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): January 24, 2013
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
On January 24, 2013, Kennametal Inc. (Kennametal or the Company) issued an earnings announcement for its fiscal second quarter ended December 31, 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, net income and diluted earnings per share, and Infrastructure sales, operating income and margin. Adjustments include the acquisition impact for the three and six months ended December 31, 2012. 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 and total equity. 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.
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) | December 31, | June 30, | ||||||
(in thousands, except percents) | 2012 | 2012 | ||||||
Total debt | $ | 706,859 | $ | 565,745 | ||||
Total equity | 1,744,443 | 1,668,221 | ||||||
Debt to equity, GAAP | 40.5 | % | 33.9 | % | ||||
Total debt | $ | 706,859 | $ | 565,745 | ||||
Total equity | 1,744,443 | 1,668,221 | ||||||
Total capital | $ | 2,451,302 | $ | 2,233,966 | ||||
Debt to capital | 28.8 | % | 25.3 | % | ||||
Item 9.01 Financial Statements and Exhibits
(d) Exhibits
99.1 Fiscal 2013 Second Quarter Earnings Announcement
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: January 24, 2013 | By: | /s/ Martha A. Bailey | ||||||
Martha A. Bailey | ||||||||
Vice President Finance and Corporate Controller | ||||||||
Exhibit 99.1
FOR IMMEDIATE RELEASE:
DATE: January 24, 2013
Investor Relations
CONTACT: Quynh McGuire
PHONE: 724-539-6559
Corporate Relations - Media
CONTACT: Lorrie Paul Crum
PHONE: 724-539-6792
KENNAMETAL ANNOUNCES SECOND QUARTER 2013 RESULTS
- Reported EPS of $0.52; Stellite accretive $0.02 per share
- Delivered double digit operating margin
- Strengthened financial position and liquidity with $400 million bond issuance
- Revised guidance for slower-than-expected recovery
LATROBE, Pa., (January 24, 2013) – Kennametal Inc. (NYSE: KMT) today reported fiscal 2013 second-quarter results, with earnings per diluted share (EPS) of $0.52 compared with the prior-year quarter EPS of $0.91.
“We again sustained strong performance, in both profitability and return on invested capital, despite generally lackluster activity in the global industrial markets,” said Kennametal Chairman, President and Chief Executive Officer Carlos Cardoso. “While recovery is progressing more slowly than expected, we have kept our organization agile and ready for the resumption of growth. Our Stellite acquisition is contributing to earnings and opening us to new growth opportunities in the energy and power generation industries. In addition, Kennametal remains committed to maximizing our results and maintaining our strong balance sheet to deliver increased shareholder value.”
Fiscal 2013 Second Quarter Key Developments
• | Sales were $633 million, compared with $642 million in the same quarter last year. Sales decreased by 1 percent, reflecting a 10 percent organic decline and a 1 percent unfavorable effect from currency exchange, partially offset by a 9 percent increase from Stellite and 1 percent from the effect of more business days. |
• | Operating income was $66 million, compared with $94 million in the same quarter last year. Stellite contributed $5 million of operating income in the current year quarter. Operating income decreased due to lower absorption of manufacturing costs related to reduced sales volume and an inventory reduction initiative, as well as an unfavorable sales mix. The company reduced operating expense with additional cost-control measures to partially offset these effects. Excluding Stellite, adjusted operating margin was 10.7 percent, compared with an operating margin of 14.7 percent in the prior year. |
• | The results reflect a higher effective tax rate in the current quarter, at 26.4 percent, compared with 17.3 percent in the prior year. The difference includes the impacts of a valuation allowance adjustment in the prior year and lower current quarter earnings contribution from Europe where tax rates are lower than those in the United States. |
• | EPS were $0.52, compared with the prior year quarter EPS of $0.91. The current year EPS includes $0.02 per share accretion from Stellite. |
• | Adjusted return on invested capital (ROIC) was 12.5 percent as of December 31, 2012. |
• | Year to date, the company generated $54 million in cash flow from operating activities, compared with $71 million in the prior year period. Net capital expenditures were $34 million and $33 million for the six months ended December 31, 2012 and 2011, respectively. For the first half of this fiscal year, the company realized free operating cash flow of $21 million compared with $38 million for the same period last year. |
• | The company also bought back 560,200 shares of its capital stock. Year-to-date purchases now total approximately 1.3 million shares, under the amended, multiyear share repurchase program announced in July. Approximately 7.2 million shares remain available under the program. |
Enhanced Liquidity and Strengthened Financial Position
In November 2012, the company further enhanced liquidity and strengthened its financial position by issuing $400 million of 2.65 percent Senior Unsecured Notes due in 2019.
