Kennametal added $570.2 million of inventory in a year when its gross profit increased by $371.9 million. That is the physical shape of this filing: a much larger business on the income statement, with a lot more metal sitting on the balance sheet.
The surface reading is powerful. For the twelve months ended June 30, revenue rose from $2.0 billion to $2.4 billion, while operating income more than tripled to $472.5 million. Net income reached $342.4 million, up from $93.1 million.
Then the cash-flow statement changes the lighting. Operating cash flow went from $208.3 million to negative $4.0 million, and cash fell to $95.8 million. The company’s cash conversion moved from 2.24 times net income to effectively zero, despite the sharp rise in reported earnings.
Kennametal attributes part of the sales increase to both price and demand, with different end markets supplying the lift. The Americas benefited from General Engineering, Aerospace & Defense build rates, and Energy initiatives.
"On a regional basis, sales in the Americas increased primarily due to pricing and indirect channel demand within General Engineering, improving build rates in Aerospace & Defense and data center power generation initiatives in Energy."
Kennametal, 2026 10-K
That is a real operating explanation for the 19.8% revenue growth, not merely a spreadsheet effect. Asia Pacific also got help from price and General Engineering demand, while Infrastructure revenue rose 28.4% to $959.3 million.
The cash shortfall came from working capital, and inventory did most of the heavy lifting. Kennametal says the increase was tied to rising tungsten prices, along with higher receivables and advance payments to vendors securing raw-material supply.
"The increase in working capital was primarily driven by an increase in inventories of $570.2 million resulting from rising tungsten prices, an increase in accounts receivable of $113.0 million and an increase in other current assets of $94.0 million, which consisted primarily of prepaid assets and advance payments made to certain vendors to secure raw material supply."
Kennametal, 2026 10-K
Inventory more than doubled to $1.1 billion, while accounts receivable rose 38.3%. The filing gives the reason for the inventory increase. It does not provide a separate explanation for every movement in receivables and other current assets.
Margins also recovered sharply: gross margin rose from 30.4% to 41.2%, and operating margin from 7.3% to 20.1%. That puts the latest year well above the weak 2025 base, when revenue was $2.0 billion and operating margin was 7.3%, but the cash statement says the recovery required substantially more capital tied up in the business.
Capital spending actually fell 13.6% to $76.9 million, so the cash pressure was not a factory-building spree. At the latest close, Kennametal shares were $30.26, down 4.1% on Aug. 11. The next quarterly report’s inventory and operating-cash figures will show whether this balance-sheet build is still the dominant accounting feature of the business.
Kennametal reported a profit surge alongside rising tungsten prices, and cash got stuck in the pile.