Guarantor Financial Information

3 Months Ended

Mar. 28, 2020

Guarantor Financial Information [Abstract]

The Company's 5.25% Notes and 3.625% Notes (see Note 10) are guaranteed on a senior unsecured basis by the following Notes Guarantors, each of which is a 100% directly or indirectly owned subsidiary of Darling and which constitute all of Darling's existing restricted subsidiaries that are Credit Agreement Guarantors (other than Darling's foreign subsidiaries, Darling Global Finance B.V., which issued the 3.625% Notes and is discussed further below, or any receivables entity): Darling National, Griffin and its subsidiary Craig Protein, Darling AWS LLC, Darling Global Holdings Inc., Darling Northstar LLC, EV Acquisition, LLC, Rousselot Inc., Rousselot Dubuque Inc., Sonac USA LLC and Rousselot Peabody Inc. In addition, the 3.625% Notes, which were issued by Darling Global Finance B.V., a wholly-owned indirect subsidiary of Darling, are guaranteed on a senior unsecured basis by Darling. The Notes Guarantors, and Darling in the case of the 3.625% Notes, fully and unconditionally guaranteed the 5.25% Notes and 3.625% Notes on a joint and several basis. The following financial statements present condensed consolidated financial data for (i) Darling, (ii) the combined Notes Guarantors, (iii) the combined other subsidiaries of the Company that did not guarantee the 5.25% Notes or the 3.625% Notes (the “Non-guarantors”), and (iv) eliminations necessary to arrive at the Company's consolidated financial statements, which include condensed consolidated balance sheets as of March 28, 2020 and December 28, 2019, and the condensed consolidated statements of operations, the condensed consolidated statements of comprehensive income/(loss) and the condensed consolidated statements of cash flows for the three months ended March 28, 2020 and March 30, 2019. Separate financial information is not presented for Darling Global Finance B.V. since it was formed as a special purpose finance subsidiary for the purpose of issuing euro-denominated notes such as the 3.625% Notes and therefore does not have any substantial operations or assets.

Condensed Consolidated Balance Sheet

As of March 28, 2020

(in thousands)



	Parent		Guarantors			Non-guarantors		Eliminations			Consolidated
ASSETS
Cash and cash equivalents	$	903	$	25		$	75,411	$	—		$	76,339
Restricted cash	103		—			3		—			106
Accounts receivable	47,852		663,967			545,669		(859,788		)	397,700
Inventories	24,028		97,781			259,623		—			381,432
Income taxes refundable	1,378		—			1,728		—			3,106
Prepaid expenses	17,927		2,281			24,899		—			45,107
Other current assets	4,950		(3,346		)	44,906		(20,240		)	26,270
Total current assets	97,141		760,708			952,239		(880,028		)	930,060
Investment in subsidiaries	5,509,606		1,283,699			844,042		(7,637,347		)	—
Property, plant and equipment, net	432,561		521,784			809,775		—			1,764,120
Intangible assets, net	42,993		163,064			291,722		—			497,779
Goodwill	49,902		490,748			661,942		—			1,202,592
Investment in unconsolidated subsidiaries	—		—			802,184		—			802,184
Operating lease right-of-use asset	72,161		30,475			21,223		—			123,859
Other assets	34,715		134			57,336		(49,532		)	42,653
Deferred taxes	—		—			14,532		—			14,532
	$	6,239,079	$	3,250,612		$	4,454,995	$	(8,566,907	)	$	5,377,779
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current portion of long-term debt	$	50,004	$	11		$	56,622	$	(20,240	)	$	86,397
Accounts payable	887,354		23,026			160,990		(859,774		)	211,596
Income taxes payable	919		—			7,674		—			8,593
Current operating lease liability	19,774		10,592			7,106		—			37,472
Accrued expenses	97,602		26,190			183,910		(14		)	307,688
Total current liabilities	1,055,653		59,819			416,302		(880,028		)	651,746
Long-term debt, net of current portion	1,139,898		27			574,465		(49,532		)	1,664,858
Long-term operating lease liability	57,796		19,462			13,992		—			91,250
Other noncurrent liabilities	76,714		—			34,431		—			111,145
Deferred income taxes	131,000		—			119,338		—			250,338
Total liabilities	2,461,061		79,308			1,158,528		(929,560		)	2,769,337
Total stockholders’ equity	3,778,018		3,171,304			3,296,467		(7,637,347		)	2,608,442
	$	6,239,079	$	3,250,612		$	4,454,995	$	(8,566,907	)	$	5,377,779

