Darling Ingredients Inc. · NYSE:DAR
Darling Ingredients — Investor Presentation (January 2016)
34 slides from Darling Ingredients's investor presentation, Jan 13, 2016
Slide 1: Randall C. Stuewe, Chairman and CEO; John Muse, EVP Chief Financial Officer
Randall C. Stuewe, Chairman and CEO John Muse, EVP Chief Financial Officer Exhibit 99.1
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: Food Feed Fuel Ingredients for a growing population
3 FOOD FEED FUEL INGREDIENTS for a growing population. We will build, acquire and develop businesses where we can achieve a sustainable top 3 market position within 5 years. To be the RECOGNIZED global leader in the production, development and value-adding of sustainable animal and nutrient recovere
Slide 4: Company facts and global platform
Employees: Approx. 10,000 Headquarters: Irving, Texas, USA Industries served: Pharma, food, feed, pet food, technical, fuel, bio-energy, fertilizer Global platform: 5 continents, 200+ locations Founded: 1882 Listed: 1994 Publicly traded: NYSE: DAR LTM 3Q 15 revenue: ~$3.6 billion • Gelatin • Casings
Slide 5: Spread business creates margin opportunity
5 Creates Margin Opportunity DAR is operated as a spread business Operating Costs Transportation Costs Energy Costs Raw Material Availability Competing Ingredient Supply Some sources estimate strong growth in world population which will drive Food, Feed & Fuel demand
Slide 6: Darling (1882 – 2013) to Darling Ingredients Inc.
6 Darling (1882 – 2013): USADarling (1882 – 2013): Darling (1882 – 2013): Today, we are Darling Ingredients Inc.
Slide 7: Three primary segments: Food, Feed, Fuel
The ingredients we produce are used in three primary segments: - Food (pharmaceutical, gelatin, natural casings, edible fats) - Feed (fats & proteins, pet food, nutritional feed supplements, fertilizers) - Fuel (renewable and bio-diesel, green gas, green energy) 7 FOOD FEED FUELFO FEED FUE
Slide 8: Creating sustainable food, feed and fuel ingredients for a growing population
Creating sustainable food, feed and fuel ingredients for a growing population
Slide 9: Food segment business overview
9 Business Overview o Collection and processing of animal by- products into gelatin and hydrolyzed collagen o Collection and processing of porcine/bovine intestines into natural casings o Production of crude heparin and edible fat Key Drivers o Supply and competing uses for bones, hides and pig skin
Slide 10: Food operational highlights 3Q 2015
8 9 10 11 12 Q4 2014 Q1 2015 Q2 2015 Q3 2015 Operational Highlights 3Q 2015 10 Note: Cost of Sales includes raw material costs, collection costs and factory costs. EBITDA Bridge Q2 2015 to Q3 2015 (millions) 9.7% 10.4% 11.4% 10.7% LTM EBITDA Margin Food $32.3 $10.0 ($26.0) $10.3 $28.5 $28.7$1.9 $0.2
Slide 11: Feed segment business overview
11 Business Overview o Rendering: Collection & processing of animal by-products into oils and protein meals / blood plasma powder and hemoglobin o Bakery: Collection & processing of residuals into Cookie Meal® o Restaurant Services: Collection & processing of used cooking oil into non-food grade fat
Slide 12: Feed operational highlights 3Q 2015
11.5 12 12.5 13 13.5 14 14.5 15 Q4 2014 Q1 2015 Q2 2015 Q3 2015 Operational Highlights 3Q 2015 12 Note: Cost of Sales includes raw material costs, collection costs and factory costs. EBITDA Bridge Q2 2015 to Q3 2015 (millions) 12.6% 13.8% 14.3% 14.6% $75.9 ($11.7) $8.7 ($4.6) $8.8 ($0.6)$77.1 $76.5
Slide 13: Fuel segment business overview
13 Business Overview o Conversion of animal fats and recycled greases into biodiesel o Conversion of organic sludge and food waste into biogas o Processing of manure into natural bio-phosphate o DGD 50/50 JV with Valero – convert feedstock into renewable diesel Key Drivers o Raw material volume o Go
Slide 14: Fuel operational highlights 3Q 2015
14 Operational Highlights 3Q 15 Note: Cost of Sales includes raw material costs, collection costs and factory costs. Note: The $1.00/gallon biodiesel tax credit was reinstated for 2015 so the 3Q 2015 EBITDA for Darling’s share of DGD was approximately $11.7 million. This includes a $1.00/gallon per
Slide 15: Diamond Green Diesel and Renewable Fuel Standard
o 126 million gallons of renewable diesel produced in 2014, capacity has been increased to 160 million gallons o 2014 EBITDA: $162.3 million o $126 million tax credit received in April 2015 o $25 million dividend issued in April o Facility debt reduced by $43 million o Total non-recourse JV debt is
Slide 16: Creating sustainable food, feed and fuel ingredients for a growing population
Creating sustainable food, feed and fuel ingredients for a growing population
Slide 17: Macro trends and our strategy highlights
Marco Trends Our Strategy Highlights 17 • Commodities: deflationary environment • Currency: strong dollar • Global supply demand • Population growth • Environmental sustainability focus worldwide • Reduce debt • Allocate capital to synergistic growth opportunities • Leverage international platform f
