Table of Contents
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Date of report (Date of earliest event reported): July 26, 2012
Kennametal Inc.
(Exact Name of Registrant as Specified in Its Charter)
| Pennsylvania | 1-5318 | 25-0900168 | ||
| (State or Other Jurisdiction of Incorporation) |
(Commission File Number) | (IRS Employer Identification No.) | ||
| World Headquarters 1600 Technology Way P.O. Box 231 Latrobe, Pennsylvania |
15650-0231 | |||
| (Address of Principal Executive Offices) |
(Zip Code) | |||
Registrant’s telephone number, including area code: (724) 539-5000
(Former Name or Former Address, if Changed Since Last Report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
[ ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Table of Contents
Item 2.02 Results of Operations and Financial Condition
Item 9.01 Financial Statements and Exhibits
Item 2.02 Results of Operations and Financial Condition
On July 26, 2012, Kennametal Inc. (Kennametal or the Company) issued an earnings announcement for its fiscal fourth quarter and full year ended June 30, 2012.
The press release contains certain non-generally accepted accounting principles (GAAP) financial measures. The following GAAP financial measures have been presented on an adjusted basis: sales, operating income and margin, Industrial sales, operating income and margin and Infrastructure sales, operating income and margin, net income and diluted earnings per share. Adjustments include acquisition impact for the three months and year ended June 30, 2012 and restructuring and related charges for the three months and year ended June 30, 2011. Management adjusts for these items in measuring and compensating internal performance and to more readily compare the Company’s financial performance period-to-period. The press release also contains free operating cash flow and adjusted return on invested capital (ROIC), which are both non-GAAP measures and are defined below.
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 measures should not be considered in isolation or as a substitute for the most comparable GAAP measures. Investors are cautioned that non-GAAP financial measures utilized by the Company may not be comparable to non-GAAP financial measures used by other companies.
Free Operating Cash Flow
Free operating cash flow is a non-GAAP financial measure and is defined by the Company as cash provided by operations (which is the most directly comparable GAAP measure) less capital expenditures plus proceeds from disposals of fixed assets. Management considers free operating cash flow to be an important indicator of Kennametal’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.
Adjusted Return on Invested Capital
Adjusted Return on Invested Capital is a non-GAAP financial measure and is defined by the Company as the previous 12 months’ net income, adjusted for interest expense, noncontrolling interest and special items, divided by the sum of the previous five quarters average balances of debt, excluding special items and total equity, excluding special items. The most directly comparable GAAP measure is return on invested capital calculated utilizing GAAP net income. Management believes that this financial measure provides additional insight into the underlying capital structure and performance of the Company. Management utilizes this non-GAAP measure in determining compensation and assessing the operations of the Company.
A copy of the Company’s earnings announcement is furnished under Exhibit 99.1 attached hereto. Reconciliations of the above non-GAAP financial measures are included in the earnings announcement.
Additionally, during our quarterly earnings teleconference we may use various non-GAAP financial measures to describe the underlying operating results. Accordingly, we have compiled below certain reconciliations as required by Regulation G. These non-GAAP measures should not be considered in isolation or as a substitute for the most comparable GAAP measures. Investors are cautioned that non-GAAP financial measures utilized by the Company may not be comparable to non-GAAP financial measures used by other companies.
Table of Contents
GROSS MARGIN - EXCLUDING STELLITE (UNAUDITED)
| Quarter Ending March 31, 2012 |
Quarter ending June 30, 2012 |
|||||||||||||||
| (in thousands) | Sales | Gross Profit | Sales | Gross Profit | ||||||||||||
| 2012 Reported Results |
$ | 696,411 | $ | 246,446 | $ | 739,216 | $ | 264,857 | ||||||||
| 2012 Reported Gross Profit Margin |
35.4% | 35.8% | ||||||||||||||
| Acquisition impact (1) |
(22,558) | (4,316) | (67,537) | (13,458) | ||||||||||||
| 2012 Adjusted Results |
$ | 673,853 | $ | 242,130 | $ | 671,679 | $ | 251,399 | ||||||||
| 2012 Adjusted Operating Margin |
35.9% | 37.4% | ||||||||||||||
(1) Adjusted for impact of Stellite operations and integration charges
Debt to Capital
Debt to Capital is a non-GAAP financial measure and is defined by Kennametal as total debt divided by the sum of total equity plus total debt. The most directly comparable GAAP measure is debt to equity, which is defined as total debt divided by total equity. Management believes that Debt to Capital provides additional insight into the underlying capital structure and performance of the Company.
