Kennametal Inc. today reported fiscal 2004 third-quarter earnings of $0.66 per diluted share compared with reported earnings of $0.27 per diluted share last year and exceeding previous guidance provided for the quarter. There were no special items to report in the fiscal 2004 third quarter, which was 74 percent above last year's comparable earnings per diluted share of $0.38, excluding special items.

                        Earnings Per Share

   Original Company Guidance (1/28/04)     $0.50 to $0.60
   (Updated to $0.65 on 4/19/04)
   Analyst Estimate Range (4/16/04)        $0.52 to $0.60
   Earnings Per Share                          $0.66

For the first nine months of fiscal 2004, reported earnings of $1.20 per diluted share compared with earnings of $0.65 per diluted share last year. Excluding special items in each period, diluted earnings of $1.34 per share were 40 percent above the prior year's comparable earnings of $0.96 per share.

Kennametal Chairman, President and Chief Executive Officer, Markos I. Tambakeras, said, "We were pleased to deliver a quarter of strong earnings growth, as improving markets combined with the implementation of the Kennametal Value Business System (KVBS) by Kennametal employees allowed us to leverage the many improvements we have made to our business. Investments in product innovation, marketing initiatives, and acquisitions allowed us to outperform several of our end markets. This improvement was broad-based, and included Metalworking North America and Rest-of-World, Mining and Construction and Energy, and the J&L distribution business. In addition to the top-line growth, our earnings benefited from our streamlined cost structure."

  Highlights of the Fiscal 2004 Third Quarter

   -- Sales of $524 million were 14 percent above the prior year comparable
      quarter primarily on 6 percent organic sales growth, 2 percent from
      additional workdays, and 6 percent benefit from foreign currency
      exchange rates.
   -- Reported net income was $24.1 million versus net income of $9.7
      million in the same quarter last year. Reported net income grew 80
      percent compared to net income excluding special items of $13.3
      million last year, reflecting the benefits of increased volume, mix,
      and a leaner cost structure.
   -- Net cash flow from operations was $54 million, versus $40 million for
      the prior year.  Free operating cash flow totaled $41 million for the
      quarter, versus $26 million in last year's comparable quarter due
      largely to the improved operating performance.
   -- As of March 31, 2004, total debt was $494 million, down $31 million
      from June 2003, and $86 million below March 2003.
   -- Debt to capital decreased to 37 percent, from 43 percent at the end of
      March in the prior year.
   -- Concluded the acquisition of Conforma Clad Inc.

  Highlights of First Nine Months of Fiscal 2004

   -- Sales of $1.4 billion were 10 percent above the prior year comparable
      period on a 2 percent improvement from organic sales growth, 3 percent
      incremental sales from acquisitions, and a 5 percent improvement from
      foreign currency exchange rates.
   -- Reported net income totaled $43.7 million versus $23.0 million in last
      year's comparable period, a 90 percent increase.  Excluding special
      items in both periods, net income improved 43% to $48.5 million in the
      current nine-month period.

  Outlook

Tambakeras said, "Entering the final quarter of our year, we are optimistic that the momentum we built through the March quarter will continue, with strong sequential earnings growth in the June quarter. We anticipate that improvement in North American markets will increase, Europe will remain fairly stable and the developing markets will sustain recent high growth rates. Further, we expect that the Kennametal Value Business System (KVBS) will support additional outperformance."

Sales for the fourth quarter of fiscal 2004 are expected to grow 10 to 12 percent year-over-year, including the impact of currency. Organic growth is anticipated to be 6 to 8 percent year-over-year. Reported diluted earnings per share are expected to be $0.70 to $0.80 per share, up 56 to 78 percent compared to the prior year.

Based on forecasted results for the fourth quarter, reported diluted earnings per share are expected to be $1.90 to $2.00 per share for fiscal 2004. This includes net special charges to date of approximately $0.14 per share. Excluding these charges, diluted earnings per share are forecasted to range from $2.05 to $2.15 per share. As previously stated, the earnings outlook for the full year includes approximately $0.12 per share of accretion from the Widia acquisition.

