Hello and welcome to your late week international coatings industry update, brought to you by SpecialChem. We've entered a bit of a news lull, although there are a lot of interesting things going on in the industry. So we'll cover the top stories here, and the fun stuff in the continuation.
In financial news, Valspar posted Q4 net income of $73.8 million, reversing a loss from the same quarter last year when the paint company was weighed down by one-time charges. For the quarter ended Oct. 26, the Minneapolis company had profits amounting to 79 cents per share, compared with a loss of $295.7 million, or $3.18 per share, in the same quarter last year. Revenue edged down 2% to $1.02 billion from $1.05 billion.
Valspar's cost of sales, selling general and administrative expenses, and operating expenses all fell. For the full year, the company earned $292.5 million, or $3.10 per share, compared with a loss of $138.6 million, or $1.47 per share, in fiscal 2011. Revenue fell to $2.67 billion from $2.72 billion.
In product news, on November 16, Evonik celebrated 50 years of making isophorone chemicals. This is an important milestone for the company, and some 200 customers, employees, and pensioned former employees joined Evonik Executive Board members Dr. Thomas Haeberle and Thomas Wessel in Herne to look back on the long and interesting history of isophorone chemistry at the site.
The first plant for isophorone production commenced operation at the Herne site of Hibernia, as a predecessor company of Evonik Industries in 1962. Discovered as a byproduct of acetone catalysis, isophorone, a solvent, evolved to eventually become one of the company's core areas of competency. "We'll be celebrating not just a strong and versatile product portfolio, but the development of tailored solutions for our customers, as well," said Dr. Thomas Haeberle, Evonik Industries Executive Board member, of the anniversary celebration.
In distribution news, following the overall review of Perstorp's use of sales channels and the greater focus from the Group on the South American business, Perstorp has announced that during the second half of 2012, a new and extended distribution agreement was signed between Perstorp AB and Grupo M.Cassab.
Besides its role as distributor for Perstorp's range of Caprolactones in the Brazilian market, Grupo M.Cassab is taking over responsibility for distributing a range of Perstorp building blocks for the coating resins market (such as Trimethylol-propane, Neopentyl glycol and Isophthalic Acid) as well as coalescing agents NX 795 and NX 800. The collaboration with Grupo M.Cassab will complement Perstorp's own sales force in serving small and mid-sized customers in Brazil.
Well, Hurricane Sandy has visited and dealt particular hell to New York City - all of the boroughs. I have some artist friends from Brooklyn that don't have electricity yet. Manhattan and its outlying boroughs are the undisputed USA center of two worlds that peacefully coexist - the financial world and the art world. Now maybe the financial world deserved a good dousing, but the art world definitely did NOT.
But the art world has shown its more generous side in the wake of Hurricane Sandy's wreckage. From Klaus Bisenbach's celebrity-studded Rockaway clean-up initiative, to emergency grants from the Warhol, Joan Mitchell, and Rauschenberg foundations, many big names are contributing to Sandy Relief. We don't cover a lot of artist color news, because frankly, there isn't much. But when a company does something great, we have to go there.
CAS AlkydPro Paint, a small Midwestern paint manufacturer has donated almost 200 hundred pounds of oil paint to artists struggling to recover from the storm. Their product is professional grade artist's paint, made in the USA. CAS Alkyds provide an alternative somewhere between oil and acrylic in terms of drying speed while not sacrificing pigment quantity or quality. They contain no linseed oil.
The owner of Illinois-based C.A.S. Paints read about the damage Sandy did to the art community in New York, and as an artist, he immediately understood the devastation of losing a studio, or a lifetime of work. After doing some research he connected with the Queens Museum, Mana Contemporary, and the Joan Mitchell Foundation. The first two organizations received their donations last Friday, and CAS is working with the latter to figure out the final details.
"I understand that artists always have a hardship, and this is what I can do to help them. It's like color therapy for the winter," the company's owner said.
Big thumbs-up to CAS Paint!
In research news, NASA engineers have created a spray paint that seals in the gases that most typically create that new car smell almost everyone loves. Now as a car guy, I immediately said "What! How dare they take away my new car smell - I only get it once every 4 years or so..."
