KENNAMETAL INC — Call Transcript 2026

Good morning. I would like to welcome everyone to Kennametal's Q3 fiscal 2026 earnings conference call. Today, all lines have been placed on mute to prevent any background noise. After today's speaker 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 your question has been addressed and you would like to withdraw it, please press star then the number two. Please note that today's event is being recorded. I would now like to turn the conference over to Michael Pici, Vice President of Investor Relations. Please go ahead. Thank you, operator. Welcome, everyone, and thank you for joining us to review Kennametal's third 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 Pici, Vice President of Investor Relations. Joining me on the call today are Sanjay Chowbey, President and Chief Executive Officer, and Patrick 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 Kennametal's SEC filings. In addition, we will be discussing non-GAAP financial measures on the call today. Reconciliations to GAAP financial measures that we believe are most directly comparable can be found at the back of the slide deck and in our Form 8-K on our website. With that, I'll turn the call over to Sanjay. Thank you, Mike. Good morning, and thank you for joining us. I will begin with an overview of the quarter, including end market commentary, followed by a discussion on unit volume trends. From there, Pat will cover the quarterly financial results and the fiscal year 2026 outlook, along with an early look at fiscal 2027. Finally, I'll make some summary comments, and then we'll open the line for questions. Turning to slide three. Let me begin by addressing some of the highlights from our strong third quarter. Our global commercial teams continued to advance our strategic growth initiatives. The Infrastructure team delivered solid growth. In construction, we saw volume growth from strong product performance and the advantage we have as a secure source of tungsten in a tight supply environment. Additionally, we received large orders in our defense business, further securing ongoing growth in this market as we head into fiscal 2027. In Metal Cutting, we continue to increase our share of wallet with key accounts, especially in aerospace and defense, and build upon our momentum in energy from AI power generation initiatives. In general engineering, we have been winning new customers through targeted promotional campaigns and improvements to our digital customer experience, especially for our small to medium-sized customers. As you know, we continue to prioritize above-market growth as a strategic imperative, and these wins position us well in our key end markets. Turning now to the broader tungsten environment. Prices continued their unprecedented increase throughout the quarter, rising from approximately $900 per metric ton to $3,000 as the supply of material continued to be constrained. This tungsten price and supply environment have created both challenges and opportunities. On the challenges front, we have seen a highly competitive market for material, but our supply chain has held up relatively well. We have and will continue to implement pricing actions in response to these rising tungsten costs and remain confident in our ability to secure that price. We are also focused on managing the primary working capital and balance sheet implications of higher tungsten costs. In terms of opportunities, our vertical integration has been a real strength in this market, providing us better supply chain control and flexibility compared to some competitors. For example, as competitors are turning away orders or extending lead times, we are well-positioned to capture business that is aligned with our strategic priorities. During the quarter, we capitalized on these opportunities in each of our business segments, specifically Earthworks within Infrastructure and aerospace & defense in Metal Cutting. These new opportunities also facilitate shaping our product portfolio away from lower margin to higher margin solutions. As such, we are seeing a unique combination of three factors that are opening the door to sales opportunities. First, continued market recovery. Second, solid execution on our strategic growth initiatives. Third, a window of opportunity from the current tungsten market, which is likely to persist in the near term. Given those dynamics, we are prioritizing our time and attention on growth opportunities over restructuring initiatives in the near term. We are shifting the timeline for facility closure actions we had previously planned to complete in fiscal 2027. We will provide additional detail on the restructuring timeline as appropriate. Even with that shift, we are still targeting approximately $110 million in savings from cost takeout actions by the end of fiscal 2027, which is $10 million above what we outlined at Investor Day. Let's move to our quarterly results, which once again exceeded our sales and EPS outlook. Compared to outlook, sales were mostly driven by increased price realization and better than expected volume in both segments. EPS benefited from the additional price raw timing of $0.09, positive volume, and lower than anticipated tax rate. Year-over-year, sales increased 19% organically. Please note, this was our third consecutive quarter of organic growth, driven by additional price realization, strategic growth initiatives, and continued recovery in several end markets. Adjusted EPS increased to $0.77 compared to $0.47 in the prior year quarter. Adjusted EBITDA margin was 20.8% compared to 17.9% in the prior year quarter. Cash from operating activities year-to-date was $70 million compared to $130 million in the prior year period. Free operating cash flow year-to-date was $18 million compared to $63 million in the prior year. Free operating cash flow was adversely impacted by increased working capital requirements related to tungsten prices. Finally, we returned $15 million to shareholders through dividends. As it relates to our outlook, today we are raising our sales and EPS outlook for fiscal 2026. This update reflects the additional price due to the continued rise in tungsten and additional volume. Patrick will provide more details on our updated outlook shortly. In summary, we are pleased with this quarter's results and how the team is navigating these unique business conditions. As I mentioned, there are opportunities and challenges in this market, and we remain focused on delivering on our commitments throughout fiscal 2026 and setting ourselves up for a successful fiscal 27. Now let's turn to slide four for an end market update. As a reminder, our full year outlook reflects forecasts of specific market drivers and general market conditions. The top half of this slide reflects our sales outlook at the midpoint and includes price, volume, and market factors. My comments will focus on the bottom half of the slide and address transportation and energy, which are the only end markets that changed since our last call. IHS estimates for transportation slightly improved from the previous estimate. Up in the low single-digit range, mostly driven by improvements in Asia-Pacific market. Energy improved slightly relative to our prior outlook as customer sentiment improved. The tone is now cautiously optimistic, which is an improved stance compared to what customers were previously signaling. Turning to slide five. As we have talked about over the last several years, customer activity rates and our sales volumes have been below the pre-COVID peak. I want to take some time to provide insight into unit volume and how those trends have improved over the last few quarters. This chart uses units sold volume and excludes the impact of price and foreign exchange. It also excludes Infrastructure defense sales, as these are lumpy and not tied to industrial production metrics. Let me spend a moment on what is driving the volume recovery, and just as importantly, why we believe it's sustainable. As the call-out indicates, we are now experiencing the second consecutive quarter of year-over-year trailing 12-month unit volume growth. Despite a macro backdrop that has been uneven, volumes are strengthening in the Americas and Asia Pacific. EMEA continues to lag, and that is consistent with what we are seeing in PMI and industrial production data. A key driver continues to be aerospace and defense, which remains strong across both Metal Cutting and Infrastructure. Importantly, this strength isn't simply tied to OEM build rates, which are still roughly 20% below pre-COVID levels, but rather to share gains and deeper penetration with tier suppliers. That gives us confidence there is still additional runway as production rates normalize over time. We are also starting to see early signs of stabilization in general engineering and energy, even while headline indicators remain soft. In energy, power generation continues to see meaningful momentum. While U.S. land rig counts are still about 30% below pre-COVID levels, we are seeing enough stabilization to suggest we are past the trough. In Infrastructure, Earthworks has delivered volume gains for two consecutive quarters, driven by share gains. Stepping back, if you look at the chart, global volumes are now up approximately 3% from the Q1 fiscal 2026 trough, following 36 months of stagnant industrial production. Our performance is not just the result of a market recovery. It's shaped by where we compete, how we allocate resources, and where we are winning share. We know we operate in cyclical end markets, but we are quite confident in the long-term growth potential of these markets and our ability to capture share within them. Let me turn the call over to Pat, who will review the third quarter financial performance and the outlook. Thank you, Sanjay, good morning, everyone. I will begin on slide six with a review of our Q3 operating results. Sales were up 22% year-over-year, with an organic increase of 19% and favorable foreign currency exchange of 5%, which was slightly offset when adjusting for the divestiture we concluded last year. Sales volume in the quarter was up low single digits. At the segment level, organic sales increased 30% in Infrastructure and 12% in Metal Cutting. On a constant currency basis, America sales increased 27%, Asia Pacific sales increased 25%, and EMEA was up 2%. The sales performance this quarter exceeded the expectations we provided last quarter on higher sales volumes from better market conditions and share capture. We also had higher than expected price, primarily in Infrastructure, from the continued rapid increase in tungsten prices. By end market, on a constant currency basis, Earthworks grew 43%, energy increased 28%, aerospace & defense grew 23%, general engineering grew 14%, and transportation increased 1%. I will provide more color when reviewing the segment performance in a moment. Adjusted EBITDA and operating margins were 20.8% and 13.8% respectively, versus 17.9% and 10.3% in the prior year quarter. The margin increase was driven by favorable price raw of $39 million within the Infrastructure segment, pricing and tariff surcharges in Metal Cutting, increased sales and production volumes, and year-over-year restructuring benefits of $7 million. These are partially offset by higher compensation costs, which are mostly performance-based, tariffs and general inflation, and a prior year benefit from an advanced manufacturing tax credit of approximately $8 million that did not repeat in the current year. Adjusted earnings per share was $0.77 in the quarter versus $0.47 in the prior year period. The main drivers of our EPS performance are highlighted on the bridge on slide seven. The year-over-year effective operations this quarter was positive $0.36. This reflects approximately $39 million of favorable timing of price/raw material costs, price and tariff surcharges in Metal Cutting, higher sales and production volume, and incremental restructuring benefits of $7 million. These are partially offset by higher compensation costs, tariffs, general inflation, and higher raw material costs in Metal Cutting. There was a headwind of $0.08 related to the net prior year manufacturing tax credit. You can also see the $0.02 of transaction gains related to preferential Bolivia exchange rates. Currency, other, and pension impacts offset each other. Slides eight and nine detail the performance of our segments this quarter. Reported Metal Cutting sales were up 18% compared to the prior year quarter, with 12% organic growth and favorable foreign currency exchange of 6%. Regionally, excluding currency exchange, Asia Pacific increased 18%, the Americas increased 17%, and EMEA increased 3%. Looking at sales by end market on a constant currency basis, aerospace & defense increased 27% year-over-year due to improved build rates in Americas and easing supply chain pressures in EMEA, combined with our global focus on deeper market penetration. Energy grew 17% this quarter from data center power generation wins. General engineering increased 13% year-over-year due to price, volume gains in Asia Pacific, and stronger distribution sales in the Americas. Lastly, transportation increased 1% year-over-year due to price and market softness, primarily in EMEA. Metal Cutting adjusted operating margin of 11.2% increased 160 basis points year-over-year, primarily due to higher price and tariff surcharges, higher sales and production volumes, and incremental year-over-year restructuring savings of approximately $5 million. These factors were partially offset by higher compensation, tariffs and general inflation, and higher raw material costs. Turning to slide nine for Infrastructure. Reported Infrastructure sales increased 29% year-over-year, with organic growth of 30% and favorable foreign currency exchange of 4%, partially offset by a divestiture effect of -5%. Regionally, on a constant currency basis, America sales increased 42%, Asia Pacific increased 35%, and EMEA sales were flat. Looking at sales by end market on a constant currency basis, Earthworks increased 43% from higher demand in construction, as we were able to provide product to customers who were unable to source product from other players and share gain in underground mining. Energy increased 34%, mainly driven by price. General engineering increased 18% due to price and higher powder demand in Asia Pacific, partially offset by lower demand in EMEA. Lastly, aerospace and defense increased 17% due to defense orders driven by continued focus on growth initiatives and timing in the Americas. Adjusted Operating Margin increased 680 basis points year-over-year to 18.3%, primarily from the favorable timing of pricing compared to raw material costs of $39 million and year-over-year restructuring savings of $2 million. These items were partially offset by higher compensation costs and a prior year manufacturing tax credit of $8 million that did not repeat in the current year. Turning to slide 10 to review our Free Operating Cash Flow and balance sheet. Our third quarter year-to-date net cash flow from operating activities was $70 million compared to $130 million in the prior year period. This change was driven primarily by higher working capital from higher tungsten prices and increased volumes of tungsten to secure our supply chain. Our third quarter year to date Free operating cash flow decreased to $18 million from $63 million in the prior year, primarily due to the increased primary working capital changes I just referenced, partially offset by lower capital expenditures. On a dollar basis, year over year, primary working capital increased to $819 million from $654 million. On a percentage of sales basis, primary working capital increased to 32.4%. It's important to note that from both an earnings and cash flow perspective, the business is operating as it normally would when the price of tungsten rises. In periods of rising tungsten prices, we always experience favorable price raw timing effects in sales and earnings while we experience headwinds to cash flow as primary working capital grows based on tungsten valuation. What is unique about the current circumstance is the magnitude of the rise in tungsten prices. In no recent time have we experienced a nine-fold increase. Due to the uncertain nature of tungsten pricing and the corresponding pressure it has placed on working capital, we once again made the decision not to repurchase shares. Net capital expenditures decreased to $52 million compared to $67 million in the prior year quarter. In total, we returned $15 million to shareholders through our dividends. Inception to date, we have repurchased $70 million or 3 million shares under our $200 million authorization. We remain committed to returning cash to shareholders while executing our strategy to drive growth and margin improvement. We continue to maintain a healthy balance sheet and debt maturity profile. At quarter end, we had ample liquidity to support the business with combined cash and revolver availability of approximately $742 million. As always, we remain well within our financial covenants. The full balance sheet can be found on slide 16 in the appendix. Now on slide 11, regarding our full year outlook. We now expect FY 2026 sales to be between $2.33 billion and $2.35 billion with volume ranging from 2%-3%, net price and tariff surcharge combined of approximately 16%. We anticipate an approximate 2% tailwind from foreign exchange. The increased outlook reflects additional pricing actions related to the increase in cost of tungsten since our February call. Specifically, within the fourth quarter, we expect net price and tariff surcharges combined of approximately 35% compared to the prior year quarter. We now expect Adjusted EPS in the range of $3.75-$4.00. This outlook includes approximately $2.45 related to the timing of price raw benefit due to the rise in tungsten prices, the significant majority of which affects the Infrastructure segment. This effect increased $1.50 from the prior outlook. On the cash side, the full year outlook for capital expenditures is now anticipated to be approximately $85 million, and Free operating cash flow is expected to be approximately negative 30% of adjusted net income, reflecting the working capital pressure from the rise in cost of tungsten as discussed earlier. It's important to note our outlook does not include any effects from the conflict in the Middle East. The other assumptions in our outlook are noted on the slide. While it is earlier than normal, I would like to take a moment to provide a bit of a framework to help you think about FY 2027. First off, our current assumption is that tungsten prices will remain elevated for some period of time going forward. That implies there will be significant carryover pricing given the 35% price expectation for the fourth quarter. This carryover pricing will diminish as FY 2027 progresses since we would fully lap it in the fourth quarter. Keep in mind that this assumption holds price at the fourth quarter level. Also, we would expect price raw timing benefits in a flat tungsten environment will continue through the first half of FY 2027 with the bulk of the benefit occurring in the first quarter. Outside of tungsten, we would expect normal cost inflation going into FY 2027. However, we would see performance-based compensation reset the target, providing a $20 million tailwind. We will also see additional savings from restructuring continuous improvement of $10 million. We will provide the rest of the details, including market expectations for FY 2027 on our call in August. Back to you, Sanjay. Thank you, Pat. Turning to slide 12. Let me take a few minutes to summarize. We have delivered three strong quarters so far in fiscal 2026, driven by price and modest improvements in various end markets, project wins on the commercial side, and productivity and cost improvement actions. Going forward, we will remain focused on the strategic growth initiatives and lean transformation we have underway, while also exploring ways to strengthen our portfolio over time. Additionally, we will continue to actively manage our tungsten supply chain. In summary, we remain confident in our plan for long-term value creation for shareholders. With that, operator, please open the line for questions. Thank you. We will now begin the question and answer session. Today's first question comes from Stephen Volkmann with Jefferies. Please proceed. Morning, Steve. Hi. Good morning, guys. Thanks for taking the question. Can we just start with, what do you think, Pat? What was the incremental margin on the volume in the quarter? Yeah, I think the volume incremental margin was pretty normal for us, Steve. I think there's a couple things obviously in the quarter that are kind of masking that because we've got some big numbers being thrown around there. You got the $39 million worth of price/raw material timing benefit coming through. You know, in the prior year, we had that $8 million advanced manufacturing tax credit. Then I'd say the third component there that's just unusual for us is variable compensation. Last year, you know, we would have been on the low side of accruing for variable compensation. This year, given performance, we're a bit on the high side. You know, in the quarter, that's like an $18 million number there in and of itself. Then, of course, you have some benefits coming through from restructuring. When you pull all that back, volume leverage is pretty normal for the business. Okay. It sounds like you've adjusted price. You obviously have a big forecast for the fiscal fourth quarter. Are we, like, where we need to be today in terms of price? Or will there be more price that sort of flows through in the fourth quarter and maybe even later into the summer? Steve, this is Sanjay. As you know, this is a very dynamic situation that we are, you know, managing, and we'll continue to monitor how that moves. As, you know, even the last call, you know, you talked about that, how it was moving on a daily basis, hourly basis. That's why, you know, we will just tell you that we are looking at different market variables. And our definitely our goal here is to fully offset the cost implication of tungsten. I would just add to that, Steve. We did put price in here in the market, you know, you know, various dates by region, but effectively, in the April-May timeframe. April-May. Okay. All right. Thank you, guys. The next question comes from Steven Fisher with UBS. Please proceed. Morning, Steve. Thanks. Good morning, and congrats on managing all the complexities here. Just to follow up on that last question. Just curious about the differences between Metal Cutting and Infrastructure. I know with Infrastructure it does tend to be fairly quick