The Valspar Corp. (VAL, Financial) filed Annual Report for the period ended 2012-10-26.
Valspar Corporation has a market cap of $5.5 billion; its shares were traded at around $61.32 with a P/E ratio of 18.6 and P/S ratio of 1.4. The dividend yield of Valspar Corporation stocks is 1.3%. Valspar Corporation had an annual average earning growth of 6% over the past 10 years. GuruFocus rated Valspar Corporation the business predictability rank of 4.5-star.
Consolidated Operating Expenses (dollars) Consolidated operating expenses increased 1.1% or $9,274 compared to the prior year. The increase was driven primarily by higher incentive compensation and investments in growth initiatives, partially offset by savings from previously completed restructuring initiatives. Restructuring charges of $9,646 or 0.2% of net sales and $8,876 or 0.2% of net sales were included in the 2012 and 2011 periods, respectively. There were no acquisition-related charges included in operating expenses in the 2012 period. Acquisition-related charges of $1,859 or 0.1% of net sales were included in operating expenses in the 2011 period.
Coatings Segment EBIT EBIT as a percent of net sales increased primarily due to the impairment charge recognized in 2011, carryover selling price increases, productivity improvements, including savings from our previously completed restructuring actions, higher margin new business and lower restructuring charges in 2012. The increase was partially offset by higher raw material costs. The restructuring charges for 2012 and 2011 periods were $1,418 or 0.1% of net sales and $20,940 or 1.0% of net sales, respectively. There were no acquisition-related charges included in EBIT in the 2012 period. EBIT included acquisition-related charges of $1,859 or 0.1% of net sales in the 2011 period. There was no impairment charge on goodwill and intangible assets included in EBIT in the 2012 period. EBIT included an impairment charge of $368,062 or 17.6% of net sales in the 2011 period.
Coatings Segment EBIT EBIT as a percent of net sales decreased primarily due to the impairment charge on goodwill and intangible assets of $368,062 or 17.6% of net sales, the lag between higher raw material costs and selling price increases, restructuring charges, a net gain on the sale of certain assets recognized in 2010 of $11,497 or 0.5% of net sales and acquisition-related charges of $1,859 or 0.1% of net sales in 2011. The decline was partially offset by new business and operating leverage on higher net sales. The restructuring charges for 2011 and 2010 periods were $20,940 or 1.0% of net sales and $10,563 or 0.6% of net sales, respectively.
Paints Segment EBIT EBIT as a percent of net sales decreased primarily due to the lag between higher raw material costs and selling price increases, as well as restructuring charges and acquisition-related charges. The restructuring charges for 2011 and 2010 periods were $13,013 or 0.8% of net sales and $1,595 or 0.1% of net sales, respectively. EBIT included acquisition-related charges of $11,416 or 0.7% of net sales and $3,173 or 0.3% of net sales in the 2011 and 2010 periods, respectively.
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Valspar Corporation has a market cap of $5.5 billion; its shares were traded at around $61.32 with a P/E ratio of 18.6 and P/S ratio of 1.4. The dividend yield of Valspar Corporation stocks is 1.3%. Valspar Corporation had an annual average earning growth of 6% over the past 10 years. GuruFocus rated Valspar Corporation the business predictability rank of 4.5-star.
Highlight of Business Operations:
Business Performance Net sales in 2012 increased 1.7% to $4,020,851 from $3,952,954 in 2011. Excluding the impact of foreign currency exchange and acquisitions, sales increased 2.6% due to carryover selling price increases across all product lines and new business gains across most of our product lines. The increase was partially offset by volume declines due to uneven demand in our global markets and our decision to exit a small number of relatively high volume, unprofitable products and customers. Our international sales accounted for approximately 46% of consolidated net sales. Net income, excluding the impairment charges related to goodwill and intangible assets (impairment charge) in 2011, increased by 30.1%. The improvement was driven by the benefit from carryover selling price increases, productivity gains, new business at higher average gross margins, lower restructuring charges in our Coatings segment in 2012 and acquisition-related charges recognized in 2011. The improvement was partially offset by volume declines due to market softness, higher raw material costs and the impact of interest expense and a higher tax rate. During the 2012 fiscal year, we generated $186,154 in free cash flow (net cash provided by operating activities of $348,868 less capital expenditures and dividends), an increase of $29,613 from the prior year due to improved operating results. We believe the non-GAAP measure (free cash flow) provides useful information to both management and investors by including the amount reinvested in the business for capital expenditures and the return on investment to our shareholders through payment of dividends. Our total debt of $1,151,109, including notes payable, increased by $93,985 due to our bond issuance and share repurchases, partially offset by operating cash flow and option exercise proceeds. In January 2012, we strengthened our liquidity position by issuing $400,000 of Senior Notes due January 15, 2022 with a coupon rate of 4.20%. We used the net proceeds for general corporate purposes, including paying down our commercial paper and retiring our $200,000 of 5.625% Senior Notes that matured on May 1, 2012. Our liquidity position is strong, with $253,327 in cash and cash equivalents and $507,328 in unused committed bank credit facilities providing total committed liquidity of $760,655 at year-end, compared to $601,802 at the end of 2011.Consolidated Operating Expenses (dollars) Consolidated operating expenses increased 1.1% or $9,274 compared to the prior year. The increase was driven primarily by higher incentive compensation and investments in growth initiatives, partially offset by savings from previously completed restructuring initiatives. Restructuring charges of $9,646 or 0.2% of net sales and $8,876 or 0.2% of net sales were included in the 2012 and 2011 periods, respectively. There were no acquisition-related charges included in operating expenses in the 2012 period. Acquisition-related charges of $1,859 or 0.1% of net sales were included in operating expenses in the 2011 period.
Coatings Segment EBIT EBIT as a percent of net sales increased primarily due to the impairment charge recognized in 2011, carryover selling price increases, productivity improvements, including savings from our previously completed restructuring actions, higher margin new business and lower restructuring charges in 2012. The increase was partially offset by higher raw material costs. The restructuring charges for 2012 and 2011 periods were $1,418 or 0.1% of net sales and $20,940 or 1.0% of net sales, respectively. There were no acquisition-related charges included in EBIT in the 2012 period. EBIT included acquisition-related charges of $1,859 or 0.1% of net sales in the 2011 period. There was no impairment charge on goodwill and intangible assets included in EBIT in the 2012 period. EBIT included an impairment charge of $368,062 or 17.6% of net sales in the 2011 period.
Coatings Segment EBIT EBIT as a percent of net sales decreased primarily due to the impairment charge on goodwill and intangible assets of $368,062 or 17.6% of net sales, the lag between higher raw material costs and selling price increases, restructuring charges, a net gain on the sale of certain assets recognized in 2010 of $11,497 or 0.5% of net sales and acquisition-related charges of $1,859 or 0.1% of net sales in 2011. The decline was partially offset by new business and operating leverage on higher net sales. The restructuring charges for 2011 and 2010 periods were $20,940 or 1.0% of net sales and $10,563 or 0.6% of net sales, respectively.
Paints Segment EBIT EBIT as a percent of net sales decreased primarily due to the lag between higher raw material costs and selling price increases, as well as restructuring charges and acquisition-related charges. The restructuring charges for 2011 and 2010 periods were $13,013 or 0.8% of net sales and $1,595 or 0.1% of net sales, respectively. EBIT included acquisition-related charges of $11,416 or 0.7% of net sales and $3,173 or 0.3% of net sales in the 2011 and 2010 periods, respectively.
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