EX-99.1 2 exh991-pressreleaseq42018.htm EXHIBIT 99.1 PRESS RELEASE
EXHIBIT 99.1
News Release
DARLING INGREDIENTS INC. REPORTS FOURTH QUARTER
AND FISCAL 2018 FINANCIAL RESULTS:
Delivering on World of Growth Strategy
February 27, 2019 - IRVING, TEXAS - Darling Ingredients Inc. (NYSE: DAR), a global developer and producer of sustainable natural ingredients from edible and inedible bio-nutrients, creating a wide range of ingredients and customized specialty solutions for customers in the pharmaceutical, food, pet food, feed, industrial, fuel, bioenergy, and fertilizer industries, today announced financial results for the fiscal 2018 fourth quarter and year ended December 29, 2018.
Fourth Quarter 2018 Overview

• | Net income of $40.6 million, or $0.24 per GAAP diluted share

• | Revenue of $853.1 million

• | Adjusted EBITDA of $108.9 million

• | DGD delivered record Fourth quarter, Entity EBITDA of $110 million

• | Strong global raw material volumes up 1.5% over Q4 2017

• | Feed segment still challenged by trade disruptions and lagging fat prices

• | Food segment showed improved earnings in the collagen business

• | Improved performance in Fuel segment reflects investment in Euro bioenergy

• | DGD partner dividend of $40 million during Q4

Fiscal 2018 Overview

• | Net income of $101.5 million, or $0.60 per GAAP diluted share

• | Consolidated Revenue of $3.4 billion

• | Adjusted EBITDA of $431.4 million

• | DGD partner dividend of $65 million during 2018 and Phase III large scale expansion underway

• | No net borrowings while investing $108 million in growth acquisitions

• | Total debt to EBITDA ratio improved to 3.13 per bank covenant

For the fourth quarter of 2018, the Company reported net sales of $853.1 million, as compared with net sales of $952.5 million for the fourth quarter of 2017. Net income attributable to Darling for the three months ended December 29, 2018 was $40.6 million, or $0.24 per diluted share, compared to a net income of $105.7 million, or $0.63 per diluted share, for the fourth quarter of 2017. The decrease in net income for the fourth quarter 2018 is primarily attributable to income tax expense compared to an income tax benefit in the same period of 2017 due to the remeasurement of deferred tax liabilities per the U.S. Tax Cuts and Jobs Act and benefits from European tax reform, along with higher depreciation costs from increased capital expenditures that more than offset increased income from unconsolidated subsidiaries and lower selling, general and administrative expenses.
For the fiscal year ended 2018, the Company reported net sales of $3,388 million, as compared with net sales of $3,662 million for the fiscal year ended 2017. Net Income attributable to Darling for the fiscal year ended December 29, 2018 was $101.5 million, or $0.60 per diluted share, as compared to a net income of $128.5 million, or $0.77 per diluted share, for the fiscal year ended December 30, 2017. The decrease in net income for 2018 is primarily attributable to income tax expense compared to an income tax benefit in 2017 due to the remeasurement of deferred tax liabilities per the U.S. Tax Cuts and Jobs Act along with benefits from European tax reform. Lower earnings in 2018 as compared to 2017 is also attributed to debt extinguishment costs, higher depreciation costs, restructuring and impairment charges and loss on disposal of subsidiaries.

| News Release February 27, 2019 Page 2 |

Comments on the Fourth Quarter and Fiscal 2018 Year End
“Our fourth quarter truly showed the diversity and consistency of our global ingredients platform and the potential DGD has to transform Darling,” said Randall C. Stuewe, Chairman and Chief Executive Officer of Darling Ingredients Inc.
Commenting on the Company’s overall strategy, Mr. Stuewe said, “During the year, we made strong advancements executing our world of growth strategy to create a sustainable portfolio of value-added and specialty ingredients through multiple, completed construction projects, expansions and bolt on acquisitions.”
Operational Update by Segment

• | Feed Ingredients - Segment lagged performance due to overall weaker fat pricing impacted from extended DGD downtime during the year and large global slaughter volumes. Trade disruptions and large palm oil supplies also weighed on results. Protein pricing stabilized with continued strong feed demand in spite of China’s Africa Swine Fever (AFS) outbreak. Expanded Midwest footprint with acquisitions focused on specialty pet food and feedstock to supply growing biofuel mandates. Growth expansions for rendering, blood and higher grade, species-specific operations delivered as expected.

