PR Newswire | Mar 2, 2021 04:25PM EST

Results

03/02 15:25 CST

Darling Ingredients Inc. Reports Fourth Quarter And Fiscal Year 2020 Financial Results IRVING, Texas, March 2, 2021

IRVING, Texas, March 2, 2021 /PRNewswire/ -- Darling Ingredients Inc. (NYSE: DAR, "Darling") --

Fourth Quarter 2020

* Net income of $44.7 million, or $0.27 per GAAP diluted share * Adjusted net income of $75.3 million, or $0.45 per diluted share, excluding the $30.6 million after-tax restructuring and asset impairment charge related to the shutdown of the company's biodiesel plants in Montreal, Quebec and Butler, Kentucky * Net Sales of $1.0 billion * Combined adjusted EBITDA of $214.5 million * Global Ingredients business record Q4 EBITDA of $146.3 million

Fiscal Year 2020

* Net income of $296.8 million, or $1.78 per GAAP diluted share * Adjusted net income of $327.4 million, or $1.96 per diluted share, excluding the $30.6 million after-tax restructuring and asset impairment charge related to the shutdown of the company's biodiesel plants in Montreal, Quebec and Butler, Kentucky * Net Sales of $3.6 billion * Combined adjusted EBITDA of $841.5 million * Global Ingredients business FY 2020 EBITDA of $504.2 million * Diamond Green Diesel sold a record 288 million gallons of renewable diesel at an average of $2.34 EBITDA per gallon

Darling reported net sales of $1.0 billion for the fourth quarter of 2020, as compared with net sales of $859.4 million for the same period a year ago. Net income attributable to Darling for the three months ended January 2, 2021 was $44.7 million, or $0.27 per diluted share, compared to a net income of $242.6 million, or $1.44 per diluted share, for the fourth quarter of 2019. Excluding the restructuring and asset impairment charge related to the shutdown of the company's 2 biodiesel locations, adjusted net income for the three months ended January 2, 2021 was $75.3 million, or $0.45 per diluted share. The results for the three months ending December 28, 2019 included retroactive blenders tax credit (BTC) for 2018 and all of 2019. Adjusted net income for the fourth quarter 2019, excluding the retroactive BTC of 2018 and the first three quarters of 2019, was $50.1 million, or $0.30 per diluted share.

"Our global ingredients business performed well in the fourth quarter of 2020 generating $146.3 million of EBITDA," said Randall C. Stuewe, Chairman and Chief Executive Officer of Darling Ingredients Inc. "We made the decision to shutdown operations of our two biodiesel plants due to unfavorable biodiesel industry economics and there are no current plans to resume biodiesel production at these facilities in the future. The closure of the facilities will create additional feedstock for growth of renewable diesel in our DGD Joint Venture."

"DGD met our expectation for 2020 selling 288 million gallons of renewable diesel at an average of $2.34 EBITDA per gallon," Stuewe added. The earnings of DGD have been consistent and steady over the last three years and based on the current environment, we believe that DGD should generate around $2.25 EBITDA per gallon for 2021. Also, we anticipate the startup of the 400 million gallon expansion in Norco, LA to commission in the fourth quarter, potentially adding some capacity to finish out the year," Stuewe added.

The leverage ratio as measured by the company's bank covenant was 1.90x at the end of the year. The company reduced its Term Loan B outstanding balance by $195 million during 2020. Capital expenditures totaled approximately $280 million for all of 2020, down $79 million from 2019, which was due to the company initiating a temporary reduction in non-essential capital expenditures in 2020.

For the 2020 fiscal year, Darling reported net sales of $3.6 billion, as compared with net sales of $3.4 billion for 2019. Net Income attributable to Darling for 2020 was $296.8 million, or $1.78 per diluted share, as compared to net income of $312.6 million, or $1.86 per diluted share, for 2019. Excluding the restructuring and asset impairment charge related to the shutdown of the company's two biodiesel locations, adjusted net income for 2020 was $327.4 million, or $1.96 per diluted share. Excluding the retroactive BTC related to 2018, adjusted net income for fiscal 2019 was $226.0 million, or $1.34 per diluted share.

