Highlights
- Reported diluted EPS of $0.99
(includes merger related costs of $18 million)
- Adjusted diluted EPS increased 10%
to $1.22
- Net sales declined 2% (includes a
negative 3% impact from F/X translation)
- Total volumes declined 1%, Coatings
segment volume increased 2%, Paints segment volume declined
6%
- Adjusted EBIT increased 2% (Adjusted
EBIT margin rate up 60 bps), driven by growth in both the Paints
and Coatings segments
- On March 20, 2016, Sherwin-Williams
and Valspar announced that they entered into a definitive agreement
pursuant to which Sherwin-Williams will acquire Valspar for $113
per share in an all-cash transaction, or an enterprise value of
approximately $11.3 billion.
Valspar (NYSE:VAL):
Summary Financials
Fiscal Second Quarter 2016 (Ended April 29, 2016)
Reported
Results
%
Change
Adjusted*
Results
%
Change
2016 2015 2016
2015 Net Sales $1,056.8 $1,079.3 (2%) $1,056.8
$1,079.3 (2%) Gross Profit $401.4 $393.2 2% $406.4 $394.4 3% EBIT
$130.2 $154.2 (16%) $159.4 $156.5 2% Net Income $80.0 $90.3 (11%)
$98.5 $92.2 7% EPS (diluted) $0.99 $1.09 (9%) $1.22 $1.11 10%
$ millions except EPS
Notes on Net Sales and Volume:
Acquisitions added 5% to net sales and 3% to volume for fiscal Q2
2016 (0% and 0% respectively for fiscal Q2 2015). Foreign currency
translation negatively impacted net sales by 3% for fiscal Q2 2016
(5% for fiscal Q2 2015).
* Adjusted Results exclude certain items, which are detailed in
the “Reconciliation of Non-GAAP Financial Measures” included in
this release. In addition to restructuring and other charges, the
excluded items include $18 million of costs incurred in connection
with the proposed merger with The Sherwin-Williams Company.
CEO Comment
“Our results in the second quarter were highlighted by new
business wins, growth in adjusted EBIT in both Paints and Coatings
and 10 percent growth in adjusted EPS. Coatings segment performance
continues to show the strength of our diversified portfolio, with
solid volume growth in the Coil, Wood and Packaging product lines.
In the Paints segment, sales and adjusted EBIT increased led by the
impact of the Quest acquisition,” said Gary E. Hendrickson,
chairman and chief executive officer.
“The previously announced combination of Sherwin-Williams and
Valspar will create significant value for our customers, employees
and other stakeholders. We are confident this transaction will
accelerate many of the operating initiatives already underway at
Valspar. We look forward to positioning Valspar to enter its next
phase of growth and to continue to work closely with
Sherwin-Williams to obtain the necessary approvals to seamlessly
close this transaction,” Hendrickson added.
Coatings Segment Results
Fiscal second quarter 2016 net sales in the Coatings segment
decreased 4 percent to $587 million. This includes the effects of
foreign currency translation that negatively impacted net sales by
4 percent. Acquisitions added 1 percent to net sales in the
quarter. Volumes increased 2 percent in the fiscal second quarter
of 2016. Volume growth from the Coil, Wood and Packaging product
lines was partially offset by lower volume in the General
Industrial product line. Acquisitions added 1 percent to volume in
the quarter. The Coatings segment adjusted earnings before interest
and taxes (adjusted EBIT) of $113 million increased 4 percent, as
the benefits from productivity initiatives and cost/price were
partially offset by the impact of currency translation. Adjusted
EBIT as a percent of net sales increased to 19.3% from 17.8% in the
prior year.
Paints Segment Results
Fiscal second quarter 2016 net sales in the Paints segment
increased 1 percent to $407 million. This includes the effects of
foreign currency translation that negatively impacted net sales by
2 percent. Acquisitions added 11 percent to net sales in the
quarter. Volume declined 6 percent in the fiscal second quarter of
2016, as lower volume in Asia and North America were partially
offset by acquisitions which added 6 percent to volume in the
quarter. Paints segment adjusted EBIT of $53 million increased 12
percent, driven by the impact of the Quest acquisition and the
benefits from productivity initiatives and cost/price. Adjusted
EBIT as a percent of net sales increased to 13.0% from 11.7% in the
prior year.
