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What changed in DARLING INGREDIENTS INC.'s 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of DARLING INGREDIENTS INC.'s 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+454 added−404 removedSource: 10-K (2024-02-28) vs 10-K (2023-02-27)

Top changes in DARLING INGREDIENTS INC.'s 2024 10-K

454 paragraphs added · 404 removed · 352 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

66 edited+8 added−6 removed119 unchanged
Biggest changeThese authorities and regulations include: ▪ Mandatory recall authority for adulterated or misbranded foods where the use of or exposure to such foods is likely to cause serious adverse health consequences or death to humans or animals, if the responsible party fails to cease distribution and recall such adulterated or misbranded foods voluntarily. ▪ Regulations that define the FDA’s administrative detention authority to include the authority to detain an article of food if there is reason to believe the food is adulterated or misbranded. ▪ Section 306 of the FSMA provides that the FDA must refuse admission of food into the United States if a foreign food establishment or foreign government refuses to permit entry for an inspection. ▪ Section 102 of the FSMA amended facility registration requirements in the Federal Food, Drug and Cosmetic (“FD&C”) Act for domestic and foreign manufacturers, processors, packers or holders of food for human or animal consumption, to require that facility registrations be renewed during the fourth quarter of each even-numbered year, beginning October 1, 2012, and that additional information be included in such registrations.
Biggest changePage 13 ▪ Section 306 of the FSMA provides that the FDA must refuse admission of food into the United States if a foreign food establishment or foreign government refuses to permit entry for an inspection. ▪ Section 102 of the FSMA amended facility registration requirements in the Federal Food, Drug and Cosmetic (“FD&C”) Act for domestic and foreign manufacturers, processors, packers or holders of food for human or animal consumption, to require that facility registrations be renewed during the fourth quarter of each even-numbered year, beginning October 1, 2012, and that additional information be included in such registrations.
Fuel Ingredients Segment Our Fuel Ingredients segment consists of (i) our investment in the DGD Joint Venture and (ii) the bioenergy business conducted by Darling Ingredients International under the Ecoson and Rendac names. Page 8 Diamond Green Diesel The DGD Joint Venture currently operates two renewable diesel plants, one located adjacent to Valero’s St.
Page 8 Fuel Ingredients Segment Our Fuel Ingredients segment consists of (i) our investment in the DGD Joint Venture and (ii) the bioenergy business conducted by Darling Ingredients International under the Ecoson and Rendac names. Diamond Green Diesel The DGD Joint Venture currently operates two renewable diesel plants, one located adjacent to Valero’s St.
In addition, the FDA is responsible for implementing and enforcing the FDA Food Safety Modernization Act (“FSMA”), which gives FDA a series of powers intended to better protect human and animal health by adopting a modern, preventive and risk-based approach to food safety regulation.
In addition, the FDA is responsible for implementing and enforcing the FDA Food Safety Modernization Act (“FSMA”), which gives the FDA a series of powers intended to better protect human and animal health by adopting a modern, preventive and risk-based approach to food safety regulation.
We have registered or applied for registration of certain of our intellectual property, including the tricolor triangle used in our signage and logos and the names “Darling,” “Darling Ingredients”, “Griffin Industries,” “Dar Pro Solutions,” “Dar Pro,” “Rousselot,” “Sonac,” “FASA,” “Ecoson,” “Rendac,” “Rothsay,” “Nature Safe,” “CleanStar,” “Peptan,” “Cookie Meal,” and “Bakery Feeds,” and certain patents, both domestically and internationally, relating to the process for preparing nutritional supplements and the drying and processing of raw materials.
We have registered or applied for registration of certain of our intellectual property, including the tricolor triangle used in our signage and logos and the names “Darling,” “Darling Ingredients”, “Griffin Industries,” “Dar Pro Solutions,” “Dar Pro,” “Rousselot,” “Gelnex,” “Sonac,” “FASA,” “Ecoson,” “Rendac,” “Rothsay,” “Nature Safe,” “CleanStar,” “Peptan,” “Cookie Meal,” and “Bakery Feeds,” and certain patents, both domestically and internationally, relating to the process for preparing nutritional supplements and the drying and processing of raw materials.
The APHA issues permits, approvals and registrations to plants carrying out certain activities related to the handling of animal by-products. Feed businesses need to be approved or registered with their local authority trading standards office. • The Food Standards Agency (“FSA”), which is responsible for safeguarding public health, including in relation to food and feed.
The APHA issues permits, approvals and registrations to plants carrying out certain activities related to the handling of animal by-products. Feed businesses need to be approved or registered with their local authority trading standards office. • The Food Standards Agency (“FSA”) is responsible for safeguarding public health, including in relation to food and feed.
The frequency of all forms of used cooking oil collection is determined by the volume of oil generated by the restaurant, food service establishment or grocery store. Processing operations: The used cooking oil we collect is heated, settled, and purified for use as a feedstock for biofuels or as an ingredient for animal feed.
The frequency of all forms of used cooking oil collection is determined by the volume of oil generated by the restaurant, food service establishment, industrial operations or grocery store. Processing operations: The used cooking oil we collect is heated, settled, and purified for use as a feedstock for biofuels or as an ingredient for animal feed.
Work on the project is underway, with completion expected in 2025 at a total estimated cost of approximately $315 million. The DGD Facilities receive feedstocks primarily by rail and trucks owned by third-parties as well as imports via ships.
Work on the project is underway, with completion expected in 2025 at a total estimated cost to DGD of approximately $315 million. The DGD Facilities receive feedstocks primarily by rail and trucks owned by third-parties as well as imports via ships.
The Sonac ingredients and specialty products businesses of Darling Ingredients International operate similarly to our North American ingredients division. However, the Sonac businesses, with the exception of Sonac C3, further separate raw material streams to add additional value to each stream.
The Sonac and FASA ingredients and specialty products businesses of Darling Ingredients International operate similarly to our North American ingredients division. However, the Sonac businesses, with the exception of Sonac C3, further separate raw material streams to add additional value to each stream.
Page 16 Canada • The Canadian Food Inspection Agency (“CFIA”), which regulates animal health and the disposal of animals and their products or by-products. • Canadian provincial ministries of agriculture and the environment , which regulate food safety and quality, air and water discharge requirements and the disposal of deadstock. • The Canadian Department of the Environment (“Environment Canada”), which ensures compliance with Canadian federal air and water discharge and wildlife management requirements and the various provincial and local environmental ministries and agencies. • The Canadian Technical Standards and Safety Authority (“TSSA”), a non-profit organization that regulates the safety of fuels and pressure vessels and boilers.
Canada • The Canadian Food Inspection Agency (“CFIA”), which regulates animal health and the disposal of animals and their products or by-products. • Canadian provincial ministries of agriculture and the environment , which regulate food safety and quality, air and water discharge requirements and the disposal of deadstock. • The Canadian Department of the Environment (“Environment Canada”), which ensures compliance with Canadian federal air and water discharge and wildlife management requirements and the various provincial and local environmental ministries and agencies. • The Canadian Technical Standards and Safety Authority (“TSSA”), a non-profit organization that regulates the safety of fuels and pressure vessels and boilers.
Within the USDA, two agencies exercise direct regulatory oversight of our activities: Page 14 - Animal and Plant Health Inspection Service (“APHIS”) certifies facilities and claims made for exported materials to meet importing country requirements and establishes and enforces import requirements for live animals and animal by-products as well as plant products, and - Food Safety and Inspection Service (“FSIS”) regulates sanitation and biosecurity of our facilities and our food safety programs at plants producing edible fats and meats, among other things.
Within the USDA, two agencies exercise direct regulatory oversight of our activities: - Animal and Plant Health Inspection Service (“APHIS”) certifies facilities and claims made for exported materials to meet importing country requirements and establishes and enforces import requirements for live animals and animal by-products as well as plant products, and - Food Safety and Inspection Service (“FSIS”) regulates sanitation and biosecurity of our facilities and our food safety programs at plants producing edible fats and meats, among other things.
We operate over 155 processing and transfer facilities in the United States to produce finished products such as protein (primarily meat and bone meal (“MBM”) and poultry meal (“PM”)), meat products for the pet food industry, blood products (plasma and whole blood), collagen, fats (primarily bleachable fancy tallow (“BFT”), poultry grease (“PG”) and yellow grease (“YG”)), bakery by-products (“BBP”) and hides, as well as a range of branded and value-added products.
We operate over 150 processing and transfer facilities in the United States to produce finished products such as protein (primarily meat and bone meal (“MBM”) and poultry meal (“PM”)), meat products for the pet food industry, blood products (plasma and whole blood), collagen, fats (primarily bleachable fancy tallow (“BFT”), poultry grease (“PG”) and yellow grease (“YG”)), bakery by-products (“BBP”) and hides, as well as a range of branded and value-added products.
Fresh and salted hides and fresh skins are sold to tanneries, automotive companies, leather processors and to the shoe and furniture industries in Italy, Germany and China. • Our grease trap services business provides our customers with a comprehensive set of solutions to their trap grease disposal needs, including manifests for regulatory compliance, computerized routing for consistent cleaning and comprehensive trap cleaning.
Fresh and salted hides and fresh skins are sold to tanneries, automotive companies, leather processors and to the shoe and furniture industries in Italy, Germany and China. • Our grease trap services business provides our customers with a comprehensive set of solutions to their trap grease disposal needs, including manifests for regulatory compliance, computerized routing for consistent Page 7 cleaning and comprehensive trap cleaning.
In North America, we compete with other rendering, restaurant Page 11 services and bakery residual businesses, and alternative methods of disposal of animal processing by-products and used restaurant cooking oil provided by trash haulers, waste management companies, biodiesel companies, anaerobic digestion companies and others. In addition, U.S. food service establishments have increasingly experienced theft of used cooking oil.
In North America, we compete with other rendering, restaurant services and bakery residual businesses, and alternative methods of disposal of animal processing by-products and used restaurant cooking oil provided by trash haulers, waste management companies, biodiesel companies, anaerobic digestion companies and others. In addition, U.S. food service establishments have increasingly experienced theft of used cooking oil.
The finished product, which is continually tested to ensure that the caloric and nutrient contents meet specifications, is a nutritious additive used in animal feed.
The finished product, which is tested to ensure that the caloric and nutrient contents meet specifications, is a nutritious additive used in animal feed.
The need for food service establishments in the United States to comply with environmental regulations concerning the proper disposal of used restaurant cooking oil should continue to provide a growth area for this raw material source. The rendering industry is highly fragmented with a number of local slaughtering operations that provide us with raw materials.
The need for food service establishments in the United Page 11 States to comply with environmental regulations concerning the proper disposal of used restaurant cooking oil should continue to provide a growth area for this raw material source. The rendering industry is highly fragmented with a number of local slaughtering operations that provide us with raw materials.
Page 6 Raw materials: Used cooking oil is collected from restaurants, food service establishments and grocery stores. Many of our suppliers operate stores that are part of national chains. Used cooking oil is placed in various sizes and types of containers and supplied to the Company under mutually agreeable contract terms.
Page 6 Raw materials: Used cooking oil is collected from restaurants, food service establishments, industrial operations and grocery stores. Many of our suppliers operate stores that are part of national chains. Used cooking oil is placed in various sizes and types of containers and supplied to the Company under mutually agreeable contract terms.
Used Cooking Oil The Company is a leading collector and processor of used cooking oil in North America for use as a valuable low carbon fuel and feed ingredient. The Company estimates it collects used cooking oil from approximately 191,000 locations in the U.S. The Company’s primary customer for this product is the DGD Joint Venture.
Used Cooking Oil The Company is a leading collector and processor of used cooking oil in North America for use as a valuable low carbon fuel and feed ingredient. The Company estimates it collects used cooking oil from approximately 173,000 locations in the U.S. The Company’s primary customer for this product is the DGD Joint Venture.
The credit received or amount charged for raw Page 9 materials under both formula and non-formula arrangements is based on various factors, including the type of raw materials, demand for the raw materials, the expected value of the finished product to be produced, the anticipated yields, the volume of material generated by the supplier and processing and transportation costs.
The credit received or amount charged for raw materials under both formula and non-formula arrangements is based on various factors, including the type of raw materials, demand for the raw materials, the expected value of the finished product to be produced, the anticipated yields, the volume of material generated by the supplier and processing and transportation costs.
The Fuel Ingredients operating segment includes the Company's global activities related to (i) the Company’s share of the results of its equity investment in Diamond Green Diesel Holdings LLC, a joint venture with Valero Energy Corporation (“Valero”) to convert animal fats, recycled greases, used cooking oil, inedible corn oil, soybean oil, or other feedstocks that become economically and commercially viable into renewable diesel (“DGD” or the “DGD Joint Venture”) as described in Note 2 to the Company's Consolidated Financial Statements for the period ended December 31, 2022 included herein, (ii) the conversion of organic sludge and food waste into biogas in Europe, (iii) the collection and conversion of fallen stock and certain animal by-products pursuant to applicable EU regulations into low-grade energy sources to be used in industrial applications in Europe, and (iv) the processing of manure into natural bio-phosphate in Europe.
The Fuel Ingredients operating segment includes the Company’s global activities related to (i) the Company’s share of the results of its equity investment in Diamond Green Diesel Holdings LLC, a joint venture with Valero Energy Corporation (“Valero”) to convert animal fats, recycled greases, used cooking oil, inedible corn oil, soybean oil, or other feedstocks that become economically and commercially viable into renewable diesel (“DGD” or the “DGD Joint Venture”) as described in Note 1 and Note 2 to the Company’s Consolidated Financial Statements for the period ended December 30, 2023 included herein, (ii) the conversion of organic sludge and food waste into biogas in Europe, (iii) the collection and conversion of fallen stock and certain animal by-products pursuant to applicable EU regulations into low-grade energy sources to be used in industrial applications in Europe, and (iv) the processing of manure into natural bio-phosphate in Europe.
Certain of our finished products are ingredients that compete with alternatives, such as corn, soybean oil, inedible corn oil, palm oils, soybean meal and heating oil, based on nutritional and functional values; therefore, the actual pricing for those finished products, as well as competing products, can be quite volatile.
Certain of our finished products are ingredients that compete with alternatives, such as corn, soybean oil, inedible corn oil, palm oils, soybean meal and heating oil, based on nutritional and Page 10 functional values; therefore, the actual pricing for those finished products, as well as competing products, can be quite volatile.
HUMAN CAPITAL We are committed to having an engaged, diverse and inclusive workplace that fosters learning, development and innovation, and we are committed to building a culture and working environment that is inclusive and respectful for all, and where our employees can do their best work and feel valued for their contributions.
Page 12 HUMAN CAPITAL We are committed to having an engaged, diverse and inclusive workplace that fosters learning, development and innovation, and we are committed to building a culture and working environment that is inclusive and respectful for all, and where our employees can do their best work and feel valued for their contributions.
Management believes we are in compliance with these provisions of FSMA and the finalized rules. The FDA also has regulations governing food additives in animal feed and pet food, which could apply to the use of protein from black soldier fly larvae in such products.
Page 14 Management believes we are in compliance with these provisions of FSMA and the finalized rules. The FDA also has regulations governing food additives in animal feed and pet food, which could apply to the use of protein from black soldier fly larvae in such products.
We provide several types of containers for used cooking oil collection to food service establishments, which are proprietary self-contained collection systems that are housed either inside or outside the establishment, with the used cooking oil pumped directly into collection vehicles via an outside valve.
We provide several types of containers for used cooking oil collection to food service establishments, which are proprietary self-contained collection systems that are housed either inside or outside the establishment, with the used cooking oil from indoor containers pumped directly into collection vehicles via an outside valve.
Additionally, in November 2022 the DGD Joint Venture completed the construction of the DGD Port Arthur Plant, with a name plate capacity to produce 470 million gallons per year of renewable diesel and 20 million gallons per year of renewable naphtha and having similar logistics flexibilities as those of the DGD St. Charles Plant.
Additionally, in November 2022 the DGD Joint Venture completed the construction of the DGD Port Arthur Plant, with a capacity to produce 470 million gallons per year of renewable diesel and 20 million gallons per year of renewable naphtha and having similar logistics flexibilities as those of the DGD St. Charles Plant.
While the Company's principal finished products are generally sold at prices prevailing at the time of sale, the Company's ability to deliver large quantities of finished products from multiple locations and to coordinate sales from a central Page 10 location enables us to sell into the market with the highest return.
While the Company’s principal finished products are generally sold at prices prevailing at the time of sale, the Company’s ability to deliver large quantities of finished products from multiple locations and to coordinate sales from a central location enables us to sell into the market with the highest return.
In the United States, Darling is a partner with Valero Energy Corporation in Diamond Green Diesel, a renewable diesel facility, which converts used cooking oils and animal fats into valuable biofuel products. In Canada, the Company is a leading recycler of animal by-products.
In the United States, Darling is a partner with Valero Energy Corporation in Diamond Green Diesel, a renewable diesel facility, which converts used cooking oils, animal fats and other feedstocks into valuable biofuel products. In Canada, the Company is a leading recycler of animal by-products.
Collagens produced and marketed by the Company are sold to third parties to be used as ingredients in the pharmaceutical, nutriceutical, food, pet food, and technical (e.g., photographic) industries. Natural casings produced and marketed by the Company are sold to third parties to be used as an ingredient in the production of sausages and other similar food products.
Collagens produced and marketed by the Company are sold to third-parties to be used as ingredients in the pharmaceutical, nutraceutical, food, pet food, and technical (e.g., photographic) industries. Natural casings produced and marketed by the Company are sold to third-parties to be used as an ingredient in the production of sausages and other similar food products.
With the Rousselot collagen business, the Company is part of the growing global collagen market. Collagen is a functional ingredient, which means that it has a role in the end product by adding a critical property to it that is largely non-substitutable.
With the Rousselot and Gelnex collagen business, the Company is part of the growing global collagen market. Collagen is a functional ingredient, which means that it has a role in the end product by adding a critical property to it that is largely non-substitutable.
All of the bakery residuals that the Company collects is bulk loaded, which we believe represents a significant advantage over competitors that receive a large percentage of raw materials from less efficient, manual methods.
All of the bakery residuals that the Company collects are bulk loaded, which we believe represents a significant advantage over competitors that receive a large percentage of raw materials from less efficient, manual methods.
Rousselot collagen products have higher sales prices relative to the Company’s other end products, but comprise a minimal portion of the cost of final products in many segments, for example the pharmaceutical end markets.
Rousselot and Gelnex collagen products have higher sales prices relative to the Company’s other end products, but comprise a minimal portion of the cost of final products in many segments, for example the pharmaceutical end markets.
Darling Ingredients International's specialized portfolio of over 340 products covers all animal origin raw material types and thereby offers a comprehensive, single source solution for suppliers.
Darling Ingredients International's specialized portfolio of over 345 products covers all animal origin raw material types and thereby offers a comprehensive, single source solution for suppliers.
In Europe, the Company's 10 largest raw material suppliers accounted for approximately 30% of the total raw material processed by the Company in Europe, with one single supplier accounting for approximately 11% of the total raw material processed in Europe.
In Europe, the Company’s 10 largest raw material suppliers accounted for approximately 34% of the total raw material processed by the Company in Europe, with one single supplier accounting for approximately 11% of the total raw material processed in Europe.
AVAILABLE INFORMATION We make available, free of charge, through our investor relations web site, our reports on Forms 10-K, 10-Q and 8-K, and amendments to those reports, as well as all other filings with the SEC, as soon as reasonably practicable after such materials are electronically filed with, or furnished to, the SEC pursuant to Section 13(a) or 15(d) of the Exchange Act.
Page 18 AVAILABLE INFORMATION We make available, free of charge, through our investor relations website, our reports on Forms 10-K, 10-Q and 8-K, and amendments to those reports, as well as all other filings with the SEC, as soon as reasonably practicable after such materials are electronically filed with, or furnished to, the SEC pursuant to Section 13(a) or 15(d) of the Exchange Act.
Rousselot is a global leading market provider of collagen for the food, pharmaceutical and technical industries with operations in Europe, the United States, South Page 4 America and China. CTH is a leading natural casings company for the sausage industry with operations in Europe, China and the United States.
Rousselot and Gelnex are global leading market providers of collagen for the Page 4 food, pharmaceutical and technical industries with operations in Europe, the United States, South America and China. CTH is a leading natural casings company for the sausage industry with operations in Europe, China and the United States.
Page 7 Food Ingredients Segment Our Food Ingredients segment consists principally of (i) the collagen business conducted by Darling Ingredients International under the Rousselot name, (ii) the natural casings and meat by-products business conducted by Darling Ingredients International under the CTH name and (iii) certain specialty products businesses conducted by Darling Ingredients International under the Sonac name.
Food Ingredients Segment Our Food Ingredients segment consists principally of (i) the collagen business conducted by Darling Ingredients International under the Rousselot and Gelnex names, (ii) the natural casings and meat by-products business conducted by Darling Ingredients International under the CTH name and (iii) certain specialty products businesses conducted by Darling Ingredients International under the Sonac name.
The Company's premium, value-added and branded products command significantly higher pricing relative to the Company's principal finished product lines due to their enhanced nutritional content, which is a function of the Company's specialized processing techniques. Customers for our premium, value-added and branded products include feed mills, pet food manufacturers, integrated poultry producers, the dairy industry and golf courses.
The Company’s premium, value-added and branded products command significantly higher pricing relative to the Company’s principal finished product lines due to their enhanced qualities, which is a function of the Company’s specialized processing techniques and/or know-how. Customers for our premium, value-added and branded products include feed mills, pet food manufacturers, integrated poultry producers, the dairy industry and golf courses.
During the 2022 fiscal year, the Company's 10 largest raw materials suppliers in North America accounted for approximately 33% of the total raw material processed by the Company in North America, with one single supplier accounting for approximately 8% of the total raw material processed in North America.
During the 2023 fiscal year, the Company’s 10 largest raw materials suppliers in North America accounted for approximately 36% of the total raw material processed by the Company in North America, with one single supplier accounting for approximately 8% of the total raw material processed in North America.
In fiscal year 2022, the Company generated $6.5 billion in revenues and $737.7 million in net income attributable to Darling. North America We are a leading provider of animal by-product processing, used cooking oil and bakery residual recycling and recovery solutions to the U.S. food industry.
In fiscal year 2023, the Company generated $6.8 billion in revenues and $647.7 million in net income attributable to Darling. North America We are a leading provider of animal by-product processing, used cooking oil and bakery residual recycling and recovery solutions to the U.S. food industry.
Europe, Asia, Australia and South America Darling Ingredients International, our subsidiary, is a worldwide leader in the development and production of specialty ingredients from animal by-products for applications in the pharmaceutical, food, pet food, animal feed, industrial, fuel, bioenergy and fertilizer industries.
International Darling Ingredients International, our subsidiary, is a worldwide leader in the development and production of specialty ingredients from animal by-products for applications in the pharmaceutical, food, pet food, animal feed, industrial, fuel, bioenergy and fertilizer industries.
For financial information about our operating segments and geographic areas, refer to Note 21 and Note 22 to the Company's Consolidated Financial Statements for the period ended December 31, 2022 included herein.
For financial information about our operating segments and geographic areas, refer to Note 21 and Note 22 to the Company’s Consolidated Financial Statements for the period ended December 30, 2023 included herein.
In South America, the Company's 10 largest raw material suppliers accounted for approximately 52% of the total raw material processed by the Company in South America, with one single supplier accounting for approximately 23% of the total raw material processed in South America.
In South America, the Company’s 10 largest raw material suppliers accounted for approximately 48% of the total raw material processed by the Company in South America, with one single supplier accounting for approximately 20% of the total raw material processed in South America.
In China, the Company's 10 largest raw material suppliers accounted for approximately 34% of the total raw material processed by the Company in China, with one single supplier accounting for approximately 9% of the total raw material processed in China.
In China, the Company’s 10 largest raw material suppliers accounted for approximately 37% of the total raw material processed by the Company in China, with one single supplier accounting for approximately 14% of the total raw material processed in China.
