Kennametal (KMT) 3 Aug 212021 Q4 Earnings call transcript

Good morning. I would like to welcome everyone to Kennametal's Fourth Quarter Fiscal 2021 Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer session. [Operator Instructions] Please note that this event is being recorded. turn Investor over Relations. to Vice Kelly like of President now the to conference Boyer, I'd Please ahead. go

Thank you, fiscal operator. release website. joining evening, us Welcome, issued and everyone, and review we slides fourth thank posted Kennametal's our quarter on earnings and our XXXX presentation Yesterday to results. press you our for

be will Boyer, slide President Investor of that Vice today's to We deck to Relations. referring Kelly call. I'm

such, President and discussion could contains and implied statements. Chris to are in Financial Joining detailed time, me filings. involve questions. factors uncertainties direct risks Damon by President the to of cause forward-looking to differ Kennametal's Chief expressed and and forward-looking SEC Audia, uncertainties comments performance that Executive call At and your like assumptions, Vice we the our materially that Chris number on constitute After disclosure Rossi, or as Officer; remarks, or will actual Chief and such Officer. today this prepared and Today's a results, company's line those statement. would achievements in risk attention from forward-looking the Damon's I These are open statements for

measures call financial turn most at we on now website. discussing addition, Chris. be on Form GAAP believe and of I'll our the today. back to And that, the directly X-K the our we non-GAAP will to Reconciliations financial comparable In can found with that are measures over be slide deck

And Thank thanks joining Good today. you, for Kelly. morning, the everyone. call

our financial in some the fourth finally, will there, year, comments some more comments I'll before for the of questions. detail. by I'll outlook opening review results followed And an Damon with call, overview the From start and general today's the quarterly summary make For line quarter. on

achieved year ended initiatives, serve particularly and our note, the safely simplification/modernization. market heading additional into fiscal at brought a achievement. of We in year And benefits time. in while despite Now year a that by simplification/modernization in $XXX to transforming 'XX line COVID-XX range and end continue strong on we the 'XX, initiatives operate savings investment this the we envisioned simplification/modernization drive continue customers with including target year with program, In is commercial operational 'XX, program notable XXXX the have may despite than obvious The investment. excellence momentum strategic total 'XX to to are challenges, in we slide our savings fiscal invest fiscal of the lower two. fiscal year advancement from turning to continued will to we the This marked enabled that and the in our million, our from Investor Day, positive volumes December recovery announced company.

already as program for of year strong leverage, operating recover, structural are contributing in and underlying 'XX fact, which the to cost expect volumes In in 'XX savings beyond. fiscal and we fiscal continue and year QX saw the to QX

designed new us in at is Innovation gain general in Trade new product indexable and to share the our higher These and Golden some examples productivity share, include improve a was of In drive innovation, in our the modernized engineering. International XXXX gain HARVI Machine growth will general Edge addition, gain. customer Show China And platform, end to processes Product and which especially investments mill, milling Best I future recent for Tool Award helping aerospace X-XX, customer of enable levels TE winner share and which service engineering. Mill investment

fit investments We for top able billion in competitors our motor point purpose application a finally, can tool multi electric by as a for without on. availability make major Reamer, manufacturer in space previously a now and to at which of been price also in win selected saw We of with not a modernization. as dollar that this be major vehicle to have the products, not electric which focused would And was casings. our modernization vehicle RIQ of produced win space result part our cutting additive had a manufacturing, we over metal

infrastructure We are of seeing energy We're in with improve leveraging and progress global making is mining purpose adjacencies. their components wind for expand machining this our to applications, business growth for in product of engineering market the the broader successfully growth. reach and renewable as space portfolio outpacing turbines such investments excellent into simplification/modernization also fit general our segment success and

our confident to excited the and So improved on as gain profitability and we looking we for economic growth, returns investment, deliver cycle. share additional forward, simplification/modernization are it leverage throughout

of on a picking markets, decline QX aerospace. We underlying the in prior of three. sequential markets. end on a all across the posted aerospace was regions Now growth let's fourth of leading year however, quarter. organic the up in slide noting, growth, momentum basis, quarter. positive except It's XX% markets and end worth saw We a summary one XX% review On year-over-year growth a posted versus and all that basis, end our

turn year. slide a shows the on quarter. full quarter left the relative sales to the XX.X%, the volume the cash the and to was for basis Graph Our absorption, to $XX $X.XX adjusted year. actions downturns. cost million margin million was quarter on temporary mainly simplification/modernization by Please reversal EBITDA Free rolling four the control during of Great downturn the EPS sales for associated level compare operating $XXX taken incremental margin to offset performance our and Adjusted through by increasing driven prior increased benefits, flow Recession. in prior four our the for to partially

