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Valspar Announces Fourth Quarter 2015 Results

Published on 2015-11-26. Author : SpecialChem

MINNEAPOLIS -- The Valspar Corporation reported fiscal fourth quarter 2015 net sales of $1.15 billion, a decrease of 9 percent over the prior year. This includes the effects of foreign currency translation that negatively impacted net sales by 6 percent; the estimated impact of the extra week in fiscal fourth quarter 2014 that reduced sales by 3 percent; and acquisitions that added 4 percent to net sales in the quarter. Total volume declined 2 percent in fiscal fourth quarter 2015. This includes the estimated impact of the extra week in fiscal fourth quarter 2014 that reduced volume by 3 percent and acquisitions that added 2 percent to volume in the quarter. Reported net income of $102 million and earnings per diluted share of $1.26 for fiscal fourth quarter 2015 include nonrecurring items, which are detailed in the “Reconciliation of Non-GAAP Financial Measures” included in this release. Fourth quarter 2015 adjusted net income and earnings per diluted share, excluding these nonrecurring items, were $109 million and $1.35, respectively.

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Fig. 1: valspar

Fiscal year 2015 net sales were $4.4 billion, and decreased 5 percent versus the prior year. This includes the effects of foreign currency translation that negatively impacted net sales by 5 percent; the estimated impact of the extra week in fiscal fourth quarter 2014 that reduced sales by 1 percent; and acquisitions added 2 percent to net sales in the year. Reported net income of $400 million and earnings per diluted share of $4.85 for fiscal 2015 include nonrecurring items, which are detailed in the “Reconciliation of Non-GAAP Financial Measures” included in this release. Fiscal year 2015 adjusted net income and earnings per diluted share, excluding these nonrecurring items, were $381 million and $4.62, respectively.

“2015 was another year of record earnings for Valspar,” said Gary E. Hendrickson, chairman and chief executive officer. “Adjusted EBIT grew 4 percent and EPS increased 6 percent for the year. We delivered this growth while facing difficult comparisons to the exceptional performance in 2014, a strengthening U.S. Dollar and a product line adjustment at a significant customer. Our performance in 2015 demonstrates the strength of Valspar’s diverse portfolio of businesses and operating model. We’re executing well, by winning new business and achieving significant productivity. In addition, we leveraged the success of this performance, by increasing our dividend 15 percent and repurchasing 5 percent of our outstanding shares during the year.

“During the fourth quarter of 2015, the Coatings segment continued its positive momentum, with new business wins in all product lines.” Hendrickson added. “In the Paints segment, international volume increased and sell-through trends improved in North America. Consolidated EBIT margin (as adjusted) increased 150 basis points in the fourth quarter, driven by strong commercial execution and significant productivity initiatives.”

Commenting on the company’s outlook Hendrickson said, “Looking ahead to fiscal 2016, we expect sales to increase in the mid-single digits and adjusted EPS growth of 8 to 13 percent, excluding the impact of foreign currency.”

Fiscal Fourth Quarter and Full Year 2015 Segment Results

Fiscal fourth quarter 2015 net sales in the Coatings segment decreased 11 percent to $638 million. This includes the effects of foreign currency translation that negatively impacted net sales by 7 percent and the estimated impact of the extra week in fiscal fourth quarter 2014 that reduced net sales by 3 percent in the quarter. Volumes decreased 3 percent in the fiscal fourth quarter of 2015. This includes the estimated impact of the extra week in fiscal fourth quarter 2014 that reduced volume by 3 percent in the quarter. Coatings segment adjusted earnings before interest and taxes (EBIT) of $125 million increased 7 percent, driven by benefits from productivity initiatives and improvements in cost/price, partially offset by the impact of currency translation. Adjusted EBIT as a percent of net sales increased to 19.5% from 16.4% in the prior year.

Fiscal 2015 net sales in the Coatings segment decreased 3 percent to $2.50 billion. This includes the effects of foreign currency translation that negatively impacted net sales by 6 percent and the estimated impact of the extra week in fiscal fourth quarter 2014 that reduced net sales by 1 percent in the year. Coatings segment EBIT of $445 million increased 6 percent from $418 million. Adjusted EBIT as a percent of net sales increased to 17.8% from 16.2% in the prior year.

Fiscal fourth quarter 2015 net sales in the Paints segment decreased 7 percent to $452 million. This includes the effects of foreign currency translation that negatively impacted net sales by 5 percent, the estimated impact of the extra week in fiscal fourth quarter 2014 that reduced net sales by 3 percent and acquisitions added 10 percent to net sales in the quarter. Volumes were down 2 percent in the fiscal fourth quarter of 2015. This includes the estimated impact of the extra week in fiscal fourth quarter 2014 that reduced volume by 2 percent and acquisitions that added 5 percent to volume in the quarter. Paints segment adjusted EBIT of $63 million declined 10 percent, driven by the lower sales, partially offset by positive benefits from productivity initiatives and the Quest acquisition. Adjusted EBIT as a percent of net sales declined to 14.0% from 14.4% in the prior year.

Fiscal 2015 net sales in the Paints segment decreased 8 percent to $1.7 billion. This includes the effects of foreign currency translation that negatively impacted net sales by 4 percent, the estimated impact of the extra week in fiscal fourth quarter 2014 that reduced net sales by 1 percent and acquisitions added 4 percent to net sales in the year. Paints segment adjusted EBIT of $191 million decreased 7 percent from $204 million. Adjusted EBIT as a percent of net sales increased to 11.5% from 11.3% in the prior year.

Dividends and Share Repurchases

During the quarter, the company paid a quarterly dividend of $0.30 per common share outstanding, or $24 million. For the full year fiscal 2015, the company paid dividends of $97 million (representing a per share increase of 15 percent). Valspar is a member of the S&P High Yield Dividend Aristocrats®, which is comprised of companies increasing dividends every year for at least 20 consecutive years. During the quarter, the company repurchased 900 thousand shares of its stock, for $77 million. For the full year fiscal 2015, the company repurchased approximately 3.9 million shares (or 5%) of the Company’s stock for $322 million.

Fiscal 2016 Guidance

The company is providing initial guidance for fiscal 2016, which includes sales growth in the “mid-single digits” in constant currency (sales including the estimated impact of foreign currency translation expected to be “up slightly” compared to fiscal 2015). The company expects annual Fiscal 2016 diluted EPS (as adjusted) of $4.80 to $5.00. This guidance range includes a 20 cent unfavorable impact from foreign currency translation. Annual Fiscal 2016 diluted EPS (as adjusted) guidance reflects growth of 8% to 13% in constant currency.

About Valspar


Valspar is one of the global leaders in the coatings industry providing customers with innovative, high-quality products and value-added services. Its 11,100 employees worldwide deliver advanced coatings solutions with best-in-class appearance, performance, protection and sustainability to customers in more than 100 countries. Valspar offers a broad range of superior coatings products for the consumer market, and highly-engineered solutions for the construction, industrial, packaging and transportation markets. Founded in 1806, Valspar is headquartered in Minneapolis.

Source: Valspar
 

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