The Valspar Corporation reported results for the fourth quarter and fiscal year ended October 25, 2013. Fourth quarter 2013 net sales were $1.1 billion, up 8% versus the prior year. Reported net income and earnings per diluted share for the current and prior year include several nonrecurring items, which are detailed in the “Reconciliation of Non-GAAP Financial Measures” included in this release. Fourth quarter 2013 adjusted net income and earnings per diluted share, excluding these nonrecurring items, were $86 million and $0.97, respectively. Fourth quarter 2012 adjusted net income and earnings per diluted share were $80 million and $0.86, respectively
Fiscal year 2013 net sales were $4.1 billion, up 2% versus the prior year. Fiscal year 2013 adjusted net income and earnings per diluted share, excluding nonrecurring items, were $320 million and $3.54, respectively. Fiscal year 2012 adjusted net income and earnings per diluted share were $310 million and $3.28, respectively.
“The fourth quarter was a good finish to the year as growth in both sales and operating income improved from previous quarters. Sales growth was led by strong performance in our US Consumer, Wood and Coil product lines and by the acquisition of Inver,” said Gary E. Hendrickson, Chairman and Chief Executive Officer. “We saw the benefit of new business wins in all product lines. These wins were partially offset by weakness in certain end markets and international regions, as has been the case throughout 2013.”
Looking ahead to fiscal 2014, Hendrickson said, “We expect stronger sales and earnings growth through continued new business, benefits from acquisitions, a stable U.S. market and through our productivity initiatives. We estimate that total sales will increase seven to nine percent in Fiscal 2014 and adjusted annual EPS will be in the range of $3.95 to $4.15.”
Net sales in the Paints segment increased 13% to $449 million in the fourth quarter of 2013, primarily driven by strong growth in the U.S. and new business wins. Adjusted earnings before interest and taxes (EBIT) increased 10% to $49 million. Paints segment adjusted EBIT margins decreased approximately 40 bps to 11.0% which reflects the continued investments in growth initiatives. For the year, Paints segment net sales increased 4% to $1.7 billion, driven by growth in the US and new business which was partially offset by weakness in international markets. Adjusted EBIT for the year increased 3% to $183 million and adjusted EBIT margins decreased by approximately 10 bps to 11.0%.
Net sales in the Coatings segment increased 5% to $602 million in the fourth quarter of 2013. Increased sales from the Inver acquisition and from the coil and wood product lines were partially offset by weakness in the general industrial product line. Coatings segment adjusted EBIT decreased 2% to $93 million, and EBIT margins decreased in the quarter by approximately 120 bps to 15.5%. For the year, Coatings segment sales increased by 2% to $2.2 billion, with growth in the packaging, coil and wood product lines being offset by weakness in the general industrial product line. Coatings segment adjusted EBIT for the year decreased 2% to $352 million, and EBIT margins decreased by approximately 50 bps to 15.9%.
The company reported fiscal 2013 free cash flow (defined as operating cash flow less capital expenditures and dividends) of $201 million. Share repurchases during fiscal 2013 totaled $378 million, representing 5.9M shares, and diluted shares outstanding declined 4%.