Dividends and Share Repurchases
During the quarter, the company paid a quarterly dividend of
$0.33 per common share outstanding, or $26 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. The company suspended share repurchases in
the fiscal second quarter of 2016 and for the balance of the fiscal
year.
Proposed Merger with The Sherwin-Williams
Company
On March 20, 2016, Sherwin-Williams and Valspar announced that
they had entered into a definitive agreement pursuant to which
Sherwin-Williams will acquire Valspar for $113 per share in an
all-cash transaction, or an enterprise value of approximately $11.3
billion. The transaction is expected to close by the end of Q1
calendar year 2017, and is subject to the approval of Valspar
shareholders and customary closing conditions, including regulatory
approvals.
Given the complementary nature of the businesses and the
benefits this transaction will provide to customers,
Sherwin-Williams and Valspar believe that no or minimal
divestitures should be required to complete the transaction. Under
the terms of the merger agreement, in what both companies believe
to be the unlikely event that divestitures are required of
businesses totaling more than $650 million of Valspar’s 2015
revenues, the transaction price would be adjusted to $105 in cash
per Valspar share. Sherwin-Williams would have the right to
terminate the transaction in the event that required divestitures
exceed $1.5 billion of Valspar’s 2015 revenues. These provisions
provide Sherwin-Williams and Valspar with greater closing
certainty.
Fiscal 2016 Guidance and Earnings
Conference Call
In light of the proposed merger transaction, the company is
withdrawing its financial and earnings guidance for fiscal 2016. In
addition, the company will not hold a conference call to discuss
quarterly financial results. Valspar will continue to post its
supplemental quarterly slide presentation on
http://investors.valspar.com and the company’s investor relations
team is available to answer questions.
Valspar: If it matters, we’re on it.®
Valspar is a global leader in the coatings industry providing
customers with innovative, high-quality products and value-added
services. Our 11,100 employees worldwide deliver advanced coatings
solutions with best-in-class appearance, performance, protection
and sustainability to customers in more than 100 countries. Valspar
offers a broad range of superior coatings products for the consumer
market, and highly-engineered solutions for the construction,
industrial, packaging and transportation markets. Founded in 1806,
Valspar is headquartered in Minneapolis. Valspar’s reported net
sales in fiscal 2015 were $4.4 billion and its shares are traded on
the New York Stock Exchange (symbol: VAL). For more information,
visit www.valspar.com and follow @valspar on Twitter.
Additional Information and Where to Find it
Valspar has filed with the SEC a preliminary proxy statement,
and amendment thereto, in connection with the contemplated
transactions. The definitive proxy statement will be sent or given
to Valspar stockholders and will contain important information
about the contemplated transactions. INVESTORS AND SECURITY HOLDERS
ARE URGED TO READ CAREFULLY AND IN THEIR ENTIRETY THE PROXY
STATEMENT (INCLUDING THE DEFINITIVE PROXY STATEMENT WHEN IT BECOMES
AVAILABLE) AND ANY OTHER RELEVANT DOCUMENTS FILED WITH THE SEC WHEN
THEY BECOME AVAILABLE. Investors and security holders may obtain a
free copy of the preliminary proxy statement and the definitive
proxy statement (when it is available) and other documents filed
with the SEC.
Certain Information Concerning Participants
Valspar and Sherwin-Williams and their respective directors and
executive officers may be deemed to be participants in the
solicitation of proxies from Valspar investors and security holders
in connection with the contemplated transactions. Information about
Valspar’s directors and executive officers is set forth in its
proxy statement for its 2016 Annual Meeting of Stockholders and its
most recent annual report on Form 10-K.
Information about Sherwin-Williams’ directors and executive
officers is set forth in its proxy statement for its 2016 Annual
Meeting of Stockholders and its most recent annual report on Form
10-K. These documents may be obtained for free at the SEC’s website
at www.sec.gov. Additional
information regarding the interests of participants in the
solicitation of proxies in connection with the contemplated
transactions is included in the preliminary proxy statement and
will be included in the proxy statement that Valspar intends to
file with the SEC.
