KENNAMETAL INC - Quarter Report: 2023 September (Form 10-Q)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q


☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended: September 30, 2023


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _______ to _______

Commission file number 1-5318

KENNAMETAL INC.

(Exact name of registrant as specified in its charter)


Pennsylvania		25-0900168
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

525 William Penn Place
Suite 3300
Pittsburgh,	Pennsylvania	15219
(Address of principal executive offices)		(Zip Code)

Registrant’s telephone number, including area code: (412) 248-8000

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol	Name of each exchange on which registered
Capital Stock, par value $1.25 per share	KMT	New York Stock Exchange
Preferred Stock Purchase Rights		New York Stock Exchange

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act.


Large accelerated filer	☒	Accelerated filer	☐
Non-accelerated filer	☐	Smaller reporting company	☐
		Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of October 31, 2023 79,603,305 shares of the Registrant’s Capital Stock, par value $1.25 per share, were outstanding.

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KENNAMETAL INC.

FORM 10-Q

FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2023

TABLE OF CONTENTS


Item No.		Page No.

PART I - FINANCIAL INFORMATION

1.	Financial Statements

	Condensed Consolidated Statements of Income (Unaudited) Three months ended September 30, 2023 and 2022	4

	Condensed Consolidated Statements of Comprehensive Income (Loss) (Unaudited) Three months ended September 30, 2023 and 2022	4

	Condensed Consolidated Balance Sheets (Unaudited) September 30, 2023 and June 30, 2023	5

	Condensed Consolidated Statements of Cash Flow (Unaudited) Three months ended September 30, 2023 and 2022	6

	Notes to Condensed Consolidated Financial Statements (Unaudited)	7

2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	19

3.	Quantitative and Qualitative Disclosures About Market Risk	29

4.	Controls and Procedures	29

5.	Other Information	29

PART II - OTHER INFORMATION
1.	Legal Proceedings	30

2.	Unregistered Sales of Equity Securities, Use of Proceeds, and Issuer Purchases of Equity Securities	30



6.	Exhibits	31

Signatures		32

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FORWARD-LOOKING INFORMATION

This Quarterly Report on Form 10-Q contains “forward-looking” statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements are statements that do not relate strictly to historical or current facts. You can identify forward-looking statements by words such as “should,” “anticipate,” “estimate,” “approximate,” “expect,” “may,” “will,” “project,” “intend,” “plan,” “believe” and other words of similar meaning and expression in connection with any discussion of future operating or financial performance or events. We have also included forward-looking statements in this Quarterly Report on Form 10-Q concerning, among other things, our strategy, goals, plans and projections regarding our financial position, liquidity and capital resources, results of operations, market position and product development. These statements are based on current estimates that involve inherent risks and uncertainties. Should one or more of these risks or uncertainties materialize, or should the assumptions underlying the forward-looking statements prove incorrect, our actual results could vary materially from our current expectations. There are a number of factors that could cause our actual results to differ from those indicated in the forward-looking statements. They include: uncertainties related to changes in macroeconomic and/or global conditions, including as a result of increased inflation and Russia's invasion of Ukraine and the resulting sanctions on Russia; the adverse effects of the COVID-19 pandemic and its impacts on our business operations, financial results and financial position and on the industries in which we operate and the global economy generally; other economic recession; our ability to achieve all anticipated benefits of restructuring, simplification and modernization initiatives; Commercial Excellence growth initiatives, Operational Excellence initiatives, our foreign operations and international markets, such as currency exchange rates, different regulatory environments, trade barriers, exchange controls, and social and political instability, including the conflict in Ukraine; changes in the regulatory environment in which we operate, including environmental, health and safety regulations; potential for future goodwill and other intangible asset impairment charges; our ability to protect and defend our intellectual property; continuity of information technology infrastructure; competition; our ability to retain our management and employees; demands on management resources; availability and cost of the raw materials we use to manufacture our products; product liability claims; integrating acquisitions and achieving the expected savings and synergies; global or regional catastrophic events; demand for and market acceptance of our products; business divestitures; energy costs; commodity prices; labor relations; and implementation of environmental remediation matters. We provide additional information about many of the specific risks we face in the “Risk Factors” section of our Annual Report on Form 10-K and in other periodic reports we file from time to time with the Securities and Exchange Commission. We can give no assurance that any goal or plan set forth in our forward-looking statements will be achieved and readers are cautioned not to place undue reliance on such statements, which speak only as of the date made. Except as required by law, we do not intend to release publicly any revisions to forward-looking statements as a result of future events or developments.

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PART I – FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

KENNAMETAL INC.

CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)


	Three Months Ended September 30,
(in thousands, except per share amounts)	2023		2022
Sales	$	492,476	$	494,792
Cost of goods sold	329,578		334,824
Gross profit	162,898		159,968
Operating expense	111,649		108,278
Restructuring and other charges, net (Note 6)	3,086		—

Amortization of intangibles	3,045		3,164
Operating income	45,118		48,526
Interest expense	6,601		6,638
Other expense, net	89		1,009
Income before income taxes	38,428		40,879
Provision for income taxes	8,059		11,242
Net income	30,369		29,637
Less: Net income attributable to noncontrolling interests	312		1,441
Net income attributable to Kennametal	$	30,057	$	28,196
PER SHARE DATA ATTRIBUTABLE TO KENNAMETAL SHAREHOLDERS
Basic earnings per share	$	0.38	$	0.35
Diluted earnings per share	$	0.37	$	0.34
Basic weighted average shares outstanding	80,025		81,544
Diluted weighted average shares outstanding	80,699		82,165

KENNAMETAL INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (UNAUDITED)


	Three Months Ended September 30,
(in thousands)	2023		2022
Net income	$	30,369	$	29,637
Other comprehensive income (loss), net of tax

Reclassification of unrealized gain on derivatives designated and qualified as cash flow hedges	(192)		(192)
Unrecognized net pension and other postretirement benefit plans gain	1,517		3,324
Reclassification of net pension and other postretirement benefit plans loss	1,054		806
Foreign currency translation adjustments	(20,188)		(52,949)

Total other comprehensive loss, net of tax	(17,809)		(49,011)
Total comprehensive income (loss)	12,560		(19,374)
Less: comprehensive loss attributable to noncontrolling interests	(326)		(324)
Comprehensive income (loss) attributable to Kennametal Shareholders	$	12,886	$	(19,050)

The accompanying notes are an integral part of these condensed consolidated financial statements.

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KENNAMETAL INC.

CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)


(in thousands, except per share data)	September 30, 2023		June 30, 2023
ASSETS
Current assets:
Cash and cash equivalents	$	95,098	$	106,021
Accounts receivable, less allowance for doubtful accounts of $8,185 and $8,759, respectively	288,655		307,313
Inventories (Note 9)	570,345		557,630


Other current assets	56,457		55,825
Total current assets	1,010,555		1,026,789
Property, plant and equipment:
Land and buildings	412,338		416,291
Machinery and equipment	1,954,536		1,951,535
Less accumulated depreciation	(1,408,628)		(1,398,758)
Property, plant and equipment, net	958,246		969,068
Other assets:
Goodwill (Note 17)	266,582		269,551
Other intangible assets, less accumulated amortization of $175,481 and $173,346, respectively (Note 17)	89,817		93,164
Operating lease right-of-use assets	43,000		43,036
Deferred income taxes	64,453		65,519
Other	80,107		80,107
Total other assets	543,959		551,377
Total assets	$	2,512,760	$	2,547,234
LIABILITIES
Current liabilities:

Revolving and other lines of credit and notes payable (Note 11)	$	31,179	$	689
Current operating lease liabilities	11,712		11,379
Accounts payable	197,369		203,341
Accrued income taxes	19,170		25,143
Accrued expenses	42,191		55,635


Other current liabilities	118,225		137,788
Total current liabilities	419,846		433,975
Long-term debt, less current maturities (Note 10)	595,374		595,172
Operating lease liabilities	31,786		32,178
Deferred income taxes	31,410		32,062
Accrued pension and postretirement benefits	112,542		115,536
Accrued income taxes	1,545		1,446
Other liabilities	21,506		22,697
Total liabilities	1,214,009		1,233,066
Commitments and contingencies
EQUITY (Note 15)
Kennametal Shareholders’ Equity:
Preferred stock, no par value; 5,000 shares authorized; none issued	—		—
Capital stock, $1.25 par value; 120,000 shares authorized; 79,818 and 79,835 shares issued, respectively	99,773		99,794
Additional paid-in capital	453,385		465,406
Retained earnings	1,138,712		1,124,590
Accumulated other comprehensive loss	(431,512)		(414,343)
Total Kennametal Shareholders’ Equity	1,260,358		1,275,447
Noncontrolling interests	38,393		38,721
Total equity	1,298,751		1,314,168
Total liabilities and equity	$	2,512,760	$	2,547,234

The accompanying notes are an integral part of these condensed consolidated financial statements.

