Kennametal (KMT) 2 May 232023 Q3 Earnings call transcript

Good morning. I would like to welcome everyone to Kennametal's Third Quarter Fiscal 2023 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 this event is being recorded.

to of conference Investor like Pici, to now President Vice Relations. would turn over the Michael I Please go ahead.

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

be will slide that today's throughout We deck to referring call.

Investor I'm Michael Pici, Relations. Vice President of

Officer. President Executive call Chris Financial Joining Chris Chief Pat are prepared the Pat's line we After and today open Officer; me and Watson, remarks, Vice on President Rossi, and the Chief questions. and will for

the time, your as disclosure that to factors risk forward-looking filings. like assumptions, involve Kennametal's company's or in performance this expressed those At contain forward-looking constitute cause in I'd of differ from to uncertainties such, attention to uncertainties implied results, comments by statements. achievements or SEC are and discussions Today's detailed direct a actual could our such materially and and These statements, number statement. risks that

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

turn And to with that the Chris. I'll over call

example as Thank start few quarterly financial a recent you, for the the you review the cover Then well the Mike. I'll innovations the Good well as outlook. Pat industry-leading to quarter and market. customer an morning joining call as a us. of and results we're thank will as of today bringing with wins

call summary open some then make the I'll for questions. Finally, and comments

inflation, organic growth various COVID-related successful continued our the initiatives, the reopening advancement presentation. high Those delivered foreign Beginning navigating on In quarter and exchange and the prior slower we slide quarter. post in headwinds. included a in while sales China strategic disruptions headwinds of the year-over-year macroeconomic the in X

grew by offset of grew At X%. of with negative at Metal X%. favorable X% Infrastructure X% increased business the organically year-over-year segment and foreign Sales Cutting days level, exchange XX%

continues to strategic the expected we offset and of As a the to are of inflation. is using be part levers significant increase price sales one

experienced we of range volume this provided that grew call. increased the Sequentially, quarter. volume was headwinds by towards on volume which Cutting, Metal X% end driven Additionally, the our strong FX was high and driven last growth sales lower by

On XX% posted our Transportation and a end growth driven to included Energy basis, basis Engineering, constant EMEA the grew negative by and point markets. effect exit a which General XXX Americas X% due currency Russia Aerospace,

X% in recovery as demand. reflecting Energy reported slower market COVID and growth Pacific from disruptions a Asia well lower China end as Transportation

balance Aerospace the Energy X%. end grew General for XX% Transportation markets Overall, grew Engineering to fiscal of and year. end remain By our and growth, resilient X% we market earthworks our X%, expect grew reported

we recognize are Of risks that course, in global still the there economy.

However, before well-positioned as despite end I've in we believe we are these uncertainties said several challenges. times our and markets all

build build to versus Aerospace of rates we for continued improvement as stabilized last improve. below gas share oil rates are positions levels, inventory wallet as us well Energy, aircraft management actions still seen although gain continue growth pre-pandemic quarter. In have In customers we which well and greater

optimistic we're is that long-term growth underway. a feedback customer on trend Based

from both our energy renewables positions increased and benefit well addition, us which products to in serve demand In solutions and traditional markets, both.

this China in remain improve Americas supply end-market as EMEA, we both platform. reach to production, experience industrial strengthen customers We strong steady, some reopens. the growth quarter lower digits mid-single to despite our Transportation through as We expect digital and this Pacific. moderation with and chains new we Asia General experienced demand while in customer Engineering in increased anticipate

in technical and tooling both and for take will we're Remember, and establishing vehicles mega-trend. benefit hybrid in transportation emerging leadership and we position the traditional electric this maintain a from advantage applications positions to leading of market

growth to activities for Asia infrastructure in continues strong Earthworks, modest future projects, procurement electric Pacific to expansion and for In mining benefit through rehabilitation spending increased finally, Internet, grid including funds the underground EMEA. opportunities federal, trenching road as Americas, state and and in the on from these And processes. government work from we anticipate, begin local

we process the in this that time, the with spoke funds from Customers remain take at of CONEXPO bill. potential confident flow indicated growth does but

