Investment in Unconsolidated Subsidiary

6 Months Ended

Jul. 02, 2022

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 expansion of the existing facility.

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


(in thousands)	June 30, 2022		December 31, 2021
Assets:
Total current assets	$	1,065,686	$	686,294
Property, plant and equipment, net	3,131,430		2,710,747
Other assets	52,324		51,514
Total assets	$	4,249,440	$	3,448,555
Liabilities and members' equity:
Total current portion of long term debt	$	165,439	$	165,092
Total other current liabilities	333,651		295,860
Total long term debt	336,743		344,309
Total other long term liabilities	17,148		17,531
Total members' equity	3,396,459		2,625,763
Total liabilities and members' equity	$	4,249,440	$	3,448,555


	Three Months Ended				Six Months Ended
(in thousands)	June 30, 2022		June 30, 2021		June 30, 2022		June 30, 2021
Revenues:
Operating revenues	$	1,455,886	$	571,859	$	2,436,578	$	1,003,492
Expenses:
Total costs and expenses less depreciation, amortization and accretion expense	1,274,665		307,857		2,082,237		523,091
Depreciation, amortization and accretion expense	31,317		11,995		57,809		23,682
Total costs and expenses	1,305,982		319,852		2,140,046		546,773
Operating income	149,904		252,007		296,532		456,719
Other income	722		353		711		411
Interest and debt expense, net	(3,266)		(784)		(6,275)		(1,104)
Net income	$	147,360	$	251,576	$	290,968	$	456,026

As of July 2, 2022, under the equity method of accounting, the Company has an investment in the DGD Joint Venture of approximately $1,702.2 million on the consolidated balance sheet. The Company has recorded equity in net income from the DGD Joint Venture of approximately $73.7 million and $125.8 million for the three months ended July 2, 2022 and July 3, 2021, respectively. The Company has recorded equity in net income from the DGD Joint Venture of approximately $145.5 million and $228.0 million for the six months ended July 2, 2022 and July 3, 2021, respectively. In December 2019, the blender tax credits were extended for calendar years 2020, 2021 and 2022. For the three months ended June 30, 2022 and June 30, 2021, the DGD Joint Venture recorded approximately $198.4 million and $83.9 million of blenders tax credits, respectively. For the six months ended June 30, 2022 and June 30, 2021, the DGD Joint Venture recorded approximately $354.2 million and $162.9 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 six months ended July 2, 2022 and July 3, 2021, respectively, the Company made $239.75 million and no capital contributions to the DGD Joint Venture. In the six months ended July 2, 2022 and 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.