Darling Ingredients Inc. · NYSE:DAR
Darling Ingredients — Q1 2017 Earnings Presentation
17 slides from Darling Ingredients's earnings presentation, May 11, 2017
Slide 1: First 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 First Quarter 2017 Earnings Conference Call May 12, 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: First Quarter Earnings Summary
3 $50 $60 $70 $80 $90 $100 $110 $120 $130 Quarterly Adjusted EBITDA 1Q16 2Q16 3Q16 4Q16 1Q17 $124.0 $106.2 $98.9 $106.2 $102.5 Gross Profit and Margin $ 1 8 0 .7 $ 2 0 0 .2 $ 1 8 2 .7 $ 1 9 2 .8 $ 1 9 0 .4 $140 $150 $160 $170 $180 $190 $200 $210 1Q16 2Q16 3Q16 4Q16 1Q17 Gross Profit 22.8% 21.7% % Gr
Slide 4: Q1 2017 Overview
4 Q1 2017 Overview Year over Year • Global volumes up 4.3% over Q1 2016 • Global pricing increased across most business lines • Food segment reduction related to challenges in South American gelatin business • SG&A expense higher due to incremental one time administrative cost related to equity awar
Slide 5: Key Drivers – Q1 2017: Feed
Key Drivers– Q1 2017 5 Non-GAAP EBITDA Margin Feed Note: Cost of Sales includes raw material costs, collection costs and factory costs. EBITDA Bridge Q4-2016 to Q1-2017 (millions) Feed Segment $74.5$74.6 $19.0 $73.9 0 20 40 60 80 100 EBITDA Q1 17 FX Impact ($0.1) Adjusted EBITDA Other ($3.4) Cost of
Slide 6: Key Drivers – Q1 2017: Food
Note: Cost of Sales includes raw material costs, collection costs and factory costs. Non-GAAP EBITDA Margin Food Key Drivers– Q1 2017 • Rousselot gelatin business delivered a steady performance in China and Europe with slight seasonality in NA and challenges in South America • Sonac edible fats held
Slide 7: Key Drivers – Q1 2017: Fuel
Key Drivers– Q1 2017 • Absence of the blenders tax credit in 2017 vs 2016 • Sequential difference also related to an insurance settlement and Rendac tariff true-up in Q4 2016 • Ecoson biophosphate plant back on line and gaining momentum • North American biodiesel operating at small losses Non-GAAP E
Slide 8: Diamond Green Diesel (50% Joint Venture)
• Absence of the blenders tax credit affecting year over year comparison • Second major maintenance turnaround completed in approximately 18 days • Issued partner dividend of $25 million each in February 2017 • Q1 2017 EBITDA: $10.1 million entity level or $5.0 million Darling’s share • Current tota
Slide 9: Balance Sheet Highlights and Debt Summary
Balance Sheet Highlights Leverage Ratios 9 Debt Summary Balance Sheet Highlights and Debt Summary April 1, 2017 Actual Credit Agreement Total Debt to EBITDA: 3.46 5.50 (US$, in thousands) April 1, 2017 Cash (includes restricted cash of $282) 139,162$ Accounts receivable 389,864 Total Inventories 342
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 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 Gross Margin 123.5 124.5 116.2 96.7 460.9 103.5 126.8 117.
Slide 12: Feed Ingredients Segment Change in Net Sales
12 Change in Net Sales - Year over Year (1Q 2016 over 1Q 2017) Change in Net Sales – Three Months Ended (Sequential 4Q16 over 1Q17) (1) Rendering Net Sales- Other category includes hides, pet food, and service charges (2) Other Net Sales category includes trap services, industrial residual services
Slide 13: Historical Pricing
13Jacobsen, Wall Street Journal and Thomson Reuters Historical Pricing QTR. Over QTR. Year Over Year Comparison Q4-2016 Q1-2017 % Q1-2016 Q1-2017 % Average Jacobsen Prices (USD) Avg. Avg. Change Avg. Avg. Change Bleachable Fancy Tallow - Chicago Renderer / cwt $30.77 $31.35 1.9% $27.07 $31.35 15.8%
Slide 14: Food Segment - Historical
14Food Segment - Historical US$ 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 Revenue $270.2 $283.4 $269.2 $272.1 $1,094.9 $247.9 $272.1 $262.0 $279.9 $1,061.9 $267.8 Gross Margin 53.5 60.2 54.8 62.9 231.4 62.3 57.8 50.7 56.7
Slide 15: Fuel Segment - Historical
15 (1) Pro forma Adjusted EBITDA assumes blenders tax credit was received during quarters earned in 2015 and Q1 2017 for comparison to 2016 when the blenders tax credit was prospective. Fuel Segment - Historical US$ and metric tons (millions) Q1 2015 Q2 2015 Q3 2015 Q4 2015 Total 2015 Q1 2016 Q2 201
Slide 16: Use of Non-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, 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) Foreign currency exchange rates held constant for comparable quarters (€1.00:USD$1.10 rate April 2, 2016 quarter; €1.00:USD $1.08 rate December 31, 2016 quarter). Adjusted EBITDA and Pro Forma Adj