Slide 1: FY24 Fourth Quarter Earnings Call Presentation
FY24 Fourth Quarter Earnings Call Presentation August 7, 2024
Slide 2: Safe Harbor Statement
Q 4 F Y 2 4 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: Sales and earnings per share exceed expectations
Q 4 F Y 2 4 E AR N I N G S Sales and earnings per share exceed expectations Earnings per share: Reported $0.47; Adjusted $0.49 (vs. $0.45 reported and $0.51 adjusted in prior year) Sales of $543M, (1)% organic decline year-over-year Sales Growth Sales Growth Sales Growth by End Market • Metal Cuttin
Slide 4: Sales reflect soft market conditions; record cash generation
F Y 2 4 E AR N I N G S Sales reflect soft market conditions; record cash generation Earnings per share: Reported $1.37; Adjusted $1.50 (vs. $1.46 reported and $1.52 adjusted in prior year) Sales Growth Sales of $2,047 million, (1)% organic decline YoY Sales Growth Sales Growth by Region • Metal Cutt
Slide 5: Three Value Creation Pillars with Strong Foundation
VAL U E C R E AT I O N P I L L AR S Efficiently creating value for customers, creates value for all Three Value Creation Pillars with Strong Foundation DELIVERING CONTINUOUS PORTFOLIO GROWTH IMPROVEMENT OPTIMIZATION Growing Above Market Doing Things Better Right Products, Right Places • Innovative s
Slide 6: Mixed markets expected to continue; modest improvement in second half
E N D M AR K E T O U T L O O K Mixed markets expected to continue; modest improvement in second half Sales Assumptions at Outlook Midpoint General Engineering Transportation Energy Earthworks Aerospace & Defense FY24 FY25 FY24 FY25 FY24 FY25 FY24 FY25 FY24 FY25 Down Flat Flat Up Down Down Down Up Up
Slide 7: Higher cash flow despite continuation of soft macro environment
C O N S O L I D AT E D Q 4 F I N AN C I AL O V E R V I E W Higher cash flow despite continuation of soft macro environment Adjusted Reported Quarter Ended ($ in millions) Change from PY June 30, 2024 June 30, 2023 Mm June 30, 2024 June 30, 2023 Sales (1)% $543 $550 $543 $550 Organic (1)% 7% (1)% 7%
Slide 8: Operational improvement offset by taxes, tornado and FX
Q 4 F Y 2 4 AD J U S T E D E P S B R I D G E Operational improvement offset by taxes, tornado and FX • Lower share count • Lower interest • Restructuring savings • Favorable timing of raw material costs • Higher price realization • Partially offset by: • Lower sales and production volume • Higher wa
Slide 9: Margin improvement on lower volume
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 4 F Y 2 4 S U M M ARY Margin improvement on lower volume Growth in the Americas; EMEA and Asia Pacific decline Sales Growth Sales Growth by Region Adjusted (in constant currency) Operating • Americas driven by General Engineering and Aerospace
Slide 10: Margins recovered; Aerospace & Defense partially offsets other markets
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 4 F Y 2 4 S U M M ARY Margins recovered; Aerospace & Defense partially offsets other markets Organic sales Regional Sales Sales Growth by Region Adjusted • EMEA – growth in Aerospace & Defense partially offset by energy decline 2% Sales Gr
Slide 11: Strong cash flow generation 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 generation continues Share Repurchases & Debt Profile Total Debt Net Debt $800 Initial $200M 3-year share repurchase program - ended June 2024 $601 $616 $596 $597 $600 • Q4: $22M purchased; 857K shares $
Slide 12: 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 13: Operational improvement offset by higher tax rate and FX
F U L L Y E AR O U T L O O K Operational improvement offset by higher tax rate and FX • Prior year impact • Higher price • Favorable timing of pricing vs. raw material • Restructuring savings & productivity • Lower share count • Other Partially offset by: • Lower volume • Higher wages and general in
Slide 14: Q1 FY25 Outlook