• | Food Ingredients - Segment results reflect the closure of the Argentina collagen plant and lower earnings in the European collagen market. Global collagen strong in Brazil and China. CTH casings business pressured by increased raw materials costs and decreased sales volumes. Sonac edible fats showed margin pressure due to competing weaker palm oil markets.

• | Fuel Ingredients - Segment delivered consistent results when excluding the $12.6 million in blenders tax credit (BTC) reinstated for 2017 in February 2018, and new earnings from Belgium digester operations contributed nicely. Ecoson bioenergy facility normalized capacity and delivered improved quarterly performance. Europe’s disposal rendering business reported stable earnings with strong volumes in Europe. North American biodiesel operations reported steady earnings absent the BTC.

• | Diamond Green Diesel Joint Venture - Increased fourth quarter production and inclusion of the retroactive 2017 BTC drove improvement. Posted fourth quarter EBITDA of $1.67 per gallon, absent a BTC for 2018. Total 2018 entity EBITDA of $187.6 million (excluding $160.4 million for 2017 BTC recorded first quarter 2018) or $1.19 per gallon on the sale of 157.4 million gallons. Distributed partner dividend of $65 million for 2018 and closed year debt free. Phase III Super Diamond expansion to 675 million gallons approved and includes additional 50-60 million gallons of renewable naphtha gallons for the green gasoline markets. Estimated expansion costs of $1.1 billion with anticipated start-up in latter half of 2021.

| News Release February 27, 2019 Page 3 |

Financial Update by Segment

Feed Ingredients | Three Months Ended | Fiscal Year Ended
($ thousands) | December 29, 2018 | December 30, 2017 | December 29, 2018 | December 30, 2017
Net sales | $ | 485,190 |  | $ | 562,206 |  | $ | 1,952,555 |  | $ | 2,239,492 |
Selling, general and administrative expenses | 44,808 |  | 45,794 |  | 176,722 |  | 178,347 |
Depreciation and amortization | 53,359 |  | 49,239 |  | 194,292 |  | 184,172 |
Segment operating income | 12,047 |  | 26,894 |  | 82,843 |  | 132,342 |
EBITDA | $ | 65,406 |  | $ | 76,133 |  | $ | 277,135 |  | $ | 316,514 |
*EBITDA calculated by adding depreciation and amortization to segment operating income. |  |

• | Feed Ingredients operating income for the three months ended December 29, 2018 was $12.0 million, a decrease of $14.9 million as compared to the three months ended December 30, 2017. Segment operating income was down in fourth quarter 2018 as compared to fourth quarter 2017 due to lower finished fat product prices and higher depreciation charges from increased capital expenditures that more than offset increased raw material volumes.

• | Feed Ingredients operating income for the fiscal year 2018 was $82.8 million, a decrease of $49.5 million as compared to fiscal year 2017. Segment operating income was down in fiscal 2018 as compared to fiscal 2017 due to lower finished fat product prices and higher depreciation charges from increased capital expenditures that more than offset increased raw material volumes.

Food Ingredients | Three Months Ended | Fiscal Year Ended
($ thousands) | December 29, 2018 | December 30, 2017 | December 29, 2018 | December 30, 2017
Net sales (1) | $ | 291,669 |  | $ | 313,478 |  | $ | 1,139,126 |  | $ | 1,156,976 |
Selling, general and administrative expenses | 23,652 |  | 27,408 |  | 91,546 |  | 104,644 |
Restructuring and impairment charges | — |  | — |  | 14,965 |  | — |
Depreciation and amortization | 20,263 |  | 19,719 |  | 80,988 |  | 75,010 |
Segment operating income | 14,613 |  | 16,416 |  | 33,768 |  | 56,939 |
EBITDA | $ | 34,876 |  | $ | 36,135 |  | $ | 129,721 |  | $ | 131,949 |
*EBITDA calculated by adding depreciation and amortization and restructuring and impairment charges to segment operating income.

• | Food Ingredients operating income was $14.6 million for the three months ended December 29, 2018, a decrease of $1.8 million as compared to the three months ended December 29, 2017. The decrease in operating income was primarily attributable to lower earnings in the casings business and lower earnings in the European collagen markets.

