Core Insights - Kennametal Inc. has been recognized as one of America's Best Midsize Companies for 2025 by TIME and Statista, highlighting its leadership in employee satisfaction and sustainability transparency [1][2] - The recognition reflects Kennametal's commitment to sustainable growth, an engaged workforce, and long-term value creation for stakeholders [2] - This accolade follows Kennametal's inclusion in TIME's World's Best Companies 2024 list, reinforcing its strong performance and values-driven culture [2] Company Overview - Kennametal has over 85 years of experience as an industrial technology leader, providing productivity solutions through materials science, tooling, and wear-resistant solutions [3] - The company serves various sectors including aerospace and defense, earthworks, energy, general engineering, and transportation, helping customers manufacture with precision and efficiency [3] - Kennametal employs approximately 8,400 individuals across nearly 100 countries and generated $2 billion in revenues in fiscal 2024 [3]

Core Insights - Kennametal Inc. (KMT) is positioned to benefit from strong momentum in its end markets, a robust product portfolio, product innovations, and a solid capital-deployment strategy [1][3] - The company has a market capitalization of $1.8 billion and its stock has increased by 8.1% over the past month, outperforming the industry growth of 4.9% [1] Business Strength - KMT is experiencing positive trends that support long-term growth, including increased U.S. and international defense spending and digitalization [3] - Improved supply chain conditions and rising original equipment manufacturer build rates in the aerospace market in EMEA are favorable for KMT [3] - For fiscal 2025, KMT anticipates revenue growth from aerospace and defense markets compared to the previous year [3] Strong Product Portfolio - The company benefits from a well-diversified product portfolio and ongoing investments in product development [4] - Notable product introductions include TopSwiss Inserts, HARVI TE Duo-Lock, KSEM ST Line, Through Coolant ER Collets, FV Geometry Inserts, and Chip Fan [4] Strategic Investments - KMT is focused on strategic partnerships and investments in manufacturing facilities to enhance growth [5] - In May 2025, KMT invested in Toolpath Labs, an AI-powered computer-aided manufacturing software company, to expand its digital capabilities for manufacturing customers globally [5] Shareholder-Friendly Policies - KMT is committed to rewarding shareholders through dividends and share repurchases [6] - In the first nine months of fiscal 2025, the company distributed $46.6 million in dividends and repurchased shares worth $55.1 million [6] - The company completed its initial share repurchase program in 2024 and authorized a new $200 million repurchase program in February 2024, valid for three years [7] Earnings Momentum - KMT's earnings per share (EPS) estimate for 2025 has increased by 24% in the past 60 days, indicating improving earnings momentum [9] - The Zacks Consensus Estimate for KMT's fiscal 2025 earnings has risen by 24%, while the estimate for fiscal 2026 has increased by 7.8% [10]

Core Viewpoint - Momentum investing focuses on "buying high and selling higher" rather than the traditional "buying low and selling high" approach, aiming for quicker profits [1] Group 1: Momentum Investing Characteristics - Fast-moving trending stocks can be difficult to enter at the right time, as they may lose momentum if future growth does not justify their high valuations [2] - Investing in bargain stocks that have recently shown price momentum can be a safer strategy, utilizing tools like the Zacks Momentum Style Score to identify potential opportunities [3] Group 2: Kennametal (KMT) Stock Analysis - Kennametal (KMT) has shown a price increase of 1.3% over the past four weeks, indicating growing investor interest [4] - KMT has gained 2.9% over the past 12 weeks, with a beta of 1.4, suggesting it moves 40% more than the market [5] - KMT has a Momentum Score of A, indicating a favorable time to invest based on momentum [6] - The stock has a Zacks Rank 2 (Buy) due to upward revisions in earnings estimates, which typically attract more investors [7] - KMT is trading at a Price-to-Sales ratio of 0.84, suggesting it is undervalued at 84 cents for each dollar of sales [7] Group 3: Additional Investment Opportunities - Besides KMT, there are other stocks that meet the criteria of the 'Fast-Paced Momentum at a Bargain' screen, presenting further investment opportunities [8] - Investors can explore over 45 Zacks Premium Screens tailored to different investing styles to identify potential winning stocks [9]

Core Viewpoint - Kennametal Inc. has completed the sale of its Goshen, IN business, which is a strategic move aimed at improving sales mix, reducing material cost volatility, and focusing on long-term priorities to enhance stakeholder value [1][2]. Financial Summary - The company received $19 million from the transaction, resulting in an immaterial pre-tax loss. The proceeds are subject to customary post-closing adjustments and an EBITDA-based earn-out opportunity after three years [2]. - The proceeds from the sale are expected to be used for general corporate purposes [2]. Business Impact - The Goshen subsidiary, Kennametal Stellite, L.P., serves the surface coating and welding products markets and represents less than 2% of Kennametal's total sales, making it immaterial to the company's overall profitability [3]. Company Overview - Kennametal Inc. has over 85 years of experience as an industrial technology leader, providing productivity solutions through materials science and tooling [4]. - The company generated $2 billion in revenues in fiscal 2024 and employs approximately 8,400 people across nearly 100 countries [4].

