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COVID-19: How Kennametal is responding

Kennametal Inc. today reported fiscal 2009 fourth quarter earnings (loss) per diluted share (EPS) of ($0.45), compared with prior year quarter reported EPS of $0.77. The current quarter reported EPS included restructuring and divestiture related charges amounting to $0.32 per share. The prior year quarter reported EPS included restructuring related charges of $0.08 per share. Absent these charges, adjusted EPS for the current quarter was ($0.13), compared with the prior year quarter adjusted EPS of $0.85.

Chairman, President and Chief Executive Officer Carlos Cardoso said, "Fiscal 2009 was the most challenging year in our company's 70-year history. We responded aggressively to the severe and rapid global economic downturn by taking a number of measures. We reduced our costs, optimized cash flow and liquidity, and preserved our competitive strengths. As a result, we offset a considerable portion of the impact of the decline in sales volume, achieved a modest profit for the fiscal year on an adjusted basis, generated strong cash flow, and further enhanced our financial position. With our high-performance consumable products, we expect to benefit relatively early and have higher operating leverage in the industrial upturn. We have a worldwide infrastructure, well-balanced business and a highly talented global workforce dedicated to serving customers."

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.

  Fiscal 2009 Fourth Quarter Key Developments
  --  Sales for the quarter were $386 million, compared with $724 million in
      the same quarter last year. The 47 percent decrease in sales was due
      to a 43 percent organic decline and a 4 percent decrease from
      unfavorable foreign currency effects.  A net favorable impact from
      acquisitions and divestitures was offset by the effect of one less
      workday.
  --  The company continued to implement certain restructuring plans to
      reduce costs and improve operating efficiencies. During the June
      quarter, the company recognized pre-tax charges related to these
      initiatives of $21 million, or $0.08 per share.  Pre-tax charges
      recorded to date for these initiatives were $82 million. Including
      these charges, the company expects to recognize approximately $115
      million of pre-tax charges related to its restructuring plans.  The
      majority of the remaining charges are expected to be incurred by
      December 31, 2009, most of which are expected to be cash expenditures.
      The company realized pre-tax benefits of approximately $50 million
      from these actions in fiscal 2009 and expects to realize approximately
      $75 million of additional pre-tax benefits in fiscal 2010.  This would
      bring the total annual ongoing pre-tax benefits from these actions to
      approximately $125 million.
  --  Operating loss was $25 million for the current quarter compared to
      operating income of $80 million for the prior year quarter.  Absent
      restructuring related charges recorded in both periods, operating loss
      for the current quarter was $3 million compared to operating income of
      $88 million in the prior year quarter. The adjusted operating loss for
      the current quarter improved sequentially from the March 2009 quarter
      despite a sequential decline in sales.  This improvement was driven by
      a higher run rate of restructuring benefits as well as the impact of
      additional cost reduction actions such as employee furloughs and the
      suspension of contributions to certain employee benefit plans.
  --  The reported effective tax rate was 39.1 percent.  On an adjusted
      basis, the effective tax rate was (116.4) percent compared to 19.9
      percent in the prior year quarter.  The change in the adjusted rate
      was driven by different jurisdictional mix of pre-tax results.
  --  On June 30, 2009, Kennametal completed the sale of its high speed
      steel drills, related product lines and assets as the company
      continued to focus on shaping its business portfolio and rationalizing
      its manufacturing footprint.  Cash proceeds from this divestiture
      amount to $29 million, of which $26 million was received through July
      2009, with the balance expected to be received in the December 2009
      quarter.  The pre-tax loss on the sale and related charges of $26
      million, as well as the related tax effects, were recorded in
      discontinued operations.  The company expects to incur additional
      pre-tax charges related to this divestiture of $4 million to $7
      million over the next six months.
  --  Net loss was $33 million for the current year quarter, compared to net
      income of $60 million in the prior year quarter. Absent the charges
      related to restructuring and divestiture, net loss for the current
      quarter was $10 million, compared to net income of $66 million in the
      prior year quarter.