Approximately 89% of Darling's U.S. volume of raw materials in fiscal year 2022 was acquired on a "formula" basis.
Approximately 91% of Darling's U.S. volume of raw materials in fiscal year 2023 was acquired on a "formula" basis.
Rousselot enters into formal arrangements related to raw material purchases that differ by raw material type, by duration and by regional area. Rousselot markets its hydrolyzed collagen under the “Peptan” brand; this fast-growing specialty ingredient is positioned specifically towards nutritional supplement customers focusing on improved bone, joint and skin health.
Rousselot and Gelnex enter into formal arrangements related to raw material purchases that differ by raw material type, by duration and by regional area. Rousselot and Gelnex market their hydrolyzed collagen under the “Peptan” and “Peptinex” brands; this fast-growing specialty ingredient is positioned specifically towards nutritional supplement customers focusing on improved bone, joint and skin health.
Charles Plant that increased its renewable diesel production capability to up to 750 million gallons per year of renewable diesel, as well as separating renewable naphtha (approximately 30 million gallons) and other light end renewable hydrocarbons for sale into low carbon fuel markets, at a total cost, including naphtha production and improved logistics capability, of approximately $1.1 billion.
Charles Plant that increased its renewable diesel production capability to up to 750 million gallons per year of renewable diesel, as well as separating renewable naphtha (approximately 30 million gallons) and other light end renewable hydrocarbons for sale into low carbon fuel markets.
Fiscal Year 2022, 2021 and 2020 Net External Sales Darling’s net external sales from fiscal year 2022, 2021 and 2020 by operating segment were as follows (in thousands): Fiscal Year 2022 Fiscal Year 2021 Fiscal Year 2020 Net sales: Feed Ingredients $ 4,539,000 69.5 % $ 3,039,500 64.1 % $ 2,072,104 58.0 % Food Ingredients 1,459,630 22.3 1,271,629 26.8 1,185,701 33.2 Fuel Ingredients 533,574 8.2 430,240 9.1 314,118 8.8 Total $ 6,532,204 100.0 % $ 4,741,369 100.0 % $ 3,571,923 100.0 % Page 5 OPERATIONS Feed Ingredients Segment Our Feed Ingredients segment consists principally of (i) our U.S. ingredients and speciality products businesses, including our fats and proteins, used cooking oil, and trap grease collection business, our Canadian ingredients business, and the ingredients and specialty products businesses conducted by Darling Ingredients International under the Sonac and FASA names (proteins, fats and plasma products) and (ii) our bakery residuals business.
Fiscal Year 2023, 2022 and 2021 Net External Sales Darling’s net external sales from fiscal year 2023, 2022 and 2021 by operating segment were as follows (in thousands): Fiscal Year 2023 Fiscal Year 2022 Fiscal Year 2021 Net sales: Feed Ingredients $ 4,472,592 65.9 % $ 4,539,000 69.5 % $ 3,039,500 64.1 % Food Ingredients 1,752,065 25.8 1,459,630 22.3 1,271,629 26.8 Fuel Ingredients 563,423 8.3 533,574 8.2 430,240 9.1 Total $ 6,788,080 100.0 % $ 6,532,204 100.0 % $ 4,741,369 100.0 % Page 5 OPERATIONS Feed Ingredients Segment Our Feed Ingredients segment consists principally of (i) our U.S. ingredients and specialty products businesses, including our fats and proteins, used cooking oil, and trap grease collection business, our Canadian ingredients business, and the ingredients and specialty products businesses conducted by Darling Ingredients International under the Sonac and FASA names (proteins, fats and plasma products) and (ii) our bakery residuals business.
United Kingdom • The Medicines and Healthcare products Regulatory Agency (“MHRA”), is an executive agency of the Department of Health and Social Care and is responsible for, inter alia , ensuring the safety of medicinal products for human and veterinary use. • The Animal and Plant Health Agency (“APHA”) is an executive agency of the Department for Environment, Food and Rural Affairs and is responsible for protecting the health and welfare of the general public and animals from disease.
Page 16 United Kingdom • The Medicines and Healthcare products Regulatory Agency (“MHRA”), is an executive agency of the Department of Health and Social Care and is responsible for, inter alia , ensuring the safety of medicinal products for human and veterinary use. • The Department for Environment, Food and Rural Affairs (“DEFRA”) is responsible for environmental protection, food production and standards, agriculture, fisheries and rural communities. • The Animal and Plant Health Agency (“APHA”) is an executive agency of DEFRA and is responsible for protecting the health and welfare of the general public and animals from disease.
The Company's website is http://www.darlingii.com and the address for the Company's investor relations web site is http://ir.darlingii.com . Information contained on these websites is not and should not be deemed to be a part of this report or any filing filed with, or furnished to, the SEC by us.
The Company’s website is https://www.darlingii.com and the address for the Company’s investor relations website is https://ir.darlingii.com . Information contained on these websites is not and should not be deemed to be a part of this report or any filing filed with, or furnished to, the SEC by us. Alternatively, these reports may be accessed at the SEC’s website at https://www.sec.gov.
Darling Ingredients International operates a global network of 74 production facilities across five continents covering all aspects of animal by-product processing through six brands: Rendac (fuel), Sonac (proteins, fats, edible fats and blood products), FASA (proteins and fats), Ecoson (bioenergy and fertilizer), Rousselot (collagen) and CTH (natural casings).
Darling Ingredients International operates a global network of 80 production facilities across five continents, including Europe, Asia, Australia, South America and North America covering all aspects of animal by-product processing through seven brands: Rendac (fuel), Sonac (proteins, fats, edible fats and blood products), FASA (proteins and fats), Ecoson (bioenergy and fertilizer), Rousselot (collagen), Gelnex (collagen) and CTH (natural casings).
Rousselot’s profitability is mainly driven by its ability to timely transfer increases in net raw material costs to its customers in order to realize a relatively stable added value per kilogram of collagen, in combination with a strong focus on operations excellence and product quality. Rousselot is involved in all four types of collagen (pigskin, hide, bone and fish).
Rousselot and Gelnex’s profitability is mainly driven by their ability to timely transfer increases in net raw material costs to their customers in order to realize a relatively stable added value per kilogram of collagen, in combination with a strong focus on operations excellence and product quality.
In fiscal 2022, the Company completed several acquisitions including two material rendering operations, Valley Proteins in North America and the FASA Group in South America. See Note 3 to the Company's Consolidated Financial Statements for more information.
In fiscal 2022 and fiscal 2023, the Company completed several acquisitions including two significant rendering operations, Valley Proteins in North America and the FASA Group in South America and a significant collagen operation, Gelnex, with processing located in South America and North America. See Note 3 to the Company’s Consolidated Financial Statements for more information.
Collagen Rousselot is a global leading market provider of collagen for the food, nutraceutical, pharmaceutical and technical (e.g., photographic) industries with operations in Europe, China, South America and the United States. Rousselot has a network of 11 production plants and six sales locations, covering sales into more than 70 countries.
Collagen Rousselot and Gelnex are global leading market providers of collagen for the food, nutraceutical, pharmaceutical and technical (e.g., photographic) industries with operations in Europe, China, South America and the United States. Rousselot and Gelnex have a network of 16 production plants and 12 sales locations, covering sales into more than 80 countries.
Raw material prices are mainly driven by the availability and quality of raw material, and sales prices are mainly driven by market demand and the expected availability of collagen supply. As such, securing sufficient raw material positions is key to the business.
Rousselot and Gelnex are involved in all four types of collagen (pigskin, hide, bone and fish). Raw material prices are mainly driven by the availability and quality of raw material, and sales prices are mainly driven by market demand and the expected availability of collagen supply. As such, securing sufficient raw material positions is key to the business.
There can be no assurance, however, that these satisfactory arrangements will continue, or that new agreements will be reached without union action or on terms satisfactory to us.
Management believes that our relations with our employees and their representatives are satisfactory. There can be no assurance, however, that these satisfactory arrangements will continue, or that new agreements will be reached without union action or on terms satisfactory to us.
European Union and EU Member States • The European Union, which has competence to adopt legislation which is binding on the EU Member States and, as regards regulations, their citizens, related to inter alia , employment and social affairs, agriculture, environment, consumer protection and public health. • EU Member States must correctly transpose EU Directives in their national legislation and apply EU Regulations, and in particular ensure adequate and effective enforcement, control and supervision of the relevant principles such as minimum safety and health requirements for the workplace and use of work equipment by workers.
European Union and EU Member States • The European Union, which has competence to adopt legislation which is binding on the EU Member States and, as regards regulations, their citizens, related to inter alia , employment and social affairs, agriculture, environment, consumer protection and public health. • EU Member States must correctly transpose EU Directives into their national legislation and directly apply EU Regulations, and ensure adequate and effective enforcement, control and supervision of the relevant principles, including minimum safety and health requirements for the workplace and use of work equipment by workers, as well as the implementation and maintenance of a system of official controls and other activities as appropriate to the circumstances, such as relevant communications on food and feed safety and risk, food and feed safety surveillance and other monitoring activities covering all stages of production, processing and distribution.
Page 13 ▪ The FDA has issued final rules for preventive controls (“PCs”) for human food and animal feed (“Human Food PC Rule” and “Animal Food PC Rule,” respectively), which apply to registered FDA facilities that manufacture, process, pack and hold human or animal food and require these facilities to establish and implement written food safety plans, which include hazard analyses, PCs to ensure that significant hazards that are identified as needing to be controlled will be significantly reduced or prevented, monitoring of PCs, supply-chain controls if appropriate to control a significant hazard, recall plans, corrective action procedures, verification activities and record keeping standards.
FSMA also provides that, if the FDA determines that food manufactured, processed, packed, received, or held by a registered facility has a reasonable probability of causing serious adverse health consequences or death to humans or animals, the FDA may suspend the registration of a facility that created, caused, or was otherwise responsible for such reasonable probability, or knew or had reason to know of such probability and packed, received, or held the food. ▪ The FDA has issued final rules for preventive controls (“PCs”) for human food and animal feed (“Human Food PC Rule” and “Animal Food PC Rule,” respectively), which apply to registered FDA facilities that manufacture, process, pack and hold human or animal food and require these facilities to establish and implement written food safety plans, which include hazard analyses, PCs to ensure that significant hazards that are identified as needing to be controlled will be significantly reduced or prevented, monitoring of PCs, supply-chain controls if appropriate to control a significant hazard, recall plans, corrective action procedures, verification activities and record keeping standards.
Australia • The Australian Quarantine and Inspection Service , which regulates the import and export of agricultural products, including animal by-products. • The Department of Agriculture, Fisheries and Forestry , which administers meat and animal by-product legislation. • PrimeSafe , which is the principal regulator of meat and animal by-product businesses in the State of Victoria. • The Australian Competition and Consumer Commission , which regulates Australia’s competition and consumer protection law. • The Australian Securities and Investments Commission , which regulates Australia’s company and financial services laws.
Australia • The Australian Quarantine and Inspection Service , which regulates the import and export of agricultural products, including animal by-products. • The Department of Agriculture, Fisheries and Forestry , which administers meat and animal by-product legislation. • PrimeSafe , which is the principal regulator of meat and animal by-product businesses in the State of Victoria. • The Australian Competition and Consumer Commission , which regulates Australia’s competition and consumer protection law. • The Australian Securities and Investments Commission , which regulates Australia’s company and financial services laws. • Worksafe Victoria , which is the regulator responsible for administering and enforcing occupational health and safety laws and regulations in the State of Victoria. • Environment Protection Authority Victoria , which administers environmental protection laws in Victoria. • Goulburn-Murray Rural Water Corporation , which manages allocation and use of water under local water laws in Victoria.
Under a “formula” arrangement, the charge or credit for raw materials is tied to published finished product prices for a competing ingredient after deducting a fixed processing fee. We also acquire raw material under “non-formula” arrangements whereby suppliers are either paid a fixed price, are not paid, or are charged a collection fee, depending on various economic and competitive factors.
We also acquire raw material under “non-formula” arrangements whereby suppliers are either paid a fixed price, are not paid, or are charged a collection fee, depending on various economic and competitive factors.
In this regard, we have a strong health and safety program that focuses on implementing policies and training programs, as well as performing self-audits, to ensure that our employees remain injury free.
Accordingly, we are committed to the health, safety and wellness of our employees. In this regard, we have a strong health and safety program that focuses on implementing policies and training programs, as well as performing self-audits, all designed to keep our employees injury free. We retain talent by providing employees with training, mentoring and career development.
We market certain of our finished products under our Dar Pro Ingredients brand, certain specialty products under the Sonac and FASA names, collagen products under the Rousselot name and natural casings and meat by-products under the CTH name. See Note 22 of Notes to Consolidated Financial Statements included herein for a breakdown of the Company’s sales by geographic regions.
We market certain of our finished products under our Dar Pro Ingredients brand, certain specialty products under the Sonac and FASA names, collagen products under the Rousselot and Gelnex names and natural casings and meat by-products under the CTH name.
While we have no national or multi-plant union contracts, at December 31, 2022, approximately 16% of the Company's North American employees were covered by multiple collective bargaining agreements. In addition, approximately 30% of Darling Ingredients International's employees are covered by various collective bargaining agreements. Management believes that our relations with our employees and their representatives are satisfactory.
As of December 30, 2023, the Company employed globally approximately 15,800 persons full-time. While we have no national or multi-plant union contracts, at December 30, 2023, approximately 17% of the Company’s North American employees were covered by multiple collective bargaining agreements. In addition, approximately 66% of Darling Ingredients International's employees are covered by various collective bargaining agreements.
Occupational Safety and Health Administration (“OSHA”), which is the main federal agency charged with the enforcement of worker safety and health legislation. • The Securities and Exchange Commission (“SEC”), which regulates securities and information required in annual, quarterly and other reports filed by publicly traded companies.
Occupational Safety and Health Administration (“OSHA”), which is the main federal agency charged with the enforcement of worker safety and health legislation.
Page 15 • The European Commission, which is the European Union’s executive arm and is responsible for drawing up proposals for new EU legislation and implementing the decisions of the European Parliament and the Council of the EU.
In general, each EU Member State is responsible for regulating health and safety at work and labor inspection services and is in charge of controlling compliance with applicable legislation and regulations. • The European Commission, which is the European Union’s politically independent executive arm and is responsible for drawing up proposals for new EU legislation and implementing the decisions of the European Parliament and the Council of the EU.
Brazil • The Ministry of Agriculture, Cattle and Supply (Ministério da Agricultura, Pecuária e Abastecimento) , which regulates the production of collagen. • Ministry of Labor (Ministério do Trabalho) , which regulates labor health and safety. • National Water Agency (ANA) , which regulates waste water discharge permits. • State Government Agency CETESB , responsible for the control, supervision, monitoring and licensing process for pollution generating activities.
Brazil • The Ministry of Agriculture and Cattle (Ministério da Agricultura, Pecuária) , which regulates the production of collagen and activities related to animal feed (i.e., animal slaughter by products). • Ministry of Labor (Ministério do Trabalho) , which regulates labor health and safety.
The EU Directives may allow EU Member States to maintain or establish more stringent measures in their own legislation. In general, each EU Member State is responsible for regulating health and safety at work and labor inspection services and is in charge of controlling compliance with applicable legislation and regulations.
The EU Directives may allow EU Member States to maintain or establish more stringent measures in their own legislation.
To facilitate growth and development, we’ve put several initiatives in place, including leadership training programs such as Darling Leadership Academy, Darling University and Darling Involve International Leadership Training. As of December 31, 2022, the Company employed globally approximately 14,600 persons full-time.
To facilitate growth and development, we’ve put several initiatives in place, including leadership training programs such as Darling Leadership Academy, Darling University and Darling Involve International Leadership Training. Combined with additional subject-specific training, these programs support skill building in the areas of communication, conflict resolution, decision making, inclusive leadership, performance management tactics and more.
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The DGD Port Arthur Plant was completed at a total cost of approximately $1.43 billion.
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Under a “formula” arrangement, the charge or credit for raw materials is tied to Page 9 published finished product prices for a competing ingredient after deducting a fixed processing fee.
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We are keenly aware that our people are fundamental to the ongoing success of our business. Accordingly, we are committed to the health, safety and wellness of our employees.
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See Note 22 of Notes to Consolidated Financial Statements included herein for a breakdown of the Company’s sales by geographic regions.
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In addition, we continue to Page 12 monitor COVID-19 and will continue, as appropriate, to implement operational guidelines in our organization consistent with the applicable governmental and regulatory policies in the geographies we operate intended to protect our employees and prevent the spread of the virus. We retain talent by providing employees with training, mentoring and career development.
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Our goal is to recruit a range of talent that reflects the diversity of our communities. We promote diversity and inclusivity in our hiring practices by posting open jobs to diverse recruiting websites and conducting outreach to diverse groups near our operations. We are keenly aware that our people are fundamental to the ongoing success of our business.
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FSMA also provides that, if the FDA determines that food manufactured, processed, packed, received, or held by a registered facility has a reasonable probability of causing serious adverse health consequences or death to humans or animals, the FDA may suspend the registration of a facility that created, caused, or was otherwise responsible for such reasonable probability, or knew or had reason to know of such probability and packed, received, or held the food.
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We offer online and in-person training for employees throughout their career. This begins with onboarding training for all new employees on a variety of topics, from cybersecurity to business ethics. Further training is then customized to each employee’s role, responsibilities and individual career aspirations.
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Page 17 • Worksafe Victoria , which is the regulator responsible for administering and enforcing occupational health and safety laws and regulations in the State of Victoria. • Environment Protection Authority Victoria , which administers environmental protection laws in Victoria. • Goulburn-Murray Rural Water Corporation , which manages allocation and use of water under local water laws in Victoria.
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To encourage job growth and career advancement for all employees, we announce job openings internally before advertising them externally. In addition, to encourage ongoing leadership development and remove potential barriers to continuing education, we offer an educational assistance program for employees who wish to pursue a degree program or professional certification.
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Alternatively, these reports may be accessed at the SEC’s web site at http://www.sec.gov.
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These authorities and regulations include: ▪ Mandatory recall authority for adulterated or misbranded foods where the use of or exposure to such foods is likely to cause serious adverse health consequences or death to humans or animals, if the responsible party fails to cease distribution and recall such adulterated or misbranded foods voluntarily. ▪ Regulations that define the FDA’s administrative detention authority to include the authority to detain an article of food if there is reason to believe the food is adulterated or misbranded.
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Page 15 • The Securities and Exchange Commission (“SEC”), which enforces the U.S. federal securities laws, including rules governing disclosures required in annual, quarterly and other reports filed by publicly traded companies, and (with the DOJ) the Foreign Corrupt Practices Act (“FCPA”), and other matters.
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Page 17 • The Ministry of the Environment and Climate Change (Ministério do Meio Ambiente e Mudança do Clima - MMA), which regulates and supervises the implementation of the national policy for the environment. • Federal Environmental Agency (Instituto Brasileiro do Meio Ambiente e dos Recursos Naturais Renováveis - IBAMA), which regulates and supervises the development of potentially pollutant activities in Brazil as well as is responsible for the Federal Technical Registry (Cadastro Técnico Federal – CTF), required for all the enterprises which develop potentially pollutant activities and/or use of natural resources. • Various local and State environmental agencies responsible for the State-Level and local-level control, supervision, monitoring and licensing process for pollution generating activities in the areas in which we operate. • Brazilian Federal Police, responsible for regulating and inspecting controlled chemical industrial products. • Brazilian Army , responsible for regulating and inspecting controlled chemical industrial products. • Federal Council of Veterinary Medicine (CFMV), and its regional counterparts (Reginal Councils of Veterinary Medicine – CRMV ), which guide, control, inspect, and regulate the exercise of certain professional categories, and issue the registration of companies (i.e., the Legal Entity Registration Certificate issued by the competent professional council – “CRPJ”) and the annotation of legally qualified professionals in charge of them (i.e., the Technical Responsibility Note issued by the competent professional council – “ART”). • Federal Council of Chemistry (CFQ) , and its regional counterparts (Regional Councils of Chemistry – CRQ), which guide, control, inspect, and regulate the exercise of certain professional categories, and issue the CRPJ (described above) and the ART (described above). • Brazilian Oil, Gas & Biofuels Regulatory Agency (ANP ), responsible for the regulation of the operation of biofuel production plants, an activity that one of our subsidiaries is engaged with. • National Land Transport Agency (ANTT ), which issues subscriptions on the National Register of Road Freight Transporters (RNTRC) and regulates road cargo transportation, an activity that one of our subsidiaries is engaged with.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

114 edited+51 added−19 removed267 unchanged
Biggest changeMany of our raw materials are derived directly or indirectly from animal by-products, which results in the following challenges: Page 20 • In North America, consolidation within the meat processing industry has resulted in bigger and more efficient slaughtering operations, the majority of which utilize “captive” rendering (rendering operations integrated with the meat or poultry packing operation). • Concurrently, there has been limited to no growth in the number of small U.S. meat processors, which have historically been a dependable source of supply for non-captive or independent U.S. renderers, such as us. • The slaughter rates in the U.S. and international meat processing industry are subject to decline during poor economic conditions when consumers generally reduce their consumption of protein, and as a result, during such periods of decline, the availability, quantity and quality of raw materials available to independent renderers, such as us, decreases. • In addition, the Company has seen an increase in the use of used cooking oil in the production of biofuels, which has increased competition for the collection of used cooking oil from restaurants and other food service establishments and contributed to an increase in the frequency and magnitude of theft of used cooking oil in the United States. • Furthermore, a decline in the general performance of the global economy (including a decline in consumer confidence and inflation) and an inability of consumers and companies to obtain credit in the financial markets could have a negative impact on our raw material volume, such as through the forced closure of any of our raw material suppliers.
Biggest changeMany of our raw materials are derived directly or indirectly from animal by-products, which results in the following challenges: • In North America, consolidation within the meat processing industry has resulted in bigger and more efficient slaughtering operations, the majority of which utilize “captive” rendering (rendering operations integrated with the meat or poultry packing operation). • Concurrently, there has been limited to no growth in the number of small U.S. meat processors, which have historically been a dependable source of supply for non-captive or independent U.S. renderers, such as us. • The slaughter rates in the U.S. and international meat processing industry are subject to decline during poor economic conditions when consumers generally reduce their consumption of protein, and as a result, during such periods of decline, the availability, quantity and quality of raw materials available to independent renderers, such as us, decreases.
We face risks associated with our international activities, which could negatively affect our sales to customers in foreign countries and our operations and assets in such countries. We conduct foreign operations in Europe, Canada, Asia, South America and Australia.
We face risks associated with our international activities, which could negatively affect our sales to customers in foreign countries and our operations and assets in such countries. We conduct foreign operations in Europe, South America, Canada, Asia and Australia.
While we expect that our geographical diversity reduces our exposure to risks in any one country or part of the world, it also subjects us to the various risks and uncertainties relating to international sales and operations, including: • imposition of tariffs, quotas, trade barriers and other trade protection measures imposed by the United States against foreign countries or by foreign countries against others regarding the importation of poultry, beef and pork products, in addition to operating, import or export licensing requirements imposed by various foreign countries; • imposition of border restrictions by foreign countries with respect to the import of poultry, beef and pork products due to animal disease or other perceived health or safety issues; • change in existing trade agreements, such as the United States-Mexico-Canada Agreement (“USMCA”), which could negatively impact our business; • impact of currency exchange rate fluctuations between the U.S. dollar and foreign currencies, particularly the euro, the Canadian dollar, the Chinese renminbi, the Brazilian real, the British pound, the Japanese yen, the Australian dollar and the Polish zloty, which may reduce the U.S. dollar value of the revenues, profits and cash flows we receive from non-U.S. markets or of our assets in non-U.S. countries or increase our supply costs, as measured in U.S. dollars in those markets; • exchange controls and other limits on our ability to import raw materials, import or export finished products or to repatriate earnings from overseas, such as exchange controls in effect in China, that may limit our ability to repatriate earnings from those countries; • different regulatory structures (including creditor rights that may be different than in the United States) and unexpected changes in regulatory environments (including, without limitation, in China), including changes resulting in potentially Page 24 adverse tax consequences or imposition of onerous trade restrictions, price controls, industry controls, animal and human food safety controls, employee welfare schemes or other government controls; • political or economic instability, social or labor unrest or changing macroeconomic conditions (such as high inflation rates) or other changes in political, economic or social conditions in the respective jurisdictions; • changes in tax laws or to tax rates in any of the jurisdictions in which we operate and adverse outcomes from tax audits; • compliance with and enforcement of a wide variety of complex U.S. and non-U.S. laws, treaties and regulations, including, without limitation, anti-bribery laws such as the U.S.
