The Valspar Corporation reported fiscal third quarter 2014 net sales of $1.2 billion, an increase of 10 percent over the prior year. Reported net income and earnings per diluted share for the current year include nonrecurring items, which are detailed in the “Reconciliation of Non-GAAP Financial Measures” included in this release. Third quarter 2014 adjusted net income and earnings per diluted share, excluding these nonrecurring items, were $103 million and $1.21, respectively. Third quarter 2013 adjusted net income and earnings per diluted share were $96 million and $1.07 respectively.
“Our diverse business portfolio continues to deliver strong results, as sales increased 10 percent and adjusted EPS increased 13 percent in the third quarter,” said Gary E. Hendrickson, chairman and chief executive officer. “These results were driven by the successful integration of acquisitions; strong performance from China and Europe; improved sales and profitability in our Coatings segment; benefits of new growth initiatives; investments in innovative products; and the positive impact of productivity initiatives.”
“Within the Coatings segment, all product lines grew both volume and sales,” Hendrickson added. “We realized the highest growth in the General Industrial product line, which benefited from the impact of the Inver acquisition and modestly improving end market demand. Our Packaging product line continues to grow, driven by market share gains and momentum of our non-BPA products. In our Paints segment, all regions grew sales and highlighting the quarter was the successful launch in the U.S. of the new Valspar® ReserveTM premium paint at Lowe’s and the roll out of Valspar branded paint at over 3,000 Ace Hardware stores. The Paints segment EBIT declined this quarter reflecting planned investments to support the launch of these new retail paint initiatives.”
“Looking forward, based on our performance to date and outlook for the fiscal fourth quarter of 2014, we are updating our annual fiscal 2014 sales guidance to approximately 9% growth and updating our adjusted earnings per share guidance to $4.05 to $4.15,” said Hendrickson.
Net sales in the Coatings segment increased 16 percent to $666 million in the fiscal third quarter of 2014. Excluding acquisitions, sales in the segment increased 6 percent and volumes were up mid-single digits. Volume grew in all product lines within the Coatings segment, led by General Industrial (including Inver), Wood, Packaging and Coil. Volumes were also up in all geographic regions. Coatings segment adjusted earnings before interest and taxes (EBIT) of $122 million increased 21 percent as a result of acquisitions, increased volume, improved sales mix and productivity initiatives.
Net sales in the Paints segment increased 4 percent to $474 million in the fiscal third quarter of 2014 and, volume increased high-single digits. Sales growth (in local currency) was led by performance in China and Australia. Sales in the U.S. increased low single-digits and were impacted by shipments made in the previous quarter to support the introduction of new retail programs in both the home improvement and hardware channels. Paints segment adjusted EBIT of $44 million was down 16 percent from the prior year primarily due to planned increases in advertising and marketing investments to support new retail programs in the home improvement and independent hardware channels.
