PITTSBURGH, May 6, 2019
/PRNewswire/ -- Kennametal Inc. (NYSE: KMT) (the "Company")
today reported results for its fiscal 2019 third quarter ended
March 31, 2019, with EPS of $0.82, compared with $0.61 in the prior year quarter, and adjusted EPS
of $0.77, compared with $0.70 in the prior year quarter.
"We delivered organic sales growth in every business segment, on
increasingly tougher comparables, and end markets remained
generally positive except for automotive," said President and Chief
Executive Officer, Chris Rossi.
"Earnings improved, and our adjusted EBITDA margin for the quarter
increased notably year-over-year which is in-line with the fiscal
2021 targets outlined at our most recent Investor Day."
Rossi continued, "We are seeing the increasing benefits from
simplification/modernization in our financial results. Moving
forward, we expect the associated restructuring efforts to further
reduce structural costs while maintaining customer
commitments."
Simplification/Modernization Restructuring
The Company today announced details of the next phase of
restructuring associated with simplification /modernization. These
actions are expected to reduce structural costs and are
currently estimated to achieve $35-$40 million of
annualized savings by the end of fiscal 2020. The Company is
expected to incur pre-tax charges of $55-$65 million
through fiscal 2019 and 2020 for these restructuring
activities.
Fiscal 2019 Third Quarter Key Developments
Sales of $597 million decreased 2
percent from $608 million
year-over-year, reflecting 4 percent unfavorable currency exchange
effect and a 1 percent unfavorable business day effect, partially
offset by 3 percent organic sales growth.
In connection with the Company's simplification/modernization
initiative, pre-tax restructuring and related charges were
$3 million, or $0.03 per share, and incremental pre-tax benefits
from simplification/modernization restructuring were approximately
$3 million in the quarter. Annualized
run-rate pre-tax benefits of approximately $12 million have been achieved in connection with
these substantially completed simplification/modernization
initiatives.
Operating income was $82 million,
or 13.7 percent margin, compared to $81
million, or 13.3 percent margin, in the prior year quarter.
Adjusted operating income was $85
million, or 14.3 percent margin, compared to $83 million, or 13.6 percent margin, in the prior
year quarter. The increase in adjusted operating income was due
primarily to organic sales growth, incremental
simplification/modernization benefits and lower compensation
expense, partially offset by unfavorable volume-related labor and
fixed cost absorption in certain facilities in part due to
simplification/modernization efforts in progress, higher raw
material costs and unfavorable currency exchange. Price realization
exceeded raw material cost inflation.
The reported effective tax rate (ETR) for the quarter was 11.0
percent and the adjusted ETR was 19.8 percent, compared to reported
ETR of 31.2 percent and adjusted ETR of 23.1 percent in the prior
year quarter. The change in the adjusted ETR was primarily due to
U.S. tax reform.
Reported EPS in the current quarter includes a non-recurring
benefit related to U.S. tax reform of $0.08 and restructuring and related charges of
$0.03. Reported EPS in the prior year
quarter includes a non-recurring charge related to U.S. tax reform
of $0.08 and restructuring and
related charges of $0.01.
Net cash flow provided by operating activities was $157 million compared to $158 million in the prior year period. Free
operating cash flow (FOCF) was $15 million compared to
$54 million in the prior year period.
The change in FOCF was driven primarily by higher working capital
and greater net capital expenditures due in part to
simplification/modernization initiatives, partially offset by
increased cash flow from operations before changes in certain other
assets and liabilities.
Outlook
The Company updated its outlook for fiscal year 2019:
- Adjusted EPS of $3.00 to
$3.10 on organic sales growth of
approximately 5 percent
- Adjusted ETR of approximately 22 percent
- Capital spending of $200 to
$220 million
- Free operating cash flow of $120
to $140 million
Segment Results
Industrial sales of $319
million decreased 4 percent from $333
million year-over-year, reflecting a 5 percent unfavorable
currency exchange impact, partially offset by organic sales growth
of 1 percent. Operating income was $57
million, or 18.0 percent margin, compared to $50 million, or 15.1 percent margin, in the prior
year quarter. Adjusted operating income was $58 million, or 18.3 percent margin, compared to
$51 million, or 15.4 percent margin,
in the prior year quarter. The increase in adjusted operating
income was driven primarily by organic sales growth and incremental
simplification/modernization benefits, partially offset by
unfavorable volume-related labor and fixed cost absorption in
certain facilities in part due to simplification/modernization
efforts in progress and unfavorable currency exchange.
