KENNAMETAL INC

Previous wording

Our sales of $482.1 million for the three months ended December 31, 2024 decreased 3 percent from $495.3 million in the prior year quarter, reflecting an organic sales decline of 6 percent, partially offset by a favorable business days effect of 3 percent.

Current wording

Our sales of $486.4 million for the three months ended March 31, 2025 decreased 6 percent from $515.8 million in the prior year quarter, reflecting an organic sales decline of 3 percent and an unfavorable currency exchange effect of 3 percent.

Previous wording

Operating income for the three months ended December 31, 2024 was $31.7 million compared to $28.5 million in the prior year quarter. The year-over-year increase of $3.2 million was primarily due to lower raw material costs, pricing, incremental year-over-year restructuring savings of approximately $6 million, and within the Infrastructure segment, a net benefit of $2 million consisting of insurance recoveries related to the tornado that struck the Rogers, Arkansas facility late in fiscal 2024 and an advanced manufacturing production credit under the Inflation Reduction Act of approximately $2 million. These factors were partially offset by lower sales and production volumes and higher wages and general inflation.

Current wording

Operating income for the three months ended March 31, 2025 was $44.1 million compared to $35.2 million in the prior year quarter. The year-over-year increase of $8.8 million was primarily due to an advanced manufacturing production credit under the Inflation Reduction Act of approximately $10 million within the Infrastructure segment, lower raw material costs, pricing, and incremental year-over-year restructuring savings of approximately $6 million. These factors were partially offset by lower sales and production volumes, higher wages and general inflation and an unfavorable currency exchange effect of approximately $3 million.

Previous wording

Operating margin for the three months ended December 31, 2024 was 6.6 percent compared to 5.7 percent in the prior year quarter. The Metal Cutting and Infrastructure segments had operating margins of 5.6 percent and 8.5 percent, respectively, for the three months ended December 31, 2024.

Current wording

Operating margin for the three months ended March 31, 2025 was 9.1 percent compared to 6.8 percent in the prior year quarter. The Metal Cutting and Infrastructure segments had operating margins of 8.2 percent and 10.7 percent, respectively, for the three months ended March 31, 2025.

Previous wording

Our business has 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.

Current wording

Additionally, our business has 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, 2024, earnings per diluted share (EPS) was $0.23 compared to EPS of $0.29 in the prior year quarter. EPS for the three months ended December 31, 2024 was unfavorably affected by restructuring and related charges of $0.01 per share and differences in annual projected tax rates of $0.01 per share.

Current wording

For the three months ended March 31, 2025, earnings per diluted share (EPS) was $0.41 compared to EPS of $0.24 in the prior year quarter. EPS for the three months ended March 31, 2025 was unfavorably affected by restructuring and related charges of $0.06 per share.

Previous wording

Net cash flow provided by operating activities was $100.9 million during the six months ended December 31, 2024 compared to $88.3 million during the prior year period. Capital expenditures were $44.0 million and $57.5 million during the six months ended December 31, 2024 and 2023, respectively. During the six months ended December 31, 2024, the Company returned $61.2 million to shareholders through $30.1 million in share repurchases and $31.1 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 $129.7 million during the nine months ended March 31, 2025 compared to $163.5 million during the prior year period. Capital expenditures were $67.5 million and $84.2 million during the nine months ended March 31, 2025 and 2024, respectively. During the nine months ended March 31, 2025, the Company returned $101.7 million to shareholders through $55.1 million in share repurchases and $46.6 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 Sales for the three months ended December 31, 2024 were $482.1 million, a decrease of $13.3 million, or 3 percent, from $495.3 million in the prior year quarter, reflecting an organic sales decline of 6 percent, partially offset by a favorable business days effect of 3 percent.

Current wording

SALES Sales for the three months ended March 31, 2025 were $486.4 million, a decrease of $29.4 million, or 6 percent, from $515.8 million in the prior year quarter, reflecting an organic sales decline of 3 percent and an unfavorable currency exchange effect of 3 percent.

Previous wording

Sales for the six months ended December 31, 2024 were $964.0 million, a decrease of $23.8 million, or 2 percent, from $987.8 million in the prior year period. The decrease in sales was driven by an organic sales decline of 4 percent, partially offset by a favorable business days effect of 2 percent.

