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Valspar Logs Growth for 2015

Tuesday, December 1, 2015

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Valspar Corp. has posted another record year of earnings despite facing “difficult comparisons to the exceptional performance in 2014, a strengthening U.S. dollar and a product line adjustment at a significant customer,” according to chairman and CEO Gary H. Hendrickson.

The Minneapolis-based parent company of consumer brands Devine Color, Cabot Stains and PlastiKote saw fourth-quarter net Paints sales decrease 7 percent to $452 million, the company reported Nov. 24.

Net sales for the company’s Coatings segment, which includes general industrial coatings, coil and wood coatings, decreased 11 percent to $638 million.

Valspar
Photos: Valspar

“Looking ahead to fiscal 2016, we expect sales to increase in the mid-single digits and adjusted EPS growth of 8 to 13 percent, excluding the impact of foreign currency,” according to Gary Hendrickson, Valspar's CEO and chairman. 

Both segments were negatively hit by the effects of foreign currency translation.

Overall, the company’s quarterly profit was $1.15 billion, a 9 percent drop from the same period a year earlier, the company reported.

Quarterly, Yearly Overviews

The company reported these fourth-quarter highlights:

  • Net sales reached $1.15 billion, an increase of 1 percent over the prior year (excludes impact of foreign currency translation and the 53rd week in the fourth quarter in fiscal 2014); and
  • Adjusted net income and earnings per diluted share were $109 million and $1.35, respectively.

For fiscal year 2015, the company reported:

  • Net sales were $4.4 billion, up 1 percent over the prior year (excludes impact of foreign currency translation and the 53rd week in the fourth quarter in fiscal 2014);
  • Adjusted net income and earnings per diluted share were $381 million and $4.62, respectively;
  • Coatings segment volume increased 3 percent; and
  • Paints segment volume declined 4 percent.

‘Positive Momentum’

“2015 was another year of record earnings for Valspar,” said Hendrickson. “Adjusted EBIT grew 4 percent and EPS increased 6 percent for the year."

He added: “Our performance in 2015 demonstrates the strength of Valspar’s diverse portfolio of businesses and operating model. We’re executing well, by winning new business and achieving significant productivity.”

In the fourth quarter, Hendrickson noted that the Coatings segment “continued its positive momentum, with new business wins in all product lines.”

“In the Paints segment, international volume increased and sell-through trends improved in North America. Consolidated EBIT margin (as adjusted) increased 150 basis points in the fourth quarter, driven by strong commercial execution and significant productivity initiatives," he said.

Paints Segment Results

The company’s Paints segment saw fourth-quarter adjusted earnings before interest and taxes (EBIT) decrease 10 percent to $63 million due to lower sales, partially offset by positive benefits from productivity initiatives and the Quest acquisition.

For the year, segment net sales decreased 8 percent to $1.7 billion.

Valspar

Net sales in the company's Paints segment decreased 7 percent to $452 million in the fiscal fourth quarter of 2015.

This includes effects of foreign currency translation that negatively impacted net sales by 4 percent, the estimated impact of the extra week in fiscal fourth quarter 2014 that reduced net sales by 1 percent and acquisitions added 4 percent to net sales in the year, Valspar reported.

Adjusted EBIT for the year decreased by 7 percent to $191 million.

Coatings Segment Results

Net sales in the coatings segment decreased 11 percent to $638 million in the fourth quarter of 2015. This includes the effects of foreign currency translation that negatively impacted net sales by 7 percent and the estimated impact of the extra week in fiscal fourth quarter 2014 that reduced net sales by 3 percent in the quarter, Valspar said.

Coatings segment adjusted EBIT for the fourth quarter increased 7 percent to $125 million, driven by benefits from productivity initiatives and improvements in cost/price, partially offset by the impact of currency translation.

Valspar

Net sales in the coatings segment decreased 11 percent to $638 million in the fourth quarter of 2015.

For the year, coatings segment sales dipped 3 percent to $2.50 billion.

Coatings segment adjusted EBIT for the year increased 6 percent to $445 million.

Growth Outlook

For the new fiscal year, Valspar forecast per-share earnings of $4.80 to $5.00 and total sales growth in the “mid-single digits.”

   

Tagged categories: Architectural coatings; Coating Business; Coatings manufacturers; Earnings reports; Finance; Paint and Coating Sales; Valspar

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