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Darling Ingredients Inc. Reports Second Quarter 2024 Results

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Darling Ingredients Inc. (NYSE: DAR) reported Q2 2024 net income of $78.9 million, or $0.49 per diluted share, down from $252.4 million in Q2 2023. Net sales decreased to $1.5 billion from $1.8 billion year-over-year. The decline was primarily due to lower fat prices and reduced earnings from Diamond Green Diesel (DGD). Combined adjusted EBITDA was $273.6 million, compared to $508.3 million in Q2 2023.

Key highlights:

  • DGD sold 311.5 million gallons of renewable diesel at $0.49/gallon EBITDA
  • Received $77.1 million cash dividend from DGD
  • Repurchased $29.2 million of common stock
  • Reaffirmed FY2024 guidance of $1.3-$1.4 billion combined adjusted EBITDA

The company remains focused on debt reduction and margin improvement through cost-cutting measures.

Darling Ingredients Inc. (NYSE: DAR) ha riportato un reddito netto Q2 2024 di 78,9 milioni di dollari, ovvero 0,49 dollari per azione diluita, in calo rispetto ai 252,4 milioni di dollari del Q2 2023. Le vendite nette sono diminuite a 1,5 miliardi di dollari rispetto ai 1,8 miliardi di dollari dell'anno precedente. Questo declino è stato principalmente causato dalla diminuzione dei prezzi dei grassi e dalla riduzione dei guadagni da Diamond Green Diesel (DGD). L'EBITDA rettificato combinato è stato di 273,6 milioni di dollari, rispetto ai 508,3 milioni di dollari nel Q2 2023.

Punti salienti:

  • DGD ha venduto 311,5 milioni di galloni di diesel rinnovabile con un EBITDA di 0,49 dollari/gallone
  • Ricevuto un dividendo in contante di 77,1 milioni di dollari da DGD
  • Riacquistati 29,2 milioni di dollari di azioni ordinarie
  • Riconfermato l'orientamento per l'intero anno 2024 di un EBITDA rettificato combinato di 1,3-1,4 miliardi di dollari

L'azienda rimane focalizzata sulla riduzione del debito e sul miglioramento dei margini attraverso misure di contenimento dei costi.

Darling Ingredients Inc. (NYSE: DAR) reportó un ingreso neto de 78.9 millones de dólares en el Q2 2024, o $0.49 por acción diluida, una disminución con respecto a los 252.4 millones de dólares en el Q2 2023. Las ventas netas disminuyeron a 1.5 mil millones de dólares desde 1.8 mil millones de dólares en comparación interanual. La disminución se debió principalmente a los precios más bajos de las grasas y a una reducción en las ganancias de Diamond Green Diesel (DGD). El EBITDA ajustado combinado fue de 273.6 millones de dólares, en comparación con 508.3 millones de dólares en el Q2 2023.

Aspectos destacados:

  • DGD vendió 311.5 millones de galones de diésel renovable con un EBITDA de $0.49/galón
  • Recibió un dividendo en efectivo de 77.1 millones de dólares de DGD
  • Recompró 29.2 millones de dólares de acciones ordinarias
  • Reiteró la guía de FY2024 de 1.3-1.4 mil millones de dólares en EBITDA ajustado combinado

La empresa sigue centrada en la reducción de deudas y la mejora de márgenes mediante medidas de reducción de costos.

Darling Ingredients Inc. (NYSE: DAR)는 2024년 2분기 순이익이 7890만 달러, 즉 희석 주당 0.49달러라고 보고했습니다. 이는 2023년 2분기의 2억 5240만 달러에서 감소한 수치입니다. 순매출은 15억 달러로 감소했습니다, 지난해 18억 달러에서 감소했습니다. 이 하락은 주로 지방 가격 하락과 Diamond Green Diesel(DGD)으로부터의 수익 감소 때문입니다. 조정된 EBITDA의 총 합계는 2억 7360만 달러로, 2023년 2분기 5억 830만 달러와 비교됩니다.

