Kennametal's FY25 Net Income Dips 14.8% Amid Flat Sales

Ticker: KMT · Form: DEF 14A · Filed: Sep 15, 2025 · CIK: 55242

Kennametal Inc DEF 14A Filing Summary
FieldDetail
CompanyKennametal Inc (KMT)
Form TypeDEF 14A
Filed DateSep 15, 2025
Risk Levelmedium
Pages15
Reading Time19 min
Key Dollar Amounts$2.0 billion, $93.1 m, $109.3 million, $285 m, $299 m
Sentimentbearish

Sentiment: bearish

Topics: Corporate Governance, Executive Compensation, Financial Performance, Proxy Statement, Shareholder Meeting, Industrial Manufacturing, Profitability Decline

Related Tickers: KMT

TL;DR

**KMT's flat sales and declining net income are a red flag; expect continued pressure on profitability and a cautious outlook for investors.**

AI Summary

Kennametal Inc. reported flat sales of $2.0 billion for Fiscal Year 2025, matching Fiscal Year 2024 figures. Net income attributable to Kennametal decreased to $93.1 million in Fiscal 2025, down from $109.3 million in Fiscal 2024, representing a 14.8% decline. EBITDA for Fiscal 2025 was $285 million, with a 14.5% margin, a slight decrease from $300 million and a 14.7% margin in Fiscal 2024. Adjusted EBITDA also saw a minor dip to $299 million (15.2% margin) from $313 million (15.3% margin) year-over-year. Return on Invested Capital (ROIC) fell to 6.2% in Fiscal 2025 from 7.0% in Fiscal 2024, with Adjusted ROIC similarly declining to 6.8% from 7.6%. The company's executive compensation program emphasizes a strong pay-for-performance philosophy, with 60% of long-term incentives granted as Performance Stock Units (PSUs) tied to Adjusted ROIC and Average Adjusted EBITDA Margin, and 40% as Restricted Stock Units (RSUs). Fiscal 2025 AIP payouts for corporate NEOs were 63.2% of target, impacted by a 10% ESG modifier reduction, while the first tranche of 2025 PSUs tied to Adjusted ROIC achieved 81.1% of target.

Why It Matters

Kennametal's flat sales and declining net income in Fiscal 2025 signal a challenging environment for investors, suggesting potential headwinds in its industrial markets. The decrease in ROIC from 7.0% to 6.2% indicates less efficient capital deployment, which could impact future shareholder returns. For employees, the executive compensation structure, heavily tied to performance metrics like Adjusted ROIC and Adjusted EBITDA Margin, means their incentives are directly linked to the company's financial health. In a competitive landscape, Kennametal's ability to improve profitability and capital efficiency will be crucial to maintain its market position against rivals in the tooling and industrial materials sector.

Risk Assessment

Risk Level: medium — Kennametal's net income decreased by 14.8% from $109.3 million in Fiscal 2024 to $93.1 million in Fiscal 2025, despite flat sales of $2.0 billion. This decline in profitability, coupled with a drop in ROIC from 7.0% to 6.2%, indicates potential operational inefficiencies or margin compression, elevating the risk profile for investors.

Analyst Insight

Investors should scrutinize Kennametal's upcoming earnings calls for detailed explanations of the profitability decline and strategies to improve ROIC. Consider holding off on new positions until there's clear evidence of margin expansion and a reversal in the net income trend.

Financial Highlights

debt To Equity
Not Disclosed
revenue
$2.0B
operating Margin
Not Disclosed
total Assets
Not Disclosed
total Debt
Not Disclosed
net Income
$93.1M
eps
Not Disclosed
gross Margin
Not Disclosed
cash Position
Not Disclosed
revenue Growth
0.0%

Executive Compensation

NameTitleTotal Compensation
Named Executive OfficersExecutive OfficersNot Disclosed

Key Numbers

  • $2.0B — Sales for Fiscal 2025 (Flat compared to Fiscal 2024 sales of $2.0 billion)
  • $93.1M — Net income attributable to Kennametal for Fiscal 2025 (Decreased from $109.3 million in Fiscal 2024, a 14.8% decline)
  • $285M — EBITDA for Fiscal 2025 (Decreased from $300 million in Fiscal 2024)
  • 14.5% — EBITDA margin for Fiscal 2025 (Decreased from 14.7% in Fiscal 2024)
  • 6.2% — Return on Invested Capital (ROIC) for Fiscal 2025 (Decreased from 7.0% in Fiscal 2024)
  • 6.8% — Adjusted ROIC for Fiscal 2025 (Decreased from 7.6% in Fiscal 2024)
  • 63.2% — Corporate NEOs AIP payout for Fiscal 2025 (Percentage of target, after a 10% ESG modifier reduction)
  • 81.1% — First tranche of 2025 PSUs tied to Adjusted ROIC performance (Multiple of target achieved)
  • 91.5% — Cumulative total payout multiple for 2023 PSUs (For combined three years of ROIC and Average Adjusted EBITDA Margin performance)
  • 8 — Number of directors to be elected (For terms to expire in 2026)

