Darling Ingredients Inc. · NYSE:DAR
Darling Ingredients — Darling International — Investor Presentation (May 2009)
37 slides from Darling Ingredients's investor presentation, May 27, 2009
Slide 1: Investor Presentation June 2009
Investor Presentation June 2009 NYSE: DAR Investor Presentation
Slide 2: Forward-Looking Statements
2 Forward-Looking Statements This presentation contains forward-looking statements regarding the business operations of Darling and the industry in which it operates. These statements are identified by words such as “may,” “will,” “expect,” “believe,” “intend,” “anticipate,” “should,” “estimate,” “c
Slide 3: America's leading provider of rendering, recycling and recovery solutions
3 Over a century old, Darling International Inc. is America’s leading provider of rendering, recycling and recovery solutions to the nation’s food industry.
Slide 4: Who we are
4 Founded in 1882 Headquartered in Dallas, TX 1900 employees Public since 1994 NYSE Listed (DAR) Largest independent rendering company with 81 locations, 43 processing plants nationwide Reports under two segments: – Rendering – Restaurant services Who we are:
Slide 5: Essential Gate Keeper for People & Planet
5 Essential “Gate Keeper” for People & Planet Composting - Volume would fill 10,000 new Dallas Cowboy stadiums per year Landfill - Volume would reduce existing US landfill space by 25% per year and increase GHG emissions Incineration - Cost prohibitive and has air quality issues Digesting - Operatio
Slide 6: Rendering... invisible industry with massive scale
6 Rendering… invisible industry with massive scale Animal and food by-product recycling industry is “mission critical” in the food supply chain and is the most efficient and environmentally sound disposal alternative for a sustainable society. Over 59 billion pounds of inedible by-products generated
Slide 7: U.S. Animal Agriculture Annual Production
7 35 million cattle (49% of live wt. not used for human food) 100 million hogs (44% not used for human food) 8 billion chickens (37% not used for human food) 280 million turkeys (36% not used for human food) U.S. Animal Agriculture Annual Production
Slide 8: How it All Fits Together
RAW MATERIAL Tallow Meat & Bone Grease Hides Lubricants Textiles Plastics Shampoo Emulsifiers Cleaners Creams Esters Paints Plastics Lubricants Inks Glues Solvents Antifreeze Explosives Rubber Plastics Tires Lubricants 8 How it All Fits Together Leather Shoes Garments Upholstery Bio- Fuels Animal Fe
Slide 9: Industry Leader: a national footprint with scale
9 Industry Leader Only recycling/rendering company with a national footprint operating in 42 states - Network of 43 processing facilities from coast to coast - Supported by 38 accumulation centers. A national footprint with scale ……
Slide 10: Reporting Segments
10 Reporting Segments Rendering Rendering is the process of recycling animal and food waste products into useful commercial goods, including tallow, protein meals (meat and bone meal), yellow grease, and hides. Restaurant Services Darling is the only US provider of collection, storage, transport, an
Slide 11: Rendering Process
Grinding Cooking Defatting 11 Rendering Process Meal Fat
Slide 12: Raw Materials - turning this
12 Raw Materials - turning this … Offal Bones and fat Blood Animals dead on arrival, in transit or on farms Feathers
Slide 13: into this
13 … into this
Slide 14: Rendering Overview
14 Rendering Overview Darling operates a fleet of approx 960 trucks to collect raw materials from approx 116,000 food service establishments, butcher shops, grocery stores, and independent meat and poultry processors nationwide. “Formula” basis: Applied to approx 58% of Darling’s annual raw material
Slide 15: Restaurant Services Overview
15 Restaurant Services Overview Basic cooking oil removal (COR) service - Collection of used cooking oil from inside systems or outside corrals Premium service offered in conjunction with COR - Self contained used cooking oil storage system inside or outside customer’s premises Grease trap maintenan
Slide 16: Cooking Oil Removal
16 Cooking Oil Removal Bundled services - Complete, individualized used cooking oil collection and recycling services nationwide through local providers Environmental compliance - Efficient, reliable pickup and disposal of non-recyclable waste
Slide 17: CleanStar
17 CleanStar Environmentally safe and efficient - Used cooking oil is pumped directly into sealed, insulated CleanStar storage tank with press of a button Customer choice - Option of inside or outside storage systems to fit customer needs
Slide 18: Torvac (Trap)
18 Torvac (Trap) Ongoing maintenance - Provides manpower, equipment and expertise to find and fix grease trap problems Compliance - Removed material is tracked and handled in a legal and environmentally sound manner
Slide 19: National Service Center
19 National Service Center Darling’s National Service Center (NSC) offers complete service management for all cooking oil removal, grease trap and rendering services. Manages grease and rendering related service needs. Ensures compliance for trap regulations and ordinances. 24 hr/day, 7 day/week hig
