Tooling products maker Kennametal reported its 2022 fiscal second quarter results on Feb. 7, and like most other major industrial suppliers in the current earnings reporting season, they were led by continued year-over-year sales gains in the October-December period.
Pittsburgh-based Kennametal reported Q2 sales of $487 million, up 10.4 percent year-over-year and just ahead of $484 million in Q1, when sales grew 21 percent. Q2 organic sales improved 11 percent year-over-year, following Q1's 19 percent organic gain.
The company's Q2 operating profit was $48 million on margin of 9.8 percent, compared to $19 million and 4.3 percent a year earlier and $55 million/11.3 percent in Q1. Kennametal attributes the growth in Q2 operating profit to organic sales growth, smaller restructuring charges compared to the year earlier, favorable pricing and product mix and about $4 million in restructuring benefits, partially offset by higher raw material costs, restoration of salaries and other cost-control measures that were taken a year earlier.
Kennametal had a Q2 net profit of $31 million, compared to $19 million a year earlier and $38 million in Q1.
"As expected, we delivered year-over-year and sequential growth in all our end markets, with the exception of Transportation where supply chain issues continue to challenge our customers," said Christopher Rossi, president and CEO. "Our results also demonstrated continued success in the execution on our Commercial and Operational Excellence programs, including wins in key growth areas like electric vehicles and further pricing actions to address inflationary pressures."
Rossi continued, "Underlying demand is strong and we expect higher than normal sequential sales trends through the balance of the fiscal year despite the continuing macroeconomic uncertainty. We maintain our expectation of strong operating leverage for the full year and remain confident in our long-term growth and profitability strategy as demonstrated by our ongoing share repurchase program."
By Kennametal business segment in Q2:
- Metal Cutting sales of $299 million increased 5.7 percent year-over-year, driven by organic growth of 7 percent. Operating profit of $28 million on 9.3 percent margin essentially doubled the $28 million and 4.8 percent margin of a year earlier, and followed Q1's $29 million/9.8 percent.
- Infrastructure sales of $188 million increased 19.0 percent year-over-year, driven by organic growth of 18 percent. Operating profit of $20 million on margin of 10.6 percent likewise dwarfed the $6 million and 4.0 margin of a year earlier, and followed Q1's $26 million/14.1 percent.
By geography, Q1 sales in the Americas (46.4 percent of business) increased 16.3 percent year-over-year; sales in EMEA (30.3 percent of business) increased 7.3 percent; and sales in Asia Pacific (23.3 percent of business) increased 4.1 percent.
Looking forward, Kennametal is forecasting Q3 sales of $500 million to $520 million.