The Valspar Corporation (NYSE: VAL) today reported its results for the second-quarter ended May 1, 2009. Second-quarter sales totaled $668.4 million, a 20.1 percent decline from the second quarter of 2008. Second-quarter adjusted net income per share was $0.36 in 2009 and $0.41 in 2008, excluding non-cash adjustments of $0.03 per share for Huarun minority interest shares in 2008 and 2009, and a $0.05 per share charge in 2009 related to restructuring actions. Reported net income for the second quarter of 2009 was $31.1 million. Second-quarter reported earnings per share in 2009 were $0.28. Reported net income for the second quarter of 2008 was $40.8 million. Second-quarter reported earnings per share in 2008 were $0.38.
“Despite a very difficult demand environment, we were able to deliver earnings for the quarter consistent with our expectations,” said William L. Mansfield, Valspar chairman and chief executive officer. “While we do not expect industrial markets to improve for the balance of the year, the earnings momentum generated by the strong execution and operational discipline of Valspar employees globally gives us confidence in our ability to deliver fiscal year 2009 adjusted net income per share, excluding restructuring charges, in the range of $1.55 to $1.65.”
William L. Mansfield and Lori A. Walker, senior vice president and chief financial officer, will conduct a conference call for investors at 10:00 a.m. Central Time (11:00 a.m. Eastern Time) today. The call can be heard live over the Internet at Valspar’s website at www.valsparglobal.com under Investor Relations. Those unable to participate during the live broadcast can access an archive of the call on the Valspar website. A taped delay of the call will also be available from 12:00 a.m. Central Time May 18th through Midnight on May 29th by dialing 1-800-475-6701 from within the U.S. or 320-365-3844 from outside of the U.S., using access code 998759.
The Valspar Corporation (NYSE:VAL) is a global leader in the paint
and coatings industry. Since 1806, Valspar has been dedicated to
bringing customers the latest innovations, the finest quality and the
best customer service in the coatings industry.
For more
information, visit www.valsparglobal.com.
This press release contains certain “forward-looking” statements. These forward-looking statements are based on management’s expectations and beliefs concerning future events. Forward-looking statements are necessarily subject to risks, uncertainties and other factors, many of which are outside our control and could cause actual results to differ materially from such statements. These uncertainties and other factors include, but are not limited to, changes in general economic conditions both domestic and international, including recessions and other external economic and political factors, which may adversely affect our business, the value of our investments, the financial stability of our customers and suppliers and our ability to obtain financing; dependence of internal earnings growth on economic conditions and growth in the domestic and international coatings industry; competitive factors including pricing pressure and product competition; risks related to any future acquisitions, including risks of adverse changes in the results of acquired businesses and the assumption of unforeseen liabilities; risks of disruptions in business resulting from the integration process and higher interest costs resulting from further borrowing for any such acquisitions; our reliance on the efforts of vendors, government agencies, utilities and other third parties to achieve adequate compliance and avoid disruption of our business; risks of disruptions in business resulting from our relationships with customers and suppliers; risks and uncertainties associated with operations and achievement of growth in developing markets, including China and Central and South America; unusual weather conditions adversely affecting sales; changes in raw materials pricing and availability; delays in passing along cost increases to customers; changes in governmental regulation, including more stringent environmental, health and safety regulations; changes in accounting policies and standards and taxation requirements such as new tax laws or revised tax law interpretations; the nature, cost and outcome of pending and future litigation and other legal proceedings; civil unrest and the outbreak of war and other significant national and international events; and other risks and uncertainties. The foregoing list is not exhaustive, and we disclaim any obligation to subsequently revise any forward-looking statements to reflect events or circumstances after the date of such statements.
