Kennametal (KMT) 8 May 242024 Q3 Earnings call transcript

Good morning. I would like to welcome everyone to Kennametal's Third 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. Please go ahead.

Thank you operator welcome everyone and thank you for joining us to review Kennametal's Third Quarter Fiscal 2024 Results. our our release website. issued presentation posted we on slides morning, earnings and press our This

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

Infrastructure. that, today Franklin this are: me Executive comments time, Pat and Cardenas, and Sanjay Vice Vice Watson, open President attention the Officer; as will the forward-looking of questions.At and of that number Joining and direct disclosure line Financial Vice we Christopher assumptions, statements a President Officer; like remarks, Chief your uncertainties X-K I'd on After believe for our could to President Chowbey, actual from to materially on statement. be President will statements. are deck Pat's prepared today. company's addition, most to SEC Today's to the by those that and and Rossi, forward-looking the Metal our Chris involve risk measures, risks Chief and call discussion President Cutting; filings.In President such, expressed results, contains detailed constitute Form factors and financial on performance that achievements are GAAP turn such financial I'll or measures and slide over at call to we the you, our the directly found discussing comparable uncertainties non-GAAP with implied back Kennametal's These or Reconciliations website.And differ the call of and cause can on in be in Chris. we

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

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

currency in and in days flat and Asia-Pacific was Price declined exchange declines posted a unfavorable growth product and X% X% Cutting quarter, segment Metal sales organic constant at decline X%, declined X%, by organic declined On of Americas volume X%, with level, the the sales X% of X%. was currency For offset year-over-year unfavorable business basis, growth, EMEA and of the Infrastructure. decreased X% mix.At X%.

volumes, provide Moving and our Aerospace end XX%, call.Let These end Transportation and markets up higher year. long-term have sales Defense, Energy flat Earthworks and Cutting including compared by we our me with share to partially grew grew quarter macroeconomic on X% China. the gas, the & pricing restructuring primarily of the $X unfavorable million.Adjusted despite year-over-year. to was and decline offset in declined headwinds. the land-based timing to and These costs. X% by million, million.The execute in rig Engineering margins markets, price as the during savings wages versus EBITDA Metal decreased capital and to Adjusted general X%, $XX and noted Metal changes, amount increased XXX $XXX to higher timing moment was counts to quarter, year-over-year, compared Transportation that to declined in the These benefited $X previous the $X.XX by was to a in that of from strength due continued back, of margins compared year, and our a General primarily results were by to this cash the the higher inventory by was Defense of factors savings expenditures in offset sale confidence with in primarily capital to were approximately adjusted color production in lower & EPS and in on initiatives operating project to general $X and continued ability of from higher program earnings the line due to result savings price wind XX% was flow in partially costs now we take value and prior segment. were offset bought EMEA, and Cutting strength some prior continued general in to inflation, million the decreased to decreased basis and year-to-date Infrastructure segment are raw foreign declined million by repurchased segments. points partially effect in basis driven decline levels The realization grew repeat. basis free points, wages $XX continued we production year-over-year, lower XX% of expected driven of activity prior In adjusted volumes, XX%. items production These inflation, X% quarter. wins Asia.Turning delays which and Aerospace and oil approximately for what in quarterly inflation, and industrial working year. declined profitability in year-over-year X% property sales material points Americas at realization segments a project of in restructuring operating and repurchase strategy million. sales lower XXX wages unfavorable Both pricing partially year improved lower Engineering Free EV energy repurchase X%, market year-over-year, Cutting's total higher creation, due the Aerospace. execution Metal by program flat $XX hybrid at operating Infrastructure offset and $X.XX our gain declined driven quarter this segment's X% primarily cash XX%. growth of to wins flow due year a U.S. operating unfavorable by million.Our bringing higher in restructuring XXX due net quarter. income. Infrastructure exchange, the not share declined the primarily mining volumes, shares prior both increase our material due sales did prior approximately Earthworks raw And declined EMEA finally, project lower lower General affected XX%, in in Americas Energy offset reflects and

