First Quarter 2021
- Net income of $151.8 million, or $0.90 per GAAP diluted share
- Net Sales of $1.05 billion
- Combined adjusted EBITDA of $284.8 million
- Global Ingredients business Q1 EBITDA of $176.6 million, best quarter in the Company's history
- Diamond Green Diesel ("DGD") earned a record $2.77 EBITDA per gallon, contributing $108.2 million of EBITDA to Darling's fuel segment
Darling reported net sales of $1.05 billion for the first quarter of 2021, as compared with net sales of $852.8 million for the same period a year ago. Net income attributable to Darling for the three months ended April 3, 2021 was $151.8 million, or $0.90 per diluted share, compared to net income of $85.5 million, or $0.51 per diluted share, for the first quarter of 2020.
"Our worldwide team delivered the best quarter in our Company's history as our global ingredients business generated $176.6 million of EBITDA in the first quarter," said Randall C. Stuewe, Chairman and Chief Executive Officer of Darling Ingredients Inc. "Adding the strong Q1 performance of DGD, our 2021 is off to a great start with $284.8 million of combined adjusted EBITDA."
"Both of the renewable diesel projects at DGD remain on track, with the expansion at Norco, LA due to begin production in the middle of Q4 of 2021 and the 470 million gallon facility under construction in Port Arthur expected to be operational in the second half of 2023," Stuewe added. "With the startup of the Norco expansion, we believe that DGD will be able to sell approximately 365 million gallons of renewable diesel this year. The record $2.77 EBITDA per gallon reported in Q1 by DGD, leads us to believe that DGD's EBITDA per gallon will average in the range of $2.25 to $2.40EBITDA per gallon for all of 2021," Stuewe stated.
"As a result of the solid performance of our global ingredients business to start the year and an improved outlook for DGD, we are increasing our combined adjusted EBITDA guidance to a range of $1.075 billion to $1.150 billion for 2021. This new guidance range is 28% to 35% better than our 2020 performance and sets up our global business for continued growth and improved profitability into the future," commented Stuewe.
As of April 3, 2021, Darling had $71.4 million in cash and cash equivalents, and $879.9 million available under its committed revolving credit agreement. Total debt outstanding at the end of the three months ended April 3, 2021 was $1.4 billion.
Combined adjusted EBITDA was $284.8 million for the first quarter of 2021, compared to $213.3 million for the same period in 2020.
Segment Financial Tables (in thousands) (unaudited) | |||||||
Three Months Ended April 3, 2021 | Feed | Food | Fuel | Corporate | Total | ||
Net Sales | $ 651,444 | $ 298,065 | $ 97,207 | $ - | $ 1,046,716 | ||
Cost of sales and operating expenses | 474,581 | 226,413 | 71,790 | - | 772,784 | ||
Gross Margin | $ 176,863 | $ 71,652 | $ 25,417 | $ - | $ 273,932 | ||
Loss/(gain) on sale of assets | (139) | 55 | 20 | - | (64) | ||
Selling, general and administrative expenses | 52,620 | 25,191 | 4,867 | 14,720 | 97,398 | ||
Restructuring and asset impairment charges | - | - | 778 | - | 778 | ||
Depreciation and amortization | 54,609 | 14,883 | 6,155 | 2,887 | 78,534 | ||
Equity in net income of Diamond Green Diesel | - | - | 102,225 | - | 102,225 | ||
Segment operating income/(loss) | $ 69,773 | $ 31,523 | $ 115,822 | $ (17,607) | $ 199,511 | ||
Equity in net income of unconsolidated subsidiaries | $ 612 | $ - | $ - | $ - | $ 612 | ||
Segment Income/(loss) | $ 70,385 | $ 31,523 | $ 115,822 | $ (17,607) | $ 200,123 | ||
Segment EBITDA | $ 124,382 | $ 46,406 | $ 20,530 | $ (14,720) | $ 176,598 | ||
DGD adjusted EBITDA (Darling's Share) | $ - | $ - | $ 108,200 | $ - | $ 108,200 | ||
Combined adjusted EBITDA | $ 124,382 | $ 46,406 | $ 128,730 | $ (14,720) | $ 284,798 | ||
Three Months Ended March 28, 2020 | Feed | Food | Fuel | Corporate | Total | ||
Net Sales | $ 512,625 | $ 270,294 | $ 69,923 | $ - | $ 852,842 | ||
