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Blount Files Annual Report on Form 10-K and Reports 2013 Results

  • Full year 2013 sales were $901 million and Adjusted EBITDA was $123 million
  • Full year 2013 free cash flow of $67.6 million
  • Non-cash intangible asset impairment charges of $24.9 million recorded in fourth quarter 2013
  • Company reiterates 2014 guidance of $925 million to $950 million of sales and $130 million to $135 million of Adjusted EBITDA

PORTLAND, Ore., April 23, 2014 (GLOBE NEWSWIRE) -- Blount International, Inc. (NYSE:BLT) ("Blount" or "Company") today filed the Company's Annual Report on Form 10-K for the year ended December 31, 2013. The Company had previously disclosed that filing would be delayed beyond the required filing date of March 17, 2013.

For the full year 2013, Blount sales were $900.6 million, consistent with the Company's estimate provided in its news release on February 10, 2014. Adjusted EBITDA (Earnings before Interest, Taxes, Depreciation and Amortization) was $123.5 million, which was $1.5 million below the Company's previous estimate primarily due to higher than anticipated audit fees. Operating income was $37.5 million, which was below the estimate of $64 million primarily due to non-cash impairment charges related to goodwill and acquired intangible assets and the higher audit fees.

External audit fees were approximately $6 million representing an increase of approximately $1.5 million to the amount estimated in the Company's February 10, 2014 announcement of estimated 2013 results. Blount announced on April 15, 2014 that it had appointed KPMG as its new auditor. The Company expects 2014 audit fees to be less than $2.0 million, similar to levels experienced prior to 2013.

Results for the Quarter Ended December 31, 2013

Sales in the fourth quarter were $216.9 million, consistent with earlier estimated results, and represented a six percent decrease from the fourth quarter of 2012. Operating loss for the fourth quarter of 2013 was $16.5 million compared to operating income of $19.4 million in the fourth quarter of 2012. The operating loss in the fourth quarter of 2013 was driven by $24.9 million in non-cash asset impairment charges related to goodwill and other indefinite-life intangible assets, $4.0 million of incremental audit fees, and the result of lower sales in the fourth quarter of 2013 compared to the fourth quarter of 2012. In the fourth quarter 2013, the Company's net loss was $21.5 million, or ($0.43) per diluted share, compared to net income of $9.0 million, or $0.18 per diluted share, in the fourth quarter of 2012.

Full year 2013 sales were $900.6 million, a three percent decrease versus the full year 2012 results of $927.7 million. Operating income for full year 2013 was $37.5 million compared to $79.3 million in 2012. Lower operating income was driven by the non-cash impairment charges mentioned earlier and the result of lower sales and related, unfavorable fixed manufacturing overhead absorption. Net income for the full year 2013 was $4.8 million, or $0.10 per diluted share, compared to net income of $39.6 million, or $0.79 per diluted share, in 2012. Actual Sales and Adjusted EBITDA results for the Company's FLAG and FRAG segments were consistent with the estimates in the Company's 2013 guidance updates provided on February 10, 2014.

Reconciliation to Updated 2013 Guidance Provided February 10, 2014

Blount operates primarily in two business segments – the Forestry, Lawn, and Garden ("FLAG") segment and the Farm, Ranch, and Agriculture ("FRAG") segment. The Company reports separate results for the FLAG and FRAG segments. Blount's Concrete Cutting and Finishing ("CCF") business is included in "Corporate and Other."

The Company has posted a presentation on its website, www.blount.com, which provides detail of actual 2013 results as well as detailed 2013 segment results compared to 2012.

Actual 2013 versus Estimated 2013 Results
(in millions; amounts may not sum due to rounding)
Full Year 2013
Actual Estimated Difference
Sales $901 $901 --
Operating Income $38 $64 ($27)
Adjusted EBITDA $123 $125 ($2)

Actual Operating Income differs from estimated full year 2013 results by $26.5 million due to $24.9 million of non-cash impairment charges and approximately $1.5 in additional external audit fees. Actual Adjusted EBITDA differs by approximately $2.0 million primarily as a result of the $1.5 million of additional external audit fees.

