Blount International Inc. (BLT, Financial) filed Quarterly Report for the period ended 2009-09-30.
Blount International Inc. is an international manufacturing company with operations in three business segments: Outdoor Products Industrial and Power Equipment and Sporting Equipment. Headquartered in Montgomery Alabamatheir focus is on manufacturing products which offer superior competitive advantage and hold leading market share positions industry-leading distribution and exceptional customer service. Blount International Inc. has a market cap of $465.1 million; its shares were traded at around $9.75 with a P/E ratio of 16.3 and P/S ratio of 0.8.
Consolidated order backlog at September 30, 2009 was $81.7 million compared to $80.5 million at June 30, 2009. Backlog in the Outdoor Products segment increased $1.8 million, while the backlog for gear components decreased by $0.6 million during the third quarter of 2009.
Gross profit decreased $11.7 million (20.7%) from the third quarter of 2008 to the third quarter of 2009. Much lower sales volume and moderate increases in product costs were partially offset by improved pricing and mix and the net favorable effects of movement in foreign currency exchange rates. Year-over-year steel costs are estimated to be $0.3 million lower for the comparable third quarter periods, reversing the steel cost increases we have experienced in the first two quarters of 2009 compared to 2008. Our manufacturing costs were adversely affected during the third quarter of 2009 by lower production volumes, including a higher number of idle manufacturing days, which caused lower absorption rates and higher period expenses for fixed and semi-variable manufacturing costs when compared to the third quarter of 2008. Our production and shipment volumes were at record levels in the year-ago third quarter. Gross margin in the third quarter of 2009 was 34.4% of sales compared to 32.3% in the third quarter of 2008.
SG&A was $23.6 million in the third quarter of 2009, compared to $26.1 million in the third quarter of 2008, representing a decrease of $2.5 million (9.6%). As a percentage of sales, SG&A increased from 14.9% in the third quarter of 2008 to 18.1% in the third quarter of 2009 primarily due to the sharp decrease in sales revenue, which outpaced the reduction in SG&A spending. Compensation expense for the quarter decreased by $2.0 million on a year-over-year basis, reflecting reductions in staffing levels implemented during 2009 and the deferral of annual merit increases for many of our employees. Employee benefit expenses increased by $1.6 million, primarily due to higher costs for our U.S. and Canadian defined benefit pension plans. Expense for these plans is higher in 2009 than it was in 2008 due to increased amortization of actuarial losses and reduced return on plan assets following the significant market-related decrease in the value of the related pension assets experienced during 2008. Professional services expenses were $0.5 million lower in the third quarter of 2009 than in the third quarter of 2008. Depreciation expense was $0.3 million lower in the third quarter of 2009 than in the comparable quarter of 2008, primarily because our enterprise resource planning software system became fully depreciated during the third quarter of 2008. Advertising expense decreased by $0.4 million as we have reduced or deferred expenditures based on the slowdown in our business. International operating expenses decreased $0.7 million from the prior year due to the stronger U.S. Dollar and its effect on the translation of foreign expenses.
Interest expense was $6.2 million in the third quarter of 2009 compared to $6.9 million in the third quarter of 2008. The decrease was due to lower average outstanding debt balances in the comparable periods, partially offset by higher average interest rates on our variable rate debt. The variable interest rate on our revolver balance increased significantly when we extended the maturity date to August 9, 2010 with an amendment signed on April 30, 2009. The variable rate on our term loans was unaffected by the amendment.
Income from continuing operations in the third quarter of 2009 was $11.3 million, or $0.23 per diluted share, compared to $15.0 million, or $0.31 per diluted share, in the third quarter of 2008.
Read the The complete ReportBLT is in the portfolios of Jean-Marie Eveillard of Arnhold & S. Bleichroeder Advisers, LLC, John Rogers of ARIEL CAPITAL MANAGEMENT LLC, Richard Pzena of Pzena Investment Management LLC, Chris Davis of Davis Selected Advisers, Robert Olstein of Olstein Financial Alert Fund.
Blount International Inc. is an international manufacturing company with operations in three business segments: Outdoor Products Industrial and Power Equipment and Sporting Equipment. Headquartered in Montgomery Alabamatheir focus is on manufacturing products which offer superior competitive advantage and hold leading market share positions industry-leading distribution and exceptional customer service. Blount International Inc. has a market cap of $465.1 million; its shares were traded at around $9.75 with a P/E ratio of 16.3 and P/S ratio of 0.8.