ensure well still we feel uncertainties all are believe and in we scenarios. end-markets well some in Right drivers we're about that there and current to potential good the positioned while perform environment, the macro our long-term in So we are growth working now, each. we underlying in

the the in was through the muting the as substantially earlier, both and expected operating and all at in forms inflation year-over-year profitability of pricing dollar margins taken came leverage volume actions exchange. sales effects increased significant to now of despite of increase a basis. segments mentioned on a the price Turning Metal business foreign quarter, portion year-over-year, cuttings operating covered

the in for operating accounts margins segment Infrastructure year-over-year. change The company

last mentioned shutdowns intentionally production quarter, into of I As powder extended we the January.

this a to in and experienced action inventory of As lower these segment. as the we levels and take of advantage Infrastructure chain. actions improving This quarter, result supply anticipated an under-absorption us enabled

level Infrastructure more margins We to and the section. Metal Well will continue have Pat his detail quarter. greater let in opportunities me certainly to say margin we general, in margins into the on that cutting go for significantly improvement. fourth is expect that even approximately in Infrastructure ahead quarter, improve just first a to reaching equal

excellence investments target our on through focused by improving in through growth costs, remain we excellence commercial Company-wide manufacturing operational productivity return initiatives. process to highest improved profitability technology business and and fixed and driving optimizing and

percentage safety primary year I working mainly slightly $XX in million this declined raw and increase at capital, largely Adjusted prior year to to by increased in stock. despite factors sales from discussed. Free this a compared a was by in the quarter to Operating $XX XX.X% prior higher the cash quarter. driven EPS driven higher $X.XX flow of year-over-year operating quarter significantly expense, decline compared the material as to with costs quarter, $X.XX year million the prior

bringing $X of program since shares program $XXX million bought And of finally, amount to million. the quarter beginning the this we back, the the continued share total with repurchased repurchase

repurchase we confidence reflects creation, for long-term ability quarterly headwinds the execute initiatives have share strategic value our and in despite program macroeconomic to our Our uncertainties.

Infrastructure Now, in commercial let's win turn Slide from to X review Generation wins growth execution resulted some a within to our that highlight I to of recent want key successful our business. Power roadmap.

a custom larger component gained developing premium for by share performance, to a with command solution. superior wallet wear We us solution which our enabled of a

providing Aerospace engine a expectations. commercial solution We facility an is the tooling initial manufacturer delivery customer's is overseas. building a that win. Next secured for provided new a We order exceeded an that

for EV region the Asian preferred EV Turning now received end to in and preferred systems. supplier Winning market. growing tooling increase status with braking positions with associated EV, we in share us the well status an OEM market to

In full and we delivered performance a industry our a competitor's metal products. steel This cutting improvement displacing in solution business, in resulted a the solution for package customer. oil the a of leading gas components manufacturer for XXX%

and in activities. high in our mining capabilities. wear-resistant And our that the high develop aid flow industry pressure and process water a examples to demonstrate are finally, tooling leveraged of We to both just customer proprietary reduced a provided new using an mining and ability times. customers. tungsten carbide underground nozzles solids we gain to our We some from upgrade with additive direct lead to manufacturing with provided solution that wins solution steel These no existing required share additional

edge for easier is inserts. modernization our improved enhanced thermal for is to customers also customers and like coating our delivers, KENGold performance The product improved Now which flanges while grades, of applications drive resistance electric shipping many an usage. maximize that production turning that applications developed Engineering. for deliver continues such how our slide General improve example customers. turning insert productivity, This making overall significantly vehicles use insert increase where turning enables quality new innovation KENGold I'd it wear product on gold as over for this identify lower and our innovative highlight costs. and product ideal has rings, shows abrasion to put in an slide Simply previous bearings in purpose technology, to to enabled our for X, offerings to been This applications. investment by and standard general shafts, of We in proprietary target it our

call turn to who me the financial let performance over the review quarter outlook. Pat the Now, third will and

morning Thank everyone. review good will you, with Chris, and for X slide operating on QX a I results. begin

any results. last we comparisons discussion for quarter, and begin, not adjusted record will prior adjustments Therefore, adjusted please did not year's presented that numbers this I year-over-year the for today's are quarter the quarter. non-GAAP current against like be note Before