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KENNAMETAL INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOW (UNAUDITED)


	Three Months Ended September 30,
(in thousands)	2023		2022
OPERATING ACTIVITIES
Net income	$	30,369	$	29,637
Adjustments to reconcile to cash from operations:
Depreciation	30,461		29,459
Amortization	3,045		3,164
Stock-based compensation expense	8,696		8,282
Restructuring and other charges, net (Note 6)	3,087		—
Deferred income taxes	(104)		64


Other	5,623		(2,406)
Changes in certain assets and liabilities:
Accounts receivable	17,937		5,303
Inventories	(20,266)		(38,499)
Accounts payable and accrued liabilities	(32,555)		(42,145)
Accrued income taxes	(11,676)		1,552
Accrued pension and postretirement benefits	(2,925)		(2,482)
Other	(5,981)		(2,677)
Net cash flow provided by (used in) operating activities	25,711		(10,748)
INVESTING ACTIVITIES
Purchases of property, plant and equipment	(31,799)		(29,484)
Disposals of property, plant and equipment	3,048		202


Other	27		(12)
Net cash flow used in investing activities	(28,724)		(29,294)
FINANCING ACTIVITIES
Net increase in notes payable	7,212		3,388
Net increase in revolving and other lines of credit	23,400		60,900




Purchase of capital stock	(13,725)		(19,376)
The effect of employee benefit and stock plans and dividend reinvestment	(7,013)		(4,757)
Cash dividends paid to Shareholders	(15,935)		(16,276)
Other	9		(754)
Net cash flow (used in) provided by financing activities	(6,052)		23,125
Effect of exchange rate changes on cash and cash equivalents	(1,858)		(4,101)
CASH AND CASH EQUIVALENTS
Net decrease in cash and cash equivalents	(10,923)		(21,018)
Cash and cash equivalents, beginning of period	106,021		85,586
Cash and cash equivalents, end of period	$	95,098	$	64,568

The accompanying notes are an integral part of these condensed consolidated financial statements.

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KENNAMETAL INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

1.BASIS OF PRESENTATION

The condensed consolidated financial statements and accompanying notes included in this Quarterly Report on Form 10-Q, which include our accounts and those of our subsidiaries in which we have a controlling interest, should be read in conjunction with the consolidated financial statements and accompanying notes included in our Annual Report on Form 10-K for the fiscal year ended June 30, 2023 (the “2023 Annual Report”). The condensed consolidated balance sheet as of June 30, 2023 was derived from the audited balance sheet included in our 2023 Annual Report. The interim statements are unaudited; however, we believe that all adjustments necessary for a fair statement of the results of the interim periods were made and all adjustments are normal recurring adjustments. The results for the three months ended September 30, 2023 are not necessarily indicative of the results to be expected for a full fiscal year. Unless otherwise specified, any reference to a “year” is to a fiscal year ended June 30. For example, a reference to 2024 is to the fiscal year ending June 30, 2024. When used in this Quarterly Report on Form 10-Q, unless the context requires otherwise, the terms “the Company,” “we,” “our” and “us” refer to Kennametal Inc. and its subsidiaries.

2.SUPPLEMENTAL CASH FLOW DISCLOSURES


	Three Months Ended September 30,
(in thousands)	2023		2022
Cash paid during the period for:
Interest	$	5,031	$	5,143
Income taxes	13,310		9,626
Supplemental disclosure of non-cash information:
Changes in accounts payable related to purchases of property, plant and equipment	(4,789)		(8,708)

3. SUPPLIER FINANCE PROGRAM

We have a supplier finance program managed through two global financial institutions under which we agree to pay the financial institutions the stated amount of confirmed invoices from our participating suppliers on the invoice due date. We, or the global financial institutions, may terminate our agreements at any time upon 30 days written notice. We do not provide any forms of guarantees under these agreements. Supplier participation in the program is solely up to the supplier. We have no economic interest in a supplier’s decision to participate in the program, and their participation has no bearing on our payment terms or amounts due. The payment terms that we have with our suppliers under this program are considered commercially reasonable. As of September 30, 2023 and June 30, 2023, the amount of obligations outstanding that the Company has confirmed as valid to the financial institutions under the program was $24.5 million and $20.7 million, respectively, and was recorded within trade accounts payable.

4. FAIR VALUE MEASUREMENTS

Fair value is defined as the price that would be received on the sale of an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The fair value hierarchy consists of three levels to prioritize the inputs used in valuations, as defined below:

Level 1: Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities.

Level 2: Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly, including quoted prices for similar assets or liabilities in active markets; quoted prices for identical or similar assets or liabilities in markets that are not active; inputs other than quoted prices that are observable for the asset or liability (e.g., interest rates); and inputs that are derived principally from or corroborated by observable market data by correlation or other means.

Level 3: Inputs that are unobservable.

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KENNAMETAL INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

As of September 30, 2023, the fair values of our financial assets and financial liabilities are categorized as follows:


(in thousands)	Level 1		Level 2		Level 3		Total
Assets:
Derivatives (1)	$	—	$	1	$	—	$	1
Total assets at fair value	$	—	$	1	$	—	$	1

Liabilities:
Derivatives (1)	$	—	$	90	$	—	$	90
Total liabilities at fair value	$	—	$	90	$	—	$	90

As of June 30, 2023, the fair values of our financial assets and financial liabilities are categorized as follows:


(in thousands)	Level 1		Level 2		Level 3		Total
Assets:
Derivatives (1)	$	—	$	68	$	—	$	68
Total assets at fair value	$	—	$	68	$	—	$	68

Liabilities:
Derivatives (1)	$	—	$	100	$	—	$	100
Total liabilities at fair value	$	—	$	100	$	—	$	100

(1) Currency derivatives are valued based on observable market spot and forward rates and are classified within Level 2 of the fair value hierarchy.

There have been no changes in classification and transfers between levels in the fair value hierarchy in the current period.

5. DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES

As part of our financial risk management program, we use certain derivative financial instruments. We do not enter into derivative transactions for speculative purposes and, therefore, we do not hold any derivative instruments for trading purposes. We account for derivative instruments as a hedge of the related asset, liability, firm commitment or anticipated transaction, when the derivative is specifically designated and qualifies as a hedge of such items. Our objective in managing foreign exchange exposures with derivative instruments is to reduce volatility in cash flow. We measure hedge effectiveness by assessing the changes in the fair value or expected future cash flows of the hedged item.

There were no derivatives designated as hedging instruments as of September 30, 2023 and June 30, 2023. The fair value of derivatives not designated as hedging instruments in the condensed consolidated balance sheets are as follows:


(in thousands)	September 30, 2023		June 30, 2023






Derivatives not designated as hedging instruments
Other current assets - currency forward contracts	$	1	$	68
Other current liabilities - currency forward contracts	(90)		(100)
Total derivatives not designated as hedging instruments	(89)		(32)
Total derivatives	$	(89)	$	(32)

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KENNAMETAL INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

Certain currency forward contracts that hedge significant cross-border intercompany loans are considered as other derivatives and therefore do not qualify for hedge accounting. These contracts are recorded at fair value in the condensed consolidated balance sheets, with the offset to other expense, net. Losses (gains) related to derivatives not designated as hedging instruments have been recognized as follows:


	Three Months Ended September 30,
(in thousands)	2023		2022
Other expense (income), net - currency forward contracts	$	122	$	(306)

NET INVESTMENT HEDGES

As of September 30, 2023 and June 30, 2023, there were no foreign currency-denominated intercompany loans payable outstanding that were designated as net investment hedges. A gain of $1.7 million was recorded as a component of foreign currency translation adjustments in other comprehensive loss for the three months ended September 30, 2022.

6. RESTRUCTURING AND OTHER CHARGES, NET

In the June quarter of fiscal 2023, we announced an initiative to streamline our cost structure while continuing to invest in our high-return commercial and operational excellence initiatives. Total restructuring and related charges for this program of $11.1 million, compared to a target of approximately $20 million, were recorded through September 30, 2023, consisting of $8.5 million in Metal Cutting and $2.6 million in Infrastructure. The majority of the remaining charges are expected to be recognized in fiscal 2024.

