Total Combined adjusted EBITDA $284.8 $213.3 33.5% Feed 42% Food 15% Fuel 43% Q1 2021 % of Total EBITDA by Segment (before corporate) 2021 EBITDA Guidance Revised May 2021 Low High (in millions) By Segment Feed $475 $510 Food 180 190 Fuel* 480 510 Corporate (60.0) (60.0) Total Combined adjusted EBITDA $1.075 $1.150 *(Estimating DGD @ 365 mmg @ $2.25 to $2.40/EBITDA gal. for '21) Page 5 | First Quarter 2021 Financial Results | 05.12.2021 Avg Price Avg Price 1st Quarter 4th Quarter 2021 2020 Chg % Chg Jacobsen Index: MBM (Ill inois) $ 386.97 $ 305.29 $ 81.68 26.8% Feed Grade PM (Mid-South) 357.79$ 283.65$ 74.14$ 26.1% Pet Food PM (Mid-South) $ 845.08 $ 733.12 $ 111.96 15.3% Feathermeal (Mid-South) 539.02$ 405.49$ 133.53$ 32.9% BFT (Chicago) $ 46.42 $ 34.24 $ 12.18 35.6% YG (Il l inois) 34.45$ 25.22$ 9.23$ 36.6% Corn (Il l inois) $ 5.56 $ 4.29 $ 1.27 29.6% Thomson Reuters: Palm Oil (CIF Rotterdam) Ton $ 1,084.00 $ 850.00 $ 234.00 27.5% Soy meal (CIF Rotterdam) Ton 535.0$ 485.0$ 50.0$ 10.3%
Feed Segment Key Drivers: • Higher protein and animal fat prices drove the overall feed segment sales up 27.1% quarter over quarter on flat raw materials processed. Gross margin increased $52.7 million or 42.4% quarter over quarter led by higher commodity prices across all products sold. • UCO volumes continue to run approximately 5% below historical levels and the northeast U.S. and California still lag as a result of COVID 19 restrictions behind the rest of North America. • Fat prices (BFT & YG) are up for 2021 compared to a year ago. BFT average price is 42% higher than 2020 and YG was up 50.3% in Q1 2021 compared to the prior year. Protein pricing (MBM) was also higher for Q1 2021 by 63.2% compared to 2020 Page 6 | First Quarter 2021 Financial Results | 05.12.2021 US$ (in millions) 1Q 2021 1Q2020 Net Sa les 651,444$ 512,625$ Cost of sa les and operating expenses 474,581 388,453 Gross Margin 176,863$ 124,172$ Loss/(ga in) on sa le of assets (139) 50 Sel l ing, genera l and adminis trative expenses 52,620 53,947 Depreciation and amortization 54,609 53,521 Segment operating income 69,773$ 16,654$ Equity in net income of unconsol idated subs idiaries 612$ 869$ Segment Income 70,385$ 17,523$ Segment EBITDA 124,382$ 70,175$ Raw material processed (mmts) 2.23 2.24 Fats Proteins Other Rendering Total Rendering Used Cooking Oil Bakery Other Total Net Sales Three Months Ended March 28, 2020 163.3$ 196.0$ 47.1$ 406.4$ 47.6$ 47.1$ 11.5$ 512.6$ Changes: Increase in sales volumes 4.9 0.8 - 5.7 (6.1) (0.9) - (1.3) Increase in finished product prices 58.2 52.3 - 110.5 9.5 16.9 - 136.9 Increase/(Decrease) due to currency exchange rates 2.6 6.4 0.1 9.1 - - - 9.1 Other change - - (4.2) (4.2) - - (1.7) (5.9) Total Change: 65.7 59.5 (4.1) 121.1 3.4 16.0 (1.7) 138.8 Net Sales Three Months Ended April 3, 2021 229.0$ 255.5$ 43.0$ 527.5$ 51.0$ 63.1$ 9.8$ 651.4$ Feed Segment Sales Change in Net Sales - 2020 to 2021 Three Months Ended