XXX improved leverage demonstrated five. the our margin. points an shows that believe continue that the slide supported margin. on operating from in we graph investments, trends 'XX, illustrating showing the basis both at strong corresponding these as current are revenue the our lines in year The adjusted margins and While were upswing trough And the downturn, will the cost operating simplification/modernization fiscal note through Also by on higher this right structure. trend substantially

even XX% operating from on a sales. You can year-over-year X% on on increase strong a consider you over the basis. evident impressive prior by took we in million a leverage quarter. with sequential Damon. when temporary we see the to turn it's actions slide also in operating the basis, $XX that that, roughly is year more call income This And of cost And me the increased let

with morning, And a reported Chris. everyone. begin and slide operating Thank of adjusted you, on review on both six results will QX our basis. I good a

from operational excellence. year-over-year on focus leverage continued and operating the As highlight and results Chris we commercial improved demand mentioned, strong our significantly now trends demonstrating are our

year. million quarter, an XX% of the $XXX $XXX XX% the and quarter improved low from of For the year-over-year fourth in on sales organic last basis million

$X.XX positive Adjusted year-over-year hold of sales, this basis The expenses partially currency on XX% seven. of level. to sales the XX.X%, $XXX up billion positive of in million simplification/modernization in quarter $XX reversal detail to million, fiscal approximately have quarter. margin volumes to XX.X% quarter. to billion XX% the The temporary this year the higher the volumes year. mix bringing $X.XX or higher Foreign operating basis, last sales close effect the we the quarter. cost taken effect third and negative highlighted and 'XX, found detailed of related X%. Simplification/modernization to made savings our last prior previous to adjusted in increased the The quarter, operations of total The increased temporary on points a able slightly in decline X% have offset effect of reduced target in last the XX.X% business appendix. an reflecting and EBITDA followed ability actions $X.XX bridge $X.X strength COVID-XX and adjusted our point price prior as our cutting $X.XX end This the cost a to reflecting up for perspective, the benefits margin Transportation in increased based. were On contributed segments structural performance timing and a on of as expenses operating $X.XX another approximately the by XXX and an versus $X.XX engineering versus performance quarter to headwind. year. of days target tax Adjusted time we year-over-year. at organically and FY The reflects in of to since the the slight in be broad data income, in XX%. GILTI of achieve more actions reduced adjusted Energy Nevertheless, gross eight per over had strongest to from quarter of margin The India up results the year, improving in to of cost XX.X% the year-over-year this was share compared of million XX%. effect margin of year-over-year than period. nine points year can by the absorption, profit $XXX another confirming with reached the this from due quarter. is validation Asia year was year All quarter raw QX XX% year. to modest the The is main as was improved a pretax to year performance fiscal regions our fourth adjusted our achieved of incremental end reported a Slides excellence. margin year-over-year XX% at increases the in earnings first the was well and points time adjusted and we GAAP earlier $X.X million slide progress related due on an million The turned quarter. by EBITDA period. a XX% $X.XX sales per by program. followed the year-over-year. XX% full is of a total initiatives year-over-year XX.X% $XX and Pacific in Americas sales market based year on quarters this third roughly rate challenges EBITDA demand yet prior the to actions another fiscal up well or to XXXX. and operations normalized share was the the associated XX.X%, positive a market versus this with in largest EPS in full in rate cost basis subsidies. EMEA amounted the was China Metal improvements of We was adjusted in loss And were X% the in reversal for margins growth $X.XX effective XX%, negative continuing on drivers operational posted basis, as 'XX despite expected. quarterly XX% the increasing From commercial effective of last and EPS year approximately offset of and increase bucket XX% positive a higher at recovery year sales was growth, than year general of for operating $X.XX the $XXX Pacific favorable the this demand temporary tax last adjusted from [ph] contributed prior $X.XX related are tax simplification/modernization as per XXX point as was year taken level up adjusted The materials, our share rate quarter slowing at successful Asia XX% the EBITDA China XX.X% prior XXX quarter year in in surge execution to sales basis the that the Adjusted due effective The cases. was on ongoing wind lower

