Darling Ingredients Inc. Reports Fourth Quarter And Fiscal Year 2020 Financial Results

IRVING, Texas, March 2, 2021 /PRNewswire/ -- Darling Ingredients Inc. (NYSE: DAR, "Darling") --

Darling International Inc. (PRNewsfoto/Darling International Inc.)

Fourth Quarter 2020

  • Net income of $44.7 million, or $0.27 per GAAP diluted share
  • Adjusted net income of $75.3 million, or $0.45 per diluted share, excluding the $30.6 million after-tax restructuring and asset impairment charge related to the shutdown of the company's biodiesel plants in Montreal, Quebec and Butler, Kentucky
  • Net Sales of $1.0 billion
  • Combined adjusted EBITDA of $214.5 million
  • Global Ingredients business record Q4 EBITDA of $146.3 million

Fiscal Year 2020

  • Net income of $296.8 million, or $1.78 per GAAP diluted share
  • Adjusted net income of $327.4 million, or $1.96 per diluted share, excluding the $30.6 million after-tax restructuring and asset impairment charge related to the shutdown of the company's biodiesel plants in Montreal, Quebec and Butler, Kentucky
  • Net Sales of $3.6 billion
  • Combined adjusted EBITDA of $841.5 million
  • Global Ingredients business FY 2020 EBITDA of $504.2 million
  • Diamond Green Diesel sold a record 288 million gallons of renewable diesel at an average of $2.34 EBITDA per gallon

Darling reported net sales of $1.0 billion for the fourth quarter of 2020, as compared with net sales of $859.4 million for the same period a year ago.  Net income attributable to Darling for the three months ended January 2, 2021 was $44.7 million, or $0.27 per diluted share, compared to a net income of $242.6 million, or $1.44 per diluted share, for the fourth quarter of 2019. Excluding the restructuring and asset impairment charge related to the shutdown of the company's 2 biodiesel locations, adjusted net income for the three months ended January 2, 2021 was $75.3 million, or $0.45 per diluted share. The results for the three months ending December 28, 2019 included retroactive blenders tax credit (BTC) for 2018 and all of 2019. Adjusted net income for the fourth quarter 2019, excluding the retroactive BTC of 2018 and the first three quarters of 2019, was $50.1 million, or $0.30 per diluted share.

"Our global ingredients business performed well in the fourth quarter of 2020 generating $146.3 million of EBITDA," said Randall C. Stuewe, Chairman and Chief Executive Officer of Darling Ingredients Inc. "We made the decision to shutdown operations of our two biodiesel plants due to unfavorable biodiesel industry economics and there are no current plans to resume biodiesel production at these facilities in the future. The closure of the facilities will create additional feedstock for growth of renewable diesel in our DGD Joint Venture."

"DGD met our expectation for 2020 selling 288 million gallons of renewable diesel at an average of $2.34 EBITDA per gallon," Stuewe added. The earnings of DGD have been consistent and steady over the last three years and based on the current environment, we believe that DGD should generate around $2.25 EBITDA per gallon for 2021. Also, we anticipate the startup of the 400 million gallon expansion in Norco, LA to commission in the fourth quarter, potentially adding some capacity to finish out the year," Stuewe added.

The leverage ratio as measured by the company's bank covenant was 1.90x at the end of the year. The company reduced its Term Loan B outstanding balance by  $195 million during 2020. Capital expenditures totaled approximately $280 million for all of 2020, down $79 million from 2019, which was due to the company initiating a temporary reduction in non-essential capital expenditures in 2020.

For the 2020 fiscal year, Darling reported net sales of $3.6 billion, as compared with net sales of $3.4 billion for 2019. Net Income attributable to Darling for 2020 was $296.8 million, or $1.78 per diluted share, as compared to net income of $312.6 million, or $1.86 per diluted share, for 2019. Excluding the restructuring and asset impairment charge related to the shutdown of the company's two biodiesel locations, adjusted net income for 2020 was $327.4 million, or $1.96 per diluted share. Excluding the retroactive BTC related to 2018, adjusted net income for fiscal 2019 was $226.0 million, or $1.34 per diluted share.