• | Food Ingredients operating income was $33.8 million for fiscal 2018, a decrease of $23.1 million as compared to fiscal 2017. This decrease was primarily due to the restructuring and impairment charges incurred as a result of the Hurlingham, Argentina collagen plant shut down and lower earnings in the European collagen markets. The casings business delivered lower earnings in fiscal 2018 due to an increase in raw material prices as compared to fiscal

| News Release February 27, 2019 Page 4 |

2017. The Company’s edible fat prices were lower in fiscal 2018 as a result of lower competing fat markets as compared to fiscal 2017.

Fuel Ingredients | Three Months Ended | Fiscal Year Ended
($ thousands) | December 29, 2018 | December 30, 2017 | December 29, 2018 | December 30, 2017
Net sales | $ | 76,271 |  | $ | 76,865 |  | $ | 296,045 |  | $ | 265,783 |
Selling, general and administrative expenses | (714 | ) | 4,707 |  | (4,770 | ) | 10,355 |
Depreciation and amortization | 8,603 |  | 8,547 |  | 34,981 |  | 31,019 |
Segment operating income | 8,617 |  | 8,103 |  | 35,308 |  | 13,980 |
EBITDA | $ | 17,220 |  | $ | 16,650 |  | $ | 70,289 |  | $ | 44,999 |
*EBITDA calculated by adding depreciation and amortization to segment operating income. |  |
Results shown do not include the Diamond Green Diesel (DGD) 50% Joint Venture. |  |

• | Exclusive of the DGD Joint Venture, the Company’s Fuel Ingredients operating income for the three months ended December 29, 2018 was $8.6 million, an increase of $0.5 million as compared to the three months ended December 30, 2017. The increase in earnings is primarily a result of higher earnings within Ecoson, the bioenergy business in Europe; and Rendac, the disposal rendering business in Europe.

• | Exclusive of the DGD Joint Venture, the Company’s Fuel Ingredients operating income for fiscal year 2018 was $35.3 million, an increase of $21.3 million as compared to fiscal 2017. The increase in earnings is primarily due to the reinstated fiscal 2017 blenders tax credits in North America of approximately $12.6 million recorded in the first quarter of fiscal 2018 as compared to the lack of blenders tax credits in the same period of fiscal 2017 and higher overall sales prices and strong demand from biodiesel industries.

| News Release February 27, 2019 Page 5 |

Darling Ingredients Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
December 29, 2018 and December 30, 2017
(in thousands)

|  | December 29, |  | December 30,
|  | 2018 |  | 2017
ASSETS |  |  |
Current assets: |  |  |
| Cash and cash equivalents | $ | 107,262 |  |  | $ | 106,774 |
| Restricted cash | 107 |  |  | 142 |
| Accounts receivable, less allowance for bad debts of $7,830 at December 29, 2018 and $8,045 at December 30, 2017 | 385,737 |  |  | 391,847 |
| Inventories | 341,028 |  |  | 358,183 |
| Prepaid expenses | 35,247 |  |  | 38,326 |
| Income taxes refundable | 6,462 |  |  | 4,509 |
| Other current assets | 22,099 |  |  | 56,664 |
| Total current assets | 897,942 |  |  | 956,445 |
Property, plant and equipment, net | 1,687,858 |  |  | 1,645,822 |
Intangible assets, net | 595,862 |  |  | 676,500 |
Goodwill | 1,229,159 |  |  | 1,301,093 |
Investment in unconsolidated subsidiaries | 410,177 |  |  | 302,038 |
Other assets | 53,375 |  |  | 62,284 |
Deferred income taxes | 14,981 |  |  | 14,043 |
|  | $ | 4,889,354 |  |  | $ | 4,958,225 |
LIABILITIES AND STOCKHOLDERS' EQUITY |  |  |
Current liabilities: |  |  |
| Current portion of long-term debt | $ | 7,492 |  |  | $ | 16,143 |
| Accounts payable, principally trade | 219,479 |  |  | 217,417 |
| Income taxes payable | 4,043 |  |  | 12,300 |
| Accrued expenses | 309,484 |  |  | 313,623 |
| Total current liabilities | 540,498 |  |  | 559,483 |
Long-term debt, net of current portion | 1,666,940 |  |  | 1,698,050 |
Other noncurrent liabilities | 115,032 |  |  | 106,287 |
Deferred income taxes | 231,063 |  |  | 266,708 |
| Total liabilities | 2,553,533 |  |  | 2,630,528 |
Commitments and contingencies |  |  |
Total Darling's stockholders' equity: | 2,273,048 |  |  | 2,244,933 |
Noncontrolling interests | 62,773 |  |  | 82,764 |
| Total stockholders' equity | $ | 2,335,821 |  |  | $ | 2,327,697 |
|  | $ | 4,889,354 |  |  | $ | 4,958,225 |