Kennametal anticipates net cash flow provided by operating activities of approximately $155 to $175 million in fiscal 2004. Purchases of property, plant and equipment, net of proceeds from disposals of property, plant and equipment are expected to be approximately $50 to $55 million. Adjusting net cash flow provided by operating activities for the above items, Kennametal expects to generate between $100 and $125 million of free operating cash flow for fiscal 2004.

Kennametal advises shareholders 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 .

Dividend Declared

Kennametal also announced its Board of Directors declared a quarterly cash dividend of $0.17 cents per share, payable May 25, 2004, to shareowners of record as of the close of business May 10, 2004.

Third quarter results will be discussed in a live Internet broadcast at 10:00 a.m. today. Access the live or archived conference by visiting the Investor Relations section of Kennametal's corporate web site at www.kennametal.com .

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. You can identify these 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. One can also identify forward-looking statements by the fact that they do not relate strictly to historical or current facts. These statements are likely to relate to, among other things, our goals, plans and projections regarding our financial position, results of operations, market position and product development, which are based on current expectations that involve inherent risks and uncertainties, including factors that could delay, divert or change any of them in the next several years. Although it is not possible to predict or identify all factors, they may include the following: global economic conditions; future terrorist attacks; epidemics; risks associated with integrating and divesting businesses and achieving the expected savings and synergies; demands on management resources; risks associated with international markets such as currency exchange rates, and social and political environments; competition; labor relations; commodity prices; demand for and market acceptance of new and existing products; and risks associated with the implementation of restructuring plans and environmental remediation matters. We can give no assurance that any goal or plan set forth in forward- looking statements can be achieved and readers are cautioned not to place undue reliance on such statements, which speak only as of the date made. We undertake no obligation to release publicly any revisions to forward-looking statements as a result of future events or developments.

Kennametal Inc. aspires to be the premier tooling solutions supplier in the world with operational excellence throughout the value chain and best-in- class manufacturing and technology. Kennametal strives to deliver superior shareowner value through top-tier financial performance. The company provides customers a broad range of technologically advanced tools, tooling systems and engineering services aimed at improving customers' manufacturing competitiveness. With about 13,500 employees worldwide, the company's annual sales approximate $1.9 billion, with nearly half coming from sales outside the United States. Kennametal is a five-time winner of the GM "Supplier of the Year" award and is represented in more than 60 countries. Kennametal operations in Europe are headquartered in Furth, Germany. Kennametal Asia Pacific operations are headquartered in Singapore. For more information, visit the company's web site at www.kennametal.com .

FINANCIAL HIGHLIGHTS

Consolidated financial highlights for Kennametal Inc. for the quarter and nine months ended March 31, 2004 and 2003 are shown in the following tables (in thousands, except per share amounts).

  Consolidated Statements of Income (Unaudited)

                                   Quarter Ended       Nine Months Ended
                                     March 31,             March 31,
                                   2004      2003       2004        2003

  Sales                          $524,230  $459,243  $1,429,583  $1,295,192
     Cost of goods sold (A)       348,376   307,582     961,990     875,079
  Gross profit                    175,854   151,661     467,593     420,113
     Operating expense (B)        132,218   122,592     378,180     343,104
     Restructuring and asset
      impairment charges              -       3,269       3,670      11,649
     Amortization of intangibles      614     1,196       1,570       3,310
  Operating income                 43,022    24,604      84,173      62,050
     Interest expense               6,332     8,979      19,479      27,058
     Other (income) expense,
      net ©                         508       713      (2,010)       (414)
  Income before provision for
   income taxes and minority
   interest                        36,182    14,912      66,704      35,406
  Provision for income taxes       11,579     4,474      21,345      10,622
  Minority interest                   533       739       1,632       1,786
  Net income                      $24,070    $9,699     $43,727     $22,998
  Basic earnings per share          $0.67     $0.28       $1.23       $0.65
  Diluted earnings per share        $0.66     $0.27       $1.20       $0.65
  Dividends per share               $0.17     $0.17       $0.51       $0.51
  Basic weighted average shares
   outstanding                     35,828    35,243      35,589      35,137
  Diluted weighted average
   shares outstanding              36,662    35,480      36,307      35,412

  (A) For the nine months ended March 31, 2004, these amounts include
      charges of $0.1 million for integration activities related to the
      Widia acquisition, $2.9 million related to restructuring programs, and
      $0.8 million for a pension curtailment.  For the quarter and nine
      months ended March 31, 2003, these amounts include charges of $0.1
      million and $0.2 million, respectively, for integration activities
      related to the Widia acquisition.

