Kennametal Inc. · NYSE:KMT

Kennametal — Q4 FY2021 Earnings Presentation

36 slides from Kennametal's earnings presentation, Aug 3, 2021

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: Performance demonstrates strength of initiatives and KMT transformation
Performance demonstrates strength of initiatives and KMT transformation FY21 Overview and Highlights Executed strategy while navigating COVID-19 crisis • Safely operated to serve customers while protecting employees • Managed costs and production to maintain strong liquidity despite unprecedented he
Slide 4: Q4 results highlight recovery across end-markets, profitable growth and operating leverage
Q4 results highlight recovery across end-markets, profitable growth and operating leverage Q4 FY21 Overview & Highlights ▪ Recovering end-markets & growth initiatives drove strong sales: 29% organic growth vs. (33)% prior year • YoY growth across all end-markets except Aerospace; benefits from FX of
Slide 5: Margins significantly higher than in previous downturn; well positioned for growth
Margins significantly higher than in previous downturn; well positioned for growth Comparison of Revenue and Adjusted Operating Margin during Downturns Revenue* Adjusted Operating Margin* $2,900 16% Rolling 4Q Sales ($ in millions) Rolling 4Q Adj. Operating Margin Current $2,700 14% downturn Current
Slide 6: Strong operating leverage demonstrates powerful effect of Simplification/Modernization
Strong operating leverage demonstrates powerful effect of Simplification/Modernization Q4 FY21 Adjusted Operating Income Sequential Bridge Sales of Sales of $485M $516M Strong operating leverage primarily driven by sales, increased production and improved manufacturing productivity. Other positive f
Slide 7: Results reflect strong operating leverage and return to YoY growth
Results reflect strong operating leverage and return to YoY growth Consolidated Q4 FY21 Financial Overview Adjusted Reported Change Quarter Ended ($ in millions) from PY June 30, 2021 June 30, 2020 June 30, 2021 June 30, 2020 Sales 36% $516 $379 $516 $379 Organic 29% (33)% 29% (33)% FX 6% (2)% 6% (2
Slide 8: Significant EPS improvement despite sizeable cost actions taken last year
Significant EPS improvement despite sizeable cost actions taken last year Q4 FY21 Adjusted EPS Bridge $0.60 $0.53 $0.03 $0.02 $0.50 Includes headwinds of ~26 cents $0.18 (~$45M) from reversal of prior year cost control actions $0.40 $0.13 $0.30 $0.20 $0.02 $0.15 $0.10 $0.00 Currency Other Taxes Oper
Slide 9: Metal Cutting Business Segment Q4 FY21
Profitable growth driven by Simplification/Modernization and growth initiatives Sales by Geography Sales by End Market Metal Cutting Business Segment AsiaPac 22% Americas Aerospace 8% Energy 7% General 39% Engineering Q4 FY21 Summary 57% EMEA Transportation 39% 28% Q4 FY21 sales $312 million; organi
Slide 10: Infrastructure Business Segment Q4 FY21
Continuing recovery and share gains driving sequential and YoY improvement Sales by Geography Sales by End Market AsiaPac General Energy 27% Infrastructure Business Segment 22% Engineering 35% Q4 FY21 Summary EMEA 19% Americas Earthworks 59% 38% Q4 FY21 sales $204 million; 28% organic sales growth v
Slide 11: Strong Free Operating Cash Flow generation and healthy balance sheet
Strong Free Operating Cash Flow generation and healthy balance sheet Total Debt Net Debt Debt Structure & Covenants 1,200 1,100 $1,094 $992 Refinancing significantly extended debt profile 1,000 • Two $300M notes mature June 2028 & March 2031 900 • Lowered annualized interest expense to ~$28M $ Milli
Slide 12: FY22 Outlook: Delivering free cash flow through growth and strong operating leverage
FY22 Outlook: Delivering free cash flow through growth and strong operating leverage Q1FY22 Outlook Mid-point: -7% sequentially, outpacing normal pattern Sales $470M - $490M Mid-point of sales range reflects: Temporary Costs ~$15M headwind YoY • Continued supply chain constraints in Transportation •
Slide 13: Leveraging margins and growth through modernized footprint
Leveraging margins and growth through modernized footprint Looking Ahead: Foundation in place for future outperformance Near-term outlook positive supported by end-market recovery and improved structural cost base • Strong operating leverage and margin improvement expected as we leverage growth thro
Slide 14: Appendix
Appendix
Slide 15: Results affected by weak end-markets; strong progress on initiatives
Results affected by weak end-markets; strong progress on initiatives FY21 Total Year Overview & Highlights ▪ Organic sales down due to declining end-markets: (4)% organic sales decline vs. (18)% decline prior year • Benefit from FX of 2%, business days neutral • Segment organic decline rates: Metal
Slide 16: Consolidated FY21 Financial Results
Margin improvement driven by Simplification/Modernization benefits Consolidated FY21 Financial Results Adjusted Reported Change Year Ended ($ in millions) from PY June 30, 2021 June 30, 2020 June 30, 2021 June 30, 2020 Sales (2)% $1,841 $1,885 $1,841 $1,885 Organic (4)% (18)% (4)% (18)% FX 2% (2)% 2
Slide 17: Simplification/Modernization mitigating reversal of prior year cost headwinds
Simplification/Modernization mitigating reversal of prior year cost headwinds FY21 Adjusted EPS Bridge $1.20 $0.02 $1.04 $0.22 $0.94 $1.00 ($0.03) $0.68 $0.80 Main drivers are reversal of prior year $0.60 cost control actions, lower volumes and related underabsorption $0.40 $0.20 ($0.79) $0.00 Prior
Slide 18: Adjusted Segment Results
Adjusted Segment Results Period ending June 30, 2021 ($ in millions) Q4 FY21 Fiscal Year 2021 Metal Cutting Infrastructure Total Metal Cutting Infrastructure Total Sales $312 $204 $516 $1,151 $691 $1,841 Organic 30% 28% 29% (4)% (3)% (4)% FX 6% 5% 6% 2% 2% 2% Business Days 1% 1% 1% - - - Divestiture
Slide 19: Balance Sheet
Balance Sheet ASSETS ($ in millions) June 2021 June 2020 Cash and cash equivalents $154 $607 Accounts receivable, net 303 238 Inventories 476 522 Other current assets 72 74 Total current assets $1,005 $1,441 Property, plant and equipment, net 1,055 1,038 Goodwill and other intangible assets, net 398
Slide 20: 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 21: 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