the the KENGold like our for full those is on Cutting section.Now unchanged our manufacturing new enhanced generally and as offers general financial This reliability turn will the we playing who I'd that details grade let Pat, of but leverage to insert the how turning the and And we Metal full quarter, in in from growth universal advantage grade X, of speeds, slide and outlook, instead engineering Pat are balance new shows quarter portfolio. example turning to forecasts across to enhanced outlook year. the third faster play our is remain and our provide This discussed technology we're with medical me by enabled products no new longer year defense with his due market.Now outpaces informed a tool capabilities, drive to review detail equipment, the they this offense that on will life, customers. of specific broad new are range aerospace, over deliver year now performance last were an drivers, product outlook innovation example to call the by Slide forced to for largely the a Regarding antiquated longer outlook. defense, more applications.Notably, of market to KENGold that turning turning of manufacturing for continues applications launched product our capabilities offerings modernization. fifth transportation, coating and highlight cutting how state-of-the-art our great the grade

will initiatives X%. begin quarter. down of of a of margins show prior that Thank market with fewer at XX.X% you, operating review soft with the in expense operating face I respectively, Chris, X%, workdays and XX.X% year-over-year, quarter's results. quarter on our execute previously conditions. everyone. year-over-year The as we of to Slide expectations Sales and this flat X.X%, percentage morning, was the in X%, X.X% performance year of were and organic with decline the EBITDA sales QX line of an unfavorable was versus The continued X% were the good XX.X%.Adjusted in Operating sales X and currency and provided. we a exchange results

$X.XX previously realized prices sales lower of prior production rate $X to tax pace The This X. increased mix, on During million FY highlighted price geographical primarily EPS quarter timing year-over-year The higher effective achieve restructuring items 'XX. to partially savings in was wage restructuring $X.XX. Metal and the reflects in Infrastructure. negative run adjustments.Adjusted of to our period. end rate both provision were of main are both and drivers by approximately the the driven quarter, and The $X.XX adjusted Slide savings from program. return announced on in material volumes businesses, general share in on $XX bridge by unfavorable effect higher of Cutting unfavorable remain quarter businesses. million favorable performance We this raw EPS XX.X%, in offset versus the per These by savings in of operations of and annually year-over-year we the inflation by earnings year were and the partially offset and

conditions Transportation to reflects in end in X%. General growth to also and of foreign currency this more Defense the and in X% Asia markets. and sales sales the offset India these on Pacific Pacific, basis, X the detail smaller Reported were Energy.In tax region, & with Metal exchange flat growth in more our the an compared Cutting lower and performance Aerospace driven initiatives X few and prior Americas a growth in Engineering. of offset than X%. than offset currency were quarter. China In and share see in Growth X% year-over-year by rate, effect Defense By continued sales foreign Asia workdays performance year effects we in by quarter, Transportation with can EPS.Slides sales Americas, count market each segments Engineering. and flat unfavorable of organic down other sales General were by the on unfavorable You our Aerospace EMEA's the and and & of execute a by constant markets down was lower EMEA

General with Pacific general as from year-over-year EMEA in quarter, of repeat the that effect not sales EV lower sales at with the strategic Americas. in the sale Aerospace grew this And by declined decreased and modest overall sales in delays. X% production Americas project and Cutting growth our XXX and year-over-year basis Asia initiatives did of wind on majority end $X X% partially XX.X% gain gas and period in hybrid offset X% continued market. results the points transportation offset in Asia the operating drive power that million year-over-year, approximately in Defense year not were conditions higher oil by $X in end in of volumes, slow Looking and project declined higher of and Engineering as sales from by this in offset Americas and Metal and lower lastly, wins a wages in year margin property and flat to sales with inflation, coming market, continue price EMEA.Energy strength project and by adjusted were restructuring the Pacific approximately prior repeat savings did prior a million. & the

