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MarketScreener Homepage  >  Equities  >  Nyse  >  Kennametal Inc.    KMT

KENNAMETAL INC.

(KMT)
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Kennametal : Announces Fourth Quarter & Fiscal 2015 Results; Announces Fiscal 2016 Outlook and Dividend Increase

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07/30/2015 | 08:02am EDT

LATROBE, Pa., July 30, 2015 /PRNewswire/ -- Kennametal Inc. (NYSE: KMT) today announced fiscal 2015 and fourth-quarter results. For fiscal 2015, the company reported loss per diluted share (LPS) of $4.71, compared with EPS of $1.99 during the prior year. Adjusted EPS were $2.02 in the current year compared to $2.53 in the prior year.

For its fiscal fourth quarter, the company reported EPS of $0.26, compared with the prior year quarter EPS of $0.57. The current quarter adjusted EPS were $0.46, compared to $0.79 in the prior year quarter.

"Our performance in the June quarter was better than expected on several fronts, driven by progress on our cost reduction measures and significant improvements in working capital management," said Kennametal President and Chief Executive Officer Don Nolan. "In a challenging market environment, our efforts to lower costs, improve efficiencies and generate higher cash flows are having a favorable impact. As we move ahead, we will remain focused on aligning our cost structure, expanding margins and investing in core growth opportunities."

Fiscal 2015 Fourth Quarter Key Developments

    --  Sales were $638 million compared with $772 million in the same quarter
        last year. Sales decreased by 17 percent, reflecting a 10 percent
        organic sales decline, a 7 percent unfavorable currency exchange impact
        and a 1 percent decrease from a prior year divestiture, offset partially
        by a 1 percent increase due to more business days.
    --  On a combined basis, pre-tax restructuring and related charges amounted
        to $21 million, or $0.24 per share, and pre-tax benefits were
        approximately $17 million, or $0.16 per share in the quarter.
    --  Operating income was $35 million, compared with $78 million in the same
        quarter last year. Adjusted operating income was $56 million, compared
        with $95 million in the prior year quarter. The decrease in operating
        income in the current period was primarily driven by organic sales
        decline, lower absorption of manufacturing costs related to reduced
        sales volumes and an inventory reduction initiative, unfavorable mix in
        Infrastructure and unfavorable currency exchange, offset partially by
        restructuring benefits. Adjusted operating margin was 8.8 percent in the
        current period and 12.4 percent in the prior period.
    --  The reported effective tax rate was 24.8 percent compared to 30.5
        percent in the prior year. The decrease was primarily driven by prior
        year restructuring charges in tax jurisdictions where a tax benefit was
        not permitted.
    --  EPS were $0.26, compared with the prior year quarter EPS of $0.57.
        Adjusted EPS were $0.46 in the current year quarter and $0.79 in the
        prior year quarter.
    --  The company realized record free operating cash flow of $267 million
        compared with $156 million last year despite the unfavorable impact of
        challenging end markets to cash earnings. The record free operating cash
        flow was primarily attributable to improved working capital management.

