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The Valspar Corp. is treating investors to a brighter earnings forecast for 2012 on the heels of a solid second quarter.
Strong sales increases in both paint and coatings kept the Minneapolis-based company well above the billion-dollar mark in the second quarter that ended April 27, according to a company earnings report issued Tuesday (May 15).
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Valspar Corp. |
| New business in Valspar’s industrial segment opened the door to higher coatings sales in the second quarter. |
Second-quarter 2012 sales totaled $1.03 billion, a 4 percent increase from the same period of 2011. Adjusted net income per share increased to 84 cents for the second quarter of 2012, up 31 percent from 2011.
Industrial Sees New Business
“We were pleased with our performance in the quarter,” said Gary E. Hendrickson, president and CEO. “Our earnings growth was driven by new business in our industrial product lines, better price-to-cost balance, productivity improvements and benefits from last year’s restructuring actions.”
He added: “Our volume trend improved sequentially in both our Coatings and Paint segments in the quarter.”
Valspar’s portfolio includes coating intermediates, coil and protective coatings, packaging and automotive coatings, and consumer paint.
Earnings Forecast Revised
The good-news quarterly report was the second consecutive one for the world’s sixth-largest paint and coatings company, which ended 2011 with a fourth-quarter loss of nearly $300 million, due to over-valuation of two product lines.
The new report came with a reward for investors: an increased full-year earnings per share guidance of $3.30, up from $3.20, “reflecting our expectation of further volume growth and continued execution of our key operational initiatives,” said Hendrickson.
Q2, YTD Highlights
Second-quarter net sales were $1.03 billion, up from $992,729 in the prior-year period. Year-to-date net sales were $1.9 billion, up from $1.8 billion in the first half of 2011. Gross profit increased to $355 million in the second quarter of 2012, from $315 million in Q2 of 2011. For the first half of the year, gross profit was $648.7 million, compared with $574.4 million for the first half of 2011.
R&D spending nudged down slightly in the second quarter, to $29.4 million from $30.0 million in the same period of 2011. For the first half of the year, R&D spending declined by about $1.5 million.
Net income increased to $76.5 million for the quarter, up from $56.3 million from 2011. Net income for the year to date was $132.3 million, up from $89.7 million for the first half of 2011.
Segment Results
Coatings continued to make up the majority of Valspar’s sales; the segment accounted for $540 million in second-quarter sales (up from $509 million in Q2 of 2011) and $1.03 billion in the first half of the year. Paint sales totaled $426 million in the first quarter (up from $418 million over 2011) and $765 million in the first half of the year.
Earnings Before Interest and Taxes (EBIT) were $89.1 million for coatings in the second quarter (up from $59.9 million in 2011) and $162.9 million for the first half of the year. Paint EBIT was $49.3 million for the second quarter (up from $38.9 million) and $72.6 million (up from $58.4 million) for the first half of the year.
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