North America’s oldest, largest and most innovative recycling solutions company serving the nation’s food industry Investor and Analyst Forum Sept. 12, 2012 Exhibit 99.1 |
Forward-looking Statements 1 Inv Conf 92012 This presentation contains forward-looking statements regarding the business, operations and prospects of Darling and industry factors affecting it. These statements are identified by words such as “may,” “will,” “ begin,” “ look forward,” “expect,” “believe,” “intend,” “anticipate,” “should,” “potential,” “estimate,” “continue,” “momentum” and other words referring to events to occur in the future. These statements reflect Darling's current view of future events and are based on its assessment of, and are subject to, a variety of risks and uncertainties beyond its control, including disturbances in world financial, credit, commodities, stock markets, and climatic conditions; potential changes in national and foreign regulations affecting the company’s products; a decline in consumer confidence and discretionary spending; the general performance of the U.S. and global economies; global demands for bio-fuels and grain and oilseed commodities, which have exhibited volatility, and can impact the cost of feed for cattle, hogs, and poultry, thus affecting available rendering feedstock; risks, including future expenditure, relating to Darling’s joint venture with Valero Energy Corporation to construct and complete a renewable diesel plant in Norco, Louisiana and possible difficulties completing and obtaining operational viability with the plant on a timely basis, or at all; risks relating to possible third party claims of intellectual property infringement; risks associated with the development of competitive sources for alternative renewable diesel or comparable fuels; economic disruptions resulting from the European debt crisis; and continued or escalated conflict in the Middle East, each of which could cause actual results to differ materially from those projected in the forward- looking statements. Other risks and uncertainties regarding Darling, its business and the industry in which it operates are referenced from time to time in the Company’s filings with the Securities and Exchange Commission. Darling is under no obligation to (and expressly disclaims any such obligation to) update or alter its forward-looking statements whether as a result of new information, future events or otherwise. This presentation also contains information about Darling’s adjusted EBITDA, adjusted net income and adjusted earnings per share, which are not measures derived in accordance with GAAP and which exclude components that are important to understanding Darling’s financial performance. Investors should recognize that these non-GAAP measures might not be comparable to similarly titled measures of other companies. These measures should be considered in addition to, and not as a substitute for or superior to, any measure of performance, cash flows or liquidity prepared in accordance with accounting principles generally accepted in the United States. Investor and Analyst Forum – Sept. 12, 2012 |
• For over 130 years….Darling has efficiently transported and processed waste streams from the food industry into value added ingredients. • Today, Darling continues to innovate, finding new ways to transform sustainable waste streams and create sustainable renewable products to help a growing world. • We are…America’s oldest, largest and most innovative recycling solutions company serving our nation’s food industry. 2 Inv Conf 92012 Investor and Analyst Forum – Sept. 12, 2012 |
A history of transition • Commodity ingredients • Specialized pet food ingredients • Custom aquaculture ingredients • Boiler fuels • Biodiesel • Renewable diesel (green diesel) • Organic fertilizer 3 Inv Conf 92012 Feed Fuel Fertilizer Investor and Analyst Forum – Sept. 12, 2012 Fertilizer & Feed Soap & Fertilizer Feed, Fuel, and Fertilizer Animal Fats, UCO, Proteins Animal Fats, UCO Enriched Animal Proteins |
What does rendering do? • Kills pathogenic organisms o Pathogens may threaten human/animal health and thrive on perishable organic materials. • Protects the environment • Recycles nutrients: o For use in animal feed and in fertilizer. o Prevents loading of soil with nitrogen and phosphorus. • Recycles carbon: o Rendering captures carbon and nitrogen to avoid greenhouse gas emissions. o Rendering captures approximately 7 times more carbon than it emits from its processes. • Recycles energy: o Captures the energy in the raw materials and packages it into stable products that can be stored, transported and used easily. o All rendered products contain significant amounts of energy. o Fats, greases and oils are nature’s way of concentrating and storing energy. o Whether energy is measured in calories or as BTU, it is still energy. • Provides control, verification and traceability to regulatory agencies and the public that condemned or expired meat products are not re-used as human food. The industry does all of this within hours of receiving raw materials, rather than taking weeks or months as some popular alternative methods do. 4 Inv Conf 92012 Investor and Analyst Forum – Sept. 12, 2012 |