2014 Guidance

The Company reiterated the 2014 guidance announced on February 10, 2014. Adjusted EBITDA for 2014 is expected to be $130 million to $135 million on sales of $925 million to $950 million. Blount expects to file its first quarter 2014 Form 10-Q by the normal deadline of May 12, 2014 and will hold a conference call to discuss the financial results for the first quarter of 2014 and updated 2014 outlook at that time.

Blount is a global manufacturer and marketer of replacement parts, equipment, and accessories for consumers and professionals operating primarily in two market segments: Forestry, Lawn, and Garden ("FLAG"); and Farm, Ranch, and Agriculture ("FRAG"). Blount also sells products in the construction markets and is the market leader in manufacturing saw chain and guide bars for chain saws. Blount has a global manufacturing and distribution footprint and sells its products in more than 115 countries around the world. Blount markets its products primarily under the OREGON®, Carlton®, Woods®, TISCO, SpeeCo®, and ICS® brands. For more information about Blount, please visit our website at http://www.blount.com.

"Forward looking statements" in this release, including without limitation Blount'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 Blount believes are reasonable; however, these forward looking statements involve certain risks and should not be considered indicative of actual results that Blount 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, and 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 being subject to 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 Statements of Income
Three Months Ended December 31, Twelve Months Ended December 31,
(Amounts in thousands, except per share data) 2012 2013 2012 2013
Sales $ 229,562 $ 216,946 $ 927,666 $ 900,595
Cost of sales 167,018 161,258 671,451 658,633
Gross profit 62,544 55,688 256,215 241,962
Selling, general, and administrative expenses 43,131 45,836 170,535 173,516
Facility closure & restructuring charges 1,477 6,400 6,046
Impairment of acquisition intangible assets 24,879 24,879
Operating income 19,413 (16,504) 79,280 37,521
Interest expense, net of interest income (4,269) (4,029) (17,206) (17,837)
Other income (expense), net (494) (799) (284) (2,120)
Income from continuing operations before income taxes 14,650 (21,332) 61,790 17,564
Provision for income taxes 5,666 194 22,202 12,724
Net income (Loss) $ 8,984 $ (21,526) $ 39,588 $ 4,840
Basic income per share: $ 0.18 $ (0.43) $ 0.81 $ 0.10
Diluted income per share: $ 0.18 $ (0.43) $ 0.79 $ 0.10
Shares used for per share computations:
Basic 49,303 49,587 49,170 49,478
Diluted 50,033 50,217 49,899 50,122
Free Cash Flow Three Months Ended December 31, Twelve Months Ended December 31,
(Amounts in thousands) 2012 2013 2012 2013
Net cash provided by operating activities $ 13,529 $ 14,701 $ 52,436 $ 97,055
Net purchases of property, plant, and equipment (14,239) (6,857) (52,892) (29,411)
Free cash flow (Loss) $ (710) $ 7,844 $ (456) $ 67,644
Segment Information Three Months Ended December 31, Twelve Months Ended December 31,
(Amounts in thousands) 2012 2013 2012 2013
Sales:
FLAG $ 165,854 $ 147,731 $ 650,480 $ 613,105
FRAG 57,211 63,051 250,845 260,297
Corporate and Other 6,497 6,164 26,341 27,193
Total sales $ 229,562 $ 216,946 $ 927,666 $ 900,595
Operating income:
FLAG $ 26,218 $ 16,343 $ 108,255 $ 83,215
FRAG (3,875) (23,957) (7,495) (18,641)
Corporate and Other (2,930) (8,890) (21,480) (27,053)
Operating income $ 19,413 $ (16,504) $ 79,280 $ 37,521
Condensed Consolidated Balance Sheets December 31, December 31,
(Amounts in thousands) 2012 2013
Assets:
Cash and cash equivalents $ 50,267 $ 42,797
Accounts receivable 128,444 110,807
Inventories 174,816 156,955
Assets held for sale 7,680
Other current assets 39,795 38,114
Property, plant, and equipment, net 177,702 164,194
Other non-current assets 334,267 295,804
Total Assets $ 905,291 $ 816,351
Liabilities:
Current maturities of long-term debt $15,072 $15,016
Other current liabilities 122,912 113,485
Long-term debt, net of current maturities 501,685 422,972
Other long-term liabilities 154,140 110,478
Total liabilities 793,809 661,951
Stockholders' equity 111,482 154,400
Total Liabilities and Stockholders' Equity $ 905,291 $ 816,351
Net debt (Current maturities plus Long-term debt less Cash and cash equivalents) $ 466,490 $ 395,191
Sales and Adjusted EBITDA
(Amounts may not sum due to rounding)
Three Months Ended December 31, Forestry, Lawn and
Garden
Farm, Ranch, and
Agriculture
Corporate and
Other

