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Kennametal's Q2 Earnings Match Estimates, Revenues Decline Y/Y
KMTKennametal(KMT) ZACKS·2025-02-06 17:56

Core Viewpoint - Kennametal Inc. reported a decline in earnings and revenues for the second quarter of fiscal 2025, with adjusted earnings per share matching estimates but showing a significant year-over-year decrease Revenue Details - Revenues for Kennametal were 482.1million,adecreaseof2.7482.1 million, a decrease of 2.7% from the previous year, and missed the Zacks Consensus Estimate of 484 million [2] - Organic sales declined by 6% year over year, although business days positively impacted revenues by 3% [2] - American operations saw a revenue decrease of 1.5% to 235.3million,whileEurope,theMiddleEast,andAfricarevenuesfellby4.9235.3 million, while Europe, the Middle East, and Africa revenues fell by 4.9% to 145.5 million; Asia Pacific revenues decreased by 2.1% to 101.3million[3]−TheMetalCuttingsegmentreportedrevenuesof101.3 million [3] - The Metal Cutting segment reported revenues of 298 million, down 4% year over year, with organic revenues declining by 7% [3] - The Infrastructure segment's revenues were flat at 184million,withorganicrevenuesdecreasingby4184 million, with organic revenues decreasing by 4% [4] Margin Profile - Cost of goods sold decreased by 5.3% year over year to 337 million, while gross profit increased by 3.9% to 145million,resultinginagrossmarginincreaseof190basispointsto30.1145 million, resulting in a gross margin increase of 190 basis points to 30.1% [5] - Operating income rose by 11.2% year over year to 31.7 million, with an operating margin increase of 90 basis points to 6.6% [5] - Interest expenses were reported at 6.2million,down9.76.2 million, down 9.7% from the previous year [6] Balance Sheet and Cash Flow - Cash and cash equivalents at the end of the fiscal second quarter were 121.2 million, down from 128millioninthepreviousquarter[7]−Long−termdebtwasreportedat128 million in the previous quarter [7] - Long-term debt was reported at 596.4 million, slightly up from 596millionyearoveryear[7]−Netcashgeneratedfromoperatingactivitiesinthefirstsixmonthsoffiscal2025was596 million year over year [7] - Net cash generated from operating activities in the first six months of fiscal 2025 was 101 million, compared to 88millioninthesameperiodlastyear[8]−Freeoperatingcashflowincreasedto88 million in the same period last year [8] - Free operating cash flow increased to 57.3 million from 36millioninthepreviousfiscalyear[8]DividendUpdate−Theboardofdirectorsapprovedaquarterlycashdividendof20centspershare,payableonFebruary25,2025,toshareholdersofrecordasofFebruary11,2025[11]Guidance−Kennametalupdateditsfiscal2025outlook,nowexpectingsalesbetween36 million in the previous fiscal year [8] Dividend Update - The board of directors approved a quarterly cash dividend of 20 cents per share, payable on February 25, 2025, to shareholders of record as of February 11, 2025 [11] Guidance - Kennametal updated its fiscal 2025 outlook, now expecting sales between 1.95 billion and 2.0billion,downfromthepreviousestimateof2.0 billion, down from the previous estimate of 2.0 billion to 2.1billion[12]−Adjustedearningspershareareanticipatedtobeintherangeof2.1 billion [12] - Adjusted earnings per share are anticipated to be in the range of 1.05 to 1.30,revisedfrom1.30, revised from 1.30 to 1.70[12]−Freeoperatingcashflowisexpectedtoexceed1251.70 [12] - Free operating cash flow is expected to exceed 125% of net income (adjusted), with capital spending projected at approximately 100 million [12]