Kennametal (KMT) 7 Aug 242024 Q4 Earnings call transcript

Good morning. I would like to welcome everyone to Kennametal's Fourth Quarter and Fiscal 2024 earnings conference call. [Operator Instructions] I would now like to turn the conference over to Michael Pici, Vice President of Investor Relations. Please go ahead, sir.

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

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

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

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us to around you thank members work joining lead our to and today. and and world. is company with morning, Good the for Mike. you, this an It Thank honor privilege team

months I role. say that portion of very took main on remarks, it busy get me a CEO into let I the Before the has been since X my

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X%. end Overall, Now other and the market pleased sales turn Slide on of declining how at let's challenges with sales on some were performed Despite softness the X. with I'm to the quarter quarter. the our in details we upper expectations organic very of

noting Cutting mixed. Metal last quarter, market X Cutting declined over is During were Metal public peers Infrastructure's has were consistently the organic sales years. that conditions outperformed worth sales organic flat. It the End our X% and

activity in timing. offset strategic growth, and favorable sales and in timing project economic execution strength Americas rig of initiatives in in down defense, sales to with with by project continued road General due X% from XX% by sales especially declined see declines EMEA. This to aerospace was driven wind timing the Competitive and market increasing our construction, the were to year. order our Engineering We U.S. mainly continued year-over-year, prior flat the lower continued in the X%. project pressures, land-based impact which earthworks project Asia. X% lower year-over-year and Transportation in business, in Energy volume were down was count and from energy Americas. market delays

Moving the end beyond now. market

Our sales the from margin despite approximately increased from last lower and million adjusted EBITDA XXX charge year points basis tornado. volume $X

Additionally, an the XXX from in infrastructure improving basis expected, business, on the third margins adjusted as normalized points we basis. quarter

pleased performed we original million business quarter, the of worth let quarter. back that $XX authorization. million $XXX with quite bought our stock, in During the the completing how say I'm Overall, me

performance. in and to a to headwinds. the and lower flat exchange essentially despite turn conditions, sales headwinds EBITDA foreign the previously about to tornado talk infrastructure, lower with impact I able us were raw we presented forward. briefly that let's year Fiscal the Slide persistently timing Now tornado But material business the with foreign even of in exchange effects year volume, was margin X 'XX market the full the mentioned. move Adjusted price volumes, soft

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X. Now let's turn Slide to

includes section will at in key fiscal a The direction Here, of reflected our sales the section performance context top on market our end trends. this provides assumptions market factors macroeconomic 'XX of The outlook. provide midpoint. overview lower in I slide reflected quick the

backlog our minimal business, component the not Given business our short-cycle our impact on is outlook. a of meaningful model has nature and of

such, range, our market As set plus and impact we initiatives. to our rely on of outlook customer strategic inputs expected the indicators external

term, you and are second share fiscal You then battery fiscal in a Aerospace build be pre-pandemic growth we area fiscal in In patterns. the OEMs light market successful positioned have expected software expect mixed supply rest can and In our of half time. calendar experience the customer near XX% below but in indications improvements is win bit for strategic traditional capitalize vehicle most continued the term constraints to be more fluctuations for growth, to to Overall, of for me IHS projected of are year. production rate 'XX us we a levels. focus for well our softer This & forecast, quality 'XX hybrid slight strategic have tends a the major of and to conditions, programs, with year. point lumpy a year still 'XX, a improvement continue growth ease the market a provide of lower market In significant the we bill especially so in improving over expected in rate Aircraft with But the near in see projects transportation calendar market, year 'XX. slide, calendar transportation. and versus strong rates nature at to Defense, see of slightly chain the beyond 'XX. let buying data markets year numbers. stay we the rate their on higher on as quarterly winning revised little Defense-related rate modest market the are the are a as at EMEA. and color in to our on is due but continuation current for the expected to Transportation orders initiatives,

have production, which about in battery investments have commented may slowing. several As the you are platform seen, manufacturers new of pace

calendar EMEA. term, to year In especially the projected very to term. also are We with for expected is for in rig year as be 'XX. case, factors, with the In we some anticipated the slightly, 'XX key result, half to counts growth market a Eurozone per flat near all improvement comparisons end As U.S. first outlook types IPI be Considering anticipate of with to feedback the market we us, slowdown the in flat. of remain continues calendar China this with and occur productivity Customer are calendar first consistent half these any grow half a remain of near in in slight calendar the this provide to remains engine a year the engineering anticipate focus. in remains could improvement increase to General near in indicators. especially of in positioned tougher cautious year term. second the for down indicate moderately to the first energy, well for 'XX. long slight the term, 'XX. half output flat rig

mining and pricing road term in competitive earthworks, and near expected is be also to Finally, including the experience soft construction pressure.