Current wording

Sales for the nine months ended March 31, 2025 were $1,450.4 million, a decrease of $53.2 million, or 4 percent, from $1,503.6 million in the prior year period. The decrease in sales was driven by an organic sales decline of 3 percent and an unfavorable currency exchange effect of 2 percent, partially offset by a favorable business days effect of 1 percent.

Previous wording

GROSS PROFIT Gross profit for the three months ended December 31, 2024 was $145.0 million, an increase of $5.4 million from $139.6 million in the prior year quarter. The increase was primarily due to lower raw material costs, pricing, and within the Infrastructure segment, a net benefit of $2 million consisting of insurance recoveries related to the tornado that struck the Rogers, Arkansas facility late in fiscal 2024 and an advanced manufacturing production credit under the Inflation Reduction Act of approximately $2 million. These factors were partially offset by lower sales and production volumes and higher wages and general inflation. Gross profit margin for the three months ended December 31, 2024 was 30.1 percent, as compared to 28.2 percent in the prior year quarter.

Current wording

GROSS PROFIT Gross profit for the three months ended March 31, 2025 was $156.4 million, an increase of $3.1 million from $153.3 million in the prior year quarter. The increase was primarily due to an advanced manufacturing production credit under the Inflation Reduction Act of approximately $10 million within the Infrastructure segment, lower raw material costs and pricing. These factors were partially offset by lower sales and production volumes and higher wages and general inflation. Gross profit margin for the three months ended March 31, 2025 was 32.1 percent, as compared to 29.7 percent in the prior year quarter.

Previous wording

Gross profit for the six months ended December 31, 2024 was $296.0 million, a decrease of $6.5 million from $302.5 million in the prior year period. The decrease was primarily due to lower sales and production volumes and higher wages and general inflation. These factors were partially offset by lower raw material costs, pricing, and within the Infrastructure segment, a net benefit of $6 million from insurance recoveries and an advanced manufacturing production credit under the Inflation Reduction Act of approximately $3 million. Gross profit margin for the six months ended December 31, 2024 was 30.7 percent, as compared to 30.6 percent in the prior year period.

Current wording

Gross profit for the nine months ended March 31, 2025 was $452.4 million, a decrease of $3.4 million from $455.8 million in the prior year period. The decrease was primarily due to lower sales and production volumes and higher wages and general inflation. These factors were partially offset by lower raw material costs, pricing, an advanced manufacturing production credit under the Inflation Reduction Act of approximately $13 million within the Infrastructure segment, and a net benefit of $6 million from insurance recoveries. Gross profit margin for the nine months ended March 31, 2025 was 31.2 percent, as compared to 30.3 percent in the prior year period.

Previous wording

OPERATING EXPENSE Operating expense for the three months ended December 31, 2024 was $109.3 million compared to $107.3 million for the three months ended December 31, 2023. Operating expense for the six months ended December 31, 2024 was $221.0 million compared to $219.0 million for the six months ended December 31, 2023.

Current wording

OPERATING EXPENSE Operating expense for the three months ended March 31, 2025 was $104.0 million compared to $108.7 million for the three months ended March 31, 2024. Operating expense for the nine months ended March 31, 2025 was $325.0 million compared to $327.7 million for the nine months ended March 31, 2024.

Previous wording

Research and development expenses included in operating expense totaled $11.0 million and $11.0 million for the three months ended December 31, 2024 and 2023, respectively, and $22.1 million and $22.0 million for the six months ended December 31, 2024 and 2023, respectively.

Current wording

Research and development expenses included in operating expense totaled $11.1 million and $11.3 million for the three months ended March 31, 2025 and 2024, respectively, and $33.2 million and $33.3 million for the nine months ended March 31, 2025 and 2024, respectively.

Previous wording

These combined actions are currently expected to deliver annualized run rate pre-tax savings of approximately $15 million by the end of fiscal 2025. The Company expects to incur pre-tax charges of approximately $25 million in connection with the execution of these actions; of which approximately $10 million is for cash-related facilities charges, approximately $10 million is for severance-related cash expenditures and approximately $5 million is for non-cash facilities charges.

Current wording

RESTRUCTURING AND OTHER CHARGES, NETIn January 2025, we announced several actions to support the long-term competitiveness of the Company and to mitigate softer market conditions. These actions are currently expected to deliver annualized run rate pre-tax savings of approximately $15 million by the end of fiscal 2025. We expect to incur pre-tax charges of approximately $25 million in connection with the execution of these actions.

