BLT

William Blair & Company 33rd Annual Growth Stock Conference June 13, 2013

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

•  Corporate Overview 4 −  BLT Investor Overview −  Business Segments −  Core Competencies −  Strategy to Drive Shareholder Value −  World-wide Sales & Distribution Network −  Manufacturing and Sourcing Capabilities −  Product Development

•  Business Segment Detail 12

−  Forestry, Lawn, and Garden End Markets and Market Drivers −  Farm, Ranch, and Agriculture End Markets and Market Drivers −  Construction End Markets −  Reasons to Invest in Blount

•  Financial Overview 20

−  Financial Performance −  Segment Performance −  Sales by Region −  Debt and Leverage

•  Appendix 25

Index

3

Page

Corporate Overview

4

$487

$657

$976 $928 $934 $955

$84 $127

$169 $136 $138 $145

17.3%19.4%

17.3%14.7% 14.7% 15.2%

$-

$200

$400

$600

$800

$1,000

$1,200

2009 Pro Forma2010

Pro Forma2011

2012 LTM March2013

Forecast2013

Net Sales Adjusted EBITDA Adjusted EBITDA Margin

Blount International, Inc. Headquartered in Portland, Oregon

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”).

BLT Investor Overview

5

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

Blount Summary ValuationBLT Price as of 06/07/13 $13.05Primary Shares (millions) 49.2

Equity Value $642Enterprise Value $1,122

Multiples of Enterprise Value

LTM Adj. EBITDA (3/31/13): $138 8.2xLTM Adj. EBITA (3/31/13): $108 10.4x2013 Estimated EBITDA: $145 7.7x

$7.58

$10.10

$12.63

$15.15

$17.68

$20.20

(25.0%)

0.0%

25.0%

50.0%

75.0%

100.0%

Jan-

10

Apr-1

0

Jul-1

0

Oct

-10

Jan-

11

Apr-1

1

Jul-1

1

Oct

-11

Jan-

12

Apr-1

2

Jul-1

2

Oct

-12

Jan-

13

Apr-1

3

BLT S&P Outdoor Power Equipment Index

Business Segments

6

Concrete Cutting and Finishing (“CCF”)

Farm, Ranch, and Agriculture (“FRAG”)

Forestry, Lawn, and Garden (“FLAG”)

•  LTM 3/31/13 sales of $26 million (3% of total) •  Accounted for in Corporate and Other •  Chain saws and diamond-coated saw chain for cutting

concrete and ductile iron pipe

•  LTM 3/31/13 sales of $654 million (70% 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 3/31/13 sales of $253 million (27% 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

We have significant assets and competitive advantages in the following core competencies:

Core Competencies

7

Distribution

Manufacturing

Product Development

Global sales and distribution infrastructure reaching OEMs and aftermarket via multiple channels

High-volume, small metal parts, particularly with cutting edges

Design and engineering of cutting and cutting-related products

Strategy to Drive Shareholder Value

8

Acquisitions •  In adjacent categories •  Businesses with similar

characteristics to our own

New Products •  Develop new products with

a demonstrable value proposition to end-users

Cost Reductions •  Develop a culture of continuous

improvement •  Reduce complexity and waste in our

processes to drive efficiency •  Increase free cash flow and pay down

debt and/or distribute a modest dividend

•  Acquisition integration

Base Business Growth •  Maintain or develop leading

market share positions in our existing business lines

•  Product design evolution •  High service levels

Cost Reduction

New Product Development

Grow Existing Markets

Accretive Acquisitions

World-wide Sales & Distribution Network

9

•  World-wide distribution reaches all end-use segments −  Traditional two-step distribution through distributor/dealer network −  Dealer direct in select regions −  Mass merchants (~10% of sales) −  End-user direct (~3% to 5% of sales) −  More than 35 chain saw OEMs globally

•  Diversified end-user base −  Mechanized harvesters −  Professional loggers −  Semi-professional: Arborists, maintenance, construction crews, landscapers, etc. −  Consumers (e.g., ruralists, homeowners)

Manufacturing capabilities •  Nearly 250 million feet of saw chain •  More than 15 million guide bars •  More than 15 million lawn mower blades •  More than 100 thousand log splitters Current saw chain capacity weighted toward North America; migrating toward regionally distributed plants •  Expanding China facility •  Planning East Europe facility

