Darling Ingredients Inc. · NYSE:DAR
Darling Ingredients — Q1 2023 Earnings Presentation
23 slides from Darling Ingredients's earnings presentation, May 10, 2023
Slide 1: Earnings Report Q1 2023
EARNINGS REPORT Q1 | May 9, 2023 1 23
Slide 2: Safe Harbor Statement
Q1 - 23 EARNINGS SAFE HARBOR STATEMENT The presentation includes “forward-looking” statements that are subject to risks and uncertainties that could cause actual results to differ materially from those expressed or implied in the statements. Statements that are not statements of historical facts are
Slide 3: Solid Financial Performance: Summary Highlights
Q1 - 23 EARNINGS Solid Financial Performance SUMMARY Q1-2023 HIGHLIGHTS Net Sales Net Income $1,791.2 million $185.8 million EPS Diluted $1.14 Combined Adjusted EBITDA $418.4 million Global Ingredients EBITDA $289.1 million Feed Ingredients EBITDA $213.1 million Food Ingredients EBITDA $73.2 million
Slide 4: Strong Earnings, Positioned for Continued Growth
Strong Full Year Earnings, Positioned for Continued Growth Balance Sheet In millions, except per share Q1-2023 Q1-2022 % variance As of As of In millions, except ratio data Net Sales $1,791.2 $1,366.3 31.1% 4/1/2023 12/31/2022 Gross Margin $424.2 $345.8 22.7% Cash (including restricted) $132.9 $127.
Slide 5: First Quarter EBITDA
First Quarter EBITDA Combined Adjusted EBITDA Q1 2023 % of Total EBITDA by Segment (In millions) $500 $450 $418.4 $413.0 $402.6 $394.7 $400 Fuel $350 $330.7 $91 $129 35% $120 $146 Food $300 $87 17% $250 Feed $200 48% $150 $312 $274 $289 $267 $244 $100 $50 $0 Q3 22 Q4 22 FY 22 Q1 22 Q2 22 Global Ingr
Slide 6: Feed Segment
Feed Segment Deliberate focus on integration efforts US $ (in millions) Q1-2023 Q1-2022 Key Drivers Net Sales $ 1,237,494 $ 879,438 Cost of sales & operating expenses 950,072 645,523 • Raw material volumes in-line with expectations. Gross Margin $ 287,422 $ 233,915 • Energy prices in Europe have mod
Slide 7: Feed Segment net sales bridge
Feed Segment Total US $ (in millions, unaudited) Fats Proteins Other Used Cooking Oil Bakery Other Total Rendering Net Sales Three Months Ended April 2, 2022 $ 368.4 $ 270.2 $ 57.5 $ 696.1 $ 94.9 $ 78.5 $ 9.9 $ 879.4 Increase/(Decrease) in sales volumes 109.5 117.7 - 227.2 22.3 (6.9) - 242.6 Increas
Slide 8: Feed Segment: Integration Remains Focus
Feed Segment Integration Remains Focus • Continued sequential quarter improvement in gross margins • Capital improvements at eastern plants continue • Improve reliability, efficiency • Species separation, product separation for higher-value finished goods • Began maximizing fat value by selling to D
Slide 9: Food Segment
Food Segment US $ (in millions) Q1-2023 Q1-2022 Key Drivers Net Sales $ 396,392 $ 354,814 • Global collagen and gelatin business Cost of sales & operating expenses 290,115 270,312 remains robust. Gross Margin $ 106,277 $ 84,502 • Closed on Gelnex acquisition, March Gain on sale of assets 31, 2023. (
Slide 10: Food Segment
Food Segment Q1 2023 % of Sales Breakdown Food Segment Trailing 4Q adjusted EBITDA $280 $260 $240 $220 11% $200 81% $180 $160 $140 $120 8% $100 Collagen Edible fats Other products Trailing 4 Q's 10 23
