Kennametal (KMT) 7 Feb 242024 Q2 Earnings call transcript

Good morning. I would like to welcome everyone to Kennametal Second 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 Second review and fiscal quarter everyone, for to joining Kennametal Welcome, This release presentation website. and we posted morning, issued our slides our on earnings press our

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

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

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

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

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

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to $XX We repurchases with of the the program million quarter the continued repurchase this share $XXX a $XXX period. total another authorized of Board back in under million. The million program Directors existing X-year shares amount repurchased share over bought bringing

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

want our through end full Turning have markets the things provide and year to commentary Slide for evolved on QX. X. how to I

drivers. us, the have market is those expected of at for uncertainty As forecast quarterly full despite discussed not we're on last Remember, specific beyond. and market drivers sales second improving a still macroeconomic backlog our we and informed meaningful our is year of unchanged, call, And half. in developing the indicating time, conditions for remained indicator the outlook by

rely the the on these we and have summarized of drivers forwarding forecasts So as evolved, these today, of slide. specific drivers market market on customer input. Fast forecast to

orders still December, sales Additionally, Based first continued has U.S. Energy, an January, to in in particularly we 'XX in half. fiscal the the second we General which in primarily these outpace unexpected slowdown Engineering on changes, saw half in year and expect

And expect However, a and Eurozone end at primarily forecasted now our More of the we slight in the were X% specifically, market be the quarter's lower energy, slightly. are land-based fiscal production, no now to longer year-over-year we're in year last expecting General are driven uptick expected is end decrease to indicating In here. rig U.S. by decline that year-over-year U.S, the growth compared Engineering, changes summarized second quarter. down industrial expected our by forecast. last to half China. customers counts

shifted order second Our decline. have aligned the half calendar calendar no activity to half anticipated this continues with is meaningful lag of of that deliveries to American year. Earthworks the sentiment first North year customer recovery during 'XX, to with

seasonality price Although than normal seeing demand, 'XX. are enter of year as we fiscal we we sensitivity anticipate half expected the second of greater

continue wins offset a slowdown mining. growth in year-over-year project IHS. to ] we're also addition, China [ in per as slight seeing In some expect Light decline Vehicle Transportation, Global In we production

anticipate market. quality and some below confident the disruptions Major to to produced Our the to still of rates a slightly recent lower potentially to still from Aerospace continue are build about half, aircraft projects level. outlook now gaining the we're of strike. forecast our experience segments and UAW decline effects aircraft Defense the to in the continue they levels. OEM additional production OEM ability will are new end number in issues. the near-term albeit and first both pre-pandemic in mid-teens year The full We And in is due growth forecasted XX% with this in for second at includes quarter's share over half expected last winning increase

we restructuring fiscal rate by This year proactive second we're recovery perspective, would if are taking announced China remains accelerates 'XX Day. at second regional actions Pat the will end I of progress measures a from official achieving discussed PMI first the in Investor as mentioned cost at targets our in take XX%. last out $XXX to for we end, longer current latest additional previously restructuring flat million no to half. expecting prepared additional $XX macroeconomic quarter's to the his half the million improve $XX that given our as be we the towards in increase a that markets On of didn't provide the metric details run the call, expected prepared savings end remarks. program million. To Finally, that uncertainties

to also an Insert. available geometry modernization. our customers. general with Coating productivity and recall, for customers legacy wider another our not differentiated on enabled engineering is Coating is you KenGold could put, tools to the performance innovation slide eliminates as higher And our transportation, applications. Notably, X, this enabled example need ideal and modernization. how a we by deliver new the geometry medical produce expands Now it advantage Technology the proprietary of Insert to equipment new and I'd across KenGold like range new applications. may Furthermore, by The the proprietary new enables which continues Technology Cutting innovation change equipment. Slide was Simply on this our of for making to new highlight enhanced offerings This product for Metal operations, our highlights finishing our

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

Chris, I quarter you, morning, with and of on results. Thank Slide good second X operating begin review will a everyone.

