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Jefferies 2014
Global Industrials ConferenceAugust 12, 2014
Certain statements contained in this presentation are forward looking based on
assumptions of future events which may not prove to be accurate. They involve
risk and uncertainty. Actual results may differ materially from those expected or
implied. We direct you to the cautionary statements detailed in recent news
releases and SEC filings.
Cautionary Statements
2
Blount International, Inc.Headquartered in Portland, Oregon
(NYSE: BLT)
Business: We design, manufacture, and market
replacement parts and equipment for consumers
and professionals in select global end markets,
including forestry, lawn, and garden (“FLAG”);
farm, ranch, and agriculture (“FRAG”); and
concrete cutting and finishing (“CCF”).
Overview
3
Financial Performance 1
3-Year Stock Price 2
1) Pro forma for certain adjustments; 2011 and 2012 pro forma (PF) include full twelve months of results for SpeeCo, KOX, PBL, and Woods.
2) Outdoor Power Equipment Index includes Husqvarna, Emak, Toro, Briggs & Stratton, and Alamo Group.
$ millions
$657
$976 $928
$901 $948
$127 $169
$136 $123 $138
19.4%17.3%
14.7% 13.7% 14.5%
$-
$200
$400
$600
$800
$1,000
$1,200
Pro Forma2010
Pro Forma2011
2012 2013 2014 Outlook
Net Sales Adjusted EBITDA Adjusted EBITDA Margin
Business Segments
4
Concrete Cutting and Finishing
Farm, Ranch, and Agriculture
Forestry, Lawn, and Garden
• LTM 6/30/14 sales of $28 million (3% of total)
• Cost effective way to cut concrete and ductile iron
• Presented in Corporate and Other
• Chain saws and diamond-coated saw chain for cutting concrete
and ductile iron pipe
• Pentruder® high-performance concrete cutting systems
distribution added in the first quarter of 2014
• LTM 6/30/14 sales of $623 million (68% of total)
• Market leader in saw chain and guide bars
• Revenues are approximately 75% – 80% replacement
• Wide-ranging geographic sales mix with approximately 70% of
sales outside of North America
• LTM 6/30/14 sales of $265 million (29% of total)
• Woods and TISCO sell direct to approximately 11,000 dealers in
North America, giving the FRAG segment meaningful presence
• Adjacent distribution to FLAG segment provides cross-selling
opportunities
• Nearly all sales are in North America, representing longer-term
opportunities for international expansion
Core Competencies
We have significant assets and competitive advantages in the following
core competencies:
5
Global Sales & Distribution Network
6
• Global distribution reaches all end-use segments
− Traditional two-step distribution through
distributor/dealer network
− Dealer direct in select regions
− Mass merchants
− End-user direct
− OEMs globally
• Diversified end-user base
• Forestry sales are approximately 80% of FLAG segment
• Blount manufactures and sells saw chain, guide bars, sprockets, other accessories, and cordless power equipment
− Sales are approximately 75% replacement (primarily traditional dealer channel) and 25% OEM
− OREGON® is largest brand; also market under Carlton® and KOX brands
− Largest competitor is a chain saw OEM; many small competitors offer low-end products
− Largest producer of saw chain globally
• Global sales and distribution network is key success factor
− Long-term relationships with 35+ OEMs and 300+ distributors
− KOX acquisition (2011) expanded distribution channel to end-user direct
• Design and engineering capabilities ensure we are continually innovating
• Global manufacturing
− Capacity for nearly 220 million feet of chain / more than 15 million guide bars
− United States, Canada, Brazil, China
Forestry End Market
7
Representative Products
Saw Chain Outdoor Power EquipmentGuide Bars Sprockets
-
2,000
4,000
6,000
8,000
10,000
12,000
14,000
16,000
18,000
20,000
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
Electric Gas
Chain Saw Growth
• Growing global market with an estimated 17.3
million power head units sold in 2012,
representing a compound annual growth rate
of 7.4% since 2000
− Gas saws growing at 8.2%
− Electric saws growing at 5.3%
• Blount benefits from initial sale, plus recurring
replacement stream
Forestry Market Drivers
8
Source: Management estimates
Total Saw Chain Market Share
Global Saw Chain Market:• 2011 – 375 million feet
• 2012 – 390 million feet
Saw Chain Market Size
• 2012 estimated market size of
approximately 390 million feet
− 25-year CAGR of 4% – 5%
− Growth driven by consumer penetration
and shift toward chain saw cutting
(vs. hand cutting)
• Blount is the largest global producer of
saw chain
− Competitor A is a chain saw OEM
− Low cost country manufacturers have
gained share over the past decade
Chain Saw Market – 2000 to 2012
1
1) As of 2012 full year data.
• Lawn and Garden sales – Approximately 20% of FLAG segment
• Outdoor power equipment replacement parts and lawnmower/edger blades
− Manufactures lawnmower/edger blades in Kansas City, Missouri, USA, and Civray, France facilities
− Other products and accessories sourced from third parties
− Sales roughly 35% lawnmower blades and 65% parts/accessories
− Approximately 10,000 SKUs; most non-blade SKUs are vended
• PBL acquisition (Q3 2011) expanded blade manufacturing capacity
• Leverages Blount’s global procurement, sales and distribution network
• Approximately 6% global market share; approximately 9% U.S. market share
− Market consolidation opportunities exist
Lawn and Garden End Market
9
Representative Products
Lawnmower Blades Edger Blades Trimmer Heads, Nylon
Trimmer Line
Air Filters, Spindles,
and Other
Replacement Parts
• FRAG division created with acquisition of SpeeCo (2010). Woods/TISCO and PBL acquisitions
(2011) expanded product offering
− Products include tractor attachments and implements, tractor parts, log splitters, diggers, augers, three-
point linkage equipment, accessories, OEM custom components, and agricultural blade manufacturing
− Today, more than 90% of sales are in the United States
• FRAG business unit offers opportunities in cross-selling, sourcing, supply chain, and back-office
− ~70% of FRAG end market users own chain saws; large replacement parts / accessories component
− Distribution adjacencies and overlap with FLAG
− Further geographic expansion opportunities in Europe and the Americas
• Positive macro dynamics
− Growing size and affluence of world population increasing global food demand
− Ruralist trends increasing number of small farms in U.S.
