Darling Ingredients Inc. · NYSE:DAR
Darling Ingredients — Investor Presentation (March 2019)
42 slides from Darling Ingredients's investor presentation, Mar 19, 2019
Slide 1: March 2019 Investor Presentation
Exhibit 99.1 March 2019 Randall C. Stuewe, Chairman and CEO Brad Phillips, EVP Chief Financial Officer Melissa A. Gaither, VP IR and Global Communications
Slide 2: Safe Harbor Statement
2 Safe Harbor Statement 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,
Slide 3: Let us show you how… touches the lives of families around the world
Let us show you how… 3 touches the lives of families around the world… every day!
Slide 4: It starts with a global presence and diverse platform
4 It starts with a GLOBAL presence and diverse platform… 200+ Operations on …in 15 Irving TX locations 5 countries world headquarters worldwide continents… in USA 135+ 10,000 $3.4 billion DAR (NYSE) years in ~ employees 2018 sales publicly traded business internationally revenue since 1994
Slide 5: It continues by touching your life at home
5 It continues by touching your life at home
Slide 6: Also in the great outdoors
6 Also in the great outdoors… Animal feed ingredients Supplements for animal health
Slide 7: And ultimately all around us
7 And ultimately all around us… Cellular concrete Energy bar Metal mold release Sunscreen lotions Surgical sponge X-ray film coating Soaps, cleansers Antiseptics Textiles Insulin
Slide 8: Our strategy: Global leader in sustainable protein and nutrient-recovered ingredients
8 Our strategy is to distinguish ourselves as the Global Leader in the production of the highest quality sustainable protein and nutrient-recovered ingredients to a growing population. FOOD FEED FUEL To accomplish this, we will BUILD, DEVELOP and ACQUIRE businesses within geographies where we can ac
Slide 9: We see a World of Growth
9 We see a “World of Growth” 36% of sales 6% of sales 54% of sales 2% of sales Ingredients produced: Food, Feed & Fuel Food & Feed 2% Food of sales Feed Our global presence enables us to Note: Net Sales from 2018 grow our FF&F business lines around the world
Slide 10: Population growth and better nutrition drive center of the plate dining
10 With an underlying assumption … As population grows, wealth is created and better nutrition evolves. Center of the plate dining becomes a staple in the global diet. Africa India Latin America Asia-Pacific Europe No. America FORECAST Source: Company, based on multiple population data reports Sourc
Slide 11: Protein consumption driven by economics
11 And protein consumption will be driven by economics to produce Cattle* Pig Chicken Fish** Feed needed to gain 1 lb. of weight 6 lbs. 2.9 lbs. 1.9 lbs. 1.0 lbs. Time to 18-22 Months 6-7 Months market 1-2 Months 5-8 Months Average weight at 1-2 lbs. slaughter 3-6 lbs. 240-270 lbs. Source: 1,200-1,4
Slide 12: Global meat production grows at 2% annually
12 While global meat production grows at 2% annually Global Meat Production Forecast 2018 269 million MT of meat is produced annually, growing at ~2%... (per USDA) ...generating over 109 million MT of meat by-products globally. Source: USDA and http://www.indexmundi.com/agriculture/?commodity=broile
Slide 13: Supplying raw material to create a portfolio of diverse ingredients
13 Supplying raw material to create a portfolio of diverse ingredients… Processed Processed Processed 1.11 million MT 8.60 million MT 1.18 million* MT ~$1 billion ~$2 billion ~$635 million FOOD FEED FUEL company company company Note: Includes DGD Revenues Note: Processed amounts are for raw material
Slide 14: Acquiring raw material and managing the spread is key
14 Where acquiring the raw material and managing the spread is key 5% 5% 70% 100% 100% 20% FEED FOOD FUEL Spread Managed Margin Spread Managed Margin Fee for Service Commodity Exposed Shared Margin Fee for Service BUSINESS DRIVERS Spread Commodity Shared Fee for Managed Exposed Margin Service Margin
Slide 15: Food segment - Ingredients for living
15 FOOD segment - Ingredients for living ~$1 billion FOOD FOOD company Gelatin & Hydrolyzed Collagen Peptides Argentina, Belgium, Brazil, China, France, Spain, US Strong performance & margin stability $140.0 $128.1 $130.4 $131.9 $129.7 30% Food Grade Fats $120.0 25% Belgium, Germany, Netherlands $10