We of offset flat continue a X%. were of year-over-year of with of market decline Sales to initiatives by an execute currency pace the favorable our conditions. work exchange face challenging in X%, organic X% favorable and

respectively, the in market margins end year-over-year for our the with quarter second operating EBITDA the negative This versus by and the affected in put markets. for quarter and Metal conditions was pressure out, XX.X% fourth shifting XX.X% performance quarter. this X%, prior and Cutting of As on quarter Chris all pointed were is Infrastructure that X.X% year volume. Adjusted

a restructuring approximately The from million Rate performance offset timing, $X.XX, ruling. on change During Swiss quarter. the bridge effect Adjusted $X.XX benefit in current from savings of period. and of quarter drivers of in quarter initiatives Tax this negative X. Slide an was The $X effective rate highlighted by an operations million year-over-year Price/raw from ongoing in year's Swiss quarter EPS operational on we savings. restructuring adjusted by in this benefit primarily and program. $X.XX a driven $X material versus the tax the tax were included $X The reflects quarter, our million year in negative prior are the the EPS approximate was approximate earnings realized partially excellence per tax main X%, The prior the volumes share lower Tax the

Asia X the prior about taxes positive performance contributing share You I with Lower effects sales China. was EMEA's Rate, flat. growth up X growth achieved Slides Americas year-over-year Americas Cutting of By on due flat Metal We region $X.XX. EMEA the at by $X.XX. the led Asia detail quarter. Reported followed with at EMEA of to Pacific Pacific were the foreign currency and X%, organic with contributed spoke can slowdown while in this in our also X%, just by growth and performance favorable Swiss initiatives and EPS segments this year-over-year X% in also the Defense. a was X% Engineering Transportation General market. count by to favorable quarter see in the growth execution Aerospace of the Americas Tax growth the and in reflects compared end and driven and effects year the and our of each. quarter driven X% Defense workday Aerospace

China. Asia market Pacific's by primarily decline conditions was driven in

in Energy Power the this wins in conditions grew in vehicles impact projects. And our from EMEA. strike. year-over-year Americas of grew by growth by X% Looking by declined project the slowdown Defense Asia as and and EV strategic result by effects driven million of Wind and X% prices continue end the in somewhat inflation. Metal General X% offset lower a majority restructuring the grew weaker capture. hybrid of our of UAW in volumes with in and selling sales the Aerospace initiatives in in lower higher year-over-year the result drive a year-over-year at Americas, the EMEA, growth Cutting were of XX Engineering Transportation China, sales strongest share of Pacific adjusted market. points and higher with quarter, by decreased as wages mainly $X general a lastly, operating as and initiatives offset to approximately savings X.X% basis year-over-year, strategic as X% margin offset partially delays

were Pacific X% Turning foreign in of from declined flat organic Americas EMEA by of sales in Infrastructure X%. in declined to X% an sales a sales Slide X for and partially Reported were tailwind Asia sales year-over-year offset decline exchange XX%. down the Infrastructure. by Regionally,

to EMEA. Looking market. prior end mining XX% declined Defense volume the when from and sales Americas. due XX% to the compared in the at mainly primarily continued inventory lastly, softer year-over-year volumes land underground and X% On Americas. the U.S. offset lower declined in demand Aerospace counts General Adjusted in the Engineering basis, sales Energy Engineering construction primarily constant operating order in lower-than-expected a declined in two our due and currency at and of to from Earthworks destocking X% margin First, lower Americas year. General timing customers. to Earthworks rig factors: by with by Defense And markets declined X.X%, end decreased

