Darling Ingredients Inc. Reports Second Quarter 2021 Financial Results
Darling Ingredients (NYSE: DAR) reported a strong second quarter in 2021 with net income reaching $196.6 million, or $1.17 per diluted share, on net sales of $1.2 billion, a significant increase from $848.7 million in the same period last year. The company achieved a record adjusted EBITDA of $353.7 million, driven by its Global Ingredients business and the renewable diesel JV, DGD, which contributed $132 million. Darling increased its full-year EBITDA guidance to $1.275 billion.
- Net income rose to $196.6 million, up from $65.4 million year-over-year.
- Net sales increased to $1.2 billion from $848.7 million year-over-year.
- Achieved record adjusted EBITDA of $353.7 million for Q2 2021.
- DGD contributed $132 million in EBITDA, marking a strong performance.
- Trailing twelve-month adjusted EBITDA surpassed $1 billion for the first time.
- Increased full-year adjusted EBITDA guidance to approximately $1.275 billion.
- None.
IRVING, Texas, Aug 10, 2021 /PRNewswire/ -- Darling Ingredients Inc. (NYSE: DAR, "Darling") --
Second Quarter 2021
- Net income of
$196.6 million , or$1.17 per GAAP diluted share - Net Sales of
$1.2 billion - Combined adjusted EBITDA of
$353.7 million - Global Ingredients business reported a record Q2 EBITDA of
$221.7 million - Renewable diesel JV, DGD generated a record quarter, contributing
$132.0 million of EBITDA to Darling - Darling repurchased approximately
$76 million of common stock in the second quarter - Darling trailing twelve-month combined adjusted EBITDA surpasses
$1 billion , first time in company history - DGD Norco, LA 400 million gallon renewable diesel project on track to be fully operational in middle of Q4 2021
- DGD Port Arthur, TX 470 million gallon renewable diesel project expected completion now in first half of 2023
Darling reported net sales of
"Our global ingredients business continues to perform at the highest levels producing a record adjusted EBITDA of approximately
"Darling's 2021 first half financial performance was strong, as we generated a combined adjusted EBITDA of
Under Darling's current share repurchase authorization, the Company repurchased 1.14 million shares of common stock during the second quarter for a total of
For the six months ended July 3, 2021, Darling reported net sales of
As of July 3, 2021, Darling had
Combined adjusted EBITDA was
Segment Financial Tables (in thousands) | ||||||
(unaudited) | ||||||
Three Months Ended July 3, 2021 | Feed | Food | Fuel | Corporate | Total | |
Net Sales | $ 771,932 | $ 317,031 | $ 109,706 | $ - | $ 1,198,669 | |
Cost of sales and operating expenses | 556,424 | 238,539 | 83,110 | - | 878,073 | |
Gross Margin | $ 215,508 | $ 78,492 | $ 26,596 | $ - | $ 320,596 | |
Gain on sale of assets | (122) | (48) | (58) | - | (228) | |
Selling, general and administrative expenses | 54,977 | 25,542 | 4,474 | 14,139 | 99,132 | |
Depreciation and amortization | 53,971 | 15,850 | 6,698 | 2,703 | 79,222 | |
Equity in net income of Diamond Green Diesel | - | - | 125,788 | - | 125,788 | |
Segment operating income/(loss) | $ 106,682 | $ 37,148 | $ 141,270 | $ (16,842) | $ 268,258 | |
Equity in net income of other unconsolidated subsidiaries | $ 1,940 | $ - | $ - | $ - | $ 1,940 | |
Segment Income/(loss) | $ 108,622 | $ 37,148 | $ 141,270 | $ (16,842) | $ 270,198 | |