to capture that pricing. I'm just curious to confidence that you can really fully pass on the price increases within the Metal Cutting. You know, what the frequency of timing you can put that through. You know, essentially, you know, are the customers that are going to these distributors, are they really seeing a 35% increase on the shelf there from these products? Just curious if there's any real differences there in dynamics between Metal Cutting and Infrastructure. Yeah, sure, Steve. I think first of all, like, in past, we have talked about the Metal Cutting is a list price business. Also when you look at the material flow, you know, there is more lag in that, you know, but Infrastructure sees that first. Based on the different product, you know, we also have like different content of how much tungsten is used. That will reflect, you know, when you look at the growth numbers, sales growth numbers, you know, by different end markets within the different, you know, like segments. You know, you will see in some cases very, very high number. Many cases, you know, those are driven by the higher content of tungsten. We have, you know, in Infrastructure, many customers who are on the index price basis, but many others are not. We do move relatively quicker on Infrastructure pricing. In Metal Cutting, you know, there's a three to six month lag generally. Based on, you know, the list price change, you know, we implement that. Okay. Then maybe just, a little more color on what you're seeing in energy and how you see that evolving for the next few months. Just curious what you are hearing from your customers there, is that something you're preparing for kind of a bit more of a ramp up? Yeah. On the energy, I'll divide the question into two pieces here. First is the, you know, AI power generation related energy demands, which we see more so in the Metal Cutting side. Definitely, as you know, there's a lot of industrial activities, driven around the world, but a lot in the U.S. also. And we are very well-positioned with our, you know, innovative solutions, application support, and custom solutions, you know, for our customers, and we are doing pretty good job in winning share there. And I do believe that that will continue. And as you have seen in the, you know, even this quarter report, you know, we talk about that quite a bit. When it comes to the other side of energy, which is more or less, let's say in oil and gas, it will definitely touch a little bit Metal Cutting, but a lot more in the Infrastructure side. As we talked about it, that there is a little bit of optimistic, you know, view, it's cautiously optimistic view. The rig count projection right now has gone from 527 to 532. If you look in the market, you know, there are two camps. You know, there are people who are saying that there will be a lot more investment coming up here. There are people who are saying that, you know, this is temporary and things like that. Our overall conclusion based on what we see, the trough is behind us, and we should see some steady improvement going forward. Thank you very much. Our next question is from Julian Mitchell with Barclays. Please proceed. Hi, Julian. Hi, good morning. Hey, just maybe a first question just to try and clarify the tungsten related sort of tailwind to EPS. I think you said $2.45 for FY 2026 in aggregate. In the fourth quarter, is it around $1.75? Is that roughly the right math? Just wanted to check that. Yeah. I think if you, if you kind of back into that, Julian, I think we had about in EPS terms, about $0.16, I think in Q2, $0.39 here in Q3, and so you just force the rest out of Q4. That's great. Thank you, Pat. Maybe, Pat, help us understand those moving parts around the sort of cash flow, year-ending leverage, when you might look to resume the share repurchase program. You know, help us understand what that free cash flow in the fourth fiscal quarter is looking like and you know, how quickly does it sort of reverse following that based on where tungsten is today? Yep. I would think, you know, think about it this way, and we talk about this from a, you know, how does the cost structure lag from an income statement perspective? That obviously the balance sheet's following that too. As tungsten has ramped, we're gonna continue to see inventory build on a valuation basis here, you know, in the fourth quarter. That's really what's driving that, you know, negative free operating cash flow for the full year. As that kind of builds up, you know, we would anticipate you get about a quarter or two out, again, from a change in tungsten, we would kind of get flatlined. The business would then move back to its normal, you know, pattern in terms of its cash generation ability. Obviously, as I said, kind of in the scripted remarks here, the magnitude of what we're dealing with here is just significantly larger than what we've seen in the past, right? Think about that from a share repurchase perspective. Look, you know, we've been very committed to returning cash to shareholders through the dividend program as well as through our repurchase program. You know, our desires have been at a minimum to offset dilution from equity compensation programs. We just fundamentally think that's good housekeeping. You know, in the current environment, you know, what would we wanna see to really resume that? We'd really wanna see some stabilization and clarity about where tungsten is headed. You know, our obvious thesis here at the moment is that tungsten should be relatively stable. You know, that being said, it's a very dynamic marketplace today. That's great. Thank you. The next question is from Steve Barger with KeyBanc Capital Markets. Please proceed. Hi, Steve. Steve, you may be muted on your side. Yep, sorry. Thanks. Hey, Pat. You talked about good activity in aerospace and defense and some share gains in Infrastructure and Earthworks. At the same time, I think you said some competitors are turning away orders, presumably on price cost. Can you talk about what you think is happening with pre-buy and just, you know, people scrambling to get product due to inflation and then, you know, how does that map to the longer term durability of share gains? Yeah. Steve, this is Sanjay. I'll take that first. First of all, you know, we did see some pre-buy. It was mostly in the Infrastructure's Earthwork, you know, construction business. Beyond that, you know, there was not much material, you know, impact on pre-buys in the rest of the business. We did see opportunities, you know, also in the Earthworks you know, business within Infrastructure and also in aerospace and defense in Metal Cutting, where we did see some evidence where we were able to capture where competitors were not able to either provide proper lead time or even just meet the demand. That's how we saw that. Does that answer your question? I think, so, just so I'm clear, why do you think the competitors are not able to meet demand right now? Yeah. Well, we have seen some competitors are definitely having problem in getting raw material. If even if they're getting raw materials, they are also pretty booked, and they are, you know, putting longer lead times. In some cases, you know, we are able to provide a better lead time, and that's how we got it. I would say that, I mean, the opportunity obviously there, Steve, is that there is short-term disruption in the marketplace that gives us an opportunity to quote and win business that maybe we wouldn't normally have seen the same opportunities on. The opportunity for us and the challenge to our sales organization, quite frankly, is to convert that to permanent long-term share capture. Yeah. That's what we're going for here. Yeah, one more thing, Steve, I will add to that. I think, you know, for investors who may be, you know, listening to us first time, I do wanna mention that this situation that we have with tungsten is not driven by higher demand. It is driven by supply constraints. As in past, you know, you have seen some of the times tungsten went up. At the same time, oil and gas and some of the other industry which consumes a lot of tungsten went up. This time it is because of supply constraint and also export controls. Just simply in a big portion of market, there is less supply right now. Yeah, understood. That actually is a good segue to my next question. If I heard you right, you're slowing facility closures and the last quarter you expected restructuring savings of $125 million, now that's $110 million. Are those two things related? If so, why? I Maybe I missed it. Why are you slowing facility closure? Yeah, very good question. As we said in the prepared remarks, and I will clarify that a little bit more, obviously, you know, we are seeing right now more, you know, growth opportunities, which is driven by all three factors: market improving, then also, you know, share gain through our routine strategic growth initiatives that we have talked about it in past. On top of that, you know, and window of opportunity from the tungsten situation. We look at how we can create the best value for all our stakeholders, and we feel right now that allocating more resources on growth opportunities and, you know, driving our, you know, routine business leverage will create more shareholder value for now, and that's how we are, you know, making the shift. However, we are not stopping the work on footprint optimization. We'll continue to work on it. Timeline will shift a little bit. We'll come back and give you more information on that at appropriate time. Got it. Thank you. Our next question is from Tami Zakaria with JPMorgan. Please proceed. Hi, Tami. Good morning. Thank you so much. First question is on tariffs. I think IEEPA got struck down. Do you expect to file any refunds? If so, what kind of what amount of refund would you expect to collect? Tami, morning. First of all, as you know, this is also one of the very dynamic situation. We still have, you know, tariffs in place, we are not, you know, taking any hasty action on this yet. I think we're continuing to, you know, monitor, based on that, you know, we'll make decisions. Nothing more to share at this point in, you know, today's call. Understood. That's fair. My second question is, for the fourth quarter, just wanted to clarify, do you expect volume growth to be in that 2%-3% full year range or it could come in above that? Yes, it's the full year range. I would say it's depending on where you're at in that range, Tami, it's gonna be low to, like, the high end, maybe up into the mid-single digits. You obviously factor in 35% price we talked about from a script perspective. You know, don't forget we had a divestiture in the prior year, and you got a little bit of FX in there as well. That kinda is the math there in terms you think about the top line. I would emphasize, you know, as we just think about, you know, the profitability, you know, that obviously we're going to see sequentially profitability step up pretty significantly here based on that price raw. You know, given the circumstances that we're in today, again, this is unusual, we're gonna have some of that price raw realization in Metal Cutting too. When you think about, again, the margin performance of the business as a whole and the two segments, pretty big ramp up for both of them. Understood. It's helpful. Thank you. The next question comes from Angel Castillo with Morgan Stanley. Please proceed. Hi, good morning. Thanks for taking my question. Just maybe first wanted to start out on the market share gains. That's been a meaningful driver, I guess, of the organic growth that you've been seeing. Just curious if you could unpack that a little bit more. I guess I'm trying to understand, you know, if it's possible to, I guess, separate how much of the share gains you think was maybe driven by kind of value proposition or, you know, project wins that tend to be a little bit stickier versus where it's maybe related to kind of competitor supply constraints. In particular, I guess to the latter bucket, curious if you kind of expect that, you know, as over time, as kind of supply, perhaps normalizes, if you would expect to kind of give that back or if there's any kind of stickiness to, you know, some of those shifts that we might be seeing on the kind of supply-driven angle. Also, if you could comment on the promotional campaigns you talked about as well, that'd be helpful. Yeah, sure, Angel. First of all, you know, again, it is a combination of all three factors. You know, market improving, and we think that that should continue. Second will be in our strategic growth initiatives, we have talked about in past, you know, those will include, for example, what we have done in aerospace and defense, energy and in general engineering, Earthworks and so on and so forth. How we have gone about winning bigger share of wallet with existing customers, also, you know, going out and winning business at different tiers of the supply chain or our customer value chain. Those I will tell you that are very sustainable because we are winning those using our core competencies from product and innovation and our commercial excellence and our operational capabilities. The third piece of the volume that we have also talked about, you know, the window of opportunity we have from Tungsten Dynamics. We also think that those are sustainable, at least in the near term, that we see that. In the long term, we'll see how that, you know, plays out. We are being very strategic about which opportunities that we go and capitalize. We are selective on what opportunities we think are gonna be longer term sustainable for us. All in all, of course, it's a mix of three things, and I won't be able to quantify, you know, break down or don't wanna disclose it, you know, in public domain on that. I can tell you that as we have talked about in past, that driving growth above market has been one of our strategic imperative, and it will continue to be. In last, you know, two years, three years, you know, actually I would go a little bit beyond that. We have shown our ability to outperform or at least, you know, hold our own in our Metal Cutting business where we have in public peer data. This is gonna continue to be one of the focus. In short, I will just say that it is gonna be a meaningful piece of our overall volume story. Very helpful. Thank you. If you could bear with me, I guess a three-part question here just on tungsten. Hoping to better understand, I guess a couple of things. One, any more color you can add in terms of the sourcing that you're doing and how that differs versus competitors that allows you know, in a market that you described as very competitive, in terms of sourcing to make sure that you're able to have the right amount of supply. Just any color you can add that, on that. Maybe a little bit more longer term or medium to longer term. On the tungsten side, I think your preliminary fiscal year 2027 outlook talked about that as being kind of stable at current levels. Just anything you can add in terms of the supply demand that you're seeing progressing from here in terms of, I think there might be some capacity that's coming online in 2027. To the extent that, I guess any implications from that or the recently kind of lower prices of tungsten in China, as to what, you know, where that commodity heads in 2027. Lastly, you know, implications of that to the price and the market share gains that you talked about on the supply basis? Yeah, certainly. I'll try to take each one of those in terms. You know, when I think about the advantages we have, you know, I want to go beyond, quite frankly, just the sourcing aspect. Like from a sourcing perspective, you know, as we've talked about in the past, we do not use significant amounts of Chinese material outside of our Chinese operation. You know, outside of China, you know, we've got a diversified supply base and partners we've been with for a long period of time and getting material from Bolivia, other East Asian sources and as well as a nice slug of recycled material. A lot of the strength that we have as a company vis-a-vis some of the competition that's out there is also the integrated nature of our supply chain, right? We have the ability basically to take in tungsten materials at various stages and turn them ultimately into a final product. You think about that from a, from, you know, our ability to take raw materials, which is virgin ore in and process that, there is only a handful of companies in the industry that can do that as well. That provides us, I think, a durable strategic advantage here in this set of circumstances. You know, as you think about where it is from an overall pricing perspective, yes, our assumption at the moment is that tungsten prices are stable. You know, I think the, you know, the, the last couple of quarters that we've gone through in terms of, you know, the magnitude of this price change, I don't think that many market participants would have envisioned us going from $200 a ton to over $3,000 a ton, excuse me, as we have over the last 12 months. You know, certainly there has been some softening in China the last week or so in terms of the prices. Unclear at the moment in time whether or not that's indicative of a larger trend that would be more durable. We'll obviously continue to monitor and watch that. Your last question, in terms of what supply is coming online. Yep, there's a variety of new mine projects that are out there that will come online. We would anticipate in the fullness of time, that would help moderate the tungsten prices here a little bit on a global basis. I think, you know, the other reality of the situation here is in particular, you know, we've got the export controls in China that are in place, number one. Number two, we've got lower Chinese mine production over the last two years, as it relates to, you know, based on some information from public domain, you know, lower quality ore potentially out there as well as I would emphasize lower mining permits provided by the Chinese government. You know, the market has been in a period of shortage. Additional supply obviously would help alleviate some of that, you know, and as that market continues to unfold, obviously that will inform our pricing decisions and, you know, how we set, I'll say, our inventory objectives here in terms of holding inventory as well. Very helpful. Thank you so much. The next question is a follow-up from Steve Barger with KeyBanc Capital Markets. Please proceed. Hey, thank you. Pat, just to level set expectations for the models. You said price/raw material timing benefit from tungsten flows through into the first half, mostly in 1Q. Is the right way to think about FY 2027 kind of reverse order from this year, high point by far in 1Q trailing back down to your, you know, quarterly average of like $0.40 towards the end of FY 2027? Yeah. Here a couple ways that I think about that, Steve. First off, just let me give you some like the basic walk, and I'll start from the midpoint, right? Midpoint of the outlook this year is $3.88. You know, we said we got $2.45 a price raw in there. You know, probably have about $0.20 worth of variable compensation that would reset. Let's think of like a, you know, a clean FY 2026, removing those items about $1.63 in EPS terms, right? Kinda moving forward next year, you're gonna add $0.10 in for the additional restructuring that we talked about. That gets you down to like about $1.73 before you get to what I'll call as additional price raw, which again should exist in that first half, right? Yeah. Whatever the volume assumption is that you guys make at this point in time. Obviously, we'll give some clarity about that in August. The second thing I would say about that in terms of now taking that cadence and thinking about the year, yeah, I think the right way to think about this, again, this is assuming a relatively stable tungsten environment, would be first half we're gonna see the benefits of price raw. Back half of that year, we'll get back to what I would call it as a normal level of profitability, right, absent the price raw tailwinds. Super helpful. Thank you. The next question is a follow-up from Julian Mitchell with Barclays. Please proceed. Much. This will be a quick one. Maybe just flesh out a bit more the cadence of kind of volume demand. You had that very interesting chart on cumulative volumes going back several years. That was interesting, and you've clearly seen a pickup, as you said, a couple of times. There's some pre-buy, I suppose, in that. Maybe give us any color you can on sort of how base volumes are performing if you can really get to that level of detail from your channel partners and so forth. Have you seen an improvement in base demand in the last couple of months, or it's difficult to disentangle that from pre-buy movement? I'll take that first, and then Sanjay will, he'll hit most of it. Just to clarify that chart to make sure we're all talking about it the same way, right? That chart is based on a 12 trailing months basis, Julian. Based on that, you can think about it as an annualized chart. It's going to kind of flatten out any sort of short-term pre-buying issues, right? Again, we're talking about an annual type number. With that, I'll turn it over to Sanjay here. Yeah, Julian, with regards to, you know, rest of the drivers, at this point, Q4, we are confident in what we are saying, you know, that we do see impact from improving market condition, which is again, moderate. Then on top of that, you know, our share gain opportunities that we have, those will definitely play out. I think with respect to fiscal 2027, we'll come back and talk about that in August, but the, you know, initial signs are, you know, seems like things are definitely stabilizing. Great. Thank you. This concludes today's question and answer session. At this time, I would like to turn the conference back over to Sanjay Chowbey for any closing remarks. Thank you, operator, and thank you everyone for joining the call today. As always, we appreciate your interest and support. Please don't hesitate to reach out to Mike if you have any questions. Have a great day. Thank you. As a reminder, a replay of this event will be available approximately one hour after its conclusion. To access the replay, you may dial toll-free within the U.S. at eight five five, six nine nine, nine six five eight. Outside of the U.S., you may dial four one two, three one seven, zero zero eight eight. You will be prompted to enter the conference ID, which is six nine three, six six two seven , then the pound or hash symbol. You will be asked to record your name and company. Today's conference has now concluded. Thank you for attending today's presentation, and you may now disconnect your lines.

