SAN FRANCISCO, CA, March 13, 2012 – Diamond Foods, Inc. (NASDAQ: DMND) (“Diamond”) today provided business and brand updates to give its stakeholders greater visibility into the progress of its accounting restatement, actions being taken to strengthen Diamond’s balance sheet and factors influencing Diamond’s performance, including walnut pricing.
“Since February 8, 2012, Diamond’s team has taken a number of actions to address the issues facing the Company and to better position Diamond for the opportunities we see going forward,” said Rick Wolford, Diamond’s Interim President and Chief Executive Officer. “The Company, working with Interim Chief Financial Officer Mike Murphy and his team from Alix Partners, is progressing well in working with our banks and addressing financial reporting and restatement issues. To assist Diamond in assessing our capital structure and evaluating ways to strengthen the balance sheet, the Company has retained Dean Bradley Osborne Partners LLC as its financial advisor.”
Diamond and its advisors are making substantial progress strengthening the Company’s financial reporting and control capabilities and restating Diamond’s consolidated financial statements for fiscal years 2010 and 2011. The timing of the restatement has not yet been finalized.
“With regard to its core business, Diamond’s management team is sharply focused on optimizing the strategy, performance and execution of each of its product lines,” added Rick Wolford.
Extensive efforts are underway to reset the Company’s walnut activities and to restore and strengthen Diamond’s relationships with growers. Increased global demand for walnuts has driven pricing to record levels of at least 35 percent higher than for last year’s crop. Diamond, as it refocuses on its walnut supply, intends to be competitive in its walnut sourcing activities, and expects its walnut-related cost of sales to rise in line with current pricing trends. Diamond is taking pricing action to address this cost issue.
Diamond’s snack brands have continued to deliver strong retail sales, with share gains for Emerald, Pop Secret and Kettle in the most recent 12-week Nielsen tracking period. While Diamond’s fiscal 2012 non-retail walnut sales were down significantly due to less supply, Diamond’s culinary branded retail sales are up 7 percent in the 12-week period, largely on the strength of price increases implemented in the past year.
Diamond’s U.S. Nielsen retail scanner performance data for the twelve-week period ended February 18, 2012 in the food, drug and mass channels was as follows:
|Brand YoY Growth||Category YoY Growth||Market Share Change|
|Emerald||+29%||+3%||+ 200 basis points|
|Pop Secret||+6%||+2%||+110 basis points|
|Kettle U.S.||+8%||+1%||+ 20 basis points|
|Diamond of California||+7%||+8%||– 30 basis points|
Sources: Nielsen U.S. Food, Drug and Mass dollar sales for 12-week period ended February 18, 2012. All comparisons are to the same measured period in the prior year.
“Despite the challenges we have faced over the past several months, our brands continue to perform well and we believe the steps we are taking will best position Diamond for the future,” continued Rick Wolford.
Diamond expects to update its outlook for fiscal 2012 after its financial restatement is completed.
Diamond Foods is an innovative packaged food company focused on building, acquiring and energizing brands including Kettle® Chips, Emerald® snack nuts, Pop Secret® popcorn, and Diamond of California® nuts. Diamond’s products are distributed in a wide range of stores where snacks and culinary nuts are sold. For more information visit our corporate web site: www.diamondfoods.com.
Note regarding forward-looking statements
Statements in this press release that relate to future results, events and expectations, including statements about our sales performance and future plans, cost of walnuts, the timing of our financial restatement and potential capital transactions, are forward-looking statements that necessarily depend on critical assumptions and are subject to risks and uncertainties. Actual results may differ materially from what we currently expect because of many risks and uncertainties, including: uncertainty about the timing and scope of our financial restatement; risks relating to our credit facility, including compliance with existing debt covenants and obtaining forbearance from our lenders; increase in the cost of debt, ability to raise additional capital, risks relating to litigation, relations with growers; availability and cost of walnuts and other raw materials; increasing competition and possible loss of key customers; and general economic and capital markets conditions. Risk factors affecting our business and prospects are described under “Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended July 31, 2011, and under “Additional Risk Factors” in our Current Report on Form 8-K filed with the SEC on November 28, 2011. All forward-looking statements and reasons why results might differ included in this press release are made as of the date of this press release, based on information currently available to Diamond’s management, and we assume no obligation to update any forward-looking statement or reasons why results might differ.
SVP, Corporate Strategy
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