KENNAMETAL INC

Previous wording

Kennametal Inc. was founded based on a tungsten carbide technology breakthrough in 1938. The Company was incorporated in Pennsylvania in 1943 as a manufacturer of tungsten carbide metal cutting tooling and was listed on the New York Stock Exchange (NYSE) in 1967. With more than 80 years of materials expertise, the Company is a global industrial technology leader, helping customers across the aerospace and defense, earthworks, energy, general engineering and transportation industries manufacture with precision and efficiency. This expertise includes the development and application of tungsten carbides, ceramics, super-hard materials and solutions used in metal cutting and extreme wear applications to keep customers up and running longer against conditions such as corrosion and high temperatures.

Current wording

Kennametal Inc. was founded based on a tungsten carbide technology breakthrough in 1938. The Company was incorporated in Pennsylvania in 1943 as a manufacturer of tungsten carbide metal cutting tooling and was listed on the New York Stock Exchange (NYSE) in 1967. With more than 80 years of materials expertise, the Company is a global industrial technology leader, helping customers across the Aerospace & Defense, Earthworks, Energy, General Engineering and Transportation industries manufacture with precision and efficiency. This expertise includes the development and application of tungsten carbides, ceramics, super-hard materials and solutions used in metal cutting and extreme wear applications to keep customers up and running longer against conditions such as corrosion and high temperatures.

Previous wording

Our sales of $495.3 million for the three months ended December 31, 2023 were flat from the prior year quarter, reflecting an organic sales decline of 3 percent, offset by a favorable business days effect of 2 percent and a favorable currency exchange effect of 1 percent.

Current wording

Our sales of $515.8 million for the three months ended March 31, 2024 decreased 4 percent from $536.0 in the prior year quarter, reflecting an organic sales decline of 2 percent, an unfavorable business days effect of 1 percent and an unfavorable currency exchange effect of 1 percent.

Previous wording

Operating income for the three months ended December 31, 2023 was $28.5 million compared to $35.5 million in the prior year quarter. The year-over-year decrease of $7.0 million was primarily due to lower volumes, higher wages and general inflation and the unfavorable timing of pricing compared to raw material costs in the Infrastructure segment. These factors were partially offset by higher price realization in the Metal Cutting segment and restructuring savings of approximately $5 million.

Current wording

Operating income for the three months ended March 31, 2024 was $35.2 million compared to $52.5 million in the prior year quarter. The year-over-year decrease of $17.2 million was primarily due to lower sales and production volumes, restructuring charges of approximately $6 million, higher wages and general inflation, unfavorable foreign currency exchange of approximately $2 million and the unfavorable timing of pricing compared to raw material costs in the Infrastructure segment. These factors were partially offset by higher pricing in the Metal Cutting segment and restructuring savings of approximately $6 million.

Previous wording

Operating margin for the three months ended December 31, 2023 was 5.7 percent compared to 7.1 percent in the prior year quarter. The Metal Cutting and Infrastructure segments had operating margins of 8.2 percent and 1.8 percent, respectively, for the three months ended December 31, 2023.

Current wording

Operating margin for the three months ended March 31, 2024 was 6.8 percent compared to 9.8 percent in the prior year quarter. The Metal Cutting and Infrastructure segments had operating margins of 9.4 percent and 2.7 percent, respectively, for the three months ended March 31, 2024.

Previous wording

Russia's invasion of Ukraine in February 2022 resulted in the imposition of economic sanctions on Russia by the United States, Canada, the European Union and other countries. We have experienced increased costs for energy and raw materials and other supply chain issues due, in part, to the negative impact of the conflict on the global economy. During the March quarter of 2022, the Company ceased operations in Russia and subsequently decided to liquidate its legal entity in Russia, which is expected to be completed during fiscal 2024. Similarly, the conflict in Gaza that began in October 2023 could negatively impact the Company's financial condition or results of operations. To date, the conflict in Gaza has not significantly affected the Company's business activities or results of operations.

Current wording

Russia's invasion of Ukraine in February 2022 resulted in the imposition of economic sanctions on Russia by the United States, Canada, the European Union and other countries. We have experienced increased costs for energy and raw materials and other supply chain issues due, in part, to the negative impact of the conflict on the global economy. During the March quarter of 2022, the Company ceased operations in Russia and subsequently decided to liquidate its legal entity in Russia, which is currently expected to be completed during fiscal 2025. Similarly, the conflict in Gaza that began in October 2023 could negatively impact the Company's financial condition or results of operations. To date, the conflict in Gaza has not significantly affected the Company's business activities or results of operations.

