Kennametal reports a strong finish in fiscal year 2024 results
August 14, 2024
Kennametal Inc., based in Pittsburgh, Pennsylvania, USA, has announced its fourth quarter and fiscal 2024 results. For 2024, sales of $2,047 million decreased 2% from $2,078 million in the prior year, said to reflect an organic sales decline of 1% and an unfavourable currency exchange effect of 1%.
“Thanks to the hard work and diligence of our global team, we delivered a strong finish in fiscal year 2024 despite persistent market softness, foreign exchange headwinds and a natural disaster affecting our facility in Arkansas. We successfully met our revenue and EPS outlook and generated $277 million in cash from operations, the highest as a percent of sales in over twenty-five years,” said Sanjay Chowbey, president and CEO.
Operating income for the year was $170 million, or 8.3% margin, compared with $192 million, or 9.3% margin, in the prior year. The decrease in operating income was primarily due to lower sales and production volumes, higher wages and general inflation, higher restructuring and related charges of approximately $6 million, charges of approximately $4 million, consisting of repairs and impairments of fixed assets and inventory due to the tornado that affected the Company’s Rogers, Arkansas facility during the fourth quarter, and unfavourable foreign currency exchange of approximately $2 million.
These factors were partially offset by pricing, restructuring benefits of approximately $21 million and lower raw material costs. Adjusted operating income was $183 million, or 8.9% margin, compared with $199 million, or 9.6% margin, in the prior year.
Net cash flow provided by operating activities in fiscal 2024 was $277 million compared to $258 million in the prior year. The change in net cash flow from operating activities was driven primarily by working capital changes including improved inventory levels, partially offset by lower net income compared to the prior year.
Free operating cash flow (FOCF) was $175 million compared to $169 million in the prior year. The increase in FOCF was driven primarily by working capital changes, including improved inventory levels, partially offset by higher capital expenditures and lower net income compared to the prior year. FOCF was 146% of adjusted net income in fiscal 2024.
In fiscal 2024, Kennametal returned $129 million to the shareholders through $65.4 million in share repurchases and $63.4 million in dividends, while investing $108 million in capital expenditures.
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