Attached files
| file | filename |
|---|---|
| EX-99.1 - EXHIBIT 99.1 - DARLING INGREDIENTS INC. | exh991-pressrelease.htm |
| 8-K - 8-K - DARLING INGREDIENTS INC. | dar-2016811x8k.htm |
Randall C. Stuewe, Chairman and CEO
John O. Muse, EVP Chief Financial Officer
Melissa A. Gaither, VP IR and Global Communications
Second Quarter 2016
Earnings Conference Call
August 12, 2016
Exhibit 99.2
2
This presentation 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,” 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 emissions that adversely affect programs like the
Renewable Fuel Standards Program (RFS2), low carbon fuel standards (LCFS) and tax credits for biofuels both in the Unites States and abroad; possible product
recall resulting from developments relating to the discovery of unauthorized adulterations to food or food additives; the occurrence of Bird Flu including, but not
limited to H5N1 flu, bovine spongiform encephalopathy (or "BSE"), porcine epidemic diarrhea ("PED") or other diseases associated with animal origin in the United
States or elsewhere; 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 regulations (including, without limitation, China) affecting the industries in which the Company operates or its value added products (including new or
modified animal feed, Bird Flu, PED or BSE or similar or unanticipated regulations); risks associated with the renewable diesel plant in Norco, Louisiana owned and
operated by a joint venture between Darling Ingredients and Valero Energy Corporation, including possible unanticipated operating disruptions and issues related
to the announced expansion project; difficulties or a significant disruption in our information systems or failure to implement new systems and software
successfully, including our ongoing enterprise resource planning project; 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 likely 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 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.
Safe Harbor Statement
3
$859.3
$779.6
$420
$520
$620
$720
$820
$920
Revenue
Quarterly Consolidated Revenue
2Q15 1Q16 2Q16
$877.3 • Revenue increase driven by
higher finished product
pricing for Global fats and
proteins in the feed segment
• Global raw material volumes
continue to be strong
• Revenue increase driven
by higher finished product
pricing for Global fats and
proteins in the feed
segment
• Global raw material
volumes continue to be
strong
Gross Profit and Margin
19.00%
19.50%
20.00%
20.50%
21.00%
21.50%
22.00%
22.50%
23.00%
23.50%
$140.0
$150.0
$160.0
$170.0
$180.0
$190.0
$200.0
$210.0
2Q15 1Q16 2Q16
Gross Profit Gross Margin
22.83%
22.23%
23.18%
$
1
8
0.
7
$
2
0
0
.2
$
1
9
1.
0
Earnings Summary
o Net income strong - $32.0 million in Q2 vs. $1.1 million in Q1 of 2016
o Net Sales higher - $877.3 million in Q2 vs. $779.6 million in Q1 of 2016
o EPS at $0.19 per diluted share
o Adjusted EBITDA - $ 124.0 million in Q2 vs. $ 98.9 million in Q1 16
o DGD Joint venture EBITDA was $18.3 vs. $9.6 in Q1 16
o Global raw material volumes for all segments were strong
o Feed Segment improvement attributable to strong performances across Global
Rendering businesses, Bakery Feeds, and Restaurant Services
o Fuel Segment consistent with Canada biodiesel solidly profitable
o Food Segment turned in consistent performance in light of easing Rousselot
earnings
o SG&A reductions taking hold
o Paid down $49.9 mm of debt during the quarter
4
2016 Second Quarter Overview
5
(1) Foreign currency exchange rates held constant for comparable quarters (€1.00:USD$1.10435 rate April 2, 2016 quarter; €1.00:USD$1.10561 rate July 4, 2015 six months).
Adjusted EBITDA and Pro Forma Adjusted EBITDA
(US$ in thousands) July 2, April 2, July 2, July 4,
2016 2016 2016 2015
Net income attributable to Darling $ 31,999 $ 1,079 $ 33,078 $ 3,189
Depreciation and amortization 69,531 72,256 141,757 132,643
Interest expense 23,980 23,901 47,881 57,394
Income tax expense/(benefit) 7,983 1,863 9,846 6,780
Foreign currency loss 8 2,603 2,595 838
Other expense, net 2,373 1,305 3,678 1,708
Equity in net (income)/loss of unconsolidated subsidiaries (13,852) (5,643) (19,495) (2,364)
Net income attributable to noncontrolling interests 1,992 1,584 3,576 3,572
Adjusted EBITDA $ 123,998 $ 98,948 $ 222,946 $ 203,760
Acquisition and integration-related expenses 70 331 401 6,527
Pro forma Adjusted EBITDA (Non-GAAP) $ 124,068 $ 99,279 $ 223,347 $ 210,287
Foreign currency exchange impact (1) $ (2,182) $ - $ 1,517 $ -
Pro forma Adjusted EBITDA to Foreign Currency (Non-GAAP) $ 121,886 $ 98,844 $ 224,864 $ 210,287
DGD Joint Venture Adjusted EBITDA (Darling's Share) $ 18,331 $ 9,629 $ 27,960 $ 10,255
Three Months Ended - Sequential Six Months Ended - Year over Year
Note: See slide 22 for information regarding Darling’s use of Non-GAAP measures.
Adjusted EBITDA
o Continuing focus on margin management
• Operational Excellence; organic growth; and bio-fuel maximization
o Target debt reduction of $150 million in 2016: year-end target total
debt leverage ratio below 4.00
o Paid down debt by $49.9 million in quarter
o Working Capital decreased slightly over Q1, but the target change in
Working Capital remains a $20 million improvement year over year
o CAPEX target of $215 million for 2016; YTD CAPEX spend at $56.0
million
• Two new USA rendering plants completed and in commissioning
phase
o SG&A targeted at $81.5 million/quarter run rate: Q2 at $76.2 million
6
2016 Strategy – “Delever and Grow”
7
Cash Flow Statement Six Months Ended
(US$ in thousands) July 2,
2016
Adjusted EBIDTA $ 222,946
Uses:
Cap-Ex (109,406)
Acquisitions (8,511)
Proceeds from Stock Issuance 143
Stock Repurchase (5,000)
Borrowings, net of repayments (48,185)
Deferred Loan Costs 0
Cash Interest (10-Q) (41,813)
Cash Taxes (10-Q) (11,799)
Accounts Receivable (20,081)
Income Tax 1,559
Inventory and Prepaid (19,501)
Accounts Payable and Accrued Expenses 30,989
Increase in Cash (931)
Other 9,590
Adjusted EBITDA $ (222,946)
Cash Flow Statement
Debt Summary Balance Sheet Highlights
Leverage Ratios
Net Debt on Balance Sheet
8
(1) Total Debt now adjusted to reflect deferred loan cost amortization.
(2) Total Debt includes 4.75% euro bond and Canadian debt which is FX
adjusted quarterly.
(US$, in thousands) July 2, 2016
Cash (includes restricted cash of $312) 158,127$
Accounts receivable 399,877
Total Inventories 364,362
Net working capital 537,460
Net property, plant and equipment 1,528,387
Total assets 4,859,894$
Total debt 1,905,334$
Shareholders' equity 2,058,076$
(US$, in thousands) July 2, 2016
Amended Credit Agreement
Revolving Credit Facility 3,869$
Term Loan A 247,141
Term Loan B 579,460
5.375% Senior Notes due 2022 491,682
4.750% Euro Senior Notes due 2022 562,465
Other Notes and Obligations 20,717
Total Debt: 1,905,334$
July 2, 2016 Actual
Credit
Agreement
Total Debt to EBITDA: 4.10 5.50
Secured Debt to EBITDA: 1.78 3.25
(US$, in thousands) Fiscal 2015 2Q 2016
Total Debt (1)(2) 1,931,017$ 1,905,334$
Available Cash (156,884)$ (157,815)$
Year End Net Debt Balance 1,774,133$ 1,747,519$
Balance Sheet Highlights and Debt Summary
Operational Overview – Q2 2016
9
Non-GAAP EBITDA Margin
Feed
o Global protein and fat prices rallied in concert
with Soy complex before softening late in
quarter
o Feed demand strong for both proteins and fats
o Global rendering volumes solid with continued
growth in poultry tonnage
o Bakery Feeds delivers strong quarter with
favorable hedge positions
o Restaurant Services delivered improved
performance with strong demand from biofuels
Note: Cost of Sales includes raw material costs, collection costs and factory costs.