Previous wording

Our business has also been negatively affected by inflationary headwinds. We have been able to partially mitigate the effects of inflation and other disruptions through price increases on our products. We cannot predict the ultimate effect of these issues on our business, operating results or financial condition, but we will continue to monitor macroeconomic conditions and attempt to mitigate the negative effect to the extent possible.

Current wording

Our business has also been negatively affected by foreign currency exchange and inflationary headwinds. We have been able to partially mitigate the effects of inflation, foreign currency exchange challenges and other disruptions through price increases on our products. We cannot predict the ultimate effect of these issues on our business, operating results or financial condition, but we will continue to monitor macroeconomic conditions and attempt to mitigate the negative effect to the extent possible.

Previous wording

For the three months ended December 31, 2023, earnings per diluted share (EPS) was $0.29 compared to EPS of $0.27 in the prior year quarter. EPS for the three months ended December 31, 2023 was unfavorably affected by restructuring and related charges of $0.01 per share.

Current wording

For the three months ended March 31, 2024, earnings per diluted share (EPS) was $0.24 compared to EPS of $0.39 in the prior year quarter. EPS for the three months ended March 31, 2024 was unfavorably affected by restructuring and related charges of $0.06 per share.

Previous wording

Cash flow provided by operating activities was $88.3 million during the six months ended December 31, 2023 compared to $52.5 million during the prior year period. Capital expenditures were $57.5 million and $50.6 million during the six months ended December 31, 2023 and 2022, respectively. During the six months ended December 31, 2023, the Company returned approximately $61 million to shareholders through $29 million in share repurchases and $32 million in dividends. The Company has a long history of consistently paying dividends to shareholders since its listing on the New York Stock Exchange in 1967.

Current wording

Net cash flow provided by operating activities was $163.5 million during the nine months ended March 31, 2024 compared to $126.2 million during the prior year period. Capital expenditures were $84.2 million and $71.1 million during the nine months ended March 31, 2024 and 2023, respectively. During the nine months ended March 31, 2024, the Company returned $91.5 million to shareholders through $43.8 million in share repurchases and $47.7 million in dividends. The Company has a long history of consistently paying dividends to shareholders since its listing on the New York Stock Exchange in 1967.

Previous wording

Sales for the three months ended December 31, 2023 were $495.3 million, a decrease of $1.8 million, or 0 percent, from $497.1 million in the prior year quarter, reflecting an organic sales decline of 3 percent, offset by a favorable business days effect of 2 percent and a favorable currency exchange effect of 1 percent.

Current wording

Sales for the three months ended March 31, 2024 were $515.8 million, a decrease of $20.2 million, or 4 percent, from $536.0 million in the prior year quarter, reflecting an organic sales decline of 2 percent, an unfavorable business days effect of 1 percent and an unfavorable currency exchange effect of 1 percent.

Previous wording

GROSS PROFIT Gross profit for the three months ended December 31, 2023 was $139.6 million, a decrease of $3.3 million from $142.9 million in the prior year quarter. The decrease was primarily due to lower volumes, higher wages and general inflation and the unfavorable timing of pricing compared to raw material costs in the Infrastructure segment. These factors were partially offset by higher price realization in the Metal Cutting segment and restructuring savings. Gross profit margin for the three months ended December 31, 2023 was 28.2 percent, as compared to 28.7 percent in the prior year quarter.

Current wording

GROSS PROFIT Gross profit for the three months ended March 31, 2024 was $153.3 million, a decrease of $14.7 million from $167.9 million in the prior year quarter. The decrease was primarily due to lower sales and production volumes, higher wages and general inflation and the unfavorable timing of pricing compared to raw material costs in the Infrastructure segment. These factors were partially offset by higher pricing in the Metal Cutting segment and restructuring savings. Gross profit margin for the three months ended March 31, 2024 was 29.7 percent, as compared to 31.3 percent in the prior year quarter.

