Cover
Cover - shares | 3 Months Ended | |
Sep. 30, 2020 | Oct. 30, 2020 | |
Document Information [Line Items] | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Period End Date | Sep. 30, 2020 | |
Document Transition Report | false | |
Entity File Number | 1-5318 | |
Entity Registrant Name | KENNAMETAL INC. | |
Entity Incorporation, State or Country Code | PA | |
Entity Tax Identification Number | 25-0900168 | |
Entity Address, Address Line One | 525 William Penn Place | |
Entity Address, Address Line Two | Suite 3300 | |
Entity Address, City or Town | Pittsburgh, | |
Entity Address, State or Province | PA | |
Entity Address, Postal Zip Code | 15219 | |
City Area Code | 412 | |
Local Phone Number | 248-8000 | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Large Accelerated Filer | |
Entity Small Business | false | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding (in shares) | 83,276,032 | |
Entity Central Index Key | 0000055242 | |
Current Fiscal Year End Date | --06-30 | |
Document Fiscal Year Focus | 2021 | |
Document Fiscal Period Focus | Q1 | |
Amendment Flag | false | |
Capital Stock, par value $1.25 per share | New York Stock Exchange | ||
Document Information [Line Items] | ||
Title of 12(b) Security | Capital Stock, par value $1.25 per share | |
Trading Symbol | KMT | |
Security Exchange Name | NYSE | |
Preferred Stock Purchase Rights | New York Stock Exchange | ||
Document Information [Line Items] | ||
Title of 12(b) Security | Preferred Stock Purchase Rights | |
Security Exchange Name | NYSE | |
No Trading Symbol Flag | true |
Basis of Presentation
Basis of Presentation | 3 Months Ended |
Sep. 30, 2020 | |
Accounting Policies [Abstract] | |
BASIS OF PRESENTATION | BASIS OF PRESENTATIONThe condensed consolidated financial statements and accompanying notes included in this Quarterly Report on Form 10-Q, which include our accounts and those of our majority-owned subsidiaries, should be read in conjunction with the consolidated financial statements and accompanying notes included in our Annual Report on Form 10-K for the fiscal year ended June 30, 2020 (the “2020 Annual Report”). The condensed consolidated balance sheet as of June 30, 2020 was derived from the audited balance sheet included in our 2020 Annual Report. The interim statements are unaudited; however, we believe that all adjustments necessary for a fair statement of the results of the interim periods were made and all adjustments are normal recurring adjustments. The results for the three months ended September 30, 2020 and 2019 are not necessarily indicative of the results to be expected for a full fiscal year. Unless otherwise specified, any reference to a “year” is to a fiscal year ended June 30. For example, a reference to 2021 is to the fiscal year ending June 30, 2021. When used in this Quarterly Report on Form 10-Q, unless the context requires otherwise, the terms “the Company,” “we,” “our” and “us” refer to Kennametal Inc. and its subsidiaries. |
New Accounting Standards
New Accounting Standards | 3 Months Ended |
Sep. 30, 2020 | |
Accounting Changes and Error Corrections [Abstract] | |
NEW ACCOUNTING STANDARDS | NEW ACCOUNTING STANDARDSIn June 2016, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2016-13, "Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments," which introduced new guidance for the accounting for credit losses on certain financial instruments. We adopted this ASU on July 1, 2020. The adoption of this new credit loss guidance did not have a material impact on our condensed consolidated financial statements. |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED) - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | |
Sep. 30, 2020 | Sep. 30, 2019 | |
Sales | $ 400,305 | $ 518,088 |
Cost of goods sold | 295,232 | 379,108 |
Gross profit | 105,073 | 138,980 |
Operating expense | 93,340 | 114,191 |
Restructuring and asset impairment charges (Note 6) | 25,577 | 4,666 |
Amortization of intangibles | 3,334 | 3,747 |
Operating (loss) income | (17,178) | 16,376 |
Interest expense | 10,578 | 7,881 |
Other income, net | (4,019) | (2,681) |
(Loss) income before income taxes | (23,737) | 11,176 |
(Benefit) provision for income taxes | (2,877) | 3,766 |
Net (loss) income | (20,860) | 7,410 |
Less: Net income attributable to noncontrolling interests | 815 | 944 |
Net (loss) income attributable to Kennametal | $ (21,675) | $ 6,466 |
PER SHARE DATA ATTRIBUTABLE TO KENNAMETAL SHAREHOLDERS | ||
Basic (loss) earnings per share | $ (0.26) | $ 0.08 |
Diluted (loss) earnings per share | (0.26) | 0.08 |
Dividends per share | $ 0.20 | $ 0.20 |
Basic weighted average shares outstanding | 83,318 | 82,881 |
Diluted weighted average shares outstanding | 83,318 | 83,487 |
Noncontrolling Interest [Member] | ||
Net (loss) income | $ 815 | $ 944 |
CONDENSED CONSOLIDATED STATEM_2
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED) - USD ($) $ in Thousands | 3 Months Ended | |
Sep. 30, 2020 | Sep. 30, 2019 | |
Net (loss) income | $ (20,860) | $ 7,410 |
Other comprehensive income (loss), net of tax [Abstract] | ||
Unrealized gain on derivatives designated and qualified as cash flow hedges | 1,210 | 395 |
Reclassification of unrealized loss on derivatives designated and qualified as cash flow hedges | 461 | 181 |
Unrecognized net pension and other postretirement benefit (loss) gain | (3,310) | 2,607 |
Reclassification of net pension and other postretirement benefit loss | 2,565 | 1,960 |
Foreign currency translation adjustments | 31,946 | (35,426) |
Total other comprehensive income (loss), net of tax | 32,872 | (30,283) |
Total comprehensive income (loss) | 12,012 | (22,873) |
Less: comprehensive income (loss) attributable to noncontrolling interests | 2,093 | (449) |
Comprehensive income (loss) attributable to Kennametal Shareholders | $ 9,919 | $ (22,424) |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED) - USD ($) shares in Thousands, $ in Thousands | Sep. 30, 2020 | Jun. 30, 2020 |
Current assets: | ||
Cash and cash equivalents | $ 98,290 | $ 606,684 |
Accounts receivable, less allowance for doubtful accounts of $9,372 and $9,430, respectively | 249,992 | 237,983 |
Inventories (Note 9) | 508,739 | 522,447 |
Other current assets | 78,700 | 73,698 |
Total current assets | 935,721 | 1,440,812 |
Property, plant and equipment: | ||
Land and buildings | 369,631 | 360,256 |
Machinery and equipment | 1,958,599 | 1,913,967 |
Less accumulated depreciation | (1,274,016) | (1,235,952) |
Property, plant and equipment, net | 1,054,214 | 1,038,271 |
Other assets: | ||
Goodwill (Note 16) | 275,406 | 270,580 |
Other intangible assets, less accumulated amortization of $142,568 and $137,386, respectively (Note 16) | 130,062 | 132,568 |
Operating lease right-of-use assets | 48,617 | 48,035 |
Deferred income taxes | 46,968 | 46,782 |
Other | 68,008 | 60,543 |
Total other assets | 569,061 | 558,508 |
Total assets | 2,558,996 | 3,037,591 |
Current liabilities: | ||
Revolving and other lines of credit and notes payable to banks (Note 10) | 46,458 | 500,368 |
Current operating lease liabilities | 13,454 | 13,246 |
Accounts payable | 136,076 | 164,641 |
Accrued income taxes | 17,769 | 27,938 |
Accrued expenses | 46,153 | 47,610 |
Other current liabilities | 155,663 | 144,277 |
Total current liabilities | 415,573 | 898,080 |
Long-term debt, less current maturities (Note 10) | 593,250 | 594,083 |
Operating lease liabilities | 35,789 | 35,372 |
Deferred income taxes | 21,970 | 21,796 |
Accrued pension and postretirement benefits | 180,697 | 175,458 |
Accrued income taxes | 9,802 | 9,584 |
Other liabilities | 35,533 | 34,430 |
Total liabilities | 1,292,614 | 1,768,803 |
Commitments and contingencies | ||
Kennametal Shareholders' Equity: | ||
Preferred stock, no par value; 5,000 shares authorized; none issued | 0 | 0 |
Capital stock, $1.25 par value; 120,000 shares authorized; 83,251 and 82,923 shares issued, respectively | 104,064 | 103,654 |
Additional paid-in capital | 540,374 | 538,575 |
Retained earnings | 966,596 | 1,004,898 |
Accumulated other comprehensive loss | (385,648) | (417,242) |
Total Kennametal Shareholders' Equity | 1,225,386 | 1,229,885 |
Noncontrolling interests | 40,996 | 38,903 |
Total equity | 1,266,382 | 1,268,788 |
Total liabilities and equity | $ 2,558,996 | $ 3,037,591 |
Common Stock, Par or Stated Value Per Share | $ 1.25 | $ 1.25 |
Preferred Stock, No Par Value | $ 0 | $ 0 |
Preferred Stock, Shares Authorized | 5,000 | 5,000 |
CONDENSED CONSOLIDATED BALANC_2
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED) (Parenthetical) - USD ($) shares in Thousands, $ in Thousands | Sep. 30, 2020 | Jun. 30, 2020 |
Statement of Financial Position [Abstract] | ||
Allowance for doubtful accounts | $ 9,372 | $ 9,430 |
Accumulated amortization on other intangible assets | $ 142,568 | $ 137,386 |
Preferred stock, par value | $ 0 | $ 0 |
Preferred stock, shares authorized | 5,000 | 5,000 |
Capital stock, par value | $ 1.25 | $ 1.25 |
Capital stock, shares authorized | 120,000 | 120,000 |
Capital stock, shares issued | 83,251 | 82,923 |
Preferred Stock, Shares Issued | 0 | 0 |
CONDENSED CONSOLIDATED STATEM_3
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOW (UNAUDITED) - USD ($) $ in Thousands | 3 Months Ended | |
Sep. 30, 2020 | Sep. 30, 2019 | |
OPERATING ACTIVITIES | ||
Net (loss) income | $ (20,860) | $ 7,410 |
Adjustments for non-cash items: | ||
Depreciation | 27,560 | 27,328 |
Amortization | 3,334 | 3,747 |
Stock-based compensation expense | 6,991 | 8,255 |
Restructuring and asset impairment charges (Note 6) | 1,184 | 1,191 |
Deferred income tax (benefit) provision | (410) | 261 |
Other | 879 | 688 |
Changes in certain assets and liabilities: | ||
Accounts receivable | (6,737) | 41,606 |
Inventories | 23,291 | 2,661 |
Accounts payable and accrued liabilities | (8,211) | (47,070) |
Accrued income taxes | (11,573) | (6,680) |
Accrued pension and postretirement benefits | (6,854) | (6,328) |
Other | 1,028 | (5,524) |
Net cash flow provided by operating activities | 9,622 | 27,545 |
INVESTING ACTIVITIES | ||
Purchases of property, plant and equipment | (39,345) | (72,455) |
Disposals of property, plant and equipment | 334 | 395 |
Other | 48 | 172 |
Net cash flow used for investing activities | (38,963) | (71,888) |
FINANCING ACTIVITIES | ||
Net increase in notes payable | 1,252 | 3,338 |
Net decrease revolving and other lines of credit | (461,500) | 0 |
Purchase of capital stock | (50) | (53) |
The effect of employee benefit and stock plans and dividend reinvestment | 4,732 | 5,819 |
Cash dividends paid to Shareholders | (16,627) | (16,565) |
Other | (1,703) | (866) |
Net cash flow used for financing activities | (483,360) | (19,965) |
Effect of exchange rate changes on cash and cash equivalents | 4,307 | (4,185) |
CASH AND CASH EQUIVALENTS | ||
Net decrease in cash and cash equivalents | (508,394) | (68,493) |
Cash and cash equivalents, beginning of period | 606,684 | 182,015 |
Cash and cash equivalents, end of period | $ 98,290 | $ 113,522 |
Supplemental Cash Flow Disclosu
Supplemental Cash Flow Disclosures | 3 Months Ended |
Sep. 30, 2020 | |
Supplemental Cash Flow Elements [Abstract] | |
SUPPLEMENTAL CASH FLOW DISCLOSURES | SUPPLEMENTAL CASH FLOW DISCLOSURES Three Months Ended September 30, (in thousands) 2020 2019 Cash paid during the period for: Interest $ 11,509 $ 6,337 Income taxes 9,635 9,631 Supplemental disclosure of non-cash information: Changes in accounts payable related to purchases of property, plant and equipment (15,100) 200 Changes in notes payable related to purchases of property, plant and equipment 6,309 — |
Supplemental Cash Flow (Tables)
Supplemental Cash Flow (Tables) | 3 Months Ended |
Sep. 30, 2020 | |
Supplemental Cash Flow Elements [Abstract] | |