Speaker 4: Good morning. I would like to welcome everyone to Kennametal's Q3 fiscal 2026 earnings conference call. Today, all lines have been placed on mute to prevent any background noise. After today's speaker 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 your question has been addressed and you would like to withdraw it, please press star then the number two. Please note that today's event is being recorded. I would now like to turn the conference over to Michael Pici, Vice President of Investor Relations. Please go ahead. Good morning. good morning I would like to welcome everyone to Kennametal's Q3 fiscal 2026 earnings conference call. i would like to welcome everyone to kennametal's q3 fiscal 2026 earnings conference call Today, all lines have been placed on mute to prevent any background noise. today all lines have been placed on mute to prevent any background noise After today's speaker remarks, there will be a question-and-answer session. after today's speaker 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 ask a question during this time simply press star then the number one on your telephone keypad If your question has been addressed and you would like to withdraw it, please press star then the number two. if your question has been addressed and you would like to withdraw it please press star then the number two Please note that today's event is being recorded. please note that today's event is being recorded I would now like to turn the conference over to Michael Pici, Vice President of Investor Relations. i would now like to turn the conference over to michael pici vice president of investor relations Please go ahead. please go ahead

Speaker 3: Thank you, operator. Welcome, everyone, and thank you for joining us to review Kennametal's third 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 Pici, Vice President of Investor Relations. Joining me on the call today are Sanjay Chowbey, President and Chief Executive Officer, and Patrick 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. Thank you, operator. thank you operator Welcome, everyone, and thank you for joining us to review Kennametal's third quarter fiscal 2026 results. welcome everyone and thank you for joining us to review kennametal's third quarter fiscal 2026 results This morning, we issued our earnings press release and posted our presentation slides on our website. 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. we will be referring to that slide deck throughout today's call I'm Michael Pici, Vice President of Investor Relations. i'm michael pici vice president of investor relations Joining me on the call today are Sanjay Chowbey, President and Chief Executive Officer, and Patrick Watson, Vice President and Chief Financial Officer. joining me on the call today are sanjay chowbey president and chief executive officer and patrick watson vice president and chief financial officer After Sanjay and Pat's prepared remarks, we will open the line for questions. 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. 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. 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 Kennametal's SEC filings. In addition, we will be discussing non-GAAP financial measures on the call today. Reconciliations to GAAP financial measures that we believe are most directly comparable can be found at the back of the slide deck and in our Form 8-K on our website. With that, I'll turn the call over to Sanjay. These risk factors and uncertainties are detailed in Kennametal's SEC filings. these risk factors and uncertainties are detailed in kennametal's sec filings In addition, we will be discussing non-GAAP financial measures on the call today. in addition we will be discussing non-gaap financial measures on the call today Reconciliations to GAAP financial measures that we believe are most directly comparable can be found at the back of the slide deck and in our Form 8-K on our website. reconciliations to gaap financial measures that we believe are most directly comparable can be found at the back of the slide deck and in our form 8-k on our website With that, I'll turn the call over to Sanjay. with that i'll turn the call over to sanjay

Speaker 6: Thank you, Mike. Good morning, and thank you for joining us. I will begin with an overview of the quarter, including end market commentary, followed by a discussion on unit volume trends. From there, Pat will cover the quarterly financial results and the fiscal year 2026 outlook, along with an early look at fiscal 2027. Finally, I'll make some summary comments, and then we'll open the line for questions. Turning to slide three. Let me begin by addressing some of the highlights from our strong third quarter. Our global commercial teams continued to advance our strategic growth initiatives. The Infrastructure team delivered solid growth. In construction, we saw volume growth from strong product performance and the advantage we have as a secure source of tungsten in a tight supply environment. Thank you, Mike. thank you mike Good morning, and thank you for joining us. good morning and thank you for joining us I will begin with an overview of the quarter, including end market commentary, followed by a discussion on unit volume trends. i will begin with an overview of the quarter including end market commentary followed by a discussion on unit volume trends From there, Pat will cover the quarterly financial results and the fiscal year 2026 outlook, along with an early look at fiscal 2027. from there pat will cover the quarterly financial results and the fiscal year 2026 outlook along with an early look at fiscal 2027 Finally, I'll make some summary comments, and then we'll open the line for questions. finally i'll make some summary comments and then we'll open the line for questions Turning to slide three. turning to slide three Let me begin by addressing some of the highlights from our strong third quarter. let me begin by addressing some of the highlights from our strong third quarter Our global commercial teams continued to advance our strategic growth initiatives. our global commercial teams continued to advance our strategic growth initiatives The Infrastructure team delivered solid growth. the infrastructure team delivered solid growth In construction, we saw volume growth from strong product performance and the advantage we have as a secure source of tungsten in a tight supply environment. in construction we saw volume growth from strong product performance and the advantage we have as a secure source of tungsten in a tight supply environment Additionally, we received large orders in our defense business, further securing ongoing growth in this market as we head into fiscal 2027. In Metal Cutting, we continue to increase our share of wallet with key accounts, especially in aerospace and defense, and build upon our momentum in energy from AI power generation initiatives. In general engineering, we have been winning new customers through targeted promotional campaigns and improvements to our digital customer experience, especially for our small to medium-sized customers. As you know, we continue to prioritize above-market growth as a strategic imperative, and these wins position us well in our key end markets. Turning now to the broader tungsten environment. Prices continued their unprecedented increase throughout the quarter, rising from approximately $900 per metric ton to $3,000 as the supply of material continued to be constrained. Additionally, we received large orders in our defense business, further securing ongoing growth in this market as we head into fiscal 2027. additionally we received large orders in our defense business further securing ongoing growth in this market as we head into fiscal 2027 In Metal Cutting, we continue to increase our share of wallet with key accounts, especially in aerospace and defense, and build upon our momentum in energy from AI power generation initiatives. in metal cutting we continue to increase our share of wallet with key accounts especially in aerospace and defense and build upon our momentum in energy from ai power generation initiatives In general engineering, we have been winning new customers through targeted promotional campaigns and improvements to our digital customer experience, especially for our small to medium-sized customers. in general engineering we have been winning new customers through targeted promotional campaigns and improvements to our digital customer experience especially for our small to medium-sized customers As you know, we continue to prioritize above-market growth as a strategic imperative, and these wins position us well in our key end markets. as you know we continue to prioritize above-market growth as a strategic imperative and these wins position us well in our key end markets Turning now to the broader tungsten environment. turning now to the broader tungsten environment Prices continued their unprecedented increase throughout the quarter, rising from approximately $900 per metric ton to $3,000 as the supply of material continued to be constrained. prices continued their unprecedented increase throughout the quarter rising from approximately $900 per metric ton to $3,000 as the supply of material continued to be constrained This tungsten price and supply environment have created both challenges and opportunities. On the challenges front, we have seen a highly competitive market for material, but our supply chain has held up relatively well. We have and will continue to implement pricing actions in response to these rising tungsten costs and remain confident in our ability to secure that price. We are also focused on managing the primary working capital and balance sheet implications of higher tungsten costs. In terms of opportunities, our vertical integration has been a real strength in this market, providing us better supply chain control and flexibility compared to some competitors. For example, as competitors are turning away orders or extending lead times, we are well-positioned to capture business that is aligned with our strategic priorities. This tungsten price and supply environment have created both challenges and opportunities. this tungsten price and supply environment have created both challenges and opportunities On the challenges front, we have seen a highly competitive market for material, but our supply chain has held up relatively well. on the challenges front we have seen a highly competitive market for material but our supply chain has held up relatively well We have and will continue to implement pricing actions in response to these rising tungsten costs and remain confident in our ability to secure that price. we have and will continue to implement pricing actions in response to these rising tungsten costs and remain confident in our ability to secure that price We are also focused on managing the primary working capital and balance sheet implications of higher tungsten costs. we are also focused on managing the primary working capital and balance sheet implications of higher tungsten costs In terms of opportunities, our vertical integration has been a real strength in this market, providing us better supply chain control and flexibility compared to some competitors. in terms of opportunities our vertical integration has been a real strength in this market providing us better supply chain control and flexibility compared to some competitors For example, as competitors are turning away orders or extending lead times, we are well-positioned to capture business that is aligned with our strategic priorities. for example as competitors are turning away orders or extending lead times we are well-positioned to capture business that is aligned with our strategic priorities During the quarter, we capitalized on these opportunities in each of our business segments, specifically Earthworks within Infrastructure and aerospace & defense in Metal Cutting. These new opportunities also facilitate shaping our product portfolio away from lower margin to higher margin solutions. As such, we are seeing a unique combination of three factors that are opening the door to sales opportunities. First, continued market recovery. Second, solid execution on our strategic growth initiatives. Third, a window of opportunity from the current tungsten market, which is likely to persist in the near term. Given those dynamics, we are prioritizing our time and attention on growth opportunities over restructuring initiatives in the near term. We are shifting the timeline for facility closure actions we had previously planned to complete in fiscal 2027. We will provide additional detail on the restructuring timeline as appropriate. During the quarter, we capitalized on these opportunities in each of our business segments, specifically Earthworks within Infrastructure and aerospace & defense in Metal Cutting. during the quarter we capitalized on these opportunities in each of our business segments specifically earthworks within infrastructure and aerospace & defense in metal cutting These new opportunities also facilitate shaping our product portfolio away from lower margin to higher margin solutions. these new opportunities also facilitate shaping our product portfolio away from lower margin to higher margin solutions As such, we are seeing a unique combination of three factors that are opening the door to sales opportunities. as such we are seeing a unique combination of three factors that are opening the door to sales opportunities First, continued market recovery. first continued market recovery Second, solid execution on our strategic growth initiatives. second solid execution on our strategic growth initiatives Third, a window of opportunity from the current tungsten market, which is likely to persist in the near term. Given those dynamics, we are prioritizing our time and attention on growth opportunities over restructuring initiatives in the near term. third a window of opportunity from the current tungsten market which is likely to persist in the near term. given those dynamics we are prioritizing our time and attention on growth opportunities over restructuring initiatives in the near term We are shifting the timeline for facility closure actions we had previously planned to complete in fiscal 2027. we are shifting the timeline for facility closure actions we had previously planned to complete in fiscal 2027 We will provide additional detail on the restructuring timeline as appropriate. we will provide additional detail on the restructuring timeline as appropriate Even with that shift, we are still targeting approximately $110 million in savings from cost takeout actions by the end of fiscal 2027, which is $10 million above what we outlined at Investor Day. Let's move to our quarterly results, which once again exceeded our sales and EPS outlook. Compared to outlook, sales were mostly driven by increased price realization and better than expected volume in both segments. EPS benefited from the additional price raw timing of $0.09, positive volume, and lower than anticipated tax rate. Year-over-year, sales increased 19% organically. Please note, this was our third consecutive quarter of organic growth, driven by additional price realization, strategic growth initiatives, and continued recovery in several end markets. Adjusted EPS increased to $0.77 compared to $0.47 in the prior year quarter. Even with that shift, we are still targeting approximately $110 million in savings from cost takeout actions by the end of fiscal 2027, which is $10 million above what we outlined at Investor Day. even with that shift we are still targeting approximately $110 million in savings from cost takeout actions by the end of fiscal 2027 which is $10 million above what we outlined at investor day Let's move to our quarterly results, which once again exceeded our sales and EPS outlook. let's move to our quarterly results which once again exceeded our sales and eps outlook Compared to outlook, sales were mostly driven by increased price realization and better than expected volume in both segments. compared to outlook sales were mostly driven by increased price realization and better than expected volume in both segments EPS benefited from the additional price raw timing of $0.09, positive volume, and lower than anticipated tax rate. eps benefited from the additional price raw timing of $0.09 positive volume and lower than anticipated tax rate Year-over-year, sales increased 19% organically. year-over-year sales increased 19% organically Please note, this was our third consecutive quarter of organic growth, driven by additional price realization, strategic growth initiatives, and continued recovery in several end markets. please note this was our third consecutive quarter of organic growth driven by additional price realization strategic growth initiatives and continued recovery in several end markets Adjusted EPS increased to $0.77 compared to $0.47 in the prior year quarter. adjusted eps increased to $0.77 compared to $0.47 in the prior year quarter Adjusted EBITDA margin was 20.8% compared to 17.9% in the prior year quarter. Cash from operating activities year-to-date was $70 million compared to $130 million in the prior year period. Free operating cash flow year-to-date was $18 million compared to $63 million in the prior year. Free operating cash flow was adversely impacted by increased working capital requirements related to tungsten prices. Finally, we returned $15 million to shareholders through dividends. As it relates to our outlook, today we are raising our sales and EPS outlook for fiscal 2026. This update reflects the additional price due to the continued rise in tungsten and additional volume. Patrick will provide more details on our updated outlook shortly. In summary, we are pleased with this quarter's results and how the team is navigating these unique business conditions. Adjusted EBITDA margin was 20.8% compared to 17.9% in the prior year quarter. adjusted ebitda margin was 20.8% compared to 17.9% in the prior year quarter Cash from operating activities year-to-date was $70 million compared to $130 million in the prior year period. cash from operating activities year-to-date was $70 million compared to $130 million in the prior year period Free operating cash flow year-to-date was $18 million compared to $63 million in the prior year. free operating cash flow year-to-date was $18 million compared to $63 million in the prior year Free operating cash flow was adversely impacted by increased working capital requirements related to tungsten prices. free operating cash flow was adversely impacted by increased working capital requirements related to tungsten prices Finally, we returned $15 million to shareholders through dividends. finally we returned $15 million to shareholders through dividends As it relates to our outlook, today we are raising our sales and EPS outlook for fiscal 2026. as it relates to our outlook today we are raising our sales and eps outlook for fiscal 2026 This update reflects the additional price due to the continued rise in tungsten and additional volume. this update reflects the additional price due to the continued rise in tungsten and additional volume Patrick will provide more details on our updated outlook shortly. patrick will provide more details on our updated outlook shortly In summary, we are pleased with this quarter's results and how the team is navigating these unique business conditions. in summary we are pleased with this quarter's results and how the team is navigating these unique business conditions As I mentioned, there are opportunities and challenges in this market, and we remain focused on delivering on our commitments throughout fiscal 2026 and setting ourselves up for a successful fiscal 27. Now let's turn to slide four for an end market update. As a reminder, our full year outlook reflects forecasts of specific market drivers and general market conditions. The top half of this slide reflects our sales outlook at the midpoint and includes price, volume, and market factors. My comments will focus on the bottom half of the slide and address transportation and energy, which are the only end markets that changed since our last call. IHS estimates for transportation slightly improved from the previous estimate. Up in the low single-digit range, mostly driven by improvements in Asia-Pacific market. Energy improved slightly relative to our prior outlook as customer sentiment improved. As I mentioned, there are opportunities and challenges in this market, and we remain focused on delivering on our commitments throughout fiscal 2026 and setting ourselves up for a successful fiscal 27. as i mentioned there are opportunities and challenges in this market and we remain focused on delivering on our commitments throughout fiscal 2026 and setting ourselves up for a successful fiscal 27 Now let's turn to slide four for an end market update. now let's turn to slide four for an end market update As a reminder, our full year outlook reflects forecasts of specific market drivers and general market conditions. as a reminder our full year outlook reflects forecasts of specific market drivers and general market conditions The top half of this slide reflects our sales outlook at the midpoint and includes price, volume, and market factors. the top half of this slide reflects our sales outlook at the midpoint and includes price volume and market factors My comments will focus on the bottom half of the slide and address transportation and energy, which are the only end markets that changed since our last call. my comments will focus on the bottom half of the slide and address transportation and energy which are the only end markets that changed since our last call IHS estimates for transportation slightly improved from the previous estimate. ihs estimates for transportation slightly improved from the previous estimate Up in the low single-digit range, mostly driven by improvements in Asia-Pacific market. up in the low single-digit range mostly driven by improvements in asia-pacific market Energy improved slightly relative to our prior outlook as customer sentiment improved. energy improved slightly relative to our prior outlook as customer sentiment improved The tone is now cautiously optimistic, which is an improved stance compared to what customers were previously signaling. Turning to slide five. As we have talked about over the last several years, customer activity rates and our sales volumes have been below the pre-COVID peak. I want to take some time to provide insight into unit volume and how those trends have improved over the last few quarters. This chart uses units sold volume and excludes the impact of price and foreign exchange. It also excludes Infrastructure defense sales, as these are lumpy and not tied to industrial production metrics. Let me spend a moment on what is driving the volume recovery, and just as importantly, why we believe it's sustainable. As the call-out indicates, we are now experiencing the second consecutive quarter of year-over-year trailing 12-month unit volume growth. The tone is now cautiously optimistic, which is an improved stance compared to what customers were previously signaling. the tone is now cautiously optimistic which is an improved stance compared to what customers were previously signaling Turning to slide five. turning to slide five As we have talked about over the last several years, customer activity rates and our sales volumes have been below the pre-COVID peak. as we have talked about over the last several years customer activity rates and our sales volumes have been below the pre-covid peak I want to take some time to provide insight into unit volume and how those trends have improved over the last few quarters. i want to take some time to provide insight into unit volume and how those trends have improved over the last few quarters This chart uses units sold volume and excludes the impact of price and foreign exchange. this chart uses units sold volume and excludes the impact of price and foreign exchange It also excludes Infrastructure defense sales, as these are lumpy and not tied to industrial production metrics. it also excludes infrastructure defense sales as these are lumpy and not tied to industrial production metrics Let me spend a moment on what is driving the volume recovery, and just as importantly, why we believe it's sustainable. let me spend a moment on what is driving the volume recovery and just as importantly why we believe it's sustainable As the call-out indicates, we are now experiencing the second consecutive quarter of year-over-year trailing 12-month unit volume growth. as the call-out indicates we are now experiencing the second consecutive quarter of year-over-year trailing 12-month unit volume growth Despite a macro backdrop that has been uneven, volumes are strengthening in the Americas and Asia Pacific. EMEA continues to lag, and that is consistent with what we are seeing in PMI and industrial production data. A key driver continues to be aerospace and defense, which remains strong across both Metal Cutting and Infrastructure. Importantly, this strength isn't simply tied to OEM build rates, which are still roughly 20% below pre-COVID levels, but rather to share gains and deeper penetration with tier suppliers. That gives us confidence there is still additional runway as production rates normalize over time. We are also starting to see early signs of stabilization in general engineering and energy, even while headline indicators remain soft. In energy, power generation continues to see meaningful momentum. Despite a macro backdrop that has been uneven, volumes are strengthening in the Americas and Asia Pacific. despite a macro backdrop that has been uneven volumes are strengthening in the americas and asia pacific EMEA continues to lag, and that is consistent with what we are seeing in PMI and industrial production data. emea continues to lag and that is consistent with what we are seeing in pmi and industrial production data A key driver continues to be aerospace and defense, which remains strong across both Metal Cutting and Infrastructure. a key driver continues to be aerospace and defense which remains strong across both metal cutting and infrastructure Importantly, this strength isn't simply tied to OEM build rates, which are still roughly 20% below pre-COVID levels, but rather to share gains and deeper penetration with tier suppliers. importantly this strength isn't simply tied to oem build rates which are still roughly 20% below pre-covid levels but rather to share gains and deeper penetration with tier suppliers That gives us confidence there is still additional runway as production rates normalize over time. that gives us confidence there is still additional runway as production rates normalize over time We are also starting to see early signs of stabilization in general engineering and energy, even while headline indicators remain soft. In energy, power generation continues to see meaningful momentum. we are also starting to see early signs of stabilization in general engineering and energy even while headline indicators remain soft. in energy power generation continues to see meaningful momentum While U.S. land rig counts are still about 30% below pre-COVID levels, we are seeing enough stabilization to suggest we are past the trough. In Infrastructure, Earthworks has delivered volume gains for two consecutive quarters, driven by share gains. Stepping back, if you look at the chart, global volumes are now up approximately 3% from the Q1 fiscal 2026 trough, following 36 months of stagnant industrial production. Our performance is not just the result of a market recovery. It's shaped by where we compete, how we allocate resources, and where we are winning share. We know we operate in cyclical end markets, but we are quite confident in the long-term growth potential of these markets and our ability to capture share within them. Let me turn the call over to Pat, who will review the third quarter financial performance and the outlook. While U.S. land rig counts are still about 30% below pre-COVID levels, we are seeing enough stabilization to suggest we are past the trough. while u.s land rig counts are still about 30% below pre-covid levels we are seeing enough stabilization to suggest we are past the trough In Infrastructure, Earthworks has delivered volume gains for two consecutive quarters, driven by share gains. in infrastructure earthworks has delivered volume gains for two consecutive quarters driven by share gains Stepping back, if you look at the chart, global volumes are now up approximately 3% from the Q1 fiscal 2026 trough, following 36 months of stagnant industrial production. stepping back if you look at the chart global volumes are now up approximately 3% from the q1 fiscal 2026 trough following 36 months of stagnant industrial production Our performance is not just the result of a market recovery. our performance is not just the result of a market recovery It's shaped by where we compete, how we allocate resources, and where we are winning share. it's shaped by where we compete how we allocate resources and where we are winning share We know we operate in cyclical end markets, but we are quite confident in the long-term growth potential of these markets and our ability to capture share within them. we know we operate in cyclical end markets but we are quite confident in the long-term growth potential of these markets and our ability to capture share within them Let me turn the call over to Pat, who will review the third quarter financial performance and the outlook. let me turn the call over to pat who will review the third quarter financial performance and the outlook