Kennametal — Q4 FY2021 Earnings Presentation on 6ix

Kennametal — Q4 FY2021 Earnings Presentation

Slide 1: FY21 Fourth Quarter and Year-end Earnings Call Presentation

Slide 2: Safe Harbor Statement

Slide 3: Performance demonstrates strength of initiatives and KMT transformation

Slide 4: Q4 results highlight recovery across end-markets, profitable growth and operating leverage

Slide 5: Margins significantly higher than in previous downturn; well positioned for growth

Slide 6: Strong operating leverage demonstrates powerful effect of Simplification/Modernization

Slide 7: Results reflect strong operating leverage and return to YoY growth

Slide 8: Significant EPS improvement despite sizeable cost actions taken last year

Slide 9: Metal Cutting Business Segment Q4 FY21

Slide 10: Infrastructure Business Segment Q4 FY21

Slide 11: Strong Free Operating Cash Flow generation and healthy balance sheet

Slide 12: FY22 Outlook: Delivering free cash flow through growth and strong operating leverage

Slide 13: Leveraging margins and growth through modernized footprint

Slide 14: Appendix

Slide 15: Results affected by weak end-markets; strong progress on initiatives

Slide 16: Consolidated FY21 Financial Results

Slide 17: Simplification/Modernization mitigating reversal of prior year cost headwinds

Slide 18: Adjusted Segment Results

Slide 19: Balance Sheet

Slide 20: Non-GAAP Reconciliations

Slide 21: Non-GAAP Reconciliations (cont’d)

Slide 22: Non-GAAP Reconciliations (cont’d)

Slide 23: Non-GAAP Reconciliations (cont’d)

Slide 24: Non-GAAP Reconciliations (cont’d)

Slide 25: Non-GAAP Reconciliations (cont’d)

Slide 26: Non-GAAP Reconciliations (cont’d)

Slide 27: Non-GAAP Reconciliations (cont’d)

Slide 28: Non-GAAP Reconciliations (cont’d)

Slide 29: Non-GAAP Reconciliations (cont’d)

Slide 30: Non-GAAP Reconciliations (cont’d)

Slide 31: Non-GAAP Reconciliations (cont’d)

Slide 32: Non-GAAP Reconciliations (cont’d)

Slide 33: Non-GAAP Reconciliations (cont’d)

Slide 34: Non-GAAP Reconciliations (cont’d)

Slide 35: Non-GAAP Reconciliations (cont’d)

Slide 36: Non-GAAP Reconciliations (cont’d)