Darling Ingredients Inc. · NYSE:DAR
Darling Ingredients — Q2 2018 Earnings Presentation
22 slides from Darling Ingredients's earnings presentation, Aug 8, 2018
Slide 1: Darling Ingredients Q2 2018 Earnings Presenters
Exhibit – 99.2 Randall C. Stuewe, Chairman and CEO Brad Phillips, EVP Chief Financial Officer Melissa A. Gaither, VP IR and Global Communications
Slide 2: Forward-looking statements
2 This presentation 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,” “
Slide 3: Consolidated Earnings Q2 2018 Overview
Consolidated Earnings 3 Q2 2018 Overview Q1 Q2 Q3 Q4 Total Q1 Q2 US$ (millions) except per share price 2017 2017 2017 2017 2017 2018 2018 • Total global volumes up 4.0% year over year Revenue $ 878.5 $ 894.9 $ 936.3 $ 952.6 $ 3,662.3 $ 875.4 (1) $ 846.6 (1) Gross Margin 190.5 195.7 193.8 206.8 786.8
Slide 4: Second Quarter 2018 Financial Summary
Second Quarter 2018 Financial Summary 4 $ in millions Q2 2018 Overview Gross Profit and Margin • Net sales - $846.6 million • Net income - $(30.4) million – adjusted (net of tax) to $17.7 million for: $(23.5) million debt refinance costs $(15.5) million sale of TRS $(15.0) closure of Argentina gelat
Slide 5: Feed Segment
Feed Segment 5 US$ and metric tons Q2 Q3 Q4 Total Q1 Q2 (millions) 2017 2017 2017 2017 2018 2018 Adj. EBITDA Bridge Q2-2017 to Q2-2018 (millions) Revenue $549.1 $575.5 $562.3 $2,239.5 $485.8 (1) $498.8 (1) 100 Gross Margin 126.9 126.0 122.0 494.9 116.7 128.0 $84.0 ($57.9) $82.8 $1.3 $84.1 80 Gross M
Slide 6: Food Segment
Food Segment 6 US$ and metric tons Q2 Q3 Q4 Total Q1 Q2 Adj. EBITDA Bridge Q2-2017 to Q2-2018 (millions) 2017 2017 2017 2017 2018 2018 (millions) $29.3 ($26.5) $2.3 $29.7 Revenue (1) $278.4 $298.9 $313.5 $1,157.0 $305.5 (2) $276.7 (2) 30 $27.4 Gross Margin 56.0 60.2 63.6 236.6 56.3 51.9 25 $10.4 Gro
Slide 7: Fuel Segment
7 Fuel Segment (Does not include Diamond Green Diesel JV) US$ and metric tons Q2 Q3 Q4 Total Q1 Q2 (millions) 2017 2017 2017 2017 2018 2018 Adj. EBITDA Bridge Q2-2017 to Q2-2018 (millions) Revenue $67.4 $61.9 $76.8 $265.8 $84.1 (1) $71.1 (1) Gross Margin 12.7 7.6 21.4 55.4 24.2 13.7 $4.5 15 $1.1 $13
Slide 8: DGD – Entity Level
8 DGD – ENTITY LEVEL DGD JV exploring phase ➢ Q2 2018 Entity EBITDA of $36.3 million or three expansion $1.05 per gallon on 34.8 million gallons of 600 - 700 million sales gallons ➢ Lower volumes, higher operating costs, hedge losses and supply chain disruption costs reflected in lower operating mar
Slide 9: Balance Sheet Highlights and Debt Summary
Balance Sheet Highlights and Debt Summary 9 (US$,Balance in thousands) Sheet HighlightsJune 30, 2018 Debt Summary (US$,Cash in thousands)(includes restricted cash Juneof $142) 30, 2018 (US$, in thousands) June 30, 2018 Cash (includes restricted cash$104,262 of $142) $ 104,262 Amended Credit Agreemen
Slide 10: Appendix – Additional Information
10 Appendix – Additional Information
Slide 11: Feed Segment – Historical
11 US$ and metric tons Q1 Q2 Q3 Q4 Total Q1 Q2 Q3 Q4 Total Q1 Q2 (millions) 2016 2016 2016 2016 2016 2017 2017 2017 2017 2017 2018 2018 Revenue $476.2 $543.0 $531.4 $538.5 $2,089.1 $552.6 $549.1 $575.5 $562.3 $2,239.5 $485.8 (1) $498.8 (1) Gross Margin 103.5 126.8 117.8 116.2 464.3 120.0 126.9 126.0
Slide 12: Feed Ingredients Segment – Net Sales Change