As of January 2, 2021, Darling had $81.7 million in cash and cash equivalents, and $893.9 million available under its committed revolving credit agreement. Total debt outstanding at the end of the fiscal year was $1.5 billion.

Combined adjusted EBITDA was $214.5 million for the fourth quarter of 2020, compared to $193.3 million for the same period in 2019, excluding retroactive BTCs recorded in the 2019 fourth quarter. For the 2020 fiscal year, combined adjusted EBITDA totaled $841.5 million, compared to $739.7 million for fiscal year 2019, excluding the 2018 retroactive BTC.

Segment Financial Tables (in thousands)

Three Months Feed Food FuelEnded January Ingredients Ingredients Ingredients Corporate Total2, 2021

Net Sales $ 572,764 $ 344,631 $ 102,444 $ - $ 1,019,839

Cost of salesand operating 426,593 268,348 76,251 - 771,192expenses

Gross Margin $ 146,171 $ 76,283 $ 26,193 $ - $ 248,647

Loss/(gain) on (274) 512 (22) - 216sale of assets

Selling,general and 56,289 26,000 5,369 14,459 102,117administrativeexpenses

Restructuringand asset - - 38,167 - 38,167impairmentcharges

Depreciationand 61,219 22,827 9,513 2,908 96,467amortization

Equity in netincome of - - 62,684 - 62,684Diamond GreenDiesel

Segmentoperating $ 28,937 $ 26,944 $ 35,850 $ (17,367) $ 74,364income/(loss)

Equity in netincome of $ 726 $ - $ - $ - $ 726unconsolidatedsubsidiaries

Segment Income $ 29,663 $ 26,944 $ 35,850 $ (17,367) $ 75,090/(loss)

Segment EBITDA $ 90,156 $ 49,771 $ 20,846 $ (14,459) $ 146,314

DGD adjustedEBITDA $ - $ - $ 68,171 $ - $ 68,171(Darling'sShare)

Combinedadjusted $ 90,156 $ 49,771 $ 89,017 $ (14,459) $ 214,485EBITDA

Three Months Feed Food FuelEnded December Ingredients Ingredients Ingredients Corporate Total28, 2019

Net Sales $ 490,317 $ 288,619 $ 80,492 $ - $ 859,428

Cost of salesand operating 375,990 221,527 43,016 - 640,533expenses

Gross Margin $ 114,327 $ 67,092 $ 37,476 $ - $ 218,895

Loss/(gain) on (377) 343 297 - 263sale of assets

Selling,general and 57,872 29,234 2,179 19,669 108,954administrativeexpenses

Depreciationand 55,185 20,556 7,891 2,821 86,453amortization

Equity in netincome of - - 270,062 - 270,062Diamond GreenDiesel

Segmentoperating $ 1,647 $ 16,959 $ 297,171 $ (22,490) $ 293,287income/(loss)

Equity in netincome of $ 1,515 $ - $ - $ - $ 1,515unconsolidatedsubsidiaries

Segment income $ 3,162 $ 16,959 $ 297,171 $ (22,490) $ 294,802/(loss)

Segment EBITDA $ 56,832 $ 37,515 $ 35,000 $ (19,669) $ 109,678

DGD adjustedEBITDA $ - $ - $ 276,146 $ - $ 276,146(Darling'sShare)

Combinedadjusted $ 56,832 $ 37,515 $ 311,146 $ (19,669) $ 385,824EBITDA

Twelve Months Feed Food FuelEnded January Ingredients Ingredients Ingredients Corporate Total2, 2021

Net Sales $ 2,072,104 $ 1,185,701 $ 314,118 $ - $ 3,571,923

Cost of salesand operating 1,544,524 920,682 223,609 - 2,688,815expenses

Gross Margin $ 527,580 $ 265,019 $ 90,509 $ - $ 883,108

Loss/(gain) on 19 482 (75) - 426sale of assets

Selling,general and 209,748 97,406 16,014 55,328 378,496administrativeexpenses

Restructuringand asset - - 38,167 - 38,167impairmentcharges

Depreciationand 221,187 83,752 34,218 11,021 350,178amortization

Equity in netincome of - - 315,095 - 315,095Diamond GreenDiesel

Segmentoperating $ 96,626 $ 83,379 $ 317,280 $ (66,349) $ 430,936income/(loss)

Equity in netincome of $ 3,193 $ - $ - $ - $ 3,193unconsolidatedsubsidiaries

Segment income $ 99,819 $ 83,379 $ 317,280 $ (66,349) $ 434,129/(loss)

Segment EBITDA $ 317,813 $ 167,131 $ 74,570 $ (55,328) $ 504,186

DGD adjustedEBITDA $ - $ - $ 337,348 $ - $ 337,348(Darling'sShare)

Combinedadjusted $ 317,813 $ 167,131 $ 411,918 $ (55,328) $ 841,534EBITDA

Twelve Months Feed Food FuelEnded December Ingredients Ingredients Ingredients Corporate Total28, 2019

Net Sales $ 1,970,561 $ 1,119,085 $ 274,259 $ - $ 3,363,905

Cost of salesand operating 1,519,596 864,618 204,871 - 2,589,085expenses

Gross Margin $ 450,965 $ 254,467 $ 69,388 $ - $ 774,820

Loss/(gain) on (7,720) (13,175) 313 - (20,582)sale of assets

Selling,general and 200,487 97,363 2,762 57,911 358,523administrativeexpenses

Depreciationand 203,456 79,671 31,946 10,437 325,510amortization

Equity in netincome of - - 364,452 - 364,452Diamond GreenDiesel

Segmentoperating $ 54,742 $ 90,608 $ 398,819 $ (68,348) $ 475,821income/(loss)

Equity in netincome of $ 428 $ - $ - $ - $ 428unconsolidatedsubsidiaries

Segment income $ 55,170 $ 90,608 $ 398,819 $ (68,348) $ 476,249/(loss)

Segment EBITDA $ 258,198 $ 170,279 $ 66,313 $ (57,911) $ 436,879

DGD adjustedEBITDA $ - $ - $ 389,416 $ - 389,416(Darling'sShare)

Combinedadjusted $ 258,198 $ 170,279 $ 455,729 $ (57,911) $ 826,295EBITDA

Darling Ingredients Inc. and Subsidiaries

Consolidated Balance Sheets

January 2, 2021 and December 28, 2019

(in thousands)

January 2, December 28,

2021 2019

ASSETS

Current assets:

Cash and cash equivalents $ 81,617 $ 72,935

Restricted cash 103 110

Accounts receivable, net 405,387 406,338

Inventories 405,922 362,957

Prepaid expenses 47,793 46,599

Income taxes refundable 3,883 3,317

Other current assets 42,289 25,032

Total current assets 986,994 917,288

Property, plant and equipment, net 1,863,814 1,802,411

Intangible assets, net 473,680 526,394

Goodwill 1,260,240 1,223,291

Investment in unconsolidated subsidiaries 804,682 689,354

Operating lease right-of-use assets 146,563 124,726

Other assets 60,682 47,400

Deferred income taxes 16,676 14,394

$ 5,613,331 $ 5,345,258

LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:

Current portion of long-term debt $ 27,538 $ 90,996

Accounts payable, principally trade 255,340 239,252

Income taxes payable 17,497 8,895

Current operating lease liabilities 39,459 37,805

Accrued expenses 335,471 311,391

Total current liabilities 675,305 688,339

Long-term debt, net of current portion 1,480,531 1,558,429

Long-term operating lease liabilities 109,707 91,424

Other noncurrent liabilities 117,371 115,785

Deferred income taxes 276,208 247,931

Total liabilities 2,659,122 2,701,908

Commitments and contingencies

Total Darling's stockholders' equity 2,891,909 2,565,819

Noncontrolling interests 62,300 77,531

Total stockholders' equity $ 2,954,209 $ 2,643,350

$ 5,613,331 $ 5,345,258

Darling Ingredients Inc. and Subsidiaries

Consolidated Operating Results

For the Three-Month and Twelve-Month Periods Ended January 2, 2021 and December28, 2019

(in thousands, except per share data)

Three Months Ended Twelve Months Ended

(unaudited) $ Change $ Change

January 2, December 28, Favorable January 2, December 28, Favorable

2021 2019 (Unfavorable) 2021 2019 (Unfavorable)

Net sales $ 1,019,839 $ 859,428 $ 160,411 $ 3,571,923 $ 3,363,905 $ 208,018

Costs andexpenses:

Cost of sales and operating 771,192 640,533 (130,659) 2,688,815 2,589,085 (99,730) expenses

Loss (gain) on 216 263 47 426 (20,582) (21,008) sale of assets

Selling, general and 102,117 108,954 6,837 378,496 358,523 (19,973) administrative expenses

Restructuring and asset 38,167 - (38,167) 38,167 - (38,167) impairment charges

Depreciation and 96,467 86,453 (10,014) 350,178 325,510 (24,668) amortization

Total costs and 1,008,159 836,203 (171,956) 3,456,082 3,252,536 (203,546)expenses

Equity in net income of 62,684 270,062 (207,378) 315,095 364,452 (49,357) Diamond Green Diesel

Operating 74,364 293,287 (218,923) 430,936 475,821 (44,885)income

Other expense:

Interest (16,883) (18,586) 1,703 (72,686) (78,674) 5,988 expense

Debt extinguishment - - - - (12,126) 12,126 costs

Foreign (1,581) (657) (924) (2,290) (1,311) (979) currency loss

Gain on disposal of - 2,967 (2,967) 2,967 (2,967) subsidiaries

Other income (256) 487 (743) (5,534) (6,671) 1,137 (expense), net

Total other (18,720) (15,789) (2,931) (80,510) (95,815) 15,305expense

Equity in netincome of 726 1,515 (789) 3,193 428 2,765unconsolidatedsubsidiaries

Income fromoperations 56,370 279,013 (222,643) 353,619 380,434 (26,815)before incometaxes

Income tax 10,231 35,567 25,336 53,289 59,467 6,178expense

Net income 46,139 243,446 (197,307) 300,330 320,967 (20,637)

Net incomeattributable to (1,394) (837) (557) (3,511) (8,367) 4,856noncontrollinginterests

Net incomeattributable to $ 44,745 $ 242,609 $ (197,864) $ 296,819 $ 312,600 $ (15,781)Darling

Basic income $ 0.28 $ 1.48 $ (1.20) $ 1.83 $ 1.90 $ (0.07)per share:

Diluted income $ 0.27 $ 1.44 $ (1.17) $ 1.78 $ 1.86 $ (0.08)per share:

Number ofdiluted common 167,920 168,152 167,208 168,378shares:

Darling Ingredients Inc. and Subsidiaries

Consolidated Statement of Cash Flows

Periods Ended January 2, 2021 and December 28, 2019

(in thousands)

Twelve Months Ended

Jan 2, Dec 28,

Cash flows from operating activities: 2021 2019

Net income $ 300,330 $ 320,967

Adjustments to reconcile net income to net cash provided by operating activities:

Depreciation and amortization 350,178 325,510

Deferred income taxes 15,814 20,530

Loss/(gain) on sale of assets 426 (20,582)

Gain on disposal of subsidiaries - (2,967)

Asset impairment 37,802

Gain on insurance proceeds from insurance settlement (293) (6,600)