As of January 2, 2021, Darling had $81.7 million in cash and cash equivalents, and $893.9 million available under its committed revolving credit agreement. Total debt outstanding at the end of the fiscal year was $1.5 billion.

Combined adjusted EBITDA was $214.5 million for the fourth quarter of 2020, compared to $193.3 million for the same period in 2019, excluding retroactive BTCs recorded in the 2019 fourth quarter. For the 2020 fiscal year, combined adjusted EBITDA totaled $841.5 million, compared to $739.7 million for fiscal year 2019, excluding the 2018 retroactive BTC.

Segment Financial Tables (in thousands)

Three Months Ended January 2, 2021

Feed
Ingredients

Food
Ingredients

Fuel
Ingredients

Corporate

Total







Net Sales

$    572,764

$    344,631

$  102,444

$            -

$ 1,019,839

Cost of sales and operating expenses

426,593

268,348

76,251

-

771,192

Gross Margin

$    146,171

$      76,283

$    26,193

$            -

$    248,647







Loss/(gain) on sale of assets

(274)

512

(22)

-

216

Selling, general and administrative expenses

56,289

26,000

5,369

14,459

102,117

Restructuring and asset impairment charges

-

-

38,167

-

38,167

Depreciation and amortization

61,219

22,827

9,513

2,908

96,467

Equity in net income of Diamond Green Diesel

-

-

62,684

-

62,684

Segment operating income/(loss)

$      28,937

$      26,944

$    35,850

$ (17,367)

$      74,364

Equity in net income of unconsolidated subsidiaries

$           726

$                -

$              -

$            -

$           726

Segment Income/(loss)

$      29,663

$      26,944

$    35,850

$ (17,367)

$      75,090







Segment EBITDA

$      90,156

$      49,771

$    20,846

$ (14,459)

$    146,314

DGD adjusted EBITDA (Darling's Share)

$                -

$                -

$    68,171

$            -

$      68,171

Combined adjusted EBITDA

$      90,156

$      49,771

$    89,017

$ (14,459)

$    214,485







Three Months Ended December 28, 2019

Feed
Ingredients

Food
Ingredients

Fuel
Ingredients

Corporate

Total







Net Sales

$    490,317

$    288,619

$    80,492

$            -

$    859,428

Cost of sales and operating expenses

375,990

221,527

43,016

-

640,533

Gross Margin

$    114,327

$      67,092

$    37,476

$            -

$    218,895







Loss/(gain) on sale of assets

(377)

343

297

-

263

Selling, general and administrative expenses

57,872

29,234

2,179

19,669

108,954

Depreciation and amortization

55,185

20,556

7,891

2,821

86,453

Equity in net income of Diamond Green Diesel

-

-

270,062

-

270,062

Segment operating income/(loss)

$        1,647

$      16,959

$  297,171

$ (22,490)

$    293,287

Equity in net income of unconsolidated subsidiaries

$        1,515

$                -

$              -

$            -

$        1,515

Segment income/(loss)

$        3,162

$      16,959

$  297,171

$ (22,490)

$    294,802







Segment EBITDA

$      56,832

$      37,515

$    35,000

$ (19,669)

$    109,678

DGD adjusted EBITDA (Darling's Share)

$                -

$                -

$  276,146

$            -

$    276,146

Combined adjusted EBITDA

$      56,832

$      37,515

$  311,146

$ (19,669)

$    385,824













Twelve Months Ended January 2, 2021

Feed
Ingredients

Food
Ingredients

Fuel
Ingredients

Corporate

Total







Net Sales

$ 2,072,104

$ 1,185,701

$  314,118

$            -

$ 3,571,923

Cost of sales and operating expenses

1,544,524

920,682

223,609

-

2,688,815

Gross Margin

$    527,580

$    265,019

$    90,509

$            -

$    883,108







Loss/(gain) on sale of assets

19

482

(75)

