Investment in Unconsolidated Subsidiary

6 Months Ended

Jul. 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)	June 30, 2021		December 31, 2020
Assets:
Total current assets	$	464,631	$	383,557
Property, plant and equipment, net	1,727,979		1,238,726
Other assets	35,369		36,082
Total assets	$	2,227,979	$	1,658,365
Liabilities and members' equity:
Total current portion of long term debt	$	581	$	517
Total other current liabilities	205,484		99,787
Total long term debt	8,635		8,705
Total other long term liabilities	8,555		3,758
Total members' equity	2,004,724		1,545,598
Total liabilities and members' equity	$	2,227,979	$	1,658,365


	Three Months Ended				Six Months Ended
(in thousands)	June 30, 2021		June 30, 2020		June 30, 2021		June 30, 2020
Revenues:
Operating revenues	$	571,859	$	295,826	$	1,003,492	$	654,441
Expenses:
Total costs and expenses less depreciation, amortization and accretion expense	307,857		157,611		523,091		308,958
Depreciation, amortization and accretion expense	11,995		11,114		23,682		22,888
Total costs and expenses	319,852		168,725		546,773		331,846
Operating income	252,007		127,101		456,719		322,595
Other income	353		200		411		661
Interest and debt expense, net	(784)		(317)		(1,104)		(632)
Net income	$	251,576	$	126,984	$	456,026	$	322,624

As of July 3, 2021, under the equity method of accounting, the Company has an investment in the DGD Joint Venture of approximately $1,002.4 million on the consolidated balance sheet. The Company has recorded equity in net income from the DGD Joint Venture of approximately $125.8 million and $63.5 million for the three months ended July 3, 2021 and June 27, 2020, respectively. The Company has recorded equity in net income from the DGD Joint Venture of approximately $228.0 million and $161.3 million for the six months ended July 3, 2021 and June 27, 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 June 30, 2021 and June 30, 2020, the DGD Joint Venture recorded approximately $83.9 million and $72.2 million of blenders tax credits, respectively. For the six months ended June 30, 2021 and June 30, 2020, the DGD Joint Venture recorded approximately $162.9 million and $152.2 million of blenders tax credits, respectively. The blenders tax credits are recorded as a reduction of cost of sales by the DGD Joint Venture. In the three and six months ended July 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.