While we expect that our geographical diversity reduces our exposure to risks in any one country or part of the world, it also subjects us to the various risks and uncertainties relating to international sales and operations, including: • imposition of tariffs, quotas, trade barriers and other trade protection measures imposed by the United States against foreign countries or by foreign countries against others regarding the importation of poultry, beef and pork products, in addition to operating, import or export licensing requirements imposed by various foreign countries; • imposition of border restrictions by foreign countries with respect to the import of poultry, beef and pork products due to animal disease or other perceived health or safety issues; • change in existing trade agreements, such as the United States-Mexico-Canada Agreement (“USMCA”), which could negatively impact our business; • impact of currency exchange rate fluctuations between the U.S. dollar and foreign currencies, particularly the euro, the Brazilian real, the Canadian dollar, the Chinese renminbi, the British pound, the Japanese yen, the Australian dollar and the Polish zloty, which may reduce the U.S. dollar value of the revenues, profits and cash flows we receive from non-U.S. markets or of our assets in non-U.S. countries or increase our supply costs, as measured in U.S. dollars in those markets; • exchange controls and other limits on our ability to import raw materials, import or export finished products or to repatriate earnings from overseas, such as exchange controls in effect in China, that may limit our ability to repatriate earnings from those countries; • different regulatory structures (including creditor rights that may be different than in the United States) and unexpected changes in regulatory environments (including, without limitation, in China), including changes resulting in potentially adverse tax consequences or imposition of onerous trade restrictions, price controls, industry controls, animal and human food safety controls, employee welfare schemes or other government controls; • political or economic instability, social or labor unrest or changing macroeconomic conditions (such as high inflation rates) or other changes in political, economic or social conditions in the respective jurisdictions; • changes in tax laws or to tax rates in any of the jurisdictions in which we operate and adverse outcomes from tax audits; • compliance with and enforcement of a wide variety of complex U.S. and non-U.S. laws, treaties and regulations, including, without limitation, anti-bribery laws such as the U.S.
For instance, while we share certain management rights with our joint venture partner under the DGD LLC Agreement, we do not have full control of every aspect of DGD’s business and certain significant decisions concerning DGD, including, among others, the acquisition or disposition of assets above a certain value threshold, making certain changes to DGD’s business plan, raising debt or equity capital, DGD’s distribution policy, and entering into particular transactions, which also require certain approvals from our joint venture partner.
For instance, while we share certain management rights with our joint venture partner under the DGD LLC Agreement, we do not have full control of every aspect of DGD’s business and certain significant decisions concerning DGD, including, among others, the acquisition or disposition of assets above a certain value threshold, making certain changes to DGD’s business plan, raising debt or equity capital, DGD’s distribution policy, and entering into particular transactions, also require certain approvals from our joint venture partner.
Even if such coverage ratios are met in the future, any determination to pay cash dividends on our common stock will be at the discretion of our board of directors and will be based upon our financial condition, operating results, capital requirements, plans for expansion, business opportunities, restrictions imposed by any of our financing arrangements, provisions of applicable law and any other factors that our board of directors determines are relevant at that point in time.
Even if such coverage ratios are met, any determination to pay cash dividends on our common stock will be at the discretion of our board of directors and will be based upon our financial condition, operating results, capital requirements, plans for expansion, business opportunities, restrictions imposed by any of our financing arrangements, provisions of applicable law and any other factors that our board of directors determines are relevant at that point in time.
In addition to the risk factors discussed in this report, the price and volume volatility of our common stock may be affected by: Page 33 • actual or anticipated fluctuations in ingredient prices; • actual or anticipated variations in our operating results; • our earnings releases and financial performance; • changes in financial estimates or buy/sell recommendations by securities analysts; • our ability to repay our debt; • our access to financial and capital markets to refinance our debt; • performance of our joint venture investments, including the DGD Joint Venture; • our dividend policy; • market conditions in the industry and the general state of the securities markets; • investor perceptions of us and the industry and markets in which we operate; • governmental legislation or regulation; • currency and exchange rate fluctuations that impact our earnings and balance sheet; and • general economic and market conditions, such as U.S. or global reactions to economic developments, including regional recessions, inflation, currency devaluations or political unrest.
In addition to the risk factors discussed in this report, the price and volume volatility of our common stock may be affected by: • actual or anticipated fluctuations in ingredient prices; • actual or anticipated variations in our operating results; • our earnings releases and financial performance; • changes in financial estimates or buy/sell recommendations by securities analysts; • our ability to repay our debt; • our access to financial and capital markets to refinance our debt; • performance of our joint venture investments, including the DGD Joint Venture; • our dividend policy; • market conditions in the industry and the general state of the securities markets; • investor perceptions of us and the industry and markets in which we operate; • governmental legislation or regulation; • currency and exchange rate fluctuations that impact our earnings and balance sheet; and Page 35 • general economic and market conditions, such as U.S. or global reactions to economic developments, including regional recessions, inflation, currency devaluations or political unrest.
We are subject to the rules and regulations of various governmental agencies in the United States, the EU, Canada, China and the other countries in which Darling Ingredients International operates. These include rules and regulations administered by governmental agencies at the supranational, federal, state, provincial or local level. See Item 1.
We are subject to the rules and regulations of various governmental agencies in the United States, the EU, Brazil, Canada, China and the other countries in which Darling Ingredients International operates. These include rules and regulations administered by governmental agencies at the supranational, federal, state, provincial or local level. See Item 1.
Page 28 Although no global disease pandemic among humans has been linked to Bird Flu or other emerging diseases as of the date of this report, governments may be pressured to address these concerns, including by executive action such as temporarily closing certain businesses, including meat and animal processing facilities, within jurisdictions suspected of contributing to the spread of such diseases or by legislative or other policy action, such as prohibiting imports of animals, meat and animal by-products from countries or regions where the disease is detected or suspected.
Although no global disease pandemic among humans has been linked to Bird Flu or other emerging diseases as of the date of this report, governments may be pressured to address these concerns, including by executive action such as temporarily closing certain businesses, including meat and animal processing facilities, within jurisdictions suspected of contributing to the spread of such diseases or by legislative or other policy action, such as prohibiting imports of animals, meat and animal by-products from countries or regions where the disease is detected or suspected.
In September 2021, the European Commission relaxed the “feed ban” to allow the feeding of non-ruminant farmed animals with insect PAP, reauthorize the feeding of poultry with pig PAP, the feeding of pigs with poultry PAP and allow the use of ruminant derived gelatin in feeds for non-ruminant farmed animals.
In 2021, the European Commission relaxed the “feed ban” to allow the feeding of non-ruminant farmed animals with insect PAP, reauthorize the feeding of poultry with pig PAP, the feeding of pigs with poultry PAP and allow the use of ruminant derived gelatin in feeds for non-ruminant farmed animals.
These developments and the impact of the terms of the Protocol can cause import/export delays between the EU and the UK, and can entail additional costs within the UK itself, where imports/exports are with Northern Ireland.
These developments and the impact of the terms of the NI Protocol can cause import/export delays between the EU and the UK, and can entail additional costs within the UK itself, where imports/exports are with Northern Ireland.
Page 34 Unlike indebtedness, where principal and interest customarily are payable on specified due dates, in the case of common stock, (i) dividends are payable only when and if declared by our board of directors or a duly authorized committee of the board and (ii) as a corporation, we are restricted under applicable Delaware law to making dividend payments and redemption payments only from legally available assets.
Unlike indebtedness, where principal and interest customarily are payable on specified due dates, in the case of common stock, (i) dividends are payable only when and if declared by our board of directors or a duly authorized committee of the board and (ii) as a corporation, we are restricted under applicable Delaware law to making dividend payments and redemption payments only from legally available assets.
Among other things, these information systems process incoming customer orders and outgoing supplier orders, manage inventory, and allow us to efficiently collect raw materials and distribute products, process and bill shipments to and collect cash from our customers, respond to customer and supplier inquiries, contribute to our overall internal control processes, maintain records of our property, plant and equipment, record and pay amounts due vendors and other creditors and manage our human resource function.
Among other things, these information systems process incoming customer orders and outgoing supplier orders, manage inventory, and allow us to efficiently collect raw materials and distribute products, process Page 38 and bill shipments to and collect cash from our customers, respond to customer and supplier inquiries, contribute to our overall internal control processes, maintain records of our property, plant and equipment, record and pay amounts due vendors and other creditors and manage our human resource function.
Additionally, our worker’s compensation, auto and general liability policies contain significant deductibles or self-insured retentions. We develop bi-yearly and record quarterly an estimate of our projected insurance-related liabilities. We estimate the liabilities associated with the risks retained by us, in part, by considering historical claims experience, demographic and severity factors and other actuarial assumptions.
Additionally, our worker’s compensation, auto and general liability policies contain significant deductibles or self-insured retentions. We develop bi-yearly and record quarterly an estimate of our projected insurance-related liabilities. We estimate the liabilities associated with the risks retained by us, in part, by considering historical claims Page 41 experience, demographic and severity factors and other actuarial assumptions.
In March 2010, the Patient Protection and Affordable Care Act, as amended by the Health Care and Education Affordability Reconciliation Act (the “ACA”), was signed into law in the United States.
In March 2010, the Patient Protection and Affordable Care Act, as amended by the Health Care and Education Affordability Reconciliation Act (collectively, the “ACA”), was signed into law in the United States.
“ Management Discussion and Analysis of Financial Condition and Results of Operations ” - “ Senior Secured Credit Facilities ,” “6 % Senior Notes due 2030, ” “ 5.25% Senior Notes due 2027 ” and “3.625 % Senior Notes due 2026 .” Page 32 Despite our existing level of indebtedness, we and our subsidiaries may still be able to incur substantially more indebtedness, which could further exacerbate the risks to our financial condition described above.
“ Management Discussion and Analysis of Financial Condition and Results of Operations ” - “ Senior Secured Credit Facilities ,” “6 % Senior Notes due 2030, ” “ 5.25% Senior Notes due 2027 ” and “3.625 % Senior Notes due 2026 .” Despite our existing level of indebtedness, we and our subsidiaries may still be able to incur substantially more indebtedness, which could further exacerbate the risks to our financial condition described above.
Should our international operations continue to expand, they will represent a larger part of our business and such exchange rate fluctuations may have a greater impact on our business, financial condition and results of operations. Page 36 Large capital projects can take many years to complete, and market conditions could deteriorate over time, negatively impacting project returns.
Should our international operations continue to expand, they will represent a larger part of our business and such exchange rate fluctuations may have a greater impact on our business, financial condition and results of operations. Large capital projects can take many years to complete, and market conditions could deteriorate over time, negatively impacting project returns.
The quality and volume of the finished products that we Page 25 are able to produce could be negatively impacted by unseasonable or severe weather or unexpected declines in the volume of raw materials available during holidays, which in turn could have a material adverse effect on our business, results of operations and financial condition.
The quality and volume of the finished products that we are able to produce could be negatively impacted by unseasonable or severe weather or unexpected declines in the volume of raw materials available during holidays, which in turn could have a material adverse effect on our business, results of operations and financial condition.
In the event of a casualty, condemnation, work stoppage, permitting withdrawal or delay, severe weather event, or other unscheduled shutdown involving one of our facilities, in a majority of our markets we would utilize a nearby operating facility to continue to serve our customers in the affected market; however, in certain markets we do not have alternate operating facilities.
In the event of a casualty, condemnation, work stoppage, permitting withdrawal or delay, severe weather event, cyber-attack or other unscheduled shutdown involving one of our facilities, in a majority of our markets we would utilize a nearby operating facility to continue to serve our customers in the affected market; however, in certain markets we do not have alternate operating facilities.
The testing of goodwill for impairment requires us to make significant estimates about our future performance and cash flows, as well as other assumptions. These estimates can be affected by numerous factors, including changes in economic, industry or market conditions, changes in business operations or regulation, or changes in competition.
The testing of goodwill for impairment requires us to make significant estimates about our future performance and cash flows, as well as other assumptions. These estimates can be affected by numerous factors, including changes in economic, industry or market conditions, changes in Page 28 business operations or regulation, or changes in competition.
There may also be adverse publicity associated with litigation or regulatory proceedings that may decrease customer confidence in our business, regardless of whether the allegations are valid or whether we are ultimately found liable. As a result, litigation or regulatory proceedings may have a material adverse effect on our business, results of operations and financial condition.
There may also be adverse publicity associated with litigation or regulatory proceedings that may decrease customer confidence in our business, regardless of whether the allegations are valid or whether we are ultimately found liable. As a result, litigation or regulatory proceedings may have a material adverse effect on our business, results of Page 40 operations and financial condition.
Freedom of movement between the UK and EU has ended, meaning neither UK nor EU citizens are able to live and work in the EU without certain visas (other than short-term visits for specific purposes (e.g., attending meetings, conducting training) in accordance with local immigration laws).
Freedom of movement between the UK and EU has ended, meaning neither UK nor EU citizens are able to live and work in the EU or UK, respectively, without certain visas (other than short-term visits for specific purposes (e.g., attending meetings, conducting training) in accordance with local immigration laws).
While in fiscal 2022, the amount of tax credits for biofuels impacting the Company was material, legal challenges or changes to, a failure to enforce, reductions in the mandated volumes under, or discontinuing any of these programs could have a negative impact on our business and results of operations.
While in fiscal 2023, the amount of tax credits for biofuels impacting the Company was material, legal challenges or changes to, a failure to enforce, reductions in the mandated volumes under, or discontinuing any of these programs could have a negative impact on our business and results of operations.
A judgment against us or against one of our customers for whom we manufacture or provide products on a product liability or other claim, or our or their agreement to settle a product liability or other claim, or a product recall, could also result in substantial and unexpected expenditures, which would reduce operating income and cash flow.
A judgment against us or against one of our customers for whom we manufacture or provide products on a product liability or other claim, or our or their Page 27 agreement to settle a product liability or other claim, or a product recall, could also result in substantial and unexpected expenditures, which would reduce operating income and cash flow.
Our fleets and drivers are subject to federal, state, local and foreign laws and licensing requirements applicable to commercial fleets, their cargo and their hours and methods of operation. Failure to comply with these laws and regulations in any location could materially adversely affect our business, results of operations, financial condition and reputation.
Our fleets and drivers are subject to federal, state, local and foreign laws and licensing requirements applicable to commercial fleets, their cargo and their hours and methods of operation. Failure to comply with Page 29 these laws and regulations in any location could materially adversely affect our business, results of operations, financial condition and reputation.
We may not successfully identify and complete acquisitions on favorable terms or achieve anticipated synergies relating to any acquisitions, and such acquisitions could result in unknown liabilities, unforeseen operating difficulties and expenditures and require significant management resources. We regularly review potential acquisitions of complementary businesses, services or products.
Page 37 We may not successfully identify and complete acquisitions on favorable terms or achieve anticipated synergies relating to any acquisitions, and such acquisitions could result in unknown liabilities, unforeseen operating difficulties and expenditures and require significant management resources. We regularly review potential acquisitions of complementary businesses, services or products.
In the UK and the EU, pension funds are generally subject to the Institution for Occupational Retirement Provision Directive (Directive 2003/41/EC) (the “IORP Directive”) as implemented in the relevant EU Member States (and the UK). The Page 38 IORP Directive provides for certain general solvency requirements but allows EU Member States discretion to impose specific national requirements.
In the UK and the EU, pension funds are generally subject to the Institution for Occupational Retirement Provision Directive (Directive 2003/41/EC) (the “IORP Directive”) as implemented in the relevant EU Member States (and the UK). The IORP Directive provides for certain general solvency requirements but allows EU Member States discretion to impose specific national requirements.
If we issue preferred shares in the future that have a preference over the common stock with respect to the payment of dividends or upon liquidation, dissolution or winding up, or if we issue preferred shares with voting rights that dilute the voting power of the common stock, the rights of holders of the common stock or the market price of the common stock could be adversely affected.
If we issue preferred shares in the future that have a preference over the common stock with respect to the payment of dividends or upon liquidation, dissolution or winding up, or if we issue preferred shares with voting rights that Page 36 dilute the voting power of the common stock, the rights of holders of the common stock or the market price of the common stock could be adversely affected.
Risks and uncertainties that may affect, or have affected, our business, operating results and financial condition include, but are not limited to, the following: • The prices of many of our products are subject to significant volatility associated with commodities markets; • Our business is dependent on the procurement of raw materials, which is the most competitive aspect of our business; • The DGD Joint Venture subjects us to a number of risks; • Our biofuels business may be affected by energy policies of U.S. and foreign governments; • We are highly dependent on natural gas, diesel fuel and electricity, the price of which can be volatile, and such dependency could materially adversely affect our business; • A significant percentage of our revenue is attributable to a limited number of suppliers and customers; • Certain of our operating facilities are highly dependent upon a single or a few suppliers; • We face risks associated with our international activities, which could negatively affect our sales to customers in foreign countries and our operations and assets in such countries; • Seasonal factors and weather, including the physical impacts of climate changes, can impact the availability, quality and volume of raw materials that we process and negatively affect our operations; • If we or our customers are the subject of product liability or other claims or product recalls, we may incur significant and unexpected costs and our business reputation could be adversely affected; Page 18 • In certain markets we are highly dependent upon a single operating facility and various events beyond our control could cause an interruption in the operation of our facilities, which could adversely affect our business in those markets; • Media campaigns related to feed and food ingredient production or fuel production present reputational and other risks; • An impairment in the carrying value of our goodwill or other intangible assets may have a material adverse effect on our results of operations; • Our operations are subject to various laws, rules and regulations including those relating to the protection of the environment and to health and safety, and we could incur significant costs to comply with these requirements or be subject to sanctions or held liable for environmental damages; • Our business may be negatively impacted by the occurrence of any disease correctly or incorrectly linked to animals; • Our business may be affected by the impact of animal related disease, such as BSE and other food safety issues; • P andemics, epidemics or disease outbreaks, such as the novel coronavirus (“COVID-19”), may disrupt our business, including, among other things, our supply chain and production processes, each of which could materially affect our operations, liquidity, financial condition and results of operations; • We may be subject to work stoppages at our operating facilities, which could cause interruptions in the manufacturing or distribution of our products; • Certain U.S. multiemployer defined benefit pension plans to which we contribute are underfunded and these plans may require minimum funding contributions; • Our substantial level of indebtedness could adversely affect our financial condition; • Despite our existing level of indebtedness, we and our subsidiaries may still be able to incur substantially more indebtedness, which could further exacerbate the risks to our financial condition described above; • We may not be able to generate sufficient cash to service all of our indebtedness and may be forced to take other actions to satisfy our obligations under our indebtedness, which may not be successful; • Our ability to repay our indebtedness depends in part on the performance of our subsidiaries, including our non-guarantor subsidiaries, and their ability to make payments; • The market price of our common stock has been and may continue to be volatile, which could cause the value of your investment to decline; • Our ability to pay any dividends on our common stock may be limited and, consequently, your ability to achieve a return on your investment will depend on appreciation in the price of our common stock; • Future sales of our common stock or the issuance of other equity may adversely affect the market price of our common stock; • Our common stock is an equity security and is subordinate to our existing and future indebtedness; • The issuance of shares of preferred stock could adversely affect holders of common stock, which may negatively impact your investment; • We may incur material costs and liabilities in complying with government regulations; • Downturns and volatility in global economies and commodity and credit markets could materially adversely affect our business, results of operations and financial condition; • We may not successfully identify and complete acquisitions on favorable terms or achieve anticipated synergies relating to any acquisitions, and such acquisitions could result in unknown liabilities, unforeseen operating difficulties and expenditures and require significant management resources; • Our business may be adversely impacted by fluctuations in foreign currency exchange rates, which could affect our ability to comply with our financial covenants; • Large capital projects can take many years to complete, and market conditions could deteriorate over time, negatively impacting project returns; • Changes in consumer preference could negatively impact our business; • If we experience difficulties or a significant disruption in our information systems or if we fail to implement new systems and software successfully, our business could be materially adversely affected; • Increased information technology security threats and more sophisticated computer crime pose a risk to our systems, networks, products and services; • Our success is dependent on our key personnel; • We could have a material weakness in our internal control over financial reporting that would require remediation; • Changes in our tax rates or exposure to additional income tax liabilities could impact our profitability; • Litigation or regulatory proceedings may materially adversely affect our business, results of operations and financial condition; • Our European pension funds may require minimum funding contributions; • The insurance coverage that we maintain may not cover, or fully cover, all operational risks, and if the number or severity of claims for which we are self-insured increases, if we are required to accrue or pay additional amounts because the claims prove to be more severe than our recorded liabilities, if our insurance premiums increase or if we are unable to obtain insurance at acceptable rates or at all, our financial condition and results of operations may be materially adversely affected; Page 19 • We may divest of certain of our brands or businesses from time to time, which could adversely affect us; • Terrorist attacks or acts of war may cause damage or disruption to us and our employees, facilities, information systems, security systems, suppliers and customers, which could materially and adversely affect our net sales, costs and expenses and financial condition; • We may be unable to protect our intellectual property rights; • Our products, processes, methods, and equipment may infringe upon the intellectual property rights of others, which may cause us to incur unexpected costs or prevent us from selling our products; • The healthcare reform legislation in the United States and its implementing regulations could impact the healthcare benefits we are required to provide our employees in the United States and cause our compensation costs to increase, potentially reducing our net income and adversely affecting our cash flows; • We may incur significant charges and experience disruptions or losses of customer and/or supplier relationships in the event we close or divest all or part of a manufacturing plant or facility; • We may not be able to achieve reduction of our greenhouse gas emissions and other sustainability goals; and • The United Kingdom's withdrawal from the EU could have an adverse effect on our business, investments and future operations in Europe.
