Darling Ingredients Inc. · NYSE:DAR
Darling Ingredients — BMO Farm to Market Conference 2019
34 slides from Darling Ingredients's conference presentation, May 14, 2019
Slide 1: Spring 2019
Exhibit – 99.1 Spring 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 that are subject to risks and uncertainties that could cause the actual results of Darling Ingredients Inc. (the “Company”) to differ materially from those expressed or implied in the statements. Statements that are not
Slide 3: Who is Darling Ingredients
3 Who is Darling Ingredients For over 135 years we have led our industry…. 1882 Founded by Ira Darling in Chicago, as a solution to beef Today, we are the world’s largest processor of slaughtered stockyards growth animal by-products transforming them into value-added ingredients and solutions to fee
Slide 4: We operate a diverse global platform
We operate a diverse global platform 4 HQ Irving, Texas 135+ years in business DAR (NYSE) $3.4 billion 200+ locations worldwide Publicly traded 2018 sales since 1994 15 countries revenue 5 continents Industries served: ~10,000 employees Pharma, food, animal feed, pet food, bioenergy, fuel, fertilize
Slide 5: Producing a wide array of products
5 Producing a wide array of products…… that touches the lives of families around the world… Animal feed ingredients every day! Providing solutions to feed and fuel a growing world
Slide 6: Closing the loops with sustainable solutions
6 Closing the loops with sustainable solutions Darling is active Livestock in each market... Food, Pharma Suppliers & Health Markets Meat Feed, Pet Foods Processors & Aquaculture Food Biofuels & production Green Energy Food service Specialty industry ...adding value Markets and safeguarding the food
Slide 7: Growing rapidly for the last years
7 Growing rapidly for the last 16 years….. Over 200 locations on 5 continents 2003 2006 2007 2010 2013 2014 2015 2016-18 2018 • New CEO Acquired Listed on Griffin Industries • Diamond Acquired Name change: 13 new DGD Randall National NYSE: acquisition fills Green Diesel Vion Darling processing Phase
Slide 8: Supported by our basic belief
Supported by our basic belief…… 8 As populations grow, countries’ wealth increase, people eat better and that generally includes center of the plate protein From fish ……. to chicken ……… to pork & beef
Slide 9: And we see this trend continuing
And we see this trend continuing…… 9 Despite Meatless Mondays and plant-based protein alternatives, in 2018, Americans hit an all-time high in meat consumption, ~270.7 pounds/person/year. Though per capita consumption will rise slower (up 3% thru 2030), the world’s total meat consumption will increa
Slide 10: Darling will play a significant role in feeding and fueling the world
…and Darling will play a significant role in 10 feeding and fueling the world Meat production expected to increase from 218 million MT in 1997-1999, to 376 million MT by 2030 Russia China 1.3 m MT 6.6 m MT Europe 3.3 m MT 8.1 m MT 4.9 m MT 48.5 m MT North America 25.6 m MT 12.6 m MT 15.7 m MT 13.8 m
Slide 11: So how do you think about our business?
So how do you think about our business? 11 Darling is in the protein and fat recovery business
Slide 12: Even simplifying it more
12 Even simplifying it more…….. Proteins Fats are sold as sustainable ingredients Collagen Proteins Bioenergy Segmented for reporting into FOOD FEED FUEL
Slide 13: Driving our strategy
Driving our strategy of….. 13 Providing natural and sustainable solutions for feeding and fueling a growing population Accomplished through Building Acquiring Developing New Grapeland, TX poultry plant TripleT acquisition, Springdale, AR animal-based ingredient businesses across the globe
Slide 14: And reported as segments
14 And reported as segments…. $1 billion FOOD company $2 billion FEED company $635 million FUEL company FOOD FEED FUEL* Tons: 1.11 million MT Tons: 8.60 million MT Tons: 1.82 million MT EBITDA: $131.3 5-year avg. EBITDA: $308.1 5-year avg. EBITDA: $148.4 5-year avg. Sector Developments: Sector Devel
Slide 15: Creating strong financial performance & predictable margins from our core segments
Creating strong financial performance & predictable margins from our core segments $600.0 1.35 1.32 $443.3 1.30 $500.0 10,805.0 $512.6 $445.0 $420.8 10,546.2 1.25 10,239.3 $431.4 $400.0 1.20 9,693.7 $300.0 1.18 1.15 8,973.5 1.13 1.10 $200.0 1.108 1.106 1.05 Adjusted EBITDA EBITDA $millionsAdjusted $
Slide 16: However, we see a world in transition
However, we see a world in transition 16 8.5 billion humans to feed by 2030 with dwindling resources to provide for them Clean water Safe Clean Food & Clean Energy air Feed And we believe Darling has an obligation to develop solutions
Slide 17: Climate Change is clearly happening
No matter your view of HOW or WHY, 17 Climate Change is clearly happening There is no single answer – we all must do our part. Darling is well positioned to provide sustainable solutions for our growing world.
