Diamond reiterates FY earnings forecast

Diamond reiterates FY earnings forecast

Diamond Foods reported a jump in first-quarter operating income as the US snacks group lapped a period of elevated costs and one-time expenses.

The company said operating income in the quarter to 31 October increased to US$18.99m, compared to an operating loss of $26.3m in the year-ago period. Last year, Diamond was hit by higher SG&A costs and a $16.9m loss on warrant liability. Net income increased to $7.7m compared to a loss of $42.2m.

Diamond was also able to report strong sales momentum in the period, as it raised its advertising spend and improved US sales offset weakness in the UK. Net sales were $246.6m, up 5.1%, Diamond revealed. Gains were driven by higher sales of Diamond of California and Emerald 100 calorie pack sales and Kettle lines in theUS. This was partially offset by lower sales in the UK, where the company lost a private-label contract.

"We are pleased with our first quarter results, with market share gains in the U.S. on Kettle, Pop Secret and Diamond of California contributing to a solid 5.1% increase in net sales," president and CEO Brian Driscoll said. "With these results and based on our outlook for the remainder of the year, we are reiterating our annual adjusted EBITDA and non-GAAP EPS guidance."

Diamond continues to expect adjusted EBITDA of $115-123m and non-GAAP diluted EPS of $0.90 to $1.10. 

Show the press release
Diamond Foods Reports First Quarter Fiscal 2015 Financial Results
Reiterates Fiscal Year 2015 Outlook

SAN FRANCISCO, Dec. 8, 2014 (GLOBE NEWSWIRE) -- Diamond Foods, Inc. (Nasdaq:DMND) ("Diamond" or the "Company") today reported financial results for its fiscal 2015 first quarter ended October 31, 2014.

First Quarter Fiscal 2015 Highlights

  • Net sales were $246.6 million, up 5.1%
  • Snacks segment net sales were $116.6 million, up 3.6%
  • Nuts segment net sales were $130.0 million, up 6.5%
  • Gross margin was 24.1%, compared to 24.7%
  • GAAP net income was $7.7 million and GAAP diluted earnings per share ("EPS") was $0.24
  • Non-GAAP net income was $8.9 million and non-GAAP diluted EPS was $0.28, up 33.3%
  • Adjusted EBITDA was $30.7 million, up 5.5%

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

"We are pleased with our first quarter results, with market share gains in the U.S. on Kettle, Pop Secret andDiamond of California contributing to a solid 5.1% increase in net sales," said Brian J. Driscoll, President and CEO. "With these results and based on our outlook for the remainder of the year, we are reiterating our annual adjusted EBITDA and non-GAAP EPS guidance."

First Quarter Fiscal 2015

Consolidated net sales during the quarter were $246.6 million, up 5.1%, compared to the same quarter of the prior year, mainly as a result of higher Kettle US, Diamond of California and Emerald 100 calorie pack sales, partially offset by lower sales in the UK, which was impacted by the loss of a private label contract. Gross profit was $59.4 million, or 24.1% of net sales, for the first quarter of fiscal 2015, compared to $57.9 million, or 24.7% of net sales, for the same quarter in the prior year.

GAAP net income during the quarter was $7.7 million. GAAP diluted EPS was $0.24 in the first quarter of fiscal 2015 compared to a loss of $1.92 in the first quarter of fiscal 2014. Excluding legal expenses and other items described below, non-GAAP net income for the first quarter of fiscal 2015 was $8.9 million and non-GAAP diluted EPS was $0.28, compared to $0.21 in the first quarter of fiscal 2014. Adjusted EBITDA was $30.7 million in the first quarter of fiscal 2015, compared to $29.1 million in the prior year. Please refer to the table at the end of this press release for a reconciliation of GAAP to non-GAAP information.

As of October 31, 2014, net debt outstanding was $637.3 million, including $8.0 million drawn on the $125 millionABL Revolver.

Segment Review - First Quarter Fiscal 2015

Snacks Segment: Net sales during the quarter were $116.6 million, up 3.6% compared to the prior year period. Gross profit was $43.0 million, or 36.8% of net sales, for the first quarter of fiscal 2015, compared to $39.4 million, or 35.0% of net sales, for the same quarter in the prior year. Gross margin increased due to improved productivity and lower input costs.

Nuts Segment: Net sales during the quarter were $130.0 million, up 6.5% compared to the prior year period. Gross profit was $16.4 million, or 12.6% of net sales, in the first quarter of fiscal 2015, compared to $18.5 million, or 15.2% of net sales, for the same quarter in the prior year. Gross margin decreased principally due to higher tree nut costs and unfavorable channel and product mix.

Outlook

The Company reiterated its fiscal 2015 outlook for adjusted EBITDA of $115 million to $123 million and non-GAAP diluted EPS 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 U.S./U.K. exchange rate of $1.60 per £1, a non-GAAP effective tax rate of between 26% to 28%, 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, asset impairments and certain other projected costs.

Original source: Diamond Foods