The problem is, that smell - or outgases as NASA calls them -- is generated by chemicals and solvents used to manufacture dashboards, car seats, carpeting and other components that are not particularly good to breathe and as NASA points out, some can be detrimental to sensitive satellite instruments containing the same ingredients.
"Outgassed solvents, epoxies, lubricants, and other materials aren't especially wholesome for contamination-sensitive telescope mirrors, thermal-control units, high-voltage electronic boxes, cryogenic instruments, detectors and solar arrays, either. As a result, NASA engineers are always looking for new techniques to prevent these gases from adhering to instrument and spacecraft surfaces and potentially shortening their lives," NASA stated.
Engineers at NASA's Goddard Space Flight Center invented what they call a patent-pending sprayable paint that adsorbs these gaseous molecules and stops them from affixing to instrument components. The paint is made from zeolite, a mineral used in industry for water purification and a colloidal silica binder that acts as the glue holding the coating together. "The new molecular adsorber is highly permeable and porous - attributes that trap the outgassed contaminants. Because it doesn't contain volatile organics, the material itself doesn't cause additional outgassing," NASA stated.
NASA noted that many instrument developers use zeolite-coated cordierite devices that look like hockey pucks to absorb gases but that technology requires multiple units, which require complex mounting hardware that can be heavy and take up a lot space.
The new paint, however, overcomes these limitations by providing a low-mass alternative. Because technicians can spray the paint directly onto surfaces, no extra mounting equipment is necessary. In addition, technicians can coat adhesive strips or tape and then place these pieces in strategic locations within an instrument, spacecraft cavity, or vacuum system, further simplifying adsorber design. This is an easy technology to insert at a relatively low risk and cost. The benefits are significant," said co-Principal Investigator Mark Hasegawa, of NASA Goddard in a statement.
NASA says a number of industry players are interested in the new spray including Northrop Grumman; the European Space Agency; the Laboratory for Atmospheric and Space Physics at the University of Colorado at Boulder; and Spica Technologies. In addition, NASA's ICESat2 ATLAS project is evaluating its use, pending the outcome of additional tests.
NASA said its development team plans to tweak the paint's recipe to enhance its performance and experiment with different pigments, mainly black, to create a coating to absorb stray light. NASA said it also believes the technology could be used on the International Space Station or future space habitats to trap pollutants and odors in crew quarters.
As we reported earlier, paints and coatings maker Valspar posted better-than-expected earnings Tuesday, but revenue missed expectations. It said it expects sluggish and uneven global demand next year and offered guidance that agreed with analysts' expectations.
Valspar's adjusted fiscal Q4 EPS climbed 2% to 86 cents, a penny over the consensus estimates of analysts. But revenue declined 2% to $1.02 billion. Analysts expected $1.07 billion.
"We overcame the challenge of uneven global markets by winning significant new business and through a relentless focus on productivity," CEO Gary Hendrickson said in a statement. "We continued to invest in our brands and innovative technology to secure long-term growth."
Larger paint rival Sherwin-Williams last month reported better-than-expected earnings, but sales came up short. Its stock rallied this month on news it was buying Mexican paints and coatings maker Consorcio Comex for about $2.34 billion, to tap into what it sees as rising demand for housing in Mexico.
The housing market in the USA seems to be gaining steam again too. The government says October housing starts climbed to a four-year high.
Last week, USA's No. 1 home improvement chain Home Depot reported better-than-expected earnings, with some positive contribution from the homeowners remodeling and otherwise sprucing up their houses. This week, smaller home improvement chain Lowe's - a major retailer of Valspar's paints - posted better earnings too, and said it expected housing to gain momentum next year.
What ever happens next year, success will definitely hinge on actual economic recovery as the coatings companies agree that austerity measures are at maximum - sales are crucial.
In other research news, it takes only a tenth of a second for the meat-eating Venus fly trap to hydrodynamically snaps its leaves and shut to trap an insect meal. Now a team of French physicists from the National Center for Scientific Research and Aix-Marseille University in Marseille, France, is working to understand this botanical movement.
