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) | March 2, 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 March 2, 2021, Darling Ingredients Inc. (the “Company”) issued a press release announcing financial results for the fourth quarter and fiscal year ended January 2, 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, March 3, 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 March 2, 2021 (furnished pursuant to Item 2.02). |
|---|---|
| 99.2 | Slide Presentation for March 3, 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: March 2, 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 FOURTH QUARTER and FISCAL YEAR 2020 FINANCIAL RESULTS
IRVING, TEXAS, Mar. 2, 2021/PRNewswire/ Darling Ingredients Inc. (NYSE: DAR, “Darling”) --
Fourth Quarter 2020
•Net income of $44.7 million, or $0.27 per GAAP diluted share
•Adjusted net income of $75.3 million, or $0.45 per diluted share, excluding the $30.6 million after-tax restructuring and asset impairment charge related to the shutdown of the company’s biodiesel plants in Montreal, Quebec and Butler, Kentucky
•Net Sales of $1.0 billion
•Combined adjusted EBITDA of $214.5 million
•Global Ingredients business record Q4 EBITDA of $146.3 million
Fiscal Year 2020
•Net income of $296.8 million, or $1.78 per GAAP diluted share
•Adjusted net income of $327.4 million, or $1.96 per diluted share, excluding the $30.6 million after-tax restructuring and asset impairment charge related to the shutdown of the company’s biodiesel plants in Montreal, Quebec and Butler, Kentucky
•Net Sales of $3.6 billion
•Combined adjusted EBITDA of $841.5 million
•Global Ingredients business FY 2020 EBITDA of $504.2 million
•Diamond Green Diesel sold a record 288 million gallons of renewable diesel at an average of $2.34 EBITDA per gallon
Darling reported net sales of $1.0 billion for the fourth quarter of 2020, as compared with net sales of $859.4 million for the same period a year ago. Net income attributable to Darling for the three months ended January 2, 2021 was $44.7 million, or $0.27 per diluted share, compared to a net income of $242.6 million, or $1.44 per diluted share, for the fourth quarter of 2019. Excluding the restructuring and asset impairment charge related to the shutdown of the company’s 2 biodiesel locations, adjusted net income for the three months ended January 2, 2021 was $75.3 million, or $0.45 per diluted share. The results for the three months ending December 28, 2019 included retroactive blenders tax credit (BTC) for 2018 and all of 2019. Adjusted net income for the fourth quarter 2019, excluding the retroactive BTC of 2018 and the first three quarters of 2019, was $50.1 million, or $0.30 per diluted share.
“Our global ingredients business performed well in the fourth quarter of 2020 generating $146.3 million of EBITDA,” said Randall C. Stuewe, Chairman and Chief Executive Officer of Darling Ingredients Inc. “We made the decision to shutdown operations of our two biodiesel plants due to unfavorable biodiesel industry economics and there are no current plans to
resume biodiesel production at these facilities in the future. The closure of the facilities will create additional feedstock for growth of renewable diesel in our DGD Joint Venture.”
“DGD met our expectation for 2020 selling 288 million gallons of renewable diesel at an average of $2.34 EBITDA per gallon,” Stuewe added. The earnings of DGD have been consistent and steady over the last three years and based on the current environment, we believe that DGD should generate around $2.25 EBITDA per gallon for 2021. Also, we anticipate the startup of the 400 million gallon expansion in Norco, LA to commission in the fourth quarter, potentially adding some capacity to finish out the year,” Stuewe added.
| News Release<br><br>March 2, 2021<br><br>Page 2 |
|---|
The leverage ratio as measured by the company’s bank covenant was 1.90x at the end of the year. The company reduced its Term Loan B outstanding balance by $195 million during 2020. Capital expenditures totaled approximately $280 million for all of 2020, down $79 million from 2019, which was due to the company initiating a temporary reduction in non-essential capital expenditures in 2020.
For the 2020 fiscal year, Darling reported net sales of $3.6 billion, as compared with net sales of $3.4 billion for 2019. Net
Income attributable to Darling for 2020 was $296.8 million, or $1.78 per diluted share, as compared to net income of $312.6
million, or $1.86 per diluted share, for 2019. Excluding the restructuring and asset impairment charge related to the
shutdown of the company’s 2 biodiesel locations, adjusted net income for 2020 was $327.4 million, or $1.96 per diluted
share. Excluding the retroactive BTC related to 2018, adjusted net income for fiscal 2019 was $226.0 million, or $1.34 per
diluted share.
As of January 2, 2021, Darling had $81.7 million in cash and cash equivalents, and $893.9 million available under its
committed revolving credit agreement. Total debt outstanding at the end of the fiscal year was $1.5 billion.
Combined adjusted EBITDA was $214.5 million for the fourth quarter of 2020, compared to $193.3 million for the same
period in 2019, excluding retroactive BTCs recorded in the 2019 fourth quarter. For the 2020 fiscal year, combined adjusted
EBITDA totaled $841.5 million, compared to $739.7 million for fiscal year 2019, excluding the 2018 retroactive BTC.
| News Release<br><br>March 2, 2021<br><br>Page 3 |
|---|
Segment Financial Tables (in thousands)
| Three Months Ended January 2, 2021 | Feed Ingredients | Food Ingredients | Fuel Ingredients | Corporate | Total | |||||
|---|---|---|---|---|---|---|---|---|---|---|
| Net sales | $ | 572,764 | $ | 344,631 | $ | 102,444 | $ | — | $ | 1,019,839 |
| Cost of sales and operating expenses | 426,593 | 268,348 | 76,251 | — | 771,192 | |||||
| Gross margin | $ | 146,171 | $ | 76,283 | $ | 26,193 | $ | — | $ | 248,647 |
| Loss/(gain) on sale of assets | (274) | 512 | (22) | — | 216 | |||||
| Selling, general and administrative expenses | 56,289 | 26,000 | 5,369 | 14,459 | 102,117 | |||||
| Restructuring and asset impairment charges | — | — | 38,167 | — | 38,167 | |||||
| Depreciation and amortization | 61,219 | 22,827 | 9,513 | 2,908 | 96,467 | |||||
| Equity in net income of Diamond Green Diesel | — | — | 62,684 | — | 62,684 | |||||
| Segment operating income/(loss) | $ | 28,937 | $ | 26,944 | $ | 35,850 | $ | (17,367) | $ | 74,364 |
| Equity in net income of unconsolidated subsidiaries | $ | 726 | $ | — | $ | — | $ | — | $ | 726 |
| Segment income/(loss) | $ | 29,663 | $ | 26,944 | $ | 35,850 | $ | (17,367) | $ | 75,090 |
| Segment EBITDA | $ | 90,156 | $ | 49,771 | $ | 20,846 | $ | (14,459) | $ | 146,314 |
| DGD Adjusted EBITDA (Darling's Share) | $ | — | $ | — | $ | 68,171 | $ | — | $ | 68,171 |
| Combined adjusted EBITDA | $ | 90,156 | $ | 49,771 | $ | 89,017 | $ | (14,459) | $ | 214,485 |
| Three Months Ended December 28, 2019 | Feed Ingredients | Food Ingredients | Fuel Ingredients | Corporate | Total | |||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| Net sales | $ | 490,317 | $ | 288,619 | $ | 80,492 | $ | — | $ | 859,428 |
| Cost of sales and operating expenses | 375,990 | 221,527 | 43,016 | — | 640,533 | |||||
| Gross margin | $ | 114,327 | $ | 67,092 | $ | 37,476 | $ | — | $ | 218,895 |
| Loss/(gain) on sale of assets | (377) | 343 | 297 | — | 263 | |||||
| Selling, general and administrative expenses | 57,872 | 29,234 | 2,179 | 19,669 | 108,954 | |||||
| Depreciation and amortization | 55,185 | 20,556 | 7,891 | 2,821 | 86,453 | |||||
| Equity in net income of Diamond Green Diesel | — | — | 270,062 | — | 270,062 | |||||
| Segment operating income/(loss) | $ | 1,647 | $ | 16,959 | $ | 297,171 | $ | (22,490) | $ | 293,287 |
| Equity in net loss of unconsolidated subsidiaries | $ | 1,515 | $ | — | $ | — | $ | — | $ | 1,515 |
| Segment income/(loss) | $ | 3,162 | $ | 16,959 | $ | 297,171 | $ | (22,490) | $ | 294,802 |
| Segment EBITDA | $ | 56,832 | $ | 37,515 | $ | 35,000 | $ | (19,669) | $ | 109,678 |