Segment EBITDA | $ 160,653 | $ 52,998 | $ 22,180 | $ (14,139) | $ 221,692 | |
DGD adjusted EBITDA (Darling's Share) | $ - | $ - | $ 132,001 | $ - | $ 132,001 | |
Combined adjusted EBITDA | $ 160,653 | $ 52,998 | $ 154,181 | $ (14,139) | $ 353,693 | |
Three Months Ended June 27, 2020 | Feed | Food | Fuel | Corporate | Total | |
Net Sales | $ 503,690 | $ 278,934 | $ 66,049 | $ - | $ 848,673 | |
Cost of sales and operating expenses | 367,902 | 220,159 | 44,286 | - | 632,347 | |
Gross Margin | $ 135,788 | $ 58,775 | $ 21,763 | $ - | $ 216,326 | |
Loss/(gain) on sale of assets | 76 | (48) | (1) | - | 27 | |
Selling, general and administrative expenses | 50,484 | 22,564 | 3,953 | 13,192 | 90,193 | |
Depreciation and amortization | 52,683 | 19,972 | 7,980 | 2,675 | 83,310 | |
Equity in net income of Diamond Green Diesel | - | - | 63,492 | - | 63,492 | |
Segment operating income/(loss) | $ 32,545 | $ 16,287 | $ 73,323 | $ (15,867) | $ 106,288 | |
Equity in net income of other unconsolidated subsidiaries | $ 692 | $ - | $ - | $ - | $ 692 | |
Segment income/(loss) | $ 33,237 | $ 16,287 | $ 73,323 | $ (15,867) | $ 106,980 | |
Segment EBITDA | $ 85,228 | $ 36,259 | $ 17,811 | $ (13,192) | $ 126,106 | |
DGD adjusted EBITDA (Darling's Share) | $ - | $ - | $ 69,108 | $ - | $ 69,108 | |
Combined adjusted EBITDA | $ 85,228 | $ 36,259 | $ 86,919 | $ (13,192) | $ 195,214 | |
Six Months Ended July 3, 2021 | Feed | Food | Fuel | Corporate | Total | |
Net Sales | $ 1,423,376 | $ 615,096 | $ 206,913 | $ - | $ 2,245,385 | |
Cost of sales and operating expenses | 1,031,005 | 464,952 | 154,900 | - | 1,650,857 | |
Gross Margin | $ 392,371 | $ 150,144 | $ 52,013 | $ - | $ 594,528 | |
Loss/(gain) on sale of assets | (261) | 7 | (38) | - | (292) | |
Selling, general and administrative expenses | 107,597 | 50,733 | 9,341 | 28,859 | 196,530 | |
Restructuring and asset impairment charges | - | - | 778 | - | 778 | |
Depreciation and amortization | 108,580 | 30,733 | 12,853 | 5,590 | 157,756 | |
Equity in net income of Diamond Green Diesel | - | - | 228,013 | - | 228,013 | |
Segment operating income/(loss) | $ 176,455 | $ 68,671 | $ 257,092 | $ (34,449) | $ 467,769 | |
Equity in net income of other unconsolidated subsidiaries | $ 2,552 | $ - | $ - | $ - | $ 2,552 | |
Segment income/(loss) | $ 179,007 | $ 68,671 | $ 257,092 | $ (34,449) | $ 470,321 | |
Segment EBITDA | $ 285,035 | $ 99,404 | $ 42,710 | $ (28,859) | $ 398,290 | |
DGD adjusted EBITDA (Darling's Share) | $ - | $ - | $ 240,201 | $ - | $ 240,201 | |
Combined adjusted EBITDA | $ 285,035 | $ 99,404 | $ 282,911 | $ (28,859) | $ 638,491 | |
Six Months Ended June 27, 2020 | Feed | Food | Fuel | Corporate | Total | |
Net Sales | $ 1,016,315 | $ 549,228 | $ 135,972 | $ - | $ 1,701,515 | |
Cost of sales and operating expenses | 756,355 | 425,589 | 97,311 | - | 1,279,255 | |
Gross Margin | $ 259,960 | $ 123,639 | $ 38,661 | $ - | $ 422,260 | |
Loss/(gain) on sale of assets | 126 | (46) | 8 | - | 88 | |
Selling, general and administrative expenses | 104,431 | 48,040 | 5,607 | 28,308 | 186,386 | |
Depreciation and amortization | 106,204 | 40,277 | 16,072 | 5,428 | 167,981 | |
Equity in net income of Diamond Green Diesel | - | - | 161,312 | - | 161,312 | |
Segment operating income/(loss) | $ 49,199 | $ 35,368 | $ 178,286 | $ (33,736) | $ 229,117 | |
Equity in net income of other unconsolidated subsidiaries | $ 1,561 | $ - | $ - | $ - | $ 1,561 | |