  --  Reported EPS was ($0.45), compared with prior year quarter reported
      EPS of $0.77.  Adjusted EPS was ($0.13) compared to prior year quarter
      adjusted EPS of $0.85.  A reconciliation follows:


                  Earnings (Loss) Per Diluted Share Reconciliation

  Fourth Quarter FY 2009              Fourth Quarter FY 2008

  Reported EPS                ($0.45) Reported EPS                  $0.77
    Restructuring and                   Restructuring and related
     related charges            0.08     charges                     0.08
    Loss on divestiture and
     related charges            0.24
  -----------------------------------------------------------------------
  Adjusted EPS                ($0.13) Adjusted EPS                  $0.85
  =======================================================================


  Fiscal Year 2009 Key Developments
  --  Cash flow from operating activities was $192 million for fiscal year
      2009, compared with $280 million for the prior fiscal year.  Capital
      expenditures for fiscal year 2009 were $105 million, a reduction of
      $59 million or 36 percent from fiscal year 2008.  Free operating cash
      flow for the current fiscal year was $90 million, compared with $119
      million in the prior fiscal year.  The generation of free operating
      cash flow was bolstered through strong focus on receivable collection,
      inventory reduction from close management of production levels and
      reduced capital expenditures.
  --  Sales of $2.0 billion decreased 23 percent from $2.6 billion in the
      previous fiscal year. Sales decreased 21 percent organically and 3
      percent from unfavorable foreign currency effects. This was partially
      offset by the net favorable impact of acquisitions and divestitures of
      1 percent.
  --  In the March quarter, the company recorded a non-cash pre-tax charge
      of $111 million for impairment of goodwill and an indefinite lived
      trademark.
  --  Operating loss was $100 million, compared with operating income of
      $259 million for the prior fiscal year.  Absent charges related to
      restructuring and impairment recorded in both periods, operating
      income for fiscal year 2009 was $85 million compared to $302 million
      for the prior fiscal year. This decrease was principally the result of
      reduced sales volumes and the related lower manufacturing cost
      absorption as well as higher raw material costs. A considerable
      portion of the impact of these factors was offset by a combination of
      restructuring benefits, other cost reduction actions, higher price
      realization and lower provisions for employee incentive compensation
      plans.
  --  The reported effective tax rate was 10.0 percent. On an adjusted
      basis, the effective tax rate was 16.6 percent compared with 21.2
      percent in the prior fiscal year.  The decrease in the adjusted rate
      was driven by the release of a deferred tax valuation allowance and a
      benefit from the completion of a routine income tax examination.

  --  Reported EPS was ($1.64) compared to the prior year reported EPS of
      $2.15.  Adjusted EPS of $0.80 decreased 71 percent, compared with
      prior year adjusted EPS of $2.76.  A reconciliation follows:



           Earnings (Loss) Per Diluted Share Reconciliation

  FY 2009                           FY 2008

  Reported EPS              ($1.64) Reported EPS                  $2.15
    Restructuring and                 Impact of German tax reform
     related charges          0.82         bill                    0.08
    Asset impairment charges  1.38    Goodwill impairment charge   0.45
    Loss on divestiture and           Restructuring and related
     related charges          0.24     charges                     0.08
  ---------------------------------------------------------------------
  Adjusted EPS               $0.80  Adjusted EPS                  $2.76
  =====================================================================



  --  Adjusted return on invested capital (ROIC) was 4.4 percent compared to
      12.3 percent for the prior fiscal year.

  Segment Highlights of Fiscal 2009 Fourth Quarter

Metalworking Solutions & Services Group (MSSG) sales decreased by 52 percent from the prior year quarter, driven by an organic sales decline of 45 percent, unfavorable foreign currency effects of 5 percent and a 2 percent decrease from the combined impact of divestitures and one less workday. Global industrial production remained extremely weak and substantially below the prior year continuing the further downturn in industrial activity experienced in the March quarter. Consequently, demand in most market sectors remained at very low levels. On a regional basis, Europe and North America reported organic sales declines of 47 percent and 46 percent, respectively, for the June quarter. Latin America, India and Asia Pacific also experienced organic sales declines of 44 percent, 43 percent and 37 percent, respectively.