FORWARD-LOOKING STATEMENTS
This press release contains forward-looking statements within
the meaning of the Private Securities Litigation Reform Act of 1995
(PSLRA). The PSLRA 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 “expect,” “project,” “forecast,” “outlook,”
“estimate,” “anticipate,” “believe,” “could,” “may,” “will,” “plan
to,” “intend,” “should” and similar words or 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; civil unrest and the
outbreak of war and other significant national and international
events; risks relating to our merger with Sherwin-Williams
including, the failure to obtain Valspar stockholder approval of
the proposed transaction, the possibility that the closing
conditions to the contemplated transactions may not be satisfied or
waived, including that a governmental entity may prohibit, delay or
refuse to grant a necessary regulatory approval; delay in closing
the transaction or the possibility of non-consummation of the
transaction; the potential for regulatory authorities to require
divestitures in connection with the proposed transaction and the
possibility that Valspar stockholders consequently receive $105 per
share instead of $113 per share; the occurrence of any event that
could give rise to termination of the merger agreement; the risk
that stockholder litigation in connection with the contemplated
transactions may affect the timing or occurrence of the
contemplated transactions or result in significant costs of
defense, indemnification and liability; risks inherent in the
achievement of cost synergies and the timing thereof; risks related
to the disruption of the transaction to Valspar and its management;
the effect of announcement of the transaction on Valspar’s ability
to retain and hire key personnel and maintain relationships with
customers, suppliers and other third parties; and other factors set
forth in the risk factors section of our Annual Report on Form 10-K
for the fiscal year ended October 30, 2015, as well as Valspar’s
Quarterly Reports on Form 10-Q and other documents filed by Valspar
with the Securities and Exchange Commission. We caution investors
not to place undue reliance on any such forward-looking statements,
which speak only as of the date on which such statements were made.
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 CORPORATIONCONDENSED CONSOLIDATED
STATEMENTS OF OPERATIONS (UNAUDITED)For the Three and Six
Months Ended April 29, 2016 and May 1, 2015(Dollars in thousands,
except per share amounts) Three Months
Ended Six Months Ended April 29,2016 May
1,2015 April 29,2016 May 1,2015 Net Sales $ 1,056,797
$ 1,079,289 $ 1,942,553 $ 2,093,958 Cost of Sales 650,430 684,856
1,217,124 1,361,384 Restructuring Charges - Cost of Sales
4,926 1,230 5,361
6,079 Gross Profit 401,441 393,203
720,068 726,495 Research and
Development 35,591 32,037 68,119 64,639 Selling, General and
Administrative 210,602 204,237 402,545 393,878 Restructuring
Charges - Operating Expenses 4,972 1,020 5,406 2,714 Proposed
Merger-related Charges - Operating Expenses 18,240 — 18,240 —
Acquisition-related Charges - Operating Expenses
1,111 — 1,125 — Operating