Source and potential volumes of animal byproducts available for rendering (from USDA 2009, data) Specie Annual weights in million pounds Pre-slaughter Slaughter Downstream (Meat Processing and Retail) Specie Totals and Grand Total On-Farm & Ante-mortem Deaths Animal Byproducts Fat, Bone & Trim 34 Expired Meat 4 Beef 1,932.2 17,114.9 7,083.8 1,350.8 27,481.8 Pork 981.7 7,878.8 4,891.5 1,013.1 14,765.0 Lamb 64.1 214.2 119.2 30.7 428.2 Chickens 598.5 12,398.0 10,649.5 1,289.4 24,935.4 Turkey 126.0 1,441.7 1,106.8 276.3 2,950.8 Category Totals 3,702.4 39,047.6 23,850.7 3,960.4 70,561.1 1 From USDA on-farm mortality and pre-slaughter data. 2 Calculated from USDA data for total live weight at slaughter minus carcass weights. 3 Calculated from USDA data for meat available at retail subtracted from carcass weights, for import and export data. 4 Packaged meat that has passed its “sell-by” date. From USDA Supermarket losses studies. 5 Inv Conf 92012 Investor and Analyst Forum – Sept. 12, 2012 1 2 |
Digester Compost Animal Feed Rendering Fertilizer Biofuel Oleo-chemical Cleansers Tires Paints Lubricants Fertilizer Effluent Biogas 75% Methane 25% CO 2 Electricity Water 7:1 capture to emit ratio Pet Food 6 Inv Conf 92012 Generator Greenhouse Gases Dryer Captured Investor and Analyst Forum – Sept. 12, 2012 Meat waste |
A LOOK BACK AND A GLIMPSE TO THE FUTURE 7 Inv Conf 92012 Investor and Analyst Forum – Sept. 12, 2012 |
10 Years of DAR Growth 8 Inv Conf 92012 Investor and Analyst Forum – Sept. 12, 2012 |
3 Basic Principles to Guide Us 9 Inv Conf 92012 Run the business Brand the business Grow the business Investor and Analyst Forum – Sept. 12, 2012 |
Run the Business • Focused on standardizing many aspects of our business • One Team, One Dream • Remain entrepreneurial while using central planning • Strengthening and empowering our management teams at all levels • Differentiating and leveraging our customer relationships • Investing wisely to capture efficiencies in the plants and on the road • Execution driven earnings in a highly volatile market • Installing a world-class ERP system • Refining our business model with hope of more sustainable and predictable earnings 10 Inv Conf 92012 Investor and Analyst Forum – Sept. 12, 2012 |
How does DGD change our model? • DGD creates a new market for our fats and greases o Expected to consume +1.1 billion pounds annually o Plant design facilitates expansion • DGD provides arbitrage opportunities between feed and fuel • DGD offers margin management opportunities • DGD helps us procure new sources of feedstock 11 Inv Conf 92012 Investor and Analyst Forum – Sept. 12, 2012 |
3 Basic Principles to Guide Us 12 Inv Conf 92012 Investor and Analyst Forum – Sept. 12, 2012 Grow the business Brand the business Run the business |
13 Inv Conf 92012 Investor and Analyst Forum – Sept. 12, 2012 |
Why “DAR PRO Solutions”? Our New York Stock Exchange (NYSE) symbol provides a strong connection to both our corporate identity and our 130 years of recycling expertise. It also connects our brand to our owners – the shareholder. We are a PROfessional, PROgressive and PROactive company manufacturing fats & PROteins and PROviding other services in addition to PROducing many different PROducts over a PROlonged period of time. Innovation permeates our business and culture. We know that to grow our business, we must consistently find new ways to add value to the products and services our customers expect from us. When Darling and Griffin joined together, we realized the opportunity to unify our operations under one brand to provide best-in-class service and products, retaining the century-plus history both companies have forged with their customers. 14 Inv Conf 92012 Investor and Analyst Forum – Sept. 12, 2012 |
DAR PRO Solutions Fleet Identification 15 Inv Conf 92012 Sample of Plant Signage Investor and Analyst Forum – Sept. 12, 2012 A Darling/Griffin Brand |
3 Basic Principles to Guide Us 16 Inv Conf 92012 Investor and Analyst Forum – Sept. 12, 2012 Run the business Brand the business Grow the business |
Grow the Business • Our balance sheet remains strong o Senior Debt will not be retired till 2014/2015 o Cash is growing o Ample debt capacity • 2012 is geared towards completing Diamond Green Diesel • Other rendering businesses may come for sale, but times are good and multiples have increased • We are poised for growth, both organically and acquisitively! 17 Inv Conf 92012 Investor and Analyst Forum – Sept. 12, 2012 |
American Proteins facilities (4-SE) Baker Commodities facilities (7) Valley Proteins facilities (11) Wintzer facility (1-OH) Tallow Masters facility (1- FL) Kaluzny Bros. facility (1- IL) Pascal (5- TX/LA) Central By-Products (2- MN) Western Mass facility (1-MA) Mahoney Mendola (1-IL) Sanimax facilities (5- US & Canada) Rothsay (6-Canada) West Coast Reduction (6- Canada) 18 Inv Conf 92012 Investor and Analyst Forum – Sept. 12, 2012 |
19 Inv Conf 92012 Central By-Products (2- MN) Western Mass facility (1-MA) Mahoney Mendola (1-IL) Sanimax facilities (5- US & Canada) Rothsay (6-Canada) West Coast Reduction (6- Canada) Darling Corporate/Regional Offices Darling Facilities American Proteins facilities (4-SE) Baker Commodities facilities (7) Valley Proteins facilities (11) Wintzer facility (1-OH) Tallow Masters facility (1- FL) Kaluzny Bros. facility (1- IL) Pascal (5- TX/LA) Investor and Analyst Forum – Sept. 12, 2012 |