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

face fourth results softness. Thank of operating quarter's continued market will and show Sales exchange to morning, and some on workdays margins the we of headwinds a operating in you, decline Slide initiatives organic favorable foreign from results. and The on by XX.X%, and I a inflation, execute expense year-over-year that our X% good to versus by Operating review begin and quarter Sanjay, the the year-over-year XX.X% headwinds continue EBITDA with everyone. of decreased quarter. foreign X an and basis. in X% exchange of adjusted as a basis XX.X% year XX.X% X%, points Adjusted percentage from of decreased XX.X% were respectively X%. XX sales partially prior offset with

shift restructuring we announced expect the During million a continue achieve of in realized the with July, rate delays $X quarter, run and slight we caused previously some savings. actions million program. savings $XX into to to approximately Timing from moving

in FY expect As $XX approximately we 'XX, a result, million savings. in rollover

repeat exchange to adjusted foreign unfavorable from year related Lastly, driven per rate mix The in to X% evaluation did period. that tax headwinds assets current quarter in XX.X%, quarter. were share versus dollar effective were adjustments primarily by in allowances year $X.XX U.S. and strong earnings prior against the approximately the this the prior not geographical quarter. deferred $X.XX Adjusted the increased year-over-year tax

As EPS Sanjay the by costs, offset price of of inflation. positive and lower operations and operations highlighted operational cash on are delivered year-over-year highest restructuring XX wage on cash and production since timing in initiatives, material operating mentioned, our and we of from flow volumes sales savings, main sales excellence Slide the effect drivers free 'XX was years. The of partially also highest raw higher percent and over as The general reflects flow a performance FY the bridge X.

also results from hit an Our approximate this Rogers our quarter tornado the include results. $X.XX on

on currency You $X.XX. offset wind our by also Metal currency to continued this timing contributed represents expense, & market and count XX general decline the order Other Asia EPS $X.XX. headwind Reported 'XX of sales. growth in prior quarter engineering, Aerospace in of quarter of at share X%. down By currency general within defense. Globally, Defense, growth the in Metal of was Pacific FY by and driven about reflects X%, execution foreign the weakness within share reflects market X offset Americas Asia organic effects $X.XX of partially X% favorable of Pacific and The market projects. market EMEA driving a days initiatives performance led year-over-year the EMEA's and down and the see the conditions XX% growth by strength business was sales constant And partially this negative sales our currency and by indirect growth basis, which can declined gain and partially Slides the of offset X% and X%. with interest compared with X%, the segments were on and energy decline detail flat engineering year and Cutting growth in tax and rate taxes quarter. Americas negative lower the of was engineering a a in annual result channel Cuttings in performance initiatives primarily transportation. channel year-over-year indirect end soft general aerospace region,

by basis and lastly, higher strategic growth timing margin foreign sales sales increased end grew EMEA drive in Energy China. year-over-year, XX production points results Now timing this project adjusted sales in offset the at from restructuring general XX.X% looking inflation grew General Americas. year-over-year our partially mainly earlier, wages X% Aerospace with market. this Cutting & declining by noted Engineering And price by as driving lower Transportation Metal in and XX% to market. the quarter. year-over-year benefits, the softness and by operating continue in Defense offset declined year-over-year, Americas, volume end X% volumes, declined and partially and exchange. and of lower in X% driven initiatives

followed to foreign for offset of X%. exchange EMEA by by year-over-year, Turning Organic declined headwinds at X% grew favorable Slide X%, sales partially Pacific by with X%, Regionally, decreased of Americas XX by sales and days business Infrastructure. X%. X% Asia

