Diamond Foods’ Sales Fell and Earnings Rose in 4Q15
Highlights of Diamond Foods' 4Q15 Performance Results
4Q15 performance highlights
In 4Q15, Diamond Food’s (DMND) net sales were reported $201.8 million—down by 7.90% compared to 4Q14. This reflects the exit of $15.2 million of high volume and low margin SKUs (stock keeping unit) in the Nuts segment. It also includes $3.9 million of an adverse foreign exchange effect in the Snacks segment—mainly related to the United Kingdom and Canada.
The gross profit was recorded at $54.5 million or 27% of net sales—compared to 22.50% in 4Q14. The GAAP (generally accepted accounting principles) net income for the quarter was $7.9 million. The GAAP diluted EPS was $0.25 in 4Q15—compared to a loss of $0.06 in 4Q14.
The non-GAAP net income for the quarter was $7.2 million. The non-GAAP diluted EPS was $0.23—compared to $0.19 in 4Q14. The adjusted EBITDA (earnings before interest, tax, depreciation, and amortization) was recorded at $29.3 million in 4Q15—compared to $23.9 million in 4Q14.
Fiscal 2015
The net sales for fiscal 2015 were mostly flat at $864.2 million—compared to $865.2 million in fiscal 2014. The Nut segment’s volume fell mainly due to exiting high volume, low margin SKUs, and a fall in Kettle UK’s net price realization. It also included the adverse impact of foreign exchange rates in the United Kingdom and Canada.
A price increase in the Nuts segment and Kettle US and higher volumes throughout the Snacks portfolio compensated for the costs related to the Emerald transition from canisters to stand up bags.
As a percentage of net sales, the gross profit was recorded at 26.40%—compared to 24.10% in fiscal 2014. The GAAP net income was recorded at $33 million, or $1.04 per share, on a fully diluted basis. Also, the non-GAAP net income for fiscal 2015 was recorded $34.7 million. The non-GAAP fully-diluted EPS was $1.10. The adjusted EBITDA was $123.8 million—compared to $105.1 million in the last fiscal year.
About Diamond Foods
Diamond Foods is a packaged food company. It primarily processes, markets, and distributes snack products and culinary in-shell and ingredient nuts. The company operates in the US, the United Kingdom, Canada, South Korea, Japan, Germany, the Netherlands, Turkey, China, and Spain. It’s based in San Francisco, California. It operates in two segments:
Snacks segment
Nuts segment
Diamond Foods peers’ in the industry include Bunge (BG). It reported a YTD (year-to-date) return of -23.98%. However, other peers like ConAgra (CAG), J.M. Smucker (SJM), and Flowers Foods (FLO) reported positive YTD returns of 11.41%, 11.91%, and 31.53%, respectively. The Power Shares S&P 500 Low Volatility (SPLV) invests 1.12% of its portfolio in J.M. Smucker.
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