Darling Ingredients Inc. Reports First Quarter 2023 Results
First Quarter 2023
- Net income of $185.8 million, or $1.14 per GAAP diluted share
- Net sales of $1.8 billion
- Combined adjusted EBITDA of $418.4 million
- Global ingredients business EBITDA of $289.1 million
- Repurchased $43.8 million of common stock
Darling Ingredients Inc. (NYSE: DAR) today reported net income of $185.8 million, or $1.14 per diluted share for first quarter of 2023, compared to net income of $188.1 million, or $1.14 per diluted share, for first quarter of 2022. The company also reported net sales of $1.8 billion for the first quarter of 2023, compared with net sales of $1.4 billion for the same period a year ago.
Combined adjusted EBITDA for the first quarter 2023 was $418.4 million, compared to $330.7 million for the same period in 2022.
"Darling Ingredients is off to a very solid start in 2023. Raw material volumes are in line with expectations, our global collagen and gelatin business remains robust and Diamond Green Diesel is expected to gain tremendous momentum in second quarter as lower fat prices will boost renewable diesel margins on expected higher volumes," said Randall C. Stuewe, Darling Ingredients Chairman and Chief Executive Officer. "The power of the vertically integrated business we have built will become evident over the next few quarters. Darling's low-carbon feedstocks, coupled with Diamond Green Diesel best-in-class margins, will illustrate the margin potential for renewable diesel in a lower priced feedstock environment while still delivering strong core ingredients earnings supplemented by the recently completed Gelnex acquisition."
Under the company's share repurchase program, the company repurchased approximately 773,000 shares of common stock during the first quarter of 2023 for a total of approximately $43.8 million, and has approximately $330.7 million remaining under the share repurchase program.
As of April 1, 2023, Darling Ingredients had $132.6 million in cash and cash equivalents, and $866.1 million available under its committed revolving credit agreement. Total debt outstanding as of April 1, 2023, was $4.7 billion. The leverage ratio as measured by the company's bank covenant was 3.19x as of April 1, 2023. Capital expenditures were $111.3 million for the first quarter 2023.
Company guidance for fiscal year 2023 is $1.875 billion combined adjusted EBITDA.
Data Table
| Segmented financial tables (in thousands, unaudited) |
|---|
Data Table
| Three Months Ended April 1, 2023 | Feed Ingredients | Food Ingredients | Fuel Ingredients | Corporate | Total |
|---|---|---|---|---|---|
| Net Sales | $ 1,237,494 | $ 396,392 | $ 157,286 | $ - | $ 1,791,172 |
| Cost Of Sales And Operating Expenses | $ 950,072 | $ 290,115 | $ 126,786 | $ - | $ 1,366,973 |
| Gross Margin | $ 287,422 | $ 106,277 | $ 30,500 | $ - | $ 424,199 |
| Gross Margin % | 23.2 % | 26.8 % | 19.4 % | - | 23.7 % |
| Selling, General And Administrative Expenses | $ 74,691 | $ 33,122 | $ 6,192 | $ 21,461 | $ 135,466 |
| Acquisition And Integration Costs | $ - | $ - | $ - | $ 7,022 | $ 7,022 |
| Loss (Gain) On Sale Of Assets | $ (342) | $ (21) | $ 36 | $ - | $ (327) |
| Depreciation And Amortization | $ 90,320 | $ 14,473 | $ 8,393 | $ 2,820 | $ 116,006 |
