Kennametal (KMT) Q4 2024 earnings summary

Executive summary

• Q4 sales were $543M, at the upper end of expectations, with a 1% organic decline year-over-year amid market softness and tornado-related challenges; Q4 adjusted EPS was $0.49, slightly below the prior year.

• Full-year FY24 sales reached $2.05B, down 1–2% organically, with adjusted EPS of $1.50 and strong cash flow from operations at $277M, the highest as a percent of sales in over 25 years.

• $129M was returned to shareholders in FY24 through dividends and share repurchases; a $200M share repurchase program was completed, and a new $200M program is in place for FY25.

• Aerospace and defense sales grew 23% year-over-year in Q4, offsetting declines in other segments.

• Cash flow from operations was $277M, and free operating cash flow reached $175M, up from $169M in the prior year.

Financial highlights

• Q4 adjusted EBITDA was $96M (17.7% margin), up 100 bps year-over-year; Q4 operating margin was 11.5%, up 10 bps; Q4 gross margin was 31.5%, down 40 bps.

• Full-year adjusted EBITDA was $313M (15.3% margin), down 20 bps; full-year operating margin was 8.9%, down 70 bps; full-year gross margin was 30.6%, down 50 bps.

• Adjusted EPS for Q4 was $0.49, down from $0.51 in the prior year; full-year adjusted EPS was $1.50, compared to $1.52 last year.

• Free operating cash flow for FY24 was $175M, up from $169M in the prior year.

• Q4 adjusted effective tax rate increased to 29.3%.

Outlook and guidance

• FY25 sales expected between $2.0B and $2.1B, with volume -3% to +2%, price realization ~2%, and -1% FX impact.

• Adjusted EPS guidance for FY25 is $1.30–$1.70; Q1 adjusted EPS expected at $0.20–$0.30.

• Free operating cash flow expected to exceed 125% of adjusted net income; capital expenditures projected at ~$110M for FY25.

• Q1 sales expected between $480M and $500M, with a 10% decline at midpoint due to market softness.

• Primary working capital as a percent of sales targeted at ~30% by year-end.