Kennametal Inc. · NYSE:KMT
Kennametal — Q1 2025 Earnings Presentation
32 slides from Kennametal's earnings presentation, Nov 6, 2024
Slide 1: FY25 First Quarter Earnings Call Presentation
FY25 First Quarter Earnings Call Presentation November 6, 2024
Slide 2: Safe Harbor Statement
Q 1 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: Continued end market pressure; strong cash flow
Q 1 F Y 2 5 E AR N I N G S Continued end market pressure; strong cash flow Earnings per share: Reported $0.28; Adjusted $0.29 (vs. $0.37 reported and $0.41 adjusted in prior year) Sales of $482M, (2)% organic decline year-over-year Sales Growth Sales Growth Sales Growth • Metal Cutting (4)% and Infr
Slide 4: Demonstrating the ability to compete and win
M E TAL C U T T I N G S H AR E G AI N U P D AT E Demonstrating the ability to compete and win Growth initiatives are progressing; US market reflects project timing Quarterly Year over Year Sales Growth KMT MC Growth Rates versus Industry Growth Rates (Year over Year) (in Constant Currency) 10% 25 %
Slide 5: Maximizing productivity for mining customers with PrimePoint picks
I N N O VAT I N G T O D R I V E G R O W T H Maximizing productivity for mining customers with PrimePoint picks PrimePoint picks equipped with polycrystalline diamond (PCD) tips are designed to reduce abrasive wear and extend tool life: • Reinforced tungsten pick bolsters reliability in the harshest
Slide 6: New high-precision tools for medical and micro machining applications
I N N O VAT I N G T O D R I V E G R O W T H New high-precision tools for medical and micro machining applications • Applicable to component features as small as 0.3mm (0.012”) • Product suite offers a complete range of versatile solutions for medical, aerospace and transportation • Ultra sharp cutti
Slide 7: Strong cash flow continues despite soft macro environment
C O N S O L I D AT E D Q 1 F I N AN C I AL O V E R V I E W Strong cash flow continues despite soft macro environment Adjusted Reported Quarter Ended ($ in millions) Change from PY Sept 30, 2024 Sept 30, 2023 Mm Sept 30, 2024 Sept 30, 2023 Sales (2)% $482 $492 $482 $492 Organic (2)% 0% (2)% 0% FX (1)
Slide 8: Operations adversely impacted by lower production
Q 1 F Y 2 5 AD J U S T E D E P S B R I D G E Operations adversely impacted by lower production $0.41 $0.01 $0.29 $0.04 ($0.13) ($0.02) ($0.02) • Lower production volumes • Lower share count • Higher wages and general inflation • Lower interest • Temporary plant shutdowns for • Other maintenance and
Slide 9: EMEA market conditions pressure sales and margins
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 1 F Y 2 5 S U M M ARY EMEA market conditions pressure sales and margins Growth in Asia Pacific offsets Americas decline Adjusted Sales Growth Sales Growth by Region • Asia Pacific driven by Transportation (in constant currency) Operating Organi
Slide 10: Aerospace & Defense projects offset market softness
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 1 F Y 2 5 S U M M ARY Aerospace & Defense projects offset market softness Organic sales Regional Sales Sales Growth by Region Adjusted • EMEA – growth in Aerospace & Defense and General Engineering increase 1% Sales Growth (in constant cur
Slide 11: 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 $680 $615 $627 Initiated new $200M 3-year share repurchase program $593 $598 $600 $ Millions $531 $486 $478 • Q1: $15M
Slide 12: Q2 FY25 Outlook
N E X T Q U AR T E R O U T L O O K Q2 FY25 Outlook OUTLOOK CONSIDERS THE FY25 SECOND QUARTER OUTLOOK FOLLOWING ASSUMPTIONS Sales • Inflationary environment continues to moderate $480 - $500M ~ (5)% - (1)% ~ 2% Neutral Year over Year sales growth reflects: Volume growth Price realization Foreign exch
Slide 13: 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 $2.0- $2.1B ~(3) – 2% ~2% ~(1)% Revenue Assumptions Year over Year Volume growth Price realization Foreign exchange • Aerospace Transpo
Slide 14: A compelling investment opportunity driven by value creation
S U M M ARY A compelling investment opportunity driven by value creation Three Value Creation Pillars DELIVERING CONTINUOUS PORTFOLIO GROWTH IMPROVEMENT OPTIMIZATION Growing Above Market Doing Things Better Right Products, Right Places • Innovative solutions • Operational Excellence • Optimize produ
Slide 15: Appendix
Appendix 15
Slide 16: Sales decline due to weak market conditions
Q 1 F Y 2 5 S E G M E N T R E S U LT S Sales decline due to weak market conditions Metal Cutting Infrastructure Americas 45% Energy 7% Americas 56% Gen Eng 33% AsiaPac 19% AsiaPac 23% Energy 23% Aero & Def 13% Gen Eng Aero & Def 8% 53% EMEA 36% Transp 27% EMEA 21% Earthworks 36% Quarter Ending Sept
Slide 17: Strong balance sheet
