Second Quarter 2023
Darling Ingredients Inc. Reports Second Quarter 2023 Results

Second Quarter 2023

  • Net income of $252.4 million, or $1.55 per GAAP diluted share
  • Net sales of $1.8 billion
  • Combined adjusted EBITDA of $508.3 million, $526.8 million excluding one-time Gelnex inventory negative impact
  • Global ingredients business EBITDA of $260.9 million
  • Received $101.4 million in cash dividends in Q2, and additional $62.2 million in cash dividends subsequent to quarter close from Diamond Green Diesel
  • Repurchased $9.1 million of common stock

IRVING, Texas, Aug. 8, 2023 /PRNewswire/ -- Darling Ingredients Inc. (NYSE: DAR) today reported net income of $252.4 million, or $1.55 per diluted share for second quarter of 2023, compared to net income of $202.0 million, or $1.23 per diluted share, for second quarter of 2022. The company also reported net sales of $1.8 billion for the second quarter of 2023, compared with net sales of $1.7 billion for the same period a year ago.

"Second quarter was an incredible quarter for Darling Ingredients. We delivered our strongest financial results in the company's history, driven by the strength of the vertically integrated business we have built," said Randall C. Stuewe, Darling Ingredients Chairman and Chief Executive Officer. "Fat prices decreased quarter over quarter, which demonstrated how beneficial that can be for our Fuel segment. The power of our integrated waste fats and oils business combined with best-in-class renewable diesel production was clearly on display this last quarter."  

For the six months ended July 1, 2023, Darling Ingredients reported net sales of $3.5 billion, compared to net sales of $3.0 billion for the same period in 2022. Net income for the first six months of 2023 was $438.2 million, or $2.69 per diluted share, as compared to net income of $390.0 million, or $2.37 per diluted share, for the first six months of 2022.

Diamond Green Diesel (DGD) sold a record 387.8 million gallons of renewable diesel for the second quarter 2023 at an average of $1.28 per gallon EBITDA. Year-to-date, DGD has sold 643.3 million gallons of renewable diesel at an average of $1.17 per gallon EBITDA. During the second quarter, Darling Ingredients received $101.4 million in cash dividends from the joint venture. Subsequent to the quarter close, Darling Ingredients received an additional $62.2 million in cash dividends from the joint venture.

Combined adjusted EBITDA for the second quarter 2023 was $508.3 million, compared to $402.6 million for the same period in 2022. On a year-to-date basis, combined adjusted EBITDA totaled $926.7 million, as compared to $733.2 million for the same period in 2022. Excluding a one-time purchase accounting inventory negative impact of $18.5 million in the Food segment due to the Gelnex acquisition, combined adjusted EBITDA would have been $526.8 million for the second quarter 2023.

The company repurchased approximately 153,000 shares of common stock during the second quarter of 2023 for approximately $9.1 million. Stock repurchased year to date 2023 is approximately 926,000 shares for a total of $52.9 million. Approximately $321.6 million remains under the company's Board approved share repurchase program.

As of July 1, 2023, Darling Ingredients had $111.5 million in cash and cash equivalents, and $956.0 million available under its committed revolving credit agreement. Total debt outstanding as of July 1, 2023, was $4.5 billion. The leverage ratio as measured by the company's bank covenant was 3.11X as of July 1, 2023. Capital expenditures were $123.0 million for the second quarter 2023, and $234.3 million for the first six months ended July 1, 2023.

The company reaffirms guidance for fiscal year 2023 at $1.875 billion combined adjusted EBITDA.

Segment Financial Tables (in thousands, unaudited)


Feed
Ingredients

Food
Ingredients

Fuel
Ingredients

Corporate

Total

Three Months Ended July 1, 2023






Net sales

$      1,141,661

$         476,093

$         139,867

$                   -

$      1,757,621

Cost of sales and operating expenses

876,413

371,095

112,194

-

1,359,702

Gross Margin

$         265,248

$         104,998

$          27,673

$                -

$         397,919







Gross Margin %

23.2 %

22.1 %

19.8 %

-

22.6 %







Loss/(gain) on sale of assets

322

2

(65)

-

259

Selling, general and administrative expenses

77,406

33,684

4,971

20,690

136,751

Restructuring and asset impairment charges

-

896

-

-

896

Acquisition and integration costs

-

-

-

1,706

1,706

Change in fair value of contingent consideration

(7,499)

-

-

-

(7,499)

