DARLING INGREDIENTS INC. [DAR] Filings

10-Q 1 dar-20220402.htm 10-Q dar-20220402

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q


	(Mark One)
☒	QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d) OF THE
	SECURITIES EXCHANGE ACT OF 1934
	For the quarterly period ended	April 2, 2022
	OR

☐	TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d) OF THE
	SECURITIES EXCHANGE ACT OF 1934
	For the transition period from _______ to _______

Commission File Number 001-13323

DARLING INGREDIENTS INC.

(Exact name of registrant as specified in its charter)


Delaware									36-2495346
(State or other jurisdiction									(I.R.S. Employer
of incorporation or organization)									Identification Number)

5601 N MacArthur Blvd., Irving, Texas 75038

(Address of principal executive offices) (Zip Code)

Registrant's telephone number, including area code: (972) 717-0300

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common stock $0.01 par value per share	DAR	New York Stock Exchange	(“NYSE”)

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the Registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the Registrant was required to submit and post such files). Yes ☒ No ☐

Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer

☒

Accelerated filer

☐

Non-accelerated filer

☐

Smaller reporting company

☐

Emerging growth company

☐

If an emerging growth company, indicate by check mark if the Registrant has elected not to use the extended transition period

for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of Exchange Act.

☐

Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

There were 161,514,066 shares of common stock, $0.01 par value, outstanding at May 5, 2022.

DARLING INGREDIENTS INC. AND SUBSIDIARIES

FORM 10-Q FOR THE QUARTERLY PERIOD ENDED APRIL 2, 2022

TABLE OF CONTENTS


		Page No.
	PART I: FINANCIAL INFORMATION

Item 1.	FINANCIAL STATEMENTS
	Consolidated Balance Sheets	3
	April 2, 2022 (unaudited) and January 1, 2022

	Consolidated Statements of Operations (unaudited)	4
	Three Months Ended April 2, 2022 and April 3, 2021

	Consolidated Statements of Comprehensive Income/(Loss) (unaudited)	5
	Three Months Ended April 2, 2022 and April 3, 2021

	Consolidated Statements of Stockholders' Equity (unaudited)	6
	Three Months Ended April 2, 2022 and April 3, 2021

	Consolidated Statements of Cash Flows (unaudited)	7
	Three Months Ended April 2, 2022 and April 3, 2021

	Notes to Consolidated Financial Statements (unaudited)	8

Item 2.	MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	25

Item 3.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	41

Item 4.	CONTROLS AND PROCEDURES	43


	PART II: OTHER INFORMATION

Item 1.	LEGAL PROCEEDINGS	44

Item 1A.	RISK FACTORS	44

Item 2.	UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS	44

Item 6.	EXHIBITS	44

	Signatures	46

DARLING INGREDIENTS INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

April 2, 2022 and January 1, 2022

(in thousands, except share data)


	April 2, 2022		January 1, 2022
ASSETS	(unaudited)
Current assets:
Cash and cash equivalents	$	99,460	$	68,906
Restricted cash	100		166
Accounts receivable, less allowance for bad debts of $9,161 at April 2, 2022 and $8,196 at January 1, 2022	517,783		469,092
Inventories	491,694		457,465
Prepaid expenses	60,562		53,711
Income taxes refundable	25,047		1,075
Other current assets	64,387		38,599
Total current assets	1,259,033		1,089,014
Property, plant and equipment, less accumulated depreciation of $1,894,760 at April 2, 2022 and $1,855,420 at January 1, 2022	1,867,880		1,840,080
Intangible assets, less accumulated amortization of $576,357 at April 2, 2022 and $560,470 at January 1, 2022	409,627		397,801
Goodwill	1,236,524		1,219,116
Investment in unconsolidated subsidiaries	1,563,840		1,349,247
Operating lease right-of-use assets	165,128		155,464
Other assets	97,709		66,795
Deferred income taxes	15,875		16,211
	$	6,615,616	$	6,133,728
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Current portion of long-term debt	$	35,337	$	24,407
Accounts payable, principally trade	351,253		307,118
Income taxes payable	25,117		32,310
Current operating lease liabilities	41,649		38,168
Accrued expenses	360,058		350,681
Total current liabilities	813,414		752,684
Long-term debt, net of current portion	1,677,925		1,438,974
Long-term operating lease liabilities	125,242		120,314
Other non-current liabilities	109,647		111,029
Deferred income taxes	393,738		362,942
Total liabilities	3,119,966		2,785,943
Commitments and contingencies
Stockholders’ equity:
Common stock, $0.01 par value; 250,000,000 shares authorized; 173,384,469 and 171,734,603 shares issued at April 2, 2022 and January 1, 2022, respectively	1,734		1,717
Additional paid-in capital	1,637,930		1,627,816
Treasury stock, at cost; 11,880,712 and 10,942,599 shares at April 2, 2022 and January 1, 2022, respectively	(438,906)		(374,721)
Accumulated other comprehensive loss	(311,369)		(321,690)
Retained earnings	2,535,891		2,347,838
Total Darling's stockholders’ equity	3,425,280		3,280,960
Noncontrolling interests	70,370		66,825
Total stockholders' equity	3,495,650		3,347,785
	$	6,615,616	$	6,133,728