Segment income/(loss) | $ 50,760 | $ 35,368 | $ 178,286 | $ (33,736) | $ 230,678 | |
Segment EBITDA | $ 155,403 | $ 75,645 | $ 33,046 | $ (28,308) | $ 235,786 | |
DGD adjusted EBITDA (Darling's Share) | $ - | $ - | $ 172,742 | $ - | 172,742 | |
Combined adjusted EBITDA | $ 155,403 | $ 75,645 | $ 205,788 | $ (28,308) | $ 408,528 | |
Darling Ingredients Inc. and Subsidiaries | ||||||
July 3, | January 2, | |||||
2021 | 2021 | |||||
ASSETS | (unaudited) | |||||
Current assets: | ||||||
Cash and cash equivalents | $ 77,741 | $ 81,617 | ||||
Restricted cash | 177 | 103 | ||||
Accounts receivable, net | 433,441 | 405,387 | ||||
Inventories | 428,203 | 405,922 | ||||
Prepaid expenses | 58,648 | 47,793 | ||||
Income taxes refundable | 2,636 | 3,883 | ||||
Other current assets | 21,734 | 42,289 | ||||
Total current assets | 1,022,580 | 986,994 | ||||
Property, plant and equipment, net | 1,846,814 | 1,863,814 | ||||
Intangible assets, net | 439,035 | 473,680 | ||||
Goodwill | 1,245,549 | 1,260,240 | ||||
Investment in unconsolidated subsidiaries | 1,037,436 | 804,682 | ||||
Operating lease right-of-use assets | 165,034 | 146,563 | ||||
Other assets | 61,000 | 60,682 | ||||
Deferred income taxes | 15,875 | 16,676 | ||||
$ 5,833,323 | $ 5,613,331 | |||||
LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||
Current liabilities: | ||||||
Current portion of long-term debt | $ 41,603 | $ 27,538 | ||||
Accounts payable, principally trade | 264,447 | 255,340 | ||||
Income taxes payable | 25,096 | 17,497 | ||||
Current operating lease liabilities | 40,228 | 39,459 | ||||
Accrued expenses | 320,838 | 335,471 | ||||
Total current liabilities | 692,212 | 675,305 | ||||
Long-term debt, net of current portion | 1,393,798 | 1,480,531 | ||||
Long-term operating lease liabilities | 126,527 | 109,707 | ||||
Other noncurrent liabilities | 115,510 | 117,371 | ||||
Deferred income taxes | 321,466 | 276,208 | ||||
Total liabilities | 2,649,513 | 2,659,122 | ||||
Commitments and contingencies | ||||||
Total Darling's stockholders' equity | 3,118,576 | 2,891,909 | ||||
Noncontrolling interests | 65,234 | 62,300 | ||||
Total stockholders' equity | $ 3,183,810 | $ 2,954,209 | ||||
$ 5,833,323 | $ 5,613,331 | |||||
Darling Ingredients Inc. and Subsidiaries | |||||||||||||||
Three Months Ended | Six Months Ended | ||||||||||||||
(unaudited) | $ Change | (unaudited) | $ Change | ||||||||||||
July 3, | June 27, | Favorable | July 3, | June 27, | Favorable | ||||||||||
2021 | 2020 | (Unfavorable) | 2021 | 2020 | (Unfavorable) | ||||||||||
Net sales | $ 1,198,669 | $ 848,673 | $ 349,996 | $ 2,245,385 | $ 1,701,515 | $ 543,870 | |||||||||
Costs and expenses: | |||||||||||||||
Cost of sales and operating expenses | 878,073 | 632,347 | (245,726) | 1,650,857 | 1,279,255 | (371,602) | |||||||||
Loss (gain) on sale of assets | (228) | 27 | 255 | (292) | 88 | 380 | |||||||||
Selling, general and administrative expenses | 99,132 | 90,193 | (8,939) | 196,530 | 186,386 | (10,144) | |||||||||
Restructuring and asset impairment charges | - | - | - | 778 | - | (778) | |||||||||
Depreciation and amortization | 79,222 | 83,310 | 4,088 | 157,756 | 167,981 | 10,225 | |||||||||
Total costs and expenses | 1,056,199 | 805,877 | (250,322) | 2,005,629 | 1,633,710 | (371,919) | |||||||||
Equity in net income of Diamond Green Diesel | 125,788 | 63,492 | 62,296 | 228,013 | 161,312 | 66,701 | |||||||||
