IntrinsicIntrinsic
← All summaries

KENNAMETAL INC

KMT
Financials & Chart →

Business Summary

Kennametal Inc. is a global industrial technology leader with more than 85 years of materials expertise, helping customers across the General Engineering, Transportation, Earthworks, Energy and Aerospace & Defense end markets build their products with precision and efficiency. The Company was founded based on a tungsten carbide technology breakthrough in 1938 and was incorporated in Pennsylvania in 1943 as a manufacturer of tungsten carbide metal cutting tooling. The Company's core expertise includes the development and application of tungsten carbides, ceramics, super-hard materials and solutions used in metal cutting and extreme wear applications. The industry is highly competitive, with several large global competitors and many smaller niche businesses, and remains largely fragmented, containing several hundred fabricators, toolmakers and niche specialty coating businesses. The principal competitive differentiators include customer focused support and application expertise, custom and standard product innovation, product performance and quality, and brand recognition. Kennametal derives competitive advantage from its premium brand positions, global presence, application expertise and ability to address unique customer needs with new and improved tools, innovative surface and wear-resistant solutions, highly engineered components, consistent quality, traditional and digital customer service and technical assistance capabilities, state-of-the-art manufacturing and multiple sales channels.

Kennametal actively competes in the sale of all its products with several large global competitors and with many smaller niche businesses. The principal competitive differentiators in the businesses include customer focused support and application expertise, custom and standard product innovation, product performance and quality, and brand recognition. The Company derives competitive advantage from its premium brand positions, global presence, application expertise and ability to address unique customer needs with new and improved tools, innovative surface and wear-resistant solutions, highly engineered components, consistent quality, traditional and digital customer service and technical assistance capabilities, state-of-the-art manufacturing and multiple sales channels. With these strengths, the Company is able to sell products based on the value-added productivity delivered to customers, rather than competing solely on price.

Kennametal generates revenue through the manufacture and sale of high performance tooling and metal cutting products and services, as well as engineered tungsten carbide and ceramic components, earth cutting tools, and advanced metallurgical powders. The Company's standard and custom product offering spans metal cutting and wear applications including turning, milling, hole making, tooling systems and services, as well as specialized wear components and metallurgical powders. End users of the Company's metal cutting products include manufacturers engaged in a diverse array of industries including: transportation vehicles and components, machine tools and light and heavy machinery; airframe and aerospace components; and energy-related components for the oil and gas industry, as well as power generation. The Company's wear and metallurgical powders are used by producers and suppliers in equipment-intensive operations such as road construction, mining, quarrying, oil and gas exploration, refining, production and supply, and for aerospace and defense. The Company markets its products through a direct sales force, a network of independent and national distributors, integrated supplier channels and digitally.

The Metal Cutting segment develops and manufactures high performance tooling and metal cutting products and services and offers an assortment of standard and custom metal cutting solutions to diverse end markets, including General Engineering, Transportation, Aerospace & Defense and Energy. The products include milling, hole making, turning, threading and toolmaking systems used in the manufacture of airframes, aero engines, trucks and automobiles, ships and various types of industrial equipment. Metal Cutting markets its products under the Kennametal, WIDIA, WIDIA Hanita and WIDIA GTD brands. In fiscal 2026, Metal Cutting sales were $1,397.4 million and operating income was $195.6 million with an operating margin of 14.0 percent . The Infrastructure segment produces engineered tungsten carbide and ceramic components, earth cutting tools, and advanced metallurgical powders, primarily for the Earthworks, General Engineering, Energy and Aerospace & Defense end markets. These wear-resistant products include compacts, nozzles, frac seats and custom components used in oil and gas and petrochemical industries; rod blanks and abrasive water jet nozzles for general industries; earth cutting tools and systems used in underground mining, trenching and foundation drilling and road milling; tungsten carbide powders for the oil and gas, aerospace and process industries; high temperature critical wear components, tungsten penetrators and armor solutions for aerospace and defense; and ceramics used by the packaging industry for metallization of films and papers. Infrastructure markets its products primarily under the Kennametal brand. In fiscal 2026, Infrastructure sales were $959.3 million and operating income was $279.9 million with an operating margin of 29.2 percent .

