Kennametal Announces Fiscal 2025 First Quarter Results
Kennametal reported fiscal 2025 first quarter results with sales of $482 million, down 2% from $492 million in the prior year. Earnings per share were $0.28, compared to $0.37 last year, while adjusted EPS was $0.29 versus $0.41. The company generated strong cash from operations of $46 million, up from $26 million year-over-year. Operating income decreased to $36 million (7.5% margin) from $45 million (9.2% margin). The company returned approximately $31 million to shareholders through $15 million in share repurchases and $16 million in dividends.
Kennametal ha riportato i risultati del primo trimestre fiscale 2025 con vendite di 482 milioni di dollari, in calo del 2% rispetto ai 492 milioni dell'anno precedente. Gli utili per azione sono stati di 0,28 dollari, rispetto a 0,37 dollari dell'anno scorso, mentre l'EPS rettificato è stato di 0,29 rispetto a 0,41. L'azienda ha generato un forte flusso di cassa dalle operazioni di 46 milioni di dollari, in aumento rispetto ai 26 milioni dell'anno scorso. L'utile operativo è diminuito a 36 milioni di dollari (margine del 7,5%) rispetto ai 45 milioni di dollari (margine del 9,2%). L'azienda ha restituito circa 31 milioni di dollari agli azionisti attraverso 15 milioni di dollari in riacquisti di azioni e 16 milioni di dollari in dividendi.
Kennametal informó los resultados del primer trimestre fiscal 2025 con ventas de 482 millones de dólares, una disminución del 2% en comparación con los 492 millones del año anterior. Las ganancias por acción fueron de 0,28 dólares, en comparación con 0,37 dólares el año pasado, mientras que el EPS ajustado fue de 0,29 frente a 0,41. La compañía generó un fuerte flujo de efectivo de las operaciones de 46 millones de dólares, un aumento respecto a los 26 millones del año anterior. Los ingresos operativos disminuyeron a 36 millones de dólares (margen del 7,5%) desde 45 millones de dólares (margen del 9,2%). La empresa devolvió aproximadamente 31 millones de dólares a los accionistas a través de 15 millones de dólares en recompra de acciones y 16 millones de dólares en dividendos.
케나메탈은 2025 회계연도 1분기 실적을 보고하며 판매액이 4억 8천2백만 달러로, 이전 해의 4억 9천2백만 달러에서 2% 감소했다고 전했습니다. 주당 수익은 0.28달러로, 작년의 0.37달러에 비해 감소했으며, 조정 주당 수익은 0.29달러로 0.41달러에서 하락했습니다. 회사는 4천6백만 달러의 강력한 운영 현금을 창출했으며, 이는 지난해의 2천6백만 달러에서 증가한 수치입니다. 운영 이익은 7.5%의 이익률로 3천6백만 달러로 감소했으며, 이는 9.2%의 이익률로 4천5백만 달러에서 하락한 것입니다. 회사는 1천5백만 달러의 자사주 매입과 1천6백만 달러의 배당금을 통해 주주에게 약 3천1백만 달러를 반환했습니다.
Kennametal a rapporté les résultats du premier trimestre de l'exercice 2025 avec des ventes de 482 millions de dollars, en baisse de 2 % par rapport à 492 millions de dollars l'année précédente. Le bénéfice par action était de 0,28 dollar, contre 0,37 dollar l'année dernière, tandis que l'EPS ajusté était de 0,29 dollar contre 0,41 dollar. L'entreprise a généré un flux de trésorerie solide provenant des opérations de 46 millions de dollars, en hausse par rapport à 26 millions de dollars d'une année sur l'autre. Le revenu d'exploitation a diminué à 36 millions de dollars (marge de 7,5 %) contre 45 millions de dollars (marge de 9,2 %). L'entreprise a restitué environ 31 millions de dollars aux actionnaires par le biais de 15 millions de dollars en rachats d'actions et de 16 millions de dollars en dividendes.
