KENNAMETAL INC

Previous wording

Throughout Management's Discussion and Analysis of Financial Condition and Results of Operations (the MD&A), we refer to measures used by management to evaluate performance. We also refer to a number of financial measures that are not defined under accounting principles generally accepted in the United States of America (U.S. GAAP), including organic sales growth (decline), constant currency regional sales growth (decline) and constant currency end market sales growth (decline). The explanation at the end of the MD&A provides the definition of these non-GAAP financial measures as well as details on their use and a reconciliation to the most directly comparable GAAP financial measures.

Current wording

Throughout Management's Discussion and Analysis of Financial Condition and Results of Operations (the MD&A), we refer to measures used by management to evaluate performance. We also refer to a number of financial measures that are not defined under accounting principles generally accepted in the United States of America (U.S. GAAP), including organic sales growth, constant currency regional sales growth and constant currency end market sales growth. The explanation at the end of the MD&A provides the definition of these non-GAAP financial measures as well as details on their use and a reconciliation to the most directly comparable GAAP financial measures.

Previous wording

Operating income was $143.1 million, or 7.3 percent margin, compared with $170.2 million, or 8.3 percent margin, in the prior year. The decrease in operating income was primarily due to lower sales and production volumes, higher wages and general inflation, unfavorable foreign currency exchange of approximately $6 million and the net effect of increased tariffs of approximately $4 million. These factors were partially offset by restructuring benefits of approximately $23 million, pricing, lower raw material costs, an incremental year-over-year benefit of approximately $13 million from an advanced manufacturing production credit under the Inflation Reduction Act within the Infrastructure segment, and a net benefit of $12 million within the Infrastructure segment related to the tornado that struck the Rogers, Arkansas facility late in fiscal 2024. In 2025, the Metal Cutting and Infrastructure segments had operating margins of 7.1 percent and 7.8 percent, respectively.

Current wording

Operating income was $472.5 million, or 20.1 percent margin, in 2026 compared with $143.1 million, or 7.3 percent margin, in the prior year. The increase in operating income was driven by the favorable timing of raw material-related pricing compared to costs of approximately $316 million, non-raw material-related pricing and tariff surcharges in Metal Cutting, higher sales and production volumes and incremental year-over-year restructuring savings of approximately $27 million. These factors were partially offset by higher compensation costs, tariffs and general inflation, and fewer insurance proceeds received within Infrastructure during 2026. In 2026, the Metal Cutting and Infrastructure segments had operating margins of 14.0 percent and 29.2 percent, respectively.

Previous 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.

Current wording

Additionally, our business has been affected by foreign currency exchange, inflationary headwinds and rising tungsten prices. These pressures, driven by tightening global supply, geopolitical factors and evolving trade policies have increased raw material costs and caused other business disruptions. We have been able to mitigate these impacts through price increases on our products, supplier diversification and inventory management initiatives. However, we cannot predict the ultimate effect of these issues on our business, operating results, cash flows or financial condition. Continued volatility in commodity pricing, foreign exchange rates and supply availability could adversely affect our margins, operations and liquidity and may increase the risk of future impairment charges, including goodwill and other intangible assets. In addition, significant declines in raw material costs could reduce the net realizable value of our inventory, potentially requiring write-downs. We are continuing to monitor macroeconomic conditions and will take actions to mitigate these effects to the extent possible.

Previous wording

Share Repurchase Program. In February 2024, the Board of Directors of the Company authorized a $200 million, three-year share repurchase program outside of the Company's dividend reinvestment program. During 2025, the Company repurchased 2.5 million shares of common stock for $60 million.

Current wording

In February 2024, the Board of Directors of the Company authorized a $200 million, three-year share repurchase program outside of the Company's dividend reinvestment program. During 2026, the Company repurchased 475 thousand shares of common stock for $10 million. Subsequent to these repurchases, the Company paused activity under the share repurchase program. The Company expects to reassess repurchase activity as cash flow generation improves.

Previous wording

We reported earnings per diluted share (EPS) of $1.20 for 2025. EPS for the year was unfavorably affected by restructuring and related charges of $0.13 per share and a loss on divestiture of $0.01 per share. EPS in the prior year of $1.37 was unfavorably affected by restructuring and related charges of $0.13 per share.

