Blount International, Inc. (NYSE: BLT) (“Blount”) announced on Aug. 10 the acquisition of SP Companies, Inc. and its wholly-owned subsidiary, SpeeCo, Incorporated (“SpeeCo”), a Golden, Colo.-based supplier of log splitters, post-hole diggers, tractor three-point linkage parts and equipment, and farm accessories. Blount purchased all of the stock of SpeeCo for approximately $90 million in cash, subject to certain adjustments, and funded the acquisition utilizing its new credit facility.
The acquisition of SpeeCo is expected to provide Blount with several benefits. It will expand Blount’s product lines and expertise in wholegoods and farm and ranch markets; establish a platform for further growth in the farm, ranch and agricultural end markets; add well-known brands to the Blount portfolio; improve low-cost country product sourcing capabilities; and produce profit and cash flow that are accretive in the near term.
“Blount’s acquisition of SpeeCo will provide an immediate, substantial entry into products and markets that complement our existing businesses,” said Josh Collins, Blount’s chairman and CEO. “SpeeCo’s well-known and respected farm and ranch brands and experienced management team, coupled with our global distribution network, provide attractive growth opportunities. We intend to utilize fully the strengths of each company to realize the benefits of this acquisition.”
In the 12 months ended July 31, 2010, SpeeCo’s revenue was $77.1 million, operating income was $8.2 million, and adjusted earnings before interest, taxes, depreciation and amortization (“adjusted EBITDA”) amounted to $13.1 million. Revenue has grown from approximately $53.3 million in 2006 to current levels, representing a compound annual growth rate of approximately 10.8 percent.
The acquisition is expected to be accretive to profit and cash flow in the near term. Commenting on SpeeCo’s profitability and cash generation profile, Calvin Jenness, Blount’s senior vice president and CFO, stated, “Earnings before interest, taxes and amortization (“adjusted EBITA”) for the 12 months ended July 31, 2010, was $12.6 million. This metric indicates a solid profit to cash conversion rate that will be accretive to Blount’s cash generation profile. While we will experience non-cash charges related to purchase accounting in calendar year 2010, SpeeCo is expected to be accretive to Blount profit in 2011.”
Under the corporate structure going forward, Paul Valas, president and CEO of SpeeCo, will report to Collins and join the Blount senior leadership team. “We are excited about Blount’s acquisition of SpeeCo and look forward to continuing our history of providing industry-leading, high-quality products to our customers,” Valas said. “Blount brings a wealth of resources to SpeeCo, particularly a global distribution network, which will help drive our continued growth.”
Founded in 1957, SpeeCo is the North American market leader in the manufacturing of log splitters and a leading distributor of parts and accessories to farm, ranch and related markets. A key customer demographic for SpeeCo is the growing “ruralist” market segment, which consists of landowners who purchase outdoor equipment and supplies largely from farm and ranch retail and farm equipment dealers. SpeeCo’s corporate headquarters and operations are located in Golden, Colo. SpeeCo also has an office in Changzhou, China, where sourcing and engineering personnel are located. SpeeCo markets its products under a variety of brands, including SpeeCo and Farmex.
Blount is a global manufacturer and marketer of replacement parts, equipment, and accessories for the forestry, lawn and garden, and outdoor power equipment sectors, and is the market leader in manufacturing saw chain and guide bars for chain saws. Blount sells its products in more than 100 countries around the world. For more information about Blount and the SpeeCo acquisition, visit www.blount.com.