Lehman Brothers Merchant
Banking Partners II L.P.
Annual Meeting
November 11, 2004
Blount International, Inc.
Outdoor Industrial and Power Lawnmower
Products Equipment
Agenda
Introduction
Company Overview
Recent Developments
Financial Overview
Next Steps
Company Overview
Blount International
LTM Sales (mm): $668
LTM EBITDA (mm) $123
Margin 18.4%
Outdoor Products Group
(“OPG”)
LTM Sales (mm): $407
LTM EBITDA (mm): $111
Margin 27.3%
Oregon Cutting Systems – Saw
chain, bar & accessories
ICS – Diamond cutting chain for
concrete industry
Industrial Power & Equipment
Group (“IPEG”)
LTM Sales (mm): $217
LTM EBITDA (mm): $26
Margin 12.0%
Forestry & Industrial Equipment –
Timber harvesting equipment
Gear Products – Rotational bearings
gear components
Lawnmower
LTM Sales (mm): $44
LTM EBITDA (mm): $2
Margin 4.5%
Dixon – ZTR ® ride-on lawnmowers
LTM Revenues
LTM EBITDA
___________________________
Note: LTM for period ending September 30, 2004. Segment EBITDA figures exclude corporate expenses.
OPG
61%
Lawnmower
7%
IPEG
32%
OPG
80%
IPEG
19%
Lawnmower
1%
Company Overview
Recent Developments
Recent Developments
Next steps discussed at last year’s annual meeting
Focus on capital structure improvements and debt reduction
Continued cash flow generation
Offshore production opportunities
Sell non-core assets
Recent Developments
Focus on Capital Structure Improvements and Debt Reduction
In August 2004, Blount issued $138 million of primary equity, $175 million of
Senior Subordinated Notes, and amended and restated its existing Credit
Facilities
Proceeds were used to redeem existing Senior and Senior Subordinated
Notes and preferred equivalent security
Over the past year Blount has decreased net debt by $90.0 million and
reduced net leverage from 6.3x to 4.0x
The recapitalization transaction lowered interest expense by over $30
million annually and extended maturities on the Company’s indebtedness
Recent Developments
Offshore Production
Opportunities
Broke ground on new 110,000
square foot facility in Fuzhou,
China
$16 million investment over
next 3 years; expected to
generate $6.5 million in
operating income annually
Artist rendition of facility in Fuzhou, China
China facility will focus on labor-intensive manufacturing processes and
procurement of high quality, low cost materials for North American facilities
Recent Developments
Continued Cash Flow Generation
LTM EBITDA increased from $94.1 mm (as of 9/30/03) to $123.3 million
(as of 9/30/04), a $29.2 million, or 31.0%, increase
Strong operating results primarily due to solid business growth across all
segments
Continue to monitor capital expenditures and corporate overhead
Sell Non-Core Assets
Continue to seek opportunities to divest non-core businesses
New management at two divisions
Solid sales and profit growth in 2004
Financial Overview
LTM period ended September 30, 2004 vs. LTM
period ended September 30, 2003:
LTM Sales increased by $140 million or 26.5%
Continuing recovery of the domestic pulp and
paper market
Strong growth in all three segments (OPG
~16.8%, IPEG ~50.4 %, Lawnmower ~25.3%)
Substantial volume increases in all three
businesses
Third consecutive quarter of $100+ million
sales in the OPG segment
LTM EBITDA increased by $29 million or 31.0%
Driven by increase in sales and leveraging of
existing cost structure
Backlog increased by $40 million, or 36.0%, from
$111 on September 30, 2003 to $151 million on
September 30, 2004
LTM Sales
LTM EBITDA
17.8%
18.4%
$ in MM
$ in MM
Financial Overview
The Amended and Restated Credit Facilities have manageable covenants and
are structured to allow for maximum debt repayment
Financial Overview
Significantly reduced leverage and improved interest coverage since last year
Interest Coverage
Net Leverage
Next Steps
Continued Cash Flow Generation
Continue to Focus on Capital Structure Improvements and Debt
Reduction
Invest in Capacity
Expand IPEG’s International Market Reach
Sell Non-Core Assets
