Darling Ingredients Inc. Reports Second Quarter 2024 Results
Second Quarter 2024
- Net income of $78.9 million, or $0.49 per GAAP diluted share
- Net sales of $1.5 billion
- Combined adjusted EBITDA of $273.6 million
- Repurchased $29.2 million of common stock
- Received $77.1 million in cash dividends from Diamond Green Diesel on July 18, 2024
IRVING, Texas, July 25, 2024 /PRNewswire/ -- Darling Ingredients Inc. (NYSE: DAR) today reported net income of $78.9 million, or $0.49 per diluted share for the second quarter of 2024, compared to net income of $252.4 million, or $1.55 per diluted share, for the second quarter of 2023. The decrease in net income was primarily due to a sharp year-over-year decline in fat prices and lower earnings within Diamond Green Diesel (DGD). The company also reported net sales of $1.5 billion for the second quarter of 2024, compared with net sales of $1.8 billion for the same period a year ago, reflecting lower finished product pricing.
"Despite a deflationary commodity market and an uncertain regulatory environment during the second quarter, our specialty ingredients business showed sequential improvement as it made the necessary changes to improve margins and earnings. DGD had a good quarter, while the Port Arthur facility completed a major turnaround as we prepare to produce sustainable aviation fuel later this year." said Randall C. Stuewe, Chairman and Chief Executive Officer. "Our focus for the balance of the year remains on paying down debt and widening margins through effective cost cutting. We remain very optimistic, as we have seen fat prices begin to improve, which should be reflected in our third and fourth quarter earnings."
For the six months ended June 29, 2024, Darling Ingredients reported net sales of $2.9 billion, compared to net sales of $3.5 billion for the same period in 2023. Net income for the first six months of 2024 was $160.0 million, or $0.99 per diluted share, as compared to net income of $438.2 million, or $2.69 per diluted share, for the first six months of 2023.
DGD sold 311.5 million gallons of renewable diesel for the second quarter 2024 at an average of $0.49 per gallon EBITDA. On July 18, 2024, Darling Ingredients received a $77.1 million cash dividend from Diamond Green Diesel.
Combined adjusted EBITDA for the second quarter 2024 was $273.6 million, compared to $508.3 million for the same period in 2023. On a year-to-date basis, combined adjusted EBITDA totaled $553.7 million, as compared to $926.7 million for the same period in 2023.
The company repurchased approximately 807,000 shares of its common stock during the second quarter of 2024 for approximately $29.2 million. On June 21, 2024, the Board of Directors refreshed the amount of the share repurchase program back up to an aggregate amount of $500 million and extended this program until August 13, 2026.
As of June 29, 2024, Darling Ingredients had $121.6 million in cash and cash equivalents, and $814.4 million available under its committed revolving credit agreement. Total debt outstanding as of June 29, 2024, was $4.4 billion. The projected leverage ratio as measured by the company's bank covenant was 4.24X as of June 29, 2024. Capital expenditures were $98.0 million for the second quarter 2024, and $191.7 million for the first six months ended June 29, 2024.
The company reaffirms guidance for fiscal year 2024, which remains at $1.3 – $1.4 billion combined adjusted EBITDA.
Segment Financial Tables (in thousands, unaudited)
Feed | Food | Fuel | Corporate | Total | |
Three Months Ended June 29, 2024 | |||||
Net sales | $ 934,147 | $ 378,841 | $ 142,304 | $ — | $ 1,455,292 |
Cost of sales and operating expenses | 737,871 | 276,760 | 113,790 | — | 1,128,421 |
Gross margin | 196,276 | 102,081 | 28,514 | — | 326,871 |
Loss (gain) on sale of assets | 205 | 37 | (20) | — | 222 |
Selling, general and administrative expenses | 74,015 | 28,844 | 8,409 | 18,463 | 129,731 |
Acquisition and integration costs | — | — | — | 1,130 | 1,130 |
Change in fair value of contingent consideration | (33,122) | — | — | — | (33,122) |
Depreciation and amortization | 86,444 | 27,372 | 8,723 | 2,066 | 124,605 |
Equity in net income of Diamond Green Diesel | — | — | 44,197 | — | 44,197 |
Segment operating income/(loss) | $ 68,734 | $ 45,828 | $ 55,599 | $ (21,659) | $ 148,502 |
Equity in net income of other unconsolidated subsidiaries | 3,017 | — | — | — | 3,017 |
Segment income/(loss) | $ 71,751 | $ 45,828 | $ 55,599 | $ (21,659) | $ 151,519 |
