Diamond Foods, Inc. (NASDAQ:DMND) ("Diamond" or the "Company")
today reported financial results for its fourth quarter and fiscal
year ended July 31, 2015.
Fourth Quarter Fiscal 2015 Highlights
- Net sales were $201.8 million, down $17.3 million or 7.9%
- Reflects the exit of $15.2 million of high-volume, low-margin
SKUs in the Nuts segment and $3.9 million of adverse FX in the
Snacks segment
- Snacks segment net sales were $129.8 million, down 0.2%
- Nuts segment net sales were $72.0 million, down 19.0%
- Gross margin was 27.0%, compared to 22.5%
- GAAP net income was $7.9 million and GAAP diluted earnings per
share ("EPS") was $0.25
- Non-GAAP net income was $7.2 million and non-GAAP diluted EPS
was $0.23, up 21.1%
- Adjusted EBITDA was $29.3 million, up 22.4%
Fiscal Year 2015 Highlights
- Net sales were $864.2 million, essentially flat
- Snacks segment net sales were $480.7 million, up 1.5%
- Nuts segment net sales were $383.4 million, down 2.1%
- Gross margin was 26.4%, compared to 24.1%
- GAAP net income was $33.0 million and GAAP diluted EPS was
$1.04
- Non-GAAP net income was $34.7 million and non-GAAP diluted EPS
was $1.10, up 71.9%
- Adjusted EBITDA was $123.8 million, up 17.7%
(All comparisons above are to the fourth quarter and fiscal
2014. Non-GAAP financial measures are reconciled in the tables
below.)
"We are encouraged by our fourth quarter earnings performance,
which was fueled by strong gross margin improvement. We are also
pleased with the continued growth of Kettle in North America, Pop
Secret market share gains, and the early signs of success in the
Emerald transition to stand up bags," said Brian J. Driscoll,
President and CEO. "Our strategic decision to exit low margin nut
SKUs negatively impacted net sales, which were also adversely
affected by foreign exchange. Looking ahead, we continue to believe
we have a solid foundation for future growth across our
portfolio."
Fourth Quarter Fiscal 2015
Net sales for the quarter were $201.8 million, down 7.9%
compared to the same quarter of the prior fiscal year. The prior
year fourth quarter included $15.2 million of high volume, low
margin nut SKUs that were exited. The impact of foreign exchange
rate changes versus prior year, primarily related to sales of
snacks in the UK and Canada, was $3.9 million. Gross profit for the
fourth quarter was $54.5 million, or 27.0% of net sales, compared
to 22.5% for the same quarter in the prior fiscal year.
GAAP net income for the quarter was $7.9 million. GAAP diluted
EPS was $0.25 in the fourth quarter of fiscal 2015 compared to a
loss of $(0.06) in the fourth quarter of fiscal 2014. Excluding
certain items described below, non-GAAP net income for the quarter
was $7.2 million and non-GAAP diluted EPS was $0.23, compared to
$0.19 in the fourth quarter of fiscal 2014. Adjusted EBITDA was
$29.3 million in the fourth quarter of fiscal 2015, compared to
$23.9 million in the prior fiscal year period. The effective tax
rate was 4.2% for the quarter, but due to a shift in the mix of
pre-tax non-GAAP income between the US and the UK, the fourth
quarter non-GAAP effective tax rate was 34.4% compared to (10.5)%
in the same quarter of the prior fiscal year. Please refer to the
table at the end of this press release for a reconciliation of GAAP
to non-GAAP information.
Fiscal Year 2015
Net sales for fiscal 2015 were essentially flat at $864.2
million, compared to $865.2 million in fiscal 2014. Volume declines
in Nuts, primarily due to exiting high-volume, low-margin SKUs, as
well as a decrease in Kettle UK's net price realization, the
adverse impact of foreign exchange rates in the UK and Canada, and
costs related to the Emerald transition from canisters to stand up
bags were largely offset by a price increase in the Nuts segment
and Kettle US and higher volumes throughout the Snacks portfolio.
Gross profit as a percent of net sales was 26.4% compared to 24.1%
in fiscal 2014.
GAAP net income was $33.0 million, or $1.04 per share on a fully
diluted basis. Excluding certain items described below, non-GAAP
net income for fiscal 2015 was $34.7 million and non-GAAP fully
diluted earnings per share was $1.10. Adjusted EBITDA was $123.8
million, compared to $105.1 million last fiscal year. Please refer
to the table at the end of this press release for a reconciliation
of GAAP to non-GAAP information.