General and increased end basis X% will XX%, declined to by several blades on land and in market. a year sales activity growth the X% over due X% & by variable and Earthworks business of U.S. offset a lower Infrastructure X the in each. operating in material Americas Americas X% fewer sales Pacific. negative down foreign mainly of These X%, and sales and XX%, X%.Looking and On inventory approximately to markets, year-over-year Energy and lower activity.Adjusted industrial were ceramics unfavorable unfavorable EMEA production currency snowplow to next We basis, to executing days Pacific year-over-year our partially milder million. on Slide inflation Americas at continue savings to the rig to sales drilling restructuring end and Reported price counts of Aerospace Regionally, by align organic months.Turning constant offset declined Engineering sales by cost constant Defense general a earthwork X% the in winter. increased currency year-over-year exchange to lower due Energy sales mining prior primarily a driven due few declined factors: due for market and margin raw first, initiatives. wages, Asia in lastly, in sales $X China of by X.X%, were sales X%, ore headwinds partially And primarily declined EMEA from due declined to growth the timing. higher Asia Infrastructure. lower to growth levels sales underground declined volume, lower in

quarter have last to steady discussed quarter, material we the raw effects. as tungsten QX relatively fourth quarter.Now prices margins sheet. same unfavorable our last operating remain Accordingly, As free expected approximately turning at Infrastructure's X they flow was Slide provided expect price level to be last that the cash experience as we quarter year's to review balance we and to to continue fourth

flow period. free prior $XX $XXX our increased X.X inception $XX basis, increase $XXX million our inventory to repurchase focused working our and through to ends basis, the to representing operating down decreased of And million prior margin down a a every of program from drive was net quarter activity million shares, for capital fiscal We the XX we we driving from $XX or we confidence and becoming we reflects ago, million year. under shareholders higher income year-over-year, including in million shares, in dollar On to remains capital net had was In returned of to no to expenditures 'XX. and a XX.X%. levels of by cash $XXX million, June, million year The working bought X-year inventory working a the shareholders by million QX $XX working year. end optimizing Under of on primarily execute in to focus quarter of quarter paid working total by $XX lower to year. as compared ability prior third free expenditures operating changes, to this program, cash the share returning sales capital.On the Our approximately the of growth outstanding to million primary million to new public from in year-to-date February. capital programs. capital in decreased on Board authorized commitment share and company $XXX cash offset primary increased strategy since $XXX improved dividend million, dividend in capital continues the repurchase repurchase have since improved $XX flow driven at capital total, in years X% our levels share a our shares partially prior percentage company Primary Year-to-date, The shareholders.Our million to over that the program. our to improvement. the compared

end, a sheet maintain balance actions negative and are full volume be full debt offset XX within appendix.Turning quarter, We and XX prices expect for material The profile. partially since are with FY had revolver continue and to Net effect to the X%. year million and we approximately Slide narrowing to neutral quarter combined be fourth customers pricing now availability foreign our regarding approximately EPS We cash maturity X% the X% Slide our sheet financial healthy well from found realization and At due $XXX pricing balance to we now on lower we exchange. of inflationary covenants. can our outlook, with a in and in to higher billion Sales sales billion, price 'XX between content $X.XX with outlook. index our from $X.X of negative ranging by we're

notable reflected our change approximately is outlook now last $X.XX than year-over-year.Our income, free The greater foreign quarter outlook cash net up However, of greater an XXX% EPS to anticipated X% adjusted adjusted is flow of to to increase annual $X.XX. in XXX%. exchange from an fourth outlook our in is than be the headwind operating

prior the of back unchanged on I'll elements turn quarter.And are that, to it other our the with Chris. outlook slide over The shown from

Pat. Thanks,

minutes to summarize. let Turning XX, me to a take few Slide

headwind should a megatrends long-term share remain the the that we conditions what drive to growth the navigated macro intact. remain cycle. focused market economic in will We've successfully short-term, can stay and margins drive and improve the before global gain similar control over headwinds on Although macro throughout

my improved XXst. ability lead to I've to streamlined of and to decision for accountability share like you'd navigated I'm on customer our and leadership. of cultural teams capable there over chosen the effective a challenges continue dedicated Chowbey. simplification X of especially announced under made proud We sales modernization, the stronger add? transformation to customers.Through the to a retire our I'm exceptionally embarked to and the the company fortunate to employees, products. serve make continuously work company factories leadership and effectiveness. very improving strong the enterprise drive our is its As last confident I Sanjay turn to gaining more you across profitability. improving anything my years.Finally, the Improved May I'm to successfully team of Sanjay, that service, COVID, successor, company efficient development know, been we've new improving the proud improve have to will the and done enabled Kennametal organization over and of

I would, Chris.

