PITTSBURGH, Aug. 3, 2020 /PRNewswire/ -- Kennametal Inc.
(NYSE: KMT) (the "Company") today announced fourth quarter and
fiscal 2020 results. For the fourth quarter, the Company reported
loss per share (LPS) of $0.11,
compared with earnings per share (EPS) of $0.74 in the prior year quarter. The current
quarter adjusted EPS was $0.15,
compared with $0.84 in the prior year
quarter. For fiscal 2020, the Company reported LPS of $0.07, compared with EPS of $2.90 in the prior year. Adjusted EPS was
$0.94 in the current year, compared
with $3.02 in the prior year.
"The effects of COVID-19 were felt in every region during the
quarter and created a challenging environment. Nevertheless, we
have continued to aggressively manage our costs and production
schedules to minimize the effect on operating leverage while
keeping our employees safe and continuing to serve customers," said
Christopher Rossi, President and
CEO. "We also continued with our simplification/modernization plan
and have substantially completed the capital spend as of
year-end. This is a significant milestone for Kennametal, and
one that substantially lowers the breakeven point of the Company
while improving customer service to enable profitable growth."
Rossi commented further: "While we expect FY21 to present
ongoing macroeconomic challenges, we are actively working to
minimize those headwinds while continuing to advance our commercial
and operational excellence initiatives so that we are
well-positioned to outperform competitors as markets recover.
Additionally, we will continue to leverage our innovative products,
including Metal Cutting's award-winning HARVITM 1 TE and
Infrastructure's PCD road-milling products, to enable us to exceed
customer performance expectations and gain market share."
FY21 Metal Cutting Segment
Effective July 1, 2020, Kennametal
has combined its former Industrial and WIDIA business segments to
form one Metal Cutting business segment. The Infrastructure segment
remains unchanged.
Rossi commented, "We combined into one metal cutting
organization to more effectively direct our commercial resources,
technical expertise, and products toward capturing a larger
share-of-wallet and expanding into a multi-billion-dollar segment
of metal cutting that we previously had not focused on. This
represents more than a 40 percent estimated increase in addressable
market for the Company. Furthermore, we will leverage our
newly-modernized manufacturing capability for improved operational
and financial performance to serve this new segment."
Pete Dragich, Chief Operations Officer, Metal Cutting, is
responsible for demand fulfillment for the segment,
including operations for all metal cutting facilities globally and
the P&L. Ron Port, Chief
Commercial Officer for Metal Cutting, is responsible
for demand generation for the new segment including
sales, marketing, brand strategy, product management and digital
customer experience. Both will continue to report to President and
CEO, Christopher Rossi.
Simplification/Modernization
The benefits from the simplification/modernization program are
expected to increase year-over-year in FY21, bringing savings since
inception to approximately $180
million at fiscal year-end.
As part of this ongoing program, the Company is continuing with
footprint rationalization and is announcing today the closure of
its manufacturing facility in Johnson
City, Tennessee. The Johnson
City operations will be consolidated into other newly
modernized Kennametal facilities.
"This is the sixth plant closure since the beginning of our
program, not including the significant downsizing of the
Essen, Germany operation. These
footprint actions over the last 18 months are lowering our
structural and operating costs for improved performance throughout
the economic cycle," said Rossi. "Notably, this closure marks the
completion of the global footprint rationalization program as
outlined in our original simplification/modernization plan, making
it an important achievement for the Company. At the same time, we
recognize the effect this has on our employees and will support
them throughout the transition."
The closure is expected to be completed by the end of fiscal
2021 and is part of the Company's previously announced FY21
Restructuring Actions.
Q4 Restructuring Update
- During the fourth quarter, as part of its ongoing
simplification/modernization initiative, the Company announced the
acceleration of its structural cost reduction plans and increased
the estimated annualized benefits of its FY21 Restructuring Actions
to $65 million to $75 million from $25
million to $30 million and the
expected pre-tax charges to $90
million to $100 million from
$55 million to $60 million.
- In connection with the Company's simplification/modernization
initiative, total incremental benefits were approximately
$14 million in the quarter, which
includes incremental restructuring savings of approximately
$9 million. The Company achieved
annualized total savings inception to date from
simplification/modernization of $101
million.
- Pre-tax restructuring and related charges for the FY20 and FY21
Restructuring Actions in the quarter were $18 million, or $0.17 per share.
