Kennametal delivered a solid first quarter of fiscal 2026, posting revenue of $497.97 million and an adjusted EBITDA margin of 15.3% with an 8.2% operating margin, supported by price/tariff actions and $8 million of restructuring savings. Management highlighted ongoing growth initiatives in Power Generation and robust project wins in Earthworks and Aerospace/Defense within Metal Cutting and Infrastructure. The quarter benefited from above-market volume gains across several end markets, offset by rising tungsten costs and tariff-related headwinds. The company raised its FY26 outlook on stronger-than-expected first-quarter performance, signaling confidence in a broader recovery across key end markets and the ability to offset input cost pressures through pricing, surcharges, and efficiency actions.
Key drivers for the quarter included share gains in Earthworks, higher aerospace build rates, and data-center-related Power Generation opportunities. Kennametal also signaled a multi-year growth runway in Power Generation, including a TAM of about $250 million with a target ~10% growth trajectory over the next few years. The guidance assumes roughly 7% net pricing/tariff surcharges, ~2% FX tailwinds, and a 27% adjusted tax rate, with expected full-year revenue of $2.1–$2.17 billion and adjusted EPS of $1.35–$1.65. While near-term earnings could be aided by continued price realization and tariff management, the investment thesis hinges on disciplined execution in growth initiatives, macro resilience, and tungsten-price dynamics. Investors should monitor tungsten pricing, tariff policy evolution, end-market demand (especially Aerospace/Defense and Power Generation), and working capital trajectory given ongoing inventory investment tied to higher tungsten costs.