Kennametal (KMT) 1 Nov 232024 Q1 Earnings call transcript

Good morning. I would like to welcome everyone to Kennametal's First Quarter Fiscal 2024 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 XXXX us results. thank First review and fiscal Quarter everyone, for to joining Kennametal's Welcome, This release presentation website. and we posted morning, issued our slides our on earnings press our

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

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

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

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

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

market cover and call Thanks, 'XX Then industry-leading Mike. end market. Good well example fiscal with financial as the a today us. the we're of morning, quarterly results for review quarter Pat innovation start you to of and some outlook. commentary, year thank as I'll bringing the and will the joining the an

then comments call at I'll on questions. the Finally, open Slide for X. some the end Beginning summary and make

X%. and no X% declines. metal were anticipated foreign flat declined For volume positive seasonal by and of flat meaningful currency. At workdays negative year-over-year organically and level, cutting the with the from grew realization Price offset the quarter, was net effect infrastructure growth organic sales segment

X%, constant X% Defense, growth, driven by primarily a and mainly Aerospace by Engineering basis, General On currency Energy EMEA declined posted driven General and Americas Transportation. and Engineering.

by declined and Asia driven sequential China. and X%, Energy, Pacific reflects Engineering, General declines year-over-year and in Transportation

market, of part the expected, end of and latter with X% engineering, in was QX and expected, is China. which was General line engineering generally largely declined XX%, and of our but from the reported General flat. Aerospace XX% By and with X% declines as midpoint XX% XX%, growth, Transportation This the declined gas Earthworks declined oil in Energy performance average sales the Defense as and Sequentially, approximately quarter, below outlook. our declined X%, historical decline in

However, anticipated. lower than China was

of prior execution growth offset And growth Infrastructure. General Metal Aerospace. declines and strong let in reported our EMEA, versus provide year-over-year me the with color Engineering again the a strength Americas market and year in X% by Infrastructure decline conditions on timing. Cutting growth Defense by was Defense, of declined continued year-over-year from led XX%. Metal Aerospace we take growth some to Cutting benefited once that in moment to In end order sales. continued the initiatives in and driven Now

new decline continued in in declined hybrid performance, position China market. both EMEA and which quarter, supply Pacific strong Asia offset to and lower chain due in by to X% driven improving declined vehicle China. further project our easing a EV a demand with Asia this decline electric segments wins, and due Pacific, slight was the partially the by Transportation in Americas, in

and the inventory during was land-based by were earthworks Energy quarter this continued the quarter. flat rig lower U.S. XX%, adjustments labor UAW customer the dispute Our not between and counts Transportation the declined automakers. big by the X affected results U.S. driven year-over-year and

profitability. to now Turning

taken actions volume XXX basis by offset the increased productivity by Cuttings of pricing savings. segments substantially margins both operational inflation operating in on initiatives price excess points As was mentioned driven Metal dollar all earlier, adjusted a price and restructuring product basis. business year-over-year, and forms covered and improved mix realization,

operating anticipated, the quarter. Infrastructure's in margins a were headwind As

The year decline Cash raw mainly offset product in by benefits million prior improvements. price was from material productivity million lower unfavorable to to the operational activities compared Adjusted increased mix, $XX margin operating increased year by cost year-over-year operating negative in $XX and inventory EPS quarter, $X.XX driven to driven excellence and restructuring timing significantly prior the levels. by quarter. $X.XX from

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

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

Turning to on a take to commentary to want provide I some Slide full moment markets for end our the X. additional year.

Overall, forecasted drivers our we year. about second As drivers intact. there expected talked our for second of on call, U.S. half counts still were rig these slightly to during land-based the acceleration. last the And are remain despite several continued uncertainty, growth increase half

North September And Engineering is in In expect EMEA as improve XXXX. according Survey, Manufacturers X% grow addition, the expected expected of that American indicate U.S., is oilfield in their customers production public in to calendar the second to National manufacturing indicates in to through ISI's grow year year commentary of revenues gradual year forecast service fiscal half of they the from 'XX, improvement IPI 'XX. Association calendar starting to General 'XX.

