Darling Ingredients Inc. Announces Third Quarter 2022 Results

Third Quarter 2022

  • Net income of $191 million, or $1.17 per GAAP diluted share
  • Net Sales of $1.7 billion
  • Combined adjusted EBITDA of $394.7 million
  • Repurchased $37.2 million of stock

IRVING, Texas, Nov. 8, 2022 /PRNewswire/ -- Darling Ingredients Inc. (NYSE: DAR) today reported net income attributable to Darling Ingredients of $191 million, or $1.17 per diluted share for the third quarter 2022, compared to net income attributable to Darling Ingredients of $146.8 million, or $0.88 per diluted share, for the third quarter 2021. The company also reported net sales of $1.7 billion for the third quarter of 2022, as compared with net sales of $1.2 billion for the same period a year ago. 

"Darling Ingredients delivered another strong quarter, carrying great momentum to finish the year with record earnings," said Randall C. Stuewe, Chairman and Chief Executive Officer of Darling Ingredients Inc. "Strong worldwide demand for fats and proteins will continue to be a tailwind for our global ingredients business. Diamond Green Diesel III is expected to come on-line within the next week, six months ahead of schedule. This, once again, showcases our strength and expertise to satisfy demand for decarbonization solutions in a meaningful way."

For the nine months ended Oct. 1, 2022, Darling Ingredients reported net sales of $4.8 billion, compared to net sales of $3.4 billion for the same period in 2021. Net income attributable to Darling Ingredients for the first nine months of 2022 was $581.1 million, or  $3.54 per diluted share, as compared to net income attributable to Darling Ingredients of $495.2 million, or $2.96 per diluted share, for the first nine months of 2021. 

Combined adjusted EBITDA was $394.7 million for the third quarter 2022, compared to $289.6 million for the same period in 2021.  On a year-to-date basis, combined adjusted EBITDA totaled $1.13 billion for 2022, as compared to $928 million for the same period in 2021.

Under Darling Ingredients' share repurchase program, the company repurchased approximately 609,000 shares of common stock during the third quarter for a total of $37.2 million, bringing the total stock repurchased year to date 2022 as of Oct. 1, 2022, to approximately 1.58 million shares of common stock for a total of $103.1 million

As of Oct. 1, 2022, Darling had $126.1 million in cash and cash equivalents, and $1.35 billion available under its committed revolving credit agreement. Total debt outstanding as of Oct. 1, 2022 was $3.3 billion. The leverage ratio as measured by the company's bank covenant was 2.48 as of Oct. 1, 2022. Year-to-date capital expenditures totaled approximately $257.1 million.  

On Aug. 1, 2022, Darling Ingredients completed the acquisition of FASA Group, the largest independent rendering company in Brazil. On Oct. 18, 2022, Darling Ingredients announced it had entered into a definitive agreement to acquire all of the shares of Gelnex, a leading global producer of collagen products for approximately $1.2 billion USD in cash. Darling Ingredients also announced on Nov. 2, 2022, that it has entered into a definitive agreement to purchase Polish rendering company, Miropasz Group for approximately €110 million Euros.

Darling Ingredients reaffirms its previously announced forecast for full year 2022 of $1.55-$1.6 billion combined adjusted EBITDA.

Segment Financial Tables (in thousands)
(unaudited)


Feed Ingredients

Food Ingredients

Fuel Ingredients

Corporate

Total

Three Months Ended October 1, 2022






Net sales

$          1,273,142

$            347,902

$            126,555

$                   -

$          1,747,599

Cost of sales and operating expenses

1,012,899

256,557

101,781

-

1,371,237

Gross Margin

260,243

91,345

24,774

-

376,362







Gain on sale of assets

(2,290)

(809)

(17)

-

(3,116)

Selling, general and administrative expenses

63,973

23,909

1,724

15,474

105,080

Acquisition and integration costs

-

-

-

4,503

4,503

Depreciation and amortization

80,679

14,408

7,284

2,607

104,978

Equity in net income of Diamond Green Diesel

-

-

103,414

-

103,414

Segment operating income/(loss)

$             117,881

$              53,837

$            119,197

$          (22,584)

$             268,331

Equity in net income of other unconsolidated subsidiaries

2,301

-

-

-

2,301

Segment income/(loss)

