Kennametal Inc. · NYSE:KMT
Kennametal — Q2 2025 Earnings Presentation
30 slides from Kennametal's earnings presentation, Feb 5, 2025
Slide 1: FY25 Second Quarter Earnings Call Presentation
FY25 Second Quarter Earnings Call Presentation February 5, 2025
Slide 2: Safe Harbor Statement
Q 2 F Y 2 5 E AR N I N G S 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
Slide 3: End market conditions drive organic sales decline
Q 2 F Y 2 5 E AR N I N G S End market conditions drive organic sales decline Earnings per Diluted Share (EPS): Reported $0.23; Adjusted $0.25 (vs. $0.29 reported and $0.30 adjusted in prior year) Sales of $482M, (6)% organic decline year-over-year Sales Growth Sales Growth Sales Growth by End Market
Slide 4: Mixed markets continue; moderate seasonal improvement in second half
E N D M AR K E T O U T L O O K Mixed markets continue; moderate seasonal improvement in second half FY25 Sales Assumptions at Outlook Midpoint General Engineering Transportation Energy Earthworks Aerospace & Defense Prior Current Prior Current Prior Current Prior Current Prior Current Up Down Down D
Slide 5: Strong cash flow continues despite soft macro environment
C O N S O L I D AT E D Q 2 F I N AN C I AL O V E R V I E W Strong cash flow continues despite soft macro environment Adjusted Reported Quarter Ended ($ in millions) Change from PY December 31, 2024 December 31, 2023 Mm December 31, 2024 Dec 31, 2023 Sales (3)% $482 $495 $482 $495 Organic (6)% (3)% (
Slide 6: Adjusted EPS decline driven by higher taxes
Q 2 F Y 2 5 AD J U S T E D E P S B R I D G E Adjusted EPS decline driven by higher taxes $0.06 $0.30 $0.01 $0.25 $0.03 ($0.12) ($0.02) ($0.01) • Prior year unfavorable timing of raw material costs • Pricing • Lower share count • Restructuring savings of $6M • Lower interest • IRA* Advanced Manufactu
Slide 7: Sales and margins impacted by EMEA
M E TAL C U T T I N G B U S I N E S S S E G M E N T Q 2 F Y 2 5 S U M M ARY Sales and margins impacted by EMEA EMEA drives decline Sales Growth Sales Growth by Region Adjusted • EMEA Transportation and General Engineering weakness partially (in constant currency) Operating Organic sales Margin dec
Slide 8: Aerospace and Defense initiatives continue to gain traction
I N F R AS T R U C T U R E B U S I N E S S S E G M E N T Q 2 F Y 2 5 S U M M ARY Aerospace and Defense initiatives continue to gain traction Organic sales Regional Sales • EMEA – Aerospace & Defense and Earthworks partially offset by General Sales Growth by Region Adjusted decline (4)% Engineering
Slide 9: Strong cash flow from operations continues
B AL AN C E S H E E T AN D C AS H F L O W S TAT E M E N T H I G H L I G H T S Strong cash flow from operations continues Total Debt Net Debt $800 Share Repurchases & Debt Profile $674 $605 $597 $619 $598 $200M 3-year share repurchase program $600 $ Millions $528 $503 $477 • Q2: $15M purchased; 525
Slide 10: Q3 FY25 Outlook
N E X T Q U AR T E R O U T L O O K Q3 FY25 Outlook OUTLOOK CONSIDERS THE FY25 THIRD QUARTER OUTLOOK FOLLOWING ASSUMPTIONS Sales Inflationary environment continues to moderate • Excludes any tariff impacts $480 - $500M ~ (6)% - (2)% ~ 2% ~(3)% Year over Year sales growth reflects: Volume growth Price
Slide 11: FY25 Outlook
