Kennametal Inc. Q1 2027 Earnings Recap

Kennametal shares fell 13.9% after earnings, with the likely pressure point a fiscal 2027 EPS outlook update reflecting lower tungsten prices, alongside steep infrastructure volume declines and sharply weaker cash conversion. Metal cutting growth and results above the midpoint of the prior outlook were positives, but did not offset those concerns.

Key Takeaways

• Fiscal Q1 sales rose 54% organically year over year; adjusted EPS was $3.48 versus $0.34 a year earlier. Management said sales and EPS were above the midpoint of its prior outlook.
• Metal cutting posted mid-single-digit volume growth for a fourth consecutive quarter. Infrastructure volumes fell in the low double digits, mainly in energy and earthworks.
• Free operating cash flow was negative $212 million year to date, versus negative $5 million a year earlier. Management attributed the deterioration largely to working-capital needs from higher tungsten prices.
• The company updated its fiscal 2027 EPS outlook to reflect Q1 performance and the recent decline in tungsten prices; the transcript does not provide the revised range. Management expects infrastructure volume recovery to be weighted more toward the second half.
• The quarter benefited from $0.08 of favorable price-cost timing and $3 million in restructuring savings, while lower infrastructure volumes were a drag.