Diamond Foods, Inc. (Nasdaq:DMND) today reported strong financial performance for its first quarter of fiscal 2011 and increased guidance for the full-year.
For the three months ended October 31, 2010, net sales grew 40 percent, with retail sales growing 58 percent to $227.8 million and snack sales increasing 130 percent to $137.6 million.
Non-retail sales declined 32 percent to $24.8 million due primarily to the later tree nut harvest.
Operating income increased 7 percent to $27.5 million, which includes a 98 percent increase in advertising for the quarter compared to the prior year. Fully diluted earnings per share (EPS) was $0.64, and excluding integration costs related to the acquisition of Kettle Foods, non-GAAP EPS was $0.65.
"We are pleased with the organic growth in our base retail business, which has been augmented by the addition of Kettle,"said Michael J. Mendes, Chairman, President and CEO. "Our strong performance gives us the confidence to further invest in our brands while increasing our sales and earnings guidance."
Corporate Highlights
- Based on syndicated data for the 12-week period ended October 30, 2010 in U.S. grocery stores:
- Emerald's dollar sales grew 32 percent compared to 6 percent for the category and drove a 190 basis point market share gain over the prior year period;
- Pop Secret's dollar sales grew 4 percent, while the category declined 8 percent, resulting in a 300 basis point increase in market share;
- Kettle's U.S. dollar sales grew 11 percent compared to 4 percent for the category, adding 20 basis points of share over the prior year period;
- Diamond of California dollar sales grew 1 percent while the category declined 5 percent, increasing market share by 160 basis points to a level that is almost 10 times greater than the nearest branded competitor.
- Kettle's sales in the United Kingdom grew 10 percent for the 12-week period and gained 10 basis points in market share in grocery. In the impulse channel, Kettle U.K. sales grew 31% based on significant new penetration. Kettle Ridge Crisps have been authorized for listing by all major U.K. grocery multiples, and demand for the new Kettle Multi-pack items is exceeding expectations.
- Increasingly, sales are being generated outside of grocery stores in non-scanned channels. During the quarter, both Emerald and Pop Secret benefited from expanded distribution in the drug and mass channels. The new Kettle Tias! product line was successfully launched in the natural channel.
- Several products, including single-serve Kettle Brand potato chips, Pop Secret Magic Colors, and Emerald Breakfast on the Go, have been authorized by customers and will begin shipping in the second quarter of fiscal 2011.
- Investment in advertising nearly doubled to $12.5 million, up from $6.3 million in the prior year period, reflecting continued focus on brand building.
- A quarterly dividend of $0.045 per share was paid on November 3, 2010 to shareholders of record as of October 22, 2010.