Widia sales of $51 million
decreased 2 percent from $52 million
year-over-year, driven by a 4 percent unfavorable currency exchange
impact and an unfavorable business day effect of 1 percent,
partially offset by organic sales growth of 3 percent. Operating
income was break-even, compared to $1
million, or 2.4 percent margin, in the prior year quarter.
Adjusted operating income was $1
million, or 1.3 percent margin, compared to $1 million, or 2.4 percent margin, in the prior
year quarter. The change in adjusted operating income was driven
primarily by lower margins from one-time costs associated with
simplification efforts to streamline the product portfolio,
partially offset by organic sales growth.
Infrastructure sales of $228
million increased 2 percent from $223
million year-over-year, driven by organic sales growth of 6
percent, partially offset by an unfavorable currency exchange
impact of 3 percent and an unfavorable business day effect of 1
percent. Operating income was $25
million, or 11.0 percent margin, compared to
$30 million, or 13.5 percent margin, in the prior year
quarter. Adjusted operating income was $27
million, or 11.7 percent margin, compared to $31 million, or 13.8 percent margin, in the prior
year quarter. The decrease in adjusted operating income was
primarily driven by higher raw material costs and manufacturing
expenses, partially offset by organic sales growth and incremental
simplification/modernization benefits.
Dividend Declared
Kennametal also announced that its Board of Directors declared a
quarterly cash dividend of $0.20 per
share. The dividend is payable on May 29,
2019 to shareholders of record as of the close of business
on May 14, 2019.
The Company will discuss its fiscal 2019 third quarter results
in a live webcast at 8:00 a.m. Eastern
Time, Tuesday, May 7,
2019.
The conference call will be broadcast via real-time audio on the
Kennametal website at www.kennametal.com. Once on the homepage,
select "About Us", "Investor Relations" and then "Events." A replay
of the call will be available on the Company's website on the
Investor Relations/Events page beginning on May 7, 2019 at 10:00
a.m. through June 4, 2019.
This earnings release contains non-GAAP financial measures.
Reconciliations and descriptions of all non-GAAP financial measures
are set forth in the tables that follow.
Certain statements in this release may be forward-looking in
nature, or "forward-looking statements" within the meaning of
Section 27A of the Securities Act of 1933 and Section 21E
of the Securities Exchange Act of 1934. Forward-looking statements
are statements that do not relate strictly to historical or current
facts. For example, statements about Kennametal's outlook for
earnings, sales volumes, cash flow and capital expenditures for
fiscal year 2019 and our expectations regarding future
growth and financial performance are forward-looking statements.
Any forward-looking statements are based on current knowledge,
expectations and estimates that involve inherent risks and
uncertainties. Should one or more of these risks or uncertainties
materialize, or should the assumptions underlying the
forward-looking statements prove incorrect, our actual results
could vary materially from our current expectations. There are a
number of factors that could cause our actual results to differ
from those indicated in the forward-looking statements. They
include: downturns in the business cycle or the economy; our
ability to achieve all anticipated benefits of restructuring,
simplification and modernization initiatives; risks related to our
foreign operations and international markets, such as currency
exchange rates, different regulatory environments, trade barriers,
exchange controls, and social and political instability; changes in
the regulatory environment in which we operate, including
environmental, health and safety regulations; potential for future
goodwill and other intangible asset impairment charges; our ability
to protect and defend our intellectual property; continuity of
information technology infrastructure; competition; our ability to
retain our management and employees; demands on management
resources; availability and cost of the raw materials we use to
manufacture our products; product liability claims; integrating
acquisitions and achieving the expected savings and synergies;
global or regional catastrophic events; demand for and market
acceptance of our products; business divestitures; labor relations;
and implementation of environmental remediation matters. Many of
these risks and other risks are more fully described in
Kennametal's latest annual report on Form 10-K and its other
periodic filings with the Securities and Exchange Commission. We
can give no assurance that any goal or plan set forth in
forward-looking statements can be achieved and readers are
cautioned not to place undue reliance on such statements, which
speak only as of the date made. We undertake no obligation to
release publicly any revisions to forward-looking statements as a
result of future events or developments.
