Darling Ingredients Inc.| Darling Ingredients Inc. is a developer and producer of sustainable natural ingredients from edible and inedible bio-nutrients, creating a ingredients and customized specialty solutions for customers in the food, animal feed, fuel, bioenergy, and fertilizer industries. The Company's business operates within three reportable operating business segments: Feed Ingredients, Food Ingredients and Fuel Ingredients. 1. Feed Ingredients segment includes collection and processing of beef, poultry, and pork animal by-products, the collection and processing of bakery residuals in North America into Cookie Meal, and collection and processing of used cooking oil into non-food grade fats. 2. The Food Ingredients segment includes the purchase and processing of beef and pork bone chips, beef hides, pig skins, and fish skins into collagen, collection, and processing of porcine and bovine intestines. 3. Fuel Ingredients operating segment includes global activities related to the Company's share of the results of its equity investment in Diamond Green Diesel Holdings LLC. In fiscal year 2021, the Company generated $4.7 billion in revenues and $650.9 million in net income attributable to Darling. The Company's stock price is $72.90 with 160.37 million shares outstanding. The five-year monthly beta is 1.23. The company has recently experienced decline in its Fuel Ingredients revenue due to high cost of diesel fuel and has contemplated to divest itself from this segment. The Fuel Ingredients revenue portion was about 9.10% of the total sales in 2021 . Table-1 shows Darling's net sales from fiscal year 2021, 2020 and 2019 continuing operations by operating segment were as follows (in thousands): On January 1,2022 , the Company had net income of $650,914 with the total asset of $6,133,728. Table-2 shows the breakdown of the three segments and the company. Suppose you have been hired as a financial analyst at J.K. Kash Financial Services and have been assigned to value the company and each segment of the company. You have gathered the following information: \begin{tabular}{|l|l|l|l|} \hline Other expense, net & (4,551) & (5,534) & (6,671) \\ \hline Total other expense & (68,827) & (80,510) & (95,815) \\ \hline Equity in net income of other unconsolidated subsidiaries & 5,753 & 3,193 & 428 \\ \hline Income before income taxes & & & \\ \hline Income tax expense & 821,396 & 353,619 & 380,434 \\ \hline Net income & 164,106 & 53,289 & 59,467 \\ \hline Net income attributable to noncontrolling interests & (6,376) & (3,511) & (8,367) \\ \hline Net income attributable to Darling & $650,914 & $296,819 & $312,600 \\ \hline Net income per share: & & & \\ \hline Basic (in dollars per share) & $4.01 & $1.83 & $1.90 \\ \hline Diluted (in dollars per share) & $3.90 & $1.78 & $1.86 \\ \hline \end{tabular} \begin{tabular}{|l|l|l|} \hline Total current liabilities & 752,684 & 675,305 \\ \hline Long-term debt, net of current portion & 1,438,974 & 1,480,531 \\ \hline Operating lease liability, non-current & 120,314 & 109,707 \\ \hline Other noncurrent liabilities & 111,029 & 117,371 \\ \hline Deferred income taxes & 362,942 & 276,208 \\ \hline Total liabilities & 2,785,943 & 2,659,122 \\ \hline Commitments and contingencies & & \\ \hline Stockholders' equity: & & \\ \hline Common stock, \$0.01 par value; 250,000,000 shares authorized, 171,734,603 and 169,880,238 shares issued at January 1,2022 and January 2,2021, respectively & 1,717 & 1,699 \\ \hline Additional paid-in capital & 1,627,816 & 1,597,429 \\ \hline \end{tabular} \begin{tabular}{|l|l|l|} \hline Treasury stock, at cost; 10,942,599 and 7,679,849 shares at January 1, 2022 and January 2, 2021, respectively & (374,721) & (151,710) \\ \hline Accumulated other comprehensive loss & (321,690) & (252,433) \\ \hline Retained earnings & 2,347,838 & 1,696,924 \\ \hline Total Darling's stockholders' equity & 3,280,960 & 2,891,909 \\ \hline Noncontrolling interests & 66,825 & 62,300 \\ \hline Total stockholders' equity & 3,347,785 & 2,954,209 \\ \hline Total liabilities and stockholders' equity & $6,133,728 & $5,613,331 \\ \hline Common stock, par value (in USD \$ per share) & $0.01 & $0.01 \\ \hline Common stock, shares authorized (in shares) & 250,000,000 & 250,000,000 \\ \hline \end{tabular} \begin{tabular}{|l|r|l|c|l|r|} \hline Table-6 Corporate Bond & Coupon & Maturity & Moody's & S\&P & price \\ \hline DAR4814991 & 5.25 & 4/15/2027 & Ba2 & BB+ & 95.28 \\ \hline DAR5422701 & 6.00 & 6/15/2030 & Ba3 & BB+ & 94.838 \\ \hline DAR5463168 & 6.00 & 6/15/2030 & Ba4 & BB+ & 96.985 \\ \hline \end{tabular} \begin{tabular}{|c|c|c|c|} \hline table- 7 Business Segment & Asset Beta & Expected Growth Rate & Cost of Debt \\ \hline Food Ingredients & 0.8 & 5.00% & 4% \\ \hline Fuel Ingredients & 0.9 & 2.00% & 6% \\ \hline Feed Ingredients & 0.6 & 4.00% & 5% \\ \hline \end{tabular} Answer the following question if the risk-free rate of interest is 3% and the market risk premium is 5%. 4. What is the value of the Feed Ingredients if its cash flow grows at its expected rate? 5. What is the value of the Food Ingredients if its cash flow grows at its expected rate? 6. What is the value of Fuel Ingredients if its cash flow grows at its expected rate? 7. What is the cost of capital for the Darling Company? 8. What is the value of Darling? Darling Ingredients Inc.