Irving, Texas based fuel ingredients developer and producer Darling Ingredients released their first quarter 2018 earnings report Wednesday, highlighting admirable performance in the company’s fuel segment with the added support of the recently reinstated blenders tax credit (BTC).
Company chief executive Randall Stuewe stated that the company delivered on target for first quarter performance, despite harsh winter weather impacting many of the company’s North American operations. Stuewe added that the company’s Diamond Green Diesel (DGD) joint venture, benefited from lower fat prices and operated at capacity following the 12-day turnaround, continuing to provide a hedge for the company’s core feed segment earnings.
Darling reported 37.1mn and 33.4mn gallons of renewable diesel produced and sold by DGD during Q1 2018, a 14% and 2% rise, respectively, from the prior year. The facility, of which Darling operates alongside Valero, earned $19.9mn in adjusted EBITDA without the addition of the BTC. Adding back the credit however DGD achieved an entity level EBITDA of $100.1mn.
The Norco, Louisiana-based production facility, which paid off its long-term debt of $53.7mn during the prior quarter, is scheduled for a 45 day turn around in mid-June, due to expansion tie-ins that are projected to increase annual production capacity from 160mn gal to 275mn gal. Phase three expansion efforts, which would increase the annual production capacity to 600mn gals, are currently being explored according the company.
Darling Ingredients posted a quarterly revenue of $875.4mn, a 0.4% fall from last year’s corresponding period. Adjusted EBITDA for the quarter was $110.4mm, a 7% rise from the prior year due in large part to continued strong global raw material volumes, which rose nearly 3% from the previous year.
When discussing the recent discussions held in Washington DC regarding RFS reform, Darling executive vice president John Bullock said that volatility is expected in these markets, and that the company has instead focused more so on the California credit market, rather than the RFS2 negotiations.
“We’re positioned great in the California market,” Bullock said, “the demand from the LCFS market, not only from California but around the world, continues to explode, we see that demand every time we go out to create a new marketing agreement for DGD, it seems those deals just get better and better every single time. We could not be more excited about the demand potential from the LCFS market, both in terms of actual volume, and in terms of the pricing associated with those gallons as we move those gallons to market.”
Outside of the companies DGD joint venture, Darling Ingredients owns and operates multiple biodiesel production facilities in the US and Canada, including Dar Pro Bioenergy, Rendac, and Ecoson.