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Kennametal Announces Fiscal 2024 First Quarter Results
- Earnings per diluted share (EPS) of
$0.37 compared to$0.34 in the prior year quarter - Strong cash flow from operations of
$26 million compared to negative$11 million in the prior year quarter - Returned approximately
$30 million to shareholders;$14 million in share repurchases and$16 million in dividends
"Sales were generally in line with the outlook we shared last quarter, despite weaker than expected results in
Rossi continued, "We remain focused on our multi-year growth and innovation strategy and the long-term targets we shared at Investor Day. The growth and margin expansion initiatives, including the
Fiscal 2024 First Quarter Key Developments
Sales of
During the quarter, the Company achieved restructuring savings of approximately
Operating income was
The reported effective tax rate (ETR) for the quarter was 21.0 percent compared to 27.5 percent in the prior year quarter. The year-over-year change in ETR is primarily due to a benefit of approximately
Year-to-date net cash flow from operating activities was
The Company paid
During the quarter, the Company repurchased 505 thousand shares of
Outlook
The Company's expectations for the second quarter of fiscal 2024 and the full year are as follows:
Quarterly Outlook:
- Sales expected to be
$490 -$515 million ; foreign exchange anticipated to be a tailwind of approximately 1 percent compared to the second quarter of fiscal 2023 - Adjusted EPS is expected to be
$0.20 -$0.30
Annual Outlook:
- Sales expected to be
$2.1 -$2.2 billion - Interest expense is expected to be approximately
$28 million - Adjusted EPS is expected to be
$1.75 -$2.15 - Pricing actions expected to cover raw material costs, wages and general inflation
- Free operating cash flow of 100 percent of adjusted net income
- Primary working capital as a percent of sales maintained at 30 - 32 percent throughout the year
- Capital spending expected to be approximately
$100 -$110 million - Adjusted ETR is expected to be approximately 24 percent
$200 million three-year share repurchase program to continue
The Company will provide more details regarding its Outlook during its quarterly earnings conference call.
Segment Results
Metal Cutting sales of
Infrastructure sales of
Dividend Declared
The Company will host a conference call to discuss its first quarter fiscal 2024 results on
This earnings release contains non-GAAP financial measures. Reconciliations and descriptions of all non-GAAP financial measures are set forth in the tables that follow.
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
About
With over 80 years as an industrial technology leader,
FINANCIAL HIGHLIGHTS |
|||
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED) |
|||
Three Months Ended |
|||
(in thousands, except per share amounts) |
2023 |
2022 |
|
Sales |
$ 492,476 |
$ 494,792 |
|
Cost of goods sold |
329,578 |
334,824 |
|
Gross profit |
162,898 |
159,968 |
|
Operating expense |
111,649 |
108,278 |
|
Restructuring and other charges, net |
3,086 |
— |
|
Amortization of intangibles |
3,045 |
3,164 |
|
Operating income |
45,118 |
48,526 |
|
Interest expense |
6,601 |
6,638 |
|
Other expense, net |
89 |
1,009 |
|
Income before income taxes |
38,428 |
40,879 |
|
Provision for income taxes |
8,059 |
11,242 |
|
Net income |
30,369 |
29,637 |
|
Less: Net income attributable to noncontrolling interests |
312 |
1,441 |
|
Net income attributable to |
$ 30,057 |
$ 28,196 |
|
PER SHARE DATA ATTRIBUTABLE TO KENNAMETAL SHAREHOLDERS |
|||
Basic earnings per share |
$ 0.38 |
$ 0.35 |
|
Diluted earnings per share |
$ 0.37 |
$ 0.34 |
|
Basic weighted average shares outstanding |
80,025 |
81,544 |
|
Diluted weighted average shares outstanding |
80,699 |
82,165 |
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED) |
|||
(in thousands) |
|
|
|
ASSETS |
|||
Cash and cash equivalents |
$ 95,098 |
$ 106,021 |
|
Accounts receivable, net |
288,655 |
307,313 |
|
Inventories |
570,345 |
557,630 |
|
Other current assets |
56,457 |
55,825 |
|
Total current assets |
1,010,555 |
1,026,789 |
|
Property, plant and equipment, net |
958,246 |
969,068 |
|
|
356,399 |
362,715 |
|
Other assets |
187,560 |
188,662 |
|
Total assets |
$ 2,512,760 |
$ 2,547,234 |
|
LIABILITIES |
|||
Revolving and other lines of credit and notes payable |
$ 31,179 |
$ 689 |
|
Accounts payable |
197,369 |
203,341 |
|
Other current liabilities |
191,298 |
229,945 |
|
Total current liabilities |
419,846 |
433,975 |
|
Long-term debt |
595,374 |
595,172 |
|
Other liabilities |
198,789 |
203,919 |
|
Total liabilities |
1,214,009 |
1,233,066 |
|
KENNAMETAL SHAREHOLDERS' EQUITY |
1,260,358 |
1,275,447 |
|
NONCONTROLLING INTERESTS |
38,393 |
38,721 |
|
Total liabilities and equity |
$ 2,512,760 |
$ 2,547,234 |
SEGMENT DATA (UNAUDITED) |
Three Months Ended |
||
(in thousands) |
2023 |
2022 |
|
Sales: |
|||
Metal Cutting |
$ 308,229 |
$ 299,936 |
|
Infrastructure |
184,247 |
194,856 |
|
Total sales |
$ 492,476 |
$ 494,792 |
|
|
|||
|
$ 246,742 |
$ 253,581 |
|
EMEA |
148,709 |
131,308 |
|
|
97,025 |
109,903 |
|
Total sales |
$ 492,476 |
$ 494,792 |
|
Operating income: |
|||
Metal Cutting |
$ 32,117 |
$ 28,605 |
|
Infrastructure |
13,644 |
20,787 |
|
Corporate (1) |
(643) |
(866) |
|
Total operating income |
$ 45,118 |
$ 48,526 |
(1) Represents unallocated corporate expenses. |
NON-GAAP RECONCILIATIONS (UNAUDITED)
In addition to reported results under generally accepted accounting principles in
Management believes that presentation of these non-GAAP financial measures provides useful information about the results of operations of the Company for the current and past periods. Management believes that investors should have available the same information that management uses to assess operating performance, determine compensation and assess the capital structure of the Company. These non-GAAP financial measures should not be considered in isolation or as a substitute for the most comparable GAAP financial measures. Investors are cautioned that non-GAAP financial measures used by management may not be comparable to non-GAAP financial measures used by other companies. Reconciliations and descriptions of all non-GAAP financial measures are set forth in the disclosures below.