| Darling Ingredients Inc. is a developer and producer of sustainable natural ingredients from edible and inedible bio-nutrients, creating a ingredients and customized specialty solutions for customers in the food, animal feed, fuel, bioenergy, and fertilizer industries. The Company's business operates within three reportable operating business segments: Feed Ingredients, Food Ingredients and Fuel Ingredients. 1. Feed Ingredients segment includes collection and processing of beef, poultry, and pork animal by-products, the collection and processing of bakery residuals in North America into Cookie Meal, and collection and processing of used cooking oil into non-food grade fats. 2. The Food Ingredients segment includes the purchase and processing of beef and pork bone chips, beef hides, pig skins, and fish skins into collagen, collection, and processing of porcine and bovine intestines. 3. Fuel Ingredients operating segment includes global activities related to the Company's share of the results of its equity investment in Diamond Green Diesel Holdings LLC. In fiscal year 2021, the Company generated $4.7 billion in revenues and $650.9 million in net income attributable to Darling. The Company's stock price is $72.90 with 160.37 million shares outstanding. The five-year monthly beta is 1.23. The company has recently experienced decline in its Fuel Ingredients revenue due to high cost of diesel fuel and has contemplated to divest itself from this segment. The Fuel Ingredients revenue portion was about 9.10% of the total sales in 2021 . Table-1 shows Darling's net sales from fiscal year 2021, 2020 and 2019 continuing operations by operating segment were as follows (in thousands): On January 1,2022 , the Company had net income of $650,914 with the total asset of $6,133,728. Table-2 shows the breakdown of the three segments and the company. Suppose you have been hired as a financial analyst at J.K. Kash Financial Services and have been assigned to value the company and each segment of the company. You have gathered the following information: \begin{tabular}{|l|l|l|l|} \hline Other expense, net & (4,551) & (5,534) & (6,671) \\ \hline Total other expense & (68,827) & (80,510) & (95,815) \\ \hline Equity in net income of other unconsolidated subsidiaries & 5,753 & 3,193 & 428 \\ \hline Income before income taxes & & & \\ \hline Income tax expense & 821,396 & 353,619 & 380,434 \\ \hline Net income & 164,106 & 53,289 & 59,467 \\ \hline Net income attributable to noncontrolling interests & (6,376) & (3,511) & (8,367) \\ \hline Net income attributable to Darling & $650,914 & $296,819 & $312,600 \\ \hline Net income per share: & & & \\ \hline Basic (in dollars per share) & $4.01 & $1.83 & $1.90 \\ \hline Diluted (in dollars per share) & $3.90 & $1.78 & $1.86 \\ \hline \end{tabular} \begin{tabular}{|l|l|l|} \hline Total current liabilities & 752,684 & 675,305 \\ \hline Long-term debt, net of current portion & 1,438,974 & 1,480,531 \\ \hline Operating lease liability, non-current & 120,314 & 109,707 \\ \hline Other noncurrent liabilities & 111,029 & 117,371 \\ \hline Deferred income taxes & 362,942 & 276,208 \\ \hline Total liabilities & 2,785,943 & 2,659,122 \\ \hline Commitments and contingencies & & \\ \hline Stockholders' equity: & & \\ \hline Common stock, \$0.01 par value; 250,000,000 shares authorized, 171,734,603 and 169,880,238 shares issued at January 1,2022 and January 2,2021, respectively & 1,717 & 1,699 \\ \hline Additional paid-in capital & 1,627,816 & 1,597,429 \\ \hline \end{tabular} \begin{tabular}{|l|l|l|} \hline Treasury stock, at cost; 10,942,599 and 7,679,849 shares at January 1, 2022 and January 2, 2021, respectively & (374,721) & (151,710) \\ \hline Accumulated other comprehensive loss & (321,690) & (252,433) \\ \hline Retained earnings & 2,347,838 & 1,696,924 \\ \hline Total Darling's stockholders' equity & 3,280,960 & 2,891,909 \\ \hline Noncontrolling interests & 66,825 & 62,300 \\ \hline Total stockholders' equity & 3,347,785 & 2,954,209 \\ \hline Total liabilities and stockholders' equity & $6,133,728 & $5,613,331 \\ \hline Common stock, par value (in USD \$ per share) & $0.01 & $0.01 \\ \hline Common stock, shares authorized (in shares) & 250,000,000 & 250,000,000 \\ \hline \end{tabular} \begin{tabular}{|l|r|l|c|l|r|} \hline Table-6 Corporate Bond & Coupon & Maturity & Moody's & S\&P & price \\ \hline DAR4814991 & 5.25 & 4/15/2027 & Ba2 & BB+ & 95.28 \\ \hline DAR5422701 & 6.00 & 6/15/2030 & Ba3 & BB+ & 94.838 \\ \hline DAR5463168 & 6.00 & 6/15/2030 & Ba4 & BB+ & 96.985 \\ \hline \end{tabular} \begin{tabular}{|c|c|c|c|} \hline table- 7 Business Segment & Asset Beta & Expected Growth Rate & Cost of Debt \\ \hline Food Ingredients & 0.8 & 5.00% & 4% \\ \hline Fuel Ingredients & 0.9 & 2.00% & 6% \\ \hline Feed Ingredients & 0.6 & 4.00% & 5% \\ \hline \end{tabular} Answer the following question if the risk-free rate of interest is 3% and the market risk premium is 5%. 4. What is the value of the Feed Ingredients if its cash flow grows at its expected rate? 5. What is the value of the Food Ingredients if its cash flow grows at its expected rate? 6. What is the value of Fuel Ingredients if its cash flow grows at its expected rate? 7. What is the cost of capital for the Darling Company? 8. What is the value of Darling