About Kennametal
With over 80 years as an industrial
technology leader, Kennametal Inc. delivers productivity to
customers through materials science, tooling and wear-resistant
solutions. Customers across aerospace, earthworks, energy, general
engineering and transportation turn to Kennametal to help them
manufacture with precision and efficiency. Every day approximately
10,000 employees are helping customers in more than 60 countries
stay competitive. Kennametal generated nearly $2.4 billion in revenues in fiscal 2018. Learn
more at www.kennametal.com. Follow @Kennametal: Twitter, Instagram,
Facebook, LinkedIn and YouTube.
FINANCIAL
HIGHLIGHTS
|
|
CONDENSED
CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
|
|
|
Three Months Ended
March 31,
|
Nine Months Ended
March 31,
|
(in thousands,
except per share amounts)
|
2019
|
|
2018
|
2019
|
|
2018
|
Sales
|
$
|
597,204
|
|
|
$
|
607,936
|
|
$
|
1,771,285
|
|
|
$
|
1,721,734
|
|
Cost of goods
sold
|
389,118
|
|
|
391,519
|
|
1,153,509
|
|
|
1,133,866
|
|
Gross profit
|
208,086
|
|
|
216,417
|
|
617,776
|
|
|
587,868
|
|
Operating
expense
|
120,135
|
|
|
130,630
|
|
358,054
|
|
|
373,361
|
|
Restructuring and
asset impairment charges
|
2,440
|
|
|
1,264
|
|
5,061
|
|
|
6,834
|
|
Amortization of
intangibles
|
3,640
|
|
|
3,690
|
|
10,780
|
|
|
11,028
|
|
Operating
income
|
81,871
|
|
|
80,833
|
|
243,881
|
|
|
196,645
|
|
Interest
expense
|
8,104
|
|
|
7,468
|
|
24,305
|
|
|
21,848
|
|
Other income, net
(1)
|
(4,993)
|
|
|
(3,876)
|
|
(11,775)
|
|
|
(11,314)
|
|
Income before income
taxes
|
78,760
|
|
|
77,241
|
|
231,351
|
|
|
186,111
|
|
Provision for income
taxes
|
8,632
|
|
|
24,130
|
|
46,553
|
|
|
51,204
|
|
Net income
|
70,128
|
|
|
53,111
|
|
184,798
|
|
|
134,907
|
|
Less: Net income
attributable to noncontrolling interests
|
1,578
|
|
|
2,245
|
|
4,852
|
|
|
3,256
|
|
Net income
attributable to Kennametal
|
$
|
68,550
|
|
|
$
|
50,866
|
|
$
|
179,946
|
|
|
$
|
131,651
|
|
PER SHARE DATA
ATTRIBUTABLE TO KENNAMETAL SHAREHOLDERS
|
|
|
|
Basic earnings per
share
|
$
|
0.83
|
|
|
$
|
0.62
|
|
$
|
2.19
|
|
|
$
|
1.62
|
|
Diluted earnings per
share
|
$
|
0.82
|
|
|
$
|
0.61
|
|
$
|
2.16
|
|
|
$
|
1.59
|
|
Dividends per
share
|
$
|
0.20
|
|
|
$
|
0.20
|
|
$
|
0.60
|
|
|
$
|
0.60
|
|
Basic weighted
average shares outstanding
|
82,479
|
|
|
81,793
|
|
82,305
|
|
|
81,445
|
|
Diluted weighted
average shares outstanding
|
83,339
|
|
|
83,109
|
|
83,266
|
|
|
82,670
|
|
|
|
(1)
Includes income of $3.6 million and $4.5 million for the three
months ended March 31, 2019 and 2018, respectively, and
$10.7 million and $13.4 million for the nine months ended
March 31, 2019 and 2018, respectively, from the combined
effects of net periodic pension income and postretirement benefit
cost (other than the service cost component) as a result of the
adoption of ASU No. 2017-07, "Improving the Presentation of Net
Periodic Pension Cost and Net Periodic Postretirement Benefit
Cost" on July 1, 2018. The prior period was restated to
reflect the retrospective adoption of this standard.