These affecting was partially offset the were factor including excellence significant margin Price/raw quarter, expected, as timing. Second unfavorable operational headwinds material restructuring. this initiatives, by

review to free The $XX was flow flow turning million XX operating cash and flow million. was property-plant working capital primary to by highest our since driven and capital a levels was XXXX. million, a year-over-year, by year. to Free from the sheet. Slide dollar balance Now from increased sales disposal $X $XXX and inventory working higher capital expenditures. On operating decreased cash year-to-date including improved in XX.X%. capital primary the free to changes, half prior of cash increase basis, offset basis, cash operating equipment, percentage working primarily partially generated first This operating in free flow up the On proceeds

million We capital million increased to $XX year-to-date compared through X.X inventory and returned our the shares improved share million continue optimizing X% levels on In million capital. in to the inception approximately dividend shares, total, prior expenditures the programs. year-to-date focus of a of we $XXX $XX to million or program. since and of of repurchased QX outstanding driving to shareholders $XX Net million shares $XX year. working We for total representing repurchase in

shareholders. Directors we dividend earlier, every public years mentioned And over Board the a since our a authorized to of over repurchase quarter becoming as we $XXX million Chris company share paid a As period. ago, X-year XX have another program have

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

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

quarter third to our Turning Slide XX outlook. regarding

includes million exchange of sales effect to negative X%. workdays, negative X% price between QX from approximately fewer be X% and million, approximately volume with foreign to expect X% We $XXX which $XXX negative from unfavorable and ranging of realization about X%

generally historical and Let me growth slightly. that the range and year-over-year our the share the On we assumptions QX to quarter expect Aerospace midpoint, to a some is to details in second Transportation and in sales affecting basis, outlook. At on increase line reflects our trends norms. the grow sequential Defense QX continue with

General persists project Energy Additionally, no pricing rig affect we as decline and continue Earthworks Engineering to lower anticipate work in at decline. to to The expect to pressures inflationary decline from growth, delayed counts, we a modest environment China. continued pace. but destocking. and significant improvement current

exchange pension basis. operating on Foreign to noncash neutral and income expense an expected be are

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

full Slide XX to our outlook. regarding year Turning

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

and decline, Aerospace Energy Transportation moderate. increase growth, persists, Year-over-year, neutral. to is Earthworks to inflationary cost and from current expect exchange be The we decline perspective. General and Engineering to to environment slightly, is to slightly which assumed to Defense Foreign expected a moderate have

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

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

approximately level be at 'XX. the will margin quarter as of fourth FY operating adjusted quarter fourth Infrastructure's expect We the same

noncash on and income exchange to be Foreign expected pension neutral operating basis. an is expense

We expanded, rate million. total approximately annualized announced has of at run from the announced end of estimated in $XX we initiative million. up XX%. $XX savings this 'XX, EPS be adjusted range to expect to of previously year Our $XX approximately now now the to of now expect of million program a cost The and restructuring $XX been the FY full million $X.XX with rate versus $X.XX effective previously achieve is tax

depreciation interest for outlook Our expenditures and capital amortization unchanged. and remains expense

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

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

Pat. Thanks,

previous Turning to market to term, still intact. long to economic conditions the Overall, over although our the confident remain our growth are market share outlook, summarize. strategy XX driving global drive Slide changed in megatrends from We gain the throughout executing cycle.

this best have for to of We the navigating is market accelerating Day. please position we An line we questions. example on these headwinds, experience focus And open at company in forward. will the and cost-out with the actions the actions $XXX outlined Investor place that, million of operator, taking moving

comes [Operator Instructions] from with today Our Jefferies. question Steve Volkmann first

quick guess, for of I couple things, interested. me. A I'm

of maybe that get I'm a negative think actually color little sensitivity, mentioned guys you not that trying would color think there. the might be? increased mean holding it was I there? more Does you're seeing Just more price but both but line I sort that great. others go Earthworks, is there Or to be any just of you're pricing

it was I related was milling. Steve, would that say and being our phenomenon Yes, I And to it a selective. road prices we're and think more holding U.S.

