Kennametal (KMT) 1 Aug 232023 Q4 Earnings call transcript

Good morning. I would like to welcome everyone to Kennametal's Fourth Quarter Fiscal 2023 Earnings Conference Call. [Operator Instructions] Please note that this event is being recorded.

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

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

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

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

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

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

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

and and Mike joining Thank you, thanks for good morning us.

results a with market. Then as Pat the customer wins today well innovation to bringing an industry-leading the as call financial we're as 'XX of a outlook. as example will the few start the the year, then well review fiscal and I'll quarter recent of quarterly year the cover

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

our negative and exchange team results offset the presented at X. Sales several Slide headwinds with X%. days in full successfully unfavorable foreign that by increased expectations. to on of organically, year year-over-year navigated X% 'XX deliver X% year of business us Beginning Fiscal line with macroeconomic

a currency driven XX% affected we to EMEA grew all at markets. of leading Metal X%, and On at Cutting offset China by both strategic growth Infrastructure levers a basis, the part be by continued growth. all continues organic grew slower Price level, reported use regions to a the segment end at increase constant is and XX% one recovery. X% to significant reported which be Asia-Pacific of with in the X%, and At sales Americas inflation. And

to Moving results. end market our

include noticed certain this in You externally may quarter the have our have slides. had goals some that and strategic end reclassified The we align we that Beginning better market following. press markets report of changes growth to the been Company's initiatives, end and release the sales with redefined.

reclassified aerospace mainly in contractors. sales which defense new created end tooling aerospace ammunition being new defense and includes defense certain segment cutting cutting. to for market, segments a market This end metal from includes also sales and the metal engineering to sales This end general and change cores defense market. sales defense and our the We've in powder certain defense classified aerospace both previously within and sales aerospace Infrastructure results at

engineering end food reclassified production general energy Finally, and market. which ceramic includes boats parts Infrastructure's packaging to wear have evaporator been from for the sales,

in discuss and Investor will growth our markets on We Day they end X. initiatives our these to connect how September upcoming

grew 'XX for transportation grew Refer these grew XX%, market general X%. grew and X% defense XX of changes. information energy earthworks the aerospace to growth, By fiscal reconciliation additional and XX% in a for Slide end reported year X%, appendix engineering and

profitability. to Shifting

at year-over-year, forms covered margins and the of leverage was a segments in compared year. For exchange. effects operating operating X.X% business segments volume despite dollar with basis. taken of expected Metal the year negative came foreign substantially pricing margin all actions full in increased operating The on inflation adjusted both Cutting prior The the the XX.X% through

under-absorption shutdown which chain lead within of segment, action, supply lowering Infrastructure intentional negatively the as margins. however, stocks improved. resulted had times affected of the reliability of intended in this the safety our production effect segment, January and extension In powder This into

Across structure, while both to end investments is early segments initiation operational optimizing initiatives. annualized million commercial XXXX. in deliver by year approximately of to and action excellence cost savings in our June, This the an fiscal streamline $XX of currently action we expected of pre-tax the announced

during We $X with primarily and been expenditures. has expect the of adjusted in excluded from million approximately was which $XX our connection of outlook. cash this results. the discusses execution initiative, Pat is when he a that pre-tax Approximately on details have related million charge of severance the charge this recognized will more quarter

am to pleased commitment. deliver to In managed through performance. we for year flow is efforts operating initiatives year with years, reduction our a while continuing advance in inventory driven our capital on challenges focus of highest eight changes, 'XX, I by area working company primarily million, was summary, to position level improved the many $XXX the Inventory key improved levels. Free team's and fiscal this for the cash strategic in over including

Let's exchange and level, by Sales Infrastructure At X% turn organically, the grew and Metal grew once Cutting unfavorable for XX% of again quarter. our outperformed largest competitor foreign of at offset X days significantly to business a review X% segment X%. this year-over-year quarter Slide organically, the X%. which increased of

part it a continues largely significant the sales price and to expected, offset increase inflation. As of be

an XX% transportation driven mainly posted defense. primarily On general by aerospace customer growth, The improving grew by in market. EMEA end engineering and X%, basis chain and a currency supply Americas constant the driven

and X%. By grew growth defense X% earthworks recovery. a X%, end X%, and general China reported XX% market, Asia-Pacific reported aerospace growth, slower energy grew grew declined engineering reflecting X% transportation