Food Segment • Net sales for the food segment grew $27.8 million or 10.3% in Q1 2021 compared to the prior year, driven by higher collagen volume sales and higher edible fat prices. • Segment income improved $12.4 million or was 65.2% higher driven by higher sales and by a reduction of depreciation and amortization expenses of 26.7% quarter over quarter as certain assets became fully depreciated at the end of 2020. • Peptan product sales continue to show strength into 2021. • Continue to expand bio-medical product offerings with our collagen peptides. Key Drivers: 80% 12% 8% 2021 % of Sales Breakdown Collagen Edible fats Other products 1) FY 2019 excludes the $13.1 million gain on an asset sale in ChinaPage 7 | First Quarter 2021 Financial Results | 05.12.2021 $100 $120 $140 $160 $180 $200 Food Segment Trailing 4Q adjusted EBITDA Trailing 4 Q's US$ (in millions) 1Q 2021 1Q2020 Net Sa les 298,065$ 270,294$ Cost of sa les and operating expenses 226,413 205,430 Gross Margin 71,652$ 64,864$ Loss on sa le of assets 55 2 Sel l ing, genera l and adminis trative expenses 25,191 25,476 Depreciation and amortization 14,883 20,305 Segment operating income 31,523$ 19,081$ Equity in net income of unconsol idated subs idiaries -$ -$ Segment Income 31,523$ 19,081$ Segment EBITDA 46,406$ 39,386$ Raw material processed (mmts) 0.3 0.3
Fuel Segment (Includes Diamond Green Diesel JV consolidated EBITDA) Key Drivers: • Q1-2021 Combined adjusted EBITDA of $128.7 million, with DGD earning $2.77 per gallon on 78.0 million gallons sold • Fuel segment incurred $778,000 of additional restructuring charges related primarily to severance expenses as a result of shuttering the Company’s two biodiesel facilities at year-end. • DGD – Norco, LA expansion remains on track and is scheduled to be at full production in the middle of Q4-2021. This expansion will add 400 million gallons of renewable diesel production and add approximately 30 million gallons of renewable naphtha. • DGD Port Arthur location construction is underway. This new 470- million-gallon facility is expected to be operational in the second half of 2023. (1) Includes Fuel Segment EBITDA and Darling's share of DGD EBITDA. • Excludes feed stock (raw material) processed at the DGD joint venture. (2) Quarterly average prices source is The Jacobson Page 8 | First Quarter 2021 Financial Results | 05.12.2021 $0.15 $0.20 $0.25 $0.30 $0.35 $0.40 $0.30 $0.50 $0.70 $0.90 $1.10 Q1-19 Q2-19 Q3-19 Q4-19 Q1-20 Q2-20 Q3-20 Q4-20 Q1-21 Quarterly Avg. Prices D4 RINS & Yellow Grease2 D4 RIN Qtrly Avg YG Avg Qtrly Price Diamond Green Diesel US$ and gallons (in millions) 1Q 2021 1Q2020 EBITDA (Enti ty) - in quarter recorded w/no BTC 137.4$ 127.3$ EBITDA (Enti ty) - BTC adjusted to when earned 216.4$ 207.3$ Pro forma Adjusted EBITDA (Darl ing's share) 108.2$ 103.6$ Tota l ga l lons produced 78.6 77.0 Tota l ga l lons sold/shipped 78.0 78.9 