- FY20 Restructuring Actions, which are substantially complete,
resulted in annualized savings of approximately $33 million and pre-tax charges of $54 million inception to date.
Fiscal 2020 Fourth Quarter Key Developments
Sales were $379 million compared
with $604 million in the same quarter
last year. Sales decreased by 37 percent, driven by 33 percent
organic decline, 2 percent unfavorable currency exchange impact and
a 2 percent unfavorable impact from divestiture. COVID-19 affected
all regions and end markets during the quarter. As an essential
business, Kennametal facilities continued to operate throughout the
quarter, with the notable exception of our Bangalore, India plant, which was closed for
approximately half of the quarter due to a government mandated
lockdown. As of today, all our production facilities are
operating.
Operating income was $16 million,
or 4.1 percent margin, compared with $85
million, or 14.1 percent margin, in the same quarter last
year. The decrease in operating income was due primarily to organic
sales decline, unfavorable labor and fixed cost absorption due to
lower volumes, $18 million of pre-tax
restructuring and related charges compared to $10 million in the prior year quarter, partially
offset by approximately $14 million
of incremental simplification/modernization benefits, lower raw
material costs, lower variable compensation expense and other
benefits from cost-control measures previously announced including,
among other things, reductions in discretionary spending,
furloughs, extensive travel restrictions, and reduced production at
global manufacturing facilities to align with the current lower
demand environment. Adjusted operating income was $33 million, or 8.8 percent margin, compared with
$95 million, or 15.8 percent margin,
in the prior year quarter.
Reported LPS in the current quarter includes restructuring and
related charges of $0.17 and
differences in projected annual tax rates of $0.17 partially offset by the effect of the
Coronavirus Aid, Relief, and Economic Security (CARES) Act of
$0.08. Reported EPS in the prior year
quarter includes restructuring and related charges of $0.11 and a discrete benefit of $0.01 from the release of a valuation allowance
on Australian deferred tax assets.
The reported effective tax rate (ETR) was 186.1
percent and the adjusted ETR was 51.2 percent, compared
to reported ETR of 21.0 percent and adjusted ETR of 21.0 percent in
the prior year quarter. The increase in the year-over-year ETR is
primarily attributable to increased Global Intangible Low-Taxed
Income (GILTI) tax partially offset by the effect of the CARES Act
in the fourth quarter of fiscal 2020.
Fiscal 2020 Key Developments
Sales of $1,885 million decreased
from $2,375 million in the prior
year. Sales decreased by 21 percent, driven by 18 percent organic
decline, 2 percent unfavorable currency exchange impact and a 1
percent unfavorable impact from divestiture.
Operating income was $22 million,
or 1.2 percent margin, compared with $329
million, or 13.8 percent margin, in the prior year. The
decrease in operating income was due primarily to organic sales
decline, unfavorable labor and fixed cost absorption due to lower
volumes and simplification/modernization efforts in progress,
$113 million of restructuring and
asset impairment charges compared to $17
million in the prior year, partially offset by incremental
simplification/modernization benefits, lower raw material costs and
lower variable compensation expense. Adjusted operating income was
$141 million, or 7.5 percent margin,
compared with $346 million, or 14.6
percent margin, in the prior year.
Net cash flow provided by operating activities in fiscal 2020
was $224 million compared to
$301 million in the prior year. The
change in net cash flow provided by operating activities was driven
primarily by lower earnings. Free operating cash flow (FOCF) was
negative $18 million compared to
positive $99 million in the prior
year period. The change in FOCF was driven primarily by lower net
income and greater net capital expenditures related to
simplification/modernization initiatives, partially offset by lower
working capital requirements. We were in compliance with all
covenants and had full availability under the terms of the Credit
Agreement as of June 30, 2020.
Fiscal 2021 Outlook
Due to the uncertainty in the global economy caused by COVID-19,
visibility into the Company's primary end markets remains limited.
As a result, the Company will not be issuing annual FY21 outlook
outside of capital spending. Capital spending is expected to be
$110 million to $130 million, with the majority of the spending
occurring in the first half of the fiscal year. The Company will
provide more details regarding its fiscal 2021 assumptions on its
conference call on August 4, 2020 at
8:00 a.m. Eastern Time.
Fiscal 2020 Fourth Quarter Segment Results
Industrial sales of $195
million decreased 39 percent from $318 million in the prior year quarter due to
organic sales decline of 36 percent, unfavorable currency exchange
of 2 percent and a 1 percent decrease due to fewer business days.
