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COVID-19: How Kennametal is responding

Kennametal Inc. today reported fiscal 2009 second quarter earnings per diluted share (EPS) of $0.21, compared with the prior year quarter reported EPS of $0.64, a decrease of 67 percent. The current quarter reported EPS included charges of $0.14 per share related to the company's previously announced restructuring plans. Absent these charges, adjusted EPS for the current quarter of $0.35 decreased 45 percent compared with prior year quarter reported EPS.

"Kennametal has made solid progress in executing strategies to balance our businesses across served geographies and end markets. However, we are not immune to the rapid and significant global decline in industrial production that has taken place over the past few months," said Chairman, President and Chief Executive Officer Carlos Cardoso. "As a result, we continue to take actions to reduce our costs and right size our business in line with current economic conditions while minimizing the impact of such on our customers. These steps, along with sharp focus on maximizing cash flow as well as maintaining our strong balance sheet and ensuring sound liquidity are at the top of our priorities. Through all of this, we will manage through the current economic downturn and we expect to emerge as an even stronger company, when industrial activity turns upward." Cardoso added.

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 Second Quarter Key Developments
  --  Sales for the quarter were $569 million, compared with $647 million in
      the same quarter last year. The 12 percent decrease in sales was
      comprised of a 10 percent organic decline and a 5 percent decrease
      from unfavorable foreign currency effects, partially offset by the net
      favorable impact of acquisitions and divestitures of 2 percent and
      more workdays of 1 percent.
  --  As previously announced, the company continued to implement certain
      restructuring plans to reduce costs and improve efficiencies in its
      operations. During the December quarter, the company recognized
      pre-tax charges related to these initiatives of $10 million, or $0.14
      per share.  Pre-tax charges recorded to date for these initiatives
      were $27 million. Including these charges, the company expects to
      recognize approximately $90 million of pre-tax charges related to its
      restructuring plans.  The remaining charges are expected to be
      incurred over the next six to nine months.  The majority of these
      charges are expected to be cash expenditures.  Annual ongoing benefits
      from these actions, once fully implemented, are expected to be
      approximately $100 million.
  --  Operating income was $23 million for the quarter.  This represents a
      decrease of $46 million, or 66 percent, from $69 million in the prior
      year quarter. Absent the impact of the restructuring and related
      charges, operating income for the quarter was $34 million, a decline
      of $36 million or 52 percent from the prior year quarter. This
      decrease was driven primarily by reduced sales volumes and the related
      lower manufacturing cost absorption as well as disruption costs from
      restructuring programs. This was partially offset by lower provisions
      for employee incentive compensation plans and higher price
      realization.
  --  The effective tax rate for the current quarter was 23.2 percent,
      compared with 17.3 percent in the prior year quarter.  Absent the
      effect of restructuring and related charges, the current quarter rate
      was 16.5 percent, which included a benefit from the recent completion
      of a routine income tax examination for certain prior fiscal years.
  --  Net income was $16 million for the current year quarter. Absent the
      charges related to restructuring, net income for the current quarter
      decreased 50 percent to $25 million, from $50 million in the prior
      year quarter.  This decrease was primarily the result of lower
      operating income partially offset by higher other income, driven
      mostly by favorable foreign currency transaction results.
  --  Reported EPS were $0.21, compared with prior year quarter reported EPS
      of $0.64.  Adjusted EPS of $0.35 decreased 45 percent, compared with
      prior year quarter reported EPS.  A reconciliation follows:



               Earnings Per Diluted Share Reconciliation

  Second Quarter FY 2009                 Second Quarter FY 2008
  Reported EPS                    $0.21  Reported EPS            $0.64
    Restructuring and related               No special items         -
     charges                       0.14
  Adjusted EPS                    $0.35                          $0.64