Risks and uncertainties that may affect, or have affected, our business, operating results and financial condition include, but are not limited to, the following: • The prices of many of our products are subject to significant volatility; • Our business is dependent on the procurement of raw materials, which is the most competitive aspect of our business; • The DGD Joint Venture subjects us to a number of risks; • Our renewable energy businesses may be affected by energy policies around the world; • We are highly dependent on natural gas, diesel fuel and electricity, the price of which can be volatile, and such dependency could materially adversely affect our business; • A significant percentage of our revenue is attributable to a limited number of suppliers and customers; • Certain of our operating facilities are highly dependent upon a single or a few suppliers; • We face risks associated with our international activities, which could negatively affect our sales to customers in foreign countries and our operations and assets in such countries; • Seasonal factors and weather, including the physical impacts of climate changes, can impact the availability, quality and volume of raw materials that we process and negatively affect our operations; • If we or our customers are the subject of product liability or other claims or product recalls, we may incur significant and unexpected costs and our business reputation could be adversely affected; • In certain markets we are highly dependent upon a single operating facility and various events beyond our control could cause an interruption in the operation of our facilities, which could adversely affect our business in those markets; • We may incur losses and additional costs as a result of our hedging transactions; • Media campaigns related to feed and food ingredient production or fuel production present reputational and other risks; • An impairment in the carrying value of our goodwill or other intangible assets may have a material adverse effect on our results of operations; Page 19 • Our operations are subject to various laws, rules and regulations including those relating to the protection of the environment and to health and safety, and we could incur significant costs to comply with these requirements or be subject to sanctions or held liable for environmental damages; • Our business may be negatively impacted by the occurrence of any disease correctly or incorrectly linked to animals; • Our business may be affected by the impact of animal related disease, such as BSE and other food safety issues; • P andemics, epidemics or disease outbreaks, such as coronavirus (“COVID-19”), may disrupt our business, including, among other things, our supply chain and production processes, each of which could materially affect our operations, liquidity, financial condition and results of operations; • We may be subject to work stoppages at our operating facilities, which could cause interruptions in the manufacturing or distribution of our products; • Certain U.S. multiemployer defined benefit pension plans to which we contribute are underfunded and these plans may require minimum funding contributions; • Our substantial level of indebtedness could adversely affect our financial condition; • Despite our existing level of indebtedness, we and our subsidiaries may still be able to incur substantially more indebtedness, which could further exacerbate the risks to our financial condition described above; • We may not be able to generate sufficient cash to service all of our indebtedness and may be forced to take other actions to satisfy our obligations under our indebtedness, which may not be successful; • Our ability to repay our indebtedness depends in part on the performance of our subsidiaries, including our non-guarantor subsidiaries, and their ability to make payments; • The market price of our common stock has been and may continue to be volatile, which could cause the value of your investment to decline; • Our ability to pay any dividends on our common stock may be limited and, consequently, your ability to achieve a return on your investment will depend on appreciation in the price of our common stock; • Future sales of our common stock or the issuance of other equity may adversely affect the market price of our common stock; • Our common stock is an equity security and is subordinate to our existing and future indebtedness; • The issuance of shares of preferred stock could adversely affect holders of common stock, which may negatively impact your investment; • We may incur material costs and liabilities in complying with government regulations; • Downturns and volatility in global economies and commodity and credit markets could materially adversely affect our business, results of operations and financial condition; • We may not successfully identify and complete acquisitions on favorable terms or achieve anticipated synergies relating to any acquisitions, and such acquisitions could result in unknown liabilities, unforeseen operating difficulties and expenditures and require significant management resources; • Our business may be adversely impacted by fluctuations in foreign currency exchange rates, which could affect our ability to comply with our financial covenants; • Large capital projects can take many years to complete, and market conditions could deteriorate over time, negatively impacting project returns; • Changes in consumer preference could negatively impact our business; • If we experience difficulties or a significant disruption in our information systems or if we fail to implement new systems and software successfully, our business could be materially adversely affected; • Increased information technology security threats and more sophisticated computer crime pose a risk to our systems, networks, products and services, while data privacy laws continue to proliferate presenting heightened regulatory risk; • Our success is dependent on our key personnel; • We could have a material weakness in our internal control over financial reporting that would require remediation; • Changes in our tax rates or exposure to additional income tax liabilities could impact our profitability; • Litigation or regulatory proceedings may materially adversely affect our business, results of operations and financial condition; • Our European pension funds may require minimum funding contributions; • The insurance coverage that we maintain may not cover, or fully cover, all operational risks, and if the number or severity of claims for which we are self-insured increases, if we are required to accrue or pay additional amounts Page 20 because the claims prove to be more severe than our recorded liabilities, if our insurance premiums increase or if we are unable to obtain insurance at acceptable rates or at all, our financial condition and results of operations may be materially adversely affected; • We may divest certain of our brands or businesses from time to time, which could adversely affect us; • Terrorist attacks or acts of war may cause damage or disruption to us and our employees, facilities, information systems, security systems, suppliers and customers, which could materially and adversely affect our net sales, costs and expenses and financial condition; • We may be unable to protect our intellectual property rights; • Our products, processes, methods, and equipment may infringe upon the intellectual property rights of others, which may cause us to incur unexpected costs or prevent us from selling our products; • The healthcare reform legislation in the United States, its implementing regulations, and subsequent healthcare developments could impact the healthcare benefits we are required to provide our employees in the United States and cause our compensation costs to increase, potentially reducing our net income and adversely affecting our cash flows; • We may incur significant charges and experience disruptions or losses of customer and/or supplier relationships in the event we close or divest all or part of a manufacturing plant or facility; • We may not be able to achieve our climate, sustainability or other such goals, targets or objectives; and • The United Kingdom's withdrawal from the EU could have an adverse effect on our business, investments and future operations in Europe.
Pandemics, epidemics or disease outbreaks, such as the novel coronavirus (“COVID-19”), may disrupt our business, including, among other things, our supply chain and production processes, each of which could materially affect our operations, liquidity, financial condition and results of operations.
Pandemics, epidemics or disease outbreaks, such as coronavirus (“COVID-19”), may disrupt our business, including, among other things, our supply chain and production processes, each of which could materially affect our operations, liquidity, financial condition and results of operations.
In addition, COVID-19 and similar outbreaks may affect the prices and demand for our finished products. Workforce limitations and travel restrictions resulting from pandemics, epidemics or disease outbreaks such as COVID-19 and related government actions may affect many aspects of our business.
In addition, any such outbreaks may affect the prices and demand for our finished products. Workforce limitations and travel restrictions resulting from pandemics, epidemics or disease outbreaks such as COVID-19 and related government actions may affect many aspects of our business.
Page 35 Given the competitive nature of our industry, we could be adversely affected by violations of various countries’ antitrust, competition and consumer protection laws. These laws generally prohibit companies and individuals from engaging in anticompetitive and unfair business practices.
Given the competitive nature of our industry, we could be adversely affected by violations of various countries’ antitrust, competition and consumer protection laws. These laws generally prohibit companies and individuals from engaging in anticompetitive and unfair business practices.
Moreover, the application of the EU-UK Trade and Cooperation Agreement and any other relevant agreements that may be made between the UK and the EU, and the divergence of laws applicable in the EU and UK as the UK adopts its own legislation will continue to present legal uncertainty.
Moreover, the application of the EU-UK Trade and Cooperation Agreement and any other relevant agreements that have been and may be made between the UK and the EU, and the divergence of laws applicable in the EU and UK as the UK adopts its own legislation will continue to present legal uncertainty.
The healthcare reform legislation in the United States and its implementing regulations could impact the healthcare benefits we are required to provide our employees in the United States and cause our compensation costs to increase, potentially reducing our net income and adversely affecting our cash flows.
Page 42 The healthcare reform legislation in the United States and its implementing regulations could impact the healthcare benefits we are required to provide our employees in the United States and cause our compensation costs to increase, potentially reducing our net income and adversely affecting our cash flows.
Page 39 Terrorist attacks or acts of war may cause damage or disruption to us and our employees, facilities, information systems, security systems, suppliers and customers, which could materially and adversely affect our net sales, costs and expenses and financial condition.
Terrorist attacks or acts of war may cause damage or disruption to us and our employees, facilities, information systems, security systems, suppliers and customers, which could materially and adversely affect our net sales, costs and expenses and financial condition.
Compliance with these and similar regulations could Page 27 increase the cost of new fleet vehicles and increase our operating expenses. Compliance with future GHG regulations may require expenditures that could materially adversely affect our business, results of operations and financial condition.
Compliance with these and similar regulations could increase the cost of new fleet vehicles and increase our operating expenses. Compliance with future GHG regulations may require expenditures that could materially adversely affect our business, results of operations and financial condition.
There is no assurance that the DGD Joint Venture will continue to be profitable or allow us to continue to make a return on our investment. Page 21 DGD’s operations are conducted through a joint venture with Valero.
There is no assurance that the DGD Joint Venture will continue to be profitable or allow us to continue to make a return on our investment. DGD’s operations are conducted through a joint venture with Valero.
Under the CFPC, SAF receives a credit equal to either $0.35/gallon or $1.75/gallon multiplied by the fuel’s emission reduction percentage. In order to receive the $1.75 per gallon baseline, the fuel must be produced at a qualifying facility that must meet prevailing wage and apprenticeship requirements, and production must take place in the United States.
Under the CFPC, sustainable aviation fuel receives a credit equal to either $0.35/gallon or $1.75/gallon multiplied by the fuel’s emission reduction percentage. In order to receive the $1.75 per gallon baseline, the fuel must be produced at a qualifying facility that must meet prevailing wage and apprenticeship requirements, and production must take place in the United States.
In addition, the indentures that govern our senior notes and the credit agreement governing our senior secured credit facilities contain restrictive covenants that limit our ability to engage in activities that may be in our long-term best interest.
In addition, the indentures that govern our senior notes and the credit agreement governing our senior secured credit facilities contain various covenants, including restrictive covenants that limit our ability to engage in activities that may be in our long-term best interest.
The credit agreement governing our senior secured credit facilities and the indentures governing our senior notes restrict our ability to use the proceeds from the disposition of assets, debt incurrence or sales of equity to repay other indebtedness.
The credit agreement governing our Page 34 senior secured credit facilities and the indentures governing our senior notes restrict our ability to use the proceeds from the disposition of assets, debt incurrence or sales of equity to repay other indebtedness.
Moreover, we may not realize the anticipated benefits of any acquisition or strategic alliance and such transactions may not generate anticipated financial results. Future acquisitions could also require us to incur debt, assume contingent liabilities or amortize expenses related to intangible assets, any of which could harm our business.
Moreover, we may not realize the anticipated benefits of any acquisition or strategic alliance and such transactions may not generate anticipated financial results. Future acquisitions could also require us to incur debt, assume contingent liabilities or amortize expenses related to intangible assets, any of which could harm our business and/or negatively impact our results of operations.
Requirements to pay increased contributions, withdrawal liability and excise taxes could negatively impact our liquidity and results of operations. Risks Related to our Indebtedness Our substantial level of indebtedness could adversely affect our financial condition.
Requirements to pay increased contributions, withdrawal liability and excise taxes could negatively impact our liquidity and results of operations. Page 33 Risks Related to our Indebtedness Our substantial level of indebtedness could adversely affect our financial condition.
Page 23 We are highly dependent on natural gas, diesel fuel and electricity, the price of which can be volatile, and such dependency could materially adversely affect our business.
We are highly dependent on natural gas, diesel fuel and electricity, the price of which can be volatile, and such dependency could materially adversely affect our business.
In addition, we and our customers may be subject to product liability or other claims, product recalls, and adverse public relations resulting from developments relating to the discovery of unauthorized adulterations to food additives or other products or from allegations that our food ingredients or other products were mislabeled, were not produced in accordance with the customer’s specifications and/or have not performed adequately in the end product, even where food safety or other product safety is not a concern.
In addition, we and our customers may be subject to product liability or other claims, product recalls, and adverse public relations resulting from developments relating to the discovery of unauthorized adulterations to food additives or other products or from allegations that our food ingredients or other products were mislabeled, were not produced in accordance with the customer’s specifications, contract requirements or regulatory standards and/or have not performed adequately in the end product, even where food safety or other product safety is not a concern.
Seasonal factors and weather, including the physical impacts of climate changes, can impact the availability, quality and volume of raw materials that we process and negatively affect our operations.
Page 26 Seasonal factors and weather, including the physical impacts of climate changes, can impact the availability, quality and volume of raw materials that we process and negatively affect our operations.
Page 29 As a result of our international operations, we could be adversely affected by additional non-U.S. regulations regarding BSE and other food safety issues.
As a result of our international operations, we could be adversely affected by additional non-U.S. regulations regarding BSE and other food safety issues.
Our business is dependent on the procurement of raw materials, which is the most competitive aspect of our business. Our management believes that the most competitive aspect of our business is the procurement of raw materials rather than the sale of finished products.
Page 21 Our business is dependent on the procurement of raw materials, which is the most competitive aspect of our business. Our management believes that the most competitive aspect of our business is the procurement of raw materials rather than the sale of finished products.
Former President Trump also signed two executive orders and other Page 40 directives designed to delay the implementation of certain provisions of the ACA or otherwise circumvent some of the requirements for health insurance mandated by the ACA. While Congress has not passed comprehensive repeal legislation, bills affecting the implementation of the ACA have been signed into law.
Former President Trump also signed two executive orders and other directives designed to delay the implementation of certain provisions of the ACA or otherwise circumvent some of the requirements for health insurance mandated by the ACA. Congress has not passed comprehensive repeal legislation, but bills affecting the implementation of the ACA have been signed into law.
Risks Related to the Company The prices of many of our products are subject to significant volatility associated with commodities markets. Our principal finished products in our Feed Ingredients segment include MBM, PM, BFT, YG, PG, BBP and hides, which are commodities.
Risks Related to the Company The prices of many of our products are subject to significant volatility. Our principal finished products in our Feed Ingredients segment include MBM, PM, BFT, YG, PG, BBP and hides, which are commodities.
Given that IORP Directive II had already been implemented in UK law, the European Union (Withdrawal) Act 2018 had preserved any legislation made in the UK to implement the obligations under IORP Directive II (including those carried over from the original IORP Directive).
Given that IORP Directive II had already been implemented in UK law, the European Union (Withdrawal) Act 2018 (the “EUWA 2018”) had preserved any legislation made in the UK to implement the obligations under IORP Directive II (including those carried over from the IORP Directive).
In addition, in the EU, harmonized rules have been adopted for prevention, control and eradication of transmissible spongiform encephalopathies (“TSEs”), which includes BSE, in Regulation (EC) No 999/2001, as amended (“TSE Regulation”) and in other instruments such as Regulation (EC) No 1069/2009 on animal by-products, as amended (“Animal By-Products Regulation”) and other food and feed hygiene regulations.
In addition, in the EU, harmonized rules have been adopted for prevention, control and eradication of transmissible spongiform encephalopathies (“TSEs”), which includes BSE, in Regulation (EC) No 999/2001, as amended (“TSE Regulation”) and in Regulation (EC) No 1069/2009, as amended (“Animal By-Products Regulation”) and other food and feed hygiene regulations.
In addition, the operation of a joint venture such as this involves a number of risks that could harm our business and result in the DGD Joint Venture not performing as expected, such as: • problems integrating or developing operations, personnel, technologies or products; • the unanticipated breakdown or failure of equipment or processes, including any unforeseen issues that may arise in connection with the operation of the DGD Facilities or completion and startup of any expansion projects, or the possibility of equipment failure as a result of materials degradation; • the inaccuracy of our assumptions about prices for the renewable diesel that the DGD Joint Venture produces; • unforeseen engineering or environmental issues, including new or more stringent environmental regulations affecting operations; • unforeseen capital contributions required under the DGD LLC Agreement; • the inaccuracy of our assumptions about the timing and amount of anticipated revenues and operating costs including feedstock prices; • the diversion of management time and resources; • difficulty in obtaining and maintaining permits and other regulatory issues, potential license revocation and changes in legal requirements; • difficulties in establishing and maintaining relationships with suppliers and end user customers; • the risk that one or more competitive new renewable diesel plants are constructed that use different technologies from the DGD Joint Venture and result in the marketing of products that are more effective as a substitute for carbon-based fuels or less expensive than the products marketed by the DGD Joint Venture; • performance below expected levels of output or efficiency; Page 22 • disruptions in the ability of the pipelines, vessels, or railroads to transport feedstocks or products because of weather events (such as hurricanes), accidents, derailment, collision, fire, explosion, governmental regulations, or third-party actions; • reliance by the DGD Joint Venture on Valero and its adjacent refinery facility for many services and processes; • possible impairment of the acquired assets, including intangible assets, in connection with the occurrence of any other risks associated with the DGD Joint Venture; • possible third-party claims of intellectual property infringement; • inability to source sufficient feedstocks for the operation; and • being forced to sell our equity interests in the DGD Joint Venture pursuant to buy/sell provisions in the DGD LLC Agreement such that we would no longer continue to realize the benefits of the DGD Joint Venture.
In addition, the operation of a joint venture such as this involves a number of risks that could harm our business and result in the DGD Joint Venture not performing as expected, such as: • problems integrating or developing operations, personnel, technologies or products; • the unanticipated breakdown or failure of equipment or processes, including any unforeseen issues that may arise in connection with the operation of the DGD Facilities or completion and startup of any expansion or capital projects, such as the SAF capital project currently underway at the DGD Port Arthur Plant, or the possibility of equipment failure as a result of materials degradation; • the inaccuracy of our assumptions about prices for the renewable diesel that the DGD Joint Venture currently produces and the SAF that the DGD Joint Venture will produce upon completion of the SAF capital project; • unforeseen engineering or environmental issues, including new or more stringent environmental regulations affecting operations; • unforeseen capital contributions required under the DGD LLC Agreement; Page 23 • the inaccuracy of our assumptions about the timing and amount of anticipated revenues and operating costs including feedstock prices; • the diversion of management time and resources; • difficulty in obtaining and maintaining permits and other regulatory issues, potential license revocation and changes in legal requirements; • difficulties in establishing and maintaining relationships with suppliers and end user customers; • the risk that one or more competitive new renewable diesel plants are constructed that use different technologies from the DGD Joint Venture and result in the marketing of products that are more effective as a substitute for carbon-based fuels or less expensive than the products marketed by the DGD Joint Venture; • performance below expected levels of output or efficiency; • disruptions in the ability of the pipelines, vessels, or railroads to transport feedstocks or products because of weather events (such as hurricanes), accidents, derailment, collision, fire, explosion, governmental regulations, or third-party actions; • reliance by the DGD Joint Venture on Valero and its adjacent refinery facility for many services and processes; • possible impairment of the acquired assets, including intangible assets, in connection with the occurrence of any other risks associated with the DGD Joint Venture; • possible third-party claims of intellectual property infringement; • inability to source sufficient feedstocks for the operation or having to increase utilization of feedstocks that produce lower margin product; and • being forced to sell our equity interests in the DGD Joint Venture pursuant to buy/sell provisions in the DGD LLC Agreement such that we would no longer continue to realize the benefits of the DGD Joint Venture.
Our business may be affected by the impact of animal related disease, such as BSE and other food safety issues.
Page 30 Our business may be affected by the impact of animal related disease, such as BSE and other food safety issues.
The UK Pensions Regulator (“TPR”) has published a consultation on its new code of practice, and a draft of the single code (the “Code”), which will cover additional governance requirements to implement IORP Directive II in the UK.
In March 2021, the UK Pensions Regulator (“TPR”) published a consultation on its new code of practice, and a draft of the single code (the “Code”), which will cover additional governance requirements to implement IORP Directive II in the UK.
Certain of our operating facilities are highly dependent upon a single or a few suppliers. Certain of our operating facilities are highly dependent on one or a few suppliers.
Page 25 Certain of our operating facilities are highly dependent upon a single or a few suppliers. Certain of our operating facilities are highly dependent on one or a few suppliers.
We may engage in capital projects, such as the DGD Joint Venture expansion project in Port Arthur, based on the forecasted project economics and level of return on the capital to be employed in the project. Large-scale projects take many years to complete, and market conditions can change from our forecast.
We may engage in capital projects, such as the DGD Joint Venture SAF project underway at the DGD Port Arthur Plant, based on the forecasted project economics and level of return on the capital to be employed in the project. Large-scale projects take many years to complete, and market conditions can change from our forecast.
In comparison, under the terms of the Northern Ireland Protocol (the “NI Protocol”), contained within the EU (Withdrawal Agreement) Act 2020, Northern Ireland is treated for the same purposes as if it were still an EU member state, and must remain aligned to the EU single market and customs rules.
As matters currently stand, under the terms of the Northern Ireland Protocol (the “NI Protocol”), contained within the EU (Withdrawal Agreement) Act 2020, Northern Ireland is treated for the same purposes as if it were still an EU Member State, and must remain aligned to the EU single market and customs rules.
We have approximately 14,600 employees world-wide and are subject to a wide range of local, provincial and national laws and regulations governing the health and safety of workers, including, for example, OSHA in the United States.
We have approximately 15,800 employees world-wide and are subject to a wide range of local, provincial and national laws and regulations governing the health and safety of workers, including, for example, OSHA in the United States.
The IORP Directive II recognizes in one of its recitals that changes in this area could potentially decrease the willingness of employers to provide occupational pension schemes. EU Member States were required to implement IORP Directive II into national legislation by January 13, 2019.
The IORP Directive II recognizes in one of its recitals that changes in this area could potentially decrease the willingness of employers to provide occupational pension schemes. EU Member States were required to implement IORP Directive II into national legislation by January 13, 2019, noting that the IORP Directive was repealed from that date.
Prices for both natural gas and diesel fuel can be volatile, partially due to the ongoing war between the Russian Federation and Ukraine and the inflationary environment, and therefore represent an ongoing challenge to our operating results.
Prices for both natural gas and diesel fuel can be volatile, partially due to the ongoing Russian-Ukraine war, the Israeli-Palestinian conflict and the inflationary environment, and therefore represent an ongoing challenge to our operating results.
The closure or divestiture of all or part of a manufacturing plant or facility could result in future charges and disruptions or losses of customer and/or supplier relationships that could be significant to our business, results of operations and financial condition. We may not be able to achieve reduction of our greenhouse gas emissions and other sustainability goals.
The closure or divestiture of all or part of a manufacturing plant or facility could result in future charges and disruptions or losses of customer and/or supplier relationships that could be significant to our business, results of operations and financial condition. We may not be able to achieve our climate, sustainability or other such goals, targets or objectives.
As a result, UK exports of products that are derived from animal by-products entering the EU must follow third country rules, including being accompanied by an export health certificate or model declaration form, and can be subjected to veterinary checks or having to enter through designated board inspection posts.
In accordance with the EU-UK Trade and Cooperation Agreement, UK exports of products that are derived from animal by-products entering the EU must follow third country rules, including being accompanied by an export health certificate or model declaration form, and can be subjected to veterinary checks or having to enter through designated board inspection posts.
Our ability to achieve any stated goal, target, or objective is and will be subject to numerous factors and conditions, many of which are outside of our control, such as evolving regulatory or quasi-regulatory sustainability standards, differing requirements and the pace of changes in technology.
Our ability to achieve any stated goal, target, or objective is and will be subject to numerous factors and conditions, including, without limitation, available technology, costs and impacts and many factors and conditions outside of our control, such as evolving regulatory or quasi-regulatory sustainability standards, differing requirements and the pace of changes in technology.
Since that time, the DGD Joint Venture has completed several expansion projects, and it currently operates the DGD St. Charles Plant and the DGD Port Arthur Plant. As of December 31, 2022, under the equity method of accounting, we had an investment in the DGD Joint Venture of approximately $1.9 billion included on the consolidated balance sheet.
Since that time, the DGD Page 22 Joint Venture has completed several expansion projects, and it currently operates the DGD St. Charles Plant and the DGD Port Arthur Plant. As of December 30, 2023, under the equity method of accounting, we had an investment in the DGD Joint Venture of approximately $2.2 billion included on the consolidated balance sheet.
This damage could adversely affect our financial results. Page 26 An impairment in the carrying value of our goodwill or other intangible assets may have a material adverse effect on our results of operations. As of December 31, 2022, the Company had approximately $2.0 billion of goodwill.
This damage could adversely affect our financial results. An impairment in the carrying value of our goodwill or other intangible assets may have a material adverse effect on our results of operations. As of December 30, 2023, the Company had approximately $2.5 billion of goodwill.
While we currently have no international, national or multi-plant union contracts, as of December 31, 2022 approximately 13% of Darling’s U.S. employees, 48% of Canadian employees and 30% of Darling Ingredients International’s employees were covered by various collective bargaining agreements.
While we currently have no international, national or multi-plant union contracts, as of December 30, 2023 approximately 14% of Darling’s U.S. employees, 47% of Canadian employees and 66% of Darling Ingredients International’s employees were covered by various collective bargaining agreements.
If any of these risks described above were to materialize and the operations of the DGD Joint Venture were significantly disrupted, it could have a material adverse effect on our business, financial condition and results of operations. Our biofuels business may be affected by energy policies of U.S. and foreign governments.
If any of these risks described above were to materialize and the operations of the DGD Joint Venture were significantly disrupted, it could have a material adverse effect on our business, financial condition and results of operations. Our renewable energy businesses may be affected by energy policies around the world.
