Financial Data and Key Metrics Changes - Sales increased by 10% year-over-year, with organic growth also at 10% and a favorable foreign currency exchange impact of 1% [14] - Adjusted EBITDA margin improved to 17.1% from 13.9% in the prior year quarter, while adjusted EPS rose to $0.47 from $0.25 [8][15] - The company raised its sales and EPS outlook for fiscal 2026, now expecting sales between $2.19 billion and $2.25 billion and adjusted EPS in the range of $2.05-$2.45 [24][25] Business Line Data and Key Metrics Changes - Infrastructure segment sales increased by 11% organically, while Metal Cutting sales grew by 9% [14][19] - Aerospace and Defense in Metal Cutting saw a 19% increase year-over-year, driven by improved build rates and easing supply chain pressures [17] - In the Infrastructure segment, Aerospace and Defense sales surged by 33% due to defense orders, while Earthworks grew by 18% [19] Market Data and Key Metrics Changes - Transportation market outlook improved slightly from a previous estimate of low single digits down to flat [9] - Aerospace and Defense continues to show growth, with OEM build rates improving [9] - General Engineering in the Americas showed slight improvement, while other regions remained unchanged [10][51] Company Strategy and Development Direction - The company is focusing on strategic growth initiatives, including pricing actions in response to rising tungsten costs and cost improvement measures [5][6] - Kennametal is well-positioned to capitalize on the rising global demand for electricity, with a broad range of products supporting energy generation and transmission [10][12] - The company aims to strengthen its portfolio while executing lean transformation and structural cost improvements [27] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the ability to offset rising tungsten costs through pricing actions and noted a modest improvement in certain end markets [5][8] - The outlook for fiscal 2026 reflects additional pricing actions related to increasing tungsten costs, with expectations of continued organic growth [24][25] - Management highlighted the importance of maintaining a healthy balance sheet and the absence of near-term refinancing requirements [23] Other Important Information - The company realized $8 million in restructuring savings during the quarter and continues to execute plans to lower structural costs [6] - Free Operating Cash Flow decreased to $38 million from $57 million in the prior year, primarily due to working capital changes [22] Q&A Session Summary Question: Discussion on tungsten price increases and customer behavior - Management confirmed a modest price increase in January and noted that customers are buying ahead of price increases due to rising tungsten costs [31][35] Question: Concerns about tungsten supply - Management reassured that they have multiple sources for tungsten and long-term agreements in place, minimizing supply risks [39][40] Question: Volume trends and market outlook - Management indicated that volume projections have improved, with expectations for slight growth in the second half of the fiscal year [48][49] Question: Competitive dynamics in various markets - Management acknowledged competition but emphasized their core competencies in material science and application engineering as key advantages [60][61] Question: Impact of tariffs and trade agreements - Management stated that current tariffs have not significantly impacted operations and that they are prepared to adjust pricing if tariffs change [85][87]

FY26 Second Quarter Earnings Call Presentation February 4, 2026 Q2 FY26 EARNINGS Safe Harbor Statement Certain statements in this release may be forward-looking in nature, or "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Forward-looking statements are statements that do not relate strictly to historical or current facts. For example, statements about Kennametal's outlook for sales, adjusted operating incom ...

Core Insights - Three stocks are highlighted with strong income characteristics and a buy rank for investors to consider on November 28 [1][2][3] Company Summaries - **Norwood Financial Corp. (NWFL)**: This bank holding company for Wayne Bank has seen a 16.6% increase in the Zacks Consensus Estimate for its current year earnings over the last 60 days. It has a dividend yield of 4.4%, significantly higher than the industry average of 2.6% [1] - **Plains GP Holdings, L.P. (PAGP)**: This midstream infrastructure systems company has experienced a 2.9% increase in the Zacks Consensus Estimate for its current year earnings over the last 60 days. It boasts a dividend yield of 8.2%, compared to the industry average of 4.3% [2] - **Kennametal Inc. (KMT)**: Engaged in tungsten carbides, ceramics, and super-hard materials for metal cutting and extreme wear applications, this company has seen a 25% increase in the Zacks Consensus Estimate for its current year earnings over the last 60 days. It offers a dividend yield of 2.9%, above the industry average of 1.2% [3]

