Darling Ingredients Inc. Reports Fourth Quarter and Fiscal Year 2023 Results
- Strong financial performance in fiscal year 2023 with net income of $647.7 million.
- Net sales reached $6.8 billion, showcasing continued growth for Darling Ingredients Inc.
- Adjusted EBITDA of $1.61 billion, highlighting the company's financial strength and stability.
- Significant decrease in net income for the fourth quarter of 2023 compared to the same period in 2022.
- DGD sold 1.2 billion gallons of renewable diesel in 2023, contributing to Darling's earnings.
- Capital expenditures were $174.9 million for the fourth quarter of 2023 and $555.5 million for fiscal year 2023.
- Decrease in net income for the fourth quarter of 2023 due to lower earnings from Diamond Green Diesel.
- Net sales decreased from $1.8 billion in the fourth quarter of 2022 to $1.6 billion in the fourth quarter of 2023.
- Total debt outstanding as of Dec. 30, 2023, was $4.4 billion, indicating a significant debt burden.
- Leverage ratio measured by the company's bank covenant was 3.26X as of Dec. 30, 2023, showing high leverage.
- Negative change in fair value of contingent consideration impacting financial results.
Insights
The reported net income decrease for Darling Ingredients in the fourth quarter of 2023, primarily attributed to a decline in Diamond Green Diesel (DGD) earnings, is a critical factor for stakeholders. This signals a potential concern for profitability sustainability, especially given the context of a global energy market that is increasingly shifting towards renewable sources. The repurchase of common stock, amounting to $52.9 million, can be interpreted as a confidence signal from management regarding the company's valuation, as stock buybacks often aim to increase shareholder value by reducing the number of shares outstanding, thus potentially increasing earnings per share (EPS).
However, the increased capital expenditures, which amounted to $555.5 million for the fiscal year, indicate significant reinvestment in the company's operations. This could suggest a strategic positioning for future growth or necessary maintenance of competitive advantage in the ingredients sector. The leverage ratio, sitting at 3.26X, is within a reasonable range for many industries, but it is essential to monitor this in conjunction with the company's cash flow and debt management strategies moving forward.
Darling Ingredients' performance in the feed, food and fuel segments reveals a diversified business model. The global ingredients business EBITDA of $1,109.9 million underscores the company's strong position in these markets. However, the year-over-year decrease in net sales for the fourth quarter, from $1.8 billion to $1.6 billion, may raise questions about market demand and pricing power in a competitive landscape.
The company's emphasis on its '6th record year of growth in volumes and combined adjusted EBITDA' is noteworthy, as it demonstrates the ability to grow amidst market challenges. Nevertheless, the nuanced understanding of each segment's contribution to the overall financial health is essential. For instance, the fuel ingredients segment, tied closely to the volatile energy sector, may be subject to different market dynamics than the typically more stable food and feed ingredients sectors.
The broader economic implications of Darling Ingredients' financial results, particularly the impact of commodity volatility, are significant. The company's vertical integration is a strategic advantage that can mitigate risks associated with fluctuating commodity prices. However, the global economic conditions, including trade policies, currency exchange rates and energy policies, will continue to influence Darling's performance.
Furthermore, the investment community should consider the company's cash dividends received from DGD, totaling $163.6 million, as a reflection of its joint venture's success in the renewable diesel market. This aspect of Darling's business could be increasingly relevant as the global economy transitions towards sustainable energy sources. The company's optimism for a strong performance in 2024 should be weighed against these broader economic factors, as they will undoubtedly play a role in shaping the operating environment for Darling Ingredients and its peers.
Fiscal Year 2023 Highlights
- Net income of
$647.7 million $3.99 - Net sales of
$6.8 billion - Combined adjusted EBITDA of
$1,611.9 million - Global ingredients business EBITDA of
$1,109.9 million - Received
$163.6 million - Repurchased
$52.9 million
For the fiscal year ended Dec. 30, 2023, Darling Ingredients reported net sales of
"Darling Ingredients had another great year with its 6th record year of growth in volumes and combined adjusted EBITDA," said Randall C. Stuewe, Darling Ingredients Chairman and Chief Executive Officer. "Our vertically integrated business continues to demonstrate that Darling Ingredients can deliver strong earnings that offsets commodity volatility."