Segment Developments for the Fiscal 2013 Second Quarter
• | Industrial segment sales of $361 million declined 12 percent from $410 million in the prior year quarter, reflecting a 10 percent organic decline and a 2 percent unfavorable effect from currency exchange. On an organic basis, sales declined 15 percent in general engineering and 8 percent in transportation, while aerospace and defense sales grew 10 percent. Inventory destocking affected indirect sales in general engineering, as distributors responded to the slow macro environment. The decline in transportation reflected lower vehicle production rates and extended plant shut-downs, while aerospace and defense sales grew with increased production of commercial aircraft. On a regional basis, sales declined approximately 15 percent in Asia, 9 percent in Europe and 8 percent in the Americas. |
• | Industrial segment operating income was $37 million compared with $63 million in the prior year. Industrial operating income decreased due to lower absorption of manufacturing costs related to reduced sales volume and an inventory reduction initiative, as well as an unfavorable sales mix. Industrial operating margin was 10.4 percent compared with 15.3 percent in the prior year. |
• | Infrastructure segment sales of $272 million increased 17 percent from $232 million in the prior year, driven by 26 percent growth from Stellite, partially offset by an 8 percent organic decline and a 1 percent unfavorable effect from currency exchange. On an organic basis, sales declined by 13 percent in energy and 6 percent in the earthworks markets. Earthworks sales declined from persistently weak coal mining activity in North America, where a number of mine closures further depressed sales. Energy sales fell globally due to reduced drilling activity in oil and gas. On a regional basis excluding the impact of Stellite, sales decreased approximately12 percent in the Americas and 3 percent in Asia and remained flat in Europe. |
• | Infrastructure segment operating income was $31 million, compared with $33 million in the same quarter of the prior year. Operating income benefited from Stellite operating income of $5 million, which was more than offset by the effects of the organic sales decline and lower absorption of manufacturing costs, as well as an unfavorable sales mix. Infrastructure adjusted operating margin was 12.3 percent compared with 14.4 percent in the prior year. |
Fiscal 2013 First Half Key Developments
• | Sales were $1,263 million, compared with $1,301 million in the same period last year. Sales decreased by 3 percent, driven by an 8 percent organic decline and 4 percent unfavorable effect from currency exchange, partially offset by a 9 percent increase from Stellite. |
• | Operating income was $131 million, compared with $196 million in the same period last year. Stellite contributed $8 million of operating income year to date. Operating income decreased primarily due to lower sales volume, lower absorption of manufacturing costs as well as unfavorable currency exchange. This decrease was partially offset by reduced operating expense achieved with cost control. Excluding Stellite, year to date adjusted operating margin was 10.7 percent, compared with an operating margin of 15.0 percent in the prior year. |
• | EPS were $1.09, compared with the prior year period EPS of $1.79. The current year EPS includes $0.02 per share accretion from Stellite. |
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
Due to slower than expected demand in the company's served markets, Kennametal adjusted its full-year outlook given lower sales volumes. However, the company notes that its order rates have remained steady over the past few months, which may reflect that bottoming has occurred.
The company now expects fiscal 2013 sales growth between negative 2 and negative 4 percent, with organic sales ranging from negative 7 to negative 9 percent. Previously, the company had forecast total sales growth ranging from 3 to 6 percent with organic sales growth of flat to negative 3 percent.