Core Viewpoint - Kennametal (KMT) shares have increased by approximately 5.2% since the last earnings report, outperforming the S&P 500, raising questions about the sustainability of this positive trend leading up to the next earnings release [1] Group 1: Earnings Estimates - Fresh estimates for Kennametal have trended upward over the past month, with the consensus estimate shifting by 7.73% [2] - The stock has an average Growth Score of C, a Momentum Score of A, and a Value Score of B, resulting in an aggregate VGM Score of A [3] Group 2: Outlook - The upward trend in estimates for Kennametal appears promising, with a Zacks Rank of 3 (Hold), indicating expectations for an in-line return in the coming months [4] Group 3: Industry Performance - Kennametal is part of the Zacks Manufacturing - Tools & Related Products industry, where Stanley Black & Decker (SWK) has gained 5.8% over the past month [5] - Stanley Black & Decker reported revenues of $3.74 billion for the last quarter, reflecting a year-over-year decline of 3.2%, with an EPS of $0.75 compared to $0.56 a year ago [5] - For the current quarter, Stanley Black & Decker is expected to post earnings of $0.35 per share, indicating a significant decline of 67.9% from the previous year, with a Zacks Rank of 5 (Strong Sell) [6]

Core Insights - Kennametal Inc. (KMT) is experiencing positive trends that support long-term growth, including increased U.S. and international defense spending, digitalization, improved supply chain, and rising original equipment manufacturer build rates in the aerospace market [1][10] - The company is focused on strategic partnerships and investments in manufacturing facilities, exemplified by its investment in Toolpath Labs to enhance AI-powered computer-aided manufacturing capabilities [2][10] - Kennametal is committed to shareholder returns, having distributed $46.6 million in dividends and repurchased $55.1 million in shares in the first nine months of fiscal 2025 [3][4] Financial Performance - In fiscal 2024, Kennametal distributed $63.4 million in dividends and repurchased shares worth $65.4 million, with a $200 million repurchase program authorized in February 2024 [4] - The company's stock has gained 9.3% over the past month, compared to the industry's 10.5% growth [7] Market Challenges - The Metal Cutting segment's organic revenues decreased by 4% year over year in the third quarter of fiscal 2025 due to reduced demand in the transportation end market [8] - The Infrastructure segment also faced challenges, with organic revenues declining by 2% year over year, attributed to weakness in the general engineering end market and lower mining activity in the Americas and Asia Pacific [9][10]

Core Insights - Kennametal Inc. has made a strategic investment in Toolpath Labs, focusing on AI-powered computer-aided manufacturing (CAM) software to enhance its digital capabilities and offerings for manufacturing customers globally [1][2] Company Overview - Kennametal has over 85 years of experience as an industrial technology leader, providing productivity solutions through materials science and tooling [5] - The company generated $2 billion in revenues in fiscal 2024 and employs approximately 8,400 people across nearly 