Depreciation and amortization

82,575

28,445

8,567

2,499

122,086

Equity in net income of Diamond Green Diesel

-

-

212,964

-

212,964

Segment Operating Income/(Loss)

112,444

41,971

227,164

(24,895)

356,684







Equity in Net Income of Unconsolidated Subs

1,849

-

-

-

1,849

Segment Income/(Loss)

$         114,293

$          41,971

$        227,164

$      (24,895)

$         358,533







Segment EBITDA

187,520

71,312

22,767

(20,690)

260,909

DGD Adjusted EBITDA (Darling's Share)

-

-

247,398

-

247,398

Combined Adjusted EBITDA

$         187,520

$          71,312

$        270,165

$      (20,690)

$         508,307














Feed
Ingredients

Food
Ingredients

Fuel
Ingredients

Corporate

Total

Three Months Ended July 2, 2022






Net Sales

$      1,170,347

$         369,181

$         110,660

$                   -

$      1,650,188

Cost of sales and operating expenses

864,306

280,964

86,237

-

1,231,507

Gross Margin

306,041

88,217

24,423

-

418,681







Gross Margin %

26.1 %

23.9 %

22.1 %

-

25.4 %







Gain on sale of assets

(964)

(73)

(18)

-

(1,055)

Selling, general and administrative expenses

64,863

22,855

4,277

15,781

107,776

Restructuring and asset impairment charges

8,557

-

-

-

8,557

Acquisition and integration costs

-

-

-

5,358

5,358

Depreciation and amortization

68,938

14,449

6,936

2,790

93,113

Equity in net income of Diamond Green Diesel

-

-

73,680

-

73,680

Segment Operating Income/(Loss)

164,647

50,986

86,908

(23,929)

278,612







Equity in Net Income of Unconsolidated Subs

2,272

-

-

-

2,272

Segment Income/(Loss)

$         166,919

$          50,986

$          86,908

$      (23,929)

$         280,884







Segment EBITDA

242,142

65,435

20,164

(15,781)

311,960

DGD Adjusted EBITDA (Darling's Share)

-

-

90,611

-

90,611

Combined Adjusted EBITDA

$         242,142

$          65,435

$        110,775

$      (15,781)

$         402,571

 

Segment Financial Tables (in thousands, unaudited)








Feed
Ingredients

Food
Ingredients

Fuel
Ingredients

Corporate

Total

Six Months Ended July 1, 2023






Net sales

$      2,379,155

$         872,485

$         297,153

$                   -

$      3,548,793

Cost of sales and operating expenses

1,826,485

661,210

238,980

-

2,726,675

Gross Margin

$         552,670

$         211,275

$          58,173

$                -

$         822,118







Gross Margin %

23.2 %

24.2 %

19.6 %

-

23.2 %







Gain on sale of assets

(20)

(19)

(29)

-

(68)

Selling, general and administrative expenses

152,097

66,806

11,163

42,151

272,217

Restructuring and asset impairment charges

92

5,328

-

-

5,420

Acquisition and integration costs

-

-

-

8,728

8,728

Change in fair value of contingent consideration

(7,499)

-

-

-

(7,499)

Depreciation and amortization

172,895

42,918

16,960

5,319

238,092

Equity in net income of Diamond Green Diesel

-

-

307,301

-

307,301

Segment Operating Income/(Loss)

235,105

96,242

337,380

(56,198)

612,529







Equity in Net Income of Unconsolidated Subs

1,969

-

-

-

1,969

Segment Income/(Loss)

$         237,074

$          96,242

$        337,380

$      (56,198)

$         614,498







Segment EBITDA

400,593

144,488

47,039

(42,151)

549,969

DGD Adjusted EBITDA (Darling's Share)

-

-

376,721

-

376,721

Combined Adjusted EBITDA

$         400,593

$         144,488

$        423,760

$      (42,151)

$         926,690














Feed
Ingredients

Food
Ingredients

Fuel
Ingredients

Corporate

Total

Six Months Ended July 2, 2022






Net Sales

$      2,049,785

$         723,995

$         242,742

$                   -

$      3,016,522

Cost of sales and operating expenses

1,509,829

551,276

190,979

-

2,252,084

Gross Margin

539,956

172,719

51,763

-

764,438







Gross Margin %

26.3 %

23.9 %

21.3 %

-

25.3 %







Gain on sale of assets

(1,305)

(82)

(57)

-

(1,444)

