Kennametal (KMT) Q3 2026 earnings summary

Executive summary

• Q3 sales reached $593M, up 22% year-over-year, with 19% organic growth and adjusted EPS of $0.77, exceeding outlook due to price realization, volume growth, and higher tungsten prices.

• Operating income rose to $79M (up 80%), with adjusted EBITDA at $123M (20.8% margin); growth was broad-based across end markets, especially Infrastructure and Metal Cutting.

• Strategic initiatives, restructuring savings, and market recovery, particularly in Aerospace & Defense and General Engineering, contributed to performance.

• Company is prioritizing growth opportunities over restructuring in the near term due to favorable market dynamics.

• Restructuring savings and operational excellence initiatives are on track, with $30M in annualized savings expected.

Financial highlights

• Gross profit for the quarter was $208M (35.1% margin), up from $156M (32.1% margin) year-over-year.

• Adjusted EPS rose to $0.77 from $0.47 year-over-year; adjusted EBITDA margin increased to 20.8% from 17.9%.

• Cash from operating activities YTD was $70M vs. $130M prior year; free operating cash flow YTD was $18M vs. $63M, impacted by higher tungsten-related working capital.

• Returned $15M to shareholders via dividends in the quarter.

• Net income attributable to shareholders for the quarter was $58M, up from $31M year-over-year.

Outlook and guidance

• FY26 sales outlook raised to $2.33B–$2.35B, with 2–3% volume growth and ~16% net price/tariff surcharge.

• Adjusted EPS guidance increased to $3.75–$4.00, including $2.45 of price/raw timing benefit from tungsten.

• Q4 expected to see ~35% price/tariff surcharge increase year-over-year.

• Free operating cash flow expected at 30% of adjusted net income; share repurchase program paused.

• FY27 framework assumes elevated tungsten prices, with price/raw timing benefits in H1 and normalization in H2.