- Fourth quarter 2014 sales increased 7% compared to 2013
- Fourth quarter 2014 Adjusted EBITDA increased 24% compared to 2013
-
Full year 2014 sales were
$945 million and Adjusted EBITDA was$138 million -
Full year 2014 free cash flow was
$46 million
PORTLAND, Ore. — Sales in the fourth quarter were
Sales for the full year were
"We operated well in 2014, and our results reflect our performance and stronger demand in our core business compared to the previous year," stated
Collins continued, "Looking ahead to 2015, we remain focused on operating well and executing on our strategic plan. While the underlying fundamentals of our business are sound, we are experiencing significant headwinds from foreign currency markets related to the strength of the U.S. dollar."
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."
Forestry, Lawn, and Garden
The FLAG segment had fourth quarter 2014 sales of
| Change in FLAG Segment Sales | ||
| (In millions; amounts may not sum due to rounding) | Sales | Change |
| Fourth quarter 2013 | $147.7 | |
| Increase / (Decrease) | ||
| Foreign Exchange | (4.7) | (3.2)% |
| 143.0 | (3.2)% | |
| Unit Volume | 20.3 | 13.7% |
| Selling Price / Mix | (2.8) | (1.9)% |
| Fourth quarter 2014 | $160.4 | 8.6% |
Segment backlog was
Segment contribution to operating income and Earnings Before Interest, Taxes, Depreciation, Amortization, and certain charges ("Adjusted EBITDA") was
| Change in FLAG Segment Contribution to Operating Income and Adjusted EBITDA | |||||
| (In millions; amounts may not sum due to rounding) | |||||
|
Contribution to Operating Income |
As a Percent of Segment Sales |
Depreciation, Amortization, and Other |
Adjusted EBITDA |
As a Percent of Segment Sales |
|
| Fourth quarter 2013 | $16.3 | 11.1% | $10.1 | $26.4 | 17.9% |
| Increase / (Decrease) | |||||
| Steel Costs | (1.2) | ||||
| Foreign Exchange | 1.0 | ||||
| 16.1 | 11.3% | ||||
| Unit Volume | 8.9 | ||||
| Selling Price / Mix | (2.8) | ||||
| Costs / Mix | (1.7) | ||||
| 20.5 | 12.8% | ||||
| Acquisition accounting(1) | 0.1 | ||||
| Impairment of Acquisition Intangibles | 3.3 | ||||
| Fourth quarter 2014 | $23.9 | 14.9% | $7.3 | $31.2 | 19.4% |
| (1) Represents change in non-cash acquisition accounting impact for all FLAG business units | |||||
Segment contribution to operating income and Adjusted EBITDA improved primarily due to higher sales volumes and favorable foreign exchange rates. Increased steel costs, lower average pricing, and slightly higher costs partially offset the improvements in those areas. The closure of a higher cost FLAG manufacturing plant announced in 2013 and higher plant utilization rates (89% in the fourth quarter of 2014 compared to 65% in the fourth quarter of 2013) contributed to improved overall operating efficiency. The manufacturing cost improvement was more than offset by an increase in SG&A spending, driven mostly by incentive compensation expense as 2014 results compare more favorably to target than in 2013 and higher training, travel, and relocation expenses.
Farm, Ranch, and Agriculture
The FRAG segment reported fourth quarter 2014 sales of
| Change in FRAG Segment Sales | ||
| (In millions; amounts may not sum due to rounding) | Sales | Change |
| Fourth quarter 2013 | $63.1 | |
| Increase / (Decrease) | ||
| Foreign Exchange | (0.1) | (0.1)% |
| 63.0 | (0.1)% | |
| Unit Volume | (0.7) | (1.2)% |
| Selling Price / Mix | 1.0 | 1.6% |
| Fourth quarter 2014 | $63.3 | 0.4% |
Segment backlog was
The FRAG segment had
| Change in FRAG Segment Contribution to Operating Loss and Adjusted EBITDA | |||||
| (In millions; amounts may not sum due to rounding) | |||||
|
Contribution to Operating Loss |
As a Percent of Segment Sales |
Depreciation, Amortization, and Other |
Adjusted EBITDA |
As a Percent of Segment Sales |
|
| Fourth quarter 2013 | $(24.0) | (38.0)% | $26.2 | $2.3 | 3.6% |
| Increase / (Decrease) | |||||
| Steel Costs | — | ||||
| Foreign Exchange | 0.1 | ||||
| (23.9) | (37.9)% | ||||
| Unit Volume | (0.1) | ||||
| Selling Price / Mix | 1.0 | ||||
| Costs / Mix | (0.7) | ||||
| (23.6) | (37.4)% | ||||
| Acquisition accounting(1) | 0.3 | ||||
| Impairment of Acquisition Intangibles | 1.9 | ||||
| Fourth quarter 2014 | $(21.4) | (33.8)% | $23.7 | $2.3 | 3.6% |
| (1) Represents change in acquisition accounting impact for all FRAG business units | |||||
The benefit of improved average pricing was more than offset by slightly lower volumes and higher costs in the FRAG segment, mainly due to additional spending in SG&A related to wages and benefits. Wages and benefits increased primarily due to additional headcount, wage inflation, and higher incentive compensation expenses. Product sales mix in the fourth quarter of 2014 included relatively lower margin products compared to 2013. The FRAG operating loss is also partially attributed to an impairment of purchased intangible assets.