Current wording

We reported earnings per diluted share (EPS) of $4.42 for 2026 compared to $1.20 in the prior year.

Previous wording

We generated cash flow from operating activities of $208.3 million in 2025 compared to $277.1 million during the prior year. Capital expenditures were $89.0 million and $107.6 million during 2025 and 2024, respectively. During 2025, the Company returned a total of $122 million to the shareholders through $60 million in share repurchases under the $200 million, three-year program and $62 million in dividends.

Current wording

In 2026, net cash flow used for operating activities was $4.0 million compared to net cash flow provided by operating activities of $208.3 million during the prior year. Capital expenditures were $76.9 million and $89.0 million during 2026 and 2025, respectively. During 2026, the Company returned a total of $71 million to the shareholders through $10 million in share repurchases under the $200 million, three-year program and $61 million in dividends.

Previous wording

SALES Sales of $1,966.8 million in 2025 decreased 4 percent from $2,046.9 million in 2024, reflecting an organic sales decline of 4 percent and an unfavorable currency exchange effect of 1 percent, partially offset by a favorable business days effect of 1 percent.

Current wording

SALES Sales of $2,356.7 million in 2026 increased 20 percent from $1,966.8 million in 2025, reflecting organic sales growth of 19 percent and a favorable foreign currency exchange effect of 2 percent, partially offset by a divestiture effect of 1 percent.

Previous wording

Our sales growth (decline) by end market and region are as follows:

Current wording

Our sales growth by end market and region are as follows:

Previous wording

OPERATING EXPENSE Operating expense in 2025 was $430.8 million, a decrease of $2.3 million, or 1 percent, from $433.2 million in 2024.

Current wording

OPERATING EXPENSE Operating expense in 2026 was $479.0 million, an increase of $48.2 million, or 11 percent, from $430.8 million in 2025.

Previous wording

We invested further in technology and innovation to continue delivering high quality products to our customers. Research and development expenses included in operating expense totaled $44.4 million and $44.2 million for 2025 and 2024, respectively.

Current wording

We invested further in technology and innovation to continue delivering high quality products to our customers. Research and development expenses included in operating expense totaled $43.2 million and $44.4 million for 2026 and 2025, respectively.

Previous wording

In January 2025, we announced several actions to support the long-term competitiveness of the Company and to mitigate softer market conditions. Total restructuring and related charges for this program of $11.4 million, compared to a target of approximately $25 million, were recorded through June 30, 2025, consisting of $8.8 million in Metal Cutting and $2.6 million in Infrastructure. These actions delivered annualized run rate pre-tax savings of approximately $28 million by the end of fiscal 2025. We now expect total annualized run rate savings of approximately $35 million in connection with these actions, exceeding the original target of $15 million. The Company substantially completed the closure of a facility in Greenfield, MA and the consolidation of facilities in Barcelona, Spain during 2025 as a part of these actions.

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. Total restructuring and related charges for this program of $23.9 million were recorded through June 30, 2026, consisting of $19.4 million in Metal Cutting and $4.5 million in Infrastructure. The Company substantially completed the closure of a facility in Greenfield, MA and the consolidation of facilities in Barcelona, Spain during 2025 as a part of these actions.

Previous wording

During 2025, we recorded restructuring and related charges of $13.3 million, which consisted of $10.4 million in Metal Cutting and $2.8 million in Infrastructure. Of this amount, restructuring-related charges of $1.3 million were included in cost of goods sold and $0.2 million were included in operating expense.

Current wording

During 2026, we recorded restructuring and related charges of $11.4 million, which consisted of $9.7 million in Metal Cutting and $1.7 million in Infrastructure. Of this amount, restructuring-related charges of $2.4 million were included in cost of goods sold and $0.1 million were included in operating expense. These amounts are inclusive of a reversal of restructuring and related charges of $1.0 million related to prior actions.

Previous wording

AMORTIZATION OF INTANGIBLES Amortization expense was $10.8 million and $11.6 million in 2025 and 2024, respectively.

Current wording

AMORTIZATION OF INTANGIBLES Amortization expense was $9.5 million and $10.8 million in 2026 and 2025, respectively.

