Valspar 8K Reports Fiscal 2015 Second Quarter Results | SEC 27 May 15

Exhibit 99.1

	News Release

Valspar Reports Fiscal 2015 Second Quarter Results

· Diluted EPS (as adjusted) increased 4 percent to $1.11

· Net sales decreased 2 percent in local currency (down 7 percent as reported)

· Coatings segment net sales up 5 percent in local currency

· Paints segment net sales decreased 12 percent in local currency, driven by the expected volume decline in North America

· Fiscal 2015 annual diluted EPS (as adjusted) guidance reaffirmed at $4.45 to $4.65

Minneapolis – (BUSINESS WIRE) – May 27, 2015 – The Valspar Corporation (NYSE: VAL) today reported fiscal second quarter 2015 net sales of $1.08 billion, a decrease of 7 percent over the prior year. Net sales in local currency decreased 2 percent. Total volumes decreased 3 percent, driven by the expected decline in the Paints segment. Reported net income and earnings per diluted share for the current fiscal year include nonrecurring items, which are detailed in the “Reconciliation of Non-GAAP Financial Measures” included in this release. Second quarter 2015 adjusted net income and earnings per diluted share, excluding these nonrecurring items, were $92 million and $1.11, respectively. Second quarter 2014 adjusted net income and earnings per diluted share were $93 million and $1.07, respectively. The effects of foreign currency translation negatively impacted net sales by approximately $55 million and EPS (as adjusted) by $0.04 in the second quarter of 2015.

“Our results for second quarter were in line with our expectations. EPS (as adjusted) grew four percent, despite the negative impact of currency translation and the expected volume decline in our Paints segment in North America,” said Gary E. Hendrickson, chairman and chief executive officer. “We saw continued volume and profit growth from our Coatings segment, driven by new business wins and benefits from productivity and cost savings. In the Paints segment, volume and sales were up in local currency in all of our international regions. ”

“Based on our solid first half results and our outlook for the rest of the year, we are reiterating our fiscal 2015 EPS (as adjusted) guidance.” Hendrickson added.

Fiscal Second Quarter 2015 Segment Results

Net sales in the Coatings segment decreased 1 percent to $615 million in the fiscal second quarter of 2015. Net sales in local currency increased 5 percent, and volumes were up 3 percent. Volume increased significantly in the General Industrial and the Coil product lines and declined slightly in the Packaging and Wood product lines. Coatings segment adjusted earnings before interest and taxes (EBIT) of $110 million (or 17.8% of net sales) increased 9 percent as a result of benefits from productivity initiatives, cost/price and increased volume.

Net sales in the Paints segment decreased 15 percent to $403 million in the fiscal second quarter of 2015. Net sales in local currency and volumes both decreased 12 percent. Volume growth in Europe, Asia and Australia regions was more than offset by a decline in North America. The volume decline in North America was driven by the previously disclosed product line adjustment at a significant customer and from difficult prior year comparisons when the company launched several significant new products in the home improvement and hardware channels. Paints segment adjusted EBIT of $47 million (or 11.7% of net sales) was down 17 percent from the prior year driven by the volume decline in North America.

Fiscal 2015 Guidance

The company is reaffirming its fiscal 2015 annual diluted EPS (as adjusted) guidance of $4.45 to $4.65. Based on the company’s updated estimate of foreign currency translation for the year, the company is updating its fiscal 2015 annual sales guidance to reflect a sales decline in the “low single-digits” from fiscal 2014, compared to the previous guidance of “approximately flat sales”. Excluding the expected impact of currency translation, fiscal 2015 annual sales are expected to increase “low single-digits”. The company’s fiscal 2015 guidance does not include the impact of the pending acquisition of the businesses from Quest Specialty Chemicals, as described below.

Dividends and Share Repurchases

During the quarter, the company paid a quarterly dividend of $0.30 per common share outstanding, or $24.4 million. Valspar is a member of the S&P High Yield Dividend Aristocrats®, which is comprised of companies increasing dividends every year for at least 20 consecutive years. Also during the quarter, the company repurchased 1.1 million shares of its stock, for $92.5 million.

