Kennametal Inc. · NYSE:KMT
Kennametal — Q1 2023 Earnings Presentation
32 slides from Kennametal's earnings presentation, Nov 1, 2022
Slide 1: FY23 First Quarter Earnings Call Presentation
FY23 First Quarter Earnings Call Presentation November 1, 2022
Slide 2: Safe Harbor Statement
Safe Harbor Statement 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 rel
Slide 3: Q1 FY23 Summary
Q1 FY23 Summary Results highlight continuing growth offset by inflation, foreign exchange & macro headwinds Regional Sales Growth End-Market Sales Growth Sales Growth Sales up YoY to $495 million (in constant currency) (in constant currency) Price and growth 9% 13% 25% initiatives driving sales gain
Slide 4: Growth Roadmap
Growth Roadmap Sustainable growth from strong competitive position and well-defined Commercial Excellence initiatives Grow share in Mega-trends Growth in Accelerate current base business + align with KMT expertise + underserved markets + with M&A • KMT holds leadership • Steady demand for • Targetin
Slide 5: Recent Customer Wins
Recent Customer Wins Investments in Commercial Excellence and Innovation driving share gain Aerospace Space Additive Plastics Production EV Battery Photo credit GE Additive Photo credit GE Additive Photo credit GE Additive • Provided tooling for • Designated as preferred • Gained share with oilfield
Slide 6: Consolidated Q1 FY23 Financial Overview
Consolidated Q1 FY23 Financial Overview Results reflect focused execution of initiatives in inflationary environment Change from PY Reported* Adjusted Reported Quarter Ended ($ in millions) Sept 30, 2022 Sept 30, 2021 Sept 30, 2021 Sales 2% $495 $484 $484 Organic 9% 19% 19% FX (7)% 2% 2% Business Da
Slide 7: Q1 FY23 Adjusted EPS Bridge
Q1 FY23 Adjusted EPS Bridge Volume growth offset by inflation, foreign exchange and regional macro headwinds * • Volume increases at typical operating leverage • Headwinds from temporary supply disruptions • Pricing actions offset raw material, wage and general cost inflation, on a dollar basis * Fi
Slide 8: Metal Cutting Business Segment — Q1 FY23 Summary
Metal Cutting Business Segment — Q1 FY23 Summary Solid performance despite challenging regional dynamics and macroeconomic headwinds Growth in all regions Sales Growth Regional Sales Growth Operating 9% Organic sales • Americas driven by broad favorable demand trends (in constant currency) Margin
Slide 9: Infrastructure Business Segment — Q1 FY23 Summary
Infrastructure Business Segment — Q1 FY23 Summary Price and productivity initiatives mitigating effects of inflationary headwinds Strong growth in the Americas and AsiaPac Regional Sales Growth Operating 10% Organic sales Sales Growth (in constant currency) Margin • Americas driven by Energy and E
Slide 10: Balance Sheet and Cashflow Statement Highlights
Balance Sheet and Cashflow Statement Highlights Strong balance sheet supports continuing execution of strategic initiatives Total Debt Net Debt Debt Structure & Covenants $800 $680 Debt profile $640 $615 $596 $593 • Two $300M notes mature June 2028 & March 2031 $ Millions $541 $500 $483 $486 • $70
Slide 11: Q2 FY23 Outlook
Q2 FY23 Outlook Focused execution of initiatives despite continuing high inflation, FX & other macro headwinds Revenue Assumptions YoY: Q2 FY23 Outlook Continued growth in Aerospace, Energy, Earthworks and General Sales $480M - $500M Engineering Volume growth 0% - 4% Price Realization ~7% Transp
Slide 12: FY23 Total Year Outlook
FY23 Total Year Outlook Ending the year stronger through focused execution of initiatives; quarterly results mixed FY23 Total Year Outlook Revenue Assumptions YoY: Sales $2,000M - $2,080M Volume growth 0% - 4% Demand expected to be in line with normal seasonality Price realization 5% - 6% Foreign
Slide 13: Summary
Summary Demonstrated ability to advance our strategic initiatives and secure market leading positions Driving price, productivity and growth initiatives to help mitigate macroeconomic headwinds Q1 results highlight Leveraging Innovative products and deep understanding of customer applications to
Slide 14: Appendix
Appendix EX cennamerat
Slide 15: Segment Results
Segment Results Growth in all end-markets and regions; aerospace, energy and earthworks at double-digit YoY growth Metal Cutting Infrastructure Energy AsiaPac 7% Transp AsiaPac 22% Earthworks Gen Eng 27% 24% 32% Americas 36% 45% Aero EMEA Americas Gen Eng EMEA 10% 17% 59% Energy 56% 33% 32% Period E
Slide 16: Balance Sheet
Balance Sheet Strong balance sheet supports initiatives ASSETS ($ in millions) September 2022 June 2022 Cash and cash equivalents $65 $86 Accounts receivable, net 279 295 Inventories 591 571 Other current assets 77 73 Total current assets 1,011 1,025 Property, plant and equipment, net 973 1,002 Good
Slide 17: Non-GAAP Reconciliations
Non-GAAP Reconciliations The information presented by the Company contains certain non-GAAP financial measures including organic sales decline, constant currency regional sales growth (decline), constant currency end market sales growth (decline), adjusted gross profit and margin; adjusted operating