Total Company
2012 2013 2012 2013 2012 2013 2012 2013
(Amounts in thousands) Actual Actual Actual Actual Actual Actual Actual Actual
Total sales $ 165,854 $ 147,731 $ 57,211 $ 63,051 $ 6,497 $ 6,164 $ 229,562 $ 216,946
Operating income 26,218 16,343 (3,875) (23,957) (2,930) (8,890) $ 19,413 $ (16,504)
Depreciation 5,933 6,254 1,143 1,447 104 1,821 7,180 9,522
Non-cash acquisition accounting charges 762 524 2,891 3,185 3,653 3,709
Impairment charges 3,292 21,587 24,879
Stock compensation 1,367 1,435 1,367 1,435
Facility closure and restructuring charges 1,477 1,477
Other
Adjusted EBITDA $ 32,913 $ 26,413 $ 159 $ 2,262 $ (1,459) $ (4,157) $ 31,613 $ 24,518
Twelve Months Ended December 31, Forestry, Lawn and
Garden
Farm, Ranch, and
Agriculture
Corporate and
Other

Total Company
2012 2013 2012 2013 2012 2013 2012 2013
(Amounts in thousands) Actual Actual Actual Actual Actual Actual Actual Actual
Total sales $ 650,480 $ 613,105 $ 250,845 $ 260,297 $ 26,341 $ 27,193 $ 927,666 $ 900,595
Operating income 108,255 83,215 (7,495) (18,641) (21,480) $ (27,053) $ 79,280 $ 37,521
Depreciation 23,140 25,322 4,580 5,281 866 2,876 28,586 33,479
Non-cash acquisition accounting charges 3,539 2,055 12,458 12,698 15,997 14,753
Impairment charges 3,292 21,587 24,879
Stock compensation 5,592 5,607 5,592 5,607
Facility closure and restructuring charges 6,989 6,046 6,989 6,046
Other 1,196 1,196
Adjusted EBITDA $ 134,934 $ 113,884 $ 9,543 $ 20,925 $ (8,033) $ (11,328) $ 136,444 $ 123,481
Total Company
2013 2014
Twelve Months Ended December 31, Actual Outlook
Total sales $ 900,595 $ 937,500
Operating income $ 37,521 $ 78,500
Depreciation 33,479 34,000
Non-cash acquisition accounting charges 14,753 12,000
Impairment charges 24,879
Stock compensation 5,607 6,000
Facility closure and restructuring charges(1) 6,046 2,000
Other 1,196
Adjusted EBITDA $ 123,481 $ 132,500
(1) The 2014 outlook includes approximately $1 million of cash transition costs and approximately $0.5 million of non-cash charges.

CONTACT: David Dugan Director, Corporate Communications and Investor Relations 503-653-4692Source:Blount International, Inc.