Diamond Foods posts 2Q profit as charges shrink

Diamond Foods posts 2nd-qtr profit, revenue drops and misses Wall Street forecast

Associated Press

SAN FRANCISCO (AP) -- Snack foods maker Diamond Foods Inc. said Monday that it turned a profit in its fiscal second quarter after taking a loss on one-time charges a year ago.

For the three months ended Jan. 31, net income totaled $10.1 million, or 43 cents per share. A year ago it took a loss of $20.2 million, or 93 cents per share. Excluding one-time items, Diamond earned 5 cents per share. Revenue fell 16 percent, to $220.8 million, as sales of Emerald Nuts decreased.

Analysts expected net income of 6 cents per share on $239.2 million in revenue, according to FactSet.

Diamond reported a gain of $18.6 million in the recent quarter as its share price fell more than 20 percent in late 2012 and early 2013. That decreased its warrant liability. A year ago the company's results included a $12.1 million charge related to a failed attempt to buy the Pringles brand from Procter & Gamble and $10.7 million related to an audit committee investigation.

Diamond Foods disclosed in early 2012 that it would have to restate two years of earnings because it had not properly accounted for payments to walnut growers. The company replaced its CEO and chief financial officer, and its bid for Pringles collapsed. Procter& Gamble Co. ultimately sold Pringles to Kellogg Co. for $2.7 billion.

Diamond Foods announced the results of the restatements in November, saying they reduced its fiscal 2010 and fiscal 2011 profit by $56.5 million. It also said it took a loss over the first three quarter of fiscal 2012 because of costs related to the investigation and restatement, and $40.6 million in charges related to the Pringles deal.

Shares of Diamond Foods hit an all-time low of $12.85 on Nov. 21. While the shares have recovered some of their value since then, they are down 28 percent over the last 12 months.

In the fiscal second quarter, Diamond's revenue from the Kettle and Pop Secret brands grew 7.2 percent to $105.4 million. Revenue from the nuts business fell 29.6 percent to $115.4 million. The company said it has been reducing its reliance on discounting and is eliminating underperforming products. Its results were also hurt by lower walnut supplies.

Shares of Diamond Foods rose 4 cents to close at $17.60. In aftermarket trading they lost 85 cents, or 4.8 percent, to $16.75.

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