Previous wording

We recorded restructuring and related charges of $1.4 million for the three months ended December 31, 2024, which consisted of $1.2 million in Metal Cutting and $0.2 million in Infrastructure. We recorded restructuring and related charges of $2.0 million for the six months ended December 31, 2024, which consisted of $1.8 million in Metal Cutting and $0.2 million in Infrastructure.

Current wording

We recorded restructuring and related charges of $5.8 million for the three months ended March 31, 2025, which consisted of $4.3 million in Metal Cutting and $1.5 million in Infrastructure. Of this amount, restructuring-related charges of $0.2 million were included in cost of goods sold. We recorded restructuring and related charges of $7.9 million for the nine months ended March 31, 2025, which consisted of $6.2 million in Metal Cutting and $1.7 million in Infrastructure. Of this amount, restructuring-related charges of $0.4 million were included in cost of goods sold.

Previous wording

INTEREST EXPENSE Interest expense for the three months ended December 31, 2024 decreased to $6.2 million compared to $6.8 million for the three months ended December 31, 2023. Interest expense for the six months ended December 31, 2024 decreased to $12.5 million compared to $13.4 million for the six months ended December 31, 2023. The decrease in interest expense is due primarily to decreased amounts outstanding under the Credit Agreement.

Current wording

INTEREST EXPENSE Interest expense for the three months ended March 31, 2025 decreased to $6.2 million compared to $6.8 million for the three months ended March 31, 2024. Interest expense for the nine months ended March 31, 2025 decreased to $18.7 million compared to $20.2 million for the nine months ended March 31, 2024. The decrease in interest expense is due primarily to decreased amounts outstanding under the Credit Agreement.

Previous wording

OTHER INCOME, NET Other income, net for the three months ended December 31, 2024 was $1.5 million compared to $0.7 million during the three months ended December 31, 2023. Other income, net for the six months ended December 31, 2024 was $3.1 million compared to $0.6 million during the six months ended December 31, 2023. The increase in other income was primarily due to insurance recoveries of approximately $1 million related to a litigation settlement in fiscal 2023, partially offset by higher net periodic pension expense, including a settlement charge of $0.8 million due to the wind-up of the Canadian defined benefit pension plans during the six months ended December 31, 2024.

Current wording

OTHER INCOME, NET Other income, net for the three months ended March 31, 2025 was $5.5 million compared to $0.1 million during the three months ended March 31, 2024. Other income, net for the nine months ended March 31, 2025 was $8.6 million compared to $0.7 million during the nine months ended March 31, 2024. The increase in other income was primarily due to foreign currency transaction gains including preferential exchange rates in Bolivia, partially offset by higher net periodic pension expense.

Previous wording

PROVISION FOR INCOME TAXESThe effective income tax rates for the three months ended December 31, 2024 and 2023 were 29.4 percent (provision on income) and 9.0 percent (benefit on income), respectively. The year-over-year change is primarily due to a $7.8 million benefit related to a tax rate change in Switzerland that was enacted during the three months ended December 31, 2023 and geographical mix, which were partially offset by a benefit for an advanced manufacturing production credit under the Inflation Reduction Act during the three months ended December 31, 2024.

Current wording

PROVISION FOR INCOME TAXESThe effective income tax rates for the three months ended March 31, 2025 and 2024 were 23.6 percent and 27.4 percent, respectively. The year-over-year change is primarily due to a benefit from the advanced manufacturing production credit under the Inflation Reduction Act recorded during the current year quarter, partially offset by discrete tax benefits recorded in the prior year quarter related to provision to return adjustments, and geographical mix.

Previous wording

The effective income tax rates for the six months ended December 31, 2024 and 2023 were 27.1 percent and 10.0 percent (both provisions on income), respectively. The year-over-year change is primarily due to 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 that were recorded during the six months ended December 31, 2023 and geographical mix, which were partially offset by a benefit of $1.4 million due to interest received to resolve an income tax dispute in India and a benefit for an advanced manufacturing production credit under the Inflation Reduction Act during the six months ended December 31, 2024.

Current wording

The effective income tax rates for the nine months ended March 31, 2025 and 2024 were 25.6 percent and 15.5 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, which were partially offset by adjustments for the nine months ended March 31, 2025 that include benefits from the advanced manufacturing production credit under the Inflation Reduction Act and $1.4 million due to interest received to resolve an income tax dispute in India, and geographical mix.

