sept 2009 diamond foods dmnd presentation

8/14/2019 Sept 2009 Diamond Foods DMND Presentation

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DF_Investor_9-3-09v2

Driving Sustainable,Long-Term Growth

Michael J. MendesPresident and Chief Executive Officer

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Important Information

This material contains forward-looking statements, including forecasts of growth, long-erm nanc a goa s, expan ng marg ns, n us ry grow an our s ra eg c p ans, a

involve known and unknown risks and uncertainties that may cause actual results, levelsof activity, performance or achievements to differ materially from results expressed orimplied by this material. Actual results may differ materially from those contained in theforward-looking statements. Such risk factors include, among others: safety and qualityissues could harm our sales; fluctuations in raw material prices and availability couldharm our profitability; competition could affect our results of operations; inability tointe rate ac uired entities could harm our rofitabilit loss of one or more ma or

customers could reduce revenue and profits; risk of failure to expand distribution inexisting channels or secure new distribution outlets to sell our products, and changes inthe food industry and customer preferences could reduce demand for our products.

Factors section of our Annual Report on Form 10-K, on file with the Securities andExchange Commission, as well as factors identified in our other periodic reports filed withthe Commission from time to time.

The forward-looking statements in this material are based on our assumptions,expectations and projections about future events as the date of this presentation. Wedo not undertake any obligation to update this information to reflect events or

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Branded, Consumer Packaged Food Company

Snack Culinary

Delivering Value to Retailers and Consumers

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Back-to-School Cliff Notes

Expanding Retail Business FuelingDouble-Digit Bottom-Line Growth

Attractive Markets with Room for GrowthSnack / CulinaryFocus

,

Sustainable FinancialGrowth Model

On-Plan, Industry-LeadingEarnings Performance

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Transformation to Retail

Total Sales

$550 - 565

$ Millions

$463Snack Snack

Culinary49% >80% + >1000 bpsGross Margin

Non-Retail

2005 2009e

Non-Retail

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2009 Estimates Based on Guidance Provided on May 27, 2009.


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Growth Story

Sales Operating Margin EPS

$463

$550 - 565

.$1.31 - $1.36

2.8% 3.0%

.

0.47$0.53

0.91

N.A. N.A.

'05 '09e '05 '06 '07 '08 '09e '05 '06 '07 '08 '09e

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2009 Estimates Based on Guidance Provided on May 27, 2009.Note: See Appendix for Non-GAAP Reconciliation


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Expanding Retail Presence

Multiple Points of Contact with Shoppers

Cereal Aisle

Baking Aisle

Snack Aisle

ProduceDepartment

Checkout

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Large Addressable Markets

$0.9B$0.9B

$6.2B U.S. Snack and Culinary Markets

Microwave Po corn

$43B+otal

$43B+otal

Snack Nuts $2.9B$2.9B

Produce Snacks,Seeds, Trail Mix

$1.5B$1.5B

Culinary Nuts $0.9B$0.9B

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Sources: Euromonitor, IRI, AC Neilsen and Company Estimates


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Snack: Bringing Excitement to the Category

Snack Net Sales GrowthSnack Net Sales GrowthInnovative Products for

-

$ Millions

,

$89

$7

2004 2008 2009eSnack Nutsrail Mixes

Produce SnacksPo corn

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Culinary: History of Quality and Commitment

Market Share LeaderEstablished 1912

$ Share

5x Larger Than

30%

2%

6%

Culinary and Baking NutsIn-Shell Nuts

Diamond Planters Fisher

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Source: AC Nielsen 08/09


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We Build Brands

Advertising Sponsorships

e a

RetailContent

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Scalable Platform for Growth

Growing Retail Opportunities

Efficient Warehouse Delivery SystemEstablished Customer Service

Ability to Add Scale Incrementally

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oy . o nsonExecutive Vice President

Chief Sales Officer

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Building Retail Strength

Keys toSuccess

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Core Product Distribution: Emerald

CoreCore

Dry Roasted Almonds

DeluxeMixed Nuts

Smoked Almonds

WholeCashews

Cocoa Roast Almonds

Sea Salt andPepper Cashews

Dry Roasted Dry Roasted Berr Blend Breakfast Blend Glazed GlazedPeanuts Peanuts L.S. Trail Mix Trail Mix Walnuts Pecans

ExpandedExpanded100 Calorie

Natural Almonds

100 CalorieDry Roasted

Almonds Apple Cinnamon

Walnuts n AlmondsButter Toffee

WalnutsTropical Blend

Trail Mix

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SmoresTrail Mix

Chocolate CherryTrail Mix

RegularMixed Nuts

Cashew Halvesand Pieces

Honey RoastedPeanuts


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Leading Segment Growth

CoreCore

Dry Roasted Almonds

DeluxeMixed Nuts

Smoked Almonds

WholeCashews

Cocoa Roast Almonds

Sea Salt andPepper Cashews

Dry Roasted Dry Roasted Berr Blend Breakfast Blend Glazed GlazedPeanuts Peanuts L.S. Trail Mix Trail Mix Walnuts Pecans

ExpandedExpanded

Dry Roasted Almonds

DeluxeMixed Nuts

WholeCashews

100 CalorieNatural

Almonds

100 CalorieDry Roasted

Almonds Apple Cinnamon

Walnuts n AlmondsButter Toffee

WalnutsTropical Blend

Trail Mix

100 Calorie Almonds Glazed Pecans

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SmoresTrail Mix

Chocolate CherryTrail Mix

RegularMixed Nuts

Cashew Halvesand Pieces

Honey RoastedPeanuts


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Emerald: Accelerated Growth and Share

$3.0

9

10

$ Millions

$ Change vs. Year Ago

1.5

$2.0

2.5

6

7

8

$ Changevs. $ Share

are

$0.5

$1.0

3

4

5 Year Ago

($0.5)

$0.0

27-Dec 24-Jan 21-Feb 21-Mar 18-Apr 16-May 13-Jun 11-Jul0

1

2

Week Ending

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Source: Nielsen 7 4-Week Periods Ending 7/11/09. Total US Over $2 Million Snack Shelled.


