Irving, Texas based fuel ingredients developer and producer Darling Ingredients released their quarterly earnings Wednesday, riding a diversified business model to solid third quarter results.
Chief executive Randall Stuewe stated that the company remained optimistic on the prospect of a retroactive blender’s tax credit for 2017 and satisfactory RVOs looking forward. Valero’s recent partnership with Darling Green Diesel should allow for expansion moving into the fourth quarter, with Stuewe claiming the relationship could see DGD raise its production capacity to 550mn gallons in 2021; up from 2018’s second quarter goal of 275mm gallons.
The company posted quarterly revenue of $937.7mn, a 9.8% increase from last year’s corresponding period. Adjusted EBITDA for the quarter was $110.5mm, due in large part to strengthened rendering volumes as well as a marked improvement in performance for both food and fuel segments.
Darling cited operational challenges at its Ecoson bioenergy plant, interruptions at the Rendac-Son facility and the lack of a retroactive tax credit as explanations for the compression YoY. Diamond Green Diesel’s Joint Venture delivered in line with expectations amid difficult market conditions. The company levied increased volatility in the RINs market as well as the aforementioned tax credit absence as explanations; noting the year-to-year decreases seen across North American biodiesel producers this quarter.
The Ecoson plant was forced to briefly halt operations to address regulatory issues, while the Rendac-Son facility suffered damages resulting from a fire.
While revenue was up nearly 10% year-on-year for the company, net income attributable to Darling for this year’s third quarter came in at $7.8 million; compared to $28.7 million in 2016’s third quarter. Higher selling and administrative expenses, as well as increased depreciation expense were to blame; with Stuewe highlighting the inclusion of a retroactive tax credit in last year’s figure.