year-over-year, showed Although X% the it sequential aerospace XX%. up declined improvement strongest

production. fiscal to their quarter metal to our their first improve cutting align Based on supply addition customers, temporary challenges strong to transportation general persist positive. factories Transportation energy thereafter. start chain which we comments better slow due these to to sequentially engineering and like declined was on a to and In XX% our plants with of engine aerospace, into force expect challenges, sequential overall showed also customers basis, to sequentially, improvement slightly signs the from

mix situation price year offset XXX by and basis points actions different taken raw year to and to simplification/modernization benefits cost However, was modest the The volume continues margin the prior be customer-by-customer. increase associated Adjusted primarily absorption, XX.X% partially and fluid last driven temporary compared operating to and material benefits, quarter. improved in and by a X.X% headwind.

XX%, year spots increased respectively. Americas the in in were to and this at Earthworks Turning in and operating margin FX the and of sales the was in forestry general to largest up results effect year-over-year to end prior nine. X% a taken the offset primarily days improvement higher decline from XX%. XX% absorption, materials, driven and Americas in the XX% were in quarter and reports and Organic XX% year-over-year increase by amount XX.X% positive the versus simplification/modernization By on by slide temporary respectively. X%, year last XX% energy, and prior year driven Adjusted The slight The EMEA was sales cost XX.X% the Regionally, raw Asia up volumes, at benefits, partially a from infrastructure quarter. in our at XX% by and and agriculture increased contributed actions price was bright engineering construction. and business and mix. then market, associated period. EMEA XX%. positively

free cash balance sheet our Now flow. turning to review slide XX and to operating

strengthen liquidity maturity strong a flat $XXX At approximately free and percentage of fiscal balance even a capital position, sales capital continue end, down we revolver the million to decreased sheet our sequentially. increased. to operating working We profile. cash relatively availability year our very continue during year-over-year of $XX flow million million. on cash and approximately basis, working year On have of focus and XX.X%, $XXX as had as debt sales to healthy was it Primary maintain combined

target working year. the XX%, to approach we end capital of by fiscal remains this primary Our expect which

were for to million $XXX cash on million year-over-year Our $XX spend approximately with last for and million, of $X free million due with Net in a is basis a year, million, $XX fourth our income decrease the year. prior was cash reflecting compared a $XX million, volume full capital free quarter operating $XXX quarter negative bringing the the operating the higher flow leverage. of expectations. operating net This expenditures flow year to line from significant similar strong to year capital total increase,

dividend appendix. on slide XX $XX million the paid The the sheet balance in quarter. of also We in full the be found can

challenges Now let's the our sales the in in is range with will year-over-year million. review Starting point, sequential turn than transportation. At normal we and At the the $XXX decline, $XXX supply in expect the approximately sequential to we X% sales to which this outlook growth detail. to our of point assumed XX% be there outlook, have stronger more implies be of change slide first approximately quarter, mid QX mid QX the significant pattern. XX of to to chain in no million

expect start persist and We challenges fiscal these our thereafter. into to quarter first to to improve sequentially

the to affected be do with expect continues fluid. lockdowns Delta to additional However, we COVID-XX situation adversely demand from not variant. see associated Also, the

planning shutdowns and Lastly, we our quarter the EMEA typical for vacation summer customers. first for are extended

and we Also, taken to million year-over-year despite tax range at XX%, increase to temporary adjusted and outlook, million minimum $X year-over-year, the current depreciation a expect million effective in year. be of XX% the $XX be in least XXX% we of our to last will to expect Assuming year-over-year. income operating $X improve by million and rate related the to to cost $XX actions QX [ph] headwinds adjusted amortization

expect to flow typical in we quarter. is the slightly first negative, operating Lastly, free be cash which

may leverage excluding Regarding in remaining the we in cost environment. in this which remains and quarter-to-quarter. to $XX scenario. time, approximately achieve any visibility will last operating QX. return million leverage million at annual $XX annual QX important headwinds of from in year. Also, full that is vary year, the note year-over-year we that patterns confident $XX mind, taken But year, Keep actions expect million leverage to are the temporary the it's strong approximately throughout growth to of [ph] will Furthermore, in current exceed operating limited we normal would continue sequential growth this

as quarter, year. example, For the after temporary to cost be pricing greatest than level, our adjusting QX normal the leverage in actions, materials has of effect higher of the for combined remainder expected to raw compared the first operating and the is annualized

the full for other to on Moving variables year.