Key Players & Entities

  • KENNAMETAL INC. (company) — Registrant for DEF 14A filing
  • Sanjay Chowbey (person) — President and Chief Executive Officer of Kennametal Inc.
  • William Lambert (person) — Chairman of the Board of Kennametal Inc.
  • PricewaterhouseCoopers LLP (company) — Independent registered public accounting firm for Kennametal Inc.
  • Michelle R. Keating (person) — Vice President, Secretary and General Counsel of Kennametal Inc.
  • Joseph Alvarado (person) — Board Director of Kennametal Inc.
  • Shelley Bausch (person) — Board Director of Kennametal Inc.
  • Douglas T. Dietrich (person) — Board Director of Kennametal Inc.
  • Lorraine M. Martin (person) — Board Director of Kennametal Inc.
  • Sagar A. Patel (person) — Board Director of Kennametal Inc.

FAQ

What were Kennametal's sales and net income for Fiscal Year 2025?

Kennametal Inc. reported sales of $2.0 billion for Fiscal Year 2025, which remained flat compared to Fiscal Year 2024. Net income attributable to Kennametal for Fiscal Year 2025 was $93.1 million, a decrease from $109.3 million in Fiscal Year 2024.

Who are the key executives and board members at Kennametal Inc.?

Sanjay Chowbey serves as the President and Chief Executive Officer, while William Lambert is the Chairman of the Board. Michelle R. Keating is the Vice President, Secretary, and General Counsel. The board nominees include Joseph Alvarado, Shelley Bausch, Douglas T. Dietrich, Lorraine M. Martin, and Sagar A. Patel.

What are the primary risks highlighted in Kennametal's DEF 14A filing?

While the filing doesn't explicitly detail specific new risks, the financial performance shows a decline in net income by 14.8% and a reduction in ROIC from 7.0% to 6.2% in Fiscal 2025, indicating potential operational or market challenges impacting profitability.

How does Kennametal's executive compensation align with performance?

Kennametal's executive compensation program has a strong pay-for-performance philosophy. In Fiscal 2025, 60% of long-term incentives were Performance Stock Units (PSUs) tied to Adjusted ROIC and Average Adjusted EBITDA Margin, and 40% were Restricted Stock Units (RSUs). The Fiscal 2025 AIP payouts for corporate NEOs were 63.2% of target, reflecting performance against financial metrics and an ESG modifier.

When is Kennametal's Annual Shareholders Meeting and what is on the agenda?

The Kennametal Annual Shareholders Meeting is scheduled for Tuesday, October 28, 2025, at 2:00 p.m. Eastern Time, held virtually. The agenda includes the election of eight directors, ratification of PricewaterhouseCoopers LLP as the independent auditor for fiscal year ending June 30, 2026, and a non-binding advisory vote on executive compensation.

What are Kennametal's corporate governance highlights?

Kennametal's corporate governance highlights include a declassified Board of Directors with all directors elected to one-year terms, separation of CEO and Chairman roles with an independent Chairman, majority voting in director elections, and independent board committees. The company also has strong stock ownership guidelines and policies prohibiting hedging, pledging, and shorting company securities.

How did Kennametal's EBITDA and ROIC change in Fiscal 2025?

Kennametal's EBITDA for Fiscal 2025 was $285 million, down from $300 million in Fiscal 2024, with EBITDA margin decreasing from 14.7% to 14.5%. Return on Invested Capital (ROIC) for Fiscal 2025 was 6.2%, a decline from 7.0% in Fiscal 2024.

What is the impact of ESG goals on Kennametal's executive compensation?

For Fiscal 2025, ESG goals were measured over the full fiscal year and acted as a modifier for annual cash-based incentives. The ESG modifier reduced NEO payouts by 10%, resulting in a 63.2% of target payout for Corporate NEOs.

What is the record date for voting at Kennametal's Annual Meeting?

The record date for Kennametal's Annual Meeting is Friday, August 29, 2025. Only shareowners of record at the close of business on this date are entitled to notice of, and to vote at, the Annual Meeting.

How can Kennametal shareholders access proxy materials?

Shareholders can access proxy materials over the Internet at www.proxyvote.com. Instructions on how to view materials online, vote shares, or request paper copies are provided in the Notice of Internet Availability of Proxy Materials mailed on or about September 15, 2025.

