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Valspar Reports First-Quarter Results

Company Raises Fiscal 2012 Guidance

MINNEAPOLIS--(BUSINESS WIRE)--Feb. 14, 2012-- The Valspar Corporation (NYSE:VAL) today reported its results for the first-quarter ended January 27, 2012.

First-quarter sales totaled $885.6 million, a 5.1 percent increase from the first quarter of 2011. First-quarter adjusted net income per share increased to $0.62 in 2012, a 59 percent increase from $0.39 in 2011. First-quarter adjusted net income per share in 2012 excludes a $0.04 per share restructuring charge. First-quarter adjusted net income per share in 2011 excludes $0.05 per share in acquisition-related charges. Net income for the first quarter of 2012 was $55.8 million and reported earnings per share were $0.58. Net income for the first quarter of 2011 was $33.4 million and reported earnings per share were $0.34.

“We are pleased to report strong earnings for the quarter, which were the result of excellent execution and generally in line with our expectations. We continue to make progress in restoring our operating margins through pricing, productivity and cost management,” said Gary E. Hendrickson, president and chief executive officer. “In the quarter, we strengthened our balance sheet by issuing a $400 million bond at attractive rates. Despite higher interest expense and challenging global markets, we are raising our full year earnings guidance to $2.92-$3.12.”

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 at Valspar’s website at www.valsparcorporate.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 235963.

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.

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.

For the Quarters Ended January 27, 2012 and January 28, 2011
First Quarter
(Dollars in thousands, except per share amounts)       (Unaudited)       (Unaudited)
                2012   2011
Net Sales $ 885,647 $ 842,404
Cost of Sales       592,331       583,491
Gross Profit                 293,316       258,913
Research and Development 26,893 27,824
Selling, General and Administrative       175,708       167,701
Operating Expenses                 202,601       195,525
Income (Loss) From Operations 90,715 63,388
Interest Expense 15,789 15,559
Other (Income) Expense, Net       (522 )     564
Income (Loss) Before Income Taxes 75,448 47,265
Income Taxes                 19,666       13,838
Net Income (Loss)               $ 55,782     $ 33,427
Average Number of Shares O/S - basic 92,861,129 96,859,667
Average Number of Shares O/S - diluted       95,485,354       99,600,414
Net Income (Loss) per Common Share - basic $ 0.60 $ 0.35
Net Income (Loss) per Common Share - diluted     $ 0.58     $ 0.34

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 restructuring charges and (ii) after-tax acquisition-related charges in the 2011 period.


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
2012 2011
Net Income per Common Share - diluted $ 0.58 $ 0.34
Restructuring Charges 0.04 -
Acquisition-related Charges - 0.05
Adjusted Net Income per Common Share - diluted $ 0.62 $ 0.39

The following is a reconciliation of "Forecasted Net Income per Common Share - diluted" to our "Full Year
Guidance" for the period presented.

Full Year
Forecasted Net Income per Common Share - diluted $2.83 - $3.03
Restructuring Charges $0.09
Full Year Guidance for Adjusted Net Income per Common Share - diluted $2.92 - $3.12


January 27, October 28, January 28,
(Dollars in thousands)         2012   2011     2011
Assets (Unaudited) (Unaudited)
Current Assets:
Cash and Cash Equivalents $ 305,712 $ 178,167 $ 168,293
Restricted Cash 20,108 20,378 12,679
Accounts and Notes Receivable, Net 596,752 664,855 549,858
Inventories 380,944 336,750 404,777
Deferred Income Taxes 48,942 50,685 50,448
Prepaid Expenses and Other           74,759     74,302       78,154
Total Current Assets           1,427,217     1,325,137       1,264,209
Goodwill 1,056,008 1,058,006 1,361,408
Intangibles, Net 552,792 553,286 638,452
Other Assets 20,597 13,560 15,645
Long Term Deferred Income Taxes 1,964 1,909 4,703
Property, Plant & Equipment, Net           545,193     548,253       567,375
Total Assets         $ 3,603,771   $ 3,500,151     $ 3,851,792
Liabilities and Stockholders' Equity
Current Liabilities:
Short-term Debt $ 8,760 $ 169,516 $ 166,544
Current Portion of Long-Term Debt 200,000 207,803 -
Trade Accounts Payable 447,437 463,580 425,757
Income Taxes 9,006 17,684 27,639
Other Accrued Liabilities           309,450     401,350       300,725
Total Current Liabilities           974,653     1,259,933       920,665
Long Term Debt, Net of Current Portion 1,066,763 679,805 949,795
Deferred Income Taxes 208,531 214,920 257,322
Other Long Term Liabilities           140,295     132,943       154,268
Total Liabilities           2,390,242     2,287,601       2,282,050
Stockholders' Equity           1,213,529     1,212,550       1,569,742
Total Liabilities and Stockholders' Equity   $ 3,603,771   $ 3,500,151     $ 3,851,792
The Valspar Corporation
Other Financial Data
Dollars in thousands
Quarter 1



I. Comparison year over year
Gross Profit, as a percentage of net sales (1)
Gross Profit, reported 33.1 % 30.7 %
Gross Profit, adjusted (2) 33.5 % 31.7 %
Operating Expense as a percentage of net sales (1)
Operating Expense, reported 22.9 % 23.2 %
Operating Expense, adjusted (3) 22.6 % 23.2 %
Operating Profit (Loss), as a percentage of net sales (1)
Operating Profit, reported 10.2 % 7.5 %
Operating Profit, adjusted (2) 10.8 % 8.5 %
Quarter 1
II. Segment Data



Coatings $ 494,649 $ 456,389
Paint 339,557 335,951
All Other less intersegment sales   51,441     50,064  
Total $ 885,647   $ 842,404  
Earnings Before Interest and Taxes (EBIT) (1)
Coatings $ 73,872 $ 50,825
Paint 23,365 19,513
All Other   (6,000 )   (7,514 )
Total $ 91,237   $ 62,824  
Earnings Before Interest and Taxes (EBIT) (1), adjusted (2)
Coatings $ 74,261 $ 51,821
Paint 27,391 26,420
All Other   (5,318 )   (7,514 )
Total $ 96,334   $ 70,727  
(1) Certain amounts in prior year financial statements have been reclassified to conform with the 2012 presentation.
(2) Excludes restructuring charges in both periods and acquisition-related charges in the 2011 period.
(3) Excludes restructuring charges in the 2012 period.

Source: The Valspar Corporation

The Valspar Corporation
Tyler Treat, 612-851-7358

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