Diamond Foods F4Q09 (Qtr End 8/31/09) Earnings Call Transcript

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2009-09-30 16:19:08.0

Tags: Call Transcript, Earnings, Currency & Foreign Exchange, Finance, Seeking Alpha, Diamond Foods Inc.

Question-and-Answer Session

Operator

(Operator Instructions) Your first question comes from Tim Ramey with D.A. Davidson.

Tim Ramey - D.A. Davidson

I was trying to figure out if there was any real seasonality to the Pop Secret business. Is there any kind of spike in the 4Q or is pretty ratable throughout the year?

Steven M. Neil

Pop Secret, when you compare it to our nut business, is much more ratable over the year. If there is seasonality, you’ll see it sometimes in September with the new TV season coming on and you may see it around the Super Bowl time but really when you look at it compared to our other businesses, it’s pretty ratable over the year.

Tim Ramey - D.A. Davidson

If I think about it being sort of a $90 million run-rate, $22.5 million quarterly rate that means your snack business was kind of $32 million in the fourth quarter and if I annualize that, we’re kind of in the $128 million, $130 million range, which seems like that’s sort of smack in the middle of what you are guiding us to. So are you guiding us to essentially flat sales for fiscal ’10 or is that just conservative or what are we expecting there? You know, flat with a run-rate of the fourth quarter.

Michael J. Mendes

Well, I think Tim, as far as the fourth quarter, there’s a lot of noise in that fourth quarter in that what you are seeing in some of that is some pipeline fill of new distribution gains, for example, with our 100-calorie pack in the mass merch channel and also with our peanut business as we are getting some new distribution there, so part of that surge in Q4 does show some channel pipeline fill. So I think when you clear that out of Q4, there is growth in next year even on a run-rate basis but part of what you see in Q4 is some pipeline from that new distribution. And also we had a new piece of club business in Pop Secret in a regional club customer which also we had pipeline from Q4.

Tim Ramey - D.A. Davidson

Great. Thanks so much.

Operator

Your next question comes from Heather Jones with BB&T Capital Markets.

Heather Jones - BB&T Capital Markets

Good evening. Great quarter. A couple of questions. You mentioned price deflation in culinary and I guess just trying to get a sense of -- I guess my core question is how much was strategic volume up there for the quarter? You mentioned walking away from rationalizing some of your SKUs there and then you mentioned price deflation, so trying to get a feel for the business you want to keep strategic, how much of those volumes were up?

 

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