| DEBT TO CAPITAL (UNAUDITED) | June 30, | June 30, | ||||||
| (in thousands, except percents) | 2012 | 2011 | ||||||
| Total debt |
$ | 565,745 | $ | 312,882 | ||||
| Total equity |
1,668,221 | 1,658,641 | ||||||
| Debt to equity, GAAP |
33.9% | 18.9% | ||||||
| Total debt |
$ | 565,745 | $ | 312,882 | ||||
| Total equity |
1,668,221 | 1,658,641 | ||||||
| Total capital |
$ | 2,233,966 | $ | 1,971,523 | ||||
| Debt to capital |
25.3% | 15.9% | ||||||
Item 9.01 Financial Statements and Exhibits
(d) Exhibits
99.1 Fiscal 2012 Fourth Quarter Earnings Announcement
Table of Contents
Signatures
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| KENNAMETAL INC. |
||||||||
| Date: July 26, 2012 |
By: | /s/ Martha A. Bailey |
||||||
| Martha A. Bailey | ||||||||
| Vice President Finance and Corporate Controller | ||||||||
Exhibit 99.1
FOR IMMEDIATE RELEASE:
DATE: July 26, 2012
Investor Relations
CONTACT: Quynh McGuire
PHONE: 724-539-6559
Media Relations
CONTACT: Lorrie Paul Crum
PHONE: 724-539-6792
KENNAMETAL ACHIEVES RECORD 2012 RESULTS;
INCREASES DIVIDEND BY 14%
- Set annual records in sales, operating income, EPS and ROIC
- Achieved 15 percent EBIT and 15 percent ROIC objectives, one year early
- Board increases quarterly dividend 14 percent to $0.16 per share
- Expands repurchase authorization to 12 million shares
- Fiscal 2013 EPS expected to range from $4.10 to $4.40
LATROBE, Pa., (July 26, 2012) – Kennametal Inc. (NYSE: KMT) today reported fiscal 2012 full-year and fourth-quarter results, noting annual performance records in sales, profitability and returns. For fiscal 2012, the company reported earnings per diluted share (EPS) of $3.77 on $2.7 billion in sales, compared with EPS of $2.76 earned on $2.4 billion in sales during the prior year. The current-year earnings included acquisition-related dilution of $0.09 per share, while the prior year comparison included restructuring and related charges of $0.22 per share.
For the fiscal fourth quarter, the company reported EPS of $1.06 on $739 million in sales, compared with EPS of $1.04 on $694 million in sales reported in the same period last year. The current-quarter results included acquisition-related dilution of $0.02 per share, while the prior-year results included $0.07 per share in restructuring and related charges.
“Fiscal 2012 was an excellent year for Kennametal,” said Chairman, President and Chief Executive Officer Carlos Cardoso. “We outperformed our markets, set new records, and delivered 15 percent earnings before interest and taxes (EBIT) margin and 15 percent return on invested capital (ROIC), a full year ahead of schedule. This performance marks our second straight year of record profitability and returns. Consistent with our strategies, we established clear goals, realized ongoing improvements in operational efficiencies and successfully managed multiple headwinds.”
Cardoso added, “The June quarter represented our 10th consecutive quarter of organic growth, reflecting successful execution of our strategies across the diverse markets and geographies we serve. In addition, we further increased sales and strengthened our core business as a result of the recent Stellite acquisition. Our company-specific initiatives continue to position Kennametal to achieve significant margin and earnings expansion. We remain committed to delivering shareowner value.”