Previous wording

Gross profit for the six months ended December 31, 2023 was $302.5 million, a decrease of $0.4 million from $302.9 million in the prior year period. The decrease was primarily due to lower volumes, higher wages and general inflation and the unfavorable timing of pricing compared to raw material costs in the Infrastructure segment. These factors were partially offset by higher price realization in the Metal Cutting segment and restructuring savings. Gross profit margin for the six months ended December 31, 2023 was 30.6 percent, as compared to 30.5 percent in the prior year period.

Current wording

Gross profit for the nine months ended March 31, 2024 was $455.8 million, a decrease of $15.0 million from $470.8 million in the prior year period. The decrease was primarily due to lower sales and production volumes, higher wages and general inflation and the unfavorable timing of pricing compared to raw material costs in the Infrastructure segment. These factors were partially offset by higher pricing in the Metal Cutting segment and restructuring savings. Gross profit margin for the nine months ended March 31, 2024 was 30.3 percent, as compared to 30.8 percent in the prior year period.

Previous wording

OPERATING EXPENSE Operating expense for the three months ended December 31, 2023 was $107.3 million compared to $105.8 million for the three months ended December 31, 2022. Operating expense for the six months ended December 31, 2023 was $219.0 million compared to $214.0 million for the six months ended December 31, 2022. The increase in operating expense for the three and six months ended December 31, 2023 was primarily due to higher wages and general inflation, partially offset by restructuring savings.

Current wording

OPERATING EXPENSE Operating expense for the three months ended March 31, 2024 was $108.7 million compared to $113.3 million for the three months ended March 31, 2023. Operating expense for the nine months ended March 31, 2024 was $327.7 million compared to $327.3 million for the nine months ended March 31, 2023.

Previous wording

Research and development expenses included in operating expense totaled $11.0 million and $10.7 million for the three months ended December 31, 2023 and 2022, respectively, and $22.0 million and $21.3 million for the six months ended December 31, 2023 and 2022, respectively.

Current wording

Research and development expenses included in operating expense totaled $11.3 million and $11.3 million for the three months ended March 31, 2024 and 2023, respectively, and $33.3 million and $32.6 million for the nine months ended March 31, 2024 and 2023, respectively.

Previous wording

RESTRUCTURING AND OTHER CHARGES, NET In the June quarter of fiscal 2023, we announced an initiative to streamline our cost structure while continuing to invest in our high-return commercial and operational excellence initiatives. During the three months ended December 31, 2023, we achieved restructuring savings of approximately $5 million from this action. This action has been enlarged and is currently expected to deliver annualized run rate pre-tax savings of approximately $35 million, up from the previous estimate of $20 million, by the end of fiscal 2024. Total restructuring and related charges for this program of $12.1 million, compared to a target of approximately $25 million, up from $20 million, were recorded through December 31, 2023, consisting of $9.2 million in Metal Cutting and $2.9 million in Infrastructure. The majority of the remaining charges are expected to be recognized in fiscal 2024. We recorded restructuring and related charges of $1.0 million for the three months ended December 31, 2023, which consisted of $0.7 million in Metal Cutting and $0.3 million in Infrastructure.

Current wording

RESTRUCTURING AND OTHER CHARGES, NET In the June quarter of fiscal 2023, we announced an initiative to streamline our cost structure while continuing to invest in our high-return commercial and operational excellence initiatives. During the three months ended March 31, 2024, we achieved restructuring savings of approximately $6 million from this action. This action is currently expected to deliver annualized run rate pre-tax savings of approximately $35 million by the end of fiscal 2024. Total restructuring and related charges for this program of $18.6 million, compared to a target of approximately $25 million, were recorded through March 31, 2024, consisting of $13.7 million in Metal Cutting and $4.9 million in Infrastructure. The majority of the remaining charges are expected to be recognized in fiscal 2024. We recorded restructuring and related charges of $6.5 million for the three months ended March 31, 2024, which consisted of $4.5 million in Metal Cutting and $2.0 million in Infrastructure.

Previous wording

We recorded restructuring and related charges of $4.7 million for the six months ended December 31, 2023, which consisted of $3.2 million in Metal Cutting and $1.5 million in Infrastructure. Also included in restructuring and other charges, net during the six months ended December 31, 2023 is a net benefit of $0.6 million primarily due to the sale of property.

Current wording

We recorded restructuring and related charges of $11.2 million for the nine months ended March 31, 2024, which consisted of $7.7 million in Metal Cutting and $3.5 million in Infrastructure. Also included in other charges, net during the nine months ended March 31, 2024 is a net benefit of $0.6 million primarily due to the sale of property.

