Investment in Unconsolidated Subsidiary

12 Months Ended

Jan. 01, 2022

INVESTMENT IN UNCONSOLIDATED SUBSIDIARIES

On January 21, 2011 a wholly-owned subsidiary of Darling entered into a limited liability company agreement with Valero to form 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 expansion of the existing facility.

Selected financial information for the Company's DGD Joint Venture is as follows:


(in thousands)	December 31, 2021		December 31, 2020
Assets:
Total current assets	$	686,294	$	383,557
Property, plant and equipment, net	2,710,747		1,238,726
Other assets	51,514		36,082
Total assets	$	3,448,555	$	1,658,365
Liabilities and members' equity:
Total current portion of long term debt	$	165,092	$	517
Total other current liabilities	295,860		99,787
Total long term debt	344,309		8,705
Total other long term liabilities	17,531		3,758
Total members' equity	2,625,763		1,545,598
Total liabilities and member's equity	$	3,448,555	$	1,658,365


	Year Ended December 31,
(in thousands)	2021		2020		2019
Revenues:
Operating revenues	$	2,342,332	$	1,267,477	$	1,217,504
Expenses:
Total costs and expenses less depreciation, amortization and accretion expense	1,575,494		592,781		438,672
Depreciation, amortization and accretion expense	58,326		44,882		50,767
Operating income	708,512		629,814		728,065
Other income	678		1,636		2,121
Interest and debt expense, net	(5,936)		(1,260)		(1,282)
Net income	$	703,254	$	630,190	$	728,904

As of January 1, 2022, under the equity method of accounting, the Company has an investment in the DGD Joint Venture of approximately $1.3 billion on the consolidated balance sheet. The Company has recorded approximately $351.6 million, $315.1 million and $364.5 million in equity in net income of Diamond Green Diesel for the years ended January 1, 2022, January 2, 2021 and December 28, 2019, respectively. Biodiesel blenders registered with the Internal Revenue Service are currently eligible for a tax incentive in the amount of $1.00 per gallon of renewable diesel blended with petroleum diesel to produce a mixture containing at least 0.1% diesel fuel. In fiscal 2021 and fiscal 2020, the DGD Joint Venture recorded approximately $371.2 million and $287.9 million, respectively in blenders tax credits. In December 2019, the blenders tax credit was reinstated by the U.S. Congress retroactively for calendar year 2018 and 2019 and extended through calendar year 2022. In fiscal 2019, the DGD Joint Venture recorded approximately $274.7 million for 2019 blenders tax credits and approximately $155.9 million for 2018 blenders tax credits. The Company received $205.2 million and $67.5 million for each of the years ended January 2, 2021 and December 28, 2019, in dividend distributions from the DGD Joint Venture. In fiscal year 2021, the Company did not receive any dividend distributions from the DGD Joint Venture. In addition, during fiscal year 2021, the Company made capital contributions to the DGD Joint Venture of approximately $189.0 million. Subsequent to January 1, 2022, each joint venture partner made a capital contribution of approximately $24.75 million.

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