MSSG operating loss was $29 million for the June quarter compared to operating income of $66 million for the same quarter of the prior year. Excluding restructuring related charges recorded in both periods, MSSG operating loss was $16 million compared with operating income of $71 million in the prior year quarter. The primary drivers of the decline in operating income were reduced sales volumes and the related lower manufacturing cost absorption. This was offset in part by restructuring benefits and other cost reduction actions, including employee furloughs, as well as higher price realization.

Advanced Materials Solutions Group (AMSG) sales decreased 37 percent during the June quarter, driven by a 38 percent organic decline, a 3 percent unfavorable impact from foreign currency effects and a 1 percent decrease from one less workday, partially offset by the favorable impact of acquisitions of 5 percent. The organic decline was primarily driven by lower sales in the engineered products business, as well as reduced demand for energy related products and surface finishing machines and services.

AMSG operating income was $14 million in the current quarter compared to operating income of $33 million in the same quarter of the prior year. Absent restructuring related charges recorded in both periods, AMSG operating income was $18 million in the current quarter compared to $36 million in the prior year quarter. The decline in operating income was primarily due to lower sales and production volumes in the engineered products and energy related businesses. A considerable portion of these impacts was offset by a combination of restructuring benefits and other cost reduction actions, including employee furloughs, as well as higher price realization and lower raw material costs.

Corporate operating loss decreased by 54 percent, or $10 million. This decrease was primarily driven by lower provisions for performance-based employee compensation programs, as well as the impact of cost reduction actions.

Recent Actions to Enhance Liquidity and Further Strengthen Financial Position

In July 2009, Kennametal completed two actions to further enhance liquidity and strengthen financial position. The first action involved an amendment to the company's existing $500 million revolving bank credit facility. This amendment provides additional flexibility with respect to financial covenants while maintaining the size and maturity of the facility. The second action involved the issuance of 8,050,000 shares of common stock generating net proceeds of approximately $120 million which were used to pay down outstanding indebtedness under the revolving credit facility.

Outlook

Given the magnitude of the current global economic downturn and the ongoing related uncertainty, visibility remains quite limited regarding global industrial activity and the corresponding demand for the company's products.

While recognizing the difficulty at this time of looking forward with any relative degree of certainty, management presently believes that global industrial activity may now be at or close to a bottom. Assuming that is the case, Kennametal would expect global demand for its products for the first half of fiscal year 2010 to remain around the levels experienced in the June quarter. The company would then expect to see the effects of an economic recovery reflected in its sales and financial results during the second half of the fiscal year.

Under these economic assumptions, Kennametal would expect EPS for fiscal 2010 to be in the range of $0.45 to $0.65 per share, excluding restructuring and divestiture related charges, on sales that would be 5 percent to 10 percent lower year-to-year on an organic basis. Cash flow from operations would be expected to be in the range of $65 million to $75 million for fiscal 2010, as a considerable portion of the cash generated is expected to be needed to fund higher working capital requirements as business improves. Based on capital expenditures of approximately $60 million, free operating cash flow would be in the range of $5 million to $15 million for fiscal 2010.

Should global economic conditions develop in line with management's assumptions, the company expects to continue to experience the adverse effects of the global recession during the first half of fiscal 2010 followed by year-over-year sales growth and positive earnings performance in the second half of fiscal 2010. As such, for the first quarter of fiscal 2010, Kennametal expects organic sales to be 35 percent to 40 percent lower than the same quarter of the previous fiscal year and expects to record a loss per diluted share, excluding restructuring and divestiture related charges, that will be greater than the loss per diluted share for the June 2009 quarter, excluding restructuring and divestiture related charges.

Dividend Declared

Kennametal also announced today that its Board of Directors declared a regular quarterly cash dividend of $0.12 per share. The dividend is payable August 21, 2009 to shareowners of record as of the close of business on August 6, 2009.

Kennametal advises shareowners to note monthly order trends, for which the company makes a disclosure ten business days after the conclusion of each month. This information is available on the Investor Relations section of Kennametal's corporate website at www.kennametal.com.

