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Kennametal Announces First Quarter Fiscal 2010 Results
Reported fiscal 2010 first quarter earnings (loss) per diluted share (EPS) were
Reconciliations of all non-GAAP financial measures are set forth in the attached tables and descriptions of certain non-GAAP financial measures are contained in our report on Form 8-K to which this release is attached.
Fiscal 2010 First Quarter Key Developments
- Sales for the quarter were
$409 million , compared with$643 million in the same quarter last year. Sales declined organically by 36 percent, while the favorable impact of 3 percent from a business acquisition made in the prior fiscal year was offset by a 3 percent decrease from unfavorable foreign currency effects. The company continued to realize benefits from cost reductions and
improved operating efficiencies resulting from a series of restructuring
programs that have been undertaken over the past eighteen months.
Pre-tax benefits from these restructuring programs reached approximately
Earnings (Loss) Per Diluted Share Reconciliation First Quarter FY 2010 First Quarter FY 2009 Reported EPS ($0.12) Reported EPS $0.47 Restructuring and Restructuring and related charges 0.06 related charges 0.10 Divestiture related charges 0.02 ------ ------ Adjusted EPS ($0.04) Adjusted EPS $0.57 ====== ======
- Cash flow from operating activities was
$17 million in the current quarter, compared with$38 million in the prior year quarter. Free operating cash flow of$9 million was generated during the current quarter compared to an outflow of$5 million in the prior year quarter. At the outset of the current quarter,
Segment Highlights of Fiscal 2010 First Quarter
MSSG operating loss was
AMSG operating income was
Sale of Gage Business
On
Outlook
Global industrial activity has recently exhibited some stability following the severe economic downturn and turbulence experienced during the previous fiscal year. However, the improvement in business conditions at present is considerably uneven and does not yet entail broad-based momentum. Certain market sectors and regions have begun to strengthen while others look to either remain flat or trend further downward in the short to medium term. While there are some overall positive signs of an improving global economy, it remains difficult to predict with any certainty the timing, magnitude and duration of a sustainable recovery.
Management presently believes that global industrial activity and the corresponding demand for the company's products will continue to moderately improve through the remainder of the current fiscal year. Under these assumed conditions,
For the second quarter of fiscal 2010,
Dividend Declared
First quarter results for fiscal 2010 will be discussed in a live Internet broadcast at
This release contains "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. You can identify forward-looking statements by the fact they use words such as "should," "anticipate," "estimate," "approximate," "expect," "may," "will," "project," "intend," "plan," "believe" and other words of similar meaning and expression in connection with any discussion of future operating or financial performance or events. Forward looking statements in this release concern, among other things,
FINANCIAL HIGHLIGHTS CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED) Three Months Ended September 30, (in thousands, except per share amounts) 2009 2008(1) ------------------------------------------------------------------ Sales $ 409,395 $ 643,374 Cost of goods sold 291,594 428,254 ------------------------------------------------------------------ Gross profit 117,801 215,120 Operating expense 116,162 150,956 Restructuring charges 7,830 8,412 Amortization of intangibles 3,340 3,409 ------------------------------------------------------------------ Operating (loss) income (9,531) 52,343 Interest expense 6,371 7,083 Other (income) expense, net (2,952) 1,086 ------------------------------------------------------------------ (Loss) income from continuing operations before income taxes (12,950) 44,174 (Benefit) provision for income taxes (5,129) 8,377 ------------------------------------------------------------------ (Loss) income from continuing operations (7,821) 35,797 (Loss) income from discontinued operations (1,367) 455 ------------------------------------------------------------------ Net (loss) income (9,188) 36,252 Less: Net income attributable to noncontrolling interests 629 785 ------------------------------------------------------------------ Net (loss) income attributable to Kennametal $ (9,817) $ 35,467 ================================================================== Amounts Attributable toKennametal Common Shareowners: (Loss) income from continuing operations $ (8,450) $ 35,012 (Loss) income from discontinued operations (1,367) 455 ------------------------------------------------------------------ Net (loss) income attributable to Kennametal $ (9,817) $ 35,467 ================================================================== PER SHARE DATA ATTRIBUTABLE TO KENNAMETAL Basic (loss) earnings per share: Continuing operations $ (0.10) $ 0.47 Discontinued operations (0.02) 0.01 ------------------------------------------------------------------ $ (0.12) $ 0.48 ================================================================== Diluted (loss) earnings per share: Continuing operations $ (0.10) $ 0.46 Discontinued operations (0.02) 0.01 ------------------------------------------------------------------ $ (0.12) $ 0.47 ================================================================== Dividends per share $ 0.12 $ 0.12 ================================================================== Basic weighted average shares outstanding 79,772 74,399 ================================================================== Diluted weighted average shares outstanding 79,772 75,526 ================================================================== (1) Amounts have been reclassified to reflect discontinued operations related to the divestiture of the high speed steel drills and related products business. CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED) September 30, June 30, (in thousands) 2009 2009 ------------------------------------------------------------------ ASSETS Cash and cash equivalents $ 105,099 $ 69,823 Accounts receivable, net 286,040 278,977 Inventories 371,969 381,306 Other current assets 121,298 145,798 ------------------------------------------------------------------ Total current assets 884,406 875,904 Property, plant