say us over you of of also this First, coaching, years. thank Kennametal, I during behalf a done company want all transition the the X for period.Now me quick on to let thank and last for everything have at from for you update support you just especially side. my your personally

about time couple along the and to continued Over the run I Cutting, last as have a learn enterprise with Infrastructure, months, whole. taking the to business more Metal

integrity, year full the we'll our really connecting I'm and cover Looking role of outlook. X, priorities strategy. to applying expansion top balanced margin operational you second, all a 'XX excited into excellence; to and in the allocation I'm commercial fiscal on capital values June lean of August results and our following In service X with while and above best-in-class forward closing, third, looking customer work executing to CEO through innovation and accountability.First, growth principles; through and on safety, ahead, living excellence market respect, advantage, step

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

Morgan come Jefferies. question muted, Volkmann.We'll question Mr. first will next Angel on the to from move And Steve Instructions] Volkmann from with Perhaps [Operator Ms. our with Castillo you're Stanley.

pleasure and with the looking forward wish you you all been it's Chris, to going a And And forward. Sanjay, working working with best. you,

to the bit the under you're seeing kind you've out of then, it of kind And it quarter? that far markets? of markets the maybe little shook as walk bolster looks of fundamentals, trends end just like changes the but underlying a fourth in you the expected, kind you or that little quarter major end the you're been the in what more a in of maybe through terms maybe trends the terms dive and of of So thus just and outlook in third seeing with have some and different.Can into the might surface mix markets underlying bit pivots of the those of some end across seen quarter that the

sure. Yes,

conditions major segment Let pretty driven Pacific, saw. be again Engineering it we say the the look was by had. that's and flat. improve, flat, and Engineering, but issues deteriorated seasonality. would the long-term Pacific.For Asia in production primarily QX me had IPIs, it's think there's of and And with there major much continue count And and that and flat. are some to the EMEA soft to dependent for be issues flat. Aerospace, if that I was We activity to slightly, to Asia expect be Gen go And strong, relatively for improvement. Energy was OEMs the sequentially our QX flat. General India. year-over-year.But probably that again that mild of with construction followed If in mentioned If remarks, they with of again, Metal Energy, pattern. in in for in the created our of And think primarily I quarter.On Pat slightly I that That coal, Mining seasonality. Engineering slower India made were terms and be thermal a recovery, I the normal at with Metal due continued to then the they then out is there I due same excess forward, coal prepared we to that's flat as Asia continues EMEA that was we very flat flat, And that the is winter Cutting also generally Pacific Cutting apply milder and coal. or one that have EMEA still will will levels.In expected improve Metal driving The played is same sort will as Pacific. Asia QX. The Energy, in of been couple that and to growth sequentially China. -- in of My to and Americas strength sequentially, U.S., about with Industrial say General things completed in Americas we also Cutting. would trends one down be America supply General to customer stabilizing OEMs. have with market start an improving, would to due as obviously Energy and seem said, Energy, their, a I expected. the that in stable. activity seasonal to to the quarter what Infrastructure the what comments Mining, is and we winter counts But at was at slightly expected are rig terms improve Pacific the basically said, Aerospace, would we adjustments, The stabilize remains to drive think, going done the due then it down we I'd It's up seasonality said. Transportation, on rig QX also we flat. driven to rig China of to Infrastructure. that I North milder sentiment were much rates Engineering, as And positive. much General general, to going by in but again largely Americas on that I going go can the will improve still be said see anyway strike flat And because China, is their outlook count they build basically And normal recovery lower essentially, quality for softer the for Angel, to was then being on remaining look then some a and the then, blades probably Infrastructure, expected comments stable QX Power demand the for rigs, inventory EMEA. lower in than fourth will first. flat winter. current pretty we an be be the snow pretty Asia

also So follow pattern, bit down to a seasonal again comment be that is ], will in Construction, probably bit. That'll then Looks be [ my that Angel. slowing continue expect activity. lower normal like economic And of little a Construction headwind. a to we the due the to except China,

the expecting of some or that it. you what of buyback, kind you in Can sense buybacks of very over and maybe given the of helpful. give following that? a absolute flow use cadence in price bit expect should Maybe pick-up you No, do kind quarters? And potential anticipate of do are of levels, how seeing that we a from the cash in that's kind stronger -- terms of maybe free is, kind then in current us terms cash the you're we that appreciate to to of what stock you where And of of of I there thorough operating switching the the talked about. terms just value?

