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Sales of industrial and other coatings fueled third-quarter growth by the Valspar Corp., but the second-quarter sunshine cooled slightly for the Minneapolis paint and coatings maker.
Overall, sales inched up 1% overall for the third quarter, compared to the same period a year earlier.
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Photos: Valspar Corp. |
| Market share gains in industrial coatings helped offset soft performance in other segments. |
Net income for the quarter ended July 27 was $86.4 million, compared to $67.4 million in the prior-year period, with the increase attributed in part to new business in the coatings segment and exits by last year’s unprofitable product lines.
3% Revenue Increase
Sales for the quarter totaled $1.08 billion, up from $1.07 billion from Q3 of 2011 and up from $1.03 billion in the second quarter of 2012. The second-quarter showing was up 4 percent from that prior-year period.
“We were pleased with our performance in the quarter,” said Gary E. Hendrickson, chairman and CEO. “Excluding negative currency impact, our revenue increased three percent, and our strong earnings growth is the outcome of excellent execution in a challenging global environment.”
For the company’s fiscal year, sales were $2.997 billion, up from $2.906 billion a year earlier. Net income thus far was $218.7 million compared to $157.1 million for the prior-year period.
Coatings Show Gains
For the Coatings segment, sales for the quarter were $569.7 million, up from $560.8 million for the same period a year earlier. Segment earnings before interest and taxes (EBIT) were $98.2 million compared to $67.8 million in the prior-year period.
According to the company, the 5.2% increase in the Coatings segment was due in part to new business, prior pricing action, and last year’s exits of unprofitable product lines.
Coatings segment sales for the year so far were $1.605 billion, up from $1.526 billion a year earlier. Segment EBIT for the year was $261.2 million, compared to $178.5 million in the prior-year period.
Moreover, notable market share gains in wood coatings, packaging and industrial coatings helped to offset soft markets in this segment, Hendrickson noted.
Paint Sales Inch Up
Paint segment sales for the quarter were $442.6 million, up from $441.6 million a year earlier. Segment EBIT for the quarter was $48.8 million, compared to $42.1 million in the prior-year period.
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| Gary E. Hendrickson, Valspar chairman and CEO, says he expects “continued softness” in the fourth quarter. |
Hendrickson credited the company’s “Love Your Color” campaign with some of the paint segment growth, saying the campaign was delivering on expectations in North America.
Paint segment sales for the year were $1.20 billion, up from $1.19 billion a year earlier. Segment EBIT for the half was $121.5 million, compared to $101 million in the prior-year period.
Looking Ahead
Hendrickson predicted a slower fourth quarter, but he remained confident about the company’s fundamentals.
“We expect continued softness in some international markets and modest growth in North America,” he said. “However, we are confident the strength of our portfolio, our growth initiatives and our proven ability to drive productivity improvements will offset these challenges.”
He also reaffirmed the full-year earnings per-share forecast of $3.20 to $3.30, from an earlier forecast of $2.92 to $3.12 per share.
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