We could be adversely affected if the CCPA, including as amended by CPRA, or other state, federal or international data privacy or security laws or regulations are interpreted in a manner that would require changes in our business practices or privacy policies, or if governing jurisdictions interpret or implement their legislation or regulations in ways that negatively affect our business, financial condition and results of operations.
We could be adversely affected if state, federal or international data privacy or cybersecurity laws or regulations are interpreted in a manner that would require changes in our business practices, or if governing jurisdictions interpret or implement their legislation or regulations in ways that negatively affect our business, financial condition and results of operations.
We are a party to various lawsuits, claims and loss contingencies arising in the ordinary course of business, including insured worker's compensation, auto, and general liability claims, assertions by certain regulatory and governmental agencies related to permitting requirements and/or air, wastewater and storm water discharges from the Company’s processing facilities, litigation involving tort, contract, statutory, labor, employment, and other claims, and tax matters.
We are a party to various lawsuits, claims and loss contingencies arising in the ordinary course of business, including insured worker's compensation, auto, and general liability claims, assertions by certain regulatory and governmental agencies related to various matters including labor and employment, employee benefits, occupational safety and health, wage and hour, compliance, sustainability, permitting requirements, environmental matters, including air, wastewater and storm water discharges from the Company’s processing facilities and other federal, state and local issues, litigation involving tort, contract, statutory, labor, employment, and other claims, and tax matters.
Article 62.2., letters (a) and (c), of the IORP Directive II states that the Commission should review and report on the application of the directive by January 13, 2023 looking at the adequacy of the directive “from a prudential and governance point of view” and the impact of the directive on the stability of IORPs.
Pursuant to Article 62.2., letters (a) and (c), of the IORP Directive II, the Commission was required to review and report on the application of the directive by January 13, 2023, to look at the adequacy of the directive “from a prudential and governance point of view” and the impact of the directive on the stability of IORPs.
We also require a significant amount of electricity in operating certain of our facilities, a significant increase in the cost of which could have a material adverse effect on the business and results of operations of the affected facility. A significant percentage of our revenue is attributable to a limited number of suppliers and customers.
We also require a significant amount of electricity in operating certain of our facilities, a significant increase in the cost of which could have a material adverse effect on the business and results of operations of the affected facility.
The outcome of litigation, particularly class action lawsuits, and regulatory proceedings is difficult to assess or quantify. Plaintiffs (including governmental agencies) in these types of lawsuits and proceedings may seek recovery of very large or indeterminate amounts, and the magnitude of the potential loss relating to such lawsuits or proceedings may remain unknown for substantial periods of time.
Plaintiffs (including governmental agencies) in these types of lawsuits and proceedings may seek recovery of very large or indeterminate amounts, and the magnitude of the potential loss relating to such lawsuits or proceedings may remain unknown for substantial periods of time.
There have also been various judicial challenges to the ACA. For example, on June 17, 2021, the U.S. Supreme Court dismissed a judicial challenge to the ACA brought by several states without specifically ruling on the constitutionality of the ACA.
There have also been various judicial challenges to the ACA. For example, on June 17, 2021, the U.S. Supreme Court dismissed a judicial challenge to the ACA brought by several states without specifically ruling on the constitutionality of the ACA. Another significant challenge to the ACA is advancing in federal courts. Specifically, in Braidwood Management v.
EFSA is tasked with establishing and managing a publicly accessible database of studies commissioned or carried out by business operators to support an application or notification in relation to which EU law contains provisions for EFSA to provide a scientific output, including a scientific opinion.
EFSA is also tasked with establishing and managing a publicly accessible database of studies commissioned or carried out by business operators to support an application or notification in relation to which it must provide a scientific output.
The TSE Regulation establishes a “feed ban” consisting of a ban on the use of processed animal protein (“PAP”), in feed for ruminants. Only certain animal proteins considered to be safe (such as fishmeal) can be used, but under very strict conditions. A ban on feeding MBM to ruminants has been in place in the EU since 1994.
The TSE Regulation establishes a “feed ban” consisting of a ban on the use of processed animal protein (“PAP”), in feed for ruminants according to which only Page 31 certain animal proteins considered to be safe (such as fishmeal) can be used, but under very strict conditions.
Currently, according to the Commission Decision of June 29, 2007, as amended, Greece is the only EU Member State classified as having a controlled BSE risk. The other EU Member States are classified as having a negligible BSE risk.
The BSE classification is based on a risk assessment and the implementation of a surveillance program. According to the Commission Decision of June 29, 2007, as amended, Greece is the only EU Member State classified as having a controlled BSE risk. The other EU Member States are classified as having a negligible BSE risk.
Several legislative changes to, or regulatory changes under, all or certain portions of the ACA have been made.
There have been several legislative changes to, or regulatory changes under, all or certain portions of the ACA since its enactment.
In December of 2019, the blender tax credit was extended for calendar years 2020, 2021, and 2022 at $1.00 per gallon. In August of 2022, as part of the Inflation Reduction Act of 2022, the blender tax credit was extended as is until December 31, 2024. After 2024, the Clean Fuels Production Credit (CFPC) becomes effective from 2025 through 2027.
In December of 2019, the blender tax credit was extended for calendar years 2020, 2021, and 2022 at $1.00 per gallon. In August of 2022, as part of the Inflation Reduction Act of 2022, the blender tax credit was extended as is until December 31, 2024.
Although Darling Ingredients International may profit from the possible lifting of the ban for pigs and poultry, changes to the “feed ban” may also adversely affect Darling Ingredients International, possibly restricting the allowed use of some of their products.
Darling Ingredients International may profit from the possible lifting of the ban for pigs and poultry, however, the introduction of changes to the feed ban and further restriction may adversely affect Darling Ingredients International, possibly restricting the allowed use of some of their products.
On December 17, 2021 the Canadian Food Inspection Agency confirmed a case of atypical BSE in an 8.5 year old cow in Alberta. However, the Canadian Food Inspection Agency reported zero cases of BSE in 2022.
On May 24, 2022, the OIE characterized Canada's BSE status as one of “negligible risk”. On December 17, 2021 the Canadian Food Inspection Agency confirmed a case of atypical BSE in an 8.5 year old cow in Alberta. However, the Canadian Food Inspection Agency reported zero cases of BSE in 2023.
The sixth and most recent case of BSE was reported in a six-year-old mixed-breed beef cow in August, 2018, which was the second case of BSE since the OIE characterized the United States’ BSE status as one of “negligible risk” in 2013. Subsequently on May 24, 2022, the OIE characterized Canada's BSE status as one of “negligible risk”.
The sixth case of BSE was reported in a six-year-old mixed-breed beef cow in August, 2018, which was the second case of BSE since the OIE characterized the United States’ BSE status as one of “negligible risk” in 2013. The seventh and most recent case of BSE was announced in May 2023 by the U.S. Department of Agriculture (“USDA”).

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Item 2. Properties

Properties — owned and leased real estate

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Biggest changeLouis, Illinois, United States Animal By-Products Ellenwood, Georgia, United States Animal By-Products Fayetteville, North Carolina, United States Animal By-Products Fresno, California, United States Animal By-Products Grapeland, Texas, United States Animal By-Products Hamilton, Michigan, United States Animal By-Products Henderson, Kentucky, United States Fertilizer Henderson, Kentucky, United States Bakery Residuals Hickson, Ontario, Canada Animal By-Products Honey Brook, Pennsylvania, United States Bakery Residuals Houston, Texas, United States Animal By-Products Itauba, Brazil Animal By-Products Jackson, Mississippi, United States Animal By-Products Jaraguari, Brazil Animal By-Products Kansas City, Kansas, United States Animal By-Products Kansas City, Kansas, United States Protein Refining Knoxville, Tennessee, United States Animal By-Products Lewiston, North Carolina, United States Animal By-Products Lexington, Nebraska, United States Animal By-Products Lingen, Germany Blood Linkwood, Maryland, United States Animal By-Products Linville, Virginia, United States Animal By-Products Loenen, Netherlands Animal By-Products Los Angeles, California, United States Animal By-Products Luohe, China Blood Maquoketa, Iowa, United States Blood Marshville, North Carolina, United States Bakery Residuals Maryborough, Australia Blood Maysville, Kentucky, United States Protein Refining Mason City, Illinois, United States Animal By-Products McBride, Missouri, United States Bakery Residuals Mering, Germany Blood Mifflintown, Pennsylvania, United States Wet Pet Food Moorefield, Ontario, Canada Animal By-Products Muscatine, Iowa, United States Bakery Residuals Newark, New Jersey, United States Animal By-Products Newberry, Indiana, United States Animal By-Products North Baltimore, Ohio, United States Bakery Residuals Omaha, Nebraska, United States Protein Refining Omaha, Nebraska, United States Animal By-Products Osetnica, Poland Animal By-Products Paducah, Kentucky, United States Wet Pet Food Pocahontas, Arkansas, United States * Animal By-Products Ravenna, Nebraska, United States Wet Pet Food Rose Hill, North Carolina, United States Animal By-Products Rose Hill, North Carolina, United States Fat Extraction Russellville, Kentucky, United State Animal By-Products Saint-Catherine, Quebec, Canada* Used Cooking Oil Page 43 San Angelo, Texas, United States Blood San Francisco, California, United States * Animal By-Products São Domingos do Araguaia, Brazil Animal By-Products Sioux City, Iowa, United States Animal By-Products Smyrna, Georgia, United States Trap Processing Springdale, Arkansas, United States Wet Pet Food Son, Netherlands Animal By-Products Starke, Florida, United States Animal By-Products Suzhou, China Blood Tacoma, Washington, United States * Animal By-Products Tama, Iowa, United States Animal By-Products Tampa, Florida, United States Animal By-Products Terre Hill, Pennsylvania, United States Animal By-Products Truro, Novia Scotia, Canada Used Cooking Oil Tubarão, Brazil Animal By-Products Turlock, California, United States Animal By-Products Turlock, California, United States Fertilizer Uberaba, Brazil Animal By-Products Union City, Tennessee, United States Animal By-Products Usnice, Poland Animal By-Products Veribest, Texas, United States Animal By-Products Wadesborro, North Carolina, United States Animal By-Products Wahoo, Nebraska, United States Animal By-Products Ward, South Carolina, United States Animal By-Products Watts, Oklahoma, United States Bakery Residuals/Protein Refining Wichita, Kansas, United States Animal By-Products Winchester, Virginia, United States Animal By-Products Winesburg, Ohio, United States * Animal By-Products Winnipeg, Manitoba, Canada Animal By-Products Xanxerê, Brazil Animal By-Products Xinguara, Brazil Animal By-Products Food Ingredients Segment Almere, Netherlands Casings Amparo, Brazil Collagen Angouleme, France Collagen Da'an, China Collagen Dubuque, Iowa, United States Collagen Eindhoven, Netherlands Fat Elsholz, Germany Fat Erolzheim, Germany Fat Gent, Belgium Collagen Girona, Spain Collagen Harlingen, Netherlands Fat Ilse-Sur-La-Sorgue, France Collagen Kaiping, China Collagen Lubien, Poland Fat Peabody, Massachusetts, United States Collagen Porto, Portugal Casings Presidente Epitacio, Brazil Collagen Stoke-on Trent, United Kingdom Bone Versmold, Germany Fat Vuren, Netherlands Bone Wenzhou, China Collagen Fuel Ingredients Segment Antwerp, Belgium Digester Belm-Icker, Germany Bioenergy Denderleeuw, Belgium Bioenergy Denderleeuw, Belgium Digester Jagel, Germany Bioenergy Rotenburg, Germany Bioenergy Son, Netherlands Bioenergy Page 44 Son, Netherlands Digester * Leased Rent expense for our leased properties was $16.6 million in the aggregate in fiscal 2022.
Biggest changeLouis, Illinois, United States Animal By-Products Ellenwood, Georgia, United States Animal By-Products Fayetteville, North Carolina, United States Animal By-Products Grapeland, Texas, United States Animal By-Products Hamilton, Michigan, United States Animal By-Products Henderson, Kentucky, United States Fertilizer Henderson, Kentucky, United States Bakery Residuals Hickson, Ontario, Canada Animal By-Products Honey Brook, Pennsylvania, United States Bakery Residuals Houston, Texas, United States Animal By-Products Itauba, Brazil Animal By-Products Jackson, Mississippi, United States Animal By-Products Jaraguari, Brazil Animal By-Products Kansas City, Kansas, United States Animal By-Products Kansas City, Kansas, United States Protein Refining Knoxville, Tennessee, United States Animal By-Products Lewiston, North Carolina, United States Animal By-Products Lexington, Nebraska, United States Animal By-Products Lingen, Germany Blood Linkwood, Maryland, United States Animal By-Products Linville, Virginia, United States Animal By-Products Loenen, Netherlands Animal By-Products Los Angeles, California, United States Animal By-Products Luohe, China Blood Maquoketa, Iowa, United States Blood Marshville, North Carolina, United States Bakery Residuals Maryborough, Australia Blood Maysville, Kentucky, United States Protein Refining Mason City, Illinois, United States Animal By-Products McBride, Missouri, United States Bakery Residuals Mering, Germany Blood Page 48 Mifflintown, Pennsylvania, United States Wet Pet Food Moorefield, Ontario, Canada Animal By-Products Muscatine, Iowa, United States Protein Refining Newark, New Jersey, United States Animal By-Products Newberry, Indiana, United States Animal By-Products North Baltimore, Ohio, United States Bakery Residuals Nova Brescia, Brazil Animal By-Products Omaha, Nebraska, United States Protein Refining Omaha, Nebraska, United States Animal By-Products Osetnica, Poland Animal By-Products Paducah, Kentucky, United States Wet Pet Food Pocahontas, Arkansas, United States * Animal By-Products Ravenna, Nebraska, United States Wet Pet Food Rose Hill, North Carolina, United States Animal By-Products Rose Hill, North Carolina, United States Fat Extraction Russellville, Kentucky, United States Animal By-Products Saint-Catherine, Quebec, Canada* Used Cooking Oil San Angelo, Texas, United States Blood San Francisco, California, United States * Animal By-Products São Domingos do Araguaia, Brazil Animal By-Products Sioux City, Iowa, United States Animal By-Products Smyrna, Georgia, United States Trap Processing Springdale, Arkansas, United States Wet Pet Food Son, Netherlands Animal By-Products Starke, Florida, United States Animal By-Products Suzhou, China Blood Tacoma, Washington, United States * Animal By-Products Tama, Iowa, United States Animal By-Products Tampa, Florida, United States Animal By-Products Terre Hill, Pennsylvania, United States Animal By-Products Truro, Novia Scotia, Canada Used Cooking Oil Tubarão, Brazil Animal By-Products Turlock, California, United States Animal By-Products Turlock, California, United States Fertilizer Uberaba, Brazil Animal By-Products Union City, Tennessee, United States Animal By-Products Usnice, Poland Animal By-Products Veribest, Texas, United States Animal By-Products Wadesborro, North Carolina, United States Animal By-Products Wahoo, Nebraska, United States Animal By-Products Ward, South Carolina, United States Animal By-Products Watts, Oklahoma, United States Bakery Residuals/Protein Refining Wichita, Kansas, United States Animal By-Products Winchester, Virginia, United States Animal By-Products Winesburg, Ohio, United States * Animal By-Products Winnipeg, Manitoba, Canada Animal By-Products Xanxerê, Brazil Animal By-Products Xinguara, Brazil Animal By-Products Food Ingredients Segment Almere, Netherlands Casings Amparo, Brazil Collagen Angouleme, France Collagen Araguaìna, Brazil Collagen Da'an, China Collagen Del Rio Monday, Paraguay Collagen Dubuque, Iowa, United States Collagen Eindhoven, Netherlands Fat Elsholz, Germany Fat Erolzheim, Germany Fat Gent, Belgium Collagen Girona, Spain Collagen Harlingen, Netherlands Fat Page 49 Ilse-Sur-La-Sorgue, France Collagen Ità, Brazil Collagen Kaiping, China Collagen Lubien, Poland Fat Nazàrio, Brazil Collagen Portage, Indiana, United States Collagen Porto, Portugal Casings Presidente Epitacio, Brazil Collagen Sorriso, Brazil Collagen Stoke-on Trent, United Kingdom Bone Versmold, Germany Fat Vuren, Netherlands Bone Wenzhou, China Collagen Fuel Ingredients Segment Antwerp, Belgium Digester Belm-Icker, Germany Bioenergy Denderleeuw, Belgium Bioenergy Denderleeuw, Belgium Digester Jagel, Germany Bioenergy Rotenburg, Germany Bioenergy Son, Netherlands Bioenergy Son, Netherlands Digester * Leased Rent expense for our leased properties was $20.2 million in the aggregate in fiscal 2023.
LOCATION DESCRIPTION Feed Ingredients Segment Albertville, Alabama, United States Bakery Residuals Amarillo, Texas, United States Animal By-Products Baltimore, Maryland, United States Used Cooking Oil Bastrop, Texas, United States Animal By-Products Bellevue, Nebraska, United States Animal By-Products Berlin, Wisconsin, United States Animal By-Products Bernailillo, New Mexico, United States Used Cooking Oil Blue Earth, Minnesota, United States Animal By-Products Blue Island, Illinois, United States Used Cooking Oil/Trap Processing Boa Vista do Sul, Brazil Animal By-Products Boise, Idaho, United States Animal By-Products Burgum, Netherlands Animal By-Products Butler, Kentucky, United States Animal By-Products Butler, Kentucky, United States Bakery Residuals Cacoal, Brazil Animal By-Products Page 42 Capela de Santana, Brazil Animal By-Products Carambei, Brazil Animal By-Products Clinton, Iowa, United States Animal By-Products Coldwater, Michigan, United States Animal By-Products Collinsville, Oklahoma, United States Animal By-Products Cruzeiro do Sul, Brazil Animal By-Products Cruzeiro do Sul, Brazil Animal By-Products Dallas, Texas, United States Animal By-Products Denver, Colorado, United States Animal By-Products Des Moines, Iowa, United States Animal By-Products Doswell, Virginia, United States Bakery Residuals Dundas, Ontario, Canada Animal By-Products Dourados, Brazil Animal By-Products East Dublin, Georgia, United States Animal By-Products E.
Page 46 Page 47 LOCATION DESCRIPTION Feed Ingredients Segment Albertville, Alabama, United States Bakery Residuals Amarillo, Texas, United States Animal By-Products Aquiraz, Brazil Animal By-Products Baltimore, Maryland, United States Used Cooking Oil Bastrop, Texas, United States Animal By-Products Bellevue, Nebraska, United States Animal By-Products Berlin, Wisconsin, United States Animal By-Products Blue Earth, Minnesota, United States Animal By-Products Blue Island, Illinois, United States Used Cooking Oil/Trap Processing Boa Vista do Sul, Brazil Animal By-Products Boise, Idaho, United States Animal By-Products Burgum, Netherlands Animal By-Products Butler, Kentucky, United States Animal By-Products Butler, Kentucky, United States Bakery Residuals Cacoal, Brazil Animal By-Products Capela de Santana, Brazil Animal By-Products Carambei, Brazil Animal By-Products Clinton, Iowa, United States Animal By-Products Coldwater, Michigan, United States Animal By-Products Collinsville, Oklahoma, United States Animal By-Products Cruzeiro do Sul, Brazil Animal By-Products Cruzeiro do Sul, Brazil Animal By-Products Dallas, Texas, United States Animal By-Products Denver, Colorado, United States Animal By-Products Des Moines, Iowa, United States Animal By-Products Doswell, Virginia, United States Bakery Residuals Dundas, Ontario, Canada Animal By-Products Dourados, Brazil Animal By-Products East Dublin, Georgia, United States Animal By-Products E.
All of the processing facilities are owned except for 10 leased facilities and the Company owns and leases a network of transfer stations. The following is a listing of a majority of the Company's operating plants as of December 31, 2022 by operating segment with a description of the plants principal process.
All of the processing facilities are owned except for 10 leased facilities and the Company owns and leases a network of transfer stations. The following is a listing of a majority of the Company’s operating plants as of December 30, 2023 by operating segment with a description of the plants principal process.
ITEM 2. PROPERTIES As of December 31, 2022, the Company's corporate headquarters is located at 5601 N MacArthur Boulevard, Irving, Texas, 75038. As of December 31, 2022, the Company operates a global network of over 260 locations, including 185 production facilities, across five continents.
ITEM 2. PROPERTIES As of December 30, 2023, the Company’s corporate headquarters is located at 5601 N MacArthur Boulevard, Irving, Texas, 75038. As of December 30, 2023, the Company operates a global network of over 260 locations, including 188 production facilities, across five continents.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

12 edited+1 added−0 removed13 unchanged
Biggest changeAs a result of the matters discussed above, the Company has established loss reserves for insurance, environmental, litigation and tax contingencies. At December 31, 2022 and January 1, 2022, the reserves for insurance, environmental, litigation and tax contingencies reflected on the balance sheet in accrued expenses and other non-current liabilities were approximately $92.1 million and $78.4 million, respectively.
Biggest changeAt December 30, 2023 and December 31, 2022, the reserves for insurance, regulatory, governmental, environmental, litigation and tax contingencies reflected on the balance sheet in accrued expenses and other non-current liabilities was approximately $95.1 million and $92.1 million, respectively.
On September 30, 2016, Occidental Chemical Corporation (“OCC”) entered into an agreement with the EPA to perform the remedial design for the cleanup plan for the lower 8.3 miles of the Passaic River.
On September 30, 2016, Occidental Chemical Corporation (“OCC”) entered into an agreement with the EPA to perform the remedial design for the cleanup plan for the lower 8.3 miles of the Lower Passaic River.
In December 2009, the Company, along with numerous other entities, received notice from the United States Environmental Protection Agency (“EPA”) that the Company (as alleged successor-in-interest to The Standard Tallow Corporation) is considered a potentially responsible party (a “PRP”) with respect to alleged contamination in the lower 17-mile stretch of the Passaic River (the “Lower Passaic River”) which is part of the Diamond Alkali Superfund Site located in Newark, New Jersey.
In December 2009, the Company, along with numerous other entities, received notice from the United States Environmental Protection Agency (“EPA”) that the Company (as alleged successor-in-interest to The Standard Tallow Corporation) is considered a potentially responsible party (a “PRP”) with respect to alleged contamination in the lower 17-mile area of the Passaic River (the “Lower Passaic River”) which is part of the Diamond Alkali Superfund Site located in Newark, New Jersey.
On June 30, 2018, OCC filed a complaint in the United States District Court for the District of New Jersey against over 100 companies, including the Company, seeking cost recovery or contribution for costs under the Comprehensive Environmental Response, Compensation and Liability Act (“CERCLA”) relating to various Page 45 investigations and cleanups OCC has conducted or is conducting in connection with the Lower Passaic River.
On June 30, 2018, OCC filed a complaint in the United States District Court for the District of New Jersey against over 100 companies, including the Company, seeking cost recovery or contribution for costs under the Comprehensive Environmental Response, Compensation and Liability Act (“CERCLA”) relating to various investigations and cleanups OCC has conducted or is conducting in connection with the Lower Passaic River.
In March 2016, the Company received another letter from EPA notifying the Company that it had issued a Record of Decision (the “ROD”) selecting a remedy for the lower 8.3 miles of the Lower Passaic River area at an estimated cost of $1.38 billion.
In March 2016, the Company received another letter from the EPA notifying the Company that it had issued a Record of Decision Page 50 (the “ROD”) selecting a remedy for the lower 8.3 miles of the Lower Passaic River area at an estimated cost of $1.38 billion.
Furthermore, the Company's settlement with the EPA described above could preclude certain of the claims alleged by OCC against the Company.
Furthermore, the Company’s settlements with the EPA described above could preclude certain of the claims alleged by OCC against the Company.
Subsequently, the EPA conducted a settlement analysis using a third-party allocator and offered early cash out settlements to those PRP's for whom the third-party allocator determined did not discharge any of the COC's.
Subsequently, the EPA conducted a settlement analysis using a third-party allocator and offered early cash out settlements to those PRPs for whom the third-party allocator determined did not discharge any of the COCs.