Fiscal 2012 Fourth Quarter Key Developments
| • | Sales were $739 million, compared with $694 million in the same quarter last year. The sales increase reflected a 10 percent acquisition contribution, 1 percent organic growth and 1 percent from more business days in the 2012 quarter, partially offset by a 5 percent unfavorable effect from currency exchange. |
| • | Operating income was $117 million compared with $115 million in the same quarter last year. Operating income included $1 million of net acquisition-related loss, while the prior year’s operating income included restructuring and related charges of $7 million. Operating income increased as a result of higher sales volume, pricing and lower employment and restructuring costs, all of which offset higher raw material costs. Operating margin excluding the impact of the acquisition of Stellite was 17.6 percent, compared to an adjusted operating margin of 17.5 percent in the prior year. |
| • | Reported EPS were $1.06, compared with the prior year’s reported EPS of $1.04. The current year EPS included the acquisition-related dilution of $0.02 per share, while the prior year’s EPS included $0.07 per share in restructuring and related charges. |
| • | Adjusted ROIC was 16.3 percent at fiscal year-end, reflecting a new record for the company’s June quarter. |
Segment Developments for the Fiscal 2012 Fourth Quarter
| • | Industrial segment sales of $421 million declined 4 percent from $437 million in the prior year, reflecting 2 percent organic growth offset by 6 percent in unfavorable currency effects. On an organic basis, sales growth was led by aerospace and defense with growth of 14 percent and transportation growth of 6 percent, while general engineering sales were down 4 percent. On a regional basis, sales increased approximately 7 percent in Europe and 3 percent in the Americas, while sales in Asia declined 9 percent from the prior year’s strong comparison. |
| • | Industrial segment operating income was essentially flat year over year, at $76 million. Industrial operating income in the fiscal fourth quarter of 2012 benefited from higher sales volume, pricing and lower employment and restructuring costs, offset by higher raw material costs. Operating income in the prior-year comparison included $5 million in restructuring and related charges. Industrial operating margin was 18.2 percent, compared with adjusted operating margin of 18.7 percent in the prior year. |
| • | Infrastructure segment sales of $318 million increased 24 percent from $257 million in the prior year, driven by 26 percent growth from the Stellite acquisition, partially offset by unfavorable currency effects of 2 percent. In earthworks, sales modestly increased, reflecting somewhat lower production rates in North American underground mining and a slow start in construction activity. Sales were slightly lower in energy, due to a decline in natural gas prices, high storage levels, and reduced drilling activity resulting from these influences. On a regional basis, sales increased approximately 11 percent in Asia and 3 percent in Europe while sales in the Americas were 5 percent lower, off strong prior-year comparisons. |
| • | Infrastructure segment operating income was $42 million, compared with $38 million in the same quarter of the prior year. Infrastructure operating income included $1 million of net acquisition-related loss, versus $2 million in restructuring and related charges in the prior year. Operating income benefited from higher sales volume, pricing and lower employment and restructuring costs, partially offset by higher raw material costs and acquisition-related costs. Infrastructure adjusted operating margin was 17.0 percent compared with adjusted operating margin of 15.6 percent in the prior year. |
Fiscal 2012 Key Developments
| • | Sales were $2.7 billion, up 14 percent from $2.4 billion last year. The sales increase reflects 9 percent organic growth, a 4 percent acquisition contribution and 1 percent from more business days in 2012. |
| • | Operating income was $416 million compared with $322 million last year. Before net acquisition-related costs in the current year of $5 million and costs associated with restructuring in fiscal 2011 of $21 million, operating income was $422 million and $343 million, respectively. Adjusted operating margin was 15.9 percent for fiscal 2012, compared with adjusted operating margin of 14.3 percent last year. |
| • | Kennametal reported EPS of $3.77 in 2012, compared with $2.76 in the prior year. The current-year EPS included acquisition-related dilution of $0.09 per share, while the prior year’s EPS included $0.22 per share in restructuring and related charges. |
| • | Cash flow from operating activities was $290 million in fiscal 2012, compared with $231 million in the prior year. Net capital expenditures were $96 million and $74 million, respectively for fiscal years 2012 and 2011, and the company generated full-year free operating cash flow of $193 million in the current year, compared with $157 million last year. |
Reconciliations of all non-GAAP financial measures are set forth in the tables attached, and corresponding descriptions are contained in the company’s report on Form 8-K, to which this news release is attached.