DGD sold 336.6 million gallons of renewable diesel for the fourth quarter 2023 at an average of
Combined adjusted EBITDA for the fourth quarter 2023 was
As of Dec. 30, 2023, Darling Ingredients had
"Darling Ingredients is committed to continuing to drive shareholder results. We have built a strong business and remain optimistic on a strong performance in 2024," Stuewe said.
Segment Financial Tables (in thousands)
Feed Ingredients | Food Ingredients | Fuel Ingredients | Corporate | Total | |
Three Months Ended December 30, 2023 (unaudited) | |||||
Net sales | $ 1,045,642 | $ 423,836 | $ 144,605 | $ - | $ 1,614,083 |
Cost of sales and operating expenses | 755,062 | 311,163 | 111,427 | - | 1,177,652 |
Gross Margin | 290,580 | 112,673 | 33,178 | - | 436,431 |
Loss (gain) on sale of assets | 1 | (8,243) | (40) | - | (8,282) |
Selling, general and administrative expenses | 77,281 | 30,195 | 6,714 | 18,430 | 132,620 |
Restructuring and asset impairment charges | 3,934 | 9,199 | - | - | 13,133 |
Acquisition and integration costs | - | - | - | 1,726 | 1,726 |
Change in fair value of contingent consideration | 5,167 | - | - | - | 5,167 |
Depreciation and amortization | 98,400 | 26,655 | 8,480 | 4,394 | 137,929 |
Equity in net income of Diamond Green Diesel | - | - | 4,690 | - | 4,690 |
Segment operating income/(loss) | $ 105,797 | $ 54,867 | $ 22,714 | $ (24,550) | $ 158,828 |
Equity in net income of other unconsolidated subsidiaries | 1,508 | - | - | - | 1,508 |
Segment income/(loss) | $ 107,305 | $ 54,867 | $ 22,714 | $ (24,550) | $ 160,336 |
Segment EBITDA | $ 213,298 | $ 90,721 | $ 26,504 | $ (18,430) | $ 312,093 |
DGD adjusted EBITDA (Darling's Share) | - | - | 38,816 | - | 38,816 |
Combined adjusted EBITDA | $ 213,298 | $ 90,721 | $ 65,320 | $ (18,430) | $ 350,909 |
Feed Ingredients | Food Ingredients | Fuel Ingredients | Corporate | Total | |
Three Months Ended December 31, 2022 | |||||
Net sales | $ 1,216,073 | $ 387,733 | $ 164,277 | $ - | $ 1,768,083 |
Cost of sales and operating expenses | 950,778 | 294,417 | 134,093 | - | 1,379,288 |
Gross Margin | 265,295 | 93,316 | 30,184 | - | 388,795 |
Loss (gain) on sale of assets | 169 | (117) | 14 | - | 66 |
Selling, general and administrative expenses | 73,736 | 28,073 | 3,769 | 16,142 | 121,720 |
Restructuring and asset impairment charges | - | 21,109 | - | - | 21,109 |
Acquisition and integration costs | - | - | - | 2,738 | 2,738 |
Depreciation and amortization | 91,282 | 14,722 | 8,606 | 2,774 | 117,384 |
Equity in net income of Diamond Green Diesel | - | - | 123,448 | - | 123,448 |
Segment operating income/(loss) | $ 100,108 | $ 29,529 | $ 141,243 | $ (21,654) | $ 249,226 |
Equity in net loss of other unconsolidated subsidiaries | (831) | - | - | - | (831) |
Segment income/(loss) | $ 99,277 | $ 29,529 | $ 141,243 | $ (21,654) | $ 248,395 |
Segment EBITDA | $ 191,390 | $ 65,360 | $ 26,401 | $ (16,142) | $ 267,009 |
DGD adjusted EBITDA (Darling's Share) | - | - | 145,984 | - | 145,984 |
Combined adjusted EBITDA | $ 191,390 | $ 65,360 | $ 172,385 | $ (16,142) | $ 412,993 |
Segment Financial Tables (in thousands)
Feed Ingredients | Food Ingredients | Fuel Ingredients | Corporate | Total | |
Twelve Months Ended December 30, 2023 (unaudited) | |||||
Net sales | $ 4,472,592 | $ 1,752,065 | $ 563,423 | $ - | $ 6,788,080 |
Cost of sales and operating expenses | 3,385,859 | 1,310,581 | 446,620 | - | 5,143,060 |
Gross Margin | 1,086,733 | 441,484 | 116,803 | - | 1,645,020 |
Loss (gain) on sale of assets | 814 | (8,144) | (91) | - | (7,421) |