Increase (decrease) in long-term pension liability (6,555) 1,831

Stock-based compensation expense 23,222 21,007

Debt extinguishment costs - 12,126

Write-off deferred loan costs 3,052 270

Deferred loan cost amortization 5,357 5,846

Equity in net income of Diamond Green Diesel and other (318,288) (364,880) unconsolidated subsidiaries

Distributions of earnings from Diamond Green Diesel and other 207,328 69,213 unconsolidated subsidiaries

Changes in operating assets and liabilities, net of effects from acquisitions:

Accounts receivable 22,362 (26,086)

Income taxes refundable/payable 4,200 9,542

Inventories and prepaid expenses (18,666) (39,111)

Accounts payable and accrued expenses 11,200 32,436

Other (12,818) 3,569

Net cash provided by operating activities 624,651 362,621

Cash flows from investing activities:

Capital expenditures (280,115) (359,498)

Acquisitions, net of cash acquired (29,793) (1,431)

Investment in unconsolidated subsidiaries - (2,000)

Proceeds from sale of investment in subsidiaries - 3,671

Gross proceeds from disposal of property, plant and equipment 2,797 18,235 and other assets

Proceeds from insurance settlement 293 6,600

Payments related to routes and other intangibles (3,810) (3,651)

Net cash used in investing activities (310,628) (338,074)

Cash flows from financing activities:

Proceeds from long-term debt 34,569 517,606

Payments on long-term debt (232,726) (581,163)

Borrowings from revolving credit facility 495,691 469,227

Payments on revolving credit facility (480,604) (461,669)

Net cash overdraft financing (37,692) 38,367

Deferred loan costs (4,292) (7,027)

Issuance of common stock 67 39

Repurchase of common stock (55,044) (19,260)

Minimum withholding taxes paid on stock awards (11,918) (4,472)

Acquisition of noncontrolling interest (8,784) -

Distributions to noncontrolling interests (6,253) (6,533)

Net cash used in financing activities (306,986) (54,885)

Effect of exchange rate changes on cash flows 1,638 (3,986)

Net increase / (decrease) in cash, cash equivalents and 8,675 (34,324)restricted cash

Cash, cash equivalents and restricted cash at beginning of year 73,045 107,369

Cash, cash equivalents and restricted cash at end of period $ 81,720 $ 73,045

Supplemental disclosure of cash flow information:

Accrued capital expenditures $ (4,967) $ 6,714

Cash paid during the period for:

Interest, net of capitalized interest $ 66,216 $ 79,132

Income taxes, net of refunds $ 36,779 $ 29,778

Non-cash operating activities:

Operating lease right of use obtained in exchange for new $ 58,052 $ 40,596 lease liabilities

Non-cash financing activities:

Debt issued for service contract assets $ 8,123 $ 25

Diamond Green Diesel Joint Venture

Condensed Consolidated Balance Sheets

December 31, 2020 and December 31, 2019

(in thousands)

December 31, December 31,

2020 2019

Assets:

Total current assets $ 383,557 $ 668,026

Property, plant and equipment, net 1,238,726 713,489

Other assets 36,082 30,710

Total assets $ 1,658,365 $ 1,412,225

Liabilities and members' equity:

Total current portion of long term debt $ 517 $ 341

Total other current liabilities 99,787 75,802

Total long term debt 8,705 8,742

Total other long term liabilities 3,758 4,422

Total members' equity 1,545,598 1,322,918

Total liabilities and members' equity $ 1,658,365 $ 1,412,225

Diamond Green Diesel Joint Venture

Operating Financial Results

For the Three-Month and Twelve-Month Periods Ended December 31, 2020 andDecember 31, 2019

(in thousands)

Three Months Ended Twelve Months Ended

(unaudited) $ Change $ Change

December 31, December 31, Favorable December 31, December 31, Favorable

Revenues: 2020 2019 (Unfavorable) 2020 2019 (Unfavorable)