Corporate and Other
Corporate and Other generated net expense of
Net Income
Fourth quarter 2014 net loss decreased primarily due to higher overall operating income in the fourth quarter of 2014 compared to 2013 and lower intangible asset impairment charges. Fourth quarter 2014 net interest expense was flat. Other income improved
| Change in Consolidated Net Loss | ||||
| (In millions, except per share data; amounts may not sum due to rounding) |
Pre-tax Loss |
Income Tax Effect |
Net Loss |
Diluted Earnings per Share |
| Fourth quarter 2013 Results | $(21.3) | $0.2 | $(21.5) | $(0.43) |
| Change due to: | ||||
| Increased operating income excluding acquisition accounting | 8.6 | (0.1) | 8.7 | 0.17 |
| Acquisition accounting & impairment | 5.4 | (0.1) | 5.5 | 0.11 |
| Increased net interest expense | (0.1) | — | (0.1) | — |
| Change in other expense | 2.2 | — | 2.3 | 0.04 |
| Change in income tax rate | — | (2.7) | 2.7 | 0.05 |
| Fourth quarter 2014 Results | $(5.1) | $(2.7) | $(2.4) | $(0.05) |
Cash Flow and Debt
As of
2015 Financial Outlook
Prior to the recent significant movement in currency exchange rates, our expectation was for FLAG sales to return to historic rates of growth with a modest headwind related to ordering patterns from our largest OEM customer. However, we now assume that the recent, significant change in foreign currency markets related to the strength of the U.S. Dollar will override those patterns. The company has significant foreign sales denominated in U.S. dollars. As a result, many of the company's products are effectively priced higher for our customers. While it is still early in the year and significant uncertainty exists, we now estimate the company's fiscal year 2015 sales to range between
The company's outlook range for sales, operating income, and adjusted EBITDA in 2015 versus 2014 is presented in the table below. The table illustrates the foreign currency translation impact at prior year business volumes as well as the expected 2015 unit volume effect resulting from market and currency driven demand pressure related to effectively higher U.S. Dollar denominated prices.
The company's outlook range for sales, operating oncome, and adjusted EBITDA in 2015 versus 2014 is presented in the table below. The table illustrates the foreign currency translation impact at prior year business volumes as well as the expected 2015 unit volume effect resulting from market and currency driven demand pressure related to effectively higher U.S. Dollar denominated prices.
| Change in Sales, Operating Income, and Adjusted EBITDA | ||||||
| (in millions; amounts may not sum due to rounding) | ||||||
| Sales | Operating Income | EBITDA | ||||
| High | Low | High | Low | High | Low | |
| 2014 Actual | $944.8 | $944.8 | $64.2 | $64.2 | $138.0 | $138.0 |
| 14.6% | 14.6% | |||||
| Increase / (Decrease) | ||||||
| Impairment | — | — | 21.1 | 21.1 | — | — |
| Restructuring | — | — | 2.8 | 2.8 | — | — |
| Depreciation, Amortization & Other | — | — | (1.6) | (1.6) | — | — |
| Foreign Currency Translation | (20.0) | (40.0) | 1.0 | 2.0 | 1.0 | 2.0 |
| Steel | — | — | (1.0) | (2.0) | (1.0) | (2.0) |
| 924.8 | 904.8 | 86.5 | 86.5 | 138.0 | 138.0 | |
| Unit Volume | 20.2 | (6.8) | 7.4 | (2.6) | 7.4 | (2.6) |
| Selling Price / Mix | 5.0 | 2.0 | 5.0 | 2.0 | 5.0 | 2.0 |
| Costs / Mix | — | — | (5.4) | (7.4) | (5.4) | (7.4) |
| 2015 Outlook | $950.0 | $900.0 | $93.5 | $78.5 | $145.0 | $130.0 |
| 9.8% | 8.7% | 15.3% | 14.4% | |||
A comparison of key operating indicators for 2014 actual results and the 2015 outlook mid-point is provided in the table below.
| (In millions) |
2014 Actual |
2015 Outlook Mid-Point |
| Sales | $944.8 | $925.0 |
| Operating Income(1) | 64.2 | 86.0 |
| Adjusted EBITDA | 138.0 | 137.5 |
| Free Cash Flow | 45.6 | 45.0 |
| Net Capital Expenditures | 37.1 | 45.0 |
| Net Debt at Period End(2) | 356.9 | 312.0 |
| Net Debt/Adjusted EBITDA | 2.6x | 2.3x |
| (1) 2014 Actual Operating Income includes a $21.1 million non-cash charge related to impairment of certain acquired intangible assets | ||
| (2) 2015 Outlook does not include potential share repurchases | ||
Adjusted EBITDA and Free Cash Flow are non-GAAP measures and are reconciled to Operating Income and Cash Flow from Operations in the attached financial data table.
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
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