Speaker 5: Thank you, Sanjay, good morning, everyone. I will begin on slide six with a review of our Q3 operating results. Sales were up 22% year-over-year, with an organic increase of 19% and favorable foreign currency exchange of 5%, which was slightly offset when adjusting for the divestiture we concluded last year. Sales volume in the quarter was up low single digits. At the segment level, organic sales increased 30% in Infrastructure and 12% in Metal Cutting. On a constant currency basis, America sales increased 27%, Asia Pacific sales increased 25%, and EMEA was up 2%. The sales performance this quarter exceeded the expectations we provided last quarter on higher sales volumes from better market conditions and share capture. We also had higher than expected price, primarily in Infrastructure, from the continued rapid increase in tungsten prices. Thank you, Sanjay, good morning, everyone. thank you sanjay good morning everyone I will begin on slide six with a review of our Q3 operating results. i will begin on slide six with a review of our q3 operating results Sales were up 22% year-over-year, with an organic increase of 19% and favorable foreign currency exchange of 5%, which was slightly offset when adjusting for the divestiture we concluded last year. sales were up 22% year-over-year with an organic increase of 19% and favorable foreign currency exchange of 5% which was slightly offset when adjusting for the divestiture we concluded last year Sales volume in the quarter was up low single digits. sales volume in the quarter was up low single digits At the segment level, organic sales increased 30% in Infrastructure and 12% in Metal Cutting. at the segment level organic sales increased 30% in infrastructure and 12% in metal cutting On a constant currency basis, America sales increased 27%, Asia Pacific sales increased 25%, and EMEA was up 2%. on a constant currency basis america sales increased 27% asia pacific sales increased 25% and emea was up 2% The sales performance this quarter exceeded the expectations we provided last quarter on higher sales volumes from better market conditions and share capture. the sales performance this quarter exceeded the expectations we provided last quarter on higher sales volumes from better market conditions and share capture We also had higher than expected price, primarily in Infrastructure, from the continued rapid increase in tungsten prices. we also had higher than expected price primarily in infrastructure from the continued rapid increase in tungsten prices By end market, on a constant currency basis, Earthworks grew 43%, energy increased 28%, aerospace & defense grew 23%, general engineering grew 14%, and transportation increased 1%. I will provide more color when reviewing the segment performance in a moment. Adjusted EBITDA and operating margins were 20.8% and 13.8% respectively, versus 17.9% and 10.3% in the prior year quarter. The margin increase was driven by favorable price raw of $39 million within the Infrastructure segment, pricing and tariff surcharges in Metal Cutting, increased sales and production volumes, and year-over-year restructuring benefits of $7 million. By end market, on a constant currency basis, Earthworks grew 43%, energy increased 28%, aerospace & defense grew 23%, general engineering grew 14%, and transportation increased 1%. by end market on a constant currency basis earthworks grew 43% energy increased 28% aerospace & defense grew 23% general engineering grew 14% and transportation increased 1% I will provide more color when reviewing the segment performance in a moment. i will provide more color when reviewing the segment performance in a moment Adjusted EBITDA and operating margins were 20.8% and 13.8% respectively, versus 17.9% and 10.3% in the prior year quarter. adjusted ebitda and operating margins were 20.8% and 13.8% respectively versus 17.9% and 10.3% in the prior year quarter The margin increase was driven by favorable price raw of $39 million within the Infrastructure segment, pricing and tariff surcharges in Metal Cutting, increased sales and production volumes, and year-over-year restructuring benefits of $7 million. the margin increase was driven by favorable price raw of $39 million within the infrastructure segment pricing and tariff surcharges in metal cutting increased sales and production volumes and year-over-year restructuring benefits of $7 million These are partially offset by higher compensation costs, which are mostly performance-based, tariffs and general inflation, and a prior year benefit from an advanced manufacturing tax credit of approximately $8 million that did not repeat in the current year. Adjusted earnings per share was $0.77 in the quarter versus $0.47 in the prior year period. The main drivers of our EPS performance are highlighted on the bridge on slide seven. The year-over-year effective operations this quarter was positive $0.36. This reflects approximately $39 million of favorable timing of price/raw material costs, price and tariff surcharges in Metal Cutting, higher sales and production volume, and incremental restructuring benefits of $7 million. These are partially offset by higher compensation costs, tariffs, general inflation, and higher raw material costs in Metal Cutting. These are partially offset by higher compensation costs, which are mostly performance-based, tariffs and general inflation, and a prior year benefit from an advanced manufacturing tax credit of approximately $8 million that did not repeat in the current year. these are partially offset by higher compensation costs which are mostly performance-based tariffs and general inflation and a prior year benefit from an advanced manufacturing tax credit of approximately $8 million that did not repeat in the current year Adjusted earnings per share was $0.77 in the quarter versus $0.47 in the prior year period. adjusted earnings per share was $0.77 in the quarter versus $0.47 in the prior year period The main drivers of our EPS performance are highlighted on the bridge on slide seven. the main drivers of our eps performance are highlighted on the bridge on slide seven The year-over-year effective operations this quarter was positive $0.36. the year-over-year effective operations this quarter was positive $0.36 This reflects approximately $39 million of favorable timing of price/raw material costs, price and tariff surcharges in Metal Cutting, higher sales and production volume, and incremental restructuring benefits of $7 million. this reflects approximately $39 million of favorable timing of price/raw material costs price and tariff surcharges in metal cutting higher sales and production volume and incremental restructuring benefits of $7 million These are partially offset by higher compensation costs, tariffs, general inflation, and higher raw material costs in Metal Cutting. these are partially offset by higher compensation costs tariffs general inflation and higher raw material costs in metal cutting There was a headwind of $0.08 related to the net prior year manufacturing tax credit. You can also see the $0.02 of transaction gains related to preferential Bolivia exchange rates. Currency, other, and pension impacts offset each other. Slides eight and nine detail the performance of our segments this quarter. Reported Metal Cutting sales were up 18% compared to the prior year quarter, with 12% organic growth and favorable foreign currency exchange of 6%. Regionally, excluding currency exchange, Asia Pacific increased 18%, the Americas increased 17%, and EMEA increased 3%. Looking at sales by end market on a constant currency basis, aerospace & defense increased 27% year-over-year due to improved build rates in Americas and easing supply chain pressures in EMEA, combined with our global focus on deeper market penetration. There was a headwind of $0.08 related to the net prior year manufacturing tax credit. there was a headwind of $0.08 related to the net prior year manufacturing tax credit You can also see the $0.02 of transaction gains related to preferential Bolivia exchange rates. you can also see the $0.02 of transaction gains related to preferential bolivia exchange rates Currency, other, and pension impacts offset each other. currency other and pension impacts offset each other Slides eight and nine detail the performance of our segments this quarter. slides eight and nine detail the performance of our segments this quarter Reported Metal Cutting sales were up 18% compared to the prior year quarter, with 12% organic growth and favorable foreign currency exchange of 6%. reported metal cutting sales were up 18% compared to the prior year quarter with 12% organic growth and favorable foreign currency exchange of 6% Regionally, excluding currency exchange, Asia Pacific increased 18%, the Americas increased 17%, and EMEA increased 3%. regionally excluding currency exchange asia pacific increased 18% the americas increased 17% and emea increased 3% Looking at sales by end market on a constant currency basis, aerospace & defense increased 27% year-over-year due to improved build rates in Americas and easing supply chain pressures in EMEA, combined with our global focus on deeper market penetration. looking at sales by end market on a constant currency basis aerospace & defense increased 27% year-over-year due to improved build rates in americas and easing supply chain pressures in emea combined with our global focus on deeper market penetration Energy grew 17% this quarter from data center power generation wins. General engineering increased 13% year-over-year due to price, volume gains in Asia Pacific, and stronger distribution sales in the Americas. Lastly, transportation increased 1% year-over-year due to price and market softness, primarily in EMEA. Metal Cutting adjusted operating margin of 11.2% increased 160 basis points year-over-year, primarily due to higher price and tariff surcharges, higher sales and production volumes, and incremental year-over-year restructuring savings of approximately $5 million. These factors were partially offset by higher compensation, tariffs and general inflation, and higher raw material costs. Turning to slide nine for Infrastructure. Energy grew 17% this quarter from data center power generation wins. energy grew 17% this quarter from data center power generation wins General engineering increased 13% year-over-year due to price, volume gains in Asia Pacific, and stronger distribution sales in the Americas. general engineering increased 13% year-over-year due to price volume gains in asia pacific and stronger distribution sales in the americas Lastly, transportation increased 1% year-over-year due to price and market softness, primarily in EMEA. lastly transportation increased 1% year-over-year due to price and market softness primarily in emea Metal Cutting adjusted operating margin of 11.2% increased 160 basis points year-over-year, primarily due to higher price and tariff surcharges, higher sales and production volumes, and incremental year-over-year restructuring savings of approximately $5 million. metal cutting adjusted operating margin of 11.2% increased 160 basis points year-over-year primarily due to higher price and tariff surcharges higher sales and production volumes and incremental year-over-year restructuring savings of approximately $5 million These factors were partially offset by higher compensation, tariffs and general inflation, and higher raw material costs. these factors were partially offset by higher compensation tariffs and general inflation and higher raw material costs Turning to slide nine for Infrastructure. turning to slide nine for infrastructure Reported Infrastructure sales increased 29% year-over-year, with organic growth of 30% and favorable foreign currency exchange of 4%, partially offset by a divestiture effect of -5%. Regionally, on a constant currency basis, America sales increased 42%, Asia Pacific increased 35%, and EMEA sales were flat. Looking at sales by end market on a constant currency basis, Earthworks increased 43% from higher demand in construction, as we were able to provide product to customers who were unable to source product from other players and share gain in underground mining. Energy increased 34%, mainly driven by price. General engineering increased 18% due to price and higher powder demand in Asia Pacific, partially offset by lower demand in EMEA. Reported Infrastructure sales increased 29% year-over-year, with organic growth of 30% and favorable foreign currency exchange of 4%, partially offset by a divestiture effect of -5%. reported infrastructure sales increased 29% year-over-year with organic growth of 30% and favorable foreign currency exchange of 4% partially offset by a divestiture effect of -5% Regionally, on a constant currency basis, America sales increased 42%, Asia Pacific increased 35%, and EMEA sales were flat. Looking at sales by end market on a constant currency basis, Earthworks increased 43% from higher demand in construction, as we were able to provide product to customers who were unable to source product from other players and share gain in underground mining. regionally on a constant currency basis america sales increased 42% asia pacific increased 35% and emea sales were flat. looking at sales by end market on a constant currency basis earthworks increased 43% from higher demand in construction as we were able to provide product to customers who were unable to source product from other players and share gain in underground mining Energy increased 34%, mainly driven by price. energy increased 34% mainly driven by price General engineering increased 18% due to price and higher powder demand in Asia Pacific, partially offset by lower demand in EMEA. general engineering increased 18% due to price and higher powder demand in asia pacific partially offset by lower demand in emea Lastly, aerospace and defense increased 17% due to defense orders driven by continued focus on growth initiatives and timing in the Americas. Adjusted Operating Margin increased 680 basis points year-over-year to 18.3%, primarily from the favorable timing of pricing compared to raw material costs of $39 million and year-over-year restructuring savings of $2 million. These items were partially offset by higher compensation costs and a prior year manufacturing tax credit of $8 million that did not repeat in the current year. Turning to slide 10 to review our Free Operating Cash Flow and balance sheet. Our third quarter year-to-date net cash flow from operating activities was $70 million compared to $130 million in the prior year period. Lastly, aerospace and defense increased 17% due to defense orders driven by continued focus on growth initiatives and timing in the Americas. lastly aerospace and defense increased 17% due to defense orders driven by continued focus on growth initiatives and timing in the americas Adjusted Operating Margin increased 680 basis points year-over-year to 18.3%, primarily from the favorable timing of pricing compared to raw material costs of $39 million and year-over-year restructuring savings of $2 million. adjusted operating margin increased 680 basis points year-over-year to 18.3% primarily from the favorable timing of pricing compared to raw material costs of $39 million and year-over-year restructuring savings of $2 million These items were partially offset by higher compensation costs and a prior year manufacturing tax credit of $8 million that did not repeat in the current year. these items were partially offset by higher compensation costs and a prior year manufacturing tax credit of $8 million that did not repeat in the current year Turning to slide 10 to review our Free Operating Cash Flow and balance sheet. turning to slide 10 to review our free operating cash flow and balance sheet Our third quarter year-to-date net cash flow from operating activities was $70 million compared to $130 million in the prior year period. our third quarter year-to-date net cash flow from operating activities was $70 million compared to $130 million in the prior year period This change was driven primarily by higher working capital from higher tungsten prices and increased volumes of tungsten to secure our supply chain. Our third quarter year to date Free operating cash flow decreased to $18 million from $63 million in the prior year, primarily due to the increased primary working capital changes I just referenced, partially offset by lower capital expenditures. On a dollar basis, year over year, primary working capital increased to $819 million from $654 million. On a percentage of sales basis, primary working capital increased to 32.4%. It's important to note that from both an earnings and cash flow perspective, the business is operating as it normally would when the price of tungsten rises. This change was driven primarily by higher working capital from higher tungsten prices and increased volumes of tungsten to secure our supply chain. this change was driven primarily by higher working capital from higher tungsten prices and increased volumes of tungsten to secure our supply chain Our third quarter year to date Free operating cash flow decreased to $18 million from $63 million in the prior year, primarily due to the increased primary working capital changes I just referenced, partially offset by lower capital expenditures. our third quarter year to date free operating cash flow decreased to $18 million from $63 million in the prior year primarily due to the increased primary working capital changes i just referenced partially offset by lower capital expenditures On a dollar basis, year over year, primary working capital increased to $819 million from $654 million. on a dollar basis year over year primary working capital increased to $819 million from $654 million On a percentage of sales basis, primary working capital increased to 32.4%. on a percentage of sales basis primary working capital increased to 32.4% It's important to note that from both an earnings and cash flow perspective, the business is operating as it normally would when the price of tungsten rises. it's important to note that from both an earnings and cash flow perspective the business is operating as it normally would when the price of tungsten rises In periods of rising tungsten prices, we always experience favorable price raw timing effects in sales and earnings while we experience headwinds to cash flow as primary working capital grows based on tungsten valuation. What is unique about the current circumstance is the magnitude of the rise in tungsten prices. In no recent time have we experienced a nine-fold increase. Due to the uncertain nature of tungsten pricing and the corresponding pressure it has placed on working capital, we once again made the decision not to repurchase shares. Net capital expenditures decreased to $52 million compared to $67 million in the prior year quarter. In total, we returned $15 million to shareholders through our dividends. Inception to date, we have repurchased $70 million or 3 million shares under our $200 million authorization. In periods of rising tungsten prices, we always experience favorable price raw timing effects in sales and earnings while we experience headwinds to cash flow as primary working capital grows based on tungsten valuation. in periods of rising tungsten prices we always experience favorable price raw timing effects in sales and earnings while we experience headwinds to cash flow as primary working capital grows based on tungsten valuation What is unique about the current circumstance is the magnitude of the rise in tungsten prices. what is unique about the current circumstance is the magnitude of the rise in tungsten prices In no recent time have we experienced a nine-fold increase. in no recent time have we experienced a nine-fold increase Due to the uncertain nature of tungsten pricing and the corresponding pressure it has placed on working capital, we once again made the decision not to repurchase shares. due to the uncertain nature of tungsten pricing and the corresponding pressure it has placed on working capital we once again made the decision not to repurchase shares Net capital expenditures decreased to $52 million compared to $67 million in the prior year quarter. net capital expenditures decreased to $52 million compared to $67 million in the prior year quarter In total, we returned $15 million to shareholders through our dividends. in total we returned $15 million to shareholders through our dividends Inception to date, we have repurchased $70 million or 3 million shares under our $200 million authorization. inception to date we have repurchased $70 million or 3 million shares under our $200 million authorization We remain committed to returning cash to shareholders while executing our strategy to drive growth and margin improvement. We continue to maintain a healthy balance sheet and debt maturity profile. At quarter end, we had ample liquidity to support the business with combined cash and revolver availability of approximately $742 million. As always, we remain well within our financial covenants. The full balance sheet can be found on slide 16 in the appendix. Now on slide 11, regarding our full year outlook. We now expect FY 2026 sales to be between $2.33 billion and $2.35 billion with volume ranging from 2%-3%, net price and tariff surcharge combined of approximately 16%. We anticipate an approximate 2% tailwind from foreign exchange. We remain committed to returning cash to shareholders while executing our strategy to drive growth and margin improvement. we remain committed to returning cash to shareholders while executing our strategy to drive growth and margin improvement We continue to maintain a healthy balance sheet and debt maturity profile. we continue to maintain a healthy balance sheet and debt maturity profile At quarter end, we had ample liquidity to support the business with combined cash and revolver availability of approximately $742 million. at quarter end we had ample liquidity to support the business with combined cash and revolver availability of approximately $742 million As always, we remain well within our financial covenants. as always we remain well within our financial covenants The full balance sheet can be found on slide 16 in the appendix. the full balance sheet can be found on slide 16 in the appendix Now on slide 11, regarding our full year outlook. now on slide 11 regarding our full year outlook We now expect FY 2026 sales to be between $2.33 billion and $2.35 billion with volume ranging from 2%-3%, net price and tariff surcharge combined of approximately 16%. we now expect fy 2026 sales to be between $2.33 billion and $2.35 billion with volume ranging from 2%-3% net price and tariff surcharge combined of approximately 16% We anticipate an approximate 2% tailwind from foreign exchange. we anticipate an approximate 2% tailwind from foreign exchange The increased outlook reflects additional pricing actions related to the increase in cost of tungsten since our February call. Specifically, within the fourth quarter, we expect net price and tariff surcharges combined of approximately 35% compared to the prior year quarter. We now expect Adjusted EPS in the range of $3.75-$4.00. This outlook includes approximately $2.45 related to the timing of price raw benefit due to the rise in tungsten prices, the significant majority of which affects the Infrastructure segment. This effect increased $1.50 from the prior outlook. The increased outlook reflects additional pricing actions related to the increase in cost of tungsten since our February call. the increased outlook reflects additional pricing actions related to the increase in cost of tungsten since our february call Specifically, within the fourth quarter, we expect net price and tariff surcharges combined of approximately 35% compared to the prior year quarter. specifically within the fourth quarter we expect net price and tariff surcharges combined of approximately 35% compared to the prior year quarter We now expect Adjusted EPS in the range of $3.75-$4.00. we now expect adjusted eps in the range of $3.75-$4.00 This outlook includes approximately $2.45 related to the timing of price raw benefit due to the rise in tungsten prices, the significant majority of which affects the Infrastructure segment. this outlook includes approximately $2.45 related to the timing of price raw benefit due to the rise in tungsten prices the significant majority of which affects the infrastructure segment This effect increased $1.50 from the prior outlook. this effect increased $1.50 from the prior outlook On the cash side, the full year outlook for capital expenditures is now anticipated to be approximately $85 million, and Free operating cash flow is expected to be approximately negative 30% of adjusted net income, reflecting the working capital pressure from the rise in cost of tungsten as discussed earlier. It's important to note our outlook does not include any effects from the conflict in the Middle East. The other assumptions in our outlook are noted on the slide. While it is earlier than normal, I would like to take a moment to provide a bit of a framework to help you think about FY 2027. First off, our current assumption is that tungsten prices will remain elevated for some period of time going forward. That implies there will be significant carryover pricing given the 35% price expectation for the fourth quarter. On the cash side, the full year outlook for capital expenditures is now anticipated to be approximately $85 million, and Free operating cash flow is expected to be approximately negative 30% of adjusted net income, reflecting the working capital pressure from the rise in cost of tungsten as discussed earlier. on the cash side the full year outlook for capital expenditures is now anticipated to be approximately $85 million and free operating cash flow is expected to be approximately negative 30% of adjusted net income reflecting the working capital pressure from the rise in cost of tungsten as discussed earlier It's important to note our outlook does not include any effects from the conflict in the Middle East. it's important to note our outlook does not include any effects from the conflict in the middle east The other assumptions in our outlook are noted on the slide. the other assumptions in our outlook are noted on the slide While it is earlier than normal, I would like to take a moment to provide a bit of a framework to help you think about FY 2027. while it is earlier than normal i would like to take a moment to provide a bit of a framework to help you think about fy 2027 First off, our current assumption is that tungsten prices will remain elevated for some period of time going forward. first off our current assumption is that tungsten prices will remain elevated for some period of time going forward That implies there will be significant carryover pricing given the 35% price expectation for the fourth quarter. that implies there will be significant carryover pricing given the 35% price expectation for the fourth quarter This carryover pricing will diminish as FY 2027 progresses since we would fully lap it in the fourth quarter. Keep in mind that this assumption holds price at the fourth quarter level. Also, we would expect price raw timing benefits in a flat tungsten environment will continue through the first half of FY 2027 with the bulk of the benefit occurring in the first quarter. Outside of tungsten, we would expect normal cost inflation going into FY 2027. However, we would see performance-based compensation reset the target, providing a $20 million tailwind. We will also see additional savings from restructuring continuous improvement of $10 million. We will provide the rest of the details, including market expectations for FY 2027 on our call in August. Back to you, Sanjay. This carryover pricing will diminish as FY 2027 progresses since we would fully lap it in the fourth quarter. this carryover pricing will diminish as fy 2027 progresses since we would fully lap it in the fourth quarter Keep in mind that this assumption holds price at the fourth quarter level. keep in mind that this assumption holds price at the fourth quarter level Also, we would expect price raw timing benefits in a flat tungsten environment will continue through the first half of FY 2027 with the bulk of the benefit occurring in the first quarter. Outside of tungsten, we would expect normal cost inflation going into FY 2027. also we would expect price raw timing benefits in a flat tungsten environment will continue through the first half of fy 2027 with the bulk of the benefit occurring in the first quarter. outside of tungsten we would expect normal cost inflation going into fy 2027 However, we would see performance-based compensation reset the target, providing a $20 million tailwind. however we would see performance-based compensation reset the target providing a $20 million tailwind We will also see additional savings from restructuring continuous improvement of $10 million. we will also see additional savings from restructuring continuous improvement of $10 million We will provide the rest of the details, including market expectations for FY 2027 on our call in August. we will provide the rest of the details including market expectations for fy 2027 on our call in august Back to you, Sanjay. back to you sanjay