Previous wording

INTEREST EXPENSE Interest expense in 2025 was $24.9 million, a decrease of $1.5 million, compared to $26.5 million in 2024. The portion of our debt subject to variable rates of interest was less than 1 percent at June 30, 2025 and 2024. There were no borrowings outstanding under the Credit Agreement as of June 30, 2025 and 2024.

Current wording

INTEREST EXPENSE Interest expense in 2026 was $28.6 million, an increase of $3.6 million, compared to $24.9 million in 2025. The increase includes a loss of $2.2 million from the early extinguishment of the 2028 Notes in May 2026. The portion of our debt subject to variable rates of interest was approximately 4 percent and less than 1 percent at June 30, 2026 and 2025. As of June 30, 2026, we had $20 million of borrowings outstanding under the Credit Agreement and no borrowings outstanding as of June 30, 2025.

Previous wording

OTHER (INCOME) EXPENSE, NET In 2025, other (income) expense, net was $13.8 million of other (income), net compared to $0.7 million in 2024. The increase of $13.1 million is primarily due to foreign currency transactions including preferential exchange rates in Bolivia, partially offset by higher net periodic pension expense.

Current wording

OTHER INCOME, NET In 2026, other income, net was $17.4 million compared to $13.8 million in 2025. The increase of $3.5 million is primarily due to foreign currency transactions including preferential exchange rates in Bolivia, partially offset by higher net periodic pension expense.

Previous wording

INCOME TAXES The effective tax rate for 2025 was 25.2 percent compared to 21.3 percent for 2024. The year-over-year change in the effective tax rate is primarily due to prior year adjustments that include a $7.8 million benefit related to a tax rate change in Switzerland, a $6.2 million benefit related to a change in unrecognized tax benefits and a $2.9 million charge to settle the Italian tax litigation. The current year effective tax rate reflects a benefit for the advanced manufacturing production credit under the Inflation Reduction Act of 2022 and $1.4 million for interest received to resolve an income tax dispute in India and geographical mix.

Current wording

INCOME TAXES The effective tax rate for 2026 was 24.0 percent compared to 25.2 percent for 2025. The year-over-year change in the effective tax rate is primarily due to favorable geographical mix partially offset by prior year adjustments that include a benefit for the advanced manufacturing production credit under the Inflation Reduction Act of 2022 and $1.4 million for interest received to resolve an income tax dispute in India.

Previous wording

U.S. Income tax reform. On July 4, 2025, the One Big Beautiful Bill Act (OBBBA), which includes a broad range of tax reform provisions, was signed into law in the United States. We are in the process of assessing what impact the OBBBA will have on our business.

Current wording

U.S. Income tax reform. On July 4, 2025, the One Big Beautiful Bill Act (OBBBA), which includes a broad range of tax reform provisions, was signed into law in the United States. We do not expect the OBBBA to have a material impact on our consolidated financial statements.

Previous wording

NET INCOME ATTRIBUTABLE TO KENNAMETALNet income attributable to Kennametal was $93.1 million, or $1.20 of earnings per diluted share (EPS) in 2025, compared to $109.3 million, or EPS of $1.37 in 2024. The decrease is a result of the factors previously discussed.

Current wording

NET INCOME ATTRIBUTABLE TO KENNAMETALNet income attributable to Kennametal was $342.4 million, or $4.42 of earnings per diluted share (EPS) in 2026, compared to $93.1 million, or EPS of $1.20 in 2025. The increase is a result of the factors previously discussed.

Previous wording

In 2025, Metal Cutting operating income was $86.4 million, a $46.2 million decrease from 2024. The decrease in operating income was primarily due to lower sales and production volumes, higher wages and general inflation, unfavorable foreign currency exchange of approximately $6 million, the net effect of increased tariffs of approximately $4 million and higher restructuring and related charges of approximately $2 million compared to the prior year. These factors were partially offset by pricing, restructuring benefits of approximately $17 million and lower raw material costs. Metal Cutting operating margin in 2025 was 7.1 percent compared to 10.4 percent in the prior year.

