Diamond Foods (DMND) Misses Q1 EPS by 2c

Diamond Foods (NASDAQ: DMND) reported Q1 EPS of $0.28, $0.02 worse than the analyst estimate of $0.30. Revenue for the quarter came in at $224.8 million versus the consensus estimate of $233.8 million.

"We are pleased with our first quarter financial results overall, which were driven by continued strong gross margin improvement; net sales, however, were adversely impacted by our decision to exit high-volume, low-margin nut SKUs and by lower net price realization in international walnut sales," said Brian J. Driscoll, President and CEO. "Notably, Kettle U.S. continued to post strong growth, we started to realize signs of a recovery in the U.K., and the Emerald brand transition is almost complete with solid signs of future growth ahead. This progress, combined with the strength of our new product pipeline, bolsters our optimism about our sales momentum for the balance of this fiscal year. Our business remains on track to meet our original annual outlook, and we remain excited about the future combination of Diamond and Snyder's-Lance as we work diligently towards a targeted closing in the first quarter of calendar 2016."

Outlook

While the Company continues to expect that the proposed merger will close in the first quarter of calendar 2016, if the Company were to remain independent for all of fiscal 2016, it would still expect annual adjusted EBITDA of $131 million to $136 million and non-GAAP diluted EPS of $1.21 to $1.32. The Company's outlook excludes the expected merger and 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 carryforward.

Fiscal 2016 adjusted EBITDA, a non-GAAP financial measure, excludes items such as interest expense, income taxes, depreciation, amortization, stock based compensation, income associated with the equity investment as well as certain legal expenses and litigation settlements, Fishers plant closure and related costs, certain expenses associated with the Emerald brand packaging transition, merger and acquisition related costs, asset impairments and certain other actual and projected costs.

For earnings history and earnings-related data on Diamond Foods (DMND) click here.

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