| News Release February 27, 2019 Page 6 |

Darling Ingredients Inc. and Subsidiaries
Consolidated Operating Results
For the Periods Ended December 29, 2018 and December 30, 2017
(in thousands, except per share data)

| (Fourth Quarter Unaudited) |  |  |  |  |
| Three Months Ended | Fiscal Year Ended
|  |  |  |  | $ Change |  |  |  |  | $ Change
| December 29, |  | December 30, |  | Favorable | December 29, |  | December 30, |  | Favorable
| 2018 |  | 2017 |  | (Unfavorable) | 2018 |  | 2017 |  | (Unfavorable)
Net sales | $ | 853,130 |  |  | $ | 952,549 |  |  | $ | (99,419 | ) | $ | 3,387,726 |  |  | $ | 3,662,251 |  |  | $ | (274,525 | )
Costs and expenses: |  |  |  |  |  |  |  |  |  |
Cost of sales and operating expenses | 667,882 |  |  | 745,722 |  |  | 77,840 |  | 2,647,083 |  |  | 2,875,443 |  |  | 228,360 |
Selling, general and administrative expenses | 76,357 |  |  | 89,894 |  |  | 13,537 |  | 309,264 |  |  | 343,502 |  |  | 34,238 |
Restructuring and impairment charges | — |  |  | — |  |  | — |  | 14,965 |  |  | — |  |  | (14,965 | )
Depreciation and amortization | 85,277 |  |  | 80,794 |  |  | (4,483 | ) | 321,192 |  |  | 302,100 |  |  | (19,092 | )
Total costs and expenses | 829,516 |  |  | 916,410 |  |  | 86,894 |  | 3,292,504 |  |  | 3,521,045 |  |  | 228,541 |
Operating income | 23,614 |  |  | 36,139 |  |  | (12,525 | ) | 95,222 |  |  | 141,206 |  |  | (45,984 | )
Other expense: |  |  |  |  |  |  |  |  |  |
Interest expense | (20,209 | ) |  | (22,269 | ) |  | 2,060 |  | (86,429 | ) |  | (88,926 | ) |  | 2,497 |
Debt extinguishment costs | — |  |  | — |  |  | — |  | (23,509 | ) |  | — |  |  | (23,509 | )
Foreign currency gain/(loss) | 651 |  |  | (2,468 | ) |  | 3,119 |  | (6,431 | ) |  | (6,898 | ) |  | 467 |
Loss on disposal of subsidiaries | (45 | ) |  | (885 | ) |  | 840 |  | (12,545 | ) |  | (885 | ) |  | (11,660 | )
Other expense, net | (3,459 | ) |  | (418 | ) |  | (3,041 | ) | (7,562 | ) |  | (8,801 | ) |  | 1,239 |
Total other expense | (23,062 | ) |  | (26,040 | ) |  | 2,978 |  | (136,476 | ) |  | (105,510 | ) |  | (30,966 | )
Equity in net income of unconsolidated subsidiaries | 49,631 |  |  | 11,835 |  |  | 37,796 |  | 159,229 |  |  | 28,504 |  |  | 130,725 |
Income before income taxes | 50,183 |  |  | 21,934 |  |  | 28,249 |  | 117,975 |  |  | 64,200 |  |  | 53,775 |
Income taxes expense/(benefit) | 8,039 |  |  | (85,010 | ) |  | (93,049 | ) | 12,031 |  |  | (69,154 | ) |  | (81,185 | )
Net income | 42,144 |  |  | 106,944 |  |  | (64,800 | ) | 105,944 |  |  | 133,354 |  |  | (27,410 | )
Net income attributable to noncontrolling interests | (1,496 | ) |  | (1,215 | ) |  | (281 | ) | (4,448 | ) |  | (4,886 | ) |  | 438 |
Net income attributable to Darling | $ | 40,648 |  |  | $ | 105,729 |  |  | $ | (65,081 | ) | $ | 101,496 |  |  | $ | 128,468 |  |  | $ | (26,972 | )
Basic income per share: | $ | 0.25 |  |  | $ | 0.64 |  |  | $ | (0.39 | ) | $ | 0.62 |  |  | $ | 0.78 |  |  | $ | (0.16 | )
Diluted income per share: | $ | 0.24 |  |  | $ | 0.63 |  |  | $ | (0.39 | ) | $ | 0.60 |  |  | $ | 0.77 |  |  | $ | (0.17 | )
Number of diluted common shares: | 168,379 |  |  | 166,997 |  |  |  | 167,910 |  |  | 166,730 |  |  |