Reconciliations to the most directly comparable GAAP financial measures for the following forward-looking non-GAAP financial measures for the second quarter and full fiscal year of 2024 have not been provided, including but not limited to: FOCF, adjusted operating income, adjusted net income, adjusted EPS, adjusted ETR and primary working capital. The most comparable GAAP financial measures are net cash flow from operating activities, operating income, net income attributable to
THREE MONTHS ENDED |
|||||
(in thousands, except percents and per share data) |
Sales |
Operating |
ETR |
Net |
Diluted EPS |
Reported results |
$ 492,476 |
45,118 |
21.0 % |
$ 30,057 |
$ 0.37 |
Reported operating margin |
9.2 % |
||||
Restructuring and related charges |
— |
3,694 |
9.5 |
3,391 |
0.04 |
Differences in projected annual tax |
— |
— |
(9.5) |
(444) |
— |
Adjusted results |
$ 492,476 |
$ 48,812 |
21.0 % |
$ 33,004 |
$ 0.41 |
Adjusted operating margin |
9.9 % |
(2) Attributable to |
THREE MONTHS ENDED |
||||
Metal Cutting |
Infrastructure |
|||
(in thousands, except percents) |
Sales |
Operating |
Sales |
Operating |
Reported results |
$ 308,229 |
$ 32,117 |
$ 184,247 |
$ 13,644 |
Reported operating margin |
10.4 % |
7.4 % |
||
Restructuring and related charges |
— |
2,539 |
— |
1,155 |
Adjusted results |
$ 308,229 |
$ 34,656 |
$ 184,247 |
$ 14,799 |
Adjusted operating margin |
11.2 % |
8.0 % |
Free Operating Cash Flow (FOCF)
FOCF is a non-GAAP financial measure and is defined by the Company as net cash flow provided by operating activities (which is the most directly comparable GAAP financial measure) less capital expenditures plus proceeds from disposals of fixed assets. Management considers FOCF to be an important indicator of the Company's cash generating capability because it better represents cash generated from operations that can be used for dividends, debt repayment, strategic initiatives (such as acquisitions) and other investing and financing activities.
FREE OPERATING CASH FLOW (UNAUDITED) |
Three Months Ended |
|||
(in thousands) |
2023 |
2022 |
||
Net cash flow provided by (used in) operating activities |
$ 25,711 |
$ (10,748) |
||
Purchases of property, plant and equipment |
(31,799) |
(29,484) |
||
Disposals of property, plant and equipment |
3,048 |
202 |
||
Free operating cash flow |
$ (3,040) |
$ (40,030) |
Organic Sales Growth
Organic sales growth is a non-GAAP financial measure of sales growth (which is the most directly comparable GAAP measure) excluding the effects of acquisitions, divestitures, business days and foreign currency exchange from year-over-year comparisons. Management believes this measure provides investors with a supplemental understanding of underlying sales trends by providing sales growth on a consistent basis. Management reports organic sales growth at the consolidated and segment levels.
ORGANIC SALES GROWTH (DECLINE) (UNAUDITED) |
||||||
Three Months Ended |
Metal Cutting |
Infrastructure |
Total |
|||
Organic sales growth (decline) |
2 % |
(3) % |
— % |
|||
Foreign currency exchange effect (3) |
1 |
(1) |
— |
|||
Business days effect (4) |
— |
(1) |
— |
|||
Sales growth (decline) |
3 % |
(5) % |
— % |
(3) Foreign currency exchange effect is calculated by dividing the difference between current period sales and current period sales at prior period foreign exchange rates by prior period sales. |
(4) Business days effect is calculated by dividing the year-over-year change in weighted average working days (based on mix of sales by country) by prior period weighted average working days. |
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SOURCE
Investor Relations CONTACT: Michael Pici PHONE: 412-790-0792 michael.pici@kennametal.com; Media Relations CONTACT: Lori Lecker PHONE: 412-248-8224, lori.lecker@kennametal.com