Investment in Unconsolidated Subsidiary

3 Months Ended

Apr. 02, 2022

Equity Method Investments and Joint Ventures [Abstract]

Investment in Unconsolidated SubsidiariesOn 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 expansion of the existing facility.

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


(in thousands)	March 31, 2022		December 31, 2021
Assets:
Total current assets	$	950,802	$	686,294
Property, plant and equipment, net	2,934,686		2,710,747
Other assets	59,196		51,514
Total assets	$	3,944,684	$	3,448,555
Liabilities and members' equity:
Total current portion of long term debt	$	165,356	$	165,092
Total other current liabilities	367,478		295,860
Total long term debt	340,591		344,309
Total other long term liabilities	17,328		17,531
Total members' equity	3,053,931		2,625,763
Total liabilities and members' equity	$	3,944,684	$	3,448,555


	Three Months Ended
(in thousands)	March 31, 2022		March 31, 2021
Revenues:
Operating revenues	$	980,692	$	431,633
Expenses:
Total costs and expenses less depreciation, amortization and accretion expense	807,572		215,234
Depreciation, amortization and accretion expense	26,492		11,687
Total costs and expenses	834,064		226,921
Operating income	146,628		204,712
Other income (expense)	(11)		58
Interest and debt expense, net	(3,009)		(320)
Net income	$	143,608	$	204,450

As of April 2, 2022, under the equity method of accounting, the Company has an investment in the DGD Joint Venture of approximately $1,528.7 million on the consolidated balance sheet. The Company has recorded equity in net income from the DGD Joint Venture of approximately $71.8 million and $102.2 million for the three months ended April 2, 2022 and April 3, 2021, respectively. In December 2019, the blender tax credits were extended for calendar years 2020, 2021 and 2022. For the three months ended March 31, 2022 and March 31, 2021, the DGD Joint Venture recorded approximately $155.8 million and $79.0 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 months ended April 2, 2022 and April 3, 2021, respectively, the Company made $164.75 million and no capital contributions to the DGD Joint Venture. In the three months ended April 2, 2022 and 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.