F U L L Y E AR O U T L O O K FY25 Outlook OUTLOOK CONSIDERS THE FY25 TOTAL YEAR OUTLOOK FOLLOWING ASSUMPTIONS Sales Inflationary environment continues to moderate • $1.950- $2.0B Excludes any tariff impacts ~(5)% – (2)% ~2% ~(2)% Revenue Assumptions Year over Year Volume growth Price realization For
Slide 12: A compelling investment opportunity driven by value creation
S U M M ARY A compelling investment opportunity driven by value creation Three Value Creation Pillars DELIVERING CONTINUOUS PORTFOLIO GROWTH IMPROVEMENT OPTIMIZATION Growing Above Market Doing Things Better Right Products, Right Places • Innovative solutions • Operational Excellence • Optimize produ
Slide 13: Appendix
Appendix 13
Slide 14: Sales decline due to weak market conditions
Q 2 F Y 2 5 S E G M E N T R E S U LT S Sales decline due to weak market conditions Metal Cutting Infrastructure Americas 44% Energy 7% Americas 56% Gen Eng 33% AsiaPac 20% AsiaPac 23% Energy 24% Aero & Def 13% Gen Eng Aero & Def 9% 54% EMEA 36% Transp 26% EMEA 21% Earthworks 34% Quarter Ending Decem
Slide 15: Strong balance sheet
B AL AN C E S H E E T Strong balance sheet ASSETS ($ in millions) December 31, 2024 June 30, 2024 Cash and cash equivalents $121 $128 Accounts receivable, net 254 303 Inventories 537 515 Other current assets 57 57 Total current assets 969 1,003 Property, plant and equipment, net 910 938 Goodwill and
Slide 16: Non-GAAP Reconciliations
N O N - G AAP R E C O N C I L I AT I O N S Non-GAAP Reconciliations The information presented by the Company contains certain non-GAAP financial measures. Kennametal management believes that presentation of these non-GAAP financial measures provides useful information about the results of operations
Slide 17: Non-GAAP Reconciliations (cont'd)
N O N - G AAP R E C O N C I L I AT I O N S Non-GAAP Reconciliations (cont’d) Constant Currency End Market Sales Growth (Decline) Constant currency end market sales growth (decline) is a non-GAAP financial measure of sales growth (decline) (which is the most directly comparable GAAP measure) by end m
Slide 18: Adjusted Results - Q2
N O N - G AAP R E C O N C I L I AT I O N S Adjusted Results - Q2 Operating Operating Effective Tax ($ in millions, except percents and per share data) Sales Gross Profit Expense Income Net Income(5) Diluted EPS Rate Q2 FY25 Reported Results $ 482.1 $ 145.0 $ 109.3 $ 31.7 $ 17.9 $ 0.23 29.4 % Reporte
Slide 19: Adjusted EBITDA and EBITDA Margin - Q2
N O N - G AAP R E C O N C I L I AT I O N S Adjusted EBITDA and EBITDA Margin - Q2 Three Months Ended December 31, ($ in millions, except percents) 2024 2023 Net income attributable to Kennametal, reported $ 17.9 $ 23.1 Add back: Interest expense 6.2 6.8 Interest income (0.5) (0.4) Provision for inco
Slide 20: Adjusted Segment Operating Income and Margins - Q2
N O N - G AAP R E C O N C I L I AT I O N S Adjusted Segment Operating Income and Margins - Q2 Metal Cutting Metal Cutting Infrastructure Infrastructure ($ in millions, except percents) Sales Operating Income Sales Operating Income Q2 FY25 Reported Results $ 297.8 $ 16.6 $ 184.3 $ 15.6 Reported Opera
Slide 21: Organic Sales Growth (Decline) - Q2
N O N - G AAP R E C O N C I L I AT I O N S Organic Sales Growth (Decline) - Q2 Three Months Ended December 31, 2024 Metal Cutting Infrastructure Kennametal Organic sales decline (7)% (4)% (6)% Foreign currency exchange effect — 1 — Business days effect 3 3 3 Sales decline (4) % — % (3) % Three Month