Supplemental Cash Flow Disclosures | Three Months Ended September 30, (in thousands) 2020 2019 Cash paid during the period for: Interest $ 11,509 $ 6,337 Income taxes 9,635 9,631 Supplemental disclosure of non-cash information: Changes in accounts payable related to purchases of property, plant and equipment (15,100) 200 Changes in notes payable related to purchases of property, plant and equipment 6,309 — |
Supplemental Cash Flow (Details
Supplemental Cash Flow (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Sep. 30, 2020 | Sep. 30, 2019 | |
Supplemental Cash Flow Elements [Abstract] | ||
Interest | $ 11,509 | $ 6,337 |
Income taxes | 9,635 | 9,631 |
Change in accounts payable related to property, plant, and equipment | (15,100) | $ 200 |
Changes in notes payable related to purchases of property, plant and equipment | $ 6,309 |
Fair Value Measurements
Fair Value Measurements | 3 Months Ended |
Sep. 30, 2020 | |
Fair Value Disclosures [Abstract] | |
FAIR VALUE MEASUREMENTS | FAIR VALUE MEASUREMENTS Fair value is defined as the price that would be received on the sale of an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The fair value hierarchy consists of three levels to prioritize the inputs used in valuations, as defined below: Level 1: Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities. Level 2: Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly, including quoted prices for similar assets or liabilities in active markets; quoted prices for identical or similar assets or liabilities in markets that are not active; inputs other than quoted prices that are observable for the asset or liability (e.g., interest rates); and inputs that are derived principally from or corroborated by observable market data by correlation or other means. Level 3: Inputs that are unobservable. As of September 30, 2020, the fair values of our financial assets and financial liabilities are categorized as follows: (in thousands) Level 1 Level 2 Level 3 Total Assets: Derivatives (1) $ — $ 432 $ — $ 432 Total assets at fair value $ — $ 432 $ — $ 432 Liabilities: Derivatives (1) $ — $ 1,659 $ — $ 1,659 Total liabilities at fair value $ — $ 1,659 $ — $ 1,659 As of June 30, 2020, the fair values of our financial assets and financial liabilities are categorized as follows: (in thousands) Level 1 Level 2 Level 3 Total Assets: Derivatives (1) $ — $ 36 $ — $ 36 Total assets at fair value $ — $ 36 $ — $ 36 Liabilities: Derivatives (1) $ — $ 2,139 $ — $ 2,139 Total liabilities at fair value $ — $ 2,139 $ — $ 2,139 (1) Currency and interest rate derivatives are valued based on observable market spot and forward rates and are classified within Level 2 of the fair value hierarchy. |
Derivative Instruments and Hedg
Derivative Instruments and Hedging Activities | 3 Months Ended |
Sep. 30, 2020 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES | DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES As part of our financial risk management program, we use certain derivative financial instruments. We do not enter into derivative transactions for speculative purposes and, therefore, we do not hold any derivative instruments for trading purposes. We account for derivative instruments as a hedge of the related asset, liability, firm commitment or anticipated transaction, when the derivative is specifically designated and qualifies as a hedge of such items. Our objective in managing foreign exchange exposures with derivative instruments is to reduce volatility in cash flow. We measure hedge effectiveness by assessing the changes in the fair value or expected future cash flows of the hedged item. The fair value of derivatives designated and not designated as hedging instruments in the condensed consolidated balance sheet are as follows: (in thousands) September 30, June 30, 2020 Derivatives designated as hedging instruments Other current assets - range forward contracts $ 1 $ 4 Other assets - forward starting interest rate swap contracts 431 20 Other liabilities - forward starting interest rate swap contracts (912) (2,094) Total derivatives designated as hedging instruments (480) (2,070) Derivatives not designated as hedging instruments Other current assets - currency forward contracts — 12 Other current liabilities - currency forward contracts (747) (45) Total derivatives not designated as hedging instruments (747) (33) Total derivatives $ (1,227) $ (2,103) Certain currency forward contracts that hedge significant cross-border intercompany loans are considered as other derivatives and therefore do not qualify for hedge accounting. These contracts are recorded at fair value in the condensed consolidated balance sheet, with the offset to other income, net. Losses related to derivatives not designated as hedging instruments have been recognized as follows: Three Months Ended September 30, (in thousands) 2020 2019 Other income, net - currency forward contracts $ 719 $ 102 CASH FLOW HEDGES Currency forward contracts and range forward contracts (a transaction where both a put option is purchased and a call option is sold) are designated as cash flow hedges and hedge anticipated cash flows from cross-border intercompany sales of products and services. Gains and losses realized on these contracts are recorded in accumulated other comprehensive loss and are recognized as a component of cost of goods sold and other income, net when the underlying sale of products or services is recognized into earnings. All contracts expired as of September 30, 2020, and the notional amount of the contracts translated into U.S. dollars at June 30, 2020 was $2.2 million. The time value component of the fair value of range forward contracts is excluded from the assessment of hedge effectiveness. During fiscal 2020, we entered into forward starting interest rate swap contracts to hedge a portion of the interest rate risk related to our anticipated refinancing of our Senior Unsecured Notes due in fiscal 2022. We recorded the fair value of these contracts as an asset or a liability, as applicable, in the balance sheet, with the offset to accumulated other comprehensive income, net of tax. The notional amount of the contracts at September 30, 2020 and June 30, 2020 was $200.0 million. As of September 30, 2020 and June 30, 2020, we recorded assets of $0.4 million and an immaterial amount, respectively, and liabilities of $0.9 million and $2.1 million, respectively, on these contracts, the net effect of which was recorded as a decrease to other comprehensive income, net of tax. The following represents gains and losses related to cash flow hedges: Three Months Ended September 30, (in thousands) 2020 2019 Gains recognized in other comprehensive income (loss), net $ 1,210 $ 395 Losses reclassified from accumulated other comprehensive loss into cost of goods sold and other income, net $ 453 $ 159 No portion of the gains or losses recognized in earnings was due to ineffectiveness and no amounts were excluded from our effectiveness testing for the three months ended September 30, 2020 and 2019. NET INVESTMENT HEDGES |
Stock-Based Compensation
Stock-Based Compensation | 3 Months Ended |
Sep. 30, 2020 | |
Share-based Payment Arrangement [Abstract] | |
STOCK-BASED COMPENSATION | STOCK-BASED COMPENSATION Stock Options Changes in our stock options for the three months ended September 30, 2020 were as follows: Options Weighted Average Exercise Price Weighted Average Remaining Life (years) Aggregate Intrinsic value (in thousands) Options outstanding, June 30, 2020 646,959 $ 33.60 Exercised (7,000) 26.89 Lapsed or forfeited (4,514) 54.65 Options outstanding, September 30, 2020 635,445 $ 33.52 2.7 $ 1,389 Options vested, September 30, 2020 635,445 $ 33.52 2.7 $ 1,389 Options exercisable, September 30, 2020 635,445 $ 33.52 2.7 $ 1,389 As of September 30, 2020 and June 30, 2020, there was no unrecognized compensation cost related to options outstanding, and all options were fully vested as of September 30, 2020 and 2019. There was no cash received from the exercise of options during the three months ended September 30, 2020, and the amount of cash received from the exercise of options during September 30, 2019 was $0.1 million. The total intrinsic value of options exercised was immaterial during the three months ended September 30, 2020 and was $0.2 million during the three months ended September 30, 2019. Restricted Stock Units – Performance Vesting and Time Vesting Changes in our performance vesting and time vesting restricted stock units for the three months ended September 30, 2020 were as follows: Performance Vesting Stock Units Performance Vesting Weighted Average Fair Value Time Vesting Stock Units Time Vesting Weighted Average Fair Value Unvested, June 30, 2020 554,633 $ 34.26 1,039,695 $ 32.48 Granted 220,876 33.49 695,840 30.96 Vested (69,626) 48.20 (377,543) 33.02 Performance metric adjustments, net (100,000) 32.92 — — Forfeited (31,063) 33.85 (51,310) 31.20 Unvested, September 30, 2020 574,820 $ 32.53 1,306,682 $ 31.57 During the three months ended September 30, 2020 and 2019, compensation expense related to time vesting and performance vesting restricted stock units was $6.7 million and $7.8 million, respectively. Certain performance metrics related to fiscal 2020 were not met, resulting in an adjustment of 100,000 performance vesting stock units during the three months ended September 30, 2020. As of September 30, 2020, the total unrecognized compensation cost related to unvested time vesting and performance vesting restricted stock units was $34.2 million and is expected to be recognized over a weighted average period of 2.4 years. |
Pension and Other Postretiremen
Pension and Other Postretirement Benefits | 3 Months Ended |
Sep. 30, 2020 | |
Retirement Benefits [Abstract] | |
PENSION AND OTHER POSTRETIREMENT BENEFITS | The table below summarizes the components of net periodic pension income: Three Months Ended September 30, (in thousands) 2020 2019 Service cost $ 416 $ 450 Interest cost 5,775 6,824 Expected return on plan assets (13,346) (13,456) Amortization of transition obligation 23 22 Amortization of prior service cost 8 12 Recognition of actuarial losses 3,372 2,595 Settlement gain — (122) Net periodic pension income $ (3,752) $ (3,675) The table below summarizes the components of net periodic other postretirement benefit cost: Three Months Ended September 30, (in thousands) 2020 2019 Interest cost $ 76 $ 101 Amortization of prior service credit (69) (69) Recognition of actuarial loss 77 64 Net periodic other postretirement benefit cost $ 84 $ 96 The service cost component of net periodic pension income is reported as a component of cost of goods sold and operating expense. All other components of net periodic pension income and net periodic other postretirement benefit cost are reported as a component of other income, net. |
Inventories
Inventories | 3 Months Ended |
Sep. 30, 2020 | |
Inventory Disclosure [Abstract] | |
INVENTORIES | INVENTORIES We used the last-in, first-out (LIFO) method of valuing inventories for 41 percent and 43 percent of total inventories at September 30, 2020 and June 30, 2020, respectively. Inventory valuations under the LIFO method are based on an annual determination of quantities and costs as of June 30 of each year; therefore, the interim LIFO valuations are based on our projections of expected year-end inventory levels and costs and are subject to any final year-end LIFO inventory adjustments. Inventories consisted of the following: (in thousands) September 30, 2020 June 30, 2020 Finished goods $ 313,266 $ 318,071 Work in process and powder blends 183,303 190,041 Raw materials 74,314 75,589 Inventories at current cost 570,883 583,701 Less: LIFO valuation (62,144) (61,254) Total inventories $ 508,739 $ 522,447 |
