EX-99.1 2 a08-27638_1ex99d1.htm EX-99.1

Exhibit 99.1

 

 

Blount International, Inc.

 

4909 SE International Way (97222 4679)

 

PO Box 22127

 

Portland, OR 97269 2127 USA

 

(503) 653-8881

 

FAX: (503) 653-4555

 

 

NEWS RELEASE

 

 

 

 

 

 

 

Contact:

Calvin E. Jenness

 

 

Senior Vice President

 

 

and Chief Financial

 

 

Officer

 

 

503-653-4573

 

Release:

Immediately

 

Blount Announces 2008 Third Quarter Results

 

·                 Record sales and operating income posted in third quarter

·                 Full year outlook for sales and operating income increased

·                 Diluted EPS from continuing operations of $0.31, up 82% from last year

 

PORTLAND, OR, November 5, 2008:  Blount International, Inc. [NYSE: BLT] (“Blount” or the “Company”) today announced results for the third quarter ended September 30, 2008.

 

Results for the Quarter Ended September 30, 2008

 

The Company’s sales in the third quarter were $175.0 million, compared to $129.9 million in 2007, a 35% increase. This year’s third quarter represents the second consecutive quarter of record sales for the Company’s continuing operations. The majority of the improvement was generated by increased unit volumes of the Company’s saw chain related products. Additional sales growth was generated by the inclusion of the Carlton business, which was acquired in May of this year.

 

Operating income in this year’s third quarter also represented a record level for the Company’s continuing operations.  In the third quarter, operating income was $30.0 million compared to $20.6 million last year, a 46% increase. Income from continuing operations increased by 83% from last year’s third quarter to $15.0 million ($0.31 per diluted share), in part due to lower interest expense.

 

“The Company’s excellent third quarter financial results were reflective of the strong demand for our products in most geographic markets,” said Chairman and Chief Executive Officer James S. Osterman.  “Sales in international markets were bolstered by new customer gains, higher selling prices and a favorable foreign currency environment. Core domestic sales were up 27% from last year’s third quarter in part due to storm activity along the U.S. Gulf Coast.  We have increased our financial outlook for 2008 to reflect these solid results, as well as the anticipated benefit on our costs from a strengthening U.S. dollar.  Fourth quarter sales are estimated to exceed last year’s fourth quarter, although at a lower growth rate than was experienced in the first nine months of 2008,” Osterman

 


 

added.  “The recent turmoil in the financial markets and the revaluation of the U.S dollar has created caution on the part of some of our customers, but has not impacted Blount’s ability to execute its business model and generate free cash flow,” Osterman concluded.

 

Outdoor Products Segment

 

The Outdoor Products segment’s third quarter sales were $166.2 million, an increase of 36.1% from last year. Excluding the impact of the Carlton acquisition, sales increased by 23.1% from the third quarter of 2007.  International sales were 70% of total segment sales and, exclusive of Carlton, were up 20.3% from last year. Increased volumes and selling prices drove much of the comparable year-over-year improvement.  Foreign exchange rates also contributed to the increase in sales.  The key drivers of the increase in sales are estimated below:

 

Selling Price/Mix

 

+1.8

%

Unit Volume

 

+19.0

%

Foreign Exchange

 

+2.3

%

Carlton Sales

 

+13.0

%

Total increase in Sales

 

+36.1

%

 

Sales order backlog for the segment was $97.7 million at the end the third quarter compared to $67.6 million in the comparable period last year.  September 30, 2008 backlog includes $23.5 million related to Carlton.

 

Segment contribution to operating income was $34.1 million in the third quarter compared to $23.7 million in the comparable period of 2007, a 44.2% increase. Segment contribution margin as a percentage of sales was 20.5% compared to 19.4% in last year’s third quarter.  The increase in segment contribution and margin reflects the impact of incremental sales and associated production leverage at the Company’s manufacturing plants. Higher average selling prices offset the impact of steel cost increases, which were approximately $1.1 million higher as compared to last year’s third quarter. The year-over-year fluctuations in foreign currencies resulted in a $2.8 million reduction in segment contribution to last year. The majority of the foreign currency reduction was related to our Brazilian-based operating costs, as the real was approximately 17% stronger relative to the U.S. dollar in this year’s third quarter as compared to last year. The key drivers of the operating margin increase are estimated below:

 

2007 Third Quarter Operating Margin

 

19.4

%

Increase/(Decrease)

 

 

 

Selling Price/Mix

 

1.4

%

Unit Volume

 

2.2

%

Costs/Mix

 

1.1

%

Carlton Margin Dilution

 

(0.7

)%

Carlton Acquisition Charges

 

(0.6

)%

Foreign Exchange

 

(2.3

)%

Total Change

 

1.1

%

 

 

 

 

2008 Third Quarter Operating Margin

 

20.5

%

 


 

Other and Corporate Expense

 

In the third quarter, contribution to operating income from other and corporate expense totaled a loss of $4.1 million compared to a loss of $3.1 million last year.  The increase in loss from last year is driven primarily by an increase in Corporate-related expenses partially offset by a slight improvement in year-over-year profit from the sales of gear components.

 

2008 Financial Outlook

 

The Company has increased its full year outlook for sales to between $610 million and $615 million and operating income to between $86 million and $88 million for fiscal 2008. The operating income outlook assumes increased steel costs in the fourth quarter as compared to this year’s third quarter and last year’s fourth quarter. This steel cost increase should be offset by the impact from a stronger U.S. dollar in relation to the Canadian and Brazilian currencies, as well as higher average selling prices. Included in the full year operating income estimate is approximately $3 million in non-recurring acquisition-related charges from the Carlton purchase, of which $2.5 million was incurred in the first nine months. Cash flow available for debt repayment is estimated to be between $33 million and $37 million in 2008, excluding the funds used to acquire Carlton.  The effective income tax rate on continuing operations for 2008 is estimated to be approximately 36%.