PMI which ] encouraged also S&P Global by latest August Flash in XX [ from to in the an data we're improvement XX October. U.S. shows Additionally,

into with on year, progress growth Earthworks normal improve make initiatives to to our is seasonality. underserved we anticipated And half the applications. expand during line second the of to continue in

in discussed share Investor I on demonstrates in a our example, underserved we applications, last to infrastructure want For mining which Day. focus our gaining that win highlight at

mining order to to downtime. expand gold existing new customer which a This Recently, Solution, to mining applied however, Wear is solution our Brazil. win, our was for leverage applications. portfolio in cast This to XX into applications secured reduce the our an for demonstrates team typically coal Protectis maintenance particular ability

segments the In 'XX. and continue Aerospace year pre-pandemic still And half half build both Transportation, half. to in grow its IHS, Defense to over anticipate strong production levels to single second is first light second half remain build the digits in performance of OEMs globally we per fiscal below vehicle projected rates project low second the major our continuing year. increase during Aircraft to are fiscal of rates and

end to our continues share strategic gain. focus this And market in drive

that optimistic As experience to indices we're approaching PMI improvement, relates XX. it China, are the as we'll

of in could markets. affect conditions differ of So of the half. our market always, end And that increasing we'll factors our We that's view second be course, conditions from know, are an risk the as that drivers will end adjust a if an bottom-up environment market expectations. number improving the end and for monitoring there

difficult-to-machine titanium, across with high-temperature and including applications end Slide Metal end all in applications surgical steel. highlight markets, and an this X, Cutting, like such materials, Notably, our parts in cutting mill on our is I'd as example suspension used innovation HARVI Aerospace of stainless X slide in for guides end alloys Now engine medical advantage. applications. and to use These This for latest mill shows

and cost value XX% proposition including of ownership life is customers The tool longer lower a rates. higher for metal removal XXX%

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

continue Thank Slide the The we results. conditions. review execute of on I QX quarter's X with you, operating a Chris, our and challenging of begin show good morning, initiatives will market face that to results everyone. in

organic Sales flat growth effect were meaningful with flat exchange. Workdays no from year-over-year, and or foreign

had for quarter. and by lower percentage lack value basis Once sales and inflation for performed XX.X%, wage From inflation. sales pointed China and result the the we foreign in as as the increased year-over-year of Operating but remains recovery in strategic a offset key XX much in as a from mitigated on As outlook, effects sales restructuring expected experienced price region. segments effect program. out, markets The of a price cost decline exchange, but savings Metal in volume, several of our a favorable offset both expense, lever, end again, our partially this Pacific price as our Asia larger points to of Chris we in China. a perspective, we the Cutting pressured

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

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

the Additionally, million 'XX. stated our we during from the in savings and approximately June the restructuring of achieve quarter, $XX FY remain we end million $X program in savings we realized of annually by to started pace run on rate

primarily million of results from The year. prior effective material to this in approximately $X ahead tax tax decreased year-over-year a prior period. a costs to Adjusted million in which quarter due litigation raw rate of per $X include to headwind Italy from was a the Our the adjusted EPS earnings benefit $X partially XX% expected, were $X.XX onetime share year of a tax by quarter, of the offset in related settlement $X.XX versus approximately million. in item, pricing

initiatives performance volumes, was costs drivers reflects quarter inflation main neutral. operations operational our This effect X. wage The on savings and highlighted general are restructuring headwinds. of on lower and of this material the bridge offsetting and EPS The year-over-year price, higher Slide excellence raw

effects settlement the clearly reflects You benefit the $X.XX tax and the the rate, in onetime also of can total. tax lower see which of Italian

Slides This up to Metal we and organic in a the favorable pension our on where currency pension foreign X%. material count Reported compared of to peers constant quarter. quarter year, lower year select share remains Cutting consecutive when to a marks the demonstrated change contributed detail this overfunded. $X.XX U.S. There of performance and sales exchange X X growth a and the our exchange prior and each. plan basis. effect Foreign fourth that was the compared were no outperformed growth quarter, income compared market, last have X% with segments

performance end result at on led We supply constant X%, was declining basis driven Asia EMEA EMEA's with wins and slowdown followed engineering in Transportation. general and Pacific Asia the region, growth OEM performance X%, China. the XX%. in Americas negative while currency China. and achieved Pacific and of Americas reflects Energy by EV also the in due improvements markets The year-over-year EMEA by By was chain the growth Transportation to of a

this growth market. end quarter Defense year-over-year the execution Americas Aerospace the initiatives and by Engineering in of and General our was driven growth

lower Asia Pacific's noted, from as build in auto included primarily rates. Chris decline, China market was conditions