The accompanying notes are an integral part of these consolidated financial statements.

DARLING INGREDIENTS INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

Three months ended April 2, 2022 and April 3, 2021

(in thousands, except per share data)

(unaudited)


	Three Months Ended
	April 2, 2022		April 3, 2021
Net sales	$	1,366,334	$	1,046,716
Costs and expenses:
Cost of sales and operating expenses	1,020,577		772,784
Gain on sale of assets	(389)		(64)
Selling, general and administrative expenses	102,032		97,398
Restructuring and asset impairment charges	—		778
Acquisition and integration costs	3,773		—
Depreciation and amortization	79,246		78,534
Total costs and expenses	1,205,239		949,430
Equity in net income of Diamond Green Diesel	71,804		102,225
Operating income	232,899		199,511

Other expense:
Interest expense	(15,603)		(16,428)

Foreign currency loss	(1,100)		(410)

Other expense, net	(742)		(1,159)
Total other expense	(17,445)		(17,997)

Equity in net income of other unconsolidated subsidiaries	1,360		612
Income before income taxes	216,814		182,126

Income tax expense	26,083		28,708

Net income	190,731		153,418

Net income attributable to noncontrolling interests	(2,678)		(1,652)

Net income attributable to Darling	$	188,053	$	151,766

Basic income per share	$	1.17	$	0.93
Diluted income per share	$	1.14	$	0.90

The accompanying notes are an integral part of these consolidated financial statements.

DARLING INGREDIENTS INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME/(LOSS)

Three months ended April 2, 2022 and April 3, 2021

(in thousands)

(unaudited)


	Three Months Ended
	April 2, 2022		April 3, 2021
Net income	$	190,731	$	153,418
Other comprehensive income/(loss), net of tax:
Foreign currency translation	3,382		(38,222)
Pension adjustments	429		792

Soybean meal derivative adjustments	(240)		(257)
Corn option derivative adjustments	(5,056)		(800)
Heating oil derivative adjustments	(16,762)		3,464
Foreign exchange derivative adjustments	29,435		(6,806)
Total other comprehensive income/(loss), net of tax	11,188		(41,829)
Total comprehensive income	$	201,919	$	111,589
Comprehensive income attributable to noncontrolling interests	3,545		3,186
Comprehensive income attributable to Darling	$	198,374	$	108,403

The accompanying notes are an integral part of these consolidated financial statements.

DARLING INGREDIENTS INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

Three months ended April 2, 2022 and April 3, 2021

(in thousands, except share data)

(unaudited)


	Common Stock
	Number of Outstanding Shares	$0.01 par Value		Additional Paid-In Capital		Treasury Stock		Accumulated Other Comprehensive Loss		Retained Earnings		Stockholders' equity attributable to Darling		Non-controlling Interests		Total Stockholders' Equity
Balances at January 1, 2022	160,792,004	$	1,717	$	1,627,816	$	(374,721)	$	(321,690)	$	2,347,838	$	3,280,960	$	66,825	$	3,347,785
Net income	—	—		—		—		—		188,053		188,053		2,678		190,731


