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 25, 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 July 25, 2013, Kennametal Inc. (Kennametal or the Company) issued an earnings announcement for its fiscal fourth quarter ended June 30, 2013.
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 and Infrastructure sales, operating income and margin. Adjustments include the Stellite operations and acquisition impact for the three and twelve months ended June 30, 2013 and 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.
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.
Adjusted EBIT
EBIT is an acronym for Earnings Before Interest and Taxes and is a non-GAAP financial measure. The most directly comparable GAAP measure is net income. However, management believes that EBIT is widely used as a measure of operating performance and believes EBIT to be an important indicator of the Company's operational strength and performance. Nevertheless, the measure should not be considered in isolation or as a substitute for operating income, cash flows from operating activities or any other measure for determining operating performance or cash generation that is calculated in accordance with GAAP. Additionally, the company may adjust EBIT. Adjustments include the Stellite operations impact for the three months ended June 30, 2013. Management uses this information in reviewing operating performance and in determining compensation.
ADJUSTED EBIT (UNAUDITED) | Three Months Ended | Twelve Months Ended | |||||
(in thousands, except percents) | June 30, 2013 | June 30, 2013 | |||||
Net income | $ | 62,184 | $ | 206,916 | |||
Adjustments: | |||||||
Interest expense | 7,042 | 27,472 | |||||
Interest income | (598 | ) | (2,253 | ) | |||
Tax expense | 19,535 | 59,693 | |||||
EBIT | $ | 88,163 | 291,828 | ||||
Sales as reported | $ | 671,410 | $ | 2,589,373 | |||
EBIT as a percent of sales | 13.1 | % | 11.3 | % | |||
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) | 2013 | 2012 | ||||||
Total debt | $ | 747,945 | $ | 565,745 | ||||
Total equity | 1,812,293 | 1,668,221 | ||||||
Debt to equity, GAAP | 41.3 | % | 33.9 | % | ||||
Total debt | $ | 747,945 | $ | 565,745 | ||||
Total equity | 1,812,293 | 1,668,221 | ||||||
Total capital | $ | 2,560,238 | $ | 2,233,966 | ||||
Debt to capital | 29.2 | % | 25.3 | % | ||||
Item 9.01 Financial Statements and Exhibits
(d) Exhibits
99.1 Fiscal 2013 Fourth 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: July 25, 2013 | By: | /s/ Martha A. Bailey | ||||||
Martha A. Bailey | ||||||||
Vice President Finance and Corporate Controller | ||||||||
Exhibit 99.1
FOR IMMEDIATE RELEASE:
DATE: July 25, 2013
Investor Relations
CONTACT: Quynh McGuire
PHONE: 724-539-6559
Corporate Relations - Media
CONTACT: Lorrie Paul Crum
PHONE: 724-539-6792
KENNAMETAL ANNOUNCES FOURTH QUARTER & FISCAL 2013 RESULTS; INCREASES DIVIDEND BY 12.5%; EXPANDS REPURCHASE PROGRAM
- Delivered fourth quarter EPS of $0.76 with double-digit operating margin, despite market challenges
- Achieved all-time annual free operating cash flow record of $204 million
- Increases quarterly dividend 12.5 percent to $0.18 per share
- Expands repurchase authorization; 10.4 million shares remaining in program
- Provides fiscal 2014 EPS range of $2.90 to $3.10
LATROBE, Pa., (July 25, 2013) – Kennametal Inc. (NYSE: KMT) today reported fiscal 2013 and fourth-quarter results. For fiscal 2013, the company reported earnings per diluted share (EPS) of $2.52 on $2.6 billion in sales, compared with EPS of $3.77 earned on $2.7 billion in sales during the prior year. The current year included $0.03 per share in earnings accretion from Stellite, while the prior year included acquisition-related dilution of $0.09 per share.
For the fiscal fourth quarter, the company reported EPS of $0.76 on $671 million in sales, compared with EPS of $1.06 on $739 million in sales for the same period last year.