Acquisition of the Performance Coating Businesses from Quest Specialty Chemicals

The company announced today that it has reached a definitive agreement to acquire the performance coatings businesses of Quest Specialty Chemicals, which includes products serving the automotive refinish and industrial end markets. The transaction, which is expected to close in the company’s third fiscal quarter, is subject to customary closing conditions. Financial terms were not disclosed. Please refer to the separate press release issued today for more details.

An earnings conference call is scheduled for 11:00 a.m. Eastern Time (10:00 a.m. Central Time) today and will be webcast and accessible from the Investor Relations section of Valspar’s website athttp://investors.valspar.com.

Valspar: If it matters, we’re on it.®
Valspar is a global leader in the coatings industry providing customers with innovative, high-quality products and value-added services. Our 10,500 employees worldwide deliver advanced coatings solutions with best-in-class appearance, performance, protection and sustainability to customers in more than 100 countries. Valspar offers a broad range of superior coatings products for the consumer market, and highly-engineered solutions for the construction, industrial, packaging and transportation markets. Founded in 1806, Valspar is headquartered in Minneapolis. Valspar’s reported net sales in fiscal 2014 were $4.5 billion and its shares are traded on the New York Stock Exchange (symbol:VAL). For more information, visitwww.valspar.com and follow @valsparCo on Twitter.

# # #

Investor Contact:

Bill Seymour

612.656.1328

william.seymour@valspar.com

Media Contact:

Kimberly A. Welch

612.656.1347

kim.welch@valspar.com

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, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. 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 forward-looking statement. We may identify forward-looking statements with words and phrases such as “expects,” “projects,” “estimates,” “anticipates,” “believes,” “could,” “may,” “will,” “plans to,” “intends,” “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 with 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 operating in foreign markets, including achievement of profitable growth in developing markets; impact of fluctuations in foreign currency exchange rates on our financial results; 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; possible interruption, failure or compromise of the information systems we use to operate our business; 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 compliance 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, except as required by law.

THE VALSPAR CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)

For the Three and Six Months Ended May 1, 2015 and April 25, 2014

(Dollars in thousands, except per share amounts)

	Three Months Ended				Six Months Ended
	May 1,		April 25,		May 1,		April 25,
	2015		2014		2015		2014

Net Sales¹	$	1,079,289	$	1,155,826	$	2,093,958	$	2,134,943
Cost of Sales¹		684,856		766,799		1,361,384		1,420,757
Restructuring Charges - Cost of Sales		1,230		8,269		6,079		14,375
Gross Profit		393,203		380,758		726,495		699,811
Research and Development		32,037		35,585		64,639		66,143
Selling, General and Administrative		204,237		201,512		393,878		388,747
Restructuring Charges		1,020		587		2,714		6,287
Operating Expenses		237,294		237,684		461,231		461,177
Gain on Sale of Certain Assets		—		—		48,001		—
Income From Operations		155,909		143,074		313,265		238,634
Interest Expense		20,241		15,756		36,556		31,688
Other (Income) Expense, Net		1,694		318		729		689
Income Before Income Taxes		133,974		127,000		275,980		206,257
Income Taxes		43,660		41,041		81,692		66,745
Net Income	$	90,314	$	85,959	$	194,288	$	139,512


Average Number of Shares O/S - basic		80,826,518		84,161,922		81,275,572		84,654,825
Average Number of Shares O/S - diluted		82,871,129		86,523,938		83,366,627		87,081,533


Net Income per Common Share - basic	$	1.12	$	1.02	$	2.39	$	1.65
Net Income per Common Share - diluted	$	1.09	$	0.99	$	2.33	$	1.60

¹ Certain amounts in the 2014 financial statements have been reclassified to conform to the 2015 presentation. In the first quarter of 2015, we changed our policy and now classify freight costs on shipments to customers as cost of sales. Previously these costs were recorded as a deduction from net sales. Reclassifications had no effect on net income (loss), cash flows or stockholders’ equity as previously reported.