Highlight of Business Operations:
Sales in the three months ended September 30, 2009 decreased by $44.6 million (25.5%) from the same period in 2008. This sales decrease was primarily due to decreased unit volume of $46.5 million. Selling price and mix improvements of $4.3 million partially offset the volume-related decrease in sales. The translation of foreign currency-denominated sales transactions, given the stronger U.S. Dollar in comparison to the third quarter of 2008, reduced consolidated sales by $2.5 million in the comparative period. International sales decreased by $24.7 million (21.3%) and domestic sales decreased by $20.0 million (33.8%). The decrease in international sales reflected worldwide weakness in demand and poor market conditions related to the global recession, as well as the unfavorable effects from movement in foreign currency exchange rates compared to 2008. We have continued to be cautious about extending credit to certain higher risk geographical areas during the current global recession, which we believe has contributed to a slowdown in sales and orders from portions of our international customer base. The decrease in U.S. sales is attributed to poor economic conditions and weakness in demand for our products in the third quarter of 2009, compared to the strong domestic market conditions that prevailed during the third quarter of 2008, attributed in part to increased severe storm activity in the prior year. While orders and sales in the third quarter of 2009 are up compared to the first two quarters of 2009, we believe that many of our customers have reduced or delayed orders for our products, and reduced their inventories of our products, over their concerns about the state of the economy and lower order rates from their customers.Consolidated order backlog at September 30, 2009 was $81.7 million compared to $80.5 million at June 30, 2009. Backlog in the Outdoor Products segment increased $1.8 million, while the backlog for gear components decreased by $0.6 million during the third quarter of 2009.
Gross profit decreased $11.7 million (20.7%) from the third quarter of 2008 to the third quarter of 2009. Much lower sales volume and moderate increases in product costs were partially offset by improved pricing and mix and the net favorable effects of movement in foreign currency exchange rates. Year-over-year steel costs are estimated to be $0.3 million lower for the comparable third quarter periods, reversing the steel cost increases we have experienced in the first two quarters of 2009 compared to 2008. Our manufacturing costs were adversely affected during the third quarter of 2009 by lower production volumes, including a higher number of idle manufacturing days, which caused lower absorption rates and higher period expenses for fixed and semi-variable manufacturing costs when compared to the third quarter of 2008. Our production and shipment volumes were at record levels in the year-ago third quarter. Gross margin in the third quarter of 2009 was 34.4% of sales compared to 32.3% in the third quarter of 2008.
SG&A was $23.6 million in the third quarter of 2009, compared to $26.1 million in the third quarter of 2008, representing a decrease of $2.5 million (9.6%). As a percentage of sales, SG&A increased from 14.9% in the third quarter of 2008 to 18.1% in the third quarter of 2009 primarily due to the sharp decrease in sales revenue, which outpaced the reduction in SG&A spending. Compensation expense for the quarter decreased by $2.0 million on a year-over-year basis, reflecting reductions in staffing levels implemented during 2009 and the deferral of annual merit increases for many of our employees. Employee benefit expenses increased by $1.6 million, primarily due to higher costs for our U.S. and Canadian defined benefit pension plans. Expense for these plans is higher in 2009 than it was in 2008 due to increased amortization of actuarial losses and reduced return on plan assets following the significant market-related decrease in the value of the related pension assets experienced during 2008. Professional services expenses were $0.5 million lower in the third quarter of 2009 than in the third quarter of 2008. Depreciation expense was $0.3 million lower in the third quarter of 2009 than in the comparable quarter of 2008, primarily because our enterprise resource planning software system became fully depreciated during the third quarter of 2008. Advertising expense decreased by $0.4 million as we have reduced or deferred expenditures based on the slowdown in our business. International operating expenses decreased $0.7 million from the prior year due to the stronger U.S. Dollar and its effect on the translation of foreign expenses.
Interest expense was $6.2 million in the third quarter of 2009 compared to $6.9 million in the third quarter of 2008. The decrease was due to lower average outstanding debt balances in the comparable periods, partially offset by higher average interest rates on our variable rate debt. The variable interest rate on our revolver balance increased significantly when we extended the maturity date to August 9, 2010 with an amendment signed on April 30, 2009. The variable rate on our term loans was unaffected by the amendment.
Income from continuing operations in the third quarter of 2009 was $11.3 million, or $0.23 per diluted share, compared to $15.0 million, or $0.31 per diluted share, in the third quarter of 2008.
Read the The complete ReportBLT is in the portfolios of Jean-Marie Eveillard of Arnhold & S. Bleichroeder Advisers, LLC, John Rogers of ARIEL CAPITAL MANAGEMENT LLC, Richard Pzena of Pzena Investment Management LLC, Chris Davis of Davis Selected Advisers, Robert Olstein of Olstein Financial Alert Fund.