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Core Product Distribution: Pop Secret

HomestyleHomestyle 100 Calorie100 CalorieSnack Snack

6 ct. 3 ct.10 ct.Butter 10 ct. Homestyle 10 ct.

Movie TheaterMovie TheaterButterButter

94% Fat Free94% Fat Free

10 ct. Snack 6 ct. 3 ct.6 ct.3 ct.

Extra ButterExtra Butter Jumbo PopJumbo Pop

Movie Theater3 ct.6 ct. 3 ct.10 ct. Butter 6 ct.

ButterButter FlavorsFlavors

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Kettle Corn3 ct.

Cheddar3 ct.

Light Butter3 ct.6 ct. 3 ct.


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Core Product Distribution: Diamond Culinary

Peg Bag

WalnutsWalnutse e oppe . e e oz. oppe oz. e e

ecansecansHalves Chopped 1 lb. Halves 8 oz. Chopped 6 oz. Halves

Almonds Almondsverece o e oz. ce oz. vere oz. o e . o e

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ererPine Nuts Macadamia Hazelnut Nut Topping


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Optimal Shelf Location

Pop Secret

Emerald

DiamondCulinary

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Driving Category Growth

12 Week Dollar Sales Change

Microwave PopcornSnack Nuts

+56%

Culinary Nuts

+5% +5%+7%

Pop Orville Category-2%

+6%

Emerald Category

0% +2%

Diamond CategoryecretPlanters

-49%Planters

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* Ending 8/8/09. Total U.S. Grocery Over $2M.


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eve . eExecutive Vice President

Chief Financial & Administrative Officer

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Dramatic Retail Sales Growth

$ Millions$452

- -

$275 $278$300

$323 $333 $345 $346 $355

$370$399

$427

$153$189

$229 $247

Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q32005 2006 2007 2008 2009

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Attractive Cash Flow Profile

Cash Generation Is Highly Accretive to Earnings

Adjusted EBITDA Net Debt

ons $60-62 ons

$201

$23$29 $124$133

$90-95

%Sales 5%5% 6%6% 7%7% 8-9%8-9%

Q4 Q1 Q2 Q3 Q4e

($55)

06 07 08 09e

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20092008



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Generating Shareholder Value

EVA Valuation

13.7% are r ce

$30 0.9

. .

$50 1.4

$60 1.7

WACC ROIC Industry Average 1.6WACC Includes 2.7% Small Company Size Premium

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First Call Consensus: FY09: $1.38; FY10: $1.73


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Ahead of Initial Long-Term Targets

FY 2006 FY 2009e

$ Millions,Except per Share and % LT TargetsLT Targets Actual Actual GuidanceGuidance

Top Line +8 - 10% per Year $477 $550 - 565

-

Gross Margin 20% 14.3% > 22%

Operating Margin 10% 2.8% > 7%

EPS > +15% per Year $0.46 $1.31 - 1.36

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A Transformational Company

HighHigh--Growth BrandedGrowth Branded

GrowerGrower--OwnedOwnedWalnut CooperativeWalnut Cooperative

IPO

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1912 2005


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Driving Sustainable,

Long-Term Growthppen x

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Non-GAAP Reconciliation

2009e 2008 2007 2006 2005GAAP Net Sales $531,492 $522,585 $477,205 $428,297

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Non-GAAP Net Sales $531,492 $522,585 $477,205 $462,548

GAAP Cost of Sales $443,490 $443,945 $411,809 $191,387

and NRV Accounting to Cost Basis Accounting and to RecordEstimated Walnut Cost of Goods Sold

$222,363

Non-GAAP Cost of Sales $443,490 $443,945 $409,039 $413,750

GAAP Operating Expense $64,121 $66,025 $58,465 $55,341

Adjustment To Remove Restructuring and Other Costs andLoss on Termination of Defined Benefit Plan ($3,039) ($3,442)

Non-GAAP Operating Expense $64,121 $62,986 $55,023 $55,341

GAAP Interest and Other Non-Operating Expense $1,040 $1,389 $605 $7,158

Debt Prepayment Penalty Less Sale of Emission ResourceCredits ($898)

Non-GAAP Interest and Other Non-Operating Expense $1,040 $1,389 $605 $7,158

GAAP Income Tax Expense $8,085 $2,793 ($1,010) ($8,385)

Net Income Tax Adjustments $366 $2,625 $6,276 $3,775

Non-GAAP Income Tax Expense $8,085 $5,418 $5,266 ($4,610)

GAAP Net Income $21,400 - $22,200 $14,756 $8,433 $7,336 $182,796

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Non-GAAP Net Income $21,900 - $22,700 $14,756 $8,847 $7,272 ($6,366)

GAAP EPS $1.28 - $1.33 $0.91 $0.53 $0.47 nm

Non-GAAP EPS $1.31 - $1.36 $0.91 $0.56 $0.46 ($0.41)

sept 2009 diamond foods dmnd presentation

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