$             120,182

$              53,837

$            119,197

$          (22,584)

$             270,632







Segment EBITDA

$             198,560

$              68,245

$              23,067

$          (15,474)

$             274,398

DGD adjusted EBITDA (Darling's Share)

-

-

120,333

-

120,333

Combined adjusted EBITDA

$             198,560

$              68,245

$            143,400

$          (15,474)

$             394,731

 


Feed Ingredients

Food Ingredients

Fuel Ingredients

Corporate

Total

Three Months Ended October 2, 2021






Net sales

$             769,626

$            311,856

$            104,434

$                   -

$          1,185,916

Cost of sales and operating expenses

553,662

241,308

64,634

-

859,604

Gross Margin

215,964

70,548

39,800

-

326,312







Gain on sale of assets

(229)

(8)

(264)

-

(501)

Selling, general and administrative expenses

54,997

24,417

4,481

13,380

97,275

Depreciation and amortization

53,824

14,933

6,361

2,708

77,826

Equity in net income of Diamond Green Diesel

-

-

53,951

-

53,951

Segment operating income/(loss)

$             107,372

$              31,206

$              83,173

$          (16,088)

$             205,663

Equity in net income of other unconsolidated subsidiaries

1,647

-

-

-

1,647

Segment income/(loss)

$             109,019

$              31,206

$              83,173

$          (16,088)

$             207,310







Segment EBITDA

$             161,196

$              46,139

$              35,583

$          (13,380)

$             229,538

DGD adjusted EBITDA (Darling's Share)

-

-

60,026

-

60,026

Combined adjusted EBITDA

$             161,196

$              46,139

$              95,609

$          (13,380)

$             289,564

Segment EBITDA consists of segment income (loss), less equity in net income from unconsolidated subsidiaries, less equity in net income of Diamond Green Diesel, plus depreciation and amortization, plus acquisition and integration costs, plus restructuring and impairment charges, plus Darling's share of DGD Adjusted EBITDA.

Segment Financial Tables (in thousands) continued
(unaudited)


Feed Ingredients

Food Ingredients

Fuel Ingredients

Corporate

Total

Nine Months Ended October 1, 2022






Net sales

$          3,322,927

$         1,071,897

$            369,297

$                   -

$          4,764,121

Cost of sales and operating expenses

2,522,728

807,833

292,760

-

3,623,321

Gross Margin

800,199

264,064

76,537

-

1,140,800







Gain on sale of assets

(3,595)

(891)

(74)

-

(4,560)

Selling, general and administrative expenses

185,045

73,608

9,921

46,314

314,888

Restructuring and asset impairment charges

8,557

-

-

-

8,557

Acquisition and integration costs

-

-

-

13,634

13,634

Depreciation and amortization

203,967

44,307

20,894

8,169

277,337

Equity in net income of Diamond Green Diesel

-

-

248,898

-

248,898

Segment operating income/(loss)

$             406,225

$            147,040

$            294,694

$          (68,117)

$             779,842

Equity in net income of other unconsolidated subsidiaries

5,933

-

-

-

5,933

Segment income/(loss)

$             412,158

$            147,040

$            294,694

$          (68,117)

$             785,775







Segment EBITDA

$             618,749

$            191,347

$              66,690

$          (46,314)

$             830,472

DGD adjusted EBITDA (Darling's Share)

-

-

297,503

-

297,503

Combined adjusted EBITDA

$             618,749

$            191,347

$            364,193

$          (46,314)

$          1,127,975

 


Feed Ingredients

Food Ingredients

Fuel Ingredients

Corporate

Total

Nine Months Ended October 2, 2021






Net sales

$          2,193,002

$            926,952

$            311,347

$                   -

$          3,431,301

Cost of sales and operating expenses

1,584,667

706,260

219,534

-

2,510,461

Gross Margin

608,335

220,692

91,813

-

920,840







Loss (gain) on sale of assets

(490)

(1)

(302)

-

(793)

Selling, general and administrative expenses

162,594

75,150

13,822

42,239

293,805

Restructuring and asset impairment charges

-

-

778

-

778

Depreciation and amortization

162,404

45,666

19,214

8,298

235,582

Equity in net income of Diamond Green Diesel

-

-

281,964

-

281,964

Segment operating income/(loss)