expect expenditures expected million. consistent $XXX the amortization to range and to $XX rate to is and million to We $XXX of be effective to tax of million Capital will million range increase $XX adjusted this year-over-year year $XXX $XXX to of with Depreciation in million XX% XX%. an a million.

with income, in operational I'll our to long-term target, capital will earlier, Chris. the commercial end transforming working our with generation continued flow this year. expect we And trend primary towards I execution and by free excellence the our As the of the which initiatives. fiscal demonstrates company cash back call of goal our by of translate to operating approximately line XXX% further progress mentioned turn in that, Together, XX% net to and adjusted over

Damon. you, Thank

we to turn closing the to I'd like some line Before Please slide open for remarks. XX. questions, make

Looking ahead are and our net leverage approximately footprint 'XX, drive QX's to leveraging operating year profitability, as we momentum cash growth income. higher excited well at in off to strong as by of fiscal and build modernized flow XXX%

with initiatives. And excellence that, We further year next calendar line which the of to sequential early in summary, to achieve to questions. markets, our our strategic as and at get operator, for provide fit for excellence next we our to the will outlining that market targeted on end expect be sales And please details recovery we remains the to In we growth open continuing gaining of look And I outpace planned tentatively normal fiscal our aimed visibility This to to driven at I commercial where for the further EBITDA right is limited these 'XX $X.X our growth throughout be billion Day, year. more end year. We'll share by both reached expect growth will now, initiatives, initiatives purpose offering. closer ability year date. Investor target billion the the demonstrate performance and details operational when trends believe execute on forward sales market quarterly adjusted strategic by $X.X commercial a including though our continue.

[Operator go first question Thank ahead. Jefferies. from Instructions] Our comes you. Volkmann Stephen Please from

Hi. there kind of or relative what Thanks. to the Good channel a sort morning, I channel, growth? shortages distributor also we the guys. wonder inventory thereof distributor in lack or any minute on seeing can spend specifically? of levels are you on And if comment

EMEA more think I overall, in being We're have we're inventory of and to in Steve, Yeah. attitude cautious align little demand. still US. in see But a - know, activity terms little I customers think Pacific cutting, starting you in mainly restocking modest the I metal and bit this restocking, guess that modestly a trying to in Asia with of

that's So there. what we see

more On the recovery, end by the methodical the infrastructure issue cutting a levels approach We as still inventory we little a be side, there there big see snapback a in usually across the think we you markets. when normal all a caused lot restocking. - direction. but in appear know, right the there's bit But moving of can customer really metal that. But for again, the don't see is, industry

can was some it take through cost? And then take of months? in us positive outlook detail the It Damon, looks just you through And next price that maybe, few kind Great. more just on can your you Okay. of us for and both sort segments.

Steve. Yeah,

were the normally seeing sides and marginally the about both business. of in we versus positive quarter excuse had fourth increases of lag that have - positive quarter quarter, did raws the some me, were The in call. a place some put we pricing price raw on for team So that And us, in two we actions third had QX. so the were mentioned in business as we in both the see materials we units

as see won't of you as until here, here quarter start cost now actions remarks materials well benefit really are in will to the first really our in pricing the QX. pre heard sold - QX, those flow in were think as - in that place I raw my we goods not into

raws, that a slight will price past, as see we've in said QX. in our you the that will expectations And benefit so versus offset are but raws, here price

so Great. Thank it you on. pass much. I'll

from UBS. question The comes Please from Fisher ahead. Steven go next

be and little bit over about this some and in Thanks. there. you quarters there's could you like quarter to. next affected know whatever mix I if auto Great. talk of visibility have how Wondering relative turning strength couple just seems you drag expect energy. But margins the versus from aerospace been the tide it what a or might

a mix? just color maybe So us little of give kind on

Sure.

than margins. was than [ph] QX the engineering transportation fact we're margin a would we And And we underestimate and affected what engineering the that our actually results we Steven, margin actually why you of higher chip thought. we we differently But transportation, the improved trying for In thought. what It's one little but that cutting be had the particular, fact might reasons thought what we down lower that transportation the issue, by that news than performance the look metal better than carries In general is cutting from thought. saw since on like. general stronger good estimate had knew to metal was were. we expectations