Slide 16: Feed segment - Nutrients for growth
16 FEED segment – Nutrients for growth ~$2 billion FEED FEED Fats company Canada, Belgium, Germany, Netherlands, Poland, USA Proteins Strong performance & margin stability Canada, Belgium, Germany, Netherlands, Poland, USA $400.0 30% $351.1 $316.5 $297.1 25% UCO Services $300.0 $282.3 $277.1 Canada,
Slide 17: Fuel segment - Energy for today's world
17 FUEL segment – Energy for today’s world ~$635 million FUEL FUEL company Strong performance & margin stability Note: Includes DGD Revenues $70.0 $57.7 50% $57.8 $57.6 Green Energy $60.0 $49.2 40% Netherlands, Belgium, Germany $50.0 $43.9 $40.0 30% $30.0 23.4% 20% Green Electricity $20.0 19.2% 19.5
Slide 18: Strong financial performance and predictable margins from core segments
Creating strong financial performance & 18 predictable margins from our core segments DAR - Consolidated Core Business 22.3% 21.1% 21.7% 21.5% 21.9% Adjusted EBITDA Adj. EBITDA Margin Gross Margin % Earnings flat due to US$ (millions) deflationary pressure and FX… …creating optionality for the futur
Slide 19: Diamond Green Diesel poised to transform low carbon fuel
With Diamond Green Diesel poised to transform 19 DAR’s oilfield into low carbon fuel #1 Producer of Low Carbon Feedstocks in North America Transforming animal fats and used cooking oils to clean-burning renewable fuel Diamond Green Diesel is a 50/50 joint venture between Darling Ingredients and Vale
Slide 20: Global Biofuel Demand
20 Global Biofuel Demand WORLD BIOMASS BASED DIESEL (Biodiesel & Renewable Diesel) USAGE 18 (Billions of annual gallons) 16 14 2.252 3.097 3.832 12 10 1.862 8 6 11.741 11.343 11.448 9.688 4 2 0 2018 2020 2025 2030 Biodiesel Renewable Diesel • Biomass Based Diesel usage is projected to increase due t
Slide 21: Approved expansion capacity of DGD - Super Diamond
Approved expansion capacity of DGD – Super Diamond 21 • Super Diamond expansion project Super Diamond approved to 675 million total annual gallons Phase 3 expansion of renewable diesel plus additional 50–60 approved parallel independent million gallons of renewable Naphtha gallons plant to bring tot
Slide 22: Super Diamond Dynamics
Super Diamond Dynamics 22 INCREASE CAPACITY 275 million gallons annually increased to 675 million gallons annually Parallel Independent plant (increase of 400 million gallons-145%) ➢ Ability to market Naphtha to low CI markets + ➢ Capture greater % of LCFS value ➢ Lower CI scores improving sales val
Slide 23: Accelerating growth through Super Diamond expansion
Accelerating growth through 23 Super Diamond expansion Ingredients Business Historical Free Cash Projected Darling Pro Forma EBITDA (est.) FCF ($ in millions) $ in millions $1,203 3 Year Average (2016 - 2018) $751 $751 $836 Ingredients EBITDA Average: $ 440 CAPEX: Maintenance CAPEX (197) 2019 2020 2
Slide 24: Continuing our journey
For 137 years, we have touched the lives of many and 24 will continue our journey by…. • Relying on our core values of Entrepreneurship, Transparency and Integrity • Believing in center of the plate dining & meat production growth • Structuring our business model to generate predictable cash returns
Slide 25: DAR - A global growth platform
DAR— A GLOBAL GROWTH PLATFORM Touching FOR your life GENERATIONS every day TO COME Creating sustainable food, feed and fuel ingredients for a growing population
Slide 26: Financials
FINANCIALS ae gp a * S¥4 4 I y q ‘ \ TF ad ¢ Fi DARLING INGREDIENTS
Slide 27: Consolidated Earnings 2018 Overview
Consolidated Earnings 27 2018 Overview Q1 Q2 Q3 Q4 Total Q1 Q2 Q3 Q4 Total US$ (millions) except per share price Q 2017 2017 2017 2017 2017 2018 2018 2018 2018 2018 4 • Global volumes up 3.3% over 2017 Revenue $ 878.5 $ 894.9 $ 936.3 $ 952.6 $ 3,662.3 $ 875.4 $ 846.6 $ 812.6 $ 853.1 $ 3,387.7 190.5
Slide 28: Adjusted EBITDA and Pro Forma Adjusted EBITDA
Adjusted EBITDA 28 Adjusted EBITDA and Pro Forma Adjusted EBITDA Three Months Ended - Year over Year Twelve Months Ended - Year over Year (US$ in thousands) December 29, December 30, December 29, December 30, 2018 2017 2018 2017 Net income/(loss) attributable to Darling $ 40,648 $ 105,729 $ 101,496