We recorded restructuring and related charges of $3.7 million for the three months ended September 30, 2023, which consisted of $2.5 million in Metal Cutting and $1.2 million in Infrastructure. Also included in restructuring and other charges, net during the three months ended September 30, 2023 is a net benefit of $0.6 million primarily due to the sale of property.

We recorded no restructuring and related charges for the three months ended September 30, 2022.

As of September 30, 2023, $7.7 million and $2.2 million of the restructuring accrual was recorded in other current liabilities and other liabilities, respectively, in our condensed consolidated balance sheet. As of June 30, 2023, $9.4 million and $0.5 million of the restructuring accrual was recorded in other current liabilities and other liabilities, respectively. The amounts are as follows:


(in thousands)	June 30, 2023		Expense		Translation		Cash Expenditures		September 30, 2023
Severance	$	9,885	$	3,694	$	(229)	$	(3,448)	$	9,902


Total	$	9,885	$	3,694	$	(229)	$	(3,448)	$	9,902

7. STOCK-BASED COMPENSATION

Stock Options

Changes in our stock options for the three months ended September 30, 2023 were as follows:


	Options	Weighted Average Exercise Price		Weighted Average Remaining Life (years)	Aggregate Intrinsic value (in thousands)
Options outstanding, June 30, 2023	217,614	$	37.29

Exercised	—
Lapsed or forfeited	(52,304)	45.24
Options outstanding, September 30, 2023	165,310	$	34.78	1.5	$	56
Options vested, September 30, 2023	165,310	$	34.78	1.5	$	56
Options exercisable, September 30, 2023	165,310	$	34.78	1.5	$	56

As of September 30, 2023 and June 30, 2023, there was no unrecognized compensation cost related to options outstanding, and all options were fully vested as of September 30, 2023 and 2022.

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KENNAMETAL INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

There was no cash received from the exercise of options during the three months ended September 30, 2023 and 2022. The total intrinsic value of options exercised during the three months ended September 30, 2023 and 2022 was zero.

Restricted Stock Units – Performance Vesting and Time Vesting

Changes in our performance vesting and time vesting restricted stock units for the three months ended September 30, 2023 were as follows:


	Performance Vesting Stock Units	Performance Vesting Weighted Average Fair Value		Time Vesting Stock Units	Time Vesting Weighted Average Fair Value
Unvested, June 30, 2023	483,481	$	31.68	1,207,442	$	30.26
Granted	270,911	25.99		676,764	25.99
Vested	(172,542)	51.63		(528,627)	30.74
Performance metric adjustments, net	37,378	38.45		—	—
Forfeited	(44,998)	50.87		(8,576)	28.10
Unvested, September 30, 2023	574,230	$	21.94	1,347,003	$	27.94

During the three months ended September 30, 2023 and 2022, compensation expense related to time vesting and performance vesting restricted stock units was $8.3 million and $7.8 million, respectively. Performance vesting stock units were adjusted by 37,378 units during the three months ended September 30, 2023 related to the fiscal 2023 performance year. As of September 30, 2023, the total unrecognized compensation cost related to unvested time vesting and performance vesting restricted stock units was $38.6 million and is expected to be recognized over a weighted average period of 2.1 years.

8. PENSION AND OTHER POSTRETIREMENT BENEFITS

The table below summarizes the components of net periodic pension income:


	Three Months Ended September 30,
(in thousands)	2023		2022
Service cost	$	297	$	238
Interest cost	8,907		8,040
Expected return on plan assets	(11,161)		(10,026)
Amortization of transition obligation	19		21
Amortization of prior service cost	(1)		2
Recognition of actuarial losses	1,444		1,105


Net periodic pension income	$	(495)	$	(620)

The table below summarizes the components of net periodic other postretirement benefit cost:


	Three Months Ended September 30,
(in thousands)	2023		2022

Interest cost	$	107	$	104
Amortization of prior service credit	(63)		(68)
Recognition of actuarial loss	34		48
Net periodic other postretirement benefit cost	$	78	$	84

The service cost component of net periodic pension income is reported as a component of cost of goods sold and operating expense. All other components of net periodic pension income and net periodic other postretirement benefit cost are reported as a component of other expense, net.

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KENNAMETAL INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

9. INVENTORIES

We used the last-in, first-out (LIFO) method of valuing inventories for 33 percent and 33 percent of total inventories at September 30, 2023 and June 30, 2023, respectively. Inventory valuations under the LIFO method are based on an annual determination of quantities and costs as of June 30 of each year; therefore, the interim LIFO valuations are based on our projections of expected year-end inventory levels and costs and are subject to any final year-end LIFO inventory adjustments.

Inventories consisted of the following:


(in thousands)	September 30, 2023		June 30, 2023
Finished goods	$	336,340	$	328,094
Work in process and powder blends	240,803		233,346
Raw materials	82,898		81,552
Inventories at current cost	660,041		642,992
Less: LIFO valuation	(89,696)		(85,362)
Total inventories	$	570,345	$	557,630

10. LONG-TERM DEBT

Fixed rate debt had a fair market value of $519.1 million and $527.4 million at September 30, 2023 and June 30, 2023, respectively. The Level 2 fair value is determined based on the quoted market prices for similar debt instruments as of September 30, 2023 and June 30, 2023, respectively.

11. REVOLVING AND OTHER LINES OF CREDIT AND NOTES PAYABLE

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

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

As of September 30, 2023, we were in compliance with all the covenants of the Credit Agreement, and there were $23.4 million of borrowings outstanding and $676.6 million of additional availability. There were no borrowings outstanding as of June 30, 2023.

Borrowings on other lines of credit and notes payable were $7.8 million and $0.7 million at September 30, 2023 and June 30, 2023, respectively.

12. ENVIRONMENTAL MATTERS

The operation of our business has exposed us to certain liabilities and compliance costs related to environmental matters. We are involved in various environmental cleanup and remediation activities at certain sites associated with our current or former operations.

We establish and maintain accruals for estimated liabilities associated with certain environmental matters. At September 30, 2023, the balance of such accruals was $11.8 million, of which $1.6 million was current. At June 30, 2023, the balance was $12.0 million, of which $1.7 million was current.

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KENNAMETAL INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

We record a loss contingency when the available information indicates it is probable that we have incurred a liability and the amount of the loss is reasonably estimable. The likelihood of a loss with respect to a particular environmental matter is often difficult to predict, and determining a meaningful estimate of the loss or a range of loss may not be practicable based on information available. When a material loss contingency is probable but a reasonable estimate cannot be made, or when a material loss contingency is at least reasonably possible, disclosure is provided. The accruals we have established for estimated environmental liabilities represent our best current estimate of the probable and reasonably estimable costs of addressing identified environmental situations, based on our review of currently available evidence, and taking into consideration our prior experience in remediation and that of other companies, as well as public information released by the United States Environmental Protection Agency (USEPA), other governmental agencies and by the Potentially Responsible Party (PRP) groups in which we are participating. The accrued liabilities for all environmental concerns could change substantially due to factors such as the nature and extent of contamination, changes in remedial requirements, technological changes, discovery of new information, the financial strength of other PRPs, the identification of new PRPs and the involvement of and direction taken by the government or the courts on these matters.

Among other environmental laws, we are subject to the Comprehensive Environmental Response Compensation and Liability Act of 1980 (CERCLA), under which we have been identified by the USEPA or other third party as a PRP with respect to environmental remedial costs at certain Superfund sites. We have evaluated our claims and estimated liability associated with these sites based upon the best information currently available to us. We believe our environmental accruals are adequate to cover our portion of the environmental remedial costs at the sites where we have been designated a PRP, to the extent these expenses are probable and reasonably estimable.

13. INCOME TAXES

The effective income tax rates for the three months ended September 30, 2023 and 2022 were 21.0 percent and 27.5 percent, respectively. The year-over-year change is primarily due to a $6.2 million benefit associated with a change in unrecognized tax benefits which was partially offset by a $2.9 million charge to settle the Italian tax litigation and geographical mix.

Italian Income Tax Litigation Settlement

In 2012, we received an assessment from the Italian tax authority that denied certain tax deductions primarily related to our 2008 tax return. Attempts at negotiating a reasonable settlement with the tax authority were unsuccessful; and as a result, we decided to litigate the matter which was eventually settled during the current quarter. We continue to believe the assessment was baseless and that our 2008 tax return was compliant, in all material respects, with Italian income tax rules and regulations. Accordingly, no income tax liability had been recorded in connection with this assessment in any period. If the Italian tax authority had been successful in litigation, payment of the assessment amount at its face on September 30, 2023 would have resulted in an increase to income tax expense for as much as €35.7 million, or $37.9 million, of which penalties and interest would have been €21.0 million, or $22.3 million.