Segment Developments for the Fiscal 2015 Fourth Quarter

    --  Industrial segment sales of $358 million decreased 14 percent from $416
        million in the prior year quarter due to unfavorable currency exchange
        of 10 percent, organic sales decline of 4 percent and prior year
        divestiture of 1 percent, partially offset by an increase of 1 percent
        due to more business days. Excluding the impact of currency exchange,
        sales remained relatively flat in general engineering, while sales
        decreased approximately 2 percent in transportation, approximately 7
        percent in aerospace and defense and approximately 22 percent in energy.
        In the general engineering market, sales in the indirect channel grew,
        offset by weak demand in the energy markets. Sales in the transportation
        market were adversely affected by lower volumes in all regions, while
        aerospace and defense sales decreased due to the company exiting lower
        margin businesses, partially offset by production growth in aircraft
        frames and engines. Energy sales declined due to continuing weakness in
        oil and gas end markets. On a regional basis, sales decreased 6 percent
        in the Americas and 1 percent in Europe, while sales remained flat in
        Asia.
    --  Industrial segment operating income was $40 million compared with $53
        million in the prior year period. Adjusted operating income was $51
        million compared to $64 million in the prior year quarter, driven by
        organic sales decline and lower absorption of manufacturing costs
        related to reduced sales volumes and an inventory reduction initiative,
        partially offset by restructuring program benefits. Industrial adjusted
        operating margin was 14.1 percent compared with 15.5 percent in the
        prior year.
    --  Infrastructure segment sales of $280 million decreased 21 percent from
        $357 million in the prior year. The decrease was driven by 16 percent
        organic sales decline and 6 percent unfavorable currency exchange,
        offset partially by an increase of 1 percent due to more business days.
        Excluding the impact of currency exchange, Infrastructure sales
        decreased by approximately 23 percent in energy and approximately 11
        percent in earthworks. The energy market was impacted by continuing
        weakness in oil and gas end markets, partially offset with some
        improvements in power generation and process industry sales. Earthworks
        was impacted by continued weakness in underground mining, while highway
        construction sales improved in line with the road rehabilitation season.
        On a regional basis, sales decreased 21 percent in the Americas, 17
        percent in Asia and 5 percent in Europe.
    --  Infrastructure segment operating loss was $4 million, compared with
        operating income of $27 million in the same quarter of the prior year.
        Adjusted operating income was $6 million compared to $32 million in the
        prior year quarter. Adjusted operating income decreased primarily due to
        lower organic sales, lower absorption of manufacturing costs related to
        reduced sales volumes and an inventory reduction initiative, and
        unfavorable business mix, partially offset by the benefits of
        restructuring savings. Infrastructure adjusted operating margin was 2.0
        percent compared with 9.0 percent in the prior year.

Fiscal 2015 Key Developments

    --  Sales were $2,647 million, compared with $2,837 million last year. Sales
        decreased by 7 percent, driven by 5 percent organic sales decline and 4
        percent unfavorable currency exchange, offset partially by 2 percent net
        increase from prior year acquisition and divestiture activity.
    --  Operating loss was $358 million, compared with operating income of $263
        million in the same period last year. Adjusted operating income was $242
        million, compared with adjusted operating income of $307 million in the
        prior year. Adjusted operating income decreased primarily due to organic
        sales decline, lower absorption of manufacturing costs related to
        reduced sales volumes and an inventory reduction initiative, and
        unfavorable mix in Infrastructure, offset partially by restructuring
        benefits and a prior period non-recurring inventory charge of
        approximately $6 million. Adjusted operating margin was 9.1 percent,
        compared to 10.8 percent in the prior year.
    --  LPS were $4.71 in the current year, compared with EPS of $1.99 in the
        prior year. Adjusted EPS were $2.02 in the current year and $2.53 in the
        prior year.

Restructuring Programs

The previously announced restructuring programs are expected to produce combined annual ongoing pre-tax permanent savings of $115-$135 million. In total, pre-tax charges for these initiatives are expected to be approximately $185-$205 million.




    RESTRUCTURING AND RELATED CHARGES AND SAVINGS (PRE-TAX)

                                           Estimated              Current      Charges      Estimated              Approximate      Approximate       Expected
                                            Charges               Quarter      To Date      Annualized               Current        Savings To       Completion
                                                                  Charges                    Savings                 Quarter           Date             Date
                                                                                                                     Savings
                                                                                                                     -------

    Phase 1                                             $55M-$60M          $8M         $52M              $50M-$55M             $10M             $30M             6/30/2016

    Phase 2                                            $90M-$100M         $12M         $24M              $40M-$50M              $7M              $7M            12/31/2016

    Phase 3                                             $40M-$45M          $1M          $1M              $25M-$30M                -                -             3/31/2017
                                                        ---------          ---          ---              ---------              ---              ---             ---------

    Total                                             $185M-$205M         $21M         $77M            $115M-$135M             $17M             $37M

Reconciliations of all non-GAAP financial measures are set forth in the tables attached, and corresponding descriptions are contained in the company's report on Form 8-K, to which this news release is attached.