Current wording

In 2026, Metal Cutting operating income was $195.6 million, a $109.2 million increase from 2025. The increase in operating income was driven by non-raw material-related pricing and tariff surcharges, the favorable timing of raw material-related pricing compared to costs of approximately $54 million, higher sales and production volumes and incremental year-over-year restructuring savings of approximately $21 million. These factors were partially offset by higher compensation costs, and tariffs and general inflation. Metal Cutting operating margin in 2026 was 14.0 percent compared to 7.1 percent in the prior year.

Previous wording

In 2025, Infrastructure sales of $747.2 million decreased by $19.0 million, or 2 percent, from 2024. This was driven by an organic sales decline 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 increased in Asia Pacific as a result of project timing, the effects of which were offset by declines 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, partially offset by growth in Asia Pacific from project timing. 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 due to lower customer capital investment from lower coal prices.

Current wording

Earthworks end market sales increased as a result of pricing, share gains in mining and construction, and higher demand in construction from availability of material. Energy end market sales increased in the Americas primarily due to pricing, which was partially offset by the effect of a divestiture and declines in EMEA from softer market conditions and order timing. Sales in the General Engineering end market increased in Asia Pacific and the Americas due to pricing, share gains and project timing, partially offset by the effect of a divestiture and a decline in EMEA due to lower ceramics sales. Aerospace & Defense end market sales increased in Americas and EMEA as a result of the execution of our growth initiatives, pricing and project timing.

Previous wording

On a regional basis, sales in the Americas decreased primarily due to a decline in the Earthworks end market from lower mining activity, including customer mine closures and competitive pressures, partially offset by higher construction activity. The General Engineering and Energy end markets decreased due to declines in industrial activity year-over-year, which 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, partially offset by a decline in the General Engineering end market from declines in industrial activity year-over-year and project timing. Sales decreased in Asia Pacific due to a decline in underground mining from lower customer capital investment from lower coal prices, partially offset by the General Engineering and Energy end markets.

Current wording

On a regional basis, sales in the Americas increased in all end markets due to price and higher volume in Earthworks and Aerospace & Defense, partially offset by the effect of a divestiture. Sales in EMEA increased in Earthworks and Aerospace & Defense end markets due to higher demand in construction from availability of material and execution of our growth initiatives and project timing, which was partly offset by declines in the General Engineering and Energy end markets. Sales in Asia Pacific increased primarily due to price and higher demand in General Engineering.

Previous wording

In 2025, Infrastructure operating income was $58.5 million, a $18.6 million increase from 2024. The increase in operating income was primarily due to an incremental year-over-year benefit of approximately $13 million from an advanced manufacturing production credit under the Inflation Reduction Act, a net benefit of $12 million related to the tornado that struck the Rogers, Arkansas facility late in fiscal 2024, restructuring benefits of approximately $7 million, lower raw material costs and pricing. These factors were partially offset by lower sales and production volumes, higher wages and general inflation and a loss from divestiture of approximately $2 million related to the sale of a subsidiary in Goshen, IN. Infrastructure operating margin in 2025 was 7.8 percent compared to 5.2 percent in the prior year.

Current wording

In 2026, Infrastructure operating income was $279.9 million, a $221.4 million increase from 2025. The increase in operating income was driven by the favorable timing of raw material-related pricing compared to costs of approximately $262 million and incremental year-over-year restructuring savings of approximately $6 million. These factors were partially offset by higher compensation costs, lower sales and production volumes, fewer insurance proceeds received during 2026 and general inflation. Infrastructure operating margin in 2026 was 29.2 percent compared to 7.8 percent in the prior year.

Previous wording

In 2025, Corporate expense decreased $0.5 million from 2024.

Current wording

In 2026, Corporate expense increased $1.2 million from 2025.

Previous wording

LIQUIDITY AND CAPITAL RESOURCES Cash flow from operations is the primary source of funding for working capital requirements, reinvesting in our business through capital expenditures and returning value to shareholders through dividends and share repurchases. During the year ended June 30, 2025, cash flow provided by operating activities was $208.3 million.

Current wording

LIQUIDITY AND CAPITAL RESOURCES Cash flow from operations is the primary source of funding for working capital requirements, reinvesting in our business through capital expenditures and returning value to shareholders through dividends and share repurchases. During the year ended June 30, 2026, net cash flow used for operating activities was $4.0 million.

