Darling Ingredients Inc. · NYSE:DAR
Darling Ingredients — Darling International — Investor Presentation (November 2007)
28 slides from Darling Ingredients's investor presentation, Nov 14, 2007
Slide 1: Investor Presentation
Servicing the food industry Investor Presentation November 14, 2007
Slide 2: Forward-Looking Language
Forward-Looking Language 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,” “conti
Slide 3: Over a century old, Darling International Inc.
Over a century old, Darling International Inc. is America’s leading provider of rendering, recycling and recovery solutions to the nation’s food industry.
Slide 4: Darling at a Glance
Darling at a Glance Founded in 1882; public since 1994 125 years old Corporate headquarters in Irving, Texas 77 locations across the US 1,850 employees nationwide Fleet of approximately 1,000 trucks and tractor-trailers NYSE: DAR Financial metrics: – $800 million market capitalizatio
Slide 5: Industry Overview
Industry Overview Over 50 billion pounds of inedible by-products generated annually from meat packers, poultry processors and retail food stores Animal and food by-product recycling industry is “mission critical” in the food supply chain and is the most efficient and environmentally sound dispos
Slide 6: Industry Leader
Industry Leader Largest and only publicly-traded US provider of rendering, recycling and recovery solutions Only rendering company with a national footprint – Network of 39 processing facilities from coast to coast – Supported by 38 reload/transfer stations Established “fee for service” busine
Slide 7: Darling's Value Proposition
Darling’s Value Proposition Unmatched capabilities and breadth of service offerings Diversified business model Healthy capital structure with attractive asset and debt mix Uniquely positioned to capitalize on favorable market and regulatory trends – Increasing government regulation of waste
Slide 8: Business Segments
Business Segments Rendering Restaurant Services 8
Slide 9: Rendering Overview
Rendering Overview Darling operates a fleet of approx 1,000 trucks to collect Purchase and raw materials from approx 115,000 food service Collection establishments, butcher shops, grocery stores, and independent meat and poultry processors nationwide “Formula” basis: Applied to approx 55% of Darling
Slide 10: Macro Factors Impacting Performance
Macro Factors Impacting Performance Raw material supply – Fluctuations in demand for proteins – Trade constraints Finished product prices Energy costs 10
Slide 11: NBP Acquisition Highlights
NBP Acquisition Highlights On May 15, 2006, Darling completed its acquisition of National By-Products (NBP), a top-five US independent rendering company based in Des Moines, IA Key benefits from transaction include: – Expanded network of facilities, particularly in the Midwest – Greater customer
Slide 12: Processing Facilities and Serviced Areas
Processing Facilities and Serviced Areas Tacoma Portland Boise Buffalo Blue Earth Berlin Twin Falls Coldwater Detroit Sioux Lynn Grand Island City Center Chicago Newark San Francisco Des Moines Waterloo Cleveland Clinton Pittsburgh Turlock Wahoo Omaha Philadelphia (4) Indianapolis Zanesville Fresn
Slide 13: Smooth and Successful Integration
Smooth and Successful Integration 9 Implemented operational best practices 9 Completed route optimization 9 Redirected raw material 9 Closed non-essential facilities 9 Administrative improvements on-going 13
Slide 14: Restaurant Services Overview
Restaurant Services Overview Premium service offered in conjunction with COR – Self-contained used cooking oil storage system inside or outside customer’s premises Grease trap maintenance and cleaning service – Operates in 20 markets – Customers represent FSEs, malls and industrial food processo
Slide 15: CleanStar
CleanStar Environmentally safe and efficient – Used cooking oil is pumped directly into sealed, insulated CleanStar storage tank with press of button Customer choice – Option of inside or outside storage systems to fit customer needs 15
Slide 16: Torvac (Trap)
Torvac (Trap) Ongoing maintenance – Provides manpower, equipment and expertise to find and fix grease trap problems Compliance – Removed material is tracked and handled in a legal and environmentally sound manner 16
Slide 17: Cooking Oil Removal (COR)
Cooking Oil Removal (COR) Bundled services – Complete, individualized used cooking oil collection and recycling services nationwide through local providers Environmental compliance – Efficient, reliable pickup and disposal of non-recyclable waste 17
Slide 18: Total Revenues
Total Revenues Millions $600 $500 $400 $525 $519 $598 $497 $442 $480 $415 $300 $200 $100 2001 2002 2003 2004 2005 2006 2007 LTM DAR & NBP Combined 18
Slide 19: Operating Cash Flows
Operating Cash Flows $ Millions $100.0 $90.0 $80.0 $89.9 $70.0 $74.0 $60.0 $68.3 $61.1 $50.0 $57.5 $40.0 $47.1 $49.9 $30.0 $20.0 $10.0 $0.0 2001 2002 2003 2004 2005 2006 2007 LTM DAR & NBP Combined 19
Slide 20: Renewable Fuels
Renewable Fuels Fuels produced from bio-mass or non-petroleum sources Only work with subsidy or high oil prices Dependent on Washington D.C. – Direct subsidies – Mandates 20
Slide 21: For DAR......
For DAR...... Darling is uniquely positioned to capitalize on emerging bio-fuel opportunities. – Top producer of rendered fats and greases – Historically, animal fats and greases have traded at a discount to vegetable oils – Elasticity of animal fats and greases decouple it from the Food vs. Fuel
Slide 22: 4 opportunities exist today
4 opportunities exist today: – Alternative Fuel Mixture Tax Credit pays Darling 50 cents per gallon to burn fats/greases in our boilers Opportunistic calculation versus natural gas Limited to no capital involved Current subsidy is through 2009 Proposed legislation extends through 2012 22
Slide 23: Bio Diesel
Bio Diesel Production of a Fatty Acid Methyl Ester from a triglyceride feedstock – Process is well known and fully commercialized – Issues exist with handling FFA, metals, phosphorus and other contaminants – Finished product has cold flow issues but are diminished when blended at 5% or less – Seve
Slide 24: Green Diesel
Green Diesel Green or renewable diesel is the process of converting a triglyceride to a hydrocarbon. – Utilizes known petroleum-focused processes – Finished product is more fungible than bio-diesel Higher Cetane Better cold flow properties Zero sulfur for upgrading distillate streams Pipel
Slide 25: Co-Processing
Co-Processing The introduction of vegetable oils, fats and greases as a blend feedstock with petroleum – Introduced at 2-5% with distillate stream prior to hydro treating – Allows petroleum companies to participate in renewable fuels, however, it displaces current refining capacity and adds no new
Slide 26: Renewable Fuels....What's next?
Renewable Fuels....What’s next? Waiting for Washington to clarify final subsidies Technology is rapidly evolving Potentially green diesel is a better solution Ultimately DAR is well positioned to participate 26
Slide 27: Strong & Experienced Management Team
Strong & Experienced Management Team Name Position Biography Randall Chairman and Chairman and CEO since February 2003. EVP at ConAgra Foods from 1996 to Stuewe Chief Executive 1999; President of Gilroy Foods from 2000 to 2003; prior to that spent 12 years in Officer management, sales and trading po
Slide 28: Servicing the food industry
DARLING INTERNATIONALINC. Servicing the food industry ®
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