Feed Ingredients Segment – Net Sales 12 Change in Net Sales – Year over Year Three Months Ended July 1, 2017 over June 30, 2018 Rendering Sales Change in Net Sales - 2Q17 to 2Q18 Total Used Fats Proteins Other (1) Rendering Cooking Oil Bakery Other (2) Total Net Sales Three Months Ended July 1, 2017
Slide 13: Historical Finished Product Pricing 2018
Jacobsen, Wall Street Journal and Thomson Reuters 13 Historical Pricing 2018 Finished Product Pricing 2018 Average Jacobsen Prices (USD) Feed Segment Ingredients January February March Q1 Avg. April May June Q2 Avg. July QTR. Over QTR. Year Over Year Bleachable Fancy Tallow - Chicago Renderer / cwt
Slide 14: Food Segment - Historical
Food Segment - Historical 14 US$ and metric tons Q1 Q2 Q3 Q4 Total Q1 Q2 Q3 Q4 Total Q1 Q2 (millions) 2016 2016 2016 2016 2016 2017 2017 2017 2017 2017 2018 2018 Revenue (1) $246.6 $270.5 $260.2 $278.4 $1,055.7 $266.2 $278.4 $298.9 $313.5 $1,157.0 $305.5 (2) $276.7 (2) Gross Margin 62.4 57.9 50.7 56
Slide 15: Fuel Segment - Historical
Fuel Segment - Historical 15 US$ and metric tons Q1 Q2 Q3 Q4 Total Q1 Q2 Q3 Q4 Total Q1 Q2 (millions) 2016 2016 2016 2016 2016 2017 2017 2017 2017 2017 2018 2018 Revenue $55.6 $62.3 $60.4 $68.8 $247.1 $59.7 $67.4 $61.9 $76.8 $265.8 $84.1 (1) $71.1 (1) Gross Margin 14.9 15.6 14.2 19.9 64.6 13.7 12.7
Slide 16: Adjusted EBITDA definition
16 Adjusted EBITDA is not a recognized accounting measurement under GAAP; it should not be considered as an alternative to net income, as a measure of operating results, or as an alternative to cash flow as a measure of liquidity, and is not intended to be a presentation in accordance with GAAP. Adj
Slide 17: Adjusted EBITDA and Pro Forma Adjusted EBITDA
Adjusted EBITDA 17 Adjusted EBITDA and Pro Forma Adjusted EBITDA Three Months Ended - Year over Year (US$ in thousands) June 30, July 1, 2018 2017 Net income/(loss) attributable to Darling $ (30,420) $ 9,149 Depreciation and amortization 78,454 72,990 Interest expense 23,016 22,446 Income tax expens
Slide 18: DAR Listed as a Green Revenue Stock
DAR Listed as a Green Revenue Stock 18 FTSE Russell US Green Revenues Index – June 2018 DAR listed: DAR listed: #2 Russell 2000 Green Revenues Index #1 Consumer Goods Industry per Russell 2000 Green Revenues Index Source: FTSE Russell Factsheet June 29, 2018
Slide 19: Renewable Diesel Avoided GHG Emissions
19 RENEWABLE DIESEL AVOIDED GHG EMISSIONS ENERGY PRODUCTION FROM FOSSIL FUEL METRICS CONSUMPTION (Used) CONTRIBUTION (Produced) (Bio) Energy Production Energy 161 million gallons 1.9 million MT Consumption 2017 production CO2e (Bio) Fuel Production 1.9 Mln metric tons fewer GHG emissions (RD emits 8
Slide 20: Net Carbon Footprint Metrics
20 NET CARBON GHG EMISSION FOSSIL FUEL RAW MATERIAL FOOTPRINT METRICS EMISSIONS CARBON CAPTURE CONSUMPTION (Used) CONTRIBUTION (Produced) (Bio) Energy Production Energy Consumption 1.8 Mln metric tonnes 5.3 Mln metric tonnes 3.5 Mln metric tonnes (Bio) Fuel CO e emissions 2 CO2e emissions CO2e emiss
Slide 21: Net Water Contribution Metrics
21 NET WATER WATER FRESH WATER WATER CONTRIBUTION METRICS CONSUMPTION PRODUCTION CONSUMPTION (Used) CONTRIBUTION (Produced) (Bio) Energy Production Energy Consumption 1.53 Bln gallons 1.56 Bln gallons 30 Mln gallons (Bio) Fuel 5.8 Mln cubic meters 5.9 Mln cubic meters Production 100 K cubic meters 1
Slide 22: Darling Investor/Analyst Day October 11, 2018
22 Darling Investor/Analyst Day October 11, 2018 Hotel Monteleone – New Orleans Tour of Diamond Green Diesel