20 Inv Conf 92012 Scope Products (13) Endres Processing (8) Investor and Analyst Forum – Sept. 12, 2012 |
21 Inv Conf 92012 Darling Bakery Feeds facilities Scope Products (13) Endres Processing (8) Investor and Analyst Forum – Sept. 12, 2012 |
Organic Growth Opportunities • New Bakery Waste Recycling Locations o Dallas transfer station o Options on several properties for future plants • Integrated Oil Delivery Systems • Hexane Extraction Waste Recovery • Expansion of Diamond Green Diesel 22 Inv Conf 92012 Investor and Analyst Forum – Sept. 12, 2012 |
Fresh Oil System Integrated Oil Delivery Small footprint, Additional storage 23 Inv Conf 92012 Investor and Analyst Forum – Sept. 12, 2012 |
Secondary protein nutrients (SPN), also called dissolved air flotation (DAF) float or skimming's, is a wastewater byproduct that is produced by the poultry industry. Today a majority of this product is land applied. We estimate several billion pounds of this product is available annually. SPN is evaporated in Dublin, GA Trucked to Hampton for extraction Protein and oil are separated Sold as animal feed and fat Hampton Extraction Plant 24 Inv Conf 92012 Investor and Analyst Forum – Sept. 12, 2012 |
Finished Meal Finished Meal Finished Finished Grease Grease Raw SPN Fines Raw SPN Fines Raw to Finished 25 Inv Conf 92012 Investor and Analyst Forum – Sept. 12, 2012 |
North America’s oldest, largest and most innovative recycling solutions company serving the nation’s food industry Q&A Q&A 26 Inv Conf 92012 Investor and Analyst Forum – Sept. 12, 2012 |
PROTEIN PRODUCTS – ADDING VALUE Jim Conway, VP of Sales & Marketing Investor and Analyst Forum – Sept. 12, 2012 |
28 INV Conf 92012 Investor and Analyst Forum – Sept. 12, 2012 Val•ue Add•ed The amount by which the value of a product increases as it proceeds through the various stages of its manufacture and distribution. Having features added to a basic product for which the buyer is prepared to pay extra. |
29 INV Conf 92012 Adds $300-$400 to the VALUE of rendered products Investor and Analyst Forum – Sept. 12, 2012 |
Blending Facilities • Blending increases the value of basic commodities produced • Our Blending Operations: o Lynn Center, IL o Omaha, NE o KC Blending 30 INV Conf 92012 Investor and Analyst Forum – Sept. 12, 2012 |
Investor and Analyst Forum – Sept. 12, 2012 Petfood 31 INV Conf 92012 Pet food grade poultry meal increases the value of our poultry meal production by over $200 a ton. |
Investor and Analyst Forum – Sept. 12, 2012 Aquaculture 32 INV Conf 92012 Aquaculture Production in China and the U.S. 1950-2010 Source: FAO Our pet food grade poultry meal has become an effective high grade protein for fish diets. Demand has steadily grown in our export markets |
Investor and Analyst Forum – Sept. 12, 2012 33 INV Conf 92012 Validating our goal of adding value for our stockholders by better serving our customers – offering the highest quality products and services under one brand name. |
Investor and Analyst Forum – Sept. 12, 2012 RISK MANAGEMENT & GLOBAL FAT MARKETS Mike Rath, EVP Commodities |
Investor and Analyst Forum – Sept. 12, 2012 Topics • Managing Risk in the Darling Portfolio • Risk factors • Risk mitigation tools • Global S & D Fats & Oils • North America fats – supply & demand • Markets • Darling’s footprint to market • Fundamental indicators 35 Inv Conf 92012 |
Investor and Analyst Forum – Sept. 12, 2012 36 Inv Conf 92012 Price and/or Formula Relationship Diesel Natural Gas Electricity •Volume •Quality •Storage •Weather •Customer •Destination •Specifications •Mode of Transportation •Terms •History •Domestic vs. export Payment Sale & Transportation Finished Product Conversion Evaporate & Separate Collection and Purchase of Raw Material Risk Factors |
Investor and Analyst Forum – Sept. 12, 2012 Mitigating Risk • Focus on “How we buy it” o Buying it on the right market is key o Selling it to the right destination is required o Spread Management Business • Use of Derivatives to Lock in Margins o Natural Gas & Diesel • Most all formula’s have adjusters • Non-formula business... we implement service charges or collection fees • Some delivery risk as quantities drive pricing ability • Hedges occasionally used to lock in margins in Bakery and Pet Food businesses 37 Inv Conf 92012 Corn & Soybean Meal Still have Operating and Quality Risk |
Investor and Analyst Forum – Sept. 12, 2012 GLOBAL FAT MARKETS Key Drivers of our Products 38 Inv Conf 92012 |
Investor and Analyst Forum – Sept. 12, 2012 Source: Informa Economics, A Profile of the North American Rendering Industry, March 2011 39 Inv Conf 92012 Feed Biofuel Export Oleo- chemicals 50% 10% 30% 10% Animal Fat Markets 2011 North American Rendering Industry Profile Volume Share |
Investor and Analyst Forum – Sept. 12, 2012 40 Inv Conf 92012 Tacoma San Francisco New Orleans Tampa Newark Mexico Market Flexibility |
Investor and Analyst Forum – Sept. 12, 2012 2011 U.S. Fat and Grease Production (9-10 billion lb. market) Total size in billion lbs. Poultry Fat 15% Other Grease 14% Edible Tallow 21% Lard 2% Yellow Grease 14% Inedible Tallow 34% 41 Inv Conf 92012 Source: Informa Economics |
