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KENNAMETAL ANNOUNCES SECOND QUARTER 1993 EARNINGS

 LATROBE, Pa., Jan. 21 /PRNewswire/ -- Kennametal Inc. (NYSE: KMT) reported today that net income for the second quarter ended Dec. 31, 1992 was $2.1 million, or $0.19 per share, as compared with $1.1 million, or $0.10 per share in the same quarter last year.
 The quarterly results include nonrecurring gains of $1.0 million, or $0.10 per share, in the most recent quarter and $0.3 million, or $0.03 per share in the second quarter of last year. Sales for the quarter were $141 million, or about the same as last year.
 Robert L. McGeehan, president and chief executive officer, said that earnings growth continued to be constrained by the weak economic recovery in the United States, slowing economic conditions in Europe, and planned increases in selling and marketing expenses. Worldwide sales of metalworking products decreased two percent from last year primarily becauseation effects of the stronger U.S. dollar, and continued sales declines in Canada.
 In the United States, sales of metalcutting inserts and toolholding devices increased 2 percent from last year mostly because of price increases. However, total sales of industrial supply products decreased slightly from last year because of product rationalization efforts and weak economic conditions on the west coast of the United States. Sales of industrial supplies through full service supply programs and mail order catalogs continued to grow.
 Sales of mining and construction tools rose 15 percent from last year as the result of continued strong demand for highway construction tools throughout the world and strong demand for mining tools in the United States. Sales of metallurgical products also increased 20 percent.
 Despite unfavorable foreign currency translation effects and lower sales volume in Canada, international sales were about the same as last year. Excluding currency effects, sales in Europe were about the same as last year while sales in Asia-Pacific continued to grow.
 In reviewing the financial results, McGeehan noted that the gross profit margin was approximately 39 percent, up from 38 percent last year. The gross margin benefited from a more favorable sales mix and slightly higher production levels. However, operating expenses increased 2 percent from last year primarily because of increased selling and marketing efforts and the start-up of a catalog sales branch in Los Angeles, in August 1992. In an effort to control rising operating expenses, Kennametal reduced its salaried work force by approximately 100 employees in December 1992. Costs to implement this action were not material.
 During the December 1992 quarter, Kennametal settled a previously disclosed patent infringement suit with GTE Products Corporation for $5.8 million in cash. In connection with this settlement, Kennametal reduced previously established expense accruals and recorded a one-time gain of $1.0 million (after tax), or $0.10 per share. During the second quarter of last year, Kennametal divested a small Belgian subsidiary resulting in a one-time gain of $0.3 million (after tax), or $0.03 per share.
 For the six months ended Dec. 31, 1992, net income was $5.1 million, or $0.47 per share, as compared with $4.8 million, or $0.45 per share, in the same period last year. Sales were $290 million, as compared with $291 million last year.
 In looking to the third quarter of fiscal 1993, McGeehan expects consolidated sales to be about the same as last year. Sales of metalworking products in the United States should continue to benefit from full service supply programs, catalog sales, and the gradual improvement in the U.S. economy. However, international sales are expected to remain weak in Canada and may decline in Europe as the German economy continues to slow. He added that sales of construction tools should continue to increase from highway construction and renovation projects throughout the world.
 FINANCIAL HIGHLIGHTS
 Consolidated financial highlights for Kennametal Inc. for the quarter and six months ended Dec. 31, 1992, and 1991, are shown in the following tables (in thousands, except per share amounts). All fiscal year 1993 data are subject to year-end (June 30) adjustment and audit by independent public accountants.
 Quarter Six Months
 Ended Dec. 31, Ended Dec. 31,
 1992 1991 1992 1991
 Net sales $140,697 $140,570 $289,527 $290,503
 Cost of goods sold 86,123 87,429 175,977 178,023
 Research & development
 expense 3,824 3,683 7,557 6,993
 Selling & marketing
 expense 35,348 33,741 71,456 68,546
 General & adminis-
 trative expense 10,568 11,314 21,535 23,006
 Interest expense 2,407 2,696 4,818 5,158
 Amortization of
 intangibles 829 828 1,657 1,822
 Patent litigation 1,738 - 1,738 -
 Other income (expense) 142 (762)(A) 238 (539)(A)
 Provisions (credits) for
 income taxes 1,400 (1,000)(A) 3,400 1,600(A)
 Net income $ 2,078 $ 1,117 $ 5,103 $ 4,816
 Average shares
 outstanding 10,834 10,706 10,824 10,692
 Earnings per share $ 0.19 $ 0.10 $ 0.47 $ 0.45
 Dividends per share $ 0.29 $ 0.29 $ 0.58 $ 0.58
 (A) Includes pretax loss of $900 relating to the divestiture of Precision Hard Materials, S.A. with related income tax benefits of $1,200.
 Quarter Six Months
 Ended Dec. 31, Ended Dec. 31,
 1992 1991 1992 1991
 Sales by Product
 Class:
 Metalworking $112,391 $114,874 $229,258 $234,532
 Mining & construction 23,436 20,307 50,104 44,354
 Metallurgical 4,870 4,057 10,165 8,868
 Other -- 1,332 -- 2,749
 Sales by Geographic
 Area:
 Within the U.S. $103,303 $103,172 $209,148 $214,758
 Export & foreign 37,394 37,398 80,379 75,745
 Dec. 31, June 30,
 1992 1992
 Assets:
 Cash & equivalents $ 4,806 $ 9,007
 Accounts receivable, net of
 allowances 78,897 90,985
 Inventories 113,599 118,248
 Total current assets 197,302 218,240
 Net property, plant & equipment 197,866 200,502
 Other assets 50,027 53,425
 Total assets $445,195 $472,167
 Liabilities & Shareholders' Equity:
 Short-term debt $ 37,861 $ 32,683
 Accounts payable 29,051 43,864
 Other current liabilities 25,574 33,589
 Total current liabilities 92,486 110,136
 Term debt, less current portion 93,503 95,271
 Deferred income taxes & other 13,885 15,249
 Shareholders' equity 245,321 251,511
 Total liabilities &
 shareholders' equity $445,195 $472,167
 -0- 1/21/93
 /CONTACT: Ron Szymanski of Kennametal, 412-539-4617/
 (KMT)


CO: Kennametal Inc. ST: Pennsylvania IN: MNG SU: ERN

CD -- PG002 -- 7220 01/21/93 08:26 EST
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Date:Jan 21, 1993
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