Previous wording

On a regional basis, sales in the Americas declined primarily due to decreases in the General Engineering and Transportation end markets and unfavorable currency exchange, partially offset by an increase in the Aerospace & Defense end market. Sales decreased in EMEA as a result of the Transportation and General Engineering end markets, partially offset by the Aerospace & Defense end market. Sales in Asia Pacific were flat primarily due to lower economic activity, partially offset by favorable currency exchange.

Current wording

On a regional basis, sales in the Americas declined primarily due to lower manufacturing activity in the General Engineering end market. Sales decreased in EMEA primarily as a result of the General Engineering, Transportation and Energy end markets. Sales in Asia Pacific decreased primarily due to the General Engineering and Aerospace & Defense end markets, partially offset by the Transportation and Energy end markets.

Previous wording

For the three months ended December 31, 2024, Metal Cutting operating income was $16.6 million compared to $25.5 million in the prior year quarter. The decrease in operating income was primarily due to lower sales and production volumes and higher wages and general inflation. These factors were partially offset by pricing, lower raw material costs and incremental year-over-year restructuring savings of approximately $4 million.

Current wording

For the three months ended March 31, 2025, Metal Cutting operating income was $24.9 million compared to $30.8 million in the prior year quarter. The decrease in operating income was primarily due to lower sales and production volumes, an unfavorable currency exchange effect of approximately $3 million and higher wages and general inflation. These factors were partially offset by pricing, incremental year-over-year restructuring savings of approximately $4 million and lower raw material costs.

Previous wording

For the six months ended December 31, 2024, Metal Cutting sales decreased 4 percent compared to the prior year period. This was driven by an organic sales decline of 5 percent and an unfavorable foreign currency effect of 1 percent, partially offset by a favorable business days effect of 2 percent. Aerospace & Defense end market sales increased in EMEA and the Americas as a result of our focused execution on our growth initiatives, the effects of which were partially offset by a decline in Asia Pacific due to lower economic activity and certain production challenges at our OEM customers. Energy end market sales decreased primarily in Asia Pacific due to a decline in wind energy and unfavorable foreign currency exchange. Transportation end market sales decreased primarily in EMEA and the Americas resulting from lower volumes and project activity. General Engineering end market sales decreased primarily in EMEA and the Americas as a result of lower economic activity.

Current wording

For the nine months ended March 31, 2025, Metal Cutting sales decreased 5 percent compared to the prior year period. This was driven by an organic sales decline of 5 percent and an unfavorable currency effect of 2 percent, partially offset by a favorable business days effect of 2 percent. Aerospace & Defense end market sales increased in EMEA and the Americas as a result of our focused execution on our growth initiatives, the effects of which were partially offset by a decline in Asia Pacific due to lower economic activity and certain production challenges at our OEM customers. Energy end market sales increased primarily in the Americas and Asia Pacific due to wind energy, the effects of which were offset by an unfavorable currency exchange effect and a decline in EMEA. Transportation end market sales decreased in EMEA and the Americas resulting from lower volumes and project activity, partially offset by an increase in Asia Pacific due to increased auto production and our focused execution on our growth initiatives. Sales in the General Engineering end market declined in EMEA, the Americas and Asia Pacific due to lower manufacturing activity.

Previous wording

On a regional basis, sales in the Americas decreased primarily due to the General Engineering and Transportation end markets and unfavorable foreign currency exchange. Sales decreased in EMEA due to the General Engineering and Transportation end markets. Sales in Asia Pacific increased due to the Transportation end market.

Current wording

On a regional basis, sales in the Americas decreased primarily due to the General Engineering and Transportation end markets. Sales decreased in EMEA primarily due to the General Engineering and Transportation end markets. Sales in Asia Pacific increased in the General Engineering and Aerospace & Defense and end markets, the effects of which were offset by the Transportation end markets and unfavorable currency exchange.

Previous wording

For the six months ended December 31, 2024, Metal Cutting operating income was $40.4 million compared to $57.6 million in the prior year period. The decrease in operating income was primarily due to lower sales and production volumes and higher wages and general inflation. These factors were partially offset by lower raw material costs, incremental year-over-year restructuring savings of approximately $9 million and pricing.