| DGD Adjusted EBITDA (Darling's Share) | $ | — | $ | — | $ | 276,146 | $ | — | $ | 276,146 |
| Combined adjusted EBITDA | $ | 56,832 | $ | 37,515 | $ | 311,146 | $ | (19,669) | $ | 385,824 |
| News Release<br><br>March 2, 2021<br><br>Page 4 | ||||||||||
| --- |
Segment Financial Tables (in thousands) continued
| Twelve Months Ended January 2, 2021 | Feed Ingredients | Food Ingredients | Fuel Ingredients | Corporate | Total | |||||
|---|---|---|---|---|---|---|---|---|---|---|
| Net sales | $ | 2,072,104 | $ | 1,185,701 | $ | 314,118 | $ | — | $ | 3,571,923 |
| Cost of sales and operating expenses | 1,544,524 | 920,682 | 223,609 | — | 2,688,815 | |||||
| Gross margin | $ | 527,580 | $ | 265,019 | $ | 90,509 | $ | — | $ | 883,108 |
| Loss/(gain) on sale of assets | 19 | 482 | (75) | — | 426 | |||||
| Selling, general and administrative expenses | 209,748 | 97,406 | 16,014 | 55,328 | 378,496 | |||||
| Restructuring and asset impairment charges | — | — | 38,167 | — | 38,167 | |||||
| Depreciation and amortization | 221,187 | 83,752 | 34,218 | 11,021 | 350,178 | |||||
| Equity in net income of Diamond Green Diesel | — | — | 315,095 | — | 315,095 | |||||
| Segment operating income/(loss) | $ | 96,626 | $ | 83,379 | $ | 317,280 | $ | (66,349) | $ | 430,936 |
| Equity in net income of unconsolidated subsidiaries | $ | 3,193 | $ | — | $ | — | $ | — | $ | 3,193 |
| Segment income/(loss) | $ | 99,819 | $ | 83,379 | $ | 317,280 | $ | (66,349) | $ | 434,129 |
| Segment EBITDA | $ | 317,813 | $ | 167,131 | $ | 74,570 | $ | (55,328) | $ | 504,186 |
| DGD Adjusted EBITDA (Darling's Share) | $ | — | $ | — | $ | 337,348 | $ | — | $ | 337,348 |
| Combined adjusted EBITDA | $ | 317,813 | $ | 167,131 | $ | 411,918 | $ | (55,328) | $ | 841,534 |
| Twelve Months Ended December 28, 2019 | Feed Ingredients | Food Ingredients | Fuel Ingredients | Corporate | Total | |||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| Net sales | $ | 1,970,561 | $ | 1,119,085 | $ | 274,259 | $ | — | $ | 3,363,905 |
| Cost of sales and operating expenses | 1,519,596 | 864,618 | 204,871 | — | 2,589,085 | |||||
| Gross margin | $ | 450,965 | $ | 254,467 | $ | 69,388 | $ | — | $ | 774,820 |
| Loss/(gain) on sale of assets | (7,720) | (13,175) | 313 | — | (20,582) | |||||
| Selling, general and administrative expenses | 200,487 | 97,363 | 2,762 | 57,911 | 358,523 | |||||
| Depreciation and amortization | 203,456 | 79,671 | 31,946 | 10,437 | 325,510 | |||||
| Equity in net income of Diamond Green Diesel | — | — | 364,452 | — | 364,452 | |||||
| Segment operating income/(loss) | $ | 54,742 | $ | 90,608 | $ | 398,819 | $ | (68,348) | $ | 475,821 |
| Equity in net loss of unconsolidated subsidiaries | $ | 428 | $ | — | $ | — | $ | — | $ | 428 |
| Segment income/(loss) | $ | 55,170 | $ | 90,608 | $ | 398,819 | $ | (68,348) | $ | 476,249 |
| Segment EBITDA | $ | 258,198 | $ | 170,279 | $ | 66,313 | $ | (57,911) | $ | 436,879 |
| DGD Adjusted EBITDA (Darling's Share) | $ | — | $ | — | $ | 389,416 | $ | — | $ | 389,416 |
| Combined adjusted EBITDA | $ | 258,198 | $ | 170,279 | $ | 455,729 | $ | (57,911) | $ | 826,295 |
| News Release<br><br>March 2, 2021<br><br>Page 5 | ||||||||||
| --- |
Darling Ingredients Inc. and Subsidiaries
Consolidated Balance Sheets
January 2, 2021 and December 28, 2019
(in thousands)
| January 2, | December 28, | ||||
|---|---|---|---|---|---|
| 2021 | 2019 | ||||
| ASSETS | |||||
| Current assets: | |||||
| Cash and cash equivalents | $ | 81,617 | $ | 72,935 | |
| Restricted cash | 103 | 110 | |||
| Accounts receivable, net | 405,387 | 406,338 | |||
| Inventories | 405,922 | 362,957 | |||
| Prepaid expenses | 47,793 | 46,599 | |||
| Income taxes refundable | 3,883 | 3,317 | |||
| Other current assets | 42,289 | 25,032 | |||
| Total current assets | 986,994 | 917,288 | |||
| Property, plant and equipment, net | 1,863,814 | 1,802,411 | |||
| Intangible assets, net | 473,680 | 526,394 | |||
| Goodwill | 1,260,240 | 1,223,291 | |||
| Investment in unconsolidated subsidiaries | 804,682 | 689,354 | |||
| Operating lease right-of-use assets | 146,563 | 124,726 | |||
| Other assets | 60,682 | 47,400 | |||
| Deferred income taxes | 16,676 | 14,394 | |||
| $ | 5,613,331 | $ | 5,345,258 | ||
| LIABILITIES AND STOCKHOLDERS' EQUITY | |||||
| Current liabilities: | |||||
| Current portion of long-term debt | $ | 27,538 | $ | 90,996 | |
| Accounts payable, principally trade | 255,340 | 239,252 | |||
| Income taxes payable | 17,497 | 8,895 | |||
| Current operating lease liabilities | 39,459 | 37,805 | |||
| Accrued expenses | 335,471 | 311,391 | |||
| Total current liabilities | 675,305 | 688,339 | |||
| Long-term debt, net of current portion | 1,480,531 | 1,558,429 | |||
| Long-term operating lease liabilities | 109,707 | 91,424 | |||
| Other noncurrent liabilities | 117,371 | 115,785 | |||
| Deferred income taxes | 276,208 | 247,931 | |||
| Total liabilities | 2,659,122 | 2,701,908 | |||
| Commitments and contingencies | |||||
| Total Darling's stockholders' equity | 2,891,909 | 2,565,819 | |||
| Noncontrolling interests | 62,300 | 77,531 | |||
| Total stockholders' equity | $ | 2,954,209 | $ | 2,643,350 | |
| $ | 5,613,331 | $ | 5,345,258 | ||
| News Release<br><br>March 2, 2021<br><br>Page 6 | |||||
| --- |
Darling Ingredients Inc. and Subsidiaries
Consolidated Operating Results
For the Three-Month and Twelve-Month Periods Ended January 2, 2021 and December 28, 2019
(in thousands, except per share data)
| Three Months Ended | Twelve Months Ended | |||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| (unaudited) | Change | Change | ||||||||
| January 2, | December 28, | Favorable | January 2, | December 28, | Favorable | |||||
| 2021 | 2019 | (Unfavorable) | 2021 | 2019 | (Unfavorable) | |||||
| Net sales | $ | 1,019,839 | $ | 859,428 | $ | 3,571,923 | $ | 3,363,905 | ||
| Costs and expenses: | ||||||||||
| Cost of sales and operating expenses | 771,192 | 640,533 | (130,659) | 2,688,815 | 2,589,085 | (99,730) | ||||
| Loss (gain) on sale of assets | 216 | 263 | 47 | 426 | (20,582) | (21,008) | ||||
| Selling, general and administrative expenses | 102,117 | 108,954 | 6,837 | 378,496 | 358,523 | (19,973) | ||||
| Restructuring and impairment charges | 38,167 | — | (38,167) | 38,167 | — | (38,167) | ||||
| Depreciation and amortization | 96,467 | 86,453 | (10,014) | 350,178 | 325,510 | (24,668) | ||||
| Total costs and expenses | 1,008,159 | 836,203 | (171,956) | 3,456,082 | 3,252,536 | (203,546) | ||||
| Equity in net income of Diamond Green Diesel | 62,684 | 270,062 | (207,378) | 315,095 | 364,452 | (49,357) | ||||
| Operating income | 74,364 | 293,287 | (218,923) | 430,936 | 475,821 | (44,885) | ||||
| Other expense: | ||||||||||
| Interest expense | (16,883) | (18,586) | 1,703 | (72,686) | (78,674) | 5,988 | ||||
| Debt extinguishment costs | — | — | — | — | (12,126) | 12,126 | ||||
| Foreign currency loss | (1,581) | (657) | (924) | (2,290) | (1,311) | (979) | ||||
| Gain/(loss) on disposal of subsidiaries | — | 2,967 | (2,967) | — | 2,967 | (2,967) | ||||
| Other income (expense), net | (256) | 487 | (743) | (5,534) | (6,671) | 1,137 | ||||
| Total other expense | (18,720) | (15,789) | (2,931) | (80,510) | (95,815) | 15,305 | ||||
| Equity in net income of unconsolidated subsidiaries | 726 | 1,515 | (789) | 3,193 | 428 | 2,765 | ||||
| Income from operations before income taxes | 56,370 | 279,013 | (222,643) | 353,619 | 380,434 | (26,815) | ||||
| Income tax expense | 10,231 | 35,567 | 25,336 | 53,289 | 59,467 | 6,178 | ||||
| Net income | 46,139 | 243,446 | (197,307) | 300,330 | 320,967 | (20,637) | ||||
| Net income attributable to noncontrolling interests | (1,394) | (837) | (557) | (3,511) | (8,367) | 4,856 | ||||
| Net income attributable to Darling | $ | 44,745 | $ | 242,609 | $ | 296,819 | $ | 312,600 | ||
| Basic income per share: | $ | 0.28 | $ | 1.48 | $ | 1.83 | $ | 1.90 | ||
| Diluted income per share: | $ | 0.27 | $ | 1.44 | $ | 1.78 | $ | 1.86 | ||
| Number of diluted common shares: | 167,920 | 168,152 | 167,208 | 168,378 |
All values are in US Dollars.