Previous wording

INTEREST EXPENSE Interest expense for the three months ended December 31, 2023 decreased to $6.8 million compared to $7.0 million for the three months ended December 31, 2022. Interest expense for the six months ended December 31, 2023 decreased to $13.4 million compared to $13.7 million for the six months ended December 31, 2022.

Current wording

INTEREST EXPENSE Interest expense for the three months ended March 31, 2024 decreased to $6.8 million compared to $7.7 million for the three months ended March 31, 2023. Interest expense for the nine months ended March 31, 2024 decreased to $20.2 million compared to $21.4 million for the nine months ended March 31, 2023.

Previous wording

OTHER (INCOME) EXPENSE, NET Other income, net for the three months ended December 31, 2023 was $0.7 million compared to other expense, net of $0.6 million during the three months ended December 31, 2022. Other income, net for the six months ended December 31, 2023 was $0.6 million compared to other expense, net of $1.6 million during the six months ended December 31, 2022.

Current wording

OTHER (INCOME) EXPENSE, NET Other income, net for the three months ended March 31, 2024 was $0.1 million compared to other expense, net of $1.0 million during the three months ended March 31, 2023. Other income, net for the nine months ended March 31, 2024 was $0.7 million compared to other expense, net of $2.6 million during the nine months ended March 31, 2023.

Previous wording

The effective income tax rates for the six months ended December 31, 2023 and 2022 were 10.0 percent and 23.6 percent (both provisions on income), respectively. The year-over-year change is primarily due to adjustments for the six months ended December 31, 2023 that include a $7.8 million benefit related to a tax rate change enacted in Switzerland, a $6.2 million benefit associated with a change in unrecognized tax benefits and a $2.9 million charge to settle tax litigation in Italy, coupled with a $2.2 million benefit in the six months ended December 31, 2022 to adjust a deferred tax asset associated with tax reform in Switzerland, and geographical mix.

Current wording

The effective income tax rates for the nine months ended March 31, 2024 and 2023 were 15.5 percent and 23.9 percent, respectively. The year-over-year change is primarily due to adjustments for the nine months ended March 31, 2024 that include a $7.8 million benefit related to a tax rate change enacted in Switzerland, a $6.2 million benefit associated with a change in unrecognized tax benefits and a $2.9 million charge to settle tax litigation in Italy, coupled with a $2.2 million benefit in the nine months ended March 31, 2023 to adjust a deferred tax asset associated with tax reform in Switzerland and geographical mix.

Previous wording

For the three months ended December 31, 2023, Metal Cutting sales increased 4 percent compared to the prior year quarter. This was driven by a favorable foreign currency effect of 2 percent and a favorable business days effect of 2 percent. Aerospace & defense end market sales increased in the Americas and EMEA as a result of our focused execution on our strategic initiatives and a continuing expansion in global travel following the COVID-19 slowdown, the effects of which were partially offset by a decline in Asia Pacific due to lower economic activity in China. Sales in the general engineering end market increased in the Americas and Asia Pacific as manufacturing activity continues to recover from the COVID-19 pandemic and underlying economic activity expands, partially offset by a decline in EMEA due to lower economic activity. Energy end market sales declined in Asia Pacific due to market priority and disruption, the effects of which were partially offset by increased sales in the Americas and EMEA due to pricing efforts. Transportation end market sales increased in EMEA and Asia Pacific stemming from improving customer supply chains and hybrid/electric vehicle business in EMEA, the effects of which were partially offset by a decline in the Americas as a result of slowing customer demand and the effects of the recent strike of the U.S. United Auto Workers (UAW) members.

Current wording

For the three months ended March 31, 2024, Metal Cutting sales decreased 2 percent compared to the prior year quarter. This was driven by flat organic sales growth, an unfavorable foreign currency effect of 1 percent and an unfavorable business days effect of 1 percent. Aerospace & Defense end market sales increased in the Americas and EMEA as a result of focused execution on our strategic initiatives, the effects of which were partially offset by a decline in Asia Pacific due to lower economic activity in China. Sales in the General Engineering end market declined in EMEA due to lower economic activity, partially offset by sales increases in the Americas and Asia Pacific as manufacturing activity continues to recover as underlying economic activity expands. Energy end market sales declined in the Americas and Asia Pacific due to slower oil and gas markets and delays in wind energy projects, respectively, and were flat in EMEA compared to the prior year quarter. Transportation end market sales were flat compared to the prior year quarter with increases in EMEA and Asia Pacific stemming from improving hybrid/electric vehicle business, offset by a decline in the Americas as a result of slowing customer demand.