Investor and Analyst Forum – Sept. 12, 2012 42 Inv Conf 92012 2008: 409 tmt rendered fat used 2009: 432 tmt rendered fat used 2010: 240 tmt rendered fat used 2011: 504 tmt rendered fat used Source: U.S. Census Bureau Rendered Fat Used in Biodiesel Production Biofuels are Changing the Marketplace Source: USDA/FAS Grain Reports, U.S. Biodiesel Board, European Biodiesel Board Food and Agriculture Policy Research Institute 13.8 15.0 17.3 20.6 Totals in millions 22.6 0 2,000,000 4,000,000 6,000,000 8,000,000 10,000,000 12,000,000 2008 2009 2010 2011 E 2012 F EU27 Brazil Argentina United States Others 2006 2007 2008 2009 2010 2011 Mexico 399,877 477,711 443,448 439,313 429,058 376,606 China 308,813 337,687 365,351 341,602 322,588 252,063 Singapore 219 559 734 95 44 125,773 Turkey 153,143 142,400 112,571 114,295 137,403 92,844 Central America and Caribbean 123,977 121,618 117,767 91,991 111,126 75,911 South Korea 134,961 125,936 104,470 102,601 98,384 51,503 Japan 75,884 60,105 57,931 41,223 54,329 47,323 Pakistan 78,208 74,317 64,726 65,957 67,164 32,557 Nigeria 124,717 161,554 123,567 110,664 89,779 31,189 Brazil 5,097 2,318 20,914 28,621 28,152 20,830 Morocco 11,086 18,852 9,455 13,841 15,427 16,913 TOTAL 1,789,999 1,878,632 1,783,385 1,639,470 1,677,347 1,358,304 Global Importers of Tallow 2006-2011 (metric tons) |
Investor and Analyst Forum – Sept. 12, 2012 Fats Outlook • Global droughts effecting grain supply • Palm oil supply increasing • European biodiesel demand evolving • Stable U.S. renewable fuel policy • Economic pressures decreasing world animal supply • China demand 43 Inv Conf 92012 |
Investor and Analyst Forum – Sept. 12, 2012 Brian Griffin, SVP Procurement & Service DAR PRO SOLUTIONS GO TO MARKET APPROACH |
Investor and Analyst Forum – Sept. 12, 2012 DAR PRO Solutions to Market 45 INV Conf 92012 Quick Look: • Over 200,000 raw material suppliers in 42 states + • Over 2,000 vehicles to provide more than 35,000 weekly services DAR PRO Solutions was created to unite two legacy companies and present the marketplace with one formidable solution. We see our mission as: Expanding our raw material volumes intelligently thru favorable, long-term business relationships |
Investor and Analyst Forum – Sept. 12, 2012 DAR PRO Solutions to Market PROfessional Team Greatest wealth of customer service knowledge in rendering industry with sales staff of 6 National/15 Regional/80 Local reps with full support from an Advisory Group of 24 team members Account Managers generate in excess of 6,000 F2F visits each week 25,000 service relationships created in most recent 6-month period Dedicated National Service Center to provide “one touch” support PROficient Services Real-time scoring with $ 1.5M commitment to on-board computers Provides suppliers with point-of-service/traceability standards Route optimization to maximize collection efficiency Service management for national accounts through National Service Center 46 INV Conf 92012 Five Key Base Elements |
Investor and Analyst Forum – Sept. 12, 2012 PROfile Best-in-Class Collection Equipment Moving industry to indoor collection equipment Best selection in the restaurant industry Focus on “intelligent, long-term relationships” PROactive Environmental Stewardship Stress the importance of our efforts in regards to timely collection and processing to exceed marketplace and regulatory expectations Continued focus towards creating margins with low value raw material supplies such as trap grease, wastewater, and bakery by-products Dar Pro Solutions to Market 47 INV Conf 92012 Reduce opportunity for grease bandits Better product yield results Increased focus towards “recycling consultants” |
Investor and Analyst Forum – Sept. 12, 2012 DAR PRO Solutions to Market 48 INV Conf 92012 PROgressive Pricing Our National Service Center will be able to reach out “electronically’ to all 200,000+ suppliers and customers via www.darpro.com, customer portals, and our new toll-free service number – (855)-DARPRO1 Ability to bundle service packages to the local diner, regional brand, or national quick service restaurant chain in a one-stop approach |
Investor and Analyst Forum – Sept. 12, 2012 DARPRO Solutions, launching this fall, will be a very exciting period for both us and our customers. Our goal is to bring new energy and leverage our abilities to change the typical stereotype of the “invisible rendering company” into a recognition of Darling, and the DAR PRO brand, as a 49 INV Conf 92012 |
Investor and Analyst Forum – Sept. 12, 2012 Larry Angotti • John Rini • Chris Fleek • Harold Bowman Mike Molini • Ken Viviani • Bill Morris • Mark Baker Brent Frisch • Donnie Thomas • Tom Gabriel Rick Geise • Dwain Varisco • Ken Thomley Doug Sabins • Kraig Fussell • Esco Hornsby Anna Maria Palacios • John Woodruff George Baker • Doug Cwiertnia Brian Breitenstein • Pat Kreeb Jessica Boyers • Gene Schneider Grant Allbrook • Brian Griffin Don Kinser • Gabe Martelino Abby Badrian • Jim Larkin Matt Stephens • Ruth Gaddis Ben Politte • Curtis Crawford Mike Olson • Al Steiger Matt Stephens • Chuck Whitfield Randall Lovinggood • Kevin Mack Marcus Asbell • Larry Stanley Tom Potter • John Wasse Steve Cox • Ken Neail • Terry Long Robert Misenhimer • Bo Stewart Dave Bryant • Larry Thompson Mike Kleier • Mark O’Callaghan Anna Marie Truis • Richard Ramirez Rich Hummel • Warren Copple • Von Dorjevski David Kasselmann • Mike Gerth • Ricardo Canseco Brian Paprocki • Chris Mattingly • Doug Spritzky Bill Borrelli • Kim Shuey • Bill Wardle • Bob Seemann Vance Cunningham • Dennis Herzog Phil Wachowski • Tim Summers • Rick Elrod John Hofstedt • Robert Moore Mark Ward • Mike Keim • Neil Katchen Ronnie Rodger • Travis Miller Roy Sutphin • Austin Crittenden Steve Guillen • Chris Jenkins Mike Thornberry • Joey Gibb Jamey Vance • Lucas Simi Pete Tzanetis • Mike Kreth Carla Simons • Rich Franklin Jeremy Poston • John Wasse Greg Rawe • Keith Wendorff Jim Brackenridge • Ed Ballew Dewitt Guttridge • Kevin Mack Marcus Griffin • Jack LaBerta Joe Fiouris • Hank Lawrence John Wasse • John Casaccio Robert Lagomarsino • Mitch Starr Dave Mancha • Carlos Ramirez Austin Cummings • Robert Moore Mathew McDonald • Nelson Benitez Marc Myerson • Chris Reitz • Bob Groszek Brandon Craun • David Callaway • Kim Stockelman • Marty Griffin • John Bullock Questions? 50 INV Conf 92012 |
Investor and Analyst Forum – Sept. 12, 2012 FINANCIAL UPDATE John Muse, Executive Vice President |
Investor and Analyst Forum – Sept. 12, 2012 Topics 52 INV Conf 92012 • Balance Sheet • Working Capital • Debt • Investments • Statement of Operations • Revenue • EBITDA % of Sales • Formulas/Prices • Investments • Cash Flows • Capex • Debt • Investment • Cash • Interest • Taxes • Other • Questions |
Investor and Analyst Forum – Sept. 12, 2012 Balance Sheet 53 INV Conf 92012 6/30/2012 12/31/2011 Cash and cash equivalents $72.3 $38.9 Restricted cash 0.4 0.4 Accounts receivables, net 97.4 95.8 Inventories 56.2 50.8 Other current assets 21.8 33.7 Total current assets $248.1 $219.7 Property, plant and equipment, net 422.7 400.2 Collection route and contracts, net 351.3 362.9 Goodwill 381.4 381.4 Investment in unconsolidated subsidiary 46.4 21.7 Other assets 29.4 31.1 Total assets $1,479.2 $1,417.0 Current portion of long-term debt $0.0 $0.0 Accounts payable 71.3 60.4 Accrued expenses 63.3 66.8 Total current liabilities $134.7 $127.3 Long-term debt 250.0 280.0 Deferred income taxes 42.6 31.1 Other non-current liabilities 56.7 58.2 Total liabilities $484.0 $496.7 Stockholder's equity 995.2 920.4 Total liabilities and equity $1,479.2 $1,417.0 Balance Sheet as of 2 Qtr 2012 and Fiscal YE 2011 (US$ in millions) nd |
Investor and Analyst Forum – Sept. 12, 2012 Balance Sheet Working Capital Data: ($ millions) 6/30/2012 12/31/2011 Accounts receivable, net $ 97.4 $ 95.8 Average days sales outstanding 21.5 days 19.5 days Inventories $ 56.2 $ 50.8 Days sales in inventory 12.4 days 10.3 days Accounts payable & accrued expenses/ Costs of sales and operating expenses $ 134.6 $ 127.2 Days AP & AE / COS & OE 41.5 days 36.6 days 54 INV Conf 92012 |
Investor and Analyst Forum – Sept. 12, 2012 55 INV Conf 92012 Balance Sheet Balance Sheet as of 2 Qtr 2012 and Fiscal YE 2011 (US$ in millions) Fiscal 2011 6/30/2012 12/31/2011 Cash and cash equivalents $72.3 $38.9 Restricted cash 0.4 0.4 Accounts receivables, net 97.4 95.8 Inventories 56.2 50.8 Other current assets 21.8 33.7 Total current assets $248.1 $219.7 Property, plant and equipment, net 422.7 400.2 Collection route and contracts, net 351.3 362.9 Goodwill 381.4 381.4 Investment in unconsolidated subsidiary 46.4 21.7 Other assets 29.4 31.1 Total assets $1,479.2 $1,417.0 Current portion of long-term debt $0.0 $0.0 Accounts payable 71.3 60.4 Accrued expenses 63.3 66.8 Total current liabilities $134.7 $127.3 Long-term debt 250.0 280.0 Deferred income taxes 42.6 31.1 Other non-current liabilities 56.7 58.2 Total liabilities $484.0 $496.7 Stockholder's equity 995.2 920.4 Total liabilities and equity $1,479.2 $1,417.0 Quarter ended nd |
Investor and Analyst Forum – Sept. 12, 2012 56 INV Conf 92012 Balance Sheet Investment in Unconsolidated Subsidiary (DGD) ($ millions) Capital Investment 2010 Capital Cost $ 1.6 2011 Cash Contributions 21.7 2011 JV Recognized P&L (1.6) 2011 Investment Balance $21.7 2012 Cash Contributions 25.6 2012 JV Recognized P&L (0.9) Total Investment at 6/30/12 $46.4 Investment Committed to DGD $93.2 Additional Investment – Scope Change (DAR) 4.1 Estimated Required Funding $97.3 Additional Funding $50.9 Plus any increases in working capital |
Investor and Analyst Forum – Sept. 12, 2012 57 INV Conf 92012 Balance Sheet 6/30/2012 12/31/2011 Cash and cash equivalents $72.3 $38.9 Restricted cash 0.4 0.4 Accounts receivables, net 97.4 95.8 Inventories 56.2 50.8 Other current assets 21.8 33.7 Total current assets $248.1 $219.7 Property, plant and equipment, net 422.7 400.2 Collection route and contracts, net 351.3 362.9 Goodwill 381.4 381.4 Investment in unconsolidated subsidiary 46.4 21.7 Other assets 29.4 31.1 Total assets $1,479.2 $1,417.0 Current portion of long-term debt $0.0 $0.0 Accounts payable 71.3 60.4 Accrued expenses 63.3 66.8 Total current liabilities $134.7 $127.3 Long-term debt 250.0 280.0 Deferred income taxes 42.6 31.1 Other non-current liabilities 56.7 58.2 Total liabilities $484.0 $496.7 Stockholder's equity 995.2 920.4 Total liabilities and equity $1,479.2 $1,417.0 Balance Sheet as of 2 Qtr 2012 and Fiscal YE 2011 (US$ in millions) nd |
