Sept 2009 Diamond Foods Dmnd Presentation

DF_Investor_9-3-09v2

Driving Sustainable, Long-Term Growth Michael J. Mendes President and Chief Executive Officer

September 2009

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NASDAQ: DMND

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Important Information This material contains forward-looking statements, including forecasts of growth, longt term fi financial i l goals, l expanding di margins, i i d t growth industry th and d our strategic t t i plans, l th t that involve known and unknown risks and uncertainties that may cause actual results, levels of activity, performance or achievements to differ materially from results expressed or implied by this material. Actual results may differ materially from those contained in the forward-looking statements. Such risk factors include, among others: safety and quality issues could harm our sales; fluctuations in raw material prices and availability could harm our profitability; competition could affect our results of operations; inability to integrate acquired entities could harm our profitability; loss of one or more major customers could reduce revenue and profits; risk of failure to expand distribution in existing channels or secure new distribution outlets to sell our products, and changes in the food industry and customer preferences could reduce demand for our products. Additional information concerning these and other risk factors is contained in the Risk Factors section of our Annual Report on Form 10-K, on file with the Securities and Exchange Commission, as well as factors identified in our other periodic reports filed with the 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. We do not undertake any obligation to update this information to reflect events or circumstances subsequent to its presentation. presentation

NASDAQ: DMND

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Branded, Consumer Packaged Food Company

Snack

Culinary

Delivering Value to Retailers and Consumers

NASDAQ: DMND

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Back-to-School “Cliff Notes”

Growth Story

Expanding Retail Business Fueling Double-Digit Bottom-Line Growth

Snack / Culinary Focus

Attractive Markets with Room for Growth

Scalable Platform

Branded Synergistic Retail Portfolio Branded,

Sustainable Financial Growth Model

NASDAQ: DMND

On-Plan, Industry-Leading Earnings Performance

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Transformation to Retail Total Sales $ Millions

$550 - 565 $463 Snack

49%

Snack

Culinary

>80%

+ >1000 bps Gross Margin

Culinary Non-Retail Non-Retail

2005

2009e

2009 Estimates Based on Guidance Provided on May 27, 2009. NASDAQ: DMND

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Growth Story

Sales

Operating Margin

$ Millions

% Revenue

>7 0% >7.0%

EPS $/Share

$1.31 - $1.36

$550 - 565 $463 4 5% 4.5%

$0 91 $0.91

2.8% 3.0% $0.47 $

N.A. '05

'09e

'05

$0.53

N.A. '06

'07

'08

'09e

'05

'06

'07

'08

'09e

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

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Meeting and Exceeding Expectations

Nine Consecutive Quarters of Outperformance Earnings per Share Actual Guidance

$0.67 $0.52 $0.62 $0.37 $0.44 $0.17

$0.16

$0.31

$0.16

$0.07

$0.05

$0.16

$0.14

$0.13

$0.03

$0.05

($0.09) ($0.16)

Q3

Q4

Q1

FY07 Upside

NASDAQ: DMND

$0 07 $0.07

$0 02 $0.02

Q2

Q3

Q4

Q1

FY08 $0 08 $0.08

$0 01 $0.01

$0 02 $0.02

Q2

Q3

FY09 $0 03 $0.03

$0 05 $0.05

$0 06 $0.06

$0 02 $0.02

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Expanding Retail Presence Multiple Points of Contact with Shoppers

Snack Aisle

Cereal Aisle

Baking Aisle

Produce Department

Checkout

NASDAQ: DMND

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Large Addressable Markets

$6.2B

Microwave Popcorn p

$0.9B

Snack Nuts

$2.9B

U.S. Snack and Culinary Markets

$43B+ Total Produce Snacks, Seeds, Trail Mix

$1.5B

Culinary Nuts

$0.9B

Sources: Euromonitor, IRI, AC Neilsen and Company Estimates NASDAQ: DMND

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Snack: Bringing Excitement to the Category Innovative Products for Healthy Active Lifestyles Healthy,

Snack Net Sales Growth $ Millions $175 - 185

$89

$7  

Snack Nuts Trail Mixes

 

Produce Snacks Popcorn

2004

2008

2009e

2009 Estimates Based on Guidance Provided on May 27, 2009. NASDAQ: DMND

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Culinary: History of Quality and Commitment Established 1912 Ingredients for Nutritious Meals

Market Share Leader $ Share

5x Larger Than #2 Brand

30%

6% 2%

 