Fourth quarter and full year results for fiscal 2009 will be discussed in a live Internet broadcast at 9:00 a.m. Eastern time today. This event will be broadcast live on the company's website, www.kennametal.com. Once on the homepage, select "Investor Relations" and then "Events." The replay of this event will also be available on the company's website through August 30, 2009.

This release contains "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. You can identify forward-looking statements by the fact they use words such as "should," "anticipate," "estimate," "approximate," "expect," "may," "will," "project," "intend," "plan," "believe" and other words of similar meaning and expression in connection with any discussion of future operating or financial performance or events. Forward looking statements in this release concern, among other things, Kennametal's outlook for earnings for its fiscal year 2010, and its expectations regarding restructuring initiatives, future growth and financial performance, all of which are based on current expectations 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, actual outcomes could vary materially from those indicated. Among the factors that could cause the actual results to differ materially from those indicated in the forward-looking statements are risks and uncertainties related to: the recent downturn in our industry; global and regional economic conditions; compliance with debt arrangements; availability and cost of the raw materials we use to manufacture our products; our ability to protect and defend our intellectual property; our foreign operations and international markets, such as currency exchange rates, different regulatory environments, trade barriers, exchange controls, and social and political instability; our ability to implement restructuring plans and other cost savings initiatives, fluctuations in energy costs and commodity prices; competition; integrating acquisitions, and achieving the expected savings and synergies; business divestitures; demands on management resources; environmental remediation matters; demand for and market acceptance of new and existing products; future terrorist attacks or acts of war; and labor relations. These 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 undertake no obligation to release publicly any revisions to forward-looking statements as a result of future events or developments.

Kennametal Inc. is a leading global supplier of tooling, engineered components and advanced materials consumed in production processes. The company improves customers' competitiveness by providing superior economic returns through the delivery of application knowledge and advanced technology to master the toughest of materials application demands. Companies producing everything from airframes to coal, from medical implants to oil wells and from turbochargers to motorcycle parts recognize Kennametal for extraordinary contributions to their value chains. In fiscal year 2009, customers bought approximately $2.0 billion of Kennametal products and services - delivered by our 12,000 talented employees in over 60 countries - with more than 50 percent of these revenues coming from outside North America. Visit us at www.kennametal.com. [KMT-E]

                              FINANCIAL HIGHLIGHTS

  CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)

                                 Three Months Ended         Year Ended
  (in thousands, except per            June 30,               June 30,
   share amounts)                    2009  2008 (1)        2009    2008 (1)
  -------------------------------------------------------------------------

  Sales                          $386,037  $723,951  $1,999,859  $2,589,786
  Cost of goods sold              287,208   476,189   1,423,320   1,682,715
  -------------------------------------------------------------------------

     Gross profit                  98,829   247,762     576,539     907,071

  Operating expense               104,024   158,748     489,567     594,187
  Restructuring and asset
   impairment charges              16,214     4,891     173,656      39,891
  Loss on divestitures                  -       582           -         582
  Amortization of intangibles       3,260     3,806      13,134      13,864
  -------------------------------------------------------------------------

     Operating (loss) income      (24,669)   79,735     (99,818)    258,547

  Interest expense                  5,503     7,351      27,244      31,586
  Other (income) expense, net      (4,617)     (754)    (14,566)     (2,439)
  -------------------------------------------------------------------------

     (Loss) income before
      income taxes and
      minority interest           (25,555)   73,138    (112,496)    229,400

  (Benefit) provision for
   income taxes                   (10,002)   14,581     (11,205)     62,754
  Minority interest expense           266       329       1,111       2,980
  -------------------------------------------------------------------------

  (Loss) income from
   continuing operations          (15,819)   58,228    (102,402)    163,666
  (Loss) income from
   discontinued operations        (17,174)    1,352     (17,340)      4,109
  -------------------------------------------------------------------------
  Net (loss) income              $(32,993)  $59,580   $(119,742)   $167,775
  =========================================================================

  Basic (loss) earnings
   per share:
    Continuing operations          $(0.21)    $0.76      $(1.40)      $2.13
    Discontinued operations         (0.24)     0.02       (0.24)       0.05
  -------------------------------------------------------------------------
                                   $(0.45)    $0.78      $(1.64)      $2.18
  =========================================================================