Selling, general and administrative expenses | 310,363 | 128,464 | 23,543 | 80,164 | 542,534 |
Restructuring and asset impairment charges | 4,026 | 14,527 | - | - | 18,553 |
Acquisition and integration costs | - | - | - | 13,884 | 13,884 |
Change in fair value of contingent consideration | (7,891) | (7,891) | |||
Depreciation and amortization | 360,249 | 94,991 | 34,466 | 12,309 | 502,015 |
Equity in net income of Diamond Green Diesel | - | - | 366,380 | - | 366,380 |
Segment operating income/(loss) | $ 419,172 | $ 211,646 | $ 425,265 | $ (106,357) | $ 949,726 |
Equity in net income of other unconsolidated subsidiaries | 5,011 | - | - | - | 5,011 |
Segment income/(loss) | $ 424,183 | $ 211,646 | $ 425,265 | $ (106,357) | $ 954,737 |
Segment EBITDA | $ 775,556 | $ 321,164 | $ 93,351 | $ (80,164) | $ 1,109,907 |
DGD adjusted EBITDA (Darling's Share) | - | - | 501,987 | - | 501,987 |
Combined adjusted EBITDA | $ 775,556 | $ 321,164 | $ 595,338 | $ (80,164) | $ 1,611,894 |
Feed Ingredients | Food Ingredients | Fuel Ingredients | Corporate | Total | |
Twelve Months Ended December 31, 2022 | |||||
Net sales | $ 4,539,000 | $ 1,459,630 | $ 533,574 | $ - | $ 6,532,204 |
Cost of sales and operating expenses | 3,473,506 | 1,102,250 | 426,853 | - | 5,002,609 |
Gross Margin | 1,065,494 | 357,380 | 106,721 | - | 1,529,595 |
Gain on sale of assets | (3,426) | (1,008) | (60) | - | (4,494) |
Selling, general and administrative expenses | 258,781 | 101,681 | 13,690 | 62,456 | 436,608 |
Restructuring and asset impairment charges | 8,557 | 21,109 | - | - | 29,666 |
Acquisition and integration costs | - | - | - | 16,372 | 16,372 |
Depreciation and amortization | 295,249 | 59,029 | 29,500 | 10,943 | 394,721 |
Equity in net income of Diamond Green Diesel | - | - | 372,346 | - | 372,346 |
Segment operating income/(loss) | $ 506,333 | $ 176,569 | $ 435,937 | $ (89,771) | $ 1,029,068 |
Equity in net income of other unconsolidated subsidiaries | 5,102 | - | - | - | 5,102 |
Segment income/(loss) | $ 511,435 | $ 176,569 | $ 435,937 | $ (89,771) | $ 1,034,170 |
Segment EBITDA | $ 810,139 | $ 256,707 | $ 93,091 | $ (62,456) | $ 1,097,481 |
DGD adjusted EBITDA (Darling's Share) | - | - | 443,487 | - | 443,487 |
Combined adjusted EBITDA | $ 810,139 | $ 256,707 | $ 536,578 | $ (62,456) | $ 1,540,968 |
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 | |||
December 30, 2023 and December 31, 2022 | |||
December 30, 2023 | December 31, 2022 | ||
ASSETS | (unaudited) | ||
Current assets: | |||
Cash and cash equivalents | $ 126,502 | $ 127,016 | |
Restricted cash | 292 | 315 | |
Accounts receivable, net | 626,008 | 559,695 | |
Accounts receivable due from related party - | 172,283 | 116,878 | |
Inventories | 758,739 | 673,621 | |
Prepaid expenses | 105,657 | 85,665 | |
Income taxes refundable | 23,599 | 18,583 | |
Other current assets | 42,586 | 56,324 | |
Total current assets | 1,855,666 | 1,638,097 | |
Property, plant and equipment, net | 2,935,185 | 2,462,082 | |
Intangible assets, net | 1,075,892 | 865,122 | |
Goodwill | 2,484,502 | 1,970,377 | |
Investment in unconsolidated subsidiaries | 2,251,629 | 1,926,395 | |
Operating lease right-of-use assets | 205,539 | 186,141 | |
Other assets | 234,960 | 136,268 | |
Deferred income taxes | 17,711 | 17,888 | |
$ 11,061,084 | $ 9,202,370 | ||
LIABILITIES AND STOCKHOLDERS' EQUITY | |||
Current liabilities: | |||
Current portion of long-term debt | $ 60,703 | $ 69,846 | |
Accounts payable, principally trade | 425,588 | 472,491 | |
Income taxes payable | 15,522 | 44,851 | |