Operating income was $4 million, or
1.8 percent margin, compared to $47
million, or 14.9 percent margin, in the prior year period.
The decrease in operating income was driven primarily by organic
sales decline, unfavorable labor and fixed cost absorption due to
lower volumes, partially offset by lower variable compensation
expense and other cost-control actions, incremental
simplification/modernization benefits and lower raw material costs.
Adjusted operating income was $15
million, or 7.7 percent margin, compared to $58 million, or 18.3 percent margin, in the prior
year quarter.
Widia sales of $32
million decreased 35 percent from $49
million in the prior year quarter, driven by organic decline
of 32 percent, unfavorable currency exchange of 2 percent and a 1
percent decrease due to fewer business days. Operating loss was
$3 million, or 10.3 percent loss
margin, compared to operating loss of $1
million, or 1.9 percent loss margin, in the prior year. The
change in operating results was driven primarily by organic sales
decline, unfavorable labor and fixed cost absorption due to lower
volumes, partially offset by lower variable compensation expense
and other cost-control actions and lower raw material costs.
Adjusted operating loss was $1
million, or 2.9 percent loss margin, compared to operating
income of $1 million, or 1.8 percent
margin, in the prior year.
Infrastructure sales of $152
million decreased 36 percent from $237 million in the prior year driven by organic
decline of 29 percent, a 4 percent unfavorable impact from
divestiture, unfavorable currency exchange of 2 percent and a 1
percent decrease due to fewer business days. Operating income was
$15 million, or 10.1 percent margin,
compared to $39 million, or 16.5
percent margin, in the prior year period. The change in operating
results was primarily driven by organic sales decline, unfavorable
labor and fixed cost absorption due to lower volumes, partially
offset by lower variable compensation expense and other
cost-control actions, lower raw material costs and incremental
simplification/modernization benefits. Adjusted operating income
was $19 million, or 12.7 percent
margin, compared to $37 million, or
15.5 percent margin, in the prior year quarter.
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
August 25, 2020 to shareholders of
record as of the close of business on August
11, 2020.
The Company will discuss its fiscal 2020 fourth quarter and full
year results in a live webcast at 8:00 a.m.
Eastern Time, Tuesday, August 4,
2020. The conference call will be broadcast via real-time
audio on the Kennametal website, 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
August 4, 2020 at 10:00 am through September
4, 2020.
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 2021 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: the duration of the COVID-19 pandemic and its impacts on
our business operations, financial results and financial position
and on the industries in which we operate and the global economy
generally; other economic recession; our ability to achieve all
anticipated benefits of restructuring, simplification and
modernization initiatives; 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; energy costs; commodity prices; 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 9,000 employees
are helping customers in more than 60 countries stay competitive.
Kennametal generated nearly $1.9
