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Paint Launches Highlight Valspar Q3

Wednesday, August 13, 2014

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The marketing effort nibbled on earnings in the short term, but two paint rollouts helped deliver overall success in Valspar Corp.'s third quarter, the company announced Tuesday.

Boosted by a double-digit increase in coating sales, the Minneapolis-based company announced an improved 2014 forecast with its third-quarter earnings report, forecasting nine percent sales growth for the year.

On the paint side, the quarter featured a new brand and a new distribution network. On the coatings side, net sales increased by 16 percent over the prior-year quarter, reflecting improvement across all product lines, the world's sixth-largest paint and coatings company reported Tuesday (Aug. 12).

Valspar industrial
Photos: Valspar Corp.

Valspar's numbers got a boost from the 2013 acquisition of the Inver Group, a leading European industrial coatings supplier.

Overall, the company reported third-quarter 2014 net sales of $1.2 billion, an increase of 10 percent over the prior-year period, and a 13 percent increase in Earnings Per Share (EPS) as adjusted, to $1.21.

Chairman and CEO Gary E. Hendrickson credited a "diverse business portfolio" for delivering "strong results."

“These results were driven by the successful integration of acquisitions; strong performance from China and Europe; improved sales and profitability in our coatings segment; benefits of new growth initiatives; investments in innovative products; and the positive impact of productivity initiatives,” he added.

Coatings Boom

Valspar's Coatings segment showed volume and sales increases across all product lines. Excluding acquisitions, sales in the segment increased 6 percent, and volumes were up by the mid-single digits.

“We realized the highest growth in the General Industrial product line, which benefited from the impact of the Inver acquisition and modestly improving end-market demand," said Hendrickson.

The General Industrial portfolio includes protective, off-road equipment, container, transportation, gneeral industry and other coatings.

Valspar Industrial

Valspar's coatings segment showed volume and sales increases across all product lines.

Valspar announced in 2013 that it planned to acquire Italy-based Inver Holding S.r.l., a leading industrial coatings supplier in Europe.

Hendrickson also reported growth in the Packaging product line, "driven by market share gains and momentum of our non-BPA products." Valspar is the top global supplier of metal packaging coatings.

Volumes were up in all geographic regions.

Paint Growth

Net sales in the Paints segment increased by four percent to $474 million in the third quarter, led by growth in China and Australia; overall volume increased in the high single digits.

Sales in the U.S. increased by the low single digits, impacted by second-quarter shipments to support the introduction of new retail programs in both the home improvement and hardware channels, Valspar said.

Valspar Paints

The quarter featured the introduction of Valspar Reserve and the rollout of Valspar paint at Ace Hardware.

The company launched its new Valspar Reserve premium paint at Lowe’s and rolled out Valspar-branded paint at more than 3,000 Ace Hardware stores. Advertising and marketing costs from those launches, however, took 16 percent from third-quarter EBIT, when compared to the prior-year period, the company reported.

Looking Ahead

Nevertheless, based on its 2014 performance to date and its outlook for the fourth quarter, Valspar updated its fiscal 2014 sales guidance to nine percent—the upper limit of its earlier projections. Adjusted EPS guidance was adjusted to $4.05 to $4.15, said Hendrickson.

A webcast of the Valspar's third-quarter earnings conference call is available in the company's Investor Center.

   

Tagged categories: Architectural coatings; Coatings manufacturers; Earnings reports; Market share; Paint and Coating Sales; Valspar

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