lower X% Asia offset the in Aerospace Engineering And Looking Pacific. with modest mainly construction lastly, declined growth volumes Americas, timing rig to Earthworks the land and And market General Defense declined lower competitive activity. X% Energy market, XX% the Americas by in when due conditions, demand sales due order product lower the the by less counts sales and compared Americas. X%, in prior resulting to at in partially in sales specialty & lower due to to U.S. drilling grew end year. declined

adjusted the sequentially effects and fourth of X.X% in price raw third to approximately the charge since that basis XX points in from timing margin the now we expected, As $X year, quarter us. XXX adjusted the increased prior second of margin. in to X.X% approximate margin operating margin Compared impact quarter third operating quarter the included had material from the Operating million this basis representing declined points. are an quarter margin behind tornado,

lower Additionally, partially under production restructuring sales favorable advanced offset for volumes, Inflation manufacturing we and raw by saw timing, production material Act. and credit an Reduction 'XX the price savings FY

sheet. $XXX to This highest review percentage XX over and year. to by flow XX $XXX Slide flow years. as to provided in sales balance the of compared million operating cash cash operating 'XX the prior million turning in Now free activities is fiscal in Net a was our

free flow million was in to year. Our $XXX the compared operating million prior cash $XXX

to very a to $XXX pleased since in are primary which working XX%. representing year. primary efficiency, of in of million the approximately the primary the We approximately driver returned $XXX the prior dollar a of shares for basis, Net working shareholders our On inventory through $XXX million to working was year-over-year, our We million. million a or capital and X% to million our inception $XXX capital with the percent effort to drive compared In X.X program, QX $XX improved improvements we total total, of $XX of decreased share capital dividend team's of shares programs. million sales were outstanding repurchased shares. decreased repurchase On in expenditures capital. basis, million

a over ago. becoming have also done something every company years to a dividend we quarter We shareholders, XX since paid our public

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

and near-term of The full covenants. sheet and cash quarter Slide million, in financial with balance appendix. well balance within revolver end, our At we we're healthy can approximately and funding on a no maturity We sheet combined requirements. be found availability debt the XX continue to had $XXX maintain profile

Slide XX Turning outlook. regarding our to

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

We $X a from be billion expect half X% trends. weighted perspective, a seasonality X%. to we $X.X from slightly recent approximately expect FY From 'XX exchange. more between of effect be X% than Price and to positive our volume billion, X% ranging negative to sales and with sales negative realization foreign second

increasing Energy as assumptions Engineering in in end midpoint moderate but sales Some at decline to flat, environment inflationary current the FY are are Transportation The & into moderate. year-over-year persists Defense and 'XX, a growth, and Aerospace our slight having to Earthworks. is market General follows: continue slightly assumed

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

exchange basis. Foreign pre-tax costs of and each noncash million expected pension to $X are headwinds a on be

As million savings announced been approximately mentioned of included. have I our rollover initiative previously earlier, $XX from restructuring

$XX savings be in year. expected of the of interest to expect the approximately approximately tax expect and and approximately Depreciation we is XX.X%. to an expense We these be million, half million realized first and of rate effective $XXX amortization more

to to Adjusted range We a expect EPS in be of $X.XX. $X.XX

the expenditures represents which primary approximately 'XX. XX% On of the working by is primary approximately capital XX% side, outlook progress year-end, and million, for for our below $XXX driving solid full fiscal capital is Day FY working by at capital goal set outlook the cash Investor year toward

greater savings free material to and no positive. The costs, price, net of inflation. restructuring of effect productivity, than operating we higher and together, EPS The bridge the This lower and outlook. cash partially the at sales from is of wage offset by to our higher price of main operations midpoint continue Slide timing general impacting year-over-year highlights drivers headwind raw be XXX% the adjusted income. XX Taken on expect flow reflects

million on expertise invest million we execute plan to us fall. approximately related we in $XXX last help some to outlined cost initiatives out expect third-party Additionally, $X the to

tornado occurred also impact from Rogers in approximately results that Our tailwind $X.XX of the FY 'XX. include the

continuing to insurance insurance are work claim related We tornado. a finalize our recoveries to with providers to for the

midpoint, $X.XX with the basis effects pension currency improvement rate of is of and the EBITDA points. Noncash negative tax currency You an this $X.XX. on also margin see and $X.XX. negative can about of XXX the taxes also At implies negative EPS

outlook. quarter first our regarding XX Slide to Turning

volume sales We between ranging of positive be expect from negative approximately million, million X% QX X% price and X%, factor $XXX with negative from to X% to and $XXX foreign realization exchange.