Selling, general and administrative expenses

121,072

49,699

8,197

30,840

209,808

Restructuring and asset impairment charges

8,557

-

-

-

8,557

Acquisition and integration costs

-

-

-

9,131

9,131

Depreciation and amortization

123,288

29,899

13,610

5,562

172,359

Equity in net income of Diamond Green Diesel

-

-

145,484

-

145,484

Segment Operating Income/(Loss)

288,344

93,203

175,497

(45,533)

511,511







Equity in Net Income of Unconsolidated Subs

3,632

-

-

-

3,632

Segment Income/(Loss)

$         291,976

$          93,203

$        175,497

$      (45,533)

$         515,143







Segment EBITDA

420,189

123,102

43,623

(30,840)

556,074

DGD Adjusted EBITDA (Darling's Share)

-

-

177,171

-

177,171

Combined Adjusted EBITDA

$         420,189

$         123,102

$        220,794

$      (30,840)

$         733,245

 

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

 

Darling Ingredients Inc. and Subsidiaries

Consolidated Balance Sheets

July 1, 2023 and December 31, 2022

(in thousands)











July 1, 2023

December 31, 2022

ASSETS


(unaudited)


Current assets:




Cash and cash equivalents


$                                  111,541

$                                  127,016

Restricted cash


299

315

Accounts receivable, net


746,638

676,573

Inventories


825,130

673,621

Prepaid expenses


116,540

85,665

Income taxes refundable


22,621

18,583

Other current assets


53,188

56,324

Total current assets


1,875,957

1,638,097





Property, plant and equipment, net


2,774,526

2,462,082

Intangible assets, net


1,074,604

865,122

Goodwill


2,566,169

1,970,377

Investment in unconsolidated subsidiaries


2,214,312

1,926,395

Operating lease right-of-use assets


196,554

186,141

Other assets


246,032

136,268

Deferred income taxes


25,085

17,888



$                            10,973,239

$                              9,202,370

LIABILITIES AND STOCKHOLDERS' EQUITY




Current liabilities:




Current portion of long-term debt


$                                    88,085

$                                    69,846

Accounts payable, principally trade


427,066

472,491

Income taxes payable


29,821

44,851

Current operating lease liabilities


48,381

49,232

Accrued Expenses


420,196

432,023

Total current liabilities


1,013,549

1,068,443

Long-term debt, net of current portion


4,458,797

3,314,969

Long-term operating lease liabilities


149,165

141,703

Other non-current liabilities


339,270

298,933

Deferred income taxes


561,895

481,832

Total liabilities


6,522,676

5,305,880

Commitments and contingencies




Stockholders' equity:




     Common stock, $0.01 par value;


1,743

1,736

Additional paid-in capital


1,680,188

1,660,084

     Treasury stock, at cost


(624,852)

(554,451)

Accumulated other comprehensive loss


(212,561)

(383,874)

Retained earnings


3,523,712

3,085,528

Total Darling's stockholders' equity


4,368,230

3,809,023

Noncontrolling interests


82,333

87,467

Total Stockholders' Equity


4,450,563

3,896,490



$                            10,973,239

$                              9,202,370

 

Darling Ingredients Inc. and Subsidiaries

Consolidated Operating Results

For the Three and Six Months Ended July 1, 2023 and July 2, 2022

(in thousands, except per share data)

















Three Months Ended


Six Months Ended




(unaudited)


$ Change


(unaudited)


$ Change




July 1,


July 2,


Favorable


July 1,


July 2,


Favorable




2023


2022


(Unfavorable)


2023


2022


(Unfavorable)


Net sales

$       1,757,621


$        1,650,188


$           107,433


$       3,548,793


$        3,016,522


$           532,271


Costs and expenses:














Cost of sales and operating expenses

1,359,702


1,231,507


(128,195)


2,726,675


2,252,084


(474,591)



Loss/(gain) on sale of assets

259


(1,055)


(1,314)


(68)


(1,444)


(1,376)



Selling, general and administrative expenses

136,751


107,776


(28,975)


272,217


209,808


(62,409)



Restructuring and asset impairment charges

896


8,557


7,661


5,420


8,557


3,137



Acquisition and integration costs

1,706


5,358


3,652


8,728


9,131


403



Change in fair value of contingent consideration

(7,499)


-


7,499


(7,499)


-


7,499



Depreciation and amortization

122,086


93,113


(28,973)


238,092


172,359


(65,733)


Total costs and expenses

1,613,901


1,445,256


(168,645)


3,243,565


2,650,495


(593,070)