  (B) For the nine months ended March 31, 2004, these amounts include
      charges of $1.8 million related to a note receivable from a
      divestiture of a business by Kennametal in 2002, $0.5 million related
      to a pension curtailment, and $1.4 million for integration activities
      related to the Widia acquisition.  For the quarter and nine months
      ended March 31, 2003, these amounts include charges of $1.8 million
      and $3.8 million, respectively, for integration activities related to
      the Widia acquisition.

  © For the nine months ended March 31, 2004, these amounts include income
      of $4.4 million related to a gain on the sale of Toshiba Tungaloy
      investment and a charge of $0.2 million on a note receivable from a
      divestiture of a business by Kennametal in 2002.

In addition to reported results under U.S. GAAP, the following financial highlight tables also include, where appropriate, a reconciliation of results excluding special items and free operating cash flow (which are non-GAAP measures), to the most directly comparable GAAP measures. Management believes that each of these non-GAAP financial measures is useful to investors to more easily compare the Company's financial performance period to period.

  RECONCILIATION TO GAAP - QUARTER ENDED MARCH 31, 2003 (Unaudited)

                                                                    Diluted
                                                                    Earnings
                                 Gross   Operating  Operating   Net    Per
                                 Profit   Expenses   Income   Income  Share

  2003 Reported Results         $151,661  $122,592  $24,604   $9,699  $0.27
    MSSG Restructuring               -         -      1,077      754   0.02
    AMSG Restructuring               -         -      1,104      773   0.02
    Corporate Restructuring          -         -        278      195   0.01
    J&L Restructuring                -         -        801      561   0.02
    FSS Restructuring                -         -          9        6    -
    Widia Integration Costs -
     MSSG                            144    (1,767)   1,911    1,337   0.04
    Widia Integration Costs -
     AMSG                            -         (18)      18       13    -
  2003 Results Excluding
   Special Items                $151,805  $120,807  $29,802  $13,338  $0.38


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

                                                                    Diluted
                                                     Other          Earnings
                        Gross  Operating Operating (Income)/   Net     Per
                        Profit  Expenses   Income   Expense  Income   Share
  2004 Reported
   Results             $467,593  $378,180  $84,173  $(2,010) $43,727  $1.20
    MSSG Restructuring    2,850       -      5,023      -      3,416   0.10
    AMSG Restructuring      -         -      1,497      -      1,018   0.03
    Widia Integration
     Costs - MSSG            63    (1,448)   1,511      -      1,027   0.03
    Widia Integration
     Costs - AMSG            48       -         48      -         33    -
    Pension
     Curtailment            779      (520)   1,299      -        883   0.02
    Gain on Toshiba
     Investment             -         -        -      4,397   (2,990) (0.08)
    Note Receivable         -      (1,817)   1,817     (183)   1,360   0.04
  2004 Results
   Excluding Special
   Items               $471,333  $374,395  $95,368   $2,204  $48,474  $1.34


  2003 Reported
   Results             $420,113  $343,104  $62,050    $(414) $22,998  $0.65
    MSSG Restructuring      -         -      5,926      -      4,148   0.12
    AMSG Restructuring      -         -      3,182      -      2,227   0.06
    Corporate
     Restructuring          -         -      1,236      -        865   0.02
    J&L Restructuring       -         -      1,267      -        888   0.03
    FSS Restructuring       -         -         38      -         26    -
    Widia Integration
     Costs - MSSG           198    (3,784)   3,982      -      2,787   0.08
    Widia Integration
     Costs - AMSG           -         (22)      22      -         16    -
  2003 Results
   Excluding Special
   Items               $420,311  $339,298  $77,703    $(414) $33,955  $0.96


  SEGMENT DATA (Unaudited):

                                   Quarter Ended        Nine Months Ended
                                      March 31,              March 31,
                                   2004      2003*       2004        2003*

  Outside Sales:
  Metalworking Solutions and
   Services Group                $317,506  $286,601    $872,128    $796,835
  Advanced Materials Solutions
   Group                          111,464    89,849     299,846     256,563
  J&L Industrial Supply            60,074    51,729     158,554     148,012
  Full Service Supply              35,186    31,064      99,055      93,782
  Total Outside Sales            $524,230  $459,243  $1,429,583  $1,295,192