N E X T Q U AR T E R O U T L O O K Q1 FY25 Outlook OUTLOOK CONSIDERS THE FY25 FIRST QUARTER OUTLOOK FOLLOWING ASSUMPTIONS Sales • Inflationary environment continues to moderate $480 - $500M ~ (4)% - 1% ~ 2% ~ (1)% Year over Year sales growth reflects: Volume growth Price realization Foreign exchange
Slide 15: A compelling investment opportunity driven by value creation
S U M M ARY A compelling investment opportunity driven by value creation Three Value Creation Pillars DELIVERING CONTINUOUS PORTFOLIO GROWTH IMPROVEMENT OPTIMIZATION Growing Above Market Doing Things Better Right Products, Right Places • Innovative solutions • Operational Excellence • Optimize produ
Slide 16: Appendix
Appendix 16
Slide 17: Higher cash flow; soft macro environment continues
C O N S O L I D AT E D F Y 2 4 F I N AN C I AL O V E R V I E W Higher cash flow; soft macro environment continues Adjusted Reported Year Ended ($ in millions) Change from PY June 30, 2024 June 30, 2023 Mm June 30, 2024 June 30, 2023 Sales (2)% $2,047 $2,078 $2,047 $2,078 Organic (1)% 9% (1)% 9% FX (
Slide 18: Lower volumes and inflation partially offset by lower interest and shares
F Y 2 4 AD J U S T E D E P S B R I D G E Lower volumes and inflation partially offset by lower interest and shares • Lower share count • Lower interest • Other • Lower volume • Higher wages and general inflation Partially offset by: • Higher price in Metal Cutting • Favorable timing of pricing vs. r
Slide 19: Sales decline slightly due to end market conditions
Q 4 F Y 2 4 S E G M E N T R E S U LT S Sales decline slightly due to end market conditions Metal Cutting Infrastructure Energy 7% Gen Eng 33% Energy 22% AsiaPac 18% Americas 46% AsiaPac 22% Americas 58% Aero & Def 13% Gen Eng Aero & Def 10% 54% EMEA 36% Transp 26% EMEA 20% Earthworks 35% Quarter End
Slide 20: Market conditions offset price and strategic initiatives
F Y 2 4 S E G M E N T R E S U LT S Market conditions offset price and strategic initiatives Metal Cutting Infrastructure AsiaPac 18% Energy 7% AsiaPac 22% Gen Eng 34% Energy 22% Aero & Def 12% Americas 45% Aero & Def 8% Americas 58% Transp 27% EMEA 37% EMEA 20% Gen Eng 54% Earthworks 36% Year Ending
Slide 21: Strong balance sheet
B AL AN C E S H E E T Strong balance sheet 1042+969+362+189 ASSETS ($ in millions) June 2024 June 2023 Cash and cash equivalents $128 $106 Accounts receivable, net 303 307 Inventories 515 558 Other current assets 57 56 Total current assets 1,003 1,027 Property, plant and equipment, net 938 969 Goodw
Slide 22: Non-GAAP Reconciliations
N O N - G AAP R E C O N C I L I AT I O N S Non-GAAP Reconciliations The information presented by the Company contains certain non-GAAP financial measures. Kennametal management believes that presentation of these non-GAAP financial measures provides useful information about the results of operations
Slide 23: Non-GAAP Reconciliations (cont’d)
N O N - G AAP R E C O N C I L I AT I O N S Non-GAAP Reconciliations (cont’d) Constant Currency End Market Sales Growth (Decline) Constant currency end market sales growth (decline) is a non-GAAP financial measure of sales growth (decline) (which is the most directly comparable GAAP measure) by end m
Slide 24: Adjusted Results – Q4
N O N - G AAP R E C O N C I L I AT I O N S Adjusted Results – Q4 Operating Operating Effective Tax ($ in millions, except percents and per share data) Sales Gross Profit Expense Income Net Income(5) Diluted EPS Rate Q4 FY24 Reported Results $ 543.3 $ 171.3 $ 105.5 $ 61.4 $ 37.2 $ 0.47 30.7 % Reporte
Slide 25: Adjusted Results – Full Year
N O N - G AAP R E C O N C I L I AT I O N S Adjusted Results – Full Year Operating Operating Effective Tax ($ in millions, except percents and per share data) Sales Gross Profit Expense Income Net Income(5) Diluted EPS Rate FY24 Reported Results $ 2,046.9 $ 627.1 $ 433.2 $ 170.2 $ 109.3 $ 1.37 21.3 %
Slide 26: 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 June 30, Year ended June 30, ($ in millions) 2024 2023 2024 2023 Net income attributable to Kennametal, reported $ 37.2 $ 36.4 $ 109.3 $ 118.5 Add back: Interest expense 6.2 7.1 26.5 28.5 Interest income
