Kennametal’s fourth quarter performance drew a positive market response, as the company delivered revenue growth above Wall Street expectations and meaningful margin expansion. Management attributed these results to a combination of successful pricing actions in response to higher tungsten costs, modest gains in key end markets, and ongoing progress in cost improvement initiatives. CEO Sanjay Chowbey highlighted that project wins in commercial segments and operational discipline helped drive the quarter, while emphasizing, “We continue to make steady progress on our strategic growth initiatives, lean transformation, and structural cost improvement.”
Is now the time to buy KMT? Find out in our full research report (it’s free for active Edge members).
Kennametal (KMT) Q4 CY2025 Highlights:
- Revenue: $529.5 million vs analyst estimates of $524.4 million (9.8% year-on-year growth, 1% beat)
- Adjusted EPS: $0.47 vs analyst estimates of $0.38 (24.3% beat)
- Adjusted EBITDA: $90.45 million vs analyst estimates of $80.95 million (17.1% margin, 11.7% beat)
- The company lifted its revenue guidance for the full year to $2.22 billion at the midpoint from $2.14 billion, a 4% increase
- Management raised its full-year Adjusted EPS guidance to $2.25 at the midpoint, a 50% increase
- Operating Margin: 9.9%, up from 6.6% in the same quarter last year
- Organic Revenue rose 9.8% year on year (beat)
- Market Capitalization: $3.13 billion
While we enjoy listening to the management's commentary, our favorite part of earnings calls are the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention.
Our Top 5 Analyst Questions From Kennametal’s Q4 Earnings Call
- Steven Volkmann (Jefferies) asked if higher tungsten prices prompted customers to accelerate purchases, and CEO Sanjay Chowbey explained a mid-single digit price increase with some buy-ahead activity, but noted volumes are still improving sequentially.
- Julian C.H. Mitchell (Barclays) questioned volume trends by segment and end market. Chowbey detailed that transportation volumes are now stable and general engineering in the Americas is improving, though EMEA remains subdued.
- Steven Fisher (UBS) probed the sharp uplift in Q4 and potential carryover into next year. CFO Michael Pici attributed this to timing of tungsten price increases and said some benefit will extend into early next year.
- Christian Zyla (KeyBanc, for Steve Barger) asked how price and volume trends impact incremental margins. Chowbey replied that incremental margins are mid-40% on volume, with price primarily offsetting cost inflation.
- Tami Zakaria (JPMorgan) inquired about exposure to India sourcing and potential tariff changes. Chowbey responded that U.S. imports from India are minimal but noted possible benefits for Kennametal’s domestic business in India if tariffs drop.
Catalysts in Upcoming Quarters
Looking forward, the StockStory team will focus on (1) the company’s ability to maintain pricing power amid ongoing volatility in tungsten costs, (2) progress and realization of savings from restructuring and plant closures, and (3) sustained momentum in project wins within aerospace, energy, and general engineering. Additionally, early signs of demand recovery in key end markets and the impact of digital machining solutions will be key areas to watch.
Kennametal currently trades at $41.07, up from $35.76 just before the earnings. In the wake of this quarter, is it a buy or sell? Find out in our full research report (it’s free).
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