Driven by net price realization policies and effective cost
Diamond Foods Inc
) adjusted earnings for the fourth quarter of fiscal 2013 rose 9
times compared with the Zacks Consensus Estimate of break-even
figures. Moreover, quarterly earnings of 9 cents per share also
rose substantially from 2 cents, including stock-based
compensation, earned in the year-ago quarter.
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Including one-time items, the company reported a loss of $6.71
per share during the quarter against a loss of $1.52 in the
fourth quarter of fiscal 2012.
Quarter in Detail
Total sales for the reported quarter were $199.8 million, down
10.8% from $224.0 million recorded in the year-ago comparable
quarter. However, the top line surpassed the Zacks Consensus
Estimate of $192.0 million. The year-over-year decline in total
sales was mainly due to weak performances at the company's Nuts
segment, partially offset by improved sales at the Snacks
Net sales at the company's Snacks segment grew 3.3% to $117.1
million in the quarter. However, net sales at the Nuts segment
fell 25.2% to $82.7 million due to a fall of 34% in volume,
offset by improved price realization.
Gross profit for the quarter surged 25.5% year over year to $53.1
million compared with $42.3 million in the year-ago quarter.
Gross margin expanded 770 basis points (bps) to 26.6% compared
with the year-ago quarter's gross margin of 18.9%. The expansion
in gross margin resulted from better price realization and
effective cost management at the company's operating segments.
Gross profit at Diamond Foods' Snacks segment increased 15.7%
year over year to $42.3 million, while as a percentage of sales
it improved 380 bps to 36.1%. Gross profit at Diamond Foods' Nuts
segment increased 88.5% to $10.7 million, whereas gross margin
expanded 790 bps to 13.0%.
Selling, general and administrative (SG&A) expenses escalated
284.6% year over year to $129.2 million, including $96.1 million
primarily related to the cost of settling the securities class
action litigation as announced on Aug 21. Advertising expenses in
the quarter nearly doubled to $12.2 million from $6.4 million in
the year-ago quarter.
Adjusted EBITDA in the quarter came in at $24.6 million compared
with $21.8 million in the year-ago comparable quarter.
Fiscal-year 2013 Synopsis
For the full year, Diamond Foods reported adjusted earnings per
share of 40 cents, beating the Zacks Consensus Estimate of 33
cents. However, it declined 27.3% from 55 cents, including
stock-based compensation, earned in the year-ago fiscal.
Including one-time items, the company reported net loss of $7.48
per share compared with a loss of $3.98 per share reported in
Net sales for the year declined 12% to $864.0 million, while it
surpassed the Zacks Consensus Estimate of $856 million.
Diamond Foods ended fiscal 2013 with cash & availability of
$74.5 million under its total revolving credit capacity of $230
million. As of Jul 31, 2013, net debt was $585.1 million,
including the Oaktree notes. Capital expenditures for the year
totaled $9.6 million.
Fiscal 2014 Outlook
Diamond Foods expects sales and earnings in the first quarter of
fiscal 2014 to be lower compared to the year-ago quarter due to
the costs related to Emerald SKU rationalization and lower walnut
supply. However, the company expects to post year-over-year
earnings gains for fiscal 2014 as the benefits of its multi-year
turnaround strategies are realized.
Other Stocks to Consider
Currently, Diamond Foods has a Zacks Rank #3 (Hold). Other stocks
in the specialty food industry that are performing better include
Green Mountain Coffee Roasters Inc.
Pinnacle Foods Inc.
Boulder Brands Inc.
). Of these, Green Mountain Coffee and Pinnacle Foods carry a
Zacks Rank #1 (Strong Buy), while Boulder Brands holds a Zacks
Rank #2 (Buy).