Long-Term Debt
Long-Term Debt | 3 Months Ended |
Sep. 30, 2020 | |
Debt Disclosure [Abstract] | |
LONG-TERM DEBT | LONG-TERM DEBT AND REVOLVING AND OTHER LINES OF CREDIT During the three months ended September 30, 2020, we entered into the First Amendment (the Amendment) to the Fifth Amended and Restated Credit Agreement dated as of June 21, 2018, (as amended by the Amendment, the Credit Agreement). The Credit Agreement is a five-year, multi-currency, revolving credit facility and we use it to augment cash from operations and as an additional source of funds. The Credit Agreement provides for revolving credit loans of up to $700.0 million for working capital, capital expenditures and general corporate purposes. The Credit Agreement allows for borrowings in U.S. dollars, euros, Canadian dollars, pounds sterling and Japanese yen. Interest payable under the Credit Agreement is based upon the type of borrowing under the facility and may be (1) LIBOR plus an applicable margin, (2) the greater of the prime rate or the Federal Funds effective rate plus an applicable margin, or (3) fixed as negotiated by us. The Credit Agreement matures in June 2023. The Credit Agreement requires us to comply with various restrictive and affirmative covenants, including two financial covenants: (1) a maximum leverage ratio where debt, net of domestic cash in excess of $25 million and, as added by the Amendment, sixty percent of the unrestricted cash held outside of the United States, must be less than or equal to 3.5 times trailing twelve months EBITDA (temporarily increased by the Amendment to 4.25 times trailing twelve months EBITDA during the period from September 30, 2020 through and including December 31, 2021), adjusted for certain non-cash expenses and which may be further adjusted, at our discretion, to include up to $120 million (increased from $80 million pursuant to the Amendment) of cash restructuring charges through December 31, 2021; and (2) a minimum consolidated interest coverage ratio of EBITDA to interest of 3.5 times (as the aforementioned terms are defined in the Credit Agreement). Borrowings under the Credit Agreement are guaranteed by our significant domestic subsidiaries. As of September 30, 2020, we were in compliance with all covenants of the Credit Agreement and we had $38.5 million of borrowings outstanding and $661.5 million of additional availability. There were $500.0 million of borrowings outstanding as of June 30, 2020. The Company continues to assess the expected conditions in its primary end markets, including the effects of COVID-19 on the Company’s business, financial condition, operating results and cash flows. Because the extent and duration of the COVID-19 pandemic are uncertain, the effects of the pandemic could materially affect our availability to borrow under the Credit Agreement and our compliance with the maximum leverage ratio covenant of the Credit Agreement. To offset some of the uncertainty related to COVID-19, we obtained an Amendment to the Credit Agreement during the first quarter of fiscal 2021, as described above. Additionally, we continue to evaluate when and to what extent we may access the capital markets, including our plan to refinance the $300 million 3.875 percent Senior Unsecured Notes due February 2022 during the current fiscal year. In the event that a refinancing does not occur before the February 2022 maturity date, management believes that the Company will have the ability to repay the February 2022 Notes with projected cash on hand and availability under the Credit Agreement. However, the Company can provide no assurance of this due in part, but not limited to, the uncertainty surrounding the COVID-19 pandemic. If over the course of the next year, market conditions do not improve or further deteriorate, the Company may need to take one or a combination of the following additional actions to ensure the Company has adequate access to liquidity and remains in compliance with the maximum leverage ratio covenant of the Credit Agreement, both of which are within the Company’s control: implement additional short-term cost-control actions and undertake new restructuring programs. We have concluded that we will remain in compliance with the covenants of the Credit Agreement and, as a result, will have adequate access to liquidity to satisfy our obligations within one year after the date the financial statements are issued. Fixed rate debt had a fair market value of $643.4 million and $630.2 million at September 30, 2020 and June 30, 2020, respectively. The Level 2 fair value is determined based on the quoted market prices for similar debt instruments as of September 30, 2020 and June 30, 2020, respectively. |
Environmental Matters
Environmental Matters | 3 Months Ended |
Sep. 30, 2020 | |
Environmental Remediation Obligations [Abstract] | |
ENVIRONMENTAL MATTERS | ENVIRONMENTAL MATTERS The operation of our business has exposed us to certain liabilities and compliance costs related to environmental matters. We are involved in various environmental cleanup and remediation activities at certain of our locations. We establish and maintain reserves for certain potential environmental liabilities. At September 30, 2020, the balance of these reserves was $15.7 million, of which $6.1 million was current. At June 30, 2020, the balance of these reserves was $15.6 million, of which $6.1 million was current. The balances as of September 30, and June 30, 2020 include the Company’s resolution of an environmental indemnity claim against the seller of a prior acquisition for which receivables are also recorded in other current and long-term assets. These reserves represent anticipated costs associated with potential remedial requirements and are generally not discounted. The reserves we have established for potential environmental liabilities represent our best current estimate of the costs of addressing all identified environmental situations, based on our review of currently available evidence, and taking into consideration our prior experience in remediation and that of other companies, as well as public information released by the United States Environmental Protection Agency (USEPA), other governmental agencies and by the Potentially Responsible Party (PRP) groups in which we are participating. Although our reserves currently appear to be sufficient to cover these potential environmental liabilities, there are uncertainties associated with environmental liabilities, and we can give no assurance that our estimate of any environmental liability will not increase or decrease in the future. The reserved and unreserved liabilities for all environmental concerns could change substantially due to factors such as the nature and extent of contamination, changes in remedial requirements, technological changes, discovery of new information, the financial strength of other PRPs, the identification of new PRPs and the involvement of and direction taken by the government on these matters. Superfund Sites Among other environmental laws, we are subject to the Comprehensive Environmental Response Compensation and Liability Act of 1980 (CERCLA), under which we have been designated by the USEPA as a PRP with respect to environmental remedial costs at certain Superfund sites. We have evaluated our claims and liabilities associated with these Superfund sites based upon best currently available information. We believe our environmental accruals are adequate to cover our portion of the environmental remedial costs at the Superfund sites where we have been designated a PRP, to the extent these expenses are probable and reasonably estimable. |
Income Taxes
Income Taxes | 3 Months Ended |
Sep. 30, 2020 | |
Income Tax Disclosure [Abstract] | |
INCOME TAXES | INCOME TAXESThe effective income tax rates for the three months ended September 30, 2020 and 2019 were 12.1 (benefit on a loss) and 33.7 (provision on income), respectively. The year-over-year change is primarily due to the effects of relatively lower pre-tax income in the current quarter. |
Earnings Per Share
Earnings Per Share | 3 Months Ended |
Sep. 30, 2020 | |
Earnings Per Share [Abstract] | |
EARNINGS PER SHARE | EARNINGS PER SHARE Basic earnings per share is computed using the weighted average number of shares outstanding during the period, while diluted earnings per share is calculated to reflect the potential dilution that would occur related to the issuance of capital stock under stock option grants, performance awards and restricted stock units. The difference between basic and diluted earnings per share relates solely to the effect of capital stock options, performance awards and restricted stock units. During the three months ended September 30, 2020, the effect of unexercised capital stock options, unvested performance awards and unvested restricted stock units was anti-dilutive as a result of a net loss in the period and therefore has been excluded from diluted shares outstanding as well as from the diluted earnings per share calculation. The following table provides the computation of diluted shares outstanding for the three months ended September 30, 2019: (in thousands) Three Months Ended September 30, 2019 Weighted-average shares outstanding during period 82,881 Add: Unexercised stock options and unvested restricted stock units 606 Number of shares on which diluted earnings per share is calculated 83,487 Unexercised stock options with an exercise price greater than the average market price and restricted stock units not included in the computation because they were anti-dilutive 649 |
Equity
Equity | 3 Months Ended |
Sep. 30, 2020 | |
Equity [Abstract] | |
EQUITY | EQUITY A summary of the changes in the carrying amounts of total equity, Kennametal Shareholders’ equity and equity attributable to noncontrolling interests for the three months ending September 30, 2020 and 2019 is as follows: Kennametal Shareholders’ Equity (in thousands, except per share amounts) Capital stock Additional paid-in capital Retained earnings Accumulated other comprehensive loss Non-controlling interests Total equity Balance as of June 30, 2020 $ 103,654 $ 538,575 $ 1,004,898 $ (417,242) $ 38,903 $ 1,268,788 Net (loss) income — — (21,675) — 815 (20,860) Other comprehensive income — — — 31,594 1,278 32,872 Dividend reinvestment 2 49 — — — 51 Capital stock issued under employee benefit and stock plans (2) 410 1,799 — — — 2,209 Purchase of capital stock (2) (49) — — — (51) Cash dividends ($0.20 per share) — — (16,627) — (16,627) Total equity, September 30, 2020 $ 104,064 $ 540,374 $ 966,596 $ (385,648) $ 40,996 $ 1,266,382 Kennametal Shareholders’ Equity (in thousands, except per share amounts) Capital stock Additional paid-in capital Retained earnings Accumulated other comprehensive loss Non-controlling interests Total equity Balance as of June 30, 2019 $ 103,026 $ 528,827 $ 1,076,862 $ (373,543) $ 39,532 $ 1,374,704 Net income — — 6,466 — 944 7,410 Other comprehensive loss — — — (28,891) (1,392) (30,283) Dividend reinvestment 2 51 — — — 53 Capital stock issued under employee benefit and stock plans (2) 516 1,868 — — — 2,384 Purchase of capital stock (2) (51) — — — (53) Cash dividends ($0.20 per share) — — (16,565) — — (16,565) Total equity, September 30, 2019 $ 103,542 $ 530,695 $ 1,066,763 $ (402,434) $ 39,084 $ 1,337,650 (2) Net of restricted stock units delivered upon vesting to satisfy tax withholding requirements. The amounts of comprehensive income attributable to Kennametal Shareholders and noncontrolling interests are disclosed in the condensed consolidated statements of comprehensive income. |
Accumulated Other Comprehensive
Accumulated Other Comprehensive Loss | 3 Months Ended |