Outlook
The company’s outlook for fiscal year 2013 assumes that the global economy and worldwide industrial production will continue to reflect positive growth, with some moderation in industrial activity and short-term slowing related to natural gas drilling and underground coal mining in North America.
Kennametal expects fiscal 2013 organic sales growth to range from 5 to 7 percent, and total sales to grow between 7 and 10 percent. This growth rate is expected to outpace global industrial production by more than double through company-specific growth initiatives.
The company expects EPS to range from $4.10 to $4.40 in fiscal 2013. The mid-point of this range represents a 10 percent increase from fiscal 2012 adjusted EPS of $3.86. Included in this outlook is the accretive contribution of the Stellite acquisition, which is expected to range between $0.15 and $0.25 per share, net of integration costs. Compared to prior year, foreign currency exchange rate fluctuations and change in the effective tax rate are expected to have a significant unfavorable impact on EPS in fiscal 2013 as reflected in the outlook.
Kennametal expects to generate cash flow from operating activities ranging from approximately $425 million to $475 million in fiscal 2013. Based on anticipated capital expenditures of approximately $115 million to $125 million, the company expects to generate between $300 million and $350 million of free operating cash flow for the full fiscal year.
Share Repurchase Program
Kennametal announced today that its Board of Directors authorized an amended multi-year repurchase program of up to 12 million shares of the company’s outstanding common stock (previously 8 million shares). The purchases may be made from time to time, at the company’s discretion, in the open market, in private transactions or through Rule 10b5-1 Plans, in accordance with applicable securities laws taking into consideration the market price of the stock, other investment opportunities, and cash flows from operations, general economic conditions and other relevant factors. There are 8.5 million shares available under the amended authorization.
Dividend Increase Declared
Kennametal also announced that its Board of Directors declared a quarterly cash dividend of $0.16 per share, which represents an increase of 14 percent, or $0.02 per share. This marks the fifth annual dividend increase in eight years for the company. The dividend is payable August 22, 2012 to shareowners of record as of the close of business on August 7, 2012.
Kennametal advises shareowners to note monthly order trends, for which the company generally makes a disclosure ten business days after the conclusion of each month. This information is available via the Investor Relations section of Kennametal’s corporate website at www.kennametal.com.
The company will discuss its fourth-quarter and full-year results for fiscal 2012 in a live webcast at 10:00 a.m. ET today. This event will be broadcast live on the company’s website, www.kennametal.com. To access the webcast, select “Investor Relations” and then “Events.” A recorded replay of this event also will be available on the company’s website through August 27, 2012.
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 earnings, sales volumes, and cash flow for fiscal year 2013 and our expectations regarding future growth and financial performance are forward-looking statements. Any forward looking statements are based on current knowledge, expectations and estimates that involve inherent risks and uncertainties. Should one or more of these risks or uncertainties materialize, or should the assumptions underlying the forward-looking statements prove incorrect, our actual results could vary materially from our current expectations. There are a number of factors that could cause our actual results to differ from those indicated in the forward-looking statements. They include: economic recession; availability and cost of the raw materials we use to manufacture our products; our foreign operations and international markets, such as currency exchange rates, different regulatory environments, trade barriers, exchange controls, and social and political instability; changes in the regulatory environment in which we operate, including environmental, health and safety regulations; our ability to protect and defend our intellectual property; competition; our ability to retain our management and employees; demands on management resources; demand for and market acceptance of our products; integrating acquisitions and achieving the expected savings and synergies; business divestitures; and implementation of environmental remediation matters. Many of these risks and other risks are more fully described in Kennametal’s latest annual report on Form 10-K and its other periodic filings with the Securities and Exchange Commission. We undertake no obligation to release publicly any revisions to forward-looking statements as a result of future events or developments.
Kennametal Inc. (NYSE: KMT) delivers productivity to customers seeking peak performance in demanding environments by providing innovative custom and standard wear-resistant solutions. This proven productivity is enabled through our advanced materials sciences and application knowledge. Our commitment to a sustainable environment provides additional value to our customers. Companies operating in everything from airframes to coal mining, from engines to oil wells and from turbochargers to construction recognize Kennametal for extraordinary contributions to their value chains. In fiscal year 2012, customers bought approximately $2.7 billion of Kennametal products and services – delivered by our approximately 13,000 talented employees doing business in more than 60 countries – with more than 50 percent of these revenues coming from outside North America. Visit us at www.kennametal.com.