$             283,827

$              99,877

$            340,265

$          (50,537)

$             673,432

Equity in net income of other unconsolidated subsidiaries

4,199

-

-

-

4,199

Segment income/(loss)

$             288,026

$              99,877

$            340,265

$          (50,537)

$             677,631







Segment EBITDA

$             446,231

$            145,543

$              78,293

$          (42,239)

$             627,828

DGD adjusted EBITDA (Darling's Share)

-

-

300,227

-

300,227

Combined adjusted EBITDA

$             446,231

$            145,543

$            378,520

$          (42,239)

$             928,055

Segment EBITDA consists of segment income (loss), less equity in net income from unconsolidated subsidiaries, less equity in net income of Diamond Green Diesel, plus depreciation and amortization, plus acquisition and integration costs, plus restructuring and impairment charges, plus Darling's share of DGD Adjusted EBITDA.

 

Darling Ingredients Inc. and Subsidiaries
Consolidated Balance Sheets
October 1, 2022 and January 1, 2022

(thousands)




October 1, 2022

January 1, 2022

ASSETS


(unaudited)


Current assets:




Cash and cash equivalents


$                           126,032

$                             68,906

Restricted cash


102

166

Accounts receivable, net


669,824

469,092

Inventories


641,980

457,465

Prepaid expenses


80,293

53,711

Income taxes refundable


17,504

1,075

Other current assets


26,301

38,599

Total current assets


1,562,036

1,089,014





Property, plant and equipment, net


2,345,671

1,840,080

Intangible assets, net


873,613

397,801

Goodwill


1,900,267

1,219,116

Investment in unconsolidated subsidiaries


1,814,583

1,349,247

Operating lease right-of-use assets


175,117

155,464

Other assets


122,668

66,795

Deferred income taxes


14,799

16,211



$                        8,808,754

$                        6,133,728

LIABILITIES AND STOCKHOLDERS' EQUITY




Current liabilities:




Current portion of long-term debt


$                             63,663

$                             24,407

Accounts payable, principally trade


398,175

307,118

Income taxes payable


43,395

32,310

Current operating lease liabilities


44,040

38,168

Accrued Expenses


478,710

350,681

Total current liabilities


1,027,983

752,684

Long-term debt, net of current portion


3,220,901

1,438,974

Long-term operating lease liabilities


133,184

120,314

Other non-current liabilities


296,066

111,029

Deferred income taxes


461,806

362,942

Total liabilities


5,139,940

2,785,943

Commitments and contingencies




Stockholders' equity:




     Common stock, $0.01 par value;


1,735

1,717

Additional paid-in capital


1,652,453

1,627,816

     Treasury stock, at cost


(529,905)

(374,721)

Accumulated other comprehensive loss


(473,139)

(321,690)

Retained earnings


2,928,968

2,347,838

Total Darling's stockholders' equity


3,580,112

3,280,960

Noncontrolling interests


88,702

66,825

Total Stockholders' Equity


3,668,814

3,347,785



$                        8,808,754

$                        6,133,728

 

Darling Ingredients Inc. and Subsidiaries

Consolidated Operating Results

For the Three-Month and Nine-Month Periods Ended October 1, 2022 and October 2, 2021

(in thousands, except per share data) 




Three Months Ended


Nine Months Ended




(unaudited)


$ Change


(unaudited)


$ Change




October 1,


October 2,


Favorable


October 1,


October 2,


Favorable




2022


2021


(Unfavorable)


2022


2021


(Unfavorable)


Net sales

$    1,747,599


$    1,185,916


$        561,683


$    4,764,121


$    3,431,301


$     1,332,820


Costs and expenses:














Cost of sales and operating expenses

1,371,237


859,604


(511,633)


3,623,321


2,510,461


(1,112,860)



Gain on sale of assets

(3,116)


(501)


2,615


(4,560)


(793)


3,767



Selling, general and administrative expenses

105,080


97,275


(7,805)


314,888


293,805


(21,083)



Restructuring and asset impairment charges

-


-


-


8,557


778


(7,779)



Acquisition and integration costs

4,503


-


(4,503)


13,634


-


(13,634)



Depreciation and amortization

104,978


77,826


(27,152)


277,337


235,582


(41,755)


Total costs and expenses

1,582,682


1,034,204


(548,478)


