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KMT > SEC Filings for KMT > Form 8-K on 31-Jul-2014All Recent SEC Filings

Show all filings for KENNAMETAL INC

Form 8-K for KENNAMETAL INC


31-Jul-2014

Results of Operations and Financial Condition, Financial Statements and Exhibits


Item 2.02 Results of Operations and Financial Condition
On July 31, 2014, Kennametal Inc. (Kennametal or the Company) issued an earnings announcement for its fiscal fourth quarter ended June 30, 2014.
The press release contains certain non-generally accepted accounting principles (GAAP) financial measures. The following GAAP financial measures have been presented on an adjusted basis: sales, operating income and margin, net income, diluted earnings per share (EPS), Industrial sales, Industrial operating income and margin, and Infrastructure sales, Infrastructure operating income and margin. Adjustments include acquisition operating results, acquisition-related charges, restructuring and related charges and tax repatriation expense for the three and twelve months ended June 30, 2014. Management adjusts for these items in measuring and compensating internal performance and to more readily compare the Company's financial performance period-to-period. The press release also contains free operating cash flow and adjusted return on invested capital (ROIC), which are both non-GAAP measures and are defined below. Management believes that presentation of these non-GAAP financial measures provides useful information about the results of operations of the Company for the current and past periods. 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. Free Operating Cash Flow
Free operating cash flow is a non-GAAP financial measure and is defined by the Company as cash provided by operations (which is the most directly comparable GAAP measure) less capital expenditures plus proceeds from disposals of fixed assets. Management considers free operating cash flow to be an important indicator of Kennametal's cash generating capability because it better represents cash generated from operations that can be used for dividends, debt repayment, strategic initiatives (such as acquisitions), and other investing and financing activities.
Adjusted Return on Invested Capital
Adjusted Return on Invested Capital is a non-GAAP financial measure and is defined by the Company as the previous 12 months' net income, adjusted for interest expense, noncontrolling interest and special items, divided by the sum of the previous five quarters average balances of debt and total equity. The most directly comparable GAAP measure is return on invested capital calculated utilizing GAAP net income. Management believes that this financial measure provides additional insight into the underlying capital structure and performance of the Company. Management utilizes this non-GAAP measure in determining compensation and assessing the operations of the Company. Additionally, during our quarterly earnings teleconference we may use various non-GAAP financial measures to describe the underlying operating results. Accordingly, we have compiled below certain reconciliations as required by Regulation G. 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.


Debt to Capital
Debt to Capital is a non-GAAP financial measure and is defined by Kennametal as total debt divided by the sum of total equity plus total debt. The most directly comparable GAAP measure is debt to equity, which is defined as total debt divided by total equity. Management believes that Debt to Capital provides additional insight into the underlying capital structure and performance of the Company.

DEBT TO CAPITAL (UNAUDITED)
(in thousands, except percents)    June 30, 2014               June 30, 2013
Total debt                        $    1,061,783     747,945  $      747,945
Total equity                           1,961,608   1,812,293       1,812,293
Debt to equity, GAAP                        54.1 %                      41.3 %
Total debt                        $    1,061,783     747,945  $      747,945
Total equity                           1,961,608   1,812,293       1,812,293
Total capital                     $    3,023,391   2,560,238  $    2,560,238
Debt to capital                             35.1 %                      29.2 %

Gross Margin
The following GAAP financial measures have been presented on an adjusted basis:
sales, gross profit and margin. Adjustments include acquisition operating results, acquisition-related charges and restructuring-related charges for the three months ended June 30, 2014. Management adjusts for these items in measuring and compensating internal performance and to more readily compare the Company's financial performance period-to-period.

THREE MONTHS ENDED JUNE 30, 2014
GROSS MARGIN (UNAUDITED)
(in thousands, except percents)    June 30, 2014
2014 Reported sales               $      772,204
TMB sales                                (72,403 )
2014 Adjusted sales               $      699,801

2014 Reported gross profit        $      252,840
2014 Reported gross margin                  32.7 %

TMB results:
 Base results                            (18,571 )
 Depreciation step-up                      1,401
Acquisition-related charges                1,041
Restructuring and related charges          1,340
2014 Adjusted gross profit        $      238,051
2014 Adjusted gross margin                  34.0 %


Operating Expense
The following GAAP financial measures have been presented on an adjusted basis:
sales, operating expense and margin. Adjustments include acquisition operating results, acquisition-related charges and restructuring-related charges for the three months ended June 30, 2014. Management adjusts for these items in measuring and compensating internal performance and to more readily compare the Company's financial performance period-to-period.

THREE MONTHS ENDED JUNE 30, 2014
OPERATING EXPENSE (UNAUDITED)
(in thousands, except percents)                        June 30, 2014
2014 Reported sales                                   $      772,204
TMB sales                                                    (72,403 )
2014 Adjusted sales                                   $      699,801

2014 Reported operating expense                              154,785
2014 Reported operating expense as a percent of sales           20.0 %

TMB results:
 Base results                                                (10,053 )
 Depreciation step-up                                              -
Acquisition-related charges                                   (2,355 )
Restructuring and related charges                                (59 )
2014 Adjusted operating expense                       $      142,318
2014 Adjusted operating expense as a percent of sales           20.3 %



Item 9.01 Financial Statements and Exhibits
(d) Exhibits
99.1 Fiscal 2014 Fourth Quarter Earnings Announcement


Signatures Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

KENNAMETAL INC.

Date: July 31, 2014 By: /s/ Martha Fusco Martha Fusco Vice President Finance and Corporate Controller

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