Walnut costs, leveraged position hinders Diamond Foods
SAN FRANCISCO — Diamond Foods, Inc. continues to struggle as the company moves beyond the accounting irregularities that forced it to restate its financials for fiscal years 2010, 2011 and parts of 2012. Walnut costs combined with the company’s leveraged position led it to record a loss of $10,729,000 during the first quarter of fiscal 2013, ended Oct. 31.
“Our first-quarter results reflect some progress against our new brand strategies, but we continue to face headwinds with respect to walnut supply and a highly leveraged balance sheet,” said Brian J. Driscoll, chief executive officer. “Reduced promotional spending on our snack brands and a shift in the timing of advertising spending to later in the year were the largest contributors to improvement in our margins in the first quarter.”
The first-quarter loss compared negatively to Diamond’s results during the first quarter of 2012, when the company earned $10,801,000, equal to 49c per share on the common stock. Sales for fiscal 2013 were $258,462,000, a decline compared with the first quarter of fiscal 2012 when sales were $287,393,000.
The net sales of snack products declined 2% during the quarter to $154.1 million, driven by declines in Emerald and Kettle branded products. Sales for Pop Secret popcorn products increased during the quarter, according to the company.
Diamond Foods also incurred a $7.5 million charge related to change in the fair value of it warrant liability with Oaktree Capital Management. This past May, Oaktree invested $225 million in Diamond Foods as part of a market recapitalization.