The letter indicates that the EPA has sent the letter to over 100 parties, which include large chemical and refining companies, manufacturing companies, foundries, plastic companies, pharmaceutical companies and food and consumer product companies.
The letter indicated that the EPA had sent the letter to over 100 parties, which include large chemical and refining companies, manufacturing companies, foundries, plastic companies, pharmaceutical companies and food and consumer product companies.
ITEM 4. MINE SAFETY DISCLOSURES Not applicable. Page 46 PART II
ITEM 4. MINE SAFETY DISCLOSURES Not applicable. Page 51 PART II
LEGAL PROCEEDINGS The Company is a party to various lawsuits, claims and loss contingencies arising in the ordinary course of its business, including insured worker's compensation, auto, and general liability claims, assertions by certain regulatory and governmental agencies related to permitting requirements and environmental matters, including air, wastewater and storm water discharges from the Company's processing facilities, litigation involving tort, contract, statutory, labor, employment, and other claims, and tax matters.
LEGAL PROCEEDINGS The Company is a party to various lawsuits, claims and loss contingencies arising in the ordinary course of its business, including insured worker's compensation, auto, and general liability claims, assertions by certain regulatory and governmental agencies related to various matters including labor and employment, employees benefits, occupational safety and health, wage and hour, compliance, sustainability, permitting requirements, environmental matters, including air, wastewater and storm water discharges from the Company’s processing facilities and other federal, state and local issues, litigation involving tort, contract, statutory, labor, employment, and other claims, and tax matters.
The EPA letter makes no demand on the Company and laid out a framework for remedial design/remedial action implementation in which the EPA will first seek funding from major PRPs.
The EPA letter made no demand on the Company and laid out a framework for remedial design/remedial action implementation under which the EPA would first seek funding from major PRPs.
The Company has insurance recovery receivables of approximately $36.0 million and $31.8 million as of December 31, 2022 and January 1, 2022, related to insurance contingencies.
The Company has insurance recovery receivables reflected on the balance sheet in other assets of approximately $36.0 million as of December 30, 2023 and December 31, 2022, related to the insurance contingencies.
Added
As a result of the matters discussed above, the Company has established loss reserves for insurance, regulatory, governmental, environmental, litigation and tax contingencies.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

5 edited+1 added−5 removed4 unchanged
Biggest changeUnder this program, we repurchased 1,916,785 shares for approximately $125.5 million including commissions in fiscal 2022 and repurchased 57,431 shares in early 2023 for approximately $3.4 million including commissions. As of the date of this report, the Company had approximately $371.1 million remaining in its share repurchase program initially approved in August 2017 and subsequently extended to August 13, 2024.
Biggest changeUnder this program, we repurchased 926,167 shares for approximately $52.9 million including commissions in fiscal 2023. As of the date of this report, the Company had approximately $321.6 million remaining in its share repurchase program initially approved in August 2017 and subsequently extended to August 13, 2024.
Page 48 The stock price performance shown on the following graph only reflects the change in the Company's stock price relative to the noted indices and is not necessarily indicative of future price performance. EQUITY COMPENSATION PLANS The information required by this Item with respect to Item 201(d) of Regulation S-K appears in Item 12 of this report. ITEM 6.
Page 52 The stock price performance shown on the following graph only reflects the change in the Company’s stock price relative to the noted indices and is not necessarily indicative of future price performance. EQUITY COMPENSATION PLANS The information required by this Item with respect to Item 201(d) of Regulation S-K appears in Item 12 of this report. ITEM 6.
Common Stock Performance Graph Set forth below is a line graph comparing the change in the cumulative total stockholder return on the Company's common stock with the cumulative total return of the Russell 2000 Index and the Dow Jones US Waste and Disposal Service Index for the period from December 30, 2017 to December 31, 2022, assuming the investment of $100 on December 30, 2017 and the reinvestment of dividends.
Common Stock Performance Graph Set forth below is a line graph comparing the change in the cumulative total stockholder return on the Company’s common stock with the cumulative total return of the Russell 2000 Index and the Dow Jones US Waste and Disposal Service Index for the period from December 29, 2018 to December 30, 2023, assuming the investment of $100 on December 29, 2018 and the reinvestment of dividends.
Separate from this share repurchase program, a total of 764,119 shares were withheld from equity award recipients to cover payroll taxes on the vesting of shares of restricted stock, restricted stock units, exercised options and the strike price on exercised options during fiscal 2022 pursuant to the terms of our 2017 Omnibus Incentive Plan and 2012 Omnibus plan, as amended.
Separate from this share repurchase program, a total of 344,522 shares were withheld from equity award recipients to cover payroll taxes on the vesting of shares of restricted stock, restricted stock units, exercised options and the strike price on exercised options during fiscal 2023 pursuant to the terms of our 2017 Omnibus Incentive Plan and 2012 Omnibus plan, as amended.
Holders The Company has been notified by its stock transfer agent that as of February 23, 2023, there were 161 holders of record of the common stock. Dividend Policy The Company has not paid any dividends on its common stock since January 3, 1989 and does not expect to pay cash dividends in 2023.
Holders The Company has been notified by its stock transfer agent that as of February 22, 2024, there were 80 holders of record of the common stock. Dividend Policy The Company has not paid any dividends on its common stock since January 3, 1989 and does not expect to pay cash dividends in 2024.
Removed
The following table is a summary of equity securities purchased by the Company during the fourth quarter of fiscal 2022.
Added
The Company did not purchase any equity securities under the share repurchase program during the fourth quarter of fiscal 2023.
Removed
ISSUER PURCHASES OF EQUITY SECURITIES Period Total Number of Shares Purchased (1) Average Price Paid per Share (2) Total Number of Shares Purchased as part of Publicly Announced Plans or Programs (4) Maximum Number (or Approximate Dollar Value) of Shares that may yet be Purchased Under the Plan or Programs at End of Period.
Removed
October 2022: October 2, 2022 through October 29, 2022 2,316 $ 76.90 — $ 396,970,892 November 2022: October 30, 2022 through November 26, 2022 37,621 $ 71.78 34,665 $ 394,548,677 December 2022: November 27, 2022 through December 31, 2022 328,063 $ 63.53 301,328 $ 374,507,112 Total 368,000 (3) $ 70.39 335,993 $ 374,507,112 Page 47 (1) All shares purchased during the fourth quarter were acquired by the Company pursuant to the announced share repurchase program (other than shares withheld for taxes on restricted stock and exercised options and the strike price on exercised options).
Removed
(2) The average price paid per share is calculated on a trade date basis and excludes commissions. (3) Includes 32,007 shares withheld for taxes on restricted stock and options.
Removed
(4) Represents purchases made during the quarter under the authorization from the Company's Board of Directors, as announced, to repurchase up to an aggregate of $500 million of the Company's common stock over the period ending August 13, 2024, unless extended or shortened by the Board of Directors.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

134 edited+30 added−20 removed99 unchanged
Biggest changeThe term A-4 facility borrowings are repayable in quarterly installments of 0.625% of the aggregate principle amount of the relevant term A-4 facility on the last day of each March, June, September and December of each year commencing on the last day of such month falling on or after the last day of the first full fiscal quarter following the borrowings or termination date and continuing until the last day of such quarterly period ending March 31, 2025, and quarterly installments of 1.25% of the aggregate principle amount of the relevant term A-4 facility due and payable on the last day of each March, June, September and December of each year commencing on the last day of such month falling on or after the last day of the first full fiscal quarter ending June 30, 2025 and continuing until the last day of such quarterly period ending immediately prior to the term A-4 facility maturity date of December 9, 2026 and one final installment in the amount of the term A-4 facility then outstanding, due and payable on December 9, 2026. • As of December 31, 2022, the Company has borrowed all $525.0 million under the terms of the term loan B facility and repaid approximately $325.0 million, which when repaid, cannot be reborrowed.
Biggest changeThe term A-4 facility borrowings are repayable in quarterly installments of 0.625% of the aggregate principle amount of the relevant term A-4 facility on the last day of each March, June, September and December of each year commencing on the last day of such month falling on or after the last day of the first full fiscal quarter following the borrowings or termination date and continuing until the last day of such quarterly period ending March 31, 2025, and quarterly installments of 1.25% of the aggregate principle amount of the relevant term A-4 facility due and payable on the last day of each March, June, September and December of each year commencing on the last day of such month falling on or after the last day of the first full fiscal quarter ending June 30, 2025 and continuing until the last day of such quarterly period ending immediately prior to the term A-4 facility maturity date of December 9, 2026 and one final installment in the amount of the term A-4 facility then outstanding, due and payable on December 9, 2026. • As of December 30, 2023, the Company had repaid all $525.0 million it had borrowed under the terms of the term loan B facility, none of which can be reborrowed. • The interest rate applicable to any borrowings under the revolving loan facility will equal the adjusted term secured overnight financing rate (SOFR) for U.S. dollar borrowings or the adjusted euro interbank rate (EURIBOR) for euro borrowings or the adjusted daily simple Sterling overnight index average (SONIA) for British pound borrowings or the Canadian dollar offered rate (CDOR) for Canadian dollar borrowings plus 1.50% per annum or base rate or the adjusted term SOFR for U.S. dollar borrowings or Canadian prime rate for Canadian dollar borrowings or the adjusted daily simple European short term rate (ESTR) for euro borrowings or the adjusted daily SONIA rate for British pound borrowings plus 0.50% per annum subject to certain step-ups or step-downs based on the Company’s total leverage ratio.
Financial Impact of Significant Debt Outstanding The Company has a substantial amount of indebtedness, which could make it more difficult for us to satisfy our obligations to our financial lenders and our contractual and commercial commitments, limit our ability to obtain additional financing to fund future working capital, capital expenditures, acquisitions or other general corporate requirements on commercially reasonable terms or at all, require us to use a substantial portion of our cash flows from operations to pay principal and interest on our indebtedness instead of other purposes, thereby reducing the amount of our cash flows from operations available for working capital, capital expenditures, acquisitions and other general corporate purposes, increase our vulnerability to adverse economic, industry and business conditions, expose us to the risk of increased interest rates as certain of our borrowings are at variable rates of interest, limit our flexibility in planning for, or reacting to, changes in our business Page 64 and the industry in which we operate, place us at a competitive disadvantage compared to other, less leveraged competitors, and/or increase our cost of borrowing.
Financial Impact of Significant Debt Outstanding The Company has a substantial amount of indebtedness, which could make it more difficult for us to satisfy our obligations to our financial lenders and our contractual and commercial commitments, limit our ability to obtain additional financing to fund future working capital, capital expenditures, acquisitions or other general corporate requirements on commercially reasonable terms or at all, require us to use a substantial portion of our cash flows from operations to pay principal and interest on our indebtedness instead of other purposes, thereby reducing the amount of our cash flows from operations available for working capital, capital expenditures, acquisitions and other general corporate purposes, increase our vulnerability to adverse economic, industry and business conditions, expose us to the risk of increased interest rates as certain of our borrowings are at variable rates of interest, limit our flexibility in planning for, or reacting to, changes in our business and the industry in which we operate, place us at a competitive disadvantage compared to other, less leveraged competitors, and/or increase our cost of borrowing.
With the Company’s significant fats ownership, this has and continues to transform how the Company operates. In 2021, a large portion of Darling’s total U.S. finished fats products were sold to the DGD St. Charles Plant and beginning in fiscal 2022 to the DGD Port Arthur Plant as feedstock for renewable diesel.
With Darling’s significant fats ownership, this has and continues to transform how the Company operates. In 2021, a large portion of Darling’s total U.S. finished fats products were sold to the DGD St. Charles Plant and beginning in fiscal 2022 to the DGD Port Arthur Plant as feedstock for renewable diesel.
The Company determined the fair value of reporting units with the assistance of a valuation expert who assisted the Company primarily using the Income Approach to determine the fair value of the Company's reporting units. Key assumptions that impacted the discounted cash flow model were raw material volumes, gross margins, terminal growth rates and discount rates.
The Company determined the fair value of reporting units with the assistance of a valuation expert who assisted the Company primarily using the Income Approach to determine the fair value of the Company’s reporting units. Key assumptions that impacted the discounted cash flow model were raw material and sales volumes, gross margins, terminal growth rates and discount rates.
The Company also includes DGD in marketing efforts to emphasize environmental sustainability that restaurants participate in when their used cooking oil is collected by the Company. From a production standpoint, the Company now isolates used cooking oil from other fats to preserve identification to qualify for a higher carbon intensity value.
The Company also includes DGD in marketing efforts to emphasize environmental sustainability that restaurants participate in when their used cooking oil is collected by Darling. From a production standpoint, Darling now isolates used cooking oil from other fats to preserve identification to qualify for a higher carbon intensity value.
The Company's actual results could differ materially from those anticipated in these forward-looking statements as a result of certain factors, including those set forth below under the heading “Forward Looking Statements” and in Item 1A of this report under the heading “Risk Factors.” Fiscal Year 2022 Overview The Company is a global developer and producer of sustainable natural ingredients from edible and inedible bio-nutrients, creating a wide range of ingredients and customized specialty solutions for customers in the pharmaceutical, food, pet food, feed, industrial, fuel, bioenergy and fertilizer industries.
The Company’s actual results could differ materially from those anticipated in these forward-looking statements as a result of certain factors, including those set forth below under the heading “Forward Looking Statements” and in Item 1A of this report under the heading “Risk Factors.” Fiscal Year 2023 Overview The Company is a global developer and producer of sustainable natural ingredients from edible and inedible bio-nutrients, creating a wide range of ingredients and customized specialty solutions for customers in the pharmaceutical, food, pet food, feed, industrial, fuel, bioenergy and fertilizer industries.
These factors, coupled with volatile prices for natural gas and diesel fuel, 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, 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 in fiscal year 2023 and thereafter.
These factors, coupled with volatile prices for natural gas and diesel fuel, 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, 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 in fiscal year 2024 and thereafter.
Cash Flows and Liquidity Risks Management believes that the Company’s cash flows from operating activities consistent with the level generated in fiscal year 2022, unrestricted cash and funds available under the Amended Credit Agreement, will be sufficient to meet the Company’s working capital needs and maintenance and compliance-related capital expenditures, scheduled debt and interest payments, income tax obligations, and other contemplated needs through the next twelve months.
Cash Flows and Liquidity Risks Management believes that the Company’s cash flows from operating activities consistent with the level generated in fiscal year 2023, unrestricted cash and funds available under the Amended Credit Agreement, will be sufficient to meet the Company’s working capital needs and maintenance and compliance-related capital expenditures, scheduled debt and interest payments, income tax obligations, and other contemplated needs through the next twelve months.
Statements that are not statements of historical facts are forward looking statements and are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Words such as “estimate,” “project,” “planned,” “contemplate,” “potential,” “possible,” “proposed,” “intend,” “believe,” “anticipate,” “expect,” “may,” “will,” “would,” “should,” “could,” and similar expressions are intended to identify forward-looking statements.
Statements that are not statements of historical facts are forward looking statements and are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Words such as “estimate,” “guidance,” “outlook,” “project,” “planned,” “contemplate,” “potential,” “possible,” “proposed,” “intend,” “believe,” “anticipate,” “expect,” “may,” “will,” “would,” “should,” “could,” and similar expressions are intended to identify forward-looking statements.
It is presented here not as an alternative to net income, but rather as a measure of the Company's operating performance. Since EBITDA (generally, net income plus interest expenses, taxes, depreciation and amortization) is not calculated identically by all companies, the presentation in this report may not be comparable to EBITDA or adjusted EBITDA presentations disclosed by other companies.
It is presented here not as an alternative to net income, but rather as a measure of the Company’s operating performance. Since EBITDA (generally, net income plus interest expense, taxes, depreciation and amortization) is not calculated identically by all companies, the presentation in this report may not be comparable to EBITDA or adjusted EBITDA presentations disclosed by other companies.
The Company traditionally collected and converted used cooking oil and animal fats into feed ingredients which were sold on a caloric value to feed animals as well as for industrial technical uses. Over the past decade, the world’s increasing focus on climate change and greenhouse gas has provided a new finished market for the Company’s finished fats ingredients.
Darling traditionally collected and converted used cooking oil and animal fats into feed ingredients which were sold on a caloric value to feed animals as well as for industrial technical uses. Over the past decade, the world’s increasing focus on climate change and greenhouse gas has provided a new finished market for the Company’s finished fats ingredients.
The Fuel Ingredients operating segment includes the Company's global activities related to (i) the Company’s share of the results of its equity investment in Diamond Green Diesel Holdings LLC, a joint venture with Valero Energy Corporation (“Valero”) to convert animal fats, recycled greases, used cooking oil, inedible corn oil, soybean oil, or other feedstocks that become economically and commercially viable into renewable diesel (“DGD” or the “DGD Joint Venture”) as described in Note 2 to the Company's Consolidated Financial Statements for the period ended December 31, 2022 included herein, (ii) the conversion of organic sludge and food waste into biogas in Europe, (iii) the collection and conversion of fallen stock and certain animal by-products pursuant to applicable E.U. regulations into low-grade energy sources to be used in industrial applications, and (iv) the processing of manure into natural bio-phosphate in Europe.
The Fuel Ingredients operating segment includes the Company’s global activities related to (i) the Company’s share of the results of its equity investment in Diamond Green Diesel Holdings LLC, a joint venture with Valero Energy Corporation (“Valero”) to convert animal fats, recycled greases, used cooking oil, inedible corn oil, soybean oil, or other feedstocks that become economically and commercially viable into renewable diesel (“DGD” or the “DGD Joint Venture”) as described in Note 1 and Note 2 to the Company’s Consolidated Financial Statements for the period ended December 30, 2023 included herein, (ii) the conversion of organic sludge and food waste into biogas in Europe, (iii) the collection and conversion of fallen stock and certain animal by-products pursuant to applicable E.U. regulations into low-grade energy sources to be used in industrial applications, and (iv) the processing of manure into natural bio-phosphate in Europe.
Programs like the National Renewable Fuel Standard Program (“RFS”) and low carbon fuel standards (“LCFS”) (such as in the state of California) and tax credits for biofuels both in the United States and abroad are subject to revision and change which may impact the demand for our finished products.
Programs like the National Renewable Fuel Standard Program (“RFS”) and low carbon fuel standards (“LCFS”) (such as in the state of California) and tax credits for biofuels both in the United States and abroad are subject to revision and change which may impact the demand for and/or price of our finished products.
In December 2022, the Company's management reviewed our global network of collagen plants for optimization opportunities and decided to close our Peabody, Massachusetts, plant in 2023. As a result, the Company incurred long-lived asset impairment charges in the food segment of approximately $18.4 million.
In December 2022, the Company’s management reviewed our global network of collagen plants for optimization opportunities and decided to close our Peabody, Massachusetts, plant in 2023. As a result, the Company incurred long-lived asset impairment charges to its food segment long-lived assets of approximately $18.4 million.
In December 2022, the Company's management reviewed our global network of collagen plants for optimization opportunities and decided to close our Peabody, Massachusetts, plant in 2023. As a result of the restructuring, the Company incurred a goodwill impairment charge in the food segment of approximately $2.7 million.
In December 2022, the Company’s management reviewed our global network of collagen plants for optimization opportunities and decided to close our Peabody, Massachusetts, plant in 2023. As a result of the restructuring, the Company incurred a goodwill impairment charge in the food Page 70 segment of approximately $2.7 million.
No assurance can be given that the minimum pension funding requirements will not increase in the future. The Company has made required and tax deductible discretionary contributions to its domestic pension plans in fiscal year 2022 and fiscal year 2021 of approximately $2.0 million and $0.2 million, respectively.
No assurance can be given that the minimum pension funding requirements will not increase in the future. The Company has made required and tax deductible discretionary contributions to its domestic pension plans in fiscal year 2023 and fiscal year 2022 of approximately $0.2 million and $2.0 million, respectively.
During the measurement period, not to exceed one year from the date of the acquisition, the Company may record adjustments to the assets acquired and liabilities assumed, with a corresponding offset to goodwill if new information is obtained related to facts and circumstances that existed as of the acquisition date.
During the measurement period, not to exceed one year Page 69 from the date of the acquisition, the Company may record adjustments to the assets acquired and liabilities assumed, with a corresponding offset to goodwill if new information is obtained related to facts and circumstances that existed as of the acquisition date.
Additionally, in November 2022 the DGD Joint Venture completed the construction of the DGD Port Arthur Plant, with a name plate capacity to produce 470 million gallons per year of renewable diesel and 20 million gallons per year of renewable naphtha and having similar logistics flexibilities as those of the DGD St. Charles Plant.
Additionally, in November 2022 the DGD Joint Venture completed the construction of the DGD Port Arthur Plant, with a capacity to produce 470 million gallons per year of renewable diesel and 20 million gallons per year of renewable naphtha and having similar logistics flexibilities as those of the DGD St. Charles Plant.
In particular, management makes estimates regarding fair value of the Company’s reporting units and future cash flows with respect to assessing potential impairment of both long-lived assets and goodwill and pension liability. Each of these estimates is discussed in greater detail in the following discussion.
In particular, management makes estimates regarding fair value of the Company’s reporting units and future cash flows with respect to assessing potential impairment of both long-lived assets and goodwill and pension liabilities. Each of these estimates is discussed in greater detail in the following discussion.
The Company’s operating results can vary significantly due to changes in factors such as the fluctuation in commodity prices and energy prices, weather conditions, crop harvests, government policies and programs, changes in global demand, changes in standards of living, protein consumption, and global production of competing ingredients.
The Company’s operating results can vary significantly due to changes in factors such as the fluctuation in commodity prices and energy prices, weather conditions, crop harvests, Page 55 government policies and programs, changes in global demand, changes in standards of living, protein consumption, and global production of competing ingredients.
In addition, certain of the Company's premium branded finished products may sell at prices that may be higher than the closest product on the related Jacobsen or Reuters index. During fiscal year 2022, the Company's actual sales prices by product trended with the disclosed Jacobsen and Reuters prices.
In addition, certain of the Company’s premium branded finished products may sell at prices that may be higher than the closest product on the related Jacobsen or Reuters index. During fiscal year 2023, the Company’s actual sales prices by product trended with the disclosed Jacobsen and Reuters prices.
It is possible, depending upon a number of factors that are not determinable at this time or within the control of the Company, that the fair value of these six reporting units could decrease in the future and result in an impairment to goodwill.
It is possible, depending upon a number of factors that are not determinable at this time or within the control of the Company, that the fair value of these three reporting units could decrease in the future and result in an impairment to goodwill.
GAAP measures These indicators and their importance are discussed below. Finished Product Commodity Prices Prices for finished product commodities that the Company produces in the Feed Ingredients segment are reported each business day on the Jacobsen Index (the “Jacobsen”), an established North American trading exchange price publisher. The Jacobsen reports industry sales from the prior day's activity by product.
GAAP measures These indicators and their importance are discussed below. Page 56 Finished Product Commodity Prices Prices for finished product commodities that the Company produces in the Feed Ingredients segment are reported each business day on the Jacobsen Index (the “Jacobsen”), an established North American trading price publisher. The Jacobsen reports industry sales from the prior day's activity by product.
Page 50 Corporate Activities principally includes unallocated corporate overhead expenses, acquisition-related expenses, interest expense net of interest income, and other non-operating income and expenses. Economic Conditions and Uncertainties Global Economic Conditions We operate globally and have operations in numerous countries.
Page 54 Corporate Activities principally includes unallocated corporate overhead expenses, acquisition-related expenses, interest expense net of interest income, and other non-operating income and expenses. Economic Conditions and Uncertainties Global Economic Conditions We operate globally and have operations in numerous countries.
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 Page 68 market conditions and other factors, which are likely to change from time to time.
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.
A decline in commodities prices, a rise in energy prices, a slowdown in the U.S. or international economy, high inflation rates or other factors, could cause the Company to fail to meet management's expectations or could cause liquidity concerns.
