Exhibit 99.1
News Release
Media Contact:
Mike Dougherty
612.851.7802
mdougherty@valspar.com | Investor Contact:
Tyler Treat
612.851.7358
ttreat@valspar.com |
Valspar Reports First-Quarter Results
Company Reaffirms FY 2011 Guidance
Minneapolis, Minn. – February 14, 2011 – The Valspar Corporation (NYSE-VAL) today reported its results for the first-quarter ended January 28, 2011.
First-quarter sales totaled $842.4 million, a 25.3 percent increase from the first quarter of 2010. First-quarter adjusted net income per share increased to $0.39 in 2011 from $0.36 in 2010. First-quarter adjusted net income per share in 2011 excludes $0.05 per share in Wattyl acquisition-related charges. First-quarter adjusted net income per share in 2010 excludes a $0.02 per share charge related to restructuring actions. Net income for the first quarter was $33.4 million in 2011 and $33.9 million in 2010 and first-quarter reported earnings per share were $0.34 for both years.
“Results for the quarter were in line with our expectations,” said William L. Mansfield, Valspar chairman and chief executive officer. “Our Australian paints acquisition and the continued success of our pricing and new business efforts drove our double-digit top line growth. Looking ahead, we remain focused on addressing continuing upward pressure on raw material costs through pricing and productivity. We continue to expect fiscal year 2011 adjusted net income per share in the range of $2.45 to $2.65.”
Mansfield, Gary Hendrickson, president and chief operating officer, 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 atwww.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 12:30 p.m. Central Time February 14 through Midnight on February 28 by dialing 1-800-475-6701 from within the U.S. or 320-365-3844 from outside of the U.S., using access code 191625.
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.
FORWARD-LOOKING STATEMENTS
Certain statements contained in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and elsewhere in this report constitute “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. The Private Securities Litigation Reform Act of 1995 provides a safe harbor for forward-looking statements. Forward-looking statements are based on management’s current expectations, estimates, assumptions and beliefs about future events, conditions and financial performance. Forward-looking statements are 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. Any statement that is not historical in nature is a for ward-looking statement. We may identify forward-looking statements with words and phrases such as “expects,” “projects,” “estimates,” “anticipates,” “believes,” “could,” “may,” “will,” “plans to,” “intend,” “should” and similar expressions. These risks, uncertainties and other factors include, but are not limited to, deterioration in general economic conditions, both domestic and international, that may adversely affect our business; fluctuations in availability and prices of raw materials, including raw material shortages and other supply chain disruptions, and the inability to pass along or delays in passing along raw material cost increases to our customers; dependence of internal sales and earnings growth on business cycles affecting our customers and growth in the domestic and international coatings industry; market share loss to, and pricing or margin pressure from, larger competitors wit h greater financial resources; significant indebtedness that restricts the use of cash flow from operations for acquisitions and other investments; dependence on acquisitions for growth, and risks related to future acquisitions, including adverse changes in the results of acquired businesses, the assumption of unforeseen liabilities and disruptions resulting from the integration of acquisitions; risks and uncertainties associated with operations and achievement of profitable growth in developing markets, including Asia and Central and South America; loss of business with key customers; damage to our reputation and business resulting from product claims or recalls, litigation, customer perception and other matters; our ability to respond to technology changes and to protect our technology; changes in governmental regulation, including more stringent environmental, health and safety regulations; our reliance on the efforts of vendors, government agencies, utilities and other third parties to achieve adequate c ompliance and avoid disruption of our business; unusual weather conditions adversely affecting sales; 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; and civil unrest and the outbreak of war and other significant national and international events. We undertake no obligation to subsequently revise any forward-looking statement to reflect new information, events or circumstances after the date of such statement.
# # #
THE VALSPAR CORPORATION
COMPARATIVE CONSOLIDATED EARNINGS
For the Quarters Ended January 28, 2011 and January 29, 2010
| | First Quarter | |
(Dollars in thousands, except per share amounts) | | (Unaudited) | | (Unaudited) | |
| | 2011 | | 2010 | |
Net Sales | $ | 842,404 | $ | 672,363 | |
Cost of Sales | | 583,491 | | 455,372 | |
Gross Profit | | 258,913 | | 216,991 | |
Research and Development | | 27,824 | | 23,665 | |
Selling, General and Administrative | | 167,701 | | 133,437 | |
Income From Operations | | 63,388 | | 59,889 | |
Interest Expense | | 15,559 | | 14,385 | |
Other (Income) Expense, Net | | 564 | | (204) | |
Income Before Income Taxes | | 47,265 | | 45,708 | |
Income Taxes | | 13,838 | | 11,771 | |
Net Income | $ | 33,427 | $ | 33,937 | |
Average Number of Shares O/S - basic | | 96,859,667 | | 99,133,315 | |
Average Number of Shares O/S - diluted | | 99,600,414 | | 101,115,945 | |
Net Income per Common Share - basic | $ | 0.35 | $ | 0.34 | |
Net Income per Common Share - diluted | $ | 0.34 | $ | 0.34 | |
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”. Management discloses these measures because we believe the measures may assist investors in comparing our results of operations in the respective periods without regard to the effect on results of (i) after-tax Wattyl acquisition related charges in the 2011 period and (ii) after-tax restructuring charges in the 2010 period.