Defense growth as to continue Americas energy. grew Aerospace Asia the end by wind to in in by results General market. X% X% the Pacific sales market this with and Energy the our EMEA at activity driven China. end grew drive lower X% initiatives strategic in partially by Engineering due quarter, in offset market. region this and declined softness Looking strongest

with Asia by weaker offset X% than EMEA, And year-over-year in customer lastly, Transportation improving conditions more chains in declined supply Pacific.

took Cutting in As Chris did operating meaningful any effect quarter, we experience step weak margin increasing this not with quarter Metal forward from earlier, a points while year-over-year. XXX operating the in volume strike. a this environment noted adjusted UAW basis profitability

to savings. operating price inflation margin efficiencies higher operational and are factors Adjusted general These partially higher realization, and volumes. was wages, restructuring offset due sales by lower improvement

to sales Pacific was sales flat each. Reported unfavorable an to foreign infrastructure business year-over-year, due X% contributing X by exchange and X%, Regionally, Turning Infrastructure. EMEA and headwinds sales grew Americas of declined negative with Slide XX%. were down for Asia organic decline days XX%,

Energy destocking at by mainly customers. our counts a constant basis, lower and market rig at in the U.S. declined to land inventory Americas Looking due on XX% sales and end of currency

second We the into expect quarter. this continue to

year. second the regions. earlier, by construction half was underground mining feedback a in to And the Engineering Americas. with But declined conditions Earthworks General as noted in X%, across lower volume market Chris fiscal all is Customer of due flat offset our indicating softer growth recovery

order factors: to when end Lastly, in Aerospace the the Energy increased timing prior Defense Americas. from declined margin year-over-year first, General year. lower volume, to the primarily primarily Engineering Adjusted and and Defense X due sales compared operating to XX% in markets X%,

by to did The benefited factor was repeat, this cost inflation. the margin addition prior and excellence material to the operational capability compared year, affecting raw These wages in headwinds higher offset from not significant price initiatives. partially that second higher were general quarter material which costs, raw

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

first negative activities million $XX in Our operating quarter up from was $XX the cash prior million, year. from

negative from a Our the free million year prior improvement million year-over-year. quarter, operating cash $X in flow increased to negative significant $XX

basis, working remains prior dividend to In repurchase capital and to flat driving company flat capital prior The and $XX returned compared to the Net percentage share our this at working On on to to inventory focus Primary The levels quarter improved XX.X%. programs. the million, year. total, capital. was year optimizing sales continues shareholders increased through of were expenditures $XX a working focused on capital we quarter. million primary

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

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

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

had we're financial million approximately the covenants. and XX combined we availability found within can be of $XXX end, quarter Slide At balance our and cash The in well full sheet on appendix. revolver

second quarter outlook. Turning to Slide XX regarding the

QX realization expect approximately $XXX with million and exchange to flat. be negative between and tailwind. X% volume we foreign ranging expect sales a and Price to million, We be to from X% $XXX about of X%

trends the assumptions sales the on outlook. QX detail some share me and Let in

reflects historical similar we Energy slight midpoint generally year-over-year remain anticipate Defense in Aerospace growth however, inventory a increases, growth, Earthwork to is China. North a in due to declines will growth QX, is America, On Engineering improvement basis, at at and declined General UAW modest slightly Our with the QX experience flat norms. line lingering as a monitor with generally that destocking continuing, continues, our FX but in and the level we Transportation QX, range