As of July 31, 2015, net debt outstanding was $629.6 million and
the net availability under the ABL Revolver was $103.0 million.
Segment Review
Snacks Segment: Net sales for the quarter were
$129.8 million, down 0.2% compared to the prior fiscal year period.
Gross profit for the fourth quarter was $47.3 million, or 36.4% of
net sales, compared to $44.9 million, or 34.5% of net sales for the
same quarter in the prior fiscal year. Gross profit as a percent of
net sales increased due primarily to favorable ingredient costs,
increased volume and higher net price realization in Kettle, North
America, partially offset by lower net price realization in Kettle
in the UK.
Net sales for fiscal 2015 were $480.7 million, up 1.5% compared
to the fiscal 2014. Gross profit for fiscal 2015 was $172.8
million, 36.0% of net sales, compared to $168.6 million, or 35.6%
of net sales in the prior fiscal year period.
Nuts Segment: Net sales for the quarter were
$72.0 million, down 19.0% compared to the prior fiscal year period.
Gross profit was $7.2 million, or 10.0% of net sales, in the fourth
quarter of fiscal 2015, compared to $4.4 million, or 4.9% of net
sales for the same quarter in the prior fiscal 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 for fiscal 2015 were $383.4 million, down 2.1%
compared to the prior fiscal year period. Gross profit for fiscal
2015 was $55.2 million, or 14.4% of net sales, compared to $39.7
million, or 10.1% of net sales, in the prior fiscal year
period.
Outlook
The Company provided fiscal 2016 annual adjusted EBITDA guidance
of $131 million to $136 million and non-GAAP diluted EPS guidance
of $1.21 to $1.32. The Company's outlook includes the following
expectations: input cost inflation of 1% to 2%, productivity
improvements of 2% to 3%, exchange rates of $1.55 per £1.00, $0.75
per C$1.00 for fiscal 2016, a non-GAAP effective tax rate of
between 30% to 32%, stock-based compensation of $10.5 million and
32 million fully diluted shares outstanding at fiscal year end. The
Company also expects cash tax payments of approximately $1 million
reflecting the current $348 million tax net operating loss
(NOL).
Fiscal 2016 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.
Conference Call
The Company will host a conference call with members of the
executive management team to discuss these results with additional
comments and details. The conference call is scheduled to begin
today at 4:30 p.m. ET. To participate on the live call, listeners
in North America may dial (888) 417-8533 and international
listeners may dial (719) 325-2308.
In addition, the call will be broadcast live over the Internet
hosted at the "Investor Relations" section of the Company's website
at http://www.diamondfoods.com and will be archived online through
October 13, 2015. A telephonic playback will be available from 7:30
p.m. ET, September 29, 2015, through October 13, 2015. North
America listeners may dial (877) 870-5176 and international
listeners may dial (858) 384-5517; the passcode is 5995219.
About Diamond Foods
We are a snack food and culinary nut company focused on making
innovative, convenient and delicious snacks as well as culinary
nuts true to our 100-year plus heritage. We sell our products under
five different widely-recognized brand names: Diamond of
California®, Kettle Brand® and KETTLE® Chips, Emerald® and Pop
Secret®. Our mission is to honor nature's ingredients by making
food that people love. We are proud of our offerings, many of which
are non-GMO Project verified and free of artificial flavors and
preservatives, and we are committed to making great tasting
products for our consumers. Diamond's products are distributed in a
wide range of stores where snacks and culinary nuts are sold. For
more information, visit the Company's corporate web site:
http://www.diamondfoods.com.
