key highlights · ypet food and animal feed yfertilizer and bio fuels operates a fleet of over y650...
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Key HighlightsCombining Darling with Griffin creates America’s largest independent renderer and recycler serving the nation’s food industry
Key considerations:
National platform with scale
Diversified base of raw material supply
Entrenched customer relationships
Insulation from commodity price fluctuationsInsulation from commodity price fluctuations through raw material pricing formulas
Global distribution of finished products
High free cash flow generationHigh free cash flow generation
Strong balance sheet
Experienced management team
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Competitive Strengths
National Platform with Scale
Diversified Base of Material Inputs
Regulatory Compliance and
PermittingLargest independent rendering provider with operations nationwide
Breadth to service
Diverse mix of beef, pork and poultry raw materials and the largest recycler of bakery waste
Permits by local governments to operate each plant
Comply with complex food
Permitting
national accounts Pricing formulas insulate from commodity price fluctuations
safety regulations
Long term
Both Darling and Griffin senior management have
Experienced Management Team
Created value-added feed formulations that improve
Culture of Innovation
Average length of top ten supply relationships is
Long-term Relationships with
Raw Material Suppliers
gan average of more than 25 years of industry experience
pdigestibility and caloric content
Implementing next-generation green diesel technology to open a new
pp y p24+ years
Processing plants generally within 100 miles of supplier facilities
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gy pmarket for fats and oils
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Darling’s National PlatformThe only independent recycling/rendering company with a national footprint
Network of 45 processing facilities from coast to coast
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Acquisition Rationale
Darling 2009Darling 2009
Diversifies into Poultry and BakeryDiversifies into Poultry and Bakery
Diversification of raw material supply, providing Darling with greater exposure to poultry
Poultry
Strategic rationaleStrategic rationale
Griffin is one of the three largest non-captive US processors of poultry by-productsReduces Darling’s reliance on beef as their #1 raw material sourcePoultry consumption growth outpaces other protein consumption
E t i t b k li b i
Poultry11%
Cooking oil12%
Beef/Pork77%
Entry into bakery recycling businessGriffin is the largest US producer of bakery by-productsHigh margin due to lower processing requirement and high caloric content of finished product
Complementary footprint resulting in increased scale and broader geographic presence
Poultry Bakery
Beef/Pork 10%
Griffin 2009Griffin 2009
broader geographic presenceFills in Darling’s footprint in the southeast United StatesGreater customer diversificationProvides entry into new products and premium feed formulationsScale arbitrage on fat and grease volume
47%
Cooking oil 11%
Bakery32%
Pro Forma 2009Pro Forma 2009Improves feedstock sourcing alternatives for Valero renewable fuels JV
Poultry fat works well to LouisianaDoubles feedstock available in the eastern region
Operating cost synergy and revenue enhancement potential
Poultry29% Beef/Pork
40%
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Formulation and branding opportunitiesOverhead reductions
Cooking oil11%
Bakery 21%
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Griffin Industries Overview
The largest independent providers of rendering, bakery feed, and cooking oil recycling services in the Southeast
Business overviewBusiness overview Key highlightsKey highlights
Highly Experienced Management
Strategic Non-Cyclical Raw
Material Availability and
Track Record of Growth
and Strong Financial
Environmentally Friendly and Sustainable
Products and
Southeast
Collects and processes by-products from:Poultry and meat processorsCommercial bakeries Market
Leading Agri Business
Management Team
Material Availability and Finished Product Demand
Global Leader in Innovation
and Premium Product
and Strong Financial Performance
Products and ProcessesRestaurants
Grocery storesButcher shops
Process raw materials into value added products,
Agri-Business Premium Product Development
Geographic presenceGeographic presence
including:Pet food and animal feedFertilizer and Bio fuels
Operates a fleet of over650 vehicles1,725 trailers525 railcars
Headquartered in Cold Spring KY and founded in
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Headquartered in Cold Spring, KY and founded in 1943 with 1,392 employees Bakery
Rendering & Other
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Griffin Industries Business ModelCommodity Products (<45% of 2009 Sales)
Griffin Premium, Value-Added, or Branded Products (>55% of 2009 Sales)
Raw Materials
• Griffin’s premium, branded organic f tili
Poultry
Poultry By-Products
fertilizer
• Griffin’s premium poultry meal processed at lower temperatures to increase digestibility and palatability
• Griffin’s branded high qualityanimal protein designed for dairy
47%
Flash Dried Poultry Meal
Meat & Bone Meal,Poultry Meal,Feather Meal,Blood Meal
• Unique service program that allows small feed mills and large farms to purchase fats and other feed
cows• Griffin’s high quality pet-food additive
made from chicken by-productsPet-Grade
Poultry Meal
Beef & Pork
Beef & Pork By-ProductsYellow Grease, Tallow,
Poultry Grease, Feed Fats
additives direct from Griffin
• Griffin’s clean-burning biodiesel produced from rendered animal by-products and recycled cooking oil
• Griffin’s branded grease product
Pork 10%
SpentSpent Cooking Oil
Bakery Feed
g pthat can be burned for fuel
• Griffin’s high energy contentanimal feed additive
Bakery32%
Cookie® Meal
Spent Cooking
Oil 11%
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Bakery & Snack Food WasteBakery Feed
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Griffin Procurement and Risk Management
