At its Investor Day, held on Sep 8, Kennametal Inc. KMT provided an update on its growth strategy and announced financial targets through fiscal 2027.
The company expects organic sales to increase at a CAGR of 4-6% through fiscal 2027. It expects adjusted EBITDA margin of 20-23% through fiscal 2027. KMT anticipates adjusted earnings per share to increase at a CAGR of 20-25%. It estimates adjusted return on invested capital of 12-14%. Free operating cash flow is predicted to be more than 100% of adjusted net income through fiscal 2027.
Kennametal also announced a $100 million operational excellence and capacity optimization cost savings initiative, as part of which the company plans to shut down three to five plants and reduce inventory levels. The latest cost-reduction initiative includes the previously announced $20 million restructuring program.
Kennametal Inc. Price
Kennametal Inc. price | Kennametal Inc. Quote
Kennametal’s president and CEO Christopher Rossi said that the company has lately invested in upgrading its manufacturing facilities to drive productivity, enhance customer service and add products to the market. The company is experiencing growth in its aerospace and defense markets as a result of its enhanced commercial excellence process. Based on these initiatives, along with its latest cost-reduction actions, KMT is confident of being able to achieve its financial targets through fiscal 2027.
Zacks Rank & Key Picks
Kennametal presently carries a Zacks Rank #3 (Hold).
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