During fiscal 2023, the Italian government launched a tax amnesty program aimed at reducing the number of tax disputes pending before the Italian courts. Pursuant to program guidelines, payments made to successfully resolve a dispute had to be received by the Italian government no later than September 30, 2023. Due to the prolonged amount of time the case had been pending, and the inherent costs and risks of further litigating the matter, we decided to negotiate a settlement with the Italian tax authority that resulted in an income tax charge of $2.9 million in the current quarter. With this settlement, we consider the matter to be officially closed.

14. EARNINGS PER SHARE

Basic earnings per share is computed using the weighted average number of shares outstanding during the period, while diluted earnings per share is calculated to reflect the potential dilution that would occur related to the issuance of capital stock under stock option grants, performance awards and restricted stock units. The difference between basic and diluted earnings per share relates solely to the effect of capital stock options, performance awards and restricted stock units.

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KENNAMETAL INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

The following table provides the computation of diluted shares outstanding for the three months ended September 30, 2023 and 2022:


	Three Months Ended September 30,
(in thousands)	2023	2022
Weighted-average shares outstanding during the period	80,025	81,544
Add: Unexercised stock options and unvested restricted stock units	674	621
Number of shares on which diluted earnings per share is calculated	80,699	82,165
Unexercised stock options with an exercise price greater than the average market price and restricted stock units not included in the computation because they were anti-dilutive	390	1,249

15. EQUITY

A summary of the changes in the carrying amounts of total equity, Kennametal Shareholders’ equity and equity attributable to noncontrolling interests for the three months ending September 30, 2023 and 2022 is as follows:


	Kennametal Shareholders’ Equity
(in thousands, except per share amounts)	Capital stock		Additional paid-in capital		Retained earnings		Accumulated other comprehensive loss		Non-controlling interests		Total equity
Balance as of June 30, 2023	$	99,794	$	465,406	$	1,124,590	$	(414,343)	$	38,721	$	1,314,168
Net income	—		—		30,057				312		30,369
Other comprehensive loss	—		—		—		(17,169)		(640)		(17,809)
Dividend reinvestment	2		43		—						45
Capital stock issued under employee benefit and stock plans(2)	610		1,028		—						1,638
Purchase of capital stock	(633)		(13,092)		—						(13,725)
Cash dividends ($0.20 per share)	—		—		(15,935)		—		—		(15,935)



Total equity, September 30, 2023	$	99,773	$	453,385	$	1,138,712	$	(431,512)	$	38,393	$	1,298,751


	Kennametal Shareholders’ Equity
(in thousands, except per share amounts)	Capital stock		Additional paid-in capital		Retained earnings		Accumulated other comprehensive loss		Non-controlling interests		Total equity
Balance as of June 30, 2022	$	101,671	$	494,202	$	1,070,655	$	(413,951)	$	38,670	$	1,291,247
Net income	—		—		28,196		—		1,441		29,637
Other comprehensive loss	—		—		—		(47,246)		(1,765)		(49,011)
Dividend reinvestment	2		44		—		—		—		46
Capital stock issued under employee benefit and stock plans(2)	454		3,028		—		—		—		3,482
Purchase of capital stock	(1,032)		(18,344)		—		—		—		(19,376)
Cash dividends ($0.20 per share)	—		—		(16,276)		—		—		(16,276)
Cash dividends to non-controlling interests	—		—		—		—		(1,404)		(1,404)

Total equity, September 30, 2022	$	101,095	$	478,930	$	1,082,575	$	(461,197)	$	36,942	$	1,238,345

(2) Net of restricted stock units delivered upon vesting to satisfy tax withholding requirements.

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KENNAMETAL INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

16. ACCUMULATED OTHER COMPREHENSIVE LOSS

The components of, and changes in, accumulated other comprehensive loss (AOCL) were as follows, net of tax, for the three months ended September 30, 2023:


(in thousands)	Pension and other postretirement benefits		Currency translation adjustment		Derivatives		Total
Attributable to Kennametal:
Balance, June 30, 2023	$	(215,435)	$	(202,641)	$	3,733	$	(414,343)
Other comprehensive income (loss) before reclassifications	1,517		(19,548)		—		(18,031)
Amounts reclassified from AOCL	1,054				(192)		862
Net other comprehensive income (loss)	2,571		(19,548)		(192)		(17,169)
AOCL, September 30, 2023	$	(212,864)	$	(222,189)	$	3,541	$	(431,512)

Attributable to noncontrolling interests:
Balance, June 30, 2023	$	—	$	(8,139)	$	—	$	(8,139)
Other comprehensive loss before reclassifications	—		(640)		—		(640)
Net other comprehensive loss	—		(640)		—		(640)
AOCL, September 30, 2023	$	—	$	(8,779)	$	—	$	(8,779)

The components of, and changes in, AOCL were as follows, net of tax, for the three months ended September 30, 2022:


(in thousands)	Pension and other postretirement benefits		Currency translation adjustment		Derivatives		Total
Attributable to Kennametal:
Balance, June 30, 2022	$	(208,406)	$	(210,048)	$	4,503	$	(413,951)
Other comprehensive income (loss) before reclassifications	3,324		(51,184)		—		(47,860)
Amounts reclassified from AOCL	806		—		(192)		614
Net other comprehensive income (loss)	4,130		(51,184)		(192)		(47,246)
AOCL, September 30, 2022	$	(204,276)	$	(261,232)	$	4,311	$	(461,197)

Attributable to noncontrolling interests:
Balance, June 30, 2022	$	—	$	(7,547)	$	—	$	(7,547)
Other comprehensive loss before reclassifications	—		(1,765)		—		(1,765)
Net other comprehensive loss	—		(1,765)		—		(1,765)
AOCL, September 30, 2022	$	—	$	(9,312)	$	—	$	(9,312)

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KENNAMETAL INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

Reclassifications out of AOCL for the three months ended September 30, 2023 and 2022 consisted of the following:


	Three Months Ended September 30,
(in thousands)	2023		2022		Affected line item in the Income Statement
Gains on cash flow hedges:
Forward starting interest rate swaps	$	(255)	$	(255)	Interest expense

Total before tax	(255)		(255)
Tax impact	63		63		Provision for income taxes
Net of tax	$	(192)	$	(192)

Pension and other postretirement benefits:
Amortization of transition obligations	$	19	$	21	Other income, net
Amortization of prior service credit	(64)		(66)		Other income, net
Recognition of actuarial losses	1,478		1,153		Other income, net
Total before tax	1,433		1,108
Tax impact	(379)		(302)		Provision for income taxes
Net of tax	$	1,054	$	806

The amount of income tax allocated to each component of other comprehensive income (loss) for the three months ended September 30, 2023 and 2022 were as follows:


			2023						2022
(in thousands)	Pre-tax		Tax impact		Net of tax		Pre-tax		Tax impact		Net of tax

Reclassification of unrealized gain on derivatives designated and qualified as cash flow hedges	$	(255)	$	63	$	(192)	$	(255)	$	63	$	(192)
Unrecognized net pension and other postretirement benefit plans gain	2,047		(530)		1,517		4,479		(1,155)		3,324
Reclassification of net pension and other postretirement benefit plans loss	1,433		(379)		1,054		1,108		(302)		806
Foreign currency translation adjustments	(20,188)		—		(20,188)		(52,799)		(150)		(52,949)

Other comprehensive loss	$	(16,963)	$	(846)	$	(17,809)	$	(47,467)	$	(1,544)	$	(49,011)

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KENNAMETAL INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

17. GOODWILL AND OTHER INTANGIBLE ASSETS

A summary of the carrying amount of goodwill attributable to each segment, as well as the changes in such carrying amounts, is as follows:


(in thousands)	Metal Cutting		Infrastructure		Total
Gross goodwill	$	447,212	$	633,211	$	1,080,423
Accumulated impairment losses	(177,661)		(633,211)		(810,872)
Balance as of June 30, 2023	$	269,551	$	—	$	269,551

Activity for the three months ended September 30, 2023:
Change in gross goodwill due to translation	(2,969)		—		(2,969)

Gross goodwill	444,243		633,211		1,077,454
Accumulated impairment losses	(177,661)		(633,211)		(810,872)
Balance as of September 30, 2023	$	266,582	$	—	$	266,582

The components of our other intangible assets were as follows:


	Estimated Useful Life (in years)	September 30, 2023				June 30, 2023
(in thousands)		Gross Carrying Amount		Accumulated Amortization			Gross Carrying Amount		Accumulated Amortization

Technology-based and other	4 to 20	$	31,618	$	(23,769)		$	31,872	$	(23,838)
Customer-related	10 to 21	179,286		(114,264)			179,889		(112,890)
Unpatented technology	10 to 30	31,467		(25,774)			31,487		(25,177)
Trademarks	5 to 20	12,384		(11,674)			12,426		(11,441)
Trademarks	Indefinite	10,543		—			10,836		—
Total		$	265,298	$	(175,481)		$	266,510	$	(173,346)

18. SEGMENT DATA

We operate in two reportable segments consisting of Metal Cutting and Infrastructure. Our reportable operating segments have been determined in accordance with our internal management structure, which is organized based on operating activities, the manner in which we organize segments for allocating resources, making operating decisions and assessing performance and the availability of separate financial results. We do not allocate certain corporate expenses related to executive retirement plans, our Board of Directors, strategic initiatives, and certain other costs and report them in Corporate. Our reportable operating segments do not represent the aggregation of two or more operating segments.