projects might happening what think still perspective there. a market is the be I from are

be talked that end we were our budgets year, Infrastructure bill miles year, last the strained. milled And to happens that about of it's backstop remember business which those quoted for business less being construction season, you But the there able fact to, helps right because budgets. to was supposed is the to the help fiscal that If now. at

little little bit expected. different which think sure we are kind see, to was normally right and more we want what get would a had make now, than projects than those price into of sensitivity a they that I so worried are that locked they And it's driving people

it. Got

that here. way, might of we're kind is broad just of pretty hearing how from much end Because market sort be companies. of weaker there to destock? sort outlooks this And weaker relative sort of what they Is seem then of the think than markets? other bit about seem Chris, weaker to And a Okay. much any how inventory end

Yes.

over side, the not but our pretty a destocking terms by been this adding on of distributors I've think I [indiscernible] pretty, been have conservative getting global in about comment. and is inventory. kind their

hold knew a never supporting, we will, of areas in saw knew they patterns because little So if had they inventory much to certain. really except you those Aerospace, demand they are we more a where they thought like restocking, were the

don't is destocking you will. major a this a think wasn't we major So, it restocking, like if because really

And so in therefore, saw of economic how the outlook it's just based mean much I more quarter. little changed over terms uncertainty on of the data has a last you the looks what like.

So I inventories working articulated sentiment an actually down, then been gas in and perspective, what's more now they've the service And been and oilfield clearly, that. about they've the it's by oil think the their versus Infrastructure, customer on now and especially calendar is first now at and companies calls. the America, least for year that, be continue year in rest that year the believe their going of half slow They 'XX. our of of earnings from North business to our that to

next from question comes The UBS. with Fisher Steven

control. on can morning. focusing you're markets control outside of your when the the you that Good are Appreciate that things

you facing In mean, the tailwind much tailwind nothing other you lower some I set cost savings? know How off but still sort So next fiscal going versus level headwinds, 'XX 'XX cost? that us on understanding I there's just maybe now be 'XX? fiscal else 'XX 'XX start likely you words, year the that compared to changed, into can if to have lower are what's with costs inflation accelerating your on the the you're year, for that just of cost fiscal

Yes.

about I $XX we rate going probably of in we a QX. million think is about would run exit at terms substantial was, think We'll Steve, from year had year this to total. the we're to in uptick that, And million uptick in about more I right? build $X way in the and think, where think I we hit the here One QX. QX, $X slight this million QX a but quarter see

we're approximately, year, And here. see this So we're in particular. that I going restructuring kind to in of and roll program be that $XX year that from take next to back savings million of over out, we'll terms

moment? have on hard when in market backdrop. increases QX in? Okay. then I'm guess That's And guess, of helpful. price broad introduce Given those is new realizations were in, the I price the I are and curious that you how X% wondering price put pricing, And And increases it the some the maybe I'm to how QX? at

the The largely to our monitor in that And segments made general, we that place. pricing smaller some the modifications in were of continue can the Cutting. prices In think we then Metal start were that Yes. was year. we've And particular, done on recently fiscal that in there prices we in think progresses. as I year we both Steve, put hold put in at to

I milling, portion the the way, I part, and of been that, the think this of anyway. profitable lines do. sort probably by is we road behaving think Infrastructure for it's of what our which have along Absent the least example, portion in most and logically of competitors business, large a Infrastructure

we think especially to can in So line inflation. raise with continue prices, we

declining less but China, price they any value threat sensitive that demand of a our are or less sensitive, influence market, price able substantially small market. to in the differentiated we're a are proposition to in have think And very we that much players even in are be markets. don't always in for a are some, prices some example, they there key there So

next Barclays. Julian Mitchell question The comes from with

wanted to just I the. to circle back

follow of the up on that to operating year. guidance sort margin Just for

an as at looks looking in margin Infrastructure. operating exiting at So the of if you're clean basis, sort X.X% year it

and maybe the breakeven in third flat be that's a to quarter. year-on-year, I think you'd said versus

of step-up that all tungsten is aspect. that So

the volumes sort total coming sequentially a kind that is of then how when framework? looking it the be of X% at guide, to trying guess, in from, simply X.X%, I understand, tungsten? Versus company? QX? third Just we're much margin of Is And might say, quarter