  Fiscal 2009 First Half Key Developments
  --  Sales of $1.2 billion decreased 2 percent from $1.3 billion in the
      same period last year. Sales decreased 3 percent on an organic basis,
      partially offset by a 1 percent increase from more workdays.
  --  During the first half of 2009, the company recognized pre-tax charges
      related to the previously mentioned restructuring plans of $19
      million, or $0.23 per share.
  --  Operating income was $77 million, compared with $134 million in the
      same period last year, a decrease of 42 percent.  Absent charges
      related to restructuring, operating income was $96 million, which was
      down $38 million, or 28 percent, from the prior year period. This
      decrease was principally the result of reduced sales volumes and the
      related lower manufacturing cost absorption as well as disruption
      costs from restructuring programs. This was partially offset by lower
      provisions for employee incentive compensation plans and higher price
      realization.
  --  The effective tax rate for the current period was 20.3 percent,
      compared with 27.1 percent in the prior year period.  Absent the
      effect of restructuring and related charges in the current year and a
      charge for a German tax law change in the prior year, the current year
      rate was 18.1 percent and the prior year rate was 21.6 percent. The
      year-to-year decrease in the adjusted rate was due to the release of a
      deferred tax benefit valuation allowance and a benefit from the recent
      completion of a routine income tax examination.
  --  Net income was $51 million for the current year period, compared with
      $85 million for the prior year. Absent the charges related to
      restructuring and the German tax law change, net income for the
      current period decreased 25 percent to $68 million, from $92 million
      in the prior year.  This decrease was driven primarily by lower
      operating income, partially offset by the favorable impact of a lower
      effective tax rate.
  --  Reported EPS was $0.69, a decrease of 36 percent from the prior year
      reported EPS of $1.08.  The current period reported EPS included
      charges of $0.23 per share related to the company's restructuring
      plans.  Prior year period reported EPS included a non-cash charge of
      $0.08 per share for the impact of the German tax law change.  Absent
      these charges, adjusted EPS for the first half of fiscal 2009 of $0.92
      decreased 21 percent, compared with prior year adjusted EPS of $1.16. 
      A reconciliation follows:

                 Earnings Per Diluted Share Reconciliation

  First Half FY 2009                    First Half FY 2008
  Reported EPS                 $0.69    Reported EPS                 $1.08
    Restructuring and related             Impact of German tax law
     charges                    0.23       change                     0.08
  Adjusted EPS                 $0.92    Adjusted EPS                 $1.16


  --  Adjusted ROIC was 10.9 percent, down 140 basis points from 12.3
      percent in the prior year quarter.
  --  Cash flow from operating activities was $115 million in the first half
      of fiscal 2009, compared with $69 million in the prior year period.
      Free operating cash flow for the current year period was $48 million,
      compared with an outflow of $9 million in the prior year period.  The
      increased generation of cash flow was driven by a strong focus on
      receivable collection and lower income tax payments.

  Segment Highlights of Fiscal 2009 Second Quarter

Metalworking Solutions & Services Group (MSSG) sales decreased by 21 percent during the December quarter, driven primarily by an organic sales decline of 15 percent, unfavorable foreign currency effects of 5 percent and 1 percent from the impact of divestitures. On a global basis, industrial production declined in contrast to the prior year quarter. Demand in most industry and market sectors has weakened. On a regional basis, Europe, India and North America reported organic sales declines of 17 percent, 17 percent and 16 percent, respectively, for the December quarter. Asia Pacific and Latin America also experienced organic sales declines of 9 percent and 2 percent, respectively.

MSSG operating income and margin decreased significantly, compared with the prior year. During the December quarter, MSSG recognized restructuring and related charges of $7 million. Absent these charges, MSSG operating income decreased 76 percent and the operating margin decreased to 4 percent. The primary drivers of the decline in operating margin were unfavorable absorption of manufacturing costs due to lower production and temporary disruption effects related to restructuring initiatives. The impact of recent price increases essentially offset the effect of higher raw material costs.

Advanced Materials Solutions Group (AMSG) sales increased 5 percent during the December quarter, driven by 8 percent from the impact of acquisitions partially offset by 3 percent from unfavorable foreign currency effects. Organic sales were flat as increased mining and construction sales and higher energy-related sales were offset by lower sales of engineered products.