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:
| | First Quarter | |
| | 2011 | | 2010 | |
Net Income per Common Share - diluted | | $ | 0.34 | | $ | 0.34 | |
Wattyl Acquisition Related Charges | | | 0.05 | | | ― | |
Restructuring Charges | | | ― | | | 0.02 | |
Adjusted Net Income per Common Share - diluted | | $ | 0.39 | | $ | 0.36 | |
The following is a reconciliation of “Forecasted Net Income per Common Share - diluted” to our “Full Year Guidance” for the period presented.
| | | | Full Year
2011 |
Forecasted Net Income per Common Share - diluted | | | | $2.37 - $2.55 |
Wattyl Acquisition Related Charges | | | | $0.08- $0.10 |
Full Year Guidance for Adjusted Net Income per Common Share - diluted | | | | $2.45- $2.65 |
(Dollars in thousands) | | January 28,
2011 | | October 29,
2010 | | January 29,
2010 | |
Assets | | (Unaudited) | | | | (Unaudited) | |
Current Assets: | | | | | | | |
Cash and Cash Equivalents | $ | 168,293 | $ | 167,621 | $ | 129,636 | |
Restricted Cash | | 12,679 | | 12,574 | | ― | |
Accounts and Notes Receivable, Net | | 549,858 | | 628,589 | | 449,485 | |
Inventories | | 404,777 | | 349,149 | | 247,373 | |
Deferred Income Taxes | | 50,448 | | 49,069 | | 34,401 | |
Prepaid Expenses and Other | | 78,154 | | 77,920 | | 79,169 | |
Total Current Assets | | 1,264,209 | | 1,284,922 | | 940,064 | |
Goodwill | | 1,361,408 | | 1,355,818 | | 1,337,555 | |
Intangibles, Net | | 638,452 | | 637,390 | | 628,283 | |
Other Assets | | 15,645 | | 17,398 | | 4,251 | |
Long Term Deferred Income Taxes | | 4,703 | | 4,778 | | 5,425 | |
Property, Plant & Equipment, Net | | 567,375 | | 567,630 | | 459,428 | |
Total Assets | $ | 3,851,792 | $ | 3,867,936 | $ | 3,375,006 | |
| | | | | | | |
Liabilities and Stockholders’ Equity | | | | | | | |
Current Liabilities: | | | | | | | |
Notes Payable and Commercial Paper | $ | 166,544 | $ | 8,088 | $ | 6,278 | |
Trade Accounts Payable | | 425,757 | | 447,303 | | 285,983 | |
Income Taxes | | 27,639 | | 33,331 | | 10,641 | |
Other Accrued Liabilities | | 300,725 | | 396,129 | | 274,816 | |
Total Current Liabilities | | 920,665 | | 884,851 | | 577,718 | |
Long Term Debt, Net of Current Portion | | 949,795 | | 943,216 | | 873,278 | |
Deferred Income Taxes | | 257,322 | | 256,525 | | 239,766 | |
Other Long Term Liabilities | | 154,268 | | 152,979 | | 170,686 | |
Total Liabilities | | 2,282,050 | | 2,237,571 | | 1,861,448 | |
Stockholders’ Equity | | 1,569,742 | | 1,630,365 | | 1,513,558 | |
Total Liabilities and Stockholders’ Equity | $ | 3,851,792 | $ | 3,867,936 | $ | 3,375,006 | |
The Valspar Corporation
Other Financial Data
Dollars in thousands
| | Quarter 1 | |
| | 2011 | | 2010 | |
I. Comparison year over year | | | | | |
Gross Margin, as a percentage of net sales * | | | | | |
Gross Margin, reported | | 30.7% | | 32.3% | |
Gross Margin, adjusted for cost of restructuring and Wattyl acquisition related charges | | 31.7% | | 32.9% | |
| | | | | |
Operating Expense as a percentage of net sales * | | | | | |
Operating Expense, reported | | 23.2% | | 23.4% | |
| | | | | |
Operating Profit, as a percentage of net sales * | | | | | |
Operating Profit, reported | | 7.5% | | 8.9% | |
Operating Profit, adjusted for cost of restructuring and Wattyl acquisition related charges | | 8.5% | | 9.5% | |
| | | | | |
| | | | | |
| | Quarter 1 | |
II. Segment Data | | 2011 | | 2010 | |
Sales | | | | | |
Coatings | | 456,389 | | 391,321 | |
Paint | | 335,951 | | 233,413 | |
All Other less intersegment sales | | 50,064 | | 47,629 | |
Total | | 842,404 | | 672,363 | |
| | | | | |
Earnings Before Interest and Taxes (EBIT) * | | | | | |
Coatings | | 50,825 | | 42,955 | |
Paint | | 19,513 | | 27,832 | |
All Other | | (7,514 | ) | (10,694 | ) |
Total | | 62,824 | | 60,093 | |
| | | | | |
| | | | | |
Earnings Before Interest and Taxes (EBIT) *, adjusted for cost of restructuring and Wattyl acquisition related charges | | | | | |
Coatings | | 51,821 | | 45,511 | |
Paint | | 26,420 | | 29,097 | |
All Other | | (7,514 | ) | (10,514 | ) |
Total | | 70,727 | | 64,094 | |
* Certain amounts in prior years’ financial statements have been reclassified to conform with the 2010 presentation.