-

426

Selling, general and administrative expenses

209,748

97,406

16,014

55,328

378,496

Restructuring and asset impairment charges

-

-

38,167

-

38,167

Depreciation and amortization

221,187

83,752

34,218

11,021

350,178

Equity in net income of Diamond Green Diesel

-

-

315,095

-

315,095

Segment operating income/(loss)

$      96,626

$      83,379

$  317,280

$ (66,349)

$    430,936

Equity in net income of unconsolidated subsidiaries

$        3,193

$                -

$              -

$            -

$        3,193

Segment income/(loss)

$      99,819

$      83,379

$  317,280

$ (66,349)

$    434,129







Segment EBITDA

$    317,813

$    167,131

$    74,570

$ (55,328)

$    504,186

DGD adjusted EBITDA (Darling's Share)

$                -

$                -

$  337,348

$            -

$    337,348

Combined adjusted EBITDA

$    317,813

$    167,131

$  411,918

$ (55,328)

$    841,534







Twelve Months Ended December 28, 2019

Feed
Ingredients

Food
Ingredients

Fuel
Ingredients

Corporate

Total







Net Sales

$ 1,970,561

$ 1,119,085

$  274,259

$            -

$ 3,363,905

Cost of sales and operating expenses

1,519,596

864,618

204,871

-

2,589,085

Gross Margin

$    450,965

$    254,467

$    69,388

$            -

$    774,820







Loss/(gain) on sale of assets

(7,720)

(13,175)

313

-

(20,582)

Selling, general and administrative expenses

200,487

97,363

2,762

57,911

358,523

Depreciation and amortization

203,456

79,671

31,946

10,437

325,510

Equity in net income of Diamond Green Diesel

-

-

364,452

-

364,452

Segment operating income/(loss)

$      54,742

$      90,608

$  398,819

$ (68,348)

$    475,821

Equity in net income of unconsolidated subsidiaries

$           428

$                -

$              -

$            -

$           428

Segment income/(loss)

$      55,170

$      90,608

$  398,819

$ (68,348)

$    476,249







Segment EBITDA

$    258,198

$    170,279

$    66,313

$ (57,911)

$    436,879

DGD adjusted EBITDA (Darling's Share)

$                -

$                -

$  389,416

$            -

389,416

Combined adjusted EBITDA

$    258,198

$    170,279

$  455,729

$ (57,911)

$    826,295

 

Darling Ingredients Inc. and Subsidiaries

Consolidated Balance Sheets

January 2, 2021 and December 28, 2019

(in thousands)








January 2,


December 28,



2021


2019

ASSETS




Current assets:





Cash and cash equivalents

$      81,617


$          72,935


Restricted cash

103


110


Accounts receivable, net

405,387


406,338


Inventories

405,922


362,957


Prepaid expenses

47,793


46,599


Income taxes refundable

3,883


3,317


Other current assets

42,289


25,032


              Total current assets

986,994


917,288

Property, plant and equipment, net

1,863,814


1,802,411

Intangible assets, net

473,680


526,394

Goodwill

1,260,240


1,223,291

Investment in unconsolidated subsidiaries

804,682


689,354

Operating lease right-of-use assets

146,563


124,726

Other assets

60,682


47,400

Deferred income taxes

16,676


14,394


$ 5,613,331


$     5,345,258

LIABILITIES AND STOCKHOLDERS' EQUITY




Current liabilities:





Current portion of long-term debt

$      27,538


$          90,996


Accounts payable, principally trade

255,340


239,252


Income taxes payable

17,497


8,895


Current operating lease liabilities

39,459


37,805


Accrued expenses

335,471


311,391


              Total current liabilities

675,305


688,339

Long-term debt, net of current portion

1,480,531


1,558,429

Long-term operating lease liabilities

109,707


91,424

Other noncurrent liabilities

117,371


115,785

Deferred income taxes

276,208


247,931


              Total liabilities

2,659,122


2,701,908

Commitments and contingencies




Total Darling's stockholders' equity

2,891,909


2,565,819

Noncontrolling interests

62,300


77,531


              Total stockholders' equity

$ 2,954,209


$     2,643,350



$ 5,613,331


$     5,345,258

 