Sourcing offices •  North America •  China •  Europe

Manufacturing & Sourcing Capabilities

10

•  Research and Development group established in 2007 to ensure break-through products −  Consists of more than 40 engineers, technicians, managers focused on developing revolutionary

products for our end markets

−  Concept development based on market/customer research and solving unmet needs

−  Recent products: OREGON® 40V MAX Cordless Chain Saw, String Trimmer/Edger, and Hedge Trimmer, as well as PowerSharp®, PowerGrit®, and others

•  Marketing groups design and develop evolutionary products within existing product families

−  More than 80 design engineers and marketing specialists across company

−  Concept development based on customer research

Product Development

11

Representative New Products

PowerSharp® PowerGrit® OREGON® 40V Cordless Tools:

Chain Saw, String Trimmer Edger, Hedge Trimmer

Business Segments

12

•  Forestry sales are approximately 80% of FLAG segment

•  Blount manufactures and sells saw chain, guide bars, sprockets, and other accessories −  Sales are approximately 75% replacement (primarily traditional dealer channel) and 25% OEM

−  OREGON® is largest brand; also market under Carlton®, KOX and Tiger® brands

−  Largest competitor is a chain saw OEM; many small competitors offer low-end products

−  Estimated market share of approximately 60% in saw chain

•  Global sales and distribution network is key success factor

−  Long-term relationships with 35+ OEMs and 300+ distributors

−  KOX acquisition (Q1 2011) expanded distribution channel to end-user direct

•  Design and engineering capabilities ensure we are continually innovating

•  Worldwide manufacturing −  Capacity for nearly 250 million feet of chain / more than 15 million guide bars – largest producer in the world

−  Five plants (Portland (2), Canada, Brazil, China)

Forestry End Market

13

Representative Products

Saw Chain PowerSharp® Chain Guide 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

Electric Gas

Chain Saw Growth •  Growing global market with an estimated 18

million power head units sold in 2011, representing a compound annual growth rate of 8.5% since 2000 −  Gas saws growing at 9.5% −  Electric saws growing at 6.0%

•  Blount benefits from initial sale, plus recurring replacement stream −  Saw chain sales grew at 5.8% CAGR 2001 to

2011

Forestry Market Drivers

14

Source: Management estimates

Total Saw Chain Market Share

Blount Brands Combined

Competitor A

All Others

Blount Brands Combined

Competitor A

All Others

Global Saw Chain Market: •  2010 – 333 million feet •  2011 – 375 million feet

Saw Chain Market Size •  2011 estimated market size of

approximately 375 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 2011

•  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, Mexico, and 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 through addition of Mexico and France blade plants

•  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

15


Lawnmower Blades Edger Blades Trimmer Heads, Nylon Trimmer Line

Air Filters, Spindles, and Other

Replacement Parts

•  FRAG division created with acquisition of SpeeCo (Q3 2010). Woods/TISCO and PBL acquisitions (Q3 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 acquisition opportunities in North America, Europe, and Brazil

•  Positive macro dynamics −  Growing size and affluence of world population increasing global food demand −  Ruralist trends increasing number of small farms in U.S. −  Water scarcity driving new technology

Farm, Ranch, and Agriculture End Market

16


Log splitters 3-Point Digger Tractor Parts Tractor Attachments 3-Point Linkage Components

$0

$10

$20

$30

$40

$50

2006 2011 2016E 2021E

($ in

bill

ions

)

$15.2

$21.2

$27.8

$36.1

FRAG – Positive Macro Dynamics

17

Developing regions converting to more protein-based diets(1)… Global Agricultural Equipment Demand

…requiring 50% increase in food output by 2030 on less land per capita. Global Agricultural Aftermarket Parts & Attachments Demand

0.0

0.1

0.2

0.3

0.4

0.5

0

1

2

3

4

5

6

7

8

9

10

1960

1970

1980

1990

2000

2010

2020

2030

2040

2050

Arable Hectares Per PersonW

orld

Pop

ulat

ion

(Bill

ions

)

Total Population Arable Hectares Per Person

Sources: USDA, U.S. Census, Global Harvest Initiative, Alexandratos (2012)

World Population Growing in Size and Affluence…

Source: Freedonia

…Driving Demand for Agricultural Equipment & Parts

'06 - '21E CAGR

n Asia-Pacific 9.0%n C. & S. America 7.8%n Africa/Mideast 6.0%n E. Europe 5.8%n N. America 3.6%n W. Europe 3.1% Total 6.0%