continued organic of and continue The to China. by quarter's COVID currency initiatives foreign Sales effects lingering our headwinds and inflation, offset X%. in from in growth workdays face we the exchange partially that of year-over-year X% execute from results X%, of by with headwinds foreign X% of disruptions increased the favorable show

out, from to normal pattern volume to points growth increased our foreign basis basis seasonal increase. was a QX by X% Operating QX, pointed driven sales X% X%, exchange. Chris XX large sequential percentage and more XX.X%. QX a price of of As a portion favorable increased the On remains of year-over-year as above sales of expense to sales up

mainly XX.X% and The prior were in year-over-year and the EBITDA respectively margin margins was following Adjusted decrease quarter. due to factors. the X.X%, operating operating versus XX.X% and XX.X% year in

we As full quarter, year the of higher raising in experiencing ahead prices. aggressively the effect last of discussed were prices prior tungsten

cost current Starting flowing metallurgical market in Infrastructure P&L. Approximately reflecting for favorability costs the in the as are price price negligible costs however, segment. segment, our QX of three-quarters material over raw material is Infrastructure the material the of through the is

for costs the relatively of to raw year. be expect We steady fiscal material balance

inflation As pricing wage quarter. substantially higher material, general and raw higher the in offset in prior quarters,

segment to planned and enabled As of call, January, in chain powder decision operations absorption in Infrastructure last the our on reduce approximately levels supply with million consistent shutdowns inventory $X into to advantage take extend resulting quarter. mentioned of we conditions. this QX unfavorable quarter us of This the our production decided improving

the decreased foreign prior versus were to the year-over-year tax year in per EPS period. XX.X%, geographical of Earnings adjusted Lastly, $X.XX exchange the quarter in rate US mix. dollar strong $X Effective share primarily million. $X.XX to from due headwinds were

of which operations The bridge negative effect quarter our main The on a this was Slide drivers from effect $X.XX, under-absorption. EPS performance X. negative includes are of $X.XX the year-over-year highlighted on

foreign and the can and contributing $X.XX. reduced on taxes income with pension see tax effects the currency clearly the pension in each $X.XX EPS, contributing positive You negative exchange also income of reduction rate, and

that, income each affecting is is quarter note pension pension market plan US and our is by fiscal in the this change in driven non-cash assumptions change and factors. remains Please overfunded This year.

is headwind QX. Foreign exchange remain to headwind although, to year-over-year decline a on year-over-year in recent expected spot the expected based is rates,

Slide X regions a and on of of end and growth and up X% quarter, year X organic partially offset days Metal by with We detail Americas EMEA constant the prior markets, foreign quarter. segments sales our Reported this in to performance achieved in the Cutting growth currency were the X%. all a of compared headwind currency XX% basis. business

Americas driven our by the followed at X%. while the Pacific end resilient EMEA all Aerospace broad continued negative region, by in this across America's markets. XX% year-over-year execution a demand of XX% initiatives led was By was growth growth and at the and Asia quarter,

growth favorable conditions. and by initiatives broadly driven our execution EMEA's reflects year-over-year strategic on market end performance

as slow recovery disruptions COVID-related by a Asia Pacific's noted, was China. Chris in negatively from growth, affected

X% continue sales Aerospace as quarter in focused to Engineering grew experienced the Americas end the strongest of Looking growth XX% our rebalancing year-over-year, in inventory with market. year-over-year, at win and activities strategic this we initiatives new this on result EMEA. as our grew business General market. sales XX% execution, end last quarter, grew subsided. a year-end customer Energy by we

EMEA, And lastly, the supply in EV chains from offset conditions weaker X% hybrid improved in and by benefiting business somewhat year-over-year Asia Transportation Pacific. customer and grew Americas

further despite cost focus dollar. cutting growth of volume offset we our with on for are its expansion. achieved an headwind US And post-COVID, ourselves excellence, from increases. XX margin strong and productivity Metal operational positioning and operating growth approximately point margin operating best margin Pricing, through the XX.X% basis