AMSG operating income decreased by 29 percent and the operating margin decreased to 9 percent from the same quarter last year. During the December quarter, AMSG recognized restructuring and related charges of $3 million. Absent these charges, AMSG operating income decreased 18 percent and the operating margin decreased 290 basis points. The decline in operating margin was due to unfavorable business mix and lower performance in the engineered products business. Improved price realization more than offset the impact of higher raw material costs.

Corporate operating loss decreased by 81 percent, or $16 million. This decrease was primarily driven by lower provisions for employee compensation programs as a result of the decline in operating performance.

Outlook

Kennametal has revised its outlook for fiscal 2009 EPS to a range of $1.30 to $1.50, excluding charges that occur relating to the previously announced restructuring actions. Organic sales for fiscal 2009 are expected to be 14 to 15 percent lower than for the previous fiscal year.

In the third quarter of fiscal 2009, Kennametal expects organic sales to decline by 22 to 25 percent from the prior year quarter and EPS to be in the range of $0.05 and $0.15, excluding charges that occur relating to the previously announced restructuring actions.

Kennametal anticipates cash flow from operating activities of approximately $170 million to $190 million for fiscal 2009. Based on anticipated capital expenditures of $110 million, the company expects to generate between $60 million and $80 million of free operating cash flow for fiscal 2009.

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 February 18, 2009 to shareowners of record as of the close of business on February 3, 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.

Second quarter results for fiscal 2009 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 February 28, 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 2009, and its expectations regarding 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: 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; our ability to implement restructuring plans and other cost savings initiatives, fluctuations in energy costs and 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; 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. Customers buy approximately $2.7 billion annually of Kennametal products and services - delivered by our 14,000 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      Six Months Ended
  (in thousands, except per        December 31,           December 31,
   share amounts)                 2008      2007        2008        2007
  -------------------------       ----      ----        ----        ----

  Sales                       $568,684  $647,423  $1,237,949  $1,262,499
  Cost of goods sold           405,369   426,485     855,856     829,470
  ------------------           -------   -------     -------     -------

     Gross profit              163,315   220,938     382,093     433,029

  Operating expense            130,348   147,921     284,030     292,953
  Restructuring charges          6,204         -      14,616           -
  Amortization of intangibles    3,269     3,626       6,678       6,571
  ---------------------------    -----     -----       -----       -----

     Operating income           23,494    69,391      76,769     133,505

  Interest expense               8,026     8,531      15,142      16,330
  Other income, net             (4,790)     (993)     (3,387)     (2,096)
  -----------------             ------      ----      ------      ------

     Income before income
      taxes and minority
      interest                  20,258    61,853      65,014     119,271

  Provision for income taxes     4,700    10,670      13,204      32,337
  Minority interest
   (income) expense               (101)    1,037         684       1,909
  -----------------               ----     -----         ---       -----

  Net income                   $15,659   $50,146     $51,126     $85,025
  ==========                   =======   =======     =======     =======

  Basic earnings per share       $0.22     $0.65       $0.70       $1.10
  ========================       =====     =====       =====       =====

  Diluted earnings per share     $0.21     $0.64       $0.69       $1.08
  ==========================     =====     =====       =====       =====

  Dividends per share            $0.12     $0.12       $0.24       $0.23
  ===================            =====     =====       =====       =====

  Basic weighted average
   shares outstanding           72,630    77,111      73,515      77,272
  ======================        ======    ======      ======      ======

  Diluted weighted average
   shares outstanding           73,199    78,647      74,347      78,821
  ========================      ======    ======      ======      ======



  CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)

                                                     December 31, June 30,
  (in thousands)                                         2008       2008
  --------------                                         ----       ----

  ASSETS
  Cash and cash equivalents                           $69,731    $86,478
  Accounts receivable, net                            367,426    512,794
  Inventories                                         464,684    460,800
  Other current assets                                102,398     91,914
  --------------------                                -------     ------
     Total current assets                           1,004,239  1,151,986
  Property, plant and equipment, net                  735,972    749,755
  Goodwill and intangible assets, net                 794,048    802,722
  Other assets                                         91,171     79,886
  ------------                                         ------     ------
     Total assets                                  $2,625,430 $2,784,349
  ===============                                  ========== ==========