Darling Ingredients Inc. and Subsidiaries

Consolidated Operating Results

For the Three-Month and Twelve-Month Periods Ended January 2, 2021 and December 28, 2019

(in thousands, except per share data)















Three Months Ended




Twelve Months Ended



(unaudited)


$ Change








$ Change



January 2,


December 28,


Favorable




January 2,


December 28,


Favorable



2021


2019


(Unfavorable)




2021


2019


(Unfavorable)

Net sales

$ 1,019,839


$        859,428


$        160,411




$ 3,571,923


$     3,363,905


$        208,018

Costs and expenses:















Cost of sales and operating expenses

771,192


640,533


(130,659)




2,688,815


2,589,085


(99,730)


Loss (gain) on sale of assets

216


263


47




426


(20,582)


(21,008)


Selling, general and administrative expenses

102,117


108,954


6,837




378,496


358,523


(19,973)


Restructuring and asset impairment charges

38,167


-


(38,167)




38,167


-


(38,167)


Depreciation and amortization

96,467


86,453


(10,014)




350,178


325,510


(24,668)

Total costs and expenses

1,008,159


836,203


(171,956)




3,456,082


3,252,536


(203,546)


Equity in net income of Diamond Green Diesel

62,684


270,062


(207,378)




315,095


364,452


(49,357)

Operating income

74,364


293,287


(218,923)




430,936


475,821


(44,885)

Other expense:















Interest expense

(16,883)


(18,586)


1,703




(72,686)


(78,674)


5,988


Debt extinguishment costs

-


-


-




-


(12,126)


12,126


Foreign currency loss

(1,581)


(657)


(924)




(2,290)


(1,311)


(979)


Gain on disposal of subsidiaries

-


2,967


(2,967)






2,967


(2,967)


Other income (expense), net

(256)


487


(743)




(5,534)


(6,671)


1,137

Total other expense

(18,720)


(15,789)


(2,931)




(80,510)


(95,815)


15,305

Equity in net income of unconsolidated subsidiaries

726


1,515


(789)




3,193


428


2,765

Income from operations before income taxes

56,370


279,013


(222,643)




353,619


380,434


(26,815)

Income tax expense

10,231


35,567


25,336




53,289


59,467


6,178

Net income

46,139


243,446


(197,307)




300,330


320,967


(20,637)

Net income attributable to noncontrolling interests

(1,394)


(837)


(557)




(3,511)


(8,367)


4,856

Net income attributable to Darling

$      44,745


$        242,609


$       (197,864)




$    296,819


$        312,600


$         (15,781)
















Basic income per share:

$          0.28


$              1.48


$             (1.20)




$          1.83


$              1.90


$             (0.07)

Diluted income per share:

$          0.27


$              1.44


$             (1.17)




$          1.78


$              1.86


$             (0.08)
















Number of diluted common shares:

167,920


168,152






167,208


168,378



 

Darling Ingredients Inc. and Subsidiaries

Consolidated Statement of Cash Flows

Periods Ended January 2, 2021 and December 28, 2019

(in thousands)






Twelve Months Ended





Jan 2,


Dec 28,

Cash flows from operating activities:

2021


2019


Net income

$  300,330


$  320,967


Adjustments to reconcile net income to net cash provided by operating activities:






Depreciation and amortization

350,178


325,510



Deferred income taxes

15,814


20,530



Loss/(gain) on sale of assets

426


(20,582)



Gain on disposal of subsidiaries

-


(2,967)



Asset impairment

37,802





Gain on insurance proceeds from insurance settlement

(293)


(6,600)



Increase (decrease) in long-term pension liability

(6,555)


1,831



Stock-based compensation expense

23,222


21,007



Debt extinguishment costs

-


12,126



Write-off deferred loan costs

3,052


270



Deferred loan cost amortization

5,357


5,846



Equity in net income of Diamond Green Diesel and other unconsolidated subsidiaries

