Darling Ingredients Inc. · NYSE:DAR
Darling Ingredients — Darling International — Jefferies Global Industrials Conference 2013
39 slides from Darling Ingredients's conference presentation, Aug 12, 2013
Slide 1: Jefferies Global Industrials Conference
Jefferies Global Industrials Conference August 12, 2013 North America’s oldest, largest and most innovative recycling solutions company serving the nation’s food industry Exhibit 99.1
Slide 2: Forward-looking statements
This presentation contains forward-looking statements regarding the business, operations and prospects of Darling International and industry factors affecting it. These statements are identified by words such as “may,” “will,” “begin,” “look forward,” “expect,” “believe,” “intend,” “anticipate,” “sh
Slide 3: Darling International is the recycling solutions company serving the nation's food industry
recycling solutions company serving the nation’s food industry Darling International is the A Family Heritage ► Darling & Co. was founded in 1882 by the Swift and Darling families to meet the needs of the growing Chicago meat-packing industry. ► Over 130 years old ► Listed as 984 on Fortune 1000 ► F
Slide 4: A History of Transition: Feed, Fuel, and Fertilizer
A History of Transition Feed, Fuel, and Fertilizer Fertilizer & Feed Soap & Fertilizer Animal Fats, UCO, Proteins Feed •Commodity ingredients •Specialized pet food ingredients •Custom aquaculture ingredients Animal Fats, UCO Fuel •Boiler fuels •Biodiesel •Renewable diesel (green diesel) Enriched Ani
Slide 5: Our Reporting Segments & Business Model
Our Reporting Segments & Business Model Darling International Inc. Route- based Service Provider Fertilizers Specialty Ingredients Renewable Fuels Food Industry Recycler 5
Slide 6: What sets DAR apart?
What sets DAR apart? Differentiator National Presence (over 120 locations) Integrated Trucking Value-Added Focus Multi-Specie Plants Integrated Biofuels DAR Regionals Integrated 6
Slide 7: Room to Grow
Room to Grow Base Business Large Market DAR Growing Faster Growing Steadily 59 billion pounds DAR Share 13% Raw Materials (animal by-products) 1,109 % 1 .1 3 % Market Cap Growth2 U.S. Meat Production1 Note 1: USDA 10-yr CAGR in millions lbs. Note 2: Darling 10-yr Market Cap Growth Note 3: Rendering
Slide 8: Our Value Proposition
Our Value Proposition Transforming raw materials into value-added ingredients Key Raw Material Streams Target Value Add Strategy Beef Poultry Pork Lamb Bakery Grease Wastewater Sludges Pet foods Aquaculture feeds Biofuels Animal feed Fertilizers Grease management systems Fresh oil systems Tanks Supp
Slide 9: Our Performance Profile
Our Performance Profile • National Presence 1 • Integrated Supply Chain with Built-in Margin Management 2 • Exceptional Customers and Suppliers 3 • Solid Margins 4 • Passionate about Growth 5 Superior Return to Shareholders 9
Slide 10: National Presence
6 National Presence DAR LISTED) NYSE
Slide 11: Darling Rendering – Processing and Transfer Facilities
Processing & transfer facilities Corporate/Regional offices Darling Rendering – Processing and Transfer Facilities 11 Corporate/Regional Office Processing/Transfer Facility
Slide 12: Darling Bakery – Processing and Transfer Facilities
Darling Bakery – Processing and Transfer Facilities Bakery Industry Approximately 3.0 million tons of bakery residuals are created annually Servicing commercial baking, snack, cookie and cracker producers Additional food safety regulations and traceability should help “scrape” rates grow 12
Slide 13: Integrated Supply Chain with Built-in Margin Management
13 Integrated Supply Chain with Built-in Margin Management 2
Slide 14: Diversified Raw Material Supply
Approximately 75% of our raw material is procured under a processing agreement, whereby margins are established and the risk is shared. The balance is a “fee for service” business. 14 19.13% 26.32% 5.07% 10.80% 25.28% 9.09% 4.32% Bakery Beef Grocery Pork Poultry Used Cooking Oil Other Diversified Ra
Slide 15: Revenue/Products
Revenue/Products (1) Will differ by raw material supplier and type of material 15 Industry Raw Yield Finished Material Factors Product Finished Products % Category (1) Available Protein Fat 26.32% Beef 48% 12.63% 6.31% 6.32% 25.28% Poultry 35% 8.85% 4.78% 4.07% 10.80% Pork 42% 4.54% 2.27% 2.27% 9.09
Slide 16: A Significant Portion has a Built-In Margin
A Significant Portion has a “Built-In Margin” How We Buy It Darling Formula Pricing Example Industry has evolved to a shared risk procurement model Pricing protocols reduce exposure to commodity price fluctuation and provide minimum margins Raw materials procured under the following pricing arrangem
Slide 17: Darling Historical Financials (Segments)
Darling Historical Financials (Segments) Revenue ($mm) EBITDA ($mm) 17 Note: 2009-2010 includes combined proforma of Griffin Industries $ 9 8 4 $ 1 ,1 4 5 $ 1 ,5 0 1 $ 1 ,4 0 6 $ 1 ,4 3 0 139 195 296 295 317 0 200 400 600 800 1000 1200 1400 1600 1800 2000 2009 2010 2011 2012 LTM 2013 Bakery Renderin
Slide 18: Exceptional Customers & Suppliers
Exceptional Customers & Suppliers 3
Slide 19: Exceptional Customers & Suppliers
Exceptional Customers & Suppliers 19
Slide 20: DAR NYSE listed
14 DAR LISTED) NYSE
Slide 21: 5-Year Earnings, EPS and Cash Flow
5-Year Earnings, EPS and Cash Flow Net Income (US$ millions) EBITDA – CAPEX (US$ millions) Earnings Per Share (US $’s) Note: 2009-2010 EBITDA- CAPEX numbers include proforma of Griffin Industries EBITDA (US$ millions) 21 Note: 2009-2010 EBITDA numbers include proforma of Griffin Industries $0.51 $0.
