) reported financial results for the first quarter of fiscal year
2014 (ended Sep 30, 2013) on Oct 24, 2013. Adjusted earnings per
share in the quarter came in at 53 cents, below 57 cents earnings
reported in the year-ago and the Zacks Consensus Estimate of 55
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Adjusted earnings per share exclude 4 cents of non-recurring
inventory charges and 1 cent of acquisition related charges.
Kennametal reported a 1.5% year-over-year decline in its revenue
that settled at $619.8 million in the first quarter of fiscal
2014. The decline can be attributed to a fall of 3% in organic
revenue, offset partially by 1% positive impact from more
A brief discussion on the segments of Kennametal is given below:
Industrial segment revenue in the quarter grew 0.9% year over
year and came in at $338.2 million. The increase can be
attributed to improvements in general engineering, transportation
and energy, offset partially by weakness in aerospace and
defense. On a geographical basis, revenues in Europe grew,
remained flat in Americas and plummeted in Asia.
Infrastructure segment reported 4.3% year-over-year decline in
revenue that came in at $281.6 million. The decline can be
attributed to weak results in the earthworks, energy and
transportation markets, offset by strength seen in general
engineering. Revenues in Europe grew but declined in the Americas
On a geographical basis, revenue in North America plummeted 4.8%
year over year to $269.5 million; revenue from Western Europe was
$187.6 million, up 5.2% year over year while revenue from Rest of
the World was about $162.7 million, down 3.1% year over year.
Cost of revenue in the first quarter went up 0.1% year over year
and represented 68.0% of total revenue; up from 66.9% in the
year-ago quarter. Operating expenses, as a percentage of total
revenue, stood at 21.7%. Adjusted operating margin in the quarter
was 9.7%, down 110 basis points year over year.
Exiting the fiscal first quarter 2014, cash and cash equivalents
of Kennametal stood at $333.3 million, down 11.7% from $377.3
million in the previous quarter. Long-term debt and capital
leases slightly declined to $703.4 million versus $703.6 million
in the previous quarter.
Kennametal reported $44.4 million net cash flow from operating
activities in the first quarter of fiscal 2014, way above $3.1
million generated in the year-ago quarter. Capital expenditure in
the quarter increased 58.0% year over year to $25.0 million. Free
cash flow was approximately $19.6 million compared with ($12.2)
million in the year-ago quarter.
During the quarter, Kennametal bought back 100,000 shares under
its share buyback program announced in Jul 2013. Roughly 10.3
million shares buyback authorization is left.
Besides the financial result announcement, Kennametal also
announced to have received its board of directors approval for
payment of a quarterly cash dividend of 18 cents. The dividend
will be paid on Nov 26, 2013 to shareholders of record on Nov 5,
For fiscal 2014, management of Kennametal anticipates total sales
growth to vary within 5%-7% range versus 4%-6% range expected
earlier. Organic revenue growth is anticipated to be within 4%-6%
range compared with 5%-7% range expected earlier.
Earnings per share guidance has been lowered to a range of
$2.90-$3.05 from $2.90-$3.10 expected earlier.
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
), each with a Zacks Rank #2 (Buy).