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8-K - FORM 8-K DATED NOVEMBER 20, 2012 - VALSPAR CORP | valspar124848_8k.htm |
Exhibit 99.1
News Release | |
Media Contact: Mark Goldman 612.851.7802 news@valspar.com |
Investor Contact: Tyler Treat 612.851.7358 ttreat@valspar.com |
Valspar Reports Fiscal 2012 Fourth Quarter and Full Year Results
Delivers Fiscal Year 2012 Adjusted Net Income per Share of $3.28, a 24 Percent Increase from Fiscal 2011
Issues Fiscal 2013 Guidance of Net Income per Share in the Range of $3.65 - $3.85
Minneapolis, Minn. – November 20, 2012 – The Valspar Corporation (NYSE-VAL) today reported its results for the fourth quarter and fiscal year ended October 26, 2012. Fiscal year 2012 sales totaled $4.02 billion, a two percent increase from fiscal year 2011. Adjusted net income per share increased 24 percent to $3.28 in 2012 from $2.65 in 2011. Fiscal year 2012 adjusted net income per share excludes $0.18 per share in restructuring charges. Adjusted net income per share for 2011 excludes a $3.75 per share non-cash impairment charge for goodwill and intangibles, a $0.24 per share restructuring charge and $0.09 per share in acquisition-related charges. Reported net income for fiscal year 2012 was $292.5 million or $3.10 per share. The reported net loss for fiscal year 2011 was $138.6 million or $1.47 per share.
Fourth-quarter sales totaled $1.02 billion, compared to $1.05 billion for the fourth quarter of 2011. Excluding currency impact, sales were flat in the quarter. Fourth-quarter adjusted net income per share was $0.86 in 2012 compared to $0.84 in 2011. Last year’s net income per share included a one-time non-recurring benefit from favorable tax rulings that contributed $0.09. Fourth-quarter adjusted net income per share in 2012 excludes $0.07 per share in restructuring charges. Reported net income for the fourth quarter of 2012 was $73.8 million or $0.79 per share.
Fourth-quarter adjusted net income per share in 2011 excludes a $3.82 per share non-cash impairment charge for goodwill and intangibles and a $0.13 per share restructuring charge. Including the after-tax non-cash impairment charge of $363.4 million in 2011, the reported net loss for the fourth quarter of 2011 was $295.7 million or $3.18 per share.
“We are pleased to deliver our fourth consecutive year of double-digit earnings growth,” said Gary E. Hendrickson, chairman and chief executive officer. “We overcame the challenge of uneven global markets by winning significant new business and through a relentless focus on productivity. We continued to invest in our brands and innovative technology to secure long-term growth. In addition, we returned cash to shareholders by repurchasing 5.7 million shares and increased our dividend for the 34th consecutive year.”
- more -
Commenting on the outlook for 2013, Hendrickson noted: “We expect uneven global demand to continue, but we are well-positioned for growth in both our Coatings and Paints segments. We have a strong new product pipeline to help gain new market share. Additionally, our productivity initiatives and operating discipline will support further margin expansion. We estimate fiscal 2013 net income per share to be in the range of $3.65 to $3.85, delivering another year of double-digit earnings growth.”
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.valsparcorporate.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 Nov. 20th through midnight Tuesday, Dec. 4th 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 270542.
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.
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.
