Kennametal Inc.

Good morning. I would like to welcome everyone to Kenna Meadows' second quarter and fiscal 2026 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 the number two. Please note this event is being recorded. I would now like to turn the conference over to Michael Pese, Vice President of Investor Relations.

Thank you, Operator. Welcome, everyone, and thank you for joining us to review Canon Metals' second quarter fiscal 2026 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 Pese, Vice President of Investor Relations. Joining me on the call today are Sanjay Chaubey, President and Chief Executive Officer, and Pat Watson, Vice President and Chief Financial Officer. After Sanjay 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 Ken Edel's SEC filings. In addition, we will be discussing non-GAAP financial measures on the call today. Reconciliation to GAAP 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 Sanjay.

Thank you, Mike. Good morning, and thank you for joining us. I will begin the call today with an overview of the quarter, including in-market commentary, followed by a spotlight on one of our growth focus areas, power generation. From there, Pat will cover the quarterly financial results, as well as the fiscal year 26 outlook. Finally, I'll make some summary comments and open the line for questions. Turning to slide three, let me begin by addressing some of the highlights from our strong second quarter. Our global commercial teams continue to advance our strategic growth initiatives. In the quarter, the infrastructure team secured significant mining orders in earthworks. from key distributors in Asia Pacific and EMEA. Both wins were a direct result of our team's efforts with those customers to deliver high quality technical support and superior product performance. In metal cutting, we want projects that continue to advance our growth focus on aerospace and defense. We also secured engine and transmission wins in transportation. In general engineering, we increased our share with the pump manufacturer by providing them an innovative solution for machining valve seeps. As you know, we have and will continue to prioritize above-market growth. In the quarter, we also implemented pricing actions in response to rising tungsten costs, which are at historically high levels. We remain confident in our ability to price for the rising tungsten costs and in our ability to offset the impact. On the cost improvement front, we realized $8 million in restructuring savings this quarter and continue to execute our plan to lower structural costs and consolidate manufacturing operations. Some of these plans will extend beyond this fiscal year into fiscal 27. And as a result, we have updated the impact in fiscal 26, which Pat will address when he provides our updated outlook. Now let's move to our quarterly results, which again exceeded the sales and EPS outlook we provided last quarter. Compared to the outlook, sales were better than expected on higher sales volume, which included the stronger than anticipated effect of customers buying ahead of price increases and modest improvement in certain end markets. EPS benefited from the volume and a lower than anticipated tax rate. Year over year, sales increased 10% organically. That's our second consecutive quarter of organic growth and reflects price realization, buy ahead, and continued modest relief from the broad market weakness. Excluding the effects of the buy ahead, sales volumes were modestly positive in the quarter. reflecting a continuation of gradual volume improvement we have seen since the fourth quarter of fiscal 25. In terms of profitability, adjusted EBITDA margin was 17.1% compared to 13.9% in the prior year quarter. An adjusted EPS increased to 47 cents compared to 25 cents in the prior year quarter. The improvement in our profitability reflects the benefits from our strategic growth and restructuring initiatives, as well as price raw timing effects from the unprecedented increase in tungsten prices. As a result, today we are raising our sales and EPS outlook for fiscal 26 to reflect the additional price raw timing benefit. Pat will provide more details on our updated outlook shortly. In summary, we are pleased with this quarter's results and we continue to focus on delivering our commitments throughout fiscal 26. Turning to slide four in our end market update. The top half of this slide shows our outlook at the midpoint and includes impact of price, growth initiatives, and market factors. I will focus on the bottom half of the slide and address the three markets that have changed since our last call. Transportation, aerospace and defense, and general engineering. First, IHS estimates for transportation slightly improved from the previous estimate of down low single digits to flat. Production volumes in Asia Pacific improved. In EMEA, the current forecast is a bit better, but it's still down, and the Americas declined slightly. Secondly, for aerospace and defense, the aerospace industry continues to show growth as OEM bill rates continue to improve. Finally, in general engineering, the IPI forecast in the Americas improved slightly, while other regions remain essentially unchanged. Also, the most recent GBI and ISM PMI surveys indicate expansion in the U.S. for the first time in almost a year. For our other end markets, conditions remain mostly unchanged from our previous forecast. Turning now to slide five. I want to take some time to expand upon an opportunity we introduced last quarter, the rising global demand for electricity and what it means for Kenna Metal. Across the growing energy value chain, Kenna Metal has a broad range of products that help our customers run faster and longer, from resource extraction through energy transmission, generation, and use. Electricity demand is projected to grow at about 3% annually through 2030. fueled by the rapid expansion of AI data centers, electric vehicle adoption, and continued grid build-out. Data centers alone could represent 17% of U.S. power demand by 2030, along with EVs and hybrids growing at a strong double-digit CAGRs in the Americas from 2023 to 2027. And as demand rises, the energy mix is diversifying. By 2030, incremental energy supply is expected to come from 45% natural gas, 35% solar, and 20% wind. Plus, coal is expected to remain a meaningful source as overall demand for electricity persists. The grid is also scaling quickly, with U.S. high power transmission lines forecasted to grow at a 20% CAGR through 2030. This source to generation opportunity represented approximately 17% of our fiscal 25 sales. We anticipate this market to grow low single digits through 2030. Some areas, like gas and combustion turbines, are anticipated to experience relatively high growth over this time frame. In our infrastructure segment, our wear resistance solutions are used in oil and gas extraction, as well as trenching and foundation digging. for wind turbines and transmission lines. In metal cutting, we supply products and solutions using gas turbines and combustion engines, supporting both utility and AI data center power generation. Gas turbines are projected to grow at 15% CAGR and combustion engines for backup generators at 10% CAGR. We are well positioned to capitalize on these trends with the right products already in our portfolio and access to the right customers. And among those customers, we are well-known for quality, reliability, and innovation. And we offer a global footprint that supports them wherever energy demand is rising. Kenna Metal is not just participating in the energy transition. We are powering it. Now, let me turn the call over to Pat, who will review the second quarter financial performance and the outlook.