Sep. 30, 2020 | |
Accumulated Other Comprehensive Income (Loss), Net of Tax [Abstract] | |
Accumulated Other Comprehensive Loss | ACCUMULATED OTHER COMPREHENSIVE LOSS The components of, and changes in, accumulated other comprehensive loss (AOCL) were as follows, net of tax, for the three months ended September 30, 2020: (in thousands) Pension and other postretirement benefits Currency translation adjustment Derivatives Total Attributable to Kennametal: Balance, June 30, 2020 $ (232,634) $ (181,027) $ (3,581) $ (417,242) Other comprehensive (loss) income before reclassifications (3,310) 30,668 1,210 28,568 Amounts reclassified from AOCL 2,565 — 461 3,026 Net current period other comprehensive (745) 30,668 1,671 31,594 AOCL, September 30, 2020 $ (233,379) $ (150,359) $ (1,910) $ (385,648) Attributable to noncontrolling interests: Balance, June 30, 2020 $ — $ (5,909) $ — $ (5,909) Other comprehensive income before — 1,278 — 1,278 Net current period other comprehensive income — 1,278 — 1,278 AOCL, September 30, 2020 $ — $ (4,631) $ — $ (4,631) The components of, and changes in, AOCL were as follows, net of tax, for the three months ended September 30, 2019: (in thousands) Pension and other postretirement benefits Currency translation adjustment Derivatives Total Attributable to Kennametal: Balance, June 30, 2019 $ (222,270) $ (147,595) $ (3,678) $ (373,543) Other comprehensive income (loss) before reclassifications 2,607 (34,034) 395 (31,032) Amounts reclassified from AOCL 1,960 — 181 2,141 Net current period other comprehensive 4,567 (34,034) 576 (28,891) AOCL, September 30, 2019 $ (217,703) $ (181,629) $ (3,102) $ (402,434) Attributable to noncontrolling interests: Balance, June 30, 2019 $ — $ (3,450) $ — $ (3,450) Other comprehensive loss before — (1,392) — (1,392) Net current period other comprehensive loss — (1,392) — (1,392) AOCL, September 30, 2019 $ — $ (4,842) $ — $ (4,842) Reclassifications out of AOCL for the three months ended September 30, 2020 and 2019 consisted of the following: Three Months Ended September 30, (in thousands) 2020 2019 Affected line item in the Income Statement Gains and losses on cash flow hedges: Forward starting interest rate swaps $ 635 $ 611 Interest expense Currency exchange contracts (24) (371) Cost of goods sold and other income, net Total before tax 611 240 Tax impact (150) (59) (Benefit) provision for income taxes Net of tax $ 461 $ 181 Pension and other postretirement benefits: Amortization of transition obligations $ 23 $ 22 Other income, net Amortization of prior service credit (61) (57) Other income, net Recognition of actuarial losses 3,449 2,659 Other income, net Total before tax 3,411 2,624 Tax impact (846) (664) (Benefit) provision for income taxes Net of tax $ 2,565 $ 1,960 The amount of income tax allocated to each component of other comprehensive income (loss) for the three months ended September 30, 2020 and 2019 were as follows: 2020 2019 (in thousands) Pre-tax Tax impact Net of tax Pre-tax Tax impact Net of tax Unrealized gain on derivatives designated and qualified as cash flow hedges $ 1,603 $ (393) $ 1,210 $ 523 $ (128) $ 395 Reclassification of unrealized loss on derivatives designated and qualified as cash flow hedges 611 (150) 461 240 (59) 181 Unrecognized net pension and other postretirement benefit (loss) gain (4,382) 1,072 (3,310) 3,469 (862) 2,607 Reclassification of net pension and other postretirement benefit loss 3,411 (846) 2,565 2,624 (664) 1,960 Foreign currency translation adjustments 32,106 (160) 31,946 (35,579) 153 (35,426) Other comprehensive income (loss) $ 33,349 $ (477) $ 32,872 $ (28,723) $ (1,560) $ (30,283) |
Goodwill and Other Intangible A
Goodwill and Other Intangible Assets | 3 Months Ended |
Sep. 30, 2020 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
GOODWILL AND OTHER INTANGIBLE ASSETS | GOODWILL AND OTHER INTANGIBLE ASSETS A summary of the carrying amount of goodwill attributable to each segment, as well as the changes in such carrying amounts, is as follows: (in thousands) Metal Cutting Infrastructure Total Gross goodwill $ 448,241 $ 633,211 $ 1,081,452 Accumulated impairment losses (177,661) (633,211) (810,872) Balance as of June 30, 2020 $ 270,580 $ — $ 270,580 Activity for the three months ended September 30, 2020: Change in gross goodwill due to translation 4,826 — 4,826 Gross goodwill 453,067 633,211 1,086,278 Accumulated impairment losses (177,661) (633,211) (810,872) Balance as of September 30, 2020 $ 275,406 $ — $ 275,406 The components of our other intangible assets were as follows: Estimated September 30, 2020 June 30, 2020 (in thousands) Gross Carrying Accumulated Gross Carrying Accumulated Technology-based and other 4 to 20 33,230 (23,363) 32,713 (22,612) Customer-related 10 to 21 182,809 (91,448) 181,408 (88,112) Unpatented technology 10 to 30 31,738 (18,590) 31,586 (17,890) Trademarks 5 to 20 13,200 (9,167) 13,087 (8,772) Trademarks Indefinite 11,653 — 11,160 — Total $ 272,630 $ (142,568) $ 269,954 $ (137,386) |
Segment Data
Segment Data | 3 Months Ended |
Sep. 30, 2020 | |
Segment Reporting [Abstract] | |
SEGMENT DATA | SEGMENT DATA Our reportable operating segments have been determined in accordance with the our internal management structure, which is organized based on operating activities, the manner in which we organize segments for allocating resources, making operating decisions and assessing performance and the availability of separate financial results. We do not allocate certain corporate expenses related to executive retirement plans, our Board of Directors, strategic initiatives, and certain other costs and report them in Corporate. Our former segments, Industrial and Widia, were combined into one Metal Cutting segment as of July 1, 2020, while Infrastructure remains unchanged. Segment results have been retrospectively restated to reflect the change in reportable segments. Our reportable operating segments do not represent the aggregation of two or more operating segments. METAL CUTTING The Metal Cutting segment develops and manufactures high performance tooling and metal cutting products and services and offers an assortment of standard and custom metal cutting solutions to diverse end markets, including aerospace, general engineering, energy and transportation. The products include milling, hole making, turning, threading and toolmaking systems used in the manufacture of airframes, aero engines, trucks and automobiles, ships and various types of industrial equipment. We leverage advanced manufacturing capabilities in combination with varying levels of customization to solve our customers’ toughest challenges and deliver improved productivity for a wide range of applications . Metal Cutting markets its products under the Kennametal ® , WIDIA ® , WIDIA Hanita ® and WIDIA GTD ® brands through its direct sales force, a network of independent and national distributors, integrated supplier channels and via the Internet. Application engineers and technicians are critical to the sales process and directly assist our customers with specified product design, selection, application and support. INFRASTRUCTURE Our Infrastructure segment produces engineered tungsten carbide and ceramic components, earth-cutting tools, and advanced metallurgical powders, primarily for the energy, earthworks and general engineering end markets. These wear-resistant products include compacts, nozzles, frac seats and custom components used in oil and gas and petrochemical industries; rod blanks and abrasive water jet nozzles for general industries; earth cutting tools and systems used in underground mining, trenching and foundation drilling and road milling; tungsten carbide powders for the oil and gas, aerospace and process industries; and ceramics used by the packaging industry for metallization of films and papers. We combine deep metallurgical and engineering expertise with advanced manufacturing capabilities to deliver solutions that drive improved productivity for our customers. Infrastructure markets its products primarily under the Kennametal ® brand and sells through a direct sales force as well as through distributors. Our sales and operating (loss) income by segment are as follows: Three Months Ended (in thousands) 2020 2019 Sales: Metal Cutting $ 247,876 $ 324,085 Infrastructure 152,429 194,003 Total sales $ 400,305 $ 518,088 Operating (loss) income: Metal Cutting $ (23,626) $ 19,306 Infrastructure 7,268 (2,690) Corporate (820) (240) Total operating (loss) income (17,178) 16,376 Interest expense 10,578 7,881 Other income, net (4,019) (2,681) (Loss) income from continuing operations before income taxes $ (23,737) $ 11,176 The following table presents Kennametal's revenue disaggregated by geography: Three Months Ended September 30, 2020 September 30, 2019 (in thousands) Metal Cutting Infrastructure Total Kennametal Metal Cutting Infrastructure Total Kennametal Americas 39% 55% 45% 42% 63% 50% EMEA 37 21 31 37 18 30 Asia Pacific 24 24 24 21 19 20 The following tables presents Kennametal's revenue disaggregated by end market: Three Months Ended September 30, 2020 (in thousands) Metal Cutting Infrastructure Total Kennametal General engineering 54% 34% 46% Transportation 29 — 18 Aerospace 9 — 5 Energy 8 25 15 Earthworks — 41 16 Three Months Ended September 30, 2019 (in thousands) Metal Cutting Infrastructure Total Kennametal General engineering 52% 34% 45% Transportation 28 — 18 Aerospace 12 — 7 Energy 8 29 16 Earthworks — 37 14 |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 3 Months Ended |
Sep. 30, 2020 | |
Fair Value Disclosures [Abstract] | |
Financial instruments at fair value on recurring basis | As of September 30, 2020, the fair values of our financial assets and financial liabilities are categorized as follows: (in thousands) Level 1 Level 2 Level 3 Total Assets: Derivatives (1) $ — $ 432 $ — $ 432 Total assets at fair value $ — $ 432 $ — $ 432 Liabilities: Derivatives (1) $ — $ 1,659 $ — $ 1,659 Total liabilities at fair value $ — $ 1,659 $ — $ 1,659 As of June 30, 2020, the fair values of our financial assets and financial liabilities are categorized as follows: (in thousands) Level 1 Level 2 Level 3 Total Assets: Derivatives (1) $ — $ 36 $ — $ 36 Total assets at fair value $ — $ 36 $ — $ 36 Liabilities: Derivatives (1) $ — $ 2,139 $ — $ 2,139 Total liabilities at fair value $ — $ 2,139 $ — $ 2,139 (1) Currency and interest rate derivatives are valued based on observable market spot and forward rates and are classified within Level 2 of the fair value hierarchy. |
Derivative Instruments and He_2
Derivative Instruments and Hedging Activities (Tables) | 3 Months Ended |
Sep. 30, 2020 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Fair value of derivatives | The fair value of derivatives designated and not designated as hedging instruments in the condensed consolidated balance sheet are as follows: (in thousands) September 30, June 30, 2020 Derivatives designated as hedging instruments Other current assets - range forward contracts $ 1 $ 4 Other assets - forward starting interest rate swap contracts 431 20 Other liabilities - forward starting interest rate swap contracts (912) (2,094) Total derivatives designated as hedging instruments (480) (2,070) Derivatives not designated as hedging instruments Other current assets - currency forward contracts — 12 Other current liabilities - currency forward contracts (747) (45) Total derivatives not designated as hedging instruments (747) (33) Total derivatives $ (1,227) $ (2,103) |
(Gains) losses related to derivatives not designated as hedging instruments | Losses related to derivatives not designated as hedging instruments have been recognized as follows: Three Months Ended September 30, (in thousands) 2020 2019 Other income, net - currency forward contracts $ 719 $ 102 |