  Diluted (loss) earnings
   per share:
    Continuing operations          $(0.21)    $0.75      $(1.40)      $2.10
    Discontinued operations         (0.24)     0.02       (0.24)       0.05
  -------------------------------------------------------------------------
                                   $(0.45)    $0.77      $(1.64)      $2.15
  =========================================================================

  Dividends per share               $0.12     $0.12       $0.48       $0.47
  =========================================================================

  Basic weighted average
   shares outstanding              72,772    76,346      73,122      76,811
  =========================================================================

  Diluted weighted average
   shares outstanding              72,772    77,614      73,122      78,201
  =========================================================================

  (1) Amounts have been reclassified to reflect discontinued operations
      related to the divestiture of the high speed steel drills and related
      products business.



  CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)
                                                       June 30,   June 30,
  (in thousands)                                         2009       2008
  -----------------------------------------------------------------------

  ASSETS
  Cash and cash equivalents                            $69,823    $86,478
  Accounts receivable, net                             278,977    512,794
  Inventories                                          381,306    460,800
  Other current assets                                 145,798     91,914
  -----------------------------------------------------------------------
     Total current assets                              875,904  1,151,986
  Property, plant and equipment, net                   720,326    749,755
  Goodwill and intangible assets, net                  677,436    802,722
  Other assets                                          73,308     79,886
  -----------------------------------------------------------------------
     Total assets                                   $2,346,974 $2,784,349
  =======================================================================

  LIABILITIES
  Current maturities of long-term debt and
   capital leases, including notes payable             $49,365    $33,600
  Accounts payable                                      87,176    189,050
  Other current liabilities                            242,428    298,661
  -----------------------------------------------------------------------
     Total current liabilities                         378,969    521,311
  Long-term debt and capital leases                    436,592    313,052
  Other liabilities                                    263,958    280,552
  -----------------------------------------------------------------------
     Total liabilities                               1,079,519  1,114,915

  MINORITY INTEREST IN CONSOLIDATED SUBSIDIARIES        20,012     21,527
  SHAREOWNERS' EQUITY                                1,247,443  1,647,907
  -----------------------------------------------------------------------
     Total liabilities and shareowners' equity      $2,346,974 $2,784,349
  =======================================================================



  SEGMENT DATA (UNAUDITED)    Three Months Ended        Year Ended
                                   June 30,               June 30,
  (in thousands)                2009    2008(1)       2009     2008(1)
  ---------------------------------------------------------------------

  Outside Sales:
  Metalworking Solutions and
   Services Group            $218,827  $459,012  $1,191,759  $1,674,516
  Advanced Materials
   Solutions Group            167,210   264,939     808,100     915,270
  ---------------------------------------------------------------------
    Total outside sales      $386,037  $723,951  $1,999,859  $2,589,786
  =====================================================================

  Sales By
   Geographic Region:
  United States              $176,751  $298,762    $907,967  $1,092,102
  International               209,286   425,189   1,091,892   1,497,684
  ---------------------------------------------------------------------
    Total sales by
     geographic region       $386,037  $723,951  $1,999,859  $2,589,786
  =====================================================================

  Operating (Loss) Income:
  Metalworking Solutions and
   Services Group            $(29,401)  $65,987    $(19,180)   $255,391
  Advanced Materials
   Solutions Group             13,536    32,858     (39,539)     83,925
  Corporate and
   eliminations (2)            (8,804)  (19,110)    (41,099)    (80,769)
  ---------------------------------------------------------------------
    Total operating
     (loss) income           $(24,669)  $79,735    $(99,818)   $258,547
  =====================================================================

  (1) Amounts have been reclassified to reflect discontinued operations
      related to the divestiture of the high speed steel drills and
      related products business.

  (2) Includes corporate functional shared services and intercompany
      eliminations.

  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, operating expense, operating income, MSSG
  operating income and margin, AMSG operating income and margin, income from
  continuing operations, income before income taxes and minority interest,
  provision for income taxes, effective tax rate, net income and diluted
  (loss) earnings per share as well as free operating cash flow and adjusted
  return on invested capital (which are non-GAAP financial measures), to the
  most directly comparable GAAP measures. 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 of Form 8-K to which this
  release is attached.

