Darling Ingredients Inc. · NYSE:DAR
Darling Ingredients — Goldman Sachs U.S. Emerging/SMID Cap Growth Conference 2014
33 slides from Darling Ingredients's conference presentation, Nov 20, 2014
Slide 1: Seeing the World Through Our Eyes
Seeing the World Through Our Eyes Goldman Sachs U.S. Emerging/SMID Cap Growth Conference November 20, 2014 Creating sustainable food, feed and fuel ingredients for a growing population Exhibit 99.1
Slide 2: Forward-looking statements
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” “sh
Slide 3: Our Historical Timeline
3 TRS: Additional value add services; New raw material supply DAR : Rendering; Used cooking oil (UCO); Trap DGD: Value add fats; Hedge core business Rothsay: Leading position in Canada NBP & Griffin Industries: Raw material diversity; Value add proteins; Bakery recycling VION: Leading global gelatin
Slide 4: A World Leader in Bio-Nutrient Transformation
4 Food Feed Fuel A World Leader in Bio-Nutrient Transformation Global footprint: 5 continents Locations: Over 200 Founded: 1882 Listed: 1994 Publicly traded: NYSE: DAR Principal segments: Three Industries served: Pharmaceutical, food, pet food, feed, technical, fuel, bioenergy, fertilizer LTM June 2
Slide 5: Locations by Continent and Process
Process USA Canada Europe China S. America Australia Total: 5 Rendering - (C3 By-products & UCO) Transfer Stations Protein Blending Bakery Used Cooking Oil processing only Disposal Rendering - (C1 & C2) Fat melting - food grade Blood Plasma Bone Ash Bio Diesel Renewable Diesel Gelatin Casings Enviro
Slide 6: Global Drivers to Business
Creates Margin Opportunity DAR is operated as a spread business 6 Raw Material Availability Competing Ingredient Supply Operating Costs Transportation Costs Energy Costs Global Drivers to Business Some sources estimate strong growth in world population which will drive Food, Feed & Fuel demand “How
Slide 7: Genesis of Business Model
7 Genesis of Business Model Diverse Raw Material Supply Establish Spread/Margin Transform and Value Add Our model today has evolved to one that shifts the majority of commodity risk to the supplier in most businesses. Our Bakery Feeds business is the exception; buy as a % of corn & sell as a % of co
Slide 8: How Do We Measure Success?
8 Darling targets employing capital at a 15% or higher rate of return while maintaining a conservative balance sheet Return on Gross Investment (ROGI): Earnings before interest, taxes, depreciation and amortization adjusted for certain non- operational costs divided by the sum of Total Assets plus A
Slide 9: Our Business Segments
Food, Feed & Fuel Our Business Segments Creating sustainable food, feed and fuel ingredients for a growing population
Slide 10: Our Brands by Reporting Segments
10 The ingredients we produce are used in three primary segments: - Food (pharmaceutical, gelatin, natural casings, edible fats) - Feed (fats & proteins, pet food, nutritional feed supplements, fertilizers) - Fuel (renewable and bio-diesel, green gas, green electricity) Our Brands by Reporting Segme
Slide 11: Our Food Ingredients – A Closer Look
11 Ingredients for living. Darling’s food ingredients are sold to a worldwide market that includes the pharmaceutical, food, nutraceuticals and cosmetic industries. Our Food Ingredients – A Closer Look
Slide 12: Food – A Closer Look: Rousselot gelatin
12 MARKET DRIVERS • Supply and competing uses for bones, hides and pig skins • Demand for gelatin in food and beverages • Pharmaceutical demand • Film industry demand • Rousselot is the world’s leading supplier of gelatin and collagen peptides to a global market* • Europe held the highest market sha
Slide 13: Darling
DARLING
Slide 14: Food – A Closer Look: Sonac fats and bone
14 MARKET DRIVERS • Palm oil • Competing spread alternatives • Food / Technical • General European economy • Sonac fat processes, refines and packages high-quality food-grade animal fats for baking, frying fats and spreads (schmaltz, lard) • Some Sonac fat products are used as a natural binding agen
Slide 15: Our Feed Ingredients – A Closer Look
15 Our Feed Ingredients – A Closer Look Nutrients for growth. Our feed ingredients compose the largest segment of our business, with sales to animal feed, aquaculture and pet food manufacturers worldwide.
