Diamond Foods Takes Bigger 4Q Loss

Diamond Foods said Monday it took a bigger loss in its fiscal fourth quarter, as it settled a securities lawsuit and absorbed other charges. It said it expects difficult business conditions in the current quarter.

In August, the maker of Pop Secret, Kettle Chips and Emerald Nuts agreed to pay $96 million to settle a securities lawsuit. The lawsuit was related to the way Diamond accounted for payments to walnut growers; critics said the company used the payments to boost its stock price by postponing some costs.

In the fourth quarter, Diamond also reported $36 million in impairment charges to Kettle US and other intangible assets and a $20.6 million charge related to a change in the fair value of Oaktree Capital’s investment in the company.

The company said much of the cash payment would be covered by its insurance, and it denies all claims of wrongdoing or liability.

The company said it lost a total of $147.1 million, or $6.71 per share. A year ago it took a loss of $32.9 million, or $1.52 per share. Its revenue fell 11 percent, to $199.8 million from $224 million.

Excluding one-time items, the company said it earned 9 cents a share.

FactSet says analysts were expecting Diamond Foods to report a break-even quarter on an adjusted basis, with $194 million in revenue.

The company said revenue from Diamond of California and Emerald Nuts fell 25 percent, to $82.7 million. Sales from its snack business, which includes Pop Secret and Kettle US and UK, rose 3 percent, to $117.1 million.

Diamond came under scrutiny in late 2011 over the way it accounted for payments to walnut growers. In early 2012, the company replaced its chief executive officer and chief financial officer, after an internal investigation found the company’s accounting for the payments was improper. Diamond also had to restate two years of financial results. Its bid for potato chip maker Pringles collapsed.

The claims against Diamond Foods were made on behalf of investors who bought the company’s stock between Oct. 5, 2010 and Feb. 8, 2012.

In the fiscal year that ended July 31, Diamond Foods lost $163.2 million, or $7.48 per share. It lost $86.3 million, or $3.98 per share, the year before. Its revenue fell 12 percent, to $864 million from $981.4 million.

The company said it expects its first-quarter results to be hurt by costs associated with the re-launch of Emerald Nuts and a reduced supply of walnuts.

Diamond Foods Inc. stock lost 62 cents, or 2.6 percent, to $23.55 on Monday. In aftermarket trading following the release of the earnings report, the shares fell 90 cents, or 4 percent, to $22.65.

This article appeared in print in the October 1st, 2013 edition of Hamodia.