  THREE MONTHS ENDED JUNE 30, 2009 (UNAUDITED)

                                                 Loss
  (in thousands,                                 from
   except per      Gross  Operating Operating Continuing   Net      Diluted
   share amounts)  Profit  Expense    Loss    Operations   Loss       EPS
  -------------------------------------------------------------------------
  2009 Reported
   Results         $98,829 $104,024 $(24,669) $(15,819) $(32,993)   $(0.45)
    Restructuring
     and
     related
     charges         3,961     (996)  21,171     6,065     6,065      0.08
    Loss on
     divestiture
     and related
     charges             -        -        -         -    17,258      0.24
  -------------------------------------------------------------------------
  2009 Adjusted
   Results        $102,790 $103,028  $(3,498)  $(9,754)  $(9,670)   $(0.13)
  =========================================================================

                                                           MSSG      AMSG
  (in thousands,                                         Operating Operating
   except percents)                                        Loss     Income
  --------------------------------------------------------------------------
  2009 Reported
   Results                                              $(29,401)  $13,536
  2009 Reported
   Operating Margin                                       (13.4%)     8.1%
    Restructuring and
     related charges                                      13,614     4,612
  2009 Adjusted
   Results                                              $(15,787)  $18,148
  ==========================================================================
  2009 Adjusted
   Operating Margin                                        (7.2%)    10.9%
  ==========================================================================


                                            Loss before
                                               Income    (Benefit)
                                             Taxes and   Provision
  (in thousands,                              Minority  for Income Effective
   except percents)                           Interest    Taxes    Tax Rate
  --------------------------------------------------------------------------
  2009 Reported
   Results                                    $(25,555) $(10,002)    39.1%
    Restructuring and
     related charges                            21,171    15,108    (155.5)
  --------------------------------------------------------------------------
  2009 Adjusted
   Results                                     $(4,384)   $5,106   (116.4%)
  ==========================================================================



  THREE MONTHS ENDED JUNE 30, 2008 (UNAUDITED)
                                                Income
  (in thousands,                                 from
   except per     Gross   Operating Operating Continuing    Net     Diluted
   share amounts) Profit   Expense   Income   Operations  Income      EPS
  --------------------------------------------------------------------------
  2008 Reported
   Results        $247,762 $158,748  $79,735   $58,228   $59,580     $0.77
    Restructuring
    and
    related
    charges          1,441   (1,916)   8,248     6,635     6,635      0.08
  --------------------------------------------------------------------------
  2008 Adjusted
   Results        $249,203 $156,832  $87,983   $64,863   $66,215     $0.85
  ==========================================================================

                                                         MSSG       AMSG
  (in thousands,                                      Operating  Operating
   except percents)                                     Income     Income
  --------------------------------------------------------------------------
  2008 Reported
   Results                                               $65,987   $32,858
  2008 Reported
   Operating Margin                                        14.4%     12.4%
    Restructuring and
     related charges                                       4,855     3,012
  --------------------------------------------------------------------------
  2008 Adjusted
   Results                                               $70,842   $35,870
  ==========================================================================
  2008 Adjusted
   Operating Margin                                        15.4%     13.5%
  ==========================================================================

                                             Income
                                             before
                                             Income
                                           Taxes and  Provision
  (in thousands,                            Minority  for Income Effective
   except percents)                         Interest    Taxes    Tax Rate
  --------------------------------------------------------------------------
  2008 Reported
   Results                                     $73,138   $14,581     19.9%
    Restructuring and
     related charges                             8,248     1,613         -
  --------------------------------------------------------------------------
  2008 Adjusted
   Results                                     $81,386   $16,194     19.9%
  ==========================================================================