Gains and losses related to cash flow hedges | The following represents gains and losses related to cash flow hedges: Three Months Ended September 30, (in thousands) 2020 2019 Gains recognized in other comprehensive income (loss), net $ 1,210 $ 395 Losses reclassified from accumulated other comprehensive loss into cost of goods sold and other income, net $ 453 $ 159 |
Stock-Based Compensation (Table
Stock-Based Compensation (Tables) | 3 Months Ended |
Sep. 30, 2020 | |
Share-based Payment Arrangement [Abstract] | |
Changes in stock options | Changes in our stock options for the three months ended September 30, 2020 were as follows: Options Weighted Average Exercise Price Weighted Average Remaining Life (years) Aggregate Intrinsic value (in thousands) Options outstanding, June 30, 2020 646,959 $ 33.60 Exercised (7,000) 26.89 Lapsed or forfeited (4,514) 54.65 Options outstanding, September 30, 2020 635,445 $ 33.52 2.7 $ 1,389 Options vested, September 30, 2020 635,445 $ 33.52 2.7 $ 1,389 Options exercisable, September 30, 2020 635,445 $ 33.52 2.7 $ 1,389 |
Changes in time vesting and performance vesting restricted stock units | Changes in our performance vesting and time vesting restricted stock units for the three months ended September 30, 2020 were as follows: Performance Vesting Stock Units Performance Vesting Weighted Average Fair Value Time Vesting Stock Units Time Vesting Weighted Average Fair Value Unvested, June 30, 2020 554,633 $ 34.26 1,039,695 $ 32.48 Granted 220,876 33.49 695,840 30.96 Vested (69,626) 48.20 (377,543) 33.02 Performance metric adjustments, net (100,000) 32.92 — — Forfeited (31,063) 33.85 (51,310) 31.20 Unvested, September 30, 2020 574,820 $ 32.53 1,306,682 $ 31.57 |
Pension and Other Postretirem_2
Pension and Other Postretirement Benefits (Tables) | 3 Months Ended |
Sep. 30, 2020 | |
Pension Plan [Member] | |
Defined Benefit Plan Disclosure [Line Items] | |
Net periodic pension (income) | The table below summarizes the components of net periodic pension income: Three Months Ended September 30, (in thousands) 2020 2019 Service cost $ 416 $ 450 Interest cost 5,775 6,824 Expected return on plan assets (13,346) (13,456) Amortization of transition obligation 23 22 Amortization of prior service cost 8 12 Recognition of actuarial losses 3,372 2,595 Settlement gain — (122) Net periodic pension income $ (3,752) $ (3,675) |
Other Postretirement Benefits Plan [Member] | |
Defined Benefit Plan Disclosure [Line Items] | |
Net periodic pension (income) | The table below summarizes the components of net periodic other postretirement benefit cost: Three Months Ended September 30, (in thousands) 2020 2019 Interest cost $ 76 $ 101 Amortization of prior service credit (69) (69) Recognition of actuarial loss 77 64 Net periodic other postretirement benefit cost $ 84 $ 96 |
Inventories (Tables)
Inventories (Tables) | 3 Months Ended |
Sep. 30, 2020 | |
Inventory Disclosure [Abstract] | |
Inventories | Inventories consisted of the following: (in thousands) September 30, 2020 June 30, 2020 Finished goods $ 313,266 $ 318,071 Work in process and powder blends 183,303 190,041 Raw materials 74,314 75,589 Inventories at current cost 570,883 583,701 Less: LIFO valuation (62,144) (61,254) Total inventories $ 508,739 $ 522,447 |
Earnings Per Share (Tables) (Ta
Earnings Per Share (Tables) (Tables) | 3 Months Ended |
Sep. 30, 2020 | |
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | |
Schedule of Antidilutive Securities Excluded from Computation of Earnings Per Share [Table Text Block] | The following table provides the computation of diluted shares outstanding for the three months ended September 30, 2019: (in thousands) Three Months Ended September 30, 2019 Weighted-average shares outstanding during period 82,881 Add: Unexercised stock options and unvested restricted stock units 606 Number of shares on which diluted earnings per share is calculated 83,487 Unexercised stock options with an exercise price greater than the average market price and restricted stock units not included in the computation because they were anti-dilutive 649 |
Equity (Tables)
Equity (Tables) | 3 Months Ended |
Sep. 30, 2020 | |
Equity [Abstract] | |
Summary of the changes in the carrying amounts of total equity, Kennametal shareholders' equity and equity attributable to noncontrolling interests | A summary of the changes in the carrying amounts of total equity, Kennametal Shareholders’ equity and equity attributable to noncontrolling interests for the three months ending September 30, 2020 and 2019 is as follows: Kennametal Shareholders’ Equity (in thousands, except per share amounts) Capital stock Additional paid-in capital Retained earnings Accumulated other comprehensive loss Non-controlling interests Total equity Balance as of June 30, 2020 $ 103,654 $ 538,575 $ 1,004,898 $ (417,242) $ 38,903 $ 1,268,788 Net (loss) income — — (21,675) — 815 (20,860) Other comprehensive income — — — 31,594 1,278 32,872 Dividend reinvestment 2 49 — — — 51 Capital stock issued under employee benefit and stock plans (2) 410 1,799 — — — 2,209 Purchase of capital stock (2) (49) — — — (51) Cash dividends ($0.20 per share) — — (16,627) — (16,627) Total equity, September 30, 2020 $ 104,064 $ 540,374 $ 966,596 $ (385,648) $ 40,996 $ 1,266,382 Kennametal Shareholders’ Equity (in thousands, except per share amounts) Capital stock Additional paid-in capital Retained earnings Accumulated other comprehensive loss Non-controlling interests Total equity Balance as of June 30, 2019 $ 103,026 $ 528,827 $ 1,076,862 $ (373,543) $ 39,532 $ 1,374,704 Net income — — 6,466 — 944 7,410 Other comprehensive loss — — — (28,891) (1,392) (30,283) Dividend reinvestment 2 51 — — — 53 Capital stock issued under employee benefit and stock plans (2) 516 1,868 — — — 2,384 Purchase of capital stock (2) (51) — — — (53) Cash dividends ($0.20 per share) — — (16,565) — — (16,565) Total equity, September 30, 2019 $ 103,542 $ 530,695 $ 1,066,763 $ (402,434) $ 39,084 $ 1,337,650 (2) Net of restricted stock units delivered upon vesting to satisfy tax withholding requirements. |
Accumulated Other Comprehensi_2
Accumulated Other Comprehensive Loss (Tables) | 3 Months Ended |
Sep. 30, 2020 | |
Accumulated Other Comprehensive Income (Loss), Net of Tax [Abstract] | |
Components of, and changes in accumulated other comprehensive loss | The components of, and changes in, accumulated other comprehensive loss (AOCL) were as follows, net of tax, for the three months ended September 30, 2020: (in thousands) Pension and other postretirement benefits Currency translation adjustment Derivatives Total Attributable to Kennametal: Balance, June 30, 2020 $ (232,634) $ (181,027) $ (3,581) $ (417,242) Other comprehensive (loss) income before reclassifications (3,310) 30,668 1,210 28,568 Amounts reclassified from AOCL 2,565 — 461 3,026 Net current period other comprehensive (745) 30,668 1,671 31,594 AOCL, September 30, 2020 $ (233,379) $ (150,359) $ (1,910) $ (385,648) Attributable to noncontrolling interests: Balance, June 30, 2020 $ — $ (5,909) $ — $ (5,909) Other comprehensive income before — 1,278 — 1,278 Net current period other comprehensive income — 1,278 — 1,278 AOCL, September 30, 2020 $ — $ (4,631) $ — $ (4,631) The components of, and changes in, AOCL were as follows, net of tax, for the three months ended September 30, 2019: (in thousands) Pension and other postretirement benefits Currency translation adjustment Derivatives Total Attributable to Kennametal: Balance, June 30, 2019 $ (222,270) $ (147,595) $ (3,678) $ (373,543) Other comprehensive income (loss) before reclassifications 2,607 (34,034) 395 (31,032) Amounts reclassified from AOCL 1,960 — 181 2,141 Net current period other comprehensive 4,567 (34,034) 576 (28,891) AOCL, September 30, 2019 $ (217,703) $ (181,629) $ (3,102) $ (402,434) Attributable to noncontrolling interests: Balance, June 30, 2019 $ — $ (3,450) $ — $ (3,450) Other comprehensive loss before — (1,392) — (1,392) Net current period other comprehensive loss — (1,392) — (1,392) AOCL, September 30, 2019 $ — $ (4,842) $ — $ (4,842) |
Reclassification out of Accumulated Other Comprehensive Loss | Reclassifications out of AOCL for the three months ended September 30, 2020 and 2019 consisted of the following: Three Months Ended September 30, (in thousands) 2020 2019 Affected line item in the Income Statement Gains and losses on cash flow hedges: Forward starting interest rate swaps $ 635 $ 611 Interest expense Currency exchange contracts (24) (371) Cost of goods sold and other income, net Total before tax 611 240 Tax impact (150) (59) (Benefit) provision for income taxes Net of tax $ 461 $ 181 Pension and other postretirement benefits: Amortization of transition obligations $ 23 $ 22 Other income, net Amortization of prior service credit (61) (57) Other income, net Recognition of actuarial losses 3,449 2,659 Other income, net Total before tax 3,411 2,624 Tax impact (846) (664) (Benefit) provision for income taxes Net of tax $ 2,565 $ 1,960 |
Income Tax Allocated to Each Component of Other Comprehensive Income [Table Text Block] | The amount of income tax allocated to each component of other comprehensive income (loss) for the three months ended September 30, 2020 and 2019 were as follows: 2020 2019 (in thousands) Pre-tax Tax impact Net of tax Pre-tax Tax impact Net of tax Unrealized gain on derivatives designated and qualified as cash flow hedges $ 1,603 $ (393) $ 1,210 $ 523 $ (128) $ 395 Reclassification of unrealized loss on derivatives designated and qualified as cash flow hedges 611 (150) 461 240 (59) 181 Unrecognized net pension and other postretirement benefit (loss) gain (4,382) 1,072 (3,310) 3,469 (862) 2,607 Reclassification of net pension and other postretirement benefit loss 3,411 (846) 2,565 2,624 (664) 1,960 Foreign currency translation adjustments 32,106 (160) 31,946 (35,579) 153 (35,426) Other comprehensive income (loss) $ 33,349 $ (477) $ 32,872 $ (28,723) $ (1,560) $ (30,283) |
Goodwill and Other Intangible_2
Goodwill and Other Intangible Assets (Tables) | 3 Months Ended |
Sep. 30, 2020 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
The carrying amount of goodwill | A summary of the carrying amount of goodwill attributable to each segment, as well as the changes in such carrying amounts, is as follows: (in thousands) Metal Cutting Infrastructure Total Gross goodwill $ 448,241 $ 633,211 $ 1,081,452 Accumulated impairment losses (177,661) (633,211) (810,872) Balance as of June 30, 2020 $ 270,580 $ — $ 270,580 Activity for the three months ended September 30, 2020: Change in gross goodwill due to translation 4,826 — 4,826 Gross goodwill 453,067 633,211 1,086,278 Accumulated impairment losses (177,661) (633,211) (810,872) Balance as of September 30, 2020 $ 275,406 $ — $ 275,406 |
The components of intangible assets | The components of our other intangible assets were as follows: Estimated September 30, 2020 June 30, 2020 (in thousands) Gross Carrying Accumulated Gross Carrying Accumulated Technology-based and other 4 to 20 33,230 (23,363) 32,713 (22,612) Customer-related 10 to 21 182,809 (91,448) 181,408 (88,112) Unpatented technology 10 to 30 31,738 (18,590) 31,586 (17,890) Trademarks 5 to 20 13,200 (9,167) 13,087 (8,772) Trademarks Indefinite 11,653 — 11,160 — Total $ 272,630 $ (142,568) $ 269,954 $ (137,386) |
Segment Data (Tables)
Segment Data (Tables) | 3 Months Ended |
Sep. 30, 2020 | |
Segment Reporting [Abstract] | |
