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Valspar Reports Q3, Merger Costs

Thursday, September 8, 2016

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Foreign currency translation nicked earnings for Valspar Corp.’s third quarter and overall volumes grew 2 percent, as the company prepares for the proposed merger with The Sherwin-Williams Company, Valspar announced Wednesday (Sept. 7).

On the paint side, the quarter reflected growth in international regions. On the coatings side, volume growth was driven by strong performance by the company’s coil and wood product lines.

Fluropon Pure
Valspar

The company recently added to its Fluropon line of coil and extrusion coatings.

Overall, Valspar reported third-quarter 2016 net sales of $1.14 billion, down slightly from $1.15 billion reported in the same quarter last year, and an 18 percent increase in Earnings Per Share (EPS), as adjusted, to $1.57.

Chairman and CEO Gary E. Hendrickson said the results highlighted “volume growth, new business wins across the portfolio and effective cost management.”

Preparing to Merge

In March, the Minneapolis-based company announced it had agreed to an acquisition by Cleveland-based paint manufacturer Sherwin-Williams for approximately $11.3 billion. Valspar’s shareholders approved the deal in late June. The companies anticipate a close by the end of the first quarter next year, pending regulatory approvals. 

Valspar said it spent $4.6 million on proposed merger-related costs, including employee-related expenses, professional services, and regulatory fees, in its third quarter.

By segment, results for the third quarter were reported as follows.

Coatings

Valspar’s coatings segment showed a 1.4 percent decrease in net sales to $631 million in the third quarter. Foreign currency translation negatively impacted net sales by 3 percent; acquisitions added 1 percent to net sales.

Volumes were up 1 percent for the segment.

valspar paints
Scott Lewis via Flickr

The company's paints segment volume increased 3 percent for the third quarter of 2016.

Adjusted Earnings Before Interest and Tax (EBIT) for the segment increased 6 percent to $127 million, primarily driven by benefits from productivity initiatives, according to the company.

Valspar expanded its coatings footprint in Europe this year with the purchase of ISVA Vernici, a Turin, Italy-based coil coatings manufacturer.

Paints

Net sales in the paints segment increased by 0.4 percent to $445.4 million compared to the prior year. Negative currency translation impacted net sales by 2 percent. Acquisitions added 4 percent to net sales in the quarter.

Volume increased 3 percent in the third quarter of 2016.

Paints segment adjusted EBIT of $68 million increased 30 percent, driven by the benefits from productivity initiatives and the impact of its 2015 acquisition of the performance coatings business of Quest Specialty Chemicals.

The company said it paid a quarterly dividend of $0.33 per common share outstanding, or $26 million, in the quarter.

   

Tagged categories: Acquisitions; Business matters; Earnings reports; Finance; Mergers; Sherwin-Williams; Valspar

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