# # #
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THE VALSPAR CORPORATION
COMPARATIVE CONSOLIDATED EARNINGS
For the Quarters Ended October 26, 2012 and October 28, 2011
(Dollars in thousands, except per share amounts)
Fourth Quarter | Year-to-Date | |||||||||||||||
2012 | 2011 | 2012 | 2011 | |||||||||||||
(Unaudited) | (Unaudited) | (Unaudited) | (Note) | |||||||||||||
Net Sales | $ | 1,024,284 | $ | 1,047,339 | $ | 4,020,851 | $ | 3,952,954 | ||||||||
Cost of Sales | 683,286 | 714,291 | 2,667,147 | 2,721,146 | ||||||||||||
Gross Profit | 340,998 | 333,048 | 1,353,704 | 1,231,808 | ||||||||||||
Research and Development | 31,071 | 27,484 | 117,109 | 115,416 | ||||||||||||
Selling, General and Administrative | 191,410 | 209,512 | 754,325 | 746,744 | ||||||||||||
Operating Expenses | 222,481 | 236,996 | 871,434 | 862,160 | ||||||||||||
Impairment of Goodwill and Intangible Assets | — | 409,714 | — | 409,714 | ||||||||||||
Income (Loss) From Operations | 118,517 | (313,662 | ) | 482,270 | (40,066 | ) | ||||||||||
Interest Expense | 16,045 | 14,665 | 67,604 | 61,511 | ||||||||||||
Other (Income) Expense, Net | (1,346 | ) | 478 | (2,558 | ) | 1,577 | ||||||||||
Income (Loss) Before Income Taxes | 103,818 | (328,805 | ) | 417,224 | (103,154 | ) | ||||||||||
Income Taxes | 30,049 | (33,082 | ) | 124,727 | 35,447 | |||||||||||
Net Income (Loss) | $ | 73,769 | $ | (295,723 | ) | $ | 292,497 | $ | (138,601 | ) | ||||||
Average Number of Shares O/S - basic | 90,129,435 | 92,874,344 | 91,415,055 | 94,309,679 | ||||||||||||
Average Number of Shares O/S - diluted | 93,057,983 | 92,874,344 | 94,380,476 | 94,309,679 | ||||||||||||
Net Income (Loss) per Common Share - basic | $ | 0.82 | $ | (3.18 | ) | $ | 3.20 | $ | (1.47 | ) | ||||||
Net Income (Loss) per Common Share - diluted | $ | 0.79 | $ | (3.18 | ) | $ | 3.10 | $ | (1.47 | ) |
NOTE: The Statement of Operations for the year ended October 28, 2011 was derived from the audited consolidated financial statements at that date.
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 (i) restructuring charges, (ii) the non-cash impairment charge on goodwill and intangible assets and (iii) acquisition-related 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:
Fourth Quarter | Year-to-Date | |||||||||||||||
2012 | 2011 | 2012 | 2011 | |||||||||||||
Net Income (Loss) per Common Share - diluted | $ | 0.79 | $ | (3.18 | ) | $ | 3.10 | $ | (1.47 | ) | ||||||
Restructuring Charges | 0.07 | 0.13 | 0.18 | 0.24 | ||||||||||||
Impact of Dilutive Shares * | — | 0.07 | — | 0.04 | ||||||||||||
Non-cash Impairment Charge on Goodwill and Intangible Assets | — | 3.82 | — | 3.75 | ||||||||||||
Acquisition-related Charges | — | — | — | 0.09 | ||||||||||||
Adjusted Net Income per Common Share - diluted | $ | 0.86 | $ | 0.84 | $ | 3.28 | $ | 2.65 |
* | In the non-GAAP reconciliation of adjusted net income per common share, we used 95,163,840 and 97,054,164 diluted shares for the 2011 quarter and year-to-date periods, respectively, to reflect positive net income on an adjusted basis and the related share dilution. |
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October 26, | October 28, | |||||||
2012 | 2011 | |||||||
(Unaudited) | (Note) | |||||||
Assets | ||||||||
Current Assets: | ||||||||
Cash and Cash Equivalents | $ | 253,327 | $ | 178,167 | ||||
Restricted Cash | 19,907 | 20,378 | ||||||
Accounts and Notes Receivable, Net | 681,099 | 664,855 | ||||||
Inventories | 360,427 | 336,750 | ||||||
Deferred Income Taxes | 42,083 | 50,685 | ||||||
Prepaid Expenses and Other | 92,334 | 74,302 | ||||||
Total Current Assets | 1,449,177 | 1,325,137 | ||||||
Goodwill | 1,056,669 | 1,058,006 | ||||||
Intangibles, Net | 550,106 | 553,286 | ||||||
Other Assets | 14,738 | 13,560 | ||||||
Long Term Deferred Income Taxes | 5,178 | 1,909 | ||||||
Property, Plant & Equipment, Net | 550,968 | 548,253 | ||||||
Total Assets | $ | 3,626,836 | $ | 3,500,151 | ||||
Liabilities and Stockholders' Equity | ||||||||
Current Liabilities: | ||||||||
Short-term Debt | $ | 94,441 | $ | 169,516 | ||||
Current Portion of Long-Term Debt | 44,090 | 207,803 | ||||||
Trade Accounts Payable | 502,967 | 463,580 | ||||||
Income Taxes | 4,612 | 17,684 | ||||||
Other Accrued Liabilities | 380,662 | 401,350 | ||||||
Total Current Liabilities | 1,026,772 | 1,259,933 | ||||||
Long Term Debt, Net of Current Portion | 1,012,578 | 679,805 | ||||||
Deferred Income Taxes | 216,314 | 214,920 | ||||||
Other Long Term Liabilities | 147,649 | 132,943 | ||||||
Total Liabilities | 2,403,313 | 2,287,601 | ||||||
Stockholders' Equity | 1,223,523 | 1,212,550 | ||||||
Total Liabilities and Stockholders' Equity | $ | 3,626,836 | $ | 3,500,151 |
NOTE: The Balance Sheet at October 28, 2011 was derived from the audited consolidated financial statements at that date.