| News Release February 27, 2019 Page 7 |

Darling Ingredients Inc. and Subsidiaries
Consolidated Statement of Cash Flows
Fiscal Years Ended December 29, 2018 and December 30, 2017
(in thousands)

| Fiscal Year Ended
| December 29, |  | December 30,
Cash flows from operating activities: | 2018 |  | 2017
Net income | $ | 105,944 |  |  | $ | 133,354 |
Adjustments to reconcile net income to net cash provided by operating activities: |  |  |
Depreciation and amortization | 321,192 |  |  | 302,100 |
Deferred taxes | (16,974 | ) |  | (98,805 | )
Loss/(gain) on sale of assets | 709 |  |  | (237 | )
Loss on disposal of subsidiaries | 12,545 |  |  | 885 |
Asset impairment | 2,907 |  |  | — |
Gain on insurance proceeds from insurance settlements | (1,253 | ) |  | (1,427 | )
Increase in long-term pension liability | 1,463 |  |  | 2,383 |
Stock-based compensation expense | 18,779 |  |  | 17,598 |
Debt extinguishment costs | 23,509 |  |  | — |
Write-off deferred loan costs | 320 |  |  | 766 |
Deferred loan cost amortization | 7,870 |  |  | 8,736 |
Equity in net income of unconsolidated subsidiaries | (159,229 | ) |  | (28,504 | )
Distribution of earnings from unconsolidated subsidiaries | 67,638 |  |  | 26,761 |
Changes in operating assets and liabilities, net of effects from acquisitions: |  |  |
Accounts receivable | (6,347 | ) |  | 3,482 |
Income taxes refundable/payable | (9,809 | ) |  | 9,360 |
Inventories and prepaid expenses | 2,391 |  |  | (15,022 | )
Accounts payable and accrued expenses | 14,534 |  |  | 73,386 |
Other | 12,426 |  |  | (24,380 | )
Net cash provided by operating activities | 398,615 |  |  | 410,436 |
Cash flows from investing activities: |  |  |
Capital expenditures | (321,896 | ) |  | (274,168 | )
Acquisitions, net of cash acquired | (107,727 | ) |  | (12,144 | )
Investment of unconsolidated subsidiaries | (12,250 | ) |  | (4,750 | )
Proceeds from sale of investment in subsidiaries | 82,760 |  |  | — |
Gross proceeds from disposal of property, plant and equipment and other assets | 19,328 |  |  | 8,090 |
Proceeds from insurance settlement | 1,253 |  |  | 6,054 |
Payments related to routes and other intangibles | (3,883 | ) |  | (7,135 | )
Net cash used by investing activities | (342,415 | ) |  | (284,053 | )
Cash flows from financing activities: |  |  |
Proceeds from long-term debt | 624,620 |  |  | 33,401 |
Payments on long-term debt | (686,628 | ) |  | (149,623 | )
Borrowings from revolving credit facility | 543,898 |  |  | 199,495 |
Payments on revolving credit facility | (510,974 | ) |  | (204,935 | )
Net cash overdraft financing | 3,460 |  |  | (714 | )
Deferred loan costs | (9,668 | ) |  | (6,717 | )
Issuance of common stock | 182 |  |  | 22 |
Minimum withholding taxes paid on stock awards | (2,215 | ) |  | (3,049 | )
Deductions of noncontrolling interest | — |  |  | (17,451 | )
Distributions to noncontrolling interests | (10,257 | ) |  | (5,281 | )
Net cash used by financing activities | (47,582 | ) |  | (154,852 | )
Effect of exchange rate changes on cash flows | (8,165 | ) |  | 20,528 |
Net increase/(decrease) in cash, cash equivalents and restricted cash | 453 |  |  | (7,941 | )
Cash, cash equivalents and restricted cash at beginning of year | 106,916 |  |  | 114,857 |
Cash, cash equivalents and restricted cash at end of year | $ | 107,369 |  |  | $ | 106,916 |
Supplemental disclosure of cash flow information: |  |  |
Accrued capital expenditures | $ | 5,951 |  |  | $ | 1,521 |
Cash paid during the period for: |  |  |
Interest, net of capitalized interest | $ | 75,006 |  |  | $ | 78,233 |
Income taxes, net of refunds | $ | 33,162 |  |  | $ | 26,304 |
Non-cash financing activities: |  |  |
Debt issued for service contract assets | $ | 22 |  |  | $ | 945 |