Slide 16: Slide 16
Slide 17: North America – Bakery Feeds
17 MARKET DRIVERS: • Corn price • Raw material volume • Calorie substitutes in feed North America - Bakery Feeds • Cookie Meal®, a Bakery Feeds product, is a premium, high- energy, animal feed ingredient that competes with corn in poultry, swine or pet food diets • Bakery Feeds earnings reflect corn
Slide 18: European Feed Ingredients
18 MARKET DRIVERS • Raw material supply • Environmental regulations and policies • Energy costs • Sonac is Europe’s leading supplier of consistent and high-quality proteins, fats and minerals from food grade animal by-products that are used in pet foods, animal feed and fertilizers. Sonac products a
Slide 19: Our Fuel Ingredients – A Closer Look
19 Our Fuel Ingredients – A Closer Look Energy for today’s world. For the past two decades, Darling has led the way in biofuel innovation and development.
Slide 20: Fuel – A DGD Update
20 MARKET DRIVERS • Renewable Fuel Standard (RFS)/Government regulations • Ultra low sulfur diesel price • Feedstock cost • Co-product values • Hydrogen costs • In operation for over a year, DGD continues as North America’s largest facility to convert animal fats, used cooking oils and distillers co
Slide 21: Year 1 – DGD Lookback
21 • Approximately 120 million gallons of renewable diesel produced • Darling EBITDA approximately $35.2 million • Darling invested capital of approximately $115 million • Plant performance excellent up until fire incident on August 3, 2014 • Operations resumed September 28, 2014 with expansion to 1
Slide 22: Fuel – A Closer Look: Rendac
22 MARKET DRIVERS • Raw material volume • Government disposal regulations • Subsidies Fuel – A Closer Look: • In answer to Europe’s stringent laws enacted post-BSE, Rendac collects and safely processes mortalities and slaughter by-products that are designated unfit for animal feeds or human consumpt
Slide 23: Fuel – A Closer Look: Ecoson Green Energy Park
23 MARKET DRIVERS • Raw material volume • Manure and organics supply • Energy prices • One of the largest producers of green energy from a digesting process in the Netherlands, our Ecoson Green Energy Park is located in Son o Organic residuals from food industry are converted to biogas for green ele
Slide 24: Growth Strategy
Growth Strategy How we will grow and sustain our business Creating sustainable food, feed and fuel ingredients for a growing population
Slide 25: Projected EBITDA Growth thru 2017 and Beyond
25 Note: Management’s current views on future performance (see page 2). Baseline EBITDA does not include Diamond Green Diesel. Projected EBITDA Growth thru 2017 and Beyond And how we plan to do it...
Slide 26: Financing Projected EBITDA Growth
26 (in US $millions) $ 600 EBITDA (250) CAPEX (100) Interest (100) Taxes $ 150 Free Cash For growth projects and debt reduction 70% maintenance/compliance 30% organic growth Financing Projected EBITDA Growth How we plan to pay for it... $75 M to new value adding projects with minimum 15-20% return N
Slide 27: Financials
Financials Creating sustainable food, feed and fuel ingredients for a growing population
Slide 28: Pro Forma Operating Performance
13 28 Creating sustainable food, feed and fuel ingredients for a growing population Pro Forma Operating Performance Exchange Rates: 2012 2013 LTM Q3 2014 USD/EURO 1.2845 1.3131 1.3582 USD/CAD 1.0084 0.9917 0.9240 See Cautionary Statement at end of this presentation.
Slide 29: Pro Forma Adjusted EBITDA
29 Pro Forma Adjusted EBITDA See Cautionary Statement at end of this presentation. FYE 2012 FYE 2013 LTM Q3 2014 Q3 2013 Q3 2014 Net Income 302,642 $ 241,426 $ 10,332 $ 73,393 $ 14,318 $ Depreciation and Amortization 173,217 188,977 256,689 45,645 67,311 Goodwill Impairment 10,083 Interest Income (6
Slide 30: Operating Performance and Debt Summary
30 Note: Net working capital is defined as current assets less current liabilities. Operating Performance (US $ in millions) Free Cash Net Working Capital September 27, 2014 Credit Agreement Revolving Credit Facility 178,204 $ Term Loan A 326,636 Term Loan B 1,246,234 5.375% Senior Notes due 2022 50
Slide 31: Our Recipe for Success
31 Shareholder Value Success is consistently providing maximum value to the supply chain Our Recipe for Success... Creating sustainable food, feed and fuel ingredients for a growing population Protein Production Maximize the valuation of our raw materials by focusing on their highest and best possib
Slide 32: Creating sustainable food, feed and fuel ingredients
17 Creating sustainable food, feed and fuel ingredients for a growing population
Slide 33: Cautionary Statement Regarding Unaudited Pro Forma Financial Information
18 33 Creating sustainable food, feed and fuel ingredients for a growing population Cautionary Statement Regarding Unaudited Pro Forma Financial Information The unaudited pro forma financial information (“Unaudited Pro Forma Financial Information”) presented in the Financial Section pages of this pr
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