Slide 20: Revenues by segment 2004-2008
$900,000 $800,000 $700,000 ~ $600,000 $500,000 $400,000 $300,000 $200,000 -- $100,000 $0 5 807,492 738,536 645,313 © Rendering 406,990 Revenues 308,867 @ Restaurant Services Revenues 2004 2005 2006 2007 2008 t™ DARLIN WN G
Slide 21: Operating Cash Flows
21 Operating Cash Flows (in millions)
Slide 22: Five-year working capital, debt, net worth, total assets
5 Year Working Capital si00 «Year Debt $80 $80 ——__ $60 - $60 $40 $40 $20 | | | s2 | ral of T | (amilins>QQ4 2005 2006 2007 2008 tno 2004 5008 2006 2007 2008 $300 _ 5 Year Net Worth goo 5 Year Total Assets $200 | $400 | $300 | #100) it $200 - i o $100 | | . om 004 2005 2006 2007 2008 ee ; 2004 2005
Slide 23: Balance Sheet
CASH ACCOUNTS RECEIVABLE INVENTORIES INCOME TAXES REFUNDABLE OTHER CURRENT ASSETS TOTAL CURRENTASSETS: PROPERTY, PLANT & EQUIP GOODWILL OTHER TOTALASSETS ‘CURRENTPORTION - DEBT A/P AND ACCRUED EXPENSES TOTAL CURRENTLIABILITIES LONG-TERM DEBT, LESS CURRENT OTHER LIABILITIES TOTAL LIABILITIES ‘STOCKHO
Slide 24: Core Business Growth through Acquisition
24 Core Business Growth through Acquisition March Dec May July Dec Feb Aug Oct Enviro Vac, Inc. FL, GA KC metro NYC metro GA GA So CA TX Burrows Industries, Inc. dba Minuteman Pumping Ace Grease Service J&R Rendering, Inc. Southeastern Maintenance & Construction Inc. National By-Products, LLC API Re
Slide 25: Darling International Inc. - Triangle of Value
25 Darling International Inc. - Triangle of Value
Slide 26: Green Impact in a Carbon World
Item Average Plant Industry CO 2 equivalents recycled, metric tons/year 233,740 73,807,000 Greenhouse gas reduction strategy Average plant Industry Number of cars taken off the road per year 42,810 13,517,766 Seedling trees planted per year 5,993,333 1,892,487,177 Tons of garbage diverted from landf
Slide 27: O7Sen FIGS...
O7Sen FIGS... a
Slide 28: Darling is uniquely positioned
28 Darling is uniquely positioned A top producer of animal fats and greases “Similar to owning the oil field” Limited food impact (Food vs. Fuel) Source: National Biodiesel Board.
Slide 29: Potential Impact of Revised RFS
29 Potential Impact of Revised RFS Proposed revised RFS released on May 5, 2009 Comment period before final rule decided Assigned mandatory greenhouse gas (GHG) reduction minimums Assigned a value of 80% GHG emission reduction to “waste greases” versus a 22% reduction assigned to vegetable oil (soy)
Slide 30: Bio-diesel has not been the solution so far for animal fats
Petro-Diesel Biodiesel (FAME) Green Diesel NOx Emission Baseline + 10 -10 to 0 Cetane 40-55 50-65 75-90 Cold flow properties Baseline Poor Excellent Oxidative stability Baseline Poor Excellent Energy content Baseline Lower Similar 30 Bio-diesel has not been the solution so far for animal fats Animal
Slide 31: Green diesel may be a better solution?
31 Green diesel may be a better solution? Green diesel is a biofuel indistinguishable from petroleum diesel; it can be blended to any proportion Green diesel can be used in any proportion within today’s infrastructure, from pipelines and storage to gas pumps and automobiles Green diesel has excellen
Slide 32: Bio-fuels may be a game changer for DAR
2006 2007 2008 3-Yr Average Per # price of diesel fuel .27 .30 .45 .34 Per # price of animal fat/used grease .16 .26 .31 .24 Price premium as fuel before tax credit .11 .04 .14 .10 Per # value of tax credit .14 .14 .14 .14 Price premium as fuel after tax credit .25 .18 .28 .24 Billions of Annual Lbs
Slide 33: Animal fat price versus soy oil
itionally been a discountto vegetabl Soy oll —BO Futures —BFT Ppunog Jed sjuap c (
Slide 34: Renewable Diesel in 2008 Earnings Snapshot
MMs Annual $ Revenue renewable diesel 526 Other products 30 Total revenue 556 Input cost 375 Plant operating cost 39 Total expenses 414 EBITDA 142 Depreciation 14 EBIT 128 Taxes 47 Entity PAT 81 Darling equity investment 50 Darling return on equity 81% 34 Renewable Diesel in 2008 10,000 barrel/day p
Slide 35: Green Diesel and the Carbon World
U.S. ANIMAL FAT & USED GREASE SUPPLY Gallons green diesel 1,250,000,000 X #’s/gallon carbon reduction 18 = Total #’s of carbon reduction 22,500,000,000 or Metric tonnes carbon credit 10,205,933 X Assumed per tonne credit $35 = Available income carbon credits $357,207,655 Green Diesel and the Carbon
Slide 36: Our Concept to enter Green Diesel Business
36 Our Concept to enter “Green Diesel” Business: Joint venture to construct a 6,800 - 10,000 barrel/ day “ Green Diesel Refinery ” Facility to have pre-treatment capability for multi-feedstock flexibility, but tallow and used cooking oil are primary Cost to construct - $150-$200 million Site locatio
Slide 37: The Recycling Company of Yesterday... The Fuel Company of Tomorrow
The RECYCLING COMPANY of YESTERDAY… The FUEL COMPANY of TOMMORROW CARBON FRIENDLY
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