No Items in Cart
Sign In
Loading Profile
English
COVID-19: How Kennametal is responding

Kennametal Inc. today reported that sales for its fiscal 2008 third quarter increased 12 percent from the prior year quarter, including organic sales growth of 4 percent. This is the company's 17th consecutive quarter of year- over-year organic sales growth.

Reported fiscal 2008 third quarter diluted earnings per share (EPS) were $0.30 compared to the prior year quarter EPS of $0.66, a decrease of 55 percent. The current quarter reported EPS included a non-cash goodwill impairment charge of $0.45 per share related to the company's surface finishing machines and services business. Absent this charge, adjusted EPS of $0.75 were at the high-end of the company's guidance and increased 14 percent compared with prior year quarter reported EPS. The company achieved March quarter records for sales, adjusted EPS and adjusted return on invested capital (ROIC) of 12.3 percent.

"Our global growth strategies and initiatives continued to deliver results as we grew sales in both of our business segments at a solid pace in the March quarter. The team achieved this growth despite reduced industrial activity in North America and in some market sectors," commented Kennametal Chairman, President and Chief Executive Officer Carlos M. Cardoso. "Our sales gains, along with a robust improvement in the operating margin of our metalworking business, made a strong contribution to Kennametal's overall operating performance."

"Our advanced materials business, however, was challenged during the quarter by continued slower conditions in certain markets, higher raw materials costs, plus lower performance and an impairment charge in our surface finishing machines and services business. We are proactively addressing these challenges," said Mr. Cardoso.

"At the same time, we are continuing to execute the growth strategies that are serving us so well. Additionally, we are taking advantage of the slower growth environment to accelerate implementation of further restructuring actions to reduce costs and enhance efficiency in our operations. These measures will further position us for margin expansion and earnings growth."

Reconciliations of all non-GAAP financial measures are set forth in the attached tables.

  Highlights of Fiscal 2008 Third Quarter

  -- Sales for the quarter were $690 million, compared with $616 million in
     the same quarter last year. Sales grew 12 percent year-over-year and
     included 4 percent organic growth, 4 percent from acquisitions and 6
     percent from foreign currency effects.  The current quarter had fewer
     workdays than the prior year quarter which reduced the overall sales
     growth by 2 percent.

  -- During the March quarter, the company performed an impairment test of
     the goodwill and other intangible assets associated with its surface
     finishing machines and services business.  This test resulted in a
     non-cash goodwill impairment charge of $35 million, or $0.45 per share.

  -- Income from continuing operations was $23 million, compared with $52
     million in the prior year quarter. Excluding the goodwill impairment
     charge, income from continuing operations increased 12 percent to $58
     million from $52 million in the prior year quarter. This increase was
     driven by organic sales growth, favorable foreign currency effects, the
     impact of acquisitions and a lower effective tax rate.

  -- The effective tax rate for the current quarter was 41.0 percent
     compared to 26.1 percent in the prior year quarter. Adjusted for the
     impact of the goodwill impairment charge for which there was no tax
     benefit, the current quarter effective tax rate was 22.0 percent.  The
     adjusted rate for the current quarter was lower than the rate for the
     prior year quarter due to increased earnings under the company's
     pan-European business strategy and a tax benefit associated with a
     dividend reinvestment plan in China.

  -- Reported EPS were $0.30, compared with prior year quarter reported EPS
     of $0.66.  Adjusted EPS of $0.75 increased 14 percent compared with
     prior year quarter reported EPS of $0.66.  A reconciliation follows:


               Earnings Per Diluted Share Reconciliation
  Third Quarter FY 2008                        Third Quarter FY 2007
  Reported EPS                    $0.30        Reported EPS           $0.66
    Goodwill impairment charge     0.45
  Adjusted EPS                    $0.75                               $0.66


  -- Adjusted ROIC was 12.3 percent, up 130 basis points from 11.0 percent
     in the prior year quarter.