Current wording

For the nine months ended March 31, 2025, Metal Cutting operating income was $65.3 million compared to $88.5 million in the prior year period. The decrease in operating income was primarily due to lower sales and production volumes and higher wages and general inflation. These factors were partially offset by pricing, incremental year-over-year restructuring savings of approximately $12 million and lower raw material costs.

Previous wording

For the three months ended December 31, 2024, Infrastructure sales were flat from the prior year quarter, driven by a favorable business days effect of 3 percent and a favorable currency exchange effect of 1 percent, offset by an organic sales decline of 4 percent. Aerospace & Defense end market sales increased due to project timing and the execution of our growth initiatives. Energy end market sales increased in the Americas and Asia Pacific due to project timing, partially offset by lower global oil and gas activities as rig counts decreased year-over-year. Sales in the General Engineering end market decreased in EMEA due to declines in industrial activity year over year, partially offset by an increase in Asia Pacific from higher ceramics demand. Earthworks end market sales decreased in Asia Pacific due to lower customer capital investment from lower coal prices as well as order timing. Earthworks end market sales decreased in the Americas due to lower mining activity, including a customer mine closure, partially offset by an increase in sales in EMEA.

Current wording

For the three months ended March 31, 2025, Infrastructure sales decreased 4 percent from the prior year quarter. This was driven by an organic sales decline of 2 percent and an unfavorable currency exchange effect of 2 percent. Aerospace & Defense end market sales increased in EMEA and the Americas as a result of project timing and the execution of our growth initiatives. Energy end market sales decreased in the Americas due to lower global oil and gas activities as rig counts decreased year-over-year and order timing. Sales in the General Engineering end market decreased in the Americas and EMEA due to declines in industrial activity year-over-year. Earthworks end market sales decreased in the Americas due to lower mining activity, including customer mine closures and competitive pressures, partially offset by higher construction activity and an increase in sales in EMEA. Earthworks end market sales decreased in Asia Pacific due to lower customer capital investment from lower coal prices.

Previous wording

On a regional basis, sales in the Americas decreased due to a decline in the Earthworks end market from lower mining activity, including a customer mine closure and order timing, and unfavorable foreign currency exchange, partially offset by order timing in the Energy end market and execution of our growth initiatives in the Aerospace & Defense end market. Sales in EMEA increased in the Aerospace & Defense end market from order timing and execution of our strategic initiatives as well as higher Earthworks end market demand, partially offset by lower demand in the General Engineering and Energy end markets from declines in industrial activity year-over-year. Sales in Asia Pacific decreased due to a decline in underground mining from lower coal prices driving lower customer capital investment as well as order timing, partially offset by growth in the General Engineering and Energy end markets.

Current wording

On a regional basis, sales in the Americas decreased due to a decline in the Earthworks end market from lower mining activity, including customer mine closures and competitive pressures, as well as in the General Engineering and Energy end markets due to declines in industrial activity year-over-year. This was partially offset by the execution of our growth initiatives in the Aerospace & Defense end market. Sales in EMEA increased in the Aerospace & Defense end market from order timing and the execution of our strategic initiatives, as well as an increase in sales in the Earthworks end market, partially offset by lower demand in the General Engineering end market from declines in industrial activity year-over-year. Sales in Asia Pacific decreased due to a decline in underground mining from lower customer capital investment as a result of lower coal prices.

Previous wording

For the six months ended December 31, 2024, Infrastructure operating income was $28.3 million compared to $16.9 million in the prior year period. The increase in operating income was primarily due to the favorable timing of pricing compared to raw material costs, a net benefit of $6 million from insurance recoveries related to the tornado that struck the Rogers, Arkansas facility late in fiscal 2024, an advanced manufacturing production credit under the Inflation Reduction Act of approximately $3 million and incremental year-over-year restructuring savings of approximately $3 million. These factors were partially offset by certain manufacturing costs in the September quarter of fiscal 2025, including temporary plant shutdowns for maintenance and process improvements, and higher wages and general inflation.

Current wording

For the three months ended March 31, 2025, Infrastructure operating income was $19.4 million compared to $5.1 million in the prior year quarter. The increase in operating income was primarily due to an advanced manufacturing production credit under the Inflation Reduction Act of approximately $10 million, the favorable timing of pricing compared to raw material costs and incremental year-over-year restructuring savings of approximately $2 million. These factors were partially offset by lower sales and production volumes.