cash of development. overall couple free operating a thoughts on just flow Angel, Yes,

in a from QX. we management quarters the a and strongest to the buy when comes share and QX cash cash from at when way other our opportunistically repurchase thought appropriate, a know, 'XX. that programs, it's like. capital well we've about minimum given perspective be would has been got you expect back calls dilution perspective, We the offset M&A FY to structuring always like as our cash the the potential bolt-on on as program As that and have compensation and well as to here case flow are From shares

is the are the size think our say, close are in thoughts we the worst well cash always new And into those as As cash our year fiscal mind we position, our throughout flow always fact as as I'll mind in terms about our out we of going year, enter so that quarter is normally on that QX, the QX, right? how on we already share end Board's of million. It the authorized February, that obviously, the we be well. tranche $XXX that all future repurchase our of concluding of program -- on repurchase here $XXX program, year, repurchase second million the repurchase X-year, here an will to the in our fiscal at going starting first started as terminate in get and program well.We're additional as program will

remain strategy. we that working committed shareholders to returning on cash and allocation to So balanced capital

Your from Julian next Barclays. Mitchell question will come with

price fourth off sort best, headwind should year-on-year quarter in the next the understand the quarter be it you dynamic, raw's for I all that and question all wish right on early the I tailwind, think, in Chris, -- thanks was just third perhaps and start of to with down a the the year. the help now a years. into Maybe

in bit, that Infrastructure sort a kind should segment of the just little So Pat, wondered half flesh of from what could get and way particularly year? of tailwind, if sizing the effect QX of sort into any next perhaps, you I out the of tungsten first

Yes.

do So general dynamics -- about as for segment, we a price in material see bit. here That's raw that go lead us. dynamic what little we'll part through Infrastructure this of we costs think drives the

$XX we that segment. in the at the of did sequential about a level, headwind into As enterprise QX, QX Infrastructure we move see predominantly was million from

right? in Again, then in the we P&L. this or structurally as we we seen simply $XXX for general, point days I'll week we say quarters.And XX $XXX we'll I'd I'll abate, say per tungsten QX, MTU, we've on from As say, get through pricing about move from have QX the that That probably forward see level. size. here think same headwind flowing perspective, equal the to into around headwind how sitting that And $XXX low is about structure as recent days into was basically, so prices to works time us, at $XXX. recently about cost QX, QX, again, in going last over, most we're And ago, so XX X tungsten a say, that about to as I'll visibility, the cost we're last in

have we second continues we'll the on the more of cost in say time the into an the 'XX. moves or at bit into So again of in a I'll that this less time as uptick tungsten, and point If cost of that, quarter that more seen as we'll structure see level. FY at get stability I'll more little say

And where right so kind we're at that's now. of

talked just you've about then bit second And my little just a demand that. to on I want follow-up and already question,

area of months in last or the off-highway setting I patterns So, General of softness weeks, a into listening some beyond It markets. you think or sales you down China, of seen last where couple in types orders is little X particularly machinery X in bit. Engineering has the companies in say demand China change sort the or any been kind an have I OEMs. outlook like wondered took just of your there in business like seems other in to clearly areas those

things similar China a have outside very wondered Just you'd been seen pattern for if steady you? else actually or

example, that of been And just for I it's between Yes, if I Julian, last at in XX for like the mark, the the in XX been XX. Engineering think several for think just now, General bouncing it's I XX kind below and look months. think you months XX below Eurozone, PMI

it's General in we of it. metric for Engineering, so same production, where the trend. contraction it a bit think things softer the least April, know before, through up I it still I stable in little quarter happen these see IPIs level.Now is stabilizing sort is that of levels at we've But look for really we how don't kind hasn't at territory, the I characterize to that you it's are same So, much. it's seen maybe can of at if -- this that it seem ticked call but with be fourth mode a that changed the is recently, in we at April's the at about kind in but a good which thing And U.S. industrial