Based on the revision, the company has reduced its EPS guidance for fiscal 2013 to range from $2.60 to $2.80, versus its previous expectation of $3.40 to $3.70. Included in this outlook is the accretive contribution of the Stellite acquisition, which is now expected to range between $0.10 and $0.15 per share as compared to the previous range of $0.15 and $0.25 per share, net of integration costs.
The company now expects to generate cash flow from operations between $290 million and $325 million for fiscal 2013, compared with the previous range of $320 million to $385 million. Based on anticipated capital expenditures of approximately $90 million to $100 million, the company expects to generate between $200 million and $225 million of free operating cash flow for the full fiscal year, as compared to the previous range of $225 million to $275 million.
Dividend Declared
Kennametal also announced that its board of directors declared a quarterly cash dividend of $0.16 per share. The dividend is payable February 20, 2013 to shareowners of record as of the close of business on February 5, 2013.
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 fiscal 2013 second-quarter results 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 February 25, 2013.
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 nearly $3 billion of Kennametal products and services – delivered by our approximately 13,000 talented employees doing business in more than 60 countries worldwide – 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 December 31, | Six Months Ended December 31, | ||||||||||||||
(in thousands, except per share amounts) | 2012 | 2011 | 2012 | 2011 | |||||||||||
Sales | $ | 633,144 | $ | 641,741 | $ | 1,262,603 | $ | 1,300,618 | |||||||
Cost of goods sold | 433,697 | 409,855 | 854,808 | 817,672 | |||||||||||
Gross profit | 199,447 | 231,886 | 407,795 | 482,946 | |||||||||||
Operating expense | 127,778 | 134,566 | 266,638 | 280,555 | |||||||||||
Amortization of intangibles | 5,200 | 3,272 | 10,307 | 6,733 | |||||||||||
Operating income | 66,469 | 94,048 | 130,850 | 195,658 | |||||||||||
Interest expense | 6,970 | 5,256 | 12,926 | 10,743 | |||||||||||
Other expense (income), net | 655 | (1,258 | ) | (246 | ) | (684 | ) | ||||||||
Income from continuing operations before income taxes | 58,844 | 90,050 | 118,170 | 185,599 | |||||||||||
Provision for income taxes | 15,535 | 15,579 | 27,815 | 37,555 | |||||||||||
Net income | 43,309 | 74,471 | 90,355 | 148,044 | |||||||||||
Less: Net income attributable to noncontrolling interests | 1,167 | 774 | 1,823 | 2,361 | |||||||||||
Net income attributable to Kennametal | $ | 42,142 | $ | 73,697 | $ | 88,532 | $ | 145,683 | |||||||
PER SHARE DATA ATTRIBUTABLE TO KENNAMETAL SHAREOWNERS | |||||||||||||||
Basic earnings per share | $ | 0.53 | $ | 0.92 | $ | 1.11 | $ | 1.82 | |||||||
Diluted earnings per share | $ | 0.52 | $ | 0.91 | $ | 1.09 | $ | 1.79 | |||||||
Dividends per share | $ | 0.16 | $ | 0.14 | $ | 0.32 | $ | 0.26 | |||||||
Basic weighted average shares outstanding | 79,713 | 79,765 | 79,980 | 80,212 | |||||||||||
Diluted weighted average shares outstanding | 80,986 | 80,936 | 81,164 | 81,357 | |||||||||||
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)
(in thousands) | December 31, 2012 | June 30, 2012 | |||||
