KENNAMETAL INC (KMT): Results of Operations and Financial Condition
KENNAMETAL INC (KMT) filed an SEC Form 8-K — Results of Operations and Financial Condition. Exhibit 99.1 FOR IMMEDIATE RELEASE: DATE: August 5, 2026 Investor Relations Media Relations CONTACT: Michael Pici CONTACT: Lori Lecker PHONE: 412-790-0792 PHONE: 412-248-8224 michael.pici@kennametal.com lori.lecker@kennametal.com Kennametal Reports Fiscal 2026 and Fourth Quarter
How this was made
The 30-second read
Why it matters
The key tradable items are the reported record adjusted EPS, the segment operating margin expansion, and the explicit FY27 Q1 and FY27 annual sales, adjusted EPS, and free operating cash flow expectations, alongside a disclosed working-capital-driven cash drag.
Market read
Earnings and guidance provide a fresh decision point for positioning around FY27 growth and margin durability, with cash flow quality as the main risk.
What to watch
Cash flow deterioration is tied to inventory value increases and advance payments to secure supply; traders may discount earnings quality if working capital remains a headwind into FY27.
Kennametal reported fiscal 2026 fourth-quarter sales of $737 million, up 43 percent, with EPS of $2.91 and record adjusted EPS of $2.96; fiscal 2026 sales were $2,357 million, up 20 percent.
Fourth-quarter and fiscal-year sales, operating income, operating margins and adjusted EPS increased sharply, led by pricing, tariff surcharges, volume and restructuring savings. Cash generation was materially weaker because of tungsten-related working-capital requirements and supplier advance payments.
Key metrics
as reported| Metric | Value | q/q | y/y |
|---|---|---|---|
| Fourth-quarter salesGAAP | $737 million | – | 43 percent |
| Fourth-quarter organic sales growthother | 42 percent | – | – |
| Fourth-quarter foreign currency exchange effect on salesother | 1 percent | – | – |
| Fourth-quarter business days effect on salesother | 1 percent | – | – |
| Fourth-quarter divestiture effect on salesother | 1 percent | – | – |
| Fourth-quarter operating incomeGAAP | $303 million, or 41.1 percent margin | – | – |
| Fourth-quarter adjusted operating incomenon-GAAP | $306 million, or 41.5 percent margin | – | – |
| Fourth-quarter earnings per diluted shareGAAP | $2.91 | – | – |
| Fourth-quarter adjusted EPSnon-GAAP | $2.96 | – | – |
| Fiscal 2026 salesGAAP | $2,357 million | – | 20 percent |
| Fiscal 2026 organic sales growthother | 19 percent | – | – |
| Fiscal 2026 foreign currency exchange effect on salesother | 2 percent | – | – |
| Fiscal 2026 divestiture effect on salesother | 1 percent | – | – |
| Fiscal 2026 operating incomeGAAP | $473 million, or 20.1 percent margin | – | – |
| Fiscal 2026 adjusted operating incomenon-GAAP | $484 million, or 20.5 percent margin | – | – |
| Fiscal 2026 earnings per diluted shareGAAP | $4.42 | – | – |
| Fiscal 2026 adjusted EPSnon-GAAP | $4.57 | – | – |
| Fiscal 2026 net cash flow from operating activitiesGAAP | negative $4 million | – | – |
| Fiscal 2026 free operating cash flownon-GAAP | negative $79 million | – | – |
| Metal Cutting fourth-quarter operating incomeGAAP | $106 million, or 26.7 percent margin | – | – |
| Metal Cutting fourth-quarter adjusted operating incomenon-GAAP | $108 million, or 27.3 percent margin | – | – |
| Infrastructure fourth-quarter operating incomeGAAP | $197 million, or 58.3 percent margin | – | – |
| Infrastructure fourth-quarter adjusted operating incomenon-GAAP | $198 million, or 58.4 percent margin | – | – |
Segments
| Segment | Revenue | q/q | y/y |
|---|---|---|---|
| Metal CuttingOrganic sales growth of 22 percent, a favorable foreign currency exchange effect of 1 percent and a favorable business days effect of 1 percent. | $398 million | – | increased 24 percent |
| InfrastructureOrganic sales growth of 74 percent, a favorable currency exchange effect of 1 percent and a favorable business days effect of 1 percent, partially offset by a divestiture effect of 3 percent. | $339 million | – | increased 73 percent |
First quarter of fiscal 2027 and fiscal 2027 annual outlook outlook
- RevenueFirst quarter sales expected to be $745 - $775 million; annual sales expected to be $3.33 - $3.45 billion
- NoteFirst quarter foreign exchange anticipated to be neutral compared to the first quarter of fiscal 2026
- NoteFirst quarter adjusted EPS is expected to be $2.50 - $2.80
- NoteAnnual foreign exchange anticipated to be neutral compared to the fiscal 2026
- NoteAnnual adjusted EPS is expected to be $4.15 - $5.15
- NoteFree operating cash flow of approximately 20 percent of adjusted net income
- NoteCapital spending expected to be approximately $85 million
Capital returns
- Quarterly cash dividend of $0.20 per share.