billion in revenues in fiscal 2020. 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
June 30,
|
|
Twelve Months
Ended June 30,
|
(in thousands,
except per share amounts)
|
2020
|
|
2019
|
|
2020
|
|
2019
|
Sales
|
$
|
379,053
|
|
|
$
|
603,949
|
|
|
$
|
1,885,305
|
|
|
$
|
2,375,234
|
|
Cost of goods
sold
|
277,599
|
|
|
390,230
|
|
|
1,355,834
|
|
|
1,543,738
|
|
Gross
profit
|
101,454
|
|
|
213,719
|
|
|
529,471
|
|
|
831,496
|
|
Operating
expense
|
68,162
|
|
|
116,097
|
|
|
388,436
|
|
|
474,151
|
|
Restructuring and
asset impairment charges
|
14,273
|
|
|
9,023
|
|
|
98,455
|
|
|
14,084
|
|
Loss on
divestiture
|
—
|
|
|
—
|
|
|
6,517
|
|
|
—
|
|
Amortization of
intangibles
|
3,398
|
|
|
3,631
|
|
|
13,811
|
|
|
14,411
|
|
Operating
income
|
15,621
|
|
|
84,968
|
|
|
22,252
|
|
|
328,850
|
|
Interest
expense
|
11,320
|
|
|
8,689
|
|
|
35,154
|
|
|
32,994
|
|
Other income,
net
|
(5,532)
|
|
|
(3,603)
|
|
|
(14,862)
|
|
|
(15,379)
|
|
Income before income
taxes
|
9,833
|
|
|
79,882
|
|
|
1,960
|
|
|
311,235
|
|
Provision for income
taxes
|
18,302
|
|
|
16,805
|
|
|
7,007
|
|
|
63,359
|
|
Net (loss)
income
|
(8,469)
|
|
|
63,077
|
|
|
(5,047)
|
|
|
247,876
|
|
Less: Net income
attributable to noncontrolling interests
|
637
|
|
|
1,099
|
|
|
614
|
|
|
5,951
|
|
Net (loss) income
attributable to Kennametal
|
$
|
(9,106)
|
|
|
$
|
61,978
|
|
|
$
|
(5,661)
|
|
|
$
|
241,925
|
|
PER SHARE DATA
ATTRIBUTABLE TO KENNAMETAL SHAREHOLDERS
|
|
|
|
|
Basic (loss) earnings
per share
|
$
|
(0.11)
|
|
|
$
|
0.75
|
|
|
$
|
(0.07)
|
|
|
$
|
2.94
|
|
Diluted (loss)
earnings per share
|
$
|
(0.11)
|
|
|
$
|
0.74
|
|
|
$
|
(0.07)
|
|
|
$
|
2.90
|
|
Dividends per
share
|
$
|
0.20
|
|
|
$
|
0.20
|
|
|
$
|
0.80
|
|
|
$
|
0.80
|
|
Basic weighted
average shares outstanding
|
83,119
|
|
|
82,598
|
|
|
83,047
|
|
|
82,379
|
|
Diluted weighted
average shares outstanding
|
83,119
|
|
|
83,430
|
|
|
83,047
|
|
|
83,291
|
|
CONDENSED
CONSOLIDATED BALANCE SHEETS (UNAUDITED)
|
|
|
|
|
|
(in
thousands)
|
June 30,
2020
|
|
June 30,
2019
|
ASSETS
|
|
|
|
Cash and cash
equivalents
|
$
|
606,684
|
|
|
$
|
182,015
|
|
Accounts receivable,
net
|
237,983
|
|
|
379,855
|
|
Inventories
|
522,447
|
|
|
571,576
|
|
Other current
assets
|
73,698
|
|
|
57,381
|
|
Total current
assets
|
1,440,812
|
|
|
1,190,827
|
|
Property, plant and
equipment, net
|
1,038,271
|
|
|
934,895
|
|
Goodwill and other
intangible assets, net
|
403,148
|
|
|
461,009
|
|
Other
assets
|
155,360
|
|
|
69,538
|
|
Total
assets
|
$
|
3,037,591
|
|
|
$
|
2,656,269
|
|
LIABILITIES
|
|
|
|
Revolving and other
lines of credit and notes payable to banks
|
$
|
500,368
|
|
|
$
|
157
|
|
Accounts
payable
|
164,641
|
|
|
212,908
|
|
Other current
liabilities
|
233,071
|
|
|
248,661
|
|
Total current
liabilities
|
898,080
|
|
|
461,726
|
|
Long-term
debt
|
594,083
|
|
|
592,474
|
|
Other
liabilities
|
276,640
|
|
|
227,365
|
|
Total
liabilities
|
1,768,803
|
|
|
1,281,565
|
|
KENNAMETAL
SHAREHOLDERS' EQUITY
|
1,229,885
|
|
|
1,335,172
|
|
NONCONTROLLING
INTERESTS
|
38,903
|
|
|
39,532
|
|
Total liabilities
and equity
|
$
|
3,037,591
|
|
|
$
|
2,656,269
|
|
|
|
|
|
|
|
SEGMENT DATA
(UNAUDITED)
|
Three Months Ended
June 30,
|
Twelve Months
Ended June 30,
|
(in
thousands)
|
2020
|
|
2019
|
2020
|
|
2019
|
Outside
Sales:
|
|
|
|
|
|
|
Industrial
|
$
|
195,050
|
|
|
$
|
317,984
|
|
$
|
1,015,058
|
|
|
$
|
1,274,499
|
|
Widia
|
31,880
|
|
|
48,930
|
|
162,995
