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Valspar Reports First-Quarter Results
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Company Reaffirms FY 2011 Guidance

MINNEAPOLIS, Feb 14, 2011 (BUSINESS WIRE) -- The Valspar Corporation (NYSE: VAL) today reported its results for the first-quarter ended January 28, 2011.

First-quarter sales totaled $842.4 million, a 25.3 percent increase from the first quarter of 2010. First-quarter adjusted net income per share increased to $0.39 in 2011 from $0.36 in 2010. First-quarter adjusted net income per share in 2011 excludes $0.05 per share in Wattyl acquisition-related charges. First-quarter adjusted net income per share in 2010 excludes a $0.02 per share charge related to restructuring actions. Net income for the first quarter was $33.4 million in 2011 and $33.9 million in 2010 and first-quarter reported earnings per share were $0.34 for both years.

"Results for the quarter were in line with our expectations," said William L. Mansfield, Valspar chairman and chief executive officer. "Our Australian paints acquisition and the continued success of our pricing and new business efforts drove our double-digit top line growth. Looking ahead, we remain focused on addressing continuing upward pressure on raw material costs through pricing and productivity. We continue to expect fiscal year 2011 adjusted net income per share in the range of $2.45 to $2.65."

Mansfield, Gary Hendrickson, president and chief operating officer, 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.valsparglobal.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 191625.

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 and Section 21E of the Securities Exchange Act of 1934. 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.

For the Quarters Ended January 28, 2011 and January 29, 2010
First Quarter
(Dollars in thousands, except per share amounts) (Unaudited) (Unaudited)
2011 2010
Net Sales $ 842,404 $ 672,363
Cost of Sales 583,491 455,372
Gross Profit 258,913 216,991
Research and Development 27,824 23,665
Selling, General and Administrative 167,701 133,437
Income From Operations 63,388 59,889
Interest Expense 15,559 14,385
Other (Income) Expense, Net 564 (204 )
Income Before Income Taxes 47,265 45,708
Income Taxes 13,838 11,771
Net Income $ 33,427 $ 33,937
Average Number of Shares O/S - basic 96,859,667 99,133,315
Average Number of Shares O/S - diluted 99,600,414 101,115,945
Net Income per Common Share - basic $ 0.35 $ 0.34
Net Income per Common Share - diluted $ 0.34 $ 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 Wattyl acquisition related charges in the 2011 period and (ii) after-tax restructuring charges in the 2010 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
2011 2010
Net Income per Common Share - diluted $ 0.34 $ 0.34
Wattyl Acquisition Related Charges 0.05 -
Restructuring Charges - 0.02
Adjusted Net Income per Common Share - diluted $ 0.39 $ 0.36

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 $2.37 - $2.55
Wattyl Acquisition Related Charges

$0.08 - $0.10

Full Year Guidance for Adjusted Net Income per Common Share - diluted

$2.45 - $2.65

January 28, October 29, January 29,
(Dollars in thousands) 2011 2010 2010
Assets (Unaudited) (Unaudited)
Current Assets:
Cash and Cash Equivalents $ 168,293 $ 167,621 $ 129,636
Restricted Cash 12,679 12,574 -
Accounts and Notes Receivable, Net 549,858 628,589 449,485
Inventories 404,777 349,149 247,373
Deferred Income Taxes 50,448 49,069 34,401
Prepaid Expenses and Other 78,154 77,920 79,169
Total Current Assets 1,264,209 1,284,922 940,064
Goodwill 1,361,408 1,355,818 1,337,555
Intangibles, Net 638,452 637,390 628,283
Other Assets 15,645 17,398 4,251
Long Term Deferred Income Taxes 4,703 4,778 5,425
Property, Plant & Equipment, Net 567,375 567,630 459,428
Total Assets $ 3,851,792 $ 3,867,936 $ 3,375,006
Liabilities and Stockholders' Equity
Current Liabilities:
Notes Payable and Commercial Paper $ 166,544 $ 8,088 $ 6,278
Trade Accounts Payable 425,757 447,303 285,983
Income Taxes 27,639 33,331 10,641
Other Accrued Liabilities 300,725 396,129 274,816
Total Current Liabilities 920,665 884,851 577,718
Long Term Debt, Net of Current Portion 949,795 943,216 873,278
Deferred Income Taxes 257,322 256,525 239,766
Other Long Term Liabilities 154,268 152,979 170,686
Total Liabilities 2,282,050 2,237,571 1,861,448
Stockholders' Equity 1,569,742 1,630,365 1,513,558
Total Liabilities and Stockholders' Equity $ 3,851,792 $ 3,867,936 $ 3,375,006
The Valspar Corporation
Other Financial Data
Dollars in thousands
Quarter 1



I. Comparison year over year
Gross Margin, as a percentage of net sales *
Gross Margin, reported 30.7 % 32.3 %
Gross Margin, adjusted for cost of restructuring and Wattyl acquisition related charges 31.7 % 32.9 %
Operating Expense as a percentage of net sales *

Operating Expense, reported

23.2 % 23.4 %
Operating Profit, as a percentage of net sales *
Operating Profit, reported 7.5 % 8.9 %
Operating Profit, adjusted for cost of restructuring and Wattyl acquisition related charges 8.5 % 9.5 %
Quarter 1
II. Segment Data



Coatings 456,389 391,321
Paint 335,951 233,413
All Other less intersegment sales 50,064 47,629
Total 842,404 672,363
Earnings Before Interest and Taxes (EBIT) *
Coatings 50,825 42,955
Paint 19,513 27,832
All Other (7,514 ) (10,694 )
Total 62,824 60,093
Earnings Before Interest and Taxes (EBIT) *, adjusted for cost of restructuring and Wattyl acquisition related charges
Coatings 51,821 45,511
Paint 26,420 29,097
All Other (7,514 ) (10,514 )
Total 70,727 64,094

* Certain amounts in prior years' financial statements have been reclassified to conform with the 2010 presentation.

SOURCE: The Valspar Corporation

The Valspar Corporation
Investor Contact:
Tyler Treat, 612-851-7358
Media Contact:
Mike Dougherty, 612-851-7802

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