"In the June quarter—and for every quarter during fiscal 2013—Kennametal delivered double-digit profitability despite market challenges. We demonstrated greater agility in this cycle and elevated our financial performance,” said Kennametal Chairman, President and Chief Executive Officer Carlos Cardoso.
“In addition, we generated all-time record free operating cash flow of $204 million; nearly 100 percent of net income. Our company-specific initiatives, proven cost disciplines and strong balance sheet provide opportunities for Kennametal to maximize revenues and earnings, while continuing to generate strong cash flows. Going forward, we will remain intensely focused on generating profitable growth.”
Fiscal 2013 Fourth Quarter Key Developments
• | Sales were $671 million, compared with $739 million in the same quarter last year. Sales decreased by 9 percent, reflecting an 8 percent organic decline and a 1 percent unfavorable effect from currency exchange. |
• | Operating income was $91 million, compared with $117 million in the same quarter last year. Operating income declined due to lower sales volume and unfavorable inventory adjustments, partially offset by favorable operating expense and absorption benefits associated with slightly higher inventory. Operating margin was 13.5 percent compared with 15.9 percent in the prior year. |
• | The effective tax rate was 23.9 percent in the period, compared with 20.3 percent in the prior year. The prior year rate benefited from a settlement of an income tax audit in Europe, partially offset by the impacts of stronger earnings in the U.S. |
• | EPS were $0.76, compared with the prior year quarter EPS of $1.06. |
• | Adjusted return on invested capital (ROIC) was 9.5 percent as of June 30, 2013. |
• | For the fiscal year, the company realized an all-time annual free operating cash flow record of $204 million compared with $193 million for last year, driven by improved working capital performance. |
• | Capital stock repurchased during the quarter was approximately 1.0 million shares and totaled approximately 3.1 million shares for the fiscal year. |
Segment Developments for the Fiscal 2013 Fourth Quarter
• | Industrial segment sales of $384 million declined 9 percent from $421 million in the prior year quarter. The results reflect an 8 percent organic decline and a 1 percent unfavorable effect from currency exchange. On an organic basis, sales declined 8 percent in general engineering, 7 percent in transportation and 6 percent in aerospace and defense. On a regional basis, sales declined approximately 12 percent in the Americas, 6 percent in Europe and 5 percent in Asia. |
• | Industrial segment operating income was $56 million compared with $76 million in the prior year. Industrial operating income decreased primarily due to lower sales volume and unfavorable inventory adjustments, partially offset by lower operating expense and absorption benefits associated with slightly higher inventory. Industrial operating margin was 14.6 percent compared with 18.2 percent in the prior year. |
• | Infrastructure segment sales of $288 million, declined 10 percent from $318 million in the prior year. The decrease was driven by an 8 percent organic decline, a 1 percent decline from fewer business days and a 1 percent unfavorable effect from currency exchange. On an organic basis, sales declined by 12 percent in the energy and 6 percent in the earthworks markets. Energy sales continued to reflect low drilling activity in oil and gas. Earthworks sales remained weak globally due to depressed levels of underground coal mining activity. On a regional basis, sales decreased approximately 11 percent in the Americas, 8 percent in Europe and 3 percent in Asia. |
• | Infrastructure segment operating income was $35 million, compared with $42 million in the same quarter of the prior year. Stellite contributed $1 million of operating income in the current year quarter, compared with $1 million of net acquisition-related loss in the prior year period. Operating income decreased primarily due to the effects of the organic sales decline and unfavorable inventory adjustments, partially offset by lower operating expense and absorption benefits associated with slightly higher inventory. Excluding Stellite, Infrastructure operating margin was 14.8 percent compared with 17.0 percent in the prior year. |
Fiscal 2013 Key Developments
