Leading paint and coatings maker
The Valspar Corporation
) first-quarter fiscal 2013 (ended Jan 25, 2013) earnings of 60
cents per share missed the Zacks Consensus Estimate of 66 cents
but were ahead of the year-ago quarter earnings of 58 cents per
share. Excluding restructuring charges of 4 cents a share,
earnings were 62 cents a year ago. The company did not incur any
one-time charge in the reported quarter.
Sales were down 1.2% year over year to $875.2 million in the
first quarter, missing the Zacks Consensus Estimate of $916
Sales from the Minneapolis-based company's larger Coatings
segment edged up 0.6% to $497.6 million in the quarter. Sales
benefited from new business which helped to offset the weak
market conditions. Paints segment revenues declined 3.1% to
$329.1 million in the quarter.
Margins and Expenses
Gross margin (as reported) increased to 33.6% in the reported
quarter from 33.1% a year ago. Adjusted gross margin rose to
33.6% from 33.5% in the prior-year quarter. Operating expenses
(as a percentage of sales) were 22.9%, up modestly from 22.6%
last year, impacted by lower sales and investments made to
support new business growth.
Cost of sales fell 1.9% year over year to $580.9 million.
Research and development expenses dropped 14.5% year over year to
$30.8 million in the quarter. Selling, general and administrative
expenses decreased 3.2% to $170 million.
As of Jan 25, 2013, cash and cash equivalents amounted to
$248.6 million compared with $305.7 million as of Jan 27, 2012.
Long-term debt declined 5.1% year over year to roughly $1,012.6
Moving ahead, Valspar anticipates weak demand in certain
international markets. It has reduced its earnings forecast for
fiscal 2013 to $3.60 to $3.80 per share from $3.65 to $3.85 per
share. The company remains optimistic that it will achieve its
new business plans for 2013.
Valspar has a strong pipeline of new products and significant
opportunities for share gains in both its Paint and Coatings
segments globally. The company should also benefit from its
restructuring actions while maintaining its operational and
pricing discipline. However, we are concerned about cost
pressures associated with raw material inflation.
Another coatings company
PPG Industries Inc.
) released its fourth-quarter 2012 results last month. The
company met earnings expectations and continued momentum across
automotive OEM and aerospace markets helped it to post
better-than-expected sales in the quarter.
), in Jan 2013, came out with better-than-expected results in the
fourth quarter. Higher paint sales volume and pricing led to an
increase in its revenues. The company's Paint Stores Group
division posted healthy results in the quarter.
Valspar currently retains a short-term Zacks Rank #2
Another paint maker having a favorable Zacks Rank is
Akzo Nobel NV
). It holds a Zacks Rank #2 (Buy).
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VALSPAR CORP (VAL): Free Stock Analysis
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