U.S. Paint Sales Grow Valspar’s Q2
Valspar Corp. saw a slight uptick in net income in its second quarter, as results strengthened for the company’s U.S. consumer paints segment.
Sales for the quarter were $1.03 billion, equal to the prior year’s second quarter. Net income for the quarter was $83 million, up slightly from $80 million for the same period a year earlier, the company announced Tuesday (May 14).
Second-quarter net income per share was $0.91, an increase from $0.84 in 2012. Valspar reaffirmed its full-year projected earnings per share to be in the $3.60 to $3.80 range. The company adjusted its 2013 full-year guidance after a flat first quarter.
The Minneapolis-based paint and coatings maker said volume increased 7 percent in the quarter, thanks to the inclusion of volumes resulting from the recent Ace Paint deal.
“The seven percent growth in total volumes, inclusive of Ace volumes, was a significant accomplishment, especially given the uneven demand this year in several markets,” said Gary E. Hendrickson, chairman and CEO.
In January, Valspar announced it would manufacture and supply Ace-branded paint products. Growth from this deal helped increase volumes by 7 percent.
Hendrickson noted solid performance and momentum in the company’s consumer paints, packaging, wood and coil product lines.
“The strengthening U.S. housing market, coupled with our continued new business initiatives, should provide further improvements in the second half of the year,” he added.
North America Fuels Paints Segment
For the company’s Paints segment, sales for the quarter ended April 26 were $438 million, edging up 3 percent from the same period in 2012.
The increase was due to volume and sales growth in North America, the company says. Paint sales there rose 13 percent, the company reported.
Paint segment adjusted earnings before interest and taxes (EBIT) increased 11 percent to $59.1 million, fueled by higher sales volume.
Coatings Unit Takes Hit
As for Valspar’s Coatings unit, net sales dipped 1 percent from the same period a year ago, to $537 million.
The company says lower demand in the general industrial product lines, including pipeline coating products, is being offset by growth in other areas. It held to its revised full-year guidance.
The company reported that sales growth in packaging, wood and coil coatings was offset by lower demand in the general industrial product line, primarily for off-road equipment, shipping container and pipeline coatings products.
The segment’s adjusted EBIT fell 8 percent to $83 million.
The company also announced restructuring actions primarily focused on “improving its North American paint manufacturing footprint following the Ace paint acquisition and to continue improving profitability in its Australian business.”
These actions are expected to result in total non-recurring charges estimated at $18 million to $23 million (after tax) in fiscal 2013 and 2014, Valspar noted.
In addition, approximately $30 million of Valspar’s planned capital spending will be used to support facility consolidations, production line transfers and efficiency improvements.
When fully implemented, the company expects to generate annual savings of approximately $0.10 per diluted share by fiscal 2015.
The company’s portfolio includes: