KMT 10-K & 10-Q changes, risk factors and insider trading

The conflictconflicts in the Middle East, Russia’s invasion of Ukraine and other conflicts could adversely affect our business. The conflictconflicts in the Middle East that began in October 2023 and in February 2026, as well as the Russian invasion of Ukraine that began in February 2022 have resulted in disruptions within our business and throughout our supply chain. A significant escalation or expansion of these conflicts beyond the current geographic, political and economic scope and scale could have a material adverse effect on our business, results of operations and financial condition and could exacerbate other risks. Such risks include, but are not limited to: an increase in the frequency and severity of the cybersecurity threats we and various third parties with whom we do business experience, unfavorable changes in exchange rates, delivery delays, price inflation in a wide variety of raw materials and components, widespread reductions in customer demand and increased logistical challenges.

Implementation of tariffs and changes to or uncertainties related to tariffs and trade agreements could adversely affect our business. The U.S. government has imposedimposed, proposed and modified tariffs on certain foreign goodsimports from a variety ofvarious countries and regions that it perceives as engaging in unfair trade practices,practices and hasadditional raisedtariffs or trade restrictions may be imposed in the possibility of imposing significant additional tariff increases or expanding the tariffs to capture other types of goods from other countries.future. In response, many of these foreign governments have imposed retaliatory tariffs on goods that their countries import from the U.S. or have enacted export restrictions on certain goods, including critical minerals, produced in their country. Uncertainties with respect to tariffs, trade agreements or any potential trade wars could negatively affect the global economy and demand for our products and could have a material adverse effect on our financial condition, results of operations and cash flows. Changes in tariffs and trade barriers could also result in adverse changes in the cost and availability of our raw materials, most notably tungsten, and our ability to manufacture globally to support global sales which could lead to increased costs that we may not be able to effectively pass on to customers, each of which could materially adversely affect our operating margins, results of operations and cash flows.

Our future operating results may be affected by fluctuations in the prices and availability of raw materials. The raw materials we use for our products include tungsten ore concentrates and scrap carbide, which are used to make tungsten oxide, as well as compounds and secondary materials such as cobalt. We also purchase steel bars and forgings for making toolholders and other tool parts, as well as for producing mining tools, rotary cutting tools and accessories. A significant portion of our raw materials is supplied by sources outside of the U.S.U.S., including tungsten, the global supply of which is concentrated in China. The raw materials extraction industry is highly cyclical and at times pricing and supply can be volatile due to a number of factors beyond our control, including natural disasters, pandemics or public health issues, general economic and political conditions, labor costs, competition, import duties, tariffs, export restrictions enacted by foreign governments and currency exchange rate fluctuations. This volatility can significantly affect our raw material costs. In an environment of increasing raw material prices, competitive conditions can affect how much of these price increases we can recover in the form of higher sales prices for our products. To the extent we are unable to pass on any raw material price increases to our customers, our profitability could be adversely affected. Furthermore, restrictions in the supply of tungsten, cobalt and other raw materials could adversely affect our operating results. IfIncreased theraw material costs could also increase our working capital requirements and negatively affect our liquidity. Conversely, if raw material prices fordecline our raw materials increase or we are unable to secure adequate supplies of raw materials on favorable terms, our profitability could be impaired. If the prices for our raw materials decrease,significantly, we could face product pricing challenges.challenges or the net realizable value of certain inventory may fall below carrying value, requiring inventory write-downs that could adversely affect our results of operations and financial condition.

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

Sales of $2,356.7 million in 2026 increased 20 percent from $1,966.8 million in 2025 decreased 4 percent from $2,046.9 million in 2024,2025, reflecting an organic sales declinegrowth of 419 percent and ana unfavorablefavorable foreign currency exchange effect of 12 percent, partially offset by a favorable business daysdivestiture effect of 1 percent.

In February 2024, the Board of Directors of the Company authorized a $200 million, three-year share repurchase program outside of the Company's dividend reinvestment program. During 2025,2026, the Company repurchased 2.5475 millionthousand shares of common stock for $60$10 million. Subsequent to these repurchases, the Company paused activity under the share repurchase program. The Company expects to reassess repurchase activity as cash flow generation improves.

WeIn generated2026, net cash flow fromused for operating activities was $4.0 million compared to net cash flow provided by operating activities of $208.3 million in 2025 compared to $277.1 million during the prior year. Capital expenditures were $89.0$76.9 million and $107.6$89.0 million during 20252026 and 2024,2025, respectively. During 2025,2026, the Company returned a total of $122$71 million to the shareholders through $60$10 million in share repurchases under the $200 million, three-year program and $62$61 million in dividends.

SALES Sales of $2,356.7 million in 2026 increased 20 percent from $1,966.8 million in 2025 decreased 4 percent from $2,046.9 million in 2024,2025, reflecting an organic sales declinegrowth of 419 percent and ana unfavorablefavorable foreign currency exchange effect of 12 percent, partially offset by a favorable business daysdivestiture effect of 1 percent.

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

OPERATING EXPENSE Operating expense in 20252026 was $430.8$479.0 million, aan decreaseincrease of $2.3$48.2 million, or 111 percent, from $433.2$430.8 million in 2024.2025.

RESTRUCTURING AND OTHER CHARGES, NET In January 2025, we announced several actions to support the long-term competitiveness of the Company and to mitigate softer market conditions. Total restructuring and related charges for this program of $11.4$23.9 million, compared to a target of approximately $25 million,million were recorded through June 30, 2025,2026, consisting of $8.8$19.4 million in Metal Cutting and $2.6$4.5 million in Infrastructure. These actions delivered annualized run rate pre-tax savings of approximately $28 million by the end of fiscal 2025. We now expect total annualized run rate savings of approximately $35 million in connection with these actions, exceeding the original target of $15 million. The Company substantially completed the closure of a facility in Greenfield, MA and the consolidation of facilities in Barcelona, Spain during 2025 as a part of these actions.

During 2025,2026, we recorded restructuring and related charges of $13.3$11.4 million, which consisted of $10.4$9.7 million in Metal Cutting and $2.8$1.7 million in Infrastructure. Of this amount, restructuring-related charges of $1.3$2.4 million were included in cost of goods sold and $0.2$0.1 million were included in operating expense. These amounts are inclusive of a reversal of restructuring and related charges of $1.0 million related to prior actions.

INTEREST EXPENSE Interest expense in 20252026 was $24.9$28.6 million, aan decreaseincrease of $1.5$3.6 million, compared to $26.5$24.9 million in 2024.2025. The increase includes a loss of $2.2 million from the early extinguishment of the 2028 Notes in May 2026. The portion of our debt subject to variable rates of interest was approximately 4 percent and less than 1 percent at June 30, 20252026 and 2024.2025. ThereAs wereof noJune 30, 2026, we had $20 million of borrowings outstanding under the Credit Agreement and no borrowings outstanding as of June 30, 2025 and 2024.2025.

OTHER (INCOME) EXPENSE,INCOME, NET In 2025,2026, other (income) expense,income, net was $13.8$17.4 million of other (income), net compared to $0.7$13.8 million in 2024.2025. The increase of $13.1$3.5 million is primarily due to foreign currency transactions including preferential exchange rates in Bolivia, partially offset by higher net periodic pension expense.

INCOME TAXES The effective tax rate for 20252026 was 25.224.0 percent compared to 21.325.2 percent for 2024.2025. The year-over-year change in the effective tax rate is primarily due to favorable geographical mix partially offset by prior year adjustments that include a $7.8 million benefit related to a tax rate change in Switzerland, a $6.2 million benefit related to a change in unrecognized tax benefits and a $2.9 million charge to settle the Italian tax litigation. The current year effective tax rate reflects a benefit for the advanced manufacturing production credit under the Inflation Reduction Act of 2022 and $1.4 million for interest received to resolve an income tax dispute in India and geographical mix.India.

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

NET INCOME ATTRIBUTABLE TO KENNAMETAL Net income attributable to Kennametal was $93.1$342.4 million, or $1.20$4.42 of earnings per diluted share (EPS) in 2025,2026, compared to $109.3$93.1 million, or EPS of $1.37$1.20 in 2024.2025. The decreaseincrease is a result of the factors previously discussed.

In 2025,2026, Metal Cutting operating income was $86.4$195.6 million, a $46.2$109.2 million decreaseincrease from 2024.2025. The decreaseincrease in operating income was primarilydriven dueby non-raw material-related pricing and tariff surcharges, the favorable timing of raw material-related pricing compared to lowercosts of approximately $54 million, higher sales and production volumes, higher wagesvolumes and generalincremental inflation,year-over-year unfavorablerestructuring foreign currency exchangesavings of approximately $6$21 million, the net effect of increased tariffs of approximately $4 million and higher restructuring and related charges of approximately $2 million compared to the prior year.million. These factors were partially offset by pricing,higher restructuringcompensation benefits of approximately $17 millioncosts, and lowertariffs rawand materialgeneral costs.inflation. Metal Cutting operating margin in 20252026 was 7.114.0 percent compared to 10.47.1 percent in the prior year.

In 2025,2026, Infrastructure operating income was $58.5$279.9 million, a $18.6$221.4 million increase from 2024.2025. The increase in operating income was primarilydriven dueby the favorable timing of raw material-related pricing compared to ancosts of approximately $262 million and incremental year-over-year benefitrestructuring savings of approximately $13$6 million from an advanced manufacturing production credit under the Inflation Reduction Act, a net benefit of $12 million related to the tornado that struck the Rogers, Arkansas facility late in fiscal 2024, restructuring benefits of approximately $7 million, lower raw material costs and pricing.million. These factors were partially offset by higher compensation costs, lower sales and production volumes, higherfewer wagesinsurance proceeds received during 2026 and general inflation and a loss from divestiture of approximately $2 million related to the sale of a subsidiary in Goshen, IN.inflation. Infrastructure operating margin in 20252026 was 7.829.2 percent compared to 5.27.8 percent in the prior year.

In 2025,2026, Corporate expense decreasedincreased $0.5$1.2 million from 2024.2025.

LIQUIDITY AND CAPITAL RESOURCES Cash flow from operations is the primary source of funding for working capital requirements, reinvesting in our business through capital expenditures and returning value to shareholders through dividends and share repurchases. During the year ended June 30, 2025,2026, net cash flow providedused byfor operating activities was $208.3$4.0 million.

During fiscal 2022,2026, we entered into the SixthSeventh Amended and Restated Credit Agreement dated as of JuneNovember 14,17, 20222025 (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, Canadian dollars, euros, pounds sterling and Japanese yen. Interest payable under the Credit Agreement is based upon the type of borrowing under the facility and may be (1) Euro Interbank Offered Rate (EURIBOR), Sterling Overnight Index Average (SONIA), Canadian Overnight Repo Rate Average (CORRA), Tokyo Interbank Offered Rate (TIBOR), and Secured Overnight Financing Rate (SOFR) for any borrowings in euros, pounds sterling, yen,Canadian dollars, yen and U.S. dollarsdollars, 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 JuneNovember 2027.2030.

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 June 30, 20252026 and 2024,2025, we were in compliance with all covenants of the Credit AgreementAgreement. We had $20 million of borrowings outstanding and we$830.0 hadmillion of availability as of June 30, 2026. There were no borrowings outstanding and $700.0 millionas of availability.June 30, 2025.

For the year ended June 30, 2025,2026, average daily borrowings outstanding under the Credit Agreement were approximately $5.4$18.2 million. The weighted average interest rate on borrowings under the Credit Agreement was 5.54.7 percent for the year ended June 30, 2025.2026. Based upon our debt structure at June 30, 20252026 and 2024,2025, approximately 4 percent and less than 1 percent of our debt was exposed to variable rates of interest.interest, respectively.

CashWe expect to fund our anticipated cash requirements through a combination of cash generated from operationsoperations, iscash expectedon hand and available borrowings. While management believes these sources of liquidity will be sufficient to meet ourthe planned capital expenditures of approximately $90 million andCompany's expected dividendcash paymentsrequirements, in fiscal 2026. Therethere can be no assurance, however,assurance that weactual operating results, cash flows or capital needs will generatenot cashdiffer from operationscurrent in line with our expectations, or that these projections will remain constant throughout fiscal 2026. If cash generated from operations is not sufficient to support these activities, we may be required to use existing cash and cash equivalents, reduce capital expenditures or borrow under the Credit Agreement.expectations. We believe that our cash and cash equivalents, cash flow from operations and available borrowings are sufficient to meet both the short-term and long-term capital needs of the Company.

Share Repurchase Program. In February 2024, the Board of Directors of the Company authorized a $200 million, three-year share repurchase program outside of the Company's dividend reinvestment program. During 2025,2026, the Company repurchased 2.5475 millionthousand shares of common stock for $60$10 million. Subsequent to these repurchases, the Company paused activity under the share repurchase program. The Company expects to reassess repurchase activity as cash flow generation improves.

Cash Flow (Used for) Provided by Operating Activities. During 2025,2026, net cash flow used for operating activities was $4.0 million, compared to net cash flow provided by operating activities wasof $208.3 million, compared to $277.1 million in 2024.2025. During 2025,2026, cash flow providedused byfor operating activities consisted of net income and non-cash items amounting to $247.5$590.5 million and changes in certain assets and liabilities netting to an outflow of $39.2$594.5 million. Contributing to the change in certain assets and liabilities were an increase in inventories of $17.4$593.4 million resulting largely from rising tungsten prices, an increase in accounts receivable of $116.9 million, an increase of other current assets of $102.1 million, which consisted primarily of prepaid assets and advance payments made to certain vendors to secure raw material supply, a decrease in accrued income taxesother of $12.3$12.2 million,million and a decrease in accrued pension and postretirement benefits of $7.4$7.1 million, apartially decreaseoffset by an increase in accounts payable and accrued liabilities of $6.2$226.1 million and aan decreaseincrease in otheraccrued income taxes of $5.0 million, partially offset by a decrease in accounts receivable of $9.1$11.0 million.

During 2024,2025, cash flow provided by operating activities was $277.1$208.3 million consisting of net income and non-cash items amounting to $278.2$247.5 million and changes in certain assets and liabilities netting to an outflow of $1.1$39.2 million. Contributing to the change in certain assets and liabilities were an increase in inventories of $17.4 million, a decrease in accrued income taxes of $16.2$12.3 million, a decrease in accrued pension and postretirement benefits of $9.5$7.4 million, a decrease in accounts payable and accrued liabilities of $6.1$6.2 million and ana increasedecrease in accounts receivableother of $2.6$5.0 million, partially offset by a decrease in inventoriesaccounts receivable of $36.8$9.1 million.

Cash Flow Used for Investing Activities. Cash flow used for investing activities was $61.8$71.3 million for 2025, a decrease of $47.6 million,2026 compared to $109.4$61.8 million in 2024.2025. During 2025,2026, cash flow used for investing activities included capital expenditures, net of $87.1$75.1 million, which consisted primarily of equipment upgrades, proceeds from a divestiture of $18.7 million and proceeds from insurance recoveries of $11.8$3.4 million, partially offset by an outflow of $5.2 million which includes an investment in a strategic partnership with Toolpath Labs, Inc.million.

CashDuring 2025, cash flow used for investing activities was $109.4$61.8 million for 2024 and included capital expenditures, net of $102.1$87.1 million, which consisted primarily of equipment upgrades, theproceeds acquisitionfrom a divestiture of a business for $4.0$18.7 million and proceeds from insurance recoveries of $11.8 million, partially offset by an outflow of $5.2 million which includes an investment in a strategic partnership with ModuleWorksToolpath GmbH.Labs, Inc.

Cash Flow Provided by (Used for) Financing Activities. CashNet cash flow usedprovided forby financing activities was $133.9$31.6 million for 20252026 compared to $141.7 million in 2024. During 2025,net cash flow used for financing activities of $133.9 million in 2025. During 2026, cash flow provided by financing activities primarily included $61.9net proceeds of $297.0 million from the issuance of the 2036 Notes, a net increase in revolving and other lines of credit of $20.0 million and a net increase in notes payable of $11.3 million. These factors were partially offset by $209.4 million due to the partial tender of the 2028 Notes, $60.8 million of cash dividends paid to shareholders, $60.1$10.1 million in common shares repurchased, primarily under the share repurchase programprogram, approximately $8.2 million of other financing activities and $7.1$8.1 million of the effect of employee benefit and stock plans and dividend reinvestment.

CashDuring 2025, cash flow used for financing activities was $141.7$133.9 million for 2024 and included $65.6$61.9 million of cash dividends paid to shareholders, $60.1 million in common shares repurchased, primarily under the share repurchase program, $63.4 million of cash dividends paid to shareholdersprogram and $10.0$7.1 million of the effect of employee benefit and stock plans and dividend reinvestment.

Our sales of $529.5$592.6 million for the three months ended DecemberMarch 31, 20252026 increased 1022 percent from $482.1$486.4 million in the prior year quarter, reflecting organic sales growth of 1019 percent and a favorable currency exchange effect of 15 percent, partially offset by a divestiture effect of 12 percent.

Operating income for the three months ended DecemberMarch 31, 20252026 was $52.7$79.4 million compared to $31.7$44.1 million in the prior year quarter. The year-over-year increase of $21.0$35.4 million was driven by the favorable timing of pricing compared to raw material costs of approximately $17$39 million within the Infrastructure segment, pricing and tariff surcharges within the Metal Cutting segment, higher sales and production volumes in Metal Cutting, andvolumes, incremental year-over-year restructuring savings of approximately $8$7 million, favorable foreign currency exchange of approximately $4 million and a decrease in restructuring and related charges of approximately $3 million. These factors were partially offset by higher compensation costs, tariffs and general inflation, athe priornet year benefit from insurance proceedseffect of approximately $3$8 million thatfrom dida notnormalized repeatadvanced manufacturing production credit under the Inflation Reduction Act in the current yearquarter within the Infrastructure segment, and anhigher increaseraw material costs in incrementalthe restructuringMetal andCutting related charges of approximately $2 million.segment.

Operating margin for the three months ended DecemberMarch 31, 20252026 was 9.913.4 percent compared to 6.69.1 percent in the prior year quarter. The Metal Cutting and Infrastructure segments had operating margins of 9.010.7 percent and 11.818.1 percent, respectively, for the three months ended DecemberMarch 31, 2025.2026.

Additionally, our business has been negatively affected by foreign currency exchangeexchange, inflationary headwinds and inflationaryrising headwinds.tungsten prices. These pressures, driven by tightening global supply, geopolitical factors and evolving trade policies have increased raw material costs and caused other business disruptions. We have been able to partially mitigate thethese effects of inflation, foreign currency exchange challenges and other disruptionsimpacts through price increases on our products.products, Wesupplier diversification and inventory management initiatives. However, we cannot predict the ultimate effect of these issues on our business, operating resultsresults, cash flows or financial condition,condition. butContinued wevolatility willin continuecommodity pricing, foreign exchange rates and supply availability could adversely affect our margins, operations and liquidity and may increase the risk of future impairment charges, including goodwill and other intangible assets. We are continuing to monitor macroeconomic conditions and attemptwill take actions to mitigate thethese negative effecteffects to the extent possible.

For the three months ended DecemberMarch 31, 2025,2026, earnings per diluted share (EPS) was $0.44$0.75 compared to EPS of $0.23$0.41 in the prior year quarter.

Net cash flow provided by operating activities was $72.6$69.7 million during the sixnine months ended DecemberMarch 31, 20252026 compared to $100.9$129.7 million during the prior year period. Capital expenditures were $35.7$53.7 million and $44.0$67.5 million during the sixnine months ended DecemberMarch 31, 20252026 and 2024,2025, respectively. During the sixnine months ended DecemberMarch 31, 2025,2026, the Company returned $40.5$55.7 million to shareholders through $10.1 million in share repurchases and $30.4$45.6 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.

SALES Sales for the three months ended DecemberMarch 31, 20252026 were $529.5$592.6 million, an increase of $47.5$106.2 million, or 1022 percent, from $482.1$486.4 million in the prior year quarter, reflecting organic sales growth of 1019 percent and a favorable currency exchange effect of 15 percent, partially offset by a divestiture effect of 12 percent.

Sales for the sixnine months ended DecemberMarch 31, 20252026 were $1,027.5$1,620.1 million, an increase of $63.5$169.7 million, or 712 percent, from $964.0$1,450.4 million in the prior year period, reflecting organic sales growth of 711 percent and a favorable currency exchange effect of 12 percent, partially offset by a divestiture effect of 1 percent.

GROSS PROFIT Gross profit for the three months ended DecemberMarch 31, 20252026 was $173.9$208.0 million, an increase of $28.8$51.6 million from $145.0$156.4 million in the prior year quarter. The increase was driven by the favorable timing of pricing compared to raw material costs of approximately $17$39 million within the Infrastructure segment, pricing and tariff surcharges within the Metal Cutting segment, higher sales and production volumesvolumes, infavorable theforeign Metalcurrency Cutting segment,exchange and incremental year-over-year restructuring savings. These factors were partially offset by higher compensation costs, tariffs and general inflation, andthe anet prior year benefit from insurance proceedseffect of approximately $3$8 million thatfrom dida notnormalized repeatadvanced manufacturing production credit under the Inflation Reduction Act in the current year.quarter within the Infrastructure segment, and higher raw material costs in the Metal Cutting segment. Gross profit margin for the three months ended DecemberMarch 31, 20252026 was 32.835.1 percent, as compared to 30.132.1 percent in the prior year quarter.

Gross profit for the sixnine months ended DecemberMarch 31, 20252026 was $328.4$536.4 million, an increase of $32.4$84.0 million from $296.0$452.4 million in the prior year period. The increase was driven by the favorable timing of pricing compared to raw material costs within the Infrastructure segment of approximately $25$64 million, pricing and tariff surcharges within the Metal cuttingCutting segment, favorable foreign currency exchange, incremental year-over-year restructuring savings,savings and higher sales and production volumes in the Metal Cutting segment.volumes. These factors were partially offset by higher compensation costs, tariffs and general inflation,inflation and ahigher priorcompensation year benefit from insurance proceeds of approximately $7 million that did not repeat in the current year.costs. Gross profit margin for the sixnine months ended DecemberMarch 31, 20252026 was 32.033.1 percent, as compared to 30.731.2 percent in the prior year period.

OPERATING EXPENSE Operating expense for the three months ended DecemberMarch 31, 20252026 was $116.3$124.0 million compared to $109.3$104.0 million for the three months ended DecemberMarch 31, 2024.2025. Operating expense for the sixnine months ended DecemberMarch 31, 20252026 was $229.3$353.4 million compared to $221.0$325.0 million for the sixnine months ended DecemberMarch 31, 2024.2025. The increase in operating expense was primarily due to higher compensation costs, partially offset by year-over-year restructuring savings.

Research and development expenses included in operating expense totaled $10.3$11.0 million and $11.0$11.1 million for the three months ended DecemberMarch 31, 20252026 and 2024,2025, respectively, and $20.9$31.9 million and $22.1$33.2 million for the sixnine months ended DecemberMarch 31, 20252026 and 2024,2025, respectively.

RESTRUCTURING AND OTHER CHARGES, NET In January 2025, we announced several actions to support the long-term competitiveness of the Company and to mitigate softer market conditions. Total restructuring and related charges for this program of $18.6$22.0 million, compared to a revised target of approximately $20 million, were recorded through DecemberMarch 31, 2025,2026, consisting of $15.1$16.6 million in Metal Cutting and $3.6$5.5 million in Infrastructure. The Company substantially completed the closure of a facility in Greenfield, MA and the consolidation of facilities in Barcelona, Spain during 2025 as a part of these actions.

We recorded restructuring and related charges of $3.1$2.4 million for the three months ended DecemberMarch 31, 2025,2026, which consisted of $2.1$1.9 million in Metal Cutting and $0.9$0.4 million in Infrastructure. Included in this amount were restructuring related charges of $0.5$0.3 million included in cost of goods sold. We recorded restructuring and related charges of $6.2$8.6 million for the sixnine months ended DecemberMarch 31, 2025,2026, which consisted of $5.4$7.4 million in Metal Cutting and $0.8$1.3 million in Infrastructure. Included in this amount were restructuring related charges of $2.1$2.4 million included in cost of goods sold.

We recorded restructuring and related charges of $1.4$5.8 million for the three months ended DecemberMarch 31, 2024,2025, which consisted of $1.2$4.3 million in Metal Cutting and $0.2$1.5 million in Infrastructure. Of this amount, restructuring-related charges of $0.2 million were included in cost of goods sold. We recorded restructuring and related charges of $2.0$7.9 million for the sixnine months ended DecemberMarch 31, 2024,2025, which consisted of $1.8$6.2 million in Metal Cutting and $0.2$1.7 million in Infrastructure. Of this amount, restructuring-related charges of $0.4 million were included in cost of goods sold.

INTEREST EXPENSE Interest expense for the three months ended DecemberMarch 31, 20252026 decreasedincreased to $6.1$6.3 million compared to $6.2 million for the three months ended DecemberMarch 31, 2024.2025. Interest expense for the sixnine months ended DecemberMarch 31, 20252026 decreased to $12.3$18.5 million compared to $12.5$18.7 million for the sixnine months ended DecemberMarch 31, 2024.2025.

OTHER INCOME, NET Other income, net for the three months ended DecemberMarch 31, 20252026 was $2.1$6.5 million compared to $1.5$5.5 million during the three months ended DecemberMarch 31, 2024.2025. Other income, net for the sixnine months ended DecemberMarch 31, 20252026 was $4.4$11.0 million compared to $3.1$8.6 million during the sixnine months ended DecemberMarch 31, 2024.2025. The increase in other incomeincome, net was primarily due to foreign currency transaction gains including preferential exchange rates in Bolivia, partially offset by higher net periodic pension expense in the current year.

PROVISION FOR INCOME TAXES The effective income tax rates for the three months ended DecemberMarch 31, 20252026 and 20242025 were 27.723.3 percent and 29.423.6 percent, respectively. The year-over-year change is primarily due to favorable geographical mix which wasmix, partially offset by a chargelarger recordednet inbenefit from the currentadvanced yearmanufacturing quarterproduction forcredit anunder incomethe taxInflation auditReduction settlement in China and a benefit recordedAct in the prior year quarter for the advanced manufacturing production credit.quarter.

The effective income tax rates for the sixnine months ended DecemberMarch 31, 20252026 and 20242025 were 27.425.4 percent and 27.125.6 percent, respectively. The year-over-year change is primarily due to afavorable benefitgeographical recordedmix in the prior year period for interest received to resolve an income tax dispute in India,and current year adjustments that include a tax rate change enacted in Germany and an income tax audit settlement in China, partially offset by a larger net benefit from the advanced manufacturing production credit under the Inflation Reduction Act in the prior year and favorablethe geographicalbenefit mix.recorded in the prior year for interest received to resolve an income tax dispute in India.

For the three months ended DecemberMarch 31, 2025,2026, Metal Cutting sales increased 1118 percent compared to the prior year quarter. The increase was driven by an organic sales growth of 912 percent and a favorable currency exchange effect of 26 percent. General Engineering end market sales increased primarily due to pricing and demand within the indirect channel. Sales in the Aerospace & Defense end market increased as a result of improved build rates in the Americas, easing supply chain pressures in EMEA and our global strategic focus. Energy end market sales increased in all regions and primarily in the Americas due to data center power generation initiatives. General Engineering end market sales increased primarily due to order timing within the indirect channel and pricing. Transportation end market sales increased due to internal combustion engine and transmission wins in the Americas and Asia Pacific primarily due to pricing, partially offset by declines in EMEA due to lower vehicle production. The decline in EMEA was offset by favorable currency exchange and pricing.

