Date of report (Date of earliest event reported) |
(Exact Name of Registrant as Specified in Charter) |
(State or Other Jurisdiction of Incorporation) | (Commission File Number) | (IRS Employer Identification No.) |
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Title of each class | Trading Symbol(s) | Name of each exchange on which registered | |||||||||
(“NYSE”) |
Emerging growth company |
99.1 | ||||||||
99.2 | ||||||||
104 | Cover Page Interactive Data File (embedded within Inline XBRL document) |
DARLING INGREDIENTS INC. | |||||||||||
Date: May 11, 2021 | By: | /s/ John F. Sterling | |||||||||
John F. Sterling | |||||||||||
Executive Vice President, General Counsel |
![]() | News Release May 11, 2021 Page 2 | ||||||||||
Three Months Ended April 3, 2021 | Feed Ingredients | Food Ingredients | Fuel Ingredients | Corporate | Total | ||||||||||||
Net sales | $ | 651,444 | $ | 298,065 | $ | 97,207 | $ | — | $ | 1,046,716 | |||||||
Cost of sales and operating expenses | 474,581 | 226,413 | 71,790 | — | 772,784 | ||||||||||||
Gross margin | $ | 176,863 | $ | 71,652 | $ | 25,417 | $ | — | $ | 273,932 | |||||||
Loss/(gain) on sale of assets | (139) | 55 | 20 | — | (64) | ||||||||||||
Selling, general and administrative expenses | 52,620 | 25,191 | 4,867 | 14,720 | 97,398 | ||||||||||||
Restructuring and asset impairment charges | — | — | 778 | — | 778 | ||||||||||||
Depreciation and amortization | 54,609 | 14,883 | 6,155 | 2,887 | 78,534 | ||||||||||||
Equity in net income of Diamond Green Diesel | — | — | 102,225 | — | 102,225 | ||||||||||||
Segment operating income/(loss) | $ | 69,773 | $ | 31,523 | $ | 115,822 | $ | (17,607) | $ | 199,511 | |||||||
Equity in net income of unconsolidated subsidiaries | $ | 612 | $ | — | $ | — | $ | — | $ | 612 | |||||||
Segment income/(loss) | $ | 70,385 | $ | 31,523 | $ | 115,822 | $ | (17,607) | $ | 200,123 | |||||||
Segment EBITDA | $ | 124,382 | $ | 46,406 | $ | 20,530 | $ | (14,720) | $ | 176,598 | |||||||
DGD Adjusted EBITDA (Darling's Share) | $ | — | $ | — | $ | 108,200 | $ | — | $ | 108,200 | |||||||
Combined adjusted EBITDA | $ | 124,382 | $ | 46,406 | $ | 128,730 | $ | (14,720) | $ | 284,798 |
Three Months Ended March 28, 2020 | Feed Ingredients | Food Ingredients | Fuel Ingredients | Corporate | Total | ||||||||||||
Net sales | $ | 512,625 | $ | 270,294 | $ | 69,923 | $ | — | $ | 852,842 | |||||||
Cost of sales and operating expenses | 388,453 | 205,430 | 53,025 | — | 646,908 | ||||||||||||
Gross margin | $ | 124,172 | $ | 64,864 | $ | 16,898 | $ | — | $ | 205,934 | |||||||
Loss on sale of assets | 50 | 2 | 9 | — | 61 | ||||||||||||
Selling, general and administrative expenses | 53,947 | 25,476 | 1,654 | 15,116 | 96,193 | ||||||||||||
Depreciation and amortization | 53,521 | 20,305 | 8,092 | 2,753 | 84,671 | ||||||||||||
Equity in net income of Diamond Green Diesel | — | — | 97,820 | — | 97,820 | ||||||||||||
Segment operating income/(loss) | $ | 16,654 | $ | 19,081 | $ | 104,963 | $ | (17,869) | $ | 122,829 | |||||||
Equity in net income of unconsolidated subsidiaries | $ | 869 | $ | — | $ | — | $ | — | $ | 869 | |||||||
Segment income/(loss) | $ | 17,523 | $ | 19,081 | $ | 104,963 | $ | (17,869) | $ | 123,698 | |||||||
Segment EBITDA | $ | 70,175 | $ | 39,386 | $ | 15,235 | $ | (15,116) | $ | 109,680 | |||||||
DGD Adjusted EBITDA (Darling's Share) | $ | — | $ | — | $ | 103,634 | $ | — | $ | 103,634 | |||||||
Combined adjusted EBITDA | $ | 70,175 | $ | 39,386 | $ | 118,869 | $ | (15,116) | $ | 213,314 |
![]() | News Release May 11, 2021 Page 3 | ||||||||||
April 3, | January 2, | |||||||||||||
2021 | 2021 | |||||||||||||
ASSETS | (unaudited) | |||||||||||||