FINANCIAL HIGHLIGHTS
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
| Three Months Ended June 30, |
Twelve Months Ended June 30, |
|||||||||||||||
| (in thousands, except per share amounts) |
2012 |
2011 | 2012 | 2011 | ||||||||||||
|
Sales |
$ | 739,216 | $ | 693,737 | $ | 2,736,246 | $ | 2,403,493 | ||||||||
| Cost of goods sold |
474,359 | 428,092 | 1,741,996 | 1,519,102 | ||||||||||||
|
Gross profit |
264,857 | 265,645 | 994,250 | 884,391 | ||||||||||||
|
Operating expense |
142,030 | 143,083 | 561,490 | 538,530 | ||||||||||||
| Restructuring charges |
- | 4,889 | - | 12,586 | ||||||||||||
| Amortization of intangibles |
5,369 | 2,906 | 16,351 | 11,602 | ||||||||||||
|
Operating income |
117,458 | 114,767 | 416,409 | 321,673 | ||||||||||||
|
Interest expense |
8,469 | 5,466 | 27,215 | 22,760 | ||||||||||||
| Other expense (income), net |
394 | (292) | (775) | 2,780 | ||||||||||||
|
Income before income taxes |
108,595 | 109,593 | 389,969 | 296,133 | ||||||||||||
|
Provision for income taxes |
22,043 | 22,764 | 79,136 | 63,856 | ||||||||||||
|
Net income |
86,552 | 86,829 | 310,833 | 232,277 | ||||||||||||
| Less: Net income attributable to noncontrolling interests |
504 | 174 | 3,603 | 2,550 | ||||||||||||
|
Net income attributable to Kennametal |
$ | 86,048 | $ | 86,655 | $ | 307,230 | $ | 229,727 | ||||||||
|
PER SHARE DATA ATTRIBUTABLE TO KENNAMETAL SHAREOWNERS |
| |||||||||||||||
| Basic earnings per share |
$ | 1.07 | $ | 1.06 | $ | 3.83 | $ | 2.80 | ||||||||
|
Diluted earnings per share |
$ | 1.06 | $ | 1.04 | $ | 3.77 | $ | 2.76 | ||||||||
|
Dividends per share |
$ | 0.14 | $ | 0.12 | $ | 0.54 | $ | 0.48 | ||||||||
|
Basic weighted average shares outstanding |
80,323 | 81,819 | 80,216 | 82,063 | ||||||||||||
|
Diluted weighted average shares outstanding |
81,554 | 83,219 | 81,439 | 83,173 | ||||||||||||
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)
| (in thousands) | June 30, 2012 |
June 30, 2011 |
||||||
|
ASSETS |
||||||||
| Cash and cash equivalents |
$ | 116,466 | $ | 204,565 | ||||
| Accounts receivable, net |
478,989 | 447,835 | ||||||
| Inventories |
585,856 | 519,973 | ||||||
| Other current assets |
101,651 | 115,212 | ||||||
| Total current assets |
1,282,962 | 1,287,585 | ||||||
| Property, plant and equipment, net |
742,201 | 697,062 | ||||||
| Goodwill and other intangible assets, net |
962,838 | 663,607 | ||||||
| Other assets |
46,187 | 106,215 | ||||||
| Total assets |
$ | 3,034,188 | $ | 2,754,469 | ||||
|
LIABILITIES |
||||||||
| Current maturities of long-term debt and capital leases, including notes payable |
$ | 75,137 | $ | 310,963 | ||||
| Accounts payable |
219,475 | 222,678 | ||||||
| Other current liabilities |
284,009 | 307,880 | ||||||
| Total current liabilities |
578,621 | 841,521 | ||||||
| Long-term debt and capital leases |
490,608 | 1,919 | ||||||
| Other liabilities |
296,738 | 252,388 | ||||||
| Total liabilities |
1,365,967 | 1,095,828 | ||||||
| KENNAMETAL SHAREOWNERS’ EQUITY |
1,643,850 | 1,638,072 | ||||||
| NONCONTROLLING INTERESTS |
24,371 | 20,569 | ||||||
| Total liabilities and equity |
$ | 3,034,188 | $ | 2,754,469 | ||||
