Kennametal Inc. (KMT) reported that its third-quarter net income attributable to the company declined to $53.92 million from $75.50 million in the prior year quarter.
Earnings per share were $0.67, compared with the prior year quarter earnings per share of $0.93. The latest quarter ncluded $0.02 per share accretion from Stellite. The prior year quarter included net loss of $0.05 per share from Stellite.
Operating income was $75 million, compared with $103 million in the same quarter last year. Stellite contributed $2.9 million of operating income in the current year quarter, compared with a net operating loss of $4.6 million in the prior year period. Operating income declined due to lower absorption of manufacturing costs related to reduced sales volume, as well as an ongoing inventory reduction initiative. Partially offsetting these effects, the company reduced operating expense with its continued cost discipline.
Sales were $655 million, compared with $696 million in the same quarter last year. Sales decreased by 6 percent, reflecting a 6 percent organic decline, a 5 percent unfavorable impact from fewer business days and a 1 percent unfavorable effect from currency exchange, partially offset by a 6 percent increase due to two months of revenues from Stellite.
Analysts polled by Thomson Reuters expected the company to report earnings of $0.71 per share on revenues of $676.66 million for the quarter. Analysts' estimates typically exclude special items.
Kennametal also announced that its board of directors declared a quarterly cash dividend of $0.16 per share. The dividend is payable May 22, 2013 to shareowners of record as of the close of business on May 7, 2013.
Kennametal adjusted its full-year outlook due to a slower than anticipated recovery in the company's served industrial end markets globally, as well as continued softness in road construction, underground mining, and oil and gas markets in the U.S. However, the company notes that its order rates have reflected a sequential increase over the prior quarter and expects continued modest improvement, primarily in its industrial end markets.
The company now expects fiscal 2013 sales decline in the range of 5 to 6 percent, with organic sales decline ranging from 8 to 9 percent. Previously, the company had forecast total sales decline ranging from 2 to 4 percent with organic sales decline of 7 to 9 percent.
Based on the revision, the company has reduced its earnings per share guidance for fiscal 2013 to range from $2.45 to $2.55, versus its previous expectation of $2.60 to $2.80. Included in this outlook is the accretive contribution of the Stellite acquisition, net of integration costs, which is now expected to range between $0.05 and $0.10 per share as compared to the previous range of $0.10 and $0.15 per share.
Analysts expect the company to report earnings of $2.69 per share on revenues of $2.66 billion for fiscal 2013.
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