주요 하이라이트:

  • DGD는 갤런당 0.49달러의 EBITDA로 3억 1150만 갤런의 재생 가능한 디젤을 판매했습니다
  • DGD로부터 7710만 달러의 현금 배당금을 받았습니다
  • 2920만 달러의 보통주를 재구매했습니다
  • 2024 회계연도의 조정된 EBITDA 가이드를 13억에서 14억 달러로 재확인했습니다

회사는 비용 절감을 통해 부채 감소와 마진 향상에 집중하고 있습니다.

Darling Ingredients Inc. (NYSE: DAR) a annoncé un revenu net de 78,9 millions de dollars pour le T2 2024, soit 0,49 dollar par action diluée, en baisse par rapport à 252,4 millions de dollars au T2 2023. Les ventes nettes ont diminué à 1,5 milliard de dollars contre 1,8 milliard de dollars d'une année sur l'autre. Cette baisse est principalement due à la baisse des prix des graisses et à la diminution des bénéfices de Diamond Green Diesel (DGD). L'EBITDA ajusté combiné s'élevait à 273,6 millions de dollars, contre 508,3 millions de dollars au T2 2023.

Points clés :

  • DGD a vendu 311,5 millions de gallons de diesel renouvelable avec un EBITDA de 0,49 dollar/gallon
  • A reçu un dividende en espèces de 77,1 millions de dollars de DGD
  • A racheté pour 29,2 millions de dollars d'actions ordinaires
  • A réaffirmé l'orientation pour l'exercice 2024 d'un EBITDA ajusté combiné de 1,3 à 1,4 milliard de dollars

L'entreprise reste concentrée sur la réduction de la dette et l'amélioration des marges grâce à des mesures de réduction des coûts.

Darling Ingredients Inc. (NYSE: DAR) berichtete über ein Nettogewinn von 78,9 Millionen US-Dollar im Q2 2024, oder 0,49 US-Dollar pro verwässerter Aktie, was einem Rückgang von 252,4 Millionen US-Dollar im Q2 2023 entspricht. Die Nettoumsätze sanken auf 1,5 Milliarden US-Dollar von 1,8 Milliarden US-Dollar im Vorjahresvergleich. Der Rückgang war hauptsächlich auf fallende Fettpreise und geringere Einnahmen von Diamond Green Diesel (DGD) zurückzuführen. Die kombinierte bereinigte EBITDA betrug 273,6 Millionen US-Dollar, im Vergleich zu 508,3 Millionen US-Dollar im Q2 2023.

Wichtige Highlights:

  • DGD verkaufte 311,5 Millionen Gallonen erneuerbaren Diesel zu einem EBITDA von 0,49 US-Dollar pro Gallone
  • Erhielt eine Barausschüttung von 77,1 Millionen US-Dollar von DGD
  • Wieder erwarb Aktien im Wert von 29,2 Millionen US-Dollar
  • Bestätigte die Prognose für das Geschäftsjahr 2024 von 1,3 bis 1,4 Milliarden US-Dollar bereinigte EBITDA

Das Unternehmen bleibt weiterhin auf die Schuldenreduzierung und die Margenverbesserung durch Kostensenkungsmaßnahmen fokussiert.

Positive
  • Reaffirmed FY2024 guidance of $1.3-$1.4 billion combined adjusted EBITDA
  • Received $77.1 million cash dividend from Diamond Green Diesel
  • Repurchased $29.2 million of common stock
  • Board refreshed share repurchase program to $500 million
  • DGD sold 311.5 million gallons of renewable diesel
Negative
  • Net income decreased to $78.9 million from $252.4 million year-over-year
  • Net sales declined to $1.5 billion from $1.8 billion year-over-year
  • Combined adjusted EBITDA fell to $273.6 million from $508.3 million in Q2 2023
  • Sharp year-over-year decline in fat prices
  • Lower earnings within Diamond Green Diesel

Insights

Darling Ingredients' Q2 2024 results reveal significant challenges, with net income dropping to $78.9 million ($0.49 per diluted share) from $252.4 million ($1.55 per diluted share) in Q2 2023. This 68.7% decline is primarily attributed to sharp decreases in fat prices and lower earnings from Diamond Green Diesel (DGD).

