Darling International Inc.
), which is engaged in providing the recovery and recycle
solutions for the American food industry, reported dismal
fourth-quarter 2012 results. Darling posted earnings per share of
24 cents, a penny short of the year-ago earnings. Also, earnings
lagged behind the Zacks Consensus Estimate of 30 cents by 20.0%.
The decline in earnings was a result of lower input volumes and
finished products prices.
Earnings in 2012 came in at $1.11 per share, decreasing 24.5%
year over year. This was a result of lower input raw material
volumes, lower finished fat selling prices and increased pay-roll
In the fourth quarter of 2012, total sales were $424.9 million,
down 1.4% from $430.9 million reported a year ago. Sales also
lagged the Zacks Consensus Estimate of $430.0 million, primarily
resulting from lower volumes in the Bakery segment as well as
lower selling prices for its finished products in the Rendering
In 2012, sales were $1.70 billion, down 5.3% from $1.80
billion in 2011. Lower selling prices of Darling's finished goods
and lower volumes of its input materials pulled down the
In the quarter, cost of sales decreased 0.2% to $314.1 million,
mainly due to a decrease in the cost of raw materials of the
Rendering segment. A decrease in the input raw material volumes
also brought about the decline.
SG&A expenses increased 8.5% to $38.9 million as a result
of increased pay-roll expenses. Operating margin reached 11.6%,
declining 210 basis points from 13.7% in the year-ago comparable
Balance Sheet/Cash Flow:
Exiting the fourth quarter 2012, Darling's cash and cash
equivalents were roughly $103.2 million, against $87.7 million in
the preceding quarter. Long-term debt was recorded at $250.1
million, constant as the previous quarter.
For the fourth quarter, cash flow from operations amounted to
$51.1 million, compared with $67.0 million in the year-ago
comparable quarter. Also, for 2012, Darling's cash flow from
operations was $249.5 million against $240.9 million in 2011.
Management expects raw material prices and volumes to rise in the
near future. It also expects the 2013 capital expenditure to be
roughly $100.0 million. Also, the expected tax rate for 2013
hovers around 38.4%.
The stock currently bears a Zacks Rank #3 (Hold). Other stocks
worth a look in the industry are
Rentech Nitrogen Partners
The Scotts Miracle-Gro Company
); each carrying a Zacks Rank #2 (Buy).
DARLING INTL (DAR): Free Stock Analysis
MONSANTO CO-NEW (MON): Free Stock Analysis
RENTECH NITROGN (RNF): Free Stock Analysis
SCOTTS MIRCL-GR (SMG): Free Stock Analysis
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