10-Q · May 6, 2026
Kennametal reported strong third-quarter results, with revenue of $592.6 million, exceeding estimates of $567.8 million, and earnings per share (EPS) of $0.77, surpassing expectations of $0.67. This reflects a continued…
Earnings analysis · 10-K
KMT earnings analysis
Filed August 12, 2026 · Our reading of the company's report
The latest report
Kennametal delivered a substantial fiscal 2026 recovery, with revenue up 20%, gross margin at 41.2%, and diluted EPS of $4.42, led particularly by Infrastructure and broad Aerospace & Defense, Earthworks, and Energy…
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Kennametal delivered a substantial fiscal 2026 recovery, with revenue up 20%, gross margin at 41.2%, and diluted EPS of $4.42, led particularly by Infrastructure and broad Aerospace & Defense, Earthworks, and Energy growth. However, the earnings improvement was heavily supported by approximately $316 million of favorable raw-material pricing timing, while operating cash flow fell to negative $4.0 million after a $593.4 million inventory increase tied largely to tungsten prices. The outlook is strategically constructive but financially balanced by raw-material reversal risk, higher debt commitments, and unresolved litigation.
Gross and operating margin
How much of each revenue dollar the business keeps.
One point per quarterly or annual filing. Both margins are shares of that report's revenue.
From revenue to operating profit
Where each $100 of revenue went in this report.
Cost of sales, operating expenses, and what remained. Figures are rounded to whole dollars.
Where revenue came from
The business segments reported by the company.
Shares of the segments disclosed in this filing, largest first.
How we read each report
Our analysis across the last few reports.
Our model's reading of each filing, not the share price or the market's reaction. Annual and quarterly reports each occupy one position.
Reported figures
- Earnings per share
- $4.42
What stood out
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Materials expertise supports differentiated positioning
Kennametal describes itself as a global industrial technology leader with more than 85 years of materials expertise, serving General Engineering, Transportation, Earthworks, Energy, and Aerospace & Defense. Its product and technology positioning includes tungsten carbides, ceramics, super-hard materials, advanced manufacturing, and Infrastructure's use of 3D printing.
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Major rebound in revenue and profitability
Revenue rose 20% to $2,356.7 million in 2026 from $1,966.8 million in 2025, while gross margin expanded to 41.2% from 30.4% and diluted EPS increased to $4.42 from $1.20. Operating income increased to $472.5 million from $143.1 million, an inflection driven substantially by favorable raw-material pricing timing.
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Infrastructure led segment growth
Infrastructure was the primary growth engine: sales increased 28% to $959.3 million and operating income increased $221.4 million to $279.9 million. Growth included Earthworks sales up 39%, Aerospace & Defense up 39%, and Energy up 36% on a reported basis, supported by pricing, share gains, and growth initiatives.
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Metal Cutting growth broadened across end markets
Metal Cutting sales increased 15% to $1,397.4 million, with Aerospace & Defense up 27%, Energy up 24%, and General Engineering up 15%. Management attributed growth to pricing, improved aerospace build rates, indirect-channel demand, data-center power-generation initiatives, and its strategic focus.
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Broad-based geographic expansion
Growth was geographically broad, with reported sales up 25% in the Americas, 14% in EMEA, and 15% in Asia Pacific. The United States remained the largest country market at $1,017.8 million, followed by Germany at $297.9 million and China at $219.3 million.
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Restructuring program is delivering savings
Restructuring savings contributed to the earnings recovery: the company recorded approximately $21 million of incremental year-over-year savings in Metal Cutting and approximately $6 million in Infrastructure. The company also reduced net restructuring accruals to $9.6 million at June 30, 2026 from $13.4 million at June 30, 2025.
What to watch
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Tungsten inventory build pressured cash flow
Cash conversion deteriorated sharply: net cash flow used in operating activities was $4.0 million versus $208.3 million provided in 2025. Inventories increased $593.4 million during the year, largely because of rising tungsten prices, while total inventory reached $1,108.5 million versus $538.2 million in 2025.
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Higher debt and refinancing exposure
The refinancing increased financial commitments while operating cash flow was negative. Total debt rose to $717.5 million from $597.8 million, the company issued $300.0 million of 5.800% notes due 2036, and it expects to fully draw a new $500.0 million term loan by September 30, 2026; the credit agreement caps leverage at 3.75 times adjusted trailing-twelve-month EBITDA.
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Earnings quality depends on raw-material timing
Raw-material economics remain a material earnings risk: gross profit benefited from approximately $316 million of favorable raw-material pricing timing versus costs, including approximately $262 million in Infrastructure. Management also stated that inflation is expected to remain a challenge in fiscal 2027, creating risk that pricing timing and margin benefits reverse.
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Material unresolved litigation
A newly disclosed litigation matter could create significant uncertainty: MachiningCloud initially sought damages in excess of $330 million in a lawsuit filed in February 2025. Although the claims were narrowed and damages sought are now significantly lower, the company states that no determination can yet be made regarding the outcome or probability of an unfavorable result.
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EMEA weakness and divestiture drag
Infrastructure growth includes regional and end-market offsets: Energy sales declined in EMEA because of softer market conditions and order timing, while General Engineering and Energy in EMEA were also affected by lower ceramics sales and weaker conditions. Infrastructure's reported growth was additionally reduced by a 4% divestiture effect.
Management's outlook
The 10-K does not provide annual revenue or EPS guidance. Quantitative forward-looking items include expected FY2027 capital spending of approximately $85 million and FOCF of approximately 20% of adjusted net income, as disclosed in the prior earnings materials rather than this filing; the 10-K states that the $500 million term loan is expected to be fully drawn by September 30, 2026.
Earlier filings 4
10-Q · February 4, 2026
Kennametal reported Q2 sales of $529.5 million (up 10% y/y) and diluted EPS of $0.44 (vs. $0.23 prior year), with gross margin improving to 32.8% and operating margin to 9.9%. Both reportable segments (Metal Cutting and…
10-Q · November 5, 2025
Kennametal reported quarterly sales of $497,974,000, up 3% from $481,948,000 a year earlier, with operating income of $37,559,000 (7.5% operating margin, unchanged YoY) and diluted EPS of $0.30 versus $0.28 in the prior…
10-Q · February 7, 2025
Kennametal reported quarterly sales of $482,051,000 (down 3% YoY) with operating income of $31,667,000 (up $3,188,000 YoY) and diluted EPS of $0.23 (down from $0.29 prior year). Gross profit improved to $145.0 million…
This is our reading of a public filing, not the filing itself. Analysis can contain errors; check the source document for full context.