Let trends softness. the QX midpoint, Overall, outside slightly persistent norms share at of the historical outlook. on reflects XX%, assumptions and our some this in decline sales details approximately recent due a market me the to

to moderate Transportation Aerospace to continue expect and slight growth. growth in Defense & We have

Engineering and declined However, slight Energy Earthworks a General and is slightly. decline

$X expense Foreign million exchange and effective XX.X%. and Interest expected have pre-tax tax to the be rate million, each approximately approximately was a is negative noncash a on assumed expense approximately pension to is impact basis. $X of

we expect of range EPS Lastly, the $X.XX to adjusted in $X.XX.

currency year Let the I me the about outlook at to items provide When compared commentary pension, the lower midpoint, previously adjusted our volume the EPS range. tax some prior EPS reflects discussed. plus and

that, expense We some the from it back year also did shows timing. expect trade some occur turn Sanjay. not that expense additional last plus I'll with in to quarter And over

you, Thank Pat.

Slide to Turning XX.

me Let Overall, our pleased we are summarize. fiscal minutes few 'XX. a performance with take in to

mixed, as Looking fiscal are to be 'XX, to earlier. conditions forward heard expected you market

flow. open We focused can monitoring factors. to operating drive portfolio competitive what on line we'll with the In questions. and capabilities, the growth, control, steady and focused a performance, and creation, approach on our the to improve improve continuous over approach managing we'll continued sustainable expansion while We'll cash performance and growth offers for to systematic compelling summary, upon above-market improvement that, parallel take work on and a a cash progress operator, momentum time. we pillars Kennametal to with please opportunity. build value margin performance In external advantages are And generation investment

question-and-answer the today's Instructions] session. begin question And Castillo with now first from comes [Operator Stanley. will Angel Morgan We

as expect further up to for 'XX that moderately. be to Defense So this Aerospace you quarter indicated had solid in a & you

And is gains in you underlying growth? driven that see can or share be how lumpy. I it elaborate wins market fiscal by project much of know on So you industry improvement can 'XX versus

from expect that? might [indiscernible] what that, on color any on So,

continued adjusting market had We we OEMs took have Airbus had First strategic that, on that us. also rates. just from of and Along comment been to helped that we all, what Boeing's wins the their uncertain. XXX XXX, has been fiscal likely, and have little saw down bit me rate you build bill Most with 'XX. noticed in let it

fiscal It which that's will projected continue we market, expect So expect but we and we all 'XX. how will looked we have It what that, include to to components. at X slightly be about at focus. will rate. which a Day engine, we lower Investor our It have to wins, have we beyond have in main the which talked strategic used gone that in the grow,

gone also of in a structures level components at have And gotten. the will We and there have and it. component we new little price tier customers of finally, course, to be, bit

So, that's how a looking we are X, Aerospace year. at combination of next those

about talk the also you throughout of you the year gives the reacceleration bottom. Thank you. implied base? can XQ in in confidence What based remainder lower on marking growth XQ And the

little flat a year. get So the bit is If we through QX normal slightly of about QX year, we're the after the QX. acceleration the harder we back we just seasonality I'll about certainly, out anticipating that, just year think as think if more normal anticipating sales we in would a down year got normal to some down, we up have pretty say and actually in cadence, of the then perhaps coming cadence, throughout this the

cadence I'll sales a perspective, normal year pretty as. describe overall, it a So from

And from Sachs. comes question next with Joe the Ritchie Goldman

you little around give more portfolio maybe to in about this size potentially value-creation color the bit little a pillars. early tenure So your that continue what thinking right talking a us want on bit piece Sanjay, piece. double-click pretty the I the optimization see Maybe fairly of to to ability portfolio? you're to just like And cool

pillars, in I as about creation these the unison. value work so talked X will Yes,

we do of a an will course, lot organic perspective. to from grow Of things

improvements. help out lean key and will laid streams parts have continue area. We capital continue Continuous the some work where across principles apply us with working and of we'll of on also to expansion business. momentum inventory all that margin our improvement the in That

something said, are improvement. the to Like the continuous generally portfolio. work this to way and on Now I as this moving will And be Even steps to growth time, you I time. third focus while it, the it, takes over look we'll is be mentioned at are pillar, on primary it. there going we piece, portfolio organic X earlier, that