Speaker 6: Thank you, Pat. Turning to slide 12. Let me take a few minutes to summarize. We have delivered three strong quarters so far in fiscal 2026, driven by price and modest improvements in various end markets, project wins on the commercial side, and productivity and cost improvement actions. Going forward, we will remain focused on the strategic growth initiatives and lean transformation we have underway, while also exploring ways to strengthen our portfolio over time. Additionally, we will continue to actively manage our tungsten supply chain. In summary, we remain confident in our plan for long-term value creation for shareholders. With that, operator, please open the line for questions. Thank you, Pat. thank you pat Turning to slide 12. turning to slide 12 Let me take a few minutes to summarize. let me take a few minutes to summarize We have delivered three strong quarters so far in fiscal 2026, driven by price and modest improvements in various end markets, project wins on the commercial side, and productivity and cost improvement actions. we have delivered three strong quarters so far in fiscal 2026 driven by price and modest improvements in various end markets project wins on the commercial side and productivity and cost improvement actions Going forward, we will remain focused on the strategic growth initiatives and lean transformation we have underway, while also exploring ways to strengthen our portfolio over time. going forward we will remain focused on the strategic growth initiatives and lean transformation we have underway while also exploring ways to strengthen our portfolio over time Additionally, we will continue to actively manage our tungsten supply chain. additionally we will continue to actively manage our tungsten supply chain In summary, we remain confident in our plan for long-term value creation for shareholders. in summary we remain confident in our plan for long-term value creation for shareholders With that, operator, please open the line for questions. with that operator please open the line for questions

Speaker 4: Thank you. We will now begin the question and answer session. Today's first question comes from Stephen Volkmann with Jefferies. Please proceed. Thank you. thank you We will now begin the question and answer session. we will now begin the question and answer session Today's first question comes from Stephen Volkmann with Jefferies. today's first question comes from stephen volkmann with jefferies Please proceed. please proceed

Speaker 5: Morning, Steve. Morning, Steve. morning steve

Speaker 7: Hi. Good morning, guys. Thanks for taking the question. Can we just start with, what do you think, Pat? What was the incremental margin on the volume in the quarter? Hi. hi Good morning, guys. good morning guys Thanks for taking the question. thanks for taking the question Can we just start with, what do you think, Pat? can we just start with what do you think pat What was the incremental margin on the volume in the quarter? what was the incremental margin on the volume in the quarter

Speaker 5: Yeah, I think the volume incremental margin was pretty normal for us, Steve. I think there's a couple things obviously in the quarter that are kind of masking that because we've got some big numbers being thrown around there. You got the $39 million worth of price/raw material timing benefit coming through. You know, in the prior year, we had that $8 million advanced manufacturing tax credit. Then I'd say the third component there that's just unusual for us is variable compensation. Last year, you know, we would have been on the low side of accruing for variable compensation. This year, given performance, we're a bit on the high side. You know, in the quarter, that's like an $18 million number there in and of itself. Then, of course, you have some benefits coming through from restructuring. Yeah, I think the volume incremental margin was pretty normal for us, Steve. yeah i think the volume incremental margin was pretty normal for us steve I think there's a couple things obviously in the quarter that are kind of masking that because we've got some big numbers being thrown around there. i think there's a couple things obviously in the quarter that are kind of masking that because we've got some big numbers being thrown around there You got the $39 million worth of price/raw material timing benefit coming through. you got the $39 million worth of price/raw material timing benefit coming through You know, in the prior year, we had that $8 million advanced manufacturing tax credit. you know in the prior year we had that $8 million advanced manufacturing tax credit Then I'd say the third component there that's just unusual for us is variable compensation. then i'd say the third component there that's just unusual for us is variable compensation Last year, you know, we would have been on the low side of accruing for variable compensation. last year you know we would have been on the low side of accruing for variable compensation This year, given performance, we're a bit on the high side. this year given performance we're a bit on the high side You know, in the quarter, that's like an $18 million number there in and of itself. you know in the quarter that's like an $18 million number there in and of itself Then, of course, you have some benefits coming through from restructuring. then of course you have some benefits coming through from restructuring When you pull all that back, volume leverage is pretty normal for the business. When you pull all that back, volume leverage is pretty normal for the business. when you pull all that back volume leverage is pretty normal for the business

Speaker 7: Okay. It sounds like you've adjusted price. You obviously have a big forecast for the fiscal fourth quarter. Are we, like, where we need to be today in terms of price? Or will there be more price that sort of flows through in the fourth quarter and maybe even later into the summer? Okay. okay It sounds like you've adjusted price. it sounds like you've adjusted price You obviously have a big forecast for the fiscal fourth quarter. you obviously have a big forecast for the fiscal fourth quarter Are we, like, where we need to be today in terms of price? are we like where we need to be today in terms of price Or will there be more price that sort of flows through in the fourth quarter and maybe even later into the summer? or will there be more price that sort of flows through in the fourth quarter and maybe even later into the summer

Speaker 6: Steve, this is Sanjay. As you know, this is a very dynamic situation that we are, you know, managing, and we'll continue to monitor how that moves. As, you know, even the last call, you know, you talked about that, how it was moving on a daily basis, hourly basis. That's why, you know, we will just tell you that we are looking at different market variables. And our definitely our goal here is to fully offset the cost implication of tungsten. Steve, this is Sanjay. steve this is sanjay As you know, this is a very dynamic situation that we are, you know, managing, and we'll continue to monitor how that moves. as you know this is a very dynamic situation that we are you know managing and we'll continue to monitor how that moves As, you know, even the last call, you know, you talked about that, how it was moving on a daily basis, hourly basis. as you know even the last call you know you talked about that how it was moving on a daily basis hourly basis That's why, you know, we will just tell you that we are looking at different market variables. that's why you know we will just tell you that we are looking at different market variables And our definitely our goal here is to fully offset the cost implication of tungsten. and our definitely our goal here is to fully offset the cost implication of tungsten

Speaker 5: I would just add to that, Steve. We did put price in here in the market, you know, you know, various dates by region, but effectively, in the April-May timeframe. I would just add to that, Steve. i would just add to that steve We did put price in here in the market, you know, you know, various dates by region, but effectively, in the April-May timeframe. we did put price in here in the market you know you know various dates by region but effectively in the april-may timeframe

Speaker 7: April-May. Okay. All right. Thank you, guys. April-May. april-may Okay. okay All right. all right Thank you, guys. thank you guys

Speaker 4: The next question comes from Steven Fisher with UBS. Please proceed. The next question comes from Steven Fisher with UBS. the next question comes from steven fisher with ubs Please proceed. please proceed