In levels chain by to customers well in quarter fourth slower continues reopening to demand gains. China. share pre-pandemic the a and rates drive aerospace strong below was Asia-Pacific still Transportation in experienced due focus aircraft strategic as performance while driven growth conditions are our and improve, lower our EMEA build defense, supply

and our to market. tooling megatrend on maintain win enhance We leading and we position electric emerging hybrid this traditional vehicle content a capitalize in and and continue the in both applications to transportation position

moment what forward moving around a we X%, some below year in as additional is Sequentially, color the market conditions historical near-term. take experienced grew see me 'XX to we we which end provide QX slightly our fiscal sales exited the Let pattern. and

by Moderation factors. within was in which we in latter of and following the engineering segments, of slow infrastructure oil the in both experienced production the industrial the This gas part general within recovery driven lower and continued China. quarter,

fiscal quarter we slightly This sequential the to exiting levels below moderation in of into the and growth historical XXXX, with continue steady is fourth anticipated the quarter experienced our first trend. year

stronger he second year half year fiscal moderately on year That these how will 'XX. said, provide end of in throughout improve year more outlook. accelerate trends progresses growth and performance Pat our we the fiscal 'XX with expect discusses to to markets 'XX fiscal as when our detail affect the

to the now profitability Turning in quarter.

forms price segments earlier, in a all substantially operational taken of covered year-over-year portion a both Metal a actions inflation excellence mentioned As increased dollar of significant the initiatives. as was pricing margins and basis. Cutting's business commercial sales on the year-over-year and of result increase operating

accounts Infrastructure the Lower The operating drove volumes decline. for mix segment Company's and this margin year-over-year. product decline

Infrastructure quarter did expected level. quarter, improvement As experienced the within we margin noted from third segment sequential and the we last

higher compared in increased to by with EPS discussed. from as expense was prior flow Adjusted this to driven quarter, prior million compared prior declined XX% year $X.XX significantly $X.XX factors sales this to of the the to the by operating Operating driven quarter. largely a slightly year and in percentage inventory levels. cash $XXX million $XX Free quarter year improved the I decline quarter mainly

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

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

to resulted to from turn X commercial execution review let's successful recent our that strategic Slide growth some Now of initiatives. wins

a from their First business. win mix and performance Metal Kennametal solution technical both a our by and This reduced the WIDIA delivered engineering costs Tooling met in XX%. Technologies. high custom included needs and is customer's very fit-for-purpose of Cutting tools general We

general and customers. for aluminum Our tools engineering range outperformed wide the competition steel components medical a of and producing

aerospace time an XX%. secured Next aerospace the of provided that We a initial solution for an tooling by order sensors. reduces We set-up customer is one. providing enclosure the

tooling applications, of for by We performance Turning won innovative high a OEM. the engines provided while for class collaborating machining with to customers. a and new We machine demonstrating European EV. builders tool

leveraged proprietary manufacturing shape solution we our help and capability gas flow additive business, Infrastructure oil a our with to control critical valve. an for In complex customer a

specifications. also the stringent grade to We customer wear-resistance new a developed material meet

customers. for we to provided with and fleet some customers' drum fuel are that just an that share existing new both These the wallet. share and reduced finally, increased design examples demonstrate a mining our wins gain of ability consumption improved of the of And our application

portfolio. deliver to suspension temperature as EV advantage X, new to applications to from Slide PRO an a innovation and Drill product used as parts Drill and on our Fix our Now tool for several I'd of applications different such shows needs PRO enhanced product like the aerospace. alloy Cutting materials with drilling example be customers. Metal many markets our can end highlight Notably, and competitive platforms high Fix offerings across within how This slide continues

customers. design to address These of cost tool increase solutions cooling over to per provide allows features ability life versatile for lower proprietary demonstrate robust the needs platforms. finish, and our hole superior And our previous enhanced effective cost the

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

Chris Thank good you, morning, and everyone.