| SEGMENT DATA (UNAUDITED) | Three Months Ended June 30, |
Twelve Months Ended June 30, |
||||||||||||||
| (in thousands) |
2012 |
2011 | 2012 | 2011 | ||||||||||||
|
Outside Sales: |
||||||||||||||||
| Industrial |
$ | 421,173 | $ | 437,112 | $ | 1,667,434 | $ | 1,528,672 | ||||||||
| Infrastructure |
318,043 | 256,625 | 1,068,812 | 874,821 | ||||||||||||
| Total outside sales |
$ | 739,216 | $ | 693,737 | $ | 2,736,246 | $ | 2,403,493 | ||||||||
|
Sales By Geographic Region: |
||||||||||||||||
| United States |
$ | 304,280 | $ | 298,924 | $ | 1,170,117 | $ | 1,041,427 | ||||||||
| International |
434,936 | 394,813 | 1,566,129 | 1,362,066 | ||||||||||||
| Total sales by geographic region |
$ | 739,216 | $ | 693,737 | $ | 2,736,246 | $ | 2,403,493 | ||||||||
|
Operating Income: |
||||||||||||||||
| Industrial |
$ | 76,455 | $ | 77,241 | $ | 283,233 | $ | 209,663 | ||||||||
| Infrastructure |
41,713 | 38,037 | 141,640 | 121,733 | ||||||||||||
| Corporate (1) |
(710 | ) | (511 | ) | (8,464 | ) | (9,723 | ) | ||||||||
| Total operating income |
$ | 117,458 | $ | 114,767 | $ | 416,409 | $ | 321,673 | ||||||||
(1) Represents unallocated corporate expenses
In addition to reported results under generally accepted accounting principles in the United States of America (GAAP), the following financial highlight tables include, where appropriate, a reconciliation of adjusted results including, sales, operating income and margin, Industrial sales, operating income and margin, Infrastructure sales, operating income and margin, net income, diluted earnings per share, free operating cash flow and return on invested capital (which are non-GAAP financial measures), to the most directly comparable GAAP measures. For those adjustments that are presented ‘net of tax’, the tax effect of the adjustment can be derived by calculating the difference between the pre-tax and the post-tax adjustments presented. The tax effect on adjustments is calculated by preparing an overall tax calculation including the adjustments and then a tax calculation excluding the adjustments. The difference between these calculations results in the tax impact of the adjustments.
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 measures should not be considered in isolation or as a substitute for the most comparable GAAP measures. Investors are cautioned that non-GAAP financial measures utilized by the company may not be comparable to non-GAAP financial measures used by other companies. 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.
THREE MONTHS ENDED JUNE 30, 2012 (UNAUDITED)
| (in thousands, except percents) | Infrastructure Sales |
Infrastructure Operating Income |
||||||||||||||
| 2012 Reported Results |
$ | 318,043 | $ | 41,713 | ||||||||||||
| 2012 Reported Operating Margin |
13.1% | |||||||||||||||
| Acquisition impact (3) |
(67,537) | 857 | ||||||||||||||
| 2012 Adjusted Results |
$ | 250,506 | $ | 42,570 | ||||||||||||
| 2012 Adjusted Operating Margin |
17.0% | |||||||||||||||
|
THREE MONTHS ENDED JUNE 30, 2012 - EXCLUDING STELLITE (UNAUDITED)
|
| |||||||||||||||
| (in thousands, except per share amounts) |
Sales | Operating Income |
