XML 21 R11.htm IDEA: XBRL DOCUMENT v3.20.2
Investment in Unconsolidated Subsidiary
9 Months Ended
Sep. 26, 2020
Equity Method Investments and Joint Ventures [Abstract]  
Investment in Unconsolidated Subsidiary Investment in Unconsolidated Subsidiaries
On January 21, 2011, a wholly-owned subsidiary of Darling entered into a limited liability company agreement with a wholly-owned subsidiary of Valero Energy Corporation (“Valero”) to form Diamond Green Diesel Holdings LLC (the “DGD Joint Venture”). The DGD Joint Venture is owned 50% / 50% with Valero and was formed to design, engineer, construct and operate a renewable diesel plant (the “DGD Facility”) located adjacent to Valero's refinery in Norco, Louisiana. The DGD Joint Venture reached mechanical completion and began the production of renewable diesel in late June 2013 and is currently capable of processing approximately 20,000 barrels per day of input feedstock to produce renewable diesel fuel and certain other co-products. Effective May 1, 2019, the limited liability company agreement was amended and restated for the purpose of updating the agreement in certain respects, including to remove certain provisions that were no longer relevant and to add new provisions relating to the DGD Joint Venture’s ongoing expansion project to construct a new, parallel facility located next to the existing facility.

In 2019, the Company continued to evaluate operational developments and the impact of anticipated significant expansion of the DGD Joint Venture. This evaluation was impactful to the consideration of how the Company most appropriately reflects its share of equity income from the DGD Joint Venture. Based on the Company's analysis, it
was determined that the DGD Joint Venture has evolved into an integral and integrated part of the Company's ongoing operations. The Company determined this justifies a more meaningful and transparent presentation of equity in net income of the DGD Joint Venture as a component of the Company's operating income.

Selected financial information for the Company's DGD Joint Venture is as follows (in thousands):
(in thousands)September 30, 2020December 31, 2019
Assets:
Total current assets$465,669 $668,026 
Property, plant and equipment, net1,039,802 713,489 
Other assets32,813 30,710 
Total assets$1,538,284 $1,412,225 
Liabilities and members' equity:
Total current portion of long term debt$506 $341 
Total other current liabilities98,618 75,802 
Total long term debt8,839 8,742 
Total other long term liabilities3,875 4,422 
Total members' equity1,426,446 1,322,918 
Total liabilities and members' equity$1,538,284 $1,412,225 

Three Months EndedNine Months Ended
(in thousands)September 30, 2020September 30, 2019September 30, 2020September 30, 2019
Revenues:
Operating revenues$346,276 $262,118 $1,000,717 $859,647 
Expenses:
Total costs and expenses less depreciation, amortization and accretion expense
153,406 183,022 462,364 633,109 
Depreciation, amortization and accretion expense
10,772 15,242 33,660 38,574 
Total costs and expenses164,178 198,264 496,024 671,683 
Operating income182,098 63,854 504,693 187,964 
Other income415 506 1,076 1,781 
Interest and debt expense, net(315)(320)(947)(965)
Net income$182,198 $64,040 $504,822 $188,780 

As of September 26, 2020, under the equity method of accounting, the Company has an investment in the DGD Joint Venture of approximately $713.2 million on the consolidated balance sheet. The Company has recorded an equity in net income of approximately $91.1 million and $32.0 million for the three months ended September 26, 2020 and September 28, 2019, respectively. The Company has recorded an equity in net income of approximately $252.4 million and $94.4 million for the nine months ended September 26, 2020 and September 28, 2019, respectively. In December 2019, the blender tax credits for calendar year 2018 and 2019 were retroactively reinstated by the U.S. Congress. In addition, blenders tax credits were extended for calendar years 2020, 2021 and 2022. For the three and nine months ended September 30, 2019, the DGD Joint Venture results do not include any blenders tax credits, while in the three and nine months ended September 30, 2020, the DGD Joint Venture recorded approximately $79.9 million and $232.1 million of blenders tax credits, respectively. In the nine months ended September 26, 2020, the Company received dividend distributions of approximately $205.2 million from the DGD Joint Venture.

In addition to the DGD Joint Venture, the Company has investments in other unconsolidated subsidiaries that are insignificant to the Company.