Slide 18: Growth projects in Food, Feed and Fuel
Food • Europe modernizations and debottlenecking •Specialty product developments •China debottlenecking • Packaged fat •Dubuque, Iowa expansion completed Feed • European rendering bolt-ons •New Arkansas rendering plant 3Q 2016 •New Ohio rendering plant 4Q 2016 •New Nebraska and Kentucky wet pet food
Slide 19: We are Darling Ingredients
19 We are Darling Ingredients
Slide 20: Creating sustainable food, feed and fuel ingredients for a growing population
Creating sustainable food, feed and fuel ingredients for a growing population
Slide 21: Financial highlights LTM Q3 2015
21 o Lower Sales in LTM Q3 2015 vs 2014 due to lower finished product prices and declining currency rates for Euro and Canadian dollar o Lower Adj. Proforma EBITDA in LTM Q3 2015 vs. 2014 due to • Declining finished product prices • Declining currency rate for Euro and Canadian dollar o Working Capi
Slide 22: Adjusted EBITDA and Proforma Adjusted EBITDA
22 Adjusted EBITDA and Proforma Adjusted EBITDA (US$ in thousands) October 3, September 27, 2015 2014 Net income/(loss) attributable to Darling $ (5,898) $ (5,728) Depreciation and amortization 199,970 200,478 Interest expense 82,222 110,783 Income tax expense/(benefit) 14,639 8,349 Foreign currency
Slide 23: Cash Flow Statement nine months ended October 3, 2015
23 Cash Flow Statement Nine Months Ended (US$ in thousands) October 3, 2015 Source: Adjusted EBITDA $ 309,895 Uses: Cap-Ex (162,264) Proceeds from Stock Issuance 171 Stock Repurchase (5,912) Debt repayment net of Euro Bond Issue (62,305) Deferred Loan Costs (17,119) Cash Interest (10-Q) (57,764) Cas
Slide 24: Debt Summary and Balance Sheet Highlights
24 Debt SummaryBalance Sheet Highlights (US$, in thousands) October 3, 2015 Cash 148,886$ Accounts receivable 379,093 Total Inventories 366,775 Net working capital 550,269 Net property, plant and equipment 1,516,598 Total assets 4,848,376$ Total debt 2,024,378$ Shareholders' equity 1,916,873$ (US$,
Slide 25: Revenue and PF Adjusted EBITDA
25 Revenue1 PF Adj. EBITDA (incl. DGD)1 o Decrease in LTM revenue y-o-y is primarily attributable to o Lower finished product prices, primarily global fat markets affecting the Feed Segment o FX impact of a weaker Euro and Canadian dollar o Raw material volumes globally were stronger y-o-y o Decreas
Slide 26: Capex and EBITDA minus Capex
26 Capex1 o Capex spending is being controlled o Spending similar to last year with five new plants in process o Expected to be approximately $230mm for fiscal 2015, which includes the planned investment in five processing plants o Each plant is to generate north of 20-25% returns which are expected
Slide 27: Appendix
APPENDIX 27
Slide 28: Food segment historical results
28 (1) Has impact of inventory step-up in 1st and 2nd quarter. (2) Exclusive of non-cash inventory step-up and Darling Ingredients International 13th week. (3) Raw material process volumes for the first quarter have been adjusted to be consistent with the presentation of the second quarter figures.
Slide 29: Feed segment historical results
(1) Has impact of inventory step-up in 1st and 2nd quarter. (2) Exclusive of non-cash inventory step-up and Darling Ingredients International 13th week. (3) Raw material process volumes have been adjusted to include additional blending materials. 29 (A) Quarters 1, 2 and 3 revenues have been adjuste
Slide 30: Change in YTD net sales 3Q14 to 3Q15
30 Used Fats Proteins Cooking Oil Bakery Other Total Net Sales YTD Third Quarter 2014 494.7$ 734.7$ 142.8$ 167.7$ 275.6$ 1,815.5$ Changes: Increase in sales volumes 34.1 33.7 5.3 31.2 − 104.3 Decrease in finished good prices (87.1) (74.1) (28.0) (34.9) − (224.1) Decrease due to currency exchange rat
Slide 31: Fuel segment historical results
31 (1) Has impact of inventory step-up in 1st quarter. (2) Exclusive of non-cash inventory step-up and Darling Ingredients Int'l 13th week. (3) Raw material process volumes for the first quarter have been adjusted to be consistent with the presentation of the second quarter figures. (A) Quarters 1,
Slide 32: Facilities by process and region
Process USA Canada Europe China S. America Australia Total: Rendering - (C3 By-products & UCO) 92 5 18 115 Bakery 10 10 Used Cooking Oil processing only 8 1 9 Disposal Rendering - (C1 & C2) 6 6 Food Grade Fat Processing 5 5 Blood Processing 1 4 5 1 11 Bone Processing 2 2 Bio Diesel 1 1 2 Renewable D
Slide 33: Adjusted EBITDA definition
Adjusted EBITDA is presented here not as an alternative to net income, but rather as a measure of the Company’s operating performance and is not intended to be a presentation in accordance with GAAP. Since EBITDA (generally, net income plus interest expenses, taxes, depreciation and amortization) is
Slide 34: Creating sustainable food, feed and fuel ingredients for a growing population
34 Creating sustainable food, feed and fuel ingredients for a growing population
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