Previous wording

For the six months ended December 31, 2023, Metal Cutting sales increased 3 percent compared to the prior year period. This was driven by organic growth of 1 percent , a favorable foreign currency effect of 1 percent and a favorable business days effect of 1 percent. Aerospace & defense end market sales increased in the Americas and EMEA as a result of our focused execution on our strategic initiatives and a continuing expansion in global travel following the COVID-19 slowdown, the effects of which were partially offset by a decline in Asia Pacific due to lower economic activity in China. Sales in the general engineering end market increased in the Americas and EMEA as manufacturing activity continues to recover from the COVID-19 pandemic and underlying economic activity expands, the effects of which were partially offset by lower economic activity in China and impacts to the wider Asia Pacific region. Energy end market sales increased in the Americas and EMEA, the effects of which were partially offset by a decline in Asia Pacific due to market priority and disruption. Transportation end market sales increased in EMEA resulting from improving customer supply chains and hybrid/electric vehicle business in EMEA, partially offset by declines in Asia Pacific and the Americas as a result of slowing customer demand and the effects of the recent strike of the UAW members.

Current wording

For the nine months ended March 31, 2024, Metal Cutting sales increased 1 percent compared to the prior year period. This was driven by organic sales growth of 1 percent. Aerospace & Defense end market sales increased in the Americas and EMEA as a result of our focused execution on our strategic initiatives, the effects of which were partially offset by a decline in Asia Pacific due to lower economic activity in China. Sales in the General Engineering end market were flat compared to the prior year period as increases in the Americas were offset by a decrease in Asia Pacific and EMEA due to lower economic activity. Energy end market sales decreased in Asia Pacific and the Americas, the effects of which were partially offset by an increase of sales in EMEA. Transportation end market sales increased in EMEA due to improving hybrid/electric vehicle business, partially offset by declines in the Americas and Asia Pacific as a result of slowing customer demand.

Previous wording

On a regional basis, sales in the Americas increased primarily due to general engineering, aerospace & defense and favorable foreign currency exchange. Sales growth in EMEA reflects the execution on our strategic initiatives and favorable foreign currency exchange. Sales in Asia Pacific decreased due to a slower recovery in China from COVID-related disruptions and unfavorable foreign currency exchange.

Current wording

On a regional basis, sales in the Americas increased primarily due to General Engineering and Aerospace & Defense. Growth in EMEA reflects execution on our strategic initiatives and favorable foreign currency. Sales in Asia Pacific decreased due to lower economic activity in China and unfavorable foreign currency.

Previous wording

For the six months ended December 31, 2023, Metal Cutting operating income was $57.6 million compared to $54.8 million in the prior year period. The increase in operating income was primarily due to higher price realization and restructuring savings of approximately $7 million. These factors were partially offset by higher wages and general inflation and lower volumes.

Current wording

For the nine months ended March 31, 2024, Metal Cutting operating income was $88.5 million compared to $98.6 million in the prior year period. The decrease in operating income was primarily due to lower sales and production volumes, higher wages and general inflation, and restructuring charges of $7.7 million. These factors were partially offset by higher pricing and restructuring savings of approximately $11 million.

Previous wording

For the three months ended December 31, 2023, Infrastructure sales decreased by 7 percent from the prior year quarter. The decrease in sales was driven by an organic sales decline of 8 percent, partially offset by a favorable foreign currency effect of 1 percent. Sales in the general engineering end market decreased in the Americas due to declines in industrial activity year over year and order timing, partially offset by an increase in Asia Pacific. Earthworks end market sales decreased primarily due to construction in the Americas, and to a lesser extent, due to mining in Asia Pacific. Energy end market sales decreased primarily due to U.S. oil and gas activities as land rig counts decreased year over year, partially offset by focused execution on our strategic initiatives in EMEA. Aerospace & defense end market sales decreased primarily due to order timing.

