Kennametal's Q2 Earnings Match Estimates, Revenues Decline Y/Y

Core Viewpoint - Kennametal Inc. reported a decline in earnings and revenues for the second quarter of fiscal 2025, with adjusted earnings per share matching estimates but showing a significant year-over-year decrease Revenue Details - Revenues for Kennametal were $482.1 million, a decrease of 2.7% from the previous year, and missed the Zacks Consensus Estimate of $484 million [2] - Organic sales declined by 6% year over year, although business days positively impacted revenues by 3% [2] - American operations saw a revenue decrease of 1.5% to $235.3 million, while Europe, the Middle East, and Africa revenues fell by 4.9% to $145.5 million; Asia Pacific revenues decreased by 2.1% to $101.3 million [3] - The Metal Cutting segment reported revenues of $298 million, down 4% year over year, with organic revenues declining by 7% [3] - The Infrastructure segment's revenues were flat at $184 million, with organic revenues decreasing by 4% [4] Margin Profile - Cost of goods sold decreased by 5.3% year over year to $337 million, while gross profit increased by 3.9% to $145 million, resulting in a gross margin increase of 190 basis points to 30.1% [5] - Operating income rose by 11.2% year over year to $31.7 million, with an operating margin increase of 90 basis points to 6.6% [5] - Interest expenses were reported at $6.2 million, down 9.7% from the previous year [6] Balance Sheet and Cash Flow - Cash and cash equivalents at the end of the fiscal second quarter were $121.2 million, down from $128 million in the previous quarter [7] - Long-term debt was reported at $596.4 million, slightly up from $596 million year over year [7] - Net cash generated from operating activities in the first six months of fiscal 2025 was $101 million, compared to $88 million in the same period last year [8] - Free operating cash flow increased to $57.3 million from $36 million in the previous fiscal year [8] Dividend Update - The board of directors approved a quarterly cash dividend of 20 cents per share, payable on February 25, 2025, to shareholders of record as of February 11, 2025 [11] Guidance - Kennametal updated its fiscal 2025 outlook, now expecting sales between $1.95 billion and $2.0 billion, down from the previous estimate of $2.0 billion to $2.1 billion [12] - Adjusted earnings per share are anticipated to be in the range of $1.05 to $1.30, revised from $1.30 to $1.70 [12] - Free operating cash flow is expected to exceed 125% of net income (adjusted), with capital spending projected at approximately $100 million [12]