Kennametal posts $20.8M quarterly loss as sales dropped
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Kennametal Corp. lost $20.8 million as sales fell about about 23% in the quarter ending Sept. 30, compared to a year ago, the company said Tuesday.
There is much uncertainty in the market and it is difficult to predict when there will be a full recovery, CEO Christopher Rossi said Tuesday in an earnings call with analysts. The company, headquartered in Pittsburgh with corporate offices in Unity, saw quarterly sales outpace typical seasonal trends, “indicating that the economic recovery may be gaining momentum,” Rossi said.
Kennametal, which manufactures industrial tooling for industries, saw a softening of its energy, aerospace, earthworks, and transportation markets. Sales slumped to $400.3 million in the first quarter of its fiscal 2021 year, compared to $518 million a year ago. With the decline in sales, Kennametal posted a net loss of $20.8 million in the first quarter compared to $7.4 million net gain a year ago. Kennametal posted a 26-cent-a-share loss compared to an 8-cent-a-share gain a year ago.
Despite the loss during the quarter, Kennametal’s revenue beat Zach’s Consensus Estimate of $385 million.
The company is seeing momentum growing even though year-over-year business remains down, Rossi said. Its general engineering and transportation sectors, representing more than 60% of its sales, were among its hard-hit sectors. Kennametal’s competitors seem to be experiencing the same end market weakness, Rossi noted.
While there is weakness in the oil and gas market, Rossi said the company sees strength in another energy market — the wind market. The energy market in China is largely driven by renewables, the manufacture of wind turbines, Rossi said. Kennametal sees the opportunity for growth in that market.
Kennametal expects to realize a savings of about $180 million by July 2021 as a result of its restructuring and modernization initiatives, which have been ongoing for several years. Among the plants that Kennametal closed was its Carbidie plant factory along Arona Road in Hempfield. The plant was shuttered late last year and operations were moved to a newer facility in Rogersville, Ark.
Kennametal’s stock opened at $31.37 a share Tuesday and was trading at about $30.34 at noon.