Darling Ingredients Inc. · NYSE:DAR
Darling Ingredients — Q2 2017 Earnings Presentation
17 slides from Darling Ingredients's earnings presentation, Aug 9, 2017
Slide 1: Second Quarter 2017 Earnings Conference Call
Randall C. Stuewe, Chairman and CEO Patrick C. Lynch, EVP Chief Financial Officer Melissa A. Gaither, VP IR and Global Communications Second Quarter 2017 Earnings Conference Call August 10, 2017 Exhibit – 99.2
Slide 2: Forward-looking statements
2 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,” “expec
Slide 3: 2Q 2017 Overview
3 $50 $60 $70 $80 $90 $100 $110 $120 $130 Quarterly Adjusted EBITDA 2Q16 3Q16 4Q16 1Q17 2Q17 $98.9 $102.5 $124.0 $106.2 $112.8 $110.1 Gross Profit and Margin $ 2 0 0 .2 $ 1 8 2 .7 $ 1 9 2 .8 $ 1 9 0 .4 $ 1 9 5 .6 $140 $150 $160 $170 $180 $190 $200 $210 2Q16 3Q16 4Q16 1Q17 2Q17 Gross Profit 22.8% 21.
Slide 4: Q2 2017 Overview
4 Q2 2017 Overview Year over Year • Global volumes up 1.4% over 2Q 2016. • Global pricing was mixed during the quarter. Global fat pricing remained fairly neutral while protein prices were down. • Gross margins were primarily impacted by pressure in the Food segment principally the gelatin business
Slide 5: Feed Segment
5 Non-GAAP EBITDA Margin Feed Note: Cost of Sales includes raw material costs, collection costs and factory costs. EBITDA Bridge Q2-2016 to Q2-2017 (millions) Feed Segment $83.4$84.3 $12.0 $83.5 0 20 40 60 80 100 ($9.9) Price / Yield ($0.8) ($0.5) Cost of Sales VolumesEBITDA Q2 16 FX Impact ($0.9) A
Slide 6: Food Segment
Note: Cost of Sales includes raw material costs, collection costs and factory costs. Non-GAAP EBITDA Margin Food Key Drivers– Q2 2017 • Rousselot gelatin business continued to face headwinds in South America with margin compression from rising raw material prices and ongoing macroeconomic issues • C
Slide 7: Fuel Segment
Non-GAAP EBITDA Margin Fuel 7 Note: Cost of Sales includes raw material costs, collection costs and factory costs. EBITDA Bridge Q2-2016 to Q2-2017 (millions) Fuel Segment $9.8 $10.1 $9.3 $13.8 0 5 10 15 20 25 Cost of Sales ($9.7) Volumes ($2.1) Price / Yield FX Impact ($0.3) Adjusted EBITDA ($1.2)
Slide 8: Diamond Green Diesel (50% Joint Venture)
• DGD delivered $0.61 cents per gallon EBITDA • Absence of the blenders tax credit affecting year-over-year comparison • Q2 2017 EBITDA: $24.8 million entity level or $12.4 million Darling’s share • Current total debt in JV stands at $62.3 million. Total cash of $154.8 million at the end of June 201
Slide 9: Balance Sheet Highlights and Debt Summary
Balance Sheet Highlights Leverage Ratios 9 Debt Summary Balance Sheet Highlights and Debt Summary July 1, 2017 Actual Credit Agreement Total Debt to EBITDA: 3.59x 5.50x (US$, in thousands) July 1, 2017 Cash (includes restricted cash of $282) 125,099$ Accounts receivable 382,957 Total Inventories 359
Slide 10: Appendix – Additional Information
Appendix – Additional Information
Slide 11: Feed Segment - Historical
11Feed Segment - Historical 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 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 Gross Margin 123.5 124.5 116.2 96.7 460.9 1
Slide 12: Change in Net Sales - Feed Ingredients Segment
12 Change in Net Sales - Three Months Ended July 2, 2016 over July 1, 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 Fats Prot
Slide 13: Historical Finished Product Pricing
13Jacobsen, Wall Street Journal and Thomson Reuters Historical Pricing 2016 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 $23.53 $27.1
Slide 14: Food Segment - Historical
14Food Segment - Historical US$ 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 Revenue $270.2 $283.4 $269.2 $272.1 $1,094.9 $247.9 $272.1 $262.0 $279.9 $1,061.9 $267.8 $279.8 Gross Margin 53.5 60.2 54.8 62.9 231.4 62.3
Slide 15: Fuel Segment - Historical
15 (1) Pro forma Adjusted EBITDA assumes blenders tax credit was received during quarters earned in 2015 and Q1 and Q2 2017 for comparison to 2016 when the blenders tax credit was prospective. Fuel Segment - Historical US$ and metric tons (millions) Q1 2015 Q2 2015 Q3 2015 Q4 2015 Total 2015 Q1 2016
Slide 16: Use of Non-GAAP measures: Adjusted EBITDA
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. Adjust
Slide 17: Adjusted EBITDA and Pro Forma Adjusted EBITDA
17 Note: See slide 16 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 July 2, 2016 of €1.00:USD$1.13 and CAD$1.00:USD$0.78 as compared to the average