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Darling Ingredients Inc. Reports First Quarter 2024 Results 

April 25, 2024

IRVING, Texas – Darling Ingredients Inc. (NYSE: DAR) today reported net income of $81.2 million, or $0.50 per diluted share for first quarter of 2024, compared to net income of $185.8 million, or $1.14 per diluted share, for first quarter of 2023. The decrease in net income was primarily due to a sharp year-over-year decline in fat prices and lower earnings within Diamond Green Diesel (DGD). The company also reported net sales of $1.4 billion for the first quarter of 2024, compared with net sales of $1.8 billion for the same period a year ago, reflecting lower finished product pricing.

 

First Quarter 2024

  • Net income of $81.2 million, or $0.50 per GAAP diluted share
  • Net sales of $1.4 billion
  • Combined adjusted EBITDA of $280.1 million  


“For several years, we have enjoyed tailwinds from a demand-driven global economy and strong global commodity and specialty ingredient prices. We are now adapting to the new reality of abundant global supplies. This is a cycle we have seen many times, and we are making the necessary adjustments in our procurement process and lowering our operating costs where feasible to gain back our margin leverage,” said Randall C. Stuewe, Darling Ingredients Chairman and Chief Executive Officer. “Globally we are seeing very nice progress and improvement in April for our core specialty ingredient business, and DGD has finally worked through its higher-priced feedstock pipeline. We anticipate an improved performance for the rest of the year.”

Combined adjusted EBITDA for the first quarter 2024 was $280.1 million, including the impact of a $25 million out-of-period inventory adjustment in the Food segment, compared to $418.4 million for the same period in 2023.  

DGD sold 331.5 million gallons of renewable diesel for the first quarter 2024 at an average of $0.69 per gallon EBITDA, including a $21.6 million lower of cost-or-market valuation adjustment. Excluding the LCM valuation adjustment, DGD EBITDA per gallon would be $0.76.

As of March 30, 2024, Darling Ingredients had $145.5 million in cash and cash equivalents, and $811.1 million available under its committed revolving credit agreement. Total debt outstanding as of March 30, 2024, was $4.5 billion. The projected leverage ratio as measured by the company’s bank covenant was 3.71X as of March 30, 2024. Capital expenditures were $93.8 million for the first quarter 2024. 
 
Company guidance for fiscal year 2024 is $1.3 – 1.4 billion combined adjusted EBITDA.

Data Table

Darling Ingredients Inc: Segment Financial Tables (in thousands, unaudited)

Data Table

Feed IngredientsFood IngredientsFuel IngredientsCorporateTotal
Three Months Ended March 30, 2024
Net sales$889,848 $391,282 $139,169 $- $1,420,299
Cost of sales and operating expenses705,769298,145112,752 - 1,116,666
Gross Margin184,07993,13726,417 - 303,633
Loss (gain) on sale of assets132-294-412 - -574
Selling, general and administrative expenses77,13831,7448,74521,516139,143
Restructuring and asset impairment charges - - - - -
Acquisition and integration costs - - - 4,0544,054
Change in fair value of contingent consideration-25,249 - - - -25,249
Depreciation and amortization87,56928,8688,6672,405127,509
Equity in net income of Diamond Green Diesel - - 78,419 - 78,419
Segment operating income/(loss)$44,489 $32,819 $87,836 ($27,975)$137,169
Equity in net income of other unconsolidated subsidiaries2,310 - - - 2,310
Segment income/(loss)$46,799 $32,819 $87,836 ($27,975)$139,479
Segment EBITDA$106,809 $61,687 $18,084 ($21,516)$165,064
DGD adjusted EBITDA (Darling's Share) - - 115,061 - 115,061
Combined adjusted EBITDA$106,809 $61,687 $133,145 ($21,516)$280,125
Feed IngredientsFood IngredientsFuel IngredientsCorporateTotal
Three Months Ended April 1, 2023
Net sales$1,237,494 $396,392 $157,286 $- $1,791,172
Cost of sales and operating expenses950,072290,115126,786 - 1,366,973
Gross Margin287,422106,27730,500 - 424,199
Loss (gain) on sale of assets-342-2136 - -327
Selling, general and administrative expenses74,69133,1226,19221,461135,466
Restructuring and asset impairment charges924,432 - - 4,524
Acquisition and integration costs - - - 7,0227,022
Depreciation and amortization90,32014,4738,3932,820116,006
Equity in net income of Diamond Green Diesel - - 94,337 - 94,337
Segment operating income/(loss)$122,661 $54,271 $110,216 ($31,303)$255,845
Equity in net income of other unconsolidated subsidiaries120 - - - 120
Segment income/(loss)$122,781 $54,271 $110,216 ($31,303)$255,965
Segment EBITDA$213,073 $73,176 $24,272 ($21,461)$289,060
DGD adjusted EBITDA (Darling's Share) - - 129,323 - 129,323
Combined adjusted EBITDA$213,073 $73,176 $153,595 ($21,461)$418,383

Data Table

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.

