Darling Ingredients Inc. · NYSE:DAR
Darling Ingredients — Q2 2023 Earnings Presentation
21 slides from Darling Ingredients's earnings presentation, Aug 9, 2023
Slide 1: Earnings Report Q2 2023
Earnings Report Q2 | August 8, 2023
Slide 2: Safe Harbor Statement
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 forward-looking
Slide 3: Q2 2023 Business Highlights
Q2 2023 Business Highlights • A leader in sustainability Solid Financial Performance Q2 – 2023 • Published Sustainability Progress Report • Achieved water goal, 3 years early Net Sales $1,757.6 million • Decreased global emissions by 8% per unit of raw material processed Net Income $252.4 million •
Slide 4: Record Quarterly Earnings – Driven by Vertical Strength
Record Quarterly Earnings – Driven by Vertical Strength In millions, except % YTD YTD % Balance Sheet Q2-2023 Q2-2022 per share variance 2023 2022 variance As of As of Net Sales $1,757.6 $1,650.2 6.5% $3,548.8 $3,016.5 17.6% In millions, except ratio data 7/1/2023 12/31/2022 Gross Margin $397.9 $418
Slide 5: EBITDA
EBITDA Combined Adjusted EBITDA Q2 2023 % of Total EBITDA by Segment (In millions) $508.3 $500 $450 $413.0 $418.4 $400 $402.6 $394.7 Feed $91 $247 35% $350 $129 $330.7 $120 $146 Food $300 $87 14% $250 Fuel 51% $200 $150 $312 $274 $289 $267 $261 $244 $100 $50 $0 Q1 2022 Q2 2022 Q3 2022 Q4 2022 Q1 202
Slide 6: Feed Segment
Feed Segment US $ (in millions) Q2-2023 Q2-2022 YTD-2023 YTD-2022 Net Sales $ 1,141,661 $ 1,170,347 $ 2,379,155 $ 2,049,785 Key Drivers Cost of sales & operating expenses 876,413 864,306 1,826,485 1,509,829 • Lower fat prices drove decrease in net sales Gross Margin $ 265,248 $ 306,041 $ 552,670 $ 5
Slide 7: Feed Segment
Feed Segment US $ (in millions, unaudited) Fats Proteins Other Total Rendering Used Cooking Oil Bakery Other Total Net Sales Three Months Ended July 2, 2022 $ 498.8 $ 351.1 $ 64.2 $ 914.1 $ 152.6 $ 89.7 $ 13.9 $ 1,170.3 Increase/(Decrease) in sales volumes 43.7 59.6 - 103.3 39.9 (11.6) - 131.6 Incre
Slide 8: Food Segment
Food Segment Key Drivers US $ (in millions) Q2-2023 Q2-2022 YTD-2023 YTD-2022 • First full quarter including Gelnex Net Sales $ 476,093 $ 369,181 $ 872,485 $ 723,995 Cost of sales & operating expenses 371,095 280,964 661,210 551,276 Gross Margin $ 104,998 $ 88,217 $ 211,375 $ 172,719 • Q2 adjusted E
Slide 9: Food Segment
Food Segment Q2 2023 % of Sales Breakdown Food Segment Trailing 4Q adjusted EBITDA $280 $260 $240 $220 87% $200 $180 8% $160 $140 $120 5% $100 Collagen Edible fats Other products Trailing 4 Q's Q2 – 23 9
Slide 10: Fuel Segment
Fuel Segment US $ (in millions) Q2-2023 Q2-2022 YTD-2023 YTD-2022 Net Sales $ 139,867 $ 110,660 $ 297,153 $ 242,742 Cost of sales & operating expenses 112,194 86,237 238,980 190,979 Key Drivers • Lower feedstock prices, higher production Gross Margin $ 27,673 $ 24,423 $ 58,173 $ 51,763 led to strong
Slide 11: Fuel Segment
Fuel Segment Diamond Green Diesel Quarterly Avg. Prices D4 RINs (1.7 Multiple) & Yellow Grease - IL US $ and gallons (in millions) Q2 2023 Q2 2022 YTD-2023 YTD-2022 $0.70 $3.50 EBITDA (Entity) – recorded w/no $107.3 ($17.2) $119.9 $0.1 $0.60 $3.00 BTC EBITDA (Entity) – recorded including $0.50 $2.50
Slide 12: Q2 Conclusions 2023 Guidance Outlook
Q2 Conclusions 2023 Guidance Outlook Combined Adjusted $1.875 billion Strong global financial EBITDA performance Diamond Green Diesel 1.2 billion gallons sold Diamond Green Diesel Continued dividend distribution Powerful vertical integration proven Capital Expenditures $565 million DGD cash dividend
Slide 13: Appendix
APPENDIX ADDITIONAL INFORMATION APPENDIX Appendix ADDITIONAL INFORMATION
Slide 14: California LCFS and RIN Value History
$0 $50 $100 $150 $200 $250 1/2018 Q2 – 23 4/2018 7/2018 10/2018 1/2019 4/2019 7/2019 10/2019 1/2020 4/2020 7/2020 10/2020 1/2021 4/2021 7/2021 10/2021 1/2022 4/2022 Monthly Average LCFS Carbon Credit Price (USD/MT) 7/2022 10/2022 1/2023 4/2023 6/2023 14 California LCFS and RIN Value History
Slide 15: Feed Segment – Historical
Feed Segment – Historical US$ (in millions) Q1-2022 Q2-2022 Q3-2022 Q4-2022 Total 2022 Q1-2023 Q2-2023 Net Sales $ 879.4 $ 1,170.3 $ 1,273.1 $ 1,216.1 $ 4,539.0 $ 1,237.5 $ 1,141.7 Gross Margin 233.9 306.0 260.2 265.3 1,065.5 287.4 265.2 Gross Margin % 26.6% 26.1% 20.4% 21.8% 23.5% 23.2% 23.2% Loss
Slide 16: Food Segment – Historical
Food Segment – Historical US$ (in millions) Q1 -2022 Q2-2022 Q3-2022 Q4-2022 Total 2022 Q1-2023 Q2-2023 Net Sales $ 354.8 $ 369.2 $ 347.9 $387.7 $1,459.6 $396.4 $ 476.1 Gross Margin 84.5 88.2 91.3 93.3 357.4 106.3 105.0 Gross Margin % 23.8% 23.9% 26.3% 24.1% 24.5% 26.8% 22.1% Loss (gain) on sale of
Slide 17: Fuel Segment – Historical
Fuel Segment – Historical US$ (in millions) Q1-2022 Q2-2022 Q3-2022 Q4-2022 Total 2022 Q1-2023 Q2-2023 Net Sales $ 132.0 $ 110.7 $ 126.6 $ 164.3 $ 533.6 $157.3 $139.9 Gross Margin 27.3 24.4 24.8 30.2 106.7 30.5 27.7 Gross Margin % 20.7% 22.1% 19.6% 18.4% 20.0% 19.4% 19.8% Loss (gain) on sale of asse
Slide 18: Historical Pricing
Historical Pricing 2023 Finished Product Pricing 2023 Average Jacobsen Prices (USD) Feed Segment Ingredi ents 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 $68.00 $60.92 $55.80 $61.39
Slide 19: Event Calendar
Event Calendar Barclays’ CEO Energy-Power Conference • New York • Sept. 6 Tudor Pickering Holt Renewable Fuels Conference • New York • Sept. 12 JP Morgan All Stars Conference • London • Sept. 21 Q2 – 23 19
Slide 20: Non-U.S. GAAP Measures
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 alternative to net
Slide 21: Earnings Report
EARNINGS REPORT Q2 | August 8, 2023