  Highlights of First Nine Months of Fiscal 2008

  -- Sales of $2.0 billion increased 13 percent from $1.7 billion in the
     same period last year. Sales grew 3 percent on an organic basis, 5
     percent from acquisitions and 5 percent from foreign currency effects.

  -- Income from continuing operations was $108 million, compared with $115
     million in the prior year period, a decrease of 6 percent. Adjusted
     income from continuing operations was $150 million, an increase of 29
     percent compared with $116 million in the prior year period.

  -- The effective tax rate for the first nine months of fiscal 2008 was
     30.6 percent, which included the unfavorable impact of a $7 million
     non-cash charge for income taxes related to a German tax reform bill
     enacted in July 2007 and the non-cash goodwill impairment charge of $35
     million for which there was no tax benefit. Absent the impact of these
     charges, the effective tax rate for the first nine months of fiscal
     2008 was 21.7 percent, compared with 28.9 percent in the prior year
     period. The lower adjusted rate versus the rate for the prior year
     period was driven by a continued increase in earnings under the
     company's pan-European business strategy, the combined effects of other
     international operations and tax benefits from the dividend
     reinvestment plan in China.

  -- Reported EPS decreased 3 percent to $1.38, compared with prior year
     reported EPS of $1.43. Adjusted EPS increased 28 percent to $1.91,
     compared with prior year period adjusted EPS of $1.49. A reconciliation
     follows:


               Earnings Per Diluted Share Reconciliation
  First Nine Months of FY 2008           First Nine Months of FY 2007
  Reported EPS             $1.38         Reported EPS                 $1.43
  Impact of German tax                   Electronics impairment and
   reform bill              0.08          divestiture-related charges  0.04
  Goodwill impairment                    Adjustment on J&L
   charge                   0.45          divestiture and
                                          transaction-related charges  0.02
  Adjusted EPS             $1.91         Adjusted EPS                 $1.49


  -- Cash flow from operating activities was $159 million for the first nine
     months of fiscal 2008, compared with $113 million in the prior year
     period. Adjusted free operating cash flow for the current period was
     $35 million compared to $134 million in the prior year period.  The
     year-over-year change in adjusted free operating cash flow was
     primarily driven by a $63 million increase in capital expenditures for
     enhanced manufacturing capabilities and geographic expansion as well as
     changes in working capital.


  Business Segment Highlights of Fiscal 2008 Third Quarter

Metalworking Solutions & Services Group (MSSG) delivered further top-line growth in the March quarter driven by organic sales gains as well as favorable foreign currency effects and the impact of acquisitions. Areas of strength included the aerospace, machine tools and distribution sectors, while weakness continued in the automotive and energy markets. The European, Asia Pacific and Latin American markets remained strong. The North American and Indian markets declined compared with the prior year quarter.

In the March quarter, MSSG sales grew by 11 percent as a result of 2 percent organic growth, 8 percent favorable foreign currency effects and 3 percent from acquisitions, less 2 percent from fewer workdays. Europe and Asia Pacific organic sales increased 8 percent and 16 percent, respectively. Latin America organic sales increased 15 percent. North America organic sales declined 7 percent and India was lower by 2 percent.

MSSG operating income increased by 25 percent and the operating margin increased 150 basis points from the same quarter last year. The current quarter results benefited from organic growth, continued cost containment, favorable foreign currency effects and the impact of acquisitions. In addition, the prior year quarter included a non-cash impairment charge of $6 million related to the company's Widia brand.

Advanced Materials Solutions Group (AMSG) sales increased 15 percent during the March quarter, driven by 6 percent organic growth, 5 percent from favorable foreign currency effects and 6 percent from acquisitions, less 2 percent from fewer workdays. Organic sales increased on stronger construction and mining sales which more than offset lower energy, energy-related and engineered product sales.

AMSG reported an operating loss for the March quarter due to the $35 million goodwill impairment charge related to the surface finishing machines and services business. Absent this charge, AMSG operating income was down 10 percent and the operating margin was 300 basis points lower than the prior year quarter due to higher raw material costs, sales mix and lower performance in the surface finishing machines and services business.

