Kennametal Inc (FRA:KM3)

Q4 2026 Kennametal Inc Earnings Call Transcript

Aug 5, 2026 / 01:30 PM GMT

Release Date Price: €31 (+2.65%)

Transcript 8-K

Key Points

Positve

Kennametal Inc (KMT) delivered a strong fiscal 2026, with full-year organic sales up 19% and record adjusted EBITDA margins of 26.9%, driven by price realization and volume improvements.
The company is capitalizing on high-growth opportunities, particularly in aerospace and defense, with a new focus on the $500 million market for cutting tools used on carbon fiber reinforced plastics (CFRP), which is expected to grow 9% annually through 2028.
Kennametal Inc (KMT) continues to outperform public peers in its metal cutting segment, marking the fourth consecutive quarter of outgrowth and extending a favorable trend that started four years ago.
The company's strategic growth initiatives are paying off, with aerospace and defense now projected to become its third-largest end market, driven by share gains and key wins on defense programs.
Kennametal Inc (KMT) is confident in its fiscal 2027 outlook, expecting broad-based growth across most end markets, with energy recast to high single-digit growth and continued strength in aerospace and defense.
The company realized $27 million in restructuring savings in fiscal 2026 and remains committed to achieving $110 million in total savings by the end of fiscal 2027, supporting margin expansion.
Kennametal Inc (KMT) has taken decisive actions to enhance liquidity and extend debt maturities, providing financial flexibility to navigate the high-tungsten-price environment and capture near-term growth opportunities.
The company is leveraging its core competencies in material science and application engineering to win new business and expand share of wallet with key customers across diverse end markets.

Negative

Kennametal Inc (KMT) experienced a significant negative free cash flow of -$79 million for fiscal 2026, primarily due to increased working capital requirements driven by higher tungsten prices.
The company's share repurchase program remains paused due to the higher tungsten pricing and corresponding working capital needs, limiting shareholder returns through buybacks.
Kennametal Inc (KMT) faces a $0.23 per share headwind from the Bolivian government ending its preferential exchange rate program, impacting earnings.
Higher interest expense is expected to be a $0.25 per share drag in fiscal 2027, reflecting increased debt levels following recent financing actions to fund working capital needs.
The company's fiscal 2027 adjusted EPS outlook of $4.15 to $5.15 is essentially flat year-over-year at the midpoint, as operational momentum is offset by non-operational headwinds like FX, interest, and a higher tax rate.
Kennametal Inc (KMT) expects free operating cash flow to be only approximately 20% of net income in fiscal 2027, reflecting continued working capital pressure from elevated tungsten costs.
The transportation end market remains soft, with global light vehicle production expected to decline about 1% in fiscal 2027, mainly in the Americas and Europe.
In earthworks, mining share gains are partially offset by soft core markets in the US and China, and the company assumes normal seasonality and competitive pressures in road construction.
The company anticipates a significant cash draw of around $200 million in the first quarter of fiscal 2027, with free cash flow not expected to turn positive until the second half of the year.

Refinitiv StreetEvents Event Transcript
E D I T E D V E R S I O N

KMT.N - Kennametal Inc.
Q4 2026 Kennametal Inc Earnings Call
Aug 05, 2026 / 01:30PM GMT

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Presentation
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Unidentified_1 [1]
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Good morning.

I would like to welcome everyone to kind of metal, 4th quarter and fiscal 2026 earnings conference call lines have been placed on mute to prevent any background noise.

After the speaker's remarks, there will be a question-and-answer session.

If you would like to ask a question during this time, please simply press the star, then the number 1 on your telephone keypad.

If you would like to withdraw your question, please press the star, then the number 2.

Please note that this event is being recorded.

And I like to turn the conference over to Michael Peay.

Vice President of Investor Relations, please go ahead, sir.

Thank you, operator.

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