  Sales By Geographic Region:
  Within the United States       $268,359  $239,565    $737,176    $708,195
  International                   255,871   219,678     692,407     586,997
  Total Outside Sales            $524,230  $459,243  $1,429,583  $1,295,192

  Operating Income (Loss), as
   reported:
  Metalworking Solutions and
   Services Group                 $36,751   $23,593     $82,937     $64,597
  Advanced Materials Solutions
   Group                           15,146     9,320      36,375      27,044
  J&L Industrial Supply             6,419     1,323      13,410       5,209
  Full Service Supply                 376        31         (64)       (320)
  Corporate and Eliminations      (15,670)   (9,663)    (48,485)    (34,480)
  Total Operating Income          $43,022   $24,604     $84,173     $62,050

  Operating Income (Loss),
   excluding special charges:
  Metalworking Solutions and
   Services Group                 $36,751   $26,581     $89,471     $74,505
  Advanced Materials Solutions
   Group                           15,146    10,442      37,920      30,248
  J&L Industrial Supply             6,419     2,124      13,410       6,476
  Full Service Supply                 376        40         (64)       (282)
  Corporate and Eliminations      (15,670)   (9,385)    (45,369)    (33,244)
  Total Operating Income          $43,022   $29,802     $95,368     $77,703

  *  Prior year segment data has been restated for organizational changes.


  OPERATING INCOME / (LOSS) RECONCILIATION (Unaudited):

  QUARTER ENDED MARCH 31,
                                                           Corp &
                            MSSG     AMSG     J&L    FSS    Elim     Total
  2003 Reported Operating
   Income (Loss)           $23,593   $9,320  $1,323   $31  $(9,663) $24,604
    Restructuring            1,077    1,104     801     9      278    3,269
    Widia Integration
     Costs                   1,911       18     -     -        -      1,929
  2003 Operating Income
   (Loss) Excluding
   Special Charges         $26,581  $10,442  $2,124   $40  $(9,385) $29,802


  NINE MONTHS ENDED MARCH 31,
                                                           Corp &
                         MSSG     AMSG      J&L     FSS     Elim     Total
  2004 Reported
   Operating Income
   (Loss)               $82,937  $36,375  $13,410   $(64) $(48,485) $84,173
    Restructuring         5,023    1,497      -      -         -      6,520
    Widia Integration
     Costs                1,511       48      -      -         -      1,559
    Pension Curtailment     -        -        -      -       1,299    1,299
    Note Receivable         -        -        -      -       1,817    1,817
  2004 Operating Income
   (Loss) Excluding
   Special Charges      $89,471  $37,920  $13,410   $(64) $(45,369) $95,368

  2003 Reported
   Operating Income
   (Loss)               $64,597  $27,044   $5,209  $(320) $(34,480) $62,050
    Restructuring         5,926    3,182    1,267     38     1,236   11,649
    Widia Integration
     Costs                3,982       22      -      -         -      4,004
  2003 Operating Income
   (Loss) Excluding
   Special Charges      $74,505  $30,248   $6,476  $(282) $(33,244) $77,703


  RECONCILIATION TO FREE OPERATING CASH FLOW INFORMATION (Unaudited)

                                          Quarter Ended   Nine Months Ended
                                            March 31,         March 31,
                                          2004     2003     2004     2003

  Net income                             $24,070   $9,699  $43,726  $22,998
  Other non-cash items                     4,238    2,593   15,457    8,082
  Depreciation and amortization           16,913   21,839   48,753   61,819
  Change in inventory                     (1,969)   1,144   13,468   14,644
  Change in accounts receivable          (26,610) (30,063)  (3,213)     848
  Change in accounts payable              18,260   28,172    9,080    2,436
  Change in other assets and liabilities  19,222    6,215  (17,805)   3,359
  Net cash flow provided by operating
   activities                             54,124   39,599  109,466  114,186

  Purchase of property, plant and
   equipment                             (14,207) (13,955) (36,060) (35,966)
  Proceeds from disposals of property,
   plant and equipment                       610      661    2,998    1,504
  Free operating cash flow               $40,527  $26,305  $76,404  $79,724


