Third Quarter 2024 Overview
Darling Ingredients Inc. today reported net income of $16.9 million, or $0.11 per diluted share for the third quarter of 2024. This represents a significant decline compared to net income of $125.0 million, or $0.77 per diluted share, in the third quarter of 2023. The notable decrease in net income is attributed to lower fat prices and reduced earnings within its Diamond Green Diesel joint venture.
Financial Highlights
The company achieved total net sales of $1.4 billion during the third quarter of 2024, down from $1.6 billion reported for the same period last year. This reduction is primarily due to lower finished product pricing, which has been heavily influenced by the prevailing market conditions.
Debt Reduction and Cash Flow Management
Despite the challenges in the market, Randall C. Stuewe, Chairman and Chief Executive Officer, noted that the core ingredients cash flow and dividends from the Diamond Green Diesel venture enabled the company to reduce its debt by approximately $192 million. He expressed optimism about the future, stating that the environment for 2025 appears promising with advancements in their sustainable aviation fuel plant and supportive regulatory frameworks promoting waste fats and oils for renewable fuels.
Year-to-Date Performance
In the nine months ended September 28, 2024, Darling Ingredients reported net sales of $4.3 billion, a decrease from $5.2 billion during the same period in 2023. The first nine months of 2024 saw net income of $177.0 million, or $1.10 per diluted share, compared to $563.2 million, or $3.47 per diluted share, reported for the corresponding period in 2023.
Diamond Green Diesel Contributions
During Q3 2024, Diamond Green Diesel sold approximately 316.6 million gallons of renewable diesel at an average EBITDA of $0.25 per gallon. The Darling Ingredients received $111.2 million cash dividends from the joint venture, and year-to-date sales volumes reached nearly 959.5 million gallons with an average EBITDA of $0.48.
Future Outlook and Guidance
Looking forward, Darling Ingredients anticipates earnings in the range of $1.15 billion to $1.175 billion in combined adjusted EBITDA for the full fiscal year. These expectations are grounded in the assumption of stable raw material volumes against the backdrop of ongoing volatility in global commodity markets.
Capital Expenditures and Financial Position
As of September 28, 2024, the company held $114.8 million in cash and cash equivalents, coupled with $1.0 billion available under its revolving credit agreement. The outstanding debt stood at $4.25 billion with a projected leverage ratio of 4.04x. Darling’s capital expenditures were noted at $67.4 million for Q3 2024 and $259.1 million for the year-to-date ending September 28, 2024.
About Darling Ingredients Inc.
Darling Ingredients Inc. operates over 260 facilities in more than 15 countries, processing approximately 15% of the world’s animal agricultural by-products, and is recognized as a leading player in the circular economy among food and renewable energy sectors. The company produces significant volumes of collagen, gelatin, and renewable energy, contributing to its diversified revenue stream.
Investor Communication
Darling Ingredients Inc. will conduct a conference call to discuss financial results on an upcoming date indicated in their announcements, providing a platform for questions on operations and guidance moving forward.
Frequently Asked Questions
1. What were the main reasons for the decline in net income?
The decline in net income was primarily driven by lower prices for fats and decreased earnings from the Diamond Green Diesel joint venture.
2. How did total net sales compare year-over-year?
Total net sales for Q3 2024 were $1.4 billion compared to $1.6 billion in Q3 2023, indicating a significant drop influenced by market conditions.
3. What steps is Darling Ingredients taking to manage its debt?
The company successfully reduced debt by approximately $192 million, supported by strong cash flows from core ingredients and dividends from their joint venture.
4. What is the outlook for Darling Ingredients in 2025?
Management expresses cautious optimism, citing favorable conditions for growth, particularly in renewable fuels, aligned with ongoing regulatory support.
5. What are the company’s capital expenditures for the year?
Darling Ingredients reported capital expenditures of $259.1 million as of September 28, 2024.