Current wording

For the three months ended March 31, 2024, Infrastructure sales decreased by 7 percent from the prior year quarter. The decrease in sales was driven by an organic sales decline of 5 percent, an unfavorable foreign currency exchange effect of 1 percent and an unfavorable business days effect of 1 percent. Sales in the General Engineering end market decreased in the Americas due to declines in industrial activity year over year and ore inventory sales in the prior year that did not repeat, partially offset by ceramics growth in EMEA and Asia Pacific. Earthworks end market sales decreased primarily due to underground mining in Asia Pacific, and to a lesser extent, lower sales of snowplow blades in the Americas due to a milder winter. Energy end market sales decreased primarily due to U.S. oil and gas activities as land rig counts decreased year over year. Aerospace & Defense end market sales increased due to the execution of our growth initiatives.

Previous wording

On a regional basis, sales in the Americas were negatively affected by declines in industrial activity year over year and order timing. Sales in EMEA decreased, excluding the favorable foreign currency effect, due to order timing in the aerospace & defense end market partially offset by an increase in the energy end market. Sales in Asia Pacific were flat, excluding the unfavorable foreign currency effect, due to increases in industrial activity year over year offset by a decline in mining activity.

Current wording

On a regional basis, sales in the Americas were negatively affected by declines in the U.S. oil and gas markets and industrial activity year over year and order timing. Sales in EMEA increased as a result of the General Engineering end market. Sales in Asia Pacific decreased due to a decline in underground mining activity.

Previous wording

For the three months ended December 31, 2023, Infrastructure operating income was $3.2 million compared to $10.1 million in the prior year quarter. The decrease in operating income was primarily due to lower volumes and the unfavorable timing of pricing compared to raw material costs. These factors were partially offset by restructuring savings of approximately $1 million.

Current wording

For the three months ended March 31, 2024, Infrastructure operating income was $5.1 million compared to $9.7 million in the prior year quarter. The decrease in operating income was primarily due to lower sales volumes, restructuring charges of approximately $2 million, higher wages and general inflation and the unfavorable timing of pricing compared to raw material costs. These factors were partially offset by restructuring savings of approximately $1 million.

Previous wording

For the six months ended December 31, 2023, Infrastructure sales decreased by 6 percent from the prior year period. The decrease in sales was driven by an organic sales decline of 6 percent. Sales growth in the aerospace & defense end market reflects an increase in defense related activity in EMEA. General engineering end market sales decreased in the Americas and EMEA due to declines in manufacturing activity year over year, partially offset by an increase in Asia Pacific. Energy end market sales decreased primarily due to U.S. oil and gas activities as land rig counts decreased year over year, partially offset by focused execution on our strategic initiatives in EMEA. Earthworks end market sales decreased primarily due to construction in Americas and mining in Asia Pacific and EMEA.

Current wording

For the nine months ended March 31, 2024, Infrastructure sales decreased by 6 percent from the prior year period. The decrease in sales was driven by an organic sales decline of 5 percent and an unfavorable business days effect of 1 percent. Sales growth in the Aerospace & Defense end market reflects an increase in defense related activity in EMEA and an increase in the Americas. General Engineering end market sales decreased in the Americas, partially offset by an increase in sales in Asia Pacific and EMEA. Energy end market sales decreased in the Americas primarily due to U.S. oil and gas activities as land rig counts decreased year over year, partially offset by focused execution on our strategic initiatives in EMEA. Earthworks end market sales decreased primarily due to construction in the Americas and underground mining in Asia Pacific.

Previous wording

On a regional basis, sales in EMEA increased due to defense related activity, and to a lesser extent, from the energy end market and favorable foreign currency effect. Sales in Asia Pacific were flat year over year, excluding the unfavorable foreign currency effect, due to increases in the general engineering end market, driven by increases in industrial activity year over year, offset with decreases in all other end markets. Sales in the Americas declined primarily due to the general engineering and energy end markets, and to a lesser extent, from the earthworks end market.

Current wording

On a regional basis, sales in EMEA increased due to defense related activity in EMEA. Sales in Asia Pacific decreased primarily due to underground mining. Sales in the Americas declined primarily due to the General Engineering and Energy end markets, and to a lesser extent, from the Earthworks end market.

Previous wording

For the six months ended December 31, 2023, Infrastructure operating income was $16.9 million compared to $30.9 million in the prior year period. The decrease in operating income was primarily due to lower volumes and the unfavorable timing of pricing compared to raw material costs. These factors were partially offset by restructuring savings of approximately $2 million.