Disaggregation of Revenue [Table Text Block] | The following table presents Kennametal's revenue disaggregated by geography: Three Months Ended September 30, 2020 September 30, 2019 (in thousands) Metal Cutting Infrastructure Total Kennametal Metal Cutting Infrastructure Total Kennametal Americas 39% 55% 45% 42% 63% 50% EMEA 37 21 31 37 18 30 Asia Pacific 24 24 24 21 19 20 The following tables presents Kennametal's revenue disaggregated by end market: Three Months Ended September 30, 2020 (in thousands) Metal Cutting Infrastructure Total Kennametal General engineering 54% 34% 46% Transportation 29 — 18 Aerospace 9 — 5 Energy 8 25 15 Earthworks — 41 16 Three Months Ended September 30, 2019 (in thousands) Metal Cutting Infrastructure Total Kennametal General engineering 52% 34% 45% Transportation 28 — 18 Aerospace 12 — 7 Energy 8 29 16 Earthworks — 37 14 |
Sales and operating income (loss) by segment and segment assets | Our sales and operating (loss) income by segment are as follows: Three Months Ended (in thousands) 2020 2019 Sales: Metal Cutting $ 247,876 $ 324,085 Infrastructure 152,429 194,003 Total sales $ 400,305 $ 518,088 Operating (loss) income: Metal Cutting $ (23,626) $ 19,306 Infrastructure 7,268 (2,690) Corporate (820) (240) Total operating (loss) income (17,178) 16,376 Interest expense 10,578 7,881 Other income, net (4,019) (2,681) (Loss) income from continuing operations before income taxes $ (23,737) $ 11,176 |
Fair Value Measurements - Asset
Fair Value Measurements - Assets and Liabilities Measured on a Recurring Basis (Details) - USD ($) $ in Thousands | Sep. 30, 2020 | Jun. 30, 2020 |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Derivatives Assets | $ 432 | $ 36 |
Total assets at fair value | 432 | 36 |
Derivatives Liabilities | 1,659 | 2,139 |
Total liabilities at fair value | 1,659 | 2,139 |
Fair Value, Recurring [Member] | Level 2 [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Derivatives Assets | 432 | 36 |
Total assets at fair value | 432 | 36 |
Derivatives Liabilities | 1,659 | 2,139 |
Total liabilities at fair value | $ 1,659 | $ 2,139 |
Derivative Instruments and He_3
Derivative Instruments and Hedging Activities - Fair Value of Derivatives Designated and Not Designated as Hedging Instruments (Details) - USD ($) $ in Thousands | Sep. 30, 2020 | Jun. 30, 2020 |
Fair value of derivatives | ||
Derivative, Fair Value, Net | $ (1,227) | $ (2,103) |
Designated as Hedging Instrument [Member] | ||
Fair value of derivatives | ||
Derivative, Fair Value, Net | (480) | (2,070) |
Not Designated as Hedging Instrument [Member] | ||
Fair value of derivatives | ||
Derivative, Fair Value, Net | (747) | (33) |
Range Forward Contracts [Member] | Designated as Hedging Instrument [Member] | Other Current Assets [Member] | ||
Fair value of derivatives | ||
Derivative assets designated as hedging instruments | 1 | 4 |
Forward Starting Interest Rate Swap Contracts [Member] | Designated as Hedging Instrument [Member] | Other Assets [Member] | ||
Fair value of derivatives | ||
Derivative assets designated as hedging instruments | 431 | 20 |
Forward Starting Interest Rate Swap Contracts [Member] | Designated as Hedging Instrument [Member] | Other Liabilities [Member] | ||
Fair value of derivatives | ||
Derivative liabilities designated as hedging instruments | (912) | (2,094) |
Currency Forward Contracts [Member] | Not Designated as Hedging Instrument [Member] | Other Current Assets [Member] | ||
Fair value of derivatives | ||
Derivative assets designated as hedging instruments | 0 | 12 |
Currency Forward Contracts [Member] | Not Designated as Hedging Instrument [Member] | Other Current Liabilities [Member] | ||
Fair value of derivatives | ||
Derivative liabilities designated as hedging instruments | $ (747) | $ (45) |
Derivative Instruments and He_4
Derivative Instruments and Hedging Activities - Gains and Losses Related to Derivatives Not Designated as Hedging Instruments and to Cash Flow Hedges (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Sep. 30, 2020 | Sep. 30, 2019 | |
Gains and losses related to cash flow hedges | ||
Gains recognized in other comprehensive (loss) income, net | $ 1,603 | $ 523 |
Net Investment Hedging [Member] | ||
Derivative Instruments, Gain (Loss) [Line Items] | ||
Gain (Loss) on Derivative Used in Net Investment Hedge, Net of Tax | (600) | 1,100 |
Currency Forward Contracts [Member] | Other Nonoperating Income (Expense) [Member] | Not Designated as Hedging Instrument [Member] | ||
Derivative Instruments, (Gain) Loss Recognized in Income, Net | ||
Other income, net - currency forward contracts | 719 | 102 |
Range Forward Contracts [Member] | Cash flow hedging [Member] | ||
Gains and losses related to cash flow hedges | ||
Gains recognized in other comprehensive (loss) income, net | 1,210 | 395 |
Losses reclassified from accumulated other comprehensive loss into cost of goods sold and other income, net | $ 453 | $ 159 |
Derivative Instruments and He_5
Derivative Instruments and Hedging Activities (Details Textual) € in Thousands, $ in Thousands | 3 Months Ended | |||
Sep. 30, 2020USD ($) | Sep. 30, 2019USD ($) | Sep. 30, 2020EUR (€) | Jun. 30, 2020USD ($) | |
Derivative Instruments and Hedging Activities (Textual) [Abstract] | ||||
Gains or losses recognized in earnings due to ineffectiveness and excluded from effectiveness testing | $ 0 | |||
Range Forward Contracts [Member] | ||||
Derivatives, Fair Value [Line Items] | ||||
Derivative, Notional Amount | $ 2,200 | |||
Net Investment Hedge Maturing on June 26, 2022 [Member] | ||||
Derivatives, Fair Value [Line Items] | ||||
Derivative, Notional Amount | 18,800 | € 16,000 | ||
Net Investment Hedging [Member] | ||||
Derivatives, Fair Value [Line Items] | ||||
Derivative, Amount of Hedged Item | € | € 15,900 | |||
Forward Starting Interest Rate Swap Contracts [Member] | ||||
Derivatives, Fair Value [Line Items] | ||||
Derivative, Notional Amount | 200,000 | |||
Net Investment Hedging [Member] | ||||
Derivatives, Fair Value [Line Items] | ||||
Gain (Loss) on Derivative Used in Net Investment Hedge, Net of Tax | (600) | $ 1,100 | ||
Designated as Hedging Instrument [Member] | Other Assets [Member] | Forward Starting Interest Rate Swap Contracts [Member] | ||||
Derivatives, Fair Value [Line Items] | ||||
Derivative Asset, Fair Value, Gross Asset | 431 | 20 | ||
Designated as Hedging Instrument [Member] | Other Liabilities [Member] | Forward Starting Interest Rate Swap Contracts [Member] | ||||
Derivatives, Fair Value [Line Items] | ||||
Derivative Liability, Fair Value, Gross Liability | $ 912 | $ 2,094 |
Restructuring and Related Charg
Restructuring and Related Charges - Restructuring Accrual (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Sep. 30, 2020 | Sep. 30, 2019 | |
Restructuring Reserve [Abstract] | ||
Beginning Balance | $ 47,366 | |
Restructuring Charges | 25,577 | $ 4,700 |
Asset Write-Down | (1,184) | |
Translation | 1,593 | |
Cash Expenditures | (14,993) | |
Ending Balance | 58,359 | |
Severance [Member] | ||
Restructuring Reserve [Abstract] | ||
Beginning Balance | 47,303 | |
Restructuring Charges | 24,393 | |
Asset Write-Down | 0 | |
Translation | 1,591 | |
Cash Expenditures | (14,928) | |
Ending Balance | 58,359 | |
Facilities [Member] | ||
Restructuring Reserve [Abstract] | ||
Beginning Balance | 0 | |
Restructuring Charges | 1,184 | |
Asset Write-Down | (1,184) | |
Translation | 0 | |
Cash Expenditures | 0 | |
Ending Balance | 0 | |
Other Restructuring [Member] | ||
Restructuring Reserve [Abstract] | ||
Beginning Balance | 63 | |
Restructuring Charges | 0 | |
Asset Write-Down | 0 | |
Translation | 2 | |
Cash Expenditures | (65) | |
Ending Balance | $ 0 |
Restructuring and Related Cha_2
Restructuring and Related Charges - Narrative (Details) - USD ($) $ in Thousands | 3 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Jun. 30, 2020 | |
Restructuring Cost and Reserve [Line Items] | |||
Restructuring Reserve | $ 58,359 | $ 47,366 | |
Restructuring and Related Cost, Incurred Cost | 28,600 | $ 8,000 | |
Restructuring Charges | 25,577 | 4,700 | |
Infrastructure [Member] | |||
Restructuring Cost and Reserve [Line Items] | |||
Restructuring and Related Cost, Incurred Cost | 2,600 | ||
Metal Cutting | |||
Restructuring Cost and Reserve [Line Items] | |||
Restructuring and Related Cost, Incurred Cost | 26,000 | ||
FY20 Restructuring Actions [Member] | |||
Restructuring Cost and Reserve [Line Items] | |||
Restructuring and Related Cost, Cost Incurred to Date | 54,800 | ||
FY20 Restructuring Actions [Member] | Infrastructure [Member] | |||
Restructuring Cost and Reserve [Line Items] | |||
Restructuring and Related Cost, Cost Incurred to Date | 8,300 | ||
FY20 Restructuring Actions [Member] | Metal Cutting | |||
Restructuring Cost and Reserve [Line Items] | |||
Restructuring and Related Cost, Cost Incurred to Date | 46,500 | ||
FY21 Restructuring Actions [Member] | |||
Restructuring Cost and Reserve [Line Items] | |||
Restructuring and Related Cost, Cost Incurred to Date | 70,400 | ||
FY21 Restructuring Actions [Member] | Minimum [Member] | |||
Restructuring Cost and Reserve [Line Items] | |||
Restructuring and Related Cost, Expected Cost | 90,000 | ||
FY21 Restructuring Actions [Member] | Maximum [Member] | |||
Restructuring Cost and Reserve [Line Items] | |||
Restructuring and Related Cost, Expected Cost | 100,000 | ||
FY21 Restructuring Actions [Member] | Infrastructure [Member] | |||
Restructuring Cost and Reserve [Line Items] | |||
Restructuring and Related Cost, Cost Incurred to Date | 5,500 | ||
FY21 Restructuring Actions [Member] | Metal Cutting | |||
Restructuring Cost and Reserve [Line Items] | |||
Restructuring and Related Cost, Cost Incurred to Date | 64,900 | ||
Cost of Sales [Member] | |||
Restructuring Cost and Reserve [Line Items] | |||
Restructuring Related Charges Recorded in Cost of Goods Sold or Operating Expense | 3,000 | $ 3,300 | |
Other Restructuring [Member] | |||
Restructuring Cost and Reserve [Line Items] | |||
Restructuring Reserve | 0 | 63 | |
Restructuring Charges | 0 | ||
Other Current Liabilities [Member] | |||
Restructuring Cost and Reserve [Line Items] | |||
Restructuring Reserve | 43,800 | 34,900 | |
Other Liabilities [Member] | |||
Restructuring Cost and Reserve [Line Items] | |||
Restructuring Reserve | $ 14,500 | $ 12,500 |
Stock-Based Compensation - Chan
Stock-Based Compensation - Changes in Stock Options (Details) | 3 Months Ended |
Sep. 30, 2020USD ($)$ / sharesshares | |
Changes in stock options | |
Options outstanding, June 30, 2020 | shares | 646,959 |
Options, Exercised | shares | (7,000) |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Forfeitures and Expirations in Period | shares | (4,514) |
Options outstanding, September 30, 2020 | shares | 635,445 |
Options vested and expected to vest, September 30, 2020 | shares | 635,445 |
Options exercisable, September 30, 2020 | shares | 635,445 |
Weighted Average Exercise Price, Options outstanding, June 30, 2020 | $ / shares | $ 33.60 |
Weighted Average Exercise Price, Exercised | $ / shares | 26.89 |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Forfeitures and Expirations in Period, Weighted Average Exercise Price | $ / shares | 54.65 |
Weighted Average Exercise Price, Options outstanding, September 30, 2020 | $ / shares | 33.52 |
Weighted Average Exercise Price, Option vested and expected to vest, September 30, 2020 | $ / shares | 33.52 |
Weighted Average Exercise Price, Options exercisable, September 30, 2020 | $ / shares | $ 33.52 |
Weighted Average Remaining Life, Options outstanding, September 30, 2020 | 2 years 8 months 12 days |
Weighted Average Remaining Life, Options vested and expected to vest, September 30, 2020 | 2 years 8 months 12 days |
Weighted Average Remaining Life, Options exercisable, September 30, 2020 | 2 years 8 months 12 days |
Aggregate Intrinsic value, Options outstanding, September 30, 2020 | $ | $ 1,389,000 |
