Sales increased by 9%, reflecting a 2% organic increase and a 7% increase from the acquisition of ATI’s tungsten materials business.
"Kennametal reported solid profitability although margin expansion lagged top-line growth this quarter," said Kennametal chairman, president and CEO Carlos Cardoso. "With the resumption of growth in our industrial markets, we are dedicating greater resources to serving customers as demand increases. It remains our goal to ensure sustainable growth and expand our through-the-cycle margin levels, just as we demonstrated during the prior growth cycle."
"During the December quarter, we also completed our recently announced acquisition of [ATI’s] tungsten materials business,” he added. “This transaction represents a highly complementary fit with Kennametal in product portfolio, strategic assets and talent base. We will continue to focus on bringing productivity improvements and outstanding service to our customers, which now include those from the acquired business. As we move forward, we remain committed to executing our strategies and maximizing margin expansion opportunities to deliver shareholder value."
Future savings
Operating income was US$50 million, compared with US$66 million in the same quarter last year, due to acquisition-related charges and restructuring charges.
Kennametal expects to incur pre-tax charges of approximately US$40 million to US$50 million within the next three years following the acquisition. However, it expects to generate annual savings of approximately US$35 million to US$45 million once these initiatives are fully implemented.