| Restructuring And Asset Impairment Charges | $ 92 | $ 4,432 | $ - | $ - | $ 4,524 |
| Equity In Net Income Of Diamond Green Diesel | $ - | $ - | $ 94,337 | $ - | $ 94,337 |
| Segment Operating Income/(Loss) | $ 122,661 | $ 54,271 | $ 110,216 | $ (31,303) | $ 255,845 |
| Equity In Net Income Of Unconsolidated Subs | $ 120 | $ - | $ - | $ - | $ 120 |
| Segment Income/(Loss) | $ 122,781 | $ 54,271 | $ 110,216 | $ (31,303) | $ 255,965 |
| Segment EBITDA | $ 213,073 | $ 73,176 | $ 24,272 | $ (21,461) | $ 289,060 |
| DGD Adjusted EBITDA (Darling's Share) | $ - | $ - | $ 129,323 | $ - | $ 129,323 |
| Combined Adjusted EBITDA | $ 213,073 | $ 73,176 | $ 153,595 | $ (21,461) | $ 418,383 |
Data Table
| Three Months Ended April 2, 2022 | Feed Ingredients | Food Ingredients | Fuel Ingredients | Corporate | Total |
|---|---|---|---|---|---|
| Net Sales | $ 879,438 | $ 354,814 | $ 132,082 | $ - | $ 1,366,334 |
| Cost Of Sales And Operating Expenses | $ 645,523 | $ 270,312 | $ 104,742 | $ - | $ 1,020,577 |
| Gross Margin | $ 233,915 | $ 84,502 | $ 27,340 | $ - | $ 345,757 |
| Gross Margin % | 26.6 % | 23.8 % | 20.7 % | - | 25.3 % |
| Selling, General And Administrative Expenses | $ 56,209 | $ 26,844 | $ 3,920 | $ 15,059 | $ 102,032 |
| Acquisition And Integration Costs | $ - | $ - | $ - | $ 3,773 | $ 3,773 |
| Gain On Sale Of Assets | $ (341) | $ (9) | $ (39) | $ - | $ (389) |
| Depreciation And Amortization | $ 54,350 | $ 15,450 | $ 6,674 | $ 2,772 | $ 79,246 |
| Equity In Net Income Of Diamond Green Diesel | $ - | $ - | $ 71,804 | $ - | $ 71,804 |
| Segment Operating Income/(Loss) | $ 123,697 | $ 42,217 | $ 88,589 | $ (21,604) | $ 232,899 |
| Equity In Net Income Of Unconsolidated Subs | $ 1,360 | $ - | $ - | $ - | $ 1,360 |
| Segment Income/(Loss) | $ 125,057 | $ 42,217 | $ 88,589 | $ (21,604) | $ 234,259 |
| Segment EBITDA | $ 178,047 | $ 57,667 | $ 23,459 | $ (15,059) | $ 244,114 |
| DGD Adjusted EBITDA (Darling's Share) | $ - | $ - | $ 86,560 | $ - | $ 86,560 |
| Combined Adjusted EBITDA | $ 178,047 | $ 57,667 | $ 110,019 | $ (15,059) | $ 330,674 |
Data Table
| Segment EBITDA consists of segment income (loss), less equity in net income/loss from unconsolidated subsidiaries, less equity in net income of Diamond Green Diesel, plus depreciation and amortization, plus acquisition and integration costs, plus restructuring and asset impairment charges, plus Darling's share of DGD Adjusted EBITDA. |
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Data Table
| Darling Ingredients Inc. And Subsidiaries: Consolidated Balance Sheets | ||
|---|---|---|
| April 1, 2023 And December 31, 2022 | ||
| (In Thousands) |
Data Table
| 1-Apr-23 | 31-Dec-22 | |
|---|---|---|
| ASSETS | (Unaudited) | |
| Current Assets: | ||
| Cash And Cash Equivalents | $ 132,572 | $ 127,016 |
| Restricted Cash | 299 | 315 |
| Accounts Receivable, Net | 750,990 | 676,573 |
| Inventories | 828,789 | 673,621 |
| Prepaid Expenses | 108,719 | 85,665 |
| Income Taxes Refundable | 19,903 | 18,583 |
| Other Current Assets | 61,234 | 56,324 |
| Total Current Assets | 1,902,506 | 1,638,097 |
| Property, Plant And Equipment, Net | 2,712,823 | 2,462,082 |
| Intangible Assets, Net | 1,091,137 | 865,122 |
