Darling Ingredients, 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, on Aug. 7 announced financial results for the 2019 second quarter ended June 29.
Second quarter 2019 overview
- Revenue of $827.3 million
- Net income of $26.3 million, or $0.16 per GAAP diluted share
- Adjusted EBITDA of $115.5 million
- Diamond Green Diesel (DGD) delivers $1.25 EBITDA per gallon
- Consolidated adjusted pro forma EBITDA $159.4 million
- DGD issued partner dividend of $17.7 million in April 2019, with a subsequent dividend of $37.8 million in July 2019
- US bond refinanced, lowering borrowing cost and extending maturity with extinguishment costs incurred in quarter
For the second quarter of 2019, the Company reported net sales of $827.3 million, as compared with net sales of $846.6 million for the second quarter of 2018. The reduction in net sales of $(19.3) million is mainly the result of lower global protein prices and the divestiture of the Company's industrial residuals business in May 2018 which was partially offset by the increase in sales volumes of the specialty pet food business and increased collagen sales values.
Net income attributable to Darling for the three months ended June 29, 2019 was $26.3 million, or $0.16 per diluted share, compared to a net loss of $(30.4) million, or $(0.18) per diluted share, for the second quarter of 2018. The increase in net income over the same period in fiscal 2018 reflects the absence of the following one-time costs realized last year: debt extinguishment costs of $23.5 million related to Euro bond refinancing; the loss of $15.5 million from the sale of Terra Renewal Services subsidiary; and $15.0 million of restructuring and impairment charges incurred as a result of the Hurlingham, Argentina, gelatin plant closure.
Comments on the second quarter 2019
"Overall, earnings improved for the second quarter with combined, pro forma adjusted EBITDA of $159.4 million, inclusive of core Darling and Diamond Green Diesel adjusted EBITDA results and $13.2 million gain from the China property sale. Operationally, our global rendering business faced negative market conditions on our finished product pricing due to unresolved trade agreements with China and continued fallout from the African Swine Fever epidemic," said Randall C. Stuewe, Chairman and Chief Executive Officer of Darling Ingredients Inc. "Our food segment showed strong performance again bolstered by volume growth from new product launches, primarily related to our growing global collagen business. Our Fuel segment delivered consistently without the Blender's Tax Credit (BTC).
"Diamond Green Diesel, our 50/50 joint venture with Valero, performed well and met expected entity level EBITDA of $1.25 per gallon. Subsequent to the end of the first quarter, we also received two partner dividends totaling $55.5 million, with $17.7 million being recorded in the second quarter and the remainder to be posted in our 2019 third quarter. Additionally, Super Diamond, our 400-mm gallon expansion project, remains on track to start up at the end of 2021.
"We continue to successfully overcome headwinds from the current macro environment. This is an ongoing demonstration that our diverse global platform and our integrated supply chain provide Darling a competitive advantage to achieve our mission of driving sustainable solutions for feeding and fueling our growing world, while at the same time driving value for our shareholders and our team members," Stuewe concluded.