Kennametal (KMT) Q2 2025 earnings summary

Executive summary

• Q2 FY25 sales were $482 million, down 3% year-over-year, with a 6% organic decline partially offset by a 3% favorable business days effect; adjusted EPS was $0.25, down from $0.30, and reported EPS was $0.23.

• Lower industrial activity, especially in EMEA, drove declines, while Aerospace & Defense was the only end market with positive growth.

• Adjusted EBITDA margin improved to 13.9% from 12.4% year-over-year, aided by lower raw material costs, restructuring savings, and insurance recoveries.

• Announced plant closures and workforce reductions targeting $15 million in annualized pre-tax savings by end of fiscal 2025, with $25 million in related pre-tax charges.

• Returned $31 million to shareholders via $15 million in share repurchases and $16 million in dividends during the quarter.

Financial highlights

• Sales: $482 million, down 3% reported and 6% organic year-over-year; gross profit was $145 million (30.1% margin), up from $139.6 million (28.2% margin).

• Adjusted operating income was $33 million (6.9% margin), up 90 bps year-over-year; operating income was $32 million (6.6% margin).

• Adjusted EBITDA was $67 million (13.9% margin), up 150 bps year-over-year.

• Net income attributable to Kennametal was $17.9 million, down from $23.1 million year-over-year.

• Free operating cash flow year-to-date was $57 million, up from $36 million.

Outlook and guidance

• Q3 sales expected between $480–$500 million, with a 3% FX headwind; adjusted EPS guidance: $0.20–$0.30.

• FY25 sales outlook: $1.95–$2.0 billion; adjusted EPS guidance: $1.05–$1.30; free operating cash flow expected to exceed 125% of adjusted net income.

• Capital spending for FY25 expected at $100 million.

• Adjusted effective tax rate for FY25 expected at 27.5%.