Valspar Reports Second-Quarter Results
MINNEAPOLIS - The Valspar Corp., Minneapolis, reported second-quarter 2013 net sales of $1.03 billion, equal to the prior year. Reported net income and earnings per diluted share for the current and prior year include several nonrecurring items. Second-quarter 2013 adjusted net income and earnings per diluted share, excluding these nonrecurring items, were $83 million and $0.91, respectively. Second quarter 2012 adjusted net income and earnings per diluted share were $80 million and $0.84, respectively.
“Strong volume growth in the quarter was driven by new business wins. 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 Chief Executive Officer. “We saw improving momentum in the U.S., driven by solid performance in our 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. We are affirming our full-year adjusted EPS guidance of $3.60 to $3.80.”
Net sales in the Paints segment increased 3 percent to $438 million in the quarter, primarily due to volume and sales growth in North America. Paints segment adjusted earnings before interest and taxes (EBIT) increased 11 percent to $59.1 million, driven by higher sales volume. Paints segment adjusted EBIT margins increased approximately 100 bps to 13.5 percent.
Net sales in the Coatings segment declined 1 percent to $537 million. 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. Coatings segment adjusted EBIT decreased 8 percent to $83 million. Coatings segment adjusted EBIT margins decreased in the quarter by approximately (110 bps) to 15.5 percent.
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 to $23 million (after tax) in fiscal 2013 and 2014. In addition, approximately $30 million of the company's planned capital spending will be used to support facility consolidations, production line transfers and efficiency improvements. When fully implemented, these actions are expected to generate annual savings of approximately $0.10 per diluted share by fiscal 2015.