Operating $ 266,760 $ 357,857 $ (91,097) $ 1,267,477 $ 1,217,504 $ 49,973 revenues

Expenses:

Total costs and expenses less depreciation, 130,417 (194,437) (324,854) 592,781 438,672 (154,109) amortization and accretion expense

Depreciation, amortization 11,222 12,193 971 44,882 50,767 5,885 and accretion expense

Total costs 141,639 (182,244) (323,883) 637,663 489,439 (148,224)and expenses

Operating 125,121 540,101 (414,980) 629,814 728,065 (98,251) income

Other income 560 340 220 1,636 2,121 (485)

Interest and debt (313) (317) 4 (1,260) (1,282) 22 expense, net

Net income $ 125,368 $ 540,124 $ (414,756) $ 630,190 $ 728,904 $ (98,714)

Darling Ingredients Inc. reports Adjusted EBITDA results, which is a Non-GAAP financial measure, as a complement to results provided in accordance with generally accepted accounting principles (GAAP) (for additional information, see "Use of Non-GAAP Financial Measures" included later in this media release). The Company believes that Adjusted EBITDA provides additional useful information to investors. Adjusted EBITDA, as the Company uses the term, is calculated below:

Reconciliation of Net Income to (Non-GAAP) Adjusted EBITDA and (Non-GAAP) Proforma Adjusted EBITDA

For the Three-Month and Twelve-Month Periods Ended January 2, 2021 and December28, 2019

Three Months Ended Twelve Months Ended

Adjusted EBITDA January 2, December 28, January 2, December 28,

(U.S. dollars in 2021 2019 2021 2019thousands)

Net incomeattributable to $ 44,745 $ 242,609 $ 296,819 $ 312,600Darling

Depreciation and 96,467 86,453 350,178 325,510amortization

Interest expense 16,883 18,586 72,686 78,674

Income tax expense 10,231 35,567 53,289 59,467

Restructuring andasset impairment 38,167 - 38,167 -charges

Foreign currency loss 1,581 657 2,290 1,311

Other (income) 256 (487) 5,534 6,671expense, net

Debt extinguishment - - - 12,126costs

Gain on disposal of - (2,967) - (2,967)subsidiaries

Equity in net incomeof Diamond Green (62,684) (270,062) (315,095) (364,452)Diesel

Equity in net incomeof unconsolidated (726) (1,515) (3,193) (428)subsidiaries

Net incomeattributable to 1,394 837 3,511 8,367noncontrollinginterests

Adjusted EBITDA $ 146,314 $ 109,678 $ 504,186 $ 436,879 (Non-GAAP)

Foreign currency (6,826) (1) - (6,419) (2) -exchange impact

Pro forma Adjusted EBITDA to Foreign $ 139,488 $ 109,678 $ 497,767 $ 436,879 Currency (Non-GAAP)

DGD Joint VentureAdjusted EBITDA $ 68,171 $ 276,146 $ 337,348 $ 389,416(Darling's Share)

Darling plus Darling'sshare of DGD Joint $ 214,485 $ 385,824 $ 841,534 $ 826,295Venture AdjustedEBITDA

(1) The average rate assumption used in this calculation was the actual fiscalaverage rate for the three months ended January 2, 2021 of (eu)1.00:USD$1.19and CAD$1.00:USD$0.77, as compared to the average rate for the three monthsended December 28, 2019 of (eu)1.00:USD$1.11 and CAD$1.00:USD$0.75,respectively.

(2) The average rate assumption used in this calculation was the actual fiscalaverage rate for the twelve months ended January 2, 2021 of (eu)1.00:USD$1.14and CAD$1.00:USD$0.75, as compared to the average rate for the twelve monthsended December 28, 2019 of (eu)1.00:USD$1.12 and CAD$1.00:USD$0.75,respectively.