First, the step in we're is is that so the will the working we step at getting allocation, business, is what return say that we do -- in desire And kind divestment what money the if process much talk find a of place the that. not the of And resource just investing step level, assessment include assessment. are what which putting of allocation, a capital first inorganic are proper we how not that even or there businesses, action. any are to performing let's that of is next immediately about kind

X from new party, all we a perspective. that are The capability need improve parts do we suppose first business focus. course, then scale also working growth talked conclusion capital, We're CapEx a there perspective, perspective. get step will bigger what In to at If at growth, do to be still of number organic that helping inorganic will actions. going will to to organizational about served look with that and growth not look But a that. be from of business other better I that parallel, our with some is we us go

Ceramics, for strategic synergy Medical, believe to also We generate continue & areas return and for look where bolt-on we investors. growth more like can Defense, our will that bring acquisitions to better support Aerospace at we ideas

particular what ones. was from about then did just that it's X in curious, what -- I quick quarter items? those on what's this see the just I'm XQ embedded of $X.XX. couple the that And specifically gave, number? for positive the that you the you and you guidance first was impact a in just impact, then Pat, -- quarter this impact? know think embedded what was as quarter, And a price cost

was the that that improvement now timing cost, QX in price obviously Joe, of big raw big as driver, which see the is past that in margin for price of of is you're is driver terms which us, going QX. to material In of and QX, infrastructure,

As -- set place at talked talk XXX overall, the we of the really got we midpoint, I lack about I'll framework. say, QX points. had, that about improved productivity margins we terms full headwinds full I'll raw last operations, From we in about, think being up of EBITDA the the we've year, when had price in of will function framework year a inside and that's year perspective, place. that the have restructuring And benefits basis we've just the some QX, a we

the terms Now based on sit on items but we've year. of Obviously, move noncash it about it's on amount, throughout on a there. costs We've a could got tax basis. And would today. top FX $X.XX is higher of unfavorable some that, bit relatively where where the it then around we long-run couple in little through got than of coming some rates rate us a have a minor pension

XX.X% year XX% at we're this in long the versus run. So

of Now one, a QX, then a all some things taking things on that we've framework perspective, QX, going annual And on. the you there. about couple know thinking got just Number from shows. going profitability I'm discrete and you've QX got same trade

occurring cutting That example, not this here show principal been we've quarter. pre-COVID. since is will for metal IMTS, at, our be which So

quarter. in this So that's expense naturally

the the component we well. to got really of around compensation moving about think talked of Sanjay of is It's our us I'd just important bit an in say as see throughout opportunity resources, year. that some but that last of little of customers. around, front move we'll As for a we've reallocation that's get

year, cadence going in a just QX me, in see bit up little pretty earnings see the now step normal fashion. to about a think think going QX. that excuse as And You're then hit say I you're we to earnings of throughout

So then at look in lumpy we Joe, a with the QX back up received the tax, to year XX kind half in earnings levelize about and the the last of accelerate because half, last benefits you're the front going front year half and the half. QX of, of of in of half. If come half. years, tax volume terms say, along in But XX% to -- and back the first of the around back the couple was XX%, split, get if in you little to we XX% I'll

now, where too. so would think expect normal year that's that's we for and I is And the about business what pretty this right

add just from productivity that and a have in improvements. third-party us also prepared in remarks other that the we a we helping I'll assistance

expense will see QX, the some of year bigger also that hit of part the we'll a but benefits So of that as progresses.

next Our with comes Mitchell question from Julian Barclays.

discrete on from of is the of engineering, in even pressure or just automation ago. kind sort continued kind industrial of demand side forth in with month things. of more you're the we've CapEx companies of X, last then on in That's so particularly or bunch wanted sort morning the X, what the start seeing is and I because off-highway. consistent world, some just general destocking to of maybe suppose Maybe markets, And XX heard other this months what a cadence project

that with kind And what so standpoint the remarks environment your it months the that you sounded of line in has from very steady in prepared and I demand thought. help months? What's from recent of that been moving a if was just you wondered or demand fair characterization last understand couple the us kind of around? the seen trending environment have how maybe just

projection recovery our will the which year, half we all, about talked be have we softness being of fiscal of the as also, soft. see in And fiscal 'XX, of we and continued there's 'XX. year calendar First first in the half seen market second some

been Cutting, you market, at have last talked several recent quarters. than we we we If in for look quarter, slightly as better about perform did the even the Metal which

