(Mark One)
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/X/ QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d) OF THE
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SECURITIES EXCHANGE ACT OF 1934
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For the quarterly period ended July 1, 2017
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OR
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/ / TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d) OF THE
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SECURITIES EXCHANGE ACT OF 1934
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For the transition period from _______ to _______
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Delaware
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36-2495346
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(State or other jurisdiction
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(I.R.S. Employer
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of incorporation or organization)
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Identification Number)
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251 O'Connor Ridge Blvd., Suite 300
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Irving, Texas
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75038
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(Address of principal executive offices)
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(Zip Code)
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Page No.
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July 1,
2017 |
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December 31,
2016 |
||||
ASSETS
|
(unaudited)
|
|
|
||||
Current assets:
|
|
|
|
||||
Cash and cash equivalents
|
$
|
124,817
|
|
|
$
|
114,564
|
|
Restricted cash
|
282
|
|
|
293
|
|
||
Accounts receivable, net
|
382,957
|
|
|
388,397
|
|
||
Inventories
|
359,635
|
|
|
330,815
|
|
||
Prepaid expenses
|
37,750
|
|
|
29,984
|
|
||
Income taxes refundable
|
6,387
|
|
|
7,479
|
|
||
Other current assets
|
13,101
|
|
|
21,770
|
|
||
Total current assets
|
924,929
|
|
|
893,302
|
|
||
Property, plant and equipment, less accumulated depreciation of
$957,017 at July 1, 2017 and $842,186 at December 31, 2016
|
1,584,735
|
|
|
1,515,575
|
|
||
Intangible assets, less accumulated amortization of
$339,794 at July 1, 2017 and $301,187 at December 31, 2016
|
703,182
|
|
|
711,927
|
|
||
Goodwill
|
1,271,927
|
|
|
1,225,893
|
|
||
Investment in unconsolidated subsidiaries
|
279,814
|
|
|
292,717
|
|
||
Other assets
|
48,239
|
|
|
43,613
|
|
||
Deferred income taxes
|
17,050
|
|
|
14,990
|
|
||
|
$
|
4,829,876
|
|
|
$
|
4,698,017
|
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LIABILITIES AND STOCKHOLDERS’ EQUITY
|
|
|
|
|
|
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Current liabilities:
|
|
|
|
|
|
||
Current portion of long-term debt
|
$
|
19,370
|
|
|
$
|
23,247
|
|
Accounts payable, principally trade
|
186,458
|
|
|
180,895
|
|
||
Income taxes payable
|
17,213
|
|
|
4,913
|
|
||
Accrued expenses
|
265,939
|
|
|
242,796
|
|
||
Total current liabilities
|
488,980
|
|
|
451,851
|
|
||
Long-term debt, net of current portion
|
1,727,553
|
|
|
1,727,696
|
|
||
Other non-current liabilities
|
96,916
|
|
|
96,114
|
|
||
Deferred income taxes
|
349,221
|
|
|
346,134
|
|
||
Total liabilities
|
2,662,670
|
|
|
2,621,795
|
|
||
Commitments and contingencies
|
|
|
|
|
|
||
Stockholders’ equity:
|
|
|
|
|
|
||
Common stock, $0.01 par value; 250,000,000 shares authorized;
167,835,432 and 167,641,415 shares issued at July 1, 2017
and at December 31, 2016, respectively
|
1,678
|
|
|
1,676
|
|
||
Additional paid-in capital
|
1,510,689
|
|
|
1,499,431
|
|
||
Treasury stock, at cost; 3,179,671 and 3,028,857 shares at
July 1, 2017 and at December 31, 2016, respectively
|
(43,054
|
)
|
|
(40,909
|
)
|
||
Accumulated other comprehensive loss
|
(272,748
|
)
|
|
(340,006
|
)
|
||
Retained earnings
|
867,737
|
|
|
852,802
|
|
||
Total Darling's stockholders’ equity
|
2,064,302
|
|
|
1,972,994
|
|
||
Noncontrolling interests
|
102,904
|
|
|
103,228
|
|
||
Total stockholders' equity
|
$
|
2,167,206
|
|
|
$
|
2,076,222
|
|
|
$
|
4,829,876
|
|
|
$
|
4,698,017
|
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||
|
July 1,
2017 |
|
July 2,
2016 |
|
July 1,
2017 |
|
July 2,
2016 |
||||||||
Net sales
|
$
|
896,348
|
|
|
$
|
877,341
|
|
|
$
|
1,776,420
|
|
|
$
|
1,656,982
|
|
Costs and expenses:
|
|
|
|
|
|
|
|
|
|
||||||
Cost of sales and operating expenses
|
700,764
|
|
|
677,115
|
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1,390,391
|
|
|
1,276,008
|
|
||||
Selling, general and administrative expenses
|
85,531
|
|
|
76,158
|
|
|
173,448
|
|
|
157,627
|
|
||||
Acquisition and integration costs
|
—
|
|
|
70
|
|
|
—
|
|
|
401
|
|
||||
Depreciation and amortization
|
72,990
|
|
|
69,531
|
|
|
144,104
|
|
|
141,787
|
|
||||
Total costs and expenses
|
859,285
|
|
|
822,874
|
|
|
1,707,943
|
|
|
1,575,823
|
|
||||
Operating income
|
37,063
|
|
|
54,467
|
|
|
68,477
|
|
|
81,159
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Other expense:
|
|
|
|
|
|
|
|
|
|
||||||
Interest expense
|
(22,446
|
)
|
|
(23,980
|
)
|
|
(44,126
|
)
|
|
(47,881
|
)
|
||||
Foreign currency gain/(loss)
|
(2,111
|
)
|
|
8
|
|
|
(2,375
|
)
|
|
(2,595
|
)
|
||||
Other expense, net
|
(2,696
|
)
|
|
(2,373
|
)
|
|
(3,656
|
)
|
|
(3,678
|
)
|
||||
Total other expense
|
(27,253
|
)
|
|
(26,345
|
)
|
|
(50,157
|
)
|
|
(54,154
|
)
|
||||
|
|
|
|
|
|
|
|
||||||||
Equity in net income of unconsolidated subsidiaries
|
8,260
|
|
|
13,852
|
|
|
8,966
|
|
|
19,495
|
|
||||
Income before income taxes
|
18,070
|
|
|
41,974
|
|
|
27,286
|
|
|
46,500
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Income tax expense
|
7,742
|
|
|
7,983
|
|
|
9,560
|
|
|
9,846
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Net income
|
10,328
|
|
|
33,991
|
|
|
17,726
|
|
|
36,654
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Net income attributable to noncontrolling interests
|
(1,179
|
)
|
|
(1,992
|
)
|
|
(2,748
|
)
|
|
(3,576
|
)
|
||||
|
|
|
|
|
|
|
|
||||||||
Net income attributable to Darling
|
$
|
9,149
|
|
|
$
|
31,999
|
|
|
$
|
14,978
|
|
|
$
|
33,078
|
|
|
|
|
|
|
|
|
|
||||||||
Basic income per share
|
$
|
0.06
|
|
|
$
|
0.19
|
|
|
$
|
0.09
|
|
|
$
|
0.20
|
|
Diluted income per share
|
$
|
0.05
|
|
|
$
|
0.19
|
|
|
$
|
0.09
|
|
|
$
|
0.20
|
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||||
|
July 1, 2017
|
|
July 2, 2016
|
|
July 1, 2017
|
|
July 2, 2016
|
||||||||
Net income
|
$
|
10,328
|
|
|
$
|
33,991
|
|
|
$
|
17,726
|
|
|
$
|
36,654
|
|
Other comprehensive income/(loss), net of tax:
|
|
|
|
|
|
|
|
||||||||
Foreign currency translation
|
49,112
|
|
|
(8,008
|
)
|
|
64,791
|
|
|
49,523
|
|
||||
Pension adjustments
|
760
|
|
|
651
|
|
|
1,519
|
|
|
1,377
|
|
||||
Corn option derivative adjustments
|
(869
|
)
|
|
1,227
|
|
|
(1,971
|
)
|
|
521
|
|
||||
Total other comprehensive income/(loss), net of tax
|
49,003
|
|
|
(6,130
|
)
|
|
64,339
|
|
|
51,421
|
|
||||
Total comprehensive income
|
$
|
59,331
|
|
|
$
|
27,861
|
|
|
$
|
82,065
|
|
|
$
|
88,075
|
|
Comprehensive income/(loss) attributable to noncontrolling interests
|
(1,418
|
)
|
|
1,725
|
|
|
(171
|
)
|
|
1,305
|
|
||||
Comprehensive income attributable to Darling
|
$
|
60,749
|
|
|
$
|
26,136
|
|
|
$
|
82,236
|
|
|
$
|
86,770
|
|
|
July 1,
2017 |
|
July 2,
2016 |
||||
Cash flows from operating activities:
|
|
|
|
||||
Net Income
|
$
|
17,726
|
|
|
$
|
36,654
|
|
Adjustments to reconcile net income to net cash provided by operating activities:
|
|
|
|
||||
Depreciation and amortization
|
144,104
|
|
|
141,787
|
|
||
Loss/(gain) on disposal of property, plant, equipment and other assets
|
(358
|
)
|
|
827
|
|
||
Gain on insurance proceeds from insurance settlements
|
—
|
|
|
(356
|
)
|
||
Deferred taxes
|
(11,205
|
)
|
|
(1,812
|
)
|
||
Increase/(decrease) in long-term pension liability
|
1,362
|
|
|
(1,596
|
)
|
||
Stock-based compensation expense
|
11,003
|
|
|
5,067
|
|
||
Write-off deferred loan costs
|
340
|
|
|
57
|
|
||
Deferred loan cost amortization
|
4,366
|
|
|
5,600
|
|
||
Equity in net income of unconsolidated subsidiaries
|
(8,966
|
)
|
|
(19,495
|
)
|
||
Distributions of earnings from unconsolidated subsidiaries
|
25,806
|
|
|
25,994
|
|
||
Changes in operating assets and liabilities, net of effects from acquisitions:
|
|
|
|
||||
Accounts receivable
|
17,705
|
|
|
(20,081
|
)
|
||
Income taxes refundable/payable
|
12,857
|
|
|
1,559
|
|
||
Inventories and prepaid expenses
|
(21,952
|
)
|
|
(19,501
|
)
|
||
Accounts payable and accrued expenses
|
16,594
|
|
|
30,989
|
|
||
Other
|
(11,834
|
)
|
|
(17,460
|
)
|
||
Net cash provided by operating activities
|
197,548
|
|
|
168,233
|
|
||
Cash flows from investing activities:
|
|
|
|
||||
Capital expenditures
|
(127,824
|
)
|
|
(109,406
|
)
|
||
Acquisitions, net of cash acquired
|
(12,369
|
)
|
|
(8,511
|
)
|
||
Investment in unconsolidated subsidiary
|
(2,250
|
)
|
|
—
|
|
||
Gross proceeds from disposal of property, plant and equipment and other assets
|
3,603
|
|
|
2,404
|
|
||
Proceeds from insurance settlement
|
3,301
|
|
|
1,537
|
|
||
Payments related to routes and other intangibles
|
(4,635
|
)
|
|
—
|
|
||
Net cash used by investing activities
|
(140,174
|
)
|
|
(113,976
|
)
|
||
Cash flows from financing activities:
|
|
|
|
||||
Proceeds from long-term debt
|
16,405
|
|
|
17,277
|
|
||
Payments on long-term debt
|
(67,974
|
)
|
|
(59,255
|
)
|
||
Borrowings from revolving credit facility
|
80,000
|
|
|
41,000
|
|
||
Payments on revolving credit facility
|
(80,327
|
)
|
|
(47,207
|
)
|
||
Net cash overdraft financing
|
(1,077
|
)
|
|
—
|
|
||
Deferred loan costs
|
(1,177
|
)
|
|
—
|
|
||
Issuance of common stock
|
22
|
|
|
143
|
|
||
Repurchase of common stock
|
—
|
|
|
(5,000
|
)
|
||
Minimum withholding taxes paid on stock awards
|
(2,091
|
)
|
|
(1,812
|
)
|
||
Excess tax benefits from stock-based compensation
|
—
|
|
|
(413
|
)
|
||
Distributions to noncontrolling interests
|
(2,135
|
)
|
|
—
|
|
||
Net cash used by financing activities
|
(58,354
|
)
|
|
(55,267
|
)
|
||
Effect of exchange rate changes on cash
|
11,233
|
|
|
1,941
|
|
||
Net increase in cash and cash equivalents
|
10,253
|
|
|
931
|
|
||
Cash and cash equivalents at beginning of period
|
114,564
|
|
|
156,884
|
|
||
Cash and cash equivalents at end of period
|
$
|
124,817
|
|
|
$
|
157,815
|
|
Supplemental disclosure of cash flow information:
|
|
|
|
||||
Accrued capital expenditures
|
$
|
(5,445
|
)
|
|
$
|
(3,684
|
)
|
Cash paid during the period for:
|
|
|
|
||||
Interest, net of capitalized interest
|
$
|
38,688
|
|
|
$
|
41,813
|
|
Income taxes, net of refunds
|
$
|
7,986
|
|
|
$
|
11,799
|
|
Non-cash financing activities
|
|
|
|
||||
Debt issued for assets
|
$
|
—
|
|
|
$
|
10
|
|
Contribution of assets to unconsolidated subsidiary
|
$
|
—
|
|
|
$
|
2,674
|
|
(1)
|
General
|
(2)
|
Summary of Significant Accounting Policies
|
(a)
|
Basis of Presentation
|
(b)
|
Fiscal Periods
|
(c)
|
Revenue Recognition
|
(d)
|
Foreign Currency Translation and Remeasurement
|
(e)
|
Earnings Per Share
|
|