|
|
CONDENSED
CONSOLIDATED BALANCE SHEETS (UNAUDITED)
|
|
(in
thousands)
|
March 31,
2019
|
|
June 30,
2018
|
ASSETS
|
|
|
|
Cash and cash
equivalents
|
$
|
112,597
|
|
|
$
|
556,153
|
|
Accounts receivable,
net
|
403,411
|
|
|
401,290
|
|
Inventories
|
588,613
|
|
|
525,466
|
|
Other current
assets
|
58,221
|
|
|
63,257
|
|
Total current
assets
|
1,162,842
|
|
|
1,546,166
|
|
Property, plant and
equipment, net
|
885,836
|
|
|
824,213
|
|
Goodwill and other
intangible assets, net
|
463,426
|
|
|
478,270
|
|
Other
assets
|
95,579
|
|
|
77,088
|
|
Total
assets
|
$
|
2,607,683
|
|
|
$
|
2,925,737
|
|
LIABILITIES
|
|
|
|
Current maturities of
long-term debt, including notes payable
|
$
|
—
|
|
|
$
|
400,200
|
|
Accounts
payable
|
205,069
|
|
|
221,903
|
|
Other current
liabilities
|
224,949
|
|
|
264,428
|
|
Total current
liabilities
|
430,018
|
|
|
886,531
|
|
Long-term
debt
|
592,070
|
|
|
591,505
|
|
Other
liabilities
|
220,190
|
|
|
217,374
|
|
Total
liabilities
|
1,242,278
|
|
|
1,695,410
|
|
KENNAMETAL
SHAREHOLDERS' EQUITY
|
1,325,121
|
|
|
1,194,325
|
|
NONCONTROLLING
INTERESTS
|
40,284
|
|
|
36,002
|
|
Total liabilities
and equity
|
$
|
2,607,683
|
|
|
$
|
2,925,737
|
|
SEGMENT DATA
(UNAUDITED)
|
Three Months Ended
March 31,
|
Nine Months Ended
March 31,
|
(in
thousands)
|
2019
|
|
2018
|
2019
|
|
2018
|
Outside
Sales:
|
|
|
|
|
|
|
Industrial
|
$
|
318,636
|
|
|
$
|
333,012
|
|
$
|
956,515
|
|
|
$
|
942,922
|
|
Widia
|
50,966
|
|
|
52,217
|
|
148,592
|
|
|
145,204
|
|
Infrastructure
|
227,602
|
|
|
222,707
|
|
666,178
|
|
|
633,608
|
|
Total
sales
|
$
|
597,204
|
|
|
$
|
607,936
|
|
$
|
1,771,285
|
|
|
$
|
1,721,734
|
|
Sales By
Geographic Region:
|
|
|
|
|
|
|
Americas
|
$
|
302,919
|
|
|
$
|
294,189
|
|
$
|
887,675
|
|
|
$
|
832,065
|
|
EMEA
|
181,390
|
|
|
192,876
|
|
527,505
|
|
|
534,040
|
|
Asia
Pacific
|
112,895
|
|
|
120,871
|
|
356,105
|
|
|
355,629
|
|
Total
sales
|
$
|
597,204
|
|
|
$
|
607,936
|
|
$
|
1,771,285
|
|
|
$
|
1,721,734
|
|
Operating Income
(2):
|
|
|
|
|
|
|
Industrial
|
$
|
57,218
|
|
|
$
|
50,239
|
|
$
|
173,279
|
|
|
$
|
122,782
|
|
Widia
|
(4)
|
|
|
1,260
|
|
3,817
|
|
|
1,414
|
|
Infrastructure
|
24,934
|
|
|
30,097
|
|
69,407
|
|
|
74,320
|
|
Corporate
(3)
|
(277)
|
|
|
(763)
|
|
(2,622)
|
|
|
(1,871)
|
|
Total operating
income
|
$
|
81,871
|
|
|
$
|
80,833
|
|
$
|
243,881
|
|
|
$
|
196,645
|
|
|
|
(2)
Amounts for the three and nine months ended March 31, 2018
were restated to reflect retrospective application for adoption of
ASU No. 2017-07, "Improving the Presentation of Net Periodic
Pension Cost and Net Periodic Postretirement Benefit Cost" on
July 1, 2018. Operating income was affected by the restatement of
the prior year period in the following manner for the three months
ended March 31, 2018: Industrial lower $2.8 million, Widia
lower $0.4 million, Infrastructure lower $1.7 million and Corporate
lower expense of $0.3 million. For the nine months ended
March 31, 2018: Industrial lower $8.4 million; Widia lower
$1.1 million, Infrastructure lower $5.0 million and Corporate lower
expense of $1.2 million.