100 countries [5] Partnership Details - The partnership with Toolpath Labs aims to integrate AI into the CAM process, optimizing tool selection and strategies, thereby improving efficiency for customers [3] - Toolpath's software is designed to make advanced toolpath strategies more accessible, addressing industry skill gaps [3] - The collaboration will focus on co-developing and commercializing solutions that leverage Toolpath's AI capabilities alongside Kennametal's tooling expertise [4] Strategic Goals - The partnership is part of Kennametal's digital transformation journey, enhancing application engineering expertise through intuitive software [2] - Both companies aim to bridge human expertise and digital intelligence to deliver measurable performance improvements on the shop floor [4] - The collaboration will involve joint efforts in go-to-market strategies, product development, and demand generation initiatives to scale Toolpath's platform globally [4]

Core Viewpoint - Kennametal Inc. reported strong adjusted earnings for Q3 fiscal 2025, significantly exceeding expectations, despite a decline in revenues year-over-year [1][2]. Revenue Performance - Total revenues for Kennametal were $486.4 million, a decrease of 5.7% from the previous year, and missed the Zacks Consensus Estimate of $490 million [2]. - Revenue breakdown by region showed a 3% decline in American operations to $240.4 million, a 4% decrease in Europe, the Middle East, and Africa to $151.3 million, and a 1% drop in Asia Pacific to $94.8 million [2]. - The Metal Cutting segment generated revenues of $304.3 million, down 7% year-over-year, with organic revenues declining 4% [3]. - The Infrastructure segment reported revenues of $182.1 million, a 4% decrease year-over-year, with organic revenues down 2% [4]. Margin and Cost Analysis - Cost of goods sold decreased by 9% year-over-year to $330 million, leading to a gross profit increase of 2% to $156.4 million and a gross margin improvement of 250 basis points to 32.2% [5]. - Operating income rose 25.7% year-over-year to $44.1 million, with an operating margin increase of 230 basis points to 9.1% [5]. - Interest expenses were reported at $6.2 million, down 8.3% from the previous year [6]. Balance Sheet and Cash Flow - As of the end of Q3, cash and cash equivalents stood at $97.5 million, down from $128 million in the previous quarter, while long-term debt increased slightly to $596.6 million [7]. - In the first nine months of fiscal 2025, net cash generated from operating activities was $129.7 million, compared to $163.5 million in the same period last year [8]. - Free operating cash flow was reported at $63 million, down from $84 million in the previous fiscal year [8]. Dividend and Share Repurchase - The company declared a quarterly cash dividend of 20 cents per share, with a total payout of $46.6 million, and repurchased shares worth $55.1 million [9][11]. Guidance - Kennametal updated its fiscal 2025 outlook, projecting sales between $1.97 billion and $1.99 billion, and adjusted earnings per share in the range of $1.30 to $1.45 [12]. - Free operating cash flow is expected to exceed 125% of net income, with capital spending anticipated at approximately $90 million [12].