(318,288)


(364,880)



Distributions of earnings from Diamond Green Diesel and other unconsolidated subsidiaries

207,328


69,213



Changes in operating assets and liabilities, net of effects from acquisitions:






     Accounts receivable

22,362


(26,086)



     Income taxes refundable/payable

4,200


9,542



     Inventories and prepaid expenses

(18,666)


(39,111)



     Accounts payable and accrued expenses

11,200


32,436



     Other

(12,818)


3,569




Net cash provided by operating activities

624,651


362,621

Cash flows from investing activities:





Capital expenditures

(280,115)


(359,498)


Acquisitions, net of cash acquired

(29,793)


(1,431)


Investment in unconsolidated subsidiaries

-


(2,000)


Proceeds from sale of investment in subsidiaries

-


3,671


Gross proceeds from disposal of property, plant and equipment and other assets

2,797


18,235


Proceeds from insurance settlement

293


6,600


Payments related to routes and other intangibles

(3,810)


(3,651)




Net cash used in investing activities

(310,628)


(338,074)

Cash flows from financing activities:





Proceeds from long-term debt

34,569


517,606


Payments on long-term debt

(232,726)


(581,163)


Borrowings from revolving credit facility

495,691


469,227


Payments on revolving credit facility

(480,604)


(461,669)


Net cash overdraft financing

(37,692)


38,367


Deferred loan costs

(4,292)


(7,027)


Issuance of common stock

67


39


Repurchase of common stock

(55,044)


(19,260)


Minimum withholding taxes paid on stock awards

(11,918)


(4,472)


Acquisition of noncontrolling interest

(8,784)


-


Distributions to noncontrolling interests

(6,253)


(6,533)




Net cash used in financing activities

(306,986)


(54,885)

Effect of exchange rate changes on cash flows

1,638


(3,986)

Net increase / (decrease) in cash, cash equivalents and restricted cash

8,675


(34,324)

Cash, cash equivalents and restricted cash at beginning of year

73,045


107,369

Cash, cash equivalents and restricted cash at end of period

$     81,720


$     73,045

Supplemental disclosure of cash flow information:





Accrued capital expenditures

$      (4,967)


$        6,714


Cash paid during the period for:






Interest, net of capitalized interest

$     66,216


$     79,132



Income taxes, net of refunds

$     36,779


$     29,778


Non-cash operating activities:






Operating lease right of use obtained in exchange for new lease liabilities

$     58,052


$     40,596


Non-cash financing activities:






Debt issued for service contract assets

$        8,123


$               25

 

Diamond Green Diesel Joint Venture

Condensed Consolidated Balance Sheets

December 31, 2020 and December 31, 2019

(in thousands)










December 31,


December  31,




2020


2019

Assets:






Total current assets

$        383,557


$         668,026


Property, plant and equipment, net

1,238,726


713,489


Other assets

36,082


30,710



Total assets

$     1,658,365


$      1,412,225







Liabilities and members' equity:





Total current portion of long term debt

$               517


$                341


Total other current liabilities

99,787


75,802


Total long term debt

8,705


8,742


Total other long term liabilities

3,758


4,422


Total members' equity

1,545,598


1,322,918



Total liabilities and members' equity

$     1,658,365


$      1,412,225

 

Diamond Green Diesel Joint Venture

Operating Financial Results

For the Three-Month and Twelve-Month Periods Ended December 31, 2020 and December 31, 2019

(in thousands)
















Three Months Ended



Twelve Months Ended




(unaudited)


$ Change







$ Change




December 31,


December 31,


Favorable



December 31,


December 31,


Favorable

Revenues:

2020


2019


(Unfavorable)



2020


2019


(Unfavorable)


Operating revenues

$        266,760


$        357,857


$         (91,097)



$     1,267,477


$     1,217,504


$          49,973

Expenses:














Total costs and expenses less depreciation, amortization and accretion expense

130,417


(194,437)


