Did Kennametal beat earnings in Q2 FY2026?

Yes, Kennametal beat EPS estimates by 27% ($0.47 vs $0.37 expected) and revenue estimates by 1.3% ($530M vs $523M expected), driven by tungsten pricing tailwinds and restructuring savings.

What did Kennametal say about guidance?

Kennametal raised FY2026 adjusted EPS guidance to $2.05-$2.45 (from prior $1.35-$1.65) and sales guidance to $2.19-$2.25B, citing favorable raw material pricing dynamics.

How did Kennametal stock react to earnings?

KMT shares rose approximately 3% in after-hours trading to $36.65, following the earnings beat and guidance raise.

Kennametal Surges on 27% EPS Beat as Tungsten Pricing Drives Blowout Quarter

February 4, 2026 · by Fintool AI Agent

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Kennametal (NYSE: KMT) delivered a standout Q2 FY2026, crushing analyst estimates with adjusted EPS of $0.47 versus the $0.37 consensus—a 27% beat—while revenues of $530 million exceeded expectations by 1.3%. The industrial tooling company also raised its full-year outlook substantially, sending shares up 3% in after-hours trading to $36.65.

The quarter's strength was driven by favorable tungsten pricing dynamics within the Infrastructure segment, incremental restructuring savings of ~$8 million, and organic sales growth of 10% year-over-year.

Did Kennametal Beat Earnings?

Yes, decisively. Kennametal beat on both the top and bottom line:

Metric	Actual	Consensus	Surprise
Revenue	$530M	$523M	+1.3%
Adjusted EPS	$0.47	$0.37	+27.0%
Operating Margin	9.9%	—	+330 bps YoY

The EPS beat was Kennametal's largest in the past two years. The outperformance was attributed to:

Tungsten pricing tailwind (~$17M favorable timing vs. raw material costs)
Restructuring savings (~$8M incremental year-over-year)
Pricing and tariff surcharges in Metal Cutting segment
Volume growth from buy-ahead activity ahead of tungsten price increases

CEO Sanjay Chowbey noted: "We are pleased with our second quarter results, which exceeded the high end of our sales and adjusted EPS Outlook, driven by volume in the quarter, largely from buy-ahead in response to the tungsten pricing environment and modest improvement in certain end markets."

What Did Management Guide?

Kennametal raised its full-year outlook materially—a significant positive signal given the challenging industrial backdrop.

Guidance	Q3 FY2026	Full Year FY2026
Sales	$545–565M	$2.19–2.25B
Adjusted EPS	$0.50–0.60	$2.05–2.45
Free Cash Flow	—	~60% of adj. net income
CapEx	—	~$90M

Prior FY2026 guidance was $1.35–$1.65 adjusted EPS, making this a 48–71% increase in the midpoint range.

The guidance raise reflects:

Continued favorable tungsten pricing dynamics
Higher production volumes expected to sustain
Additional restructuring benefits flowing through

How Did the Stock React?

KMT shares traded up approximately 3% in after-hours to $36.65 from the $35.56 prior close.

The stock has been on a tear, trading near its 52-week high of $36.34 (which was set during today's regular session). For context, the 52-week low was $17.30—meaning KMT has more than doubled from its lows.

Price Metric	Value
Previous Close	$35.56
After-Hours	$36.65 (+3.1%)
52-Week High	$36.34
52-Week Low	$17.30
50-Day Avg	$30.33
Market Cap	$2.7B

What Changed From Last Quarter?

Several key dynamics shifted from Q1 FY2026:

Metric	Q1 FY2026	Q2 FY2026	Change
Revenue	$498M	$530M	+6.4%
Adj. Operating Margin	7.9%*	10.5%	+260 bps
Adjusted EPS	$0.34*	$0.47	+38%
Metal Cutting Sales	$311M*	$331M	+6.4%
Infrastructure Sales	$187M*	$198M	+5.9%

*Values retrieved from S&P Global

The biggest delta was the tungsten pricing tailwind that emerged in Q2—management quantified this as approximately $17 million of favorable timing between pricing and raw material costs within the Infrastructure segment.

Segment Performance Deep Dive

Metal Cutting (63% of sales)

Metric	Q2 FY2026	Q2 FY2025	YoY Change
Sales	$331M	$298M	+11%
Organic Growth	—	—	+9%
Adj. Operating Margin	9.6%	6.0%	+360 bps

Metal Cutting benefited from:

Pricing and tariff surcharges
Higher sales and production volumes
~$6M incremental restructuring savings

Infrastructure (37% of sales)

Metric	Q2 FY2026	Q2 FY2025	YoY Change
Sales	$198M	$184M	+8%
Organic Growth	—	—	+11%
Adj. Operating Margin	12.3%	8.6%	+370 bps

Infrastructure was the star performer, driven almost entirely by the ~$17 million favorable timing of pricing vs. raw material costs.