About Darling

Darling Ingredients Inc. (NYSE: DAR) is one of the world's leading producers of organic ingredients, producing a wide array of sustainable protein and fat products while being one of the largest producers of renewable clean energy. With operations on five continents, Darling collects waste streams from the agri-food industry, repurposing into specialty ingredients, such as hydrolyzed collagen, edible and feed-grade fats, animal proteins and meals, plasma, pet food ingredients, fuel feedstocks, and green bioenergy. The Company sells its products around the globe and works to strengthen our promise for a better tomorrow, creating product applications for health, nutrients and bioenergy while optimizing our services to the food chain. Darling is a 50% joint partner in Diamond Green Diesel (DGD), North America's largest renewable diesel manufacturer, currently producing approximately 290 million gallons of renewable diesel annually which products reduce Green House Gas (GHG) emissions by up to 85% compared to fossil fuels. For additional information, visit the Company's website at http://www.darlingii.com. For more information on Darling's ESG efforts, visit http://www.darlingii.com/csr.

Darling Ingredients Inc. will host a conference call to discuss the Company's fourth quarter and fiscal year 2020 financial results at 9:00 am Eastern Time (8:00 am Central Time) on Wednesday, March 3, 2021. To listen to the conference call, participants calling from within North America should dial 1-844-868-8847; international participants should dial 1-412-317-6593. Please refer to access code 10151509. Please call approximately ten minutes before the start of the call to ensure that you are connected.

The call will also be available as a live audio webcast that can be accessed on the Company website at http://ir.darlingii.com. Beginning one hour after its completion, a replay of the call can be accessed through March 10, 2021, by dialing 1-877-344-7529 (U.S. callers), 1-855-669-9658 (Canada) and 1-412-317-0088 (international callers). The access code for the replay is 10151509. The conference call will also be archived on the Company's website.

Use of Non-GAAP Financial Measures:

Adjusted EBITDA is not a recognized accounting measurement under GAAP; it should not be considered as an alternative to net income, as a measure of operating results, or as an alternative to cash flow as a measure of liquidity and is not intended to be a presentation in accordance with GAAP. Adjusted EBITDA is presented here not as an alternative to net income, but rather as a measure of the Company's operating performance. Since EBITDA (generally, net income plus interest expense, taxes, depreciation and amortization) is not calculated identically by all companies, this presentation may not be comparable to EBITDA or Adjusted EBITDA presentations disclosed by other companies. Adjusted EBITDA is calculated in this presentation and represents, for any relevant period, net income/(loss) plus depreciation and amortization, goodwill and long-lived asset impairment, interest expense, (income)/loss from discontinued operations, net of tax, income tax provision, other income/(expense) and equity in net loss of unconsolidated subsidiary. Management believes that Adjusted EBITDA is useful in evaluating the Company's operating performance compared to that of other companies in its industry because the calculation of Adjusted EBITDA generally eliminates the effects of financing, income taxes and certain non-cash and other items that may vary for different companies for reasons unrelated to overall operating performance.

As a result, the Company's management uses Adjusted EBITDA as a measure to evaluate performance and for other discretionary purposes. In addition to the foregoing, management also uses or will use Adjusted EBITDA to measure compliance with certain financial covenants under the Company's Senior Secured Credit Facilities, 5.25% Notes and 3.625% Notes that were outstanding at January 2, 2021. However, the amounts shown in this presentation for Adjusted EBITDA differ from the amounts calculated under similarly titled definitions in the Company's Senior Secured Credit Facilities, 5.25% Notes and 3.625% Notes, as those definitions permit further adjustments to reflect certain other non-recurring costs, non-cash charges and cash dividends from the DGD Joint Venture. Additionally, the Company evaluates the impact of foreign exchange impact on operating cash flow, which is defined as segment operating income (loss) plus depreciation and amortization.

