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Diamond Foods Posts 9-Month Loss; Stock Plunges On Restated Results - Update

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Diamond Foods Inc. (DMND: Quote) Wednesday reported a net loss for the nine-month period of 2012, and said profits for the preceding two years have been vastly eroded owing to an accounting scandal-led restatement.

Shares of the company sank 19 percent in after-hours trade, a new low for the year.

The maker of Emerald snack nuts and Kettle potato chips reported a net loss of $53.4 million or $2.46 per share for the nine-month period, compared with net income of $23.7 million or $1.05 per share in the prior year.

Results were hurt by lower gross margin, higher restatement-related costs, and acquisition-related charges.

Net sales for the period were $757.7 million. Results were partly impacted by a 36 percent decline in non-retail sales, owing to a drop in walnut crop deliveries to the company in the fall of 2011.

Diamond Foods said its restatement led to decline in income before taxes of $39.5 million in fiscal 2011 and $17 million in fiscal 2010 from amounts earlier reported.

The company has been embroiled in an accounting scandal, whereby certain payments to walnut growers accounted for in fiscal 2011 and 2012, were not accounted for in the correct periods.

Critics have said that payments to walnut growers may have been shifted to inflate the preceding year's earnings, while Diamond Foods says the payments were made in advance for the 2011 crop.

The scandal had led to a sharp erosion in Diamond Foods stock price and also upset its plan to acquire Pringles chips business from Procter & Gamble for about $2.4 billion.

Diamond Foods, which also has been struggling to maintain its listing on the Nasdaq, said its Audit Committee probe has revealed material accounting weaknesses and remedial steps are being taken.

"The company regrets the extended time investors had to wait for financial reports during the restatement process," said Brian Driscoll, who took over as CEO in May.

For the full-year 2012, Diamond expects adjusted EBITDA of $78 million to $81 million and net sales of $975 million to $980 million.

Analysts on consensus currently expect sales of $941.75 million for the full year 2012.

Diamond Foods stock closed Wednesday at $19.50, down 4.55%, on a volume of 1.25 million shares on the Nasdaq. In after hours, the stock dropped 19.28% at $15.74. In the past year, the stock has traded in a range of $16.15 - $40.71.

by RTT Staff Writer

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