X, in-sourced by as by well sales foreign exchange of increased project which headwinds Slide a customer timing for X%. XX%, Pacific flat to partially Turning followed Infrastructure. by at due X% Americas to of disclosed who Organic orders. sales as X%. year-over-year Regionally production, we previously Asia offset grew primarily were EMEA

up XXXX grew US, Energy Engineering market. sales in at market XX%, earthworks was X%. The end Looking approximately gas mainly grew as by QX Energy General counts to grew XXXX. from X% year-over-year oil improvement by by rig and XX% driven QX indicated in strength US and the FY

driven prior stabilized growth Chris in earlier, Asia in in quarter. by and the in order growth Pacific, South customer saw sales mine was by EMEA mining actions flooding timing. Earthworks affected As while impacted by negatively quarter were unfavorably underground noted Africa the mainly destocking this Americas,

Engineering Lastly, orders a from in offset mentioned Americas driven the was project I mainly General project just in EMEA, and timing by of by customer demand lower orders. in-sourcing

margin due year-over-year primarily declined factors. Operating to to X.X% two

the the discussed balance over call, is through for as material costs expect relatively now costs the be costs material we of of market we current year. the to been have negligible, earlier are on First, price as raw now raw Again, the flowing favorability material reflecting costs the P&L. fiscal experiencing steady

which We quarter, did to was helped previously lower quarter anticipated discussed, Second, shutdown supply margin chain inventory was under-absorption January. as extended levels that us experienced plant powder significant affecting this into the as continues normalize. factor the the this

We operating do in previously is XXXX we expected FY not volume, in costs incur return to increased QX. continue favorable remains margin and The from more powder in but our discussed by effect force margin majeure level in in primarily expect seasonal will profit we This absorption uptick expect construction QX operations. to approximately sales in driven to QX. improvement the disruption

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

stock increased raw with year-over-year operating year-over-year to mainly Our On the free third extended increased working safety associated and to higher chains. flow million, million primary capital supply a dollar million from cash $XXX $XX costs prior quarter quarter. higher year reflecting material $XX in basis,

On a working XX.X%. primary sales to of basis, increased percentage capital

levels to inventory as again continues continue now decrease we We the quarter as improve. expect to manage levels inventory supply in fourth down to chain our

$X our million $XXX million million approximately Net approximately capital inception programs. outstanding to of returned expenditures in through of $XX $XX X% of dividend and We million share of to prior shareholders shares or program. million shares representing compared repurchase total, the for X $XX in million repurchased the In a we year were QX the since quarter. total shares

every have to we paid a years dividend we as over ago, our becoming quarter And shareholders. XX since public company a

to returning strategy our to ability execute cash in our to drive commitment our improvement. and confidence Our reflects growth shareholders margin

$XXX within found sheet balance a maintain appendix. The quarter sheet and million cash to financial XX of we're balance and covenants. At continue maturity slide We healthy and combined the we debt well end, had profile. revolver our availability be on full in approximately can

to year XX, regarding full Turning outlook. slide our

FY We the are raising outlook. low-end of our XXXX

of volume We expect sales quarter China in X% throughout price fourth FY exchange XXXX to be between $XXX X.XX assumes a and exchange sequentially to neutral. $X.X up realization outlook billion demand sales is the This foreign improves headwind that X%, approximately million. foreign and in with approximately and from X%, of

to $XXX total Lower a headwind expected general income offset on the into wage, year. on operating be $XX million each full and a for sales a basis. approximately On income basis. of is for pension a basis year quarter to expect $XX headwind A raw million dollar we foreign cost exchange translate will material, an increases million

to an million and and $XX million is approximately expected raising outlook effective We're approximately XX%. adjusted $XXX rate amortization expect we of be now interest expense Depreciation also tax approximately our of for EPS. and

We EPS adjusted $X.XX to $X.XX. the of expect range in

working primary for XX% outlook On million the the $XXX XX%. full expenditures is to capital year capital for approximately side, and at unchanged outlook the for cash is

expect with free cash income long-term operating adjusted XXX% Taken net together we target. continue to approximately in at our flow of line

with turn back Chris. I'll that, to it And over

Thanks Pat.

