Company Reaffirms FY 2009 Guidance
MINNEAPOLIS, Feb. 23 /PRNewswire-FirstCall/ -- The Valspar Corporation
(NYSE: VAL) today reported its results for the first-quarter ended January 30,
2009.
First-quarter sales totaled $639.5 million, a 16.4 percent decline from
the first quarter of 2008. First-quarter adjusted net income per share was
$0.20 in 2009 and $0.24 in 2008, excluding non-cash adjustments of $0.03 per
share for Huarun minority interest shares in 2008 and 2009, and a $0.06 per
share charge in 2009 related to restructuring actions. Net income for the
first quarter of 2009 was $14.2 million. First-quarter reported earnings per
share in 2009 were $0.11. Net income for the first quarter of 2008 was $24.0
million. First-quarter reported earnings per share in 2008 were $0.21.
During the quarter, the company took additional steps to reduce its cost
structure, an expansion to restructuring actions initiated in July 2008. The
company now expects restructuring costs to total $0.35-$0.38 per share. To
date, $0.22 per share in restructuring costs have been incurred. The
restructuring actions are expected to be completed by the end of the third
quarter of fiscal 2009. In fiscal 2010, these steps are expected to generate
annual savings of $0.20-$0.23 per share.
"Despite the global recession, earnings for the quarter were in line with
our expectations," said William L. Mansfield, Valspar chairman and chief
executive officer. "Through solid execution and operational discipline, we
were able to mitigate the impact of lower sales. We are meeting the
challenges presented by the difficult economic environment and continue to
expect fiscal year 2009 adjusted net income per share to be in the range of
$1.55 to $1.65, excluding restructuring charges."
William L. 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 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 a.m. Central Time February 23 through Midnight on
March 6 by dialing 1-800-475-6701 from within the U.S. or 320-365-3844 from
outside of the U.S., using access code 985806.
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.
For more information, visit 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 our
control and could cause actual results to differ materially from such
statements. These uncertainties and other factors include, but are not
limited to, changes in general economic conditions both domestic and
international, including recessions and other external economic and political
factors, which may adversely affect our business, the value of our
investments, the financial stability of our customers and suppliers and our
ability to obtain financing; dependence of internal earnings growth on
economic conditions and growth in the domestic and international coatings
industry; competitive factors including pricing pressure and product
competition; 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 our relationships with customers and suppliers; risks and uncertainties
associated with operations and achievement of growth in developing markets,
including China and Central and South America; 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; 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; civil unrest and the outbreak of war and other significant
national and international events; and other risks and uncertainties. The
foregoing list is not exhaustive, and we disclaim 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 January 30, 2009 and January 25, 2008
(Dollars in thousands, except per First Quarter
share amounts) (Unaudited) (Unaudited)
--------------------------------- ----------- -----------
2009 2008
--------- ---- ----
Net Sales $639,497 $765,124
Cost of Sales 450,153 554,659
Operating Expenses 155,101 155,484
------------------ ------- -------
Income From Operations 34,243 54,981
Interest Expense 11,926 15,683
Other (Income) Expense, Net 554 2,634
--------------------------- --- -----
Income Before Income Taxes 21,763 36,664
Income Taxes 7,595 12,649
------------ ----- ------
Net Income $14,168 $24,015
---------- ------- -------
Huarun Redeemable Stock Accrual (1) (3,318) (2,914)
----------------------------------- ------ ------
Net Income Available to Common
Shareholders $10,850 $21,101
------------------------------ ------- -------
Average Number of Shares O/S -
basic 99,782,705 100,093,680
Average Number of Shares O/S -
diluted 100,188,774 100,940,574
------------------------------ ----------- -----------
Net Income per Common Share - basic $0.11 $0.21
Net Income per Common Share - diluted $0.11 $0.21
------------------------------------- ----- -----
(1) HUARUN REDEEMABLE STOCK ACCRUAL REDUCED BASIC AND DILUTED NET
INCOME PER SHARE $0.03 IN THE FIRST QUARTER OF 2009 AND $0.03
IN THE FIRST QUARTER OF 2008.