Net sales fell to $1.5 billion from $1.8 billion year-over-year, reflecting lower finished product pricing. Combined adjusted EBITDA also decreased substantially to $273.6 million from $508.3 million in Q2 2023.

Despite these challenges, there are some positive indicators:

  • DGD sold 311.5 million gallons of renewable diesel at $0.49 per gallon EBITDA
  • Darling received a $77.1 million cash dividend from DGD
  • The company repurchased $29.2 million of common stock
  • The Board refreshed the share repurchase program to $500 million

However, the company's debt position remains concerning, with total debt outstanding at $4.4 billion and a projected leverage ratio of 4.24X. This high leverage could limit financial flexibility in the near term.

Darling reaffirmed its fiscal year 2024 guidance of $1.3 - $1.4 billion combined adjusted EBITDA, suggesting management expects improvement in the latter half of the year. This optimism is partly based on recent improvements in fat prices, which could positively impact Q3 and Q4 earnings.

The sharp decline in Darling Ingredients' performance reflects broader market trends affecting the renewable fuels and specialty ingredients sectors. The deflationary commodity market has significantly impacted the company's profitability, particularly in its core fat processing business.

Key market factors to consider:

  • Regulatory uncertainty in the renewable fuels market is creating headwinds for Diamond Green Diesel
  • Fat prices have been volatile, but show signs of improvement, which could benefit future quarters
  • The specialty ingredients business is adapting to market conditions, with sequential improvements noted
  • Sustainable aviation fuel production is on the horizon, potentially opening new revenue streams

The company's focus on debt reduction and margin improvement through cost-cutting measures is a prudent strategy in the current market environment. However, the effectiveness of these measures will be important to watch in the coming quarters.

Darling's stock repurchase program and the Board's decision to refresh it to $500 million signals confidence in the company's long-term prospects. This could potentially provide some support for the stock price in the near term.

The reaffirmation of the full-year guidance suggests management believes the worst may be over, but investors should remain cautious given the significant year-over-year declines and the uncertain regulatory environment in the renewable fuels sector.

Second Quarter 2024

  • Net income of $78.9 million, or $0.49 per GAAP diluted share
  • Net sales of $1.5 billion
  • Combined adjusted EBITDA of $273.6 million
  • Repurchased $29.2 million of common stock
  • Received $77.1 million in cash dividends from Diamond Green Diesel on July 18, 2024

IRVING, Texas, July 25, 2024 /PRNewswire/ -- Darling Ingredients Inc. (NYSE: DAR) today reported net income of $78.9 million, or $0.49 per diluted share for the second quarter of 2024, compared to net income of $252.4 million, or $1.55 per diluted share, for the second 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 $1.5 billion for the second quarter of 2024, compared with net sales of $1.8 billion for the same period a year ago, reflecting lower finished product pricing.

"Despite a deflationary commodity market and an uncertain regulatory environment during the second quarter, our specialty ingredients business showed sequential improvement as it made the necessary changes to improve margins and earnings. DGD had a good quarter, while the Port Arthur facility completed a major turnaround as we prepare to produce sustainable aviation fuel later this year." said Randall C. Stuewe, Chairman and Chief Executive Officer. "Our focus for the balance of the year remains on paying down debt and widening margins through effective cost cutting. We remain very optimistic, as we have seen fat prices begin to improve, which should be reflected in our third and fourth quarter earnings."

For the six months ended June 29, 2024, Darling Ingredients reported net sales of $2.9 billion, compared to net sales of $3.5 billion for the same period in 2023. Net income for the first six months of 2024 was $160.0 million, or $0.99 per diluted share, as compared to net income of $438.2 million, or $2.69 per diluted share, for the first six months of 2023. 