|
|
|
197,522
|
|
Infrastructure
|
152,123
|
|
|
237,035
|
|
707,252
|
|
|
903,213
|
|
Total
sales
|
$
|
379,053
|
|
|
$
|
603,949
|
|
$
|
1,885,305
|
|
|
$
|
2,375,234
|
|
Sales By
Geographic Region:
|
|
|
|
|
|
|
Americas
|
$
|
179,409
|
|
|
$
|
308,096
|
|
$
|
926,345
|
|
|
$
|
1,195,770
|
|
EMEA
|
110,273
|
|
|
173,803
|
|
561,033
|
|
|
701,309
|
|
Asia
Pacific
|
89,371
|
|
|
122,050
|
|
397,927
|
|
|
478,155
|
|
Total
sales
|
$
|
379,053
|
|
|
$
|
603,949
|
|
$
|
1,885,305
|
|
|
$
|
2,375,234
|
|
Operating Income
(Loss):
|
|
|
|
|
|
|
Industrial
|
$
|
3,513
|
|
|
$
|
47,416
|
|
$
|
35,671
|
|
|
$
|
220,696
|
|
Widia
|
(3,276)
|
|
|
(935)
|
|
(34,686)
|
|
|
2,882
|
|
Infrastructure
|
15,434
|
|
|
39,073
|
|
23,113
|
|
|
108,480
|
|
Corporate
(1)
|
(50)
|
|
|
(586)
|
|
(1,846)
|
|
|
(3,208)
|
|
Total operating
income
|
$
|
15,621
|
|
|
$
|
84,968
|
|
$
|
22,252
|
|
|
$
|
328,850
|
|
(1) 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 (loss)
income attributable to Kennametal shareholders; diluted (LPS) EPS;
Industrial operating income and margin; Widia operating (loss)
income and margin; Infrastructure operating income and margin;
FOCF; 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 June 30, 2020 include:
(1) restructuring and related charges, (2) the CARES Act and (3)
differences in projected annual tax rates. Adjustments for the
three months ended June 30, 2019
include: (1) restructuring and related charges and (2) release of
valuation allowance on Australian deferred tax assets. Adjustments
for the twelve months ended June 30,
2020 include: (1) restructuring and related charges, (2)
goodwill and other intangible asset impairment charges, (3) loss on
divestiture, (4) discrete benefit from Swiss tax reform, (5) the
CARES Act and (6) other tax matters. Adjustments for
the twelve months ended June 30, 2019 include:
(1) restructuring and related charges, (2) tax charge from change
in permanent reinvestment assertion, (3) net discrete effects of
tax reform and (4) release of valuation allowance on Australian
deferred tax assets. 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.
THREE MONTHS ENDED
JUNE 30, 2020 (UNAUDITED)
|
|
(in thousands,
except percents)
|
Sales
|
Operating
income
|
ETR
|
Net
(loss)
income
(2)
|
Diluted
(L)EPS
|
Reported
results
|
$
|
379,053
|
|
$
|
15,621
|
|
186.1
|
%
|
$
|
(9,106)
|
|
$
|
(0.11)
|
|
Reported
margins
|
|
4.1
|
%
|
|
|
|
Restructuring and
related charges
|
—
|
|
17,855
|
|
18.7
|
|
14,454
|
|
0.17
|
|
CARES Act
|
—
|
|
—
|
|
70.3
|
|
(6,913)
|
|
(0.08)
|
|
Differences in
projected annual tax rates (3)
|
—
|
|
—
|
|
(223.9)
|
|
14,393
|
|
0.17
|
|
Adjusted
results
|
$
|
379,053
|
|
$
|
33,476
|
|
51.2
|
%
|
$
|
12,828
|
|
$
|
0.15
|
|
Adjusted
margins
|
|
8.8
|
%
|
|
|
|
(2)
Attributable to Kennametal Shareholders
|
(3) Represents
a change in the method in which management calculates the tax
effect on adjustments within the non-GAAP reconciliations. By
separately presenting the effect of the differences in projected
annual tax rates during the current period, management believes
that the tax effects related to restructuring and related charges
and the CARES Act are more accurately reflected. This change does
not affect adjusted results. The effect of the differences in
projected annual tax rates was immaterial during the three months
ended June 30, 2019 and, therefore, the prior period has not been
retrospectively adjusted.