Net Income (2) | Diluted EPS | ||||||||||||
| 2012 Reported Results |
$ | 739,216 | $ | 117,458 | $ | 86,048 | $ | 1.06 | ||||||||
| 2012 Reported Operating Margin |
15.9% | |||||||||||||||
| Acquisition impact (3) |
(67,537 | ) | 857 | 2,413 | 0.02 | |||||||||||
| 2012 Adjusted Results |
$ | 671,679 | $ | 118,315 | $ | 88,461 | $ | 1.08 | ||||||||
| 2012 Adjusted Operating Margin |
17.6% | |||||||||||||||
|
THREE MONTHS ENDED JUNE 30, 2011 (UNAUDITED) |
| |||||||||||||||
| (in thousands, except percents) | Industrial Sales |
Industrial Operating Income |
Infrastructure Sales |
Infrastructure Operating Income |
||||||||||||
| 2011 Reported Results |
$ | 437,112 | $ | 77,241 | $ | 256,625 | $ | 38,037 | ||||||||
| 2011 Reported Operating Margin |
17.7% | 14.8% | ||||||||||||||
| Restructuring and related charges |
- | 4,535 | - | 2,051 | ||||||||||||
| 2011 Adjusted Results |
$ | 437,112 | $ | 81,776 | $ | 256,625 | $ | 40,088 | ||||||||
| 2011 Adjusted Operating Margin |
18.7% | 15.6% | ||||||||||||||
THREE MONTHS ENDED JUNE 30, 2011 (UNAUDITED)
| (in thousands, except percents) | Gross Profit | Operating Expense |
Operating Income |
Net Income(2) | Diluted EPS | |||||||||||||||
| 2011 Reported Results |
265,645 | $ | 143,083 | $ | 114,767 | $ | 86,655 | $ | 1.04 | |||||||||||
| 2011 Reported Operating Margin |
16.5% | |||||||||||||||||||
| Restructuring and related charges |
1,481 | (216 | ) | 6,586 | 5,588 | 0.07 | ||||||||||||||
| 2011 Adjusted Results |
$ 267,126 | $ | 142,867 | $ | 121,353 | $ | 92,243 | $ | 1.11 | |||||||||||
| 2011 Adjusted Operating Margin |
17.5% | |||||||||||||||||||
|
YEAR ENDED JUNE 30, 2012 - EXCLUDING STELLITE (UNAUDITED)
|
| |||||||||||||||||||
| (in thousands, except per share amounts) |
Sales | Operating Income |
Net Income (2) | Diluted EPS | ||||||||||||||||
| 2012 Reported Results |
$ | 2,736,246 | $ | 416,409 | $ | 307,230 | $ | 3.77 | ||||||||||||
| 2012 Reported Operating Margin |
15.2% | |||||||||||||||||||
| Acquisition impact (3) |
(90,096 | ) | 5,463 | 7,061 | 0.09 | |||||||||||||||
| 2012 Adjusted Results |
$ | 2,646,150 | $ | 421,872 | $ | 314,291 | $ | 3.86 | ||||||||||||
| 2012 Adjusted Operating Margin |
15.9% | |||||||||||||||||||
|
(3) Adjusted for impact of Stellite operations and integration charges |
| |||||||||||||||||||
|
YEAR ENDED JUNE 30, 2011 (UNAUDITED)
|
| |||||||||||||||||||
| (in thousands, except per share amounts) |
Gross Profit | Operating Expense |
Operating Income |
Net Income(2) | Diluted EPS | |||||||||||||||
| 2011 Reported Results |
$ 884,391 | $ | 538,530 | $ | 321,673 | $ | 229,727 | $ | 2.76 | |||||||||||
| 2011 Reported Operating Margin |
13.4% | |||||||||||||||||||
| Restructuring and related charges |
5,467 | (3,446 | ) | 21,499 | 18,083 | 0.22 | ||||||||||||||
| 2011 Adjusted Results |
$ 889,858 | $ | 535,084 | $ | 343,172 | $ | 247,810 | $ | 2.98 | |||||||||||
| 2011 Adjusted Operating Margin |
14.3% | |||||||||||||||||||
|
(2) Represents amounts attributable to Kennametal shareowners |
| |||||||||||||||||||
| FREE OPERATING CASH FLOW (UNAUDITED) | Twelve Months Ended | |||||||||
| June 30, | ||||||||||
| (in thousands) | 2012 | 2011 | ||||||||