THE VALSPAR CORPORATION

SEGMENT INFORMATION (UNAUDITED AND SUBJECT TO RECLASSIFICATION)

For the Three and Six Months Ended May 1, 2015 and April 25, 2014

(Dollars in thousands)

	Three Months Ended						Six Months Ended
	May 1,			April 25,			May 1,			April 25,
	2015			2014			2015			2014

Coatings Segment
Net Sales¹	$	614,821		$	621,092		$	1,217,878		$	1,186,478
Earnings Before Interest and Taxes (EBIT)		108,022			98,047			243,631			168,022

Key Metrics (GAAP):
Sales Growth¹		(1.0%	)		12.6%			2.6%			11.6%
EBIT, % of Net Sales¹		17.6%			15.8%			20.0%			14.2%

Key Metrics (non-GAAP)²:
Adjusted EBIT	$	109,578		$	100,686		$	200,539		$	179,281
Adjusted EBIT, % of Net Sales¹		17.8%			16.2%			16.5%			15.1%

Paints Segment
Net Sales¹	$	402,979		$	476,594		$	765,502		$	842,381
Earnings Before Interest and Taxes (EBIT)		46,571			50,423			71,900			81,420

Key Metrics (GAAP):
Sales Growth¹		(15.4%	)		7.7%			(9.1%	)		8.5%
EBIT, % of Net Sales¹		11.6%			10.6%			9.4%			9.7%

Key Metrics (non-GAAP)²:
Adjusted EBIT	$	47,274		$	56,759		$	75,793		$	90,575
Adjusted EBIT, % of Net Sales¹		11.7%			11.9%			9.9%			10.8%

Other and Administrative
Net Sales¹	$	61,489		$	58,140		$	110,578		$	106,084
Earnings Before Interest and Taxes (EBIT)		(378	)		(5,714	)		(2,995	)		(11,497	)

Key Metrics (GAAP):
Sales Growth¹		5.8%			(2.6%	)		4.2%			(3.5%	)
EBIT, % of Net Sales¹		(0.6%	)		(9.8%	)		(2.7%	)		(10.8%	)

Key Metrics (non-GAAP)²:
Adjusted EBIT	$	(387	)	$	(5,833	)	$	(3,004	)	$	(11,249	)
Adjusted EBIT, % of Net Sales¹		(0.6%	)		(10.0%	)		(2.7%	)		(10.6%	)

² The information on this page includes non-GAAP financial measures. Please refer to the "RECONCILIATION OF NON-GAAP FINANCIAL MEASURES" included in this release for detailed information.

THE VALSPAR CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)

As of May 1, 2015 and April 25, 2014

(Dollars in thousands)

	May 1, 2015		April 25, 2014

Assets
Current Assets:
Cash and Cash Equivalents	$	146,279	$	116,503
Restricted Cash		1,532		2,966
Accounts and Notes Receivable, Net		823,014		852,678
Inventories		494,355		497,579
Deferred Income Taxes		28,621		40,754
Prepaid Expenses and Other		105,333		112,018
Total Current Assets		1,599,134		1,622,498
Goodwill		1,081,255		1,144,042
Intangibles, Net		575,939		603,978
Other Assets		108,881		76,527
Long-Term Deferred Income Taxes		6,570		7,021
Property, Plant & Equipment, Net		607,081		638,096
Total Assets	$	3,978,860	$	4,092,162

Liabilities and Stockholders' Equity
Current Liabilities:
Short-term Debt	$	273,840	$	556,672
Current Portion of Long-Term Debt		162,502		—
Trade Accounts Payable		550,361		606,614
Income Taxes		47,829		33,810
Other Accrued Liabilities		367,475		382,000
Total Current Liabilities		1,402,007		1,579,096
Long Term Debt, Net of Current Portion		1,350,005		1,092,419
Deferred Income Taxes		215,789		238,664
Other Long-Term Liabilities		139,693		134,117
Total Liabilities		3,107,494		3,044,296
Stockholders' Equity		871,366		1,047,866
Total Liabilities and Stockholders' Equity	$	3,978,860	$	4,092,162

