Diamond Foods’ second-quarter earnings indicate luster is slowly returning
SAN FRANCISCO – It has been a challenging two years for Diamond Foods, Inc. as it recovers from an accounting scandal that led to the ouster of the company’s chief executive officer and the restatement of earnings for a period covering more than two years. During the second quarter of fiscal 2013, ended Jan. 31, Diamond Foods recorded net income of $10,141,000, equal to 46c per share on the common stock. The company incurred a loss of $20,184,000 during the same period of the previous year.
Sales for the quarter declined 16% to $220,844,000 compared with the previous year as Diamond Foods focused on reducing its frequency of discounting products and eliminated underperforming stock-keeping units (s.k.u.s).
“Our second-quarter results reflect continued progress against our key initiatives, which are aimed at driving margin expansion and a more sustainable top-line growth profile over time,” said Brian J. Driscoll, chief executive officer.
Net sales in the company’s Snacks division increased 7% to $105.4 million and were driven by an increase in net price realization on a 2% volume increase. Snacks gross profit was $34.8 million, 33% of net sales, for the second quarter of fiscal 2013, compared with $28.4 million, or 29% of net sales, for the same quarter in the prior year. The company said the improvement in Snacks gross profit as a percentage of net sales reflected an increase in net price realization.
Sales in the Nuts business unit decreased 30% to $115.4 million, driven by a 37% volume decline. The drivers of the decline were related to a smaller walnut supply, planned reductions in s.k.u.s and promotional spending associated with the Emerald brand. Nuts gross profit was $15.7 million, or 14% of net sales, in the second quarter of fiscal 2013, compared to $13.5 million, or 8% of net sales, for the same quarter in the prior year.
For the first six months of fiscal 2013, Diamond Foods was still feeling the effects of its earnings restatement efforts. For the period the company recorded a loss of $588,000, which is an improvement compared with the first six months of fiscal 2012 when it recorded a loss of $9,383,000.