  YEAR ENDED JUNE 30, 2009 (UNAUDITED)          (Loss)
                                                Income
  (in thousands,                     Operating   from
   except per       Gross   Operating (Loss)  Continuing  Net (Loss) Diluted
   share amounts)   Profit   Expense  Income  Operations   Income     EPS
  --------------------------------------------------------------------------
  2009 Reported
   Results        $576,539 $489,567 $(99,818) $(102,402) $(119,742) $(1.64)
    Restructuring
     and
     related
     charges        10,860      182   73,292     60,020     60,020    0.82
    Asset
     impairment
     charges             -        -  111,042    101,200    101,200    1.38
    Loss on
     divestiture
     and related
     charges             -        -        -          -     17,657    0.24
  --------------------------------------------------------------------------
  2009 Adjusted
   Results        $587,399 $489,749  $84,516    $58,818    $59,135   $0.80
  ==========================================================================

                                                                   Effective
                                                                   Tax Rate
  --------------------------------------------------------------------------
  2009 Reported Results                                               10.0%
    Restructuring and
     related charges                                                  (1.5)
    Asset impairment charges                                           8.1
  --------------------------------------------------------------------------
  2009 Adjusted Results                                               16.6%
  ==========================================================================



  YEAR ENDED JUNE 30, 2008 (UNAUDITED)
                                               Income
  (in thousands,                                from
   except per      Gross  Operating Operating Continuing     Net    Diluted
   share amounts)  Profit  Expense   Income   Operations   Income     EPS
  --------------------------------------------------------------------------
  2008 Reported
   Results        $907,071 $594,187 $258,547   $163,666   $167,775   $2.15
    German
     tax law
     change              -        -        -      6,594      6,594    0.08
    Goodwill
     impairment
     charge              -        -   35,000     35,000     35,000    0.45
    Restructuring
     and
     related
     charges         1,441   (1,916)   8,248      6,635      6,635    0.08
  --------------------------------------------------------------------------
  2008 Adjusted
   Results        $908,512 $592,271 $301,795   $211,895   $216,004   $2.76
  ==========================================================================


                                                                 Effective
                                                                  Tax Rate
  --------------------------------------------------------------------------
  2008 Reported Results                                               27.4%
     German tax law change                                            (2.4)
     Goodwill impairment charge                                       (3.6)
     Restructuring and related charges                                (0.2)
  --------------------------------------------------------------------------
  2008 Adjusted Results                                               21.2%
  ==========================================================================


  FREE OPERATING CASH FLOW (UNAUDITED)
                                      Three Months Ended      Year Ended
                                           June 30,             June 30,
  (in thousands)                         2009      2008      2009      2008
  -------------------------------------------------------------------------
  Net cash flow provided by
   operating activities               $28,524  $121,228  $192,263  $279,786
  Purchases of property,
   plant and equipment                (12,130)  (32,902) (104,842) (163,489)
  Proceeds from disposals of
   property, plant and equipment          528       469     2,914     2,839
  -------------------------------------------------------------------------
     Free operating cash flow         $16,922   $88,795   $90,335  $119,136
  =========================================================================



  RETURN ON INVESTED CAPITAL (UNAUDITED)
  June 30, 2009 (in thousands, except percents)

  Invested
   Capital 6/30/2009  3/31/2009 12/31/2008  9/30/2008  6/30/2008   Average
  --------------------------------------------------------------------------
  Debt      $485,957   $502,093   $522,722   $481,723   $346,652   $467,829
  Minority
   interest   20,012     18,678     19,235     20,412     21,527     19,973
  Shareowners'
   Equity  1,247,443  1,249,328  1,430,727  1,465,757  1,647,907  1,408,232
  --------------------------------------------------------------------------
  Total   $1,753,412 $1,770,099 $1,972,684 $1,967,892 $2,016,086 $1,896,035
  ==========================================================================