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THE VALSPAR CORPORATION
OTHER FINANCIAL DATA
For the Quarters Ended October 26, 2012 and October 28, 2011
(Dollars in thousands)
Fourth Quarter | Year-to-Date | |||||||||||||||
2012 | 2011 | 2012 | 2011 | |||||||||||||
(Unaudited) | (Unaudited) | (Unaudited) | (Unaudited) | |||||||||||||
I. Comparison year over year | ||||||||||||||||
Gross Profit, as a percentage of net sales (1) | ||||||||||||||||
Gross Profit, reported | 33.3 | % | 31.8 | % | 33.7 | % | 31.2 | % | ||||||||
Gross Profit, adjusted (2) | 34.0 | % | 32.9 | % | 34.1 | % | 32.1 | % | ||||||||
Operating Expense as a percentage of net sales (1) | ||||||||||||||||
Operating Expense, reported | 21.7 | % | 22.6 | % | 21.7 | % | 21.8 | % | ||||||||
Operating Expense, adjusted (2) | 21.5 | % | 22.1 | % | 21.4 | % | 21.5 | % | ||||||||
Operating Profit (Loss), as a percentage of net sales (1) | ||||||||||||||||
Operating Profit, reported | 11.6 | % | -29.9 | % | 12.0 | % | -1.0 | % | ||||||||
Operating Profit, adjusted (2) | 12.5 | % | 10.8 | % | 12.6 | % | 10.6 | % | ||||||||
Fourth Quarter | Year-to-Date | |||||||||||||||
2012 | 2011 | 2012 | 2011 | |||||||||||||
(Unaudited) | (Unaudited) | (Unaudited) | (Unaudited) | |||||||||||||
II. Segment Data | ||||||||||||||||
Sales | ||||||||||||||||
Coatings | $ | 571,545 | $ | 566,206 | $ | 2,176,732 | $ | 2,092,490 | ||||||||
Paint | 396,155 | 416,335 | 1,604,599 | 1,612,219 | ||||||||||||
All Other less intersegment sales | 56,584 | 64,798 | 239,520 | 248,245 | ||||||||||||
Total | $ | 1,024,284 | $ | 1,047,339 | $ | 4,020,851 | $ | 3,952,954 | ||||||||
Earnings Before Interest and Taxes (EBIT) (1) | ||||||||||||||||
Coatings | $ | 95,141 | $ | (290,753 | ) | $ | 356,389 | $ | (112,209 | ) | ||||||
Paint | 38,092 | 34,330 | 159,598 | 134,886 | ||||||||||||
All Other | (13,370 | ) | (57,717 | ) | (31,159 | ) | (64,320 | ) | ||||||||
Total | $ | 119,863 | $ | (314,140 | ) | $ | 484,828 | $ | (41,643 | ) | ||||||
Earnings Before Interest and Taxes (EBIT) (1), adjusted (2) | ||||||||||||||||
Coatings | $ | 95,663 | $ | 87,543 | $ | 357,807 | $ | 278,650 | ||||||||
Paint | 44,973 | 41,350 | 177,990 | 159,316 | ||||||||||||
All Other | (11,307 | ) | (15,922 | ) | (25,124 | ) | (22,181 | ) | ||||||||
Total | $ | 129,329 | $ | 112,971 | $ | 510,673 | $ | 415,785 |
(1) Certain amounts in prior year financial statements have been reclassified to conform with the 2012 presentation.
(2) Excludes restructuring charges in all periods and acquisition-related charges in the 2011 year-to-date period.
(3) Excludes goodwill and intangible asset impairment charges in the 2011 fourth quarter and year-to-date periods.
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