Company Overview - Kennametal Inc. is an industrial technology leader with over 85 years of experience, focusing on materials science, tooling, and wear-resistant solutions [1] - The company serves various sectors including aerospace and defense, earthworks, energy, general engineering, and transportation, helping customers manufacture with precision and efficiency [1] - Kennametal employs approximately 8,400 individuals across nearly 100 countries [1] Financial Performance - In fiscal 2024, Kennametal generated revenues of $2 billion [1] Upcoming Events - Kennametal will attend the KeyBanc Capital Markets Industrials & Basic Materials Conference in Boston, MA on May 28, 2025 [1] - Key attendees from Kennametal include Patrick Watson (Vice President and CFO), Michael Pici (Vice President, Investor Relations), and John Witt (Vice President Finance and Corporate Controller) [1]

[PART I - FINANCIAL INFORMATION](index=4&type=section&id=PART%20I%20-%20FINANCIAL%20INFORMATION) This section provides the unaudited condensed consolidated financial statements, management's discussion and analysis, and disclosures on market risk and internal controls for the period ended March 31, 2025 [Financial Statements](index=4&type=section&id=Item%201.%20Financial%20Statements) This section presents the unaudited condensed consolidated financial statements for the three and nine months ended March 31, 2025, and 2024, including Statements of Income, Comprehensive Income, Balance Sheets, and Cash Flows, along with detailed notes [Condensed Consolidated Statements of Income (Unaudited)](index=4&type=section&id=Condensed%20Consolidated%20Statements%20of%20Income%20%28Unaudited%29) For the third quarter of fiscal 2025, sales decreased to $486.4 million from $515.8 million year-over-year, while net income attributable to Kennametal increased significantly to $31.5 million from $19.0 million, resulting in diluted EPS rising to $0.41 from $0.24 Q3 & Nine Months FY2025 vs FY2024 Income Statement Highlights | Metric (in thousands, except per share) | Q3 2025 | Q3 2024 | Change | 9 Months 2025 | 9 Months 2024 | Change | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Sales | $486,399 | $515,794 | -5.7% | $1,450,398 | $1,503,591 | -3.5% | | Gross Profit | $156,365 | $153,262 | +2.0% | $452,405 | $455,757 | -0.7% | | Operating Income | $44,060 | $35,227 | +25.1% | $111,753 | $108,824 | +2.7% | | Net Income Attributable to Kennametal | $31,482 | $18,976 | +65.9% | $71,533 | $72,141 | -0.8% | | Diluted EPS | $0.41 | $0.24 | +70.8% | $0.91 | $0.90 | +1.1% | [Condensed Consolidated Balance Sheets (Unaudited)](index=5&type=section&id=Condensed%20Consolidated%20Balance%20Sheets%20%28Unaudited%29) As of March 31, 2025, total assets were $2.49 billion, a slight decrease from $2.50 billion at June 30, 2024, with total liabilities also seeing a minor decrease to $1.21 billion and Kennametal Shareholders' Equity decreasing to $1.24 billion Balance Sheet Highlights | Metric (in thousands) | March 31, 2025 | June 30, 2024 | Change | | :--- | :--- | :--- | :--- | | Cash and cash equivalents | $97,467 | $127,971 | -23.8% | | Inventories | $555,989 | $514,632 | +8.0% | | Total current assets | $1,013,360 | $1,002,592 | +1.1% | | Total assets | $2,490,503 | $2,503,758 | -0.5% | | Total liabilities | $1,211,587 | $1,215,159 | -0.3% | | Total Kennametal Shareholders' Equity | $1,236,868 | $1,249,875 | -1.0% | [Condensed Consolidated Statements of Cash Flow (Unaudited)](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flow%20%28Unaudited%29) For the nine months ended March 31, 2025, net cash from operating activities was $129.7 million, a decrease from $163.5 million in the prior year, mainly due to a significant increase in inventories, while investing and financing activities used $60.1 million and $98.0 million respectively Nine Months Ended Cash Flow Summary | Cash Flow Activity (in thousands) | Nine Months Ended Mar 31, 2025 | Nine Months Ended Mar 31, 2024 | | :--- | :--- | :--- | | Net cash flow provided by operating activities | $129,730 | $163,460 | | Net cash flow used in investing activities | ($60,055) | ($86,111) | | Net cash flow used in financing activities | ($98,026) | ($88,659) | | Net decrease in cash and cash equivalents | ($30,504) | ($13,902) | [Notes to Condensed Consolidated Financial Statements (Unaudited)](index=7&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements%20%28Unaudited%29) The notes provide detailed explanations for the financial statements, including information on restructuring charges, segment