Kennametal 2025 Q4 Earnings Misses Targets as Net Income Drops 39.5%

Kennametal reported its fiscal 2025 Q4 earnings on August 6, 2025, with results missing expectations due to significant declines in both revenue and net income. The company issued cautious guidance for fiscal 2026, forecasting continued market headwinds.

Revenue

Kennametal's total revenue declined by 4.9% year-over-year to $516.45 million in fiscal 2025 Q4, reflecting broader market softness and operational adjustments. The Metal Cutting segment remained the company’s largest revenue generator, contributing $320.65 million to total sales, a decline of 4% compared to the prior year. The Infrastructure segment also saw a drop in revenue, with $195.80 million, representing a 6% year-over-year decline. These reductions were driven by organic sales losses, currency headwinds, and the impact of the Goshen, IN subsidiary divestiture. The company also closed its Greenfield, MA facility and consolidated operations in Barcelona, Spain, further influencing the revenue figures.

Earnings/Net Income

Kennametal’s earnings per share (EPS) plummeted by 40.4% to $0.28 in fiscal 2025 Q4, compared to $0.47 in the prior year. This decline was in line with the broader net income drop to $23.12 million, a 39.5% decrease from $38.23 million in fiscal 2024 Q4. These results highlight the company’s ongoing challenges in maintaining profitability amid global economic pressures.

Price Action

The stock price of Kennametal has experienced a steep decline in recent trading sessions. Over the latest trading day, the stock dropped 1.39%, while over the past week, it plummeted 17.37%. For the month, the stock has tumbled 12.89%, reflecting investor concerns over the company’s earnings performance and forward-looking guidance.

Post-Earnings Price Action Review

Strategically, buying KMT following an earnings beat and holding for 30 days resulted in a 10.55% return, underperforming the benchmark return of 84.41%. The strategy’s Sharpe ratio of 0.06 indicates modest risk-adjusted returns, with a maximum drawdown of 0.00%, pointing to relatively low risk exposure. However, the strategy was marked by high volatility at 36.15%, underscoring the significant price fluctuations that have characterized the stock's performance post-earnings.

CEO Commentary

Sanjay Chowbey, Kennametal’s President and CEO, acknowledged the challenges posed by market softness, tariff impacts, and foreign exchange pressures. He emphasized that the company has taken decisive steps to enhance productivity, reduce costs, and consolidate operations. These initiatives have already begun delivering results, with $65 million in annualized pre-tax savings achieved since fiscal 2024. The CEO expressed confidence in the company's ability to build resilience and unlock value for shareholders by continuing to optimize its portfolio and improve operational efficiency.

Guidance

Looking ahead, Kennametal anticipates further market headwinds in fiscal 2026, with the company expecting to achieve $125 million in annualized pre-tax savings by June 2027, exceeding its initial target of $100 million. The company will also continue to execute its strategic growth initiatives and focus on right-sizing capacity and cost improvements. Kennametal plans to provide more detailed guidance during its quarterly earnings conference call, offering investors a clearer picture of its financial outlook and strategic direction.

Additional News

Kennametal announced the completion of the sale of its Goshen, IN subsidiary, marking a key step in its portfolio optimization strategy. The company received $19 million in proceeds, though it recognized a $2 million loss on the divestiture. Additionally, Kennametal returned $122 million to shareholders in fiscal 2025 through $62 million in dividends and $60 million in share repurchases, demonstrating its commitment to value creation. The company repurchased 232,000 shares during the quarter under its $200 million three-year share repurchase program, and it continues to pay dividends consistently since its 1967 listing on the New York Stock Exchange. These actions reflect Kennametal’s focus on balancing growth initiatives with shareholder returns.