|
|
(3)
Represents unallocated corporate expenses
|
|
NON-GAAP RECONCILIATIONS (UNAUDITED)
In addition to reported results under generally accepted
accounting principles in the United
States of America (GAAP), the following financial highlight
tables include, where appropriate, a reconciliation of adjusted
results including: operating income and margin; ETR; net income
attributable to Kennametal shareholders; diluted EPS; Industrial
operating income and margin; Widia operating income and margin;
Infrastructure operating income and margin; FOCF; EBITDA and
consolidated and segment organic sales growth (all of which are
non-GAAP financial measures), to the most directly comparable GAAP
financial measures. Adjustments for the three months ended
March 31, 2019 and 2018 include: (1) restructuring and related
charges; and (2) non-recurring effect of tax reform. For those
adjustments that are presented 'net of tax', the tax effect of the
adjustment can be derived by calculating the difference between the
pre-tax and the post-tax adjustments presented. The tax effect on
adjustments is calculated by preparing an overall tax calculation
including the adjustments and then a tax calculation excluding the
adjustments. The difference between these calculations results in
the tax impact of the adjustments.
Management believes that presentation of these non-GAAP
financial measures provides useful information about the results of
operations of the Company for the current and past periods.
Management believes that investors should have available the same
information that management uses to assess operating performance,
determine compensation and assess the capital structure of the
Company. These non-GAAP financial measures should not be considered
in isolation or as a substitute for the most comparable GAAP
financial measures. Investors are cautioned that non-GAAP financial
measures used by management may not be comparable to non-GAAP
financial measures used by other companies. Reconciliations and
descriptions of all non-GAAP financial measures are set forth in
the disclosures below.
Reconciliations to the most directly comparable GAAP financial
measures for the following forward-looking non-GAAP financial
measures for the full fiscal year of 2019 have not been provided,
including but not limited to: adjusted EPS, adjusted ETR, organic
sales growth and FOCF. The most comparable GAAP financial measures
are earnings per share, ETR, sales growth and net cash flow from
operating activities, respectively. Because the non-GAAP financial
measures on a forward-looking basis are subject to uncertainty and
variability as they are dependent on many factors - including, but
not limited to, the effect of foreign currency exchange
fluctuations, impacts from potential acquisitions or divestitures,
gains or losses on the potential sale of businesses or other
assets, restructuring costs, asset impairment charges, gains or
losses from early extinguishment of debt, the tax impact of the
items above and the impact of tax law changes or other tax matters
- reconciliations to the most directly comparable forward-looking
GAAP financial measures are not available without unreasonable
effort.
THREE MONTHS ENDED
MARCH 31, 2019 (UNAUDITED)
|
|
(in thousands,
except percents and per share data)
|
Sales
|
Operating
income
|
ETR
|
Net
income(4)
|
Diluted
EPS
|
Reported
results
|
$
|
597,204
|
|
$
|
81,871
|
|
11.0
|
%
|
$
|
68,550
|
|
$
|
0.82
|
|
Reported
margins
|
|
13.7
|
%
|
|
|
|
Restructuring and
related charges
|
—
|
|
3,433
|
|
0.1
|
|
2,614
|
|
0.03
|
|
Non-recurring effect
of tax reform (5)
|
—
|
|
—
|
|
8.7
|
|
(6,840)
|
|
(0.08)
|
|
Adjusted
results
|
$
|
597,204
|
|
$
|
85,304
|
|
19.8
|
%
|
$
|
64,324
|
|
$
|
0.77
|
|
Adjusted
margins
|
|
14.3
|
%
|
|
|
|
|
|
(4) Attributable to
Kennametal
|
|
(5) Additional benefit recorded to
reflect the effect of regulations and other relevant guidance
issued through March 31, 2019 on the amounts recorded for the
application of a measure of the Tax Cuts and Jobs Act of 2017
(TCJA) requiring a one-time transition tax on previously untaxed
accumulated earnings and profits of non-U.S. companies (toll tax).