and equipment, net 716,821 720,326 Goodwill and intangible assets, net 679,875 677,436 Other assets 76,530 73,308 ------------------------------------------------------------------ Total assets $ 2,357,632 $ 2,346,974 ================================================================== LIABILITIES Current maturities of long-term debt and capital leases, including notes payable $ 42,381 $ 49,365 Accounts payable 90,840 87,176 Other current liabilities 253,500 242,428 ------------------------------------------------------------------ Total current liabilities 386,721 378,969 Long-term debt and capital leases 324,978 436,592 Other liabilities 245,174 263,958 ------------------------------------------------------------------ Total liabilities 956,873 1,079,519 KENNAMETAL SHAREOWNERS' EQUITY 1,379,702 1,247,443 NONCONTROLLING INTERESTS 21,057 20,012 ------------------------------------------------------------------ Total liabilities and equity $ 2,357,632 $ 2,346,974 ================================================================== SEGMENT DATA (UNAUDITED) Three Months Ended September 30, (in thousands) 2009 2008(1) ------------------------------------------------------------------ Outside Sales: Metalworking Solutions and Services Group $ 230,991 $ 405,395 Advanced Materials Solutions Group 178,404 237,979 ------------------------------------------------------------------ Total outside sales $ 409,395 $ 643,374 ================================================================== Sales By Geographic Region: United States $ 186,588 $ 269,512 International 222,807 373,862 ------------------------------------------------------------------ Total sales by geographic region $ 409,395 $ 643,374 ================================================================== Operating (Loss) Income: Metalworking Solutions and Services Group $ (12,766) $ 42,379 Advanced Materials Solutions Group 23,107 29,990 Corporate and eliminations (2) (19,872) (20,026) ------------------------------------------------------------------ Total operating (loss) income $ (9,531) $ 52,343 ================================================================== (1) Amounts have been reclassified to reflect discontinued operations related to the divestiture of the high speed steel drills and related products business. (2) Includes corporate functional shared services and intercompany eliminations.
In addition to reported results under generally accepted accounting principles in
THREE MONTHS ENDEDSEPTEMBER 30, 2009 (UNAUDITED) Loss (in thousands, from except per Gross Operating Operating Continuing Net Diluted share amounts) Profit Expense Loss Operations Loss EPS ------------------------------------------------------------------------- 2010 Reported Results $117,801 $116,162 $(9,531) $(7,821) $(9,817) $(0.12) Restructuring and related charges 456 263 8,549 5,260 5,260 0.06 Divestiture related charges - - - - 1,284 0.02 ------------------------------------------------------------------------- 2010 Adjusted Results $118,257 $116,425 $ (982) $(2,561) $(3,273) $(0.04) ========================================================================= MSSG AMSG Operating Operating (in thousands, except percents) Loss Income ------------------------------------------------------------------------- 2010 Reported Results $(12,766) $23,107 2010 Reported Operating Margin (5.5%) 13.0% Restructuring and related charges 4,289 1,321 ------------------------------------------------------------------------- 2010 Adjusted Results $ (8,477) $24,428 ========================================================================= 2010 Adjusted Operating Margin (3.7%) 13.7% ========================================================================= Loss from Continuing (Benefit) Operations Provision before Income for Income Effective (in thousands, except percents) Taxes Taxes Tax Rate ------------------------------------------------------------------------- 2010 Reported Results $(12,950) $(5,129) 39.6% Restructuring and related charges 8,549 3,289 2.2% ------------------------------------------------------------------------- 2010 Adjusted Results $ (4,401) $(1,840) 41.8% ========================================================================= THREE MONTHS ENDEDSEPTEMBER 30, 2008 (UNAUDITED) Income (in thousands, from except per Gross Operating Operating Continuing Net Diluted share amounts) Profit Expense Income Operations Income EPS ------------------------------------------------------------------------- 2009 Reported Results $215,120 $150,956 $52,343 $35,797 $35,467 $0.47 Restructuring and related charges 775 (42) 9,145 7,408 7,408 0.10 ------------------------------------------------------------------------- 2009 Adjusted Results $215,895 $150,998 $61,488 $43,205 $42,875 $0.57 ========================================================================= MSSG AMSG Operating Operating (in thousands, except percents) Income Income ------------------------------------------------------------------------- 2009 Reported Results $42,379 $29,990 2009 Reported Operating Margin 10.5% 12.6% Restructuring and related charges 7,234 1,405 ------------------------------------------------------------------------- 2009 Adjusted Results $49,613 $31,395 ========================================================================= 2009 Adjusted Operating Margin 12.2% 13.2% ========================================================================= Income from Continuing Operations Provision before Income for Income Effective (in thousands, except percents) Taxes Taxes Tax Rate ------------------------------------------------------------------------- 2009 Reported Results $44,174 $ 8,377 19.0% Restructuring and related charges 9,145 1,737 - ------------------------------------------------------------------------- 2009 Adjusted Results $53,319 $10,114 19.0% ========================================================================= FREE OPERATING CASH FLOW (UNAUDITED) Three Months Ended September 30, (in thousands) 2009 2008 ------------------------------------------------------------------------- Net cash flow provided by operating activities $17,290 $37,950 Purchases of property, plant and equipment (8,915) (44,592) Proceeds from disposals of property, plant and equipment 987 1,309 ------------------------------------------------------------------------- Free operating cash flow $ 9,362 $(5,333) =========================================================================
SOURCE
Investor Relations, Quynh McGuire, +1-724-539-6559; Media Relations, Joy Chandler, +1-724-539-4618, both of Kennametal Inc.