And because back high too, something not that detailed the season. while infrastructure. did. [ph] fair it quarter gas less Energy. bounce of them, only surprised it's and business, us. and surprised surprised a similar us, customer surprised fourth as and Normally, gas our And actually oil that's in And it oil as than profitable do is the it And voicing we good construction customers amount strongly happen

thought the since was higher side. on and going So margins, has infrastructure oil gas to to above we again, the helped margin what raise happen that

kind an direction half. operating capacity Okay. a could on That's looking that what happening cost going the quantify a not what's the sense also have of be? follow-up because tungsten versus on could related, us understand just if But the imagine with much way of might can less I'm I that. maybe of you of if in robust give to of input kind be on there's you any impact just that's it second to the just also Really leverage half the first sure very helpful. And question. maybe year how Steve's

I in we increases. let speak tungsten, - as the one But But we've to think increase tungsten that to prices I'll leverage relative we demand expecting Yeah. are will here. that Damon thing in, so kind estimates, to terms factored of we tungsten's think and far, first quarter. factored for of in be, the our we've we've in think what our outlook going that's especially

know we've industry, this the prices, past have that and we in And to of adjust of Beyond prices demonstrated the know, where and the been big the tungsten does the that you there's actually some this of tungsten, on in also business, ability kind price - – that, that's type we we pricing industry a of that history to covers know, raise if move indexed infrastructure of is raws. you some And as the of APT. is price side accordingly.

pretty is the of you going want leverage? operating year. feel as it's going but not price we for Damon, up, is, do that is good with if rises, the news the demand we that also talk the to we So course believe over can up, APT even that product that our cover about means good that

Yeah.

to operating would full year. leverage. plus some going calls, I Steve, have on full leverage expect strong prior think the we've is for we here think, What it's as And operating XX% I some the absorption. to said we've said

using XX% thumb. been rule of sort that of we've So

mark. And around we lever year full to look would FY XX% that so at as at we expect 'XX,

then system. I a think come as some to certain quarter in back leverage see half, will little point, and here into and bit the first higher costs the your we the first

deal half through into year. Travel the our weaker as system flow throughout inflation our some probably we'll we we'll merit, expect fiscal the today, the second in at flow So slightly again, those sit that half, of hard given with. first will have start back would back the leverage of costs we very second of year, course half that to least the annual would predict the But versus go in. we to

many And you year, I Steven, absorption around for you model plus XX%. think have is overall, using and of some XX% been using some of fixed the cost this that the

the though XX% leverage the that some in net expect even half, operating good the estimate. margins model higher the would pretty is using be you that that across we So - are a know, first might year,

much. very Thanks Terrific.

The next Please question ahead. comes from go from Barclays. Julian Mitchell

color it. than you and a little What's the year QX focus Thank help that by just half year to higher from noted, please? XXX for morning. good XX%-ish a half and and in of I tailwind the materials. materials? sound bit that the it and the in the if leverage. in pricing how of embedded the maybe on understand raws, combination the sort the bps operating that first of Hi, within want benefit in from of that us now just number and I on understand look I it's sort raw guide, much maybe But price of You at think, we raw margin is embedded for

Yeah.

cost fourth tungsten increases I that point So into it time. until rate here. is, the be quarter sold goods at or the of you material won't seeing with quarter Julian, put early escalating that late sort our starting we in QX. activities The don't here either And would what sort of would give first cost we're guess in specifics run related to pricing raw of I and raws. flow tell that place then in really a have teams started pricing But

And we'll so to start see here materialize in first quarter. that the

raws so about from the price be two will tell contributor a positive here, delta those would leverage what standpoint, the you is And in we between it again, and negate itself into cost I to the leverage a think of the And raw starts into and sold, as will first more goods quarter cost increase second material the then back that quarter. in our to half.

sort operating around the the of just And divisions. you. wondered leverage Thank helpful. very That's two across

specifically segments for in some are you're assumptions, metal the cutting But out operating as sort 'XX? mix between on leverage mix, thinking of and how about today surprises called two within you at think of infrastructure. I and your fourth the balance the the looking you quarter

Yeah.

what we're I focused reasons I is labor still more think run on you of metal need through labor-intensive, than they sales know, would on dependent But which say have is before, one about more those we cutting less expense. so and that, factories. talked today the modernizing Julian, were we volume the you We're factories you is need why to a - larger before. as

So volumes. the that metal the the expect we we time by would cutting end get year our the on will current margins infrastructure overtake of to based margins

to add You'd Damon? that,

Thank Great. you.