The toll tax charge is $71 million
|
.
|
|
Industrial
|
Widia
|
Infrastructure
|
(in thousands,
except percents)
|
Sales
|
Operating
income(2)
|
Sales
|
Operating
income(2)
|
Sales
|
Operating
income(2)
|
Reported
results
|
$
|
318,636
|
|
$
|
57,218
|
|
$
|
50,966
|
|
$
|
(4)
|
|
$
|
227,602
|
|
$
|
24,934
|
|
Reported operating
margin
|
|
18.0
|
%
|
|
—
|
%
|
|
11.0
|
%
|
Restructuring and
related charges
|
—
|
|
1,003
|
|
—
|
|
662
|
|
—
|
|
1,768
|
|
Adjusted
results
|
$
|
318,636
|
|
$
|
58,221
|
|
$
|
50,966
|
|
$
|
658
|
|
$
|
227,602
|
|
$
|
26,702
|
|
Adjusted operating
margin
|
|
18.3
|
%
|
|
1.3
|
%
|
|
11.7
|
%
|
THREE MONTHS ENDED
MARCH 31, 2018 (UNAUDITED)
|
|
(in thousands,
except percents and per share data)
|
Sales
|
Operating
income
|
ETR
|
Net
income(4)
|
Diluted
EPS
|
Reported
results
|
$
|
607,936
|
|
$
|
80,833
|
|
31.2
|
%
|
$
|
50,866
|
|
$
|
0.61
|
|
Reported
margins
|
|
13.3
|
%
|
|
|
|
Restructuring and
related charges
|
—
|
|
1,681
|
|
0.2
|
|
1,230
|
|
0.01
|
|
Non-recurring effect
of tax reform (6)
|
—
|
|
—
|
|
(8.3)
|
|
6,382
|
|
0.08
|
|
Adjusted
results
|
$
|
607,936
|
|
$
|
82,514
|
|
23.1
|
%
|
$
|
58,478
|
|
$
|
0.70
|
|
Adjusted
margins
|
|
13.6
|
%
|
|
|
|
|
|
(6)
Additional charge recorded to reflect adjustments to the amounts
recorded for the toll tax considering regulatory guidance issued
through March 31, 2018.
|
|
|
Industrial
|
Widia
|
Infrastructure
|
(in thousands,
except percents)
|
Sales
|
Operating
income(2)
|
Sales
|
Operating
income(2)
|
Sales
|
Operating
income(2)
|
Reported
results
|
$
|
333,012
|
|
$
|
50,239
|
|
$
|
52,217
|
|
$
|
1,260
|
|
$
|
222,707
|
|
$
|
30,097
|
|
Reported operating
margin
|
|
15.1
|
%
|
|
2.4
|
%
|
|
13.5
|
%
|
Restructuring and
related charges
|
—
|
|
1,023
|
|
—
|
|
17
|
|
—
|
|
641
|
|
Adjusted
results
|
$
|
333,012
|
|
$
|
51,262
|
|
$
|
52,217
|
|
$
|
1,277
|
|
$
|
222,707
|
|
$
|
30,738
|
|
Adjusted operating
margin
|
|
15.4
|
%
|
|
2.4
|
%
|
|
13.8
|
%
|
Free Operating Cash Flow (FOCF)
FOCF is a non-GAAP
financial measure and is defined by the Company as net cash flow
provided by operating activities (which is the most directly
comparable GAAP financial measure) less capital expenditures plus
proceeds from disposals of fixed assets. Management considers FOCF
to be an important indicator of the Company's cash generating
capability because it better represents cash generated from
operations that can be used for dividends, debt repayment,
strategic initiatives (such as acquisitions) and other investing
and financing activities.