Slide 27: Adjusted Segment Operating Income and Margins – Q4 FY24
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 – Q4 FY24 Metal Cutting Infrastructure Metal Cutting Operating Infrastructure Operating ($ in millions, except percents) Sales Income Sales Income Q4 FY24 Reported Results $ 334.5 $ 44.1 $ 208.8 $ 17.8 Reported
Slide 28: Adjusted Segment Operating Income and Margins – Full Year
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 – Full Year Metal Cutting Infrastructure Metal Cutting Operating Infrastructure Operating ($ in millions, except percents) Sales Income Sales Income FY24 Reported Results $ 1,280.8 $ 132.6 $ 766.1 $ 39.9 Reporte
Slide 29: Organic Sales Growth (Decline) – Q4 and Full Year
N O N - G AAP R E C O N C I L I AT I O N S Organic Sales Growth (Decline) – Q4 and Full Year Three months ended June 30, 2024 Metal Cutting Infrastructure Kennametal Organic sales decline —% (2)% (1)% Foreign currency exchange effect (2) (1) (2) Business days effect 1 1 2 Sales decline (1)% (2)% (1)
Slide 30: Constant Currency Regional Sales Growth (Decline) – Q4 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) – Q4 FY24 Metal Cutting Three months ended June 30, 2024 Americas EMEA Asia Pacific Constant currency regional sales growth (decline) 7 % (3)% (2)% Foreign currency exchange effect (2) (2) (3) Regional sales
Slide 31: Constant Currency Regional Sales Growth (Decline) – Q4 FY23
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) – Q4 FY23 Metal Cutting Three months ended June 30, 2023 Americas EMEA Asia Pacific Constant currency regional sales growth 8 % 12 % 1 % Foreign currency exchange effect — (1) (6) Regional sales growth (decl
Slide 32: Constant Currency Regional Sales Growth (Decline) – Full Year 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) – Full Year FY24 Metal Cutting Year ended June 30, 2024 Americas EMEA Asia Pacific Constant currency regional sales growth (decline) 3 % 2 % (4)% Foreign currency exchange effect (1) 2 (3) Regional sales gro
Slide 33: Constant Currency Regional Sales Growth (Decline) – Full Year FY23
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) – Full Year FY23 Metal Cutting Year ended June 30, 2023 Americas EMEA Asia Pacific Constant currency regional sales growth 12 % 10 % 2 % Foreign currency exchange effect — (10) (8) Regional sales growth (dec
Slide 34: Constant Currency End Market Sales Growth (Decline) – Q4 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) – Q4 FY24 Metal Cutting General Aerospace & Three months ended June 30, 2024 Energy Engineering Defense Transportation Constant currency end market sales (decline) growth (1)% 1 % 11 % (1)% Foreign currenc
Slide 35: Constant Currency End Market Sales Growth (Decline) – Q4 FY23
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) – Q4 FY23 Metal Cutting General Aerospace & Three months ended June 30, 2023 Energy Engineering Defense Transportation Constant currency end market sales growth 3 % 7 % 19 % 7 % Foreign currency exchange e
Slide 36: Constant Currency End Market Sales Growth (Decline) – Full Year 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) – Full Year FY24 Metal Cutting General Aerospace & Year ended June 30, 2024 Energy Engineering Defense Transportation Constant currency end market sales (decline) growth (4)% — % 8 % 1 % Foreign currency e
Slide 37: Constant Currency End Market Sales Growth (Decline) – Full Year FY23
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) – Full Year FY23 Metal Cutting General Aerospace & Year ended June 30, 2023 Energy Engineering Defense Transportation Constant currency end market sales growth 4 % 8 % 22 % 8 % Foreign currency exchange ef
Slide 38: 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 Year ended (in millions) 6/30/2024 6/30/2023 6/30/2022 6/30/2021 Total debt (gross) $ 597.4 $ 595.9 $ 615.6 $ 600.5 Less: cash and cash equivalents 128.0 106.0 85.6 154.0 Net debt $ 469.4 $ 489.9 $ 530.0 $ 446.
