VAL Valaris Limited

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

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FORM 8-K

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CURRENT REPORT

Pursuant to Section 13 or 15(d) of The Securities Act of 1934

 

Date of Report (Date of earliest event reported): February 24, 2015

 

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THE VALSPAR CORPORATION

(Exact name of registrant as specified in its charter)

 

Delaware	1-3011	36-2443580
(State or other jurisdiction	(Commission	(I.R.S. Employer
of incorporation)	File Number)	Identification No.)
901 – 3rd Avenue South, Minneapolis, Minnesota		55402
(Address of principal executive offices)		(Zip Code)

 

Registrant’s telephone number, including area code: (612) 851-7000

 

Not Applicable

(Former name or former address, if changed since last report)

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Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

 

☐   Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

☐   Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

☐   Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

☐   Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

 

Item 2.02.	Results of Operations and Financial Condition.
	On February 24, 2015, the Company issued the press release attached as Exhibit 99.1, which sets out the Company's results of operations for the first quarter of fiscal 2015.
Item 9.01.	Financial Statements and Exhibits.
(d)	Exhibits
	99.1.    First Quarter Earnings Press Release dated February 24, 2015

 

 

SIGNATURE

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

 

 

	THE VALSPAR CORPORATION
Dated:   February 24, 2015	/s/Rolf Engh
	Name:  Rolf Engh
	Title:    Secretary

 

 

 

 

 

EXHIBIT INDEX

 

 

Exhibit No.		Description
99.1		First Quarter Earnings Press Release dated February 24, 2015

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Exhibit 99.1

		News Release

 

 

Valspar Reports Fiscal 2015 First Quarter Results

·         First quarter net sales increased 4 percent (up 7 percent in local currency) to $992 million

·         First quarter diluted EPS (as adjusted) increased 21 percent to $0.85

·         Volumes increased 7 percent driven by continued strength in Coatings segment

·         Fiscal 2015 annual diluted EPS (as adjusted) guidance reaffirmed at $4.45 to $4.65

 

Minneapolis – (BUSINESS WIRE) – February 24, 2015 – The Valspar Corporation (NYSE: VAL) today reported fiscal first quarter 2015 net sales of $992 million, an increase of 4 percent over the prior year. Reported net income and earnings per diluted share for the current fiscal year include nonrecurring items, which are detailed in the “Reconciliation of Non-GAAP Financial Measures” included in this release. First quarter 2015 adjusted net income and earnings per diluted share, excluding these nonrecurring items, were $71 million and $0.85, respectively. First quarter 2014 adjusted net income and earnings per diluted share were $61 million and $0.70, respectively.

“We are pleased to report a good start to the year with sales growth of 4 percent and EPS growth of 21 percent in the first quarter,” said Gary E. Hendrickson, chairman and chief executive officer. “These results were driven by improved sales and profitability in our Coatings segment, strong performance from China, new business wins in many of our product lines and the benefits from productivity initiatives.”

“Both the Coatings and Paints segments increased volumes and grew sales in local currency,” Hendrickson added. “We saw continued momentum in Coatings, with all product lines growing volume and sales. In the Paints segment, volumes increased and sales were up modestly in local currency, driven by our international regions.”

Fiscal First Quarter 2015 Segment Results

Net sales in the Coatings segment increased 7 percent to $586 million in the fiscal first quarter of 2015. Net sales in local currency increased 10 percent, and volumes were up 10 percent. Volume increased in all product lines and geographic regions. Coatings segment adjusted earnings before interest and taxes (EBIT) of $91 million (or 15.5% of net sales) increased 16 percent as a result of increased volume and benefits from productivity initiatives.

Net sales in the Paints segment decreased 1 percent to $359 million in the fiscal first quarter of 2015. Net sales in local currency increased 2 percent, and volumes increased 5 percent. Volume growth was led by the Europe, Australia and Asia regions and was partially offset by declines in North America. Paints segment adjusted EBIT of $29 million (or 8.0% of net sales) was down 16 percent from the prior year. The decline was primarily due to difficult prior year comparisons (adjusted EBIT increased 50 percent in first quarter of fiscal 2014) and from a product line adjustment by one of the company’s customers as previously disclosed.

Sale of Non-Strategic Assets

During the fiscal first quarter of 2015, the company completed the divestiture of certain assets related to a non-strategic product in our Coatings segment. The company recorded this asset sale in the first quarter of 2015, which included a pre-tax gain of approximately $48 million to reported income from operations. This gain has been excluded from the company’s fiscal first quarter of 2015 “adjusted” results.

Fiscal 2015 Guidance

The company is reaffirming its fiscal 2015 annual diluted EPS (as adjusted) guidance of $4.45 to $4.65. As a result of the expected impact of a stronger U.S. Dollar, the company is updating its fiscal 2015 annual sales guidance to approximately flat sales compared to fiscal 2014, from the previous guidance of growth in the low single-digits.

Dividends and Share Repurchases

During the quarter, the company paid a quarterly dividend of $0.30 per common share outstanding, or $24.6 million. 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. Also during the quarter, the company repurchased 983 thousand shares, for $83.6 million.

 

An earnings conference call is scheduled for 11:00 a.m. Eastern Time (10:00 a.m. Central Time) today and will be webcast and accessible from the Investor Relations section of Valspar’s website at http://investors.valspar.com.

 

 

About The Valspar Corporation
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.valspar.com.

 

 

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Investor Contact:

Bill Seymour

612.656.1328

william.seymour@valspar.com

 

 

Media Contact:

Kimberly A. Welch

612.656.1347

kim.welch@valspar.com

 

FORWARD-LOOKING STATEMENTS

Certain statements contained in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and elsewhere in this report constitute “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. The Private Securities Litigation Reform Act of 1995 provides a safe harbor for forward-looking statements. Forward-looking statements are based on management’s current expectations, estimates, assumptions and beliefs about future events, conditions and financial performance. Forward-looking statements are 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. Any statement that is not historical in nature is a forward-looking statement. We may identify forward-looking statements with words and phrases such as “expects,” “projects,” “estimates,” “anticipates,” “believes,” “could,” “may,” “will,” “plans to,” “intends,” “should” and similar expressions. These risks, uncertainties and other factors include, but are not limited to, deterioration in general economic conditions, both domestic and international, that may adversely affect our business; fluctuations in availability and prices of raw materials, including raw material shortages and other supply chain disruptions, and the inability to pass along or delays in passing along raw material cost increases to our customers; dependence of internal sales and earnings growth on business cycles affecting our customers and growth in the domestic and international coatings industry; market share loss to, and pricing or margin pressure from, larger competitors with greater financial resources; significant indebtedness that restricts the use of cash flow from operations for acquisitions and other investments; dependence on acquisitions for growth, and risks related to future acquisitions, including adverse changes in the results of acquired businesses, the assumption of unforeseen liabilities and disruptions resulting from the integration of acquisitions; risks and uncertainties associated with operating in foreign markets, including achievement of profitable growth in developing markets; impact of fluctuations in foreign currency exchange rates on our financial results; loss of business with key customers; damage to our reputation and business resulting from product claims or recalls, litigation, customer perception and other matters; our ability to respond to technology changes and to protect our technology; possible interruption, failure or compromise of the information systems we use to operate our business; changes in governmental regulation, including more stringent environmental, health and safety regulations; our reliance on the efforts of vendors, government agencies, utilities and other third parties to achieve adequate compliance and avoid disruption of our business; unusual weather conditions adversely affecting sales; 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; and civil unrest and the outbreak of war and other significant national and international events. We undertake no obligation to subsequently revise any forward-looking statement to reflect new information, events or circumstances after the date of such statement, except as required by law.

 

 

 

 

THE VALSPAR CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)

For the Three Months Ended January 30, 2015 and January 24, 2014

(Dollars in thousands, except per share amounts)

 

		Three Months Ended
		January 30,				January 24,
		2015				2014
Net Sales		$	991,973			$	956,119
Cost of Sales			653,832				630,960
Restructuring Charges - Cost of Sales			4,849				6,106
Gross Profit			333,292				319,053
Research and Development			32,602				30,558
Selling, General and Administrative			189,641				187,235
Restructuring Charges			1,694				5,700
Operating Expenses			223,937				223,493
Gain on Sale of Certain Assets			48,001				—
Income From Operations			157,356				95,560
Interest Expense			16,315				15,932
Other (Income) Expense, Net			(965	)			371
Income Before Income Taxes			142,006				79,257
Income Taxes			38,032				25,704
Net Income		$	103,974			$	53,553
Average Number of Shares O/S - basic			81,724,627				85,147,728
Average Number of Shares O/S - diluted			83,866,879				87,641,304
Net Income per Common Share - basic		$	1.27			$	0.63
Net Income per Common Share - diluted		$	1.24			$	0.61

  

THE VALSPAR CORPORATION

SEGMENT INFORMATION (UNAUDITED AND SUBJECT TO RECLASSIFICATION)

For the Three Months Ended January 30, 2015 and January 24, 2014

(Dollars in thousands)

 

		Three Months Ended
		January 30,				January 24,
		2015				2014
Coatings Segment
Net Sales		$	586,367			$	548,585
Earnings Before Interest and Taxes (EBIT)			135,609				69,975
Key Metrics (GAAP):
Sales Growth			6.9%				10.2%
EBIT, % of Net Sales			23.1%				12.8%
Key Metrics (non-GAAP)1:
Adjusted EBIT		$	90,961			$	78,595
Adjusted EBIT, % of Net Sales			15.5%				14.3%
Paints Segment
Net Sales		$	358,604			$	361,405
EBIT			25,329				30,997
Key Metrics (GAAP):
Sales Growth			(0.8%	)			9.8%
EBIT, % of Net Sales			7.1%				8.6%
Key Metrics (non-GAAP)1:
Adjusted EBIT		$	28,519			$	33,816
Adjusted EBIT, % of Net Sales			8.0%				9.4%
Other and Administrative
Net Sales		$	47,002			$	46,129
EBIT			(2,617	)			(5,783	)
Key Metrics (GAAP):
Sales Growth			1.9%				(5.0%	)
EBIT, % of Net Sales			(5.6%	)			(12.5%	)
Key Metrics (non-GAAP)1:
Adjusted EBIT		$	(2,617	)		$	(5,416	)
Adjusted EBIT, % of Net Sales			(5.6%	)			(11.7%	)

 

1

The information on this page includes non-GAAP financial measures. Please refer to the "RECONCILIATION OF NON-GAAP FINANCIAL MEASURES" included in this release for detailed information.

 

THE VALSPAR CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)

As of January 30, 2015 and January 24, 2014

(Dollars in thousands)

 

		January 30, 2015				January 24, 2014
Assets
Current Assets:
Cash and Cash Equivalents		$	191,766			$	192,591
Restricted Cash			2,720				3,241
Accounts and Notes Receivable, Net			747,800				669,975
Inventories			511,171				504,151
Deferred Income Taxes			29,805				40,440
Prepaid Expenses and Other			109,636				117,452
Total Current Assets			1,592,898				1,527,850
Goodwill			1,103,225				1,147,356
Intangibles, Net			587,960				611,374
Other Assets			93,707				56,237
Long-Term Deferred Income Taxes			7,017				6,835
Property, Plant & Equipment, Net			622,054				632,912
Total Assets		$	4,006,861			$	3,982,564
Liabilities and Stockholders' Equity
Current Liabilities:
Short-term Debt		$	193,702			$	540,162
Current Portion of Long-Term Debt			162,502				—
Trade Accounts Payable			578,954				593,777
Income Taxes			36,731				12,307
Other Accrued Liabilities			364,463				358,238
Total Current Liabilities			1,336,352				1,504,484
Long Term Debt, Net of Current Portion			1,350,081				1,012,354
Deferred Income Taxes			218,914				240,679
Other Long-Term Liabilities			138,749				135,666
Total Liabilities			3,044,096				2,893,183
Stockholders' Equity			962,765				1,089,381
Total Liabilities and Stockholders' Equity		$	4,006,861			$	3,982,564

 

 

THE VALSPAR CORPORATION

SELECTED INFORMATION (UNAUDITED AND SUBJECT TO RECLASSIFICATION)

For the Three Months Ended January 30, 2015 and January 24, 2014

(Dollars in thousands)

 

		Three Months Ended
		January 30,				January 24,
		2015				2014
Depreciation and Amortization		$	23,901			$	28,142
Capital Expenditures			17,839				20,991
Dividends Paid			24,574				22,226

 

 

 

 

 

THE VALSPAR CORPORATION

RECONCILIATION OF NON-GAAP FINANCIAL MEASURES (UNAUDITED)

For the Three Months Ended January 30, 2015 and January 24, 2014

(Dollars in thousands, except per share amounts)

 

The following information provides reconciliations of non-GAAP financial measures from operations presented in the accompanying news release to the most comparable financial measures calculated and presented in accordance with accounting principles generally accepted in the U.S. (“GAAP”). The company has provided non-GAAP financial measures, which are not calculated or presented in accordance with GAAP, as information supplemental and in addition to the financial measures presented in the accompanying news release that are calculated and presented in accordance with GAAP. Such non-GAAP financial measures should not be considered superior to, as a substitute for, or as an alternative to, and should be considered in conjunction with, the GAAP financial measures presented in the news release. The non-GAAP financial measures in the accompanying news release may differ from similar measures used by other companies. The following tables reconcile gross profit, operating expense, earning before interest and taxes (EBIT), net income, net income per common share - diluted, and diluted earnings per share (EPS) guidance for the periods presented (GAAP financial measures) to adjusted gross profit, adjusted operating expense, adjusted earning before interest and taxes (EBIT), adjusted net income, adjusted net income per common share - diluted, and adjusted diluted earnings per share (EPS) guidance (non-GAAP financial measures) for the periods presented.

 

		Three Months Ended January 30, 2015								Three Months Ended January 24, 2014
		Dollars				% of Net Sales				Dollars				% of Net Sales
Coatings Segment
Earnings Before Interest and Taxes (EBIT)		$	135,609				23.1%			$	69,975				12.8%
Restructuring Charges - Cost of Sales			2,390				0.4%				4,265				0.8%
Restructuring Charges - Operating Expense			963				0.2%				4,355				0.8%
Gain on Sale of Certain Assets			(48,001	)			(8.2%	)			—				0.0%
Adjusted EBIT		$	90,961				15.5%			$	78,595				14.3%
Paints Segment
EBIT		$	25,329				7.1%			$	30,997				8.6%
Restructuring Charges - Cost of Sales			2,459				0.7%				1,775				0.5%
Restructuring Charges - Operating Expense			731				0.2%				1,044				0.3%
Adjusted EBIT		$	28,519				8.0%			$	33,816				9.4%
Other and Administrative
EBIT		$	(2,617	)			(5.6%	)		$	(5,783	)			(12.5%	)
Restructuring Charges - Cost of Sales			—				0.0%				66				0.1%
Restructuring Charges - Operating Expense			—				0.0%				301				0.7%
Adjusted EBIT		$	(2,617	)			(5.6%	)		$	(5,416	)			(11.7%	)
Total
Gross Profit		$	333,292				33.6%			$	319,053				33.4%
Restructuring Charges - Cost of Sales			4,849				0.5%				6,106				0.6%
Adjusted Gross Profit		$	338,141				34.1%			$	325,159				34.0%
Operating Expenses		$	223,937				22.6%			$	223,493				23.4%
Restructuring Charges - Operating Expense			(1,694	)			(0.2%	)			(5,700	)			(0.6%	)
Adjusted Operating Expenses		$	222,243				22.4%			$	217,793				22.8%
EBIT		$	158,321				16.0%			$	95,189				10.0%
Restructuring Charges - Total			6,543				0.7%				11,806				1.2%
Gain on Sale of Certain Assets			(48,001	)			(4.8%	)			—				0.0%
Adjusted EBIT		$	116,863				11.8%			$	106,995				11.2%
Net Income		$	103,974							$	53,553
After Tax Restructuring Charges - Total			4,118								7,581
After Tax Gain on Sale of Certain Assets			(37,216	)							—
Adjusted Net Income		$	70,876							$	61,134
Net Income per Common Share - diluted		$	1.24							$	0.61
After Tax Restructuring Charges - Total			0.05								0.09
After Tax Gain on Sale of Certain Assets			(0.44	)							—
Adjusted Net Income per Common Share - diluted		$	0.85							$	0.70
Reconciliation of Fiscal 2015 Annual Adjusted Diluted EPS Guidance
Diluted EPS Guidance										$	4.79 - $ 4.94
After Tax Restructuring Charges											0.10 - 0.15
After Tax Gain on Sale of Certain Assets											(0.44)
Adjusted Diluted EPS Guidance										$	4.45 - $ 4.65