Shares of Kennametal (KMT 0.08%) plummeted by 11% today after the company reported fiscal first-quarter earnings. The results were mixed compared to analyst expectations.
Revenue in the fiscal first quarter fell by 23% to $400.3 million, which was ahead of the $384.3 million in sales that Wall Street was looking for. That translated into adjusted earnings per share of $0.03, shy of the consensus estimate of $0.05. The industrial materials company is making progress on the simplification and modernization initiative that it has been working on. Kennametal realized approximately $22 million in incremental benefits related to the effort during the quarter.
"Our results demonstrate effective execution on several fronts despite low levels of industrial activity," CEO Christopher Rossi said in a statement. "Benefits from our simplification/modernization initiatives increased, as we move into the final stages of footprint rationalization, positioning us well for the economic recovery."
Kennametal is not providing much outlook for fiscal 2021 due to the ongoing macroeconomic uncertainty related to the pandemic. The company is encouraged by certain signs of improvement but says that overall market conditions remain too unpredictable and visibility into its main markets remains limited. The only guidance that the company is providing is for capital expenditures, which are expected in the range of $110 million to $130 million.
"Based on the monthly sales results in [fiscal] Q1, early indications from our October sales, assuming that there is no additional second wave of COVID-19 lockdowns in the quarter, we expect [fiscal] Q2 to see low- to mid-single-digit growth sequentially, which would be above our normal sequential growth pattern of 1% to 2%," Rossi offered on the conference call with analysts. "While it feels like the economic recovery may be gaining momentum, as I said, it is still difficult to predict the pace and trajectory."