Slide 18: Non-GAAP Reconciliations (cont'd)
Non-GAAP Reconciliations (cont’d) Constant Currency End Market Sales Growth (Decline) Constant currency end market sales growth (decline) is a non-GAAP financial measure of sales growth (decline) (which is the most directly comparable GAAP measure) by end market excluding the impacts of acquisitions
Slide 19: Non-GAAP Reconciliations (cont'd)
Non-GAAP Reconciliations (cont’d) Operating Operating Effective Tax ($ in millions, except percents and per share data) Sales Gross Profit Expense Income Net Income(5) Diluted EPS Rate Q1 FY22 Reported Results $ 483.5 $ 160.8 $ 102.7 $ 54.6 $ 36.2 $ 0.43 27.0 % Reported Margins 33.2 % 21.2 % 11.3 %
Slide 20: Non-GAAP Reconciliations (cont'd)
Non-GAAP Reconciliations (cont’d) Three Months Ended September 30, ($ in millions) 2022 2021 Net income attributable to Kennametal, reported $ 28.2 $ 36.2 Add back: Interest expense 6.6 6.3 Interest income (0.2) (0.2) Provision for income taxes 11.2 14.0 Depreciation 29.5 29.1 Amortization 3.2 3.3 E
Slide 21: Non-GAAP Reconciliations (cont'd)
Non-GAAP Reconciliations (cont’d) Metal Cutting Metal Cutting Infrastructure Infrastructure ($ in millions, except percents) Sales Operating Income Sales Operating Income Q1 FY22 Reported Results $ 298.4 $ 29.2 $ 185.1 $ 26.0 Reported Operating Margin 9.8 % 14.1 % Restructuring and related charges —
Slide 22: Non-GAAP Reconciliations (cont'd)
Non-GAAP Reconciliations (cont’d) Non-GAAP Reconciliations (cont’d) Three Months Ended September 30, 2022 Metal Cutting Infrastructure Kennametal Organic sales growth 9% 10 % 9% Foreign currency exchange effect (8) (5) (7) Sales growth 1% 5% 2% Three Months Ended September 30, 2021 Metal Cutting Inf
Slide 23: Non-GAAP Reconciliations (cont'd)
Non-GAAP Reconciliations (cont’d) Metal Cutting Three Months Ended September 30, 2022 Americas EMEA Asia Pacific Constant currency regional sales growth 13 % 5% 6% Foreign currency exchange effect (1) (16) (7) Regional sales growth (decline) 12 % (11)% (1)% Infrastructure Three Months Ended Septembe
Slide 24: Non-GAAP Reconciliations (cont'd)
Non-GAAP Reconciliations (cont’d) Metal Cutting Three Months Ended September 30, 2021 Americas EMEA Asia Pacific Constant currency regional sales growth 22 % 21 % 7% Foreign currency exchange effect 2 2 4 Regional sales growth 24 % 23 % 11 % Infrastructure Three Months Ended September 30, 2021 Ameri
Slide 25: Non-GAAP Reconciliations (cont'd)
Non-GAAP Reconciliations (cont’d) Metal Cutting General Three Months Ended September 30, 2022 Engineering Transportation Aerospace Energy Constant currency end market sales growth 8% 6% 25 % 4% Foreign currency exchange effect (8) (9) (7) (7) End market sales growth (decline) —% (3)% 18 % (3)% Infra
Slide 26: Non-GAAP Reconciliations (cont'd)
Non-GAAP Reconciliations (cont’d) Metal Cutting General Three Months Ended September 30, 2021 Engineering Transportation Aerospace Energy Constant currency end market sales growth 23 % 14 % 19 % 1% Foreign currency exchange effect 2 3 2 3 End market sales growth 25 % 17 % 21 % 4% Infrastructure Gene
Slide 27: Non-GAAP Reconciliations (cont'd)
Non-GAAP Reconciliations (cont’d) Net Debt Three Months Ended (in millions) 9/30/2022 9/30/2021 9/30/2020 9/30/2019 Total debt (gross) $ 679.8 $ 592.9 $ 639.7 $ 596.4 Less: cash and cash equivalents 64.6 107.3 98.3 113.5 Net debt $ 615.2 $ 485.6 $ 541.4 $ 482.9 Three Months Ended September 30, (in m
Slide 28: Non-GAAP Reconciliations (cont'd)
Non-GAAP Reconciliations (cont’d) (in thousands, except percents) 9/30/2022 6/30/2022 3/31/2022 12/31/2021 9/30/2021 Average Current assets $ 1,011,486 $ 1,024,708 $ 1,043,241 $ 984,201 $ 966,948 Current liabilities 497,488 485,610 460,365 410,983 389,223 Working capital, GAAP $ 513,998 $ 539,098 $
Slide 29: Non-GAAP Reconciliations (cont'd)
Non-GAAP Reconciliations (cont’d) (in thousands, except percents) 9/30/2021 6/30/2021 3/31/2021 12/31/2020 9/30/2020 Average Current assets $ 966,948 $ 1,004,807 $ 966,916 $ 948,686 $ 935,721 Current liabilities 389,223 437,394 425,553 402,641 415,573 Working capital, GAAP $ 577,725 $ 567,413 $ 541,
Slide 30: Non-GAAP Reconciliations (cont'd)
Non-GAAP Reconciliations (cont’d) (in thousands, except percents) 9/30/2020 6/30/2020 3/31/2020 12/31/2019 9/30/2019 Average Current assets $ 935,721 $ 1,440,812 $ 966,723 $ 1,035,912 $ 1,065,389 Current liabilities 415,573 898,080 383,131 409,110 418,719 Working capital, GAAP $ 520,148 $ 542,732 $
Slide 31: Non-GAAP Reconciliations (cont'd)
Non-GAAP Reconciliations (cont’d) (in thousands, except percents) 9/30/2019 6/30/2019 3/31/2019 12/31/2018 9/30/2018 Average Current assets $ 1,065,389 $ 1,190,827 $ 1,162,842 $ 1,119,034 $ 1,121,482 Current liabilities 418,719 461,726 430,018 412,053 439,171 Working capital, GAAP $ 646,670 $ 729,10
Slide 32: KE <cennamerat
KE <cennamerat