EBITDA per gallon sold 2.77 2.63 US$ (in millions) 1Q 2021 1Q2020 Net Sa les 97,207$ 69,923$ Cost of sa les and operating expenses 71,790 53,025 Gross Margin 25,417$ 16,898$ Loss on sa le of assets 20 9 Sel l ing, genera l and adminis trative expenses 4,867 1,654 Restructuring and asset impairment charges 778 - Depreciation and amortization 6,155 8,092 Equity in net income of Diamond Green Diesel 102,225 97,820 Segment operating income 115,822$ 104,963$ Equity in net income of unconsol idated subs idiaries -$ -$ Segment Income 115,822$ 104,963$ Segment EBITDA 20,530$ 15,235$ DGD adjusted EBITDA (Darl ing's Share) 108,200$ 103,634$ Segment EBITDA (1) 128,730$ 118,869$ Raw material processed (mmts) * 0.3 0.3
April 2021 400-million-gallon expansion Existing 290-million-gallon plant Page 9 | First Quarter 2021 Financial Results | 05.12.2021
April 2021 Port Arthur, TX 470-million-gallon facility Page 10 | First Quarter 2021 Financial Results | 05.12.2021
Appendix Additional Information
California LCFS & RIN value history Source: The Jacobson and StoneX Page 12 | First Quarter 2021 Financial Results | 05.12.2021 $0 $50 $100 $150 $200 $250 1 / 1 / 2 0 1 6 4 / 1 / 2 0 1 6 7 / 1 / 2 0 1 6 1 0 / 1 / 2 0 1 6 1 / 1 / 2 0 1 7 4 / 1 / 2 0 1 7 7 / 1 / 2 0 1 7 1 0 / 1 / 2 0 1 7 1 / 1 / 2 0 1 8 4 / 1 / 2 0 1 8 7 / 1 / 2 0 1 8 1 0 / 1 / 2 0 1 8 1 / 1 / 2 0 1 9 4 / 1 / 2 0 1 9 7 / 1 / 2 0 1 9 1 0 / 1 / 2 0 1 9 1 / 1 / 2 0 2 0 4 / 1 / 2 0 2 0 7 / 1 / 2 0 2 0 1 0 / 1 / 2 0 2 0 1 / 1 / 2 0 2 1 4 / 1 / 2 0 2 1 Monthly Average LCFS Carbon Credit Price (USD/MT)
Feed Segment - Historical (1) Does not include Unconsolidated Subsidiaries EBITDAPage 13 | First Quarter 2021 Financial Results | 05.12.2021 US$ (in millions) Q1-2019 Q2-2019 Q3-2019 Q4-2019 Total 2019 Q1-2020 Q2-2020 Q3-2020 Q4-2020 Total 2020 Q1-2021 Net Sales 495.8$ 487.4$ 497.0$ 490.4$ 1,970.6$ 512.6$ 503.7$ 483.0$ 572.8$ 2,072.1$ 651.4$ Gross Margin 109.0 110.5 117.2 114.3 451.0 124.2 135.8 121.4 146.2 527.6 176.9 Gross Margin % 22.0% 22.7% 23.6% 23.3% 22.9% 24.2% 27.0% 25.1% 25.5% 25.5% 27.1% Loss/(gain) on sale of assets (4.4) (0.5) (2.4) (0.4) (7.7) 0.1 0.1 0.2 (0.3) - (0.1) SG&A 48.8 46.5 47.3 57.9 200.5 53.9 50.5 49.0 56.3 209.7 52.6 SG&A Margin % 9.8% 9.5% 9.5% 11.8% 10.2% 10.5% 10.0% 10.2% 9.8% 10.1% 8.1% Operating Income 15.2 15.8 22.1 1.6 54.7 16.7 32.5 18.5 28.9 96.6 69.8 Adj. EBITDA (1) 64.5$ 64.5$ 72.3$ 56.8$ 258.2$ 70.2$ 85.2$ 72.3$ 90.2$ 317.8$ 124.4$ Adj. EBITDA Margin % 13.0% 13.2% 14.5% 11.5% 13.2% 13.7% 16.9% 15.0% 15.7% 15.3% 19.1% Raw Material Processed (mmts) 2.18 2.16 2.19 2.21 8.74 2.24 2.15 2.18 2.37 8.95 2.23