So channel I not any what our we major role. we respect do customers, to seeing are stocking With believe shift in partners seeing with or destocking. that plays are and into

purposes, energy ago. seeing They all very a customers, than time any I they the more some also cautious destocking. think, even I year stocking adjustments, industrial for our practical from or are perspective, made were we not And major think ago. an

has delivery we have overall think as performance partners has areas. some our improved, Our channel adjusted time in And improved a also inventories. result, lead that

any in see coming to are we major not months. going destocking So

maybe for just And one more strategically. you

down growth, do rejuvenate of on then increasing versus higher And fruits can a from reinvestment need nuance year? Slide on or outgrowth while sales versus Or some would say, points I the framework margins for sort but are sort of that of perhaps that there sort last your One trying CEO good sales and of Investor as we think emphasis, areas line? you you that organic So couple of bit, Kennametal's is so of let's year, get the a margins? of say increased last do a be to of things. kind any viewpoint of X point. starting period you guess margins for kind that Day number the personally a of suffer you late late

price I Julian, believe confident X%. about as for to long we value. but the of term. and those Like we X% that we Investor things the Day for earlier also for inflation that the we the the control, we fundamentals we we'll price to believe at feel the same Market stays we above-market able Price very unknown, talked obviously targets, time, industries growth, the serve On be said things. about in

help will we be megatrends we there I as several assumptions know. some the but shift all could think to market us, that have in continue

the to million cost and benefits. $XX have improvement with we on at run we at we'll heard going track the $XX exit about 'XX you of at that to Investor cost Pat, rate also exit we the of from roughly perspective sales. million 'XX respect on that type restructuring are then top out as the are year we fiscal Day, Now million $XX of talked worth million from that, on then $XXX the of fiscal And

sure mentioned deliver And mark make we So by the focus which million. about of on with hitting $XXX the we what 'XX, be need end a additional we continuous million. $XXX fiscal that on to improvement, the we'll halfway of

feel with do comfortable we those So overall very targets.

question, your things see margin? affect some and synergies. attractive this only we is do investment, where an we potential ROIC goal At our have to from take to margin we we when that coming if other will time, that perspective inorganic do any see do Now inorganic bolt-on and will acquisitions growth and synergies

So, to decision. I factor negative that in be don't our expect a

JP Zakaria The next Morgan. question is from Tami with

comment there's some could to we there? X% expect range the differences segments? to for Should the up volume for hold the down this Or So by X% you segment. year on both expectation

of I the the of don't in difference volume or the terms terms year. not -- for there's a market segments in

or the looking think to down should down get we on can of X% us as sort X% about the give and X%, be end or So markets at you plus some to we color what the focused X% you the I'm will end? of to whether markets ask up to end do trying be it the think for the decider to or to which goes end year? get high the low

comes our start to with, I TamX, General that. say, Engineering half revenue So about will because, from again, of

at in happens India, either Production negative major the So in look General you are markets of what besides sentiment, with flat sentiment. even And PMI sentiment when all IPI. general, Industrial or type other the

in our as through, will we last we and that be EMEA, we that I will all did if side is a I the of couple down. we improves, transition would terms quarters continues a work that more definitely where the So the years And we to like of projects than traditional piece, other moving have see even transportation. win expect transportation higher that. in hybrid rate then next And bit and in electric our of couple to range. of the from And say, that us quite industry like think

we finally, the moves did will having us. will quality outlook, is also market that share, Aerospace, win And also on help that production us. which we that other As faster, if have transition help is that's and and OEM, But how improves, that things. that where issues overall, And happening, a in consider then one can our little of adjusted. if we

will that continue. So initiative

range. that's we're how this point, at So looking at the

Steven is Fisher question next UBS. with the from And

all But it depending seems on thanks it's far. So so a I for. accounts big comparison the how for still on there's it to $X.XX handful you still QX you seems maybe cents. $X.XX, conference But another color of the account spending need handful like guess, we items like provided of that that that the is, for mentioned maybe

help little each included of what that, in QX? EPS I'm margins items quantify just bridge in to wondering about for terms a you there's QX So in in help the if else thinking anything on maybe can QX and you're the segments for the

