Business Segments

9 Months Ended

Sep. 28, 2019

The Company sells its products domestically and internationally, operating within three industry segments: Feed Ingredients, Food Ingredients and Fuel Ingredients. The measure of segment income (loss) includes all revenues, operating expenses (excluding certain amortization of intangibles), and selling, general and administrative expenses incurred at all operating locations and excludes corporate activities.

Included in corporate activities are general corporate expenses and the amortization of certain intangibles. Assets of corporate activities include cash, unallocated prepaid expenses, deferred tax assets, prepaid pension, and miscellaneous other assets.

Feed Ingredients

Feed Ingredients consists principally of (i) the Company's U.S. ingredients business, including the Company's fats and proteins, used cooking oil, trap grease and food residuals collection businesses, the Rothsay ingredients business, the ingredients and specialty products businesses conducted by Darling Ingredients International under the Sonac name (proteins, fats, and plasma products) and (ii) the Company's bakery residuals business. Feed Ingredients operations process animal by-products and used cooking oil into fats, proteins and hides.

Food Ingredients

Food Ingredients consists principally of (i) the collagen business conducted by Darling Ingredients International under the Rousselot name, (ii) the natural casings and meat-by-products business conducted by Darling Ingredients International under the CTH name and (iii) certain specialty products businesses conducted by Darling Ingredients International under the Sonac name, which primarily consists of an edible fat business.

Fuel Ingredients

The Company's Fuel Ingredients segment consists of (i) the portion of the Company's biofuel business related to its investment in the DGD Joint Venture (ii) the Company's biofuel business conducted under the Dar Pro® and Rothsay names and (iii) the bioenergy business conducted by Darling Ingredients International under the Ecoson and Rendac names.

Business Segments (in thousands):



	Feed Ingredients			Food Ingredients			Fuel Ingredients		Corporate			Total
Three Months Ended September 28, 2019
Net Sales	$	496,978		$	276,467		$	68,604	$	—		$	842,049
Cost of sales and operating expenses	379,792			214,643			58,488		—			652,923
Gross Margin	117,186			61,824			10,116		—			189,126

Loss/(gain) on sale of assets	(2,429		)	(253		)	13		—			(2,669		)
Selling, general and administrative expenses	47,319			22,811			912		12,507			83,549
Depreciation and amortization	50,182			19,743			7,895		2,587			80,407
Equity in net income of Diamond Green Diesel	—			—			32,020		—			32,020
Segment operating income/(loss)	22,114			19,523			33,316		(15,094		)	59,859

Equity in net loss of other unconsolidated subsidiaries	(665		)	—			—		—			(665		)
Segment income/(loss)	21,449			19,523			33,316		(15,094		)	59,194

Total other expense												(21,507		)
Income before income taxes												$	37,687



	Feed Ingredients			Food Ingredients			Fuel Ingredients			Corporate			Total
Three Months Ended September 29, 2018
Net Sales	$	482,744		$	265,208		$	64,624		$	—		$	812,576
Cost of sales and operating expenses	383,739			210,730			53,460			—			647,929
Gross Margin	99,005			54,478			11,164			—			164,647

Loss/(gain) on sale of assets	107			(33		)	98			—			172
Selling, general and administrative expenses	39,702			21,843			(2,822		)	8,724			67,447
Depreciation and amortization	47,321			19,697			9,370			2,454			78,842
Equity in net loss of Diamond Green Diesel	—			—			(2,630		)	—			(2,630		)
Segment operating income/(loss)	11,875			12,971			1,888			(11,178		)	15,556

Equity in net loss of other unconsolidated subsidiaries	(162		)	—			—			—			(162		)
Segment income/(loss)	11,713			12,971			1,888			(11,178		)	15,394

Total other expense													(21,934		)
Loss before income taxes													$	(6,540	)



	Feed Ingredients			Food Ingredients			Fuel Ingredients		Corporate			Total
Nine Months Ended September 28, 2019
Net Sales	$	1,480,244		$	830,466		$	193,767	$	—		$	2,504,477
Cost of sales and operating expenses	1,143,606			643,091			161,855		—			1,948,552
Gross Margin	336,638			187,375			31,912		—			555,925

Loss (gain) on sale of assets	(7,343		)	(13,518		)	16		—			(20,845		)
Selling, general and administrative expense	142,615			68,129			583		38,242			249,569
Depreciation and amortization	148,271			59,115			24,055		7,616			239,057
Equity in net income of Diamond Green Diesel	—			—			94,390		—			94,390
Segment operating income/(loss)	53,095			73,649			101,648		(45,858		)	182,534

Equity in net loss of other unconsolidated subsidiaries	(1,087		)	—			—		—			(1,087		)
Segment income/(loss)	52,008			73,649			101,648		(45,858		)	181,447

Total other expense												(80,026		)
Income before income taxes												$	101,421

Segment assets at September 28, 2019	$	2,592,298		$	1,307,422		$	789,692	$	255,487		$	4,944,899



	Feed Ingredients			Food Ingredients			Fuel Ingredients			Corporate			Total
Nine Months Ended September 29, 2018
Net Sales	$	1,467,365		$	847,457		$	219,774		$	—		$	2,534,596
Cost of sales and operating expenses	1,123,196			684,962			170,571			—			1,978,729
Gross Margin	344,169			162,495			49,203			—			555,867

Loss (gain) on sale of assets	526			(244		)	190			—			472
Selling, general and administrative expense	131,914			67,894			(4,056		)	37,155			232,907
Restructuring and impairment charges	—			14,965			—			—			14,965
Depreciation and amortization	140,933			60,725			26,378			7,879			235,915
Equity in net income of Diamond Green Diesel	—			—			109,655			—			109,655
Segment operating income/(loss)	70,796			19,155			136,346			(45,034		)	181,263

Equity in net loss of other unconsolidated subsidiaries	(57		)	—			—			—			(57		)
Segment income/(loss)	70,739			19,155			136,346			(45,034		)	181,206

Total other expense													(113,414		)
Income before income taxes													$	67,792

Segment assets at December 29, 2018	$	2,566,106		$	1,401,291		$	761,817		$	160,140		$	4,889,354