in pleased minutes take to me let a the Overall, organic strong XX, and cash we're with quarter. free our slide flow summarize. growth to few operating Turning

our down allows remains the in reduction materials, took and we're stocks. continued end improvements environment forward the markets to from challenging, look we QX. the continued of in benefit draw operating supply encouraged to we improvement by inventory resiliency in which the us seeing the actions as QX of we're Although And margin safety we

growth We're excellence initiatives to our technology. greater the ability on and poised by for And from encouraged plants even return have focus our continue market our while markets modernized our year investments in in shareholders, our ongoing from mega for and growth our operational we benefit to confident end efficiency to we're cash in strategic optimizing the trends opportunity improvement. beyond profitability commercial and we're XXXX, to fiscal position. our investing affecting Looking to and extract

And line with that please operator the open for questions.

Thank question you. comes go from first ahead. Our [Operator from Mitchell Instructions] Julian Barclays. Please

for Hi, Cutting wanted a Metal the good second margins. I to morning. home in just on

of of sort is of the So I a think the XX% in up steps in fourth wanted a year-on-year as in Cutting is quarter. placeholder? QX. about you're guide operating sort in So just think a Metal check, bit sort margin Metal a a of Cutting in of good getting the implying leverage, third sort this that mid-XXs And ahead, mid-teens margin we to quarter? that year I sort incremental good operating then, the

Yes. Good morning, Julian.

things of now. annual couple we're about to about we through think as going there. a process 'XX, So, FY planning our Obviously, think

so we update get that's we'll call to something on August. And obviously you when in our

that bit think we of before as we in generated on And and QX excuse rate we've volume about segment I'll a see above Metal -- normal the in to quarter, a as to QX the performance run a lever. Metal QX. will we basis. talked fourth to would slight little me where say leverage about QX As uptick Cutting margin consolidated is sequentially normally, Obviously, our is, QX the Cutting look,

margin coming with expect performance. volume higher we'd slightly through So,

what or wondered channel behavior, operating margin of That just sequentially distributor any of Thanks Yes. be, one Thank sort second customers I I terms then And very much. Yes. And you. you're suppose. my higher seeing that's in little makes of bit margin sense. slow a to recovery on would below -- of plan any the last a down partners looking China, And date. a change you Has then there said, in months? the in in destock in couple kind customer behavior orders been to particular? Americas or it's as quick

think understandably. I areas in improvement an Transportation, like assuming you're

real So, what maybe you're on seeing of more kind China in please? color any time

much on of just say, would been the we had. cautious Metal I pandemic, the ever Julian, really distributors they have the side, how Yes. pretty about out since Cutting came inventory

there's good be if are serve cautious. for I they customers, also to tend So they've engineering, there. inventory make But a example, that they aerospace pretty serving general more customers because want those supporting can that, sure growth to there, and think they they're adding trajectory on those been

So we're not think don't Julian, saw if a I seeing a restocking really will. ever but destocking, we you really

And and think supply customers less did then, the taking I some construction oil to start the abate, we've about less chain we even Infrastructure the needed they and stock safety see reduction talked on some actions of problems gas and as side, customers inventory stock.

kind of in supply whole there's throughout So, that the adjustments been regard. chain

China, been to Transportation demand expected in our actually cars we that's to to that's especially has is begin the exposure -- That by one, as is been driven Cutting, over we Transportation and there. Julian. we in lot mind, relates As slower of for in have think watch have I of to sale it to yes, reduction improve, but Metal know recovery a the that

Thank you. great. That’s

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

your just the complex, around curious, for with impacts you But you're just that's curious morning, or your hearing guys. customers out answer. kind any a tighter Good on lot financing distribution there of feedback impacts to of from of environment, the this to had of maybe kind the well. potential there's Thanks one sentiment data is but probably channel the a regards industrial the from broader if as question. a concern difficult bit more kind I realize from of Great. points

Yes.

if will haven't or our banking customers about We very you heard from much our distributors the potential crisis. really smaller

of We So quite eye of those deposit any have the thing. seen. it's We the in limits covered actually that would kind And it has banks monitoring nothing lot are small. our by situation. -- keep a probably the and are certainly FDIC on and have that we've that they an customers we're do

effect, we to we to have that not be there's an but So, that it going something much is think of watch.