Restructuring Actions

To further Kennametal's ability to achieve its long-term goals for margin expansion and earnings growth, the company intends to implement restructuring actions over the next twelve to eighteen months to reduce costs and otherwise improve efficiency in its operations. These initiatives are expected to include the rationalization of certain manufacturing and service facilities as well as other employment and cost reduction programs. The company expects to recognize charges related to these initiatives in the range of $40 million to $50 million over the next twelve to eighteen months. Approximately 90 percent of these charges are expected to be cash expenditures. Annual ongoing benefits from these actions, once fully implemented, are expected to be in the range of $20 million to $25 million.

Outlook

Global market indicators support Kennametal's expectation for continued top-line growth during the remainder of fiscal 2008. The company believes that the North American economy will be challenging in the near term. The company also believes that the European market will remain favorable, and that business conditions will continue to be strong in developing economies. While there are some inherent and changing uncertainties and risks within the current macro-economic environment, it appears that fundamental drivers will continue to provide a platform for ongoing growth in global demand.

For the fourth quarter of 2008, Kennametal expects total sales growth of 13 to 14 percent, including organic sales growth of 2 to 3 percent. This would result in total sales growth of approximately 13 percent and organic sales growth of approximately 3 percent for fiscal 2008.

The company expects fourth quarter 2008 EPS to be in the range of $0.81 to $0.84, absent any charges that may result from restructuring actions. The company narrowed its range for adjusted EPS guidance for fiscal 2008 to a range of $2.72 to $2.75 (from $2.71 to $2.77). This guidance represents 19 percent to 21 percent growth, compared with fiscal 2007 adjusted EPS of $2.28.

Kennametal anticipates cash flow from operating activities of approximately $250 million to $260 million for fiscal 2008. Based on anticipated capital expenditures of $150 million to $155 million, the company expects to generate between $100 million and $105 million of free operating cash flow for fiscal 2008.

Dividend Declared

Kennametal announced today that its Board of Directors declared a regular quarterly cash dividend of $0.12 per share. The dividend is payable May 20, 2008 to shareowners of record as of the close of business on May 5, 2008.

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 web site at www.kennametal.com.

Third quarter results for fiscal 2008 will be discussed in a live Internet broadcast at 10:00 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 May 23, 2008.

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 event. Forward looking statements in this release concern, among other things, Kennametal's expectations regarding future growth, end markets, financial performance for future periods and its intended restructuring activities, all of which are based on current expectations that involve inherent risks and uncertainties. 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: global and regional economic conditions; availability and cost of the raw materials we use to manufacture our products; our ability to protect our intellectual property in foreign jurisdictions; our foreign operations and international markets, such as currency exchange rates, different regulatory environments, trade barriers, exchange controls, and social and political instability; energy costs; commodity prices; competition; integrating recent acquisitions, as well as any future acquisitions, and achieving the expected savings and synergies; business divestitures; demands on management resources; implementation of restructuring plans and environmental remediation matters; demand for and market acceptance of new and existing products; future terrorist attacks or acts of war; and labor relations. 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. 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. Customers buy approximately $2.4 billion annually of Kennametal products and services -- delivered by our 14,000 talented employees in over 60 countries -- with 50 percent of these revenues coming from outside North America. Visit us at www.kennametal.com. [KMT-E]

                           FINANCIAL HIGHLIGHTS

  CONSOLIDATED STATEMENTS OF INCOME (Unaudited)


                                    Three Months Ended    Nine Months Ended
  (in thousands, except per               March 31,             March 31,
   share amounts)                    2008      2007        2008        2007

  Sales                          $689,669   $615,884  $1,952,168 $1,728,016
  Cost of goods sold              451,803    395,046   1,281,273  1,121,997

    Gross profit                  237,866    220,838     670,895    606,019

  Operating expense               150,461    136,933     443,414    412,306
  Asset impairment charges         35,000      5,970      35,000      5,970
  Loss on divestiture                   -          -           -      1,686
  Amortization of
   intangibles                      3,487      1,808      10,058      5,703