Current wording

For the nine months ended March 31, 2024, Infrastructure operating income was $22.0 million compared to $40.5 million in the prior year period. The decrease in operating income was primarily due to lower sales and production volumes, the unfavorable timing of pricing compared to raw material costs, higher wages and general inflation and restructuring charges of approximately $3 million. These factors were partially offset by restructuring savings of approximately $3 million.

Previous wording

For the three months ended December 31, 2023, Corporate expense decreased by $0.5 million from the prior year quarter. For the six months ended December 31, 2023, Corporate expense decreased by $0.8 million from the prior year period.

Current wording

For the three months ended March 31, 2024, Corporate expense decreased by $0.2 million from the prior year quarter. For the nine months ended March 31, 2024, Corporate expense decreased by $1.0 million from the prior year period.

Previous wording

Cash flow from operations is the primary source of funding for our capital expenditures. For the six months ended December 31, 2023, cash flow provided by operating activities was $88.3 million.

Current wording

Cash flow from operations is the primary source of funding for our capital expenditures. For the nine months ended March 31, 2024, cash flow provided by operating activities was $163.5 million.

Previous wording

As of December 31, 2023, we were in compliance with all the covenants of the Credit Agreement, and there were $20.5 million of borrowings outstanding and $679.5 million of additional availability. There were no borrowings outstanding as of June 30, 2023.

Current wording

As of March 31, 2024, we were in compliance with all the covenants of the Credit Agreement, and there were $7.5 million of borrowings outstanding and $692.5 million of additional availability. There were no borrowings outstanding as of June 30, 2023.

Previous wording

At December 31, 2023, cash and cash equivalents were $90.7 million. Total Kennametal Shareholders' equity was $1,287.8 million and total debt was $618.9 million. Our current senior credit ratings are at investment grade levels. We believe that our current financial position, liquidity and credit ratings provide us access to the capital markets. We believe that we have sufficient resources available to meet cash requirements for the next 12 months. We continue to closely monitor our liquidity position and the condition of the capital markets, as well as the counterparty risk of our credit providers. There have been no material changes in our contractual obligations and commitments since June 30, 2023.

Current wording

At March 31, 2024, cash and cash equivalents were $92.1 million. Total Kennametal shareholders' equity was $1,264.6 million and total debt was $608.1 million. Our current senior credit ratings are at investment grade levels. We believe that our current financial position, liquidity and credit ratings provide us access to the capital markets. We believe that we have sufficient resources available to meet cash requirements for the next 12 months. We continue to closely monitor our liquidity position and the condition of the capital markets, as well as the counterparty risk of our credit providers. There have been no material changes in our contractual obligations and commitments since June 30, 2023.

Previous wording

Share Repurchase Program In July 2021, the Board of Directors of the Company approved a share repurchase program authorizing the Company to purchase up to $200 million of the Company's common stock over a three-year period. During the three and six months ended December 31, 2023, the Company repurchased $15 million and $29 million, respectively, of Kennametal common stock. Inception-to-date the Company has repurchased $163 million of Kennametal common stock under the $200 million three-year program.

Current wording

Share Repurchase Program In July 2021, the Board of Directors of the Company approved a share repurchase program authorizing the Company to purchase up to $200 million of the Company's common stock over a three-year period. During the nine months ended March 31, 2024, the Company repurchased $44 million of Kennametal common stock. Inception-to-date the Company has repurchased $178 million of Kennametal common stock under the existing $200 million three-year program.

Previous wording

On February 2, 2024, the Board of Directors of the Company authorized an additional share repurchase program. The Company intends to repurchase up to an additional $200 million of Kennametal common stock over a three-year period. The Company expects to fund repurchases through cash generated from operations.

Current wording

On February 2, 2024, the Board of Directors of the Company authorized an additional $200 million, three-year share repurchase program. The Company expects to fund repurchases through cash generated from operations.

Previous wording

Dividends During the six months ended December 31, 2023, the Company paid a total of $31.8 million in dividends to Kennametal Shareholders.

Current wording

Dividends During the nine months ended March 31, 2024, the Company paid a total of $47.7 million in dividends to Kennametal Shareholders.