| News Release<br><br>March 2, 2021<br><br>Page 7 |
|---|
Darling Ingredients Inc. and Subsidiaries
Consolidated Statement of Cash Flows
Periods Ended January 2, 2021 and December 28, 2019
(in thousands)
| Twelve Months Ended | ||||
|---|---|---|---|---|
| Jan 2, | Dec 28, | |||
| Cash flows from operating activities: | 2021 | 2019 | ||
| Net income | $ | 300,330 | $ | 320,967 |
| Adjustments to reconcile net income to net cash provided by operating activities: | ||||
| Depreciation and amortization | 350,178 | 325,510 | ||
| Deferred income taxes | 15,814 | 20,530 | ||
| Loss/(gain) on sale of assets | 426 | (20,582) | ||
| Loss/(gain) on disposal of subsidiaries | — | (2,967) | ||
| Asset impairment | 37,802 | — | ||
| Gain on insurance proceeds from insurance settlements | (293) | (6,600) | ||
| Increase (decrease) in long-term pension liability | (6,555) | 1,831 | ||
| Stock-based compensation expense | 23,222 | 21,007 | ||
| Debt Extinguishment costs | — | 12,126 | ||
| Write-off deferred loan costs | 3,052 | 270 | ||
| Deferred loan cost amortization | 5,357 | 5,846 | ||
| Equity in net income of Diamond Green Diesel and other unconsolidated subsidiaries | (318,288) | (364,880) | ||
| Distribution of earnings from Diamond Green Diesel and other unconsolidated subsidiaries | 207,328 | 69,213 | ||
| Changes in operating assets and liabilities, net of effects from acquisitions: | ||||
| Accounts receivable | 22,362 | (26,086) | ||
| Income taxes refundable/payable | 4,200 | 9,542 | ||
| Inventories and prepaid expenses | (18,666) | (39,111) | ||
| Accounts payable and accrued expenses | 11,200 | 32,436 | ||
| Other | (12,818) | 3,569 | ||
| Net cash provided by operating activities | 624,651 | 362,621 | ||
| Cash flows from investing activities: | ||||
| Capital expenditures | (280,115) | (359,498) | ||
| Acquisition, net of cash acquired | (29,793) | (1,431) | ||
| Investment in unconsolidated subsidiaries | — | (2,000) | ||
| Proceeds from sale of investment in subsidiary | — | 3,671 | ||
| Gross proceeds from disposal of property, plant and equipment and other assets | 2,797 | 18,235 | ||
| Proceeds from insurance settlement | 293 | 6,600 | ||
| Payments related to routes and other intangibles | (3,810) | (3,651) | ||
| Net cash used by investing activities | (310,628) | (338,074) | ||
| Cash flows from financing activities: | ||||
| Proceeds from long-term debt | 34,569 | 517,606 | ||
| Payments on long-term debt | (232,726) | (581,163) | ||
| Borrowings from revolving credit facility | 495,691 | 469,227 | ||
| Payments on revolving credit facility | (480,604) | (461,669) | ||
| Net cash overdraft financing | (37,692) | 38,367 | ||
| Deferred loan costs | (4,292) | (7,027) | ||
| Issuance of common stock | 67 | 39 | ||
| Repurchase of common stock | (55,044) | (19,260) | ||
| Minimum withholding taxes paid on stock awards | (11,918) | (4,472) | ||
| Acquisition of noncontrolling interest | (8,784) | — | ||
| Distributions to noncontrolling interests | (6,253) | (6,533) | ||
| Net cash provided by financing activities | (306,986) | (54,885) | ||
| Effect of exchange rate changes on cash flows | 1,638 | (3,986) | ||
| Net increase / (decrease) in cash, cash equivalents and restricted cash | 8,675 | (34,324) | ||
| Cash, cash equivalents and restricted cash at beginning of year | 73,045 | 107,369 | ||
| Cash, cash equivalents and restricted cash at end of period | $ | 81,720 | $ | 73,045 |
| Supplemental disclosure of cash flow information: | ||||
| Accrued capital expenditures | $ | (4,967) | $ | 6,714 |
| Cash paid during the period for: | ||||
| Interest, net of capitalized interest | $ | 66,216 | $ | 79,132 |
| Income taxes, net of refunds | $ | 36,779 | $ | 29,778 |
| Non-cash operating activities: | ||||
| Operating lease right of use asset obtained in exchange for new lease liabilities | $ | 58,052 | $ | 40,596 |
| Non-cash financing activities: | ||||
| Debt issued for service contract assets | $ | 8,123 | $ | 25 |
| News Release<br><br>March 2, 2021<br><br>Page 8 | ||||
| --- |
Diamond Green Diesel Joint Venture
Condensed Consolidated Balance Sheets
December 31, 2020 and December 31, 2019
(in thousands)
| December 31, | December 31, | |||
|---|---|---|---|---|
| 2020 | 2019 | |||
| Assets: | ||||
| Total current assets | $ | 383,557 | $ | 668,026 |
| Property, plant and equipment, net | 1,238,726 | 713,489 | ||
| Other assets | 36,082 | 30,710 | ||
| Total assets | $ | 1,658,365 | $ | 1,412,225 |
| Liabilities and members' equity: | ||||
| Total current portion of long term debt | $ | 517 | $ | 341 |
| Total other current liabilities | 99,787 | 75,802 | ||
| Total long term debt | 8,705 | 8,742 | ||
| Total other long term liabilities | 3,758 | 4,422 | ||
| Total members' equity | 1,545,598 | 1,322,918 | ||
| Total liabilities and members' equity | $ | 1,658,365 | $ | 1,412,225 |
Diamond Green Diesel Joint Venture
Operating Financial Results
For the Three-Month and Twelve-Month Periods Ended December 31, 2020 and December 31, 2019
(in thousands)
| Three Months Ended | Twelve Months Ended | |||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| (unaudited) | Change | Change | ||||||||
| December 31, | December 31, | Favorable | December 31, | December 31, | Favorable | |||||
| 2020 | 2019 | (Unfavorable) | 2020 | 2019 | (Unfavorable) | |||||
| Revenues: | ||||||||||
| Operating revenues | $ | 266,760 | $ | 357,857 | $ | 1,267,477 | $ | 1,217,504 | ||
| Expenses: | ||||||||||
| Total costs and expenses less depreciation, amortization and accretion expense | 130,417 | (194,437) | (324,854) | 592,781 | 438,672 | (154,109) | ||||
| Depreciation, amortization and accretion expense | 11,222 | 12,193 | 971 | 44,882 | 50,767 | 5,885 | ||||
| Total costs and expenses | 141,639 | (182,244) | (323,883) | 637,663 | 489,439 | (148,224) | ||||
| Operating income | 125,121 | 540,101 | (414,980) | 629,814 | 728,065 | (98,251) | ||||
| Other income | 560 | 340 | 220 | 1,636 | 2,121 | (485) | ||||
| Interest and debt expense, net | (313) | (317) | 4 | (1,260) | (1,282) | 22 | ||||
| Net income | $ | 125,368 | $ | 540,124 | $ | 630,190 | $ | 728,904 |
All values are in US Dollars.
