Latrobe, PA-based metalworking and metal cutting tool manufacturer Kennametal reported its 2017 Q3 fiscals on Tuesday. The company posted Q3 sales of $529 million, up 6.2 percent year-over-year, with organic sales up approximately 5 percent. That follows an overall Q2 sales decline of 6.9 percent, though organic sales increased 2 percent.
Kennametal's Q3 2017 total profit of $38.9 million, dwarfing profit of $16.0 million a year earlier, while this past quarter's operating profit of $57.9 million likewise was more than double from last year's $27.3 million.
Kennametal's Q3 operating margin was 11.0 percent, compared to 5.5 percent a year earlier, while adjusted operating margin of 12.8 percent compared with 7.8 percent a year earlier.
"This quarter's results exceeded our expectations by almost every metric," commented Ron De Feo, Kennametal President and CEO. "Simply stated, revenue grew and costs declined, reflecting continuing progress with the work we began nine months ago."
The first three months of 2017 were quite positive for Kennametal, which had a tumultuous 2016. The company changed CEOs that February, and in August announced the reduction of 1,000 jobs in addition to previously announced cost-cutting measures, while the company's fiscal 2016 finished with sales down 18 percent and a net loss of $66.1 million.
"Very little of this progress reflects the structural benefits from the modernization and end-to-end initiatives that we have planned, nor the benefits from the ongoing product and process simplification initiatives," DeFoe said in Tuesday's Q3 earnings release. "The results of those programs will accrue to the company over the next two to three years. This is a time of real change at Kennametal and we are excited to continue the work of improving the company."
By business segment in Q3:
- Industrial sales of $289 million increased approximately 6 percent year-over-year, with organic sales up 5 percent. Overall sales increased approximately 18 percent in energy, 9 percent in general engineering, 6 percent in aerospace and defense and 3 percent in transportation. Operating profit of $39 million increased from $26 million a year earlier, while opeating margin of 15.1 percent rose from last year's 11.2 percent.
- Widia sales of $46 million increased 10 percent year-over-year, with organic sales up 9 percent.
- Infrastructure sales of $193 million increased 6 percent year-over-year, with organic sales up 4 percent. Overall sales increased approximately 22 percent in energy, 3 percent in earthworks and 1 percent in general engineering. Operating profit of $20 million compared with $4 million a year earlier.
Kennametal also raised its full year 2017 sales and earnings outlook from that of its Q2 report.
By the end of trading Tuesday, Kennametal shares reached $40.48, a 73 percent rise in the last 12 months. Kennametal shares have risen 29 percent since the start of 2017.
