Kennametal's Q2 Earnings & Revenues Top Estimates, Increase Y/Y

Kennametal Inc. KMT reported second-quarter fiscal 2026 (ended Dec. 31, 2025) adjusted earnings of 47 cents per share, which surpassed the Zacks Consensus Estimate of 35 cents. The bottom line increased 89% from the year-ago figure.

KMT’s Revenue Details

Kennametal’s revenues were $530 million, which increased 10% from the year-ago quarter’s figure. Organic sales rose 10% year over year. Foreign currency translation had a positive impact of 1% on sales, while divestitures had an adverse impact of 1%. KMT’s revenues beat the Zacks Consensus Estimate of $516.1 million.

On a geographical basis, revenues from American operations increased 13% year over year to $265.2 million, whereas sales from the Europe, the Middle East and Africa region were $156.3 million, up 7% from the year-ago quarter. Sales from the Asia Pacific belt increased 7% to $108.1 million.

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

The Metal Cutting segment’s revenues of $331.1 million increased 11% year over year. Organic revenues grew 9% and currency exchange had a positive impact of 2% year over year. The Zacks Consensus Estimate for Metal Cutting’s revenues was pegged at $316 million.

The Infrastructure segment’s revenues totaled $198.5 million, up 8% year over year. Organic revenues increased 11% and currency exchange had a positive impact of 1% year over year. This was partially offset by the negative impact of 4% from divestitures. The consensus estimate for Infrastructure’s revenues was pegged at $200 million.

KMT’s Margin Profile

Kennametal’s cost of goods sold increased 5.5% year over year to $355.7 million. The gross profit rose 19.9% year over year to $173.9 million, while the margin increased 270 basis points (bps) to 32.8%. Operating expenses were $116.3 million, up 6.4% year over year.

Operating income increased 66.3% year over year to $52.7 million. Operating margin increased 330 bps year over year to 9.9%. The results were driven by favorable impacts of pricing and tariff surcharges, higher sales and production volume and restructuring savings, offset by increased compensation costs and general inflation.

Interest expenses were $6.1 million, down 1.5% from the year-ago quarter’s figure. The adjusted effective tax rate was 27.4%.

Kennametal’s Balance Sheet and Cash Flow

While exiting the fiscal second quarter, Kennametal’s cash and cash equivalents were $129.3 million compared with $140.5 million at the end of fiscal 2025. Long-term debt was $597.2 million compared with $596.8 million at the end of fiscal 2025.

In the first six months of fiscal 2026, Kennametal generated net cash of $72.6 million in operating activities compared with $100.9 million in the previous fiscal year’s comparable period. Capital invested in purchasing property, plant and equipment was $35.7 million, down 18.8% from $44 million in the prior fiscal year period. Free operating cash flow was $38.5 million compared with $57.4 million in the previous fiscal year’s period.

KMT paid a dividend of $30.4 million and repurchased shares worth $10.1 million.

KMT’s 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 Feb. 10, 2026. The disbursement will be made on Feb. 24.

Kennametal’s Guidance

KMT has updated its fiscal 2026 (ending June 2026) outlook. The company currently anticipates sales to be in the range of $2.19 - $2.25 billion, higher than $2.10-$2.17 billion projected earlier. Adjusted earnings per share are anticipated to be in the range of $2.05-$2.45, compared with the previous projection of $1.35-$1.65. Free operating cash flow is expected to be approximately 60% of net income (adjusted). Capital spending is expected to be approximately $90 million.

For third-quarter fiscal 2026 (ending March 31, 2026), Kennametal expects sales to be in the range of $545-$565 million. Adjusted earnings per share are anticipated to be in the range of 50-60 cents.

KMT’s Zacks Rank

The company currently sports a Zacks Rank #1 (Strong Buy). 

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

Performance of Other Companies

Graco Inc. GGG posted quarterly earnings of 77 cents per share in the fourth quarter of 2025, in line with the Zacks Consensus Estimate. This compares with earnings of $0.64 per share a year ago.

Graco posted revenues of $593.2 million for the quarter, surpassing the Zacks Consensus Estimate by 1.39%. This compares with year-ago revenues of $548.67 million.

Baker Hughes Company BKR reported fourth-quarter 2025 adjusted earnings of 78 cents per share, which beat the Zacks Consensus Estimate of 67 cents. The bottom line also increased from the year-ago level of 70 cents.

Total quarterly revenues of $7,386 million beat the Zacks Consensus Estimate of $7,056 million. The top line also increased from the year-ago quarter’s $7,364 million.

3M Company MMM delivered adjusted earnings of $1.83 per share in the fourth quarter of 2025, which surpassed the Zacks Consensus Estimate of $1.82. The company reported earnings of $1.68 per share in the year-ago quarter.

MMM’s adjusted revenues of $6.00 billion missed the consensus estimate of $6.08 billion. On an adjusted basis, organic revenues increased 2.2% year over year.

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

This article originally published on Zacks Investment Research (zacks.com).

Zacks Investment Research