|
|
|
|
THREE MONTHS ENDED
JUNE 30, 2020 (UNAUDITED)
|
|
Industrial
|
Widia
|
Infrastructure
|
(in thousands,
except percents)
|
Sales
|
Operating
income
|
Sales
|
Operating (loss)
income
|
Sales
|
Operating
income
|
Reported
results
|
$
|
195,050
|
|
$
|
3,513
|
|
$
|
31,880
|
|
$
|
(3,276)
|
|
$
|
152,123
|
|
$
|
15,434
|
|
Reported operating
margin
|
|
1.8
|
%
|
|
(10.3)
|
%
|
|
10.1
|
%
|
Restructuring and
related charges
|
—
|
|
11,601
|
|
—
|
|
2,364
|
|
—
|
|
3,957
|
|
Adjusted
results
|
$
|
195,050
|
|
$
|
15,114
|
|
$
|
31,880
|
|
$
|
(912)
|
|
$
|
152,123
|
|
$
|
19,391
|
|
Adjusted operating
margin
|
|
7.7
|
%
|
|
(2.9)
|
%
|
|
12.7
|
%
|
|
|
|
|
|
|
THREE MONTHS ENDED
JUNE 30, 2019 (UNAUDITED)
|
|
|
(in thousands,
except percents)
|
Sales
|
Operating
income
|
ETR
|
Net
income
(2)
|
Diluted
EPS
|
Reported
results
|
$
|
603,949
|
|
$
|
84,968
|
|
21.0
|
%
|
$
|
61,978
|
|
$
|
0.74
|
|
Reported
margins
|
|
14.1
|
%
|
|
|
|
Restructuring and
related charges(4)
|
—
|
|
10,286
|
|
(1.3)
|
|
9,219
|
|
0.11
|
|
Release of valuation
allowance on Australian deferred tax assets
|
—
|
|
—
|
|
1.3
|
|
(1,066)
|
|
(0.01)
|
|
Adjusted
results
|
$
|
603,949
|
|
$
|
95,254
|
|
21.0
|
%
|
$
|
70,131
|
|
$
|
0.84
|
|
Adjusted
margins
|
|
15.8
|
%
|
|
|
|
(4)
Net of a $5 million gain from the sale of the Infrastructure
segment's Madison, AL manufacturing facility which was previously
closed as part of our simplification/modernization restructuring
programs.
|
|
|
THREE MONTHS ENDED
JUNE 30, 2019 (UNAUDITED)
|
|
Industrial
|
Widia
|
Infrastructure
|
(in thousands,
except percents)
|
Sales
|
Operating
income
|
Sales
|
Operating
(loss) income
|
Sales
|
Operating
income
|
Reported
results
|
$
|
317,984
|
|
$
|
47,416
|
|
$
|
48,930
|
|
$
|
(935)
|
|
$
|
237,035
|
|
$
|
39,073
|
|
Reported operating
margin
|
|
14.9
|
%
|
|
(1.9)
|
%
|
|
16.5
|
%
|
Restructuring and
related charges(4)
|
—
|
|
10,909
|
|
—
|
|
1,808
|
|
—
|
|
(2,432)
|
|
Adjusted
results
|
$
|
317,984
|
|
$
|
58,325
|
|
$
|
48,930
|
|
$
|
873
|
|
$
|
237,035
|
|
$
|
36,641
|
|
Adjusted operating
margin
|
|
18.3
|
%
|
|
1.8
|
%
|
|
15.5
|
%
|
|
|
|
|
|
|
TWELVE MONTHS
ENDED JUNE 30, 2020 - (UNAUDITED)
|
|
|
(in thousands,
except percents)
|
Sales
|
Operating
income
|
Net (loss) income
(2)
|
Diluted
(L)EPS
|
Reported
results
|
$
|
1,885,305
|
|
$
|
22,252
|
|
$
|
(5,661)
|
|
$
|
(0.07)
|
|
Reported operating
margin
|
|
1.2
|
%
|
|
|
Restructuring and
related charges
|
—
|
|
82,366
|
|
73,954
|
|
0.88
|
|
Goodwill and other
intangible asset impairment charges
|
—
|
|
30,227
|
|
27,611
|
|
0.33
|
|
Loss on
divestiture
|
—
|
|
6,517
|
|
5,148
|
|
0.06
|
|
Discrete benefit from
Swiss tax reform
|
—
|
|
—
|
|
(14,500)
|
|
(0.17)
|
|
CARES Act
|
—
|
|
—
|
|
(6,913)
|
|
(0.08)
|
|
Other tax
matters
|
—
|
|
—
|
|
(788)
|
|
(0.01)
|
|
Adjusted
results
|
$
|
1,885,305
|
|
$
|
141,362
|
|
$
|
78,851
|
|
$
|
0.94
|
|
Adjusted operating
margin
|
|
7.5
|
%
|
|
|
|
|
|
|
|
|
TWELVE MONTHS
ENDED JUNE 30, 2019 - (UNAUDITED)
|
|
|
(in thousands,
except percents)
|
Sales
|
Operating