Outlook

For fiscal year 2016, the company's outlook reflects ongoing market uncertainties as well as limited visibility related to customer demand trends. Kennametal's current assumptions include expectations of some growth in the Industrial segment, although not sufficient to offset weakness in the Infrastructure segment. In addition, orders activity levels remained weak during the June quarter, and the company expects year-over-year comparisons to be unfavorable through December 2015.

Given these factors, the company expects organic sales decline ranging from 1 to 3 percent, with total sales decline between 7 and 9 percent.

Restructuring benefits are expected to range from $80 million to $90 million in fiscal 2016.

The company expects consolidated EPS to range from $1.70 to $2.00 in fiscal 2016, which includes foreign currency headwinds of approximately $0.30 to $0.35 due to the continued strength of the U.S. dollar.

"In fiscal 2016, we remain focused on increasing margins through portfolio simplification, footprint restructuring and reductions in G&A costs," said Nolan. "At the same time, we continue to invest in innovation to fuel organic growth and expand our return on invested capital to the double-digit level as part of our long-term plan."

Kennametal expects to generate cash flow from operating activities in the range of $275 million to $310 million in fiscal 2016. Based on anticipated capital expenditures of approximately $160 million to $175 million, the company expects to generate free operating cash flow in the range of $115 million to $135 million for fiscal year 2016.

Kennametal remains committed to maintaining investment-grade credit ratings. In fiscal 2015, we achieved significant debt reduction through record cash from operations and overseas cash redeployment thereby strengthening our balance sheet and credit metrics. Consistent with our capital structure principles, our priority is business reinvestment for profitable growth and margin expansion while remaining balanced in consistently deploying a portion of excess cash to shareholders through dividends and share repurchases. We are confident in our ability to generate consistent, strong cash flow and drive shareholder value.

Dividend Increase Declared

Kennametal also announced that its board of directors declared a quarterly cash dividend of $0.20 per share, which represents an increase of 11 percent, or $0.02 per share. The dividend is payable August 26, 2015 to shareholders of record as of the close of business on August 11, 2015.

The company will discuss its fiscal 2015 fourth-quarter results in a live webcast at 10:00 a.m. Eastern Time today. This event will be broadcast live on the company's website, www.kennametal.com. To access the webcast, select "About Us", "Investor Relations" and then "Events." A recorded replay of this event also will be available on the company's website through August 31, 2015.

Certain statements in this release may be forward-looking in nature, or "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Forward-looking statements are statements that do not relate strictly to historical or current facts. For example, statements about Kennametal's outlook for earnings, sales volumes, and cash flow for fiscal year 2016 and our expectations regarding future growth and financial performance are forward-looking statements. Any forward looking statements are based on current knowledge, expectations and estimates that involve inherent risks and uncertainties. Should one or more of these risks or uncertainties materialize, or should the assumptions underlying the forward-looking statements prove incorrect, our actual results could vary materially from our current expectations. There are a number of factors that could cause our actual results to differ from those indicated in the forward-looking statements. They include: economic recession; availability and cost of the raw materials we use to manufacture our products; our foreign operations and international markets, such as currency exchange rates, different regulatory environments, trade barriers, exchange controls, and social and political instability; changes in the regulatory environment in which we operate, including environmental, health and safety regulations; our ability to protect and defend our intellectual property; competition; our ability to retain our management and employees; demands on management resources; demand for and market acceptance of our products; integrating acquisitions and achieving the expected savings and synergies; business divestitures; global or regional catastrophic events; energy costs; commodity prices; labor relations; demand for and market acceptance of new and existing products; and implementation of environmental remediation matters. Many of these risks and other risks are more fully described in Kennametal's latest annual report on Form 10-K and its other periodic filings with the Securities and Exchange Commission. We can give no assurance that any goal or plan set forth in forward-looking statements can be achieved and readers are cautioned not to place undue reliance on such statements, which speak only as of the date made. We undertake no obligation to release publicly any revisions to forward-looking statements as a result of future events or developments.