Current operating lease liabilities | 55,325 | 49,232 | |
Accrued expenses | 440,999 | 432,023 | |
Total current liabilities | 998,137 | 1,068,443 | |
Long-term debt, net of current portion | 4,366,370 | 3,314,969 | |
Long-term operating lease liabilities | 154,903 | 141,703 | |
Other non-current liabilities | 349,809 | 298,933 | |
Deferred income taxes | 498,174 | 481,832 | |
Total liabilities | 6,367,393 | 5,305,880 | |
Commitments and contingencies | |||
Stockholders' equity: | |||
Common stock, | 1,744 | 1,736 | |
Additional paid-in capital | 1,697,787 | 1,660,084 | |
Treasury stock, at cost | (629,008) | (554,451) | |
Accumulated other comprehensive loss | (198,346) | (383,874) | |
Retained earnings | 3,733,254 | 3,085,528 | |
Total Darling's stockholders' equity | 4,605,431 | 3,809,023 | |
Noncontrolling interests | 88,260 | 87,467 | |
Total Stockholders' Equity | 4,693,691 | 3,896,490 | |
$ 11,061,084 | $ 9,202,370 | ||
Darling Ingredients Inc. and Subsidiaries Consolidated Operating Results For the Three and Twelve Months Ended Dec. 30, 2023 and Dec. 31, 2022 (in thousands, except per share data) | ||||||||||||
Three Months Ended | Twelve Months Ended | |||||||||||
(unaudited) | $ Change | (unaudited) | $ Change | |||||||||
December 30, | December 31, | Favorable | December 30, | December 31, | Favorable | |||||||
2023 | 2022 | (Unfavorable) | 2023 | 2022 | (Unfavorable) | |||||||
Net sales | $ 1,614,083 | $ 1,768,083 | $ (154,000) | $ 6,788,080 | $ 6,532,204 | $ 255,876 | ||||||
Costs and expenses: | ||||||||||||
Cost of sales and operating expenses | 1,177,652 | 1,379,288 | 201,636 | 5,143,060 | 5,002,609 | (140,451) | ||||||
(Gain) loss on sale of assets | (8,282) | 66 | 8,348 | (7,421) | (4,494) | 2,927 | ||||||
Selling, general and administrative expenses | 132,620 | 121,720 | (10,900) | 542,534 | 436,608 | (105,926) | ||||||
Restructuring and asset impairment charges | 13,133 | 21,109 | 7,976 | 18,553 | 29,666 | 11,113 | ||||||
Acquisition and integration costs | 1,726 | 2,738 | 1,012 | 13,884 | 16,372 | 2,488 | ||||||
Change in fair value of contingent consideration | 5,167 | - | (5,167) | (7,891) | - | 7,891 | ||||||
Depreciation and amortization | 137,929 | 117,384 | (20,545) | 502,015 | 394,721 | (107,294) | ||||||
Total costs and expenses | 1,459,945 | 1,642,305 | 182,360 | 6,204,734 | 5,875,482 | (329,252) | ||||||
Equity in net income of Diamond Green Diesel | 4,690 | 123,448 | (118,758) | 366,380 | 372,346 | (5,966) | ||||||
Operating income | 158,828 | 249,226 | (90,398) | 949,726 | 1,029,068 | (79,342) | ||||||
Other expense: | ||||||||||||
Interest expense | (68,453) | (46,139) | (22,314) | (259,223) | (125,566) | (133,657) | ||||||
Foreign currency gain (loss) | (206) | (5,272) | 5,066 | 8,133 | (11,277) | 19,410 | ||||||
Other income (expense), net | 2,825 | 242 | 2,583 | 16,310 | (3,609) | 19,919 | ||||||
Total other expense | (65,834) | (51,169) | (14,665) | (234,780) | (140,452) | (94,328) | ||||||
Equity in net income (loss) | ||||||||||||
of other unconsolidated subsidiaries | 1,508 | (831) | 2,339 | 5,011 | 5,102 | (91) | ||||||
Income from operations before income taxes | 94,502 | 197,226 | (102,724) | 719,957 | 893,718 | (173,761) | ||||||
Income tax expense | 7,246 | 37,995 | 30,749 | 59,568 | 146,626 | 87,058 | ||||||
Net income | 87,256 | 159,231 | (71,975) | 660,389 | 747,092 | (86,703) | ||||||
Net income attributable to | ||||||||||||
noncontrolling interests | (2,740) | (2,671) | (69) | (12,663) | (9,402) | (3,261) | ||||||
