Kennametal sales decline 4%
Kennametal Inc. reported sales declined 4% for its fiscal 2024 third quarter – $516 million compared to $536 million in the prior year quarter.
"Results this quarter were in line with our expectations, and we once again generated strong cash from operations despite market softness, particularly in the energy end market and a continued slow recovery in China," said Christopher Rossi, president and CEO.
"We have tightened our full year outlook to align with current market conditions," Rossi continued. "As always, we remain focused on the things we can control, including driving share gain and productivity. We are expecting to deliver approximately $35 million in annualized savings in fiscal 2024, which is excellent progress toward our $100 million productivity target by the end of fiscal 2027. Finally, as I prepare to leave Kennametal at the end of this month, I am confident that my successor, Sanjay Chowbey, and his leadership team will continue to pursue above-market growth and margin expansion while deploying a balanced capital allocation strategy."
During the quarter, the company achieved restructuring savings of approximately $6 million from the previously announced action to streamline cost structure while continuing to invest in its high-return Commercial and Operational Excellence initiatives. This action is expected to deliver annualized run rate pre-tax savings of approximately $35 million by the end of fiscal 2024. Restructuring and related charges of $6 million were recognized during the quarter in connection with the execution of this initiative.
Year-to-date net cash flow from operating activities was $163 million compared to $126 million in the prior year period, driven primarily by improved inventory levels, partially offset by lower net income compared to the prior year period.
Looking forward, the company expects full fiscal year 2024 sales to be $2.030–$2.050 billion. Kennametal said it expects to raise pricing to cover raw material costs, wages, and general inflation.
Segment Results
Metal cutting sales of $327 million decreased 2% from $334 million in the prior year quarter, driven by flat organic sales, an unfavorable currency exchange effect of 1% and an unfavorable business days effect of 1%.
Infrastructure sales of $189 million decreased 7% from $203 million in the prior year quarter, driven by an organic sales decline of 5%, an unfavorable currency exchange effect of 1%, and an unfavorable business days effect of 1%. A 2.7% decrease in operating income was primarily due to lower sales volumes, restructuring charges of approximately $2 million, higher wages and general inflation, and the unfavorable timing of pricing compared to raw material costs.
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