  LIABILITIES
  Current maturities of long-term debt and
   capital leases, including notes payable            $43,111    $33,600
  Accounts payable                                    128,779    189,050
  Other current liabilities                           241,434    298,661
  -------------------------                           -------    -------
     Total current liabilities                        413,324    521,311
  Long-term debt and capital leases                   479,611    313,052
  Other liabilities                                   282,533    280,552
  -----------------                                   -------    -------
     Total liabilities                              1,175,468  1,114,915

  MINORITY INTEREST IN CONSOLIDATED SUBSIDIARIES       19,235     21,527
  SHAREOWNERS' EQUITY                               1,430,727  1,647,907
  -------------------                               ---------  ---------
     Total liabilities and shareowners' equity     $2,625,430 $2,784,349
  ============================================     ========== ==========



  SEGMENT DATA (UNAUDITED)        Three Months Ended     Six Months Ended
                                     December 31,           December 31,
  (in thousands)                    2008      2007        2008        2007
  --------------                    ----      ----        ----        ----

  Outside Sales:
  Metalworking Solutions and
   Services Group               $344,630  $434,733    $775,916    $842,430
  Advanced Materials
   Solutions Group               224,054   212,690     462,033     420,069
  ------------------             -------   -------     -------     -------
    Total outside sales         $568,684  $647,423  $1,237,949  $1,262,499
    ===================         ========  ========  ==========  ==========

  Sales By Geographic Region:
  United States                 $274,397  $278,238    $563,203    $561,318
  International                  294,287   369,185     674,746     701,181
  -------------                  -------   -------     -------     -------
    Total sales by
     geographic region          $568,684  $647,423  $1,237,949  $1,262,499
    ==================          ========  ========  ==========  ==========

  Operating Income (Loss):
  Metalworking Solutions and
   Services Group                 $7,827   $61,986     $51,138    $117,338
  Advanced Materials
   Solutions Group                19,437    27,197      49,427      57,177
  Corporate and eliminations(a)   (3,770)  (19,792)    (23,796)    (41,010)
  -----------------------------   ------   -------     -------     -------
    Total operating income       $23,494   $69,391     $76,769    $133,505
    ======================       =======   =======     =======    ========

  (a) 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, effective tax rate, net income and diluted 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 DECEMBER 31, 2008 (UNAUDITED)
  (in thousands,
   except per share      Gross  Operating  Operating      Net      Diluted
   amounts)             Profit   Expense    Income      Income       EPS
  -----------------     ------  ---------  ---------    ------     -------
  2009 Reported
   Results             $163,315  $130,348    $23,494    $15,659       $0.21
    Restructuring
     and related
     charges              3,875        (9)    10,088      9,779        0.14
  ----------------        -----        --     ------      -----        ----
  2009 Adjusted
   Results             $167,190  $130,339    $33,582    $25,438       $0.35
  =============        ========  ========    =======    =======       =====

                                                         MSSG       AMSG
  (in thousands,                                      Operating   Operating
   except percents)                                     Income     Income
  -----------------                                   ---------   ---------
  2009 Reported
   Results                                               $7,827     $19,437
  2009 Reported
   Operating Margin                                         2.3%        8.7%
    Restructuring
     and related
     charges                                              7,288       2,800
  -----------------                                       -----       -----
  2009 Adjusted
   Results                                              $15,115     $22,237
  =============                                         =======     =======
  2009 Adjusted
   Operating
   Margin                                                   4.4%        9.9%
  =============                                             ===         ===

                                                                  Effective
                                                                   Tax Rate
  -------------                                                   ---------
  2009 Reported
   Results                                                             23.2%
    Impact on
     effective tax
     rate as a result
     of restructuring
     and related
     charges                                                           (6.7)
  -------------------                                                  ----
  2009 Adjusted
   Results                                                             16.5%
  =============                                                        ====