Slide 39: Primary Working Capital – FY24
N O N - G AAP R E C O N C I L I AT I O N S Primary Working Capital – FY24 (in thousands, except percents) 6/30/2024 3/31/2024 12/31/2023 9/30/2023 6/30/2023 Average Current assets $ 1,002,592 $ 999,937 $ 1,009,820 $ 1,010,555 $ 1,026,789 Current liabilities 415,961 413,245 414,108 419,846 433,975 Wo
Slide 40: Primary Working Capital – FY23
N O N - G AAP R E C O N C I L I AT I O N S Primary Working Capital – FY23 (in thousands, except percents) 6/30/2023 3/31/2023 12/31/2022 9/30/2022 6/30/2022 Average Current assets $ 1,026,789 $ 1,079,035 $ 1,048,303 $ 1,011,486 $ 1,024,708 Current liabilities 433,975 488,729 494,334 497,488 485,610
Slide 41: Primary Working Capital – FY22
N O N - G AAP R E C O N C I L I AT I O N S Primary Working Capital – FY22 (in thousands, except percents) 6/30/2022 3/31/2022 12/31/2021 9/30/2021 6/30/2021 Average Current assets $ 1,024,708 $ 1,043,241 $ 984,201 $ 966,948 $ 1,004,807 Current liabilities 485,610 460,365 410,983 389,223 437,394 Work
Slide 42: Primary Working Capital – FY21
N O N - G AAP R E C O N C I L I AT I O N S Primary Working Capital – FY21 (in thousands, except percents) 6/30/2021 3/31/2021 12/31/2020 9/30/2020 6/30/2020 Average Current assets $ 1,004,807 $ 966,916 $ 948,686 $ 935,721 $ 1,440,812 Current liabilities 437,394 425,553 402,641 415,573 898,080 Workin
Slide 43: Adjusted ROIC – FY24
N O N - G AAP R E C O N C I L I AT I O N S Adjusted ROIC – FY24 (in thousands, except percents) 6/30/2024 3/31/2024 12/31/2023 9/30/2023 6/30/2023 Average Total debt (gross) $ 595,861 $ 608,080 $ 618,891 $ 626,553 $ 595,861 $ 609,049 Total equity 1,288,599 1,305,894 1,328,104 1,298,751 1,314,168 1,3
Slide 44: Adjusted ROIC – FY23
N O N - G AAP R E C O N C I L I AT I O N S Adjusted ROIC – FY23 (in thousands, except percents) 6/30/2023 3/31/2023 12/31/2022 9/30/2022 6/30/2022 Average Total debt (gross) $ 595,861 $ 659,025 $ 673,573 $ 679,805 $ 615,500 $ 644,753 Total equity 1,314,169 1,316,316 1,289,201 1,238,344 1,291,247 1,2