Encouragingly, to we improving order China, in late see QX. in intake began

material in Infrastructure This due timing approximately $XX and primarily compared the estimate We raw some to than previous slightly affect expect more sequential QX. to of headwind headwind to experienced the favorability QX. price million will

basis. neutral on operating Foreign income exchange an be to expected is

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

to Slide regarding Turning full the outlook. year XX

as full year, our the outlook as the to maintaining to For accelerate, progresses. continue are expect we we growth year

first With half second the outpacing half. the

to inflationary offset with customers with partially approximately realization billion, for X%, prices with $X.X continue price X% by We actions, expect pricing. 'XX and from billion between our ranging $X.X negative to of be volume FY to net sales index pricing positive lower X%,

slightly and but it and anticipate Defense assumed flat. we strong. inflationary volume From Aerospace and Engineering remains moderate. we cost perspective, Transportation persist, be a Earthworks increased to current the to General and expect Energy is environment to

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

will from pricing we largely level in costs of segment. fiscal tungsten second 'XX, the begin constant half benefit fourth see This material will affect the for Assuming in lower to Infrastructure quarter. remains the a our

neutral approximately approximately operating 'XX. an previously annualized achieve Approximately We at run on million noncash of income included. expect is rate of we expected pension the target savings expense effective And income has million approximately and $XX to the FY Foreign of exchange be end remain year. of tax million, for initiative on full been an interest $XX our restructuring basis. to an rate announced $XX of from XX%

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

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

with over with our that, I'll in adjusted we to the together, back approximately Taken flow operating to target. continue long-term call Chris. of line turn free income, XXX% at expect net cash And

Pat. you, Thank

XX. Turning to Slide

a initiatives continues challenging, focused summarize. executing we although Let take environment our drive long-term on remain to Overall, to minutes value. to be operating strategic me the few

example, consecutive to For Cutting delivered of when Metal quarter growth, peers. select a above-market compared fourth

we for modernized operator, and expansion Investor Day. advantage questions. of open the confidence the discussed Also, greater excellence and Cutting, Infrastructure our And as These margin lower results efficiency even innovation in with commercial margins to cost in mitigate our to give from drive contributed that, operational driving through us we ability initiatives to out excellence please an line $XXX declines the despite volume million growth experienced. volumes. at improved above-market initiatives operational And extract plants, market-driven part to Metal our our plan,

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

Maybe quarter -- to the start just wanted second with guide.

have So QX sequential before very EPS. I QX decent think looking in and to you we talked similar about now sized step then down this

the at when that we wanted the lot I are mid-single do double about Infrastructure Infrastructure then margins in there's just of of mentioned. And tailwind And by full margin low think cost year you QX. just sort are material a to sort So digit, the ending to understand, changing? year thinking guide, that helped low of to assumption with digit we

Yes, Julian.

of So things. yes, a couple

QX, terms here year, cost the the year. QX Absolutely, then is for of and throughout driven and through material will progression be really perspective. that's think we about just Infrastructure in a thinking Patrick margin happening Just about to talk from is what going as trough, our the by

say, our XX ago, for about that. about $XX we QX, I around thought I would I that thought estimate million, headwind think material current days being as

volume that progression the for as up only we primarily see in it's come Infrastructure. as as costs us material will will current hold QX. we there throughout the at prepared price And And get time the a from long $XX tailwind segments. the about to not for to see get the back as midpoint So around perspective, of we'll those that also remarks. by will at through a that half talked the million, margin tungsten year, move flip we we we year. of level, the But out as both affect

And helpful. is around my just suppose, and the, also Engineering second That's I General then segment Earthworks. question

be understand us it's realize So called general. the better half. tricky half? given impression the what what be of maybe you in kind expect in second get better of regionally, it's General specific, Engineering, can It I of but sort hard help to to any there gets back

sales. a you've talked flattish Earthworks, about for sort then XXXX And of

excited lot next year. I in about on other U.S. get the of think companies so a stimulus and

on what Earthworks wondered that was market? your perspective the vis-a-vis Just

bottoms-up the metrics Yes, number Eng sort that went Gen would perspective, think a from I a that. of drive Julien, of I through

second in those Association for to Manufacturers . And our the on which ago, sentiment growth IPI, touched is grow. the to that expected were U.S. the industrial the year. And is of largely half metrics days exactly improve of we the was base expected European also in So same. XX National

improvement basis to of in in expecting intake like of start we in latter were September that's than it to started also weaker a out were but Gen we this situation why where, to was our Pat that looking to as QX. going thought Eng think we to QX, it's started is about, We So encouraged that. increase. moving order the see part we the because that's talked is And QX China now improve.