Aggregate Intrinsic Value, Options vested and expected to vest, September 30, 2020 | $ | 1,389,000 |
Aggregate Intrinsic Value, Options exercisable, September 30, 2020 | $ | $ 1,389,000 |
Stock-Based Compensation - Ch_2
Stock-Based Compensation - Changes in Restricted Stock Units (Details) | 3 Months Ended |
Sep. 30, 2020$ / sharesshares | |
Restricted Stock Units - Performance Vesting [Member] | |
Changes in restricted stock awards | |
Unvested restricted stock awards, June 30, 2020, Shares | shares | 554,633 |
Granted, Shares | shares | 220,876 |
Vested, Shares | shares | (69,626) |
Share-based Compensation Arrangement by Share-based Payment Award, Non-Option Equity Instruments, Forfeitures and Expirations | shares | (100,000) |
Forfeited, Shares | shares | (31,063) |
Unvested restricted stock awards, September 30, 2020 | shares | 574,820 |
Weighted Average Fair Value, Unvested restricted stock awards, June 30, 2020 | $ / shares | $ 34.26 |
Weighted Average Fair Value, Granted | $ / shares | 33.49 |
Weighted Average Fair Value, Vested | $ / shares | 48.20 |
Share-based Compensation Arrangements by Share-based Payment Award, Options, Other Share Increase (Decrease) in Period, Weighted Average Exercise Price | $ / shares | 32.92 |
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Forfeitures, Weighted Average Grant Date Fair Value | $ / shares | 33.85 |
Weighted Average Fair Value, Unvested restricted stock awards, September 30, 2020 | $ / shares | $ 32.53 |
Restricted Stock Units - Time Vesting [Member] | |
Changes in restricted stock awards | |
Unvested restricted stock awards, June 30, 2020, Shares | shares | 1,039,695 |
Granted, Shares | shares | 695,840 |
Vested, Shares | shares | (377,543) |
Performance metric adjustments, net, Shares | shares | 0 |
Forfeited, Shares | shares | (51,310) |
Unvested restricted stock awards, September 30, 2020 | shares | 1,306,682 |
Weighted Average Fair Value, Unvested restricted stock awards, June 30, 2020 | $ / shares | $ 32.48 |
Weighted Average Fair Value, Granted | $ / shares | 30.96 |
Weighted Average Fair Value, Vested | $ / shares | 33.02 |
Weighted Average Fair Value, Performance Metric Not Achieved | $ / shares | 0 |
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Forfeitures, Weighted Average Grant Date Fair Value | $ / shares | 31.20 |
Weighted Average Fair Value, Unvested restricted stock awards, September 30, 2020 | $ / shares | $ 31.57 |
Stock-Based Compensation (Detai
Stock-Based Compensation (Details Textual) - USD ($) $ in Millions | 3 Months Ended | |
Sep. 30, 2020 | Sep. 30, 2019 | |
Stock-Based Compensation (Textual) [Abstract] | ||
Cash received from the exercise of capital stock option | $ 0 | $ 0.1 |
Stock Option [Member] | ||
Stock-Based Compensation (Textual) [Abstract] | ||
Unrecognized compensation cost | 0 | |
Total Intrinsic value of options exercised | 0.2 | |
Restricted Stock Units (RSUs) [Member] | ||
Stock-Based Compensation (Textual) [Abstract] | ||
Compensation expense related to time vesting and performance vesting restricted stock units | 6.7 | $ 7.8 |
Unrecognized compensation cost | $ 34.2 | |
Unrecognized compensation costs, weighted average period | 2 years 4 months 24 days |
Pension and Other Postretirem_3
Pension and Other Postretirement Benefits - Components of Net Periodic Pension Income (Details) - Pension plans contribution [Member] - USD ($) $ in Thousands | 3 Months Ended | |
Sep. 30, 2020 | Sep. 30, 2019 | |
Net periodic pension income | ||
Service cost | $ 416 | $ 450 |
Interest cost | 5,775 | 6,824 |
Expected return on plan assets | (13,346) | (13,456) |
Amortization of transition obligation | 23 | 22 |
Amortization of prior service cost (credit) | 8 | 12 |
Recognition of actuarial losses | 3,372 | 2,595 |
Settlement gain | 0 | (122) |
Net periodic pension income | $ (3,752) | $ (3,675) |
Pension and Other Postretirem_4
Pension and Other Postretirement Benefits - Components of Net Periodic Other Postretirement Benefit Cost (Details) - Other postretirement benefit plans [Member] - USD ($) $ in Thousands | 3 Months Ended | |
Sep. 30, 2020 | Sep. 30, 2019 | |
Net periodic other postretirement benefit costs | ||
Interest cost | $ 76 | $ 101 |
Amortization of prior service credit | (69) | (69) |
Recognition of actuarial loss | 77 | 64 |
Net periodic other postretirement benefit cost | $ 84 | $ 96 |
Inventories (Details)
Inventories (Details) - USD ($) $ in Thousands | Sep. 30, 2020 | Jun. 30, 2020 |
Inventories | ||
Finished goods | $ 313,266 | $ 318,071 |
Work in process and powder blends | 183,303 | 190,041 |
Raw materials | 74,314 | 75,589 |
Inventories at current cost | 570,883 | 583,701 |
Less: LIFO valuation | (62,144) | (61,254) |
Total inventories | $ 508,739 | $ 522,447 |
Inventories (Textual) [Abstract] | ||
Percentage of inventories valued by using LIFO method | 41.00% | 43.00% |
Long-Term Debt (Details)
Long-Term Debt (Details) - USD ($) | Feb. 14, 2012 | Sep. 30, 2020 | Jun. 30, 2020 | Jun. 07, 2018 |
Long-Term Debt (Additional Textual) [Abstract] | ||||
Fixed rate at fair market value | $ 643,400,000 | $ 630,200,000 | ||
ThreePointEightSevenFivePercentSeniorUnsecuredNotesDueInTwoThousandAndTwentyTwo [Member] | ||||
Long-Term Debt (Additional Textual) [Abstract] | ||||
Proceeds from Issuance of Senior Long-term Debt | $ 300,000,000 | |||
Debt Instrument, Interest Rate, Stated Percentage | 3.875% | |||
2018 Credit Agreement [Member] | ||||
Long-Term Debt (Textual) [Abstract] | ||||
Line of Credit Facility, Remaining Borrowing Capacity | $ 661,500,000 | |||
Borrowing outstanding under 2018 Credit Agreement | 38,500,000 | $ 500,000,000 | ||
Line of Credit Facility, Maximum Borrowing Capacity | $ 700,000,000 | |||
Line of Credit [Member] | ||||
Long-Term Debt (Textual) [Abstract] | ||||
Amended Net Debt to EBITDA Ratio, allowable adjustment for cash restructuring charges, amount | 120,000,000 | |||
Amended Net Debt to EBITDA Ratio, Maximum | 4.25 | |||
Consolidated Interest Coverage Ratio, Minimum | 3.5 | |||
Net Debt to EBITDA Ratio, allowable adjustment for cash restructuring charges, amount | 80,000,000 | |||
Net Debt to EBITDA Ratio, Maximum | 3.5 | |||
Net Debt to EBITDA Ratio, domestic cash allowed to net debt, amount, minimum | $ 25,000,000 |
Environmental Matters (Details)
Environmental Matters (Details) - USD ($) $ in Millions | Sep. 30, 2020 | Jun. 30, 2020 |
Environmental Remediation Obligations [Abstract] | ||
Reserves for Environmental Costs | $ 15.7 | $ 15.6 |
Accrued Environmental Loss Contingencies, Current | $ 6.1 | $ 6.1 |
Income Taxes (Details)
Income Taxes (Details) | 3 Months Ended | |
Sep. 30, 2020 | Sep. 30, 2019 | |
Income Tax (Textual) [Abstract] | ||
Effective tax rate | 12.10% | 33.70% |
Earnings Per Shares (Details)
Earnings Per Shares (Details) - shares shares in Thousands | 3 Months Ended | |
Sep. 30, 2020 | Sep. 30, 2019 | |
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Weighted Average Number of Shares Outstanding, Basic | 83,318 | 82,881 |
Earnings Per Share (Textual) [Abstract] | ||
Increase in weighted average shares due to dilutive effect of unexercised capital stock options and unvested restricted stock units | 606 | |
Weighted Average Number of Shares Outstanding, Diluted | 83,318 | 83,487 |
Unexercised capital stock options and restricted stock units excluded from computation of diluted EPS | 649 |
Equity (Details)
Equity (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Sep. 30, 2020 | Sep. 30, 2019 | |
Beginning Balance | $ 1,268,788 | $ 1,374,704 |
Net (loss) income | (20,860) | 7,410 |
Other comprehensive income (loss) | 32,872 | (30,283) |
Dividend reinvestment | 51 | 53 |
Capital stock issued under employee benefit and stock plans | 2,209 | 2,384 |
Purchase of capital stock | (51) | (53) |
Cash dividends | (16,627) | (16,565) |
Ending Balance | 1,266,382 | 1,337,650 |
Capital stock [Member] | ||
Beginning Balance | 103,654 | 103,026 |
Dividend reinvestment | 2 | 2 |
Capital stock issued under employee benefit and stock plans | 410 | 516 |
Purchase of capital stock | (2) | (2) |
Ending Balance | 104,064 | 103,542 |
Additional paid-in capital [Member] | ||
Beginning Balance | 538,575 | 528,827 |
Dividend reinvestment | 49 | 51 |
Capital stock issued under employee benefit and stock plans | 1,799 | 1,868 |
Purchase of capital stock | (49) | (51) |
Ending Balance | 540,374 | 530,695 |
Retained earnings [Member] | ||
Beginning Balance | 1,004,898 | 1,076,862 |
Net (loss) income | (21,675) | 6,466 |
Cash dividends | (16,627) | (16,565) |
Ending Balance | 966,596 | 1,066,763 |
Accumulated other comprehensive loss [Member] | ||
Beginning Balance | (417,242) | (373,543) |
Other comprehensive income (loss) | 31,594 | (28,891) |
Ending Balance | (385,648) | (402,434) |
Non-controlling interest [Member] | ||
Beginning Balance | 38,903 | 39,532 |
Net (loss) income | 815 | 944 |
Other comprehensive income (loss) | 1,278 | (1,392) |
Cash dividends | 0 | 0 |
Ending Balance | $ 40,996 | $ 39,084 |
Accumulated Other Comprehensi_3
Accumulated Other Comprehensive Loss - Components of and Changes in Accumulated Other Comprehensive (Loss) Income (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Sep. 30, 2020 | Sep. 30, 2019 | |
Accumulated Other Comprehensive (Loss) Income [Line Items] | ||
Accumulated Other Comprehensive Loss, Net of Tax | $ (417,242) | $ (373,543) |
Other comprehensive (loss) income before reclassifications | 28,568 | (31,032) |
Amounts reclassified from accumulated other comprehensive loss | 3,026 | 2,141 |
Net current period other comprehensive (loss) income | 31,594 | (28,891) |
Accumulated Other Comprehensive Loss, Net of Tax | (385,648) | (402,434) |
Accumulated Defined Benefit Plans Adjustment [Member] | ||
Accumulated Other Comprehensive (Loss) Income [Line Items] | ||
Accumulated Other Comprehensive Loss, Net of Tax | (232,634) | (222,270) |
Other comprehensive (loss) income before reclassifications | (3,310) | 2,607 |
Amounts reclassified from accumulated other comprehensive loss | 2,565 | 1,960 |
Net current period other comprehensive (loss) income | (745) | 4,567 |
Accumulated Other Comprehensive Loss, Net of Tax | (233,379) | (217,703) |
Accumulated Currency Translation Adjustment [Member] | ||
Accumulated Other Comprehensive (Loss) Income [Line Items] | ||
Accumulated Other Comprehensive Loss, Net of Tax | (181,027) | (147,595) |
Other comprehensive (loss) income before reclassifications | 30,668 | (34,034) |
Amounts reclassified from accumulated other comprehensive loss | 0 | 0 |
Net current period other comprehensive (loss) income | 30,668 | (34,034) |
Accumulated Other Comprehensive Loss, Net of Tax | (150,359) | (181,629) |
Accumulated Net (Loss) Gain from Designated or Qualifying Cash Flow Hedges [Member] | ||
Accumulated Other Comprehensive (Loss) Income [Line Items] | ||
Accumulated Other Comprehensive Loss, Net of Tax | (3,581) | (3,678) |
Other comprehensive (loss) income before reclassifications | 1,210 | 395 |
Amounts reclassified from accumulated other comprehensive loss | 461 | 181 |
Net current period other comprehensive (loss) income | 1,671 | 576 |
Accumulated Other Comprehensive Loss, Net of Tax | (1,910) | (3,102) |
Noncontrolling Interest [Member] | ||
Accumulated Other Comprehensive (Loss) Income [Line Items] | ||
Accumulated Other Comprehensive Loss, Net of Tax | (5,909) | (3,450) |
Other comprehensive (loss) income before reclassifications | 1,278 | (1,392) |
Net current period other comprehensive (loss) income | 1,278 | (1,392) |
Accumulated Other Comprehensive Loss, Net of Tax | (4,631) | (4,842) |
Reclassification out of Accumulated Other Comprehensive Loss [Member] | Accumulated Defined Benefit Plans Adjustment [Member] | ||
Accumulated Other Comprehensive (Loss) Income [Line Items] | ||