End Market Commentary

Management provided updated views on key end markets:

End Market	Prior Outlook	Current Outlook	Change
Transportation	Down low single digits	Flat	Improved
Aerospace & Defense	Up mid single digits	Continued growth	Stable
General Engineering	Flat	Slight Americas improvement	Improved
Earthworks	Flat	Flat	Stable
Energy	Flat	Flat	Stable

Key end market insights:

Transportation: IHS estimates improved with Asia-Pacific volumes up, EMEA still down but better, Americas slightly negative but flat overall
Aerospace & Defense: OEM build rates continue improving; Boeing strike absence in prior year was a tailwind (+19-23% growth)
General Engineering: US ISM PMI above 50 for the first time in 12 months—a positive signal, though management is waiting for it to translate to real orders

Historical Earnings Trends

Kennametal's quarterly performance over the past 8 quarters:

Period	Revenue	YoY Growth	Adj. EPS	vs Est.
Q2 FY26	$530M	+10%	$0.47	Beat +27%
Q1 FY26	$498M	+3%	$0.34*	Beat +45%
Q4 FY25	$516M	-5%	$0.34*	Miss
Q3 FY25	$486M	0%	$0.47*	Beat +97%
Q2 FY25	$482M	-3%	$0.25*	Miss
Q1 FY25	$482M	-3%	$0.29*	Beat +13%
Q4 FY24	$543M	+2%	$0.49*	Beat +13%
Q3 FY24	$516M	-5%	$0.30*	Flat

*Values retrieved from S&P Global

The company has now beaten estimates in 3 of the last 4 quarters after a challenging stretch in early FY2025.

Cash Flow and Capital Allocation

Metric	H1 FY2026	H1 FY2025	Change
Operating Cash Flow	$73M	$101M	-28%
Capital Expenditures	$36M	$44M	-18%
Free Operating Cash Flow	$38M	$57M	-33%

Cash flow was lower year-over-year due to increased inventory build (customers buying ahead of tungsten price increases). Management expects FOCF to reach approximately 60% of adjusted net income for the full year.

Dividend: Kennametal declared a quarterly dividend of $0.20 per share, payable February 24, 2026.

Power Generation: A Key Growth Catalyst

Management spotlighted the rising global demand for electricity as a major growth opportunity. This "source-to-generation" market represented approximately 17% of FY2025 sales, with attractive growth tailwinds.

Growth Driver	Projected CAGR
Gas Turbines	15% through 2030
Combustion Engines (backup generators)	10% through 2030
High Power Transmission Lines (US)	20% through 2030
Overall Electricity Demand	3% annually through 2030

Key drivers include:

AI Data Centers: Could represent 17% of US power demand by 2030
EV Adoption: EVs and hybrids growing at strong double-digit CAGRs in the Americas
Energy Mix Diversification: By 2030, incremental supply expected from 45% natural gas, 35% solar, 20% wind

CEO Sanjay Chowbey emphasized: "Kennametal is not just participating in the energy transition, we are powering it."

Q&A Highlights

Tungsten Supply and Sourcing Strategy

Analyst Steve Volkmann (Jefferies) pressed on tungsten supply concerns given prices are up 33% year-to-date. Management provided reassurance:

Diversified sourcing: Uses recycled materials, a facility in Bolivia, and multiple suppliers with long-term agreements
No China dependence: Operations outside China do not depend on Chinese material
Supply outlook: Additional mining activity and government involvement in projects suggest ample supply coming online longer-term
Product efficiency: R&D focused on using tungsten more efficiently (mixing with steel, optimizing product design)

Volume Trends Adjusted for Buy-Ahead

Julian Mitchell (Barclays) sought clarity on underlying volume trends. Management explained:

Total buy-ahead in Q2: $13 million ($10M Metal Cutting + $3M Infrastructure)
Adjusted Q2 volume: Flat (vs. reported +3% organic)
Adjusted Q3 volume: +1% (vs. reported -2% at midpoint)
Trend: Volume improving sequentially—Q1 was -1%, Q2 flat (adjusted), Q3 expected +1% (adjusted)

Pricing Dynamics

On pricing lag in Metal Cutting, management noted:

~3 month lag for list price changes in Metal Cutting
Goal is to stay competitive if tungsten prices eventually decline
Tariff surcharges remain separate from permanent pricing—will be rolled back if tariffs decrease

FY2027 Preview

CFO Pat Watson provided early hints on fiscal 2027 tailwinds:

Tailwind	Estimated Benefit
Additional restructuring savings	$30M (reaching ~$125M run rate)
Compensation normalization	$0.10–0.15 EPS
Price/raw carryover	Some favorability expected early FY27

Incremental Margins

Management reiterated their target incremental margin on volume growth:

Mid-40s% on volume (through-the-cycle)
Metal Cutting has slightly higher incrementals than Infrastructure
On pricing, the goal is to offset raw material cost increases (neutral contribution)

Key Risks and Concerns

Despite the strong quarter, management flagged several headwinds:

Tariff exposure: Higher tariffs and trade barriers could pressure margins—though India tariff impact is minimal as Kennametal doesn't source much from India to US
Tungsten timing reversal: The favorable pricing vs. raw material timing may normalize or reverse; management expects some benefit to carry into early FY27
Macroeconomic uncertainty: Industrial demand remains uneven across end markets
Inventory normalization: Customer buy-ahead activity (~$13M in Q2) may create future demand headwinds
Ukraine/Middle East conflicts: Ongoing geopolitical risks to operations and supply chains

Date	Event
Feb 18, 2026	Barclays Industrial Select Conference
May 2026	Q3 FY2026 Earnings (est.)
Aug 2026	Q4 FY2026 / Full Year Results

KENNAMETAL (KMT)·Q2 2026 Earnings Summary