Diamond Foods Inc. (DMND) swung to a fiscal second-quarter
profit as the snack-food company's operating expenses slipped,
though nut sales weakened.
Shares fell 2.4%, to $17.18 after hours, as adjusted earnings
and revenue fell short of analyst expectations. The stock is down
27% over the past 12 months.
Diamond shares reached an all-time high of $96.13 in September
2011 as the company inched toward buying Pringles for $2.35 billion
from Procter & Gamble Co. (PG), which would have made Diamond
one of the largest global snack-foods players by revenue. But the
stock soon started falling after analysts and investors questioned
the company's accounting methods.
The company in November disclosed restated financial results
tied to a walnut-accounting scandal and showed that it swung to a
loss during the first three quarters of 2012 as it took significant
charges related to the investigation. The company also posted
losses in the fourth-quarter and first-quarter amid
investigation-related expenses.
Though the company, whose products include Kettle chips, Emerald
snack nuts and Pop Secret popcorn, said its has closed the book on
the walnut-accounting scandal, new issues have emerged such as
securing enough walnuts for its business and addressing issues at
some of its other businesses.
"Our second quarter results reflect continued progress against
our key initiatives, which are aimed at driving margin expansion
and a more sustainable topline growth profile over time," said
Chief Executive Brian J. Driscoll.
The latest period included an $18.6 million gain related to a
change in the fair value of the Oaktree warrant liability and $6.7
million of charges primarily for the audit committee investigation,
restatement-related expenses and other items, while the year-ago
period included $12.1 million in acquisition and
integration-related expenses.
For the quarter ended Jan. 31, Diamond reported a profit of
$10.1 million, or 43 cents a share, compared with a year-earlier
loss of $20.2 million, or 93 cents a share. Excluding the gain on
the warrant liability, charges related to the accounting
investigation and earnings restatements, and other items, adjusted
per-share earnings rose to five cents from a penny a year earlier.
Revenue fell 16%, to $220.8 million.
Analysts polled by Thomson Reuters most recently projected a
per-share profit of six cents and revenue of $239 million.
Snacks sales were up 7.2%. Nuts sales slumped 30%, driven by a
37% volume decline.
Gross margin widened to 22.9% from 16% as input costs slipped
23%.
Total operating expenses slipped 55%.
Write to Nathalie Tadena at nathalie.tadena@dowjones.com
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