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Valspar Beats Q2 EPS Estimates, Reaffirms Guidance

Valspar Beats Q2 EPS Estimates, Reaffirms Guidance

The Valspar Corporation (NYSE: VAL) is riding high on Tuesday after beating second-quarter EPS estimates.

The Minneapolis-based firm's EPS rose 8.3 percent year-over-year to $0.91, edging estimates of $0.90.

Revenue remained roughly flat at $1.03 billion, just missing the $1.05 billion analysts expected.

Glossy Paint Sales

Valspar's paints segment grew 2.7 percent to around $438 million. The increase was driven primarily by volume and sales growth in North America.

Meanwhile, the company's coatings segment dropped one percent to $537 million. The decline was primarily due to lower demand for off-road equipment, shipping container and pipeline coating products.

A New Texture

Valspar announced plans to improve its North American paint manufacturing footprint following the Ace paint acquisition and to continue improving profitability in its Australian business. The world's sixth-largest manufacturer of paints and coatings estimates non-recurring charges of $18 to $23 million after-tax in fiscal 2013. And, it will use approximately $30 million of its planned capital spending to support efficiency improvements, facility consolidations and production line transfers.

The company expects the moves to generate annual savings of about $0.10 per share by 2015.

New Leaders in the Mix

On March 11, James L. Muehlbauer assumed the company's chief financial and administrative officer role. Prior to joining Valspar, Muehlbauer was EVP and CFO of Best Buy (NYSE: BBY) and held leadership positions at The Pillsbury Company and PriceWaterouseCoopers. He replaced Lori A. Walker, who retired in April.

Then, on April 25, Valspar announced the appointment of Shane D. Fleming to its board of directors. Fleming will also serve on the board's compensation committee, effective June 4. And, he is currently the chairman, CEO and president of Cytec Industries (NYSE: CYT).

Prime Deal with Lowe's

On April 4, Valspar announced an expanded retail paint program available at Lowe's (NYSE: LOW). The program includes a lineup of professional-grade products in multiple formulations and finishes. It also expands in-store support through custom tinting and color matching services, small batch mixing as well as direct shipping, volume and value pricing.

According to the company, the new program “substantially increases the depth of products and services it provides in more than 1,700 Lowe's retail locations nationwide.” It believes the program provides a substantial growth opportunity, since the professional paint business represents over half of the U.S. architectural paint market.

Varnished Guidance

Valspar has reaffirmed its 2013 EPS guidance of $3.60 to $3.80 per share. At the middle-ground of $3.70, it would top estimates of $3.68.

Painting Wall Street Red

After closing below $63 on May 1, Valspar steadily climbed and reached nearly $68 on Monday. Now, after posting a solid second quarter and reaffirming its guidance, the stock has inched above $68 as of this writing.

Valspar is up approximately 0.25 percent on Tuesday.

Posted-In: James L. Muehlbauer Lori A. Walker PricewaterhouseCoopers Shane D. Fleming The Pillsbury CompanyEarnings News Guidance Best of Benzinga


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