Slide 18: Darling and Valero created Diamond Green Diesel
In 2013, Darling Ingredients and Valero Energy 18 joined forces to create Diamond Green Diesel Leading green feedstock supplier Leading green fuel producer • Darling (NYSE: DAR) collects and transforms all • Valero (NYSE: VLO) an international manufacturer and aspects of animal by-product streams in
Slide 19: Creating a solution for clean air and clean energy
19 Creating a solution to help with clean air and clean energy Diamond Green Diesel was originally conceived to fill the mandated volumes driven by the Renewable Fuel Standard RENEWABLE DIESEL (RD) • RD is a drop-in fuel • RD has same chemical properties as petro-diesel, with biofuel advantages • RD
Slide 20: A successful partnership of Ag and Oil
20 A successful partnership of Ag and Oil…… Diamond Green Diesel (50% Joint Venture) US$ (millions) 2014 2015 2016 2017 2018 Q1Q1 US$ (millions) 2014 2015 2016 2017 2018 20192019 EBITDA (Entity) $163.3 $177.0 $174.4 * $246.8 $187.6 $59.7 EBITDA (Darling's share) 81.6 88.5 87.2 * 123.4 93.8 29.8 Gall
Slide 21: Renewable fuel is not solely supported by government mandates
But…. renewable fuel is not solely supported by 21 government mandated programs… RD originally received support from programs intended …and then through agreements & programs, to help agriculture and ensure energy security… focused on combatting climate change… Renewable Fuel Standard Volumes by Yea
Slide 22: Renewable Fuel Mandates helped drive initial demand
Renewable Fuel Mandates helped drive initial demand 22 State (USA) Global Low Carbon Fuel Standard - LCFS • 66 countries have adopted mandates or target goals to reduce emissions • Low Carbon Fuel Standard mandate was enacted in • British Columbia, European Union and United Kingdom have 2007 by the
Slide 23: Low carbon biofuels help lower GHG emissions
Low carbon biofuels help lower GHG emissions 23 from tail pipes = Cleaner air California has led the charge on reducing GHG emissions (2007: LCFS) – Low carbon fuels are mandated to replace increasing percentages of petroleum-based diesel fuel. Low carbon fuels from animal fats and used cooking oils
Slide 24: We are in the early stages of demand for RD
And yet we are in the early stages of demand for RD 24 California Average Carbon Reduction Mandate – State of CA Carbon Price $/MT Spot price 25.00% April 24, 2019 $192.10 20.00% 20.00% 18.75% $168.29 17.30% 16.25% 15.00% 15.00% $100.33 13.75% 12.50% 11.25% $100.33 10.00% 10.00% 8.80% 7.50% $52.11 6
Slide 25: Renewable Diesel is the solution the world recognizes
25 Renewable Diesel is the solution the world recognizes Renewable Diesel is produced from animal fats/used cooking oils and reduces GHG emissions by up to 85% 20 WORLD BIOMASS BASED DIESEL USAGE (Biodiesel & Renewable Diesel) (billions of annual gallons) 15 2.252 3.097 3.832 10 1.862 z 11.741 11.34
Slide 26: The world will also produce renewable diesel
The world will also produce renewable diesel… 26 but this is positive for Darling’s core business 1 3 180,000 MT 620,000 MT capacity capacity 1 1,000,000 MT capacity 1 500,000 MT capacity 1 4 20,000 MT 1,455,000 MT 2 capacity capacity 240,000 MT capacity 1 1,000,000 MT capacity 1 1 230,000 MT 400,00
Slide 27: Darling is the leading processor of low CI feedstocks
Darling is the leading processor of 27 low CI feedstocks in the world… 93% Production Volumes (MTs) 1,600,000 1,505,997 1,342,071 1,385,902 1,400,000 1,284,854 344,569 1,200,000 313,956 316,882 315,717 1,000,000 800,000 z (UCO) Oil Cooking Used Metric Tons Metric 600,000 1,161,428 967,972 1,026,354
Slide 28: Providing DAR a unique opportunity to grow
28 Providing DAR a unique opportunity to grow… • Super Diamond expansion underway • 675 million total annual gallons renewable diesel Start up late 2021 • Parallel 400 million gallon plant • Super Diamond estimated expansion costs of $1.1 billion for entire project includes: - expansion on 28-acre s
Slide 29: With an attractive historical margin structure
With an attractive historical margin structure 29 ➢ 5 year average EBITDA per gallon is 60 $1.26 with Blenders Tax Credit (BTC) included in years 2014-2017 ➢ Capture greater % of LCFS market ➢ Lowering CI scores ➢ Renewable Naphtha to Low CI Markets ➢ Reduced per gallon operating expenses SOURCE: Co
Slide 30: So how do we see the future?
So how do we see the future? 30 Looking back helps us look to the future… Darling Core Historical Proforma Adjusted EBITDA DGD Historical Adjusted EBITDA Darling’s Share $600.0 300 $200.0 300 $512.6 $180.0 $172.5 $500.0 275 250 275 250 Gallonssold (millions) $445.0 $455.9 $427.5 $160.0 projected $42
Slide 31: Super Diamond will transform and revalue DAR
What do we see in our future? 31 Super Diamond will transform and revalue DAR Estimated Consolidated Proforma $1,000 $900 $876 $800 $700 $624 $600 $624 $624 $600 87.4 $500 $876.0 $400 • Assumes 5 year avg. EBITDA for Core $300 $624.0 $624.0 $624.0 512.6 • Assumes 275 mm gallons per year $200 @$1.26/
Slide 32: Did you know that Darling...
32 Did you know that Darling… Processes Returns Removes 10% CO2 10 bln equivalent of animal gallons of byproducts 450,000 water to worldwide environment cars from road (from DGD production) Produces Provides Avoids 3.3 bln ~12,000 5.4 mln pounds of homes Metric tons of low CI with green CO2 emission
Slide 33: A company focused on innovation
Darling Ingredients… 33 A company focused on innovation Sustainable natural ingredients For the Providing people Insect Collagen solutions to Proteins Peptides feed and fuel a growing For the planet population For the Digitization Renewable planet & Diesel Automation
Slide 34: Each day, we invest in a greener future
• Each day, we invest in a greener future. Touching • A cleaner world. your life every day • Healthier people and animals. • A profitable future. Feeding and fueling a growing population
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