4,233,177


3,039,833


(1,193,344)



Equity in net income of Diamond Green Diesel

103,414


53,951


49,463


248,898


281,964


(33,066)


Operating income

268,331


205,663


62,668


779,842


673,432


106,410


Other expense:














Interest expense

(39,816)


(15,409)


(24,407)


(79,427)


(47,105)


(32,322)



Foreign currency loss

(493)


(205)


(288)


(6,005)


(1,299)


(4,706)



Other expense, net

(2,807)


(853)


(1,954)


(3,851)


(3,210)


(641)


Total other expense

(43,116)


(16,467)


(26,649)


(89,283)


(51,614)


(37,669)


Equity in net income













    of other unconsolidated subsidiaries

2,301


1,647


654


5,933


4,199


1,734


Income from operations before income taxes

227,516


190,843


36,673


696,492


626,017


70,475


Income tax expense

35,215


42,637


7,422


108,631


126,324


17,693


Net income

192,301


148,206


44,095


587,861


499,693


88,168


Net income attributable to














noncontrolling interests

(1,220)


(1,394)


174


(6,731)


(4,533)


(2,198)


Net income attributable to Darling

$       191,081


$       146,812


$          44,269


$       581,130


$       495,160


$          85,970
















Basic income per share:

$             1.19


$             0.91


$              0.28


$             3.60


$             3.04


$              0.56


Diluted income per share:

$             1.17


$             0.88


$              0.29


$             3.54


$             2.96


$              0.58
















Number of diluted common shares:

163,635


166,770




164,327


167,374




 

Darling Ingredients Inc. and Subsidiaries
Consolidated Statement of Cash Flows

Nine-Month Periods Ended October 1, 2022 and October 2, 2021

(in thousands)






Nine Months Ended (Unaudited)





October 1,


October 2,

Cash flows from operating activities:

2022


2021


Net income


$   587,861


$ 499,693


Adjustments to reconcile net income to net cash provided by operating activities:






Depreciation and amortization

277,337


235,582



Gain on sale of assets

(4,560)


(793)



Asset impairment

8,557


138



Deferred taxes


42,120


67,272



Decrease in long-term pension liability

(2,753)


(1,118)



Stock-based compensation expense

18,884


18,413



Write-off deferred loan costs

-


1,130



Deferred loan cost amortization

3,552


3,044



Equity in net income of Diamond Green Diesel and other unconsolidated subsidiaries

(254,831)


(286,163)



Distributions of earnings from Diamond Green Diesel and other unconsolidated subsidiaries

95,546


3,322



Changes in operating assets and liabilities, net of effects from acquisitions:






     Accounts receivable

(45,457)


(85,822)



     Income taxes refundable/payable

(2,004)


18,688



     Inventories and prepaid expenses

(140,971)


(97,531)



     Accounts payable and accrued expenses

78,656


46,912



     Other


(23,499)


29,282




Net cash provided by operating activities

638,438


452,049

Cash flows from investing activities:





Capital expenditures

(257,120)


(191,738)


Acquisitions, net of cash acquired

(1,760,139)


(2,059)


Investment in Diamond Green Diesel

(239,750)


(25,000)


Investment in other unconsolidated subsidiaries

-


(4,449)


Loan to Diamond Green Diesel

(25,000)


-


Loan repayment from Diamond Green Diesel

50,000


-


Gross proceeds from disposal of property, plant and equipment and other assets

9,430


3,805


Payments related to routes and other intangibles

(179)


(274)




Net cash used in investing activities

(2,222,758)


(219,715)

Cash flows from financing activities:





Proceeds from long-term debt

1,929,870


31,088


Payments on long-term debt

(39,511)


(131,224)


Borrowings from revolving credit facility

1,684,840


287,000


Payments on revolving credit facility

(1,743,523)


(309,000)


Net cash overdraft financing

21,090


29,034


Deferred loan costs

(16,758)


-


Issuance of common stock

-


50


Repurchase of common stock

(103,061)


(97,924)


Minimum withholding taxes paid on stock awards

(46,394)


(45,260)


Distributions to noncontrolling interests

(3,653)


(3,853)




Net cash provided/(used) in financing activities

1,682,900


(240,089)

Effect of exchange rate changes on cash flows

(20,295)


