Darling Ingredients Inc. · NYSE:DAR
Darling Ingredients — Q4 2017 Earnings Presentation
19 slides from Darling Ingredients's earnings presentation, Feb 27, 2018
Slide 1: Randall C. Stuewe, Chairman and CEO; Brad Phillips, CFO
Randall C. Stuewe, Chairman and CEO Brad Phillips, EVP Chief Financial Officer Melissa A. Gaither, VP IR and Global Communications Exhibit 99.2
Slide 2: Forward-looking statements
This presentation contains “forward-looking” statements regarding the business operations and prospects of Darling Ingredients Inc., including its Diamond Green Diesel joint venture, and industry factors affecting it. These statements are identified by words such as “believe,” “anticipate,” “expect,
Slide 3: Financial highlights and World of Growth strategy
3 Financial: • U.S. Tax Cuts and Jobs Act plus European tax reform adds $88.9 mm, or $0.53 to EPS • Blenders Tax Credit passed retroactive in February 2018 for 2017 will add $0.56 per share in 1Q 2018 • Total Debt reduction of $112.5 mm in Fiscal 2017 • Refinanced Term Loan B – lowered borrowing cos
Slide 4: 2017 Overview Consolidated Earnings
4 2017 Overview Consolidated Earnings • Global volumes up 3.1% over 2016 • Tax Reform in both the U.S. and Europe benefit of $88.9 mm, or $0.53 per share • Gross margin of $786.4 up 4.0% with lower protein pricing in the Feed Segment off-set by higher fat pricing and increased sales volumes • Absenc
Slide 5: 4Q 2017 Overview
5 $50 $70 $90 $110 $130 Quarterly Adjusted EBITDA 4Q16 1Q17 2Q17 3Q17 4Q17 Gross Profit and Margin $ 1 9 2 .8 $ 1 9 0 .4 $ 1 9 5 .6 $ 1 9 3 .7 $ 2 0 6 .7 $140 $150 $160 $170 $180 $190 $200 $210 $220 4Q16 1Q17 2Q17 3Q17 4Q17 Gross Profit % Gross Margin 4Q 2017 Overview $ in millions $ in millions $ i
Slide 6: Feed Segment EBITDA Bridge Q4-2016 to Q4-2017
6 Note: Cost of Sales includes raw material costs, collection costs and factory costs. EBITDA Bridge Q4-2016 to Q4-2017 (millions) Feed Segment Year over Year Overview • Global volumes up year over year ~3.4% with strong slaughter volumes • Improved performance by our specialty businesses. (Wet Pet
Slide 7: Food Segment EBITDA Bridge Q4-2016 to Q4-2017
Note: Cost of Sales includes raw material costs, collection costs and factory costs. Non-GAAP EBITDA Margin Food • Food segment delivered consistent results. • Rousselot gelatin business results improved during the year. Record sales volumes and stabilized pricing will set tone for 2018. Argentina c
Slide 8: Fuel Segment EBITDA Bridge Q4-2016 to Q4-2017
Non-GAAP Adj. EBITDA Margin Fuel 8 Note: Cost of Sales includes raw material costs, collection costs and factory costs. EBITDA Bridge Q4-2016 to Q4-2017 (millions) Fuel Segment 0 10 20 30 $2.3 EBITDA Q4 16 $18.0 Volumes Cost of Sales ($2.5) ($0.1) Price / Yield FX Impact $1.2 Adjusted EBITDA $15.3 E
Slide 9: Diamond Green Diesel joint venture
9 DGD earned $0.54 cents per gallon EBITDA excluding blenders tax credit (BTC) Entity EBITDA of $86.4 mm on 160.4 mm gallons of sales With BTC, DGD at the entity level had an EBITDA of $247 mm DARLING SHARE BTC approved retroactively in Feb. 2018 will add $0.48 per share in 1Q 2018 Q4 2017
Slide 10: Balance Sheet Highlights and Debt Summary
Balance Sheet Highlights Leverage Ratio 10 Debt Summary Balance Sheet Highlights and Debt Summary Historical Leverage Ratios 2014 - 2017 December 30, 2017 Actual Credit Agreement Total Debt to EBITDA: 3.47 5.50x (US$, in thousands) December 30, 2017 Amended Credit Agreement Revolving Credit Facility
Slide 11: Appendix – Additional Information
Appendix – Additional Information 11
Slide 12: Feed Segment quarterly financial data
US$ and metric tons (millions) Q1 2015 Q2 2015 Q3 2015 Q4 2015 Total 2015 Q1 2016 Q2 2016 Q3 2016 Q4 2016 Total 2016 Q1 2017 Q2 2017 Q3 2017 Q4 2017 Total 2017 Revenue $547.5 $529.4 $525.2 $472.2 $2,074.3 $476.2 $543.0 $531.4 $538.5 $2,089.1 $552.6 $549.1 $575.5 $562.3 $2,239.5 Gross Margin 123.5 12
Slide 13: Feed Ingredients Segment change in net sales
13 Change in Net Sales - Three Months Ended December 31, 2016 over December 30, 2017 (1) Rendering Net Sales- Other category includes hides, pet food, and service charges (2) Other Net Sales category includes trap services, industrial residual services and organic fertilizer Feed Ingredients Segment
Slide 14: 2017 Finished Product Pricing Feed Segment Ingredients
14Jacobsen, Wall Street Journal and Thomson Reuters Historical Pricing 2017 Finished Product Pricing Feed Segment Ingredients January February March Q1 Avg. April May June Q2 Avg. July August Sept. Q3 Avg. Oct. Nov. Dec. Q4 Avg. Year Avg. Bleachable Fancy Tallow - Chicago Renderer / cwt $32.00 $31.6
Slide 15: Food Segment quarterly financial data
US$ and metric tons (millions) Q1 2015 Q2 2015 Q3 2015 Q4 2015 Total 2015 Q1 2016 Q2 2016 Q3 2016 Q4 2016 Total 2016 Q1 2017 Q2 2017 Q3 2017 Q4 2017 Total 2017 Revenue (1) $268.8 $282.1 $267.5 $270.3 $1,088.7 $246.6 $270.5 $260.2 $278.4 $1,055.7 $266.2 $278.4 $298.9 $313.5 $1,157.0 Gross Margin 53.5
Slide 16: Fuel Segment quarterly financial data
(1) Pro forma Adjusted EBITDA assumes blenders tax credit was received during quarters earned in 2015 and 2017 for comparison to 2016 when the blenders tax credit was prospective. US$ and metric tons (millions) Q1 2015 Q2 2015 Q3 2015 Q4 2015 Total 2015 Q1 2016 Q2 2016 Q3 2016 Q4 2016 Total 2016 Q1
Slide 17: Use of Non-GAAP measures: Adjusted EBITDA
17 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. Adj
Slide 18: Adjusted EBITDA and Pro Forma Adjusted EBITDA
18 Note: See slide 17 for information regarding Darling’s use of Non-GAAP measures. Adjusted EBITDA (1) The average rates assumption used in this calculation was the actual fiscal average rate for the three months ended December 31, 2016 of €1.00:USD$1.08 and CAD$1.00:USD$0.75 as compared to the ave
Slide 19: Upcoming investor conferences
19 Annual ROTH Conference March 13, 2018 Ritz-Carlton – Dana Point, CA BMO Farm to Market Conference May 16-17, 2018 Grand Hyatt – New York City Oppenheimer Consumer Conference June 19-20, 2018 Four Seasons – Boston, MA