| THE VALSPAR CORPORATION | ||||||||||||||||
| COMPARATIVE CONSOLIDATED EARNINGS | ||||||||||||||||
| For the Quarters Ended May 1, 2009 and April 25, 2008 | ||||||||||||||||
| Second Quarter | Year-To-Date | |||||||||||||||
| (Dollars in thousands, except per share amounts) | (Unaudited) | (Unaudited) | (Unaudited) | (Unaudited) | ||||||||||||
| 2009 | 2008 | 2009 | 2008 | |||||||||||||
| Net Sales | $ | 668,384 | $ | 836,379 | $ | 1,307,881 | $ | 1,601,503 | ||||||||
| Cost of Sales | 447,248 | 592,118 | 897,401 | 1,146,777 | ||||||||||||
| Gross Profit | 221,136 | 244,261 | 410,480 | 454,726 | ||||||||||||
| Research and Development | 22,543 | 24,608 | 45,612 | 47,350 | ||||||||||||
| Selling and Administrative | 141,499 | 142,549 | 273,531 | 275,291 | ||||||||||||
| Income From Operations | 57,094 | 77,104 | 91,337 | 132,085 | ||||||||||||
| Interest Expense | 10,581 | 13,914 | 22,507 | 29,597 | ||||||||||||
| Other (Income) Expense, Net | 86 | 1,309 | 640 | 3,943 | ||||||||||||
| Income Before Income Taxes | 46,427 | 61,881 | 68,190 | 98,545 | ||||||||||||
| Income Taxes | 15,297 | 21,034 | 22,892 | 33,683 | ||||||||||||
| Net Income | $ | 31,130 | $ | 40,847 | $ | 45,298 | $ | 64,862 | ||||||||
| Huarun Redeemable Stock Accrual (1) | (3,318 | ) | (2,915 | ) | (6,636 | ) | (5,829 | ) | ||||||||
| Net Income Available to Common Stockholders | 27,812 | 37,932 | 38,662 | 59,033 | ||||||||||||
| Average Number of Shares O/S - basic | 99,996,680 | 99,617,232 | 99,889,693 | 99,855,456 | ||||||||||||
| Average Number of Shares O/S - diluted | 100,538,299 | 100,180,834 | 100,396,752 | 100,556,774 | ||||||||||||
| Net Income per Common Share - basic | $ | 0.28 | $ | 0.38 | $ | 0.39 | $ | 0.59 | ||||||||
| Net Income per Common Share - diluted | $ | 0.28 | $ | 0.38 | $ | 0.39 | $ | 0.59 | ||||||||
(1) Huarun redeemable stock accrual reduced basic and diluted net income per common share $0.03 in the second quarter of 2009, $0.06 year to date in 2009, $0.03 in the second quarter of 2008 and $0.06 year to date in 2008.
NON-GAAP FINANCIAL MEASURES
In
the accompanying press release, management has reported non-GAAP
financial measures - "Adjusted Net Income per Common Share - diluted"
and "Full Year Guidance for Adjusted Net Income per Common Share -
diluted" - which exclude a non-cash accrual relating to Huarun
Redeemable Stock in connection with the Company's acquisition of the
remaining minority interest shares of Huarun Paints Holding Company
Limited and restructuring charges. Management discloses these measures
because it believes these measures may assist investors in comparing the
Company's results of operations in the respective periods without regard
to the effect on the results in the 2009 and 2008 periods of the
non-cash accrual relating to the Huarun acquisition and the effect of
the restructuring charges in 2009.
NON-GAAP RECONCILIATION
The
following is a reconciliation of "Net Income Per Common Share - diluted"
to "Adjusted Net Income Per Common Share - diluted" for the periods
presented:
| Second Quarter | Year-To-Date | |||||||||||
2009 | 2008 | 2009 | 2008 | |||||||||
| Net Income per Common Share - diluted | $ | 0.28 | $ | 0.38 | $ | 0.39 | $ | 0.59 | ||||
| Huarun Redeemable Stock Accrual | 0.03 | 0.03 | 0.06 | 0.06 | ||||||||
| Restructuring Charges | 0.05 | - | 0.11 | - | ||||||||
| Adjusted Net Income per Common Share - diluted | $ | 0.36 | $ | 0.41 | $ | 0.56 | $ | 0.65 | ||||
The following is a reconciliation of "Forecasted Net Income per Common Share - Diluted" to our "Full Year Guidance" for the period presented.
Full Year | |||
| 2009 | |||
| Forecasted Net Income per Common Share - diluted | $1.27 - $1.34 | ||
| Huarun Redeemable Stock Accrual | $0.09 | ||
| Restructuring Charges | $0.19 - $0.22 | ||
| Full Year Guidance for Adjusted Net Income per Common Share - diluted | $1.55 - $1.65 |
| May 1, | October 31, | April 25, | |||||||
| (Dollars in thousands) | 2009 | 2008 | 2008 | ||||||
| Assets | (Unaudited) | (Unaudited) | |||||||
| Current Assets: | |||||||||
| Cash and Cash Equivalents | $ | 75,640 | $ | 90,073 | $ | 77,917 | |||