Expenses 270,516 237,294
495,435 461,231 Gain on Sale of Certain Assets
— — — 48,001
Income From Operations 130,925 155,909
224,633 313,265 Interest Expense 22,789
20,241 45,204 36,556 Other (Income) Expense, Net 751
1,694 1,366 729 Income
Before Income Taxes 107,385 133,974 178,063 275,980 Income Taxes
27,358 43,660 45,605
81,692 Net Income $ 80,027 $ 90,314
$ 132,458 $ 194,288
Average Number of Shares O/S -
basic 78,955,687 80,826,518 78,858,226 81,275,572 Average Number of
Shares O/S - diluted 80,878,849
82,871,129 80,739,760 83,366,627
Net Income
per Common Share - basic $ 1.01 $ 1.12 $ 1.68 $ 2.39 Net Income per
Common Share - diluted $ 0.99 $ 1.09 $ 1.64
$ 2.33
THE VALSPAR CORPORATIONSEGMENT
INFORMATION (UNAUDITED AND SUBJECT TO RECLASSIFICATION)For the
Three and Six Months Ended April 29, 2016 and May 1, 2015(Dollars
in thousands)
Three Months Ended Six Months Ended
April 29,2016 May 1,2015 April 29,2016 May
1,2015
Coatings
Segment
Net Sales $ 587,436 $ 614,821 $ 1,130,999 $ 1,217,878 Earnings
Before Interest and Taxes (EBIT) 112,372 108,022 208,919 243,631
Key Metrics (GAAP): Sales Growth (4.5%) (1.0%) (7.1%) 2.6%
EBIT, % of Net Sales 19.1% 17.6% 18.5% 20.0% Key Metrics
(non-GAAP)1: Adjusted EBIT $ 113,443 $ 109,578 $ 210,195 $ 200,539
Adjusted EBIT, % of Net Sales 19.3% 17.8% 18.6% 16.5%
Paints
Segment
Net Sales $ 407,060 $ 402,979 $ 698,157 $ 765,502 EBIT 42,742
46,571 46,561 71,900 Key Metrics (GAAP): Sales Growth 1.0%
(15.4%) (8.8%) (9.1%) EBIT, % of Net Sales 10.5% 11.6% 6.7% 9.4%
Key Metrics (non-GAAP)1: Adjusted EBIT $ 52,721 $ 47,274 $
57,218 $ 75,793 Adjusted EBIT, % of Net Sales 13.0% 11.7% 8.2% 9.9%
Other and
Administrative
Net Sales $ 62,301 $ 61,489 $ 113,397 $ 110,578 EBIT (24,940) (378)
(32,213) (2,995) Key Metrics (GAAP): Sales Growth 1.3% 5.8%
2.5% 4.2% EBIT, % of Net Sales (40.0%) (0.6%) (28.4%) (2.7%)
Key Metrics (non-GAAP)1: Adjusted EBIT $
(6,741)
$
(387)
$
(14,014)
$
(3,004)
Adjusted EBIT, % of Net Sales (10.8%) (0.6%) (12.4%) (2.7%)
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 CORPORATIONCONDENSED CONSOLIDATED
BALANCE SHEETS (UNAUDITED)As of April 29, 2016 and May 1,
2015(Dollars in thousands) April
29,2016 May 1,2015
Assets
Current Assets: Cash and Cash Equivalents $ 100,278 $ 146,279
Restricted Cash 734 1,532 Accounts and Notes Receivable, Net
827,903 823,014 Inventories 536,483 494,355 Deferred Income Taxes
33,385 28,621 Prepaid Expenses and Other 121,543
105,333 Total Current Assets 1,620,326
1,599,134 Goodwill 1,296,669 1,081,255 Intangibles,
Net 639,408 575,939 Other Assets 130,232 108,881 Long-Term Deferred
Income Taxes 10,229 6,570 Property, Plant & Equipment, Net
649,607 607,081 Total Assets $
4,346,471 $ 3,978,860
Liabilities and
Stockholders' Equity
Current Liabilities: Short-term Debt $ 333,100 $ 273,840 Current
Portion of Long-Term Debt 101 162,502 Trade Accounts Payable
533,741 550,361 Income Taxes Payable 21,503 47,829 Other Accrued
Liabilities 393,282 367,475 Total
Current Liabilities 1,281,727 1,402,007
Long Term Debt, Net of Current Portion 1,707,042 1,350,005 Deferred
Income Taxes 238,173 215,789 Other Long-Term Liabilities
151,316 139,693 Total Liabilities