us, will big think that in right you QX component Once to the As out get a in we flip for on right? of is a Julian, Infrastructure and margins. as as is top repeat know, there's that, the the that in positive that's significant improvement pretty and to that to for propel Infrastructure going margin QX QX And you you're well. company-wide Price/raw of will quarter sense then a this a Infrastructure, an here timing, about strongest QX, in

uptick well. we'll see volume notable a going to QX we QX, as from margin so And than in perspective a more from would QX

helpful. for a should That's about think X.X%, in we the with quarter, And fair? third Infrastructure, about is the company that X% a margin breakeven of being sort

Yes.

perspective, I a well modest as an to uptick think little a perspective, based of infrastructure you'll then QX, in improvement right? from see you'll Cutting here volume. from an bit really on margin again, QX Metal see And

just That's question, things. on Surprised sort rolls Just from liquidation, as over. the kind more Anything of flow weaker management. the perhaps sort volumes, helpful. there? follow-up of just side cash conversion about going of that of how maybe capital volume think my you're curious that And with working inventory not then conversion on maybe getting you

bit think I up sales were cap the versus in you X the little assumption that working of improve June. [ kind kind months' and ] are flat will holding time? the inventories on Or of a sequentially

Yes.

particular. short and elongated basis, you chain conditions the When in It of perspective, does just a in relatively the context a drive about time. think shifting is to over that little for that say, in the supply the couple think I'll of us term, a take working a physical to of bit longer-term about As underway time of, we from distance got rectify market supply chain. terms framework inventory initiatives number in of a down things working capital we've and capital,

that as kind So chain, where take we've demand reacclimated to a here month time the and will us to of out. of the come developed supply got in it we softening you of get December, inventory expect know, bit little to

take off net will And but temporary so bit going long that's us set we inventory, on a to the not put track capital of probably drive of of over that the in improving to run. our for ability down a the ourselves pause little terms working objective

from JPMorgan. question comes next The Zakaria with Tami

on the a I have So question Defense segment. and Aero

growth expect environment initiatives. you think to now lower related I OEM some production

your from prepared strategy arise? or new and are try need structural more long how term you issues away should perspective, How structural. risk? this OEM to is from the If this to diversify win So said or What's prove OEMs? temporary the it

Yes.

couple of The they're even I actually would good producers is think it's here. they I the supply would really levels still Defense, of other a producing chain. And things much about even the than lower OEMs Aerospace or pre-pandemic. think amount demand aircraft, a and and out to by there, at the of news is produce like large huge whether they more but are constrained there

into our don't outlook. We got the appropriate we the factored for think immediate a particular business. So know exactly. But I as the longer-term a quality projections issue, think, is just risk a see this probably short-term risk phenomenon. that don't We of we've

the part our level, the adding And of we and that opportunity And Tier gain not X, Tier quite support suppliers we're about X share so ability where gain, X just that's also supplier, industry, at but the to new share. as is. feel our OEM good customers that this

as So changes I that don't as growth, to much think there our our quite term. while short will in have be thought be won't reflect we that any But the it of forecast picture. did, did it

premium your there? your competitors, perspective, reassuring. or given positioning a the second the years versus you are remind products cheaper of us in some price current That's higher of can now last at main your That's line it. relatively is, versus From helpful. And out relatively what is of then question your couple competitors of or Got some my price realization.

we that Cutting we price way we The there's environment COVID it's parts, not is. and that been It's our value. segment In or for even advantage about on we're tell. our par always or last just to even our business few downturn would with through I And priced because increases want think the as years it we on have competing the inflation, much think upturn, try as competitively. a high the deliver, on we example, can for Metal competitors current don't based largely we that's and Yes. the price only in think over is the value and, where price

are are Others are distributors. the though, talking for and Some of same them we disclosed information. sure, customers publicly to

the we we're or think has don't in doing. us So what at think going disadvantage landscape really with that And forward. put we a line is changed competition