METAL CUTTING The Metal Cutting segment develops and manufactures high performance tooling and metal cutting products and services and offers an assortment of standard and custom metal cutting solutions to diverse end markets, including aerospace and defense, general engineering, energy and transportation. The products include milling, hole making, turning, threading and toolmaking systems used in the manufacture of airframes, aero engines, trucks and automobiles, ships and various types of industrial equipment. We leverage advanced manufacturing capabilities in combination with varying levels of customization to solve our customers’ toughest challenges and deliver improved productivity for a wide range of applications. Metal Cutting markets its products under the Kennametal®, WIDIA®, WIDIA Hanita® and WIDIA GTD® brands through its direct sales force, a network of independent and national distributors, integrated supplier channels and via the Internet. Application engineers and technicians are critical to the sales process and directly assist our customers with specified product design, selection, application and support.

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KENNAMETAL INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

INFRASTRUCTURE Our Infrastructure segment produces engineered tungsten carbide and ceramic components, earth-cutting tools, and advanced metallurgical powders, primarily for the aerospace and defense, energy, earthworks and general engineering end markets. These wear-resistant products include compacts, nozzles, frac seats and custom components used in oil and gas and petrochemical industries; rod blanks and abrasive water jet nozzles for general industries; earth cutting tools and systems used in underground mining, trenching and foundation drilling and road milling; tungsten carbide powders for the oil and gas, aerospace and process industries; high temperature critical wear components, tungsten penetrators and armor solutions for aerospace and defense; and ceramics used by the packaging industry for metallization of films and papers. We combine deep metallurgical and engineering expertise with advanced manufacturing capabilities, such as 3D printing, to deliver solutions that drive improved productivity for our customers. Infrastructure markets its products primarily under the Kennametal® brand and sells through a direct sales force as well as through distributors.

Our sales and operating income by segment are as follows:


	Three Months Ended September 30,
(in thousands)	2023		2022
Sales:
Metal Cutting	$	308,229	$	299,936
Infrastructure	184,247		194,856
Total sales	$	492,476	$	494,792
Operating income:
Metal Cutting	$	32,117	$	28,605
Infrastructure	13,644		20,787
Corporate	(643)		(866)
Total operating income	45,118		48,526
Interest expense	6,601		6,638
Other expense, net	89		1,009
Income before income taxes	$	38,428	$	40,879

The following table presents Kennametal's revenue disaggregated by geography:


	Three Months Ended
	September 30, 2023			September 30, 2022
(in percentages)	Metal Cutting	Infrastructure	Total Kennametal	Metal Cutting	Infrastructure	Total Kennametal
Americas	45%	59%	50%	45%	62%	51%
EMEA	37	19	30	33	16	27
Asia Pacific	18	22	20	22	22	22

To better align with the Company's strategic goals and initiatives, certain of the end markets that are reported externally and used to analyze sales performance were redefined beginning in the fourth quarter of fiscal 2023. The changes include 1.) defense sales were moved from general engineering and are now combined with aerospace sales for a new "aerospace and defense" end market, 2.) certain Metal Cutting sales have been reclassified from general engineering to the aerospace and defense end market, and 3.) Infrastructure's ceramics sales have been reclassified from energy to the general engineering end market. The fiscal 2023 period has been retrospectively restated to align with the new end markets.

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KENNAMETAL INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

The following tables presents Kennametal's revenue disaggregated by end market:


	Three Months Ended September 30, 2023
(in percentages)	Metal Cutting	Infrastructure	Total Kennametal
General engineering	54%	34%	46%
Transportation	27	—	17
Aerospace & Defense	12	6	10
Energy	7	22	13
Earthworks	—	38	14


	Three Months Ended September 30, 2022
(in percentages)	Metal Cutting	Infrastructure	Total Kennametal
General engineering	55%	35%	47%
Transportation	27	—	16
Aerospace & Defense	11	3	8
Energy	7	25	14
Earthworks	—	37	15

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Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (MD&A)

OVERVIEW

Kennametal Inc. was founded based on a tungsten carbide technology breakthrough in 1938. The Company was incorporated in Pennsylvania in 1943 as a manufacturer of tungsten carbide metal cutting tooling and was listed on the New York Stock Exchange (NYSE) in 1967. With more than 80 years of materials expertise, the Company is a global industrial technology leader, helping customers across the aerospace and defense, earthworks, energy, general engineering and transportation industries manufacture with precision and efficiency. This expertise includes the development and application of tungsten carbides, ceramics, super-hard materials and solutions used in metal cutting and extreme wear applications to keep customers up and running longer against conditions such as corrosion and high temperatures.

Our standard and custom product offering spans metal cutting and wear applications including turning, milling, hole making, tooling systems and services, as well as specialized wear components and metallurgical powders. End users of the Company's metal cutting products include manufacturers engaged in a diverse array of industries including: the manufacturers of transportation vehicles and components, machine tools and light and heavy machinery; airframe and aerospace components; and energy-related components for the oil and gas industry, as well as power generation. The Company’s wear and metallurgical powders are used by producers and suppliers in equipment-intensive operations such as road construction, mining, quarrying, oil and gas exploration, refining, production and supply, and for aerospace and defense.

Throughout MD&A, we refer to measures used by management to evaluate performance. We also refer to a number of financial measures that are not defined under accounting principles generally accepted in the United States of America (U.S. GAAP), including organic sales growth (decline), constant currency regional sales growth (decline) and constant currency end market sales growth (decline). We provide the definitions of these non-GAAP financial measures at the end of the MD&A section as well as details on the use and derivation of these financial measures.

Our sales of $492.5 million for the quarter ended September 30, 2023 reflect flat organic growth and no meaningful effect from business days or foreign currency.

Operating income was $45.1 million compared to $48.5 million in the prior year quarter. The year-over-year decrease of $3.4 million was primarily due to higher wages and general inflation, lower sales volumes, higher raw material costs and restructuring and related charges of approximately $4 million in the current quarter. These factors were partially offset by higher price realization and operational efficiencies including restructuring savings. Operating margin was 9.2 percent compared to 9.8 percent in the prior year quarter. The Metal Cutting and Infrastructure segments had operating margins of 10.4 percent and 7.4 percent, respectively, for the quarter ended September 30, 2023.

On March 11, 2020, the World Health Organization declared the Coronavirus Disease 2019 (COVID-19) a pandemic bringing significant uncertainty in our end markets and operations. Although COVID-19 is no longer considered a global emergency, the slow recovery in China, temporary labor shortages due to COVID-19 related absenteeism in certain regions and other supply chain challenges have created significant operating constraints on our business.

Russia's invasion of Ukraine in February 2022 resulted in the imposition of economic sanctions on Russia by the United States, Canada, the European Union and other countries. We have experienced increased costs for energy and raw materials and other supply chain issues due, in part, to the negative impact of the conflict on the global economy. During the March quarter of 2022, the Company ceased operations in Russia and subsequently decided to liquidate its legal entity in Russia, which is expected to be completed during fiscal 2024. Similarly, the developing conflict in Israel that began in October 2023 could negatively impact the Company's financial condition or results of operations. To date, the Israeli conflict has not significantly affected the Company's business activities or results of operations.

The outcome of the strike of the U.S. United Auto Workers (UAW) members also has the potential to negatively affect our business as well as our customers in the transportation end market. To date, the strike has not significantly affected the Company's business activities or results of operations.