Investor and Analyst Forum – Sept. 12, 2012 58 INV Conf 92012 Balance Sheet Debt (@ 6/30/12): ($ millions) Senior Credit Facilities: Revolver: 5-yr facility–expires 12/17/15 Revolver Credit Facility $415.0 Issued L/C’s (25.3) Availability under Revolver $389.7 Current Borrowings on Revolver 0 Current Pricing is Libor (3 mos. plus 2.00%) Long-Term Debt: Senior Unsecured Notes: Principal Amount $250.0 Term of Facility: 8 yrs– due Dec 2018 Rate: 8.50% fixed Issued: 12/17/2010 Redemption: Non-callable for 4 yrs; callable after 4 yrs at half the coupon. Declining ratably to par thereafter: 2014 104.250% 2015 102.125% 2016+ 100.000% |
Investor and Analyst Forum – Sept. 12, 2012 Revenue Business Model Raw Material/Finished Products 59 INV Conf 92012 Diversified supply of raw material Approximately 75% of our raw material is procured under a processing agreement, whereby margins are established and the risk is shared. The balance is a “fee for service” business. 28.74% 10.10% 24.27% 5.76% 9.65% 19.71% 1.77% Beef Pork Poultry Grocery Used Cooking Oil Bakery Other |
Investor and Analyst Forum – Sept. 12, 2012 Revenue/Products 60 INV Conf 92012 Industry Raw Yield Finished Material Factors Product Finished Products % Category (1) Available Protein Fat 28.74% Beef 48% 13.80% 6.90% 6.90% 24.27% Poultry 35% 8.50% 4.61% 3.89% 10.10% Pork 42% 4.25% 2.12% 2.13% 9.65% Used Cooking Oil 70% 6.75% – 6.75% 5.76% Grocery 45% 2.59% 1.30% 1.29% 1.77% Other 35% 0.62% 0.31% 0.31% 80.29% Rendering 36.51% 15.24% 21.27% 19.71% Bakery 41.75% 58.25% 100.00% Total (1) Will differ by raw material supplier and type of material |
Investor and Analyst Forum – Sept. 12, 2012 A Significant Portion has a “Built-In Margin” 61 INV Conf 92012 Darling Formula Pricing Example Industry has evolved to a shared risk procurement model Pricing protocols reduce exposure to commodity price fluctuation and provide minimum margins Raw materials procured under the following pricing arrangements: Product Finished price Total yield Animal Fats $40.00cwt 26% Protein Meals $20.00cwt 22% Note: Yield is based on individual supplier’s historical yields and is adjusted as needed Product Finished price Total yield Value Animal Fats $40.00cwt 26% $10.40 Protein Meals $20.00cwt 22% $ 4.40 Finished product sales value $14.80 Darling conversion cost with Energy adjuster ($6.00) Darling fixed margin ($1.50) Total processing cost ($7.50) (Charge) / Rebate to supplier per cwt $7.30 Source: Company Management Note: When finished product sales value covers Darling’s cost and fixed spread, a rebate to the supplier is generated. Conversely, when the finished product sales value is less than Darling’s cost and fixed spread, the supplier is charged for the difference. Indicative Formula Terms Theoretical Finished Product Sales Value Theoretical Darling (Charges)/Rebate to Supplier Formula-based rendering (~70% of total raw material volume) Used cooking oil (~45% of total raw material volume) Bakery waste is 100% formula tied to corn (profit share) How We Buy It |
Investor and Analyst Forum – Sept. 12, 2012 Darling Historical Financials (Segments) 62 INV Conf 92012 2008 2009 2010 2011 2Q-12 Bakery 26.8% 13.7% 13.3% 24.0% 23.1% Rendering 19.7% 18.7% 18.4% 21.5% 18.6% Total Company 20.7% 18.1% 17.7% 21.9% 19.3% EBITDA % of Revenue 0 200 400 600 800 1000 1200 1400 1600 1800 2008 2009 2010 2011 2Q12 Bakery Revenues Rendering Revenues $1489 $1123 $1340 $1797 $824 0 50 100 150 200 250 300 350 400 2008 2009 2010 2011 2Q12 Rendering Bakery $203 $237 $394 $308 $159 Revenue ($mm) EBITDA ($mm) |
Revenue ($ Millions) 63 INV Conf 92012 2008 2009 2010 2011 2Q-12 EBITDA (% Sale) 20.7% 18.1% 17.7% 21.9% 19.3% Revenue $1,489 $1,123 $1,340 $1,797 $824 EBITDA $308 $203 $237 $394 $159 $1,489 $1,340 (1,123) 1,797 366 457 x .30 $308 x .30 $237 ($109) (109) $137 137 $199 $374 Factors: - Finished product prices - Raw material volume/yield - Energy - Operating costs – collection & factory Investor and Analyst Forum – Sept. 12, 2012 |
Investor and Analyst Forum – Sept. 12, 2012 Cash Flows ($ millions) 64 INV Conf 92012 6 Months 6/30/12 Fiscal 2011 Source: EBITDA $158.9 $393.5 Uses: Capex ($53.5) ($60.2) Acquisition (2.0) (1.8) Debt Reduction (30.0) (427.0) Issuance of Common Stock 0.0 293.1 Cash Interest (10.9) (29.1) Cash Taxes (10.8) (88.2) Working Capital Change 16.2 (45.6) Investment in Unconsolidated Sub. (25.5) (23.3) Other (9.1) 8.3 (Increase)/Decrease in Cash (33.3) (19.7) Total ($158.9) ($393.5) |
Investor and Analyst Forum – Sept. 12, 2012 65 INV Conf 92012 Historical Financials - Capex Capex (US$ millions) 1 Source: Company Management 1 Griffin capex includes capex and investments, including acquisitions. Note: 2008-2010 includes combined proforma of Griffin Industries $- $10 $20 $30 $40 $50 $60 $70 $80 2008 2009 2010 2011 2Q12 $71 $69 $61 $60 $54 |
Investor and Analyst Forum – Sept. 12, 2012 66 INV Conf 92012 |
Investor and Analyst Forum – Sept. 12, 2012 DIAMOND GREEN DIESEL John Bullock, SVP Business Development |
