) reported its financial results for the fourth quarter and
fiscal year 2013 (ended Jun 30, 2013) on Jul 25, 2013. Adjusted
earnings per share in the fourth quarter came in at 76 cents, way
below $1.06 earnings reported in the year-ago quarter but above
the Zacks Consensus Estimate of 73 cents.
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KENNAMETAL INC (KMT): Free Stock Analysis
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For fiscal year 2013, adjusted earnings per share were $2.49,
down from $3.86 reported in the previous year. The results,
however, were in-line with the Zacks Consensus Estimate.
Kennametal reported a 9.2% year-over-year decline in its revenue
that settled at $671.4 million in the fourth quarter of fiscal
2013. The decline can be attributed to a fall of 8% in organic
revenue and 1% negative impact from foreign currency
Adjusted revenue in the quarter came in at $614.3 million, down
compared with $671.7 million in the year-ago quarter.
A brief discussion on the segments of Kennametal is given below:
Industrial segment generated revenues of $383.7 million in the
fourth quarter, down 8.9% from the year-ago quarter as weakness
in general engineering, transportation and aerospace and defense
impacted results adversely. Moreover, revenues across the
Americas, Asia and Europe declined.
Infrastructure segment reported 9.5% year-over-year decline in
revenue that came in at $287.7 million. The decline can be
attributed to weak results from energy and earthworks markets. On
an adjusted basis, Infrastructure revenue in the quarter was
$230.5 million, down compared with $250.5 million. Moreover,
revenues across the Americas, Asia and Europe declined.
On a geographical basis, revenue in North America plummeted 11.8%
year over year to $293.0 million; revenue from Western Europe was
$202.2 million, down 7.5% year over year while revenue from Rest
of the World was about $176.2 million, down 6.5% year over year.
For the fiscal year 2013, total revenue came in at $2,589.4
million, down 5.4% year over year.
Cost of revenue in the fourth quarter went down 6.7% year over
year and represented 65.9% of total revenue; up from 64.2% in the
year-ago quarter. Operating expenses, as a percentage of total
revenue, stood at 19.8%. Adjusted operating margin in the quarter
was 14.6%, down 300 basis points year over year.
Exiting the fiscal fourth quarter 2013, cash and cash equivalents
of Kennametal stood at $377.3 million compared with $322.1
million in the previous quarter. Long-term debt and capital
leases slightly declined to $703.6 million versus $703.9 million
in the previous quarter.
Kennametal reported $284.2 million net cash flow from operating
activities in fiscal 2013, down slightly compared with $289.6
million in 2012. Capital expenditure in the year declined to
$82.8 million from $103.0 million in 2012. Free cash flow was
approximately $204.3 million compared with $193.4 million the
During fiscal 2013, Kennametal repurchased approximately 3.1
million shares, including 1.0 million share buyback activities
carried out in the fourth quarter.
Apart from declaring its financial results, Kennametal's board of
directors approved a 12.5% increase in its quarterly dividend
rate. The revised rate of 18 cents will be paid on Aug 21, 2013
to shareholders of record as on Aug 6, 2013.
Also, Kennametal announced its second amended multi-year
repurchase program, which now stands at 17 million shares versus
12 million expected earlier. Exiting the fiscal year 2013,
roughly 10.4 million shares remained in authorization under the
For fiscal 2014, management of Kennametal anticipates total sales
growth to vary within 4%-6% range while organic revenue is
predicted to grow within the 5%-7% range. Earnings per share are
expected to fall within the $2.90-$3.10 range. At mid-point, the
guidance reflects year-over-year increase of 19%.
Kennametal anticipates cash flow from operating activities to
range within $330-$380 million, capital expenditure to be within
the $130-$150 million range and free cash flow to be within the
$200-$230 million range.
Kennametal currently carries a Zacks Rank #3 (Hold). Other stocks
to watch out for in the industry are
Lincoln Electric Holdings Inc.
Chart Industries Inc.
Gardner Denver Inc.
), each with a Zacks Rank #2 (Buy).