    Operating income               48,918     76,127     182,423    180,354

  Interest expense                  8,005      6,915      24,335     21,628
  Other expense (income), net         385     (1,803)     (1,711)    (5,435)

    Income from continuing
     operations before income taxes
     and minority interest         40,528     71,015     159,799    164,161

  Provision for income taxes       16,616     18,520      48,953     47,457

  Minority interest expense           742        757       2,651      1,956

  Income from continuing
   operations                      23,170     51,738     108,195    114,748
  Loss from discontinued
   operations (a)                       -          -           -     (2,599)

  Net income                      $23,170    $51,738    $108,195   $112,149

  Basic earnings per share: (b)
    Continuing operations           $0.30      $0.67       $1.41      $1.50
    Discontinued operations (a)         -          -           -      (0.03)
                                    $0.30      $0.67       $1.41      $1.47

  Diluted earnings per share: (b)
    Continuing operations           $0.30      $0.66       $1.38      $1.46
    Discontinued operations (a)         -          -           -      (0.03)
                                    $0.30      $0.66       $1.38      $1.43

  Dividends per share (b)           $0.12      $0.11       $0.36      $0.31
  Basic weighted average
   shares outstanding (b)          76,463     76,856      76,984     76,636
  Diluted weighted average
   shares outstanding (b)          77,503     78,464      78,374     78,353

  (a) Loss from discontinued operations reflects divested results of the
      Kemmer Praezision Electronics business (Electronics) -- AMSG and the
      consumer retail product line, including industrial saw blades (CPG)
      -- MSSG.
  (b) Per share amounts and shares outstanding have been restated to reflect
      the company's 2-for-1 stock split completed in December 2007.



  CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited)
                                                     March 31,      June 30,
   (in thousands)                                      2008           2007
  ASSETS
  Cash and cash equivalents                          $66,422        $50,433
  Accounts receivable, net                           487,465        466,690
  Inventories                                        494,528        403,613
  Other current assets                                92,035         95,766
    Total current assets                           1,140,450      1,016,502
  Property, plant and equipment, net                 727,608        614,019
  Goodwill and intangible assets, net                817,657        834,290
  Other assets                                       139,369        141,416
    Total                                         $2,825,084     $2,606,227

  LIABILITIES
  Current maturities of long-term debt
   and capital leases, including notes
   payable                                           $18,193         $5,430
  Accounts payable                                   174,208        189,301
  Other current liabilities                          269,597        292,506
    Total current liabilities                        461,998        487,237
  Long-term debt and capital leases                  410,263        361,399
  Other liabilities                                  315,376        255,500
    Total liabilities                              1,187,637      1,104,136

  MINORITY INTEREST IN CONSOLIDATED SUBSIDIARIES      21,879         17,624
  SHAREOWNERS' EQUITY                              1,615,568      1,484,467
    Total                                         $2,825,084     $2,606,227



  SEGMENT DATA (Unaudited)
                                Three Months Ended      Nine Months Ended
                                      March 31,             March 31,
  (in thousands)                   2008     2007        2008         2007

  Outside Sales:
  Metalworking Solutions and
   Services Group                $459,407 $415,525  $1,301,837   $1,146,604
  Advanced Materials Solutions
   Group                          230,262  200,359     650,331      581,412
    Total outside sales          $689,669 $615,884  $1,952,168   $1,728,016

  Sales By Geographic Region:
  United States                  $294,281 $292,742    $855,599     $827,904
  International                   395,388  323,142   1,096,569      900,112
    Total sales by geographic
     region                      $689,669 $615,884  $1,952,168   $1,728,016

  Operating Income (Loss):
  Metalworking Solutions and
   Services Group                 $75,679  $60,784    $193,017     $151,658
  Advanced Materials Solutions
   Group                           (6,110)  31,970      51,067       93,349
  Corporate and eliminations( c ) (20,651) (16,627)    (61,661)     (64,653)
    Total operating income        $48,918  $76,127    $182,423     $180,354

  ( c )  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 operating expense, AMSG operating income (loss), operating income, effective tax rate, income from continuing operations, net income and diluted earnings per share (which are GAAP financial measures), as well as adjusted 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.