3,378,258 3,107,494 Stockholders' Equity
968,213 871,366 Total Liabilities and
Stockholders' Equity $ 4,346,471 $ 3,978,860
THE VALSPAR CORPORATIONSELECTED INFORMATION (UNAUDITED
AND SUBJECT TO RECLASSIFICATION)For the Three and Six Months
Ended April 29, 2016 and May 1, 2015(Dollars in thousands)
Three Months Ended Six Months Ended
April 29,2016 May 1,2015 April 29,2016 May
1,2015 Depreciation and Amortization $ 24,662 $ 21,591 $
47,683 $ 45,492 Capital Expenditures 38,414 23,360 62,531
41,199 Dividends Paid 26,092 24,377 52,155 48,951
THE VALSPAR CORPORATIONRECONCILIATION OF NON-GAAP
FINANCIAL MEASURES (UNAUDITED)For the Three Months Ended April
29, 2016 and May 1, 2015(Dollars in thousands, except per share
amounts) The following information
provides reconciliations of non-GAAP financial measures from
operations, which are 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
expenses, net income and net income per common share - diluted
(GAAP financial measures) and earnings before interest and taxes
(EBIT) for the periods presented to adjusted gross profit, adjusted
operating expenses, adjusted net income, adjusted net income per
common share - diluted and adjusted EBIT (non-GAAP financial
measures) for the periods presented. Three Months EndedApril
29, 2016 Three Months EndedMay 1, 2015 Dollars
% of Net Sales Dollars % of Net Sales
Coatings
Segment
EBIT $ 112,372 19.1 % $ 108,022 17.6 % Restructuring Charges - Cost
of Sales 2 0.0 % 561 0.1 % Restructuring Charges - Operating
Expense 173 0.0 % 995 0.2 % Acquisition-related Charges - Operating
Expense 896 0.2 % — 0.0 % Gain on Sale of Certain Assets —
0.0 % — 0.0 % Adjusted EBIT1 $ 113,443 19.3 %
$ 109,578 17.8 %
Paints
Segment
EBIT $ 42,742 10.5 % $ 46,571 11.6 % Restructuring Charges - Cost
of Sales 4,924 1.2 % 669 0.2 % Restructuring Charges - Operating
Expense 4,840 1.2 % 34 0.0 % Acquisition-related Charges -
Operating Expense 215 0.1 % — 0.0 %
Adjusted EBIT1 $ 52,721 13.0 % $ 47,274 11.7 %
Other and
Administrative
EBIT $ (24,940 ) (40.0 %) $ (378 ) (0.6 %) Restructuring Charges -
Operating Expense (41 ) (0.1 %) (9 ) (0.0 %) Proposed
Merger-related Charges - Operating Expenses 18,240
29.3 % — 0.0 % Adjusted EBIT1 $ (6,741 ) (10.8 %) $
(387 ) (0.6 %)
Total
Gross Profit $ 401,441 38.0 % $ 393,203 36.4 % Restructuring
Charges - Cost of Sales 4,926 0.5 % 1,230
0.1 % Adjusted Gross Profit1 $ 406,367 38.5 % $ 394,433 36.5
% Operating Expenses $ 270,516 25.6 % $ 237,294 22.0 %
Restructuring Charges - Operating Expense (4,972 ) (0.5 %) (1,020 )
(0.1 %) Proposed Merger-related Charges - Operating Expenses
(18,240 ) (1.7 %) — 0.0 % Acquisition-related Charges - Operating
Expense (1,111 ) (0.1 %) — 0.0 % Adjusted
Operating Expenses1 $ 246,193 23.3 % $ 236,274 21.9 % EBIT $
130,174 12.3 % $ 154,215 14.3 % Restructuring Charges - Total 9,898
0.9 % 2,250 0.2 % Proposed Merger-related Charges - Total 18,240
1.7 % — 0.0 % Acquisition-related Charges - Total 1,111 0.1 % — 0.0
% Gain on Sale of Certain Assets - Total — 0.0 %
— 0.0 % Adjusted EBIT1 $ 159,423 15.1 % $ 156,465
14.5 % 1 The data in this schedule has been individually
rounded and therefore may not sum.