Condensed Consolidated Balance Sheet

As of December 28, 2019

(in thousands)



	Parent			Guarantors			Non-guarantors		Eliminations			Consolidated
ASSETS
Cash and cash equivalents	$	551		$	26		$	72,358	$	—		$	72,935
Restricted cash	103			—			7		—			110
Accounts receivable	51,097			702,945			518,614		(866,318		)	406,338
Inventories	26,893			86,609			249,455		—			362,957
Income taxes refundable	1,106			—			2,211		—			3,317
Prepaid expenses	20,888			2,241			23,470		—			46,599
Other current assets	5,399			(2,326		)	40,872		(18,913		)	25,032
Total current assets	106,037			789,495			906,987		(885,231		)	917,288
Investment in subsidiaries	5,365,956			1,366,635			844,043		(7,576,634		)	—
Property, plant and equipment, net	434,237			524,577			843,597		—			1,802,411
Intangible assets, net	44,404			170,581			311,409		—			526,394
Goodwill	49,902			490,748			682,641		—			1,223,291
Investment in unconsolidated subsidiary	—			—			689,354		—			689,354
Operating lease right-of-use asset	74,005			31,243			19,478		—			124,726
Other assets	35,456			134			61,974		(50,164		)	47,400
Deferred income taxes	—			—			14,394		—			14,394
	$	6,109,997		$	3,373,413		$	4,373,877	$	(8,512,029	)	$	5,345,258
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current portion of long-term debt	$	40,916		$	10		$	68,983	$	(18,913	)	$	90,996
Accounts payable	893,490			29,535			182,484		(866,257		)	239,252
Income taxes payable	(10		)	—			8,905		—			8,895
Current operating lease liability	20,454			10,510			6,841		—			37,805
Accrued expenses	116,758			32,861			161,833		(61		)	311,391
Total current liabilities	1,071,608			72,916			429,046		(885,231		)	688,339
Long-term debt, net of current portion	1,040,974			30			567,589		(50,164		)	1,558,429
Long-term operating lease liability	58,970			20,281			12,173		—			91,424
Other noncurrent liabilities	80,409			—			35,376		—			115,785
Deferred income taxes	122,109			—			125,822		—			247,931
Total liabilities	2,374,070			93,227			1,170,006		(935,395		)	2,701,908
Total stockholders’ equity	3,735,927			3,280,186			3,203,871		(7,576,634		)	2,643,350
	$	6,109,997		$	3,373,413		$	4,373,877	$	(8,512,029	)	$	5,345,258

Condensed Consolidated Statements of Operations

For the three months ended March 28, 2020

(in thousands)



	Parent			Guarantors			Non-guarantors			Eliminations			Consolidated
Net sales	$	180,919		$	310,301		$	405,025		$	(43,403	)	$	852,842
Cost and expenses:
Cost of sales and operating expenses	144,142			246,320			299,849			(43,403		)	646,908
Loss/(gain) on sale of assets	(38		)	63			36			—			61
Selling, general and administrative expenses	48,074			12,517			35,602			—			96,193
Depreciation and amortization	17,272			26,593			40,806			—			84,671
Total costs and expenses	209,450			285,493			376,293			(43,403		)	827,833
Equity in net income of Diamond Green Diesel	—			—			97,820			—			97,820
Operating income/(loss)	(28,531		)	24,808			126,552			—			122,829

Interest expense	(13,775		)	(58		)	(5,257		)	—			(19,090		)
Foreign currency gains/(losses)	(326		)	(24		)	2,014			—			1,664
Other expense, net	(1,540		)	(339		)	(2		)	—			(1,881		)
Equity in net income of other unconsolidated subsidiaries	—			—			869			—			869
Earnings in investments in subsidiaries	121,939			—			—			(121,939		)	—
Income/(loss) before taxes	77,767			24,387			124,176			(121,939		)	104,391
Income tax expense/(benefit)	(7,743		)	4,275			21,768			—			18,300
Net income attributable to noncontrolling interests	—			—			(581		)	—			(581		)
Net income/(loss) attributable to Darling	$	85,510		$	20,112		$	101,827		$	(121,939	)	$	85,510