| News Release February 27, 2019 Page 8 |

Diamond Green Diesel Joint Venture
Condensed Consolidated Balance Sheets
December 31, 2018 and December 31, 2017
(in thousands)

| December 31, |  | December 31,
| 2018 |  | 2017
Assets: |  |  |
Total current assets | $ | 186,258 |  |  | $ | 202,778 |
Property, plant and equipment, net | 576,384 |  |  | 435,328 |
Other assets | 24,601 |  |  | 4,655 |
Total assets | $ | 787,243 |  |  | $ | 642,761 |
Liabilities and members' equity: |  |  |
Total current portion of long term debt | $ | 189 |  |  | $ | 17,023 |
Total other current liabilities | 40,619 |  |  | 40,705 |
Total long term debt | 8,485 |  |  | 36,730 |
Total other long term liabilities | 539 |  |  | 450 |
Total members' equity | 737,411 |  |  | 547,853 |
Total liabilities and members' equity | $ | 787,243 |  |  | $ | 642,761 |

Diamond Green Diesel Joint Venture
Operating Financial Results
Three Months and Fiscal Year Ended December 31, 2018 and December 31, 2017
(in thousands)

| (Fourth Quarter Unaudited) |  |  |  |  |
| Three Months Ended | Twelve Months Ended
|  |  |  |  | $ Change |  |  |  |  | $ Change
| December 31, |  | December 31, |  | Favorable | December 31, |  | December 31, |  | Favorable
| 2018 |  | 2017 |  | (Unfavorable) | 2018 |  | 2017 |  | (Unfavorable)
Revenues: |  |  |  |  |  |  |  |  |  |
Operating revenues | $ | 270,542 |  |  | $ | 182,140 |  |  | $ | 88,402 |  | $ | 677,663 |  |  | $ | 633,908 |  |  | $ | 43,755 |
Expenses: |  |  |  |  |  |  |  |  |  |
Total costs and expenses less depreciation, amortization and accretion expense | 160,004 |  |  | 151,769 |  |  | (8,235 | ) | 329,636 |  |  | 547,512 |  |  | 217,876 |
Depreciation, amortization and accretion expense | 10,544 |  |  | 6,088 |  |  | (4,456 | ) | 29,434 |  |  | 28,955 |  |  | (479 | )
Total costs and expenses | 170,548 |  |  | 157,857 |  |  | (12,691 | ) | 359,070 |  |  | 576,467 |  |  | 217,397 |
Operating income | 99,994 |  |  | 24,283 |  |  | 75,711 |  | 318,593 |  |  | 57,441 |  |  | 261,152 |
Other income | 571 |  |  | 384 |  |  | 187 |  | 1,919 |  |  | 1,343 |  |  | 576 |
Interest and debt expense, net | (318 | ) |  | — |  |  | (318 | ) | (955 | ) |  | (2,306 | ) |  | 1,351 |
Net income | $ | 100,247 |  |  | $ | 24,667 |  |  | $ | 75,580 |  | $ | 319,557 |  |  | $ | 56,478 |  |  | $ | 263,079 |

| News Release February 27, 2019 Page 9 |

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) Pro forma Adjusted EBITDA
Three and twelve months ended December 29, 2018 and December 30, 2017