                                       Three Months Ended
  Interest Expense    6/30/2009  3/31/2009 12/31/2008  9/30/2008     Total
  --------------------------------------------------------------------------
  Interest expense       $5,503     $6,658     $8,000     $7,083    $27,244
  ------------------------------------------------------------------
  Income tax benefit                                                  4,523
                                                                      -----
  Total
   interest
   expense,
   net of tax                                                       $22,721
                                                                    ========
  Total Income        6/30/2009  3/31/2009 12/31/2008  9/30/2008     Total
  --------------------------------------------------------------------------
  Net (loss)
   income,
   as reported         $(32,993) $(137,875)    $15,659   $35,467  $(119,742)
  Restructuring and
   related charges        6,065     36,768       9,779     7,408     60,020
  Asset impairment
   charges                    -    101,200           -         -    101,200
  Loss on
   divestiture
   and related
   charges               17,258        399           -         -     17,657
  Minority interest
   expense (income)         266        161        (101)      785      1,111
  --------------------------------------------------------------------------
  Total income,
   adjusted             $(9,404)      $653     $25,337   $43,660    $60,246
  =================================================================
  Total
   interest
   expense,
   net of tax                                                        22,721
                                                                    --------
                                                                    $82,967
  Average invested
   capital                                                       $1,896,035
                                                                 -----------
  Adjusted Return on
   Invested Capital                                                    4.4%
                                                                 ===========

  Return on invested
   capital calculated
   utilizing net loss,
   as reported is as
   follows:
  Net loss, as
   reported                                                       $(119,742)
  Total
   interest
   expense,
   net of tax                                                        22,721
  --------------------------------------------------------------------------
                                                                   $(97,021)
  Average invested
   capital                                                       $1,896,035
  --------------------------------------------------------------------------
  Return on
   Invested Capital                                                   (5.1%)
  ==========================================================================



  RETURN ON INVESTED CAPITAL (UNAUDITED)
  June 30, 2008 (in thousands, except percents)

  Invested
   Capital 6/30/2008  3/31/2008 12/31/2007  9/30/2007  6/30/2007   Average
  --------------------------------------------------------------------------
  Debt      $346,652   $428,456   $446,956   $377,051   $366,829   $393,189
  Minority
   interest   21,527     21,879     20,276     19,122     17,624     20,086
  Shareowners'
   equity  1,647,907  1,615,568  1,563,297  1,531,378  1,484,467  1,568,523
  --------------------------------------------------------------------------
  Total   $2,016,086 $2,065,903 $2,030,529 $1,927,551 $1,868,920 $1,981,798
  ==========================================================================


                                        Three Months Ended
  Interest Expense    6/30/2008  3/31/2008 12/31/2007  9/30/2007      Total
  --------------------------------------------------------------------------
  Interest expense       $7,351     $7,974     $8,494     $7,767    $31,586
  Securitization fees         4          5          5          8         22
  --------------------------------------------------------------------------
  Total interest
   expense               $7,355     $7,979     $8,499     $7,775    $31,608
  =================================================================
  Income tax benefit                                                  6,701
                                                                     -------
  Total interest
   expense, net of tax                                              $24,907
                                                                    ========
  Total Income        6/30/2008  3/31/2008 12/31/2007  9/30/2007      Total
  --------------------------------------------------------------------------
  Net income, as
   reported             $59,580    $23,170    $50,146    $34,879   $167,775
  Impact of German tax
   law change                 -          -          -      6,594      6,594
  Goodwill
   impairment charge          -     35,000          -          -     35,000
  Restructuring and
   related charges        6,635          -          -          -      6,635
  Minority
   interest expense         329        742      1,037        872      2,980
  --------------------------------------------------------------------------
  Total income,
   adjusted             $66,544    $58,912    $51,183    $42,345   $218,984
  ================================================================
  Total interest
   expense, net of tax                                               24,907
                                                                    --------
                                                                   $243,891
  Average invested
   capital                                                       $1,981,798
                                                                ------------
  Adjusted Return on
   Invested Capital                                                   12.3%
                                                                ============
  Return on invested
   capital calculated
   utilizing net
   income, as reported
   is as follows:
  Net income, as
   reported                                                        $167,775
  Total interest
   expense, net of tax                                               24,907
  --------------------------------------------------------------------------
                                                                   $192,682
  Average invested
   capital                                                       $1,981,798
  --------------------------------------------------------------------------
  Return on
   Invested Capital                                                    9.7%
  ==========================================================================

First Call Analyst:
FCMN Contact: deborah.mullen@kennametal.com

SOURCE: Kennametal Inc.

CONTACT: Investor Relations, Quynh McGuire, +1-724-539-6559, or Media
Relations, Joy Chandler, +1-724-539-4618