Cost of sales and operating expenses | 388,453 | 205,430 | 53,025 | - | 646,908 | ||
Gross Margin | $ 124,172 | $ 64,864 | $ 16,898 | $ - | $ 205,934 | ||
Loss on sale of assets | 50 | 2 | 9 | - | 61 | ||
Selling, general and administrative expenses | 53,947 | 25,476 | 1,654 | 15,116 | 96,193 | ||
Depreciation and amortization | 53,521 | 20,305 | 8,092 | 2,753 | 84,671 | ||
Equity in net income of Diamond Green Diesel | - | - | 97,820 | - | 97,820 | ||
Segment operating income/(loss) | $ 16,654 | $ 19,081 | $ 104,963 | $ (17,869) | $ 122,829 | ||
Equity in net income of unconsolidated subsidiaries | $ 869 | $ - | $ - | $ - | $ 869 | ||
Segment income/(loss) | $ 17,523 | $ 19,081 | $ 104,963 | $ (17,869) | $ 123,698 | ||
Segment EBITDA | $ 70,175 | $ 39,386 | $ 15,235 | $ (15,116) | $ 109,680 | ||
DGD adjusted EBITDA (Darling's Share) | $ - | $ - | $ 103,634 | $ - | $ 103,634 | ||
Combined adjusted EBITDA | $ 70,175 | $ 39,386 | $ 118,869 | $ (15,116) | $ 213,314 | ||
Darling Ingredients Inc. and Subsidiaries Consolidated Balance Sheets April 3, 2021 and January 2, 2021 (in thousands) | |||||||
April 3, | January 2, | ||||||
2021 | 2021 | ||||||
ASSETS | (unaudited) | ||||||
Current assets: | |||||||
Cash and cash equivalents | $ 71,199 | $ 81,617 | |||||
Restricted cash | 177 | 103 | |||||
Accounts receivable, net | 385,663 | 405,387 | |||||
Inventories | 420,659 | 405,922 | |||||
Prepaid expenses | 50,251 | 47,793 | |||||
Income taxes refundable | 3,274 | 3,883 | |||||
Other current assets | 9,544 | 42,289 | |||||
Total current assets | 940,767 | 986,994 | |||||
Property, plant and equipment, net | 1,822,075 | 1,863,814 | |||||
Intangible assets, net | 452,539 | 473,680 | |||||
Goodwill | 1,241,242 | 1,260,240 | |||||
Investment in unconsolidated subsidiaries | 915,085 | 804,682 | |||||
Operating lease right-of-use assets | 145,238 | 146,563 | |||||
Other assets | 59,099 | 60,682 | |||||
Deferred income taxes | 15,402 | 16,676 | |||||
$ 5,591,447 | $ 5,613,331 | ||||||
LIABILITIES AND STOCKHOLDERS' EQUITY | |||||||
Current liabilities: | |||||||
Current portion of long-term debt | $ 26,997 | $ 27,538 | |||||
Accounts payable, principally trade | 245,648 | 255,340 | |||||
Income taxes payable | 15,627 | 17,497 | |||||
Current operating lease liabilities | 38,064 | 39,459 | |||||
Accrued expenses | 311,371 | 335,471 | |||||
Total current liabilities | 637,707 | 675,305 | |||||
Long-term debt, net of current portion | 1,417,534 | 1,480,531 | |||||
Long-term operating lease liabilities | 108,777 | 109,707 | |||||
Other noncurrent liabilities | 115,799 | 117,371 | |||||
Deferred income taxes | 281,684 | 276,208 | |||||
Total liabilities | 2,561,501 | 2,659,122 | |||||
Commitments and contingencies | |||||||
Total Darling's stockholders' equity | 2,966,603 | 2,891,909 | |||||
Noncontrolling interests | 63,343 | 62,300 | |||||
Total stockholders' equity | $ 3,029,946 | $ 2,954,209 | |||||
$ 5,591,447 | $ 5,613,331 | ||||||
Darling Ingredients Inc. and Subsidiaries Consolidated Operating Results For the Three-Month Periods Ended April 3, 2021 and March 28, 2020 (in thousands, except per share data) | ||||||
Three Months Ended | ||||||
(unaudited) | $ Change | |||||
April 3, | March 28, | Favorable | ||||
2021 | 2020 | (Unfavorable) | ||||
Net sales | $ 1,046,716 | $ 852,842 | $ 193,874 | |||
Costs and expenses: | ||||||
Cost of sales and operating expenses | 772,784 | 646,908 | (125,876) | |||
Loss (gain) on sale of assets | (64) | 61 | 125 | |||
Selling, general and administrative expenses | 97,398 | 96,193 | (1,205) | |||
Restructuring and asset impairment charges | 778 | - | (778) | |||
Depreciation and amortization | 78,534 | 84,671 | 6,137 | |||
Total costs and expenses | 949,430 | 827,833 | (121,597) | |||
Equity in net income of Diamond Green Diesel | 102,225 | 97,820 | 4,405 | |||
Operating income | 199,511 | 122,829 | 76,682 | |||
Other expense: | ||||||
Interest expense | (16,428) | (19,090) | 2,662 | |||
Foreign currency gain / (loss) | (410) | 1,664 | (2,074) | |||
Other expense, net | (1,159) | (1,881) | 722 | |||