On a regional basis, sales inFor the Americas,three EMEAmonths andended AsiaMarch Pacific31, 2026, sales increased across all end markets.regions. Sales increased in the Americas primarily asdue ato resultpricing ofand indirect channel demand within General EngineeringEngineering, andimproving build rates in Aerospace & Defense.Defense and data center power generation initiatives in Energy. Sales growth in EMEA was driven primarily by our global strategic focus in Aerospace & Defense. SalesThe sales increase in Asia Pacific increasedwas driven primarily dueby topricing and demand within the indirect channel in General Engineering and Aerospace & Defense.Engineering.

For the three months ended DecemberMarch 31, 2025,2026, Metal Cutting operating income was $29.8$38.1 million compared to $16.6$24.9 million in the prior year quarter. The increase in operating income was driven by pricing and tariff surcharges, higher sales and production volumes andvolumes, incremental year-over-year restructuring savings of approximately $6$5 million, favorable foreign currency exchange of approximately $3 million and a decrease in restructuring and related charges of approximately $2 million. These factors were partially offset by higher compensation costs, and tariffs and general inflation.inflation, and higher raw material costs.

For the sixnine months ended DecemberMarch 31, 2025,2026, Metal Cutting sales increased 811 percent compared to the prior year period. The increase was driven by an organic sales growth of 68 percent and a favorable currency exchange effect of 23 percent. Sales in the General Engineering end market increased primarily due to pricing and demand within the indirect channel within the Americas and Asia Pacific. Aerospace & Defense end market sales increased as a result of improved build rates in the Americas, easing supply chain pressures in EMEA and our global strategic focus. Energy end market sales increased in the Americas and Asia Pacific primarily due to our strategic focus. Sales in the General Engineering end market increased primarily due to order timing within the indirect channelfocus and pricing. Transportation end market sales increased primarily in the Americas due to light vehicle production and pricing as well as favorable currency exchange, the effects of which werepricing, partially offset by declines in Asia Pacific due to project timing and EMEA due to alower vehicle production. The decline in vehicleEMEA production.was offset by favorable currency exchange and pricing.

For the sixnine months ended DecemberMarch 31, 2025,2026, Metal Cutting operating income was $51.3$89.4 million compared to $40.4$65.3 million in the prior year period. The increase in operating income was primarily due to pricing and tariff surcharges, higher sales and production volumes and incremental year-over-year restructuring savings of approximately $12$17 million, and higher sales and production volumes, partially offset by higher compensation costs, and tariffs and general inflation, and an increase in incremental restructuring and related charges of approximately $4 million.inflation.

On a regional basis, sales in the Americas increased primarily due to pricing and higher volume in allEarthworks endand markets,Aerospace & Defense, partially offset by the effect of a divestiture. Sales in EMEA decreased due to a declinedeclined in General Engineering, the effect of which was more than offset by price, favorable currency exchange and saleshigher demand in Earthworks. Sales in Asia Pacific increased primarily due to pricing and higher demand in General Engineering and Earthworks.

For the three months ended DecemberMarch 31, 2025,2026, Infrastructure operating income was $23.4$42.5 million compared to $15.6$19.4 million in the prior year quarter. The increase in operating income was driven by the favorable timing of pricing compared to raw material costs of approximately $17$39 million,million and incremental year-over-year restructuring savings of approximately $2 million. These factors were partially offset by higher compensation costs, a prior year benefit fromthe net insurance proceedseffect of approximately $3$8 million thatfrom dida notnormalized repeatadvanced manufacturing production credit under the Inflation Reduction Act in the current yearquarter, higher compensation costs and general inflation.

For the sixnine months ended DecemberMarch 31, 2025,2026, Infrastructure sales increased 413 percent from the prior year period. The increase was driven by an organic sales growth of 715 percent and a favorable currency exchange effect of 12 percent, partially offset by a divestiture effect of 4 percent. Aerospace & Defense end market sales increased in the Americas and EMEA as a result of the execution of our growth initiatives and project timing. Earthworks end market sales increased as a result of pricing, share gains in mining and construction and higher globaldemand in construction volumesfrom dueavailability toof buy-ahead and share gains.material. Sales in the General Engineering end market increased in Asia Pacific and the Americas and Asia Pacific due to pricing, share gains and project timing, partially offset by the effect of a divestiture and a decline in EMEA due to lower ceramics sales. Aerospace & Defense end market sales increased in Americas and EMEA as a result of the execution of our growth initiatives and project timing. Energy end market sales decreasedincreased in the Americas primarily due to pricing, which was partially offset by the effect of a divestiture,divestiture and declines in EMEA and Asia Pacific due tofrom softer market conditions and order timing.

