Kennametal Reports Q3 Earnings Increase
Kennametal, Inc. (Latrobe, PA) reported net income for the third quarter ended March 31, 2000, of $21.6 million ($0.71/share), an increase of 22% compared to $17.4 million ($0.58/share) last year, excluding special charges in both periods. Earnings per share, excluding goodwill amortization expense and special charges, were $0.92/share compared to $0.80/share in the prior year's quarter.
Kennametal president and CEO Markos I. Tambakeras said the improved results reflected the success of the company's ongoing drive to improve operational effectiveness. "On a 1% sales improvement, we generated earnings growth of more than 20%," he said. "Our margins improved substantially and, once again, we generated significant cash flow, enabling us to reduce debt by $34 million." Growth was especially solid in the company's Metalworking and Engineered Products business areas, Tambakeras added.
Sales for the most recent quarter were $483.0 million, a 6% improvement from the December quarter. Sales grew 4% over the year-ago quarter, excluding unfavorable currency translation effects and the divestiture of the Strong Tool Company steel mill business, which affected the quarter by two and one percent, respectively.
Gross profit margin in the third quarter was 39.0%, an improvement of 180 basis points from the December quarter and an improvement of 140 basis points from last year's quarter, excluding special charges. The improved margins were attributed to continuing benefits from lean manufacturing initiatives and a favorable sales mix. Operating expenses for the quarter were $125.8 million, up slightly from $123.6 million in the same quarter last year, excluding special charges.
"The results of the current quarter clearly demonstrate that the company is making progress towards its ambition of becoming a top-tier financial performer," Tambakeras commented. "We are executing on our operational initiatives -- our technology excellence will result in accelerating sales growth as the markets turn and our world-class manufacturing helps give us operating leverage. For example, Renault, one of the world's foremost global automakers, recently awarded Kennametal a multi-year contract to provide all the tooling for its new engine plant in Brazil."
The company also is intensifying its evaluation of opportunities to enhance growth by leveraging the power of the Internet. It expects to announce in the next few months its e-commerce plans in support of the company's business strategy.
"The Internet will play an increasing role in business-to-business commerce, and it is clear that the players in the Internet world--from bricks-to-clicks and from customers to suppliers--are rapidly converging on realistic expectations on how to work with each other to create value and sustainable competitive advantage through the Internet," Tambakeras concluded.
Kennametal Inc., P.O. Box 346, Latrobe, PA15650. Phone (800) 446-7738.