Total other expense | (17,997) | (19,307) | 1,310 | |||
Equity in net income | ||||||
of unconsolidated subsidiaries | 612 | 869 | (257) | |||
Income from operations before income taxes | 182,126 | 104,391 | 77,735 | |||
Income tax expense | 28,708 | 18,300 | (10,408) | |||
Net income | 153,418 | 86,091 | 67,327 | |||
Net income attributable to | ||||||
noncontrolling interests | (1,652) | (581) | (1,071) | |||
Net income attributable to Darling | $ 151,766 | $ 85,510 | $ 66,256 | |||
Basic income per share: | $ 0.93 | $ 0.52 | $ 0.41 | |||
Diluted income per share: | $ 0.90 | $ 0.51 | $ 0.39 | |||
Number of diluted common shares: | 167,749 | 167,927 | ||||
Darling Ingredients Inc. and Subsidiaries Consolidated Statement of Cash Flows Periods Ended April 3, 2021 and March 28, 2020 (in thousands) (unaudited) | |||||||||||
Three Months Ended | |||||||||||
April 3, | March 28, | ||||||||||
Cash flows from operating activities: | 2021 | 2020 | |||||||||
Net income | $ 153,418 | $ 86,091 | |||||||||
Adjustments to reconcile net income to net cash provided by operating activities: | |||||||||||
Depreciation and amortization | 78,534 | 84,671 | |||||||||
Loss/(gain) on sale of assets | (64) | 61 | |||||||||
Asset impairment | 138 | - | |||||||||
Deferred taxes | 11,809 | 6,377 | |||||||||
Decrease in long-term pension liability | (448) | (264) | |||||||||
Stock-based compensation expense | 8,415 | 10,818 | |||||||||
Write-off deferred loan costs | 598 | - | |||||||||
Deferred loan cost amortization | 1,040 | 1,416 | |||||||||
Equity in net income of Diamond Green Diesel and other unconsolidated subsidiaries | (102,837) | (98,689) | |||||||||
Distributions of earnings from other unconsolidated subsidiaries | 57 | - | |||||||||
Changes in operating assets and liabilities, net of effects from acquisitions: | |||||||||||
Accounts receivable | 10,721 | 487 | |||||||||
Income taxes refundable/payable | (760) | 348 | |||||||||
Inventories and prepaid expenses | (27,188) | (24,999) | |||||||||
Accounts payable and accrued expenses | (13,462) | (16,790) | |||||||||
Other | 18,834 | (14,981) | |||||||||
Net cash provided by operating activities | 138,805 | 34,546 | |||||||||
Cash flows from investing activities: | |||||||||||
Capital expenditures | (60,751) | (61,599) | |||||||||
Acquisitions, net of cash acquired | (340) | - | |||||||||
Investment in unconsolidated subsidiaries | (4,449) | - | |||||||||
Gross proceeds from disposal of property, plant and equipment and other assets | 1,629 | 379 | |||||||||
Payments related to routes and other intangibles | (347) | (3,416) | |||||||||
Net cash used in investing activities | (64,258) | (64,636) | |||||||||
Cash flows from financing activities: | |||||||||||
Proceeds from long-term debt | 9,262 | 8,264 | |||||||||
Payments on long-term debt | (60,444) | (8,638) | |||||||||
Borrowings from revolving credit facility | 111,000 | 219,933 | |||||||||
Payments on revolving credit facility | (97,000) | (100,782) | |||||||||
Net cash overdraft financing | 499 | (9,594) | |||||||||
Issuance of common stock | 50 | 67 | |||||||||
Repurchase of common stock | - | (55,044) | |||||||||
Minimum withholding taxes paid on stock awards | (42,268) | (4,328) | |||||||||
Acquisition of noncontrolling interest | - | (8,784) | |||||||||
Distributions to noncontrolling interests | (2,143) | (688) | |||||||||
Net cash provided (used) by financing activities | (81,044) | 40,406 | |||||||||
Effect of exchange rate changes on cash flows | (3,847) | (6,916) | |||||||||
Net increase / (decrease) in cash, cash equivalents and restricted cash | (10,344) | 3,400 | |||||||||
Cash, cash equivalents and restricted cash at beginning of period | 81,720 | 73,045 | |||||||||
Cash, cash equivalents and restricted cash at end of period | $ 71,376 | $ 76,445 | |||||||||
Supplemental disclosure of cash flow information: | |||||||||||
Accrued capital expenditures | $ (9,678) | $ (1,630) | |||||||||
Cash paid during the period for: | |||||||||||
Interest, net of capitalized interest | $ 2,774 | $ 5,863 | |||||||||