Note Regarding Forward Looking Statements
This press release and the accompanying conference call include
forward-looking statements that are based on our current
expectations and assumptions only as of the date of this press
release. These forward looking statements, including statements
under the caption "Outlook" or referred to as "guidance," are
subject to certain risks and uncertainties that could cause actual
results to differ materially from the potential results discussed
in the forward-looking statements. In particular, our predictions
about our business and our guidance for adjusted EBITDA and
non-GAAP diluted earnings per share (including related expectations
regarding segment performance, cost inflation, productivity
improvements, exchange rates, our effective tax rate, stock-based
compensation and fully diluted shares outstanding) could be
affected by a variety of factors including: raw material headwinds;
crop harvests; increasing competition and possible loss of key
customers; risk associated with our operations outside the U.S.,
including foreign currency fluctuations; general economic and
capital markets conditions; competitive dynamics in the consumer
foods industry and the markets for our products, including new
product introductions, advertising activities, pricing actions, and
promotional activities of our competitors; progress against the
Company's turnaround plan; unexpected delays or increased costs in
implementing our business strategies; risks relating to our
leverage, including the cost of our debt and its effect on our
ability to respond to changes in our business, markets and
industry; the dilutive impact of equity issuances; risks relating
to litigation and regulatory proceedings; uncertainties relating to
our relations with growers; availability and cost of walnuts and
other raw materials; weather conditions (climate or otherwise);
economic conditions including, changes in inflation rates, interest
rates, tax rates, or the availability of capital; consumer
acceptance of new products and product improvements; customer and
consumer reaction to pricing actions and changes in promotion
levels; acquisitions or dispositions of businesses or assets;
changes in capital structure; changes in the legal and regulatory
environment, including labeling and advertising regulations and
litigation; impairments in the carrying value of goodwill, other
intangible assets, or other long-lived assets, or changes in the
useful lives of other intangible assets; changes in the accounting
standards and the impact of significant accounting estimates;
product quality and safety issues, including recalls and product
liability; changes in consumer preferences and demand for our
products; effectiveness of advertising, marketing and promotional
programs and activities and contractual relationships; changes in
consumer behavior, trends and preferences; consolidation in the
retail environment, changes in purchasing and inventory levels of
significant customers; disruption or inefficiencies in the supply
chain; benefit plan expenses; upgrading our information technology
infrastructure, including implementation of a new Enterprise
Resource Planning software planning software platform; failure or
breach of our information technology systems, including those
managed by third parties; inappropriate use of social media; and
political and economic conditions in other countries. Risks and
uncertainties are discussed in greater detail in the "Risk Factors"
sections of the periodic reports that we file with the SEC. Many of
our forward-looking statements include discussions of trends and
anticipated developments under the "Risk Factors" and "Management's
Discussion and Analysis of Financial Condition and Results of
Operations" sections of the periodic reports that we file with the
SEC. We use the words "anticipate," "believe," "estimate,"
"expect," "intend," "plan," "seek," "may" and other similar
expressions to identify forward-looking statements that discuss our
future expectations, contain projections of our results of
operations or financial condition or state other "forward-looking"
information. You also should carefully consider other cautionary
statements elsewhere in this press release and in other documents
we file from time to time with the SEC. We do not undertake any
obligation to update forward-looking statements to reflect events
or circumstances occurring after the date of this press
release.
Financial
Summary |