Previous wording

During fiscal 2022, we entered into the Sixth Amended and Restated Credit Agreement dated as of June 14, 2022 (the Credit Agreement). The Credit Agreement is a five-year, multi-currency, revolving credit facility, which we use to augment cash from operations and as an additional source of funds. The Credit Agreement provides for revolving credit loans of up to $700.0 million for working capital, capital expenditures and general corporate purposes. The Credit Agreement allows for borrowings in U.S. dollars, euros, pounds sterling and Japanese yen. Interest payable under the Credit Agreement is based upon the type of borrowing under the facility and may be (1) Euro Interbank Offered Rate (EURIBOR), Sterling Overnight Index Average (SONIA), Tokyo Interbank Offered Rate (TIBOR), and Secured Overnight Financing Rate (SOFR) for any borrowings in euros, pounds sterling, yen, and U.S. dollars respectively, plus an applicable margin, (2) the greater of the prime rate or the Federal Funds effective rate plus an applicable margin, or (3) fixed as negotiated by us. The Credit Agreement matures in June 2027.

Current wording

During fiscal 2026, we entered into the Seventh Amended and Restated Credit Agreement dated as of November 17, 2025 (the Credit Agreement). The Credit Agreement is a five-year, multi-currency, revolving credit facility, which we use to augment cash from operations and as an additional source of funds. The Credit Agreement allows for borrowings in U.S. dollars, Canadian dollars, euros, pounds sterling and Japanese yen. Interest payable under the Credit Agreement is based upon the type of borrowing under the facility and may be (1) Euro Interbank Offered Rate (EURIBOR), Sterling Overnight Index Average (SONIA), Canadian Overnight Repo Rate Average (CORRA), Tokyo Interbank Offered Rate (TIBOR) and Secured Overnight Financing Rate (SOFR) for any borrowings in euros, pounds sterling, Canadian dollars, yen and U.S. dollars, respectively, plus an applicable margin, (2) the greater of the prime rate or the Federal Funds effective rate plus an applicable margin, or (3) fixed as negotiated by us. The Credit Agreement matures in November 2030.

Previous wording

The Credit Agreement requires us to comply with various restrictive and affirmative covenants, including one financial covenant: a maximum leverage ratio where debt, net of domestic cash in excess of $25 million and sixty percent of the unrestricted cash held outside of the United States, must be less than or equal to 3.75 times trailing twelve months EBITDA, adjusted for certain non-cash expenses.

Current wording

The Credit Agreement requires us to comply with various restrictive and affirmative covenants, including one financial covenant: a maximum leverage ratio where debt, net of domestic cash and sixty percent of the unrestricted cash held outside of the United States, must be less than or equal to 3.75 times trailing twelve months EBITDA, adjusted for certain non-cash expenses.

Previous wording

As of June 30, 2025 and 2024, we were in compliance with all covenants of the Credit Agreement and we had no borrowings outstanding and $700.0 million of availability.

Current wording

As of June 30, 2026 and 2025, we were in compliance with all covenants of the Credit Agreement. We had $20 million of borrowings outstanding and $830.0 million of availability as of June 30, 2026. There were no borrowings outstanding as of June 30, 2025.

Previous wording

Borrowings on other lines of credit and notes payable were $1.0 million and $1.4 million at June 30, 2025 and 2024, respectively. The lines of credit represented short-term borrowings under credit lines with commercial banks in the various countries in which we operate. The availability of the credit lines, translated into U.S. dollars at June 30, 2025 exchange rates, totaled $62.1 million.

Current wording

Borrowings on other lines of credit and notes payable were $12.2 million and $1.0 million at June 30, 2026 and 2025, respectively. The lines of credit represented short-term borrowings under credit lines with commercial banks in the various countries in which we operate. The availability of the credit lines, translated into U.S. dollars at June 30, 2026 exchange rates, totaled $48.8 million.

Previous wording

For the year ended June 30, 2025, average daily borrowings outstanding under the Credit Agreement were approximately $5.4 million. The weighted average interest rate on borrowings under the Credit Agreement was 5.5 percent for the year ended June 30, 2025. Based upon our debt structure at June 30, 2025 and 2024, less than 1 percent of our debt was exposed to variable rates of interest.