Income taxes, net of refunds | $ 15,578 | $ 11,453 | |||||||||
Non-cash operating activities: | |||||||||||
Operating lease right of use obtained in exchange for new lease liabilities | $ 12,404 | $ 9,121 | |||||||||
Non-cash financing activities: | |||||||||||
Debt issued for service contract assets | $ - | $ 21 | |||||||||
Diamond Green Diesel Joint Venture Condensed Consolidated Balance Sheets March 31, 2021 and December 31, 2020 (in thousands) | |||||||||||
March 31, | December 31, | ||||||||||
2021 | 2020 | ||||||||||
Assets: | (unaudited) | ||||||||||
Total current assets | $ 477,840 | $ 383,557 | |||||||||
Property, plant and equipment, net | 1,437,905 | 1,238,726 | |||||||||
Other assets | 39,171 | 36,082 | |||||||||
Total assets | $ 1,954,916 | $ 1,658,365 | |||||||||
Liabilities and members' equity: | |||||||||||
Total current portion of long term debt | $ 562 | $ 517 | |||||||||
Total other current liabilities | 177,594 | 99,787 | |||||||||
Total long term debt | 8,702 | 8,705 | |||||||||
Total other long term liabilities | 8,722 | 3,758 | |||||||||
Total members' equity | 1,759,336 | 1,545,598 | |||||||||
Total liabilities and members' equity | $ 1,954,916 | $ 1,658,365 | |||||||||
Diamond Green Diesel Joint Venture Operating Financial Results For the Three-Month Periods Ended March 31, 2021 and March 31, 2020 (in thousands) | |||||||
Three Months Ended | |||||||
(unaudited) | $ Change | ||||||
March 31, | March 31, | Favorable | |||||
Revenues: | 2021 | 2020 | (Unfavorable) | ||||
Operating revenues | $ 431,633 | $ 358,615 | $ 73,018 | ||||
Expenses: | |||||||
Total costs and expenses less | |||||||
depreciation, amortization and | 215,234 | 151,347 | (63,887) | ||||
Depreciation, amortization and | 11,687 | 11,774 | 87 | ||||
accretion expense | |||||||
Total costs and expenses | 226,921 | 163,121 | (63,800) | ||||
Operating income | 204,712 | 195,494 | 9,218 | ||||
Other income | 58 | 461 | (403) | ||||
Interest and debt expense, net | (320) | (315) | (5) | ||||
Net income | $ 204,450 | $ 195,640 | $ 8,810 | ||||
Darling Ingredients Inc. reports Adjusted EBITDA results, which is a Non-GAAP financial measure, as a complement to results provided in accordance with generally accepted accounting principles (GAAP) (for additional information, see "Use of Non-GAAP Financial Measures" included later in this media release). The Company believes that Adjusted EBITDA provides additional useful information to investors. Adjusted EBITDA, as the Company uses the term, is calculated below:
Reconciliation of Net Income to (Non-GAAP) Adjusted EBITDA and (Non-GAAP) Pro forma Adjusted EBITDA | ||||
Three Months Ended | ||||
Adjusted EBITDA | April 3, | March 28, | ||
(U.S. dollars in thousands) | 2021 | 2020 | ||
Net income attributable to Darling | $ 151,766 | $ 85,510 | ||
Depreciation and amortization | 78,534 | 84,671 | ||
Interest expense | 16,428 | 19,090 | ||
Income tax expense | 28,708 | 18,300 | ||
Restructuring and asset impairment charges | 778 | - | ||
Foreign currency loss / (gain) | 410 | (1,664) | ||
Other expense, net | 1,159 | 1,881 | ||
Equity in net income of Diamond Green Diesel | (102,225) | (97,820) | ||
Equity in net income of unconsolidated subsidiaries | (612) | (869) | ||
Net income attributable to noncontrolling interests | 1,652 | 581 | ||
Adjusted EBITDA (Non-GAAP) | $ 176,598 | $ 109,680 | ||
Foreign currency exchange impact | (8,050) | (1) | - | |
Pro forma Adjusted EBITDA to Foreign Currency (Non-GAAP) | $ 168,548 | $ 109,680 | ||
DGD Joint Venture Adjusted EBITDA (Darling's Share) | $ 108,200 | $ 103,634 | ||
Darling plus Darling's share of DGD Joint Venture Adjusted EBITDA | $ 284,798 | $ 213,314 | ||
(1) The average rate assumption used in this calculation was the actual fiscal average rate for the three months ended | ||||
April 3, 2021 of €1.00:USD$1.20 and CAD$1.00:USD$0.79, as compared to the average rate for the three months ended | ||||
March 28, 2020 of €1.00:USD$1.10 and CAD$1.00:USD$0.75, respectively. | ||||