Net income attributable to Darling | $ 84,516 | $ 156,560 | $ (72,044) | $ 647,726 | $ 737,690 | $ (89,964) | ||||||
Basic income per share: | $ 0.53 | $ 0.98 | $ (0.45) | $ 4.05 | $ 4.58 | $ (0.53) | ||||||
Diluted income per share: | $ 0.52 | $ 0.96 | $ (0.44) | $ 3.99 | $ 4.49 | $ (0.50) | ||||||
Number of diluted common shares: | 161,935 | 163,504 | 162,387 | 164,121 | ||||||||
Darling Ingredients Inc. and Subsidiaries | |||||||
Consolidated Statement of Cash Flows | |||||||
For the Twelve Months Ended December 30, 2023 and December 31, 2022 | |||||||
(in thousands) | |||||||
Twelve Months Ended | |||||||
(unaudited) | December 31, | ||||||
Cash flows from operating activities: | 2023 | 2022 | |||||
Net income | $ 660,389 | $ 747,092 | |||||
Adjustments to reconcile net income to net cash provided by operating activities: | |||||||
Depreciation and amortization | 502,015 | 394,721 | |||||
Gain on sale of assets | (7,421) | (4,494) | |||||
Asset impairment | 4,734 | 29,666 | |||||
Deferred taxes | (22,241) | 46,734 | |||||
Change in fair value of contingent consideration | (7,891) | - | |||||
Decrease in long-term pension liability | (1,040) | (7,037) | |||||
Stock-based compensation expense | 33,156 | 25,005 | |||||
Write-off deferred loan costs | 653 | - | |||||
Deferred loan cost amortization | 6,216 | 4,984 | |||||
Equity in net income of Diamond Green Diesel and other unconsolidated subsidiaries | (371,391) | (377,448) | |||||
Distributions of earnings from Diamond Green Diesel and other unconsolidated subsidiaries | 168,277 | 95,546 | |||||
Changes in operating assets and liabilities, net of effects from acquisitions: | |||||||
Accounts receivable | (10,832) | (56,543) | |||||
Income taxes refundable/payable | (39,933) | (3,495) | |||||
Inventories and prepaid expenses | 49,582 | (130,170) | |||||
Accounts payable and accrued expenses | (82,939) | 65,936 | |||||
Other | 17,929 | (16,758) | |||||
Net cash provided by operating activities | 899,263 | 813,739 | |||||
Cash flows from investing activities: | |||||||
Capital expenditures | (555,480) | (391,309) | |||||
Acquisitions, net of cash acquired | (1,093,183) | (1,772,437) | |||||
Investment in Diamond Green Diesel | (75,000) | (264,750) | |||||
Investment in other unconsolidated subsidiaries | (27) | - | |||||
Loan to Diamond Green Diesel | - | (50,000) | |||||
Loan repayment from Diamond Green Diesel | 25,000 | 50,000 | |||||
Gross proceeds from sale of property, plant and equipment and other assets | 10,748 | 13,442 | |||||
Proceeds from insurance settlement | 14,014 | - | |||||
Payments related to routes and other intangibles | (1,524) | (1,492) | |||||
Net cash used in investing activities | (1,675,452) | (2,416,546) | |||||
Cash flows from financing activities: | |||||||
Proceeds from long-term debt | 817,101 | 1,934,885 | |||||
Payments on long-term debt | (319,367) | (63,078) | |||||
Borrowings from revolving credit facility | 2,666,360 | 1,873,795 | |||||
Payments on revolving credit facility | (2,194,902) | (1,897,280) | |||||
Net cash overdraft financing | (9,780) | 24,069 | |||||
Acquisition hold-back payments | (3,793) | - | |||||
Deferred loan costs | (9) | (16,780) | |||||
Repurchase of common stock | (52,941) | (125,531) | |||||
Minimum withholding taxes paid on stock awards | (17,296) | (46,944) | |||||
Distributions to noncontrolling interests | (9,081) | (4,532) | |||||
Net cash provided by financing activities | 876,292 | 1,678,604 | |||||
Effect of exchange rate changes on cash flows | 14,179 | 5,299 | |||||