Net Income per Common Share (in thousands, except per share data)
|
||||||||||||||||||||
|
Three Months Ended
|
||||||||||||||||||||
|
|
|
July 1, 2017
|
|
|
|
|
|
July 2, 2016
|
|
|
||||||||||
|
Income
|
|
Shares
|
|
Per Share
|
|
Income
|
|
Shares
|
|
Per Share
|
||||||||||
Basic:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Net Income attributable to Darling
|
$
|
9,149
|
|
|
164,718
|
|
|
$
|
0.06
|
|
|
$
|
31,999
|
|
|
164,634
|
|
|
$
|
0.19
|
|
Diluted:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Effect of dilutive securities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Add: Option shares in the money and dilutive effect of non-vested stock awards
|
|
|
|
4,166
|
|
|
|
|
|
|
|
|
1,793
|
|
|
|
|
||||
Less: Pro forma treasury shares
|
|
|
|
(2,053
|
)
|
|
|
|
|
|
|
|
(953
|
)
|
|
|
|
||||
Diluted:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Net income attributable to Darling
|
$
|
9,149
|
|
|
166,831
|
|
|
$
|
0.05
|
|
|
$
|
31,999
|
|
|
165,474
|
|
|
$
|
0.19
|
|
|
Net Income per Common Share (in thousands, except per share data)
|
||||||||||||||||||||
|
Six Months Ended
|
||||||||||||||||||||
|
|
|
July 1, 2017
|
|
|
|
|
|
July 2, 2016
|
|
|
||||||||||
|
Income
|
|
Shares
|
|
Per Share
|
|
Loss
|
|
Shares
|
|
Per Share
|
||||||||||
Basic:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Net Income/(loss) attributable to Darling
|
$
|
14,978
|
|
|
164,728
|
|
|
$
|
0.09
|
|
|
$
|
33,078
|
|
|
164,534
|
|
|
$
|
0.20
|
|
Diluted:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Effect of dilutive securities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Add: Option shares in the money and dilutive effect of non-vested stock awards
|
|
|
|
3,089
|
|
|
|
|
|
|
|
|
975
|
|
|
|
|
||||
Less: Pro forma treasury shares
|
|
|
|
(1,469
|
)
|
|
|
|
|
|
|
|
(496
|
)
|
|
|
|
||||
Diluted:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Net income/(loss) attributable to Darling
|
$
|
14,978
|
|
|
166,348
|
|
|
$
|
0.09
|
|
|
$
|
33,078
|
|
|
165,013
|
|
|
$
|
0.20
|
|
(3)
|
Inventories
|
|
July 1, 2017
|
|
December 31, 2016
|
||||
Finished product
|
$
|
180,476
|
|
|
$
|
156,542
|
|
Work in process
|
95,750
|
|
|
87,284
|
|
||
Raw material
|
32,998
|
|
|
39,859
|
|
||
Supplies and other
|
50,411
|
|
|
47,130
|
|
||
|
$
|
359,635
|
|
|
$
|
330,815
|
|
(4)
|
Intangible Assets
|
|
July 1, 2017
|
|
December 31, 2016
|
||||
Indefinite Lived Intangible Assets
|
|
|
|
||||
Trade names
|
$
|
53,670
|
|
|
$
|
51,687
|
|
|
53,670
|
|
|
51,687
|
|
||
Finite Lived Intangible Assets:
|
|
|
|
|
|
||
Routes
|
391,031
|
|
|
374,989
|
|
||
Permits
|
504,074
|
|
|
493,311
|
|
||
Non-compete agreements
|
3,871
|
|
|
3,638
|
|
||
Trade names
|
76,301
|
|
|
76,033
|
|
||
Royalty, consulting, land use rights and leasehold
|
14,029
|
|
|
13,456
|
|
||
|
989,306
|
|
|
961,427
|
|
||
Accumulated Amortization:
|
|
|
|
||||
Routes
|
(118,562
|
)
|
|
(105,934
|
)
|
||
Permits
|
(190,631
|
)
|
|
(170,165
|
)
|
||
Non-compete agreements
|
(2,027
|
)
|
|
(1,788
|
)
|
||
Trade names
|
(25,773
|
)
|
|
(21,042
|
)
|
||
Royalty, consulting, land use rights and leasehold
|
(2,801
|
)
|
|
(2,258
|
)
|
||
|
(339,794
|
)
|
|
(301,187
|
)
|
||
Total Intangible assets, less accumulated amortization
|
$
|
703,182
|
|
|
$
|
711,927
|
|
(5)
|
Goodwill
|
|
Feed Ingredients
|
Food Ingredients
|
Fuel Ingredients
|
Total
|
||||||||
Balance at December 31, 2016
|
|
|
|
|
||||||||
Goodwill
|
$
|
813,621
|
|
$
|
317,008
|
|
$
|
111,178
|
|
$
|
1,241,807
|
|
Accumulated impairment losses
|
(15,914
|
)
|
—
|
|
—
|
|
(15,914
|
)
|
||||
|
797,707
|
|
317,008
|
|
111,178
|
|
1,225,893
|
|
||||
Goodwill acquired during year
|
2,197
|
|
—
|
|
—
|
|
2,197
|
|
||||
Foreign currency translation
|
19,980
|
|
16,236
|
|
7,621
|
|
43,837
|
|
||||
Balance at July 1, 2017
|
|
|
|
|
|
|
|
|||||
Goodwill
|
835,798
|
|
333,244
|
|
118,799
|
|
1,287,841
|
|
||||
Accumulated impairment losses
|
(15,914
|
)
|
—
|
|
—
|
|
(15,914
|
)
|
||||
|
$
|
819,884
|
|
$
|
333,244
|
|
$
|
118,799
|
|
$
|
1,271,927
|
|
(6)
|
Investment in Unconsolidated Subsidiaries
|
(in thousands)
|
|
June 30, 2017
|
December 31, 2016
|
||||
Assets:
|
|
|
|
||||
Total current assets
|
|
$
|
216,993
|
|
$
|
268,734
|
|
Property, plant and equipment, net
|
|
371,355
|
|
354,871
|
|
||
Other assets
|
|
7,291
|
|
12,164
|
|
||
Total assets
|
|
$
|
595,639
|
|
$
|
635,769
|
|
Liabilities and members' equity:
|
|
|
|
||||
Total current portion of long term debt
|
|
$
|
17,023
|
|
$
|
17,023
|
|
Total other current liabilities
|
|
24,112
|
|
23,200
|
|
||
Total long term debt
|
|
45,242
|
|
53,753
|
|
||
Total other long term liabilities
|
|
435
|
|
418
|
|
||
Total members' equity
|
|
508,827
|
|
541,375
|
|
||
Total liabilities and member's equity
|
|
$
|
595,639
|
|
$
|
635,769
|
|
|
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||
(in thousands)
|
|
June 30, 2017
|
June 30, 2016
|
|
June 30, 2017
|
June 30, 2016
|
||||||||
Revenues:
|
|
|
|
|
|
|
||||||||
Operating revenues
|
|
$
|
150,786
|
|
$
|
132,226
|
|
|
$
|
276,183
|
|
$
|
203,994
|
|
Expenses:
|
|
|
|
|
|
|
||||||||
Total costs and expenses less depreciation, amortization and accretion expense
|
|
125,975
|
|
95,565
|
|
|
241,297
|
|
148,074
|
|
||||
Depreciation, amortization and accretion expense
|
|
8,021
|
|
7,547
|
|
|
16,134
|
|
12,925
|
|
||||
Total costs and expenses
|
|
133,996
|
|
103,112
|
|
|
257,431
|
|
160,999
|
|
||||
Operating income
|
|
16,790
|
|
29,114
|
|
|
18,752
|
|
42,995
|
|
||||
Other income
|
|
328
|
|
70
|
|
|
551
|
|
85
|
|
||||
Interest and debt expense, net
|
|
(861
|
)
|
(1,928
|
)
|
|
(1,851
|
)
|
(4,742
|
)
|
||||
Net income/(loss)
|
|
$
|
16,257
|
|
$
|
27,256
|
|
|
$
|
17,452
|
|
$
|
38,338
|
|
(7)
|
Debt
|
|
July 1, 2017
|
|
December 31, 2016
|
||||
Amended Credit Agreement:
|
|
|
|
||||
Revolving Credit Facility ($5.3 million denominated in euro at December 31, 2016)
|
$
|
5,000
|
|
|
$
|
5,280
|
|
Term Loan A ($72.1 million and $76.9 million denominated in CAD at July 1, 2017 and December 31, 2016, respectively)
|
115,356
|
|
|
120,103
|
|
||
Less unamortized deferred loan costs
|
(931
|
)
|
|
(1,083
|
)
|
||
Carrying value Term Loan A
|
114,425
|
|
|
119,020
|
|
||
|
|
|
|
||||
Term Loan B
|
540,500
|
|
|
583,500
|
|
||
Less unamortized deferred loan costs
|
(5,251
|
)
|
|
(6,298
|
)
|
||
Carrying value Term Loan B
|
535,249
|
|
|
577,202
|
|
||
|
|
|
|
||||
5.375% Senior Notes due 2022 with effective interest of 5.72%
|
500,000
|
|
|
500,000
|
|
||
Less unamortized deferred loan costs
|
(6,998
|
)
|
|
(7,667
|
)
|
||
Carrying value 5.375% Senior Notes due 2022
|
493,002
|
|
|
492,333
|
|
||
|
|
|
|
||||
4.75% Senior Notes due 2022 - Denominated in euro with effective interest of 5.10%
|
587,306
|
|
|
543,840
|
|
||
Less unamortized deferred loan costs - Denominated in euro
|
(8,877
|
)
|
|
(8,956
|
)
|
||
Carrying value 4.75% Senior Notes due 2022
|
578,429
|
|
|
534,884
|
|
||
|
|
|
|
||||
Other Notes and Obligations
|
20,818
|
|
|
22,224
|
|
||
|
1,746,923
|
|
|
1,750,943
|
|
||
Less Current Maturities
|
19,370
|
|
|
23,247
|
|
||
|
$
|
1,727,553
|
|
|
$
|
1,727,696
|
|
(8)
|
Income Taxes
|
(9)
|
Other Comprehensive Income
|
|
Three Months Ended
|
|||||||||||||||||
|
Before-Tax
|
Tax (Expense)
|
Net-of-Tax
|
|||||||||||||||
|
Amount
|
or Benefit
|
Amount
|
|||||||||||||||
|
July 1, 2017
|
July 2, 2016
|
July 1, 2017
|
July 2, 2016
|
July 1, 2017
|
July 2, 2016
|
||||||||||||
Defined benefit pension plans
|
|
|
|
|
|
|
||||||||||||
Amortization of prior service cost/(benefit)
|
$
|
9
|
|
$
|
7
|
|
$
|
(2
|
)
|
$
|
(2
|
)
|
$
|
7
|
|
$
|
5
|
|
Amortization of actuarial loss
|
1,203
|
|
1,166
|
|
(450
|
)
|
(445
|
)
|
753
|
|
721
|
|
||||||
Amortization of settlement
|
—
|
|
(123
|
)
|
—
|
|
48
|
|
—
|
|
(75
|
)
|
||||||
Total defined benefit pension plans
|
1,212
|
|
1,050
|
|
(452
|
)
|
(399
|
)
|
760
|
|
651
|
|
||||||
Corn option derivatives
|
|
|
|
|
|
|
||||||||||||
Loss/(gain) reclassified to net income
|
(1,213
|
)
|
(869
|
)
|
470
|
|
337
|
|
(743
|
)
|
(532
|
)
|
||||||
Gain/(loss) activity recognized in other comprehensive income (loss)
|
(207
|
)
|
2,875
|
|
81
|
|
(1,116
|
)
|
(126
|
)
|
1,759
|
|
||||||
Total corn option derivatives
|
(1,420
|
)
|
2,006
|
|
551
|
|
(779
|
)
|
(869
|
)
|
1,227
|
|
||||||
|
|
|
|
|
|
|
||||||||||||
Foreign currency translation
|
49,112
|
|
(8,008
|
)
|
—
|
|
—
|
|
49,112
|
|
(8,008
|
)
|
||||||
|
|
|
|
|
|
|
||||||||||||
Other comprehensive income (loss)
|
$
|
48,904
|
|
$
|
(4,952
|
)
|
$
|
99
|
|
$
|
(1,178
|
)
|
$
|
49,003
|
|
$
|
(6,130
|
)
|
|
Six Months Ended
|
|||||||||||||||||
|
Before-Tax
|
Tax (Expense)
|
Net-of-Tax
|
|||||||||||||||
|
Amount
|
or Benefit
|
Amount
|
|||||||||||||||
|
July 1, 2017
|
July 2, 2016
|
July 1, 2017
|
July 2, 2016
|
July 1, 2017
|
July 2, 2016
|
||||||||||||
Defined benefit pension plans
|
|
|
|
|
|
|
||||||||||||
Amortization of prior service cost/(benefit)
|
$
|
18
|
|
$
|
14
|
|
$
|
(5
|
)
|
$
|
(5
|
)
|
$
|
13
|
|
$
|
9
|
|
Amortization of actuarial loss
|
2,406
|
|
2,334
|
|
(900
|
)
|
(891
|
)
|
1,506
|
|
1,443
|
|
||||||
Amortization of settlement
|
—
|
|
(123
|
)
|
—
|
|
48
|
|
—
|
|
(75
|
)
|
||||||
Total defined benefit pension plans
|
2,424
|
|
2,225
|
|
(905
|
)
|
(848
|
)
|
1,519
|
|
1,377
|
|
||||||
Corn option derivatives
|
|
|
|
|
|
|
||||||||||||
Loss/(gain) reclassified to net income
|
(2,398
|
)
|
(2,343
|
)
|
930
|
|
909
|
|
(1,468
|
)
|
(1,434
|
)
|
||||||
Gain/(loss) activity recognized in other comprehensive income (loss)
|
(822
|
)
|
3,195
|
|
319
|
|
(1,240
|
)
|
(503
|
)
|
1,955
|
|
||||||
Total corn option derivatives
|
(3,220
|
)
|
852
|
|
1,249
|
|
(331
|
)
|
(1,971
|
)
|
521
|
|
||||||
|
|
|
|
|
|
|
||||||||||||
Foreign currency translation
|
64,791
|
|
49,523
|
|
—
|
|
—
|
|
64,791
|
|
49,523
|
|
||||||
|
|
|
|
|
|
|
||||||||||||
Other comprehensive income (loss)
|
$
|
63,995
|
|
$
|
52,600
|
|
$
|
344
|
|
$
|
(1,179
|
)
|
$
|
64,339
|
|
$
|
51,421
|
|
|
Three Months Ended
|
Six Months Ended
|
|
||||||||||
|
July 1, 2017
|
July 2, 2016
|
July 1, 2017
|
July 2, 2016
|
Statement of Operations Classification
|
||||||||
Derivative instruments
|
|
|
|
|
|
||||||||
Corn option derivatives
|
$
|
1,213
|
|
$
|
869
|
|
$
|
2,398
|
|
$
|
2,343
|
|
Cost of sales and operating expenses
|
|
1,213
|
|
869
|
|
2,398
|
|
2,343
|
|
Total before tax
|
||||
|
(470
|
)
|
(337
|
)
|
(930
|
)
|
(909
|
)
|
Income taxes
|
||||
|
743
|
|
532
|
|
1,468
|
|
1,434
|
|
Net of tax
|
||||
Defined benefit pension plans
|
|
|
|
|
|
||||||||
Amortization of prior service (cost)/benefit
|
$
|
(9
|
)
|
$
|
(7
|
)
|
$
|
(18
|
)
|
$
|
(14
|
)
|
(a)
|
Amortization of actuarial loss
|
(1,203
|
)
|
(1,166
|
)
|
(2,406
|
)
|
(2,334
|
)
|
(a)
|
||||
Amortization of settlement
|
—
|
|
123
|
|
—
|
|
123
|
|
(a)
|
||||
|
(1,212
|
)
|
(1,050
|
)
|
(2,424
|
)
|
(2,225
|
)
|
Total before tax
|
||||
|
452
|
|
399
|
|
905
|
|
848
|
|
Income taxes
|
||||
|
(760
|
)
|
(651
|
)
|
(1,519
|
)
|
(1,377
|
)
|
Net of tax
|
||||
Total reclassifications
|
$
|
(17
|
)
|
$
|
(119
|
)
|
$
|
(51
|
)
|
$
|
57
|
|
Net of tax
|
(a)
|
These items are included in the computation of net periodic pension cost. See Note 11 Employee Benefit Plans for additional information.