Kennametal berichtete über die Ergebnisse des ersten Quartals des Geschäftsjahres 2025 mit einem Umsatz von 482 Millionen Dollar, was einem Rückgang von 2% gegenüber 492 Millionen Dollar im Vorjahr entspricht. Der Gewinn pro Aktie betrug 0,28 Dollar im Vergleich zu 0,37 Dollar im letzten Jahr, während das bereinigte EPS 0,29 Dollar gegen 0,41 Dollar betrug. Das Unternehmen erzielte einen starken operativen Cashflow von 46 Millionen Dollar, ein Anstieg gegenüber 26 Millionen Dollar im Jahresvergleich. Der operative Gewinn sank auf 36 Millionen Dollar (Marge von 7,5%) von 45 Millionen Dollar (Marge von 9,2%). Das Unternehmen gab etwa 31 Millionen Dollar an die Aktionäre zurück, darunter 15 Millionen Dollar durch Aktienrückkäufe und 16 Millionen Dollar in Dividenden.
- Strong cash from operations increased to $46M from $26M year-over-year
- Free operating cash flow improved to $21M from -$3M in prior year
- Achieved $5M in incremental restructuring savings
- Insurance recovery of $5M received for tornado damage
- Sales declined 2% to $482M from $492M year-over-year
- EPS decreased to $0.28 from $0.37 in prior year
- Operating income margin declined to 7.5% from 9.2%
- Metal Cutting segment sales decreased 4% to $297M
Insights
Kennametal's Q1 FY2025 results show mixed performance with concerning trends. Sales declined
Key concerns include:
- Softening demand across multiple end markets
- Declining margins in both Metal Cutting and Infrastructure segments
- Higher operating costs despite restructuring savings
The FY2025 outlook suggests continued challenges with adjusted EPS guidance of
- Strong cash from operations of
compared to$46 million in the prior year; free operating cash flow of$26 million compared to negative$21 million in the prior year$3 million - Earnings per diluted share (EPS) of
and adjusted EPS of$0.28 $0.29 - Returned approximately
to shareholders;$31 million in share repurchases and$15 million in dividends$16 million
"While we continue to generate strong cash flow from operations, softer market conditions in a number of our end markets have led sales to come in on the lower end of our expectations," said Sanjay Chowbey, President and CEO. "We do, however, anticipate second quarter results in line with our historical sequential performance and we remain focused on the continued execution of the Value Creation Pillars we outlined last quarter: Delivering Growth, Continuous Improvement and Portfolio Optimization."
Fiscal 2025 First Quarter Key Developments
Sales of
During the quarter, the Company achieved incremental year-over-year restructuring savings of approximately
Operating income was
The reported effective tax rate (ETR) for the quarter was 25.2 percent compared to 21.0 percent in the prior year quarter. The increase in the ETR year-over-year was primarily driven by prior year adjustments including a benefit of approximately
Year-to-date net cash flow from operating activities was
The Company paid
During the quarter, the Company repurchased 600 thousand shares of Kennametal common stock for
Outlook
The Company's expectations for the second quarter of fiscal 2025 and the full year are as follows:
Quarterly Outlook:
- Sales expected to be
-$480 ; foreign exchange anticipated to be neutral compared to the second quarter of fiscal 2024$500 million - Adjusted ETR is expected to be approximately 27.5 percent
- Adjusted EPS is expected to be
-$0.20 $0.30
Annual Outlook:
- Sales expected to be
-$2.0 $2.1 billion - Adjusted EPS is expected to be
-$1.30 $1.70 - At the midpoint, improved operating performance offset by higher ETR and currency headwinds
- Pricing actions expected to cover raw material costs, wages and general inflation
- Interest expense is expected to be approximately
$27 million - Adjusted ETR is expected to be approximately 27.5 percent
- Free operating cash flow of greater than 125 percent of adjusted net income
- Primary working capital as a percent of sales at approximately 30 percent by fiscal year-end
- Capital spending expected to be approximately
$110 million
The Company will provide more details regarding its Outlook during its quarterly earnings conference call.
Segment Results
Metal Cutting sales of
Infrastructure sales of
Dividend Declared
Kennametal announced that its Board of Directors declared a quarterly cash dividend of
The Company will host a conference call to discuss its first quarter fiscal 2025 results on Wednesday, November 6, 2024 at 9:30 a.m. Eastern Time. The conference call will be broadcast via real-time audio on Kennametal's investor relations website at https://investors.kennametal.com/ - click "Event" (located in the blue Quarterly Earnings block).
This earnings release contains non-GAAP financial measures. Reconciliations and descriptions of all non-GAAP financial measures are set forth in the tables that follow.