(324,854)



592,781


438,672


(154,109)


Depreciation, amortization and accretion expense

11,222


12,193


971



44,882


50,767


5,885

Total costs and expenses

141,639


(182,244)


(323,883)



637,663


489,439


(148,224)


Operating income 

125,121


540,101


(414,980)



629,814


728,065


(98,251)

Other income

560


340


220



1,636


2,121


(485)



Interest and debt expense, net

(313)


(317)


4



(1,260)


(1,282)


22



Net income 

$        125,368


$        540,124


$       (414,756)



$        630,190


$        728,904


$         (98,714)

Darling Ingredients Inc. reports Adjusted EBITDA results, which is a Non-GAAP financial measure, as a complement to results provided in accordance with generally accepted accounting principles (GAAP) (for additional information, see "Use of Non-GAAP Financial Measures" included later in this media release). The Company believes that Adjusted EBITDA provides additional useful information to investors. Adjusted EBITDA, as the Company uses the term, is calculated below:

Reconciliation of Net Income to (Non-GAAP) Adjusted EBITDA and (Non-GAAP) Pro forma Adjusted EBITDA

For the Three-Month and Twelve-Month Periods Ended January 2, 2021 and December 28, 2019




Three Months Ended



Twelve Months Ended 

Adjusted EBITDA 

January 2,


December 28,



January 2,


December 28,

(U.S. dollars in thousands)

2021


2019



2021


2019











Net income attributable to Darling

$   44,745


$        242,609



$ 296,819


$        312,600

Depreciation and amortization

96,467


86,453



350,178


325,510

Interest expense

16,883


18,586



72,686


78,674

Income tax expense

10,231


35,567



53,289


59,467

Restructuring and asset impairment charges

38,167


-



38,167


-

Foreign currency loss

1,581


657



2,290


1,311

Other (income) expense, net

256


(487)



5,534


6,671

Debt extinguishment costs

-


-



-


12,126

Gain on disposal of subsidiaries

-


(2,967)



-


(2,967)

Equity in net income of Diamond Green Diesel

(62,684)


(270,062)



(315,095)


(364,452)

Equity in net income of unconsolidated subsidiaries

(726)


(1,515)



(3,193)


(428)

Net income attributable to noncontrolling interests

1,394


837



3,511


8,367


Adjusted EBITDA (Non-GAAP)

$ 146,314


$      109,678



$ 504,186


$      436,879

Foreign currency exchange impact 

(6,826)

(1)

-



(6,419)

(2)

-


 Pro forma Adjusted EBITDA to Foreign Currency (Non-GAAP)

$ 139,488


$      109,678



$ 497,767


$      436,879

DGD Joint Venture Adjusted EBITDA (Darling's Share)

$   68,171


$      276,146



$ 337,348


$      389,416











Darling plus Darling's share of DGD Joint Venture Adjusted EBITDA 

$ 214,485


$      385,824



$ 841,534


$      826,295


(1) The average rate assumption used in this calculation was the actual fiscal average rate for the three months ended January 2, 2021 of €1.00:USD$1.19 and CAD$1.00:USD$0.77, as compared to the average rate for the three months ended December 28, 2019 of  €1.00:USD$1.11 and CAD$1.00:USD$0.75, respectively.

(2) The average rate assumption used in this calculation was the actual fiscal average rate for the twelve months ended January 2, 2021 of €1.00:USD$1.14 and CAD$1.00:USD$0.75, as compared to the average rate for the twelve months ended December 28, 2019 of  €1.00:USD$1.12 and CAD$1.00:USD$0.75, respectively.