|
|
|
Six Months Ended July 1, 2017
|
|||||||||||
|
|
Foreign Currency
|
Derivative
|
Defined Benefit
|
|
||||||||
|
|
Translation
|
Instruments
|
Pension Plans
|
Total
|
||||||||
Accumulated Other Comprehensive Income (loss) December 31, 2016, attributable to Darling, net of tax
|
|
$
|
(308,910
|
)
|
$
|
2,468
|
|
$
|
(33,564
|
)
|
$
|
(340,006
|
)
|
Other comprehensive gain before reclassifications
|
|
64,791
|
|
(503
|
)
|
—
|
|
64,288
|
|
||||
Amounts reclassified from accumulated other comprehensive income/(loss)
|
|
—
|
|
(1,468
|
)
|
1,519
|
|
51
|
|
||||
Net current-period other comprehensive income
|
|
64,791
|
|
(1,971
|
)
|
1,519
|
|
64,339
|
|
||||
Noncontrolling interest
|
|
(2,919
|
)
|
—
|
|
—
|
|
(2,919
|
)
|
||||
Accumulated Other Comprehensive Income (loss) July 1, 2017, attributable to Darling, net of tax
|
|
(241,200
|
)
|
$
|
497
|
|
$
|
(32,045
|
)
|
$
|
(272,748
|
)
|
•
|
The Company recorded a tax expense of less than $
0.1 million
within income tax expense for the six months ended
July 1, 2017
related to the excess tax expense on stock options, nonvested stock, director restricted stock units and performance units. Prior to the adoption this amount would have been recorded as reduction of additional paid-in capital.
|
•
|
The Company has made a policy election to account for forfeitures in the period they occur, rather than estimating a forfeiture rate. Applying this guidance on a modified retrospective basis resulted in an insignificant adjustment to opening retained earnings.
|
•
|
The Company no longer reclassifies the excess tax benefit from operating activities to financing activities in the statement of cash flows. The Company elected to apply this change in presentation prospectively and thus prior periods have not been adjusted.
|
•
|
The Company excluded the excess tax benefits from the assumed proceeds available to repurchase shares of common stock in the computation of the Company's diluted earnings per share for the six months ended July 1, 2017. This increased the Company's diluted weighted average common shares outstanding by approximately
306,000
shares in the six months ended July 1, 2017.
|
|
Pension Benefits
|
|
Pension Benefits
|
||||||||||
|
Three Months Ended
|
|
Six Months Ended
|
||||||||||
|
July 1,
2017 |
July 2,
2016 |
|
July 1,
2017 |
July 2,
2016 |
||||||||
Service cost
|
$
|
750
|
|
$
|
685
|
|
|
$
|
1,485
|
|
$
|
1,322
|
|
Interest cost
|
1,679
|
|
1,770
|
|
|
3,348
|
|
3,515
|
|
||||
Expected return on plan assets
|
(1,790
|
)
|
(1,890
|
)
|
|
(3,578
|
)
|
(3,775
|
)
|
||||
Amortization of prior service cost/(benefit)
|
9
|
|
7
|
|
|
18
|
|
14
|
|
||||
Amortization of net loss
|
1,203
|
|
1,166
|
|
|
2,406
|
|
2,334
|
|
||||
Curtailment gain
|
—
|
|
—
|
|
|
—
|
|
(1,223
|
)
|
||||
Settlement gain
|
—
|
|
(123
|
)
|
|
—
|
|
(123
|
)
|
||||
Net pension cost
|
$
|
1,851
|
|
$
|
1,615
|
|
|
$
|
3,679
|
|
$
|
2,064
|
|
(12)
|
Derivatives
|
Functional Currency
|
|
Contract Currency
|
||||
Type
|
Amount
|
|
Type
|
Amount
|
||
Brazilian real
|
28,302
|
|
|
Euro
|
7,710
|
|
Brazilian real
|
83,615
|
|
|
U.S. dollar
|
25,010
|
|
Brazilian real
|
328
|
|
|
Mexican peso
|
1,824
|
|
Euro
|
140,552
|
|
|
U.S. dollar
|
155,711
|
|
Euro
|
9,649
|
|
|
Polish zloty
|
40,444
|
|
Euro
|
3,848
|
|
|
Japanese yen
|
464,300
|
|
Euro
|
37,637
|
|
|
Chinese renminbi
|
287,736
|
|
Euro
|
11,064
|
|
|
Australian dollar
|
16,700
|
|
Polish zloty
|
23,992
|
|
|
Euro
|
5,678
|
|
Japanese yen
|
22,550
|
|
|
U.S. dollar
|
203
|
|
Derivatives
Designated as
Cash Flow Hedges
|
Gain or (Loss)
Recognized in Other Comprehensive Income (“OCI”)
on Derivatives
(Effective Portion) (a)
|
Gain or (Loss)
Reclassified from
Accumulated OCI
into Income
(Effective Portion) (b)
|
Gain or (Loss)
Recognized in Income
on Derivatives
(Ineffective Portion and
Amount Excluded from
Effectiveness Testing) (c)
|
|||||||||||||||
|
2017
|
2016
|
2017
|
2016
|
2017
|
2016
|
||||||||||||
Corn options
|
$
|
(207
|
)
|
$
|
2,875
|
|
$
|
1,213
|
|
$
|
869
|
|
$
|
(1,394
|
)
|
$
|
162
|
|
|
|
|
|
|
|
|
||||||||||||
Total
|
$
|
(207
|
)
|
$
|
2,875
|
|
$
|
1,213
|
|
$
|
869
|
|
$
|
(1,394
|
)
|
$
|
162
|
|
(a)
|
Amount recognized in accumulated OCI (effective portion) is reported as accumulated other comprehensive income/(loss) of approximately $
(0.2) million
and $
2.9 million
recorded net of taxes of approximately $
0.1 million
and $
(1.1) million
as of
July 1, 2017
and
July 2, 2016
, respectively.
|
(b)
|
Gains and (losses) reclassified from accumulated OCI into income (effective portion) for corn options are included in cost of sales, respectively, in the Company’s consolidated statements of operations.
|
(c)
|
Gains and (losses) recognized in income on derivatives (ineffective portion) for corn options are included in other income/ (expense), net in the Company’s consolidated statements of operations.
|
Derivatives Designated as Cash Flow Hedges |
Gain or (Loss) Recognized in Other Comprehensive Income (“OCI”) on Derivatives (Effective Portion) (a) |
Gain or (Loss)
Reclassified from Accumulated OCI into Income (Effective Portion) (b) |
Gain or (Loss)
Recognized in Income on Derivatives (Ineffective Portion and Amount Excluded from Effectiveness Testing) (c) |
|||||||||||||||
|
2017
|
2016
|
2017
|
2016
|
2017
|
2016
|
||||||||||||
Corn options
|
$
|
(822
|
)
|
$
|
3,195
|
|
$
|
2,398
|
|
$
|
2,343
|
|
$
|
(1,305
|
)
|
$
|
214
|
|
|
|
|
|
|
|
|
||||||||||||
Total
|
$
|
(822
|
)
|
$
|
3,195
|
|
$
|
2,398
|
|
$
|
2,343
|
|
$
|
(1,305
|
)
|
$
|
214
|
|
(a)
|
Amount recognized in accumulated OCI (effective portion) is reported as accumulated other comprehensive income/(loss) of approximately $
(0.8) million
and $
3.2 million
recorded net of taxes of approximately $
0.3 million
and $
(1.2) million
as of
July 1, 2017
and
July 2, 2016
, respectively.
|
(b)
|
Gains and (losses) reclassified from accumulated OCI into income (effective portion) for corn options are included in cost of sales, respectively, in the Company’s consolidated statements of operations.
|
(c)
|
Gains and (losses) recognized in income on derivatives (ineffective portion) for corn options are included in other income/ (expense), net in the Company’s consolidated statements of operations.
