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| 8-K - DARLING INTERNATIONAL 8-K 5-14-2010 - DARLING INGREDIENTS INC. | form8k.htm |
Investor Presentation
BMO Capital Markets
2010 Agriculture, Protein & Fertilizer Conference
May 2010
NYSE: DAR
2
Forward-Looking Statements
This presentation contains forward-looking statements regarding the business
operations of Darling and the industry in which it operates. These statements are
identified by words such as “may,” “will,” “expect,” “believe,” “intend,” “anticipate,”
“should,” “estimate,” “continue,” 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 business and economic conditions in its existing
markets that 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.
operations of Darling and the industry in which it operates. These statements are
identified by words such as “may,” “will,” “expect,” “believe,” “intend,” “anticipate,”
“should,” “estimate,” “continue,” 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 business and economic conditions in its existing
markets that 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.
Rendering = ReCYCLING
Mission Critical,
Necessary,
Essential and
Sustainable
Necessary,
Essential and
Sustainable
4
Sustaining
Innovating
Renewing
“Darling International Inc. is
America’s leading provider of
rendering, recycling and recovery
solutions to the nation’s food industry
… converting valuable waste streams
into sustainable feed and fuel products.”
America’s leading provider of
rendering, recycling and recovery
solutions to the nation’s food industry
… converting valuable waste streams
into sustainable feed and fuel products.”
The Original Recycler
5
Founded in 1882
Headquartered in Dallas, TX
1870 employees
Public since 1994
NYSE listed (DAR)
Reports under two segments:
– Rendering
– Restaurant services
Green when green was just a color!
6
The only recycling/rendering company with a national footprint operating in 42 states
- Network of 45 processing facilities from coast to coast
- Supported by 36 accumulation centers.
- Supported by 36 accumulation centers.
With a National Platform…
Producing sustainable green ingredients for feed and fuel
Rendering of Fat and Bone
Tallow
Meat & Bone Meal
Pet
Food
Food
Poultry
Feed
Feed
Hog
Food
Food
Animal
Feed
Feed
Pet
Food
Food
Renewable
Fuels
Fuels
Soap
Linoleic
Acid
Acid
Oleic
Acid
Acid
Glycerine
Stearic
Acid
Acid
Fertilizer
Lubricants
Textiles
Plastics
Shampoo
Emulsifiers
Cleaners
Creams
Esters
Paints
Plastics
Lubricants
Inks
Glues
Solvents
Antifreeze
Explosives
Rubber
Plastics
Tires
Lubricants
Finished
Products
Products
Component By-
Products
Products
Component By-
Products
Applications
Products
Applications
7
8
Animal
Feed
Feed
Lubricants
Textiles
Plastics
Cleaners
Rubber
Plastics
Tires
Lubricants
Component By-
Products Applications
Products Applications
Chemical
uses
Industrial
uses
Boiler fuel
Biodiesel
Green diesel
Energy
Finished
Products
Products
Renewable
Fuels
Fuels
Producing sustainable green ingredients for feed and fuel
9
Animal and food by-product recycling industry is “mission critical” in the
food supply chain and is the most efficient and environmentally sound
disposal alternative for a sustainable society.
food supply chain and is the most efficient and environmentally sound
disposal alternative for a sustainable society.
Over 30 million tons of inedible by-products generated annually from
meat packers, poultry processors and retail food stores.
meat packers, poultry processors and retail food stores.
Source: NRA/Harvard Risk Assessment
A Proven Industry Leader…
10
Reporting Segments:
Rendering
Restaurant Services
Darling is the only US provider of collection, storage, transport, and recycling of
old grease on a national scale.
old grease on a national scale.
11
The Business Model
Darling operates a fleet of approx 1,000 trucks to collect raw materials from approx
110,000 food service establishments, butcher shops, grocery stores, and independent
meat and poultry processors nationwide and delivers the material back to one of its 45
processing plants.
110,000 food service establishments, butcher shops, grocery stores, and independent
meat and poultry processors nationwide and delivers the material back to one of its 45
processing plants.
“Formula” basis: Applied to approx 53% of Darling’s annual raw material volume; cost is
tied to published finished product commodity prices after deducting a fixed service
charge.
tied to published finished product commodity prices after deducting a fixed service
charge.
