Kennametal's Q3 Earnings Beat Estimates, Revenues Decline Y/Y

Kennametal Inc. KMT reported third-quarter fiscal 2025 (ended March 31, 2025) adjusted earnings of 47 cents per share, which beat the Zacks Consensus Estimate of 26 cents. The bottom line increased 56.7% from the year-ago figure. (Find the latest EPS estimates and surprises on Zacks Earnings Calendar.)

KMT’s Revenue Details

Kennametal’s revenues were $486.4 million, which decreased 5.7% from the year-ago quarter’s figure. Organic sales declined 3% year over year. Business days did not have any impact in the quarter.

KMT’s revenues missed the Zacks Consensus Estimate of $490 million.

On a geographical basis, revenues from American operations decreased 3% year over year to $240.4 million, whereas sales from the Europe, the Middle East and Africa region were $151.3 million, down 4% from the year-ago quarter. Sales from the Asia Pacific belt decreased 1% to $94.8 million.

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

The Metal Cutting segment’s revenues of $304.3 million decreased 7% year over year. Organic revenues declined 4%. Foreign currency had a negative impact of 3%. The Zacks Consensus Estimate for Metal Cutting’s revenues was pegged at $307 million.

The Infrastructure segment’s revenues totaled $182.1 million, down 4% year over year. Organic revenues decreased 2% and currency exchange had a negative impact of 2% year over year. The consensus estimate for Infrastructure’s revenues was pegged at $184 million.

KMT’s Margin Profile

Kennametal’s cost of goods sold decreased 9% year over year to $330 million. The gross profit increased 2% year over year to $156.4 million, while the margin increased 250 basis points (bps) to 32.2%. Operating expenses were $109.3 million, up 1.8% year over year.

Operating income increased 25.7% year over year to $44.1 million. Operating margin increased 230 bps year over year to 9.1%. Lower raw material costs aided the results.

Interest expenses were $6.2 million, down 8.3% from the year-ago quarter’s figure. The adjusted effective tax rate was 22.8%.

Kennametal’s Balance Sheet and Cash Flow

While exiting the fiscal third quarter, Kennametal’s cash and cash equivalents were $97.5 million compared with $128 million in fourth-quarter fiscal 2024. Long-term debt was $596.6 million compared with the $596 million in the year-ago quarter.

In the first nine months of fiscal 2025, Kennametal generated net cash of $129.7 million in operating activities compared with $163.5 million in the previous fiscal year’s quarter. Capital invested in purchasing property, plant and equipment (net of the amount received on disposals) was $67.5 million, down 19.9% from $84.2 million in the prior fiscal year. Free operating cash flow was $63 million compared with $84 million in the previous fiscal year’s period.

KMT paid a dividend of $46.6 million and repurchased shares worth $55.1 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 May 13, 2025. The disbursement will be made on May 27.

Kennametal’s Guidance

KMT has updated its fiscal 2025 (ending June 2025) outlook. The company now anticipates sales to be in the range of $1.97-$1.99 billion compared with $1.95-$2.0 billion expected earlier. Adjusted earnings per share are anticipated to be in the range of $1.30- $1.45 compared with $1.05-$1.30 expected earlier. Free operating cash flow is expected to be more than 125% of net income (adjusted).

Capital spending is expected to be approximately $90 million.

KMT’s Zacks Rank

The company currently carries a Zacks Rank #4 (Sell).

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

Performance of Other Companies

AZZ Inc. AZZ came out with quarterly earnings of $0.98 per share in the second quarter of fiscal 2025 (ended March 2025), beating the Zacks Consensus Estimate of $0.95. This compares with earnings of $0.93 per share a year ago.

AZZ reported revenues of $351.88 million, missing the consensus estimate by 3.77%. This compares with year-ago revenues of $366.5 million.

Valmont Industries VMI reported revenues of $969.31 million in the first quarter of 2025, declining 0.9% on a year-over-year basis. Earnings per share of $4.32 for the same period compare with $4.32 a year ago.

The reported revenues compare with the Zacks Consensus Estimate of $975.6 million. The company delivered an earnings surprise of 1.89%, with the consensus estimate being $4.24 per share.

Pentair plc PNR came out with quarterly earnings of $1.11 per share in the first quarter of 2025, beating the Zacks Consensus Estimate of $1.01. This compares with earnings of $0.94 per share a year ago.

Pentair posted revenues of $1.01 billion for the quarter, surpassing the consensus estimate by 2.68%. This compares with year-ago revenues of $1.02 billion.

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