Certain statements in this release may be forward-looking in nature, or "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Forward-looking statements are statements that do not relate strictly to historical or current facts. For example, statements about Kennametal's outlook for sales, interest expense, adjusted EPS, FOCF, primary working capital, capital expenditures and adjusted effective tax rate for the second quarter and full year of fiscal 2025 and our expectations regarding future growth and financial performance are forward-looking statements. Any forward-looking statements are based on current knowledge, expectations and estimates that involve inherent risks and uncertainties. Should one or more of these risks or uncertainties materialize, or should the assumptions underlying the forward-looking statements prove incorrect, our actual results could vary materially from our current expectations. There are a number of factors that could cause our actual results to differ from those indicated in the forward-looking statements. They include: uncertainties related to changes in macroeconomic and/or global conditions, including as a result of increased inflation and
About Kennametal
With over 85 years as an industrial technology leader, Kennametal Inc. delivers productivity to customers through materials science, tooling and wear-resistant solutions. Customers across aerospace and defense, earthworks, energy, general engineering and transportation turn to Kennametal to help them manufacture with precision and efficiency. Every day approximately 8,400 employees are helping customers in nearly 100 countries stay competitive. Kennametal generated
FINANCIAL HIGHLIGHTS
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED) | |||
Three Months Ended | |||
(in thousands, except per share amounts) | 2024 | 2023 | |
Sales | $ 481,948 | $ 492,476 | |
Cost of goods sold | 330,939 | 329,578 | |
Gross profit | 151,009 | 162,898 | |
Operating expense | 111,653 | 111,649 | |
Restructuring and other charges, net | 611 | 3,086 | |
Amortization of intangibles | 2,718 | 3,045 | |
Operating income | 36,027 | 45,118 | |
Interest expense | 6,312 | 6,601 | |
Other (income) expense, net | (1,657) | 89 | |
Income before income taxes | 31,372 | 38,428 | |
Provision for income taxes | 7,906 | 8,059 | |
Net income | 23,466 | 30,369 | |
Less: Net income attributable to noncontrolling interests | 1,343 | 312 | |
Net income attributable to Kennametal | $ 22,123 | $ 30,057 | |
PER SHARE DATA ATTRIBUTABLE TO KENNAMETAL SHAREHOLDERS | |||
Basic earnings per share | $ 0.28 | $ 0.38 | |
Diluted earnings per share | $ 0.28 | $ 0.37 | |
Basic weighted average shares outstanding | 78,067 | 80,025 | |
Diluted weighted average shares outstanding | 78,657 | 80,699 |
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)
| |||
(in thousands) | September 30, 2024 | June 30, 2024 | |
ASSETS | |||
Cash and cash equivalents | $ 119,588 | $ 127,971 | |
Accounts receivable, net | 282,464 | 302,810 | |
Inventories | 543,427 | 514,632 | |
Other current assets | 58,390 | 57,179 | |
Total current assets | 1,003,869 | 1,002,592 | |
Property, plant and equipment, net | 942,114 | 938,063 | |
Goodwill and other intangible assets, net | 356,616 | 352,988 | |
Other assets | 219,330 | 210,115 | |
Total assets | $ 2,521,929 | $ 2,503,758 | |
LIABILITIES | |||
Revolving and other lines of credit and notes payable | $ 1,426 | $ 1,377 | |
Accounts payable | 201,908 | 191,541 | |
Other current liabilities | 195,052 | 223,043 | |
Total current liabilities | 398,386 | 415,961 | |
Long-term debt | 596,182 | 595,980 | |
Other liabilities | 209,398 | 203,218 | |
Total liabilities | 1,203,966 | 1,215,159 | |
KENNAMETAL SHAREHOLDERS' EQUITY | 1,277,173 | 1,249,875 | |
NONCONTROLLING INTERESTS | 40,790 | 38,724 | |
Total liabilities and equity | $ 2,521,929 | $ 2,503,758 |
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOW (UNAUDITED)
| |||
Three Months Ended | |||
(in thousands) | 2024 | 2023 | |
OPERATING ACTIVITIES | |||
Net income | $ 23,466 | 30,369 | |
Adjustments to reconcile to cash from operations: | |||
Depreciation | 30,839 | 30,461 | |
Amortization | 2,718 | 3,045 | |
Stock-based compensation expense | 7,937 | 8,696 | |
Restructuring and other charges, net | 611 | 3,087 | |
Deferred income taxes | (1,253) | (104) | |
Gain on insurance recoveries | (5,000) | — | |