Our business has also been negatively affected by foreign currency exchange and inflationary headwinds. We have been able to partially mitigate the effects of inflation, foreign currency exchange challenges and other disruptions through price increases on our products. We cannot predict the ultimate effect of these issues on our business, operating results or financial condition, but we will continue to monitor macroeconomic conditions and attempt to mitigate the negative effect to the extent possible.

Current quarter earnings per diluted share (EPS) was $0.37 compared to EPS of $0.34 in the prior year quarter. EPS for the three months ended September 30, 2023 was unfavorably affected by restructuring and related charges of $0.04 per share.

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Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)

Cash flow provided by operating activities was $25.7 million during the three months ended September 30, 2023 compared to negative $10.7 million during the prior year period. Capital expenditures were $31.8 million and $29.5 million during the three months ended September 30, 2023 and 2022, respectively. During the three months ended September 30, 2023, the Company returned approximately $30 million to shareholders through $14 million in share repurchases under the three-year share repurchase program and $16 million in dividends. The Company has a long history of consistently paying dividends to shareholders since its listing on the New York Stock Exchange in 1967.

RESULTS OF CONTINUING OPERATIONS

SALES Sales for the three months ended September 30, 2023 were $492.5 million, a decrease of $2.3 million, or 0 percent, from $494.8 million in the prior year quarter, reflecting flat organic sales growth and no meaningful effect from business days or foreign currency.

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


	Three Months Ended September 30, 2023
(in percentages)	As Reported	Constant Currency
End market sales growth (decline):
Aerospace & Defense	19%	17%
Energy	(12)	(12)
Earthworks	(2)	—
General engineering	—	(1)
Transportation	1	(1)
Regional sales (decline) growth:
Americas	(3)%	(3)%
Europe, the Middle East and Africa (EMEA)	13	8
Asia Pacific	(12)	(8)

GROSS PROFIT Gross profit for the three months ended September 30, 2023 was $162.9 million, an increase of $2.9 million from $160.0 million in the prior year quarter. The increase was primarily due to higher price realization and operational efficiencies including restructuring savings. These factors were partially offset by higher wages and general inflation, lower sales volumes and higher raw material costs. Gross profit margin for the three months ended September 30, 2023 was 33.1 percent, as compared to 32.3 percent in the prior year quarter.

OPERATING EXPENSE Operating expense for the three months ended September 30, 2023 was $111.6 million compared to $108.3 million for the three months ended September 30, 2022.

Research and development expenses included in operating expense totaled $11.0 million and $10.6 million for the three months ended September 30, 2023 and 2022, respectively.

RESTRUCTURING AND OTHER CHARGES, NET In the June quarter of fiscal 2023, we announced an initiative to streamline our cost structure while continuing to invest in our high-return commercial and operational excellence initiatives. During the quarter, we achieved restructuring savings of approximately $4 million from this action, and currently expect to deliver annualized run rate pre-tax savings of approximately $20 million by the end of fiscal 2024. Total restructuring and related charges for this program of $11.1 million, compared to a target of approximately $20 million, were recorded through September 30, 2023, consisting of $8.5 million in Metal Cutting and $2.6 million in Infrastructure. The majority of the remaining charges are expected to be recognized in fiscal 2024.

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Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)

INTEREST EXPENSE Interest expense for the three months ended September 30, 2023 remained flat at $6.6 million compared to $6.6 million for the three months ended September 30, 2022.

OTHER EXPENSE, NET Other expense, net for the three months ended September 30, 2023 was $0.1 million compared to $1.0 million during the three months ended September 30, 2022. The year-over year change is due primarily to foreign currency exchange.

PROVISION FOR INCOME TAXES The effective income tax rates for the three months ended September 30, 2023 and 2022 were 21.0 percent and 27.5 percent, respectively. The year-over-year change is primarily due to a $6.2 million benefit associated with a change in unrecognized tax benefits which was partially offset by a $2.9 million charge to settle the Italian tax litigation and geographical mix.

Italian Income Tax Litigation Settlement

BUSINESS SEGMENT REVIEW

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Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)

Our sales and operating income by segment are as follows:


	Three Months Ended September 30,
(in thousands)	2023		2022
Sales:
Metal Cutting	$	308,229	$	299,936
Infrastructure	184,247		194,856
Total sales	$	492,476	$	494,792
Operating income:
Metal Cutting	$	32,117	$	28,605
Infrastructure	13,644		20,787
Corporate	(643)		(866)
Total operating income	45,118		48,526
Interest expense	6,601		6,638
Other expense, net	89		1,009
Income before income taxes	$	38,428	$	40,879

METAL CUTTING


	Three Months Ended September 30,
(in thousands, except operating margin)	2023			2022
Sales	$	308,229		$	299,936
Operating income	32,117			28,605
Operating margin	10.4		%	9.5		%


			Three Months Ended September 30, 2023
(in percentages)
Organic sales growth			2%
Foreign currency exchange effect(1)			1



Sales growth			3%


	Three Months Ended September 30, 2023
(in percentages)	As Reported	Constant Currency
End market sales growth (decline):
Aerospace & Defense	9%	7%
Transportation	1	(1)
General engineering	3	1
Energy	(2)	(3)
Regional sales growth (decline):
Americas	4%	3%
EMEA	14	8
Asia Pacific	(16)	(13)

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Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)

For the three months ended September 30, 2023, Metal Cutting sales increased 3 percent compared to the prior year quarter. This was driven by organic growth of 2 percent and a favorable foreign currency effect of 1 percent. Aerospace & defense end market sales increased in the Americas and EMEA as a result of our focused execution on our strategic initiatives and a continuing expansion in global travel following the COVID-19 slowdown, the effects of which were partially offset by unfavorable foreign currency exchange and a decline in Asia Pacific due to lower economic activity in China. Sales in the general engineering end market increased in the Americas and EMEA as industrial activity continues to recover from the COVID-19 pandemic and underlying economic activity expands, the effects of which were partially offset by unfavorable foreign currency exchange and a slower recovery in China from COVID-related disruptions. Energy end market sales declined in all regions due to market disruptions and project delays, the effects of which were partially offset by favorable foreign currency exchange. Transportation end market sales declined in Asia Pacific and the Americas as a result of slowing customer demand, the effects of which were partially offset by improving customer supply chains and hybrid/electric vehicle business in EMEA and favorable foreign currency exchange.

On a regional basis, sales in the Americas increased primarily due to strength in general engineering and aerospace & defense. Sales growth in EMEA reflects the execution on our strategic initiatives. Sales in Asia Pacific decreased due to a slower recovery in China from COVID-related disruptions and unfavorable foreign currency exchange.

For the three months ended September 30, 2023, Metal Cutting operating income was $32.1 million compared to $28.6 million in the prior year quarter. The increase in operating income was primarily due to higher price realization and operational efficiencies including restructuring savings. These factors were partially offset by higher wages and general inflation, lower sales volumes, restructuring and related charges of approximately $3 million in the current quarter and higher raw material costs.

INFRASTRUCTURE


	Three Months Ended September 30,
(in thousands)	2023			2022
Sales	$	184,247		$	194,856
Operating income	13,644			20,787
Operating margin	7.4		%	10.7		%


			Three Months Ended September 30, 2023
(in percentages)
Organic sales decline			(3)%
Foreign currency exchange effect(1)			(1)
Business days effect(4)			(1)


Sales decline			(5)%

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Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)


	Three Months Ended September 30, 2023
(in percentages)	As Reported	Constant Currency
End market sales (decline) growth:
Energy	(16)%	(17)%
Earthworks	(3)	—
General engineering	(8)	(8)
Aerospace & Defense	73	67
Regional sales (decline) growth:
Americas	(10)%	(10)%
EMEA	12	11
Asia Pacific	(5)	—

For the three months ended September 30, 2023, Infrastructure sales decreased by 5 percent from the prior year quarter. The decrease in sales was driven by an organic sales decline of 3 percent, an unfavorable foreign currency effect of 1 percent and an unfavorable business days effect of 1 percent. Energy end market sales decreased primarily due to U.S. oil and gas where land rig counts decreased year over year. Sales in the general engineering end market decreased in all regions primarily due to declines in industrial activity year over year. Earthworks end market sales were flat year over year, excluding the unfavorable foreign currency effect, as growth in underground mining was offset by a decline in construction. Aerospace & defense end market sales increased primarily due to order timing in EMEA. On a regional basis, sales in EMEA increased due to the aerospace & defense end market. Sales in Asia Pacific were flat year over year, excluding the unfavorable foreign currency effect, due to an increase in the earthworks end market offset with decreases in other end markets. Sales in the Americas declined primarily due to the energy and general engineering end markets.