|  | (unaudited) |  |  |  |
|  | Three Months Ended - Year over Year |  | Fiscal Year Ended
Adjusted EBITDA |  | December 29, |  | December 30, |  | December 29, |  | December 30,
(U.S. dollars in thousands) |  | 2018 |  | 2017 |  | 2018 |  | 2017
Net income attributable to Darling |  | $ | 40,648 |  |  | $ | 105,729 |  |  | $ | 101,496 |  |  | $ | 128,468 |
Depreciation and amortization |  | 85,277 |  |  | 80,794 |  |  | 321,192 |  |  | 302,100 |
Interest expense |  | 20,209 |  |  | 22,269 |  |  | 86,429 |  |  | 88,926 |
Income tax expense/(benefit) |  | 8,039 |  |  | (85,010 | ) |  | 12,031 |  |  | (69,154 | )
Restructuring and impairment charges |  | — |  |  | — |  |  | 14,965 |  |  | — |
Foreign currency loss/(gain) |  | (651 | ) |  | 2,468 |  |  | 6,431 |  |  | 6,898 |
Other expense, net |  | 3,459 |  |  | 418 |  |  | 7,562 |  |  | 8,801 |
Debt extinguishment costs |  | — |  |  | — |  |  | 23,509 |  |  | — |
Loss on disposal of subsidiaries |  | 45 |  |  | 885 |  |  | 12,545 |  |  | 885 |
Equity in net income of unconsolidated subsidiaries |  | (49,631 | ) |  | (11,835 | ) |  | (159,229 | ) |  | (28,504 | )
Net income attributable to noncontrolling interests |  | 1,496 |  |  | 1,215 |  |  | 4,448 |  |  | 4,886 |
Adjusted EBITDA (Non-GAAP) |  | $ | 108,891 |  |  | $ | 116,933 |  |  | $ | 431,379 |  |  | $ | 443,306 |
Foreign currency exchange impact |  | 2,279 |  | (1 | ) | — |  |  | (8,565 | ) | (2 | ) | — |
Pro forma Adjusted EBITDA to Foreign Currency (Non-GAAP) |  | $ | 111,170 |  |  | $ | 116,933 |  |  | $ | 422,814 |  |  | $ | 443,306 |
DGD Joint Venture Adjusted EBITDA (Darling's share) |  | $ | 55,268 |  |  | $ | 15,185 |  |  | $ | 174,013 |  |  | $ | 43,198 |
(1) The average rates assumption used in the calculation was the actual fiscal average rate for the three months ended December 29, 2018 of €1.00:USD$1.14 and
CAD$1.00:USD$0.76 as compared to the average rate for the three months ended December 30, 2017 of €1.00:USD$1.18 and CAD$1.00:USD$0.79, respectively.
(2) The average rates assumption used in the calculation was the actual fiscal average rate for the twelve months ended December 29, 2018 of €1.00:USD$1.18 and
CAD$1.00:USD$0.77 as compared to the average rate for the twelve months ended December 30, 2017 of €1.00:USD$1.13 and CAD$1.00:USD$0.77, respectively.

About Darling
Darling Ingredients Inc. is a global developer and producer of sustainable natural ingredients from edible and inedible bio-nutrients, creating a wide range of ingredients and specialty solutions for customers in the pharmaceutical, food, pet food, feed, technical, fuel, bioenergy, and fertilizer industries. With operations on five continents, the Company collects and transforms all aspects of animal by-product streams into useable and specialty ingredients, such as collagen, edible fats, feed-grade fats, animal proteins and meals, plasma, pet food ingredients, organic fertilizers, yellow grease, fuel feedstocks, green energy, natural casings and hides. The Company also recovers and converts recycled oils (used cooking oil and animal fats) into valuable feed and fuel ingredients and collects and processes residual bakery products into feed ingredients. In addition, the Company provides environmental services, such as grease trap collection and disposal services to food service establishments. The Company sells its products domestically and internationally and operates within three industry

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segments: Feed Ingredients, Food Ingredients and Fuel Ingredients. For additional information, visit the Company's website at http://www.darlingii.com.
Darling Ingredients Inc. will host a conference call to discuss the Company’s fourth quarter and fiscal year end 2018 financial results at 8:30 am Eastern Time (7:30 am Central Time) on Thursday, February 28, 2019. 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 10128432. 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 7, 2019, 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 10128432. 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 expenses, 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 and 5.375% Notes and 3.625% Notes that were outstanding at December 29, 2018. 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 and 5.375% 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 Unites 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”), bovine spongiform encephalopathy (or "BSE"), porcine epidemic diarrhea ("PED") or other

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diseases associated with animal origin in the United States or elsewhere, such as the recent African Swine Fever (“ASF”) outbreak in China; 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, 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, including our ongoing enterprise resource planning project; 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 likely 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 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: |  |  |
Melissa A. Gaither, VP IR and Global Communications 251 O’Connor Ridge Blvd., Suite 300 Irving, Texas 75038 |  | Email : mgaither@darlingii.com Phone : 972-281-4478 |