Celebrating more than 75 years as an industrial technology leader, Kennametal Inc. delivers productivity to customers seeking peak performance in demanding environments. The company provides innovative wear-resistant products, application engineering and services backed by advanced material science, serving customers in 60 countries across diverse sectors of aerospace, earthworks, energy, industrial production, transportation and infrastructure. With approximately 13,000 employees and nearly $3 billion in sales, the company realizes half of its revenue from outside North America, and over 40% globally from innovations introduced in the past five years. Recognized among the "World's Most Ethical Companies" (Ethisphere); "Outstanding Corporate Innovator" (Product Development Management Association); and "America's Safest Companies" (EHS Today) with a focus on 100% safety, Kennametal and its foundation invest in technical education, industrial technologies and material science to deliver the promise of progress and economic prosperity to people everywhere. For more information, visit the company's website at www.kennametal.com.


                                                              FINANCIAL HIGHLIGHTS



    CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)


                                                                        Three Months Ended                 Twelve Months Ended
                                                                             June 30,
                                                                                                                June 30,

    (in thousands, except per share amounts)                     2015                       2014                2015           2014
    ---------------------------------------                      ----                       ----                ----           ----

    Sales                                                                $637,653                  $772,204                         $2,647,195  $2,837,190

    Cost of goods sold                                        448,687                      519,364             1,841,202              1,940,187
    ------------------                                        -------                      -------             ---------              ---------

       Gross profit                                           188,966                      252,840               805,993                897,003

    Operating expense                                         130,923                      154,785               554,895                589,768

    Restructuring and asset impairment charges                 16,398                       12,594               582,235                 17,608

    Amortization of intangibles                                 6,325                        7,404                26,686                 26,195
    ---------------------------                                 -----                        -----                ------                 ------

       Operating income (loss)                                 35,320                       78,057             (357,823)                263,432

    Interest expense                                            7,537                        8,450                31,466                 32,451

    Other (income) expense, net                               (1,705)                       1,267               (1,674)                 2,172
    ---------------------------                                ------                        -----                ------                  -----

       Income (loss) from continuing operations before income  29,488                       68,340             (387,615)                228,809
          taxes

       Provision (benefit) for income taxes                     7,321                       20,861              (16,654)                66,611
       ------------------------------------                     -----                       ------               -------                 ------

    Net income (loss)                                          22,167                       47,479             (370,961)                162,198

    Less: Net income attributable to noncontrolling interests   1,021                        2,024                 2,935                  3,832
                                                                -----                        -----                 -----                  -----

    Net income (loss) attributable to Kennametal                          $21,146                   $45,455                         $(373,896)   $158,366
    ============================================                          =======                   =======                          =========    ========

    PER SHARE DATA ATTRIBUTABLE TO KENNAMETAL SHAREHOLDERS

    Basic earnings (loss) per share                                         $0.27                     $0.58                            $(4.71)      $2.01
    ===============================                                         =====                     =====                             ======       =====

    Diluted earnings (loss) per share                                       $0.26                     $0.57                            $(4.71)      $1.99
    =================================                                       =====                     =====                             ======       =====

    Dividends per share                                                     $0.18                     $0.18                              $0.72       $0.72
    ===================                                                     =====                     =====                              =====       =====

    Basic weighted average shares outstanding                  79,518                       78,818                79,342                 78,678
    =========================================                  ======                       ======                ======                 ======