tell you, in I'll fact, in for our And October, outlook QX. of expectations our met terms in it

on is momentum light some by also So versus affected then vehicle that side. there's expected there. second positive And Transportation still half half Gen and is to increase. Eng production, also first

So drivers there. big those would be the

last of number talking spend, I think remember, had customers, what to to miles. budget only -- they you inflation miles because they costs limit the main the And up QX, to would only that much road milling an with to of associated the and was number for milling if road was that our from normally business Earthworks driver road expect. actually milling of below having had road year, had perspective, we could so they municipalities was and reduce significantly, milling the they so our

this Infrastructure Infrastructure certainly And from bill. expect backstopped have point, is to been than greater some the budgets funding the your so seasonal a bill, actually in growth, municipal Earthworks replenished particular, by or our feeling is QX see because those via that for year, of that to lot the we in --

comes next The from from question JPMorgan. Tami Zakaria

good quarter. And

quarter. that impressive us another Defense, very on remind levels? in Can of So where volume versus you terms pre-COVID are and in segment you growth Aerospace

if -- OEMs other we Airbus the the still don't below rates -- and are that other actually is, pace I specific but increase. have think is production second see levels. Tami, Mike, production thing statistic, The know, projecting half to Yes. production definitely and still we Boeing the pre-Covid that are I

supply Now that some there still kind -- that. is they're chain of are still experiencing delays limiting

that they pre pandemic to levels So this don't know I get back year.

is what, below still it? what they're think I by Mike,

got so OEMs. on XX% the the in growth second or and you've rates half percent XX build That based

expect And sort That's driving after it. you And talking time continues. longer? Stepping do on the light little Any know it do in within think Got slight it. specific decline some Got I Energy, Or weakness? be about you're destocking the see a just at it. second think what you as to where you helpful. bit back, spent quarter, you said you then is you think you seeing like XQ, it's Energy, can softness? the the a tunnel, And of going linger largely end do of categories done? this

Yes.

our QX rig for in driver also. the that big particular that declined the -- year-over-year has And down count. Tami, been stepped and U.S. think, has significantly sequentially is business I land-based

from QX QX. So to

was to began inventories. Now that simultaneous to mitigate to reduce service is the safety their oilfield other as thing that started companies chains happening that the supply stock

We is now us for sort the do we've optimistic that been that, of to recover they think in of have that, will to talk they quarter, start So, year. talking behind about now inventory number a in customers -- our and quarters. of reduction that they're that the every second half And QX.

be Tami, say, do can The that, when happens. destocking is I may with where scenario they that under is on have would not overdo through that some there end, of this be recovery it's go effort, uncommon some and the That a pickup they understocking. the it they because that a they oilfield back service to other customers thing typical

of The from next from America. Bank comes Feniger question Mike

pricing of Just probably guidance this plus that to with something did X, quarter, you I similar the believe number.

that and and of us your the the of you year you full to put year cadence price Just just help achieve to the in you backlog? based on to that number, or to if to in that that contracts have do QX whatever year? help have Is already kind number. get kind half full increases curious understand full back in of -- us Just achieve in set that

Yes.

solutions to both we to the particular, dynamically. relatively we way businesses, say, adjust think things X we we the get one, pricing, prices. live, and when things. do the to portfolios, about quote Mike, I'll for And about Number those get value, in all time. that in we think, price that custom I So think the

just thing markets think we 'XX, other The is the price selected did in quarter. FY here some the for pricing think about as to here into we about first put

so And us, obviously, and actions will are fiscal year. they throughout the underway, entire those benefit

other my that that follow-up destocking there, the ended. rise the I'm okay? the feel I'm like think just then just Helpful. and should maybe Engineering, just about you what And through seeing you we General the question, curious just, inventories, are like seems you rest you're own kind about And destocking just on if and that. some seeing second your that's guys there you inventories, of services, could working touch curious, I'm through year? those your on is been talked curious of customers, of how have you're there the oilfield that with

Okay, Mike.

of as General of distributors out recovery, terms adding to skis, not we've me our about and of have this terms talked customers coming in inventory. getting our their in So fairly out seems over disciplined Engineering, pandemic been about

particular Gen when there's caution. strong in So normally, we of a we that in saw a these recovery so there happens. restocking. a We is in did not see really And restocking Eng, -- type markets, lot of a