Historical Pricing Jacobson, Wall Street Journal and Thomson Reuters Page 14 | First Quarter 2021 Financial Results | 05.12.2021 2021 Avg. Jacobsen Prices January February March Q1Avg. April May June Q2 Avg. July August September Q3 Avg. October November December Q4 Avg. BFT - Chicago Renderer / cwt $39.74 $44.68 $51.98 $45.47 YG - IL / cwt $29.01 $34.36 $39.02 $34.13 Choice White Grease - IL / cwt $36.21 $39.37 $50.43 $42.00 Poultry Fat - Southeast / cwt $39.87 $43.13 $47.70 $43.57 Poultry Grease - Mid South / cwt $39.71 $43.74 $48.04 $43.83 Distiller's Corn Oil - IL / cwt $39.92 $43.50 $51.25 $44.89 Corn - Decatur, IL / bushel $5.04 $5.35 $5.65 $5.35 MBM - IL / ton $355.5 $380.5 $418.3 $384.77 MBM - CA / ton $294.7 $346.1 $365.0 $335.26 Pork Meal - IA IL / ton $363.9 $397.4 $413.0 $391.45 Feed Grade PM - Carolina / ton $369.5 $427.1 $450.0 $415.53 Feed Grade PM - Mid South / ton $326.6 $386.6 $359.8 $357.65 Pet Food PM - SE / ton $877.0 $831.7 $818.5 $842.39 Pet Food PM - Mid South / ton $877.0 $845.4 $818.5 $846.95 Feather meal - AL GA / ton $463.7 $477.6 $512.5 $484.61 Feather meal - Mid South / ton $512.1 $563.2 $541.3 $538.87 Blood Meal - Ruminant MO River / ton $939.5 $1,047.4 $1,082.6 $1,023.2 D4 RINs (B21) $1.03 $1.10 $1.38 $1.17 Comparison Q4-2020 Q1-2021 % Q1-2020 Q1-2021 % FY 2020 FY 2021 % Q1Avg. Q2 Avg. Q3 Avg. Q4 Avg. Avg. Avg. Change Avg. Avg. Change Avg. Avg. Change BFT - Chicago Renderer / cwt $45.47 $34.24 $45.47 32.79% $32.70 $45.47 39.04% $31.48 $0.00 -100.00% YG - IL / cwt $34.13 $25.22 $34.13 35.33% $22.92 $34.13 48.90% $21.95 $0.00 -100.00% Choice White Grease - IL / cwt $42.00 $31.44 $42.00 33.59% $27.02 $42.00 55.45% $31.48 $0.00 -100.00% Poultry Grease - SE / cwt $43.57 $33.39 $43.57 30.49% $28.32 $43.57 53.83% $29.43 $0.00 -100.00% Poultry Grease - Mid South / cwt $43.83 $30.03 $43.83 45.98% $25.90 $43.83 69.23% $29.88 $0.00 -100.00% Distiller's Corn Oil - IL / cwt $44.89 $33.10 $44.89 35.61% $26.91 $44.89 66.82% $28.82 $0.00 -100.00% Corn - Decatur, IL / bushel $5.35 $4.29 $5.35 24.67% $3.90 $5.35 37.14% $3.75 $0.00 -100.00% MBM - IL / ton $384.77 $305.29 $384.77 26.04% $237.10 $384.77 62.28% $261.43 $0.00 -100.00% MBM - CA / ton $335.26 $253.48 $335.26 32.26% $188.11 $335.26 78.23% $211.77 $0.00 -100.00% Pork Meal - IA IL / ton $391.45 $306.81 $391.45 27.59% $208.51 $391.45 87.74% $257.79 $0.00 -100.00% Feed Grade PM - Carolina / ton $415.53 $311.66 $415.53 33.33% $227.02 $415.53 83.04% $267.70 $0.00 -100.00% Feed Grade PM - Mid South / ton $357.65 $283.65 $357.65 26.09% $225.73 $357.65 58.44% $251.13 $0.00 -100.00% Pet Food PM - SE / ton $842.39 $718.30 $842.39 17.27% $502.62 $842.39 67.60% $607.65 $0.00 -100.00% Pet Food PM - Mid South / ton $846.95 $733.12 $846.95 15.53% $540.44 $846.95 56.71% $633.61 $0.00 -100.00% Feathermeal - AL GA / ton $484.61 $362.64 $484.61 33.63% $272.60 $484.61 77.77% $289.51 $0.00 -100.00% Feathermeal - Mid South / ton $538.87 $405.58 $538.87 32.86% $282.50 $538.87 90.75% $314.20 $0.00 -100.00% Blood Meal - Ruminant MO River / ton $1,023.2 $800.35 $1,023.2 27.84% $886.30 $1,023.2 15.44% $771.37 $0.00 -100.00% D4 Rins $1.17 $0.88 $1.17 32.83% $0.50 $1.17 133.94% $0.64 $0.00 -100.00% 2021