data, and a new legal proceeding initiated against the company seeking over $330 million in damages - In January 2025, the company announced new restructuring actions expected to incur pre-tax charges of approximately **$25 million**[32](index=32&type=chunk) - A lawsuit was filed against the company in February 2025 by MachiningCloud, Inc. for breach of contract, seeking more than **$330 million** in damages, which the company intends to vigorously defend[60](index=60&type=chunk) Segment Operating Income (Q3 2025 vs Q3 2024) | Segment (in thousands) | Q3 2025 | Q3 2024 | | :--- | :--- | :--- | | Metal Cutting | $24,900 | $30,809 | | Infrastructure | $19,423 | $5,140 | [Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A)](index=23&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses a 6% year-over-year sales decrease for Q3 2025 to $486.4 million, driven by organic decline and unfavorable currency effects, while operating income increased due to an advanced manufacturing production credit, lower raw material costs, and restructuring savings - Q3 2025 sales decreased **6%** from the prior year quarter to **$486.4 million**, reflecting a **3%** organic sales decline and a **3%** unfavorable currency exchange effect[69](index=69&type=chunk) - Q3 2025 operating income increased by **$8.8 million** year-over-year, primarily due to a **~$10 million** advanced manufacturing production credit (Inflation Reduction Act), lower raw material costs, and **~$6 million** in restructuring savings[70](index=70&type=chunk) - The company estimates a potential annual exposure of approximately **$80 million** related to additional tariffs and is working to mitigate negative impacts[72](index=72&type=chunk) [Results of Operations](index=24&type=section&id=RESULTS%20OF%20CONTINUING%20OPERATIONS) For Q3 2025, sales decreased 6% year-over-year, with an organic decline of 3%, while gross profit margin improved to 32.1% from 29.7% due to an advanced manufacturing production credit and lower raw material costs, also impacting the effective tax rate End Market Sales Growth (Decline) - Q3 2025 vs Q3 2024 | End Market | As Reported | Constant Currency | | :--- | :--- | :--- | | Aerospace & Defense | 4% | 7% | | Energy | (3)% | (1)% | | General Engineering | (8)% | (5)% | | Transportation | (6)% | (2)% | | Earthworks | (8)% | (7)% | - Gross profit margin for Q3 2025 was **32.1%**, compared to **29.7%** in the prior year quarter, boosted by a **~$10 million** advanced manufacturing production credit[77](index=77&type=chunk) - The effective tax rate for Q3 2025 was **23.6%**, down from **27.4%** in Q3 2024, primarily due to the benefit from the advanced manufacturing production credit[85](index=85&type=chunk) [Business Segment Review](index=25&type=section&id=BUSINESS%20SEGMENT%20REVIEW) In Q3 2025, the Metal Cutting segment's sales fell 7% to $304.3 million, with operating income decreasing to $24.9 million, while the Infrastructure segment's sales decreased 4% to $182.1 million but its operating income surged to $19.4 million from $5.1 million year-over-year, primarily due to an advanced manufacturing production credit Segment Performance - Q3 2025 vs Q3 2024 | Segment (in thousands) | Sales Q3 2025 | Sales Q3 2024 | Operating Income Q3 2025 | Operating Income Q3 2024 | | :--- | :--- | :--- | :--- | :--- | | Metal Cutting | $304,349 | $326,561 | $24,900 | $30,809 | | Infrastructure | $182,050 | $189,233 | $19,423 | $5,140 | - Metal Cutting Q3 operating income decreased due to lower sales volumes, unfavorable currency effects, and inflation, partially offset by pricing and restructuring savings[92](index=92&type=chunk) - Infrastructure Q3 operating income surged primarily due to a **~$10 million** advanced manufacturing production credit, favorable pricing-to-raw material cost timing, and restructuring savings[99](index=99&type=chunk) [Liquidity and Capital Resources](index=29&type=section&id=LIQUIDITY%20AND%20CAPITAL%20RESOURCES) As of March 31, 2025, the company maintained a solid liquidity position with $97.5 million in cash and $689.8 million available under its $700 million credit facility, with operating cash flow for the first nine months of fiscal 2025 decreasing to $129.7 million primarily due to higher inventory levels - As of March 31, 2025, the company was in compliance with all credit agreement covenants and had **$689.8 million** of additional availability under its revolving credit facility[107](index=107&type=chunk) - During the nine months ended March 31, 2025, the company repurchased **$55 million** of its common stock under a **$200 million** three-year program authorized in February 2024[110](index=110&type=chunk) - Cash flow from operating activities decreased to **$129.7 million** for the nine months ended March 31, 2025, from **$163.5 million** in the prior year period, largely due to a **$41.3 million** increase in inventories[112](index=112&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=37&type=section&id=ITEM%203.