Darling Ingredients Inc. Reports First Quarter 2017 Financial Results

IRVING, Texas, May 11, 2017

First Quarter 2017 Overview

• Revenue of $880.1 million, up 12.9 %
• Net income of $5.8 million, or $0.04 per GAAP diluted share
• Adjusted EBITDA of $102.5 million
• Continued strong global raw material volumes, up 4.3 %
• Improved pricing environment across most product lines
• SG&A increase related to equity award accounting
• Diamond Greed Diesel issued partner dividend of $25 million each

For the first quarter of 2017, the Company reported net sales of $880.1 million, as compared with net sales of $779.6 million for the first quarter of 2016.  Net income attributable to Darling for the three months ended April 1, 2017 was $5.8 million, or $0.04 per diluted share, compared to a net income of $1.1 million, or $0.01 per diluted share, for the first quarter of 2016.  The increase in net income for the first quarter 2017 is primarily due to higher finished product pricing for fats and proteins offset by the absence of the blenders tax credit, which was reported in the first quarter 2016 but which has not yet been reinstated for 2017.

Comments on the First Quarter 2017

"We capitalized on an improved environment with our first quarter results reflecting solid execution across our global platform leveraged by sequentially consistent and improved performance in our Feed and Food segments. Sequentially, Fuel segment results reflect the lack of the blenders tax credit and one-time settlements received last quarter," said Randall C. Stuewe, Chairman and Chief Executive Officer of Darling Ingredients Inc. "Diamond Green Diesel completed its second maintenance turnaround and issued a partner dividend of $25 million each.  Our planned expansion of Diamond Green Diesel is progressing well and we continue to focus on growing our global platform while improving efficiencies and increasing capital returns. We're off to a good start in 2017."

Operational Update by Segment

• Feed Ingredients – Delivered operational excellence and rigorous cost control measures supported by strong global raw material volumes both sequentially and year-over-year. Strong global fats market driven by improved European biofuel demand were offset by lagging meat and bone meal pricing in North America. Slow demand challenged North American specialty businesses early in quarter with sales rebounding to expected levels.
• Food Ingredients – Rousselot gelatin business leveraged improved pricing and delivered steady performance in China and Europe. However, these results were offset by lower than expected earnings in our South American markets. Volumes were consistent over prior periods. Sonac edible fat earnings held margins despite weakening of the global palm oil markets. CTH casings business delivered strong performance on tight markets due to global shrinking raw material availability especially from the Chinese markets.
• Fuel Ingredients –Steady performance with segment decline due to the absence of the blenders tax credit, and sequential decline reflects insurance settlement and tariff true-ups in Q4 2016. Ecoson biophosphate plant back on line and gaining momentum. Rendac delivered consistent earnings while North American biodiesel facilities operated at a minor loss with the lack of the blenders tax credit.
• Diamond Green Diesel Joint Venture (DGD) – DGD was operationally strong with second major turnaround completed in approximately 18 days. Margin compression was due to reduced RIN values, higher fat prices and absence of the blenders tax credit. Partner dividends of $25 million each were issued during the quarter. Solid cash position and expansion to 275 million gallons of annual production is on schedule for completion in Q2 2018.

Financial Update by Segment