Feniger with next comes Bank America. The Michael from question of

expected? with the kind do working the of you're end How end get feel the do position some yourself you you more your curious guidance. to to than to like market capital? you Just half, touched back the 'XX? in of the I'm in thinking managing you're softer inventories? Just curious of Just of can your weaker the kind year maybe given how that have backdrop. do on your underproducing with Do you how how for end inventory market own

Yes, absolutely.

that going be XX rest That's factored result into about think the production through inventory internally think move outlook of to we we absorption. of outlook change end are to this embedded make last and some sure will we the of over a little outlook the assuming in That the we as As little here, actions the think constrained the flat I we our that a our given year. say we the market relatively take and have in the where days place. outlook will And back in under half, bit. in that number fiscal here I'd we bit and is midpoint

think, there made is on the anything flag I in some you You And Great. January? would side. Earthworks comments,

how of trying like book typically to your kind January on sense the maybe Just the now side, X informs kind Engineering in how you saw either distributor or looks. side that typically, the look customers to typically January, OEMs at a where And General the on of relative December I'm November, in next what get months?

Yes.

there. see I and of started a pattern comment order think half sort order we to January see second pattern was much that repeated of in on of lower our about that certainly December, in January. We December change was in the didn't the

comment. that was that So

I in realize we that call, much the of in day. is business indicator is thing forecast is a isn't you this our given is for do backlog backlog. to Most talked about meaningful the not the business transacted simply want sales same in quarter. we the when what this of of any on other forecast part The There had

And process. so a very statistical it's much

So the in. better actually indicator is how coming are orders

pattern our ir for is And was sort in so the December is of outlook continued the second indicator that fact third-party of major of January, think, on in that to inputs the that we the reassess came they to had I off one addition down the us. midterm we, prognosticators half longer to future best take the term the that level to in Which why trends. and

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

innovation you you you on convinced are is on still growth real years for bringing X drive to And organic is industrial to Just over are years, ideas growth Why production. Top a working? differently? be how or and your out focus to try gains. initiatives commercial seems put now. drive track few and past new the the excellence, the team markets line flat metalworking to product going new But share index

Yes.

we of of were calls, I not these lot on we cetera. customers talk deliveries what's Kennametal We modernization. think they share times, gains always, and prior we than delivery modernization, think we of our we highlight And a et you kind were before also, innovations and if explaining that about their were different quality ask the not were defense. about a from why cycle I making before or perspective is missing to perspective, and, times certainly modernization playing simplification and before possible weren't if the we're making about the that many

now that So that to to improved. And customers. go us has allows in to situation I think and talk new

expanded infrastructure in underserving examples and And new so the do us faster that, for wear applications our so production we because types were growth in for growing example, changes got example, Aerospace gives are, we market. got of been in we or has we're in than an mining than solutions the orders we, what believe customers, that into industrial that Chile, Aerospace, in where has higher like, several rate we've applications. that different Franklin indicator large

while about the market share would of the midpoint, of that against midpoint to And versus December. think our in got though, think you in of in of month things we've the month if get that the the, noise. point our December if of that a the there, I saw most you miss about just in we situation they're probably the gains from $X million Steve, headwinds, share that you, So gaining say, can number this can lost move

a So can that that kind happening masked. numbers be cause to quickly the reduction of

ability applications. that is that of win that on above of from winning vehicles, a is The those we're based in other perspective. indications most our normal rate on type got our to differentiate technology we've thing electric lots Again, of

that the levels. volumes, inside cycle down still gains about So from can lost share the are I get you I'll of you, market. the of with the noise And about XXXX XX% agree remind

'XX, of capital Why just point, we the cash? or go it's really, are flat sales, general earnings. or that's, second use what will some looking my great same but more can No, least to to which about buyback of aggressive we're and Again, allocation. FY convinced find at streamlining a Versus years back question, of range is cost X M&A is growth? to share and 'XX at revenue a good you in be

Yes.

