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Dec 31, 2019
Kennametal Q2 2020 Earnings Report
Reported a loss per share of $0.07 and adjusted EPS of $0.17, impacted by weakening end-market conditions.
Key Takeaways
Kennametal Inc. reported a decrease in sales and earnings for the second quarter of fiscal year 2020. Sales were $505 million, a 14% decrease compared to the prior year quarter. The company reported a loss per share of $0.07, while adjusted EPS was $0.17. The results reflect weakening end-market conditions, particularly in the U.S., Germany, and India, as well as headwinds in the 737 MAX supply chain.
Sales decreased 14% year-over-year due to weakening end-markets.
Organic sales declined by 12%.
The company recognized approximately $11 million in incremental simplification/modernization benefits in the quarter.
Fiscal year 2020 outlook adjusted earnings per diluted share of $1.20 to $1.50 reflects further weakening in end-markets and higher adjusted effective tax rate.
Revenue by Geographic Location
Forward Guidance
The Company has reduced its outlook due primarily to lower end-market demand experienced in the December quarter, as well as expectations of further weakness through the remainder of the fiscal year, which was previously forecasted to stabilize. The outlook also accounts for the effect of the 737 MAX on the aerospace supply chain, and a higher than anticipated effective tax rate.
Positive Outlook
- Adjusted EPS of $1.20 to $1.50
- Simplification/modernization benefits expected to accelerate in the second half of fiscal 2020
- FY20 and FY21 Restructuring Actions on-track to deliver projected savings
- Divestiture is expected to be accretive to margins
- Raw material cost improvements expected in the second half of fiscal 2020
Challenges Ahead
- Organic sales decline of 9 to 12 percent
- Adjusted ETR of 25 to 28 percent
- Capital spending of $240 to $260 million
Revenue & Expenses
Visualization of income flow from segment revenue to net income
Historical Earnings Impact
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Avg. Return Before/After Earnings
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