MINNEAPOLIS, May 12 /PRNewswire-FirstCall/ -- The Valspar Corporation today reported its results for the second-quarter ended April 25, 2008.
Second-quarter sales totaled $836.4 million, a 3.5 percent increase from the second quarter of 2007. Net income for the second quarter was $40.8 million. Second-quarter adjusted net income per share was $0.41 in 2008 and $0.40 in 2007, excluding non-cash adjustments of $0.03 and $0.05 per share, respectively, for Huarun minority interest shares. In 2007, second-quarter net income was $41.5 million. Second quarter reported earnings per share were $0.38 in 2008 and $0.35 in 2007.
"Results for the quarter were in line with our expectations and reflect the impact of operational discipline and tight control of expenses" said William L. Mansfield, Valspar chairman and chief executive officer. "Our packaging, coil and general industrial coatings product lines performed well. New business and pricing helped to partially offset the impact of rising raw material costs and a weak U.S. economy."
Looking ahead, the company now expects fiscal year 2008 adjusted net income per share to be in the range of $1.55 to $1.65. "Raw material costs have increased beyond our prior expectations, and we anticipate demand in the U.S. to remain soft for the rest of the year," said Mansfield. "We are responding with additional pricing actions, and remain focused on aggressively reducing costs, gaining new business and investing in our long-term growth opportunities."
Mansfield 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 http://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 12:00 p.m. Central Time May 12 through Midnight on May 27 by dialing 1-800-475-6701 from within the U.S. or 320-365-3844 from outside of the U.S., using access code 921998.
The Valspar Corporation 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 http://www.valsparglobal.com/.
This press release contains certain "forward-looking" statements. These forward-looking statements are based on management's expectations and beliefs concerning future events. Forward-looking statements are necessarily subject to risks, uncertainties and other factors, many of which are outside the control of the Company that could cause actual results to differ materially from such statements. These uncertainties and other factors include, but are not limited to, dependence of internal earnings growth on economic conditions and growth in the domestic and international coatings industry; risks related to any future acquisitions, including risks of adverse changes in the results of acquired businesses and the assumption of unforeseen liabilities; risks of disruptions in business resulting from the integration process and higher interest costs resulting from further borrowing for any such acquisitions; our reliance on the efforts of vendors, government agencies, utilities and other third parties to achieve adequate compliance and avoid disruption of our business; risks of disruptions in business resulting from the Company's relationships with customers and suppliers; unusual weather conditions adversely affecting sales; changes in raw materials pricing and availability; delays in passing along cost increases to customers; changes in governmental regulation, including more stringent environmental, health and safety regulations; the nature, cost and outcome of pending and future litigation and other legal proceedings; the outbreak of war and other significant national and international events; and other risks and uncertainties. The foregoing list is not exhaustive, and the Company disclaims any obligation to subsequently revise any forward-looking statements to reflect events or circumstances after the date of such statements.
THE VALSPAR CORPORATION
COMPARATIVE CONSOLIDATED EARNINGS
For the Quarters Ended April 25, 2008 and April 27, 2007
(Dollars in thousands,
except per share Second Quarter Year-To-Date
amounts) (Unaudited) (Unaudited) (Unaudited) (Unaudited)
2008 2007 2008 2007
Net Sales $836,379 $808,471 $1,601,503 $1,502,994
Cost of Sales 592,118 561,590 1,146,777 1,057,029
Operating Expenses 167,157 168,662 322,641 316,527
Income From Operations 77,104 78,219 132,085 129,438
Interest Expense 13,914 16,238 29,597 30,929
Other (Income)
Expense, Net 1,309 (382) 3,943 2,044
Income Before Income
Taxes 61,881 62,363 98,545 96,465
Income Taxes 21,034 20,847 33,683 31,351
Net Income $40,847 $41,516 $64,862 $65,114
Mandatorily Redeemable
Stock Accrual (1) (2,915) (5,067) (5,829) (10,134)
Net Income Available
to Common
Shareholders 37,932 36,449 59,033 54,980
Average Number of
Shares O/S -- basic 99,617,232 101,672,432 99,855,456 101,717,101
Average Number of
Shares O/S -- diluted 100,180,834 103,371,264 100,556,774 103,453,373
Net Income per Common
Share -- basic $0.38 $0.36 $0.59 $0.54
Net Income per Common
Share -- diluted $0.38 $0.35 $0.59 $0.53
(1) MANDATORILY REDEEMABLE STOCK ACCRUAL REDUCED BASIC AND DILUTED NET
INCOME PER SHARE $0.03 IN THE SECOND QUARTER OF 2008, $0.06 YEAR TO
DATE IN 2008 AND $0.05 IN THE SECOND QUARTER OF 2007 AND $0.10 YEAR
TO DATE IN 2007.