• | Sales were $2.6 billion, compared with $2.7 billion last year. Sales decreased by 5 percent, driven by an 8 percent organic decline, a 2 percent unfavorable effect from currency exchange and a 1 percent decline due to fewer business days, partially offset by a 6 percent increase from Stellite. |
• | Operating income was $296 million, compared with $416 million last year. Stellite contributed $12 million of operating income, compared with $5 million of net operating loss for the four months owned in the prior year. Operating income decreased primarily due to lower sales volume, lower absorption of manufacturing costs related to reduced sales volume and an inventory reduction initiative, as well as unfavorable currency exchange. The decrease was lessened by reduced operating expense, driven by lower employment costs, favorable currency exchange, a decrease in Stellite acquisition-related costs and containment of discretionary spending. Excluding Stellite, fiscal year adjusted operating margin was 12.1 percent, compared with 15.9 percent in the prior year. |
• | EPS were $2.52, compared with the prior year EPS of $3.77. The current year includes $0.03 per share accretion from Stellite. Prior year included acquisition-related dilution of $0.09 per share 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
For fiscal year 2014, Kennametal's outlook reflects expectations of continued macro-economic improvement, with worldwide industrial production building momentum. While manufacturing and industrial sectors are projected to expand over the next 12 months, underground coal mining will likely remain weak globally as well as some near-term project delays in the energy markets.
As a result of these factors, the company expects organic sales growth to range from 5 to 7 percent, and total sales to grow between 4 and 6 percent in fiscal 2014. This growth rate is expected to outpace global industrial production by more than double through company-specific initiatives.
The company expects EPS to range from $2.90 to $3.10 in fiscal 2014. The mid-point of this range represents a 19 percent increase from EPS of $2.52 in fiscal 2013.
Kennametal expects to generate cash flow from operating activities in the range of $330 million to $380 million in fiscal 2014. Based on anticipated capital expenditures of approximately $130 million to $150 million, the company expects to generate free operating cash flow in the range of $200 million to $230 million for fiscal year 2014.
Amended Share Repurchase Program
Kennametal announced today that its Board of Directors authorized a second amended multi-year repurchase program of up to 17 million shares of the company's outstanding capital stock (previously 12 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. Currently, there are 10.4 million shares available for repurchase under this second amended authorization.
Increased Dividend Declared
Kennametal also announced that its Board of Directors declared a quarterly cash dividend of $0.18 per share, which represents an increase of 12.5 percent, or $0.02 per share. This action marks the company's sixth increase to the annual dividend over a nine-year period. The dividend is payable August 21, 2013 to shareowners of record as of the close of business on August 6, 2013.
Enhanced Operating Structure Implemented as of July 1, 2013
At the start of fiscal 2014, Kennametal enhanced its organizational structure to align a broader base management team with customer-facing products and technology platforms, as well as to further increase cross-selling opportunities. This operating structure supports the company's stated growth objectives across diverse market sectors, preserves the focus on customers and increases product innovation.
Kennametal will continue to report results in each of the Industrial and Infrastructure segments, as well as by served end markets, while also providing expanded disclosures discussing technology-based sales for each segment. Consistent with previous allocation methodologies, corporate expenses related to each segment will be classified accordingly.
Previously disclosed segment results will be recast for certain sales reclassifications based on products and technologies and disclosed in future filings as appropriate.
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 fourth-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 August 26, 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.
