While it's not the most darling of businesses, in fact it's messy and it's stinky, Darling is willing to do it. The company is the largest publicly traded rendering operation in the US; it collects, processes, and recycles animal by-products, used cooking grease, and bakery waste, and offers grease-trap cleaning services. It counts restaurants, butcher shops, grocery stores, and independent meat and poultry processors among its customers. Darling's rendering unit, which accounts for roughly 85% of sales, produces yellow grease, tallow, and meat, bone, and blood meal. The company sells its products nationwide and overseas to makers of soap, rubber, oils, pet and livestock feed, and chemicals.
Darling's profits have suffered in recent years due to rising raw-material costs and high fuel prices. Raw material availability has declined, too, amid a weak economy coupled with a drop in US meat consumption that caused the company's suppliers to reduce slaughter volume. Restaurant grease volume dropped as well, driven by fewer consumers choosing to dine out.
Nonetheless, Darling has remained true to its growth through acquisition strategy. In 2012 it purchased RVO BioPur, a provider of grease trap and used cooking oil collection services. RVO BioPur's customers are primarily restaurants and foodservice operators along the East coast. Although relatively small, the acquisition followed Darling's buyout of fellow rendering company Griffin Industries, the largest purchase in Darling's history. It picked up the Kentucky-based company in a deal valued at $840 million in late 2010. The purchase boosted the number of Darling's processing and transfer facilities to 120, adding Griffin's 55 locations that include a dozen rendering plants, about 10 bakery by-product plants, and a lone bio-diesel facility.
Buying rival Griffin made 2011 a record-setting year for Darling. As the economy showed signs of improvement, Darling saw rises in raw material tonnage in the beef segment as more meat processors pushed up beef slaughter volumes. More people began to dine out, as well, which benefited Darling in the area of cooking oil collection and grease trap processing. Its bakery segment also logged improvements as commercial bakeries put in longer hours to keep up with higher demand.
With 2011 representing the first full year with Griffin on its books, Darling logged noteworthy increases among its two operating segments: rendering and bakery. Net sales rose to nearly $1.8 billion in 2011 vs. about $723 million during 2010. A $786.5 million rise in rendering revenue and boost of $285.8 million in bakery revenue accounted for the overall increases in 2011 sales.
Prior to the Griffin buy, Darling purchased the Indiana and Ohio operations of rival renderer Sanimax in 2010. The deal included a number of Sanimax collection routes in Pennsylvania and the lower part of Michigan. In mid-2010 the renderer purchased Nebraska By-Products, extending its reach in Nebraska, Kansas, Colorado, and South Dakota.
Before these acquisitions in 2010, Darling had inked three other deals. The company bought Smyrna, Georgia-headquartered Boca Industries, a provider of grease-trap and oil-collection services to restaurants and other foodservice operators in Georgia and surrounding states. The purchase complements Darling's other oil collection business, API Recycling, which also serves Georgia and surrounding areas.
For Darling, competition comes mostly from obtaining its raw materials. Large meat-packing companies usually handle their own rendering in-house. As the meat industry has consolidated, fewer independent meat and poultry processors are left from whom to collect scraps; however, until the economic recession, Darling had been seeing growth in its restaurant-services division, even though collecting spent grease from restaurants is highly competitive. When it comes time to sell its commodity-grade products, Darling competes with vegetable-oil producers as well as other rendering operations.
The company operates a fleet of trucks, trailers, and railcars for collection of its raw materials. Within its bakery feed division, a new business in 2010 with the Griffin purchase, Darling uses third party logistics companies for inbound and outbound freight. The company has no foreign collection or rendering operations but does export its products to Mexico, South America, Asia, the European Union, North Africa, and the Pacific Rim. – less