Kennametal Inc. KMT reported adjusted earnings of 77 cents per share for the third quarter of fiscal 2026 (ended March 31, 2026), up 63.8% year over year. The bottom line beat the Zacks Consensus Estimate of 68 cents.
KMT’s Revenue Details
Sales were $592.6 million, up 22.0% from the year-ago quarter. The top line topped the Zacks Consensus Estimate of $567 million. The quarter benefited from stronger volume and pricing.
Organic sales rose 19% year over year. Foreign currency translation had a positive impact of 5% on sales, while divestitures had an adverse impact of 2%.
Regionally (in constant currency), growth was strongest in the Americas (up 27%) and Asia Pacific (up 25%), while EMEA increased 2%. End-market performance also skewed positive, led by Earthworks (up 43%), Energy (up 28%) and Aerospace & Defense (up 23%).
Kennametal’s Segment Highlights
Kennametal reports results under two business segments, namely Metal Cutting and Infrastructure. Its segmental performance for the fiscal third quarter is briefly discussed below:
The Metal Cutting segment’s revenues of $358 million increased 18% year over year. Organic revenues grew 12% and currency exchange had a positive impact of 6% year over year.
The Infrastructure segment’s revenues totaled $235 million, up 29% year over year. Organic revenues increased 30% and currency exchange had a positive impact of 4% year over year. This was partially offset by the negative impact of 5% from divestitures.
KMT’s Margin Profile
Kennametal’s cost of goods sold increased 16.5% year over year. Gross profit rose 33.0% year over year to $208.0 million, while the margin increased 300 basis points (bps) to 35.1%. Operating expenses were $124.0 million, up 19.2% year over year.
Operating income increased 79.5% year over year to $79.4 million. Operating margin increased 430 bps year over year to 13.4%. The results were driven by favorable impacts of pricing and tariff surcharges, higher sales and production volume and restructuring savings, offset by increased compensation costs and general inflation.
Interest expenses were $6.3 million, up 0.8% from the year-ago quarter’s figure. The adjusted effective tax rate was 23.1%.
Kennametal’s Cash Flow and Balance Sheet
While exiting the fiscal third quarter, Kennametal’s cash and cash equivalents were $106.9 million compared with $140.5 million at the end of fiscal 2025. Long-term debt was $597.4 million compared with $596.8 million at the end of fiscal 2025.
In the first nine months of fiscal 2026, Kennametal generated net cash of $69.7 million in operating activities compared with $129.7 million in the previous fiscal year’s comparable period. Capital invested in purchasing property, plant and equipment was $53.7 million, down 20.5% from $67.5 million in the prior fiscal year period. Free operating cash flow was $18 million compared with $63 million in the previous fiscal year’s period.
KMT paid a dividend of $45.6 million and repurchased shares worth $10.1 million.
KMT’s Dividend Update
Kennametal announced that its board of directors approved a quarterly cash dividend of 20 cents per share to its shareholders of record as of May 12, 2026. The disbursement will be made on May 26.
KMT’s Outlook and Capital Allocation
KMT has updated its fiscal 2026 (ending June 2026) outlook. The company currently anticipates sales to be in the range of $2.33-$2.35 billion. Adjusted earnings per share are expected to be in the range of $3.75-$4.00. Free operating cash flow is projected to be approximately (30)% of adjusted net income, while capital spending is expected to be approximately $85 million.
For fiscal 2026, Kennametal expects interest expense of about $25 million and an adjusted effective tax rate of about 25%. The outlook also assumes restructuring savings of about $30 million, with share repurchases paused.
KMT’s Zacks Rank
The company currently sports a Zacks Rank #1 (Strong Buy).
You can see the complete list of today’s Zacks #1 Rank stocks here.
Performance of Other Companies
Graco Inc. GGG posted quarterly earnings of 66 cents per share in the first quarter of 2026, missing the Zacks Consensus Estimate of 75 cents per share. This compares with earnings of 70 cents per share a year ago.
Graco posted revenues of $540.1 million for the quarter, missing the Zacks Consensus Estimate by 3.5%. This compares with year-ago revenues of $528.3 million.
Stanley Black & Decker, Inc. SWK reported first-quarter 2026 adjusted earnings of 80 cents per share, which beat the Zacks Consensus Estimate of 61 cents. The bottom line increased 6.7% year over year.
Stanley Black’s net sales of $3.85 billion beat the consensus estimate of $3.74 billion. The top line increased 2.7% from the year-ago quarter.
Ingersoll Rand Inc. IR reported first-quarter 2026 adjusted earnings of 77 cents per share, which surpassed the Zacks Consensus Estimate of 74 cents. The bottom line increased 7% year over year.
Total revenues of $1.85 billion beat the consensus estimate of $1.83 billion. The top line increased 7.6% year over year.
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This article originally published on Zacks Investment Research (zacks.com).
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