    Diluted weighted average shares outstanding                80,113                       79,850                79,342                 79,667
    ===========================================                ======                       ======                ======                 ======


    CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)


    (in thousands)                                                           June 30, 2015             June 30, 2014
    -------------                                                            -------------             -------------

    ASSETS

    Cash and cash equivalents                                                                 $105,494                     $177,929

    Accounts receivable, net                                                        445,373                      531,515

    Inventories                                                                     575,531                      703,766

    Other current assets                                                            132,148                      111,986
    --------------------                                                            -------                      -------

    Total current assets                                                          1,258,546                    1,525,196

    Property, plant and equipment, net                                              815,825                      884,458

    Goodwill and other intangible assets, net                                       704,058                    1,318,752

    Other assets                                                                     71,100                      139,680

    Total assets                                                                            $2,849,529                   $3,868,086
    ============                                                                            ==========                   ==========

    LIABILITIES

    Current maturities of long-term debt and capital leases, including notes                   $15,702                      $80,117
       payable

    Accounts payable                                                                187,381                      206,891

    Other current liabilities                                                       279,661                      275,748
    -------------------------                                                       -------                      -------

    Total current liabilities                                                       482,744                      562,756

    Long-term debt and capital leases                                               735,885                      981,666

    Other liabilities                                                               255,465                      362,056
    -----------------                                                               -------                      -------

    Total liabilities                                                             1,474,094                    1,906,478

    KENNAMETAL SHAREHOLDERS' EQUITY                                               1,345,807                    1,929,256

    NONCONTROLLING INTERESTS                                                         29,628                       32,352

    Total liabilities and equity                                                            $2,849,529                   $3,868,086
    ============================                                                            ==========                   ==========




    SEGMENT DATA (UNAUDITED)                  Three Months Ended          Twelve Months Ended
                                                   June 30,                    June 30,

    (in thousands)                        2015                                  2014          2015            2014
    -------------                         ----                                  ----          ----            ----

    Outside Sales:

    Industrial                                                   $357,519                           $415,529       $1,461,744  $1,524,075

    Infrastructure                     280,134                                 356,675              1,185,451        1,313,115

      Total outside sales                                        $637,653                           $772,204       $2,647,195  $2,837,190
      ===================                                        ========                           ========       ==========  ==========

    Sales By Geographic Region:

    North America                                                $295,066                           $353,604       $1,250,535  $1,276,704

    Western Europe                     176,405                                 232,280                731,014          873,828

    Rest of World                      166,182                                 186,320                665,646          686,658

      Total sales by geographic region                           $637,653                           $772,204       $2,647,195  $2,837,190
      ================================                           ========                           ========       ==========  ==========

    Operating Income (Loss):

    Industrial                                                    $39,771                            $52,598         $160,894    $177,040

    Infrastructure                     (3,583)                                 26,636              (509,381)          94,940

    Corporate (1)                        (868)                                (1,177)                (9,336)         (8,548)

      Total operating income (loss)                               $35,320                            $78,057       $(357,823)   $263,432
      ============================                                =======                            =======        =========    ========


    (1) Represents unallocated
     corporate expenses.

In addition to reported results under generally accepted accounting principles in the United States of America (GAAP), the following financial highlight tables include, where appropriate, a reconciliation of adjusted results including: gross profit and margin, operating expense, operating expense as a percentage of sales, operating income (loss) and margin, net income (loss), diluted EPS (LPS), effective tax rate, Industrial operating income and margin, Infrastructure operating income (loss) and margin and free operating cash flow (which are non-GAAP financial measures), to the most directly comparable GAAP measures. For those adjustments that are presented 'net of tax', the tax effect of the adjustment can be derived by calculating the difference between the pre-tax and the post-tax adjustments presented. The tax effect on adjustments is calculated by preparing an overall tax calculation including the adjustments and then a tax calculation excluding the adjustments. The difference between these calculations results in the tax impact of the adjustments.

