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Kennametal (KMT) Q3 Earnings Miss Estimates, Revenues Fall Y/Y
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Kennametal Inc. (KMT - Free Report) reported third-quarter fiscal 2024 (ended Mar 31, 2024) adjusted earnings of 30 cents per share, which missed the Zacks Consensus Estimate of 31 cents. The bottom line decreased 23.1% from the year-ago figure.
Revenue Details
Kennametal’s revenues were $515.8 million, which decreased 3.8% from the year-ago quarter’s figure. Organic sales declined 2% year over year. Business days had a negative impact of 1%. Currency exchange negatively affected sales by 1%.
KMT’s revenues missed the Zacks Consensus Estimate of $525 million.
On a geographical basis, revenues from American operations decreased 6.2% year over year to $252.9 million, whereas sales from Europe, the Middle East and Africa region were $164.2 million, up 0.2% from the year-ago quarter’s reading. Sales from the Asia Pacific belt decreased 3.1% to $98.6 million.
Kennametal reports results under two business segments, namely Metal Cutting and Infrastructure. Its segmental performance for the fiscal third quarter is briefly discussed below:
The Metal Cutting segment’s revenues of $326.6 million decreased 2.1% year over year. Organic sales growth in the quarter was flat. Forex woes had an unfavorable impact of 1% and business days had a negative impact of 1%. The Zacks Consensus Estimate for Metal Cutting’s revenues was pegged at $326 million.
The Infrastructure segment’s revenues totaled $189.2 million, which were down 6.6% year over year. Foreign currency movements had an adverse impact of 1% and unfavorable business days had a negative impact of 1% year over year. Organic sales declined 5% year over year. The consensus estimate for Infrastructure’s revenues was pegged at $196 million.
Kennametal’s cost of goods sold decreased 1.5% year over year to $362.5 million. The gross profit decreased 8.7% year over year to $153.3 million wherein the margin decreased 160 basis points (bps) to 29.7%. Operating expenses summed $109 million, down 4% year over year.
The operating income decreased 32.9% year over year to $35.2 million. Operating margin decreased 300 bps year over year to 6.8%. Higher wages and general inflation, lower sales volumes and higher raw material costs were spoilsports.
Interest expenses were $6.8 million, down 12.5% from the year-ago quarter’s figure. The adjusted effective tax rate was 26.5%.
Balance Sheet and Cash Flow
While exiting the third quarter of fiscal 2024, Kennametal’s cash and cash equivalents were $92.1 million compared with $106 million reported in fourth-quarter fiscal 2023. Long-term debt was $595.8 million, almost in line with the $595.2 million reported in the fiscal fourth quarter of 2023.
In the first nine months of fiscal 2024, Kennametal generated net cash of $163.5 million in operating activities compared with $126.2 million net cash generated in the previous fiscal year’s quarter. Capital invested in purchasing property, plant and equipment (net of the amount received on disposals) was $84.2 million, up 18.5% from $71.1 million in the prior fiscal year. Free operating cash flow was $84.5 million compared with $59.9 million in the previous fiscal year’s period.
KMT paid a dividend worth $16 million and repurchased shares worth $15 million.
Dividend Update
Kennametal announced that its board of directors approved a quarterly cash dividend of 20 cents per share to its shareholders of record as of May 14, 2024. The disbursement will be made on May 28.
Fiscal 2024 Guidance
For fiscal 2024 (ending June 2024), the company anticipates sales to be in the range of $2.03-$2.05 billion compared with $2.02-$2.07 billion stated before. Adjusted earnings per share are anticipated to be in the range of $1.40-$1.55 compared with $1.35-$1.65 expected before. Free operating cash flow is expected to be more than 125% of net income (adjusted).
Capital spending is expected to be in the range of $100-$110 million.
IDEX Corporation’s (IEX - Free Report) first-quarter adjusted earnings of $1.88 per share surpassed the Zacks Consensus Estimate of $1.75. On a year-over-year basis, the bottom line decreased approximately 10.1%.
IDEX’s net sales of $800.5 million underperformed the consensus estimate of $805 million. The top line also decreased 5.3% year over year.
A. O. Smith Corporation’s (AOS - Free Report) first-quarter adjusted earnings of $1.00 per share surpassed the Zacks Consensus Estimate of 99 cents. The bottom line increased 6% on a year-over-year basis.
Net sales of $978.8 million missed the consensus estimate of $995 million. However, the top line inched up 1% year over year, driven by strong demand for commercial water heaters in North America.
W.W. Grainger, Inc. (GWW - Free Report) has reported earnings per share of $9.62 in first-quarter 2024, beating the Zacks Consensus Estimate of $9.58. The bottom line improved 0.1% year over year.
Grainger’s quarterly revenues rose 3.5% year over year to $4.24 billion. The top line missed the consensus estimate of $4.27 billion.
