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Valspar ‘Off to Good Start’ in 2014

Thursday, February 13, 2014

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Increased volume growth in the U.S. and abroad delivered a double-digit sales increase for Valspar’s Paints segment in the first quarter of 2014, the company reported Wednesday (Feb. 12).

The company’s Coatings segment also saw a sales increase in the double digits, driven by new business wins and acquisitions.

Valspar’s net sales and income per share both saw increases for the quarter ended Jan. 25.

"We are pleased to report a good start to our fiscal year with first-quarter sales increasing nine percent over the previous year and diluted EPS (as adjusted) up 17 percent," Gary E. Hendrickson, chairman and CEO of Minneapolis-based Valspar, said in a statement.

Valspar
Images: The Valspar Corp.

Valspar's first-quarter net sales increased 9 percent, to $956 million.

Valspar's consumer brands include Valspar, Medallion, Duramax, Devine Color and PlastiKote paints, stains and primers; and Cabot Stain, Guardsman and McCloskey Man O'War wood products. Its high-performance architectural coatings consist of an extrusion coating line and coil surface coatings.

Valspar's protective line includes coatings for oil and gas pipeline, tanks, utilities, containers, and concrete-reinforcing steel.

Valspar operates in more than 25 countries.

Sales and Income Up

Overall first-quarter sales totaled $956 million, an increase of nine percent over the prior year’s first quarter.

Adjusted net income for the first quarter of 2014 was $61 million, up from $55 million in the prior-year period. Earnings per diluted share, excluding nonrecurring items, was $0.70, an increase from $0.60 reported in Q1 of 2013.

Looking ahead, the company reaffirmed its full year diluted EPS (as adjusted) guidance of $3.95 to $4.15.

“We remain focused on executing our significant new business initiatives and productivity plans to drive growth in fiscal 2014," Hendrickson noted.

Sales by Segment

Both the Paints and Coatings segments saw double-digit sales growth for Q1, while the company’s “Other” category dipped slightly.

Net sales in the Paints segment increased 10 percent to $361 million in the first quarter of 2014.

Valspar

Valspar's portfolio includes high-performance coil coating systems for commercial, residential and industrial applications.

The growth was driven by strong volume growth in the U.S. and China and by improving volume in Australia, Valspar reported.

Net sales in the company’s Coatings segment also saw a 10 percent jump to reach $549 million in the first quarter of 2014.

Growth there was due to acquisitions and the continued growth of Valspar’s wood product line, according to the company. Recent acquisitions include the Inver Group, a leading industrial coatings manufacturer in Europe.

tanks

The company's Coatings segment, which includes general industrial protective coatings, saw a 10 percent increase from the first quarter of 2013.

Sales in the Other category—which includes specialty polymers, colorants and furniture protection—declined to $46.1 million in the first quarter of 2014, from $48.5 million in the year-ago period.

"We saw strong growth in both our Paints and Coatings segments, reflecting the benefits of new business wins, acquisitions and productivity improvements,” Hendrickson said.

Earnings Mixed

Adjusted Earnings Before Interest and Taxes (EBIT) followed the sales trends for the most part, with the Paints segment by increasing 50 percent to $34 million for the quarter. Paints segment adjusted EBIT margins increased approximately 250 basis points to 9.4 percent.

The growth in EBIT margins in that segment was primarily due to higher volume, improved mix and increased profitability in Valspar’s international markets, according to the company.

The Coatings segment adjusted EBIT increased six percent to $79 million. However, EBIT margins for the segment decreased in the quarter by about 60 basis points to 14.3 percent, driven primarily by the impact of acquisitions, the company reported.

Valspar’s reported net income and earnings includes nonrecurring items detailed in the “Reconciliation of Non-GAAP Financial Measures” section of its balance sheet.

   

Tagged categories: Architectural coatings; Coatings manufacturers; Earnings reports; Finance; OEM (Original Equipment Manufacturers); Paint and Coating Sales; Valspar; Wood coatings

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