Food Segment - Historical (1) Adjusted for the $13.1 million gain on the asset sale in China for Q2-19 and FY-19 Page 15 | First Quarter 2021 Financial Results | 05.12.2021 US$ (in millions) Q1-2019 Q2-2019 Q3-2019 Q4-2019 Total 2019 Q1-2020 Q2-2020 Q3-2020 Q4-2020 Total 2020 Q1-2021 Net Sales 279.2$ 274.8$ 276.5$ 288.6$ 1,119.1$ 270.3$ 278.9$ 291.8$ 344.6$ 1,185.7$ 298.1$ Gross Margin 65.1 60.4 61.8 67.2 254.5 64.9 58.8 65.1 76.3 265.0 71.7 Gross Margin % 23.3% 22.0% 22.4% 23.3% 22.7% 24.0% 21.1% 22.3% 22.1% 22.4% 24.0% Loss/(gain) on sale of assets 0.1 (13.4) (0.2) 0.3 (13.2) - - 0.0 0.5 0.5 0.1 SG&A 21.9 23.4 22.8 29.3 97.4 25.5 22.6 23.4 26.0 97.4 25.2 SG&A Margin % 7.8% 8.5% 8.2% 10.2% 8.7% 9.4% 8.1% 8.0% 7.5% 8.2% 8.5% Operating Income 23.6 30.5 19.5 17.0 90.6 19.1 16.3 21.1 26.9 83.4 31.5 Adj. EBITDA (1) 43.2$ 37.1$ 39.3$ 37.5$ 157.1$ 39.4$ 36.3$ 41.7$ 49.8$ 167.1$ 46.4$ Adj. EBITDA Margin % 15.5% 13.5% 14.2% 13.0% 14.0% 14.6% 13.0% 14.3% 14.4% 14.1% 15.6% Raw Material Processed (mmts) 0.3 0.3 0.3 0.3 1.1 0.3 0.3 0.3 0.3 1.1 0.3
Fuel Segment - Historical (1) Includes Fuel Segment EBITDA and Darling's share of DGD EBITDA. * Excludes feed stock (raw material) processed at the DGD joint venture. Page 16 | First Quarter 2021 Financial Results | 05.12.2021 Diamond Green Diesel (50% Joint Venture) US$ and gallons (in millions) Q1-2019 Q2-2019 Q3-2019 Q4-2019 Total 2019 Q1-2020 Q2-2020 Q3-2020 Q4-2020 Total 2020 Q1-2021 EBITDA (Entity) - in quarter recorded w/no BTC 59.7$ 87.8$ 79.1$ 121.7$ 348.3$ 127.3$ 66.0$ 112.9$ 79.5$ 385.7$ 137.4$ EBITDA (Entity) - BTC adjusted to when earned 130.2$ 157.2$ 137.3$ 198.2$ 623.0$ 207.3$ 138.2$ 192.9$ 136.3$ 674.7$ 216.4$ Pro forma Adjusted EBITDA (Darling's share) 65.1$ 78.6$ 68.6$ 99.1$ 311.5$ 103.6$ 69.1$ 96.4$ 68.2$ 337.3$ 108.2$ Total gallons produced 67.6 73.2 55.9 77.9 274.6 77.0 74.5 77.3 60.5 289.3 78.6 Total gallons sold/shipped 71.1 70.0 58.7 77.1 276.9 78.9 72.3 80.0 56.8 288.0 78.0 EBITDA per gallon sold/shipped 1.83$ 2.25$ 2.34$ 2.57$ 2.25$ 2.63$ 1.91$ 2.41$ 2.40$ 2.34$ 2.77$ US$ (in millions) Q1-2019 Q2-2019 Q3-2019 Q4-2019 Total 2019 Q1-2020 Q2-2020 Q3-2020 Q4-2020 Total 2020 Q1-2021 Net Sales 60.1$ 65.0$ 68.6$ 80.6$ 274.3$ 69.9$ 66.0$ 75.7$ 102.4$ 314.1$ 97.2$ Gross Margin 10.0 11.7 10.1 37.6 69.4 16.9 21.8 25.7 26.2 90.5 25.4 Gross Margin % 16.7% 18.0% 14.7% 46.7% 25.3% 24.2% 32.9% 33.9% 25.6% 28.8% 26.1% Loss/(gain) on sale of assets - - - 0.3 0.3 - (0.0) (0.1) (0.0) (0.1) 0.0 SG&A (0.8) 0.4 0.9 2.3 2.8 1.6 4.0 5.0 5.4 16.0 4.9 Restructuring and asset impairment charges - - - - - - - - 38.2 38.2 0.8 Depreciation and amortization 7.8 8.4 7.9 7.8 31.9 8.1 8.0 8.6 9.5 34.2 6.2 Equity in net income of DGD 24.3 38.1 32.0 270.1 364.5 97.8 63.5 91.1 62.7 315.1 102.2 Segment Income 27.3 41.1 33.3 297.2 398.8 105.0 73.3 103.1 35.9 317.3 115.8 Segment EBITDA 10.8 11.4 9.2 35.0 66.3 15.3 17.8 20.7 20.8 74.6 20.5 DGD adjusted EBITDA (Darling's Share) 29.8 43.8 39.5 276.2 389.4 103.6 69.1 96.4 68.2 337.3 108.2 Combined Adj. EBITDA (1) 40.6$ 55.2$ 48.7$ 311.2$ 455.7$ 118.9$ 86.9$ 117.1$ 89.0$ 411.9$ 128.7$ Raw Material Processed*(mmts) 0.3 0.3 0.3 0.3 1.3 0.3 0.3 0.3 0.4 1.3 0.3