Culinary and Baking Nuts In-Shell In Shell Nuts

Diamond

Planters

Fisher

Source: AC Nielsen 08/09 NASDAQ: DMND

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We Build Brands Advertising

Sponsorships

M di Media Content

NASDAQ: DMND

Retail

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NASDAQ: DMND

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Retail Synergies Creating Scale Efficiencies

Go-to-Market Synergies

NASDAQ: DMND

Operating / Distribution Efficiencies 

P od ction Production



Packaging



Procurement



Capacity Optimization



Supply Chain



Billing



Customer Service

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Scalable Platform for Growth

Leverageable Infrastructure for Growing Retail Opportunities

  

Consolidated Broker Network Efficient Warehouse Delivery System Established Customer Service

NASDAQ: DMND

Ability to Add Scale Incrementally

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Ll d JJ. JJohnson Lloyd h Executive Vice President Chief Sales Officer

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Building Retail Strength

Core Product Distribution

Keys y to Success

Optimal Shelf Location Effective Merchandising

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Core Product Distribution: Emerald Core Dry Roasted Almonds

Deluxe Mixed Nuts

Whole Cashews

Smoked Almonds

Cocoa Roast Almonds

Sea Salt and Pepper Cashews

Dryy Roasted Peanuts

Dryy Roasted Peanuts L.S.

Berryy Blend Trail Mix

Breakfast Blend Trail Mix

Glazed Walnuts

Glazed Pecans

Expanded

NASDAQ: DMND

100 Calorie Natural Almonds

100 Calorie Dry Roasted Almonds

Apple Cinnamon Walnuts n’ Almonds

Butter Toffee Walnuts

Tropical Blend Trail Mix

Smores Trail Mix

Chocolate Cherry Trail Mix

Regular Mixed Nuts

Cashew Halves and Pieces

Honey Roasted Peanuts 19

Leading Segment Growth Core Dry Roasted Almonds

Deluxe Mixed Nuts

Dryy Roasted Peanuts

Dryy Roasted L.S. DryPeanuts Roasted

Almonds

Whole Cashews

Berryy Blend Trail Mix

Smoked Almonds

Cocoa Roast Almonds

Sea Salt and Pepper Cashews

Breakfast Blend

Glazed Walnuts

Glazed

Deluxe Trail Mix Mixed Nuts

WholePecans Cashews

Expanded 100 Calorie Natural Almonds

100 Calorie Dry Roasted Almonds

Apple Cinnamon Walnuts n’ Almonds

100 Calorie Almonds Smores Trail Mix NASDAQ: DMND

Chocolate Cherry Trail Mix

Regular Mixed Nuts

Butter Toffee Walnuts

Tropical Blend Trail Mix

Glazed Pecans Cashew Halves and Pieces

Honey Roasted Peanuts 20

Emerald: Accelerated Growth and Share

$ Millions $3.0

$ Change vs. Year Ago

$ $2.5

$ Share Sh

10 9 8

$2.0

$ Change vs. Year Ago

7 6

$1.5 $

$ Share

5 $1.0

4 3

$0.5

2 $0.0 ($0.5) Week Ending

1 0 27-Dec

24-Jan

21-Feb

21-Mar

18-Apr

16-May

13-Jun

11-Jul

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

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Core Product Distribution: Pop Secret Homestyle

100 Calorie Snack 10 ct.

6 ct.

3 ct.

Homestyle 10 ct.

6 ct.

3 ct.

94% Fat Free

Movie Theater Butter

10 ct. Snack

3 ct.

6 ct.

Extra Butter

Jumbo Pop

10 ct.

6 ct.

3 ct.

Butter

Butter 6 ct.

Movie Theater 3 ct.

Kettle Corn 3 ct.

Cheddar 3 ct.

Flavors

6 ct. NASDAQ: DMND

Butter 10 ct.

3 ct.

Light Butter 3 ct.

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Core Product Distribution: Diamond Culinary Peg

Bag

Walnuts Sh ll d Shelled

Ch Chopped d

1 lb. lb Shelled Sh ll d

8 oz. Chopped Ch d

6 oz. Shelled Sh ll d

Halves

Chopped

1 lb. Halves

8 oz. Chopped

6 oz. Halves

Sliced

Slivered

P Pecans

Almonds Whole

10 oz. oz Sliced

10 oz. oz Slivered 6 oz. oz Whole

1 lb. lb Whole

Other Pine Nuts Macadamia Hazelnut NASDAQ: DMND

Nut Topping 23

Optimal Shelf Location Pop Secret Emerald

Diamond Culinary

NASDAQ: DMND

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Effective Merchandising % Dollar Lift from Feature and Display Snack Nuts (Shelled)

