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Diamond Foods’ Gross Margin Improved in the Last Quarter

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Gross margin rose

A strong Kettle North America performance in the snack segment, where a sharp volume rise resulted in significant operating leverage and reduced cost of goods sold, also improved the gross margin.

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Other key results of fiscal 2015

The company generated adjusted EBITDA (earnings before income, tax, depreciation, and amortization) of $29.3 million in fiscal 4Q15, compared to $23.9 million in the prior fiscal year period. As mentioned in the press release, adjusted EBITDA excludes stock-based compensation and various other items. For fiscal 2015, adjusted EBITDA also improved by 17.7% to $123.8 million. Also, gross margin for fiscal 2015 rose to 26.4% versus fiscal 2014. The non-GAAP (generally accepted accounting principles) net earnings on a fully diluted basis for the year equaled $34.7 million, or $1.10 per share.

The company’s competitors in the industry include Campbell Soup (CPB), ConAgra Foods (CAG), and Mead Johnson (MJN). They reported gross margins of 37.9%, 25.1%, and 64.5%, respectively, for their last reported quarters. The Guggenheim S&P Equal Weight Consumer Staples ETF (RHS) and the iShares Morningstar Large Growth ETF (JKE) respectively invest 2.8% and 0.28% of their portfolios in the MJN stock as of December 3.

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