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Valspar's Q3 Leads to Adjusted Outlook

Wednesday, August 26, 2015

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International paint and coatings manufacturer Valspar reported flat net sales in its coatings segment, as well as a slight decrease in paint segment net sales in its fiscal year 2015 third quarter results, leading it to adjust earlier forecasts.

Net sales for Valspar Corp.’s third quarter declined over the prior-year period by 7 percent (1 percent in local currency), to $1.15 billion, the company announced Tuesday (Aug. 25).

Valspar
Photos: Valspar Corp.

Net sales in the company’s Paints segment decreased 7 percent to $444 million in the fiscal third quarter of 2015.

The Minneapolis-based company posted a quarterly profit of $102.9 million ($1.25 per share), up from $97.8 million ($1.14) per share reported the same period a year ago.

Total volume was flat as growth in the company’s Coatings segment was offset by declines in the company’s Paints segment, Valspar reported.

Solid Results

Chairman and CEO Gary E. Hendrickson called the showing a “solid performance.”

The company achieved a 6 percent increase in adjusted EBIT (Earnings Before Interest and Taxes) and a 10 percent increase in EPS (Earnings Per Share), he said.

CEO of Valspar

Valspar CEO Gary Hendrickson increased the company's earnings per share outlook for the rest of the year.

“These results were driven by our strong commercial execution and significant productivity initiatives, despite the impact of unfavorable currency and the change in our North American Paint business,” said Hendrickson.

Coatings Segment

Net sales in the Valspar’s Coatings segment declined 6 percent, to $640 million, from $685 million posted in the third quarter 2014.

Third-quarter net sales in local currency were flat and volumes increased 1 percent.

“Against the backdrop of strong performance in the prior year, Coatings segment volumes grew driven by new business wins in the General Industrial and Coil product lines,” Hendrickson commented.

Coatings segment adjusted EBIT of $120 million declined 2 percent from $122 million seen last year. That decline was the result of currency translation and a slight decline in sales, partially offset by benefits from productivity initiatives and improvements in cost/price, according to Valspar.

Industrial

The Coatings segment net sales were flat in local currency, according to Valspar.

Adjusted EBIT as a percent of net sales increased to 18.7 percent from 17.8 percent in the prior year.

Paints Segment

Net sales in the company’s Paints segment decreased 7 percent to $444 million in the fiscal third quarter of 2015.

Net sales in local currency declined 3 percent, and volumes were down 4 percent.

The recent acquisition of Quest Specialty Chemicals’ performance coatings division added 3 percent to segment volume and 6 percent to segment net sales.

Volume growth in international regions was more than offset by a decline in North America. The volume decline in North America stemmed from the recent loss of Valspar’s partnership with Lowe’s.

Paints segment adjusted EBIT of $52 million was up 18 percent from $44 million in the prior year.

The decline in volume was more than offset by benefits from productivity initiatives, lower operating expenses, improved cost/price and the Quest acquisition, Valspar reported. Adjusted EBIT as a percent of net sales increased to 11.7 percent from 9.1 percent in the prior year.

Updated Outlook

“Based on our year-to-date results and outlook for the fourth quarter, we are updating our fiscal 2015 EPS (as adjusted) guidance to $4.55 to $4.65,” Hendrickson added.

The company’s earlier forecast was $4.45 to $4.65 per share.

The company also expects sales to fall in the “mid-single digits” for the year.

   

Tagged categories: Architectural coatings; Coating Business; Coatings manufacturers; Earnings reports; Finance; Paint and Coating Sales; Quest Specialty Chemicals; Valspar

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