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Kennametal Inc. KMT reported first-quarter fiscal 2025 (ended Sept. 30, 2024) adjusted earnings of 29 cents per share, which beat the Zacks Consensus Estimate of 25 cents. The bottom line decreased 29.3% from the year-ago figure.
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KMT’s Revenue Details
Kennametal’s revenues were $481.9 million, which decreased 2% from the year-ago quarter’s figure. Organic sales declined 2% year over year. Business days had a positive impact of 1%. Currency exchange negatively affected sales by 1%.
KMT’s revenues beat the Zacks Consensus Estimate of $581 million.
On a geographical basis, revenues from American operations decreased 2% year over year to $237.7 million, whereas sales from Europe, the Middle East and Africa region were $145.9 million, down 1% from the year-ago quarter’s reading. Sales from the Asia Pacific belt increased 2% to $98.3 million.
Kennametal reports results under two business segments, namely Metal Cutting and Infrastructure. Its segmental performance for the fiscal first quarter is briefly discussed below:
The Metal Cutting segment’s revenues of $297 million decreased 4% year over year. Organic revenues declined 4%. Forex woes had an unfavorable impact of 2%, while business days had a positive impact of 2%. The Zacks Consensus Estimate for Metal Cutting’s revenues was pegged at $301 million.
The Infrastructure segment’s revenues totaled $185 million, up 0.4% year over year. Organic revenues increased 1%, while business days had a negative impact of 1% year over year. The consensus estimate for Infrastructure’s revenues was pegged at $180 million.
Kennametal Inc. Price, Consensus and EPS Surprise
Kennametal Inc. price-consensus-eps-surprise-chart | Kennametal Inc. Quote
KMT’s Margin Profile
Kennametal’s cost of goods sold increased 0.4% year over year to $330.9 million. The gross profit decreased 7% year over year to $151 million, while the margin decreased 180 basis points (bps) to 31.3%. Operating expenses were $112 million, flat year over year.
The operating income decreased 25% year over year to $37 million. Operating margin decreased 130 bps year over year to 7.6%. Lower sales and production volumes within the Metal Cutting segment, higher wages and general inflation and certain manufacturing costs within the Infrastructure segment ailed the results.
Interest expenses were $6.3 million, down 12% from the year-ago quarter’s figure. The adjusted effective tax rate was 4.4%.
Kennametal’s Balance Sheet and Cash Flow
While exiting the fiscal first quarter, Kennametal’s cash and cash equivalents were $119.6 million compared with $128 million in fourth-quarter fiscal 2024. Long-term debt was $596.2 million compared with the $596 million in the year-ago quarter.
In the first three months of fiscal 2025, Kennametal generated net cash of $45.7 million in operating activities compared with $25.7 million in the previous fiscal year’s quarter. Capital invested in purchasing property, plant and equipment (net of the amount received on disposals) was $24.7 million, down 22.2% from $31.8 million in the prior fiscal year. Free operating cash flow was $21.1 million against $3 million cash out flow in the previous fiscal year’s period.
KMT paid a dividend of $15.6 million and repurchased shares worth $15 million.