continued I operating of Sales currency face of initiatives The work X%. of to a by China. of pace recovery X% increased demonstrate quarter's execute inflation, foreign in headwinds results. X exchange results will growth, QX Slide days unfavorable and begin from our headwinds on ability review slower with with the and the partially foreign from by year-over-year organic in offset X% of X% our

out, to sales expense of the remains a X% driven of QX QX, from of large portion by normal Chris growth a Operating increased X.X%, increase. up at price lower sequential lower-than-normal XX% seasonal driven to our of was pointed sales year-over-year volume as inflation. end XX increase. On percentage a a of points by sales of QX effects the basis As basis pattern the

and and XX.X% year margins operating the XX.X% prior in EBITDA respectively, and quarter. XX.X% versus were Adjusted XX.X%

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

exchange headwinds were strong U.S. $X approximately the foreign million. Lastly, dollar from

to the period. related due adjusted share per to of drivers highlighted was adjustments prior certain decreased year bridge in performance valuation year-over-year in The tax adjusted Adjusted X. Slide quarter allowances of EPS tax on EPS the on effective primarily XX.X% earnings the main are positions. related to $X.XX $X.XX The reserves and to versus rate our

of operations. volume was settlement related charge due operations effect $X.XX, legacy year-over-year litigation negative this to and lower quarter The to

of the clearly rate. effects tax can the see also You

that $X.XX positive in slightly Foreign and income exchange, in pension the note which Please improved reduced from quarter pension non-cash on our the plan affected currency remains $X.XX. and negative has contributing reduction assumptions factors. income with This fiscal EPS is pension contributing last market income this and U.S. is each in taxes each pension year. quarter by and overfunded change in change driven

Slides segments X and this quarter. of performance the detail our XX

Metal were We prior metal Reported organic Turning constant end growth, cutting and basis. offset each. with to and quarter for all markets currency on days Cutting. X unfavorable sales in XX% exchange to a year foreign compared X% the achieved by growth regions Slide up business of partially

By growth backlogs supply Asia-Pacific at EMEA's EMEA and performance at by and volume followed the OEM led region, transportation reflects chain affecting improvements year-over-year and X% at general Americas XX% by in engineering. driven X%.

our was driven the growth and quarter by end the this growth initiatives market. of in engineering defense in aerospace execution year-over-year general and Americas

Chris Asia-Pacific's recovery adversely as in a by affected slower noted primarily growth was China.

in market. General engineering end Looking grew grew at by strategic the and this year-over-year initiatives strongest our as sales in partially by Aerospace to defense continue a Americas China recovery. X% EMEA, and market. with offset year-over-year results slower drive XX% end growth

X%. the operating XXX grew offset EMEA, increased points in Metal weaker customer margin Energy, year-over-year grew X% somewhat lastly, year-over-year. XX.X% cutting transportation supply And experienced from moderation demand chains conditions adjusted of in by benefiting which some improved fourth basis Asia-Pacific. quarter in

unfavorable by grew XX XX% Slide increased Asia-Pacific sales and Regionally, sales offset EMEA the at X% to followed X%. declined Infrastructure. X% Turning exchange Americas in X%. by business of foreign by days X% of and Organic for year-over-year

prior grew X%, a Looking from order at all used plastics grew delivery the Americas. manufacturing demand improved to saw in the and dyes order and in and but offset And X% pelletizing for Asia-Pacific timing of regions growth growth. offset by modest to end market. in demand the Energy year. volume compared lower when EMEA General engineering in sales EMEA to with declined lower in declined EMEA mainly by due regions, large partially X% defense Asia-Pacific the due Earthworks by construction lastly, the in X% Americas. aerospace

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

prior First, reflecting had experienced the market price of calls, are as negligible raw we through as costs material costs flowing on is discussed over favorability the material now P&L. current now costs the

The the rehabilitation. road earthworks this primarily affecting the end quarter margin second was significant in in volume, factor sales America's lower market

are our about We this customers and seeing hearing season. projects fewer from construction

telling this. are factors causing that are two Customers us there

plant call, and year. quarter. customers earlier our labor driven was to improve This the miles as on improvement our have prior support to margin increased absorption mile available from the of over unfavorable municipalities And power First, last in noted the with see XXX higher rehabilitate abatement the option, work. fiscal do the we did points fixed budgets, we no not volume sales basis per enough shutdowns cost primarily by effects Sequentially, fewer but have secondly, of road. left

