Valspar Reports Fiscal 2013 First-Quarter Results

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Valspar Reports Fiscal 2013 First-Quarter Results

MINNEAPOLIS--(BUSINESS WIRE)-- The Valspar Corporation (NYS: VAL) today reported its results for the first-quarter ended January 25, 2013. First-quarter sales totaled $875.2 million compared to $885.6 million in the first quarter of 2012. First-quarter net income per share was $0.60 in 2013 compared to adjusted net income per share of $0.62 in 2012, which excludes a $0.04 per share restructuring charge. Net income for the first quarter of 2013 was $55.0 million. Net income for the first quarter of 2012 was $55.8 million and reported earnings per share were $0.58.

"Although we made substantial progress this quarter on a number of key initiatives, international markets were weaker than anticipated," said Gary E. Hendrickson, chairman and chief executive officer. "We continued to invest in our long term opportunities and remain confident we will achieve our new business plans for the full year. However, weak demand in certain international markets is expected to continue and thus we are adjusting our full-year guidance to $3.60 to $3.80 to reflect these market conditions."


Hendrickson and Lori A. Walker, senior vice president and chief financial officer, will conduct a conference call for investors at 10:00 a.m. Central Time (11:00 a.m. Eastern Time) today. The call can be heard live over the Internet by visiting the Investor Relations section of Valspar's website at www.valsparglobal.com. Those unable to participate during the live broadcast can access an archive of the call on the Valspar website. A taped delay of the call will also be available from 12:30 p.m. Central Time, Tuesday, Feb. 12th through midnight, Tuesday, Feb. 26th by dialing +1 800-475-6701 from within the U.S. or +1 (320) 365-3844 from outside of the U.S., using access code 280279.

About The Valspar Corporation

The Valspar Corporation (NYS: VAL) is a global leader in the paint and coatings industry. Since 1806, Valspar has been dedicated to bringing customers the latest innovations, the finest quality and the best customer service in the coatings industry. For more information, visitwww.valsparglobal.com.

FORWARD-LOOKING STATEMENTS

Certain statements contained in "Management's Discussion and Analysis of Financial Condition and Results of Operations" and elsewhere in this report constitute "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. The Private Securities Litigation Reform Act of 1995 provides a safe harbor for forward-looking statements. Forward-looking statements are based on management's current expectations, estimates, assumptions and beliefs about future events, conditions and financial performance. Forward-looking statements are subject to risks, uncertainties and other factors, many of which are outside our control and could cause actual results to differ materially from such statements. Any statement that is not historical in nature is a forward-looking statement. We may identify forward-looking statements with words and phrases such as "expects," "projects," "estimates," "anticipates," "believes," "could," "may," "will," "plans to," "intend," "should" and similar expressions.These risks, uncertainties and other factors include, but are not limited to, deterioration in general economic conditions, both domestic and international, that may adversely affect our business; fluctuations in availability and prices of raw materials, including raw material shortages and other supply chain disruptions, and the inability to pass along or delays in passing along raw material cost increases to our customers; dependence of internal sales and earnings growth on business cycles affecting our customers and growth in the domestic and international coatings industry; market share loss to, and pricing or margin pressure from, larger competitors with greater financial resources; significant indebtedness that restricts the use of cash flow from operations for acquisitions and other investments; dependence on acquisitions for growth, and risks related to future acquisitions, including adverse changes in the results of acquired businesses, the assumption of unforeseen liabilities and disruptions resulting from the integration of acquisitions; risks and uncertainties associated with operations and achievement of profitable growth in developing markets, including Asia and Central and South America; loss of business with key customers; damage to our reputation and business resulting from product claims or recalls, litigation, customer perception and other matters; our ability to respond to technology changes and to protect our technology; changes in governmental regulation, including more stringent environmental, health and safety regulations; our reliance on the efforts of vendors, government agencies, utilities and other third parties to achieve adequate compliance and avoid disruption of our business; unusual weather conditions adversely affecting sales; changes in accounting policies and standards and taxation requirements such as new tax laws or revised tax law interpretations; the nature, cost and outcome of pending and future litigation and other legal proceedings; and civil unrest and the outbreak of war and other significant national and international events. We undertake no obligation to subsequently revise any forward-looking statement to reflect new information, events or circumstances after the date of such statement, except as required by law.