Operating income | 268,258 | 106,288 | 161,970 | 467,769 | 229,117 | 238,652 | |||||||||
Other expense: | |||||||||||||||
Interest expense | (15,268) | (17,920) | 2,652 | (31,696) | (37,010) | 5,314 | |||||||||
Foreign currency gain / (loss) | (684) | (1,134) | 450 | (1,094) | 530 | (1,624) | |||||||||
Other expense, net | (1,198) | (1,485) | 287 | (2,357) | (3,366) | 1,009 | |||||||||
Total other expense | (17,150) | (20,539) | 3,389 | (35,147) | (39,846) | 4,699 | |||||||||
Equity in net income | |||||||||||||||
of other unconsolidated subsidiaries | 1,940 | 692 | 1,248 | 2,552 | 1,561 | 991 | |||||||||
Income from operations before income taxes | 253,048 | 86,441 | 166,607 | 435,174 | 190,832 | 244,342 | |||||||||
Income tax expense | 54,979 | 19,946 | (35,033) | 83,687 | 38,246 | (45,441) | |||||||||
Net income | 198,069 | 66,495 | 131,574 | 351,487 | 152,586 | 198,901 | |||||||||
Net income attributable to | |||||||||||||||
noncontrolling interests | (1,487) | (1,056) | (431) | (3,139) | (1,637) | (1,502) | |||||||||
Net income attributable to Darling | $ 196,582 | $ 65,439 | $ 131,143 | $ 348,348 | $ 150,949 | $ 197,399 | |||||||||
Basic income per share: | $ 1.21 | $ 0.40 | $ 0.81 | $ 2.14 | $ 0.93 | $ 1.21 | |||||||||
Diluted income per share: | $ 1.17 | $ 0.39 | $ 0.78 | $ 2.08 | $ 0.90 | $ 1.18 | |||||||||
Number of diluted common shares: | 167,597 | 165,999 | 167,673 | 166,963 | |||||||||||
Darling Ingredients Inc. and Subsidiaries | |||||||
Six Months Ended | |||||||
July 3, | June 27, | ||||||
Cash flows from operating activities: | 2021 | 2020 | |||||
Net income | $ 351,487 | $ 152,586 | |||||
Adjustments to reconcile net income to net cash provided by operating activities: | |||||||
Depreciation and amortization | 157,756 | 167,981 | |||||
Loss/(gain) on sale of assets | (292) | 88 | |||||
Asset impairment | 138 | - | |||||
Deferred taxes | 49,572 | 13,998 | |||||
Decrease in long-term pension liability | (622) | (890) | |||||
Stock-based compensation expense | 14,011 | 15,566 | |||||
Write-off deferred loan costs | 598 | - | |||||
Deferred loan cost amortization | 2,047 | 2,835 | |||||
Equity in net income of Diamond Green Diesel and other unconsolidated subsidiaries | (230,565) | (162,873) | |||||
Distributions of earnings from Diamond Green Diesel and other unconsolidated subsidiaries | 2,497 | 125,891 | |||||
Changes in operating assets and liabilities, net of effects from acquisitions: | |||||||
Accounts receivable | (34,911) | 26,077 | |||||
Income taxes refundable/payable | 9,116 | 6,119 | |||||
Inventories and prepaid expenses | (39,992) | (35,413) | |||||
Accounts payable and accrued expenses | 2,770 | (33,375) | |||||
Other | 14,327 | (14,941) | |||||
Net cash provided by operating activities | 297,937 | 263,649 | |||||
Cash flows from investing activities: | |||||||
Capital expenditures | (126,094) | (123,204) | |||||
Acquisitions, net of cash acquired | (2,059) | - | |||||
Investment in unconsolidated subsidiaries | (4,449) | - | |||||
Gross proceeds from disposal of property, plant and equipment and other assets | 3,064 | 1,053 | |||||
Payments related to routes and other intangibles | (347) | (3,712) | |||||
Net cash used by investing activities | (129,885) | (125,863) | |||||
Cash flows from financing activities: | |||||||
Proceeds from long-term debt | 20,679 | 16,164 | |||||
