Third Quarter 2017 Earnings Conference Call November 8, 2017 - PowerPoint PPT Presentation

Third Quarter 2017 Earnings Conference Call November 8, 2017 Randall C. Stuewe, Chairman and CEO Patrick C. Lynch, EVP Chief Financial Officer Melissa A. Gaither, VP IR and Global Communications

Safe Harbor Statement 2 This presentation contains “forward - looking” statements regarding the business operations and prospects of Darling Ingredients Inc., including its Diamond Green Diesel joint venture, 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,” “assumption,” 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 emissions that adversely affect programs like the Renewable Fuel Standards Program (RFS2), 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 Bird Flu including, but not limited to H5N1 flu, bovine spongiform encephalopathy (or "BSE"), porcine epidemic diarrhea ("PED") or other diseases associated with animal origin in the United States or elsewhere; 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 regulations (including, without limitation, China) affecting the industries in which the Company operates or its value added products (including new or modified animal feed, Bird Flu, PED or BSE or similar or unanticipated regulations); risks associated with the renewable diesel plant in Norco, Louisiana owned and operated by a joint venture between Darling Ingredients and Valero Energy Corporation, including possible unanticipated operating disruptions and issues related to the announced expansion project; 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.

Third Quarter 2017 Earnings Summary 3 3Q 2017 Overview Gross Profit and Margin $ in millions Net sales - $937.7 million – up 9.8% from 3Q 2016 • $200 21.8% 21.7% 20.7% 21.6% $190 Net income - $7.8 million • 21.4% $180 $195.6 EPS at $0.05 per diluted share • $193.7 $192.8 $190.4 $170 $182.7 Adjusted EBITDA - $110.5 million • $160 $150 DGD joint venture EBITDA - $10.6 million • (Darling’s share) $140 3Q16 4Q16 1Q17 2Q17 3Q17 Gross Profit % Gross Margin Quarterly Adjusted EBITDA Strong Free Cash Flow Generation $ in millions $ in millions $120 $120 $112.8 $110.5 $110.1 $106.2 $110 $100 $102.5 $110.5 $110.1 $100 $112.8 $102.5 $80 $90 $75.3 $68.6 $60 $80 $65.5 $62.3 $40 $44.6 $41.9 $40.2 $70 $37.5 $20 $60 $0 $50 4Q 2016 1Q 2017 2Q 2017 3Q 2017 3Q16 4Q16 1Q17 2Q17 3Q17 Adjusted EBITDA is a Non-U.S. GAAP Measure (See slide 16) Adjusted EBITDA Capex Free Cash Flow (Adjusted EBITDA after Capex)

Consolidated Earnings 4 Q3 2017 Overview Year over Year Q3 Q4 Total Q1 Q2 Q3 US$ (millions) except per share price 2016 2016 2016 2017 2017 2017 Global volumes up 3.8% over 3Q 2016. • Revenue $ 853.9 $ 887.3 $ 3,398.1 $ 880.1 $ 896.3 $ 937.7 Gross margin compression driven by Fuel • Gross Margin 182.7 192.8 756.4 190.4 195.6 193.7 Segment. Operating challenges at the Gross Margin % 21.4% 21.7% 22.3% 21.6% 21.8% 20.7% company’s Ecoson bioenergy plant, absence SG&A 76.5 79.9 314.0 87.9 85.5 83.1 of a blenders tax credit and business interruption at Rendac-Son facility explain SG&A Margin % 9.0% 9.0% 9.2% 10.0% 9.5% 8.9% the variance. Operating Income 35.5 35.4 152.1 31.4 37.1 33.3 EBITDA (1) Global pricing of fats and greases 106.2 112.8 441.9 102.5 110.1 110.5 • improved on solid biofuel demand while a EBITDA Margin % 12.4% 12.7% 13.0% 11.6% 12.3% 11.8% growing global slaughter produced ample Interest Expense (23.9) (22.4) (94.2) (21.7) (22.4) (22.5) protein and pressured prices. Foreign Currency gain/(loss) 0.4 0.4 (1.9) (0.3) (2.1) (2.1) The absence of the blenders tax credit • Other Expense (2) (1.9) 1.7 (3.9) (0.9) (2.9) (1.4) negatively impacted overall profitability by Equity in net income of unconsolidated 18.1 32.7 70.4 0.7 8.3 7.7 approximately $21.5 million EBITDA from subsidiaries DGD, $2.4 million EBITDA in Fuel Segment Income Tax (Expense)/Benefit 0.7 (6.2) (15.3) (1.8) (7.7) (6.3) or $0.14 EPS. Net income attributable to (0.2) (1.1) (4.9) (1.6) (1.2) (0.9) noncontrolling interests Strong free cash flow in the quarter that led • to a $18.5 million debt reduction in the Net income attributable to Darling $ 28.7 $ 40.5 $ 102.3 $ 5.8 $ 9.1 $ 7.8 quarter and $69.5 million year to date. Earnings per share (fully diluted) $ 0.17 $ 0.25 $ 0.62 $ 0.04 $ 0.05 $ 0.05 (1) Does not inlcude Unconsolidated Subsidiaries EBITDA. (2) Rounding captured in Other Expense.