A decline in commodities prices, a rise in Page 68 energy prices, a slowdown in the U.S. or international economy, high inflation rates or other factors, could cause the Company to fail to meet management's expectations or could cause liquidity concerns.
See “Risk Factors - Our business may be adversely impacted by fluctuations in foreign currency exchange rates, which could affect our ability to comply with our financial covenants” and “- Our ability to repay our indebtedness depends in part on the performance of our subsidiaries, including our non-guarantor subsidiaries, and their ability to make payments” in Item 1A of this Annual Report on Form 10-K for the fiscal year ended December 31, 2022.
See “Risk Factors - Our business may be adversely impacted by fluctuations in foreign currency exchange rates, which could affect our ability to comply with our financial covenants” and “- Our ability to repay our indebtedness depends in part on the performance of our subsidiaries, including our non-guarantor subsidiaries, and their ability to make payments” in Item 1A of this Annual Report on Form 10-K for the fiscal year ended December 30, 2023.
The change in this line item is not significant and primarily represents the Company's pro rata share of the net income from its foreign unconsolidated subsidiaries. Income Taxes.
Equity in Net Income of Other Unconsolidated Subsidiaries. The change in this line item is not significant and primarily represents the Company’s pro rata share of the net income from its foreign unconsolidated subsidiaries. Income Taxes.
The actuarial estimate may vary from year to year, due to Page 62 changes in costs of health care, the pending number of claims and other factors beyond the control of management of the Company.
The actuarial estimate may vary from year to year, due to changes in costs of health care, the pending number of claims and other factors beyond the control of management of the Company.
Disturbances in world financial, credit, commodities and stock markets, including inflationary, deflationary and recessionary conditions, could have a negative impact on the Company’s results of operations. Any such disturbances or disruptions may also magnify the impact of other risks described in this Annual Report on Form 10-K for the fiscal year ended December 31, 2022.
Disturbances in world financial, credit, commodities and stock markets, including inflationary, deflationary and recessionary conditions, could have a negative impact on the Company’s results of operations. Any such disturbances or disruptions may also magnify the impact of other risks described in this Annual Report on Form 10-K for the fiscal year ended December 30, 2023.
Page 61 As a result of the Company's borrowings under its Amended Credit Agreement, the 6% Indenture, the 5.25% Indenture and the 3.625% Indenture, the Company is highly leveraged.
As a result of the Company’s borrowings under its Amended Credit Agreement, the 6% Indenture, the 5.25% Indenture and the 3.625% Indenture, the Company is highly leveraged.
The Company supply chain has become more efficient and sustainable with transparency for verification to obtain full value to low carbon intensity markets.
The Darling supply chain has become more efficient and sustainable with transparency for verification to obtain full value to low carbon intensity markets.
The net periodic benefit cost for fiscal year 2023 would increase by approximately $0.7 million if the discount rate was 0.5% lower at a weighted average of 4.32%. The net periodic benefit cost for fiscal year 2023 would decrease by approximately $0.7 million if the discount rate was 0.5% higher at a weighted average of 5.32%.
The net periodic benefit cost for fiscal year 2023 would increase by approximately $0.6 million if the discount rate was 0.5% lower at a weighted average of 4.12%. The net periodic benefit cost for fiscal year 2023 would decrease by approximately $0.7 million if the discount rate was 0.5% higher at a weighted average of 5.12%.
The term A-1 facility borrowings are repayable in quarterly installments of 0.25% of the aggregate principle amount of the relevant term A-1 facility on the last day of each March, June, September and December of each year commencing on the last day of such month falling on or after the last day of the first full fiscal quarter following the second anniversary of December 9, 2021 and continuing until the last day of such quarterly period ending immediately prior to the term A-1 facility maturity date of December 9, 2026 and one final installment in the amount of the term A-1 facility then outstanding, due and payable on December 9, 2026. • As of December 31, 2022, the Company has borrowed all $500.0 million under the terms of the term A-2 facility and has repaid $6.3 million, which when repaid by the Company cannot be reborrowed.
The term A-1 facility borrowings are repayable in quarterly installments of 0.25% of the aggregate principle amount of the relevant term A-1 facility on the last day of each March, June, September and December of each year commencing on the last day of such month falling on or after the last day of the first full fiscal quarter following the second anniversary of December 9, 2021 and continuing until the last day of such quarterly period ending immediately prior to the term A-1 facility maturity date of December 9, 2026 and one final installment in the amount of the term A-1 facility then outstanding, due and payable on December 9, 2026. • As of December 30, 2023, the Company has borrowed all $500.0 million under the terms of the term A-2 facility and has repaid $18.8 million, which when repaid by the Company cannot be reborrowed.
In addition to the foregoing, management also uses or will use Adjusted EBITDA to measure compliance with certain financial covenants under the Company's Senior Secured Credit Facilities, 6% Notes, 5.25% Notes and 3.625% Notes that were outstanding at December 31, 2022.
In addition to the foregoing, management also uses or will use Adjusted EBITDA to measure compliance with certain financial covenants under the Company’s Senior Secured Credit Facilities, 6% Notes, 5.25% Notes and 3.625% Notes that were outstanding at December 30, 2023.
The Company has also stepped up collection efforts by providing indoor used cooking oil collection units in exchange for extended collection contracts at eating establishments and has moved to more of a centralized digital marketing effort with restaurant chains and franchise groups and invested in internet search engine key words to improve visibility with restaurants.
Darling has also stepped up collection efforts by providing indoor used cooking oil collection units in exchange for extended collection Page 67 contracts at eating establishments and has moved to more of a centralized digital marketing effort with restaurant chains and franchise groups and invested in internet search engine key words to improve visibility with restaurants.
The Company's off-balance sheet contractual obligations and commercial commitments as of December 31, 2022 relate to letters of credit, foreign bank guarantees, forward purchase agreements and employment agreements. The Company has excluded these items from the balance sheet in accordance with U.S. GAAP.
The Company’s off-balance sheet contractual obligations and commercial commitments as of December 30, 2023 relate to letters of credit, foreign bank guarantees, forward purchase agreements and employment agreements. The Company has excluded these items from the balance sheet in accordance with U.S. GAAP.
Certain of the policies require management to make significant and subjective estimates or assumptions regarding uncertainties, including the business and economic uncertainty resulting from the Russia-Ukraine war and the high interest rate and inflationary cost environment, and as a result, such estimates may deviate from actual results and significantly impact our financial results.
Certain of the policies require management to make significant and subjective estimates or assumptions regarding uncertainties, including the business and economic uncertainty resulting from the Russia-Ukraine war and the Israeli-Palestinian conflict and associated conflicts and the high interest rate and inflationary cost environment, and as a result, such estimates may deviate from actual results and significantly impact our financial results.
The development of the low carbon markets in North America and Europe has influenced how the Company operates its core business and has also been a driver for the recent DGD expansions, which are making DGD much more relevant to the Company’s earnings.
The development of the low carbon markets in North America and Europe has influenced how Darling operates its core business and has also been a driver for the recent DGD expansions, which are making DGD much more relevant to Darling’s earnings.
During the fourth quarter of fiscal 2021, in September 2022 and again in December 2022, the DGD Joint Venture borrowed all $50.0 million available under the DGD Loan Agreement, including the Company's full $25.0 million commitment and paid interest to the Company for the year ended December 31, 2022 and January 1, 2022 of approximately $0.6 million and $0.1 million, respectively.
During the fourth quarter of fiscal 2021, in September 2022 and again in December 2022, the DGD Joint Venture borrowed all $50.0 million available under the 2019 DGD Loan Agreement, including the Company’s full $25.0 million commitment and paid interest to the Company for the years ended December 30, 2023, December 31, 2022 and January 1, 2022 of approximately $0.6 million, $0.6 million and $0.1 million, respectively.
Depending on the acquisition size, the Company determines the fair values using the assistance of a valuation expert who assists the Company primarily using the cost, market and income approaches and using estimates of future revenue and cash flows, discount rates and the selection of comparable companies.
Depending on the acquisition size, the Company determines the fair values using the assistance of a valuation expert who assists the Company primarily using the cost, market and income approaches and using estimates of future revenue and cash flows, raw material and sales volumes, discount rates and the selection of comparable companies.
The discussion and analysis of our financial condition and results of operations for the year ended January 1, 2022 compared to the year ended January 2, 2021 are included in Item 7. Management's Discussion and Analysis of Financial Condition and Results in our 2021 Form 10-K and is incorporated herein by reference.
The discussion and analysis of our financial condition and results of operations for the year ended December 31, 2022 compared to the year ended January 1, 2022 are included in Item 7. Management's Discussion and Analysis of Financial Condition and Results in our 2022 Form 10-K and is incorporated herein by reference.
Additionally, the Company has made required and tax deductible discretionary contributions to its foreign pension plans in fiscal year 2022 of approximately $3.6 million, as compared to $3.7 million in contributions in fiscal year 2021. The U.S. Pension Protection Act of 2006 (“PPA”) went into effect in January 2008.
Additionally, the Company has made required and tax deductible discretionary contributions to its foreign pension plans in fiscal year 2023 of approximately $4.1 million, as compared to $3.6 million in contributions in fiscal year 2022. The U.S. Pension Protection Act of 2006 (“PPA”) went into effect in January 2008.
In 2022, 2021 and 2020, DGD was the Company’s largest finished product customer in terms of sales, with the Company recording sales to DGD in those years of $1.1 billion, $521.7 million and $264.1 million, respectively. From a procurement, production and distribution standpoint, DGD has become integral to the Company’s base business.
In 2023, 2022 and 2021, DGD was the Company’s largest finished product customer in terms of sales, with the Company recording sales to DGD in those years of $1.3 billion, $1.1 billion and $521.7 million, respectively. From a procurement, production and distribution standpoint, DGD has become integral to Darling’s base business.
The classification of long-term debt in the Company’s December 31, 2022 consolidated balance sheet is based on the contractual repayment terms of the 6% Notes, the 5.25% Notes, the 3.625% Notes and debt issued under the Amended Credit Agreement.
The classification of long-term debt in the Company’s December 30, 2023 consolidated balance sheet is based on the contractual repayment terms of the 6% Notes, the 5.25% Notes, the 3.625% Notes and debt issued under the Amended Credit Agreement.
As of December 31, 2022, the Company believes it is in compliance with all financial covenants under the Amended Credit Agreement, as well as all of the other covenants contained in the Amended Credit Agreement, the 6% Indenture, the 5.25% Indenture and the 3.625% Indenture.
As of December 30, 2023, the Company believes it is in compliance with all financial covenants under the Amended Credit Agreement, as well as all of the other covenants contained in the Amended Credit Agreement, the 6% Indenture, the 5.25% Indenture and the 3.625% Indenture.
In addition to those factors discussed under the heading “Risk Factors” in Item 1A of this report and elsewhere in this report, and in the Company's other public filings with the SEC, important factors that could cause actual results to differ materially from the Company's expectations include: 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 GHG emissions that adversely affect programs like the U.S. government's renewable fuel standard, low carbon fuel standards (“LCFS”) and tax credits for biofuels both in the United States and abroad; possible product recall resulting from developments relating to the discovery of unauthorized adulterations to food or food additives; the occurrence of 2009 H1N1 flu (initially known as Swine Flu), highly pathogenic strains of avian influenza (collectively known as Bird Flu), SARS, BSE, PED or other diseases associated with animal origin in the United States or elsewhere, such as the outbreak of ASF in China and elsewhere; the occurrence of pandemics, epidemics or disease outbreaks, such as the current COVID-19 outbreak; 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 (including, without limitation, China) regulations (including new or modified animal feed, Bird Flu, SARS, PED, BSE or ASF or similar or unanticipated regulations) affecting the industries in which the Company operates or its value added products; risks associated with the DGD Joint Venture, including possible unanticipated operating disruptions, a decline in margins on the products produced by the DGD Joint Venture and issues relating to the announced SAF upgrade project; risks and uncertainties relating to international sales and operations, including imposition of tariffs, quotas, trade barriers and other trade protections imposed by foreign countries; difficulties or a significant disruption in the Company's information systems or failure to implement new systems and software successfully; 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, including the Russia-Ukraine war; uncertainty regarding the exit of the U.K. from the European Union; and/or unfavorable export or import markets.
In addition to those factors discussed under the heading “Risk Factors” in Item 1A of this report and elsewhere in this report, and in the Company’s other public filings with the SEC, important factors that could cause actual results to differ materially from the Company’s expectations include: 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; reduced demands or prices for biofuels, biogases or renewable electricity; global demands for grain and Page 71 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, reduced volume due to government regulations affecting animal production 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, used cooking oil, protein or collagen (including, without limitation, collagen peptides and gelatin) finished product prices; changes to government policies around the world relating to renewable fuels and GHG emissions that adversely affect prices, margins or markets (including for the DGD Joint Venture), including programs like the U.S. government's renewable fuel standard, low carbon fuel standards (“LCFS”) and tax credits for biofuels both in the United States and abroad; climate related adverse results, including with respect to the Company’s climate goals, targets or commitments; possible product recall resulting from developments relating to the discovery of unauthorized adulterations to food or food additives or products which do not meet specifications, contract requirements or regulatory standards; the occurrence of 2009 H1N1 flu (initially known as Swine Flu), highly pathogenic strains of avian influenza (collectively known as Bird Flu), SARS, BSE, PED or other diseases associated with animal origin in the United States or elsewhere, such as the outbreak of ASF in China and elsewhere; the occurrence of pandemics, epidemics or disease outbreaks, such as the COVID-19 outbreak; 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 (including, without limitation, China) regulations (including new or modified animal feed, Bird Flu, SARS, PED, BSE or ASF or similar or unanticipated regulations) affecting the industries in which the Company operates or its value added products; risks associated with the DGD Joint Venture, including possible unanticipated operating disruptions, a decline in margins on the products produced by the DGD Joint Venture and issues relating to the announced SAF upgrade project; risks and uncertainties relating to international sales and operations, including imposition of tariffs, quotas, trade barriers and other trade protections imposed by foreign countries; tax changes, such as the introduction of a global minimum tax; difficulties or a significant disruption (including, without limitation, due to cyber-attack) in the Company’s information systems, networks or the confidentiality, availability or integrity of our data or failure to implement new systems and software successfully; 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, including the Russia-Ukraine war and the Israeli-Palestinian conflict and other associated or emerging conflicts in the Middle East; uncertainty regarding the exit of the U.K. from the European Union; and/or unfavorable export or import markets.
With respect to the other U.S. multiemployer pension plans in which the Company participates and which are not individually significant, five plans have certified as critical or red zone and one plan has certified as endangered or yellow zone, as defined by the PPA. The Company has withdrawal liabilities recorded on three U.S. multiemployer plans in which it participated.
With respect to the other U.S. multiemployer pension plans in which the Company participates and which are not individually significant, five plans have certified as critical or red zone, as defined by the PPA. The Company has withdrawal liabilities recorded on four U.S. multiemployer plans in which it participated.
Accrued Insurance and Pension Plan Obligations Based upon the annual actuarial estimate, current accruals and claims paid during fiscal year 2022, the Company has accrued approximately $13.2 million as of December 31, 2022 that it expects will become due during the next twelve months in order to meet obligations related to the Company's self-insurance reserves and accrued insurance obligations, which are included in current accrued expenses at December 31, 2022.
Page 65 Accrued Insurance and Pension Plan Obligations Based upon the annual actuarial estimate, current accruals and claims paid during fiscal year 2023, the Company has accrued approximately $13.3 million as of December 30, 2023 that it expects will become due during the next twelve months in order to meet obligations related to the Company’s self-insurance reserves and accrued insurance obligations, which are included in current accrued expenses at December 30, 2023.
Numerous factors could have adverse consequences to the Company that cannot be estimated at this time, such as negative impacts from the COVID-19 outbreak and the Russia-Ukraine war and those other factors discussed below under the heading “Forward Looking Statements”.
Numerous factors could have adverse consequences to the Company that cannot be estimated at this time, such as negative impacts from the Russia-Ukraine war and the Israeli-Palestinian conflict and those other factors discussed below under the heading “Forward Looking Statements”.
As of December 31, 2022, under the equity method of accounting the Company has an investment in the DGD Joint Venture of approximately $1.9 billion included on the consolidated balance sheet. The Company’s original investment in DGD has expanded since 2011 to the point that it is now integral to how the Company operates its business.
As of December 30, 2023, under the equity method of accounting the Company has an investment in the DGD Joint Venture of approximately $2.2 billion included on the consolidated balance sheet. The Company’s original investment in DGD has expanded since 2011 to the point that it is now integral to how the Company operates its business.
As of December 31, 2022 and January 1, 2022, $25.0 million was owed to Darling Green under the DGD Loan Agreement. This note receivable amount is included in other current assets on the balance sheet and is included in investing activities on the cash flow statement.
As of December 30, 2023 and December 31, 2022, zero and $25.0 million was owed to Darling Green under the 2023 DGD Loan Agreement and 2019 DGD Loan Agreement, respectively. This note receivable amount is included in other current assets on the balance sheet and is included in investing activities on the cash flow statement.
Furthermore, emerging legislation seeks to regulate corporate ESG practices, including practices related to the causes and impacts of climate change as well as supply chain control and compliance with human rights.
Furthermore, emerging legislation seeks to regulate corporate environmental, social and governance (“ESG”) practices, including practices related to the causes and impacts of climate change as well as supply chain control and compliance with human rights.
Based upon current actuarial estimates, the Company expects to make payments of approximately $0.2 million in order to meet minimum pension funding requirements to its domestic plans in fiscal year 2023. In addition, the Company expects to make payments of approximately $3.4 million under its foreign pension plans in fiscal year 2023.
Based upon current actuarial estimates, the Company expects to make payments of approximately $0.8 million in order to meet minimum pension funding requirements to its domestic plans in fiscal year 2024. In addition, the Company expects to make payments of approximately $3.6 million under its foreign pension plans in fiscal year 2024.
Page 52 Results of Operations Fiscal Year Ended December 31, 2022 Compared to Fiscal Year Ended January 1, 2022 Operating Performance Metrics Other operating performance metrics indicators which management routinely monitors as an indicator of operating performance include: • Finished product commodity prices • Segment results • Foreign currency exchange • Corporate activities • Non-U.S.
Results of Operations Fiscal Year Ended December 30, 2023 Compared to Fiscal Year Ended December 31, 2022 Operating Performance Metrics Other operating performance metrics which management routinely monitors as an indicator of operating performance include: • Finished product commodity prices • Segment results • Foreign currency exchange • Corporate activities • Non-U.S.
The interest rate applicable to any borrowing under the delayed draw term A-2 facility and term A-4 facility will equal the adjusted term SOFR plus 1.25% per annum subject to certain step-ups or step-downs based on the Company's total leverage ratio.The interest rate applicable to any borrowings under the term loan B facility will equal the base rate plus 1.00% or LIBOR plus 2.00%. 6% Senior Notes due 2030.
The interest rate applicable to any borrowing under the delayed draw term A-2 facility and term A-4 facility will equal the adjusted term SOFR plus 1.50% per annum subject to certain step-ups or step-downs based on the Company’s total leverage ratio. 6% Senior Notes due 2030.
The term A-2 facility borrowings are repayable in quarterly installments of 0.625% of the aggregate principle amount of the relevant term A-2 facility on the last day of each March, June, September and December of each year commencing on the last day of such month falling on or after the last day of the first full fiscal quarter following the borrowings or September 30, 2022 and continuing until the last day of such quarterly period ending March 31, 2025, and quarterly installments of 1.25% of the aggregate principle amount of the relevant term A-2 facility due and payable on the last day of each March, June, September and December of each year commencing on the last day of such month falling on or after the last day of the first full fiscal quarter ending June 30, 2025 and continuing until the last day of such quarterly period ending immediately prior to the term A-2 facility maturity date of December 9, 2026 and one final installment in the amount of the term A-2 facility then outstanding, due and payable on December 9, 2026. • As of December 31, 2022, the Company had full availability under its delayed draw term A-3 facility commitment of $300.0 million.
The term A-2 facility borrowings are repayable in quarterly installments of 0.625% of the aggregate principle amount of the relevant term A-2 facility on the last day of each March, June, September and December of each year commencing on the last day of such month falling on or after the last day of the first full fiscal quarter following the borrowings or September 30, 2022 and continuing until the last day of such quarterly period ending March 31, 2025, and quarterly installments of 1.25% of the aggregate principle amount of the relevant term A-2 facility due and payable on the last day of each March, June, September and December of each year commencing on the last day of such month falling on or after the last day of the first full fiscal quarter ending June 30, 2025 and continuing until the last day of such quarterly period ending immediately prior to the term A-2 facility maturity date of December 9, 2026 and one final installment in the amount of the term A-2 facility then outstanding, due and payable on December 9, 2026. • As of December 30, 2023, the Company has borrowed all $300.0 million under the terms of the term A-3 facility and has made no repayments.
Average Jacobsen and Reuters prices (at the specified delivery point) for fiscal year 2022, compared to average Jacobsen and Reuters prices for fiscal year 2021 are: Avg. Price Fiscal Year 2022 Avg.
Average Jacobsen and Reuters prices (at the specified delivery point) for fiscal year 2023, compared to average Jacobsen and Reuters prices for fiscal year 2022 are as follows: Avg. Price Fiscal Year 2023 Avg.
The increase in interest expense is primarily due to an increase in debt outstanding including increased interest expense from the issuance of the 6% Senior Notes due 2030, the borrowing of all amounts under the term A-1 and term A-2 facilities, higher borrowings under the revolving credit facility and higher overall interest rates as compared to fiscal year 2021.
The increase in interest expense is primarily due to an increase in debt outstanding, including increased interest expense from the issuance of the 6% Senior Notes due 2030, the borrowing of all amounts under the term A-1, term A-2, term A-3 and term A-4 facilities, all of which were borrowed to fund acquisitions, and higher borrowings under the revolving credit facility and higher overall interest rates as compared to fiscal year 2022.
The term A-3 facility borrowings are repayable in quarterly installments of 0.25% of the aggregate principle amount of the relevant term A-3 facility on the last day of each March, June, September and December of each year commencing on the last day of such month falling on or after the last day of the first full fiscal quarter following the second anniversary of December 9, 2021 and continuing until the last day of such quarterly period ending immediately prior to the term A-3 facility maturity date of December 9, 2026 and one final installment in the amount of the term A-3 facility then outstanding, due and payable on December 9, 2026. • As of December 31, 2022, the Company had full availability under its delayed draw term A-4 facility commitment of $500.0 million.
The term A-3 facility borrowings are repayable in quarterly installments of 0.25% of the aggregate principle amount of the relevant term A-3 facility on the last day of each March, June, September and December of each year commencing on the last day of such month falling on or after the last day of the first full fiscal quarter following the second anniversary of December 9, 2021 and continuing until the last day of such quarterly period ending immediately prior to the term A-3 facility maturity date of December 9, 2026 and one final installment in the amount of the term A-3 facility then outstanding, due and payable on December 9, 2026.
Global economic conditions continue to be highly volatile due to, among other things, the conflict in Ukraine and its impact on volatility in energy and other commodity prices, inflation, cost and supply chain pressures and availability, and disruption in banking systems and capital markets.
Global economic conditions continue to be highly volatile due to, among other things, the conflicts in Ukraine and the Middle East and their impacts on volatility in energy and other commodity prices, inflation, cost and supply chain pressures and availability, and disruption in banking systems and capital markets.
Capital expenditures related to compliance with environmental regulations were $54.7 million in fiscal year 2022, $40.6 million in fiscal year 2021 and $38.7 million in fiscal year 2020.
Capital expenditures related to compliance with environmental regulations were $64.8 million in fiscal year 2023, $54.7 million in fiscal year 2022 and $40.6 million in fiscal year 2021.