Risk Factors

  • Cyclicality and Commodity Exposure [medium — operational]: The company's incentive arrangements are designed to mitigate the impact of cyclicality and commodity exposure, which can affect performance goals and payouts. This suggests that these factors pose a significant risk to consistent financial performance.
  • Performance Goal Volatility [medium — financial]: Performance goals for PSUs are established annually for each fiscal year to alleviate instances where rapidly changing economic conditions render goals unachievable. This indicates a risk of economic conditions significantly impacting the ability to meet pre-set targets.
  • Adjusted EBITDA Margin and ROIC Fluctuations [high — financial]: The compensation program is tied to Adjusted ROIC and Average Adjusted EBITDA Margin. The decline in these metrics from Fiscal 2024 to Fiscal 2025 (ROIC from 7.0% to 6.2%, Adjusted ROIC from 7.6% to 6.8%, EBITDA Margin from 14.7% to 14.5%) highlights the sensitivity of executive pay to these key financial indicators and the inherent risk of underperformance.
  • ESG Modifier Impact [low — regulatory]: The Fiscal 2025 AIP payouts for corporate NEOs were reduced by a 10% ESG modifier, indicating that environmental, social, and governance factors are increasingly influencing compensation outcomes and present a compliance or reputational risk if not met.

Industry Context

Kennametal Inc. operates in the industrial manufacturing sector, specifically in metalworking solutions. The industry is characterized by its cyclical nature, driven by global manufacturing output, capital expenditures, and demand from key end markets like automotive, aerospace, and energy. Competition is intense, with players focusing on innovation, product performance, and cost efficiency. Trends include the adoption of advanced materials, digitalization, and sustainability initiatives.

Regulatory Implications

The company faces standard regulatory compliance requirements for publicly traded companies, including financial reporting under SEC rules. The increasing focus on ESG factors in executive compensation also suggests potential future regulatory scrutiny or disclosure requirements related to environmental, social, and governance performance.

What Investors Should Do

  1. Monitor ROIC and Adjusted EBITDA Margin trends
  2. Evaluate the effectiveness of the pay-for-performance philosophy
  3. Assess the impact of ESG modifiers on compensation

Key Dates

  • 2025-10-28: 2025 Annual Meeting of Shareowners — Key date for shareholder voting on corporate matters, including director elections and advisory votes on executive compensation.

Glossary

AIP
Annual Incentive Plan, a cash-based incentive plan for executives. (Payouts under the AIP for Fiscal 2025 were 63.2% of target, impacted by an ESG modifier, showing a direct link between company performance and executive cash compensation.)
PSU
Performance Stock Unit, a form of equity award that vests based on the achievement of specific performance goals. (60% of long-term incentives are PSUs tied to Adjusted ROIC and Average Adjusted EBITDA Margin, making them a critical component of executive compensation and company performance.)
RSU
Restricted Stock Unit, a form of equity award that vests over time, typically based on continued employment. (40% of long-term incentives are RSUs, providing a retention component of executive compensation.)
Adjusted ROIC
Adjusted Return on Invested Capital, a measure of how effectively a company uses its invested capital to generate profits, excluding certain non-recurring or non-cash items. (A key performance metric for long-term incentives, which declined to 6.8% in Fiscal 2025 from 7.6% in Fiscal 2024.)
Average Adjusted EBITDA Margin
The average of the Adjusted EBITDA Margin over a specified period, reflecting profitability relative to revenue after certain adjustments. (A key performance metric for long-term incentives, with payouts tied to achieving specific margin targets.)
ESG
Environmental, Social, and Governance, a set of standards for a company's operations that socially conscious investors use to screen potential investments. (An ESG modifier reduced Fiscal 2025 AIP payouts by 10%, indicating its growing importance in executive compensation evaluation.)

Year-Over-Year Comparison

Compared to the prior fiscal year, Kennametal Inc. reported flat sales of $2.0 billion for Fiscal 2025, indicating no revenue growth. Net income attributable to Kennametal saw a significant decline of 14.8% to $93.1 million from $109.3 million. Both EBITDA and Adjusted EBITDA decreased, with margins slightly contracting. Key performance indicators for executive compensation, such as ROIC and Adjusted ROIC, also declined, reflecting a weaker financial performance year-over-year.