ASSETS | |||||||
Cash and cash equivalents | $ | 216,771 | $ | 116,466 | |||
Accounts receivable, net | 412,563 | 478,989 | |||||
Inventories | 619,484 | 585,856 | |||||
Other current assets | 107,545 | 101,651 | |||||
Total current assets | 1,356,363 | 1,282,962 | |||||
Property, plant and equipment, net | 737,638 | 742,201 | |||||
Goodwill and other intangible assets, net | 961,786 | 962,837 | |||||
Other assets | 44,752 | 46,188 | |||||
Total assets | $ | 3,100,539 | $ | 3,034,188 | |||
LIABILITIES | |||||||
Current maturities of long-term debt and capital leases, including notes payable | $ | 2,647 | $ | 75,137 | |||
Accounts payable | 155,401 | 219,475 | |||||
Other current liabilities | 204,477 | 284,010 | |||||
Total current liabilities | 362,525 | 578,622 | |||||
Long-term debt and capital leases | 704,212 | 490,608 | |||||
Other liabilities | 289,359 | 296,737 | |||||
Total liabilities | 1,356,096 | 1,365,967 | |||||
KENNAMETAL SHAREOWNERS’ EQUITY | 1,719,991 | 1,643,850 | |||||
NONCONTROLLING INTERESTS | 24,452 | 24,371 | |||||
Total liabilities and equity | $ | 3,100,539 | $ | 3,034,188 | |||
SEGMENT DATA (UNAUDITED) | Three Months Ended December 31, | Six Months Ended December 31, | |||||||||||||
(in thousands) | 2012 | 2011 | 2012 | 2011 | |||||||||||
Outside Sales: | |||||||||||||||
Industrial | $ | 361,171 | $ | 409,887 | $ | 714,348 | $ | 827,706 | |||||||
Infrastructure | 271,973 | 231,854 | 548,255 | 472,912 | |||||||||||
Total outside sales | $ | 633,144 | $ | 641,741 | $ | 1,262,603 | $ | 1,300,618 | |||||||
Sales By Geographic Region: | |||||||||||||||
North America | $ | 279,943 | $ | 288,622 | $ | 563,167 | $ | 591,168 | |||||||
Western Europe | 184,433 | 177,474 | 360,587 | 362,973 | |||||||||||
Rest of World | 168,768 | 175,645 | 338,849 | 346,477 | |||||||||||
Total sales by geographic region | $ | 633,144 | $ | 641,741 | $ | 1,262,603 | $ | 1,300,618 | |||||||
Operating Income: | |||||||||||||||
Industrial | $ | 37,402 | $ | 62,898 | $ | 72,591 | $ | 135,583 | |||||||
Infrastructure | 31,181 | 33,312 | 62,916 | 65,866 | |||||||||||
Corporate (1) | (2,114 | ) | (2,162 | ) | (4,657 | ) | (5,791 | ) | |||||||
Total operating income | $ | 66,469 | $ | 94,048 | $ | 130,850 | $ | 195,658 | |||||||
(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, net income and diluted earnings per share, Infrastructure sales, operating income and margin, 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 DECEMBER 31, 2012 - (UNAUDITED)
(in thousands, except percents) | Infrastructure Sales | Infrastructure Operating Income | ||||||||||||||
2013 Reported Results | $ | 271,973 | $ | 31,181 | ||||||||||||
2013 Reported Operating Margin | 11.5 | % | ||||||||||||||
Acquisition impact (2) | (60,151 | ) | (5,186 | ) | ||||||||||||
2013 Adjusted Results | $ | 211,822 | $ | 25,995 | ||||||||||||
2013 Adjusted Operating Margin | 12.3 | % | ||||||||||||||
THREE MONTHS ENDED DECEMBER 31, 2012 - (UNAUDITED) | ||||||||||||||||
(in thousands, except per share amounts) | Sales | Operating Income | Net Income (3) | Diluted EPS | ||||||||||||
2013 Reported Results | $ | 633,144 | $ | 66,469 | $ | 42,142 | $ | 0.52 | ||||||||
2013 Reported Operating Margin | 10.5 | % | ||||||||||||||
Acquisition impact (2) | (60,151 | ) | (5,186 | ) | (1,696 | ) | (0.02 | ) | ||||||||