NON-GAAP FINANCIAL MEASURES
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" -- which exclude a non-cash accrual relating to Mandatorily
Redeemable Stock in connection with the Company's acquisition of the
remaining minority interest shares of Huarun Paints Holding Company
Limited. Management discloses these measures because it believes these
measures may assist investors in comparing the Company's results
of operations in the respective periods without regard to the effect on
the results in the 2008 and 2007 periods of the non-cash accrual relating
to the Huarun acquisition.
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:
Second Quarter Year-To-Date
2008 2007 2008 2007
Net Income per Common Share -- diluted $0.38 $0.35 $0.59 $0.53
Mandatorily Redeemable Stock Accrual $0.03 $0.05 $0.06 $0.10
Adjusted Net Income per Common Share
-- diluted $0.41 $0.40 $0.65 $0.63
The following is a reconciliation of "Forecasted Net Income per Common
Share -- Diluted" to our "Full Year Guidance" for the period presented.
Full Year
2008
Forecasted Net Income per Common Share -- diluted $1.43 - $1.53
Mandatorily Redeemable Stock Accrual $0.12
Full Year Guidance for Adjusted Net Income per Common
Share -- diluted $1.55 - $1.65
April 25, October 26, April 27,
(Dollars in thousands) 2008 2007 2007
Assets (Unaudited) (Unaudited)
Current Assets:
Cash and Cash Equivalents $77,917 $84,948 $61,424
Accounts Receivable, Net 578,612 537,890 549,434
Inventories 320,254 291,688 289,919
Other 121,341 115,116 129,127
Total Current Assets 1,098,124 1,029,642 1,029,904
Goodwill, Net 1,374,422 1,298,951 1,423,307
Other Assets, Net 622,272 609,292 430,250
Property, Plant & Equipment, Net 516,717 514,396 480,486
Total Assets $3,611,535 $3,452,281 $3,363,947
Liabilities and Stockholders' Equity
Current Liabilities:
Notes Payable and Commercial Paper $304,854 $367,521 $485,569
Trade Accounts Payable 385,546 371,437 342,024
Income Taxes 2,951 19,316 36,077
Accrued Liabilities 243,814 270,873 239,633
Total Current Liabilities 937,165 1,029,147 1,103,303
Long Term Debt 807,900 648,988 620,862
Deferred Liabilities 398,522 356,007 361,545
Mandatorily Redeemable Stock 43,170 37,342 28,857
Stockholders' Equity 1,424,778 1,380,797 1,249,380
Total Liabilities and Stockholders'
Equity $3,611,535 $3,452,281 $3,363,947
The Valspar Corporation
Other Financial Data
Dollars in millions, except per share amounts
Quarter 2 YTD
2008 2007 2008 2007
I. Comparison year over year
Earnings Per Share
Diluted EPS, reported $0.38 $0.35 $0.59 $0.53
Adjustments Per Share, net of
tax:
Favorable (Unfavorable) tax
adjustments $- $- $- $0.01
Mandatorily redeemable stock
accrual $0.03 $0.05 $0.06 $0.10
Quarter 2 YTD
2008 2007 2008 2007
II. Segment Data
Sales
Coatings $493.9 $453.3 965.3 $865.6
Paint $261.8 $273.8 $490.6 $493.5
All Other less intersegment
sales $80.7 $81.4 $145.6 $143.9
Total $836.4 $808.5 $1,601.5 $1,503.0
Earnings Before Interest and
Taxes (EBIT) *
Coatings $49.5 $45.6 $88.8 $80.2
Paint $23.5 $30.3 $41.8 $50.0
All Other $2.8 $2.7 $(2.5) $(2.8)
Total $75.8 $78.6 $128.1 $127.4
* Certain amounts in prior years' financial statements have been
reclassified to conform with the 2008 presentation.
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