Payments on long-term debt | (73,393) | (18,239) | |||||
Borrowings from revolving credit facility | 207,000 | 375,971 | |||||
Payments on revolving credit facility | (220,000) | (405,800) | |||||
Net cash overdraft financing | 16,487 | (26,461) | |||||
Issuance of common stock | 50 | 67 | |||||
Repurchase of common stock | (75,663) | (55,044) | |||||
Minimum withholding taxes paid on stock awards | (43,853) | (4,863) | |||||
Acquisition of noncontrolling interest | - | (8,784) | |||||
Distributions to noncontrolling interests | (2,164) | (987) | |||||
Net cash used by financing activities | (170,857) | (127,976) | |||||
Effect of exchange rate changes on cash flows | (997) | (6,567) | |||||
Net increase / (decrease) in cash, cash equivalents and restricted cash | (3,802) | 3,243 | |||||
Cash, cash equivalents and restricted cash at beginning of period | 81,720 | 73,045 | |||||
Cash, cash equivalents and restricted cash at end of period | $ 77,918 | $ 76,288 | |||||
Supplemental disclosure of cash flow information: | |||||||
Accrued capital expenditures | $ 1,101 | $ 23 | |||||
Cash paid during the period for: | |||||||
Interest, net of capitalized interest | $ 29,928 | $ 35,070 | |||||
Income taxes, net of refunds | $ 25,270 | $ 18,030 | |||||
Non-cash operating activities: | |||||||
Operating lease right of use obtained in exchange for new lease liabilities | $ 44,218 | $ 28,801 | |||||
Non-cash financing activities: | |||||||
Debt issued for service contract assets | $ 60 | $ 21 | |||||
Diamond Green Diesel Joint Venture | ||||||
June 30, | December 31, | |||||
2021 | 2020 | |||||
Assets: | (unaudited) | |||||
Total current assets | $ 464,631 | $ 383,557 | ||||
Property, plant and equipment, net | 1,727,979 | 1,238,726 | ||||
Other assets | 35,369 | 36,082 | ||||
Total assets | $ 2,227,979 | $ 1,658,365 | ||||
Liabilities and members' equity: | ||||||
Total current portion of long term debt | $ 581 | $ 517 | ||||
Total other current liabilities | 205,484 | 99,787 | ||||
Total long term debt | 8,635 | 8,705 | ||||
Total other long term liabilities | 8,555 | 3,758 | ||||
Total members' equity | 2,004,724 | 1,545,598 | ||||
Total liabilities and members' equity | $ 2,227,979 | $ 1,658,365 | ||||
Diamond Green Diesel Joint Venture | |||||||||||||||
Three Months Ended | Six Months Ended | ||||||||||||||
(unaudited) | $ Change | (unaudited) | $ Change | ||||||||||||
June 30, | June 30, | Favorable | June 30, | June 30, | Favorable | ||||||||||
Revenues: | 2021 | 2020 | (Unfavorable) | 2021 | 2020 | (Unfavorable) | |||||||||
Operating revenues | $ 571,859 | $ 295,826 | $ 276,033 | $ 1,003,492 | $ 654,441 | $ 349,051 | |||||||||
Expenses: | |||||||||||||||
Total costs and expenses less | |||||||||||||||
depreciation, amortization and | 307,857 | 157,611 | (150,246) | 523,091 | 308,958 | (214,133) | |||||||||
Depreciation, amortization and | 11,995 | 11,114 | (881) | 23,682 | 22,888 | (794) | |||||||||
accretion expense | |||||||||||||||
Total costs and expenses | 319,852 | 168,725 | (151,127) | 546,773 | 331,846 | (214,927) | |||||||||
Operating income | 252,007 | 127,101 | 124,906 | 456,719 | 322,595 | 134,124 | |||||||||
Other income | 353 | 200 | 153 | 411 | 661 | (250) | |||||||||
Interest and debt expense, net | (784) | (317) | (467) | (1,104) | (632) | (472) | |||||||||
Net income | $ 251,576 | $ 126,984 | $ 124,592 | $ 456,026 | $ 322,624 | $ 133,402 | |||||||||