And was there. happened clearly in to the customers support areas Aerospace, where restocking like where the growth was

my theory destocking -- as we they over ski. terms things really got in globe general around the that because really of seen softened consequently, haven't really any industrial So is have never in production, the

significant think situation, take. question not then seeing a gas. Pat let we're And what and I other that's I'll in which you had than is our we -- that on So about particular talked oil destocking inventory our view still

Yes.

on you get That's some improvement time really As from implies be year. working about driven inventory think to this get our in improvement really capital, there, going that outlook, inventory, it in reflect that at I the we working primary we've the back as the is got capital throughout position. we'll point out primarily

for this at capital our working we to we areas improve an focus the going on have to about basis, efficiency. ongoing be of one talked us think Investor we As Day, opportunity of is

Dankert Chris from comes question next from Loop. The

seems us improvement. of what I was? kind was help income triangulate signposts if of could correct? of you that in the but or if factors, the what And impact could the lot like was impact the give Wondering operating us you excellence know metalworking majority of of that it operational some the a quarter. kind just Is

Yes.

drivers bit as Metal would think the we a what's an Metal in improvement, terms from think margin I think Cutting. about we I'll overall going say, say, in an I little had there on they perspective. Cutting, was overall, And of headwind tailwind program Certainly, absolutely efficiency about a FX. we're me, And but Obviously, tailwind bit able of as a of restructuring -- cost see a we've some a to well. manage perspective from from as continuing excuse inflation, the from a well. from pricing a little been to that

say in performance So construction overall, excellent perspective operational from QX. a I'd

efficiency from modernized I I still think, drive Chris, other operational flow add we our and to would margins. processes, Day, Investor have opportunity And the see seeing start put try think thing in as through It's factories. to better talked through. benefits the to applications in. the to all thing But I higher one that data improve we think get to Cutting up we is, equipment to as you're and putting to about in smart analytics the Metal I starting factory at and operating now modernize the are that of factory getting our in that do flowing you're ramp

Is neutral forgive me basis. was impact a little And I'm segment, company, then what of you uptake. bit it. But way said on Metal headwind impact the kind then by in remind tailwind the to Infrastructure, that was in think was you Can you were cost price on saying just dollar full about the Got us for if the the it. a equivalent Got slow Cutting, it it? an

Yes.

I think that's right.

are we One materials we of things indexed. and dynamic relative the do these about the have contracts to and think that as price Infrastructure, the raw margin

repricing price affected seen move natural here. There's have But quarter. Infrastructure the going to the down. in as QX that continue how occurs. a Again, that's of that We come that's tungsten we through in

Capital Steve Barger comes from question next KeyBanc The Markets. from

the back pandemic. in guide, about implies look X% half. increase. is XQ which at Chris, ex of XQ around consensus a about revenue, some reacceleration you've of seasonal, to above X% it midpoint the your But talked is if the I the relative Which like factors

when little maybe a timing and to So should seasonality of bit assume improvement, Or we that about think more year you you get the seem a sense cadence. back for better? Just does half trying then normal exit reasonable?

Yes.

us say side little get was was year, Tami factors talked low that's would going of even I earthworks -- back with that think even, fourth generally, normal bit on higher that which of think I low pretty -- drive seasonality, it but if to are road the to I for a there and we it's one quarter. will last was couple milling a construction very and that just about

it's generally bit ramp-up but even, the quarter. in a think little is fourth of there I So a

oil gas and And Got energy products. you all due wind decline think economics Can one lower it. the you around you? stories favorable how just mentioned from business rates. And in are to us I we've big for is of remind less seen energy then how both the inflation and and interest some delays that projects

There Cutting, stuff business you at -- a Yes, in that preponderance if that but can the some is but I of -- separately, Asia look you Metal win, that's wind. our don't the think and power we I wind. for preponderance but is tell Energy there, broke out I gen in is

wind investing lot happening wind, be some And that that straights. between seen that farms of us Taiwan given thing is other about there's is been China dynamic to seems it China uncertainty and Taiwan, located these the wind in to what we've in are farm those about the a continuing fields. And the what's

our put what's of damper on to driving that's to customers, that's a don't but China. expect that business that that They And so in according a seen delay. we've wind But little last little forever, it. bit