(6,605)

Net increase / (decrease) in cash, cash equivalents and restricted cash

78,285


(14,360)

Cash, cash equivalents and restricted cash at beginning of period

69,072


81,720

Cash, cash equivalents and restricted cash at end of period

$   147,357


$   67,360

 

Diamond Green Diesel Joint Venture
Condensed Consolidated Balance Sheets

September 30, 2022 and December 31, 2021

(in thousands)






September 30,


December  31,





2022


2021

Assets:



 (unaudited) 




Total current assets


$        933,332


$        686,294


Property, plant and equipment, net


3,292,831


2,710,747


Other assets


46,736


51,514



Total assets


$     4,272,899


$     3,448,555








Liabilities and members' equity:






Total current portion of long term debt


$        115,506


$        165,092


Total other current liabilities


316,345


295,860


Total long term debt


332,794


344,309


Total other long term liabilities


16,973


17,531


Total members' equity


3,491,281


2,625,763



Total liabilities and members' equity


$     4,272,899


$     3,448,555

 

Diamond Green Diesel Joint Venture
Operating Financial Results

For the Three-Month and Nine-Month Periods Ended September 30, 2022 and September 30, 2021

(in thousands)





Three Months Ended



Nine Months Ended




(unaudited)


$ Change



(unaudited)


$ Change




September 30,


September 30,


Favorable



September 30,


September 30,


Favorable

Revenues:

2022


2021


(Unfavorable)



2022


2021


(Unfavorable)


Operating revenues

$     1,470,036


$        401,900


$       1,068,136



$  3,906,614


$ 1,405,392


$  2,501,222

Expenses:














Total costs and expenses less















depreciation, amortization and
accretion expense

1,229,371


281,848


(947,523)



3,311,608


804,939


(2,506,669)


Depreciation, amortization and

31,793


10,991


(20,802)



89,602


34,673


(54,929)



accretion expense













Total costs and expenses

1,261,164


292,839


(968,325)



3,401,210


839,612


(2,561,598)


Operating income 

208,872


109,061


99,811



505,404


565,780


(60,376)

Other income

1,215


113


1,102



1,926


524


1,402

Interest and debt expense, net

(3,259)


(1,272)


(1,987)



(9,534)


(2,376)


(7,158)


Net income

$        206,828


$        107,902


$            98,926



$     497,796


$    563,928


$      (66,132)

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 Nine-Month Periods Ended October 1, 2022 and October 2, 2021



Three Months Ended



Nine Months Ended

Adjusted EBITDA 

October 1,


October 2, 



October 1,


October 2, 

(U.S. dollars in thousands)

2022


2021



2022


2021











Net income attributable to Darling

$          191,081


$          146,812



$          581,130


$          495,160

Depreciation and amortization

104,978


77,826



277,337


235,582

Interest expense

39,816


15,409



79,427


47,105

Income tax expense

35,215


42,637



108,631


126,324

Restructuring and asset impairment charges

-


-



8,557


778

Acquisition and integration costs

4,503


-



13,634


-

Foreign currency loss

493


205



6,005


1,299

Other expense, net

2,807


853



3,851


3,210

Equity in net income of Diamond Green Diesel

(103,414)


(53,951)



(248,898)


(281,964)

Equity in net income of other unconsolidated subsidiaries

(2,301)


(1,647)



(5,933)


(4,199)

Net income attributable to noncontrolling interests

1,220


1,394



6,731


4,533


Adjusted EBITDA (Non-GAAP)

$          274,398


$          229,538



$          830,472


$          627,828

Foreign currency exchange impact 

18,426

(1)




41,581

(2)



 Pro forma Adjusted EBITDA to Foreign Currency (Non-GAAP)

$          292,824


$          229,538



$          872,053


$          627,828

DGD Joint Venture Adjusted EBITDA (Darling's Share)

$          120,333


$            60,026



$          297,503


$          300,227











Darling plus Darling's share of DGD Joint Venture Adjusted EBITDA 

$          394,731


$          289,564



$       1,127,975


$          928,055











(1) The average rate assumption used in this calculation was the actual fiscal average rate for the three months ended

October 1, 2022 of €1.00:USD$1.01 and CAD$1.00:USD$0.77, as compared to the average rate for the three months ended

October 2, 2021 of  €1.00:USD$1.18 and CAD$1.00:USD$0.79, respectively.