Slide 22: Historical Financials - Capex
Historical Financials - Capex Capex (US$ millions) 1 Source: Company Management 1 Griffin capex includes capex and investments, including acquisitions. Note: 2009-2010 includes combined proforma of Griffin Industries 22 $69 $61 $60 $115 $117 $0 $20 $40 $60 $80 $100 $120 $140 2009 2010 2011 2012 LTM
Slide 23: Passionate About Growth
Passionate About Growth DAR [LISTED] NYSE
Slide 24: Passionate About Growth
Passionate About Growth Aug 2008 API Recycling, div of American Proteins Inc. GA Oct 2005 Southeastern Maintenance & Construction Inc. FL, GA Feb 2009 Boca Transport, Inc. GA Dec 2009 Sanimax USA Great Lakes Dec 2010 Griffin Industries SE/Central US Dec 2004 Burrows Industries, Inc. dba Minuteman Pu
Slide 25: Years of DAR Growth
10 Years of DAR Growth WM – Waste Management; TSN – Tyson Foods; BG – Bunge; ADM – Archer Daniels 8/6/13 DAR Yearly ̶
Slide 26: Areas for Growth Focus
Areas for Growth Focus Acquisition of other independent rendering companies New locations for recycling Bakery residuals Integrated oil delivery systems Hexane extraction fat recovery Expansion of Diamond Green Diesel 26
Slide 27: Rendering Companies – Growth Opportunities
Rendering Companies – Growth Opportunities 27
Slide 28: Fresh Oil System
Fresh Oil System Integrated Oil Delivery & Removal Small footprint Additional storage Delivers fresh oil Monitors usage Collects used oil 28
Slide 29: Hampton Extraction Plant
Hampton Extraction Plant Secondary protein nutrients (SPN), also called dissolved air flotation (DAF), float or skimmings, is a wastewater byproduct that is produced by the poultry industry. Today a majority of this product is land applied. We estimate several billion pounds of this product is avail
Slide 30: Diamond Green Diesel
&» Diamond Green Diesel 30 DARLING DIAMOND GREEN DIESEL
Slide 31: Darling Biofuels: The Path to Here
Darling Biofuels The Path to Here • Tax credit for Biodiesel/ Renewable Diesel implemented • Darling evaluates Biodiesel product and processes • RFS 1 implemented- Ethanol only Darling begins studying biofuels • Darling evaluates over 20 different biodiesel processes • Determines that while feasible
Slide 32: What is DGD?
What is DGD? 50/50 JV with Valero Energy Corporation Renewable Diesel plant located next to Valero’s 3rd largest oil refinery in Norco, Louisiana using Desmet-Ballestra pre-treatment and UOP eco-fining technologies producing at approximately 136.7 million gallons of renewable diesel and 21.7 million
Slide 33: DGD Feedstock Origination
DGD Feedstock Origination What we use defines our advantage Darling is one of the largest suppliers of animal fats and used cooking oils in the U.S. DGD is expected to consume ~11% of historical 10-year avg. supply of animal fats & used cooking oils DGD will always have available supply of feedstock
Slide 34: DGD Margin Foundation
DGD Margin Foundation How the margins are created RFS2 Mandates Requires minimum annual production of 1 million gallons of biomass-based diesel (ie, biodiesel or renewable diesel only). Renewable RIN valued higher than biodiesel RIN (1.7 vs 1.5) Renewable diesel can be distributed through existing i
Slide 35: RFS2: The Bedrock
2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 Undifferentiated Advanced Biofuel 1.75 2.00 2.50 3.00 3.50 4.00 4.50 4.50 4.50 5.00 Biomass Based Diesel 1.28 1.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00 Cellulosic 0.006 1.75 3.00 4.25 5.50 7.00 8.50 10.50 13.50 16.00 0 5 10 15 20 25 4.75 RFS2 The
Slide 36: DGD Feedstock & Processing Advantage
Canola oil Soybean oil Palm oil Choice white grease Non-edible tallow Edible tallow Poultry fat Yellow grease Distillers corn oil $4.96 $4.10 $3.78 $3.17 $3.16 $3.15 $.3.00 $2.72 2.62 Cost per gallon of Biofuel First half 2013 Average Prices ($) DGD primary feedstocks DGD Feedstock & Processing Adva
Slide 37: DGD Margin Equation
DGD Margin Equation Item DGD Renewable Diesel Biodiesel (Midwest Soybean) Advantage To: DGD RENEWABLE DIESEL has the ADVANTAGE in: RIN’s value (.16); distribution cost / discount (.53); co-product value (.22); raw material (.45); and processing aid (.03) Note: Above pro forma assumes revenue, feedst
Slide 38: Darling EBITDA & Pro Forma DGD EBITDA
DARLING EBITDA & Pro Forma DGD EBITDA Diamond Green Diesel... Creating a New Market U S $ m ill ion s $243 $271 $464 $392 $423 38 Note: Above pro forma assumes revenue, feedstock and production costs are consistent with projections. $ 2 0 3 $ 2 3 7 $ 3 9 2 $ 3 1 7 3 1 2 $ 4 0 $ 3 4 $ 7 0 $ 7 5 $ 1 1
Slide 39: Q&A
North America’s oldest, largest and most innovative recycling solutions company serving the nation’s food industry Q&A 39
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