The Metal Cutting segment develops and manufactures high performance tooling and metal cutting products and services and offers an assortment of standard and custom metal cutting solutions to diverse end markets, including General Engineering, Transportation, Aerospace & Defense and Energy. The products include milling, hole making, turning, threading and toolmaking systems used in the manufacture of airframes, aero engines, trucks and automobiles, ships and various types of industrial equipment. Metal Cutting markets its products under the Kennametal, WIDIA, WIDIA Hanita and WIDIA GTD brands through its direct sales force, a network of independent and national distributors, integrated supplier channels and digitally. In fiscal 2026, Metal Cutting sales were $1,397.4 million and operating income was $195.6 million with an operating margin of 14.0 percent . The Infrastructure segment produces engineered tungsten carbide and ceramic components, earth cutting tools, and advanced metallurgical powders, primarily for the Earthworks, General Engineering, Energy and Aerospace & Defense end markets. These wear-resistant products include compacts, nozzles, frac seats and custom components used in oil and gas and petrochemical industries; rod blanks and abrasive water jet nozzles for general industries; earth cutting tools and systems used in underground mining, trenching and foundation drilling and road milling; tungsten carbide powders for the oil and gas, aerospace and process industries; high temperature critical wear components, tungsten penetrators and armor solutions for aerospace and defense; and ceramics used by the packaging industry for metallization of films and papers. Infrastructure markets its products primarily under the Kennametal brand and sells through a direct sales force as well as through distributors. In fiscal 2026, Infrastructure sales were $959.3 million and operating income was $279.9 million with an operating margin of 29.2 percent .

During fiscal 2025, the Company completed the sale of a subsidiary located in Goshen, Indiana to a Chicago-based private equity firm and recognized a loss on divestiture of $1.5 million . In January 2025, the Company announced several actions to support the long-term competitiveness of the Company and to mitigate softer market conditions, with total restructuring and related charges for this program of $23.9 million recorded through June 30, 2026, consisting of $19.4 million in Metal Cutting and $4.5 million in Infrastructure. During fiscal 2026, the Company recorded restructuring and related charges of $11.4 million , which consisted of $9.7 million in Metal Cutting and $1.7 million in Infrastructure. In May 2026, the Company issued $300.0 million of 5.800% Senior Unsecured Notes due 2036 and used net proceeds to fund a tender offer for the Company's outstanding 4.625 percent Senior Unsecured Notes due 2028, resulting in the repurchase of $209.4 million out of the total $300.0 million aggregate principal of the 2028 Notes. The Company also entered into a new $500.0 million delayed-draw three-year term loan and amended its Credit Agreement to increase aggregate commitments by $200.0 million . In February 2024, the Board of Directors authorized a $200 million , three-year share repurchase program. During fiscal 2026, the Company repurchased 475 thousand shares of common stock for $10 million and returned a total of $71 million to shareholders through $10 million in share repurchases and $61 million in dividends.

Sales of $2,356.7 million in fiscal 2026 increased 20 percent from $1,966.8 million in fiscal 2025, reflecting organic sales growth of 19 percent and a favorable foreign currency exchange effect of 2 percent , partially offset by a divestiture effect of 1 percent . Operating income was $472.5 million , or 20.1 percent margin, in fiscal 2026 compared with $143.1 million , or 7.3 percent margin, in the prior year. Net income attributable to Kennametal was $342.4 million , or $4.42 of earnings per diluted share in fiscal 2026, compared to $93.1 million , or $1.20 of earnings per diluted share in fiscal 2025. Gross profit increased $371.9 million to $970.0 million in fiscal 2026 from $598.1 million in fiscal 2025. The gross profit margin for fiscal 2026 was 41.2 percent compared to 30.4 percent in fiscal 2025.

Business Outlook

The Company's strategic partnerships with Toolpath Labs, Inc. during fiscal 2025 and ModuleWorks GmbH during fiscal 2024 support the digital manufacturing and intelligent machining solutions strategy. The Company expects to continue to grow its business and further enhance its market position through investment opportunities that exist within its core businesses, including potential acquisitions in the near term. The Company's Commercial Excellence growth initiatives and Operational Excellence initiatives are referenced as key strategic programs.

The Company's restructuring actions are designed to reduce structural costs, improve operational efficiency and position the Company for long-term profitable growth. Incremental year-over-year restructuring savings of approximately $27 million were realized in fiscal 2026. The Company expects to continue to realize benefits from these actions.

The Company's internal tungsten recycling capability provides access to additional sources of tungsten and helps mitigate reliance on third parties. The Company exercises great care in selecting, purchasing and managing the availability of raw materials utilizing a mix of long-term supply agreements coupled with spot purchases. The Company's production capacity is adequate for its present needs.

Research and development expenses totaled $43.2 million and $44.4 million for fiscal 2026 and 2025, respectively. Capital expenditures were $76.9 million and $89.0 million during fiscal 2026 and 2025, respectively. In February 2024, the Board of Directors authorized a $200 million , three-year share repurchase program. During fiscal 2026, the Company repurchased 475 thousand shares of common stock for $10 million and paid $61 million in dividends. The Company expects to reassess repurchase activity as cash flow generation improves.