  SIX MONTHS ENDED DECEMBER 31, 2008 (UNAUDITED)
  (in thousands,
   except per share      Gross  Operating  Operating      Net      Diluted
   amounts)             Profit   Expense    Income      Income       EPS
  -----------------     ------  ---------  ---------    ------     -------
  2009 Reported
   Results             $382,093  $284,030    $76,769    $51,126       $0.69
    Restructuring
     and related
     charges              4,598       (19)    19,233     17,188        0.23
  ---------------         -----       ---     ------     ------        ----
  2009 Adjusted
   Results             $386,691  $284,011    $96,002    $68,314       $0.92
  =============        ========  ========    =======    =======       =====

                                                                  Effective
                                                                   Tax Rate
  -------------                                                   ---------
  2009 Reported
   Results                                                             20.3%
     Impact on
      effective tax
      rate as a result
      of restructuring
      and related
      charges                                                          (2.2)
  --------------------                                                 ----
  2009 Adjusted
   Results                                                             18.1%
  =============                                                        ====

  SIX MONTHS ENDED DECEMBER 31, 2007 (UNAUDITED)
  (in thousands,
   except percents
   and per share                           Effective      Net      Diluted
   amounts)                                 Tax Rate    Income       EPS
  ----------------                         ---------    ------     -------
  2008 Reported
   Results                                      27.1%   $85,025       $1.08
    Impact of German
     tax law change                             (5.5)     6,594        0.08
  -------------------                           ----      -----        ----
  2008 Adjusted
   Results                                      21.6%   $91,619       $1.16
  =============                                 ====    =======       =====



  FREE OPERATING CASH FLOW (UNAUDITED)                Six Months Ended
                                                         December 31,
  (in thousands)                                        2008     2007
  --------------                                        ----     ----

  Net cash flow provided by operating activities    $115,490  $68,934
  Purchases of property, plant and equipment         (68,659) (79,559)
  Proceeds from disposals of property, plant and
   equipment                                           1,668    1,891
  ----------------------------------------------       -----    -----
     Free operating cash flow                        $48,499  $(8,734)
  ===========================                        =======  =======



  RETURN ON INVESTED CAPITAL (UNAUDITED)
  December 31, 2008 (in thousands, except percents)

  Invested Capital                  12/31/2008  9/30/2008  6/30/2008
  ----------------                  ----------  ---------  ---------
  Debt                                $522,722   $481,723   $346,652
  Minority interest                     19,235     20,412     21,527
  Shareowners' equity                1,430,727  1,465,757  1,647,907
  -------------------                ---------  ---------  ---------
  Total                             $1,972,684 $1,967,892 $2,016,086
  =====                             ========== ========== ==========



  Invested Capital                   3/31/2008 12/31/2007   Average
  ----------------                   --------- ----------   -------
  Debt                                $428,456   $446,956   $445,302
  Minority interest                     21,879     20,276     20,666
  Shareowners' equity                1,615,568  1,563,297  1,544,651
  -------------------                ---------  ---------  ---------
  Total                             $2,065,903 $2,030,529 $2,010,619
  =====                             ========== ========== ==========



                                      Three Months Ended
  Interest Expense   12/31/2008  9/30/2008 6/30/2008 3/31/2008    Total
  ----------------   ----------  --------- --------- ---------    -----
  Interest expense       $8,026     $7,116    $7,393    $8,005    $30,540
  Securitization
   fees                       -          -         4         5          9
  --------------         ------     ------    ------    ------     ------
  Total interest
   expense               $8,026     $7,116    $7,397    $8,010    $30,549
  ==============         ======     ======    ======    ======
  Income tax benefit                                                6,110
                                                                    -----
  Total interest
   expense, net of
   tax                                                            $24,439
                                                                  =======
  Total Income       12/31/2008  9/30/2008 6/30/2008 3/31/2008    Total
  ------------       ----------  --------- --------- ---------    -----
  Net income, as
   reported             $15,659    $35,467   $59,580   $23,170   $133,876
  Goodwill
   impairment charge          -          -         -    35,000     35,000
  Restructuring and
   related charges        9,779      7,408     6,635         -     23,822
  Minority interest
   (income) expense        (101)       785       329       742      1,755
  -----------------        ----        ---       ---       ---      -----
  Total income,
   adjusted             $25,337    $43,660   $66,544   $58,912   $194,453
  =============         =======    =======   =======   =======
  Total interest
   expense, net of
   tax                                                             24,439
                                                                   ------
                                                                 $218,892
  Average invested
   capital                                                     $2,010,619
                                                               ----------
  Adjusted Return on
   Invested Capital                                                  10.9%
                                                                     ====



