Q2 2026 Kennametal Inc Earnings Call Transcript
Key Points
- Kennametal Inc (KMT) reported a 10% year-over-year organic sales increase, marking the second consecutive quarter of organic growth.
- The company secured significant mining orders in the Asia Pacific and EMEA regions, contributing to its infrastructure segment's 11% organic growth.
- Adjusted EBITDA margin improved to 17.1% from 13.9% in the prior-year quarter, driven by favorable price/raw material cost timing and restructuring savings.
- Kennametal Inc (KMT) raised its fiscal 2026 sales and EPS outlook, reflecting additional pricing actions related to rising tungsten costs.
- The company is well-positioned to capitalize on the growing demand for electricity, with products supporting energy transmission and use, particularly in AI data centers and electric vehicles.
- The unprecedented increase in tungsten prices has led to higher working capital requirements, impacting free operating cash flow.
- Despite improvements, the transportation market remains flat, with production volumes in the Americas slightly declining.
- Higher compensation costs, tariffs, and general inflation partially offset the benefits from restructuring savings and pricing actions.
- The company did not repurchase shares in the second quarter due to increased working capital needs from rising tungsten prices.
- Some restructuring actions in EMEA are taking longer to execute, affecting the anticipated cost savings timeline.
Good morning. I would like to welcome everyone to Kennametal second quarter in fiscal 2026 earnings conference call. (Operator Instructions) Please note this event is being recorded. I would now like to turn the conference over to Michael Pici, Vice President of Investor Relations.
Thank you, operator. Welcome, everyone, and thank you for joining us to review Kennametal's second quarter fiscal 2026 results. This morning we issued our earnings press release and posted our presentation slides on our website. We will be referring to that slide deck throughout today's call. I'm Michael Pici, Vice President of Investor Relations. Joining me on the call today are Sanjay Chowbey, President and Chief Executive Officer; and Pat Watson, Vice President and Chief Financial Officer.
After Sanjay and Pat's prepared remarks, we will open the line for questions. At this time, I'd like to direct your attention to our forward-looking disclosure statement. Today's discussion contains comments that
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