Darling Ingredients Inc. reported net income of $32 million, or $0.19 per diluted share, for the three months ended July 2, 2016. That is compared with $3.1 million, or $0.02 per diluted share for the same quarter a year ago.
Net income for the six-month period ended July 2, 2016, was $33.1 million, or $0.20 per diluted share, compared with $3.2 million, or $0.02 per diluted share, for the same period a year ago.
The company said higher earnings were driven by improved margins in the non-formula portion of the Feed Ingredients segment; increased earnings from biofuels and fuel ingredients in the Fuel segment; and lower selling, general and administrative expenses globally.
“The results show how we can capture notable gains when market conditions improve,” said Randall C. Stuewe, Darlings Ingredients Inc. chairman and CEO. “Our Feed Ingredients segment led the way this quarter, capturing margin as prices improved for global fats and proteins from the first quarter.”
Commenting on the company’s overall strategy, Stuewe said: “We’ve lowered our cost structure, continued to pay down debt and created a robust global business model that is diversified and increasingly focused on premium, value-add products. In the second quarter, the optionality within several of our businesses enabled us to take full advantage of a stronger market.”
Feed Ingredients segment
Global protein and fat prices sharply rallied early in the second quarter in concert with the global soy complex before softening late in the quarter. Feed demand for protein and fats remained strong while pricing of fat destined for biofuels continued to improve. Global rendering saw strong raw material volumes and continued growth in poultry inputs.
Feed Ingredients operating income for the three months ended July 2, 2016, was $41.4 million, an increase of $6 million as compared with the three months ended July 4, 2015. Earnings for the Feed Ingredients segment were higher due to lower selling, general and administrative expenses, increases in fats and used cooking oil finished product prices and increased production volumes due to higher raw material supply.
Feed Ingredients operating income for the six months ended July 2, 2016, was $55.3 million, a decrease of $15.5 million as compared with the first six months ended July 4, 2015. Earnings for the Feed Ingredients segment were lower due to the significant decline in proteins finished product prices resulting from near record grain production in fiscal year 2015. Higher depreciation and amortization was offset by reduced selling, general and administrative expense. In the U.S., lower earnings were related primarily to lower prices in proteins, particularly in the company’s non-formula business.