THE VALSPAR
CORPORATIONRECONCILIATION OF NON-GAAP FINANCIAL MEASURES
(UNAUDITED)For the Six Months Ended April 29, 2016 and May 1,
2015(Dollars in thousands, except per share amounts)
Six Months EndedApril 29, 2016 Six Months EndedMay 1,
2015 Dollars % of Net Sales Dollars %
of Net Sales
Coatings
Segment
EBIT $ 208,919 18.5 % $ 243,631 20.0 % Restructuring Charges - Cost
of Sales 72 0.0 % 2,951 0.2 % Restructuring Charges - Operating
Expense 294 0.0 % 1,958 0.2 % Acquisition-related Charges -
Operating Expense 910 0.1 % — 0.0 % Gain on Sale of Certain Assets
— 0.0 % (48,001 ) (3.9 %) Adjusted EBIT1 $
210,195 18.6 % $ 200,539 16.5 %
Paints
Segment
EBIT $ 46,561 6.7 % $ 71,900 9.4 % Restructuring Charges - Cost of
Sales 5,289 0.8 % 3,128 0.4 % Restructuring Charges - Operating
Expense 5,153 0.7 % 765 0.1 % Acquisition-related Charges -
Operating Expense 215 0.0 % — 0.0 %
Adjusted EBIT1 $ 57,218 8.2 % $ 75,793 9.9 %
Other and
Administrative
EBIT $ (32,213 ) (28.4 %) $ (2,995 ) (2.7 %) Restructuring Charges
- Operating Expense (41 ) (0.0 %) (9 ) (0.0 %) Proposed
Merger-related Charges - Operating Expenses 18,240
16.1 % — 0.0 % Adjusted EBIT1 $ (14,014 ) (12.4 %) $
(3,004 ) (2.7 %)
Total
Gross Profit $ 720,068 37.1 % $ 726,495 34.7 % Restructuring
Charges - Cost of Sales 5,361 0.3 % 6,079
0.3 % Adjusted Gross Profit1 $ 725,429 37.3 % $ 732,574 35.0
% Operating Expenses $ 495,435 25.5 % $ 461,231 22.0 %
Restructuring Charges - Operating Expense (5,406 ) (0.3 %) (2,714 )
(0.1 %) Proposed Merger-related Charges - Operating Expenses
(18,240 ) (0.9 %) — 0.0 % Acquisition-related Charges - Operating
Expense (1,125 ) (0.1 %) — 0.0 % Adjusted
Operating Expenses1 $ 470,664 24.2 % $ 458,517 21.9 % EBIT $
223,267 11.5 % $ 312,536 14.9 % Restructuring Charges - Total
10,767 0.6 % 8,793 0.4 % Proposed Merger-related Charges - Total
18,240 0.9 % — 0.0 % Acquisition-related Charges - Total 1,125 0.1
% — 0.0 % Gain on Sale of Certain Assets - Total —
0.0 % (48,001 ) (2.3 %) Adjusted EBIT1 $ 253,399 13.0 % $
273,328 13.1 % 1 The data in this schedule has been
individually rounded and therefore may not sum.
THE VALSPAR CORPORATIONRECONCILIATION OF
NON-GAAP FINANCIAL MEASURES (UNAUDITED)For the Three and Six
Months Ended April 29, 2016 and May 1, 2015(Dollars in thousands,
except per share amounts) Three Months Ended Six Months
Ended April 29,2016 May 1,2015 April
29,2016 May 1,2015 Net Income $ 80,027 $ 90,314 $
132,458 $ 194,288 Restructuring charges - Total1 9,898 2,250 10,767
8,793 Proposed merger-related charges - Total2 18,240 — 18,240 —
Acquisition-related charges - Total3 1,111 — 1,125 — Gain on sale
of certain assets - Total4 — — —
(48,001 ) Total Adjustments 29,249 2,250 30,132
(39,208 ) Income Taxes Impact - Total5 (10,763 ) (401
) (11,086 ) 7,959 Adjusted Net Income $ 98,513
$ 92,163 $ 151,504 $ 163,039 Average Number of Shares
O/S - diluted 80,878,849 82,871,129 80,739,760 83,366,627
Adjusted Net Income per Common Share - diluted $ 1.22 $ 1.11
$ 1.88 $ 1.96 1 Represents severance and employee
benefits, asset-related charges and exit costs related to
restructuring activities.
2 Represents costs incurred related to the
pending merger with The Sherwin-Williams Company including
professional services, regulatory fees and employee-related
expenses.
3 Represents professional fees and acquisition-related
charges associated with other acquisition-related activity.
4 Represents gain on sale of a non-strategic specialty product
offering in our Coatings segment. 5 Represents the income
taxes impact on the adjustments above.
View source
version on businesswire.com: http://www.businesswire.com/news/home/20160524005488/en/
ValsparInvestor Contact:Bill Seymour,
612-656-1328william.seymour@valspar.comMedia Contact:Kimberly A.
Welch, 612-656-1347kim.welch@valspar.com
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