Slide 22: Constant Currency Regional Sales Growth (Decline) - Q2 FY25
N O N - G AAP R E C O N C I L I AT I O N S Constant Currency Regional Sales Growth (Decline) - Q2 FY25 Metal Cutting Three Months Ended December 31, 2024 Americas EMEA Asia Pacific Constant currency regional sales decline — % (10) % (1) % Foreign currency exchange effect (2) 1 1 Regional sales decli
Slide 23: Constant Currency Regional Sales Growth (Decline) - Q2 FY24
N O N - G AAP R E C O N C I L I AT I O N S Constant Currency Regional Sales Growth (Decline) - Q2 FY24 Metal Cutting Three Months Ended December 31, 2023 Americas EMEA Asia Pacific Constant currency regional sales growth 1 % 4 % — % Foreign currency exchange effect 1 5 (1) Regional sales growth (dec
Slide 24: Constant Currency End Market Sales Growth (Decline) - Q2 FY25
N O N - G AAP R E C O N C I L I AT I O N S Constant Currency End Market Sales Growth (Decline) - Q2 FY25 Metal Cutting General Aerospace & Three Months Ended December 31, 2024 Engineering Transportation Defense Energy Constant currency end market sales (decline) growth (4) % (9) % 7 % (1) % Foreign
Slide 25: Constant Currency End Market Sales Growth (Decline) - Q2 FY24
N O N - G AAP R E C O N C I L I AT I O N S Constant Currency End Market Sales Growth (Decline) - Q2 FY24 Metal Cutting General Aerospace & Three Months Ended December 31, 2023 Engineering Transportation Defense Energy Constant currency end market sales growth (decline) 1 % 4 % 6 % (3) % Foreign curr
Slide 26: Net Debt and Free Operating Cash Flow
N O N - G AAP R E C O N C I L I AT I O N S Net Debt and Free Operating Cash Flow Net Debt Three Months Ended (in millions) 12/31/2024 12/31/2023 12/31/2022 12/31/2021 Total debt (gross) $ 597.8 $ 618.9 $ 673.6 $ 605.0 Less: cash and cash equivalents 121.2 90.7 76.8 101.8 Net debt $ 476.6 $ 528.2 $ 5
Slide 27: Primary Working Capital – Q2 FY25
N O N - G AAP R E C O N C I L I AT I O N S Primary Working Capital – Q2 FY25 (in thousands, except percents) 12/31/2024 9/30/2024 6/30/2024 3/31/2024 12/31/2023 Average Current assets $ 968,774 $ 1,003,869 $ 1,002,592 $ 999,937 $ 1,009,820 Current liabilities 382,228 398,386 415,961 413,245 414,108
Slide 28: Primary Working Capital – Q2 FY24
N O N - G AAP R E C O N C I L I AT I O N S Primary Working Capital – Q2 FY24 (in thousands, except percents) 12/31/2023 9/30/2023 6/30/2023 3/31/2023 12/31/2022 Average Current assets $ 1,009,820 $ 1,010,555 $ 1,026,789 $ 1,079,035 $ 1,048,303 Current liabilities 414,108 419,846 433,975 488,729 494,
Slide 29: Primary Working Capital – Q2 FY23
N O N - G AAP R E C O N C I L I AT I O N S Primary Working Capital – Q2 FY23 (in thousands, except percents) 12/31/2022 9/30/2022 6/30/2022 3/31/2022 12/31/2021 Average Current assets $ 1,048,303 $ 1,011,486 $ 1,024,708 $ 1,043,241 $ 984,201 Current liabilities 494,334 497,488 485,610 460,365 410,98
Slide 30: Primary Working Capital – Q2 FY22
N O N - G AAP R E C O N C I L I AT I O N S Primary Working Capital – Q2 FY22 (in thousands, except percents) 12/31/2021 9/30/2021 6/30/2021 3/31/2021 12/31/2020 Average Current assets $ 984,201 $ 966,948 $ 1,004,807 $ 966,916 $ 948,686 Current liabilities 410,983 389,223 437,394 425,553 402,641 Work