Darling Ingredients Inc. · NYSE:DAR
Darling Ingredients — Darling International — Investor Presentation (May 2011)
28 slides from Darling Ingredients's investor presentation, May 17, 2011
Slide 1: America's leading provider of rendering, recycling and recovery solutions
Exhibit 99.1 America’s leading provider of rendering, recycling and recovery solutions to the nation’s food industry …converting waste streams into sustainable feed and fuel ingredients.”
Slide 2: Forward-Looking Statements
Forward-Looking Statements This presentation contains forward-looking statements regarding the business operations of Darling and the industry in which it operates. These statements are identified by words such as “may,” “will,” “expect,” “believe,” “intend,” “anticipate,” “should,” “estimate,” “con
Slide 3: America's Leading Provider of Rendering, Recycling and Recovery Solutions
WE are America’s Leading Provider of Rendering, Recycling and Recovery Solutions to the Nation’s Food Industry Founded in 1882 and headquartered in Irving, TX Approximately 3,300 employees Listed on the NYSE (DAR) LARGEST renderer with over 130 locations nationwide in 42 states LARGEST bakery waste
Slide 4: Our Platform
Our Platform Rendering Segment Cooking of non-edible meat products (beef, pork, Collection and processing of used cooking oil & poultry) into usable ingredients wastewater to produce ingredients for animal feed or bio-fuel Key Suppliers End Products Key Suppliers End Products o Slaughter houses o Fa
Slide 5: Rendering…. Inedible meat processing
Rendering…. Inedible meat processing Rendering Industry Rendering Drivers Animal and food by-product recycling industry is Over 200,000 Suppliers providing raw material “mission critical” in the food supply chain o Meat production to feed the world Most efficient and environmentally sound disposal a
Slide 6: What Does Rendering Do?
What Does Rendering Do? Kills pathogenic organisms o Pathogens that may threaten human and animal health thrive on perishable organic materials Protects the environment Recycles nutrients: o For use in animal feed and in fertilizer o Prevents loading of soil with nitrogen and phosphorus Recycles car
Slide 7: Rendering: Producing Sustainable Green Ingredients for Feed and Fuel
Rendering: Producing Sustainable Green Ingredients for Feed and Fuel Rendering Animal Fats Animal Proteins Hides Finished Renewable Pet Animal Hog Poultry Pet Soap Leather Products Fuels Food Feed Feed Feed Food Component Linoleic Oleic Stearic Shoes Glycerine Fertilizer Garment By-Products Acid Aci
Slide 8: Rendering: Cooking Oil and Trap Services
Rendering: Cooking Oil and Trap Services Recovery of Used Greases Chemical Industrial Energy uses uses Finished Animal Renewable Products Feed Fuels Lubricants Rubber Boiler fuel Textiles Plastics Biodiesel Plastics Tires Green diesel Cleaners Lubricants 8
Slide 9: Bakery Segment
Bakery Segment Bakery Industry Commercial Baking Growth Drivers Approximately 3.0 million tons of bakery waste is 5-10% of “scrape” rate and growing created annually. Additional food safety regulations and traceability Service commercial baking, snacks, cookies and should help “scrape” rates grow cr
Slide 10: Bakery: Producing Sustainable Green Ingredients for Feed
Bakery: Producing Sustainable Green Ingredients for Feed Raw Dough, Baked Goods, Snack Items Dried and Standardized Packaging is burned for fuel Cookie Meal 10
Slide 11: Going forward….a platform of opportunity
Going forward….a platform of opportunity Positive Industry #1 Platform Across 1 2 the Food Recycling Spectrum Fundamentals Strong Financial Attractive Business Performance & Cash 6 3 Model with Solid Flow Generation Risk Management Green Diesel Growth and Margin 5 4 Joint Venture Expansion Opportuni
Slide 12: Inputs Key Driver – Animal Production
Inputs Key Driver – 1 Positive Industry Fundamentals Animal Production U.S. Animal Agriculture Annual U.S. Protein Production (million pounds) Processing Volume 33 million cattle 50,000 1970–2009 CAGR: 3.8% (49% of live weight not used for human food) 40,000 110 million hogs (44% not used for human
Slide 13: Inputs Key Driver – Commodity Momentum
Inputs Key Driver – 1 Positive Industry Fundamentals Commodity Momentum While the agriculture complex is near historical highs, it is not supply-constrained but is demand- Corn and Veg. Oil prices should driven by global BIOFUEL mandates and strong remain firm for the foreseeable Chinese demand futu
Slide 14: Darling's National Platform