DGD sold 311.5 million gallons of renewable diesel for the second quarter 2024 at an average of $0.49 per gallon EBITDA. On July 18, 2024, Darling Ingredients received a $77.1 million cash dividend from Diamond Green Diesel.

Combined adjusted EBITDA for the second quarter 2024 was $273.6 million, compared to $508.3 million for the same period in 2023. On a year-to-date basis, combined adjusted EBITDA totaled $553.7 million, as compared to $926.7 million for the same period in 2023.

The company repurchased approximately 807,000 shares of its common stock during the second quarter of 2024 for approximately $29.2 million. On June 21, 2024, the Board of Directors refreshed the amount of the share repurchase program back up to an aggregate amount of $500 million and extended this program until August 13, 2026.

As of June 29, 2024, Darling Ingredients had $121.6 million in cash and cash equivalents, and $814.4 million available under its committed revolving credit agreement. Total debt outstanding as of June 29, 2024, was $4.4 billion. The projected leverage ratio as measured by the company's bank covenant was 4.24X as of June 29, 2024. Capital expenditures were $98.0 million for the second quarter 2024, and $191.7 million for the first six months ended June 29, 2024.

The company reaffirms guidance for fiscal year 2024, which remains at $1.3$1.4 billion combined adjusted EBITDA.

Segment Financial Tables (in thousands, unaudited)  


Feed
Ingredients

Food
Ingredients

Fuel
Ingredients

Corporate

Total

Three Months Ended June 29, 2024






Net sales

$        934,147

$        378,841

$        142,304

$                 —

$     1,455,292

Cost of sales and operating expenses

737,871

276,760

113,790

1,128,421

Gross margin

196,276

102,081

28,514

326,871







Loss (gain) on sale of assets

205

37

(20)

222

Selling, general and administrative expenses

74,015

28,844

8,409

18,463

129,731

Acquisition and integration costs

1,130

1,130

Change in fair value of contingent consideration

(33,122)

(33,122)

Depreciation and amortization

86,444

27,372

8,723

2,066

124,605

Equity in net income of Diamond Green Diesel

44,197

44,197

Segment operating income/(loss)

$          68,734

$          45,828

$          55,599

$        (21,659)

$        148,502

Equity in net income of other unconsolidated subsidiaries

3,017

3,017

Segment income/(loss)

$          71,751

$          45,828

$          55,599

$        (21,659)

$        151,519







Segment EBITDA

$        122,056

$          73,200

$          20,125

$        (18,463)

$        196,918

DGD adjusted EBITDA (Darling's Share)

76,642

76,642

Combined adjusted EBITDA

$        122,056

$          73,200

$          96,767

$        (18,463)

$        273,560



Feed
Ingredients

Food
Ingredients

Fuel
Ingredients

Corporate

Total

Three Months Ended July 1, 2023






Net sales

$     1,141,661

$        476,093

$        139,867

$                 —

$     1,757,621

Cost of sales and operating expenses

876,413

371,095

112,194

1,359,702

Gross margin

265,248

104,998

27,673

397,919







Loss (gain) on sale of assets

322

2

(65)

259

Selling, general and administrative expenses

77,406

33,684

4,971

20,690

136,751

Restructuring and asset impairment charges

896

896

Acquisition and integration costs

1,706

1,706

Change in fair value of contingent consideration

(7,499)

(7,499)

Depreciation and amortization

82,575

28,445

8,567

2,499

122,086

Equity in net income of Diamond Green Diesel

212,964

212,964

Segment operating income/(loss)

$        112,444

$          41,971

$        227,164

$        (24,895)

$        356,684

Equity in net income of other unconsolidated subsidiaries

1,849

1,849

Segment income/(loss)

$        114,293

$          41,971

$        227,164

$        (24,895)

$        358,533







Segment EBITDA

$        187,520

$          71,312

$          22,767

$        (20,690)

$        260,909

DGD adjusted EBITDA (Darling's Share)

247,398

247,398

Combined adjusted EBITDA

$        187,520

$          71,312

$        270,165

$        (20,690)

$        508,307

Segment EBITDA consists of segment income (loss), less equity in net income 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.