Pension liability adjustments, net of tax	—	—		—		—		429		—		429		—		429

Heating oil derivative adjustments, net of tax	—	—		—		—		(16,762)		—		(16,762)		—		(16,762)
Corn option derivative adjustments, net of tax	—	—		—		—		(5,056)		—		(5,056)		—		(5,056)
Soybean meal derivative adjustments, net of tax	—	—		—		—		(240)		—		(240)		—		(240)
Foreign exchange derivative adjustments, net of tax	—	—		—		—		29,435		—		29,435		—		29,435
Foreign currency translation adjustments	—	—		—		—		2,515		—		2,515		867		3,382
Issuance of non-vested stock	5,000	—		18		—		—		—		18		—		18
Stock-based compensation	—	—		6,305		—		—		—		6,305		—		6,305
Treasury stock	(938,113)	—		—		(64,185)		—		—		(64,185)		—		(64,185)
Issuance of common stock	1,644,866	17		3,791		—		—		—		3,808		—		3,808
Balances at April 2, 2022	161,503,757	$	1,734	$	1,637,930	$	(438,906)	$	(311,369)	$	2,535,891	$	3,425,280	$	70,370	$	3,495,650


	Common Stock
	Number of Outstanding Shares	$0.01 par Value		Additional Paid-In Capital		Treasury Stock		Accumulated Other Comprehensive Loss		Retained Earnings		Stockholders' equity attributable to Darling		Non-controlling Interests		Total Stockholders' Equity
Balances at January 2, 2021	162,200,389	$	1,699	$	1,597,429	$	(151,710)	$	(252,433)	$	1,696,924	$	2,891,909	$	62,300	$	2,954,209

Net income	—	—		—		—		—		151,766		151,766		1,652		153,418
Distribution of noncontrolling interest earnings	—	—		—		—		—		—		—		(2,143)		(2,143)

Pension liability adjustments, net of tax	—	—		—		—		792		—		792		—		792

Heating oil derivative adjustments, net of tax	—	—		—		—		3,464		—		3,464				3,464
Corn option derivative adjustments, net of tax	—	—		—		—		(800)		—		(800)		—		(800)
Soybean meal derivative adjustments, net of tax	—	—		—		—		(257)		—		(257)		—		(257)
Foreign exchange derivative adjustments, net of tax	—	—		—		—		(6,806)		—		(6,806)		—		(6,806)
Foreign currency translation adjustments	—	—		—		—		(39,756)		—		(39,756)		1,534		(38,222)
Issuance of non-vested stock	—	—		58		—		—		—		58		—		58
Stock-based compensation	—	—		8,357		—		—		—		8,357		—		8,357
Treasury stock	(684,674)	—		—		(48,141)		—		—		(48,141)		—		(48,141)
Issuance of common stock	1,639,151	16		6,001		—		—		—		6,017		—		6,017
Balances at April 3, 2021	163,154,866	$	1,715	$	1,611,845	$	(199,851)	$	(295,796)	$	1,848,690	$	2,966,603	$	63,343	$	3,029,946

The accompanying notes are an integral part of these consolidated financial statements.

DARLING INGREDIENTS INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

Three months ended April 2, 2022 and April 3, 2021

(in thousands)

(unaudited)


	April 2, 2022		April 3, 2021
Cash flows from operating activities:
Net Income	$	190,731	$	153,418
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	79,246		78,534
Gain on sale of assets	(389)		(64)

Asset impairment	—		138

Deferred taxes	23,826		11,809
Decrease in long-term pension liability	(269)		(448)
Stock-based compensation expense	6,323		8,415

Write-off deferred loan costs	—		598
Deferred loan cost amortization	1,131		1,040
Equity in net income of Diamond Green Diesel and other unconsolidated subsidiaries	(73,164)		(102,837)
Distributions of earnings from Diamond Green Diesel and other unconsolidated subsidiaries	—		57
Changes in operating assets and liabilities, net of effects from acquisitions:
Accounts receivable	(41,317)		10,721
Income taxes refundable/payable	(31,224)		(760)
Inventories and prepaid expenses	(42,891)		(27,188)
Accounts payable and accrued expenses	58,964		(13,462)
Other	(18,775)		18,834
Net cash provided by operating activities	152,192		138,805
Cash flows from investing activities:
Capital expenditures	(71,618)		(60,751)
Acquisitions, net of cash acquired	(59,003)		(340)
Investment in Diamond Green Diesel	(164,750)		—
Investment in other unconsolidated subsidiaries	—		(4,449)

Gross proceeds from disposal of property, plant and equipment and other assets	974		1,629