EBITDA Bridge Q1-2016 to Q2-2016
(millions)
0
2
4
6
8
10
12
14
16
18
Q2
2015
Q3
2015
Q4
2015
Q1
2016
Q2
2016
14.3%
12.2%
15.4% 14.6%
11.5%
$60.4
$1.0 $2.2
$1.3
$83.5 $82.5
$58.3
0
20
40
60
80
100
120
EBITDA
Q1 16
Price /
Yield
Volumes Cost of
Sales
Other Adjusted
EBITDA
FX
Impact
EBITDA
Q2 16
(39.7)
US$ and metric tons
(millions)
Q2
2015
Q3
2015
Q4
2015
Total
2015
Q1
2016
Q2
2016
Seq. %
Change
Revenue $529.4 $525.2 $472.2 $2,074.3 $476.2 $542.9 14.0%
Gross Margin 124.5 116.2 96.7 460.9 103.5 126.8 22.5%
Gross Margin % 23.5% 22.1% 20.5% 22.2% 21.7% 23.4%
Operating Income 35.4 35.6 10.1 116.5 13.9 41.4 197.8%
EBITDA (1) 75.9 76.5 54.4 282.3 58.3 83.5 43.2%
Raw Material Pr cessed
(million metric tons)
1.83 1.86 1.89 7.45 1.97 1.97 0.0%
(1) Does not include Unconsoli ated Subsidiaries EBITDA.
Feed Segment
Yellow Grease-UCO
o Sharp increase in pricing with strong bio fuel and
feed demand
o LCFS markets beginning to stabilize with sufficient
nearby supply
o Excellent global feed demand
Protein price improvement over 1Q 2016
o Meat and bone meal price recovering over 48%
from last quarter
o Feed formulations opening to lower protein pricing
pushing closer to soymeal
o Poultry Meal Pet Food premiums hold strong but
feeling demand pressure from the aquaculture
industry
10
QTR. Over QTR. Year Over Year
Comparison Q1-2016 Q2-2016 % Q2-2015 Q2-2016 %
Average Jacobsen Prices (USD) Avg. Avg. Change Avg. Avg. Change
Bleachable Fancy Tallow - Chicago Renderer / cwt $27.07 $32.57 20.3% $29.18 $32.57 11.6%
Yellow Grease - Illinois / cwt $21.25 $26.77 26.0% $23.24 $26.77 15.2%
Meat and Bone Meal - Ruminant - Illinois / ton $220.98 $328.26 48.5% $348.88 $328.26 -5.9%
Poultry By-Product Meal - Feed Grade - Mid South/ton $249.10 $305.58 22.7% $426.94 $305.58 -28.4%
Poultry By-Product Meal - Pet Food - Mid South/ton $506.31 $557.81 10.2% $521.50 $557.81 7.0%
Feathermeal - Mid South / ton $277.21 $358.91 29.5% $499.13 $358.91 -28.1%
Average Wall Street Journal Prices (USD)
Corn - Track Central IL #2 Yellow / bushel $3.55 $3.75 5.7% $3.51 $3.75 6.9%
Average Thomson Reuters Prices (USD)
Palm oil - CIF Rotterdam / metric ton $632 $702 11.1% $650 $702 8.0%
Soy meal - CIF Rotterdam / metric ton $328 $409 24.6% $396 $409 3.3%
2016 Finished Product Pricing
Feed Segment Ingredients January February March Q1 Avg. April May June Q2 Avg. July
Bleachable Fancy Tallow - Chicago Renderer / cwt $23.53 $27.10 $30. 9 $27.07 $32 93 $32.81 $31.64 $32.57 $29.95
Yellow Grease - Illinois / cwt $19.03 $20.89 $23.51 $21.25 $26.40 $27.56 $25.95 $26.77 $24.54
Meat and Bone Meal - Ruminant - Illinois / ton $184.74 $198.38 $272.84 $220.98 $314.17 $305.00 $356.59 $328.26 $378.75
Poultry By-Product Meal - Feed Grade - Mid South/ton $247.11 $235.00 $263.64 $249.10 $308.10 $296.79 $307.73 $305.58 $380.88
Poultry By-Product Meal - Pet Food - Mid South/ton $498.03 $497.50 $521.48 $506.31 $573.81 $505.83 $588.64 $557.81 $649.38
Feathermeal - Mid South / ton $255.39 $244.88 $325.45 $277.21 $409.88 $319.05 $342.73 $358.91 $476.88
2016 Cash Corn Pricing
Competing Ingredient for Bakery Feeds and Fats January February March Q1 Avg. April May June Q2 Avg. July
Corn - Track Central IL #2 Yellow / bushel $3.58 $3.54 $3.52 $3.55 $3.63 $3.77 $3.85 $3.75 $3.28
European Benchmark Pricing
2016 January February March Q1 Avg. April May June Q2 Avg. July
Palm oil - CIF Rotterdam / metric ton $565 $646 $686 $632 $720 $702 $684 $702 $648
Soy meal - CIF Rotterdam / metric ton $339 $326 $320 $328 $341 $420 $465 $409 $439
2016 Average Jacobsen Prices (USD)
2016 Average Wall Street Journal Prices (USD)
2016 Average Thomson Reuters Prices (USD)
Note: Cost of Sales includes raw material costs, collection costs and factory costs.