  RECONCILIATION TO GAAP - THREE MONTHS ENDED MARCH 31, 2008 (Unaudited)

  (in thousands, except percents
    and per share amounts)     AMSG
                             Operating            Income from
                   Effective  Income   Operating  Continuing   Net  Diluted
                    Tax Rate  (Loss)    Income    Operations Income  EPS (d)

  2008 Reported
   Results          41.0%   $(6,110)   $48,918    $23,170    $23,170  $0.30
    Goodwill
     impairment
     charge        (19.0)    35,000     35,000     35,000     35,000   0.45
  2008 Adjusted
   Results          22.0%   $28,890    $83,918    $58,170    $58,170  $0.75


  RECONCILIATION TO GAAP - NINE MONTHS ENDED MARCH 31, 2008 (Unaudited)

  (in thousands, except percents
    and per share amounts)                       Income from
                           Effective  Operating  Continuing    Net  Diluted
                            Tax Rate   Income    Operations   Income EPS (d)
  2008 Reported Results      30.6%    $182,423    $108,195   $108,195  $1.38
    Impact of German tax
     reform bill             (4.1)           -       6,594      6,594   0.08
    Goodwill impairment
     charge                  (4.8)      35,000      35,000     35,000   0.45
  2008 Adjusted Results      21.7%    $217,423    $149,789   $149,789  $1.91


  RECONCILIATION TO GAAP - NINE MONTHS ENDED MARCH 31, 2007 (Unaudited)

  (in thousands, except percents
    and per share amounts)                        Income from
                             Operating Operating  Continuing  Net   Diluted
                              Expense   Income    Operations Income  EPS (d)
  2007 Reported Results      $412,306   $180,354   $114,748  $112,149  $1.43
    Electronics impairment
     and divestiture-related
     charges                        -          -          -     3,213   0.04
    Adjustment on J&L
     divestiture and
     transaction-related
     charges                     (333)     2,019      1,252     1,252   0.02
  2007 Adjusted Results      $411,973   $182,373   $116,000  $116,614  $1.49

  (d) Per share amounts have been restated to reflect the company's 2-for-1
      stock split completed in December 2007.



  FREE OPERATING CASH FLOW (Unaudited)                    Nine Months Ended
                                                               March 31,
  (in thousands)                                           2008       2007

  Net cash flow provided by operating activities        $158,558   $113,442
  Purchases of property, plant and equipment            (130,587)   (67,129)
  Proceeds from disposals of property, plant
   and equipment                                           2,370      1,021
    Free operating cash flow                              30,341     47,334
  Adjustments:
    Income taxes paid during first quarter                 4,659     86,236
  Adjusted free operating cash flow                      $35,000   $133,570


  RETURN ON INVESTED CAPITAL (Unaudited)
  March 31, 2008 (in thousands, except percents)

  Invested
   Capital   03/31/2008 12/31/2007 09/30/2007 06/30/2007 03/31/2007  Average
  Debt       $428,456   $446,956   $377,051   $366,829   $371,521   $398,163
  Minority
   interest    21,879     20,276     19,122     17,624     16,896     19,159
  Shareowners'
   equity   1,615,568  1,563,297  1,531,378  1,484,467  1,431,235  1,525,189
    Total  $2,065,903 $2,030,529 $1,927,551 $1,868,920 $1,819,652 $1,942,511

                                        Three Months Ended
  Interest
   Expense              03/31/2008 12/31/2007  09/30/2007  06/30/2007  Total
  Interest expense         $8,005    $8,531      $7,799     $7,513   $31,848
  Securitization fees           5         5           8          5        23
  Total interest expense   $8,010    $8,536      $7,807     $7,518   $31,871
  Income tax benefit                                                   7,617
  Total interest expense,
    net of tax                                                       $24,254