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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 and Twelve-Month Periods ended January 2, 2021 and December 28, 2019
| Twelve Months Ended | |||||||||
|---|---|---|---|---|---|---|---|---|---|
| Adjusted EBITDA | December 28, | January 2, | December 28, | ||||||
| (U.S. dollars in thousands) | 2019 | 2021 | 2019 | ||||||
| Net income attributable to Darling | 44,745 | $ | 242,609 | $ | 296,819 | $ | 312,600 | ||
| Depreciation and amortization | 86,453 | 350,178 | 325,510 | ||||||
| Interest expense | 18,586 | 72,686 | 78,674 | ||||||
| Income tax expense | 35,567 | 53,289 | 59,467 | ||||||
| Restructuring and impairment charges | — | 38,167 | — | ||||||
| Foreign currency loss | 657 | 2,290 | 1,311 | ||||||
| Other (income) expense, net | (487) | 5,534 | 6,671 | ||||||
| Debt extinguishment costs | — | — | 12,126 | ||||||
| Gain on disposal of subsidiaries | (2,967) | — | (2,967) | ||||||
| Equity in net income of Diamond Green Diesel | (270,062) | (315,095) | (364,452) | ||||||
| Equity in net income of unconsolidated subsidiaries | (1,515) | (3,193) | (428) | ||||||
| Net income attributable to noncontrolling interests | 837 | 3,511 | 8,367 | ||||||
| Adjusted EBITDA (Non-GAAP) | 146,314 | $ | 109,678 | $ | 504,186 | $ | 436,879 | ||
| Foreign currency exchange impact | (1) | — | (6,419) | (2) | — | ||||
| Pro forma Adjusted EBITDA to Foreign Currency (Non-GAAP) | 139,488 | $ | 109,678 | $ | 497,767 | $ | 436,879 | ||
| DGD Joint Venture Adjusted EBITDA (Darling's share) | 68,171 | $ | 276,146 | $ | 337,348 | $ | 389,416 | ||
| Darling plus Darling's share of DGD Joint Venture Adjusted EBITDA | 214,485 | $ | 385,824 | $ | 841,534 | $ | 826,295 | ||
| (1) The average rate assumption used in the calculation was the actual fiscal average rate for the three months ended January 2, 2021 of 1.00:1.19 and CAD1.00:0.77 as compared to the average rate for the three months ended December 28, 2019 of 1.00:1.11 and CAD1.00: 0.75, respectively. (2) The average rate assumption used in the calculation was the actual fiscal average rate for the twelve months ended January 2, 2021 of 1.00:1.14 and CAD1.00:0.75 as compared to the average rate for the twelve months ended December 28, 2019 of 1.00:1.12 and CAD1.00:0.75, respectively. |
All values are in US Dollars.
About Darling
Darling Ingredients Inc. (NYSE: DAR) is one of the world’s leading producers of organic ingredients, producing 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. The Company sells its products 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 partner in Diamond Green Diesel (DGD), North America’s largest renewable diesel manufacturer, currently producing approximately 275 million gallons of renewable diesel annually which products reduce Green House Gas (GHG) emissions by up to 85% compared to fossil fuels. For additional information, visit the Company's website at http://www.darlingii.com. For more information on Darling’s ESG efforts, visit http://www.darlingii.com/csr.
| News Release<br><br>March 2, 2021<br><br>Page 10 |
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Darling Ingredients Inc. will host a conference call to discuss the Company’s fourth quarter and fiscal year 2020 financial results at 9:00 am Eastern Time (8:00 am Central Time) on Wednesday, March 3, 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 10151509. 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 March 10, 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 10151509. 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.
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 January 2, 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.
Cautionary Statements Regarding Forward-Looking Information:
{This media release contains “forward-looking” statements regarding the business operations and prospects of Darling Ingredients Inc. and industry factors affecting it. These statements are identified by words such as “believe,” “anticipate,” “expect,” “estimate,” “intend,” “could,” “may,” “will,” “should,” “planned,” “potential,” “continue,” “momentum,” and other words referring to events that may occur in the future. These statements reflect Darling Ingredient’s current view of future events and are based on its assessment of, and are subject to, a variety of risks and uncertainties beyond its control, each of which could cause actual results to differ materially from those indicated in the forward-looking statements. These factors include, among others, existing and unknown future limitations on the ability of the Company's direct and indirect subsidiaries to make their cash flow available to the Company for payments on the Company's indebtedness or other purposes; global demands for bio-fuels and grain and oilseed commodities, which have exhibited volatility, and can impact the cost of feed for cattle, hogs and poultry, thus affecting available rendering feedstock and selling prices for the Company’s products; reductions in raw material volumes available to the Company due to weak margins in the meat production industry as a result of higher feed costs, reduced consumer demand or other factors, reduced volume from food service establishments, or otherwise; reduced demand for animal feed; reduced finished product prices, including a decline
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in fat and used cooking oil finished product prices; changes to worldwide government policies relating to renewable fuels and greenhouse gas(“GHG”) emissions that adversely affect programs like the U.S. government’s renewable fuel standard, low carbon fuel standards (“LCFS”) and tax credits for biofuels both in the United States and abroad; possible product recall resulting from developments relating to the discovery of unauthorized adulterations to food or food additives; the occurrence of 2009 H1N1 flu (initially known as “Swine Flu”), Highly pathogenic strains of avian influenza (collectively known as “Bird Flu”), severe acute respiratory syndrome (“SARS”), bovine spongiform encephalopathy (or "BSE"), porcine epidemic diarrhea ("PED") or other diseases associated with animal origin in the United States or elsewhere, such as the outbreak of African Swine Fever (“ASF”) in China and elsewhere; the occurrence of pandemics, epidemics or disease outbreaks, such as the current COVID-19 outbreak; unanticipated costs and/or reductions in raw material volumes