Darling Ingredients Inc. reported net income for the first quarter of 2016 of $1.1 million, or $0.01 per diluted share, compared with a net income of $0.1 million, or $0.00 per diluted share, for the same period a year ago.
“Sequentially, our segments showed nice consistency in light of very volatile markets around the globe,” said Randall C. Stuewe, Darlings Ingredients chairman and CEO. “In the Feed segment, we saw our global rendering businesses once again adjust to falling protein prices during the quarter but volume increases and strengthening fat prices partially offset the headwinds. … Looking forward, we have seen both protein and fat prices significantly strengthen late in the quarter and we should see our Feed segment realize the benefit in the second quarter. Our model is clearly working and we are picking up momentum once again.”
For the first quarter of 2016, the company reported net sales of $779.6 million, as compared with net sales of $874.7 million for the first quarter of 2015. The $95.1 million decrease in net sales is primarily attributable to weaker selling prices for fats and protein within the Feed Ingredients segment and continued foreign exchange translation impacts. Overall, global raw material volumes were stronger year over year.
Adjusted EBITDA for Darling was $98.9 million compared with Adjusted EBITDA of $98.2 million for the three months ended April 4, 2015. The $0.7 million increase in Adjusted EBITDA is primarily attributable to increased earnings in the Food and Fuel Ingredients segments and higher raw material volumes in the Feed Ingredients segment that more than offset lower finished product prices and the impact of foreign exchange.
Feed Ingredients segment
Protein meal values dipped to decade lows before rebounding in mid-March 2016, while fat prices trended upwards during the quarter and rose sharply in late March 2016. Pet Food premiums returned due to strong consumer demand. Global blood volumes were strong and pricing held steady. Restaurant Services experienced volume growth and non-formula pricing will show benefits going forward.
Feed Ingredients operating income for the quarter was $13.9 million, a decrease of $21.5 million as compared to the year-ago period. Earnings for the Feed Ingredients segment were lower due to significant decline in proteins, fats and used cooking oil finished product prices as a result of the global record-setting grain production and increased volumes from the slaughter industry which increased supply above demand levels. Looking forward, both fat and protein prices have increased and the company says it should realize a benefit to the Feed Ingredients segment earnings in the second quarter of 2016.
The company’s Feed Ingredients segment operating cash flow was negatively impacted by foreign exchange translation by approximately $1.2 million when using prior year average exchange rates.