Darling’s National Platform – 2 #1 Platform Across the Food Recycling Spectrum A superior Platform to Assist Customers Nationwide Network of over 130 facilities from coast to coast Breadth to service national accounts Footprint that allows Darling to grow organically and acquisitively Darling Intern
Slide 15: Attractive Business Model
Attractive Business 3 Model with Solid Attractive Business Model Risk Management Key Metrics Raw material “Formula” basis: fixed margin processing relationship with suppliers procurement “Non-formula” basis: suppliers either paid a fixed price, not paid, or charged for the expense of collection Raw
Slide 16: Built-In Margin and Risk Management Tools
Built-In Margin and 3 Attractive Business Model with Solid Risk Management Tools Risk Management Darling Procurement Darling Formula Pricing Example Industry has evolved to a shared risk Indicative Formula Terms procurement model Product Finished price Total yield Animal Fats $30.00cwt 26% Pricing p
Slide 17: Growth and EBITDA Expansion Opportunities
Growth and Margin 4 Growth and EBITDA Expansion Expansion Opportunities Growth and EBITDA Expansion Opportunities National footprint will provide customer growth opportunities and potential margin expansion Value-adding of product streams and new waste inputs Meaningful synergy opportunity Bakery bu
Slide 18: Focus on Premium and Value Added Products
Focus on Premium and Value Growth and Margin 4 Expansion Added Products Opportunities Strategic Focus on Premium and Value-Added Products Griffin’s Focus on Value-Add and Branding of Ingredients Opportunity to move more of Darling’s products into Griffin’s premium/value-added products Differentiated
Slide 19: Synergy….delivery of value
Growth and Margin 4 Expansion Synergy….delivery of value Opportunities While limited overlap exists geographically, there is still significant opportunity to capture synergies over time Routing improvements (Florida, Georgia, Indiana, Ohio and Texas in 2011) o Closure of transfer stations & some sma
Slide 20: A proven track record of growth…
Growth and Margin 4 Expansion A proven track record of growth… Opportunities Since 2003, Darling has acquired and integrated 10 companies investing over $1.1 Billion Oct 2005 July 2007 Dec 2008 Dec 2009 Southeastern Ace Grease Service J&R Rendering, Inc. Maintenance & Sanimax USA KC metro NYC metro
Slide 21: A Potential Game Changer……
A Potential Game Changer…… 5 Green Diesel Low quality animal fats to hydrocarbon Joint Venture Proposed 50/50 JV with Valero subject to DOE Loan Located adjacent to Valero’s St. Charles Refinery Creates a new market for Darling’s feed stocks Represents significant margin opportunity Creates a natura
Slide 22: What is Diamond Green Diesel?
5 Green Diesel What is Diamond Green Diesel? Joint Venture Joint Venture between Darling International & Valero Energy Corporation Ownership: 50/50 Management: Valero employees reporting to/directed by Joint Venture Board Annual Renewable Diesel 136.7 million Annual 9,300 Barrel Per Day gallons Anim
Slide 23: Diamond Green Diesel – What are the Drivers of Profitability?
Diamond Green Diesel – 5 Green Diesel Joint Venture What are the Drivers of Profitability? RFS2 requires a MINIMUM of 1 billion gallons of Biomass-based Diesel be blended annually in U.S. diesel pool Renewable Fuel Only two products can fulfill Biomass-based Diesel mandate – they are Standard Renewa
Slide 24: Why Darling is Investing
5 Green Diesel Why Darling is Investing Joint Venture Annual Average Price / Gallon $5.00 $4.50 $4.04 $4.00 $3.33 $3.50 $3.12 $3.20 $2.81 $2.76 $3.00 $2.50 $2.25 $1.89 $1.96 $1.81 $2.46 $2.00 $2.32 $1.99 $1.93 $1.50 $1.00 $1.39 $1.44 $1.36 $1.23 $0.95 $1.06 $0.50 $0.00 2001 2002 2003 2004 2005 2006
Slide 25: Overview of St. Charles Refinery
Overview of St. Charles Refinery 5 Green Diesel Joint Venture Green Diesel Location 25
Slide 26: Historical Financials
Strong Financial Performance & 6 Historical Financials Cash Flow Generation Revenue (US$ millions) EBITDA (US$ millions) 1600 $1143 $1489 $1123 $1340 $ 440 350 $213 $308 $190 $237 $108 1400 300 1200 250 681 175 1000 615 498 525 200 800 123 109 600 150 94 807 725 400 598 100 645 133 200 104 96 114 50
Slide 27: Pro Forma: Balance Sheet
Strong Financial Performance & 6 Pro Forma: Balance Sheet Cash Flow Generation Balance Sheet as of 1 st Qtr 2011 and Fiscal YE 2010 (US$ in millions) Quarter ended Fiscal 2010 4/2/2011 1/1/2011 Cash and cash equivalents $38.0 $19.2 Restricted cash 0.4 0.4 Accounts receivables, net 114.4 103.7 Invent
Slide 28: Q&A
The Original RECYCLING COMPANY…. Sustaining Innovating Renewing Q&A
Darling International — Investor Presentation (May 2011) on 6ix