|
Net cash flow provided by operating activities |
$ | 289,580 | $ | 230,797 | ||||||
| Purchases of property, plant and equipment |
(103,036) | (83,442) | ||||||||
| Proceeds from disposals of property, plant and equipment |
6,886 | 9,755 | ||||||||
| Free operating cash flow |
$ | 193,430 | $ | 157,110 | ||||||
RETURN ON INVESTED CAPITAL (UNAUDITED)
June 30, 2012 (in thousands, except percents)
| Invested Capital | 6/30/2012 | 3/31/2012 | 12/31/2011 | 9/30/2011 | 6/30/2011 | Average | ||||||||||||||||||
|
|
||||||||||||||||||||||||
| Debt |
$ | 565,745 | $ | 640,871 | $ | 307,938 | $ | 312,721 | $ | 312,882 | $ | 428,031 | ||||||||||||
| Less acquisition debt |
(10,319) | (7,924) | - | - | - | (3,649) | ||||||||||||||||||
| Total equity |
1,668,221 | 1,745,699 | 1,630,174 | 1,588,745 | 1,658,641 | 1,658,296 | ||||||||||||||||||
| Less acquisition equity |
(5,818) | (5,308) | - | - | - | (2,225) | ||||||||||||||||||
|
|
||||||||||||||||||||||||
| Total |
$ | 2,217,829 | $ | 2,373,338 | $ | 1,938,112 | $ | 1,901,466 | $ | 1,971,523 | $ | 2,080,454 | ||||||||||||
|
|
||||||||||||||||||||||||
| Three Months Ended | ||||||||||||||||||||||||
| Interest Expense | 6/30/2012 | 3/31/2012 | 12/31/2011 | 9/30/2011 | Total | |||||||||||||||||||
|
|
||||||||||||||||||||||||
| Interest expense |
$ | 8,469 | $ | 8,003 | $ | 5,256 | $ | 5,487 | $ | 27,215 | ||||||||||||||
|
|
||||||||||||||||||||||||
| Income tax benefit |
5,525 | |||||||||||||||||||||||
|
|
|
|||||||||||||||||||||||
| Total interest expense, net of tax |
$ | 21,690 | ||||||||||||||||||||||
|
|
|
|||||||||||||||||||||||
| Total Income | 6/30/2012 | 3/31/2012 | 12/31/2011 | 9/30/2011 |
Total |
|||||||||||||||||||
|
|
||||||||||||||||||||||||
| Net income attributable to Kennametal, as reported |
$ | 86,048 | $ | 75,499 | $ | 73,697 | $ | 71,986 | $ | 307,230 | ||||||||||||||
| Acquisition impact (3) |
2,413 | 4,648 | - | - | 7,061 | |||||||||||||||||||
| Noncontrolling interest |
(100) | 538 | 774 | 1,587 | 2,799 | |||||||||||||||||||
|
|
||||||||||||||||||||||||
| Total income, adjusted |
$ | 88,361 | $ | 80,685 | $ | 74,471 | $ | 73,573 | $ | 317,090 | ||||||||||||||
|
|
||||||||||||||||||||||||
| Total interest expense, net of tax |
21,690 | |||||||||||||||||||||||
|
|
|
|||||||||||||||||||||||
| $ | 338,780 | |||||||||||||||||||||||
| Average invested capital |
$ | 2,080,454 | ||||||||||||||||||||||
|
|
|
|||||||||||||||||||||||
| Adjusted Return on Invested Capital |
|
16.3% | ||||||||||||||||||||||
|
|
|
|||||||||||||||||||||||
| Return on invested capital calculated utilizing net income, as reported is as follows: | ||||||||||||||||||||||||
| Net income attributable to Kennametal, as reported |
|
$ | 307,230 | |||||||||||||||||||||
| Total interest expense, net of tax |
|
21,690 | ||||||||||||||||||||||
|
|
||||||||||||||||||||||||
| $ | 328,920 | |||||||||||||||||||||||
| Average unadjusted invested capital |
|
$ | 2,086,327 | |||||||||||||||||||||
|
|
||||||||||||||||||||||||
| Return on Invested Capital |
|
15.8% | ||||||||||||||||||||||
|
|
||||||||||||||||||||||||
(3) Adjusted for impact of Stellite operations and integration charges