Current assets: | ||||||||||||||
Cash and cash equivalents | $ | 71,199 | $ | 81,617 | ||||||||||
Restricted cash | 177 | 103 | ||||||||||||
Accounts receivable, net | 385,663 | 405,387 | ||||||||||||
Inventories | 420,659 | 405,922 | ||||||||||||
Prepaid expenses | 50,251 | 47,793 | ||||||||||||
Income taxes refundable | 3,274 | 3,883 | ||||||||||||
Other current assets | 9,544 | 42,289 | ||||||||||||
Total current assets | 940,767 | 986,994 | ||||||||||||
Property, plant and equipment, net | 1,822,075 | 1,863,814 | ||||||||||||
Intangible assets, net | 452,539 | 473,680 | ||||||||||||
Goodwill | 1,241,242 | 1,260,240 | ||||||||||||
Investment in unconsolidated subsidiaries | 915,085 | 804,682 | ||||||||||||
Operating lease right-of-use assets | 145,238 | 146,563 | ||||||||||||
Other assets | 59,099 | 60,682 | ||||||||||||
Deferred income taxes | 15,402 | 16,676 | ||||||||||||
$ | 5,591,447 | $ | 5,613,331 | |||||||||||
LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||||||||||
Current liabilities: | ||||||||||||||
Current portion of long-term debt | $ | 26,997 | $ | 27,538 | ||||||||||
Accounts payable, principally trade | 245,648 | 255,340 | ||||||||||||
Income taxes payable | 15,627 | 17,497 | ||||||||||||
Current operating lease liabilities | 38,064 | 39,459 | ||||||||||||
Accrued expenses | 311,371 | 335,471 | ||||||||||||
Total current liabilities | 637,707 | 675,305 | ||||||||||||
Long-term debt, net of current portion | 1,417,534 | 1,480,531 | ||||||||||||
Long-term operating lease liabilities | 108,777 | 109,707 | ||||||||||||
Other noncurrent liabilities | 115,799 | 117,371 | ||||||||||||
Deferred income taxes | 281,684 | 276,208 | ||||||||||||
Total liabilities | 2,561,501 | 2,659,122 | ||||||||||||
Commitments and contingencies | ||||||||||||||
Total Darling's stockholders' equity | 2,966,603 | 2,891,909 | ||||||||||||
Noncontrolling interests | 63,343 | 62,300 | ||||||||||||
Total stockholders' equity | $ | 3,029,946 | $ | 2,954,209 | ||||||||||
$ | 5,591,447 | $ | 5,613,331 |
![]() | News Release May 11, 2021 Page 4 | ||||||||||
Three Months Ended | |||||||||||||||||
(unaudited) | $ Change | ||||||||||||||||
April 3, | March 28, | Favorable | |||||||||||||||
2021 | 2020 | (Unfavorable) | |||||||||||||||
Net sales | $ | 1,046,716 | $ | 852,842 | $ | 193,874 | |||||||||||
Costs and expenses: | |||||||||||||||||
Cost of sales and operating expenses | 772,784 | 646,908 | (125,876) | ||||||||||||||
Loss (gain) on sale of assets | (64) | 61 | 125 | ||||||||||||||
Selling, general and administrative expenses | 97,398 | 96,193 | (1,205) | ||||||||||||||
Restructuring and asset impairment charges | 778 | — | (778) | ||||||||||||||
Depreciation and amortization | 78,534 | 84,671 | 6,137 | ||||||||||||||
Total costs and expenses | 949,430 | 827,833 | (121,597) | ||||||||||||||
Equity in net income of Diamond Green Diesel | 102,225 | 97,820 | 4,405 | ||||||||||||||
Operating income | 199,511 | 122,829 | 76,682 | ||||||||||||||
Other expense: | |||||||||||||||||
Interest expense | (16,428) | (19,090) | 2,662 | ||||||||||||||
Foreign currency gain/(loss) | (410) | 1,664 | (2,074) | ||||||||||||||
Other expense, net | (1,159) | (1,881) | 722 | ||||||||||||||
Total other expense | (17,997) | (19,307) | 1,310 | ||||||||||||||
Equity in net income/(loss) of unconsolidated subsidiaries | 612 | 869 | (257) | ||||||||||||||
Income from operations before income taxes | 182,126 | 104,391 | 77,735 | ||||||||||||||
Income tax expense | 28,708 | 18,300 | (10,408) | ||||||||||||||
Net income | 153,418 | 86,091 | 67,327 | ||||||||||||||
Net income attributable to noncontrolling interests | (1,652) | (581) | (1,071) | ||||||||||||||