THE VALSPAR CORPORATION

SELECTED INFORMATION (UNAUDITED AND SUBJECT TO RECLASSIFICATION)

For the Three and Six Months Ended May 1, 2015 and April 25, 2014

(Dollars in thousands)

	Three Months Ended				Six Months Ended
	May 1,		April 25,		May 1,		April 25,
	2015		2014		2015		2014

Depreciation and Amortization	$	21,591	$	24,492	$	45,492	$	52,634

Capital Expenditures		23,360		29,630		41,199		50,621

Dividends Paid		24,377		21,954		48,951		44,180

THE VALSPAR CORPORATION

RECONCILIATION OF NON-GAAP FINANCIAL MEASURES (UNAUDITED)

For the Three Months Ended May 1, 2015 and April 25, 2014

(Dollars in thousands, except per share amounts)

The following information provides reconciliations of non-GAAP financial measures from operations presented in the accompanying news release to the most comparable financial measures calculated and presented in accordance with accounting principles generally accepted in the U.S. (“GAAP”). The company has provided non-GAAP financial measures, which are not calculated or presented in accordance with GAAP, as information supplemental and in addition to the financial measures presented in the accompanying news release that are calculated and presented in accordance with GAAP. Such non-GAAP financial measures should not be considered superior to, as a substitute for, or as an alternative to, and should be considered in conjunction with, the GAAP financial measures presented in the news release. The non-GAAP financial measures in the accompanying news release may differ from similar measures used by other companies. The following tables reconcile gross profit, operating expense, earnings before interest and taxes (EBIT), net income, net income per common share - diluted, and diluted earnings per share (EPS) guidance for the periods presented (GAAP financial measures) to adjusted gross profit, adjusted operating expense, adjusted earnings before interest and taxes (EBIT), adjusted net income, adjusted net income per common share - diluted, and adjusted diluted earnings per share (EPS) guidance (non-GAAP financial measures) for the periods presented.

	Three Months Ended May 1, 2015						Three Months Ended April 25, 2014¹
	Dollars			% of Net Sales			Dollars			% of Net Sales

Coatings Segment
Earnings Before Interest and Taxes (EBIT)	$	108,022			17.6	%	$	98,047			15.8	%
Restructuring Charges - Cost of Sales		561			0.1	%		2,468			0.4	%
Restructuring Charges - Operating Expense		995			0.2	%		171			0.0	%
Adjusted EBIT	$	109,578			17.8	%	$	100,686			16.2	%

Paints Segment
EBIT	$	46,571			11.6	%	$	50,423			10.6	%
Restructuring Charges - Cost of Sales		669			0.2	%		5,828			1.2	%
Restructuring Charges - Operating Expense		34			0.0	%		508			0.1	%
Adjusted EBIT	$	47,274			11.7	%	$	56,759			11.9	%

Other and Administrative
EBIT	$	(378	)		(0.6	%)	$	(5,714	)		(9.8	%)
Restructuring Charges - Cost of Sales		—			0.0	%		(27	)		(0.0	%)
Restructuring Charges - Operating Expense		(9	)		(0.0	%)		(92	)		(0.2	%)
Adjusted EBIT	$	(387	)		(0.6	%)	$	(5,833	)		(10.0	%)

Total
Gross Profit	$	393,203			36.4	%	$	380,758			32.9	%
Restructuring Charges - Cost of Sales		1,230			0.1	%		8,269			0.7	%
Adjusted Gross Profit	$	394,433			36.5	%	$	389,027			33.7	%

Operating Expenses	$	237,294			22.0	%	$	237,684			20.6	%
Restructuring Charges - Operating Expense		(1,020	)		(0.1	%)		(587	)		(0.1	%)
Adjusted Operating Expenses	$	236,274			21.9	%	$	237,097			20.5	%