On a regional basis, sales in the Americas increased in all end markets,markets due to price and higher volume in Earthworks and Aerospace & Defense, partially offset by the effect of a divestiture. Sales in EMEA decreased due to a decline in General Engineering, the effect of which was more thanpartially offset by favorable currency exchange and sales in Earthworks. Sales in Asia Pacific increased primarily due to price and higher demand in General Engineering.Engineering and Earthworks.

For the sixnine months ended DecemberMarch 31, 2025,2026, Infrastructure operating income was $40.0$82.5 million compared to $28.3$47.8 million in the prior year period. The increase in operating income was driven by the favorable timing of pricing compared to raw material costs of approximately $25$64 million,million and incremental year-over-year restructuring savings of approximately $4$5 million. These factors were partially offset by higher compensation costs, the net effect of approximately $8 million from a normalized advanced manufacturing production credit under the Inflation Reduction Act, a prior year benefit from net insurance proceeds of approximately $7 million that did not repeat in the current year and general inflation.

For the three months ended DecemberMarch 31, 2025,2026, Corporate expense decreasedincreased by$0.9 an immaterial amountmillion from the prior year quarter. For the sixnine months ended DecemberMarch 31, 2025,2026, Corporate expense increased by $0.1$1.0 million from the prior year quarter.

Cash flow from operations is the primary source of funding for our capital expenditures. For the sixnine months ended DecemberMarch 31, 2025,2026, cash flow provided by operating activities was $72.6$69.7 million.

As of DecemberMarch 31, 2025,2026, we were in compliance with all the covenants of the Credit Agreement, and there were no$15.3 million borrowings outstanding and $650.0$634.7 million of additional availability. There were no borrowings outstanding as of June 30, 2025.

Cash flow used in financing activities was $68.0$98.0 million for the sixnine months ended DecemberMarch 31, 20242025 and primarily included $31.1$55.1 million in common shares repurchased, $46.6 million of cash dividends paid to Kennametal Shareholders, $30.1 million in common shares repurchasedShareholders and $6.2$6.6 million of the effect of employee benefit and stock plans and dividend reinvestment.reinvestment, partially offset by borrowings of $10.2 million under the Credit Agreement.

Working capital was $681.9$742.0 million at DecemberMarch 31, 2025,2026, an increase of $65.0$125.1 million from $616.9 million at June 30, 2025. The increase in working capital was primarily driven by an increase in inventories of $83.7$209.1 million resulting from rising tungsten prices, an increase in accounts receivable of $39.0 million, and an increase in other current assets of $16.7$24.4 million, which consisted primarily of prepaid assets, a decrease of accrued expenses of $8.9 million and a decrease in other current liabilities of $5.7 million, partially offset by an increase in accounts payable of $24.5$67.1 million, a decrease in cash and cash equivalents of $11.2$33.7 million, aan decreaseincrease in accountsother receivablecurrent liabilities of $7.2$22.2 million, an increase in revolving and other lines of credit and notes payable of $15.8 million and an increase inof accrued income taxesexpenses of $6.6$7.4 million. Currency exchange rate effects decreased working capital by a total of approximately $0.9$5.6 million, the effects of which are included in the aforementioned changes.

AtProperty, Decemberplant and equipment, net decreased $62.0 million from $919.9 million at June 30, 2025 to $857.9 million at March 31, 2025,2026, primarily due to depreciation expense of $100.4 million and currency exchange effects of $5.5 million, partially offset by net capital additions of $52.0 million, At March 31, 2026, total other assets were $593.0$594.8 million, an increase of $6.7$8.5 million from $586.2 million at June 30, 2025. The increase was primarily due to an increase in other of $11.7$19.7 million, which consisted primarily of pension assets and long-term prepaid assets, partially offset by amortization of intangibles of $4.8$7.1 million. Currency exchange rate effects were approximately $0.5$4.8 million, the effects of which are included in the aforementioned changes.

Kennametal Shareholders' equity was $1,315.0$1,354.7 million at DecemberMarch 31, 2025,2026, an increase of $31.1$70.8 million from $1,284.0 million at June 30, 2025. The increase was primarily due to net income attributable to Kennametal of $57.2$115.4 million,million and capital stock issued under employee benefit and stock plans of $7.3 million and other comprehensive income attributable to Kennametal of $4.9$18.0 million, partially offset by cash dividends paid to Kennametal Shareholders of $30.4$45.6 million andmillion, the repurchase of capital stock of $10.1 million primarily under the share repurchase program.program, and other comprehensive loss attributable to Kennametal of $7.0 million.