Net income attributable to Darling | $ | 151,766 | $ | 85,510 | $ | 66,256 | |||||||||||
Basic income per share: | $ | 0.93 | $ | 0.52 | $ | 0.41 | |||||||||||
Diluted income per share: | $ | 0.90 | $ | 0.51 | $ | 0.39 | |||||||||||
Number of diluted common shares: | 167,749 | 167,927 |
![]() | News Release May 11, 2021 Page 5 | ||||||||||
Three Months Ended | |||||||||||
April 3, | March 28, | ||||||||||
Cash flows from operating activities: | 2021 | 2020 | |||||||||
Net income | $ | 153,418 | $ | 86,091 | |||||||
Adjustments to reconcile net income to net cash provided by operating activities: | |||||||||||
Depreciation and amortization | 78,534 | 84,671 | |||||||||
Loss/(gain) on sale of assets | (64) | 61 | |||||||||
Asset impairment | 138 | — | |||||||||
Deferred taxes | 11,809 | 6,377 | |||||||||
Decrease in long-term pension liability | (448) | (264) | |||||||||
Stock-based compensation expense | 8,415 | 10,818 | |||||||||
Write-off deferred loan costs | 598 | — | |||||||||
Deferred loan cost amortization | 1,040 | 1,416 | |||||||||
Equity in net income of Diamond Green Diesel and other unconsolidated subsidiaries | (102,837) | (98,689) | |||||||||
Distribution of earnings from other unconsolidated subsidiaries | 57 | — | |||||||||
Changes in operating assets and liabilities, net of effects from acquisitions: | |||||||||||
Accounts receivable | 10,721 | 487 | |||||||||
Income taxes refundable/payable | (760) | 348 | |||||||||
Inventories and prepaid expenses | (27,188) | (24,999) | |||||||||
Accounts payable and accrued expenses | (13,462) | (16,790) | |||||||||
Other | 18,834 | (14,981) | |||||||||
Net cash provided by operating activities | 138,805 | 34,546 | |||||||||
Cash flows from investing activities: | |||||||||||
Capital expenditures | (60,751) | (61,599) | |||||||||
Acquisition, net of cash acquired | (340) | — | |||||||||
Investment in unconsolidated subsidiary | (4,449) | — | |||||||||
Gross proceeds from disposal of property, plant and equipment and other assets | 1,629 | 379 | |||||||||
Payments related to routes and other intangibles | (347) | (3,416) | |||||||||
Net cash used by investing activities | (64,258) | (64,636) | |||||||||
Cash flows from financing activities: | |||||||||||
Proceeds from long-term debt | 9,262 | 8,264 | |||||||||
Payments on long-term debt | (60,444) | (8,638) | |||||||||
Borrowings from revolving credit facility | 111,000 | 219,933 | |||||||||
Payments on revolving credit facility | (97,000) | (100,782) | |||||||||
Net cash overdraft financing | 499 | (9,594) | |||||||||
Issuance of common stock | 50 | 67 | |||||||||
Repurchase of common stock | — | (55,044) | |||||||||
Minimum withholding taxes paid on stock awards | (42,268) | (4,328) | |||||||||
Acquisition of noncontrolling interest | — | (8,784) | |||||||||
Distributions to noncontrolling interests | (2,143) | (688) | |||||||||
Net cash provided (used) by financing activities | (81,044) | 40,406 | |||||||||
Effect of exchange rate changes on cash flows | (3,847) | (6,916) | |||||||||
Net increase/ (decrease) in cash, cash equivalents and restricted cash | (10,344) | 3,400 | |||||||||
Cash, cash equivalents and restricted cash at beginning of period | 81,720 | 73,045 | |||||||||
Cash, cash equivalents and restricted cash at end of period | $ | 71,376 | $ | 76,445 | |||||||
Supplemental disclosure of cash flow information: | |||||||||||
Accrued capital expenditures | $ | (9,678) | $ | (1,630) | |||||||
Cash paid during the period for: | |||||||||||
Interest, net of capitalized interest | $ | 2,774 | $ | 5,863 | |||||||
Income taxes, net of refunds | $ | 15,578 | $ | 11,453 | |||||||