- The dividend is payable on August 25, 2026 to shareholders of record as of the close of business on August 11, 2026.
What drove it
- Fourth-quarter operating income benefited from favorable timing of raw material-related pricing compared to costs of approximately $252 million, non-raw material-related pricing and tariff surcharges in Metal Cutting, higher sales and production volumes, and incremental year-over-year restructuring savings of approximately $5 million.
- Fiscal 2026 operating income benefited from favorable timing of raw material-related pricing compared to raw material costs of approximately $316 million, non-raw material-related pricing and tariff surcharges in Metal Cutting, higher sales and production volumes, and incremental year-over-year restructuring savings of approximately $27 million.
- Metal Cutting fourth-quarter operating income benefited from favorable timing of raw material-related pricing compared to costs of approximately $54 million, non-raw material-related pricing and tariff surcharges, higher sales and production volumes, and incremental year-over-year restructuring savings of approximately $4 million.
- Infrastructure fourth-quarter operating income benefited from favorable timing of raw material-related pricing compared to costs of approximately $198 million.
Concerns
- Higher compensation costs, tariffs and general inflation partially offset fiscal 2026 operating-income drivers.
- Infrastructure operating-income drivers were partially offset by lower sales and production volumes, higher compensation costs and general inflation in the current quarter.
- Fiscal 2026 operating income was affected by fewer insurance proceeds received within Infrastructure in the current year.
- Operating cash flow and free operating cash flow declined because of working-capital requirements related to tungsten price increases and supplier advance payments.
What to watch
- First-quarter fiscal 2027 sales expected to be $745 - $775 million and adjusted EPS expected to be $2.50 - $2.80.
- Fiscal 2027 sales expected to be $3.33 - $3.45 billion and adjusted EPS expected to be $4.15 - $5.15.
- Fiscal 2027 free operating cash flow is expected to be approximately 20 percent of adjusted net income.
- Capital spending is expected to be approximately $85 million.
- Volume trends across end markets and the continuation of pricing, cost-improvement and strategic-growth initiatives.
Balance sheet and cash flow
- Net cash flow from operating activities in fiscal 2026 was negative $4 million compared to positive $208 million in the prior year.
- Free operating cash flow was negative $79 million compared to positive $121 million in the prior year.
- Working capital requirements included increased inventory values resulting from unprecedented tungsten price increases and advance payments made to certain suppliers to secure raw material supply.
Analysis
Kennametal closed fiscal 2026 with strong fourth-quarter growth. Sales of $737 million increased 43 percent from $516 million, including 42 percent organic sales growth. Metal Cutting sales increased 24 percent to $398 million, while Infrastructure sales increased 73 percent to $339 million. The company attributed the result to pricing, tariff surcharges, volume and production growth, favorable currency and business-day effects, with the Infrastructure sales result partly offset by a divestiture effect.
Profitability expanded substantially. Fourth-quarter GAAP operating income was $303 million, or 41.1 percent margin, compared with $31 million, or 6.1 percent margin, and adjusted operating income was $306 million, or 41.5 percent margin, compared with $38 million, or 7.4 percent margin. The release identifies favorable timing of raw material-related pricing versus costs of approximately $252 million as a principal fourth-quarter contributor. Metal Cutting delivered $106 million of GAAP operating income, while Infrastructure delivered $197 million.