|
|
|
|
|
Loss or (Gain) Recognized in Income on Derivatives Not Designated as Hedges
|
|||||||||||
|
|
|
|
Three Months Ended
|
Six Months Ended
|
||||||||||
Derivatives not designated as hedging instruments
|
|
Location
|
|
July 1, 2017
|
July 2, 2016
|
July 1, 2017
|
July 2, 2016
|
||||||||
|
|
|
|
|
|
|
|
||||||||
Foreign Exchange
|
|
Foreign currency loss/(gain)
|
|
$
|
6,130
|
|
$
|
(7,204
|
)
|
$
|
9,276
|
|
$
|
4,083
|
|
Foreign Exchange
|
|
Selling, general and administrative expense
|
|
492
|
|
(3,868
|
)
|
(989
|
)
|
(6,779
|
)
|
||||
Corn options and futures
|
|
Net sales
|
|
(18
|
)
|
344
|
|
(40
|
)
|
345
|
|
||||
Corn options and futures
|
|
Cost of sales and operating expenses
|
|
46
|
|
(81
|
)
|
316
|
|
(613
|
)
|
||||
Heating Oil swaps and options
|
|
Net sales
|
|
—
|
|
226
|
|
—
|
|
153
|
|
||||
Soybean Meal
|
|
Net sales
|
|
(9
|
)
|
7
|
|
(281
|
)
|
7
|
|
||||
Soybean Oil
|
|
Net sales
|
|
—
|
|
—
|
|
45
|
|
—
|
|
||||
Total
|
|
|
|
$
|
6,641
|
|
$
|
(10,576
|
)
|
$
|
8,327
|
|
$
|
(2,804
|
)
|
|
|
Fair Value Measurements at July 1, 2017 Using
|
||||||||||
|
|
Quoted Prices in
Active Markets for
Identical Assets
|
Significant Other
Observable
Inputs
|
Significant
Unobservable
Inputs
|
||||||||
(In thousands of dollars)
|
Total
|
(Level 1)
|
(Level 2)
|
(Level 3)
|
||||||||
Assets:
|
|
|
|
|
||||||||
Derivative instruments
|
$
|
2,645
|
|
$
|
—
|
|
$
|
2,645
|
|
$
|
—
|
|
Total Assets
|
$
|
2,645
|
|
$
|
—
|
|
$
|
2,645
|
|
$
|
—
|
|
|
|
|
|
|
||||||||
Liabilities:
|
|
|
|
|
||||||||
Derivative instruments
|
$
|
6,961
|
|
$
|
—
|
|
$
|
6,961
|
|
$
|
—
|
|
5.375% Senior notes
|
519,350
|
|
—
|
|
519,350
|
|
—
|
|
||||
4.75% Senior notes
|
616,671
|
|
—
|
|
616,671
|
|
—
|
|
||||
Term loan A
|
115,644
|
|
—
|
|
115,644
|
|
—
|
|
||||
Term loan B
|
542,865
|
|
—
|
|
542,865
|
|
—
|
|
||||
Revolver debt
|
4,975
|
|
—
|
|
4,975
|
|
—
|
|
||||
Total Liabilities
|
$
|
1,806,466
|
|
$
|
—
|
|
$
|
1,806,466
|
|
$
|
—
|
|
|
|
Fair Value Measurements at December 31, 2016 Using
|
||||||||||
|
|
Quoted Prices in
Active Markets for
Identical Assets
|
Significant Other
Observable
Inputs
|
Significant
Unobservable
Inputs
|
||||||||
(In thousands of dollars)
|
Total
|
(Level 1)
|
(Level 2)
|
(Level 3)
|
||||||||
Assets:
|
|
|
|
|
||||||||
Derivative instruments
|
$
|
13,325
|
|
$
|
—
|
|
$
|
13,325
|
|
$
|
—
|
|
Total Assets
|
$
|
13,325
|
|
$
|
—
|
|
$
|
13,325
|
|
$
|
—
|
|
|
|
|
|
|
||||||||
Liabilities:
|
|
|
|
|
||||||||
Derivative instruments
|
$
|
730
|
|
$
|
—
|
|
$
|
730
|
|
$
|
—
|
|
5.375% Senior notes
|
520,300
|
|
—
|
|
520,300
|
|
—
|
|
||||
4.75% Senior notes
|
575,111
|
|
—
|
|
575,111
|
|
—
|
|
||||
Term loan A
|
120,403
|
|
—
|
|
120,403
|
|
—
|
|
||||
Term loan B
|
593,347
|
|
—
|
|
593,347
|
|
—
|
|
||||
Revolver debt
|
5,201
|
|
—
|
|
5,201
|
|
—
|
|
||||
Total Liabilities
|
$
|
1,815,092
|
|
$
|
—
|
|
$
|
1,815,092
|
|
$
|
—
|
|
(14)
|
Contingencies
|
(15)
|
Business Segments
|
|
Feed Ingredients
|
Food Ingredients
|
Fuel Ingredients
|
Corporate
|
Total
|
||||||||||
Three Months Ended July 1, 2017
|
|
|
|
|
|
||||||||||
Net Sales
|
$
|
549,119
|
|
$
|
279,827
|
|
$
|
67,402
|
|
$
|
—
|
|
$
|
896,348
|
|
Cost of sales and operating expenses
|
422,236
|
|
223,830
|
|
54,698
|
|
—
|
|
700,764
|
|
|||||
Gross Margin
|
126,883
|
|
55,997
|
|
12,704
|
|
—
|
|
195,584
|
|
|||||
|
|
|
|
|
|
||||||||||
Selling, general and administrative expense
|
43,506
|
|
26,788
|
|
2,902
|
|
12,335
|
|
85,531
|
|
|||||
Depreciation and amortization
|
44,354
|
|
18,184
|
|
7,715
|
|
2,737
|
|
72,990
|
|
|||||
Segment operating income/(loss)
|
39,023
|
|
11,025
|
|
2,087
|
|
(15,072
|
)
|
37,063
|
|
|||||
|
|
|
|
|
|
||||||||||
Equity in net income of unconsolidated subsidiaries
|
131
|
|
—
|
|
8,129
|
|
—
|
|
8,260
|
|
|||||
Segment income/(loss)
|
39,154
|
|
11,025
|
|
10,216
|
|
(15,072
|
)
|
45,323
|
|
|||||
|
|
|
|
|
|
||||||||||
Total other expense
|
|
|
|
|
(27,253
|
)
|
|||||||||
Income before income taxes
|
|
|
|
|
$
|
18,070
|
|
|
Feed Ingredients
|
Food Ingredients
|
Fuel Ingredients
|
Corporate
|
Total
|
||||||||||
Three Months Ended July 2, 2016
|
|
|
|
|
|
||||||||||
Net Sales
|
$
|
542,955
|
|
$
|
272,120
|
|
$
|
62,266
|
|
$
|
—
|
|
$
|
877,341
|
|
Cost of sales and operating expenses
|
416,145
|
|
214,279
|
|
46,691
|
|
—
|
|
677,115
|
|
|||||
Gross Margin
|
126,810
|
|
57,841
|
|
15,575
|
|
—
|
|
200,226
|
|
|||||
|
|
|
|
|
|
||||||||||
Selling, general and administrative expense
|
43,319
|
|
20,455
|
|
1,804
|
|
10,580
|
|
76,158
|
|
|||||
Acquisition and integration costs
|
—
|
|
—
|
|
—
|
|
70
|
|
70
|
|
|||||
Depreciation and amortization
|
42,119
|
|
17,736
|
|
7,184
|
|
2,492
|
|
69,531
|
|
|||||
Segment operating income/(loss)
|
41,372
|
|
19,650
|
|
6,587
|
|
(13,142
|
)
|
54,467
|
|
|||||
|
|
|
|
|
|
||||||||||
Equity in net income of unconsolidated subsidiaries
|
224
|
|
—
|
|
13,628
|
|
—
|
|
13,852
|
|
|||||
Segment income/(loss)
|
41,596
|
|
19,650
|
|
20,215
|
|
(13,142
|
)
|
68,319
|
|
|||||
|
|
|
|
|
|
||||||||||
Total other expense
|
|
|
|
|
(26,345
|
)
|
|||||||||
Income before income taxes
|
|
|
|
|
$
|
41,974
|
|
|
Feed Ingredients
|
Food Ingredients
|
Fuel Ingredients
|
Corporate
|
Total
|
||||||||||
Six Months Ended July 1, 2017
|
|
|
|
|
|
||||||||||
Net Sales
|
$
|
1,101,743
|
|
$
|
547,615
|
|
$
|
127,062
|
|
$
|
—
|
|
$
|
1,776,420
|
|
Cost of sales and operating expenses
|
854,846
|
|
434,831
|
|
100,714
|
|
—
|
|
1,390,391
|
|
|||||
Gross Margin
|
246,897
|
|
112,784
|
|
26,348
|
|
—
|
|
386,029
|
|
|||||
|
|
|
|
|
|
||||||||||
Selling, general and administrative expense
|
88,973
|
|
51,847
|
|
6,193
|
|
26,435
|
|
173,448
|
|
|||||
Depreciation and amortization
|
88,073
|
|
35,785
|
|
14,560
|
|
5,686
|
|
144,104
|
|
|||||
Segment operating income/(loss)
|
69,851
|
|
25,152
|
|
5,595
|
|
(32,121
|
)
|
68,477
|
|
|||||
|
|
|
|
|
|
||||||||||
Equity in net income of unconsolidated subsidiaries
|
240
|
|
—
|
|
8,726
|
|
—
|
|
8,966
|
|
|||||
Segment income/(loss)
|
70,091
|
|
25,152
|
|
14,321
|
|
(32,121
|
)
|
77,443
|
|
|||||
|
|
|
|
|
|
||||||||||
Total other expense
|
|
|
|
|
(50,157
|
)
|
|||||||||
Income before income taxes
|
|
|
|
|
$
|
27,286
|
|
||||||||
|
|
|
|
|
|
||||||||||
Segment assets at July 1, 2017
|
$
|
2,542,793
|
|
$
|
1,466,675
|
|
$
|
658,039
|
|
$
|
162,369
|
|
$
|
4,829,876
|
|
|
Feed Ingredients
|
Food Ingredients
|
Fuel Ingredients
|
Corporate
|
Total
|
||||||||||
Six Months Ended July 2, 2016
|
|
|
|
|
|
||||||||||
Net Sales
|
$
|
1,019,126
|
|
$
|
520,017
|
|
$
|
117,839
|
|
$
|
—
|
|
$
|
1,656,982
|
|
Cost of sales and operating expenses
|
788,802
|
|
399,833
|
|
87,373
|
|
—
|
|
1,276,008
|
|
|||||
Gross Margin
|
230,324
|
|
120,184
|
|
30,466
|
|
—
|
|
380,974
|
|
|||||
|
|
|
|
|
|
||||||||||
Selling, general and administrative expense
|
88,570
|
|
44,214
|
|
3,654
|
|
21,189
|
|
157,627
|
|
|||||
Acquisition and integration costs
|
—
|
|
—
|
|
—
|
|
401
|
|
401
|
|
|||||
Depreciation and amortization
|
86,496
|
|
34,440
|
|
14,103
|
|
6,748
|
|
141,787
|
|
|||||
Segment operating income/(loss)
|
55,258
|
|
41,530
|
|
12,709
|
|
(28,338
|
)
|
81,159
|
|
|||||
|
|
|
|
|
|
||||||||||
Equity in net income of unconsolidated subsidiaries
|
326
|
|
—
|
|
19,169
|
|
—
|
|
19,495
|
|
|||||
Segment income/(loss)
|
55,584
|
|
41,530
|
|
31,878
|
|
(28,338
|
)
|
100,654
|
|
|||||
|
|
|
|
|
|
||||||||||
Total other expense
|
|
|
|
|
(54,154
|
)
|
|||||||||
Income before income taxes
|
|
|
|
|
$
|
46,500
|
|
||||||||
|
|
|
|
|
|
||||||||||
Segment assets at December 31, 2016
|
$
|
2,464,509
|
|
$
|
1,414,409
|
|
$
|
657,637
|
|
$
|
161,462
|
|
$
|
4,698,017
|
|
(16)
|
Related Party Transactions
|
|
Parent
|
Guarantors
|
Non-guarantors
|
Eliminations
|
Consolidated
|
||||||||||
ASSETS
|
|
|
|
|
|
||||||||||
Cash and cash equivalents
|
$
|
1,174
|
|
$
|
1,717
|
|
$
|
121,926
|
|
$
|
—
|
|
$
|
124,817
|
|
Restricted cash
|
103
|
|
—
|
|
179
|
|
—
|
|
282
|
|
|||||
Accounts receivable
|
31,932
|
|
181,674
|
|
363,857
|
|
(194,506
|
)
|
382,957
|
|
|||||
Inventories
|
12,466
|
|
93,965
|
|
253,204
|
|
—
|
|
359,635
|
|
|||||
Income taxes refundable
|
2,914
|
|
—
|
|
3,473
|
|
—
|
|
6,387
|
|
|||||
Prepaid expenses
|
13,531
|
|
2,785
|
|
21,434
|
|
—
|
|
37,750
|
|
|||||
Other current assets
|
2,915
|
|
1,712
|
|
12,095
|
|
(3,621
|
)
|
13,101
|
|
|||||
Total current assets
|
65,035
|
|
281,853
|
|
776,168
|
|
(198,127
|
)
|
924,929
|
|
|||||
Investment in subsidiaries
|
4,361,030
|
|
1,154,398
|
|
875,051
|
|
(6,390,479
|
)
|
—
|
|
|||||
Property, plant and equipment, net
|
252,217
|
|
504,818
|
|
827,700
|
|
—
|
|
1,584,735
|
|
|||||
Intangible assets, net
|
19,104
|
|
276,198
|
|
407,880
|
|
—
|
|
703,182
|
|
|||||
Goodwill
|
21,860
|
|
552,154
|
|
697,913
|
|
—
|
|
1,271,927
|
|
|||||
Investment in unconsolidated subsidiaries
|
2,923
|
|
—
|
|
276,891
|
|
—
|
|
279,814
|
|
|||||
Other assets
|
34,385
|
|
356,456
|
|
179,084
|
|
(521,686
|
)
|
48,239
|
|
|||||
Deferred taxes
|
—
|
|
—
|
|
17,050
|
|
—
|
|
17,050
|
|
|||||
|
$
|
4,756,554
|
|
$
|
3,125,877
|
|
$
|
4,057,737
|
|
$
|
(7,110,292
|
)
|
$
|
4,829,876
|
|
LIABILITIES AND STOCKHOLDERS’ EQUITY
|
|
|
|
|
|
|
|
|
|||||||
Current portion of long-term debt
|
$
|
1,215
|
|
$
|
—
|
|
$
|
21,776
|
|
$
|
(3,621
|
)
|
$
|
19,370
|
|
Accounts payable
|
207,344
|
|
26,538
|
|
137,308
|
|
(184,732
|
)
|
186,458
|
|
|||||
Income taxes payable
|
3,819
|
|
373
|
|
13,021
|
|
—
|
|
17,213
|
|
|||||
Accrued expenses
|
84,454
|
|
24,990
|
|
166,268
|
|
(9,773
|
)
|
265,939
|
|
|||||
Total current liabilities
|
296,832
|
|
51,901
|
|
338,373
|
|
(198,126
|
)
|
488,980
|
|
|||||
Long-term debt, net of current portion
|
1,076,227
|
|
—
|
|
1,173,012
|
|
(521,686
|
)
|
1,727,553
|
|
|||||
Other noncurrent liabilities
|
62,021
|
|
—
|
|
34,895
|
|
—
|
|
96,916
|
|
|||||
Deferred income taxes
|
137,049
|
|
—
|
|
212,172
|
|
—
|
|
349,221
|
|
|||||
Total liabilities
|
1,572,129
|
|
51,901
|
|
1,758,452
|
|
(719,812
|
)
|
2,662,670
|
|
|||||
Total stockholders’ equity
|
