What drives KMT's EPS volatility quarterly?

Kennametal's (KMT) EPS volatility can be attributed to several key factors that influence its financial performance on a quarterly basis:

1. Revenue Decline: Kennametal has experienced a decline in revenue, with a reported decrease of 4% year-over-year in the second quarter of fiscal 2025. This decline is due to weakness across its business segments, including the Metal Cutting segment and the Infrastructure segment. The company's revenue guidance for the next quarter also fell short of Wall Street expectations.
2. Operating Expenses: The company's operating expenses have increased by 1.8% year-over-year in the second quarter of fiscal 2025. This increase in operating expenses has impacted the company's margins, with the operating margin in the Metal Cutting segment decreasing. High operating expenses have been a significant factor contributing to the company's financial volatility.
3. Segment Performance: Kennametal's business segments, particularly the Metal Cutting segment and the Infrastructure segment, have been affected by various factors such as lower demand in the transportation end market and weakness in the general engineering end market. These factors have led to a softness in the company's performance, resulting in volatility in its EPS.
4. Foreign Currency Headwind: Kennametal's extensive international presence exposes the company to foreign currency headwinds, which can impact its financial results. This adds to the uncertainty surrounding the company's earnings and contributes to the volatility in its EPS.

In conclusion, Kennametal's EPS volatility quarterly is primarily driven by revenue decline, operating expenses, segment performance, and foreign currency headwind. These factors combined create a challenging operating environment for the company, leading to fluctuations in its EPS.