Speaker 5: Morning, Steve. Morning, Steve. morning steve

Speaker 9: Thanks. Good morning, and congrats on managing all the complexities here. Just to follow up on that last question. Just curious about the differences between Metal Cutting and Infrastructure. I know with Infrastructure it does tend to be fairly quick to capture that pricing. I'm just curious to confidence that you can really fully pass on the price increases within the Metal Cutting. You know, what the frequency of timing you can put that through. You know, essentially, you know, are the customers that are going to these distributors, are they really seeing a 35% increase on the shelf there from these products? Just curious if there's any real differences there in dynamics between Metal Cutting and Infrastructure. Thanks. thanks Good morning, and congrats on managing all the complexities here. good morning and congrats on managing all the complexities here Just to follow up on that last question. just to follow up on that last question Just curious about the differences between Metal Cutting and Infrastructure. just curious about the differences between metal cutting and infrastructure I know with Infrastructure it does tend to be fairly quick to capture that pricing. i know with infrastructure it does tend to be fairly quick to capture that pricing I'm just curious to confidence that you can really fully pass on the price increases within the Metal Cutting. i'm just curious to confidence that you can really fully pass on the price increases within the metal cutting You know, what the frequency of timing you can put that through. you know what the frequency of timing you can put that through You know, essentially, you know, are the customers that are going to these distributors, are they really seeing a 35% increase on the shelf there from these products? you know essentially you know are the customers that are going to these distributors are they really seeing a 35% increase on the shelf there from these products Just curious if there's any real differences there in dynamics between Metal Cutting and Infrastructure. just curious if there's any real differences there in dynamics between metal cutting and infrastructure

Speaker 6: Yeah, sure, Steve. I think first of all, like, in past, we have talked about the Metal Cutting is a list price business. Also when you look at the material flow, you know, there is more lag in that, you know, but Infrastructure sees that first. Based on the different product, you know, we also have like different content of how much tungsten is used. That will reflect, you know, when you look at the growth numbers, sales growth numbers, you know, by different end markets within the different, you know, like segments. You know, you will see in some cases very, very high number. Many cases, you know, those are driven by the higher content of tungsten. We have, you know, in Infrastructure, many customers who are on the index price basis, but many others are not. Yeah, sure, Steve. yeah sure steve I think first of all, like, in past, we have talked about the Metal Cutting is a list price business. i think first of all like in past we have talked about the metal cutting is a list price business Also when you look at the material flow, you know, there is more lag in that, you know, but Infrastructure sees that first. also when you look at the material flow you know there is more lag in that you know but infrastructure sees that first Based on the different product, you know, we also have like different content of how much tungsten is used. based on the different product you know we also have like different content of how much tungsten is used That will reflect, you know, when you look at the growth numbers, sales growth numbers, you know, by different end markets within the different, you know, like segments. that will reflect you know when you look at the growth numbers sales growth numbers you know by different end markets within the different you know like segments You know, you will see in some cases very, very high number. you know you will see in some cases very very high number Many cases, you know, those are driven by the higher content of tungsten. many cases you know those are driven by the higher content of tungsten We have, you know, in Infrastructure, many customers who are on the index price basis, but many others are not. we have you know in infrastructure many customers who are on the index price basis but many others are not We do move relatively quicker on Infrastructure pricing. In Metal Cutting, you know, there's a three to six month lag generally. Based on, you know, the list price change, you know, we implement that. We do move relatively quicker on Infrastructure pricing. we do move relatively quicker on infrastructure pricing In Metal Cutting, you know, there's a three to six month lag generally. in metal cutting you know there's a three to six month lag generally Based on, you know, the list price change, you know, we implement that. based on you know the list price change you know we implement that

Speaker 9: Okay. Then maybe just, a little more color on what you're seeing in energy and how you see that evolving for the next few months. Just curious what you are hearing from your customers there, is that something you're preparing for kind of a bit more of a ramp up? Okay. okay Then maybe just, a little more color on what you're seeing in energy and how you see that evolving for the next few months. then maybe just a little more color on what you're seeing in energy and how you see that evolving for the next few months Just curious what you are hearing from your customers there, is that something you're preparing for kind of a bit more of a ramp up? just curious what you are hearing from your customers there is that something you're preparing for kind of a bit more of a ramp up

Speaker 6: Yeah. On the energy, I'll divide the question into two pieces here. First is the, you know, AI power generation related energy demands, which we see more so in the Metal Cutting side. Definitely, as you know, there's a lot of industrial activities, driven around the world, but a lot in the U.S. also. And we are very well-positioned with our, you know, innovative solutions, application support, and custom solutions, you know, for our customers, and we are doing pretty good job in winning share there. And I do believe that that will continue. And as you have seen in the, you know, even this quarter report, you know, we talk about that quite a bit. Yeah. yeah On the energy, I'll divide the question into two pieces here. on the energy i'll divide the question into two pieces here First is the, you know, AI power generation related energy demands, which we see more so in the Metal Cutting side. first is the you know ai power generation related energy demands which we see more so in the metal cutting side Definitely, as you know, there's a lot of industrial activities, driven around the world, but a lot in the U.S. also. definitely as you know there's a lot of industrial activities driven around the world but a lot in the u.s also And we are very well-positioned with our, you know, innovative solutions, application support, and custom solutions, you know, for our customers, and we are doing pretty good job in winning share there. and we are very well-positioned with our you know innovative solutions application support and custom solutions you know for our customers and we are doing pretty good job in winning share there And I do believe that that will continue. and i do believe that that will continue And as you have seen in the, you know, even this quarter report, you know, we talk about that quite a bit. and as you have seen in the you know even this quarter report you know we talk about that quite a bit When it comes to the other side of energy, which is more or less, let's say in oil and gas, it will definitely touch a little bit Metal Cutting, but a lot more in the Infrastructure side. As we talked about it, that there is a little bit of optimistic, you know, view, it's cautiously optimistic view. The rig count projection right now has gone from 527 to 532. If you look in the market, you know, there are two camps. You know, there are people who are saying that there will be a lot more investment coming up here. There are people who are saying that, you know, this is temporary and things like that. Our overall conclusion based on what we see, the trough is behind us, and we should see some steady improvement going forward. When it comes to the other side of energy, which is more or less, let's say in oil and gas, it will definitely touch a little bit Metal Cutting, but a lot more in the Infrastructure side. when it comes to the other side of energy which is more or less let's say in oil and gas it will definitely touch a little bit metal cutting but a lot more in the infrastructure side As we talked about it, that there is a little bit of optimistic, you know, view, it's cautiously optimistic view. as we talked about it that there is a little bit of optimistic you know view it's cautiously optimistic view The rig count projection right now has gone from 527 to 532. the rig count projection right now has gone from 527 to 532 If you look in the market, you know, there are two camps. if you look in the market you know there are two camps You know, there are people who are saying that there will be a lot more investment coming up here. you know there are people who are saying that there will be a lot more investment coming up here There are people who are saying that, you know, this is temporary and things like that. there are people who are saying that you know this is temporary and things like that Our overall conclusion based on what we see, the trough is behind us, and we should see some steady improvement going forward. our overall conclusion based on what we see the trough is behind us and we should see some steady improvement going forward

Speaker 9: Thank you very much. Thank you very much. thank you very much

Speaker 4: Our next question is from Julian Mitchell with Barclays. Please proceed. Our next question is from Julian Mitchell with Barclays. our next question is from julian mitchell with barclays Please proceed. please proceed

Speaker 5: Hi, Julian. Hi, Julian. hi julian

Speaker 2: Hi, good morning. Hey, just maybe a first question just to try and clarify the tungsten related sort of tailwind to EPS. I think you said $2.45 for FY 2026 in aggregate. In the fourth quarter, is it around $1.75? Is that roughly the right math? Just wanted to check that. Hi, good morning. hi good morning Hey, just maybe a first question just to try and clarify the tungsten related sort of tailwind to EPS. hey just maybe a first question just to try and clarify the tungsten related sort of tailwind to eps I think you said $2.45 for FY 2026 in aggregate. i think you said $2.45 for fy 2026 in aggregate In the fourth quarter, is it around $1.75? in the fourth quarter is it around $1.75 Is that roughly the right math? is that roughly the right math Just wanted to check that. just wanted to check that

Speaker 5: Yeah. I think if you, if you kind of back into that, Julian, I think we had about in EPS terms, about $0.16, I think in Q2, $0.39 here in Q3, and so you just force the rest out of Q4. Yeah. yeah I think if you, if you kind of back into that, Julian, I think we had about in EPS terms, about $0.16, I think in Q2, $0.39 here in Q3, and so you just force the rest out of Q4. i think if you if you kind of back into that julian i think we had about in eps terms about $0.16 i think in q2 $0.39 here in q3 and so you just force the rest out of q4

Speaker 2: That's great. Thank you, Pat. Maybe, Pat, help us understand those moving parts around the sort of cash flow, year-ending leverage, when you might look to resume the share repurchase program. You know, help us understand what that free cash flow in the fourth fiscal quarter is looking like and you know, how quickly does it sort of reverse following that based on where tungsten is today? That's great. that's great Thank you, Pat. thank you pat Maybe, Pat, help us understand those moving parts around the sort of cash flow, year-ending leverage, when you might look to resume the share repurchase program. maybe pat help us understand those moving parts around the sort of cash flow year-ending leverage when you might look to resume the share repurchase program You know, help us understand what that free cash flow in the fourth fiscal quarter is looking like and you know, how quickly does it sort of reverse following that based on where tungsten is today? you know help us understand what that free cash flow in the fourth fiscal quarter is looking like and you know how quickly does it sort of reverse following that based on where tungsten is today

Speaker 5: Yep. I would think, you know, think about it this way, and we talk about this from a, you know, how does the cost structure lag from an income statement perspective? That obviously the balance sheet's following that too. As tungsten has ramped, we're gonna continue to see inventory build on a valuation basis here, you know, in the fourth quarter. That's really what's driving that, you know, negative free operating cash flow for the full year. As that kind of builds up, you know, we would anticipate you get about a quarter or two out, again, from a change in tungsten, we would kind of get flatlined. The business would then move back to its normal, you know, pattern in terms of its cash generation ability. Yep. yep I would think, you know, think about it this way, and we talk about this from a, you know, how does the cost structure lag from an income statement perspective? i would think you know think about it this way and we talk about this from a you know how does the cost structure lag from an income statement perspective That obviously the balance sheet's following that too. that obviously the balance sheet's following that too As tungsten has ramped, we're gonna continue to see inventory build on a valuation basis here, you know, in the fourth quarter. as tungsten has ramped we're gonna continue to see inventory build on a valuation basis here you know in the fourth quarter That's really what's driving that, you know, negative free operating cash flow for the full year. that's really what's driving that you know negative free operating cash flow for the full year As that kind of builds up, you know, we would anticipate you get about a quarter or two out, again, from a change in tungsten, we would kind of get flatlined. as that kind of builds up you know we would anticipate you get about a quarter or two out again from a change in tungsten we would kind of get flatlined The business would then move back to its normal, you know, pattern in terms of its cash generation ability. the business would then move back to its normal you know pattern in terms of its cash generation ability Obviously, as I said, kind of in the scripted remarks here, the magnitude of what we're dealing with here is just significantly larger than what we've seen in the past, right? Think about that from a share repurchase perspective. Look, you know, we've been very committed to returning cash to shareholders through the dividend program as well as through our repurchase program. You know, our desires have been at a minimum to offset dilution from equity compensation programs. We just fundamentally think that's good housekeeping. You know, in the current environment, you know, what would we wanna see to really resume that? We'd really wanna see some stabilization and clarity about where tungsten is headed. You know, our obvious thesis here at the moment is that tungsten should be relatively stable. You know, that being said, it's a very dynamic marketplace today. Obviously, as I said, kind of in the scripted remarks here, the magnitude of what we're dealing with here is just significantly larger than what we've seen in the past, right? obviously as i said kind of in the scripted remarks here the magnitude of what we're dealing with here is just significantly larger than what we've seen in the past right Think about that from a share repurchase perspective. think about that from a share repurchase perspective Look, you know, we've been very committed to returning cash to shareholders through the dividend program as well as through our repurchase program. look you know we've been very committed to returning cash to shareholders through the dividend program as well as through our repurchase program You know, our desires have been at a minimum to offset dilution from equity compensation programs. you know our desires have been at a minimum to offset dilution from equity compensation programs We just fundamentally think that's good housekeeping. we just fundamentally think that's good housekeeping You know, in the current environment, you know, what would we wanna see to really resume that? you know in the current environment you know what would we wanna see to really resume that We'd really wanna see some stabilization and clarity about where tungsten is headed. we'd really wanna see some stabilization and clarity about where tungsten is headed You know, our obvious thesis here at the moment is that tungsten should be relatively stable. you know our obvious thesis here at the moment is that tungsten should be relatively stable You know, that being said, it's a very dynamic marketplace today. you know that being said it's a very dynamic marketplace today

Speaker 2: That's great. Thank you. That's great. that's great Thank you. thank you

Speaker 4: The next question is from Steve Barger with KeyBanc Capital Markets. Please proceed. The next question is from Steve Barger with KeyBanc Capital Markets. the next question is from steve barger with keybanc capital markets Please proceed. please proceed

Speaker 5: Hi, Steve. Hi, Steve. hi steve

Speaker 4: Steve, you may be muted on your side. Steve, you may be muted on your side. steve you may be muted on your side

Speaker 8: Yep, sorry. Thanks. Hey, Pat. You talked about good activity in aerospace and defense and some share gains in Infrastructure and Earthworks. At the same time, I think you said some competitors are turning away orders, presumably on price cost. Can you talk about what you think is happening with pre-buy and just, you know, people scrambling to get product due to inflation and then, you know, how does that map to the longer term durability of share gains? Yep, sorry. yep sorry Thanks. thanks Hey, Pat. hey pat You talked about good activity in aerospace and defense and some share gains in Infrastructure and Earthworks. you talked about good activity in aerospace and defense and some share gains in infrastructure and earthworks At the same time, I think you said some competitors are turning away orders, presumably on price cost. at the same time i think you said some competitors are turning away orders presumably on price cost Can you talk about what you think is happening with pre-buy and just, you know, people scrambling to get product due to inflation and then, you know, how does that map to the longer term durability of share gains? can you talk about what you think is happening with pre-buy and just you know people scrambling to get product due to inflation and then you know how does that map to the longer term durability of share gains

Speaker 6: Yeah. Steve, this is Sanjay. I'll take that first. First of all, you know, we did see some pre-buy. It was mostly in the Infrastructure's Earthwork, you know, construction business. Beyond that, you know, there was not much material, you know, impact on pre-buys in the rest of the business. We did see opportunities, you know, also in the Earthworks you know, business within Infrastructure and also in aerospace and defense in Metal Cutting, where we did see some evidence where we were able to capture where competitors were not able to either provide proper lead time or even just meet the demand. That's how we saw that. Does that answer your question? Yeah. yeah Steve, this is Sanjay. steve this is sanjay I'll take that first. i'll take that first First of all, you know, we did see some pre-buy. first of all you know we did see some pre-buy It was mostly in the Infrastructure's Earthwork, you know, construction business. it was mostly in the infrastructure's earthwork you know construction business Beyond that, you know, there was not much material, you know, impact on pre-buys in the rest of the business. beyond that you know there was not much material you know impact on pre-buys in the rest of the business We did see opportunities, you know, also in the Earthworks you know, business within Infrastructure and also in aerospace and defense in Metal Cutting, where we did see some evidence where we were able to capture where competitors were not able to either provide proper lead time or even just meet the demand. we did see opportunities you know also in the earthworks you know business within infrastructure and also in aerospace and defense in metal cutting where we did see some evidence where we were able to capture where competitors were not able to either provide proper lead time or even just meet the demand That's how we saw that. that's how we saw that Does that answer your question? does that answer your question

Speaker 8: I think, so, just so I'm clear, why do you think the competitors are not able to meet demand right now? I think, so, just so I'm clear, why do you think the competitors are not able to meet demand right now? i think so just so i'm clear why do you think the competitors are not able to meet demand right now

Speaker 6: Yeah. Well, we have seen some competitors are definitely having problem in getting raw material. If even if they're getting raw materials, they are also pretty booked, and they are, you know, putting longer lead times. In some cases, you know, we are able to provide a better lead time, and that's how we got it. Yeah. yeah Well, we have seen some competitors are definitely having problem in getting raw material. well we have seen some competitors are definitely having problem in getting raw material If even if they're getting raw materials, they are also pretty booked, and they are, you know, putting longer lead times. if even if they're getting raw materials they are also pretty booked and they are you know putting longer lead times In some cases, you know, we are able to provide a better lead time, and that's how we got it. in some cases you know we are able to provide a better lead time and that's how we got it