(2) The average rate assumption used in this calculation was the actual fiscal average rate for the nine months ended


October 1, 2022 of €1.00:USD$1.06 and CAD$1.00:USD$0.78, as compared to the average rate for the nine months ended

October 2, 2021 of  €1.00:USD$1.20 and CAD$1.00:USD$0.80, respectively.

About Darling

Darling Ingredients Inc. (NYSE: DAR) is the largest publicly traded company turning edible by-products and food waste into sustainable products and a leading producer of renewable energy. Recognized as a sustainability leader, the company operates more than 270 plants in 17 countries and repurposes approximately 15% of the world's meat industry waste streams into value-added products, such as green energy, renewable diesel, collagen, fertilizer, animal proteins and meals and pet food ingredients. To learn more, visit darlingii.com and follow us on LinkedIn.

Darling Ingredients Inc. will host a conference call to discuss the Company's third quarter 2022 financial results at 9 am Eastern Time (8 am Central Time) on Wednesday, November 9, 2022.

Due to historically high call volume, the company is offering participants the opportunity to register in advance for the conference through the following link: https://dpregister.com/sreg/10171165/f47e536d62

Registered participants will receive an email with a calendar reminder and a dial-in number and PIN that will allow them immediate access to the call on November 9, 2022.

To listen to the conference call, participants calling from within North America should dial 1-844-868-8847; international participants should dial 1-412-317-6593.  Please asked to be joined to the Darling Ingredients call. Please call approximately ten minutes before the start of the call to ensure that you are connected.

The call will also be available as a live audio webcast that can be accessed on the Company website at http://ir.darlingii.com. Beginning two hours after its completion, a replay of the call can be accessed through November 16, 2022, by dialing 1-877-344-7529 (U.S. callers), 1-855-669-9658 (Canada) and 1-412-317-0088 (international callers).  The access code for the replay is 3834610.

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 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, 6% Notes, 5.25% Notes and 3.625% Notes that were outstanding at Oct. 1, 2022. However, the amounts shown in this presentation for Adjusted EBITDA differ from the amounts calculated under similarly titled definitions in the Company's Senior Secured Credit Facilities, 6% Notes, 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.

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 project; risks and uncertainties relating to international sales and operations, including imposition of tariffs, quotas, trade barriers and other trade protections imposed by foreign countries; difficulties or a significant disruption in our information systems or failure to implement new systems and software successfully,  risks relating to possible third party claims of intellectual property infringement; increased contributions to the Company's pension and benefit plans, including multiemployer and employer-sponsored defined benefit pension plans as required by legislation, regulation or other applicable U.S. or foreign law or resulting from a U.S. mass withdrawal event; bad debt write-offs; loss of or failure to obtain necessary permits and registrations; continued or escalated conflict in the Middle East, North Korea, Ukraine or elsewhere, including the Russia-Ukraine war; uncertainty regarding the exit of the U.K. from the European Union; and/or unfavorable export or import markets. These factors, coupled with volatile prices for natural gas and diesel fuel, climate conditions, currency exchange fluctuations, general performance of the U.S. and global economies, disturbances in world financial, credit, commodities and stock markets, and any decline in consumer confidence and discretionary spending, including the inability of consumers and companies to obtain credit due to lack of liquidity in the financial markets, among others, could cause actual results to vary materially from the forward looking statements included in this release or negatively impact the Company's results of operations. Among other things, future profitability may be affected by the Company's ability to grow its business, which faces competition from companies that may have substantially greater resources than the Company. The Company's announced share repurchase program may be suspended or discontinued at any time and purchases of shares under the program are subject to market conditions and other factors, which are likely to change from time to time. Other risks and uncertainties regarding Darling Ingredients Inc., its business and the industries in which it operates are referenced from time to time in the Company's filings with the Securities and Exchange Commission.  Darling Ingredients Inc. is under no obligation to (and expressly disclaims any such obligation to) update or alter its forward-looking statements whether as a result of new information, future events or otherwise.}

Contact:

Suann Guthrie


VP, Investor Relations, Sustainability & Communications


469) 214-8202; Suann.Guthrie@darlingii.com

 

SOURCE Darling Ingredients Inc.

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