THE VALSPAR CORPORATION
COMPARATIVE CONSOLIDATED EARNINGS
For the Quarters Ended January 25, 2013 and January 27, 2012
(Dollars in thousands, except per share amounts)
  
First Quarter
  2013 2012
  (Unaudited) (Unaudited)
Net Sales$875,242$885,647
Cost of Sales  580,891  592,331 
Gross Profit  294,351  293,316 
Research and Development30,78326,893
Selling, General and Administrative  170,037  175,708 
Operating Expenses  200,820  202,601 
Income (Loss) From Operations  93,531  90,715 
Interest Expense15,87315,789
Other (Income) Expense, Net  950  (522)
Income (Loss) Before Income Taxes  76,708  75,448 
Income Taxes  21,679  19,666 
Net Income (Loss) $55,029 $55,782 
Average Number of Shares O/S - basic89,477,59192,861,129
Average Number of Shares O/S - diluted  92,397,428  95,485,354 
Net Income (Loss) per Common Share - basic$0.62$0.60
Net Income (Loss) per Common Share - diluted $0.60 $0.58 
 

NON-GAAP FINANCIAL MEASURES
In the accompanying press release, we have reported non-GAAP financial measures - "Adjusted net income per common share - diluted". We disclose this measure because we believe the measure may assist investors in comparing our results of operations in the respective periods without regard to the effect on results of restructuring charges.

NON-GAAP RECONCILIATION
The following is a reconciliation of "Net income per common share - diluted" to "Adjusted net income per common share - diluted" for the periods presented:

 First Quarter
2013 2012

Net Income (Loss) per Common Share - diluted

$0.60$0.58

Restructuring Charges

-0.04

Adjusted Net Income per Common Share - diluted

$0.60$0.62
 
 January 25, October 26, January 27,
  2013 2012 2012
  (Unaudited) (Note) (Unaudited)
Assets
Current Assets:
Cash and Cash Equivalents$248,642$253,327$305,712
Restricted Cash19,89319,90720,108
Accounts and Notes Receivable, Net585,539681,099596,752
Inventories425,590360,427380,944
Deferred Income Taxes43,63742,08348,942
Prepaid Expenses and Other  89,956  92,334  74,759
Total Current Assets  1,413,257  1,449,177  1,427,217
Goodwill1,075,6921,056,6691,056,008
Intangibles, Net551,131550,106552,792
Other Assets28,48814,73820,597
Long-Term Deferred Income Taxes5,1945,1781,964
Property, Plant & Equipment, Net  556,905  550,968  545,193
Total Assets $3,630,667 $3,626,836 $3,603,771
 
Liabilities and Stockholders' Equity
Current Liabilities:
Short-term Debt$217,283$94,441$8,760
Current Portion of Long-Term Debt39,73744,090200,000
Trade Accounts Payable470,187502,967447,437
Income Taxes15,2774,6129,006
Other Accrued Liabilities  298,669  380,662  309,450
Total Current Liabilities  1,041,153  1,026,772  974,653
Long Term Debt, Net of Current Portion1,012,5631,012,5781,066,763
Deferred Income Taxes217,025216,314208,531
Other Long-Term Liabilities  155,094  147,649  140,295
Total Liabilities  2,425,835  2,403,313  2,390,242
Stockholders' Equity  1,204,832  1,223,523  1,213,529
Total Liabilities and Stockholders' Equity $3,630,667 $3,626,836 $3,603,771
 
NOTE: The Balance Sheet at October 26, 2012 was derived from the audited consolidated financial statements at that date.
 
THE VALSPAR CORPORATION
OTHER FINANCIAL DATA
For the Quarters Ended January 25, 2013 and January 27, 2012
(Dollars in thousands)
  
 
 
First Quarter
  2013 2012
  (Unaudited) (Unaudited)

I. Comparison year over year

Gross Profit, as a percentage of net sales (1)

Gross Profit, reported

 

33.6%33.1%

Gross Profit, adjusted (2)

33.6%33.5%
 

Operating Expense as a percentage of net sales (1)

Operating Expense, reported22.9%22.9%

Operating Expense, adjusted (2)

22.9%22.6%
 

Income (Loss) from Operations, as a percentage of net sales (1)

Income (Loss) from Operations, reported10.7%10.2%

Income (Loss) from Operations, adjusted (2)

10.7%10.8%
 
 
 
 
 
 
 
First Quarter
  2013 2012
  (Unaudited) (Unaudited)
II. Segment Data
Sales
Coatings$497,616$494,649
Paint329,079339,557
All Other less intersegment sales  48,547   51,441 
Total $875,242  $885,647 
 
Earnings Before Interest and Taxes (EBIT) (1)
Coatings$74,340$73,872
Paint22,54323,365
All Other  (4,302)  (6,000)
Total $92,581  $91,237 
 
 

Earnings Before Interest and Taxes (EBIT) (1), adjusted (2)

Coatings$74,340$74,261
Paint22,54327,391
All Other  (4,302)  (5,318)
Total $92,581  $96,334 

 

(1)Certain amounts in prior year financial statements have been reclassified to conform with the 2013 presentation.
(2)Excludes restructuring charges in the first quarter of 2012.



The Valspar Corporation
Investor Contact:
Tyler Treat, 612-851-7358
ttreat@valspar.com
or
Media Contact:
Mark Goldman, 612-851-7802
news@valspar.com

KEYWORDS:   United States  North America  Minnesota

INDUSTRY KEYWORDS:

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