Filing Stats: 4,642 words · 19 min read · ~15 pages · Grade level 11.8 · Accepted 2025-09-15 09:01:00

Key Financial Figures

  • $2.0 billion — he comparable GAAP measures): Sales of $2.0 billion for Fiscal 2025, compared with sales of
  • $93.1 m — table to Kennametal for Fiscal 2025 was $93.1 million, compared to $109.3 million in Fi
  • $109.3 million — cal 2025 was $93.1 million, compared to $109.3 million in Fiscal 2024. Earnings Before Intere
  • $285 m — tization ("EBITDA") for Fiscal 2025 was $285 million, or 14.5% EBITDA margin. Adjusted
  • $299 m — in. Adjusted EBITDA for Fiscal 2025 was $299 million, or 15.2% Adjusted EBITDA margin.
  • $300 m — ITDA margin. EBITDA for Fiscal 2024 was $300 million, or 14.7% EBITDA margin. Adjusted
  • $313 m — in. Adjusted EBITDA for Fiscal 2024 was $313 million, or 15.3% Adjusted EBITDA margin.
  • $638 million — scal 2024. Primary Working Capital was $638 million as of June 30, 2025, compared to $626 m
  • $626 million — illion as of June 30, 2025, compared to $626 million as of June 30, 2024. Primary Working Ca

Filing Documents

Executive Compensation Highlights for Fiscal 2025

Executive Compensation Highlights for Fiscal 2025 The following are the highlights of our 2025 executive compensation program: The Committee has adopted a strong pay-for-performance philosophy which is evaluated on an annual basis through a realizable pay-for-performance alignment assessment for the CEO position conducted by the Committee's independent consultant. This assessment has revealed a strong alignment between our CEO's historical realizable compensation and our company's performance compared to our peers over the past three years. Compensation is paid in a mix of base salary, annual cash-based incentives under our AIP, and equity-based long-term incentive awards. Compensation is significantly tied to Company and Segment financial and stock performance, so that a substantial portion of the compensation provided to our executive officers is performance-based and at risk. The Committee has adopted certain design methodologies in our incentive arrangements to help mitigate the impact of cyclicality, commodity exposure and other factors which can impact performance goals established by the Committee and actual payouts received by executives. These methodologies include: Annual cash-based incentive plan: "first half" and "second half" goal setting for metrics that comprise 70% of the AIP weight, which provides the Committee with better insights into economic conditions that can rapidly impact our business either positively or negatively. No payments are made until the end of the fiscal year. PSU plan: Adjusted ROIC performance goals established annually for each fiscal year. No awards are paid until following the full three-year performance period. The Committee adopted this methodology to alleviate instances where rapidly changing economic conditions render performance goals either not challenging (goals set in an economic trough) or unachievable early in the three-year performance period which can result in retention risks and even the need for separate

EXECUTIVE COMPENSATION

EXECUTIVE COMPENSATION 35 COMPENSATION DISCUSSION AND ANALYSIS 35 Fiscal 2025 Summary 35

Executive Compensation Highlights for Fiscal 2025

Executive Compensation Highlights for Fiscal 2025 36 Relationship Between Pay and Performance 38 Design of our Executive Compensation Program 41 How Compensation Decisions are Made 44 2025 Executive Compensation Program 46 COMPENSATION AND HUMAN CAPITAL COMMITTEE REPORT 61 ANALYSIS OF RISK INHERENT IN OUR COMPENSATION POLICIES AND PRACTICES 62

Executive Compensation Tables

Executive Compensation Tables 63 2025 Nonqualified Deferred Compensation 70 Retirement Programs 70 EQUITY COMPENSATION PLANS 72 POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE IN CONTROL 74 CEO PAY RATIO FOR FISCAL YEAR 2025 81 Pay Versus Performance ("PVP") 82 PROPOSAL III. NON-BINDING (ADVISORY) VOTE TO APPROVE THE COMPENSATION PAID TO THE COMPANY'S NAMED EXECUTIVE OFFICERS 89 90 PRINCIPAL HOLDERS OF VOTING SECURITIES 92 FORM 10-K ANNUAL REPORT 93 OTHER MATTERS 94 Delinquent Section 16(a) Reports 94 APPENDIX A — EBITDA, EBITDA MARGIN, ADJUSTED EBITDA, ADJUSTED EBITDA MARGIN, PWC, PWCPS, ROIC AND ADJUSTED ROIC RECONCILIATIONS A- 1 Table of Contents General Information When and where is the 2025 Annual Meeting? The 2025 Annual Meeting of shareowners (the "Annual Meeting") will be held virtually, through a live, audio-only webcast, on Tuesday, October 28, 2025, at 2:00 p.m. (Eastern Time). Shareowners of record may attend the Annual Meeting online, vote and submit questions during the Annual Meeting by visiting www.virtualshareholdermeeting.com/KMT2025 and entering the 16-digit Control Number included on the Notice, on the proxy card or on the instructions that accompanied the proxy materials. There will not be a physical meeting location. Why did I receive a Notice in the mail regarding the Internet availability of proxy materials instead of a full set paper copy of this Proxy Statement and the 2025 Annual Report? We are utilizing an SEC rule that allows companies to furnish their proxy materials over the Internet rather than in paper form. This rule allows a company to send some or all its shareowners a Notice regarding Internet availability of proxy materials ("Notice"). Instructions on how to access the proxy materials over the Internet or how to request a paper copy of proxy materials may be found in the Notice. If you have receiv

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