Kennametal Inc.

Good morning. I would like to welcome everyone to Kenan Metal's third quarter fiscal 2024 earnings conference call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star, then the number one on your telephone keypad. If you would like to withdraw your question, please press star, then two. Please note this event is being recorded. I would now like to turn the conference over to Mr. Michael Pese, Vice President of Investor Relations. Please go ahead.

Thank you, Operator. Welcome, everyone, and thank you for joining us to review CannaMetal's third quarter fiscal 2024 results. This morning, we issued our earnings press release and posted our presentation slides on our website. We will be referring to that slide deck throughout today's call. I'm Michael Pisi, Vice President of Investor Relations. Joining me on the call today are Christopher Rossi, President and Chief Executive Officer, Pat Watson, Vice President and Chief Financial Officer, Sanjay Chaubey, Vice President and President of Metal Cutting, and Franklin Cardenas, Vice President and President of Infrastructure. After Chris and Pat's prepared remarks, we will open the line for questions. At this time, I'd like to direct your attention to our forward-looking disclosure statement. Today's discussion contains comments that constitute forward-looking statements. and as such involve a number of assumptions, risks, and uncertainties that could cause the company's actual results, performance, or achievements to differ materially from those expressed in or implied by such statements. These risk factors and uncertainties are detailed in Kenna Metals SEC filings. In addition, we will be discussing non-GAAP financial measures on the call today. Reconciliations to Gap Financial Measures that we believe are most directly comparable can be found at the back of the slide deck and on our form 8K on our website. And with that, I'll turn the call over to you, Chris. Thanks, Mike.

Good morning and thank you for joining us. I'll start the call today with a review of the quarter and some end market commentary, as well as an example of the industry-leading innovation we are bringing to market. Then Pat will cover the quarterly financial results as well as the fiscal year 24 outlook. Finally, I'll make some summary comments and then open the call for questions. Beginning on slide three, for the quarter, sales decreased 4% year over year with organic decline of 2%, unfavorable business stays of 1%, and unfavorable currency exchange of 1%. Price was offset by volume declines and product mix. At the segment level, Organic growth was flat at 0% in metal cutting and declined 5% in infrastructure. On a constant currency basis, EMEA posted 0% growth. Asia-Pacific sales declined 1%, and the Americas declined 5%. Moving to our end markets, aerospace and defense grew 10%. Transportation was flat at 0%. General engineering declined 2%. Earthworks declined 5%. and energy decline 14%. These results are in line with what we expected and noted on our previous earnings call. Let me take a moment to provide some color on end markets year over year. In aerospace and defense, sales increased 10% year over year, metal cutting grew 9%, and infrastructure grew 13%. Both segments benefited from continued execution of our growth initiatives and market strength in aerospace. Transportation was flat at 0% this quarter due to continued strength in EMEA, which was driven by EV and hybrid project winds offset by a decline in the Americas due to prior year project winds that did not repeat. General engineering declined 2% versus prior year due to lower industrial production in EMEA and the Americas that affected both segments. Earthworks declined 5% during the quarter, primarily due to lower mining activity in China. Energy declined 14% primarily in oil and gas as a result of the 20% decline year-over-year in U.S. land-based rig counts and wind energy project delays in Asia, turning now to profitability in the quarter. Adjusted EBITDA declined 150 basis points primarily due to lower sales and production volumes, higher wages and general inflation, unfavorable foreign exchange, and the continued effect of unfavorable timings of pricing compared to raw material costs in the infrastructure segment. These were partially offset by higher price realization in the metal cutting segment and restructuring savings of approximately $6 million. Metal cutting adjusted operating margins decreased 230 basis points year-over-year driven by lower sales and production volumes, higher wages and general inflation, and a property sale gain in the prior year. These items were partially offset by higher price realization and restructuring savings of approximately $5 million. The infrastructure segments adjusted operating margins decreased 100 basis points year over year, primarily due to lower sales volumes, 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. Adjusted EPS decreased to 30 cents compared to 39 cents in the prior year quarter. Free operating cash flow year-to-date was $84 million, up from $60 million in the prior year. The increase in free operating cash flow was driven primarily by working capital changes, including improved inventory levels, partially offset by higher capital expenditures, and lower net income. And finally, we continued the share repurchase program this quarter with $15 million of shares bought back, bringing the total amount repurchased to $178 million. Our share repurchase program reflects the confidence we have in our ability to execute our strategy for long-term value creation, despite quarterly macroeconomic headwinds. Regarding the full year outlook, as we discussed in detail last quarter, our outlook for the full year is largely informed by forecasts of specific market drivers, and those remain generally unchanged for the balance of the year. Pat will provide more details on the outlook in his section. Now on slide four, I'd like to highlight an example of how our innovation advantage continues to deliver enhanced product offerings to our customers. This slide shows our new universal turning grade with Ken Gold technology from our metal cutting portfolio. This new turning grade offers longer tool life, faster cutting speeds, and enhanced reliability across a broad range of aerospace defense, transportation, medical equipment, and general engineering applications. Notably, this new turning grade is the fifth product launched for turning applications that leverage our state-of-the-art Ken Gold coating and insert manufacturing capabilities that were enabled by modernization. And they are a great example of how we're no longer forced to play defense due to antiquated manufacturing capabilities, but instead we are now playing offense with new products to drive growth that outpaces the market. Now let me turn the call over to Pat, who will review the third quarter financial performance and the outlook.