Investor and Analyst Forum – Sept. 12, 2012 Darling Biofuels – The Path to Here 68 INV Conf 92012 Darling begins studying biofuels 2004 2005 Tax credit for Biodiesel/Renewable Diesel implemented Darling evaluates Biodiesel product and processes RFS 1 implemented-Ethanol only 2007- 2008 Darling evaluates over 20 different biodiesel processes Determines that while feasible to make biodiesel from Darling feedstock impurities within Darling feedstock make for inefficient process Darling begins pretreatment work with Desmet-Ballestra RFS2 enabling legislation passed (Advanced Biofuel Mandate) Tax credit extended Darling studies UOP Renewable Diesel process output 2010 Darling studies UOP process output and undertakes extensive pretreatment & pilot plant testing Darling determines Renewable Diesel process is right process for its feedstock Begins seeking energy partners RFS2 implemented Tax credit extended Darling partners with Valero (DGD) 2011 Tax credit expires California Air Resource Board implements Low Carbon Fuel Standard DGD begins construction 1Q- 2013 Projected startup |
Investor and Analyst Forum – Sept. 12, 2012 What is DGD? 69 INV Conf 92012 50/50 JV with Valero Energy Corporation Construct & operate a 136.7 million gallon Renewable Diesel plant located next to Valero’s 3 rd largest oil refinery in NORCO Louisiana using Desmet-Ballestra pre-treatment & UOP Eco-fining technologies $-Millions Total Project Cost $413 (includes working capital) Partners Capital $192 JV DEBT $221 Agriculture Petroleum |
Investor and Analyst Forum – Sept. 12, 2012 70 INV Conf 92012 Most economical feedstock available – 1.135 billion #’s annually D-975 diesel fuel is capable of distribution using existing infrastructure – 136.7 million gallons renewable diesel annually – 21.7 million gallons of LPG’s & Naphtha DGD Objective – Why it is being built DGD will be the low cost producer of the highest quality product capable of fulfilling RFS2 biomass-based diesel mandate |
Investor and Analyst Forum – Sept. 12, 2012 DGD Difference Engine – Old tricks with new twists 71 INV Conf 92012 Traditional agricultural raw material handling and storage practices Traditional oil distribution of finished products DIFFERENCE ENGINE Traditional agricultural pretreatment processing (Modified) Traditional petroleum oil processing |
Investor and Analyst Forum – Sept. 12, 2012 DGD Feedstock Origination – What we use defines our advantage 72 INV Conf 92012 Darling is one of the largest suppliers of animal fats & used cooking oils in U.S. DGD is expected to consume ~11% of historical 10-year avg. supply of animal fats & used cooking oils DGD will always have available supply of feedstock from Darling; however, DGD has the flexibility to purchase feedstock from other suppliers should that feedstock be more economical |
Investor and Analyst Forum – Sept. 12, 2012 DGD Feedstock Logistics – Receive, separate, and homogenize 73 INV Conf 92012 42 rail cars per day – over 2.5 days of usage 50 trucks per day – 3/4 of a days usage DGD HAS UNMATCHED FEEDSTOCK RECEIVING CAPABILITY 3 raw material tanks 3 mixing tanks prior to pretreatment 3 post pretreatment tanks 30 days usage of feedstock storage DGD CAN HOMOGENIZE VARIABLE FEEDSTOCK |
Investor and Analyst Forum – Sept. 12, 2012 DGD Pretreatment – Desmet Ballestra plus plus 74 INV Conf 92012 One of the five largest such facilities in the world Sole purpose is to remove impurities which will impact eco-fining catalyst DGD CAN UTILIZE LOW COST FEEDSTOCK WITH HIGHER IMPURITIES Five-step process combining enhanced traditional vegetable oil refining with non-traditional “polishing” process and modified impurity removal processes taken from the petroleum refining industry System is “unique” in that it has enhanced capabilities at each step as well as redundant capacity for all critical pieces of equipment |
DGD Eco-fining – UOP 75 INV Conf 92012 UOP licensed process – UOP is largest provider in the world of catalyst technology to the oil refining industry Three-stage process utilizing hydrogen and well established catalysts to convert feedstock into a true hydrocarbon with the same cold flow properties as diesel fuel THE FINISHED PRODUCT MEETS SPECIFICATIONS OF DIESEL FUEL (D-975) Investor and Analyst Forum – Sept. 12, 2012 |
Investor and Analyst Forum – Sept. 12, 2012 Renewable Diesel tank (Located in St. Charles Refinery tank farm) DGD Finished Product Distribution & Marketing 76 INV Conf 92012 Renewable Diesel tank (Located @ DGD) Bengal pipeline Colonial pipeline Parkway pipeline Plantation pipeline R-100 or blends Barge 2.2 days production 19.5 days production DGD has capability to market 100% of product via pipeline or barge Valero Marketing Services will market 100% of product DGD will receive full value of all products R-100 Co-products (Butane/propane/NATHPA) transferred directly to Valero refinery for further processing Access to: South-coast refineries Midwest Pipelines California (LCFS) |
DGD Margin foundation – How the margins are created 77 INV Conf 92012 RENEWABLE DIESEL is a superior fuel than Biodiesel RENEWABLE DIESEL can be distributed using existing infrastructure (Biodiesel cannot) RENEWABLE DIESEL process can efficiently use lower cost feedstocks (However only with specialized pretreatment with scale) Co-Products from RENEWABLE DIESEL more valuable than from Biodiesel RENEWABLE DIESEL cash processing costs are competitive with Biodiesel DGD in the right location (Feedstock flow, access to markets for finished product) Infrastructure synergies from St. Charles Refinery Investor and Analyst Forum – Sept. 12, 2012 RFS2 mandates a minimum of 1 billion gallons of BIOMASS-BASED DIESEL annually (BIOMASS BASED DIESEL can only be BIODIESEL or RENEWABLE DIESEL) RENEWABLE DIESEL RIN’s, due to higher energy content, are valued at multiple of 1.7 vs. Biodiesel 1.5 |
