Darling Ingredients Inc. Reports First Quarter 2024 Results
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 Ingredients | Food Ingredients | Fuel Ingredients | Corporate | Total | |
|---|---|---|---|---|---|
| Three Months Ended March 30, 2024 | |||||
| Net sales | $889,848 | $391,282 | $139,169 | $- | $1,420,299 |
| Cost of sales and operating expenses | 705,769 | 298,145 | 112,752 | - | 1,116,666 |
| Gross Margin | 184,079 | 93,137 | 26,417 | - | 303,633 |
| Loss (gain) on sale of assets | 132 | -294 | -412 | - | -574 |
| Selling, general and administrative expenses | 77,138 | 31,744 | 8,745 | 21,516 | 139,143 |
| Restructuring and asset impairment charges | - | - | - | - | - |
| Acquisition and integration costs | - | - | - | 4,054 | 4,054 |
| Change in fair value of contingent consideration | -25,249 | - | - | - | -25,249 |
| Depreciation and amortization | 87,569 | 28,868 | 8,667 | 2,405 | 127,509 |
| 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 subsidiaries | 2,310 | - | - | - | 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 Ingredients | Food Ingredients | Fuel Ingredients | Corporate | Total | |
| Three Months Ended April 1, 2023 | |||||
| Net sales | $1,237,494 | $396,392 | $157,286 | $- | $1,791,172 |
| Cost of sales and operating expenses | 950,072 | 290,115 | 126,786 | - | 1,366,973 |
| Gross Margin | 287,422 | 106,277 | 30,500 | - | 424,199 |
| Loss (gain) on sale of assets | -342 | -21 | 36 | - | -327 |
| Selling, general and administrative expenses | 74,691 | 33,122 | 6,192 | 21,461 | 135,466 |
| Restructuring and asset impairment charges | 92 | 4,432 | - | - | 4,524 |
| Acquisition and integration costs | - | - | - | 7,022 | 7,022 |
| Depreciation and amortization | 90,320 | 14,473 | 8,393 | 2,820 | 116,006 |
| 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 subsidiaries | 120 | - | - | - | 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. |
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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, 2024 | April 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, 2024 | March 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 expense | 1,159,356 | 1,421,404 | 262,048 | |
| Lower of cost or market (LCM) inventory valuation adjustment | 21,638 | - | -21,638 | |
| Depreciation, amortization and accretion expense | 65,290 | 58,607 | -6,683 | |
| Total costs and expenses | 1,246,284 | 1,480,011 | 233,727 | |
| Operating income | 164,831 | 200,039 | -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, net | 3,870,508 | 3,838,800 | |
| Other assets | 102,279 | 89,697 | |
| 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 liabilities | 302,519 | 417,918 | |
| Total long term debt | 729,756 | 737,097 | |
| Total other long term liabilities | 17,331 | 16,996 | |
| Total members' equity | 4,608,277 | 4,355,277 | |
| 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, 2024 | April 1, 2023 |
| Net income attributable to Darling | $81,157 | $185,801 |
| Depreciation and amortization | 127,509 | 116,006 |
| Interest expense | 62,876 | 50,299 |
| Income tax expense | 3,907 | 26,974 |
| Restructuring and asset impairment charges | - | 4,524 |
| Acquisition and integration costs | 4,054 | 7,022 |
| 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 interests | 431 | 4,054 |
| 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. |
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