For the three months ended September 30, 2023, Infrastructure operating income was $13.6 million compared to $20.8 million in the prior year quarter. The decrease in operating income was primarily due to lower sales volumes, higher raw material costs and less price realization.

CORPORATE


	Three Months Ended September 30,
(in thousands)	2023		2022
Corporate expense	$	(643)	$	(866)

For the three months ended September 30, 2023, Corporate expense decreased by $0.2 million from the prior year quarter.

LIQUIDITY AND CAPITAL RESOURCES

Cash flow from operations is the primary source of funding for our capital expenditures. For the three months ended September 30, 2023, cash flow provided by operating activities was $25.7 million.

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Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)

We consider the majority of the unremitted earnings of our non-U.S. subsidiaries to be permanently reinvested. With regard to these unremitted earnings, we have not, nor do we anticipate the need to, repatriate funds to the U.S. to satisfy domestic liquidity needs arising in the ordinary course of business, including liquidity needs associated with our domestic debt service requirements. With regard to the small portion of unremitted earnings that are not indefinitely reinvested, we maintain a deferred tax liability for foreign withholding and U.S. state income taxes.

At September 30, 2023, cash and cash equivalents were $95.1 million. Total Kennametal Shareholders' equity was $1,260.4 million and total debt was $626.6 million. Our current senior credit ratings are at investment grade levels. We believe that our current financial position, liquidity and credit ratings provide us access to the capital markets. We believe that we have sufficient resources available to meet cash requirements for the next 12 months. We continue to closely monitor our liquidity position and the condition of the capital markets, as well as the counterparty risk of our credit providers. There have been no material changes in our contractual obligations and commitments since June 30, 2023.

Share Repurchase Program In July 2021, the Board of Directors of the Company approved a share repurchase program authorizing the Company to purchase up to $200 million of the Company's common stock over a three-year period. During the three months ended September 30, 2023, the Company repurchased 505 thousand shares of common stock for $13.7 million.

Dividends During the three months ended September 30, 2023, the Company paid a dividend of $0.20 per share for a total of $15.9 million in dividends returned to shareholders.

Cash Flow Provided by (Used in) Operating Activities

During the three months ended September 30, 2023, cash flow provided by operating activities was $25.7 million, compared to negative $10.7 million for the prior year period. Cash flow provided by operating activities for the current year period consisted of net income and non-cash items amounting to an inflow of $81.2 million and changes in certain assets and liabilities netting to an outflow of $55.5 million. Contributing to the changes in certain assets and liabilities were a decrease in accounts payable and accrued liabilities of $32.6 million, an increase in inventories of $20.3 million, and a decrease in accrued income taxes of $11.7 million. Offsetting these cash outflows was a decrease in accounts receivable of $17.9 million.

During the three months ended September 30, 2022, cash flow used in operating activities was $10.7 million consisting of net income and non-cash items amounting to an inflow of $68.2 million and changes in certain assets and liabilities netting to an outflow of $78.9 million. Contributing to the changes in certain assets and liabilities were a decrease in accounts payable and accrued liabilities of $42.1 million, an increase in inventories of $38.5 million due to higher material costs, lengthening supply chains and higher sales volumes and a decrease in accrued pension and postretirement benefits of $2.5 million. Partially offsetting these cash outflows was a decrease in accounts receivable of $5.3 million and an increase in accrued income taxes of $1.6 million.

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Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)

Cash Flow Used in Investing Activities

Cash flow used in investing activities was $28.7 million for the three months ended September 30, 2023, compared to $29.3 million for the prior year period. During the current year period, cash flow used in investing activities primarily included capital expenditures of $31.8 million, which consisted primarily of equipment upgrades, partially offset by disposals of property, plant, and equipment of $3.0 million.

For the three months ended September 30, 2022, cash flow used in investing activities was $29.3 million and primarily included capital expenditures of $29.5 million, which consisted primarily of equipment upgrades, partially offset by disposals of property, plant, and equipment of $0.2 million.

Cash Flow Used in (Provided by) Financing Activities

Cash flow used in financing activities was $6.1 million for the three months ended September 30, 2023 compared to cash flow provided by financing activities of $23.1 million in the prior year period. During the current year period, cash flow used in financing activities primarily included $15.9 million of cash dividends paid to Kennametal Shareholders, $13.7 million in common shares repurchased, and $7.0 million of the effect of employee benefit and stock plans and dividend reinvestment, partially offset by $23.4 million of borrowings under the Credit Agreement and an increase in notes payable of $7.2 million.

For the three months ended September 30, 2022, cash flow provided by financing activities was $23.1 million and included $60.9 million of borrowings under the Credit Agreement and a $3.4 million increase in notes payable, partially offset by $19.4 million in common shares repurchased, $16.3 million of cash dividends paid to Kennametal Shareholders and $4.8 million of the effect of employee benefit and stock plans and dividend reinvestment.

FINANCIAL CONDITION

Working capital was $590.7 million at September 30, 2023, a decrease of $2.1 million from $592.8 million at June 30, 2023. The decrease in working capital was primarily driven by an increase in borrowings under the Credit Agreement and notes payable of $30.5 million, a decrease in accounts receivable of $18.7 million, and a decrease in cash and cash equivalents of $10.9 million, partially offset by a decrease in other current liabilities of $19.6 million, a decrease in accrued expenses of $13.4 million, and an increase in inventories of $12.7 million. Currency exchange rate effects decreased working capital by a total of approximately $10.2 million.

Property, plant and equipment, net decreased $10.8 million from $969.1 million at June 30, 2023 to $958.2 million at September 30, 2023, primarily due to depreciation expense of $30.5 million and unfavorable currency effects of $7.6 million, partially offset by net capital additions of $28.8 million.

At September 30, 2023, other assets were $544.0 million, a decrease of $7.4 million from $551.4 million at June 30, 2023. The decrease was primarily due to amortization of intangibles of $3.0 million and unfavorable currency exchange effects.

Kennametal Shareholders' equity was $1,260.4 million at September 30, 2023, a decrease of $15.1 million from $1,275.4 million at June 30, 2023. The decrease was primarily due to other comprehensive loss of $17.8 million, cash dividends paid to Kennametal Shareholders of $15.9 million and the repurchase of capital stock of $13.7 million primarily under the share repurchase program that was initiated during fiscal 2022, partially offset by net income attributable to Kennametal of $30.1 million.

DISCUSSION OF CRITICAL ACCOUNTING POLICIES

There have been no changes to our critical accounting policies since June 30, 2023.

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Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)

RECONCILIATION OF FINANCIAL MEASURES NOT DEFINED BY U.S. GAAP

In accordance with SEC rules, below are the definitions of the non-GAAP financial measures we use in this report and the reconciliation of these measures to the most closely related GAAP financial measures. We believe that these measures provide useful perspective on underlying business trends and results and provide a supplemental measure of year-over-year results. The non-GAAP financial measures described below are used by management in making operating decisions, allocating financial resources and for business strategy purposes. We believe these measures may be useful to investors as they provide supplemental information about business performance and provide investors a view of our business results through the eyes of management. These non-GAAP financial measures are not intended to be considered by the user in place of the related GAAP financial measure, but rather as supplemental information to our business results. These non-GAAP financial measures may not be the same as similar measures used by other companies due to possible differences in method and in the items or events being adjusted.

Organic sales growth (decline) Organic sales growth (decline) is a non-GAAP financial measure of sales growth (decline) (which is the most directly comparable GAAP measure) excluding the effects of acquisitions, divestitures, business days and foreign currency exchange from year-over-year comparisons. We believe this measure provides investors with a supplemental understanding of underlying sales trends by providing sales growth (decline) on a consistent basis. Also, we report organic sales growth (decline) at the consolidated and segment levels.

Constant currency end market sales growth (decline) Constant currency end market sales growth (decline) is a non-GAAP financial measure of sales growth (decline) (which is the most directly comparable GAAP measure) by end market excluding the effects of acquisitions, divestitures and foreign currency exchange from year-over-year comparisons. We note that, unlike organic sales growth, constant currency end market sales growth does not exclude the effect of business days. We believe this measure provides investors with a supplemental understanding of underlying end market trends by providing end market sales growth (decline) on a consistent basis. Also, we report constant currency end market sales growth (decline) at the consolidated and segment levels.

Constant currency regional sales growth (decline) Constant currency regional sales growth (decline) is a non-GAAP financial measure of sales growth (decline) (which is the most directly comparable GAAP measure) by region excluding the effects of acquisitions, divestitures and foreign currency exchange from year-over-year comparisons. We note that, unlike organic sales growth, constant currency regional sales growth does not exclude the effect of business days. We believe this measure provides investors with a supplemental understanding of underlying regional trends by providing regional sales growth (decline) on a consistent basis. Also, we report constant currency regional sales growth (decline) at the consolidated and segment levels.

