Business Segments

6 Months Ended

Jun. 29, 2019

The Company sells its products domestically and internationally, operating within three industry segments: Feed Ingredients, Food Ingredients and Fuel Ingredients. The measure of segment income (loss) includes all revenues, operating expenses (excluding certain amortization of intangibles), and selling, general and administrative expenses incurred at all operating locations and excludes corporate activities.

Included in corporate activities are general corporate expenses and the amortization of certain intangibles. Assets of corporate activities include cash, unallocated prepaid expenses, deferred tax assets, prepaid pension, and miscellaneous other assets.

Feed Ingredients

Feed Ingredients consists principally of (i) the Company's U.S. ingredients business, including the Company's fats and proteins, used cooking oil, trap grease and food residuals collection businesses, the Rothsay ingredients business, the ingredients and specialty products businesses conducted by Darling Ingredients International under the Sonac name (proteins, fats, and plasma products) and (ii) the Company's bakery residuals business. Feed Ingredients operations process animal by-products and used cooking oil into fats, proteins and hides.

Food Ingredients

Food Ingredients consists principally of (i) the collagen business conducted by Darling Ingredients International under the Rousselot name, (ii) the natural casings and meat-by-products business conducted by Darling Ingredients International under the CTH name and (iii) certain specialty products businesses conducted by Darling Ingredients International under the Sonac name, which primarily consists of an edible fat business.

Fuel Ingredients

The Company's Fuel Ingredients segment consists of (i) the Company's investment in the DGD Joint Venture (ii) the Company's biofuel business conducted under the Dar Pro® and Rothsay names and (iii) the bioenergy business conducted by Darling Ingredients International under the Ecoson and Rendac names.

Business Segments (in thousands):



	Feed Ingredients			Food Ingredients			Fuel Ingredients			Corporate			Total
Three Months Ended June 29, 2019
Net Sales	$	487,447		$	274,835		$	65,042		$	—		$	827,324
Cost of sales and operating expenses	376,955			214,444			53,317			—			644,716
Gross Margin	110,492			60,391			11,725			—			182,608

Gain on sale of assets	(524		)	(13,379		)	(23		)	—			(13,926		)
Selling, general and administrative expenses	46,465			23,431			425			10,696			81,017
Depreciation and amortization	48,720			19,861			8,362			2,543			79,486
Segment operating income/(loss)	15,831			30,478			2,961			(13,239		)	36,031

Equity in net income of unconsolidated subsidiaries	82			—			38,093			—			38,175
Segment income/(loss)	15,913			30,478			41,054			(13,239		)	74,206

Total other expense													(35,386		)
Income before income taxes													$	38,820



	Feed Ingredients		Food Ingredients			Fuel Ingredients		Corporate			Total
Three Months Ended June 30, 2018
Net Sales	$	498,823	$	276,729		$	71,094	$	—		$	846,646
Cost of sales and operating expenses	370,007		224,892			57,340		—			652,239
Gross Margin	128,816		51,837			13,754		—			194,407

Loss (gain) on sale of assets	782		(57		)	37		—			762
Selling, general and administrative expenses	43,947		22,190			164		12,257			78,558
Restructuring and impairment charges	—		14,965			—		—			14,965
Depreciation and amortization	46,823		20,388			8,537		2,706			78,454
Segment operating income/(loss)	37,264		(5,649		)	5,016		(14,963		)	21,668

Equity in net income of unconsolidated subsidiaries	150		—			15,086		—			15,236
Segment income/(loss)	37,414		(5,649		)	20,102		(14,963		)	36,904

Total other expense											(64,359		)
Loss before income taxes											$	(27,455	)



	Feed Ingredients			Food Ingredients			Fuel Ingredients			Corporate			Total
Six Months Ended June 29, 2019
Net Sales	$	983,266		$	553,999		$	125,163		$	—		$	1,662,428
Cost of sales and operating expenses	763,814			428,448			103,367			—			1,295,629
Gross Margin	219,452			125,551			21,796			—			366,799

Loss (gain) on sale of assets	(4,914		)	(13,265		)	3			—			(18,176		)
Selling, general and administrative expense	95,296			45,318			(329		)	25,735			166,020
Depreciation and amortization	98,089			39,372			16,160			5,029			158,650
Segment operating income/(loss)	30,981			54,126			5,962			(30,764		)	60,305

Equity in net income/(loss) of unconsolidated subsidiaries	(422		)	—			62,370			—			61,948
Segment income/(loss)	30,559			54,126			68,332			(30,764		)	122,253

Total other expense													(58,519		)
Income before income taxes													$	63,734

Segment assets at June 29, 2019	$	2,601,181		$	1,372,184		$	813,368		$	249,863		$	5,036,596



	Feed Ingredients		Food Ingredients			Fuel Ingredients			Corporate			Total
Six Months Ended June 30, 2018
Net Sales	$	984,621	$	582,249		$	155,150		$	—		$	1,722,020
Cost of sales and operating expenses	739,456		474,233			117,111			—			1,330,800
Gross Margin	245,165		108,016			38,039			—			391,220

Loss (gain) on sale of assets	420		(212		)	92			—			300
Selling, general and administrative expense	92,212		46,051			(1,234		)	28,431			165,460
Restructuring and impairment charges	—		14,965			—			—			14,965
Depreciation and amortization	93,612		41,028			17,008			5,425			157,073
Segment operating income/(loss)	58,921		6,184			22,173			(33,856		)	53,422

Equity in net income of unconsolidated subsidiaries	105		—			112,285			—			112,390
Segment income/(loss)	59,026		6,184			134,458			(33,856		)	165,812

Total other expense												(91,480		)
Income before income taxes												$	74,332

Segment assets at December 29, 2018	$	2,566,106	$	1,401,291		$	761,817		$	160,140		$	4,889,354