Non-cash operating activities: | |||||||||||
Operating lease right of use asset obtained in exchange for new lease liabilities | $ | 12,404 | $ | 9,121 | |||||||
Non-cash financing activities: | |||||||||||
Debt issued for service contract assets | $ | — | $ | 21 |
![]() | News Release May 11, 2021 Page 6 | ||||||||||
March 31, | December 31, | ||||||||||
2021 | 2020 | ||||||||||
(unaudited) | |||||||||||
Assets: | |||||||||||
Total current assets | $ | 477,840 | $ | 383,557 | |||||||
Property, plant and equipment, net | 1,437,905 | 1,238,726 | |||||||||
Other assets | 39,171 | 36,082 | |||||||||
Total assets | $ | 1,954,916 | $ | 1,658,365 | |||||||
Liabilities and members' equity: | |||||||||||
Total current portion of long term debt | $ | 562 | $ | 517 | |||||||
Total other current liabilities | 177,594 | 99,787 | |||||||||
Total long term debt | 8,702 | 8,705 | |||||||||
Total other long term liabilities | 8,722 | 3,758 | |||||||||
Total members' equity | 1,759,336 | 1,545,598 | |||||||||
Total liabilities and members' equity | $ | 1,954,916 | $ | 1,658,365 |
Three Months Ended | |||||||||||||||||
(unaudited) | $ Change | ||||||||||||||||
March 31, | March 31, | Favorable | |||||||||||||||
2021 | 2020 | (Unfavorable) | |||||||||||||||
Revenues: | |||||||||||||||||
Operating revenues | $ | 431,633 | $ | 358,615 | $ | 73,018 | |||||||||||
Expenses: | |||||||||||||||||
Total costs and expenses less depreciation, amortization and accretion expense | 215,234 | 151,347 | (63,887) | ||||||||||||||
Depreciation, amortization and accretion expense | 11,687 | 11,774 | 87 | ||||||||||||||
Total costs and expenses | 226,921 | 163,121 | (63,800) | ||||||||||||||
Operating income | 204,712 | 195,494 | 9,218 | ||||||||||||||
Other income | 58 | 461 | (403) | ||||||||||||||
Interest and debt expense, net | (320) | (315) | (5) | ||||||||||||||
Net income | $ | 204,450 | $ | 195,640 | $ | 8,810 |
![]() | News Release May 11, 2021 Page 7 | ||||||||||
Three Months Ended | ||||||||||||||
Adjusted EBITDA | April 3, | March 28, | ||||||||||||
(U.S. dollars in thousands) | 2021 | 2020 | ||||||||||||
Net income attributable to Darling | $ | 151,766 | $ | 85,510 | ||||||||||
Depreciation and amortization | 78,534 | 84,671 | ||||||||||||
Interest expense | 16,428 | 19,090 | ||||||||||||
Income tax expense | 28,708 | 18,300 | ||||||||||||
Restructuring and impairment charges | 778 | — | ||||||||||||
Foreign currency loss/(gain) | 410 | (1,664) | ||||||||||||
Other expense, net | 1,159 | 1,881 | ||||||||||||
Equity in net income of Diamond Green Diesel | (102,225) | (97,820) | ||||||||||||
Equity in net income of unconsolidated subsidiaries | (612) | (869) | ||||||||||||
Net income attributable to noncontrolling interests | 1,652 | 581 | ||||||||||||
Adjusted EBITDA (Non-GAAP) | $ | 176,598 | $ | 109,680 | ||||||||||
Foreign currency exchange impact | (8,050) | (1) | — | |||||||||||
Pro forma Adjusted EBITDA to Foreign Currency (Non-GAAP) | $ | 168,548 | $ | 109,680 | ||||||||||
DGD Joint Venture Adjusted EBITDA (Darling's share) | $ | 108,200 | $ | 103,634 | ||||||||||
Darling plus Darling's share of DGD Joint Venture Adjusted EBITDA | $ | 284,798 | $ | 213,314 | ||||||||||
(1) The average rate assumption used in the calculation was the actual fiscal average rate for the three months ended April 3, 2021 of €1.00:USD$1.20 and CAD$1.00:USD$0.79 as compared to the average rate for the three months ended March 28, 2020 of €1.00:USD$1.01 and CAD$1.00:USD $0.75, respectively. |
![]() | News Release May 11, 2021 Page 8 | ||||||||||
![]() | News Release May 11, 2021 Page 9 | ||||||||||
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