Payments related to routes and other intangibles	(100)		(347)
Net cash used in investing activities	(294,497)		(64,258)
Cash flows from financing activities:
Proceeds from long-term debt	9,657		9,262
Payments on long-term debt	(12,128)		(60,444)
Borrowings from revolving credit facility	369,902		111,000
Payments on revolving credit facility	(134,000)		(97,000)
Net cash overdraft financing	9,830		499
Deferred loan costs	(1,810)		—
Issuance of common stock	—		50
Repurchase of common stock	(17,189)		—
Minimum withholding taxes paid on stock awards	(43,351)		(42,268)

Distributions to noncontrolling interests	—		(2,143)
Net cash provided/(used) in financing activities	180,911		(81,044)
Effect of exchange rate changes on cash	(8,118)		(3,847)
Net increase/(decrease) in cash, cash equivalents and restricted cash	30,488		(10,344)
Cash, cash equivalents and restricted cash at beginning of period	69,072		81,720
Cash, cash equivalents and restricted cash at end of period	$	99,560	$	71,376

The accompanying notes are an integral part of these consolidated financial statements.

DARLING INGREDIENTS INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

April 2, 2022

(unaudited)

(1)General

The accompanying consolidated financial statements for the three month periods ended April 2, 2022 and April 3, 2021, have been prepared by Darling Ingredients Inc., a Delaware corporation (“Darling”, and together with its subsidiaries, the “Company” or “we”, “us” or “our”) in accordance with generally accepted accounting principles in the United States (“GAAP”) without audit, pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). The information furnished herein reflects all adjustments (consisting only of normal recurring accruals) that are, in the opinion of management, necessary to present a fair statement of the financial position and operating results of the Company as of and for the respective periods. However, these operating results are not necessarily indicative of the results expected for a full fiscal year. Certain information and footnote disclosures normally included in annual financial statements prepared in accordance with GAAP have been omitted pursuant to such rules and regulations. However, management of the Company believes, to the best of their knowledge, that the disclosures herein are adequate to make the information presented not misleading. The accompanying consolidated financial statements should be read in conjunction with the audited consolidated financial statements contained in the Company’s Form 10-K for the fiscal year ended January 1, 2022.

(2)Summary of Significant Accounting Policies

(a)Basis of Presentation

The consolidated financial statements include the accounts of Darling and its consolidated subsidiaries. Noncontrolling interests represent the outstanding ownership interest in the Company's consolidated subsidiaries that are not owned by the Company. In the accompanying Consolidated Statements of Operations, the noncontrolling interest in net income of the consolidated subsidiaries is shown as an allocation of the Company's net income and is presented separately as “Net income attributable to noncontrolling interests.” In the Company's Consolidated Balance Sheets, noncontrolling interests represent the ownership interests in the Company consolidated subsidiaries' net assets held by parties other than the Company. These ownership interests are presented separately as “Noncontrolling interests” within “Stockholders' Equity.” All intercompany balances and transactions have been eliminated in consolidation.

(b)Fiscal Periods

The Company has a 52/53 week fiscal year ending on the Saturday nearest December 31. Fiscal periods for the consolidated financial statements included herein are as of April 2, 2022, and include the 13 weeks ended April 2, 2022, and the 13 weeks ended April 3, 2021.

The Company has entered into agreements with third party banks to factor certain of the Company's trade receivables in order to enhance working capital by turning trade receivables into cash faster. Under these agreements, the Company sells certain selected customers’ trade receivables to third party banks without recourse for cash less a nominal fee. For the three months ended April 2, 2022 and April 3, 2021, the Company sold approximately $126.3 million and $106.9 million of its trade receivables and incurred approximately $0.4 million and $0.3 million in fees, which are recorded as interest expense, respectively.

(d) Revenue Recognition

The Company recognizes revenue on sales when control of the promised finished product is transferred to the Company's customers in an amount that reflects the consideration the Company expects to be entitled to in exchange for the finished product. Service revenues are recognized when the service occurs. Certain customers may be required to prepay prior to shipment in order to maintain payment protection related to certain foreign and domestic sales. These amounts are recorded as unearned revenue and recognized when

control of the promised finished product is transferred to the Company's customer. See Note 19 (Revenue) to the Company's Consolidated Financial Statements included herein.