3,184,425
|
|
3,073,976
|
|
2,299,285
|
|
(6,390,480
|
)
|
2,167,206
|
|
|||||
|
$
|
4,756,554
|
|
$
|
3,125,877
|
|
$
|
4,057,737
|
|
$
|
(7,110,292
|
)
|
$
|
4,829,876
|
|
|
Parent
|
Guarantors
|
Non-guarantors
|
Eliminations
|
Consolidated
|
||||||||||
ASSETS
|
|
|
|
|
|
||||||||||
Cash and cash equivalents
|
$
|
1,470
|
|
$
|
5,754
|
|
$
|
107,340
|
|
$
|
—
|
|
$
|
114,564
|
|
Restricted cash
|
103
|
|
—
|
|
190
|
|
—
|
|
293
|
|
|||||
Accounts receivable
|
39,209
|
|
97,220
|
|
339,251
|
|
(87,283
|
)
|
388,397
|
|
|||||
Inventories
|
16,573
|
|
85,890
|
|
228,352
|
|
—
|
|
330,815
|
|
|||||
Income taxes refundable
|
3,566
|
|
—
|
|
3,913
|
|
—
|
|
7,479
|
|
|||||
Prepaid expenses
|
11,152
|
|
2,769
|
|
16,063
|
|
—
|
|
29,984
|
|
|||||
Other current assets
|
5,859
|
|
3,165
|
|
19,221
|
|
(6,475
|
)
|
21,770
|
|
|||||
Total current assets
|
77,932
|
|
194,798
|
|
714,330
|
|
(93,758
|
)
|
893,302
|
|
|||||
Investment in subsidiaries
|
4,296,200
|
|
1,154,398
|
|
909,263
|
|
(6,359,861
|
)
|
—
|
|
|||||
Property, plant and equipment, net
|
233,456
|
|
497,312
|
|
784,807
|
|
—
|
|
1,515,575
|
|
|||||
Intangible assets, net
|
13,746
|
|
291,724
|
|
406,457
|
|
—
|
|
711,927
|
|
|||||
Goodwill
|
21,860
|
|
549,960
|
|
654,073
|
|
—
|
|
1,225,893
|
|
|||||
Investment in unconsolidated subsidiary
|
1,438
|
|
—
|
|
291,279
|
|
—
|
|
292,717
|
|
|||||
Other assets
|
36,063
|
|
396,222
|
|
160,505
|
|
(549,177
|
)
|
43,613
|
|
|||||
Deferred income taxes
|
—
|
|
—
|
|
14,990
|
|
—
|
|
14,990
|
|
|||||
|
$
|
4,680,695
|
|
$
|
3,084,414
|
|
$
|
3,935,704
|
|
$
|
(7,002,796
|
)
|
$
|
4,698,017
|
|
LIABILITIES AND STOCKHOLDERS’ EQUITY
|
|
|
|
|
|
|
|
|
|||||||
Current portion of long-term debt
|
$
|
4,220
|
|
$
|
—
|
|
$
|
25,502
|
|
$
|
(6,475
|
)
|
$
|
23,247
|
|
Accounts payable
|
116,075
|
|
18,142
|
|
130,718
|
|
(84,040
|
)
|
180,895
|
|
|||||
Income taxes payable
|
(383
|
)
|
373
|
|
4,923
|
|
—
|
|
4,913
|
|
|||||
Accrued expenses
|
86,581
|
|
33,834
|
|
125,624
|
|
(3,243
|
)
|
242,796
|
|
|||||
Total current liabilities
|
206,493
|
|
52,349
|
|
286,767
|
|
(93,758
|
)
|
451,851
|
|
|||||
Long-term debt, net of current portion
|
1,109,523
|
|
—
|
|
1,167,349
|
|
(549,176
|
)
|
1,727,696
|
|
|||||
Other noncurrent liabilities
|
63,072
|
|
—
|
|
33,042
|
|
—
|
|
96,114
|
|
|||||
Deferred income taxes
|
140,543
|
|
—
|
|
205,591
|
|
—
|
|
346,134
|
|
|||||
Total liabilities
|
1,519,631
|
|
52,349
|
|
1,692,749
|
|
(642,934
|
)
|
2,621,795
|
|
|||||
Total stockholders’ equity
|
3,161,064
|
|
3,032,065
|
|
2,242,955
|
|
(6,359,862
|
)
|
2,076,222
|
|
|||||
|
$
|
4,680,695
|
|
$
|
3,084,414
|
|
$
|
3,935,704
|
|
$
|
(7,002,796
|
)
|
$
|
4,698,017
|
|
|
Parent
|
Guarantors
|
Non-guarantors
|
Eliminations
|
Consolidated
|
||||||||||
Net sales
|
$
|
135,896
|
|
$
|
359,840
|
|
$
|
459,621
|
|
$
|
(59,009
|
)
|
$
|
896,348
|
|
Cost and expenses:
|
|
|
|
|
|
||||||||||
Cost of sales and operating expenses
|
107,977
|
|
290,511
|
|
361,285
|
|
(59,009
|
)
|
700,764
|
|
|||||
Selling, general and administrative expenses
|
35,951
|
|
13,351
|
|
36,229
|
|
—
|
|
85,531
|
|
|||||
Depreciation and amortization
|
9,980
|
|
25,876
|
|
37,134
|
|
—
|
|
72,990
|
|
|||||
Total costs and expenses
|
153,908
|
|
329,738
|
|
434,648
|
|
(59,009
|
)
|
859,285
|
|
|||||
Operating income/(loss)
|
(18,012
|
)
|
30,102
|
|
24,973
|
|
—
|
|
37,063
|
|
|||||
|
|
|
|
|
|
|
|
|
|||||||
Interest expense
|
(14,247
|
)
|
3,968
|
|
(12,167
|
)
|
—
|
|
(22,446
|
)
|
|||||
Foreign currency gains/(losses)
|
(178
|
)
|
205
|
|
(2,138
|
)
|
—
|
|
(2,111
|
)
|
|||||
Other income/(expense), net
|
(3,437
|
)
|
(1,590
|
)
|
2,331
|
|
—
|
|
(2,696
|
)
|
|||||
Equity in net income/(loss) of unconsolidated subsidiaries
|
(393
|
)
|
—
|
|
8,653
|
|
—
|
|
8,260
|
|
|||||
Earnings in investments in subsidiaries
|
26,513
|
|
—
|
|
—
|
|
(26,513
|
)
|
—
|
|
|||||
Income/(loss) before taxes
|
(9,754
|
)
|
32,685
|
|
21,652
|
|
(26,513
|
)
|
18,070
|
|
|||||
Income taxes (benefit)
|
(18,903
|
)
|
16,325
|
|
10,320
|
|
—
|
|
7,742
|
|
|||||
Net income attributable to noncontrolling interests
|
—
|
|
—
|
|
(1,179
|
)
|
—
|
|
(1,179
|
)
|
|||||
Net income/(loss) attributable to Darling
|
$
|
9,149
|
|
$
|
16,360
|
|
$
|
10,153
|
|
$
|
(26,513
|
)
|
$
|
9,149
|
|
|
Parent
|
Guarantors
|
Non-guarantors
|
Eliminations
|
Consolidated
|
||||||||||
Net sales
|
$
|
272,053
|
|
$
|
720,024
|
|
$
|
900,971
|
|
$
|
(116,628
|
)
|
$
|
1,776,420
|
|
Cost and expenses:
|
|
|
|
|
|
||||||||||
Cost of sales and operating expenses
|
217,640
|
|
583,282
|
|
706,097
|
|
(116,628
|
)
|
1,390,391
|
|
|||||
Selling, general and administrative expenses
|
75,767
|
|
27,528
|
|
70,153
|
|
—
|
|
173,448
|
|
|||||
Depreciation and amortization
|
20,265
|
|
51,312
|
|
72,527
|
|
—
|
|
144,104
|
|
|||||
Total costs and expenses
|
313,672
|
|
662,122
|
|
848,777
|
|
(116,628
|
)
|
1,707,943
|
|
|||||
Operating income/(loss)
|
(41,619
|
)
|
57,902
|
|
52,194
|
|
—
|
|
68,477
|
|
|||||
|
|
|
|
|
|
|
|
|
|||||||
Interest expense
|
(27,833
|
)
|
7,991
|
|
(24,284
|
)
|
—
|
|
(44,126
|
)
|
|||||
Foreign currency gains/(losses)
|
(184
|
)
|
180
|
|
(2,371
|
)
|
—
|
|
(2,375
|
)
|
|||||
Other income/(expense), net
|
(6,338
|
)
|
(1,558
|
)
|
4,240
|
|
—
|
|
(3,656
|
)
|
|||||
Equity in net income/(loss) of unconsolidated subsidiaries
|
(766
|
)
|
—
|
|
9,732
|
|
—
|
|
8,966
|
|
|||||
Earnings in investments in subsidiaries
|
64,831
|
|
—
|
|
—
|
|
(64,831
|
)
|
—
|
|
|||||
Income/(loss) before taxes
|
(11,909
|
)
|
64,515
|
|
39,511
|
|
(64,831
|
)
|
27,286
|
|
|||||
Income taxes (benefit)
|
(26,887
|
)
|
22,604
|
|
13,843
|
|
—
|
|
9,560
|
|
|||||
Net income attributable to noncontrolling interests
|
—
|
|
—
|
|
(2,748
|
)
|
—
|
|
(2,748
|
)
|
|||||
Net income/(loss) attributable to Darling
|
$
|
14,978
|
|
$
|
41,911
|
|
$
|
22,920
|
|
$
|
(64,831
|
)
|
$
|
14,978
|
|
|
Parent
|
Guarantors
|
Non-guarantors
|
Eliminations
|
Consolidated
|
||||||||||
Net sales
|
$
|
129,377
|
|
$
|
342,879
|
|
$
|
452,833
|
|
$
|
(47,748
|
)
|
$
|
877,341
|
|
Cost and expenses:
|
|
|
|
|
|
||||||||||
Cost of sales and operating expenses
|
99,788
|
|
272,746
|
|
352,329
|
|
(47,748
|
)
|
677,115
|
|
|||||
Selling, general and administrative expenses
|
34,569
|
|
11,461
|
|
30,128
|
|
—
|
|
76,158
|
|
|||||
Acquisition and integration costs
|
—
|
|
—
|
|
70
|
|
—
|
|
70
|
|
|||||
Depreciation and amortization
|
9,412
|
|
24,102
|
|
36,017
|
|
—
|
|
69,531
|
|
|||||
Total costs and expenses
|
143,769
|
|
308,309
|
|
418,544
|
|
(47,748
|
)
|
822,874
|
|
|||||
Operating income/(loss)
|
(14,392
|
)
|
34,570
|
|
34,289
|
|
—
|
|
54,467
|
|
|||||
|
|
|
|
|
|
|
|
|
|||||||
Interest expense
|
(15,338
|
)
|
4,577
|
|
(13,219
|
)
|
—
|
|
(23,980
|
)
|
|||||
Foreign currency gains/(losses)
|
74
|
|
23
|
|
(89
|
)
|
—
|
|
8
|
|
|||||
Other income/(expense), net
|
(3,665
|
)
|
127
|
|
1,165
|
|
—
|
|
(2,373
|
)
|
|||||
Equity in net income/(loss) of unconsolidated subsidiaries
|
(355
|
)
|
—
|
|
14,207
|
|
—
|
|
13,852
|
|
|||||
Earnings in investments in subsidiaries
|
68,020
|
|
—
|
|
—
|
|
(68,020
|
)
|
—
|
|
|||||
Income/(loss) before taxes
|
34,344
|
|
39,297
|
|
36,353
|
|
(68,020
|
)
|
41,974
|
|
|||||
Income taxes
|
2,345
|
|
1,920
|
|
3,718
|
|
—
|
|
7,983
|
|
|||||
Net income attributable to noncontrolling interests
|
—
|
|
—
|
|
(1,992
|
)
|
—
|
|
(1,992
|
)
|
|||||
Net income/(loss) attributable to Darling
|
$
|
31,999
|
|
$
|
37,377
|
|
$
|
30,643
|
|
$
|
(68,020
|
)
|
$
|
31,999
|
|
|
Parent
|
Guarantors
|
Non-guarantors
|
Eliminations
|
Consolidated
|
||||||||||
Net sales
|
$
|
237,748
|
|
$
|
646,644
|
|
$
|
863,870
|
|
$
|
(91,280
|
)
|
$
|
1,656,982
|
|
Cost and expenses:
|
|
|
|
|
|
||||||||||
Cost of sales and operating expenses
|
189,271
|
|
509,082
|
|
668,935
|
|
(91,280
|
)
|
1,276,008
|
|
|||||
Selling, general and administrative expenses
|
70,462
|
|
24,597
|
|
62,568
|
|
—
|
|
157,627
|
|
|||||
Acquisition costs
|
—
|
|
—
|
|
401
|
|
—
|
|
401
|
|
|||||
Depreciation and amortization
|
20,837
|
|
50,910
|
|
70,040
|
|
—
|
|
141,787
|
|
|||||
Total costs and expenses
|
280,570
|
|
584,589
|
|
801,944
|
|
(91,280
|
)
|
1,575,823
|
|
|||||
Operating income/(loss)
|
(42,822
|
)
|
62,055
|
|
61,926
|
|
—
|
|
81,159
|
|
|||||
|
|
|
|
|
|
|
|
|
|||||||
Interest expense
|
(30,860
|
)
|
8,954
|
|
(25,975
|
)
|
—
|
|
(47,881
|
)
|
|||||
Foreign currency gains/(losses)
|
43
|
|
188
|
|
(2,826
|
)
|
—
|
|
(2,595
|
)
|
|||||
Other income/(expense), net
|
(6,990
|
)
|
122
|
|
3,190
|
|
—
|
|
(3,678
|
)
|
|||||
Equity in net income/(loss) of unconsolidated subsidiaries
|
(452
|
)
|
—
|
|
19,947
|
|
—
|
|
19,495
|
|
|||||
Earnings in investments in subsidiaries
|
96,991
|
|
—
|
|
—
|
|
(96,991
|
)
|
—
|
|
|||||
Income/(loss) before taxes
|
15,910
|
|
71,319
|
|
56,262
|
|
(96,991
|
)
|
46,500
|
|
|||||
Income taxes (benefit)
|
(17,168
|
)
|
15,101
|
|
11,913
|
|
—
|
|
9,846
|
|
|||||
Net income attributable to noncontrolling interests
|
—
|
|
—
|
|
(3,576
|
)
|
—
|
|
(3,576
|
)
|
|||||
Net income/(loss) attributable to Darling
|
$
|
33,078
|
|
$
|
56,218
|
|
$
|
40,773
|
|
$
|
(96,991
|
)
|
$
|
33,078
|
|
|
Parent
|
Guarantors
|
Non-guarantors
|
Eliminations
|
Consolidated
|
||||||||||
Net income/(loss)
|
$
|
10,328
|
|
$
|
16,360
|
|
$
|
10,153
|
|
$
|
(26,513
|
)
|
$
|
10,328
|
|
Other comprehensive income/(loss), net of tax:
|
|
|
|
|
|
||||||||||
Foreign currency translation
|
—
|
|
—
|
|
49,112
|
|
—
|
|
49,112
|
|
|||||
Pension adjustments
|
641
|
|
—
|
|
119
|
|
—
|
|
760
|
|
|||||
Corn option derivative adjustments
|
(869
|
)
|
—
|
|
—
|
|
—
|
|
(869
|
)
|
|||||
Total other comprehensive income/(loss), net of tax
|
(228
|
)
|
—
|
|
49,231
|
|
—
|
|
49,003
|
|
|||||
Total comprehensive income/(loss)
|
10,100
|
|
16,360
|
|
59,384
|
|
(26,513
|
)
|
59,331
|
|
|||||
Total comprehensive loss attributable to noncontrolling interest
|
—
|
|
—
|
|
(1,418
|
)
|
—
|
|
(1,418
|
)
|
|||||
Total comprehensive income/(loss) attributable to Darling
|
$
|
10,100
|
|
$
|
16,360
|
|
$
|
60,802