Current wording

For the year ended June 30, 2026, average daily borrowings outstanding under the Credit Agreement were approximately $18.2 million. The weighted average interest rate on borrowings under the Credit Agreement was 4.7 percent for the year ended June 30, 2026. Based upon our debt structure at June 30, 2026 and 2025, approximately 4 percent and less than 1 percent of our debt was exposed to variable rates of interest, respectively.

Previous wording

We consider the majority of the $1.0 billion unremitted earnings of our non-U.S. subsidiaries to be permanently reinvested. With regard to these unremitted earnings, we have not, nor do we anticipate the need to, repatriate funds to the U.S. to satisfy domestic liquidity needs arising in the ordinary course of business, including liquidity needs associated with our domestic debt service requirements. Determination of the amount of unrecognized deferred tax liability related to indefinitely reinvested earnings is not practicable due to our legal entity structure and the complexity of U.S. and local tax laws. With regard to the small portion of unremitted earnings that are not indefinitely reinvested, we maintain a deferred tax liability for foreign withholding and U.S. state income taxes. The deferred tax liability associated with unremitted earnings of our non-U.S. subsidiaries not permanently reinvested is $3.8 million as of June 30, 2025.

Current wording

We consider the majority of the $1.1 billion unremitted earnings of our non-U.S. subsidiaries to be permanently reinvested. With regard to these unremitted earnings, we have not, nor do we anticipate the need to, repatriate funds to the U.S. to satisfy domestic liquidity needs arising in the ordinary course of business, including liquidity needs associated with our domestic debt service requirements. Determination of the amount of unrecognized deferred tax liability related to indefinitely reinvested earnings is not practicable due to our legal entity structure and the complexity of U.S. and local tax laws. With regard to the small portion of unremitted earnings that are not indefinitely reinvested, we maintain a deferred tax liability for foreign withholding and U.S. state income taxes. The deferred tax liability associated with unremitted earnings of our non-U.S. subsidiaries not permanently reinvested is $6.8 million as of June 30, 2026.

Previous wording

At June 30, 2025, we had cash and cash equivalents of $140.5 million. Total Kennametal Shareholders’ equity was $1,284.0 million and total debt was $597.8 million. Our current senior credit ratings are considered investment grade. We believe that our current financial position, liquidity and credit ratings provide us with access to the capital markets. 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.

Current wording

At June 30, 2026, we had cash and cash equivalents of $95.8 million. Total Kennametal Shareholders’ equity was $1,569.8 million and total debt was $717.5 million. Our current senior credit ratings are considered investment grade. We believe that our current financial position, liquidity and credit ratings provide us with access to the capital markets. 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.

Previous wording

Cash generated from operations is expected to meet our planned capital expenditures of approximately $90 million and expected dividend payments in fiscal 2026. There can be no assurance, however, that we will generate cash from operations in line with our expectations, or that these projections will remain constant throughout fiscal 2026. If cash generated from operations is not sufficient to support these activities, we may be required to use existing cash and cash equivalents, reduce capital expenditures or borrow under the Credit Agreement. We believe that our cash and cash equivalents, cash flow from operations and available borrowings are sufficient to meet both the short-term and long-term capital needs of the Company.

Current wording

We expect to fund our anticipated cash requirements through a combination of cash generated from operations, cash on hand and available borrowings. While management believes these sources of liquidity will be sufficient to meet the Company's expected cash requirements, there can be no assurance that actual operating results, cash flows or capital needs will not differ from current expectations. We believe that our cash and cash equivalents, cash flow from operations and available borrowings are sufficient to meet both the short-term and long-term capital needs of the Company.

Previous wording

(1)Long-term debt includes interest obligations of $92.0 million and excludes debt issuance costs of $2.5 million.

Current wording

(2)Long-term debt includes interest obligations of $216.4 million and excludes unamortized debt issuance costs of $4.2 million. The 2028 Notes were fully redeemed on July 1, 2026 and are reflected in the fiscal 2027 column in the table. Not reflected in the table are any amounts related to the $500.0 million three-year delayed draw term loan that was established in May 2026 as there were no amounts drawn as of June 30, 2026.

Previous wording

(2)Annual payments are expected to continue into the foreseeable future at the amounts noted in the table.