Non-GAAP EBITDA Margin
Food
Operational Overview – Q2 2016
11
EBITDA Bridge Q1-2016 to Q2-2016
(millions)
Rousselot gelatin performance slightly off Q1
• softening in China
• improved availability of raw material in South
America and FX positively impacted
performance
• steady performance in Europe and USA
Sonac edible fats margins stable with volatile
Palm Oil markets and some raw material being
diverted to China
CTH casings strong sales in quarter and
improvement over Q1
0
2
4
6
8
10
12
14
16
18
Q2
2015
Q3
2015
Q4
2015
Q1
2016
Q2
2016
10.7%
14.4%
15.6%
13.7%
11.4%
$37.4 $0.8 $36.6 $3.8
$38.6
$0.2 $18.1
0
10
20
30
40
50
60
EBITDA
Q1 16
Price /
Yield
Volumes Cost of
Sales
Other Adjusted
EBITDA
FX
Impact
EBITDA
Q2 16
(24.1)
US$ and metric tons
(millions)
Q2
2015
Q3
2015
Q4
2015
Total
2015
Q1
2016
Q2
2016
Seq. %
Change
Revenue $283.4 $269.2 $272.1 $1,094.9 $247.9 $272.1 9.8%
Gross Margin 60.2 54.8 62.9 231.4 62.3 57.8 -7.2%
Gross Margin % 21.2% 20.4% 23.1% 21.1% 25.1% 21.3%
Operating Incom 15.5 11.6 23.3 61.2 21.9 19.6 -10.5%
EBITDA 32.3 28.7 39.1 128.1 38.6 37.3 -3.4%
Raw Material Proc ssed
(million metric tons)
0.28 0.26 0.26 1.07 0.27 0.27 0.0%
Food Segment
Operational Overview – Q2 2016
Non-GAAP EBITDA Margin
Fuel
o Rendac delivers normal performance
with steady volumes
o Ecoson digester performing nicely while
demand for our refined fat for biofuels
improved in the quarter
o Biodiesel-Canada delivered a profitable
performance
12
Note: Cost of Sales includes raw material costs, collection costs and factory costs.
EBITDA Bridge Q1-2016 to Q2-2016
(millions)
$13.0 $3.5 $0.1 $12.9
$0.9 $13.8
6
8
10
12
14
($0.2)
EBITDA
Q1 16
Price /
Yield
Volumes Cost of
Sales
Other Adjusted
EBITDA
FX
Impact
EBITDA
Q2 16
($3.5)
0
5
10
15
20
25
30
35
Q2
2015
Q3
2015
Q4
2015
Q1
2016
Q2
2016
11.8%
23.4%
18.5%
29.4%
22.2%
Adjusted EBITDA Margins for normalized Blender’s Tax Credit
in Pro forma EBITDA and in Revenues for 2015 would represent:
21.9%
Q2 15
14.8%
Q3 15
23.3%
Q4 15
US$ and metric tons
(millions)
Q2
2015
Q3
2015
Q4
2015
Total
2015
Q1
2016
Q2
2016
Seq. %
Change
Revenue $46.5 $59.3 $65.4 $228.2 $55.6 $62.2 11.9%
Gross Margin 6.3 11.4 20.2 51.1 14.9 15.6 4.7%
Gross Margin % 13.5% 19.2% 30.9% 22.4% 26.80 25.10
Operating Income 2.0 0.2 12.5 17.2 6.1 6.6 8.2%
EBITDA (1) 8.6 7.0 19.2 43.9 13.0 13.8 6.2%
Raw Material Processed *
(million metric tons)
0.29 0.27 0.31 1.17 0.28 0.30 7.1%
(1) Does not include DGD EBITDA
* Excludes raw material processed at the DGD joint venture.
Fuel Segment
DGD earnings recovered in Q2 2016
Q2 2016 EBITDA: $36.7 million entity level or $18.3 million Darling’s share
Escalating fat prices ,volatile heating oil and stagnant RIN’s weighed on earnings
$156 million tax credit received and a partner dividend of $25 million each
received April 2016
Current total debt in JV stands at $85.6 million. Total cash of $82.9 million at the
end of June.
Final engineering phase progressing on major expansion announced in April
increasing output from 160 million gallons annually to 275 million. Expected
completion in Q4 2017.