Net increase in cash, cash equivalents and restricted cash | 114,282 | 81,096 | |||||
Cash, cash equivalents and restricted cash at beginning of period | 150,168 | 69,072 | |||||
Cash, cash equivalents and restricted cash at end of period | $ 264,450 | $ 150,168 | |||||
Diamond Green Diesel Joint Venture | |||||||
Condensed Consolidated Balance Sheets | |||||||
December 31, 2023 and December 31, 2022 | |||||||
(in thousands) | |||||||
December 31, | December 31, | ||||||
2023 | 2022 | ||||||
Assets: | |||||||
Total current assets | $ 1,877,430 | $ 1,304,805 | |||||
Property, plant and equipment, net | 3,838,800 | 3,866,854 | |||||
Other assets | 89,697 | 61,665 | |||||
Total assets | $ 5,805,927 | $ 5,233,324 | |||||
Liabilities and members' equity: | |||||||
Total current portion of long term debt | $ 278,639 | $ 217,066 | |||||
Total other current liabilities | 417,918 | 515,023 | |||||
Total long term debt | 737,097 | 774,783 | |||||
Total other long term liabilities | 16,996 | 17,249 | |||||
Total members' equity | 4,355,277 | 3,709,203 | |||||
Total liabilities and members' equity | $ 5,805,927 | $ 5,233,324 | |||||
Diamond Green Diesel Joint Venture | ||||||||||||||
Operating Financial Results | ||||||||||||||
For the Three and Twelve Months Ended December 31, 2023 and 2022 | ||||||||||||||
(in thousands) | ||||||||||||||
Three Months Ended | Twelve Months Ended | |||||||||||||
$ Change | $ Change | |||||||||||||
December 31, | December 31, | Favorable | December 31, | December 31, | Favorable | |||||||||
Revenues: | 2023 | 2022 | (Unfavorable) | 2023 | 2022 | (Unfavorable) | ||||||||
Operating revenues | $ 1,633,795 | $ 1,594,552 | $ 39,243 | $ 6,990,622 | $ 1,489,456 | |||||||||
Expenses: | ||||||||||||||
Total costs and expenses less | ||||||||||||||
lower of cost or market inventory | 1,495,293 | 1,302,584 | (192,709) | 5,925,778 | 4,614,192 | (1,311,586) | ||||||||
Lower of cost or market (LCM) inventory | 60,871 | - | (60,871) | 60,871 | - | (60,871) | ||||||||
Depreciation, amortization and | 58,881 | 36,054 | (22,827) | 230,921 | 125,656 | (105,265) | ||||||||
accretion expense | ||||||||||||||
Total costs and expenses | 1,615,045 | 1,338,638 | (276,407) | 6,217,570 | 4,739,848 | (1,477,722) | ||||||||
Operating income | 18,750 | 255,914 | (237,164) | 773,052 | 761,318 | 11,734 | ||||||||
Other income | 3,454 | 1,244 | 2,210 | 10,317 | 3,170 | 7,147 | ||||||||
Interest and debt expense, net | (12,072) | (10,262) | (1,810) | (49,857) | (19,796) | (30,061) | ||||||||
Income before income tax expense | 10,132 | 246,896 | (236,764) | 733,512 | 744,692 | (11,180) | ||||||||
Income tax expense | 752 | (752) | 752 | (752) | ||||||||||
Net income | $ 9,380 | $ 246,896 | $ (237,516) | $ 732,760 | $ 744,692 | $ (11,932) | ||||||||
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 Twelve Months Ended December 30, 2023 and December 31, 2022 | ||||||||||
(in thousands) | ||||||||||
Three Months Ended | Twelve Months Ended | |||||||||
Adjusted EBITDA | (unaudited) | December 31, | (unaudited) | December 31, | ||||||
( | 2023 | 2022 | 2023 | 2022 | ||||||
Net income attributable to Darling | $ 84,516 | $ 156,560 | $ 647,726 | $ 737,690 | ||||||
Depreciation and amortization | 137,929 | 117,384 | 502,015 | 394,721 | ||||||
Interest expense | 68,453 | 46,139 | 259,223 | 125,566 | ||||||
Income tax expense | 7,246 | 37,995 | 59,568 | 146,626 | ||||||
Restructuring and asset impairment charges | 13,133 | 21,109 | 18,553 | 29,666 | ||||||
Acquisition and integration costs | 1,726 | 2,738 | 13,884 | 16,372 | ||||||