Celebrating its 75th year as an industrial technology leader, Kennametal Inc. delivers productivity to customers seeking peak performance in demanding environments. The company provides innovative wear-resistant products and application engineering backed by advanced material science, serving customers in 60 countries across diverse sectors of aerospace, earthworks, energy, industrial production, transportation and infrastructure. With approximately 13,000 employees and nearly $3 billion in sales, the company realizes half of its revenue from outside North America, and 40% globally from innovations introduced in the past five years. Recognized among the “World's Most Ethical Companies” (Ethisphere); “Outstanding Corporate Innovator” (Product Development Management Association); and "America's Safest Companies" (EHS Today) with a focus on 100% safety, Kennametal and its foundation invest in technical education, industrial technologies and material science to deliver the promise of progress and economic prosperity to people everywhere. For more information, visit the company's website 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) | 2013 | 2012 | 2013 | 2012 | |||||||||||
Sales | $ | 671,410 | $ | 739,216 | $ | 2,589,373 | $ | 2,736,246 | |||||||
Cost of goods sold | 442,696 | 474,359 | 1,744,369 | 1,741,996 | |||||||||||
Gross profit | 228,714 | 264,857 | 845,004 | 994,250 | |||||||||||
Operating expense | 132,883 | 142,030 | 527,850 | 561,490 | |||||||||||
Amortization of intangibles | 5,258 | 5,369 | 20,760 | 16,351 | |||||||||||
Operating income | 90,573 | 117,458 | 296,394 | 416,409 | |||||||||||
Interest expense | 7,042 | 8,469 | 27,472 | 27,215 | |||||||||||
Other expense (income), net | 1,812 | 394 | 2,313 | (775 | ) | ||||||||||
Income from continuing operations before income taxes | 81,719 | 108,595 | 266,609 | 389,969 | |||||||||||
Provision for income taxes | 19,535 | 22,043 | 59,693 | 79,136 | |||||||||||
Net income | 62,184 | 86,552 | 206,916 | 310,833 | |||||||||||
Less: Net income attributable to noncontrolling interests | 1,366 | 504 | 3,651 | 3,603 | |||||||||||
Net income attributable to Kennametal | $ | 60,818 | $ | 86,048 | $ | 203,265 | $ | 307,230 | |||||||
PER SHARE DATA ATTRIBUTABLE TO KENNAMETAL SHAREOWNERS | |||||||||||||||
Basic earnings per share | $ | 0.77 | $ | 1.07 | $ | 2.56 | $ | 3.83 | |||||||
Diluted earnings per share | $ | 0.76 | $ | 1.06 | $ | 2.52 | $ | 3.77 | |||||||
Dividends per share | $ | 0.16 | $ | 0.14 | $ | 0.64 | $ | 0.54 | |||||||
Basic weighted average shares outstanding | 78,615 | 80,323 | 79,463 | 80,216 | |||||||||||
Diluted weighted average shares outstanding | 79,866 | 81,554 | 80,612 | 81,439 | |||||||||||
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)
(in thousands) | June 30, 2013 | June 30, 2012 | |||||
ASSETS | |||||||
Cash and cash equivalents | $ | 377,316 | $ | 116,466 | |||
Accounts receivable, net | 445,322 | 478,989 | |||||
Inventories | 578,795 | 585,856 | |||||
Other current assets | 98,040 | 101,651 | |||||
Total current assets | 1,499,473 | 1,282,962 | |||||
Property, plant and equipment, net | 741,482 | 742,201 | |||||
Goodwill and other intangible assets, net | 944,520 | 962,837 | |||||
Other assets | 115,564 | 46,188 | |||||
Total assets | $ | 3,301,039 | $ | 3,034,188 | |||
LIABILITIES | |||||||
Current maturities of long-term debt and capital leases, including notes payable | $ | 44,319 | $ | 75,137 | |||
Accounts payable | 190,623 | 219,475 | |||||
Other current liabilities | 232,651 | 284,010 | |||||
Total current liabilities | 467,593 | 578,622 | |||||