The question Capital from Markets. Joel go from Tiss Please next BMO ahead. comes

is How it Hey, guys. going?

Hi, morning. Joel. Good

you wonder a because to we of I little a highlight different of great customers can your related sort for or markets you of could gaining just tangentially XXXX. is where if momentum direction. feel the some this the take not bit really like visibility And you're

just pieces maybe if might better the you I So have on some of on pieces? - some the of visibility wondered

that the end of mean? is what Some market pieces, you

feel the Yes, direction and improvements all had momentum. customers, gaining all they're they're a And like whichever good really and the of you're noticing sudden, really changes made you've all buying really it. or into discussions you you've and

with right without that as price Kennametal And because And opening I weren't on. was point space, they footprint, tooling, - really Yeah. but launched Well, couldn't in all remarks, our have the purpose. deliver general they know, said my fit for performance general also for the fit never end, look, modernized the of basically engineering availability. But and product needs we right as in sort we have purpose what markets. purpose really they call which high the segment it's customers high engineering, for in one focused fit a affects in portfolio, we have for you at

they are the our we're business, journey, right and So price right this and the They're this need make margins the acceptable that see - have offer to able the we at Kennametal. availability they're but were modernization have for - we're of We that we now recognition. end still already the point this they have never and necessarily starting because nearing tooling. to have looking this to they that always feel in can tooling, brand sell customers

general good the QX feel regions. to going from expect to they QX the to we strengthen about In continue So year across throughout engineering, that. and is all

program from engineering, currently a the those we're portfolio. this now a our We've where product your some we a with we fact, of cases, added have And So of cutting entire buying whether where new accounts those target some And of at now and to Pacific, wallet. again, to some accounts, we're And EMEA customers, portfolio their amount also actually top of have have existing Asia x examples, access we in given them we for in it's region, in are in general customers. every have to only access displacing an or products that and customers, want channel we're Americas, you case new looking brand had And distributor. other metal saying instance, them. us, selling list we and share energy. we and larger where aerospace we've

tooling. keeping track in in fit measure spaces gone we've for we the can approach because we X% also - in offer purpose XX% wins And and now customers, this because of some that we so from way maybe we we those are have to share actually can where them of part share the

some speaking, simply which in couldn't we point, because we're purpose. we're customer that level are my products, I this before said fit the them. like in things equals couldn't also and you have on that - uptick that the we generally gaining all increased will. opening traction then feel those And and that and getting direction, examples share add So footprint, is the if remarks know, we for availability service we're also, the us that all innovations just manufacture price by added is modernized And actually that to helping encouraged you our that to when

maybe balance That's looking about, Or to are of on acquisitions? you share be And what more you - can bit terms to in at focused acquisitions, would your modernization are awesome. to know, or sense at And doesn't then make point talk repurchase? repairing, benefits? going sense because you're you a little going to layer it you don't rapidly want you on sheet make with look all your this

use the the feel excess you - use best Yeah. allocation, that the business. I would we the cash say invest to best continue in capital think to in know, is for our terms of I

investing launched to we're continue processes. going to So and stop like it's initial program, while simplification/modernization this to not that, in we we're internal going lever

to those required have the every course, Of returns. of one has

also to are help things improve type commercial investments commoners our like a good things think of are technologies. and improve manufacturing continue also that advance to to advance operations all and that our going with or to and And these digital digital customers, perspective So we from connectivity growth there areas drive those underlying excellence us business. the

you to with well at next acquisitions. be have your My is, it strategy. looking know, aligned they worthwhile that think philosophy is I is on

will. technology That's do announced return of attack even direct sure, market going And to of opportunity the scenario buyback. kind It's can last would going have portfolio. shy if for the or say stay in don't that. grow or a thing dilution. can make away business, acquisitions, ourselves price. the inside also shareholders. the we an the fairway, direct they're that's market at a is right a priority vehicle strategically by But maybe can this shareholder which but offset the more target our it's and reasons why return. and help bolt-on quickly we're sure we actually the your segment organic to We more thinking aligned you more maybe of probably at sequence, a I least investing get can about be to you where have way of of And then one that to a specific in them from we're our it. And fairway faster then more and to augment is So we share But

