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Diamond Reports Financial Results For First Quarter Of Fiscal 2013

To participate in the call via telephone dial (888) 500-6955 from the U.S./Canada or (719) 325-2347 elsewhere and enter the participant pass code of 817-624. To listen to the call over the internet, visit the company's website at http://www.diamondfoods.com  and select "Investor Relations."

Archived audio replays of the call will be available on the company's website and via telephone. The latter will begin approximately two hours after the call's conclusion and remain available through 6:00 p.m. Pacific Time December 24, 2012. It can be accessed by dialing (888) 203-1112 from the U.S./Canada or (719) 457-0820 elsewhere. Both phone numbers require the participant pass code 928-0014.

To receive email notification of future press releases from Diamond Foods, please visit http://investor.diamondfoods.com and select "email alerts."

Financial Summary
       
Net Sales by Product Line:      
       
  Three months ended
  October 31,
(in thousands) 2012 2011 % Prior Year
Snack $154,057 $157,122 (2.0%)
Culinary/Domestic In-shell 90,723 98,112 (7.5%)
   
 Total retail 244,780 255,234 (4.1%)
International non-retail 8,067 21,444 (62.4%)
N. American Ingredient/Food Service and Other 5,615 10,715 (47.6%)
 Total non-retail 13,682 32,159 (57.5%)
Total $258,462 $287,393 (10.1%)
       
Summarized Statement of Operations:      
       
  Three months ended  
  October 31,  
(in thousands, except per share amounts) 2012 2011  
Net sales  $258,462 $287,393  
Cost of sales  199,916 226,086  
Gross profit 58,546 61,307  
Operating expenses:      
Selling, general and administrative 38,181 29,455  
Advertising 9,045 12,716  
Acquisition and integration related expenses -- 17,214  
Loss on warrant liability 7,516 --  
Total operating expenses 54,742 59,385  
Income from operations  3,804 1,922  
Interest expense, net 13,912 5,761  
Loss before income taxes  (10,108) (3,839)  
Income taxes (benefit) 621 (14,640)  
Net income (loss)   $ (10,729) $10,801  
Earnings (loss) per share (EPS):      
Basic  $ (0.49) $0.49  
Diluted  $ (0.49) $0.47  
Shares used to compute EPS:      
Basic 21,753 21,668  
Diluted 21,753 22,567  
       
Summarized Balance Sheet Data:      
       
   October 31,  
(in thousands) 2012 2011  
Cash and cash equivalents $9,852 $4,474  
Trade receivables, net 113,540 141,760  
Inventories 231,979 254,860  
Current assets 376,011 463,161  
Property plant and equipment, net  143,752 146,417  
Other intangible assets, net 438,458 446,267  
Goodwill 407,196 406,850  
Current liabilities 307,473 372,072  
Total debt 613,113 576,778  
Stockholders' equity 322,143 425,321  
 
Non-GAAP Financial Information
     
Reconciliation of income (loss) before income taxes to non-GAAP EPS:
  Three months ended
  October 31,
(in thousands, except per share amounts) 2012 2011
GAAP income (loss) before income taxes   $ (10,108)  $ (3,839)
Loss on warrant liability 7,516 --
Retention stock-based compensation  357 --
Reduction of liability due to lease assignment (1,319)  --
Adjustment to remove costs associated with acquisitions and integrations   --  17,214
Adjustment to exclude certain SG&A costs (1)  11,784  2,016
     
Non-GAAP income before income taxes  8,230 15,391
GAAP income taxes (benefit)  621  (14,640)
Tax effect of Non-GAAP adjustments 2,391 13,686
Non-GAAP income taxes (benefit)  3,012  (954)
Non-GAAP net income  $5,218 $16,345
Non-GAAP EPS-diluted $0.24 $0.71
Shares used in computing Non-GAAP EPS-diluted  22,091 22,932
     
(1)  Related primarily to audit committee investigation, restatement- related expenses, consulting fees, retention, and severance. 
     
Reconciliation of US GAAP net income (loss) to Adjusted EBITDA: 
     
  Three months ended
  October 31,
 (in thousands)  2012 2011
     
Net income (loss)  $ (10,729) $10,801
Income taxes (benefit)  621 (14,640)
Loss before income taxes (10,108) (3,839)
Interest expense, net 13,912 5,761
Income from operations (EBIT) 3,804 1,922
     
Costs associated with acquisitions and integrations  -- 17,214
Reduction of liability due to lease assignment (1,319) --
Loss on warrant liability 7,516 --
Certain selling, general and administrative costs (1) 11,784 2,016
Stock-based compensation expense  1,250 1,902
Depreciation and amortization 7,967 6,743
Adjusted EBITDA $31,002 $29,797
     
(1)  Related primarily to audit committee investigation, restatement-related expenses, consulting fees, retention, and severance. 

About Diamond's non-GAAP Financial Measures

This release contains 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, 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 GAAP financial measures, and its financial statements to evaluate its business.

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