Reconciliations of organic sales growth (decline) to sales growth (decline) are as follows:


Three Months Ended September 30, 2023	Metal Cutting	Infrastructure	Total
Organic sales growth (decline)	2%	(3)%	—%
Foreign currency exchange effect(1)	1	(1)	—
Business days effect(4)	—	(1)	—


Sales growth (decline)	3%	(5)%	—%

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Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)

Reconciliations of constant currency end market sales growth (decline) to end market sales growth (decline)(2) are as follows:


Metal Cutting
Three Months Ended September 30, 2023	General Engineering	Transportation	Aerospace & Defense	Energy
Constant currency end market sales growth (decline)	1%	(1)%	7%	(3)%
Foreign currency exchange effect(1)	2	2	2	1


End market sales growth (decline)(2)	3%	1%	9%	(2)%


Infrastructure
Three Months Ended September 30, 2023	Energy	Earthworks	General Engineering	Aerospace & Defense
Constant currency end market sales (decline) growth	(17)%	—%	(8)%	67%
Foreign currency exchange effect(1)	1	(3)	—	6%


End market sales (decline) growth(2)	(16)%	(3)%	(8)%	73%


Total
Three Months Ended September 30, 2023	General Engineering	Transportation	Aerospace & Defense	Energy	Earthworks
Constant currency end market sales (decline) growth	(1)%	(1)%	17%	(12)%	—%
Foreign currency exchange effect(1)	1	2	2	—	(2)


End market sales growth (decline)(2)	—%	1%	19%	(12)%	(2)%

Reconciliations of constant currency regional sales growth (decline) to reported regional sales growth (decline)(3) are as follows:


	Three Months Ended September 30, 2023
	Americas	EMEA	Asia Pacific
Metal Cutting
Constant currency regional sales growth (decline)	3%	8%	(13)%
Foreign currency exchange effect(1)	1	6	(3)


Regional sales growth (decline)(3)	4%	14%	(16)%

Infrastructure
Constant currency regional sales (decline) growth	(10)%	11%	—%
Foreign currency exchange effect(1)	—	1	(5)


Regional sales (decline) growth(3)	(10)%	12%	(5)%

Total
Constant currency regional sales (decline) growth	(3)%	8%	(8)%
Foreign currency exchange effect(1)	—	5	(4)


Regional sales (decline) growth(3)	(3)%	13%	(12)%

(1) Foreign currency exchange effect is calculated by dividing the difference between current period sales and current period sales at prior period foreign exchange rates by prior period sales.

(2) Aggregate sales for all end markets sum to the sales amount presented on Kennametal's financial statements.

(3) Aggregate sales for all regions sum to the sales amount presented on Kennametal's financial statements.

(4) Business days effect is calculated by dividing the year-over-year change in weighted average working days (based on mix of sales by country) by prior period weighted average working days.

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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

There have been no material changes to our market risk exposures since June 30, 2023.


ITEM 4. CONTROLS AND PROCEDURES

As of the end of the period covered by this Quarterly Report on Form 10-Q, the Company's management evaluated, with the participation of the Company's Chief Executive Officer and Chief Financial Officer, the effectiveness of the Company's disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)). The Company's disclosure controls were designed to provide a reasonable assurance that information required to be disclosed in reports that we file or submit under the Securities Exchange Act of 1934, as amended (Exchange Act), is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the Securities and Exchange Commission. It should be noted that the design of any system of controls is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions, regardless of how remote. However, the controls have been designed to provide reasonable assurance of achieving the controls' stated goals. Based on that evaluation, the Company's Chief Executive Officer and Chief Financial Officer have concluded that the Company's disclosure controls and procedures are effective to provide reasonable assurance at September 30, 2023 that information required to be disclosed in the reports that we file or submit under the Exchange Act is (i) accumulated and communicated to management, including the Company's Chief Executive Officer and Chief Financial Officer, to allow timely decisions regarding required disclosure and (ii) recorded, processed, summarized and reported within the time periods specified in the rules and forms of the Securities and Exchange Commission.

There were no changes in the Company's internal control over financial reporting that occurred during the Company's most recent fiscal quarter that have materially affected, or are reasonably likely to materially affect, the Company's internal control over financial reporting.


ITEM 5. OTHER INFORMATION

Rule 10b5-1 Trading Arrangements

In the quarter ended September 30, 2023, none of our directors or officers (as defined in Rule 16a-1(f) of the Exchange Act) adopted, modified or terminated a plan for the purchase or sale of our securities intended to satisfy the affirmative defense conditions of Rule 10b5-1(c) or a non-Rule 10b5-1 trading arrangement for the purchase or sale of our securities, within the meaning of Item 408 of Regulation S-K.

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PART II. OTHER INFORMATION


ITEM 1. LEGAL PROCEEDINGS

From time to time, we are party to legal claims and proceedings that arise in the ordinary course of business, which may relate to our operations or assets, including real, tangible or intellectual property. Although certain of these types of actions are currently pending, we do not believe that any individual proceeding is material or that our pending legal proceedings in the aggregate are material to Kennametal. See "Note 12. Environmental Matters" for a discussion of our exposure to certain environmental liabilities.


ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES, USE OF PROCEEDS, AND ISSUER PURCHASES OF EQUITY SECURITIES

ISSUER PURCHASES OF EQUITY SECURITIES


Period	Total Number of Shares Purchased (1)	Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs	Approximate Dollar Value of of Shares that May Yet Be Purchased Under the Plans or Programs (2)
July 1 through July 31, 2023	140,368	$	28.86	138,360	$	61,600,000
August 1 through August 31, 2023	436,056	26.52		229,545	55,400,000
September 1 through September 30, 2023	136,868	25.56		136,750	51,900,000
Total	713,292	$	26.80	504,655

(1)During the current period, 1,712 shares were purchased on the open market on behalf of Kennametal to fund the Company’s dividend reinvestment program. Also, during the current period employees delivered 206,925 shares of restricted stock to Kennametal, upon vesting, to satisfy tax withholding requirements.

(2)On July 27, 2021, the Board of Directors of the Company approved a share repurchase program authorizing the Company to purchase up to $200 million of the Company's common stock over a three-year period outside of the Company's dividend reinvestment program.

UNREGISTERED SALES OF EQUITY SECURITIES

None.

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ITEM 6. EXHIBITS

Rule 13a-14(a)/15d-14(a) Certifications

31.1

Certification executed by Christopher Rossi, President and Chief Executive Officer of Kennametal Inc.

Filed herewith.

31.2

Certification executed by Patrick S. Watson, Vice President and Chief Financial Officer of Kennametal Inc.

Filed herewith.

Section 1350 Certifications

32.1

Certification Pursuant to 18 U.S.C. Section 1350 as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, executed by Christopher Rossi, President and Chief Executive Officer of Kennametal Inc., and Patrick S. Watson, Vice President and Chief Financial Officer of Kennametal Inc.

Filed herewith.

101

XBRL

101.INS (3)

XBRL Instance Document

Filed herewith.

101.SCH (4)

XBRL Taxonomy Extension Schema Document

Filed herewith.

101.CAL (4)

XBRL Taxonomy Extension Calculation Linkbase Document

Filed herewith.

101.DEF (4)

XBRL Taxonomy Definition Linkbase

Filed herewith.

101.LAB (4)

XBRL Taxonomy Extension Label Linkbase Document

Filed herewith.

101.PRE (4)

XBRL Taxonomy Extension Presentation Linkbase Document

Filed herewith.

(3)The instance document does not appear in the Interactive Data File because its XBRL (Extensible Business Reporting Language) tags are embedded within the Inline XBRL document.

(4)Attached as Exhibit 101 to this report are the following documents formatted in Inline XBRL: (i) the Condensed Consolidated Statements of Income for the three months ended September 30, 2023 and 2022, (ii) the Condensed Consolidated Statements of Comprehensive Income for the three months ended September 30, 2023 and 2022, (iii) the Condensed Consolidated Balance Sheets at September 30, 2023 and June 30, 2023, (iv) the Condensed Consolidated Statements of Cash Flows for the three months ended September 30, 2023 and 2022 and (v) Notes to Condensed Consolidated Financial Statements for the three months ended September 30, 2023 and 2022.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

KENNAMETAL INC.

Date:

November 3, 2023

By:

/s/ John W. Witt

John W. Witt
Vice President Finance and Corporate Controller