Cautionary Statements Regarding Forward-Looking Information:

{This media release contains "forward-looking" statements regarding the business operations and prospects of Darling Ingredients Inc. and industry factors affecting it. These statements are identified by words such as "believe," "anticipate," "expect," "estimate," "intend," "could," "may," "will," "should," "planned," "potential," "continue," "momentum," and other words referring to events that may occur in the future. These statements reflect Darling Ingredient'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, each of which could cause actual results to differ materially from those indicated in the forward-looking statements. These factors include, among others, existing and unknown future limitations on the ability of the Company's direct and indirect subsidiaries to make their cash flow available to the Company for payments on the Company's indebtedness or other purposes; 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 and selling prices for the Company's products; reductions in raw material volumes available to the Company due to weak margins in the meat production industry as a result of higher feed costs, reduced consumer demand or other factors, reduced volume from food service establishments, or otherwise; reduced demand for animal feed; reduced finished product prices, including a decline in fat and used cooking oil finished product prices; changes to worldwide government policies relating to renewable fuels and greenhouse gas("GHG") emissions that adversely affect programs like the U.S. government's renewable fuel standard, low carbon fuel standards ("LCFS") and tax credits for biofuels both in the United States and abroad; possible product recall resulting from developments relating to the discovery of unauthorized adulterations to food or food additives; the occurrence of 2009 H1N1 flu (initially known as "Swine Flu"), Highly pathogenic strains of avian influenza (collectively known as "Bird Flu"), severe acute respiratory syndrome ("SARS"), bovine spongiform encephalopathy (or "BSE"), porcine epidemic diarrhea ("PED") or other diseases associated with animal origin in the United States or elsewhere, such as the outbreak of African Swine Fever ("ASF") in China and elsewhere; the occurrence of pandemics, epidemics or disease outbreaks, such as the current COVID-19 outbreak; unanticipated costs and/or reductions in raw material volumes related to the Company's compliance with the existing or unforeseen new U.S. or foreign (including, without limitation, China) regulations (including new or modified animal feed, Bird Flu, SARS, PED, BSE, ASF or similar or unanticipated regulations) affecting the industries in which the Company operates or its value added products; risks associated with the DGD Joint Venture, including possible unanticipated operating disruptions and issues relating to the announced expansion project; risks and uncertainties relating to international sales and operations, including imposition of tariffs, quotas, trade barriers and other trade protections imposed by foreign countries; difficulties or a significant disruption in our information systems or failure to implement new systems and software successfully, risks relating to possible third party claims of intellectual property infringement; increased contributions to the Company's pension and benefit plans, including multiemployer and employer-sponsored defined benefit pension plans as required by legislation, regulation or other applicable U.S. or foreign law or resulting from a U.S. mass withdrawal event; bad debt write-offs; loss of or failure to obtain necessary permits and registrations; continued or escalated conflict in the Middle East, North Korea, Ukraine or elsewhere; uncertainty regarding the exit of the U.K. from the European Union; and/or unfavorable export or import markets. These factors, coupled with volatile prices for natural gas and diesel fuel, climate conditions, currency exchange fluctuations, general performance of the U.S. and global economies, disturbances in world financial, credit, commodities and stock markets, and any decline in consumer confidence and discretionary spending, including the inability of consumers and companies to obtain credit due to lack of liquidity in the financial markets, among others, could cause actual results to vary materially from the forward looking statements included in this release or negatively impact the Company's results of operations. Among other things, future profitability may be affected by the Company's ability to grow its business, which faces competition from companies that may have substantially greater resources than the Company. The Company's announced share repurchase program may be suspended or discontinued at any time and purchases of shares under the program are subject to market conditions and other factors, which are likely to change from time to time. Other risks and uncertainties regarding Darling Ingredients Inc., its business and the industries in which it operates are referenced from time to time in the Company's filings with the Securities and Exchange Commission. Darling Ingredients Inc. 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.}

For More Information, contact:

Jim Stark, Vice President, Investor Relations Email : james.stark@darlingii.com

5601 MacArthur Blvd., Irving, Texas 75038 Phone : 972-281-4823

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SOURCE Darling Ingredients Inc.