Kennametal Inc. (NYSE:KMT) Q4 2016 Earnings Conference Call - Final Transcript

Aug 02, 2016 • 08:30 am ET

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Kennametal Inc. (NYSE:KMT) Q4 2016 Earnings Conference Call - Final Transcript

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Q & A
Operator
operator

(Operator Instructions) Ann Duignan, JPMorgan.

Analyst
Ann Duignan

Ron, could you just walk us through your expectations by quarter or maybe first half, back half as we go through fiscal '17? Do we lose a day in Q1 because we gained a working day in Q4? Just talk us through the mechanics of how we should think about modeling? That would be great.

Executive
Ron De Feo

I think pretty much, we spent some time on this, and the simplest way to answer that question is, we expect 2017 to pattern itself in a fairly similar way to 2016. It won't be identical, there a couple of days here and there that change, but we do expect pretty much 2016 to split our earnings and our revenue in a fairly similar pattern.

Analyst
Ann Duignan

That was about what? 48-52, is that the way to think about it?

Executive
Ron De Feo

It's something like that, that's for revenue, but for earnings it's more like 25%-ish first half, 75%-ish second half, on an EPS basis.

Analyst
Ann Duignan

And then if you could talk about industrial versus infrastructure, what specifically -- I know you said maybe destocking is done, maybe end markets stabilizing, maybe just a little bit more color by end-market?

Executive
Ron De Feo

Okay. I will start on that but I will let Pete and Chuck to make a couple of comments as well. Just so I frame 2017 a little bit. When we report the first quarter, we are going to report with WIDIA broken out. So, WIDIA is now reported in Chuck's Industrial business and that will be pulled out. The impact of that will provide a looking backward detail but it will take some business out of our North American area and actually make Chuck's business is a little bit more concentrated in Europe than might be readily apparent. And WIDIA is, revenue-wise, probably in the range of $170-ish million, maybe a little bit more, maybe a little bit more but in that range, so, for people's perspective.

End-market wise, it's really pretty tough out there across a range of end markets. I guess I would say in the Industrial side, aerospace, maybe automotive to a little bit of the extent. And in Infrastructure, pick your poison, mining, commodities. The only positives, I think, are a little bit in the earthworks kind of business some in the construction side. But, just general, it's tough to get ahead of the prior year.

The good news I think as we look forward is that we have a little bit easier comps to go against, but one of the concerns we have is that while we're calling our revenue to be basically flat year-over-year, we're not sure how confident for us to really be on that. So, that's in fact one of the reasons why we were a bit more aggressive on thinking about further cost reduction. But any more comments on end markets, Chuck or Pete?

Executive
Chuck Byrnes

Sure. Ann, thank you for that question. In Industrial, we definitely have seen the end of the de-stocking. For four straight months,