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, goodwill and long-lived asset impairment, interest expense, (income)/loss from discontinued operations, net of tax, income tax provision, other income/(expense) and equity in net loss of unconsolidated subsidiary. Management believes that Adjusted EBITDA is useful in evaluating the Company’s operating performance compared to that of other companies in its industry because the calculation of Adjusted EBITDA generally eliminates the effects of financing, income taxes and certain non-cash and other items that may vary for different companies for reasons unrelated to overall operating performance. As a result, the Company’s management uses Adjusted EBITDA as a measure to evaluate performance and for other discretionary purposes. In addition to the foregoing, management also uses or will use Adjusted EBITDA to measure compliance with certain financial covenants under the Company’s Senior Secured Credit Facilities and 5.25% Notes and 3.625% Notes that were outstanding at April 3, 2021. 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. Page 17 | First Quarter 2021 Financial Results | 05.12.2021
Adjusted EBITDA Page 18 | First Quarter 2021 Financial Results | 05.12.2021 Adjusted EBITDA April 3, March 28, (U.S. dollars in thousands) 2021 2020 Net income attributable to Darl ing 151,766$ 85,510$ Depreciation and amortization 78,534 84,671 Interest expense 16,428 19,090 Income tax expense 28,708 18,300 Restructuring and asset impairment charges 778 - Foreign currency loss / (ga in) 410 (1,664) Other expense, net 1,159 1,881 Equity in net income of Diamond Green Diesel (102,225) (97,820) Equity in net income of unconsol idated subs idiaries (612) (869) Net income attributable to noncontrol l ing interests 1,652 581 Adjusted EBITDA (Non-GAAP) 176,598$ 109,680$ Foreign currency exchange impact (8,050) (1) - Pro forma Adjusted EBITDA to Foreign Currency (Non-GAAP) 168,548$ 109,680$ DGD Joint Venture Adjusted EBITDA (Darl ing's Share) 108,200$ 103,634$ Darl ing plus Darl ing's share of DGD Joint Venture Adjusted EBITDA 284,798$ 213,314$ (1) The average rate assumption used in this calculation was the actual fiscal average rate for the three months ended April 3, 2021 of €1.00:USD$1.20 and CAD$1.00:USD$0.79, as compared to the average rate for the three months ended March 28, 2020 of €1.00:USD$1.10 and CAD$1.00:USD$0.75, respectively. Three Months Ended
Upcoming IR Events • BMO FTM Conference- 5.19.21 • Baird Global Consumer Conference– 6.08.21 • Tudor, Pickering Holt Hotter ‘N Hell Conference – 6.10.21 • Roth Capital Virtual London Conference – 6.22.21 Page 19 | First Quarter 2021 Financial Results | 05.12.2021
Thank you