Management believes that investors should have available the same information that management uses to assess operating performance, determine compensation and assess the capital structure of the company. These non-GAAP measures should not be considered in isolation or as a substitute for the most comparable GAAP measures. Investors are cautioned that non-GAAP financial measures utilized by the company may not be comparable to non-GAAP financial measures used by other companies. Reconciliations of all non-GAAP financial measures are set forth in the attached tables and descriptions of certain non-GAAP financial measures are contained in our report on Form 8-K to which this release is attached.




    THREE MONTHS ENDED JUNE 30, 2015 - (UNAUDITED)


    (in thousands, except                          Sales    Gross          Operating  Operating       Net             Diluted     Effective
    percents)                                              Profit            Expense   Income     Income (2)            EPS       Tax Rate
    --------                                               ------            -------   ------      ---------            ---       --------

    2015 Reported Results                                         $637,653                                   $188,966                         $130,923             $35,320         $21,146 $0.26 24.8%

    2015 Reported Margins                                            29.6%                 20.5%                           5.5%

       Restructuring and                                 -                      2,908                         (1,691)                  20,996             18,566      0.24   (5.5)
         related charges (3)

    Tax impact of prior                                  -                          -                              -                       -           (3,651)   (0.05)    7.2
         impairment charges

    Tax redeployment                                     -                          -                              -                       -               807      0.01   (1.6)
         expense
         -------

    2015 Adjusted Results                                         $637,653                                   $191,874                         $129,232             $56,316         $36,868 $0.46 24.9%
    =====================                                         ========                                   ========                         ========             =======         ======= =====  ====

    2015 Adjusted Margins                                            30.1%                 20.3%                           8.8%
    =====================                                             ====                   ====                             ===


    (2) Represents amounts attributable
     to Kennametal Shareholders.

    (3) Includes pre-tax restructuring
     and related charges recorded in
     corporate of $986.




    (in thousands, except percents)       Industrial  Industrial         Infrastructure  Infrastructure
                                             Sales     Operating              Sales     Operating (Loss)
                                                        Income                               Income
    ---                                                 ------                               ------

    2015 Reported Results                                       $357,519                                 $39,771       $280,134 $(3,583)

    2015 Reported Operating Margin                                 11.1%                                 (1.3)%

    Restructuring and related charges (4)           -                            10,743                        - 9,267
                                                  ---                            ------                      --- -----

    2015 Adjusted Results                                       $357,519                                 $50,514       $280,134   $5,684
    =====================                                       ========                                 =======       ========   ======

    2015 Adjusted Operating Margin                                 14.1%                                   2.0%
    ==============================                                  ====                                     ===


    (4) Excludes pre-tax
     restructuring related charges
     recorded in corporate of $986.




    THREE MONTHS ENDED JUNE 30, 2014 - (UNAUDITED)


    (in thousands, except percents)                    Sales     Gross   Operating  Operating    Net     Diluted
                                                                 Profit     Expense   Income  Income (2)    EPS
    ---                                            ---                                                             ------     ------      ------      --- ---

    2014 Reported Results                                       $772,204                        $252,840                         $154,785                    $78,057 $45,455 $0.57

    2014 Reported Margins                                        32.7%                 20.0%               10.1%

      Acquisition-related charges                             -               1,041              (2,355)                3,396                   1,914           0.03

      Restructuring and related charges                       -               1,341                 (58)               13,994                  13,874           0.17

    Loss on divestiture                                       -                   -                   -                    -                  1,607           0.02
    -------------------                                     ---                 ---                 ---                  ---                  -----           ----

    2014 Adjusted Results                                       $772,204                        $255,222                         $152,372                    $95,447 $62,850 $0.79
    =====================                                       ========                        ========                         ========                    ======= ======= =====

    2014 Adjusted Margins                                        33.1%                 19.7%               12.4%
    =====================                                         ====                   ====                 ====


    (2) Represents amounts attributable
     to Kennametal Shareholders.