related to the Company’s compliance with the existing or unforeseen new U.S. or foreign (including, without limitation, China) regulations (including new or modified animal feed, Bird Flu, SARS, PED, BSE, ASF or similar or unanticipated regulations) affecting the industries in which the Company operates or its value added products; risks associated with the DGD Joint Venture, including possible unanticipated operating disruptions and issues relating to the announced expansion project; risks and uncertainties relating to international sales and operations, including imposition of tariffs, quotas, trade barriers and other trade protections imposed by foreign countries; difficulties or a significant disruption in our information systems or failure to implement new systems and software successfully, risks relating to possible third party claims of intellectual property infringement; increased contributions to the Company’s pension and benefit plans, including multiemployer and employer-sponsored defined benefit pension plans as required by legislation, regulation or other applicable U.S. or foreign law or resulting from a U.S. mass withdrawal event; bad debt write-offs; loss of or failure to obtain necessary permits and registrations; continued or escalated conflict in the Middle East, North Korea, Ukraine or elsewhere; uncertainty regarding the exit of the U.K. from the European Union; and/or unfavorable export or import markets. These factors, coupled with volatile prices for natural gas and diesel fuel, climate conditions, currency exchange fluctuations, general performance of the U.S. and global economies, disturbances in world financial, credit, commodities and stock markets, and any decline in consumer confidence and discretionary spending, including the inability of consumers and companies to obtain credit due to lack of liquidity in the financial markets, among others, could cause actual results to vary materially from the forward looking statements included in this release or negatively impact the Company's results of operations. Among other things, future profitability may be affected by the Company’s ability to grow its business, which faces competition from companies that may have substantially greater resources than the Company. The Company’s announced share repurchase program may be suspended or discontinued at any time and purchases of shares under the program are subject to market conditions and other factors, which are likely to change from time to time. Other risks and uncertainties regarding Darling Ingredients Inc., its business and the industries in which it operates are referenced from time to time in the Company’s filings with the Securities and Exchange Commission. Darling Ingredients Inc. is under no obligation to (and expressly disclaims any such obligation to) update or alter its forward-looking statements whether as a result of new information, future events or otherwise.}
For More Information, contact:
Jim Stark, Vice President, Investor Relations Email : james.stark@darlingii.com
5601 MacArthur Blvd., Irving, Texas 75038 Phone : 972-281-4823
darlingingredientsq42020
Fourth Quarter & FY 2020 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” 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; 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 | Fourth Quarter & FY 2020 Results | 03.03.2021
Summary Highlights Fourth Quarter & FY 2020 Business Update • Record fourth quarter global ingredients EBITDA of $146.3 million lead by a strong performance in our feed segment • 2020 combined adjusted EBITDA totaled a record $841.5 million • Q4-2020 adjusted net income of $75.3 million, adjusted EPS of $0.45 per diluted share; FY-2020 adjusted net income of $327.4 million, adjusted EPS of $1.96 per diluted share exclusive of the $30.6 million after-tax restructuring and asset impairment charge related to the shutdown of biodiesel plants located in Montreal, Quebec and Butler Kentucky • DGD sold a record 288 million gallons for 2020 at an average $2.34 EBITDA/gallon, generating $675 million total EBITDA • Reduced term loan B balance by $195 million to $300 million outstanding as of January 2, 2021 • 2020 ESG report issued with targets to reduce energy & water usage 5% on a per unit bases by 2025 • Three new Peptan hydrolyzed collagen production facilities online in 2020 • Repurchased approximately 2.2 million shares of common stock in 2020 • Amended and extended $1.0 billion revolver until September 2025 • DGD Port Arthur FID approved in January 2021. Construction is underway with commissioning expected in the second half of 2023 Page 3 | Fourth Quarter & FY 2020 Results | 03.03.2021
Financial Highlights Balance Sheet (in millions, except ratio data) As of 01/02/2021 As of 12/28/2019 Cash (including restricted) $81.7 $73.0 Revolver availability $893.9 $911.9 Net working capital $257.5 $246.9 Total debt $1,508.1 $1,649.4 Leverage ratio (2) 1.90x 3.18x Capital expenditures $280.1 $359.5 Financials (in millions, except per share data) Q4-2020 Q4-2019 FY 2020 FY 2019 Net sales $1,019.8 $859.4 $3,571.9 $3,363.9 Gross margin 248.6 218.9 883.1 774.8 Gross margin % 24.4% 25.5% 24.7% 23.0% Net income(1) $44.7 $242.6 $296.8 $312.6 EPS diluted $0.27 $1.44 $1.78 $1.86 Adj. net income(1) $75.3 $50.1 $327.4 $226.0 Adj. EPS diluted(1) $0.45 $0.30 $1.96 $1.34 $110 $126 $122 $146 $504 $104 $69 $96 $68 $337 $0 $150 $300 $450 $600 $750 Q1 Q2 Q3 Q4 FY 2020 Global Ingredients DGD $213.3 $195.2 $218.5 $841.5 (In millions) 2020 Combined adjusted EBITDA $214.5 (1) Q4 2019 net income includes approximately $193 million of retroactive 2018 and the first none months of 2019 BTC. Q4 and FY 2020 results adjusted to exclude the $30.6 million after-tax restructuring and asset impairment charge related to the shutdown of 2 biodiesel plants. Q4-19 adjusted net income excludes 2018 and first nine months of 2019 retroactive BTC. FY 2019 adjusted net income excludes retroactive 2018 BTC. (2) Leverage ratio calculated per bank covenant Page 4 | Fourth Quarter & FY 2020 Results | 03.03.2021 $445 $456 $428 $428 $504 $350 $370 $390 $410 $430 $450 $470 $490 $510 $530 2016 2017 2018 2019 2020 $ in m ill io n s Global Ingredients Business Proforma Adjusted EBITDA 2017 & 2018 Darling BTC moved to the period earned