| Accounts and Notes Receivable, Net | 491,061 | 565,237 | 578,612 | ||||||
| Inventories | 239,239 | 271,423 | 320,254 | ||||||
| Deferred Income Taxes | 32,132 | 31,989 | 28,012 | ||||||
| Prepaid Expenses and Other | 88,348 | 88,298 | 93,329 | ||||||
| Total Current Assets | 926,420 | 1,047,020 | 1,098,124 | ||||||
| Goodwill | 1,312,118 | 1,352,813 | 1,374,422 | ||||||
| Intangibles, Net | 626,494 | 619,468 | 605,447 | ||||||
| Other Assets | 5,337 | 7,123 | 14,369 | ||||||
| Long Term Deferred Income Taxes | 2,714 | 3,902 | 2,456 | ||||||
| Property, Plant & Equipment, Net | 459,361 | 489,716 | 516,717 | ||||||
| Total Assets | $ | 3,332,444 | $ | 3,520,042 | $ | 3,611,535 | |||
| Liabilities and Stockholders' Equity | |||||||||
| Current Liabilities: | |||||||||
| Notes Payable and Commercial Paper | $ | 285,977 | $ | 159,514 | $ | 304,827 | |||
| Current Portion of Long Term Debt | 0 | 12 | 27 | ||||||
| Trade Accounts Payable | 252,761 | 400,763 | 385,546 | ||||||
| Income Taxes | 9,927 | 29,156 | 2,951 | ||||||
| Accrued Liabilities | 245,423 | 290,898 | 243,814 | ||||||
| Total Current Liabilities | 794,088 | 880,343 | 937,165 | ||||||
| Long Term Debt, Net of Current Portion | 695,392 | 763,129 | 807,900 | ||||||
| Deferred Income Taxes | 227,297 | 224,764 | 219,724 | ||||||
| Deferred Liabilities | 161,340 | 165,361 | 178,798 | ||||||
| Total Liabilities | 1,878,117 | 2,033,597 | 2,143,587 | ||||||
| Huarun Redeemable Stock | 40,213 | 33,577 | 43,170 | ||||||
| Stockholders' Equity | 1,414,114 | 1,452,868 | 1,424,778 | ||||||
| Total Liabilities and Stockholders' Equity | $ | 3,332,444 | $ | 3,520,042 | $ | 3,611,535 | |||
The Valspar Corporation | ||||||||||||||||
Other Financial Data | ||||||||||||||||
| Dollars in millions | ||||||||||||||||
| Quarter 2 | YTD | |||||||||||||||
2009 | 2008 | 2009 | 2008 | |||||||||||||
| I. Comparison year over year | ||||||||||||||||
| Gross Margin, as a percentage of net sales * | ||||||||||||||||
| Gross Margin, reported | 33.1 | % | 29.2 | % | 31.4 | % | 28.4 | % | ||||||||
| Gross Margin, adjusted for cost of restructuring | 34.3 | % | 29.2 | % | 32.4 | % | 28.4 | % | ||||||||
| Operating Expense as a percentage of net sales * | ||||||||||||||||
| Operating Expense, reported | 24.5 | % | 20.0 | % | 24.4 | % | 20.1 | % | ||||||||
| Operating Expense, adjusted for cost of restructuring | 24.5 | % | 20.0 | % | 24.1 | % | 20.1 | % | ||||||||
| Operating Profit, as a percentage of net sales * | ||||||||||||||||
| Operating Profit, reported | 8.5 | % | 9.2 | % | 7.0 | % | 8.2 | % | ||||||||
| Operating Profit, adjusted for cost of restructuring | 9.7 | % | 9.2 | % | 8.3 | % | 8.2 | % | ||||||||
| Quarter 2 | YTD | |||||||||||||||
| II. Segment Data | 2009 | 2008 | 2009 | 2008 | ||||||||||||
| Sales | ||||||||||||||||
| Coatings | $ | 357.8 | $ | 493.9 | $ | 732.5 | $ | 965.3 | ||||||||
| Paint | $ | 257.2 | $ | 261.8 | $ | 469.9 | $ | 490.6 | ||||||||
| All Other less intersegment sales | $ | 53.4 | $ | 80.7 | $ | 105.5 | $ | 145.6 | ||||||||
| Total | $ | 668.4 | $ | 836.4 | $ | 1,307.9 | $ | 1,601.5 | ||||||||
| Earnings Before Interest and Taxes (EBIT) * | ||||||||||||||||
| Coatings | $ | 29.9 | $ | 49.5 | $ | 54.8 | $ | 88.8 | ||||||||
| Paint | $ | 35.3 | $ | 23.5 | $ | 51.3 | $ | 41.8 | ||||||||
| All Other | $ | (8.2 | ) | $ | 2.8 | $ | (15.4 | ) | $ | (2.5 | ) | |||||
| Total | $ | 57.0 | $ | 75.8 | $ | 90.7 | $ | 128.1 | ||||||||
| Earnings Before Interest and Taxes (EBIT) *, adjusted for | ||||||||||||||||
| cost of restructuring | ||||||||||||||||
| Coatings | $ | 35.4 | $ | 49.5 | $ | 67.5 | $ | 88.8 | ||||||||
| Paint | $ | 35.6 | $ | 23.5 | $ | 51.9 | $ | 41.8 | ||||||||
| All Other | $ | (6.1 | ) | $ | 2.8 | $ | (11.7 | ) | $ | (2.5 | ) | |||||
| Total | $ | 64.9 | $ | 75.8 | $ | 107.7 | $ | 128.1 | ||||||||
* Certain amounts in prior years' financial statements have been reclassified to conform with the 2009 presentation.
Contacts:
Investor Contact:
Tyler Treat,
612-851-7358
or
Media Contact:
Mike Dougherty,
612-851-7802