Equity in net income of Diamond Green Diesel

212,964


73,680


139,284


307,301


145,484


161,817


Operating income

356,684


278,612


78,072


612,529


511,511


101,018


Other expense:














Interest expense

(70,193)


(24,008)


(46,185)


(120,492)


(39,611)


(80,881)



Foreign currency gain/(loss)

2,490


(4,412)


6,902


7,494


(5,512)


13,006



Other income/(expense), net

5,079


(302)


5,381


11,238


(1,044)


12,282


Total other expense

(62,624)


(28,722)


(33,902)


(101,760)


(46,167)


(55,593)


Equity in net income














of other unconsolidated subsidiaries

1,849


2,272


(423)


1,969


3,632


(1,663)


Income before income taxes

295,909


252,162


43,747


512,738


468,976


43,762


Income tax expense

40,712


47,333


6,621


67,686


73,416


5,730


Net income

255,197


204,829


50,368


445,052


395,560


49,492


Net income attributable to














noncontrolling interests

(2,814)


(2,833)


19


(6,868)


(5,511)


(1,357)


Net income attributable to Darling

$          252,383


$           201,996


$             50,387


$          438,184


$           390,049


$             48,135
















Basic income per share:

$                1.58


$                 1.25


$                 0.33


$                2.74


$                 2.41


$                 0.33


Diluted income per share:

$                1.55


$                 1.23


$                 0.32


$                2.69


$                 2.37


$                 0.32
















Number of diluted common shares:

162,370


164,745




162,593


164,673




 

Darling Ingredients Inc. and Subsidiaries

Consolidated Statement of Cash Flows

For the Six Months Ended July 1, 2023 and July 2, 2022

(in thousands)













(unaudited)






July 1,


July 2,


Cash flows from operating activities:

2023


2022



Net income


$     445,052


$       395,560



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







Depreciation and amortization

238,092


172,359




Gain on sale of assets

(68)


(1,444)




Asset Impairment


-


8,557




Change in fair value of contingent consideration

(7,499)


-




Gain on insurance proceeds from insurance settlements

(13,836)


-




Deferred taxes


34,202


35,674




Decrease in long-term pension liability

480


(547)




Stock-based compensation expense

18,085


13,369




Deferred loan cost amortization

3,138


2,207




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

(309,270)


(149,116)




Distribution of earnings from Diamond Green Diesel and other unconsolidated subsidiaries

103,794


1,631




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







     Accounts receivable

24,397


(47,046)




     Income taxes refundable/payable

(24,551)


(28,834)




     Inventories and prepaid expenses

(22,301)


(95,199)




     Accounts payable and accrued expenses

(94,080)


72,351




     Other


10,065


(18,487)





Net cash provided by operating activities

405,700


361,035


Cash flows from investing activities:






Capital expenditures


(234,307)


(151,478)



Acquisitions, net of cash acquired

(1,079,083)


(1,235,537)



Investment in Diamond Green Diesel

(75,000)


(239,750)



Investment in other unconsolidated subsidiaries

(27)


-



Loan repayment from Diamond Green Diesel

25,000


-



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

2,733


2,161



Proceeds from insurance settlement

13,836


-



Payments related to routes and other intangibles

(1,517)


(179)





Net cash used in investing activities

(1,348,365)


(1,624,783)


Cash flows from financing activities:






Proceeds from long-term debt

807,956


1,663,612



Payments on long-term debt

(83,616)


(23,600)



Borrowings from revolving credit facility

1,415,916


777,902



Payments on revolving credit facility

(1,063,516)


(937,921)



Net cash overdraft financing

16,673


12



Deferred loan costs


(9)


(10,707)



Repurchase of common stock

(52,941)


(65,887)



Minimum withholding taxes paid on stock awards

(15,558)


(45,836)



Distributions to noncontrolling interests

(4,824)


-





Net cash provided by financing activities

1,020,081


1,357,575


Effect of exchange rate changes on cash flows

16,535


(16,059)


Net increase in cash, cash equivalents and restricted cash

93,951


77,768


Cash, cash equivalents and restricted cash at beginning of period

150,168


69,072


Cash, cash equivalents and restricted cash at end of period

$     244,119


$       146,840


 

Diamond Green Diesel Joint Venture

Consolidated Balance Sheets

June 30, 2023 and December 31, 2022

(in thousands)













June 30,


December 31,






2023


2022


Assets:



 (unaudited)



Total current assets


$        1,623,715


$       1,304,805



Property, plant and equipment, net


3,828,093


3,866,854



Other assets


88,305


61,665




Total assets


$        5,540,113


$       5,233,324










Liabilities and members' equity:







Total current portion of long term debt


$           102,935


$           217,066



Total other current liabilities


378,589


515,023



Total long term debt


760,700


774,783



Total other long term liabilities


16,568


17,249



Total members' equity


4,281,321


3,709,203




Total liabilities and members' equity


$        5,540,113


$       5,233,324


 

Diamond Green Diesel Joint Venture

Operating Financial Results

For the Three and Six Months Ended June 30, 2023 and June 30, 2022

(in thousands)















Three Months Ended


Six Months Ended





(unaudited)


$ Change


(unaudited)


$ Change





June 30,


June 30,


Favorable


June 30,


June 30,


Favorable





2023


2022


(Unfavorable)


2023


2022


(Unfavorable)


Revenues:















          Operating revenues

$        2,246,111


$        1,455,886


$             790,225


$   3,926,161


$   2,436,578


$     1,489,583


Expenses:













          Total costs and expenses less













               depreciation, amortization and
               accretion expense

1,751,315


1,274,665


(476,650)


3,172,719


2,082,237


(1,090,482)


          Depreciation, amortization and













               accretion expense

58,315


31,317


(26,998)


116,922


57,809


(59,113)


Total costs and expenses

1,809,630


1,305,982


(503,648)


3,289,641


2,140,046


(1,149,595)


          Operating income 

436,481


149,904


286,577


636,520


296,532


339,988


Other income

2,121


722


1,399


4,162


711


3,451


Interest and debt expense, net

(12,674)


(3,266)


(9,408)


(26,080)


(6,275)


(19,805)


          Net income

$           425,928


$           147,360


$             278,568


$      614,602


$       290,968


$        323,634


 

Darling Ingredients Inc. reports Adjusted EBITDA results, which is a Non-GAAP financial measure, as a compliment to results provided in accordance with generally accepted accounting principles (GAAP) (for additional information, see "Use of Non-GAAP Financial Measures" included later in this media release). The Company believes that Adjusted EBITDA provides additional useful information to investors. Adjusted EBITDA, as the Company uses the term, is calculated below:

 

Reconciliation of Net Income to (Non-GAAP) Adjusted EBITDA and (Non-GAAP) Pro-Forma 

Adjusted EBITDA to Foreign Currency

For the Three and Six Months Ended July 1, 2023 and July 2, 2022

(in thousands)














Three Months Ended



Six Months Ended




(unaudited)



(unaudited)


Adjusted EBITDA 

July 1,


July 2,



July 1,


July 2,




2023


2022



2023


2022













Net income attributable to Darling

$             252,383


$             201,996



$        438,184


$    390,049


Depreciation and amortization

122,086


93,113



238,092


172,359


Interest expense

70,193


24,008



120,492


39,611


Income tax expense

40,712


47,333



67,686


73,416


Restructuring and asset impairment charges

896


8,557



5,420


8,557


Acquisition and integration costs

1,706


5,358



8,728


9,131


Change in fair value of contingent consideration

(7,499)


-



(7,499)


-


Foreign currency loss/(gain)

(2,490)


4,412



(7,494)


5,512


Other expense/(income), net

(5,079)


302



(11,238)


1,044


Equity in net income of Diamond Green Diesel

(212,964)


(73,680)



(307,301)


(145,484)


Equity in net income of other unconsolidated subsidiaries

(1,849)


(2,272)



(1,969)


(3,632)


Net income attributable to noncontrolling interests

2,814


2,833



6,868


5,511



Adjusted EBITDA (Non-GAAP)

$             260,909


$             311,960



$        549,969


$    556,074


Foreign currency exchange impact 

(1,550)

(1)




5,779

(2)




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

$             259,359


$             311,960



$        555,748


$    556,074


DGD Joint Venture Adjusted EBITDA (Darling's Share)

$             247,398


$                90,611



$        376,721


$    177,171













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

$             508,307


$             402,571



$        926,690


$    733,245













(1) The average rates for the three months ended July 1, 2023 were €1.00:$1.09, R$1.00:$0.20









 and C$1.00:$0.74 as compared to the average rate for the three months ended July 2, 2022










 of  €1.00:$1.06, R$1.00:$0.20 and C$1.00:$0.78, respectively.





















(2) The average rates for the six months ended July 1, 2023 were €1.00:$1.08, R$1.00:$0.20










 and C$1.00:$0.74 as compared to the average rate for the six months ended July 2, 2022










 of  €1.00:$1.09, R$1.00:$0.20 and C$1.00:$0.79, respectively.










 

About Darling Ingredients

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 260 facilities 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. Follow us on LinkedIn.

Darling Ingredients Inc. will host a conference call to discuss the Company's second quarter 2023 financial results at 9 a.m. Eastern Time (8 a.m. Central Time) on Wednesday, Aug. 9, 2023. 

To join the call as a participant to ask a question, please register in advance to receive a confirmation email with the dial-in number and PIN for immediate access on August 9, 2023, or call 844-868-8847 (United States) or 412-317-6593 (International) and ask for "The Darling Ingredients Call" that day.

A replay of the call will be available online via the webcast registration link  and via phone at 877-344-7529 (United States), 855-669-9658 (Canada) or 412-317-0088 (International) using reference passcode 2280026. The phone replay will be available two hours after the call concludes through August 16, 2023.

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. It 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, the presentation in this report may not be comparable to EBITDA or Adjusted EBITDA presentations disclosed by other companies. Adjusted EBITDA is calculated below and represents for any relevant period, net income/(loss) plus depreciation and amortization, restructuring, acquisition and integration costs, goodwill and long-lived asset impairment, change in fair value of contingent consideration, interest expense, income tax provision, other income/(expense) and equity in net (income)/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).

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 July 1, 2023. However, the amounts shown below 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 nonrecurring costs, non-cash charges and cash dividends from the DGD Joint Venture. Additionally, the Company evaluates the impact of foreign exchange on operating cash flow, which is defined as segment operating income (loss) plus depreciation and amortization.

DGD Joint Venture Adjusted EBITDA (Darling's share) is not a recognized accounting measure under GAAP; it should not be considered as an alternative to net income or equity in net income of Diamond Green Diesel, 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. The Company calculates DGD Joint Venture Adjusted EBITDA (Darling's share) by taking DGD's operating income plus DGD's depreciation, amortization and accretion expense and then multiplying by 50% to get Darling's share of DGD's EBITDA.

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 operations and statement of cash flows, 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 guidance 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.

EBITDA per gallon is not a recognized accounting measurement under GAAP; it should not be considered as an alternative to net income or equity in income of Diamond Green Diesel, 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.  EBITDA per gallon is presented here not as an alternative to net income or equity in income of Diamond Green Diesel, but rather as a measure of Diamond Green Diesel's operating performance. Since EBITDA per gallon (generally, net income plus interest expense, taxes, depreciation and amortization divided by total gallons sold) is not calculated identically by all companies, this presentation may not be comparable to EBITDA per gallon presentations disclosed by other companies. Management believes that EBITDA per gallon is useful in evaluating Diamond Green Diesel's operating performance compared to that of other companies in its industry because the calculation of EBITDA per gallon generally eliminates the effects of financing, income taxes and certain non-cash and other items presented on a per gallon basis that may vary for different companies for reasons unrelated to overall operating performance.

Cautionary Statements Regarding Forward-Looking Information:

This media release contains includes "forward-looking" statements that are subject to risks and uncertainties that could cause actual results 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," "guidance," "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. All statements other than statements of historical facts included in this release are 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. Important factors that could cause actual results to differ materially from the Company's expectations include: 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 in China and elsewhere; the occurrence of pandemics, epidemics or disease outbreaks, such as the 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 or 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, a decline in margins on the products produced by the DGD Joint Venture and issues relating to the announced SAF upgrade 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; tax changes, such as the introduction of a global minimum tax; difficulties or a significant disruption in the Company's 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, inflation rates, climate conditions, currency exchange fluctuations, general performance of the U.S. and global economies, disturbances in world financial, credit, commodities and stock markets, such as the recent turmoil in the world banking 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 report 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. For more detailed discussion of these factors and other risks and uncertainties regarding the Company, its business and the industries in which it operates, see the Company's filings with the SEC, including the Risk Factors discussion in Item 1A of Part I of the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2022. The Company cautions readers that all forward-looking statements speak only as of the date made, and the Company undertakes no obligation to update any forward-looking statements, whether as a result of changes in circumstances, new events or otherwise.

Darling Ingredients Contacts


Investors:       

Suann Guthrie


Senior VP, Investor Relations, Sustainability & Communications


(469) 214-8202; suann.guthrie@darlingii.com    



Media:            

Jillian Fleming


Director, Global Communications


(972) 541-7115; jillian.fleming@darlingii.com

SOURCE Darling Ingredients Inc.

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