Data Table

Darling Ingredients Inc. and Subsidiaries: Consolidated Operating Results for the Three-Month Periods Ended March 30, 2024 and April 1, 2023 (in thousands, except per share data, unaudited)

Data Table

Three Months Ended
March 30, 2024April 1, 2023$ Change Favorable (Unfavorable)
Net sales $1,420,299 $1,791,172 $(370,873)
Costs and expenses:
Cost of sales and operating expenses 1,116,666 1,366,973 250,307
Gain on sale of assets (574) (327) 247
Selling, general and administrative expenses 139,143 135,466 (3,677)
Restructuring and asset impairment charges - 4,524 4,524
Acquisition and integration costs 4,054 7,022 2,968
Change in fair value of contingent consideration (25,249) - 25,249
Depreciation and amortization 127,509 116,006 (11,503)
Total costs and expenses 1,361,549 1,629,664 268,115
Equity in net income of Diamond Green Diesel 78,419 94,337 (15,918)
Operating income 137,169 255,845 (118,676)
Other expense:
Interest expense (62,876) (50,299) (12,577)
Foreign currency gain 236 5,004 (4,768)
Other income, net 8,656 6,159 2,497
Total other expense (53,984) (39,136) (14,848)
Equity in net income of other unconsolidated subsidiaries 2,310 120 2,190
Income from operations before income taxes 85,495 216,829 (131,334)
Income tax expense 3,907 26,974 23,067
Net income 81,588 189,855 (108,267)
Net income attributable to noncontrolling interests (431) (4,054) 3,623
Net income attributable to Darling $81,157 $185,801 $(104,644)
Basic income per share: $0.51 $1.16 $(0.65)
Diluted income per share: $0.50 $1.14 $(0.64)
Number of diluted common shares: 161,905 162,817

Data Table

Darling Ingredients Inc. and Subsidiaries: Balance Sheet Disclosures as of March 30, 2024 and December 30, 2023 (in thousands)

Data Table

March 30, 2024 (unaudited)December 30, 2023
Cash and cash equivalents$145,473 $126,502
Property, plant and equipment, net$2,910,335 $2,935,185
Current portion of long-term debt$103,075 $60,703
Long-term debt, net of current portion$4,362,856 $4,366,370

Data Table

Darling Ingredients Inc. and Subsidiaries: Other Financial Data as of March 30, 2024 (in thousands, unaudited)

Data Table

Other Financial Data
Revolver availability$811,116
Capital expenditures - YTD$93,775
Projected Leverage Ratio 3.71x

Data Table

Diamond Green Diesel Joint Venture: Operating Financial Results for the Three Months Ended March 31, 2024 and March 31, 2023 (in thousands, unaudited)

Data Table

Revenues:March 31, 2024March 31, 2023$ Change Favorable (Unfavorable)
Operating revenues$1,411,115 $1,680,050 ($268,935)
Expenses:
Total costs and expenses less
lower of cost or market inventory valuation adjustment and depreciation, amortization and accretion expense1,159,3561,421,404262,048
Lower of cost or market (LCM) inventory valuation adjustment21,638 - -21,638
Depreciation, amortization and accretion expense65,29058,607-6,683
Total costs and expenses1,246,2841,480,011233,727
Operating income 164,831200,039-35,208

Data Table

Diamond Green Diesel Joint Venture: Consolidated Balance Sheets -- March 31, 2024 and December 31, 2023 (in thousands)

Data Table

Assets: March 31, 2024 (unaudited) December 31, 2023
Total current assets$1,814,038 $1,877,430
Property, plant and equipment, net3,870,5083,838,800
Other assets102,27989,697
Total assets$5,786,825 $5,805,927
Liabilities and members' equity:
Total current portion of long term debt$128,942 $278,639
Total other current liabilities302,519417,918
Total long term debt729,756737,097
Total other long term liabilities17,33116,996
Total members' equity4,608,2774,355,277
Total liabilities and members' equity$5,786,825 $5,805,927

Data Table

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 Months Ended March 30, 2024 and April 1, 2023 (in thousands, unaudited)

Data Table

Adjusted EBITDA
(U.S. dollars in thousands)March 30, 2024April 1, 2023
Net income attributable to Darling$81,157 $185,801
Depreciation and amortization127,509116,006
Interest expense62,87650,299
Income tax expense3,90726,974
Restructuring and asset impairment charges - 4,524
Acquisition and integration costs4,0547,022
Change in fair value of contingent consideration-25,249 -
Foreign currency gain -236-5,004
Other income, net-8,656-6,159
Equity in net income of Diamond Green Diesel-78,419-94,337
Equity in net income of other unconsolidated subsidiaries-2,310-120
Net income attributable to noncontrolling interests4314,054
Adjusted EBITDA (Non-GAAP)$165,064 $289,060
Foreign currency exchange impact (1)-1,240 -
Pro forma Adjusted EBITDA to Foreign Currency (Non-GAAP)$163,824 $289,060
DGD Joint Venture Adjusted EBITDA (Darling's Share)$115,061 $129,323
Darling plus Darling's share of DGD Joint Venture Adjusted EBITDA $280,125 $418,383

Data Table

(1) The average rate assumption used in this calculation were the actual average rate for the three months ended March 30, 2024 of €1.00:USD$1.09, R$1.00:USD$0.20 and CAD$1.00:USD$0.74, as compared to the average rate for the three months ended April 1, 2023 of €1.00:USD$1.07, R$1.00:USD$0.19 and CAD$1.00:USD$0.74, respectively.