Valspar Misses Expectations; Paint Volumes Slide
May 24 2016 - 9:40AM
Dow Jones News
Valspar Corp., in the midst of a merger with rival
Sherwin-Williams Co., said earnings in its latest quarter fell amid
restructuring costs and lower paint sales.
The Minneapolis paint maker in March agreed to the $9.3 billion
cash deal, a price tag that represented a 35% premium and that
gives Sherwin-Williams a more access to do-it-yourself painters who
tend to buy supplies at retailers such as Lowe's Cos. and Ace
hardware stores, places where Valspar is particularly strong.
Valspar also sells industrial coatings and last year acquired Quest
Specialty Chemicals, Inc., which specializes in automotive
refinishes.
In its second quarter, Valspar said merger-related costs totaled
$18 million. The Sherwin-Williams deal is still on track to close
by the end of next year's March quarter, the company said
Tuesday.
In addition to merger costs, lower paint volumes dragged down
first-quarter earnings. Total volume slipped 1% as a 6% decline in
paint volume offset a 2% increase in the larger coatings
segment.
Over all for the quarter, Valspar reported a profit of $80
million, or 99 cents a share, down from $90.3 million, or $1.09 a
share, a year earlier. Excluding merger and restructuring costs,
among other items, earnings per share rose to $1.22 from $1.11.
Sales fell 2.1% to $1.06 billion. Analysts projected $1.26 in
per-share profit on $1.12 billion in revenue, according to Thomson
Reuters.
Because of the pending merger, Valspar said Tuesday that it had
withdrawn its guidance for the year. Analysts have been looking for
$4.85 in adjusted earnings per share for the fiscal year ending in
October.
Shares in the company, up 29% this year through Monday's close,
were inactive during premarket trading.
Write to Lisa Beilfuss at lisa.beilfuss@wsj.com
(END) Dow Jones Newswires
May 24, 2016 09:25 ET (13:25 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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