Slide 29: Balance Sheet Highlights and Debt Summary
Balance Sheet Highlights and Debt Summary 29 (US$,Balance in thousands) Sheet HighlightsJune 30, 2018 Debt Summary Cash(US$, in thousands)(includes restricted cashDecember of $142) 29, 2018 (US$, in thousands) December 29, 2018 $104,262 Cash (includes restricted cash of $107) $ 107,369 Amended Credi
Slide 30: Food Segment
Food Segment 30 US$ and metric tons Q4 Total Q1 Q2 Q3 Q4 Total Adj. EBITDA Bridge Q4-2017 to Q4-2018 (millions) 2017 2017 2018 2018 2018 2018 2018 (millions) (1) (1) (1) (1) (1) 60 Revenue $313.5 $1,157.0 $305.5 $276.7 $265.2 $291.7 $1,139.1 $15.4 ($22.3) Gross Margin 63.6 236.6 56.3 51.9 54.5 58.6
Slide 31: Feed Segment
31 Feed Segment US$ and metric tons Q4 Total Q1 Q2 Q3 Q4 Total (millions) 2017 2017 2018 2018 2018 2018 2018 Adj. EBITDA Bridge Q4-2017 to Q4-2018 (millions) Revenue $562.3 $2,239.5 $485.8 (1) $498.8 (1) $482.7 (1) $485.3 (1) $1,952.6 80 $76.1 ($50.9) Gross Margin 122.0 494.9 116.7 128.0 98.9 110.2
Slide 32: Fuel Segment
32 Fuel Segment (Does not include Diamond Green Diesel JV) US$ and metric tons Q4 Total Q1 Q2 Q3 Q4 Total Adj. EBITDA Bridge Q4-2017 to Q4-2018 (millions) 2017 2017 2018 2018 2018 2018 2018 (millions) Revenue $76.8 $265.8 $84.1 (1) $71.1 (1) $64.6 (1) $76.2 (1) $296.0 (1) Gross Margin 21.4 55.4 24.2
Slide 33: DGD - Entity Level
33 DGD – ENTITY LEVEL Super Diamond phase three expansion ➢ Expansion to 275 million gallons completed and running at approved capacity since early October parallel independent plant to bring total annual ➢ Super Diamond expansion project approved to 675 production to 675 million million total annua
Slide 34: Executing World of Growth Strategy
34 Executing World of Growth Strategy: Financial: • Refinanced 4.75% senior Euro-notes to 3.625% – lowering interest cost and Growth projects completed in 2018: extending terms through 2026 • Protein Conversion Facility – Los Angeles, California Q1 2018 • Protein Conversion Facility (beef) – Wahoo,
Slide 35: Appendix
Appendix Creating sustainable food, feed and fuel ingredients for a growing population
Slide 36: Food Segment - Historical
36 Food Segment - Historical US$ and metric tons Q1 Q2 Q3 Q4 Total Q1 Q2 Q3 Q4 Total Q1 Q2 Q3 Q4 Total (millions) 2016 2016 2016 2016 2016 2017 2017 2017 2017 2017 2018 2018 2018 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) $26
Slide 37: Feed Segment - Historical
37 US$ and metric tons Q1 Q2 Q3 Q4 Total Q1 Q2 Q3 Q4 Total Q1 Q2 Q3 Q4 Total (millions) 2016 2016 2016 2016 2016 2017 2017 2017 2017 2017 2018 2018 2018 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) $482.7 (1) $485.3 (1) $1,952.6 Gr
Slide 38: Feed Ingredients Segment - Net Sales Change
Feed Ingredients Segment – Net Sales 38 Change in Net Sales – Year over Year Three Months Ended December 30, 2017 over December 29, 2018 Rendering Sales Change in Net Sales - 4Q17 to 4Q18 Total Used Fats Proteins Other (1) Rendering Cooking Oil Bakery Other (2) Total Net Sales Three Months Ended Dec
Slide 39: Historical Finished Product Pricing 2018
Jacobsen, Wall Street Journal and Thomson Reuters 39 Historical Pricing 2018 Finished Product Pricing 2018 Average Jacobsen Prices (USD) Feed Segment Ingredients January February March Q1 Avg. April May June Q2 Avg. July August Sept. Q3 Avg. Oct. Nov. Dec. Q4 Avg. Year Avg. Bleachable Fancy Tallow -
Slide 40: Fuel Segment - Historical
40 Fuel Segment - Historical US$ and metric tons Q1 Q2 Q3 Q4 Total Q1 Q2 Q3 Q4 Total Q1 Q2 Q3 Q4 Total (millions) 2016 2016 2016 2016 2016 2017 2017 2017 2017 2017 2018 2018 2018 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) $64.6 (1) $76.2 (1) $
Slide 41: Locations by continent and process
41 Locations by continent and process Process USA Canada Europe China S. America Australia Total: Feed Ingredients Segment Rendering - (C3 By-products & UCO) 40 5 18 63 Transfer Stations 54 54 Protein Blending 6 6 Bakery 10 10 Used Cooking Oil (processing only) 8 1 9 Pet Food 3 1 4 Grease Trap Servi
Slide 42: Adjusted EBITDA definition
42 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
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