Previous wording

During the six months ended December 31, 2023, cash flow provided by operating activities was $88.3 million, compared to $52.5 million for the prior year period. Cash flow provided by operating activities for the current year period consisted of net income and non-cash items amounting to an inflow of $143.3 million and changes in certain assets and liabilities netting to an outflow of $55.0 million. Contributing to the changes in certain assets and liabilities were a decrease in accounts payable and accrued liabilities of $36.2 million, a decrease in accrued income taxes of $17.3 million and an increase in inventories of $9.5 million. Partially offsetting these cash outflows was a decrease in accounts receivable of $20.4 million.

Current wording

During the nine months ended March 31, 2024, cash flow provided by operating activities was $163.5 million, compared to $126.2 million for the prior year period. Cash flow provided by operating activities for the current year period consisted of net income and non-cash items amounting to an inflow of $212.2 million and changes in certain assets and liabilities netting to an outflow of $48.8 million. Contributing to the changes in certain assets and liabilities were a decrease in accounts payable and accrued liabilities of $26.0 million, a decrease in accrued income taxes of $17.5 million and a decrease in accrued pension and postretirement benefits of $8.5 million. Partially offsetting these cash outflows was a decrease in inventories of $7.0 million and a decrease in accounts receivable of $3.9 million.

Previous wording

During the six months ended December 31, 2022, cash flow provided by operating activities was $52.5 million consisting of net income and non-cash items amounting to an inflow of $131.3 million and changes in certain assets and liabilities netting to an outflow of $78.8 million. Contributing to the changes in certain assets and liabilities were a decrease in accounts payable and accrued liabilities of $52.8 million, an increase in inventories of $32.9 million, and a decrease in accrued pension and postretirement benefits of $4.5 million. Partially offsetting these cash outflows was a decrease in accounts receivable of $4.0 million.

Current wording

During the nine months ended March 31, 2023, cash flow provided by operating activities was $126.2 million and consisted of net income and non-cash items amounting to an inflow of $204.4 million and changes in certain assets and liabilities netting to an outflow of $78.2 million. Contributing to the changes in certain assets and liabilities were a decrease in accounts payable and accrued liabilities of $46.3 million, an increase in inventories of $17.3 million, an increase in accounts receivable of $16.4 million and a decrease in accrued pension and postretirement benefits of $7.0 million.

Previous wording

Cash flow used in investing activities was $56.4 million for the six months ended December 31, 2023, compared to $48.1 million for the prior year period. During the current year period, cash flow used in investing activities primarily included capital expenditures of $57.5 million, which consisted primarily of equipment upgrades, and the acquisition of a business for $4.0 million, partially offset by disposals of property, plant, and equipment of $5.2 million.

Current wording

Cash flow used in investing activities was $86.1 million for the nine months ended March 31, 2024, compared to $66.2 million for the prior year period. During the current year period, cash flow used in investing activities included capital expenditures of $84.2 million, which consisted primarily of equipment upgrades, the acquisition of a business for $4.0 million and an investment in a strategic partnership, partially offset by disposals of property, plant, and equipment of $5.3 million.

Previous wording

Cash flow used in investing activities was $48.1 million for the six months ended December 31, 2022 and primarily included capital expenditures, net of $48.2 million, which consisted primarily of equipment upgrades, partially offset by disposals of property, plant, and equipment of $2.5 million.

Current wording

Cash flow used in investing activities was $66.2 million for the nine months ended March 31, 2023 and included capital expenditures of $71.1 million, which consisted primarily of equipment upgrades, partially offset by disposals of property, plant, and equipment of $4.8 million.

Previous wording

Cash flow used in financing activities was $46.5 million for the six months ended December 31, 2023 compared to $11.2 million in the prior year period. During the current year period, cash flow used in financing activities primarily included $31.8 million of cash dividends paid to Kennametal Shareholders, $28.8 million in common shares repurchased, and $7.9 million of the effect of employee benefit and stock plans and dividend reinvestment, partially offset by $20.5 million of borrowings under the Credit Agreement and an increase in notes payable of $2.1 million.

Current wording

Cash flow used in financing activities was $88.7 million for the nine months ended March 31, 2024 compared to $50.0 million in the prior year period. During the current year period, cash flow used in financing activities primarily included $47.7 million of cash dividends paid to Kennametal Shareholders, $43.8 million in common shares repurchased and $7.9 million of the effect of employee benefit and stock plans and dividend reinvestment, partially offset by borrowings of $7.5 million under the Credit Agreement and $4.1 million in notes payable.