Farm, Ranch, and Agriculture End Market
10
Representative Products
Log splitters 3-Point Digger Tractor PartsTractor Attachments 3-Point Linkage
Components
• Concrete cutting and finishing business addresses the professional concrete-cutting, municipal
water utilities, and contractor markets
− Product expansion into ductile iron pipe cutting (sewage, utility) with PowerGrit®
− Leveraged Blount’s knowledge of chain saws and saw chain design/manufacturing
• Specialized hydraulic and gas chain saws provide alternative to cut-off saw
− Diamond saw chain grinds through concrete and rebar with a plunge cut
− Advantages vs. cut-off saw are: square corners without overcutting, deeper cuts, time efficient
− Replacement saw chain business provides recurring sales stream
• Growth opportunities
− Geographic expansion in Europe and China
− Exclusive distribution rights for Pentruder Concrete Cutting System in the Americas acquired in Q1 2014
− Acquisition opportunities in concrete cutting and finishing products
Construction End Market
11
Representative Products
Whole Goods Diamond Saw Chain PowerGrit®
1) Registered trademark of Tractive AB
1
$220.4$235.4
$32.0 $34.8
Q2 13 Q2 14
Net Sales Adjusted EBITDA
Second Quarter 2014 Financial Performance
• Sales increased 7% compared to Q2 2013
• We operated well and our profitability improved
• Margins improved due to plant utilization and
restructuring efforts in 2013
$ millions
12
North America Q2 2014
Sales $119.8
vs. 2013 11.9% Europe/Russia Q2 2014
Sales $61.4
vs. 2013 6.0%
Latin America/Other Q2 2014
Sales $22.1
vs. 2013 9.2%
Asia Pacific Q2 2014
Sales $32.2
vs. 2013 -8.7%
LTM LTM
Sales by Category 12/31/13 6/30/14
Forestry $502 $509
Lawn and Garden 111 113
Farm, Ranch, and Agriculture 260 265
Construction 27 28
Total Sales $901 $915
$ millions
Sales up 7%
year-over-year
Profit up 9%
Second Quarter 2014 Results by Segment
13
FLAG
FRAG
___________________1) Reflects segment contribution to operating income
2) Amounts may not sum due to rounding
3) LTM 6/30/2014 contribution to profit includes $21.6 million non cash impairment of purchased intangible assets
• Year-over-year FLAG sales increased $9.4
million, or 6.2%, compared to Q2 2013
• Adjusted EBITDA increased $2.9 million
− Lower costs from closure of a higher cost
FLAG manufacturing plant and improved plant
utilization
− Higher SG&A spend for incentive
compensation, advertising, and professional
fees
• FRAG sales increased $4.7 million, or 7.4%,
versus Q2 2013
− Higher sales volumes and stronger average
pricing
• Adjusted EBITDA increased $0.4 million
− Higher volumes and improved average pricing
− Conversion costs were unfavorable as a result of
marginally higher labor costs
− Product sales mix included relatively lower
margin products compared to 2013
$ millions 2
LTM
Q2 13 Q2 14 $ % 6/30/14
Sales $150.8 $160.1 $9.4 6.2% $622.5
Contribution to Profit1 $20.7 $23.8 $3.1 15.2% $89.9
% of Sales 13.7% 14.9% 14.4%
Adjusted EBITDA $27.4 $30.3 $2.9 10.6% $119.8
% of Sales 18.2% 18.9% 19.2%
Year-over-Year Change
$ millions 2
LTM3
Q2 13 Q2 14 $ % 6/30/14
Sales $62.7 $67.3 $4.7 7.4% $264.6
Contribution to Profit1 $2.0 $2.6 $0.6 29.6% ($17.9)
% of Sales 3.2% 3.9% -6.7%
Adjusted EBITDA $6.4 $6.8 $0.4 5.5% $21.0
% of Sales 10.3% 10.1% 8.0%
Year-over-Year Change
$127.4 $168.7 $136.4 $123.5 $137.5
$656.6
$975.5
$927.7$900.6
$947.5
2010Pro Forma
2011Pro Forma
2012Actual
2013Actual
2014Outlook
Mid-point
EBITDA Sales
2014 Outlook
14
• 2014 full-year sales range $935 million – $960 million
− FLAG sales projected to increase 3% – 6% versus 2013 full year
− FRAG sales projected to increase 6% – 8% versus 2013 full year
• Full-year Adjusted EBITDA expected to range between $135 million – $140 million
• Full-year Free Cash Flow of $32 million to $38 million
• Net leverage 2.6x EBITDA excluding share repurchase
Strategy
• Leverage our channel and geographic resources to sell existing and new, innovative
products for profitable growth
• Build a high performance organization
• Prudently allocate capital
− Share repurchase program recently authorized by Blount’s Board of Directors
− Potential acquisitions to accelerate growth
Targets
• Organic growth to $1.1 billion in revenue and $175 million Adjusted EBITDA
• Generate substantial free cash flow to strengthen balance sheet
Strategy and Five-Year Targets
15
$901
$1,100
$123 $175
2013Actual
2018Target
Net Sales Adjusted EBITDA