$0

$100

$200

$300

2006 2011 2016E 2021E

($ in

bill

ions

)

$84.2

$125.6

$174.6

$236.6

'06 - '21E CAGR

n Asia-Pacific 10.1%n C. & S. America 8.9%n Africa/Mideast 6.6%n E. Europe 6.0%n N. America 4.5%n W. Europe 3.2% Total 7.1%

(1) Increasing demand for grains for livestock feed, as producing calorie energy & protein from livestock takes an estimated 2.5 – 10x more grain

1.5%

1.1%

0.8%

0.3%

0.0%

2.0%

4.0%

6.0%

8.0%

10.0%

0.0%

0.5%

1.0%

1.5%

2.0%

South &SE Asia

Africa LatinAmerica

Developed

Meat Consumption (Kg/person/year) GDP per Capita

% C

AGR

200

5vs

. 203

0

% C

AGR

2005vs. 2030

•  ICS business launched in 1991 to service the professional concrete-cutting market −  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, saves time

−  Replacement saw chain business provides recurring sales stream

•  Growth opportunities

−  Geographic expansion in Europe and China

−  Product expansion into ductile iron pipe cutting (sewage, utility) with PowerGrit®

−  Acquisition opportunities in concrete cutting and finishing products

Construction End Market

18


Whole Goods Diamond Saw Chain PowerGrit®

Reasons to Invest in Blount

19

Attractive Business Model

Leveragable Infrastructure

Well Positioned to Grow

•  “Razor blade”-like FLAG and FRAG replacement parts business

•  Stable non-cyclical FLAG parts business

•  5% saw chain CAGR last 10 years

•  Complementary FRAG whole goods business

•  Strong position in niche markets

•  Strong operating margins •  Strong cash flow profile

•  Design and engineering of cutting systems

•  Manufacturing of high-volume small metal parts, often with a cutting edge

•  Low cost capability •  Global sales and

distribution network •  Segment cross-selling

opportunities

•  Organic growth and margin enhancement

•  Strong management team, back-office, and culture

•  Significant continuous improvement focus

•  Shared services infrastructure •  Global Supply Chain •  R&D •  Finance and other

functional areas •  New product

development focus •  Expansion in

replacement parts •  Leveraging existing

distribution •  Margin expansion

•  Acquisition opportunities in Lawn & Garden, FRAG, and Concrete Cutting and Finishing

Financial Overview

20

Financial Performance

21

______________ 1)  2010 pro forma includes a full twelve months of results for SpeeCo, excludes $1.9 million of M&A and certain other expenses 2)  2011 pro forma includes a full twelve months of results for KOX, PBL, and Woods, excludes $4.4 million of M&A and certain other expenses

1 2

•  2013 full year sales expected to range between $930 – $980 million −  FLAG sales up 0% – 4% versus 2012 full year −  FRAG sales up 1% – 6% versus 2012 full year

•  Full-year EBITDA expected to increase to between $140 million and $150 million versus 2012 due to the benefit of volume and absence of non-recurring expense incurred in 2012

$84 $127 $169 $136 $138 $145

$487

$657

$975$928 $934 $955

2009 2010Pro Forma

2011Pro Forma

2012Actual

LTM Mar 2013Actual

2013Outlook

Mid-point

EBITDA Sales

($ millions)

$145 $135 $132

$678 $650 $654

2011PF 2012 LTM 3/31/13

Adjusted EBITDA Net Sales

$36$10 $12

$273

$251 $253

2011PF 2012 LTM 3/31/13

Adjusted EBITDA Net Sales

Segment Performance

22

First Quarter 2013

FRAG Segment ($ millions)

FLAG Segment ($ millions)

•  FLAG Sales −  Soft Europe and

South America •  FLAG EBITDA

−  Margin of 20%+ −  Includes $25.0 million of

shared service charges in the LTM March 2013 period

•  FRAG Sales −  Drought driven decline in

2012 and LTM Mar 2013 periods

•  FRAG EBITDA −  Impacted by SpeeCo

consolidation in 2012 −  Includes $7.3 million of

shared service charges in the LTM March 2013 period

______________ 1)  2011 pro forma includes a full twelve months of results for KOX, PBL, and Woods, excludes certain other expenses

