Darling Ingredients Inc. · NYSE:DAR
Darling Ingredients — Q4 2016 Earnings Presentation
18 slides from Darling Ingredients's earnings presentation, Feb 28, 2017
Slide 1: Fourth Quarter 2016 Earnings Conference Call
Randall C. Stuewe, Chairman and CEO Patrick C. Lynch, EVP Chief Administrative Officer Melissa A. Gaither, VP IR and Global Communications Fourth Quarter 2016 Earnings Conference Call March 1, 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: Fourth Quarter Earnings Summary
3 $50 $60 $70 $80 $90 $100 $110 $120 $130 Quarterly Adjusted EBITDA 4Q15 1Q16 2Q16 3Q16 4Q16 $102.7 $124.0 $106.2 Gross Profit and Margin $140 $150 $160 $170 $180 $190 $200 $210 4Q15 1Q16 2Q16 3Q16 4Q16 Gross Profit 21.4% 22.2% $ 2 0 0. 2 $ 1 8 2 .7 22.8% $ 1 8 0. 7 $ 1 9 2. 8 21.7% % Gross Margin $
Slide 4: 2016 Overview
4 2016 Overview • Net income of $102.3 million, or $0.62 per GAAP diluted share • Revenue of $3.398 billion • Adjusted EBITDA of $441.9 million • DGD joint venture EBITDA - $87.2 million (Darling’s share) Key Deliverables in 2016 • Reduced debt by $169.7 million • Improved leverage ratio from 4.32 t
Slide 5: Key Drivers – Q4/YTD 2016: Feed Segment
Key Drivers– Q4/YTD 2016 5 Non-GAAP EBITDA Margin Feed Note: Cost of Sales includes raw material costs, collection costs and factory costs. EBITDA Bridge Q3-2016 to Q4-2016 (millions) Feed Segment $73.9$74.3 $26.0 $78.9 0 20 40 60 80 100 EBITDA Q3 16 ($15.6) VolumesPrice / Yield ($11.5) ($3.5) Cost
Slide 6: Key Drivers – Q4/YTD 2016: Food Segment
Note: Cost of Sales includes raw material costs, collection costs and factory costs. Non-GAAP EBITDA Margin Food Key Drivers– Q4/YTD 2016 • Rousselot recovered in Q4 from Q3 with solid performance in China • Rousselot consistent year over year • Sonac edible fats volumes softer but margins consisten
Slide 7: Key Drivers – Q4/YTD 2016: Fuel Segment
Key Drivers– Q4/YTD 2016 • Consistent and improving segment performance year over year • Rendac performance improved aided by strong volumes in Q4 and year end tariff recovery • Segment includes final settlement of $3.1 million on business interruption claim for the bio-phosphate plant fire in Dec.
Slide 8: Diamond Green Diesel (50% Joint Venture)
DGD continues to deliver strong earnings Issued partner dividend of $25 million each in February 2017 Q4 2016 EBITDA: $73.4 million entity level or $36.7 million Darling’s share Current total debt in JV stands at $70.8 million. Total cash of $166.9 million at the end of December 2016. Fina
Slide 9: Balance Sheet Highlights and Debt Summary
Balance Sheet Highlights Leverage Ratios 9 December 31, 2016 Actual Credit Agreement Total Debt to EBITDA: 3.69 5.50 Debt Summary (US$, in thousands) December 31, 2016 January 2, 2016 Cash (includes restricted cash of $293K) 114,857$ 157,215$ Accounts receivable 388,397 371,392 Total Inventories 330
Slide 10: Appendix – Additional Information
Appendix – Additional Information
Slide 11: Feed Segment - Historical
(1) Has impact of inventory step-up in 1st and 2nd quarter of 2014. (2) Exclusive of non-cash inventory step-up and Darling Ingredients International 13th week during 2014. (3) Raw material process volumes in 2014 have been adjusted to include additional blending materials. (A) Quarters 1, 2 and 3 r
Slide 12: Change in Net Sales - 4Q 2016 Year over Year and Sequential
12 Change in Net Sales - Year over Year (4Q 2015 over 4Q 2016) Change in Net Sales – Three Months Ended (Sequential 3Q16 over 4Q16) (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: Fiscal Year Change in Net Sales - Feed Ingredients Segment
13 Fiscal Year End Change in Net Sales – Ended January 2, 2016 over December 31, 2016 Feed Ingredients Segment (1) Rendering Net Sales- Other category includes hides, pet food, and service charges (2) Other Net Sales category includes trap services, industrial residual services and organic fertilize
Slide 14: 2016 Finished Product Pricing
14 2016 Finished Product Pricing 2017 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. January Bleachable Fancy Tallow - Chicago Renderer / cwt $23.53 $27.10 $30.09 $27.07 $32.93 $32.81 $31.64 $32.57 $29.95 $28.
Slide 15: Food Segment - Historical
(1) Has impact of inventory step-up in 1st and 2nd quarter in 2014. (2) Exclusive of non-cash inventory step-up and Darling Ingredients International 13th week during 2014. (3) Raw material process volumes for the first quarter 2014 have been adjusted to be consistent with the presentation of the se
Slide 16: Fuel Segment - Historical
(A) Quarters 1, 2 and 3 revenues in 2014 have been adjusted for re-class between sales and cost of sales. 16 (1) Exclusive of non-cash inventory step-up and Darling Ingredients International’s 13th week in 2014. (2) Has impact of inventory step-up in 1st quarter and Darling Ingredients Int'l 13th we
Slide 17: Non-GAAP Adjusted EBITDA definition
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 18: Adjusted EBITDA and Pro Forma Adjusted EBITDA
18 Note: See slide 17 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$1.117 rate October 1, 2016 quarter; €1.00:USD $1.108 rate January 2, 2016 twelve months). Adjusted EBITDA and Pro F