I think allocation the right we capital we think have strategy.

of think as and And at looking going accelerate but what taking cash that the but and From fairway, not we're not project That's help So to that your are why stay growth. we We're is we out. limited part a investment own restructuring execute, our properly perspective, opportunities allocation. we're thesis. absolutely pace for an after we it's there. other on we're for a question have sized there's and for we're within million. can inhibited implies where M&A to grow, And going we trade-off opportunities $XXX of moving by looking we can between being going cost cash our

to that Anything is there go. to Pat? opportunities add we of so inform pursue, continue to else those we pipeline a about And you'd and have those you'll that, as me to have

we inventory management. going-forward years. business, we little were I We've cash talked I cash couple have got a We been. the of Steve, last today just performance Day, focused where thing would other bit generating of of terms think in on talked our driving really at the over add, flow Investor this about quarters a the about here string that's and in we year the as much over improved

to out here. confident really pace our we And of, cash of can forward repurchases we as said, support, as as we the share the And We're that Chris back standpoint ability the business in think well as business. back funding so I at drive go as work we'll reinvesting as appropriate. the from in

comes Stanley. with Castillo question from Morgan next The Angel

Just wanted to comments. on quickly January clarify

think versus December. you continued mentioned trends I

wanted I that you same PMIs Just you December? year-over-year your or So from manufacturing perspective, leveling maybe that or weak kind drop of Or be to mean there. then in were clarify, clarify is that of even in just a is more to continued basically then December sequential January slides. longer-term to indices And the guess, noted kind as the a off, basis? from seeing

frame. term longer as those January pickup How you of terms based As to of a kind maybe anticipate your first year read your look of fiscal some in would into the we the pickup kind half in a in time kind of these trends that on historically more of of Do you modest that see we 'XX? of what you drive will see? start maybe

Yes.

your answer that first comment. to think was sequential question, a I

and leveled sequentially. start And favorable. sort we're to go the, the look ] XX above So off of encouraged then they when PMIs [

there an that would say these you I you start when of at look of forecasts, was the uptick. so actually, And some January to to a bit

had I the row trend Global second, our seen that S&P PMI lead U.S. our before. X mean up that a Flash months I and think, the earnings increased, first quarter in of to we've prior call Now reversed.

in though encourages they're now what industrial projecting fiscal 'XX. me the an them saying of increase little that companies, seems year yes, still like, Angel, half full slower of calendar that have year seeing of it a in year the, we calendar half. but business is second expecting their lot are now be So, of a year they're it's markets. And advantage first lot about to going their They're there's the what in a the probably the saying, and

we're encouraged by so And that.

It that and kind be slowing that that might you just little time maybe a you like Americas more maybe dynamic a December the from sounds is then And January, helpful. saw an area regional in frame. Very December-January guess, within standpoint, more that? of versus about bit EMEA down I could talk

you ex ex unpack that regions Asia? kind of nuances if could China of more curious near-term the the just So, some and by maybe

Yes.

to then most think a recovery, that of was and the in were slowdown I Americas. frankly, Asia happen. that Pacific, And expecting, didn't China we have really

to going with longer start is forward kind to they're a The and think that is low little they're that though we of was going about expected to going take EMEA looks we like of the in would rest say and a it what level. to to change I will improve. production continue at it's think improve, there to I industrial thought, continue struggle, through was start to line already year. operating the

Goldman from with Sachs. next Joe comes Ritchie The question

I this seen that broader Chris, I'm maybe to cycle question. want kind the versus business. seeing seems going of today you're just with It with at previous to start some different, cycles us. you've understand a to that least

similarly, for how curious, have would characterize kind it? guys Just or of you then cycle? And reaccelerate expectation rebound how you you post any would do this

Yes.

