Strong coatings sales and increased industrial demand helped Valspar Corp. beat expectations for its third fiscal quarter and led executives to boost their guidance for the rest of the year.
Sales for the fiscal quarter ended July 25, jumped 10 percent to $1.2 billion. Excluding one-items, adjusted earnings rose 7 percent to $103 million, or $1.21 a share. On average Wall Street analysts had expected $1.19 billion in sales and earnings of $1.16 per share. Including one-time items, earnings were $97.8 million or $1.14 per share.
Upbeat investors pushed up the stock price about a half-percent to close Tuesday at $78.25 while the broader market was lower.
CEO Gary Hendrickson credited the results to "the successful integration of acquisitions; strong performance from China and Europe; improved sales and profitability in our coatings segment." He also noted that the company benefited from new growth initiatives, new products and productivity improvements.
Hendrickson said he expects 2014 sales to now grow 9 percent, which is at the high end of the firm's previous guidance of 7 percent to 9 percent. He also updated Valspar's adjusted earnings guidance to $4.05 to $4.15 per share, from the previous range of $3.95 to $4.15 per share.
Minneapolis-based Valspar makes paints, stains and coatings that are sold through Lowes, Ace Hardware stores and to industrial factories around the world. Officials said they were pleased with Lowes and Ace's domestic results.
During a conference call with analysts Tuesday, Hendrickson noted that Valspar's overseas operations benefited from four developments, including the gains in China, the restructuring of its business in Australia and the effect of its year-old purchase of Inver Group, an Italy-based entity that makes industrial liquid and powder coatings for customers across Europe.
The fourth factor, Hendrickson said, was progress from Valspar's two-year-old partnership with the B & Q hardware chain in Great Britain. Valspar had products in only 100 B & Q stores as recently as February. By July's end, however, it had products in 250 B & Q stores and plans to enter another 100 by the end of the year.
"The sell-through of Valspar products and consumer acceptance is very good at B & Q," Hendrickson said. "Consumer acceptance has been phenomenal. It's exceeded our expectations."