Segment EBITDA | $ 122,056 | $ 73,200 | $ 20,125 | $ (18,463) | $ 196,918 |
DGD adjusted EBITDA (Darling's Share) | — | — | 76,642 | — | 76,642 |
Combined adjusted EBITDA | $ 122,056 | $ 73,200 | $ 96,767 | $ (18,463) | $ 273,560 |
Feed | Food | Fuel | Corporate | Total | |
Three Months Ended July 1, 2023 | |||||
Net sales | $ 1,141,661 | $ 476,093 | $ 139,867 | $ — | $ 1,757,621 |
Cost of sales and operating expenses | 876,413 | 371,095 | 112,194 | — | 1,359,702 |
Gross margin | 265,248 | 104,998 | 27,673 | — | 397,919 |
Loss (gain) on sale of assets | 322 | 2 | (65) | — | 259 |
Selling, general and administrative expenses | 77,406 | 33,684 | 4,971 | 20,690 | 136,751 |
Restructuring and asset impairment charges | — | 896 | — | — | 896 |
Acquisition and integration costs | — | — | — | 1,706 | 1,706 |
Change in fair value of contingent consideration | (7,499) | — | — | — | (7,499) |
Depreciation and amortization | 82,575 | 28,445 | 8,567 | 2,499 | 122,086 |
Equity in net income of Diamond Green Diesel | — | — | 212,964 | — | 212,964 |
Segment operating income/(loss) | $ 112,444 | $ 41,971 | $ 227,164 | $ (24,895) | $ 356,684 |
Equity in net income of other unconsolidated subsidiaries | 1,849 | — | — | — | 1,849 |
Segment income/(loss) | $ 114,293 | $ 41,971 | $ 227,164 | $ (24,895) | $ 358,533 |
Segment EBITDA | $ 187,520 | $ 71,312 | $ 22,767 | $ (20,690) | $ 260,909 |
DGD adjusted EBITDA (Darling's Share) | — | — | 247,398 | — | 247,398 |
Combined adjusted EBITDA | $ 187,520 | $ 71,312 | $ 270,165 | $ (20,690) | $ 508,307 |
Segment EBITDA consists of segment income (loss), less equity in net income from unconsolidated subsidiaries, less equity in net income of Diamond Green Diesel, plus depreciation and amortization, acquisition and integration costs, restructuring and asset impairment charges, change in fair value of contingent consideration, plus Darling's share of DGD Adjusted EBITDA.
Feed | Food | Fuel | Corporate | Total | |
Six Months Ended June 29, 2024 | |||||
Net sales | $ 1,823,995 | $ 770,123 | $ 281,473 | $ — | $ 2,875,591 |
Cost of sales and operating expenses | 1,443,640 | 574,905 | 226,542 | — | 2,245,087 |
Gross margin | 380,355 | 195,218 | 54,931 | — | 630,504 |
Loss (gain) on sale of assets | 337 | (257) | (432) | — | (352) |
Selling, general and administrative expenses | 151,153 | 60,588 | 17,154 | 39,979 | 268,874 |
Acquisition and integration costs | — | — | — | 5,184 | 5,184 |
Change in fair value of contingent consideration | (58,371) | — | — | — | (58,371) |
Depreciation and amortization | 174,013 | 56,240 | 17,390 | 4,471 | 252,114 |
Equity in net income of Diamond Green Diesel | — | — | 122,616 | — | 122,616 |
Segment operating income/(loss) | $ 113,223 | $ 78,647 | $ 143,435 | $ (49,634) | $ 285,671 |
Equity in net income of other unconsolidated subsidiaries | 5,327 | — | — | — | 5,327 |
Segment income/(loss) | $ 118,550 | $ 78,647 | $ 143,435 | $ (49,634) | $ 290,998 |
Segment EBITDA | $ 228,865 | $ 134,887 | $ 38,209 | $ (39,979) | $ 361,982 |
DGD adjusted EBITDA (Darling's Share) | — | — | 191,702 | — | 191,702 |
Combined adjusted EBITDA | $ 228,865 | $ 134,887 | $ 229,911 | $ (39,979) | $ 553,684 |
Feed | Food | Fuel | Corporate | Total | |
Six Months Ended July 1, 2023 | |||||
Net sales | $ 2,379,155 | $ 872,485 | $ 297,153 | $ — | $ 3,548,793 |
Cost of sales and operating expenses | 1,826,485 | 661,210 | 238,980 | — | 2,726,675 |
Gross margin | 552,670 | 211,275 | 58,173 | — | 822,118 |
Gain on sale of assets | (20) | (19) | (29) | — | (68) |
Selling, general and administrative expenses | 152,097 | 66,806 | 11,163 | 42,151 | 272,217 |
Restructuring and asset impairment charges | 92 | 5,328 | — | — | 5,420 |
Acquisition and integration costs | — | — | — | 8,728 | 8,728 |
Change in fair value of contingent consideration | (7,499) | — | — | — | (7,499) |
Depreciation and amortization | 172,895 | 42,918 | 16,960 | 5,319 | 238,092 |
Equity in net income of Diamond Green Diesel | — | — | 307,301 | — | 307,301 |
Segment operating income/(loss) | $ 235,105 | $ 96,242 | $ 337,380 | $ (56,198) | $ 612,529 |
Equity in net income of other unconsolidated subsidiaries | 1,969 | — | — | — | 1,969 |
Segment income/(loss) | $ 237,074 | $ 96,242 | $ 337,380 | $ (56,198) | $ 614,498 |
Segment EBITDA | $ 400,593 | $ 144,488 | $ 47,039 | $ (42,151) | $ 549,969 |
DGD adjusted EBITDA (Darling's Share) | — |
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