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

was $XX double free year million, operating full Our reported cash the year. million $XXX in prior flow nearly the

We cash are XXXX. flow very the since pleased free to effort with deliver operating the team's best

On from capital to our focus improved The sales basis, a cash realized. working inventory capital, million. specifically reducing inventory the On the dollar of to flow increased primary primary increased driver level a capital on increase $XXX as of levels working for XX.X%. year-over-year benefit lower in working basis, primary percentage was was a

shareholders the through In capital we repurchase $XXX million million and approximately $XX to were compared total $XX share to million Net for programs. the our in prior returned expenditures dividend year. year,

we every a becoming our shares a repurchased shares have X.X XX paid date, million repurchased million in to company $XXX of have years million quarter dividend of X% public We Inception to outstanding shares. QX. approximately or ago as $XX over shareholders. representing since we And

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

maturity We maintain profile. continue balance a to healthy and sheet debt

revolver end, quarter combined $XXX and had million covenants. and we financial we approximately within cash were well At availability of our

of full fully Additionally, found the end quarter. balance was revolver XX our paid appendix. the Slide in the on be at down sheet can The

margin, macro Turning I EBITDA moment faced our full want talk year to to so a about margin. how can we to XX. affected Slide forces everyone take EBITDA see

As that FY you our the was declined to 'XX year XX.X% in XX.X% can and FY on full see slide, 'XX. EBITDA margin

that margin. year a the full XX was added to For volume factor positive basis points

However, we unfavorable basis approximately and absorption of XX in from points in QX both also margin in lowering due dilution to from infrastructure had stock safety supply chain segments. disruptions

this environment, the points cost year The have full a on basis. dollar for discussing we have this effect covering margin is inflation XXX As in of of this been dilution price we net basis a with been year. high inflation

margin exchange forces basis in XX dilution lower basis foreign lower and In a of for Additionally, dollar approximately inflation, and income pension were 'XX. points XXX XX respectively. income and the pension points points total, macro stronger basis price dilutive accounted over of FY

foreign FY and to expect from moderate. the inflation to we unfavorable cost ahead pension income, headwinds exchange 'XX, Looking

expect disruptive initiatives operational Additionally, to and supply as going chain initiatives grow and we to not commercial execute continue we on increase will business be excellence the to and forward, profitability. our do

turn to to Slide our 'XX let's review outlook. So FY XX

We the are quarter. first the for with year first both providing outlook quarter. full and an Beginning

from with flat. neutral quarter negative with realization first effects. to We approximately exchange and Price X% of and expect X% million ranging $XXX $XXX million be volume between sales to foreign

the Let outlook. the assumptions detail sales me some share on underlying QX

The top general our decline historical lower engineering better the saw markets recovery QX we was average. of decline perform historical in a at than remains average. energy expectation year decline last our to a continue China that that seasonal reflects that level our the greater QX Our and reflects will slightly in than seasonal is range On that and the slow.

environment inflationary moderating We current expect the but a pace. persist, at to

We year. expect raw of ahead materials prior million $X due a material the pricing raw of headwind to QX in of

one-time items are share. X%, driving expected income non-cash to million is expense assumed be earnings quarter an $X tax is and to and includes effective which approximately exchange approximately rate a rate. lower first neutral Foreign discrete the pension which be Interest of to per

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

our Turning to regarding Slide full XX outlook. year

$X.X to 'XX to down between volume the want X%. to We and be $X.X sales assumptions moment expect from X% up review outlook volume billion, ranging spend billion to in this FY detail. I with more a in

For first level we year, to full 'XX. continue into of the the exiting I mentioned, as anticipated that growth just FY 'XX FY the moderation quarter is in at experienced

energy, growth the transportation and China. expect We an accelerate driven and conditions in progresses end engineering half growth by the as first with to improvement in general half year second the improving markets outpacing

year prices, remain For aerospace partially general expect to strong. customers Energy tungsten with actions, full flattish. our on and prices to index pricing net Based we of moderately current pricing volume with price to material by and expect due offset higher for earthworks transportation we realization increase the with defense content. lower engineering and X% inflationary

to exchange We neutral. expect be foreign

a current environment moderate. to but we persist FY 'XX, perspective, it From to cost assumed is expect inflationary the into

raw We wage general expect increases offset price material, and on to dollar cost basis. a

