Diamond shares rise after the bell on improved outlook

Diamond shares rise after the bell on improved outlook

US snack group Diamond Foods has raised the lower end of its full-year earnings outlook after booking higher sales and earnings in the first six months of the fiscal year.

In the first half, ended 31 January, Diamond said sales rose to US$476.3m, compared to $455.2m in the year ago period. Diamond said higher US snack and nut sales more than offset a jump in UK promotional activity in the six months. 

Margins were also up. Gross margin climbed to 25.3% from 25% and the company's operating profit benefited from a significant fall in SG&A costs. Operating profit rose to $40.6m, compared to a loss of $24.2m in 2013. Lower finance costs also bolstered the bottom line, with net profit increasing to $18.8m from a loss of $57.2m. 

Looking to the full year, Diamond lifted its EBITDA guidance to $117-123m, compared to its previous range of $115-123m.   

Diamond shares rose 3.81% in after hours trading following the announcement yesterday (6 March). 

Show the press release
Diamond Foods Reports Second Quarter Fiscal 2015 Financial Results
Updates Fiscal Year 2015 Outlook

SAN FRANCISCOMarch 5, 2015 (GLOBE NEWSWIRE) -- Diamond Foods, Inc. (Nasdaq:DMND) ("Diamond" or the "Company") today reported financial results for its fiscal 2015 second quarter and six months ended January 31, 2015.

Second Quarter Fiscal 2015 Highlights

  • Net sales were $229.7 million, up 4.1%
  • Snacks segment net sales were $120.4 million, up 3.2%
  • Nuts segment net sales were $109.2 million, up 5.2%
  • Gross margin was 26.6%, compared to 25.4%
  • GAAP net income was $11.2 million and GAAP diluted earnings per share ("EPS") was $0.35
  • Non-GAAP net income was $11.2 million and non-GAAP diluted EPS was $0.35, up 191.7%
  • Adjusted EBITDA was $33.8 million, up 18.4%

Year-to-Date Fiscal 2015 Highlights

  • Net sales were $476.3 million, up 4.6%
  • Snacks segment net sales were $237.0 million, up 3.3%
  • Nuts segment net sales were $239.3 million, up 5.9%
  • Gross margin was 25.3%, compared to 25.0%
  • GAAP net income was $18.9 million and GAAP diluted earnings per share ("EPS") was $0.59
  • Non-GAAP net income was $20.1 million and non-GAAP diluted EPS was $0.64, up 88.2%
  • Adjusted EBITDA was $64.5 million, up 11.9%

(All comparisons above are to the second quarter and first six months of fiscal 2014. Non-GAAP financial measures are reconciled in the tables below.)

"We are encouraged with our earnings performance in the second quarter. Strong sales and margin improvement in the US drove these results, but our overall sales were muted by continued challenges in the UK," said Brian J. Driscoll, President and CEO. "While the third quarter is seasonally our lowest for sales and earnings, and we face challenges including an intensely competitive promotional environment and the effects of a strong dollar, we believe that we are on track to achieve our updated annual adjusted EBITDA and EPS outlook."

Second Quarter Fiscal 2015

Consolidated net sales during the quarter were $229.7 million, up 4.1%, compared to the same quarter of the prior year, mainly due to higher sales in the US for both the Snacks and Nuts segments, partially offset by lower sales in the UK, primarily due to increased promotional activity. Gross profit was $61.2 million, or 26.6% of net sales, for the second quarter of fiscal 2015, compared to $55.9 million, or 25.4% of net sales, for the same quarter in the prior year.

GAAP net income during the quarter was $11.2 million. GAAP diluted EPS was $0.35 in the second quarter of fiscal 2015 compared to a loss of $0.68 in the second quarter of fiscal 2014. Excluding certain items described below, non-GAAP net income for the second quarter of fiscal 2015 was $11.2 million and non-GAAP diluted EPS was $0.35, compared to $0.12 in the second quarter of fiscal 2014. Adjusted EBITDA was $33.8 million in the second quarter of fiscal 2015, compared to $28.6 million in the prior year. Due to a shift in the mix of pre-tax income between the US and the UK, the non-GAAP effective tax rate was 26.7% compared to 14.0% in the same quarter of the prior year. Please refer to the table at the end of this press release for a reconciliation of GAAP to non-GAAP information.

Year-to-Date Fiscal 2015

Consolidated net sales for the first six months of fiscal 2015 increased 4.6% to $476.3 million compared to $455.2 million in the first half of last year. This increase was primarily due to higher sales in the US for both the Snacks and Nuts segments, partially offset by lower sales in the UK, primarily due to increased promotional activity. Gross profit as a percent of net sales was 25.3% compared to 25.0% in the first six months last fiscal year.

GAAP net income was $18.9 million, or income of $0.59 per share on a fully diluted basis. Excluding certain items described below, non-GAAP net income for the first six months of fiscal 2015 was $20.1 million and non-GAAP fully diluted earnings per share was $0.64. Adjusted EBITDA was $64.5 million, compared to $57.7 million last year. Please refer to the table at the end of this press release for a reconciliation of GAAP to non-GAAP information.

As of January 31, 2015, net debt outstanding was $590.3 million and the net availability under the ABL Revolver was $119.8 million.

Segment Review

Snacks Segment: Net sales during the quarter were $120.4 million, up 3.2% compared to the prior year period. Gross profit was $41.8 million, or 34.7% of net sales, for the second quarter of fiscal 2015, compared to $42.5 million, or 36.4% of net sales, for the same quarter in the prior year. Gross profit as a percent of net sales decreased primarily due to increased promotional spending in the US and UK.

Net sales during the first six months of fiscal 2015 were $237.0 million, up 3.3% compared to the first half of last year. Gross profit during the first six months of fiscal 2015 was $84.7 million, 35.7% of net sales, compared to $82.0 million, or 35.7% of net sales, in the prior year period.

Nuts Segment: Net sales during the quarter were $109.2 million, up 5.2% compared to the prior year period. Gross profit was $19.4 million, or 17.8% of net sales, in the second quarter of fiscal 2015, compared to $13.4 million, or 12.9% of net sales, for the same quarter in the prior year. Gross profit as a percent of net sales increased primarily due to improved net price realization and lower walnut costs, partially offset by higher other tree nut costs.

Net sales during the first six months of fiscal 2015 were $239.3 million, up 5.9% compared to the first half of last year. Gross profit during the first six months of fiscal 2015 was $35.8 million, or 15.0% of net sales, compared to$31.9 million, or 14.1% of net sales, in the prior year periods.

Outlook

The Company is updating its fiscal 2015 outlook. The Company now expects to achieve adjusted EBITDA of $117 million to $123 million, compared to its previous range of $115 million to $123 million. The Company now expects non-GAAP diluted EPS of $0.95 to $1.10, compared to its previous range of $0.90 to $1.10. The Company's outlook includes the following expectations: input cost inflation of 3% to 4%, productivity improvements of 2% to 3%, a US/UK exchange rate of $1.50 per £1.00 for the remainder of the fiscal year, a non-GAAP effective tax rate of between 28% to 30%, stock-based compensation of $9.7 million and 31.9 million fully diluted shares outstanding.

Fiscal 2015 adjusted EBITDA, a non-GAAP financial measure, excludes items such as interest expense, income taxes, depreciation, amortization, stock based compensation as well as certain legal expenses and litigation settlements, acquisition-related costs, asset impairments and certain other actual and projected costs.

Original source: http://investor.diamondfoods.com/phoenix.zhtml?c=189398&p=irol-newsArticle&ID=2023222