|
|
Nine Months Ended
March 31,
|
FREE OPERATING
CASH FLOW (UNAUDITED)
|
|
(in
thousands)
|
|
2019
|
|
2018
|
Net cash flow
provided by operating activities (7)
|
|
$
|
157,465
|
|
|
$
|
157,886
|
|
Purchases of
property, plant and equipment (7)
|
|
(145,942)
|
|
|
(105,610)
|
|
Disposals of
property, plant and equipment
|
|
3,575
|
|
|
2,196
|
|
Free operating cash
flow
|
|
$
|
15,098
|
|
|
$
|
54,472
|
|
|
|
(7) The
Company revised its statement of cash flow for the nine months
ended March 31, 2018, resulting in a decrease of $23 million
to previously reported net cash flow provided by operating
activities and a corresponding decrease to previously reported net
cash flow used for investing activities. The Company has concluded
that the impact of the revision was not material to the previously
issued interim financial statements. The revision had no
impact on the previously issued annual financial statements nor
FOCF in any period.
|
|
Earnings before interest, taxes, depreciation and
amortization (EBITDA)
EBITDA is a non-GAAP financial measure
and is defined as net income attributable to Kennametal (which is
the most directly comparable GAAP measure and is sometimes referred
to as "earnings"), with interest expense, interest income,
provision for income taxes, depreciation and amortization added
back. Management believes that EBITDA is widely used as a measure
of operating performance and is an important indicator of the
Company's operational strength and performance. Nevertheless, the
measure should not be considered in isolation or as a substitute
for operating income, cash flows from operating activities or any
other measure for determining liquidity that is calculated in
accordance with GAAP. Additionally, Kennametal will present EBITDA
on an adjusted basis. Management uses this information in reviewing
operating performance.
|
Three Months Ended
March 31,
|
EBITDA
(UNAUDITED)
|
(in
thousands)
|
2019
|
|
2018
|
Net income
attributable to Kennametal
|
$
|
68,550
|
|
|
$
|
50,866
|
|
Add back:
|
|
|
|
Interest
expense
|
8,104
|
|
|
7,468
|
|
Interest
income
|
(752)
|
|
|
(1,023)
|
|
Provision for
income taxes
|
8,632
|
|
|
24,130
|
|
Depreciation
|
24,281
|
|
|
23,933
|
|
Amortization
of intangibles
|
3,640
|
|
|
3,690
|
|
EBITDA
|
$
|
112,455
|
|
|
$
|
109,064
|
|
Margin
|
18.8
|
%
|
|
17.9
|
%
|
|
|
|
|
Adjustments:
|
|
|
|
Restructuring and
related charges
|
3,433
|
|
|
1,681
|
|
Adjusted
EBITDA
|
$
|
115,888
|
|
|
$
|
110,745
|
|
Adjusted
margin
|
19.4
|
%
|
|
18.2
|
%
|
Organic Sales Growth
Organic sales growth is a
non-GAAP financial measure of sales growth (decline) (which is the
most directly comparable GAAP measure) excluding the impacts of
acquisitions, divestitures, business days and foreign currency
exchange from year-over-year comparisons. Management believes this
measure provides investors with a supplemental understanding of
underlying sales trends by providing sales growth on a consistent
basis. Management reports organic sales growth at the consolidated
and segment levels.
ORGANIC SALES
GROWTH (UNAUDITED)
|
|
|
|
|
Three Months Ended
March 31, 2019
|
|
Industrial
|
|
Widia
|
|
Infrastructure
|
|
Total
|
Organic sales
growth
|
|
1%
|
|
3%
|
|
6%
|
|
3%
|
Foreign currency
exchange impact (8)
|
|
(5)
|
|
(4)
|
|
(3)
|
|
(4)
|
Business days impact
(9)
|
|
—
|
|
(1)
|
|
(1)
|
|
(1)
|
Sales (decline)
growth
|
|
(4)%
|
|
(2)%
|
|
2%
|
|
(2)%
|
|
|
(8)
Foreign currency exchange impact is calculated by dividing the
difference between current period sales at prior period foreign
exchange rates and prior period sales by prior period
sales.
|
|
(9)
Business days impact is calculated by dividing the year-over-year
change in weighted average working days (based on mix of sales by
country) by prior period weighted average working days.
|
|
View original
content:http://www.prnewswire.com/news-releases/kennametal-announces-fiscal-2019-third-quarter-results-10th-consecutive-quarter-of-year-over-year-earnings-per-share-growth-300844611.html
SOURCE Kennametal Inc.