Slide 11: Fuel Segment
Fuel Segment US $ (in millions) Q1-2023 Q1-2022 Net Sales $ 157,286 $ 132,082 Cost of sales & operating expenses 126,786 104,742 Key Drivers Gross Margin • Diamond Green Diesel sold 255 million 30,500 27,340 gallons of renewable diesel, $1.01 EBITDA Loss (gain) on sale of assets per gallon 36 (39) •
Slide 12: Fuel Segment: Diamond Green Diesel
Fuel Segment Diamond Green Diesel Quarterly Avg. Prices D4 RINs (1.7 Multiple) & Yellow Grease - IL US $ and gallons (in millions) Q1 2023 Q1 2022 $0.70 $3.50 EBITDA (Entity) – recorded w/no BTC $12.6 $17.3 $0.60 $3.00 $0.50 $2.50 EBITDA (Entity) – recorded including BTC $258.6 $173.1 $0.40 $2.00 Pr
Slide 13: Appendix: Additional Information
Q1-23 EARNINGS APPENDIX ADDITIONAL INFORMATION 13 23
Slide 14: Fixed vs. Floating Rate
Q1-23 EARNINGS Fixed vs. Floating Rate 120% • Entered into $600 million Interest 100% Rate Swap in Q1 2023 to convert 80% floating rate debt to 3Y fixed at an average swap rate of 3.77%. 60% 40% • Anticipate fixed rate % to increase by 20% applying free cash flows for the pre- payment of (floating r
Slide 15: California LCFS RIN Value History
Q1-23 EARNINGS California LCFS RIN Value History 15 23
Slide 16: Feed Segment – Historical
Q1-23 EARNINGS Feed Segment – Historical US$ (in millions) Q1-2022 Q2-2022 Q3-2022 Q4-2022 Total 2022 Q1-2023 Net Sales $ 879.4 $ 1,170.3 $ 1,273.1 $ 1,216.1 $ 4,539.0 $ 1,237.5 Gross Margin 233.9 306.0 260.2 265.3 1,065.5 287.4 Gross Margin % 26.6% 26.1% 20.4% 21.8% 23.5% 23.2% Loss (Gain) on sale
Slide 17: Food Segment – Historical
Q1-23 EARNINGS Food Segment – Historical US$ (in millions) Q1 -2022 Q2-2022 Q3-2022 Q4-2022 Total 2022 Q1-2023 Net Sales $ 354.8 $ 369.2 $ 347.9 $387.7 $1,459.6 $396.4 Gross Margin 84.5 88.2 91.3 93.3 357.4 106.3 Gross Margin % 23.8% 23.9% 26.3% 24.1% 24.5% 26.8% Gain on sale of assets (0.1) (0.1) (
Slide 18: Fuel Segment – Historical
Q1-23 EARNINGS Fuel Segment – Historical US$ (in millions) Q1-2022 Q2-2022 Q3-2022 Q4-2022 Total 2022 Q1-2023 Net Sales $ 132.0 $ 110.7 $ 126.6 $ 164.3 $ 533.6 $157.3 Gross Margin 27.3 24.4 24.8 30.2 106.7 30.5 Gross Margin % 20.7% 22.1% 19.6% 18.4% 20.0% 19.4% Loss (gain) on sale of assets (0.0) (0
Slide 19: Historical Pricing
2023 Finished Product Pricing Historical Pricing 2023 Average Jacobsen Prices (USD) 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 $64.00 $60.92 $55.80 $61.39 Y
Slide 20: Reconciliation of Net Income to Adjusted EBITDA
Reconciliation of Net Income to (Non-GAAP) Adjusted EBITDA and (Non-GAAP) Pro-Forma Adjusted EBITDA to Foreign Currency For the Three Months Ended April 1, 2023 and April 2, 2022 (in thousands) Three Months Ended (unaudited) Adjusted EBITDA April 1, April 2, 2023 2022 Net income attributable to Darl
Slide 21: Event Calendar
Q1 – 23 Earnings Gabelli Waste & Sustainability Symposium May 11 – New York EVENT BMO Farm to Market CALENDAR May 17 – New York TD Cowen ESG Conference June 9 – Virtual 21 23
Slide 22: Non-U.S. GAAP Measures
Q1– 23 EARNINGS Non-U.S. GAAP 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. It is presented here not as an al
Slide 23: Earnings Report Q1 2023
EARNINGS REPORT Q1 | May 9, 2023 23 23