Previous wording

For the six months ended December 31, 2024, Infrastructure sales were flat from the prior year period, driven by an organic sales decline of 1 percent, offset by a favorable business days effect of 1 percent. Sales growth in the Aerospace & Defense end market reflects project timing and the execution of our growth initiatives. Energy end market sales increased in the Americas and Asia Pacific primarily due to project timing, partially offset by lower global oil and gas activities as rig counts decreased year-over-year. General engineering end market sales decreased in the Americas stemming from temporary plant shutdowns during the September quarter of fiscal 2025 and in EMEA due to declines in industrial activity year-over-year, the effects of which were partially offset by an increase in Asia Pacific. Earthworks end market sales decreased in the Americas due to lower mining activity, including a customer mine closure, and decreased in Asia Pacific due to lower customer capital investment from lower coal prices as well as order timing, the effects of which were partially offset by an increase in sales in EMEA.

Current wording

For the nine months ended March 31, 2025, Infrastructure sales decreased 1 percent compared to the prior year period. This was driven by an organic sales decline of 1 percent. Aerospace & Defense end market sales increased in EMEA and the Americas, reflecting project timing and the execution of our growth initiatives. Energy end market sales increased in Asia Pacific and the Americas primarily due to project timing, partially offset by lower global oil and gas activities as rig counts decreased year-over-year. General Engineering end market sales decreased due to industrial activity year-over-year and temporary plant shutdowns in the Americas, partially offset by an increase in Asia Pacific. Earthworks end market sales decreased in the Americas due to lower mining activity, including customer mine closures and competitive pressures, partially offset by higher construction activity and an increase in sales in EMEA. Earthworks end market sales decreased in Asia Pacific due to lower customer capital investment from lower coal prices.

Previous wording

On a regional basis, sales in the Americas decreased due to a decline in the Earthworks end market driven by lower mining activity, including a customer mine closure and project order timing, and a decline in the General Engineering end market due to temporary plant shutdowns during the September quarter of fiscal 2025, partially offset by order timing and execution of strategic initiatives in the Aerospace & Defense and Energy end markets. Sales in EMEA increased in the Aerospace & Defense end market from order timing and execution of our strategic initiatives as well as higher Earthworks end market demand. Sales in Asia Pacific decreased due to a decline in underground mining from lower coal prices driving lower customer capital investment as well as order timing, partially offset by growth in the General Engineering and Energy end markets.

Current wording

On a regional basis, sales in the Americas decreased due to a decline in the Earthworks and General Engineering end markets. This was partially offset by the execution of our growth initiatives in the Aerospace & Defense end market. Sales in EMEA increased in the Aerospace & Defense end market from order timing and execution of our strategic initiatives as well as higher Earthworks demand. This was partially offset by a decline in the General Engineering end market from declines in industrial activity year over year. Sales in Asia Pacific decreased due to a decline in underground mining from lower customer capital investment as a result of lower coal prices, partially offset by the General Engineering and Energy end markets.

Previous wording

For the three months ended December 31, 2024, Infrastructure operating income was $15.6 million compared to $3.2 million in the prior year quarter. The increase in operating income was primarily due to the favorable timing of pricing compared to raw material costs, a net benefit of $2 million from insurance recoveries related to the tornado that struck the Rogers, Arkansas facility late in fiscal 2024, an advanced manufacturing production credit under the Inflation Reduction Act of approximately $2 million and incremental year-over-year restructuring savings of approximately $2 million. These factors were partially offset by lower production volumes and higher wages and general inflation.

Current wording

For the nine months ended March 31, 2025, Infrastructure operating income was $47.8 million compared to $22.0 million in the prior year period. The increase in operating income was primarily due to the favorable timing of pricing compared to raw material costs, an advanced manufacturing production credit under the Inflation Reduction Act of approximately $13 million, a net benefit of $6 million from insurance recoveries related to the tornado that struck the Rogers, Arkansas facility late in fiscal 2024, and incremental year-over-year restructuring savings of approximately $5 million. These factors were partially offset by lower sales and production volumes and higher wages and general inflation.

Previous wording

For the three months ended December 31, 2024, Corporate expense increased by $0.2 million from the prior year quarter. For the six months ended December 31, 2024, Corporate expense increased by $0.1 million from the prior year period.

Current wording

For the three months ended March 31, 2025, Corporate expense decreased by $0.5 million from the prior year quarter. For the nine months ended March 31, 2025, Corporate expense decreased by $0.3 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, 2024, cash flow provided by operating activities was $100.9 million.