then clear. And That's broader of question Thanks, one Okay. Chris. pricing on trends. just cost kind price and

as year? prepared bit of from remarks were Pat, you thinking next next think how price into less you are are about further we price pricing in the guys mentioned going put a end How I progression you we're would planning the expecting fiscal of into overall mean, positivity progress cost that on feel you be a move should increases? year benefit your through like here. to bound? upper through Do helpful. hitting color year I you Any that

as think talk sure the just next year, Yes. about pricing, we're that of we I we'll to the committed value price product as we pricing about ahead about think mean, going into strategically we obviously, number for one. making

mindful being sure and we're from but not pricing two, going see into the we product. a of the the that in we're in that business being the inflation Number that's cost value, the environment cost perspective for just

again, across that have value cost pricing the grip So, business that a place be be, we that the proposition we'll we are both as think planning product to and the process complete having. good FY we get cost inflation sure are will again the and the we responsive structure make in of in will kind businesses that what of here on XXXX our actions

you. Very Thank helpful.

Sachs. next ahead. from question from Please Goldman comes Ritchie go The Joe

guys. Good Thanks. morning

Good morning. Joe.

a you understand I'm I have opportunity typically forward. being into just the I to China us maybe selling penetration understand about OEMs? further. you in going for little a help the into market EV selling of China? Chinese are China, Are your you curious just in OEMs? just you big Can talked Just Western -- guys EV you bit guys want that know

but lot are to Chinese of traditional out a interesting, the EV they them that Joe, We're are OEMs players ones for. both, recognizing are the this into watch the with selling Yes. it's that

hybrids and new important -- we're on while selling forward. going I'll And so that players EV focus call even new both we the for into are strategic have the a

in position will both, feel on both. you OEMs So good if we some Chinese. see we're competition We but traditional tackle they're to the the like from to a going have

helpful. question Okay. done specifically, inventory continuing fourth thinking maybe about guess quarter? also powder like that continuing Is just comment at to levels Infrastructure the be and I Great. And all made talked into a you reduced around well. about It production you shutdown. this sounds point, XQ That's at my into follow-on that's the but as

So I square I things. make to just want those sure two

Yes.

I actions taken from think fourth have inventory powder they plants customers' in perspective significant and about in the are don't the question more some was and our the QX QX and to -- stabilized. had quarter. that that We expect situation running seems

So to not there. having we're adjustment make an

So I I me both question think I answered know let of your if didn't. parts but

just Yes. no perfect. Maybe question. longer-term just one I'll No, that's ask more

guys in like opportunity had little understand curious there's at good development. of that I bit the better. And to about long You want like a been quarter. just how range just highlighted here. KENGold this and it seems I'm particular products talked really some opportunity

ability the product works The and that KENGold the case a equipment with these in technology new were while have lot produce actually we primarily come place team been the up the our It's required by our a Yes. coatings innovations which of in product. for to modern precision of to like you and limited have processes.

of the product what was of Joe at release that the of really facilities. our so And insert completion modernization some the enabled

delivery improve a we was it also And market would modernize of major of KENGold of to and this of our is our performance, our not the come only example one pacing to great that folks they innovation in that cost to and was say got and some a to enable expect great I is the was bring reasons that. more case, there So quality to because but it to products item. modernization was

Okay.

guys. Sounds good. Thanks

Tami The question from go ahead. Please comes next Zakaria JPMorgan. from

versus ones, Hi. actually you in so quick have my my each questions. just much disclosed most price taking was just Good reported? segment know recent been already I couple growth in a and I'm for of do already Most if that asked. But what morning. have it. sorry, we Thanks volume questions you quarter the of

realization a about had in in as the growth the quarter. volume we From price press perspective, -- on Infrastructure a a strong year-over-year segment in remarks businesses. We we've we release, the Metal volume had talked slight Yeah. Cutting the and basis, see well as as both we prepared across negative did volume in

into you expect it. quarter, as we Got do be both volume in positive segments? And look fourth to the

both go volume will into be basis we Overall, a positive as fourth as as quarter sequentially. Yeah. in on segments the well year-over-year

it. much. you Thank Got so

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

guys. Hey, morning, good

Hey, Steve.