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Kennametal (KMT) Q3 Earnings Miss Estimates, Revenues Fall Y/Y
Kennametal Inc. (KMT - Free Report) reported third-quarter fiscal 2024 (ended Mar 31, 2024) adjusted earnings of 30 cents per share, which missed the Zacks Consensus Estimate of 31 cents. The bottom line decreased 23.1% from the year-ago figure.
Revenue Details
Kennametal’s revenues were $515.8 million, which decreased 3.8% from the year-ago quarter’s figure. Organic sales declined 2% year over year. Business days had a negative impact of 1%. Currency exchange negatively affected sales by 1%.
KMT’s revenues missed the Zacks Consensus Estimate of $525 million.
On a geographical basis, revenues from American operations decreased 6.2% year over year to $252.9 million, whereas sales from Europe, the Middle East and Africa region were $164.2 million, up 0.2% from the year-ago quarter’s reading. Sales from the Asia Pacific belt decreased 3.1% to $98.6 million.
Kennametal reports results under two business segments, namely Metal Cutting and Infrastructure. Its segmental performance for the fiscal third quarter is briefly discussed below:
The Metal Cutting segment’s revenues of $326.6 million decreased 2.1% year over year. Organic sales growth in the quarter was flat. Forex woes had an unfavorable impact of 1% and business days had a negative impact of 1%. The Zacks Consensus Estimate for Metal Cutting’s revenues was pegged at $326 million.
The Infrastructure segment’s revenues totaled $189.2 million, which were down 6.6% year over year. Foreign currency movements had an adverse impact of 1% and unfavorable business days had a negative impact of 1% year over year. Organic sales declined 5% year over year. The consensus estimate for Infrastructure’s revenues was pegged at $196 million.
Kennametal Inc. Price, Consensus and EPS Surprise
Kennametal Inc. price-consensus-eps-surprise-chart | Kennametal Inc. Quote
Margin Profile
Kennametal’s cost of goods sold decreased 1.5% year over year to $362.5 million. The gross profit decreased 8.7% year over year to $153.3 million wherein the margin decreased 160 basis points (bps) to 29.7%. Operating expenses summed $109 million, down 4% year over year.
The operating income decreased 32.9% year over year to $35.2 million. Operating margin decreased 300 bps year over year to 6.8%. Higher wages and general inflation, lower sales volumes and higher raw material costs were spoilsports.
Interest expenses were $6.8 million, down 12.5% from the year-ago quarter’s figure. The adjusted effective tax rate was 26.5%.
Balance Sheet and Cash Flow
While exiting the third quarter of fiscal 2024, Kennametal’s cash and cash equivalents were $92.1 million compared with $106 million reported in fourth-quarter fiscal 2023. Long-term debt was $595.8 million, almost in line with the $595.2 million reported in the fiscal fourth quarter of 2023.
In the first nine months of fiscal 2024, Kennametal generated net cash of $163.5 million in operating activities compared with $126.2 million net cash generated in the previous fiscal year’s quarter. Capital invested in purchasing property, plant and equipment (net of the amount received on disposals) was $84.2 million, up 18.5% from $71.1 million in the prior fiscal year. Free operating cash flow was $84.5 million compared with $59.9 million in the previous fiscal year’s period.
KMT paid a dividend worth $16 million and repurchased shares worth $15 million.
Dividend Update
Kennametal announced that its board of directors approved a quarterly cash dividend of 20 cents per share to its shareholders of record as of May 14, 2024. The disbursement will be made on May 28.
Fiscal 2024 Guidance
For fiscal 2024 (ending June 2024), the company anticipates sales to be in the range of $2.03-$2.05 billion compared with $2.02-$2.07 billion stated before. Adjusted earnings per share are anticipated to be in the range of $1.40-$1.55 compared with $1.35-$1.65 expected before. Free operating cash flow is expected to be more than 125% of net income (adjusted).
Capital spending is expected to be in the range of $100-$110 million.
Zacks Rank
KMT currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Performance of Other Industrial Companies
IDEX Corporation’s (IEX - Free Report) first-quarter adjusted earnings of $1.88 per share surpassed the Zacks Consensus Estimate of $1.75. On a year-over-year basis, the bottom line decreased approximately 10.1%.
IDEX’s net sales of $800.5 million underperformed the consensus estimate of $805 million. The top line also decreased 5.3% year over year.
A. O. Smith Corporation’s (AOS - Free Report) first-quarter adjusted earnings of $1.00 per share surpassed the Zacks Consensus Estimate of 99 cents. The bottom line increased 6% on a year-over-year basis.
Net sales of $978.8 million missed the consensus estimate of $995 million. However, the top line inched up 1% year over year, driven by strong demand for commercial water heaters in North America.
W.W. Grainger, Inc. (GWW - Free Report) has reported earnings per share of $9.62 in first-quarter 2024, beating the Zacks Consensus Estimate of $9.58. The bottom line improved 0.1% year over year.
Grainger’s quarterly revenues rose 3.5% year over year to $4.24 billion. The top line missed the consensus estimate of $4.27 billion.