Current wording

Cash flow from operations is the primary source of funding for our capital expenditures. For the nine months ended March 31, 2025, cash flow provided by operating activities was $129.7 million.

Previous wording

As of December 31, 2024, we were in compliance with all the covenants of the Credit Agreement, and there were no borrowings outstanding and $700.0 million of additional availability. There were no borrowings outstanding as of June 30, 2024.

Current wording

As of March 31, 2025, we were in compliance with all the covenants of the Credit Agreement, and there were $10.2 million of borrowings outstanding and $689.8 million of additional availability. There were no borrowings outstanding as of June 30, 2024.

Previous wording

At December 31, 2024, cash and cash equivalents were $121.2 million. Total Kennametal shareholders' equity was $1,220.0 million and total debt was $597.8 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, 2024.

Current wording

At March 31, 2025, cash and cash equivalents were $97.5 million. Total Kennametal shareholders' equity was $1,236.9 million and total debt was $609.1 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, 2024.

Previous wording

Share Repurchase Program In February 2024, the Board of Directors of the Company authorized 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, 2024, the Company repurchased $15 million and $30 million, respectively, of Kennametal common stock. Inception-to-date the Company has repurchased $30 million of Kennametal common stock under the $200 million three-year program.

Current wording

Share Repurchase Program In February 2024, the Board of Directors of the Company authorized 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, 2025, the Company repurchased $55 million of Kennametal common stock. Inception-to-date the Company has repurchased $55 million of Kennametal common stock under the $200 million three-year program.

Previous wording

Dividends During the six months ended December 31, 2024, the Company paid a total of $31.1 million in dividends to Kennametal Shareholders.

Current wording

Dividends During the nine months ended March 31, 2025, the Company paid a total of $46.6 million in dividends to Kennametal Shareholders.

Previous wording

During the six months ended December 31, 2024, cash flow provided by operating activities was $100.9 million, compared to $88.3 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 $118.7 million and changes in certain assets and liabilities netting to an outflow of $17.8 million. Contributing to the changes in certain assets and liabilities were an increase in inventories of $30.7 million and a decrease in accounts payable and accrued liabilities of $27.2 million. Partially offsetting these cash outflows was a decrease in accounts receivable of $43.2 million.

Current wording

During the nine months ended March 31, 2025, cash flow provided by operating activities was $129.7 million, compared to $163.5 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 $194.3 million and changes in certain assets and liabilities netting to an outflow of $64.5 million. Contributing to the changes in certain assets and liabilities were an increase in inventories of $41.3 million, a decrease in accounts payable and accrued liabilities of $14.1 million and a decrease in accrued income taxes of $11.7 million. Partially offsetting these cash outflows was a decrease in accounts receivable of $10.5 million.

Previous wording

During the six months ended December 31, 2023, cash flow provided by operating activities was $88.3 million and 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 and 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

Cash flow used in investing activities was $36.6 million for the six months ended December 31, 2024, compared to $56.4 million for the prior year period. During the current year period, cash flow used in investing activities included capital expenditures of $44.0 million, which consisted primarily of equipment upgrades, partially offset by proceeds from insurance recoveries of $7.2 million.

Current wording

Cash flow used in investing activities was $60.1 million for the nine months ended March 31, 2025, compared to $86.1 million for the prior year period. During the current year period, cash flow used in investing activities included capital expenditures of $67.5 million, which consisted primarily of equipment upgrades, partially offset by proceeds from insurance recoveries of $7.2 million.

Previous wording

Cash flow used in investing activities was $56.4 million for the six months ended December 31, 2023 and 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 and 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 financing activities was $68.0 million for the six months ended December 31, 2024 compared to $46.5 million in the prior year period. During the current year period, cash flow used in financing activities primarily included $31.1 million of cash dividends paid to Kennametal Shareholders, $30.1 million in common shares repurchased and $6.2 million of the effect of employee benefit and stock plans and dividend reinvestment.

Current wording

Cash flow used in financing activities was $98.0 million for the nine months ended March 31, 2025 compared to $88.7 million in the prior year period. During the current year period, cash flow used in financing activities primarily included $55.1 million in common shares repurchased, $46.6 million of cash dividends paid to Kennametal Shareholders and $6.6 million of the effect of employee benefit and stock plans and dividend reinvestment, partially offset by borrowings of $10.2 million under the Credit Agreement.