Summarized Statements of
Operations: |
|
Quarter Ended
July 31, |
Year Ended July
31, |
|
2015 |
2014 |
2015 |
2014 |
Net sales |
$ 201,810 |
$ 219,070 |
$ 864,165 |
$ 865,207 |
Cost of sales |
147,321 |
169,781 |
636,171 |
656,961 |
Gross profit |
54,489 |
49,289 |
227,994 |
208,246 |
Operating expenses: |
|
|
|
|
Selling, general and administrative |
26,499 |
30,202 |
112,599 |
151,315 |
Advertising |
9,586 |
10,959 |
39,421 |
43,336 |
Loss on warrant liability |
— |
— |
— |
25,933 |
Warrant exercise fee |
— |
— |
— |
15,000 |
Total operating expenses |
36,085 |
41,161 |
152,020 |
235,584 |
Income (loss) from operations |
18,404 |
8,128 |
75,974 |
(27,338) |
Loss on debt extinguishment |
— |
— |
— |
83,004 |
Interest expense, net |
10,196 |
10,435 |
40,757 |
51,969 |
Other income |
5 |
— |
41 |
— |
Income (loss) before income taxes |
8,213 |
(2,307) |
35,258 |
(162,311) |
Income taxes (benefit) |
344 |
(451) |
2,228 |
2,391 |
Net income (loss) |
$ 7,869 |
$ (1,856) |
$ 33,030 |
$ (164,702) |
|
|
|
|
|
Earnings (loss) per share: |
|
|
|
|
Basic |
$ 0.25 |
$ (0.06) |
$ 1.05 |
$ (6.33) |
Diluted |
$ 0.25 |
$ (0.06) |
$ 1.04 |
$ (6.33) |
Shares used to compute earnings (loss) per
share: |
|
|
|
|
Basic |
31,224 |
30,993 |
31,138 |
26,033 |
Diluted |
31,784 |
30,993 |
31,570 |
26,033 |
|
|
Segment
Information: |
|
Quarter Ended
July 31, |
% Change
from |
Year Ended July
31, |
% Change
from |
|
2015 |
2014 |
2014 to 2015 |
2015 |
2014 |
2014 to 2015 |
Net sales |
|
|
|
|
|
|
Snacks |
$ 129,814 |
$ 130,135 |
(0.2)% |
$ 480,738 |
$ 473,736 |
1.5% |
Nuts |
71,996 |
88,935 |
(19.0)% |
383,427 |
391,471 |
(2.1)% |
Total |
$ 201,810 |
$ 219,070 |
(7.9)% |
$ 864,165 |
$ 865,207 |
(0.1)% |
Gross profit |
|
|
|
|
|
|
Snacks |
$ 47,258 |
$ 44,908 |
5.2% |
$ 172,843 |
$ 168,568 |
2.5% |
Nuts |
7,231 |
4,381 |
65.1% |
55,151 |
39,678 |
39.0% |
Total |
$ 54,489 |
$ 49,289 |
10.6% |
$ 227,994 |
$ 208,246 |
9.5% |
|
|
Summarized Balance Sheets
Data: |
|
July
31, |
|
2015 |
2014 |
ASSETS |
|
|
Total current assets |
$ 283,229 |
$ 243,871 |
Equity method investment |
1,855 |
— |
Property, plant and equipment, net |
137,065 |
131,891 |
Goodwill |
403,535 |
410,720 |
Other intangible assets, net |
375,489 |
392,358 |
Other long-term assets |
11,519 |
13,994 |
Total assets |
$ 1,212,692 |
$ 1,192,834 |
LIABILITIES AND STOCKHOLDER'S
EQUITY |
|
|
Total current liabilities |
$ 136,751 |
$ 133,549 |
Long-term obligations, net |
633,134 |
637,327 |
Deferred income taxes |
114,715 |
115,902 |
Other liabilities |
19,515 |
22,256 |
Total stockholders' equity |
308,577 |
283,800 |
Total liabilities and stockholders'
equity |
$ 1,212,692 |
$ 1,192,834 |
|
|
Non-GAAP Financial
Information |
Reconciliation of Net
Income (Loss) to Non-GAAP EPS and Income (Loss) Before Income Taxes
to Non-GAAP EPS: |
|
Quarter Ended
July 31, |
Year Ended July
31, |
|
2015 |
2014 |
2015 |
2014 |
Net income (loss) |
$ 7,869 |
$ (1,856) |
$ 33,030 |
$ (164,702) |
Income taxes (benefit) |
344 |
(451) |
2,228 |
2,391 |
Income (loss) before income taxes |
8,213 |
(2,307) |
35,258 |
(162,311) |
Loss on warrant liability |
— |
— |
— |
25,933 |
Warrant exercise fee |
— |
— |
— |
15,000 |
Loss on debt extinguishment |
— |
— |
— |
83,004 |
Loss on Securities settlement
liability |
— |
— |
— |
38,136 |
Amortization of deferred financing costs
and discounts |
1,590 |
1,475 |
5,960 |
6,468 |
SEC settlement |
— |
— |
— |
5,000 |
Shareholder derivative suit gain |
— |
— |
— |
(1,600) |
Certain legal expenses |
— |
1,619 |
3,288 |
5,885 |
Litigation settlement reserve and related
legal expenses |
46 |
2,805 |
262 |
2,805 |
Fishers plant closure and related
costs |
277 |
— |
1,191 |
— |
Certain expenses associated with the
Emerald brand packaging transition |
680 |
— |
2,727 |
— |
Acquisition related transaction
costs |
(126) |
— |
869 |
— |
Idle equipment impairment |
— |
— |
244 |
— |
UK workforce reduction expenses |
102 |
— |
716 |
— |
Other SG&A adjustments (1) |
189 |
1,980 |
48 |
2,310 |
Non-GAAP income before income taxes |
10,971 |
5,572 |
50,563 |
20,630 |
GAAP income taxes |
344 |
(451) |
2,228 |
2,391 |
Adjustments to GAAP income taxes |
3,430 |
(134) |
13,641 |
(1,218) |
Non-GAAP income taxes (benefit) (2) |
3,774 |
(585) |
15,869 |
1,173 |
Non-GAAP net income |
$ 7,197 |
$ 6,157 |
$ 34,694 |
$ 19,457 |
|
|
|
|
|
Non-GAAP EPS-diluted |
|
|
|
|
Non-GAAP EPS-diluted |
$ 0.23 |
$ 0.19 |
$ 1.10 |
$ 0.64 |
Shares used in computing Non-GAAP |
31,784 |
31,859 |
31,570 |
30,456 |
(1) Represents U.K.
