Valspar Reports Fiscal 2013 First-Quarter Results

  Valspar Reports Fiscal 2013 First-Quarter Results

Business Wire

MINNEAPOLIS -- February 12, 2013

The Valspar Corporation (NYSE: VAL) today reported its results for the
first-quarter ended January 25, 2013. First-quarter sales totaled $875.2
million compared to $885.6 million in the first quarter of 2012. First-quarter
net income per share was $0.60 in 2013 compared to adjusted net income per
share of $0.62 in 2012, which excludes a $0.04 per share restructuring charge.
Net income for the first quarter of 2013 was $55.0 million. Net income for the
first quarter of 2012 was $55.8 million and reported earnings per share were
$0.58.

“Although we made substantial progress this quarter on a number of key
initiatives, international markets were weaker than anticipated,” said Gary E.
Hendrickson, chairman and chief executive officer. “We continued to invest in
our long term opportunities and remain confident we will achieve our new
business plans for the full year. However, weak demand in certain
international markets is expected to continue and thus we are adjusting our
full-year guidance to $3.60 to $3.80 to reflect these market conditions.”

Hendrickson 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 by visiting the Investor Relations section of Valspar’s website at
www.valsparglobal.com. 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, Tuesday, Feb. 12^th
through midnight, Tuesday, Feb. 26^th by dialing +1 800-475-6701 from within
the U.S. or +1 (320) 365-3844 from outside of the U.S., using access code
280279.

About The Valspar Corporation

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. For more information, visit
www.valsparglobal.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,” “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 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 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 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
COMPARATIVE CONSOLIDATED EARNINGS
For the Quarters Ended January 25, 2013 and January 27, 2012
(Dollars in thousands, except per share amounts)
                                                           
                                               First Quarter
                                             2013          2012
                                             (Unaudited)   (Unaudited)
Net Sales                                      $ 875,242      $ 885,647
Cost of Sales                                  580,891      592,331    
Gross Profit                                   294,351      293,316    
Research and Development                         30,783         26,893
Selling, General and Administrative            170,037      175,708    
Operating Expenses                             200,820      202,601    
Income (Loss) From Operations                  93,531       90,715     
Interest Expense                                 15,873         15,789
Other (Income) Expense, Net                    950          (522       )
Income (Loss) Before Income Taxes              76,708       75,448     
Income Taxes                                   21,679       19,666     
Net Income (Loss)                             $ 55,029      $ 55,782     
Average Number of Shares O/S - basic             89,477,591     92,861,129
Average Number of Shares O/S - diluted         92,397,428   95,485,354 
Net Income (Loss) per Common Share - basic     $ 0.62         $ 0.60
Net Income (Loss) per Common Share - diluted  $ 0.60        $ 0.58       
                                                                           

NON-GAAP FINANCIAL MEASURES
In the accompanying press release, we have reported non-GAAP financial
measures - "Adjusted net income per common share – diluted”. We disclose this
measure because we believe the measure may assist investors in comparing our
results of operations in the respective periods without regard to the effect
on results of restructuring charges.

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
                                                   2013    2012
Net Income (Loss) per Common Share - diluted     $ 0.60   $ 0.58
Restructuring Charges                              -        0.04
Adjusted Net Income per Common Share - diluted   $ 0.60   $ 0.62
                                                            

                             January 25,      October 26,     January 27,
                            2013             2012            2012
                            (Unaudited)      (Note)          (Unaudited)
Assets
Current Assets:
Cash and Cash Equivalents     $   248,642       $  253,327       $  305,712
Restricted Cash                   19,893           19,907           20,108
Accounts and Notes                585,539          681,099          596,752
Receivable, Net
Inventories                       425,590          360,427          380,944
Deferred Income Taxes             43,637           42,083           48,942
Prepaid Expenses and            89,956         92,334         74,759
Other
Total Current Assets            1,413,257      1,449,177      1,427,217
Goodwill                          1,075,692        1,056,669        1,056,008
Intangibles, Net                  551,131          550,106          552,792
Other Assets                      28,488           14,738           20,597
Long-Term Deferred Income         5,194            5,178            1,964
Taxes
Property, Plant &               556,905        550,968        545,193
Equipment, Net
Total Assets                 $   3,630,667    $  3,626,836    $  3,603,771
                                                                    
Liabilities and
Stockholders' Equity
Current Liabilities:
Short-term Debt               $   217,283       $  94,441        $  8,760
Current Portion of                39,737           44,090           200,000
Long-Term Debt
Trade Accounts Payable            470,187          502,967          447,437
Income Taxes                      15,277           4,612            9,006
Other Accrued Liabilities       298,669        380,662        309,450
Total Current Liabilities       1,041,153      1,026,772      974,653
Long Term Debt, Net of            1,012,563        1,012,578        1,066,763
Current Portion
Deferred Income Taxes             217,025          216,314          208,531
Other Long-Term                 155,094        147,649        140,295
Liabilities
Total Liabilities               2,425,835      2,403,313      2,390,242
Stockholders' Equity            1,204,832      1,223,523      1,213,529
Total Liabilities and        $   3,630,667    $  3,626,836    $  3,603,771
Stockholders' Equity
                                                                    
NOTE: The Balance Sheet at October 26, 2012 was derived from the audited
consolidated financial statements at that date.


THE VALSPAR CORPORATION
OTHER FINANCIAL DATA
For the Quarters Ended January 25, 2013 and January 27, 2012
(Dollars in thousands)
                                                                
                                                                   
                                                                   
                                                     First Quarter
                                                   2013         2012
                                                   (Unaudited)  (Unaudited)
I. Comparison year over year
Gross Profit, as a percentage of net sales(1)
Gross Profit, reported                                33.6    %     33.1    %
Gross Profit, adjusted(2)                             33.6    %     33.5    %
                                                                   
Operating Expense as a percentage of net sales(1)
Operating Expense, reported                            22.9    %     22.9    %
Operating Expense, adjusted(2)                        22.9    %     22.6    %
                                                                   
Income (Loss) from Operations, as a percentage of
net sales(1)
Income (Loss) from Operations, reported                10.7    %     10.2    %
Income (Loss) from Operations, adjusted(2)            10.7    %     10.8    %
                                                                   
                                                                   
                                                                   
                                                                   
                                                                   
                                                                   
                                                                   
                                                     First Quarter
                                                   2013         2012
                                                   (Unaudited)  (Unaudited)
II. Segment Data
Sales
Coatings                                             $ 497,616     $ 494,649
Paint                                                  329,079       339,557
All Other less intersegment sales                    48,547     51,441  
Total                                               $ 875,242   $ 885,647 
                                                                   
Earnings Before Interest and Taxes (EBIT) (1)
Coatings                                             $ 74,340      $ 73,872
Paint                                                  22,543        23,365
All Other                                            (4,302  )   (6,000  )
Total                                               $ 92,581    $ 91,237  
                                                                   
                                                                   
Earnings Before Interest and Taxes (EBIT)(1),
adjusted(2)
Coatings                                             $ 74,340      $ 74,261
Paint                                                  22,543        27,391
All Other                                            (4,302  )   (5,318  )
Total                                               $ 92,581    $ 96,334  


(1) Certain amounts in prior year financial statements have been reclassified
    to conform with the 2013 presentation.
(2) Excludes restructuring charges in the first quarter of 2012.

Contact:

The Valspar Corporation
Investor Contact:
Tyler Treat, 612-851-7358
ttreat@valspar.com
or
Media Contact:
Mark Goldman, 612-851-7802
news@valspar.com
 
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