Feed
Ingredients

Food
Ingredients

Fuel
Ingredients

Corporate

Total

Six Months Ended June 29, 2024






Net sales

$     1,823,995

$        770,123

$        281,473

$                 —

$     2,875,591

Cost of sales and operating expenses

1,443,640

574,905

226,542

2,245,087

Gross margin

380,355

195,218

54,931

630,504







Loss (gain) on sale of assets

337

(257)

(432)

(352)

Selling, general and administrative expenses

151,153

60,588

17,154

39,979

268,874

Acquisition and integration costs

5,184

5,184

Change in fair value of contingent consideration

(58,371)

(58,371)

Depreciation and amortization

174,013

56,240

17,390

4,471

252,114

Equity in net income of Diamond Green Diesel

122,616

122,616

Segment operating income/(loss)

$        113,223

$          78,647

$        143,435

$        (49,634)

$        285,671

Equity in net income of other unconsolidated subsidiaries

5,327

5,327

Segment income/(loss)

$        118,550

$          78,647

$        143,435

$        (49,634)

$        290,998







Segment EBITDA

$        228,865

$        134,887

$          38,209

$        (39,979)

$        361,982

DGD adjusted EBITDA (Darling's Share)

191,702

191,702

Combined adjusted EBITDA

$        228,865

$        134,887

$        229,911

$        (39,979)

$        553,684



Feed
Ingredients

Food
Ingredients

Fuel
Ingredients

Corporate

Total

Six Months Ended July 1, 2023






Net sales

$     2,379,155

$        872,485

$        297,153

$                 —

$     3,548,793

Cost of sales and operating expenses

1,826,485

661,210

238,980

2,726,675

Gross margin

552,670

211,275

58,173

822,118







Gain on sale of assets

(20)

(19)

(29)

(68)

Selling, general and administrative expenses

152,097

66,806

11,163

42,151

272,217

Restructuring and asset impairment charges

92

5,328

5,420

Acquisition and integration costs

8,728

8,728

Change in fair value of contingent consideration

(7,499)

(7,499)

Depreciation and amortization

172,895

42,918

16,960

5,319

238,092

Equity in net income of Diamond Green Diesel

307,301

307,301

Segment operating income/(loss)

$        235,105

$          96,242

$        337,380

$        (56,198)

$        612,529

Equity in net income of other unconsolidated subsidiaries

1,969

1,969

Segment income/(loss)

$        237,074

$          96,242

$        337,380

$        (56,198)

$        614,498







Segment EBITDA

$        400,593

$        144,488

$          47,039

$        (42,151)

$        549,969

DGD adjusted EBITDA (Darling's Share)

376,721

376,721

Combined adjusted EBITDA

$        400,593

$        144,488

$        423,760

$        (42,151)

$        926,690

Segment EBITDA consists of segment income (loss), less equity in net income 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 Operating Results

For the Three and Six Months Ended June 29, 2024 and July 1, 2023

(in thousands, except per share data, unaudited)






Three Months Ended


Six Months Ended




$ Change




$ Change


June 29,


July 1,


Favorable


June 29,


July 1,


Favorable


2024


2023


(Unfavorable)


2024


2023


(Unfavorable)

Net sales

$    1,455,292


$    1,757,621


$     (302,329)


$      2,875,591


$     3,548,793


$       (673,202)

Costs and expenses:












Cost of sales and operating expenses

1,128,421


1,359,702


231,281


2,245,087


2,726,675


481,588

(Gain)/loss on sale of assets

222


259


37


(352)


(68)


284

Selling, general and administrative expenses

129,731


136,751


7,020


268,874


272,217


3,343

Restructuring and asset impairment charges


896


896



5,420


5,420

     Acquisition and integration costs

1,130


1,706


576


5,184


8,728


3,544

Change in fair value of contingent consideration

(33,122)


(7,499)


25,623


(58,371)


(7,499)


50,872

Depreciation and amortization

124,605


122,086


(2,519)


252,114


238,092


(14,022)

