Kennametal (KMT) Misses Q2 EPS by 3c, Revenues Miss; Offers FY20 EPS Guidance Below Consensus

Kennametal (NYSE: KMT) reported Q2 EPS of $0.17, $0.03 worse than the analyst estimate of $0.20. Revenue for the quarter came in at $505 million versus the consensus estimate of $520.53 million.

"Our second quarter results reflect weakening end-market conditions, particularly from greater than expected deceleration in the U.S., Germany and India, combined with headwinds developing in the 737 MAX supply chain," said Christopher Rossi, President and CEO.

Rossi continued, "We expect increased profitability in the second half driven by progress on simplification/ modernization and raw material cost improvements now that higher-priced inventory has moved through the P&L. Nevertheless, we are reducing our full-year outlook to reflect further second half end-market weakness and a higher adjusted effective tax rate."

GUIDANCE:

Kennametal sees FY2020 EPS of $1.20-$1.50, versus the consensus of $1.77.

The Company has reduced its outlook due primarily to lower end-market demand experienced in the December quarter, as well as expectations of further weakness through the remainder of the fiscal year, which was previously forecasted to stabilize. The outlook also accounts for the effect of the 737 MAX on the aerospace supply chain, and a higher than anticipated effective tax rate.

The updated outlook for fiscal 2020 is as follows:

• Adjusted EPS of $1.20 to $1.50 on organic sales decline of 9 to 12 percent
• Adjusted ETR of 25 to 28 percent
• Capital spending of $240 to $260 million
• Break-even FOCF

For earnings history and earnings-related data on Kennametal (KMT) click here.

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