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 Six-Month Periods Ended July 3, 2021 and June 27, 2020 | ||||||||||
Three Months Ended | Six Months Ended | |||||||||
Adjusted EBITDA | July 3, | June 27, | July 3, | June 27, | ||||||
(U.S. dollars in thousands) | 2021 | 2020 | 2021 | 2020 | ||||||
Net income attributable to Darling | $ 196,582 | $ 65,439 | $ 348,348 | $ 150,949 | ||||||
Depreciation and amortization | 79,222 | 83,310 | 157,756 | 167,981 | ||||||
Interest expense | 15,268 | 17,920 | 31,696 | 37,010 | ||||||
Income tax expense | 54,979 | 19,946 | 83,687 | 38,246 | ||||||
Restructuring and asset impairment charges | - | - | 778 | - | ||||||
Foreign currency loss / (gain) | 684 | 1,134 | 1,094 | (530) | ||||||
Other expense, net | 1,198 | 1,485 | 2,357 | 3,366 | ||||||
Equity in net income of Diamond Green Diesel | (125,788) | (63,492) | (228,013) | (161,312) | ||||||
Equity in net income of other unconsolidated subsidiaries | (1,940) | (692) | (2,552) | (1,561) | ||||||
Net income attributable to noncontrolling interests | 1,487 | 1,056 | 3,139 | 1,637 | ||||||
Adjusted EBITDA (Non-GAAP) | $ 221,692 | $ 126,106 | $ 398,290 | $ 235,786 | ||||||
Foreign currency exchange impact | (11,493) | (1) | - | (19,542) | (2) | - | ||||
Pro forma Adjusted EBITDA to Foreign Currency (Non-GAAP) | $ 210,199 | $ 126,106 | $ 378,748 | $ 235,786 | ||||||
DGD Joint Venture Adjusted EBITDA (Darling's Share) | $ 132,001 | $ 69,108 | $ 240,201 | $ 172,742 | ||||||
Darling plus Darling's share of DGD Joint Venture Adjusted EBITDA | $ 353,693 | $ 195,214 | $ 638,491 | $ 408,528 | ||||||
(1) The average rate assumption used in this calculation was the actual fiscal average rate for the three months ended July 3, 2021 of | ||||||||||
(2) The average rate assumption used in this calculation was the actual fiscal average rate for the six months ended July 3, 2021 of |
About Darling
Darling Ingredients Inc. (NYSE: DAR) is a world leading producer of organic ingredients, generating a wide array of sustainable protein and fat products while being one of the largest producers of renewable clean energy. With operations on five continents, Darling collects waste streams from the agri-food industry, repurposing into specialty ingredients, such as hydrolyzed collagen, edible and feed-grade fats, animal proteins and meals, plasma, pet food ingredients, fuel feedstocks, and green bioenergy. Darling Ingredients named one of the 50 Sustainability and Climate Leaders in 2021, to learn more Darling Ingredients: The greenest Company on the planet - 50 Sustainability & Climate Leaders (50climateleaders.com). The Company sells its ingredients around the globe and works to strengthen our promise for a better tomorrow, creating product applications for health, nutrients and bioenergy while optimizing our services to the food chain. Darling is a
Darling Ingredients Inc. will host a conference call to discuss the Company's second quarter 2021 financial results at 9:00 am Eastern Time (8:00 am Central Time) on Wednesday, August 11, 2021. To listen to the conference call, participants calling from within North America should dial 1-844-868-8847; international participants should dial 1-412-317-6593. Please refer to access code 10158835. Please call approximately ten minutes before the start of the call to ensure that you are connected.