1

1

Sales by Region

23

Year-over-year first quarter sales up 3% overall

North America Q1 2013 Sales $106.3 vs. 2012 6.3% Europe/Russia Q1 2013

Sales $74.1 vs. 2012 -3.8%

Rest of World Q1 2013 Sales $17.1 vs. 2012 -12.5%

Asia Pacific Q1 2013 Sales $35.1 vs. 2012 17.9%

LTM Sales by Category 3/31/2013 Forestry $535 Lawn and Garden 119 Farm, Ranch, and Agriculture 253 Construction 26 Total Sales $934

($ millions)

$286

$350

$530 $517$494

$231$269

$468 $466 $480

3.4x 2.8x

3.1x 3.8x 3.6x

2.7x 2.1x

2.8x 3.4x 3.5x

2009 Pro Forma 2010 Pro Forma 2011 2012 LTM Q1 2013

Debt Net Debt Debt / LTM EBITDA Net Debt / LTM EBITDA

•  Net debt increased from 2009 levels primarily for acquisition of FRAG business segment •  Leverage levels driven by acquisition debt and recent profit and cash flow softness

Debt & Leverage

24

___________________ 1)  LTM EBITDA represents earnings before interest, taxes, depreciation, amortization, and other adjustments for the last twelve months. Acquisitions

are included within the measurement of LTM EBITDA for the twelve month period ending in the quarter of acquisition and thereafter.

($ millions)

(1) (1)

Appendix

25

Adjusted EBITDA From Continuing Operations

26

______________

1)  2010 pro forma includes a full twelve months of results for SpeeCo, excludes $1.9 million of M&A and certain other expenses 2)  2011 pro forma includes full twelve months of results for KOX, PBL and Woods 3)  2013 outlook based on sales range between $930 million and $980 million and operating income range between $88 million and $98 million 4)  Amounts may not sum due to rounding

$ millions 4

Actual 2009

Actual 2010

Pro Forma1

2010Actual2011

Pro Forma2

2011Actual2012

LTM3/31/13

Outlook3

2013Net Sales $487.4 $611.5 $656.6 $831.6 $975.5 $927.7 $934.0 $955.0

Operating income $54.5 $85.6 $89.3 $98.0 $110.0 $79.3 $84.9 $93.0Depreciation 19.5 21.0 21.3 23.5 26.9 28.6 29.2 31.4Non-cash acquisition accounting 1.5 4.9 8.1 15.6 22.0 16.0 15.3 14.9Non-cash stock compensation 1.6 3.2 3.2 4.4 4.4 5.6 5.8 5.7

Subtotal 77.1 114.6 121.9 141.5 163.3 129.5 135.1 145.0

Other AdjustmentsInventory / asset impairment charges - 3.0 3.0 0.5 0.5 - - - M&A expense 1.6 0.6 1.9 4.4 4.4 - - - Facility closure & restructuring 5.7 - - - - 7.0 2.5 - CEO transaction / transition costs - - 0.6 0.5 0.5 - - -

Adjusted EBITDA $84.3 $118.2 $127.4 $146.9 $168.7 $136.4 $137.6 $145.0

CAPEX net 13.4 19.8 20.1 39.4 41.6 51.7 48.3 45.0Adjusted EBITDA less CAPEX $70.9 $98.4 $107.3 $107.5 $127.1 $84.7 $89.3 $100.0

Net debt $230.8 $269.3 $269.3 $468.2 $468.2 $466.5 $480.0 $421.5

Adjusted EBITDA by Segment

27

______________

1)  Amounts may not sum due to rounding 2)  2011 pro forma includes a full twelve months of results for KOX, PBL, and Woods, excludes $4.4 million of M&A and certain other

expenses

$ millions 1

Forestry, Lawn & Garden

Farm, Ranch &

AgriculturalCorporate &

Other Total Blount


Farm, Ranch &


Other Total Blount


Farm, Ranch &


Other Total BlountNet Sales $678.2 $273.0 $24.3 $975.5 $650.5 $250.8 $26.3 $927.7 $654.0 $253.5 $26.5 $934.0

Operating income $116.9 $15.2 ($22.1) $110.0 $108.3 ($7.5) ($21.5) $79.3 $105.1 ($4.8) ($15.4) $84.9Depreciation 21.9 4.7 0.4 27.0 23.1 4.6 0.9 28.6 24.0 4.7 0.5 29.2 Non-cash acquisition accounting 5.5 16.5 - 22.0 3.5 12.5 - 16.0 3.1 12.2 - 15.3 Non-cash stock compensation - - 4.4 4.4 - - 5.6 5.6 - - 5.8 5.8