Condensed Consolidated Statements of Operations

For the three months ended March 30, 2019

(in thousands)



	Parent			Guarantors			Non-guarantors			Eliminations			Consolidated
Net sales	$	160,230		$	329,991		$	403,911		$	(59,028	)	$	835,104
Cost and expenses:
Cost of sales and operating expenses	128,324			271,671			309,946			(59,028		)	650,913
Loss (gain) on sale of assets	68			(4,477		)	159			—			(4,250		)
Selling, general and administrative expenses	47,423			11,947			25,633			—			85,003
Depreciation and amortization	14,373			26,112			38,679			—			79,164
Total costs and expenses	190,188			305,253			374,417			(59,028		)	810,830
Equity in net income of Diamond Green Diesel	—			—			24,277			—			24,277
Operating income/(loss)	(29,958		)	24,738			53,771			—			48,551

Interest expense	(14,027		)	(32		)	(5,817		)	—			(19,876		)
Foreign currency losses	(4		)	—			(728		)	—			(732		)
Other income/(expense), net	(1,567		)	(1,212		)	254			—			(2,525		)
Equity in net income/(loss) of other unconsolidated subsidiaries	(891		)	—			387			—			(504		)
Earnings in investments in subsidiaries	54,627			—			—			(54,627		)	—
Income/(loss) before taxes	8,180			23,494			47,867			(54,627		)	24,914
Income tax expense/(benefit)	(9,832		)	4,973			10,133			—			5,274
Net income attributable to noncontrolling interests	—			—			(1,628		)	—			(1,628		)
Net income/(loss) attributable to Darling	$	18,012		$	18,521		$	36,106		$	(54,627	)	$	18,012

Condensed Consolidated Statements of Comprehensive Income/(Loss)

For the three months ended March 28, 2020

(in thousands)



	Parent		Guarantors			Non-guarantors			Eliminations			Consolidated
Net income/(loss)	$	86,091	$	20,112		$	101,827		$	(121,939	)	$	86,091
Other comprehensive income/(loss), net of tax:
Foreign currency translation	651		(128,994		)	63,107			—			(65,236		)
Pension adjustments	518		—			130			—			648
Corn option derivative adjustments	136		—			—			—			136
Heating oil derivative adjustments	—		—			10,870			—			10,870
Foreign exchange derivative adjustments	—		—			(9,151		)	—			(9,151		)
Total other comprehensive income/(loss), net of tax	1,305		(128,994		)	64,956			—			(62,733		)
Total comprehensive income/(loss)	87,396		(108,882		)	166,783			(121,939		)	23,358
Total comprehensive loss attributable to noncontrolling interest	—		—			492			—			492
Total comprehensive income/(loss) attributable to Darling	$	87,396	$	(108,882	)	$	166,291		$	(121,939	)	$	22,866

Condensed Consolidated Statements of Comprehensive Income/(Loss)

For the three months ended March 30, 2019

(in thousands)



	Parent		Guarantors		Non-guarantors			Eliminations			Consolidated
Net income/(loss)	$	19,640	$	18,521	$	36,106		$	(54,627	)	$	19,640
Other comprehensive income/(loss), net of tax:
Foreign currency translation	507		—		(5,393		)	—			(4,886		)
Pension adjustments	767		—		91			—			858
Foreign exchange derivative adjustment	—		—		(1,937		)	—			(1,937		)
Total other comprehensive income/(loss), net of tax	1,274		—		(7,239		)	—			(5,965		)
Total comprehensive income/(loss)	20,914		18,521		28,867			(54,627		)	13,675
Total comprehensive income attributable to noncontrolling interest	—		—		3,387			—			3,387
Total comprehensive income/(loss) attributable to Darling	$	20,914	$	18,521	$	25,480		$	(54,627	)	$	10,288

Condensed Consolidated Statements of Cash Flows

For the three months ended March 28, 2020

(in thousands)



	Parent			Guarantors			Non-guarantors			Eliminations			Consolidated
Cash flows from operating activities:

Net income/(loss)	$	86,091		$	20,112		$	101,827		$	(121,939	)	$	86,091
Earnings in investments in subsidiaries	(121,939		)	—			—			121,939			—
Other operating cash flows	19,102			(3,545		)	(67,102		)	—			(51,545		)
Net cash provided/(used) by operating activities	(16,746		)	16,567			34,725			—			34,546

Cash flows from investing activities:
Capital expenditures	(14,829		)	(16,695		)	(30,075		)	—			(61,599		)
Investment in subsidiaries and affiliates	(13,534		)	—			—			13,534			—
Gross proceeds from sale of property, plant and equipment and other assets	87			129			163			—			379
Payments related to routes and other intangibles	(3,416		)	—			—			—			(3,416		)
Net cash provided/(used) in investing activities	(31,692		)	(16,566		)	(29,912		)	13,534			(64,636		)

Cash flows from financing activities:
Proceeds for long-term debt	—			—			8,264			—			8,264
Payments on long-term debt	(1		)	(2		)	(8,635		)	—			(8,638		)
Borrowings from revolving facilities	176,000			—			43,933			—			219,933
Payments on revolving facilities	(71,000		)	—			(29,782		)	—			(100,782		)
Net cash overdraft financing	3,084			—			(12,678		)	—			(9,594		)
Issuances of common stock	67			—			—			—			67
Repurchase of treasury stock	(55,044		)	—			—			—			(55,044		)
Contributions from parent	—			—			13,534			(13,534		)	—
Minimum withholding taxes paid on stock awards	(4,316		)	—			(12		)	—			(4,328		)
Acquisition of noncontrolling interest	—			—			(8,784		)	—			(8,784		)
Distributions to noncontrolling interests	—			—			(688		)	—			(688		)
Net cash provided/(used) in financing activities	48,790			(2		)	5,152			(13,534		)	40,406

Effect of exchange rate changes on cash	—			—			(6,916		)	—			(6,916		)

Net increase/(decrease) in cash, cash equivalents and restricted cash	352			(1		)	3,049			—			3,400
Cash, cash equivalents and restricted cash at beginning of period	654			26			72,365			—			73,045
Cash, cash equivalents and restricted cash at end of period	$	1,006		$	25		$	75,414		$	—		$	76,445

Condensed Consolidated Statements of Cash Flows

For the three months ended March 30, 2019

(in thousands)



	Parent			Guarantors			Non-guarantors			Eliminations			Consolidated
Cash flows from operating activities:
Net income/(loss)	$	19,640		$	18,521		$	36,106		$	(54,627	)	$	19,640
Earnings in investments in subsidiaries	(54,627		)	—			—			54,627			—
Other operating cash flows	52,135			(2,881		)	(20,293		)	—			28,961
Net cash provided by operating activities	17,148			15,640			15,813			—			48,601

Cash flows from investing activities:
Capital expenditures	(34,303		)	(23,498		)	(26,468		)	—			(84,269		)
Acquisitions	(1,157		)	—			(274		)	—			(1,431		)
Gross proceeds from sale of property, plant and equipment and other assets	132			7,016			720			—			7,868
Proceeds from insurance settlements	—			845			—			—			845
Payments related to routes and other intangibles	—			—			(2,778		)	—			(2,778		)
Net cash used in investing activities	(35,328		)	(15,637		)	(28,800		)	—			(79,765		)

Cash flows from financing activities:
Proceeds for long-term debt	—			—			2,138			—			2,138
Payments on long-term debt	—			(2		)	(10,972		)	—			(10,974		)
Borrowings from revolving credit facility	50,000			—			106,829			—			156,829
Payments on revolving credit facility	(37,000		)	—			(101,147		)	—			(138,147		)
Net cash overdraft financing	8,350			—			6,175			—			14,525
Issuances of common stock	12			—			—			—			12
Minimum withholding taxes paid on stock awards	(3,190		)	—			—			—			(3,190		)
Net cash provided/(used) by financing activities	18,172			(2		)	3,023			—			21,193

Effect of exchange rate changes on cash	—			—			(1,575		)	—			(1,575		)

Net increase/(decrease) in cash, cash equivalents and restricted cash	(8		)	1			(11,539		)	—			(11,546		)
Cash, cash equivalents and restricted cash at beginning of period	1,098			32			106,239			—			107,369
Cash, cash equivalents and restricted cash at end of period	$	1,090		$	33		$	94,700		$	—		$	95,823