13
US$ (millions)
Q2
2015
Q3
2015
Q4
2015
Total
2015
Q1
2016
Q2
2016
EBITDA (Darling's share) 7.9 (8.3) 86.6 $89 9.6 18.3
Gallons Produced 41.9 41.5 37.9 158.8 28.5 43.8
Diamond Green Diesel (50% Joint Venture)
Diamond Green Diesel (DGD)
Appendix – Additional Information
15
Change in Net Sales - 2Q 2015 over 2Q 2016
Change in Net Sales – Three Months Ended (Sequential 1Q16 over 2Q16)
Change in Net Sales -2Q15 to 2Q16
Fats Proteins Other
Total
Rendering
Used
Cooking Oil Bakery Other Total
N t Sales Second Quarter Ended July 4, 2015 139.9$ 209.9$ 60.1$ 409.9$ 43.1$ 54.3$ 22.1$ 529.4$
Changes:
Increase/(Decrease) in sales volumes 8.1 24.6 - 32.7 0.1 1.0 - 33.8
Increase/(Decrease) in finished good prices 5.0 (36.0) - (31.0) (1.4) 1.1 - (31.3)
D crease due to currency exchange rates (0.1) 0.6 0.8 1.3 (0.1) - - 1.2
Other change - - 9.5 9.5 - - 0.4 9.9
Total Change: 13.0$ (10.8)$ 10.3$ 12.5$ (1.4)$ 2.1$ 0.4$ 13.6$
Net Sales Second Quarter Ended July 2, 2016 152.9$ 199.1$ 70.4$ 422.4$ 41.7$ 56.4$ 22.5$ 543.0$
Rendering Sales
Change in Net Sales - 1Q16 to 2Q16
Fats Proteins Other
Total
Rendering
Used
Cooking Oil Bakery Other Total
Net Sales Three Months Ended April 2, 2016 125.3$ 172.0$ 66.6$ 363.9$ 34.4$ 54.5$ 23.4$ 476.2$
Changes:
Increase/(Decrease) in sales volumes 2.2 10.2 - 12.4 0.9 0.5 - 13.8
I cr ase/(Decre s ) in finished good prices 24.2 14.3 - 38.5 6.4 1.3 - 46.2
Decrease due to currency exchange rates 1.3 2.6 1.2 5.1 0.1 - - 5.2
Oth r change - - 2.6 2.6 - - (1.0) 1.6
Total Change: 27.7$ 27.1$ 3.8$ 58.6$ 7.4$ 1.8$ (1.0)$ 66.8$
Net Sales Three Months Ended July 2, 2016 153.0$ 199.1$ 70.4$ 422.5$ 41.8$ 56.3$ 22.4$ 54 .0$
Feed Ingredients Segment
16
Change in Net Sales – Six Months Ended July 4, 2015 over July 2, 2016
Fats Proteins Other
Total
Rendering
Used
Cooking Oil Bakery Other Total
Net Sales Second Quarter Ended July 4, 2015 286.6$ 429.9$ 127.8$ 844.3$ 79.2$ 108.1$ 45.3$ 1,076.9$
Changes:
Increase/(Decrease) in sales volumes 12.5 34.5 - 47.0 1.5 2.7 - 51.2
Increase/(Decrease) in finished good prices (19.3) (91.4) - (110.7) (4.5) 0.1 - (115.1)
Decrease due to currency exchange rates (1.6) (1.9) (0.3) (3.8) (0.2) - (0.1) (4.1)
Other change - - 9.5 9.5 - - 0.7 10.2
Total Change: (8.4)$ (58.8)$ 9.2$ (58.0)$ (3.2)$ 2.8$ 0.6$ (57.8)$
Net Sales Second Quarter Ended July 2, 2016 278.2$ 371.1$ 137.0$ 786.3$ 76.0$ 110.9$ 45.9$ 1,019.1$
Rendering Sales
Change in YTD Net Sales
2Q15 to 2Q16
Feed Ingredients Segment
(1) Has impact of inventory step-up in 1st and 2nd quarter of 2014.
(2) Exclusive of non-cash inventory step-up and Darling Ingredients International 13th week during 2014.
(3) Raw material process volumes in 2014 have been adjusted to include additional blending materials.
(A) Quarters 1, 2 and 3 revenues have been adjusted for re-class between sales and cost of sales in 2014.