Change in fair value of contingent consideration | 5,167 | - | (7,891) | - | ||||||
Foreign currency (gain) loss | 206 | 5,272 | (8,133) | 11,277 | ||||||
Other (income) expense, net | (2,825) | (242) | (16,310) | 3,609 | ||||||
Equity in net income of Diamond Green Diesel | (4,690) | (123,448) | (366,380) | (372,346) | ||||||
Equity in net (income) loss of other unconsolidated subsidiaries | (1,508) | 831 | (5,011) | (5,102) | ||||||
Net income attributable to noncontrolling interests | 2,740 | 2,671 | 12,663 | 9,402 | ||||||
Adjusted EBITDA (Non-GAAP) | $ 312,093 | $ 267,009 | $ 1,109,907 | $ 1,097,481 | ||||||
Foreign currency exchange impact | (7,932) | (1) | - | (10,830) | (2) | - | ||||
Pro forma Adjusted EBITDA to Foreign Currency (Non-GAAP) | $ 304,161 | $ 267,009 | $ 1,099,077 | $ 1,097,481 | ||||||
DGD Joint Venture Adjusted EBITDA (Darling's Share) | $ 38,816 | $ 145,984 | $ 501,987 | $ 443,487 | ||||||
Darling plus Darling's share of DGD Joint Venture Adjusted EBITDA | $ 350,909 | $ 412,993 | $ 1,611,894 | $ 1,540,968 | ||||||
(1) The average rate assumption used in this calculation were the actual average rate for the three months ended December 30, 2023 | ||||||||||
of | ||||||||||
December 31, 2022 of | ||||||||||
(2) The average rate assumption used in this calculation were the actual average rate for the twelve months ended December 30, 2023 | ||||||||||
of | ||||||||||
December 31, 2022 of | ||||||||||
About Darling Ingredients
A pioneer in circularity, Darling Ingredients Inc. (NYSE: DAR) takes material from the animal agriculture and food industries, and transforms them into valuable ingredients that nourish people, feed animals and crops, and fuel the world with renewable energy. The company operates over 260 facilities in more than 15 countries and processes about
Darling Ingredients Inc. will host a conference call to discuss the Company's fourth quarter and fiscal year 2023 financial results at 9 a.m. Eastern Time (8 a.m. Central Time) on Feb. 28, 2024.
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 February 28, 2024, or call 844-868-8847 (
A replay of the call will be available online via the webcast registration link and via phone at 877-344-7529 (
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 above and represents for any relevant period, net income/(loss) plus depreciation and amortization, restructuring and asset impairment charges, acquisition and integration costs, 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,
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
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 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," "outlook," "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; reduced demands or prices for biofuels, biogases or renewable electricity; global demands for 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, reduced volume due to government regulations affecting animal production 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, used cooking oil, protein or collagen (including, without limitation, collagen peptides and gelatin) finished product prices; changes to government policies around the world relating to renewable fuels and greenhouse gas ("GHG") emissions that adversely affect prices, margins or markets (including for the DGD Joint Venture), including programs like the
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 | |
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SOURCE Darling Ingredients Inc.
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