Kennametal FY26: Sales +20%, EPS $4.42, but cash flow turns negative on tungsten inventory surge
KMT sits 52% above its 52-week low of $20.17.
Summary
Kennametal reported strong FY26 earnings with sales up 20% and EPS of $4.42, but negative operating cash flow and a doubling of inventories due to tungsten stockpiling raise liquidity concerns.
Key Events · Earnings and Guidance · KMT
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FY26 Sales and EPS Surge
Sales rose 20% to $2,356.7M; diluted EPS jumped to $4.42 from $1.20, driven by pricing and volume gains.
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Operating Margin Expansion
Operating income reached $472.5M (20.1% margin) vs $143.1M (7.3%) prior year, aided by favorable raw material pricing timing.
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Inventory Build Consumes Cash
Inventories more than doubled to $1,108.5M, consuming $593.4M of cash and turning operating cash flow negative at -$4.0M.
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Refinancing Completed
Issued $300M 5.800% notes due 2036, entered $500M delayed-draw term loan, and expanded credit facility to $850M.
Analysis · KMT · Technology
Kennametal's fiscal 2026 results show a dramatic operating turnaround — sales up 20% to $2.36B and operating margin expanding from 7.3% to 20.1% — but the balance sheet tells a more complicated story. Inventories more than doubled to $1.1B as the company stockpiled tungsten amid rising prices, consuming $593M of cash and flipping operating cash flow to negative $4M. The company also completed a major refinancing, extending maturities but adding leverage. The pause in share buybacks and the inventory build suggest management is prioritizing liquidity and raw material security over shareholder returns, a shift that could pressure the stock if tungsten prices reverse.
At the time of this filing, KMT was trading at $30.64 on NYSE in the Technology sector, with a market capitalization of approximately $2.3B. The 52-week trading range was $20.17 to $43.81. This filing was assessed with neutral market sentiment and an importance score of 7 out of 10.