|
|
$
|
(26,513
|
)
|
$
|
60,749
|
|
|
Parent
|
Guarantors
|
Non-guarantors
|
Eliminations
|
Consolidated
|
||||||||||
Net income/(loss)
|
$
|
17,726
|
|
$
|
41,911
|
|
$
|
22,920
|
|
$
|
(64,831
|
)
|
$
|
17,726
|
|
Other comprehensive income/ (loss), net of tax:
|
|
|
|
|
|
||||||||||
Foreign currency translation
|
—
|
|
—
|
|
64,791
|
|
—
|
|
64,791
|
|
|||||
Pension adjustments
|
1,282
|
|
—
|
|
237
|
|
—
|
|
1,519
|
|
|||||
Corn option derivative adjustments
|
(1,971
|
)
|
—
|
|
—
|
|
—
|
|
(1,971
|
)
|
|||||
Total other comprehensive income, net of tax
|
(689
|
)
|
—
|
|
65,028
|
|
—
|
|
64,339
|
|
|||||
Total comprehensive income/(loss)
|
17,037
|
|
41,911
|
|
87,948
|
|
(64,831
|
)
|
82,065
|
|
|||||
Total comprehensive loss attributable to noncontrolling interest
|
—
|
|
—
|
|
(171
|
)
|
—
|
|
(171
|
)
|
|||||
Total comprehensive income/(loss) attributable to Darling
|
$
|
17,037
|
|
$
|
41,911
|
|
$
|
88,119
|
|
$
|
(64,831
|
)
|
$
|
82,236
|
|
|
Parent
|
Guarantors
|
Non-guarantors
|
Eliminations
|
Consolidated
|
||||||||||
Net income/(loss)
|
$
|
33,991
|
|
$
|
37,377
|
|
$
|
30,643
|
|
$
|
(68,020
|
)
|
$
|
33,991
|
|
Other comprehensive income/(loss), net of tax:
|
|
|
|
|
|
||||||||||
Foreign currency translation
|
—
|
|
—
|
|
(8,008
|
)
|
—
|
|
(8,008
|
)
|
|||||
Pension adjustments
|
658
|
|
(75
|
)
|
68
|
|
—
|
|
651
|
|
|||||
Corn option derivative adjustments
|
1,227
|
|
—
|
|
—
|
|
—
|
|
1,227
|
|
|||||
Total other comprehensive income/(loss), net of tax
|
1,885
|
|
(75
|
)
|
(7,940
|
)
|
—
|
|
(6,130
|
)
|
|||||
Total comprehensive income/(loss)
|
35,876
|
|
37,302
|
|
22,703
|
|
(68,020
|
)
|
27,861
|
|
|||||
Total comprehensive income attributable to noncontrolling interest
|
—
|
|
—
|
|
1,725
|
|
—
|
|
1,725
|
|
|||||
Total comprehensive income/(loss) attributable to Darling
|
$
|
35,876
|
|
$
|
37,302
|
|
$
|
20,978
|
|
$
|
(68,020
|
)
|
$
|
26,136
|
|
|
Parent
|
Guarantors
|
Non-guarantors
|
Eliminations
|
Consolidated
|
||||||||||
Net income/(loss)
|
$
|
36,654
|
|
$
|
56,218
|
|
$
|
40,773
|
|
$
|
(96,991
|
)
|
$
|
36,654
|
|
Other comprehensive income/(loss), net of tax:
|
|
|
|
|
|
||||||||||
Foreign currency translation
|
—
|
|
—
|
|
49,523
|
|
—
|
|
49,523
|
|
|||||
Pension adjustments
|
1,316
|
|
(75
|
)
|
136
|
|
—
|
|
1,377
|
|
|||||
Corn option derivative adjustments
|
521
|
|
—
|
|
—
|
|
—
|
|
521
|
|
|||||
Total other comprehensive income, net of tax
|
1,837
|
|
(75
|
)
|
49,659
|
|
—
|
|
51,421
|
|
|||||
Total comprehensive income/(loss)
|
38,491
|
|
56,143
|
|
90,432
|
|
(96,991
|
)
|
88,075
|
|
|||||
Total comprehensive income attributable to noncontrolling interest
|
—
|
|
—
|
|
1,305
|
|
—
|
|
1,305
|
|
|||||
Total comprehensive income/(loss) attributable to Darling
|
$
|
38,491
|
|
$
|
56,143
|
|
$
|
89,127
|
|
$
|
(96,991
|
)
|
$
|
86,770
|
|
|
Parent
|
Guarantors
|
Non-guarantors
|
Eliminations
|
Consolidated
|
||||||||||
Cash flows from operating activities:
|
|
|
|
|
|
||||||||||
|
|
|
|
|
|
||||||||||
Net income/(loss)
|
$
|
17,726
|
|
$
|
41,911
|
|
$
|
22,920
|
|
$
|
(64,831
|
)
|
$
|
17,726
|
|
Earnings in investments in subsidiaries
|
(64,831
|
)
|
—
|
|
—
|
|
64,831
|
|
—
|
|
|||||
Other operating cash flows
|
135,192
|
|
(36,021
|
)
|
80,651
|
|
—
|
|
179,822
|
|
|||||
Net cash provided by operating activities
|
88,087
|
|
5,890
|
|
103,571
|
|
—
|
|
197,548
|
|
|||||
|
|
|
|
|
|
||||||||||
Cash flows from investing activities:
|
|
|
|
|
|
||||||||||
Capital expenditures
|
(41,907
|
)
|
(38,269
|
)
|
(47,648
|
)
|
—
|
|
(127,824
|
)
|
|||||
Acquisitions
|
—
|
|
(12,369
|
)
|
—
|
|
—
|
|
(12,369
|
)
|
|||||
Investment in subsidiaries and affiliates
|
(2,250
|
)
|
—
|
|
—
|
|
—
|
|
(2,250
|
)
|
|||||
Note receivable from affiliates
|
—
|
|
39,733
|
|
(39,733
|
)
|
—
|
|
—
|
|
|||||
Gross proceeds from sale of property, plant and equipment and other assets
|
1,704
|
|
978
|
|
921
|
|
—
|
|
3,603
|
|
|||||
Proceeds from insurance settlements
|
—
|
|
—
|
|
3,301
|
|
—
|
|
3,301
|
|
|||||
Payments related to routes and other intangibles
|
(4,635
|
)
|
—
|
|
—
|
|
—
|
|
(4,635
|
)
|
|||||
Net cash used in investing activities
|
(47,088
|
)
|
(9,927
|
)
|
(83,159
|
)
|
—
|
|
(140,174
|
)
|
|||||
|
|
|
|
|
|
||||||||||
Cash flows from financing activities:
|
|
|
|
|
|
||||||||||
Proceeds for long-term debt
|
—
|
|
—
|
|
16,405
|
|
—
|
|
16,405
|
|
|||||
Payments on long-term debt
|
(43,063
|
)
|
—
|
|
(24,911
|
)
|
—
|
|
(67,974
|
)
|
|||||
Borrowings from revolving facilities
|
80,000
|
|
—
|
|
—
|
|
—
|
|
80,000
|
|
|||||
Payments on revolving facilities
|
(75,000
|
)
|
—
|
|
(5,327
|
)
|
—
|
|
(80,327
|
)
|
|||||
Net cash overdraft financing
|
—
|
|
—
|
|
(1,077
|
)
|
—
|
|
(1,077
|
)
|
|||||
Deferred loan costs
|
(1,177
|
)
|
—
|
|
—
|
|
—
|
|
(1,177
|
)
|
|||||
Issuances of common stock
|
22
|
|
—
|
|
—
|
|
—
|
|
22
|
|
|||||
Minimum withholding taxes paid on stock awards
|
(2,077
|
)
|
—
|
|
(14
|
)
|
—
|
|
(2,091
|
)
|
|||||
Distributions to noncontrolling interests
|
—
|
|
—
|
|
(2,135
|
)
|
—
|
|
(2,135
|
)
|
|||||
Net cash used in financing activities
|
(41,295
|
)
|
—
|
|
(17,059
|
)
|
—
|
|
(58,354
|
)
|
|||||
|
|
|
|
|
|
||||||||||
Effect of exchange rate changes on cash
|
—
|
|
—
|
|
11,233
|
|
—
|
|
11,233
|
|
|||||
|
|
|
|
|
|
||||||||||
Net increase/(decrease) in cash and cash equivalents
|
(296
|
)
|
(4,037
|
)
|
14,586
|
|
—
|
|
10,253
|
|
|||||
Cash and cash equivalents at beginning of year
|
1,470
|
|
5,754
|
|
107,340
|
|
—
|
|
114,564
|
|
|||||
Cash and cash equivalents at end of year
|
$
|
1,174
|
|
$
|
1,717
|
|
$
|
121,926
|
|
$
|
—
|
|
$
|
124,817
|
|
|
Parent
|
Guarantors
|
Non-guarantors
|
Eliminations
|
Consolidated
|
||||||||||
Cash flows from operating activities:
|
|
|
|
|
|
||||||||||
Net income/(loss)
|
$
|
36,654
|
|
$
|
56,218
|
|
$
|
40,773
|
|
$
|
(96,991
|
)
|
$
|
36,654
|
|
Earnings in investments in subsidiaries
|
(96,991
|
)
|
—
|
|
—
|
|
96,991
|
|
—
|
|
|||||
Other operating cash flows
|
121,503
|
|
(16,111
|
)
|
26,187
|
|
—
|
|
131,579
|
|
|||||
Net cash provided by operating activities
|
61,166
|
|
40,107
|
|
66,960
|
|
—
|
|
168,233
|
|
|||||
|
|
|
|
|
|
||||||||||
Cash flows from investing activities:
|
|
|
|
|
|
||||||||||
Capital expenditures
|
(21,542
|
)
|
(43,883
|
)
|
(43,981
|
)
|
—
|
|
(109,406
|
)
|
|||||
Acquisitions
|
—
|
|
—
|
|
(8,511
|
)
|
—
|
|
(8,511
|
)
|
|||||
Gross proceeds from sale of property, plant and equipment and other assets
|
1,009
|
|
383
|
|
1,012
|
|
—
|
|
2,404
|
|
|||||
Proceeds from insurance settlements
|
—
|
|
—
|
|
1,537
|
|
—
|
|
1,537
|
|
|||||
Net cash used in investing activities
|
(20,533
|
)
|
(43,500
|
)
|
(49,943
|
)
|
—
|
|
(113,976
|
)
|
|||||
|
|
|
|
|
|
||||||||||
Cash flows from financing activities:
|
|
|
|
|
|
||||||||||
Proceeds for long-term debt
|
—
|
|
—
|
|
17,277
|
|
—
|
|
17,277
|
|
|||||
Payments on long-term debt
|
(35,890
|
)
|
—
|
|
(23,365
|
)
|
—
|
|
(59,255
|
)
|
|||||
Borrowings from revolving credit facility
|
41,000
|
|
—
|
|
—
|
|
—
|
|
41,000
|
|
|||||
Payments on revolving credit facility
|
(41,000
|
)
|
—
|
|
(6,207
|
)
|
—
|
|
(47,207
|
)
|
|||||
Issuances of common stock
|
143
|
|
—
|
|
—
|
|
—
|
|
143
|
|
|||||
Repurchase of treasury stock
|
(5,000
|
)
|
—
|
|
—
|
|
—
|
|
(5,000
|
)
|
|||||
Minimum withholding taxes paid on stock awards
|
(1,687
|
)
|
—
|
|
(125
|
)
|
—
|
|
(1,812
|
)
|
|||||
Excess tax benefits from stock-based compensation
|
(413
|
)
|
—
|
|
—
|
|
—
|
|
(413
|
)
|
|||||
Net cash used in financing activities
|
(42,847
|
)
|
—
|
|
(12,420
|
)
|
—
|
|
(55,267
|
)
|
|||||
|
|
|
|
|
|
||||||||||
Effect of exchange rate changes on cash
|
—
|
|
—
|
|
1,941
|
|
—
|
|
1,941
|
|
|||||
|
|
|
|
|
|
||||||||||
Net increase/(decrease) in cash and cash equivalents
|
(2,214
|
)
|
(3,393
|
)
|
6,538
|
|
—
|
|
931
|
|
|||||
Cash and cash equivalents at beginning of year
|
3,443
|
|
3,993
|
|
149,448
|
|
—
|
|
156,884
|
|
|||||
Cash and cash equivalents at end of year
|
$
|
1,229
|
|
$
|
600
|
|
$
|
155,986
|
|
$
|
—
|
|
$
|
157,815
|
|
•
|
Finished product commodity prices
|
•
|
Segment results
|
•
|
Foreign currency
|
•
|
Corporate activities
|
•
|
Non-U.S. GAAP measures
|
|
Avg. Price
2nd Quarter
2017
|
Avg. Price
2nd Quarter
2016
|
Increase/(Decrease)
|
%
Increase/(Decrease)
|
|
Jacobsen:
|
|
|
|
|
|
MBM (Illinois)
|
$ 251.91/ton
|
$ 328.26/ton
|
$ (76.35)/ton
|
(23.3
|
)%
|
Feed Grade PM (Mid-South)
|
$ 284.90/ton
|
$ 305.58/ton
|
$ (20.68)/ton
|
(6.8
|
)%
|
Pet Food PM (Mid-South)
|
$ 688.91/ton
|
$ 557.81/ton
|
$ 131.10/ton
|
23.5
|
%
|
Feather meal (Mid-South)
|
$ 390.14/ton
|
$ 358.91/ton
|
$ 31.23/ton
|
8.7
|
%
|
BFT (Chicago)
|
$ 33.61/cwt
|
$ 32.57/cwt
|
$ 1.04/cwt
|
3.2
|
%
|
YG (Illinois)
|
$ 25.64/cwt
|
$ 26.77/cwt
|
$ (1.13)/cwt
|
(4.2
|
)%
|
Corn (Illinois)
|
$ 3.73/bushel
|
$ 3.99/bushel
|
$ (0.26)/bushel
|
(6.5
|
)%
|
Reuters:
|
|
|
|
|
|
Palm Oil (CIF Rotterdam)
|
$ 690.00/MT
|
$ 702.00/MT
|
$ (12.00)/MT
|
(1.7
|
)%
|
Soy meal (CIF Rotterdam)
|
$ 341.00/MT
|
$ 409.00/MT
|
$ (68.00)/MT
|
(16.6
|
)%
|
|
Avg. Price
2nd Quarter
2017
|
Avg. Price
1st Quarter
2017
|
Increase/(Decrease)
|
%
Increase/(Decrease)
|
|
Jacobsen:
|
|
|
|
|
|
MBM (Illinois)
|
$ 251.91/ton
|
$ 270.69/ton
|
$ (18.78)/ton
|
(6.9
|
)%
|
Feed Grade PM (Mid-South)
|
$ 284.90/ton
|
$ 287.42/ton
|
$ (2.52)/ton
|
(0.9
|
)%
|
Pet Food PM (Mid-South)
|
$ 688.91/ton
|
$ 635.89/ton
|
$ 53.02/ton
|
8.3
|
%
|
Feather meal (Mid-South)
|
$ 390.14/ton
|
$ 422.94/ton
|
$ (32.80)/ton
|
(7.8
|
)%
|
BFT (Chicago)
|
$ 33.61/cwt
|
$ 31.35/cwt
|
$ 2.26/cwt
|
7.2
|
%
|
YG (Illinois)
|
$ 25.64/cwt
|
$ 23.78/cwt
|
$ 1.86/cwt
|
7.8
|
%
|
Corn (Illinois)
|
$ 3.73/bushel
|
$ 3.69/bushel
|
$ 0.04/bushel
|
1.1
|
%
|
Reuters:
|
|
|
|
|
|
Palm Oil (CIF Rotterdam)
|
$ 690.00/MT
|
$ 765.00/MT
|
$ (75.00)/MT
|
(9.8
|
)%
|
Soy meal (CIF Rotterdam)
|
$ 341.00/MT
|
$ 368.00/MT
|
$ (27.00)/MT
|
(7.3
|
)%
|
(in thousands, except percentages)
|
Feed Ingredients
|
Food Ingredients
|
Fuel Ingredients
|
Corporate
|
Total
|
||||||||||
Three Months Ended July 1, 2017