Other | 1,742 | 5,623 | |
Changes in certain assets and liabilities: | |||
Accounts receivable | 26,605 | 17,937 | |
Inventories | (17,455) | (20,266) | |
Accounts payable and accrued liabilities | (22,270) | (32,555) | |
Accrued income taxes | 1,976 | (11,676) | |
Accrued pension and postretirement benefits | (1,195) | (2,925) | |
Other | (2,975) | (5,981) | |
Net cash flow provided by operating activities | 45,746 | 25,711 | |
INVESTING ACTIVITIES | |||
Purchases of property, plant and equipment | (24,748) | (31,799) | |
Disposals of property, plant and equipment | 93 | 3,048 | |
Proceeds from insurance recoveries | 4,693 | — | |
Other | 9 | 27 | |
Net cash flow used in investing activities | (19,953) | (28,724) | |
FINANCING ACTIVITIES | |||
Net increase in notes payable | — | 7,212 | |
Net increase in revolving and other lines of credit | — | 23,400 | |
Purchase of capital stock | (15,030) | (13,725) | |
The effect of employee benefit and stock plans and dividend reinvestment | (5,768) | (7,013) | |
Cash dividends paid to Shareholders | (15,582) | (15,935) | |
Other | 26 | 9 | |
Net cash flow used in financing activities | (36,354) | (6,052) | |
Effect of exchange rate changes on cash and cash equivalents | 2,178 | (1,858) | |
CASH AND CASH EQUIVALENTS | |||
Net decrease in cash and cash equivalents | (8,383) | (10,923) | |
Cash and cash equivalents, beginning of period | 127,971 | 106,021 | |
Cash and cash equivalents, end of period | $ 119,588 | $ 95,098 |
SEGMENT DATA (UNAUDITED) | Three Months Ended September 30, | ||
(in thousands) | 2024 | 2023 | |
Sales: | |||
Metal Cutting | $ 296,900 | $ 308,229 | |
Infrastructure | 185,048 | 184,247 | |
Total sales | $ 481,948 | $ 492,476 | |
Sales By Geographic Region: | |||
$ 237,727 | $ 246,742 | ||
EMEA | 145,934 | 148,709 | |
98,287 | 97,025 | ||
Total sales | $ 481,948 | $ 492,476 | |
Operating income: | |||
Metal Cutting | $ 23,822 | $ 32,117 | |
Infrastructure | 12,734 | 13,644 | |
Corporate (1) | (529) | (643) | |
Total operating income | $ 36,027 | $ 45,118 | |
(1) Represents unallocated corporate expenses. |
NON-GAAP RECONCILIATIONS (UNAUDITED)
In addition to reported results under generally accepted accounting principles in
Management believes that presentation of these non-GAAP financial measures provides useful information about the results of operations of the Company for the current and past periods. Management believes that investors should have available the same information that management uses to assess operating performance, determine compensation and assess the capital structure of the Company. These non-GAAP financial measures should not be considered in isolation or as a substitute for the most comparable GAAP financial measures. Investors are cautioned that non-GAAP financial measures used by management may not be comparable to non-GAAP financial measures used by other companies. Reconciliations and descriptions of all non-GAAP financial measures are set forth in the disclosures below.
Reconciliations to the most directly comparable GAAP financial measures for the following forward-looking non-GAAP financial measures for the second quarter and full fiscal year of 2025 have not been provided, including but not limited to: FOCF, adjusted operating income, adjusted net income, adjusted EPS, adjusted ETR and primary working capital. The most comparable GAAP financial measures are net cash flow from operating activities, operating income, net income attributable to Kennametal, EPS, ETR and working capital (defined as current assets less current liabilities), respectively. Primary working capital is defined as accounts receivable, net plus inventories, net minus accounts payable. Because the non-GAAP financial measures on a forward-looking basis are subject to uncertainty and variability as they are dependent on many factors - including, but not limited to, the effect of foreign currency exchange fluctuations, impacts from potential acquisitions or divestitures, gains or losses on the potential sale of businesses or other assets, restructuring costs, asset impairment charges, gains or losses from early extinguishment of debt, the tax impact of the items above and the impact of tax law changes or other tax matters - reconciliations to the most directly comparable forward-looking GAAP financial measures are not available without unreasonable effort.