Speaker 5: I would say that, I mean, the opportunity obviously there, Steve, is that there is short-term disruption in the marketplace that gives us an opportunity to quote and win business that maybe we wouldn't normally have seen the same opportunities on. The opportunity for us and the challenge to our sales organization, quite frankly, is to convert that to permanent long-term share capture. I would say that, I mean, the opportunity obviously there, Steve, is that there is short-term disruption in the marketplace that gives us an opportunity to quote and win business that maybe we wouldn't normally have seen the same opportunities on. i would say that i mean the opportunity obviously there steve is that there is short-term disruption in the marketplace that gives us an opportunity to quote and win business that maybe we wouldn't normally have seen the same opportunities on The opportunity for us and the challenge to our sales organization, quite frankly, is to convert that to permanent long-term share capture. the opportunity for us and the challenge to our sales organization quite frankly is to convert that to permanent long-term share capture

Speaker 6: Yeah. Yeah. yeah

Speaker 5: That's what we're going for here. That's what we're going for here. that's what we're going for here

Speaker 6: Yeah, one more thing, Steve, I will add to that. I think, you know, for investors who may be, you know, listening to us first time, I do wanna mention that this situation that we have with tungsten is not driven by higher demand. It is driven by supply constraints. As in past, you know, you have seen some of the times tungsten went up. At the same time, oil and gas and some of the other industry which consumes a lot of tungsten went up. This time it is because of supply constraint and also export controls. Just simply in a big portion of market, there is less supply right now. Yeah, one more thing, Steve, I will add to that. yeah one more thing steve i will add to that I think, you know, for investors who may be, you know, listening to us first time, I do wanna mention that this situation that we have with tungsten is not driven by higher demand. i think you know for investors who may be you know listening to us first time i do wanna mention that this situation that we have with tungsten is not driven by higher demand It is driven by supply constraints. it is driven by supply constraints As in past, you know, you have seen some of the times tungsten went up. as in past you know you have seen some of the times tungsten went up At the same time, oil and gas and some of the other industry which consumes a lot of tungsten went up. at the same time oil and gas and some of the other industry which consumes a lot of tungsten went up This time it is because of supply constraint and also export controls. this time it is because of supply constraint and also export controls Just simply in a big portion of market, there is less supply right now. just simply in a big portion of market there is less supply right now

Speaker 8: Yeah, understood. That actually is a good segue to my next question. If I heard you right, you're slowing facility closures and the last quarter you expected restructuring savings of $125 million, now that's $110 million. Are those two things related? If so, why? I Maybe I missed it. Why are you slowing facility closure? Yeah, understood. yeah understood That actually is a good segue to my next question. that actually is a good segue to my next question If I heard you right, you're slowing facility closures and the last quarter you expected restructuring savings of $125 million, now that's $110 million. if i heard you right you're slowing facility closures and the last quarter you expected restructuring savings of $125 million now that's $110 million Are those two things related? are those two things related If so, why? if so why I Maybe I missed it. i maybe i missed it Why are you slowing facility closure? why are you slowing facility closure

Speaker 6: Yeah, very good question. As we said in the prepared remarks, and I will clarify that a little bit more, obviously, you know, we are seeing right now more, you know, growth opportunities, which is driven by all three factors: market improving, then also, you know, share gain through our routine strategic growth initiatives that we have talked about it in past. On top of that, you know, and window of opportunity from the tungsten situation. We look at how we can create the best value for all our stakeholders, and we feel right now that allocating more resources on growth opportunities and, you know, driving our, you know, routine business leverage will create more shareholder value for now, and that's how we are, you know, making the shift. However, we are not stopping the work on footprint optimization. Yeah, very good question. yeah very good question As we said in the prepared remarks, and I will clarify that a little bit more, obviously, you know, we are seeing right now more, you know, growth opportunities, which is driven by all three factors: market improving, then also, you know, share gain through our routine strategic growth initiatives that we have talked about it in past. as we said in the prepared remarks and i will clarify that a little bit more obviously you know we are seeing right now more you know growth opportunities which is driven by all three factors market improving then also you know share gain through our routine strategic growth initiatives that we have talked about it in past On top of that, you know, and window of opportunity from the tungsten situation. on top of that you know and window of opportunity from the tungsten situation We look at how we can create the best value for all our stakeholders, and we feel right now that allocating more resources on growth opportunities and, you know, driving our, you know, routine business leverage will create more shareholder value for now, and that's how we are, you know, making the shift. we look at how we can create the best value for all our stakeholders and we feel right now that allocating more resources on growth opportunities and you know driving our you know routine business leverage will create more shareholder value for now and that's how we are you know making the shift However, we are not stopping the work on footprint optimization. however we are not stopping the work on footprint optimization We'll continue to work on it. Timeline will shift a little bit. We'll come back and give you more information on that at appropriate time. We'll continue to work on it. we'll continue to work on it Timeline will shift a little bit. timeline will shift a little bit We'll come back and give you more information on that at appropriate time. we'll come back and give you more information on that at appropriate time

Speaker 8: Got it. Thank you. Got it. got it Thank you. thank you

Speaker 4: Our next question is from Tami Zakaria with JPMorgan. Please proceed. Our next question is from Tami Zakaria with JP Morgan. our next question is from tami zakaria with jp morgan Please proceed. please proceed

Speaker 6: Hi, Tami. Hi, Tami. hi tami

Speaker 10: Good morning. Thank you so much. First question is on tariffs. I think IEEPA got struck down. Do you expect to file any refunds? If so, what kind of what amount of refund would you expect to collect? Good morning. good morning Thank you so much. thank you so much First question is on tariffs. first question is on tariffs I think IEEPA got struck down. i think ieepa got struck down Do you expect to file any refunds? do you expect to file any refunds If so, what kind of what amount of refund would you expect to collect? if so what kind of what amount of refund would you expect to collect

Speaker 6: Tami, morning. First of all, as you know, this is also one of the very dynamic situation. We still have, you know, tariffs in place, we are not, you know, taking any hasty action on this yet. I think we're continuing to, you know, monitor, based on that, you know, we'll make decisions. Nothing more to share at this point in, you know, today's call. Tami, morning. tami morning First of all, as you know, this is also one of the very dynamic situation. first of all as you know this is also one of the very dynamic situation We still have, you know, tariffs in place, we are not, you know, taking any hasty action on this yet. we still have you know tariffs in place we are not you know taking any hasty action on this yet I think we're continuing to, you know, monitor, based on that, you know, we'll make decisions. i think we're continuing to you know monitor based on that you know we'll make decisions Nothing more to share at this point in, you know, today's call. nothing more to share at this point in you know today's call

Speaker 10: Understood. That's fair. My second question is, for the fourth quarter, just wanted to clarify, do you expect volume growth to be in that 2%-3% full year range or it could come in above that? Understood. understood That's fair. that's fair My second question is, for the fourth quarter, just wanted to clarify, do you expect volume growth to be in that 2%-3% full year range or it could come in above that? my second question is for the fourth quarter just wanted to clarify do you expect volume growth to be in that 2%-3% full year range or it could come in above that

Speaker 6: Yes, it's the full year range. Yes, it's the full year range. yes it's the full year range

Speaker 5: I would say it's depending on where you're at in that range, Tami, it's gonna be low to, like, the high end, maybe up into the mid-single digits. You obviously factor in 35% price we talked about from a script perspective. You know, don't forget we had a divestiture in the prior year, and you got a little bit of FX in there as well. That kinda is the math there in terms you think about the top line. I would emphasize, you know, as we just think about, you know, the profitability, you know, that obviously we're going to see sequentially profitability step up pretty significantly here based on that price raw. I would say it's depending on where you're at in that range, Tami, it's gonna be low to, like, the high end, maybe up into the mid-single digits. i would say it's depending on where you're at in that range tami it's gonna be low to like the high end maybe up into the mid-single digits You obviously factor in 35% price we talked about from a script perspective. you obviously factor in 35% price we talked about from a script perspective You know, don't forget we had a divestiture in the prior year, and you got a little bit of FX in there as well. you know don't forget we had a divestiture in the prior year and you got a little bit of fx in there as well That kinda is the math there in terms you think about the top line. that kinda is the math there in terms you think about the top line I would emphasize, you know, as we just think about, you know, the profitability, you know, that obviously we're going to see sequentially profitability step up pretty significantly here based on that price raw. i would emphasize you know as we just think about you know the profitability you know that obviously we're going to see sequentially profitability step up pretty significantly here based on that price raw You know, given the circumstances that we're in today, again, this is unusual, we're gonna have some of that price raw realization in Metal Cutting too. When you think about, again, the margin performance of the business as a whole and the two segments, pretty big ramp up for both of them. You know, given the circumstances that we're in today, again, this is unusual, we're gonna have some of that price raw realization in Metal Cutting too. you know given the circumstances that we're in today again this is unusual we're gonna have some of that price raw realization in metal cutting too When you think about, again, the margin performance of the business as a whole and the two segments, pretty big ramp up for both of them. when you think about again the margin performance of the business as a whole and the two segments pretty big ramp up for both of them

Speaker 10: Understood. It's helpful. Thank you. Understood. understood It's helpful. it's helpful Thank you. thank you

Speaker 4: The next question comes from Angel Castillo with Morgan Stanley. Please proceed. The next question comes from Angel Castillo with Morgan Stanley. the next question comes from angel castillo with morgan stanley Please proceed. please proceed

Speaker 1: Hi, good morning. Thanks for taking my question. Just maybe first wanted to start out on the market share gains. That's been a meaningful driver, I guess, of the organic growth that you've been seeing. Just curious if you could unpack that a little bit more. I guess I'm trying to understand, you know, if it's possible to, I guess, separate how much of the share gains you think was maybe driven by kind of value proposition or, you know, project wins that tend to be a little bit stickier versus where it's maybe related to kind of competitor supply constraints. Hi, good morning. hi good morning Thanks for taking my question. thanks for taking my question Just maybe first wanted to start out on the market share gains. just maybe first wanted to start out on the market share gains That's been a meaningful driver, I guess, of the organic growth that you've been seeing. that's been a meaningful driver i guess of the organic growth that you've been seeing Just curious if you could unpack that a little bit more. just curious if you could unpack that a little bit more I guess I'm trying to understand, you know, if it's possible to, I guess, separate how much of the share gains you think was maybe driven by kind of value proposition or, you know, project wins that tend to be a little bit stickier versus where it's maybe related to kind of competitor supply constraints. i guess i'm trying to understand you know if it's possible to i guess separate how much of the share gains you think was maybe driven by kind of value proposition or you know project wins that tend to be a little bit stickier versus where it's maybe related to kind of competitor supply constraints In particular, I guess to the latter bucket, curious if you kind of expect that, you know, as over time, as kind of supply, perhaps normalizes, if you would expect to kind of give that back or if there's any kind of stickiness to, you know, some of those shifts that we might be seeing on the kind of supply-driven angle. Also, if you could comment on the promotional campaigns you talked about as well, that'd be helpful. In particular, I guess to the latter bucket, curious if you kind of expect that, you know, as over time, as kind of supply, perhaps normalizes, if you would expect to kind of give that back or if there's any kind of stickiness to, you know, some of those shifts that we might be seeing on the kind of supply-driven angle. in particular i guess to the latter bucket curious if you kind of expect that you know as over time as kind of supply perhaps normalizes if you would expect to kind of give that back or if there's any kind of stickiness to you know some of those shifts that we might be seeing on the kind of supply-driven angle Also, if you could comment on the promotional campaigns you talked about as well, that'd be helpful. also if you could comment on the promotional campaigns you talked about as well that'd be helpful

Speaker 6: Yeah, sure, Angel. First of all, you know, again, it is a combination of all three factors. You know, market improving, and we think that that should continue. Second will be in our strategic growth initiatives, we have talked about in past, you know, those will include, for example, what we have done in aerospace and defense, energy and in general engineering, Earthworks and so on and so forth. How we have gone about winning bigger share of wallet with existing customers, also, you know, going out and winning business at different tiers of the supply chain or our customer value chain. Those I will tell you that are very sustainable because we are winning those using our core competencies from product and innovation and our commercial excellence and our operational capabilities. Yeah, sure, Angel. yeah sure angel First of all, you know, again, it is a combination of all three factors. first of all you know again it is a combination of all three factors You know, market improving, and we think that that should continue. you know market improving and we think that that should continue Second will be in our strategic growth initiatives, we have talked about in past, you know, those will include, for example, what we have done in aerospace and defense, energy and in general engineering, Earthworks and so on and so forth. second will be in our strategic growth initiatives we have talked about in past you know those will include for example what we have done in aerospace and defense energy and in general engineering earthworks and so on and so forth How we have gone about winning bigger share of wallet with existing customers, also, you know, going out and winning business at different tiers of the supply chain or our customer value chain. how we have gone about winning bigger share of wallet with existing customers also you know going out and winning business at different tiers of the supply chain or our customer value chain Those I will tell you that are very sustainable because we are winning those using our core competencies from product and innovation and our commercial excellence and our operational capabilities. those i will tell you that are very sustainable because we are winning those using our core competencies from product and innovation and our commercial excellence and our operational capabilities The third piece of the volume that we have also talked about, you know, the window of opportunity we have from Tungsten Dynamics. We also think that those are sustainable, at least in the near term, that we see that. In the long term, we'll see how that, you know, plays out. We are being very strategic about which opportunities that we go and capitalize. We are selective on what opportunities we think are gonna be longer term sustainable for us. All in all, of course, it's a mix of three things, and I won't be able to quantify, you know, break down or don't wanna disclose it, you know, in public domain on that. The third piece of the volume that we have also talked about, you know, the window of opportunity we have from Tungsten Dynamics. the third piece of the volume that we have also talked about you know the window of opportunity we have from tungsten dynamics We also think that those are sustainable, at least in the near term, that we see that. we also think that those are sustainable at least in the near term that we see that In the long term, we'll see how that, you know, plays out. in the long term we'll see how that you know plays out We are being very strategic about which opportunities that we go and capitalize. we are being very strategic about which opportunities that we go and capitalize We are selective on what opportunities we think are gonna be longer term sustainable for us. we are selective on what opportunities we think are gonna be longer term sustainable for us All in all, of course, it's a mix of three things, and I won't be able to quantify, you know, break down or don't wanna disclose it, you know, in public domain on that. all in all of course it's a mix of three things and i won't be able to quantify you know break down or don't wanna disclose it you know in public domain on that I can tell you that as we have talked about in past, that driving growth above market has been one of our strategic imperative, and it will continue to be. In last, you know, two years, three years, you know, actually I would go a little bit beyond that. We have shown our ability to outperform or at least, you know, hold our own in our Metal Cutting business where we have in public peer data. This is gonna continue to be one of the focus. In short, I will just say that it is gonna be a meaningful piece of our overall volume story. I can tell you that as we have talked about in past, that driving growth above market has been one of our strategic imperative, and it will continue to be. i can tell you that as we have talked about in past that driving growth above market has been one of our strategic imperative and it will continue to be In last, you know, two years, three years, you know, actually I would go a little bit beyond that. in last you know two years three years you know actually i would go a little bit beyond that We have shown our ability to outperform or at least, you know, hold our own in our Metal Cutting business where we have in public peer data. we have shown our ability to outperform or at least you know hold our own in our metal cutting business where we have in public peer data This is gonna continue to be one of the focus. this is gonna continue to be one of the focus In short, I will just say that it is gonna be a meaningful piece of our overall volume story. in short i will just say that it is gonna be a meaningful piece of our overall volume story

Speaker 1: Very helpful. Thank you. If you could bear with me, I guess a three-part question here just on tungsten. Hoping to better understand, I guess a couple of things. One, any more color you can add in terms of the sourcing that you're doing and how that differs versus competitors that allows you know, in a market that you described as very competitive, in terms of sourcing to make sure that you're able to have the right amount of supply. Just any color you can add that, on that. Maybe a little bit more longer term or medium to longer term. On the tungsten side, I think your preliminary fiscal year 2027 outlook talked about that as being kind of stable at current levels. Very helpful. very helpful Thank you. thank you If you could bear with me, I guess a three-part question here just on tungsten. if you could bear with me i guess a three-part question here just on tungsten Hoping to better understand, I guess a couple of things. hoping to better understand i guess a couple of things One, any more color you can add in terms of the sourcing that you're doing and how that differs versus competitors that allows you know, in a market that you described as very competitive, in terms of sourcing to make sure that you're able to have the right amount of supply. one any more color you can add in terms of the sourcing that you're doing and how that differs versus competitors that allows you know in a market that you described as very competitive in terms of sourcing to make sure that you're able to have the right amount of supply Just any color you can add that, on that. just any color you can add that on that Maybe a little bit more longer term or medium to longer term. maybe a little bit more longer term or medium to longer term On the tungsten side, I think your preliminary fiscal year 2027 outlook talked about that as being kind of stable at current levels. on the tungsten side i think your preliminary fiscal year 2027 outlook talked about that as being kind of stable at current levels Just anything you can add in terms of the supply demand that you're seeing progressing from here in terms of, I think there might be some capacity that's coming online in 2027. To the extent that, I guess any implications from that or the recently kind of lower prices of tungsten in China, as to what, you know, where that commodity heads in 2027. Lastly, you know, implications of that to the price and the market share gains that you talked about on the supply basis? Just anything you can add in terms of the supply demand that you're seeing progressing from here in terms of, I think there might be some capacity that's coming online in 2027. just anything you can add in terms of the supply demand that you're seeing progressing from here in terms of i think there might be some capacity that's coming online in 2027 To the extent that, I guess any implications from that or the recently kind of lower prices of tungsten in China, as to what, you know, where that commodity heads in 2027. to the extent that i guess any implications from that or the recently kind of lower prices of tungsten in china as to what you know where that commodity heads in 2027 Lastly, you know, implications of that to the price and the market share gains that you talked about on the supply basis? lastly you know implications of that to the price and the market share gains that you talked about on the supply basis

