Valspar Q3 Results Top Estimates; Boosts 2014 Earnings Outlook

(RTTNews) - Paints and coatings maker Valspar Corp. (VAL) reported Tuesday a profit for the third quarter that increased from last year, reflecting improved margins and sales growth. Both adjusted earnings per share and quarterly sales topped analysts' expectations. The company also raised adjusted earnings guidance for the full-year 2014.

"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," Chairman and CEO Gary Hendrickson said in a statement.

The Minneapolis, Minnesota-based company reported net income of $97.83 million or $1.14 per share for the third quarter, higher than $93.81 million or $1.04 per share in the prior-year quarter.

Excluding the charges, adjusted net income for the quarter was $103.45 million and $1.21 per share, compared to $96.42 million and $1.07 per share in the year-ago quarter.

On average, 14 analysts polled by Thomson Reuters expected the company to report earnings of $1.16 per share for the quarter. Analysts' estimates typically excludes special items.

Net sales for the quarter grew 10 percent to $1.20 billion from $1.09 billion in the same quarter last year, and topped ten Wall Street analysts' consensus estimate of $1.19 billion. Volumes increased 11 percent driven primarily by strength in coatings.

Coatings net sales for the quarter increased 16.3 percent to $666 million from the year-ago quarter. Excluding acquisitions, sales grew 6 percent and volumes were up mid-single digits, with volumes growing across all product lines and geographic regions.

Net sales for paints improved 4.2 percent to $474 million from the prior-year quarter, with volumes increasing in the high-single digits. Sales in the U.S. increased low single-digits.

Operating profit margin for the quarter improved from last year as gross profit margin expanded 70 basis points and operating expense as a percentage of total sales increased 190 basis points.

Looking ahead to 2014, the company raised adjusted earnings guidance to a range of $4.05 to $4.15 per share from the prior guidance in the range $3.95 to $4.15 per share. Annual sales growth is now anticipated to be about 9 percent, compared to previous projection for a 7 to 9 percent growth.

Street is currently looking for full-year 2014 earnings of $4.09 per share on annual revenue growth of 8.7 percent to $4.46 billion.

VAL closed Monday's regular trading session at $77.89, up $0.24 on a volume of 1.10 million shares.