(e) Use of Estimates

The preparation of the consolidated financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

If it is at least reasonably possible that the estimate of the effect on the financial statements of a condition, situation, or set of circumstances that exist at the date of the financial statements will change in the near term due to one or more future confirming events, and the effect of the change would be material to the financial statements, the Company will disclose the nature of the uncertainty and include an indication that it is at least reasonably possible that a change in the estimate will occur in the near term. If the estimate involves certain loss contingencies, the disclosure will also include an estimate of the probable loss or range of loss or state that an estimate cannot be made.

As a result of the continuing global COVID-19 pandemic, and related government-imposed movement restrictions and initiatives implemented to reduce the global transmission of COVID-19, as well as the Russia-Ukraine war, we have evaluated the potential impact to the Company's operations and for any indicators of potential triggering events that could indicate certain of the Company's assets may be impaired. Through the three months ended April 2, 2022, the Company has not observed any impairments of the Company's assets or a significant change in their fair value due to the COVID-19 pandemic or the Russia-Ukraine war.

(f) Earnings Per Share

Basic income per common share is computed by dividing net income attributable to Darling by the weighted average number of common shares including non-vested and restricted shares outstanding during the period. Diluted income per common share is computed by dividing net income attributable to Darling by the weighted average number of common shares outstanding during the period increased by dilutive common equivalent shares determined using the treasury stock method.


	Net Income per Common Share (in thousands, except per share data)
	Three Months Ended
			April 2, 2022					April 3, 2021
	Income		Shares	Per Share		Income		Shares	Per Share
Basic:
Net Income attributable to Darling	$	188,053	161,396	$	1.17	$	151,766	162,925	$	0.93
Diluted:
Effect of dilutive securities:
Add: Option shares in the money and dilutive effect of non-vested stock awards			3,976					5,733
Less: Pro forma treasury shares			(771)					(909)
Diluted:
Net income attributable to Darling	$	188,053	164,601	$	1.14	$	151,766	167,749	$	0.90

For the three months ended April 2, 2022 and April 3, 2021, respectively, no outstanding stock options were excluded from diluted income per common share as the effect was antidilutive. For the three months ended April 2, 2022 and April 3, 2021, respectively, 194,546 and 162,896 shares of non-vested stock and stock equivalents were excluded from diluted income per common share as the effect was antidilutive.

(3) Investment in Unconsolidated Subsidiaries

On January 21, 2011, a wholly-owned subsidiary of Darling entered into a limited liability company agreement with a wholly-owned subsidiary of Valero Energy Corporation (“Valero”) to form Diamond Green Diesel Holdings LLC

(“DGD” or the “DGD Joint Venture”). The DGD Joint Venture is owned 50% / 50% with Valero and was formed to design, engineer, construct and operate a renewable diesel plant located adjacent to Valero's refinery in Norco, Louisiana. The DGD Joint Venture reached mechanical completion and began the production of renewable diesel in late June 2013. Effective May 1, 2019, the limited liability company agreement was amended and restated for the purpose of updating the agreement in certain respects, including to remove certain provisions that were no longer relevant and to add new provisions relating to the expansion of the existing facility.

Selected financial information for the Company's DGD Joint Venture is as follows (in thousands):


(in thousands)	March 31, 2022		December 31, 2021
Assets:
Total current assets	$	950,802	$	686,294
Property, plant and equipment, net	2,934,686		2,710,747
Other assets	59,196		51,514
Total assets	$	3,944,684	$	3,448,555
Liabilities and members' equity:
Total current portion of long term debt	$	165,356	$	165,092
Total other current liabilities	367,478		295,860
Total long term debt	340,591		344,309
Total other long term liabilities	17,328		17,531
Total members' equity	3,053,931		2,625,763
Total liabilities and members' equity	$	3,944,684	$	3,448,555


	Three Months Ended
(in thousands)	March 31, 2022		March 31, 2021
Revenues:
Operating revenues	$	980,692	$	431,633
Expenses:
Total costs and expenses less depreciation, amortization and accretion expense	807,572		215,234
Depreciation, amortization and accretion expense	26,492		11,687
Total costs and expenses	834,064		226,921
Operating income	146,628		204,712
Other income (expense)	(11)		58
Interest and debt expense, net	(3,009)		(320)
Net income	$	143,608	$	204,450

