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Blount Preliminary Q4 Results Weak; Buyout Expected in 1H16

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Machinery company Blount International Inc. recently reported preliminary results for fourth-quarter 2015 and the full year.

Per the report, Blount International generated net sales of $200.7 million, down roughly 13.6% year over year. The decline was primarily triggered by a 13.8% drop in revenues generated from the Forestry, Lawn and Garden segment, and a 14% decline in sales at the Farm, Ranch and Agriculture segment. Unit volume sales were also weak, while unfavorable foreign currency movements posed headwinds in the quarter. For 2015, the company’s net sales totaled $828.6 million, down 12.3% from the year-ago period.
 
Also, Blount International’s margin profile weakened in the fourth quarter, with the gross margin falling 240 basis points year over year to 26.7%. Operating loss in the quarter widened to $24.4 million from operating loss of $2.5 million a year ago. Adjusted earnings before interest, tax, depreciation and amortization (“EBITDA”) totaled $21.3 million.

The company’s cash position improved from the prior year, with net cash generated from operating activities surging 303.6% to $13.8 million, while free cash was $16.2 million as compared to cash used of $7 million. Cash and cash equivalents were $25.9 million at fourth-quarter end.

Additionally, Blount International stated that management anticipates the acquisition of the company by the affiliates of American Securities and P2 Capital Partners to close in the first half of 2016. As revealed earlier, this all-cash transaction is worth approximately $855 million, including the assumption of debt. Each common share of Blount International will be exchanged for $10.00 in cash.
 
Blount International, with a market capitalization of $468 million, currently carries a Zacks Rank #3 (Hold). Better-ranked stocks in the machinery industry include Graco Inc. (GGG - Free Report) , Nordson Corporation (NDSN - Free Report) and Astec Industries, Inc. (ASTE - Free Report) . All these stocks carry a Zacks Rank #2 (Buy).

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