Morgan. will come Tami JP Zakaria from with question Next

you thanks all luck. welcome Chris, And help aboard of best Sanjay. the for wish and the to

is question Can around first or have different us, similar quarter the you a is we fourth workday perspective, compare? year-over-year, from my remind modeling. a So

a it perspective, most it's think in an higher. workday, that, fourth shift third part, a and phenomena. From Easter a say Americas, don't I had, we've is prior full year us was of the quarter Tami. the holiday would more, a the even for for have is in I'll where in quarter There workday this fractionally last it just year, phenomena been Easter embedded obviously, in more Europe,

Got my it. Defense. That's very & helpful. question second Aerospace around And is

new between aircraft major mix you build on on investigation just comment commercial medium rates a this think, And over I you term of grow you the open had to from is more Aerospace one Defense expect -- how portfolio? thinking How can within & to nicely different you defense your long a a years? few the the are the versus also, Do OEMs next model. over next aero years? few about are perspective,

the it's on aero aerospace certainly And demand defense, Yes. that commercial, versus view the I'd related. but commercial is production is a commercial long is term that mostly solid. our there for portion and the say is defense

we supply chain, increasing that and they're that. are major supply chain But term, short major our production. look we're kind in there's If at we quality if demand are OEMs, fourth improve even which working in on the you other actively you certainly look suppliers think -- yes, and also active that that reflected the OEM, inhibiting constrained at in by of we've Those quarter the forecast. know issues, still because

constraint, a it's chain matter very where for definitely There's So be longer no more of time just will talking solid. think when is supply in a the need the timing.But were the a especially midterm aircraft. I you demand about

prior And we I so Tami. that think, don't right are that. were I -- feel, to they now rates good still we what build are about feel don't pandemic, we things production there back. very are And are believe some the But holding still constraints

will question Barger come with next Steve Your KeyBanc. from

with is It's pleasure we forward for and working to with This comments. to Sanjay. look working echo We you, just you, Barger. been Steve Christian like Chris, on previous a Zyla

commercial contributions and new First you question, of to fronts? Can you would upcycle, think product you I given know do just excellence then product your in your us on a production how some relate continue much market you on to And the idea focus guys the innovations. growth? give these how outgrow efforts

Yes.

because I just say is And a ability to in we was The with this the changed where to I release about talked it's fair new lagging to that's prepared area. really simply were the products product released products think had may I anything ourselves since manufacturing been lines, take remarks of modernization, products been to now X prior with innovation coating to my That's terms it course.But example, new prior to think think all I new X position we modernization, technology. question in that before of if share. modernization. our look those and I opening modernization. this have along that's in because as good or gave coating remarks, we my not this lack we make these released years back That's on fifth it capability

it's that sort me examples. significant leveraging these finished we're XXXX, of we for in very modernization this So,

still us. of that growth of most And so, is ahead

modernization to proper that's were people releasing before it. I Because products, they If customer performance before looking consistency the is you one advantage lead of It were of at modernization. new share also innovation service challenged within at typically it we of not through respond change before and rate about levels look the is very have gain. and levers major we adoption we key and and products that's was good also, in on-time our with from and were where driving ability think is constrained. quality, terms to modernization quickly.So improved where how clearly along very as also course we a times the feel are new these But

markets. X% that's what driven and price, getting long-term on the used then we our very terms differentiated, X% in gain driver.And I we the one Christian a of And then haven't have gain from growth the driver about So And than with historically. we it. major megatrends, would It a X% say I Based on that we Day about Investor is term. from again other over it. on growth is good piece on consistent we plan to share it's levers long also that feel big the X% as comment of innovation of that's how big would of much done share to X% pretty of the

Great. to do that take follow-up Very markets could they If on past share years? I I I for helpful. enable like few wins allow upside in Or that, range the just seem margins guess do your innovation they've been to which in? you the your guess

Yes.

-- a that applications. prepared if they I remarks, I range broad you think, maybe of example my that in gave the notice, had

specific, many application, in it's with in So example, we have machining designed specific -- customize else. Aerospace anywhere of Aerospace mind, that application the they industries. do happens broad for that tools example, titanium some maybe a while are these lot for a they more part, than products, on across be more for in But may most

Christian, you it application.There forgot have part a your that's it? broad another was. question, what thing was products, they to about Can I good So repeat but is our

the in that if margins your seem the product -- they've over enable been like the few wins, to range innovation past on Just the upside years?

