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Economic Pulse: Valspar Reports Sales Decline, Earnings Gain

Tuesday, November 24, 2009

The Valspar Corp. reported net income of $49.9 million for the company’s fourth quarter ended Oct. 30, a gain of 28% from $38.9 million for the same quarter a year earlier. Sales for the quarter declined 15.9%, to $776.6 million.

For the company’s fiscal year ended Oct. 30, net income was $160.2 million, a gain of 6% from the prior year. Sales for the year declined 17.3%, to $2.8 billion.

The company said sales for its Coatings segment declined approximately 30% for the year ended Oct. 30 compared to the previous year, to $1.58 billion. Sales for the Paint segment fell 5%, to $1.07 billion.

In a webcast on Monday, held to discuss the quarterly and year-end figures, Valspar Senior Vice President and Chief Financial Officer Lori Walker said the fourth-quarter results exceeded expectations due to better-than-expected sales, primarily in the coatings segment. Adjusting for unfavorable currency-exchange rates and the fact that this year’s fourth quarter was one week shorter than the previous year’s, sales were off about 9%, Walker said. She added that the results also benefited from lower raw-material costs, productivity gains, and an improved product mix.

William L. Mansfield, Valspar chairman and CEO, said the improved earnings results reflected “the operational discipline of Valspar employees.”  He said the company “maintained our investments in branding and development of leading-edge technologies, significantly lowered our cost structure, and strengthened our global operations. By remaining focused on execution, we gained share in key markets, improved productivity and delivered strong cash flow.”

Mansfield said the company’s architectural, packaging, and auto-refinish coatings businesses performed well for the year, while the general-industrial, coil, and wood coatings product lines “faced stiff challenges.” Still, he said all the segments turned in good resuls “under the circumstances.”

For 2010, Mansfield said the company anticipates modest revenue growth. “Many industrial markets we serve are not improving, but appear to have stabilized,” he said. “We also anticipate ongoing pressure on raw-material costs, continuing a trend that started in third quarter.”

The company is projecting adjusted net income per share to be in the range of $1.85 to $2.05 for its fiscal year 2010. Earnings per share for the year ended Oct. 30 were $1.77.