Core Viewpoint - Kennametal Inc. (KMT) has underperformed in operational performance, facing challenges from weak business segments and high debt levels [1] Group 1: Business Performance - The Metal Cutting segment has experienced a 4% year-over-year decline in organic revenues in Q4 of fiscal 2025, primarily due to decreased demand in the transportation end market and lower industrial production [3] - The Infrastructure segment's organic revenues fell by 5% year-over-year in Q4 of fiscal 2025, attributed to weakness in the general engineering end market and reduced mining activity in the Americas and Asia Pacific [4] Group 2: Financial Health - As of the end of Q4 fiscal 2025, Kennametal's long-term debt was $596.8 million, with cash and cash equivalents amounting to $140.5 million, resulting in a long-term debt-to-capital ratio of 31.1% [5] - The company's high debt levels may increase financial obligations and negatively impact profitability in the future [5] Group 3: Market Performance - Over the past year, Kennametal's stock has declined by 16.3%, contrasting with the industry's growth of 4.4% [7] - The earnings per share (EPS) estimate for fiscal 2026 has decreased from $1.38 to $1.22 over the past 60 days, indicating a downward trend in earnings expectations [9][11] Group 4: External Factors - Kennametal's global operations expose it to risks from geopolitical issues and adverse foreign currency movements, with a 1% negative impact on revenues due to foreign currency translation in fiscal 2025 [10]

Core Insights - Kennametal reported revenue of $486.4 million for the quarter ended March 2025, a year-over-year decline of 5.7% [1] - The EPS for the same period was $0.47, compared to $0.30 a year ago, indicating a significant increase [1] - The reported revenue fell short of the Zacks Consensus Estimate of $490.31 million, resulting in a surprise of -0.80% [1] - The company delivered an EPS surprise of +80.77%, with the consensus EPS estimate being $0.26 [1] Performance Metrics - Total Sales in the Infrastructure segment were $182.05 million, slightly below the average estimate of $183.52 million, reflecting a year-over-year change of -3.8% [4] - Total Sales in the Metal Cutting segment were $304.35 million, compared to the average estimate of $307.12 million, representing a year-over-year decline of -6.8% [4] - Operating Income (loss) for Corporate was -$0.26 million, better than the average estimate of -$0.69 million [4] - Proforma Operating Income for Infrastructure was $20.94 million, exceeding the average estimate of $12.93 million [4] - Proforma Operating Income for Metal Cutting was $29.22 million, surpassing the average estimate of $23.01 million [4] Stock Performance - Kennametal shares have returned +13% over the past month, outperforming the Zacks S&P 500 composite's +10.6% change [3] - The stock currently holds a Zacks Rank 4 (Sell), indicating potential underperformance relative to the broader market in the near term [3]

Financial Performance - Kennametal's Q3 FY25 reported earnings per diluted share (EPS) was $0.41, while adjusted EPS was $0.47, compared to $0.24 reported and $0.30 adjusted in the prior year[5] - Adjusted EBITDA reached $86.9 million with a 17.9% margin, a 370 bps increase year-over-year[7] - The company returned $40 million to shareholders, including $25 million in share repurchases and $15 million in dividends[7] - YTD cash flow from operations was $130 million, and free operating cash flow (FOCF) was $63 million[7] Sales and Market Trends - Sales were $486 million, reflecting a (3)% organic decline year-over-year[6,23] - Metal Cutting sales declined by (4)%, while Infrastructure sales decreased by (2)%, but Aerospace & Defense sales experienced growth[6] - In constant currency, sales growth by region showed Asia Pacific down (1)%, Americas down (3)%, and EMEA down (4)%[6] - By end market (in constant currency), Aerospace & Defense grew by 7%, while Energy declined by (1)%, Transportation by (2)%, General Engineering by (5)%, and Earthworks by (7)%[6] Factors Affecting Performance - Kennametal benefited from an IRA advanced manufacturing production credit of approximately $10 million, with $8 million related to prior periods[7] - Restructuring savings contributed $6 million[7] - Lower raw material costs and favorable pricing also positively impacted results[7] - These gains were partially offset by lower sales and production volumes, higher wages, general inflation, and unfavorable foreign exchange of approximately $3 million[7] Outlook - The company anticipates approximately $80 million in tariff cost exposure and is implementing mitigation strategies[10] - FY25 sales are projected to be between $1.970 billion and $1.990 billion, reflecting a decline of approximately (5)% to (4)%[36] - Adjusted EPS for FY25 is expected to be in the range of $1.30 to $1.45[36] - Free Operating Cash Flow (FOCF) is projected to be greater than 125% of adjusted net income[36]