Yes, certainly.

you're from, So or at I about tax pension just drag about we moving from item, perspective, go prorate that guided fairly the think, looking can because is an items $X.XX you you're to the through. XX% tax there. quarter And as well. EPS to a talked of there some the large be a We've rate overall XX.X%. $X.XX Obviously, going talking midpoint, in FX we the at then

about differential. from in we you're in that to yes, You're top in perspective driving few of some overall layer picture $X.XX going terms from volume year-over-year. Again, you're timing terms perspective. a of elements you're a cents a full capability in cost going some On And couple there decrement as drives $X.XX, you're talking as of of get cents then, well, have down at got an to an talked the restructuring going well, there From that as these well. what's the in from layering to and pretty midpoint. coming in overall that. that, that volume much of That's

the question on to a going just Day framework. then Investor Julian's about follow-up back of kind And the

Just in X% consistent. a fiscal feel in Is like that X% about market gains to embedded X% X% where trying about. to context, gain share year, basically, the positive couple to your it's 'XX X% [indiscernible] your embedded sounds lower good the got a Sanjay, because share market percentage there? for that guidance think you gain than And X% that's points the it meaning of it's have to share in that you price X%

That all, will the to come growth not X% X%. we is gained in to of embedded share. share. is saying X% first let me just X% X% We're X% clarify market So to that implying we're through model. What market

digits percentage the There bigger seen. markets now down terms high which in course, we single digits. Of moves factor, market of are in have or is obviously, are several mid-single that right

will and doing have 'XX. of today affecting turn also to will that's one bit we the terms couple So are fact I inventory continue like business. the of been things growth in despite market, reduction, are better numbers a the said for driving net-net help we're doing we driving fiscal us the than the we productivity, driving in And performing these our earlier, positive. things days, are market years the see doing of that last initiatives, where, quality, But definitely

are capitalize we can what well also So we improve. positioned on when markets to and now very the do even

earlier cost may to if terms at we're I And $XXX be program on and takeout million where in the this Sanjay, as you going mentioned add of to that, well.

So this year. expecting about exit be $XX to when we million

as through from capital. the made on about think program, halfway we're an the our as outlook in of perspective, from percent was we've we perspective as driving at cost we're a So And consistent halfway 'XX where capital what that working a of primary working to well primary objective XX%, as well. with progress that working capital FY here in as through terms 'XX takeout is sales the and

business, well the can towards here the So goals our achieving what as we're as do all of in improving fronts driving on we terms growing profitability.

Barger our next And is question with KeyBanc Steve Capital Markets. from

to you But put better I understand and have the while. been process a to for portfolio you, wanting Pat a happening. what's quite there Sanjay, in about team hear place the optimization,

there too be So many surprises. shouldn't

if there can exit? why that second, business are And drag So have tell been a first, you that persistent us percentage what is on the of not parts you unacceptable? revenue generating of margin margin, consider

few all, in focus But be of that running our a may look, our jump have have business do to first, and do to yes, immediately not answer. we for I divestment the experience years, First the like we said, is conclusion ideas.

prognosis for in do continue terms area and continuous are one capital of we on give our you only will shared action this to organic performance to I early we going the we is I message actions and reasons, improve we working is happens. we But work either overall are, those of also for main to all take first this portfolio, point, goes that that. ready going improvement point, growing my through and to we what perspective in where do resource That's will if But at inorganic allocation, be time or share from actions. as think also are need here it's more some have to too way of me information the and different the allocation. are actions, when take to or some on we to at the an that other, this that

that Can you is a you tell margin us what revenue generating unacceptable? percentage consider of

to detail, share we not going are That Steve, be to able point. this at

of timing the And of drive? they Slide Or the magnitude? favorable order in you they'll of XX, versus listed show outlook price walk, higher Pat, restructuring. then on are benefit raw more equally Are and price, material weighted then those terms in

bit more a they're say would equally weighted, I Steve.

do How what much do sneaks raw have kind of can that in it confidence and will material affects like you half the and often up seems prices back the that of Because year? quarters. fiscal

