Kennametal sales decline 2% in fiscal Q2
Kennametal Inc. reported fiscal second quarter sales of $482 million, a 3% decrease from $495 million in the prior year quarter – reflecting an organic sales decline of 6%, partially offset by a favorable business days effect of 3%.
"This quarter we once again generated strong cash flow from operations," said Sanjay Chowbey, president and CEO. "However, conditions in a number of our end markets, primarily in EMEA, continued to weaken resulting in sales at the lower end of our expectations."
Chowbey continued: "In light of these challenging conditions, we have reduced our full year outlook and have taken the additional restructuring actions we announced in mid-January. By the end of this fiscal year, these actions, along with prior initiatives, will have us on pace to achieve approximately $65 million of the $100 million structural cost improvement program we introduced at our September 2023 Investor Day."
During the quarter, the company achieved incremental year-over-year restructuring savings of approximately $6 million from the previously announced action to streamline its cost structure. This action has delivered an annualized run rate pre-tax savings of approximately $35 million and is considered substantially complete as of December 31, 2024. Restructuring and related charges of $1 million were recognized during the quarter in connection with the execution of this initiative compared to $1 million in the prior year quarter.
Operating income was $32 million, or 6.6% margin versus $28 million/5.7% in the prior year quarter. The increase in operating income was primarily due to lower raw material costs, pricing, incremental year-over-year restructuring savings of approximately $6 million, and within the infrastructure segment – a net benefit of $2 million consisting of insurance recoveries related to the tornado that struck the Rogers, Arkansas, facility late in fiscal 2024 and an advanced manufacturing production credit under the Inflation Reduction Act of approximately $2 million. These factors were partially offset by lower sales and production volumes and higher wages and general inflation. Adjusted operating income was $33 million, or 6.9% margin, in the current quarter, compared to $30 million, or 6.0% margin, in the prior year quarter.
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