THREE MONTHS ENDED SEPTEMBER 30, 2024 (UNAUDITED) | |||||
(in thousands, except percents and per share data) | Sales | Operating | ETR | Net | Diluted EPS |
Reported results | $ 481,948 | 36,027 | 25.2 % | $ 22,123 | $ 0.28 |
Reported operating margin | 7.5 % | ||||
Restructuring and related charges | — | 626 | 22.2 | 487 | 0.01 |
Differences in projected annual tax rates | — | — | (22.3) | 14 | — |
Adjusted results | $ 481,948 | $ 36,653 | 25.1 % | $ 22,624 | $ 0.29 |
Adjusted operating margin | 7.6 % | ||||
(2) Attributable to Kennametal. |
THREE MONTHS ENDED SEPTEMBER 30, 2024 (UNAUDITED) | ||||
Metal Cutting | Infrastructure | |||
(in thousands, except percents) | Sales | Operating | Sales | Operating |
Reported results | $ 296,900 | $ 23,822 | $ 185,048 | $ 12,734 |
Reported operating margin | 8.0 % | 6.9 % | ||
Restructuring and related charges | — | 646 | — | (20) |
Adjusted results | $ 296,900 | $ 24,468 | $ 185,048 | $ 12,714 |
Adjusted operating margin | 8.2 % | 6.9 % |
THREE MONTHS ENDED SEPTEMBER 30, 2023 (UNAUDITED) | |||||
(in thousands, except percents and per share data) | Sales | Operating | ETR | Net | Diluted EPS |
Reported results | $ 492,476 | 45,118 | 21.0 % | $ 30,057 | $ 0.37 |
Reported operating margin | 9.2 % | ||||
Restructuring and related charges | — | 3,694 | 9.5 | 3,391 | 0.04 |
Differences in projected annual tax rates | — | — | (9.5) | (444) | — |
Adjusted results | $ 492,476 | $ 48,812 | 21.0 % | $ 33,004 | $ 0.41 |
Adjusted operating margin | 9.9 % | ||||
(2) Attributable to Kennametal. |
THREE MONTHS ENDED SEPTEMBER 30, 2023 (UNAUDITED) | ||||
Metal Cutting | Infrastructure | |||
(in thousands, except percents) | Sales | Operating | Sales | Operating |
Reported results | $ 308,229 | $ 32,117 | $ 184,247 | $ 13,644 |
Reported operating margin | 10.4 % | 7.4 % | ||
Restructuring and related charges | — | 2,539 | — | 1,155 |
Adjusted results | $ 308,229 | $ 34,656 | $ 184,247 | $ 14,799 |
Adjusted operating margin | 11.2 % | 8.0 % |
Free Operating Cash Flow (FOCF)
FOCF is a non-GAAP financial measure and is defined by the Company as net cash flow provided by operating activities (which is the most directly comparable GAAP financial measure) less capital expenditures plus proceeds from disposals of fixed assets. Management considers FOCF to be an important indicator of the Company's cash generating capability because it better represents cash generated from operations that can be used for dividends, debt repayment, strategic initiatives (such as acquisitions) and other investing and financing activities.
FREE OPERATING CASH FLOW (UNAUDITED) | Three Months Ended | |||
(in thousands) | 2024 | 2023 | ||
Net cash flow provided by operating activities | $ 45,746 | $ 25,711 | ||
Purchases of property, plant and equipment | (24,748) | (31,799) | ||
Disposals of property, plant and equipment | 93 | 3,048 | ||
Free operating cash flow | $ 21,091 | $ (3,040) |
Organic Sales Growth (Decline)
Organic sales growth (decline) is a non-GAAP financial measure of sales growth (decline) (which is the most directly comparable GAAP measure) excluding the effects of acquisitions, divestitures, business days and foreign currency exchange from year-over-year comparisons. Management believes this measure provides investors with a supplemental understanding of underlying sales trends by providing sales growth on a consistent basis. Management reports organic sales growth (decline) at the consolidated and segment levels.
ORGANIC SALES (DECLINE) GROWTH (UNAUDITED) | ||||||
Three Months Ended September 30, 2024 | Metal Cutting | Infrastructure | Total | |||
Organic sales (decline) growth | (4) % | 1 % | (2) % | |||
Foreign currency exchange effect (3) | (2) | — | (1) | |||
Business days effect (4) | 2 | (1) | 1 | |||
Sales decline | (4) % | — % | (2) % |
(3) Foreign currency exchange effect is calculated by dividing the difference between current period sales and current period sales at prior period foreign exchange rates by prior period sales. |
(4) Business days effect is calculated by dividing the year-over-year change in weighted average working days (based on mix of sales by country) by prior period weighted average working days. |
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SOURCE Kennametal Inc.
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