About Darling

Darling Ingredients Inc. (NYSE: DAR) is one of the world's leading producers of organic ingredients, producing a wide array of sustainable protein and fat products while being one of the largest producers of renewable clean energy. With operations on five continents, Darling collects waste streams from the agri-food industry, repurposing into specialty ingredients, such as hydrolyzed collagen, edible and feed-grade fats, animal proteins and meals, plasma, pet food ingredients, fuel feedstocks, and green bioenergy. The Company sells its products around the globe and works to strengthen our promise for a better tomorrow, creating product applications for health, nutrients and bioenergy while optimizing our services to the food chain. Darling is a 50% joint partner in Diamond Green Diesel (DGD), North America's largest renewable diesel manufacturer, currently producing approximately 290 million gallons of renewable diesel annually which products reduce Green House Gas (GHG) emissions by up to 85% compared to fossil fuels. For additional information, visit the Company's website at http://www.darlingii.com. For more information on Darling's ESG efforts, visit  http://www.darlingii.com/csr.

Darling Ingredients Inc. will host a conference call to discuss the Company's fourth quarter and fiscal year 2020 financial results at 9:00 am Eastern Time (8:00 am Central Time) on Wednesday, March 3, 2021.  To listen to the conference call, participants calling from within North America should dial 1-844-868-8847; international participants should dial 1-412-317-6593.  Please refer to access code 10151509. Please call approximately ten minutes before the start of the call to ensure that you are connected.

The call will also be available as a live audio webcast that can be accessed on the Company website at http://ir.darlingii.com. Beginning one hour after its completion, a replay of the call can be accessed through March 10, 2021, by dialing 1-877-344-7529 (U.S. callers), 1-855-669-9658 (Canada) and 1-412-317-0088 (international callers).  The access code for the replay is 10151509.  The conference call will also be archived on the Company's website.

Use of Non-GAAP Financial Measures:

Adjusted EBITDA is not a recognized accounting measurement under GAAP; it should not be considered as an alternative to net income, as a measure of operating results, or as an alternative to cash flow as a measure of liquidity and is not intended to be a presentation in accordance with GAAP.  Adjusted EBITDA is presented here not as an alternative to net income, but rather as a measure of the Company's operating performance. Since EBITDA (generally, net income plus interest expense, taxes, depreciation and amortization) is not calculated identically by all companies, this presentation may not be comparable to EBITDA or Adjusted EBITDA presentations disclosed by other companies. Adjusted EBITDA is calculated in this presentation and represents, for any relevant period, net income/(loss) plus depreciation and amortization, goodwill and long-lived asset impairment, interest expense, (income)/loss from discontinued operations, net of tax, income tax provision, other income/(expense) and equity in net loss of unconsolidated subsidiary. Management believes that Adjusted EBITDA is useful in evaluating the Company's operating performance compared to that of other companies in its industry because the calculation of Adjusted EBITDA generally eliminates the effects of financing, income taxes and certain non-cash and other items that may vary for different companies for reasons unrelated to overall operating performance.

As a result, the Company's management uses Adjusted EBITDA as a measure to evaluate performance and for other discretionary purposes. In addition to the foregoing, management also uses or will use Adjusted EBITDA to measure compliance with certain financial covenants under the Company's Senior Secured Credit Facilities, 5.25% Notes and 3.625% Notes that were outstanding at January 2, 2021. However, the amounts shown in this presentation for Adjusted EBITDA differ from the amounts calculated under similarly titled definitions in the Company's Senior Secured Credit Facilities, 5.25% Notes and 3.625% Notes, as those definitions permit further adjustments to reflect certain other non-recurring costs, non-cash charges and cash dividends from the DGD Joint Venture. Additionally, the Company evaluates the impact of foreign exchange impact on operating cash flow, which is defined as segment operating income (loss) plus depreciation and amortization.

