Darling Ingredients Inc. Reports Third Quarter 2017 Financial Results

Solid Feed Segment Performance and Recovery in the Food Segment

Exploring Phase III Expansion of Diamond Green Diesel JV with Valero

IRVING, Texas, Nov. 8, 2017 /PRNewswire/ -- Darling Ingredients Inc. (NYSE: DAR), a global developer and producer of sustainable natural ingredients from edible and inedible bio-nutrients, creating a wide range of ingredients and customized specialty solutions for customers in the pharmaceutical, food, pet food, feed, industrial, fuel, bioenergy, and fertilizer industries, today announced financial results for the 2017 third quarter ended September 30, 2017.

Third Quarter 2017 Overview

• Revenue of $937.7 million, up 9.8%
• Net income of $7.8 million, or $0.05 per GAAP diluted share
• Adjusted EBITDA of $110.5 million
• Strong balance sheet with debt reduction of $18.5 million
• Global raw material volumes strong, up 3.8%
• Improved global pricing environment, with fats holding firm while protein prices were mixed
• Food Segment highlighted by improved performance across gelatin markets
• Diamond Green Diesel (DGD) facility results tempered due to EPA uncertainty; JV exploring Phase III expansion

For the third quarter of 2017, the Company reported net sales of $937.7 million, as compared with net sales of $853.9 million for the third quarter of 2016.  Net income attributable to Darling for the three months ended September 30, 2017 was $7.8 million, or $0.05 per diluted share, compared to a net income of $28.7 million, or $0.17 per diluted share, for the third quarter of 2016.  The decrease in net income for the third quarter 2017 is due to higher selling, general and administrative expenses, depreciation expense related to new plant locations in our Feed Ingredients segment, and the absence of the blenders tax credit, which was included in the third quarter 2016 results but has not yet been reinstated for 2017.

Comments on the Third Quarter 2017

"The success of our diversified business model continued to deliver consistent earnings even in volatile markets. Our teams delivered solid results across our business segments supported by strong global rendering volumes and an improved performance in Rousselot and CTH.  Despite general seasonality impacting our third quarter and a fire incident at our Rendac facility, we executed well on our key financial metrics," said Randall C. Stuewe, Chairman and Chief Executive Officer of Darling Ingredients Inc.

"We remain optimistic the EPA will support the earlier announced Renewable Fuel Standard (RFS2) mandates, and we remain confident that the blenders tax credit could soon be reinstated. Additionally, we are excited about our just announced joint intention with our partner, Valero Energy, to explore further expansion of DGD, potentially doubling its capacity to 550 million gallons annually by 2021," concluded Mr. Stuewe.            

Operational Update by Segment

• Feed Ingredients – EBITDA up 2.0 percent to $80.5 million; revenue up 8.3 percent to $575.5 million; gross margin up 6.9 percent $125.9 million; raw material processed up 3.8 percent.
• Food Ingredients – EBITDA up 36.4 percent to $34.5 million; revenue up 14.6 percent to $300.3 million; gross margin up 18.6 percent to $60.1 million; raw material processed up 9.2 percent.
• Fuel Ingredients – EBITDA down 37.2 percent to $8.1 million; revenue up 2.3 percent $61.9 million; gross margin down 46.5 percent to $7.6 million; raw material processed down 2.2 percent.
• Diamond Green Diesel Joint Venture (DGD) –Delivered in line despite legislative uncertainty. EBITDA of $0.49 per gallon with negative impact from lack of blenders tax credit in 2017 versus 2016. JV exploring further expansion to 550 million gallons of annual production beyond current 275 million gallon capacity planned for Q2 2018 completion.