  CONDENSED BALANCE SHEETS (Unaudited)

                                                   Quarter Ended
                                            03/31/04    12/31/03    09/30/03
  ASSETS
  Cash and equivalents                      $27,528     $15,086     $14,720
  Accounts receivable, net of allowance     248,879     223,087     232,146
  Inventories                               387,202     386,250     387,877
  Deferred income taxes                      87,651      88,020      86,888
  Other current assets                       38,803      39,460      47,003
      Total current assets                  790,063     751,903     768,634
  Property, plant and equipment, net        481,793     487,530     489,242
  Goodwill and Intangible assets, net       554,614     500,890     484,662
  Other assets                               59,641      72,802      67,108
      Total                              $1,886,111  $1,813,125  $1,809,646

  LIABILITIES
  Short-term debt, including notes
   payable                                   $8,193     $12,872     $11,375
  Accounts payable                          132,246     112,563     107,653
  Accrued liabilities                       202,460     183,835     197,578
      Total current liabilities             342,899     309,270     316,606
  Long-term debt                            486,119     468,455     508,763
  Deferred income taxes                      38,045      36,087      41,368
  Other liabilities                         192,546     191,585     180,258
      Total liabilities                   1,059,609   1,005,397   1,046,995

  MINORITY INTEREST                          16,598      16,286      16,089

  SHAREOWNERS' EQUITY                       809,904     791,442     746,562

      Total                              $1,886,111  $1,813,125  $1,809,646


  CONDENSED BALANCE SHEETS (Unaudited)

                                                      Quarter Ended
                                                06/30/03          03/31/03
  ASSETS
  Cash and equivalents                           $15,093           $17,250
  Accounts receivable, net of allowance          231,803           235,908
  Inventories                                    389,613           408,996
  Deferred income taxes                           97,237            81,651
  Other current assets                            48,606            44,286
      Total current assets                       782,352           788,091
  Property, plant and equipment, net             489,828           476,208
  Goodwill and Intangible assets, net            473,173           491,987
  Other assets                                    68,534           107,159
      Total                                   $1,813,887        $1,863,445

  LIABILITIES
  Short-term debt, including notes
   payable                                       $10,845           $15,068
  Accounts payable                               118,509           120,981
  Accrued liabilities                            206,993           208,816
      Total current liabilities                  336,347           344,865
  Long-term debt                                 514,842           565,067
  Deferred income taxes                           43,543            38,382
  Other liabilities                              178,698           140,550
      Total liabilities                        1,073,430         1,088,864

  MINORITY INTEREST                               18,880            18,070

  SHAREOWNERS' EQUITY                            721,577           756,511

      Total                                   $1,813,887        $1,863,445


  Debt to Capital Reconciliation (Unaudited)

                              Quarter Ended March 31,
                                 2004        2003

  Total Debt                    494,312     580,135
  Total Shareowners' Equity     809,904     756,511

  Debt to Equity, GAAP             37.9%       43.4%

  Total Debt                    494,312     580,135
  Minority Interest              16,598      18,070
  Total Shareowners' Equity     809,904     756,511

  Total Capital               1,320,814   1,354,716

  Debt to Capital                  37.4%       42.8%


  RECONCILIATION OF FORECASTED GAAP EPS (UNAUDITED)

  FY03 4Q EPS - As Reported                            ($0.14)
   MSSG Restructuring                                    0.06
   AMSG Restructuring                                    0.02
   AMSG Electronics Impairment                           0.43
   Widia Integration - MSSG                              0.06
   Widia Integration - AMSG                              0.02
  FY03 4Q EPS - Excluding Special Items                 $0.45

  Forecasted Increase                                 56% - 78%

  FY04 4Q Forecasted EPS - Excluding Special Items  $0.70 - $0.80


  RECONCILIATION OF FORECASTED GAAP CASH FLOW INFORMATION (Unaudited)

                                                        Twelve Months Ended
                                                           June 30, 2004
  Forecasted net cash flow provided by operating
   activity                                             $155,000 - $175,000
  Forecasted purchases and disposals of property,
   plant and equipment                                    50,000 - 55,000
  Forecasted free operating cash flow                   $100,000 - $125,000

SOURCE: Kennametal Inc.