{"id":521468,"date":"2021-08-02T16:04:56","date_gmt":"2021-08-02T20:04:56","guid":{"rendered":"https:\/\/www.marketnewsdesk.com\/index.php\/kennametal-reports-q4-and-fiscal-2021-results-announces-share-repurchase-program\/"},"modified":"2021-08-02T16:04:56","modified_gmt":"2021-08-02T20:04:56","slug":"kennametal-reports-q4-and-fiscal-2021-results-announces-share-repurchase-program","status":"publish","type":"post","link":"https:\/\/www.marketnewsdesk.com\/index.php\/kennametal-reports-q4-and-fiscal-2021-results-announces-share-repurchase-program\/","title":{"rendered":"Kennametal Reports Q4 and Fiscal 2021 Results; Announces Share Repurchase Program"},"content":{"rendered":"
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– Sales of $516 million increased 36 percent year-over-year and 6 percent sequentially<\/h2>\n

– Earnings per diluted share (EPS) of $0.41 and adjusted EPS of $0.53<\/h2>\n

– Strong cash flow from operations of $236 million and free operating cash flow of $113 million<\/h2>\n

– Simplification\/modernization capital spend and restructuring substantially complete; achieved total savings of approximately $186 million<\/h2>\n

– First quarter sales expected to outpace normal seasonality<\/h2>\n

– Announces share repurchase program of up to $200 million over three years<\/h2>\n

PR Newswire<\/p>\n<\/p><\/div>\n

\n

\n PITTSBURGH<\/span>, Aug. 2, 2021<\/span> \/PRNewswire\/ —\u00a0Kennametal Inc. (NYSE: KMT) (the “Company”) today announced fourth quarter and fiscal 2021 results. For the fourth quarter, the Company reported earnings per diluted share (EPS) of $0.41<\/span>, compared with loss per diluted share (LPS) of $0.11<\/span> in the prior year quarter. The current quarter adjusted EPS was $0.53<\/span>, compared with $0.15<\/span> in the prior year quarter. For fiscal 2021, the Company reported EPS of $0.65<\/span>, compared with LPS of $0.07<\/span> in the prior year. Adjusted EPS was $1.04<\/span> in the current year, compared with $0.94<\/span> in the prior year.<\/p>\n

“We ended fiscal 2021 with positive momentum driven by solid execution of our strategic Commercial and Operational Excellence initiatives and continued recovery in our end-markets. Sales increased 6 percent sequentially and 36 percent year-over-year, with notable sequential improvement in General Engineering and Aerospace end-markets. In the quarter, we achieved strong operating leverage, free operating cash flow and 400 basis points of adjusted operating margin improvement year-over-year despite approximately 1,200 basis points of headwinds from prior year temporary cost controls,” said Christopher Rossi<\/span>, President and CEO.<\/p>\n

“Our performance this year demonstrates continued success in transforming the Company, including achieving our simplification\/modernization savings target and positioning the Company to deliver strong operating leverage and free operating cash flow at approximately 100 percent of adjusted net income. Looking ahead, we are confident in our growth and profitability strategy and will continue to invest in the business to further those initiatives. We also announced today a share repurchase program of up to $200 million<\/span> over the next three years, yet another sign of our confidence in the strategy,” Rossi added.<\/p>\n

\n
\n Simplification\/Modernization<\/u>
\n <\/b>\n <\/p>\n

The Company has achieved total savings of $186 million<\/span> from simplification\/modernization, in line with the $180 million<\/span> savings target set at Investor Day in December 2017<\/span>, despite much lower volumes than anticipated when the target was originally set. Total incremental benefits in the quarter were approximately $23 million<\/span>, which includes incremental restructuring savings of approximately $16 million<\/span> as noted in the table below.<\/p>\n

\n\n\n\n\n\n\n
\n

\n
\n RESTRUCTURING AND RELATED CHARGES AND SAVINGS (PRE-TAX)<\/b>
\n <\/span>\n <\/p>\n<\/td>\n<\/tr>\n

