Kennametal Inc., Pittsburgh, Pennsylvania, USA, has announced its financial results for its second fiscal quarter of 2022, ended December 31, 2021. The company reported sales of $487 million, increasing 10% from $441 million in the prior year quarter, reflecting organic growth of 11%.
Earnings per diluted share (EPS) were reported at $0.37 with an adjusted EPS of $0.35 in comparison to an EPS of $0.23 and an adjusted EPS of $0.16 in the same quarter of 2020. The company also announced that its board of directors declared a quarterly cash dividend of $0.20 per share.
“We posted strong results again this quarter, reflected in both operating leverage and free operating cash flow,” stated Christopher Rossi, president and CEO. “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. Our results also demonstrated continued success in the execution on our Commercial and Operational Excellence programmes, including wins in key growth areas like electric vehicles and further pricing actions to address inflationary pressures.”
Fiscal 2022 second quarter key developments
Operating income was $48 million (9.8% of sales), compared to $19 million (4.3% of sales) in the prior year quarter. The increase in operating income was attributed primarily to organic sales growth, favourable pricing & product mix; and approximately $4 million of incremental simplification/modernisation benefits, partially offset by higher raw material costs, salary restoration and other cost-control measures that were taken in the prior year. Adjusted operating income was $45 million, or 9.2%, compared to $23 million, or 5.3% margin, in the prior year quarter.
Year-to-date net cash flow provided by operating activities was $58 million compared to $67 million in the prior year period. The change in net cash flow provided by operating activities was driven primarily by higher net income that was more than offset by working capital adjustments primarily resulting from higher sales and raw material prices. Year-to-date free operating cash flow (FOCF) was $21 million compared to negative $0.4 million in the prior year period.
During the quarter, Kennametal repurchased $23 million of its common stock under its share repurchase programme. Year-to-date, the company has repurchased $35 million of common stock of the $200 million three-year programme.
Metal Cutting sales of $299 million increased 6% from $283 million in the prior year quarter, driven by organic growth of 7%, partially offset by an unfavourable business days effect of 1%. Operating income was $28 million, or 9.3% of sales, compared to $14 million, or 4.8% of sales, in the prior year quarter. Adjusted operating income was $26 million, or 8.8% margin, compared to $17 million, or 6.1% margin, in the prior year quarter.
Infrastructure sales of $188 million increased 19% from $158 million in the prior year quarter, driven by organic growth of 18% and a favourable currency exchange effect of 1%. Operating income was $20 million, or 10.6% of sales, compared to $6 million, or 4% of sales, in the prior year quarter. Adjusted operating income was $19 million, or 10.1% margin, compared to $7 million, or 4.4% margin, in the prior year quarter.
“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,” Rossi continued. “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 programme.”