%20QUANTITATIVE%20AND%20QUALITATIVE%20DISCLOSURES%20ABOUT%20MARKET%20RISK) The company states that there have been no material changes to its market risk exposures since the end of the previous fiscal year, June 30, 2024 - There have been no material changes to our market risk exposures since June 30, 2024[129](index=129&type=chunk) [Controls and Procedures](index=37&type=section&id=ITEM%204.%20CONTROLS%20AND%20PROCEDURES) Management, including the CEO and CFO, evaluated the company's disclosure controls and procedures and concluded they were effective at a reasonable assurance level as of March 31, 2025, with no material changes to internal control over financial reporting during the quarter - Based on an evaluation, the CEO and CFO concluded that the Company's disclosure controls and procedures are effective to provide reasonable assurance as of March 31, 2025[130](index=130&type=chunk) - There were no changes in the Company's internal control over financial reporting during the most recent fiscal quarter that have materially affected, or are reasonably likely to materially affect, internal controls[131](index=131&type=chunk) [Other Information](index=37&type=section&id=ITEM%205.%20OTHER%20INFORMATION) The company reports that none of its directors or officers adopted, modified, or terminated a Rule 10b5-1 trading plan or a non-Rule 10b5-1 trading arrangement for the purchase or sale of company securities during the quarter ended March 31, 2025 - In the quarter ended March 31, 2025, none of the company's directors or officers adopted, modified or terminated a Rule 10b5-1 trading arrangement[132](index=132&type=chunk) [PART II - OTHER INFORMATION](index=38&type=section&id=PART%20II%20-%20OTHER%20INFORMATION) This section details legal proceedings, equity security transactions, and a list of exhibits filed with the report [Legal Proceedings](index=38&type=section&id=ITEM%201.%20LEGAL%20PROCEEDINGS) The company is party to various legal claims that arise in the ordinary course of business, and while the ultimate outcome is uncertain, management does not currently believe these proceedings will materially affect its financial position, with a significant new lawsuit from MachiningCloud, Inc. seeking over $330 million disclosed in the Notes to Condensed Consolidated Financial Statements - The company is party to legal claims and proceedings that arise in the ordinary course of business[134](index=134&type=chunk) - This section refers to the Notes to Condensed Consolidated Financial Statements for further information, which includes details on a lawsuit from MachiningCloud, Inc. seeking over **$330 million** in damages[134](index=134&type=chunk)[60](index=60&type=chunk) [Unregistered Sales of Equity Securities, Use of Proceeds, and Issuer Purchases of Equity Securities](index=38&type=section&id=ITEM%202.%20UNREGISTERED%20SALES%20OF%20EQUITY%20SECURITIES%2C%20USE%20OF%20PROCEEDS%2C%20AND%20ISSUER%20PURCHASES%20OF%20EQUITY%20SECURITIES) During the quarter ended March 31, 2025, the company repurchased a total of 1,146,780 shares at an average price of $22.01 per share, with approximately $145 million remaining available for repurchase under the current program authorized in February 2024 Issuer Purchases of Equity Securities (Q3 2025) | Period | Total Shares Purchased | Average Price Paid per Share | Shares Purchased as Part of Publicly Announced Program | | :--- | :--- | :--- | :--- | | January 2025 | 6,445 | $24.01 | — | | February 2025 | 582,895 | $22.33 | 580,000 | | March 2025 | 557,440 | $21.66 | 555,364 | | **Total** | **1,146,780** | **$22.01** | **1,135,364** | - As of March 31, 2025, approximately **$145 million** remained available for repurchase under the **$200 million**, three-year share repurchase program[135](index=135&type=chunk) [Exhibits](index=39&type=section&id=ITEM%206.%20EXHIBITS) This section lists the exhibits filed with the 10-Q report, including CEO and CFO certifications and XBRL interactive data files - Lists filed exhibits, including CEO/CFO certifications (**31.1**, **31.2**, **32.1**) and XBRL data files (**101** series)[138](index=138&type=chunk)