As of April 2, 2022, under the equity method of accounting, the Company has an investment in the DGD Joint Venture of approximately $1,528.7 million on the consolidated balance sheet. The Company has recorded equity in net income from the DGD Joint Venture of approximately $71.8 million and $102.2 million for the three months ended April 2, 2022 and April 3, 2021, respectively. In December 2019, the blender tax credits were extended for calendar years 2020, 2021 and 2022. For the three months ended March 31, 2022 and March 31, 2021, the DGD Joint Venture recorded approximately $155.8 million and $79.0 million of blenders tax credits, respectively. The blenders tax credits are recorded as a reduction of cost of sales by the DGD Joint Venture. In the three months ended April 2, 2022 and April 3, 2021, respectively, the Company made $164.75 million and no capital contributions to the DGD Joint Venture. In the three months ended April 2, 2022 and April 3, 2021, the Company did not receive any dividend distributions from the DGD Joint Venture.

In addition to the DGD Joint Venture, the Company has investments in other unconsolidated subsidiaries that are insignificant to the Company.

(4) Acquisitions

On February 25, 2022, a wholly-owned international subsidiary of the Company acquired all of the shares of Group Op de Beeck, a Belgium digester, organic and industrial waste processing company, that is now included in our Fuel

Ingredients segment, for an initially estimated purchase price of approximately $91.7 million, plus or minus various closing adjustments in accordance with the stock purchase agreement. After estimated purchase price adjustments related to future estimated construction, net debt and working capital, the Company paid approximately $71.3 million in cash consideration. The Company recorded assets and liabilities consisting of property, plant and equipment of approximately $27.8 million, intangible assets of approximately $27.1 million, goodwill of approximately $25.5 million and other net liabilities of approximately $(9.1) million including working capital and net debt. Such amounts have been recorded on a preliminary basis pending finalization of future construction, actual net debt and working capital that is expected to occur within the next six months. The Company does not expect material changes to these pending amounts. The identifiable intangibles have a weighted average life of 15 years.

Additionally, the Company completed another immaterial acquisition in the first quarter of fiscal 2022.

(5) Inventories

A summary of inventories follows (in thousands):


	April 2, 2022		January 1, 2022
Finished product	$	304,644	$	272,995
Work in process	80,955		81,158
Raw material	47,062		48,186
Supplies and other	59,033		55,126
	$	491,694	$	457,465

(6) Intangible Assets

The gross carrying amount of intangible assets not subject to amortization and intangible assets subject to amortization

is as follows (in thousands):


	April 2, 2022		January 1, 2022
Indefinite Lived Intangible Assets:
Trade names	$	52,502	$	53,133
	52,502		53,133
Finite Lived Intangible Assets:
Routes	365,933		337,399
Permits	475,491		475,520
Non-compete agreements	645		645
Trade names	65,675		65,675
Royalty, consulting, land use rights and leasehold	25,738		25,899
	933,482		905,138
Accumulated Amortization:
Routes	(175,450)		(169,984)
Permits	(344,672)		(336,020)
Non-compete agreements	(469)		(441)
Trade names	(47,662)		(46,028)
Royalty, consulting, land use rights and leasehold	(8,104)		(7,997)
	(576,357)		(560,470)
Total Intangible assets, less accumulated amortization	$	409,627	$	397,801

Gross intangible assets changed due to acquisitions in the first quarter of fiscal 2022 by approximately $28.0 million and the remaining change was from foreign currency translation and retirements. Amortization expense for the three months ended April 2, 2022 and April 3, 2021, was approximately $16.5 million and $17.0 million, respectively.

(7) Goodwill

Changes in the carrying amount of goodwill (in thousands):


	Feed Ingredients		Food Ingredients		Fuel Ingredients		Total
Balance at January 1, 2022
Goodwill	$	814,863	$	332,866	$	119,342	$	1,267,071
Accumulated impairment losses	(15,914)		(461)		(31,580)		(47,955)
	798,949		332,405		87,762		1,219,116
Goodwill acquired during year	—		—		25,892		25,892


Foreign currency translation	(802)		(5,267)		(2,415)		(8,484)
Balance at April 2, 2022
Goodwill	814,061		327,599		142,819		1,284,479
Accumulated impairment losses	(15,914)		(461)		(31,580)		(47,955)