100% of rendering business under formula pricing100% of bakery business under formula pricingO 60% f t t ki il t dOver 60% of restaurant cooking oil customers under
formula pricing agreementsContracts typically 3-5 yearsContracts typically 3 5 years
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Griffin Industries Premium ProductsStrategic focus on premium and value-added productsStrategic focus on premium and value-added products
Griffin is able to drive premium pricing through differentiated and value-added
(As a % of total sales)
Expansion of premium, value-added and branded salesExpansion of premium, value-added and branded salesExpansion of premium, value-added and branded salesExpansion of premium, value-added and branded sales
through differentiated and value added products
57%57%• Expanded premium, value-added and branded
sales from 25% in 2005 to 57% in 2009
57%57%
25%
Premium products pricing relative to commodity mealsPremium products pricing relative to commodity meals
2005 2009
25%
sales from 25% in 2005 to 57% in 2009
• Enhanced nutritional content, consistency and customization drives premium pricing
25%
Premium products pricing relative to commodity mealsPremium products pricing relative to commodity meals
2005 2009
25%
Premium products pricing relative to commodity mealsPremium products pricing relative to commodity meals
Griffin Pet - Grade Poultry Meal
Griffin Poultry Meal (Flash Dried)
Griffin Low Ash Poultry Meal
• Processing capacity and proprietary equipment and methods allow Griffin to focus on raw material segregation which facilitates the production of specialized custom blends
Premium products pricing relative to commodity mealsPremium products pricing relative to commodity meals
+65%+70%
+75%
Commodity Feed Grade Poultry Meal
production of specialized, custom blends
Value-added products sell for a significant premium to commodity products Grade Poultry Meal
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products
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Griffin’s Operating DivisionsOperating segment overviewOperating segment overview
Raw Material Processing and Production & Sale of Finished Goods
Production & Sale of Finished Goods Support
Rendering Bakery FeedsHides &
Skins Export Fertilizer Biodiesel Jay Gee
Year Established 1943 1993 1976 1986 1995 1999 1978
2009 sales mix by segment22009 sales mix by segment2
Processing Facilities 12 facilities 9 facilities 2 facilities 1 facility 1 facility 1 facility 2 facilities
Transfer Stations 24 3 N/A N/A N/A N/A N/A
2009 raw materials mix12009 raw materials mix1 y gy g
Rendering
Export 9%Other 5%
Beef/Pork10%
Poultry47%
Rendering 59%
Bakery26%
Bakery32%
Spent Cooking Oil
11%
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1 Restaurant cooking oil raw material volumes are divided between the Rendering (92%) and Bakery Feeds (8%) divisions2 Other includes Hides & Skins (2%), Fertilizer (1%), and Biodiesel (1%)
32%
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Fills in the U.S. Southeast Footprint
Griffin IndustriesDarling International
Darling and Griffin locationsGriffin locations onlyDarling locations only
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Similar Size Companies
DarlingDarling GriffinGriffin ProF
ProFDarlingDarling GriffinGriffin FormaFormaFYE December 31, 2009
Revenue $598 $525 $1,123
Locations 81 55 136 ocat o s 8 55 36
Employees 1,870 1,392 3,262
2009 EBITDA $96 $114 $210
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Transaction Synergy Potential
Griffin will operate as a wholly-owned subsidiary of Darling and over time will create synergies through:and over time will create synergies through:
Routing improvements (Florida, Georgia, Indiana, Ohio in 2011)
Implementation of best practices from Darling and Griffin to achieve plant processing efficiencies
Scale arbitrage on fat & grease volume for green diesel opportunity
Expanded footprint to better serve national accounts
SG&A reduction opportunities
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Successful Acquisition Integration Track Recordg
Ace Grease J&R Southeastern Maintenance Sanimax USA
Since 2004, Darling has acquired and integrated 9 companies investing a total of $212 millionSince 2004, Darling has acquired and integrated 9 companies investing a total of $212 million
2004 2005 2006 2007 2008 2009
July07
Dec08
Oct05
FL, GA KC metro NYC metro
Service Rendering, Inc.& Construction Inc.
2010
Sanimax USA
Dec09
Great Lakes
2004 2005 2006 2007 2008 2009
Dec04
May06
Feb09
Aug08
GAGASo CA
Burrows Industries, Inc. National API Recycling, Boca
MidwestUS
2010
June10
NE, KS
Nebraskadba Minuteman Pumping By-Products, LLC div of American
Proteins Inc.Transport, Inc. By-Products
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Griffin Enhances Existing Management Team
Griffin
Name Years at Griffin Years in Industry
Darling
Name Years at Darling Years in Industry
Robert GriffinPresident & CEO
37 37
Martin Griffin 30 30
Randy StueweChairman & CEO
8 27
John Muse 13 40Chief Operating Officer
Anthony GriffinChief Financial Officer
17 17
EVP & CFO
Neil KatchenEVP, Operations
40 40
Thomas GriffinSenior Vice President
31 31
William ReagorJohn Sterling
Michael Rath,EVP Commodities & Risk Management
2 24
William ReagorPresident of Bakery Division
17 17
Rick ElrodExecutive Vice President
26 26
John SterlingEVP, Secretary & GC
3 13
Dr. Ross HamiltonVP Technology &
14 14
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Government Affairs
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Transaction OverviewTransaction Overview
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Transaction Overview
Target & Purchase Price
Griffin Industries (“Target”)One of the largest independent providers of value-added rendering, bakery feed and cooking oil recycling servicesPurchase Price
$840mm purchase price
Capital Structure$325mm Revolver due 2015$300mm Term Loan B due 2016Capital Structure $250mm High Yield Bond due 2018$100mm Equity to Target
Acquisition Diversification of raw material supplyEntry into bakery recycling business
qRationale Entry into bakery recycling business
Complementary footprint in the southeast
Projected Closing Week of December 13th
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