Investor and Analyst Forum – Sept. 12, 2012 RFS 2 – The bedrock 78 INV Conf 92012 Billions of annual gallons ADVANCED BIOFUELS 2.75 6.50 8.25 10.00 12.00 14.00 16.00 19.00 22.00 Biomass-based diesel may be more than 1.0 billion gallons Biomass-based diesel may be used to fulfill undifferentiated category 4.75 25 20 15 10 5 0 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 5.00 4.50 4.50 4.50 4.00 3.50 3.00 2.50 2.00 1.75 1.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00 0 1.75 3.00 4.25 5.50 7.00 8.50 10.50 13.50 16.00 Undifferentiated Advanced Biofuel Biomass Based Diesel Cellulosic |
Investor and Analyst Forum – Sept. 12, 2012 DGD Product & Distribution Advantage 79 INV Conf 92012 PRODUCT QUALITY ADVANTAGE PRODUCT DISTRIBUTION ADVANTAGE RENEWABLE DIESEL meets DIESEL FUEL QUALITY specification(D-975) INCLUDING COLD FLOW PROPERTIES while Biodiesel is not a true hydrocarbon and can only be included at a 5% blend into D-975 RENEWABLE DIESEL can be DISTRIBUTED USING PIPELINES and requires no special tanks for STORAGE while Biodiesel cannot be distributed (even as a blend) in any pipeline which transports jet fuel and, due to the cold flow properties of Biodiesel, requires special tanks at the distributors As a result of these two issues BIODIESEL has sold at a discount to diesel fuel net of RIN’s value while RENEWABLE DIESEL will market at diesel fuel price less only transportation costs to destination (pipeline injection points) |
Investor and Analyst Forum – Sept. 12, 2012 DGD Feedstock & Processing Advantage 80 INV Conf 92012 Although DGD utilizes much higher pressure and temperature than for biodiesel processing, the process is exothermic – heat generated from the process results in very little actual energy usage during processing F/H 2012 Cost/gallon ($) DGD .12 Biodiesel .16 Hydrogen vs. methanol Energy efficiency Canola oil Soybean oil Palm oil Edible tallow Non-edible tallow Choice white grease Poultry fat Yellow grease 3.92 3.47 3.41 3.11 2.86 2.63 2.55 2.31 Cost per gallon of Biofuel 2007 -2011 Average Prices ($) DGD primary feedstocks |
Investor and Analyst Forum – Sept. 12, 2012 3.05 Diesel fuel price 3.05 1.97 (1.7 multiplier of 1.16) RIN’s value 1.74 (1.5 multiplier of 1.16) (.07) Distribution cost/discount (.22) 4.95 Fuel value @ plant 4.57 .28 Co-Product value .09 5.23 TOTAL REVENUE 4.66 3.86 Raw material cost dlvd. plant 4.39 .12 Processing aids .16 .26 Cash processing cost .26 4.24 TOTAL PROCESSING COST 4.81 .99 EBITDA (.15) DGD Margin Equation – The bottom line 81 INV Conf 92012 ($ per gallon of Renewable Diesel January-June 2012) DGD RENEWABLE DIESEL Has advantage in RIN’s value (.23); distribution cost (.15); co-product value (.19); raw material (.53); and processing aid (.04). Note: Above proforma assumes revenue, feedstock and production costs are consistent with projections from January-June 2012 ITEM (Midwest soybean) |
Investor and Analyst Forum – Sept. 12, 2012 Renewable Diesel is RIGHT for Darling... 82 INV Conf 92012 The RIGHT PRODUCT from The RIGHT FEEDSTOCK using The RIGHT PROCESS at The RIGHT LOCATION with The RIGHT PARTNER |
Investor and Analyst Forum – Sept. 12, 2012 NEWARK RENDERING Neil Katchen, EVP and Co-COO |
Investor and Analyst Forum – Sept. 12, 2012 84 INV Conf 92012 You won’t see this at our Newark operation... |
Investor and Analyst Forum – Sept. 12, 2012 Welcome to our Newark facility 85 INV Conf 92012 |
Investor and Analyst Forum – Sept. 12, 2012 Our Newark NJ Facility 86 INV Conf 92012 Built in 1977 Originally located in Long Island City NY; moved due to excessive cost of operating in the 5 Boroughs 115 employees 45 kitchen grease and rendering routes run daily Located in Newark on mouth of Passaic River Waterfront access to Newark Bay |
Investor and Analyst Forum – Sept. 12, 2012 87 INV Conf 92012 |
Investor and Analyst Forum – Sept. 12, 2012 Safety is Critical 88 INV Conf 92012 • Employees and guests are provided safety gear prior to gaining access to any of our operations areas |
OUR NEWARK OPERATION Investor and Analyst Forum, Sept. 12 2012 89 INV Conf 92012 |
Investor and Analyst Forum – Sept. 12, 2012 Weighing In 90 INV Conf 92012 |
Investor and Analyst Forum – Sept. 12, 2012 Boiler 91 INV Conf 92012 |
Investor and Analyst Forum – Sept. 12, 2012 Raw Material Receiving Hopper 92 INV Conf 92012 |
Investor and Analyst Forum – Sept. 12, 2012 93 INV Conf 92012 Restaurant Grease Receiving Hopper |
Investor and Analyst Forum – Sept. 12, 2012 Control Room Operator 94 INV Conf 92012 |
Investor and Analyst Forum – Sept. 12, 2012 Control Screen 95 INV Conf 92012 |
Investor and Analyst Forum – Sept. 12, 2012 Cooker/Feather Hydrolyzer 96 INV Conf 92012 |
Investor and Analyst Forum – Sept. 12, 2012 Dryer 97 INV Conf 92012 |
Investor and Analyst Forum – Sept. 12, 2012 Our Lab 98 INV Conf 92012 |
Investor and Analyst Forum – Sept. 12, 2012 Tank Farm 99 INV Conf 92012 |
Investor and Analyst Forum – Sept. 12, 2012 Protein Storage 100 INV Conf 92012 |
Investor and Analyst Forum – Sept. 12, 2012 Shipping Out 101 INV Conf 92012 |
Investor and Analyst Forum – Sept. 12, 2012 102 INV Conf 92012 Nationwide Service Facilities (Newark service area highlighted) |
Investor and Analyst Forum – Sept. 12, 2012 Questions? 103 INV Conf 92012 |