As QX to anticipate the prior by of raw approximately material a in pricing million. year, negatively we $X materials affect of cost result QX raw ahead of

$XX are from of in the for reflects In lower million benefit assuming current our outlooks in Collectively, level these headwinds segment. begin pricing pricing FY headwind primarily will costs QX. is QX our material the we 'XX, remains effectiveness tungsten. second level 'XX an FY this addition, The Infrastructure half affecting approximate constant to

initiatives at the We of expect second approximately an million has be end expected to Depreciation and be million on previously full rate million target income rate to and more of half tax of to Approximately $XXX 'XX. $XX $XX been the of are annualized from of year. XX%. remain and in million and year effective is share. amortization an included, expected to expect expense per approximately realized run to restructuring exchange $XX be it achieve pension we we neutral and earnings FY non-cash the approximately announced Foreign our approximately interest the for of savings

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

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

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

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

Pat. Thanks,

while Turning pleased with to few the me free strong in to we're continue for our minutes growth share cash remain to opportunities initiatives drive cash summarize. technology. let and and XX additional optimizing see ability investing take gain We from drive in in return Overall, our investments efficiencies modernized profitability commercial quarter greater in to operational by a to our and and Slide to excellence shareholders, operating flow strategic our improvement. plants our confident

XXXX, volumes light environment year durable with spending Looking will gas and pre-COVID associated ahead customers commodity confidence we expectation that accelerate. provides with into will levels. half, progresses remain us such a end our vehicle in production that key And as and second oil to fiscal airline growth remain volatile rates still build the peak year markets below see the as

event. update for growth Investor details Day. innovation our upcoming XX more specifics as conditions, targets operational forward to end We XXXX at the providing and as and these company's to See are Slide financial a an to registration looking market link and on more strategy on year fiscal the well

open line that for the operator, And please questions. with

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

looks XX%. Kiran it is guidance. like ask of your to margin EBIT I around wanted on on fiscal an XXXX for implies It This just Patel-O'Connor Julian.

to of out basis embedded So any I on math. call was XXX if just up to roughly within just the And points terms differences are expansion correct. your segment in wanted margin margins that check by our than more year-on-year guide?

Kiran. sounds Yes. reasonable, That

call. talked a I about kind on think things couple the about the just to about if think margin terms in we of as the of segments, think we of

costs half will move APT the in the ahead with raw Infrastructure first into prior First and basically as as quarter. headwind material some QX the off, in Infrastructure. about, of price start talked we here additional material year headwinds the have we in second being

negative Those items, Volume for slightly. year items the will positive being up affecting the the be the is midpoint. us at

the the and we benefits absorption in will well million get that as in restructuring our I within $XX plants had disruptions quarter third predominantly approximately $XX QX the million. margin about a be Overall, and of also had initiative, excellence issues We as will chain year-over-year we'll - - midpoint. Infrastructure be and segment, will in quarter we given some both Infrastructure on our at in up again, see from supply back some see operational our basis will come through We'll have think productivity initiatives. segments second come

about I EPS narrower than you. know EPS it year half. in maybe maybe the just Thank helpful. That's follow-up weighted the the of little like my the through a factors some It XH as normally sounds the restructuring, it. better just year of And progresses, be is. like out is Got And growth year. raw more topline material then you this cadence called would second headwinds kind thinking

So just check to if versus second us half EPS any fiscal the could half you split first in of rough XXXX? the Thanks. give I wanted on

Yes.

half would right, through normally EPS weighted think half. the think towards a about that be you're We be I you first will going to second think more. if of in about the bit it's that, coming XX%

the think will obviously we I back as raw We'll out this the the Raw be get from in restructuring benefits material quarter a half a material up on the in as fourth bit should year. for to be relief get it well. than us. net more positive pick less the back, get the

Great. Thank you.

