Kennametal (KMT) investor relations material

Executive summary

• FY25 sales declined 4% organically to $1.97B, with broad market weakness but notable wins in defense and AI power generation projects.

• Adjusted EPS for FY25 was $1.34, down from $1.50, with cost reduction, restructuring, and portfolio optimization initiatives achieving $65M in annualized savings.

• $122M returned to shareholders in FY25 via $62M in dividends and $60M in share repurchases.

• Management is executing a two-phase plan to consolidate six facilities by FY28, targeting $125M in cost savings.

• Market softness, lower volumes, and supply chain disruptions impacted results, partially offset by restructuring and pricing actions.

Financial highlights

• Q4 FY25 sales were $516M, down 5% organically year-over-year; adjusted EPS $0.34 vs. $0.49 prior year.

• FY25 adjusted EBITDA was $299M (15.2% margin), down 10 bps year-over-year.

• Free operating cash flow for FY25 was $121M, down from $175M in FY24.

• FY25 gross margin was 30.5% (down 10 bps); operating margin 8.0% (down 90 bps).

• Net income attributable for FY25 was $93M, down from $109M in FY24.

Outlook and guidance

• FY26 sales expected between $1.95B and $2.05B, with volume down 5% to flat, price/tariff surcharges up 4%, and 2% FX tailwind.

• Adjusted EPS guidance for FY26 is $0.90 to $1.30; Q1 sales expected $465M–$485M, adjusted EPS $0.20–$0.30.

• Restructuring savings of $35M included in FY26 outlook, with benefits weighted 40%/60% first half/second half.

• Capital expenditures for FY26 projected at ~$90M; free operating cash flow expected at 120% of adjusted net income.

• Aerospace and defense projected for low double-digit growth; transportation, general engineering, and earthworks expected to decline.