Long-term debt and capital leases | 703,626 | 490,608 | |||||
Other liabilities | 317,527 | 296,737 | |||||
Total liabilities | 1,488,746 | 1,365,967 | |||||
KENNAMETAL SHAREOWNERS’ EQUITY | 1,781,826 | 1,643,850 | |||||
NONCONTROLLING INTERESTS | 30,467 | 24,371 | |||||
Total liabilities and equity | $ | 3,301,039 | $ | 3,034,188 | |||
SEGMENT DATA (UNAUDITED) | Three Months Ended June 30, | Twelve Months Ended June 30, | |||||||||||||
(in thousands) | 2013 | 2012 | 2013 | 2012 | |||||||||||
Outside Sales: | |||||||||||||||
Industrial | $ | 383,727 | $ | 421,173 | $ | 1,471,882 | $ | 1,667,434 | |||||||
Infrastructure | 287,683 | 318,043 | 1,117,491 | 1,068,812 | |||||||||||
Total outside sales | $ | 671,410 | $ | 739,216 | $ | 2,589,373 | $ | 2,736,246 | |||||||
Sales By Geographic Region: | |||||||||||||||
North America | $ | 293,048 | $ | 332,207 | $ | 1,145,722 | $ | 1,250,124 | |||||||
Western Europe | 202,168 | 218,479 | 768,276 | 781,683 | |||||||||||
Rest of World | 176,194 | 188,530 | 675,375 | 704,439 | |||||||||||
Total sales by geographic region | $ | 671,410 | $ | 739,216 | $ | 2,589,373 | $ | 2,736,246 | |||||||
Operating Income: | |||||||||||||||
Industrial | $ | 56,193 | $ | 76,455 | $ | 173,744 | $ | 283,233 | |||||||
Infrastructure | 35,288 | 41,713 | 130,537 | 141,640 | |||||||||||
Corporate (1) | (908 | ) | (710 | ) | (7,887 | ) | (8,464 | ) | |||||||
Total operating income | $ | 90,573 | $ | 117,458 | $ | 296,394 | $ | 416,409 | |||||||
(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; 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 utilized 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, 2013 - (UNAUDITED) | ||||||
(in thousands, except percents) | Infrastructure Sales | Infrastructure Operating Income | ||||
2013 Reported Results | $ | 287,683 | $ | 35,288 | ||
2013 Reported Operating Margin | 12.3 | % | ||||
Stellite (2) | (57,140 | ) | (1,150 | ) | ||
2013 Adjusted Results | $ | 230,543 | $ | 34,138 | ||
2013 Adjusted Operating Margin | 14.8 | % | ||||
(2) Includes three months of Stellite operations (Stellite was acquired March 1, 2012).
THREE MONTHS ENDED JUNE 30, 2013 - (UNAUDITED) | ||||||
(in thousands, except percents) | Sales | Operating Income | ||||
2013 Reported Results | $ | 671,410 | $ | 90,573 | ||
2013 Reported Operating Margin | 13.5 | % | ||||
Stellite (2) | (57,140 | ) | (1,150 | ) | ||
2013 Adjusted Results | $ | 614,270 | $ | 89,423 | ||
2013 Adjusted Operating Margin | 14.6 | % | ||||
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 | % | ||||
(3) Includes the impact of Stellite operations and integration charges
THREE MONTHS ENDED JUNE 31, 2012 - (UNAUDITED) | ||||||
(in thousands, except percents) | Sales | Operating Income | ||||
2012 Reported Results | $ | 739,216 | $ | 117,458 | ||
2012 Reported Operating Margin | 15.9 | % | ||||
Acquisition impact (3) | (67,537 | ) | 857 | |||
2012 Adjusted Results | $ | 671,679 | $ | 118,315 | ||
2012 Adjusted Operating Margin | 17.6 | % | ||||
YEAR ENDED JUNE 30, 2013 - (UNAUDITED) | ||||||
(in thousands, except percents) | Sales | Operating Income | ||||
2013 Reported Results | $ | 2,589,373 | $ | 296,394 | ||
2013 Reported Operating Margin | 11.4 | % | ||||
Stellite (4) | (238,004 | ) | (12,293 | ) | ||
2013 Adjusted Results | $ | 2,351,369 | $ | 284,101 | ||
2013 Adjusted Operating Margin | 12.1 | % | ||||
(4) Includes twelve months of Stellite operations (Stellite was acquired March 1, 2012). The eight months of acquisition impact included sales of $160.4 million and operating income of $10.7 million.