The Company faces headwinds from foreign currency exchange, inflationary headwinds and rising tungsten prices driven by tightening global supply, geopolitical factors and evolving trade policies. These pressures have increased raw material costs and caused other business disruptions. The Company cannot predict the ultimate effect of these issues on its business, operating results, cash flows or financial condition. Continued volatility in commodity pricing, foreign exchange rates and supply availability could adversely affect margins, operations and liquidity and may increase the risk of future impairment charges, including goodwill and other intangible assets. Significant declines in raw material costs could reduce the net realizable value of inventory, potentially requiring write-downs.

The Company's international operations are subject to risks including currency exchange rate fluctuations, differing protections of intellectual property, trade barriers, exchange controls, regional economic uncertainty, overlap of different tax regimens, differing labor regulations, labor unrest, risk of governmental expropriation, domestic and foreign customs and tariffs, current and changing regulatory environments, difficulty in obtaining distribution support, difficulty in staffing and managing widespread operations, differences in the availability and terms of financing, social and political instability and unrest and risks of increased taxes and/or adverse tax consequences. During fiscal 2026, 57 percent of consolidated sales were derived from non-U.S. markets.

Risk Factors

The Company's international operations pose risks, with 57 percent of consolidated sales derived from non-U.S. markets, exposing the Company to currency exchange rate fluctuations, trade barriers, tariffs, and social and political instability. The global tungsten market remains susceptible to supply constraints and price volatility due to the concentration of mining and processing capacity in China, and recent export controls have increased uncertainty regarding the availability and cost of tungsten products. At June 30, 2026, goodwill totaled $279.2 million , or 9 percent of total assets, and if future operating performance at the Metal Cutting reporting unit were to fall significantly below current levels, a non-cash impairment charge could be recorded. The Company's restructuring efforts may not have the intended effects, and there is no assurance that these actions will be sufficient to counter future economic or industry disruptions. The Company is subject to environmental cleanup and remediation activities, with accruals of $12.3 million as of June 30, 2026 for estimated environmental liabilities.

Management Priorities

Management's message emphasizes the Company's position as a global industrial technology leader with more than 85 years of materials expertise. The strategic priorities emphasized include the Commercial Excellence growth initiatives and Operational Excellence initiatives, as well as restructuring actions to support long-term competitiveness and mitigate softer market conditions. Management highlights the favorable timing of raw material-related pricing compared to costs of approximately $316 million as a key driver of operating income improvement in fiscal 2026. The Company reported earnings per diluted share of $4.42 for fiscal 2026 compared to $1.20 in the prior year. Management notes that the Company expects to reassess share repurchase activity as cash flow generation improves.