  Return on invested capital calculated utilizing net income, as reported
   is as follows:
  Net income, as reported                                        $133,876
  Total interest expense,
   net of tax                                                      24,439
  -----------------------                                          ------
                                                                 $158,315
  Average invested capital                                     $2,010,619
  ------------------------                                     ----------
  Return on Invested
   Capital                                                            7.9%
  ==================                                                  ===



  RETURN ON INVESTED CAPITAL (UNAUDITED)
  December 31, 2007 (in thousands, except percents)

  Invested Capital                  12/31/2007  9/30/2007  6/30/2007
  ----------------                  ----------  ---------  ---------
  Debt                                $446,956   $377,051   $366,829
  Minority interest                     20,276     19,122     17,624
  Shareowners' equity                1,563,297  1,531,378  1,484,467
  -------------------                ---------  ---------  ---------
  Total                             $2,030,529 $1,927,551 $1,868,920
  =====                             ========== ========== ==========



  Invested Capital                   3/31/2007 12/31/2006   Average
  ----------------                   --------- ----------   -------
  Debt                                $371,521   $376,472   $387,766
  Minority interest                     16,896     15,807     17,945
  Shareowners' equity                1,431,235  1,369,748  1,476,025
  -------------------                ---------  ---------  ---------
  Total                             $1,819,652 $1,762,027 $1,881,736
  =====                             ========== ========== ==========

                                              Three Months Ended
  Interest
   Expense            12/31/2007  9/30/2007  6/30/2007 3/31/2007    Total
  --------            ----------  ---------  --------- ---------    -----
  Interest expense        $8,531     $7,799     $7,513    $6,915    $30,758
  Securitization
   fees                        5          8          5         5         23
  ----------------        ------     ------     ------    ------     ------
  Total interest
   expense                $8,536     $7,807     $7,518    $6,920    $30,781
  ==============          ======     ======     ======    ======
  Income tax benefit                                                  8,434
                                                                      -----
  Total interest
   expense, net
   of tax                                                           $22,347
                                                                    =======
  Total Income        12/31/2007  9/30/2007  6/30/2007 3/31/2007    Total
  ------------        ----------  ---------  --------- ---------    -----
  Net income, as
   reported              $50,146    $34,879    $62,093   $51,738   $198,856
  Impact of German
   tax law change              -      6,594          -         -      6,594
  Minority interest
   expense                 1,037        872        229       757      2,895
  -----------------        -----        ---        ---       ---      -----
  Total income,
   adjusted              $51,183    $42,345    $62,322   $52,495   $208,345
  =============          =======    =======    =======   =======
  Total interest
   expense, net
   of tax                                                            22,347
                                                                     ------
                                                                   $230,692
  Average invested
   capital                                                       $1,881,736
                                                                 ----------
  Adjusted Return on
   Invested Capital                                                    12.3%
                                                                       ====
  Return on invested capital calculated utilizing net income, as reported
   is as follows:
  Net income, as reported                                          $198,856
  Total interest expense,
   net of tax                                                        22,347
  -----------------------                                            ------
                                                                   $221,203
  Average invested capital                                       $1,881,736
  ------------------------                                       ----------
  Return on Invested
   Capital                                                             11.8%
  ==================                                                   ====

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

SOURCE: Kennametal Inc.

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