Kennametal Reports 6% Sales Decline in Q3 Fiscal 2025, Operating Income Increases

Kennametal Inc. reported a decline in financial performance for the third quarter of fiscal 2025, with sales totaling $486.4 million, a decrease of 6% from $515.8 million in the same quarter of the previous year. The decline was attributed to an organic sales drop of 3% and an unfavorable currency exchange effect of 3%. Despite the decrease in sales, the company achieved an operating income of $44.1 million, up from $35.2 million in the prior year quarter, primarily due to an advanced manufacturing production credit under the Inflation Reduction Act, lower raw material costs, and restructuring savings.

For the nine months ended March 31, 2025, Kennametal's total sales were $1.45 billion, down 4% from $1.50 billion in the prior year. The decrease was similarly driven by an organic sales decline of 3% and an unfavorable currency exchange effect of 2%. The company reported net income attributable to Kennametal of $71.5 million for the nine-month period, compared to $72.1 million in the previous year. Earnings per diluted share increased to $0.91 from $0.90, reflecting the company's efforts to manage costs and improve operational efficiency.

Strategically, Kennametal has been focusing on restructuring initiatives to enhance competitiveness amid softer market conditions. The company recorded restructuring and related charges of $5.8 million for the quarter, with expectations of achieving annualized pre-tax savings of approximately $15 million by the end of fiscal 2025. The company also reported a significant increase in operating income for its Infrastructure segment, which rose to $19.4 million from $5.1 million in the prior year quarter, largely due to the aforementioned production credit and improved pricing strategies.

Operationally, Kennametal's inventory levels increased to $556.0 million as of March 31, 2025, compared to $514.6 million at the end of the previous fiscal year. The company reported a decrease in cash and cash equivalents to $97.5 million from $128.0 million, reflecting cash flow challenges. The total employee headcount remained stable, and the company continues to monitor macroeconomic conditions, including inflation and foreign currency exchange impacts, which have affected its operations and financial results.

Looking ahead, Kennametal anticipates ongoing challenges from global trade policies and inflationary pressures, estimating a potential exposure of approximately $80 million related to tariffs. The company remains committed to mitigating these impacts through pricing strategies and operational efficiencies. Management expressed cautious optimism about future performance, emphasizing the importance of adapting to market conditions while continuing to invest in growth initiatives across its segments.