you Thank much. so great. That’s

question comes from ahead. next Cumming The from Dillon Please Stanley. Morgan go

high in is bit or of those can was the terms you maybe faster do to view chain, accounted give in moderate transportation what harder of end look the of a you side I next question. your in kind I guys. in you than Good I like curious of transportation bit But for just would not the be the already But kind morning, the this curious just over if improve faster know, these to supply maybe start, or it's what of just than guess of sense a expected kind us of growth Great. might outlook for was some range. issues quantify. actually Thanks expected? the quarter a or know, issues whether

Yeah.

gauge use if just for I full think could first I as a the the quarter year.

to stay transportation we're in we - largely decrease saw expecting chain from we the disruptions. about as think going - saw QX, same QX. at to And QX we have level the because We a that's that of the supply

be we're us shortages thing or sequential end. to more does growth. our supply better, year going you to but is why of things towards think But outperform only end in point, than readily should tell like like, we us of year, is really we able excess to your a current more drive higher play the think of the become in what look able of alleviates should normal should that if should going go - view our uncertainty. things year. uncertainty a we are there's could our did get that which the And given given it that is about sales towards how direction in full the the alleviated faster, - move about some it we because achieve actually markets of to our direction whole predict, given something guidance. hard outlook. to So We chain give that higher if lot that the for It's to didn't are And the a they're is readily. now, that's help current going we But I be and but know full of Dillon, we perform and out, actually stronger if are the markets obviously, challenge the you to we it's - the hard that's go generally, to, feel say for

understandable. that Yeah. appreciate for me. No, I last color. of And then kind certainly question

you wind guys remarks. prepared had few in times called think I a your out

government fiscal of level of then you today? terms all, of that out out of of I guess I in business of what for business? and that curious growth called you're 'XX of Just guess, context growth kind those in out seeing penciling the what headwinds some in you're first of subsidy

away in cut the the significant is has right. still growth, is going in metal Yes. still chunk significant, - subsidy Asia. China, quite which the good that of energy cutting It's business the report about we We It's a but talked the growing in year-over-year. growth

us. engine subsidies growth aren't there, still growing the while it's So for and a

to like business a we growth. over - a like - we'd it's at you it's number, great grow an but well, don't to exact but give - it's the substantial continuing over - So love have back, feel and feel want subsidies certainly I still a we to

Thanks it. Got Chris. for the time,

from Capital question comes ahead. go next Markets. from KeyBanc Barger The Steve Please

the relative gauging global Hey. what guys. Good think growth for to there production? commercial your you industrial Chris, the back for about morning, excellence increased going be opportunity performance? you a purpose, coming think or relationship fit rate and do there to domestic from should Is

Yeah.

portfolio, how measures fit And - point. that given a we the is have purpose for how general of at outpacing looking outpacing it that not for fixed at - And One exactly general is moving, significant. is we're we're also overall we're models quite is it's existing Kennametal it's because using including us any that our for portfolio amount, that small that we of we're know what it's brands the purpose general a growth. into space. just market And the engineering by fit actually selling selling

very base, the and I And kind be Plus starting why general we quarter-after-quarter, this so track we're also, indication good fit that up we're we're share customers. of as we're with we're where of know outpacing and kind customer-by-customer, us low in that the we're normal engineering picking the purpose with said, by we we Now share. winning we we know gaining winning, than that this a gives for space. growth fact measure is it but and encouraged would a those

measuring that gauge the in we're purpose our of we're that space. an will, that's success, understanding in you moving direction fit how if right for So getting or

is? you Kennametal's X% a portfolio you relationship growth Is IP? on think to framework the So the basis, if a outside kind in about with I consolidated you IP think we think it it see of pick assuming we Is are times? the or number, - do what that on growth line guess Any that if about? two of

things. Yeah. Maybe of a couple just

into of, model, that more had the in specific as year than that looking forecast. use you - If a like in bit X%, it say, of our mind as would a kind engineering at IPI of our you're would that's IPI, growth And mostly we're really inputs general space. - we the full assuming is that - one little affect if so what