17
US$ and metric tons
(millions)
Q1
2014
Q2
2014
Q3
2014
Q4
2014
Total
2014
Q1
2015
Q2
2015
Q3
2015
Q4
2015
Total
2015
Q1
2016
Q2
2016
Revenue (A) $586.1 $622.1 $607.3 $606.0 $2,421.5 $547.5 $529.4 $525.2 $472.2 $2,074.3 $476.2 $542.9
Gross Margin (1) 142.5 165.4 132.5 132.5 572.9 123.5 124.5 116.2 96.7 460.9 103.5 126.8
Gross Margin % (1) 24.3% 26.6% 21.8% 21.9% 23.7% 22.6% 23.5% 22.1% 20.5% 22.2% 21.7% 23.4%
Operating Income (2) 37.5 74.7 46.4 33.6 192.2 35.4 35.4 35.6 10.1 116.5 13.9 41.4
Adjusted Operating Income (1) 52.3 76.2 46.4 33.6 208.5 35.4 35.4 35.6 10.1 116.5 13.9 41.4
EBITDA (2) 76.1 114.6 84.2 76.4 351.3 75.5 75.9 76.5 54.4 282.3 58.3 83.5
Adjusted EBITDA (1) 90.9 116.1 84.2 76.4 367.6 75.5 75.9 76.5 54.4 282.3 58.3 83.5
Adjusted EBITDA/Revenue 15.5% 18.7% 13.9% 12.6% 15.2% 13.8% 14.3% 14.6% 11.5% 13.6% 12.2% 15.4%
Raw Material Processed (3)
(millions of metric tons) 1.73 1.73 1.73 1.92 7.11 1.87 1.83 1.86 1.89 7.45 1.97 1.97
Feed Segment - Historical
(1) Has impact of inventory step-up in 1st and 2nd quarter in 2014.
(2) Exclusive of non-cash inventory step-up and Darling Ingredients International 13th week during 2014.
(3) Raw material process volumes for the first quarter 2014 have been adjusted to be consistent with the
presentation of the second quarter figures in 2014.
(A) Quarters 1, 2 and 3 revenues have been adjusted for re-class between sales and cost of sales in 2014.
18 Food Segment - Historical
US$ and metric tons
(millions)
Q1
2014
Q2
2014
Q3
2014
Q4
2014
Total
2014
Q1
2015
Q2
2015
Q3
2015
Q4
2015
Total
2015
Q1
2016
Q2
2016
Revenue (A) 293.5 331.4 301.4 322.0 1,248.3 270.2 283.4 269.2 272.1 1,094.9 247.9 272.1
Gross Margin (1) 62.3 65.3 64.2 63.4 255.2 53.5 60.2 54.8 62.9 231.4 62.3 57.8
Gross Margin % (1) 21.2% 19.7% 21.3% 19.7% 20.4% 19.8% 21.2% 20.4% 23.1% 21.1% 25.1% 21.2%
Operating Income/(Loss) (2) (12.1) 11.3 14.0 13.7 26.9 10.8 15.5 11.6 23.3 61.2 21.9 19.7
Adjusted Operating Income (1) 20.9 14.7 14.0 13.7 63.3 10.8 15.5 11.6 23.3 61.2 21.9 19.7
EBITDA (2) 5.3 30.9 32.6 31.4 100.2 28.0 32.3 28.7 39.1 128.1 38.6 37.4
Adjusted EBITDA (1) 38.3 34.3 32.6 31.4 136.6 28.0 32.3 28.7 39.1 128.1 38.6 37.4
Adjusted EBITDA/Revenue 13.0% 10.4% 10.8% 9.7% 10.9% 10.4% 11.4% 10.7% 14.4% 11.7% 15.6% 13.7%
Raw Material Processed
(millions of metric tons) 0.25 (3) 0.27 0.26 0.28 1.06 0.27 0.28 0.26 0.26 1.07 0.27 0.27
(A) Quarters 1, 2 and 3 revenues in 2014 have been adjusted for
re-class between sales and cost of sales.
19
(1) Exclusive of non-cash inventory step-up and Darling Ingredients International’s 13th week in 2014.
(2) Has impact of inventory step-up in 1st quarter and Darling Ingredients Int'l 13th week in 2014.
(3) Raw material process volumes for the first quarter 2014 have been adjusted to be consistent
with the presentation of the second quarter figures 2014.
(4) Pro forma Adjusted EBIDTA includes blender's tax credit throughout full years in 2014 and 2015.