EBIT	$	154,215			14.3	%	$	142,756			12.4	%
Restructuring Charges - Total		2,250			0.2	%		8,856			0.8	%
Adjusted EBIT	$	156,465			14.5	%	$	151,612			13.1	%

Net Income	$	90,314					$	85,959
After Tax Restructuring Charges - Total		1,849						6,661
Adjusted Net Income	$	92,163					$	92,620

Net Income per Common Share - diluted	$	1.09					$	0.99
After Tax Restructuring Charges - Total		0.02						0.08
Adjusted Net Income per Common Share - diluted	$	1.11					$	1.07

THE VALSPAR CORPORATION

RECONCILIATION OF NON-GAAP FINANCIAL MEASURES (UNAUDITED)

For the Six Months Ended May 1, 2015 and April 25, 2014

(Dollars in thousands, except per share amounts)

	Six Months Ended May 1, 2015						Six Months Ended April 25, 2014¹
	Dollars			% of Net Sales			Dollars			% of Net Sales

Coatings Segment
Earnings Before Interest and Taxes (EBIT)	$	243,631			20.0	%	$	168,022			14.2	%
Restructuring Charges - Cost of Sales		2,951			0.2	%		6,733			0.6	%
Restructuring Charges - Operating Expense		1,958			0.2	%		4,526			0.4	%
Gain on Sale of Certain Assets		(48,001	)		(3.9	%)		—			0.0	%
Adjusted EBIT	$	200,539			16.5	%	$	179,281			15.1	%

Paints Segment
EBIT	$	71,900			9.4	%	$	81,420			9.7	%
Restructuring Charges - Cost of Sales		3,128			0.4	%		7,603			0.9	%
Restructuring Charges - Operating Expense		765			0.1	%		1,552			0.2	%
Adjusted EBIT	$	75,793			9.9	%	$	90,575			10.8	%

Other and Administrative
EBIT	$	(2,995	)		(2.7	%)	$	(11,497	)		(10.8	%)
Restructuring Charges - Cost of Sales		—			0.0	%		39			0.0	%
Restructuring Charges - Operating Expense		(9	)		(0.0	%)		209			0.2	%
Adjusted EBIT	$	(3,004	)		(2.7	%)	$	(11,249	)		(10.6	%)

Total
Gross Profit	$	726,495			34.7	%	$	699,811			32.8	%
Restructuring Charges - Cost of Sales		6,079			0.3	%		14,375			0.7	%
Adjusted Gross Profit	$	732,574			35.0	%	$	714,186			33.5	%

Operating Expenses	$	461,231			22.0	%	$	461,177			21.6	%
Restructuring Charges - Operating Expense		(2,714	)		(0.1	%)		(6,287	)		(0.3	%)
Adjusted Operating Expenses	$	458,517			21.9	%	$	454,890			21.3	%

EBIT	$	312,536			14.9	%	$	237,945			11.1	%
Restructuring Charges - Total		8,793			0.4	%		20,662			1.0	%
Gain on Sale of Certain Assets		(48,001	)		(2.3	%)		—			0.0	%
Adjusted EBIT	$	273,328			13.1	%	$	258,607			12.1	%

Net Income	$	194,288					$	139,512
After Tax Restructuring Charges - Total		5,967						14,242
After Tax Gain on Sale of Certain Assets		(37,216	)					—
Adjusted Net Income	$	163,039					$	153,754

Net Income per Common Share - diluted	$	2.33					$	1.60
Restructuring Charges - Total		0.07						0.17
After Tax Gain on Sale of Certain Assets		(0.44	)					—
Adjusted Net Income per Common Share - diluted	$	1.96					$	1.77

Reconciliation of Fiscal 2015 Annual Adjusted Diluted EPS Guidance
Diluted EPS Guidance							$4.79 - $4.94
After Tax Restructuring Charges							0.10 - 0.15
After Tax Gain on Sale of Certain Assets							(0.44)
Adjusted Diluted EPS Guidance							$4.45 - $4.65

Valspar Inactive 8-KValspar Reports Fiscal 2015 Second Quarter Results