Specialty cutting tool insert maker, Kennametal, Inc. (KMT, Financial) also weighed on results in the period, as investors were concerned about near-term challenges for automotive production due to semiconductor constraints. In our view, these headwinds are short-term in nature and we remain focused on KMT’s improving sales and free cash flow profile, solid operating discipline, as well as its continued execution on simplification/modernization initiatives. We believe the scale, scope, quality, low-cost production and the value proposition of the cutting tools themselves will continue to mitigate pricing pressure in recovering markets. Additionally, KMT is executing on its strategic plan to improve economies of scale and generate margin improvement, while gaining share in the marketplace.
From John Rogers (Trades, Portfolio)' Ariel Fund second-quarter 2021 commentary.