compensation alignment benefit and foreign distributor exit benefit
for fiscal 2015. Represents historical debt maintenance consulting
expenses for fiscal 2014. |
(2) The GAAP tax rate for
the quarter and year ended July 31, 2015, was 4.19% and 6.32%,
respectively and the Non-GAAP tax rates were 34.40% and 31.385%,
respectively. The difference between the GAAP and Non-GAAP rates is
primarily caused by the valuation allowance against tax net
operating losses which arose from costs, principally legal and
accounting expenses related to the earnings restatement in fiscal
2012, that we did not recognize in Non-GAAP income but were
recognized for GAAP purposes. |
|
|
Reconciliation of Net
Income (Loss) to Adjusted EBITDA: |
|
Quarter Ended
July 31, |
Year Ended July
31, |
|
2015 |
2014 |
2015 |
2014 |
Net income (loss) |
$ 7,869 |
$ (1,856) |
$ 33,030 |
$ (164,702) |
Income taxes (benefit) |
344 |
(451) |
2,228 |
2,391 |
Income (loss) before income taxes |
8,213 |
(2,307) |
35,258 |
(162,311) |
Other income |
5 |
— |
41 |
— |
Interest expense, net |
10,196 |
10,435 |
40,757 |
51,969 |
Loss on debt extinguishment |
— |
— |
— |
83,004 |
Income (loss) from operations |
18,404 |
8,128 |
75,974 |
(27,338) |
Loss on warrant liability |
— |
— |
— |
25,933 |
Warrant exercise fee |
— |
— |
— |
15,000 |
Loss on Securities settlement
liability |
— |
— |
— |
38,136 |
SEC settlement |
— |
— |
— |
5,000 |
Shareholder derivative suit gain |
— |
— |
— |
(1,600) |
Certain legal expenses |
— |
1,619 |
3,288 |
5,885 |
Litigation settlement reserve and related
legal expenses |
46 |
2,805 |
262 |
2,805 |
Fishers plant closure and related
costs |
277 |
— |
1,191 |
— |
Certain expenses associated with the
Emerald brand packaging transition |
680 |
— |
2,727 |
— |
Acquisition related transaction
costs |
(126) |
— |
869 |
— |
Idle equipment impairment |
— |
— |
244 |
— |
UK workforce reduction expenses |
102 |
— |
716 |
— |
Other SG&A adjustments (1) |
189 |
1,980 |
48 |
2,310 |
Stock-based compensation expense |
2,417 |
2,026 |
9,576 |
7,484 |
Depreciation and amortization
expense |
7,288 |
7,353 |
28,857 |
31,506 |
Adjusted EBITDA |
$ 29,277 |
$ 23,911 |
$ 123,752 |
$ 105,121 |
(1) Represents U.K.
compensation alignment benefit and foreign distributor exit benefit
for fiscal 2015. Represents historical debt maintenance consulting
expenses for fiscal 2014. |
|
|
Reconciliation of GAAP
Selling, general and administrative ("SG&A") expenses to
Adjusted Selling, general and administrative
expenses: |
|
Quarter Ended
July 31, |
Year Ended July
31, |
|
2015 |
2014 |
2015 |
2014 |
SG&A |
$ 26,499 |
$ 30,202 |
$ 112,599 |
$ 151,315 |
Less: |
|
|
|
|
Loss on Securities settlement
liability |
— |
— |
— |
38,136 |
SEC settlement |
— |
— |
— |
5,000 |
Shareholder derivative suit gain |
— |
— |
— |
(1,600) |
Certain legal expenses |
— |
1,619 |
3,288 |
5,885 |
Litigation settlement reserve and related
legal expenses |
46 |
2,805 |
262 |
2,805 |
Fishers plant closure and related
costs |
277 |
— |
1,191 |
— |
Acquisition related transaction
costs |
(126) |
— |
869 |
— |
Idle equipment impairment |
— |
— |
244 |
— |
UK workforce reduction expenses |
102 |
— |
716 |
— |
Other SG&A adjustments(1) |
189 |
1,980 |
48 |
2,310 |
Adjusted SG&A |
$ 26,011 |
$ 23,798 |
$ 105,981 |
$ 98,779 |
(1) Represents U.K.