Steve. Hi,

suggests some your there's in going think growth to you I cycle Happy ISM sub-XX has Do months? around that the seven square Can your could decouple those you to tracked organic for that commentary six months been the resilience. continued forward? end degree. of market that six past hear your having think anything with about being mix sub-XX index up last for and Metalworking the this or

Yeah.

they to it's supply customers huge cycle particular -- it's our the a in think I chain that built this constraints maybe with had lot all of backlogs.

of levels. them out pre-pandemic have the And so even many coming never production returned to pandemic, of

that So they've backlog. got

you seen. are if XX, below to those in our a indices have start probably of would little that we Steve more business to softening type -- normally, So than see we've

So used but we've word really the resilience it might happen, there's that, yet. an hasn't shown that that in expectation

with back pre-COVID are of levels we're it ramped in other chain production operating to up a it really never backlogs because and my large at. many supply is customers And their the chip of theory or our constraints shortages, markets labor shortages, that whether of really be that, lot never

Yeah. That makes sense.

this ahead I maybe four year. of think volume that's a good Price is times running theory.

on given general incremental the do inflation based drive market? you So have year next growth if just price your able you moderates the initiatives for algorithm proposition? commercial your will to excellence be versus And value a

it terms always think Yes, to of in trying versus value. we're said, Pat price I price

we're the that have to necessarily really case sort already normal all the we But environment, Now, a value. we because to same. in change more our return factor environment inflationary high the of to if had on did anything also based pricing inflationary we in don't of and competitors

to continue that It's business a the have. we'll actually an to salespeople. so have discipline you and a that's And education. with process do It's

at And been the so hyperinflation. to now years we've prior for this several

push getting were much and as have value to we price to ago. it's environment, continue we'll So, you than but even a few much at years as we do a can. we're Recognizing sell better competitive

was second your part of what the Sorry, question?

on does like organic cycle? your have expectation commercial of You've an look what an the done down in growth market relative algorithm you lot a over internal past of cycle to should or up or a years. couple excellence kind the Do whatever for

I And market. would the want sales we're that's the we growing don't the is you our just I is market to faster. but Yes. and in gaining we our we're say reasons, not competitive that you to expectation market we to executives force for than if share way is ride we down, – general, leader our expanding, the it's expect enough target – give or market and the business compensate the do better up ride don't

based for the or index How something you that? them? Is define on Metalworking the market it do like

cutting lot can yourself there. metal revenues cutting metal companies how then take metal you – is are kind their like a there indices. the to several of depends country gives cutting an be in you you association business, and where is for association compare report what of unfortunately that you But a in market can and this on the grow world. It if It you Yes. Germany, use you the have into example to

countries. similar little to something the US You other do in that can a bit and

tell then much buying we to look with business have are for we good getting. customers, that several at that you also you that but can of at things we have So how you're that gaining a metal are us total specific looked And cutting have kinds the metrics directionally beyond in what versus share. sense those they're actually

these y". And set can and entitlement percent we so customers based we of have have models specific "Hey business say only and on people's also targets we and x should

the set we targets. how that's So

Thank it. Got you.

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

secure market-leading outlook. positions ability I'm full strategic everyone to our thanks the and call very year quarter The results operator joining confident reinforce Thanks, today. and advance our deliver and for we'll this really initiatives our

excited for growth hope next that hear upcoming we details executive join reflect forward forthcoming Investor management as Exchange. us and really plans Day we the the September with our York our company. team, update an our to you'll from at you about on that X, targets Mike. taking to New you we're be our that long-term More share look I on from to Finally, We're will quarter be event and innovation where able speaking Stock and provide at also

to Mike, Thanks. to hesitate appreciate always, and Everyone have have you great out reach any day. Don't a if support. As questions. interest your

toll-free XXX-XXX-XXXX. A the XXX-XXX-XXXX. approximately event replay of this you access will United within dial may you be hour of conclusion. States United To States its may dial one replay, available the after the Outside

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