For fiscal 2026, sales rose 20 percent to $2,357 million from $1,967 million, with 19 percent organic growth. GAAP operating income reached $473 million, or 20.1 percent margin, compared with $143 million, or 7.3 percent margin; adjusted operating income was $484 million, or 20.5 percent margin, compared with $158 million, or 8.0 percent margin. Fiscal-year EPS was $4.42 and adjusted EPS was $4.57. Pricing relative to raw material costs contributed approximately $316 million during the year, while higher compensation costs, tariffs, general inflation and fewer Infrastructure insurance proceeds were offsets.
Cash conversion was the principal negative feature of the fiscal year. Net cash flow from operating activities moved to negative $4 million from positive $208 million, and free operating cash flow moved to negative $79 million from positive $121 million. The company linked the change to increased inventory values from unprecedented tungsten price increases and advance payments to suppliers to secure raw material supply, partly offset by higher net income and lower capital expenditures.
The fiscal 2027 outlook calls for first-quarter sales of $745 - $775 million and adjusted EPS of $2.50 - $2.80. Annual sales are expected to be $3.33 - $3.45 billion and adjusted EPS is expected to be $4.15 - $5.15, with foreign exchange anticipated to be neutral in both outlooks. Management also expects free operating cash flow of approximately 20 percent of adjusted net income and capital spending of approximately $85 million. The board declared a quarterly cash dividend of $0.20 per share.
Management, verbatim
Our team delivered strong fiscal 2026 results, reflecting volume from improving market conditions and our strategic growth initiatives.
Sanjay Chowbey, President and CEO
We achieved record adjusted EPS this quarter through decisive pricing actions in an unprecedented tungsten environment, volume growth and cost improvement efforts.
Sanjay Chowbey, President and CEO
Looking ahead, we are encouraged by the volume trends we have seen across several end markets and expect those improving conditions, along with our strategic initiatives, to continue to drive sales growth throughout fiscal 2027.
Sanjay Chowbey, President and CEO
Not in the filing
stated, not guessed- Net income for the fourth quarter and fiscal 2026 was not available in the supplied filing text.
- Gross profit and gross margin for the fourth quarter and fiscal 2026 were not available in the supplied filing text.
- Prior-year comparisons for GAAP EPS and adjusted EPS were not provided in the supplied release text.
- Prior-quarter comparisons for reported metrics were not provided.
- Cash balances and debt balances were not available in the supplied filing text.
- Share repurchases were not disclosed in the supplied filing text.
- Fiscal 2027 guidance for gross margin, operating expenses and tax rate was not provided.
- Prior outlook was not provided, so comparisons of actual results with prior guidance are unavailable.
- The supplied financial-statements table is truncated after the cost-of-goods-sold line; figures beyond that point were not used.
AlphaAI analysis generated from the company’s SEC earnings filing (Form 8-K Item 2.02, or Form 6-K for a foreign private issuer). Every figure was cross-checked against the filing text; consensus estimates, price targets and share-price reactions are not shown because they are not in the filing. AI-generated research, not investment advice.
Background
This is an SEC Form 8-K with Exhibit 99.1 reporting Kennametal’s fiscal 2026 Q4 and full-year results and providing FY27 outlook.
Ticker impact
Kennametal reported Q4 sales of $737M, record adjusted EPS of $2.96, and guided FY27 Q1 sales and adjusted EPS ranges.
Likely positive near-term bias if investors focus on record adjusted EPS and FY27 adjusted EPS range, partially offset by negative free operating cash flow and working-capital/inventory/tungsten dynamics.
The release includes specific quarterly and annual results, explicit FY27 Q1 and FY27 annual outlook ranges, and cash flow drivers (inventory build from tungsten price increases, supplier advance payments) that can affect valuation and near-term sentiment.
Market effects
Metal cutting and industrial infrastructure demand signals are embedded in segment growth, but the dominant swing factor is raw-material pricing timing and tungsten-related working capital.
No explicit regional macro drivers beyond foreign currency neutrality assumptions in guidance.
Tungsten price volatility and tariff/inflation references suggest global input-cost sensitivity for industrials and tooling supply chains.
Counterpoint
Operating income strength is heavily attributed to favorable timing of raw-material-related pricing versus costs, which may not repeat if tungsten pricing normalizes.
Key entities
- companyKennametal Inc.
Industrial materials and tooling company reporting fiscal 2026 Q4 and full-year results and issuing FY27 outlook.
- executiveSanjay Chowbey
CEO quoted on record adjusted EPS drivers and improving volume trends across end markets.