income
|
Net income
(2)
|
Diluted
EPS
|
Reported
results
|
$
|
2,375,234
|
|
$
|
328,850
|
|
$
|
241,925
|
|
$
|
2.90
|
|
Reported operating
margin
|
|
13.8
|
%
|
|
|
Restructuring and
related charges
|
—
|
|
16,850
|
|
14,212
|
|
0.17
|
|
Tax charge from change
in permanent reinvestment assertion(5)
|
—
|
|
—
|
|
6,093
|
|
0.07
|
|
Net discrete effects
from tax reform(6)
|
—
|
|
—
|
|
(9,281)
|
|
(0.11)
|
|
Release of valuation
allowance on Australian deferred tax assets
|
—
|
|
—
|
|
(1,066)
|
|
(0.01)
|
|
Adjusted
results
|
$
|
2,375,234
|
|
$
|
345,700
|
|
$
|
251,883
|
|
$
|
3.02
|
|
Adjusted operating
margin
|
|
14.6
|
%
|
|
|
(5) As a result of TCJA, the
Company reevaluated its permanent reinvestment assertion in certain
jurisdictions, concluding that the unremitted earnings and profits
of certain of our non-U.S. subsidiaries and affiliates will no
longer be permanently reinvested. This change in assertion required
the recognition of a tax charge
of $6 million primarily for foreign withholding and
state income taxes.
|
(6)
Net discrete benefits recorded to reflect the effect of regulations
and other relevant guidance issued through June 30, 2019 on
the toll tax.
|
Free Operating Cash Flow (FOCF)
FOCF is a non-GAAP financial measure and is defined by the
Company as cash provided by operations (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.
FREE OPERATING
CASH FLOW (UNAUDITED)
|
Twelve Months
Ended
|
|
June
30,
|
(in
thousands)
|
2020
|
|
2019
|
Net cash flow from
operating activities
|
$
|
223,738
|
|
|
$
|
300,519
|
|
Purchases of
property, plant and equipment
|
(244,151)
|
|
|
(212,343)
|
|
Proceeds from
disposals of property, plant and equipment
|
2,622
|
|
|
11,243
|
|
Free operating cash
flow
|
$
|
(17,791)
|
|
|
$
|
99,419
|
|
Organic Sales Decline
Organic sales decline is a non-GAAP financial measure of sales
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
(DECLINE) GROWTH (UNAUDITED)
|
|
|
|
|
THREE MONTHS ENDED
JUNE 30, 2020
|
|
Industrial
|
|
Widia
|
|
Infrastructure
|
|
Total
|
Organic sales
decline
|
|
(36)%
|
|
(32)%
|
|
(29)%
|
|
(33)%
|
Foreign currency
exchange impact(7)
|
|
(2)
|
|
(2)
|
|
(2)
|
|
(2)
|
Business days
impact(8)
|
|
(1)
|
|
(1)
|
|
(1)
|
|
—
|
Divestiture
impact(9)
|
|
—
|
|
—
|
|
(4)
|
|
(2)
|
Sales
decline
|
|
(39)%
|
|
(35)%
|
|
(36)%
|
|
(37)%
|
|
|
|
TWELVE MONTHS
ENDED JUNE 30, 2020
|
|
Total
|
Organic sales
decline
|
|
(18)%
|
Foreign currency
exchange impact
|
|
(2)
|
Divestiture
impact
|
|
(1)
|
Sales
decline
|
|
(21)%
|
(7) Foreign currency exchange impact
is calculated by dividing the difference between current period
sales and current period sales at prior period foreign exchange
rates by prior period sales.
|
(8) 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.
|
(9) Divestiture impact is calculated
by dividing prior period sales attributable to divested businesses
by prior period sales.
|
View original
content:http://www.prnewswire.com/news-releases/kennametal-announces-fourth-quarter-and-fiscal-2020-results-301104990.html
SOURCE Kennametal Inc.