As of the date of this report, other than the Company's previously announced acquisition of Gelnex for approximately $1.2 billion and Miropasz for approximately €110.0 million, both of which will be financed through borrowings under the Company's Amended Credit Agreement, no decision has been made as to non-ordinary course material cash usages at this time; however, potential usages could include: opportunistic capital expenditures and/or acquisitions and joint ventures; investments relating to the Company’s renewable energy strategy, including, without limitation, potential required funding obligations with respect to the DGD Joint Venture SAF project or potential investments in additional renewable diesel projects; investments in response to governmental regulations relating to human and animal food safety or other regulations; unexpected funding required by the legislation, regulation or mass termination of multiemployer plans; and paying dividends or repurchasing stock, subject to limitations under the Amended Credit Agreement, the 6% Notes, the 5.25% Notes and the 3.625% Notes, as well as suitable cash conservation to withstand adverse commodity cycles.
As of the date of this report, no decision has been made as to non-ordinary course material cash usages at this time; however, potential usages could include: opportunistic capital expenditures and/or acquisitions and joint ventures; investments relating to the Company’s renewable energy strategy, including, without limitation, potential required funding obligations with respect to the DGD Joint Venture SAF project or potential investments in additional renewable diesel or SAF projects; investments in response to governmental regulations relating to human and animal food safety or other regulations; unexpected funding required by the legislation, regulation or mass termination of multiemployer plans; and paying dividends or repurchasing stock, subject to limitations under the Amended Credit Agreement, the 6% Indenture, the 5.25% Indenture and the 3.625% Indenture, as well as suitable cash conservation to withstand adverse commodity cycles.
The discount rate applied to the Company’s pension liability is the interest rate used to calculate the present value of the pension benefit obligation. The weighted average discount rate was 4.82% at December 31, 2022 and 2.40% at January 1, 2022, respectively.
The discount rate applied to the Company’s pension liability is the interest rate used to calculate the present value of the pension benefit obligation. The weighted average discount rate was 4.62% at December 30, 2023 and 4.82% at December 31, 2022, respectively.
Charles Plant that increased its renewable diesel production capability to up to 750 million gallons per year of renewable diesel, as well as separating renewable naphtha (approximately 30 million gallons) and other light end renewable hydrocarbons for sale into low carbon fuel markets, at a total cost, including naphtha production and improved logistics capability, of approximately $1.1 billion.
Charles Plant that increased its renewable diesel production capability to up to 750 million gallons per year of renewable diesel, as well as separating renewable naphtha (approximately 30 million gallons) and other light end renewable hydrocarbons for sale into low carbon fuel markets.
The effective tax rate for both fiscal years 2022 and 2021 differs from the statutory rate of 21% due primarily to biofuel tax incentives, the relative mix of earnings among jurisdictions with different tax rates, state income taxes and excess tax benefits from stock-based compensation. Non-U.S.
The effective tax rate for fiscal year 2022 was 16.4%. The effective tax rate for fiscal year 2022 differs from the statutory rate of 21% due primarily to biofuel tax incentives, the relative mix of earnings among jurisdictions with different tax rates, state income taxes and excess tax benefits from stock-based compensation.
As of December 31, 2022, the Company has an aggregate accrued liability of approximately $3.9 million representing the present value of scheduled withdrawal liability payments on the remaining multiemployer plans that have given notices of withdrawals.
As of December 30, 2023, the Company has an aggregate accrued liability of approximately $4.7 million representing the present value of scheduled withdrawal liability payments on the remaining multiemployer plans that have given notices of withdrawals.
The program runs through August 13, 2024, unless further extended or shortened by the Board of Directors. During fiscal year 2022, the Company repurchased approximately $125.5 million, including commissions, of its common stock in the open market. As of December 31, 2022, the Company had approximately $374.5 million remaining in its share repurchase program.
The program runs through August 13, 2024, unless further extended or shortened by the Board of Directors. During fiscal year 2023, the Company repurchased approximately $52.9 million, including commissions, of its common stock in the open market. As of December 30, 2023, the Company had approximately $321.6 million remaining in its share repurchase program.
Charles Plant, which reached mechanical completion and began production of renewable diesel and certain other co-products in late June 2013. In October 2021, the DGD Joint Venture completed an expansion of the DGD St.
The DGD Joint Venture was formed in January 2011 to design, engineer, construct and operate the DGD St. Charles Plant, which reached mechanical completion and began production of renewable diesel and certain other co-products in late June 2013. In October 2021, the DGD Joint Venture completed an expansion of the DGD St.
Based on the most currently available information, the Company has determined that, if a withdrawal were to occur, withdrawal liabilities on two of the U.S. plans in which the Company currently participates could be material to the Company, with one of these material plans certified as critical or red zone.
Based on the most currently available information, the Company has determined that, if a withdrawal were to occur, withdrawal liabilities on two of the U.S. plans in which the Company currently participates could be material to the Company.
Other debt consists of U.S. and European ancillary and overdraft facilities and capital lease obligations and note arrangements in Brazil, China and Europe that are not part of the Company's Amended Credit Agreement, 6% Notes, 5.25% Notes or 3.625% Notes.
Page 64 Other debt consists of U.S., European and Chinese overdraft ancillary facilities, U.S., European and Brazilian finance lease obligations and note arrangements in U.S., Brazilian, Chinese and European notes that are not part of the Amended Credit Agreement, 6% Notes, 5.25% Notes or 3.625% Notes.
Any borrowings by the DGD Joint Venture under the DGD Loan Agreement are at the applicable annum rate equal to the sum of (a) the LIBO Rate (meaning Reuters BBA Libor Rates Page 3750) on such day Page 63 plus (b) 2.50%. The DGD Loan Agreement matures on April 29, 2023, unless extended by agreement of the parties.
Any borrowings by the DGD Joint Venture under the 2019 DGD Loan Agreement were at the applicable annum rate equal to the sum of (a) the LIBO Rate (meaning Reuters BBA Libor Rates Page 3750) on such day plus (b) 2.50%.
Capital expenditures of $391.3 million were made during fiscal year 2022 as compared to $274.1 million in fiscal year 2021, an increase of $117.2 million, or 42.8%. The Company expects to incur capital expenditures of approximately $565 million in fiscal year 2023, including compliance, replacement and expansion projects. The Company intends to finance these costs using cash flows from operations.
Capital expenditures of $555.5 million were made during fiscal year 2023 as compared to $391.3 million in fiscal year 2022, an increase of $164.2 million. The Company expects to incur capital expenditures of approximately $500 million in fiscal year 2024, including compliance, replacement and expansion projects. The Company intends to finance these costs using cash flows from operations.
The closing balance sheet rate assumptions used in this calculation were the actual fiscal closing balance sheet rate at December 31, 2022 of €1.00:USD$1.067600 as compared to the closing balance sheet rate at January 1, 2022 of €1.00:USD$1.132000. Senior Secured Credit Facilities . On January 6, 2014, Darling, Darling International Canada Inc. (“Darling Canada”) and Darling International NL Holdings B.V.
The Page 62 closing balance sheet rate assumptions used in this calculation were the actual fiscal closing balance sheet rate at December 30, 2023 of €1.00:USD$1.105000 as compared to the closing balance sheet rate at December 31, 2022 of €1.00:USD$1.067600. Senior Secured Credit Facilities . On January 6, 2014, Darling, Darling International Canada Inc.
At December 31, 2022, the Company had unrestricted cash of $127.0 million and funds available under the revolving credit facility of $1.313 billion, compared to unrestricted cash of $68.9 million and funds available under the revolving credit facility of $1.286 billion at January 1, 2022.
At December 30, 2023, the Company had unrestricted cash of $126.5 million and funds available under the revolving credit facility of $832.5 million, compared to unrestricted cash of $127.0 million and funds available under the revolving credit facility of $1.313 billion at December 31, 2022.
Page 65 The following table summarizes the Company’s other commercial commitments, including both on- and off-balance sheet arrangements that are part of the Company's Amended Credit Agreement and other foreign bank guarantees that are not a part of the Company's Amended Credit Agreement at December 31, 2022 (in thousands): Other commercial commitments: Standby letters of credit $ 3,871 Standby letters of credit (ancillary facility) 25,672 Foreign bank guarantees 23,856 Total other commercial commitments: $ 53,399 CRITICAL ACCOUNTING POLICIES The Company follows certain significant accounting policies when preparing its consolidated financial statements.
The following table summarizes the Company’s other commercial commitments, including both on- and off-balance sheet arrangements that are part of the Amended Credit Agreement and other foreign bank guarantees that are not a part of the Amended Credit Agreement at December 30, 2023 (in thousands): Other commercial commitments: Standby letters of credit $ 3,895 Standby letters of credit (ancillary facility) 30,177 Foreign bank guarantees 22,733 Total other commercial commitments: $ 56,805 CRITICAL ACCOUNTING POLICIES The Company follows certain significant accounting policies when preparing its consolidated financial statements.
The average rates assumption used in this calculation was the actual average rate for fiscal year 2022 of €1.00:USD$1.05 and CAD$1.00:USD$0.77 as compared to the average rate for fiscal year 2021 of €1.00:USD$1.18 and CAD$1.00:USD$0.80, respectively. Corporate Activities Selling, General and Administrative Expenses.
The average rates assumption used in this calculation was the actual average rate for fiscal year 2023 of €1.00:$1.08, R$1.00:$0.20 and C$1.00:$0.74 as compared to the average rate for fiscal year 2022 of €1.00:$1.05, R$1.00:$0.19 and C$1.00:$0.77, respectively. Corporate Activities Selling, General and Administrative Expenses.
In addition, in the second quarter of fiscal 2022, the Company lost a large raw material customer at a plant location in Canada that resulted in a long-lived asset impairment charge in the feed segment of approximately $8.6 million. In fiscal year 2021, no triggering event occurred requiring that the Company perform testing of its long-lived assets for impairment.
In addition, in the second quarter of fiscal 2022, the Company lost a large raw material customer at a plant location in Canada that resulted in a long-lived asset impairment charge in the feed segment of approximately $8.6 million.
The Company recorded income tax expense of $146.6 million for fiscal year 2022, compared to $164.1 million of income tax expense recorded in fiscal year 2021, a decrease of $17.5 million, which was primarily due to an increase in the benefit from biofuel tax incentives.
The Company recorded income tax expense of $59.6 million for fiscal year 2023, compared to $146.6 million of income tax expense recorded in fiscal year 2022, a decrease of $(87.0) million, which was primarily due to a decrease in pre-tax income and an increase in the benefit from biofuel tax incentives.
DGD is integrated into the Company’s operations via the combined vertical operating structure from collecting raw fats, to processing collected fats at the Company facilities nationwide to transporting the refined fats to the DGD St. Charles Plant as feedstock.
DGD is integrated to the Company’s operations via the combined vertical operating structure from collecting raw fats, to processing collected fats at Darling facilities worldwide to transporting the refined fats to the DGD St. Charles and Port Arthur Plants as feedstock.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeType Amount Type Amount Hedge rates Equivalent Brazilian real 627 Euro 110 5.7 $ 120 Brazilian real 3,458,502 U.S. dollar 807,739 3.35 - 6.63 807,739 Euro 33,631 U.S. dollar 35,505 1.01 - 1.08 35,505 Euro 26,798 Polish zloty 126,500 4.69 - 4.74 28,609 Euro 12,982 Japanese yen 1,859,840 140.03 - 146.23 13,860 Euro 18,827 Chinese renminbi 138,363 7.09 - 7.44 20,100 Euro 17,221 Australian dollar 26,800 1.55 - 1.59 18,386 Euro 3,398 British pound 2,972 0.87 - 0.89 3,628 Euro 34 Canadian dollar 50 1.45 37 Polish zloty 38,373 Euro 8,155 4.70 - 4.72 8,735 Polish zloty 1,212 U.S. dollar 274 4.42 274 British pound 284 Euro 325 0.87 342 British pound 446 U.S. dollar 544 1.22 544 Japanese yen 360,425 U.S. dollar 2,753 129.40 - 135.36 2,753 U.S. dollar 746 Japanese yen 101,000 135.36 746 U.S. dollar 352 Euro 330 1.07 352 Australian dollar 159 Euro 100 1.59 108 $ 941,838 The above foreign currency contracts had an aggregate fair value of approximately $11.7 million and are included in other current assets, noncurrent assets, accrued expenses and noncurrent liabilities at December 31, 2022.
Biggest changeType Amount Type Amount Hedge rates Equivalent Brazilian real 170,788 Euro 31,272 5.34 - 5.66 $ 35,282 Brazilian real 1,546,487 U.S. dollar 292,015 4.84 - 6.09 292,015 Euro 48,435 U.S. dollar 52,622 1.06 - 1.11 52,622 Euro 40,614 Polish zloty 176,500 4.33 - 4.36 44,879 Euro 11,177 Japanese yen 1,741,390 154.81 - 161.79 12,351 Euro 25,043 Chinese renminbi 195,270 7.79 - 7.82 27,673 Euro 18,373 Australian dollar 30,150 1.62 - 1.65 20,302 Euro 2,797 British pound 2,415 0.86 3,091 Polish zloty 35,023 Euro 8,066 4.34 - 4.36 8,901 Polish zloty 2,941 U.S. dollar 740 3.97 740 British pound 149 Euro 173 0.86 190 British pound 75 U.S. dollar 95 0.79 95 Japanese yen 145,199 U.S. dollar 994 141.64 - 148.95 994 U.S. dollar 1,050 Japanese yen 149,000 141.89 1,050 U.S. dollar 562,340 Euro 519,182 1.08 562,340 Australian dollar 162 Euro 100 1.62 110 $ 1,062,635 The above foreign currency contracts had an aggregate fair value of approximately $5.0 million and are included in other current assets, accrued expenses and noncurrent liabilities at December 30, 2023.
The Company makes limited use of derivative instruments to manage cash flow risks related to natural gas usage, diesel fuel usage, inventory, forecasted sales and foreign currency exchange rates. The Company does not use derivative instruments for trading purposes.
The Company makes limited use of derivative instruments to manage cash flow risks related to interest rates, natural gas usage, diesel fuel usage, inventory, forecasted sales and foreign currency exchange rates. The Company does not use derivative instruments for trading purposes.
The Company had corn forward contracts that are marked to market because they did not qualify for hedge accounting at December 31, 2022. These contracts have an aggregate fair value of approximately $0.1 million and are included in current other assets and accrued expenses at December 31, 2022.
The Company had corn forward contracts that are marked to market because they did not qualify for hedge accounting at December 30, 2023. These contracts have an aggregate fair value of approximately $0.3 million and are included in current other assets and accrued expenses at December 30, 2023.
At December 31, 2022, the Company had the following outstanding forward contracts that were entered into to hedge the future payments of intercompany notes, and foreign currency transactions in currencies other than the functional currency and forecasted transactions in currencies other than the functional currency (in thousands): Page 69 Functional Currency Contract Currency Range of U.S.
At December 30, 2023, the Company had the following outstanding forward contracts that were entered into to hedge the future payments of intercompany notes, and foreign currency transactions in currencies other than the functional currency and forecasted transactions in currencies other than the functional currency (in thousands): Page 73 Functional Currency Contract Currency Range of U.S.
Interest Rate Sensitivity At December 31, 2022, the Company's fixed rate debt obligations consist of the 6% Notes, the 5.25% Notes, the 3.625% Notes and other immaterial debt that accrue interest at an annual weighted average fixed rate of approximately 5.18%.
Interest Rate Sensitivity At December 30, 2023, the Company’s fixed rate debt obligations consist of the 6% Notes, the 5.25% Notes, the 3.625% Notes and other immaterial debt that accrue interest at an annual weighted average fixed rate of approximately 5.29%.
Heating oil swaps and options are entered into with the intent of managing the overall cost of diesel fuel usage by reducing the potential impact of seasonal weather demands on diesel fuel that increases diesel fuel prices. Soybean meal forward contracts and options are entered into with the intent of managing the impact of changing prices for poultry meal sales.
Heating oil swaps and options are entered into with the intent of managing the overall cost of diesel fuel usage by reducing the potential impact of seasonal weather demands on diesel fuel that increases diesel fuel prices.
As of December 31, 2022, the Company had forward purchase agreements in place for purchases of approximately $138.0 million of finished and raw material products during the next five years.
As of December 30, 2023, the Company had forward purchase agreements in place for purchases of approximately $98.7 million of finished and raw material products during the next five years.
Foreign Exchange The Company has significant international operations and is subject to certain opportunities and risks, including currency fluctuations. As a result, the Company is affected by changes in foreign currency exchange rates, particularly with respect to the euro, Brazilian real, Canadian dollar, Australian dollar, Chinese renminbi, British pound and Japanese yen. Page 70
As a result, the Company is affected by changes in foreign currency exchange rates, particularly with respect to the euro, Brazilian real, Canadian dollar, Australian dollar, Chinese renminbi, Polish zloty, British pound and Japanese yen. Page 74
At December 31, 2022, the Company had foreign currency option and forward contracts, soybean meal forward contracts and corn option contracts outstanding that qualified and were designated for hedge accounting as well as corn forward contracts, heating oil options, soybean meal forward contracts and foreign currency forward contracts that did not qualify and were not designated for hedge accounting.
At December 30, 2023, the Company had foreign currency forward contracts and interest rate swaps outstanding that qualified and were designated for hedge accounting as well as corn forward contracts and foreign currency forward contracts that did not qualify and were not designated for hedge accounting.
Some of the Company's natural gas and diesel fuel instruments qualify as normal purchases as defined in Financial Accounting Standards Board (“FASB”) authoritative guidance and therefore are not subject to fair value derivative accounting.
The Company intends to take physical delivery of the commodities under certain of the Company’s natural gas and diesel fuel instruments and accordingly, these contracts are not subject to the requirements of fair value accounting because they qualify as normal purchases as defined in Financial Accounting Standards Board (“FASB”) authoritative guidance.
At December 31, 2022, the aggregate fair value of the corn contracts was $0.9 million. The amounts are included in other current assets on the balance sheet. In fiscal 2022, fiscal 2021 and fiscal 2020, the Company entered into soybean meal forward contracts to hedge a portion of its forecasted poultry meal sales into the third quarter of fiscal 2023.
In fiscal 2023, fiscal 2022 and fiscal 2021, the Company entered into soybean meal forward contracts to hedge a portion of its forecasted poultry meal sales into the fourth quarter of fiscal 2023. At December 30, 2023, the aggregate fair value of the soybean meal contracts was zero.
Corn options and future contracts are entered into with the intent of managing U.S. forecasted sales of BBP by reducing the impact of changing prices. Foreign currency forward contracts and options are entered into to mitigate the foreign exchange rate risk for transactions designated in a currency other than the local functional currency.
Foreign currency forward contracts and options are entered into to mitigate the foreign exchange rate risk for transactions designated in a currency other than the local functional currency.
As of December 31, 2022, the Company has long-term debt of approximately $1.2 billion subject to variable interest rates under the Company's Senior Secured Credit Facilities. This portion of the Company's debt is sensitive to fluctuations in interest rates. The Company estimates that a 1% increase in interest rates will increase the Company's annual interest expense by approximately $12.2 million.
As of December 30, 2023, the Company has long-term debt of approximately $2.3 billion that is subject to variable interest rates under the Company’s Senior Secured Credit Facilities.
In fiscal 2022, fiscal 2021 and fiscal 2020, the Company entered into corn option contracts that are considered cash flow hedges. Under the terms of the corn option contracts the Company hedged a portion of its forecasted sales of BBP into the second quarter of fiscal 2023.
Under the terms of the corn option contracts the Company hedged a portion of its forecasted sales of BBP into the second quarter of fiscal 2023. At December 30, 2023, the aggregate fair value of the corn contracts was zero.
At December 31, 2022, the aggregate fair value of these foreign exchange contracts was approximately $13.8 million. The amounts are included in other current assets, other noncurrent assets, accrued expenses and noncurrent liabilities on the balance sheet, with an offset recorded in accumulated other comprehensive loss.
These amounts are included in other current assets and noncurrent liabilities on the balance sheet, with an offset recorded in accumulated other comprehensive loss. In fiscal 2023, fiscal 2022 and fiscal 2021, the Company entered into foreign exchange option and forward contracts that are considered cash flow hedges.
These contracts have an aggregate fair value of less than $0.1 million and are included in current other assets at December 31, 2022. At December 31, 2022, the Company had forward purchase agreements in place for purchases of approximately $243.3 million of natural gas and diesel fuel and approximately $19.8 million of other commitments during the next three years.
At December 30, 2023, the Company had forward purchase agreements in place for purchases of approximately $191.9 million of natural gas and diesel fuel and approximately $35.5 million of other commitments during the next three years.
In fiscal 2022, fiscal 2021 and fiscal 2020, the Company entered into foreign exchange option and forward contracts that are considered cash flow hedges. Under the terms of the foreign exchange contracts, the Company hedged a portion of its forecasted collagen sales in currencies other than the functional currency through the fourth quarter of fiscal 2024.
Under the terms of the foreign exchange contracts, the Company hedged a portion of its forecasted sales in currencies other than the functional currency through the fourth quarter of fiscal 2024. At December 30, 2023, the aggregate fair value of these foreign exchange contracts was approximately $15.9 million.
Removed
At December 31, 2022, the aggregate fair value of the soybean meal contracts was $0.6 million and was recorded in other current assets on the balance sheet.
Added
Interest rate swaps are entered into with the intent of managing overall borrowing costs by reducing the potential impact of increases in interest rates on floating-rate long-term debt.
Removed
The Company had soybean meal forward contracts that are marked to market at December 31, 2022. These contracts have an aggregate fair value of approximately $1.7 million and are included in current other assets at December 31, 2022. Additionally, the Company had heating oil options that are marked to market at December 31, 2022.
Added
Soybean meal forward contracts and options are Page 72 entered into with the intent of managing the impact of changing prices for poultry meal sales. Corn options and future contracts are entered into with the intent of managing U.S. forecasted sales of BBP by reducing the impact of changing prices.
Added
In fiscal 2023, the Company entered into interest rate swaps that are designated as cash flow hedges. The notional amount of these swaps totaled $900.0 million. Under the contracts, the Company is obligated to pay a weighted average rate of 4.007% while receiving the 1-month SOFR rate.
Added
Under the terms of the interest rate swaps, the Company hedged a portion of its variable rate debt into the first quarter of 2026. At December 30, 2023, the aggregate fair value of these interest rate swaps was approximately $3.7 million.
Added
These amounts are included in other current assets, accrued expenses and noncurrent liabilities on the balance sheet, with an offset recorded in accumulated other comprehensive loss. In fiscal 2023, the Company also entered into cross currency swaps that are designated as cash flow hedges. The notional amount of these swaps was €519.2 million.
Added
Under the contracts, the Company is obligated to pay a 4.6% euro denominated fixed rate while receiving a weighted average U.S. dollar fixed rate of 5.799%. Under the terms of the cross currency swaps, the Company hedged its intercompany notes receivable into the first quarter of 2025.
Added
Accordingly, changes in the fair value of the cash flow hedge are initially recorded as gains and/or losses as a component of accumulated other comprehensive loss. We immediately reclassify from accumulated other comprehensive loss to earnings an amount to offset the remeasurement recognized in earnings associated with the respective intercompany loan.
Added
Additionally, we reclassify amounts from accumulated other comprehensive income/(loss) associated with the interest rate differential between the U.S. dollar and a Euro to interest expense. At December 30, 2023, the aggregate fair value of these cross currency swaps was approximately $10.8 million.
Added
The amounts are included in other current assets and accrued expenses on the balance sheet, with an offset recorded in accumulated other comprehensive loss. In fiscal 2022 and fiscal 2021, the Company entered into corn option contracts that are considered cash flow hedges.
Added
Of this variable rate debt, $900.0 million has been fixed through the first quarter of fiscal 2026 at a weighted average rate of 4.007% as a result of our entry into interest swap transactions.
Added
This leaves approximately $1.36 billion over the next year that will actually be subject to changing interest rates and the Company estimates that a 1% increase in interest rates will increase the Company’s annual interest expense by approximately $13.6 million. Foreign Exchange The Company has significant international operations and is subject to certain opportunities and risks, including currency fluctuations.

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