B AL AN C E S H E E T Strong balance sheet ASSETS ($ in millions) September 30, 2024 June 30, 2024 Cash and cash equivalents $120 $128 Accounts receivable, net 282 303 Inventories 543 515 Other current assets 58 57 Total current assets 1,004 1,003 Property, plant and equipment, net 942 938 Goodwill
Slide 18: Non-GAAP Reconciliations
N O N - G AAP R E C O N C I L I AT I O N S Non-GAAP Reconciliations The information presented by the Company contains certain non-GAAP financial measures. Kennametal management believes that presentation of these non-GAAP financial measures provides useful information about the results of operations
Slide 19: Non-GAAP Reconciliations (cont'd)
N O N - G AAP R E C O N C I L I AT I O N S Non-GAAP Reconciliations (cont’d) Constant Currency End Market Sales Growth (Decline) Constant currency end market sales growth (decline) is a non-GAAP financial measure of sales growth (decline) (which is the most directly comparable GAAP measure) by end m
Slide 20: Adjusted Results - Q1
N O N - G AAP R E C O N C I L I AT I O N S Adjusted Results - Q1 Operating Operating Effective Tax ($ in millions, except percents and per share data) Sales Gross Profit Expense Income Net Income(5) Diluted EPS Rate Q1 FY25 Reported Results $ 481.9 $ 151.0 $ 111.7 $ 36.0 $ 22.1 $ 0.28 25.2 % Reporte
Slide 21: Adjusted EBITDA and EBITDA Margin
N O N - G AAP R E C O N C I L I AT I O N S Adjusted EBITDA and EBITDA Margin Three Months Ended September 30, ($ in millions, except percents) 2024 2023 Net income attributable to Kennametal, reported $ 22.1 $ 30.1 Add back: Interest expense 6.3 6.6 Interest income (1.5) (0.3) Provision for income t
Slide 22: Adjusted Segment Operating Income and Margins
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 Metal Cutting Metal Cutting Infrastructure Infrastructure ($ in millions, except percents) Sales Operating Income Sales Operating Income Q1 FY25 Reported Results $ 296.9 $ 23.8 $ 185.0 $ 12.7 Reported Operating
Slide 23: Organic Sales Growth (Decline)
N O N - G AAP R E C O N C I L I AT I O N S Organic Sales Growth (Decline) Three Months Ended September 30, 2024 Metal Cutting Infrastructure Kennametal Organic sales (decline) growth (4)% 1% (2)% Foreign currency exchange effect (2) — (1) Business days effect 2 (1) 1 Sales decline (4) % — % (2) % Th
Slide 24: Constant Currency Regional Sales Growth (Decline) – Q1 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) – Q1 FY25 Metal Cutting Three Months Ended September 30, 2024 Americas EMEA Asia Pacific Constant currency regional sales (decline) growth (1) % (6) % 3 % Foreign currency exchange effect (3) — (1) Regional
Slide 25: Constant Currency Regional Sales Growth (Decline) – Q1 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) – Q1 FY24 Metal Cutting Three Months Ended September 30, 2023 Americas EMEA Asia Pacific Constant currency regional sales growth (decline) 3 % 8 % (13) % Foreign currency exchange effect 1 6 (3) Regional sal
Slide 26: Constant Currency End Market Sales Growth (Decline) – Q1 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) – Q1 FY25 Metal Cutting General Aerospace & Three Months Ended September 30, 2024 Engineering Transportation Defense Energy Constant currency end market sales (decline) growth (4) % (2) % 5 % — % Foreign c
Slide 27: Constant Currency End Market Sales Growth (Decline) – Q1 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) – Q1 FY24 Metal Cutting General Aerospace & Three Months Ended September 30, 2023 Engineering Transportation Defense Energy Constant currency end market sales growth (decline) 1 % (1) % 7 % (3) % Foreign c
Slide 28: 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) 9/30/2024 9/30/2023 9/30/2022 9/30/2021 Total debt (gross) $ 597.6 $ 626.6 $ 679.8 $ 592.9 Less: cash and cash equivalents 119.6 95.1 64.6 107.3 Net debt $ 478.0 $ 531.5 $ 615.2
Slide 29: Primary Working Capital – Q1 FY25
N O N - G AAP R E C O N C I L I AT I O N S Primary Working Capital – Q1 FY25 (in thousands, except percents) 9/30/2024 6/30/2024 3/31/2024 12/31/2023 9/30/2023 Average Current assets $ 1,003,869 $ 1,002,592 $ 999,937 $ 1,009,820 $ 1,010,555 Current liabilities 398,386 415,961 413,245 414,108 419,846
Slide 30: Primary Working Capital – Q1 FY24
N O N - G AAP R E C O N C I L I AT I O N S Primary Working Capital – Q1 FY24 (in thousands, except percents) 9/30/2023 6/30/2023 3/31/2023 12/31/2022 9/30/2022 Average Current assets $ 1,010,555 $ 1,026,789 $ 1,079,035 $ 1,048,303 $ 1,011,486 Current liabilities 419,846 433,975 488,729 494,334 497,4
Slide 31: Primary Working Capital – Q1 FY23
N O N - G AAP R E C O N C I L I AT I O N S Primary Working Capital – Q1 FY23 (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 W
Slide 32: Primary Working Capital – Q1 FY22
N O N - G AAP R E C O N C I L I AT I O N S Primary Working Capital – Q1 FY22 (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 Worki