US$ and metric tons
(millions)
Q1
2014
Q2
2014
Q3
2014
Q4
2014
Total
2014
Q1
2015
Q2
2015
Q3
2015
Q4
2015
Total
2015
Q1
2016
Q2
2016
Revenue $66.7 $77.7 $70.0 $72.2 $286.6 $57.0 $46.5 $59.3 $65.4 $228.2 $55.6 $62.2
Gross Margin 15.3 15.9 17.8 10.0 59.0 13.2 6.3 11.4 20.2 51.1 14.9 15.6
Gross Margin % 21.1% 20.5% 25.4% 13.9% 20.6% 23.1% 13.5% 19.2% 30.9% 22.4% 26.8% 25.1%
Operating Income (1) 2.3 5.2 2.8 10.9 21.2 2.5 2.0 0.2 12.5 17.2 6.1 6.6
Adjusted Operating Income (2) 3.5 5.2 2.8 10.9 22.4 2.5 2.0 0.2 12.5 17.2 6.1 6.6
EBITDA (2) 9.7 11.1 11.5 16.9 49.2 9.1 8.6 7.0 19.2 43.9 13.0 13.8
Adjusted EBITDA (1) 10.9 11.1 11.5 16.9 50.4 9.1 8.6 7.0 19.2 43.9 13.0 13.8
Pro forma Adjusted EBITDA (4) 12.2 12.3 13.0 12.8 50.4 10.2 10.6 9.1 14.0 43.9 13.0 13.8
Adjusted EBITDA/Revenue 16.3% 14.3% 16.4% 23.4% 17.6% 16.0% 18.5% 11.8% 29.4% 19.2% 23.4% 22.2%
Raw Material Processed *
(millions of metric tons) 0.23 (3) 0.24 0.26 0.33 1.07 0.30 0.29 0.27 0.31 1.17 0.28 0.30
*Excludes raw material processed at the DGD joint venture.
Diamond Green Diesel (50% Joint Venture)
US$ (millions)
Q1
2014
Q2
2014
Q3
2014
Q4
2014
Total
2014
Q1
2015
Q2
2015
Q3
2015
Q4
2015
Total
2015
Q1
2016
Q2
2016
EBITDA (Darling's share) $9.1 5.9 2.9 63.7 $81.6 2.3 7.9 (8.3) 86.6 $88.5 $9.6 $18.3
Pro forma Adjusted EBITDA (4) $22.9 24.3 12.5 21.8 $81.6 19.6 30.2 11.7 27.0 $88.5 $9.6 $18.3
Fuel Segment - Historical
20
2015 Finished Product Pricing
Feed Segment Ingredients January February March Q1 Avg. April May June Q2 Avg. July August Sept. Q3 Avg. Oct. Nov. Dec. Q4 Avg. Year Avg.
Bleachable Fancy Tallow - Chicago Renderer / cwt $29.16 $29.14 $30.53 $29.66 $28.69 $28.95 $29.91 $29.18 $29.00 $29.64 $29.62 $29.42 $22.91 $20.00 $20.00 $21.18 $27.36
Yellow Grease - Illinois / cwt $24.54 $24.34 $24.81 $24.58 $22.36 $22.84 $24.50 $23.24 $23.80 $21.19 $19.55 $21.48 $18.02 $17.51 $18.00 $17.86 $21.79
Meat and Bone Meal - Ruminant - Illinois / ton $402.13 $375.53 $377.95 $385.12 $387.02 $359.75 $304.20 $348.88 $338.18 $385.00 $343.10 $354.91 $280.68 $251.58 $217.27 $249.29 $334.55
Poultry By-Product Meal - Feed Grade - Mid South/ton $466.00 $460.26 $468.18 $465.00 $487.14 $427.25 $370.91 $426.94 $376.70 $399.64 $402.50 $391.55 $376.93 $334.74 $293.41 $334.67 $404.54
Poultry By-Product Meal - Pet Food - Mid South/ton $712.50 $629.61 $625.00 $655.12 $607.74 $520.00 $446.59 $521.50 $478.18 $568.21 $557.14 $532.45 $477.27 $463.95 $467.61 $469.49 $544.64
Feathermeal - Mid South / ton $538.63 $460.39 $565.00 $523.77 $579.17 $491.75 $430.57 $499.13 $467.95 $555.00 $476.67 $499.12 $404.20 $369.47 $329.43 $367.06 $472.27
2015 Cash Corn Pricing
Competing Ingredient for Bakery Feeds and Fats January February March Q1 Avg. April May June Q2 Avg. July August Sept. Q3 Avg. Oct. Nov. Dec. Q4 Avg. Year Avg.