Culinary Nuts (Baking) 474

286

354

323 224

267 166

Category

Private Label

Planters

Category

Emerald

Private Label

Diamond

Microwave Popcorn 352 291

291 241

Source: AC Nielsen, Total US Grocery Channel, 52 Weeks Ending 7/11/09 NASDAQ: DMND

Category

Private Label

Orville

Pop Secret 25

Driving Category Growth 12 Week Dollar Sales Change Snack Nuts

Microwave Popcorn

Culinary Nuts

+56%

+6% Emerald

Category -2% Planters

+5%

+5%

+7%

Pop S Secret

Orville

Category

0%

+2%

Diamond

Category

-49% Planters

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

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St Steve M. M Neil N il Executive Vice President Chief Financial & Administrative Officer

NASDAQ: DMND

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Dramatic Retail Sales Growth

16 of 17 Quarters with Year-Over-Year Year Over Year Growth $ Millions

$229

$247

$263

$262

Q2

Q3

$275

$278

Q4

Q1

$300

$333

$345

$346

$355

$323

Q3

Q4

Q1

Q2

Q3

$370

$399

$ $427

$452 $

$189 $153

Q2

Q3 2005

NASDAQ: DMND

Q4

Q1

2006

Q2

2007

2008

Q4

Q1

Q2

Q3

2009

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Attractive Cash Flow Profile Cash Generation Is Highly Accretive to Earnings Adjusted EBITDA $ Millions Million

Net Debt $60-62

$ Millions Million $201

$37 $23 % Sales

5%

$133

$29

$124 $90-95

6%

7%

8-9%

($55) ‘06 06

‘07 07

‘08 08

’09e 09e

Q4

2008

Q1

Q2

Q3

Q4e

2009

2009 Estimates Based on Guidance Provided on May 27, 2009. NASDAQ: DMND

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Generating Shareholder Value

EVA

Valuation 13.7%

7 3% 7.3%

WACC

ROIC

Sh Share P Price i

PEG

$30

0.9

$40

11 1.1

$50

1.4

$60

1.7

Industry Average

1.6

WACC Includes 2.7% Small Company Size Premium

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

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Financial Summary

Fiscall Year Ended d d July l 31 3 $ Millions, Except per Share and %

2008

2009e Guidance

Total Net Sales Snack R t il Retail

$531 $89 $370

$550 - 565 $175 - 185 +18 18 - 22%

Gross Margin

16.6%

22.6%

Operating Margin

4.5%

> 7%

EPS

$0.91

$1.31 - $1.36

2010e Guidance

$1.55 - $1.70

2009 Estimates Based on Guidance Provided on May 27, 2009. 2010 Estimates Based on Guidance Provided on March 11, 2009. NASDAQ: DMND

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Ahead of Initial Long-Term Targets FY 2009e

FY 2006 $ Millions, Except per Share and %

LT Targets

Actual

Guidance

+8 - 10% per Year

$477

$550 - 565

Snack Sales

+40% per Year

$41

$175 - 185

Gross Margin

20%

14.3%

> 22%

Operating Margin

10%

2.8%

> 7%

> +15% per Year

$0.46

$1.31 - 1.36

Top Line

EPS

2009 Estimates Based on Guidance Provided on May 27, 2009. NASDAQ: DMND

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A Transformational Company High-Growth Branded HighFood Company

Grower-Owned GrowerWalnut Cooperative

IPO

1912 NASDAQ: DMND

2005 33

Driving Sustainable, Long-Term Growth A Appendix di

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Non-GAAP Reconciliation 2009e

2008

2007

2006

2005

$531,492

$522,585

$477,205

$428,297

$0

$0

$0

$34 251 $34,251

Non-GAAP Net Sales

$531,492

$522,585

$477,205

$462,548

GAAP Cost of Sales

$443,490

$443,945

$411,809

$191,387

GAAP Net Sales Patronage Inventory Adjustments

Adjustment to Convert Walnut Inventories from Crop Year Pool and NRV Accounting to Cost Basis Accounting and to Record Estimated 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

($3,039)

($3,442)

Adjustment To Remove Restructuring and Other Costs and Loss on Termination of Defined Benefit Plan 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

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)

$2,625

$6,276

$3,775

$8,085

$5,418

$5,266

($4,610)

Debt Prepayment Penalty Less Sale of Emission Resource Credits

Net Income Tax Adjustments

($898)

$366

Non-GAAP Income Tax Expense GAAP Net Income

$21,400 - $22,200

$14,756

$8,433

$7,336

$182,796

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)

NASDAQ: DMND

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