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Diamond Foods Swings To Profit, Tops View - Update

Packaged food company Diamond Foods Inc. (DMND), Thursday reported a swing to profit in the third quarter from a loss last year, as last year's results were weighed down by hefty charges. Earnings for the quarter trumped analysts estimates, helped largely by stronger margins, while revenues fell short of expectations.

San Francisco, California-based Diamond Food reported third-quarter profit of $6.3 million or $0.20 per share, compared to a loss of $105.6 million or $3.63 per share last year. Last year's results reflects hefty loss on debt extinguishment of about $83 million.

Excluding one-time items, adjusted earnings for the quarter improved to $0.23 per share from $0.11 per share a year ago. On average, 7 analysts polled by Thomson Reuters estimated earnings of $0.15 per share for the quarter. Analysts' estimates typically exclude special items.

Revenues for the quarter dropped 2.5 percent to $186.1 million from $190.9 million last year. Analysts had a consensus revenue estimate of $195.3 million for the quarter.

Snacks segment sales dropped 0.3 percent to $113.9 million, while nuts segment sales declined 5.8 percent to $72.2 million.

Gross margin improved to 28.5 percent from 23.6 percent last year.

"We are pleased with our earnings performance in the third quarter, fueled by margin growth in the Nuts segment and strong Kettle results in North America. Our lower net sales primarily reflect our decision to exit certain high volume, low margin nut SKUs," said CEO Brian Driscoll.

Looking forward to the full year 2015, the company now expect adjusted earnings of $1.00 to $1.10 per share, up from its prior guidance of $0.95 to $1.10 per share. Analysts currently expect earnings of $1.04 per share for 2015.

DMND closed Thursday's trading at $28.97, down $0.20 or 0.69%, on the Nasdaq. The stock, however, gained $0.83 or 2.87% in the after-hours trade.

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