    (in thousands, except percents)   Industrial  Industrial         Infrastructure Infrastructure
                                         Sales     Operating              Sales        Operating
                                                    Income                              Income
    ---                                             ------                              ------

    2014 Reported Results                                   $415,529                               $52,598       $356,675 $26,636

    2014 Reported Operating Margin                             12.7%                                 7.5%

      Acquisition-related charges               -                             1,327                      - 2,069

    Restructuring and related charges           -                            10,516                      - 3,478
                                              ---                            ------                    --- -----

    2014 Adjusted Results                                   $415,529                               $64,441       $356,675 $32,183
    =====================                                   ========                               =======       ======== =======

    2014 Adjusted Operating Margin                             15.5%                                 9.0%
    ==============================                              ====                                   ===




    TWELVE MONTHS ENDED JUNE 30, 2015 - (UNAUDITED)


    (in thousands, except percents)                      Sales    Operating     Net     Diluted
                                                                    (Loss)     (Loss)     (LPS)
                                                                    Income   Income (2)    EPS
    ---                                              ---                                                               ------ --- ---

    2015 Reported Results                                         $2,647,195                    $(357,823)       $(373,896)           $(4.71)

    2015 Reported Operating Margin                                 (13.5)%

    Restructuring and related charges                           -               58,102              44,197  0.56

    Technology asset impairment charge                          -                5,500               3,377  0.04

      Goodwill and other intangible asset impairment            -              536,200             483,386  6.09
         charges

    Tax redeployment expense                                    -                    -              2,945  0.04
    ------------------------                                  ---                  ---              -----  ----

    2015 Adjusted Results                                         $2,647,195                      $241,979          $160,009              $2.02
    =====================                                         ==========                      ========          ========              =====

    2015 Adjusted Operating Margin                                    9.1%
    ==============================                                     ===


    (2) Represents amounts attributable
     to Kennametal Shareholders.



    TWELVE MONTHS ENDED JUNE 30, 2014 - (UNAUDITED)


    (in thousands, except percents)                 Sales    Operating               Net    Diluted
                                                                                 Income (2)   EPS
                                                              Income
    ---                                                       ------

    2014 Reported Results                                             $2,837,190                    $263,432       $158,366 $1.99

    2014 Reported Operating Margin                                          9.3%

    TMB inventory step-up                                  -                         15,420           11,518  0.14

    Acquisition-related charges                            -                          8,674            5,648  0.07

    Restructuring and related charges                      -                         19,085           17,356  0.22

      Tax repatriation expense                             -                              -           7,170  0.09

    Loss on divestiture                                    -                              -           1,607  0.02
    -------------------                                  ---                            ---           -----  ----

    2014 Adjusted Results                                             $2,837,190                    $306,611       $201,665 $2.53
    =====================                                             ==========                    ========       ======== =====

    2014 Adjusted Operating Margin                                         10.8%
    ==============================                                          ====


    (2) Represents amounts attributable
     to Kennametal Shareholders.



    FREE OPERATING CASH FLOW (UNAUDITED)                              Twelve Months Ended

                                                                           June 30,

    (in thousands)                                                2015                                2014
    -------------                                                 ----                                ----

    Net cash flow from operating activities                                              $351,437            $271,873

    Purchases of property, plant and equipment               (100,939)                            (117,376)

    Proceeds from disposals of property, plant and equipment    16,122                                 1,236
                                                                ------                                 -----

      Free operating cash flow                                                           $266,620            $155,733
      ========================                                                           ========            ========

To view the original version on PR Newswire, visit:http://www.prnewswire.com/news-releases/kennametal-announces-fourth-quarter--fiscal-2015-results-announces-fiscal-2016-outlook-and-dividend-increase-300120847.html

SOURCE Kennametal Inc.


© PRNewswire 2015
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