 

Blount International, Inc. is an international company operating one principal business segment, the Outdoor Products segment.  Blount sells its products in more than 100 countries around the world.  For more information about Blount, please visit our website at http://www.blount.com.

 

“Forward looking statements” in this release, including without limitation the Company’s “outlook,” “expectations,” “beliefs,” “plans,” “indications,” “estimates,” “anticipations,” “guidance,” and their variants, as defined by the Private Securities Litigation Reform Act of 1995,  are based upon available information and upon assumptions that the Company believes are reasonable; however, these forward looking statements involve certain risks and should not be considered indicative of actual results that the Company may achieve in the future.  In particular, among other things, guidance given in this release is expressly based upon certain assumptions concerning market conditions, global financial markets, foreign currency exchange rates, raw material costs, especially with respect to the price of steel, the presumed relationship between backlog and future sales trends and certain income tax matters.  To the extent that these assumptions are not realized going forward, or other unforeseen factors arise, actual results for the periods subsequent to the date of this announcement may differ materially.

 


 

Blount International, Inc. Financial Data (Unaudited)

 

Condensed Consolidated Statements of Income

 

 

 

Three Months

 

Nine Months

 

 

 

Ended September 30,

 

Ended September 30,

 

(In thousands, except per share data)

 

2008

 

2007

 

2008

 

2007

 

Sales

 

$

175,006

 

$

129,853

 

$

463,265

 

$

383,749

 

Cost of sales

 

118,470

 

85,927

 

314,929

 

253,492

 

Gross profit

 

56,536

 

43,926

 

148,336

 

130,257

 

Selling, general and administrative expenses

 

26,526

 

23,327

 

80,037

 

70,800

 

Operating income

 

30,010

 

20,599

 

68,299

 

59,457

 

Interest expense, net of interest income

 

(6,572

)

(8,129

)

(19,501

)

(24,440

)

Other income, net

 

690

 

651

 

1,461

 

715

 

Income from continuing operations before income taxes

 

24,128

 

13,121

 

50,259

 

35,732

 

Provision for income taxes

 

9,146

 

4,940

 

18,171

 

12,490

 

Income from continuing operations

 

14,982

 

8,181

 

32,088

 

23,242

 

Income (loss) from discontinued operations

 

(232

)

1,262

 

(406

)

2,049

 

Net income

 

$

14,750

 

$

9,443

 

$

31,682

 

$

25,291

 

 

 

 

 

 

 

 

 

 

 

Basic income (loss) per share:

 

 

 

 

 

 

 

 

 

Continuing operations

 

$

0.31

 

$

0.17

 

$

0.68

 

$

0.49

 

Discontinued operations

 

—

 

0.03

 

$

(0.01

)

0.04

 

Basic income per share:

 

$

0.31

 

$

0.20

 

$

0.67

 

$

0.53

 

Diluted income (loss) per share:

 

 

 

 

 

 

 

 

 

Continuing operations

 

$

0.31

 

$

0.17

 

$

0.67

 

$

0.48

 

Discontinued operations

 

—

 

0.03

 

$

(0.01

)

0.04

 

Diluted income per share:

 

$

0.31

 

$

0.20

 

$

0.66

 

$

0.52

 

Shares used for per share computations (in 000’s):

 

 

 

 

 

 

 

 

 

Basic

 

47,624

 

47,288

 

47,440

 

47,276

 

Diluted

 

48,248

 

48,113

 

48,079

 

48,068

 

 

Condensed Consolidated Balance Sheets

 

 

 

Sept. 30,

 

Dec. 31,

 

(In thousands)

 

2008

 

2007

 

Assets:

 

 

 

 

 

Cash and cash equivalents

 

$

53,577

 

$

57,589

 

Accounts receivable, net

 

91,454

 

67,818

 

Inventories, net

 

81,363

 

70,273

 

Other current assets

 

19,281

 

21,929

 

Property, plant and equipment, net

 

116,582

 

89,729

 

Other assets

 

123,023

 

104,611

 

Total assets

 

$

485,280

 

$

411,949

 

Liabilities:

 

 

 

 

 

Current maturities of long-term debt

 

$

38,232

 

$

1,242

 

Other current liabilities

 

88,368

 

87,779

 

Long-term debt, net of current maturities

 

293,847

 

295,758

 

Other liabilities

 

84,920

 

81,316

 

Total liabilities

 

505,367

 

466,095

 

Stockholders’ deficit

 

(20,087

)

(54,146

)

Total liabilities and stockholders’ deficit

 

$

485,280

 

$

411,949

 

 

Segment Information

 

 

 

Three Months

 

Nine Months

 

 

 

Ended September 30,

 

Ended September 30,

 

(In thousands)

 

2008

 

2007

 

2008

 

2007

 

Sales:

 

 

 

 

 

 

 

 

 

Outdoor products

 

$

166,217

 

$

122,112

 

$

438,800

 

$

361,085

 

Other

 

8,789

 

7,741

 

24,465

 

22,664

 

Total sales

 

$

175,006

 

$

129,853

 

$

463,265

 

$

383,749

 

Operating income:

 

 

 

 

 

 

 

 

 

Outdoor products

 

$

34,131

 

$

23,667

 

$

80,482

 

$

71,401

 

Other and corporate expense

 

(4,121

)

(3,068

)

(12,183

)

(11,944

)

Operating income

 

$

30,010

 

$

20,599

 

$

68,299

 

$

59,457