Cautionary Statements Regarding Forward-Looking Information:

{This media release contains "forward-looking" statements regarding the business operations and prospects of Darling Ingredients Inc. and industry factors affecting it. These statements are identified by words such as "believe," "anticipate," "expect," "estimate," "intend," "could," "may," "will," "should," "planned," "potential," "continue," "momentum," and other words referring to events that may occur in the future.  These statements reflect Darling Ingredient's current view of future events and are based on its assessment of, and are subject to, a variety of risks and uncertainties beyond its control, each of which could cause actual results to differ materially from those indicated in the forward-looking statements.  These factors include, among others, existing and unknown future limitations on the ability of the Company's direct and indirect subsidiaries to make their cash flow available to the Company for payments on the Company's indebtedness or other purposes; global demands for bio-fuels and grain and oilseed commodities, which have exhibited volatility, and can impact the cost of feed for cattle, hogs and poultry, thus affecting available rendering feedstock and selling prices for the Company's products; reductions in raw material volumes available to the Company due to weak margins in the meat production industry as a result of higher feed costs, reduced consumer demand or other factors, reduced volume from food service establishments, or otherwise; reduced demand for animal feed; reduced finished product prices, including a decline in fat and used cooking oil finished product prices; changes to worldwide government policies relating to renewable fuels and greenhouse gas("GHG") emissions that adversely affect programs like the U.S. government's renewable fuel standard, low carbon fuel standards ("LCFS") and tax credits for biofuels both in the United States and abroad; possible product recall resulting from developments relating to the discovery of unauthorized adulterations to food or food additives; the occurrence of 2009 H1N1 flu (initially known as "Swine Flu"), Highly pathogenic strains of avian influenza (collectively known as "Bird Flu"), severe acute respiratory syndrome ("SARS"), bovine spongiform encephalopathy (or "BSE"), porcine epidemic diarrhea ("PED") or other diseases associated with animal origin in the United States or elsewhere, such as the outbreak of African Swine Fever ("ASF") in China and elsewhere; the occurrence of pandemics, epidemics or disease outbreaks, such as the current COVID-19 outbreak; unanticipated costs and/or reductions in raw material volumes related to the Company's compliance with the existing or unforeseen new U.S. or foreign (including, without limitation, China) regulations (including new or modified animal feed, Bird Flu, SARS, PED, BSE, ASF or similar or unanticipated regulations) affecting the industries in which the Company operates or its value added products; risks associated with the DGD Joint Venture, including possible unanticipated operating disruptions and issues relating to the announced expansion project; risks and uncertainties relating to international sales and operations, including imposition of tariffs, quotas, trade barriers and other trade protections imposed by foreign countries; difficulties or a significant disruption in our information systems or failure to implement new systems and software successfully,  risks relating to possible third party claims of intellectual property infringement; increased contributions to the Company's pension and benefit plans, including multiemployer and employer-sponsored defined benefit pension plans as required by legislation, regulation or other applicable U.S. or foreign law or resulting from a U.S. mass withdrawal event; bad debt write-offs; loss of or failure to obtain necessary permits and registrations; continued or escalated conflict in the Middle East, North Korea, Ukraine or elsewhere; uncertainty regarding the exit of the U.K. from the European Union; and/or unfavorable export or import markets. These factors, coupled with volatile prices for natural gas and diesel fuel, climate conditions, currency exchange fluctuations, general performance of the U.S. and global economies, disturbances in world financial, credit, commodities and stock markets, and any decline in consumer confidence and discretionary spending, including the inability of consumers and companies to obtain credit due to lack of liquidity in the financial markets, among others, could cause actual results to vary materially from the forward looking statements included in this release or negatively impact the Company's results of operations. Among other things, future profitability may be affected by the Company's ability to grow its business, which faces competition from companies that may have substantially greater resources than the Company. The Company's announced share repurchase program may be suspended or discontinued at any time and purchases of shares under the program are subject to market conditions and other factors, which are likely to change from time to time. Other risks and uncertainties regarding Darling Ingredients Inc., its business and the industries in which it operates are referenced from time to time in the Company's filings with the Securities and Exchange Commission.  Darling Ingredients Inc. is under no obligation to (and expressly disclaims any such obligation to) update or alter its forward-looking statements whether as a result of new information, future events or otherwise.}

For More Information, contact:


Jim Stark, Vice President, Investor Relations

Email : james.stark@darlingii.com

5601 MacArthur Blvd., Irving, Texas 75038

Phone : 972-281-4823

 

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SOURCE Darling Ingredients Inc.

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