The next UBS. from question Fisher comes from Steven

there forecast forecast know that you in Just -- the could just coming of back you I'm improvement. I historical have, actually percentages. some gave magnitude you was an I to automotive mean it? how you of using much factors. apply. of growth you into Are that guess curious about I how indicators is seasonality of sort the there the Again, science second just those mean, I the talked you translate half some

you half what's how the the magnitude to of get implied in curious rates? second growth Just actual

Yes.

and tie, years, that IPIs the light Steve. for production we by have region that translates or into us, models Over vehicle example, how for business

a kind it. it what that. of math IPIs the So, going do forecast view those starts But behind to there and I out with and obviously, their prognosticators is are of third-party laid some of

always But balance we customer to with have then customers. -- the that ability

there do math Infrastructure the of behind what the telling a heavily customers where then in rely those project so are sentiment are part our it. business, what And business, of customer lot there's But So us. certainly, -- is we on is. that's

be? might it's supposed extent helpful. benefits you That's in you of that restructuring forward? sort of then that Okay. forward? just what's the And hope that play play any the timing event some that the you that you let of out to to that have pull going to out, for Or doesn't what the potential accelerate would in Could

Yes.

a that's Steve, think, good I question.

actions Rebalance, plants of we've call improvements. we $XXX Project we're our cost-out is and productivity on just some with got Pat moving about As We Investor payment number talked other structural million based Day, it of And costs project. spoke which associated at of, a the the down things. restructuring, $XX and and was It's million. that and

not point we've projects -- certainly news good we'll And we those starting have active that flight. already the always because we're the anyway. But if we're already the moving environment are some things accelerate have that we look to in So, looking worsens, flat-footed is is got to forward. --

Volkmann from question Steve The comes Jefferies. next from

question My Europe. on is

there, hear I really Steve. can't you

about All this Sorry that. Is better? right.

Much better, better. much

Helps guess. mic, to I into speak the

case? seeing why over I share you gains think seems guess Aerospace there something. really over there's probably maybe growth in of maybe you more And I lot or there. a don't of So different is sort in mix, segments some it there a curious little that have both to contrary know. a you're what Europe. like my strong and I'm and from about Europe hearing question we're others the But over

growth any area? the on Just that sort commentary of why standout is

Yes.

down, Eng I think light production was Gen up. vehicle Transportation. chunk of of And Steve, Gen you is, were terms the particular, last what were very this a improvement versus think year in levels. know, they Cutting, a about producing year-over-year as way -- Metal year, improvement off we and is they baseline. low that was Germany, a the in attribute the so you the And if is QX -- at there big actually in Eng And that, low

chain still the The trying to of good news are they're backlog. some their them issues is supply and fill behind that

equally winning and important is that And transformation to I happening other projects. think that a driver then EV thing and EV those is the is their big we're so

just this So good is -- some as gain of those of of winning also winning a you number projects. pointed out, share

Europe. -- on think picking and that's just up we're also then was I markets there, if combination up I feel focused Aerospace thing Defense, the that And of and we're is a strong but like in certainly share. we continued and other

obvious that Defense by it largely was Defense business think Aerospace our And For Infrastructure, in and -- the Europe. I reasons, was driven for that business. up is

update Okay. And purpose, adding Chris, Great. well? there. Is that helpful. for an share as fit That's just to then still

Yes, need Kennametal We segments We've we're the them sort offer we broad custom the going you to normal portfolio to together. both and distributors fit-for-purpose that -- brand where together, that and our brings. our applications higher Cutting have X the strategy, and of customers put we know, it end both brought for a solutions market the We've as the -- now Metal now with is. business. WIDIA

picking So globe. we is are that working feel and share strategy across we up the like

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

We're and our generating shareholder above-market everyone, the committed cash flow by Thanks, advantages, Thank increasing drive competitive operating growth leveraging value. and joining expand call. for strong margins, to while you, free operator.

you and we to out appreciate everyone. to if Have Mike, and don't your have As always, hesitate reach interest support day, any great a questions.

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