Kennametal 2025 Q3 Earnings Strong EPS Growth with 70.8% Increase

Kennametal (KMT) reported its fiscal 2025 Q3 earnings on May 7, 2025. The company delivered an impressive performance, with diluted EPS rising significantly to $0.41 from $0.24 in the prior year, surpassing expectations. Adjusted EPS also exceeded forecasts at $0.47, driven by an advanced manufacturing tax credit. While sales declined by 6%, the company raised its full-year adjusted EPS guidance, reflecting confidence in its strategic initiatives. Free operating cash flow is projected to exceed 125% of adjusted net income, indicating robust cash generation.

Revenue

Kennametal's total revenue for Q3 2025 fell to $486.40 million, marking a 5.7% decline from $515.79 million in the same quarter last year. The Metal Cutting segment generated $304.35 million, and the Infrastructure segment contributed $182.05 million, while corporate sales were negligible, reflecting challenging market conditions.

Earnings/Net Income

Kennametal's earnings per share (EPS) increased by 70.8% to $0.41 in Q3 2025, compared to $0.24 in the same period last year. The company's net income rose to $33.08 million, up 59.7% from $20.71 million in Q3 2024. This growth in EPS and net income indicates a positive performance.

Post-Earnings Price Action Review

Following the earnings report, the strategy of purchasing Kennametal shares after a revenue increase and holding them for 30 days resulted in an 18.88% return, falling short of the benchmark by 65.20%. The compound annual growth rate (CAGR) of this strategy was 3.53%, with a maximum drawdown of -14.39%. The Sharpe ratio stood at 0.27, reflecting moderate returns and associated risks. The company's stock price experienced fluctuations, dropping by 7.01% on the latest trading day, while rising 1.44% over the past trading week and climbing 3.40% month-to-date, illustrating market volatility.

CEO Commentary

“During the quarter, we demonstrated continued progress on our growth and cost initiatives despite weak market conditions, primarily in EMEA and the Americas,” stated Sanjay Chowbey, President and CEO. He noted that sales were slightly below expectations due to market headwinds, but adjusted EPS exceeded forecasts thanks to an advanced manufacturing production credit. Chowbey acknowledged challenges from tariff policies but expressed confidence in mitigating these impacts while seeking new market opportunities.

Guidance

Kennametal now forecasts full fiscal year 2025 sales to range between $1.970 billion and $1.990 billion, with adjusted EPS anticipated between $1.30 and $1.45. The company plans to offset inflationary pressures through pricing actions and expects an adjusted effective tax rate of approximately 25%. Capital spending is projected at around $90 million, while free operating cash flow should exceed 125% of adjusted net income.

Additional News

In recent corporate developments, Kennametal announced the election of Shelley Bausch to its Board of Directors, effective May 1, 2025, replacing Cindy L. Davis. Additionally, during the third quarter, the company returned approximately $40 million to shareholders through $25 million in share repurchases and $15 million in dividends. Kennametal also recently participated in the BofA Securities Industrials, Transportation & Airlines Key Leaders Conference 2025 in New York City, showcasing its ongoing engagement with industry leaders and investors.