What is Kennametal's expected normalized earnings power for fiscal 2027 once the temporary benefits of higher tungsten p

Short answer

There is no single official "normalized, no-tungsten-windfall" earnings number for fiscal 2027 in the evidence. Kennametal’s official guidance is for adjusted EPS of $4.15 to $5.15, midpoint about $4.65, on sales of $3.33 billion to $3.45 billion [1][5][6][72][79]. That guidance assumes tungsten prices stay stable and still includes temporary tungsten-related price-versus-cost timing benefits [73][74][80].

One published analysis puts the clean, no-tungsten-windfall normalized EPS for fiscal 2027 at $1.80 to $2.00 [24]. Management has also used its own "clean" baseline of roughly $1.63 to $1.64 per share, which removes the tungsten price/raw-material timing benefit and variable-compensation effects [59][64][86].

Why the reported numbers are so different

Tungsten is a major raw material for Kennametal products. When its price spiked sharply, Kennametal could raise product prices before the higher raw-material costs fully flowed through its results, creating a temporary timing profit that management has explicitly described as temporary [16][19][27].

In fiscal 2026, the company reported record adjusted EPS of $4.57 and adjusted operating margin of 20.5%, up from 8.0% a year earlier [7][8]. That jump was driven partly by about $316 million of favorable timing between raw-material-related pricing and raw-material costs, with about $252 million of that occurring in the fourth quarter alone [10][11]. Management credited record results to pricing in an unprecedented tungsten environment, volume growth, and cost improvement efforts [9][44].

For fiscal 2027, the official adjusted EPS guide of $4.15 to $5.15 still includes about $0.39 per share of favorable raw-material pricing timing [74][80]. The first-quarter guide of $2.50 to $2.80 includes about $2.25 of that timing benefit, which management expects to reverse later in the year [4][47][71]. So the official guide is not a clean, tungsten-free number.

The main normalized estimate

The clearest direct estimate in the evidence is a normalized fiscal 2027 EPS range of $1.80 to $2.00, which assumes the business is running at its restructured cost base with modest volume recovery and no commodity windfall [24].

That estimate was built by stripping about $2.45 of price/raw-material timing benefit from an earlier fiscal 2026 adjusted EPS guidance midpoint of $3.88, leaving base EPS of roughly $1.43 [17][20]. Adding about $0.40 per share of structural fiscal 2027 improvements, such as a compensation reset tailwind and additional restructuring savings, brings the estimate to around $1.80 to $2.00 [21][23][24]. This is an outside analyst-style estimate, not a company target.

Management’s own clean comparable figure is lower-level but consistent in spirit: CFO Patrick Watson described a clean fiscal 2026 EPS baseline of about $1.63 to $1.64 after removing the tungsten price/raw-material benefit and variable-compensation effects [59][64][86].

What management said about sustaining the margins

Management did not describe the record margin level as a normal run rate. It said the favorable tungsten timing benefit should carry through the first half of fiscal 2027, with the largest impact in the first quarter, then normalize in the second half if tungsten prices stay flat [18][57][58][60]. By the beginning of the third quarter, the benefit should be materially behind the company, with tungsten pricing and costing expected to be aligned [75][81].

Management also pointed to fiscal 2027 as the transition year. It expects the second half of fiscal 2027 to return to more normal profitability and models a fourth-quarter EBITDA margin in the mid-teens as a clean starting point for fiscal 2028 and beyond [60][82]. CFO Patrick Watson added that, after stripping out unusual items like price/raw timing benefits and higher variable compensation, underlying volume leverage was in line with historical norms [37]. In metal cutting, price increases typically lag raw-material cost changes by three to six months, which reinforces that part of the recent margin lift is timing-related [38].

For the lasting, non-tungsten part of the improvement, management pointed to structural actions:

• A planned $125 million in cost-out by the end of fiscal 2027 [3].
• Restructuring savings targets increased to $110 million by the end of fiscal 2027, with $27 million already booked [49][55][62].
• About $20 million of fiscal 2027 tailwind from performance-based compensation resetting to target levels, plus $10 million of additional restructuring savings, which management described as structural gains that compound regardless of tungsten prices [21][22][61].
• Continued commitment to share-gain initiatives, continuous-improvement actions, and portfolio optimization to enhance margins [45][84].
• Encouraging volume trends across several end markets, which management expects to support sales growth through fiscal 2027 [12][43].

Management also acknowledged that some recent share gains are a mix of structural wins and temporary supply-driven opportunities, and the focus is on converting those wins into lasting customer relationships [39][40].