|
|
|
|
|
|
||||||||||
Net Sales
|
$
|
549,119
|
|
$
|
279,827
|
|
$
|
67,402
|
|
$
|
—
|
|
$
|
896,348
|
|
Cost of sales and operating expenses
|
422,236
|
|
223,830
|
|
54,698
|
|
—
|
|
700,764
|
|
|||||
Gross Margin
|
126,883
|
|
55,997
|
|
12,704
|
|
—
|
|
195,584
|
|
|||||
|
|
|
|
|
|
||||||||||
Gross Margin %
|
23.1
|
%
|
20.0
|
%
|
18.8
|
%
|
—
|
%
|
21.8
|
%
|
|||||
|
|
|
|
|
|
||||||||||
Selling, general and administrative expense
|
43,506
|
|
26,788
|
|
2,902
|
|
12,335
|
|
85,531
|
|
|||||
Depreciation and amortization
|
44,354
|
|
18,184
|
|
7,715
|
|
2,737
|
|
72,990
|
|
|||||
Segment operating income/(loss)
|
39,023
|
|
11,025
|
|
2,087
|
|
(15,072
|
)
|
37,063
|
|
|||||
|
|
|
|
|
|
||||||||||
Equity in net income of unconsolidated subsidiaries
|
131
|
|
—
|
|
8,129
|
|
—
|
|
8,260
|
|
|||||
Segment income/(loss)
|
39,154
|
|
11,025
|
|
10,216
|
|
(15,072
|
)
|
45,323
|
|
(in thousands, except percentages)
|
Feed Ingredients
|
Food Ingredients
|
Fuel Ingredients
|
Corporate
|
Total
|
||||||||||
Three Months Ended July 2, 2016
|
|
|
|
|
|
||||||||||
Net Sales
|
$
|
542,955
|
|
$
|
272,120
|
|
$
|
62,266
|
|
$
|
—
|
|
$
|
877,341
|
|
Cost of sales and operating expenses
|
416,145
|
|
214,279
|
|
46,691
|
|
—
|
|
677,115
|
|
|||||
Gross Margin
|
126,810
|
|
57,841
|
|
15,575
|
|
—
|
|
200,226
|
|
|||||
|
|
|
|
|
|
||||||||||
Gross Margin %
|
23.4
|
%
|
21.3
|
%
|
25.0
|
%
|
—
|
%
|
22.8
|
%
|
|||||
|
|
|
|
|
|
||||||||||
Selling, general and administrative expense
|
43,319
|
|
20,455
|
|
1,804
|
|
10,580
|
|
76,158
|
|
|||||
Acquisition and integration costs
|
—
|
|
—
|
|
—
|
|
70
|
|
70
|
|
|||||
Depreciation and amortization
|
42,119
|
|
17,736
|
|
7,184
|
|
2,492
|
|
69,531
|
|
|||||
Segment operating income/(loss)
|
41,372
|
|
19,650
|
|
6,587
|
|
(13,142
|
)
|
54,467
|
|
|||||
|
|
|
|
|
|
||||||||||
Equity in net income of unconsolidated subsidiaries
|
224
|
|
—
|
|
13,628
|
|
—
|
|
13,852
|
|
|||||
Segment income/(loss)
|
41,596
|
|
19,650
|
|
20,215
|
|
(13,142
|
)
|
68,319
|
|
|
Fats
|
Proteins
|
Other Rendering
|
Total Rendering
|
Used Cooking Oil
|
Bakery
|
Other
|
Total
|
||||||||||||||||
Net sales three months ended July 2, 2016
|
$
|
152.9
|
|
$
|
199.1
|
|
$
|
70.4
|
|
$
|
422.4
|
|
$
|
41.7
|
|
$
|
56.4
|
|
$
|
22.5
|
|
$
|
543.0
|
|
Increase/(decrease) in sales volumes
|
6.9
|
|
1.2
|
|
—
|
|
8.1
|
|
—
|
|
(1.9
|
)
|
—
|
|
6.2
|
|
||||||||
Increase/(decrease) in finished product prices
|
1.7
|
|
(2.1
|
)
|
—
|
|
(0.4
|
)
|
3.8
|
|
(2.9
|
)
|
—
|
|
0.5
|
|
||||||||
Increase/(decrease) due to currency exchange rates
|
(1.3
|
)
|
(2.4
|
)
|
(1.3
|
)
|
(5.0
|
)
|
(0.1
|
)
|
—
|
|
—
|
|
(5.1
|
)
|
||||||||
Other change
|
—
|
|
—
|
|
4.4
|
|
4.4
|
|
—
|
|
—
|
|
0.1
|
|
4.5
|
|
||||||||
Total change
|
7.3
|
|
(3.3
|
)
|
3.1
|
|
7.1
|
|
3.7
|
|
(4.8
|
)
|
0.1
|
|
6.1
|
|
||||||||
Net sales three months ended July 1, 2017
|
$
|
160.2
|
|
$
|
195.8
|
|
$
|
73.5
|
|
$
|
429.5
|
|
$
|
45.4
|
|
$
|
51.6
|
|
$
|
22.6
|
|
$
|
549.1
|
|
|
Three Months Ended
|
|||||
(dollars in thousands)
|
July 1,
2017 |
July 2,
2016 |
||||
Net income/(loss) attributable to Darling
|
$
|
9,149
|
|
$
|
31,999
|
|
Depreciation and amortization
|
72,990
|
|
69,531
|
|
||
Interest expense
|
22,446
|
|
23,980
|
|
||
Income tax expense/(benefit)
|
7,742
|
|
7,983
|
|
||
Foreign currency loss/(gain)
|
2,111
|
|
(8
|
)
|
||
Other expense/(income), net
|
2,696
|
|
2,373
|
|
||
Equity in net (income)/loss of unconsolidated subsidiaries
|
(8,260
|
)
|
(13,852
|
)
|
||
Net income attributable to non-controlling interests
|
1,179
|
|
1,992
|
|
||
Adjusted EBITDA
|
$
|
110,053
|
|
$
|
123,998
|
|
|
|
|
||||
Acquisition and integration-related expenses
|
—
|
|
70
|
|
||
Pro forma Adjusted EBITDA (Non-GAAP)
|
$
|
110,053
|
|
$
|
124,068
|
|
|
|
|
||||
Foreign currency exchange impact (1)
|
1,973
|
|
—
|
|
||
Pro forma Adjusted EBITDA to Foreign Currency (Non-GAAP)
|
$
|
112,026
|
|
$
|
124,068
|
|
|
|
|
||||
DGD Joint Venture Adjusted EBITDA (Darling's Share)
|
$
|
12,406
|
|
$
|
18,331
|
|
•
|
Finished product commodity prices
|
•
|
Segment results
|
•
|
Foreign currency
|
•
|
Corporate activities
|
•
|
Non-U.S. GAAP measures
|
|
Avg. Price
First Six Months
2017
|
Avg. Price
First Six Months
2016
|
Increase/(Decrease)
|
%
Increase/(Decrease)
|
|
Jacobsen:
|
|
|
|
|
|
MBM (Illinois)
|
$ 261.30/ton
|
$ 274.62/ton
|
$ (13.32)/ton
|
(4.9
|
)%
|
Feed Grade PM (Mid-South)
|
$ 286.16/ton
|
$ 277.34/ton
|
$ 8.82/ton
|
3.2
|
%
|
Pet Food PM (Mid-South)
|
$ 662.40/ton
|
$ 532.06/ton
|
$ 130.34/ton
|
24.5
|
%
|
Feather meal (Mid-South)
|
$ 406.54/ton
|
$ 318.06/ton
|
$ 88.48/ton
|
27.8
|
%
|
BFT (Chicago)
|
$ 32.48/cwt
|
$ 29.82/cwt
|
$ 2.66/cwt
|
8.9
|
%
|
YG (Illinois)
|
$ 24.71/cwt
|
$ 24.01/cwt
|
$ 0.70/cwt
|
2.9
|
%
|
Corn (Illinois)
|
$ 3.71/bushel
|
$ 3.90/bushel
|
$ (0.19)/bushel
|
(4.9
|
)%
|
Reuters:
|
|
|
|
|
|
Palm Oil (CIF Rotterdam)
|
$ 728.00/MT
|
$ 667.00/MT
|
$ 61.00/MT
|
9.1
|
%
|
Soy meal (CIF Rotterdam)
|
$ 354.00/MT
|
$ 369.00/MT
|
$ (15.00)/MT
|
(4.1
|
)%
|
(in thousands, except percentages)
|
Feed Ingredients
|
Food Ingredients
|
Fuel Ingredients
|
Corporate
|
Total
|
||||||||||
Six Months Ended July 1, 2017
|
|
|
|
|
|
||||||||||
Net Sales
|
$
|
1,101,743
|
|
$
|
547,615
|
|
$
|
127,062
|
|
$
|
—
|
|
$
|
1,776,420
|
|
Cost of sales and operating expenses
|
854,846
|
|
434,831
|
|
100,714
|
|
—
|
|
1,390,391
|
|
|||||
Gross Margin
|
246,897
|
|
112,784
|
|
26,348
|
|
—
|
|
386,029
|
|
|||||
|
|
|
|
|
|
||||||||||
Gross Margin %
|
22.4
|
%
|
20.6
|
%
|
20.7
|
%
|
—
|
%
|
21.7
|
%
|
|||||
|
|
|
|
|
|
||||||||||
Selling, general and administrative expense
|
88,973
|
|
51,847
|
|
6,193
|
|
26,435
|
|
173,448
|
|
|||||
Depreciation and amortization
|
88,073
|
|
35,785
|
|
14,560
|
|
5,686
|
|
144,104
|
|
|||||
Segment operating income/(loss)
|
69,851
|
|
25,152
|
|
5,595
|
|
(32,121
|
)
|
68,477
|
|
|||||
|
|
|
|
|
|
||||||||||
Equity in net income of unconsolidated subsidiaries
|
240
|
|
—
|
|
8,726
|
|
—
|
|
8,966
|
|
|||||
Segment income/(loss)
|
70,091
|
|
25,152
|
|
14,321
|
|
(32,121
|
)
|
77,443
|
|
(in thousands, except percentages)
|
Feed Ingredients
|
Food Ingredients
|
Fuel Ingredients
|
Corporate
|
Total
|
||||||||||
Six Months Ended July 2, 2016
|
|
|
|
|
|
||||||||||
Net Sales
|
$
|
1,019,126
|
|
$
|
520,017
|
|
$
|
117,839
|
|
$
|
—
|
|
$
|
1,656,982
|
|
Cost of sales and operating expenses
|
788,802
|
|
399,833
|
|
87,373
|
|
—
|
|
1,276,008
|
|
|||||
Gross Margin
|
230,324
|
|
120,184
|
|
30,466
|
|
—
|
|
380,974
|
|
|||||
|
|
|
|
|
|
||||||||||
Gross Margin %
|
22.6
|
%
|
23.1
|
%
|
25.9
|
%
|
—
|
%
|
23.0
|
%
|
|||||
|
|
|
|
|
|
||||||||||
Selling, general and administrative expense
|
88,570
|
|
44,214
|
|
3,654
|
|
21,189
|
|
157,627
|
|
|||||
Acquisition and integration costs
|
—
|
|
—
|
|
—
|
|
401
|
|
401
|
|
|||||
Depreciation and amortization
|
86,496
|
|
34,440
|
|
14,103
|
|
6,748
|
|
141,787
|
|
|||||
Segment operating income/(loss)
|
55,258
|
|
41,530
|
|
12,709
|
|
(28,338
|
)
|
81,159
|
|
|||||
|
|
|
|
|
|
||||||||||
Equity in net income of unconsolidated subsidiaries
|
326
|
|
—
|
|
19,169
|
|
—
|
|
19,495
|
|
|||||
Segment income/(loss)
|
55,584
|
|
41,530
|
|
31,878
|
|
(28,338
|
)
|
100,654
|
|
|
Fats
|
Proteins
|
Other Rendering
|
Total Rendering
|
Used Cooking Oil
|
Bakery
|
Other
|
Total
|
||||||||||||||||
Net sales six months ended July 2, 2016
|
$
|
278.2
|
|
$
|
371.1
|
|
$
|
137.0
|
|
$
|
786.3
|
|
$
|
76.0
|
|
$
|
110.9
|
|
$
|
45.9
|
|
$
|
1,019.1
|
|
Increase/(decrease) in sales volumes
|
19.9
|
|
18.5
|
|
—
|
|
38.4
|
|
(0.8
|
)
|
(1.5
|
)
|
—
|
|
36.1
|
|
||||||||
Increase/(decrease) in finished product prices
|
22.0
|
|
8.5
|
|
—
|
|
30.5
|
|
14.3
|
|
(1.7
|
)
|
—
|
|
43.1
|
|
||||||||
Increase/(decrease) due to currency exchange rates
|
(1.9
|
)
|
(4.1
|
)
|
(3.0
|
)
|
(9.0
|
)
|
—
|
|
—
|
|
—
|
|
(9.0
|
)
|
||||||||
Other change
|
—
|
|
—
|
|
13.0
|
|
13.0
|
|
—
|
|
—
|
|
(0.6
|
)
|
12.4
|
|
||||||||
Total change
|
40.0
|
|
22.9
|
|
10.0
|
|
72.9
|
|
13.5
|
|
(3.2
|
)
|
(0.6
|
)
|
82.6
|
|
||||||||
Net sales six months ended July 1, 2017
|
$
|
318.2
|
|
$
|
394.0
|
|
$
|
147.0
|
|
$
|
859.2
|
|
$
|
89.5
|
|
$
|
107.7
|
|
$
|
45.3
|
|
$
|
1,101.7
|
|
|
Six Months Ended
|
|||||
(dollars in thousands)
|
July 1,
2017 |
July 2,
2016 |
||||
Net income/(loss) attributable to Darling
|
$
|
14,978
|
|
$
|
33,078
|
|
Depreciation and amortization
|
144,104
|
|
141,787
|
|
||
Interest expense
|
44,126
|
|
47,881
|
|
||
Income tax expense/(benefit)
|
9,560
|
|
9,846
|
|
||
Foreign currency loss/(gain)
|
2,375
|
|
2,595
|
|
||
Other expense/(income), net
|
3,656
|
|
3,678
|
|
||
Equity in net (income)/loss of unconsolidated subsidiaries
|
(8,966
|
)
|
(19,495
|
)
|
||
Net income attributable to non-controlling interests
|
2,748
|
|
3,576
|
|
||
Adjusted EBITDA
|
$
|
212,581
|
|
$
|
222,946
|
|
|
|
|
||||
Acquisition and integration-related expenses
|
—
|
|
401
|
|
||
Pro forma Adjusted EBITDA (Non-GAAP)
|
$
|
212,581
|
|
$
|
223,347
|
|
|
|
|
||||
Foreign currency exchange impact (1)
|
3,805
|
|
—
|
|
||
Pro forma Adjusted EBITDA to Foreign Currency (Non-GAAP)
|
$
|
216,386
|
|
$
|
223,347
|
|
|
|
|
||||
DGD Joint Venture Adjusted EBITDA (Darling's Share)
|
$
|
17,443
|
|
$
|
27,960
|
|
Senior Notes:
|
|
||
5.375 % Notes due 2022
|
$
|
500,000
|
|
Less unamortized deferred loan costs
|
(6,998
|
)
|
|
Carrying value of 5.375% Notes due 2022
|
$
|
493,002
|
|
|
|
||
4.75 % Notes due 2022 - Denominated in euros
|
$
|
587,306
|
|
Less unamortized deferred loan costs
|
(8,877
|
)
|
|
Carrying value of 4.75% Notes due 2022
|
$
|
578,429
|
|
|
|
||
Amended Credit Agreement:
|
|
||
Term Loan A
|
$
|
115,356
|
|
Less unamortized deferred loan costs
|
(931
|
)
|
|
Carrying value of Term Loan A
|
114,425
|
|
|
|
|
||
Term Loan B
|
$
|
540,500
|
|
Less unamortized deferred loan costs
|
(5,251
|
)
|
|
Carrying value of Term Loan B
|
$
|
535,249
|
|
|
|
||
Revolving Credit Facility:
|
|
||
Maximum availability
|
$
|
1,000,000
|
|
Borrowings outstanding