View Source Annual Report on SEC.gov ↗

References

  1. [1] Item 7, MD&A — Business Segment Review, Metal Cutting
  2. [2] Item 7, MD&A — Business Segment Review, Metal Cutting
  3. [3] Item 7, MD&A — Business Segment Review, Metal Cutting
  4. [4] Item 7, MD&A — Business Segment Review, Infrastructure
  5. [5] Item 7, MD&A — Business Segment Review, Infrastructure
  6. [6] Item 7, MD&A — Business Segment Review, Infrastructure
  7. [7] Item 7, MD&A — Business Segment Review, Metal Cutting
  8. [8] Item 7, MD&A — Business Segment Review, Metal Cutting
  9. [9] Item 7, MD&A — Business Segment Review, Metal Cutting
  10. [10] Item 7, MD&A — Business Segment Review, Infrastructure
  11. [11] Item 7, MD&A — Business Segment Review, Infrastructure
  12. [12] Item 7, MD&A — Business Segment Review, Infrastructure
  13. [13] Item 1, Business — Acquisitions, Strategic Investments and Divestitures
  14. [14] Item 7, MD&A — Restructuring and Other Charges, Net
  15. [15] Item 7, MD&A — Restructuring and Other Charges, Net
  16. [16] Item 7, MD&A — Restructuring and Other Charges, Net
  17. [17] Item 7, MD&A — Restructuring and Other Charges, Net
  18. [18] Item 7, MD&A — Restructuring and Other Charges, Net
  19. [19] Item 7, MD&A — Restructuring and Other Charges, Net
  20. [20] Item 7, MD&A — Liquidity and Capital Resources
  21. [21] Item 7, MD&A — Liquidity and Capital Resources
  22. [22] Item 7, MD&A — Liquidity and Capital Resources
  23. [23] Item 7, MD&A — Liquidity and Capital Resources
  24. [24] Item 7, MD&A — Liquidity and Capital Resources
  25. [25] Item 7, MD&A — Overview
  26. [26] Item 7, MD&A — Overview
  27. [27] Item 7, MD&A — Overview
  28. [28] Item 7, MD&A — Overview
  29. [29] Item 7, MD&A — Overview
  30. [30] Item 7, MD&A — Overview
  31. [31] Item 7, MD&A — Overview
  32. [32] Item 7, MD&A — Overview
  33. [33] Item 7, MD&A — Overview
  34. [34] Item 7, MD&A — Overview
  35. [35] Item 7, MD&A — Overview
  36. [36] Item 7, MD&A — Overview
  37. [37] Item 7, MD&A — Overview
  38. [38] Item 7, MD&A — Overview
  39. [39] Item 7, MD&A — Overview
  40. [40] Item 7, MD&A — Overview
  41. [41] Item 7, MD&A — Net Income Attributable to Kennametal
  42. [42] Item 7, MD&A — Net Income Attributable to Kennametal
  43. [43] Item 7, MD&A — Net Income Attributable to Kennametal
  44. [44] Item 7, MD&A — Net Income Attributable to Kennametal
  45. [45] Item 7, MD&A — Gross Profit
  46. [46] Item 7, MD&A — Gross Profit
  47. [47] Item 7, MD&A — Gross Profit
  48. [48] Item 7, MD&A — Gross Profit
  49. [49] Item 7, MD&A — Gross Profit
  50. [50] Item 7, MD&A — Overview
  51. [51] Item 7, MD&A — Operating Expense
  52. [52] Item 7, MD&A — Operating Expense
  53. [53] Item 7, MD&A — Overview
  54. [54] Item 7, MD&A — Overview
  55. [55] Item 7, MD&A — Overview
  56. [56] Item 7, MD&A — Overview
  57. [57] Item 7, MD&A — Overview
  58. [58] Item 7, MD&A — Overview
  59. [59] Item 1, Business — International Operations
  60. [60] Item 1, Business — International Operations
  61. [61] Item 1A, Risk Factors — Impairment of goodwill could result in a negative effect on our financial condition and results of operations
  62. [62] Item 1A, Risk Factors — Impairment of goodwill could result in a negative effect on our financial condition and results of operations
  63. [63] Item 1, Business — Regulation
  64. [64] Item 7, MD&A — Overview
  65. [65] Item 7, MD&A — Overview
  66. [66] Item 7, MD&A — Overview
  67. [67] Item 7, MD&A — Results of Continuing Operations, Sales
  68. [68] Item 7, MD&A — Results of Continuing Operations, Sales
  69. [69] Item 7, MD&A — Net Income Attributable to Kennametal
  70. [70] Item 7, MD&A — Net Income Attributable to Kennametal
  71. [71] Item 7, MD&A — Net Income Attributable to Kennametal
  72. [72] Item 7, MD&A — Net Income Attributable to Kennametal
  73. [73] Item 7, MD&A — Overview
  74. [74] Item 7, MD&A — Overview
  75. [75] Item 7, MD&A — Overview
  76. [76] Item 7, MD&A — Overview
  77. [77] Item 7, MD&A — Gross Profit
  78. [78] Item 7, MD&A — Gross Profit
  79. [79] Item 7, MD&A — Gross Profit
  80. [80] Item 7, MD&A — Gross Profit
  81. [81] Item 7, MD&A — Income Taxes
  82. [82] Item 7, MD&A — Income Taxes
  83. [83] Item 7, MD&A — Liquidity and Capital Resources
  84. [84] Item 7, MD&A — Liquidity and Capital Resources
  85. [85] Item 7, MD&A — Overview
  86. [86] Item 7, MD&A — Overview
  87. [87] Item 7, MD&A — Liquidity and Capital Resources
  88. [88] Item 7, MD&A — Liquidity and Capital Resources
  89. [89] Item 7, MD&A — Liquidity and Capital Resources
  90. [90] Item 7, MD&A — Business Segment Review, Metal Cutting
  91. [91] Item 7, MD&A — Business Segment Review, Metal Cutting
  92. [92] Item 7, MD&A — Business Segment Review, Metal Cutting
  93. [93] Item 7, MD&A — Business Segment Review, Infrastructure
  94. [94] Item 7, MD&A — Business Segment Review, Infrastructure
  95. [95] Item 7, MD&A — Business Segment Review, Infrastructure
  96. [96] Item 7, MD&A — Restructuring and Other Charges, Net
  97. [97] Item 7, MD&A — Restructuring and Other Charges, Net
  98. [98] Item 7, MD&A — Restructuring and Other Charges, Net
  99. [99] Item 7, MD&A — Interest Expense
  100. [100] Item 7, MD&A — Interest Expense

Analysis on 8/12/2026