- Third quarter sales increased by 14% to $130.4 million from the
second quarter of 2009 - Outdoor Products segment operating income
contribution margin improved to 20.1% in the third quarter compared
to 13.8% in the first half of 2009 - Diluted EPS of $0.23 per share
in the third quarter - Quarter-end sales order backlog stable at
$81.7 million PORTLAND, Ore., Nov. 3 /PRNewswire-FirstCall/ --
Blount International, Inc. (NYSE:BLT) ("Blount" or the "Company")
today announced third quarter net income of $11.3 million, or $0.23
per diluted share, on sales of $130.4 million. The Company's third
quarter sales represent an improvement from the levels experienced
in the first half of this year. Although third quarter sales were
25.5% less than one year ago, the third quarter of 2008 was a
record period, and 2009 has been subject to the global recession.
Operating income in this year's third quarter was $20.8 million, a
significant improvement from the $19.5 million recorded over the
first six months of this year. Compared to last year's third
quarter, operating income declined by 31%, which was primarily the
result of lower sales volumes. Despite the lower sales volume, the
Company achieved an improved gross profit margin of 34.4% compared
to 32.3% in last year's third quarter. Third quarter net income was
$11.3 million ($0.23 per diluted share) compared to $14.8 million
($0.31 per diluted share) in last year's third quarter. The lower
net income reflects the impact of lower operating income, partially
offset by lower net interest expense and lower income tax expense.
As of September 30, 2009, debt outstanding was $310.2 million,
compared to $332.1 million at the end of last year's third quarter.
The Company had $58.1 million in cash on hand at the end of the
third quarter, up from $53.6 million in the same period last year.
Commenting on the third quarter results, James S. Osterman,
Chairman and Chief Executive Officer, stated: "I am encouraged by
the improvement in customer demand that we saw in the third
quarter. After last year's record third quarter, customer inventory
levels were excessive. We believe that the recent sales uptick
compared to this year's first and second quarters reflects the
correction of much of the field inventory overhang and some
improvement in end-user demand. Equally encouraging is the
improvement we achieved in operating margins this quarter,
reflective of the decisive actions we took earlier this year to
control costs during the economic downturn. We believe we are well
positioned to meet improving customer demand going forward and to
leverage our improved cost structure." Outdoor Products Segment The
Outdoor Products Segment, which represents over 96% of the
Company's revenue to date in 2009, reported third quarter sales of
$126.9 million. This year's third quarter sales were down 23.6%
compared to last year's all-time record third quarter, but
represent the best performance in any quarter since. Lower
year-over-year sales volumes continue to be the biggest driver of
the decline, with changes in foreign exchange rates having a
moderately unfavorable impact on reported sales. Higher selling
prices and improved product mix partially offset the lower volume
and foreign exchange factors. In geographic terms, third quarter
sales declined by 21.1% internationally and 29.4% domestically
compared to last year's third quarter. Domestic sales in the third
quarter of last year were lifted by storm-driven demand in the
United States that has not recurred this year. The trend in
international sales is consistent with the experience recorded in
the first six months of 2009. By channel, third quarter sales to
original equipment manufacturers were down 35.5% and replacement
sales were down 19.6% compared to the prior year, consistent with
first half trends. Through the first nine months of 2009,
approximately 77% of the segment's sales have been through the
replacement channel, which reflects the weaker demand from original
equipment manufacturers as a result of the economic downturn. The
table below reconciles the change in Outdoor Products sales from
the third quarter of last year to this year's third quarter: %
Change in Sales from Prior Year: Unit Volume (25.0)% Selling
Price/Mix +2.9 % Foreign Exchange (1.5)% ------ Total (23.6)%
======= Sales order backlog for the segment was $80.3 million at
the end of this year's third quarter, up 2.3% compared to the $78.6
million as of June 30, 2009 and $97.7 million as of September 30,
2008. Segment contribution to operating income for the third
quarter declined by $9.0 million to $25.5 million compared to last
year's third quarter. The contribution margin of 20.1% of sales in
this year's third quarter was significantly better than the
contribution margin of 13.8% recorded in the first six months of
2009. Last year's third quarter segment contribution was 20.8%. The
year-over-year decline in segment contribution margin reflects
lower unit sales volumes and the associated manufacturing
inefficiencies, partially offset by the impact of higher selling
prices, improved product mix and favorable foreign exchange rates.