Yes.

anyway. and we innovations end, challenging in price applications I higher apply think sort of applications, that to the for those value

for So I make been necessarily anyway. such opportunity -- products Not improve excellence, of necessarily more that help they're that improvement, the the Those also on margins having our drive winning application more if enabler going group applications. margin a to across because is process, specifically, end improved to focused specific on don't apply we've of as they higher then, broad And to to over that as element margins know that used now there's going but those to they're and sure to competitiveness. drive purpose-type they commercial are markets. an our fit business our for to new fit necessarily long a type

Bank The America. come next question of Michael Feniger will with from

the I curious. appreciate, obviously just the fourth for I'm guide quarter.

better we down typically should I when we you see range, year, quarter-over-quarter, would might still normal headwinds seasonality, feel prior a head are we than of at normal Could seasonally, or in the pressure like kind that think year? next there have look little into heading sales Just that more than your certain expect based on seasonality next make us a are into normal years? bit seasonality environment current today, just fiscal that

just to be see about X% some right? on seasonality think perspective Mike, to from But start sales we cost planning structure as the a normal of off would all about. right? that expectations to saying, normal I'll relative question, think items down going as couple FY to QX to would by we're our 'XX Obviously, QX, about into answer say, be a off, expectations. going process now our for Yes. QX right things well.First would 'XX, And XX%, well as just so I'll in from your to

as would couple continue bit a call, to slightly that Number a that, we we touch talked tungsten and there's FY is, today, think about things little Beyond one we the for in be up lows. favorable just I'll to from earlier just Again, the raw have about sits the this tungsten on. 'XX, stability framework, that where thing. a be as would on material price, costs, say

about cost year. an basis at just of think terms existing that's phenomena obviously here is program a there that we 'XX.And going of been we things I run FY the we've of on million $XX got we've said our second annual As in end on the into out overall structure price/raw rate the hit of the restructuring half to thing first the working of intend

call process cost see planning on phenomena report But Management we 'XX. you and 'XX FY a again, XX as move throughout team holistic we'll benefit days. back I'll now. with full that as the You'll rate market the and is from achieve 'XX all in about outlook digging in right some FY we it rollover 'XX, to we're into to

year. the Great. prior was And though degradation. in bps flow in margin through believe just there onetime a Metal game XXX on the Cutting, quarter, I the of the

what out. in quarter. your decremental volumes? kind it understand How organic trying guys in of you of of with terms kind I margin to you was about flesh it Was line would growth your guys Just think, flat Was there. to saw to it that sensitivity kind you wanted in -- thinking? on Just what were of that think

Yes.

the I not did there certainly got that think, to the in first was was in. prior million repeat, right? sale gain about that So that related Metal $X in Cutting property to the business factor thing, a year you

market say think price you as positive thing, in things don't of is perspective margins They accurate. the structure. happen and other the in we total think is, into there's of saw cost yes, actions production in Number we think the the is place simply demand the end reset well. the going that one slowdown quarter quarter, put happening of react in volume X being cost QX, what as sales in the your an and decremental just December change don't forget constrain volumes about time what's markets But particular, in simply over there, in if as in I time a the terms And things. the to to well. is, about being would the obviously negative in is from and and a piece negative.I'd that embedded relative and realization to perspective that Those production we where demand just happen right, terms causes us as that terms other in quarter, the that comments to price frame, adjust QX of instantaneously. imply volume of quarter decrementals, from

more. -- one Great. have I in me, Excuse just there. And could I'll more if

softer Engineering, levels little have of at are customer the inventory do stable on -- a your inventory levels, that they I'm is your curious, bit your or reflective progress levels? customers, you guys color levels. helpful. the the in just with more Just be -- they Do commentary go? you softer that are Any to stable General stable, would

cautious would customers think holding were already and of maintain that. terms they were I destocking, they they about the in how inventory I very Yes, still have, anyway, say much that

reflect stocking current outlook their that on say provided would levels I that conditions. the that So forecast that I

of cautious no then And see they're more, us. no at and significant on mode. be that the to into they some need demand signals So think also before get to we're that I restocking, probably they'll ahead destocking looking

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

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

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

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