like would conference over Rossi turn queue. questions more remarks. question-and-answer to back concludes no for closing the Chris the I the are There to in This session.

will hope be Xth at thanks our Stock Day September the on I for joining operator able us Exchange. that and Thanks, next join to York the everyone Investor today. at month call New you

call a the A in in queue. queue. have the question We

go ahead. Steve from Please Markets. We from KeyBanc Capital have question a Barger

morning. Busy Thanks.

queue. -- to the Sorry, But I forgot into punch

morning, Steve. Good

and seen IP the Metalworking - for the declined year-over-year negative for good June. We've year Index of printed morning. most just We've seen

back to outlook, Just of see that? you just in given year? about confident in especially you are the historical how cycle, how talk half the Kennametal's relationship Can the the volume you

Yes.

maybe data I think is few a what points. seeing we're

in of the kind first quarter of the said levels at so kind saw Pat first progressing progressing As we in we see half certainly, his the comments, not really - QX, And course deteriorating. year of half calendar which then first the And year things half that. couple of we some second is of a are the driving our XXXX, improvements. of see

If you look to and be at first half, to going about aircraft according OEM build Airbus, they're up rates, XX%. second versus Boeing half

look at We improvement production, gradual vehicle X% be going then in as think And second to from increase first to also that's production there'll year a in light we the globally Europe about progresses. half. industrial half

the China slow, stimulus we on it's and its measures, front, rig current will and level then understand increase help get Chinese which has but the QX. And into low expected government looking also some time gas is count also been oil at the recovery we of to the think the we China. the is pretty acceleration And by

calendar year XXXX. Manufacturers U.S. as and we've forecast will of Association there's QX for said, points from stay expected first couple then look got. National improve of that's half, in will I production the to it say and on I of finally manufacturing then it a And about X.X% levels at year-over-year be the there about We the data manufacturing,

our that half So will in the accelerate of some of the we year. second think benefits

was think S&P July PMIs, PMI - at we at U.S. the XX%. it's I in then also look and it's at in And XX.X% the manufacturing June

our right get that think the implied we first in the contraction once So to start industrial the huge that have as we it's in up we and in volume see don't in ramp we year-over-year But it's territory increase know. - these And still through forecast. direction you in a of that half our should the overall. moving production year

at you slightly the look probably up. be flat it down cutting infrastructure be year and If to slightly metal for full will

a we're not improvement. midpoint assuming the volume of of guidance, So huge at our amount

the of If you're year the us of more that will the second about to end optimistic half take range. the high

end a could at you're be more If range. pessimistic the of little the that lower

That's Thanks. that. Yes. appreciate great I color.

of expecting But for guidance to really But a have the a hard an make spend the offsetting that itself? are you of half. function your talking can case in kind volume a expectations, cycle pretty expect you in, you by where been come how must that now terms In to the see while good start to end of about the Or has the markets environment because volumes for resilient. side. some And on back time the other is wins. volume you business be commercialization drive something we often new outgrowth, been

driven is on that of commercial combination initiatives. by - counting This excellence Yes. the this to a part, not most would say the give we're is much. markets I for us very the A lot of

excellence cycle go the initiatives year? the more volume itself, as will commercial you So think than through the drive you

through to of a and in portion XX-XX roughly. year, in As think Metal of split, we Infrastructure, initiatives bit probably I are a the that drive a going go good it's commercial the Cutting, little

talked growth picking about given the XQ some cadence, Pat, half tungsten of the from as you - million $XX of unfavorable looks that just in XQ. progresses. XQ? year Does that the in and But you with help you mean XQ XQ? you generally it. first us kind Got have expect takes up and Or impact can more And like puts

I to much going you're like QX. right, QX Yes, look think is

it. Got

much. very Thanks Okay.

care. Take Thanks, Steve.

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

Okay.

And Stock to any a Hopefully call, all usual, all Mike. you if Exchange. able And reminder, certainly - just we we New hesitate appreciate So don't and interest be have your you. you there. our questions, at Investor Thank September on Xth we'll to see support. you Day have as York

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

or then You ID conference enter the to symbol. will the be XXXXXXX, pound hash prompted

The company. has will asked conference You today's you be attending presentation. your and for Thank name concluded. to record now

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