Yes.

point at said previously, out time. quarters we generally any have about visibility we've X in As

good So think I'd say visibility. half, we very as have the first we about

they moving did Overall, and here time QX. back in prior trailed if more We ramp were have time. say, think here, I'll start up period early for have them As of level having to into, about spring been, tungsten we'll where visibility off or their see into prices flat they we summer progresses a less.

first So at the time in we're half. in in again general, I decent for think this shape point

X. the swing So be back that of can't would in control the factor the that you half

right. there, It's

something As that you get we'll have to the to to back see. time half, take that's

Mike from question next America. of The Bank Feniger with is

should plus X do QX? plus curious how Clearly, for think go in that keep about you you of how year? that the we that out kind and X% just now the QX pricing and Industrials. the plus of out across obviously, kind even there's price signs X% the of some full playing for guidance, for the plus deflation I'm year, visibility X% and full for stable have the on Just

if here you our pricing pricing think framework, some I actions we've think action, taken pricing recently. so about the

portfolio year-over-year would and where is achieve I at based there out that the look adjustments I'll this other to will implemented. some pricing -- now. value on last the And always we'll throughout make have actions the continue We'll the can. they're in across we year we piece continued, basis year a for marketplace we've we say, pricing So just say on

good is we just pricing are had where pricing. conversation tungsten index and assumption about year. the for what and underlying really pretty so in plan the And an prices course feel with Again, Steve the the of we around the the over

could move as and Our we index at this But point assumption that is fact flat. the the in swing tungsten through relatively is time. time is therefore, that's us flat, pricing

experience Also, are energy, like wind going add, we've there pockets that. excess in talked to are Mike, about capacity I'll where we just

to places and be market where competitive. we there be be very will So will the close

definitely take reduction So business to if or some we'll business, we price that. win in be to maintain have engaged new

and the gave markets and first the half. top And full color end QX you year, half, on about guys great the second line something for

Just those helpful. ranges really are

differences we QX in think half? in should anything versus volume and plays range think your for terms about about Any of margin full through guide? QX in how means that as on Just operating second the you out year side the decrementals the those

basis think about the margin year. up points EBITDA you we full the at as XXX obviously, And midpoint, being for about the talked

QX I'd think incremental mid-XXs. being normally long-term about we As the decrementals decrementals, say here in particularly we in about think would

earnings decremental long-term volume call, again, and normal And back And capacity go higher better perspective, an a earnings again, a from from little where that experience we here going about perspective a from I earlier be what as on as a quarter-to-quarter. well. just we perspective. we're the pretty a than is cadence little from mid-XXs sitting I today, to talked would cadence to but that's think a number probably bit

just XXX%. inventory of if -- flesh know lastly, out, up a we're talking The I cash customers. curious kind that inventory just stepping in conversion about -- you flow to Is that guys. creating And XXXX that's I'm for reduction the is

[indiscernible] that curious a of cash you kind bit. is about Just the unpack flow that level, hoping XXXX? little tailwind to Just conversion can in

add what management of produce, talent. We you and processes, than Pat made all, to improvement to of with internal inventory that, production overall the majority much numbers. me Through brought how And bit our some We the color we and little said quite appointments network and warehouses. inventory improvements. a just earlier, ship respect more that through talent some let times new of a some inventory we produce, first week made really the of in sales keep just Mike, we was to global bit how did many how also have by new beyond we started -- as want driven I process in do planning. where we we give

those We are continuing the sustainable. thing have to that's one been the that's numbers. optimize that, up of and And in good thing showing is

that's we building So what on now see 'XX. you of why and did and on then in 'XX, top are 'XX we what that, that

that add? we deliver Pat, 'XX. to feel else comfortable anything improvement in able pretty be level next So to we'll fiscal

So question. on that's the you your pointed to answer really

of that's year. one the driving So that's the cash conversion flow in things that

the turn conference to queue, back questioners to conclude our Chowbey At question-and-answer remarks. time, this I does over in no for we showing this Sanjay would are any the like further now and session. closing

operator, questions. always, you, don't thank and everyone, to joining out and your Have call any hesitate appreciate we great Thank interest reach us today. And as a the you, Please have you day. support. to if for

you. Thank

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

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