|
5,000
|
|
|
Letters of credit issued
|
26,272
|
|
|
Availability
|
$
|
968,728
|
|
|
|
||
Other Debt
|
$
|
20,818
|
|
•
|
As of
July 1, 2017
, the Company had unused capacity of $
968.7 million
under the revolving loan facility, taking into account that the Company had $
5.0 million
outstanding borrowings and letters of credit issued of $
26.3 million
.
|
•
|
As of
July 1, 2017
, the Company has borrowed all $
350.0 million
under the term loan A facility and repaid approximately CAD$
56.4 million
and $
156.8 million
, which when repaid, cannot be reborrowed. The term loan A facility is repayable in quarterly installments which commenced on March 31, 2017 as follows: for the first eight quarters following December 16, 2016,
1.25%
of the original principal amount of the term loan A facility outstanding on the Fourth Amendment date, for the ninth through sixteenth quarters following December 16, 2016,
1.875%
of the original principal amount of the term loan A facility outstanding on the Fourth Amendment date, and for each quarterly installment after such sixteenth installment until December 16, 2021,
3.75%
of the original principal amount of the term loan A facility outstanding on the Fourth Amendment date. The term loan A facility will mature on
|
•
|
As of
July 1, 2017
, the Company has borrowed all $
1.3 billion
under the terms of the term loan B facility and repaid approximately €
510.0 million
and $
59.5 million
, which when repaid, cannot be reborrowed. The term loan B facility is repayable in quarterly installments of
0.25%
of the aggregate principal amount of the relevant term loan B facility on the last day of each March, June, September and December of each year commencing on the last day of each month falling on or after the last day of the first full quarter following January 6, 2014, and continuing until the last day of each quarter period ending immediately prior to January 6, 2021; and one final installment in the amount of the relevant term loan B facility then outstanding, due on January 6, 2021. The term loan B facility will mature on January 6, 2021.
|
•
|
The interest rate applicable to any borrowings under the term loan A facility and the revolving loan facility will equal either LIBOR/euro interbank offered rate/CDOR plus
2.00%
per annum or base rate/Canadian prime rate plus
1.00%
per annum, subject to certain step-downs or step-ups based on the Company's total leverage ratio. The interest rate applicable to any borrowings under the term loan B facility will equal (a) for U.S. dollar term loans, either the base rate plus
1.50%
or LIBOR plus
2.50%
, and (b) for euro revolving loans, the euro interbank offered rate plus
2.75%
, in each case subject to a step-down based on Darling’s total leverage ratio. For term loan B loans, the LIBOR rate shall not be less than
0.75%
.
|
Other commercial commitments:
|
|
||
Standby letters of credit
|
$
|
26,272
|
|
Foreign bank guarantees
|
11,612
|
|
|
Total other commercial commitments:
|
$
|
37,884
|
|
Functional Currency
|
|
Contract Currency
|
|
Range of
|
U.S.
|
||||||
Type
|
Amount
|
|
Type
|
Amount
|
|
Hedge rates
|
Equivalent
|
||||
Brazilian real
|
28,302
|
|
|
Euro
|
7,710
|
|
|
3.42 - 3.99
|
$
|
8,584
|
|
Brazilian real
|
83,615
|
|
|
U.S. dollar
|
25,010
|
|
|
3.19 - 3.71
|
25,010
|
|
|
Brazilian real
|
328
|
|
|
Mexican peso
|
1,824
|
|
|
0.18
|
100
|
|
|
Euro
|
140,552
|
|
|
U.S. dollar
|
155,711
|
|
|
1.06 - 1.15
|
155,711
|
|
|
Euro
|
9,649
|
|
|
Polish zloty
|
40,444
|
|
|
4.18 - 4.23
|
11,003
|
|
|
Euro
|
3,848
|
|
|
Japanese yen
|
464,300
|
|
|
118.26 - 123.71
|
4,389
|
|
|
Euro
|
37,637
|
|
|
Chinese renminbi
|
287,736
|
|
|
7.42 - 7.80
|
42,921
|
|
|
Euro
|
11,064
|
|
|
Australian dollar
|
16,700
|
|
|
1.51
|
12,617
|
|
|
Polish zloty
|
23,992
|
|
|
Euro
|
5,678
|
|
|
4.20 - 4.26
|
6,480
|
|
|
Japanese yen
|
22,550
|
|
|
U.S. dollar
|
203
|
|
|
106.54 - 113.02
|
203
|
|
|
|
|
|
|
|
|
|
$
|
267,018
|
|
|
10.1
|
Form of Notice of Grant of Restricted Stock Unit Award (Non-Employee Directors) under the Darling Ingredients Inc. 2017 Omnibus Incentive Plan.
|
||
|
31.1
|
Certification pursuant to Rule 13a-14(a) or Rule 15d-14(a) of the Securities Exchange Act of 1934, of Randall C. Stuewe, the Chief Executive Officer of the Company.
|
||
|
31.2
|
Certification pursuant to Rule 13a-14(a) or Rule 15d-14(a) of the Securities Exchange Act of 1934, of Patrick C. Lynch, the Chief Financial Officer of the Company.
|
||
|
32
|
Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, of Randall C. Stuewe, the Chief Executive Officer of the Company, and of Patrick C. Lynch, the Chief Financial Officer of the Company.
|
||
|
101
|
Interactive Data Files Pursuant to Rule 405 of Regulation S-T: (i) Consolidated Balance Sheets as of July 1, 2017 and December 31, 2016; (ii) Consolidated Statements of Operations for the three and six months ended July 1, 2017 and July 2, 2016; (iii) Consolidated Statements of Comprehensive Income for the three and six months ended July 1, 2017 and July 2, 2016; (iv) Consolidated Statements of Cash Flows for the six months ended July 1, 2017 and July 2, 2016; (v) Notes to the Consolidated Financial Statements.
|
|
|
DARLING INGREDIENTS INC.
|
|
|
|
|
|
|
|
|
|
Date:
|
August 9, 2017
|
By:
|
/s/ Randall C. Stuewe
|
|
|
|
Randall C. Stuewe
|
|
|
|
Chairman and
|
|
|
|
Chief Executive Officer
|
Date:
|
August 9, 2017
|
By:
|
/s/ Patrick C. Lynch
|
|
|
|
Patrick C. Lynch
|
|
|
|
Executive Vice President
|
|
|
|
Chief Financial Officer
|
|
|
|
(Principal Financial Officer)
|
(a)
|
Except as provided by Section 3(b), vested Restricted Stock Units shall be payable to the Grantee in a single lump sum payment as soon as administratively practicable following the Grantee’s Separation from Service.
|
(b)
|
Notwithstanding the provisions of Section 3(a) to the contrary, if the Grantee has met the stock ownership guidelines established in the Stock Ownership and Retention Policy as of the December 31
st
immediately prior to the Grant Date, the Grantee may elect to have vested Restricted Stock Units payable as soon as administratively practicable after either (i) the Grantee’s Separation from Service or (ii) the earlier of (x) a specified date that is no earlier than the Vesting Date or (y) Separation from Service. In case of an election under clause (ii) in the preceding sentence, the Grantee may also elect to receive payment in either a lump sum or annual installments of up to ten years, with the first installment payment to be made as soon as administratively practicable following the specified
|
(c)
|
Each date upon which vested Restricted Stock Units are payable is referred to herein as a “
Settlement Date
.” Any payment election hereunder must be completed and properly submitted to and accepted by the Company no later than the December 31
st
immediately preceding the Grant Date. If a payment election is not duly made, payment of vested Restricted Stock Units shall be made as a lump sum payment as soon as administratively practicable following Separation from Service (but in any event no later than 60 days following such Separation from Service). In case of installment payments, the number of Restricted Stock Units payable as of a given Settlement Date shall be the total number of vested Restricted Stock Units that are subject to the installment payment divided by the number of installment payments remaining (including the payment then being made), rounded to the nearest whole Restricted Stock Unit. The payment election applicable to the Restricted Stock Units shall also apply to any Dividend Restricted Stock Units credited in accordance with Section 1(c) of the Terms and Conditions.
|
(a)
|
“
Disability
” shall mean that the Grantee is unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment as determined by the Board of Directors in its sole discretion; provided, however, that the Grantee shall recuse himself or herself from the determination as to his or her own Disability.
|
(b)
|
“
Retirement
” shall mean the Grantee’s separation from the Board due to the decision of the Grantee to not stand for re-election as a Non-Employee Director, provided that the Grantee completes his or her current term as a Non-Employee Director by serving as a Non-Employee Director through the date of the Annual Shareholders Meeting following the Grant Date.
|
(c)
|
“
Separation from Service
” shall mean the Grantee’s “separation from service” with the Company within the meaning of Section 409A and any related administrative policies of the Company.
|
1.
|
I have reviewed this quarterly report on Form 10-Q of Darling Ingredients Inc.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstance under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
(a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
(b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
(c)
|
Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
(d)
|
Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
|
5.
|
The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
|
(a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
|
(b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
|
Date:
|
August 9, 2017
|
1.
|
I have reviewed this quarterly report on Form 10-Q of Darling Ingredients Inc.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstance under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
(a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
(b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
(c)
|
Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
(d)
|
Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
|
5.
|
The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
|
(a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
|
(b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
|
Date:
|
August 9, 2017
|
|
/s/ Randall C. Stuewe
|
|
/s/ Patrick C. Lynch
|
|
Randall C. Stuewe
|
|
Patrick C. Lynch
|
|
Chief Executive Officer
|
|
Chief Financial Officer
|
|
Date: August 9, 2017
|
|
Date: August 9, 2017
|