Income (Loss) from Continuing Operations, Including Portion Attributable to Noncontrolling Interest | (3,411) | (2,624) |
Reclassification out of Accumulated Other Comprehensive Loss [Member] | Accumulated Net (Loss) Gain from Designated or Qualifying Cash Flow Hedges [Member] | ||
Accumulated Other Comprehensive (Loss) Income [Line Items] | ||
Income (Loss) from Continuing Operations, Including Portion Attributable to Noncontrolling Interest | $ (611) | $ (240) |
Accumulated Other Comprehensi_4
Accumulated Other Comprehensive Loss - Reclassifications (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Sep. 30, 2020 | Sep. 30, 2019 | |
Reclassification Adjustment out of Accumulated Other Comprehensive Loss [Line Items] | ||
Currency exchange contracts | $ 4,019 | $ 2,681 |
Reclassification of unrealized loss on derivatives designated and qualified as cash flow hedges, tax | (150) | (59) |
Recognition of actuarial losses | 3,411 | 2,624 |
(Benefit) provision for income taxes | (2,877) | 3,766 |
Reclassification out of Accumulated Other Comprehensive Loss [Member] | Accumulated Net (Loss) Gain from Designated or Qualifying Cash Flow Hedges [Member] | ||
Reclassification Adjustment out of Accumulated Other Comprehensive Loss [Line Items] | ||
Reclassification of unrealized loss on derivatives designated and qualified as cash flow hedges, tax | (150) | (59) |
Total before tax | 611 | 240 |
Net of tax | 461 | 181 |
Reclassification out of Accumulated Other Comprehensive Loss [Member] | Accumulated Defined Benefit Plans Adjustment [Member] | ||
Reclassification Adjustment out of Accumulated Other Comprehensive Loss [Line Items] | ||
Amortization of transition obligations | 23 | 22 |
Amortization of prior service credit | (61) | (57) |
Recognition of actuarial losses | 3,449 | 2,659 |
Total before tax | 3,411 | 2,624 |
(Benefit) provision for income taxes | (846) | (664) |
Net of tax | (2,565) | (1,960) |
Reclassification out of Accumulated Other Comprehensive Loss [Member] | Forward Starting Interest Rate Swap Contracts [Member] | Accumulated Net (Loss) Gain from Designated or Qualifying Cash Flow Hedges [Member] | ||
Reclassification Adjustment out of Accumulated Other Comprehensive Loss [Line Items] | ||
Forward starting interest rate swaps | 635 | 611 |
Reclassification out of Accumulated Other Comprehensive Loss [Member] | Currency Forward Contracts [Member] | Accumulated Net (Loss) Gain from Designated or Qualifying Cash Flow Hedges [Member] | ||
Reclassification Adjustment out of Accumulated Other Comprehensive Loss [Line Items] | ||
Currency exchange contracts | $ (24) | $ (371) |
Accumulated Other Comprehensi_5
Accumulated Other Comprehensive Loss Other Comprehensive Income - Income Tax Allocated to Each Component (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Sep. 30, 2020 | Sep. 30, 2019 | |
Other Comprehensive Income - Income Tax Allocated to Each Component [Abstract] | ||
Unrealized gain on derivatives designated and qualified as cash flow hedges, before tax | $ 1,603 | $ 523 |
Unrealized gain on derivatives designated and qualified as cash flow hedges, tax | (393) | (128) |
Unrealized gain on derivatives designated and qualified as cash flow hedges, net of tax | 1,210 | 395 |
Reclassification of unrealized loss on derivatives designated and qualified as cash flow hedges, before tax | 611 | 240 |
Reclassification of unrealized loss on derivatives designated and qualified as cash flow hedges, tax | (150) | (59) |
Reclassification of unrealized loss on derivatives designated and qualified as cash flow hedges, net of tax | 461 | 181 |
Unrecognized net pension and other postretirement benefit (loss) gain, before tax | (4,382) | 3,469 |
Unrecognized net pension and other postretirement benefit (loss) gain, tax | 1,072 | (862) |
Unrecognized net pension and other postretirement benefit (loss) gain, net of tax | (3,310) | 2,607 |
Reclassification of net pension and other postretirement benefit loss, before tax | 3,411 | 2,624 |
Reclassification of net pension and other postretirement benefit loss, tax | (846) | (664) |
Reclassification of net pension and other postretirement benefit loss | 2,565 | 1,960 |
Foreign currency translation adjustments, before tax | 32,106 | (35,579) |
Foreign currency translation adjustments, tax | (160) | 153 |
Foreign currency translation adjustments, net of tax | 31,946 | (35,426) |
Other comprehensive income (loss), before tax | 33,349 | (28,723) |
Other comprehensive income (loss), tax | (477) | (1,560) |
Other comprehensive income (loss), net of tax | $ 32,872 | $ (30,283) |
Goodwill and Other Intangible_3
Goodwill and Other Intangible Assets - Carrying Amount of Goodwill Attributable to Each Segment (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Sep. 30, 2020 | Jun. 30, 2020 | |
Goodwill [Roll Forward] | ||
Gross goodwill | $ 1,086,278 | $ 1,081,452 |
Accumulated impairment losses | (810,872) | (810,872) |
Goodwill, Beginning Balance | 270,580 | |
Change in gross goodwill due to translation | 4,826 | |
Goodwill, Ending Balance | 275,406 | |
Infrastructure [Member] | ||
Goodwill [Roll Forward] | ||
Gross goodwill | 633,211 | 633,211 |
Accumulated impairment losses | (633,211) | (633,211) |
Goodwill, Beginning Balance | 0 | |
Change in gross goodwill due to translation | 0 | |
Goodwill, Ending Balance | 0 | |
Metal Cutting | ||
Goodwill [Roll Forward] | ||
Gross goodwill | 453,067 | 448,241 |
Accumulated impairment losses | (177,661) | $ (177,661) |
Goodwill, Beginning Balance | 270,580 | |
Change in gross goodwill due to translation | 4,826 | |
Goodwill, Ending Balance | $ 275,406 |
Goodwill and Other Intangible_4
Goodwill and Other Intangible Assets - Components of Other Intangible Assets (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Sep. 30, 2020 | Jun. 30, 2020 | |
The components of intangible assets | ||
Accumulated amortization | $ (142,568) | $ (137,386) |
Intangible Assets, Gross (Excluding Goodwill) | 272,630 | 269,954 |
Trademarks [Member] | ||
The components of intangible assets | ||
Gross carrying amount, Indefinite | 11,653 | 11,160 |
Technology-based and other [Member] | ||
The components of intangible assets | ||
Gross carrying amount, finite | 33,230 | 32,713 |
Accumulated amortization | (23,363) | (22,612) |
Customer-related [Member] | ||
The components of intangible assets | ||
Gross carrying amount, finite | 182,809 | 181,408 |
Accumulated amortization | (91,448) | (88,112) |
Unpatented technology [Member] | ||
The components of intangible assets | ||
Gross carrying amount, finite | 31,738 | 31,586 |
Accumulated amortization | (18,590) | (17,890) |
Trademarks [Member] | ||
The components of intangible assets | ||
Gross carrying amount, finite | 13,200 | 13,087 |
Accumulated amortization | $ (9,167) | $ (8,772) |
Minimum [Member] | Technology-based and other [Member] | ||
The components of intangible assets | ||
Useful life related to technology-based intangible assets | 4 years | |
Minimum [Member] | Customer-related [Member] | ||
The components of intangible assets | ||
Useful life related to technology-based intangible assets | 10 years | |
Minimum [Member] | Unpatented technology [Member] | ||
The components of intangible assets | ||
Useful life related to technology-based intangible assets | 10 years | |
Minimum [Member] | Trademarks [Member] | ||
The components of intangible assets | ||
Useful life related to technology-based intangible assets | 5 years | |
Maximum [Member] | Technology-based and other [Member] | ||
The components of intangible assets | ||
Useful life related to technology-based intangible assets | 20 years | |
Maximum [Member] | Customer-related [Member] | ||
The components of intangible assets | ||
Useful life related to technology-based intangible assets | 21 years | |
Maximum [Member] | Unpatented technology [Member] | ||
The components of intangible assets | ||
Useful life related to technology-based intangible assets | 30 years | |
Maximum [Member] | Trademarks [Member] | ||
The components of intangible assets | ||
Useful life related to technology-based intangible assets | 20 years |
Segment Data - Sales and Operat
Segment Data - Sales and Operating (Loss) Income by Segment (Details) - USD ($) $ in Thousands | 3 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Jun. 30, 2020 | |
Segment Reporting Information [Line Items] | |||
Assets | $ 2,558,996 | $ 3,037,591 | |
External sales: | |||
Sales | 400,305 | $ 518,088 | |
Operating (loss) income: | |||
Total operating (loss) income | (17,178) | 16,376 | |
Interest expense | 10,578 | 7,881 | |
Other income, net | (4,019) | (2,681) | |
(Loss) income from continuing operations before income taxes | (23,737) | 11,176 | |
Infrastructure [Member] | |||
External sales: | |||
Sales | 152,429 | 194,003 | |
Operating (loss) income: | |||
Total operating (loss) income | (7,268) | 2,690 | |
Corporate [Member] | |||
Operating (loss) income: | |||
Total operating (loss) income | 820 | 240 | |
Metal Cutting | |||
External sales: | |||
Sales | 247,876 | 324,085 | |
Operating (loss) income: | |||
Total operating (loss) income | $ 23,626 | $ (19,306) |
Segment Data Disaggregation of
Segment Data Disaggregation of Revenue (Details) | 3 Months Ended | |
Sep. 30, 2020 | Sep. 30, 2019 | |
General Engineering [Member] | ||
Disaggregation of Revenue [Line Items] | ||
Revenues, percent | 46.00% | 45.00% |
Transportation [Member] | ||
Disaggregation of Revenue [Line Items] | ||
Revenues, percent | 18.00% | 18.00% |
Aerospace [Member] | ||
Disaggregation of Revenue [Line Items] | ||
Revenues, percent | 5.00% | 7.00% |
Energy [Member] | ||
Disaggregation of Revenue [Line Items] | ||
Revenues, percent | 15.00% | 16.00% |
Earthworks [Member] | ||
Disaggregation of Revenue [Line Items] | ||
Revenues, percent | 16.00% | 14.00% |
Americas [Member] | ||
Disaggregation of Revenue [Line Items] | ||
Revenues, percent | 45.00% | 50.00% |
EMEA [Member] | ||
Disaggregation of Revenue [Line Items] | ||
Revenues, percent | 31.00% | 30.00% |
Asia Pacific [Member] | ||
Disaggregation of Revenue [Line Items] | ||
Revenues, percent | 24.00% | 20.00% |
Infrastructure [Member] | General Engineering [Member] | ||
Disaggregation of Revenue [Line Items] | ||
Revenues, percent | 34.00% | 34.00% |
Infrastructure [Member] | Energy [Member] | ||
Disaggregation of Revenue [Line Items] | ||
Revenues, percent | 25.00% | 29.00% |
Infrastructure [Member] | Earthworks [Member] | ||
Disaggregation of Revenue [Line Items] | ||
Revenues, percent | 41.00% | 37.00% |
Infrastructure [Member] | Americas [Member] | ||
Disaggregation of Revenue [Line Items] | ||
Revenues, percent | 55.00% | 63.00% |
Infrastructure [Member] | EMEA [Member] | ||
Disaggregation of Revenue [Line Items] | ||
Revenues, percent | 21.00% | 18.00% |
Infrastructure [Member] | Asia Pacific [Member] | ||
Disaggregation of Revenue [Line Items] | ||
Revenues, percent | 24.00% | 19.00% |
Metal Cutting | General Engineering [Member] | ||
Disaggregation of Revenue [Line Items] | ||
Revenues, percent | 54.00% | 52.00% |
Metal Cutting | Transportation [Member] | ||
Disaggregation of Revenue [Line Items] | ||
Revenues, percent | 29.00% | 28.00% |
Metal Cutting | Aerospace [Member] | ||
Disaggregation of Revenue [Line Items] | ||
Revenues, percent | 9.00% | 12.00% |
Metal Cutting | Energy [Member] | ||
Disaggregation of Revenue [Line Items] | ||
Revenues, percent | 8.00% | 8.00% |
Metal Cutting | Americas [Member] | ||
Disaggregation of Revenue [Line Items] | ||
Revenues, percent | 39.00% | 42.00% |
Metal Cutting | EMEA [Member] | ||
Disaggregation of Revenue [Line Items] | ||
Revenues, percent | 37.00% | 37.00% |
Metal Cutting | Asia Pacific [Member] | ||
Disaggregation of Revenue [Line Items] | ||
Revenues, percent | 24.00% | 21.00% |