“Non-formula” basis: Applied to remaining volume; suppliers are either paid a fixed
price, are not paid, or are charged for the expense of collection, depending on various
economic and competitive factors
price, are not paid, or are charged for the expense of collection, depending on various
economic and competitive factors
Darling markets finished products worldwide.
Primarily BFT and YG, and also MBM, a protein;
Oils used in pet food, animal feed, soaps and biofuels;
Oleo-chemical producers use oils to produce ingredients for paint,
rubber, paper, concrete, plastics;
MBM is used as high protein additives in pet food and animal feed
Primarily BFT and YG, and also MBM, a protein;
Oils used in pet food, animal feed, soaps and biofuels;
Oleo-chemical producers use oils to produce ingredients for paint,
rubber, paper, concrete, plastics;
MBM is used as high protein additives in pet food and animal feed
Trucking
Raw Material
Procurement
Procurement
Global
Ingredient
Sales
Ingredient
Sales
Rendering - Turning this …
Meat scrap
Bones and fat
Blood
Dead animals
Feathers
12
… into This
Restaurant Services Overview
Basic Cooking Oil Removal (COR) Service
– Complete, individualized used cooking oil collection services
offered nationwide - recycling 100% of the
used oil we collect
offered nationwide - recycling 100% of the
used oil we collect
– Operates in 20 markets
– Customers represent FSEs, malls and industrial food processors
CleanStar® Used Cooking Oil Storage Tank System
– Premium service offered in conjunction with COR
– Installed inside or outside, this self-contained storage system offers a
clean, efficient and safe storage and collection option
clean, efficient and safe storage and collection option
14
One-stop National Approach
to your food waste recycling needs
to your food waste recycling needs
Darling International is:
America’s leading independent renderer and recycler
A diversified national platform with scale
A time proven business
Solid balance sheet
Experienced management team
A track record of growth
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16
Core Business Growth through Acquisition
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March
03
03
Dec
04
04
May
06
06
July
07
07
Dec
08
08
Feb
09
09
Aug
08
08
Oct
05
05
Enviro Vac,
Inc.
Inc.
FL, GA
KC metro
NYC metro
GA
GA
Socal
TX
Burrows Industries, Inc.
dba Minuteman Pumping
dba Minuteman Pumping
Ace Grease
Service
Service
J&R
Rendering, Inc.
Rendering, Inc.
Southeastern
Maintenance &
Construction Inc.
Maintenance &
Construction Inc.
National
By-Products, LLC
By-Products, LLC
API Recycling,
div of American
Proteins Inc.
div of American
Proteins Inc.
Boca
Transport, Inc.
Transport, Inc.
Midwest
US
US
Sanimax
USA
USA
Great
Lakes
Lakes
Dec
09
09
Uniquely positioned to grow again
RFS 2…mandates apply!
“Similar to owning the oil field”
Not a food oil
Source: National Biodiesel Board.
Like owning an oil field!
MIDWESTERN
FEEDSTOCK
Coldwater Indianapolis
Mason City Chicago
Berlin Blue Earth
Sioux City Denver
Omaha (3) Bellevue
Des Moines Clinton
St. Louis Kansas City
Wichita Tulsa
Little Rock Dallas
Houston
WESTERN
FEEDSTOCK
EASTERN
FEEDSTOCK
Los Angeles
Las Vegas
Fresno
Turlock
San Francisco
Boise
Tacoma
Cleveland
Kendallville
Newark
Florida
Georgia
Representing about 15% of US Supply!....200mm gallons.
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Darling’s fats and oils have limited uses
Feed
Fat calories supplement corn calories…..
2001 .11 .10 (.01) .14 .13
2002 .10 .12 (.02) .14 .12
2003 .12 .17 (.05) .14 .09
2004 .16 .17 (.01) .14 .13
2005 .24 .17 .07 .14 .21
2006 .27 .16 .11 .14 .25
2007 .30 .26 .04 .14 .18
2008 .41 .32 .09 .14 .23
2009 .20 .22 (.02) .14 .12
AVERAGE .21 .19 .02 .14 .16
Worth more as a fuel….