Financial Highlights Financials (in millions) Q4-2020 Q4-2019 FY-2020 FY-2019 Segment EBITDA Feed $90.2 $56.8 $317.8 $258.2 Food 49.8 37.5 167.1 157.1 Fuel (2) 89.0 118.7 411.9 $369.1 Corporate (14.5) (19.7) (55.3) (57.9) Total Combined adjusted EBITDA (2) $214.5 $193.3 $841.5 $739.7 (1) FY 2019 excludes the $13.1 million gain on an asset sale in China (2) Fuel segment and total combined adjusted EBITDA exclude retroactive 2018 BTC in Q4 2019 and first 9 months BTC. 4Q 2020 turnaround at DGD resulted in lower gallons sold vs 4Q 2019 (1) Page 5 | Fourth Quarter & FY 2020 Results | 03.03.2021 Feed 35% Food 19% Fuel 46% FY 2020 % of Total EBITDA by Segment (before corporate) 968 1,026 1,072 1,161 1,163 1,221 317 316 314 345 343 308 - 200 400 600 800 1,000 1,200 1,400 1,600 1,800 2015 2016 2017 2018 2019 2020 Darling Production Volumes (000's metic tons) Animal Fats Used Cooking Oil 2021 EBITDA Guidance Low High (in millions) By Segment Feed $380 $400 Food 180 190 Fuel* 400 420 Corporate (60.0) (60.0) Total Combined adjusted EBITDA $900 $950 *(Estimating DGD @ 300-310 mmg @ $2.25/gallon for '21)
Feed Segment Key Drivers: Page 6 | Fourth Quarter & FY 2020 Results | 03.03.2021 • Solid growth in overall feed segment sales quarter over quarter and year over year. Lead by a 7.2% improvement in raw material processed for 4Q and 2.4% increase in raw material processed for 2020 over 2019 • UCO volumes continue to run approximately 10% below historical levels, UCO pricing did improve offsetting some of the lost volume due to the impact of COVID 19 on the restaurant industry • Fat prices (BFT & YG) were mixed for 2020 compared to a year ago. BFT average price finished 2020 12.1% higher than 2019 while YG was flat in 2020 compared to the prior year. Protein pricing (MBM) was also higher for 2020 by 13.2% compared to 2019 US$ (in millions) 4Q 2020 4Q2019 FY 2020 FY 2019 Net Sa les 572,764$ 490,317$ 2,072,104$ 1,970,561$ Cost of sa les and operating expenses 426,593 375,990 1,544,524 1,519,596 Gross Margin 146,171$ 114,327$ 527,580$ 450,965$ Loss/(ga in) on sa le of assets (275) (377) 19 (7,720) Sel l ing, genera l and adminis trative expenses 56,289 57,872 209,748 200,487 Depreciation and amortization 61,218 55,185 221,187 203,456 Segment operating income 28,939$ 1,647$ 96,626$ 54,742$ Equity in net income of unconsol idated subs idiaries 726$ 1,515$ 3,193$ 428$ Segment Income 29,665$ 3,162$ 99,819$ 55,170$ Segment EBITDA 90,157$ 56,832$ 317,813$ 258,198$ Raw material processed (mmts) 2.37 2.21 8.95 8.74 Fats Proteins Other Rendering Total Rendering Used Cooking Oil Bakery Other Total Net Sales Twelve Months Ended December 28, 2019 584.3$ 791.3$ 167.9$ 1,543.5$ 185.7$ 191.6$ 49.8$ 1,970.6$ Changes: Increase/(Decrease) in sales volumes 66.6 20.2 - 86.8 (11.7) (0.6) - 74.5 Increase/(Decrease) in finished product prices 10.5 16.1 - 26.6 2.8 (7.2) - 22.2 Increase/(Decrease) due to currency exchange rates 0.3 2.6 0.1 3.0 (0.1) - - 2.9 Other change - - 10.6 10.6 - - (8.7) 1.9 Total Change: 77.4 38.9 10.7 127.0 (9.0) (7.8) (8.7) 101.5 Net Sales Twelve Months Ended January 2, 2021 661.7$ 830.2$ 178.6$ 1,670.5$ 176.7$ 183.8$ 41.1$ 2,072.1$ Rendering Sales Change in Net Sales - 2019 to 2020 Twelve Months Ended
Food Segment Page 7 | Fourth Quarter & FY 2020 Results | 03.03.2021 • Second half of 2020 Peptan sales were 16% higher than the first half of 2020. Peptan sales continues to show growth into 2021. • Excluding the gain on the sale of assets in 2019, 2020 EBITDA improved 6.4% over the previous year and 4Q 2020 EBITDA was 32.7% better than 4Q 2019 Key Drivers: $130.5 $131.9 $129.7 $157.1 $167.1 $0 $50 $100 $150 $200 2016 2017 2018 2019 2020 Food Segment 5 Year EBITDA EBITDA 80% 12% 8% 2020 % of Sales Breakdown Collagen Edible fats Other products 1) FY 2019 excludes the $13.1 million gain on an asset sale in China US$ (in millions) 4Q 2020 4Q2019 FY 2020 FY 2019 Net Sales 344,631$ 288,619$ 1,185,701$ 1,119,085$ Cost of sales and operating expenses 268,348 221,527 920,682 864,618 Gross Margin 76,283$ 67,092$ 265,019$ 254,467$ Loss/(gain) on sale of assets 512 343 482 (13,175) Selling, general and administrative expenses 25,999 29,234 97,406 97,363 Depreciation and amortization 22,826 20,556 83,752 79,671 Segment operating income 26,946$ 16,959$ 83,379$ 90,608$ Equity in net income of unconsolidated subsidiaries -$ -$ -$ -$ Segment Income 26,946$ 16,959$ 83,379$ 90,608$ Segment EBITDA 49,772$ 37,515$ 167,131$ 157,104$ Raw material processed (mmts) 0.3 0.3 1.1 1.1 (1) (1)
Fuel Segment (Includes Diamond Green Diesel JV consolidated EBITDA) Key Drivers: • Q4-2020 Combined adjusted EBITDA of $89.1 million, with DGD earning $2.40 per gallon on 56.8 million gallons sold • DGD turnaround in October lowered the production gallons for the quarter, but DGD still sold record number 288 million gallons in 2020 • European green bioenergy 2020 results best in our history • Darling approved the shutdown of its two biodiesel plant operations in December 2020. There are no plans to reopen the Montreal, Quebec and Butler Kentucky due to unfavorable biodiesel economics • DGD II – Norco, LA expansion is on track to startup in Q4-2021, adding 400 million gallons. The current production run rate at Norco, LA has been raised to 290 million gallons of production capacity • DGD Port Arthur location FID made in Jan. 2021 and is expected to be operational in the second half of 2023 Page 8 | Fourth Quarter & FY 2020 Results | 03.03.2021 Diamond Green Diesel US$ and gallons (in millions) 4Q 2020 4Q2019 FY 2020 FY 2019 EBITDA (Enti ty) - in quarter recorded w/no BTC 79.8$ 121.7$ 386.0$ 348.3$ EBITDA (Enti ty) - BTC adjusted to when earned 136.6$ 198.2$ 675.0$ 623.0$ Pro forma Adjusted EBITDA (Darl ing's share) 68.3$ 99.1$ 337.4$ 311.5$ Tota l ga l lons produced 60.5 77.9 289.3 274.6 Total ga l lons sold/shipped 56.8 77.1 288.0 276.9 EBITDA per gallon sold $2.40 $2.57 $2.34 $2.25 $1.09 $1.53 $2.18 $2.25 $2.34 2016 2017 2018 2019 2020 DGD Annual EBIDTA per Gallon (1) Includes Fuel Segment EBITDA and Darling's share of DGD EBITDA. • Excludes feed stock (raw material) processed at the DGD joint venture. (2) Q4-19 and fiscal 2019 EBITDA includes retroactive BTC for 2018 & 2019. BTC was recognized in Q4-19 US$ (in millions) 4Q 2020 4Q2019 FY 2020 FY 2019 Net Sa les 102,443$ 80,492$ 314,118$ 274,259$ Cost of sa les and operating expenses 76,250 43,016 223,609 204,871 Gross Margin 26,193$ 37,476$ 90,509$ 69,388$ Loss/(ga in) on sa le of assets (22) 297 (75) 313 Sel l ing, genera l and adminis trative expenses 5,369 2,179 16,014 2,762 Restructuring and asset impairment charges 38,167 38,167 Depreciation and amortization 9,513 7,891 34,218 31,946 Equity in net income of Diamond Green Diesel 62,684 270,062 315,095 364,452 Segment operating income 35,850$ 297,171$ 317,280$ 398,819$ Equity in net income of unconsol idated subs idiaries -$ -$ -$ -$ Segment Income 35,850$ 297,171$ 317,280$ 398,819$ Segment EBITDA 20,846$ 35,000$ 74,570$ 66,313$ DGD adjusted EBITDA (Darl ing's Share) 68,171$ 276,146$ 337,348$ 389,416$ Segment EBITDA (1) (2) 89,017$ 311,146$ 411,918$ 455,729$ Raw material processed (mmts) * 0.4 0.3 1.3 1.3