Speaker 5: Yeah, certainly. I'll try to take each one of those in terms. You know, when I think about the advantages we have, you know, I want to go beyond, quite frankly, just the sourcing aspect. Like from a sourcing perspective, you know, as we've talked about in the past, we do not use significant amounts of Chinese material outside of our Chinese operation. You know, outside of China, you know, we've got a diversified supply base and partners we've been with for a long period of time and getting material from Bolivia, other East Asian sources and as well as a nice slug of recycled material. A lot of the strength that we have as a company vis-a-vis some of the competition that's out there is also the integrated nature of our supply chain, right? Yeah, certainly. yeah certainly I'll try to take each one of those in terms. i'll try to take each one of those in terms You know, when I think about the advantages we have, you know, I want to go beyond, quite frankly, just the sourcing aspect. you know when i think about the advantages we have you know i want to go beyond quite frankly just the sourcing aspect Like from a sourcing perspective, you know, as we've talked about in the past, we do not use significant amounts of Chinese material outside of our Chinese operation. like from a sourcing perspective you know as we've talked about in the past we do not use significant amounts of chinese material outside of our chinese operation You know, outside of China, you know, we've got a diversified supply base and partners we've been with for a long period of time and getting material from Bolivia, other East Asian sources and as well as a nice slug of recycled material. you know outside of china you know we've got a diversified supply base and partners we've been with for a long period of time and getting material from bolivia other east asian sources and as well as a nice slug of recycled material A lot of the strength that we have as a company vis-a-vis some of the competition that's out there is also the integrated nature of our supply chain, right? a lot of the strength that we have as a company vis-a-vis some of the competition that's out there is also the integrated nature of our supply chain right We have the ability basically to take in tungsten materials at various stages and turn them ultimately into a final product. You think about that from a, from, you know, our ability to take raw materials, which is virgin ore in and process that, there is only a handful of companies in the industry that can do that as well. That provides us, I think, a durable strategic advantage here in this set of circumstances. You know, as you think about where it is from an overall pricing perspective, yes, our assumption at the moment is that tungsten prices are stable. We have the ability basically to take in tungsten materials at various stages and turn them ultimately into a final product. we have the ability basically to take in tungsten materials at various stages and turn them ultimately into a final product You think about that from a, from, you know, our ability to take raw materials, which is virgin ore in and process that, there is only a handful of companies in the industry that can do that as well. you think about that from a from you know our ability to take raw materials which is virgin ore in and process that there is only a handful of companies in the industry that can do that as well That provides us, I think, a durable strategic advantage here in this set of circumstances. that provides us i think a durable strategic advantage here in this set of circumstances You know, as you think about where it is from an overall pricing perspective, yes, our assumption at the moment is that tungsten prices are stable. you know as you think about where it is from an overall pricing perspective yes our assumption at the moment is that tungsten prices are stable You know, I think the, you know, the, the last couple of quarters that we've gone through in terms of, you know, the magnitude of this price change, I don't think that many market participants would have envisioned us going from $200 a ton to over $3,000 a ton, excuse me, as we have over the last 12 months. You know, certainly there has been some softening in China the last week or so in terms of the prices. Unclear at the moment in time whether or not that's indicative of a larger trend that would be more durable. We'll obviously continue to monitor and watch that. Your last question, in terms of what supply is coming online. Yep, there's a variety of new mine projects that are out there that will come online. You know, I think the, you know, the, the last couple of quarters that we've gone through in terms of, you know, the magnitude of this price change, I don't think that many market participants would have envisioned us going from $200 a ton to over $3,000 a ton, excuse me, as we have over the last 12 months. you know i think the you know the the last couple of quarters that we've gone through in terms of you know the magnitude of this price change i don't think that many market participants would have envisioned us going from $200 a ton to over $3,000 a ton excuse me as we have over the last 12 months You know, certainly there has been some softening in China the last week or so in terms of the prices. you know certainly there has been some softening in china the last week or so in terms of the prices Unclear at the moment in time whether or not that's indicative of a larger trend that would be more durable. unclear at the moment in time whether or not that's indicative of a larger trend that would be more durable We'll obviously continue to monitor and watch that. we'll obviously continue to monitor and watch that Your last question, in terms of what supply is coming online. your last question in terms of what supply is coming online Yep, there's a variety of new mine projects that are out there that will come online. yep there's a variety of new mine projects that are out there that will come online We would anticipate in the fullness of time, that would help moderate the tungsten prices here a little bit on a global basis. I think, you know, the other reality of the situation here is in particular, you know, we've got the export controls in China that are in place, number one. Number two, we've got lower Chinese mine production over the last two years, as it relates to, you know, based on some information from public domain, you know, lower quality ore potentially out there as well as I would emphasize lower mining permits provided by the Chinese government. You know, the market has been in a period of shortage. We would anticipate in the fullness of time, that would help moderate the tungsten prices here a little bit on a global basis. we would anticipate in the fullness of time that would help moderate the tungsten prices here a little bit on a global basis I think, you know, the other reality of the situation here is in particular, you know, we've got the export controls in China that are in place, number one. i think you know the other reality of the situation here is in particular you know we've got the export controls in china that are in place number one Number two, we've got lower Chinese mine production over the last two years, as it relates to, you know, based on some information from public domain, you know, lower quality ore potentially out there as well as I would emphasize lower mining permits provided by the Chinese government. number two we've got lower chinese mine production over the last two years as it relates to you know based on some information from public domain you know lower quality ore potentially out there as well as i would emphasize lower mining permits provided by the chinese government You know, the market has been in a period of shortage. you know the market has been in a period of shortage Additional supply obviously would help alleviate some of that, you know, and as that market continues to unfold, obviously that will inform our pricing decisions and, you know, how we set, I'll say, our inventory objectives here in terms of holding inventory as well. Additional supply obviously would help alleviate some of that, you know, and as that market continues to unfold, obviously that will inform our pricing decisions and, you know, how we set, I'll say, our inventory objectives here in terms of holding inventory as well. additional supply obviously would help alleviate some of that you know and as that market continues to unfold obviously that will inform our pricing decisions and you know how we set i'll say our inventory objectives here in terms of holding inventory as well

Speaker 1: Very helpful. Thank you so much. Very helpful. very helpful Thank you so much. thank you so much

Speaker 4: The next question is a follow-up from Steve Barger with KeyBanc Capital Markets. Please proceed. The next question is a follow-up from Steve Barger with KeyBanc Capital Markets. the next question is a follow-up from steve barger with keybanc capital markets Please proceed. please proceed

Speaker 8: Hey, thank you. Pat, just to level set expectations for the models. You said price/raw material timing benefit from tungsten flows through into the first half, mostly in 1Q. Is the right way to think about FY 2027 kind of reverse order from this year, high point by far in 1Q trailing back down to your, you know, quarterly average of like $0.40 towards the end of FY 2027? Hey, thank you. hey thank you Pat, just to level set expectations for the models. pat just to level set expectations for the models You said price/raw material timing benefit from tungsten flows through into the first half, mostly in 1Q. you said price/raw material timing benefit from tungsten flows through into the first half mostly in 1q Is the right way to think about FY 2027 kind of reverse order from this year, high point by far in 1Q trailing back down to your, you know, quarterly average of like $0.40 towards the end of FY 2027? is the right way to think about fy 2027 kind of reverse order from this year high point by far in 1q trailing back down to your you know quarterly average of like $0.40 towards the end of fy 2027

Speaker 5: Yeah. Here a couple ways that I think about that, Steve. First off, just let me give you some like the basic walk, and I'll start from the midpoint, right? Midpoint of the outlook this year is $3.88. You know, we said we got $2.45 a price raw in there. You know, probably have about $0.20 worth of variable compensation that would reset. Let's think of like a, you know, a clean FY 2026, removing those items about $1.63 in EPS terms, right? Kinda moving forward next year, you're gonna add $0.10 in for the additional restructuring that we talked about. That gets you down to like about $1.73 before you get to what I'll call as additional price raw, which again should exist in that first half, right? Yeah. yeah Here a couple ways that I think about that, Steve. here a couple ways that i think about that steve First off, just let me give you some like the basic walk, and I'll start from the midpoint, right? first off just let me give you some like the basic walk and i'll start from the midpoint right Midpoint of the outlook this year is $3.88. midpoint of the outlook this year is $3.88 You know, we said we got $2.45 a price raw in there. you know we said we got $2.45 a price raw in there You know, probably have about $0.20 worth of variable compensation that would reset. you know probably have about $0.20 worth of variable compensation that would reset Let's think of like a, you know, a clean FY 2026, removing those items about $1.63 in EPS terms, right? let's think of like a you know a clean fy 2026 removing those items about $1.63 in eps terms right Kinda moving forward next year, you're gonna add $0.10 in for the additional restructuring that we talked about. kinda moving forward next year you're gonna add $0.10 in for the additional restructuring that we talked about That gets you down to like about $1.73 before you get to what I'll call as additional price raw, which again should exist in that first half, right? that gets you down to like about $1.73 before you get to what i'll call as additional price raw which again should exist in that first half right

Speaker 8: Yeah. Yeah. yeah

Speaker 5: Whatever the volume assumption is that you guys make at this point in time. Obviously, we'll give some clarity about that in August. The second thing I would say about that in terms of now taking that cadence and thinking about the year, yeah, I think the right way to think about this, again, this is assuming a relatively stable tungsten environment, would be first half we're gonna see the benefits of price raw. Back half of that year, we'll get back to what I would call it as a normal level of profitability, right, absent the price raw tailwinds. Whatever the volume assumption is that you guys make at this point in time. whatever the volume assumption is that you guys make at this point in time Obviously, we'll give some clarity about that in August. obviously we'll give some clarity about that in august The second thing I would say about that in terms of now taking that cadence and thinking about the year, yeah, I think the right way to think about this, again, this is assuming a relatively stable tungsten environment, would be first half we're gonna see the benefits of price raw. the second thing i would say about that in terms of now taking that cadence and thinking about the year yeah i think the right way to think about this again this is assuming a relatively stable tungsten environment would be first half we're gonna see the benefits of price raw Back half of that year, we'll get back to what I would call it as a normal level of profitability, right, absent the price raw tailwinds. back half of that year we'll get back to what i would call it as a normal level of profitability right absent the price raw tailwinds

Speaker 8: Super helpful. Thank you. Super helpful. super helpful Thank you. thank you

Speaker 4: The next question is a follow-up from Julian Mitchell with Barclays. Please proceed. The next question is a follow-up from Julian Mitchell with Barclays. the next question is a follow-up from julian mitchell with barclays Please proceed. please proceed

Speaker 2: Much. This will be a quick one. Maybe just flesh out a bit more the cadence of kind of volume demand. You had that very interesting chart on cumulative volumes going back several years. That was interesting, and you've clearly seen a pickup, as you said, a couple of times. There's some pre-buy, I suppose, in that. Maybe give us any color you can on sort of how base volumes are performing if you can really get to that level of detail from your channel partners and so forth. Have you seen an improvement in base demand in the last couple of months, or it's difficult to disentangle that from pre-buy movement? Much. much This will be a quick one. this will be a quick one Maybe just flesh out a bit more the cadence of kind of volume demand. maybe just flesh out a bit more the cadence of kind of volume demand You had that very interesting chart on cumulative volumes going back several years. you had that very interesting chart on cumulative volumes going back several years That was interesting, and you've clearly seen a pickup, as you said, a couple of times. that was interesting and you've clearly seen a pickup as you said a couple of times There's some pre-buy, I suppose, in that. there's some pre-buy i suppose in that Maybe give us any color you can on sort of how base volumes are performing if you can really get to that level of detail from your channel partners and so forth. maybe give us any color you can on sort of how base volumes are performing if you can really get to that level of detail from your channel partners and so forth Have you seen an improvement in base demand in the last couple of months, or it's difficult to disentangle that from pre-buy movement? have you seen an improvement in base demand in the last couple of months or it's difficult to disentangle that from pre-buy movement

Speaker 5: I'll take that first, and then Sanjay will, he'll hit most of it. Just to clarify that chart to make sure we're all talking about it the same way, right? That chart is based on a 12 trailing months basis, Julian. Based on that, you can think about it as an annualized chart. It's going to kind of flatten out any sort of short-term pre-buying issues, right? Again, we're talking about an annual type number. With that, I'll turn it over to Sanjay here. I'll take that first, and then Sanjay will, he'll hit most of it. i'll take that first and then sanjay will he'll hit most of it Just to clarify that chart to make sure we're all talking about it the same way, right? just to clarify that chart to make sure we're all talking about it the same way right That chart is based on a 12 trailing months basis, Julian. that chart is based on a 12 trailing months basis julian Based on that, you can think about it as an annualized chart. based on that you can think about it as an annualized chart It's going to kind of flatten out any sort of short-term pre-buying issues, right? it's going to kind of flatten out any sort of short-term pre-buying issues right Again, we're talking about an annual type number. again we're talking about an annual type number With that, I'll turn it over to Sanjay here. with that i'll turn it over to sanjay here

Speaker 6: Yeah, Julian, with regards to, you know, rest of the drivers, at this point, Q4, we are confident in what we are saying, you know, that we do see impact from improving market condition, which is again, moderate. Then on top of that, you know, our share gain opportunities that we have, those will definitely play out. I think with respect to fiscal 2027, we'll come back and talk about that in August, but the, you know, initial signs are, you know, seems like things are definitely stabilizing. Yeah, Julian, with regards to, you know, rest of the drivers, at this point, Q4, we are confident in what we are saying, you know, that we do see impact from improving market condition, which is again, moderate. yeah julian with regards to you know rest of the drivers at this point q4 we are confident in what we are saying you know that we do see impact from improving market condition which is again moderate Then on top of that, you know, our share gain opportunities that we have, those will definitely play out. then on top of that you know our share gain opportunities that we have those will definitely play out I think with respect to fiscal 2027, we'll come back and talk about that in August, but the, you know, initial signs are, you know, seems like things are definitely stabilizing. i think with respect to fiscal 2027 we'll come back and talk about that in august but the you know initial signs are you know seems like things are definitely stabilizing

Speaker 2: Great. Thank you. Great. great Thank you. thank you

Speaker 4: This concludes today's question and answer session. At this time, I would like to turn the conference back over to Sanjay Chowbey for any closing remarks. This concludes today's question and answer session. this concludes today's question and answer session At this time, I would like to turn the conference back over to Sanjay Chowbey for any closing remarks. at this time i would like to turn the conference back over to sanjay chowbey for any closing remarks

Speaker 6: Thank you, operator, and thank you everyone for joining the call today. As always, we appreciate your interest and support. Please don't hesitate to reach out to Mike if you have any questions. Have a great day. Thank you, operator, and thank you everyone for joining the call today. thank you operator and thank you everyone for joining the call today As always, we appreciate your interest and support. as always we appreciate your interest and support Please don't hesitate to reach out to Mike if you have any questions. please don't hesitate to reach out to mike if you have any questions Have a great day. have a great day

Speaker 4: Thank you. As a reminder, a replay of this event will be available approximately one hour after its conclusion. To access the replay, you may dial toll-free within the U.S. at eight five five, six nine nine, nine six five eight. Outside of the U.S., you may dial four one two, three one seven, zero zero eight eight. You will be prompted to enter the conference ID, which is six nine three, six six two seven , then the pound or hash symbol. You will be asked to record your name and company. Today's conference has now concluded. Thank you for attending today's presentation, and you may now disconnect your lines. Thank you. thank you As a reminder, a replay of this event will be available approximately one hour after its conclusion. as a reminder a replay of this event will be available approximately one hour after its conclusion To access the replay, you may dial toll-free within the U.S. at eight five five, six nine nine, nine six five eight. to access the replay you may dial toll-free within the u.s at eight five five, six nine nine, nine six five eight Outside of the U.S., you may dial four one two, three one seven, zero zero eight eight. outside of the u.s you may dial four one two, three one seven, zero zero eight eight You will be prompted to enter the conference ID, which is six nine three, six six two seven , then the pound or hash symbol. you will be prompted to enter the conference id which is six nine three, six six two seven then the pound or hash symbol You will be asked to record your name and company. you will be asked to record your name and company Today's conference has now concluded. today's conference has now concluded Thank you for attending today's presentation, and you may now disconnect your lines. thank you for attending today's presentation and you may now disconnect your lines