Corn - Track Central IL #2 Yellow / bushel $3.65 $3.68 $3.66 $3.66 $3.55 $3.48 $3.49 $3.51 $3.81 $3.49 $3.56 $3.62 $3.65 $3.60 $3.68 $3.64 $3.61
European Benchmark Pricing
2015 January February March Q1 Avg. April May June Q2 Avg. July August Sept. Q3 Avg. Oct. Nov. Dec. Q4 Avg. Year Avg.
Palm oil - CIF Rotterdam / metric ton $619 $698 $652 $656 $645 $653 $651 $650 $603 $505 $565 $558 $565 $555 $569 $563 $607
Soy meal - CIF Rotterdam / metric ton $456 $442 $410 $436 $403 $392 $393 $396 $394 $381 $365 $380 $367 $353 $336 $352 $391
2015 Average Thomson Reuters Prices (USD)
2015 Average Jacobsen Prices (USD)
2015 Average Wall Street Journal Prices (USD)
2016 Finished Product Pricing
Feed Segment Ingredients January February March Q1 Avg. April May June Q2 Avg. July
Bleachable Fancy Tallow - Chicago Renderer / cwt $23.53 $27.10 $30.09 $27.07 $32.93 $32.81 $31.64 $32.57 $29.95
Yellow Grease - Illinois / cwt $19.03 $20.89 $23.51 $21.25 $26.40 $27.56 $25.95 $26.77 $24.54
Meat and Bone Meal - Ruminant - Illinois / ton $184.74 $198.38 $272.84 $220.98 $314.17 $305.00 $356.59 $328.26 $378.75
Poultry By-Product Meal - Feed Grade - Mid South/ton $247.11 $235.00 $263.64 $249.10 $308.10 $296.79 $307.73 $305.58 $380.88
Poultry By-Product Meal - Pet Food - Mid South/ton $498.03 $497.50 $521.48 $506.31 $573.81 $505.83 $588.64 $557.81 $649.38
Feathermeal - Mid South / ton $255.39 $244.88 $325.45 $277.21 $409.88 $319.05 $342.73 $358.91 $476.88
2016 C sh Corn Pricing
Competing Ingredient for Bakery Feeds and Fats January February March Q1 Avg. April May June Q2 Avg. July
C rn - Track Central IL #2 Yellow / bushel $3.58 $3.54 $3.52 $3.55 $3.63 $3.77 $3.85 $3.75 $3.28
European Benchmark Pricing
2016 January February March Q1 Avg. April May June Q2 Avg. July
Palm oil - CIF Rotterdam / metric ton $565 $646 $686 $632 $720 $702 $684 $702 $648
Soy meal - CIF Rotterd m / metric t n $339 $326 $320 $328 $341 $420 $465 $409 $439
2016 Average Jacobsen Prices (USD)
2016 Average Wall Street Journal Prices (USD)
2016 Average Thomson Reuters Prices (USD)
Jacobsen, Wall Street Journal and Thomson Reuters
Historical Pricing
Process USA Canada Europe China S. America Australia Total:
Rendering - (C3 By-products & UCO) 92 5 18 115
Bakery 10 10
Used Cooking Oil processing only 8 1 9
Disposal Rendering - (C1 & C2) 6 6
Food Grade Fat Processing 5 5
Blood Processing 1 4 5 1 11
Bone Processing 2 2
Bio Diesel 1 1 2
Renewable Diesel 1 1
Gelatin 2 4 4 3 13
Casings 4 1 5
Environmental Services 4 1 5
Fertilizer 1 1
Pet Food 3 1 4
Hides 3 3 6
126 6 49 10 3 1 195
Under Construction:
Rendering 2
21
European categories for rendering of animal by-products:
• C3 – food-grade material, for food and feed products
• C2 – unfit for food or animal feed, can be used as fertilizer
• C1 – must be destroyed; used to generate green energy
*
Note: List excludes administrative and dedicated sales offices.
*Includes transfer stations and blending
Locations by Continent and Process
Adjusted EBITDA is not a recognized accounting measurement under GAAP; it should not be considers 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 expenses, 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.
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 and 5.375% Notes
and 4.75% Notes that were outstanding at July 2, 2016. However, the amounts shown in this presentation for
Adjusted EBITDA differ from the amounts calculated under similarly titled definitions in the Company’s Senior
Secured Credit Facilities and 5.375% Notes and 4.75% Notes, as those definitions permit further adjustments to
reflect certain other non-recurring costs, non-cash charges and cash dividends from the DGD Joint Venture.
Additionally, the Company evaluates the impact of foreign exchange impact on operating cash flow, which is defined
as segment operating income (loss) plus depreciation and amortization.
22
Non-U.S. GAAP Measures