Kennametal(US:KMT)2025-11-05 19:36Financial Performance - Sales for the three months ended September 30, 2025, were $497.974 million, an increase of 3.1% compared to $481.948 million in the same period of 2024[14]. - Gross profit for the same period was $154.550 million, up from $151.009 million, reflecting a gross margin of approximately 31.0%[14]. - Net income attributable to Kennametal for the three months ended September 30, 2025, was $23.298 million, representing a 5.3% increase from $22.123 million in 2024[14]. - Basic earnings per share increased to $0.31 for the three months ended September 30, 2025, compared to $0.28 in the prior year[14]. - The company reported a total comprehensive income of $24.202 million for the three months ended September 30, 2025, compared to $57.807 million in 2024[15]. - Operating income for the total segments was $38.203 million, an increase from $36.556 million in the previous year, with Metal Cutting contributing $21.564 million and Infrastructure $16.639 million[63]. - The company reported a net income before income taxes of $33.695 million for the three months ended September 30, 2025, compared to $31.372 million in the same period of 2024, reflecting a growth of 7.4%[63]. - The company recorded a net income of $24.6 million for the three months ended September 30, 2025[56]. - Basic earnings per share for the three months ended September 30, 2025, was calculated using a weighted average of 76,128 thousand shares outstanding[55]. Assets and Liabilities - Total assets as of September 30, 2025, were $2.519 billion, a decrease from $2.545 billion as of June 30, 2025[16]. - The company had $1.284 billion in total equity attributable to Kennametal shareholders as of September 30, 2025, slightly up from $1.284 billion at the end of the previous quarter[16]. - Total equity as of September 30, 2025, was $1,325.6 million, a slight decrease from $1,324.6 million as of June 30, 2025[56]. - As of September 30, 2025, total debt was $598.4 million, with no borrowings outstanding under the $700.0 million revolving credit facility[100]. - The company’s obligations under the supplier finance program increased to $25.0 million as of September 30, 2025, from $17.3 million as of June 30, 2025[21]. - Environmental liabilities accrued as of September 30, 2025, totaled $11.0 million, with $1.4 million classified as current[49]. Cash Flow and Investments - Cash and cash equivalents decreased to $103.497 million from $140.540 million at the end of the previous quarter[17]. - Net cash flow provided by operating activities was $17.487 million, down from $45.746 million in the same period of 2024[17]. - Cash flow used in investing activities was $22.7 million for the three months ended September 30, 2025, compared to $20.0 million in the prior year period, primarily due to capital expenditures of $23.0 million[106]. - Cash flow used in financing activities was $31.1 million for the three months ended September 30, 2025, which included $15.1 million in dividends paid and $10.0 million in common shares repurchased[108]. - The company returned $25.1 million to shareholders through share repurchases and dividends during the three months ended September 30, 2025[75]. Segment Performance - The Metal Cutting segment generated sales of $310.625 million, up from $296.900 million in the prior year, while the Infrastructure segment saw sales increase to $187.349 million from $185.048 million[62]. - Metal Cutting segment sales were $310.6 million, a 5% increase from the prior year, while Infrastructure segment sales were $187.3 million, a 1% increase[86]. - Operating margin for the Metal Cutting segment was 6.9%, down from 8.0% in the prior year, while the Infrastructure segment's operating margin improved to 8.9% from 6.9%[87][91]. - The General Engineering end market represented 44% of total sales, followed by Transportation at 16%, Aerospace & Defense at 13%, and Energy at 13%[64]. Market and Regional Performance - The Americas accounted for 50% of total sales, while Europe, the Middle East, and Africa (EMEA) contributed 31%, and Asia Pacific made up 19%[63]. - Constant currency end market sales growth for the Aerospace & Defense sector was 16% for the three months ended September 30, 2025[120]. - Americas region reported a constant currency sales growth of 6% for the three months ended September 30, 2025[121]. - EMEA region experienced a constant currency sales growth of 1%, while Asia Pacific saw a decline of 1%[121]. - Total regional sales growth was reported at 4%, with a decline of 6% in the Americas and a growth of 5% in EMEA[121]. - Infrastructure segment showed a constant currency sales growth of 7%, with a decline of 3% in EMEA[121]. Legal and Compliance - The company is currently involved in litigation with MachiningCloud, Inc., which is seeking over $330 million in damages, although the outcome remains uncertain[60]. - The company is involved in ongoing legal proceedings, but believes the ultimate liability will not materially affect its financial position[127]. - The company's disclosure controls and procedures were evaluated as effective as of September 30, 2025[123]. - No changes in internal control over financial reporting occurred during the most recent fiscal quarter[124]. - The company expects no material impact from the One Big Beautiful Bill Act (OBBBA) on its consolidated financial statements for the current fiscal year[53]. Other Financial Metrics - The effective income tax rate for the three months ended September 30, 2025, was 26.9%, compared to 25.2% for the same period in 2024[52]. - The company recorded total restructuring and related charges of $15.6 million through September 30, 2025, compared to a target of approximately $25 million[33]. - For the three months ended September 30, 2025, the net periodic pension expense was $1.75 million, an increase from $1.01 million in the same period of 2024[40]. - The fair value of derivatives designated as hedging instruments was $11,000 as of September 30, 2025, compared to a liability of $(9,000) as of June 30, 2025[27]. - The company recorded a net loss of $3,000 related to currency forward contracts for the three months ended September 30, 2025, compared to a gain of $14,000 in the same period of 2024[28].