example as there just threw X% out I an number. So

you - If see going we've we're you. what if that, is given general you IPI than going engineering think to then beyond higher be to

our to be might If then closer to we're it's slightly that, going less you than in. range think that be you

you know fair just half, hard I it XX% understand. say think go that there's more I your rate consensus of to the end shutdowns, to the as strength that no it's revenue in opportunity continued And but market about you into assumption predict 'XX expected FY for less is Or growth reasonable? back or half? do back the new and is and thinking using

to we're growth. did would I But our us the somewhere of the like - looking if Yeah. be down use around average than X% and normal X%. mid middle of of pattern, sequential middle an would range just and higher QX QX, for our to - our range the our at guidance be normal XX% QX point that's we was - on QX, that. said mean, you took going just if we're of about I kind of And typically, you then

you're So you - pick basis points up there. can on better XXX [ph]

to think, helps be is you XX% not bad will. all things, sort right I of turn And those just and of it kind up, high supply low if out as double digits, then if again, the you're right ballpark. constraints digits, So in that push to of single kind the

Sure, understood. Thanks for the color.

The Liptak Seaport. comes question Walter next from go ahead. Please from

guys. morning, Good thanks. Hey,

Walt. Morning,

ask bill like that, looks the and from comes full that? of back some these of get of But the a of construction there's road term some you other be markets. some benefits on to maybe maybe to what there thinking the a to year into follow-on I end bill as some infrastructure and would think got or XXXX? the the help XXXX are exposure X going that and you be you It How could longer wanted about into table, you've infrastructure growth do that's questions. year about the

talk infrastructure bill bit road in of Yeah. about so on not a trenching But also that is depends rehabilitation. stuff road positive a a The for we're expansion us, for much It - and money example. even you drilling is We're how when just net little to lot rehabilitation. of sure. requires for and allocated trenching the involved Internet,

it we're good So you know, thing about talking that will been have optimistic be people for quite that might long it a but actually very a happen, our business. time, Walt, for infrastructure

Okay, great. Thank you.

The Research. ahead. next go from Adam Uhlman from Please question Cleveland comes

guys. morning. Hey, Good

Adam. Hi,

get what goals for to pull that guess, the on you're year are I end? of main year, to sales XX% looking the capital levers Damon the by to Hey, working

Yeah.

I would But we think, inventory course sales as It's going slight not on expect I sales. that the relatively the of it's use as reduce more the percent, AR slight of - tell inventory, see - over here a that would most use will a Adam, we're growth what going flat. our expect year to generally you of percent of the slight a help to is by positive. and offset I

cash capital trending to a XX% from use about talked working use on at slight that 'XX, is look you to that in mark, that but you fiscal when I So for the standpoint. year numbers the maybe see not start overall material call,

of And to in are wind what energy guess, what can outside there that, we that you I and the other slowing go then seeing serve? but are market. sectors I you in and China, optimism you. sectors business unrelated - back Got guys guess maybe you Okay. seeing of about are excited signs the to in

Yeah.

then fact, shortages there. out in also They transportation on particular, from to on by see that's China, QX engineering level still But an I be obviously were QX, going saw think back decline. We that of general transportation. But a we to in think kind from in track here QX of QX. there. affected uptick we is terms to should

to are be for this little well, for time of it's a along general. - But going and that very slowed us slowing is slow in still here to growth the other of So bit going upward it their on in us little bit started rate a earlier. year. disruption, markets, but think maybe remember, may transportation China still further also because recovery. maybe And forward kind - have over it's positive may the They they relative an of terms trajectory we

Okay. Thanks.

turn for remarks. concludes like I'd over This question-and-answer the back to Rossi conference session. the closing to Chris

for operator. And everyone, thanks, the Thanks, joining today. call

and the which continued we've an this please And that be transformational proxy today and We view the this for finally, segment on our type detailed contain our will outpacing as to of our It along report, also advancing demonstrated volumes significant newest on with ESG opportunity profitability journey. I annual early and you meet product for modernized on summer. be be Technology lookout Presidents Chief markets. stayed our innovations. released we improvement for more As hosting call, the growth Investor later year leverage with recover. and second Officer our our will equipment progress newly our annual focused of some initiatives and report plans to the details on Day our our on strategic to strategic we present look made forward year next

any for As reach out interest to please always, and we And have appreciate questions, you. Kennametal. Thank if your Kelly. support you

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