The call will also be available as a live audio webcast that can be accessed on the Company website at http://ir.darlingii.com. Beginning one hour after its completion, a replay of the call can be accessed through August 18, 2021, by dialing 1-877-344-7529 (U.S. callers), 1-855-669-9658 (Canada) and 1-412-317-0088 (international callers). The access code for the replay is 10158835. The conference call will also be archived on the Company's website.
Use of Non-GAAP Financial Measures:
Adjusted EBITDA is not a recognized accounting measurement under GAAP; it should not be considered as an alternative to net income, as a measure of operating results, or as an alternative to cash flow as a measure of liquidity and is not intended to be a presentation in accordance with GAAP. Adjusted EBITDA is presented here not as an alternative to net income, but rather as a measure of the Company's operating performance. Since EBITDA (generally, net income plus interest expense, taxes, depreciation and amortization) is not calculated identically by all companies, this presentation may not be comparable to EBITDA or Adjusted EBITDA presentations disclosed by other companies. Adjusted EBITDA is calculated in this presentation and represents, for any relevant period, net income/(loss) plus depreciation and amortization, goodwill and long-lived asset impairment, interest expense, (income)/loss from discontinued operations, net of tax, income tax provision, other income/(expense) and equity in net loss of unconsolidated subsidiary. Management believes that Adjusted EBITDA is useful in evaluating the Company's operating performance compared to that of other companies in its industry because the calculation of Adjusted EBITDA generally eliminates the effects of financing, income taxes and certain non-cash and other items that may vary for different companies for reasons unrelated to overall operating performance.
Pro forma Adjusted EBITDA to Foreign Currency is not a recognized accounting measurement under GAAP. The Company evaluates the impact of foreign currency on its adjusted EBITDA. DGD Joint Venture Adjusted EBITDA (Darling's share) is not reflected in the Adjusted EBITDA or the Pro forma Adjusted EBITDA to Foreign Currency (Non-GAAP).
As a result, the Company's management uses Adjusted EBITDA as a measure to evaluate performance and for other discretionary purposes. In addition to the foregoing, management also uses or will use Adjusted EBITDA to measure compliance with certain financial covenants under the Company's Senior Secured Credit Facilities,
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 projects; risks and uncertainties relating to international sales and operations, including imposition of tariffs, quotas, trade barriers and other trade protections imposed by foreign countries; difficulties or a significant disruption in our information systems or failure to implement new systems and software successfully, risks relating to possible third party claims of intellectual property infringement; increased contributions to the Company's pension and benefit plans, including multiemployer and employer-sponsored defined benefit pension plans as required by legislation, regulation or other applicable U.S. or foreign law or resulting from a U.S. mass withdrawal event; bad debt write-offs; loss of or failure to obtain necessary permits and registrations; continued or escalated conflict in the Middle East, North Korea, Ukraine or elsewhere; uncertainty regarding the exit of the U.K. from the European Union; and/or unfavorable export or import markets. These factors, coupled with volatile prices for natural gas and diesel fuel, climate conditions, currency exchange fluctuations, general performance of the U.S. and global economies, disturbances in world financial, credit, commodities and stock markets, and any decline in consumer confidence and discretionary spending, including the inability of consumers and companies to obtain credit due to lack of liquidity in the financial markets, among others, could cause actual results to vary materially from the forward looking statements included in this release or negatively impact the Company's results of operations. Among other things, future profitability may be affected by the Company's ability to grow its business, which faces competition from companies that may have substantially greater resources than the Company. The Company's announced share repurchase program may be suspended or discontinued at any time and purchases of shares under the program are subject to market conditions and other factors, which are likely to change from time to time. Other risks and uncertainties regarding Darling Ingredients Inc., its business and the industries in which it operates are referenced from time to time in the Company's filings with the Securities and Exchange Commission. Darling Ingredients Inc. is under no obligation to (and expressly disclaims any such obligation to) update or alter its forward-looking statements whether as a result of new information, future events or otherwise.}
For More Information, contact: | |
Jim Stark, Vice President, Investor Relations | Email : james.stark@darlingii.com |
5601 MacArthur Blvd., Irving, Texas 75038 | Phone : 972-281-4823 |
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SOURCE Darling Ingredients Inc.
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