Per # price
Diesel fuel
Per # price
Tallow/YG
Per # premium
Fuel to feed
Per # value
Tax credit
Per # premium
Fuel after tax credit
Feed or Fuel: Own the arbitrage
21
Bio-fuels represent a significant margin opportunity
Waste fats and greases are the cheapest feedstock
RFS2 mandates will drive margin
Identified as most efficient technology for conversion of DAR fats and
greases
greases
Customer driven solution…. Oil company friendly
or
22
A proposed 50/50 Joint Venture Company
between Darling and Valero
between Darling and Valero
Green Diesel
Animal fat based bio-diesel (TME)
has not been embraced because of
cold flow properties… hard to handle in the
distribution system and variable quality.
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Petro-Diesel
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Biodiesel (FAME)
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Green Diesel
|
|
NOx Emission
|
Baseline
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+ 10
|
-10 to 0
|
|
Cetane
|
40-55
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50-65
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75-90
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|
Cold flow properties
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Baseline
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Poor
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Excellent
|
|
Oxidative stability
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Baseline
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Poor
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Excellent
|
|
Energy content
|
Baseline
|
Lower
|
Similar
|
|
Pipeline ready
|
Yes
|
NO
|
Yes
|
23
OVERVIEW OF ST. CHARLES REFINERY/GREEN DIESEL LOCATION
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A 50/50 Joint Venture
UOP Technology selected
Desmet Ballestra designed pre-treat
Darling to supply the feedstock
Valero to market the fuel
Integrated and operated within the Valero infrastructure
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Department of Energy Loan Process
Applied for Dept. of Energy Loan Guarantee Program
In Phase III of due diligence
— Technology review
— Marketing review
— Environmental assessment
— Financial modeling
Detailed engineering proceeding
Air permit has been received
26
March 2010
NYSE: DAR
Our Financials
Our Financials
Historical Revenue
29
Operating Cash Flows
(in $ millions)
Key Financials
30
In $ millions
Capital Expenditures
31
$ millions
Balance Sheet
32
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April 3, 2010
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April 4, 2009
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|
|
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|
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CASH
|
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$ 77,106
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|
$ 38,608
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|
|
ACCOUNTS RECEIVABLE
|
|
47,927
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|
41,337
|
|
|
INVENTORIES
|
|
20,698
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|
18,142
|
|
|
INCOME TAXES REFUNDABLE
|
|
168
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|
11,098
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OTHER CURRENT ASSETS
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|
13,787
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|
13,356
|
|
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TOTAL CURRENT ASSETS
|
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159,686
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122,541
|
|
|
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PROPERTY, PLANT & EQUIP
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150,612
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147,692
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GOODWILL
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79,085
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66,958
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OTHER
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47,664
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51,088
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TOTAL ASSETS
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$ 437,047
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$ 388,279
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CURRENT PORTION - DEBT
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$ 5,009
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$ 5,000
|
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A/P AND ACCRUED EXPENSES
|
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65,913
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54,496
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TOTAL CURRENT LIABILITIES
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70,922
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59,496
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LONG-TERM DEBT, LESS CURRENT
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26,287
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31,250
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OTHER LIABILITIES
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41,380
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54,278
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TOTAL LIABILITIES
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138,589
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145,024
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STOCKHOLDERS' EQUITY
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298,458
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243,255
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TOTAL LIABILITIES AND EQUITY
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$ 437,047
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$ 388,279
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Climate Change
and
Carbon Impact
and
Carbon Impact
33
Darling Captures and Recycles Carbon
(Emissions per 1000 lb raw material)
Rendering
Facility
64 kg CO2
Industrial uses
and biofuels
and biofuels
Feed
|
Material Darling recycles in a year:
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Carbon Darling captures, lb/year
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1.23 billion
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CO2 Darling avoids, metric ton/year
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2.1 million
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CO2 emitted per metric ton avoided
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0.14 metric ton
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GHG avoided ,metric ton/year*
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4 million
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*Avoided when materials are rendered rather than composted, based on a study by Xu et al., 2008
Animal
Byproducts
&
Mortalities
Byproducts
&
Mortalities
34
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The Original RECYCLING COMPANY….
The
CARBON FRIENDLY
FUEL COMPANY
of TOMORROW
CARBON FRIENDLY
FUEL COMPANY
of TOMORROW
Sustaining
Innovating
Renewing