January 2021 400-million-gallon expansion Existing 290-million-gallon plant Page 9 | Fourth Quarter & FY 2020 Results | 03.03.2021
Appendix Additional Information
California LCFS & RIN value history Source: https://ww3.arb.ca.gov/fuels/lcfs/credit/lrtweeklycreditreports.htm Page 11 | Fourth Quarter & FY 2020 Results | 03.03.2021 $- $50 $100 $150 $200 $250 A p r - 1 6 J u n - 1 6 A u g - 1 6 O c t - 1 6 D e c - 1 6 F e b -1 7 A p r - 1 7 J u n - 1 7 A u g - 1 7 O c t - 1 7 D e c - 1 7 F e b -1 8 A p r - 1 8 J u n - 1 8 A u g - 1 8 O c t - 1 8 D e c - 1 8 F e b -1 9 A p r - 1 9 J u n - 1 9 A u g - 1 9 O c t - 1 9 D e c - 1 9 F e b -2 0 A p r - 2 0 J u n - 2 0 A u g - 2 0 O c t - 2 0 D e c - 2 0 Average LCFS Carbon Credit Price Weighted Ave Price (USD/MT)
Feed Segment - Historical (1) Does not include Unconsolidated Subsidiaries EBITDA Page 12 | Fourth Quarter & FY 2020 Results | 03.03.2021 US$ (in millions) Q1-2019 Q2-2019 Q3-2019 Q4-2019 Total 2019 Q1-2020 Q2-2020 Q3-2020 Q4-2020 Total 2020 Net Sales 495.8$ 487.4$ 497.0$ 490.4$ 1,970.6$ 512.6$ 503.7$ 483.0$ 572.8$ 2,072.1$ Gross Margin 109.0 110.5 117.2 114.3 451.0 124.2 135.8 121.4 146.2 527.6 Gross Margin % 22.0% 22.7% 23.6% 23.3% 22.9% 24.2% 27.0% 25.1% 25.5% 25.5% Loss/(gain) on sale of assets (4.4) (0.5) (2.4) (0.4) (7.7) 0.1 0.1 0.2 (0.3) - SG&A 48.8 46.5 47.3 57.9 200.5 53.9 50.5 49.0 56.3 209.7 SG&A Margin % 9.8% 9.5% 9.5% 11.8% 10.2% 10.5% 10.0% 10.2% 9.8% 10.1% Operating Income 15.2 15.8 22.1 1.6 54.7 16.7 32.5 18.5 28.9 96.6 Adj. EBITDA (1) 64.5$ 64.5$ 72.3$ 56.8$ 258.2$ 70.2$ 85.2$ 72.3$ 90.2$ 317.8$ Adj. EBITDA Margin % 13.0% 13.2% 14.5% 11.5% 13.2% 13.7% 16.9% 15.0% 15.7% 15.3% Raw Material Processed (mmts) 2.18 2.16 2.19 2.21 8.74 2.24 2.15 2.18 2.37 8.95
Historical Pricing Jacobson, Wall Street Journal and Thomson Reuters Page 13 | Fourth Quarter & FY 2020 Results | 03.03.2021 Avg. Jacobsen Prices January February March Q1Avg. April May June Q2 Avg. July August September Q3 Avg. October November December Q4 Avg. Avg. BFT - Chicago Renderer / cwt $31.26 $35.21 $31.86 $32.70 $30.78 $33.98 $24.86 $29.94 $23.86 $30.60 $32.07 $29.04 $32.00 $33.00 $36.41 $34.24 $31.48 YG - IL / cwt $22.00 $24.22 $22.73 $22.92 $20.67 $21.78 $18.33 $20.18 $17.60 $18.70 $22.37 $19.48 $23.50 $24.72 $26.23 $25.22 $21.95 Choice White Grease - IL / cwt $25.81 $29.13 $26.36 $27.02 $26.53 $26.95 $22.77 $25.34 $21.00 $25.68 $28.08 $24.92 $29.02 $28.89 $36.41 $31.44 $31.48 Poultry Fat - Southeast / cwt $28.50 $28.50 $28.00 $28.32 $29.23 $30.00 $26.52 $28.54 $25.50 $27.41 $29.04 $27.32 $30.06 $33.24 $36.86 $33.39 $29.43 Poultry Grease - Mid South / cwt $25.71 $26.50 $25.60 $25.90 $24.57 $23.95 $22.18 $23.52 $22.07 $23.05 $24.23 $23.12 $25.97 $28.45 $35.66 $30.03 $29.88 Distiller's Corn Oil - IL / cwt $25.05 $28.04 $27.70 $26.91 $29.04 $26.98 $23.08 $26.29 $21.57 $24.50 $28.38 $24.82 $30.98 $33.07 $35.26 $33.10 $28.82 Corn - Decatur, IL / bushel $4.02 $3.96 $3.73 $3.90 $3.21 $3.22 $3.37 $3.26 $3.46 $3.06 $3.77 $3.55 $3.99 $4.36 $4.56 $4.29 $3.75 MBM - IL / ton $230.0 $231.6 $248.6 $237.1 $306.8 $326.6 $240.7 $290.4 $208.64 $208.57 $224.17 $212.91 $268.75 $317.11 $331.59 $305.29 $261.43 MBM - CA / ton $165.8 $190.3 $207.5 $188.1 $220.0 $218.5 $205.0 $214.5 $190.70 $190.00 $191.90 $190.87 $234.32 $247.37 $278.75 $253.48 $211.77 Pork Meal - IA IL / ton $195.0 $198.7 $229.9 $208.5 $369.3 $332.5 $214.1 $304.1 $205.00 $208.57 $223.81 $212.46 $298.60 $306.84 $315.00 $306.81 $257.79 Feed Grade PM - Carolina / ton $220.0 $220.0 $239.8 $227.0 $300.0 $304.0 $259.1 $287.5 $245.00 $245.00 $245.00 $245.00 $275.23 $314.74 $345.00 $311.66 $267.70 Feed Grade PM - Mid South / ton $215.0 $215.0 $245.7 $225.7 $269.3 $298.3 $241.4 $257.0 $225.00 $225.00 $229.29 $226.07 $252.73 $283.16 $315.00 $283.65 $251.13 Pet Food PM - SE / ton $447.0 $471.1 $583.0 $502.6 $653.6 $690.6 $625.0 $656.6 $585.23 $527.38 $548.21 $553.61 $626.70 $731.05 $797.16 $718.30 $607.65 Pet Food PM - Mid South / ton $471.0 $550.0 $598.9 $540.4 $660.7 $729.4 $647.7 $679.1 $610.80 $555.95 $578.57 $581.80 $667.05 $732.90 $799.43 $733.12 $633.61 Feather meal - AL GA / ton $270.0 $270.0 $277.3 $272.6 $280.0 $280.0 $248.6 $269.0 $240.00 $248.93 $275.71 $254.88 $307.73 $374.74 $405.45 $362.64 $289.51 Feather meal - Mid South / ton $279.1 $280.0 $288.0 $282.5 $303.2 $333.8 $268.4 $300.9 $252.10 $264.29 $289.29 $267.91 $338.41 $407.89 $470.45 $405.58 $314.20 Blood Meal - Ruminant MO River / ton $802.4 $912.5 $943.8 $886.3 $973.8 $965.1 $665.6 $863.2 $527.73 $540.12 $557.14 $541.66 $742.61 $811.84 $846.59 $800.35 $771.37 D4 RINs (B20) $0.40 $0.50 $0.50 $0.50 $0.52 $0.54 $0.57 $0.43 $0.60 $0.65 $0.76 $0.67 $0.80 $0.87 $0.97 $0.88 $0.64 Comparison Q3-2020 Q4-2020 % Q4-2019 Q4-2020 % FY 2019 FY 2020 % Q1Avg. Q2 Avg. Q3 Avg. Q4 Avg. Avg. Avg. Change Avg. Avg. Change Avg. Avg. Change BFT - Chicago Renderer / cwt $32.70 $29.94 $28.84 $34.24 $29.04 $34.24 17.91% $25.62 $34.24 33.65% $28.08 $31.48 12.09% YG - IL / cwt $22.92 $20.18 $19.56 $25.22 $19.48 $25.22 29.47% $20.39 $25.22 23.69% $22.01 $21.95 -0.27% Choice White Grease - IL / cwt $27.02 $25.34 $24.92 $31.44 $24.92 $31.44 26.17% $23.21 $31.44 35.46% $25.48 $31.48 23.53% Poultry Grease - SE / cwt $28.32 $28.54 $27.32 $33.39 $27.32 $33.39 22.23% $28.56 $33.39 16.90% $30.13 $29.43 -2.32% Poultry Grease - Mid South / cwt $25.90 $23.52 $23.12 $30.03 $23.12 $30.03 29.89% $24.09 $30.03 24.64% $25.61 $29.88 16.65% Distiller's Corn Oil - IL / cwt $26.91 $26.29 $24.82 $33.10 $24.82 $33.10 33.39% $22.73 $33.10 45.63% $24.26 $28.82 18.79% Corn - Decatur, IL / bushel $3.90 $3.26 $3.43 $4.29 $3.55 $4.29 20.85% $3.98 $4.29 7.79% $3.95 $3.75 -4.96% MBM - IL / ton $237.10 $290.42 $213.79 $305.29 $212.91 $305.29 43.39% $230.01 $305.29 32.73% $230.85 $261.43 13.25% MBM - CA / ton $188.11 $214.49 $190.87 $253.48 $190.87 $253.48 32.80% $164.60 $253.48 54.00% $174.53 $211.77 21.33% Pork Meal - IA IL / ton $208.51 $304.09 $212.46 $306.81 $212.46 $306.81 44.41% $193.54 $306.81 58.53% $208.21 $257.79 23.81% Feed Grade PM - Carolina / ton $227.02 $287.46 $245.00 $311.66 $245.00 $311.66 27.21% $231.01 $311.66 34.91% $251.08 $267.70 6.62% Feed Grade PM - Mid South / ton $225.73 $256.99 $226.43 $283.65 $226.07 $283.65 25.47% $223.46 $283.65 26.94% $241.37 $251.13 4.04% Pet Food PM - SE / ton $502.62 $656.58 $553.61 $718.30 $553.61 $718.30 29.75% $395.86 $718.30 81.45% $540.42 $607.65 12.44% Pet Food PM - Mid South / ton $540.44 $679.08 $581.77 $733.12 $581.80 $733.12 26.01% $408.75 $733.12 79.36% $522.39 $633.61 21.29% Feathermeal - AL GA / ton $272.60 $269.00 $254.88 $362.64 $254.88 $362.64 42.28% $276.71 $362.64 31.05% $339.80 $289.51 -14.80% Feathermeal - Mid South / ton $282.50 $300.90 $268.56 $405.58 $267.91 $405.58 51.39% $283.81 $405.58 42.91% $352.87 $314.20 -10.96% Blood Meal - Ruminant MO River / ton $886.30 $863.22 $541.66 $800.35 $541.66 $800.35 47.76% $634.06 $800.35 26.23% $647.98 $771.37 19.04% D4 Rins $0.50 $0.43 $0.67 $0.88 $0.67 $0.88 31.21% $0.56 $0.88 57.25% $0.47 $0.64 35.59% 2020
Food Segment - Historical (1) Adjusted for the $13.1 million gain on the asset sale in China for Q2-19 and FY-19 Page 14 | Fourth Quarter & FY 2020 Results | 03.03.2021 US$ (in millions) Q1-2019 Q2-2019 Q3-2019 Q4-2019 Total 2019 Q1-2020 Q2-2020 Q3-2020 Q4-2020 Total 2020 Net Sales 279.2$ 274.8$ 276.5$ 288.6$ 1,119.1$ 270.3$ 278.9$ 291.8$ 344.6$ 1,185.7$ Gross Margin 65.1 60.4 61.8 67.2 254.5 64.9 58.8 65.1 76.3 265.0 Gross Margin % 23.3% 22.0% 22.4% 23.3% 22.7% 24.0% 21.1% 22.3% 22.1% 22.4% Loss/(gain) on sale of assets 0.1 (13.4) (0.2) 0.3 (13.2) - - 0.0 0.5 0.5 SG&A 21.9 23.4 22.8 29.3 97.4 25.5 22.6 23.4 26.0 97.4 SG&A Margin % 7.8% 8.5% 8.2% 10.2% 8.7% 9.4% 8.1% 8.0% 7.5% 8.2% Operating Income 23.6 30.5 19.5 17.0 90.6 19.1 16.3 21.1 26.9 83.4 Adj. EBITDA (1) 43.2$ 37.1$ 39.3$ 37.5$ 157.1$ 39.4$ 36.3$ 41.7$ 49.8$ 167.1$ Adj. EBITDA Margin % 15.5% 13.5% 14.2% 13.0% 14.0% 14.6% 13.0% 14.3% 14.4% 14.1% Raw Material Processed (mmts) 0.3 0.3 0.3 0.3 1.1 0.3 0.3 0.3 0.3 1.1
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 15 | Fourth Quarter & FY 2020 Results | 03.03.2021 Diamond Green Diesel (50% Joint Venture) US$ and gallons (in millions) Q1-2018 Q2-2018 Q3-2018 Q4-2018 Total 2018 Q1-2019 Q2-2019 Q3-2019 Q4-2019 Total 2019 Q1-2020 Q2-2020 Q3-2020 Q4-2020 Total 2020 EBITDA (Entity) - in quarter recorded w/no BTC 39.7$ 36.3$ 1.0$ 110.6$ 187.6$ 59.7$ 87.8$ 79.1$ 121.7$ 348.3$ 127.3$ 66.0$ 112.9$ 79.5$ 385.7$ EBITDA (Entity) - BTC adjusted to when earned 72.8$ 70.8$ 23.9$ 176.1$ 343.5$ 130.2$ 157.2$ 137.3$ 198.2$ 623.0$ 207.3$ 138.2$ 192.9$ 136.3$ 674.7$ Pro forma Adjusted EBITDA (Darling's share) 36.4$ 35.4$ 11.9$ 88.0$ 171.7$ 65.1$ 78.6$ 68.6$ 99.1$ 311.5$ 103.6$ 69.1$ 96.4$ 68.2$ 337.3$ Total gallons produced 37.1 33.2 17.2 72.8 160.3 67.6 73.2 55.9 77.9 274.6 77.0 74.5 77.3 60.5 289.3 Total gallons sold/shipped 33.4 34.8 23.1 66.1 157.4 71.1 70.0 58.7 77.1 276.9 78.9 72.3 80.0 56.8 288.0 EBITDA per gallon sold/shipped 2.18$ 2.03$ 1.03$ 2.66$ 2.18$ 1.83$ 2.25$ 2.34$ 2.57$ 2.25$ 2.63$ 1.91$ 2.41$ 2.40$ 2.34$ US$ (in millions) Q1-2019 Q2-2019 Q3-2019 Q4-2019 Total 2019 Q1-2020 Q2-2020 Q3-2020 Q4-2020 Total 2020 Net Sales 60.1$ 65.0$ 68.6$ 80.6$ 274.3$ 69.9$ 66.0$ 75.7$ 102.4$ 314.1$ Gross Margin 10.0 11.7 10.1 37.6 69.4 16.9 21.8 25.7 26.2 90.5 Gross Margin % 16.7% 18.0% 14.7% 46.7% 25.3% 24.2% 32.9% 33.9% 25.6% 28.8% Loss/(gain) on sale of assets - - - 0.3 0.3 - (0.0) (0.1) (0.0) (0.1) SG&A (0.8) 0.4 0.9 2.3 2.8 1.6 4.0 5.0 5.4 16.0 Depreciation and amortization 7.8 8.4 7.9 7.8 31.9 8.1 8.0 8.6 9.5 34.2 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 Segment Income 27.3 41.1 33.3 297.2 398.8 105.0 73.3 103.1 35.9 317.3 Segment EBITDA 10.8 11.4 9.2 35.0 66.3 15.3 17.8 20.7 20.8 74.6 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 Combined Adj. EBITDA (1) 40.6$ 55.2$ 48.7$ 311.2$ 455.7$ 118.9$ 86.9$ 117.1$ 89.0$ 411.9$ Raw Material Processed*(mmts) 0.3 0.3 0.3 0.3 1.3 0.3 0.3 0.3 0.4 1.3
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 January 2, 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 16 | Fourth Quarter & FY 2020 Results | 03.03.2021
Adjusted EBITDA Page 17 | Fourth Quarter & FY 2020 Results | 03.03.2021 Adjusted EBITDA January 2, December 28, January 2, December 28, (U.S. dollars in thousands) 2021 2019 2021 2019 Net income attributable to Darling 44,745$ 242,609$ 296,819$ 312,600$ Depreciation and amortization 96,467 86,453 350,178 325,510 Interest expense 16,883 18,586 72,686 78,674 Income tax expense 10,231 35,567 53,289 59,467 Restructuring and asset impairment charges 38,167 - 38,167 - Foreign currency loss 1,581 657 2,290 1,311 Other (income) expense, net 256 (487) 5,534 6,671 Debt extinguishment costs - - - 12,126 Gain on disposal of subsidiaries - (2,967) - (2,967) Equity in net income of Diamond Green Diesel (62,684) (270,062) (315,095) (364,452) Equity in net income of unconsolidated subsidiaries (726) (1,515) (3,193) (428) Net income attributable to noncontrolling interests 1,394 837 3,511 8,367 Adjusted EBITDA (Non-GAAP) 146,314$ 109,678$ 504,186$ 436,879$ Foreign currency exchange impact (6,826) (1) - (6,419) (2) - Pro forma Adjusted EBITDA to Foreign Currency (Non-GAAP) 139,488$ 109,678$ 497,767$ 436,879$ DGD Joint Venture Adjusted EBITDA (Darling's Share) 68,171$ 276,146$ 337,348$ 389,416$ Darling plus Darling's share of DGD Joint Venture Adjusted EBITDA 214,485$ 385,824$ 841,534$ 826,295$ Three Months Ended Twelve Months Ended (1) The average rate assumption used in this calculation was the actual fiscal average rate for the three months ended January 2, 2021 of €1.00:USD$1.19 and CAD$1.00:USD$0.77, as compared to the average rate for the three months ended December 28, 2019 of €1.00:USD$1.11 and CAD$1.00:USD$0.75, respectively. (2) The average rate assumption used in this calculation was the actual fiscal average rate for the twelve months ended January 2, 2021 of €1.00:USD$1.14 and CAD$1.00:USD$0.75, as compared to the average rate for the twelve months ended December 28, 2019 of €1.00:USD$1.12 and CAD$1.00:USD$0.75, respectively. For the twelve months ended December 28, 2019, Adjusted EBITDA included a gain on the sale of assets of approximately $20.8 million.
Upcoming IR Events • Roth Capital Conference- 3.15.21 • BNP Exane Conference– 3.17.21 • Gabelli Conference – 3.18.21 Page 18 | Fourth Quarter & FY 2020 Results | 03.03.2021
Thank you