Total costs and expenses

1,350,987


1,613,901


262,914


2,712,536


3,243,565


531,029

Equity in net income of Diamond Green Diesel

44,197


212,964


(168,767)


122,616


307,301


(184,685)

Operating income

148,502


356,684


(208,182)


285,671


612,529


(326,858)

Other expense:












Interest expense

(69,225)


(70,193)


968


(132,101)


(120,492)


(11,609)

Foreign currency gain

413


2,490


(2,077)


649


7,494


(6,845)

Other income/(expense), net

(568)


5,079


(5,647)


8,088


11,238


(3,150)

Total other expense

(69,380)


(62,624)


(6,756)


(123,364)


(101,760)


(21,604)

Equity in net income of other unconsolidated
     subsidiaries

3,017


1,849


1,168


5,327


1,969


3,358

Income from operations before income taxes

82,139


295,909


(213,770)


167,634


512,738


(345,104)

Income tax expense

774


40,712


39,938


4,681


67,686


63,005

Net income

81,365


255,197


(173,832)


162,953


445,052


(282,099)

Net income attributable to noncontrolling interests

(2,499)


(2,814)


315


(2,930)


(6,868)


3,938

Net income attributable to Darling

$         78,866


$       252,383


$     (173,517)


$         160,023


$       438,184


$       (278,161)













Basic income per share:

$            0.49


$            1.58


$          (1.09)


$              1.00


$             2.74


$            (1.74)

Diluted income per share:

$            0.49


$            1.55


$          (1.06)


$              0.99


$             2.69


$            (1.70)













Number of diluted common shares:

161,705


162,370




161,805


162,593



 

Darling Ingredients Inc. and Subsidiaries

Balance Sheet Disclosures

As of June 29, 2024 and December 30, 2023

(in thousands)





(unaudited)




June 29,


December 30,


2024


2023

Cash and cash equivalents

$           121,587


$           126,502

Property, plant and equipment, net

$       2,840,682


$       2,935,185

Current portion of long-term debt

$             92,258


$             60,703

Long-term debt, net of current portion

$       4,317,129


$       4,366,370









Other Financial Data

As of June 29, 2024


(unaudited)




June 29,




2024



Revolver availability

$           814,426



Capital expenditures - YTD

$           191,728



Projected Leverage Ratio

4.24x



 

Diamond Green Diesel Joint Venture

Operating Financial Results

For the Three and Six Months Ended June 30, 2024 and June 30, 2023

(in thousands, unaudited)







Three Months Ended


Six Months Ended




$ Change




$ Change


June 30,


June 30,


Favorable


June 30,


June 30,


Favorable


2024


2023


(Unfavorable)


2024


2023


(Unfavorable)

Revenues:












Operating revenues

$     1,184,076


$     2,246,111


$    (1,062,035)


$      2,595,191


$      3,926,161


$    (1,330,970)

Expenses:












Total costs and expenses less
     lower of cost or market
     inventory valuation adjustment 
     and depreciation, amortization
     and accretion expense

1,014,927


1,751,315


736,388


2,174,283


3,172,719


998,436

Lower of cost or market (LCM)
     inventory valuation adjustment

15,866



(15,866)


37,504



(37,504)

Depreciation, amortization
     and accretion expense

61,910


58,315


(3,595)


127,200


116,922


(10,278)

Total costs and expenses

1,092,703


1,809,630


716,927


2,338,987


3,289,641


950,654

Operating income

91,373


436,481


(345,108)


256,204


636,520


(380,316)

Other income

6,058


2,121


3,937


9,278


4,162


5,116

Interest and debt expense, net

(9,037)


(12,674)


3,637


(20,279)


(26,080)


5,801

Income before income tax expense

88,394


425,928


(337,534)


245,203


614,602


(369,399)

Income tax benefit




(29)



29

Net income

$          88,394


$        425,928


$       (337,534)


$         245,232


$         614,602


$       (369,370)

 

Diamond Green Diesel Joint Venture

Consolidated Balance Sheets

June 30, 2024 and December 31, 2023

(in thousands)