They believe that understanding the mechanism of the Venus fly trap's leaf snapping mechanism may one day help improve products such as release-on-command coatings and adhesives, electronic circuits, optical lenses, and drug delivery.
The work extends findings by Dr. Yoel Forterre and researchers from Harvard University who discovered several years ago that the curvature of the Venus fly-trap's leaf changes while closing due to a snap-buckling instability in the leaf structure related to the shell-like geometry of the leaves.
Mathieu Colombani, Ph.D. student in Forterre's laboratory is now conducting experiments to elucidate the physical mechanisms behind this movement.
"The extremely high pressure inside the Venus fly trap cells prompted us to suspect that changes with a cell's pressure regime could be a key component driving this rapid leaf movement," he noted. The Colombani team uses a microfluidic pressure probe to target and measure individual cells.
This is a tricky experiment because it requires the living plant to be immobilized with dental silicone paste while the probe is inserted using a micromanipulator guided by binoculars.
They take pressure measurements before and after leaf closure. They also measure cell wall elasticity by injecting or removing a known amount of liquid and recording the cellular responses, as well as take other measurements.
"By measuring osmotic pressure and elasticity of leaf cells we hope to come closer to explaining the snapping mechanism," Colombani explained.
They presented their findings at 65th meeting of the American Physical Society's Division of Fluid Dynamics , November 18 - 20, 2012, in San Diego, California, USA.
In business news, The Resolute Fund II SIE, L.P., an affiliate of The Jordan Company, this week announced that it has partnered with the management team of Sequa Automotive Group to purchase the business from its parent company, Sequa Corporation, a diversified industrial company with operations in aerospace and metal coatings. Financial terms of the transaction were not disclosed.
Sequa Auto is a leading global supplier of highly engineered automotive components. The Company operates under two business segments: Casco Products Corp and ARC Automotive. Casco is a leading supplier of automotive power outlets, connectivity devices and sensors. ARC is a leading independent provider of airbag inflators, the critical component in a passive airbag system that causes the airbag to deploy in a vehicle.
"Sequa Auto is a market leader with exciting growth prospects that has built strong global customer relationships over time based on its superior service, engineering capability, reliability and innovative products," said Jonathan F. Boucher, a Managing Principal at Jordan. "We look forward to partnering with Sequa Auto's exceptional management team to continue to grow the business, strengthen its market presence and enhance its industry-leading operating capabilities."
"Jordan is widely respected as a long term investor and builder of businesses, and will bring both financial and operating resources to our Company which will help us to continue to grow organically and through acquisitions to better serve our customers," said Ali El-Haj, CEO of Sequa Auto. "We look forward to partnering with Jordan to achieve our strategic growth objectives and continue to provide our customers with the service and high-quality products that they have come to expect."
In other news, BASF Corporation has expanded the territories of two exclusive distributors for its Industrial Kaolin Business, Brandt Technologies of Bensenville, Illinois, and Ribelin Sales, Inc. of Garland Texas. BASF specialty kaolins improve performance, lower costs, increase efficiency, and enhance the value of customer products and processes in the plastics, rubber, ink, cosmetics, ceramics, adhesives, paints and many other industries...
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Chemtura Corporation announced that it has entered into an asset purchase agreement to sell its Antioxidant and UV Stabilizers business, including dedicated manufacturing plants in the U.S, France, and Germany, to an affiliate of SK Capital Partners, for $200 million and the assumption of certain liabilities...
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Ashland Specialty Ingredients recently received the 2012 Best Service Award from AkzoNobel, the world's largest coatings manufacturer. The award recognized Ashland's outstanding achievements as a top global supplier in delivering high-quality coating additives solutions while fulfilling application requirements...
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And finally, SpecialChem announced the launch of a new online platform dedicated to bio-based chemicals and materials, available at www.specialchem4bio.com. The website will be a unique resource for both suppliers of bio-based solutions and the downstream industries who are in search of bio-based products to improve the sustainability of their offers...
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