compensation alignment benefit and foreign distributor exit benefit
for fiscal 2015. Represents historical debt maintenance consulting
expenses for fiscal 2014. |
About Diamond's Non-GAAP Financial Measures
This release and the accompanying conference call contain
non-GAAP financial measures of Diamond's performance ("non-GAAP
measures") for different periods. Non-GAAP financial measures
should not be considered as a substitute for financial measures
prepared in accordance with GAAP. Diamond's non-GAAP financial
measures do not reflect a comprehensive system of accounting
principles, and differ both from GAAP financial measures and from
non-GAAP financial measures used by other companies. Diamond urges
investors to review its reconciliation of non-GAAP financial
measures to the most directly comparable GAAP financial measures,
and its GAAP financial statements generally to evaluate its
business.
Diamond believes that its non-GAAP financial measures provide
meaningful information to investors because they allow investors to
view the business through the eyes of management. Diamond believes
that its non-GAAP financial measures provide meaningful
supplemental information regarding Diamond's operating results
because they exclude amounts that Diamond excludes when monitoring
operating results and assessing the performance of Diamond's
business. Diamond believes that its non-GAAP financial measures
also facilitate comparison of its results for current periods with
historical periods, and with its business outlook for future
periods.
Non-GAAP net income, non-GAAP diluted earnings per share, and
adjusted EBITDA are used by management as core measures of
Diamond's operating performance. For Diamond, non-GAAP net income
and non-GAAP diluted earnings per share reflect adjustments to
eliminate the effect of loss on warrant liability; warrant exercise
fee; loss on debt extinguishment; loss on securities settlement
liability; adjustments to eliminate the effect of amortization of
deferred financing costs and discounts; SEC settlement; shareholder
derivative suit gain; legal expenses primarily related to audit
committee investigation and restatement and related matters;
litigation settlement reserve and related legal expenses; Fishers
plant closure and related costs; certain expenses associated with
the Emerald brand packaging transition relating to the conversion
from canisters to small bags; acquisition related transaction
expenses associated with the Yellow Chips Holding B.V. equity
investment; asset impairment on idle equipment; UK workforce
reduction expenses; and expense related to UK compensation
alignment benefit, foreign distributor exit benefit and debt
maintenance consulting expenses included in SG&A. Adjusted
EBITDA reflects net income plus interest expense, income taxes,
depreciation, amortization, other income and stock-based
compensation, and also reflects the aforementioned adjustments
(other than amortization of deferred financing costs and discounts,
which is included in interest expense). Adjusted SG&A reflects
adjustments to Selling, general and administrative costs to
eliminate the impact of the aforementioned adjustments to income
(other than loss on warrant liability, warrant exercise fee, loss
on debt extinguishment, amortization of deferred financing costs
and discounts, and certain expenses associated with the Emerald
brand packaging transition relating to the conversion from
canisters to small bags; which are not in SG&A). We believe
that non-GAAP net income, non-GAAP diluted EPS, adjusted EBITDA and
adjusted SG&A are useful indicators of Diamond's ongoing
operating performance. As a result, Diamond management reports
feature these non-GAAP financial measures in conjunction with
traditional GAAP measures, as part of our overall assessment of
company performance.
Diamond's management uses these non-GAAP financial measures in
internal reports used to monitor and make decisions about its
business, such as monthly financial reports prepared for management
and quarterly reports to Diamond's Board of Directors. The
principal limitation of the non-GAAP measures is that they exclude
significant expenses that are required under GAAP to be recorded.
They also reflect the exercise of management's judgments about
which charges are excluded from the non-GAAP financial measures.
Consequently, these non-GAAP measures should not be considered in
isolation or as alternatives to GAAP measures. Diamond urges
investors to review the reconciliations of these non-GAAP financial
measures to the comparable GAAP financial measures included in this
press release, and recommends that investors do not give undue
weight to the non-GAAP financial measures or rely on any single
financial measure to evaluate our business.
CONTACT: Investors:
ICR
Katie Turner
415-230-7952
Media:
ICR
Anton Nicholas/Jessica Liddell
415-445-7431
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