June 30,


December 31,


2024


2023


(unaudited)



Assets:




Total current assets

$          1,849,534


$          1,877,430

Property, plant and equipment, net

3,888,370


3,838,800

Other assets

122,629


89,697

Total assets

$          5,860,533


$          5,805,927





Liabilities and members' equity:




Total current portion of long term debt

$               29,251


$             278,639

Total other current liabilities

404,090


417,918

Total long term debt

722,346


737,097

Total other long term liabilities

17,189


16,996

Total members' equity

4,687,657


4,355,277

Total liabilities and members' equity

$          5,860,533


$          5,805,927

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 Six Months Ended June 29, 2024 and July 1, 2023

(in thousands, unaudited)



Three Months Ended


Six Months Ended







Adjusted EBITDA

June 29,


July 1,


June 29,


July 1,


(U.S. dollars in thousands)

2024


2023


2024


2023











Net income attributable to Darling

$           78,866


$         252,383


$         160,023


$         438,184


Depreciation and amortization

124,605


122,086


252,114


238,092


Interest expense

69,225


70,193


132,101


120,492


Income tax expense

774


40,712


4,681


67,686


Restructuring and asset impairment charges


896



5,420


Acquisition and integration costs

1,130


1,706


5,184


8,728


Change in fair value of contingent consideration

(33,122)


(7,499)


(58,371)


(7,499)


Foreign currency gain

(413)


(2,490)


(649)


(7,494)


Other (income)/expense, net

568


(5,079)


(8,088)


(11,238)


Equity in net income of Diamond Green Diesel

(44,197)


(212,964)


(122,616)


(307,301)


Equity in net income of other unconsolidated subsidiaries

(3,017)


(1,849)


(5,327)


(1,969)


Net income attributable to noncontrolling interests

2,499


2,814


2,930


6,868


Adjusted EBITDA (Non-GAAP)

$         196,918


$         260,909


$         361,982


$         549,969


Foreign currency exchange impact

1,765

(1)


525

(2)


Pro forma Adjusted EBITDA to Foreign Currency (Non-GAAP)

$         198,683


$         260,909


$         362,507


$         549,969


DGD Joint Venture Adjusted EBITDA (Darling's share)

$           76,642


$         247,398


$         191,702


$         376,721


Darling plus Darling's share of DGD Joint Venture Adjusted EBITDA

$         273,560


$         508,307


$         553,684


$         926,690



(1) The average rates for the three months ended June 29, 2024 were €1.00:$1.08, R$1.00:$0.19 and C$1.00:$0.73 as
compared to the average rate for the three months ended July 1, 2023 of
 €1.00:$1.09, R$1.00:$0.20 and
C$1.00:$0.74
, respectively.

(2) The average rates for the six months ended June 29, 2024 were €1.00:$1.08, R$1.00:$0.20 and C$1.00:$0.74 as
compared to the average rate for the six months ended July 1, 2023 of €1.00:$1.08, R$1.00:$0.20 and C$1.00:$0.74,
respectively.                                                                                                                                                                                                                                                                                                                                                     

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 15% of the world's animal agricultural by-products, produces about 30% of the world's collagen (both gelatin and hydrolyzed collagen), and is one of the largest producers of renewable energy. To learn more, visit darlingii.com. Follow us on LinkedIn.

Darling Ingredients will host a conference call on Thursday, July 25, 2024, at 9 a.m. Eastern Time (8 a.m. Central Time) to discuss second quarter 2024 financial results, which will be released earlier that day, and provide an update on company operations. A presentation with accompanying supplemental financial data will also be available at darlingii.com/investors

To access the call as a listener, please register for the audio-only webcast.

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 July 25, 2024, or call 844-868-8847 (United States) or 412-317-6593 (International) and ask for "The Darling Ingredients Call" that day.

A replay of the call will be available online via the webcast registration link and via phone at 877-344-7529 (United States), 855-669-9658 (Canada) or 412-317-0088 (International) using reference passcode 2144325. The phone replay will be available two hours after the call concludes through August 1, 2024.