\n

\n
\n ($ in millions)<\/b>
\n <\/span>\n <\/p>\n<\/td>\n

\n \n <\/td>\n<\/tr>\n
\n \n <\/td>\n\n

\n
\n Charges<\/b>
\n <\/span>\n <\/p>\n<\/td>\n

\n

\n
\n Approximate Savings<\/b>
\n <\/span>\n <\/p>\n<\/td>\n<\/tr>\n

\n

\n
\n Programs<\/b>
\n <\/span>\n <\/p>\n<\/td>\n

\n

\n
\n Total Estimated<\/b>
\n <\/span>\n <\/p>\n<\/td>\n

\n

\n
\n Current Quarter<\/b>
\n <\/span>\n <\/p>\n<\/td>\n

\n

\n
\n Inception to Date<\/b>
\n <\/span>\n <\/p>\n<\/td>\n

\n

\n
\n Total Estimated<\/b>
\n <\/span>\n <\/p>\n<\/td>\n

\n

\n
\n YoY Incremental Current Quarter<\/b>
\n <\/span>\n <\/p>\n<\/td>\n

\n

\n
\n Annualized Inception to Date<\/b>
\n <\/span>\n <\/p>\n<\/td>\n<\/tr>\n

\n

\n FY21 Actions<\/span>\n <\/p>\n<\/td>\n

\n

\n $90<\/span>\n <\/p>\n<\/td>\n

\n

\n $5<\/span>\n <\/p>\n<\/td>\n

\n

\n $82<\/span>\n <\/p>\n<\/td>\n

\n

\n $75<\/span>\n <\/p>\n<\/td>\n

\n

\n $16<\/span>\n <\/p>\n<\/td>\n

\n

\n $68<\/span>\n <\/p>\n<\/td>\n<\/tr>\n<\/table><\/div>\n

\n
\n Share Repurchase Program<\/u>
\n <\/b>\n <\/p>\n

Today the Company announced that its Board of Directors authorized a share repurchase program. Under this program, the Company intends to repurchase up to $200 million<\/span> of Kennametal common stock. The Company expects to fund repurchases through cash generated from operations.<\/p>\n

\n
\n Fiscal 2021 Fourth Quarter Key Developments<\/u>
\n <\/b>\n <\/p>\n

Sales were $516 million<\/span> compared with $379 million<\/span> in the same quarter last year. Sales increased by 36 percent, driven by 29 percent organic growth and favorable currency exchange and business day effects of 6 percent and 1 percent, respectively.<\/p>\n

Operating income was $61 million<\/span>, or 11.8 percent margin, compared with $16 million<\/span>, or 4.1 percent margin, in the same quarter last year. The increase in operating income was due primarily to organic sales growth, approximately $23 million<\/span> of incremental simplification\/modernization benefits and $5 million<\/span> of pre-tax restructuring and related charges compared to $18 million<\/span> in the prior year quarter, partially offset by approximately $45 million<\/span> of temporary cost headwinds caused by the return of variable compensation expense and other cost-control measures that were taken in the prior year and unfavorable geographic and product mix. Adjusted operating income was $66 million<\/span>, or 12.8 percent margin, compared with $33 million<\/span>, or 8.8 percent margin, in the prior year quarter.<\/p>\n

The reported effective tax rate (ETR) was\u00a031.4 percent\u00a0and the adjusted ETR was\u00a024.3 percent, compared to reported ETR of 186.1 percent and adjusted ETR of 51.2 percent in the prior year quarter. The year-over-year change in the reported ETR is due primarily to higher pretax income in the current year, lower global intangible low-taxed income (GILTI) associated with favorable regulations that were issued during the current year, and a tax benefit recorded in the prior year quarter related to the CARES Act. The decrease in the adjusted ETR is due primarily to a higher pretax income in the current year, as well as lower global intangible low-taxed income (GILTI) associated with favorable regulations that were issued during the current year.<\/p>\n

Reported EPS in the current quarter includes restructuring and related charges of $0.05<\/span>, the partial annuitization of Canadian pension plans of $0.02<\/span> and differences in projected annual tax rates of $0.05<\/span>. Reported LPS in the prior year quarter includes restructuring and related charges of $0.17<\/span> and differences in projected annual tax rates of $0.17<\/span> partially offset by the effect of the CARES Act of $0.08<\/span>.<\/p>\n

\n
\n Fiscal 2021 Key Developments<\/u>
\n <\/b>\n <\/p>\n

Sales of $1,841 million<\/span> decreased from $1,885 million<\/span> in the prior year. Sales decreased by 2 percent, driven by 4 percent organic decline, partially offset by 2 percent favorable currency exchange effect.<\/p>\n

Operating income was $102 million<\/span>, or 5.5 percent margin, compared with $22 million<\/span>, or 1.2 percent margin, in the prior year. The increase in operating income was due primarily to incremental simplification\/modernization benefits of $85 million<\/span>, lower raw material costs and $40 million<\/span> of pre-tax restructuring and related charges compared to $82 million<\/span> in the prior year, partially offset by increased variable compensation expense, organic sales decline, volume-related manufacturing inefficiencies and unfavorable geographical and product mix. Adjusted operating income was $143 million<\/span>, or 7.7 percent margin, compared with $141 million<\/span>, or 7.5 percent margin, in the prior year.<\/p>\n

Net cash flow provided by operating activities in fiscal 2021 was $236 million<\/span> compared to $224 million<\/span> in the prior year. The change in net cash flow provided by operating activities was driven primarily by higher earnings, partially offset by higher cash restructuring outflows and working capital adjustments. Free operating cash flow (FOCF) was $113 million<\/span> compared to negative $18 million<\/span> in the prior year. The change in FOCF was driven primarily by lower net capital expenditures due to simplification\/modernization initiatives and higher cash flow provided by operating activities.<\/p>\n

\n
\n Outlook<\/u>
\n <\/b>\n <\/p>\n

The Company’s expectations for the first quarter of fiscal 2022 and the full year are as follows:<\/p>\n

\n Quarterly Outlook<\/u>\n <\/p>\n