Darling Ingredients Inc. Reports Third Quarter 2024 Results
Third Quarter 2024
Net income of $16.9 million, or $0.11 per GAAP diluted share
Total net sales of $1.4 billion
Combined adjusted EBITDA of $236.7 million
Received $111.2 million in cash dividends from Diamond Green Diesel
IRVING, Texas, Oct. 24, 2024 /PRNewswire/ -- Darling Ingredients Inc. (NYSE:DAR) today reported net income of $16.9 million, or $0.11 per diluted share for the third quarter of 2024, compared to net income of $125.0 million, or $0.77 per diluted share, for the third 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 total net sales of $1.4 billion for the third quarter of 2024, compared with total net sales of $1.6 billion for the same period a year ago, reflecting lower finished product pricing.
"During the third quarter, Darling Ingredients continued to navigate challenging markets. Even with these headwinds, our core ingredients cash flows and dividends from DGD allowed us to reduce debt by about $192 million," said Randall C. Stuewe, Chairman and Chief Executive Officer. "The environment for 2025 is shaping up nicely. Our sustainable aviation fuel plant is in the process of commissioning, the evolving regulatory landscape is increasingly supportive of the use of waste fats and oils as feedstocks in renewable fuels, paving the way for greater growth and improved margins."
For the nine months ended September 28, 2024, Darling Ingredients reported net sales of $4.3 billion, compared to net sales of $5.2 billion for the same period in 2023. Net income for the first nine months of 2024 was $177.0 million, or $1.10 per diluted share, as compared to net income of $563.2 million, or $3.47 per diluted share, for the first nine months of 2023.
DGD sold 316.6 million gallons of renewable diesel for the third quarter 2024 at an average of $0.25 per gallon EBITDA. Darling Ingredients received $111.2 million cash dividends from Diamond Green Diesel during the third quarter of 2024. Year-to-date 2024, DGD has sold 959.5 million gallons at an average of $0.48 per gallon EBITDA.
Combined adjusted EBITDA for the third quarter of 2024 was $236.7 million, compared to $334.3 million for the same period in 2023. On a year-to-date basis, combined adjusted EBITDA totaled $790.4 million, as compared to $1.26 billion for the same period in 2023.
As of September 28, 2024, Darling Ingredients had $114.8 million in cash and cash equivalents, and $1.0 billion available under its committed revolving credit agreement. Total debt outstanding as of September 28, 2024, was $4.25 billion. The projected leverage ratio as measured by the company's bank covenant was 4.04x as of September 28, 2024. Capital expenditures were $67.4 million for the third quarter 2024, and $259.1 million for the first nine months ended September 28, 2024.
For the full fiscal year, Darling Ingredients expects earnings of $1.15 billion to $1.175 billion combined adjusted EBITDA. This reflects assumptions of steady raw material volumes, volatile global commodity markets and uncertain regulatory programs. The company anticipates improved performance in 2025 and will comment more broadly on the drivers during its earnings call.
Darling Ingredients Inc. and Subsidiaries
Consolidated Operating Results
For the Three and Nine Months Ended September 28, 2024 and September 30, 2023
(in thousands, except per share data, unaudited)
Three Months Ended
Nine Months Ended
$ Change
$ Change
September 28,
September 30,
Favorable
September 28,
September 30,
Favorable
2024
2023
(Unfavorable)
2024
2023
(Unfavorable)
Net sales to third parties
$ 1,157,075
$ 1,348,602
$ (191,527)
$ 3,551,392
$ 4,233,769
$ (682,377)
Net sales to related party - Diamond Green Diesel
264,816
276,602
(11,786)
746,090
940,228
(194,138)
Total net sales
1,421,891
1,625,204
(203,313)
4,297,482
5,173,997
(876,515)
Costs and expenses:
Cost of sales and operating expenses (excludes depreciation and amortization, shown separately below)
1,108,319
1,238,733
130,414
3,353,406
3,965,408
612,002
(Gain)/loss on sale of assets
251
929
678
(101)
861
962
Selling, general and administrative expenses
115,717
137,697
21,980
384,591
409,914
25,323
Restructuring and asset impairment charges
—
—
—
—
5,420
5,420
Acquisition and integration costs
218
3,430
3,212
5,402
12,158
6,756
Change in fair value of contingent consideration
16,156
(5,559)
(21,715)
(42,215)
(13,058)
29,157
Depreciation and amortization
123,553
125,994
2,441
375,667
364,086
(11,581)
Total costs and expenses
1,364,214
1,501,224
137,010
4,076,750
4,744,789
668,039
Equity in net income of Diamond Green Diesel
2,430
54,389
(51,959)
125,046
361,690
(236,644)
Operating income
60,107
178,369
(118,262)
345,778
790,898
(445,120)
Other expense:
Interest expense
(66,846)
(70,278)
3,432
(198,947)
(190,770)
(8,177)
Foreign currency gain/(loss)
(134)
845
(979)
515
8,339
(7,824)
Other income, net
4,735
2,247
2,488
12,823
13,485
(662)
Total other expense
(62,245)
(67,186)
4,941
(185,609)
(168,946)
(16,663)
Equity in net income of other unconsolidated subsidiaries
3,782
1,534
2,248
9,109
3,503
5,606
Income from operations before income taxes
1,644
112,717
(111,073)
169,278
625,455
(456,177)
Income tax expense/(benefit)
(17,471)
(15,364)
2,107
(12,790)
52,322
65,112
Net income
19,115
128,081
(108,966)
182,068
573,133
(391,065)
Net income attributable to noncontrollinginterests
(2,166)
(3,055)
889
(5,096)
(9,923)
4,827
Net income attributable to Darling
$ 16,949
$ 125,026
$ (108,077)
$ 176,972
$ 563,210
$ (386,238)
Basic income per share:
$ 0.11
$ 0.78
$ (0.67)
$ 1.11
$ 3.52
$ (2.41)
Diluted income per share:
$ 0.11
$ 0.77
$ (0.66)
$ 1.10
$ 3.47
$ (2.37)
Number of diluted common shares:
160,991
162,425
161,534
162,537
Segment Financial Tables (in thousands, unaudited)
Feed Ingredients
Food Ingredients
Fuel Ingredients
Corporate
Total
Three Months Ended September 28, 2024
Total net sales
$ 927,457
$ 357,292
$ 137,142
$ ,
$ 1,421,891
Cost of sales and operating expenses
727,642
271,861
108,816
—
1,108,319
Gross margin
199,815
85,431
28,326
—
313,572
Loss (gain) on sale of assets
204
49
(2)
—
251
Selling, general and administrative expenses
67,445
28,351
7,757
12,164
115,717
Acquisition and integration costs
—
—
—
218
218
Change in fair value of contingent consideration
16,156
—
—
—
16,156
Depreciation and amortization
85,480
26,743
9,297
2,033
123,553
Equity in net income of Diamond Green Diesel
—
—
2,430
—
2,430
Segment operating income/(loss)
$ 30,530
$ 30,288
$ 13,704
$ (14,415)
$ 60,107
Equity in net income of other unconsolidated subsidiaries
3,782
—
—
—
3,782
Segment income/(loss)
$ 34,312
