Sales decreased by 9%, reflecting an 8% organic decline and a 1% unfavourable effect from currency exchange.
Earnings per diluted share (EPS) were US$2.52 on US$2.6 billion in sales, compared with EPS of US$3.77 earned on US$2.7 billion in sales during the prior year. The current year included US$0.03 per share in earnings accretion from Stellite, while the prior year included acquisition-related dilution of US$0.09 per share.
For the fiscal fourth quarter, Kennametal reported EPS of US$0.76 on US$671 million in sales, compared with EPS of US$1.06 on$739 million in sales for the same period last year.
"In the June quarter – and for every quarter during fiscal 2013 – Kennametal delivered double-digit profitability despite market challenges," said Carlose Cardoso, Kennametal chairman, president and CEO. "We demonstrated greater agility in this cycle and elevated our financial performance." Kennametal generated all-time record free operating cash flow of US$204 million; nearly 100% of net income. "Our company-specific initiatives, proven cost disciplines and strong balance sheet provide opportunities for Kennametal to maximize revenues and earnings, while continuing to generate strong cash flows," Cardoso explained. "Going forward, we will remain intensely focused on generating profitable growth."
Operating income was US$91 million, compared with US$117 million in the same quarter last year. Industrial segment sales of US$384 million declined 9% from US$421 million in the prior year quarter. The results reflect an 8% organic decline and a 1% unfavourable effect from currency exchange. On an organic basis, sales declined 8% in general engineering, 7% in transportation and 6% in aerospace and defence. On a regional basis, sales declined approximately 12% in the Americas, 6% in Europe and 5% in Asia.
Infrastructure segment sales of US$288 million, declined 10% from US$318 million in the prior year. The decrease was driven by an 8% organic decline, a 1% decline from fewer business days and a 1% unfavorable effect from currency exchange. On an organic basis, sales declined by 12% in the energy and 6% in the earthworks markets. Energy sales continued to reflect low drilling activity in oil and gas. Earthworks sales remained weak globally due to depressed levels of underground coal mining activity. On a regional basis, sales decreased approximately 11% in the Americas, 8% in Europe and 3% in Asia.
Infrastructure segment operating income was US$35 million, compared with US$42 million in the same quarter of the prior year. Stellite contributed US$1 million of operating income in the current year quarter, compared with US$1 million of net acquisition-related loss in the prior year period. Operating income decreased primarily due to the effects of the organic sales decline and unfavorable inventory adjustments, partially offset by lower operating expense and absorption benefits associated with slightly higher inventory. Excluding Stellite, Infrastructure operating margin was 14.8% compared with 17.0% in the prior year.