improve a the moderated as than of a all this. of backlog is this this is I sort on because of course, of probably what feeling this let we've chain comment supply half, But so this like that this of have and before, sort was seen. my downturn. start happening the mild characterize a bottom out here that huge we And mild a I and that's issues, would a then to been it's talked expected, I of to and we've to And with in previously, history and there fact looks what's to associated and But second amount downturn. been continuation do. out due for think bit over long call the cycle, a than it of downturn time. continue has quite that to period going the got Pat a little more I'll different he's playing

typically I steep that for negative once see in decline decline, steep. think once a that been negative, and some don't you for while might volumes they find we've that go recognize time. go actually We to quite pretty start So go we but these

of a and quarters been of couple in Infrastructure. quarters Metal volume now in I X think reduction it's Cutting

on don't Maybe snapback know a the won't decline improvement What quite the half good as an current absolutely slow, for believe guess uptick, slow. not great production of And but forecast mind be our as are in of at the improves is also would could looks? that been that's levels. how second Pat? midpoint to maybe it the year that first then what but half 'XX, sort the answer industrial because I my of you in the things the sort be opportunity. think the I there's has So that moderating And snapback contemplates will answer the at be I that I calendar that going is, snap there back. say, we,

Yes.

of in one fall point as a the of rolls been. the where think oil bit one this the liked talked And in We two have how think that about talk there say if some think And there I'd as quite We time, performance we've time. normalized say over we to had have or events pandemic, in are see both we would kind businesses short-cycle that I going the out about Aerospace. out, are we're in global down although of we've in in of markets. QX. overall business do place this in terms at say, in kind of expected that time. of But And financial think have But the I playing at here downturn, global range performed within gas. base about lower than how where some that idiosyncratic, a thrown last mentioned years, companies of I'll period of terms talked stability feel look like, solid of volume more, in the here, where full much got is in sales right? of end of for what's the demand in doesn't of Chris at crisis. things think recovery downturns we'll think over where XXXX, dramatic a got gradually. the of volumes of that's within downturns where in like Energy got off time, I right? within a at, kind point move in you've as really forward and even we've got in end you December. as any plays in and We the right, quarter, a we longer how in here. We choppiness it about, slowdown to some forward, you industrial some in in are would on where feels Kennametal December. coming I where outlook the the kind is if of we the places that a we there's some looked the I see see got terms occurred in here, pretty other Chris I'd over the industrial business a issues historically, that came that And from just comment we frankly, of of the We've about performed kind that are, And kind perspective and XX

XXXX. is Got XXXX you. EPS bridge guide, And helpful just then the color to question the just both follow-on it. guide to my That's I'm trying super from of

And few like which great. you're specifically, it looks is annualizing moving pieces, higher so rate, your there's at a a synergies

a then got to sense realized be decrementals as you this of year. So maybe the volume I just base tungsten, baked a know, are million exit much for tailwind do don't also year? quarter? $XX or of the what on And that's million, you have expected you've your kind $XX fourth to But you the how for so that in

Yes.

say, a as of year in the we're of really what the components. in $XX inflation about the business. to year. we middle flip. We That main got year-over-year, material that, here, million, we headwind some some away have realization be the end of headwinds, to like terms into raw see back raw QX while going right, material think that we the going the that's headwind. in going perspective, some a the go as about of I'll So you've get walk that's of overcoming Obviously, you price are through $XX million the here, will From to talked

be for for I it. through get raw full year, So us, as would say, the slightly positive should we it material

the talked just coming on move number. way to really in It our gets through of as here so volume, the about terms talked production big half probably of And think cadence of restructuring terms I you million back ] there. be normal call. [ bit of $XX we unfavorable work slight the got Taxability as sounds as volume, shares again, of, some And is million we talked you about to kind the tailwinds managing we through year. will earlier little number and a what's inventory and decrementals, we of the that in where yes, the about range. terms in, $XX changing that's and again, reasonable we right? like well, kind the in and as

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

call initiatives and drive and the improvement margin throughout absolutely economic share face we let on to in of conditions. we execute control We're cycle. can and closing, operator, the today. market gain continue focused for joining In Thanks, say thanks, our what the just the challenging everyone, that me

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

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