The key drivers of the contribution margin decline for the quarter
are illustrated below: Change in Segment Contribution Margin from
Last Year: 2008 Contribution Margin 20.8 % Increase/ (Decrease)
Unit Volume (2.8)% Selling Price/Mix +2.2 % Cost/Mix (2.3)% Foreign
Exchange +2.2 % Total Change ------ (0.7)% ------ 2009 Contribution
Margin 20.1 % ====== Corporate and Other In the third quarter,
corporate and other incurred net expenses of $4.7 million compared
to net expenses of $4.5 million last year. Reduced corporate
overhead spending was more than offset by smaller operating profit
from the sale of gear components. Our gear components operation
continues to be profitable in spite of a nearly 61% sales decline
compared to the prior year. In this year's third quarter, the
Company recorded $0.5 million in severance expenses related to a
reduction in work force, a level consistent with last year. 2009
Financial Outlook For the full year, the Company expects sales to
range between $480 million and $490 million and operating income to
range between $57 million and $60 million. The operating income
range includes approximately $7 million of restructuring costs and
a $2.7 million gain on sale of property. We expect free cash flow
to be between $25 million and $30 million for the full year of
2009. Blount defines free cash flow as cash flow from operations
less net capital expenditures. The effective income tax rate for
2009 is estimated to range between 28% and 32%. Blount
International, Inc. is a global company whose principal business is
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, 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, as well as the uncertainty of the
current global economic situation. 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 Three Months Ended Nine Months Ended Statements of
Income September 30, September 30, ------------------
------------------ (In thousands, except per share data) 2009 2008
2009 2008 ------------------------------- ---- ---- ---- ---- Sales
$130,361 $175,006 $360,886 $463,265 Cost of sales 85,513 118,470
243,609 314,929 ------------- ------ ------- ------- ------- Gross
profit 44,848 56,536 117,277 148,336 Selling, general and
administrative expenses 23,581 26,080 72,767 78,518 Gain on sale of
land and building - - (2,701) - Plant closure and severance costs
482 446 6,886 1,519 --------------------------------- --- --- -----
----- Operating income 20,785 30,010 40,325 68,299 Interest
expense, net of interest income (6,125) (6,572) (18,326) (19,501)
Other income, net 369 690 406 1,461 ----------------- --- --- ---
----- Income from continuing operations before income taxes 15,029
24,128 22,405 50,259 Provision for income taxes 3,687 9,146 5,874
18,171 -------------------------- ----- ----- ----- ------ Income
from continuing operations 11,342 14,982 16,531 32,088 Loss from
discontinued operations - (232) - (406)
--------------------------------- --- ---- --- ---- Net income
$11,342 $14,750 $16,531 $31,682 ---------- ------- ------- -------
------- Basic income (loss) per share: Continuing operations $0.24
$0.31 $0.35 $0.68 Discontinued operations - - - $(0.01) Basic
income per share: $0.24 $0.31 $0.35 $0.67 -----------------------
----- ----- ----- ----- Diluted income (loss) per share: Continuing
operations $0.23 $0.31 $0.34 $0.67 Discontinued operations - - -
$(0.01) Diluted income per share: $0.23 $0.31 $0.34 $0.66
------------------------- ----- ----- ----- ----- Shares used for
per share computations (in 000's): Basic 47,766 47,624 47,751
47,440 Diluted 48,271 48,248 48,210 48,079 ------- ------ ------
------ ------ Condensed Consolidated Balance Sheets September 30,
December 31, (In thousands) 2009 2008 -------------- ---- ----
Assets: Cash and cash equivalents $58,140 $58,275 Accounts
receivable 72,759 75,555 Inventory 81,225 90,302 Other current
assets 24,638 20,432 Property, plant and equipment, net 115,717
119,749 Other assets 135,370 135,371 ------------ ------- -------
Total assets $487,849 $499,684 ------------ -------- --------
Liabilities: Accounts payable and accrued expenses $72,026 $84,597
Debt 310,244 325,520 Other long-term liabilities 127,733 133,087
--------------------------- ------- ------- Total liabilities
510,003 543,204 ----------------- ------- ------- Stockholders'
deficit (22,154) (43,520) --------------------- ------- -------
Total liabilities and stockholders' deficit $487,849 $499,684
------------------------------------------- -------- -------- Three
Months Ended Nine Months Ended Segment Information September 30,
September 30, ------------------ ----------------- (In thousands)
2009 2008 2009 2008 -------------- ---- ---- ---- ---- Sales:
Outdoor products $126,923 $166,217 $348,473 $438,800 Other 3,438
8,789 12,413 24,465 ----- ----- ----- ------ ------ Total sales
$130,361 $175,006 $360,886 $463,265 ----------- -------- --------
-------- -------- Operating income: Outdoor products $25,506
$34,552 $56,020 $81,244 Other and corporate expense (4,721) (4,542)
(15,695) (12,945) --------------------------- ------ ------ -------
------- Operating income $20,785 $30,010 $40,325 $68,299
---------------- ------- ------- ------- ------- DATASOURCE: Blount
International, Inc. CONTACT: Calvin E. Jenness, Senior Vice
President and Chief Financial Officer of Blount International,
Inc., +1-503-653-4573 Web Site: http://www.blount.com/
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