Flat sales reported for Kennametal's first fiscal quarter 2024
Kennametal Inc. today reported results for its fiscal 2024 first quarter ended September 30, 2023, with sales of $492 million, compared to $495 million in the prior year quarter.
"Sales were generally in line with the outlook we shared last quarter, despite weaker than expected results in China," said President and CEO Christopher Rossi. "We also generated strong cash flow from operations, and executed on our Commercial and Operational Excellence initiatives and previously announced restructuring program to offset the weaker market conditions.
"We remain focused on our multi-year growth and innovation strategy and the long-term targets we shared at Investor Day," Rossi continued. "The growth and margin expansion initiatives, including the $100 million cost reduction target, within our plan continue to give me confidence that we will drive long-term value for shareholders."
Fiscal 2024 First Quarter Key Developments
Sales of $492 million were flat from the prior year quarter, reflecting flat organic growth and no meaningful effect from business days or currency exchange.
During the quarter, the company achieved restructuring savings of approximately $4 million from the previously announced action to streamline our cost structure while continuing to invest in our high-return Commercial and Operational Excellence initiatives. This action is currently expected to deliver annualized run rate pre-tax savings of approximately $20 million by the end of fiscal 2024. Restructuring and related charges of $4 million were recognized during the quarter in connection with the execution of this initiative.
Operating income was $45 million, or 9.2 percent of sales, compared to $49 million, or 9.8 percent of sales, in the prior year quarter. The decrease in operating income was primarily due to higher wages and general inflation, lower sales volumes, higher raw material costs and restructuring and related charges of approximately $4 million in the current quarter. These factors were partially offset by higher price realization and operational efficiencies including restructuring savings. Adjusted operating income was $48.8 million, or 9.9 percent margin, in the current quarter, whereas operating income was not adjusted in the prior year quarter.
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