Subtotal 144.3 36.3 (17.3) 163.3 134.9 9.5 (15.0) 129.5 132.1 12.1 (9.1) 135.1

Other AdjustmentsInventory / asset impairment charges 0.5 - - 0.5 - - - - - - - - M&A expense - - 4.4 4.4 - - - - - - - - Facility closure & restructuring - - - - - - 7.0 7.0 - - 2.5 2.5 CEO transaction / transition costs - - 0.5 0.5 - - - - - - - -

Adjusted EBITDA $144.8 $36.3 ($12.4) $168.7 $134.9 $9.5 ($8.0) $136.4 $132.1 $12.1 ($6.6) $137.6

2012 LTM 3/31/132011 Pro Forma2

Sales and EBITDA Comparison

28

______________

1)  Amounts may not sum due to rounding 2)  2011 pro forma includes a full twelve months of results for KOX, PBL, and Woods, excludes $4.4 million of M&A and certain other

expenses

$ millions 1

Actual 2011

Pro Forma2

2011 2012LTM

3/31/13Sales

FLAG $659.9 $678.2 $650.5 $654.0FRAG 147.5 273.0 250.8 253.5 Other 24.3 24.3 26.3 26.5

Total sales $831.6 $975.5 $927.7 $934.0

Adjusted EBITDAFLAG $141.4 $144.8 $134.9 $132.1FRAG 18.0 36.3 9.5 12.1 Other (12.5) (12.4) (8.0) (6.6)

Adjusted EBITDA $146.9 $168.7 $136.4 $137.6

•  Blount International and Oregon Saw Chain were founded in 1946 and 1947, respectively, and eventually merged in 1985

1946 – Red Blount founded Blount as a construction contractor in Alabama, USA

1947 – Joe Cox founded Oregon Saw Chain Corporation

1952 – Acquired Planer Chain in Guelph, Ontario, Canada and became a multi-national corporation

1957 – Changed the name to Omark Industries to better reflect diversified offering

1963 – Pioneered the development of modern era of light-weight direct-drive chain saws

1985 – Blount acquired Omark Industries in Portland, Oregon, USA

1992 – Founded ICS Division to develop construction products

1997 – Acquired Frederick Manufacturing in Kansas City, Missouri, USA

1999 – Acquired by Lehman Brothers Merchant Banking (“LBMB”)

2000 – Acquired Windsor Forestry Tools from Snap-On Inc.

2001 – Sold commercial ammunition business to Alliant Techsystems

2002 – Moved Corporate Headquarters to Portland, Oregon, USA

2004 – Blount held an initial public offering, where LBMB exited a large portion of its holding

2006 – Sold Dixon Industries (riding lawnmowers) to Husqvarna

2007 – Sold Forestry Division (heavy equipment) to Caterpillar

2008 – Acquired Carlton Holdings in Milwaukie, Oregon, USA

2010 – Acquired SpeeCo in Golden, Colorado, USA; Sold Gear Products to Dover

2011 – Acquired KOX in Germany; PBL in France and Mexico; and Woods/TISCO in Oregon, Illinois, USA

2012 – Opened Sourcing Office in Suzhou, China

Company History

29

Senior Leadership Team

30

YearName Title Joined Blount Prior Experience

Josh Collins Chairman & CEO 2009 n Collins Willmott & Co. (Private Equity)n Lehman Brothers Private Equity

David Willmott President & COO 2009 n Collins Willmott & Co. (Private Equity)n Lehman Brothers Private Equity

Cal Jenness Chief Financial Officer 2000 n Blount Corporate Controller, Treasurern CFO of Bryan Foods, division of Sara Lee Corporation

Ken Saito Senior Vice President 1975 n Blount President, Outdoor Products GroupSupply Chain & Manufacturing Ops. n Blount Senior Vice President Finance and Administration

Andy York Senior Vice President 2012 n Leupold & Stevens, Inc. since 2002Global Sales & Marketing

Cyrille Michel Senior Vice President 1983 n Blount Senior Vice President - Sales & MarketingEuropean Operations n Blount Vice President - Marketing

Jerry Johnson President - FRAG Division 2011 n President, Woods Equipment Companyn General Electric Company

Chad Paulson Vice President 2006 n PacifiCorp since 2003General Counsel & Secretary

BLT

Documents

Transcript of BLT