YEAR ENDED JUNE 30, 2012 - (UNAUDITED) | ||||||
(in thousands, except percents) | Sales | Operating Income | ||||
2012 Reported Results | $ | 2,736,246 | $ | 416,409 | ||
2012 Reported Operating Margin | 15.2 | % | ||||
Acquisition impact (3) | (90,096 | ) | 5,463 | |||
2012 Adjusted Results | $ | 2,646,150 | $ | 421,872 | ||
2012 Adjusted Operating Margin | 15.9 | % | ||||
FREE OPERATING CASH FLOW (UNAUDITED) | Year Ended | |||||
June 30, | ||||||
(in thousands) | 2013 | 2012 | ||||
Net cash flow from operating activities | $ | 284,150 | $ | 289,580 | ||
Purchases of property, plant and equipment | (82,835 | ) | (103,036 | ) | ||
Proceeds from disposals of property, plant and equipment | 3,016 | 6,886 | ||||
Free operating cash flow | $ | 204,331 | $ | 193,430 | ||
RETURN ON INVESTED CAPITAL (UNAUDITED)
June 30, 2013 (in thousands, except percents)
Invested Capital | 6/30/2013 | 3/31/2013 | 12/31/2012 | 9/30/2012 | 6/30/2012 | Average | ||||||||||||||||||
Debt | $ | 747,945 | $ | 751,030 | $ | 706,859 | $ | 601,124 | $ | 565,745 | $ | 674,541 | ||||||||||||
Total equity | 1,812,293 | 1,753,834 | 1,744,443 | 1,712,532 | 1,668,221 | 1,738,265 | ||||||||||||||||||
Total | $ | 2,560,238 | $ | 2,504,864 | $ | 2,451,302 | $ | 2,313,656 | $ | 2,233,966 | $ | 2,412,806 | ||||||||||||
Three Months Ended | ||||||||||||||||||||||||
Interest Expense | 6/30/2013 | 3/31/2013 | 12/31/2012 | 9/30/2012 | Total | |||||||||||||||||||
Interest expense | $ | 7,042 | $ | 7,504 | $ | 6,970 | $ | 5,956 | $ | 27,472 | ||||||||||||||
Income tax benefit | 6,154 | |||||||||||||||||||||||
Total interest expense, net of tax | $ | 21,318 | ||||||||||||||||||||||
Net Income | 6/30/2013 | 3/31/2013 | 12/31/2012 | 9/30/2012 | Total | |||||||||||||||||||
Net income attributable to Kennametal, as reported | $ | 60,818 | $ | 53,916 | $ | 42,142 | $ | 46,390 | $ | 203,265 | ||||||||||||||
Noncontrolling interest | 1,366 | 460 | 1,167 | 657 | 3,651 | |||||||||||||||||||
Net income, adjusted | $ | 62,184 | $ | 54,376 | $ | 43,309 | $ | 47,047 | $ | 206,916 | ||||||||||||||
Total interest expense, net of tax | 21,318 | |||||||||||||||||||||||
$ | 228,234 | |||||||||||||||||||||||
Average invested capital | $ | 2,412,806 | ||||||||||||||||||||||
Adjusted Return on Invested Capital | 9.5 | % | ||||||||||||||||||||||
Return on invested capital calculated utilizing net income, as reported is as follows: | ||||||||||||||||||||||||
Net income attributable to Kennametal, as reported | $ | 203,265 | ||||||||||||||||||||||
Total interest expense, net of tax | 21,318 | |||||||||||||||||||||||
$ | 224,583 | |||||||||||||||||||||||
Average invested capital | $ | 2,412,806 | ||||||||||||||||||||||
Return on Invested Capital | 9.3 | % | ||||||||||||||||||||||