  Total Income          03/31/2008 12/31/2007 09/30/2007 06/30/2007  Total
  Net income, as
   reported               $23,170    $50,146    $34,879   $62,093  $170,288
  Impact of German tax
   reform bill                  -          -      6,594         -     6,594
  Goodwill impairment
   charge                  35,000          -          -         -    35,000
  Minority interest
   expense                    742      1,037        872       229     2,880
  Total income, adjusted  $58,912    $51,183    $42,345   $62,322  $214,762
  Total interest expense,
   net of tax                                                        24,254
                                                                   $239,016
  Average invested capital                                       $1,942,511
  Adjusted Return on Invested
   Capital                                                            12.3%
  Return on invested capital
   calculated utilizing net
   income, as reported is
   as follows:
  Net income, as reported                                          $170,288
  Total interest expense,
   net of tax                                                        24,254
                                                                   $194,542
  Average invested capital                                       $1,942,511
  Return on Invested Capital                                          10.0%


  RETURN ON INVESTED CAPITAL (Unaudited)
  March 31, 2007 (in thousands, except percents)

  Invested
   Capital  03/31/2007 12/31/2006 09/30/2006 06/30/2006 03/31/2006  Average
  Debt       $371,521   $376,472   $409,592   $411,722   $365,906  $387,043
  Accounts
   receivable
   securitized      -          -          -          -    106,106    21,221
  Minority
   interest    16,896     15,807     15,177     14,626     18,054    16,112
  Share-
   owners'
   equity   1,431,235  1,369,748  1,319,599  1,295,365  1,115,110  1,306,211
  Total    $1,819,652 $1,762,027 $1,744,368 $1,721,713 $1,605,176 $1,730,587

                                         Three Months Ended

  Interest Expense     03/31/2007  12/31/2006  09/30/2006  06/30/2006  Total
  Interest expense          $6,915    $7,286     $7,427     $7,478   $29,106
  Securitization fees            5         6         22      1,288     1,321
  Total interest expense    $6,920    $7,292     $7,449     $8,766   $30,427
  Income tax benefit                                                   9,843
  Total interest expense,
   net of tax                                                        $20,584

  Total Income         03/31/2007  12/31/2006  09/30/2006  06/30/2006  Total
  Net income, as
   reported               $51,738  $30,051     $30,361  $164,196    276,346
  Gain on divestiture
   of J&L                       -        -       1,045  (132,001)  (130,956)
  J&L transaction-related
   charges                      -        -         207     2,796      3,003
  Loss on divestiture of
   Electronics, impairment
   and transaction-related
   charges                      -    3,213           -    15,366     18,579
  Tax impact of cash
   repatriation under AJCA      -        -           -    11,176     11,176
  Loss on divestiture of CPG,
   goodwill impairment and
   transaction-related
   charges                      -        -         368    (2,192)    (1,824)
  Loss on divestiture of
   Presto                       -        -           -     1,410      1,410
  Favorable resolution of
   tax contingencies            -        -           -   (10,873)   (10,873)
  Minority interest expense   757      642         557       525      2,481
  Total income,
   adjusted               $52,495  $33,906     $32,538   $50,403   $169,342
  Total interest expense,
   net of tax                                                        20,584
                                                                   $189,926
  Average invested
   capital                                                       $1,730,587
  Adjusted Return on
   Invested Capital                                                    11.0%
  Return on invested capital calculated utilizing net
   income, as reported is as follows:
  Net income, as reported                                          $276,346
  Total interest expense,
   net of tax                                                        20,584
                                                                   $296,930
  Average invested capital                                       $1,730,587
  Return on Invested Capital                                           17.2%

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

SOURCE: Kennametal Inc.

CONTACT: Investors, Quynh McGuire, +1-724-539-6559; Media, Joy Chandler,
+1-724-539-4618, both of Kennametal Inc.