2013 Adjusted Results | $ | 572,993 | $ | 61,283 | $ | 40,446 | $ | 0.50 | ||||||||
2013 Adjusted Operating Margin | 10.7 | % | ||||||||||||||
SIX MONTHS ENDED DECEMBER 31, 2012 - (UNAUDITED) | ||||||||||||||||
(in thousands, except per share amounts) | Sales | Operating Income | Net Income (3) | Diluted EPS | ||||||||||||
2013 Reported Results | 1,262,603 | 130,850 | 88,532 | 1.09 | ||||||||||||
2013 Reported Operating Margin | 10.4 | % | ||||||||||||||
Acquisition impact (2) | (119,656 | ) | (8,278 | ) | (2,071 | ) | (0.02 | ) | ||||||||
2013 Adjusted Results | 1,142,947 | 122,572 | 86,461 | 1.07 | ||||||||||||
2013 Adjusted Operating Margin | 10.7 | % | ||||||||||||||
(2) Includes the impact of Stellite operations
(3) Represents amounts attributable to Kennametal Shareowners
FREE OPERATING CASH FLOW (UNAUDITED) | Six Months Ended | |||||||
December 31, | ||||||||
(in thousands) | 2012 | 2011 | ||||||
Net cash flow from operating activities | $ | 54,235 | $ | 71,099 | ||||
Purchases of property, plant and equipment | (34,372 | ) | (35,593 | ) | ||||
Proceeds from disposals of property, plant and equipment | 704 | 2,557 | ||||||
Free operating cash flow | $ | 20,567 | $ | 38,063 | ||||
RETURN ON INVESTED CAPITAL (UNAUDITED)
December 31, 2012 (in thousands, except percents)
Invested Capital | 12/31/2012 | 9/30/2012 | 6/30/2012 | 3/31/2012 | 12/31/2011 | Average | ||||||||||||||||||
Debt | $ | 706,859 | $ | 601,124 | $ | 565,745 | $ | 640,871 | $ | 307,938 | $ | 564,507 | ||||||||||||
Total equity | 1,744,443 | 1,712,532 | 1,668,221 | 1,745,699 | 1,630,174 | 1,700,214 | ||||||||||||||||||
Total | $ | 2,451,302 | $ | 2,313,656 | $ | 2,233,966 | $ | 2,386,570 | $ | 1,938,112 | $ | 2,264,721 | ||||||||||||
Three Months Ended | ||||||||||||||||||||||||
Interest Expense | 12/31/2012 | 9/30/2012 | 6/30/2012 | 3/31/2012 | Total | |||||||||||||||||||
Interest expense | $ | 6,970 | $ | 5,956 | $ | 8,469 | $ | 8,003 | $ | 29,398 | ||||||||||||||
Income tax benefit | 6,321 | |||||||||||||||||||||||
Total interest expense, net of tax | $ | 23,077 | ||||||||||||||||||||||
Total Income | 12/31/2012 | 9/30/2012 | 6/30/2012 | 3/31/2012 | Total | |||||||||||||||||||
Net income attributable to Kennametal, as reported | $ | 42,142 | $ | 46,390 | $ | 86,048 | $ | 75,499 | $ | 250,079 | ||||||||||||||
Stellite acquisition charges | — | — | 2,267 | 4,738 | 7,005 | |||||||||||||||||||
Noncontrolling interest | 1,167 | 657 | 504 | 738 | 3,066 | |||||||||||||||||||
Total income, adjusted | $ | 43,309 | $ | 47,047 | $ | 88,819 | $ | 80,975 | $ | 260,150 | ||||||||||||||
Total interest expense, net of tax | 23,077 | |||||||||||||||||||||||
$ | 283,227 | |||||||||||||||||||||||
Average invested capital | $ | 2,264,721 | ||||||||||||||||||||||
Adjusted Return on Invested Capital | 12.5 | % | ||||||||||||||||||||||
Return on invested capital calculated utilizing net income, as reported is as follows: | ||||||||||||||||||||||||
Net income attributable to Kennametal, as reported | $ | 250,079 | ||||||||||||||||||||||
Total interest expense, net of tax | 23,077 | |||||||||||||||||||||||
$ | 273,156 | |||||||||||||||||||||||
Average invested capital | $ | 2,264,721 | ||||||||||||||||||||||
Return on Invested Capital | 12.1 | % | ||||||||||||||||||||||