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Kennametal (KMT) Q4 Earnings Beat Estimates, Revenues Down Y/Y

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Kennametal Inc. (KMT - Free Report) reported fourth-quarter fiscal 2024 (ended Jun 30, 2024) adjusted earnings of 49 cents per share, which beat the Zacks Consensus Estimate of 44 cents. The bottom line decreased 3.9% from the year-ago figure.

Revenue Details

Kennametal’s revenues were $543 million, which decreased 1% from the year-ago quarter’s figure. Organic sales declined 1% year over year. Business days had a positive impact of 2%. Currency exchange negatively impacted sales by 2%.

KMT’s revenues beat the Zacks Consensus Estimate of $540 million.

On a geographical basis, revenues from American operations increased 2% year over year to $274.3 million whereas sales from Europe, the Middle East and Africa region were $162.7 million, down 1% from the year-ago quarter’s reading. Sales from the Asia Pacific belt decreased 1% to $106.2 million.

Kennametal reports results under two business segments, namely Metal Cutting and Infrastructure. Its segmental performance for the fiscal fourth quarter is briefly discussed below:

The Metal Cutting segment’s revenues of $334.5 million decreased 1% year over year. Forex woes had an unfavorable impact of 2% and business days had a positive impact of 1%. The Zacks Consensus Estimate for Metal Cutting’s revenues was pegged at $327 million.

The Infrastructure segment’s revenues totaled $209 million, down 2% year over year. Foreign currency movements had an adverse impact of 1% and business days had a positive impact of 1% year over year. Organic sales declined 2% year over year. The consensus estimate for Infrastructure’s revenues was pegged at $205 million.

Kennametal Inc. Price, Consensus and EPS Surprise 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 0.7% year over year to $372 million. The gross profit decreased 2.5% year over year to $171.3 million wherein the margin decreased 40 basis points (bps) to 31.5%. Operating expenses were $105.5 million, down 4.1% year over year.

The operating income increased 8.9% year over year to $61 million. Operating margin increased 110 bps year over year to 11.3%. Lower raw material costs and restructuring savings aided the results.

Interest expenses were $6.2 million, down 12% from the year-ago quarter’s figure. The adjusted effective tax rate was 29.3%.

Balance Sheet and Cash Flow

While exiting the fiscal fourth quarter, Kennametal’s cash and cash equivalents were $128 million compared with $106 million reported in fourth-quarter fiscal 2023. Long-term debt was $596 million compared with the $595.2 million reported in the year-ago quarter.

In fiscal 2024, Kennametal generated net cash of $277.1 million in operating activities compared with $257.9 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 $107.6 million, up 14% from $94.4 million in the prior fiscal year. Free operating cash flow was $175 million compared with $168.6 million in the previous fiscal year’s period.

KMT paid a dividend worth $63.4 million and repurchased shares worth $108 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 Aug 13, 2024. The disbursement will be made on Aug 27.

Guidance

For fiscal 2025 (ending June 2025), the company anticipates sales to be in the range of $2.0-$2.1 billion. Adjusted earnings per share are anticipated to be in the range of $1.30-$1.70. Free operating cash flow is expected to be more than 125% of net income (adjusted).

Capital spending is expected to be approximately $110 million.

Zacks Rank

The company currently carries a Zacks Rank #4 (Sell).

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Performance of Other Industrial Companies

Pentair plc (PNR - Free Report) reported second-quarter adjusted earnings per share of $1.22, which beat the Zacks Consensus Estimate of $1.15. The reported figure also improved 18% from the year-ago quarter.

Net sales rose 1.6% year over year to $1.1 billion. PNR’s top line outpaced the Zacks Consensus Estimate of $1.09 billion. 

Crown Holdings, Inc. (CCK - Free Report) reported second-quarter adjusted earnings per share of $1.81, which beat the Zacks Consensus Estimate of $1.59. The bottom line improved 8% year over year.

Net sales totaled $3.04 billion, down 2.2% from the year-ago quarter. The top line missed the Zacks Consensus Estimate of $3.06 billion.

A. O. Smith Corporation’s (AOS - Free Report) second-quarter adjusted earnings of $1.06 per share missed the Zacks Consensus Estimate of $1.07. However, the bottom line increased 5% on a year-over-year basis.

Net sales of $1.02 billion surpassed the consensus estimate of $992 million. The top line increased 7% year over year, driven by the strong demand for residential and commercial water heaters in North America.

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