Current wording

(3)Annual payments are expected to continue into the foreseeable future at the amounts noted in the table.

Previous wording

(3)In 2025, the Company signed a material lease agreement related to a future innovation center in Germany. The lease has not yet commenced as the facility has yet to be constructed and the Company does not have the right to use the property until the future handover date. The future cash flows related to this lease are not included in the table.

Current wording

(4)In 2025, the Company signed a material lease agreement related to a future innovation center in Germany. The lease has not yet commenced as the facility has yet to be constructed and the Company does not have the right to use the property until the future handover date. The future cash flows related to this lease are not included in the table.

Previous wording

(4)Purchase obligations consist of purchase commitments for materials, supplies and machinery and equipment as part of the ordinary conduct of business. Purchase obligations with variable price provisions were determined assuming market prices as of June 30, 2025 remain constant.

Current wording

(5)Purchase obligations consist of purchase commitments for materials, supplies and machinery and equipment as part of the ordinary conduct of business. Purchase obligations with variable price provisions were determined assuming market prices as of June 30, 2026 remain constant.

Previous wording

(5)Unrecognized tax benefits are positions taken or expected to be taken on an income tax return that may result in additional payments to tax authorities. These amounts include interest of $0.2 million and a penalty of $0.1 million accrued related to such positions as of June 30, 2025. If a tax authority agrees with the tax position taken or expected to be taken or the applicable statute of limitations expires, then additional payments will not be necessary.

Current wording

(6)Unrecognized tax benefits are positions taken or expected to be taken on an income tax return that may result in additional payments to tax authorities. These amounts include interest of $0.8 million and a penalty of $0.1 million accrued related to such positions as of June 30, 2026. If a tax authority agrees with the tax position taken or expected to be taken or the applicable statute of limitations expires, then additional payments will not be necessary.

Previous wording

In February 2024, the Board of Directors of the Company authorized a $200 million, three-year share repurchase program outside of the Company's dividend reinvestment program. During 2025, the Company repurchased 2.5 million shares of common stock for $60 million.

Current wording

Share Repurchase Program. In February 2024, the Board of Directors of the Company authorized a $200 million, three-year share repurchase program outside of the Company's dividend reinvestment program. During 2026, the Company repurchased 475 thousand shares of common stock for $10 million. Subsequent to these repurchases, the Company paused activity under the share repurchase program. The Company expects to reassess repurchase activity as cash flow generation improves.

Previous wording

Dividends. In fiscal 2025, the Board of Directors of the Company declared a dividend of $0.20 per share in each quarter for a total of $62 million in dividends returned to the shareholders.

Current wording

Dividends. In fiscal 2026, the Board of Directors of the Company declared a dividend of $0.20 per share in each quarter for a total of $61 million in dividends returned to the shareholders.

Previous wording

During 2024, cash flow provided by operating activities was $277.1 million consisting of net income and non-cash items amounting to $278.2 million and changes in certain assets and liabilities netting to an outflow of $1.1 million. Contributing to the change in certain assets and liabilities were a decrease in accrued income taxes of $16.2 million, a decrease in accrued pension and postretirement benefits of $9.5 million, a decrease in accounts payable and accrued liabilities of $6.1 million and an increase in accounts receivable of $2.6 million, partially offset by a decrease in inventories of $36.8 million.

Current wording

Cash Flow (Used for) Provided by Operating Activities. During 2026, net cash flow used for operating activities was $4.0 million, compared to net cash flow provided by operating activities of $208.3 million in 2025. During 2026, cash flow used for operating activities consisted of net income and non-cash items amounting to $590.5 million and changes in certain assets and liabilities netting to an outflow of $594.5 million. Contributing to the change in certain assets and liabilities were an increase in inventories of $593.4 million resulting largely from rising tungsten prices, an increase in accounts receivable of $116.9 million, an increase of other current assets of $102.1 million, which consisted primarily of prepaid assets and advance payments made to certain vendors to secure raw material supply, a decrease in other of $12.2 million and a decrease in accrued pension and postretirement benefits of $7.1 million, partially offset by an increase in accounts payable and accrued liabilities of $226.1 million and an increase in accrued income taxes of $11.0 million.