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, 6% Notes, 5.25% Notes and 3.625% Notes that were outstanding at June 29, 2024. However, the amounts shown below for Adjusted EBITDA differ from the amounts calculated under similarly titled definitions in the Company's Senior Secured Credit Facilities, 6% Notes, 5.25% Notes and 3.625% Notes, as those definitions permit further adjustments to reflect certain other nonrecurring costs, non-cash charges and cash dividends from the DGD Joint Venture. Additionally, the Company evaluates the impact of foreign exchange on operating cash flow, which is defined as segment operating income (loss) plus depreciation and amortization.

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 50% to get Darling's share of DGD's EBITDA.

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 U.S. government's renewable fuel standard, low carbon fuel standards ("LCFS"), renewable fuel mandates and tax credits for biofuels both in the U.S. and abroad, or loss or diminishment of tax credits due to failure to satisfy any eligibility requirements, including, without limitation, in relation to the blender tax credit or the Clean Fuels Production Credit ("CFPC"); climate related adverse results, including with respect to the Company's climate goals, targets or commitments; possible product recall resulting from developments relating to the discovery of unauthorized adulterations to food or food additives or products which do not meet specifications, contract requirements or regulatory standards; 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 U.S. or elsewhere, such as the outbreak of African Swine Fever in China and elsewhere; the occurrence of pandemics, epidemics or disease outbreaks, such as the 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 or 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, a decline in margins on the products produced by the DGD Joint Venture and issues relating to the announced SAF upgrade project (including, without limitation, operational, mechanical, product quality, market based or other such issues); risks and uncertainties relating to international sales and operations, including imposition of tariffs, quotas, trade barriers and other trade protections imposed by foreign countries; tax changes, such as global minimum tax measures, or issues related to guidance and/or regulations associated with biofuel policies, including CFPC; difficulties or a significant disruption (including, without limitation, due to cyber-attack) in the Company's information systems, networks or the confidentiality, availability or integrity of our data 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, including the Russia-Ukraine war and the Israeli-Palestinian conflict and other associated or emerging conflicts in the Middle East; uncertainty regarding the exit of the U.K. from the European Union; uncertainty regarding any administration changes in the U.S. or elsewhere around the world, including, without limitation, impacts to trade, tariffs and/or policies impacting the Company (such as biofuel policies and mandates); and/or unfavorable export or import markets. These factors, coupled with volatile prices for natural gas and diesel fuel, inflation rates, 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 report 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. For more detailed discussion of these factors and other risks and uncertainties regarding the Company, its business and the industries in which it operates, see the Company's filings with the SEC, including the Risk Factors discussion in Item 1A of Part I of the Company's Annual Report on Form 10-K for the fiscal year ended December 30, 2023. The Company cautions readers that all forward-looking statements speak only as of the date made, and the Company undertakes no obligation to update any forward-looking statements, whether as a result of changes in circumstances, new events or otherwise.

#              #              #

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.

FAQ

What was Darling Ingredients' (DAR) net income for Q2 2024?

Darling Ingredients reported net income of $78.9 million, or $0.49 per diluted share, for Q2 2024.

How much were Darling Ingredients' (DAR) net sales in Q2 2024?

Darling Ingredients reported net sales of $1.5 billion for Q2 2024.

What was Darling Ingredients' (DAR) combined adjusted EBITDA for Q2 2024?

Darling Ingredients' combined adjusted EBITDA for Q2 2024 was $273.6 million.

How much common stock did Darling Ingredients (DAR) repurchase in Q2 2024?

Darling Ingredients repurchased approximately $29.2 million of its common stock during Q2 2024.

What is Darling Ingredients' (DAR) guidance for fiscal year 2024?

Darling Ingredients reaffirmed its guidance for fiscal year 2024 at $1.3 – $1.4 billion combined adjusted EBITDA.

DARLING INGREDIENTS INC.

NYSE:DAR

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5.88B
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