Investment in Unconsolidated Subsidiary

3 Months Ended

Apr. 03, 2021

Equity Method Investments and Joint Ventures [Abstract]

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 (“DGD” or 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 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. 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.

Selected financial information for the Company's DGD Joint Venture is as follows (in thousands):


(in thousands)	March 31, 2021		December 31, 2020
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
(in thousands)	March 31, 2021		March 31, 2020
Revenues:
Operating revenues	$	431,633	$	358,615
Expenses:
Total costs and expenses less depreciation, amortization and accretion expense	215,234		151,347
Depreciation, amortization and accretion expense	11,687		11,774
Total costs and expenses	226,921		163,121
Operating income	204,712		195,494
Other income	58		461
Interest and debt expense, net	(320)		(315)
Net income	$	204,450	$	195,640

As of April 3, 2021, under the equity method of accounting, the Company has an investment in the DGD Joint Venture of approximately $879.7 million on the consolidated balance sheet. The Company has recorded equity in net income from the DGD Joint Venture of approximately $102.2 million and $97.8 million for the three months ended April 3, 2021 and March 28, 2020, 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 months ended March 31, 2021 and March 31, 2020, the DGD Joint Venture recorded approximately $79.0 million and $80.0 million of blenders tax credits, respectively. In the three months ended April 3, 2021, the Company did not receive any dividend distributions 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.