| Goodwill | 2,587,587 | 1,970,377 |
| Investment In Unconsolidated Subsidiaries | 2,125,126 | 1,926,395 |
| Operating Lease Right-Of-Use Assets | 189,026 | 186,141 |
| Other Assets | 231,960 | 136,268 |
| Deferred Income Taxes | 20,967 | 17,888 |
| $ 10,861,132 | $ 9,202,370 | |
| LIABILITIES AND STOCKHOLDERS' EQUITY | ||
| Current Liabilities: | ||
| Current Portion Of Long-Term Debt | $ 118,804 | $ 69,846 |
| Accounts Payable, Principally Trade | 433,845 | 472,491 |
| Income Taxes Payable | 38,425 | 44,851 |
| Current Operating Lease Liabilities | 45,356 | 49,232 |
| Accrued Expenses | 462,594 | 432,023 |
| Total Current Liabilities | 1,099,024 | 1,068,443 |
| Long-Term Debt, Net Of Current Portion | 4,558,632 | 3,314,969 |
| Long-Term Operating Lease Liabilities | 144,604 | 141,703 |
| Other Non-Current Liabilities | 414,542 | 298,933 |
| Deferred Income Taxes | 522,731 | 481,832 |
| Total Liabilities | 6,739,533 | 5,305,880 |
| Commitments And Contingencies | ||
| Stockholders' Equity: | ||
| Common Stock, $0.01 Par Value; | 1,742 | 1,736 |
| Additional Paid-In Capital | 1,673,632 | 1,660,084 |
| Treasury Stock, At Cost | -614,961 | -554,451 |
| Accumulated Other Comprehensive Loss | -299,208 | -383,874 |
| Retained Earnings | 3,271,329 | 3,085,528 |
| Total Darling's Stockholders' Equity | 4,032,534 | 3,809,023 |
| Noncontrolling Interests | 89,065 | 87,467 |
| Total Stockholders' Equity | 4,121,599 | 3,896,490 |
| $ 10,861,132 | $ 9,202,370 |
Data Table
| Darling Ingredients Inc. And Subsidiaries: Consolidated Statement Of Cash Flows |
|---|
| For The Three Months Ended April 1, 2023 And April 2, 2022 |
| (In Thousands) |
Data Table
| Three Months Ended | |||
|---|---|---|---|
| (Unaudited) | $ Change | ||
| 1-Apr-23 | 2-Apr-22 | Favorable (Unfavorable) | |
| Net Sales | $1,791,172 | $1,366,334 | $424,838 |
| Costs And Expenses: | |||
| Cost Of Sales And Operating Expenses | 1,366,973 | 1,020,577 | (346,396) |
| Gain On Sale Of Assets | (327) | (389) | (62) |
| Selling, General And Administrative Expenses | 135,466 | 102,032 | (33,434) |
| Restructuring And Asset Impairment Charges | 4,524 | - | (4,524) |
| Acquisition And Integration Costs | 7,022 | 3,773 | (3,249) |
| Depreciation And Amortization | 116,006 | 79,246 | (36,760) |
| 1,629,664 | 1,205,239 | (424,425) | |
| Equity In Net Income Of Diamond Green Diesel | 94,337 | 71,804 | 22,533 |
| Operating Income | 255,845 | 232,899 | 22,946 |
| Other Expense: | |||
| Interest Expense | (50,299) | (15,603) | (34,696) |
| Foreign Currency Gain/(Loss) | 5,004 | (1,100) | 6,104 |
| Other Income/(Expense), Net | 6,159 | (742) | 6,901 |
| Total Other Expense | (39,136) | (17,445) | (21,691) |
| Equity In Net Income | |||
| Of Other Unconsolidated Subsidiaries | 120 | 1,360 | (1,240) |
| Income Before Income Taxes | 216,829 | 216,814 | 15 |
| Income Tax Expense | 26,974 | 26,083 | (891) |
| Net Income | 189,855 | 190,731 | (876) |
| Net Income Attributable To | |||
| Noncontrolling Interests | (4,054) | (2,678) | (1,376) |
| Net Income Attributable To Darling | $185,801 | $188,053 | $ (2252) |
| Basic Income Per Share: | $1.16 | $1.17 | $ (-0.01) |
| Diluted Income Per Share: | $1.14 | $1.14 | $ - |
| Number Of Diluted Common Shares: | $162,817 | $164,601 |