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 Huarun
Redeemable Stock in connection with the Company's acquisition of the
remaining minority interest shares of Huarun Paints Holding Company
Limited and restructuring charges. 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 2009 and 2008 periods of
the non-cash accrual relating to the Huarun acquisition and the effect
of the restructuring charges in 2009.
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:
First Quarter
2009 2008
---- ----
Net Income per Common Share - diluted $0.11 $0.21
Huarun Redeemable Stock Accrual $0.03 $0.03
Restructuring Charges $0.06 $-
----- ----
Adjusted Net Income per Common Share - diluted $0.20 $0.24
===== =====
The following is a reconciliation of "Forecasted Net Income per Common
Share - Diluted" to our "Full Year Guidance" for the period presented.
Full Year
2009
-------------
Forecasted Net Income per Common Share - diluted $1.27 - $1.34
Huarun Redeemable Stock Accrual $0.09
Restructuring Charges $0.19 - $0.22
-------------
Full Year Guidance for Adjusted Net Income per
Common Share - diluted $1.55 - $1.65
=============
January 30, October 31, January 25,
(Dollars in thousands) 2009 2008 2008
---------------------- ---- ---- ----
Assets (Unaudited) (Unaudited)
Current Assets:
Cash and Cash Equivalents $81,072 $90,073 $84,131
Accounts Receivable, Net 453,943 565,237 513,425
Inventories 265,561 271,423 321,867
Other 113,029 120,287 129,891
------- ------- ------- -------
Total Current Assets 913,605 1,047,020 1,049,314
Goodwill 1,320,946 1,352,813 1,359,270
Other Assets, Net 640,182 630,493 614,249
Property, Plant & Equipment, Net 471,733 489,716 522,287
------------------- ------- ------- -------
Total Assets $3,346,466 $3,520,042 $3,545,120
------------ ---------- ---------- ----------
Liabilities and Stockholders' Equity
Current Liabilities:
Notes Payable and Commercial Paper $231,223 $159,526 $302,801
Trade Accounts Payable 266,722 400,763 375,844
Income Taxes 43 29,156 -
Accrued Liabilities 243,991 290,898 244,968
--------------------- ------- ------- -------
Total Current Liabilities 741,979 880,343 923,613
Long Term Debt 767,080 763,129 801,695
Deferred Liabilities 385,134 390,125 396,010
Huarun Redeemable Stock 36,895 33,577 40,256
Stockholders' Equity 1,415,378 1,452,868 1,383,546
---------------------- --------- --------- ---------
Total Liabilities and
Stockholders' Equity $3,346,466 $3,520,042 $3,545,120
--------------------- ---------- ---------- ----------
The Valspar Corporation
Other Financial Data
Dollars in millions, except per share amounts
Quarter 1
---------
2009 2008
---- ----
I. Comparison year over year
Gross Margin, as a percentage of net sales *
Gross Margin, reported 29.6% 27.5%
Gross Margin, adjusted for cost of
restructuring 30.4% 27.5%
Operating Expense as a percentage of net sales *
Operating Expense, reported 24.3% 20.3%
Operating Expense, adjusted for cost of
restructuring 23.6% 20.3%
Operating Profit, as a percentage of net sales *
Operating Profit, reported 5.4% 7.2%
Operating Profit, adjusted for cost of
restructuring 6.8% 7.2%
Quarter 1
---------
II. Segment Data 2009 2008
---- ----
Sales
Coatings $374.7 $471.4
Paint $212.7 $228.7
All Other less intersegment sales $52.1 $65.0
Total $639.5 $765.1
Earnings Before Interest and Taxes (EBIT) *
Coatings $24.9 $39.3
Paint $16.0 $18.3
All Other $(7.2) $(5.3)
Total $33.7 $52.3
* Certain amounts in prior years' financial statements have been
reclassified to conform with the 2009 presentation.
SOURCE The Valspar Corporation
CONTACT: Investors, Tyler Treat, +1-612-851-7358, or Media, Mike
Dougherty, +1-612-851-7802, both of The Valspar Corporation
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